<PAGE>
                                                                   EXHIBIT 10.22

                             BUSINESS LOAN AGREEMENT

<TABLE>
<CAPTION>
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   PRINCIPAL       LOAN DATE    MATURITY      LOAN NO.     CALL/COLL      ACCOUNT      OFFICER    INITIALS

<S>                <C>          <C>           <C>          <C>            <C>          <C>        <C>
 $5,000,000.00     09-09-02     02-15-04      373376963      2000                        024
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</TABLE>

References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

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BORROWER:    Niku Corporation                  LENDER:    Mid-Peninsula Bank
             305 Main Street                              Palo Alto Main
             Redwood City, CA  94063                      420 Cowper Street
                                                          Palo Alto, CA  94301
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THIS BUSINESS LOAN AGREEMENT DATED SEPTEMBER 9, 2002, IS MADE AND EXECUTED
BETWEEN NIKU CORPORATION ("BORROWER") AND MID-PENINSULA BANK ("LENDER") ON THE
FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED PRIOR COMMERCIAL LOANS
FROM LENDER OR HAS APPLIED TO LENDER FOR A COMMERCIAL LOAN OR LOANS OR OTHER
FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED ON ANY EXHIBIT
OR SCHEDULE ATTACHED TO THIS AGREEMENT. BORROWER UNDERSTANDS AND AGREES THAT:
(A) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN HEREUNDER, LENDER IS RELYING
UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS AS SET FORTH IN THIS
AGREEMENT, AND (B) THE LOAN SHALL BE AND REMAIN SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT.

TERM. This Agreement shall be effective as of September 9, 2002, and shall
continue in full force and effect until such time as the Loan has been paid in
full, including principal, interest, costs, expenses, attorneys' fees, and other
fees and charges, or until such time as the parties may agree in writing to
terminate this Agreement.

CONDITIONS PRECEDENT TO THE LOAN. On the terms and subject to the conditions set
forth in this Agreement, within one business day after the date hereof, Lender
will make a term loan to Borrower in the principal sum of Five Million Dollars
($5,000,000) (the "Loan"). Lender's Loan shall be evidenced by the Note, with
appropriate entries on Lender's records to reflect the outstanding principal
balance owing thereunder following each full or partial repayment thereof, all
interest accruing on such Loan, and all Lender's Expenditures, attorneys' fees
and expenses, and other fees, charges, and other expenses which are then due and
payable as specified in this Agreement or any Related Document. The Loan, all
interest, all Lender's Expenditures and all attorneys' and other fees, charges,
and other expenses which are from time to time due and payable as specified in
this Agreement or any Related Document are and shall be due and payable as set
forth in this Agreement and/or any Related Document. Lender is hereby authorized
and empowered to pay itself for the Loan, any principal installments from time
to time due in connection with the Loan, interest, Lender's Expenditures, and/or
any attorneys' and other fees, charges, and other expenses which are from time
to time due and payable as specified in this Agreement, the Note, and/or any
Related Document and charge same to any deposit or other accounts maintained or
established by Borrower with Lender as set forth in this Agreement, the Note
and/or any Related Document. Accordingly, on the terms and subject to the
conditions hereof and so long as no Event of Default has occurred under the
Note, this Agreement, and/or under any of the Related Documents, Lender's
obligation to make the Loan under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.

        COLLATERAL. To secure the payment of the Loan and the performance of the
        obligations contained in this Agreement and in any Related Documents,
        Borrower (and, if required by Lender, its Subsidiaries) shall execute
        and deliver to Lender the Security Agreement, which Security Agreement
        shall grant a Security Interest in the Collateral to Lender. Lender's
        Security interests in the Collateral shall be continuing liens and shall
        include the proceeds and products of the Collateral, including without
        limitation the proceeds of any insurance. With respect to the
        Collateral, Borrower agrees and represents and warrants to Lender:

        PERFECTION OF SECURITY INTEREST. Borrower shall execute and deliver to
        Lender financing statements and all documents requested by Lender
        perfecting Lender's Security Interest and to take whatever other actions
        are requested by Lender to perfect and continue Lender's Security
        Interests in the Collateral. Upon request of Lender, Borrower will
        deliver to Lender any and all of the documents evidencing or
        constituting the Collateral, and Borrower will note Lender's interest
        upon any and all chattel paper and instruments if not delivered to
        Lender for possession by Lender. Contemporaneous with the execution of
        this Agreement, Lender will be authorized to file one or more UCC
        financing statements and any similar statements as may be required by
        applicable law which Lender reasonably determines are necessary to
        perfect, continue or terminate the security interests in the Collateral.
        Borrower hereby appoints Lender as its irrevocable attorney-in-fact for
        the purpose of executing and/or filing or recording any documents
        necessary to perfect or to continue any Security Interest in the
        Collateral and Borrower hereby consents to and approves of Lender
        executing and/or filing or recording any documents necessary to perfect
        or to continue any Security Interest in the Collateral. Lender may at
        any time, and without further authorization from Borrower, file a
        carbon, photograph, facsimile, or other reproduction of any
<PAGE>
                                                                          PAGE 2



        financing statement for use as a financing statement. Borrower will
        reimburse Lender for all expenses for the perfection, termination, and
        the continuation of the perfection of Lender's security interest in the
        Collateral. Borrower promptly will notify Lender before any change in
        Borrower's name or state of organization (including any change to the
        assumed business names of Borrower or any merger involving Borrower).
        Borrower also promptly will notify Lender before any change in
        Borrower's employer identification number. Borrower further agrees to
        notify Lender in writing prior to any change in address or location of
        Borrower's principal governance office or should Borrower merge or
        consolidate with any other entity.

        LOAN DOCUMENTS AND APPLICABLE FEES AND CHARGES. In addition to this
        Agreement, Borrower shall on the date hereof provide to Lender the
        following documents for the Loan: (1) the Note; (2) the Security
        Agreement granting to Lender security interests in the Collateral; (3)
        financing statements and all other documents perfecting Lender's
        security interest; (4) evidence of insurance as required below; and (5)
        all Related Documents as Lender may require for the Loan; all in form
        and substance satisfactory to Lender and Lender's counsel. In addition
        and if required by Lender, Borrower shall have paid Lender all Lender's
        Expenditures in accordance with the Disbursement Authorization and
        Request of even date herewith and other fees, charges, and other
        expenses which are then due and payable as specified in this Agreement
        or any Related Document.

        BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
        substance reasonably satisfactory to Lender properly certified
        resolutions, duly authorizing the execution and delivery of this
        Agreement, the Note and the Related Documents. In addition, Borrower
        shall have provided such other resolutions, authorizations, documents
        and instruments as Lender or its counsel may reasonably require.

        PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender a fee
        in the amount of Fifteen Thousand Dollars ($15,000) as consideration for
        Lender's execution of this Agreement, together with all fees, charges,
        and other expenses which are then due and payable as specified in this
        Agreement or any Related Document.

        REPRESENTATIONS AND WARRANTIES. The representations and warranties set
        forth in this Agreement, in the Related Documents, and in any document
        or certificate delivered to Lender under this Agreement are true and
        correct in all material respects as of the date of the Loan, except for
        those representations and warranties which specifically refer to an
        earlier date which shall only be required to be true in all material
        respects as of such earlier date.

        NO EVENT OF DEFAULT. There shall not exist at the time of the closing of
        the Loan and/or the advance of funds hereunder a condition which would
        constitute an Event of Default under this Agreement or under any Related
        Document.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of the Loan,
and at all times any Indebtedness exists:

        ORGANIZATION. Borrower is a corporation for profit which is, and at all
        times shall be, duly organized, validly existing, and in good standing
        under and by virtue of the laws of the State of Delaware. Borrower is
        duly authorized to transact business in all other states in which
        Borrower is doing business, having obtained all necessary filings,
        governmental licenses and approvals for each state in which Borrower is
        doing business. Specifically, Borrower is, and at all times shall be,
        duly qualified as a foreign corporation in all states in which the
        failure to so qualify would have a material adverse effect on its
        business or financial condition. Borrower has the full power and
        authority to own its properties and to transact the business in which it
        is presently engaged or presently proposes to engage. Borrower maintains
        its principal office at 305 Main Street, Redwood City, CA 94063. Unless
        Borrower has designated otherwise in writing, the principal office is
        the office at which Borrower keeps its books and records including its
        records concerning the Collateral. Borrower will notify Lender prior to
        any change in the location of Borrower's state of organization or any
        change in Borrower's name. Borrower shall do all things necessary to
        preserve and to keep in full force and effect its existence, rights and
        privileges, and shall comply with all regulations, rules, ordinances,
        statutes, orders and decrees of any governmental or quasi-governmental
        authority or court applicable to Borrower and Borrower's business
        activities, except to the extent that failure to so comply would not
        reasonably be expected to have a material adverse effect on Borrower's
        financial condition, operations or assets.

        ASSUMED BUSINESS NAMES. Borrower has filed or recorded all documents or
        filings required by law relating to all assumed business names used by
        Borrower. Excluding the name of Borrower, the following is a complete
        list of all assumed business names under which Borrower does business:
        NONE.

        AUTHORIZATION. Borrower's execution, delivery, and performance of this
        Agreement and all the Related Documents have been duly authorized by all
        necessary action by Borrower and do not conflict with, result in a
        violation of, or constitute a default under (1) any provision of
        Borrower's articles of incorporation or organization, or bylaws, or any
        agreement or other instrument binding upon Borrower or (2) any law,
        governmental regulation, court decree, or order applicable to Borrower
        or to Borrower's properties.

        FINANCIAL INFORMATION. Each of Borrower's financial statements supplied
        to Lender truly and completely disclosed Borrower's financial condition
        as of the date of the statement in accordance with GAAP.

<PAGE>
                                                                          PAGE 3



        LEGAL EFFECT. This Agreement constitutes, and any instrument or
        agreement Borrower is required to give under this Agreement when
        delivered will constitute legal, valid, and binding obligations of
        Borrower enforceable against Borrower in accordance with their
        respective terms.

        PROPERTIES. Except as contemplated by this Agreement or as previously
        disclosed in Borrower's financial statements or in writing to Lender and
        as accepted by Lender, and except for property tax liens for taxes not
        presently due and payable and other Permitted Liens, Borrower owns and
        has good title to all of Borrower's properties (other than properties
        leased or licensed in the ordinary course of business) free and clear of
        all Security Interests, and has not executed any security documents or
        financing statements relating to such properties (other than for
        properties leased or licensed in the ordinary course of business). All
        of Borrower's owned properties are titled in Borrower's legal name, and
        Borrower has not used, or filed a financing statement under, any other
        name for at least the last five (5) years.

        HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Lender
        in writing, Borrower represents and warrants that: (1) During the period
        of Borrower's ownership of Borrower's Collateral, there has been no use,
        generation, manufacture, storage, treatment, disposal, release or
        threatened release of any Hazardous Substance by any person on, under,
        about or from any of the Collateral. (2) Borrower has no knowledge of,
        or reason to believe that there has been (a) any breach or violation of
        any Environmental Laws; (b) any use, generation, manufacture, storage,
        treatment, disposal, release or threatened release of any Hazardous
        Substance on, under, about or from the Collateral by any prior owners or
        occupants of any of the Collateral; or (c) any actual or threatened
        litigation or claims of any kind by any person relating to such matters.
        (3) Neither Borrower nor any tenant, contractor, agent or other
        authorized user of any of the Collateral shall use, generate,
        manufacture, store, treat, dispose of or release any Hazardous Substance
        on, under, about or from any of the Collateral; and any such activity
        shall be conducted in compliance with all applicable federal, state, and
        local laws, regulations, and ordinances, including without limitation
        all Environmental Laws. Borrower authorizes Lender and its agents to
        enter upon the Collateral to make such inspections and tests as Lender
        may deem appropriate to determine compliance of the Collateral with this
        section of the Agreement. Any inspections or tests made by Lender shall
        be at Borrower's expense and for Lender's purposes only and shall not be
        construed to create any responsibility or liability on the part of
        Lender to Borrower or to any other person. Prior to an Event of Default,
        Borrower shall only be required to pay for one inspection test per year.
        The representations and warranties contained herein are based on
        Borrower's due diligence in investigating the Collateral for hazardous
        waste and Hazardous Substances. Borrower hereby (1) releases and waives
        any future claims against Lender for indemnity or contribution in the
        event Borrower becomes liable for cleanup or other costs under any such
        laws, and (2) agrees to indemnify and hold harmless Lender against any
        and all claims, losses, liabilities, damages, penalties, and expenses
        which Lender may directly or indirectly sustain or suffer resulting from
        a breach of this section of the Agreement or as a consequence of any
        use, generation, manufacture, storage, disposal, release or threatened
        release of a hazardous waste or substance on the Collateral. The
        provisions of this section of the Agreement, including the obligation to
        indemnify, shall survive the payment of the Indebtedness and the
        termination, expiration or satisfaction of this Agreement and shall not
        be affected by Lender's acquisition of any interest in any of the
        Collateral, whether by foreclosure or otherwise.

        LITIGATION AND CLAIMS. To Borrower's knowledge after a reasonably
        diligent investigation and inquiry, no litigation, claim, investigation,
        administrative proceeding or similar action (including those for unpaid
        taxes) against Borrower is pending or threatened, and no other claim,
        suit, investigation or proceeding has occurred which, in either case,
        may materially adversely affect Borrower's financial condition or
        properties, other than litigation, claims, or other events, if any, that
        have been disclosed to Lender in writing pursuant to the notice
        provisions of this Agreement or in Borrower's public filings with the
        Securities and Exchange Commission.

        TAXES. To the best of Borrower's knowledge, all of Borrower's material
        tax returns and reports that are or were required to be filed, have been
        filed, and all taxes, assessments and other governmental charges have
        been paid in full, except those presently being or to be contested by
        Borrower in good faith in the ordinary course of business and for which
        adequate reserves have been provided.

        LIEN PRIORITY. Unless otherwise previously disclosed to Lender in
        writing and except for Permitted Liens, Borrower has not entered into or
        granted any Security Agreements, or permitted the filing or attachment
        of any Security Interests on or affecting any of the Collateral directly
        or indirectly securing repayment of Borrower's Loan and Note, that would
        be prior or that may in any way be superior to Lender's Security
        Interests and rights in and to such Collateral.

        BINDING EFFECT. This Agreement, the Note, all Security Agreements (if
        any), and all Related Documents are binding upon the signers thereof, as
        well as upon their successors, representatives and assigns, and are
        legally enforceable in accordance with their respective terms.

<PAGE>
                                                                          PAGE 4



AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:

        NOTICES OF CLAIMS AND LITIGATION. Promptly inform Lender in writing of
        (1) all material adverse changes in the rate at which Borrower is, on a
        quarterly basis, incurring operating losses or expending available cash,
        cash equivalent and marketable securities assets, and (2) all existing
        and all threatened litigation, claims, investigations, administrative
        proceedings or similar actions affecting Borrower which could materially
        adversely affect the financial condition of Borrower.

        FINANCIAL RECORDS. Maintain its books and records in accordance with
        GAAP, applied on a consistent basis, and permit Lender to examine and
        audit Borrower's books and records at all reasonable times and upon
        reasonable notice, giving adequate consideration to Borrower's status as
        a public company with quarterly reporting obligations.

        FINANCIAL INFORMATION. Furnish Lender with the following:

                ADDITIONAL REQUIREMENTS. Borrower agrees to furnish Lender with
                the following:

                (1)     A full copy of Borrower's most recently filed federal
                        income tax return and full copies of all other federal
                        tax returns filed after the date of this Agreement
                        within fifteen (15) days of filing, but in no more than
                        one hundred twenty (120) days after Borrower's fiscal
                        year-end, unless extended in accordance with applicable
                        law.
                (2)     Quarterly submission of Form 10-Q report within fifteen
                        (15) days of filing.
                (3)     Quarterly submission of an aged balance of outstanding
                        accounts receivable and accounts payable within fifteen
                        days after the end of each of Borrower's fiscal
                        quarters.
                (4)     Annual Form 10-K report within fifteen (15) days of
                        filing.
                (5)     Monthly financial statements within fifteen (15) days
                        after the end of each calendar month, including (without
                        limitation) a balance sheet and a profit and loss
                        statement.

        All financial reports required to be provided in accordance with clauses
        (2), (3), (4) and (5) immediately above shall be prepared in accordance
        with GAAP, applied on a consistent basis (except as noted in the
        financial statements set forth in such reports), and certified by
        Borrower as being true and correct, in all material respects.

                ADDITIONAL INFORMATION. Furnish such additional information and
        statements, as Lender may reasonably request from time to time.

        FINANCIAL COVENANTS. Comply with the following covenants:

                LIQUIDITY REQUIREMENT. Borrower agrees that the aggregate amount
                of its cash, cash equivalents and marketable securities
                (excluding for such purposes amounts that are pledged or
                hypothecated to any third parties or are in a restricted account
                with Lender as collateral for any specific letter of credit or
                similar advance by Lender to or for the benefit of Borrower)
                shall, (1) at the end of Borrower's fiscal quarter ending July
                31, 2002, equal at least Twelve Million Dollars ($12,000,000),
                (2) at all times during Borrower's fiscal quarter ending October
                31, 2002, equal at least Nine Million Dollars ($9,000,000), (3)
                at all times during Borrower's fiscal quarter ending January 31,
                2003, equal at least Eight Million Five Hundred Thousand Dollars
                ($8,500,000), and (4) at all times during Borrower's fiscal
                quarter ending April 30, 2003, equal at least Ten Million Five
                Hundred Thousand Dollars ($10,500,000). Notwithstanding anything
                contained herein to the contrary, for compliance purposes
                compliance with this financial covenant shall be monitored
                quarterly.

                MINIMUM CASH REQUIREMENTS. Borrower agrees that the ratio of (1)
                the aggregate amount of its cash, cash equivalents and
                marketable securities (excluding for such purposes amounts that
                are pledged or hypothecated to any third parties or are in a
                restricted account with Lender as collateral for any specific
                letter of credit or similar advance by Lender to or for the
                benefit of Borrower) to (2) the outstanding principal balance of
                the Loan shall at all time be equal to at least 1.25 or higher.

                OPERATING EXPENSES. Borrower shall not incur any Operating
                Expenses for Borrower's fiscal quarter ending October 31, 2002
                in a amount exceeding Eleven Million Three Hundred Thousand
                Dollars ($11,300,000) for such fiscal quarter, shall not incur
                Operating Expenses for Borrower's fiscal quarter beginning on
                November 1, 2002 and ending on January 31, 2003 in an amount
                exceeding Eleven Million Three Hundred Thousand Dollars
                ($11,300,000) for such fiscal quarter, and shall not incur
                Operating Expenses for Borrower's fiscal quarter beginning
                February 1, 2003 and ending April 30, 2003 in an amount
                exceeding Eleven Million Dollars ($11,000,000) for such fiscal
                quarter.

                MINIMUM REVENUE REQUIREMENTS. Borrower agrees that Borrower's
                revenues from operations (excluding interest income,
                extraordinary gains, capital gains from the sale of assets
                outside the ordinary course of business and investment income
                earned outside the ordinary course of business) shall, (1) equal
                at least Eleven Million Five Hundred Thousand Dollars
                ($11,500,000) for Borrower's fiscal quarter ending October 31,
                2002, (2) equal at least Twelve Million Five Hundred Thousand
                Dollars ($12,500,000) for Borrower's fiscal quarter ending
                January 31,

<PAGE>
                                                                          PAGE 5



                2003, and (3) equal at least Eleven Million Five Hundred
                Thousand Dollars ($11,500,000) for Borrower's fiscal quarter
                ending April 30, 2003.

                Except as provided above, all computations made to determine
                compliance with the requirements contained in this paragraph
                shall be made in accordance with generally accepted accounting
                principles, applied on a consistent basis, and certified by
                Borrower as being true and correct in all material respects.

        INSURANCE. Maintain fire and other risk insurance, public liability
        insurance, and such other insurance as Lender may reasonably require
        with respect to Borrower's properties and operations, in form, amounts,
        coverages and with insurance companies acceptable to Lender. Borrower,
        upon request of Lender, will deliver to Lender from time to time the
        policies or certificates of insurance in form reasonably satisfactory to
        Lender, including stipulations that coverages will not be cancelled or
        diminished without at least ten (10) days prior written notice to
        Lender. Each insurance policy also shall include an endorsement
        providing that coverage in favor of Lender will not be impaired in any
        way by any act, omission or default of Borrower or any other person. In
        connection with all policies covering assets in which Lender holds or is
        offered a security interest for the Loans, Borrower will provide Lender
        with such Lender's loss payable or other endorsements as Lender may
        require.

        INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
        each existing insurance policy showing such information as Lender may
        reasonably request, including without limitation the following: (1) the
        name of the insurer; (2) the risks insured; (3) the amount of the
        policy; (4) the properties insured; (5) the then current property values
        on the basis of which insurance has been obtained, and the manner of
        determining those values; and (6) the expiration date of the policy.

        OTHER AGREEMENTS. Comply with all terms and conditions of each
        agreement, the breach or default of which would be reasonably likely to
        have a material adverse effect on Borrower's financial condition,
        operations or assets, whether now or hereafter existing, between
        Borrower and any other party and notify Lender immediately in writing of
        any default in connection with any such agreement, except where the
        failure to so comply with any such agreement would not reasonably be
        likely to have a material adverse effect on Borrower's financial
        condition, operations or assets or where the failure to so comply with
        any such agreement will not result in a material default thereunder or
        where the agreement in question is a real estate lease which the
        Borrower is in negotiations to terminate.

        LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
        operations (including termination of real estate leases), unless
        specifically consented to the contrary by Lender in writing.

        TAXES, CHARGES AND LIENS. Pay and discharge when due all of its material
        indebtedness and obligations, including without limitation all
        assessments, taxes, governmental charges, levies and liens, of every
        kind and nature, imposed upon Borrower or its properties, income, or
        profits, prior to the date on which penalties would attach, and all
        lawful claims that, if unpaid, might become a lien or charge upon any of
        Borrower's properties, income, or profits, except for any such
        obligations, taxes or claims which are being contested in good faith and
        for which there are adequate reserves.

        PERFORMANCE. Perform and comply, in a timely manner, with all terms,
        conditions, and provisions set forth in this Agreement, in the Related
        Documents, and in all other instruments and agreements between Borrower
        and Lender. Borrower shall notify Lender immediately in writing of any
        default in connection with any agreement, except in the case of any
        default which would not reasonably be likely to have a material adverse
        effect on Borrower's financial condition, operations or assets.

        OPERATIONS. Continue to employ and maintain a chief executive officer
        and chief financial officer with substantially the same qualifications
        and experience as the present chief executive officer and chief
        financial officer; provide written notice to Lender of any change in
        such personnel; and conduct its business affairs in a reasonable and
        prudent manner, except where the failure to so conduct its business
        affairs would not reasonably be likely to have a material adverse effect
        on Borrower's financial condition, operations or assets.

        ENVIRONMENTAL STUDIES. Promptly conduct and complete, at Borrower's
        expense, all such investigations, studies, samplings and testings as may
        be requested by Lender or any governmental authority relative to any
        substance, or any waste or by-product of any substance defined as toxic
        or a hazardous substance under applicable federal, state, or local law,
        rule, regulation, order or directive, at or affecting any property or
        any facility owned, leased or used by Borrower.

        COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws,
        ordinances, and regulations, now or hereafter in effect, of all
        governmental authorities applicable to the conduct of Borrower's
        properties, businesses and operations, and to the use or occupancy of
        the Collateral, including without limitation, the Americans With
        Disabilities Act, except where noncompliance would not reasonably be
        likely to have a material adverse effect on Borrower's financial
        condition, operations or assets. Borrower may contest in good faith any
        such law, ordinance, or regulation and withhold compliance during any
        proceeding, including appropriate appeals, so long as Borrower has
        notified Lender in writing prior to doing so and so long as, in Lender's
        sole opinion, Lender's interests in the Collateral are not jeopardized.
        Lender may require Borrower to post adequate security or a surety bond,
        reasonably satisfactory to Lender, to protect Lender's interest.

<PAGE>
                                                                          PAGE 6



        INSPECTION. Permit employees or agents of Lender at any reasonable time,
        upon reasonable notice giving adequate consideration to Borrower's
        status as a public company with quarterly reporting obligations, to
        inspect any and all Collateral for the Loan or Loans and Borrower's
        other properties and to examine or audit Borrower's books, accounts, and
        records and to make copies and memoranda of Borrower's books, accounts
        and records. If Borrower now or at any time hereafter maintains any
        records (including without limitation computer generated records and
        computer software programs for the generation of such records) in the
        possession of a third party, Borrower, upon request of Lender, shall
        notify such party to permit Lender free access to such records at all
        reasonable times and to provide Lender with copies of any records it may
        request, all at Borrower's expense.

        COMPLIANCE CERTIFICATES. Unless waived in writing by Lender, provide
        Lender at least annually, with a certificate executed by Borrower's
        chief financial officer, or other officer or person acceptable to
        Lender, certifying that the representations and warranties set forth in
        this Agreement are true and correct in all material respects as of the
        date of the certificate, except for those representations and warranties
        which specifically refer to an earlier date which shall only be required
        to be true in all material respects as of such earlier date and further
        certifying that, as of the date of the certificate, no Event of Default
        exists under this Agreement.

        ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all
        material respects with any and all Environmental Laws; not cause or
        permit to exist, as a result of an intentional or unintentional action
        or omission on Borrower's part or on the part of any third party, on
        property owned and/or occupied by Borrower, any environmental activity
        where damage may result to the environment, unless such environmental
        activity is pursuant to and in compliance with the conditions of a
        permit issued by the appropriate federal, state or local governmental
        authorities; shall furnish to Lender promptly and in any event within
        thirty (30) days after receipt thereof a copy of any notice, summons,
        lien, citation, directive, letter or other communication from any
        governmental agency or instrumentality concerning any intentional or
        unintentional action or omission on Borrower's part in connection with
        any environmental activity whether or not there is damage to the
        environment and/or other natural resources.

        ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such
        promissory notes, mortgages, deeds of trust, security agreements,
        assignments, financing statements, instruments, documents and other
        agreements as Lender or its attorneys may reasonably request to evidence
        and secure the Loans and to perfect all Security Interests granted
        pursuant to the Security Agreements.

        DISBURSEMENT OF LOAN PROCEEDS. Lender shall pay and advance the proceeds
        of the Loan into Borrower's deposit account number 373376901 maintained
        by Borrower with Lender or to such other deposit or other accounts as
        Lender may designate that are established and maintained by Borrower
        with Lender.

        LITIGATION RECOVERIES. If Borrower receives any extraordinary income or
        revenue from the prosecution, settlement or other resolution of any
        legal proceedings or arbitrations that, net of fees and expenses, equals
        or exceeds Five Million Dollars ($5,000,000), Borrower will immediately
        pay to Lender one-half (1/2) of the then-outstanding balance of the Loan
        (including the outstanding principal balance, all accrued and unpaid
        interest, and all accrued and unpaid Lender Expenditures). If Borrower
        receives any extraordinary income or revenue from the prosecution,
        settlement or other resolution of any legal proceedings or arbitrations
        that is less than Five Million Dollars ($5,000,000), Borrower will
        immediately pay to Lender one-half (1/2) of the amount of such
        extraordinary income or revenue from the prosecution, settlement or
        other resolution, net of fees and expenses, and Lender will apply same
        to the then-outstanding balance of the Loan (including the outstanding
        principal balance, all accrued and unpaid interest, and all accrued and
        unpaid Lender Expenditures).

RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including any
request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except federal, state or local income or franchise taxes
imposed on Lender), reserve requirements, capital adequacy requirements or other
obligations which would (A) increase the cost to Lender for extending or
maintaining the credit facilities to which this Agreement relates, (B) reduce
the amounts payable to Lender under this Agreement or the Related Documents, or
(C) reduce the rate of return on Lender's capital as a consequence of Lender's
obligations with respect to the credit facilities to which this Agreement
relates, then Borrower agrees to pay Lender such additional amounts as will
compensate Lender therefor, within five (5) days after Lender's written demand
for such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable detail of the additional
amounts payable by Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially adversely affect Lender's interest in the Collateral or if Borrower
fails to comply with any provision of this Agreement or any Related Documents,
including but not limited to Borrower's failure to discharge or pay when due any
amounts Borrower is required to discharge or pay under this Agreement or any
Related Documents, Lender on Borrower's behalf may (but shall not be obligated
to) take any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests,

<PAGE>
                                                                          PAGE 7



encumbrances and other claims, at any time levied or placed on any Collateral
and paying all costs for insuring, maintaining and preserving any Collateral.
All such expenditures ("Lender's Expenditures") incurred or paid by Lender for
such purposes will then bear interest at the rate charged under the Note from
the date incurred or paid by Lender to the date of repayment by Borrower. All
such Lender's Expenditures will become a part of the Indebtedness and, at
Lenders option will (A) be payable on demand; (B) be added to the balance of the
Note and be apportioned among and be payable with any installment payments to
become due during either (1) the term of any applicable insurance policy; or (2)
the remaining term of the Note; or (C) be treated as a balloon payment which
will be due and payable at the Note's maturity.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, from and after the date hereof, Borrower shall not, and
shall not permit any Subsidiary of Borrower to, without the prior written
consent of Lender:

        INDEBTEDNESS AND LIENS. (1) Except for trade debt incurred in the normal
        course of business, Permitted Indebtedness and Indebtedness to Lender
        contemplated by this Agreement, create, incur or assume indebtedness for
        borrowed money, including capital leases, (2) sell, transfer mortgage,
        assign, pledge, lease, grant a security interest in, or encumber any of
        Borrower's assets (except as allowed as Permitted Liens and except for
        sales, leases or licenses of any intellectual property rights embodied
        in products of Borrower and its Subsidiaries and dispositions of office
        fixtures and equipment consistent with the ordinary course of Borrower's
        business), or (3) sell with recourse any of Borrower's Accounts, except
        to Lender.

        CONTINUITY OF OPERATIONS. (1) Engage in any business activities
        substantially different than those in which Borrower is presently
        engaged, (2) cease operations, liquidate, merge, transfer, acquire or
        consolidate with any other entity, change its name, dissolve or transfer
        or sell Collateral out of the ordinary course of business, or (3) pay
        any dividends on Borrower's stock (other than dividends payable in its
        stock).

        LOANS, ACQUISITIONS AND GUARANTIES. (1) Loan, invest in or advance money
        or assets, except for Permitted Investments, (2) purchase, create or
        acquire any interest in any other enterprise or entity, except for
        Permitted Investments, or (3) incur any obligation as surety or
        guarantor other than in the ordinary course of business.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:

        PAYMENT DEFAULT. Borrower fails to make any payment of principal when
        due or of interest or fees within five (5) days of when due under the
        Loan.

        COVENANT DEFAULT. A default or breach shall occur in Borrower's
        obligations under the section entitled "Financial Covenants."

        DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults
        under any loan, extension of credit, security agreement, purchase or
        sales agreement, or any other agreement, in favor of any other creditor
        or person that may materially adversely affect Borrower's financial
        condition, operation or assets or Borrower's ability to repay the Loans
        or perform its obligations under this Agreement or any of the Related
        Documents.

        FALSE STATEMENTS. Any warranty, representation or statement made or
        furnished to Lender by Borrower or on Borrower's behalf under this
        Agreement or the Related Documents is false or misleading in any
        material respect, either now or at the time of the closing of the Loan
        and/or the time of advancing any funds thereunder.

        INSOLVENCY. The dissolution or termination of Borrower's existence as a
        going business, the insolvency of Borrower, the appointment of a
        receiver for any part of Borrower's property, any assignment for the
        benefit of creditors, any type of creditor workout, or the commencement
        of any proceeding under any bankruptcy or insolvency laws by or against
        Borrower.

        DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
        Documents granting Security Interests in Collateral ceases to be in full
        force and effect (including failure of any collateral document to create
        a valid and perfected security interest or lien) at any time and for any
        reason.

        CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
        forfeiture proceedings, whether by judicial proceeding, self-help,
        repossession or any other method, by any creditor of Borrower or by any
        governmental agency against any collateral securing the Loan. This
        includes a garnishment of any of Borrower's accounts, including deposit
        accounts, with Lender. However, this Event of Default shall not apply if
        there is a good faith dispute by Borrower as to the validity or
        reasonableness of the claim which is the basis of the creditor or
        forfeiture proceeding and if Borrower gives Lender written notice of the
        creditor or forfeiture proceeding and deposits with Lender monies or a
        surety bond for the creditor or forfeiture proceeding, in an amount
        determined by Lender, in its sole discretion, as being an adequate
        reserve or bond for the dispute.

        CHANGE IN OWNERSHIP. The acquisition by any individual (other than the
        Company's chief executive officer) or entity of fifty-one percent (51%)
        or more of the common stock of Borrower.

        ADVERSE CHANGE. Lender believes the prospect of payment or performance
        of this Note is impaired.

<PAGE>
                                                                          PAGE 8



        OTHER DEFAULTS. Either (a) Borrower fails to comply with or to perform
        any other term, obligation, covenant or condition contained in this
        Agreement and such failure continues for ten (10) days after the date of
        written notice from Lender identifying such failure and/or (b) an Event
        of Default (as defined in such agreement) occurs in any of the Related
        Documents or under any other agreement between Lender and Borrower.

        RIGHT TO CURE. If any default, other than a default on Indebtedness, is
        curable and if Borrower or Grantor, as the case may be, has not been
        given a notice of a similar default within the preceding twelve (12)
        months, it may be cured (and no Event of Default will have occurred) if
        Borrower or Grantor, as the case may be, after receiving written notice
        from Lender demanding cure of such default: (1) cure the default within
        fifteen (15) days; or (2) if the cure requires more than fifteen (15)
        days, immediately initiate steps which Lender deems in Lender's sole
        discretion to be sufficient to cure the default and thereafter continue
        and complete all reasonable and necessary steps sufficient to produce
        compliance as soon as reasonably practical.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.

EXHIBIT A. Exhibit A is attached to this Agreement and, by this reference, is
made a part of this Agreement just as if all of the provisions, terms, and
conditions of Exhibit "A" had been fully set forth in this Agreement.

DEPOSIT RELATIONSHIP. Borrower agrees that until such time as Borrower is no
longer subject to the terms of this Agreement, any Related Document, any other
credit agreement(s) with Lender, Borrower shall maintain all of its cash and
cash equivalents in accounts established and maintained with Lender and
Borrower's primary deposit account(s) will be placed and maintained with Lender,
or a bank affiliated with Lender, except for amounts as may be reasonably be
required for the operation and maintenance of Borrower's operations outside of
the Untied States.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

        AMENDMENTS. This Agreement, together with any Related Documents,
        constitutes the entire understanding and agreement of the parties as to
        the matters set forth in this Agreement. No alteration of or amendment
        to this Agreement shall be effective unless given in writing and signed
        by the party or parties sought to be charged with or bound by the
        alteration or amendment.

        ATTORNEYS' FEES; EXPENSES. Borrower agrees to pay upon demand all of
        Lender's costs and expenses, including Lender's attorneys' fees and
        Lender's legal expenses, incurred in connection with the enforcement of
        this Agreement. Lender may hire or pay someone else to help enforce this
        Agreement, and Borrower shall pay the costs and expenses of such
        enforcement. Costs and expenses include Lender's attorneys' fees and
        legal expenses whether or not there is a lawsuit, including attorneys'
        fees and legal expenses for bankruptcy proceedings (including efforts to
        modify or vacate any automatic stay or injunction), appeals, and any
        anticipated post-judgment collection services. Borrower also shall pay
        all court costs and such additional fees as may be directed by the
        court.

        CAPTION HEADINGS. Caption headings in this Agreement are for convenience
        purposes only and are not to be used to interpret or define the
        provisions of this Agreement.

        CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
        sale or transfer, whether now or later, of one or more participation
        interests in the Loan to one or more purchasers, whether related or
        unrelated to Lender. Lender may provide, without any limitation
        whatsoever, to any one or more purchasers, or potential purchasers, any
        information or knowledge Lender may have about Borrower or about any
        other matter relating to the Loan, and Borrower hereby waives any rights
        to privacy Borrower may have with respect to such matters. Borrower
        additionally waives any and all notices of sale of participation
        interests, as well as all notices of any repurchase of such
        participation interests. Borrower also agrees that the purchasers of any
        such participation interests will be considered as the absolute owners
        of such interests in the Loan and will have all the rights granted under
        the participation agreement or agreements governing the sale of such
        participation interests. Borrower further waives all rights of offset or
        counterclaim that it may have now or later against Lender or against any
        purchaser of such a participation interest and unconditionally agrees
        that either Lender or such purchaser may enforce Borrower's obligation
        under the Loan irrespective of the failure or insolvency of any holder
        of any interest in the Loan. Borrower further agrees that the purchaser
        of any such participation interests may enforce its interests
        irrespective of any personal claims or defenses that Borrower may have
        against Lender.

<PAGE>
                                                                          PAGE 9



        GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND
        ENFORCED IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF
        CALIFORNIA. THIS AGREEMENT HAS BEEN ACCEPTED BY BORROWER AND LENDER IN
        THE STATE OF CALIFORNIA.

        CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's
        request to submit to the jurisdiction of the courts of Santa Clara
        County, State of California.

        NO WAIVER BY LENDER. Lender shall not be deemed to have waived any
        rights under this Agreement unless such waiver is given in writing and
        signed by Lender. No delay or omission on the part of Lender in
        exercising any right shall operate as a waiver of such right or any
        other right. A waiver by Lender of a provision of this Agreement shall
        not prejudice or constitute a waiver of Lender's right otherwise to
        demand strict compliance with that provision or any other provision of
        this Agreement. No prior waiver by Lender, nor any course of dealing
        between Lender and Borrower, or between Lender and any Grantor, shall
        constitute a waiver of any of Lender's rights or of any of Borrower's or
        any Grantor's obligations as to any future transactions. Whenever the
        consent of Lender is required under this Agreement, the granting of such
        consent by Lender in any instance shall not constitute continuing
        consent to subsequent instances where such consent is required and in
        all cases such consent may be granted or withheld in the sole discretion
        of Lender.

        NOTICES. Any notice required to be given under this Agreement shall be
        given in writing, and shall be effective when actually delivered, when
        actually received by telefacsimile (unless otherwise required by law),
        when deposited with a nationally recognized overnight courier, or, if
        mailed, when deposited in the United States mail, as first class,
        certified or registered mail postage prepaid, directed to the addresses
        shown near the beginning of this Agreement. Any party may change its
        address for notices under this Agreement by giving formal written notice
        to the other parties, specifying that the purpose of the notice is to
        change the party's address. For notice purposes, Borrower agrees to keep
        Lender informed at all times of Borrower's current address.

        SEVERABILITY. If a court of competent jurisdiction finds any provision
        of this Agreement to be illegal, invalid, or unenforceable as to any
        circumstance, that finding shall not make the offending provision
        illegal, invalid, or unenforceable as to any other circumstance. If
        feasible, the offending provision shall be considered modified so that
        it becomes legal, valid and enforceable. If the offending provision
        cannot be so modified, it shall be considered deleted from this
        Agreement. Unless otherwise required by law, the illegality, invalidity,
        or unenforceability of any provision of this Agreement shall not affect
        the legality, validity or enforceability of any other provision of this
        Agreement.

        SUBSIDIARIES OF BORROWER. To the extent the context of any provisions of
        this Agreement makes it appropriate, including without limitation any
        representation, warranty or covenant, the word "Borrower" as used in
        this Agreement shall include all of Borrower's Subsidiaries.
        Notwithstanding the foregoing however, under no circumstances shall this
        Agreement be construed to require Lender to make any Loan or other
        financial accommodation to any of Borrower's Subsidiaries.

        SUCCESSORS AND ASSIGNS. All covenants and agreements contained in this
        Agreement by or on behalf of Borrower shall bind Borrower's successors
        and assigns and shall inure to the benefit of Lender and its successors
        and assigns. Borrower shall not, however, have the right to assign
        Borrower's rights under this Agreement or any interest therein, without
        the prior written consent of Lender.

        SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
        agrees that in extending the Loan Lender is relying on all
        representations, warranties, and covenants made by Borrower in this
        Agreement or in any certificate or other instrument delivered by
        Borrower to Lender under this Agreement or the Related Documents.
        Borrower further agrees that regardless of any investigation made by
        Lender, all such representations, warranties and covenants will survive
        the extension of the Loan and delivery to Lender of the Related
        Documents, shall be continuing in nature and shall remain in full force
        and effect until such time as Borrower's Indebtedness shall be paid in
        full, or until this Agreement shall be terminated in the manner provided
        above, whichever is the last to occur.

        TIME IS OF THE ESSENCE. Time is of the essence in the performance of
        this Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:

        ACCOUNT. The word "Account" means a trade account, account receivable,
        other receivable, or other right to payment for goods sold or services
        rendered owing to Borrower or any of its consolidating Subsidiaries that
        has guaranteed the Indebtedness, which guaranty shall be in a form and
        content prepared by and acceptable to Lender, and that has granted a
        security interest to Lender in such Accounts, which security interest
        shall be in a form and content prepared by and acceptable to Lender (or
        to a third party grantor acceptable to Lender).

<PAGE>
                                                                         PAGE 10



        AGREEMENT. The word "Agreement" means this Business Loan Agreement, as
        this Business Loan Agreement may be amended or modified from time to
        time, together with all exhibits and schedules attached to this Business
        Loan Agreement from time to time.

        BORROWER. The word "Borrower" means Niku Corporation.

        BUSINESS DAY. The words "Business Day" mean a day on which commercial
        banks are open in the State of California.

        COLLATERAL. The word "Collateral" means (i) the Collateral, as such term
        is defined in the Security Agreement and, (ii) as applicable, any other
        Collateral ("Other Collateral") from time to time pledged as collateral
        for the Loan.

        ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and all
        state, federal and local statutes, regulations and ordinances relating
        to the protection of human health or the environment, including without
        limitation the Comprehensive Environmental Response, Compensation, and
        Liability Act of l960, as amended, 42 U.S.C. Section 9601, et seq.
        ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
        Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act,
        49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
        Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of
        Division 20 of the California Health and Safety Code, Section 25100, et
        seq., or other applicable state or federal laws, rules, or regulations
        adopted pursuant thereto.

        EVENT OF DEFAULT. The words "Event of Default" mean any of the events of
        default set forth in this Agreement in the default section of this
        Agreement.

        GAAP. The word "GAAP" means generally accepted accounting principles.

        GRANTOR. The word "Grantor" means each and all of the persons or
        entities granting a Security Interest in any Collateral for the Loan,
        including without limitation Borrower.

        HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials
        that, because of their quantity, concentration or physical, chemical or
        infectious characteristics, may cause or pose a present or potential
        hazard to human health or the environment when improperly used, treated,
        stored, disposed of, generated, manufactured, transported or otherwise
        handled. The words "Hazardous Substances" are used in their very
        broadest sense and include without limitation any and all hazardous or
        toxic substances, materials or waste as defined by or listed under the
        Environmental Laws. The term "Hazardous Substances" also includes,
        without limitation, petroleum and petroleum by-products or any fraction
        thereof and asbestos.

        INDEBTEDNESS. The word "Indebtedness" means the Indebtedness evidenced
        by the Note or Related Documents, including all principal and interest
        together with all other Indebtedness and costs and expenses for which
        Borrower is responsible under this Agreement or under any of the Related
        Documents.

        LENDER. The word "Lender" means Mid-Peninsula Bank, its successors and
        assigns.

        LOAN. The word "Loan" means any and all loans and financial
        accommodations from Lender to Borrower made pursuant to this Agreement
        or described on any exhibit or schedule attached to this Agreement from
        time to time, together with all renewals of, extensions of,
        modifications of, refinancings of, consolidations of, and substitutions
        thereof.

        NOTE. The word "Note" means the promissory note dated September 9, 2002,
        executed by Borrower, and initially in the principal amount of
        $5,000,000.00, together with all renewals of, extensions of,
        modifications of, refinancings of, consolidations of, and substitutions
        for the Note or this Agreement.

        OPERATING EXPENSES. The words "Operating Expenses" mean (without
        repetition) the sum of (i) cost of license revenue and cost of services
        revenue, (ii) sales and marketing operating expenses, (iii) research and
        development operating expenses and (iv) general and administrative
        operating expenses, determined in accordance with GAAP and set forth on
        Borrower's financial statements.

        PERMITTED ACQUISITIONS. The words "Permitted Acquisitions" mean an
        acquisition (whether pursuant to an acquisition of stock, assets or
        otherwise) by Borrower of any entity or the assets of any entity which
        meets all of the following conditions: (i) the purchase price paid by
        Borrower pursuant to such acquisition consists solely of securities of
        Borrower; (ii) such entity is primarily engaged in a similar line of
        business as Borrower as of the date of this Agreement; (iii) more than
        80 percent of the assets acquired or owned by the entity being acquired
        are located in the United States and such entity (in the case of a stock
        acquisition) is organized under the laws of the United States or a state
        thereof; (iv) immediately before and after giving effect to such
        acquisition, no Event of Default shall have occurred and be continuing
        or would result therefrom; (v) Borrower shall have delivered to Lender a
        pro forma financial statement for the period of four full fiscal
        quarters immediately preceding such acquisition (prepared in good faith
        and in a manner and using such methodology which is consistent with the
        most recent financial statements delivered to Lender) giving pro forma
        effect to the consummation of such acquisition and evidencing compliance
        with the financial covenants and ratios set forth above and in
        compliance with the financial ratios contained in any Related Documents;
        and (vi) Lender shall have received a true and complete copy of each
        purchase agreement, and all other material documents and

<PAGE>
                                                                         PAGE 11




        instruments delivered in connection with the consummation of any
        Permitted Acquisition (the delivery of which would not violate any
        confidentiality obligations).

        PERMITTED INDEBTEDNESS. The words "Permitted Indebtedness" mean:

        (a) unsecured indebtedness (i) incurred in the ordinary course of
        business of Borrower or its Subsidiaries (including open accounts
        extended by suppliers on normal trade terms in connection with purchases
        of goods and services which are not overdue for a period of more than 90
        days or, if overdue for more than 90 days, as to which a dispute exists
        and adequate reserves in conformity with GAAP have been established on
        the books of Borrower or such Subsidiary) and (ii) in respect of any
        performance, surety or appeal bonds provided in the ordinary course of
        business, which bonds are issued in accordance with an agreement
        approved by Lender;

        (b) indebtedness of any Subsidiary owing to Borrower or any other
        Subsidiary, which is not forgiven or otherwise discharged for any
        consideration other than payment in full or in part in cash;

        (c) indebtedness of Borrower and its Subsidiaries in respect of purchase
        money indebtedness for property and equipment purchased in the ordinary
        course of business consistent any capital budget; and

        (d) indebtedness of Borrower and its Subsidiaries in respect of
        capitalized leases for equipment not in excess of the initial purchase
        price of such equipment.

        PERMITTED INVESTMENTS. The words "Permitted Investments" mean:

        (a) loans to officers and other key employees of Borrower and its
        Subsidiaries which (i) are made as book entries and in which no cash is
        actually advanced and which are made to permit the purchase of
        securities of Borrower and are secured by such securities and (ii) are
        made in cash in amounts not exceeding two hundred fifty thousand dollars
        ($250,000) in any one transaction and not exceeding (in the aggregate)
        one million dollars ($1,000,000) for all such transactions outstanding
        at any time;

        (b) (i) investments of cash balances in cash equivalents and short term
        investments, consistent with any investment guidelines and practices in
        effect on the date of this Agreement or as may from time to time be
        approved by Lender in writing and (ii) repurchases of common stock (1)
        pursuant to any agreements with employees providing for such repurchase
        at the time of execution thereof at a purchase price not exceeding the
        lesser of the fair market value of such stock or the purchase price for
        same actually paid by the employee and (2) pursuant to Borrower's share
        repurchase program in effect on the date of this Agreement or in
        accordance with such other program as may from time to time be approved
        by Lender in writing;

        (c) without duplication, investments to the extent permitted as
        Permitted Indebtedness;

        (d) investments by way of contributions to capital or purchases of
        equity by Borrower in any Subsidiary that has guaranteed the
        Indebtedness, which guaranty shall be in a form and content prepared by
        and acceptable to Lender;

        (e) investments constituting (i) accounts receivable arising, (ii) trade
        debt granted, or (iii) deposits made in connection with the purchase
        price (or license or other similar fee) of goods or services, in each
        case in the ordinary course of business; and

        (f) Investments by way of Permitted Acquisitions in companies that have
        guaranteed the Indebtedness, which guaranty shall be in a form and
        content prepared by and acceptable to Lender.

        PERMITTED LIENS. The words "Permitted Liens" mean (1) liens and security
        interests securing Indebtedness (or other indebtedness) owed by Borrower
        to Lender; (2) liens for taxes, assessments, or similar charges either
        not yet due or being contested in good faith; (3) liens of materialmen,
        mechanics, warehousemen, landlords, or carriers, or other like liens
        arising in the ordinary course of business and securing obligations
        which are not yet delinquent; (4) purchase money liens or purchase money
        security interests upon or in any property acquired or held by Borrower
        in the ordinary course of business to secure indebtedness outstanding on
        the date of this Agreement or permitted to be incurred under the
        paragraph of this Agreement titled "Indebtedness and Liens"; (5) liens
        of lessors in respect of equipment and other operating and capital
        leases of property leased in the ordinary course of business; (6) liens
        and security interests which, as of the date of this Agreement, have
        been disclosed to and approved by the Lender in writing; (7) those liens
        and security interests which in the aggregate constitute an immaterial
        and insignificant monetary amount with respect to the net value of
        Borrower's assets; and (8) judgment liens (x) in an aggregate amount not
        exceeding at any time $500,000 that have been outstanding less than 45
        days, or (y) are covered by adequate insurance, or (z) the execution of
        which has been stayed.

        RELATED DOCUMENTS. The words "Related Documents" mean all promissory
        notes, credit agreements, loan agreements, environmental agreements,
        guaranties, security agreements, mortgages, deeds of trust, security
        deeds, collateral mortgages, and all other instruments, agreements and
        documents, whether now or hereafter existing, executed in connection
        with the Loan.

        SECURITY AGREEMENT. The words "Security Agreement" mean (i) the
        Commercial Security Agreement dated as of the date hereof and, (ii) in
        respect of any Other Collateral that may from time to time be pledged as
        collateral for the Loan,

<PAGE>
                                                                         PAGE 12



        any agreements, promises, covenants, arrangements, understandings or
        other agreements, whether created by law, contract, or otherwise,
        evidencing, governing, representing, or creating a Security Interest in
        such Other Collateral.

        SECURITY INTEREST. The words "Security Interest" mean, without
        limitation, any and all types of collateral security, present and
        future, whether in the form of a lien, charge, encumbrance, mortgage,
        deed of trust, security deed, assignment, pledge, crop pledge, chattel
        mortgage, collateral chattel mortgage, chattel trust, factor's lien,
        equipment trust, conditional sale, trust receipt, lien or title
        retention contract, lease or consignment intended as a security device,
        or any other security or lien interest whatsoever whether created by
        law, contract, or otherwise.

        SUBSIDIARY. Subsidiary means any corporation, limited liability company,
        limited partnership or other similar entity which is either eligible to
        be consolidated with Borrower in accordance with GAAP on the financial
        statements of Borrower or in which Borrower either directly or
        indirectly holds 50% or more of the outstanding capital stock,
        membership interests, partnership interest, or any other indicia of
        ownership.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED SEPTEMBER 9, 2002.

BORROWER:


NIKU CORPORATION


By:      /s/ Joshua Pickus
    -------------------------------------
    Joshua Pickus, Chief Financial Officer
    of Niku Corporation


LENDER:


MID-PENINSULA BANK


By:      /s/ V. Michelle Titus
    -------------------------------------
    V. Michelle Titus, Senior Vice President


<PAGE>
                                                                         PAGE 13




                  NONE OF THESE TERMS ARE USED IN THIS DOCUMENT




<PAGE>

                          COMMERCIAL SECURITY AGREEMENT


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
   PRINCIPAL       LOAN DATE    MATURITY      LOAN NO.     CALL/COLL      ACCOUNT      OFFICER    INITIALS

<S>                <C>          <C>           <C>          <C>            <C>          <C>        <C>
 $5,000,000.00     09-09-02     02-15-04      373376963      2000                        024

----------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

------------------------------------------------------------------------------
BORROWER:    Niku Corporation                  LENDER:    Mid-Peninsula Bank
             305 Main Street                              Palo Alto Main
             Redwood City, CA  94063                      420 Cowper Street
                                                          Palo Alto, CA  94301
------------------------------------------------------------------------------

        THIS COMMERCIAL SECURITY AGREEMENT is entered into between Niku
Corporation (referred to below as "Grantor") and Mid-Peninsula Bank (referred to
below as "Lender") as of September 9, 2002. For valuable consideration, Grantor
grants to Lender a security interest in the Collateral to secure the
Indebtedness and agrees that Lender shall have the rights stated in this
Agreement with respect to the Collateral, in addition to all other rights which
Lender may have by law.

        1. DEFINITIONS. The following words shall have the following meanings
when used in this Agreement. Terms not otherwise defined in this Agreement shall
have the meanings attributed to such terms in the California Uniform Commercial
Code. Words and terms used in the singular shall include the plural, and the
plural shall include the singular, as the context may require. All references to
dollar amounts shall mean amounts in lawful money of the United States of
America.

               1.1. AGREEMENT. The word "Agreement" means this Commercial
Security Agreement, as this Commercial Security Agreement may be amended or
modified from time to time, together with all exhibits and schedules attached to
this Commercial Security Agreement from time to time.

               1.2. COLLATERAL. The word "Collateral" means the following
described property of Grantor, whether now owned or hereafter acquired, whether
now existing or hereafter arising, and wherever located:

               ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, EQUIPMENT, GENERAL
INTANGIBLES, MONEY OR DEPOSIT ACCOUNTS (INCLUDING, WITHOUT LIMITATION, DEPOSIT
ACCOUNT NUMBERS 373376901, 3733376902, 373376905 MAINTAINED BY GRANTOR WITH
LENDER), ANY OTHER ASSETS OF GRANTOR IN WHICH LENDER RECEIVES A SECURITY
INTEREST, OR WHICH HEREAFTER COME INTO THE POSSESSION, CUSTODY OR CONTROL OF
LENDER, AND ALL PROCEEDS THEREOF

               In addition, the word "Collateral" includes all the following,
whether now owned or hereafter acquired, whether now existing or hereafter
arising, and wherever located:

               (a) All attachments, accessions, accessories, tools, parts,
supplies, increases, and additions to and all replacements of and substitutions
for any property described above.

               (b) All products and produce or any of the property described in
this Collateral section.

               (c) All accounts, general intangibles, instruments, rents,
monies, payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral section.


<PAGE>
                                                                          PAGE 2



               (d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property described in this
Collateral section (the "Proceeds").

               (e) All records and data relating to any of the property
described in this Collateral section, whether in the form of a writing,
photograph, microfilm, microfiche, or electronic media, together with all of
Grantor's right, title, and interest in and to all computer software required to
utilize, create, maintain, and process any such records or data on electronic
media.

               1.3. EVENT OF DEFAULT. The words "Event of Default" mean and
include without limitation any of the Events of Default set forth below in the
section titled "Events of Default."

               1.4. GRANTOR. The word "Grantor" means Niku Corporation, its
successors and assigns.

               1.5. INDEBTEDNESS. The word "Indebtedness" means the indebtedness
evidenced by the Note, including all principal and interest, together with all
other indebtedness and costs and expenses for which Grantor is responsible under
this Agreement, under the Note, under the Business Loan Agreement and/or under
any of the Related Documents. In addition, the word "Indebtedness" includes all
other obligations, debts and liabilities, plus interest thereon, of Grantor, or
any one or more of them, to Lender, as well as all claims by Lender against
Grantor, or any one or more of them, whether existing now or later, whether they
are voluntary or involuntary, due or not due, direct or indirect, absolute or
contingent, liquidated or unliquidated; whether Grantor may be liable
individually or jointly with others; whether Grantor may be obligated as
guarantor, surety, accommodation party or otherwise; whether recovery upon such
indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such indebtedness may be or hereafter may become
otherwise unenforceable. (Initial Here _______)

               1.6. LENDER. The word "Lender" means Mid-Peninsula Bank, its
successors and assigns.

               1.7. NOTE. The word "Note" means that certain promissory note
dated as of September 9,, 2002, in the principal amount of $5,000,000.00 from
Grantor to Lender, together with all renewals of, extensions of, modifications
of, refinancings of, consolidations of and substitutions for the Note. The words
"Business Loan Agreement" mean that certain Business Loan Agreement dated
September 9, 2002.

               1.8. RELATED DOCUMENTS. The words "Related Documents" mean and
include without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the loans made
pursuant to the Business Loan Agreement.

               1.9. SUBSIDIARY. Subsidiary means any corporation, limited
liability company, limited partnership or other similar entity which is either
eligible to be consolidated with Grantor in accordance with GAAP on the
financial statements of Grantor or in which Grantor either directly or
indirectly holds 50% or more of the outstanding capital stock, membership
interests, partnership interest, or any other indicia of ownership.

        2. OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as
follows:

               2.1. PERFECTION OF SECURITY INTEREST. Grantor authorizes Lender
to file such financing statements and to take whatever other actions are
reasonably requested by Lender to perfect and continue Lender's security
interest in the Collateral. Upon request of Lender, Grantor will deliver to
Lender, any and all of the documents evidencing or constituting the Collateral
and/or that are reasonably requested by Lender to perfect and continue Lender's
security interest in the Collateral, and Grantor will note Lender's interest
upon any and all chattel paper if not delivered to Lender for possession by
Lender.

<PAGE>
                                                                          PAGE 3



Grantor hereby appoints Lender as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or to continue the
security interest granted in this Agreement. Lender may at any time, and without
further authorization from Grantor, file a carbon, photographic or other
reproduction of any financing statement or of this Agreement for use as a
financing statement. Grantor will reimburse Lender for all expenses for the
perfection and the continuation of the perfection of Lenders' security interest
in the Collateral. Grantor promptly will notify Lender before any change in
Grantor's name (including any change to the assumed business names of Grantor)
or Grantor's state of organization (including any change in the State of
organization resulting from a merger or reorganization of Grantor). This is a
continuing Security Agreement and will continue in effect even though all or any
part of the Indebtedness is paid in full and even though for a period of time
Grantor may not be indebted to Lender.

               2.2. NO VIOLATION. The execution and delivery of this Agreement
will not violate any law or agreement governing Grantor or to which Grantor is a
party, and its certificate or articles of incorporation and bylaws do not
prohibit any term or condition of this Agreement.

               2.3. ENFORCEABILITY OF COLLATERAL. To the extent the Collateral
consists of accounts, chattel paper, or general intangibles, the Collateral is
enforceable in accordance with its terms, is genuine, and complies with
applicable laws concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as they appear to
be on the Collateral. At the time any account becomes subject to a security
interest in favor of Lender, the account shall be a good and valid account
representing an undisputed, bona fide indebtedness incurred by the account
debtor, for merchandise held subject to delivery instructions or theretofore
shipped or delivered pursuant to a contract of sale, or for services theretofore
performed by Grantor with or for the account debtor; there shall be no setoffs
or counterclaims against any such account; and no agreement under which any
deductions or discounts may be claimed shall have been made with the account
debtor except those disclosed to Lender in writing.

               2.4. LOCATION OF THE COLLATERAL. Grantor, upon request of Lender,
will deliver to Lender in form satisfactory to Lender a schedule of real
properties and Collateral locations relating to Grantor's operations, including
without limitation the following: (a) all real property owned or being purchased
by Grantor; (b) all real property being rented or leased by Grantor; (c) all
storage facilities owned, rented, leased, or being used by Grantor; and (d) all
other properties where tangible Collateral is or may be located. Except in the
ordinary course of its business, Grantor shall not remove the tangible
Collateral from its existing locations without the prior written consent of
Lender.

               2.5. REMOVAL OF COLLATERAL. Grantor shall keep the tangible
Collateral (or to the extent the Collateral consists of intangible property such
as accounts, the records concerning the Collateral) at Grantor's address shown
above or at such other locations as may be acceptable to Lender. Except in the
ordinary course of its business, including the sales of inventory, Grantor shall
not remove the tangible Collateral from its existing locations without the prior
written consent of Lender. To the extent that the Collateral consists of
vehicles, or other mobile property, Grantor shall not take or permit any action
which would require application for certificates of title for the vehicles
outside the State of California, without the prior written consent of Lender.

               2.6. TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold
or accounts collected in the ordinary course of Grantor's business (and except
for sales, leases or licenses of any intellectual property rights embodied in
products of Grantor and its subsidiaries and dispositions of office fixtures and
equipment in the ordinary course of business), Grantor shall not sell, offer to
sell, or otherwise transfer or dispose of the Collateral. While Grantor is not
in default under this Agreement, Grantor may sell, lease or license inventory,
but only in the ordinary course of its business and only to buyers who qualify
as a buyer in the ordinary course of business. A sale in the ordinary course of
Grantor's business does not include a transfer in partial or total satisfaction
of a debtor any bulk sale. Grantor shall not pledge, mortgage, encumber or
otherwise permit the Collateral to be subject to any lien, security interest,
encumbrance, or charge, other than the security interest provided for in this
Agreement and except for Permitted Liens (as defined in the Business Loan
Agreement), without the prior written consent of

<PAGE>
                                                                          PAGE 4



Lender. This includes security interests even if junior in right to the security
interests granted under this Agreement. Unless waived by Lender, from and after
an Event of Default, all proceeds from any disposition of the Collateral (for
whatever reason) shall be held in trust for Lender and shall not be commingled
with any other funds; provided however, this requirement shall not constitute
consent by Lender to any sale or other disposition. Upon receipt, Grantor shall
immediately deliver any such proceeds to Lender.

               2.7. TITLE. Grantor represents and warrants to Lender that it
holds good and marketable title to the Collateral, free and clear of all liens
and encumbrances except for the lien of this Agreement and except for Permitted
Liens. No financing statement covering any of the Collateral is on file in any
public office other than those which reflect the security interest created by
this Agreement (or by any predecessor to this Agreement) or to which Lender has
specifically consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons.

               2.8. COLLATERAL SCHEDULES AND LOCATIONS. As often as Lender shall
reasonably require, and insofar as the Collateral consists of accounts and
general intangibles, Grantor shall deliver to Lender schedules of such
Collateral, including such information as Lender may require, including without
limitation names and addresses of account debtors and agings of accounts and
general intangibles. Insofar as the Collateral consists of inventory and
equipment, Grantor shall deliver to Lender, as often as Lender shall reasonably
require, such lists, descriptions, and designations of such Collateral as Lender
may reasonably require to identify the nature, extent, and location of such
Collateral. Such information shall be submitted for Grantor and each of its
Subsidiaries.

               2.9. MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall
maintain all tangible Collateral in good condition and repair. Grantor will not
commit or permit damage to or destruction of the Collateral or any part of the
Collateral. Lender and its designated representatives and agents shall have the
right at all reasonable times and upon reasonable notice giving adequate
consideration to Grantor's status as a public company with quarterly reporting
obligations to examine, inspect, and audit the Collateral wherever located.
Grantor shall immediately notify Lender of all cases involving the return,
rejection, repossession, loss or damage of or to any Collateral; of any request
for credit or adjustment of any other dispute arising with respect to the
Collateral; and generally of all happenings and events affecting the Collateral
or the value or the amount of the Collateral.

               2.10. TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all
material taxes, assessments and liens upon the Collateral, its use or operation,
except those presently being or to be contested by Grantor in good faith in the
ordinary course of business and for which adequate reserves have been provided.
Grantor may withhold any such payment or may elect to contest any lien if
Grantor is in good faith conducting an appropriate proceeding to contest the
obligation to pay and so long as Lender's interest in the Collateral is not
jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien
which is not discharged within fifteen (15) days, Grantor shall deposit with
Lender cash, a sufficient corporate surety bond or other security satisfactory
to Lender in an amount adequate to provide for the discharge of the lien plus
any interest, costs, attorneys' fees or other charges that could accrue as a
result of foreclosure or sale of the Collateral. In any contest Grantor shall
defend itself and Lender and shall satisfy any final adverse judgment before
enforcement against the Collateral. Grantor shall name Lender as an additional
obligee under any surety bond furnished in the contest proceedings.

               2.11. COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall
comply promptly with all laws, ordinances, rules and regulations of all
governmental authorities, now or hereafter in effect, applicable to the
ownership, production, disposition, or use of the Collateral, except where the
failure to so comply would not reasonably be likely to have a material adverse
effect on the financial condition, operations or assets of Borrower or Grantor,
including the Collateral. Grantor may contest in good faith any such law,
ordinance or regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender's interest in the Collateral, in Lender's
opinion, is not jeopardized.

<PAGE>
                                                                          PAGE 5



               2.12. HAZARDOUS SUBSTANCES. Grantor represents and warrants that
Collateral never has been, and never will be so long as this Agreement remains a
lien on the Collateral, used for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5
through 7.7 of Division 20 of the California Health and Safety Code, Section
25100, et seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. The terms "hazardous waste" and
"hazardous substance" shall also include, without limitation, petroleum and
petroleum by-products or any fraction thereof and asbestos. The representations
and warranties contained herein are based on Grantor's due diligence in
investigating the Collateral for hazardous wastes and substances. Grantor hereby
(a) releases and waives any future claims against Lender for indemnity or
contribution in the event Grantor becomes liable for cleanup or other costs
under any such laws, and (b) agrees to indemnify and hold harmless Lender
against any and all claims and losses resulting from a breach of this provision
of this Agreement. This obligation to indemnity shall survive the payment of the
Indebtedness and the satisfaction of this Agreement.

        3. INSURANCE.

               3.1. MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and
maintain all risks insurance, including without limitation fire, theft and
liability coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably acceptable
to Lender. Grantor, upon request of Lender, will deliver to Lender from time to
time the policies or certificates of insurance in form satisfactory to Lender,
including stipulations that coverages will not be cancelled or diminished
without at least ten (10) days' prior written notice to Lender and not including
any disclaimer of the insured's liability for failure to give such a notice.
Each insurance policy also shall include an endorsement providing that coverage
in favor of Lender will not be impaired in any way by any act, omission or
default of Grantor or any other person. In connection with all policies covering
assets in which Lender holds or is offered a security interest, Grantor will
provide Lender with such loss payable or other endorsements as Lender may
require. If Grantor at any time fails to obtain or maintain any insurance as
required under this Agreement, Lender may (but shall not be obligated to) obtain
such insurance as Lender deems appropriate, including if it so chooses "single
interest insurance," which will cover only Lender's interest in the Collateral.

               3.2. APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly
notify Lender of any loss or damage to Collateral. Lender may make proof of loss
if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds
of any insurance on the Collateral, including accrued Proceeds thereon, shall be
held by Lender as part of the Collateral. If Lender consents to repair or
replacement of damaged or destroyed Collateral, Lender shall, upon satisfactory
proof of expenditure, pay or reimburse Grantor from the proceeds for the
reasonable cost of repair or restoration. If Lender does not consent to repair
or replacement of the Collateral, Lender shall retain a sufficient amount of the
proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor.
Any proceeds which have not been disbursed within six (6) months after their
receipt and which Grantor has not committed to the repair or restoration of the
Collateral shall be used to prepay the Indebtedness.

               3.3. INSURANCE RESERVES. Lender may require Grantor to maintain
with Lender reserves for payment of insurance premiums, which reserves shall be
created by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due date,
amounts at least equal to the insurance premiums to be paid. If fifteen (15)
days before payment is due, the reserve funds are insufficient, Grantor shall
upon demand pay any deficiency to Lender. The reserve funds shall be held by
Lender as a general deposit and shall constitute a non-interest-bearing account
which Lender may satisfy by payment of the insurance premiums required to be
paid by Grantor as they become due. Lender does not hold the reserve funds in
trust for Grantor, and Lender is not

<PAGE>
                                                                          PAGE 6



the agent of Grantor for payment of the insurance premiums required to be paid
by Grantor. The responsibility for the payment of premiums shall remain
Grantor's sole responsibility.

               3.4. INSURANCE REPORTS. Grantor, upon request of Lender, shall
furnish to Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy; (d)
the property insured; (e) the then current value on the basis of which insurance
has been obtained and the manner of determining that value; and (f) the
expiration date of policy. In addition, Grantor shall upon request by Lender
(however not more often than annually) have an independent appraiser
satisfactory to Lender determine, as applicable, the cash value or replacement
cost of the Collateral.

        4. GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until the
occurrence of an Event of Default and except as otherwise provided below with
respect to accounts, Grantor may have possession of the tangible personal
property and beneficial use of all the Collateral and may use it in any lawful
manner not inconsistent with this Agreement or the Related Documents, provided
that Grantor's right to possession and beneficial use shall not apply to any
Collateral where possession of the Collateral by Lender is required by law to
perfect Lender's security interest in such Collateral. Until the occurrence of
an Event of Default, Grantor may collect any of the Collateral consisting of
accounts. At any time after an Event of Default exists, Lender may exercise its
rights to collect the accounts and to notify account debtors to make payments
directly to Lender for application to the Indebtedness. If Lender at any time
has possession of any Collateral, whether before or after an Event of Default,
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Lender takes such action for that purpose as
Grantor shall request or as Lender, in Lender's sole discretion, shall deem
appropriate under the circumstances, but failure to honor any request by Grantor
shall not of itself be deemed to be a failure to exercise reasonable care.
Lender shall not be required to take any steps necessary to preserve any rights
in the Collateral against prior parties, nor to protect, preserve or maintain
any security interest given to secure the Indebtedness.

        5. EXPENDITURES BY LENDER. If not discharged or paid when due, Lender
may (but shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral and may make advances under either this
Agreement, the Note, the Business Loan Agreement, or any Related Documents (as
Lender may determine) in connection with same. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note, the Business Loan
Agreement or the Related Documents with respect to which it is so advanced (the
"Applicable Expenditure Rate") from the date incurred or paid by Lender to the
date of repayment by Grantor. All such expenses shall become a part of the
Indebtedness and, at Lender's option, will (a) be payable on demand, (b) be
added to the balance of such Note and be apportioned among and be payable with
any installment payments to become due during either (i) the term of any
applicable insurance policy or (ii) the remaining term of such Note, or (c) be
treated as a balloon payment which will be due and payable at such Note's
maturity. This Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon the occurrence of an Event of Default.

        6. EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:

               6.1. DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any
payment when due on the Indebtedness.

               6.2. COVENANT DEFAULT. A default or breach shall occur in
Borrower's obligations under the section of either Business Loan Agreement
entitled "Financial Covenants".

<PAGE>
                                                                          PAGE 7



               6.3. DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any
Grantor default under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any other
creditor or person that may materially affect Borrower's or Grantor's financial
condition, operations or assets or Borrower's or Grantor's ability to repay the
Indebtedness or perform their respective obligations under this Agreement or any
of the Related Documents.

               6.4. FALSE STATEMENTS. Any warranty, representation or statement
made or furnished to Lender by or on behalf of Grantor under this Agreement,
either Note or the Related Documents is false or misleading in any material
respect, either now or, at the time of the closing of the Loan and/or the
advance of funds under the Business Loan Agreement.

               6.5. DEFECTIVE COLLATERALIZATION. This Agreement or any of the
Related Documents granting Security Interests in the Collateral ceases to be in
full force and effect (including failure of any collateral documents to create a
valid and perfected security interest or lien) at any time and for any reason.

               6.6. INSOLVENCY. The dissolution or termination of Grantor's
existence as a going business, the insolvency of Grantor, the appointment of a
receiver for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Grantor.

               6.7. CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of
foreclosure or forfeiture proceedings, whether by judicial proceeding,
self-help, repossession or any other method, by any creditor or Grantor or by
any governmental agency against the Collateral or any other collateral securing
the Indebtedness. This includes a garnishment of any of Grantor's deposit
accounts with Lender. However, this Event of Default shall not apply if there is
a good faith dispute by Grantor as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if Grantor
gives Lender written notice of the creditor or forfeiture proceeding and
deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion, as being
an adequate reserve or bond for the dispute.

               6.8 ADVERSE CHANGE. Lender believes that the prospect of payment
or performance of the Indebtedness is materially impaired.

               6.9 OTHER DEFAULTS. Either (a) the failure of Grantor to comply
with or to perform any other term, obligation, covenant or condition contained
in this Agreement and such failure continues for ten (10) days after the date of
written notice from Lender identifying such failure or (b) an Event of Default
(as such term is defined in the Business Loan Agreement) occurs under either
Business Loan Agreement, under any such Related Documents, or under any other
agreement between Lender and either Borrower or Grantor.

        7. RIGHTS TO CURE. If any default, other than a Default on Indebtedness,
is curable and if Grantor has not been given a prior notice of a breach of the
same provision of this Agreement, it may be cured (and no Event of Default will
have occurred) it Grantor, after Lender sends written notice demanding cure of
such default, (a) cures the default within fifteen (15) days; or (b), if the
cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems in Lender's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.

        8. RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under
this Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the California Uniform Commercial Code. In addition and
without limitation, if an Event of Default occurs Lender may exercise any one or
more of the following rights and remedies:

<PAGE>
                                                                          PAGE 8



               8.1. ACCELERATE INDEBTEDNESS. Lender may declare the entire
Indebtedness, including any prepayment penalty which Grantor would be required
to pay, immediately due and payable, without notice.

               8.2. ASSEMBLE COLLATERAL. Lender may require Grantor to deliver
to Lender all or any portion of the Collateral and any and all certificates of
title and other documents relating to the Collateral. Lender may require grantor
to assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
Collateral contains other goods not covered by this Agreement at the time of
repossession, Grantor agrees Lender may take such other goods, provided that
Lender makes reasonable efforts to return them to Grantor after repossession.

               8.3. SELL THE COLLATERAL. Lender shall have full power to sell,
lease, transfer, or otherwise deal with the Collateral or proceeds thereof in
its own name or that of Grantor. Lender may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Lender will give
Grantor reasonable notice of the time after which any private sale or any other
intended disposition of the Collateral is to be made. The requirements of
reasonable notice shall be met if such notice is given at least ten (10) days,
or such lesser time as required by state law, before the time of the sale or
disposition. All expenses relating to the disposition of the Collateral,
including without limitation the expenses of retaking, holding, insuring,
preparing for sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the Applicable Expenditure Rate from date of expenditure until
repaid.

               8.4. APPOINT RECEIVER. To the extent permitted by applicable law,
Lender shall have the following rights and remedies regarding the appointment of
a receiver: (a) Lender may have a receiver appointed as a matter of right, (b)
the receiver may be an employee of Lender and may serve without bond, and (c)
all fees of the receiver and his or her attorney shall become part of the
Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the Applicable Expenditure Rate from date of expenditure until
repaid.

               8.5. COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or
through a receiver, may collect the payments, rents, income, and revenues from
the Collateral. Lender may at any time in its discretion transfer any Collateral
into its own name or that of its nominee and receive the payments, rents,
income, and revenues therefrom and hold the same as security for the
Indebtedness or apply it to payment of the Indebtedness in such order of
preference as Lender may determine. Insofar as the Collateral consists of
accounts, general intangibles, insurance policies, instruments, chattel paper,
choses in action, or similar property, Lender may demand, collect, receipt for,
settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as
Lender may determine, whether or not Indebtedness or Collateral is then due. For
these purposes, Lender may, on behalf of and in the name of Grantor, receive,
open and dispose of mail addressed to Grantor, change any address to which mail
and payments are to be sent; and endorse notes, checks, drafts, money orders,
documents of title, instruments and items pertaining to payment, shipment, or
storage of any Collateral. To facilitate collection, Lender may notify account
debtors and obligors on any Collateral to make payments directly to Lender.

               8.6. OBTAIN DEFICIENCY. If Lender chooses to sell any or all of
the Collateral, Lender may obtain a judgment against Grantor for any deficiency
remaining on the Indebtedness due to Lender after application of all amounts
received from the exercise of the rights provided in this Agreement. Grantor
shall be liable for a deficiency even if the transaction described in this
subsection is a sale of accounts or chattel paper.

               8.7. APPLICATION AND LIQUIDATION OF DEPOSIT ACCOUNTS. Without
limiting any rights Lender may have under the Note to obtain payment of any of
the Indebtedness and/or to pay itself for any Advances (as defined in the
Business Loan Agreement), interest, Lender's Expenditures (as defined in the
Business Loan Agreement), and/or any attorneys' and other fees, charges, and
other

<PAGE>
                                                                          PAGE 9



expenses which are from time to time due and payable by Grantor and/or Borrower
to Lender under the Note, the Business Loan Agreement, or any Related Documents
and charge same to any deposit or other accounts maintained or established by
Borrower with Lender, without constituting a retention of Collateral in
satisfaction of an obligation within the meaning of Sections 9620, 9621, and/or
9624 of the California Commercial Code or an action under California Code of
Civil Procedure Section 726, Lender may apply any and all amounts maintained by
Borrower with Lender as deposit accounts (as that term is defined under Section
9102 of the Code) or other accounts against the Indebtedness.

               8.8. OTHER RIGHTS AND REMEDIES. Lender shall have all the rights
and remedies of a secured creditor under the provisions of the California
Uniform Commercial Code, as may be amended from time to time. In addition,
Lender shall have and may exercise any or all other rights and remedies it may
have available at law, in equity, or otherwise.

               8.9. CUMULATIVE REMEDIES. All of Lender's rights and remedies,
whether evidenced by this Agreement or the Related Documents or by any other
writing, shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Grantor under this Agreement, after Grantor's failure to perform,
shall not affect Lender's right to declare a default and to exercise its
remedies.

        9. CONSENT TO LOAN PARTICIPATION. Grantor agrees and consents to
Lender's sale or transfer, whether now or later, of one or more participation
interests in the Indebtedness to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation whatsoever, to
any one or more purchasers, or potential purchasers, any information or
knowledge Lender may have about Grantor or about any other matter relating to
the Indebtedness, and Grantor hereby waives any rights to privacy Grantor may
have with respect to such matters. Grantor additionally waives any and all
notices of sale of participation interests, as well as all notices of any
repurchase of such participation interests. Grantor also agrees that the
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Indebtedness and will have all the
rights granted under the participation agreement or agreements governing the
sale of such participation interests. Grantor further waives all rights of
offset or counterclaim that it may have now or later against Lender or against
any purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Grantor's obligation under the
Indebtedness irrespective of the failure or insolvency of any holder of any
interest in the Indebtedness. Grantor further agrees that the purchaser of any
such participation interests may enforce its interests irrespective of any
personal claims or defenses that Grantor may have against Lender.

        10. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are
a part of this Agreement:

               10.1. AMENDMENTS. This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment.

               10.2. APPLICABLE LAW. This Agreement has been delivered to Lender
and accepted by Lender in the State of California. If there is a lawsuit,
Grantor agrees upon Lender's request to submit to the jurisdiction of the courts
of the county of Santa Clara, State of California. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California.

               10.3. ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon
demand all of Lender's costs and expenses, including attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement of this
Agreement. Lender may pay someone else to help enforce this Agreement, and
Grantor shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender's attorneys' fees and legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal

<PAGE>
                                                                         PAGE 10



expenses for bankruptcy proceedings (and including efforts to modify or vacate
any automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Grantor also shall pay all court Costs and such additional
fees as may be directed by the court.

               10.4. CAPTION HEADINGS. Caption headings in this Agreement are
for convenience purposes only and are not to be used to interpret or define the
provisions of this Agreement.

               10.5. NOTICES. All notices required to be given under this
Agreement shall be given in writing, may be sent by telefacsimile (unless
otherwise required by law), and shall be effective when actually delivered or
when deposited with a nationally recognized overnight courier or deposited in
the United States mail, first class, postage prepaid, addressed to the party to
whom the notice is to be given at the address shown above. Any party may change
its address for notices under this Agreement by giving formal written notice to
the other parties, specifying that the purpose of the notice is to change the
party's address. To the extent permitted by applicable law, if there is more
than one Grantor, notice to any Grantor will constitute notice to all Grantors.
For notice purposes, Grantor will keep Lender informed at all times of Grantor's
current address(es).

               10.6. POWER OF ATTORNEY. Grantor hereby appoints Lender as its
true and lawful attorney-in-fact, irrevocably, with full power of substitution
to do the following: (a) to demand, collect, receive, receipt for, sue and
recover all sums of money or other property which may now or hereafter become
due, owing or payable from the Collateral; (b) to execute, sign and endorse any
and all claims, instruments, receipts, checks, drafts or warrants issued in
payment for the Collateral; (c) to settle or compromise any and all claims
arising under the Collateral, and, in the place and stead of Grantor, to execute
and deliver its release and settlement for the claim; and (d) to file any claim
or claims or to take any action or institute or take part in any proceedings,
either in its own name or in the name of Grantor, or otherwise, which in the
discretion of Lender may seem to be necessary or advisable. This power is given
as security for the Indebtedness, and the authority hereby conferred is and
shall be irrevocable and shall remain in full force and affect until renounced
by Lender.

               10.7. PREFERENCE PAYMENT. Any monies Lender pays because of an
asserted preference claim in any bankruptcy of Borrower or Grantor will become a
part of the Indebtedness and, at Lender's option, shall be payable by Grantor as
provided above in the "EXPENDITURES BY LENDER" paragraph.

               10.8. SEVERABILITY. If a court of competent jurisdiction finds
any provision of this Agreement to be invalid or unenforceable as to any person
or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.

               10.9. SUCCESSOR INTERESTS. Subject to the limitations set forth
above on transfer of the Collateral, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns.

               10.10. WAIVER. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender is exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or any
other provision of this Agreement. No prior waiver by Lender, nor any course of
dealing between Lender and Grantor, shall constitute a waiver of any of Lender's
rights or of any of Grantor's obligations as to any future transactions.
Whenever the consent of Lender is required under this Agreement, the granting of
such consent by Lender in any instance shall not constitute continuing consent
in subsequent instances where such consent is required and in all cases such
consent may be granted or withhold in the sole discretion of Lender.

<PAGE>
                                                                         PAGE 11



               10.11. WAIVER OF CO-OBLIGOR'S RIGHTS. If more than one person is
obligated for the Indebtedness, Grantor irrevocably waives, disclaims and
relinquishes all claims against such other person which Grantor has or would
otherwise have by virtue of payment of the Indebtedness or any part thereof,
specifically including but not limited to all rights of indemnity, contribution
or exoneration.

               10.12. SUBSIDIARIES OF BORROWER. To the extent the context of any
provisions of this Agreement makes it appropriate, including without limitation
any representation, warranty or covenant, the word "Borrower" as used in this
Agreement shall include all of Borrower's Subsidiaries. Lender shall have the
right, in its sole discretion, to require any Subsidiaries existing on the date
hereof and any Subsidiaries formed or acquired after the date of this Agreement
to execute and deliver a security agreement (in a form and content substantially
similar to this Agreement, as from time to time amended) wherein such Subsidiary
grants a security interest in all collateral of such Subsidiary that is
substantially similar to the Collateral encumbered by this Agreement.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any loan or other financial
accommodation to any of Borrower's Subsidiaries.

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS AS OF SEPTEMBER 9, 2002.


GRANTOR:

Niku Corporation


By:      /s/ Joshua Pickus
   --------------------------------------
   Joshua Pickus, Chief Financial Officer
   of Niku Corporation



<PAGE>

                                 PROMISSORY NOTE

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
   PRINCIPAL       LOAN DATE    MATURITY      LOAN NO.     CALL/COLL      ACCOUNT      OFFICER    INITIALS

<S>                <C>          <C>           <C>          <C>            <C>          <C>        <C>
 $5,000,000.00     09-09-02     February      373376963    2000                        024
                                15, 2004
----------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

------------------------------------------------------------------------------
BORROWER:    Niku Corporation                  LENDER:    Mid-Peninsula Bank
             305 Main Street                              Palo Alto Main
             Redwood City, CA  94063                      420 Cowper Street
                                                          Palo Alto, CA  94301
------------------------------------------------------------------------------

PRINCIPAL AMOUNT: $5,000,000.00   RATE: 7.500%   DATE OF NOTE: SEPTEMBER 9, 2002


PROMISE TO PAY. IN ACCORDANCE WITH THE COVENANTS, TERMS AND CONDITIONS OF THIS
NOTE, NIKU CORPORATION, A DELAWARE CORPORATION ("BORROWER") PROMISES TO PAY TO
MID-PENINSULA BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF
AMERICA, THE PRINCIPAL AMOUNT OF FIVE MILLION & 00/100 DOLLARS ($5,000,000.00).
BORROWER PROMISES TO PAY INTEREST ON THE UNPAID OUTSTANDING PRINCIPAL BALANCE
UNDER THE BUSINESS LOAN AGREEMENT. INTEREST SHALL BE CALCULATED FROM THE DATE
THE PRINCIPAL BALANCE IS ADVANCED UNDER THE BUSINESS LOAN AGREEMENT UNTIL
REPAYMENT OF SUCH AMOUNT.

PAYMENT. BORROWER MAY REPAY ALL OR ANY PORTION OF THE AMOUNT OF THIS LOAN AT ANY
TIME (TOGETHER WITH ACCRUED BUT UNPAID INTEREST THEREON), BUT IN ANY CASE SHALL
PAY ALL OUTSTANDING AMOUNTS ON FEBRUARY 15, 2004. The principal amount of this
Note (or so much thereof as may then be outstanding), all interest, all Lender's
Expenditures (as defined in the Business Loan Agreement) of even date herewith
and all attorneys' and other fees, charges, and other expenses which are from
time to time due and payable as specified in this Agreement or any Related
Document are and shall be due and payable by February 15, 2004 (the "Maturity
Date") or earlier in accordance with the terms of this Note, the Business Loan
Agreement or any Related Document. Lender is hereby authorized and empowered to
pay itself for this loan, interest, Lender's Expenditures, and/or any attorneys'
and other fees, charges, and other expenses which are from time to time due and
payable as specified in this Note, the Business Loan Agreement, and/or any
Related Document and charge same to any deposit or other accounts maintained or
established by Borrower with Lender and/or to make advances under this Note, the
Business Loan Agreement, or any Related Document in connection with same as set
forth in this Note, the Business Loan Agreement and/or any Related Document.
Absent any demand or payment by Lender to itself in accordance with the
authority contained in this Note, BORROWER WILL PAY REGULAR QUARTERLY PAYMENTS
OF PRINCIPAL IN THE AMOUNT OF TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) PER
QUARTER AND REGULAR QUARTERLY PAYMENTS OF ALL ACCRUED UNPAID INTEREST DUE ON THE
PRINCIPAL AMOUNT FROM TIME TO TIME OUTSTANDING DURING SUCH QUARTER, THE FIRST OF
WHICH SHALL BE DECEMBER 2, 2002, WITH ALL SUBSEQUENT PAYMENTS OF PRINCIPAL AND
INTEREST TO BE DUE EVERY THREE (3) MONTHS AFTER THAT UNTIL THE EARLIER OF THE
DATE OF DEMAND FOR FULL PAYMENT BY LENDER IN ACCORDANCE WITH THE TERMS OF THIS
NOTE, THE BUSINESS LOAN AGREEMENT AND/OR ANY RELATED DOCUMENT OR THE MATURITY
DATE. ON THE EARLIER OF THE DATE OF DEMAND FOR FULL PAYMENT BY LENDER IN
ACCORDANCE WITH THE TERMS OF THIS NOTE, THE BUSINESS LOAN AGREEMENT AND/OR ANY
RELATED DOCUMENT OR THE MATURITY DATE, THE THEN-OUTSTANDING PRINCIPAL BALANCE,
ALL ACCRUED AND UNPAID INTEREST, AND ALL ACCRUED AND UNPAID LENDER EXPENSES WILL
BE DUE AND PAYABLE. UNLESS OTHERWISE AGREED OR REQUIRED BY APPLICABLE LAW,
PAYMENTS WILL BE APPLIED FIRST TO UNPAID COLLECTION COSTS AND LATE CHARGES, NEXT
TO ACCRUED UNPAID INTEREST, THEN ANY REMAINING AMOUNT TO PRINCIPAL. THE ANNUAL
INTEREST RATE FOR THIS NOTE IS COMPUTED ON A 365/360 BASIS; THAT IS, BY APPLYING
THE RATIO OF THE ANNUAL INTEREST RATE OVER A YEAR OF 360 DAYS, MULTIPLIED BY THE
OUTSTANDING PRINCIPAL BALANCE, MULTIPLIED BY THE ACTUAL NUMBER OF DAYS THE
PRINCIPAL BALANCE IS OUTSTANDING. Borrower will pay Lender at Lender's address
shown above or at such other place as Lender may designate in writing.

INTEREST RATE. The interest rate on this Note is and shall be seven and one-half
percent (7.5%) per annum, compounded daily. NOTICE: Under no circumstances will
the interest rate on this Note be more than the maximum rate allowed by
applicable law.

PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of the amounts outstanding at any time under this Note, Borrower
understands that Lender is entitled to a MINIMUM INTEREST CHARGE OF $250.00.
Other than Borrower's obligation to pay any minimum interest charge, Borrower
may pay without penalty all or a portion of the amount owed earlier than it is
due. Early payments will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments of principal and
accrued unpaid interest thereafter due, but will be applied in the inverse order
such principal payments would otherwise be due in order to reduce the amount of
principal due at maturity. Borrower agrees not to send Lender payments marked
"paid in full", "without recourse", or similar language. If Borrower sends such
a payment, Lender may accept it without losing any of Lender's rights under this
Note, and Borrower will remain obligated to pay any further amount owed to
Lender. All written communications concerning disputed amounts, including any
check or other payment instrument that indicates that the


<PAGE>
                                                                          PAGE 2



payment constitutes "payment in full" of the amount owed or that is tendered
with other conditions or limitations or as full satisfaction of a disputed
amount must be mailed or delivered to: Mid-Peninsula Bank, Palo Alto Main, 420
Cowper Street, Palo Alto, CA 94301.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% OF THE UNPAID PORTION OF THE REGULARLY SCHEDULED PAYMENT.

INTEREST AFTER DEFAULT. Upon Borrower's failure to pay all amounts declared due
pursuant to this section, including failure to pay upon final maturity. Lender,
at its option, may, if permitted under applicable law, increase the variable
interest rate on this Note to 4.000 percentage points over the interest rate
that would have been applicable had no such Event of Default occurred.

DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:

        PAYMENT DEFAULT. Borrower fails to make any payment of principal when
        due or of interest within five (5) days of when due under this Note.

        COVENANT DEFAULT. A default or breach shall occur in Borrower's
        obligations under the section of the Business Loan Agreement entitled
        "Financial Covenants" or an event or condition exists and is continuing
        that, with the passage of time, the giving of notice or both would
        constitute breach or default under such section.

        DEFAULT IN FAVOR OF THIRD PARTIES. Borrower defaults under any loan,
        extension of credit, security agreement, purchase or sales agreement, or
        any other agreement, in favor of any other creditor or person that may
        materially adversely affect Borrower's financial condition, operations
        or assets or Borrower's ability to repay this Note or perform Borrower's
        obligations under this Note or any of the related documents.

        FALSE STATEMENTS. Any warranty, representation or statement made or
        furnished to Lender by Borrower or on Borrower's behalf under this Note
        or the Related Documents is false or misleading in any material respect,
        either now or at the time of the closing of the Loan and/or the time of
        advancing any funds hereunder.

        INSOLVENCY. The dissolution or termination of Borrower's existence as a
        going business, the insolvency of Borrower, the appointment of a
        receiver for any part of Borrower's property, any assignment for the
        benefit of creditors, any type of creditor workout, or the commencement
        of any proceeding under any bankruptcy or insolvency laws by or against
        Borrower.

        CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
        forfeiture proceedings, whether by judicial proceeding, self-help,
        repossession or any other method, by any creditor of Borrower or by any
        governmental agency against any collateral securing the loan. This
        includes a garnishment of any of Borrower's accounts, including deposit
        accounts, with Lender. However, this Event of Default shall not apply if
        there is a good faith dispute by Borrower as to the validity or
        reasonableness of the claim which is the basis of the creditor or
        forfeiture proceeding and if Borrower gives Lender written notice of the
        creditor or forfeiture proceeding and deposits with Lender monies or a
        surety bond for the creditor or forfeiture proceeding, in an amount
        determined by Lender, in its sole discretion, as being an adequate
        reserve or bond for the dispute.

        CHANGE IN OWNERSHIP. Any individual or entity (other than Borrower's
        chief executive officer) shall acquire fifty-one percent (51%) or more
        of the common stock of Borrower.

        ADVERSE CHANGE. Lender believes the prospect of payment or performance
        of this Note is impaired.

        OTHER DEFAULTS. Either (a) Borrower falls to comply with or to perform
        any other term, obligation, covenant or condition contained in this Note
        and such failure continues for ten (10) days after the date of written
        notice from Lender identifying such failure and/or (b) an Event of
        Default (as defined in such agreement) occurs in any of the Related
        Documents or in any other agreement between Lender and Borrower.

        CURE PROVISIONS. If any default, other than a default in payment is
        curable and if Borrower has not been given a notice of a breach of the
        same provision of this Note within the preceding twelve (12) months, it
        may be cured (and no event of default will have occurred) if Borrower,
        after receiving written notice from Lender demanding cure of such
        default: (1) cures the default within fifteen (15) days; or (2) if the
        cure requires more than fifteen (15) days, immediately initiates steps
        which Lender deems in Lender's sole discretion to be sufficient to cure
        the default and thereafter continues and completes all reasonable and
        necessary steps sufficient to produce compliance as soon as reasonably
        practical.

LENDER'S RIGHTS. Upon the occurrence of an Event of Default, Lender may declare
the entire unpaid principal balance on this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and Lender's legal expenses, whether or not there is a lawsuit, including
attorneys' fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals. Borrower also
will pay any court costs, in addition to all other sums provided by law.

GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF CALIFORNIA. THIS NOTE
HAS BEEN ACCEPTED BY LENDER IN THE STATE OF CALIFORNIA.

<PAGE>
                                                                          PAGE 3



CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of Santa Clara County, State of
California.

COLLATERAL. Borrower acknowledges this Note is secured by the Collateral, as
described in that certain Commercial Security Agreement dated September 9, 2002.

BUSINESS LOAN AGREEMENT. In addition to the terms and conditions contained in
the Note, the debt evidenced by this Note is also subject to the terms and
conditions contained in that certain Business Loan Agreement dated as of
September 9, 2002, executed by Borrower in favor of Lender.

SUCCESSOR INTERESTS. The terms of this Note shell be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower, to the extent allowed by
law, waives any applicable statute of limitations, presentment, demand for
payment, and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, Borrower shall not be released
from liability. Borrower agrees that Lender may renew or extend (repeatedly and
for any length of time) this Note and/or the Business Loan Agreement or release
any party or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the Collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.


BORROWER:


NIKU CORPORATION


BY: /S/ JOSHUA PICKUS
   ---------------------------------------
    JOSHUA PICKUS, CHIEF FINANCIAL OFFICER
    OF NIKU CORPORATION