<PAGE>


                              DEVELOPMENT AGREEMENT


     This DEVELOPMENT AGREEMENT (the "Agreement") is made as of December 22,
1997, by and between DURA PHARMACEUTICALS, INC., a Delaware corporation
("DURA"), and SPIROS DEVELOPMENT CORPORATION II, INC., a Delaware corporation
("Spiros Corp. II").

                                    RECITALS

     WHEREAS, DURA and Spiros Corp. II are parties to the Technology Agreement,
the Manufacturing and Marketing Agreement, and the Albuterol and Product Option
Agreement (all capitalized terms shall have the respective meaning set forth in
Section 1 hereto).

     WHEREAS DURA, Dura Delivery Systems, Inc., a Delaware corporation ("DDSI"),
and Spiros Development Corporation, a Delaware corporation ("Spiros Corp."),
have granted to Spiros Corp. II, and Spiros Corp. II has acquired from DURA,
DDSI and Spiros Corp., a license to certain technology for the purpose of
allowing Spiros Corp. II to further develop the Core Technology and to develop
and commercialize the Spiros Products.

     WHEREAS, DURA has experience in the development of pharmaceutical products
and has the facilities, equipment, employees and other resources to accomplish
development activities, on behalf of Spiros Corp. II, with respect to such
rights and technology.

     WHEREAS, Spiros Corp. II desires to engage DURA to perform such services in
connection with the Development, and DURA is willing to provide such services.

     NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to induce DURA to enter into the
Agreements, DURA and Spiros Corp. II hereby agree as follows:

1.   DEFINITIONS.

     1.1  DEFINITIONS.  All capitalized terms used herein and not otherwise
defined shall have the respective meanings, to the extent such terms are used
herein, set forth in SCHEDULE 1.1 attached hereto, which is incorporated by this
reference as though fully set forth herein.

     1.2  SINGULAR AND PLURAL.  Singular and plural forms, as the case may be,
of terms defined herein shall have correlative meanings.

2.   DEVELOPMENT SERVICES.

     2.1  DEVELOPMENT.  Spiros Corp. II hereby engages DURA, and DURA hereby
accepts such engagement, to use commercially reasonable efforts to undertake the
Development.  Such services shall be provided as follows:

<PAGE>

          2.1.1  WORKPLAN AND BUDGET.  As of the date of the closing of the
Offering, DURA shall have provided Spiros Corp. II with a workplan and budget
acceptable to the Board of Directors of Spiros Corp. II covering the period from
the closing through December 31, 1998, a copy of which is attached hereto as
SCHEDULE 2.1.  Thereafter, DURA and Spiros Corp. II shall prepare an annual
workplan and budget in accordance with Section 3 hereof.  DURA and Spiros Corp.
II may make changes in the annual workplan and budget from time to time as
approved in writing by an authorized representative of each party.  Expenditures
made on behalf of Spiros Corp. II by DURA for which DURA is to be reimbursed
pursuant to Section 5.1 hereof, shall not exceed in any calendar year one
hundred twenty percent (120%) of the amount allocated in the annual workplan and
budget applicable to such year unless otherwise approved by the Board of
Directors of Spiros Corp. II.  DURA shall report significant deviations from the
annual workplan and budget to Spiros Corp. II in a timely manner.

          2.1.2  CONDUCT OF DEVELOPMENT.  During the term of this Agreement,
DURA shall use commercially reasonable efforts to (a) conduct the Development on
behalf of Spiros Corp. II in a prudent and skillful manner in accordance, in all
material respects, with the annual workplan and budget then in effect and
applicable laws, ordinances, rules, regulations, orders, licenses and other
requirements now or hereafter in effect and (b) diligently execute such annual
workplan and budget and report to Spiros Corp. II any significant deviations
therefrom in a timely manner.  Spiros Corp. II hereby appoints DURA its
exclusive agent, for the term of this Agreement, with the sole power and
authority to file and prosecute all necessary regulatory applications and
permits in DURA's name required to obtain FDA Approval and other regulatory
approvals for the Spiros Products.  DURA shall, at Spiros Corp. II's expense as
described below, furnish all labor, supervision, services, supplies and
materials necessary to perform the Development in accordance with the annual
workplan and budget then in effect.  In addition to its undertakings pursuant to
the Technology Agreement, DURA agrees to use commercially reasonable efforts, on
behalf of itself, DDSI and Spiros Corp., to attempt to obtain and to sublicense
to Spiros Corp. II subject to the terms and conditions of the Technology
Agreement, on behalf of and at the expense of Spiros Corp. II but in accordance
with Section 2.4 of the Technology Agreement, any patent or technology license
or sublicense from any Person, including DURA, DDSI or Spiros Corp., that DURA
reasonably determines to be necessary or useful to enable DURA to conduct the
Development under this Agreement.

          2.1.3  SUBCONTRACTS.  Spiros Corp. II acknowledges that DURA may elect
to subcontract to third parties a portion of the Development.  Spiros Corp. II
acknowledges and agrees that in performing the Development, DURA may, and is
hereby authorized to, without the prior written consent of Spiros Corp. II,
engage or agree or otherwise collaborate with other Persons, including, without
limitation, Affiliates of DURA or institutions performing other development
activities for DURA, to provide assistance in carrying out the Development.

          2.1.4  CHANGES TO THE WORKPLANS.  If at any time Spiros Corp. II
determines, based on the reports furnished pursuant to Section 3 hereof, in its
reasonable business judgment and in consultation with DURA, or DURA determines
with Spiros Corp. II's consent (which consent shall not be withheld
unreasonably), that the Development should be discontinued with respect to the

                                       -2-
<PAGE>

further development of a particular Spiros Product because the continuance
thereof is unfeasible or uneconomic, or that the Development should be expanded
to include one or more Designated Compounds, then Spiros Corp. II and DURA shall
use all reasonable efforts to agree on the nature of further development and the
identity of such Designated Compounds.

          2.1.5  SALE OF SPIROS PRODUCTS PRIOR TO REGULATORY APPROVAL.
Spiros Corp. II hereby appoints DURA as its exclusive agent for the
Manufacture and Sale of Spiros Products during the term of this Agreement for
the sole purpose of conducting the clinical testing required to obtain FDA
Approval or other regulatory approval to market such Spiros Products.  DURA
shall charge Spiros Corp. II for all the costs (determined in accordance with
Section 6.5 hereof) relating to the Manufacture and Sale of such Spiros
Products prior to FDA Approval of such Spiros Products as Development Costs,
and shall remit to Spiros Corp. II any revenues received by it from the sale
of such Spiros Products.  Spiros Corp. II agrees that all such revenues
received hereunder with respect to Spiros Products shall be considered
Available Funds.

          2.1.6     MANUFACTURE AND SALE OF SPIROS PRODUCTS FOLLOWING
REGULATORY APPROVAL.  Spiros Corp. II and DURA hereby agree that the
Manufacture and Sale of each Spiros Product during the term of this Agreement
following FDA Approval or other required regulatory approval to market such
Spiros Product shall be governed solely by the terms and conditions of the
Manufacturing and Marketing Agreement.

     2.2  DISCLAIMER OF WARRANTIES.  DURA cannot and does not guarantee that the
Development will be successful in whole or in part, that any Spiros Products
will be developed or that any developed Spiros Products will be successful in
the marketplace.  To the extent that DURA has complied with Section 2.1.2
hereof, the failure of DURA to further develop successfully the Program
Technology or to discover, develop or commercialize any Spiros Product will not
in and of itself constitute a breach by DURA of any representation, warranty,
covenant or other obligation under the Agreements.  In addition, neither DURA
nor Spiros Corp. II makes any representation or warranty or guaranty that the
Available Funds will be sufficient for the completion of the Development of any
or all of the Spiros Products or to begin commercialization with respect to any
Spiros Product.

     2.3  RIGHTS TO PROPERTY.  All right, title and interest to the Program
Technology acquired or developed pursuant to this Agreement including any
submissions or applications to the FDA or any foreign equivalent made by DURA in
its name on behalf of Spiros Corp. II shall be the exclusive property of Spiros
Corp. II; PROVIDED, HOWEVER, that such right, title and interest shall be
subject in all events to (a) the rights to Albuterol Program Assets obtained
from Spiros Corp. II pursuant to the exercise of the Albuterol Option or (b) the
rights to the Spiros Product Program Assets obtained from Spiros Corp. II
pursuant to the exercise of the Product Option.  All matters relating to patents
and patent applications with respect to the Program Technology acquired or
developed pursuant to this Agreement shall be governed by Section 5.2 of the
License Agreement.

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     2.4  TERMINATION OF DEVELOPMENT UPON EXERCISE OF THE ALBUTEROL OPTION.  If
the Albuterol Option is exercised, Development hereunder shall cease with
respect to the Albuterol Product.  DURA and the Board of Directors of Spiros
Corp. II shall agree upon an allocation to one or more remaining Spiros Products
or to the Other Expenditures of the funds available as a result of the exercise
of the Albuterol Option.

     2.5  TERMINATION OF DEVELOPMENT UPON EXERCISE OF THE PRODUCT OPTION.  If
the Product Option is exercised, Development hereunder shall cease with respect
to the Option Product.  DURA and the Board of Directors of Spiros Corp. II shall
agree upon an allocation to one or more remaining Spiros Products or to the
Other Expenditures of the funds available as a result of the exercise of the
Product Option.

3.   REPORTS AND RECORDS.  Within thirty (30) days after the end of each
calendar quarter during the term of this Agreement, DURA shall provide to the
Board of Directors of Spiros Corp. II a reasonably detailed report setting forth
in respect of such quarter (a) the total Development Costs incurred, (b) a
summary of the work performed hereunder by DURA and its employees and agents and
(c) a description of any material developments with respect to the Program
Technology.  Prior to December 1 of each year (commencing with December 1, 1998)
during the term of this Agreement, DURA shall report to the Board of Directors
of Spiros Corp. II with respect to the progress of the Development, which report
shall include the proposed annual workplan and budget for the next calendar
year.  Prior to January 1 of each year (commencing January 1, 1999), the Board
of Directors of Spiros Corp. II shall approve such annual workplan and budget
with such changes as it may, in the exercise of its reasonable business
judgment, deem necessary and as DURA may approve (which approval shall not be
unreasonably withheld); PROVIDED, that no annual workplan and budget shall be
deemed effective until approved by DURA and the Board of Directors of Spiros
Corp. II.  DURA shall prepare a final report, within ninety (90) days after the
expiration or termination of this Agreement, setting forth in reasonable detail
a summary of the work performed since the last report provided to the Board of
Directors hereunder and the material developments with respect thereto and
containing a final statement of all costs billed to Spiros Corp. II hereunder.
DURA shall keep and maintain proper and complete records and books of account
documenting all of its expenses related to the Development, including those
allocated to and reimbursed by Spiros Corp. II hereunder.  At Spiros Corp. II's
request and expense, DURA shall permit a certified independent public accountant
selected by Spiros Corp. II to have access, no more than once in each calendar
year during the term of this Agreement and each year for three (3) calendar
years following the termination hereof, during regular business hours and upon
reasonable notice to DURA, to such records and books for the sole purpose of
determining the appropriateness of Development Costs invoiced hereunder;
PROVIDED, HOWEVER, that if such certified independent public accountant
reasonably determines that such Development Costs have been, for any calendar
year, after adjustments herein provided for, overstated by DURA by an amount
equal to or greater than five percent (5%), DURA shall promptly refund any such
overpayment to Spiros Corp. II and pay all reasonable fees and disbursements of
such certified independent public accountant incurred in the course of making
such determination.

4.   OTHER ACTIVITIES.  During the term of this Agreement, DURA shall devote
such time and

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<PAGE>

effort to the performance of services pursuant to this Agreement as may be
necessary or appropriate to fulfill its duties under this Agreement;
PROVIDED, HOWEVER, it is specifically understood and agreed by Spiros Corp.
II that DURA shall not be required to devote itself, on a full-time basis, to
the provision of such services and that DURA shall have the right to engage
in its own development activities and in other business activities with other
Persons, and Spiros Corp. II shall not, by virtue of this Agreement, have any
right, title or interest in or to such independent activities or to the
income or profits derived therefrom and, without limiting DURA's obligation
to use commercially reasonable efforts to provide certain services hereunder,
nothing set forth in this Agreement shall limit or reduce the ability of DURA
to carry on such other activities.

5.   PAYMENT FOR SERVICES; TIMING OF PAYMENTS.


     5.1  PAYMENTS FOR DEVELOPMENT.  In consideration of the Development
to be carried out by DURA during the term of this Agreement, Spiros Corp. II
shall reimburse DURA out of Available Funds for all of (a) the Direct
Development Costs plus a fee equal to twenty-five percent (25%) of all of
such costs (the "Management Fee"), PROVIDED that the cost to DURA of services
provided by Affiliates of DURA shall not exceed the cost to each Affiliate of
providing such services, and (b) the Indirect Development Costs plus a fee
equal to twenty percent (20%) of all such costs (the "Indirect Management
Fee"), invoiced to Spiros Corp. II by DURA. The amount to be paid to DURA
pursuant to this Agreement shall not exceed the amount of the Available
Funds.  The Available Funds must be retained by Spiros Corp. II in an account
separate from all accounts containing any other funds. Spiros Corp. II agrees
to expend all Available Funds on Development and Other Expenditures pursuant
to this Agreement, except as otherwise set forth in the Agreements.  In the
event that the cash and cash equivalents of Spiros Corp. II are reduced to
less than $5 million, DURA may, within thirty (30) days following notice from
Spiros Corp. II that such funds have been reduced to less than $5 million, at
its option (the "Funding Option"), provide additional funds sufficient in the
reasonable judgment of DURA and Spiros Corp. II to fund the continued
Development of Spiros Products for an additional twelve (12) months at a
level comparable to the level of funding provided during the prior twelve
(12) months, which funding shall be considered Available Funds.  The Funding
Option may only be exercised one time and shall be irrevocable following
exercise. Payment to Spiros Corp. II of all amounts in respect of the Funding
Option must be made within thirty (30) days of its exercise.

     5.2  CONTRIBUTIONS.  Concurrently with the execution of this Agreement,
DURA will contribute Seventy-Five Million Dollars ($75,000,000) in cash to
Spiros Corp. II (the "Contribution").

     5.3  DEVELOPMENT EXPENSES.  Within five (5) business days of the closing of
the Offering and upon the receipt by Spiros Corp. II of an invoice therefor,
Spiros Corp. II shall reimburse DURA for all development services as set forth
on SCHEDULE 5.3 incurred by DURA through the date of the closing of the
Offering, estimated to be five million Dollars ($5,000,000)
but which shall in no event exceed seven million Dollars
($7,000,000).

     5.4  TIMING OF PAYMENTS.  Spiros Corp. II shall pay to DURA monthly the
Development

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Costs, plus the applicable Management Fee and Indirect Management Fee,
actually incurred in the prior month as shown on a statement delivered by
DURA to Spiros Corp. II.  Spiros Corp. II shall make such payment within
fifteen (15) days after the delivery of such statement from DURA.

     5.5  CALCULATION OF COSTS.  Direct Development Costs shall be allocated on
a reasonable and consistent basis, and charged to Spiros Corp. II for services
performed by DURA on behalf of Spiros Corp. II hereunder.  DURA's expenditures
and estimated expenditures for performing the Development hereunder shall be
determined using generally accepted accounting principles, consistent with
DURA's internal financial and accounting systems, allocated on a reasonable and
consistent basis.  Allocation of all Indirect Development Costs shall be made by
DURA on a reasonable basis consistent with DURA's regular internal cost
accounting system.

6.   REPRESENTATIONS, WARRANTIES AND COVENANTS.  The provisions of Section 3 of
the Technology Agreement with respect to DURA and Spiros Corp. II shall apply
with equal force and effect to this Agreement and are incorporated hereunder.

7.   CONFIDENTIALITY.  The provisions of Sections 4.3 and 4.4 of the Technology
Agreement shall apply with equal force and effect to this Agreement and are
incorporated hereunder.

8.   DISCLAIMER OF WARRANTY; CONSEQUENTIAL DAMAGES.  The provisions of Section
5.3 of the Technology Agreement shall apply with equal force and effect to this
Agreement and are incorporated hereunder.

9.   INDEMNIFICATION AND INSURANCE.

     9.1  INDEMNIFICATION.  The provisions of Section 6 of the Technology
Agreement shall apply with equal force and effect to this Agreement and are
incorporated hereunder.

     9.2  INSURANCE.

          9.2.1     INSURANCE BY SPIROS CORP. II.  To the extent Spiros Corp. II
develops or uses, or causes the development or use (except by DURA or its
Affiliates or subcontractors under this Agreement) of, the Spiros Products,
Spiros Corp. II shall, to the extent available at commercially reasonable rates,
maintain with insurers or underwriters of good repute such insurance relating to
the Development, and the sale and use of the Spiros Products, against such
risks, pursuant to such terms (including deductible limits or self-insured
retentions) and for such periods, as is customary for comparable businesses
undertaking the development, sale and use of products of a similar nature, and
shall, to the extent reasonably possible and not unreasonably expensive, cause
DURA, DDSI and Spiros Corp. to be named as additional insured parties on its
insurance policies.  To the extent Spiros Corp. II is required to obtain
insurance under this Section 9.2.1 during the term of this Agreement, Spiros
Corp. II may use Available Funds to pay the premiums therefor.

          9.2.2     INSURANCE BY DURA.  DURA shall, to the extent available at
commercially

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reasonable rates, maintain, with insurers or underwriters of good repute such
insurance relating to the Development, against such risks and pursuant to
such terms (including deductible limits or self-insured retentions) as is
customary for comparable businesses undertaking research and development
programs of a similar nature, and shall, to the extent reasonably possible
and not unreasonably expensive, cause Spiros Corp. II to be named as an
additional insured party on its insurance policies.

10.  TERM AND TERMINATION.

     10.1 TERM.  This Agreement shall be effective as of the date hereof and,
unless terminated earlier as provided in Sections 10.2, 10.3 and 10.4 hereof,
shall continue in full force and effect for the duration of the Development
Term.

     10.2 TERMINATION BY MUTUAL AGREEMENT.  By mutual agreement, the parties
hereto may at any time terminate this Agreement and the Development on mutually
acceptable terms.

     10.3 EFFECT OF PURCHASE OPTION EXERCISES.

          10.3.1    PURCHASE OPTION.  In the event the Purchase Option is
exercised by DURA, this Agreement shall terminate, effective upon the Purchase
Option Closing Date, without any obligation to make payments pursuant to Section
7 of the Technology Agreement.

          10.3.2    PARTIAL TERMINATION UPON EXERCISE OF ALBUTEROL OPTION.  In
the event that the Albuterol Option is exercised as provided in the Albuterol
and Product Option Agreement, this Agreement shall terminate, effective on the
Albuterol Option Closing Date, with respect to the Albuterol Product, but shall
otherwise continue in full force and effect until terminated pursuant to this
Section 10.

          10.3.3    PARTIAL TERMINATION UPON EXERCISE OF PRODUCT OPTION.  In the
event that the Product Option is exercised as provided in the Albuterol and
Product Option Agreement, this Agreement shall terminate, effective on the
Product Option Closing Date, with respect to the Option Product but shall
otherwise continue in full force and effect until terminated pursuant to this
Section 10.

     10.4 TERMINATION FOR EVENT OF DEFAULT.  Either DURA or Spiros Corp. II
shall have the right to terminate this Agreement, effective as set forth in a
written notice to the othe party of the occurrence of an Event of Default with
respect to such other party.

     10.5 EFFECT OF TERMINATION.

          10.5.1    RETURN OF SPIROS PRODUCTS.  In the event of the termination
of DURA's right to continue Development of one or more Spiros Products pursuant
to Section 10.4 as a result of an Event of Default by DURA, DURA shall within
thirty (30) days of the effective date of such termination, transfer to Spiros
Corp. II all Program Technology and all other data, records and materials in
DURA's possession or control which relate to such Spiros Products.  DURA shall
also cooperate in the transfer of regulatory filings related to such Spiros
Products, and take such other

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actions and execute such other instruments, assignments and documents as may
be necessary to effect the transfer of such Development rights to Spiros
Corp. II.

          10.5.2    CONTINUING OBLIGATION TO MAKE PAYMENTS.  Termination of this
Agreement shall not relieve the parties hereto of any liability, including any
obligation to pay any amounts payable by any party to another party which
accrued prior to such termination, nor preclude any party from pursuing all
rights and remedies it may have hereunder or at law or equity with respect to
any breach of this Agreement nor prejudice any party's right to obtain
performance of any obligation.

11.  MISCELLANEOUS.

     11.1 NO IMPLIED WAIVERS; RIGHTS CUMULATIVE.  No failure on the part of DURA
or Spiros Corp. II to exercise and no delay in exercising any right, power,
remedy or privilege under this Agreement or provided by statute or at law or in
equity or otherwise, including, without limitation, the right or power to
terminate this Agreement, shall impair, prejudice or constitute a waiver of any
such right, power, remedy or privilege or be construed as a waiver of any breach
of this Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.

     11.2 FORCE MAJEURE.  DURA and Spiros Corp. II shall each be excused for any
failure or delay in performing any of their respective obligations under this
Agreement, if such failure or delay is caused by Force Majeure.

     11.3 RELATIONSHIP OF THE PARTIES.  Nothing contained in this Agreement is
intended or is to be construed to constitute DURA and Spiros Corp. II as
partners or joint venturers or one party as an employee of any other party.
Except as expressly provided herein, no party hereto shall have any express or
implied right or authority to assume or create any obligations on behalf of or
in the name of any other party or to bind any other party to any contract,
agreement or undertaking with any third party.

     11.4 NOTICES.  All notices, requests and other communications to DURA or
Spiros Corp. II hereunder shall be in writing (including telecopy or similar
electronic transmissions), shall refer specifically to this Agreement and
shall be personally delivered or sent by telecopy or other electronic
facsimile transmission or by registered mail or certified mail, return
receipt requested and postage prepaid, or by reliable overnight courier
service, in each case to the respective address specified below (or to such
address as may be specified in writing to the other party hereto):

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<PAGE>

          If to DURA, addressed to:

          Dura Pharmaceuticals, Inc.
          7475 Lusk Boulevard
          San Diego, CA  92121
          Attention: President
           with a copy to the attention of General Counsel

          If to Spiros Corp. II, addressed to:

          Spiros Development Corporation II, Inc.
          7475 Lusk Boulevard
          San Diego, CA 92121
          Attention:  President

Any notice or communication given in conformity with this Section 12.4 shall be
deemed to be effective when received by the addressee, if delivered by hand,
telecopy or electronic transmission, three (3) days after mailing, if mailed and
one (1) business day after delivery to a reliable overnight courier service.

     11.5 FURTHER ASSURANCES.  Each of DURA and Spiros Corp. II hereby agrees to
duly execute and deliver, or cause to be duly executed and delivered, such
further instruments and do and cause to be done such further acts and things,
including, without limitation, the filing of such additional assignments,
agreements, documents and instruments, that may be necessary or as the other
party hereto may at any time and from time to time reasonably request in
connection with this Agreement or to carry out more effectively the provisions
and purposes of, or to better assure and confirm unto such other party its
rights and remedies under, this Agreement.

     11.6 SUCCESSORS AND ASSIGNS.  The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, DURA, Spiros Corp. II, and
their respective successors and assigns; PROVIDED, HOWEVER, that DURA and Spiros
Corp. II may not assign or otherwise transfer any of their respective rights and
interests, nor delegate any of their respective obligations, hereunder,
including, without limitation, pursuant to a merger or consolidation, without
the prior written consent of the other party hereto; PROVIDED FURTHER, HOWEVER,
that DURA may fully assign its rights and interests, and delegate its
obligations, hereunder, effective upon written notice thereof (a) to an
Affiliate if such Affiliate assumes all of the obligations of DURA hereunder and
this Agreement remains binding upon DURA; or (b) to any Person that acquires all
or substantially all of the assets of DURA, or which is the surviving Person in
a merger or consolidation with DURA, if such Person assumes all the obligations
of DURA hereunder.  Notwithstanding the foregoing, Spiros Corp. II shall have
the right to assign its rights and delegate its obligations hereunder following
expiration or termination (other than by exercise) of the Purchase Option.
Notwithstanding the foregoing, Spiros Corp. II shall have the right to assign
its rights and delegate its obligations hereunder following expiration or
termination (other than by exercise) of the Purchase Option.  Any attempt to
assign or delegate any portion of this Agreement in violation of this Section
11.6 shall be null and void.  Subject to the foregoing any reference to DURA or
Spiros Corp. II hereunder shall be deemed to include the successors thereto and
assigns thereof.

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<PAGE>

     11.7 AMENDMENTS.  No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent by DURA or Spiros
Corp. II to any departure therefrom, shall in any event be effective unless the
same shall be in writing specifically identifying this Agreement and the
provision intended to be amended, modified, waived, terminated or discharged and
signed by DURA and Spiros Corp. II, and each amendment, modification, waiver,
termination or discharge shall be effective only in the specific instance and
for the specific purpose for which given.  No provision of this Agreement shall
be varied, contradicted or explained by any other agreement, course of dealing
or performance or any other matter not set forth in an agreement in writing and
signed by DURA and Spiros Corp. II.

     11.8 GOVERNING LAW.  This Agreement shall be governed by and construed in
accordance with the laws of the State of California, as applied to contracts
made and performed entirely within the State of California.  Except as otherwise
provided herein, any claim or controversy arising out of or related to this
contract or any breach hereof shall be submitted to a court of competent
jurisdiction in the State of California, and the parties hereby consent to the
jurisdiction and venue of such court.

     11.9 SEVERABILITY. If any provision hereof should be held invalid, illegal
or unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may be possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction.  To the
extent permitted by applicable law, DURA and Spiros Corp. II hereby waive any
provision of law that would render any provision hereof prohibited or
unenforceable in any respect.

     11.10  HEADINGS. Headings used herein are for convenience only and shall
not in any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.

     11.11  COUNTERPARTS.  This Agreement may be executed in any number of
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.

     11.12  ENTIRE AGREEMENT. This Agreement, together with any agreements
referenced herein, constitute, on and as of the date hereof, the entire
agreement of DURA and Spiros Corp. II with respect to the subject matter hereof,
and all prior or contemporaneous understandings or agreements, whether written
or oral, between DURA and Spiros Corp. II with respect to such subject matter
are hereby superseded in their entirety.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                              DURA PHARMACEUTICALS, INC.



                              By   /s/ Cam L. Garner
                                ----------------------------------------------
                                   Cam L. Garner
                                   President and Chief Executive Officer


                                SPIROS DEVELOPMENT CORPORATION II, INC.



                              By   /s/ David S. Kabakoff
                                ----------------------------------------------
                                   David S. Kabakoff
                                   President and Chief Executive Officer






















                    [SIGNATURE PAGE TO DEVELOPMENT AGREEMENT]
<PAGE>

                                  SCHEDULE 1.1

                                    GLOSSARY








                                  SCHEDULE 1.1
<PAGE>

                                  SCHEDULE 1.1

                                    GLOSSARY

     "AFFILIATE" of a person shall mean a Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with such Person.  "Control" (and, with correlative meanings, the
terms "controlled by" and "under common control with") shall mean the possession
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting stock, by contract or
otherwise.  In the case of a corporations, "control" shall mean, among other
things, the direct or indirect ownership of more than fifty percent (50%) of its
outstanding voting stock.

     "AGREEMENTS" shall mean the Manufacturing and Marketing Agreement, the
Technology Agreement and the Development Agreement.

     "ALBUTEROL OPTION" shall have the meaning assigned to it in Section 1.1 of
the Albuterol and Product Option Agreement.

     "ALBUTEROL AND PRODUCT OPTION AGREEMENT" shall mean the Albuterol and
Product Option Agreement dated as of December 22, 1997, between DURA and Spiros
Corp. II, as amended, modified or supplemented from time to time.

     "ALBUTEROL OPTION CLOSING DATE" shall have the meaning assigned to it in
Section 1.5 of the Albuterol and Product Option Agreement.

     "ALBUTEROL PROGRAM ASSETS" shall have the meaning assigned to it in Section
1.1 of the Albuterol and Product Option Agreement.

     "ALBUTEROL PRODUCT" shall have the meaning assigned to it in Section 1.1 of
the Albuterol and Product Option Agreement.

     "AVAILABLE FUNDS" shall mean the sum of (a) the net proceeds to Spiros
Corp. II from the sale of the Units in the Offering and the Contribution, (b)
all royalties or fees remitted to Spiros Corp. II by DURA (or its Affiliates)
from the Sale of Spiros Products or in consideration of license rights
granted pursuant to the Agreements, (c) the Option Proceeds, if any, (d) any
other amounts provided by DURA to Spiros Corp. II, if any and (e) interest or
other income earned through temporary investment of the amounts described in
clauses (a), (b), (c) or (d).

     "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, as amended
from time to time.

     "CLAIM" shall mean any and all liabilities, damages, losses, settlements,
claims, actions, suits, penalties, fines, costs or expenses (including, without
limitation, reasonable attorneys' fees).

                                  SCHEDULE 1.1
<PAGE>

     "CONFIDENTIAL INFORMATION" shall mean all Program Technology disclosed by
DURA (and its Affiliates) to Spiros Corp. II or by Spiros Corp. II to DURA
pursuant to the Agreements or the Services Agreement.

     "CONTRIBUTION" shall have the meaning assigned in Section 5.2 of the
Development Agreement.

     "CORE TECHNOLOGY" shall mean the DURA Core Technology, the DDSI Core
Technology and the Spiros Core Technology.

     "DDSI CORE TECHNOLOGY" shall mean (a) Technology owned or controlled by
DDSI as of the date of the closing of the Offering necessary or useful to the
development of the Spiros Products, and (b) the DDSI Patent Rights; PROVIDED,
HOWEVER, that DDSI Core Technology shall also include Technology acquired by
DDSI from a third party after the date of the closing of the Offering necessary
or useful to the development of the Spiros Products, except to the extent that
there are any limitations or restrictions on DDSI's ability to license or
sublicense such Technology.  "Owned or controlled" shall include Technology that
DDSI owns, or under which DDSI is licensed and has the right to grant
sublicenses and/or grant immunity from suit.

     "DDSI INDEMNITEE" shall mean DDSI, its successors and assigns, and the
directors, officers, employees, agents and counsel thereof.

     "DDSI PATENT RIGHTS" shall mean those certain inventions described in
claims of (a) the patent applications pending, filed by DDSI (or the rights to
which have been assigned to DDSI) as of the date of the Technology Agreement
relating to dry powder inhalers, powder storage systems and/or formulation
methods for dry powder inhalation, (b) any patent application constituting an
equivalent, counterpart, reissue, extension or continuation (including, without
limitation, a continuation in part or a subdivision) of any of the foregoing
patent applications and (c) any patent issued or issuing upon any of the
foregoing.

     "DESIGNATED COMPOUND(S)" shall mean any compounds for delivery using the
System selected by Spiros Corp. II, and agreed to be developed by DURA.

     "DEVELOPED TECHNOLOGY" shall mean any Technology including, without
limitation, any enhancements, substitutions or improvements to the Core
Technology that is (a) discovered, developed or otherwise acquired by DURA
pursuant to the terms of the Development Agreement or (b) otherwise acquired by
or on behalf of Spiros Corp. II during the term of the Development Agreement.

     "DEVELOPMENT" shall mean the further development of the Program Technology
for the purpose of identifying, developing, manufacturing, marketing and
commercializing Spiros Products and

                                  SCHEDULE 1.1
<PAGE>

the making of the Other Expenditures.

     "DEVELOPMENT AGREEMENT" shall mean the Development Agreement dated as of
December 22, 1997, between DURA and Spiros Corp., as amended, modified or
supplemented from time to time.

     "DEVELOPMENT COSTS" shall mean the Direct Development Costs, the Indirect
Development Costs and the Other Expenditures.

     "DEVELOPMENT TERM" shall mean the period commencing on the Closing Date and
ending on the earlier of (a) the Option Closing Date or (b) the date the Option
terminates or expires other than by exercise.

     "DIRECT DEVELOPMENT COSTS" shall mean all costs incurred by DURA or its
Affiliates in respect of the Development, other than Indirect Development
Costs, determined in accordance with generally accepted accounting principles
consistent with DURA's internal accounting system, allocated on a reasonable
and consistent basis.  Direct Development Costs shall consist primarily of
fully-burdened payroll costs (burdened to include benefits, payroll taxes and
an allocation of facilities and overhead costs) and any other such costs
generated internally by DURA in respect of the Development.

     "DPI" shall mean the motor-driven dry powder inhaler (other than an inahler
designed to deliver a single dose of a drug) developed by DURA, DDSI and/or
Spiros Corp. and to be developed by DURA and/or Spiros Corp. II.

     "DURA COMMON STOCK" shall mean the Common Stock of DURA, par value $.001
per share.

     "DURA CORE TECHNOLOGY" shall mean (a) Technology owned or controlled by
DURA as of the date of the closing of the Offering necessary or useful to the
development of the Spiros Products, and (b) the DURA Patent Rights and DURA
Trademarks; PROVIDED, HOWEVER, that DURA Core Technology shall also include
Technology acquired by DURA from a third party after the date of the closing of
the Offering necessary or useful to the development of the Spiros Products,
except to the extent that there are any limitations or restrictions on DURA's
ability to license or sublicense such Technology.  "Owned or controlled" shall
include Technology that DURA owns, or under which DURA is licensed and has the
right to grant sublicenses and/or grant immunity from suit.

     "DURA INDEMNITEE" shall mean DURA, its successors and assigns, and the
directors, officers, employees, agents and counsel thereof.

     "DURA PATENT RIGHTS" shall mean those certain inventions described in
claims of (a) the patent applications pending, filed by DURA (or the rights to
which have been assigned to DURA) as of the date of the Technology Agreement
relating to DPIs, PSSs and/or formulation methods for dry powder inhalation, (b)
any

                                  SCHEDULE 1.1
<PAGE>

patent application constituting an equivalent, counterpart, reissue,
extension or continuation (including, without limitation, a continuation in
part or a subdivision) of any of the foregoing patent applications and (c)
any patent issued or issuing upon any of the foregoing.

     "DURA TRADEMARKS" shall mean SpirosTM.

     "EVENT OF DEFAULT" shall mean any of the following events:  (a) at any
time, if DURA or Spiros Corp. II fails to perform or observe or otherwise
breaches any of its Material Obligations, and such failure or breach continues
unremedied for a period of sixty (60) days after receipt by of written notice
thereof from the other party; (b) at any time, effective as set forth in a
written notice from the other party if DURA or Spiros Corp. II shall (i) seek
the liquidation, reorganization, dissolution or winding-up of itself or the
composition or readjustment of its debts (other than pursuant to a merger with
an Affiliate), (ii) apply for or consent to the appointment of, or the taking
possession by, a receiver, custodian, trustee or liquidator for itself or of all
or a substantial part of its assets, (iii) make a general assignment for the
benefit of its creditors, (iv) commence a voluntary case under the Bankruptcy
Code, (v) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
readjustment of debts (other than pursuant to a merger with an Affiliate) or
(vi) adopt any resolution of its Board of Directors or shareholders for the
purpose of effecting any of the foregoing (other than pursuant to a merger with
an Affiliate); or (c) at any time, effective as set forth in a written notice
from the other party, if a proceeding or case shall be commenced without the
application or consent of DURA or Spiros Corp. II as applicable, and such
proceeding or case shall continue undismissed, or an order, judgment or decrees
approving or ordering any of the following shall be entered and continued
unstayed and in effect, for a period of sixty (60) days from and after the date
service of process is effected, seeking (i) DURA's or Spiros Corp. II's, as
applicable, liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of DURA or Spiros Corp. II or for
all or any substantial part of its assets or (iii) similar relief in respect of
DURA or Spiros Corp. II under any law relating to bankruptcy, insolvency,
reorganization, winding-up or the composition or readjustment of debts.

     "FDA" shall mean the United States Food and Drug Administration or any
successor agency or authority, the approval of which is required to market
health care products in the United States.

     "FDA APPROVAL" shall mean the final regulatory approval of the FDA required
to commence commercial marketing of a health product.

                                  SCHEDULE 1.1
<PAGE>

     "FORCE MAJEURE" shall mean any act of God, any accident explosion, fire,
storm, earthquake, flood, drought, peril of the sea, riot, embargo, war or
foreign, federal, state or municipal order of general application, seizure,
requisition or allocation, any failure or delay of transportation, shortage of
or inability to obtain supplies, equipment, fuel or labor or any other
circumstance or event beyond the reasonable control of the party relying upon
such circumstance or event.

     "INDIRECT DEVELOPMENT COSTS" shall mean all costs, fees and out-of-pocket
or other expenses, including the purchase of any capital equipment related to
the Development, incurred or paid by DURA to a third party, other than an
Affiliate of DURA, in respect of the Development, determined in accordance with
generally accepted accounting principles consistent with DURA's internal
accounting system, allocated on a reasonable and consistent basis.

     "MANUFACTURING AND MARKETING AGREEMENT" shall mean the Manufacturing and
Marketing Agreement dated as of December 22, 1997 between DURA and Spiros Corp.
II, as amended, modified or supplemented from time to time.

     "MANUFACTURE" shall mean the manufacture and assembly of the Spiros
Products.

     "MATERIAL OBLIGATION" shall mean the material obligations of a party under
the Technology Agreement, the Development Agreement or the Manufacturing and
Marketing Agreement.

     "NET SALES" shall mean the gross amount invoiced for sales of Spiros
Products by DURA or its sublicensees, if any, to third parties less (i)
discounts actually allowed, (ii) credits for claims, allowances, retroactive
price reductions or returned Spiros Products, (iii) prepaid freight charges
incurred in transporting Spiros Products to customers, (iv) sales taxes and
other governmental charges actually paid in connection with the sales (but
excluding what is commonly known as income taxes) and (v) any royalty
obligations under the 1993 Royalty Agreement.  Net Sales shall not include sales
between or among DURA, its Affiliates and its sublicensees unless such sales are
for end use rather than for purposes of resale.

     "OFFERING" shall mean the underwritten public offering of the Units
pursuant to the Registration Statement.

     "OPTION PROCEEDS" shall have the meaning assigned to it in Section 3 of the
Albuterol and Product Option Agreement.

     "OPTION PRODUCT" shall have the meaning assigned to it in Section 2.1 of
the Albuterol and Product Option Agreement.

     "OTHER EXPENDITURES" shall mean funds spent by Spiros Corp. II to acquire
capital equipment, develop a next generation inhaler system or to enhance the
System.

                                  SCHEDULE 1.1
<PAGE>


     "PATENT RIGHTS" shall mean any patents or patent applications within the
Spiros Corp. II Patent Rights, the DURA Patent Rights, the DDSI Patent Rights
and the Spiros Corp. Patent Rights.

     "PERSON" shall mean any individual, partnership, corporation, firm,
association, unincorporated organization, joint venture, trust or other entity.

     "PRODUCT OPTION" shall have the meaning assigned to it in Section 2.1 of
the Albuterol and Product Option Agreement.

     "PRODUCT OPTION CLOSING DATE" shall have the meaning assigned to it in
Section 2.5 of the Albuterol and Product Option Agreement.

     "PROGRAM TECHNOLOGY" shall mean the Core Technology and the Developed
Technology.

     "PSS" shall mean the powder storage system developed and to be developed by
DURA for use with the DPI.

     "PURCHASE AGREEMENT" shall mean the Purchase Agreement dated as of
December 16, 1997, among DURA, Spiros Corp. II, Merrill Lynch & Co., and
Donaldson, Lufkin & Jenrette.

     "PURCHASE OPTION" shall mean the option granted to the holder of Spiros
Corp. II's Special Common Stock to purchase all of the Spiros Corp. II Common
Stock as set forth in Article V of the Spiros Corp. II Charter.

     "PURCHASE OPTION CLOSING DATE" shall have the meaning assigned to it in
Article V of the Spiros Corp. II Charter.

     "PURCHASE OPTION EXERCISE PRICE" shall have the meaning assigned to it in
Article V of the Spiros Corp. II Charter

     "REGISTRATION STATEMENT" shall mean the Registration Statement on Form S-
1/S-3 filed by Spiros Corp. II and DURA dated October 10, 1997 (No. 333-37673/
333-37673-01), including all exhibits and any amendments thereof
and supplements thereto.

     "RESEARCH FUNDS" shall mean the Available Funds, less (i) all general and
administrative expenses including, without limitation, those paid or payable
pursuant to the Development Agreement or the Services Agreement, and the
reasonable out-of-pocket expenses of Spiros Corp. II directors and reasonable
compensation for Spiros Corp. II's independent directors, less (ii) any amounts
paid to DURA under the Development Agreement or the Services Agreement, less
(iii) any costs and expenses incurred in the defense or settlement of any action
or claim or in respect of a judgment thereon, and less (iv) One Million Dollars
($1,000,000) to be retained by Spiros Corp. II as working capital in the event
DURA does not exercise the Purchase Option.

                                  SCHEDULE 1.1
<PAGE>

     "SALE(S)" or "SELL" shall mean the activity undertaken by a sales
representative during a sales call on physicians, physician assistants, nurses,
hospitals, clinics, health maintenance organizations, preferred provider
organizations and managed care companies (including all forms of communication
not involving face to face contact by such sales representatives), describing
the FDA-approved indicated uses, safety, effectiveness, contraindications, side
effects, warnings and other relevant characteristics of the Spiros Product, in a
fair and balanced manner consistent with the requirements of the Federal Food,
Drug, and Cosmetic Act, as amended (and the regulations thereunder).

     "SPIROS CASSETTE SYSTEM" shall mean a DPI in which the PSS is in the form
of a cassette.

     "SPIROS CORE TECHNOLOGY" shall mean (a) Technology owned or controlled by
Spiros Corp. as of the date of the closing of the Offering necessary or useful
to the development of the Spiros Products, and (b) the Spiros Corp. Patent
Rights; PROVIDED, HOWEVER, that Spiros Core Technology shall also include
Technology acquired by Spiros Corp. from a third party after the date of the
closing of the Offering necessary or useful to the development of the Spiros
Products, except to the extent that there are any limitations or restrictions on
Spiros Corp.'s ability to license or sublicense such Technology.  "Owned or
controlled" shall include Technology that Spiros Corp. owns, or under which
Spiros Corp. is licensed and has the right to grant sublicenses and/or grant
immunity from suit.

     "SPIROS CORP. INDEMNITEE" shall mean Spiros Corp., its successors and
assigns, and the directors, officers, employees, agents and counsel thereof.

     "SPIROS CORP. PATENT RIGHTS" shall mean those certain inventions described
in claims of (a) the patent applications pending, filed by Spiros Corp. (or the
rights to which have been assigned to Spiros Corp.) as of the date of the
Technology Agreement relating to dry powder inhalers, powder storage systems
and/or formulation methods for dry powder inhalation, (b) any patent application
constituting an equivalent, counterpart, reissue, extension or continuation
(including, without limitation, a continuation in part or a subdivision) of any
of the foregoing patent applications and (c) any patent issued or issuing upon
any of the foregoing.

     "SPIROS CORP. II CHARTER" shall mean Amended and Restated Certificate of
Spiros Development Corporation II, Inc. in effect as of the closing of the
Offering, as amended from time to time.

     "SPIROS CORP. II COMMON STOCK" shall mean the Callable Common Stock of
Spiros Corp. II, $.001 par value.

     "SPIROS CORP. II INDEMNITEE" shall mean Spiros Corp. II, its

                                  SCHEDULE 1.1
<PAGE>

successors and assigns, and the directors, officers, employees, agents and
counsel thereof.

     "SPIROS CORP. II PATENT RIGHTS" shall mean those certain inventions
described in claims of (a) any patent application having one or more claims
covering Developed Technology, (b) any patent application constituting an
equivalent, counterpart, reissue, extension or continuation (including, without
limitation, a continuation in part or a subdivision) of any of the foregoing
applications or (c) any patent issued or issuing upon any of the foregoing
applications.

     "SPIROS PRODUCT(S)" shall mean (a) any System used with a formulation of
albuterol, beclomethasone, ipratropium, an albuterol-ipratropium combination,
budesonide or a Designated Compound developed, produced, manufactured or
marketed by DURA on behalf of Spiros Corp. II using the Program Technology.

     "SPIROS PRODUCT PROGRAM ASSETS" shall have the meaning assigned to it in
Section 2.1 of the Albuterol and Product Option Agreement.

     "SYSTEM" shall mean the DPI and the PSS when used together.

     "TECHNOLOGY" shall mean, solely with respect to motor-driven dry powder
inhalers and powder storage systems for drugs for delivery through such
inhalers, the manufacture thereof, and formulations of drugs to be delivered
through such inhalers, public and nonpublic technical or other information,
trade secrets, know-how, processes, formulations, concepts, ideas, preclinical,
clinical, pharmacological or other data and testing results, experimental
methods, or results, assays, descriptions, business or scientific plans,
depictions, customer lists and any other written, printed or electronically
stored materials, pharmaceutical compounds or any other natural or man-made
pharmaceutical materials and any and all other intellectual  property, including
patents and patent applications, of any nature whatsoever.  The term
"Technology" shall include, without limitation, any of the foregoing as it
relates to enhancements of, substitutions for or improvements to the Core
Technology.

     "TECHNOLOGY AGREEMENT" shall mean the Technology License Agreement dated as
of December 22, 1997, among DURA, DDSI, Spiros Corp. and Spiros Corp. II, as
amended, modified or supplemented from time to time.

     "TERRITORY" shall mean the entire world.

     "UNDERWRITERS" shall have the meaning assigned to it in the Registration
Statement.

     "UNITS" shall mean units, each consisting of one share of Spiros Corp. II
Common Stock and one warrant to purchase one-fourth of one share of DURA Common
Stock, all as described in the Registration Statement.

                                  SCHEDULE 1.1
<PAGE>

     "1993 ROYALTY AGREEMENT" shall have the meaning assigned to it in the
Registration Statement.


<PAGE>

                                  SCHEDULE 2.1


                          Proposed Budget and Workplan
<TABLE>
<CAPTION>
                                                                      Year ended December 31,
                                                                           (in millions)
                                                   -----------------------------------------------------------
                                                   (3 months)                               (4 months)
                                                     1997(2)     1998      1999      2000      2001     Total
                                                   ----------   ------     -----     -----     -----    ------
<S>                                                <C>          <C>        <C>       <C>       <C>      <C>
Beginning cash balance . . . . . . . . . . . . . .    $ --      $151.7     $95.8     $45.9     $12.4    $ --
Dura Contribution. . . . . . . . . . . . . . . . .      75.0      --        --        --        --        75.0
Net proceeds of the Offerings. . . . . . . . . . .      81.7      --        --        --        --        81.7
Interest income(1) . . . . . . . . . . . . . . . .      --         6.0       3.5       1.4       0.3      11.2
                                                      ------    ------     -----     -----     -----    ------
     Total . . . . . . . . . . . . . . . . . . . .    $156.7    $157.7     $99.3     $47.3     $12.7    $167.9
                                                      ------    ------     -----     -----     -----    ------
                                                      ------    ------     -----     -----     -----    ------
Payments
   Albuterol . . . . . . . . . . . . . . . . . . .       3.4      30.3      --        --        --        33.7
   Beclomethasone. . . . . . . . . . . . . . . . .       1.6       9.1       6.0       0.3      --        17.0
   Budesonide. . . . . . . . . . . . . . . . . . .      --         4.6      15.2      11.1       6.3      37.2
   Ipratropium . . . . . . . . . . . . . . . . . .      --         9.5      16.1       9.0      --        34.6
   Albuterol-Ipratropium . . . . . . . . . . . . .      --         6.5      11.2      10.1       3.0      30.8
Other Expenditures . . . . . . . . . . . . . . . .      --         1.5       4.5       4.0       2.0      12.0
General and administrative expenses. . . . . . . .      --         0.4       0.4       0.4       0.4       1.6
                                                      ------    ------     -----     -----     -----    ------
     Total . . . . . . . . . . . . . . . . . . . .    $  5.0    $ 61.9     $53.4     $34.9     $11.7    $166.9
                                                      ------    ------     -----     -----     -----    ------
                                                      ------    ------     -----     -----     -----    ------
Ending cash balance  . . . . . . . . . . . . . . .    $151.7    $ 95.8     $45.9     $12.4     $ 1.0    $  1.0
                                                      ------    ------     -----     -----     -----    ------
                                                      ------    ------     -----     -----     -----    ------
</TABLE>
------------------------
(1)  Assumes an interest rate of 5%.

(2)  Expenditures in the year ended December 31, 1997 include approximately $4
     million to repay Dura for estimated costs and expenses to be incurred by
     Dura on behalf of Spiros Corp. II between October 10, 1997 and the closing
     of the Offerings.

<PAGE>

                                  SCHEDULE 5.3


Contracting for Development services through closing.

     Dry powder inhaler and drug development costs through closing of the
     Offering.







                                  SCHEDULE 5.3