KIDDIE ACADEMY INTERNATIONAL INC, SC 13D, 1997-06-02

KIDDIE ACADEMY INTERNATIONAL INC
SC 13D, 1997-06-02
CHILD DAY CARE SERVICES

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<PAGE> 1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 13D

UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*

Kiddie Academy International, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)

Common Stock, $.01 Par Value
- --------------------------------------------------------------------------------
(Title of Class of Securities)

49380C100
- --------------------------------------------------------------------------------
(CUSIP Number)
George L. Miller John J. Ghingher, III, Esquire
1420 Tayside Way Weinberg & Green LLC
Bel Air, Maryland 21015 (410) 836-8261 100 South Charles Street
Baltimore, Maryland 21201
(410) 332-8748
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

May 22, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.

Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.

*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
SCHEDULE 13D

CUSIP NO. 49380C100 PAGE 2 OF 5 PAGES
---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON George L. Miller
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY

- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*

BK, AF, PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]

- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION

United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
310,333.33 shares or 15.3%
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
90,000 shares or 4.4%
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
46,047 shares or 2.3%
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
90,000 shares or 4.4%
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

400,333.33 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]

- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

19.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*

IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D

CUSIP NO. 49380C100 PAGE 2 OF 5 PAGES
---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON Pauline J. Miller
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*

BK, AF, PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]

- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION

United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
308,333.33 shares or 15.2%
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
90,000 shares or 4.4%
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
44,047 shares or 2.2%
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
90,000 shares or 4.4%
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

398,333.33 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]

- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

19.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*

IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
SCHEDULE 13D

CUSIP NO. 49380C100 PAGE 2 OF 5 PAGES
---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON Michael J. Miller
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*

BK, PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]

- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION

United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
308,333.33 shares or 15.2%
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0 shares or 0.0%
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
836,906 shares or 41.3%
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
0 shares or 0.0%
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

836,906 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]

- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

41.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*

IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
Item 1. Security and Issuer.

This Schedule 13D relates to the Common Stock, $.01 par value
per share (the "Shares"), of Kiddie Academy International, Inc. (the "Issuer"),
whose principal executive offices are located at 108 Wheel Road, Bel Air,
Maryland 21015.

Item 2. Identity and Background.

This Schedule 13D is being filed on behalf of three
individuals, George L. Miller, Pauline J. Miller, his wife, and Michael J.
Miller, their son (the "Miller Group"), who are acting as a group with respect
to their interests in the Shares of the Issuer.

George L. Miller

(a) The name of the first member of the group filing this
Schedule 13D is George L. Miller.

(b) The business address of George L. Miller is 108 Wheel
Road, Bel Air, Maryland 21015.

(c) George L. Miller is currently the Chairman of the
Board of the Issuer. The principal business of the Issuer is the ownership and
operation of education-based commercial child care centers, the franchising of
the Issuer's child care business and the distribution of school supplies and
equipment. The address of the principal executive offices of the Issuer is 108
Wheel Road, Bel Air, Maryland 21015.

(d) During the last five years, George L. Miller has not
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).

(e) During the last five years, George L. Miller has not
been a party to a civil proceeding of a judicial or administrative body, nor is
George L. Miller subject to any judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.

(f) George L. Miller is a citizen of the United States.

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

Pauline J. Miller

(a) The name of the second member of the group filing
this Schedule 13D is Pauline J. Miller.

(b) The residential address of Pauline J. Miller is 1420
Tayside Way, Bel Air, Maryland 21015.
<PAGE> 6
(c) Pauline J. Miller is currently employed by the Issuer
as its director of training and customer liaison.

(d) During the last five years, Pauline J. Miller has not
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).

(e) During the last five years, Pauline J. Miller has not
been a party to a civil proceeding of a judicial or administrative body, nor is
Pauline J. Miller subject to any judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.

(f) Pauline J. Miller is a citizen of the United States.

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

Michael J. Miller

(a) The name of the third member of the group filing this
Schedule 13D is Michael J. Miller.

(b) The business address of Michael J. Miller is 108
Wheel Road, Bel Air, Maryland 21015.

(c) Michael J. Miller is currently the President and
Secretary of the Issuer. The principal business of the Issuer is the ownership
and operation of education-based commercial child care centers, the franchising
of the Issuer's child care business and the distribution of school supplies and
equipment. The address of the principal executive offices of the Issuer is 108
Wheel Road, Bel Air, Maryland 21015.

(d) During the last five years, Michael J. Miller has not
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).

(e) During the last five years, Michael J. Miller has not
been a party to a civil proceeding of a judicial or administrative body, nor is
Michael J. Miller subject to any judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.

(f) Michael J. Miller is a citizen of the United States.

Item 3. Source and Amount of Funds or Other Consideration.

The funds recently used by George and Pauline Miller, as joint
tenants, to purchase the Shares of the Issuer were obtained from various
sources, including personal funds, borrowing certain funds from Michael J.
Miller, a member of the group, and from drawing down on a personal line of
credit from a bank. The total amount of funds, including commissions, used
<PAGE> 7
in making the purchases to date is $90,943.99. Additional funds may be used to
purchase additional securities of the Issuer.

On Thursday May 22, 1997, Michael J. Miller loaned George
and Pauline Miller, his parents, $15,000.00 of his personal funds to be used to
purchase the Shares of the Issuer. On Tuesday, May 27, 1997, Michael J. Miller
loaned an additional $20,000 to George and Pauline Miller, his parents, which
Michael J. Miller borrowed from The Sparks State Bank (the "Bank") by drawing
down from a pre-existing personal line of credit with the Bank. Also on May
22, 1997, George L. Miller borrowed $30,000.00 from the Bank by writing a
check from a pre-existing personal line of credit with the Bank. The balance
of funds used by George and Pauline Miller, as joint tenants, were derived from
their personal funds.

The Miller Group previously acquired 925,000 of the Shares
of the Issuer in connection with the initial public offering of the Issuer on
or about December 12, 1995. Additionally, George L. Miller previously purchased
2,000 shares of the Shares of the Issuer on January 17,1996.

Item 4. Purpose of Transaction.

The purpose of the acquisition of the Shares of the Issuer
by the Miller Group is to acquire control of the Issuer by purchasing in excess
of 50% of the issued and outstanding Common Stock of the Issuer. This
determination was made in light of the Miller Group's concern that the actions
being contemplated by the existing management of the Issuer to address the
serious liquidity problem faced by the Issuer would not be in the best interest
of the Issuer's stockholders. Following the acquisition of a controlling share
interest in the Issuer the Miller Group intends to change the present
composition of the Board of Directors of the Issuer to elect directors they
believe may be disposed to examining the feasibility and desirability of
changing present management of the Issuer. The Miller Group has serious
concerns about the present course being pursued by current management because
it would not have the effect of maximizing stockholder value; as a result, the
Miller Group intends to make significant changes in present management and to
pursue alternatives for addressing the Issuer's liquidity problems, including
exploring the possibility of filing for protection under the U.S. Bankruptcy
Code. The Miller Group intends to accomplish changes in the present
composition of the Board of Directors of the Issuer by amending the bylaws to
increase the size of the board from six to nine members and filling the three
vacancies created by virtue of the increase in size and by amending the bylaws
to permit the removal of board members by a majority, removing two current
board members, and filling the vacancies created by their removal. The Miller
Group intends to fill the three vacancies created by virtue of the increase in
board size with the following individuals: Pauline J. Miller; Diane Amato,
Executive Vice President of development for the Issuer; and Gary Miller, an
accountant with Hildebrandt & Miller, P.A., who acts as the personal accountant
for each member of the Miller Group and for Penguin Properties, a company owned
by the members of the Miller Group, but who has no familial relationship with
any of the members of the Miller Group. The Miller Group intends, subject to
the approval of Barington Capital Group, L.P. (the "Underwriter"), pursuant to
the Underwriting Agreement by and between the Issuer and the Underwriter dated
December 12, 1995, to fill the two vacancies created by virtue of the
<PAGE> 8
removal of Angelo Bizzarro and Carl J. Meil, Jr., with the following
individuals: Glenn Brainer, the owner of a family business, and Larry V. Fila,
also the owner of a family business. The Miller Group reserves the right to
change its present intention with respect to the securities of the Issuer.

While the Miller Group has no current plans to take any of
the following actions, other than as stated herein, the Miller Group reserves
the right to take any action with respect to the Issuer, including, but not
limited to the following: the acquisition of additional securities of the
Issuer; undertaking extraordinary corporate transactions, including merger,
reorganization, or liquidation of the Issuer; selling a material amount of the
assets of the Issuer; changing the present capitalization and dividend
policies; changing the Issuer's business or corporate structure; changing the
Issuer's charter, bylaws or other constituent documents; causing a class of
securities of the Issuer to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
causing a class of equity securities of the Issuer to become eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934; or taking any action similar to those described above.

Item 5. Interest in Securities of the Issuer.

(a) George L. Miller beneficially owns 400,333.33
Shares or 19.8% of the issued and outstanding Shares of the Issuer. These
shares exclude 44,047 Shares owned by Pauline J. Miller, his wife, as to which
George L. Miller disclaims beneficial ownership pursuant to Rule 13d-4 under
the Securities Exchange Act of 1934 (the "Act"). These shares include
264,286.33 Shares owned by Michael J. Miller, son of George L. Miller, as to
which the voting is determined by an agreement described below and incorporated
herein by reference as an Exhibit and as to which George L. Miller disclaims
beneficial ownership pursuant to Rule 13d-4 under the Act.

Pauline J. Miller beneficially owns 398,333.33 Shares or
19.6% of the issued and outstanding Shares of the Issuer. Those shares exclude
46,047 Shares owned by George L. Miller, her husband, as to which Pauline J.
Miller disclaims beneficial ownership pursuant to Rule 13d-4 under the
Securities Exchange Act of 1934 (the "Act"). These shares include 264,286.33
Shares owned by Michael J. Miller, son of Pauline J. Miller, as to which the
voting is determined by an agreement described below and incorporated herein by
reference as an Exhibit and as to which Pauline J. Miller disclaims beneficial
ownership pursuant to Rule 13d-4 under the Act.

Michael J. Miller beneficially owns 836,906 Shares or 41.3%
of the issued and outstanding Shares of the Issuer.

The Miller Group beneficially owns 1,017,000 shares in the
aggregate or 50.2% of the issued and outstanding Shares of the Issuer.

(b) George L. Miller has sole power to vote or
direct the vote of 310,333.33 Shares, shared power to vote or direct the vote
of 90,000 Shares, sole power to dispose or direct
<PAGE> 9
the disposition of 46,047 Shares and shared power to dispose or direct the
disposition of 90,000 Shares. These share calculations are subject to the
qualifications and explanations previously stated in paragraph (a) of this Item
5 of this Schedule 13D.

Pauline J. Miller has sole power to vote or direct the vote
of 308,333.33 Shares, shared power to vote or direct the vote of 90,000 Shares,
sole power to dispose or direct the disposition of 44,047 Shares and shared
power to dispose or direct the disposition of 90,000 Shares. These share
calculations are also subject to the qualifications and explanations previously
stated in paragraph (a) of this Item 5 of this Schedule 13D.

Michael J. Miller has sole power to vote or direct the
voting of 308,333.33 Shares, shared power to vote or direct the voting of 0
Shares, sole power to dispose or direct the disposition of 836,906 Shares and
shared power to dispose or direct the disposition of 0 Shares.

(c) On Thursday May 22, 1997, George L. Miller
and Pauline J. Miller, as joint tenants, purchased 10,000 Shares of the Issuer
at $.26 per Share. On Friday May 23, 1997, George L. Miller and Pauline J.
Miller, as joint tenants, purchased the following Shares of the Issuer at the
following prices: (i) 2,500 Shares at $.53 per Share; (ii) 2,500 Shares at
$.75 per Share; (iii) 20,000 Shares at $.99 per Share; (iv) 5,000 Shares at
$1.00 per Share; (v) 15,000 Shares at $1.00 per Share; (vi) 5,000 Shares at
$1.00 per Share; and (vii) 30,000 Shares at $1.20 per Share. All purchases
were unsolicited O.T.C. broker trades executed through the Towson, Maryland
office of Merrill Lynch, Pierce, Fenner & Smith, Inc.

(d) No other person is known to have the right to
receive or the power to direct the receipt of dividends from or the proceeds of
the sale of the securities of the Miller Group described in this Schedule 13D.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.

On August 8, 1995, George L. Miller, Pauline J. Miller and
Michael J. Miller entered into a voting agreement (the "Voting Agreement"),
pursuant to which 792,859 Shares of the Issuer (the "Secondary Shares") are
currently voted. Under the terms of the Voting Agreement, Michael J. Miller,
the owner of the Secondary Shares is obligated to vote the Secondary Shares as
follows: (i) one-third of the Secondary Shares in like manner as the 44,067
Shares owned directly by George L. Miller, his father, and which are those
Shares (adjusted for stock splits and reverse stock splits) owned by him as of
the date of the Voting Agreement (the "GM Primary Shares"); (ii) one-third of
the Secondary Shares in like manner as the 44,067 Shares owned directly by
Pauline J. Miller, his mother, and which are those Shares (adjusted for stock
splits and reverse stock splits) owned by her as of the date of the Voting
Agreement (the "PM Primary Shares"); and (iii) one-third of the Secondary
Shares in like manner as the 44,067 Shares which he owns directly, which are
not Secondary Shares, and which are those Shares (adjusted for stock splits and
reverse stock splits) owned by him as of the date of the Voting Agreement (the
<PAGE> 10
"MM Primary Shares")(the GM Primary Shares, PM Primary Shares and the MM
Primary Shares are collectively referred to as the "Primary Shares"). The
Voting Agreement also provides that if Michael J. Miller disposes of any Shares
of the Issuer, he is deemed first to sell Shares not owned by him as of the
date of the Voting Agreement, second, MM Primary Shares and, finally, Secondary
Shares.

On Thursday, May 22, 1997, and Tuesday, May 27, 1997,
Michael J. Miller loaned his parents, George L. Miller and Pauline J. Miller,
$15,000.00 and $20,000 respectively for the purpose of purchasing securities
of the Issuer. The parties' oral understanding as to that loan is that it is
payable on demand at an interest rate equal to the applicable federal rate.

Item 7. Material to be Filed as Exhibits.

<TABLE>
<CAPTION>
Exhibits Description
<S> <C>
1 Joint Acquisition Statement Filing Agreement dated May 31, 1997.

2 Voting Agreement by and among George L. Miller, Pauline J. Miller, and Michael J.
Miller dated August 8, 1995.

3 Personal Line of Credit Loan Agreement by and between George L. Miller, Pauline
J. Miller and The Sparks State Bank dated February 22, 1996.

4 Personal Line of Credit Loan Agreement by and between Michael J. Miller, Lisa
Marie Miller and The Sparks State Bank dated February 22, 1996.
</TABLE>
<PAGE> 11
SIGNATURE

After reasonable inquiry and to the best of our knowledge
and belief, the undersigned certify that the information set forth in the
Statement is true, correct and complete.

DATED: June 2, 1997 /s/ Michael J. Miller
-----------------------------------------

/s/ George L. Miller
-----------------------------------------

/s/ Pauline J. Miller
-----------------------------------------

<PAGE> 1
EXHIBIT 1

AGREEMENT

AGREEMENT, dated as of May 31, 1997, by and between each of
the persons named on the signature pages hereto.

WHEREAS, each of the parties hereto beneficially owns shares
(the "Shares") of common stock of Kiddie Academy International, Inc., a
Delaware corporation (the "Company"); and

WHEREAS, the parties hereto constitute a "group" with respect
to the beneficial ownership of the Shares for purposes of Rule 13d-1 and
Schedule 13D promulgated by the Securities and Exchange Commission;

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. The parties hereto shall prepare a simple statement
containing the information required by Schedule 13D with respect to their
respective interests in the shares (the "Schedule 13D") and any necessary
amendments thereto, and for the completeness and accuracy of the information
concerning him or it contained therein, but shall not be responsible for the
completeness and accuracy of the information concerning any other party
contained therein, except to the extent that he or it knows or has reason to
believe that such information is inaccurate.

2. Mr. John J. Ghingher, III, and Mr. George L. Miller
shall be designated as the persons authorized to receive notices and
communications with respect to the Schedule 13D and any amendments thereto.

3. Each of the undersigned hereby constitutes and
appoints John J. Ghingher, III, his or its true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or it and in
his or its name, place and stead, in any and all capacities, to sign the
Schedule 13D and any and all amendments thereto, and other documents in
connection therewith, to be filed with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent all power and authority to do
and perform each and every act requisite and necessary to be done, as fully to
all intents and purposes as he or it might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

4. This Agreement may be executed in counterparts, each
of which taken together shall constitute one and the same instrument.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.

WITNESS:

/s/ Eric G. Orlinsky /s/ George L. Miller (SEAL)
- ------------------------------ ----------------------------
George L. Miller

/s/ Eric G. Orlinsky /s/ Pauline J. Miller (SEAL)
- ------------------------------ ----------------------------
Pauline J. Miller

/s/ Eric G. Orlinsky /s/ Michael J. Miller (SEAL)
- ------------------------------ ----------------------------
Michael J. Miller

<PAGE> 1
EXHIBIT 2

VOTING AGREEMENT

VOTING AGREEMENT, dated as of August 8, 1995, among Michael
Miller ("MM"), George Miller ("GM") and Pauline Miller ("PM").

WITNESSETH:

WHEREAS, MM was the holder of (i) 100 shares of voting common
stock and 1,800 shares of nonvoting common stock of Maryland Day Care Centers,
Inc., a Maryland corporation whose name has been changed to Kiddie Academy
Child Care Learning Centers, Inc. (MDC"), and (ii) 100 shares of voting common
stock and 1,800 shares of non-voting common stock of Kid's Craft, Inc., a
Maryland corporation ("KCI"); and

WHEREAS, GM was the holder of (i) 100 shares of voting common
stock of MDC, and (ii) 100 shares of voting common stock of KCI; and

WHEREAS, PM was the holder of (i) 100 shares of voting common
stock of MDC, and (ii) 100 shares of voting common stock of KCI; and

WHEREAS, on the date hereof, MM exchanged his shares of voting
and nonvoting stock of each of MDC and KCI for 995,238 shares of common stock,
par value $.01 per share (the "KAI Common Stock"), of Kiddie Academy
International, Inc., a Delaware corporation ("KAI"); and

WHEREAS, on the date hereof, each of GM and PM exchanged his
or her shares of voting stock of MDC and KCI for 52,381 shares of KAI common
stock (such shares, together with 52,381 shares of KAI Common Stock owned by MM
(the "MM Primary Shares") being hereinafter referred to collectively as the
"Primary Shares"); and
<PAGE> 2
WHEREAS, MM, GM and PM wish to preserve the respective voting
power each of them held prior to the exchange of MDC and KCI shares for KAI
shares.

NOW, THEREFORE, the parties hereto do hereby agree as follows:

1. Voting Agreement. With regard to all matters on
which stockholders of KAI are permitted or entitled to vote pursuant to the
Delaware General Corporation Law (the "DGCL"), the Certificate of Incorporation
of KAI, the By-laws of KAI or otherwise, MM shall vote the shares of KAI Common
Stock received by him on the date hereof other than the MM Primary Shares (the
"Secondary Shares") in the manner in which the Primary Shares are voted in the
same proportion in which such shares are voted. By way of example, and not by
way of limitation, if two-thirds of the Primary Shares are voted in favor of a
matter put to a vote of stockholders and one-third of such shares are voted
against such matter, MM shall vote two-thirds of the Secondary Shares in favor
of such matter, and one-third of such shares against such matter.

2. Sale of Shares. Primary Shares or Secondary Shares
sold by GM, PM or MM shall no longer be deemed to be Primary Shares or
Secondary Shares; and any new shares of KAI Common Stock acquired by GM, PM or
MM shall not be deemed to be Primary Shares or Secondary Shares. If MM sells
any shares of KAI Common Stock, he will be deemed to have sold first any shares
of KAI Common Stock owned by him which are neither Primary Shares nor Secondary
Shares, then, Primary Shares, and lastly, Secondary Shares.

3. Certificates. Each certificate representing the
Secondary Shares shall contain the following legend:

"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON VOTING, AS PROVIDED
<PAGE> 3
IN A VOTING AGREEMENT, DATED AS OF
JULY 31, 1995, AMONG MICHAEL MILLER,
GEORGE MILLER AND PAULINE MILLER, A
COPY OF WHICH IS ON FILE AT THE
CORPORATE HEADQUARTERS OF THE
COMPANY IN BEL AIR, MARYLAND.

4. Term. The term of this Agreement shall commence on
the date hereof and shall terminate on the first to occur of the following:

(i) the sale of all of the Primary Shares; or

(ii) the mutual consent of MM, GM and PM.

5. Dividends, etc. Notwithstanding anything to the
contrary contained herein, nothing herein shall affect the right of MM to
receive dividends or any other distributions to which a stockholder is entitled
or any other rights of a stockholder under the DGCL, the Certificate of
Incorporation of the Company, or the By-laws of the Company.

6. Termination of Stockholders Agreements. The
following stockholder agreements among the parties hereto shall be terminated
upon execution hereof: (i) Agreement Among Stockholders dated as of December
16, 1992 between KCI, PM and MM, as amended as of July 1, 1994 by KCI, PM, MM
and GM; and (ii) Agreement Among Stockholders dated as of December 16, 1992
between MDC, PM and MM, as amended as of July 1, 1994 by MDC, PM, MM and GM.

7. Miscellaneous.

(a) This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein. This Agreement
<PAGE> 4
shall not be amended, altered or modified except by an instrument in writing
duly executed by each of the parties hereto.

(b) This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement shall not be assignable by any party, except
with the consent of the other parties thereto.

IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement on the day and year first above written.

/s/ Michael Miller
--------------------------------------
Michael Miller

/s/ George Miller
---------------------------------------
George Miller

/s/ Pauline Miller
---------------------------------------
Pauline Miller

FOR PURPOSES OF SECTION 6:

Kiddie Academy Child Care Learning Centers, Inc.
(formerly known as Maryland Day Care Centers,
Inc.)

By: /s/ George Miller
------------------------------------
George Miller, President

Kid's Craft, Inc.

By: /s/ Michael J. Miller
------------------------------------
Michael J. Miller, President

<PAGE> 1
EXHIBIT 3

HOME EQUITY LINE OF CREDIT

THE SPARKS STATE BANK

VARIABLE RATE
SECURED LINE OF CREDIT AGREEMENT
AND
FEDERAL TRUTH-IN-LENDING DISCLOSURE STATEMENT

This Agreement establishes an open-end credit account between
the person or persons who sign below and The Sparks State Bank. This Agreement
also includes the disclosures about the account which are required by the
Federal Truth-in-Lending Act.

1. Meaning of Words. In this Agreement the words "you",
"your", and "yours" refer to the persons who sign below and anyone else
authorized to use the account. The words "Bank," "we" and "us" refer to The
Sparks State Bank. The word "account" means the Home Equity Line of Credit
established for your use by this Agreement. The words "Credit Limit" mean the
maximum amount you can owe us at any one time.

2. Use of Account. You may request extensions of credit
in minimum amounts of $500, and up to but not exceeding the Credit Limit, only
by using the Checks that we issue to you. We will not be obligated to make any
loans in excess of your available Credit Limit and may at our option refuse
payment or honor any such loan request without increasing your Credit Limit.
Any loan amount above the Credit Limit shall become due and payable at once.
You agree not to use any Check to purchase goods or services, but only to
obtain cash or make deposits. We have the right to refuse any loan request if,
at the time the loan request is made, (1) an Event of Default has occurred as
defined in Paragraph 16 below or we prohibit additional extensions of credit as
provided in Paragraph 22 below; (2) the check is not properly completed or
signed; (3) the outstanding balance of your loan including accrued interest and
unpaid charges, as shown on our records at the time the check is presented for
payment, exceeds or upon payment would exceed your Credit Limit then in effect;
or (4) the request is for less that $500. We have the right, at our option, to
make any loan regardless of whether any of the above conditions exists. We are
not obligated to stop payment on Checks or to certify Checks.

3. Term. The term of your Home Equity Line of Credit is
indefinite.

4. Possible Actions. Under certain conditions, we may
terminate your Home Equity Line of Credit and require payment of the
outstanding balance in full in a single payment and prohibit additional
extensions of credit or reduce your credit limit. These conditions and
possible actions are described in this Agreement.

5. FINANCE CHARGES. Each time you obtain a loan, we
will consolidate your entire loan balance. You will pay a FINANCE CHARGE
(interest) on your loan from the date the loan is posted to your account until
the loan is paid in full. There is no time period within which you can pay
your loan off without incurring a FINANCE CHARGE.

We calculate the FINANCE CHARGE on your account by applying a
daily periodic rate of interest to the Average Daily Balance of your account
(including current transactions). To get the Average Daily Balance we take the
beginning loan balance of your account each day, add any new loans, and
subtract any payments or credits (and unpaid FINANCE CHARGES). This gives us
the daily loan balance. At the end of the billing period, we add up all the
daily loan balances for the billing period and divide the total by the number
of days in the billing period. This gives us the Average Daily Balance. We
then multiply the Average Daily Balance by the number of days in the billing
period and multiply the result by the daily periodic rate. The result is the
FINANCE CHARGE for that billing period. The Average Daily Balance does not
include unpaid FINANCE CHARGES, credit life insurance premiums, or late
charges.

In some cases the FINANCE CHARGE may not calculate to a number
ending in a whole penny. In those cases the FINANCE CHARGE is rounded up or
down to the nearest penny and printed on your monthly billing statement. For
example, if the calculation of your FINANCE
<PAGE> 2
CHARGE were to equal $1.00750, the FINANCE CHARGE printed on your monthly
billing statement would be $1.01 and if the calculation of your FINANCE CHARGE
were to equal $1.00490, the FINANCE CHARGE printed on your monthly billing
statement would be $1.00.

The daily periodic rate in effect on the date of this
Agreement is .0253425 (Corresponding ANNUAL PERCENTAGE RATE 9.25%). The daily
periodic rate and the corresponding ANNUAL PERCENTAGE RATE are variable and may
increase from time to time based upon changes in the "Index Rate". The "Index
Rate" means the highest rate of interest described in the "Money Rates" column
of The Wall Street Journal as the "Prime Rate," which refers to the base rate
on corporate loans at large U.S. Money center commercial banks. The daily
periodic rate and the corresponding ANNUAL PERCENTAGE RATE also may decrease
from time to time based upon changes in the Index Rate.

The ANNUAL PERCENTAGE RATE in effect for any billing period
will be equal to the interest rate per annum that is equal to three quarter
percentage point (.75 %) plus the Index Rate published for the last time in the
calendar month immediately preceding the calendar month in which the applicable
billing period begins. Accordingly, increases in the Index Rate will take
effect on the first day of the billing period. Decreases in the Index Rate
also will take effect on the first day of the billing period. The ANNUAL
PERCENTAGE RATE and corresponding daily periodic rate will appear on each
monthly billing statement. If the Index Rate is not published during a month,
then the previous Index rate will remain in effect until the Index Rate is
published. If the Index Rate defined above is no longer available, we can
change the index and margin used for your account so long as the new index has
an historical movement substantially similar to that of the original index, and
the new index and margin would have resulted in an annual percentage rate
substantially similar to the rate in effect at the time the original index
became unavailable.

The ANNUAL PERCENTAGE RATE does not include costs other than
interest.

If the ANNUAL PERCENTAGE RATE increases, then the number of
payments may increase until the entire loan balance and all FINANCE CHARGES and
other charges are paid in full. If the ANNUAL PERCENTAGE RATE decreases, then
the number of payments may decrease until the entire loan balance and all
FINANCE CHARGES and other charges are paid in full. The ANNUAL PERCENTAGE RATE
will not increase more than once each month. The ANNUAL PERCENTAGE RATE will
not exceed the lesser of 22 % per year or the maximum amount permitted by law.
Except for this "cap" there is no limit on the amount by which the rate can
change during any one-year period.

6. Payments. You may pay all or any part of your loan
balance at any time, but each month you must pay the "Minimum Amount Due" shown
on your monthly billing statement. The "Minimum Amount Due" will be equal to
the greater of either (i) 2.00% of the "New Balance" shown on your monthly
billing statement or (ii) $50, plus any late charges and any unpaid amount due
from a prior billing period. If the New Balance is less then $50, then the
Minimum Amount Due will equal the New Balance, plus any accrued but unpaid
FINANCE CHARGES, plus any late charges. The "New Balance" is the outstanding
loan balance of your account.

If you borrow more money when you have an outstanding loan
balance, monthly payments may change based on the new total outstanding loan
balance. If you make payments that reduce your outstanding loan balance,
monthly payments may change based on the new outstanding loan balance.
Payments will be applied to FINANCE CHARGES, principal, and late charges in
such order as we determine. Interest will accrue until we actually credit your
payment to your account, unless an earlier date is required by law. The
monthly billing statement will be conclusively presumed correct unless you give
notice in writing of any error to the bank within sixty (60) days after the
statement is sent to you.

7. Time for Payment. You may make payments on your loan
at any time during a billing period. You may pre-pay any part of the loan
balance at any time without penalty. However, you must pay at least the
Minimum Amount Due on or before the "Payment Due Date". The Payment Due Date
will be indicated on your statement. Time is of the essence.

2
<PAGE> 3
8. Late Charge. If you do not pay the entire Minimum
Amount Due within 15 days after the Payment Due Date, you shall pay at our
option a late charge of 5% of the Minimum Amount Due. No more than one late
charge will be imposed for any single scheduled payment or portion thereof
regardless of the period during which it remains delinquent. This charge is in
addition to and not instead of the FINANCE CHARGES you owe under this
Agreement, and is intended to reimburse the Bank for the extra collection
expenses it may incur if you are late in making a payment.

9. Other Charges. You agree to pay all expenses, taxes
and charges paid by the Bank to governmental agencies in connection with the
account, all attorneys fees paid by the Bank for services rendered in
connection with the preparation, closing, or disbursement of the loan, all
costs for examination of title, appraisals and all other costs necessary or
appropriate to the security for this account, all premiums for insurance
coverage which is either required by the Bank or chosen by you and including
all such amounts as you are obligated to pay under the deed of trust. With or
without prior notice to you, we may create a loan under this Agreement to pay
all such amounts which you are obligated to pay. You agree to pay such amounts
whether we incur these costs at this time or later, and in particular, we may
from time to time obtain an appraisal of the real estate which secures this
Agreement and you agree to pay the cost of such appraisal. The amount of such
costs incurred by the Bank at this time is stated below.

10. Security. The account established by this Agreement
is secured by a deed of trust on the real estate described below. Except as
may be prohibited by law, if you are in default under this Agreement we may
offset your money on deposit with us to repay amounts you owe us under this
Agreement.

11. Property Insurance and Title Insurance. Property
insurance covering the real estate described below is required. It may be
obtained from any person you choose. Title Insurance is also required and you
may choose the title insurance company. If you have not specifically requested
a particular title insurer, we have selected one to perform the title search
and issue the policy.

12. Amendment to this Agreement. We may change the terms
of this Agreement to the extent permitted by applicable law. We will provide
you with notice of changes as required by applicable law. Except as limited by
applicable law, any such change will apply to the entire balance in your
account, including any loans obtained prior to the effective date of the
change. If we are legally required to obtain your specific consent to the
change, then we will not make the change without your written consent, unless
we are legally permitted to evidence your consent by your continued use of this
account after receiving notice of the change. For purposes of this Section
"applicable law" includes the federal Truth-in-Lending Act Regulation Z of the
Board of Governors of the Federal Reserve System, Section 12-912 of the
Maryland Commercial Law Article, and any other applicable law.

13. Termination, Release of Deed of Trust. In addition
to our right to terminate your account in accordance with Section 16 of this
Agreement, we will terminate the account at the request of any person signing
below. The Checks are our property and you agree to return all Checks upon
termination. Upon such termination (or upon a credit limit reduction in
accordance with Section 22 of this Agreement) you will still be responsible
for any loan made prior to the termination (or credit limit reduction).
Whenever you have no amounts due under this Agreement we will, upon your giving
us at least 15 days prior written notice, release the deed of trust, provided
you have paid all such amounts and returned all Checks to us. You agree to pay
the governmental charge to record the release of the deed of trust. The deed
of trust shall remain in full force and effect and shall secure all amounts due
under this Agreement until such release, even if at some time during the term
of this Agreement you do not owe us any amounts.

14. Recording Taxes. You will pay any fees and taxes
imposed on the recording of the deed of trust or on loans made to you under
this Agreement, whether due at the time the deed of trust is recorded or any
time thereafter. If you do not pay such amounts when due, then we may at our
option and with or without notice to you, pay any such taxes and either bill
you for such amounts or create a loan under this Agreement equal to such
amount. Our determination of whether and when

3
<PAGE> 4
such taxes are due shall be conclusive.

15. Credit Investigations and Financial Reports. The
Bank is authorized now or at any time in the future to make or have made any
credit investigation we believe is necessary to evaluate our decision about
continuing to make loans to you under this Agreement. You also agree to
furnish us any financial statements which we may require at any time.

16. Events of Default, Remedies. Upon any of the
following Events of Default, at our option, we may terminate your Home Equity
Line of Credit and all amounts due under this account shall become immediately
due and payable: (1) you commit fraud, or make a material misrepresentation, in
connection with your account, (2) you fail to meet the repayment terms of your
account for an outstanding balance, (3) you fail to maintain the insurance for
the security that is required by the deed of trust, (4) you transfer title to
the security (including transfers resulting from your death), or sell the
security, covered by the deed of trust without our permission, or (5) your
action or inaction adversely affects the security for your account or any of
our rights to such security. If any Event of Default occurs, you will be liable
for all costs and expenses of collection including court costs and a reasonable
attorney's fee. Any waiver by the Bank of any one of its rights upon an Event
of Default does not constitute a waiver of any other or all of such rights upon
such Event of Default, or upon the same default on any future occasion. If an
Event of Default occurs, the Bank may exercise its rights under the deed of
trust, including the right to foreclose the deed of trust.

17. Others Using Your Account. Each person who signs
below and each person authorized to use your account are liable, jointly and
severally, for all amounts owing on the account, even if only one of you
receives the proceeds of a loan.

18. General Matters. We may send any notice to the
latest address shown on our records, and any such notice shall be considered
given to you when placed in the mail, postage prepaid. All rights of the Bank
shall benefit its successors and assigns; all obligations of yours shall be
binding on your heirs and personal representatives. In the event any provision
of this Agreement shall be held invalid, the invalidity of such provision shall
not affect any other provision of the Agreement.

19. Title Insurance Choice. Each person acknowledges
choosing the title insurance company to which the fee shown below will be paid
or consents to that company if the Bank has selected it.

20. No Tax Advice Provided. You should consult a tax
advisor regarding the deductibility of interest and charges for your Home
Equity Line of Credit. By signing below you acknowledge that you have not
received any advice of any kind from the Bank or any representative or employee
of the Bank, or through any advertisement by Bank, regarding any federal or
State income tax law or your income taxes.

21. Optional Credit Life Insurance. You are not required
to purchase Credit Life Insurance as a condition of obtaining this Home Equity
Line of Credit and it will not be provided unless you request such insurance,
sign a separate application for Credit Life Insurance, and agree to pay the
additional cost. We may terminate the insurance at any time and you may
terminate the insurance at any time by giving us written notice.

22. Credit Limit. The initial amount of your Credit
Limit under this Agreement is $75,000.00. We may prohibit additional extensions
of credit or reduce the credit limit applicable to your account during any
period in which (a) the value of the dwelling that secures your account
declines significantly below the dwelling's appraised value for purposes of
your account (for example, if the value of the dwelling declines such that the
initial difference between the Credit Limit and the available equity, based on
the property's appraised value for the purposes of this Agreement, is reduced
by 50%), (b) we reasonably believe that you will be unable to fulfill the
repayment obligations under your account because of a material change in your
financial circumstances, (c) you are in default of any material obligation of
this Agreement, (d) we are precluded by government action from imposing the
annual percentage rate provided for in this Agreement, (e) the priority of our
security interest is adversely affected by government action to the

4
<PAGE> 5
extent that the value of the security interest less than 120 percent of your
credit line, (f) we are notified by our regulatory agency that continued
advances constitute unsafe and unsound practice, or (g) the maximum annual
percentage rate has been reached.

23. Real Estate Description. The real estate covered by
the deed of trust is located at: 1420 Tayside Way, Bel Air, Maryland 21015.

24. Other Charges ("Closing Costs") incurred by Bank and
payable by you in cash on this date:

<TABLE>
<S> <C>
TITLE EXAMINATION AND
TITLE INSURANCE FEE
(to Jerry S. Sopher) $202.00
-------------------- --------

Attorneys fees for preparation,
closing or disbursement of loan
(to Jerry S. Sopher) $68.00
-------------------- ------

APPRAISAL FEE
(to "An Appraiser" ($175.00)P.O.C.) +
----------------------------------- ------

RECORDING TAXES AND FEES
(to government officials) $545.00
-------

TOTAL CLOSING COSTS = $815.00
-------
</TABLE>

25. Maryland Law; Subtitle 9 Election. This Agreement is
governed by Maryland law. With reference to Section 12-913.1 of the Maryland
Commercial Law Article, the Bank expressly elects that this Agreement is
established and governed by Subtitle 9 of Title 12 of the Maryland Commercial
Law Article.

26. Copies Received. Each person who signs below
acknowledges receiving a copy of this Agreement and the Fair Credit Billing
Rights Disclosure before signing below. Each person who signs below also
acknowledges he or she received separate home equity disclosures entitled
"IMPORTANT TERMS OF OUR THE SPARKS STATE BANK HOME EQUITY LINE OF CREDIT"
together with a brochure entitled "WHAT YOU SHOULD KNOW ABOUT HOME EQUITY LINES
OF CREDIT", at the time that he or she was provided with the application for
this credit.

Witness, my signature and seal below this 22nd day of
February, 1996.

Witness:

/s/ George L. Miller (SEAL)
- ---------------------------- -------------------------------
George L. Miller, Borrower

/s/ Pauline Miller (SEAL)
- ---------------------------- -------------------------------
Pauline Miller, Borrower

JSS/ew/0096CT

<PAGE> 1
EXHIBIT 4

HOME EQUITY LINE OF CREDIT

THE SPARKS STATE BANK

VARIABLE RATE
SECURED LINE OF CREDIT AGREEMENT
AND
FEDERAL TRUTH-IN-LENDING DISCLOSURE STATEMENT

3. Term. The term of your Home Equity Line of Credit is
indefinite.

In some cases the FINANCE CHARGE may not calculate to a number
ending in a whole penny. In those cases the FINANCE CHARGE is rounded up or
down to the nearest penny and printed on your monthly billing statement. For
example, if the calculation of your FINANCE CHARGE were to equal $1.00750, the
FINANCE CHARGE printed on your monthly billing statement would be $1.01 and if
the calculation of your FINANCE CHARGE were to equal $1.00490, the FINANCE
CHARGE printed on your monthly billing statement would be $1.00.

The daily periodic rate in effect on the date of this
Agreement is .0253425 (Corresponding ANNUAL PERCENTAGE RATE 9.25%). The daily
periodic rate and the corresponding ANNUAL PERCENTAGE
<PAGE> 2
RATE are variable and may increase from time to time based upon changes in the
"Index Rate". The "Index Rate" means the highest rate of interest described in
the "Money Rates" column of The Wall Street Journal as the "Prime Rate," which
refers to the base rate on corporate loans at large U.S. Money center
commercial banks. The daily periodic rate and the corresponding ANNUAL
PERCENTAGE RATE also may decrease from time to time based upon changes in the
Index Rate.

The ANNUAL PERCENTAGE RATE in effect for any billing period
will be equal to the interest rate per annum that is equal to three quarter
percentage point (.75 %) plus the Index Rate published for the last time in the
calendar month immediately preceding the calendar month in which the applicable
billing period begins. Accordingly, increases in the Index Rate will take
effect on the first day of the billing period. Decreases in the Index Rate also
will take effect on the first day of the billing period. The ANNUAL PERCENTAGE
RATE and corresponding daily periodic rate will appear on each monthly billing
statement. If the Index Rate is not published during a month, then the previous
Index rate will remain in effect until the Index Rate is published. If the
Index Rate defined above is no longer available, we can change the index and
margin used for your account so long as the new index has an historical
movement substantially similar to that of the original index, and the new index
and margin would have resulted in an annual percentage rate substantially
similar to the rate in effect at the time the original index became
unavailable.

The ANNUAL PERCENTAGE RATE does not include costs other than
interest.

8. Late Charge. If you do not pay the entire Minimum
Amount Due within 15 days after the Payment Due Date, you shall pay at our
option a late charge of 5 % of the Minimum Amount Due. No more than one late
charge will be imposed for any single scheduled payment or portion thereof
regardless of the period during which it remains delinquent. This charge is in
addition to and not instead of the FINANCE CHARGES you owe under this
Agreement, and is intended to reimburse the Bank for the extra collection
expenses it may incur if you are late in making a payment.

2
<PAGE> 3
as you are obligated to pay under the deed of trust. With or without prior
notice to you, we may create a loan under this Agreement to pay all such
amounts which you are obligated to pay. You agree to pay such amounts whether
we incur these costs at this time or later, and in particular, we may from time
to time obtain an appraisal of the real estate which secures this Agreement and
you agree to pay the cost of such appraisal. The amount of such costs incurred
by the Bank at this time is stated below.

13. Termination. Release of Deed of Trust. In addition
to our right to terminate your account in accordance with Section 16 of this
Agreement, we will terminate the account at the request of any person signing
below. The Checks are our property and you agree to return all Checks upon
termination. Upon such termination (or upon a credit limit reduction in
accordance with Section 22 of this Agreement) you will still be responsible for
any loan made prior to the termination (or credit limit reduction). Whenever
you have no amounts due under this Agreement we will, upon your giving us at
least 15 days prior written notice, release the deed of trust, provided you
have paid all such amounts and returned all Checks to us. You agree to pay the
governmental charge to record the release of the deed of trust. The deed of
trust shall remain in full force and effect and shall secure all amounts due
under this Agreement until such release, even if at some time during the term
of this Agreement you do not owe us any amounts.

14. Recording Taxes. You will pay any fees and taxes
imposed on the recording of the deed of' trust or on loans made to you under
this Agreement, whether due at the time the deed of trust is recorded or any
time thereafter. If you do not pay such amounts when due, then we may at our
option and with or without notice to you, pay any such taxes and either bill
you for such amounts or create a loan under this Agreement equal to such
amount. Our determination of whether and when such taxes are due shall be
conclusive.

16. Events of Default, Remedies. Upon any of the
following Events of Default, at our option, we may terminate your Home Equity
Line of Credit and all amounts due under this account shall become immediately
due and payable: (1) you commit fraud, or make a material misrepresentation, in
connection with your account, (2) you fail to meet the repayment terms of your
account for an outstanding balance, (3) you fail to maintain the insurance for
the security that is required by the deed of trust, (4) you transfer title to
the security (including transfers resulting from your death), or sell the
security, covered by the deed of trust without our permission, or (5) your
action or inaction adversely affects the security for your account or any of
our rights to such security. If any Event of Default occurs, you will be
liable for all costs and expenses of collection including court costs and a
reasonable attorney's fee. Any waiver by the Bank of any one of its rights
upon an Event of Default does not constitute a waiver of any other or all of
such rights upon such Event of Default, or upon the same default on any future
occasion. If an Event of Default occurs, the Bank may exercise its rights
under the deed of trust, including the right to foreclose the deed of trust.

17. Others Using Your Account. Each person who signs
below and each person authorized to use

3
<PAGE> 4
your account are liable, jointly and severally, for all amounts owing on the
account, even if only one of you receives the proceeds of a loan.

19. Title Insurance Choice. Each person acknowledges
choosing the title insurance company to which the fee shown below will be paid
or consents to that company if the Bank has selected it.

22. Credit Limit. The initial amount of your Credit
Limit under this Agreement is $50,000.00. We may prohibit additional extensions
of credit or reduce the credit limit applicable to your account during any
period in which (a) the value of the dwelling that secures your account
declines significantly below the dwelling's appraised value for purposes of
your account (for example, if the value of the dwelling declines such that the
initial difference between the Credit Limit and the available equity, based on
the property's appraised value for the purposes of this Agreement, is reduced
by 50%), (b) we reasonably believe that you will be unable to fulfill the
repayment obligations under your account because of a material change in your
financial circumstances, (c) you are in default of any material obligation of
this Agreement, (d) we are precluded by government action from imposing the
annual percentage rate provided for in this Agreement, (e) the priority of our
security interest is adversely affected by government action to the extent that
the value of the security interest less than 120 percent of your credit line,
(f) we are notified by our regulatory agency that continued advances constitute
unsafe and unsound practice, or (g) the maximum annual percentage rate has been
reached.

23. Real Estate Description. The real estate covered by
the deed of trust is located at: 2503 Palmer View Drive, Bel Air, Maryland
21014.

24. Other Charges ("Closing Costs") incurred by Bank and
payable by you in cash on this date:

<TABLE>
<S> <C>
TITLE EXAMINATION AND
TITLE INSURANCE FEE
(to Jerry S. Sopher ) $ 202.00
---------------------------------- -------------

Attorneys fees for preparation,
closing or disbursement of loan
(to Jerry S. Sopher ) $ $68.00
---------------------------------- -------------

APPRAISAL FEE
(to "An Appraiser" ($175.00)P.O.C ) + $
----------------------------------- -------------

RECORDING TAXES AND FEES
(to government officials) $ 380.00
-------------

TOTAL CLOSING COSTS = $ 650.00
-------------
</TABLE>

25. Maryland Law, Subtitle 9 Election. This Agreement is governed by
Maryland law. With reference to Section 12-913.1 of the Maryland Commercial
Law Article, the Bank expressly elects that this Agreement is established and
governed by Subtitle 9 of Title 12 of the Maryland Commercial Law Article.

4
<PAGE> 5
26. Copies Received. Each person who signs below acknowledges
receiving a copy of this Agreement and the Fair Credit Billing Rights
Disclosure before signing below. Each person who signs below also acknowledges
he or she received separate home equity disclosures entitled "IMPORTANT TERMS
OF OUR THE SPARKS STATE BANK HOME EQUITY LINE OF CREDIT" together with a
brochure entitled "WHAT YOU SHOULD KNOW ABOUT HOME EQUITY LINES OF CREDIT", at
the time that he or she was provided with the application for this credit.

Witness, my signature and seal below this 22nd day of February, 1996.

Witness:

/s/ Michael J. Miller (SEAL)
- --------------------------- ----------------------------------
Michael Jude Miller, Borrower

/s/ Lisa Miller (SEAL)
- --------------------------- ----------------------------------
Lisa Marie Miller, Borrower

JSS/ew/0096CT