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         Bank of America                         Business Loan Agreement
[LOGO]   National Trust and Savings Association                      


This Agreement dated as of April 14, 1997, is between Bank of America National
Trust and Savings Association (the "Bank") and Dura Pharmaceuticals, Inc. (the
"Borrower").

1.   LINE OF CREDIT AMOUNT AND TERMS

1.1  Line of Credit Amount.

(a)  During the availability period described below, the Bank will provide a 
     line of credit to the Borrower.  The amount of the line of credit (the 
     "Commitment") is Fifty Million Dollars ($50,000,000).

(b)  This is a revolving line of credit with a within line facility for 
     letters of credit. During the availability period, the Borrower may 
     repay principal amounts and reborrow them.

(c)  Each advance must be for at least Twenty-Five Thousand Dollars ($25,000), 
     or for the amount of the remaining available line of credit, if less.

(d)  The Borrower agrees not to permit the outstanding principal balance of 
     the line of credit plus the outstanding amounts of any letters of credit, 
     including amounts drawn on letters of credit and not yet reimbursed, to 
     exceed the Commitment.

1.2  Availability Period.  The line of credit is available between the date of 
this Agreement and May 1, 1999 (the "Expiration Date") unless the Borrower 
is in default.

1.3  Interest Rate.

(a)  Unless the Borrower elects an optional interest rate as described below, 
     the interest rate is the Bank's Reference Rate.

(b)  The Reference Rate is the rate of interest publicly announced from time   
     to time by the Bank in San Francisco, California, as its Reference 
     Rate.  The Reference Rate is set by the Bank based on various factors, 
     including the Bank's costs and desired return, general economic 
     conditions and other factors, and is used as a reference point for 
     pricing some loans.  The Bank may price loans to its customers at, 
     above, or below the Reference Rate.  Any change in the Reference Rate 
     shall take effect at the opening of business on the day specified in the 
     public announcement of a change in the Bank's Reference Rate.

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1.4  Repayment Terms.

(a)  The Borrower will pay interest on May 1, 1997, and then monthly 
     thereafter until payment in full of any principal outstanding under this 
     line of credit.

(b)  The Borrower will repay in full all principal and any unpaid interest or 
     other charges outstanding under this line of credit no later than the 
     Expiration Date.

(c)  Any amount bearing interest at an optional interest rate (as described 
     below) may be repaid at the end of the applicable interest period, which 
     shall be no later than the Expiration Date.

1.5  Optional Interest Rates.  Instead of the interest rate based on the 
Bank's Reference Rate, the Borrower may elect to have all or portions 
of the line of credit (during the availability period) bear interest at 
the rate(s) described below during an interest period agreed to by the 
Bank and the Borrower.  Each interest rate is a rate per year. 
Interest will be paid on the last day of each interest period, and, if 
the interest period is longer than a month, then on the first day each 
month during the interest period.  At the end of any interest period, 
the interest rate will revert to the rate based on the Reference Rate, 
unless the Borrower has designated another optional interest rate for 
the portion.

1.6  Offshore Rate.  The Borrower may elect to have all or portions of the 
principal balance of the line of credit bear interest at the Offshore 
Rate plus 1.50 percentage points.

Designation of an Offshore Rate portion is subject to the following 
requirements:

(a)  The interest period during which the Offshore Rate will be in effect will 
     be one year or less.  The last day of the interest period will be 
     determined by the Bank using the practices of the offshore dollar 
     inter-bank market.

(b)  Each Offshore Rate portion will be for an amount not less than Five 
     Hundred Thousand Dollars ($500,000) for interest periods of 30 days 
     or longer.  For shorter maturities, each Offshore Rate portion will be 
     for an amount which, when multiplied by the number of days in the 
     applicable interest period, is not less than fifteen million 
     (15,000,000) dollar-days.

(c)  The "Offshore Rate" means the interest rate determined by the following 
     formula, rounded upward to the nearest 1/100 of one percent.  (All 
     amounts in the calculation will be determined by the Bank as of the 
     first day of the interest period.)

                  Offshore Rate = GRAND CAYMAN RATE
                                  -----------------
                                  (1.0 - Reserve Percentage)
      
                                      -2-

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     Where,
     (i)   "Grand Cayman Rate" means the interest rate (rounded upward to the 
           nearest 1/16th of one percent) at which the Bank's Grand Cayman 
           Branch, Grand Cayman, British West Indies, would offer U.S. dollar 
           deposits for the applicable interest period to other major banks in 
           the offshore dollar inter-bank markets.

     (ii)  "Reserve Percentage" means the total of the maximum reserve 
           percentages for determining the reserves to be maintained by member 
           banks of the Federal Reserve System for Eurocurrency Liabilities, 
           as defined in the Federal Reserve Board Regulation D, rounded 
           upward to the nearest 1/100 of one percent.  The percentage will 
           be expressed as a decimal, and will include, but not be limited to, 
           marginal, emergency, supplemental, special, and other reserve 
           percentages.

(d)  The Borrower may not elect an Offshore Rate with respect to any portion 
     of the principal balance of the line of credit which is scheduled to 
     be repaid before the last day of the applicable interest period.

(e)  Any portion of the principal balance of the line of credit already 
     bearing interest at the Offshore Rate will not be converted to a 
     different rate during its interest period.

(f)  Each prepayment of an Offshore Rate portion, whether voluntary, by 
     reason of acceleration or otherwise, will be accompanied by the 
     amount of accrued interest on the amount prepaid, and a prepayment fee 
     equal to the amount (if any) by which

     (i)   the additional interest which would have been payable on the 
           amount prepaid had it not been paid until the last day of the 
           interest period, exceeds

     (ii)  the interest which would have been recoverable by the Bank by 
           placing the amount prepaid on deposit in the offshore dollar market 
           for a period starting on the date on which it was prepaid and 
           ending on the last day of the interest period for such portion.

(g)  The Bank will have no obligation to accept an election for an Offshore 
     Rate portion if any of the following described events has occurred and 
     is continuing:

     (i)   Dollar deposits in the principal amount, and for periods equal to 
           the interest period, of an Offshore Rate portion are not available 
           in the offshore dollar inter-bank markets; or

     (ii)  the Offshore Rate does not accurately reflect the cost of an 
           Offshore Rate portion.
    
                                      -3-

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1.7  Letters of Credit.  This line of credit may be used for financing:

     (i)   commercial letters of credit with a maximum maturity of 365 days but 
           not to extend beyond the Expiration Date.  Each commercial letter of 
           credit will require drafts payable at sight.

     (ii)  standby letters of credit with a maximum maturity of 365 days but 
           not to extend beyond the Expiration Date.

     (iii) The amount of letters of credit outstanding at any one time, 
           (including amounts drawn on letters of credit and not yet
           reimbursed), may not exceed Ten Million Dollars ($10,000,000).

The Borrower agrees:

(a)  any sum drawn under a letter of credit may, at the option of the Bank, 
     be added to the principal amount outstanding under this Agreement.  The 
     amount will bear interest and be due as described elsewhere in this 
     Agreement.

(b)  if there is a default under this Agreement, to immediately prepay and 
     make the Bank whole for any outstanding letters of credit.

(c)  the issuance of any letter of credit and any amendment to a letter of 
     credit is subject to the Bank's written approval and must be in form and 
     content satisfactory to the Bank and in favor of a beneficiary acceptable 
     to the Bank.

(d)  to sign the Bank's form Application and Agreement for Commercial Letter 
     of Credit or Application and Agreement for Standby Letter of Credit.

(e)  to pay any issuance and/or other fees that the Bank notifies the Borrower 
     will be charged for issuing and processing letters of credit for the 
     Borrower.

(f)  to allow the Bank to automatically charge its checking account for 
     applicable fees, discounts, and other charges.

2.   FEES AND EXPENSES

2.1  Unused Commitment Fee.  The Borrower agrees to pay a fee on any 
difference between the Commitment and the amount of credit it actually 
uses (including the undrawn and the drawn but unreimbursed amounts of 
letters of credit), determined by the weighted average loan balance 
maintained during the specified period.  The fee will be calculated at 
0.125% per year, pro rated for any portion of a year.  This fee will be 
due 10 days from the Bank's billing date for each calendar quarter, 
commencing with the quarter ending June 30, 1997.

                                      -4-

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2.2 Expenses.

(a)  The Borrower agrees to immediately repay the Bank for expenses that 
     include, but are not limited to, filing, recording and search fees, 
     and documentation fees.

(b)  The Borrower agrees to reimburse the Bank for any expenses it incurs in 
     the preparation of this Agreement and any agreement or instrument 
     required by this Agreement.  Expenses include, but are not limited to, 
     reasonable attorneys' fees, including any allocated costs of the 
     Bank's in-house counsel.

3.   DISBURSEMENTS, PAYMENTS AND COSTS

3.1  Requests for Credit.  Each request for an extension of credit will be 
made in writing in a manner acceptable to the Bank, or by another means 
acceptable to the Bank.

3.2  Disbursements and Payments.  Each disbursement by the Bank and each 
payment by the Borrower will be:

(a)  made at the Bank's branch (or other location) selected by the Bank from 
     time to time;

(b)  made for the account of the Bank's branch selected by the Bank from time 
     to time;

(c)  made in immediately available funds, or such other type of funds 
     selected by the Bank;

(d)  evidenced by records kept by the Bank.  In addition, the Bank may, at 
     its discretion, require the Borrower to sign one or more promissory 
     notes.

3.3  Telephone Authorization.

(a)  The Bank may honor telephone instructions for advances or repayments or 
     for the designation of optional interest rates given by any one of 
     the individuals authorized to sign loan agreements on behalf of the 
     Borrower, or any other individual designated by any one of such 
     authorized signers.

(b)  Advances will be deposited in and repayments will be withdrawn from the 
     Borrower's account number 1450707440, or such other of the 
     Borrower's accounts with the Bank as designated in writing by the 
     Borrower.

(c)  The Borrower indemnifies and excuses the Bank (including its officers, 
     employees, and agents) from all liability, loss, and costs in 
     connection with any act resulting from telephone instructions it 
     reasonably believes are made by any individual authorized by the 
     Borrower to give such instructions.  This indemnity and excuse will 
     survive this Agreement.

                                      -5-

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3.4  Direct Debit (Pre-Billing).

(a)  The Borrower agrees that the Bank will debit the Borrower's deposit 
     account number 14507-07440, or such other of the Borrower's accounts 
     with the Bank as designated in writing by the Borrower (the "Designated 
     Account") on the date each payment of interest and any fees from the 
     Borrower becomes due (the "Due Date"). If the Due Date is not a banking 
     day, the Designated Account will be debited on the next banking day.

(b)  Approximately 10 days prior to each Due Date, the Bank will mail to the 
     Borrower a statement of the amounts that will be due on that Due 
     Date (the "Billed Amount").  The calculation will be made on the 
     assumption that no new extensions of credit or payments will be made 
     between the date of the billing statement and the Due Date, and that 
     there will be no changes in the applicable interest rate.

(c)  The Bank will debit the Designated Account for the Billed Amount, 
     regardless of the actual amount due on that date (the "Accrued 
     Amount").

     If the Billed Amount debited to the Designated Account differs from the 
     Accrued Amount, the discrepancy will be treated as follows:

     (i)   If the Billed Amount is less than the Accrued Amount, the Billed 
           Amount for the following Due Date will be increased by the 
           amount of the discrepancy.  The Borrower will not be in default by 
           reason of any such discrepancy.
    
     (ii)  If the Billed Amount is more than the Accrued Amount, the Billed 
           Amount for the following Due Date will be decreased by the amount 
           of the discrepancy.

     Regardless of any such discrepancy, interest will continue to accrue 
     based on the actual amount of principal outstanding without 
     compounding.  The Bank will not pay the Borrower interest on any 
     overpayment.

(d)  The Borrower will maintain sufficient funds in the Designated Account to 
     cover each debit.  If there are insufficient funds in the Designated 
     Account on the date the Bank enters any debit authorized by this 
     Agreement, the debit will be reversed.

3.5  Banking Days.  Unless otherwise provided in this Agreement, a banking 
day is a day other than a Saturday or a Sunday on which the Bank is open 
for business in California.  For amounts bearing interest at an offshore 
rate (if any), a banking day is a day other than a Saturday or a Sunday 
on which the Bank is open for business in California and dealing in 
offshore dollars.  All payments and disbursements which would be due on 
a day which is not a banking day will be due on the next banking day.  
All payments received on a day which is not a banking day will be 
applied to the credit on the next banking day.

                                      -6-

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3.6  Taxes.  The Borrower will not deduct any taxes from any payments it 
makes to the Bank.  If any government authority imposes any taxes on any 
payments made by the Borrower, the Borrower will pay the taxes and will also 
pay to the Bank, at the time interest is paid, any additional amount which 
the Bank specifies as necessary to preserve the after-tax yield the Bank 
would have received if such taxes had not been imposed.  Upon request by the 
Bank, the Borrower will confirm that it has paid the taxes by giving the Bank 
official tax receipts (or notarized copies) within 30 days after the due 
date.  However, the Borrower will not pay the Bank's net income taxes.

3.7  Additional Costs.  The Borrower will pay the Bank, on demand, for the 
Bank's costs or losses arising from any statute or regulation, or any request 
or requirement of a regulatory agency which is applicable to all national 
banks or a class of all national banks.  The costs and losses will be 
allocated to the loan in a manner determined by the Bank, using any 
reasonable method.  The costs include the following:

(a)  any reserve or deposit requirements; and

(b)  any capital requirements relating to the Bank's assets and commitments 
     for credit.

3.8  Interest Calculation.  Except as otherwise stated in this Agreement, all 
interest and fees, if any, will be computed on the basis of a 360-day year 
and the actual number of days elapsed.  This results in more interest or a 
higher fee than if a 365-day year is used.

3.9  Interest on Late Payments.  At the Bank's sole option in each instance, 
any amount not paid when due under this Agreement (including interest) shall 
bear interest from the due date at the Bank's Reference Rate plus 2.00 
percentage points.  This may result in compounding of interest.

3.10 Default Rate.  Upon the occurrence and during the continuation of any 
default under this Agreement, advances under this Agreement will at the 
option of the Bank bear interest at a rate per annum which is 2.00 percentage 
points higher than the rate of interest otherwise provided under this 
Agreement.  This will not constitute a waiver of any default.

4.   CONDITIONS

The Bank must receive the following items, in form and content acceptable to 
the Bank, before it is required to extend any credit to the Borrower under 
this Agreement:

4.1  Authorizations.  Evidence that the execution, delivery and performance 
by the Borrower (and any guarantor) of this Agreement and any instrument or 
agreement required under this Agreement have been duly authorized.

                                      -7-

<PAGE>

4.2  Good Standing.  Certificates of good standing for the Borrower from its 
state of incorporation and from any other state in which the Borrower is 
required to qualify to conduct its business.

4.3  Silicon Valley Bank Termination.  Evidence that the Borrower's credit 
facility with Silicon Valley Bank has been terminated and that any and all 
security interests and liens securing such facilities have been fully 
released.
  
4.4  Other Items.  Any other items that the Bank reasonably requires.

5.   REPRESENTATIONS AND WARRANTIES

When the Borrower signs this Agreement, and until the Bank is repaid in full, 
the Borrower makes the following representations and warranties.  Each 
request for an extension of credit constitutes a renewed representation.

5.1  Organization of Borrower.  The Borrower is a corporation duly formed and 
existing under the laws of the state where organized.

5.2  Authorization.  This Agreement, and any instrument or agreement required 
hereunder, are within the Borrower's powers, have been duly authorized, and 
do not conflict with any of its organizational papers.

5.3  Enforceable Agreement.  This Agreement is a legal, valid and binding 
agreement of the Borrower, enforceable against the Borrower in accordance 
with its terms, and any instrument or agreement required hereunder, when 
executed and delivered, will be similarly legal, valid, binding and 
enforceable.

5.4  Good Standing.  In each state in which the Borrower does business, it is 
properly licensed, in good standing, and, where required, in compliance with 
fictitious name statutes.

5.5  No Conflicts.  This Agreement does not conflict with any law, agreement, 
or obligation by which the Borrower is bound.

5.6  Financial Information.  All financial and other information that has 
been or will be supplied to the Bank, including the Borrower's financial 
statement dated as December 31, 1996, is:

(a)  sufficiently complete to give the Bank accurate knowledge of the 
     Borrower's (and any guarantor's) financial condition.

(b)  in form and content required by the Bank.

(c)  in compliance with all government regulations that apply.

                                      -8-

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Since the date of the financial statement specified above, there has been no 
material adverse change in the assets or the financial condition of the 
Borrower (or any guarantor).

5.7  Lawsuits.  There is no lawsuit, tax claim or other dispute pending or 
threatened against the Borrower, which, if lost, would impair the Borrower's 
financial condition or ability to repay the loan, except as have been 
disclosed in writing to the Bank.

5.8  Permits, Franchises.  The Borrower possesses all permits, memberships, 
franchises, contracts and licenses required and all trademark rights, trade 
name rights, patent rights and fictitious name rights necessary to enable it 
to conduct the business in which it is now engaged.

5.9  Other Obligations.  The Borrower is not in default on any obligation for 
borrowed money, any purchase money obligation or any other material lease, 
commitment, contract, instrument or obligation.

5.10 Income Tax Returns.  The Borrower has no knowledge of any pending 
assessments or adjustments of its income tax for any year.

5.11 No Event of Default.  There is no event which is, or with notice or 
lapse of time or both would be, a default under this Agreement.

5.12 ERISA Plans.

(a)  The Borrower has fulfilled its obligations, if any, under the minimum 
     funding standards of ERISA and the Code with respect to each Plan and is 
     in compliance in all material respects with the presently applicable 
     provisions of ERISA and the Code, and has not incurred any liability with 
     respect to any Plan under Title IV of ERISA.

(b)  No reportable event has occurred under Section 4043(b) of ERISA for 
     which the PBGC requires 30 day notice.

(c)  No action by the Borrower to terminate or withdraw from any Plan has 
     been taken and no notice of intent to terminate a Plan has been filed 
     under Section 4041 of ERISA.

(d)  No proceeding has been commenced with respect to a Plan under Section 
     4042 of ERISA, and no event has occurred or condition exists which might 
     constitute grounds for the commencement of such a proceeding.

(e)  The following terms have the meanings indicated for purposes of this 
     Agreement:

     (i)  "Code" means the Internal Revenue Code of 1986, as amended from time 
          to time.

                                      -9-

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     (ii)  "ERISA" means the Employee Retirement Income Act of 1974, as 
           amended from time to time.

     (iii) "PBGC" means the Pension Benefit Guaranty Corporation established 
           pursuant to Subtitle A of Title IV of ERISA.

     (iv)  "Plan" means any employee pension benefit plan maintained or 
           contributed to by the Borrower and insured by the Pension Benefit 
           Guaranty Corporation under Title IV of ERISA.

5.13 Location of Borrower.  The Borrower's place of business (or, if the 
Borrower has more than one place of business, its chief executive office) is 
located at the address listed under the Borrower's signature on this 
Agreement.

6.   COVENANTS

The Borrower agrees, so long as credit is available under this Agreement and 
until the Bank is repaid in full:

6.1  Use of Proceeds.  To use the proceeds of the credit only for funding 
acquisitions of product lines or companies and for general corporate purposes.

6.2  Financial Information.  To provide the following financial information 
and statements and such additional information as requested by the Bank from 
time to time:

(a)  Within 90 days of the Borrower's fiscal year end, the Borrower's annual 
     financial statements.  These financial statements must be audited by a 
     Certified Public Accountant ("CPA") acceptable to the Bank.  The 
     statements shall be prepared on a consolidated basis.

(b)  Within 45 days of the period's end, the Borrower's quarterly financial 
     statements including the fourth quarter.  These financial statements are 
     to include year-to-date financial reporting and may be Borrower prepared. 
     The statements shall be prepared on a consolidated and consolidating 
     basis by division including without limitation the Healthscript division, 
     the HealthCo division, and any other division of the Borrower.

(c)  Copies of the Borrower's Form 10-K Annual Report and Form 10-Q Quarterly 
     Report within 10 days after the date of filing with the Securities and 
     Exchange Commission.

(d)  Within the periods provided in (a) and (b) above, a compliance certificate 
     of the Borrower signed by the Borrower's Chief Financial Officer or Vice 
     President-Finance setting forth (i) the information and computations (in 
     sufficient detail) to establish that the Borrower is in compliance with 
     all financial covenants at the end of the period covered by the financial
     statements then being furnished, (ii) whether there exists as of the date 
     of such financial

                                     -10-

<PAGE>

     statements and whether there exists as of the date of the certificate, 
     any default under this Agreement and, if such a default exists, specifying 
     the nature thereof and the action the Borrower is taking and proposes to 
     take with respect to such default, and (iii) the Borrower's representation 
     and warranty as of the date of the certificate that there are no 
     Significant Subsidiaries except those that have executed and delivered to 
     the Bank a guaranty as required under Paragraph 6.6 of this Agreement.

(e)  Within 60 days of the Borrower's fiscal year end, the Borrower's 
     projections by product line (balance sheet, income statement, statement of 
     cash flows, and assumptions) for the forthcoming year.

(f)  Upon the request of the Bank, copies of the Borrower's federal tax 
     return with all supporting schedules.

6.3  Tangible Net Worth. To maintain on a consolidated basis Tangible Net 
     Worth equal to at least the greater of:

(a)  Two Hundred Million Dollars ($200,000,000) or

(b)  the difference between:

     (i)   The sum of:

          (A) Two Hundred Fifty Million Dollars ($250,000,000); plus

          (B) the sum of 50% of net income after income taxes (without 
              subtracting losses) earned in each quarterly accounting 
              period commencing after December 31, 1996; plus

          (C) the net proceeds from any equity securities issued after the 
              date of this Agreement (including shares issued upon the 
              exercise of stock options); plus
    
          (D) any increase in stockholders' equity resulting from the 
              conversion of debt securities to equity securities after
              the date of this Agreement; and
    
     (ii)  The sum of (without duplication):
    
          (A) Cash and noncash charges for in-process technology purchased 
              from Spiros Development Corporation (the "Spiros Charges") up 
              to a maximum of Twenty Million Dollars ($20,000,000); plus
    
          (B) The amount of purchases of intangible assets up to a maximum of 
              Fifty Million Dollars ($50,000,000).

                                     -11-
<PAGE>

"Tangible Net Worth" means the gross book value of the Borrower's assets 
(excluding license agreements, product rights, goodwill, patents, trademarks, 
trade names, organization expense, treasury stock, unamortized debt discount 
and expense, capitalized or deferred research and development costs, deferred 
marketing expenses, deferred receivables, and other like intangibles, and 
monies due from affiliates, officers, directors, employees, or shareholders 
of the Borrower) less total liabilities, including but not limited to accrued 
and deferred income taxes, and any reserves against assets.

6.4   Adjusted Funded Debt to Adjusted EBITDA.  To maintain a ratio of funded 
debt, including all interest bearing obligations but excluding obligations 
owing to Procter & Gamble Pharmaceuticals, Inc. for the Entex Products up to 
a maximum of Twenty Million Dollars ($20,000,000), TO the sum of EBITDA plus 
the Spiros Charges up to a maximum of Twenty Million Dollars ($20,000,000) of 
not greater than the ratio indicated for each period specified below:

         PERIOD                                              RATIO
         ------                                              -----

         From and including the date of this Agreement
         to and including August 31, 1997                   2.00 to 1.00

         From and including September 1, 1997
         and thereafter                                     1.75 to 1.00

For purposes of this Agreement, "EBITDA" means earnings before interest 
income and taxes, plus interest expense, plus depreciation and amortization.  
EBITDA will be calculated at the end of each fiscal quarter, using the 
results of that quarter and each of the 3 immediately preceding quarters.

6.5   Minimum EBIT.  To maintain on a consolidated basis a sum of (i) net 
income before taxes and interest expense plus (ii) the Spiros Charges up to a 
maximum of Twenty Million Dollars ($20,000,000) at least Zero Dollars ($0) 
for each quarterly accounting period.

6.6   Additional Guaranties.  If at any time after the date of this Agreement 
a subsidiary of the Borrower or any guarantor becomes a Significant 
Subsidiary, to cause such Significant Subsidiary to execute and deliver to 
the Bank, as soon as reasonably practicable but not later than thirty (30) 
days after the Bank's request therefor, a continuing guaranty in the 
principal amount of at least Fifty Million Dollars ($50,000,000) and 
otherwise in form and substance acceptable to the Bank, together with 
satisfactory evidence of such Significant Subsidiary's authority to execute 
and deliver such guaranty.  For purposes of this Agreement, "Significant 
Subsidiary" means a corporation (i) that is wholly-owned by the Borrower or 
any guarantor and (ii) that owns ten percent (10%) or more of the Borrower's 
total consolidated assets or ten percent (10%) or more of the Borrower's  
total consolidated sales for any fiscal quarter.


                                     -12-
<PAGE>

6.7   Other Debts.  Not to have outstanding or incur any direct or contingent 
debts (other than those to the Bank), or become liable for the debts of 
others without the Bank's written consent.  This does not prohibit:

(a)   Acquiring goods, supplies, or merchandise on normal trade credit.

(b)   Endorsing negotiable instruments received in the usual course of 
      business.

(c)   Obtaining surety bonds in the usual course of business.

(d)   Debts in existence on the date of this Agreement disclosed in writing 
      to the Bank.

(e)   Additional debts for the acquisition of fixed or capital assets which 
      do not exceed a total principal amount of Five Million Dollars 
      ($5,000,000) in any single fiscal year.

6.8   Other Liens.  Not to create, assume, or allow any security interest or 
lien (including judicial liens) on property the Borrower now or later owns, 
except:

(a)   Deeds of trust and security agreements in favor of the Bank.

(b)   Liens for taxes not yet due.

(c)   Liens outstanding on the date of this Agreement disclosed in writing to 
      the Bank.

(d)   Additional purchase money security interests in personal property 
      acquired after the date of this Agreement if the total principal amount 
      of debts secured by such liens does not exceed Five Million Dollars 
      ($5,000,000) in any single fiscal year.

6.9   Capital Expenditures.  Not to spend more than Thirty Million Dollars 
($30,000,000) during 1997 fiscal year and Fifteen Million Dollars 
($15,000,000) during 1998 fiscal year to acquire fixed or capital assets.

6.10  Leases.  Not to permit the aggregate payments due in any fiscal year 
under all leases (including capital and operating leases for real or personal 
property) to exceed Two Million Dollars ($2,000,000).

6.11  Dividends.  Not to declare or pay any dividends on any of its shares 
except dividends payable in capital stock of the Borrower, and not to 
purchase, redeem or otherwise acquire for value any of its shares, or create 
any sinking fund in relation thereto.

6.12  Loans to Affiliated Companies.  Not to make any loans, advances or 
other extensions of credit to any of the Borrower's affiliated companies in 
excess of an aggregate of Ten Million Dollars ($10,000,000).


                                   -13-
<PAGE>

6.13  Notices to Bank.  To promptly notify the Bank in writing of:

(a)   any lawsuit over Two Million Dollars ($2,000,000) against the Borrower 
      (or any guarantor).

(b)   any substantial dispute between the Borrower (or any guarantor) and any 
      government authority.

(c)   any failure to comply with this Agreement.

(d)   any material adverse change in the Borrower's (or any guarantor's) 
      financial condition or operations.

(e)   any change in the Borrower's name, legal structure, place of business, 
      or chief executive office if the Borrower has more than one place of 
      business.

6.14  Books and Records.  To maintain adequate books and records.

6.15  Audits. To allow the Bank and its agents to inspect the Borrower's 
properties and examine, audit and make copies of books and records at any 
reasonable time.  If any of the Borrower's properties, books or records are 
in the possession of a third party, the Borrower authorizes that third party 
to permit the Bank or its agents to have access to perform inspections or 
audits and to respond to the Bank's requests for information concerning such 
properties, books and records.

6.16  Compliance with Laws.  To comply with the laws (including any 
fictitious name statute), regulations, and orders of any government body with 
authority over the Borrower's business.

6.17  Preservation of Rights.  To maintain and preserve all rights, 
privileges, and franchises the Borrower now has.

6.18  Maintenance of Properties.  To make any repairs, renewals, or 
replacements to keep the Borrower's properties in good working condition.

6.19  Cooperation.  To take any action requested by the Bank to carry out the 
intent of this Agreement.

6.20  General Business Insurance.  To maintain insurance as is usual for the 
business it is in.

6.21  Additional Negative Covenants.  Not to, without the Bank's written 
consent:

(a)   engage in any business activities substantially different from the 
      present business of the Borrower or any of its subsidiaries.

(b)   liquidate or dissolve the Borrower's business.


                                    -14-
<PAGE>

(c)   enter into any consolidation, merger, pool, joint venture, syndicate, 
      or other combination; provided, however, that the Borrower may enter into
      any joint venture if the amount of the Borrower's capital contribution 
      thereto, when added to the total, cumulative amount of capital 
      contributions to other joint ventures entered into by the Borrower after 
      the date of this Agreement, would not exceed Ten Million Dollars 
      ($10,000,000).

(d)   lease, or dispose of all or a substantial part of the Borrower's 
      business or the Borrower's assets except in the ordinary course of the 
      Borrower's business.

(e)   acquire a business through the purchase of its stock.

(f)   sell or otherwise dispose of any assets for less than fair market 
      value, or enter into any sale and leaseback agreement covering any of 
      its fixed or capital assets.

(g)   cancel or terminate those existing licensing or co-branding agreements 
      that generated revenues in excess of ten percent 10% of the Borrower's 
      consolidated total revenues for the immediately preceding four (4) 
      quarters.

6.22  ERISA Plans.  To give prompt written notice to the Bank of:

(a)   The occurrence of any reportable event under Section 4043(b) of ERISA 
      for which the PBGC requires 30 day notice.

(b)   Any action by the Borrower to terminate or withdraw from a Plan or the 
      filing of any notice of intent to terminate under Section 4041 of ERISA.

(c)   Any notice of noncompliance made with respect to a Plan under Section 
      4041(b) of ERISA.

(d)   The commencement of any proceeding with respect to a Plan under Section 
      4042 of ERISA.

7.    HAZARDOUS WASTE INDEMNIFICATION

The Borrower will indemnify and hold harmless the Bank from any loss or 
liability directly or indirectly arising out of the use, generation, 
manufacture, production, storage, release, threatened release, discharge, 
disposal or presence of a hazardous substance. This indemnity will apply 
whether the hazardous substance is on, under or about the Borrower's property 
or operations or property leased to the Borrower.  The indemnity includes but 
is not limited to attorneys' fees (including the reasonable estimate of the 
allocated cost of in-house counsel and staff).  The indemnity extends to the 
Bank, its parent, subsidiaries and all of their directors, officers, 
employees, agents, successors, attorneys and assigns.  "Hazardous substances" 
means any substance, material or waste that is or becomes designated or 
regulated as "toxic," "hazardous,"


                                   -15-
<PAGE>

"pollutant," or "contaminant" or a similar designation or regulation under 
any federal, state or local law (whether under common law, statute, 
regulation or otherwise) or judicial or administrative interpretation of 
such, including without limitation petroleum or natural gas.  This indemnity 
will survive repayment of the Borrower's obligations to the Bank.

8.    DEFAULT

If any of the following events occur, the Bank may do one or more of the 
following: declare the Borrower in default, stop making any additional credit 
available to the Borrower, and require the Borrower to repay its entire debt 
immediately and without prior notice. If an event of default occurs under the 
paragraph entitled "Bankruptcy," below, with respect to the Borrower, then 
the entire debt outstanding under this Agreement will automatically be due 
immediately.

8.1   Failure to Pay.  The Borrower fails to make a payment under this 
Agreement when due.

8.2   False Information.  The Borrower has given the Bank false or misleading 
information or representations.

8.3   Bankruptcy.  The Borrower (or any guarantor) files a bankruptcy 
petition, a bankruptcy petition is filed against the Borrower (or any 
guarantor), or the Borrower (or any guarantor) makes a general assignment for 
the benefit of creditors.  The default will be deemed cured if any bankruptcy 
petition filed against the Borrower (or any guarantor) is dismissed within a 
period of 60 days after the filing; provided, however, that the Bank will not 
be obligated to extend any additional credit to the Borrower during that 
period.

8.4   Receivers.  A receiver or similar official is appointed for the 
Borrower's (or any guarantor's) business, or the business is terminated.

8.5   Judgments.  One or more judgments or arbitration awards are entered 
against the Borrower (or any guarantor) on a claim or claims not fully 
covered by insurance (excluding reasonable deductibles) and remain 
undischarged, unvacated, unbonded, or unstayed for a period of 30 days or in 
any event later than 5 days prior to any proposed sale under any such 
judgment or award, or the Borrower (or any guarantor) enters into any 
settlement agreements with respect to any litigation or arbitration in the 
aggregate amount One Million Dollars ($1,000,000) or more on a claim or 
claims not fully cover by insurance (excluding reasonable deductibles).

8.6   Government Action.  Any government authority takes action that the Bank 
believes materially adversely affects the Borrower's (or any guarantor's) 
financial condition or ability to repay.

8.7   Material Adverse Change.  A material adverse change occurs in the 
Borrower's (or any guarantor's) financial condition, properties or prospects, 
or ability to repay the loan.


                                   -16-
<PAGE>

8.8   Cross-default.  Any default occurs under any agreement in connection 
with any credit the Borrower (or any guarantor) has obtained from anyone else 
or which the Borrower (or any guarantor) has guaranteed in the amount of One 
Hundred Thousand Dollars ($100,000) or more in the aggregate if the default 
consists of failing to make a payment when due or gives the other lender the 
right to accelerate the obligation.

8.9   Default Under Related Documents.  Any guaranty, security agreement, or 
other document required by this Agreement is violated or no longer in effect.

8.10  Other Bank Agreements.  The Borrower (or any guarantor) fails to meet 
the conditions of, or fails to perform any obligation under any other 
agreement the Borrower (or any guarantor) has with the Bank or any affiliate 
of the Bank.

8.11  ERISA Plans.  The occurrence of any one or more of the following events 
with respect to the Borrower, provided such event or events could reasonably 
be expected, in the judgment of the Bank, to subject the Borrower to any tax, 
penalty or liability (or any combination of the foregoing) which, in the 
aggregate, could have a material adverse effect on the financial condition of 
the Borrower with respect to a Plan:  

(a)   A reportable event shall occur with respect to a Plan which is, in the 
      reasonable judgment of the Bank likely to result in the termination of 
      such Plan for purposes of Title IV of ERISA. 

(b)   Any Plan termination (or commencement of proceedings to terminate a 
      Plan) or the Borrower's full or partial withdrawal from a Plan.

8.12  Other Breach Under Agreement.  The Borrower fails to meet the 
conditions of, or fails to perform any obligation under, any term of this 
Agreement not specifically referred to in this Article.  If, in the Bank's 
opinion, the breach is capable of being remedied, the breach will not be 
considered an event of default under this Agreement for a period of thirty 
(30) days after the date on which the Bank gives written notice of the breach 
to the Borrower; provided, however, that the Bank will not be obligated to 
extend any additional credit to the Borrower during that period.

9.    ENFORCING THIS AGREEMENT; MISCELLANEOUS

9.1   GAAP.  Except as otherwise stated in this Agreement, all financial 
information provided to the Bank and all financial covenants will be made 
under generally accepted accounting principles, consistently applied.  

9.2   California Law.  This Agreement is governed by California law.

9.3   Successors and Assigns.  This Agreement is binding on the Borrower's 
and the Bank's successors and assignees.  The Borrower agrees that it may not 
assign this Agreement without the Bank's prior consent.  Subject to the 
Borrower's prior written consent in each case, the Bank 


                                    -17-
<PAGE>

may sell participations in or assign this loan, and may exchange financial 
information about the Borrower with actual or potential participants or 
assignees.  If a participation is sold or the loan is assigned, the purchaser 
will have the right of set-off against the Borrower.

9.4   Arbitration.

(a)   This paragraph concerns the resolution of any controversies or claims 
      between the Borrower and the Bank, including but not limited to those 
      that arise from:
    
      (i)   This Agreement (including any renewals, extensions or 
            modifications of this Agreement);

      (ii)  Any document, agreement or procedure related to or delivered in 
            connection with this Agreement;

      (iii) Any violation of this Agreement; or

      (iv)  Any claims for damages resulting from any business conducted 
            between the Borrower and the Bank, including claims for injury to 
            persons, property or business interests (torts).

(b)   At the request of the Borrower or the Bank, any such controversies or 
      claims will be settled by arbitration in accordance with the United 
      States Arbitration Act.  The United States Arbitration Act will apply 
      even though this Agreement provides that it is governed by California 
      law.

(c)   Arbitration proceedings will be administered by the American 
      Arbitration Association and will be subject to its commercial rules of 
      arbitration.

(d)   For purposes of the application of the statute of limitations, the 
      filing of an arbitration pursuant to this paragraph is the equivalent of 
      the filing of a lawsuit, and any claim or controversy which may be 
      arbitrated under this paragraph is subject to any applicable statute of 
      limitations. The arbitrators will have the authority to decide whether 
      any such claim or controversy is barred by the statute of limitations 
      and, if so, to dismiss the arbitration on that basis.

(e)   If there is a dispute as to whether an issue is arbitrable, the 
      arbitrators will have the authority to resolve any such dispute.

(f)   The decision that results from an arbitration proceeding may be 
      submitted to any authorized court of law to be confirmed and enforced.

(g)   The procedure described above will not apply if the controversy or 
      claim, at the time of the proposed submission to arbitration, arises from
      or relates to an obligation to the Bank 


                                   -18-
<PAGE>

      secured by real property located in California.  In this case, both the 
      Borrower and the Bank must consent to submission of the claim or 
      controversy to arbitration.  If both parties do not consent to 
      arbitration, the controversy or claim will be settled as follows:
    
      (i)   The Borrower and the Bank will designate a referee (or a panel of 
            referees) selected under the auspices of the American Arbitration 
            Association in the same manner as arbitrators are selected in 
            Association-sponsored proceedings;
    
      (ii)  The designated referee (or the panel of referees) will be 
            appointed by a court as provided in California Code of Civil 
            Procedure Section 638 and the following related sections;

      (iii) The referee (or the presiding referee of the panel) will be an 
            active attorney or a retired judge; and
    
      (iv)  The award that results from the decision of the referee (or the 
            panel) will be entered as a judgment in the court that appointed 
            the referee, in accordance with the provisions of California Code 
            of Civil Procedure Sections 644 and 645.

(h)   This provision does not limit the right of the Borrower or the Bank to:

      (i)   exercise self-help remedies such as setoff;

      (ii)  foreclose against or sell any real or personal property 
            collateral; or

      (iii) act in a court of law, before, during or after the arbitration 
            proceeding to obtain:
         
            (A)  an interim remedy; and/or

            (B)  additional or supplementary remedies.
    
(i)   The pursuit of or a successful action for interim, additional or 
      supplementary remedies, or the filing of a court action, does not 
      constitute a waiver of the right of the Borrower or the Bank, including 
      the suing party, to submit the controversy or claim to arbitration if 
      the other party contests the lawsuit.  However, if the controversy or 
      claim arises from or relates to an obligation to the Bank which is 
      secured by real property located in California at the time of the 
      proposed submission to arbitration, this right is limited according to 
      the provision above requiring the consent of both the Borrower and the 
      Bank to seek resolution through arbitration.

(j)   If the Bank forecloses against any real property securing this Agreement,
      the Bank has the option to exercise the power of sale under the deed of 
      trust or mortgage, or to proceed by judicial foreclosure.


                                    -19-
<PAGE>

9.5   Severability; Waivers.  If any part of this Agreement is not 
enforceable, the rest of the Agreement may be enforced.  The Bank retains all 
rights, even if it makes a loan after default.  If the Bank waives a default, 
it may enforce a later default.  Any consent or waiver under this Agreement 
must be in writing.

9.6   Administration Costs.  The Borrower shall pay the Bank for all 
reasonable costs incurred by the Bank in connection with administering this 
Agreement.

9.7   Attorneys' Fees.  The Borrower shall reimburse the Bank for any 
reasonable costs and attorneys' fees incurred by the Bank in connection with 
the enforcement or preservation of any rights or remedies under this 
Agreement and any other documents executed in connection with this Agreement, 
and including any amendment, waiver, "workout" or restructuring under this 
Agreement.  In the event of a lawsuit or arbitration proceeding, the 
prevailing party is entitled to recover costs and reasonable attorneys' fees 
incurred in connection with the lawsuit or arbitration proceeding, as 
determined by the court or arbitrator.  As used in this paragraph, 
"attorneys' fees" includes the allocated costs of in-house counsel.

9.8   One Agreement.  This Agreement and any related security or other 
agreements required by this Agreement, collectively:

(a)   represent the sum of the understandings and agreements between the Bank 
      and the Borrower concerning this credit; and

(b)   replace any prior oral or written agreements between the Bank and the 
      Borrower concerning this credit; and

(c)   are intended by the Bank and the Borrower as the final, complete and 
      exclusive statement of the terms agreed to by them.

In the event of any conflict between this Agreement and any other agreements 
required by this Agreement, this Agreement will prevail.

9.9   Notices.  All notices required under this Agreement shall be personally 
delivered or sent by first class mail, postage prepaid, to the addresses on 
the signature page of this Agreement, or to such other addresses as the Bank 
and the Borrower may specify from time to time in writing.

9.10  Headings.  Article and paragraph headings are for reference only and 
shall not affect the interpretation or meaning of any provisions of this 
Agreement.

9.11  Counterparts.  This Agreement may be executed in as many counterparts 
as necessary or convenient, and by the different parties on separate 
counterparts each of which, when so executed, shall be deemed an original but 
all such counterparts shall constitute but one and the same agreement.


                                   -20-
<PAGE>

This Agreement is executed as of the date stated at the top of the first page.

[LOGO]
Bank of America
National Trust and Savings Association      Dura Pharmaceuticals, Inc.  


X  /s/ SUSAN J. PEPPING                     X  /s/ JAMES W. NEWMAN
  ----------------------------------          -------------------------------
By:    Susan J. Pepping                      By:    Jim Newman
Title: Vice President                        Title: Sr. Vice President,
                                                    Finance and Administration

Address where notices to the Bank           Address where notices to the 
are to be sent:                             Borrower are to be sent: 



San Diego RCBO #1450                        5880 Pacific Center Boulevard 
450 B Street, Suite 100                     San Diego, California 92121-4204
San Diego, California  92101