Document:

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                        INHALE THERAPEUTIC SYSTEMS, INC.
                           2000 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT

         Pursuant to the Stock Option Notice ("Option Notice") and this Stock
Option Agreement, Inhale Therapeutic Systems, Inc. (the "Company") has granted
you an option under its 2000 Equity Incentive Plan (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in the Option Notice at
the exercise price indicated in the Option Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.

         The details of your option are as follows:

         1. VESTING. Subject to the limitations contained herein, your option
will vest as provided in the Option Notice, provided that vesting will cease
upon the termination of your Continuous Service.

         2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares subject to
your option and your exercise price per share referenced in the Option Notice
may be adjusted from time to time for capitalization adjustments, as provided in
the Plan.

         3. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in one or more of the following forms:

                  (a) In cash or by check;

                  (b) In the Company's sole discretion at the time your option
is exercised and provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds; or

                  (c) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, by delivery of
already-owned shares of Common Stock, held for the period required to avoid a
charge to the Company's reported earnings (generally six months) or were not
acquired, directly or indirectly from the Company, owned free and clear of any
liens, claims, encumbrances or security interests, and valued at its Fair Market
Value on the date of exercise. "Delivery" for these purposes, in the sole
discretion of the Company at the time your option is exercised, shall include
delivery to the Company of your attestation of ownership of such shares of
Common Stock in a form approved by the Company. Notwithstanding the foregoing,
your option may not be exercised by tender to the Company of Common Stock to the
extent such tender would constitute a violation of the

                                     1.
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provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.

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

         5. TERM. The term of your option commences on the Grant Date and
expires upon the EARLIEST of the following:

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

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

                  (c) eighteen (18) months after your death if you die either
during your Continuous Service or within three (3) months after your Continuous
Service terminates;

                  (d) the Expiration Date indicated in the Option Notice; or

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

         Note, if your option is an incentive stock option, to obtain the
federal income tax advantages associated with an "incentive stock option," the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment
terminates.

                                        2.
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         6. EXERCISE.

                  (a) You may exercise the vested portion of your option
during its term by delivering a Notice of Exercise (in a form designated by
the Company) together with the exercise price to the Secretary of the
Company, or to such other person as the Company may designate, during regular
business hours, together with such additional documents as the Company may
then require.

                  (b) By exercising your option you agree that, as a
condition to any exercise of your option, the Company may require you to
enter an arrangement providing for the payment by you to the Company of any
tax withholding obligation of the Company arising by reason of (1) the
exercise of your option, (2) the lapse of any substantial risk of forfeiture
to which the shares are subject at the time of exercise, or (3) the
disposition of shares acquired upon such exercise.

                  (c) If your option is an incentive stock option, by
exercising your option you agree that you will notify the Company in writing
within fifteen (15) days after the date of any disposition of any of the
shares of the Common Stock issued upon exercise of your option that occurs
within two (2) years after the date of your option grant or within one (1)
year after such shares of Common Stock are transferred upon exercise of your
option.

         7. TRANSFERABILITY. Your option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.

         8. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective shareholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Consultant for
the Company or an Affiliate.

         9. WITHHOLDING OBLIGATIONS.

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

                  (b) Upon your request and subject to approval by the Company,
in its sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company

                                    3.
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may withhold from fully vested shares of Common Stock otherwise issuable to
you upon the exercise of your option a number of whole shares having a Fair
Market Value, determined by the Company as of the date of exercise, not in
excess of the minimum amount of tax required to be withheld by law. Shares
shall be withheld solely from fully vested shares of Common Stock determined
as of the date of exercise of your option that are otherwise issuable to you
upon such exercise. Any adverse consequences to you arising in connection
with such share withholding procedure shall be your sole responsibility.

                  (c) Your option is not exercisable unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise your option when desired even though your option is
vested, and the Company shall have no obligation to issue a certificate for such
shares or release such shares from any escrow provided for herein.

         10. NOTICES. Any notices provided for in your option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after deposit
in the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.

         11. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control.

                                      4.<PAGE>

                             CONTRIBUTION AGREEMENT

                                  BY AND AMONG

                         INHALE THERAPEUTIC SYSTEMS INC.
                             A DELAWARE CORPORATION,

                        INHALE 201 INDUSTRIAL ROAD, L.P.
                        A CALIFORNIA LIMITED PARTNERSHIP

                                       AND

                        BERNARDO PROPERTY ADVISORS, INC.
                            A CALIFORNIA CORPORATION

                               SEPTEMBER __, 2000

                                    PROJECT:

                               201 INDUSTRIAL ROAD
                             SAN CARLOS, CALIFORNIA

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                         AGREEMENT FOR THE CONTRIBUTION
                                     OF THE
                           201 INDUSTRIAL ROAD PROJECT
                             SAN CARLOS, CALIFORNIA

         THIS AGREEMENT FOR THE CONTRIBUTION OF 201 INDUSTRIAL ROAD PROJECT
(this "AGREEMENT") is made and entered into as September __, 2000 by and among
INHALE THERAPEUTIC SYSTEMS INC., a Delaware corporation ("CONTRIBUTOR"), INHALE
201 INDUSTRIAL ROAD, L.P., a California limited partnership ("PARTNERSHIP") and
BERNARDO PROPERTY ADVISORS, INC., a California corporation ("BPA").

                                    RECITALS

         A. Contributor owns certain real property currently partially improved
with a building being constructed thereon, situated at 201 Industrial Road, San
Carlos, California, legally described on Exhibit A attached hereto (the "REAL
PROPERTY"). Contributor also owns certain contract rights, plans, drawings,
specifications and reports used in connection with the ownership and improvement
of the Real Property and construction of the Project (defined below), including
without limitation Contributor's interest in and rights under the Construction
Contracts (the "INTANGIBLE PROPERTY"). The Real Property and the Intangible
Property are sometimes referred to collectively herein as the "PROPERTY."

         B. Pursuant to this Agreement, Contributor shall contribute the
Property to Partnership and Partnership shall grant a 49.0% limited partnership
interest in Partnership to Contributor.

         C. On the Closing Date, Partnership, as "Landlord," and Contributor as
"Tenant" shall enter into a Build-to-Suit Lease Agreement in the form attached
hereto as Exhibit B (the "LEASE"). Pursuant to the Lease and the plans,
specifications, and other documents contemplated by the Lease or otherwise
incorporated into the Lease (collectively with the Lease, the "LEASE
DOCUMENTS"), Partnership will construct and/or complete certain improvements on
the Real Property, including (i) two connected four-story buildings containing
an aggregate of approximately 390,000 square feet, consisting of approximately
171,965 square feet of rentable area and two lower stories primarily of parking
for the foregoing buildings as well as for adjacent property currently leased
and occupied by Contributor located at 150 Industrial Road; (ii) site
improvements; and (iii) certain other improvements, all as set forth in the
Lease Documents (collectively, the "PROJECT").

         D. Partnership now desires to accept from Contributor and Contributor
desires to contribute to Partnership, the Property, on and subject to the terms
and conditions contained in this Agreement.

                                    AGREEMENT

         NOW, THEREFORE, Partnership and Contributor do hereby agree as follows:

                                        1.
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                                    ARTICLE I

                                BASIC DEFINITIONS

         Unless the context otherwise specifies or requires for the purpose of
this Agreement, all words and phrases having their initial letters capitalized
herein shall have the meanings set forth below:

         ASSIGNMENT OF INTANGIBLE PROPERTY. The term "Assignment of Intangible
Property" shall have the meaning assigned to such term in Section 6.1(a)(iii) of
this Agreement.

         BROKER. The term "Broker" shall mean BT Commercial (represented by
Gregg Domanico).

         CALIFORNIA CERTIFICATE. The term "California Certificate" shall have
the meaning assigned to such term in Section 6.1(a)(v) of this Agreement.

         CLOSING DATE. The term "Closing Date" shall mean a date as soon as
possible and mutually agreeable to Partnership and Contributor for the close of
escrow, but in no event shall the close of escrow with respect to the
contribution of the Property be later than September __, 2000.

         CONSTRUCTION CONTRACTS. The term "Construction Contracts" shall refer
collectively to the following contracts, entered into by Contributor and to be
assigned to Partnership on the Closing Date: (a) Dowler-Gruman Architects
contract dated March 16, 1999, (b) Dowler-Gruman Architects contract dated July
18, 2000, (c) South Bay Construction contract dated August 24, 1999, and (d)
Rudolph & Sletten contract dated March 14, 2000.

         CONSTRUCTION COSTS. The term "Construction Costs" shall have the
meaning assigned to such term in Section 2.2 of this Agreement.

         CONSTRUCTION FINANCING. The term "Construction Financing" shall refer
to the loan or loans to be secured by deed(s) of trust on the Real Property in
the approximate aggregate amount of $51,500,000 to be obtained by Partnership in
order to construct the Project.

         CONTRACT PERIOD. The term "Contract Period" shall mean the period from
the date of this Agreement through and including the Closing Date.

         CONTRIBUTOR'S INITIAL CAPITAL ACCOUNT. The term "Contributor's Initial
Capital Account" shall have the meaning assigned to such term in Section 2.2.

         DEED. The term "Deed" shall have the meaning assigned to such term in
Section 6.1(a)(i) of this Agreement.

         DEPOSIT. The term "Deposit" shall have the meaning assigned to such
term in Article V of this Agreement.

<PAGE>

         FIRPTA CERTIFICATE. The term "FIRPTA Certificate" shall have the
meaning assigned to such term in Section 6.1(a)(vi) of this Agreement.

         HAZARDOUS SUBSTANCE. The term "Hazardous Substance" shall have the
meaning set forth in Section 25359.7 of the California Health and Safety Code.

         INTANGIBLE PROPERTY. The term "Intangible Property" shall have the
meaning assigned to such term in Recital A of this Agreement.

         LEASE. The term "Lease" shall have the meaning assigned to such term in
Recital C of this Agreement.

         LEASE DOCUMENTS. The term "Lease Documents" shall have the meaning
assigned to such term in Recital C of this Agreement.

         LIMITATION PERIOD. The term "Limitation Period" shall have the meaning
assigned to such term in Section 4.4(a) of this Agreement.

         MEMORANDUM OF LEASE. The term "Memorandum of Lease" shall have the
meaning assigned to such term in Section 6.1(a)(ii) of this Agreement.

         MEMORANDUM OF PARKING LEASE. The term "Memorandum of Parking Lease"
shall have the meaning assigned to such term in Section 6.1(a)(iv) of this
Agreement.

         OWNER'S POLICY. The term "Owner's Policy" shall have the meaning
assigned to such term in Section 3.1(a)(i) of this Agreement.

         PARKING LEASE. The term "Parking Lease" shall have the meaning assigned
to such term in Section 6.1(a)(iv) of this Agreement.

         PERMITTED EXCEPTIONS. The term "Permitted Exceptions" shall have the
meaning assigned to such term in Section 2.4 of this Agreement.

         PROJECT. The term "Project" shall have the meaning assigned to such
term in Recital C of this Agreement.

         PROPERTY. The term "Property" shall mean the Real Property and the
Intangible Property collectively.

         REAL ESTATE COMPENSATION. The term "Real Estate Compensation" shall
have the meaning assigned to such term in Section 7.2 of this Agreement.

         REAL PROPERTY. The term "Real Property" shall have the meaning assigned
to such term in Recital A.

         TITLE COMPANY. The term "Title Company" shall mean Chicago Title
Company, 189 El Camino Real, San Carlos, California 94070.

<PAGE>

                                   ARTICLE II

                                  CONTRIBUTION

         SECTION 2.1 CONTRIBUTION AND ACCEPTANCE. Contributor agrees to
contribute the Property to Partnership, and Partnership agrees to accept the
Property upon and subject to all of the terms, covenants and conditions set
forth in this Agreement.

         SECTION 2.2 CONTRIBUTOR'S INITIAL CAPITAL ACCOUNT; REIMBURSEMENT OF
CONSTRUCTION COSTS. In consideration for its contribution of the Property to
Partnership, Contributor will receive a 49.0% limited partnership interest in
Partnership with an initial capital account of Twelve Million Dollars
($12,000,000) ("CONTRIBUTOR'S INITIAL CAPITAL ACCOUNT"). In addition,
Contributor shall be reimbursed by Partnership in the amount of all costs and
expenses incurred or paid for by Contributor up through the Closing Date in
connection with the planning, permitting and construction of the building
currently being constructed on the Real Property, or the Project, including,
without limitation, both hard and soft costs and off-site and on-site
improvements to the Real Property ("CONSTRUCTION COSTS") through the escrow
described in Section 6.1 below. A schedule of Construction Costs as of the date
hereof is set forth on Schedule 2.2, attached hereto and incorporated herein. A
revised and updated Schedule 2.2 shall be prepared and substituted for the
Schedule 2.2 currently attached hereto prior to Closing.

         SECTION 2.3 PARTNERSHIP'S REVIEW AND CONTRIBUTOR'S DISCLAIMER.

                  (a) Heretofore, Partnership has made a complete review and
inspection of the physical, legal, economic and environmental condition of the
Property and the Real Property, including, without limitation, the status of the
construction currently taking place on the Real Property, any leases and
contracts affecting the Property or the Real Property, books and records
maintained by Contributor or its agents relating to the Property or the Real
Property, boundary and other survey-related issues relating to the Property or
the Real Property, pest control matters, soil condition, asbestos, PCB,
hazardous waste, toxic substance or other environmental matters, compliance with
building, health, safety, land use and zoning laws, regulations and orders,
plans and specifications, structural, life safety, HVAC and other building
system and engineering characteristics, traffic patterns and all other
information pertaining to the Property or the Real Property. Partnership
acknowledges (i) that Partnership has entered into this Agreement with the
intention of making and relying upon its own investigation of the physical,
environmental, economic and legal condition of the Property, and (ii) that
Partnership is not relying upon any representations and warranties, other than
those specifically set forth in Section 4.1 below, made by Contributor or anyone
acting or claiming to act on Contributor's behalf concerning the Property.
Partnership further acknowledges that it has not received from Contributor and
in any event is not relying on any accounting, tax, legal, architectural,
engineering, property management or other advice with respect to this
transaction, and is relying solely upon the advice of its own accounting, tax,
legal, architectural, engineering, property management and other advisors.
Partnership specifically undertakes and assumes all risks associated with all
matters disclosed by Contributor to Partnership in writing. Subject to the
provisions of Section 4.1 of this Agreement, Partnership shall accept the
Property in its "AS-IS" condition on the Closing

<PAGE>

Date and assumes the risk that adverse physical, environmental, economic or
legal conditions may not have been revealed by its investigation.

                  (b) BPA shall indemnify, defend and hold Contributor harmless
from all loss, cost, and expense resulting from any entry or inspections
performed by BPA, its agents, contractors or representatives (exclusive of the
financial effects of the discovery, if any, of the presence of any Hazardous
Substances), which obligation shall survive, for a period of three hundred and
sixty five (365) days following Partnership's acquisition of the Real Property
or termination of this Agreement.

         SECTION 2.4 PERMITTED TITLE EXCEPTIONS. Partnership has obtained and
reviewed the condition of title to the Real Property and agrees that, for
purposes of this Agreement, the following shall be deemed "PERMITTED
EXCEPTIONS": those matters listed on Schedule B to that certain preliminary
title report issued by Title Company dated as of August 2, 2000 under its number
112977-WEW. Notwithstanding anything to the contrary in this Agreement,
Contributor agrees that it shall cause to be removed (i) any exceptions
reflecting monetary obligations incurred by Contributor, with the understanding
that nothing in this sentence shall be deemed to relieve Partnership from
reimbursing Contributor for the Construction Costs that are a part of the
Contributor's Initial Capital Account, pursuant to Section 2.2, above and (ii)
monetary encumbrances not created by Contributor, but which, in the aggregate,
require $200,000 or less to remove.

                                   ARTICLE III

                              CONDITIONS PRECEDENT

         SECTION 3.1 CONDITIONS.

                  (a) Notwithstanding anything in this Agreement to the
contrary, Partnership's obligation to accept the Property shall be subject to
and contingent upon the satisfaction of the following conditions precedent on or
before the Closing Date, any or all of which may be waived by Partnership in its
sole discretion:

                           (i) The willingness of Title Company to issue its
American Land Title Association extended coverage Owner's Policy of Title
Insurance [1992 Form] (the "Owner's Policy"), insuring Partnership in the amount
of $60,000,000 that title to the Real Property is vested of record in
Partnership on the Closing Date, subject only to the standard printed conditions
and exceptions of such policy and to the Permitted Exceptions;

                           (ii) Contributor's execution and delivery of the
Lease on the Closing Date;

                           (iii) All of the representations and warranties of
Contributor contained in this Agreement shall be true and correct in all
material respects as of the Closing Date;

                           (iv) The physical condition of the Real Property
shall be in as good a condition substantially on the Closing Date as on the date
of this Agreement, construction progress, reasonable wear and tear excepted;

<PAGE>

                           (v) No proceeding shall have been commenced against
Contributor under the federal Bankruptcy Code or any state law for relief of
debtors;

                           (vi) Partnership shall have obtained the Construction
Financing on rates and terms acceptable to Partnership and Contributor, in their
reasonable discretion; the Title Company shall be prepared to issue any title
policy required by the lender under the Construction Financing ("Lender"),
including any endorsements to said policy; and funding under the Construction
Financing shall close simultaneously with the Closing.

                  (b) Notwithstanding anything in this Agreement to the
contrary, Contributor's obligation to transfer the Property shall be subject to
and contingent upon the satisfaction of the following conditions precedent on or
before the Closing Date, any or all of which may be waived by Contributor in its
sole discretion:

                           (i) The satisfaction or Partnership's written waiver
of the condition set forth in Section 3.1 (a)(i) above;

                           (ii) Partnership's execution and delivery of the
Lease on the Closing Date;

                           (iii) All of the representations and warranties of
Partnership contained in this Agreement shall be true and correct in all
material respects as of the Closing Date; and

                           (iv) Partnership shall have obtained the Construction
Financing on rates and terms acceptable to Partnership and Contributor, in their
reasonable discretion; the Title Company shall be prepared to issue any title
policy required by the Lender, including any endorsements to said policy; and
funding under the Construction Financing shall close simultaneously with the
Closing.

         SECTION 3.2 FAILURE OR WAIVER OF CONDITIONS PRECEDENT. In the event any
of the conditions set forth in Section 3.1 are not fulfilled or waived, the
party benefited by such condition may, by written notice to the other party,
terminate this Agreement, whereupon all rights and obligations hereunder of each
party shall be at an end. In the event this Agreement is terminated as a result
of the failure of any condition set forth in Section 3.1, Contributor shall
return the full amount of the Deposit to Partnership. In any event,
Partnership's consent to the close of escrow pursuant to this Agreement shall
waive any remaining unfulfilled conditions.

                                   ARTICLE IV

                    COVENANTS, WARRANTIES AND REPRESENTATIONS

         SECTION 4.1 CONTRIBUTOR'S WARRANTIES AND REPRESENTATIONS. Contributor
hereby makes the following representations and warranties to Partnership as of
the date of this Agreement; provided that each of such representations and
warranties shall be deemed to be modified by any contrary or qualifying
information contained in any reports, schedules or other informational materials
delivered to Partnership on or before the date of this Agreement:

<PAGE>

                  (a) Contributor has, and as of the Closing shall have, full
power and lawful authority to enter into and carry out the terms and provisions
of this Agreement and to execute and deliver all documents which are
contemplated by this Agreement, and all actions of Contributor necessary to
confer such power and authority upon the persons executing this Agreement (and
all documents which are contemplated by this Agreement) on behalf of Contributor
have been taken;

                  (b) To Contributor's knowledge, Contributor has received, no
written notice from any governmental authorities that eminent domain proceedings
for the condemnation of the Real Property are pending;

                  (c) To Contributor's knowledge, Contributor has received no
written notice of any threatened or pending litigation, arbitration, unsatisfied
orders or judgments, governmental investigations or proceedings against
Contributor or affecting the Real Property which would materially affect the
Real Property or Contributor's capacity to perform under its Agreement;

                  (d) Contributor is not a "foreign person" within the meaning
of Section 1445(f)(3) of the Internal Revenue Code; and

                  (e) To Contributor's knowledge, Contributor has received no
written notice from any governmental authority that the Real Property or any of
the improvements located on the Real Property are presently in violation of any
applicable building codes, zoning or land use laws, or other law, order,
ordinance, rule or regulation affecting the Real Property.

                  (f) No proceedings under any federal or state bankruptcy or
insolvency laws have been commenced by or against Contributor which have not
been terminated; no general assignment for the benefit of creditors has been
made by Contributor; and no trustee or receiver of Contributor's property has
been appointed.

                  (g) To Contributor's knowledge, Contributor has not received
any written notice or information regarding the Real Property's failure to
comply with or violation of any restrictive easements or covenants affecting the
Real Property.

                  (h) There are no leases affecting the Real Property other than
as contemplated hereby;

                  (i) To Contributor's knowledge (i) there has not been any
release of any Hazardous Substance on or beneath the Real Property in violation
of any applicable law, and (ii) Contributor has received no written notice of
any violation of claimed violation of any law, rule, or regulation relating to
Hazardous Substances;

                  (j) To Contributor's knowledge, title to the Real Property is
not subject to any liens or encumbrances (including mechanics' liens) including,
without limitation, liens or claims for delinquent taxes, and security
agreements and pledges, except for those exceptions to title shown in the
preliminary title report or the other Permitted Exceptions;

                  (k) Except for the Construction Contracts or agreements
terminable at will without penalty or premium or as specified in this Agreement
(including, without limitation, the

<PAGE>

Permitted Exceptions), Contributor has not entered into any agreements or
understandings concerning the Real Property by which Partnership would be
bound following the Closing Date;

                  (l) To Contributor's knowledge, there are no taxes,
assessments (special, general or otherwise) or bonds of any nature assessed
against the Real Property, or any portion thereof, except as disclosed in the
preliminary title report for the Real Property;

                  (m) To Contributor's knowledge, all utilities for servicing
the Real Property are on site and paid current;

                  (n) To Contributor's knowledge, there are no existing,
proposed, or contemplated plans to widen, modify or realign any street or
highway which affects the size of, use of, or set-backs on the Real Property
except as disclosed in writing to Partnership;

                  (o) Each Construction Contract constitutes a true, correct and
complete copy of such Construction Contract. There are no material commitments
or agreements affecting the Real Property which would survive Closing which have
not been disclosed by Contributor to Partnership in writing;

                  (p) To Contributor's knowledge, Contributor is not in default
of Contributor's obligations or liabilities pertaining to the Real Property or
the Construction Contracts, nor, to Contributor's knowledge, are there facts,
circumstances, conditions or events which, after notice or lapse of time, would
constitute a default. Contributor has not received notice or information that
any party to any of the Construction Contracts considers a breach or default to
have occurred;

                  (q) The schedule of Construction Costs listed on Schedule 2.2
attached hereto is true, correct and complete;

                  (r) To Contributor's knowledge, all storm water flowing from
the Real Property drains either into a public drainage system through easements
or permitted locations for the benefit of the Real Property, except as disclosed
in writing to Partnership;

                  (s) To Contributor's knowledge, there are no conditions which
would materially and adversely affect the Real Property or any part thereof or
Partnership's intended use and development thereof.

         As used herein, the term "CONTRIBUTOR'S KNOWLEDGE" or words of similar
effect shall mean the current actual, subjective knowledge of Sharron
Reiss-Miller. Neither Sharron Reiss-Miller nor any party other than Contributor
shall bear responsibility for any breach of representation. Contributor,
however, represents and warrants that Sharron Reiss-Miller is the individual
with principal administrative and oversight responsibility for the Real
Property.

         SECTION 4.2 CONTRIBUTOR'S COVENANTS. Contributor hereby covenants and
agrees as follows:

                  (a) During the Contract Period, Contributor shall comply with
its obligations under the Construction Contracts and shall ensure that the Real
Property is operated and

<PAGE>

maintained in a manner consistent with current practices and maintain
reasonable and customary levels and coverages of insurance and Contributor
shall not create or acquiesce in the creation of liens or exceptions to title
other than the Permitted Exceptions or voluntarily take any action to render
any of the representations or warranties of Contributor set forth in Section
4.1 materially incorrect.

                  (b) During the Contract Period Contributor shall (i) remove
the Real Property from the market, and (ii) cease and refrain from any and all
negotiations with any other parties relating to any disposition of the Real
Property;

                  (c) Except as referred to in Recital C and in accordance with
the Construction Contracts, Contributor shall not take any actions with respect
to modifying the proposed development of the Real Property, including, without
limitation, applying for, pursuing, accepting or obtaining any permits,
approvals or other development entitlements from any governmental or other
regulatory entities or finalizing or entering into any agreements relating
thereto without the prior written consent of Partnership (which consent may be
granted or withheld in Partnership's reasonable discretion);

                  (d) Contributor shall not enter into, extend, renew or replace
any existing Construction Contract in respect of the Real Property other than a
contract for the construction of tenant improvements without the prior written
consent of Partnership (which consent may be withheld in Partnership's
reasonable discretion), unless the same shall be cancelable without penalty or
premium, upon not more than thirty (30) days' notice from the owner of the Real
Property and Contributor shall immediately notify Partnership of any such
extension, renewal or replacement.

                  (e) Contributor shall promptly notify Partnership of any
change in any condition with respect to the Real Property or any portion thereof
or of any event or circumstance of which Contributor becomes aware subsequent to
the date of this Agreement which (a) materially and adversely affects the Real
Property or any portion thereof or the use or operation of the Real Property or
any portion thereof, (b) makes any representation or warranty of Contributor to
Partnership under this Agreement untrue or misleading, or (c) makes any covenant
or agreement of Contributor under this Agreement incapable or less likely of
being performed. It is expressly understood that Contributor's obligation to
provide information to Partnership under this Section 4.2 shall in no way
relieve Contributor of any liability for a breach by Contributor of any of its
representations, warranties, covenants or agreements under this Agreement.

         SECTION 4.3 PARTNERSHIP'S WARRANTIES AND REPRESENTATIONS. Partnership
hereby represents and warrants to Contributor that (a) Partnership has and as of
the Closing Date shall have, full power and lawful authority to enter into and
carry out the terms and conditions of this Agreement and to execute and deliver
all documents which are contemplated by this Agreement, (b) all actions
necessary to confer such power and authority upon the persons executing this
Agreement and all documents which are contemplated by this Agreement to be
executed on behalf of Partnership or its assignee have been taken, and (c)
Partnership has received no written notice of any threatened or pending
litigation which would materially affect Partnership's capacity to perform under
this Agreement.

<PAGE>

         SECTION 4.4 LIMITATIONS.

                  (a) The parties agree that (i) Contributor's representations
and warranties set forth in Sections 4.1(a) and 4.1(d) and 4.1(f) shall survive
Contributor's Contribution of the Real Property, (ii) all other warranties and
representations of Contributor contained in this Agreement shall survive
Contributor's contribution of the Real Property only for a period of 365 days
after the Closing Date (the "LIMITATION PERIOD"), (ii) Contributor's aggregate
liability for claims arising out of such representations and warranties shall
not exceed $50,000 and (iii) Partnership shall provide actual written notice to
Contributor of any breach of such warranties or representations and shall allow
Contributor 30 days within which to cure such breach, or, if such breach cannot
reasonably be cured within 30 days, an additional reasonable time period, so
long as such cure has been commenced within such 30 days and diligently pursued.
If Contributor fails to cure such breach after actual written notice and within
such cure period, Partnership's sole remedy shall be an action at law for
damages as a consequence thereof, which must be commenced, if at all, within the
Limitation Period (except with respect to a breach of the Sections 4.1(a), (d)
or (f)); provided, however, that if within the Limitation Period Partnership
gives Contributor written notice of such a breach and Contributor commences to
cure and thereafter terminates such cure effort, Partnership shall have an
additional 30 days from the date of such termination within which to commence an
action at law for damages as a consequence of Contributor's failure to cure. The
Limitation Period referred to herein shall apply to known as well as unknown
breaches of such warranties or representations.

                  (b) Notwithstanding any contrary provision of this Agreement,
if Contributor becomes aware during the Contract Period of any matters which
make any of its representations or warranties untrue, Contributor shall promptly
disclose such matters to Partnership in writing. In the event that Contributor
so discloses any matters which make any of Contributor's representations or
warranties untrue in any material respect or in the event that Partnership
otherwise becomes aware during the Contract Period of any matters which make any
of Contributor's representations or warranties untrue in any material respect,
Contributor shall bear no liability for such matters (provided that Contributor
has not breached an express covenant set forth in this Agreement), but
Partnership shall have the right to elect in writing on or before the Closing
Date, (i) to waive such matters and complete the acquisition of the Real
Property in accordance with the terms of this Agreement, or (ii) to terminate
this Agreement. Partnership's election to consummate the acquisition of the Real
Property at Closing shall constitute Partnership's conclusive agreement to
accept or waive any such matters discovered by or disclosed to Partnership prior
to the Closing.

         SECTION 4.5 INDEMNIFICATIONS. Subject to the foregoing limitations and
the provisions of Sections 6.3, 6.4 and 7.12:

                  (a) Contributor shall indemnify and defend Partnership and
each of the Partners of Partnership (excluding Contributor) against and hold
Partnership harmless from any and all claims, liabilities, losses, damages,
costs and expenses, including, without limitation, all reasonable attorneys'
fees, asserted against or suffered by Partnership resulting from (i) any breach
by Contributor of this Agreement, (ii) the untruth, inaccuracy or breach of any
of the representations and warranties made by Contributor pursuant to this
Agreement, and (iii) any

<PAGE>

liability or obligation arising in connection with Contributor's use of the
Real Property on or before the Closing Date.

                  (b) BPA shall indemnify and defend Contributor against and
hold Contributor harmless from any and all claims, liabilities, losses, damages,
costs and expenses, including, without limitation, all reasonable attorneys
fees, asserted against or suffered by Contributor resulting from (i) any breach
by BPA or Partnership caused by BPA of this Agreement, (ii) the untruth,
inaccuracy or breach of any of the representations or warranties made by
Partnership and caused by BPA pursuant to this Agreement, and (iii) except as
otherwise provided in the Lease Documents and/or the Agreement of Limited
Partnership of Inhale 201 Industrial Road, L.P. (the "Partnership Agreement"),
any liability or obligation arising in connection with the Real Property
accruing following the Closing Date.

                                    ARTICLE V

                                     DEPOSIT

Within two (2) business days following the execution of this Agreement by
Partnership, Contributor and BPA, BPA shall deliver to Title Company, for
deposit into the escrow described in Section 6.1 below, the sum of Ten Thousand
Dollars ($10,000) (the "DEPOSIT"). In the event that this transaction is
consummated as contemplated by this Agreement, then the entire amount of the
Deposit, together with any interest accrued thereon, shall be credited against
the Construction Costs payable to Contributor by Partnership. The entire amount
of the Deposit, together with any interest accrued thereon, shall be returned
immediately to BPA: (i) in the event of the failure of any of the conditions
precedent set forth in Section 3.1(a) above; or (ii) in the event that (a) the
conditions precedent set forth in Section 3.1(b) shall have been satisfied or
waived (unless with respect to Sections 3.1(b) (iii) or (iv), satisfaction of
any such conditions precedent was prevented by Contributor), (b) Partnership and
BPA shall have performed fully or tendered performance of its obligations
hereunder and (c) Contributor shall be unable or fail to perform its
obligations, under this Agreement. Contributor reserves all rights and remedies
available to it at law or in equity in the event of a default by Partnership or
BPA in its obligations under this Agreement.

                                   ARTICLE VI

                               ESCROW AND CLOSING

         SECTION 6.1 ESCROW ARRANGEMENTS. An escrow for the contribution and
payment of Construction Costs contemplated by this Agreement has been opened by
Partnership and Contributor with Title Company. Promptly following the full
execution of this Agreement, Contributor and Partnership shall each deliver
escrow instructions to Title Company consistent with this Article VI, and the
parties shall deposit in escrow the funds and documents described below.

                  (a) Contributor shall deposit (or cause to be deposited):

<PAGE>

                           (i) a duly executed and acknowledged grant deed in
favor of Partnership from Contributor with respect to the Real Property in the
form attached to this Agreement as Exhibit D (the "DEED")

                           (ii) duly executed and acknowledged counterparts of
the Lease and a Memorandum of Lease in the form attached to this Agreement as
Exhibit E (the "MEMORANDUM OF LEASE");

                           (iii) a duly executed counterpart of an assignment
and assumption of Contributor's interest in the Intangible Property in the form
attached to this Agreement as Exhibit F (the "ASSIGNMENT OF INTANGIBLE
PROPERTY");

                           (iv) a duly executed and acknowledged counterpart of
a Memorandum of Parking Lease in the form attached to this Agreement as Exhibit
G-1 (the "MEMORANDUM OF PARKING LEASE"), and a Parking Lease in the form
attached to this Agreement as Exhibit G-2 (the "PARKING LEASE");

                           (v) a certificate from Contributor certifying the
information required by Sections 18662 of the California Revenue and Taxation
Code and the regulations issued thereunder to establish that the transaction
contemplated by this Agreement is exempt from the tax withholding requirements
of such provisions (the "CALIFORNIA CERTIFICATE"); and

                           (vi) a certificate from Contributor certifying the
information required by Section 1445 of the Internal Revenue Code and the
regulations issued thereunder to establish, for the purposes of avoiding
Partnership's tax withholding obligations, that Contributor is not a "foreign
person" as defined in Internal Revenue Code Section 1445(f)(3) (the "FIRPTA
CERTIFICATE");

                           (vii) such evidence as the Title Company may
reasonably require as to the authority of the person or persons executing
documents on behalf of Contributor;

                           (viii) such affidavits as may be customarily and
reasonably required by the Title Company, in a form reasonably acceptable to
Contributor;

                           (ix) a closing statement acceptable to Contributor;

                           (x) such additional documents as shall be reasonably
required to consummate the transaction contemplated by this Agreement.

                  (b) Partnership shall deposit:

                           (i) immediately available funds sufficient to pay
Construction Costs to Contributor, plus sufficient additional cash to pay
Partnership's share of all escrow costs and closing expenses;

                           (ii) a duly executed and acknowledged counterpart of
the Memorandum of Parking Lease and a duly executed counterpart of the Parking
Lease;

<PAGE>

                           (iii) the duly executed and, where applicable,
acknowledged counterparts of the Lease, the Memorandum of Lease and the
Assignment of Intangible Property;

                           (iv) such evidence as the Title Company may
reasonably require as to the authority of the person or persons executing
documents on behalf of Partnership;

                           (v) such affidavits as may be customarily and
reasonably required by the Title Company, in a form reasonably accepted to
Partnership;

                           (vi) a closing statement acceptable to Partnership;

                           (vii) such additional documents as shall be
reasonably required to consummate the transaction contemplated by this
Agreement.

         SECTION 6.2 CLOSING. Title Company shall close escrow on the Closing
Date by:

                  (a) recording the Deed, the Memorandum of Parking Lease and
the Memorandum of Lease, in that order, in the Official Records of San Mateo
County, California;

                  (b) causing Title Company to issue (i) the Owner's Policy to
Partnership and (ii) the lender's title policy to Lender;

                  (c) delivering to Partnership the FIRPTA Certificate, the
California Certificate, the counterparts executed by Contributor of the Lease,
Parking Lease and Assignment of Intangible Property, and conformed copies of all
recorded documents; and

                  (d) delivering to Contributor the counterparts executed by
Partnership of the Lease, Parking Lease and Assignment of Intangible Property,
conformed copies of all recorded documents, and funds in the amount of the
Construction Costs, as adjusted for credits, prorations and closing costs in
accordance with this Article VI.

         SECTION 6.3 PRORATIONS.

                  (a) Real estate taxes and assessments constituting a lien and
allocable to the payment period that includes the Closing Date, personal
property taxes, if any, rental income and all other items of income, if any, and
expense with respect to the Property shall be prorated between Contributor and
Partnership as of the Closing Date. Income and expenses shall be prorated on the
basis of a 30-day month and on the basis of the accrual method of accounting.
All such items attributable to the period through and including the Closing Date
shall be credited to Contributor; all such items attributable to the period
following the Closing Date shall be credited to Partnership subject to
Contributor's obligation to pay such items in accordance with the Lease
Documents.

                  (b) Partnership and Contributor shall cooperate to produce
prior to the Closing Date a schedule of prorations to be made on and after the
Closing Date as complete and accurate as reasonably possible. All prorations
which can be liquidated accurately or reasonably estimated as of the Closing
Date shall be made in escrow on the Closing Date. All other prorations, and
adjustments to initial estimated prorations, shall be made by the parties with
due

<PAGE>

diligence and cooperation within 30 days following the Closing Date, or such
later time as may be required to obtain necessary information for proration,
by cashier's check or wire transfer of immediately available funds to the
party yielding a net credit from such prorations from the other party.

         SECTION 6.4 OTHER CLOSING COSTS.

                  (a) Partnership shall pay (i) fifty percent (50%) of any
escrow fees or costs charged by or reimbursable to Title Company, (ii) the title
insurance premium for any Lender's Policy requested by any lender to
Partnership, including costs of endorsements, extended coverage and related
survey costs, (iii) fifty percent (50%) of the title insurance premium of the
Owner's Policy including costs of endorsements and extended coverage, (iv) any
loan fees and costs associated with any loan obtained by Partnership, and (v)
the commission to Broker pursuant to Section 7.2

                  (b) BPA shall pay all fees and expenses of its legal counsel
and other third party consultants engaged by or on behalf of BPA in connection
with this transaction.

                  (c) Contributor shall pay (i) any county documentary transfer
or transaction taxes or fees due on the transfer of the Real Property, (ii) any
city documentary transfer or transaction taxes or fees due on the transfer of
the Real Property, (iii) any prepayment fees or penalties, if any, to pay off
existing mortgages affecting the Real Property, (iv) all fees and expenses of
its legal counsel and other third party consultants engaged by or on behalf of
Contributor in connection with this transaction, (v) fifty percent (50%) of the
title insurance premium of the Owner's Policy including costs of endorsements
and extended coverage, and (vi) fifty percent (50%) of any escrow fees charged
by or reimbursable to Title Company.

                  (d) Any costs and expenses of closing that are not expressly
identified in subparagraph (a), (b) or (c) above shall be allocated between the
parties in accordance with prevailing custom in San Mateo County.

         SECTION 6.5 FURTHER DOCUMENTATION. At or following the close of escrow,
Partnership and Contributor each shall execute any certificate or other
instruments required by law or local custom or otherwise reasonably requested by
the other party to effect the transaction contemplated by this Agreement.

                                   ARTICLE VII

                                  MISCELLANEOUS

         SECTION 7.1 DAMAGE OR DESTRUCTION. Any risk of loss to the Real
Property shall be borne by Contributor until the Closing Date. If prior to the
Closing Date there are instituted any proceedings or any such proceedings are
threatened, whether judicial, administrative, or otherwise which relate to the
taking of any material portion of the Real Property by eminent domain or the
Real Property is destroyed or materially damaged in whole or in part,
Partnership shall have the right to terminate this Agreement by giving
Contributor written notice within ten (10) business days after it has received
written notice of such eminent domain proceedings or destruction of the Real
Property. Upon any termination pursuant to this Section 7.1, the parties

<PAGE>

shall proceed as if this Agreement had been terminated by a failure of a
condition precedent pursuant to Section 3.2 hereof. If Partnership does not
terminate this Agreement, then on the Closing Date, Contributor shall assign
to Partnership all of its right, title and interest in any proceeds or award
arising out of such taking or destruction.

         SECTION 7.2 BROKERAGE COMMISSIONS AND FINDER'S FEES. Except with
respect to the Broker, each party to this Agreement warrants to the other that
no person or entity can properly claim a right to a real estate commission, real
estate finder's fee, real estate acquisition fee or other real estate
brokerage-type compensation (collectively, "REAL ESTATE COMPENSATION") based
upon the acts of that party with respect to the transaction contemplated by this
Agreement. Each party hereby agrees to indemnify and defend the other against
and to hold the other harmless from any and all loss, cost, liability or expense
(including but not limited to attorneys' fees and returned commissions)
resulting from any claim for Real Estate Compensation by any person or entity
based upon such acts. Partnership shall pay the Broker pursuant to a separate
written agreement between Partnership and the BT Commercial, pursuant to which
Partnership has agreed to pay Three Hundred Sixty Thousand Dollars ($360,000) to
BT Commercial.

         SECTION 7.3 SUCCESSORS AND ASSIGNS. Partnership may not assign any of
Partnership's rights or duties hereunder without the prior written consent of
Contributor, which consent may be withheld in Contributor's sole and absolute
discretion. Subject to the limitations on assignment expressed in this Section
7.3, this Agreement shall be binding upon, and inure to the benefit of,
Partnership and Contributor and their respective successors and assigns.

         SECTION 7.4 NOTICES. Any notice required or permitted to be given under
this Agreement shall be in writing and (i) personally delivered, (ii) sent by
United States mail, registered or certified mail, postage prepaid, return
receipt requested, (iii) sent by Federal Express or other reputable overnight
courier service, or (iv) transmitted by facsimile with a hard copy sent within
one (1) business day by any of the foregoing means, and in all cases addressed
as follows:

         TO PARTNERSHIP:                    INHALE 201 INDUSTRIAL ROAD, L.P.
                                            c/o Bernardo Property Advisors
                                            11440 West Bernardo Court, Suite 208
                                            San Diego, CA 92127
                                            Attention:  Alan D. Gold
                                            Fax No.     (858) 485-9843
                                            Phone No.   (858) 485-9840

         with copies to:                    David J. Dorne, Esq.
                                            SELTZER CAPLAN McMAHON VITEK
                                            750 B Street, Suite 2100
                                            San Diego, California  92101
                                            Fax No.     (619) 685-3100
                                            Phone No.   (619) 685-3003

<PAGE>

         TO CONTRIBUTOR:                    INHALE THERAPEUTIC SYSTEMS, INC.
                                            150 Industrial Road
                                            San Carlos, California 94070
                                            Attn:  Sharron Reiss-Miller,
                                                   Vice President
                                            Fax No.     (650) 631-3150
                                            Phone No.   (650) 631-3100

                                            INHALE THERAPEUTIC SYSTEMS, INC.
                                            150 Industrial Road
                                            San Carlos, California  94070
                                            Attn:  Robert A. Donnally, Esq.
                                            Fax No.     (650) 631-3150
                                            Phone No.   (650) 631-3100

         with copies to:                    COOLEY GODWARD LLP
                                            One Maritime Plaza
                                            20th Floor
                                            San Francisco, California  94111
                                            Attn:  Anna B. Pope, Esq.
                                            Fax No.     (415) 951-3699
                                            Phone No.   (415) 693-2000

         TO BPA:                            BERNARDO PROPERTY ADVISORS
                                            11440 West Bernardo Court, Suite 208
                                            San Diego, CA 92127
                                            Attention:  Alan D. Gold
                                            Fax No.     (858) 485-9843
                                            Phone No.   (858) 485-9840

Any such notice shall be deemed delivered as follows: (a) if personally
delivered, the date of delivery to the address of the person to receive such
notice; (b) if sent by "next business day" Federal Express or other reputable
overnight courier service, the next business day after being sent; or (c) if
sent by facsimile transmission, the date transmitted to the person to receive
such notice if sent by 5:00 p.m. Pacific Time and the next business day if sent
after 5:00 p.m. Pacific Time, provided in either case that there is evidence of
such transmission printed by the sending machine. Any notice sent by facsimile
transmission must be confirmed by personally delivering or mailing a copy of the
notice sent by facsimile transmission. Any party may change its address for
notice by written notice given to the other at least three (3) business days
before the effective date of such change in the manner provided in this Section.

         SECTION 7.5 TIME. Time is of the essence of every provision contained
in this Agreement.

         SECTION 7.6 POSSESSION. The rights of possession of the Real Property
(subject to the Lease) shall be delivered to Partnership on the Closing Date.

<PAGE>

         SECTION 7.7 INCORPORATION BY REFERENCE. All of the exhibits and
attachments attached to this Agreement or referred to herein and all documents
in the nature of such exhibits, when executed, are by this reference
incorporated in and made a part of this Agreement.

         SECTION 7.8 NO DEDUCTIONS OR OFF-SETS. Partnership acknowledges that
the Construction Costs to be paid to Contributor pursuant to this Agreement is a
net amount and shall not be subject to any off-sets or deductions, except as
provided under Section 6.3, above.

         SECTION 7.9 ATTORNEYS' FEES. If Partnership, Contributor or BPA bring
any suit or other proceeding with respect to the subject matter or the
enforcement of this Agreement, the prevailing party (as determined by the court,
agency or other authority before which such suit or proceeding is commenced), in
addition to such other relief as may be awarded, shall be entitled to recover
all costs and expenses including, without limitation, reasonable attorneys' and
paralegals' fees and expenses, incurred by such prevailing party. The foregoing
includes, without limitation, attorneys' fees, expenses and costs of
investigation incurred in appellate proceedings, costs incurred in collection of
any award(s), judgment or other relief, costs incurred in establishing the right
to indemnification, or in any action or participation in, or in connection with,
any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code, 11
United States Code Section 101 et seq., or any successor statutes.

         SECTION 7.10 CONSTRUCTION. The parties acknowledge that each party and
its counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto. If any provision of this Agreement shall be
determined to be illegal or unenforceable, such determination shall not affect
any other provisions of this Agreement and all such other provisions shall
remain in full force and effect.

         SECTION 7.11 GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with and shall be governed and enforced in all
respects according to the laws of the State of California, excluding conflicts
of laws principals which would cause the application of the laws of another
jurisdiction.

         SECTION 7.12 DAMAGES. Partnership agrees that any liability of
Contributor under any claim brought by Partnership prior to the Closing Date
pursuant to this Agreement, shall be limited as set forth in Section 4.4 above,
and shall be limited solely to Contributor's interest in the Property, and no
other assets of Contributor shall be subject to levy or execution. With respect
to any such claim brought by Partnership following the Closing Date, any
liability of Contributor shall be limited to Contributor's assets in an amount
equal to the amount set forth in Section 4.4 above. Nothing contained in this
Agreement shall be construed to limit the parties' rights against one another
(i) as Tenant and Landlord under the Lease, or (ii) as partners under the
Partnership Agreement. In no event shall Partnership seek satisfaction for any
such obligation from any of Contributor's shareholders, officers, directors,
trustees, beneficiaries, employees, agents, legal representatives, successors or
assigns, nor shall any such person or entity have any personal liability for any
such obligations of Contributor.

<PAGE>

         SECTION 7.13 CONFIDENTIALITY. Each party (the "RECEIVING PARTY") hereby
acknowledges and agrees that all information regarding the other party's
business, assets and financial condition received which is not in the public
domain ("CONFIDENTIAL INFORMATION") is to be kept strictly confidential.
Accordingly, except as may be required by law or court order, or except to the
extent expressly permitted in a writing signed by the party owning the
Confidential Information, the Receiving Party shall not, without the prior
written consent of the other party, release, publish or otherwise distribute
(and shall not authorize or permit any other person or entity to release,
publish or otherwise distribute) any Confidential Information other than to the
Receiving Party's prospective lenders and legal and financial advisors, each of
whom shall agree to hold such information strictly confidential as if such
persons were bound by the provisions of this Section.

         SECTION 7.14 COUNTERPARTS. This Agreement may be executed in one or
more counterparts and each such counterpart shall be deemed to be an original;
all counterparts so executed shall constitute one instrument and shall be
binding on all of the parties to this Agreement notwithstanding that all of the
parties are not signatory to the same counterpart.

         SECTION 7.15 ENTIRE AGREEMENT. This Agreement, together with the Lease
Documents and the Partnership Agreement and the schedules, attachments, and
exhibits attached hereto, incorporates all agreements, warranties,
representations and understandings between the parties to the Agreement with
respect to the subject matter hereof and constitutes the entire agreement of
Contributor and Partnership with respect to the acquisition of the Property by
Partnership from Contributor. Any prior or other contemporaneous correspondence,
memoranda, understandings, offers, negotiations and agreements, oral or written,
relating to the acquisition of the Property by Partnership from Contributor are
merged herein and replaced in total by this Agreement and the exhibits hereto
and shall be of no further force or effect. This Agreement may not be modified
or amended except in a writing signed by Contributor, BPA and Partnership.

         SECTION 7.16 NO WAIVER. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver, nor
shall a waiver in any instance constitute a waiver in any subsequent instance.
No waiver shall be binding unless executed in writing by the party making the
waiver.

         SECTION 7.17 FURTHER ACTS. Each party, at the request of the other,
shall execute, acknowledge or have notarized (if appropriate) and deliver in a
timely manner such additional documents, and do such other additional acts, also
in a timely manner, as may be reasonably required in order to accomplish the
intent and purposes of this Agreement.

         SECTION 7.18 NO INTENT TO BENEFIT THIRD PARTIES. The parties do not
intend by any provision of this Agreement to confer any right, remedy or benefit
upon any third party, and no third party shall be entitled to enforce, or
otherwise shall acquire any right, remedy or benefit by reason of, any provision
of this Agreement.

         SECTION 7.19 PERFORMANCE DUE ON DAY OTHER THAN BUSINESS DAY. If the
time period for the performance of any act called for under this Agreement
expires on a Saturday, Sunday or any other day on which banking institutions in
the State of California are authorized or obligated

<PAGE>

by law or executive order to close (a "HOLIDAY"), the act in question may be
performed on the next succeeding day that is not a Saturday, Sunday or
Holiday.

         SECTION 7.20 NO JOINT VENTURE. Nothing set forth in this Agreement
shall be construed to create a partnership or joint venture among BPA,
Partnership and Contributor. Nothing contained in this Agreement shall be deemed
to make either party the agent or representative of the other.

         SECTION 7.21 VENUE. Each of the parties hereto consents to the
jurisdiction of any court in the County of San Mateo, California for any action
arising out of matters related to this Agreement. Each of the parties hereto
waives the right to commence an action in connection with this Agreement in any
court outside of such County.

<PAGE>

         IN WITNESS WHEREOF, Contributor and Partnership have executed this
Agreement as of the day and year first written above.

CONTRIBUTOR:               INHALE THERAPEUTIC SYSTEMS INC.,
                           a Delaware corporation

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

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

PARTNERSHIP:              INHALE 201 INDUSTRIAL ROAD, L.P.

                          By:   SciMed Prop III, Inc., a California corporation,
                                its General Partner

                             By:
                                 ----------------------------------
                                 Alan D. Gold
                                 President

                             By:
                                ------------------------------------
                                Gary A. Kreitzer
                                Executive Vice President

BPA                       BERNARDO PROPERTY ADVISORS, INC.

                          By:
                              -------------------------------------
                              Alan D. Gold
                              President

                          By:
                              -------------------------------------
                              Gary A. Kreitzer
                              Executive Vice President

<PAGE>

                                          TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                        PAGE
<S>                                                                                                    <C>
ARTICLE I       BASIC DEFINITIONS.........................................................................1

ARTICLE II      CONTRIBUTION..............................................................................4

     Section 2.1   Contribution and Acceptance............................................................4

     Section 2.2   Contributor's Initial Capital Account..................................................4

     Section 2.3   Partnership's Review and Contributor's Disclaimer......................................4

     Section 2.4   Permitted Title Exceptions.............................................................5

ARTICLE III     CONDITIONS PRECEDENT......................................................................6

     Section 3.1   Conditions.............................................................................6

     Section 3.2   Failure or Waiver of Conditions Precedent..............................................7

ARTICLE IV      COVENANTS, WARRANTIES AND REPRESENTATIONS.................................................8

     Section 4.1   Contributor's Warranties and Representations...........................................8

     Section 4.2   Contributor's Covenants...............................................................10

     Section 4.3   Partnership's Warranties and Representations..........................................11

     Section 4.4   Limitations...........................................................................11

     Section 4.5   Indemnifications......................................................................12

ARTICLE V       DEPOSIT..................................................................................12

ARTICLE VI      ESCROW AND CLOSING.......................................................................13

     Section 6.1   Escrow Arrangements...................................................................13

     Section 6.2   Closing...............................................................................14

     Section 6.3   Prorations............................................................................15

     Section 6.4   Other Closing Costs...................................................................15

     Section 6.5   Further Documentation.................................................................16

ARTICLE VII     MISCELLANEOUS............................................................................16

     Section 7.1   Damage or Destruction.................................................................16

     Section 7.2   Brokerage Commissions and Finder's Fees...............................................16

     Section 7.3   Successors and Assigns................................................................16

     Section 7.4   Notices...............................................................................17

     Section 7.5   Time..................................................................................18

     Section 7.6   Possession............................................................................18

     Section 7.7   Incorporation by Reference............................................................18

                                                 i

<PAGE>

                                       TABLE OF CONTENTS
                                          (CONTINUED)

                                                                                                        PAGE

     Section 7.8   No Deductions or Off-Sets.............................................................18

     Section 7.9   Attorneys' Fees.......................................................................18

     Section 7.10  Construction..........................................................................18

     Section 7.11  Governing Law.........................................................................18

     Section 7.12  Damages...............................................................................19

     Section 7.13  Confidentiality.......................................................................19

     Section 7.14  Counterparts..........................................................................19

     Section 7.15  Entire Agreement......................................................................19

     Section 7.16  No Waiver.............................................................................19

     Section 7.17  Further Acts..........................................................................20

     Section 7.18  No Intent To Benefit Third Parties....................................................20

     Section 7.19  Performance Due On Day Other Than Business Day........................................20

     Section 7.20  No Joint Venture......................................................................20

     Section 7.21  Venue.................................................................................20
</TABLE>

                                             ii.
<PAGE>

Exhibit A         Legal Description
Exhibit B         Form of Lease
Exhibit C         Intentionally Deleted
Exhibit D         Form of Deed
Exhibit E         Form of Memorandum of Lease
Exhibit F         Form of Assignment of Intangible Property
Exhibit G-1       Form of Memorandum of Parking Lease
Exhibit G-2       Form of Parking Lease
Exhibit H         Form of Assignment and Assumption Agreement
Schedule 2.2      Construction Costs

                                             iii.

<PAGE>

                             EXHIBIT A

                      Property Legal Description

All that certain real property in the State of California, County of San
Mateo, City of San Carlos more particularly described as follows:

ALL LANDS LYING WITHIN THE EXTERIOR BOUNDARIES OF THAT MAP ENTITLED
"REVERSION TO ACREAGE OF THE LANDS OF ARNDT ELECTRONICS LYING WITHIN THE
COUNTY OF SAN MATEO, BEING PARCELS 1,2,3 AND 4 AS SHOWN ON THAT CERTAIN
PARCEL MAP FILED IN VOLUME 51 OF PARCEL MAPS AT PAGE 71 RECORDS OF SAN
MATEO," FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN MATEO COUNTY, STATE
OF CALIFORNIA, ON OCTOBER 6, 1986 IN VOLUME 58 OF PARCEL MAPS AT PAGE 13.

ASSESSOR'S PARCEL NOS. 046-020-370    JOINT PLAN NOS.  046-002-020-22A
                       046-020-380                     046-002-020-22-01A
                                                       046-002-020-22-02A
                                                       046-002-020-22-03A
                                                       046-002-020-23A
                                                       046-002-020-23-01A

<PAGE>

                                  EXHIBIT B
                                      TO
                            CONTRIBUTION AGREEMENT

                                FORM OF LEASE

  [For text of document refer to EXHIBIT 10.23 to the Company's Quarterly Report
             on Form 10-Q for the Quarter Ended September 30, 2000]

<PAGE>

                                    EXHIBIT C

                             [INTENTIONALLY DELETED]

<PAGE>

Assessor's Parcel No.

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

MAIL TAX STATEMENTS TO:

Inhale Therapeutic Systems
150 Industrial Road
San Carlos, CA  94070

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

         The undersigned grantor declares:

         Documentary transfer tax is:

         (   )    computed on full value of property conveyed, or
         (   )    computed on full value less value of liens and encumbrances.

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

                                   GRANT DEED

FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, INHALE THERAPEUTIC SYSTEMS INC., a Delaware corporation, HEREBY
GRANTS to INHALE 201 INDUSTRIAL ROAD L.P., a California limited partnership, all
that real property in San Mateo County, California, described as follows:

      SEE EXHIBIT "A" ATTACHED HERETO AND BY THIS REFERENCE INCORPORATED HEREIN.

This conveyance is made subject to all liens and encumbrances of record.

<TABLE>

<S>                                      <C>
GRANTOR:                                 INHALE THERAPEUTIC SYSTEMS INC.,
                                         a Delaware corporation

                                         By: ________________________________
                                             Name:
                                             Title:

Date:  _______________ ____, 2000
</TABLE>
                      MAIL TAX STATEMENTS AS DIRECTED ABOVE

<PAGE>

<TABLE>

=====================================================================================================================
<S>                                                                              <C>
STATE OF CALIFORNIA                                           )                  CAPACITY CLAIMED BY SIGNER
                                                              )  ss.             Though statute does not require
COUNTY OF _________________                                   )                  the Notary to fill in the data
                                                                                 below, doing so may prove invaluable
                                                                                 to persons relying on the document.
On _________________________, before me, ________________________________,

Personally appeared ___________________________________ (name of witness),       ''  Individual
                                                                                 ''  Corporate Officer(s)
       / /      personally known to me                                           ''  __________________________

                -or-                                                             ''  Partner(s)    ''  Limited
                                                                                                   ''  General
       / /      proved to me on the basis of satisfactory evidence to be the     ''  Attorney-in-Fact
                person whose name(s) is/are subscribed to the within             ''  Trustee(s)
                instrument and acknowledged to me that he/she/they executed      ''  Guardian/Conservator
                the  same in his/her/their authorized capacity, and that by      ''  Other:____
                his/her/their signature(s) on the instrument the person(s),          __________________________
                or the entity upon behalf of which the person(s) acted,
                executed the instrument.
                                                                                 SIGNER IS REPRESENTING:
                                                                                 Name of person(s) or entity(ies)
                                         WITNESS my hand and official seal.      ________________________________
                                         _________________________________
                                         Signature of Notary                     ________________________________

=====================================================================================================================

 This certificate must be attached to the           Title or Type of Document: ____________________________________
 document described at right:                       Number of Pages: ________________  Date of Document: __________
                                                    Signer other than named above: ________________________________
=====================================================================================================================
</TABLE>

<PAGE>

                             EXHIBIT A

                      Property Legal Description

All that certain real property in the State of California, County of San
Mateo, City of San Carlos more particularly described as follows:

ALL LANDS LYING WITHIN THE EXTERIOR BOUNDARIES OF THAT MAP ENTITLED
"REVERSION TO ACREAGE OF THE LANDS OF ARNDT ELECTRONICS LYING WITHIN THE
COUNTY OF SAN MATEO, BEING PARCELS 1,2,3 AND 4 AS SHOWN ON THAT CERTAIN
PARCEL MAP FILED IN VOLUME 51 OF PARCEL MAPS AT PAGE 71 RECORDS OF SAN
MATEO," FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN MATEO COUNTY, STATE
OF CALIFORNIA, ON OCTOBER 6, 1986 IN VOLUME 58 OF PARCEL MAPS AT PAGE 13.

ASSESSOR'S PARCEL NOS. 046-020-370    JOINT PLAN NOS.  046-002-020-22A
                       046-020-380                     046-002-020-22-01A
                                                       046-002-020-22-02A
                                                       046-002-020-22-03A
                                                       046-002-020-23A
                                                       046-002-020-23-01A

<PAGE>
                                                                      EXHIBIT E

RECORDING REQUESTED BY
AND WHEN RECORDED, MAIL TO

Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, CA  94111
Attn:  Anna B. Pope, Esq.

                               MEMORANDUM OF LEASE

         THIS MEMORANDUM OF LEASE (this "Memorandum") is made and entered into
this ____ day of September 2000, by and between INHALE 201 INDUSTRIAL ROAD L.P.,
a California limited partnership, whose present address is c/o Bernardo Property
Advisors, 11440 West Bernardo Court, Suite 208, San Diego, CA 92127 ("Landlord")
and INHALE THERAPEUTIC SYSTEMS INC., a Delaware corporation ("Tenant"), whose
present address is 150 Industrial Road, San Carlos, CA 94070, with reference to
the following facts:

         A. Landlord is the owner of that certain real property located in the
City of San Carlos, County of San Mateo, State of California, more particularly
described in Exhibit "A" attached hereto (the "Property").

         B. Landlord desires to lease the Property to Tenant, and Tenant desires
to lease the Property from Landlord, all subject to the terms and provisions of
this Memorandum.

         NOW, THEREFORE, the parties hereto hereby agree as follows:

         1. Lease of the Property. Landlord hereby leases the Property to
Tenant, and Tenant hereby leases the Property from Landlord for a term of
__________(__) years commencing on ___________________ and terminating on
________________, all subject to and on terms and conditions more fully set
forth in that certain Lease executed by and between Landlord and Tenant and
dated September __, 2000 (the "Lease"). The Lease is incorporated herein by this
reference. Should any party require any information concerning the Lease, they
should contact the Landlord and Tenant at the above-referenced addresses.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Memorandum on
the day and year first above written.

<TABLE>

<S>                                       <C>
TENANT:                                   LANDLORD:

INHALE THERAPEUTIC SYSTEMS INC.           INHALE 201 INDUSTRIAL ROAD L.P.

By:    _____________________________      By:     _____________________________

Name:  _____________________________      Name:    _____________________________

Title: _____________________________      Title:   _____________________________

By:    _____________________________      By:      _____________________________

Name:  _____________________________      Name:    _____________________________

Title: _____________________________      Title:   _____________________________
</TABLE>

<PAGE>

<TABLE>

<S>                                      <C>
GRANTOR:                                 INHALE THERAPEUTIC SYSTEMS INC.,
                                         a Delaware corporation

                                         By: ________________________________
                                             Name:
                                             Title:

Date:  _______________ ____, 2000
</TABLE>
                      MAIL TAX STATEMENTS AS DIRECTED ABOVE

<PAGE>

<TABLE>

=====================================================================================================================
<S>                                                                              <C>
STATE OF CALIFORNIA                                           )                  CAPACITY CLAIMED BY SIGNER
                                                              )  ss.             Though statute does not require
COUNTY OF _________________                                   )                  the Notary to fill in the data
                                                                                 below, doing so may prove invaluable
                                                                                 to persons relying on the document.
On _________________________, before me, ________________________________,

Personally appeared ___________________________________ (name of witness),       ''  Individual
                                                                                 ''  Corporate Officer(s)
       / /      personally known to me                                           ''  __________________________

                -or-                                                             ''  Partner(s)    ''  Limited
                                                                                                  ''  General
       / /      proved to me on the basis of satisfactory evidence to be the     ''  Attorney-in-Fact
                person whose name(s) is/are subscribed to the within             ''  Trustee(s)
                instrument and acknowledged to me that he/she/they executed      ''  Guardian/Conservator
                the  same in his/her/their authorized capacity, and that by      ''  Other:____
                his/her/their signature(s) on the instrument the person(s),          __________________________
                or the entity upon behalf of which the person(s) acted,
                executed the instrument.
                                                                                 SIGNER IS REPRESENTING:
                                                                                 Name of person(s) or entity(ies)
                                         WITNESS my hand and official seal.      ________________________________
                                         _________________________________
                                         Signature of Notary                     ________________________________

=====================================================================================================================

 This certificate must be attached to the           Title or Type of Document: ____________________________________
 document described at right:                       Number of Pages: ________________  Date of Document: __________
                                                    Signer other than named above: ________________________________
=====================================================================================================================
</TABLE>

<PAGE>

<TABLE>

=====================================================================================================================
<S>                                                                              <C>
STATE OF CALIFORNIA                                           )                  CAPACITY CLAIMED BY SIGNER
                                                              )  ss.             Though statute does not require
COUNTY OF _________________                                   )                  the Notary to fill in the data
                                                                                 below, doing so may prove invaluable
                                                                                 to persons relying on the document.
On _________________________, before me, ________________________________,

Personally appeared ___________________________________ (name of witness),       ''  Individual
                                                                                 ''  Corporate Officer(s)
       / /      personally known to me                                           ''  __________________________

                -or-                                                             ''  Partner(s)    ''  Limited
                                                                                                   ''  General
       / /      proved to me on the basis of satisfactory evidence to be the     ''  Attorney-in-Fact
                person whose name(s) is/are subscribed to the within             ''  Trustee(s)
                instrument and acknowledged to me that he/she/they executed      ''  Guardian/Conservator
                the  same in his/her/their authorized capacity, and that by      ''  Other:____
                his/her/their signature(s) on the instrument the person(s),          __________________________
                or the entity upon behalf of which the person(s) acted,
                executed the instrument.
                                                                                 SIGNER IS REPRESENTING:
                                                                                 Name of person(s) or entity(ies)
                                          WITNESS my hand and official seal.     ________________________________
                                          _________________________________
                                          Signature of Notary                    ________________________________

=====================================================================================================================

 This certificate must be attached to the           Title or Type of Document: ____________________________________
 document described at right:                       Number of Pages: ________________  Date of Document: __________
                                                    Signer other than named above: ________________________________
=====================================================================================================================
</TABLE>

<PAGE>

                                                                      EXHIBIT F

                        ASSIGNMENT OF INTANGIBLE PROPERTY

         FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby expressly acknowledged, INHALE THERAPEUTIC SYSTEMS INC., a Delaware
corporation ("Assignor"), hereby assigns, transfers and conveys to INHALE 201
INDUSTRIAL ROAD L.P., a California limited partnership ("Assignee"), all of
Assignor's right, title and interest in and to the Intangible Property
(including, without limitation, Contributor's interest in the Construction
Contracts), as defined in that certain Contribution Agreement for the
contribution of 201 Industrial Road, San Carlos, California dated September __,
2000 (the "Agreement"), entered into by and between Assignor, as "Contributor,"
and Assignee, as "Partnership."

         In accordance with the Agreement, Assignee hereby assumes all
obligations of the owner of the Intangible Property arising on or after the date
of this Assignment (collectively, the "Assigned Obligations"), and Assignee
agrees to indemnify and defend Assignor against, to hold Assignor harmless from,
and to reimburse Assignor for, any and all loss, cost, liability and expense
(including attorneys', fees) arising out of or relating to any breach or alleged
breach of the Assigned Obligations occurring (or alleged to have occurred) on or
after the date of this Assignment. Assignor agrees to indemnify and defend
Assignee against, to hold Assignee harmless from, and to reimburse Assignee for,
any and all loss, cost, liability and expense (including attorneys', fees)
arising out of or relating to any breach or alleged breach of the Assigned
Obligations occurring (or alleged to have occurred) prior to the date of this
Assignment.

         IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
Intangible Property as of September __, 2000.

<TABLE>

<S>                                    <C>
ASSIGNOR:                              INHALE THERAPEUTIC SYSTEMS INC.,
                                       a Delaware corporation

                                       By: __________________________________
                                           Name:
                                           Title:

ASSIGNEE:                              INHALE 201 INDUSTRIAL ROAD L.P., a
                                       California limited partnership

                                       By: __________________________________
                                           Its:
</TABLE>

<PAGE>

                                                                    EXHIBIT G-1

RECORDING REQUESTED BY
AND WHEN RECORDED, MAIL TO

Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, CA  94111
Attn:  Anna B. Pope, Esq.

                           MEMORANDUM OF PARKING LEASE

         THIS MEMORANDUM OF PARKING LEASE (this "Memorandum") is made and
entered into effective September __, 2000, by and between INHALE 201 INDUSTRIAL
ROAD L.P. a California limited partnership, whose present address is c/o
Bernardo Property Advisors, Inc., 11440 West Bernardo Court, Suite 208, San
Diego, California 92127 ("Landlord") and INHALE THERAPEUTIC SYSTEMS INC., a
Delaware corporation ("Tenant"), whose present address is 150 Industrial Road,
San Carlos, CA 94070, for the benefit of each other and the City of San Carlos,
a municipal corporation (the "City") and with reference to the following facts:

                                    RECITALS

         A. Landlord is the owner of fee title to that certain real property
commonly known as 201 Industrial Road, San Carlos, California, more particularly
described on the attached Exhibit A (referred to herein as "201 Industrial
Road");

         B. TMT Associates, LLC, a California limited liability company ("TMT")
is the owner of fee title to that certain real property commonly known as 150
Industrial Road, San Carlos California, more particularly described on the
attached Exhibit B (referred to herein as "150 Industrial Road");

         C. Tenant leases 201 Industrial Road from Landlord pursuant to a
Build-to-Suit Lease dated as of September ___, 2000 (as amended from time to
time, the "Inhale 201 Lease"), and leases 150 Industrial Road from TMT pursuant
to a lease dated October 1996 (as amended from time to time, the "Inhale 150
Lease").

         D. In the event that Tenant elects to expand its facility at 150
Industrial Road ("Inhale's Proposed Expansion"), the City will require
additional parking of up to 190 parking spaces be provided, and pursuant to the
City's Ordinance Number 1257, adopted April 12, 1999, one way in which such
additional parking can be provided is through the leasing of the required spaces
on 201 Industrial Road for Tenant's use in connection with its use of its
facility at 150 Industrial Road.

<PAGE>

                                    AGREEMENT

         NOW, THEREFORE, subject to and on terms and conditions more fully set
forth in that certain Parking Lease executed by and between Landlord and Tenant
and dated as of September ____, 2000 (the "Parking Lease"), which is hereby
incorporated herein by this reference, the parties hereto hereby agree as
follows:

         1. PREMISES. Landlord hereby leases to Tenant one hundred and ninety
(190) parking spaces located in the area described in Exhibit C attached hereto
and made a part hereof (the "Inhale Parking Area"), for the sole purpose of
parking vehicles by employees and invitees of Tenant. Landlord reserves the
right to reconfigure and/or relocate the location of the Inhale Parking Area at
201 Industrial Road.

         2. TERM. The term shall commence on the date hereof and shall terminate
on the date Tenant, or its successor or assignee, ceases to operate its business
at 150 Industrial Road, San Carlos, California.

         3. FURTHER INFORMATION. Should any party require any information
concerning the Parking Lease, such party should contact the Landlord and Tenant
at the above-referenced addresses.

         IN WITNESS WHEREOF, the parties hereto have executed this Memorandum on
the day and year first above written.

<TABLE>

<S>                                       <C>
TENANT:                                   LANDLORD:

INHALE THERAPEUTIC SYSTEMS INC.         INHALE 201 INDUSTRIAL ROAD L.P.

                                        BY: SciMed Prop III, its General Partner

By:    _____________________________    By:      _____________________________

Name:  _____________________________    Name:    _____________________________

Title: _____________________________    Title:   _____________________________

By:    _____________________________    By:      _____________________________

Name:  _____________________________    Name:    _____________________________

Title: _____________________________    Title:   _____________________________
</TABLE>

<PAGE>

<TABLE>

=====================================================================================================================
<S>                                                                              <C>
STATE OF CALIFORNIA                                           )                  CAPACITY CLAIMED BY SIGNER
                                                              )  ss.             Though statute does not require
COUNTY OF _________________                                   )                  the Notary to fill in the data
                                                                                 below, doing so may prove invaluable
                                                                                 to persons relying on the document.
On _________________________, before me, ________________________________,

Personally appeared ___________________________________ (name of witness),       ''  Individual
                                                                                 ''  Corporate Officer(s)
       / /      personally known to me                                           ''  __________________________

                -or-                                                             ''  Partner(s)    ''  Limited
                                                                                                   ''  General
       / /      proved to me on the basis of satisfactory evidence to be the     ''  Attorney-in-Fact
                person whose name(s) is/are subscribed to the within             ''  Trustee(s)
                instrument and acknowledged to me that he/she/they executed      ''  Guardian/Conservator
                the  same in his/her/their authorized capacity, and that by      ''  Other:____
                his/her/their signature(s) on the instrument the person(s),          __________________________
                or the entity upon behalf of which the person(s) acted,
                executed the instrument.
                                                                                 SIGNER IS REPRESENTING:
                                                                                 Name of person(s) or entity(ies)
                                         WITNESS my hand and official seal.      ________________________________
                                         _________________________________
                                         Signature of Notary                     ________________________________

=====================================================================================================================

 This certificate must be attached to the           Title or Type of Document: ____________________________________
 document described at right:                       Number of Pages: ________________  Date of Document: __________
                                                    Signer other than named above: ________________________________
=====================================================================================================================
</TABLE>

<PAGE>

<TABLE>

=====================================================================================================================
<S>                                                                              <C>
STATE OF CALIFORNIA                                           )                  CAPACITY CLAIMED BY SIGNER
                                                              )  ss.             Though statute does not require
COUNTY OF _________________                                   )                  the Notary to fill in the data
                                                                                 below, doing so may prove invaluable
                                                                                 to persons relying on the document.
On _________________________, before me, ________________________________,

Personally appeared ___________________________________ (name of witness),       ''  Individual
                                                                                 ''  Corporate Officer(s)
       / /      personally known to me                                           ''  __________________________

                -or-                                                             ''  Partner(s)    ''  Limited
                                                                                                   ''  General
       / /      proved to me on the basis of satisfactory evidence to be the     ''  Attorney-in-Fact
                person whose name(s) is/are subscribed to the within             ''  Trustee(s)
                instrument and acknowledged to me that he/she/they executed      ''  Guardian/Conservator
                the  same in his/her/their authorized capacity, and that by      ''  Other:____
                his/her/their signature(s) on the instrument the person(s),          __________________________
                or the entity upon behalf of which the person(s) acted,
                executed the instrument.
                                                                                 SIGNER IS REPRESENTING:
                                                                                 Name of person(s) or entity(ies)
                                         WITNESS my hand and official seal.      ________________________________
                                         _________________________________
                                         Signature of Notary                     ________________________________

=====================================================================================================================

 This certificate must be attached to the           Title or Type of Document: ____________________________________
 document described at right:                       Number of Pages: ________________  Date of Document: __________
                                                    Signer other than named above: ________________________________
=====================================================================================================================
</TABLE>

<PAGE>

                             EXHIBIT A

                      Property Legal Description

All that certain real property in the State of California, County of San
Mateo, City of San Carlos more particularly described as follows:

ALL LANDS LYING WITHIN THE EXTERIOR BOUNDARIES OF THAT MAP ENTITLED
"REVERSION TO ACREAGE OF THE LANDS OF ARNDT ELECTRONICS LYING WITHIN THE
COUNTY OF SAN MATEO, BEING PARCELS 1,2,3 AND 4 AS SHOWN ON THAT CERTAIN
PARCEL MAP FILED IN VOLUME 51 OF PARCEL MAPS AT PAGE 71 RECORDS OF SAN
MATEO," FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN MATEO COUNTY, STATE
OF CALIFORNIA, ON OCTOBER 6, 1986 IN VOLUME 58 OF PARCEL MAPS AT PAGE 13.

ASSESSOR'S PARCEL NOS. 046-020-370    JOINT PLAN NOS.  046-002-020-22A
                       046-020-380                     046-002-020-22-01A
                                                       046-002-020-22-02A
                                                       046-002-020-22-03A
                                                       046-002-020-23A
                                                       046-002-020-23-01A

<PAGE>
                                     EXHIBIT B

       [For the text of this document refer to Exhibit C of EXHIBIT 10.25
        to the Company's Quarterly Report on Form 10-Q for the period
        Ended September 30, 2000]

<PAGE>

                                     EXHIBIT G-2
                                          TO
                                CONTRIBUTION AGREEMENT

                                 FORM OF PARKING LEASE

       [For the text of this document refer to EXHIBIT 10.25 to the Company's
       Quarterly Report on Form 10-Q for the period Ended September 30, 2000]

<PAGE>

                                                                      EXHIBIT H

                                   ASSIGNMENT

         This Assignment dated as of September __, 2000 (the "ASSIGNMENT"), is
entered into by and between INHALE THERAPEUTIC SYSTEMS, INC., a Delaware
corporation ("ASSIGNOR") and INHALE 201 INDUSTRIAL ROAD, L.P., a California
limited partnership ("ASSIGNEE").

                                    RECITALS:

         A. Assignor is a party to certain agreements executed in connection
with that certain real property commonly known as 201 Industrial Road, San
Carlos, California (the "PROPERTY") as more fully described in EXHIBIT A
attached hereto, which agreements are described in Schedule 1 attached hereto
(the "AGREEMENTS"); and

         B. Assignor desires to assign its rights and delegate its duties in the
Agreements to Assignee, and Assignee desires to accept the assignment and
delegation thereof.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of the promises and conditions
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

         1. Effective as of the Effective Date (as defined below): (i) Assignor
hereby assigns to Assignee all of its right, title and interest in and to the
Agreements, and (ii) Assignee does hereby accept this assignment and, for the
benefit of Assignor, expressly assumes and agrees to hereafter perform all of
the terms, covenants, conditions and obligations of Assignor under the
Agreements.

         2. Assignor hereby agrees to indemnify Assignee against and hold
Assignee harmless from any and all cost, liability, loss, damage or expense,
including, without limitation, attorneys' fees, arising out of or relating to
events occurring prior to the Effective Date (as defined below) and arising out
of Assignor's obligations under the Agreements.

         3. Assignee hereby agrees to indemnify Assignor against and hold
Assignor harmless from any and all cost, liability, loss, damage or expense,
including, without limitation, attorneys' fees, arising out of or relating to
events occurring after the Effective Date and arising out of Assignee's
obligations under the Agreements.

         4. In the event of any litigation arising out of this Assignment, the
non-prevailing party shall pay the prevailing party's costs and expenses of such
litigation, including, without limitation, attorneys' fees.

         5. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.

         6. This Assignment shall be governed by and construed in accordance
with the laws of the State of California.

<PAGE>

         7. This Assignment may be signed in two or more counterparts. When at
least one such counterpart has been signed by each party, this Assignment shall
be deemed to have been fully executed, each counterpart shall be deemed to be an
original, and all counterparts shall be deemed to be one and the same agreement.

         8. For purposes of this Assignment, the "EFFECTIVE DATE" shall be the
date of recordation of the Deed, as defined in that certain Contribution
Agreement, dated as of September __, 2000 between Assignor and Assignee.

         IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
the day and year first above written.

ASSIGNOR:                           ASSIGNEE:

INHALE THERAPEUTIC SYSTEMS, INC.,   INHALE 201 INDUSTRIAL ROAD, L.P.
a Delaware corporation.             a California limited partnership

                                    By Scimed Prop III, a California corporation
                                    General Partner

By: ___________________________     By: ___________________________

Name: _________________________     Name: _________________________

Title: ________________________     Title: ________________________

By: ___________________________     By: ___________________________

Name: _________________________     Name: _________________________

Title: ________________________     Title: ________________________

<PAGE>

                                   SCHEDULE 1
                                   AGREEMENTS
<TABLE>

<S>      <C>
1.       Building 4, Phase 1 A Two Story Research & Development Laboratory
         Office Shell Improvements (dated as of March 16, 1999) between Inhale
         Therapeutic Systems, Inc. and Dowler Gruman Architects

2.       Building 4, Phase 1 A Core Improvements (dated as of July 18, 2000)
         between Inhale Therapeutic Systems, Inc. and Dowler Gruman Architects

3.       Building 4, Phase 1, Shell and Core (base agreement, general conditions
         and supplementary general conditions) dated as of August 19, 1999
         between Inhale Therapeutic Systems, Inc. and South Bay
         Construction, Inc.
4.       Building 4, Phase A, Interior Core Improvements (base agreement,
         general conditions and supplementary general conditions) dated as
         of March 14, 2000 between Inhale Therapeutic Systems, Inc. and
         Rudolph & Sletten, Inc.
</TABLE>

<PAGE>

                                  SCHEDULE 2.2

                               CONSTRUCTION COSTS

<TABLE>
<CAPTION>
                                    SCHEDULE 2.2 - REIMBURSEMENT OF CONSTRUCTION COSTS THROUGH ESCROW
                                    -----------------------------------------------------------------
CATEGORY                                        VENDOR                     DESCRIPTION                 AMOUNT            TOTAL
--------                                 ----------------------    ----------------------------    --------------    ---------------
<S>                                      <C>                       <C>                             <C>               <C>
SITEWORK                                 South Bay Construction    Phase 1 - Draws 1-8             Included Below

BUILDING & PARKING                       South Bay Construction    Phase 1 - Draws 1-8              $8,490,593.09    $ 8,490,593.09
                                         South Bay Change Order                                     $1,109,308.13    $ 1,109,308.13

TENANT IMPROVEMENTS
     Phase 1A                            Enslow Consulting         Phase 1 TI - Consulting              32,199.31      2,897,045.21
                                         Dowler-Gruman             Phase 1A TI - Architecture          248,595.89
                                         Dowler-Gruman             Phase 1A TI - Architecture           17,748.01
                                         Rudolph and Sletten       Phase 1A TI - General Contr.      2,598,502.00

     Phase 1B                            Dowler-Gruman             Phase 1B TI - Architecture            4,595.00         10,210.00
                                         Dowler-Gruman             Phase 1B TI - Architecture            5,615.00

SOFT COSTS
     Architecture/Eng/Cons               Dowler-Gruman             Architects                          902,958.21      1,175,317.90
                                         Geomatrix                 Geotechnical                         93,623.52
                                         Smith-Emery               Consulting                           38,238.35
                                         Enslow Consulting         Consulting                          135,323.38
                                         Various                   Consulting                            5,174.44

TOTAL CONSTRUCTION COSTS PAID                                                                                         13,682,474.32
LESS: LOAN CREDIT                                                                                                     (3,000,000.00)
LESS: TENANT CONTRIBUTION FOR SHELL COST                                                                                (479,387.00)
                                         NET REIMBURSEMENT TO INHALE THROUGH ESCROW                                  $10,203,087.32
</TABLE>

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