Document:

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     $100,000,000

                          INHALE THERAPEUTIC SYSTEMS, INC.

                6 3/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2006

                                 PURCHASE AGREEMENT

                                                                 October 6, 1999

LEHMAN BROTHERS INC.
DEUTSCHE BANK SECURITIES INC.
U.S. BANCORP PIPER JAFFRAY INC.
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285

                                                           Ladies and Gentlemen:
          Inhale Therapeutic Systems, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell $100,000,000 in aggregate principal amount of its 6 3/4%
Convertible Subordinated Debentures due 2006 (the "Firm Debentures") to Lehman
Brothers Inc., Deutsche Bank Securities Inc. and U.S. Bancorp Piper Jaffray Inc.
(collectively, the "Initial Purchasers").  In addition, the Company proposes to
grant to the Initial Purchasers an option (the "Option") to purchase up to an
additional $9,000,000 in aggregate principal amount of 6 3/4% Convertible
Subordinated Debentures due 2006 to cover over-allotments, if any (the "Optional
Debentures" and, together with the Firm Debentures, the "Debentures").

          The Debentures will be convertible into fully paid, nonassessable
shares of common stock of the Company, par value $0.0001 per share (the "Common
Stock"), on the terms, and subject to the conditions, set forth in the
Indenture.  As used herein, "Conversion Shares" means the shares of Common Stock
into which the Debentures are convertible.  The Debentures will be issued
pursuant to an indenture (the "Indenture") to be dated as of the First Delivery
Date (as defined in Section 2(a)), between the Company and Chase Manhattan Bank
and Trust Company, National Association, as Trustee (the "Trustee").  The
Debentures will be offered and sold to the Initial Purchasers without being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in reliance upon an exemption therefrom.

          Holders of the Debentures (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of a Resale
Registration Rights Agreement, dated the First Delivery Date, between the
Company and the Initial Purchasers (the "Registration Rights Agreement"),
pursuant to which the Company will agree to file with the Securities and
Exchange Commission (the "Commission") a shelf registration statement pursuant
to Rule 415 under the Securities Act (the "Registration Statement") covering the
resale of the Debentures and the Conversion Shares, and to use its best efforts
to cause the Registration Statement to be declared effective.

          This Agreement, the Indenture, the Debentures and the Registration
Rights Agreement are referred to herein collectively as the "Operative
Documents".

          This is to confirm the agreement between the Company and the Initial
Purchasers concerning the issue, offer and sale of the Debentures.

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1              .  REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
The Company represents, warrants to and agrees with, the Initial Purchasers
that:

(a)                 The Company has prepared a preliminary offering memorandum
dated September 27, 1999 (the "Preliminary Offering Memorandum") and will
prepare an offering memorandum dated the date hereof  (the "Offering
Memorandum") setting forth information concerning the Company, the Debentures,
the Registration Rights Agreement and the Common Stock.  Copies of the
Preliminary Offering Memorandum have been, and copies of the Offering Memorandum
will be, delivered by the Company to the Initial Purchasers pursuant to the
terms of this Agreement.  As used in this Agreement, "Preliminary Offering
Memorandum" and "Offering Memorandum" means the Preliminary Offering Memorandum
or the Offering Memorandum, as the case may be, as amended or supplemented.
Each of the Preliminary Offering Memorandum and the Offering Memorandum, did not
as of its respective date, and the Offering Memorandum will not as of a Delivery
Date (as defined in Section 2(b)), contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; PROVIDED that the Company makes no representation or warranty as to
information contained in or omitted from the Preliminary Offering Memorandum or
the Offering Memorandum in reliance upon and in conformity with written
information furnished to the Company by or on the behalf of any Initial
Purchaser through Lehman Brothers Inc. specifically for inclusion therein.

(b)                 Assuming the accuracy of the representations and warranties
of the Initial Purchasers contained in Section 6 and their compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Debentures to the Initial Purchasers and the offer,
resale and delivery of the Debentures by the Initial Purchasers in the manner
contemplated by this Agreement, the Indenture, the Registration Rights Agreement
and the Offering Memorandum, to register the Debentures or the Conversion Shares
under the Securities Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act").

(c)                 The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of property or
the conduct of its businesses requires such qualification (except for where the
failure to be so qualified would not have a material adverse effect on the
affairs, management, business, properties, financial condition, results of
operations or prospects of the Company (a "Material Adverse Effect")), and has
all power and authority necessary to own or hold its properties and to conduct
the businesses in which it is engaged; and the Company has no subsidiaries.

(d)                 The Company has an authorized capitalization as set forth in
the Offering Memorandum, and all of the issued and outstanding shares of capital
stock of the Company have been duly and validly authorized and issued, are fully
paid and nonassessable and conform to the description thereof contained in the
Offering Memorandum; the Conversion Shares which are authorized on the date
hereof have been duly and validly authorized and reserved for issuance upon
conversion of the Debentures and are free of preemptive rights; and all
Conversion Shares, when so issued and delivered upon such conversion in
accordance with the terms of the Indenture, will be duly and validly authorized
and issued, fully paid and nonassessable and free and clear of all liens,
encumbrances, equities or claims.

(e)                 The execution, delivery and performance of the Operative
Documents by the Company and the issuance of the Debentures and the Conversion
Shares and the consummation of the transactions contemplated hereby and thereby
will not (x) conflict with or

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result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the properties or assets of the
Company is subject, (y) result in any violation of the provisions of the
certificate of incorporation or bylaws of the Company or (z) result in any
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties or assets; and except (i) with respect to the transactions
contemplated by the Registration Rights Agreement, as may be required under the
Securities Act, the Trust Indenture Act and the rules and regulations
promulgated thereunder and (ii) as required by the state securities or "blue
sky" laws, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of the Operative Documents by the
Company, and the consummation of the transactions contemplated hereby and
thereby.

(f)                 The Company has all necessary corporate right, power and
authority to execute and deliver this Agreement and perform its obligations
hereunder; and this Agreement and the transactions contemplated hereby have been
duly authorized, executed and delivered by the Company.

(g)                 The Company has all necessary corporate right, power and
authority to execute and deliver the Indenture and perform its obligations
thereunder; the Indenture has been duly authorized by the Company, and upon the
effectiveness of the Registration Statement, will be qualified under the Trust
Indenture Act; on the First Delivery Date, the Indenture will have been duly
executed and delivered by the Company and, assuming due authorization, execution
and delivery of the Indenture by the Trustee, will constitute a legally valid
and binding agreement of the Company enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, subject to general principles of
equity and to limitations on availability of equitable relief, including
specific performance (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing; and the Indenture
conforms in all material respects to the description thereof contained in the
Offering Memorandum.

(h)                 The Company has all necessary corporate right, power and
authority to execute and deliver the Registration Rights Agreement and perform
its obligations thereunder; the Registration Rights Agreement and the
transactions contemplated thereby have been duly authorized by the Company; when
the Registration Rights Agreement is duly executed and delivered by the Company
(assuming due authorization, execution and delivery by the Initial Purchasers),
it will be a legally valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, subject to general principles of equity and to

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limitations on availability of equitable relief, including specific performance
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing, and except with respect to the rights of
indemnification and contribution thereunder, where enforcement thereof may be
limited by federal or state securities laws or the policies underlying such
laws; and the Registration Rights Agreement conforms in all material respects to
the description thereof contained in the Offering Memorandum.

(i)                 The Company has all necessary corporate right, power and
authority to execute, issue and deliver the Debentures and perform its
obligations thereunder; the Debentures have been duly authorized by the Company;
when the Debentures are executed, authenticated and issued in accordance with
the terms of the Indenture and delivered to and paid for by the Initial
Purchasers pursuant to this Agreement on the respective Delivery Date (assuming
due authentication of the Debentures by the Trustee), such Debentures will
constitute legally valid and binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable in accordance with their terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, subject to general principles of
equity and to limitations on availability of equitable relief, including
specific performance (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing; and the Debentures
conform in all material respects to the description thereof contained in the
Offering Memorandum.

(j)                 Except for the Registration Rights Agreement and the Stock
Purchase Agreement, dated January 18, 1995, between the Company and Pfizer, Inc.
("Pfizer"), the Stock Purchase Agreement, dated March 1, 1996, as amended,
between the Company and Baxter Healthcare Corporation and the Restated Investor
Rights Agreement, dated April 29, 1993, as amended October 29, 1993, among the
Company and certain stockholders of the Company, and except as contemplated
pursuant the Asset Purchase Agreement between the Company and Alliance
Pharmaceutical Corp., dated October 4, 1999 (the "Alliance Agreement"), there
are no contracts, agreements or understandings between the Company and any
person granting such person the right (other than rights which have been waived
or satisfied) to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in any
securities being registered pursuant to any registration statement filed by the
Company under the Securities Act.

(k)                 The Company has not sustained, since the date of the latest
audited financial statements included in the Offering Memorandum, any material
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree; and, since such date, there has
not been any change in the capital stock or long-term debt of the Company or any
material adverse change in or affecting the affairs, management, business,
properties,

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financial condition, stockholders' equity, results of operations or prospects of
the Company except: (i) as set forth or contemplated in the Offering Memorandum,
(ii) any grants under the Company's employee stock plans in accordance with the
terms of such plans as described in the Offering Memorandum, or other shares of
Common Stock (or rights to receive Common Stock) issued to service providers to
the Company in the ordinary course of business (the "Authorized Grants") or
(iii) operating losses incurred in the ordinary course of business.

(l)                 The financial statements of the Company (including the
related notes and supporting schedules) included in the Offering Memorandum
present fairly the financial condition and results of operations of the Company,
at the dates and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved.

(m)                 Ernst &Young LLP, who have certified the financial
statements of the Company included in the Offering Memorandum, whose report
appears in the Offering Memorandum, are independent accountants as required by
the Securities Act and the rules and regulations promulgated thereunder.

(n)                 The Company has good and marketable title in fee simple to
all real property and good and marketable title to all personal property owned
by it, in each case free and clear of all liens, encumbrances, security
interests, claims and defects, except such as are described in the Offering
Memorandum or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company; and all real property and personal property held under lease by the
Company is held by it under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property by the Company.

(o)                 The Company carries, or is covered by, insurance as is
customary for  companies similarly situated and engaged in similar businesses in
similar industries.

(p)                 The Company owns, or possesses adequate rights to use, all
material  trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights and licenses necessary for the conduct of
its business, and has no reason to believe that the conduct of its business will
conflict with, and has not received any notice of any claim of conflict with,
any such rights of others.

(q)                 The Company owns, or possesses adequate rights to use, all
material patents necessary for the conduct of its business.  Except as set forth
or contemplated in the Offering Memorandum, no valid U.S. patent is, or to the
knowledge of the Company would be, infringed by the activities of the Company in
the manufacture, use or sale of any product or component thereof as described in
the Offering Memorandum.  The patent applications (the "Patent Applications")
filed by or on behalf of the Company described in the Offering

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Memorandum have been properly prepared and filed on behalf of the Company; each
of the Patent Applications and patents (the "Patents") described in the Offering
Memorandum is assigned or licensed to the Company, and, except as set forth or
contemplated in the Offering Memorandum, no other entity or individual has any
right or claim in any Patent, Patent Application or any patent to be issued
therefrom; and, to the knowledge of the Company, each of the Patent Applications
discloses potentially patentable subject matter.  There are no actions, suits or
judicial proceedings pending relating to patents or proprietary information to
which the Company is a party or of which any property of the Company is subject,
and, to the knowledge of the Company, no actions, suits or judicial proceedings
are threatened by governmental authorities or, except as set forth or
contemplated in the Offering Memorandum, others.  The Company is not aware of,
except as set forth or contemplated in the Offering Memorandum, any claim by
others that the Company is infringing or otherwise violating any patents or
other intellectual property rights of others and is not aware of any rights of
third parties to any of the Company's Patent Applications, licensed Patents or
licenses which could affect materially the use thereof by the Company.  Except
as set forth in the Offering Memorandum, the Company owns or possesses
sufficient licenses or other rights to use all patents, trade secrets,
technology and know-how necessary to conduct the Company's business as described
in the Offering Memorandum.

(r)                 Except as disclosed in the Offering Memorandum, the Company
has filed with the Food and Drug Administration (the "FDA") and the California
Food and Drug Branch ("CFDB") for and received approval of all registrations,
applications, licenses, requests for exemptions, permits and other regulatory
authorizations necessary to conduct the Company's business as it is described in
the Offering Memorandum; the Company is in material compliance with all such
registrations, applications, licenses, requests for exemptions, permits and
other regulatory authorizations, and all applicable FDA and CFDB rules and
regulations, guidelines and policies, including but not limited to, applicable
FDA and CFDB rules, regulations and policies relating to current good
manufacturing practice ("CGMP") and current good laboratory practice ("CGLP");
the Company has no reason to believe that any party granting any such
registration, application, license, request for exemption, permit or other
authorization is considering limiting, suspending or revoking the same and knows
of no basis for any such limitation, suspension or revocation.

(s)                 The human clinical trials, animal studies and other
preclinical tests conducted by the Company or in which the Company has
participated that are described in the Offering Memorandum or the results of
which are referred to in the Offering Memorandum, and, to the knowledge of the
Company, such studies and tests conducted on behalf of the Company, were and, if
still pending, are being conducted in accordance with commonly used or
appropriate experimental protocols, procedures and controls applied by research
scientists generally in the preclinical or clinical study of new drugs; the
descriptions or the results of such studies and tests contained in the Offering
Memorandum are accurate and complete in all material respects, and the Company
has no knowledge of any other studies or tests, the results of which reasonably
call

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into question the results described or referred to in the Offering Memorandum;
and the Company has not received any notices or other correspondence from the
FDA or any other governmental agency requiring the termination, suspension or
modification of any animal studies or other preclinical tests, or clinical
studies conducted by or on behalf of the Company or in which the Company has
participated that are described in the Offering Memorandum or the results of
which are referred to in the Offering Memorandum.

(t)                 Except as disclosed in the Offering Memorandum, there are no
legal or governmental proceedings pending to which the Company is a party or of
which any property or asset of the Company is the subject which, if determined
adversely to the Company might have a Material Adverse Effect; and to the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or, except as set forth or contemplated in the Offering
Memorandum,  threatened by others.

(u)                 No event has occurred nor has any circumstance arisen which,
had the Debentures been issued on such Delivery Date, would constitute a default
or an Event of Default (as such term is defined in the Indenture).

(v)                 The Company is not (i) in violation of its certificate of
incorporation or bylaws, (ii) in default in any material respect, and no event
has occurred which, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its properties or assets is subject or (iii) in violation of any
law, ordinance, governmental rule, regulation or court decree to which it or its
properties or assets may be subject or has failed to obtain any license, permit,
certificate, franchise or other governmental authorization or permit necessary
to the ownership of its properties or to the conduct of its business, except to
the extent that any such default, event or violation described in the foregoing
clauses (i), (ii) and (iii) would not have a Material Adverse Effect.

(w)                 The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.

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(x)                 The Company has timely and properly filed with the
Commission all reports and other documents required to have been filed by it
with the Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the rules and regulations promulgated under the
Exchange Act.

(y)                 The Company has filed all federal, state and local income
and franchise tax returns required to be filed through the date hereof or has
requested extensions thereof and has paid all taxes due thereon, and no tax
deficiency has been determined adversely to the Company which has had (nor does
the Company have any knowledge of any tax deficiency which, if determined
adversely to the Company, might have) a Material Adverse Effect.

(z)                 There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic wastes,
medical wastes, hazardous wastes or hazardous substances by the Company (or, to
the knowledge of the Company, any of its predecessors in interest) at, upon or
from any of the property now or previously owned or leased by the Company in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit, except for
any violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions a Material Adverse Effect; there has been no
material spill, discharge, leak, emission, injection, escape, dumping or release
of any kind onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company
or with respect to which the Company has knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which would not
have or would not be reasonably likely to have, singularly or in the aggregate
with all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a Material Adverse Effect; and the terms "hazardous
wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall have
the meanings specified in any applicable local, state, federal and foreign laws
or regulations with respect to environmental protection.

(aa)                There are no contracts or other documents which would be
required to be described in the Offering Memorandum if the Offering Memorandum
were a prospectus included in a registration statement on Form S-1 that have not
been so described in the Offering Memorandum.

(bb)                Except as set forth in the Company's Proxy Statement filed
with the Commission on April 29, 1999, there is no relationship, direct or
indirect, between or among the Company, on the one hand, and the directors,
officers, shareholders, customers or suppliers of the Company, on the other
hand, which would be required to be described in the Offering Memorandum if the
Offering Memorandum were a prospectus included in a registration statement on
Form S-1 that has not been so described.

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(cc)                Since the date as of which information is given in the
Offering Memorandum through the date hereof,  the Company has not (i) issued or
granted any securities (other than Authorized Grants), (ii) incurred any
material liability or obligation, direct or contingent, other than liabilities
and obligations which were incurred in the ordinary course of business, (iii)
entered into any material transaction not in the ordinary course of business or
(iv) declared or paid any dividend on its capital stock.

(dd)                Except as disclosed in the Offering Memorandum, (i) there
are no outstanding securities convertible into or exchangeable for, or warrants,
rights or options issued by the Company to purchase, any shares of the capital
stock of the Company (except, in the case of options, any Authorized Grants),
(ii) there are no statutory, contractual, preemptive or other rights to
subscribe for or to purchase any Common Stock that do not by their terms
terminate upon the First Delivery Date and (iii) there are no restrictions upon
transfer of the Common Stock pursuant to the Company's certificate of
incorporation or bylaws.

(ee)                The Company has undertaken a review to evaluate the effect
of the Year 2000 Problem (that is, any significant risk that its computer
hardware and software ("Computer Equipment") will not, in the case of dates or
time periods occurring after December 31, 1999, function at least as effectively
as in the case of dates or time periods occurring prior to January 1, 2000), and
determined that as a result thereof, the Company reasonably believes that (i)
there are no issues related to the Company's readiness to address the Year 2000
Problem that are of a character required to be described or referred to in the
Offering Memorandum and which have not been so described or referred to in the
Offering Memorandum and (ii) the Year 2000 Problem will not have a Material
Adverse Effect.

(ff)                The Company (i) makes and keeps materially accurate books
and records and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability for its
assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.

(gg)                Neither the Company nor any director, officer, agent or
employee acting on behalf of the Company has (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity, (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds, (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977 or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.

(hh)                No labor disturbance by the employees of the Company exists
or, to the

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knowledge of the Company, is imminent which might be expected to have a Material
Adverse Effect.

(ii)                The Company is not an "investment company" within the
meaning of such term under the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder.

(jj)                No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Debentures are listed on any
national securities exchange registered under Section 6 of the Exchange Act or
quoted on an automated inter-dealer quotation system.

(kk)                None of the Company or any of its affiliates (as defined in
Rule 501(b) of Regulation D under the Securities Act ("Regulation D")) (other
than the Initial Purchasers, about which no representation is made by the
Company), has, directly or through an agent, engaged in any form of general
solicitation or general advertising in connection with the offering of the
Debentures (as those terms are used in Regulation D) under the Securities Act or
in any manner involving a public offering within the meaning of Section 4(2) of
the Securities Act; the Company has not entered into any contractual arrangement
with respect to the distribution of the Debentures except for this Agreement and
the Company will not enter into any such arrangement.

(ll)                None of the Company or any of its affiliates (other than the
Initial Purchasers, about which no representation is made by the Company), has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any "security" (as defined in the
Securities Act) which is or will be integrated with the sale of the Debentures
in a manner that would require the registration under the Securities Act of the
Debentures.

(mm)                The Company has not taken, directly or indirectly, any
action designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company in connection with the offering of the
Debentures.

2              .  PURCHASE, SALE AND DELIVERY OF DEBENTURES.

(a)                 Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to sell to
each Initial Purchaser, and each Initial Purchaser agrees, severally and not
jointly, to purchase from the Company, at a purchase price of 97.00% of the
principal amount thereof (the "purchase price") the principal amount of Firm
Debentures set forth opposite such Initial Purchaser's name in Schedule I
hereto.

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          Delivery of and payment for the Firm Debentures shall be made at the
office of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York
10017, at 10:00 a.m. (New York time) on October 13, 1999, or such later date as
the Initial Purchasers shall designate, which date and time may be postponed by
agreement between the Initial Purchasers and the Company or as provided in
Section 8 (such date and time of delivery and payment for the Firm Debentures
being herein called the "First Delivery Date").  Delivery of the Firm Debentures
shall be made to the Initial Purchasers against payment of the purchase price by
the Initial Purchasers.  Payment for the Firm Debentures shall be effected
either by wire transfer of immediately available funds to an account with a bank
in The City of New York, the account number and the ABA number for such bank to
be provided by the Company to the Initial Purchasers at least two business days
in advance of the First Delivery Date, or by such other manner of payment as may
be agreed by the Company and the Initial Purchasers.

(b)                 Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants the
Option to the Initial Purchasers to purchase, severally and not jointly, the
Optional Debentures at the same price as the Initial Purchasers shall pay for
the Firm Debentures and the principal amount of the Optional Debentures to be
sold to be each Initial Purchaser shall be that principal amount which bears the
same ratio to the aggregate principal amount of Optional Debentures being
purchased as the principal amount of Firm Debentures set forth opposite the name
of such Initial Purchaser in Schedule I hereto (or such number increased as set
forth in Section 8).  The Option may be exercised only to cover over-allotments
in the sale of the Firm Debentures by the Initial Purchasers.  The Option may be
exercised once in whole or in part at any time not more than 30 days subsequent
to the date of this Agreement upon notice in writing or by facsimile by the
Initial Purchasers to the Company setting forth the amount (which shall be an
integral multiple of $1,000) of Optional Debentures as to which the Initial
Purchasers are exercising the Option.

          The date for the delivery of and payment for the Optional Debentures,
being herein referred to as an "Optional Delivery Date", which may be the First
Delivery Date (the First Delivery Date and the Optional Delivery Date, if any,
being sometimes referred to as a "Delivery Date"), shall be determined by the
Initial Purchasers but shall not be later than five full business days after
written notice of election to purchase Optional Debentures is given.  Delivery
of the Optional Debentures shall be made to the Initial Purchasers against
payment of the purchase price by the Initial Purchasers.  Payment for the
Optional Debentures shall be effected either by wire transfer of immediately
available funds to an account with a bank in The City of New York, the account
number and the ABA number for such bank to be provided by the Company to the
Initial Purchasers at least two business days in advance of the Optional
Delivery Date, or by such other manner of payment as may be agreed by the
Company and the Initial Purchasers.

(c)                 The Company will deliver against payment of the purchase
price (a) the

<PAGE>

Debentures initially sold to qualified institutional buyers ("QIBs"), as defined
in Rule 144A under the Securities Act ("Rule 144A") in the form of one or more
permanent global certificates (the "Global Debentures"), registered in the name
of Cede & Co., as nominee for The Depository Trust Company ("DTC") and (b) the
Debentures initially sold to "accredited investors" (as defined in Rule 501(a)
under the Securities Act) who are not QIBs in certificated, fully registered
form (the "Certificated Debentures").  Beneficial interests in the Debentures
initially sold to QIBs will be shown on, and transfers thereof will be effected
only through, records maintained in book-entry form by DTC and its participants.

          The Global Debentures will be made available, at the request of the
Initial Purchasers, for checking at least 24 hours prior to such Delivery Date.
The Certificated Debentures will be made available, at the request of the
Initial Purchasers, for checking at least 48 hours prior to such Delivery Date.

(d)                 Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligations of the Initial Purchasers hereunder.

3              .  FURTHER AGREEMENTS OF THE COMPANY.  The Company further
agrees:

(a)                 To advise the Initial Purchasers promptly of any proposal to
amend or supplement the Offering Memorandum and not to effect any such amendment
or supplement without the consent of the Initial Purchasers.  If, at any time
prior to completion of the resale of the Debentures by the Initial Purchasers,
any event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a purchaser,
not misleading, to promptly notify the Initial Purchaser and prepare, subject to
the first sentence of this Section 3(a), such amendment or supplement as may be
necessary to correct such untrue statement or omission.

(b)                 To furnish to the Initial Purchasers and to Simpson Thacher
& Bartlett, counsel to the Initial Purchasers, copies of the Preliminary
Offering Memorandum and the Offering Memorandum (and all amendments and
supplements thereto) in each case as soon as available and in such quantities as
the Initial Purchasers reasonably requests for internal use and for distribution
to prospective purchasers; and to furnish to the Initial Purchasers on the date
hereof four copies of the Offering Memorandum signed by duly authorized officers
of the Company, one of which will include the independent auditors' reports
therein manually signed by such independent auditors.  The Company will pay the
expenses of printing and distributing to the Initial Purchasers all such
documents.

(c)                 To use its reasonable efforts to take such action as the
Initial Purchasers

<PAGE>

may reasonably request from time to time, to qualify the Debentures for offering
and sale under the securities laws of such jurisdictions as the Initial
Purchasers may request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions in the United
States for as long as may be necessary to complete the resale of the Debentures;
PROVIDED that in connection therewith, the Company shall not be required to
qualify as a foreign corporation or otherwise subject itself to taxation in any
jurisdiction in which it is not otherwise so qualified or subject.

(d)                 To apply the proceeds from the sale of the Debentures as set
forth under "Use of Proceeds" in the Offering Memorandum.

(e)                 For a period of 90 days from the date of the Offering
Memorandum, not to, directly or indirectly, offer for sale, sell or otherwise
dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition or purchase by any person at any
time in the future of), or announce an offering of any debt securities of the
Company (other than the Debentures) or any shares of Common Stock (other than
the Conversion Shares), or sell or grant options, rights or warrants with
respect to any shares of Common Stock (other than Authorized Grants or issuances
of shares of Common Stock or rights to receive shares of Common Stock in
connection with collaborative agreements entered into in the ordinary course of
business (the "Collaborative Shares") or issuances of shares of Common Stock or
rights to receive shares of Common Stock in connection with any merger,
consolidation, acquisition or similar business combination with a company not
subject to the reporting requirements of the Exchange Act ("Acquisition Shares")
or as contemplated pursuant to the Alliance Agreement (the "Alliance Shares"))
without the prior written consent of Lehman Brothers Inc.; and to cause each
officer and director of the Company to furnish to the Initial Purchasers, prior
to the First Delivery Date, and to cause each person or entity receiving any
such Collaborative Shares, Acquisition Shares or Alliance Shares to furnish to
the Initial Purchasers, prior to issuance of any such Collaborative Shares,
Acquisition Shares or Alliance Shares, a letter or letters, in form and
substance satisfactory to counsel to the Initial Purchasers, pursuant to which
each such person shall agree not to, directly or indirectly, offer for sale,
sell or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition or purchase by
any person at any time in the future of), any shares of Common Stock
beneficially owned, deemed to be beneficially owned, or in the future acquired
by each such person for a period of 90 days from the date of the Offering
Memorandum, without the prior written consent of Lehman Brothers Inc., PROVIDED,
HOWEVER, that no such letter or letters shall be required with respect to any
such Collaborative Shares, Acquisition Shares or Alliance Shares so long as (i)
such shares shall be restricted securities, as defined in Rule 144 under the
Securities Act, on the day 90 days from the date of the Offering Memorandum and
(ii) the Company shall be under no obligation to register such shares under the
Securities Act prior to such date, PROVIDED, FURTHER, that with respect to the
shares of Common Stock owned by the officers of the Company, such restrictions
shall not apply to (i) sales of shares of Common Stock made to satisfy loans
incurred to finance the purchase of such shares of Common Stock, if that

<PAGE>

satisfaction is required by the lender pursuant to margin regulations and (ii)
charitable donations of shares of Common Stock that are consistent with the
prior years' practice.

(f)                 For so long as any of the Debentures are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act, to
provide to any holder of the Debentures or to any prospective purchaser of the
Debentures designated by any holder, upon request of such holder or prospective
purchaser, information required to be provided by Rule 144A(d)(4) of the
Securities Act if, at the time of such request, the Company is not subject to
the reporting requirements under Section 13 or 15(d) of the Exchange Act.

(g)                 Each of the Debentures will bear, to the extent applicable,
the legend contained in "Notice to Investors" in the Offering Memorandum for the
time period and upon the other terms stated therein, except after the Debentures
are resold pursuant to a registration statement effective under the Securities
Act.

(h)                 To take such steps as shall be necessary to ensure that it
shall not become an "investment company" within the meaning of such term under
the Investment Company Act, and the rules and regulations of the Commission
thereunder.

(i)                 None of the Company or any of its affiliates will take,
directly or indirectly, any action which is designed to stabilize or manipulate,
or which constitutes or which might reasonably be expected to cause or result in
stabilization or manipulation, of the price of any security of the Company in
connection with the offering of the Debentures.

(j)                 To execute and deliver the Registration Rights Agreement (in
form and substance satisfactory to the Initial Purchasers.

(k)                 To use its best efforts to assist the Initial Purchasers in
arranging to cause the Debentures to be accepted to trade in the PORTAL market
("PORTAL") of the National Association of Securities Dealers, Inc. ("NASD").

(l)                 To use its best efforts to cause the Debentures to be
accepted for clearance and settlement through the facilities of DTC.

(m)                 To use its best efforts to have the Conversion Shares
approved by the NASDAQ Stock Market's National Stock Exchange ("NASDAQ") for
inclusion prior to the effectiveness of the Registration Statement.

(n)                 The Company has not taken and until a period of 90 days has
elapsed from the date of the Offering Memorandum shall not take, directly or
indirectly, any action which releases Pfizer from or waives any restriction
imposed on Pfizer with respect to the transfer ofshares of Common Stock
contained in the Stock Purchase Agreement between Pfizer and the

<PAGE>

Company, dated January 18, 1995.

(0)                 The Company has not taken and until a period of 90 days has
elapsed from the date of the Offering Memorandum shall not take, directly or
indirectly, any action which releases Baxter from or waives any restriction
imposed on Baxter with respect to the transfer of shares of Common Stock
contained in the Stock Purchase Agreement between Baxter and the Company, dated
March 1, 1996, as amended.

4              .  EXPENSES.  The Company agrees to pay:

     (a)            the costs incident to the authorization, issuance, sale and
     delivery of the Debentures, and any taxes payable in that connection;

     (b)            the costs incident to the preparation, printing and
     distribution of the Preliminary Offering Memorandum, the Offering
     Memorandum and any amendment or supplement to the Offering Memorandum, all
     as provided in this Agreement;

     (c)            the costs of producing and distributing the Operative
     Documents;

     (d)            the fees and expenses of Cooley Godward LLP and Ernst &
     Young LLP;

     (e)            the costs of distributing the terms of agreement relating to
     the organization of the underwriting syndicate and selling group to the
     members thereof by mail, telex or other means of communication;

     (f)            the fees and expenses of qualifying the Debentures under the
     securities laws of the several jurisdictions as provided in Section 3(c)
     and of preparing, printing and distributing a Blue Sky Memorandum
     (including reasonable related fees and expenses of counsel to the Initial
     Purchasers);

     (g)            all costs and expenses incident to (i) the preparation of
     the "road show" presentation materials and (ii) the road show travelling
     expenses of the Company;

     (h)            all fees and expenses incurred in connection with any rating
     of the Debentures;

     (i)            the costs of preparing the Debentures;

     (j)            all expenses and fees in connection with the application for
     inclusion of the Debentures in the PORTAL market and the inclusion of the
     Conversion Shares on the NASDAQ;

<PAGE>

     (k)            the fees and expenses (including fees and disbursements of
     counsel) of the Trustee, and the costs and charges of any registrar,
     transfer agent, paying agent or conversion agent; and

     (l)            all other costs and expenses incident to the performance of
     the obligations of the Company under this Agreement;

PROVIDED that, except as provided in this Section 4 and in Section 7, the
Initial Purchasers shall pay their own costs and expenses, including the costs
and expenses of their counsel and any transfer taxes on the Debentures which
they may sell.

5              .  CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS.  The
several obligations of the Initial Purchasers hereunder are subject to the
accuracy, when made and on each Delivery Date, of the representations and
warranties of the Company contained herein, to the performance by the Company of
its obligations hereunder, and to each of the following additional terms and
conditions:

(a)                 No Initial Purchaser shall have discovered and disclosed to
the Company prior to or on such Delivery Date that the Offering Memorandum or
any amendment or supplement thereto contains any untrue statement of a fact
which, in the opinion of counsel to the Initial Purchasers, is material or omits
to state any fact which is material and necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

(b)                 All corporate proceedings and other legal matters incident
to the authorization, form and validity of the Operative Documents and the
Offering Memorandum or any amendment or supplement thereto, and all other legal
matters relating to the Operative Documents and the transactions contemplated
thereby shall be satisfactory in all material respects to counsel to the Initial
Purchasers, and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.

(c)                 Cooley Godward LLP shall have furnished to the Initial
Purchasers their written opinion, as counsel to the Company, addressed to the
Initial Purchasers and dated such Delivery Date, in form and substance
satisfactory to the Initial Purchasers, to the effect that:

     (i)                 The Company has been duly organized and is validly
     existing as a corporation in good standing under the laws of the State of
     Delaware, and, based solely on certificates of public officials, is duly
     qualified to do business and is in good standing as a foreign corporation
     in each jurisdiction in which its ownership or lease of property or the
     conduct of its business requires such qualification, except where the
     failure to be so qualified would not have a material adverse effect on the
     Company, and has all corporate

<PAGE>

     power and authority necessary to own or hold its properties and conduct the
     business in which it is engaged; and, to the knowledge of such counsel, the
     Company has no subsidiaries;

     (ii)                The Company has an authorized capitalization as set
     forth in the Offering Memorandum, and all of the issued shares of capital
     stock of the Company have been duly and validly authorized and conform to
     the description thereof contained in the Offering Memorandum in the section
     entitled "Description of Capital Stock";

     (iii)               The Conversion Shares that are authorized on the date
     hereof have been duly authorized and validly reserved for issuance upon
     conversion of the Debentures and are free of preemptive rights; and the
     Conversion Shares, when so issued and delivered upon such conversion in
     accordance with the terms of the Indenture, will be duly and validly
     authorized and issued, fully paid and nonassessable;

     (iv)                The statements in the Offering Memorandum under the
     captions "Description of the Debentures" and "Description of Capital
     Stock", insofar as they purport to summarize the provisions of the
     Indenture, the Registration Rights Agreement, the Debentures and the Common
     Stock (including the Conversion Shares) are accurate and complete in all
     material respects to the extent required if such statements were contained
     in a registration statement on Form S-3 under the Securities Act;

     (v)                 There are no preemptive or other rights to subscribe
     for or to purchase from the Company, or any restriction upon the voting or
     transfer of, any shares of Common Stock pursuant to the Company's
     certificate of incorporation or bylaws;

     (vi)                To the knowledge of such counsel and other than as set
     forth in the Offering Memorandum, there are no legal or governmental
     proceedings pending to which the Company is a party or of which any
     property or assets of the Company is the subject which, if determined
     adversely to the Company, might have a material adverse effect on the
     financial position, stockholders' equity, results of operations or business
     of the Company; and, to the actual knowledge of such counsel, no such
     proceedings are overtly threatened or contemplated by governmental
     authorities or threatened by others;

     (vii)               The execution, delivery and performance of this
     Agreement, the Indenture and the Registration Rights Agreement and the
     issuance of the Debentures and the Conversion Shares and the consummation
     of the transactions contemplated hereby and thereby do not result in any
     violation of the provisions of the certificate of incorporation or bylaws
     of the Company or any statute or any order, rule or regulation known to
     such counsel of any court or governmental agency or body having
     jurisdiction over the Company or any of its properties or assets; and,
     except as may be required by the

<PAGE>

     securities or "blue sky" laws of any state of the United States in
     connection with the sale of the Debentures, no consent, approval,
     authorization or order of, or filing or registration with, any such court
     or governmental agency or body is required for the execution, delivery and
     performance of this Agreement and the Indenture by the Company and the
     issuance of the Debentures and the Conversion Shares and the consummation
     of the transactions contemplated hereby and thereby;

     (viii)              No registration of the Debentures or the Conversion
     Shares under the Securities Act, and no qualification of the Indenture or
     an indenture under the Trust Indenture Act, is required in connection with
     the offer, sale and delivery of the Debentures or in connection with the
     conversion of the Debentures into Conversion Shares, in each case, in the
     manner contemplated by the Offering Memorandum, this Agreement and the
     Indenture;

     (ix)                The statements in the Offering Memorandum under the
     caption "Certain United States Federal Income Tax Considerations", insofar
     as they purport to constitute summaries of matters of United States federal
     income tax law and regulations or legal conclusions with respect thereto,
     constitute accurate summaries of the matters described therein in all
     material respects to the extent required if such statements were contained
     in a registration statement on Form S-3 under the Securities Act;

     (x)                 The Company is not an "investment company" within the
     meaning of the Investment Company Act of 1940, as amended;

     (xi)                The Company has all necessary corporate right, power
     and authority to execute and deliver each of the Operative Documents to
     which it is a party and to perform its obligations thereunder and to issue,
     sell and deliver the Debentures and the Conversion Shares to the Initial
     Purchasers;

     (xii)               This Agreement has been duly authorized, executed and
     delivered by the Company;

     (xiii)              The Indenture has been duly authorized, executed and
     delivered by the Company and, assuming due authorization, execution and
     delivery thereof by the Trustee, constitutes a legally valid and binding
     agreement of the Company enforceable against the Company in accordance with
     its terms except as the enforceability thereof may be limited by
     bankruptcy, insolvency, reorganization, moratorium and other similar laws
     relating to or affecting creditors' rights generally, subject to general
     principles of equity and to limitations on availability of equitable
     relief, including specific performance (regardless of whether such
     enforceability is considered in a proceeding in equity or at law) or by an
     implied covenant of good faith and fair dealing;

<PAGE>

     (xiv)               The Registration Rights Agreement has been duly
     authorized, executed and delivered by the Company and, assuming due
     authorization, execution and delivery thereof by the Initial Purchasers,
     constitutes a valid and legally binding agreement of the Company
     enforceable against the Company in accordance with its terms except as
     rights to indemnity contained therein may be limited by applicable law and
     except as the enforceability thereof may be limited by bankruptcy,
     insolvency, reorganization, moratorium and other similar laws relating to
     or affecting creditors' rights generally, subject to general principles of
     equity and to limitations on availability of equitable relief, including
     specific performance (regardless of whether such enforceability is
     considered in a proceeding in equity or at law), by an implied covenant of
     good faith and fair dealing; and

     (xv)                The Debentures have been duly authorized by the Company
     and when executed, issued and authenticated in accordance with terms of the
     Indenture and delivered to and paid for by the Initial Purchasers, will
     constitute legally valid and binding obligations of the Company, entitled
     to the benefits of the Indenture and enforceable against the Company in
     accordance with their terms except as the enforceability thereof may be
     limited by bankruptcy, insolvency, reorganization, moratorium and other
     similar laws relating to or affecting creditors' rights generally, subject
     to general principles of equity and to limitations on availability of
     equitable relief, including specific performance (regardless of whether
     such enforceability is considered in a proceeding in equity or at law) or
     by an implied covenant of good faith and fair dealing.

          In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the federal laws of the United States of America,
the laws of the State of New York and the Delaware General Corporation Law and
may state that it is relying, in respect of matters of New York law, upon
Simpson Thacher & Bartlett, and in respect of matters of fact, upon certificates
of officers of the Company, PROVIDED that such counsel shall state that it
believes that the Initial Purchasers and it are justified in relying upon such
certificates.  Such counsel shall also have furnished to the Initial Purchasers
a written statement, addressed to the Initial Purchasers and dated such Delivery
Date, in form and substance satisfactory to the Initial Purchasers, to the
effect that during the course of preparing the Offering Memorandum, such counsel
participated in conferences with officers and other representatives of the
Company, the Company's independent public accountants, the Initial Purchasers
and their counsel, at which the contents of the Offering Memorandum were
discussed, and while such counsel has not independently verified and is not
passing upon the accuracy, completeness or fairness of the statements made in
the Offering Memorandum except as explicitly set forth above, no facts have come
to the attention of such counsel which lead it to believe that the Offering
Memorandum (other than the financial statements,

<PAGE>

financial and statistical data and supporting schedules as to which such counsel
shall make no statement), as of its date or as of such Delivery Date, contained
or contains any untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.

(d)                 Stephen L. Hurst, Esq., General Counsel and Secretary of the
Company, shall have furnished to the Initial Purchasers his written opinion,
addressed to the Initial Purchasers and dated such Delivery Date, in form and
substance satisfactory to the Initial Purchasers, to the effect that:

               (i)  All of the issued shares of capital stock of the Company
     have been duly and validly authorized and issued and are fully paid and
     nonassessable;

               (ii) Except as disclosed in the Offering Memorandum, there are no
     preemptive or other rights to subscribe for or to purchase from the
     Company, or any restriction upon the voting or transfer of, any shares of
     Common Stock pursuant to any agreement or other instrument to which the
     Company is a party known to such counsel; and

               (iii) The execution, delivery and performance of this Agreement,
     the Indenture and the Registration Rights Agreement and the issuance of the
     Debentures and the Conversion Shares and the consummation of the
     transactions contemplated hereby and thereby do not result in a breach or
     violation of any of the terms or provisions of, or constitute a default
     under, any indenture, mortgage, deed of trust, loan agreement or other
     agreement or instrument known to such counsel to which the Company is a
     party or by which the Company is bound or to which any of the property or
     assets of the Company is subject.

          Such counsel shall also have furnished to the Initial Purchasers a
written statement, addressed to the Initial Purchasers and dated such Delivery
Date, in form and substance satisfactory to the Initial Purchasers, to the
effect that he has no reason to believe that the statements under the captions
"Risk Factors--Our patents may not protect our products and our products may
infringe on third-party patent rights" and "Patents and Proprietary Rights" in
the Offering Memorandum, as of its date or as of such Delivery Date, contained
or contains any untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.

(e)                 Simpson Thacher & Bartlett, shall have furnished to the
Initial Purchasers their written opinion, as counsel to the Initial Purchasers,
addressed to the Initial Purchasers and dated such  Delivery Date, in form and
substance satisfactory to the Initial Purchasers.

<PAGE>

(f)                 With respect to the letter of Ernst & Young LLP delivered to
the Initial Purchasers concurrently with the execution of this Agreement (the
"initial letter"), the Company shall have furnished to the Initial Purchasers a
letter (the "bring-down letter") of such accountants, addressed to the Initial
Purchasers and dated such Delivery Date (i) confirming that they are independent
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more than five
days prior to the date of the bring-down letter), the conclusions and findings
of such firm with respect to the financial information and other matters covered
by the initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.

(g)                 The Company shall have furnished to the Initial Purchasers
on such Delivery Date a certificate, dated such Delivery Date and delivered on
behalf of the Company by one of its co-chief executive officers and its chief
financial officer, in form and substance satisfactory to the Initial Purchasers,
to the effect that:

     (i)                 The representations, warranties and agreements of the
     Company in Section 1 are true and correct as of the date given and as of
     such Delivery Date; and the Company has complied in all material respects
     with all its agreements contained herein to be performed prior to or on
     such Delivery Date;

     (ii)                (A)  The Company has not sustained since the date of
     the latest audited financial statements included in the Offering Memorandum
     any loss or interference with its business from fire, explosion, flood or
     other calamity, whether or not covered by insurance, or from any labor
     dispute or court or governmental action, order or decree, except (x) as set
     forth or contemplated in the Offering Memorandum and (y) for operating
     losses incurred in the ordinary course of business, or (B) since such date
     there has not been any change in the capital stock or long-term debt of the
     Company (except for issuances of shares of Common Stock upon exercise of
     outstanding options described in the Offering Memorandum or pursuant to
     Authorized Grants), or any change, or any development involving a
     prospective change, in or affecting the general affairs, management,
     financial position, stockholders' equity or results of operations of the
     Company, except as set forth or contemplated in the Offering Memorandum;
     and

     (iii)               Such officer has carefully examined the Offering
     Memorandum and, in such officer's opinion (A) the Offering Memorandum, as
     of its date, did not include any untrue statement of a material fact and
     did not omit to state any material fact necessary to make the statements
     therein, in the light of the circumstances under which they were made, not
     misleading, and (B) since the date of the Offering Memorandum, no event has
     occurred which should have been set forth in a supplement or

<PAGE>

     amendment to the Offering Memorandum.

(h)                 The Indenture shall have been duly executed and delivered by
the Company and the Trustee and the Debentures shall have been duly executed and
delivered by the Company and duly authenticated by the Trustee.

(i)                 The Company and the Initial Purchasers shall have executed
and delivered the Registration Rights Agreement (in form and substance
satisfactory to the Initial Purchasers) and the Registration Rights Agreement
shall be in full force and effect.

(j)                 The NASD shall have accepted the Debentures for trading on
PORTAL.

(i)                 The Company shall not have sustained since the date of
the latest audited financial statements included in the Offering Memorandum
any loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, except (A) as set
forth or contemplated in the Offering Memorandum and (B) for operating losses
incurred in the ordinary course of business, or (ii) since such date there
shall not have been any change in the capital stock or long-term debt of the
Company (except for issuances of shares of Common Stock upon exercise of
outstanding options described in the Offering Memorandum or pursuant to
Authorized Grants), or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company, except as set
forth or contemplated in the Offering Memorandum, the effect of which, in any
such case described in clause (i) or (ii), is, in the reasonable judgment of
the Initial Purchasers, so material and adverse as to make it impracticable
or inadvisable to proceed with the sale or the delivery of the Debentures
being delivered on such Delivery Date on the terms and in the manner
contemplated in the Offering Memorandum.

(1)                 Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following:

                     (i)      trading in securities generally on the New York
               Stock Exchange, the American Stock Exchange, the NASDAQ or the
               over-the-counter market, or trading in any securities of the
               Company on any exchange shall have been suspended or minimum
               prices shall have been established on any such exchange or
               market by the Commission, by such exchange or by any other
               regulatory body or governmental authority having jurisdiction;

                     (ii)     a banking moratorium shall have been declared by
               United States federal or New York State authorities;

                    (iii)     the United States shall have become engaged in
               hostilities, there

<PAGE>

               shall have been an escalation in hostilities involving the United
               States, or there shall have been a declaration of a national
               emergency or war by the United States; or

                     (iv)     there shall have occurred such a material adverse
               change in general economic, political or financial conditions (or
               the effect of international conditions on the financial markets
               in the United States shall be such) as to make it, in the sole
               judgment of the Initial Purchasers, impracticable or inadvisable
               to proceed with the offering or delivery of the Debentures being
               delivered on such Delivery Date on the terms and in the manner
               contemplated in the Offering Memorandum.

(m)                 The Company shall have furnished to the Initial Purchasers
such further information, certificates and documents as the Initial Purchasers
may reasonably request to evidence compliance with the conditions set forth in
this Section 5.

          All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
to the Initial Purchasers.

6              .  REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF INITIAL
PURCHASERS.  Each Initial Purchaser, severally and not jointly, represents and
warrants that such Initial Purchaser is a QIB.  Each Initial Purchaser,
severally and not jointly, agrees with the Company that:

          (a)  The Debentures and the Conversion Shares have not been and will
     not be registered under the Securities Act in connection with the initial
     offering of the Debentures.

          (b)  Such Initial Purchaser is purchasing the Debentures pursuant to a
     private sale exemption from registration under the Securities Act;

          (c)  The Debentures have not been and will not be offered or sold by
     such Initial Purchaser or its affiliates acting on its behalf within the
     United States or to, or for the account or benefit of, United States
     persons except in accordance with Rule 144A or to limited number of
     "accredited investors" (as defined in Rule 501(a) under the Securities
     Act);

          (d)  Such Initial Purchaser will not offer or sell the Debentures in
     the United States by means of any form of general solicitation or general
     advertising within the meaning of Rule 502(c) of Regulation D, including
     (i) any advertisement, article, notice or other communication published in
     any newspaper, magazine or similar medium or broadcast over television or
     radio, or (ii) any seminar or meeting

<PAGE>

     whose attendees have been invited by any general solicitation or general
     advertising in the United States; and

          (e)  Such Initial Purchaser has not offered or sold, and will not
     offer or sell, any Debentures in the United States except to (A) persons
     whom it reasonably believes to be QIBs and (B) a limited number of
     "accredited investors" (as defined in Rule 501(a) under the Securities
     Act).

7              .  INDEMNIFICATION AND CONTRIBUTION.

(a)                 The Company shall indemnify and hold harmless each Initial
Purchaser, its officers and employees and each person, if any, who controls any
Initial Purchaser within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of the Debentures), to which that Initial
Purchaser, officer, employee or controlling person may become subject, insofar
as such loss, claim, damage, liability or action arises out of, or is based
upon:

     (i)            any untrue statement or alleged untrue statement of a
     material fact contained in (A) any Preliminary Offering Memorandum or the
     Offering Memorandum, or in any amendment or supplement thereto, or (B) any
     blue sky application or other document prepared or executed by the Company
     (or based upon any written information furnished by the Company) filed in
     any jurisdiction specifically for the purpose of qualifying any or all of
     the Debentures under the securities laws of any state or other jurisdiction
     (such application, document or information being hereinafter called a "Blue
     Sky Application") or

     (ii)           the omission or alleged omission to state therein any
     material fact necessary to make the statements therein not misleading,

and shall reimburse each Initial Purchaser and each such officer, employee and
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Initial Purchaser, officer, employee or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Offering Memorandum or the
Offering Memorandum, or in any such amendment or supplement, or in any Blue Sky
Application in reliance upon and in conformity with the written information
furnished to the Company by or on behalf of any Initial Purchaser specifically
for inclusion therein and described in Section 7(e); PROVIDED, FURTHER, that as
to any Preliminary Offering Memorandum, this indemnity agreement shall not inure
to the benefit of any Initial

<PAGE>

Purchaser, its officers or employees or any person controlling that Initial
Purchaser on account of any loss, claim, damage, liability or action arising
from the sale of Debentures to any person by that Initial Purchaser if that
Initial Purchaser failed to send or give a copy of the Offering Memorandum,
as the same may be amended or supplemented, to that person, and the untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact in such Preliminary Offering
Memorandum was corrected in the Offering Memorandum, unless such failure
resulted from non-compliance by the Company with Section 3(b).  The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any Initial Purchaser or to any officer, employee or
controlling person of that Initial Purchaser.

(b)                 Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless, the Company, its officers and directors, and each
person, if any, who controls the Company within the meaning of the Securities
Act from and against any loss, claim, damage or liability, joint or several, or
any action in respect thereof, to which the Company or any such director,
officer or controlling person may become subject, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon:

     (i)            any untrue statement or alleged untrue statement of a
     material fact contained in any Preliminary Offering Memorandum or the
     Offering Memorandum or in any amendment or supplement thereto, or in any
     Blue Sky Application, or

     (ii)           the omission or alleged omission to state therein any
     material fact necessary to make the statements therein not misleading,

but in each case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with the written information furnished to the Company by or on behalf
of that Initial Purchaser specifically for inclusion therein and described in
Section 7(e), and shall reimburse the Company and any such director, officer or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred.  The foregoing indemnity agreement is in addition to any liability
which any Initial Purchaser may otherwise have to the Company or any such
director, officer or controlling person.

(c)                 Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent it has
been materially prejudiced by

<PAGE>

such failure and, PROVIDED, FURTHER, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 7.  If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party.  After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; PROVIDED, HOWEVER, that
the Initial Purchasers shall have the right to employ counsel to represent
jointly the Initial Purchasers and their respective officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Initial Purchasers against the
Company under this Section 8, if the Initial Purchasers shall have reasonably
concluded that there may be one or more legal defenses available to the Initial
Purchasers and their respective officers, employees and controlling persons that
are different from or additional to those available to the Company and its
officers, employees and controlling persons, the fees and expenses of a single
separate counsel shall be paid by the Company.  No indemnifying party shall:

          (i)  without the prior written consent of the indemnified parties
     (which consent shall not be unreasonably withheld) settle or compromise or
     consent to the entry of any judgment with respect to any pending or
     threatened claim, action, suit or proceeding in respect of which
     indemnification or contribution may be sought hereunder (whether or not the
     indemnified parties are actual or potential parties to such claim or
     action) unless such settlement, compromise or consent includes an
     unconditional release of each indemnified party from all liability arising
     out of such claim, action, suit or proceeding, or

          (ii)      be liable for any settlement of any such action effected
     without its written consent (which consent shall not be unreasonably
     withheld), but if settled with its written consent or if there be a final
     judgment of the plaintiff in any such action, the indemnifying party agrees
     to indemnify and hold harmless any indemnified party from and against any
     loss of liability by reason of such settlement or judgment.

(d)                 If the indemnification provided for in this Section 7 shall
for any reason be unavailable or insufficient to hold harmless an indemnified
party under Section 7(a) or 7(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof:

<PAGE>

     (i)            in such proportion as shall be appropriate to reflect the
     relative benefits received by the Company on the one hand and the Initial
     Purchasers on the other from the offering of the Debentures, or

     (ii)           if the allocation provided by clause 7(d)(i) is not
     permitted by applicable law, in such proportion as is appropriate to
     reflect not only the relative benefits referred to in clause 7(d)(i) but
     also the relative fault of the Company on the one hand and the Initial
     Purchasers on the other with respect to the statements or omissions or
     alleged statements or alleged omissions that resulted in such loss, claim,
     damage or liability (or action in respect thereof), as well as any other
     relevant equitable considerations.

The relative benefits received by the Company on the one hand and the Initial
Purchasers on the other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Debentures purchased under this Agreement (before deducting expenses) received
by the Company on the one hand, and the total discounts and commissions received
by the Initial Purchasers with respect to the Debentures purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the offering
of the Debentures under this Agreement, in each case as set forth in the table
on the cover page of the Offering Memorandum.  The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Initial Purchasers, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission.  The Company and the Initial
Purchasers agree that it would not be just and equitable if the amount of
contributions pursuant to this Section 7(d) were to be determined by PRO RATA
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein.  The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7(d) shall be
deemed to include, for purposes of this Section 7(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.  Notwithstanding the
provisions of this Section 7(d), no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Debentures resold by it in the initial placement of such Debentures were
offered to investors exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.  The Initial Purchasers'
obligations to contribute as provided in this Section 7(d) are several in
proportion to their respective purchase obligations and not joint.

(e)                 The Initial Purchasers severally confirm that the statements
with respect to

<PAGE>

the offering of the Debentures set forth on the cover page of the Offering
Memorandum and in the fifth, seventh, ninth, tenth, eleventh, twelfth and
fourteenth paragraphs under the caption "Plan of Distribution" in the Offering
Memorandum are correct and constitute the only information furnished in writing
to the Company by or on behalf of the Initial Purchasers specifically for
inclusion in the Offering Memorandum.

8              .  DEFAULTING INITIAL PURCHASERS.

          If, on any Delivery Date, any Initial Purchaser defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Initial Purchasers shall be obligated to purchase the aggregate
principal amount of Debentures which the defaulting Initial Purchaser agreed but
failed to purchase on such Delivery Date in the respective proportions which the
total aggregate principal amount of Debentures set opposite the name of each
remaining non-defaulting Initial Purchaser in Schedule 1 hereto bears to the
total aggregate principal amount of Debentures set opposite the names of all the
remaining non-defaulting Initial Purchasers in Schedule 1 hereto; PROVIDED,
HOWEVER, that the remaining non-defaulting Initial Purchasers shall not be
obligated to purchase any Debentures on such Delivery Date if the total
aggregate principal amount of Debentures which the defaulting Initial Purchasers
agreed but failed to purchase on such date exceeds 9.09% of the total aggregate
principal amount at maturity of Debentures to be purchased on such Delivery
Date, and any remaining non-defaulting Initial Purchaser shall not be obligated
to purchase more than 110% of the aggregate principal amount at maturity of
Debentures which it agreed to purchase on such Delivery Date pursuant to the
terms of Section 2.  If the foregoing maximums are exceeded, the remaining
non-defaulting Initial Purchasers, or those other purchasers satisfactory to the
Initial Purchasers who so agree, shall have the right, but shall not be
obligated, to purchase on such Delivery Date, in such proportion as may be
agreed upon among them, the total aggregate principal amount of Debentures to be
purchased on such Delivery Date.  If the remaining Initial Purchasers or other
purchasers satisfactory to the Initial Purchasers do not elect to purchase on
such Delivery Date the aggregate principal amount of Debentures which the
defaulting Initial Purchasers agreed but failed to purchase, this Agreement (or
with respect to the Optional Delivery Date, the obligation of the Initial
Purchasers to purchase the Optional Debentures) shall terminate without
liability on the part of any non-defaulting Initial Purchasers and the Company,
except that the Company will continue to be liable for the payment of expenses
to the extent set forth in Sections 4 and 10.  As used in this Agreement, the
term "Initial Purchaser" includes, for all purposes of this Agreement unless the
context requires otherwise, any party not listed in Schedule 1 hereto who,
pursuant to this Section 8, purchases Debentures which a defaulting Initial
Purchaser agreed but failed to purchase.

          Nothing contained herein shall relieve a defaulting Initial Purchaser
of any liability it may have to the Company for damages caused by its default.
If other purchasers are obligated or agree to purchase the Debentures of a
defaulting or withdrawing Initial Purchaser, either the remaining non-defaulting
Initial Purchasers or the Company may postpone the

<PAGE>

Delivery Date for up to seven full business days in order to effect any changes
in the Offering Memorandum or in any other document or arrangement that, in the
opinion of counsel to the Company or counsel to the Initial Purchasers, may be
necessary.

9              .  TERMINATION.   The obligations of the Initial Purchasers
hereunder may be terminated by the Initial Purchasers by notice given to and
received by the Company prior to delivery of and payment for the Debentures if,
prior to that time, any of the events described in Sections 5(k) and (l) shall
have occurred or if the Initial Purchasers shall decline to purchase the
Debentures for any reason permitted under this Agreement.

10             .  REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES.  If (a) the
Company shall fail to tender the Debentures for delivery to the Initial
Purchasers for any reason permitted under this Agreement or (b) the Initial
Purchasers shall decline to purchase the Debentures for any reason permitted
under this Agreement (including the termination of this Agreement pursuant to
Section 9), the Company shall reimburse the Initial Purchasers for the fees and
expenses of their counsel and for such other out-of-pocket expenses as shall
have been incurred by them in connection with this Agreement and the proposed
purchase of the Debentures, and upon demand the Company shall pay the full
amount thereof to the Initial Purchasers.  If this Agreement is terminated
pursuant to Section 8 by reason of the default of one or more Initial
Purchasers, the Company shall not be obligated to reimburse any defaulting
Initial Purchaser on account of those expenses.

11             .  NOTICES, ETC.  All statements, requests, notices and
agreements hereunder shall be in writing, and:

     (a)            if to the Initial Purchasers, shall be delivered or sent by
     mail, telex or facsimile transmission to Lehman Brothers Inc., Three World
     Financial Center, New York, New York 10285, Attention:  Syndicate
     Department (Fax: 1-212-528-8822); and
     (b)            if to the Company, shall be delivered or sent by mail, telex
     or facsimile transmission to Inhale Therapeutic Systems, Inc., 150
     Industrial Road, San Carlos, California  94070, Attention: Stephen L.
     Hurst, Esq. (Fax: (650) 631-3150).

PROVIDED, HOWEVER, that any notice to an Initial Purchaser pursuant to Section
7(c) shall be delivered or sent by mail, telex or facsimile transmission to each
such Initial Purchaser, which address will be supplied to any other party hereto
by Lehman Brothers Inc. upon request.  Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.  The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by Lehman Brothers Inc.

(B)            .  PERSONS ENTITLED TO BENEFIT OF AGREEMENT.  This Agreement
shall inure to the benefit of and be binding upon the Initial Purchasers, the
Company and their respective successors.  This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements of the

<PAGE>

Company contained in this Agreement shall also be deemed to be for the benefit
of the officers and employees of each Initial Purchaser and the person or
persons, if any, who control each Initial Purchaser within the meaning of
Section 15 of the Securities Act and  any indemnity agreement of the Initial
Purchasers contained in Section 7(b) of this Agreement shall be deemed to be for
the benefit of directors, officers and employees of the Company, and any person
controlling the Company within the meaning of Section 15 of the Securities Act.
Nothing contained in this Agreement is intended or shall be construed to give
any person, other than the persons referred to in this Section 12, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.

13             .  SURVIVAL.  The respective indemnities, representations,
warranties and agreements of the Company and the Initial Purchasers contained in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Debentures and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
of them or any person controlling any of them.

14             .  DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY".  For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the rules and regulations promulgated under the
Securities Act.

15             .  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

16             .  COUNTERPARTS.  This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.

17             .  HEADINGS.  The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.

<PAGE>

          If the foregoing correctly sets forth the agreement between the
Company and the Initial Purchasers, please indicate your acceptance in the space
provided for that purpose below.

                         Very truly yours,

                         Inhale Therapeutic Systems, Inc.

                         By /s/ Robert Chess
                           -------------------------------
                                NAME:
                              TITLE:

Accepted and agreed by:

Lehman Brothers Inc.
Deutsche Bank Securities Inc.
U.S. Bancorp Piper Jaffray

By: Lehman Brothers Inc.

By  /s/  Edward Breck
  ------------------------------
       AUTHORIZED REPRESENTATIVE

<PAGE>

                                      SCHEDULE 1

<TABLE>
<CAPTION>
                                                        Principal Amount
Initial Purchasers                                    of Firm Debentures
-------------------
<S>                                                  <C>
Lehman Brothers Inc.                                 $     65,000,000

Deutsche Bank Securities Inc.                              17,500,000

U.S. Bancorp Piper Jaffray Inc.                            17,500,000

                                                     --------------------
          Total                                      $    100,000,000

                                                     --------------------
                                                     --------------------
</TABLE><PAGE>

                      RESALE REGISTRATION RIGHTS AGREEMENT

                                     between

                        INHALE THERAPEUTIC SYSTEMS, INC.

                                       and

                              LEHMAN BROTHERS INC.

                          DEUTSCHE BANK SECURITIES INC.

                                       and

                         U.S. BANCORP PIPER JAFFRAY INC.

                                                    DATED AS OF OCTOBER 13, 1999

<PAGE>

                                                                               2

                RESALE REGISTRATION RIGHTS AGREEMENT, dated as of October 13,
1999, between Inhale Therapeutic Systems, Inc., a Delaware corporation (together
with any successor entity, herein referred to as the "Issuer"), and Lehman
Brothers Inc., Deutsche Bank Securities Inc. and U.S. Bancorp Piper Jaffray Inc.
(collectively, the "Initial Purchasers").

                 Pursuant to the Purchase Agreement, dated October 6, 1999,
between the Issuer and the Initial Purchasers (the "Purchase Agreement"), the
Initial Purchasers have agreed to purchase from the Issuer up to $100,000,000
($109,000,000 if the Initial Purchasers exercise the over-allotment option in
full) in aggregate principal amount of 6 3/4% Convertible Subordinated
Debentures due 2006 (the "Debentures"). The Debentures will be convertible into
fully paid, nonassessable common stock, par value $.0001 per share, of the
Issuer (the "Common Stock") on the terms, and subject to the conditions, set
forth in the Indenture (as defined herein). To induce the Initial Purchasers to
purchase the Debentures, the Issuer has agreed to provide the registration
rights set forth in this Agreement pursuant to Section 3(j) of the Purchase
Agreement.

                 The parties hereby agree as follows:

                 1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings:

                 ADVICE:  As defined in Section 4(c)(ii) hereof.

                 AGREEMENT:  This Resale Registration Rights Agreement.

                 BLUE SKY APPLICATION:  As defined in Section 6(a) hereof.

                 BROKER-DEALER:  Any broker or dealer registered under the
        Exchange Act.

                 BUSINESS DAY: A day other than a Saturday or Sunday or any
        federal holiday in the United States.

                 CLOSING DATE:  The date of this Agreement.

                 COMMISSION:  Securities and Exchange Commission.

                 COMMON STOCK:  As defined in the preamble hereto.

                 DAMAGES PAYMENT DATE:  Each Interest Payment Date.  For
        purposes of this Agreement, if no Debentures are outstanding, "Damages
        Payment Date" shall mean each

<PAGE>

                                                                               3

        April 13 and October 13.

                 DEBENTURES:  As defined in the preamble hereto.

                 EFFECTIVENESS PERIOD:  As defined in Section 2(a)(iii) hereof.

        EFFECTIVENESS TARGET DATE:  As defined in Section 2(a)(ii) hereof.

                 EXCHANGE ACT:  Securities Exchange Act of 1934, as amended.

                 HOLDER:  A Person who owns, beneficially or otherwise,
        Transfer Restricted Securities.

                 INDEMNIFIED HOLDER:  As defined in Section 6(a) hereof.

                 INDENTURE: The Indenture, dated as of October 13, 1999, between
        the Issuer and Chase Manhattan Bank and Trust Company, National
        Association, as trustee (the "Trustee"), pursuant to which the
        Debentures are to be issued, as such Indenture is amended, modified or
        supplemented from time to time in accordance with the terms thereof.

                 INITIAL PURCHASERS:  As defined in the preamble hereto.

                 INTEREST PAYMENT DATE:  As defined in the Indenture.

                 ISSUER:  As defined in the preamble hereto.

                 LIQUIDATED DAMAGES:  As defined in Section 3(a) hereof.

                 MAJORITY OF HOLDERS: Holders holding over 50% of the aggregate
        principal amount of Debentures outstanding; PROVIDED that, for purpose
        of this definition, a holder of shares of Common Stock which constitute
        Transfer Restricted Securities and issued upon conversion of the
        Debentures shall be deemed to hold an aggregate principal amount of
        Debentures (in addition to the principal amount of Debentures held by
        such holder) equal to the product of (x) the number of such shares of
        Common Stock held by such holder and (y) the prevailing conversion
        price, such prevailing conversion price as determined in accordance with
        Section 12 of the Indenture.

                 NASD:  National Association of Securities Dealers, Inc.

                 PERSON:  An individual, partnership, corporation,
        unincorporated organization,

<PAGE>

                                                                               4

        trust, joint venture or a government or agency or political subdivision
        thereof.

                 PROSPECTUS: The prospectus included in a Shelf Registration
        Statement, as amended or supplemented by any prospectus supplement and
        by all other amendments thereto, including post-effective amendments,
        and all material incorporated by reference into such Prospectus.

                 QUESTIONNAIRE DEADLINE:  As defined in Section 2(b) hereof.

        RECORD HOLDER: With respect to any Damages Payment Date, each Person who
is a Holder on the record date with respect to the Interest Payment Date on
which such Damages Payment Date shall occur. In the case of a Holder of shares
of Common Stock issued upon conversion of the Debentures, "Record Holder" shall
mean each Person who is a Holder of shares of Common Stock which constitute
Transfer Restricted Securities on the March 31 or September 30 immediately
preceding the Damages Payment Date.

                 REGISTRATION DEFAULT:  As defined in Section 3(a) hereof.

                 SALE NOTICE:  As defined in Section 4(e) hereof.

                 SECURITIES ACT:  Securities Act of 1933, as amended.

                 SHELF FILING DEADLINE: As defined in Section 2(a)(i) hereof.

                 SHELF REGISTRATION STATEMENT:  As defined in Section 2(a)(i)
        hereof.

                 SUSPENSION PERIOD.  As defined in Section 4(b)(i) hereof.

                 TIA:  Trust Indenture Act of 1939, as in effect on the date the
        Indenture is qualified under the TIA.

                 TRANSFER RESTRICTED SECURITIES:  Each Debenture and each share
        of Common Stock issued upon conversion of Debentures until the earlier
        of:

                           (i) the date on which such Debenture or such share of
                 Common Stock issued upon conversion has been effectively
                 registered under the Securities Act and disposed of in
                 accordance with the Shelf Registration Statement;

                           (ii) the date on which such Debenture or such share
                 of Common Stock issued upon conversion is transferred in
                 compliance with Rule 144 under the Securities Act or may be
                 sold or transferred pursuant to Rule 144 under the Securities
                 Act (or any other similar provision then in force); or

<PAGE>

                                                                               5

                           (iii) the date on which such Debenture or such share
                 of Common Stock issued upon conversion ceases to be outstanding
                 (whether as a result of redemption, repurchase and
                 cancellation, conversion or otherwise).

                 UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING:  A
        registration in which securities of the Issuer are sold to an
        underwriter for reoffering to the public.

                 2.        SHELF REGISTRATION.

                 (a)       The Issuer shall:

                           (i) not later than 90 days after the date hereof (the
                 "Shelf Filing Deadline"), cause to be filed a registration
                 statement pursuant to Rule 415 under the Securities Act (the
                 "Shelf Registration Statement"), which Shelf Registration
                 Statement shall provide for resales of all Transfer Restricted
                 Securities held by Holders that have provided the information
                 required pursuant to the terms of Section 2(b) hereof;

                           (ii) use its best efforts to cause the Shelf
                 Registration Statement to be declared effective by the
                 Commission not later than 180 days after the date hereof (the
                 "Effectiveness Target Date"); and

                           (iii) use its best efforts to keep the Shelf
                 Registration Statement continuously effective, supplemented and
                 amended as required by the provisions of Section 4(b) hereof to
                 the extent necessary to ensure that (A) it is available for
                 resales by the Holders of Transfer Restricted Securities
                 entitled to the benefit of this Agreement and (B) conforms with
                 the requirements of this Agreement and the Securities Act and
                 the rules and regulations of the Commission promulgated
                 thereunder as announced from time to time for a period (the
                 "Effectiveness Period") of:

                                    (1)     two years following the last date of
                           original issuance of Debentures; or

                                    (2) such shorter period that will terminate
                           when (x) all of the Holders of Transfer Restricted
                           Securities are able to sell all Transfer Restricted
                           Securities immediately without restriction pursuant
                           to Rule 144(k) under the Securities Act or any
                           successor rule thereto, (y) when all Transfer
                           Restricted Securities have ceased to be outstanding
                           (whether as

<PAGE>

                                                                               6

                           a result of redemption, repurchase and cancellation,
                           conversion or otherwise) or (z) all Transfer
                           Restricted Securities registered under the Shelf
                           Registration Statement have been sold.

                 (b) No Holder of Transfer Restricted Securities may include any
of its Transfer Restricted Securities in the Shelf Registration Statement
pursuant to this Agreement unless such Holder furnishes to the Issuer in
writing, prior to or on the 20th Business Days after receipt of a request
therefor (the "Questionnaire Deadline"), such information as the Issuer may
reasonably request for use in connection with the Shelf Registration Statement
or Prospectus or preliminary Prospectus included therein and in any application
to be filed with or under state securities laws. In connection with all such
requests for information from Holders of Transfer Restricted Securities, the
Issuer shall notify such Holders of the requirements set forth in the preceding
sentence. No Holder of Transfer Restricted Securities shall be entitled to
Liquidated Damages pursuant to Section 3 hereof unless such Holder shall have
provided all such reasonably requested information prior to or on the
Questionnaire Deadline. Each Holder as to which the Shelf Registration Statement
is being effected agrees to furnish promptly to the Issuer all information
required to be disclosed in order to make information previously furnished to
the Issuer by such Holder not materially misleading.

                 3.        LIQUIDATED DAMAGES.

                 (a)       If:

                           (i)      the Shelf Registration Statement is not
                 filed with the Commission prior to or on the Shelf Filing
                 Deadline;

                           (ii) the Shelf Registration Statement has not been
                 declared effective by the Commission prior to or on the
                 Effective Target Date;

                           (iii) subject to the provisions of Section 4(b)(i)
                 hereof, the Shelf Registration Statement is filed and declared
                 effective but, during the Effectiveness Period, shall
                 thereafter cease to be effective or fail to be usable for its
                 intended purpose without being succeeded within five Business
                 Days by a post-effective amendment to the Shelf Registration
                 Statement or a report filed with the Commission pursuant to
                 Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that
                 cures such failure and, in the case of a post-effective
                 amendment, is itself immediately declared effective; or

                           (iv) prior to or on the 45th or 60th day, as the case
                 may be, of any Suspension Period, such suspension has not been
                 terminated,

<PAGE>

                                                                               7

(each such event referred to in foregoing clauses (i) through (iv), a
"Registration Default"), the Issuer hereby agrees to pay liquidated damages
("Liquidated Damages") with respect to the Transfer Restricted Securities from
and including the day following the Registration Default to but excluding the
day on which the Registration Default has been cured:

                           (A) in respect of the Debentures, to each holder of
                 Debentures, (x) with respect to the first 90-day period during
                 which a Registration Default shall have occurred and be
                 continuing, in an amount per year equal to an additional 0.25%
                 of the principal amount of the Debentures, and (y) with respect
                 to the period commencing on the 91st day following the day the
                 Registration Default shall have occurred and be continuing, in
                 an amount per year equal to an additional 0.50% of the
                 principal amount of the Debentures; PROVIDED that in no event
                 shall Liquidated Damages accrue at a rate per year exceeding
                 0.50% of the principal amount of the Debentures; and

                           (B) in respect of any shares of Common Stock, to each
                 holder of shares of Common Stock issued upon conversion of
                 Debentures, (x) with respect to the first 90-day period in
                 which a Registration Default shall have occurred and be
                 continuing, in an amount per year equal to 0.25% of the
                 principal amount of the converted Debentures, and (y) with
                 respect to the period commencing the 91st day following the day
                 the Registration Default shall have occurred and be continuing,
                 in an amount per year equal to 0.50% of the principal amount of
                 the converted Debentures; PROVIDED that in no event shall
                 Liquidated Damages accrue at a rate per year exceeding 0.50% of
                 the principal amount of the converted Debentures.

                 (b) All accrued Liquidated Damages shall be paid in arrears to
Record Holders by the Issuer on each Damages Payment Date by wire transfer of
immediately available funds or by federal funds check. Following the cure of all
Registration Defaults relating to any particular Debenture or share of Common
Stock, the accrual of Liquidated Damages with respect to such Debenture or share
of Common Stock will cease.

                 All obligations of the Issuer set forth in this Section 3 that
are outstanding with respect to any Transfer Restricted Security at the time
such security ceases to be a Transfer Restricted Security shall survive until
such time as all such obligations with respect to such Transfer Restricted
Security shall have been satisfied in full.

                 The Liquidated Damages set forth above shall be the exclusive
monetary remedy available to the Holders of Transfer Restricted Securities for
such Registration Default.

                 4.        REGISTRATION PROCEDURES.

<PAGE>

                                                                               8

                 (a) In connection with the Shelf Registration Statement, the
Issuer shall comply with all the provisions of Section 4(b) hereof and shall use
its best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof, and pursuant thereto, shall as expeditiously as
possible prepare and file with the Commission a Shelf Registration Statement
relating to the registration on any appropriate form under the Securities Act.

                 (b) In connection with the Shelf Registration Statement and any
Prospectus required by this Agreement to permit the sale or resale of Transfer
Restricted Securities, the Issuer shall:

                           (i) Subject to any notice by the Issuer in accordance
                 with this Section 4(b) of the existence of any fact or event of
                 the kind described in Section 4(b)(iii)(D), use its best
                 efforts to keep the Shelf Registration Statement continuously
                 effective during the Effectiveness Period; upon the occurrence
                 of any event that would cause any the Shelf Registration
                 Statement or the Prospectus contained therein (A) to contain a
                 material misstatement or omission or (B) not be effective and
                 usable for resale of Transfer Restricted Securities during the
                 Effectiveness Period, the Issuer shall file promptly an
                 appropriate amendment to the Shelf Registration Statement or a
                 report filed with the Commission pursuant to Section 13(a),
                 13(c), 14 or 15(d) of the Exchange Act, in the case of clause
                 (A), correcting any such misstatement or omission, and, in the
                 case of either clause (A) or (B), use its best efforts to cause
                 such amendment to be declared effective and the Shelf
                 Registration Statement and the related Prospectus to become
                 usable for their intended purposes as soon as practicable
                 thereafter. Notwithstanding the foregoing, the Issuer may
                 suspend the effectiveness of the Shelf Registration Statement
                 by written notice to the Holders for a period not to exceed an
                 aggregate of 45 days in any 90-day period (each such period, a
                 "Suspension Period") if:

                                    (x) an event occurs and is continuing as a
                           result of which the Shelf Registration Statement
                           would, in the Issuer's reasonable judgment, contain
                           an untrue statement of a material fact or omit to
                           state a material fact required to be stated therein
                           or necessary to make the statements therein not
                           misleading; and

                                    (y) the Issuer reasonably determines that
                           the disclosure of such event at such time would have
                           a material adverse effect on the business of the
                           Issuer (and its subsidiaries, if any, taken as a
                           whole);

                 PROVIDED that in the event the disclosure relates to a
                 previously undisclosed

<PAGE>

                                                                               9

                 proposed or pending material business transaction, the
                 disclosure of which would impede the Issuer's ability to
                 consummate such transaction, the Issuer may extend a
                 Suspension Period from 45 days to 60 days; PROVIDED, HOWEVER,
                 that Suspension Periods shall not exceed an aggregate of 90
                 days in any 360-day period.

                           (ii) Prepare and file with the Commission such
                 amendments and post-effective amendments to the Shelf
                 Registration Statement as may be necessary to keep the Shelf
                 Registration Statement effective during the Effectiveness
                 Period; cause the Prospectus to be supplemented by any required
                 Prospectus supplement, and as so supplemented to be filed
                 pursuant to Rule 424 under the Securities Act, and to comply
                 fully with the applicable provisions of Rules 424 and 430A
                 under the Securities Act in a timely manner; and comply with
                 the provisions of the Securities Act with respect to the
                 disposition of all securities covered by the Shelf Registration
                 Statement during the applicable period in accordance with the
                 intended method or methods of distribution by the sellers
                 thereof set forth in the Shelf Registration Statement or
                 supplement to the Prospectus.

                           (iii) Advise the underwriter(s), if any, and selling
                 Holders promptly (but in any event within five Business Days)
                 and, if requested by such Persons, to confirm such advice in
                 writing:

                                    (A) when the Prospectus or any Prospectus
                           supplement or post-effective amendment has been
                           filed, and, with respect to the Shelf Registration
                           Statement or any post-effective amendment thereto,
                           when the same has become effective,

                                    (B) of any request by the Commission for
                           amendments to the Shelf Registration Statement or
                           amendments or supplements to the Prospectus or for
                           additional information relating thereto,

                                    (C) of the issuance by the Commission of any
                           stop order suspending the effectiveness of the Shelf
                           Registration Statement under the Securities Act or of
                           the suspension by any state securities commission of
                           the qualification of the Transfer Restricted
                           Securities for offering or sale in any jurisdiction,
                           or the initiation of any proceeding for any of the
                           preceding purposes, or

                                    (D) of the existence of any fact or the
                           happening of any event, during the Effectiveness
                           Period, that makes any statement of a material fact
                           made in the Shelf Registration Statement, the
                           Prospectus, any amendment or supplement thereto, or
                           any document incorporated by

<PAGE>

                                                                              10

                           reference therein untrue, or that requires the
                           making of any additions to or changes in the Shelf
                           Registration Statement or the Prospectus in order to
                           make the statements therein not misleading.

                 If at any time the Commission shall issue any stop order
                 suspending the effectiveness of the Shelf Registration
                 Statement, or any state securities commission or other
                 regulatory authority shall issue an order suspending the
                 qualification or exemption from qualification of the Transfer
                 Restricted Securities under state securities or Blue Sky laws,
                 the Issuer shall use its reasonable best efforts to obtain the
                 withdrawal or lifting of such order at the earliest possible
                 time.

                           (iv) Furnish to each of the selling Holders and each
                 of the underwriter(s), if any, before filing with the
                 Commission, a copy of the Shelf Registration Statement and
                 copies of any Prospectus included therein or any amendments or
                 supplements to any the Shelf Registration Statement or
                 Prospectus (other than documents incorporated by reference
                 after the initial filing of the Shelf Registration Statement),
                 which documents will be subject to the review of such holders
                 and underwriter(s), if any, for a period of at least ten
                 Business Days, and the Issuer will not file any the Shelf
                 Registration Statement or Prospectus or any amendment or
                 supplement to any the Shelf Registration Statement or
                 Prospectus (other than documents incorporated by reference) to
                 which a selling Holder of Transfer Restricted Securities
                 covered by the Shelf Registration Statement or the
                 underwriter(s), if any, shall reasonably object within five
                 Business Days after the receipt thereof. A selling Holder or
                 underwriter, if any, shall be deemed to have reasonably
                 objected to such filing if the Shelf Registration Statement,
                 amendment, Prospectus or supplement, as applicable, as proposed
                 to be filed, contains a material misstatement or omission.

                           (v) Make available at reasonable times for inspection
                 by one or more representatives of the selling Holders,
                 designated in writing by a Majority of Holders whose Transfer
                 Restricted Securities are included in the Shelf Registration
                 Statement, any underwriter participating in any distribution
                 pursuant to the Shelf Registration Statement, and any attorney
                 or accountant retained by such selling Holders or any of the
                 underwriter(s), all financial and other records, pertinent
                 corporate documents and properties of the Issuer as shall be
                 reasonably necessary to enable them to exercise any applicable
                 due diligence responsibilities, and cause the Issuer's
                 officers, directors, managers and employees to supply all
                 information reasonably requested by any such representative or
                 representatives of the selling Holders, underwriter, attorney
                 or accountant in connection with the Shelf Registration
                 Statement after the filing thereof and before its
                 effectiveness; PROVIDED, HOWEVER, that any information
                 designated by the Company as

<PAGE>

                                                                              11

                 confidential at the time of delivery of such information shall
                 be kept confidential by the recipient thereof.

                           (vi) If requested by any selling Holders or the
                 underwriter(s), if any, promptly incorporate in the Shelf
                 Registration Statement or Prospectus, pursuant to a supplement
                 or post-effective amendment if necessary, such information as
                 such selling Holders and underwriter(s), if any, may reasonably
                 request to have included therein, including, without
                 limitation: (1) information relating to the "Plan of
                 Distribution" of the Transfer Restricted Securities, (2)
                 information with respect to the principal amount of Debentures
                 or number of shares of Common Stock being sold to such
                 underwriter(s), (3) the purchase price being paid therefor and
                 (4) any other terms of the offering of the Transfer Restricted
                 Securities to be sold in such offering; and make all required
                 filings of such Prospectus supplement or post-effective
                 amendment as soon as reasonably practicable after the Issuer is
                 notified of the matters to be incorporated in such Prospectus
                 supplement or post-effective amendment.

                           (vii) Furnish to each selling Holder and each of the
                 underwriter(s), if any, without charge, at least one copy of
                 the Shelf Registration Statement, as first filed with the
                 Commission, and of each amendment thereto (and any documents
                 incorporated by reference therein or exhibits thereto (or
                 exhibits incorporated in such exhibits by reference) as such
                 Person may request).

                           (viii) Deliver to each selling Holder and each of the
                 underwriter(s), if any, without charge, as many copies of the
                 Prospectus (including each preliminary prospectus) and any
                 amendment or supplement thereto as such Persons reasonably may
                 request; subject to any notice by the Issuer in accordance with
                 this Section 4(b) of the existence of any fact or event of the
                 kind described in Section 4(b)(iii) (D), the Issuer hereby
                 consents to the use of the Prospectus and any amendment or
                 supplement thereto by each of the selling Holders and each of
                 the underwriter(s), if any, in connection with the offering and
                 the sale of the Transfer Restricted Securities covered by the
                 Prospectus or any amendment or supplement thereto.

                           (ix) If an underwriting agreement is entered into and
                 the registration is an Underwritten Registration, the Issuer
                 shall:

                                    (A) upon request, furnish to each selling
                           Holder and each underwriter, if any, in such
                           substance and scope as they may reasonably request
                           and as are customarily made by issuers to
                           underwriters in primary underwritten offerings, upon
                           the date of closing of any sale of Transfer
                           Restricted Securities in an Underwritten
                           Registration:

<PAGE>

                                                                              12

                                          (1) a certificate, dated the date of
                                    such closing, signed by the Chief Financial
                                    Officer of the Issuer confirming, as of the
                                    date thereof, the matters set forth in
                                    Section 5(g) of the Purchase Agreement and
                                    such other matters as such parties may
                                    reasonably request;

                                          (2) opinions, each dated the date of
                                    such closing, of counsel to the Issuer
                                    covering such of the matters set forth in
                                    Sections 5(c) and 5(d) of the Purchase
                                    Agreement as are customarily covered in
                                    legal opinions to underwriters in connection
                                    with primary underwritten offerings of
                                    securities; and

                                          (3) customary comfort letters, dated
                                    the date of such closing, from the Issuer's
                                    independent accountants (and from any other
                                    accountants whose report is contained or
                                    incorporated by reference in the Shelf
                                    Registration Statement), in the customary
                                    form and covering matters of the type
                                    customarily covered in comfort letters to
                                    underwriters in connection with primary
                                    underwritten offerings of securities;

                                    (B) set forth in full in the underwriting
                           agreement, if any, indemnification provisions and
                           procedures which provide rights no less protective
                           than those set forth in Section 6 hereof with respect
                           to all parties to be indemnified; and

                                    (C) deliver such other documents and
                           certificates as may be reasonably requested by such
                           parties to evidence compliance with clause (A) above
                           and with any customary conditions contained in the
                           underwriting agreement or other agreement entered
                           into by the selling Holders pursuant to this clause
                           (ix).

                           (x) Before any public offering of Transfer Restricted
                 Securities, cooperate with the selling Holders, the
                 underwriter(s), if any, and their respective counsel in
                 connection with the registration and qualification of the
                 Transfer Restricted Securities under the securities or Blue Sky
                 laws of such jurisdictions as the selling Holders or
                 underwriter(s), if any, may reasonably request and do any and
                 all other acts or things necessary or advisable to enable the
                 disposition in such jurisdictions of the Transfer Restricted
                 Securities covered by the Shelf Registration Statement;
                 PROVIDED, HOWEVER, that the Issuer shall not be required (A) to
                 register or qualify as a foreign corporation or a dealer of
                 securities where it is not now so

<PAGE>

                                                                              13

                 qualified or to take any action that would subject it to the
                 service of process in any jurisdiction where it is not now so
                 subject or (B) to subject themselves to taxation in any such
                 jurisdiction if they are not now so subject.

                           (xi) Cooperate with the selling Holders and the
                 underwriter(s), if any, to facilitate the timely preparation
                 and delivery of certificates representing Transfer Restricted
                 Securities to be sold and not bearing any restrictive legends
                 (unless required by applicable securities laws); and enable
                 such Transfer Restricted Securities to be in such denominations
                 and registered in such names as the Holders or the
                 underwriter(s), if any, may request at least two Business Days
                 before any sale of Transfer Restricted Securities made by such
                 underwriter(s).

                           (xii) Use its best efforts to cause the Transfer
                 Restricted Securities covered by the Shelf Registration
                 Statement to be registered with or approved by such other U.S.
                 governmental agencies or authorities as may be necessary to
                 enable the seller or sellers thereof or the underwriter(s), if
                 any, to consummate the disposition of such Transfer Restricted
                 Securities.

                           (xiii) Subject to Section 4(b)(i) hereof, if any fact
                 or event contemplated by Section 4(b)(iii)(D) hereof shall
                 exist or have occurred, use its reasonable best efforts prepare
                 a supplement or post-effective amendment to the Shelf
                 Registration Statement or related Prospectus or any document
                 incorporated therein by reference or file any other required
                 document so that, as thereafter delivered to the purchasers of
                 Transfer Restricted Securities, the Prospectus will not contain
                 an untrue statement of a material fact or omit to state any
                 material fact required to be stated therein or necessary to
                 make the statements therein not misleading.

                           (xiv) Provide CUSIP numbers for all Transfer
                 Restricted Securities not later than the effective date of the
                 Shelf Registration Statement and provide the Trustee under the
                 Indenture with certificates for the Debentures that are in a
                 form eligible for deposit with The Depository Trust Company.

                           (xv) Cooperate and assist in any filings required to
                 be made with the NASD and in the performance of any due
                 diligence investigation by any underwriter that is required to
                 be retained in accordance with the rules and regulations of the
                 NASD.

                           (xvi) Otherwise use its best efforts to comply with
                 all applicable rules and regulations of the Commission and all
                 reporting requirements under the rules and regulations of the
                 Exchange Act.

<PAGE>

                                                                              14

                           (xvii) Cause the Indenture to be qualified under the
                 TIA not later than the effective date of the Shelf Registration
                 Statement required by this Agreement, and, in connection
                 therewith, cooperate with the trustee and the holders of
                 Debentures to effect such changes to the Indenture as may be
                 required for such Indenture to be so qualified in accordance
                 with the terms of the TIA; and execute and use its best efforts
                 to cause the trustee thereunder to execute all documents that
                 may be required to effect such changes and all other forms and
                 documents required to be filed with the Commission to enable
                 such Indenture to be so qualified in a timely manner.

                           (xviii) Cause all Transfer Restricted Securities
                 covered by the Shelf Registration Statement to be listed or
                 quoted, as the case may be, on each securities exchange or
                 automated quotation system on which similar securities issued
                 by the Issuer are then listed or quoted.

                           (xix) Provide promptly to each Holder upon written
                 request each document filed with the Commission pursuant to the
                 requirements of Section 13 and Section 15 of the Exchange Act
                 after the effective date of the Shelf Registration Statement.

                           (xx) If requested by the underwriters, make
                 appropriate officers of the Issuer available to the
                 underwriters for meetings with prospective purchasers of the
                 Transfer Restricted Securities and prepare and present to
                 potential investors customary "road show" material in a manner
                 consistent with other new issuances of other securities similar
                 to the Transfer Restricted Securities.

                 (c) Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Issuer of the existence of
any fact of the kind described in Section 4(b)(iii)(D) hereof, such Holder will,
and will use its reasonable best efforts to cause any underwriter(s) in an
Underwritten Offering to, forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the Shelf Registration Statement until:

                           (i)      such Holder has received copies of the
                 supplemented or amended Prospectus contemplated by Section
                 4(b)(xiv) hereof; or

                           (ii) such Holder is advised in writing (the "Advice")
                 by the Issuer that the use of the Prospectus may be resumed,
                 and has received copies of any additional or supplemental
                 filings that are incorporated by reference in the Prospectus.

If so directed by the Issuer, each Holder will deliver to the Issuer (at the
Issuer's expense) all

<PAGE>

                                                                              15

copies, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Transfer Restricted Securities that was current at
the time of receipt of such notice of suspension.

                 (d) Each Holder who intends to be named as a selling Holder in
the Shelf Registration Statement shall furnish to the Issuer in writing, within
20 Business Days after receipt of a request therefor as set forth in a
questionnaire, such information regarding such Holder and the proposed
distribution by such Holder of its Transfer Restricted Securities as the Issuer
may reasonably request for use in connection with the Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. (The form of
the questionnaire is attached hereto as Exhibit A.) Holders that do not complete
the questionnaire and deliver it to the Issuer shall not be named as selling
securityholders in the Prospectus or preliminary Prospectus included in the
Shelf Registration Statement and therefore shall not be permitted to sell any
Transfer Restricted Securities pursuant to the Shelf Registration Statement.
Each Holder who intends to be named as a selling Holder in the Shelf
Registration Statement shall promptly furnish to the Issuer in writing such
other information as the Issuer may from time to time reasonably request in
writing.

                 (e) Upon the effectiveness of the Shelf Registration Statement,
each Holder shall notify the Issuer at least three Business Days prior to any
intended distribution of Transfer Restricted Securities pursuant to the Shelf
Registration Statement (a "Sale Notice"), which notice shall be effective for
five Business Days. Each Holder of this Security, by accepting the same, agrees
to hold any communication by the Company in response to a Sale Notice in
confidence.

                 5.        REGISTRATION EXPENSES.

                 (a) All expenses incident to the Issuer's performance of or
compliance with this Agreement shall be borne by the Issuer regardless of
whether a Shelf Registration Statement becomes effective, including, without
limitation:

                           (i) all registration and filing fees and expenses
                 (including filings made by any Initial Purchasers or Holders
                 with the NASD);

                           (ii) all fees and expenses of compliance with federal
                 securities and state Blue Sky or securities laws;

                           (iii) all expenses of printing (including printing of
                 Prospectuses and certificates for the Common Stock to be issued
                 upon conversion of the Debentures), messenger and delivery
                 services and telephone;

                           (iv) all fees and disbursements of counsel to the
                 Issuer and, subject to

<PAGE>

                                                                              16

                 Section 5(b) below, the Holders of Transfer Restricted
                 Securities;

                           (v) all application and filing fees in connection
                 with listing (or authorizing for quotation) the Common Stock on
                 a national securities exchange or automated quotation system
                 pursuant to the requirements hereof; and

                           (vi) all fees and disbursements of independent
                 certified public accountants of the Issuer (including the
                 expenses of any special audit and comfort letters required by
                 or incident to such performance).

                 The Issuer shall bear its internal expenses (including, without
limitation, all salaries and expenses of their officers and employees performing
legal, accounting or other duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Issuer.

                 (b) In connection with the Shelf Registration Statement
required by this Agreement, the Issuer shall reimburse the Initial Purchasers
and the Holders of Transfer Restricted Securities being registered pursuant to
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, which shall be Simpson Thacher &
Bartlett, or such other counsel as may be chosen by a Majority of Holders for
whose benefit the Shelf Registration Statement is being prepared.

                 6.        INDEMNIFICATION AND CONTRIBUTION.

                 (a) The Issuer shall indemnify and hold harmless each Holder,
such Holder's officers and employees and each person, if any, who controls such
Holder within the meaning of the Securities Act (each, an "Indemnified Holder"),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to resales of the Transfer Restricted
Securities), to which such Indemnified Holder may become subject, insofar as any
such loss, claim, damage, liability or action arises out of, or is based upon:

                 (i) any untrue statement or alleged untrue statement of a
        material fact contained in (A) the Shelf Registration Statement or
        Prospectus or any amendment or supplement thereto or (B) any blue sky
        application or other document or any amendment or supplement thereto
        prepared or executed by the Issuer (or based upon written information
        furnished by or on behalf of the Issuer expressly for use in such blue
        sky application or other document or amendment on supplement) filed in
        any jurisdiction specifically for the purpose of qualifying any or all
        of the Transfer Restricted Securities under the securities law of any
        state or other jurisdiction (such application or document being
        hereinafter called a "Blue Sky Application"); or

<PAGE>

                                                                              17

                 (ii) the omission or alleged omission to state therein any
        material fact required to be stated therein or necessary to make the
        statements therein, in the light of the circumstances under which they
        were made, not misleading,

and shall reimburse each Indemnified Holder promptly upon demand for any legal
or other expenses reasonably incurred by such Indemnified Holder in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; PROVIDED,
HOWEVER, that the Issuer shall not be liable in any such case to the extent that
any such loss, claim, damage, liability or action arises out of, or is based
upon, any untrue statement or alleged untrue statement or omission or alleged
omission made in the Shelf Registration Statement or Prospectus or amendment or
supplement thereto or Blue Sky Application in reliance upon and in conformity
with written information furnished to the Issuer by or on behalf of any Holder
(or its related Indemnified Holder) specifically for use therein. The foregoing
indemnity agreement is in addition to any liability which the Issuer may
otherwise have to any Indemnified Holder.

                 (b) Each Holder, severally and not jointly, shall indemnify and
hold harmless the Issuer, its officers and employees and each person, if any,
who controls the Issuer within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Issuer or any such officer, employee or
controlling person may become subject, insofar as any such loss, claim, damage
or liability or action arises out of, or is based upon:

                 (i) any untrue statement or alleged untrue statement of any
        material fact contained in the Shelf Registration Statement or
        Prospectus or any amendment or supplement thereto or any Blue Sky
        Application; or

                 (ii) the omission or the alleged omission to state therein any
        material fact required to be stated therein or necessary to make the
        statements therein, in light of the circumstances under which they were
        made, not misleading,

but in each case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Issuer by or on behalf of
such Holder (or its related Indemnified Holder) specifically for use therein,
and shall reimburse the Issuer and any such officer, employee or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by the Issuer or any such officer, employee or controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Holder may
otherwise have to the Issuer and any such

<PAGE>

                                                                              18

officer, employee or controlling person.

                 (c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent it has
been materially prejudiced by such failure and, PROVIDED, FURTHER, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 6.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; PROVIDED, HOWEVER, that a
Majority of Holders shall have the right to employ a single counsel to represent
jointly a Majority of Holders and their respective officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by a Majority of Holders against the
Issuer under this Section 7, if a Majority of Holders shall have reasonably
concluded that there may be one or more legal defenses available to them and
their respective officers, employees and controlling persons that are different
from or additional to those available to the Issuer and its officers, employees
and controlling persons, the fees and expenses of a single separate counsel
shall be paid by the Issuer. No indemnifying party shall:

                 (i) without the prior written consent of the indemnified
        parties (which consent shall not be unreasonably withheld) settle or
        compromise or consent to the entry of any judgment with respect to any
        pending or threatened claim, action, suit or proceeding in respect of
        which indemnification or contribution may be sought hereunder (whether
        or not the indemnified parties are actual or potential parties to such
        claim or action) unless such settlement, compromise or consent includes
        an unconditional release of each indemnified party from all liability
        arising out of such claim, action, suit or proceeding, or

                 (ii) be liable for any settlement of any such action effected
        without its written consent (which consent shall not be unreasonably
        withheld), but if settled with its written consent or if there be a
        final judgment for the plaintiff in any such action, the indemnifying
        party agrees to indemnify and hold harmless any indemnified party from
        and against any loss of liability by reason of such settlement or
        judgment.

<PAGE>

                                                                              19

                 (d) If the indemnification provided for in this Section 6 shall
for any reason be unavailable or insufficient to hold harmless an indemnified
party under Section 6(a) or 6(b) in respect of any loss, claim, damage or
liability (or action in respect thereof) referred to therein, each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability (or action in respect thereof):

                  (i) in such proportion as is appropriate to reflect the
        relative benefits received by the Issuer from the offering and sale of
        the Transfer Restricted Securities on the one hand and a Holder with
        respect to the sale by such Holder of the Transfer Restricted Securities
        on the other, or

                 (ii) if the allocation provided by clause (6)(d)(i) is not
        permitted by applicable law, in such proportion as is appropriate to
        reflect not only the relative benefits referred to in clause 6(d)(i) but
        also the relative fault of the Issuer on the one hand and the Holders on
        the other in connection with the statements or omissions or alleged
        statements or alleged omissions that resulted in such loss, claim,
        damage or liability (or action in respect thereof), as well as any other
        relevant equitable considerations.

The relative benefits received by the Issuer on the one hand and a Holder on the
other with respect to such offering and such sale shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Debentures
purchased under the Purchase Agreement (before deducting expenses) received by
the Issuer as set forth in the table on the cover of the Offering Memorandum,
dated October 6, 1999, on the one hand, bear to the total proceeds received by
such Holder with respect to its sale if Transfer Restricted Securities on the
other. The relative fault of the parties shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuer on the one hand or the Holders on the other, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Issuer and
each Holder agree that it would not be just and equitable if the amount of
contribution pursuant to this Section 6(d) were determined by PRO RATA
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above in
this Section 6 shall be deemed to include, for purposes of this Section 7, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 6, no Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Transfer Restricted Securities purchased by it were
resold exceeds the amount of any damages which such

<PAGE>

                                                                              20

Holder has otherwise been required to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute as provided
in this Section 6(d) are several and not joint.

                 7. RULE 144A. In the event the Issuer is not subject to Section
13 or 15(d) of the Exchange Act, the Issuer hereby agrees with each Holder, for
so long as any Transfer Restricted Securities remain outstanding, to make
available to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Securities Act in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144A.

                 8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Holder may
participate in any Underwritten Registration hereunder unless such Holder:

                 (i) agrees to sell such Holder's Transfer Restricted Securities
        on the basis provided in any underwriting arrangements approved by the
        Persons entitled hereunder to approve such arrangements and

                 (ii) completes and executes all reasonable questionnaires,
        powers of attorney, indemnities, underwriting agreements, lock-up
        letters and other documents required under the terms of such
        underwriting arrangements.

                 9. SELECTION OF UNDERWRITERS. The Holders of Transfer
Restricted Securities covered by the Shelf Registration Statement who desire to
do so may sell such Transfer Restricted Securities in an Underwritten Offering.
In any such Underwritten Offering, the investment banker or investment bankers
and manager or managers that will administer the offering will be selected by a
Majority of Holders whose Transfer Restricted Securities are included in such
offering; PROVIDED, that such investment bankers and managers must be reasonably
satisfactory to the Issuer.

                 10.       MISCELLANEOUS.

                 (a) REMEDIES. The Issuer acknowledges and agrees that any
failure by the Issuer to comply with its obligations under Section 2 hereof may
result in material irreparable injury to the Initial Purchasers or the Holders
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Issuer's obligations under Section 2
hereof. The Issuer further agrees to

<PAGE>

                                                                              21

waive the defense in any action for specific performance that a remedy at law
would be adequate.

                 (b) ADJUSTMENTS AFFECTING TRANSFER RESTRICTED SECURITIES. The
Issuer shall not, directly or indirectly, take any action with respect to the
Transfer Restricted Securities as a class that would adversely affect the
ability of the Holders of Transfer Restricted Securities to include such
Transfer Restricted Securities in a registration undertaken pursuant to this
Agreement.

                 (c) NO INCONSISTENT AGREEMENTS. The Issuer will not, on or
after the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. In addition, the
Issuer shall not grant to any of its security holders (other than the holders of
Transfer Restricted Securities in such capacity) the right to include any of its
securities in the Shelf Registration Statement provided for in this Agreement
other than the Transfer Restricted Securities. Other than the Stock Purchase
Agreement, dated January 18, 1995, between the Issuer and Pfizer, Inc. and the
Stock Purchase Agreement, dated March 1, 1996, as amended, between the Issuer
and Baxter Healthcare Corporation, the Issuer has not previously entered into
any agreement (which has not expired or been terminated) granting any
registration rights with respect to its securities to any Person which rights
conflict with the provisions hereof.

                 (d) AMENDMENTS AND WAIVERS. This Agreement may not be amended,
modified or supplemented, and waivers or consents to or departures from the
provisions hereof may not be given, unless the Issuer has obtained the written
consent of a Majority of Holders.

                 (e) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:

                           (i) if to a Holder, at the address set forth on the
                 records of the registrar under the Indenture or the transfer
                 agent of the Common Stock, as the case may be; and

                           (ii)     if to the Issuer:

                                    Inhale Therapeutic Systems, Inc.
                                    150 Industrial Road
                                    San Carlos, California 94070
                                    Attention: Stephen L. Hurst, Esq.

                                    With a copy to:

                                    Cooley Godward LLP

<PAGE>

                                                                              22

                                    3000 Sand Hill Road
                                    Building #3, suite 230
                                    Menlo Park, California  94025
                                    Attention:  Marc P. Tanoury, Esq.

                 All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.

                 (f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; PROVIDED,
HOWEVER, that (i) this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities from such Holder and (ii)
nothing contained herein shall be deemed to permit any assignment, transfer or
other disposition of Transfer Restricted Securities in violation of the terms of
the Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Transfer Restricted Securities, in any manner, whether by operation of
law or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this Agreement. .

                 (g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                 (h) SECURITIES HELD BY THE ISSUER OR THEIR AFFILIATES. Whenever
the consent or approval of Holders of a specified percentage of Transfer
Restricted Securities is required hereunder, Transfer Restricted Securities held
by the Issuer or its "affiliates" (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.

                 (i) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                 (j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

<PAGE>

                                                                              23

                 (k) SEVERABILITY. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

                 (l) ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Issuer with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.

<PAGE>

                                                                              24

                 In Witness Whereof, the parties have executed this Agreement as
of the date first written above.

<PAGE>

                                                                            25

                                          Inhale Therapeutic Systems, Inc.

                                          By  /s/ Robert Chess
                                            ----------------------------------
                                                 NAME:
                                                 TITLE:

                                          Lehman Brothers Inc.
                                          Deutsche Bank Securities Inc.
                                          U.S. Bancorp Piper Jaffray Inc.

                                          By:  Lehman Brothers Inc.

                                          By  /s/ Edward Breck
                                            ----------------------------------
                                                 AUTHORIZED REPRESENTATIVE

<PAGE>

                                                                             26

                                                                      EXHIBIT A

                        INHALE THERAPEUTIC SYSTEMS, INC.

             FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

         The undersigned beneficial holder of 6 3/4% Convertible Subordinated
Debentures due 2006 (the "Debentures") of Inhale Therapeutic Systems, Inc. (the
"Issuer"), or common stock, par value $.001 per share (the "Shares" and together
with the Debentures, the "Transfer Restricted Securities") of the Issuer
understands that the Issuer has filed, or intends to file, with the Securities
and Exchange Commission (the "Commission") a registration statement (the "Shelf
Registration Statement"), for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "Securities Act"), of the Transfer
Restricted Securities in accordance with the terms of the Registration Rights
Agreement, dated as of October 13, 1999 (the "Registration Rights Agreement")
between the Issuer and Lehman Brothers Inc., Deutsche Bank Securities Inc. and
U.S. Bancorp Piper Jaffray Inc. A copy of the Registration Rights Agreement is
available from the Issuer upon request at the address set forth below. All
capitalized terms not otherwise defined herein have the meaning ascribed thereto
in the Registration Rights Agreement.

         Each beneficial owner of Transfer Restricted Securities is entitled to
the benefits of the Registration Rights Agreement. In order to sell or otherwise
dispose of any Transfer Restricted Securities pursuant to the Shelf Registration
Statement, a beneficial owner of Transfer Restricted Securities generally will
be required to be named as a selling securityholder in the related Prospectus,
deliver a Prospectus to purchasers of Transfer Restricted Securities and be
bound by those provisions of the Registration Rights Agreement applicable to
such beneficial owner (including certain indemnification provisions, as
described below). BENEFICIAL OWNERS THAT DO NOT COMPLETE THIS NOTICE AND
QUESTIONNAIRE WITHIN 20 BUSINESS DAYS OF RECEIPT HEREOF AND DELIVER IT TO THE
ISSUER AS PROVIDED BELOW WILL NOT BE NAMED AS SELLING SECURITYHOLDERS IN THE
PROSPECTUS AND THEREFORE WILL NOT BE PERMITTED TO SELL ANY TRANSFER RESTRICTED
SECURITIES PURSUANT TO THE SHELF REGISTRATION STATEMENT.

         Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and the related Prospectus.
Accordingly, holders and beneficial owners of Transfer Restricted Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling securityholder in the Shelf
Registration Statement and the related Prospectus.

<PAGE>

         NOTICE

         The undersigned beneficial owner (the "Selling Securityholder") of
Transfer Restricted Securities hereby gives notice to the Issuer of its
intention to sell or otherwise dispose of Transfer Restricted Securities
beneficially owned by it and listed below in Item 3 (unless otherwise specified
under Item 3) pursuant to the Shelf Registration Statement. The undersigned, by
signing and returning this Notice and Questionnaire, understands that it will be
bound by the terms and conditions of this Notice and Questionnaire and the
Registration Rights Agreement.

         Pursuant to the Registration Rights Agreement, the undersigned has
agreed to indemnify and hold harmless the Issuer, the Issuer's directors, the
Issuer's officers who sign the Shelf Registration Statement and each person, if
any, who controls the Issuer within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against certain
losses arising in connection with statements concerning the undersigned made in
the Shelf Registration Statement or the related Prospectus in reliance upon the
information provided in this Notice and Questionnaire.

         The undersigned hereby provides the following information to the Issuer
and represents and warrants that such information is accurate and complete:

                                  QUESTIONNAIRE

1.       (a)      Full legal name of Selling Securityholder:

         (b)      Full legal name of registered holder (if not the same as (a)
                  above) through which Transfer Restricted Securities listed in
                  (3) below are held:

         (c)      Full legal name of DTC participant (if applicable and if not
                  the same as (b) above) through which Transfer Restricted
                  Securities listed in (3) are held:

2.       Address for notices to Selling Securityholders:

         Telephone:

         Fax:

         Contact Person:

<PAGE>

3.       Beneficial ownership of Transfer Restricted Securities:

         (a) Type of Transfer Restricted Securities beneficially owned, and
             principal amount of Debentures or number of shares of Common
             Stock, as the case may be, beneficially owned:

         (b) CUSIP No(s). of such Transfer Restricted Securities beneficially
             owned:

4.       Beneficial ownership of the Issuer's securities owned by the Selling
Securityholder:

         EXCEPT AS SET FORTH BELOW IN THIS ITEM (4), THE UNDERSIGNED IS NOT THE
         BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE ISSUER OTHER
         THAN THE TRANSFER RESTRICTED SECURITIES LISTED ABOVE IN ITEM (3)
         ("OTHER SECURITIES").

         (a) Type and amount of Other Securities beneficially owned by the
             Selling Securityholder:

         (b) CUSIP No(s). of such Other Securities beneficially owned:

5.       Relationship with the Issuer

         Except as set forth below, neither the undersigned nor any of its
         affiliates, officers, directors or principal equity holders (5% or
         more) has held any position or office or has had any other material
         relationship with the Issuer (or their predecessors or affiliates)
         during the past three years.

         State any exceptions here:

6.       Plan of Distribution

         Except as set forth below, the undersigned (including its donees or
         pledgees) intends to distribute the Transfer Restricted Securities
         listed above in Item (3) pursuant to the Shelf Registration Statement
         only as follows (if at all). Such Transfer Restricted Securities may be
         sold from time to time directly by the undersigned or, alternatively,
         through underwriters, broker-dealers or agents. If the Transfer
         Restricted Securities are sold through underwriters or broker-dealers,
         the Selling Securityholder will be responsible for underwriting
         discounts or commissions or agent's commissions. Such Transfer
         Restricted Securities

<PAGE>

         may be sold in one or more transactions at fixed prices, at prevailing
         market prices at the time of sale, at varying prices determined at the
         time of sale, or at negotiated prices. Such sales may be effected in
         transactions (which may involve crosses or block transactions):

                         (i) on any national securities exchange or quotation
                  service on which the Transfer Restricted Securities may be
                  listed or quoted at the time of sale;

                         (ii)  in the over-the-counter market;

                         (iii) in transactions otherwise than on such exchanges
                  or services or in the over-the-counter market; or

                         (iv) through the writing of options.

         In connection with sales of the Transfer Restricted Securities or
         otherwise, the undersigned may enter into hedging transactions with
         broker-dealers, which may in turn engage in short sales of the Transfer
         Restricted Securities and deliver Transfer Restricted Securities to
         close out such short positions, or loan or pledge Transfer Restricted
         Securities to broker-dealers that in turn may sell such securities.

         State any exceptions here:

         Note: In no event will such method(s) of distribution take the form of
an underwritten offering of the Transfer Restricted Securities without the prior
agreement of the Issuer.

         The undersigned acknowledges that it understands its obligation to
comply with the provisions of the Exchange Act and the rules and regulations
promulgated thereunder relating to stock manipulation, particularly Regulation M
thereunder (or any successor rules or regulations), in connection with any
offering of Transfer Restricted Securities pursuant to the Shelf Registration
Statement. The undersigned agrees that neither it nor any person acting on its
behalf will engage in any transaction in violation of such provisions.

         The Selling Securityholder hereby acknowledges its obligations under
the Registration Rights Agreement to indemnify and hold harmless certain persons
as set forth therein.

         Pursuant to the Registration Rights Agreement, the Issuer has agreed
under certain circumstances to indemnify the Selling Securityholders against
certain liabilities.

         In accordance with the undersigned's obligation under the Registration
Rights Agreement

<PAGE>

to provide such information as may be required by law for inclusion in the Shelf
Registration Statement, the undersigned agrees to promptly notify the Issuer of
any inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Shelf Registration Statement
remains effective. All notices hereunder and pursuant to the Registration Rights
Agreement shall be made in writing at the address set forth below.

         By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and the
related Prospectus. The undersigned understands that such information will be
relied upon by the Issuer in connection with the preparation or amendment of the
Shelf Registration Statement and the related Prospectus.

         IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.

Dated:

Beneficial Owner

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

Please return the completed and executed Notice and Questionnaire to Inhale
Therapeutic Systems, Inc. at:

                  Inhale Therapeutic Systems, Inc.
                  150 Industrial Road
                  San Carlos, California 94070
                  Attention: Stephen L. Hurst, Esq.

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