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
Jeffrey E. Butler, Sr.
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
1,423,375 (consisting of 1,011,375
shares and options to purchase 412,000
shares exercisable within 60 days)
Shares 8. Shared Voting Power
Beneficially 0
Owned by Each 9. Sole Dispositive Power
With 1,423,375 (consisting of 1,011,375
Shares and options for 412,000 shares
exercisable within 60 days)
10. Shared Dispositive Power
0
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,423,375 (consisting of 1,011,375 shares and options for 412,000
shares exercisable within 60 days)
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares [X]
Excludes 333,919 shares held by or for the benefit of the
reporting person's son. The reporting person disclaims beneficial
ownership of these shares.
13. Percent of Class Represented by Amount in Row (11)
9.3%
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 Jeffrey E.
Butler in the Common Stock, $0.025 par value (the "Common Stock")
of The American Education Corporation, (the "Issuer") has
increased from 6.9% to 9.3%.
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 as of September 30, 1998,
Mr. Butler converted the outstanding principal balance
of a promissory note executed by the Issuer in favor of
John D. Garber into 371,471 shares of Common Stock. See
item 6 for further details of the transaction.
Item 4. Purpose of Transaction.
There is no change to Mr. Butler'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. Butler is 1,423,375 or approximately
9.3%. This amount does not include 333,919 shares beneficially
owned individually by Mr. Butler's son who also employed by the Issuer.
The reporting person disclaims beneficial ownership of the shares
beneficially owned by his son.
(b) Mr. Butler has the sole power to vote and to dispose of
1,011,375 shares of the Issuer and the sole power to dispose of
the 412,000 options.
(c) Effective as of September 30, 1998, Mr. Butler acquired
371,471
shares of the Common Stock of the Issuer. These shares were
acquired as the result of the conversion of a promissory note
in the principal amount of $50,000, executed by the Issuer in
favor of Mr. Garber. See item 6 for further details of this
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 under such note
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. Butler and Mr. Garber converted their
respective amounts owed by the Issuer into Common Stock of
the Issuer. The $50,000 owed to Mr. Butler converted into
371,471 shares of Common Stock and the $11,750 owed to
Mr. Garber converted into 87,296 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 Jeffrey E. Butler.
CONVERSION AGREEMENT
This Conversion Agreement ("Agreement") is entered into
effective as of the 30th day of September, 1998, by and
between Jeffrey E. Butler, Sr., a resident of Oklahoma (the
"Noteholder"), and The American Education Corporation, a Colorado
corporation ("AEC").
WHEREAS, AEC has issued to John D. Garber ("Garber") one or
more 12% Convertible Notes pursuant to which Garber (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 Garber 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, Garber has transferred and assigned to the
Noteholder all of Garber's rights under such 12% Convertible
Notes with respect to the $50,000 of principal owed;
WHEREAS, the Noteholder desires to convert all the principal
amount 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 partially assigned to the
Noteholder by Garber (collectively, the "Notes"), including all
amounts owed with respect thereto, which represents all of the
indebtedness of AEC to the Noteholder. The Notes are surrendered
to AEC for cancellation in exchange for 371,471 shares of the
Common Stock. The parties agree that, as set forth in of 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 Jeffrey E. Butler, Sr.
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
his rights in 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 his rights in 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.
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/Jeffrey E. Butler, Sr.
"AEC"
THE AMERICAN EDUCATION CORPORATION,
a Colorado corporation
By: /s/Jeffrey E. Butler, Sr., President
AGREED TO:
/s/John D. Garber
Agreement, dated as of September 30, 1998 among 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/Jeffery E. Butler
