Cause of the problem in using PHP version 5.3
The solution is quite easy, although it will have to rewrite slightly module imageapi. To do this, open the folder with the module and open the file in the editor imagecache_canvasactions.module. Search code:
<?php
function imageapi_gd_image_overlay(&$image, &$layer, $x, $y, $alpha = 100, $reverse = FALSE) {
...
?>
Replace to:
<?php
function imageapi_gd_image_overlay(&$image, $layer, $x, $y, $alpha = 100, $reverse = FALSE) {
...
?>
