F5 NETWORKS, INC.
                       NONQUALIFIED STOCK OPTION AGREEMENT


     THIS  NONQUALIFIED  STOCK OPTION  AGREEMENT (the  "Agreement")  is made and
entered  into as of October  23, 2000 (the "Grant  Date")  between F5  Networks,
Inc., a Washington corporation (the "Company") and Jeff Pancottine ("Holder").

     THE PARTIES AGREE AS FOLLOWS:

     1. Grant of Option;  Grant Date. The Company  hereby grants to Holder,  the
right (the  "Option") to purchase up to 200,000  shares of the Company's  Common
Stock (the "Option Shares"),  150,000 at a price per share of $33.00, and 50,000
at a price  per  share of  $30.00  (the  "Exercise  Price"),  on the  terms  and
conditions set forth in this  Agreement.  This Option is not intended to qualify
as an incentive stock option for purposes of Section 422 of the Code. The number
and kind of Option  Shares and the  Exercise  Price may be  adjusted  in certain
circumstances in accordance with the provisions of Section 9 below.

     2. Definitions.  For purposes of this Agreement,  the following terms shall
be defined as set forth below:

          2.1 Affiliate.  "Affiliate" means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing.

          2.2  Board.  "Board"  means the  Board of  Directors  of the  Company.

          2.3 Code.  "Code" means the Internal Revenue Code of 1986, as amended.

          2.4  Common  Stock.  "Common  Stock"  means  the  common  stock of the
Company.

          2.5  Continuous  Service.  "Continuous  Service"  means that  Holder's
service with the Company or an Affiliate,  whether as an employee or consultant,
is not  interrupted  or  terminated.  Holder's  Continuous  Service shall not be
deemed to have  terminated  merely  because of a change in the capacity in which
Holder  renders  service  to the  Company  or an  Affiliate  as an  employee  or
consultant  or a change in the entity for which  Holder  renders  such  service,
provided that there is no  interruption  or termination  of Holder's  Continuous
Service.  For  example,  a change in status from an employee of the Company to a
consultant of an Affiliate  will not  constitute an  interruption  of Continuous
Service.  The Board, in its sole discretion,  may determine  whether  Continuous
Service  shall be  considered  interrupted  in the case of any leave of  absence
approved  by the  Board,  including  sick  leave,  military  leave or any  other
personal leave.

          2.6 Disability.  "Disability" means the permanent and total disability
of Holder within the meaning of Section 22(e)(3) of the Code.

<PAGE>

          2.7  Expiration  Date.  "Expiration  Date"  means  October  22,  2010.

          2.8 Fair Market Value.  "Fair Market Value" means, as of any date, the
value of the  Common  Stock.  If the Common  Stock is listed on any  established
stock exchange or traded on the NASDAQ  National  Market or the NASDAQ Small Cap
Market,  the Fair Market  Value of a share of Common  Stock shall be the closing
sales price for such stock (or the closing  bid, if no sales were  reported)  as
quoted on such  exchange or market (or the  exchange or market with the greatest
volume of trading in the Common  Stock) on the day of  determination  or, if the
day of  determination  is not a market  trading  day,  then on the  last  market
trading  day prior to the day of  determination,  as reported in The Wall Street
Journal or such other source as the Board deems reliable. In the absence of such
markets for the Common Stock,  the Fair Market Value shall be determined in good
faith by the Board.

          2.9 Securities Act. "Securities Act" means the Securities Act of 1933,
as amended.

          2.10 Vesting Commencement Date. "Vesting Commencement Date" shall mean
Holder's first day of continuous service with the Company.

     3. Vesting.  Subject to the limitations  contained herein,  the Option will
vest and become  exercisable  with  respect  to 25% of the Option  Shares on the
first  anniversary  of the  Vesting  Commencement  Date and with  respect to the
remaining  Option  Shares in equal  monthly  installments  over the three  years
following the Vesting  Commencement Date;  provided that vesting will cease upon
the termination of Holder's Continuous Service.

     4. Method of Payment of the Exercise  Price.  Payment of the Exercise Price
is due in full upon exercise of all or any part of the Option.  Holder may elect
to make payment of the Exercise  Price in cash or by check or one or more of the
following  if the  Company,  in its sole  discretion  at the time the  Option is
exercised, is then offering such alternatives:

          (a) Provided that at the time of exercise the Common Stock is publicly
traded and quoted  regularly  in The Wall  Street  Journal,  then  pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which,  prior to the issuance of Common Stock,  results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds (a "cashless
exercise").

          (b) Provided that at the time of exercise the Common Stock is publicly
traded and quoted  regularly  in The Wall  Street  Journal,  then by delivery of
already-owned  shares of Common Stock  (valued at their Fair Market Value on the
date of exercise) if (i) either Holder has held the already-owned shares for the
period required to avoid a charge to the Company's reported earnings  (generally
six  months) or Holder did not  acquire the  already-owned  shares,  directly or
indirectly from the Company and (ii) Holder owns the  already-owned  shares free
and clear of any liens, claims,  encumbrances or security interests.  "Delivery"
for these purposes, in the sole discretion of the Company at the time the Option
is exercised,  shall include delivery to the Company of Holder's  attestation of
ownership  of such shares of Common  Stock in a form  approved  by the  Company.

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<PAGE>

Notwithstanding the foregoing,  the Option may not be exercised by tender to the
Company of Common Stock to the extent such tender  would  constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company's stock.

          (c) Provided  there has been a change in control  described in Section
9(c) and the surviving  corporation or acquiring  corporation  refuses to assume
the Option or to substitute a similar option for the Option, then by authorizing
the Company to withhold  shares  from the shares of the Common  Stock  otherwise
issuable to Holder as a result of the  exercise  of the Option.  Notwithstanding
the foregoing,  the Option may not be exercised by withholding  shares of Common
Stock to the  extent  such  withholding  would  constitute  a  violation  of the
provisions of any law, regulation or agreement restricting the redemption of the
Company's stock.

     5. Whole Shares. The Option may only be exercised for whole shares.

     6.  Securities  Law  Compliance.  Notwithstanding  anything to the contrary
contained  herein,  the Option may not be exercised  unless the shares  issuable
upon exercise of the Option are then registered  under the Securities Act or, if
such shares are not then so  registered,  the Company has  determined  that such
exercise and issuance would be exempt from the registration  requirements of the
Securities  Act.  The  exercise  of the  Option  must  also  comply  with  other
applicable laws and regulations  governing the Option, and the Option may not be
exercised if the Company  determines  that the exercise would not be in material
compliance with such laws and regulations.

     7. Term.  The term of the Option  commences  on the Grant Date and  expires
upon the earliest of the following:

          (a) three (3) months  after the  termination  of  Holder's  Continuous
Service for any reason other than death or  Disability,  provided that if during
any part of such three-month period the Option is not exercisable solely because
of the  condition  set forth in Section 6, the Option shall not expire until the
earlier of the Expiration  Date or until it shall have been  exercisable  for an
aggregate  period  of  three  (3)  months  after  the  termination  of  Holder's
Continuous Service;

          (b) twelve (12) months after the  termination  of Holder's  Continuous
Service due to Disability;

          (c) eighteen  (18) months after  Holder's  death if Holder dies either
during  Holder's  Continuous  Service or within three (3) months after  Holder's
Continuous Service terminates for reason other than Cause;

          (d) the Expiration Date; or

          (e) the tenth (10th) anniversary of the Grant Date.

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<PAGE>

     8. Exercise.

          (a) The vested portion of the Option may be exercised  during its term
by  delivering  a Notice of Exercise in the form  attached  hereto as Exhibit A,
together with the Exercise  Price (payable in the manner set forth in Section 4)
to the  Secretary  of the  Company,  or to such other  person as the Company may
designate,   during  regular  business  hours,  together  with  such  additional
documents as the Company may then require.

          (b) By  exercising  the Option,  Holder agrees that, as a condition to
any  exercise  of the  Option,  the  Company  may  require  Holder  to  enter an
arrangement  providing  for the  payment  by  Holder to the  Company  of any tax
withholding  obligation of the Company  arising by reason of (1) the exercise of
the Option or (2) the disposition of shares acquired upon such exercise.

     9. Adjustments Upon Changes in Stock.

          (a)  Capitalization  Adjustments.  If any change is made in the Common
Stock  without the receipt of  consideration  by the  Company  (through  merger,
consolidation,   reorganization,   recapitalization,    reincorporation,   stock
dividend,  dividend  in  property  other than  cash,  stock  split,  liquidating
dividend,  combination  of  shares,  exchange  of  shares,  change in  corporate
structure or other transaction not involving the receipt of consideration by the
Company),   the  number  of  Option  Shares  and  the  Exercise  Price  will  be
appropriately adjusted by the Board, whose determination shall be final, binding
and conclusive.  (The  conversion of any  convertible  securities of the Company
shall not be treated as a transaction  "without receipt of consideration" by the
Company.)

          (b) Change in Control--Dissolution  or Liquidation.  In the event of a
dissolution or liquidation of the Company, the Option shall be terminated if not
exercised (if applicable) prior to such event.

          (c) Change in Control--Asset  Sale,  Merger,  Consolidation or Reverse
Merger.

               (i) The Option will immediately vest 50% in the event of a change
in control of the Company  consisting of: (1) a sale of substantially all of the
assets of the Company, (2) a merger or consolidation in which the Company is not
the surviving  corporation  or (3) a reverse  merger in which the Company is the
surviving  corporation  but the shares of Common Stock  outstanding  immediately
preceding the merger are converted by virtue of the merger into other  property,
whether in the form of securities,  cash or otherwise.  If applicable,  the time
during which the Option may be exercised  shall also be accelerated in full. The
Option shall  terminate if not  exercised  (if  applicable)  at or prior to such
event, and any surviving  corporation or acquiring  corporation shall assume the
remaining unvested portion of the Option or shall substitute a similar Option.

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<PAGE>

               (ii) For purposes of  subsection  9(c) the Option shall be deemed
assumed if,  following  the change in control,  the Option  confers the right to
purchase, in accordance with its terms and conditions,  for each share of Common
Stock  subject to the Option  immediately  prior to the change in  control,  the
consideration  (whether stock,  cash or other securities or property) to which a
holder of a share of Common Stock on the effective date of the change in control
was entitled.

     10. Transferability.  The Option is not transferable,  except by will or by
the laws of descent and  distribution,  and is exercisable  during Holder's life
only by Holder.  Notwithstanding the foregoing,  by delivering written notice to
the Company, in a form satisfactory to the Company, Holder may designate a third
party who,  in the event of  Holder's  death,  shall  thereafter  be entitled to
exercise the Option.

     11. Not a Service Contract.  This Agreement is not an employment or service
contract,  and  nothing in this  Agreement  shall be deemed to create in any way
whatsoever  any  obligation  on  Holder's  part to continue in the employ of the
Company, or of the Company to continue Holder's employment. In addition, nothing
in this Agreement shall obligate the Company, its shareholders,  Board, officers
or employees to continue any  relationship  that Holder might have as a director
or consultant for the Company.

     12. Withholding Obligations.

          (a) At the time the Option is  exercised,  in whole or in part,  or at
any time  thereafter  as  requested  by the Company,  Holder  hereby  authorizes
withholding from payroll and any other amounts payable to Holder,  and otherwise
agrees  to make  adequate  provision  for  (including  by means  of a  "cashless
exercise"  pursuant to a program  developed under Regulation T as promulgated by
the Federal  Reserve  Board to the extent  permitted by the  Company),  any sums
required  to satisfy the  federal,  state,  local and  foreign  tax  withholding
obligations of the Company, which arise in connection with the Option.

          (b)  The  Option  is  not  exercisable   unless  the  tax  withholding
obligations of the Company are satisfied. Accordingly, Holder may not be able to
exercise the Option when desired even though the Option is vested.

     13. No Rights As A Shareholder.  The Option shall not entitle the Holder to
any cash dividend,  voting or other right of a shareholder  unless and until the
date of issuance of the shares that are the subject of the Option.

     14. Professional  Advice. The acceptance and exercise of the Option and the
sale  of  Option  Shares  has  consequences  under  federal  and  state  tax and
securities  laws which may vary depending upon the individual  circumstances  of
the Holder. Accordingly, Holder acknowledges that he has been advised to consult
his personal  legal and tax advisor in  connection  with this  Agreement and his
dealings  with  respect  to the Option and the  Option  Shares.  Holder  further

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<PAGE>

acknowledges  that the  Company has made no  warranties  or  representations  to
Holder with respect to the income tax  consequences of the grant and exercise of
the Option or the sale of the Option  Shares and Holder is in no manner  relying
on the Company or its representatives for an assessment of such consequences.

     15.  Assignment;  Binding  Effect.  Subject to the limitations set forth in
this Agreement, this Agreement shall be binding upon and inure to the benefit of
the executors,  administrators,  heirs, legal representatives, and successors of
the  parties  hereto;  provided,  however,  that  Holder  may not  assign any of
Holder's rights under this Agreement.

     16.  Damages.  Holder  shall be  liable  to the  Company  for all costs and
damages,  including  incidental  and  consequential  damages,  resulting  from a
disposition  of Option Shares which is not in conformity  with the provisions of
this Agreement.

     17.  Governing Law. This  Agreement  shall be governed by, and construed in
accordance  with, the laws of the State of Washington  excluding those laws that
direct the application of the laws of another jurisdiction.

     18.  Notices.  All notices and other  communications  under this  Agreement
shall be in  writing.  Unless  and until  Holder is  notified  in writing to the
contrary, all notices, communications, and documents directed to the Company and
related to the Agreement,  if not delivered by hand, shall be mailed,  addressed
as follows:

                           F5 Networks, Inc.
                           501 Elliott Ave West
                           Seattle, WA  98119

Unless  and until the  Company is  notified  in  writing  to the  contrary,  all
notices,  communications,  and documents intended for Holder and related to this
Agreement,  if not  delivered  by hand,  shall be mailed to Holder's  last known
address as shown on the Company's  books.  Notices and  communications  shall be
mailed by first class mail, postage prepaid. All mailings and deliveries related
to this Agreement  shall be deemed received when actually  received,  if by hand
delivery, and five (5) business days after mailing, if by mail.

     19.  Amendment of this  Agreement.  The Board at any time, and from time to
time, may amend the terms of this Agreement;  provided, however, that the rights
under this Agreement shall not be impaired by any such amendment  unless (i) the
Company requests the consent of the Holder and (ii) Holder consents in writing.

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<PAGE>

     IN WITNESS  WHEREOF,  the parties have executed this Option Agreement as of
the Effective Date.

                                 F5 NETWORKS, INC.


                                 By
                                    --------------------------------------------

                                 Title
                                       -----------------------------------------


Holder hereby  accepts and agrees to be bound by all of the terms and conditions
of this Agreement.


                                 Holder


                                 -----------------------------------------------
                                 Jeff Pancottine

                                       7

<PAGE>

                                    EXHIBIT A

                               NOTICE OF EXERCISE

                   (To be signed only upon exercise of Option)


To:      F5 Networks, Inc.
         501 Elliott Ave West
         Seattle, WA  98119


     The undersigned, the holder of an option to purchase shares of common stock
of F5 Networks,  Inc. pursuant to an Option Agreement dated as of __________ __,
____ (the "Option Agreement") hereby irrevocably elects to exercise the purchase
right represented by the Option Agreement for, and to purchase under that Option
Agreement,  __________  shares of Common  Stock and  herewith  makes  payment of
$_____________  for those shares and payment of $___________  for holder's share
of withholding and employment taxes resulting from such exercise.  Holder hereby
confirms the representations,  warranties and agreements set forth in the Option
Agreement.

     DATED: __________________, ____.


                                     HOLDER:





                                     By:
                                        ----------------------------------------
                                     Title:
                                           -------------------------------------

                                     ADDRESS:


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