LOAN MODIFICATION AGREEMENT

        This Loan  Modification  Agreement  is entered  into as of  October  15,
1999, by and between Optika,  Inc.  (formerly  known as Optika Imaging  Systems,
Inc). ("Borrower") and Silicon Valley Bank ("Bank").

1. DESCRIPTION OF EXISTING  INDEBTEDNESS:  Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents,  a Loan and Security  Agreement,  dated  October 15, 1998,  as may be
amended from time to time, (the "Loan  Agreement").  The Loan Agreement provided
for, among other things,  a Committed  Revolving Line in the original  principal
amount  of  Three  Million  Dollars  ($3,000,000).  Defined  terms  used but not
otherwise defined herein shall have the same meanings as in the Loan Agreement.

Hereinafter,  all  indebtedness  owing by  Borrower to Bank shall be referred to
as the "Indebtedness."

2.  DESCRIPTION OF COLLATERAL AND GUARANTIES.  Repayment of the  Indebtedness is
secured by the  Collateral  as  described in the Loan  Agreement.  Additionally,
Borrower has agreed with Bank not to mortgage,  pledge, hypothecate or otherwise
encumber its  Intellectual  Property,  pursuant to a Negative  Pledge  Agreement
dated October 15, 1998.

Hereinafter,  the  above-described  security documents and guaranties,  together
with  all  other  documents  securing  repayment  of the  Indebtedness  shall be
referred to as the "Security  Documents".  Hereinafter,  the Security Documents,
together with all other documents  evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

3.      DESCRIPTION OF CHANGE IN TERMS.

        A.     Modification(s) to Loan Agreement.

               1.      Sub-section  (ii)  entitled   "Tangible  Net  Worth"  and
                       sub-section (iv) entitled  "Profitability" of Section 6.7
                       entitled "Financial Covenants" are hereby amended to read
                       as follows:

                      (ii)  Tangible  Net  Worth.  A  Tangible  Net  Worth of at
                       least $7,500,000.

                      (iv) Profitability.  Borrower shall achieve  profitability
                       of $1 each  quarter,  except that  Borrower  may suffer 2
                       quarterly losses not to exceed $500,000 in the aggregate.

               2.      The defined term  "Revolving  Maturity Date" as described
                       in Section 13.1 entitled  "Definitions" is hereby amended
                       to read as follows:

                      "Revolving Maturity Date" is October 15, 2000.

4. CONSISTENT  CHANGES.  The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

5. PAYMENT OF LOAN FEE. Borrower shall pay Lender a fee in the amount of Fifteen
Thousand Dollars ($15,000) plus all out-of-pocket expenses.

6. NO DEFENSES OF BORROWER.  Borrower (and each  guarantor  and pledgor  signing
below)  agrees  that,  as of the date  hereof,  it has no  defenses  against the
obligations to pay any amounts under the Indebtedness.

7. CONTINUING VALIDITY.  Borrower (and each guarantor and pledgor signing below)
understands  and agrees that in  modifying  the existing  Indebtedness,  Bank is
relying upon Borrower's  representations,  warranties,  and  agreements,  as set
forth in the Existing Loan Documents.  Except as expressly  modified pursuant to
this Loan  Modification  Agreement,  the terms of the  Existing  Loan  Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification  Agreement in no
way shall obligate Bank to make any future  modifications  to the  Indebtedness.
Nothing in this Loan  Modification  Agreement shall constitute a satisfaction of
the  Indebtedness.  It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker,  endorser, or guarantor will be
released  by  virtue  of this  Loan  Modification  Agreement.  The terms of this
paragraph apply not only to this Loan  Modification  Agreement,  but also to all
subsequent loan modification agreements.

8.  CONDITIONS.  The  effectiveness  of  this  Loan  Modification  Agreement  is
conditioned upon payment of the Loan Fee.


        This  Loan  Modification  Agreement  is  executed  as of the date  first
written above.

BORROWER:                                BANK:

OPTIKA, INC.                             SILICON VALLEY BANK

By:                                      By:
Name:                                    Name:
Title:                                   Title: