WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT

     THIS WAIVER AND SECOND  AMENDMENT TO AMENDED AND RESTATED CREDIT  AGREEMENT
("Waiver and Amendment"), dated as of December 18 , 1996, is entered into by and
between FILENET  CORPORATION (the "Borrower") and BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (the "Bank").

                                    RECITALS

     A. The Bank and the Borrower are parties to an Amended and Restated  Credit
Agreement  (Multicurrency)  dated as of August  8,1995,  effective  as of May 1,
1995,  as amended by that Waiver and Amendment to Credit  Agreement  dated as of
July 11, 1996 (as so amended,  the  "Credit  Agreement"),  pursuant to which the
Bank has extended certain credit facilities to the Borrower.

     B. The  Borrower  has  reported  to the Bank the  existence  of an Event of
Default under the Credit  Agreement.  The Borrower has  requested  that the Bank
waive such Event of Default and agree to an amendment to the Credit Agreement.

     C. The Bank is willing  to waive  such  Event of  Default  under the Credit
Agreement,  and  to  amend  the  Credit  Agreement,  subject  to the  terms  and
conditions of this Waiver and Amendment.

     NOW,  THEREFORE,  for valuable  consideration,  the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:

     1. Defined Terms.  Unless otherwise defined herein,  capitalized terms used
herein  shall  have  the  meanings,  if any,  assigned  to  them  in the  Credit
Agreement.

     2. Default and Waiver.

          (a) For purposes of this Waiver and Amendment,  the "Existing Default"
     shall mean the Event of Default existing on this date under Section 8.01(c)
     of the  Credit  Agreement  as a  consequence  of a breach  of the  negative
     covenant set forth at Section 7.13 of the Credit  Agreement  solely for the
     quarter ended September 30, 1996.

          (b)  Subject  to and upon the terms and  conditions  hereof,  the Bank
     hereby waives the Existing Default.

          (c) Nothing contained herein shall be deemed a waiver of (or otherwise
     affect  the  Bank's  ability  to  enforce)  any other  default  or Event of
     Default,  including without  limitation (i) any default or Event of Default
     as may now or hereafter exist and arise from or otherwise be related to

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     the  Existing  Default  (including  without  limitation  any  cross-default
     arising under the Credit Agreement by virtue of any matters  resulting from
     the Existing Default),  and (ii) any default or Event of Default arising at
     any time  after the  Effective  Date and which is the same as the  Existing
     Default.

     3. Amendments to Credit Agreement.

     (a) Section 7.13 of the Credit  Agreement  shall be amended and restated in
its entirety so as to read as follows:

     "7.13  Tangible Net Worth.  The Borrower  shall not permit at any time on a
     consolidated basis its Tangible Net Worth to be less than $115,000,000 plus
     the sum of (i) 75% of net income after income  taxes  (without  subtracting
     losses)  earned  in  each  quarterly  accounting  period  commencing  after
     September 30, 1996, (ii) the net proceeds from any equity securities issued
     after  September 30, 1996, and (iii) any increase in  stockholders'  equity
     resulting from the conversion of debt securities to equity securities after
     September 30, 1996."

          (b)  Schedule 2 to the  Compliance  Certificate  shall be amended  and
     restated in its entirety so as to read as in the schedule  attached  hereto
     as Schedule 2.

     4.  Representations  and  Warranties.  The Borrower  hereby  represents and
warrants to the Bank as follows:

          (a) Other than the  Existing  Default,  no Default or Event of Default
     has occurred and is continuing.

          (b) The  execution,  delivery and  performance by the Borrower of this
     Waiver and Amendment have been duly  authorized by all necessary  corporate
     and other  action and do not and will not  require any  registration  with,
     consent or approval of, notice to or action by, any person  (including  any
     governmental  authority)  in order to be  effective  and  enforceable.  The
     Credit  Agreement as amended by this Waiver and Amendment  constitutes  the
     legal, valid and binding  obligations of the Borrower,  enforceable against
     it in accordance with its respective terms.  without defense,  counterclaim
     or offset.

          (c)  Subject  to  the  Existing  Default,   all   representations  and
     warranties of the Borrower  contained in the Credit  Agreement are true and
     correct.

          (d) The  Borrower is entering  into this Waiver and  Amendment  on the
     basis of its own  investigation  and for its own reasons,  without reliance
     upon the Bank or any other person.

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<PAGE>

     5. Effective  Date.  This Waiver and Amendment will become  effective as of
the date first above written (the "Effective  Date"),  provided that each of the
following conditions precedent are satisfied.

          (a) The Bank has received from the Borrower a duly  executed  original
     (or, if elected by the Bank, an executed facsimile copy) of this Waiver and
     Amendment; and

          (b) All representations  and warranties  contained herein are true and
     correct as of the Effective Date.

     6. Reservation of Rights. The Borrower acknowledges and agrees that neither
the Bank's  forbearance in exercising its rights and remedies in connection with
the Existing Default,  nor the execution and delivery by the Bank of this Waiver
and  Amendment,  shall be deemed (i) to create a course of dealing or  otherwise
obligate  the Bank to  forbear  or  execute  similar  waivers  under the same or
similar circumstances in the future, or (ii) to waive,  relinquish or impair any
right of the Bank to receive any indemnity or similar payment from any person or
entity  as a result of any  matter  arising  from or  relating  to the  Existing
Default.

     7. Miscellaneous.

          (a)  Except as herein  expressly  amended,  all terms,  covenants  and
     provisions  of the Credit  Agreement are and shall remain in full force and
     effect and all references therein to such Credit Agreement shall henceforth
     refer to the Credit Agreement as amended by this Waiver and Amendment. This
     Waiver and Amendment shall be deemed  incorporated into, and a part of, the
     Credit Agreement.

          (b) This Waiver and  Amendment  shall be binding upon and inure to the
     benefit of the parties hereto and thereto and their  respective  successors
     and assigns.  No third party  beneficiaries are intended in connection with
     this Waiver and Amendment.

          (c) This Waiver and  Amendment  shall be governed by and  construed in
     accordance with the law of the State of California.

          (d) This  Waiver  and  Amendment  may be  executed  in any  number  of
     counterparts,  each of which  shall be  deemed  an  original,  but all such
     counterparts  together shall  constitute  but one and the same  instrument.
     Each of the parties hereto understands and agrees that this document


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     (and any other  document  required  herein) may be  delivered  by any party
     thereto either in the form of an executed  original or an executed original
     sent by facsimile transmission to be followed promptly by mailing of a hard
     copy  original,  and that  receipt by the Bank of a  facsimile  transmitted
     document  purportedly  bearing the signature of the Borrower shall bind the
     Borrower,  with the same  force and effect as the  delivery  of a hard copy
     original.  Any  failure  by the  Bank to  receive  the hard  copy  executed
     original of such document  shall not diminish the binding effect of receipt
     of the facsimile  transmitted executed original of such document which hard
     copy page was not received by the Bank.

          (e) This Waiver and  Amendment,  together  with the Credit  Agreement,
     contains  the entire and  exclusive  agreement  of the parties  hereto with
     reference  to the matters  discussed  herein and  therein.  This Waiver and
     Amendment  supersedes  all prior  drafts and  communications  with  respect
     thereto.  This Waiver and Amendment may not be amended except in accordance
     with the provisions of Section 9.05 of the Credit Agreement.

          (f) If any term or  provision  of this Waiver and  Amendment  shall be
     deemed  prohibited by or invalid under any  applicable  law, such provision
     shall be  invalidated  without  affecting the remaining  provisions of this
     Waiver and Amendment or the Credit Agreement, respectively.

          (g) The Borrower  covenants  to pay to or reimburse  the Bank at cost,
     upon demand,  for all reasonable  costs and expenses  (including  allocated
     costs of in-house  counsel)  incurred in connection  with the  development,
     preparation,  negotiation,  execution  and  delivery  of  this  Waiver  and
     Amendment and the administration of the Existing Default.



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<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have executed and delivered  this
Waiver and Amendment as of the date first above written.

                                    FILENET CORDORATION

                                    By:  /s/ Mark S. St. Clare
                                    Typed Name: Mark S. St. Clare
                                    Title: Chief Financial Officer

                                    By:  /s/ William R. Hughes
                                    Typed Name: William R. Hughes
                                    Title: Controller/Chief Accounting Officer




                                    BANK OF AMERICA NATIONAL TRUST
                                    AND SAVINGS ASSOCIATION

                                    By:  /s/ John Cinderey
                                    Typed Name: John Cinderey
                                    Title: Managing Director






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                                            Date:                        , 199
                                            For the fiscal quarter/year
                                            ended                        , 199


                                   SCHEDULE 2
                           to Compliance Certificate


                                             Actual          Required/Permitted
                                             ------          ------------------
1.  Section 7.01(d) Other Bank Borrowings
    by Subsidiaries

    Indebtedness of Subsidiaries for
    borrowed money from other bank                      Not to exceed $5,000,000


2.  Section 7.01(e)  Purchase Money
    Obligations and Section 7.02 purchase
    Money Liens

    Purchase money obligations and
    related liens                                      Not to exceed $10,000,000


3.  Section 7.03  Capital Assets
 
    Obligations for the acquisition of
    fixed or capital assets during
    current fiscal year                                Not to exceed $25,000,000


4.  Section 7.07(d)  Sale and Leaseback
 
    Financing under sale and leaseback
    agreements of fixed or capital assets               Not to exceed $5,000,000






A11 amounts determined on a consolidated basis.

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                                             Actual          Required/Permitted
                                             ------          ------------------

  5.  Section 7.11 Quick Ratio

      A.  (i)   cash
          (ii)  net accounts receivable
          (iii) short-term cash
                investments
          (iv)  investment grade marketable
                securities not classified
                as long- term investments
          (v)   long-term investments in
                compliance with the
                Investment Guidelines (not
                to exceed $25,000.000)

          (i) + (ii) + (iii) + (iv) + (v) =

      B. Current liabilities (including
         all funded and unfunded
         obligations under the credit
         Agreement and other Credit
         Documents, including undrawn
         amounts (or the Equivalent Amount
         thereof) of all letters of credit
         and Bank Guaranties and drawn and
         unreimbursed obligations with
         respect thereto

                A
 =              B                   =                 Not less than 1.75 to 1.00

                                       2


<PAGE>

                                             Actual          Required/Permitted
                                             ------          ------------------

  6. Section 7.l2 Total Liabilities to
     Total Net Worth

     the ratio of

   A. total liabilities (including all
      funded and unfunded obligations
      under the Credit Agreement and
      other Credit Documents. including
      undrawn amounts (or the
      Equivalent Amount thereof) of all
      letters of credit and Bank
      Guaranties and drawn and
      unreimbursed obligations with
      respect thereto

   B. Tangible Net Worth

        the difference of:

         (i) gross book value of
             assets

                 less

        (ii) goodwill, patents, trademarks, trade names,
             organization expense, capitalized software,
             treasury stock, unamortized debt
             discount and expense, deferred charges, and
             other like intangibles, monies due from
             affiliates, officers, directors. or
             shareholders of the Borrower or any of its
             Subsidiaries. and value placed on any leasehold
             (other than leasehold improvements)

                 less

        (iii)applicable reserves

             less


        (iv) all liabilities
             (including accrued and deferred income taxes)

         (i) - (ii) - (iii) - (iv)          =

              A                             =
              B                                    Not greater than 0.75 to 1.00

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<PAGE>

                                             Actual          Required/Permitted
                                             ------          ------------------
   
  7.  Section 7.13 Tangible Net Worth
      Tangible Net Worth (from 6 above)                Not less than the sum of:

                                                    A.$115,000,000  $115,000,000

                                                                plus

                                                    B.75% of net income
                                                      after taxes (with-out
                                                      subtracting losses)for
                                                      each fiscal quarter
                                                      commencing after 9/30/96

                                                                plus

                                                    C.100% of net proceeds
                                                      from the issuance of
                                                      any equity securities
                                                      issued after 9/30/96

                                                                plus

                                                    D.100% of any increase
                                                      in shareholders' equity
                                                      from conversion of debt
                                                      to equity after 9/30/96

                                                    =    A + B + C + D      =


8.  Section 7.24 Consecutive Quarterly
    Losses: Losses in One Quarter

    A. (i)    Net (after tax) income
              (loss) for fiscal quarter
              reported on                          Not in excess of ($5,000,000)
       
       (ii)   Operating income (loss) for
              fiscal quarter reported on           Not in excess of ($5,000.000)

    B. (i)    Net (after tax) income
              (loss) immediately
              preceding fiscal quarter

       (ii)   Net (after tax) income
              (loss) for fiscal quarter          If (i) is a loss, (ii) shall
              reported on                        not be a loss.

    C. (i)    Operating income (loss) for
              the immediately preceding
              fiscal quarter

       (ii)   Operating income (loss) for    If (i) is a loss, (ii) shall not be
              fiscal quarter reported on     a loss.


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