<SUBMISSION>
<ACCESSION-NUMBER>0000912057-02-032776
<TYPE>S-8
<PUBLIC-DOCUMENT-COUNT>4
<FILING-DATE>20020819
<EFFECTIVENESS-DATE>20020819
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>INHALE THERAPEUTIC SYSTEMS INC
<CIK>0000906709
<ASSIGNED-SIC>2834
<IRS-NUMBER>943134940
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-8
<ACT>33
<FILE-NUMBER>333-98321
<FILM-NUMBER>02742356
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>150 INDUSTRIAL RD
<CITY>SAN CARLOS
<STATE>CA
<ZIP>94070
<PHONE>6506313100
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>150 INDUSTRIAL ROAD
<CITY>SAN CARLOS
<STATE>CA
<ZIP>94070
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>INHALE THERAPEUTIC SYSTEMS
<DATE-CHANGED>19940303
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>S-8
<SEQUENCE>1
<FILENAME>a2087442zs-8.htm
<DESCRIPTION>S-8
<TEXT>
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<P ALIGN="CENTER"><FONT SIZE=2><B>As filed with the Securities and Exchange Commission on August&nbsp;19, 2002  </B></FONT></P>

<P ALIGN="RIGHT"><FONT SIZE=2><B> Registration No.&nbsp;333-  </B></FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=5><B>SECURITIES AND EXCHANGE COMMISSION<BR>  </B></FONT><FONT SIZE=2><B>Washington, D.C. 20549  </B></FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=5><B>FORM S-8<BR>  </B></FONT><FONT SIZE=2><B>REGISTRATION STATEMENT<BR>
UNDER<BR>
THE SECURITIES ACT OF 1933  </B></FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=5><B>Inhale Therapeutic Systems,&nbsp;Inc.<BR>  </B></FONT><FONT SIZE=2>(Exact name of registrant as specified in its charter) </FONT></P>

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<TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2><B>Delaware</B></FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2><B>94-3134940</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2>(State of Incorporation)</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="33%" ALIGN="CENTER"><FONT SIZE=2>(I.R.S. Employer Identification No.)</FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2><B>150 Industrial Road<BR>
San Carlos, California 94070<BR>  </B></FONT><FONT SIZE=2>(Address of principal executive offices) </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><B>Inhale Therapeutic Systems,&nbsp;Inc. Employee Stock Purchase Plan<BR>  </B></FONT><FONT SIZE=2>(Full title of the plans) </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>Ajit S. Gill<BR>
President, Chief Executive Officer and Director<BR>
Inhale Therapeutic Systems,&nbsp;Inc.<BR>
150 Industrial Road<BR>
San Carlos, California 94070<BR>
(650)&nbsp;631-3100<BR>  </B></FONT><FONT SIZE=2>(Name, address, including zip code, and telephone number, including area code, of agent for service) </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2>Copies
to:<BR></FONT> <FONT SIZE=2><B>Mark P. Tanoury, Esq.<BR>
John M. Geschke, Esq.<BR>
Cooley Godward LLP<BR>
Five Palo Alto Square<BR>
3000 El Camino Real<BR>
Palo Alto, California 94306<BR>
(650)&nbsp;843-5000  </B></FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><B> CALCULATION OF REGISTRATION FEE  </B></FONT></P>

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<TD WIDTH="34%" ALIGN="CENTER" VALIGN="BOTTOM"><FONT SIZE=1><B>Title of Securities<BR>
to be Registered</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="CENTER" VALIGN="BOTTOM"><FONT SIZE=1><B>Amount to<BR>
be Registered(1)</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="CENTER" VALIGN="BOTTOM"><FONT SIZE=1><B>Proposed Maximum<BR>
Offering Price<BR>
per Share(2)</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER" VALIGN="BOTTOM"><FONT SIZE=1><B>Proposed Maximum<BR>
Aggregate<BR>
Offering Price(2)</B></FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="CENTER" VALIGN="BOTTOM"><FONT SIZE=1><B>Amount of<BR>
Registration Fee</B></FONT></TD>
</TR>
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<TD COLSPAN=9 VALIGN="BOTTOM"><HR NOSHADE></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="34%"><FONT SIZE=2>Common Stock, par value $0.0001 per share</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="CENTER"><FONT SIZE=2>500,000 shares</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="CENTER"><FONT SIZE=2>$7.80</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="CENTER"><FONT SIZE=2>$3,900,000.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="CENTER"><FONT SIZE=2>$358.80</FONT></TD>
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<TD COLSPAN=9 VALIGN="BOTTOM"><HR NOSHADE></TD>
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<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Pursuant
to Rule&nbsp;416(a), this Registration Statement shall also cover any additional shares of Registrant's Common Stock that become issuable under the plan by reason of any
stock dividend, stock split, recapitalization or other similar transaction effected without receipt of consideration that increases the number of outstanding shares of Registrant's Common Stock.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Estimated
solely for the purpose of calculating the amount of the registration fee pursuant to Rule&nbsp;457(h). The price per share and aggregate offering price are based upon the
average of the high and low prices of Registrant's Common Stock on August&nbsp;14, 2002 as reported on the Nasdaq National Market (pursuant to Rule&nbsp;457(c) under the Securities Act of 1933, as
amended).   </FONT></DD></DL>
<BR>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_de2077_1_2"> </A> </FONT> <FONT SIZE=2><B>INCORPORATION BY REFERENCE OF CONTENTS OF<BR>
REGISTRATION STATEMENT ON FORM S-8 NO. 33-79630  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The contents of Registration Statement on Form&nbsp;S-8 No.&nbsp;33-79630 filed with the Securities and Exchange Commission on
June&nbsp;1, 1994 are incorporated by reference herein with such modifications as are set forth below. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>INDEMNIFICATION OF DIRECTORS AND OFFICERS  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Section&nbsp;145 of the Delaware General Corporation Law, the Registrant has broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act of 1933, as amended. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Registrant's certificate of incorporation, as amended, provides for the elimination of liability for monetary damages for breach of the directors' fiduciary duty of care to the
Registrant and its stockholders. These provisions do not eliminate the directors' duty of care and, in appropriate circumstances, equitable remedies such as an injunctive or other forms of
non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director's duty of loyalty to the
Registrant, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, for any transaction from which the director derived an improper personal
benefit and for violating Section&nbsp;174 of the Delaware General Corporation Law. The provision does not affect a director's responsibilities under any other laws, such as the federal securities
laws or state or federal environmental laws. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Registrant has entered into agreements with its directors and executive officers that require the Registrant to indemnify such persons against expenses, judgments, fines, settlements
and other amounts actually and reasonably incurred (including expenses of a derivative action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a
party by reason of the fact that such person is or was a director or officer of the Registrant or any of the Registrant's affiliated enterprises, provided such person acted in god faith and in a
manner such person reasonably believed to be in or not opposed to the best interests of the Registrant and, with respect to any criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dg2077_exhibits"> </A>
<A NAME="toc_dg2077_1"> </A>
<BR></FONT><FONT SIZE=2><B>EXHIBITS    <BR>  </B></FONT></P>

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<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>Exhibit<BR>
Number</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="80%" ALIGN="CENTER"><FONT SIZE=1><B>Description</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="4%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>3.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2>Certificate of Incorporation of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2>(1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
3.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Bylaws of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
3.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Certificate of Amendment of the Amended Certificate of Incorporation of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
3.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Certificate of Designation of Series&nbsp;A Junior Participating Preferred Stock of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
3.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Certificate of Designation of Series&nbsp;B Convertible Preferred Stock of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Reference is made to Exhibits&nbsp;3.1, 3.2, 3.3, 3.4 and 3.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Restated Investor Rights Agreement, dated April 29, 1993, as amended October&nbsp;29, 1993, by and among the Registrant and certain other persons named therein.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Stock Purchase Agreement, dated January&nbsp;18, 1995, by and between the Registrant and Pfizer, Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Form of Purchase Agreement, dated January&nbsp;28, 1997, by and between the Registrant and the individual Purchasers.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Stock Purchase Agreement, dated December&nbsp;8, 1998, by and between the Registrant and Capital Research and Management Company</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(6</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.6</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Purchase Agreement, dated October&nbsp;6, 1999, by and among the Registrant and Lehman Brothers Inc., Deutsche Bank Securities Inc. and U.S.&nbsp;Bancorp Piper Jaffray&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Resale Registration Rights Agreement, dated October&nbsp;13, 1999, by and among the Registrant and Lehman Brothers Inc., Deutsche Bank Securities Inc. and U.S.&nbsp;Bancorp Piper Jaffray&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Indenture, dated October&nbsp;13, 1999, by and between the Registrant as Issuer and Chase Manhattan Bank and Trust Company, National Association as Trustee</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Form of the Registrant Registration Rights Agreement, dated January&nbsp;25, 2000, by and between the Registrant and Selling Shareholder.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Purchase Agreement, dated February&nbsp;2, 2000, by and among the Registrant and Merrill Lynch, Pierce, Fenner&nbsp;&amp; Smith Incorporated, Deutsche Bank Securities Inc., Lehman Brothers Inc. and U.S.&nbsp;Bancorp Piper
Jaffray&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Resale Registration Rights Agreement, dated February&nbsp;8, 2000, by and among the Registrant and Merrill Lynch, Pierce, Fenner&nbsp;&amp; Smith Incorporated, Deutsche Bank Securities Inc., Lehman Brothers Inc. and U.S.&nbsp;Bancorp Piper Jaffray
Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Indenture, dated February&nbsp;8, 2000, by and between the Registrant as Issuer and Chase Manhattan Bank and Trust Company, National Association as Trustee</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Specimen common stock certificate of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Specimen warrants to purchase shares of common stock of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.15</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Purchase Agreement, dated October&nbsp;11, 2000, by and among the Registrant and Merrill Lynch, Pierce, Fenner &amp; Smith Incorporated, Deutsche Bank Securities Inc., Lehman Brothers Inc. and U.S.&nbsp;Bancorp Piper Jaffray&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Resale Registration Rights Agreement, dated October&nbsp;17, 2000, by and among the Registrant and Merrill Lynch, Pierce, Fenner &amp; Smith Incorporated, Deutsche Bank Securities Inc., Lehman Brothers Inc. and U.S.&nbsp;Bancorp Piper
Jaffray&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE>
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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Indenture, dated October&nbsp;17, 2000, by and between the Registrant as Issuer and Chase Manhattan Bank and Trust Company, National Association as Trustee</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.18</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Rights Agreement, dated June&nbsp;1, 2001, by and between the Registrant and Mellon Investor Services&nbsp;LLC</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.19</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Form of Right Certificate of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.20</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Stock Purchase Agreement, dated January&nbsp;7, 2002, by and between the Registrant and Enzon,&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
5.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Opinion of Cooley Godward&nbsp;LLP</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
23.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Consent of Ernst&nbsp;&amp; Young LLP, independent auditors</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
23.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Consent of Cooley Godward&nbsp;LLP is contained in Exhibit&nbsp;5.1 to this Registration Statement</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
24</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Power of Attorney is contained on the signature pages.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
99.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Inhale Therapeutic Systems, Inc. Employee Stock Purchase Plan, as amended and restated</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Quarterly Report on Form&nbsp;10-Q for the quarter ended June&nbsp;30, 1998.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Quarterly Report on Form&nbsp;10-Q for the quarter ended June&nbsp;30, 2000.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-1 (No.&nbsp;33-75942), as amended.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-1 (No.&nbsp;33-89502), as amended.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-3 (No.&nbsp;333-20787).
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-3 (No.&nbsp;333-68897), as amended.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-3 (No.&nbsp;333-94161), as amended.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Annual Report on Form&nbsp;10-K for the year ended December&nbsp;31, 1999.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Quarterly Report on Form&nbsp;10-Q for the quarter ended September&nbsp;30, 2000.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(10)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-3 (No.&nbsp;333-53678), filed on
January&nbsp;12, 2001.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(11)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Current Report on Form&nbsp;8-K, filed on June&nbsp;4, 2001.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(12)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Current Report on Form&nbsp;8-K, filed on January&nbsp;8, 2002.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(13)</FONT></DT><DD><FONT SIZE=2>Filed
herewith. </FONT></DD></DL>
<HR NOSHADE>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="jc2077_signatures"> </A>
<A NAME="toc_jc2077_1"> </A>
<BR></FONT><FONT SIZE=2><B>SIGNATURES    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form&nbsp;S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San
Carlos, State of California, on August&nbsp;19, 2002. </FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2><B>INHALE THERAPEUTIC SYSTEMS, INC.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>AJIT S. GILL</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Ajit S. Gill<BR>
President, Chief Executive Officer and Director</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="jc2077_power_of_attorney"> </A>
<A NAME="toc_jc2077_2"> </A>
<BR></FONT><FONT SIZE=2><B>POWER OF ATTORNEY    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><B>KNOW ALL PERSONS BY THESE PRESENTS</B></FONT><FONT SIZE=2>, that each person whose signature appears below constitutes and appoints
Ajit&nbsp;S. Gill and Brigid&nbsp;A. Makes, and each or any one of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. </FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="37%" ALIGN="CENTER"><FONT SIZE=1><B>Signature<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="37%" ALIGN="CENTER"><FONT SIZE=1><B>Title</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="21%" ALIGN="CENTER"><FONT SIZE=1><B>Date</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" VALIGN="TOP"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="37%"><FONT SIZE=2>/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>AJIT S. GILL</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Ajit S. Gill</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="37%"><FONT SIZE=2>President, Chief Executive Officer and Director (Principal Executive Officer)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%"><FONT SIZE=2>August&nbsp;19, 2002</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="37%"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>ROBERT B. CHESS</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Robert B. Chess</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%"><FONT SIZE=2><BR>
Chairman of the Board of Directors</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%"><FONT SIZE=2><BR>
August&nbsp;19, 2002</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="37%"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>BRIGID A. MAKES</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Brigid A. Makes</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%"><FONT SIZE=2><BR>
Vice President, Finance and Administration,<BR>
Chief Financial Officer and Assistant Secretary (Principal Financial and Accounting Officer)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%"><FONT SIZE=2><BR>
August&nbsp;19, 2002</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>JOHN S. PATTON</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> John S. Patton</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
Director</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP"><FONT SIZE=2><BR>
August&nbsp;19, 2002</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" VALIGN="TOP"><BR><HR NOSHADE><FONT SIZE=2> James B. Glavin</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
Director</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" VALIGN="TOP"><BR><HR NOSHADE><FONT SIZE=2> Melvin Perelman</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
Director</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>IRWIN LERNER</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Irwin Lerner</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
Director</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP"><FONT SIZE=2><BR>
August&nbsp;19, 2002</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>ROY A. WHITFIELD</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Roy A. Whitfield</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
Director</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP"><FONT SIZE=2><BR>
August&nbsp;19, 2002</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>CHRISTOPHER A. KUEBLER</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Christopher A. Kuebler</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="TOP"><FONT SIZE=2><BR>
Director</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP"><FONT SIZE=2><BR>
August&nbsp;19, 2002</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE>
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<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ka2077_exhibit_index"> </A>
<A NAME="toc_ka2077_1"> </A>
<BR></FONT><FONT SIZE=2><B>EXHIBIT INDEX    <BR>  </B></FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>Exhibit<BR>
Number</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="80%" ALIGN="CENTER"><FONT SIZE=1><B>Description</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="4%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>3.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2>Certificate of Incorporation of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2>(1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
3.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Bylaws of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
3.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Certificate of Amendment of the Amended Certificate of Incorporation of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
3.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Certificate of Designation of Series&nbsp;A Junior Participating Preferred Stock of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
3.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Certificate of Designation of Series&nbsp;B Convertible Preferred Stock of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Reference is made to Exhibits&nbsp;3.1, 3.2, 3.3, 3.4 and 3.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Restated Investor Rights Agreement, dated April 29, 1993, as amended October&nbsp;29, 1993, by and among the Registrant and certain other persons named therein.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Stock Purchase Agreement, dated January&nbsp;18, 1995, by and between the Registrant and Pfizer, Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Form of Purchase Agreement, dated January&nbsp;28, 1997, by and between the Registrant and the individual Purchasers.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Stock Purchase Agreement, dated December&nbsp;8, 1998, by and between the Registrant and Capital Research and Management Company</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(6</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.6</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Purchase Agreement, dated October&nbsp;6, 1999, by and among the Registrant and Lehman Brothers Inc., Deutsche Bank Securities Inc. and U.S.&nbsp;Bancorp Piper Jaffray&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Resale Registration Rights Agreement, dated October&nbsp;13, 1999, by and among the Registrant and Lehman Brothers Inc., Deutsche Bank Securities Inc. and U.S.&nbsp;Bancorp Piper Jaffray&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Indenture, dated October&nbsp;13, 1999, by and between the Registrant as Issuer and Chase Manhattan Bank and Trust Company, National Association as Trustee</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Form of the Registrant Registration Rights Agreement, dated January&nbsp;25, 2000, by and between the Registrant and Selling Shareholder.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Purchase Agreement, dated February&nbsp;2, 2000, by and among the Registrant and Merrill Lynch, Pierce, Fenner&nbsp;&amp; Smith Incorporated, Deutsche Bank Securities Inc., Lehman Brothers Inc. and U.S.&nbsp;Bancorp Piper
Jaffray&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Resale Registration Rights Agreement, dated February&nbsp;8, 2000, by and among the Registrant and Merrill Lynch, Pierce, Fenner&nbsp;&amp; Smith Incorporated, Deutsche Bank Securities Inc., Lehman Brothers Inc. and U.S.&nbsp;Bancorp Piper Jaffray
Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Indenture, dated February&nbsp;8, 2000, by and between the Registrant as Issuer and Chase Manhattan Bank and Trust Company, National Association as Trustee</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Specimen common stock certificate of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Specimen warrants to purchase shares of common stock of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.15</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Purchase Agreement, dated October&nbsp;11, 2000, by and among the Registrant and Merrill Lynch, Pierce, Fenner &amp; Smith Incorporated, Deutsche Bank Securities Inc., Lehman Brothers Inc. and U.S.&nbsp;Bancorp Piper Jaffray&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Resale Registration Rights Agreement, dated October&nbsp;17, 2000, by and among the Registrant and Merrill Lynch, Pierce, Fenner &amp; Smith Incorporated, Deutsche Bank Securities Inc., Lehman Brothers Inc. and U.S.&nbsp;Bancorp Piper
Jaffray&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
</TABLE>
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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Indenture, dated October&nbsp;17, 2000, by and between the Registrant as Issuer and Chase Manhattan Bank and Trust Company, National Association as Trustee</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.18</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Rights Agreement, dated June&nbsp;1, 2001, by and between the Registrant and Mellon Investor Services&nbsp;LLC</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.19</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Form of Right Certificate of the Registrant</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
4.20</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Stock Purchase Agreement, dated January&nbsp;7, 2002, by and between the Registrant and Enzon,&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
5.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Opinion of Cooley Godward&nbsp;LLP</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
23.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Consent of Ernst&nbsp;&amp; Young LLP, independent auditors</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
23.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Consent of Cooley Godward&nbsp;LLP is contained in Exhibit&nbsp;5.1 to this Registration Statement</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
24</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Power of Attorney is contained on the signature pages.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
99.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="80%"><FONT SIZE=2><BR>
Inhale Therapeutic Systems, Inc. Employee Stock Purchase Plan, as amended and restated</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
(13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Quarterly Report on Form&nbsp;10-Q for the quarter ended June&nbsp;30, 1998.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Quarterly Report on Form&nbsp;10-Q for the quarter ended June&nbsp;30, 2000.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-1 (No.&nbsp;33-75942), as amended.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-1 (No.&nbsp;33-89502), as amended.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-3 (No.&nbsp;333-20787).
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-3 (No.&nbsp;333-68897), as amended.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-3 (No.&nbsp;333-94161), as amended.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Annual Report on Form&nbsp;10-K for the year ended December&nbsp;31, 1999.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Quarterly Report on Form&nbsp;10-Q for the quarter ended September&nbsp;30, 2000.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(10)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Registration Statement on Form&nbsp;S-3 (No.&nbsp;333-53678), filed on
January&nbsp;12, 2001.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(11)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Current Report on Form&nbsp;8-K, filed on June&nbsp;4, 2001.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(12)</FONT></DT><DD><FONT SIZE=2>Incorporated
by reference to the indicated exhibit in the Registrant's Current Report on Form&nbsp;8-K, filed on January&nbsp;8, 2002.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(13)</FONT></DT><DD><FONT SIZE=2>Filed
herewith. </FONT></DD></DL>
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<TYPE>EX-5.1
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<BR></FONT><FONT SIZE=2><B>Exhibit 5.1    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>[LETTERHEAD
OF COOLEY GODWARD LLP] </FONT></P>

<P><FONT SIZE=2>August&nbsp;19,
2002 </FONT></P>

<P><FONT SIZE=2>Inhale
Therapeutic Systems,&nbsp;Inc.<BR>
150 Industrial Road<BR>
San Carlos, CA 94070 </FONT></P>

<P><FONT SIZE=2>Ladies
and Gentlemen: </FONT></P>

<P><FONT SIZE=2>You
have requested our opinion with respect to certain matters in connection with the filing by </FONT><FONT SIZE=2><B>INHALE THERAPEUTIC
SYSTEMS,&nbsp;INC.</B></FONT><FONT SIZE=2> (the "Registrant") of a Registration Statement on Form&nbsp;S-8 (the "Registration Statement") with the Securities and Exchange Commission
covering the offering of up to an aggregate of 500,000 shares of the Registrant's Common Stock, $0.0001 par value (the "Shares"), pursuant to the Registrant's Employee Stock Purchase Plan (the
"Plan"). </FONT></P>

<P><FONT SIZE=2>In
connection with this opinion, we have examined the Registration Statement, the Plan, the Registrant's Certificate of Incorporation, as amended, and Bylaws and such other documents, records,
certificates, memoranda and other instruments as we deem necessary as a basis for this opinion. We have assumed the genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof and the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness
thereof. </FONT></P>

<P><FONT SIZE=2>On
the basis of the foregoing, and in reliance thereon, we are of the opinion that the Shares, when sold and issued in accordance with the Plan and the Registration Statement, will be validly issued,
fully paid and nonassessable (except as to shares issued pursuant to certain deferred payment arrangements, which will be fully paid and nonassessable when such deferred payments are made in full). </FONT></P>

<P><FONT SIZE=2>We
consent to the filing of this opinion as an exhibit to the Registration Statement. </FONT></P>

<P><FONT SIZE=2>Sincerely,
</FONT></P>

<P><FONT SIZE=2>COOLEY GODWARD LLP</FONT></P>

<P><FONT SIZE=2>/s/&nbsp;&nbsp;</FONT><FONT
SIZE=2>VINCENT P. PANGRAZIO</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>Vincent
P. Pangrazio, Esq. </FONT></P>

<P><FONT SIZE=2>VPP:slk </FONT></P>

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<BR></FONT><FONT SIZE=2><B>EXHIBIT 23.1    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>CONSENT OF ERNST&nbsp;&amp; YOUNG LLP, INDEPENDENT AUDITORS  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We consent to the incorporation by reference in the Registration Statement (Form&nbsp;S-8) pertaining to the Inhale Therapeutic Systems,&nbsp;Inc.
Employee Stock Purchase Plan of our report dated January&nbsp;18, 2002, with respect to the consolidated financial statements of Inhale Therapeutic Systems,&nbsp;Inc. included in its Annual Report
(Form&nbsp;10-K) for the year ended December&nbsp;31, 2001, filed with the Securities and Exchange Commission. </FONT></P>

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<TD WIDTH="49%"><FONT SIZE=2>/s/ ERNST &amp; YOUNG LLP</FONT></TD>
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<P><FONT SIZE=2>Palo
Alto, California<BR>
August 13, 2002 </FONT></P>

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<A NAME="toc_ki2077_1"> </A>
<BR></FONT><FONT SIZE=2><B>Exhibit 99.1    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2077_inhale_therapeutic_syst__ki202352"> </A>
<A NAME="toc_ki2077_2"> </A>
<BR></FONT><FONT SIZE=2><B>INHALE THERAPEUTIC SYSTEMS<BR>  EMPLOYEE STOCK PURCHASE PLAN    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ki2077_adopted_by_the_board_of_direct__ado05144"> </A>
<A NAME="toc_ki2077_3"> </A>
<BR></FONT><FONT SIZE=2><B>ADOPTED BY THE BOARD OF DIRECTORS FEBRUARY&nbsp;10, 1994<BR>  APPROVED BY STOCKHOLDERS FEBRUARY&nbsp;18, 1994<BR>  AMENDED AND RESTATED MAY 10, 2002<BR>  APPROVED BY STOCKHOLDERS JUNE 25, 2002    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>1.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>PURPOSE.  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The purpose of the Plan is to provide a means by which Employees of the Company and certain designated Related
Corporations may be given an opportunity to purchase shares of the Common Stock of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Company, by means of the Plan, seeks to retain the services of such Employees, to secure and retain the services of
new Employees and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Related Corporations. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(c)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Company intends that the Purchase Rights be considered options issued under an Employee Stock Purchase Plan. </FONT></P>

<P><FONT SIZE=2><B>2.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>DEFINITIONS.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Board"</I></B></FONT><FONT SIZE=2> means the Board of Directors of the Company. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Code"</I></B></FONT><FONT SIZE=2> means the Internal Revenue Code of 1986, as
amended</FONT><FONT SIZE=2><I>.</I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(c)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Committee"</I></B></FONT><FONT SIZE=2> means a committee appointed by the Board in accordance with
Section&nbsp;3(c) of the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(d)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Common Stock"</I></B></FONT><FONT SIZE=2> means the common stock of the Company. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(e)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Company"</I></B></FONT><FONT SIZE=2> means Inhale Therapeutic Systems, a Delaware corporation. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(f)&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B><I>"Contributions"</I></B></FONT><FONT SIZE=2> means the payroll deductions, and other additional payments specifically provided
for in the Offering, that a Participant contributes to fund the exercise of a Purchase Right. A Participant may make additional payments into his or her account, if specifically provided for in the
Offering, and then only if the Participant has not already had the maximum permitted amount through payroll deductions withheld during the Offering. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(g)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Corporate Transaction"</I></B></FONT><FONT SIZE=2> means the occurrence, in a single transaction or
in a series of related transactions, of any one or more of the following events: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(i)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(ii)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company; </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(iii)</B></FONT><FONT SIZE=2>&nbsp;a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(iv)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares
of Common Stock outstanding immediately preceding the </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>1</FONT></P>

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<P><FONT SIZE=2>
merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or
otherwise. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(h)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Director"</I></B></FONT><FONT SIZE=2> means a member of the Board. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(i)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Eligible Employee"</I></B></FONT><FONT SIZE=2> means an Employee who meets the requirements set
forth in the Offering for eligibility to participate in the Offering, provided that such Employee also meets the requirements for eligibility to participate set forth in the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(j)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Employee"</I></B></FONT><FONT SIZE=2> means any person, including Officers and Directors, who is
employed for purposes of Section&nbsp;423(b)(4) of the Code by the Company or a Related Corporation. Neither service as a Director nor payment of a director's fee shall be sufficient to make an
individual an Employee of the Company or a Related Corporation. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(k)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Employee Stock Purchase Plan"</I></B></FONT><FONT SIZE=2> means a plan that grants Purchase Rights
intended to be options issued under an "employee stock purchase plan," as that term is defined in Section&nbsp;423(b) of the Code. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(l)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Exchange Act"</I></B></FONT><FONT SIZE=2> means the Securities Exchange Act of 1934, as amended. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(m)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Fair Market Value"</I></B></FONT><FONT SIZE=2> means the value of a security, as determined in good
faith by the Board. If the security is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of the security, unless
otherwise determined by the Board, shall be the closing sales price (rounded up where necessary to the nearest whole cent) for such security (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume of trading in the relevant security of the Company) on the Trading Day prior to the relevant determination date, as
reported in </FONT><FONT SIZE=2><I>The Wall Street Journal</I></FONT><FONT SIZE=2> or such other source as the Board deems reliable. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(n)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Offering"</I></B></FONT><FONT SIZE=2> means the grant of Purchase Rights to purchase shares of
Common Stock under the Plan to Eligible Employees. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(o)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Offering Date"</I></B></FONT><FONT SIZE=2> means a date selected by the Board for an Offering to
commence. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(p)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B>"</B></FONT><FONT SIZE=2><B><I>Officer</I></B></FONT><FONT SIZE=2><B>"</B></FONT><FONT SIZE=2> means a person
who is an officer of the Company within the meaning of Section&nbsp;16 of the Exchange Act and the rules and regulations promulgated thereunder. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(q)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Participant"</I></B></FONT><FONT SIZE=2> means an Eligible Employee who holds an outstanding
Purchase Right granted pursuant to the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(r)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Plan"</I></B></FONT><FONT SIZE=2> means this Inhale Therapeutic Systems Employee Stock Purchase
Plan, as amended and restated May 10, 2002. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(s)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Purchase Date"</I></B></FONT><FONT SIZE=2> means one or more dates during an Offering established by
the Board on which Purchase Rights shall be exercised and as of which purchases of shares of Common Stock shall be carried out in accordance with such Offering. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(t)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Purchase Period"</I></B></FONT><FONT SIZE=2> means a period of time specified within an Offering
beginning on the Offering Date or on the next day following a Purchase Date within an Offering and ending on a Purchase Date. An Offering may consist of one or more Purchase Periods. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(u)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Purchase Right"</I></B></FONT><FONT SIZE=2> means an option to purchase shares of Common Stock
granted pursuant to the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(v)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Related Corporation"</I></B></FONT><FONT SIZE=2> means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(w)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>"Securities Act"</I></B></FONT><FONT SIZE=2> means the Securities Act of 1933, as amended. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(x)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B>"</B></FONT><FONT SIZE=2><B><I>Trading Day</I></B></FONT><FONT SIZE=2><B>"</B></FONT><FONT SIZE=2> means any
day the exchange(s) or market(s) on which shares of Common Stock are listed, whether it be any established stock exchange, the Nasdaq National Market, the Nasdaq SmallCap Market or otherwise, is open
for trading. </FONT></P>

<P><FONT SIZE=2><B>3.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>ADMINISTRATION.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in
Section&nbsp;3(c). Whether or not the Board has delegated administration, the Board shall have the final power to determine all questions of policy and expediency that may arise in the
administration of the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Board (or the Committee) shall have the power, subject to, and within the limitations of, the express provisions of
the Plan: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(i)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;To determine when and how Purchase Rights to purchase shares of Common Stock shall be granted and the provisions of each
Offering of such Purchase Rights (which need not be identical). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(ii)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;To designate from time to time which Related Corporations of the Company shall be eligible to participate in the Plan. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(iii)</B></FONT><FONT SIZE=2>&nbsp;To construe and interpret the Plan and Purchase Rights, and to establish, amend and revoke rules and regulations for
the administration of the Plan. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(iv)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;To amend the Plan as provided in Section&nbsp;15. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(v)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best
interests of the Company and its Related Corporations and to carry out the intent that the Plan be treated as an Employee Stock Purchase Plan. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(c)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Board may delegate administration of the Plan to a Committee of the Board composed of two (2)&nbsp;or more members
of the Board. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, subject,
however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the
Board the administration of the Plan. If administration is delegated to a Committee, references to the Board in this Plan and in the Offering document shall thereafter be deemed to be to the Board or
the Committee, as the case may be. </FONT></P>

<P><FONT SIZE=2><B>4.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>SHARES OF COMMON STOCK SUBJECT TO THE PLAN.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of Section&nbsp;14 relating to adjustments upon changes in securities, the shares of Common Stock that may be sold pursuant to
Purchase Rights shall not exceed in the aggregate eight hundred thousand (800,000) shares of Common Stock. If any Purchase Right granted under the Plan shall for any reason terminate without having
been exercised, the shares of Common Stock not purchased under such Purchase Right shall again become available for issuance under the Plan. </FONT></P>

<P><FONT SIZE=2><B>5.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>GRANT OF PURCHASE RIGHTS; OFFERING.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Board may from time to time grant or provide for the grant of Purchase Rights to purchase shares of Common Stock
under the Plan to Eligible Employees in an Offering (consisting of one or more Purchase Periods) on an Offering Date or Offering Dates selected by the Board. Each Offering shall be in such form and
shall contain such terms and conditions as the Board shall deem </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

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<P><FONT SIZE=2>
appropriate, which shall comply with the requirement of Section&nbsp;423(b)(5) of the Code that all Employees granted Purchase Rights shall have the same rights and privileges. The terms and
conditions of an Offering shall be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate Offerings need not be identical, but each Offering shall include
(through incorporation of the provisions of this Plan by reference in the document comprising the Offering or otherwise) the period during which the Offering shall be effective, which period shall not
exceed twenty-seven (27)&nbsp;months beginning with the Offering Date, and the substance of the provisions contained in Sections 6 through 9, inclusive. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;If a Participant has more than one Purchase Right outstanding under the Plan, unless he or she otherwise indicates in
agreements or notices delivered hereunder: (i)&nbsp;each agreement or notice delivered by that Participant shall be deemed to apply to all of his or her Purchase Rights under the Plan, and
(ii)&nbsp;a Purchase Right with a lower exercise price (or an earlier-granted Purchase Right, if different Purchase Rights have identical exercise prices) shall be exercised to the fullest possible
extent before a
Purchase Right with a higher exercise price (or a later-granted Purchase Right if different Purchase Rights have identical exercise prices) shall be exercised. </FONT></P>

<P><FONT SIZE=2><B>6.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>ELIGIBILITY.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;Purchase Rights may be granted only to Employees of the Company or, as the Board may designate as provided in
Section&nbsp;3(b), to Employees of a Related Corporation. Except as provided in Section&nbsp;6(b), an Employee shall not be eligible to be granted Purchase Rights under the Plan unless, on the
Offering Date, such Employee has been in the employ of the Company or the Related Corporation, as the case may be, for such continuous period preceding such Offering Date as the Board may require, but
in no event shall the required period of continuous employment be greater than two (2)&nbsp;years. In addition, the Board may provide that no Employee shall be eligible to be granted Purchase Rights
under the Plan unless, on the Offering Date, such Employee's customary employment with the Company or the Related Corporation is more than twenty (20)&nbsp;hours per week and more than five
(5)&nbsp;months per calendar year. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Board may provide that each person who, during the course of an Offering, first becomes an Eligible Employee shall,
on a date or dates specified in the Offering which coincides with the day on which such person becomes an Eligible Employee or which occurs thereafter, receive a Purchase Right under that Offering,
which Purchase Right shall thereafter be deemed to be a part of that Offering. Such Purchase Right shall have the same characteristics as any Purchase Rights originally granted under that Offering, as
described herein, except that: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(i)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;the date on which such Purchase Right is granted shall be the "Offering Date" of such Purchase Right for all purposes,
including determination of the exercise price of such Purchase Right; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(ii)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;the period of the Offering with respect to such Purchase Right shall begin on its Offering Date and end coincident with
the end of such Offering; and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(iii)</B></FONT><FONT SIZE=2>&nbsp;the Board may provide that if such person first becomes an Eligible Employee within a specified period of time before
the end of the Offering, he or she shall not receive any Purchase Right under that Offering. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(c)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;No Employee shall be eligible for the grant of any Purchase Rights under the Plan if, immediately after any such Purchase
Rights are granted, such Employee owns stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any
Related Corporation. For purposes of this Section&nbsp;6(c), the rules of Section&nbsp;424(d) of the Code shall apply in determining the stock ownership of any Employee, and stock which such </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>

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Employee may purchase under all outstanding Purchase Rights and options shall be treated as stock owned by such Employee. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(d)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;As specified by Section&nbsp;423(b)(8) of the Code, an Eligible Employee may be granted Purchase Rights under the Plan
only if such Purchase Rights, together with any other rights granted under all Employee Stock Purchase Plans of the Company and any Related Corporations, do not permit such Eligible Employee's rights
to purchase stock of the Company or any Related Corporation to accrue at a rate which exceeds twenty five thousand dollars ($25,000) of Fair Market Value of such stock (determined at the time such
rights are granted, and which, with respect to the Plan, shall be determined as of their respective Offering Dates) for each calendar year in which such rights are outstanding at any time. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(e)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;Officers of the Company and any designated Related Corporation, if they are otherwise Eligible Employees, shall be
eligible to participate in Offerings under the Plan. Notwithstanding the foregoing, the Board may provide in an Offering that Employees who are highly compensated Employees within the meaning of
Section&nbsp;423(b)(4)(D) of the Code shall not be eligible to participate. </FONT></P>

<P><FONT SIZE=2><B>7.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>PURCHASE RIGHTS; PURCHASE PRICE.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;On each Offering Date, each Eligible Employee, pursuant to an Offering made under the Plan, shall be granted a Purchase
Right to purchase up to that number of shares of Common Stock purchasable either with a percentage or with a maximum dollar amount, as designated by the Board, but in either case not exceeding fifteen
percent (15%), of such Employee's Earnings (as defined by the Board in each Offering) during the period that begins on the Offering Date (or such later date as the Board determines for a particular
Offering) and ends on the date stated in the Offering, which date shall be no later than the end of the Offering. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Board shall establish one (1)&nbsp;or more Purchase Dates during an Offering as of which Purchase Rights granted
pursuant to that Offering shall be exercised and purchases of shares of Common Stock shall be carried out in accordance with such Offering. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(c)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;In connection with each Offering made under the Plan, the Board may specify a maximum number of shares of Common Stock
that may be purchased by any Participant on any Purchase Date during such Offering. In connection with each Offering made under the Plan, the Board may specify a maximum aggregate number of shares of
Common Stock that may be purchased by all Participants
pursuant to such Offering. In addition, in connection with each Offering that contains more than one Purchase Date, the Board may specify a maximum aggregate number of shares of Common Stock that may
be purchased by all Participants on any given Purchase Date under the Offering. If the aggregate purchase of shares of Common Stock issuable upon exercise of Purchase Rights granted under the Offering
would exceed any such maximum aggregate number, then, in the absence of any Board action otherwise, a pro rata allocation of the shares of Common Stock available shall be made in as nearly a uniform
manner as shall be practicable and equitable. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(d)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The purchase price of shares of Common Stock acquired pursuant to Purchase Rights shall be not less than the lesser of: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(i)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;an amount equal to eighty-five percent (85%) of the Fair Market Value of the shares of Common Stock on the
Offering Date; or </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(ii)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;an amount equal to eighty-five percent (85%) of the Fair Market Value of the shares of Common Stock on the
applicable Purchase Date. </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P>

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<P><FONT SIZE=2><B>8.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>PARTICIPATION; WITHDRAWAL; TERMINATION.  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;A Participant may elect to authorize payroll deductions pursuant to an Offering under the Plan by completing and
delivering to the Company, within the time specified in the Offering, an enrollment form (in such form as the Company may provide). Each such enrollment form shall authorize an amount of Contributions
expressed as a percentage of the submitting Participant's Earnings (as defined in each Offering) during the Offering (not to exceed the maximum percentage specified by the Board). Each Participant's
Contributions shall be credited to a bookkeeping account for such Participant under the Plan and shall be deposited with the general funds of the Company except where applicable law requires that
Contributions be deposited with a third party. To the extent provided in the Offering, a Participant may begin such Contributions after the beginning of the Offering. To the extent provided in the
Offering, a Participant may thereafter reduce (including to zero) or increase his or her Contributions. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;During an Offering, a Participant may cease making Contributions and withdraw from the Offering by delivering to the
Company a notice of withdrawal in such form as the Company may provide. Such withdrawal may be elected at any time prior to the end of the Offering, except as provided otherwise in the Offering. Upon
such withdrawal from the Offering by a Participant, the Company shall distribute to
such Participant all of his or her accumulated Contributions (reduced to the extent, if any, such deductions have been used to acquire shares of Common Stock for the Participant) under the Offering,
and such Participant's Purchase Right in that Offering shall thereupon terminate. A Participant's withdrawal from an Offering shall have no effect upon such Participant's eligibility to participate in
any other Offerings under the Plan, but such Participant shall be required to deliver a new enrollment form in order to participate in subsequent Offerings. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(c)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;Purchase Rights granted pursuant to any Offering under the Plan shall terminate immediately upon a Participant ceasing to
be an Employee for any reason or for no reason (subject to any post-employment participation period required by law) or other lack of eligibility. The Company shall distribute to such
terminated or otherwise ineligible Employee all of his or her accumulated Contributions (reduced to the extent, if any, such deductions have been used to acquire shares of Common Stock for the
terminated or otherwise ineligible Employee) under the Offering. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(d)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;Purchase Rights shall not be transferable by a Participant otherwise than by will or the laws of descent and
distribution, or by a beneficiary designation as provided in Section&nbsp;13 and, during a Participant's lifetime, shall be exercisable only by such Participant. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(e)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;Unless otherwise specified in an Offering, the Company shall have no obligation to pay interest on Contributions. </FONT></P>

<P><FONT SIZE=2><B>9.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>EXERCISE.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;On each Purchase Date during an Offering, each Participant's accumulated Contributions shall be applied to the purchase
of shares of Common Stock up to the maximum number of shares of Common Stock permitted pursuant to the terms of the Plan and the applicable Offering, at the purchase price specified in the Offering.
No fractional shares shall be issued upon the exercise of Purchase Rights unless specifically provided for in the Offering. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;If any amount of accumulated Contributions remains in a Participant's account after the purchase of shares of Common
Stock and such remaining amount is less than the amount required to purchase one share of Common Stock on the final Purchase Date of an Offering, then such remaining amount shall be held in such
Participant's account for the purchase of shares of Common Stock under the next Offering under the Plan, unless such Participant withdraws from such next Offering, as provided in Section&nbsp;8(b),
or is not eligible to participate in such Offering, as provided in Section&nbsp;6, in which case such amount shall be distributed to such Participant after the final Purchase Date, without </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P>

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interest. If the amount of Contributions remaining in a Participant's account after the purchase of shares of Common Stock is at least equal to the amount required to purchase one (1)&nbsp;whole
share of Common Stock on the final Purchase Date of the Offering, then such remaining amount shall be distributed in full to such Participant at the end of the Offering. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(c)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;No Purchase Rights may be exercised to any extent unless the shares of Common Stock to be issued upon such exercise under
the Plan are covered by an effective registration statement pursuant to the Securities Act and the Plan is in material compliance with all applicable federal, state, foreign and other securities and
other laws applicable to the Plan. If on a Purchase Date during any Offering hereunder the shares of Common Stock are not so registered or the Plan is not in such compliance, no Purchase Rights or any
Offering shall be exercised on such Purchase Date, and the Purchase Date shall be delayed until the shares of Common Stock are subject to such an effective registration statement and the Plan is in
such compliance, except that the Purchase Date shall not be delayed more than twelve (12)&nbsp;months and the Purchase Date shall in no event be more than twenty-seven (27)&nbsp;months from the
Offering Date. If, on the Purchase Date under any Offering hereunder, as delayed to the maximum extent permissible, the shares of Common Stock are not registered and the Plan is not in such
compliance, no Purchase Rights or any Offering shall be exercised and all Contributions accumulated during the Offering (reduced to the extent, if any, such deductions have been used to acquire shares
of Common Stock) shall be distributed to the Participants. </FONT></P>


<P><FONT SIZE=2><B>10.&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>COVENANTS OF THE COMPANY.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall seek to obtain from each federal, state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as
may be required to issue and sell shares of Common Stock upon exercise of the Purchase Rights. If, after commercially reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of shares of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell shares of Common Stock upon exercise of such Purchase Rights unless and until such authority is obtained. </FONT></P>

<P><FONT SIZE=2><B>11.&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>USE OF PROCEEDS FROM SHARES OF COMMON STOCK.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights shall constitute general funds of the Company. </FONT></P>

<P><FONT SIZE=2><B>12.&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>RIGHTS AS A STOCKHOLDER.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Participant shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, shares of Common Stock subject to Purchase Rights
unless and until the Participant's shares
of Common Stock acquired upon exercise of Purchase Rights are recorded in the books of the Company (or its transfer agent). </FONT></P>

<P><FONT SIZE=2><B>13.&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>DESIGNATION OF BENEFICIARY.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;A Participant may file&nbsp;a written designation of a beneficiary who is to receive any shares of Common Stock and/or
cash, if any, from the Participant's account under the Plan in the event of such Participant's death subsequent to the end of an Offering but prior to delivery to the Participant of such shares of
Common Stock or cash. In addition, a Participant may file&nbsp;a written designation of a beneficiary who is to receive any cash from the Participant's account under the Plan in the event of such
Participant's death during an Offering. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Participant may change such designation of beneficiary at any time by written notice to the Company. In the event of
the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant's death, the Company shall </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P>

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deliver such shares of Common Stock and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its sole discretion, may deliver such shares of Common Stock and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the Company may designate. </FONT></P>

<P><FONT SIZE=2><B>14.&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>ADJUSTMENTS UPON CHANGES IN SECURITIES; CORPORATE TRANSACTIONS.  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;If any change is made in the shares of Common Stock, subject to the Plan, or subject to any Purchase Right, without the
receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan shall be
appropriately adjusted in the type(s), class(es) and maximum number of shares of Common Stock subject to the Plan pursuant to Section&nbsp;4(a), and the outstanding Purchase Rights shall be
appropriately adjusted in the type(s), class(es), number of shares and purchase limits of such outstanding Purchase Rights. The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a "transaction not involving the receipt of consideration by the Company.") </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;In the event of a Corporate Transaction, then: (i)&nbsp;any surviving or acquiring corporation may continue or assume
Purchase Rights outstanding under the Plan or may substitute similar rights (including a right to acquire the same consideration paid to stockholders in the Corporate Transaction) for those
outstanding under the Plan, or (ii)&nbsp;if any surviving or acquiring corporation does not continue or assume such Purchase Rights or does not substitute similar rights for Purchase Rights
outstanding under the Plan, then, the Participants' accumulated Contributions shall be used to purchase shares of Common Stock within ten (10)&nbsp;business days prior to the Corporate Transaction
under the ongoing Offering, and the Participants' Purchase Rights under the ongoing Offering shall terminate immediately after such purchase. </FONT></P>

<P><FONT SIZE=2><B>15.&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>AMENDMENT OF THE PLAN.  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section&nbsp;14
relating to adjustments upon changes in securities and except as to amendments solely to benefit the administration of the Plan, to take account of a change in legislation or to obtain or maintain
favorable tax, exchange control or regulatory treatment for Participants or the Company or any Related Corporation, no amendment shall be effective unless approved by the stockholders of the Company
to the extent stockholder approval is necessary for the Plan to satisfy the requirements of Section&nbsp;423 of the Code or other applicable laws or regulations. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to
provide Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Employee Stock Purchase Plans and/or to
bring the Plan and/or Purchase Rights into compliance therewith. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(c)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The rights and obligations under any Purchase Rights granted before amendment of the Plan shall not be impaired by any
amendment of the Plan except: (i)&nbsp;with the consent of the person to whom such Purchase Rights were granted, or (ii)&nbsp;as necessary to comply with any laws or governmental regulations
(including, without limitation, the provisions of the Code and the regulations promulgated thereunder relating to Employee Stock Purchase Plans). </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>8</FONT></P>

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<P><FONT SIZE=2><B>16.&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>TERMINATION OR SUSPENSION OF THE PLAN.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Board in its discretion may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall
terminate at the time that all of the shares of Common Stock reserved for issuance under the Plan, as increased and/or adjusted from time to time, have been issued under the terms of the Plan. No
Purchase Rights may be granted under the Plan while the Plan is suspended or after it is terminated. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;Any benefits, privileges, entitlements and obligations under any Purchase Rights while the Plan is in effect shall not be
impaired by suspension or termination of the Plan except (i)&nbsp;as expressly provided in the Plan or with the consent of the person to whom such Purchase Rights were granted, (ii)&nbsp;as
necessary to comply with any laws, regulations, or listing requirements, or (iii)&nbsp;as necessary to ensure that the Plan and/or Purchase Rights comply with the requirements of Section&nbsp;423
of the Code. </FONT></P>

<P><FONT SIZE=2><B>17.&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>EFFECTIVE DATE OF PLAN.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan shall become effective as determined by the Board, but no Purchase Rights shall be exercised unless and until the Plan has been approved by the
stockholders of the Company within twelve (12)&nbsp;months before or after the date the Plan is adopted by the Board. </FONT></P>

<P><FONT SIZE=2><B>18.&nbsp;&nbsp;</B></FONT><FONT SIZE=2><B>MISCELLANEOUS PROVISIONS.  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(a)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The Plan and Offering do not constitute an employment contract. Nothing in the Plan or in the Offering shall in any way
alter the at will nature of a Participant's employment or be deemed to create in any way whatsoever any obligation on the part of any Participant to continue in the employ of the Company or a Related
Corporation, or on the part of the Company or a Related Corporation to continue the employment of a Participant. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(b)</B></FONT><FONT SIZE=2>&nbsp;&nbsp;The provisions of the Plan shall be governed by the laws of the State of California without resort to that state's
conflicts of laws rules. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>9</FONT></P>

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<P><br><A NAME="02PAL2077_4">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<UL>
<FONT SIZE=2><A HREF="#toc_ki2077_1">Exhibit 99.1</A></FONT><BR>
</UL>
<FONT SIZE=2><A HREF="#toc_ki2077_2">INHALE THERAPEUTIC SYSTEMS EMPLOYEE STOCK PURCHASE PLAN</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_ki2077_3">ADOPTED BY THE BOARD OF DIRECTORS FEBRUARY 10, 1994 APPROVED BY STOCKHOLDERS FEBRUARY 18, 1994 AMENDED AND RESTATED MAY 10, 2002 APPROVED BY STOCKHOLDERS JUNE 25, 2002</A></FONT><BR>

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