
<PAGE>





                                F5 LABS, INC.

                          INVESTOR RIGHTS AGREEMENT





<PAGE>

                                F5 LABS, INC.

                          INVESTOR RIGHTS AGREEMENT

         THIS INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into as of
the 21st day of August, 1998 by and among F5 LABS, INC., a Washington
corporation (the "Company"), the holders of the Company's Series A Stock, Series
B Stock and Series C Stock (with respect to Section 2 only) and the purchasers
of the Series D Stock, all as set forth on Exhibit A hereto. The holders of the
Series A, B and C Stock shall be referred to hereinafter as the "Prior
Shareholders" and each individually as a "Prior Shareholder." The purchasers of
the Series D Stock shall be referred to hereinafter as the "Investors" and each
individually as an "Investor."


                                  RECITALS

         WHEREAS, the Company has issued Series A Stock, Series B Stock, Series
C Stock and Warrants to purchase Common Stock and has granted registration
rights to the holders thereof pursuant to (i) Section 6 of the Series A
Preferred Stock Purchase Agreement (the "Series A Agreement"), dated April 11,
1996, (ii) Section 5 of the Series B Stock Purchase Agreement (the "Series B
Agreement"), dated August, 1997, (iii) Section 5 of the Series B Preferred Stock
and Common Stock Warrant Purchase Agreement (the "Series B and Warrant
Agreement"), dated October 27, 1997, and (iv) Section 5 of the Series C
Preferred Stock and Common Stock Warrant Purchase Agreement (the "Series C
Agreement"), dated April 15, 1998, (collectively, the "Prior Agreements");

         WHEREAS, the Company and the undersigned holders of Series A Stock,
Series B Stock, Series C Stock and Warrants to purchase Common Stock desire to
terminate the registration rights under the Prior Agreements and to accept the
rights created pursuant hereto in lieu of such rights under the Prior
Agreements;

         WHEREAS, the Company proposes to sell and issue up to 1,138,438 shares
of its Series D Stock pursuant to the Series D Preferred Stock Purchase
Agreement (the "Purchase Agreement"); and

         WHEREAS, as a condition of entering into the Purchase Agreement, the
Investors have requested that the Prior Shareholders terminate their
registration rights under the Prior Agreements and become parties to this
Agreement and that the Company extend to the Investors registration rights,
information rights and other rights as set forth below.

         NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree as follows:

                                      1.


<PAGE>

SECTION 1.   GENERAL

        1.1  DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:

             "EXCHANGE ACT" means the Securities Exchange Act of 1934, as 
amended.

             "FORM S-3" means such form under the Securities Act as in effect 
on the date hereof or any successor registration form under the Securities 
Act subsequently adopted by the SEC which permits inclusion or incorporation 
of substantial information by reference to other documents filed by the 
Company with the SEC.

             "HOLDER" means any person owning of record Registrable 
Securities that have not been sold to the public or any assignee of record of 
such Registrable Securities in accordance with Section 2.10 hereof.

             "INITIAL OFFERING" means the Company's first firm commitment 
underwritten public offering of its Common Stock registered under the 
Securities Act prior to or in connection with which all outstanding shares of 
the Series D Preferred Stock are converted to Common Stock.

             "REGISTER," "REGISTERED," and "REGISTRATION" refer to a 
registration effected by preparing and filing a registration statement in 
compliance with the Securities Act, and the declaration or ordering of 
effectiveness of such registration statement or document.

             "REGISTRABLE SECURITIES" means (a) any shares of Common Stock of 
the Company issued or issuable upon conversion of the Shares, (b) any Common 
Stock issued upon exercise of the Warrants, and (c) any shares of Common 
Stock of the Company issued as (or issuable upon the conversion or exercise 
of any warrant, right or other security which is issued as) by way of 
dividend, distribution, exchange, replacement or otherwise with respect to 
such above described securities. Notwithstanding the foregoing, Registrable 
Securities shall not include any securities sold by a person to the public 
either pursuant to a registration statement or Rule 144 or sold in a private 
transaction in which the transferor's rights under Section 2 of this 
Agreement are not assigned.

             "REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of 
shares determined by calculating the total number of shares of the Company's 
Common Stock that are Registrable Securities and either (a) are then issued 
and outstanding or (b) are issuable pursuant to then exercisable or 
convertible securities.

             "REGISTRATION EXPENSES" shall mean all expenses incurred by the 
Company in complying with Sections 2.2, 2.3, 2.4 and 2.5 hereof, including, 
without limitation, all registration and filing fees, printing expenses, fees 
and disbursements of counsel for the Company, reasonable fees and 
disbursements not to exceed fifteen thousand dollars ($15,000) of a single 
special counsel for the Holders, blue sky fees and expenses and the expense 
of any special audits incident to or required by any such registration (but 
excluding the compensation of regular employees of the Company which shall be 
paid in any event by the Company).

                                      2.


<PAGE>

             "SEC" or "COMMISSION" means the Securities and Exchange 
Commission.

             "SECURITIES ACT" shall mean the Securities Act of 1933, as 
amended.

             "SELLING EXPENSES" shall mean all underwriting discounts and 
selling commissions applicable to the sale.

             "SERIES A STOCK" shall mean the Company's Series A Preferred 
Stock, no par value.

             "SERIES B STOCK" shall mean the Company's Series B Preferred 
Stock, no par value.

             "SERIES C STOCK" shall mean the Company's Series C Preferred 
Stock, no par value.

             "SERIES D STOCK" shall mean the Company's Series D Preferred 
Stock, no par value.

             "SHARES" shall mean the Series A Stock, Series B Stock, Series C 
Stock, Series D Stock held by the Investors and Prior Shareholders as of the 
date hereof or subsequently acquired by the Investors or Prior Shareholders 
and held by the Investors and Prior Shareholders listed on Exhibit A hereto 
and their permitted assigns.

             "WARRANTS" shall mean (i) the warrants issued to the holders of 
the Series C Preferred Stock to purchase up to 93,750 shares of Common Stock, 
(ii) the outstanding warrants issued to the holders of the Series B Stock to 
purchase 562,500 shares of Common Stock, (iii) the outstanding warrants 
issued to Britannia Holdings, Ltd. to purchase an aggregate 537,500 shares of 
Common Stock, and (iv) an outstanding warrant issued to Alexander Hutton 
Capital, L.L.C. to purchase 120,000 shares of Common Stock.

SECTION 2.   REGISTRATION; RESTRICTIONS ON TRANSFER

        2.1  RESTRICTIONS ON TRANSFER.

             (a) Each Holder agrees not to make any disposition of all or any 
portion of the Shares or Registrable Securities unless and until:

                 (i) There is then in effect a registration statement under 
the Securities Act covering such proposed disposition and such disposition is 
made in accordance with such registration statement; or

                 (ii) (A) The transferee has agreed in writing to be bound by 
the terms of this Agreement, (B) such Holder shall have notified the Company 
of the proposed disposition and shall have furnished the Company with a 
detailed statement of the circumstances surrounding the proposed disposition, 
and (C) if reasonably requested by the Company, such Holder shall have 
furnished the Company with an opinion of counsel, reasonably satisfactory to 
the Company, that such disposition will not require registration of such 
shares under the 

                                      3.


<PAGE>

Securities Act. It is agreed that the Company will not require opinions of 
counsel for transactions made pursuant to Rule 144 except in unusual 
circumstances.

                 (iii) Notwithstanding the provisions of paragraphs (i) and 
(ii) above, no such registration statement or opinion of counsel shall be 
necessary for a transfer by a Holder which is (A) a partnership to its 
partners or former partners in accordance with partnership interests, (B) a 
limited liability company to its members or former members in accordance with 
their interest in the limited liability company, or (C) to the Holder's 
family member or trust for the benefit of an individual Holder, or (D) any 
transferee who acquires at least 50,000 of Registrable Securities; PROVIDED 
that in each case the transferee will be subject to the terms of this 
Agreement to the same extent as if he were an original Holder hereunder.

             (b) Each certificate representing Shares or Registrable 
Securities shall (unless otherwise permitted by the provisions of the 
Agreement) be stamped or otherwise imprinted with a legend substantially 
similar to the following (in addition to any legend required under applicable 
state securities laws):

                 THE SECURITIES REPRESENTED HEREBY HAVE NOT 
                 BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 
                 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR 
                 OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR 
                 HYPOTHECATED UNLESS AND UNTIL REGISTERED 
                 UNDER THE ACT OR UNLESS THE COMPANY HAS 
                 RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO 
                 THE COMPANY AND ITS COUNSEL THAT SUCH
                 REGISTRATION IS NOT REQUIRED.

             (c) The Company shall be obligated to reissue promptly 
unlegended certificates at the request of any holder thereof if the holder 
shall have obtained an opinion of counsel (which counsel may be counsel to 
the Company) reasonably acceptable to the Company to the effect that the 
securities proposed to be disposed of may lawfully be so disposed of without 
registration, qualification or legend.

             (d) Any legend endorsed on an instrument pursuant to applicable 
state securities laws and the stop-transfer instructions with respect to such 
securities shall be removed upon receipt by the Company of an order of the 
appropriate blue sky authority authorizing such removal.

        2.2  DEMAND REGISTRATION.

             (a) Subject to the conditions of this Section 2.2, if the 
Company shall receive a written request from the Holders of a majority of the 
Registrable Securities then outstanding (the "Initiating Holders") that the 
Company file a registration statement under the Securities Act covering the 
registration of Registrable Securities then outstanding such that the 
anticipated aggregate offering price, net of underwriting discounts and 
commissions, would exceed $5,000,000 (a "Qualified Public Offering")), then 
the Company shall, within thirty (30) days of the receipt thereof, give 
written notice of such request to all Holders, and subject to the 

                                      4.


<PAGE>

limitations of this Section 2.2, use its best efforts to effect, as soon as 
practicable, the registration under the Securities Act of all Registrable 
Securities that the Holders request to be registered.

             (b) If the Initiating Holders intend to distribute the 
Registrable Securities covered by their request by means of an underwriting, 
they shall so advise the Company as a part of their request made pursuant to 
this Section 2.2 or any request pursuant to Section 2.4 and the Company shall 
include such information in the written notice referred to in Section 2.2(a) 
or Section 2.4(a), as applicable. In such event, the right of any Holder to 
include its Registrable Securities in such registration shall be conditioned 
upon such Holder's participation in such underwriting and the inclusion of 
such Holder's Registrable Securities in the underwriting to the extent 
provided herein. All Holders proposing to distribute their securities through 
such underwriting shall enter into an underwriting agreement in customary 
form with the underwriter or underwriters selected for such underwriting by a 
majority in interest of the Initiating Holders (which underwriter or 
underwriters shall be reasonably acceptable to the Company). Notwithstanding 
any other provision of this Section 2.2 or Section 2.4, if the underwriter 
advises the Company that marketing factors require a limitation of the number 
of securities to be underwritten (including Registrable Securities) then the 
Company shall so advise all Holders of Registrable Securities which would 
otherwise be underwritten pursuant hereto, and the number of shares that may 
be included in the underwriting shall be allocated, first, to the Holders of 
Series D Stock on a pro rata basis based on the total number of Registrable 
Securities held by all such Holders of Series D Stock and, second, to all 
other Holders of Registrable Securities on a pro rata basis based on the 
total number of Registrable Securities held by all such Holders. Any 
Registrable Securities excluded or withdrawn from such underwriting shall be 
withdrawn from the registration.

             (c)  The Company shall not be required to effect a registration 
pursuant to this Section 2.2:

                  (i) prior to the later of (A) the third anniversary of the 
date of this Agreement and (B) one hundred eighty (180) days following the 
effective date of the registration statement pertaining to the Initial 
Offering;

                  (ii) after the Company has effected two (2) registrations 
pursuant to this Section 2.2, and such registrations have been declared or 
ordered effective;

                  (iii) during the period starting 30 days prior to the date 
of filing of, and ending on the date one hundred eighty (180) days following 
the effective date of the registration statement pertaining to a public 
offering of securities by the Company; PROVIDED that the Company makes 
reasonable good faith efforts to cause such registration statement to become 
effective;

                  (iv) if the Company shall furnish to Holders requesting a 
registration statement pursuant to this Section 2.2, a certificate signed by 
the Chairman of the Board stating that in the good faith judgment of the 
Board of Directors of the Company, it would be seriously detrimental to the 
Company and its shareholders for such registration statement to be effected 
at such time, in which event the Company shall have the right to defer such 
filing for a period of not more than ninety (90) days after receipt of the 
request of the Initiating Holders; PROVIDED that 

                                      5.


<PAGE>

such right to delay a request shall be exercised by the Company not more than 
once in any twelve (12) month period; or

                  (v) if the Initiating Holders propose to dispose of shares 
of Registrable Securities that may be immediately registered on Form S-3 
pursuant to a request made pursuant to Section 2.4 below.

        2.3  PIGGYBACK REGISTRATIONS.  The Company shall notify all Holders 
of Registrable Securities in writing at least fifteen (15) days prior to the 
filing of any registration statement under the Securities Act for purposes of 
a public offering of securities of the Company (including a registration 
statement filed pursuant to Section 2.2 or 2.4 of this Agreement and 
including, but not limited to, registration statements relating to secondary 
offerings of securities of the Company, but excluding registration statements 
relating to employee benefit plans or with respect to corporate 
reorganizations or other transactions under Rule 145 of the Securities Act) 
and will afford each such Holder an opportunity to include in such 
registration statement all or part of such Registrable Securities held by 
such Holder. Each Holder desiring to include in any such registration 
statement all or any part of the Registrable Securities held by it shall, 
within fifteen (15) days after the above-described notice from the Company, 
so notify the Company in writing. Such notice shall state the intended method 
of disposition of the Registrable Securities by such Holder. If a Holder 
decides not to include all of its Registrable Securities in any registration 
statement thereafter filed by the Company, such Holder shall nevertheless 
continue to have the right to include any Registrable Securities in any 
subsequent registration statement or registration statements as may be filed 
by the Company with respect to offerings of its securities, all upon the 
terms and conditions set forth herein.

             (a) UNDERWRITING. If the registration statement under which the 
Company gives notice under this Section 2.3 is for an underwritten offering, 
the Company shall so advise the Holders of Registrable Securities. In such 
event, the right of any such Holder to be included in a registration pursuant 
to this Section 2.3 shall be conditioned upon such Holder's participation in 
such underwriting and the inclusion of such Holder's Registrable Securities 
in the underwriting to the extent provided herein. All Holders proposing to 
distribute their Registrable Securities through such underwriting shall enter 
into an underwriting agreement in customary form with the underwriter or 
underwriters selected for such underwriting by the Company. Notwithstanding 
any other provision of the Agreement, if the underwriter determines in good 
faith that marketing factors require a limitation of the number of shares to 
be underwritten, the number of shares that may be included in the 
underwriting shall be allocated, first, to the Company; second, to the 
Holders on a PRO RATA basis based on the total number of Registrable 
Securities held by the Holders; and third, to any shareholder of the Company 
(other than a Holder) on a PRO RATA basis. No such reduction shall (i) reduce 
the securities being offered by the Company for its own account to be 
included in the registration and underwriting, or (ii) reduce the amount of 
securities of the selling Holders included in the registration below 
twenty-five percent (25%) of the total amount of securities included in such 
registration, unless such offering is the Initial Offering, in which event 
any or all of the Registrable Securities of the Holders may be excluded in 
accordance with the immediately preceding sentence. In no event will shares 
of any other selling shareholder be included in such registration which would 
reduce the number of shares which may be included by Holders without the 
written consent of Holders of not less than a majority of the Registrable 
Securities proposed to be sold in the offering. If any 

                                      6.


<PAGE>

Holder disapproves of the terms of any such underwriting, such Holder may 
elect to withdraw therefrom by written notice to the Company and the 
underwriter, delivered at least ten (10) business days prior to the effective 
date of the registration statement. Any Registrable Securities excluded or 
withdrawn from such underwriting shall be excluded and withdrawn from the 
registration. For any Holder which is a partnership or corporation, the 
partners, retired partners and shareholders of such Holder, or the estates 
and family members of any such partners and retired partners and any trusts 
for the benefit of any of the foregoing person shall be deemed to be a single 
"Holder", and any PRO RATA reduction with respect to such "Holder" shall be 
based upon the aggregate amount of shares carrying registration rights owned 
by all entities and individuals included in such "Holder," as defined in this 
sentence.

             (b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the 
right to terminate or withdraw any registration initiated by it under this 
Section 2.3 prior to the effectiveness of such registration whether or not 
any Holder has elected to include securities in such registration. The 
Registration Expenses of such withdrawn registration shall be borne by the 
Company in accordance with Section 2.5 hereof.

        2.4  FORM S-3 REGISTRATION. In case the Company shall receive from 
any Holder or Holders of Series D Stock a written request or requests that 
the Company effect a registration on Form S-3 (or any successor to Form S-3) 
or any similar short-form registration statement and any related 
qualification or compliance with respect to all or a part of the Registrable 
Securities owned by such Holder or Holders of Series D Stock, the Company 
will:

             (a) promptly give written notice of the proposed registration, 
and any related qualification or compliance, to all other Holders of Series D 
Stock; and

             (b) as soon as practicable, effect such registration and all 
such qualifications and compliances as may be so requested and as would 
permit or facilitate the sale and distribution of all or such portion of such 
Holder's or Holders' Registrable Securities as are specified in such request, 
together with all or such portion of the Registrable Securities of any other 
Holder or Holders of Series D Stock joining in such request as are specified 
in a written request given within fifteen (15) days after receipt of such 
written notice from the Company pursuant to Section 2.3 hereof; PROVIDED, 
HOWEVER, that the Company shall not be obligated to effect any such 
registration, qualification or compliance pursuant to this Section 2.4:

                 (i)  if Form S-3 (or any successor or similar form) is 
not available for such offering by the Holders, or

                 (ii) if the Holders, together with the holders of any other 
securities of the Company entitled to inclusion in such registration, propose 
to sell Registrable Securities and such other securities (if any) at an 
aggregate price to the public of less than two million dollars ($2,000,000), 
or

                 (iii) if the Company shall furnish to the Holders a 
certificate signed by the Chairman of the Board of Directors of the Company 
stating that in the good faith judgment of the Board of Directors of the 
Company, it would be seriously detrimental to the Company and its 
shareholders for such Form S-3 registration to be effected at such time, in 
which event the 

                                      7.


<PAGE>

Company shall have the right to defer the filing of the Form S-3 registration 
statement for a period of not more than ninety (90) days after receipt of the 
request of the Holder or Holders under this Section 2.4; PROVIDED, that such 
right to delay a request shall be exercised by the Company not more than once 
in any twelve (12) month period, or

                 (iv) during the period starting 30 days prior to the date of 
filing of, and ending on the date one hundred eighty (180) days following the 
effective date of the registration statement pertaining to a public offering 
of securities by the Company; provided that the Company makes reasonable good 
faith efforts to cause such registration statement to become effective, or

                 (v) if the Company has already  effected two (2)  
registrations  on Form S-3 for the Holders  pursuant to this Section 2.4, or

                 (vi) in any particular jurisdiction in which the Company 
would be required to qualify to do business or to execute a general consent 
to service of process in effecting such registration, qualification or 
compliance.

             (c) Subject to the foregoing, the Company shall file a Form S-3 
registration statement covering the Registrable Securities and other 
securities so requested to be registered as soon as practicable after receipt 
of the request or requests of the Holders. Registrations effected pursuant to 
this Section 2.4 shall not be counted as demands for registration or 
registrations effected pursuant to Sections 2.2 or 2.3, respectively.

        2.5  EXPENSES OF REGISTRATION. Except as specifically provided 
herein, all Registration Expenses incurred in connection with any 
registration, qualification or compliance pursuant to Section 2.2 or any 
registration under Section 2.3 or Section 2.4 herein shall be borne by the 
Company. All Selling Expenses incurred in connection with any registrations 
hereunder, shall be borne by the holders of the securities so registered PRO 
RATA on the basis of the number of shares so registered. The Company shall 
reimburse the reasonable itemized fees of and expenses of one special counsel 
of the selling Holders; PROVIDED, HOWEVER that such reasonable itemized fees 
and expenses shall not exceed $15,000. The Company shall not, however, be 
required to pay for expenses of any registration proceeding begun pursuant to 
Section 2.2 or 2.4, the request of which has been subsequently withdrawn by 
the Initiating Holders unless (a) the withdrawal is based upon material 
adverse information concerning the Company of which the Initiating Holders 
were not aware at the time of such request or (b) the Holders of a majority 
of Registrable Securities agree to forfeit their right to one requested 
registration pursuant to Section 2.2 or Section 2.4, as applicable, in which 
event such right shall be forfeited by all Holders). If the Holders are 
required to pay the Registration Expenses, such expenses shall be borne by 
the holders of securities (including Registrable Securities) requesting such 
registration in proportion to the number of shares for which registration was 
requested. If the Company is required to pay the Registration Expenses of a 
withdrawn offering pursuant to clause (a) above, then the Holders shall not 
forfeit their rights pursuant to Section 2.2 or Section 2.4 to a demand 
registration.

        2.6  OBLIGATIONS OF THE COMPANY. Whenever required to effect the 
registration of any Registrable Securities, the Company shall, as 
expeditiously as reasonably possible:

                                      8.


<PAGE>

             (a) Prepare and file with the SEC a registration statement with 
respect to such Registrable Securities and use all reasonable efforts to 
cause such registration statement to become effective, and, upon the request 
of the Holders of a majority of the Registrable Securities registered 
thereunder, keep such registration statement effective for up to ninety (90) 
days or, if earlier, until the Holder or Holders have completed the 
distribution related thereto. The Company shall not be required to file, 
cause to become effective or maintain the effectiveness of any registration 
statement that contemplates a distribution of securities on a delayed or 
continuous basis pursuant to Rule 415 under the Securities Act.

             (b) Prepare and file with the SEC such amendments and 
supplements to such registration statement and the prospectus used in 
connection with such registration statement as may be necessary to comply 
with the provisions of the Securities Act with respect to the disposition of 
all securities covered by such registration statement.

             (c) Furnish to the Holders such number of copies of a 
prospectus, including a preliminary prospectus, in conformity with the 
requirements of the Securities Act, and such other documents as they may 
reasonably request in order to facilitate the disposition of Registrable 
Securities owned by them.

             (d) Use all reasonable efforts to register and qualify the 
securities covered by such registration statement under such other securities 
or Blue Sky laws of such jurisdictions as shall be reasonably requested by 
the Holders, PROVIDED that the Company shall not be required in connection 
therewith or as a condition thereto to qualify to do business or to file a 
general consent to service of process in any such states or jurisdictions.

             (e) In the event of any underwritten public offering, enter into 
and perform its obligations under an underwriting agreement, in usual and 
customary form, with the managing underwriter(s) of such offering. Each 
Holder participating in such underwriting shall also enter into and perform 
its obligations under such an agreement.

             (f) Notify each Holder of Registrable Securities covered by such 
registration statement at any time when a prospectus relating thereto is 
required to be delivered under the Securities Act of the happening of any 
event as a result of which the prospectus included in such registration 
statement, as then in effect, includes an untrue statement of a material fact 
or omits to state a material fact required to be stated therein or necessary 
to make the statements therein not misleading in the light of the 
circumstances then existing.

             (g) Furnish, at the request of a majority of the Holders 
participating in the registration, on the date that such Registrable 
Securities are delivered to the underwriters for sale, if such securities are 
being sold through underwriters, or, if such securities are not being sold 
through underwriters, on the date that the registration statement with 
respect to such securities becomes effective, (i) an opinion, dated as of 
such date, of the counsel representing the Company for the purposes of such 
registration, in form and substance as is customarily given to underwriters 
in an underwritten public offering and reasonably satisfactory to a majority 
in interest of the Holders requesting registration, addressed to the 
underwriters, if any, and to the Holders requesting registration of 
Registrable Securities and (ii) a letter dated as of such date, from the 
independent certified public accountants of the Company, in form and 
substance as is 

                                      9.


<PAGE>

customarily given by independent certified public accountants to underwriters 
in an underwritten public offering and reasonably satisfactory to a majority 
in interest of the Holders requesting registration, addressed to the 
underwriters, if any, and if permitted by applicable accounting standards, to 
the Holders requesting registration of Registrable Securities.

        2.7  TERMINATION OF REGISTRATION RIGHTS. All registration rights 
granted under this Section 2 terminate to Holders, with respect to an 
individual Holder, when he/she can sell all shares in one quarter under Rule 
144 and as to all Holders, three years after the Company becomes subject to 
the reporting requirements of the Securities Exchange Act of 1934, as amended.

        2.8  DELAY OF REGISTRATION; FURNISHING INFORMATION.

             (a) It shall be a condition precedent to the obligations of the 
Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the 
selling Holders shall furnish to the Company such information regarding 
themselves, the Registrable Securities held by them and the intended method 
of disposition of such securities as shall be required to effect the 
registration of their Registrable Securities.

             (b) The Company shall have no obligation with respect to any 
registration requested pursuant to Section 2.2 or Section 2.4 if, due to the 
operation of subsection 2.2(b), the number of shares or the anticipated 
aggregate offering price of the Registrable Securities to be included in the 
registration does not equal or exceed the number of shares or the anticipated 
aggregate offering price required to originally trigger the Company's 
obligation to initiate such registration as specified in Section 2.2 or 
Section 2.4, whichever is applicable.

        2.9  INDEMNIFICATION. In the event any Registrable Securities are 
included in a registration statement under Sections 2.2, 2.3 or 2.4:

             (a) To the extent permitted by law, the Company will indemnify 
and hold harmless each Holder, the partners, officers and directors of each 
Holder, any underwriter (as defined in the Securities Act) for such Holder 
and each person, if any, who controls such Holder or underwriter within the 
meaning of the Securities Act or the Exchange Act, against any losses, 
claims, damages, or liabilities (joint or several) to which they may become 
subject under the Securities Act, the Exchange Act or other federal or state 
law, insofar as such losses, claims, damages or liabilities (or actions in 
respect thereof) arise out of or are based upon any of the following 
statements, omissions or violations (collectively a "Violation") by the 
Company: (i) any untrue statement or alleged untrue statement of a material 
fact contained in such registration statement, including any preliminary 
prospectus or final prospectus contained therein or any amendments or 
supplements thereto, (ii) the omission or alleged omission to state therein a 
material fact required to be stated therein, or necessary to make the 
statements therein not misleading, or (iii) any violation or alleged 
violation by the Company of the Securities Act, the Exchange Act, any state 
securities law or any rule or regulation promulgated under the Securities 
Act, the Exchange Act or any state securities law in connection with the 
offering covered by such registration statement; and the Company will pay as 
incurred to each such Holder, partner, officer, director, underwriter or 
controlling person for any legal or other expenses reasonably incurred by 
them in connection with investigating or defending any such loss, claim, 
damage, 

                                     10.



<PAGE>

liability or action; PROVIDED HOWEVER, that the indemnity agreement contained
in this Section 2.9(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by such Holder, partner, officer, director, underwriter or
controlling person of such Holder.

             (b)  To the extent permitted by law, each Holder will, if 
Registrable Securities held by such Holder are included in the securities as 
to which such registration qualifications or compliance is being effected, 
indemnify and hold harmless the Company, each of its directors, its officers 
and each person, if any, who controls the Company within the meaning of the 
Securities Act, any underwriter and any other Holder selling securities under 
such registration statement or any of such other Holder's partners, directors 
or officers or any person who controls such Holder, against any losses, 
claims, damages or liabilities (joint or several) to which the Company or any 
such director, officer, controlling person, underwriter or other such Holder, 
or partner, director, officer or controlling person of such other Holder may 
become subject under the Securities Act, the Exchange Act or other federal or 
state law, insofar as such losses, claims, damages or liabilities (or actions 
in respect thereto) arise out of or are based upon any Violation, in each 
case to the extent (and only to the extent) that such Violation occurs in 
reliance upon and in conformity with written information furnished by such 
Holder under an instrument duly executed by such Holder and stated to be 
specifically for use in connection with such registration; and each such 
Holder will pay as incurred any legal or other expenses reasonably incurred 
by the Company or any such director, officer, controlling person, underwriter 
or other Holder, or partner, officer, director or controlling person of such 
other Holder in connection with investigating or defending any such loss, 
claim, damage, liability or action if it is judicially determined that there 
was such a Violation; PROVIDED, HOWEVER, that the indemnity agreement 
contained in this Section 2.9(b) shall not apply to amounts paid in 
settlement of any such loss, claim, damage, liability or action if such 
settlement is effected without the consent of the Holder, which consent shall 
not be unreasonably withheld; PROVIDED FURTHER, that in no event shall any 
indemnity under this Section 2.9 exceed the gross proceeds from the offering 
received by such Holder.

             (c)  Promptly after receipt by an indemnified party under this 
Section 2.9 of notice of the commencement of any action (including any 
governmental action), such indemnified party will, if a claim in respect 
thereof is to be made against any indemnifying party under this Section 2.9, 
deliver to the indemnifying party a written notice of the commencement 
thereof and the indemnifying party shall have the right to participate in, 
and, to the extent the indemnifying party so desires, jointly with any other 
indemnifying party similarly noticed, to assume the defense thereof with 
counsel mutually satisfactory to the parties; PROVIDED, HOWEVER, that an 
indemnified party shall have the right to retain its own counsel, with the 
fees and expenses to be paid by the indemnifying party, if representation of 
such indemnified party by the counsel retained by the indemnifying party 
would be inappropriate due to actual or potential differing interests between 
such indemnified party and any other party represented by such counsel in 
such proceeding. The failure to deliver written notice to the indemnifying 
party within a reasonable time of the commencement of any such action, if 
materially prejudicial to its

                                     11.
<PAGE>

ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 2.9, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 2.9.

             (d)  If the indemnification provided for in this Section 2.9 is 
held by a court of competent jurisdiction to be unavailable to an indemnified 
party with respect to any losses, claims, damages or liabilities referred to 
herein, the indemnifying party, in lieu of indemnifying such indemnified 
party thereunder, shall to the extent permitted by applicable law contribute 
to the amount paid or payable by such indemnified party as a result of such 
loss, claim, damage or liability in such proportion as is appropriate to 
reflect the relative fault of the indemnifying party on the one hand and of 
the indemnified party on the other in connection with the Violation(s) that 
resulted in such loss, claim, damage or liability, as well as any other 
relevant equitable considerations. The relative fault of the indemnifying 
party and of the indemnified party shall be determined by a court of law by 
reference to, among other things, whether the untrue or alleged untrue 
statement of a material fact or the omission to state a material fact relates 
to information supplied by the indemnifying party or by the indemnified party 
and the parties' relative intent, knowledge, access to information and 
opportunity to correct or prevent such statement or omission; PROVIDED, that 
in no event shall any contribution by a Holder hereunder exceed the proceeds 
from the offering received by such Holder.

             (e)  The obligations of the Company and Holders under this 
Section 2.9 shall survive completion of any offering of Registrable 
Securities in a registration statement and the termination of this agreement. 
No Indemnifying Party, in the defense of any such claim or litigation, shall, 
except with the consent of each Indemnified Party, consent to entry of any 
judgment or enter into any settlement which does not include as an 
unconditional term thereof the giving by the claimant or plaintiff to such 
Indemnified Party of a release from all liability in respect to such claim or 
litigation.

        2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the 
Company to register Registrable Securities pursuant to this Section 2 may be 
assigned by a Holder to a transferee or assignee of Registrable Securities 
which (a) is a subsidiary, parent, general partner, limited partner, retired 
partner, member or retired member of a Holder, (b) is a Holder's family 
member or trust for the benefit of an individual Holder, or (c) acquires at 
least fifty thousand (50,000) shares of Registrable Securities (as adjusted 
for stock splits and combinations); provided, however, (i) the transferor 
shall, within ten (10) days after such transfer, furnish to the Company 
written notice of the name and address of such transferee or assignee and the 
securities with respect to which such registration rights are being assigned 
and (ii) such transferee shall agree to be subject to all restrictions set 
forth in this Agreement.

        2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 
2 may be amended and the observance thereof may be waived (either generally 
or in a particular instance and either retroactively or prospectively), only 
with the written consent of the Company and the Holders of at least 
two-thirds (2/3) of the Registrable Securities then outstanding; PROVIDED, 
HOWEVER, that any amendment to this Section 2 that adversely affects the 
holders of Series D Preferred Stock shall require the written consent of the 
holders of at least two-thirds (2/3) of the

                                     12.
<PAGE>

Series D Preferred Stock. Any amendment or waiver effected in accordance with
this Section 2.11 shall be binding upon each Holder and the Company.

        2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of 
this Agreement, the Company shall not, without the prior written consent of 
the Holders of two-thirds (2/3) of the Registrable Securities then 
outstanding, enter into any agreement with any holder or prospective holder 
of any securities of the Company that would grant such holder registration 
rights senior to or on parity with those granted to the Holders hereunder.

        2.13 "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH INFORMATION. 
Each Holder hereby agrees that such Holder shall not sell or otherwise 
transfer or dispose of any Common Stock (or other securities) of the Company 
held by such Holder (other than those included in the registration) for a 
period specified by the representative of the underwriters of Common Stock 
(or other securities) of the Company not to exceed one hundred eighty (180) 
days following the effective date of a registration statement of the Company 
filed under the Securities Act; PROVIDED that:

             (i)  such agreement shall apply only to the Company's Initial 
Offering; and

             (ii) all officers and directors of the Company enter into 
similar agreements.

        Each Holder agrees to execute and deliver such other agreements as 
may be reasonably requested by the Company or the underwriter which are 
consistent with the foregoing or which are necessary to give further effect 
thereto. In addition, if requested by the Company or the representative of 
the underwriters of Common Stock (or other securities) of the Company, each 
Holder shall provide, within ten (10) days of such request, such information 
as may be required by the Company or such representative in connection with 
the completion of any public offering of the Company's securities pursuant to 
a registration statement filed under the Securities Act. The obligations 
described in this Section 2.13 shall not apply to a registration relating 
solely to employee benefit plans on Form S-1 or Form S-8 or similar forms 
that may be promulgated in the future, or a registration relating solely to a 
Commission Rule 145 transaction on Form S-4 or similar forms that may be 
promulgated in the future. The Company may impose stop-transfer instructions 
with respect to the shares of Common Stock (or other securities) subject to 
the foregoing restriction until the end of said one hundred eighty (180) day 
period.

        2.14 RULE 144 REPORTING. With a view to making available to the 
Holders the benefits of certain rules and regulations of the SEC which may 
permit the sale of the Registrable Securities to the public without 
registration, the Company agrees to use its best efforts to:

             (a)  Make and keep public information available, as those terms 
are understood and defined in SEC Rule 144 or any similar or analogous rule 
promulgated under the Securities Act, at all times after the effective date 
of the first registration filed by the Company for an offering of its 
securities to the general public;

             (b)  File with the SEC, in a timely manner, all reports and 
other documents required of the Company under the Exchange Act; and

                                     13.
<PAGE>

             (c)  So long as a Holder owns any Registrable Securities, 
furnish to such Holder forthwith upon request: a written statement by the 
Company as to its compliance with the reporting requirements of said Rule 144 
of the Securities Act, and of the Exchange Act (at any time after it has 
become subject to such reporting requirements); a copy of the most recent 
annual or quarterly report of the Company; and such other reports and 
documents as a Holder may reasonably request in availing itself of any rule 
or regulation of the SEC allowing it to sell any such securities without 
registration.

        2.15 TERMINATION OF REGISTRATION RIGHTS UNDER PRIOR AGREEMENTS. The 
registrations rights provided under (i) Section 6 of the Series A Agreement, 
(ii) Section 5 of the Series B Agreement, (iii) Section 5 the Series B and 
Warrant Agreement, and (iv) Section 5 of the Series C Preferred Stock and 
Common Stock Warrant Purchase Agreement are terminated in their entirety and 
shall have no further force or effect whatsoever. The registration rights 
contained in this Agreement set forth the sole and entire agreement among the 
Company and the Prior Shareholders on the subject matter hereof and supersede 
any and all rights granted and covenants made under any prior agreements (and 
the undersigned parties to the Prior Agreements hereby amend such agreements 
such that the registration rights provided for herein shall apply to all 
parties under the Prior Agreements).

SECTION 3.   COVENANTS OF THE COMPANY

        3.1  BASIC FINANCIAL INFORMATION AND REPORTING.

             (a)  The Company will maintain true books and records of account 
in which full and correct entries will be made of all its business 
transactions pursuant to a system of accounting established and administered 
in accordance with generally accepted accounting principles consistently 
applied, and will set aside on its books all such proper accruals and 
reserves as shall be required under generally accepted accounting principles 
consistently applied.

             (b)  As soon as practicable after the end of each fiscal year of 
the Company, and in any event within one hundred twenty (120) days 
thereafter, the Company will furnish each Investor a consolidated balance 
sheet of the Company, as at the end of such fiscal year, and a consolidated 
statement of income and a consolidated statement of cash flows of the 
Company, for such year, all prepared in accordance with generally accepted 
accounting principles consistently applied and setting forth in each case in 
comparative form the figures for the previous fiscal year, all in reasonable 
detail, with the exception that no notes need be attached to such statements. 
The Company will furnish each Investor, as soon as practicable after the end 
of the first, second and third quarterly accounting periods in each fiscal 
year of the Company, and in any event within forty-five (45) days thereafter, 
a consolidated balance sheet of the Company as of the end of each such 
quarterly period, and a consolidated statement of income and a consolidated 
statement of cash flows of the Company for such period and for the current 
fiscal year to date, prepared in accordance with generally accepted 
accounting principles, with the exception that no notes need be attached to 
such statements and year-end audit adjustments may not have been made.

             (c)  The Company will additionally furnish each Investor that 
(with its affiliates) shall own not less than two hundred thousand (200,000) 
shares of Registrable

                                     14.
<PAGE>

Securities (as adjusted for stock splits and combinations) (a "Major
Investor") (i) at least thirty (30) days prior to the beginning of each fiscal
year an annual budget and operating plans for such fiscal year and (ii) as
soon as practicable after the end of each month a consolidated balance sheet
of the Company as of the end of such month and consolidated statements of
income and cash flows of the Company for each month and for the current fiscal
year of the Company to date, all subject to normal year-end adjustments,
together with a comparison of such statements against plan.

        3.2  INSPECTION RIGHTS. Each Major Investor shall have the right to 
visit and inspect any of the properties of the Company or any of its 
subsidiaries, and to discuss the affairs, finances and accounts of the 
Company or any of its subsidiaries with its officers, and to review such 
information as is reasonably requested all at such reasonable times and as 
often as may be reasonably requested; provided, however, that the Company 
shall not be obligated under this Section 3.2 with respect to a competitor of 
the Company or with respect to information which the Board of Directors 
determines in good faith is confidential and should not, therefore, be 
disclosed.

        3.3  CONFIDENTIALITY OF RECORDS. Each Investor agrees to use, and to 
use its best efforts to insure that its authorized representatives use, the 
same degree of care as such Investor uses to protect its own confidential 
information to keep confidential any information furnished to it which the 
Company identifies as being confidential or proprietary (so long as such 
information is not in the public domain), except that such Investor may 
disclose such proprietary or confidential information to any partner, 
subsidiary or parent of such Investor for the purpose of evaluating its 
investment in the Company as long as such partner, subsidiary or parent is 
advised of the confidentiality provisions of this Section 3.3.

        3.4  RESERVATION OF COMMON STOCK. The Company will at all times 
reserve and keep available, solely for issuance and delivery upon the 
conversion of the Preferred Stock, all Common Stock issuable from time to 
time upon such conversion.

        3.5  STOCK VESTING. Unless otherwise approved by the Board of 
Directors, all stock options and other stock equivalents issued after the 
date of this Agreement to employees, directors, consultants and other service 
providers shall be subject to vesting as follows: (a) twenty-five percent 
(25%) of such stock shall vest at the end of the first year following the 
earlier of the date of issuance or such person's services commencement date 
with the company, and (b) seventy-five percent (75%) of such stock shall vest 
monthly over the remaining three (3) years; provided that subsequent stock 
options granted to employees after their initial employment by the Company 
may vest over a four year monthly vesting schedule in which such monthly 
vesting would begin immediately. With respect to any shares of stock 
purchased by any such person, the Company's repurchase option shall provide 
that upon such person's termination of employment or service with the 
Company, with or without cause, the Company or its assignee (to the extent 
permissible under applicable securities laws and other laws) shall have the 
option to purchase at cost any unvested shares of stock held by such person.

        3.6  KEY MAN INSURANCE. Subject to the approval of the Board of 
Directors, the Company will use its best efforts to obtain and maintain in 
full force and effect term life

                                     15.
<PAGE>

insurance in the amount of one million ($1,000,000) dollars on the life of
Jeffrey Hussey, naming the Company as beneficiary.

        3.7  ASSIGNMENT OF INVENTIONS AGREEMENTS. The Company shall require 
all officers, employees and consultants to execute and deliver an Assignment 
of Inventions Agreement in a form approved by the Company's Board of 
Directors.

        3.8  DIRECTORS AND OFFICERS LIABILITY INSURANCE. The Company shall 
use its best efforts to secure and maintain directors and officers liability 
insurance no less than $1,000,000, provided that such coverage is available 
at commercially reasonable rates, as determined by the Board of Directors of 
the Company. Such directors and officers liability insurance shall be 
maintained for so long as any of the representative(s) of the Investors serve 
on the Company's Board of Directors.

        3.9  REIMBURSEMENT OF EXPENSES FOR ATTENDING BOARD MEETINGS. The 
Company will reimburse all directors for reasonable expenses (including 
airfare, lodging and other travel expenses) incurred in connection with 
attending meetings of the Company's Board of Directors.

        3.10 TERMINATION OF COVENANTS. All covenants of the Company contained 
in Section 3 of this Agreement shall expire and terminate as to each Investor 
upon the earlier of (i) the effective date of the registration statement 
pertaining to the Initial Offering or (ii) upon (a) the acquisition of all or 
substantially all of the assets of the Company or (b) an acquisition of the 
Company by another corporation or entity by consolidation, merger or other 
reorganization in which the holders of the Company's outstanding voting stock 
immediately prior to such transaction own, immediately after such 
transaction, securities representing less than fifty percent (50%) of the 
voting power of the corporation or other entity surviving such transaction (a 
"Change in Control").

SECTION 4.   RIGHTS OF FIRST REFUSAL

        4.1  SUBSEQUENT OFFERINGS. Each Holder of Series D Preferred Stock 
shall have a right of first refusal to purchase its PRO RATA share of all 
Equity Securities, as defined below, that the Company may, from time to time, 
propose to sell and issue after the date of this Agreement, other than the 
Equity Securities excluded by Section 4.6 hereof. Each Investor's PRO RATA 
share is equal to the ratio of (a) the number of shares of the Company's 
Common Stock (including all shares of Common Stock issued or issuable upon 
conversion of the Shares) which such Investor is deemed to hold immediately 
prior to the issuance of such Equity Securities to (b) the total number of 
shares of the Company's outstanding Common Stock (including all shares of 
Common Stock issued or issuable upon conversion of the Shares or upon the 
exercise of any outstanding warrants or options) immediately prior to the 
issuance of the Equity Securities. The term "Equity Securities" shall mean 
(i) any Common Stock or Preferred Stock of the Company, (ii) any security 
convertible, with or without consideration, into any Common Stock or 
Preferred Stock (including any option to purchase such a convertible 
security), or (iii) any warrant or right to subscribe to or purchase any 
Common Stock or Preferred Stock

        4.2  EXERCISE OF RIGHTS. If the Company proposes to issue any Equity 
Securities, it shall give each Holder written notice of its intention, 
describing the Equity Securities, the price

                                     16.
<PAGE>

and the terms and conditions upon which the Company proposes to issue the
same. Each Holder shall have fifteen (15) days from the giving of such notice
to agree to purchase its pro rata share of the Equity Securities for the price
and upon the terms and conditions specified in the notice by giving written
notice to the Company and stating therein the quantity of Equity Securities to
be purchased. Notwithstanding the foregoing, the Company shall not be required
to offer or sell such Equity Securities to any Holder who would cause the
Company to be in violation of applicable federal securities laws by virtue of
such offer or sale.

        4.3  ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of 
the Holders elect to purchase their pro rata share of the Equity Securities, 
then the Company shall promptly notify in writing the Holders who do so elect 
and shall offer such Holders the right to acquire a pro rata share of such 
unsubscribed shares. The Holders shall have five (5) days after receipt of 
such notice to notify the Company of its election to purchase all or a 
portion thereof of the unsubscribed shares. If the Holders fail to exercise 
in full the rights of first refusal, the Company shall have ninety (90) days 
thereafter to sell the Equity Securities in respect of which the Holder's' 
rights were not exercised, at a price and upon general terms and conditions 
materially no more favorable to the purchasers thereof than specified in the 
Company's notice to the Holders pursuant to Section 4.2 hereof. If the 
Company has not sold such Equity Securities within ninety (90) days of the 
notice provided pursuant to Section 4.2, the Company shall not thereafter 
issue or sell any Equity Securities without first offering such securities to 
the Holders in the manner provided above.

        4.4  TERMINATION AND WAIVER OF RIGHTS OF FIRST REFUSAL. The rights of 
first refusal established by this Section 4 shall not apply to, and shall 
terminate upon the effective date of the registration statement pertaining to 
the Company's Initial Public Offering of the Company in which all of the 
Preferred Stock is converted into Common Stock.

        4.5  TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal 
of each Holder under this Section 4 may be transferred to the same parties, 
and subject to the same restrictions, as any transfer of registration rights 
pursuant to Section 2.10.

        4.6  EXCLUDED SECURITIES. The rights of first refusal established by 
this Section 4 shall have no application to any of the following Equity 
Securities:

             (a)  shares of Common Stock (and/or options, warrants or other 
Common Stock purchase rights issued pursuant to such options, warrants or 
other rights) issued or to be issued to employees, officers or directors of, 
or consultants or advisors to, the Company or any subsidiary, pursuant to 
stock purchase or stock option plans or other arrangements that are approved 
by the Board of Directors;

             (b)  stock issued pursuant to any rights or agreements 
outstanding as of the date of this Agreement, options and warrants 
outstanding as of the date of this Agreement; and stock issued pursuant to 
any such rights or agreements granted after the date of this Agreement, 
provided that the rights of first refusal established by this Section 4 
applied with respect to the initial sale or grant by the Company of such 
rights or agreements;

                                     17.
<PAGE>

             (c)  any Equity Securities issued pursuant to a merger, 
consolidation, acquisition or similar business combination;

             (d)  shares of Common Stock issued in connection with any stock 
split, stock dividend or recapitalization by the Company;

             (e)  shares of Common Stock issued upon conversion of the Shares;

             (f)  any Equity Securities issued pursuant to any equipment 
leasing arrangement, or pursuant to debt financing from a bank or other 
financial institution;

             (g)  any Equity Securities that are issued by the Company 
pursuant to a registration statement filed under the Securities Act for the 
Company's Initial Offering;

             (h)  shares of the Company's Common Stock or Preferred Stock 
issued in connection with strategic transactions involving the Company and 
other entities, including (A) joint ventures, manufacturing, marketing or 
distribution arrangements or (B) technology transfer or development 
arrangements; provided that such strategic transactions and the issuance of 
shares therein, have been approved by the Company's Board of Directors; and

                  (i)  any shares of Common Stock or options, warrants or 
convertible securities issued upon receipt of written consent or approval of 
the holders of two-thirds (2/3) of the Registrable Securities.

SECTION 5.   MISCELLANEOUS

        5.1  GOVERNING LAW. This Agreement shall be governed by and construed 
under the laws of the State of California as applied to agreements among 
California residents entered into and to be performed entirely within 
California. In any action between or among any of the parties, whether 
arising out of this Agreement or otherwise, (a) each of the parties 
irrevocably and unconditionally consents to jurisdiction and venue in any 
federal or state court located in the State of Washington; and (b) if any 
such action is commenced in a state court, then, subject to applicable law, 
no party shall object to the removal of such action to any federal court 
located in the State of Washington.

        5.2  SURVIVAL. The representations, warranties, covenants, and 
agreements made herein shall survive any investigation made by any Holder and 
the closing of the transactions contemplated hereby. All statements as to 
factual matters contained in any certificate or other instrument delivered by 
or on behalf of the Company pursuant hereto in connection with the 
transactions contemplated hereby shall be deemed to be representations and 
warranties by the Company hereunder solely as of the date of such certificate 
or instrument.

        5.3  SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided 
herein, the provisions hereof shall inure to the benefit of, and be binding 
upon, the successors, assigns, heirs, executors, and administrators of the 
parties hereto and shall inure to the benefit of and be enforceable by each 
person who shall be a holder of Registrable Securities from time to time; 
PROVIDED, HOWEVER, that prior to the receipt by the Company of adequate 
written notice of the transfer of any Registrable Securities specifying the 
full name and address of the transferee, the

                                     18.
<PAGE>

Company may deem and treat the person listed as the holder of such shares in
its records as the absolute owner and holder of such shares for all purposes,
including the payment of dividends or any redemption price.

        5.4  ENTIRE AGREEMENT. Except for those certain inspection rights 
granted pursuant to Section 7.2 of the Series A Agreement and Section 9.2 of 
the Series B and Warrant Agreement, which the parties hereto agree shall 
continue pursuant to the respective terms of such agreements, this Agreement, 
the Exhibits and Schedules hereto, the Purchase Agreement and the other 
documents delivered pursuant thereto constitute the full and entire 
understanding and agreement between the parties with regard to the subjects 
hereof and no party shall be liable or bound to any other in any manner by 
any representations, warranties, covenants and agreements except as 
specifically set forth herein and therein.

        5.5  SEVERABILITY. In case any provision of the Agreement shall be 
invalid, illegal, or unenforceable, the validity, legality, and 
enforceability of the remaining provisions shall not in any way be affected 
or impaired thereby.

        5.6  AMENDMENT AND WAIVER.

             (a)  Except with respect to Section 2 and as otherwise expressly 
provided, this Agreement may be amended or modified only upon the written 
consent of the Company and the holders of at least two-thirds (2/3) of the 
Series D Preferred Stock.

             (b)  Except as otherwise expressly provided, the obligations of 
the Company and the rights of the Holders under this Agreement may be waived 
only with the written consent of the holders of at least two-thirds (2/3) of 
the Series D Preferred Stock.

             (c)  Notwithstanding the foregoing, this Agreement may be 
amended with only the written consent of the Company to include additional 
purchasers of Shares as "Investors," "Holders" and parties hereto.

             (d)  Notwithstanding the foregoing, Section 2 of this Agreement 
may be amended or modified only upon written consent of (i) the Company, (ii) 
the holders of a majority of the Registrable Securities and (iii) the holders 
of at least two-thirds (2/3) of the Series D Stock, and the obligations of 
the Company and the rights of the Holders under this Agreement may be waived 
only with the written consent of (i) the holders of a majority of the 
Registrable Securities and (ii) the holders of two-thirds (2/3) of the Series 
D Stock.

        5.7  DELAYS OR OMISSIONS. It is agreed that no delay or omission to 
exercise any right, power, or remedy accruing to any Holder, upon any breach, 
default or noncompliance of the Company under this Agreement shall impair any 
such right, power, or remedy, nor shall it be construed to be a waiver of any 
such breach, default or noncompliance, or any acquiescence therein, or of any 
similar breach, default or noncompliance thereafter occurring. It is further 
agreed that any waiver, permit, consent, or approval of any kind or character 
on any Holder's part of any breach, default or noncompliance under the 
Agreement or any waiver on such Holder's part of any provisions or conditions 
of this Agreement must be in writing and shall be effective only to the 
extent specifically set forth in such writing. All remedies, either under 
this Agreement, by law, or otherwise afforded to Holders, shall be cumulative 
and not alternative.

                                     19.
<PAGE>

        5.8  NOTICES. All notices required or permitted hereunder shall be in 
writing and shall be deemed effectively given: (a) upon personal delivery to 
the party to be notified, (b) when sent by confirmed telex or facsimile if 
sent during normal business hours of the recipient; if not, then on the next 
business day, (c) five (5) days after having been sent by registered or 
certified mail, return receipt requested, postage prepaid, or (d) one (1) day 
after deposit with a nationally recognized overnight courier, specifying next 
day delivery, with written verification of receipt. All communications shall 
be sent to the party to be notified at the address as set forth on the 
signature pages hereof or Exhibit A hereto or at such other address as such 
party may designate by five (5) days advance written notice to the other 
parties hereto.

        5.9  ATTORNEYS' FEES. In the event that any dispute among the parties 
to this Agreement should result in litigation, the prevailing party in such 
dispute shall be entitled to recover from the losing party all fees, costs 
and expenses of enforcing any right of such prevailing party under or with 
respect to this Agreement, including without limitation, such reasonable fees 
and expenses of attorneys and accountants, which shall include, without 
limitation, all fees, costs and expenses of appeals.

        5.10 TITLES AND SUBTITLES. The titles of the sections and subsections 
of this Agreement are for convenience of reference only and are not to be 
considered in construing this Agreement.

        5.11 COUNTERPARTS. This Agreement may be executed in any number of 
counterparts, each of which shall be an original, but all of which together 
shall constitute one instrument.


                      [THIS SPACE INTENTIONALLY LEFT BLANK]


                                     20.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this INVESTOR
RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.


COMPANY:

F5 LABS, INC.


By:    /s/ Jeff Hussey
   ---------------------------------
Name:  Jeffrey S. Hussey
     -------------------------------
Title: CEO & President
      ------------------------------





                                     21.
<PAGE>

                                     INVESTORS:

                                     SERIES D HOLDERS:

                                     MENLO VENTURES VII, L.P.

                                     By: MV MANAGEMENT VII, L.L.C.
                                     Its General Partner



                                     By:  /s/ Sonya Hoel
                                        ------------------------------
                                        Managing Member


                                     MENLO ENTREPRENEURS FUND VII, L.P.

                                     By: MV MANAGEMENT VII, L.L.C.
                                     Its General Partner



                                     By:  /s/ Sonya Hoel
                                        ------------------------------------
                                        Managing Member


                                     PACIFIC TECHNOLOGY VENTURES U.S.A., L.P.

                                     BY: IDG VENTURES, L.L.C.

                                     Name:  /s/ Kim Davis
                                          ----------------------------------
                                     Title: General Partner Managing Member
                                           ---------------------------------


                                     22.
<PAGE>

                                            SERIES A HOLDERS:

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

                                            By:    /s/ Charles Anderson 8/20/98
                                               -------------------------------
                                            Name:  Charles L. Anderson
                                                 -----------------------------
                                            Title:
                                                  ----------------------------


                                            By:    /s/ Richard Andrew 8/18/98
                                               -------------------------------
                                            Name:  Richard Andrew
                                                 -----------------------------
                                            Title:
                                                  ----------------------------


                                            By:    /s/ Geoffrey Boguch
                                               -------------------------------
                                            Name:  Geoffrey Erin Boguch
                                                 -----------------------------
                                            Title:
                                                  ----------------------------


                                            By:   
                                               -------------------------------
                                            Name:  John Crosby Barnett, Jr.
                                                 -----------------------------
                                            Title:
                                                  ----------------------------


                                            By:    /s/ John Brazier
                                               -------------------------------
                                            Name:  John M. Brazier
                                                 -----------------------------
                                            Title:
                                                  ----------------------------


                                            By:    /s/ Thomas F. Broderick
                                               -------------------------------
                                                   /s/ Joyce Broderick
                                               -------------------------------
                                            Name:  Thomas F. & Joyce Broderick
                                                 -----------------------------
                                            Title:
                                                  ----------------------------


                                            By:    /s/ Gary L. Byland
                                               -------------------------------
                                                   /s/ Jacalyn O. Bylund
                                               -------------------------------
                                            Name:  Gary L. & Jacalyn O. Bylund
                                                 -----------------------------
                                            Title:
                                                  ----------------------------


                                            By:    /s/ John Crutcher
                                               -------------------------------
                                            Name:  John Crutcher
                                                 -----------------------------
                                            Title:
                                                  ----------------------------


                                            By:    /s/ James David
                                               -------------------------------
                                                   /s/ Patricia David
                                               -------------------------------
                                            Name:  James & Patricia David
                                                 -----------------------------
                                            Title:
                                                  ----------------------------


<PAGE>


                                            By:    /s/ Janet Elzey
                                               -------------------------------
                                            Name:  Janet Elzey
                                                 -----------------------------
                                            Title:
                                                  ----------------------------


                                            Encompass Group, Inc.

                                            By:    /s/ Craig D. McCallum
                                               -------------------------------
                                            Name:  Craig D. McCallum
                                                 -----------------------------
                                            Title: Senior Vice President
                                                  ----------------------------


                                            By:    /s/ Penelope Genise
                                               -------------------------------
                                            Name:  Robert and Penelope Genise
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    /s/ Alan Higginson
                                               -------------------------------
                                            Name:  Alan Higginson
                                                 -----------------------------
                                            Title: Atrieva Corp.
                                                  ----------------------------


                                            By:    /s/ Helen J. Hussey
                                               -------------------------------
                                            Name:  Helen J. Hussey
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    /s/ Joel R. Hussey
                                               -------------------------------
                                                   /s/ Christi Hussey
                                               -------------------------------
                                            Name:  Joel R. and Christi Hussey
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    /s/ George Jansen
                                               -------------------------------
                                            Name:  George Jansen
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            KLJ Ventures, LLC

                                            By:    /s/ Kent Johnson
                                               -------------------------------
                                            Name:  Kent Johnson
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    /s/ Clinton Mead 8-19-98
                                               -------------------------------
                                            Name:  Clinton Mead
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    /s/ John Meisenbach
                                               -------------------------------
                                            Name:  John Meisenbach
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    /s/ Jean Patterson
                                               -------------------------------
                                            Name:  Jean Patterson
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            Pruzan Bldg. Co.

                                            By:    /s/ Herbert Pruzan
                                               -------------------------------
                                            Name:  Herbert Pruzan
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    /s/ Peter Rettman
                                               -------------------------------
                                            Name:  Peter Rettman
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                     23.



<PAGE>

                                            By:    /s/ Herbert Rosen
                                               -------------------------------
                                            Name:  Herbert Rosen
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    /s/ Michael Sherry
                                               -------------------------------
                                            Name:  Michael Sherry
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    /s/ Richard Smith
                                               -------------------------------
                                                   /s/ Mayumi Smith
                                               -------------------------------
                                            Name:  Richard and Mayumi Smith
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    /s/ Bradley Spak for
                                                   Bradley Spak, Sheryl Bartel,
                                                   and William Whitlock
                                                   Trustees, 
                                                   Anesthesia Service Inc.
                                                   FBO Bradley Spak
                                               -------------------------------
                                            Name:  Bradley Spak
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  Paul J. & Marie Anderson
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  Linda & Aljandro Aruffo
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  Sheryl J. Bartel &
                                                   Lee Edward Christopher Mott
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  Joel & Rebecca Barton
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  Paul A. Christensen
                                                 -----------------------------
                                            Title: DDS
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  John F. & Marjorie A. Decker
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------



                                            By:    
                                               -------------------------------
                                            Name:  Kristin N. Decker
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  Jeffrey J. Decker
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------

                                     24.


<PAGE>

                                            By:    
                                               -------------------------------
                                            Name:  Leland W. Foote
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  Chi-Dooh & Cynthia Mary Li
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  Chauncy F. Lufkin
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  Herbert & Rita Rosen 
                                                 -----------------------------
                                            Title: Trust
                                                  ----------------------------


                                            By:    
                                               -------------------------------
                                            Name:  Delaware Charter,
                                                   Trustee FBO
                                                   Richard T. Tschetter
                                                 -----------------------------
                                            Title: 
                                                  ----------------------------

                                     25.


<PAGE>

                                            SERIES B HOLDERS:

                                            BRITANNIA HOLDINGS LIMITED

                                            By: /s/ Patrick Adrian Blin
                                                ------------------------------
                                            [Its General Partner]

                                            Name:  Patrick Adrian Blin
                                                 -----------------------------
                                            Title: Director
                                                  ----------------------------


                                            ENCOMPASS GROUP INCORPORATED

                                            By: [______________________]

                                            Name:  /s/ Craig D. Whitlock
                                                 -----------------------------
                                            Title: Senior Vice President
                                                  ----------------------------


                                            GARY PITTMAN

                                            By:  /s/ Gary Pittman

                                            Name: Gary Pittman
                                                 ------------------------------
                                            Title:
                                                  -----------------------------


                                     26.
<PAGE>

                                            SERIES C HOLDERS:

                                            CYPRESS PARTNERS, L.P.

                                            By:   /s/ Richard C. Hedreen
                                            -----------------------------------
                                            [Its General Partner]

                                            Name:  Richard C. Hedreen
                                                 ------------------------------
                                            Title: General Partner
                                                  -----------------------------



                                     27.


<PAGE>

                               TABLE OF CONTENTS

                                                                      PAGE

SECTION 1.  GENERAL..................................................   2

     1.1    Definitions..............................................   2

SECTION 2.  REGISTRATION; RESTRICTIONS ON TRANSFER...................   3

     2.1    Restrictions on Transfer.................................   3

     2.2    Demand Registration......................................   4

     2.3    Piggyback Registrations..................................   6

     2.4    Form S-3 Registration....................................   7

     2.5    Expenses of Registration.................................   8

     2.6    Obligations of the Company...............................   8

     2.7    Termination of Registration Rights.......................  10

     2.8    Delay of Registration; Furnishing Information............  10

     2.9    Indemnification..........................................  10

     2.10   Assignment of Registration Rights........................  12

     2.11   Amendment of Registration Rights.........................  12

     2.12   Limitation on Subsequent Registration Rights.............  13

     2.13   "Market Stand-Off" Agreement; Agreement to Furnish
            Information..............................................  13

     2.14   Rule 144 Reporting.......................................  13

     2.15   Termination of Registration Rights Under Prior
            Agreements...............................................  14

SECTION 3.  COVENANTS OF THE COMPANY.................................  14

     3.1    Basic Financial Information and Reporting................  14

     3.2    Inspection Rights........................................  15

     3.3    Confidentiality of Records...............................  15

     3.4    Reservation of Common Stock..............................  15

     3.5    Stock Vesting............................................  15

     3.6    Key Man Insurance........................................  15

     3.7    Assignment of Inventions Agreements......................  16

     3.8    Directors and Officers Liability Insurance...............  16

     3.9    Reimbursement of Expenses for Attending Board Meetings...  16

     3.10   Termination of Covenants.................................  16

<PAGE>

                               TABLE OF CONTENTS
                                  (CONTINUED)

                                                                      PAGE

SECTION 4.  RIGHTS OF FIRST REFUSAL..................................  16

     4.1    Subsequent Offerings.....................................  16

     4.2    Exercise of Rights.......................................  16

     4.3    Issuance of Equity Securities to Other Persons...........  17

     4.4    Termination and Waiver of Rights of First Refusal........  17

     4.5    Transfer of Rights of First Refusal......................  17

     4.6    Excluded Securities......................................  17

SECTION 5.  MISCELLANEOUS............................................  18

     5.1    Governing Law............................................  18

     5.2    Survival.................................................  18

     5.3    Successors and Assigns...................................  18

     5.4    Entire Agreement.........................................  18

     5.5    Severability.............................................  19

     5.6    Amendment and Waiver.....................................  19

     5.7    Delays or Omissions......................................  19

     5.8    Notices..................................................  19

     5.9    Attorneys' Fees..........................................  20

     5.10   Titles and Subtitles.....................................  20

     5.11   Counterparts.............................................  20


                                    ii.
<PAGE>

                                    EXHIBIT A


                              SCHEDULE OF INVESTORS









                                        A-1
                             INVESTOR RIGHTS AGREEMENT
<PAGE>




                              SCHEDULE OF INVESTORS

Charles L. Anderson
Richard G. Andrew
John Crosby Barnettt, Jr.
Geoffrey A. & Erin E. Boguch JWROS
John M. Brazier
Britannia Holdings Limited
Thomas F. & Joyce S. Broderick
Gary L. & Jacalyn O. Bylund
Paul A. Christensen, D.D.S.
Sheryl J. Bartel & Lee Edward Christopher Mott JTWROS
John Crutcher
Cypress Partners Limited Partnership
James J. & Patricia F. David, Tenants In Common
John F. Decker & Marjorie A. Decker, JTWROS
Robert L. Smith & John F. Decker, JTWROS
Delaware Charter, Trustee, fbo Helen J. Hussey IRA
Delaware Charter, Trustee, fbo Richard W. Tschetter IRA
Janet E. Elzey
Encompass Group Incorporated
Leland W. Foote
Robert J. & Penelope W. Genise JTWROS
Alan J. Higginson
Joel R. & Christi L. Hussey
George Jansen
KLJ Ventures, L.L.C.
Chi-Dooh & Cynthia Mary Li
Chauncey F. Lufkin
Clinton T. Mead
John Meisenbach
Menlo Entrepreneurs Fund VII, L.P.
Menlo Ventures VII, L.P.
Pacific Technology Ventures U.S.A., L.P.
Jean Patterson
Gary Pittman
Pruzan Building Company
Peter Rettman
Herbert I. Rosen
Michael A. Sherry
Richard N. & Mayumi N. Smith, Tenants in Common
Bradley Spak, Sheryl Bartel & William Whitlock, Trustees, Anesthesia Services
  Inc. Deferred Retirement Plan fbo Bredley Spak

                                        A-2.

