Document:

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                                                                    EXHIBIT 10.4
                            NONCOMPETITION AGREEMENT

        THIS NONCOMPETITION AGREEMENT is entered into as of June 1, 2000
("Effective Date") by and between RANDALL M. ELL ("Executive"), SUMMIT
PROPERTIES INC., a Maryland corporation, and SUMMIT MANAGEMENT COMPANY, a
Maryland corporation.

        WHEREAS, on the date hereof, as a condition to the consummation of the
employment of Executive by the Company, the parties hereto desire to enter into
certain agreements restricting the activities of Executive in an effort to
eliminate potential conflicts of interest that may arise in the future, to
protect the Company's legitimate business interests, i.e., the value of its
business and its good will, and for other business purpose;

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

        1.     Definitions. Capitalized terms used herein shall have the
meanings set forth below:

               "Affiliate" means (i) any entity directly or indirectly
controlling (including without limitation an entity for which Executive serves
as an officer, director, employee, consultant or other agent), controlled by, or
under common control with Executive, and (ii) each other entity in which
Executive, directly or indirectly, owns any controlling interest or of which
Executive serves as a general partner.

               "Agreement" means this Noncompetition Agreement, including any
amendments hereto made in accordance with paragraph 8(d) hereof.

               "Company" means (i) Summit Management Company, (ii) Summit
Properties Inc., (iii) any corporation, partnership or other business entity
that is, directly or indirectly, controlled by or under common control with
Summit Properties Inc. and (iv) their respective successors.

               "Company Project" means any Multifamily Property that the Company
owns, operates or manages as of the date of Executive's termination of
employment with the Company or that the Company has in any manner taken steps to
acquire, develop, construct, operate, manage or lease (including without
limitation making market surveys of a site, talking to a owner or his agent
concerning the purchase or joint venture of a site, optioning or contracting to
buy a site or discussions with the owner or his agent regarding managing or
leasing a property) during the twelve (12) month period immediately preceding
Executive's termination of employment with the Company. Company agrees to
provide Executive with a list of all Company Projects within thirty (30)
business day of Executives termination of employment with the Company for any
reason.

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               "Multifamily Property" means any real property on which
multifamily residential-use development has been constructed or is now or
hereafter proposed to be constructed (for example, and not by way of limitation,
a property of the type managed by the Company).

        2.     Executive's Obligations While Employed by the Company.

               (a) Sole Employment. Subject to the provisions of paragraph 2(b)
below, Executive agrees to devote his full time during the customary business
hours of the Company and give his best efforts to the business of the Company
and, during the period of his employment by the Company, Executive shall not
engage in any manner, whether as an officer, employee, owner, partner,
stockholder, director, consultant or otherwise -- directly or indirectly -- in
any business other than on behalf of the Company without the prior written
approval of the President of Summit Properties Inc., and Executive shall not
accept any other employment whatsoever from any other person, firm, corporation
or entity.

               (b) Exceptions. Notwithstanding the provisions of paragraph 2(a)
above to the contrary, Executive may during the term of his employment by the
Company and at any time thereafter (i) acquire an interest in any corporation,
partnership, venture or other business entity so long as (A) any such interest
is a passive investment of Executive not exceeding ten percent (10%) of the
total ownership interest in such entity, (B) such entity does not afford
Executive the power to influence in any material fashion the decision making
processes of the entity in which such interest is held and (C) Executive is not
the sponsor, promoter or similar initiator of such entity.

        3.     Executive's Obligations Following Termination of Employment with
the Company.

               (a) Anti-Pirating of Employees. For a two (2) year period
immediately following the termination of Executive's employment with the
Company, Executive agrees not to hire, directly or indirectly, or entice or
participate in any efforts to entice to leave the Company's employ, any person
who was or is a "key employee" (as hereinafter defined) of the Company at any
time during the twelve (12) month period immediately preceding the termination
date of Executive's employment with the Company. For purposes of this Agreement,
"key employee" means an employee who has an annualized rate of base salary
equaling or exceeding fifty thousand dollars ($50,000).

               (b) Anti-Pirating of Company Projects. For a period of one (1)
year immediately following the termination of Executive's employment with the
Company, Executive agrees not to engage in any manner, whether as an officer,
employee, owner, partner, stockholder, director, consultant or otherwise --
directly or indirectly -- in any business which engages or attempts to engage,
directly or indirectly, in the acquisition, development, construction,
operation, management or leasing of any Company Project.

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               (c) Trade Secrets and Confidential Information. Executive hereby
agrees that he will hold in a fiduciary capacity for the benefit of the Company,
and shall not directly or indirectly use or disclose any Trade Secret, as
defined hereinafter, that Executive may have acquired during the term of his
employment by the Company for so long as such information remains a Trade
Secret. The term "Trade Secret" as used in this Agreement shall mean non-public
information including, but not limited to, technical or non-technical data, a
formula, a pattern, a compilation, a program, a device, a method, a technique, a
drawing, a process, financial data, financial plans, product plans, or a list of
actual or potential customers or suppliers which:

               derives economic value, actual or potential from not being
               generally known to, and not being readily ascertainable by proper
               means by, other persons who can obtain economic value from its
               disclosure or use; and is the subject of reasonable efforts by
               the Company to maintain its secrecy.

        In addition to the foregoing and not in limitation thereof, Executive
agrees that during the period of his employment by the Company and for a period
of one (1) year thereafter, he will hold in a fiduciary capacity for the benefit
of the Company and shall not directly or indirectly use or disclose, any
Confidential or Proprietary Information, as defined hereinafter, that Executive
may have acquired (whether or not developed or compiled by Executive and whether
or not Executive was authorized to have access to such Information) during the
term of, in the course of or as a result of his employment by the Company. The
term "Confidential or Proprietary Information" as used in this Agreement means
any secret, confidential or proprietary non-public information of the Company
not otherwise included in the definition of "Trade Secret" above. The term
"Confidential and Proprietary non-public Information" does not include
information that has become generally available to the public by the act of one
who has the right to disclose such information without violating any right of
the Company.

               (d) Exceptions. Notwithstanding any provision of paragraph 3(b)
to the contrary, Executive shall not be restricted at any time after his
termination of employment with the Company from engaging in any activities for
which Executive would not be restricted from performing during the term of his
employment with the Company as set forth in paragraph 2(b) above.

        4. Reasonable and Necessary Restrictions. Executive acknowledges that
the restrictions, prohibitions and other provisions hereof, including without
limitation the various periods of restrictions set forth in paragraphs 3(a),
3(b) and 3(c), are reasonable, fair and equitable in scope, terms and duration,
are necessary to protect the legitimate business interests of the Company, and
are a material inducement to the Company to enter into the transactions
contemplated in the recitals hereto.

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        5. Restrictions In Addition to Employment Agreement. Executive
acknowledges that the restrictions, prohibitions and other provisions hereof
shall be in addition to and not in substitution of the restrictions,
prohibitions and other provisions of that certain employment agreement between
Executive, Summit Properties Inc. and Summit Management Company of even date
herewith, as such agreement shall be amended and supplemented from time to time
(the "Employment Agreement").

        6. Specific Performance. Executive acknowledges that the obligations
undertaken by him pursuant to this Agreement are unique and that the Company
likely will have no adequate remedy at law if Executive shall fail to perform
any of his obligations hereunder, and Executive therefore confirms that the
Company's right to specific performance of the terms of this Agreement is
essential to protect the rights and interests of the Company. Accordingly, in
addition to any other remedies that the Company may have at law or in equity,
the Company shall have the right to have all obligations, covenants, agreements
and other provisions of this Agreement specifically performed by Executive, and
the Company shall have the right to obtain preliminary and permanent injunctive
relief to secure specific performance and to prevent a breach or contemplated
breach of this Agreement by Executive, and Executive submits to the jurisdiction
of the courts of the State of North Carolina for this purpose. Said permanent
injunctive relief shall have a term which coincides with the respective periods
of Executive's obligations pursuant to the covenants, agreements and other
provisions of this agreement.

        7. Operations of Affiliates. Executive agrees that he will refrain from
(i) authorizing any Affiliate to perform or (ii) assisting in any manner any
Affiliate in performing any activities that would be prohibited by the terms of
this Agreement if they were performed by Executive. Notwithstanding anything to
the contrary contained in this paragraph 7 (or in any other paragraph of this
Agreement), Executive shall not be required by the terms of this Agreement to
violate any fiduciary or contractual duty he owes as a director or officer of a
corporation, as a partner of a partnership or as a trustee of a trust, which
position he holds not in violation of this Agreement or the Employment
Agreement.

        8.     Miscellaneous Provisions.

               (a) Binding Effect. Subject to any provisions hereof restricting
assignment, all covenants and agreements in this Agreement by or on behalf of
any of the parties hereto shall bind and inure to the benefit of the respective
successors, assigns, heirs, and personal representatives. None of the parties
hereto may assign any of its rights under this Agreement or attempt to have any
other person or entity assume any of its obligations hereunder.

               (b) Severability. If fulfillment of any provision of this
Agreement, at the time such fulfillment shall be due, shall transcend the limit
of validity prescribed by law, then the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any clause or provision contained
in this Agreement operates or would operate to invalidate this Agreement, in
whole or in part, then such clause or provision only shall be held ineffective,
as though not herein

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contained, and the remainder of this Agreement shall remain operative and in
full force and effect.

               (c) Governing Law. This Agreement, the rights and obligations of
the parties hereto, and any claims or disputes relating thereto shall be
governed by and construed in accordance with the laws of the State of North
Carolina, not including the choice-of-law rules thereof.

               (d) Amendment: Waiver. Except as otherwise expressly provided in
this Agreement, no amendment, modification or discharge of this Agreement shall
be valid or binding unless set forth in writing and duly executed by each of the
parties hereto. Any waiver by any party or consent by any party to any variation
from any provision of this Agreement shall be valid only if in writing and only
in the specific instance in which it is given, and such waiver or consent shall
not be construed as a waiver of any other provision or as a consent with respect
to any similar instance or circumstance.

               (e) Headings. Paragraph and subparagraph headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.

               (f) Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or entity may require.

               (g) Arbitration. Any dispute or controversy arising out of or
relating to this Agreement shall be settled finally and exclusively by
arbitration in Charlotte, North Carolina in accordance with the rules of the
American Arbitration Association then in effect. Such arbitration shall be
conducted by an arbitrator(s) appointed by the American Arbitration Association
in accordance with its rules and any finding by such arbitrator(s) shall be
final and binding upon the parties. Judgment upon any award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof, and the
parties consent to the jurisdiction of the courts of the State of North Carolina
for this purpose. Nothing contained in this paragraph 8(g) shall be construed to
preclude the Company from obtaining injunctive or other equitable relief to
secure specific performance or to otherwise prevent a breach or contemplated
breach of this Agreement by Executive as provided in paragraph 6 hereof.

               (h) Execution in Counterparts. This Agreement may be executed in
two or more counterparts, none of which need contain the signatures of all
parties hereto and each of which shall be deemed an original.

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        IN WITNESS WHEREOF, each of the undersigned has executed this Agreement,
or caused this Agreement to be duly executed on its behalf, as of the date first
set forth above.

                                             SUMMIT PROPERTIES INC.

                                             By: /s/ Steven R. LeBlanc
                                                 -------------------------------
                                                 Name: Steven R. LeBlanc
                                                 Title: President

                                             SUMMIT MANAGEMENT COMPANY

                                             By: /s/ Steven R. LeBlanc
                                                 -------------------------------
                                                 Name: Steven R. LeBlanc
                                                 Title: Vice President

                                              /s/ Randall M. Ell          [SEAL]
                                              ----------------------------------
                                              Name: Randall M. Ell

                                              "Executive"

                                        6<PAGE>   1

                                                                    EXHIBIT 10.6

                     PROMISSORY NOTE AND SECURITY AGREEMENT

$50,000.00                                                         April 1, 1998

         FOR VALUE RECEIVED, Randall M. Ell who resides at 13001 Arborview
Place, Tampa, Florida 33618 (hereinafter referred to as the "Employee") hereby
promises to pay to the order of Summit Properties Inc., a Maryland corporation
with its principal place of business at 212 South Tryon Street, Suite 500,
Charlotte, North Carolina (hereinafter referred to as the "Company"), the
principal amount of $50,000.00 together with interest thereon as provided below
subject to the terms and conditions set forth herein.

         1. Purpose and Authority. This Promissory Note and Security Agreement
(the "Note") is entered into for the purpose of financing the Employee's
purchase of Two Thousand Seven Hundred Seventy Eight (2,778) shares of common
stock, par value $0.01 per share, of the Company ("Common Stock") pursuant to
and subject to the terms and conditions of (i) the Company's Statement of
Company Policy on Loans to Executive Officers and Qualified Employees to
Purchase the Company Stock as adopted by the Board of Directors of the Company
on September 8, 1997, as amended from time to time, and (ii) the Company's 1996
Non-Qualified Employee Stock Purchase Plan, as amended from time to time.

         2. Security. The Employee hereby grants the Company a security interest
in any and all shares of Common Stock purchased by the Employee with the
proceeds of this Note (hereinafter referred to as the "Collateral Stock") and in
any and all distributions and dividends which may from time to time be, paid or
payable on the Collateral Stock (each, a "Distribution"). Employee agrees to
take all such actions and execute all such documents as may from time to time be
reasonably requested by the Company to perfect and maintain the validity and
priority of any security interest granted to the Company pursuant to this Note.
Employee also agrees that a carbon, photographic or other reproduction of this
Promissory Note and Security Agreement may be filed as a financing statement to
the extent that the Company determines that such filing is necessary for the
Company to establish or maintain its security interest in the Collateral Stock.
The Employee shall cause the Collateral Stock to be delivered to the Company and
the Company may retain possession of the Collateral Stock until such time as the
Note has been paid in full.

         3. Payment. All Distributions received by the Company in cash shall be
applied toward repayment of this Note. Each such payment shall first be applied
to the payment of interest accrued as of the date of such payment and the
remainder thereof, if any, shall then be applied to the payment of outstanding
principal. The Note will bear interest at the rate provided in Section 4 hereof.
The entire principal balance and all accrued and unpaid interest and other
charges as may be due hereunder shall be due and payable on or before the tenth
anniversary of the date of this Note (the "Maturity Date").

<PAGE>   2

         4. Interest. Interest on this Note will be computed on a simple
interest basis and will accrue on the unpaid principal balance due under the
Note until maturity, whether by reason of Default (as defined below) and
acceleration, lapse of time or otherwise ("Maturity"), at the rate of Five and
98/100 percent (5.98%) per annum. Prior to Maturity interest shall be payable
solely from Distributions.

         5. Prepayment. The Employee may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.

         6. Default. (a) The occurrence of any of the following events shall
constitute a Default under this Note:

                  (i) the failure by the Employee to deliver or cause to be
         delivered the Collateral Stock to the Company within three business
         days after the purchase of any Collateral Stock;

                  (ii) retention by the Employee of any Distribution, which
         retention continues for a period of ten (10) days;

                  (iii) the failure by the Employee to pay the entire
         outstanding balance of this Note and all accrued interest within one
         hundred and twenty (120) days after termination of the Employee's
         employment with the Company; or

                  (iv) the failure by the Employee to pay the entire outstanding
         balance of this Note and all accrued interest on or before the Maturity
         Date.

               (b) Upon the occurrence of a Default under this Note, the
outstanding principal balance hereof, together with all reasonable costs of
collection and/or enforcement of the Note, including reasonable attorney's fees,
shall at the option of the Company become immediately due and payable.

               (c) If the Employee is in Default hereunder, the Company may,
except as otherwise provided herein, exercise the rights and remedies accorded a
secured party by the Uniform Commercial Code as enacted in the State of
Maryland.

         7. Personal Liability. Except in the case of fraud, willful
misrepresentation or retention of a Distribution by Employee, the Company agrees
that the Employee's personal liability on this Note shall be limited to Twelve
Thousand Five Hundred and 00/100 Dollars ($12,500.00) due hereunder for any
deficiency which may arise upon a foreclosure and sale or other disposition of
the Collateral Stock; provided that, this provision shall not diminish in any
way the powers of the Company to foreclose on the Collateral Stock and to apply
the full value of the Collateral Stock and all related Distributions to the
amount outstanding under this Note in the event of a Default.

<PAGE>   3

         8. Modification. Neither this Note nor any provision hereof may be
modified, altered, or amended in any manner or form except by an agreement in
writing, executed by a duly authorized officer of the Company and the Employee,
which writing shall make specific reference hereto.

         9. Transfer by Employee. Employee will not sell, assign, transfer or
otherwise dispose of, directly or indirectly, nor grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber any of the
Collateral Stock or any interest therein, except for the security interest
provided for in this Note.

         10. Severability. If for any reason any provision or provisions hereof
are determined to be invalid, unenforceable or contrary to any existing or
future law, such invalidity or unenforcability shall not impair the operation or
affect those portions of this Note which are valid.

         11. Usury, etc. All agreements between the Employee and the Company are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason Maturity of the indebtedness or otherwise, shall the amount paid or
agreed to be paid to the holder for the use, forbearance or detention of the
indebtedness evidenced hereby exceed the maximum amount which the holder is
permitted to receive under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Note, at the time performance
of such provision shall be due, shall involve payments exceeding such amount,
then the obligation to be fulfilled shall automatically be reduced to the limit
of such maximum amount, and if from any circumstances the holder should ever
receive as interest an amount which would exceed such maximum amount, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. As
used herein, the term "applicable law" shall mean the law in effect as of the
date hereof; provided, however, that in the event that there is a change in the
law which results in a higher permissible rate of interest, then this Note shall
be governed by such new law as of its effective date. This provision shall
control every other provision of this Note.

         12. Valuation: Manner of Disposition. Employee acknowledges and agrees
that the Company may not be able to effect a public sale of the Collateral Stock
and, accordingly, agrees that in the event of any sale, collection, realization
or other disposition of or upon the Collateral Stock by the Company, in lieu of
such public sale, the Company may transfer all or any portion of the Collateral
Stock to itself and apply the value of such shares (at a price per share equal
to the average of the daily high and low sales prices, computed to three decimal
places, of the Company's stock as reported on the NYSE for the ten (10) days on
which the NYSE is open and for which trades in the Company stock are reported
immediately preceding the date of such action by the Company or, if one or more
of such days is not a day on which the NYSE is open or the Company's stock is
not traded on the NYSE for the ten (10) days immediately preceding said action
for which the trades are reported) to the amounts due under or in connection
with this Note.

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         13. Governing Law. The execution, delivery and performance of this Note
shall be governed by, construed, and enforced in accordance with the laws of the
State of Maryland.

         14. Waivers. The failure of the Company at any time to exercise any
option or right hereunder shall not constitute a waiver of the Company's right
to exercise such option or right at any other time.

                  [Remainder of page intentionally left blank]

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         IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.

                                            /s/ Randall M. Ell
                                            ------------------------------------
                                            Name of Employee:
                                            Randall M. Ell

Executed, sealed and
delivered in the
presence of:

 /s/ Anita Lind
---------------------
Name of Witness:

<PAGE>   6

                     PROMISSORY NOTE AND SECURITY AGREEMENT

$50,000.00                                                       January 4, 1999

         FOR VALUE RECEIVED, Randall M. Ell, who resides at 10419 Greenhedges
Drive, Tampa, Florida 33626 (hereinafter referred to as the "Employee"), hereby
promises to pay to the order of Summit Properties Inc., a Maryland corporation
with its principal place of business at 212 South Tryon Street, Suite 500,
Charlotte, North Carolina 28281 (hereinafter referred to as the "Company"), the
principal amount of $50,000.00 together with interest thereon as provided below
subject to the terms and conditions set forth herein.

         1. Purpose and Authority. This Promissory Note and Security Agreement
(the "Note") is entered into for the purpose of financing the Employee's
purchase of shares of common stock, par value $0.01 per share, of the Company
("Common Stock") pursuant to and subject to the terms and conditions of (i) the
Company's Statement of Company Policy on Loans to Executive Officers and
Qualified Employees to Purchase the Company Stock as adopted by the Board of
Directors of the Company on September 8, 1997, as amended from time to time, and
(ii) the Company's 1996 Non-Qualified Employee Stock Purchase Plan, as amended
from time to time.

         2. Security. The Employee hereby grants the Company a security interest
in any and all shares of Common Stock purchased by the Employee with the
proceeds of this Note (hereinafter referred to as the "Collateral Stock") and in
any and all distributions and dividends which may from time to time be, paid or
payable on the Collateral Stock (each, a "Distribution"). Employee agrees to
take all such actions and execute all such documents as may from time to time be
reasonably requested by the Company to perfect and maintain the validity and
priority of any security interest granted to the Company pursuant to this Note.
Employee also agrees that a carbon, photographic or other reproduction of this
Promissory Note and Security Agreement may be filed as a financing statement to
the extent that the Company determines that such filing is necessary for the
Company to establish or maintain its security interest in the Collateral Stock.
The Employee shall cause the Collateral Stock to be delivered to the Company and
the Company may retain possession of the Collateral Stock until such time as the
Note has been paid in full.

         3. Payment. All Distributions received by the Employee in cash shall be
applied toward repayment of this Note. The Employee agrees that the Company may
establish and institute any procedure that it deems necessary or advisable to
ensure that each such Distribution shall be applied toward repayment of this
Note, including without limitation, the placement of a restrictive legend on any
check representing a Distribution. Each such payment shall first be applied to
the payment of interest accrued as of the date of such payment and the remainder
thereof, if any, shall then be applied to the payment of outstanding principal.
The Note will bear interest at the rate provided in Section 4 hereof. The entire
principal balance and all accrued and unpaid interest and other charges as may
be due hereunder shall be due and payable on or before the ninth anniversary of
the date of this Note (the "Maturity Date").

<PAGE>   7

         4. Interest. Interest on this Note will be computed on a simple
interest basis and will accrue on the unpaid principal balance due under the
Note until maturity, whether by reason of Default (as defined below) and
acceleration, lapse of time or otherwise ("Maturity"), at the rate of Four and
64/100 percent (4.64%) per annum. Prior to Maturity interest shall be payable
solely from Distributions.

         5. Prepayment. The Employee may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.

         6. Default. (a) The occurrence of any of the following events shall
constitute a Default under this Note:

                  (i) the failure by the Employee to deliver or cause to be
         delivered the Collateral Stock to the Company within three business
         days after the purchase of any Collateral Stock;

                  (ii) retention by the Employee of any Distribution, which
         retention continues for a period of ten (10) days;

                  (iii) the failure by the Employee to pay the entire
         outstanding balance of this Note and all accrued interest within one
         hundred and twenty (120) days after termination of the Employee's
         employment with the Company; or

                  (iv) the failure by the Employee to pay the entire outstanding
         balance of this Note and all accrued interest on or before the Maturity
         Date.

               (b) Upon the occurrence of a Default under this Note, the
outstanding principal balance hereof, together with all reasonable costs of
collection and/or enforcement of the Note, including reasonable attorney's fees,
shall at the option of the Company become immediately due and payable.

               (c) If the Employee is in Default hereunder, the Company may,
except as otherwise provided herein, exercise the rights and remedies accorded a
secured party by the Uniform Commercial Code as enacted in the State of
Maryland.

         7. Personal Liability. Except in the case of fraud, willful
misrepresentation or retention of a Distribution by Employee, the Company agrees
that the Employee's personal liability on this Note shall be limited to Twelve
thousand five hundred dollars and 00/100 ($12,500.00) due hereunder for any
deficiency which may arise upon a foreclosure and sale or other disposition of
the Collateral Stock; provided that, this provision shall not diminish in any
way the powers of the Company to foreclose on the Collateral Stock and to apply
the full value of the Collateral Stock and all related Distributions to the
amount outstanding under this Note in the event of a Default.

         8. Modification. Neither this Note nor any provision hereof may be
modified, altered, or amended in any manner or form except by an agreement in
writing, executed by a duly authorized officer of the Company and the Employee,
which writing shall make specific reference hereto.

<PAGE>   8

         9. Transfer by Employee. Employee will not sell, assign, transfer or
otherwise dispose of, directly or indirectly, nor grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber any of the
Collateral Stock or any interest therein, except for the security interest
provided for in this Note.

         10. Severability. If for any reason any provision or provisions hereof
are determined to be invalid, unenforceable or contrary to any existing or
future law, such invalidity or unenforcability shall not impair the operation or
affect those portions of this Note which are valid.

         11. Usury, etc. All agreements between the Employee and the Company are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason Maturity of the indebtedness or otherwise, shall the amount paid or
agreed to be paid to the holder for the use, forbearance or detention of the
indebtedness evidenced hereby exceed the maximum amount which the holder is
permitted to receive under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Note, at the time performance
of such provision shall be due, shall involve payments exceeding such amount,
then the obligation to be fulfilled shall automatically be reduced to the limit
of such maximum amount, and if from any circumstances the holder should ever
receive as interest an amount which would exceed such maximum amount, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. As
used herein, the term "applicable law" shall mean the law in effect as of the
date hereof; provided, however, that in the event that there is a change in the
law which results in a higher permissible rate of interest, then this Note shall
be governed by such new law as of its effective date. This provision shall
control every other provision of this Note.

         12. Valuation: Manner of Disposition. Employee acknowledges and agrees
that the Company may not be able to effect a public sale of the Collateral Stock
and, accordingly, agrees that in the event of any sale, collection, realization
or other disposition of or upon the Collateral Stock by the Company, in lieu of
such public sale, the Company may transfer all or any portion of the Collateral
Stock to itself and apply the value of such shares (at a price per share equal
to the average of the daily high and low sales prices, computed to three decimal
places, of the Company's stock as reported on the New York Stock Exchange (the
"NYSE") for the ten (10) days on which the NYSE is open and for which trades in
the Company stock are reported immediately preceding the date of such action by
the Company or, if one or more of such days is not a day on which the NYSE is
open or the Company's stock is not traded on the NYSE for the ten (10) days
immediately preceding said action for which the trades are reported) to the
amounts due under or in connection with this Note.

         13. Governing Law. The execution, delivery and performance of this Note
shall be governed by, construed, and enforced in accordance with the laws of the
State of Maryland.

         14. Waivers. The failure of the Company at any time to exercise any
option or right hereunder shall not constitute a waiver of the Company's right
to exercise such option or right at any other time.

<PAGE>   9

        IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.

                                              /s/ Randall M. Ell
                                              ---------------------------------
                                              Randall M. Ell

Executed, sealed and
delivered in the
presence of:

 /s/ Michelle S. Brown
--------------------------
Name of Witness:

<PAGE>   10

                     PROMISSORY NOTE AND SECURITY AGREEMENT

$8,000.00                                                        January 3, 2000

         FOR VALUE RECEIVED, Randall M. Ell, who resides at 10419 Greenhedges
Drive, Tampa, Florida 33626, (hereinafter referred to as the "Employee") hereby
promises to pay to the order of Summit Properties Inc., a Maryland corporation
with its principal place of business at 212 South Tryon Street, Suite 500,
Charlotte, North Carolina (hereinafter referred to as the "Company"), the
principal amount of $8,000.00 together with interest thereon as provided below
subject to the terms and conditions set forth herein.

         1. Purpose and Authority. This Promissory Note and Security Agreement
(the "Note") is entered into for the purpose of financing the Employee's
purchase of shares of common stock, par value $0.01 per share, of the Company
("Common Stock") pursuant to and subject to the terms and conditions of (i) the
Company's Statement of Company Policy on Loans to Executive Officers and
Qualified Employees to Purchase the Company Stock as adopted by the Board of
Directors of the Company on September 8, 1997, as amended from time to time, and
(ii) the Company's 1994 Stock Option and Incentive Plan, as amended from time to
time.

         2. Security. The Employee hereby grants the Company a security interest
in any and all shares of Common Stock purchased by the Employee with the
proceeds of this Note (hereinafter referred to as the "Collateral Stock") and in
any and all distributions and dividends which may from time to time be, paid or
payable on the Collateral Stock (each, a "Distribution"). Employee agrees to
take all such actions and execute all such documents as may from time to time be
reasonably requested by the Company to perfect and maintain the validity and
priority of any security interest granted to the Company pursuant to this Note.
Employee also agrees that a carbon, photographic or other reproduction of this
Promissory Note and Security Agreement may be filed as a financing statement to
the extent that the Company determines that such filing is necessary for the
Company to establish or maintain its security interest in the Collateral Stock.
The Employee shall cause the Collateral Stock to be delivered to the Company and
the Company may retain possession of the Collateral Stock until such time as the
Note has been paid in full.

        3. Payment. All Distributions received by the Employee in cash shall be
applied toward repayment of this Note. The Employee agrees that the Company may
establish and institute any procedure that it deems necessary or advisable to
ensure that each such Distribution shall be applied toward repayment of this
Note, including without limitation, the placement of a restrictive legend on any
check representing a Distribution. Each such payment shall first be applied to
the payment of interest accrued as of the date of such payment and the remainder
thereof, if any, shall then be applied to the payment of outstanding principal.
The Note will bear interest at the rate provided in Section 4 hereof. The entire
principal balance and all accrued and unpaid interest and other charges as may
be due hereunder shall be due and payable on or before the tenth anniversary of
the date of this Note (the "Maturity Date").

<PAGE>   11

         4. Interest. Interest on this Note will be computed on a simple
interest basis and will accrue on the unpaid principal balance due under the
Note until maturity, whether by reason of Default (as defined below) and
acceleration, lapse of time or otherwise ("Maturity"), at the rate of Six and
30/100 percent (6.30%) per annum. Prior to Maturity interest shall be payable
solely from Distributions.

         5. Prepayment. The Employee may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.

         6. Default. (a) The occurrence of any of the following events and the
expiration of the applicable cure period without such event having been cured,
shall constitute a Default under this Note:

                  (i) the failure by the Employee to deliver or cause to be
         delivered the Collateral Stock to the Company within three business
         days after the purchase of any Collateral Stock;

                  (ii) retention by the Employee of any Distribution, which
         retention continues for a period of ten (10) days;

                  (iii) the failure by the Employee to pay the entire
         outstanding balance of this Note and all accrued interest within one
         hundred and twenty (120) days after termination of the Employee's
         employment with the Company; or

                  (iv) the failure by the Employee to pay the entire outstanding
         balance of this Note and all accrued interest on or before the Maturity
         Date.

               (b) Upon the occurrence of a Default under this Note, the
outstanding principal balance hereof, together with all reasonable costs of
collection and/or enforcement of the Note, including reasonable attorney's fees,
shall at the option of the Company become immediately due and payable.

               (c) If the Employee is in Default hereunder, the Company may,
except as otherwise provided herein, exercise the rights and remedies accorded a
secured party by the Uniform Commercial Code as enacted in the State of
Maryland.

         7. Notice and Cure Periods. Notwithstanding any term or provision to
the contrary in this Note or any other document or instrument evidencing or
securing the loan (collectively, the "Loan Documents"), Employee shall have
thirty (30) days following written notice to the Employee of Employee's default
under any provision of the Loan Documents, including, without limitation, the
Note, in which to cure any such default before the Company may exercise any
remedies for said default as provided in this Note or any other Loan Documents.

         8. Personal Liability. Except in the case of fraud, willful
misrepresentation or retention of a Distribution by Employee, the Company agrees
that the Employee's personal liability on this Note shall be limited to
twenty-five percent (25%) of the then current outstanding principal balance due
hereunder for any deficiency which may arise upon a foreclosure and sale

<PAGE>   12

or other disposition of the Collateral Stock; provided that, this provision
shall not diminish in any way the powers of the Company to foreclose on the
Collateral Stock and to apply the full value of the Collateral Stock and all
related Distributions to the amount outstanding under this Note in the event of
a Default.

         9. Modification. Neither this Note nor any provision hereof may be
modified, altered, or amended in any manner or form except by an agreement in
writing, executed by a duly authorized officer of the Company and the Employee,
which writing shall make specific reference hereto.

         10. Transfer by Employee. Employee will not sell, assign, transfer or
otherwise dispose of, directly or indirectly, nor grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber any of the
Collateral Stock or any interest therein, except for the security interest
provided for in this Note.

         11. Severability. If for any reason any provision or provisions hereof
are determined to be invalid, unenforceable or contrary to any existing or
future law, such invalidity or unenforcability shall not impair the operation or
affect those portions of this Note which are valid.

         12. Usury, etc. All agreements between the Employee and the Company are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason Maturity of the indebtedness or otherwise, shall the amount paid or
agreed to be paid to the holder for the use, forbearance or detention of the
indebtedness evidenced hereby exceed the maximum amount which the holder is
permitted to receive under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Note, at the time performance
of such provision shall be due, shall involve payments exceeding such amount,
then the obligation to be fulfilled shall automatically be reduced to the limit
of such maximum amount, and if from any circumstances the holder should ever
receive as interest an amount which would exceed such maximum amount, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. As
used herein, the term "applicable law" shall mean the law in effect as of the
date hereof; provided, however, that in the event that there is a change in the
law which results in a higher permissible rate of interest, then this Note shall
be governed by such new law as of its effective date. This provision shall
control every other provision of this Note.

         13. Valuation: Manner of Disposition. Employee acknowledges and agrees
that the Company may not be able to effect a public sale of the Collateral Stock
and, accordingly, agrees that in the event of any sale, collection, realization
or other disposition of or upon the Collateral Stock by the Company, in lieu of
such public sale, the Company may transfer all or any portion of the Collateral
Stock to itself and apply the value of such shares (at a price per share equal
to the average of the daily high and low sales prices, computed to three decimal
places, of the Company's stock as reported on the New York Stock Exchange (the
"NYSE") for the ten (10) days on which the NYSE is open and for which trades in
the Company stock are reported immediately preceding the date of such action by
the Company or, if one or more of such days is not a day on which the NYSE is
open or the Company's stock is not traded on the NYSE for the

<PAGE>   13

ten (10) days immediately preceding said action for which the trades are
reported) to the amounts due under or in connection with this Note.

         14. Governing Law. The execution, delivery and performance of this Note
shall be governed by, construed, and enforced in accordance with the laws of the
State of Maryland.

         15. Waivers. The failure of the Company at any time to exercise any
option or right hereunder shall not constitute a waiver of the Company's right
to exercise such option or right at any other time.

        IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.

                                              /s/ Randall M. Ell
                                              ---------------------------------
                                              RANDALL M. ELL

Executed, sealed and
delivered in the
presence of:

 /s/ Anita Lind
-----------------------
Name of Witness:

<PAGE>   14

                     PROMISSORY NOTE AND SECURITY AGREEMENT

$125,353.68                                                     January 31, 2000

         FOR VALUE RECEIVED, Randall M. Ell, who resides at 10419 Greenhedges
Drive, Tampa, Florida 33626 (hereinafter referred to as the "Employee"), hereby
promises to pay to the order of Summit Properties Inc., a Maryland corporation
with its principal place of business at 212 South Tryon Street, Suite 500,
Charlotte, North Carolina (hereinafter referred to as the "Company"), the
principal amount of $125,353.68 together with interest thereon as provided below
subject to the terms and conditions set forth herein.

         1. Purpose and Authority. This Promissory Note and Security Agreement
(the "Note") is entered into for the purpose of financing the Employee's
purchase of shares of common stock, par value $0.01 per share, of the Company
("Common Stock") pursuant to and subject to the terms and conditions of (i) the
Company's Statement of Company Policy on Loans to Executive Officers and
Qualified Employees to Purchase the Company Stock as adopted by the Board of
Directors of the Company on September 8, 1997, as amended from time to time, and
(ii) the Company's 1994 Stock Option and Incentive Plan, as amended from time to
time.

         2. Security. The Employee hereby grants the Company a security interest
in any and all shares of Common Stock purchased by the Employee with the
proceeds of this Note (hereinafter referred to as the "Collateral Stock") and in
any and all distributions and dividends which may from time to time be, paid or
payable on the Collateral Stock (each, a "Distribution"). Employee agrees to
take all such actions and execute all such documents as may from time to time be
reasonably requested by the Company to perfect and maintain the validity and
priority of any security interest granted to the Company pursuant to this Note.
Employee also agrees that a carbon, photographic or other reproduction of this
Promissory Note and Security Agreement may be filed as a financing statement to
the extent that the Company determines that such filing is necessary for the
Company to establish or maintain its security interest in the Collateral Stock.
The Employee shall cause the Collateral Stock to be delivered to the Company and
the Company may retain possession of the Collateral Stock until such time as the
Note has been paid in full.

         3. Payment. All Distributions received by the Employee in cash shall be
applied toward repayment of this Note. The Employee agrees that the Company may
establish and institute any procedure that it deems necessary or advisable to
ensure that each such Distribution shall be applied toward repayment of this
Note, including without limitation, the placement of a restrictive legend on any
check representing a Distribution. Each such payment shall first be applied to
the payment of interest accrued as of the date of such payment and the remainder
thereof, if any, shall then be applied to the payment of outstanding principal.
The Note will bear interest at the rate provided in Section 4 hereof. The entire
principal balance and all accrued and unpaid interest and other charges as may
be due hereunder shall be due and payable on or before the tenth anniversary of
the date of this Note (the "Maturity Date").

         4. Interest. Interest on this Note will be computed on a simple
interest basis and will accrue on the unpaid principal balance due under the
Note until maturity, whether by reason of

<PAGE>   15

Default (as defined below) and acceleration, lapse of time or otherwise
("Maturity"), at the rate of Six and 21/100 percent (6.21%) per annum. Prior to
Maturity interest shall be payable solely from Distributions.

         5. Prepayment. The Employee may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.

         6. Default. (a) The occurrence of any of the following events shall
constitute a Default under this Note:

                  (i) the failure by the Employee to deliver or cause to be
         delivered the Collateral Stock to the Company within three business
         days after the purchase of any Collateral Stock;

                  (ii) retention by the Employee of any Distribution, which
         retention continues for a period of ten (10) days;

                  (iii) the failure by the Employee to pay the entire
         outstanding balance of this Note and all accrued interest within one
         hundred and twenty (120) days after termination of the Employee's
         employment with the Company; or

                  (iv) the failure by the Employee to pay the entire outstanding
         balance of this Note and all accrued interest on or before the Maturity
         Date.

             (b) Upon the occurrence of a Default under this Note, the
outstanding principal balance hereof, together with all reasonable costs of
collection and/or enforcement of the Note, including reasonable attorney's fees,
shall at the option of the Company become immediately due and payable.

             (c) If the Employee is in Default hereunder, the Company may,
except as otherwise provided herein, exercise the rights and remedies accorded a
secured party by the Uniform Commercial Code as enacted in the State of
Maryland.

         7. Personal Liability. The obligations of the Employee to pay the
unpaid principal balance of this Note, plus accrued interest thereon and other
charges as may be due hereunder, shall be absolute and unconditional, and the
Company shall have full recourse against the Employee's assets (including, but
not limited to, the Collateral Stock) to recover such amounts.

         8. Modification. Neither this Note nor any provision hereof may be
modified, altered, or amended in any manner or form except by an agreement in
writing, executed by a duly authorized officer of the Company and the Employee,
which writing shall make specific reference hereto.

         9. Transfer by Employee. Employee will not sell, assign, transfer or
otherwise dispose of, directly or indirectly, nor grant any option with respect
to, or pledge or

<PAGE>   16

grant any security interest in or otherwise encumber any of the Collateral Stock
or any interest therein, except for the security interest provided for in this
Note.

         10. Severability. If for any reason any provision or provisions hereof
are determined to be invalid, unenforceable or contrary to any existing or
future law, such invalidity or unenforcability shall not impair the operation or
affect those portions of this Note which are valid.

         11. Usury, etc. All agreements between the Employee and the Company are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason Maturity of the indebtedness or otherwise, shall the amount paid or
agreed to be paid to the holder for the use, forbearance or detention of the
indebtedness evidenced hereby exceed the maximum amount which the holder is
permitted to receive under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Note, at the time performance
of such provision shall be due, shall involve payments exceeding such amount,
then the obligation to be fulfilled shall automatically be reduced to the limit
of such maximum amount, and if from any circumstances the holder should ever
receive as interest an amount which would exceed such maximum amount, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. As
used herein, the term "applicable law" shall mean the law in effect as of the
date hereof; provided, however, that in the event that there is a change in the
law which results in a higher permissible rate of interest, then this Note shall
be governed by such new law as of its effective date. This provision shall
control every other provision of this Note.

         12. Valuation: Manner of Disposition. Employee acknowledges and agrees
that the Company may not be able to effect a public sale of the Collateral Stock
and, accordingly, agrees that in the event of any sale, collection, realization
or other disposition of or upon the Collateral Stock by the Company, in lieu of
such public sale, the Company may transfer all or any portion of the Collateral
Stock to itself and apply the value of such shares (at a price per share equal
to the average of the daily high and low sales prices, computed to three decimal
places, of the Company's stock as reported on the NYSE for the ten (10) days on
which the NYSE is open and for which trades in the Company stock are reported
immediately preceding the date of such action by the Company or, if one or more
of such days is not a day on which the NYSE is open or the Company's stock is
not traded on the NYSE for the ten (10) days immediately preceding said action
for which the trades are reported) to the amounts due under or in connection
with this Note.

         13. Governing Law. The execution, delivery and performance of this Note
shall be governed by, construed, and enforced in accordance with the laws of the
State of Maryland.

         14. Waivers. The failure of the Company at any time to exercise any
option or right hereunder shall not constitute a waiver of the Company's right
to exercise such option or right at any other time.

                  [Remainder of page intentionally left blank]

<PAGE>   17

         IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.

                                              /s/ Randall M. Ell
                                              ---------------------------------
                                              RANDALL M. ELL

Executed, sealed and
delivered in the
presence of:

  /s/ Ray Hutchinson
----------------------
Name of Witness:

<PAGE>   18

                     PROMISSORY NOTE AND SECURITY AGREEMENT

$125,045.42                                                         May 17, 2000

         FOR VALUE RECEIVED, Randall M. Ell, who resides at 10419 Greenhedges
Drive, Tampa, Florida 33626 (hereinafter referred to as the "Employee"), hereby
promises to pay to the order of Summit Properties Inc., a Maryland corporation
with its principal place of business at 212 South Tryon Street, Suite 500,
Charlotte, North Carolina (hereinafter referred to as the "Company"), the
principal amount of $125,045.42 together with interest thereon as provided below
subject to the terms and conditions set forth herein.

         1. Purpose and Authority. This Promissory Note and Security Agreement
(the "Note") is entered into for the purpose of financing the Employee's
purchase of shares of common stock, par value $0.01 per share, of the Company
("Common Stock") pursuant to and subject to the terms and conditions of (i) the
Company's Statement of Company Policy on Loans to Executive Officers and
Qualified Employees to Purchase the Company Stock as adopted by the Board of
Directors of the Company on September 8, 1997, as amended from time to time, and
(ii) the Company's 1994 Stock Option and Incentive Plan, as amended from time to
time.

         2. Security. The Employee hereby grants the Company a security interest
in any and all shares of Common Stock purchased by the Employee with the
proceeds of this Note (hereinafter referred to as the "Collateral Stock") and in
any and all distributions and dividends which may from time to time be, paid or
payable on the Collateral Stock (each, a "Distribution"). Employee agrees to
take all such actions and execute all such documents as may from time to time be
reasonably requested by the Company to perfect and maintain the validity and
priority of any security interest granted to the Company pursuant to this Note.
Employee also agrees that a carbon, photographic or other reproduction of this
Promissory Note and Security Agreement may be filed as a financing statement to
the extent that the Company determines that such filing is necessary for the
Company to establish or maintain its security interest in the Collateral Stock.
The Employee shall cause the Collateral Stock to be delivered to the Company and
the Company may retain possession of the Collateral Stock until such time as the
Note has been paid in full.

        3. Payment. All Distributions received by the Employee in cash shall be
applied toward repayment of this Note. The Employee agrees that the Company may
establish and institute any procedure that it deems necessary or advisable to
ensure that each such Distribution shall be applied toward repayment of this
Note, including without limitation, the placement of a restrictive legend on any
check representing a Distribution. Each such payment shall first be applied to
the payment of interest accrued as of the date of such payment and the remainder
thereof, if any, shall then be applied to the payment of outstanding principal.
The Note will bear interest at the rate provided in Section 4

<PAGE>   19

hereof. The entire principal balance and all accrued and unpaid interest and
other charges as may be due hereunder shall be due and payable on or before the
tenth anniversary of the date of this Note (the "Maturity Date").

         4. Interest. Interest on this Note will be computed on a simple
interest basis and will accrue on the unpaid principal balance due under the
Note until maturity, whether by reason of Default (as defined below) and
acceleration, lapse of time or otherwise ("Maturity"), at the rate of Six and
40/100 percent (6.40%) per annum. Prior to Maturity interest shall be payable
solely from Distributions.

         5. Prepayment. The Employee may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.

         6. Default. (a) The occurrence of any of the following events shall
constitute a Default under this Note:

                  (i) the failure by the Employee to deliver or cause to be
         delivered the Collateral Stock to the Company within three business
         days after the purchase of any Collateral Stock;

                  (ii) retention by the Employee of any Distribution, which
         retention continues for a period of ten (10) days;

                  (iii) the failure by the Employee to pay the entire
         outstanding balance of this Note and all accrued interest within one
         hundred and twenty (120) days after termination of the Employee's
         employment with the Company; or

                  (iv) the failure by the Employee to pay the entire outstanding
         balance of this Note and all accrued interest on or before the Maturity
         Date.

               (b) Upon the occurrence of a Default under this Note, the
outstanding principal balance hereof, together with all reasonable costs of
collection and/or enforcement of the Note, including reasonable attorney's fees,
shall at the option of the Company become immediately due and payable.

               (c) If the Employee is in Default hereunder, the Company may,
except as otherwise provided herein, exercise the rights and remedies accorded a
secured party by the Uniform Commercial Code as enacted in the State of
Maryland.

         7. Personal Liability. The obligations of the Employee to pay the
unpaid principal balance of this Note, plus accrued interest thereon and other
charges as may be due hereunder, shall be absolute and unconditional, and the
Company shall have full recourse against the Employee's assets (including, but
not limited to, the Collateral Stock) to recover such amounts.

<PAGE>   20

         8. Modification. Neither this Note nor any provision hereof may be
modified, altered, or amended in any manner or form except by an agreement in
writing, executed by a duly authorized officer of the Company and the Employee,
which writing shall make specific reference hereto.

         9. Transfer by Employee. Employee will not sell, assign, transfer or
otherwise dispose of, directly or indirectly, nor grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber any of the
Collateral Stock or any interest therein, except for the security interest
provided for in this Note.

         10. Severability. If for any reason any provision or provisions hereof
are determined to be invalid, unenforceable or contrary to any existing or
future law, such invalidity or unenforcability shall not impair the operation or
affect those portions of this Note which are valid.

         11. Usury, etc. All agreements between the Employee and the Company are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason Maturity of the indebtedness or otherwise, shall the amount paid or
agreed to be paid to the holder for the use, forbearance or detention of the
indebtedness evidenced hereby exceed the maximum amount which the holder is
permitted to receive under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Note, at the time performance
of such provision shall be due, shall involve payments exceeding such amount,
then the obligation to be fulfilled shall automatically be reduced to the limit
of such maximum amount, and if from any circumstances the holder should ever
receive as interest an amount which would exceed such maximum amount, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. As
used herein, the term "applicable law" shall mean the law in effect as of the
date hereof; provided, however, that in the event that there is a change in the
law which results in a higher permissible rate of interest, then this Note shall
be governed by such new law as of its effective date. This provision shall
control every other provision of this Note.

         12. Valuation: Manner of Disposition. Employee acknowledges and agrees
that the Company may not be able to effect a public sale of the Collateral Stock
and, accordingly, agrees that in the event of any sale, collection, realization
or other disposition of or upon the Collateral Stock by the Company, in lieu of
such public sale, the Company may transfer all or any portion of the Collateral
Stock to itself and apply the value of such shares (at a price per share equal
to the average of the daily high and low sales prices, computed to three decimal
places, of the Company's stock as reported on the NYSE for the ten (10) days on
which the NYSE is open and for which trades in the Company stock are reported
immediately preceding the date of such action by the Company or, if one or more
of such days is not a day on which the NYSE is open or the Company's stock is
not traded on the NYSE for the ten (10) days immediately preceding said action
for which the trades are reported) to the amounts due under or in connection
with this Note.

<PAGE>   21

         13. Governing Law. The execution, delivery and performance of this Note
shall be governed by, construed, and enforced in accordance with the laws of the
State of Maryland.

         14. Waivers. The failure of the Company at any time to exercise any
option or right hereunder shall not constitute a waiver of the Company's right
to exercise such option or right at any other time.

         IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.

                                              /s/ Randall M. Ell
                                              ---------------------------------
                                              Randall M. Ell

Executed, sealed and
delivered in the
presence of:

 /s/ Judith McLeod
-----------------------
Name of Witness:

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