The simulated annealing (SA) algorithm based on entropy optimization is a technique of synthesizing distortion-invariant matched filters capable of discriminating very similar images. The synthesis of rotation-invariant filters using modified SA-based filter equations and their tolerance to distortions are studied. The filters are trained with true class images rotated in-plane at 3 degrees intervals between 0 degrees and 360 degrees . A total of seven filters are required over the whole range for both CCD or thermal images. Optical correlation in a hybrid digital-optical correlator results in an unwanted zero-order dc along with two first-order (+/-1) correlation peaks. A chirp function multiplied with the filter separates out the three peaks to three different planes, and only one peak in focus is captured in a camera. The performance of the modified SA-based filter has been studied in comparison to the conventional SA filter as well as with other filters.