SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
(Amendment No. 7)
Under the Securities Exchange Act of 1934
Imaging Technologies Corporation
--------------------------------
(Name of Issuer)
Common Stock
---------------------------------
(Title of Class of Securities)
45244U-104
----------
(CUSIP Number)
American Industries, Inc.
Suite 106
1750 N.W. Front Avenue
Portland, Oregon 97209
(503) 222-0060
-----------------------------------
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
With a copy to:
Kenneth D. Stephens, Esq.
Tonkon Torp LLP
1600 Pioneer Tower
888 S.W. Fifth Avenue
Portland, Oregon 97204
(503) 802-2008
July 28, 1999
-----------------------------------
(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 that 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 [ ].
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CUSIP No. 45244U-104
1. Name of Reporting Person S.S. or I.R.S. Identification No. of
Above Person
American Industries, Inc.
IRS Identification Number: 93-0331722
2. Check the appropriate box if a member of a group (a) / /
(b) / /
3. SEC USE ONLY
4. Source of Funds
WC, OO
5. Check box if disclosure of legal proceedings is required pursuant
to Items 2(d) or 2(e) / /
6. Citizenship or place of organization
Oregon
7. Sole Voting Power
2,472,099*
8. Shared Voting Power
-0-
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* Includes 150,000 shares that may be acquired by a warrant issued to American
Industries, Inc., dated November 13, 1998; 190,000 shares that may be acquired
by a warrant issued to American Industries, Inc., dated September 17, 1998; and
432,099 shares underlying a Convertible Subordinated Promissory Note issued to
American Industries, Inc., dated September 17, 1998.
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9. Sole Dispositive Power
2,472,099*
10. Shared Dispositive Power
-0-
11. Aggregate amount beneficially owned by each reporting person
2,472,099*
12. Check box if the aggregate amount in row (11) excludes certain
shares / /
13. Percent of class represented by amount in row (11)
12.00% percent*
14. Type of Reporting Person
CO
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* Includes 150,000 shares that may be acquired by a warrant issued to American
Industries, Inc., dated November 13, 1998; 190,000 shares that may be acquired
by a warrant issued to American Industries, Inc., dated September 17, 1998; and
432,099 shares underlying a Convertible Subordinated Promissory Note issued to
American Industries, Inc., dated September 17, 1998.
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This Amendment No. 7 to the Schedule 13D dated July 21, 1998 (the "Original
Schedule 13D"), as amended by Amendment No. 1 dated September 21, 1998, as
amended by Amendment No. 2 dated October 9, 1998, as amended by Amendment No. 3
dated October 9, 1998, as amended by Amendment No. 4 dated December 4, 1998, as
amended by Amendment No. 5 dated January 19, 1999, as amended by Amendment No. 6
dated April 5, 1999, is being filed to amend Items 3, 5 and 7 as follows:
Item 3 of the Schedule 13D is hereby amended in its entirety to read as follows:
"Item 3. Source and Amount of Funds and Other Consideration
- -----------------------------------------------------------
The funds used by American to purchase the shares held by it
were provided from the working capital of American, funds advanced through a
margin account with Black & Company, Inc., One S.W. Columbia Street, Portland,
Oregon 97258, and from advances under a working capital line of credit with U.S.
Bank (NA), 111 S.W. Fifth Avenue, Portland, Oregon 97204 in the ordinary course
of business. The acquisition of 2,000,000 shares on April 5, 1999, was funded by
the conversion of a previously contracted $950,000 Non-Convertible Subordinated
Promissory Note, dated September 17, 1998. As of the date of this report, funds
invested in the subject security by American, not including funds loaned to the
issuer, aggregated $3,870,680.58."
Item 5 of Schedule 13D is hereby amended in its entirety to read as follows:
"Item 5. Interests in Securities of Issuer
- -------------------------------------------
Since the filing of Amendment No. 6 to the Original Schedule 13D,
American has reduced its holdings of the issuer's Common Stock by an aggregate
700,000 shares in transactions effected by a registered broker-dealer on the
Nasdaq Stock Market on dates between June 25, 1999 and August 4, 1999, at prices
ranging from $1.02 per share to $0.6535 per share.
As a result of such divestment, American holds an aggregate of
2,472,099 shares of the issuer's Common Stock, representing approximately 12.00%
of the issuer's outstanding Common Stock, acquired for an aggregate
consideration of $3,870,680.58. Of such shares, 190,000 shares may be acquired
pursuant to the exercise of a warrant, dated September 17, 1998, at $2.025 per
share; 150,000 shares may be acquired pursuant to the exercise of a warrant,
dated November 13, 1998, at $1.28 per share; and 432,099 shares may be acquired
pursuant to a Convertible Subordinated Promissory Note, dated September 17,
1998, at $1.0125 per share. American holds all such shares with sole voting
power and sole dispositive power."
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Item 7. Material to be Filed as Exhibits
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Exhibit 1. Convertible Subordinated Promissory Note dated September 17, 1998.
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: August 6, 1999 AMERICAN INDUSTRIES, INC.
By: /s/ Howard H. Hedinger
-----------------------------
Howard H. Hedinger, Chairman
THIS SUBORDINATED PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER APPLICABLE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED UNDER CIRCUMSTANCES THAT WOULD RESULT IN A
VIOLATION OF THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 OR SUCH
OTHER LAWS.
IMAGING TECHNOLOGIES CORPORATION
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
$437,500.00 September 17, 1998
Imaging Technologies Corporation, a Delaware corporation (the
"Company"), for value received, hereby promises to pay to the order of American
Industries, Inc. (the "Holder"), the principal sum of Four Hundred Thirty Seven
Thousand Five Hundred Dollars ($437,500), together with simple interest on the
unpaid balance from the date hereof until paid in accordance with the terms
hereof at a rate of sixteen percent (16%) per annum, interest to accrue on the
basis of a 365-day year for the number of days actually elapsed. Interest shall
be payable monthly in arrears with the first interest payment due September 30,
1998. Unless otherwise provided in Sections 3 and 4 hereof, both principal and
all outstanding interest shall be due and payable on September 16, 2000 (the
"Maturity Date").
This Promissory Note is issued pursuant to that certain
Subordinated Note Purchase Agreement, dated as of the date hereof (the "Purchase
Agreement"), between the Company and the purchaser listed on Schedule A attached
thereto, and is entitled to the benefits thereof. All terms not otherwise
defined herein shall have the meaning given such terms in the Purchase
Agreement.
Section 1 PAYMENT. All payments made in accordance with this
Promissory Note are to be made in lawful money of the United States of America
at the address of the Holder as indicated on the signature page hereof, or at
such other location as the Holder may designate from time to time by written
notice to the Company.
The Company shall pay all costs and expenses, including
reasonable attorney's fees, for services to collect this Promissory Note,
regardless of whether litigation ensues and, if so, for services prior to trial
or hearing, on trial and in any appeal or appeals therefrom. The Company hereby
waives notice of default, presentment or demand for payment, protest or notice
of nonpayment or dishonor and all other notices or demands relative to this
instrument.
Section 2 PREPAYMENT. The Company, at its option, may at any
time on or after the date hereof, prepay in whole or in part, without penalty,
the principal sum, together with accrued interest to the date of payment,
outstanding under this Promissory Note by giving written notice (the "Prepayment
Notice") to the Holder at least fifteen (15) days prior to the date of such
prepayment (the "Prepayment Date"). The Company shall not prepay any of the
other Subordinated Notes, the non-convertible subordinated promissory note
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issued pursuant to that certain Subordinated Note Purchase Agreement, dated as
of the date hereof between the Company and the purchaser listed on Schedule A
thereto (together with the Subordinated Notes, the "Notes"), or any other
subordinated debt of the same rank as the Notes (the "Other Subordinated Debt")
unless, at the time of such prepayment, the Company pays to the holders of all
of the Notes (including the holder of this Promissory Note) a prepayment in the
same proportionate amount as the prepayment made to the holders of the other
Notes or to the holders of the Other Subordinated Debt (based on the total
amount owed to the holders of the other Notes or to the holders of the Other
Subordinated Debt).
Section 3 ACCELERATION OF MATURITY DATE OF PROMISSORY NOTE.
3.1. GENERAL. Upon the occurrence of an Acceleration Event (as
hereinafter defined), the entire unpaid principal amount, together with the
accrued but unpaid interest thereon, of this Promissory Note shall become
immediately due and payable in cash subject to Section 4 hereof (hereinafter,
the "Acceleration").
3.2. ACCELERATION EVENTS. An "Acceleration Event" shall be
deemed to have occurred upon the earlier of (i) (A) the acquisition by any
person (as such term is defined in Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") of the power to direct the
management and business of the Company, whether by ownership of voting
securities, by contract or by other arrangement; (B) the individuals who, as of
the date of this Promissory Note, are directors of the Company shall cease for
any reason to constitute a majority of the Board of Directors of the Company,
unless the election or appointment, or nomination for election or appointment,
of any new member of the Board of Directors was approved by a vote of a majority
of the Board of Directors, in which event such new member shall, for purposes of
this Promissory Note, be considered as a member of the Board of Directors; (C) a
merger or consolidation involving the Company, if the stockholders of the
Company immediately before such merger or consolidation, do not, as a result of
such merger or consolidation, own, directly or indirectly, more than 50 percent
of the combined voting power or ownership interests of the Company or the entity
resulting from such merger or consolidation; or (D) the dissolution or the
complete or partial liquidation, or the sale or other disposition of all or
substantially all of the assets, of the Company; (ii) the commencement by or
against the Company of any case or proceeding under any bankruptcy,
reorganization, insolvency or moratorium law, or any other law or laws for the
relief of debtors, or the appointment of any receiver, trustee or assignee to
take possession of the properties of the Company; provided, however, that in the
event that such case, proceeding or appointment does not occur with the consent
of the Company, then the Acceleration Event shall be deemed to occur only in the
event that such case, proceeding or appointment is not dismissed within ninety
(90) days of the commencement of such case, proceeding or appointment; (iii) the
liquidation or dissolution of the Company; (iv) the commencement of any lawsuit
or foreclosure proceeding against the Company by the holders of any Senior
Indebtedness (as defined in Section 4); (v) the Company's failure in a material
respect to observe any covenant or obligation binding on it under the Purchase
Agreement or this Promissory Note; (vi) any of the representations and
warranties of the Company contained in Section 3 of the Purchase Agreement being
false or misleading in a material respect on and as of the Closing (as defined
in the Purchase Agreement); (vii) acceleration of the maturity date of any
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Senior Indebtedness resulting from the Company's breach or default thereunder;
or (viii) upon the closing of any equity or convertible debt financing in which
the Company receives net proceeds in excess of $5,000,000.
3.3. SPECIAL LIMITED ACCELERATION. Upon the closing of any
equity or convertible debt financing in which the Company receives net proceeds
in excess of $2,000,000 but less than or equal to $5,000,000, fifty percent
(50%) of the entire unpaid principal amount, together with fifty percent (50%)
of the accrued but unpaid interest thereon, of this Promissory Note, shall
become immediately due and payable in cash subject to Section 4 hereof
(hereinafter, the "Special Limited Acceleration").
3.4. ADDITIONAL INTEREST ON UNPAID AMOUNTS. All amounts due
and owing to Holder hereunder that are not paid by the Company when due shall
accrue additional interest at the rate of two percent (2%) per annum in excess
of the interest rate set forth hereunder, interest to accrue from the date of
such non-payment on the basis of a 365 day year for the number of days actually
elapsed.
Section 4 SUBORDINATION.
4.1 SENIOR INDEBTEDNESS. As used herein, the term "Senior
Indebtedness" shall mean the principal of and unpaid interest on the following
indebtedness of the Company: (i) all secured indebtedness of the Company,
whether now existing or hereinafter incurred, (ii) the principal of any unpaid
interest on any amounts borrowed or to be borrowed from, or owing to, a bank,
trust company, insurance company or other financial institutions regularly
engaged in the business of lending money, or a combination thereof, on an
unsecured basis, whether now existing or hereinafter incurred, and (iii) amounts
owed or to be owed to equipment lessors pursuant to equipment lease lines
approved by the Company's Board of Directors, whether now existing or
hereinafter incurred. In no event (a) will the Senior Indebtedness owing to
Imperial Bank and/or any other financial institution that may lend money to the
Company to replace all or a portion of the debt owed to Imperial Bank exceed
$12,000,000 in the aggregate or (b) will all other Senior Indebtedness exceed
$8,000,000 in the aggregate. The Company shall give notice to the Holder of any
additional Senior Indebtedness incurred after the date hereof within a
reasonable time period after the date such additional Senior Indebtedness is
incurred.
4.2 SUBORDINATION. The Company has agreed and the Holder, by
its acceptance of this Promissory Note, covenants, expressly for the benefit of
the present and future holders of Senior Indebtedness, that the payment of the
principal of and interest on this Promissory Note, and all other obligations of
the Company to pay money to the Holder under this Promissory Note, is expressly
subordinated in right of payment to the prior payment, or provision for payment,
in full of the Senior Indebtedness of the Company in accordance with the
provisions of this Section 4.2. The Company shall not pay, and the Holder shall
not be entitled to receive, other than in connection with the purchase of
securities of the Company through forgiveness of the indebtedness evidenced by
this Promissory Note, any amount in respect of the principal of or interest on
this Promissory Note or any other obligation of the Company to pay money to the
Holder on this Promissory Note upon the occurrence and continuance of any of the
following: (a) with respect to any payment that is contractually due hereunder,
prior to the date on which the payment is contractually due (including, without
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<PAGE>
limitation, any payments which shall become due and payable on the Maturity
Date, in case of an Acceleration Event or in the event of the Special Limited
Acceleration) as provided under this Promissory Note, (b) an event of default
under any agreement evidencing solely the Senior Indebtedness, or (c) an event
of default relating to the payment when due of the principal of or interest on
the Senior Indebtedness. Notwithstanding any other provision of this Promissory
Note or of the Purchase Agreement to the contrary, the foregoing payment
restrictions shall not apply if (i) in the case of an event of default, such
event of default shall have been cured or permitted by the holder(s) of Senior
Indebtedness, (ii) the event of default, or the benefits of the subordination
provisions hereunder, shall have been waived in writing to the Holder by the
holder(s) of the Senior Indebtedness, (iii) the outstanding Senior Indebtedness
shall have been paid in full, or (iv) no event of default has occurred and is
continuing under any of the Senior Indebtedness and the payment is contractually
due (including, without limitation, any payments which shall become due and
payable on the Maturity Date, in case of an Acceleration Event or in the event
of the Special Limited Acceleration) as provided under this Promissory Note.
Section 5 CONVERSION
5.1 OPTION TO CONVERT PROMISSORY NOTE. The Holder shall have
the option, exercisable in the manner set forth in Section 5.3 below prior to
the Maturity Date or earlier payment in full of the entire principal amount and
any accrued but unpaid interest on this Promissory Note, to convert at any time
and from time to time in minimum increments of $100,000 all or any portion of
the principal amount outstanding on this Promissory Note into fully paid and
nonassessable shares of the Company's Common Stock. The number of shares of
Common Stock to be issued upon such conversion shall be equal to the quotient
obtained by dividing (x) the entire principal amount of this Promissory Note by
(y) $2.025 (the "Conversion Price," which is subject to adjustment as provided
in Section 5.2 below).
5.2 ADJUSTMENT TO CONVERSION PRICE. In the event the Company
does not, for any reason by December 31, 1998, reduce its outstanding capital
stock by terminating or otherwise eliminating without the payment of any
significant consideration therefore (other than the settlement of any claims or
the termination of any agreements or relationships) warrants to purchase an
aggregate of 800,000 shares of Common Stock (the "Warrant Reduction Target")
currently held by the individuals and entities set forth on Schedule 1 attached
hereto, then for all or any portion of each 100,000 warrants less than the
Warrant Reduction Target that the Company is not able to terminate or otherwise
eliminate, the Conversion Price with respect to ten percent (10%) of the
outstanding principal amount of this Promissory Note will be reduced to $1.0125;
provided, however, that the Conversion Price with respect to all of the
remaining outstanding principal amount of this Promissory Note shall remain at
$2.025.
5.3 MECHANICS AND EFFECT OF CONVERSION. No fractional shares
of Common Stock will be issued upon any conversion of this Promissory Note. In
lieu of any fractional share to which the Holder would otherwise be entitled,
the Company will pay to the Holder in cash that amount of the unconverted
principal and interest on this Promissory Note. Upon any conversion of this
Promissory Note pursuant to this Section 5, the Holder shall surrender this
Promissory Note, duly endorsed, at the principal offices of the Company or any
transfer agent for the Company. At its expense, the Company will, as soon as
practicable thereafter, issue and deliver to the Holder at such principal
office, a certificate or certificates for the number of shares of Common Stock
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<PAGE>
to which the Holder is entitled upon such conversion, together with the payment
of all accrued but unpaid interest on this Promissory Note and any cash payable
in lieu of any fractional share to which the Holder is entitled upon such
conversion under the terms of this Promissory Note. The conversion will be
deemed effective on the date the Holder surrenders this Promissory Note to the
Company and, from and after such date, the Company will be forever released from
all its obligations and liabilities under this Promissory Note with regard to
the entire principal amount and accrued interest, including without limitation
the obligation to pay such principal amount and accrued interest.
5.4 NOTICES TO HOLDER. In the event of: (i) any taking by the
Company of a record of the holders of the Company's Common Stock for the purpose
of determining the holders thereof who are entitled to receive any dividend
(other than a cash dividend payable out of earned surplus at the same rate as
that of the last such cash dividend theretofore paid) or other distribution, or
any right to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other right; or
(ii) any capital reorganization of the Company, any reclassification or
recapitalization of the Company's Common Stock or any transfer of all or
substantially all of the assets of the Company to any other person, or any
consolidation or merger involving the Company; or (iii) any voluntary or
involuntary dissolution, liquidation or winding-up of the Company; the Company
will mail to the Holder, at least fifteen (15) days prior to any record date or
prior to any date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding-up is expected to
become effective, a notice specifying: (a) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right; and (b) the date
on which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding-up is expected to become effective
and the record date for determining the stockholders entitled to vote thereon,
if any.
Section 6 MISCELLANEOUS.
6.1 TRANSFER OF PROMISSORY NOTE. Except as prohibited or
limited by the terms of the Purchase Agreement, this Promissory Note shall be
transferable or assignable without the prior written consent of the Company. Any
attempted disposition of this Promissory Note (in whole or in part) not in
accordance with the Purchase Agreement shall be void and of no force or effect.
6.2 TITLES AND SUBTITLES. The titles and subtitles used herein
are for convenience only and are not to be considered in construing or
interpreting this Promissory Note.
6.3 NOTICES, ETC. All notices and other communications
required or permitted under this Promissory Note shall be in writing and may be
delivered in person, by facsimile, overnight delivery service or registered or
certified mail, addressed to the Company, or to the Holder at their respective
addresses set forth on the signature pages hereto or at such other address as
the Company or the Holder shall have furnished to the other party in writing.
All notices and other communications shall be effective upon the earlier of
actual receipt thereof by the person to whom notice is directed or (i) in the
case of notices and communications sent by personal delivery or facsimile, one
business day after such notice or communication arrives at the applicable
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address or was successfully sent to the applicable facsimile number, (ii) in the
case of notices and communications sent by overnight delivery service, at noon
(local time) on the second business day following the day such notice or
communication was sent, and (iii) in the case of notices and communications sent
by United States mail, seven days after such notice or communication shall have
been deposited in the United States mail.
6.4 AMENDMENTS AND WAIVERS. Any term of this Promissory Note
may be amended and the observance of any term of this Promissory Note may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holder. Any
amendment or waiver effected in accordance with this Section 6.4 shall be
binding upon the Holder and the Company.
6.5 SEVERABILITY. If any provision of this Promissory Note
shall be determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
6.6 GOVERNING LAW. This Promissory Note shall be governed in
all respects by and construed in accordance with the laws of the State of Oregon
without any regard to conflicts of laws principles. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in Portland, Multnomah County, Oregon, for the adjudication of
any dispute hereunder or in connection herewith, and hereby waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Promissory Note and agrees that such service shall
constitute good and sufficient service of process and notice thereof.
6.7 ENTIRE AGREEMENT. This Promissory Note, together with the
Purchase Agreement, constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
6.8 COUNTERPARTS. This Promissory Note may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
6.9 SUCCESSORS AND ASSIGNS. The provisions hereof shall inure
to the benefit of, and be binding upon, the successors, permitted assigns,
heirs, executors and administrators of the parties to this Promissory Note.
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IN WITNESS WHEREOF, this Promissory Note has been duly
executed and delivered under its corporate seal as of the date first above
written.
IMAGING TECHNOLOGIES CORPORATION
By: /s/ Brian Bonar
---------------------------
Brian Bonar, President and
Chief Executive Officer
Address: 11031 Via Frontera
San Diego, CA 92127
ACKNOWLEDGED AND AGREED TO:
AMERICAN INDUSTRIES, INC.
By: /s/ Howard H. Hedinger
------------------------------
Name: Howard H. Hedinger
------------------------------
Title: President
------------------------------
Address: 1750 NW Front Avenue, Suite 106
Portland, OR 97209
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