CERTIFICATE OF DESIGNATION, POWERS,
                      PREFERENCES AND RIGHTS OF THE SERIES
                                       OF
                                 PREFERRED STOCK
                                       OF
                        IMAGING TECHNOLOGIES CORPORATION
                                TO BE DESIGNATED
                      SERIES E CONVERTIBLE PREFERRED STOCK


         Pursuant to Section 151(g) of the General  Corporation Law of the State
of  Delaware,  we,  the  undersigned,  Brian  Bonar  and  Gerry B.  Berg,  being
respectively the President and the Secretary of Imaging Technologies Corporation
(the  "Company"),  a  corporation  organized  and  existing  under  the  General
Corporation  Law of the State of Delaware,  DO HEREBY CERTIFY that the following
resolution was duly adopted by the Board of Directors of the Company.

         RESOLVED,  that,  pursuant to authority expressly granted to and vested
in the Board of Directors by the provisions of the Certificate of Incorporation,
as amended, the Board of Directors hereby creates a series of Series E Preferred
Stock of the  Company,  par value  $1,000 per share and stated  value $5,000 per
share, to be designated "Series E Convertible Preferred Stock" and to consist of
one  thousand two hundred  fifty  (1,250)  shares,  and hereby fixes the powers,
designations, preferences and relative, participating, optional and other rights
of  the  shares  of  such  series,  and  the  qualifications,   limitations,  or
restrictions  thereof  (in  addition  to  those  provisions  set  forth  in  the
Certificate of the Incorporation, as amended, which are applicable to the Series
E Convertible Preferred Stock), as follows:

         Section 1. Designation,  Amount, Par Value,  Stated Value and Rank. The
series of Preferred stock shall be designated as Series E Convertible  Preferred
Stock (the "Series E Preferred  Stock"),  and the number of shares so designated
shall be 1,250  (which  shall not be subject to increase  without the consent of
the holders of the Series E Preferred Stock ("Holders")). Each share of Series E
Preferred Stock shall have a par value of $1,000 per share and a stated value of
$5,000 per share (the "Stated Value").

         The Series E Preferred Stock shall rank senior to the Junior Securities
(as defined  below) and pari passu with all other series of  preferred  stock of
the Company issued and outstanding on the Original Issue Date (as defined below)
as to distributions and upon liquidation, dissolution or winding up.

         Section 2. Junior  Securities.  So long as any Series E Preferred Stock
shall remain  outstanding,  neither the Company nor any subsidiary thereof shall
redeem, purchase or otherwise acquire otherwise than upon conversion or exchange
directly or indirectly any Junior Securities,  nor shall the Company directly or
indirectly  pay or declare any dividend or make any  distribution  (other than a
dividend  or   distribution   described  in  Section  5)  upon,  nor  shall  any
distribution be made in respect of, any Junior Securities,  nor shall any monies
be set aside for or applied to the  purchase  or  redemption  (through a sinking
fund or otherwise) of any Junior Securities.



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<PAGE>



         Section 3. Voting Rights. The holders of Series E Preferred Stock shall
have the right to vote,  together with the holders of all the outstanding shares
of Common Stock (and the holders of every other class or series entitled to vote
together  with such holders) and not by class,  except as otherwise  required by
Delaware  law,  on all matters on which  holders of Common  Stock shall have the
right to vote.  Each holder of Series E Preferred  Stock shall have the right to
cast one vote for each  whole  share of Common  Stock  into  which each share of
Series E Preferred Stock held by such holder is convertible immediately prior to
the record date for the determination of shareholders entitled to vote (based on
the Per  Share  Market  Value on the date  immediately  preceding  the  Original
Issuance Date).  In addition,  so long as any shares of Series E Preferred Stock
are outstanding,  the Company shall not and shall cause its subsidiaries not to,
without  the  affirmative  vote of the  holders  of 66 2/3% of the shares of the
Series E  Preferred  Stock  then  outstanding,  (a)  amend,  alter or change the
preferences  or rights of any  series or class of capital  stock of the  Company
(including the Series E Preferred Stock) or the  qualifications,  limitations or
restrictions  thereof if such amendment,  alteration or change adversely affects
the powers,  preferences  or rights given to the Series E Preferred  Stock,  (b)
alter or amend this  Certificate  of  Designation,  (c)  authorize or create any
class or series of any class of  capital  stock  ranking as to  distribution  of
assets upon a Liquidation  (as defined in Section 4) or otherwise  senior to the
Series E Preferred Stock, (d) amend its Certificate of Incorporation,  bylaws or
other charter documents so as to affect adversely any rights of any Holders, (e)
increase the  authorized  number of shares of Series E Preferred  Stock,  or (f)
enter into any agreement with respect to the foregoing.

         Section 4. Liquidation. Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary (a "Liquidation"),  the Holders
shall be  entitled  to receive out of the assets of the  Company,  whether  such
assets are  capital or surplus,  for each share of Series E  Preferred  Stock an
amount  equal to the Stated Value before any  distribution  or payment  shall be
made to the holders of any Junior  Securities,  and if the assets of the Company
shall be insufficient to pay in full such amounts,  then the entire assets to be
distributed  to the  holders of Series E Preferred  Stock  shall be  distributed
among the holders of Series E Preferred  Stock and the holders of all securities
ranking pari passu to the Series E Preferred  Stock ratably in  accordance  with
the  respective  amounts  that would be payable  on such  shares if all  amounts
payable  thereon were paid in full. A sale,  conveyance or disposition of all or
substantially  all of the  assets  of the  Company  or the  effectuation  by the
Company of a transaction  or series of related  transactions  in which more than
50% of the voting  power of the Company is disposed  of, or a  consolidation  or
merger of the Company with or into any other  company or companies  shall not be
treated as a  Liquidation,  but instead  shall be subject to the  provisions  of
Section 5(c)(ii). The Company shall mail written notice of any such Liquidation,
not less than 45 days prior to the payment date stated  therein,  to each record
holder of Series E Preferred Stock.

         Section 5.        Conversion.

         (a) (i) Each  share of Series E  Preferred  Stock  held by the  Holders
listed on Schedule A shall be  convertible  into shares of Common Stock (subject
to Section  5(a)(ii)) at the  Conversion  Ratio (as defined in Section 6) at the
option  of such  Holders  in  whole or in part at any time  after  the  Original
Issuance  Date;  provided,  however,  that the number of shares of Common  Stock
issued by the Company to such Holders  shall not exceed the number of shares set
forth  opposite each of the Holders'  names on Schedule A attached  hereto until
the date on which the Company receives

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<PAGE>



Shareholder Approval. Each Holder not listed on Schedule A attached hereto shall
not convert shares of Series E Preferred Stock until the earlier of (i) the date
on which the Company receives Shareholder Approval and (ii) the date which is 65
days  after  the  Original  Issuance  Date.  If  the  Company  does  not  obtain
Shareholder  Approval and on a Conversion Date (as defined below) the Company is
listed for trading on the Nasdaq National  Market,  the New York Stock Exchange,
the American Stock Exchange or the Nasdaq SmallCap Market,  each share of Series
E Preferred  Stock shall be  convertible  in  accordance  with Section  5(a)(ii)
below.  The Holders shall effect  conversions by surrendering the certificate or
certificates representing the shares of Series E Preferred Stock to be converted
to the Company,  together with the form of conversion  notice attached hereto as
Exhibit A (the "Conversion  Notice").  Each Conversion  Notice shall specify the
number of shares of Series E Preferred Stock to be converted.  The date on which
such  conversion  is to be effected  shall be the date the Holder  delivers such
Conversion  Notice by facsimile  (the  "Conversion  Date").  Subject to Sections
5(a)(ii)  and  5(b)  hereof,  each  Conversion  Notice,  once  given,  shall  be
irrevocable.  If the  Holder  is  converting  less  than all  shares of Series E
Preferred Stock  represented by the certificate or certificates  tendered by the
Holder  with the  Conversion  Notice,  or if a  conversion  hereunder  cannot be
effected in full for any  reason,  the Company  shall  promptly  deliver to such
Holder  (in the  manner  and  within  the time  set  forth  in  Section  5(b)) a
certificate for such number of shares as have not been converted.

                  (ii) If on the Conversion  Date  applicable to any conversion,
         (A) the Common Stock is then listed for trading on the Nasdaq  National
         Market, the New York Stock Exchange, the American Stock Exchange or The
         Nasdaq SmallCap Market, (B) the Conversion Price then in effect is such
         that the aggregate  number of shares of Common Stock that would then be
         issuable  upon  conversion  of  all  outstanding  shares  of  Series  E
         Preferred  Stock,  together with any shares of Common Stock  previously
         issued  upon  conversion  of Series E Preferred  Stock,  would equal or
         exceed 20% of the number of shares of Common Stock  outstanding  on the
         Original Issue Date (the "Issuable  Maximum"),  and (C) the Company has
         not  previously  obtained (or attempted  pursuant to clause (1) of this
         subsection  to obtain)  Shareholder  Approval,  then the Company  shall
         issue to any  Holder so  requesting  conversion  of Series E  Preferred
         Stock its pro rata portion of the Issuable  Maximum less the  aggregate
         number  of shares of Common  Stock  set forth on  Schedule  A  attached
         hereto  in the same  ratio  that  the  number  of  shares  of  Series E
         Preferred Stock held by any such Holder bears to all shares of Series E
         Preferred  Stock then  outstanding  and,  with respect to any shares of
         Common Stock that otherwise  would have been issuable to such Holder in
         respect  of the  Conversion  Notice at issue in excess of the  Issuable
         Maximum,  the Company shall at the Holder's request, (1) as promptly as
         possible but in no event later than 65 days after such Conversion Date,
         convene a meeting of the  holders of the Common  Stock and use its best
         efforts to obtain the Shareholder Approval or a waiver of such approval
         from The Nasdaq Stock Market or the  appropriate  exchange,  and (2) as
         promptly as possible from time to time,  after a written request by the
         Holder, issue shares of Common Stock at a Conversion Price equal to the
         Per Share Market  Value on the Trading Day  immediately  preceding  the
         date of such  request  for all or a portion  of the  shares of Series E
         Preferred Stock held by such Holder as would cause the number of shares
         of Common Stock  issuable  upon such  conversion to exceed the Issuable
         Maximum. "Shareholder Approval" means the approval by a majority of the
         total votes cast on the proposal,  in person or by proxy,  at a meeting
         of  the  shareholders  of the  Company  held  in  accordance  with  the
         Company's Certificate of Incorporation and

                                        3

<PAGE>



         bylaws,  of the  issuance  by the  Company  of shares  of Common  Stock
         exceeding the Issuable  Maximum as a consequence  of the  conversion of
         Series E  Preferred  Stock into  Common  Stock at a price less than the
         greater of the book or market value on the  Original  Issue Date as and
         to the extent  required  pursuant to Rule  4460(i) of The Nasdaq  Stock
         Market,  Inc.'s  Marketplace  Rules (or any  successor  or  replacement
         provision thereof).

         (b) (i) Not later than  three (3)  Trading  Days  after any  Conversion
Date, the Company will deliver to the applicable Holder by express courier (A) a
certificate  or  certificates  which  shall be free of  restrictive  legends and
trading  restrictions  (other  than  those  required  by  Section  3.1(b) of the
Purchase  Agreement)  representing  the number of shares of Common  Stock  being
acquired upon the  conversion of shares of Series E Preferred  Stock (subject to
reduction  pursuant  to  Section  5(a)(ii))),  and (B) one or more  certificates
representing the number of shares of Series E Preferred Stock not converted.  If
in the case of any Conversion  Notice such  certificate or certificates  are not
delivered to or as directed by the  applicable  Holder by the third  Trading Day
after the Conversion Date (the "Delivery Date"), the holder shall be entitled by
written  notice to the  Company  at any time on or before  its  receipt  of such
certificate or certificates  thereafter,  to rescind such  conversion,  in which
event the Company shall  immediately  return the  certificates  representing the
shares of Series E  Preferred  Stock  tendered  for  conversion,  whereupon  the
Company  and the Holder  shall each be restored  to their  respective  positions
immediately prior to the delivery of such notice of revocation,  except that any
amounts  described in Sections  5(b)(ii) and (iii) shall be payable  through the
date notice of rescission is given to the Company.

                  (ii) The Company  understands  that a delay in the delivery of
         the  shares  of  Common  Stock  upon  conversion  of shares of Series E
         Preferred Stock and failure to deliver  certificates  representing  the
         unconverted shares of Series E Preferred Stock beyond the Delivery Date
         could result in economic  loss to the Holder.  If the Company  fails to
         deliver to the Holder such certificate or certificates pursuant to this
         Section  hereunder by the Delivery  Date, the Company shall pay to such
         Holder,  in cash,  an amount per Trading Day for each Trading Day until
         such certificates are delivered,  together with interest on such amount
         at a rate of 15% per annum,  accruing until such amount and any accrued
         interest  thereon is paid in full,  equal to (i) 1% of the Stated Value
         of the shares of Series E Preferred Stock requested to be converted for
         each of the first five Trading Days after the Delivery Date and (ii) 2%
         of the Stated Value of the shares of Series E Preferred Stock requested
         to be converted for each Trading Day thereafter (which amounts shall be
         paid as liquidated damages and not as a penalty).  Nothing herein shall
         limit a  Holder's  right to pursue  actual  damages  for the  Company's
         failure to deliver  certificates  representing  shares of Common  Stock
         upon conversion within the period specified herein (including,  without
         limitation,  damages relating to any purchase of shares of Common Stock
         by such Holder to make delivery on a sale effected in  anticipation  of
         receiving  certificates   representing  shares  of  Common  Stock  upon
         conversion,  as provided in Section 5(b)(iii)  below),  and such Holder
         shall have the right to pursue all  remedies  available to it at law or
         in  equity  (including,   without  limitation,  a  decree  of  specific
         performance and/or injunctive relief).

                  (iii) In addition to any other rights available to the Holder,
         if the  Company  fails to  deliver to the Holder  such  certificate  or
         certificates  pursuant to Section  5(b)(i) by the Delivery  Date and if
         after  the  Delivery  Date  the  Holder  purchases  (in an open  market
         transaction or

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<PAGE>



         otherwise)  shares of Common Stock to deliver in satisfaction of a sale
         by such Holder of the  Underlying  Shares (as defined  below) which the
         Holder  anticipated  receiving upon such conversion (a "Buy-In"),  then
         the  Company  shall  pay in  cash to the  Holder  (in  addition  to any
         remedies available to or elected by the Holder) the amount by which (A)
         the Holder's total purchase price (including brokerage commissions,  if
         any) for the  shares  of  Common  Stock so  purchased  exceeds  (B) the
         aggregate  Stated  Value of the shares of Series E Preferred  Stock for
         which such  conversion was not timely  honored,  together with interest
         thereon at a rate of 15% per annum,  accruing until such amount and any
         accrued interest thereon is paid in full (which amount shall be paid as
         liquidated  damages and not as a penalty).  For example,  if the Holder
         purchases  shares  of Common  Stock  having a total  purchase  price of
         $11,000 to cover a Buy-In with  respect to an attempted  conversion  of
         $10,000  aggregate  Stated  Value of the  shares of Series E  Preferred
         Stock,  the Company  shall be required to pay the Holder  $1,000,  plus
         interest.   The  Holder  shall  provide  the  Company   written  notice
         indicating the amounts payable to the Holder in respect of the Buy-In.

         (c) (i) The conversion price for each share of Series E Preferred Stock
(the "Conversion Price") in effect on any Conversion Date shall be the lesser of
(A) $.50 and (B) an amount  equal to 70% of the average Per Share  Market  Value
for the three  Trading  Days having the lowest Per Share Market Value during the
thirty  Trading  Days prior to the  Conversion  Date,  except that if during any
period (a "Black-out Period"), a Holder is unable to sell shares of Common Stock
issued or issuable upon conversion of Series E Preferred  Stock  immediately due
to the  postponement  of filing or delay or  suspension  of  effectiveness  of a
registration statement or because the Company has otherwise informed such Holder
that an existing  prospectus cannot be used at that time in the sale or transfer
of such Common Stock,  such Holder shall have the option but not the  obligation
on any  Conversion  Date within ten Trading Days following the expiration of the
Black-out  Period of using the Conversion  Price  applicable on such  Conversion
Date or any  Conversion  Price  selected  by such  Holder  that  would have been
applicable  had  such  Conversion  Date  been at any  earlier  time  during  the
Black-out Period or within the ten Trading Days thereafter.

                  (ii) In case the Company  after the Original  Issue Date shall
          do any of the following  (each, a "Triggering  Event") (a) consolidate
          with or merge into any other  Person and the Company  shall not be the
          continuing or surviving  corporation of such  consolidation or merger,
          or (b) permit any other Person to  consolidate  with or merge into the
          Company and the Company shall be the  continuing  or surviving  Person
          but, in  connection  with such  consolidation  or merger,  any capital
          stock of the Company shall be changed into or exchanged for securities
          of any other Person or cash or any other property, or (c) transfer all
          or substantially  all of its properties or assets to any other Person,
          or (d)  effect a capital  reorganization  or  reclassification  of its
          capital  stock,  the  holders  of the  Series E  Preferred  Stock then
          outstanding  shall have the right  thereafter  to convert  such shares
          only into the shares of stock and other securities,  cash and property
          receivable  upon or  deemed  to be held by  holders  of  Common  Stock
          following  such  Triggering  Event,  and the  holders  of the Series E
          Preferred  Stock  shall be  entitled  upon such event to receive  such
          amount of  securities,  cash or  property  as the shares of the Common
          Stock of the  Company  into  which such  shares of Series E  Preferred
          Stock could have been converted  immediately  prior to such Triggering
          Event would have been entitled. The terms of any such Triggering Event
          shall  include  such terms so as to  continue to give to the holder of
          Series E Preferred Stock the right to receive

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<PAGE>



          the  securities,  cash or property set forth in this Section  5(c)(ii)
          upon any conversion  following such Triggering  Event.  This provision
          shall similarly apply to successive Triggering Events.

                  (iii) If:

                           A.   the  Company  shall  declare a dividend  (or any
                                other distribution) on its Common Stock; or

                           B.   the Company shall declare a special nonrecurring
                                cash  dividend on or a redemption  of its Common
                                Stock; or

                           C.   the Company shall  authorize the granting to all
                                holders of the Common  Stock  rights or warrants
                                to  subscribe  for or  purchase  any  shares  of
                                capital stock of any class or of any rights; or

                           D.   the approval of any  shareholders of the Company
                                shall  be  required  in   connection   with  any
                                Triggering Event; or

                           E.   the Company  shall  authorize  the  voluntary or
                                involuntary dissolution,  liquidation or winding
                                up of the affairs of the Company;

         then the  Company  shall  cause to be filed at each  office  or  agency
         maintained  for the purpose of conversion of Series E Preferred  Stock,
         and shall cause to be mailed to the Holders of Series E Preferred Stock
         at their last  addresses  as they shall  appear upon the stock books of
         the Company,  at least 30 calendar days prior to the applicable  record
         or effective  date  hereinafter  specified (but not prior to the public
         announcement  thereof), a notice stating (x) the date on which a record
         is  to be  taken  for  the  purpose  of  such  dividend,  distribution,
         redemption,  rights or warrants, or if a record is not to be taken, the
         date as of which the  holders of Common  Stock of record to be entitled
         to such dividend, distributions,  redemption, rights or warrants are to
         be  determined  or  (y)  the  date  on  which  such   reclassification,
         consolidation,  merger, sale, transfer or share exchange is expected to
         become effective or close, and the date as of which it is expected that
         holders of Common Stock of record  shall be entitled to exchange  their
         shares  of  Common  Stock  for  securities,   cash  or  other  property
         deliverable upon such  reclassification,  consolidation,  merger, sale,
         transfer or share exchange; provided, however, that the failure to mail
         such notice or any defect  therein or in the mailing  thereof shall not
         affect the validity of the corporate action required to be specified in
         such  notice.  Holders  are  entitled  to  convert  shares  of Series E
         Preferred  Stock during the 30-day period  commencing  the date of such
         notice to the effective date of the event triggering such notice.

                  (iv)   Notwithstanding   anything  to  the  contrary  in  this
         Certificate of Designation, if a holder of shares of Series E Preferred
         Stock  notifies  the  Company  in  writing  on the first date that such
         holder  receives shares of Series E Preferred Stock that the provisions
         of this  Section  5(c)(iv)  shall  apply  to the  shares  of  Series  E
         Preferred  Stock held by such  holder and  transferees  of such  shares
         (collectively a "5(c)(iv) Holder"), no 5(c)(iv) Holder

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<PAGE>



         shall have the right to convert any shares of Series E Preferred  Stock
         to the extent that after giving effect to such conversion such 5(c)(iv)
         Holder  (together  with such 5(c)(iv)  Holder's  affiliates)  (A) would
         beneficially  own in excess of 10.00% of the outstanding  shares of the
         Common Stock  following  such  conversion  or (B) would have  acquired,
         through  conversion of shares of Series E Preferred Stock or otherwise,
         beneficial  ownership of a number of shares of Common Stock which, when
         added to the number of shares of Common Stock beneficially owned at the
         beginning  of the 60-day  period  ending on and  including  the date of
         conversion of such shares of Series E Preferred  Stock, is in excess of
         10.00% of the  outstanding  shares of the Common Stock  following  such
         conversion  during  the  60-day  period  ending on and  including  such
         conversion date. For purposes of the foregoing sentence,  the number of
         shares of Common Stock  beneficially owned by a 5(c)(iv) Holder and its
         affiliates  shall include the number of shares of Common Stock issuable
         upon  conversion of the shares of Series E Preferred Stock with respect
         to which the  determination  of such sentence is being made,  but shall
         exclude  the number of shares of Common  Stock  which would be issuable
         upon (i) conversion of the remaining,  nonconverted  shares of Series E
         Preferred  Stock  beneficially  owned by such  5(c)(iv)  Holder and its
         affiliates  and (ii)  conversion  or  exercise  of the  unconverted  or
         unexercised  portion of any other securities of the Company (including,
         without  limitation,  warrants)  beneficially  owned  by such  5(c)(iv)
         Holder and its  affiliates  subject to a limitation  on  conversion  or
         exercise  analogous  to  the  limitation   contained  in  this  Section
         5(c)(iv).  Except as set forth in the preceding sentence,  for purposes
         of this Section 5(c)(iv),  beneficial  ownership shall be calculated in
         accordance  with Section 13(d) of the Securities  Exchange Act of 1934,
         as amended.  Notwithstanding anything to the contrary contained herein,
         each  conversion   notice   delivered  by  the  5(c)(iv)  Holder  shall
         constitute a  representation  by the 5(c)(iv)  Holder  submitting  such
         conversion notice that, after giving effect to such conversion  notice,
         (A) the 5(c)(iv)  Holder will not  beneficially  own (as  determined in
         accordance  with  this  Section  5(c)(iv))  in  excess  of  10%  of the
         outstanding shares of Common Stock and (B) the 5(c)(iv) Holder will not
         have acquired, through conversion of shares of Series E Preferred Stock
         or  otherwise,  beneficial  ownership  of a number  of shares of Common
         Stock  which,  when  added to the  number of  shares  of  Common  Stock
         beneficially  owned at the beginning of the 60-day period ending on and
         including  such  conversion  date,  is  in  excess  of  10.00%  of  the
         outstanding  shares of  Common  Stock.  For  purposes  of this  Section
         5(c)(iv),  in determining the number of outstanding shares Common Stock
         a  5(c)(iv)  Holder  may rely on the  number of  outstanding  shares of
         Common Stock as reflected in (1) the Company's most recent Form 10-Q or
         Form 10-K, as the case may be, (2) a more recent public announcement by
         the  Company or (3) any other  notice by the  Company  or its  transfer
         agent setting  forth the number of shares of Common Stock  outstanding.
         For any  reason at any time,  upon the  written  or oral  request  of a
         5(c)(iv) Holder,  the Company shall  immediately  confirm orally and in
         writing to any such  5(c)(iv)  Holder the number of shares Common Stock
         then  outstanding.  In any case,  the number of  outstanding  shares of
         Common Stock shall be determined  after giving effect to conversions of
         shares of Series E Preferred  Stock by such  5(c)(iv)  Holder since the
         date as of which such number of outstanding  shares of Common Stock was
         reported.


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<PAGE>



         (d) The Company  covenants  that it will at all times  reserve and keep
available out of its authorized and unissued Common Stock solely for the purpose
of issuance  upon  conversion of Series E Preferred  Stock free from  preemptive
rights or any other actual contingent  purchase rights of Persons other than the
holders  of Series E  Preferred  Stock,  not less than such  number of shares of
Common Stock as shall (subject to any additional  requirements of the Company as
to reservation  of such shares set forth in the Purchase  Agreement) be issuable
(taking into account the adjustments and  restrictions of Section 5(c)) upon the
conversion of all outstanding  shares of Series E Preferred  Stock.  The initial
number of shares of Common  Stock  reserved  for  conversions  of the  shares of
Series E Preferred  Stock and each  increase in the number of shares so reserved
shall be  allocated  pro rata  among  the  holders  of the  shares  of  Series E
Preferred  Stock based on the number of shares of Series E Preferred  Stock held
by each holder at the time of issuance of the shares of Series E Preferred Stock
or increase in the number of reserved shares, as the case may be. In the event a
holder shall sell or otherwise  transfer any of such holder's shares of Series E
Preferred  Stock,  each transferee  shall be allocated a pro rata portion of the
number of reserved  shares of Common  Stock  reserved for such  transferor.  Any
shares of Common Stock reserved and allocated to any person which ceases to hold
any shares of Series E  Preferred  Stock  shall be  allocated  to the  remaining
holders of shares of Series E Preferred  Stock,  pro rata based on the number of
shares of  Series E  Preferred  Stock  then held by such  holders.  The  Company
covenants that all shares of Common Stock that shall be so issuable shall,  upon
issue, be duly and validly authorized,  issued and fully paid, nonassessable and
freely tradable.

         (e) Upon a conversion  hereunder  the Company  shall not be required to
issue stock certificates  representing  fractions of shares of Common Stock, but
may if otherwise permitted, make a cash payment in respect of any final fraction
of a share  based on the Per Share  Market  Value at such time.  If the  Company
elects not, or is unable, to make such a cash payment,  the holder of a share of
Series E Preferred  Stock  shall be  entitled  to receive,  in lieu of the final
fraction of a share, one whole share of Common Stock.

         (f) The  issuance  of  certificates  for  shares  of  Common  Stock  on
conversion  of Series E  Preferred  Stock  shall be made  without  charge to the
holders thereof for any  documentary  stamp or similar taxes that may be payable
in respect of the issue or delivery of such certificate.

         (g) Shares of Series E Preferred  Stock  converted  into  Common  Stock
shall be canceled and shall have the status of authorized but unissued shares of
undesignated preferred stock.

         (h) Any and all notices or other  communications  or  deliveries  to be
provided by the holders of the Series E Preferred  Stock  hereunder,  including,
without  limitation,  any Conversion  Notice,  shall be in writing and delivered
personally,  by facsimile or sent by a nationally  recognized  overnight courier
service, addressed to the attention of the President and to the Secretary of the
Company at the facsimile  telephone  number or address of the principal place of
business  of the  Company as set forth in the  Purchase  Agreement.  Any and all
notices or other  communications  or  deliveries  to be  provided by the Company
hereunder shall be in writing and delivered personally,  by facsimile or sent by
a nationally  recognized overnight courier service,  addressed to each Holder of
Series E Preferred  Stock at the facsimile  telephone  number or address of such
holder appearing on the books of the Company,  or if no such facsimile telephone
number or address appears, at the principal place of business of the Holder. Any
notice or other communication or deliveries hereunder

                                        8

<PAGE>



shall  be  deemed  given  and  effective  on the  earlier  of (i)  the  date  of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  telephone  number  specified in this Section prior to 5:00 p.m.,  San
Diego  time,  (ii) the date after the date of  transmission,  if such  notice or
communication  is delivered  via  facsimile at the  facsimile  telephone  number
specified in this Section later than 5:00 p.m.,  San Diego time, on any date and
earlier than 11:59 p.m., San Diego time, on such date, (iii) receipt, if sent by
a nationally recognized overnight courier service, or (iv) actual receipt by the
party to whom such notice is required to be given.

         (i) In the event a Holder shall elect to convert any shares of Series E
Preferred Stock as provided herein,  the Company cannot refuse  conversion based
on any claim that such  Holder or any one  associated  or  affiliated  with such
Holder has been engaged in any violation of law,  unless,  an injunction  from a
court,  on notice,  restraining  and or adjoining  conversion  of all or of said
shares of Series E Preferred  Stock shall have been issued and the Company posts
a surety  bond for the  benefit of such  Holder in the amount of the  difference
between the  Conversion  Price and the Per Share Market Value on the Trading Day
preceding  the date of the  attempted  conversion  multiplied  by the  number of
shares of Series E  Preferred  Stock  sought to be  converted,  which bond shall
remain in effect until the completion of  arbitration/litigation  of the dispute
and the  proceeds  of which  shall be  payable  to such  Holder  in the event it
obtains judgment.

         Section 6. Definitions.  For  the purposes  hereof, the following terms
shall have the following meanings:

         "Common  Stock" means the common stock,  $.005 par value per share,  of
the Company  and stock of any other  class into which such shares may  hereafter
have been reclassified or changed.

         "Conversion  Ratio"  means,  at any  time,  a  fraction,  of which  the
numerator is Stated Value and of which the  denominator is the Conversion  Price
at such time.

         "Independent Appraiser" means a nationally recognized or major regional
investment  banking firm or firm of independent  certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements  of the  Company)  that  is  regularly  engaged  in the  business  of
appraising  the capital  stock or assets of  corporations  or other  entities as
going  concerns,  and which is not  affiliated  with  either the  Company or any
Holder.

         "Junior  Securities"  means  the  Common  Stock  and all  other  equity
securities of the Company which are junior in rights and liquidation  preference
to the Series E Preferred Stock.

         "NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.

         "Original  Issue Date" shall mean the date of the first issuance of any
shares of the Series E Preferred Stock  regardless of the number of transfers of
any particular  shares of Series E Preferred  Stock and regardless of the number
of certificates which may be issued to evidence such Series E Preferred Stock.


                                        9

<PAGE>



         "Per Share Market Value" means on any  particular  date (a) the closing
bid price  per share of the  Common  Stock on such date on The  Nasdaq  SmallCap
Market,  the Nasdaq National Market or other registered  national stock exchange
on which the  Common  Stock is then  listed or if there is no such price on such
date,  then the closing bid price on such  exchange or  quotation  system on the
date nearest  preceding such date, or (b) if the Common Stock is not listed then
on The Nasdaq  SmallCap  Market,  the Nasdaq  National  Market or any registered
national  stock  exchange,  the closing bid price for a share of Common Stock in
the over-the-counter  market, as reported by NASDAQ or in the National Quotation
Bureau  Incorporated  (or  similar  organization  or  agency  succeeding  to its
functions of reporting  prices) at the close of business on such date, or (c) if
the  Common  Stock  is not  then  reported  by  the  National  Quotation  Bureau
Incorporated (or similar  organization or agency  succeeding to its functions of
reporting prices),  then the average of the "Pink Sheet" quotes for the relevant
conversion  period,  as  determined  in good faith by the Holder,  or (d) if the
Common  Stock is not then  publicly  traded the fair market  value of a share of
Common Stock as determined by an Independent Appraiser selected in good faith by
the  holders of a majority  in  interest of the shares of the Series E Preferred
Stock;  provided,  however, that the Company, after receipt of the determination
by such  Independent  Appraiser,  shall  have the right to select an  additional
Independent  Appraiser,  in which case,  the fair market value shall be equal to
the  average  of the  determinations  by each such  Independent  Appraiser;  and
provided, further that all determinations of the Per Share Market Value shall be
appropriately  adjusted for any stock  dividends,  stock splits or other similar
transactions  during such period.  The  determination of fair market value by an
Independent  Appraiser  shall be based upon the fair market value of the Company
determined  on a going  concern  basis as between a willing  buyer and a willing
seller and taking into account all relevant factors  determinative of value, and
shall be final and binding on all parties.  In determining the fair market value
of  any  shares  of  Common  Stock,  no  consideration  shall  be  given  to any
restrictions  on transfer of the Common Stock imposed by agreement or by federal
or state  securities laws, or to the existence or absence of, or any limitations
on, voting rights.

         "Person"  means  an  individual  or  corporation,  partnership,  trust,
incorporated or  unincorporated  association,  joint venture,  limited liability
company,  joint stock company,  government (or an agency or subdivision thereof)
or other entity of any kind.

         "Purchase Agreement" means the Securities Purchase Agreement,  dated as
of the Original  Issue Date,  among the Company and the original  holders of the
Series E Preferred Stock.

         "Registration   Rights   Agreement"  means  the   Registration   Rights
Agreement, dated as of the Original Issue Date, by and among the Company and the
original Holders.

         "Trading  Day" means (a) a day on which the  Common  Stock is listed on
The Nasdaq  SmallCap  Market,  the Nasdaq  National  Market or other  registered
national stock exchange on which the Common Stock has been listed, or (b) if the
Common Stock is not listed on The Nasdaq  SmallCap  Market,  the Nasdaq National
Market or any  registered  national  stock  exchange,  a day or which the Common
Stock is quoted in the over-the-counter  market, as reported by the OTC Bulletin
Board, or (c) if the Common Stock is not quoted on the OTC Bulletin Board, a day
on which the Common Stock is quoted in the  over-the-counter  market as reported
by the National  Quotation Bureau  Incorporated (or any similar  organization or
agency succeeding its functions of reporting prices); provided, however, that in
the event that the Common Stock is not listed or quoted as set forth in (a),

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<PAGE>



(b) and (c) hereof, then Trading Day shall mean any day except Saturday,  Sunday
and  any  day  which  shall  be a  legal  holiday  or a  day  on  which  banking
institutions  in the State of  California  are  authorized or required by law or
other government action to close.

         "Underlying  Shares"  means the  number of shares of Common  Stock into
which the Shares are  convertible  in  accordance  with the terms hereof and the
Purchase Agreement.

     IN  WITNESS  WHEREOF,  we have  subscribed  this  document  on the date set
opposite  each of our names below and do hereby  affirm,  under the penalties of
perjury,  that the statements contained therein have been examined by us and are
true and correct.



Date: January 28, 1999



                                                  /s/ Brian Bonar  
                                                 -------------------------------
                                               Name:  Brian Bonar
                                               Title:  President


                                                  /s/ Gerry B. Berg  
                                                  ------------------------------
                                               Name:  Gerry B. Berg
                                               Title:  Secretary



                                       11

<PAGE>




                                    EXHIBIT A

                        IMAGING TECHNOLOGIES CORPORATION
                                CONVERSION NOTICE


Reference is made to the  Certificate of  Designation,  Powers,  Preferences and
Rights of the Series of Preferred Stock of Imaging  Technologies  Corporation to
be  Designated  Series  E  Convertible  Preferred  Stock  (the  "Certificate  of
Designation").   In  accordance   with  and  pursuant  to  the   Certificate  of
Designation,  the  undersigned  hereby elects to convert the number of shares of
Series E  Convertible  Preferred  Stock,  par value  $1,000 per share and stated
value  $5,000  per share  (the  "Preferred  Shares"),  of  Imaging  Technologies
Corporation, a Delaware corporation (the "Company"), indicated below into shares
of Common Stock, par value $.005 per share (the "Common Stock"), of the Company,
by tendering the stock  certificates(s)  representing  the share(s) of Preferred
Shares specified below as of the date specified below.

                               Date of Conversion:

                   Number of Preferred Shares to be converted:

          Stock certificate no(s). of Preferred Shares to be converted:

         The Common Stock have been sold pursuant to the Registration  Statement
         (as defined in the  Registration  Rights  Agreement  dated  January 28,
         1999: YES_____ NO_____

Please confirm the following information:

                        Conversion Price: $______________

                 Number of shares of Common Stock to be issued:

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

Please  issue the  Common  Stock  into  which  the  Preferred  Shares  are being
converted  and, if  applicable,  any check drawn on an account of the Company in
the following name and to the following address:

         Issued to: ___________________________________________

         Facsimile Number: ____________________________________

         Authorization: _______________________________________

         By:________________________________________________






                                       12

<PAGE>


         Title: ______________________________________________

         Dated: _____________________________________________

         Account Number: ____________________________________
                          (if electronic book entry transfer)

         Transaction Code Number: _____________________________
                                   (if electronic book entry transfer)


                                 PRICES ATTACHED






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