U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
The American Education Corporation
(Name of Issuer)
Common Stock, $.025 par value
(Title of Class of Securities)
02553P 10 1
(CUSIP NUMBER)
Armand Paliotta
1600 Bank of Oklahoma Plaza
201 Robert S. Kerr
Oklahoma City, Oklahoma 73102
(Name, Address and Telephone Number of Person authorized to
Receive
Notices and Communications)
November 25, 1998
(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: Schedules filed in paper format shall include a signed
original and five copies of this schedule, including all
exhibits. See Section 240.13d-7(b) for other parties to whom
copies are to be sent.
CUSIP NO. 02553P 10 1
1. Name of Reporting Person
John D. Garber *
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds
PF/00
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
5,921,286 shares
Shares 8. Shared Voting Power
Beneficially 0
Owned by Each 9. Sole Dispositive Power
Reporting Person 5,921,286 shares
With
10. Shared Dispositive Power
0
11. Aggregate Amount Beneficially Owned by Each Reporting Person
5,921,286 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares [__]
13. Percent of Class Represented by Amount in Row (11)
38.6%
14. Type of Reporting Person
IN
The purpose of this Amendment No. 1 to the previously filed
Schedule 13D is to report that the ownership of John D.
Garber in the Common Stock, $0.025 par value (the "Common
Stock") of The American Education Corporation, (the "Issuer")
has decreased from 41.0% to 38.6%.
Item 1. Security and Issuer.
- -----------------------------
No Change.
Item 2. Identity and Background.
- ---------------------------------
No Change.
Item 3. Source and Amount of Funds or Other Consideration.
- -----------------------------------------------------------
On November 25, 1998, effective September 30, 1998, Mr. Garber
sold the outstanding principal balance of a promissory note
executed by the Issuer in favor of Mr. Garber, which was
convertible into 371,471 shares of Common Stock of the Issuer.
See item 6 for further details of the transaction.
Item 4. Purpose of Transaction.
- --------------------------------
There is no change to Mr. Garber's response to this item.
Item 5. Interest in Securities of the Issuer.
- ----------------------------------------------
(a) The aggregate number of shares of common stock of the issuer
beneficially owned by Mr. Garber is 5,921,286 or
approximately 38.6%.
(b) Mr. Garber has the sole power to vote and to dispose of
5,921,286 shares of the issuer.
(c) Effective as of September 30, 1998, Mr. Garber acquired
87,296 shares of the Common Stock of the Issuer. These
shares were acquired as the result of the conversion
of the interest due on a promissory note in the principal
amount of $50,000, executed by the Issuer in favor of
Mr. Garber. The $50,000 promissory note was sold by
Mr. Garber to Jeffrey E. Butler, Sr. effective September
30, 1998, in exchange for $50,000 in cash and notes from
Mr. Butler. See item 6 for further details of the
transaction.
(d) Not Applicable.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
- -----------------------------------------------------------------
John D. Garber was the holder of a convertible note issued
by The American Education Corporation which was convertible
into Common Stock of the Issuer at $.1346 per share. As
of September 30, 1998 the principal amount due was $50,000
plus accrued interest of $11,750. Effective September 30,
1998, Mr. Garber sold the principal portion of the amount
due to Jeffrey E. Butler in exchange for $50,000 in cash
and notes from Mr. Butler. Immediately after that
transaction, both Mr. Garber and Mr. Butler converted
their respective amounts owed by the Issuer into Common
Stock of the Issuer. The $11,750 owed to Mr. Garber
Converted into 87,296 shares of Common Stock and the
$50,000 owed to Mr. Butler converted into 371,471 shares
of Common Stock.
Item 7. Material to be Filed as Exhibits.
- -----------------------------------------
Conversion Agreement, dated as of September 30, 1998
between The American Education Corporation and John D.
Garber.
CONVERSION AGREEMENT
This Conversion Agreement ("Agreement") is entered into effective as of the
30th day of September, 1998, by and between John D. Garber, a resident of
California (the "Noteholder"), and The American Education Corporation, a
Colorado corporation ("AEC").
WHEREAS, AEC has issued to the Noteholder one or more 12% Convertible Notes
pursuant to which the Noteholder (i) loaned money to AEC and (ii) received
the right to surrender such 12% Convertible Notes for cancellation (and release
all indebtedness of AEC to the Noteholder under such 12% Convertible Notes) in
exchange for shares of AEC's common stock (the "Common Stock"), par value $.025
per share;
WHEREAS, as of September 30, 1998, the aggregate amount of unpaid principal and
accrued and unpaid interest owed by AEC under such 12% Convertible Notes was
$50,000 and $11,750, respectively;
WHEREAS, the Noteholder has transferred and assigned to Jeffrey E. Butler, Sr.
all of the Noteholder's rights under such 12% Convertible Notes with respect to
the $50,000 of principal owed;
WHEREAS, the Noteholder retained all his rights with respect to the $11,750 of
accrued and unpaid interest owed to the Noteholder;
WHEREAS, the Noteholder desires to convert all the accrued and unpaid interest
owed under such 12% Convertible Notes into shares of the Common Stock; and
WHEREAS, AEC and the Noteholder desire to enter into this Agreement to set
forth the terms and conditions of such conversion:
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. Conversion of Notes to Common Stock. The Noteholder hereby surrenders to
AEC all of the Noteholder's rights with respect to the 12% Convertible Notes
(collectively, the "Notes"), including all amounts owed with respect thereto,
which represents all of the 12% Convertible Notes, and other indebtedness, that
have been issued or are owed by AEC to the Noteholder, except for $90,010 of
debt of AEC to the Noteholder. The Notes are surrendered to AEC for
cancellation in exchange for 87,296 shares of the Common Stock. The parties
agree that, as set forth in the Notes, fractional shares shall not be issued,
and AEC shall round up the number of shares of Common Stock to be issued. The
shares of Common Stock to be issued to the Noteholder shall be issued in the
name of John Garber.
2. Representations and Warranties of the Noteholder. The Noteholder hereby
represents and warrants to AEC each of the following:
2.1 Purchase of the Notes. The Noteholder acquired the Notes for his own
account and for the purpose of investment only and not with a view to the
resale or distribution of all or any part of the Notes.
2.2 Ownership. The Noteholder is the legal and beneficial owner of his rights
in the Notes, free and clear of all liens, pledges, claims, contract
restrictions, buy and sell agreements and encumbrances of any kind. The
Noteholder has all the requisite right, power and authority to enter into this
Agreement and consummate the transactions described herein. The Noteholder has
not assigned any of his rights under the Notes.
2.3 Entire Indebtedness. The Noteholder's rights in the Notes being
surrendered to AEC in exchange for Common Stock comprise all of the
indebtedness of AEC to the Noteholder, except for $90,010 of debt of AEC to the
Noteholder.
2.4 Disclosures. The Noteholder has had an opportunity to ask questions to
his full satisfaction regarding the business and financial condition of AEC and
the value of the Common Stock. The Noteholder agrees and understands that AEC
makes no representation or warranty regarding the financial or business
condition of AEC or the value of the Common Stock. The Noteholder waives any
right he may otherwise have to object to any term or condition of this
Agreement based upon any alleged omission to disclose any material fact with
respect to AEC or the value of the Common Stock.
2.5 Suitability. The Noteholder has sufficient knowledge and experience in
business and financial matters (either alone or with the Noteholder's personal
investment advisors) to be capable of utilizing the information made available
to the Noteholder in evaluating the Noteholder's decision to convert his debt
into Common Stock on the terms set forth in this Agreement. The Noteholder has
not relied on the advice of AEC or anyone acting on AEC's behalf in connection
with the Common Stock to be issued to the Noteholder. The Noteholder
understands the risks of an investment in the Common Stock, and the Noteholder
is capable of bearing all economic risks involved in this investment, with full
knowledge that it could result in a complete loss of the Noteholder's
investment. The Noteholder acknowledges that such investment is highly
speculative. The Noteholder further understands and acknowledges that there
may be no market for the Common Stock.
2.6 Advice. Noteholder has not sought advice from AEC and AEC has not advised
the Noteholder as to the income tax consequences resulting from the conversion.
2.7 Investment Intent. The Noteholder is acquiring the Common Stock for the
Noteholder's own account, as a principal, for investment purposes only and not
with a view to the resale or distribution of all or any part of such Common
Stock, and the Noteholder has no present intention, agreement or arrangement to
divide the Noteholder's participation with others or to resell, assign,
transfer or otherwise dispose of any part of the Common Stock.
3. Release and Indemnification. The Noteholder hereby releases AEC from all
obligations and liabilities of AEC to the Noteholder under the Notes; it being
the intention of the parties hereto that the Notes be cancelled in their
entirety. The Noteholder agrees that he will indemnify and hold harmless AEC
and its successors and assigns (the "Indemnified Parties") from and against all
claims, liabilities, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses, including reasonable attorneys'
fees and expenses of investigation, incurred by any Indemnified Party as a
result of any breach of any representation, warranty, covenant or agreement
made by the Noteholder in this Agreement.
4. Limitation on Transfer of the Common Stock. The Noteholder understands
that, although certain shares of the Common Stock are registered, the Common
Stock to be issued to the Noteholder is restricted and has not been registered
under any state or federal securities laws and the Noteholder has no right to
require such registration, except as may otherwise be required in the Notes.
Any certificate which evidences the Common Stock will contain a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THE SALE OF THE SECURITIES IS REGISTERED UNDER THE ACT AND
ALL APPLICABLE STATE SECURITIES LAWS, OR UNLESS SUCH SALE IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND ALL APPLICABLE
STATE SECURITIES LAWS AND THE COMPANY IS PROVIDED WITH AN OPINION OF
COUNSEL AND OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE ACT
AND APPLICABLE STATE SECURITIES LAWS."
5. Survival of Representations and Warranties. All representations and
warranties made by the parties in this Agreement shall survive the execution of
this Agreement.
6. General. The parties shall pay their own expenses incident
to the negotiation, preparation, execution and performance of the terms of this
Agreement. Each party agrees to execute and deliver such other agreements,
assurances, instruments and documents at any time as may be reasonably
requested by the other party and which are necessary or desirable to consummate
the transaction contemplated by this Agreement. The terms of this Agreement
shall be binding upon and inure to the benefit of, and shall be enforceable by,
the successors and assigns of the parties hereto. This Agreement shall be
governed by and construed in accordance with the laws of the State of Oklahoma,
except as to the manner in which the Noteholder elects to take title to the
Common Stock. This Agreement constitutes the entire agreement among the
parties, and there are no agreements, understandings, restrictions, warranties
or representations among the parties other than those set forth, referenced, or
contemplated herein. This Agreement may be amended only by an instrument in
writing signed by all parties hereto. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which taken
together shall be deemed one instrument, but it shall not be effective until
all parties have executed at least one counterpart. Whenever a word is used
herein in the singular, the same shall include the plural, where appropriate,
and the words of one gender shall include the other gender, where appropriate.
Captions in this Agreement are for the convenience of reference only and shall
not limit or otherwise affect the interpretation or effect of any term or
provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"Noteholder"
/s/John D. Garber
"AEC"
THE AMERICAN EDUCATION CORPORATION,
a Colorado corporation
By: /s/Jeffrey E. Butler, President
Agreement, dated as of September 30, 1998 between
Jeffrey E. Butler, John D. Garber and The American
Education Corporation.
AGREEMENT
This Agreement is entered into effective as of the 30th day
of September, 1998, by and between Jeffrey E. Butler, Sr.,
residing in Oklahoma City, Oklahoma ("Butler"), and John D.
Garber, residing in Palm Desert, California ("Garber").
RECITALS
WHEREAS, Garber is the payee under (i) that certain 12%
Convertible Note of The American Education Corporation, a
Colorado corporation ("AEC"), dated January 2, 1992, in the
principal amount of $15,000; (ii) that certain 12% Convertible
Note of AEC, dated January 11, 1991, in the principal amount of
$50,000; and (iii) that certain 12% Convertible Note of AEC,
dated April 15, 1991, in the principal amount of $125,000
(collectively, the "Convertible Notes");
WHEREAS, the Convertible Notes permit Garber, subject to the
terms and conditions of the Convertible Notes, to convert any or
all of the unpaid principal and interest due under the
Convertible Notes into shares of the common stock of AEC;
WHEREAS, as of September 30, 1998, the total unpaid
principal amount due under the Convertible notes was $50,000 and
the accrued and unpaid interest due under the Convertible Notes
was $11,750;
WHEREAS, in addition to the Convertible Notes, Garber is
owed, as of September 30, 1998, approximately $90,010 (the "Other
Indebtedness") by AEC; and
WHEREAS, Garber desires to sell, assign and transfer to
Butler, and Butler desires to purchase from Garber, certain of
Garber's rights under the Convertible Notes.
AGREEMENTS
NOW, THERFORE, in consideration of the mutual covenants
herein contained, the parties agree as follows:
1. In exchange for the delivery by Butler to Garber of (i)
a check for $25,000 and (ii) Butler's Promissory Note payable to
the order of Garber in the principal amount of $25,000, bearing
interest at 6% per annum and payable in eight equal, consecutive
quarterly installments beginning March 31, 1999, Garber hereby
sells, assigns and transfers unto Butler, and Butler hereby
accepts from Garber (i) AEC's obligation to repay Garber the
aggregate $50,000 principal amount due under the Convertible
Notes and (ii) Garber's right to convert such $50,000 of
principal amount into common stock of AEC. Garber expressly
retains the right to collect from AEC the accrued and unpaid
interest due under the Convertible Notes, as well as the right to
convert such accrued and unpaid interest into common stock of
AEC.
2. Garber hereby represents to Butler that (i) Garber is
the legal and beneficial owner of the Convertible Notes, free and
clear of all liens, pledges, claims, contract restrictions, buy
and sell agreements and encumbrances of any kind; (ii) Garber has
all the requisite right, power and authority to enter into this
Agreement and consummate the transactions described herein; (iii)
Garber has not assigned any of his rights under the Convertible
Notes; (iv) the debts evidenced by the Convertible Notes arose
out of loans made by Garber to AEC and Garber has done and will
do nothing to discharge such debts or hinder their collection;
and (v) the full principal amount of $50,000 is still due from
AEC to Garber without offset or defense.
3. Garber represents and warrants for the benefit of AEC
that the Other Indebtedness represents all of the indebtedness
now owed by AEC to Garber, to AmEd Financing Company, or to any
of Garber's affiliates, excluding $11,750 as of September 30,
1998, of accrued and unpaid interest due under the Convertible
Notes.
4. Butler hereby represents to Garber that Butler is
acquiring the Convertible Notes for Butler's own account, as a
principal, for investment purposes only and not with a view to
the resale or distribution of all or any part of such Convertible
Notes, and Butler has no present intention, agreement or
arrangement to divide his participation with others or to resell,
assign, transfer or otherwise dispose of any part of the
Convertible Notes.
5. Each party hereby agrees that he will indemnify and hold
harmless the other from and against all claims, liabilities,
damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses, including reasonable attorneys'
fees and expenses of investigations, incurred by the other party
as a result of any breach by the other party of any
representation, warranty, covenant or agreement made in this
Agreement. All representations and warranties made by the
parties in this Agreement shall survive the execution of this
Agreement.
6. The parties shall pay their own expenses incident to the
negotiation, preparation, execution and performance of the terms
of this Agreement. Each party agrees to execute and deliver such
other agreements, assurances, instruments and documents at any
time as may be reasonably requested by the other party and which
are necessary or desirable to consummate the transaction
contemplated by this Agreement. The terms of this Agreement
shall be binding upon and inure to the benefit of, and shall be
enforceable by, the successors and assigns of the parties hereto.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Oklahoma. This Agreement
constitutes the entire agreement between the parties, and there
are no agreements, understandings, restrictions, warranties or
representation between the parties other than those set forth,
referenced, or contemplated herein. This Agreement may be
amended only by an instrument in writing signed by all parties
hereto. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which taken
together shall be deemed one instrument, but it shall not be
effective until all parties have executed at least one
counterpart. Whenever a work is used herein in the singular, the
same shall include the plural, where appropriate, and the words
of one gender shall include the other gender, where appropriate.
IN WITNESS WHEREOF, the parties have executed this Agreement
to be effective as the date first above written.
/s/Jeffrey E. Butler, Sr.
/s/John D. Garber
Agreed to:
THE AMERICAN EDUCATION CORPORATION
By: /s/Jeffrey E. Butler, Sr.
Chief Executive Officer
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
DATED: December 4, 1998
/s/John D. Garber
