Document:

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                                                                    Exhibit 10.4

                             INTERCREDITOR AGREEMENT

        THIS INTERCREDITOR AGREEMENT is entered into as of November 15, 2000 by
and among THE BANK OF NOVA SCOTIA ("Scotiabank"), KEYBANK NATIONAL ASSOCIATION
("KeyBank"), U.S. NATIONAL ASSOCIATION ("US Bank") and AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED ACN 005 357 522 ("ANZ") (each individually referred to as
a "Lender" and all collectively referred to as "Lenders," and Scotiabank,
KeyBank and US Bank each individually referred to as a "US Lender" and
collectively referred to as "US Lenders").

                                    RECITALS

        The US Lenders have entered into the US Facility with the US Borrowers,
and ANZ has entered into the Australian Facilities with the Australian
Borrowers. The Lenders desire to administer the US Facility and the Australian
Facilities as if they were a single credit facility with Scotiabank acting as
the administrator for the Lenders with respect to the US Facility and ANZ acting
as the administrator for the Lenders with respect to the Australian Facilities.
Further, the Lenders desire to grant certain rights to each other with respect
to the Facilities.

        NOW, THEREFORE, in consideration of the mutual covenants and promises of
the parties contained herein, Lenders hereby agree as follows:

SECTION  1.       DEFINITIONS

        All terms defined above shall have the meanings set forth above. The
following terms shall have the meanings set forth below (with all such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):

        "ADMINISTRATIVE LENDER" means, with respect to the US Facility,
Scotiabank acting as administrator thereunder for the Lenders, and with respect
to the Australian Facilities, ANZ acting as administrator thereunder for the
Lenders.

        "ASSIGNMENT AGREEMENT" shall have the meaning attributed to such term in
Section 5.2.

        "AUD" means Australian Dollars.

        "AUSTRALIAN BORROWERs" means Penford Holdings, Penford Australia and
Starch New Zealand Limited.

        "AUSTRALIAN COMMITMENTS" means the total Commitments to extend credit in
AUD under the Australian Facilities.

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        "AUSTRALIAN FACILITIES" means the Australian Revolver Facility and the
Australian Term Facility.

        "AUSTRALIAN REVOLVER FACILITY" means the credit facility provided for in
that certain Syndicated Facility Agreement dated November 15, 2000 among Penford
Australia, ANZ and certain other lenders named therein and in the "Financing
Documents" (as defined in said Syndicated Facility Agreement), as said
Syndicated Facility Agreement and each such Financing Document may be amended,
modified or supplemented from time to time, provided, however, that in no event
shall "Australian Revolver Facility" include the Letter of Offer Facilities.

        "AUSTRALIAN TERM FACILITY" means the credit facility provided for in
that certain Debenture Trust Deed dated November 15, 2000 between Penford
Holdings and ANZ Capel Court Limited ACN 004 768 807 and in the "Transaction
Documents" (as defined in said Debenture Trust Deed), as said Debenture Trust
Deed and each such Transaction Document may be amended, modified or supplemented
from time to time.

        "BORROWER" means any US Borrower or Australian Borrower.

        "COMMITMENTS" means, with respect to each Lender, its commitments to
advance credit and extend other financial accommodations under the Loan
Documents.

        "FACILITIES" means the Australian Facilities and the US Facility.

        "LETTER OF CREDIT" shall have the meaning attributed to such term in the
Amended and Restated Credit Agreement referenced in the definition of "US
Facility."

        "LETTER OF OFFER FACILITIES" means all credit facilities and services
extended to one or more Australian Borrowers described in the "Letters of Offer"
(as defined in the Syndicated Facility Agreement referenced in the definition of
"Australian Revolver Facility").

        "LOAN DOCUMENTS" means this Agreement and all agreements, notes,
instruments and documents evidencing the Facilities.

        "PERCENTAGE" means, with respect to a Lender, the percentage set forth
opposite such Lender's name below, as adjusted from time to time to reflect
changes resulting from one or more assignments by such Lender pursuant to
Section 5.2:

<TABLE>
<CAPTION>
               LENDER                          PERCENTAGE
               ------                          ----------
<S>                                            <C>
               Scotiabank                      30.7692308%
               KeyBank                         25.0%
               US Bank                         25.0%
               ANZ                             19.2307692%
</TABLE>

        "PENFORD AUSTRALIA" means Penford Australia Limited ACN 003 780 229.

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        "PENFORD HOLDINGS" means Penford Holdings Pty. Ltd. ACN 094 279 339.

        "PERSON" means an individual, partnership, corporation (including,
without limitation, a business trust), joint stock company, limited liability
company, trust, unincorporated association, joint venture or other entity, or
any domestic or foreign national, state or local government, any political
subdivision thereof, any department, agency, authority or bureau of any of the
foregoing, or any other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

        "REQUIRED LENDERS" means any Lender or Lenders not in default of
its/their obligations under the Loan Documents ("Non-Defaulting Lenders") having
more than 85% of the Percentages of all Non-Defaulting Lenders; provided,
however, that with respect to the matters identified in Section 3 as requiring
the consent of all Lenders, "Required Lenders" means all Lenders.

        "US$" means US Dollars.

        "US BORROWERS" means Penford Corporation, a Washington corporation, and
Penford Products Co., a Delaware corporation.

        "US FACILITY" means the credit facilities advanced by the US Lenders to
the US Borrowers under that certain Amended and Restated Credit Agreement dated
November 15, 2000, as amended, modified or supplemented from time to time and in
the "Loan Documents" (as defined in said Amended and Restated Credit Agreement).

SECTION  2.       ADMINISTRATIVE LENDER

        2.1       APPOINTMENT AND ACTIONS

        (a) Each Lender hereby appoints Scotiabank as Administrative Lender with
respect to the US Facility and ANZ as Administrative Lender with respect to the
Australian Facilities and authorizes each Administrative Lender to perform the
functions of Administrative Lender provided for in this Agreement. With respect
to the Loan Documents evidencing the US Facility, Scotiabank shall perform the
functions provided in such documents to be performed by the "Administrative
Lender." With respect to the Loan Documents evidencing the Australian
Facilities, ANZ shall perform the functions provided in such documents to be
performed by the "Agent."

        (b) Each Lender authorizes each Administrative Lender to act on behalf
of such Lender under the Loan Documents and, in the absence of other written
instructions from the Required Lenders received from time to time by
Administrative Lender (with respect to which Administrative Lender agrees that
it will comply, except as otherwise provided in this Section 2 or as otherwise
advised by counsel), to exercise such powers thereunder as are specifically
delegated to, or required of Administrative Lender by the terms thereof,
together with such powers as may be reasonably incidental thereto. Each Lender
hereby indemnifies

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(which indemnity shall survive any termination of this Agreement) Administrative
Lender ratably in accordance with its Percentage from and against any and all
liabilities, obligations, losses, damages, claims, costs or expenses of any kind
or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against Administrative Lender (in its capacity as an Administrative
Lender) in any way relating to or arising out of the Loan Documents, including
reasonable attorneys' fees (whether incurred at the trial or appellate level, in
an arbitration proceeding, in bankruptcy (including, without limitation, any
adversary proceeding, contested matter or motion) or otherwise), and as to which
Administrative Lender is not reimbursed by Borrowers; provided, however, that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, claims, costs or expenses which are determined by
a court of competent jurisdiction in a final proceeding to have resulted solely
from Administrative Lender's gross negligence or willful misconduct.
Administrative Lender shall not be required to take any action under any Loan
Document, or to prosecute or defend any suit in respect of any Loan Document,
unless it is indemnified to its satisfaction. If any indemnity in favor of
Administrative Lender shall be or become, in Administrative Lender's
determination, inadequate, Administrative Lender may call for additional
indemnification from Lenders and cease to do the acts in issue until such
additional indemnity is given.

        2.2       RELIANCE BY ADMINISTRATIVE LENDER

        Administrative Lender shall be entitled to rely upon any certificate,
notice or other document (including any cable, telegram, fax, or telex) or
telephonic notice believed by it in good faith to be genuine and correct and to
have been signed, sent or made by or on behalf of the proper Person, and upon
advice and statements of legal counsel (including any Borrower's counsel),
independent accountants and other experts selected by Administrative Lender with
reasonable care. As to any matters not expressly provided for by this Agreement,
Administrative Lender shall not be required to take any action or exercise any
discretion, but shall be required to act or to refrain from acting upon
instructions of the Required Lenders and shall in all cases be fully protected
by Lenders in acting, or in refraining from acting, under any Loan Document in
accordance with the instructions of the Required Lenders, and such instructions
of the Required Lenders and any action taken or failure to act pursuant thereto
shall be binding on all Lenders.

        2.3       EXCULPATION

        Neither Administrative Lender nor any of its directors, officers,
employees or agents shall be liable to any Lender for any action taken or
omitted to be taken by it under any Loan Document, or in connection therewith,
except for its own willful misconduct or gross negligence, nor responsible for
any recitals or warranties therein, nor for the effectiveness, enforceability,
validity or due execution of any Loan Document, nor for the creation, perfection
or priority of any liens, charges or encumbrances purported to be created by any
Loan Document, or the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, nor to make any inquiry respecting the
performance by Borrowers

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of their obligations under any Loan Document. Any such inquiry which may be made
by Administrative Lender shall not obligate it to make any further inquiry or to
take any action. Administrative Lender shall be entitled to rely upon advice of
counsel concerning legal matters and upon any notice, consent, certificate,
statement or writing which Administrative Lender believes to be genuine and to
have been presented by a proper Person.

        2.4       SUCCESSOR

        An Administrative Lender may resign as such at any time upon at least 30
days prior notice to the other Lenders and to Penford Corporation. If an
Administrative Lender at any time shall resign, the Required Lenders may appoint
another Lender as a successor Administrative Lender which shall thereupon become
Administrative Lender. If no successor Administrative Lender shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Administrative Lender's giving notice of
resignation, then the retiring Administrative Lender may, on behalf of Lenders,
appoint a successor Administrative Lender, which shall be one of Lenders or a
commercial banking institution having a combined capital and surplus of at least
US$500,000,000. Upon the acceptance of any appointment as Administrative Lender
by a successor Administrative Lender, such successor Administrative Lender shall
give Penford Corporation notice of such acceptance, shall be entitled to receive
from the retiring Administrative Lender such documents of transfer and
assignment as such successor Administrative Lender may reasonably request, and
shall thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring Administrative Lender, and the retiring
Administrative Lender shall be discharged from its duties and obligations under
this Agreement. After any retiring Administrative Lender's resignation as
Administrative Lender, the provisions of this Agreement and any indemnity and
expense reimbursement provision of the Loan Documents shall continue to inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Lender.

        2.5       LOANS BY ADMINISTRATIVE LENDER

        An Administrative Lender shall have the same rights and powers with
respect to (x) loans and other financial accommodations made by it or any of its
affiliates under the Loan Documents and (y) the promissory notes and other
evidence of indebtedness under the Loan Documents held by it or any of its
affiliates as any other Lender and may exercise the same as if it were not
Administrative Lender. An Administrative Lender and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
any Borrower or any subsidiary or affiliate of any Borrower as if it were not an
Administrative Lender.

        2.6       CREDIT DECISIONS

        Each Lender acknowledges that it has, independently of Administrative
Lenders and each other Lender, and based on such Lender's review of the
financial information of Borrowers, the Loan Documents (the terms and provisions
of which being satisfactory to

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such Lender) and such other documents, information and investigations as such
Lender has deemed appropriate, made its own credit decision to extend credit
under the Loan Documents and to enter into this Agreement. Each Lender also
acknowledges that it will, independently of Administrative Lenders and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under any Loan Document.

        2.7       COPIES, ETC.

        Administrative Lender shall give prompt notice to each Lender of each
notice or request required or permitted to be given to Administrative Lender by
any Borrower pursuant to the terms of any Loan Document (unless concurrently
delivered to Lenders). Administrative Lender will distribute to each Lender each
document or instrument received for its account and copies of all other
communications received by Administrative Lender from Borrowers for distribution
to Lenders in accordance with the terms of the Loan Documents.

SECTION  3.       WAIVERS, AMENDMENTS AND CONSENTS

        Any term, covenant, agreement or condition of any Loan Document may be
amended or waived and any consent with respect thereto given if such amendment,
waiver or consent is in writing and is signed by the Required Lenders (or by
Administrative Lender with written consent of the Required Lenders); provided,
however, that any amendment, waiver or consent which affects the rights or
duties of Administrative Lender or of any Lender acting as an issuer of a letter
of credit, must be in writing and be signed also by the affected Administrative
Lender or Lender; and provided further, that any amendment, waiver or consent
which effects any of the following changes must be in writing and signed by all
Lenders (or by Administrative Lender with the written consent of all Lenders):
(a) increases the maximum amount of credit available under any Loan Document;
(b) extends the maturity date of any loan or other extension of credit under any
Loan Document; (c) reduces the principal of, or interest (including default rate
interest) on, any loan or any fees or other amounts payable for the account of
Lenders under any Loan Document; (d) postpones or conditions any date fixed for
any payment of the principal of, or interest on, any loan or any fees or other
amounts payable for the account of Lenders under any Loan Document; (e)
increases or decreases the commitment or the ratable portion thereof of any
Lender (other than through an assignment by such Lender permitted under Section
5 or 6); (f) waives any of the conditions to advancement of credit set forth in
any Loan Document; (g) releases any material collateral securing any obligation
of any Borrower; (h) amends any of the draw conditions of any letter of credit
issued by any US Lender with respect to the Australian Facilities; or (i) amends
any guaranty of the obligations of any Borrower under any Loan Document (or
releases any guarantor of its obligations thereunder).

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SECTION  4.       ENFORCEMENT OF RIGHTS

        All rights and remedies of the Lenders under the Loan Documents and
under the Letter of Offer Facilities shall be enforced only by each
Administrative Lender (with respect to that portion of the Facilities for which
it is the Administrative Lender) with the consent of or upon instructions from
the Required Lenders, provided that ANZ may draw against the Letter of Credit
without the consent of the Required Lenders to the extent the terms of the
Letter of Credit permit ANZ to draw against it without the consent of the
Required Lenders.

SECTION  5.       PARTICIPATIONS AND ASSIGNMENTS

        5.1    PARTICIPATIONS

        Any Lender may, in the ordinary course of its business and in accordance
with applicable law, at any time sell to one or more banks or other financial
institutions ("Participants") participating interests in any obligation owing to
such Lender under any Loan Document. In the event of any such sale, (i) such
Lender's obligations under the Loan Documents to the other parties to the Loan
Documents shall remain unchanged, (ii) such Lender shall remain solely
responsible for the performance of its obligations under the Loan Documents,
(iii) such Lender shall, for all purposes under the Loan Documents, remain the
holder of any promissory note, debenture or other evidence of indebtedness under
the Loan Documents, and (iv) Borrowers, Lenders and Administrative Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents. Participants shall
have no rights under the Loan Documents except as provided below. No Lender
shall sell any participating interest under which the Participant shall have any
right to vote on any amendment or waiver of any Loan Document; provided,
however, that any agreement under which any Lender sells a participating
interest to a Participant may require the selling Lender to obtain the consent
of such Participant in order for such Lender to agree or consent to any action
described in any of items (a) -- (i) of Section 3. No agreement under which any
Lender sells a participating interest to a Participant may permit the
Participant to transfer, pledge, assign, sell participations in or otherwise
encumber its participating interest. If any amount outstanding under the Loan
Documents is due and unpaid, a Participant may have and exercise set off rights
to the extent the applicable Loan Document so provides.

        5.2    ASSIGNMENTS

        Any Lender may, in the ordinary course of its business and in accordance
with applicable law, at any time, sell and assign to any Lender, any affiliate
of a Lender or any other bank or financial institution (individually, an
"Assignee") all or any percentage portion of its rights and obligations under
the Loan Documents as a whole, but not selected portions thereof or differing
percentages regarding different portions thereof, (such a sale and assignment to
be referred to herein as an "Assignment") pursuant to an Assignment and
Assumption Agreement in the form of Exhibit A attached hereto (an "Assignment
Agreement") executed by each Assignee and such assignor Lender (an "Assignor"),
together

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with such ancillary assignment documents as may be required by the various Loan
Documents to the extent such ancillary assignment documents do not conflict with
the Assignment Agreement; provided, however, that: (i) each Assignment shall be
in a minimum amount equivalent to US$5,000,000; (ii) if the Assignment is not an
assignment of Assignor's entire Commitments, Assignor maintains minimum
Commitments equivalent to US$5,000,000; and (iii) each Assignment which is not
to an Assignee which, immediately before such Assignment is a Lender or an
affiliate thereof, shall be made only with the written consent of all Lenders,
which consents shall not be unreasonably withheld, and (to the extent required
by the applicable Loan Documents) Borrowers' consent. Assignor shall deliver a
fully executed Assignment Agreement to each Administrative Lender. Upon the
later of (i) delivery to Administrative Lenders of an executed Assignment
Agreement with the requisite consents and payment of any fees payable to
Administrative Lenders under the terms of the Loan Documents or (ii) the
effective date provided in the Assignment Agreement, (A) each Assignee
thereunder shall be a Lender with Commitments as set forth in such Assignment
Agreement and shall have the rights, duties and obligations of a Lender, (B) the
Assignor thereunder shall be a Lender with Commitments as set forth in such
Assignment Agreement, or, if the Assignor's Commitments have been reduced to
zero, the Assignor shall cease to be a Lender (except to the extent that the
Assignor is entitled to any indemnification rights as provided in the Loan
Documents), and (C) each Administrative Lender shall make such entries in its
records of the Loan Documents as is necessary to evidence the effect of such
assignment.

        5.3    REGISTER

        Scotiabank (or its successor as Administrative Lender for the US
Facility) shall maintain a copy of each fully executed Assignment Agreement and
a register for the recordation of the names and addresses of Lenders and the
Percentage of each Lender from time to time. The entries in the register shall
be conclusive and binding for all purposes, absent manifest error. The register
shall be available for inspection by any Lender at any reasonable time and from
time to time upon reasonable prior notice.

SECTION  6.       OPTIONS

        6.1       CALL OPTIONS

        ANZ hereby grants to each US Lender the option to acquire from ANZ by
assignment an interest in the Australian Facilities equal to such US Lender's
Percentage. Each US Lender hereby grants to ANZ the option to acquire from such
US Lender by assignment an interest in the US Facility equal to ANZ's Percentage
multiplied by such US Lender's Percentage.

        6.2       PUT OPTIONS

        Upon notice from ANZ to the US Lenders, each US Lender shall acquire
from ANZ by assignment an interest in the Australian Facilities equal to such US
Lender's Percentage.

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Upon notice from a US Lender to ANZ, ANZ shall acquire from such US Lender by
assignment an interest in the US Facility equal to ANZ's Percentage multiplied
by such US Lender's Percentage.

        6.3       PRICE

        The purchase price for each assigned interest acquired under Section 6.1
or Section 6.2 shall be the par value of all principal, interest and fees
included in such assigned interest. Acquired interests in the US Facility shall
be paid for in US$, and acquired interests in the Australian Facilities shall be
paid for in AUD.

        6.4       EXERCISE MECHANICS

        (a) Any Lender desiring to exercise its rights under either Section 6.1
or Section 6.2 shall do so by giving the other Lenders notice of such exercise
("Exercise Notice"). Each transfer of an assigned interest under either Section
6.1 or Section 6.2 shall be implemented by means of an Assignment Agreement. An
acquisition shall be closed within 10 days after delivery of the Exercise Notice
by the selling and buying Lenders executing and exchanging counterparts of and
Assignment Agreement and any other relevant assignment documents and the buying
Lender paying to the selling Lender the purchase price in same day or
immediately available funds. The relevant Percentages of the Lenders with
respect to an acquisition shall be determined by Scotiabank as of the day
immediately before the day such acquisition is closed.

        (b) A Lender may exercise its rights under either Section 6.1 or Section
6.2 only at one time and only with respect to all of the interests which it is
entitled to purchase or sell. If an option is exercised under Section 6.1, then
the corresponding option right under Section 6.2 shall expire, and if an option
is exercised under Section 6.2, then the corresponding option right under
Section 6.1 shall expire. If ANZ desires to exercise its rights under either
Section 6.1 or Section 6.2, it must do so simultaneously with respect to all US
Lenders.

        (c) The rights set forth in this Section 6 may be exercised
notwithstanding any provision in the Loan Documents (including Section 5.2)
requiring that an assignment by a Lender be in a minimum amount or minimum
percentage.

SECTION 7.        CURRENCY FLUCTUATIONS

        As of June 30 and December 31 of each year and more frequently if in
Scotiabank's judgment events warrant (each a "Valuation Date"), Scotiabank shall
determine the value of the AUD relative to the US$ and the change in such
relative value since November 15, 2000 ("Closing Date") based on conversion
factors determined by Scotiabank to be reasonable. If as of a Valuation Date the
Australian Commitments (expressed in US$) are either (a) less than the
Australian Commitments would be if expressed in US$ based on the relative value
of the AUD and the US$ as of the Closing Date (said difference being the
"Negative

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Commitment Differential") or (b) at least US$2,000,000 more than the Australian
Commitments would be if expressed in US$ based on the relative value of the AUD
and the US$ as of the Closing Date (the amount of said difference in excess of
US$2,000,000 being the "Positive Commitment Differential"), then the Commitments
under the Australian Revolver Facility shall be adjusted by the amount of AUD
necessary to eliminate the Negative or Positive Commitment Differential as of
such Valuation Date, but in no event shall such Commitments (expressed in AUD)
exceed the AUD amount of such Commitments on the Closing Date.

SECTION 8.        MISCELLANEOUS

        8.1       NOTICES

        All notices, requests and demands which any party is required or may
desire to give to any other party under this Agreement must be in writing. Each
notice shall be addressed to each Lender at its address or fax number set forth
as the "Address for Notices" in Schedule I hereto, or to such other address or
fax number as any Lender may designate for itself by notice to all other
Lenders. Each such notice, request and demand shall be deemed given or made as
follows: (a) the second business day after such notice was delivered to a
regularly scheduled overnight delivery, or (b) upon receipt of notice given by
fax, mailgram, telegram, telex, or personal delivery.

        8.2       SUCCESSORS AND ASSIGNS

        This Agreement shall be binding upon and inure to the benefit of Lenders
and their respective permitted successors and assigns.

        8.3       ENTIRE AGREEMENT

        This Agreement constitutes the entire agreement among Lenders with
respect to the subject matter hereof and supersedes all prior negotiations,
communications, discussions, correspondence and agreements concerning the
subject matter hereof. In the event of any conflict between the terms of this
Agreement and any other Loan Document, the terms of this Agreement shall
control.

        8.4       NO THIRD PARTY BENEFICIARIES

        This Agreement is made and entered into for the sole protection and
benefit of the Lenders and their respective permitted successors and assigns,
and no other person or entity (including Borrowers) shall be a third party
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement.

        8.5       SEVERABILITY OF PROVISIONS

        If any provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity

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without invalidating the remainder of such provision or any remaining provisions
of this Agreement.

        8.6       GOVERNING LAW

        This Agreement shall be governed by and construed in accordance with the
laws of the State of Washington.

        8.7       SUBMISSION TO JURISDICTION

        EACH LENDER HEREBY: (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF WASHINGTON AND THE FEDERAL COURTS OF THE UNITED STATES
FOR THE WESTERN DISTRICT OF WASHINGTON FOR THE PURPOSE OF ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT; (B) AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH COURTS; (C) IRREVOCABLY WAIVES (TO THE FULL EXTENT PERMITTED BY
APPLICABLE LAW) ANY OBJECTION WHICH IT NOW OR HEREAFTER MAY HAVE TO THE LAYING
OF VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY OF THE FOREGOING
COURTS, AND ANY OBJECTION ON THE GROUND THAT ANY SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM; AND (D) AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PERMITTED BY LAW.

        8.8       WAIVER OF JURY TRIAL

        EACH LENDER, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING,
COUNTERCLAIM OR OTHER LITIGATION IN ANY WAY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS OR EVENTS REFERENCED HEREIN OR CONTEMPLATED
HEREBY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. A COPY OF THIS SECTION MAY BE FILED WITH ANY
COURT AS WRITTEN EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND THE
CONSENT TO TRIAL BY COURT.

        8.9       COUNTERPARTS

        This Agreement may be executed in any number of identical counterparts,
any set of which signed by all the parties hereto shall be deemed to constitute
a complete, executed

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original for all purposes. Delivery of an executed signature page of this
Agreement by fax shall be effective as delivery of a manually executed
counterpart hereof.

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        IN WITNESS WHEREOF, this Intercreditor Agreement has been duly executed
as of the date first written above.

THE BANK OF NOVA SCOTIA                 KEYBANK NATIONAL ASSOCIATION

By:   /s/ Patrik G. Norris              By: /s/ Thomas A. Crandell
Title: Director                         Title: Senior Vice President

U.S. BANK NATIONAL ASSOCIATION          AUSTRALIAN AND NEW ZEALAND BANKING GROUP
                                        LIMITED

By: /s/ James R. Farmer                 By: /s/ Ralph Terence Allen
Title: Vice President                   Title: Associate Director

<PAGE>   14
                              CONSENT OF BORROWERS

        The undersigned hereby acknowledge receipt of the foregoing and consent
to the provisions thereof.

        Dated:  as of November 15, 2000

PENFORD CORPORATION                              PENFORD PRODUCTS CO.

By: /s/ Keith T. Fujinaga                        By: /s/ Keith T. Fujinaga
Title: Assistant Secretary                       Title: Assistant Secretary

PENFORD HOLDINGS PTY. LTD.                       PENFORD AUSTRALIA LIMITED

By: /s/ Keith T. Fujinaga                        By: /s/ Susan M. Iverson
Title: Assistant Secretary                       Title: Director

                                                 STARCH NEW ZEALAND LIMITED

                                                 By: /s/ Keith T. Fujinaga
                                                 Title: Director

<PAGE>   15
                                   SCHEDULE I

                               ADDRESS FOR NOTICES

The Bank of Nova Scotia
Corporate Banking
888 S.W. 5th Avenue, Suite 750
Portland, Oregon, USA 97204-2078
Attn: Patrik G. Norris
Fax: (503) 222-5502

KeyBank National Association
Large Corporate Group
601 108th Avenue NE, 5th Floor
Bellevue, Washington 98009
Attn: Ms. Mary K. Young
Fax: (425) 709-4587

U.S. Bank National Association
1420 Fifth Avenue, Eleventh Floor
Seattle, Washington, USA 98101
Attn: James Farmer
Fax: (206) 334-3654

Australian and New Zealand Banking Group Limited
Level 9
20 Martin Place
Sydney, NSW, Australia 2000
Attn: Michelle Burke
Fax: 612-9227-1332

<PAGE>   16
                                    EXHIBIT A
                                       TO
                             INTERCREDITOR AGREEMENT

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

        THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") is entered into
as of ____________, between ___________________ ______________________
("Assignor") and ________________________ ("Assignee").

        WHEREAS, Assignor is a Lender under that certain Intercreditor Agreement
among The Bank of Nova Scotia, U.S. Bank National Association, KeyBank National
Association and Australian and New Zealand Banking Group Limited ACN 005 357 522
dated as of November 15, 2000 (as further amended, modified or supplemented from
time to time, the "Intercreditor Agreement") and has Commitments outstanding
under one or both Facilities. Capitalized terms used but not defined in this
Agreement shall have the meanings set forth in the Intercreditor Agreement.

        WHEREAS, it is the intention of Assignor and Assignee that (a) Assignor
assign to Assignee [all] [a portion] of Assignor's rights and obligations under
the Facilities, (b) Assignee assume all such assigned rights and obligations of
Assignor, and (c) Assignor be released therefrom.

        NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:

        1. Assignment. Effective on the Effective Date (as defined in Section 3
hereof), Assignor, without recourse and without representation or warranty
(except as expressly provided in Section 6 hereof), hereby assigns to Assignee
___________% of Assignor's share of the Commitments on the Effective Date (which
percentage represents a total of US$_________ and AUD _________ of Commitments)
and all of Assignor's other rights and obligations under the Loan Documents
attributable to such share of the Commitments ("Assigned Rights and
Obligations").

        2. Assumption. Effective on the Effective Date, Assignee hereby accepts
the foregoing assignment of, and hereby assumes from Assignor all of,
the Assigned Rights and Obligations.

        3. Effectiveness. This assignment and assumption shall be effective on
the later of _____________________ or delivery to Administrative Lenders of an
executed copy of this Agreement with the consent of all Lenders and, to the
extent required by the Loan Documents, the consent of one or more Borrowers (the
"Effective Date").

                                       1
<PAGE>   17
        4. Payments on Effective Date. In consideration of the assignment by
Assignor to, and the assumption by Assignee of, the Assigned Rights and
Obligations, on the Effective Date: (a) Assignee shall pay to Assignor the
principal amount of all loans made by Assignor pursuant to the Loan Documents
that are attributable to the Assigned Rights and Obligations and outstanding on
the Effective Date; (b) each of Assignor and Assignee shall pay to the other
such amounts (if any) as are specified in any written agreement or exchange of
letters between them; and (c) Assignee shall pay to Administrative Lenders any
assignment processing and recordation fees required by the Loan Documents.

        5. Allocation and Payment of Interest and Fees.

        (a) Administrative Lenders shall pay to Assignee all interest,
commitment fees and other amounts not constituting principal that are paid by or
on behalf of Borrowers pursuant to the Loan Documents and are attributable to
the Assigned Rights and Obligations ("Borrower Amounts") which accrue on and
after the Effective Date. If Assignor receives or collects any such Borrower
Amounts, Assignor shall promptly pay them to Assignee.

        (b) Administrative Lenders shall pay to Assignor all Borrower Amounts
that accrue before the Effective Date. If Assignee receives or collects any such
Borrower Amounts, Assignee shall promptly pay them to Assignor.

        6. Representations and Warranties.

        (a) Each of Assignor and Assignee represents and warrants to the other
party as follows: (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Agreement and to fulfill its obligations
under, and to consummate the transactions contemplated by, this Agreement; (ii)
the making and performance of this Agreement and all documents required to be
executed and delivered by it pursuant hereto do not and will not violate any law
or regulation applicable to it; (iii) this Agreement has been duly executed and
delivered by, and constitutes a legal, valid and binding obligation of, it,
enforceable in accordance with its terms; and (iv) all approvals, authorizations
or other actions by, or filings with, any governmental authority necessary for
the validity or enforceability of its obligations under this Agreement have been
made or obtained.

        (b) Assignor represents and warrants to Assignee that Assignor owns the
Assigned Rights and Obligations, free and clear of all liens or other
encumbrances.

        (c) Assignee represents and warrants to Assignor as follows: (i)
Assignee has made and shall continue to make its own independent investigation
of the financial condition, affairs and creditworthiness of Borrowers, and the
value of any collateral now or hereafter securing any of the obligations,
indebtedness, liabilities or undertakings under the Loan Documents, in
connection with Assignee's assumption of the Assigned Rights and Obligations;
and (ii) Assignee has received a copy of the Loan Documents and such other
documents, financial statements and information as Assignee deems appropriate to
make its own credit analysis and decision to enter into this Agreement.

                                       2
<PAGE>   18
        7. No Assignor Responsibility. Assignor makes no representation or
warranty and assumes no responsibility to Assignee for: (a) the execution by any
party other than Assignor, or the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of the Loan Documents; (b) any
representations, warranties, recitals or statements made in the Loan Documents
or in any financial statement or other statement, instrument, report,
certificate or any other document made or furnished or made available by or on
behalf of Borrowers to Assignor or Assignee in connection with the Loan
Documents and the transactions contemplated thereby; (c) the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained in any of the Loan Documents or the existence or possible existence of
any default or event of default under the Loan Documents; or (d) the accuracy or
completeness of any information provided to Assignee, whether by Assignor or by
or on behalf of Borrowers. Assignor shall have no initial or continuing duty or
responsibility to make any investigation of the financial condition, affairs or
creditworthiness of Borrowers, or the value of any collateral, in connection
with the assignment of the Assigned Rights and Obligations hereunder, or to
provide Assignee with any credit or other information with respect thereto,
whether coming into Assignor's possession before the date hereof or at any time
or times thereafter.

        8. Assignee Bound By Loan Documents. Effective on the Effective Date,
Assignee: (a) shall be deemed to be a party to and a "Lender" under the
Intercreditor Agreement; (b) agrees to be bound by the Loan Documents to the
same extent as it would have been if it had been an original Lender party
thereto; and (c) agrees to perform in accordance with their respective terms all
obligations which are required under the Loan Documents to be performed by it as
a Lender. Assignee appoints and authorizes Administrative Lenders to take such
actions as Administrative Lender on Assignee's behalf and to exercise such
powers under the Loan Documents as are delegated to the Administrative Lenders
by the terms thereof, together with such powers as are reasonably incidental
thereto.

        9. Assignor Released From Loan Documents. Effective on the Effective
Date, Assignor shall be released from the Assigned Rights and Obligations;
provided, however, that Assignor shall retain all of its rights to
indemnification under the Loan Documents for any events, acts or omissions
occurring before the Effective Date.

        10. New Notes. On or promptly after the Effective Date, Borrowers,
Administrative Lenders, Assignor and Assignee shall make appropriate
arrangements so that new promissory notes or other appropriate evidences of
indebtedness (collectively, "Notes") executed by Borrowers, dated as of the
Effective Date and in the amount of the share of [Assignor and] Assignee in the
loans evidenced thereby after giving effect to this Agreement, are issued to
[Assignor and] Assignee, in exchange for the surrender by Assignor [and
Assignee] to Borrowers of any outstanding Notes from Borrowers evidencing such
loans, marked "Exchanged."

        11.    General.

                                       3
<PAGE>   19
        (a) This Agreement constitutes the entire understanding of the parties
with respect to the subject matter hereof and supersedes all prior and current
understandings and agreements, whether written or oral (other than with respect
to any fees payable as provided in Section 4 hereof).

        (b) No term or provision of this Agreement may be amended, waived or
terminated orally, but only by an instrument signed by the parties hereto.

        (c) This Agreement may be executed in one or more counterparts. Each set
of executed counterparts shall be an original. Executed counterparts may be
delivered by facsimile transmission.

        (d) Assignor may at any time and from time to time grant to others
pursuant to the Loan Documents assignments of or participations in all or part
of Assignor's share of the total Commitments, but not with respect to the
Assigned Rights and Obligations.

        (e) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Neither Assignor nor
Assignee may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the other. The preceding sentence
shall not limit the right of Assignee to grant to others assignments of or
participations in all or part of the Assigned Rights and Obligations to the
extent permitted by the terms of the Loan Documents.

        (f) All payments to Assignor or Assignee hereunder shall, unless
otherwise specified by the party entitled thereto, be made in US$ with respect
to the US Facility and AUD with respect to the Australian Facilities, in
immediately available funds, and to the address or account specified on the
signature pages of this Agreement. The address of Assignee for notice purposes
under the Loan Documents shall be as specified on the signature pages of this
Agreement.

        (g) If any provision of this Agreement is held invalid, illegal or
unenforceable, the remaining provisions hereof will not be affected or impaired
in any way.

        (h) Each party shall bear its own expenses in connection with the
preparation and execution of this Agreement.

        (i) This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington.

                                       4
<PAGE>   20
        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                            ASSIGNOR:

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

Assignor's Payment Instructions:            Assignor's Notice Instructions:

------------------------------------        ------------------------------------

------------------------------------        ------------------------------------

------------------------------------        ------------------------------------

ABA No.:                                    Attn:
        ----------------------------             -------------------------------
Account No.:                                Ref:
            ------------------------            --------------------------------
Attn:                                       Telephone: (   )
     -------------------------------                    --- --------------------
Ref.:                                       Facsimile: (   )
     -------------------------------                    --- --------------------

                                            ASSIGNEE:

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

Assignee's Payment Instructions:            Assignee's Notice Instructions:

------------------------------------        ------------------------------------

------------------------------------        ------------------------------------

------------------------------------        ------------------------------------

ABA No.:                                    Attn:
        ----------------------------             -------------------------------
Account No.:                                Ref:
            ------------------------            --------------------------------

                                       5
<PAGE>   21
Attn:                                       Telephone: (   )
     -------------------------------                    --- --------------------
Ref.:                                       Facsimile: (   )
     -------------------------------                    --- --------------------

                        CONSENT OF LENDERS AND BORROWERS

        [INSERT SIGNATURE PROVISIONS FOR EACH OF THE LENDERS AND EACH BORROWER
WHOSE CONSENT IS REQUIRED]

                                       6<PAGE>   1
                                                                   EXHIBIT 10.11

                                F5 NETWORKS, INC.
                       NONQUALIFIED STOCK OPTION AGREEMENT

           THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made
and entered into as of July 24, 2000 (the "Grant Date") between F5 Networks,
Inc., a Washington corporation (the "Company") and John McAdam ("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 645,000 shares of the Company's
Common Stock (the "Option Shares") at a price per share of $42.56 (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.

              2.7 Expiration Date. "Expiration Date" means July 25, 2010.

<PAGE>   2

              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. 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

                                       2
<PAGE>   3

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.

                                       3
<PAGE>   4

           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 100% 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.

                                       4
<PAGE>   5

                      (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
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

                                       5
<PAGE>   6

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.

                                       6
<PAGE>   7

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

                                        F5 NETWORKS, INC.

                                        By /s/ JEFFREY HUSSEY
                                          --------------------------------------

                                        Title Chairman of the Board
                                             -----------------------------------

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

                                        /s/ JOHN McADAM
                                        ----------------------------------------
                                        Holder

                                       7

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