DURA PHARMACEUTICALS INC/CA, S-1/A, 1997-12-01

DURA PHARMACEUTICALS INC/CA
S-1/A, 1997-12-01
PHARMACEUTICAL PREPARATIONS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 1997

REGISTRATION NO. 333-37673/37673-01
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------

AMENDMENT NO. 3
TO FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SPIROS DEVELOPMENT CORPORATION II, INC.

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 5122
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>

7475 LUSK BOULEVARD, SAN DIEGO, CALIFORNIA 92121 (619) 457-2553
(Address and telephone number, including area code, of registrant's principal
executive offices)
------------------------------

AMENDMENT NO. 3
TO FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DURA PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 5122 95-3645543
(State or other jurisdiction (Primary Standard Industrial (I.R.S.Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>

7475 LUSK BOULEVARD, SAN DIEGO, CALIFORNIA 92121 (619) 457-2553

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

CAM L. GARNER DAVID S. KABAKOFF
Chairman, President and Chief Chairman, President and Chief
Executive Officer Executive Officer
DURA PHARMACEUTICALS, INC. SPIROS DEVELOPMENT CORPORATION II,
INC.
7475 Lusk Boulevard c/o Dura Pharmaceuticals, Inc.
San Diego, California 92121 7475 Lusk Boulevard
(619) 457-2553 San Diego, California 92121
(619) 457-2553
(Name, address, including zip code, (Name, address, including zip code,
and telephone and telephone
number, including area code, of agent number, including area code, of agent
for service) for service)

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

COPIES TO:

FAYE H. RUSSELL, ESQ. MARK KESSEL, ESQ.
BROBECK, PHLEGER & HARRISON LLP SHEARMAN & STERLING
550 West "C" Street, Suite 1300 599 Lexington Avenue
San Diego, California 92101 New York, New York 10022
(619) 234-1966 (212) 848-4000

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------------

* If the securities being registered on this form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------------

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.

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

* SOLELY WITH RESPECT TO THE FORM S-3.
<PAGE>
EXPLANATORY NOTE

This Registration Statement contains a Prospectus relating to an offering in
the United States and Canada ("U.S. Offering") of an aggregate of 3,750,000
Units, together with separate Prospectus pages relating to a concurrent offering
outside of the United States and Canada ("International Offering") of an
aggregate of 937,500 Units. The complete Prospectus for the U.S. Offering
follows immediately after this Explanatory Note. After such Prospectus are the
following alternate pages for the International Offering: a front cover page,
page 14, pages 73 through 78 ("United States Taxation of Non-U.S. Persons" and
"Underwriting") and a back cover page. All other pages of the Prospectus for the
U.S. Offering are identical and are to be used for both the U.S. Offering and
the International Offering. The complete Prospectus for each of the U.S.
Offering and International Offering in the exact forms in which they are to be
used after effectiveness will be filed with the Securities and Exchange
Commission pursuant to Rule 424(b).

<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 1, 1997

PROSPECTUS

[LOGO]
4,687,500 UNITS

[LOGO]
SPIROS DEVELOPMENT CORPORATION II, INC.
DURA PHARMACEUTICALS, INC.

EACH UNIT CONSISTING OF
ONE SHARE OF CALLABLE COMMON STOCK, PAR VALUE $.001 PER SHARE,
OF SPIROS DEVELOPMENT CORPORATION II, INC. AND
ONE WARRANT TO PURCHASE ONE-FOURTH OF ONE SHARE OF COMMON STOCK,
PAR VALUE $.001 PER SHARE, OF DURA PHARMACEUTICALS, INC.
-------------------

The Callable Common Stock, par value $.001 per share (the "Spiros Corp. II
Common Stock"), of Spiros Development Corporation II, Inc. ("Spiros Corp. II")
and the Warrants (the "Warrants") to purchase one-fourth of one share of Common
Stock, par value $.001 per share (the "Dura Common Stock"), of Dura
Pharmaceuticals, Inc. ("Dura") which comprise the units (the "Units") will trade
only as units (and not separately) through December 31, 1999 or such earlier
date as the Purchase Option (as defined below) is exercised or expires
unexercised. Of the 4,687,500 Units offered hereby, 3,750,000 Units are being
offered initially in the United States and Canada by the U.S. Underwriters (the
"U.S. Offering") and 937,500 Units are being offered in a concurrent offering
outside the United States and Canada by the International Underwriters (the
"International Offering" and, together with the U.S. Offering, the "Offerings").
The initial public offering price and the underwriting discount per Unit will be
identical for both Offerings. See "Underwriting." It is currently estimated that
the public offering price will be between $15.00 and $17.00 per Unit.
Application has been made to have the Units listed for quotation on the Nasdaq
National Market under the symbol "SDCO." The Warrants are exercisable at any
time from January 1, 2000 through December 31, 2002. The exercise price of the
Warrants is $ per share of Dura Common Stock (currently anticipated to
be 125% of the closing price of Dura Common Stock on the date of the
Prospectus). See "Description of the Warrants." On November 28, 1997 the last
reported sales price of a share of Dura Common Stock on the Nasdaq National
Market was $43 7/8.

Immediately prior to the consummation of the Offerings, Dura will contribute
$75 million in cash to Spiros Corp. II. See "Prospectus Summary--The
Contribution."

Elan International Services, Ltd., a wholly owned subsidiary of Elan
Corporation, plc and a stockholder of Dura, has expressed an interest in
acquiring up to $15 million of the Units in the Offerings.

Prior to the Offerings, there has been no public market for the Units.
Spiros Corp. II will receive all of the net proceeds of the Offerings. Spiros
Corp. II will, pursuant to the terms of a development agreement, pay to Dura
substantially all of the net proceeds of the Offerings in research, clinical
development, product development and commercialization costs. See "Use of
Proceeds."

Beginning on the closing date of the Offerings and ending on the earlier of
(i) December 31, 2002 or (ii) the 90th day after Spiros Corp. II provides Dura
with quarterly financial statements of Spiros Corp. II showing cash or cash
equivalents of less than $5 million (which period may be extended by Dura under
certain circumstances but in no event beyond December 31, 2002), Dura will have
an option to purchase all (but not less than all) of the shares of Spiros Corp.
II Common Stock at a substantial premium over the offering price. The option
price may be paid in cash, shares of Dura Common Stock or any combination of the
foregoing, at Dura's sole discretion. The holders of Spiros Corp. II Common
Stock will be entitled to one vote per share; in a winding-up or liquidation of
Spiros Corp. II, the assets available for distribution shall be distributed pro
rata among the holders of shares of Spiros Corp. II Common Stock. See "The
Agreements and the Purchase Options--Stock Purchase Option."

SEE "RISK FACTORS" BEGINNING ON PAGE 17 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN CONSIDERATIONS RELATED TO AN INVESTMENT IN THE UNITS.
-----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) SPIROS CORP. II(2)
<S> <C> <C> <C>
Per Unit.............................................. $ $ $
Total(3).............................................. $ $ $
</TABLE>

(1) Spiros Corp. II and Dura have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."

(2) Before deducting expenses, estimated at $600,000, payable by Spiros Corp.
II.

(3) Spiros Corp. II and Dura have granted the U.S. Underwriters and the
International Underwriters options, exercisable within 30 days after the
date hereof, to purchase up to an additional 562,500 and 140,625 Units,
respectively, on the same terms as set forth above solely to cover
over-allotments, if any. If the option is exercised in full, the total Price
to Public, Underwriting Discount, and Proceeds to Spiros Corp. II will be
$ , $ and $ , respectively. See "Underwriting."
------------------------

The Units are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by the Underwriters, and subject to the
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the Units will be made in New York, New York on or about ,
1997.
------------------------
MERRILL LYNCH & CO. DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
-------------------

The date of this Prospectus is , 1997.
<PAGE>
SPIROS-TM- PULMONARY DRY POWDER DRUG DELIVERY SYSTEM

[PHOTO OF INDIVIDUAL USING SPIROS-TM-]

Spiros-TM- is a proprietary dry powder delivery system under development
that is designed to aerosolize pharmaceuticals in dry powder formulations for
propellant-free delivery to the lungs.

Spiros-TM- features:

-- Inspiratory Flow Rate Independence

-- Minimum Need for Patient Coordination

-- Absence of Chlorofluorocarbon Propellants

-- Patient Convenience

Product candidates based on Spiros-TM- are in various stages of research or
development and have not been cleared by the United States Food and Drug
Administration for commercial sale. There can be no assurance that products will
be successfully developed or approved by regulatory authorities for commercial
sale.

[PHOTO OF SPIROS-TM- MODELS]

The Spiros cassette system, the first to be developed, was used in
clinical trials to support the Albuterol Spiros NDA submission,
and is currently in use in clinical trials with beclomethasone.

The Spiros blisterdisk system is being developed for use with
drugs sensitive to moisture or light.

CERTAIN PERSONS PARTICIPATING IN THE UNIT OFFERINGS MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF ANY OF
THE UNITS, THE SPIROS CORP. II COMMON STOCK, THE DURA COMMON STOCK OR THE
WARRANTS. SPECIFICALLY, THE REPRESENTATIVES OF THE UNDERWRITERS MAY OVER-ALLOT
IN CONNECTION WITH THE UNIT OFFERINGS, MAY BID FOR AND PURCHASE UNITS IN THE
OPEN MARKET AND MAY IMPOSE PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."

2
<PAGE>
AVAILABLE INFORMATION

Dura is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
can be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well
as at the Commission's regional offices at 7 World Trade Center, 13th Floor, New
York, New York 10048; and at Citicorp Center, 500 West Madison Street, Room
1400, Chicago, Illinois 60661-2511. Copies of such material can also be obtained
at prescribed rates at the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, the Commission
maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Dura Common
Stock is traded on the Nasdaq National Market and other information concerning
Dura can be inspected at the offices of Nasdaq Operations, 1745 K Street, N.W.,
Washington, D.C. 20006.

Dura and Spiros Corp. II have filed with the Commission a registration
statement on Forms S-1/S-3 (together with all amendments and exhibits thereto,
the "Registration Statement") under the Securities Act of 1933, as amended, with
respect to the securities offered by this Prospectus. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to Dura, Spiros Corp. II and
the securities offered hereby, reference is made to the Registration Statement,
which may be obtained from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, upon payment of the fees prescribed
by the Commission.

Upon completion of the Offerings, Spiros Corp. II is expected to be subject
to the information and reporting requirements of the Exchange Act and in
accordance therewith to file reports and other information with the Commission.
Holders of Spiros Corp. II Common Stock will receive annual reports containing
financial information including the report of independent accountants as to the
financial statements of Spiros Corp. II.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by Dura (File No. 0-19809) with the Commission
are hereby incorporated by reference in this Prospectus: (1) the Annual Report
of Dura on Form 10-K for the fiscal year ended December 31, 1996; (2) the
Quarterly Report of Dura on Form 10-Q for the quarter ended March 31, 1997; (3)
the Quarterly Report of Dura on Form 10-Q for the quarter ended June 30, 1997;
(4) the Quarterly Report of Dura on Form 10-Q for the quarter ended September
30, 1997; (5) the Proxy Statement of Dura dated April 16, 1997 in connection
with the Annual Meeting of Stockholders held on May 28, 1997; (6) the Current
Report of Dura on Form 8-K filed on May 22, 1997; (7) the Current Report of Dura
on Form 8-K filed on October 10, 1997, as amended on October 21, 1997 and
November 26, 1997; (8) the Current Report of Dura on Form 8-K filed on October
24, 1997; (9) the Current Report of Dura on Form 8-K filed on December 1, 1997;
and (10) the description of Dura's Common Stock contained in its Registration
Statement on Form 8-A filed on July 22, 1997.

All reports and other documents subsequently filed by Dura pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the Offerings shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such reports and documents. Any statement incorporated herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

Dura will provide without charge to each person to whom this Prospectus is
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into any such document). Requests for such documents should be submitted in
writing to Mitchell R. Woodbury, Senior Vice President and General Counsel, at
Dura Pharmaceuticals, Inc., 7475 Lusk Boulevard, San Diego, California 92121 or
by telephone at (619) 457-2553.

Spiros Corp. II is a Delaware company incorporated on September 23, 1997 and
has conducted no business to date. Spiros Corp. II's principal executive office
is located at 7475 Lusk Boulevard, San Diego, California 92121, and its
telephone number is (619) 457-2553.

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PROSPECTUS SUMMARY
THE INFORMATION SET FORTH BELOW SHOULD BE READ IN CONJUNCTION WITH, AND IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION, INCLUDING "RISK
FACTORS" AND FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN. EXCEPT AS
OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTION. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE
TERM "DURA" REFERS TO "DURA PHARMACEUTICALS, INC." AND ITS SUBSIDIARIES. THIS
PROSPECTUS MAY CONTAIN, IN ADDITION TO HISTORICAL INFORMATION, FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISK AND UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS
THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED UNDER
"RISK FACTORS," AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS OR IN
THE DOCUMENTS INCORPORATED BY REFERENCE.
DURA
Dura Pharmaceuticals, Inc. ("Dura") is a specialty respiratory
pharmaceutical and pulmonary drug delivery company. Dura is engaged in
developing and marketing prescription pharmaceutical products for the treatment
of asthma, hay fever, chronic obstructive pulmonary disease ("COPD"), the common
cold and related respiratory ailments, and is developing a pulmonary drug
delivery system. Dura has strategically focused on the U.S. respiratory market
because of its size and growth opportunities. The estimated size of the target
market for antihistamines, asthma/rhinitis therapies, cough/cold preparations
and anti-infectives in 1996 was approximately $9.5 billion. The size and
fragmented nature of the market and the identifiable base of physician
prescribers allow Dura to achieve significant market penetration with a
specialized sales force. Dura currently markets 31 prescription products. Dura
also has a separate mail service pharmacy, Health Script Pharmacy Services, Inc.
("Health Script"), which dispenses respiratory pharmaceuticals.
Dura employs a dual marketing strategy utilizing its focused field sales
force of over 300 people and dedicated managed care sales and marketing and
national account groups that cover managed care organizations and retail
pharmacy chains. Dura's field sales force targets a physician base that includes
approximately 80,000 U.S. allergists, ear, nose, and throat specialists
("ENTs"), pulmonologists and a selected subset of pediatricians and generalist
physicians, who Dura believes collectively write a significant portion of
respiratory pharmaceutical prescriptions. Dura believes that its field sales
force calls on approximately one-half of the target physician base. Dura's
managed care sales and marketing group concentrates on sales to large regional
and national managed care organizations. Dura expects to continue expanding both
the field sales force and the managed care sales and marketing group as
warranted by market opportunities.
This marketing strategy has allowed Dura to leverage its distribution
capabilities by acquiring the rights to market additional prescription
pharmaceutical products through acquisition, in-license or co-promotion
arrangements. Since 1992, Dura has acquired 19 products targeted at the U.S.
respiratory market. In September 1996, Dura acquired from Eli Lilly and Company
("Lilly") exclusive U.S. marketing rights to the antibiotics Keftab-Registered
Trademark- and Ceclor-Registered Trademark- CD. Dura began marketing Keftab in
September 1996, and launched Ceclor CD in October 1996. In May 1997, Dura
acquired from Syntex (USA) Inc. and other members of the Roche Group
(collectively, "Syntex") the exclusive U.S. rights to the intranasal steroid
products Nasarel-Registered Trademark- and Nasalide-Registered Trademark-.
Another key component of Dura's strategy is to develop the Spiros-TM-
pulmonary drug delivery system ("Spiros"). Spiros is being designed to
aerosolize pharmaceuticals in dry powder formulations for delivery to the lungs
while providing certain advantages over other currently-used methods of
pulmonary drug delivery. Dura has a three-level development program for Spiros
which entails (i) developing, on behalf of Spiros Development Corporation II,
Inc. ("Spiros Corp. II"), certain drug compounds for use in Spiros, including in
the near-term albuterol, beclomethasone and ipratropium, three of the
pharmaceutical agents most frequently prescribed to treat respiratory
conditions, (ii) licensing Spiros primarily to pharmaceutical

4
<PAGE>
companies, generally for use with certain of their proprietary respiratory
products, and (iii) developing Spiros, generally in collaboration with third
parties, for the systemic delivery of compounds, including certain proteins and
peptides, through the lungs for respiratory and non-respiratory indications as
an alternative to current invasive delivery techniques.
Spiros Development Corporation ("Spiros Corp.") is a separate company formed
in December 1995 to fund the development of Spiros for use with certain asthma
drugs. Spiros Corp. has used substantially all of the $28 million in financing
it raised and a $13 million contribution it received from Dura to finance the
development of Spiros and certain compounds for use in Spiros. On or prior to
the closing of the Offerings, Dura will purchase all of the common stock of
Spiros Corp. for an aggregate purchase price estimated to be $45.7 million,
payable in cash, shares of Dura Common Stock, or any combination thereof, at
Dura's sole discretion (the "Spiros Corp. Purchase"). The Spiros Corp. Purchase
will result in a one-time charge in the period in which the Spiros Corp.
Purchase is closed, relating to the acquisition of in-process research, that
will approximate the purchase price.
Prior to the formation of Spiros Corp., Dura Delivery Systems, Inc. ("DDSI")
was organized as a separate entity responsible for Spiros development. DDSI
spent approximately $23 million for the development of Spiros before being
acquired by Dura in December 1995.

Dura was incorporated under the laws of California in 1981 and
reincorporated in Delaware in 1997. Dura's principal executive offices are
located at 7475 Lusk Boulevard, San Diego, California 92121. Its telephone
number is (619) 457-2553.

SPIROS CORP. II
Spiros Corp. II was formed in September 1997 to continue to fund the
development of Spiros and to conduct formulation work, clinical trials and
commercialization for four leading asthma drugs (albuterol, beclomethasone,
ipratropium and budesonide) and certain combinations and alternative
formulations thereof for use in Spiros. Spiros Corp. II may also expend funds on
enhancements to the existing Spiros technology, initial development of a next
generation inhaler system and the acquisition of capital equipment (the "Other
Expenditures") to be used in the manufacture of the Spiros Products (as defined
below). Finally, Spiros Corp. II plans to use a portion of its funding to
conduct technical evaluation projects designed to identify additional
respiratory drug candidates for further development in Spiros. There can be no
assurance that the pharmaceutical products currently in development by Spiros
Corp. II or that any products that may be developed in the future will be
approved by the United States Food and Drug Administration ("FDA"). In addition,
there can be no assurance that FDA review or other actions will not involve
delays that could adversely affect the time to market and the sale of the
products.
Dura believes that the research and development work performed to date by
Spiros Corp. and DDSI and the research and development work it has undertaken on
Spiros, directly and through collaborators, have yielded results which justify
further research and development. However, a substantial amount of additional
research and development effort is required to further develop the Spiros
technology through to its potential commercialization. Management of Dura
determined to undertake such research and development through Spiros Corp. II
because such opportunities involve significantly different risk/reward profiles
as compared to Dura's established specialty respiratory pharmaceutical business.
Spiros has been designed to aerosolize pharmaceuticals in dry powder
formulations for delivery to the lungs while providing certain advantages over
other currently-used methods of pulmonary drug delivery, including inspiratory
flow rate independence, minimum need for patient coordination, reduced side
effects, improved patient convenience and lack of chlorofluorocarbon
propellants.
Asthma is a complex physiological disorder characterized by airway
hyperactivity to a variety of stimuli such as dust, pollen, stress or physical
exercise, resulting in airway obstruction that is partially or temporarily
reversible. The number of people with asthma has grown steadily in recent years
and is now believed to be over 200 million worldwide. COPD is a complex
condition comprising a combination of

5
<PAGE>
chronic bronchitis, emphysema and airway obstruction. The worldwide combined
market for therapeutic drugs to treat asthma and COPD was approximately $7.5
billion in 1996. The primary categories of therapeutic drugs used in the
treatment of asthma and COPD include bronchodilators and anti-inflammatories.
Bronchodilators dilate the airways and include beta agonists (such as albuterol
and bitolterol), xanthines (such as theophylline) and anticholinergics (such as
ipratropium). Anti-inflammatories reduce inflammation and include steroids (such
as beclomethasone, budesonide, flunisolide and triamcinolone).
Inhaled therapeutic drugs have been shown to be effective in treating or
preventing the symptoms of asthma, COPD, and other lung diseases. When treating
respiratory diseases, inhalation delivery puts the drug directly into the lung
for topical treatment. If administered in capsule, tablet or liquid form, rather
than through inhalation, the patient must take sufficient drug to achieve a
systemic therapeutic blood level to benefit the lungs. In many instances, this
may cause serious side effects by impacting other organs. Because inhaled
therapy delivers the drug directly into the lung, it provides comparable
efficacy with less risk of systemic side effects at greatly reduced dosages.
Inhalation delivery also yields a fast onset of action, hastening the time for
patient relief.
Spiros Corp. II has no employees other than its three executive officers who
are full-time employees,
officers and/or directors of Dura. Spiros Corp. II does not intend to perform
any research, marketing, manufacturing or other activities on its own behalf, as
it will pay Dura to perform all such activities pursuant to the terms of the
Development Agreement (as defined below) and the Manufacturing and Marketing
Agreement (as defined below). Substantially all of the net proceeds of the
Offerings and the Contribution (as defined below), together with interest earned
thereon (the "Available Funds"), will be used for payments to Dura for clinical
and other services under the Development Agreement in connection with the
development of the following compounds using Spiros (the "Spiros Products") and
the Other Expenditures:
ALBUTEROL. Albuterol, a beta agonist, provides rapid symptomatic relief of
reversible bronchospasm. When administered by inhalation, it produces
significant bronchodilation promptly and its effects are demonstrable for a
number of hours. Albuterol is the most widely accepted asthma medication in the
world. The leading branded metered dose inhaler ("MDI") albuterol products are
Proventil-Registered Trademark-, sold by Schering-Plough Corporation
("Schering-Plough"), and Ventolin-Registered Trademark-, sold by Glaxo Wellcome,
Inc. ("Glaxo"). In 1996, U.S. sales of albuterol were approximately $700 million
as measured by average wholesale prices.
In March 1997, patient dosing was completed in long-term and short-term
pivotal clinical trials. In November 1997, Dura announced, on behalf of Spiros
Corp., that it had submitted a New Drug Application ("NDA") with the FDA for
albuterol in the Spiros cassette system. The NDA includes the results of
clinical trials that were designed to demonstrate comparability of the Spiros
delivery system to a leading branded albuterol MDI product. Three pivotal
studies in addition to a number of dose finding and performance verification
studies were conducted for the submission. An open label study of albuterol in
the Spiros cassette system is currently in progress. Interim results of this
study were provided to the FDA in the NDA and results of the full study must be
submitted to and reviewed by the FDA prior to product approval. Dura is planning
market launch of albuterol in the Spiros cassette system in late 1998 or early
1999, pending FDA approval. There can be no assurance of receipt of FDA approval
in a timely manner, if at all.
BECLOMETHASONE. Beclomethasone is a steroid used to treat the inflammatory
component of asthma and certain symptoms of COPD. Systemic side effects
resulting from the inhalation of beclomethasone are less than those that occur
with steroids taken in capsule, tablet or liquid form. Beclomethasone was first
launched in MDI form as Vanceril-Registered Trademark- by Schering-Plough and
later as Beclovent-Registered Trademark- by Glaxo. In 1996, U.S. sales of
beclomethasone were approximately $205 million as measured by average wholesale
prices.
In the first quarter of 1997, Dura, on behalf of Spiros Corp., completed
dose ranging studies of a one dosage strength of beclomethasone in the Spiros
cassette system under an Investigational New Drug

6
<PAGE>
("IND") application, and preparations for Phase III pivotal clinical trials to
demonstrate safety and efficacy have been initiated.
IPRATROPIUM. Ipratropium is an anticholinergic bronchodilator. Ipratropium
is most commonly prescribed for the long term management of COPD (including
chronic bronchitis and emphysema) and for treatment of asthmatic patients who
are poorly controlled by, or who experience troublesome side effects from,
beta-agonists such as albuterol. Ipratropium acts at a site that is different
from the site where beta-agonists act and thus affords an alternative approach
to the treatment of airway obstruction. Ipratropium in MDI form is marketed as
Atrovent-Registered Trademark- by Boehringer Ingelheim International GmbH
("Boehringer Ingelheim"). In 1996, U.S. sales of ipratropium were approximately
$200 million as measured by average wholesale prices.
Dura, on behalf of Spiros Corp., has conducted initial preclinical
formulation studies using ipratropium to demonstrate that delivery via Spiros is
feasible. In 1998, Spiros Corp. II plans to begin product development for a
formulation of ipratropium to be delivered using Spiros.
ALBUTEROL-IPRATROPIUM COMBINATION. Albuterol and ipratropium are frequently
prescribed in combination for patients with COPD or asthma. Boehringer Ingelheim
has marketed an albuterol-ipratropium combination product, Combivent-Registered
Trademark-, outside of the U.S. for a number of years. Combivent was approved
for marketing in the U.S. in early 1997, and has recently been launched in MDI
form by Boehringer Ingelheim in the U.S.
Based on the substantial work performed with albuterol and the feasibility
study conducted with ipratropium, Spiros Corp. II believes that developing an
albuterol-ipratropium formulation for delivery using Spiros will be feasible,
and it intends to commence the development of this formulation in 1998.
BUDESONIDE. Budesonide is a new generation steroid used to treat the
inflammatory component of asthma. Budesonide has been marketed in several dosage
forms outside of the U.S., but to date, has only been available in the U.S. in
nasal spray form. However, in June 1997, the FDA approved for marketing in the
U.S. a dry powder formulation of budesonide for delivery through Astra
Pharmaceutical's Pulmicort-Registered Trademark-Turbuhaler-Registered
Trademark-. In 1996, worldwide sales of budesonide were estimated to be greater
than $600 million as measured by average wholesale prices.
In 1998, Spiros Corp. II expects to begin formulation of budesonide for
delivery through Spiros.
DESIGNATED COMPOUNDS. The Board of Directors of Spiros Corp. II has the
right, with the consent of Dura, to select additional compounds for the
treatment of respiratory diseases, including asthma, allergy, cystic fibrosis or
respiratory infection (the "Designated Compounds") for delivery using Spiros.
See "The Agreements and the Purchase Options--Technology License Agreement."
In the event that Spiros Corp. II obtains the rights to any Designated
Compounds, Spiros Corp. II will conduct technical evaluations of the applicable
compounds as candidates for delivery through Spiros. Technical evaluations will
generally include patent evaluation, establishment of analytical methods,
micronization of drug substance, preliminary formulation development,
preliminary aerosol characterization, preliminary stability evaluation and
animal bioavailability, efficacy and toxicology evaluation. Technical
evaluations may also include initial safety and efficacy studies in humans.
In the event that additional funds become available to Spiros Corp. II,
whether through the exercise of the Albuterol Option (as defined below) or the
Product Option (as defined below), such funds will become part of the Available
Funds, and a portion of such funds may be used for additional development of a
next generation inhaler system and certain other enhancements to the existing
Spiros technology and to fund the acquisition of capital equipment to be used to
manufacture the Spiros Products.

7
<PAGE>
RISK FACTORS
An investment in the Units involves certain risks associated with the
Offerings, the business of Dura and Spiros Corp. II and the industry in which
they compete. See "Risk Factors."
THE OFFERINGS
Of the 4,687,500 Units to be sold in the Offerings, 3,750,000 shares are
initially being offered in the United States and Canada by the U.S. Underwriters
and 937,500 shares are initially being offered outside the United States and
Canada by the International Underwriters.

<TABLE>
<S> <C>
Units Offered.................................................................... 4,687,500
Number of Shares of Spiros Corp. II Common Stock Offered
and to be Outstanding after the Offerings................................ 4,687,500
Warrants to Purchase Dura Common Stock Offered (1,171,875 shares of Dura Common
Stock will be issuable upon exercise of Warrants)............................ 4,687,500
Proposed Nasdaq National Market Symbol for Unit.................................. SDCO
</TABLE>

TRADING INFORMATION
Application has been made to have the Units listed for quotation on the
Nasdaq National Market. The Spiros Corp. II Common Stock and the Warrants
comprising the Units will trade only as units through December 31, 1999 or such
earlier date as the Purchase Option (as defined below) is exercised or expires
unexercised (the "Separation Date"). See "Description of the Warrants." It is
expected that the Spiros Corp. II Common Stock and the Warrants will be eligible
for quotation after the Separation Date on the Nasdaq National Market. There can
be no assurance that there will be an active trading market for the Units or
that, after the Separation Date, there will be active trading markets for the
Spiros Corp. II Common Stock or the Warrants. The Dura Common Stock is quoted on
the Nasdaq National Market.
THE WARRANTS
Each Unit includes a Warrant to purchase one-fourth of one share of Dura
Common Stock. The Warrants will be exercisable from January 1, 2000 through
December 31, 2002 (the "Warrant Expiration Date") at an exercise price of $
per share of Dura Common Stock (currently anticipated to be 125% of the closing
price of Dura Common Stock on the date of the Prospectus) (the "Warrant Exercise
Price"). The Warrants will trade separately from the Spiros Corp. II Common
Stock beginning on the Separation Date. In the event that Dura exercises the
Purchase Option, holders of Spiros Corp. II Common Stock will retain their
Warrants, unless sold or otherwise transferred by those holders. See
"Description of the Warrants."
THE CONTRIBUTION
Prior to the consummation of the Offerings, Dura will contribute $75 million
in cash to Spiros Corp. II (the "Contribution") in order to increase the funds
available for Spiros Corp. II to undertake research, clinical development,
product development, including regulatory approval, and commercialization of the
Spiros Products under the Development Agreement. Dura will incur a one-time
charge to earnings in the amount of the Contribution in the period in which the
Contribution is made.
STOCK PURCHASE OPTION
Dura, as the holder of all of the issued and outstanding special shares, par
value $1.00 per share, of Spiros Corp. II (the "Special Shares"), will have the
right to purchase all, but not less than all, of the Spiros Corp. II Common
Stock outstanding at the time such right is exercised (the "Purchase Option").
The Purchase Option will be exercisable by notice (the "Exercise Notice") given
at any time beginning on the

8
<PAGE>
closing date of the Offerings and ending on the earlier of (i) December 31, 2002
or (ii) the 90th day after the date Spiros Corp. II provides Dura (as such
holder) with quarterly financial statements of Spiros Corp. II showing cash or
cash equivalents of less than $5 million (the "Financial Notice"), although,
following the receipt of the Financial Notice, Dura may elect to extend such
period by providing additional funding for the continued development of the
Spiros Products (but in no event beyond December 31, 2002). If the Purchase
Option is exercised, the purchase price calculated on a per share basis (the
"Purchase Option Exercise Price"), assuming an offering price of $16.00 per
Unit, will be as follows:

<TABLE>
<CAPTION>
IF THE SPIROS CORP. II COMMON STOCK IS ACQUIRED PURCHASE OPTION
PURSUANT TO THE PURCHASE OPTION: EXERCISE PRICE
- ----------------------------------------------------------------------------- ---------------
<S> <C>
Before January 1, 2000....................................................... $ 24.01
On or after January 1, 2000 and on or before March 31, 2000.................. 25.26
On or after April 1, 2000 and on or before June 30, 2000..................... 26.57
On or after July 1, 2000 and on or before September 30, 2000................. 27.96
On or after October 1, 2000 and on or before December 31, 2000............... 29.41
On or after January 1, 2001 and on or before March 31, 2001.................. 31.10
On or after April 1, 2001 and on or before June 30, 2001..................... 32.88
On or after July 1, 2001 and on or before September 30, 2001................. 34.77
On or after October 1, 2001 and on or before December 31, 2001............... 36.76
On or after January 1, 2002 and on or before March 31, 2002.................. 38.87
On or after April 1, 2002 and on or before June 30, 2002..................... 41.10
On or after July 1, 2002 and on or before September 30, 2002................. 43.46
On or after October 1, 2002 and on or before December 31, 2002............... 45.95
</TABLE>

The Purchase Option Exercise Price per share of Spiros Corp. II Common Stock
will increase or decrease if the offering price per Unit is more or less than
$16.00 per Unit.
The Purchase Option Exercise Price may be paid in cash or shares of Dura
Common Stock, or any combination of the foregoing, at Dura's sole discretion.
Any such shares of Dura Common Stock will be valued based upon the average of
the closing price for Dura Common Stock on the Nasdaq National Market for ten
trading days immediately preceding the date of the Exercise Notice. See "The
Agreements and Purchase Options--Stock Purchase Option."
Dura owns all of the issued and outstanding Special Shares, which grants
Dura the Purchase Option and confers certain voting and other rights, including
the right to elect two of the five directors of Spiros Corp. II. Under Spiros
Corp. II's Amended and Restated Certificate of Incorporation, Spiros Corp. II
will be prohibited, until the expiration of the Purchase Option, from taking or
permitting certain actions inconsistent with Dura's rights under the Purchase
Option. For example, until the expiration of the Purchase Option, Spiros Corp.
II will not be able to, among other things, without the consent of Dura, pay any
dividends, issue additional shares of capital stock, have outstanding borrowings
in excess of an aggregate of $1 million, or merge, liquidate or sell all or
substantially all of its assets or alter the Purchase Option. See "Spiros Corp.
II Capital Stock."
TECHNOLOGY LICENSE AGREEMENT
Dura, Spiros Corp. and Spiros Corp. II will enter into an agreement (the
"Technology Agreement"), under which Dura and Spiros Corp. will grant Spiros
Corp. II an exclusive, worldwide, perpetual, royalty-bearing license to use
technology owned or controlled by Dura or Spiros Corp. as of the date of the
closing of the Offerings relating to Spiros and any technology acquired
following the closing of the Offerings relating to Spiros, which such parties
have the right to sublicense, (the "Core Technology") in research, development
and commercialization (except with respect to beclomethasone in Japan, Hong
Kong, Singapore, the Republic of China (Taiwan), the Republic of Korea and the
People's Republic of China (collectively, "Asia")) of the Spiros Products,
including rights to patents, patent applications and other intellectual property
rights necessary or useful to the development of the Spiros Products.

9
<PAGE>
In consideration for these license rights granted to Spiros Corp. II by Dura
and Spiros Corp., Spiros Corp. II will pay Dura and Spiros Corp. a technology
access fee equal to the greater of (a) 5% of the Net Sales (as defined below) of
each Spiros Product or (b) $2 million for all Spiros Products in any calendar
year beginning in 1998. Spiros Corp. II's obligation will terminate, on a
country-by-country basis, (a) within 10 years from the first sale of such Spiros
Product in those countries where no patents covering such product are issued and
(b) in those countries where patents covering the Spiros Products are issued,
upon the expiration of the last-to-expire patent covering such Spiros Product in
such country.
In addition, Spiros Corp. II will grant Dura (a) a worldwide, exclusive,
royalty-free license to use the Core Technology and any technology developed or
acquired on behalf of Spiros Corp. II by Dura (the "Program Technology") to
develop the Spiros Products pursuant to the terms of the Development Agreement;
(b) a worldwide, exclusive, royalty-bearing license to use the Program
Technology to sell Spiros Products worldwide pursuant to the terms of the
Manufacturing and Marketing Agreement; (c) upon Dura's exercise of the Albuterol
Option (as defined below), a worldwide, exclusive, royalty-free, irrevocable,
perpetual license to the Program Technology to develop, manufacture and
commercialize the Albuterol Product (as defined below); (d) upon Dura's exercise
of the Product Option (as defined below), a worldwide, exclusive, royalty-free,
irrevocable, perpetual license to the Program Technology to develop, manufacture
and commercialize the Spiros Product for which the Product Option is exercised;
and (e) a worldwide, exclusive, royalty-free, irrevocable, perpetual license to
the Program Technology, including technology relating to enhancements to
existing Spiros technology or any next generation inhaler system, to develop,
manufacture and commercialize products other than the Spiros Products, including
products that compete with the Spiros Products.
Under the Technology Agreement, Dura must use commercially reasonable
efforts to secure the rights of third parties in technology that is necessary or
useful to the development of the Spiros Products. Spiros Corp. II will have no
obligation to accept any grant of such rights or to assume any obligation
without its prior written consent. If Spiros Corp. II desires to obtain any such
rights, Dura and Spiros Corp. II agree to negotiate in good faith regarding the
allocation of any royalty, license fee or other payments payable to the third
party and the assumption of any obligations applicable to such license.
Prior to the expiration of the Purchase Option, Spiros Corp. II cannot
without Dura's prior written consent (a) license, sublicense, encumber or
otherwise transfer any rights in the Program Technology; (b) make, use or sell
any of the Program Technology; or (c) authorize, cause or assist in any way any
other person to do any of the foregoing. Following the expiration or termination
of the Purchase Option, the foregoing limitations will cease to be applicable
and Spiros Corp. II will have the right to license, sublicense, encumber or
otherwise transfer the Program Technology for use with any Spiros Products that
have not been acquired by Dura through the exercise of either the Albuterol
Option or the Product Option.
The Technology Agreement will remain in full force and effect indefinitely,
unless terminated by (a) mutual agreement of the parties or (b) Dura's exercise
of the Purchase Option.
Either Dura or Spiros Corp. II may terminate the Technology Agreement prior
to its expiration if the other party (a) breaches any material obligation under
the Technology Agreement or the Development Agreement, which breach continues
for a period of 60 days after written notice thereof, (b) enters into any
voluntary proceeding in bankruptcy, reorganization or an arrangement for the
benefit of its creditors, or its Board of Directors or stockholders authorize
such action or (c) fails to dismiss any such proceeding within 60 days after the
same is involuntarily commenced. If Spiros Corp. II terminates the Technology
Agreement, Spiros Corp. II's license to use the Program Technology will continue
(except with respect to any Spiros Products that have been previously acquired
by Dura through the exercise of the Albuterol Option or the Product Option), and
Spiros Corp. II will be free to enter into arrangements with third parties to
research, develop and commercialize the Spiros Products. If Dura terminates the
Technology Agreement, (a) Spiros Corp. II's license to use the Core Technology
under the Technology Agreement will

10
<PAGE>
terminate, (b) all of Spiros Corp. II's rights to the Program Technology will
revert to Dura, and (c) all rights to develop, use and sell the Spiros Products
will revert to Dura. Dura and Spiros Corp. II will use reasonable efforts for a
period of 120 days after the Technology Agreement is terminated by Dura to reach
agreement on royalties and other compensation to be paid by Dura to Spiros Corp.
II solely with respect to the Spiros Products and the Program Technology and, in
the absence of such agreement, the matter will be submitted to binding
arbitration. There can be no assurance that, upon termination of the Technology
Agreement by Spiros Corp. II, that it will be able to make alternative
arrangements for the research, development and commercialization of some or all
of the Spiros Products. See "The Agreements and the Purchase Options--Technology
License Agreement."
ALBUTEROL AND PRODUCT OPTION AGREEMENT
Dura and Spiros Corp. II will enter into an agreement (the "Albuterol and
Product Option Agreement") pursuant to which Dura will obtain options to acquire
(a) the Albuterol Program Assets (as defined below) (the "Albuterol Option") and
(b) the Spiros Product Program Assets (as defined below) (the "Product Option").
The Albuterol Program Assets include (a) the product developed by Dura
pursuant to the Development Agreement with albuterol in the Spiros cassette
system (the "Albuterol Product"), (b) albuterol as formulated for use in the
Albuterol Product, (c) a perpetual, sublicensable, non-exclusive, royalty-free
license to the technology owned by Dura or developed or acquired by Dura during
the term of the Development Agreement applicable to the Albuterol Product for
use solely with the Albuterol Product, and (d) all applications and documents
filed with the FDA or a foreign regulatory authority to obtain regulatory
approval to commence commercial sale or use of the Albuterol Product. The
Albuterol Option is exercisable commencing on the date of the closing of the
Offerings and ending on the earlier of (i) 360 days after receipt of FDA
approval to market the Albuterol Product or (ii) the date Dura ceases to
manufacture or market the Albuterol Product in accordance with the terms of the
Manufacturing and Marketing Agreement.
Upon exercise of the Albuterol Option, Dura will make a single payment to
Spiros Corp. II in cash equal to (a) the aggregate Purchase Option Exercise
Price, assuming acquisition of all shares of Spiros Corp. II Common Stock issued
pursuant to the Offerings four years following closing of the Offerings,
multiplied by (b) a fraction, the numerator of which will equal the development
and commercialization costs and expenses incurred by Spiros Corp. II in
connection with the development and commercialization of the Albuterol Product
and the denominator of which will equal the Available Funds (excluding the
proceeds, if any, from the exercise of the Albuterol Option or the Product
Option) set forth in the proposed budget contained herein. See "Use of
Proceeds."
The Spiros Product Program Assets include (a) a single Spiros Product (other
than the Albuterol Product) for which Dura elects to exercise the Product Option
(the "Option Product"), (b) the compound to be delivered by the Option Product,
as formulated for use specifically in the Option Product, (c) a perpetual,
sublicensable, non-exclusive, royalty-free license to the technology owned by
Dura or developed or acquired by Dura during the term of the Development
Agreement applicable to the Option Product for use solely with the Option
Product, and (d) all applications and documents filed with the FDA or a foreign
regulatory authority to obtain regulatory approval to commence commercial sale
or use of the Option Product. The Product Option is exercisable with respect to
each Spiros Product commencing on the date of the closing of the Offerings and
ending 90 days after receipt of FDA approval to market such Spiros Product;
provided, however, that the Product Option may only be exercised with respect to
a single Spiros Product.
Upon exercise of the Product Option, Dura will make a single payment to
Spiros Corp. II in cash equal to 110% of (a) the aggregate Purchase Option
Exercise Price, assuming acquisition of all shares of Spiros Corp. II Common
Stock issued pursuant to the Offerings four years following closing of the

11
<PAGE>
Offerings, multiplied by (b) a fraction, the numerator of which will equal the
development and commercialization costs and expenses incurred by Spiros Corp. II
in connection with the development of the Option Product and the denominator of
which will equal the Available Funds (excluding the proceeds, if any, from the
exercise of the Albuterol Option or the Product Option) set forth in the
proposed budget contained herein. See "Use of Proceeds."
Any payments received by Spiros Corp. II with respect to the exercise of the
Albuterol Option and the Product Option will become part of the Available Funds.
The Albuterol and Product Option Agreement will automatically terminate in
the event that Spiros Corp. II terminates the Technology Agreement, the
Development Agreement or the Manufacturing and Marketing Agreement, consistent
with the terms of those agreements.
DEVELOPMENT AGREEMENT
Dura and Spiros Corp. II will enter into an agreement (the "Development
Agreement") under which Dura will agree to use commercially reasonable efforts
to develop the Program Technology for the purpose of identifying and developing
the Spiros Products and to make the Other Expenditures (the "Development"). Dura
will furnish all labor, supervision, services, supplies, and materials necessary
to perform the Development.
Dura also agrees to use commercially reasonable efforts to obtain the rights
to, and to sublicense to, Spiros Corp. II, any patent or technology license held
by a third party that Dura reasonably determines to be necessary or useful to
enable Dura to conduct the Development. Dura will act as Spiros Corp. II's
exclusive agent for the filing and prosecuting of all regulatory applications
and permits required to obtain FDA approval in Dura's name and any other
necessary regulatory approvals for the Spiros Products. In the event that the
Purchase Option expires unexercised, Dura will use its reasonable efforts to
cause all applications and documents filed with the FDA or a foreign regulatory
authority to obtain regulatory approvals for the Spiros Products, with respect
to which Dura has not acquired exclusive rights, to be assigned to Spiros Corp.
II.
Dura will conduct the Development in accordance with an annual workplan and
budget. At the closing, Dura will provide Spiros Corp. II with a workplan and
budget covering the period from the closing date through December 31, 1998.
Thereafter, Dura and Spiros Corp. II will prepare annual workplans and budgets.
The annual workplans and budgets are subject to approval and acceptance by
Spiros Corp. II's Board of Directors. Dura must report any significant
deviations from an annual workplan and budget in a timely manner. Further,
reimbursement for expenditures from Spiros Corp. II may not exceed in any
calendar year 120% of the amount allocated in the applicable annual workplan and
budget, unless otherwise approved by Spiros Corp. II.
Payments to Dura under the Development Agreement for Dura's work in
performing the Development will be made for the full amount of all Development
Costs (as defined in the Development Agreement) incurred by Dura in performing
these activities, up to the maximum amount of the funds available to Spiros
Corp. II, which includes substantially all of the Available Funds. Development
Costs will include development expenses (including salaries, benefits, supplies
and facilities and overhead allocations) that are billed at a rate of fully
burdened cost plus 25%, provided, however, that services provided by third
parties will be billed at a rate of cost plus 20%. Development Costs will
include costs, estimated to be approximately $4 million, for the Development
conducted by Dura from October 10, 1997 through the date of the closing of the
Offerings.
If Spiros Corp. II or Dura determine that the development of a particular
Spiros Product should be discontinued because continued development is not
feasible or is uneconomic, or that the development should be expanded to include
one or more Designated Compounds, then Spiros Corp. II and Dura will

12
<PAGE>
use reasonable efforts to agree on the nature of the Development and the
identity of any other compound on which unexpended Available Funds will be
spent.
Under the Development Agreement, the manufacture and sale of the Spiros
Products for the sole purpose of conducting clinical trials necessary to obtain
FDA approval or any other required regulatory approval will be charged to Spiros
Corp. II as Development Costs. Dura will remit to Spiros Corp. II any revenue
received by it from the sale of such Spiros Products prior to receipt of FDA
approval to market.
MANUFACTURING AND MARKETING AGREEMENT
Dura and Spiros Corp. II will enter into an agreement (the "Manufacturing
and Marketing Agreement") under which Spiros Corp. II will grant to Dura an
exclusive, worldwide license to manufacture and market the Spiros Products. Dura
will pay Spiros Corp. II on a quarterly basis a royalty of 7% of the Net Sales
of each Spiros Product beginning upon receipt of FDA approval to market such
product; provided, however, that prior to the expiration of the Albuterol
Option, no royalty payment will be made with respect to Net Sales of the
Albuterol Product.
Under the Manufacturing and Marketing Agreement, Dura will agree to use
diligent efforts to commence sales of each Spiros Product promptly upon
receiving FDA approval for such product. Dura will be responsible for
maintaining competent, qualified sales personnel, and will agree not to make any
representations inconsistent with the approved labeling of each Spiros Product.
"Net Sales" for purposes of the Manufacturing and Marketing Agreement and
the Technology Agreement will be defined as the gross amount invoiced for sales
of the 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 (as defined below). See "Business
of Spiros Corp. II-- Patents." Net Sales will 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.
The Manufacturing and Marketing Agreement will terminate (a) upon the
exercise or termination of the Purchase Option or (b) by mutual agreement of the
parties at any time. In the event Dura exercises the Albuterol Option or the
Product Option, the Manufacturing and Marketing Agreement will terminate with
respect to the Albuterol Product or the Option Product, as the case may be, but
will otherwise continue in full force and effect.
SERVICES AGREEMENT
Spiros Corp. II will enter into an agreement with Dura (the "Services
Agreement") under which Dura will provide certain management and administrative
services to Spiros Corp. II at the rate of $100,000 per calendar quarter for
services to be performed internally by Dura and for services performed by third
parties for Dura on Spiros Corp. II's behalf. In addition, Spiros Corp. II will
reimburse Dura for all costs and expenses incurred by Dura in connection with
the Offerings (currently estimated to be approximately $600,000). The Services
Agreement terminates on the earlier of (i) the exercise of the Purchase Option
or (ii) 12 months after expiration of the Purchase Option.

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<PAGE>
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

Certain United States federal income tax consequences may be applicable to
the purchase of Units, the sale of Warrants and Spiros Corp. II Common Stock and
the expiration unexercised of the Purchase Option. Such tax consequences are
important and include the recognition by Spiros Corp. II stockholders of taxable
income upon the sale of the Units, the Warrants, the Spiros Corp. II Common
Stock or Dura Common Stock or upon the expiration unexercised of the Purchase
Option. The recognition by Spiros Corp. II stockholders of income on expiration
of the Purchase Option will be required notwithstanding the fact that no cash or
other property will be received at such time. See "United States Federal Income
Tax Consequences."

Additionally, certain United States federal income tax consequences may be
applicable to the receipt of dividends, if any, or the sale of Warrants, the
Spiros Corp. II Common Stock or the Dura Common Stock by Non-U.S. Holders (as
defined). See "United States Taxation of Non-U.S. Persons."

USE OF PROCEEDS
The net proceeds from the Offerings, assuming an offering price of $16.00
per Unit, are expected to be approximately $69.2 million ($79.6 million if the
Underwriters' over-allotment option is exercised in full), all of which will be
received by Spiros Corp. II. Spiros Corp. II expects to use substantially all of
the net proceeds of the Offerings, the Contribution and interest to be earned
thereon, less $1 million to be used as working capital, to engage Dura to
undertake research, clinical development, product development, including
regulatory approval, and commercialization of the Spiros Products under the
Development Agreement, including to make the Other Expenditures. Spiros Corp. II
expects that during the term of the Development Agreement, unless Dura exercises
the Albuterol Option or the Product Option, it will have very limited sources of
revenue other than the net proceeds of the Offerings, the Contribution and the
interest earned thereon. Any funds received by Spiros Corp. II as a result of
Dura's exercise of the Albuterol Option or the Product Option will become part
of the Available Funds and are intended to be paid to Dura pursuant to the
Development Agreement. See "Use of Proceeds."

14
<PAGE>
SPIROS CORP. II SUMMARY FINANCIAL INFORMATION
Spiros Corp. II was formed in September 1997 to continue the development of
Spiros with four leading asthma drugs. Spiros Corp. II has not yet commenced
operations. Assuming completion of the Offerings, Spiros Corp. II anticipates
that it will use the net proceeds and the $75 million from the Contribution to
undertake research, clinical development, product development and
commercialization of the Spiros Products pursuant to the Development Agreement.
It is anticipated that Spiros Corp. II's only source of revenue will be
interest income on the unused portion of the Contribution and net proceeds of
the Offerings. As a result, Spiros Corp. II will likely incur substantial
recurring losses.

<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
-------------
<S> <C>
BALANCE SHEET DATA:
Cash........................................................................... $ 1,000
Total assets................................................................... 1,000
Shareholder's equity........................................................... 1,000
</TABLE>

DURA SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:(1)
Sales........................................ $ 9,561 $ 15,816 $ 22,199 $ 39,308 $ 79,563 $ 45,900 $ 105,437
Contract revenues............................ -- 2,297 10,481 12,194 24,556 17,407 22,430
--------- --------- --------- --------- --------- --------- ----------
Total revenues............................. 9,561 18,113 32,680 51,502 104,119 63,307 127,867
Operating income (loss)(2)................... (7,016) (8,240) 1,456 (37,252) 21,647 12,173 36,849
Net income (loss)(2)......................... (6,769) (8,173) 1,936 (35,778) 24,328 14,471 29,395
Net income (loss) per share(2)............... (0.47) (0.55) 0.10 (1.53) 0.60 0.37 0.62
Weighted average number of common and common
equivalent shares.......................... 14,506 14,988 19,860 23,440 40,479 38,890 47,392
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments................................. $ 240,345 $ 454,710
Working capital................................................................... 219,864 457,276
Total assets...................................................................... 504,670 821,105
Long-term obligations (excluding current portion)................................. 6,670 294,535
Shareholders' equity.............................................................. 443,577 482,297
</TABLE>

- ------------------------------
(1) Dura Summary Consolidated Financial Information includes Health Script
subsequent to its acquisition on March 22, 1995, the Rondec-Registered
Trademark- product line subsequent to its acquisition on June 30, 1995, the
Entex-Registered Trademark- product line subsequent to its acquisition on
July 3, 1996, the Ceclor CD and Keftab products subsequent to their
acquisition on September 5, 1996, and the Nasarel and Nasalide products
subsequent to their acquisition on May 7, 1997.
(2) In 1993 and 1995, Dura incurred charges for purchase options and acquired
in-process technology totaling $2.3 million and $43.8 million, respectively.
If these charges were excluded, Dura would have reported a net loss of $5.9
million, or $0.39 per share, for 1993 and net income of $8.0 million, or
$0.28 per share, in 1995.

15
<PAGE>
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following summary unaudited pro forma consolidated financial data
illustrates the effects of the Spiros Corp. Purchase under the purchase method
of accounting as if the Spiros Corp. Purchase had occurred as of September 30,
1997 for the balance sheet data and as of January 1, 1996 for the statement of
operations data. The summary unaudited pro forma consolidated statement of
operations data also includes pro forma adjustments to reflect the impact from
the acquisitions of the Entex products (July 1996), Keftab and Ceclor CD
(September 1996), and Nasarel and Nasalide (May 1997), as if they had occurred
on January 1, 1996. This financial data has been derived from information
included in the unaudited pro forma condensed consolidated financial statements
incorporated herein by reference from Dura's Current Report on Form 8-K, dated
October 10, 1997, as amended.
The summary unaudited pro forma combined financial data is not necessarily
indicative of the results of operations which may have occurred if the Spiros
Corp. Purchase had been consummated on the dates indicated and should not be
construed as representative of any future results.
The Spiros Corp. Purchase adjustments to contract and total revenues relate
to the elimination of intercompany revenue from Spiros Corp. These adjustments
are substantially offset by a reduction in operating expenses relating to
intercompany development expenses. The adjustment to net income relates
primarily to a reduction in the pro forma consolidated provision for income
taxes resulting from the recognition of the income tax benefit on Spiros Corp.'s
pre-tax loss, which was not recorded on a stand-alone basis. The Product
Acquisition Adjustments are based on sales data for the products referred to
above prior to their acquisition by Dura. The pro forma adjustments do not
reflect any revenues or expenses for Ceclor CD as this product was launched
after it was acquired by Dura.
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS DATA

<TABLE>
<CAPTION>
SPIROS CORP. PRODUCT
PURCHASE ACQUISITIONS PRO FORMA
DURA SPIROS CORP. ADJUSTMENTS ADJUSTMENTS CONSOLIDATED
--------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Sales.......................................... $ 79,563 $ -- $ -- $ 51,047 $ 130,610
Contract revenue............................... 24,556 200 (19,138) -- 5,618
--------- ------------ ------------ ----------- ------------
Total revenues............................... 104,119 200 (19,138) 51,047 136,228
Operating income (loss)........................ 21,647 (20,640) 1,702 28,400 31,109
Net income (loss).............................. 24,328 (18,854) 8,562 13,987 28,023
Net income per share........................... 0.60 0.68
Weighted average number of common and common
equivalent shares............................ 40,479 41,495
NINE MONTHS ENDED SEPTEMBER 30, 1997
Sales.......................................... $ 105,437 $ -- $ -- $ 4,860 $ 110,297
Contract revenue............................... 22,430 -- (18,331) -- 4,099
--------- ------------ ------------ ----------- ------------
Total revenues............................... 127,867 -- (18,331) 4,860 114,396
Operating income (loss)........................ 36,849 (19,732) 1,401 2,702 21,220
Net income (loss).............................. 29,395 (19,044) 8,458 1,044 19,853
Net income per share........................... 0.62 0.41
Weighted average number of common and common
equivalent shares............................ 47,392 48,408
</TABLE>

SUMMARY UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET DATA

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
---------------------------------------------------------------------
PRO FORMA
PRO FORMA CONSOLIDATED
DURA SPIROS CORP. ADJUSTMENTS CONSOLIDATED AS ADJUSTED(1)
--------- ------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and short-term
investments................................ $ 454,710 $ 4,851 $ -- $ 459,561 $ 384,561
Working capital............................. 457,276 2,518 -- 459,794 384,794
Total assets................................ 821,105 4,851 (2,325) 823,631 748,631
Long-term obligations (excluding current
portion)................................... 294,535 -- -- 294,535 294,535
Shareholders' equity........................ 482,297 2,518 -- 484,815 409,815
</TABLE>

- ------------------------------
(1) Pro Forma Consolidated As Adjusted amounts give effect to the Contribution.
No adjustment has been made to reflect the Offerings as it will result in an
increase to additional paid-in capital in an amount equal to the value of
the Warrants as determined at the time of their issuance, offset by an
increase to the warrant subscriptions receivable contra equity account.

16
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE UNITS OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS OR INCORPORATED
HEREIN BY REFERENCE, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS BEFORE PURCHASING THE UNITS OFFERED HEREBY.

CONFLICTS OF INTEREST

COMMON MANAGEMENT. The Technology Agreement, the Development Agreement, the
Manufacturing and Marketing Agreement and the Albuterol and Product Option
Agreement (collectively, the "Major Agreements") were approved by Dura, as
controlling stockholder of Spiros Corp. II, which, in such capacity, may have
influenced the Board of Directors of Spiros Corp. II to enter into such
agreements. Two of the five authorized members of the Board of Directors of
Spiros Corp. II are persons who are directors and/or officers of Dura or its
affiliates.

LACK OF ARM'S-LENGTH NEGOTIATION. The Development Agreement and the
Manufacturing and Marketing Agreement were not negotiated on an arm's-length
basis and Dura and Spiros Corp. II did not retain separate counsel in connection
therewith. In particular, the Board of Directors of Spiros Corp. II may have
been influenced by Dura, as the controlling stockholder of Spiros Corp. II, in
entering into the Development Agreement and the Manufacturing and Marketing
Agreement. Dura is the contractor under the Development Agreement and will
perform or participate in all development and other activities thereunder.
Additionally, Dura will be primarily responsible for the marketing and
manufacture of Spiros Products under the Manufacturing and Marketing Agreement.
Spiros Corp. II will be responsible for and will pay the development costs that
are incurred by Dura under the Development Agreement and the marketing and
manufacturing costs incurred by Dura under the Manufacturing and Marketing
Agreement. Dura will determine unilaterally certain activities to be undertaken
under the Development Agreement and in all events Dura will have substantial
influence over all activities and procedures (including the timing and
priorities thereof) to be undertaken under the Development Agreement and the
Manufacturing and Marketing Agreement. Dura has no obligation to complete any
development or other activity after all funds of Spiros Corp. II have been
expended. Dura's own projects and other third party projects may compete for
time and resources with projects undertaken pursuant to the Development
Agreement and the Manufacturing and Marketing Agreement and the resources that
Dura expends under such agreements may therefore be limited.

THE ALBUTEROL OPTION AND THE PRODUCT OPTION. If Dura exercises the
Albuterol Option for the Albuterol Product or the Product Option for any other
Spiros Product, it will have sole discretion to control the commercialization of
such product, including discretion to allocate its marketing resources among
that product and other Dura products.

THE PURCHASE OPTION EXERCISE PRICE. The Purchase Option Exercise Price was
determined by Spiros Corp. II and Dura giving consideration to the Spiros
Products, the agreements between Spiros Corp. II and Dura, such other factors as
Spiros Corp. II and Dura deemed appropriate, and other advice given by the
Underwriters. Therefore, such price was not determined on an arm's-length basis.

BUSINESS RISKS RELATING TO SPIROS CORP. II

NO ASSURANCE OF SUCCESSFUL DEVELOPMENT OF THE SPIROS PRODUCTS. Spiros Corp.
II has agreed with Dura that Dura will conduct work on the Spiros Products in
accordance with the Development Agreement for the purpose of research, clinical
development, product development, including regulatory approval, and
commercialization of the Spiros Products. Dura's historical performance has no
relationship to Spiros Corp. II's potential product development and is not
indicative of the future performance of Spiros Corp. II. While certain research
and development on the Spiros Products being transferred to Spiros Corp. II by
Dura has been conducted, additional clinical studies and product development are
still to be

17
<PAGE>
undertaken. There can be no assurance that Spiros Corp. II or Dura will be able
to complete the development, gain regulatory approval and successfully
commercialize any of the Spiros Products or that the Spiros Products can be
introduced in a timely manner. The successful development of any of the Spiros
Products will require demonstration through human clinical studies that such
Spiros Products are both safe and efficacious. See "Business of Spiros Corp.
II."

NO ASSURANCE OF EXERCISE OF DURA'S OPTIONS. Dura is not obligated to
exercise the Purchase Option, the Albuterol Option or the Product Option, and it
will exercise such options only if, in the opinion of Dura's Board of Directors,
it is in Dura's best interest to do so. Even if the Spiros Products are
developed and approved, if Dura does not exercise the Purchase Option, the
Albuterol Option or the Product Option, Spiros Corp. II will be required to find
alternative ways to commercially market or exploit the Spiros Products and there
can be no assurance that Spiros Corp. II will be able to do so. If, in the event
Dura fails to exercise the Purchase Option, the Albuterol Option and the Product
Option and Spiros Corp. II determines to market the Spiros Products itself,
Spiros Corp. II will require substantial additional funds. There can be no
assurance that such funds will be available on attractive terms, if at all.
Similarly, if Spiros Corp. II determines to license the Spiros Products to third
parties, such arrangements, if available, may be on terms less favorable to
Spiros Corp. II than the terms of Spiros Corp. II's arrangements with Dura. See
"The Agreements and the Purchase Options--Stock Purchase Option" and "The
Agreements and the Purchase Options--Albuterol and Product Option Agreement."

NO ASSURANCE OF SUFFICIENT FUNDS. Although Spiros Corp. II believes that
the Available Funds will be sufficient to enable it to advance three Spiros
Products through the FDA approval stage, there can be no assurance that this
will be the case. Until the expiration of the Purchase Option, Spiros Corp. II
is significantly restricted from raising additional funds without Dura's consent
and there can be no assurance that Spiros Corp. II will have sufficient funds to
successfully develop any Spiros Products. While Dura may, at its sole option,
provide funds for further development of the Spiros Products, it is not
obligated to do so. If the Purchase Option is not exercised, Spiros Corp. II
would have to raise substantial funding while hiring, or otherwise obtaining
access to research, and management personnel.

NO ASSURANCE THAT THE PURCHASE OPTION WILL BE REPRESENTATIVE OF THE VALUE OF
SPIROS CORP. II. The Purchase Option Exercise Price is set forth in the Spiros
Corp. II Amended and Restated Certificate of Incorporation as of the date of the
closing of the Offerings and therefore may not be representative of the value of
the Spiros Corp. II Common Stock at the time of the exercise of the Purchase
Option.

DEPENDENCE ON DURA. Substantially all of the Available Funds will be paid
by Spiros Corp. II to Dura under the Development Agreement. Payments under the
Development Agreement will be made for the full amount of all of Dura's research
and development expenses, general and administrative expenses, capital equipment
costs and all other costs and expenses incurred by Dura in performing the
activities described in "The Agreements and the Purchase Options--Development
Agreement," up to the maximum amount of the funds available to Spiros Corp. II,
which include substantially all of the Available Funds. Development Costs will
include development expenses (including salaries, benefits, supplies, and
facilities and overhead allocations) that are billed at a rate of fully burdened
cost plus 25%; provided, however, that services provided by third parties will
be billed at a rate of cost plus 20%. Development Costs also include costs,
estimated to be approximately $4 million, for the Development conducted by Dura
from October 10, 1997 through the date of the closing of the Offerings. In
addition, Dura will be primarily responsible for the marketing and manufacturing
of the Spiros Products, if any are commercialized prior to the expiration of the
Purchase Option. Spiros Corp. II is not expected to have its own research,
development, clinical, licensing, administration, manufacturing or marketing
employees or facilities and thus will be entirely dependent on Dura in these
areas. Subject to their respective obligations under the Development Agreement,
consistent with commercially reasonable practices, Dura will have sole
discretion to determine the allocation of its research, development, clinical,
licensing, administration, manufacturing and marketing employees and facilities.
Although Dura believes that its personnel and facilities currently are or, in
the

18
<PAGE>
future, will be adequate for the performance of its duties under the Development
Agreement and the Manufacturing and Marketing Agreement, Dura's proprietary and
collaborative development, licensing, manufacturing and marketing projects may
compete for time and resources with projects undertaken by Spiros Corp. II
pursuant to the Development Agreement and the Manufacturing and Marketing
Agreement, thereby delaying development, manufacture and marketing of the Spiros
Products. Any material adverse change in the business or financial condition of
Dura would have a material adverse effect upon Spiros Corp. II. See "The
Agreements and the Purchase Options--Development Agreement."

POTENTIAL COMPETITION FROM DURA. Dura is engaged in ongoing licensing and
development of new products. While Dura has licensed the rights to develop,
manufacture and commercialize the Spiros Products in connection with the Core
Technology to Spiros Corp. II, Dura is not prohibited from developing other
products using Spiros, including those that may compete with the Spiros
Products, or from in-licensing or acquiring products that may compete with the
Spiros Products. Dura's activities may, in some circumstances, lead to the
development, in-licensing or acquisition of products that compete with the
Spiros Products being developed by Spiros Corp II. It is possible that Dura's
rights with respect to such competitive products could reduce Dura's incentive
to exercise the Albuterol Option, the Product Option or the Purchase Option. See
"Business of Dura."

NO MANUFACTURING OR MARKETING CAPABILITY. Spiros Corp. II has no
manufacturing or marketing capability. Spiros Corp. II is obligated to only
utilize Dura's manufacturing facilities for manufacturing in the U.S. during the
term of the Manufacturing and Marketing Agreement. Dura has the right under the
Manufacturing and Marketing Agreement to use contract manufacturers and
currently plans to rely on third parties to manufacture certain components of
Spiros. There can be no assurance that Dura's facilities or those of its
contract manufacturers will be satisfactory for the needs of Spiros Corp. II. In
addition, Dura or its contract manufacturers, as the case may be, may require
additional FDA approval prior to commencing manufacturing of Spiros Products.
There can be no assurance that the Spiros Products can be manufactured, whether
by Dura or a contract manufacturer, on a commercial scale for commercially
reasonable cost or on a timely basis. In addition, Spiros Corp. II has no
experience in sales, marketing or distribution. Under the Manufacturing and
Marketing Agreement, Dura has been granted exclusive worldwide marketing rights
to the Spiros Products. There can be no assurance that Dura's sales and
marketing force will be able to establish commercially successful sales and
distribution capabilities for the Spiros Products. See "The Agreements and the
Purchase Options--Manufacturing and Marketing Agreement."

ABSENCE OF OPERATING HISTORY; NO ASSURANCE OF PROFITABILITY; LACK OF
DIVIDENDS. Spiros Corp. II was recently formed and has no operating history
upon which investors may base an evaluation of its likely financial performance.
Spiros Corp. II anticipates that substantially all of the Available Funds may be
expended prior to the earliest receipt of any significant revenues by Spiros
Corp. II, resulting in significant losses. Further, even if the Spiros Products
are developed in accordance with the Development Agreement and marketed pursuant
to the Manufacturing and Marketing Agreement, there can be no assurance that
they can be marketed profitably. Even if such Spiros Products are commercialized
profitably, the initial losses incurred by Spiros Corp. II may never be
recovered. Spiros Corp. II is prevented from paying dividends on the Spiros
Corp. II Common Stock without the approval of Dura, and accordingly, does not
expect to pay any dividends. See "Spiros Corp. II Capital Stock" and "The
Agreements and the Purchase Options--Stock Purchase Option."

ABILITY OF SPECIAL STOCKHOLDER TO LIMIT CERTAIN SPIROS CORP. II
ACTIVITIES. Pursuant to the Amended and Restated Certificate of Incorporation
of Spiros Corp. II, until the expiration of the Purchase Option, no resolution
or act of Spiros Corp. II to authorize or permit any of the following will be
effective without the prior written approval of the holders of a majority of the
outstanding Special Shares: (i) the allotment or issue of shares or other
securities of Spiros Corp. II or the creation of any right to such allotment or
issue; (ii) the reduction of Spiros Corp. II's authorized share capital; (iii)
outstanding borrowings by Spiros Corp.

19
<PAGE>
II in excess of $1 million; (iv) the sale or other disposition of, or the
creation of any lien or liens on, the whole or a part of Spiros Corp. II's
business or assets; (vi) the consolidation of Spiros Corp. II; and (vii) any
alteration of the Purchase Option. Accordingly, Dura as the holder of a majority
of the outstanding Special Shares, could preclude the holders of a majority of
the outstanding Spiros Corp. II Common Stock and the Board of Directors of
Spiros Corp. II from taking any of the foregoing actions during such period.
Dura, as holder of all of the outstanding Special Shares, may transfer or sell
all, but not less than all, of such shares. As a result, an unrelated third
party may acquire rights associated with the Special Shares, including the
rights discussed in this section and the right to exercise the Albuterol Option,
the Product Option and the Purchase Option. There can be no assurance that any
transferee of the Special Shares will have the same financial resources or
development, manufacturing or marketing capabilities as Dura, which may have a
material adverse effect on the likelihood of the exercise of the Albuterol
Option, the Product Option or the Purchase Option. See "Spiros Corp. II Capital
Stock."

POTENTIAL LOSS OF TECHNOLOGY BY SPIROS CORP. II. Under the Development
Agreement, Spiros Corp. II is obligated to make payments to Dura equal in the
aggregate to substantially all of the Available Funds. If Spiros Corp. II does
not use such Available Funds as provided in the Development Agreement or
otherwise breaches any of its material obligations under the Major Agreements,
Dura may have the right to terminate the Technology Agreement, the Development
Agreement and the Manufacturing and Marketing Agreement, and thereby reacquire
rights to all technology licensed to Spiros Corp. II thereunder, including
improvements made to such technology using funds provided by Spiros Corp. II. In
the event of such a termination by Dura, it is unlikely that Dura would exercise
the Albuterol Option, the Product Option or the Purchase Option. See "The
Agreements and the Purchase Options."

ACCELERATION OF PURCHASE OPTION. If Spiros Corp. II terminates all Major
Agreements due to a material breach of any of the Major Agreements by Dura, the
Purchase Option automatically accelerates. The Purchase Option also terminates
in the event of certain voluntary or involuntary bankruptcy events affecting
Dura or an uncured material breach by Dura under any of its material loan
agreements. There can be no assurance that, at that time, the development of the
Spiros Products will have progressed to a point where Dura will have sufficient
information to determine whether to exercise the Purchase Option. As a result,
Dura may determine not to exercise the Purchase Option. There can be no
assurance that, upon termination of the Development Agreement by Spiros Corp. II
as described above, alternative arrangements for the development of some or all
of the Spiros Products could be made or that such development of the Spiros
Products by Spiros Corp. II would be successful. See "The Agreements and the
Purchase Options."

BUSINESS RISKS RELATED TO SPIROS CORP. II AND DURA

NO ASSURANCE OF MARKET FOR UNITS, WARRANTS OR SPIROS CORP. II COMMON
STOCK. The Warrants and the Spiros Corp. II Common Stock that constitute the
Units will be transferable only as Units until the Separation Date. No assurance
can be given that an active trading market for the Units will develop. After the
Separation Date, the Warrants and the Spiros Corp. II Common Stock will be
separately transferable. There can be no assurance that factors related to Dura
or otherwise will not depress the value of the Warrants, or that factors related
to Spiros Corp. II or otherwise will not depress the value of the Spiros Corp.
II Common Stock, in either case reducing the liquidity of an investment in the
Units. After the Separation Date, there can be no assurance that there will be
an active trading market for the Warrants or the Spiros Corp. II Common Stock.
Prior to the Separation Date, application will be made to list the Spiros Corp.
II Common Stock and the Warrants for trading on the Nasdaq National Market.

UNCERTAINTY REGARDING PATENTS AND PROPRIETARY TECHNOLOGY; UNPREDICTABILITY
OF PATENT PROTECTION--SPIROS CORP. II. Spiros Corp. II's success will depend,
in part, on its ability to obtain patents, protect trade secrets and other
proprietary information and operate without infringing upon the proprietary
rights of others both in the U.S. and abroad. There can be no assurance that
patent applications for a Spiros

20
<PAGE>
Product will be approved, that Spiros Corp. II will develop any Spiros Product
to the point that it is patentable, that any issued patents for a Spiros Product
will provide Spiros Corp. II with adequate protection or will not be challenged
by others, or that the patents of others will not impair the ability of Spiros
Corp. II to do business. Furthermore, there can be no assurance that others will
not independently develop similar products, duplicate any unpatented Spiros
Products or design around any patented Spiros Products in development or
marketed by Spiros Corp. II.

Spiros Corp. II will rely on secrecy to protect technology where patent
protection is not believed to be appropriate or obtainable. There can be no
assurance that any confidentiality agreement entered into by Dura with third
parties will not be breached, that Spiros Corp. II will have adequate remedies
for any breach, that others will not independently develop substantially
equivalent proprietary information or that third parties will not otherwise gain
access to proprietary information concerning the Spiros Products or Program
Technology.

Spiros Corp. II may be required to obtain licenses to patents or other
proprietary rights of others. No assurance can be given that any licenses
required under any such patents or proprietary rights would be made available on
terms acceptable to Spiros Corp. II, if at all. If Spiros Corp. II does not
obtain such licenses, it could encounter delays in Spiros Product market
introductions or could find that the development, manufacture or sale of the
Spiros Products requiring such licenses could be foreclosed. Moreover, Spiros
Corp. II could incur substantial costs and diversion of management time in
defending itself in any suits brought against it claiming infringement of the
patent rights of others or in asserting Spiros Corp. II's patent rights.

Spiros Corp. II is aware of foreign patents granted to third parties in the
United Kingdom that claim proprietary rights in areas that may overlap with
certain Spiros technology. In the event that Spiros Corp. II determines to
market any Spiros Product in the United Kingdom and further determines that such
activity would infringe upon such third party patents, Spiros Corp. II may need
to either design around these patents, obtain licenses to such patents, or avoid
marketing products in the United Kingdom and other areas in Europe in which
these patents provide protection. There can be no assurance that patents or
patent applications do not exist or will not exist in the future that may
materially affect Spiros Corp. II's ability to make, use or sell any current or
future products. See "Business of Spiros Corp. II--Patents."

UNCERTAINTY REGARDING PATENTS AND PROPRIETARY; UNPREDICTABILITY OF PATENT
PROTECTION--DURA. Dura's success will depend in part on its ability to obtain
patents on current or future products or formulations, defend its patents,
maintain trade secrets and operate without infringing upon the proprietary
rights of others both in the U.S. and abroad. However, only six of the
pharmaceuticals currently marketed by Dura are covered by patents. Dura also has
licenses or license rights to certain other U.S. and foreign patent and patent
applications. There can be no assurance that patents, U.S. or foreign, will be
obtained, or that, if issued or licensed to Dura, they will be enforceable or
will provide substantial protection from competition or be of commercial benefit
to Dura or that Dura will possess the financial resources necessary to enforce
or defend any of its patent rights. Federal court decisions establishing legal
standards for determining the validity and scope of patents in the field are in
transition. There can be no assurance that the historical legal standards
surrounding questions or validity and scope will continue to be applied or that
current defenses as to issued patents in the field will offer protection in the
future. The commercial success of Dura will also depend upon avoiding the
infringement of patents issued to competitors and upon maintaining the
technology licenses upon which certain of Dura's current products are, or any
future products under development might be, based. Litigation, which could
result in substantial cost to Dura, may be necessary to enforce Dura's patent
and license rights or to determine the scope and validity of proprietary rights
of third parties. If any of Dura's products are found to infringe upon patents
or other rights owned by third parties, Dura could be required to obtain a
license to continue to manufacture or market such products. There can be no
assurance that licenses to such patent rights would be made available to Dura on
commercially reasonable terms, if at all. If Dura does not obtain such licenses,
it could encounter delays in marketing affected products while it attempts to
design around such patents or it

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could find that the development, manufacture or sale of products requiring such
licenses is not possible. Dura currently has certain licenses from third parties
and in the future may require additional licenses from other parties to develop,
manufacture and market commercially viable products effectively. There can be no
assurance that such licenses will be obtainable on commercially reasonable
terms, if at all, or that the patents underlying such licenses will be valid and
enforceable. See "Business of Dura--Patents and Proprietary Rights."

GOVERNMENT REGULATION; NO ASSURANCE OF FDA APPROVAL. Development, testing,
manufacturing and marketing of pharmaceutical products including drug delivery
systems are subject to extensive regulation by numerous governmental authorities
in the U.S. and other countries. The process of obtaining FDA approval of
pharmaceutical products and drug delivery systems is costly and time consuming.
Any new pharmaceutical product must undergo rigorous preclinical and clinical
testing and an extensive regulatory approval process mandated by the FDA. Such
regulatory review includes the determination of manufacturing capability and
product performance. Marketing of drug delivery systems also requires FDA
approval, which can be costly and time consuming to obtain. A separate
regulatory approval will need to be obtained for each Spiros drug delivery
system.

Dura expects to submit an abbreviated NDA called a 505(b)(2) application for
the use of albuterol and other drugs with the Spiros system. No assurances can
be given that all of Dura's drugs identified for development with Spiros will be
suitable for, or approved under, abbreviated application procedures. Certain
abbreviated application procedures have been the subject of petitions filed by
brand name manufacturers which seek changes in the FDA's approval process for
such abbreviated applications. These requested changes include, among other
things, disallowance of the use by an applicant of an abbreviated application
with data considered proprietary by the original manufacturer that was submitted
to the FDA as part of an original NDA. Dura is unable to predict at this time
whether the FDA will make any changes to its abbreviated application procedures
as a result of such petitions or the effect that such changes or challenges may
have on Dura.

There can be no assurance that the pharmaceutical products currently in
development by Spiros Corp. II or Dura, or those products acquired or
in-licensed by either company, will be approved by the FDA. In addition, there
can be no assurance that all necessary approvals will be granted for future
products or that FDA review or actions will not involve delays caused by the
FDA's request for additional information or testing that could adversely affect
the time to market and sale of the products. For both currently marketed
products of Dura and future products of Dura and Spiros Corp. II, failure to
comply with applicable regulatory requirements can, among other things, result
in the suspension of regulatory approval, as well as possible civil and criminal
sanctions.

Dura, on behalf of Spiros Corp. II, plans to submit an NDA for the Albuterol
Product in November 1997. The FDA may determine to reject Dura's NDA at any time
within 60 days of submission based on a determination that the NDA is incomplete
or that additional information is required prior to consideration of the NDA.
Prior to the FDA's approval of the Albuterol Product, Dura will be required to
complete an ongoing open label study with respect to the Albuterol Product.
Since completion of the pivotal trials, Dura has made, and is proposing to make,
a number of additional modifications to the Spiros system, some of which address
problems encountered with the mechanical features of the Spiros delivery system
during the pivotal trials. These changes are intended to improve the
reliability, performance, manufacturability, and customer acceptance of the
mechanical features of the Spiros delivery system. Dura expects that it will be
required to complete testing and validation pursuant to cGMP requirements of the
Spiros system as modified for commercial distribution, which could be costly and
time-consuming. There can be no assurance that the FDA will not require Dura to
undertake further laboratory testing, field testing and/or clinical studies in
order to insure the safety and effectiveness of the Albuterol Product intended
to be commercialized by Dura and to insure that it can be reliably manfactured.
If a proposed change is deemed to be a major modification by the FDA, Dura could
be required to repeat one or more of the clinical studies. Moreover, because of
the time necessary to validate the changes to the Spiros

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system, there can be no assurance that Dura will be prepared for any FDA
preapproval inspection of Dura's manufacturing facilities in a timely manner. If
Dura is required to undertake additional laboratory testing and/or clinical
studies or to postpone the preapproval inspection, or if Dura fails to complete
the open label study in a timely manner, Dura could receive a non-approval
letter and, in any event, there could be a substantial delay in completion of
the approval process. FDA approval to market the Albuterol Product could take
several months to several years, or approval may ultimately be denied.

The FDA is required to conduct biennial inspections of drug manufacturing
establishments. Since the planned NDA submission for the Albuterol Product will
be Dura's first for a Spiros Product, the FDA will inspect Dura's manufacturing
facility as part of the review process. Dura may also be subject to State of
California inspection. There can be no assurance that Dura will be able to
satisfy such inspections in a timely manner, if at all.

In addition, changes in regulations could have a material adverse effect on
Dura. The FDA is continuing an evaluation of the effectiveness of all drug
products containing ingredients marketed prior to 1962 (the year of enactment of
the "Drug Amendments of 1962" to the Federal Food, Drug and Cosmetic Act) as
part of its Drug Efficacy Study Implementation ("DESI") program and will
determine which drugs are considered "new drugs" requiring approval through a
NDA for marketing. A Policy Guide (CPG 440.100) issued by the FDA indicates that
the FDA will implement procedures to determine whether the new drug provisions
are applicable to existing products. This Policy Guide requires that products
covered by paragraph B not be similar or related to any drug included in the
DESI program, or have a different formulation or conditions for use than
products marketed before November 13, 1984. If a final determination is made
that a particular drug required an approved NDA, such approval will be required
for marketing to continue. If such a determination is made, the FDA might impose
various requirements; for example, it might require that the current product be
the subject of an approved NDA, that the product be reformulated and an NDA
approval be obtained, that the product must be sold on an over-the-counter basis
rather than as a prescription drug or that the products must be removed from the
market. Dura believes that nine of its prescription pharmaceutical products may
be covered by paragraph B of the Policy Guide and is aware that one of its
products may be considered to be similar or related to a DESI drug. Also, Dura
is not aware of evidence to substantiate that three of its products have the
same formulation or conditions for use as products marketed before November 13,
1984. There can be no assurance as to which regulatory course the FDA will
follow, if any, with respect to many of Dura's pharmaceutical products or
whether either Dura or Spiros Corp. II will be able to obtain any approvals that
the FDA may deem necessary. If any negative actions are taken by the FDA, such
actions could have a material adverse effect on business of Dura or Spiros Corp.
II. Dura's Health Script is subject to regulation by state regulatory
authorities, principally state boards of pharmacy. In addition, Dura's Health
Script is subject to regulation by other state and federal agencies with respect
to reimbursement for prescription drug benefits provided to individuals covered
primarily by publicly-funded programs. See "Business of Dura--Government
Regulation."

ATTRACTION AND RETENTION OF KEY PERSONNEL. Spiros Corp. II will be highly
dependent on the principal members of Dura's scientific and management staff,
the loss of whose services might impede the achievement of development
objectives. Dura is also highly dependent on the principal members of its
scientific and management staff. No Dura employee, other than Mr. Garner, is
currently employed under an employment contract. Mr. Garner is employed under a
letter agreement which is automatically extended for successive one-year
periods. Pursuant to such letter agreement Mr. Garner is entitled to six months
of base salary if his employment is terminated without cause (nine months in the
event his employment is terminated in connection with a change in control of
Dura). Recruiting and retaining management and operational personnel and
qualified scientific personnel to perform research and development work, whether
for Spiros Corp. II's or Dura's internal projects, will also be critical to
Spiros Corp. II's and Dura's success. Although Dura believes it will be
successful in attracting and retaining skilled and experienced management,
operational and scientific personnel, there can be no assurance that

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Dura will be able to attract and retain such personnel on acceptable terms given
the competition among numerous pharmaceutical companies, universities and
research institutions for such personnel. See "Business of Dura--Human
Resources."

COMPETITION. Many companies, including large pharmaceutical firms with
financial and marketing resources and development capabilities substantially
greater than those of Dura and Spiros Corp. II, are engaged in developing,
marketing and selling products that compete with those offered or planned to be
offered by Dura and Spiros Corp. II. The selling prices of such products
typically decline as competition increases. Further, other products now in use
or under development by others may be more effective than Dura's or Spiros Corp.
II's current or future products. The industry is characterized by rapid
technological change, and competitors may develop their products more rapidly
than Dura or Spiros Corp. II. Competitors may also be able to complete the
regulatory process sooner, and therefore, may begin to market their products in
advance of Dura's or Spiros Corp. II's products. Dura and Spiros Corp. II
believe that competition among both prescription pharmaceuticals and pulmonary
drug delivery systems aimed at the respiratory infection, allergy, cough and
cold, and asthma and COPD markets will be based on, among other things, product
efficacy, safety, reliability, availability and price.

There are at least 25 other companies in the U.S. that are currently engaged
in developing, marketing and selling respiratory pharmaceuticals. Additionally,
there are at least 10 companies currently involved in the development, marketing
or sales of dry powder pulmonary drug delivery systems. There are two types of
dry powder inhalers ("DPIs") currently in commercial use worldwide. In the U.S.,
only individual dose DPIs currently are marketed, including the Rotohaler-TM-
(developed and marketed by Glaxo) and the Spinhaler-Registered Trademark-
(developed and marketed by Fisons Limited). The Turbuhaler-Registered Trademark-
(developed and marketed by Astra Pharmaceuticals), a multiple dose DPI, is the
leading DPI in worldwide sales. In June 1997, the FDA approved the first
Turbuhaler product, the Pulmicort Turbuhaler, for marketing in the U.S. See
"Business of Dura--Competition" and "Business of Spiros Corp. II--Competition."

THIRD-PARTY REIMBURSEMENT; PRICING PRESSURES. Dura's and Spiros Corp. II's
commercial success will depend in part on the availability of adequate
reimbursement from third-party health care payers, such as government and
private health insurers and managed care organizations. Third-party payers are
increasingly challenging the pricing of medical products and services. There can
be no assurance that reimbursement will be available to enable Dura or Spiros
Corp. II to achieve market acceptance of products or to maintain price levels
sufficient to realize an appropriate return on the investment in product
acquisition, in-licensing and development. The market for Dura's and Spiros
Corp. II's products may be limited by actions of third-party payers. For
example, many managed health care organizations are now controlling the
pharmaceuticals that are on their formulary lists. The resulting competition
among pharmaceutical companies to place their products on these formulary lists
has created a trend of downward pricing pressure in the industry. In addition,
many managed care organizations are pursuing various ways to reduce
pharmaceutical costs and are considering formulary contracts primarily with
those pharmaceutical companies that can offer a full line of products for a
given therapy sector or disease state. There can be no assurance that Dura or
Spiros Corp. II products will be included on the formulary list of managed care
organizations or that downward pricing pressure in the industry generally will
not negatively impact the operations of Dura or Spiros Corp. II.

LIMITED MANUFACTURING EXPERIENCE AND RELIANCE ON THIRD PARTIES. Dura's
principal manufacturing facility is intended to be used to formulate, mill,
blend and manufacture drugs to be used with Spiros, pending regulatory approval.
Equipment purchases and validation are currently scheduled through 1998. Dura's
manufacturing facility must be registered with and licensed by various
regulatory authorities and must comply with current Good Manufacturing Practice
("cGMP") requirements prescribed by the FDA and the State of California. Dura is
currently expanding its facilities to provide additional manufacturing

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capabilities. Dura will need to significantly scale up its current manufacturing
operations and comply with cGMPs and other regulations prescribed by various
regulatory agencies in the U.S. and other countries to achieve the prescribed
quality and required levels of production of such products to obtain marketing
approval. Spiros Corp. II is completely reliant on Dura for all of its
manufacturing needs. Any failure or significant delay in the validation of or
obtaining a satisfactory regulatory inspection of the new facility or failure to
successfully scale up could have a material adverse effect on the ability of
Dura and Spiros Corp. II to manufacture products in connection with Spiros. Dura
intends to utilize third parties to produce components of and assemble the
Spiros aerosol generator. Such third parties have only produced limited
quantities of components and assembled generators and will be required to
significantly scale up their activities. There can be no assurance that such
third parties will be successful in completing these activities in a timely
manner or can meet cGMP requirements. Any failure or delay in the scale up of
aerosol generator manufacturing would have a material adverse effect on the
ability of Dura and Spiros Corp. II to manufacture Spiros Products. See
"Business of Dura--Manufacturing."

PRODUCT LIABILITY AND INSURANCE. Dura's and Spiros Corp. II's respective
businesses will expose them to potential product liability risks which are
inherent in the testing, manufacturing and marketing of respiratory drugs and
drug delivery systems. Dura currently has limited product liability insurance;
however, there can be no assurance that Dura will be able to maintain such
insurance, that such insurance can be maintained on acceptable terms or that
insurance will provide adequate coverage against potential liabilities. Spiros
Corp. II does not maintain any product liability insurance and there can be no
assurance Spiros Corp. II will be able to obtain adequate product liability
insurance on reasonable terms, or at all, or that such insurance, if obtained,
can be maintained on acceptable terms or that insurance will provide adequate
coverage against potential liabilities.

BUSINESS RISKS RELATING TO DURA

REDUCTION IN GROSS MARGINS. There is no proprietary protection for most of
the products sold by Dura and substitutes for such products are sold by other
pharmaceutical companies. Dura expects average selling prices for many of its
products to decline over time due to competitive and reimbursement pressures.
While Dura will seek to mitigate the effect of this decline in average selling
prices, there can be no assurance that Dura will be successful in these efforts.
See "Business of Dura--Competition."

DEPENDENCE ON ACQUISITION OF RIGHTS TO PHARMACEUTICAL PRODUCTS. Dura's
strategy for growth is dependent, in part, upon acquiring, in-licensing and
co-promoting pharmaceuticals targeted primarily at allergists, ENTs,
pulmonologists and a selected subset of pediatricians and generalist physicians.
Other companies, including those with substantially greater resources, are
competing with Dura for the rights to such products. There can be no assurance
that Dura will be able to acquire, in-license or co-promote additional
pharmaceuticals on acceptable terms, if at all. The failure to acquire,
in-license, co-promote, develop or market commercially successful
pharmaceuticals would have a material adverse effect on Dura. Furthermore, there
can be no assurance that Dura, once it has obtained rights to a pharmaceutical
product and committed to payment terms, will be able to generate sales
sufficient to create a profit or otherwise avoid a loss. See "Business of
Dura--Strategy" and "Business of Dura--Strategic Alliances."

RISKS ASSOCIATED WITH RECENT ACQUISITIONS OF PRODUCTS. In September 1996,
Dura acquired from Lilly the exclusive U.S. rights to market and distribute
Keftab and Ceclor CD and entered into a manufacturing agreement with Lilly which
terminates in certain circumstances. In May 1997, Dura acquired from Syntex the
exclusive U.S. rights to the intranasal steroid products Nasarel and Nasalide.
Any interruption in the supply of these products due to regulatory or other
causes could result in the inability of Dura to meet demand and could have a
material adverse impact on Dura.

Dura has limited experience in marketing antibiotic products, such as Keftab
and Ceclor CD, and steroid products, such as Nasarel and Nasalide. Ceclor CD was
not previously marketed to physicians prior to its October 1996 launch by Dura,
and no assurance can be given that Dura will be able to continue to successfully
compete with currently available products. Failure to successfully market and
sell Keftab, Ceclor CD, Nasarel or Nasalide would have a material adverse effect
on the Dura's business, financial

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condition and results of operations. See "Business of Dura--Dura's Current
Products" and "Business of Dura--Sales and Marketing."

Dura has transferred a substantial portion of its recently acquired product
rights to foreign subsidiaries. Risks inherent in having assets in foreign
subsidiaries include those relating to political and economic instability and
the burden of complying with a wide variety of complex foreign laws and
treaties.

CUSTOMER CONCENTRATION; CONSOLIDATION OF DISTRIBUTION NETWORK. The
distribution network for pharmaceutical products has in recent years been
subject to increasing consolidation. As a result, a few large wholesale
distributors control a significant share of the market and the number of
independent drug stores and small chains has decreased. Further consolidation
among, or any financial difficulties of, distributors or retailers could result
in the combination or elimination of warehouses thereby stimulating product
returns to Dura. Further consolidation or financial difficulties could also
cause customers to reduce their inventory levels, or otherwise reduce purchases
of Dura's products which could result in a material adverse effect on Dura's
business, financial condition or results of operations.

Dura's principal customers are wholesale drug distributors and major drug
store chains. For the first nine months of 1997, three wholesale customers
individually accounted for 11% (McKesson Corporation), 11% (Cardinal Health,
Inc.) and 10% (AmeriSource Corporation) of sales. For 1996, three wholesale
customers individually accounted for 17% (McKesson Corporation), 14% (Bergen
Brunswig Corporation) and 13% (Cardinal Health, Inc.) of sales. Two wholesale
customers individually accounted for 16% and 11% of 1995 sales, and three
wholesale customers individually accounted for 21%, 14% and 12% of 1994 sales.
The loss of any of these customers could have a material adverse effect upon
Dura's business, financial condition or results of operations.

SEASONALITY AND FLUCTUATING QUARTERLY RESULTS. Historically, as a result of
the winter cold and flu season, industry-wide demand for respiratory products
has been stronger in the first and fourth quarters than in the second and third
quarters of the year. In addition, variations in the timing and severity of the
winter cold and flu season have influenced Dura's results of operations in the
past. While the growth and productivity of Dura's sales force and the
introduction by Dura of new products have historically mitigated the impact of
seasonality on Dura's results of operations, recent product acquisitions by
Dura, especially Keftab and Ceclor CD, which are used to treat respiratory
infections, are likely to increase the impact of seasonality on Dura's results
of operations. No assurances can be given that Dura's results of operations will
not be materially adversely affected by the seasonality of product sales.

DEPENDENCE ON THIRD PARTIES. Dura's strategy for development and
commercialization of certain of its products is dependent upon entering into
various arrangements with corporate partners, licensors and others and upon the
subsequent success of these partners, licensors and others in performing their
obligations. There can be no assurance that Dura will be able to negotiate
acceptable arrangements in the future or that such arrangements or its existing
arrangements will be successful. In addition, partners, licensors and others may
pursue alternative technologies or develop alternative compounds or drug
delivery systems either on their own or in collaboration with others, including
Dura's competitors. Dura has limited experience manufacturing products for
commercial purposes and currently does not have the capability to manufacture
its pharmaceutical products and therefore is dependent on contract manufacturers
for the production of such products for development and commercial purposes. The
manufacture of Dura's products is subject to cGMP regulations prescribed by the
FDA. Dura relies on a single manufacturer for each of its products. In the event
that Dura is unable to obtain or retain third-party manufacturing, it may not be
able to commercialize its products as planned. There can be no assurance that
Dura will be able to continue to obtain adequate supplies of such products in a
timely fashion at acceptable quality and prices. Also, there can be no assurance
that Dura will be able to enter into agreements for the manufacture of future
products with manufacturers whose facilities and procedures comply with cGMP and
other regulatory requirements. Dura's current dependence upon others for the
manufacture of its products may adversely affect future profit margins, if any,
on the sale of those products and Dura's ability to develop and deliver products
on a timely and competitive basis. See "Business of Dura-- Manufacturing."

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MANAGING GROWTH OF BUSINESS. Dura has experienced significant growth as
total revenues increased 58% in fiscal 1995, 102% in fiscal 1996, and 102% for
the first nine months of 1997, as compared to prior periods, primarily as a
result of the acquisition or in-licensing of additional respiratory
pharmaceutical products. During fiscal 1997, Dura executed an agreement relating
to the acquisition of the rights to the Nasarel and Nasalide products. During
fiscal 1996, Dura executed agreements relating to the acquisition of the rights
to the Entex, Ceclor CD and Keftab products. During fiscal 1995, Dura executed
three agreements relating to the acquisition, in-licensing and co-promotion of
products and acquired Health Script. Due to Dura's emphasis on acquiring and
in-licensing respiratory pharmaceutical products, Dura anticipates that the
integration of the recently acquired businesses and products, as well as any
future acquisitions, will require significant management attention and expansion
of its sales force. Dura's ability to achieve and maintain profitability is
based on management's ability to manage its changing business effectively. See
"--Attraction and Retention of Key Personnel" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Dura."

UNCERTAINTY OF PROFITABILITY; NEED FOR ADDITIONAL FUNDS. Dura has
experienced significant operating losses in the past, and, at September 30,
1997, Dura's accumulated deficit was $49.6 million. Although Dura achieved
profitability on an annual basis in 1996 and in the first nine months of 1997,
there can be no assurance that revenue growth or profitability will continue on
an annual or quarterly basis in the future. In addition, the Spiros Corp.
Purchase and the Contribution will result in significant, non-recurring charges
to earnings in the period such transactions are completed. The acquisition and
in-licensing of products, the expansion of Dura's sales force in response to
acquisition and in-licensing of products, the maintenance of Dura's existing
sales force, the upgrade and expansion of its facilities, continued pricing
pressure, the exercise of the Purchase Option, the Albuterol Option or the
Product Option, if Dura decides to do so, will require the commitment of
substantial capital resources and may also result in significant losses.
Depending upon, among other things, the acquisition and in-licensing
opportunities available, Dura may need to raise additional funds for these
purposes. Dura may seek such additional funding through public and private
financing, including equity or debt financing. Adequate funds for these
purposes, whether through financial markets or from other sources, may not be
available when needed or on terms acceptable to Dura. Insufficient funds may
require Dura to delay, scale back or suspend some or all of its product
acquisition and in-licensing programs, the upgrade and expansion of its
facilities, or the potential exercise of the Purchase Option, the Albuterol
Option and/or the Product Option. Dura anticipates that its existing capital
resources, together with cash expected to be generated from operations and
available bank borrowings, should be sufficient to finance its current
operations and working capital requirements through at least 12 months following
the date of this Prospectus. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations of Dura."

ABILITY TO SERVICE INDEBTEDNESS. In the third quarter of 1997, Dura issued
$287.5 million principal amount of 3 1/2% Convertible Subordinated Notes due
2002 (the "Notes"). There can be no assurance that Dura will have the necessary
funds available to pay the interest on the principal of the Notes or that the
Notes will be able to be refinanced. Any inability to service the obligations in
respect to the Notes could have a material adverse effect on Dura, the market
value of the Units, the Warrants and the Dura Common Stock.

EFFECT OF EXERCISE OF THE PURCHASE OPTION, THE ALBUTEROL OPTION AND THE
PRODUCT OPTION; DILUTION. If Dura exercises the Purchase Option, it will be
required to make a substantial cash payment or to issue shares of Dura Common
Stock, or both. A payment in cash would reduce Dura's capital resources. A
payment in shares of Dura Common Stock would result in a decrease in the
percentage ownership of Dura's stockholders at that time. The exercise of the
Purchase Option will likely require Dura to record a significant charge to
earnings and may adversely impact future operating results. If Dura does not
exercise the Purchase Option prior to its expiration, Dura's rights in and to
Spiros Corp. II with respect to certain compounds will terminate.

As part of Dura's contractual relationship with Spiros Corp. II, Dura
received the Albuterol Option to purchase certain rights to the Albuterol
Product and the Product Option to purchase certain rights to one

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additional Spiros Product. If Dura exercises the Albuterol Option or the Product
Option, it will be required to make a significant cash payment which could have
an adverse effect on its capital resources. Dura may not have sufficient capital
resources to exercise the Albuterol Option or the Product Option, which may
result in Dura's loss of valuable rights.

PRODUCT LIABILITY AND RECALL. Dura faces an inherent business risk of
exposure to product liability claims in the event that the use of its
technologies or products is alleged to have resulted in adverse effects. Such
risks will exist even with respect to those products that receive regulatory
approval for commercial sale. While Dura has taken, and will continue to take,
what it believes are appropriate precautions, there can be no assurance that it
will avoid significant product liability exposure. Dura currently has product
liability insurance; however, there can be no assurance that the level or
breadth of any insurance coverage will be sufficient to fully cover potential
claims. There can be no assurance that adequate insurance coverage will be
available in the future at acceptable costs, if at all, or that a product
liability claim or recall would not materially and adversely affect the business
or financial condition of Dura.

TERMINATION OF MERGER AGREEMENT WITH SCANDIPHARM, INC. On December 1, 1997,
Dura announced it had terminated its merger agreement with Scandipharm, Inc.
("Scandipharm"). Dura has been advised by counsel for Scandipharm that
Scandipharm does not believe Dura has the right to terminate such merger
agreement and that Scandipharm reserves all rights under such agreement. There
can be no assurances that Scandipharm will not pursue its remedies under such
agreement, including, without limitation, litigation against Dura. See "Business
of Dura--Overview."

CHANGE IN CONTROL. Certain provisions of Dura's charter documents and terms
relating to the acceleration of the exercisability of certain warrants and
options relating to the purchase of such securities by Dura in the event of a
change in control may have the effect of delaying, deferring or preventing a
change in control of Dura, thereby possibly depriving stockholders of receiving
a premium for their shares of the Dura Common Stock. In addition, upon a Change
in Control (as defined), Dura will be required to offer to purchase for cash all
of the outstanding Notes at a purchase price of 100% of the principal amount
thereof, plus accrued but unpaid interest through the Change in Control Purchase
Date (as defined). The Change in Control purchase features of the Notes may in
certain circumstances have an anti-takeover effect. If a Change in Control were
to occur, there can be no assurance that Dura would have sufficient funds to pay
the Change in Control Purchase Price (as defined) for all Notes tendered by the
holders thereof and to repay other indebtedness that may become due as a result
of any Change in Control.

EFFECT OF ISSUANCE OF EQUITY SECURITIES. The potential issuance of Dura's
equity securities in connection with the Offerings and the Spiros Corp. Purchase
will result in a substantial dilution in the percentage ownership of Dura's
stockholders in Dura at the time of issuance and could negatively affect the
market price of Dura Common Stock.

VOLATILITY OF DURA STOCK PRICE. The market prices for securities of
emerging companies, including Dura, have historically been highly volatile.
Future announcements concerning Dura or its competitors may have a significant
impact on the market price of the Dura Common Stock. Such announcements might
include financial results, the results of testing, technological innovations,
new commercial products, changes to government regulations, government decisions
on commercialization of products, developments concerning proprietary rights,
litigation or public concern as to safety of Dura's products.

ABSENCE OF DIVIDENDS. Dura has never paid any cash dividends on the Dura
Common Stock. In accordance with a bank loan agreement, Dura is prohibited from
paying cash dividends without prior bank approval. Dura currently anticipates
that it will retain all available funds for use in its business and does not
expect to pay any cash dividends in the foreseeable future.

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FORWARD LOOKING STATEMENTS MAY NOT PROVE ACCURATE

This Prospectus contains forward-looking statements. Discussions containing
such forward-looking statements may be found in the material set forth under
"Prospectus Summary," "Use of Proceeds," "Business of Spiros Corp. II,"
"Business of Dura," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations of Dura," as well as within the Prospectus
generally and within documents incorporated by reference into this Prospectus.
In addition, when used in this Prospectus, the words "believes," "anticipates,"
"expects" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to a number of risks and uncertainties.
Actual results in the future could differ materially from those described in the
forward-looking statements as a result of the risk factors set forth herein and
the matters set forth in the Prospectus generally.

TAX RISKS

There are tax risks associated with the purchase of the Units, principally
relating to (i) the valuation of the Warrants (which will be used to determine
the tax basis of the Warrants and the Spiros Corp. II Common Stock after the
Separation Date), and (ii) the possibility that the United States Internal
Revenue Service ("IRS") could assert that the substance of the various
transactions is different from the form of such transactions. Certain United
States federal income tax consequences may be applicable to the purchase of the
Units, Warrants and Spiros Corp. II Common Stock and the exercise or expiration
of the Purchase Option. Such tax consequences are important and include the
recognition by Spiros Corp. II stockholders of taxable income upon the exercise
or expiration unexercised of the Purchase Option. The recognition by Spiros
Corp. II stockholders of income on expiration of the Purchase Option will be
required notwithstanding the fact that no cash or other property will be
received at such time.

29
<PAGE>
USE OF PROCEEDS

The net proceeds from the Offerings, assuming an offering price of $16.00
per Unit, are expected to be approximately $69.2 million ($79.6 million if the
Underwriters' over-allotment option is exercised in full), all of which will be
received by Spiros Corp. II. Spiros Corp. II expects to use substantially all of
the net proceeds of the Offerings, the Contribution and interest to be earned
thereon, less $1 million to be used as working capital, to engage Dura to
undertake research, clinical development, product development, including
regulatory approval, and commercialization of the Spiros Products under the
Development Agreement, and to make the Other Expenditures. Spiros Corp. II
expects that during the term of the Development Agreement, unless Dura exercises
the Albuterol Option or the Product Option, it will have very limited sources of
revenue other than the net proceeds of the Offerings, the Contribution and the
interest earned thereon. Any funds received by Spiros Corp. II as a result of
Dura's exercise of the Albuterol Option or the Product Option will become part
of the Available Funds and are intended to be paid to Dura pursuant to the
Development Agreement. See "The Agreements and the Purchase Options--
Development Agreement." Pending expenditure of such funds, the net proceeds of
the Offerings will be invested in short-term interest-bearing or other debt
securities. Dura's obligation to perform development work under the Development
Agreement will terminate at such time as Spiros Corp. II has cash or cash
equivalents of less than $5 million, which is projected by Spiros Corp. II to
occur on or about February 28, 2001. Upon receipt of notice from Spiros Corp.
II, Dura may elect to provide additional funding for the development of the
Spiros Products (but in no event beyond December 31, 2002). See "The Agreements
and Purchase Options--Stock Purchase Option" and "--Development Agreement."

The following table sets forth a proposed budget that provides estimates of
Spiros Corp. II's cash flow through April 2001, assuming the net proceeds of the
Offerings and the Contribution together with interest thereon total $154.2
million. The proposed budget assumes no exercise of the Underwriters' over-
allotment option and does not take into account any cash received upon the
exercise of the Albuterol Option or the Product Option. Because of the
long-range nature of the development plans, there can be no assurance that funds
will be expended as set forth below and Spiros Corp. II and Dura reserve the
right to reallocate funds as they deem appropriate. Neither Spiros Corp. II's
nor Dura's independent auditors, nor any independent accountants or financial
advisors, have compiled, examined or performed any procedures with respect to
the budget contained herein, nor have they expressed any opinion or any form of
assurance on such information and assume no responsibility for, and disclaim any
association with, the information. See "Risk Factors" for a discussion of
various factors that could materially affect the operations of Spiros Corp. II.

PROPOSED BUDGET
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(3 MONTHS) (4 MONTHS)
1997(2) 1998 1999 2000 2001 TOTAL
----------- --------- --------- --------- ------------- ---------

<CAPTION>
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Beginning cash balance... $ -- $ 139.2 $ 86.0 $ 36.1 $ 9.3 $ --
Dura Contribution........ 75.0 -- -- -- -- 75.0
Net proceeds of the
Offerings.............. 69.2 -- -- -- -- 69.2
Interest income(1)....... -- 5.6 3.0 1.1 0.3 10.0
----------- --------- --------- --------- ----- ---------
Total................ $ 144.2 $ 144.8 $ 89.0 $ 37.2 $ 9.6 $ 154.2
----------- --------- --------- --------- ----- ---------
----------- --------- --------- --------- ----- ---------
Payments
Albuterol.............. 3.4 27.3 -- -- -- 30.7
Beclomethasone......... 1.6 9.1 6.0 0.3 -- 17.0
Budesonide............. -- 4.6 15.2 11.1 5.2 36.1
Ipratropium............ -- 9.5 16.1 6.0 -- 31.6
Albuterol-Ipratropium... -- 6.5 11.2 7.1 3.0 27.8
Other Expenditures....... -- 1.4 4.0 3.0 -- 8.4
General and
administrative
expenses............... -- 0.4 0.4 0.4 0.4 1.6
----------- --------- --------- --------- ----- ---------
Total................ $ 5.0 $ 58.8 $ 52.9 $ 27.9 $ 8.6 $ 153.2
----------- --------- --------- --------- ----- ---------
----------- --------- --------- --------- ----- ---------
Ending cash balance...... $ 139.2 $ 86.0 $ 36.1 $ 9.3 $ 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.

30
<PAGE>
PRICE RANGE OF DURA COMMON STOCK AND DIVIDEND POLICIES

Dura Common Stock is traded in the over-the-counter market and prices are
quoted on the Nasdaq National Market under the symbol "DURA." The following
table sets forth the intraday high and low prices for the Dura Common Stock for
the periods indicated, as reported on the Nasdaq National Market, as adjusted
for the 2-for-1 stock split in the form of a 100% stock dividend, effective July
1, 1996.

<TABLE>
<CAPTION>
HIGH LOW
--------- -------
<S> <C> <C>
1995:
1st Quarter................................................................ $ 7 1/2 $ 5 3/4
2nd Quarter................................................................ 9 7/8 6 1/2
3rd Quarter................................................................ 17 1/2 9 1/8
4th Quarter................................................................ 17 3/4 13 1/4

1996:
1st Quarter................................................................ $27 1/4 $16 3/8
2nd Quarter................................................................ 34 11/16 22
3rd Quarter................................................................ 40 1/2 19 3/4
4th Quarter................................................................ 47 7/8 29 1/2

1997:
1st Quarter................................................................ $47 1/8 $31 3/4
2nd Quarter................................................................ 44 22 3/4
3rd Quarter................................................................ 45 1/2 32 3/8
4th Quarter (through November 28).......................................... 53 42 3/8
</TABLE>

On November 28, 1997, the last reported sale price of the Dura Common Stock
on the Nasdaq National Market was $43 7/8 per share. As of September 30, 1997,
there were approximately 360 holders of record of Dura Common Stock.

In addition, at September 30, 1997, warrants to purchase a total of
3,856,014 shares of Dura Common Stock were outstanding. The number of holders of
record was 22.

Dura has never paid any cash dividends on the Dura Common Stock. In
accordance with a bank loan agreement, Dura is prohibited from paying cash
dividends without prior bank approval. Dura currently anticipates that it will
retain all available funds for use in its business and does not expect to pay
any cash dividends in the foreseeable future.

It is not expected that Spiros Corp. II will pay any dividends to
stockholders for the foreseeable future. The Amended and Restated Certificate of
Incorporation of Spiros Corp. II provides that until the Purchase Option is
exercised or terminates unexercised, Spiros Corp. II is not permitted to pay
dividends to holders of Spiros Corp. II Common Stock without the approval of
holders of a majority of the Special Shares.

31
<PAGE>
DURA CAPITALIZATION

The following table sets forth the capitalization of the Dura at September
30, 1997 on an actual basis and on a "pro forma as adjusted" basis, assuming
consummation of the Spiros Corp. Purchase for an aggregate purchase price of
$45.7 million, paid by Dura through the issuance of 936,614 shares of Dura
Common Stock, and the Contribution. The Spiros Corp. Purchase will result in a
one-time charge to Dura's earnings in the period in which the purchase is closed
relating to the acquisition of in-process research. The charge will approximate
the purchase price. The Contribution will result in a one-time charge of $75
million to Dura's earnings in the period in which it occurs.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
--------------------------
PRO FORMA
ACTUAL AS ADJUSTED(2)
---------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and short-term investments..................................... $ 454,710 $ 384,561
---------- --------------
---------- --------------
Current portion of long-term obligations.............................................. $ 2,948 $ 2,948
---------- --------------
---------- --------------
Long-term obligations (excluding current portion of long-term obligations)............ $ 7,035 $ 7,035
Convertible subordinated notes........................................................ 287,500 287,500
---------- --------------
294,535 294,535
---------- --------------
Shareholders' equity:
Preferred stock; 5,000,000 shares authorized; no shares issued or outstanding....... -- --
Common stock; 100,000,000 shares authorized; 43,890,806 shares outstanding actual;
44,827,420 outstanding pro forma as adjusted(1)................................... 44 45
Additional paid-in capital.......................................................... 533,003 578,709
Accumulated deficit................................................................. (49,597) (169,134)
Unrealized gain on investments...................................................... 195 195
Warrant subscriptions receivable.................................................... (1,348) --
---------- --------------
Total shareholders' equity........................................................ 482,297 409,815
---------- --------------
Total capitalization.............................................................. $ 776,832 $ 704,350
---------- --------------
---------- --------------
</TABLE>

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

(1) Excludes (a) 3,371,141 shares of Dura Common Stock issuable upon the
exercise of options outstanding at September 30, 1997 under the Dura's stock
option plan, (b) 1,436,033 shares of Dura Common Stock available for future
grants under such plan and (c) 3,856,014 shares of Dura Common Stock
issuable upon exercise of warrants outstanding at September 30, 1997. Also
excludes 5,677,891 shares of Dura Common Stock issuable upon conversion of
the Notes. See "Description of Dura Capital Stock."

(2) Pro Forma As Adjusted amounts reflect the Spiros Corp. Purchase and the
Contribution as if those transactions occurred on September 30, 1997. No
adjustment has been made to give effect to the Offerings. The Offerings will
result in an increase to additional paid-in capital in an amount equal to
the value of the Warrants as determined at the time of their issuance, and
an offsetting increase to the warrant subscriptions receivable contra equity
account.

32
<PAGE>
SPIROS CORP. II CAPITALIZATION

The following table sets forth the capitalization of Spiros Corp. II as of
September 30, 1997 and as adjusted to reflect the issuance of the Units and the
Contribution.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
------------------------
<S> <C> <C>
AS
ACTUAL ADJUSTED(2)(3)
--------- -------------
(DOLLARS IN THOUSANDS)
Callable common stock, par value $.001 per share; no shares authorized, issued and
outstanding actual; 6,500,000 shares authorized, 4,687,500 shares issued and
outstanding as adjusted................................................................ $ -- $ 5
Common stock, par value $1.00 per share; 1,000 shares authorized; 1,000 shares issued and
outstanding actual and as adjusted(1).................................................. 1 1
Additional paid-in capital............................................................... -- 144,145
--------- -------------
Total capitalization................................................................... $ 1 $ 144,151
--------- -------------
--------- -------------
</TABLE>

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

(1) Held by Dura and to be renamed Special Common Stock immediately prior to the
closing of the Offerings.

(2) Does not include the effect of amounts payable by Spiros Corp. II to Dura
under the Development Agreement for research and development costs relating
to the Spiros Products and the Core Technology incurred by Dura from October
10, 1997 through the date of the closing of the Offerings (currently
estimated to be $4 million).

(3) Adjusted to give effect to (a) the assumed issue of 4,687,500 Units for
proceeds of $75 million, assuming an offering price of $16.00 per Unit, net
of underwriting discounts and commissions and estimated expenses of the
Offerings aggregating $5.8 million, and (b) the Contribution.

33
<PAGE>
BUSINESS OF SPIROS CORP. II

BACKGROUND

Spiros Corp. is a separate company formed in December 1995 to fund the
development of Spiros with certain asthma drugs. Spiros Corp. has used
substantially all of the $28 million in financing that it raised and a $13
million contribution from Dura to finance the development of Spiros and certain
compounds for use in Spiros. On or prior to the closing of the Offerings, Dura
will purchase all of the common stock of Spiros Corp. for an aggregate purchase
price estimated to be $45.7 million, payable in cash, shares of Dura Common
Stock or any combination thereof, at Dura's sole discretion. Prior to the
formation of Spiros Corp., DDSI was organized as a separate entity responsible
for Spiros development. DDSI spent approximately $23 million for the development
of Spiros before being acquired by Dura in December 1995.

Spiros Corp. II was formed in September 1997 to continue to fund the
development of Spiros and to conduct formulation work, clinical trials, and
commercialization for four leading asthma drugs (albuterol, beclomethasone,
ipratropium and budesonide) and certain combinations and alternative
formulations thereof for use in Spiros. Spiros Corp. II may also expend funds on
enhancements to the existing Spiros technology, initial development of a next
generation inhaler system and the acquisition of capital equipment to be used in
the manufacture of the Spiros Products. Finally, Spiros Corp. II plans to use a
portion of its funding to conduct technical evaluation projects designed to
identify additional respiratory drug candidates for further development in
Spiros.

Spiros Corp. II is the exclusive licensee of Dura to employ the Spiros
technology to make, use, sell and import the Spiros Products throughout the
world (except with respect to beclomethasone in certain areas of Asia). Dura
will be primarily responsible for the marketing and manufacturing of the Spiros
Products, to the extent any such products are commercialized prior to the
expiration of the Purchase Option. Spiros Corp. II is not expected to have its
own research, development, clinical, licensing, administration, manufacturing or
marketing employees or facilities and thus will be entirely dependent on Dura in
these areas.

Through acquisition of complementary products and businesses and through
internal research and development collaborations, Dura seeks to expand its
product line with proprietary specialty respiratory pharmaceutical products.
Dura believes that the research and development work performed to date by Spiros
Corp. and DDSI and the research and development work it has undertaken on
Spiros, directly and through collaborators, have yielded results which justify
further research and development. However, a substantial amount of additional
research and development effort is required to further develop the Spiros
technology through to its potential commercialization. Management of Dura
determined to undertake such research and development through Spiros Corp. II
because such opportunities involve significantly different risk/reward profiles
as compared to Dura's established specialty pharmaceutical business. Dura
believes that the arrangements with Spiros Corp. II will significantly benefit
Dura and its stockholders by: (i) separating the risks associated with
researching, developing and commercializing products based on the Spiros
technology from those associated with Dura's established business; (ii)
obtaining for Dura the exclusive right to commercialize worldwide any
successfully developed Spiros Product, assuming Dura's exercise of the Albuterol
Option, the Product Option or the Purchase Option, thereby making it possible
for Dura to capture a potentially greater return on the products developed by
Spiros Corp. II than would otherwise be possible from products developed for
commercialization in conjunction with or by third parties; and (iii) allowing
Dura's near-term financial results to continue to reflect principally its
established business, by providing Dura with research and development revenues
from Spiros Corp. II to reimburse Dura for research and development costs
incurred by Dura.

ASTHMA AND COPD MARKET

Asthma is a complex physiological disorder characterized by airway
hyperactivity to a variety of stimuli such as dust, pollen, stress or physical
exercise, resulting in airway obstruction that is partially or

34
<PAGE>
temporarily reversible. The number of people with asthma has grown steadily in
recent years and is now believed to be over 200 million worldwide. COPD is a
complex condition comprising a combination of chronic bronchitis, emphysema and
airway obstruction. The worldwide combined market for therapeutic drugs to treat
asthma and COPD was approximately $7.5 billion in 1996. The primary categories
of therapeutic drugs used in the treatment of asthma and COPD include
bronchodilators and anti-inflammatories. Bronchodilators dilate the airways and
include beta agonists (such as albuterol and bitolterol), xanthines (such as
theophylline) and anticholinergics (such as ipratropium). Anti-inflammatories
reduce inflammation and include steroids (such as beclomethasone, budesonide,
flunisolide and triamcinolone).

PULMONARY DRUG DELIVERY SYSTEMS

Inhaled therapeutic drugs have been shown to be effective in treating or
preventing the symptoms of asthma, COPD and other respiratory diseases. When
treating respiratory diseases, inhalation delivery puts the drug directly into
the lung for topical treatment. If administered in capsule, tablet or liquid
form, rather than through inhalation, the patient must take sufficient drug to
achieve a systemic therapeutic blood level to benefit the lungs. In many
instances, this may cause serious side effects by impacting other organs.
Because inhaled therapy delivers the drug directly into the lung, it provides
comparable efficacy with less risk of systemic side effects at greatly reduced
dosages. Inhalation delivery also yields a fast onset of action, hastening the
time for patient relief.

TRADITIONAL INHALATION DELIVERY DEVICES

Traditional delivery systems used for administering inhaled drugs include
the following:

JET NEBULIZERS

Jet nebulizers aerosolize a liquid solution of medicine, either
ultrasonically or with compressed air, creating a fine mist that patients inhale
slowly over several minutes. Jet nebulizers are larger than other inhalation
delivery systems and because of their size, are primarily used to deliver
aerosol to hospitalized patients, patients with acute asthma exacerbation in a
clinic or emergency room environment, and patients unable to coordinate the use
of other inhalation delivery technology.

METERED DOSE INHALERS

MDIs are the most popular inhalation delivery system due to their relative
convenience and portability. MDIs consist of a suspension or solution of drug
filled into a canister which is sealed with a metering valve and pressurized
using a propellant, most commonly a chlorofluorocarbon ("CFC"). Because MDIs
contain an internal energy source, the CFCs, the operation is relatively flow
rate independent, and the dose exiting the MDI is relatively consistent.
However, it is estimated that only 10 to 20 percent of the dose from an MDI
actually deposits in the lung. The variation in lung deposition is in large part
reflected by the inability of most patients to coordinate actuation of the
system with inhalation.

DRY POWDER INHALERS

DPIs represent a significant advancement in the development of inhalation
delivery systems. Dry powder inhalers are relatively convenient and portable,
and are CFC-free. DPIs are breath actuated, so they eliminate the need for
hand-lung coordination associated with MDIs. Although DPIs overcome the need for
coordination of actuation and inspiration, currently marketed DPIs require high
inspiratory flow rates and the ultimate dose delivered to the patient is
dependent on inspiratory flow rate. This high inspiratory flow rate is difficult
to achieve for pediatrics, geriatrics and patients in acute respiratory
distress.

35
<PAGE>
SPIROS

Spiros is a proprietary pulmonary drug delivery system that is designed to
aerosolize pharmaceuticals in dry powder formulations for delivery to the lungs
while providing certain advantages over traditional pulmonary delivery systems.
Spiros Corp. II believes new inhalation systems will gradually replace MDIs as
the leading pulmonary delivery systems, due primarily to the phasing out of CFCs
and coordination problems associated with many MDIs. Many companies are studying
alternative propellants, such as hydrofluorocarbons ("HFAs"), for use in MDIs,
and the first albuterol MDI using an HFA propellant has obtained FDA approval
and is being marketed by Schering-Plough. However, Spiros Corp. II believes that
any product utilizing alternative propellants will still suffer from many of the
limitations of currently marketed MDIs, including the need for patients to
coordinate breathing with actuation of the drug delivery system. There are
currently two general classes of DPIs in commercial use worldwide, individual
and multiple dose systems, and both are breath powered and inspiratory flow rate
dependent. In the U.S., only individual dose DPIs are currently marketed.
Turbuhaler, a multiple dose DPI, is the leading DPI in worldwide sales and was
approved by the FDA for marketing in the U.S. in June 1997.

POTENTIAL ADVANTAGES OF SPIROS. Spiros Corp. II believes Spiros may have
certain advantages over other currently used methods of pulmonary drug delivery
including:

INSPIRATORY FLOW RATE INDEPENDENCE. Spiros is designed to deliver a
relatively consistent drug dose to the lungs over a wide range of
inspiratory flow rates, which can vary depending on a patient's health,
effort or physical abilities. Tests of Spiros on human subjects have shown a
relatively consistent and significant level of drug deposition throughout
the clinically relevant inspiratory range. Existing DPIs can vary
significantly in their level of drug deposition depending on the patient's
inspiratory flow rate and can deliver significantly less drug at the lower
flow rates typically associated with asthma attacks.

MINIMUM NEED FOR PATIENT COORDINATION. Spiros is breath-actuated and
does not require the user to coordinate inhalation and actuation of the drug
delivery system. MDIs generally require the user to coordinate their
breathing with actuation of the MDI. Studies indicate that a significant
percentage of patients, particularly young children and the elderly, do not
use MDIs correctly. Spiros is designed to solve these coordination problems
by delivering the drug to patient's lungs as they inhale.

REDUCED SIDE EFFECTS. Spiros is designed to efficiently deliver drugs
to the lungs, thereby reducing drug deposition to the mouth and throat which
could reduce the possibility of unwanted side effects of certain
pharmaceutical agents, such as coughing and local irritation. With MDIs, a
significant portion of the dose is delivered to the mouth and throat and is
swallowed.

PATIENT CONVENIENCE. Spiros is designed to be convenient for patients,
with features such as breath actuation (Spiros is triggered by inhalation),
portability (light weight and small size), quick delivery time, simple
operation, dose delivery feedback and multi-dose capability. Spiros also
allows the patient to see the actual number of doses remaining in a cassette
or blister pack and an LED light provides a warning of the need to replace
Spiros prior to the end of its useful life.

FREE OF CHLOROFLUOROCARBON PROPELLANTS. CFC propellants have ozone
destructive characteristics and are subject to worldwide regulations aimed
at eliminating their usage within the decade. Spiros does not use CFCs while
most MDIs, currently the most popular form of aerosol drug delivery, use
CFCs. Virtually all of the world's industrial nations, under the auspices of
the United Nations Environmental Program, have pledged to cease use of CFCs
by the year 2000. Continued use of CFCs in medical products has been
permitted under annual exemptions. As a result of the planned phase out of
CFCs, Spiros Corp. II believes that DPIs will become a leading method for
pulmonary drug delivery.

36
<PAGE>
CORE SPIROS TECHNOLOGY

The core technology contained in Spiros which gives rise to the flow rate
independent delivery is an aerosol generator that uses electromechanical energy
to disperse dry powder to form an aerosol for inhalation. The main components of
the aerosol generator include the impeller, the motor, the breath actuated
switch, and the dosing chamber. When the switch is activated, the electric
circuit is completed and the impeller rotates. The action of the impeller on the
dry powder formulation supplies the energy to disperse the drug and provide a
zero-velocity cloud of aerosolized drug for inhalation. The cloud of aerosolized
drug is suspended in the dosing chamber and is delivered to the lungs only as
the patient inhales.

Two separate Spiros systems are currently under development, both utilizing
the same core technology with distinct powder storage systems ("PSS"). Because
of the physical and chemical requirements of the specific drugs deliverable by
Spiros, as well as the varying needs of the patients and marketplace, Spiros
Corp. II believes that its cassette and blisterdisk systems will provide
flexibility for delivery of many different types of drugs.

CASSETTE SYSTEM

The cassette system was the first Spiros system developed and has been
utilized in all clinical testing of Spiros conducted to date. The PSS in this
system is a 30-dose plastic cassette packed in a foil pouch. In order to take a
dose using the cassette system, the patient first opens the lid of the Spiros
generator to load the cassette. When the lid is closed the cassette rotates to
deliver a dose of drug into the dosing chamber. The dosing chamber contains the
impeller. When the patient inhales through the mouthpiece, the impeller is
automatically activated. The action of the impeller on the powder in the chamber
generates the aerosol which the patient inhales. The patient then closes the
lid. When the 30-dose cassette is empty, the patient opens the lid and presses
an ejection button on the bottom of the system to remove an empty cassette and
load a new cassette.

The Spiros cassette system has been produced in clinical trial quantities
and is being used in ongoing clinical trials of albuterol and beclomethasone.
Dura is currently working with outside vendors on Spiros Corp. II's behalf to
produce the necessary tooling for commercial scale production.

BLISTERDISK SYSTEM

Once a cassette is removed from the foil package it is no longer protected
from fluctuations in the relative humidity. Although some drugs and powder
formulations are sufficiently stable using the cassette system, many other dry
powders are sensitive to relative humidity. In those cases, exposure to moisture
causes agglomeration of the powder which can no longer be readily aerosolized to
the required aerodynamic diameter. The blisterdisk system is being developed for
drugs that require a barrier against moisture or light. This system utilizes
powder-filled sealed foil blisters which prevent moisture build-up into the
powder. The blisterdisk system has been designed to contain 16 doses per
blisterdisk and is believed to be sufficiently flexible to accommodate a wide
variety of drugs. In order to take a dose using the blisterdisk system, the
patient will open the mouthpiece cover, push a button to open the blister and
inhale through the mouthpiece to actuate the impeller and aerosolize the dose.
As the patient closes the mouthpiece cover, the next blister is advanced to the
dosing position.

The Spiros blisterdisk system design has evolved to the prototype stage and
units that are suitable for laboratory testing have been produced. Further
refinements in the design of this system aimed at producing units suitable for
clinical trials are in progress.

37
<PAGE>
SPIROS PRODUCTS IN DEVELOPMENT

Spiros Corp. II has selected five compounds to develop for delivery through
Spiros: a beta-agonist (albuterol), two steroids (beclomethasone and
budesonide), an anticholinergic (ipratropium) and a combination of a
beta-agonist and an anticholinergic (albuterol-ipratropium). There can be no
assurance that the pharmaceutical products currently in development by Spiros
Corp. II or that any products that may be developed in the future will be
approved by the FDA. In addition, there can be no assurance that FDA review or
other actions will not involve delays that could adversely affect the time to
market and the sale of the products.

ALBUTEROL

Albuterol, a beta-agonist, provides rapid symptomatic relief of reversible
bronchospasm. When administered by inhalation, it produces significant
bronchodilation promptly and its effects are demonstrable for a number of hours.
Albuterol is the most widely accepted asthma medication in the world. The
leading branded MDI products are Proventil, sold by Schering-Plough, and
Ventolin, sold by Glaxo. In 1996, U.S. sales of albuterol were approximately
$700 million as measured by average wholesale prices.

In 1994, an IND application was filed with the FDA to begin clinical testing
of an albuterol dry powder formulation with the Spiros cassette system. In April
1996, dosing of subjects in a clinical trial focusing on dose selection using a
formulation of powdered albuterol with Spiros was completed. In March 1997,
patient dosing was completed in long-term and short-term pivotal clinical trials
In November 1997, Dura announced, on behalf of Spiros Corp., that it had
submitted an NDA with the FDA for albuterol in the Spiros cassette system. The
NDA includes the results of clinical trials that were designed to demonstrate
comparability of the Spiros delivery system to a leading branded albuterol MDI
product. Three pivotal studies in addition to a number of dose finding and
performance verification studies were conducted for the submission.

An open label study of albuterol in the Spiros cassette system is currently
in progress. Interim results of this study were provided to the FDA in the NDA
and results of the full study must be submitted to and reviewed by the FDA prior
to product approval. Dura is planning market launch of albuterol in the Spiros
cassette system in late 1998 or early 1999, pending FDA approval. There can be
no assurance of receipt of FDA approval in a timely manner, if at all.

BECLOMETHASONE

Beclomethasone is a steroid used to treat the inflammatory component of
asthma and certain symptoms of COPD. Systemic side effects resulting from the
inhalation of beclomethasone are less than those that occur with steroids taken
in capsule, tablet or liquid form. Beclomethasone was first launched in MDI form
as Vanceril by Schering-Plough and later as Beclovent by Glaxo. In 1996, U.S.
sales of beclomethasone were approximately $205 million as measured by average
wholesale prices.

In the first quarter of 1997, Dura completed, on behalf of Spiros Corp.,
dose ranging studies of a one dosage strength of beclomethasone in the Spiros
cassette system under an IND, and preparations for Phase III pivotal clinical
trials to demonstrate safety and efficacy have been initiated.

IPRATROPIUM

Ipratropium is an anticholinergic bronchodilator. Ipratropium is most
commonly prescribed for the long term management of COPD (including chronic
bronchitis and emphysema) and for the treatment of asthmatic patients who are
poorly controlled by, or who experience troublesome side effects from, beta-
agonists such as albuterol. Ipratropium acts at a site that is different from
the site where beta-agonists act and thus affords an alternative approach to the
treatment of airway obstruction. Ipratropium in MDI form

38
<PAGE>
is marketed as Atrovent by Boehringer Ingelheim. In 1996, U.S. sales of
ipratropium were approximately $200 million as measured by average wholesale
prices.

Dura, on behalf of Spiros Corp., has conducted initial preclinical
formulation studies using ipratropium in order to demonstrate that delivery via
Spiros is feasible. Spiros Corp. II currently anticipates that ipratropium will
be the first compound formulated for delivery through the Spiros blisterdisk
system. In 1998, Spiros Corp. II plans to begin product development for a
formulation of ipratropium to be delivered using Spiros.

ALBUTEROL-IPRATROPIUM COMBINATION

Albuterol and ipratropium are frequently prescribed in combination for
patients with COPD or asthma. Boehringer Ingelheim has marketed an
albuterol-ipratropium combination product, Combivent, outside of the U.S. for a
number of years. Combivent was approved for marketing in the U.S. in early 1997
and has recently been launched in MDI form by Boehringer Ingelheim.

Based on the substantial work performed with albuterol and the feasibility
study conducted with ipratropium, Spiros Corp. II believes that developing an
albuterol-ipratropium formulation for delivery using Spiros will be feasible and
intends to commence the development of this formulation in 1998.

BUDESONIDE

Budesonide is a new generation steroid used to treat the inflammatory
component of asthma. Budesonide has been marketed in several dosage forms
outside of the U.S., but to date, has only been available in the U.S. in nasal
spray form. However, in June 1997, the FDA approved for marketing in the U.S. a
dry powder formulation of budesonide for delivery through Astra Pharmaceutical's
Pulmicort Turbuhaler. In 1996, worldwide sales of budesonide were estimated to
be greater than $600 million as measured by average wholesale prices.

In 1998, Spiros Corp. II expects to begin formulation of budesonide for
delivery through Spiros.

OTHER PRODUCT DEVELOPMENT EFFORTS

The Board of Directors of Spiros Corp. II has the right, with the consent of
Dura, to select additional Designated Compounds for the treatment of respiratory
diseases, including asthma, allergy, cystic fibrosis or respiratory infection
for delivery using Spiros. See "The Agreement and the Purchase Options--
Technology License Agreement."

In the event that Spiros Corp. II obtains the rights to any Designated
Compounds, Spiros Corp. II will conduct technical evaluations of the applicable
compounds as candidates for delivery through Spiros. Technical evaluations will
generally include patent evaluation, establishment of analytical methods,
micronization of drug substance, preliminary formulation development,
preliminary aerosol characterization, preliminary stability evaluation and
animal bioavailability, efficacy and toxicology evaluation. Technical
evaluations may also include initial safety and efficacy studies in humans.

In the event that additional funds become available to Spiros Corp. II,
whether through the exercise of the Albuterol Option or the Product Option, such
funds will become part of the Available Funds, and a portion of such funds may
be used for additional development of a next generation inhaler system and
certain other enhancements to the existing Spiros technology and to fund the
acquisition of capital equipment to be used to manufacture the Spiros Products.

39
<PAGE>
SALES AND MARKETING

Spiros Corp. II will rely entirely on Dura under the Manufacturing and
Marketing Agreement for its sales and marketing efforts. Under the Manufacturing
and Marketing Agreement, Dura will submit an annual marketing plan to be
approved by Spiros Corp. II. See "Business of Dura--Sales and Marketing."

SPIROS CORP. II BUDGET

The following is a preliminary budget of anticipated expenditures by Spiros
Corp. II for research, clinical development, product development and
commercialization. Due to the late stage in the development of certain of the
Spiros Products, most of the funds are expected to be expended for clinical
trials, product development and initial commercialization. If the Underwriters'
over-allotment option is exercised, amounts to be spent under the Development
Agreement will be increased. Substantial additional funding will still be
required for the development of certain Spiros Products and for the
commercialization of the Spiros Products. Due to the long-range nature of the
development plans, Spiros Corp. II, in consultation with Dura, reserves the
right to reallocate funds as it deems appropriate. See "Use of Proceeds."

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
(3 MONTHS) (4 MONTHS)
1997 1998 1999 2000 2001 TOTAL
------------- --------- --------- --------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Products
Albuterol....................................... $ 3.4 $ 27.3 $ -- $ -- $ -- $ 30.7
Beclomethasone.................................. 1.6 9.1 6.0 0.3 -- 17.0
Budesonide...................................... -- 4.6 15.2 11.1 5.2 36.1
Ipratropium..................................... -- 9.5 16.1 6.0 -- 31.6
Albuterol-Ipratropium........................... -- 6.5 11.2 7.1 3.0 27.8
Other Expenditures................................ -- 1.4 4.0 3.0 -- 8.4
General and administrative expenses............... -- 0.4 0.4 0.4 0.4 1.6
--- --------- --------- --------- ----- ---------
Total............................................. $ 5.0 $ 58.8 $ 52.9 $ 27.9 $ 8.6 $ 153.2
--- --------- --------- --------- ----- ---------
--- --------- --------- --------- ----- ---------
</TABLE>

COMPETITION

There are at least 10 companies currently involved in the development,
marketing or sales of dry powder pulmonary drug delivery systems. There are two
types of DPIs currently in commercial use worldwide. In the U.S., only
individual dose DPIs currently are marketed, including the Rotohaler (developed
and marketed by Glaxo) and the Spinhaler (developed and marketed by Fisons
Limited). The Turbuhaler (developed and marketed by Astra Pharmaceuticals), a
multiple dose DPI, is the leading DPI in worldwide sales. In June 1997, the FDA
approved the first Turbuhaler product, the Pulmicort Turbuhaler, for marketing a
dry powder formulation of budesonide in the U.S.

Many of these companies, including large pharmaceutical firms with financial
and marketing resources and development capabilities substantially greater than
those of Spiros Corp. II and Dura, are engaged in developing, marketing and
selling products that compete with the proposed products of Spiros Corp. II. In
addition, Dura may develop or acquire products which may compete with Spiros
Products. Further, other products now in use or under development by others may
be more effective than Spiros Corp. II's current or future products. The
industry is characterized by rapid technological change, and competitors may
develop their products more rapidly than Dura and Spiros Corp. II. Competitors
may also be able to complete the regulatory process sooner, and therefore, may
begin to market their products in advance of Dura's and Spiros Corp. II's
products. Dura and Spiros Corp. II believe that competition among both
prescription pharmaceuticals and pulmonary delivery systems will be based on,
among other things, product efficacy, safety, reliability, availability and
price.

40
<PAGE>
GOVERNMENT REGULATION

For a discussion of governmental regulations applicable to Spiros Corp. II,
see "Business of Dura-- Government Regulation."

MANUFACTURING

A substantial amount of the work under the Development Agreement and the
Manufacturing and Marketing Agreement will be conducted at Dura's facilities.
See "Business of Dura--Manufacturing" and "Business of Dura--Facilities." Dura
believes that its available facilities are sufficient to satisfy its obligations
for performance under the Development Agreement and the Manufacturing and
Marketing Agreement. However, the same facilities may be used by Dura for work
performed on its own account and in the performance of third party contracts.

PATENTS

Dura presently holds five U.S. patents and four U.S. patent applications
relating to the Spiros technology to be further developed by Spiros Corp. II.
The issued patents include a patent with claims covering the use in Spiros of an
impeller to create an aerosol cloud of a drug intended for inhalation, which
expires in 2011. Dura has also filed certain continuations in part and foreign
patent applications relating to Spiros. All of the above patents and patent
applications, relating to the Spiros technology, together with their respective
continuations in part and foreign patent applications, have been licensed to
Spiros Corp. II pursuant to the Technology Agreement. Until the expiration or
termination of the Purchase Option, Dura is required to file patent
applications, at Spiros Corp. II's expense, with respect to inventions included
in the Program Technology. Dura will be the owner and Spiros Corp. II will be
the exclusive licensee for use with the Spiros Products of any patents included
in the Program Technology. See "Risk Factors--Business Risks Related to Spiros
Corp. II and Dura--Uncertainty Regarding Patents and Proprietary Technology;
Unpredictability of Patent Protection," and "The Agreements and the Purchase
Options--Technology Agreement."

Spiros Corp. II and Dura consider the protection of discoveries in
connection with their development activities important to their respective
businesses. Spiros Corp. II and Dura intend to seek patent protection in the
U.S. and selected foreign countries where deemed appropriate. There can be no
assurance that issued patents or subsequent patents, if issued, will adequately
protect Spiros Corp. II or Dura or that such patents will provide protection
against infringement claims by competitors. Dura has also filed certain foreign
patent applications relating to Spiros technology. There can be no assurance
that additional patents, U.S. or foreign, will be obtained covering the Spiros
Products or Dura products or that, if issued or licensed, the patents covering
such products will provide substantial protection or be of commercial benefit.
Federal court decisions establishing legal standards for determining the
validity and scope of patents in the field are in transition. There can be no
assurance that the historical legal standards surrounding questions of validity
and scope will continue to be applied or that current defenses as to issued
patents in the field will offer protection in the future.

Both Spiros Corp. II and Dura also rely upon trade secrets, unpatented
proprietary know-how and continuing technological innovation to develop their
respective competitive positions. Dura enters into confidentiality agreements
with certain of its employees pursuant to which such employees agree to assign
to Dura any inventions relating to Dura's business made by them while in Dura's
employ. There can be no assurance, however, that others may not acquire or
independently develop similar technology or, if patents are not issued with
respect to products arising from research, that Spiros Corp. II or Dura will be
able to maintain information pertinent to such research as proprietary
technology or trade secrets.

In connection with one of the patents described above, in 1993, Dura entered
into an agreement (the "1993 Royalty Agreement") with the principal inventor
thereof which, among other things, provides compensation to the inventor over
the life of the patent which is linked to annual sales of products related

41
<PAGE>
to such patent. Such compensation amounts to approximately $1 million of the
first $50 million of annual sales of such products, and $1 million of the next
$100 million of annual sales, with a maximum aggregate compensation of $6
million.

EXECUTIVE OFFICERS AND DIRECTORS

The following table provides information concerning the current officers and
directors of Spiros Corp. II. The current officers and directors of Spiros Corp.
II are also officers, directors and/or employees of Dura. Subsequent to the
consummation of the Offerings, it is anticipated that the current directors
will, pursuant to delegated authority from the existing stockholder, appoint
independent directors such that independent directors will constitute a majority
of the board. As the holder of the Special Shares, Dura has the right to elect
two directors (the "Special Directors"). The Special Directors represent the
interest of the holder of Special Shares. All other directors (the "Common
Directors") represent the interests of the other stockholders and in the future
will be elected by the holders of Spiros Corp. II Common Stock. Spiros Corp. II
has no employees other than its three executive officers who are full-time
employees, officers and/or directors of Dura.

<TABLE>
<CAPTION>
NAME POSITION WITH SPIROS CORP. II AGE ON SEPTEMBER 30, 1997
- ------------------------------------------ ------------------------------------------- -----------------------------
<S> <C> <C>
David S. Kabakoff......................... Chairman, President and 49
Chief Executive Officer

Cam L. Garner............................. Director 49

Erle T. Mast.............................. Vice President, Chief Financial Officer 35

Mitchell R. Woodbury...................... Secretary 55
</TABLE>

David S. Kabakoff has served as the Chairman and President and Chief
Executive Officer of Spiros Corp. II since its formation in September 1997. Dr.
Kabakoff also has served as a director and Executive Vice President of Dura and
as President and Chief Executive Officer and a director of Spiros Corp. since
1996. From 1989 to 1996, Dr. Kabakoff was employed by Corvas International,
Inc., a biopharmaceutical company, and served in a number of capacities during
that time period, including Chief Executive Officer, President, Chief Operating
Officer and Chairman of the Board. From 1983 to 1989, Dr. Kabakoff was employed
by Hybritech, most recently as Senior Vice President of Research and
Development-Diagnostics. Dr. Kabakoff received a Ph.D. in Organic Chemistry from
Yale University and a B.A. in Chemistry from Case Western Reserve University.

Cam L. Garner has served as a director of Spiros Corp. II since its
formation in September 1997. Mr. Garner also has served as the President and
Chief Executive Officer of Dura since 1990 and was named Chairman of Dura's
Board of Directors in 1995. Prior to joining Dura, Mr. Garner served as
President of Syntro Corporation, a biotechnology company, from 1987 to 1989. Mr.
Garner currently serves as a director of the following companies: Safeskin
Corporation, CardioDynamics International Corporation and Trega Biosciences,
Inc. ("Trega"). Mr. Garner received an MBA from Baldwin-Wallace College and a
B.S. in Biology from Virginia Wesleyan College.

Erle T. Mast has served as Vice President and Chief Financial Officer of
Spiros Corp. II since September 1997. Mr. Mast also has served as Vice
President, Finance of Dura since February 1997. From 1984 through 1997, Mr. Mast
served in various positions at Deloitte & Touche LLP, an accounting and
consulting firm, most recently as a partner where Mr. Mast specialized in
providing accounting, auditing and business consulting services to companies in
various industries, including the healthcare and life science industries. Mr.
Mast received a B.A. in Business Administration from California State University
at Bakersfield.

Mitchell R. Woodbury has served as Secretary of Spiros Corp. II since
September 1997. Mr. Woodbury also served as Vice President, General Counsel and
Secretary of Dura from June 1994 until

42
<PAGE>
January 1997, and since January 1997 has served as Senior Vice President,
General Counsel and Secretary of Dura. Prior to joining Dura, Mr. Woodbury
served as Vice President, General Counsel and Secretary at Advance Tissue
Sciences, Inc., a biomedical company. From October 1981 until June 1992, Mr.
Woodbury served as Senior Vice President, General Counsel of Intermark, Inc., a
publicly held operating/holding company. He was elected Vice President and
Corporate Counsel of Intermark in 1980 and had served as Corporate Secretary
since 1981. Mr. Woodbury received his J.D. from the University of San Diego
School of Law and a B.A. in Business Administration from San Diego State
University.

Shortly after the completion of the Offerings, Spiros Corp. II intends to
appoint three additional directors to its Board of Directors so that a majority
of the members will be persons unaffiliated with Dura.

1997 STOCK OPTION PLAN

Spiros Corp. II's 1997 Stock Plan (the "Plan") was adopted by the board of
directors of Spiros Corp. II on October 17, 1997 and approved by the stockholder
of Spiros Corp. II on October 17, 1997. The Plan will become effective on the
date the Spiros Corp. II Common Stock is registered under Section 12 of the
Exchange Act in connection with this Offerings.

A reserve of 450,000 shares of Spiros Corp. II Common Stock has been
authorized for issuance pursuant to stock option grants made from time to time
under the Plan. In no event, however, may any one participant in the Plan
receive stock option grants for more than 100,000 shares of Spiros Corp. II
Common Stock per calendar year.

Under the Plan, eligible individuals in Spiros Corp. II's employ or service
(including officers, non-employee board members and consultants) may, at the
discretion of the Plan Administrator, be granted options to purchase shares of
Spiros Corp. II Common Stock at an exercise price not less than 100% of their
fair market value on the grant date. The Plan will be administered by the
Compensation Committee of the board of directors, and the Compensation Committee
in its capacity as Plan Administrator will have complete discretion to determine
which eligible individuals are to receive option grants under the Plan, the time
or times when such option grants are to be made, the number of shares subject to
each such grant, the status of any granted option as either an incentive stock
option or a non-statutory stock option under the Federal tax laws, the vesting
schedule to be in effect for the option grant and the maximum term for which any
granted option is to remain outstanding. However, administration of the Plan
with respect to individuals who are not subject to the short-swing liability
provisions of Section 16 of the Exchange Act may be delegated to a secondary
committee of one or more board members appointed by the board of directors.

It is anticipated that the options to be granted under the Plan will
generally become exercisable upon the optionee's completion of five years of
employ or service (including as an officer, non-employee board member or
consultant) with Spiros Corp. II. However, if Dura exercises the Purchase
Option, then all options outstanding under the Plan at that time will
immediately vest and become exercisable for all the option shares. No option
grant will have a term in excess of 10 years and options will be subject to
earlier termination following the optionee's cessation of service with Spiros
Corp. II.

The exercise price for the shares of Spiros Corp. II Common Stock subject to
option grants made under the Plan may be paid in cash or in shares of Spiros
Corp. II Common Stock valued at fair market value on the exercise date. The
option may also be exercised through a same-day sale program without any cash
outlay by the optionee. The Plan Administrator may also permit one or more
holders of non-statutory stock options to satisfy the withholding tax liability
incurred in connection with the exercise of those options by having Spiros Corp.
II withhold a portion of the purchased shares with a market value equal to such
liability.

The Plan Administrator will have the authority to effect the cancellation of
outstanding options under the Plan in return for the grant of new options for
the same or different number of option shares with an

43
<PAGE>
exercise price per share based upon the fair market value of the Spiros Corp. II
Common Stock on the new grant date.

In the event that Spiros Corp. II is acquired by merger or asset sale, each
outstanding option under the Plan will automatically accelerate in full and
become immediately exercisable for all the shares of Spiros Corp. II Common
Stock at the time subject to that option, unless the option is to be assumed by
the successor corporation. The Plan Administrator will have complete discretion
to grant one or more options under the Plan which will become immediately
exercisable for all the option shares in the event those options are assumed in
the acquisition and the optionee's service with Spiros Corp. II or the acquiring
entity terminates within a designated period following such acquisition. The
Plan Administrator will also have the authority to grant options which will
immediately vest upon an acquisition of Spiros Corp. II, whether or not those
options are assumed by the successor corporation. Finally, the Plan
Administrator will have the discretionary authority to structure one or more
option grants so that those options will immediately vest in connection with a
change in control of Spiros Corp. II (whether by successful tender offer for
more than 50% of the outstanding voting stock or a change in the majority of the
board of directors by reason of one or more contested elections for board
membership), with such vesting to occur either at the time of such change in
control or upon the subsequent termination of the individual's service within a
designated period following such change in control.

The board of directors may amend or modify the Plan at any time, subject to
any required stockholder approval. The Plan will terminate on the earliest of
(i) October 31, 2007, (ii) the date on which all shares available for issuance
under the Plan have been issued as fully-vested shares or (iii) the termination
of all outstanding options in connection with certain changes in control or
ownership of Spiros Corp. II.

44
<PAGE>
BUSINESS OF DURA

OVERVIEW

Dura is a specialty respiratory pharmaceutical and pulmonary drug delivery
company. Dura is engaged in developing and marketing prescription pharmaceutical
products for the treatment of asthma, hay fever, COPD, the common cold and
related respiratory ailments, and is developing a pulmonary drug delivery
system. Dura has strategically focused on the U.S. respiratory market because of
its size and growth opportunities. The estimated size of the target market for
antihistamines, asthma/rhinitis therapies, cough/ cold preparations and
anti-infectives in 1996 was approximately $9.5 billion. The size and fragmented
nature of the market and the identifiable base of physician prescribers allow
Dura to achieve significant market penetration with a specialized sales force.
Dura currently markets 31 prescription products. Dura also has a separate mail
service pharmacy, Health Script, which dispenses respiratory pharmaceuticals.

Dura employs a dual marketing strategy utilizing its focused field sales
force of over 300 people and a dedicated managed care sales and marketing and
national account groups that covers managed care organizations and retail
pharmacy chains. Dura's field sales force targets a physician base that includes
approximately 80,000 U.S. allergists, ENTs, pulmonologists and a selected subset
of pediatricians and generalist physicians, who Dura believes collectively write
a significant portion of respiratory pharmaceutical prescriptions. Dura believes
that its field sales force calls on approximately one-half of the target
physician base. Dura's managed care sales and marketing group concentrates on
sales to large regional and national managed care organizations. Dura expects to
continue expanding both the field sales force and the managed care sales and
marketing group as warranted by market opportunities.

This marketing strategy has allowed Dura to leverage its distribution
capabilities by acquiring the rights to market additional prescription
pharmaceutical products through acquisition, in-license or co-promotion
arrangements. Since 1992, Dura has acquired 19 products targeted at the U.S.
respiratory market. In September 1996, Dura acquired from Lilly exclusive U.S.
marketing rights to the antibiotics Keftab and Ceclor CD. Dura began marketing
Keftab in September 1996 and launched Ceclor CD in October 1996. In May 1997,
Dura acquired from Syntex the exclusive U.S. rights to the intranasal steroid
products Nasarel and Nasalide.

Another key component of Dura's strategy is to develop Spiros. Spiros is
being designed to aerosolize pharmaceuticals in dry powder formulations for
delivery to the lungs while providing certain advantages over other
currently-used methods of pulmonary drug delivery. Dura has a three-level
development program for Spiros which entails (i) developing, on behalf of Spiros
Corp. II, certain drug compounds for use in Spiros, including in the near-term
albuterol, beclomethasone and ipratropium, three of the pharmaceutical agents
most frequently prescribed to treat respiratory conditions, (ii) licensing
Spiros primarily to pharmaceutical companies, generally for use with certain of
their proprietary respiratory products, and (iii) developing Spiros, generally
in collaboration with third parties, for the systemic delivery of compounds,
including certain proteins and peptides, through the lungs for respiratory and
non-respiratory indications as an alternative to current invasive delivery
techniques.

On October 21, 1997, Dura announced that it had signed a definitive merger
agreement with Scandipharm, Inc. ("Scandipharm"). On December 1, 1997, Dura
announced it had terminated the merger agreement. Dura has been advised by
counsel for Scandipharm that Scandipharm does not believe Dura has the right to
terminate the merger agreement and that Scandipharm reserves all rights under
such agreement. Scandipharm is an Alabama-based distributor of pharmaceutical
products for the treatment of cystic fibrosis, a fatal genetic disease affecting
approximately 30,000 children and young adults.

U.S. RESPIRATORY MARKET

Dura divides the U.S. respiratory market into three primary segments: (i)
respiratory infection, (ii) allergy, cough and cold and (iii) asthma and COPD.

RESPIRATORY INFECTION. Respiratory infections are generally caused by a
variety of bacteria and can affect either the upper respiratory tract (nasal
cavity, sinuses and throat) or the lower respiratory tract

45
<PAGE>
(lungs). The resulting diagnoses include sinusitis, tonsillitis and bronchitis.
These infections are treated with antibiotics, which kill the bacteria causing
the symptoms. There are a variety of classes of antibiotics that treat specific
ranges, or spectrums, of bacteria. Classes used to treat respiratory infection
include cephalosporins, broad spectrum macrolides and quinolones. The market for
these classes is very large, totaling $4.6 billion in 1996 for the oral solid
forms alone. The cephalosporin class accounts for approximately $1.3 billion of
this total.

ALLERGY, COUGH AND COLD. While the causes of allergies (which can be
seasonal or perennial) and cough and colds differ, nasal congestion and sneezing
are common symptoms of these diseases. The U.S. combined market for therapeutic
drugs to treat allergies, coughs and colds was over $2.1 billion in 1996.
Antihistamines and antihistamine/decongestant combinations are the most widely
used forms of therapy for allergies and represent the largest portion of the
allergy, cough and cold market in the U.S. An additional form of therapy for
allergies includes intranasal steroids, such as Nasarel and Nasalide, which are
increasingly being prescribed for allergic rhinitis. Cough and cold preparations
represent the next largest portion of the allergy, cough and cold market and
include decongestant and decongestant/ expectorant combinations, cough
suppressants and antihistamine combinations and expectorants.

ASTHMA AND COPD. Asthma is a complex physiological disorder characterized
by airway hyperactivity to a variety of stimuli such as dust, pollen, stress or
physical exercise, resulting in airway obstruction that is partially or
temporarily reversible. The U.S. asthma population has grown steadily in recent
years. COPD is a complex condition comprising a combination of chronic
bronchitis, emphysema and airway obstruction. The disease affects males more
often than females and is exacerbated by smoking and other insults to the lung.
Incidence is as high as 20% of the adult male population, though only a minority
are clinically disabled. The U.S. combined market for therapeutic drugs to treat
asthma and COPD was approximately $2.8 billion in 1996.

STRATEGY

Dura's objective is to be a leading supplier of respiratory pharmaceuticals
and pulmonary drug delivery systems. Dura attempts to achieve this objective
through the implementation of the following strategies:

--FOCUSING MARKETING EFFORTS ON RESPIRATORY PHYSICIAN SPECIALISTS. Dura
employs a dual marketing strategy utilizing its focused field sales force
and a dedicated managed care sales and marketing group. Dura's field sales
force targets a physician base that includes approximately 80,000 U.S.
allergists, ENTs, pulmonologists and a selected subset of pediatricians and
generalist physicians, who Dura believes collectively write a significant
portion of respiratory pharmaceutical prescriptions. Dura believes that its
field sales force calls on approximately one-half of the target physician
base. Dura's managed care sales and marketing group concentrates on sales to
large regional and national managed care organizations. Dura expects to
continue expanding both the field sales force and the managed care sales and
marketing group as warranted by market opportunities.

--ACQUIRING, IN-LICENSING OR CO-PROMOTING RESPIRATORY PRESCRIPTION
PHARMACEUTICALS. Dura seeks to acquire, in-license or co-promote
respiratory prescription pharmaceuticals or companies developing and/or
marketing such pharmaceuticals. Dura is particularly focused on respiratory
drugs that are under-promoted by large pharmaceutical companies. Dura
believes that the pharmaceutical industry is undergoing a restructuring that
may create greater opportunities for Dura. For example, many large
pharmaceutical companies are consolidating and merging and/or redirecting
their sales forces, which may lead to the underpromotion of certain products
deemed too small for large sales forces and create significant acquisition,
in-licensing and co-promotion opportunities. Additionally, consolidation
within the sector may make small product lines less desirable to large
pharmaceutical companies. Dura is actively pursuing the acquisition of
rights to products and/or companies, which may require the use of
substantial capital resources.

46
<PAGE>
--DEVELOPING SPIROS. Dura has a three-level development program for Spiros
which entails (i) developing, on behalf of Spiros Corp. II, certain drug
applications for use in Spiros, including in the near term albuterol,
beclomethasone and ipratropium, three of the most frequently prescribed
pharmaceutical agents to treat respiratory conditions, (ii) licensing Spiros
primarily to pharmaceutical companies, including Mitsubishi Chemical
Corporation ("Mitsubishi"), Fujisawa Pharmaceutical Co., Ltd. ("Fujisawa")
and Trega, generally for use with certain of their proprietary respiratory
products, and (iii) developing Spiros, generally in collaboration with third
parties, for the systemic delivery of compounds, including certain proteins
and peptides, through the lungs for respiratory and non-respiratory
indications as an alternative to current invasive delivery techniques.

DURA'S CURRENT PRODUCTS

Dura currently markets 31 prescription products, including 25 that are
off-patent, in the following therapeutic categories: respiratory infection (five
products); allergy, cough and cold (24 products); and asthma and COPD (two
products). The following is a list of Dura's principal prescription
pharmaceuticals:

<TABLE>
<CAPTION>
RIGHTS
OBTAINED FROM OR
PRODUCTS DEVELOPED BY
- -------------------------------------------------------------------- ------------------------
<S> <C>
Respiratory Infection
Ceclor CD Tablets (anhydrous cefaclor)............................ Lilly
Keftab (cephalexin hydrochloride)................................. Lilly
Allergy, Cough and Cold
Nasarel (flunisolide) Nasal Solution.............................. Syntex
Nasalide (flunisolide) Nasal Solution............................. Syntex
ENTEX Products.................................................... P&G
DURA-VENT-Registered Trademark- Products.......................... Dura
RONDEC Products................................................... Abbott, Dura
Asthma and COPD
TORNALATE-Registered Trademark- Products.......................... Sanofi-Winthrop, Inc.
</TABLE>

In September 1996, Dura acquired the exclusive U.S. rights to the
cephalosporin antibiotics Keftab and Ceclor CD from Lilly. The U.S. antibiotic
market was $4.6 billion in 1996, of which $1.3 billion was accounted for by
cephalosporin antibiotics. Dura believes that this acquisition complements its
existing strategy because approximately 60% of antibiotics are prescribed for
respiratory infections. Keftab is an antibiotic indicated for respiratory tract,
skin and soft tissue infections. Ceclor CD is a twice-a-day dosage form of
cefaclor typically taken for seven days. Ceclor, Lilly's currently marketed
cefaclor, is normally taken three times a day for 10 days. Dura believes these
product acquisitions further its strategy of acquiring prescription
pharmaceuticals which are marketed by its sales force to its targeted
physicians.

In May 1997, Dura acquired from Syntex the exclusive U.S. rights to the
intranasal steroid products Nasarel and Nasalide. The U.S. market for intranasal
steroids for the treatment of perennial and allergic rhinitis was approximately
$700 million in 1996, and has averaged 24% growth over the last two years. Dura
believes that this acquisition complements its strategy because the products fit
within Dura's respiratory focus while adding a new respiratory category, nasal
steroids, to its product portfolio. In addition, Dura believes that it will be
able to further leverage its field sales force by offering these new products
acquired from Lilly and Syntex to high-prescribing physicians during sales
calls. A portion of the revenues from these products is being utilized to fund
the expansion of Dura's existing field sales force.

Keftab and Ceclor CD and the two Tornalate products are the subject of
approved NDAs. Dura also markets Capastat-Registered Trademark- Sulfate and
Seromycin-Registered Trademark- which are also the subject of approved NDAs.
Crolom-TM- is the subject of an approved Abbreviated New Drug Application
("ANDA"). The remaining products are branded pharmaceuticals which are not the
subject of NDAs or ANDAs.

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<PAGE>
Of Dura's 31 prescription products, 24 are owned and promoted by Dura, six
are marketed under licensing agreements with Lilly and Sanofi-Winthrop, Inc.,
and one is co-promoted with Bausch & Lomb Pharmaceuticals, Inc.

STRATEGIC ALLIANCES

MITSUBISHI CHEMICAL CORPORATION. In October 1994, Dura, DDSI and Mitsubishi
entered into a license and supply agreement, under which Mitsubishi was granted
the exclusive right to use and sell Spiros together with a dry powder
formulation of an asthma compound in Japan, Hong Kong, Singapore, the Republic
of China (Taiwan), the Republic of Korea and the People's Republic of China
(collectively the "Territory"). DDSI's rights under the agreement were assigned
to Spiros Corp. Dura and Spiros Corp. have agreed to develop a dry powder
formulation of such compound for Mitsubishi and will manufacture and supply to
Mitsubishi its requirements for both Spiros and such compound. Mitsubishi will
be responsible for conducting all clinical and other work needed to obtain
regulatory approvals of Spiros and such compound in the Territory. In connection
with the license and supply agreement, Mitsubishi is obligated to make milestone
and other payments to Dura and/or Spiros Corp. in certain circumstances.

FUJISAWA PHARMACEUTICAL CO., LTD. In April 1995, Dura entered into a
collaborative development agreement with Fujisawa covering the use of Spiros to
deliver one of Fujisawa's new chemical entity asthma compounds. The agreement
was an extension of previous feasibility work completed by Dura. Pursuant to the
agreement, Dura will provide dry powder formulation assistance, manufacturing
process development and clinical trial supplies to Fujisawa through the
completion of clinical trials in Japan or June 30, 1998, whichever occurs first.
Dura received an up-front payment and is to receive additional milestone
payments and reimbursement of costs from Fujisawa. Fujisawa can terminate the
agreement upon 30 days' notice to Dura. If Fujisawa's clinical trials are
successful, the parties have agreed to negotiate additional agreements, which
could include license and supply agreements.

TREGA BIOSCIENCES, INC. In February 1996, Dura entered into a research and
development agreement with Trega to develop inhalation formulations of new
compounds discovered and developed by Trega. In addition, Dura will provide to
Trega, for a four-year period, contract services for Trega's drug development
programs using Dura's development capabilities and proprietary formulation and
delivery technology. Dura will receive a percentage of proceeds received by
Trega with respect to jointly developed compounds, and will receive contract
revenues from Trega for services provided. Concurrently, Dura made a $5 million
equity investment in Trega, which was subsequently converted into 775,193 shares
of Trega common stock.

In addition, Dura has executed agreements with a number of international
pharmaceutical companies to conduct feasibility studies on formulations of
certain compounds for use with Spiros, including small molecules and proteins
and peptides, for treatment of respiratory and non-respiratory diseases.

SALES AND MARKETING

FIELD SALES FORCE. Dura's specialized sales and marketing organization
targets a physician base that includes approximately 80,000 U.S. allergists,
ENTs, pulmonologists, and a selected subset of pediatricians and generalist
physicians who treat a large number of allergy and asthma patients. Dura
believes this relatively small group of physicians writes a significant portion
of respiratory pharmaceutical prescriptions. This concentration allows for
effective market penetration by a specialized sales and marketing organization.

As of September 30, 1997, Dura had 277 pharmaceutical sales representatives
nationwide, supervised by 20 district managers, six area recruiter-trainers and
two regional directors. Dura believes its focused sales force currently calls on
approximately one-half of its target physician base. Dura intends to continue
expansion of its field sales force as warranted by market opportunities,
including the potential commercialization of the Spiros Products.

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<PAGE>
Dura believes that the personal relationships of Dura's sales
representatives with their physician customers are essential to Dura's business.
Dura's sales representatives differentiate themselves from the competition by
focusing primarily on respiratory infections, allergy, cough and cold, and
asthma and COPD, and by promoting pharmaceuticals used by respiratory
specialists in treating patients. With a relatively small target audience,
promotional spending by Dura on advertising and direct mail is generally
inexpensive and efficient. Dura regularly participates in local, regional and
national medical meetings of the key specialty groups. Dura believes that it has
established a national awareness of the Dura name within the U.S. respiratory
market.

MANAGED CARE SALES AND MARKETING AND NATIONAL ACCOUNTS GROUPS. To implement
Dura's marketing strategy, Dura established dedicated managed care sales and
marketing and national accounts groups, which concentrates on sales to large
regional and national managed care organizations. These organizations include
health maintenance organizations ("HMOs"), preferred provider organizations
("PPOs"), large drug merchandising chains, nursing home providers and mail order
pharmacies. A primary goal of the managed care sales and marketing group is to
place Dura's products on approved formulary lists of HMOs and PPOs.

HEALTH SCRIPT

In March 1995, Dura acquired Health Script, located in Denver, Colorado.
Health Script is a mail service pharmacy which dispenses respiratory
pharmaceuticals. Mail order services are particularly well-suited for
respiratory patients who are long-term, chronic users of certain pharmaceuticals
and to whom the convenience and cost efficiency of mail order is appealing.
Health Script was formed in 1990 to supply value-priced respiratory
pharmaceutical products to patients through the mail. Health Script currently
dispenses to its approximately 30,000 patients nationwide over 100 respiratory
products manufactured by third parties. Health Script is focused on working with
home healthcare providers and patients to coordinate respiratory medication
services and patients' management programs. Health Script markets its services
through specialty field sales representatives and telemarketing. The existing
patient base is maintained by telephone contact with patients to monitor
compliance with their doctors' prescriptions.

COMPETITION

Dura directly competes with at least 25 other companies in the U.S. which
are currently engaged in developing, marketing and selling respiratory
pharmaceuticals. Additionally, there are at least 10 companies currently
involved in the development, marketing or sales of dry powder pulmonary drug
delivery systems. There are two types of DPIs currently in commercial use
worldwide. In the U.S., only individual dose DPIs currently are marketed,
including the Rotohaler (developed and marketed by Glaxo) and the Spinhaler
(developed and marketed by Fisons Limited). The Turbuhaler (developed and
marketed by Astra Pharmaceuticals), a multiple dose DPI, is the leading DPI in
worldwide sales. In June 1997, the FDA approved the first Turbuhaler product,
the Pulmicort Turbuhaler, for marketing a dry powder formulation of budesonide
in the U.S.

Many of these companies, including large pharmaceutical firms with financial
and marketing resources and development capabilities substantially greater than
those of Dura, are engaged in developing, marketing and selling products that
compete with those offered by Dura. The selling prices of such products
typically decline as competition increases. Further, other products now in use
or under development by others may be more effective than Dura's current or
future products. The industry is characterized by rapid technological change,
and competitors may develop their products more rapidly than Dura. Competitors
may also be able to complete the regulatory process sooner and, therefore, may
begin to market their products in advance of Dura's products. Dura believes that
competition among both prescription pharmaceuticals and pulmonary drug delivery
systems aimed at the respiratory infection, allergy, cough and cold and asthma
and COPD markets will be based on, among other things, product efficacy, safety,
reliability, availability and price.

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CLINICAL, DEVELOPMENT AND REGULATORY

Dura's clinical, development and regulatory expenses relate primarily to
product development and regulatory compliance activities. Clinical, development
and regulatory expenses were $9,354,000, $8,408,000, and $18,540,000 for the
years ended December 31, 1994, 1995 and 1996, respectively, and $12,122,000 and
$18,160,000 for the nine-month periods ended September 30, 1996 and 1997,
respectively. The clinical, development and regulatory expenses associated with
Spiros development, for which Dura recorded contract revenues from DDSI and
Spiros Corp., were $8,260,000, $6,428,000, and $15,932,000 for the years ended
December 31, 1994, 1995, and 1996, respectively, and $10,634,000 and $14,872,000
for the nine-month periods ended September 30, 1996 and 1997, respectively.

PATENTS AND PROPRIETARY RIGHTS

Tornalate Inhalation Solution and Tornalate MDI are covered by patents filed
by Sanofi-Winthrop, Inc. which expire in the near-term. The Keftab, Ceclor CD,
Nasarel and Nasalide products or processes to make such products are covered by
patents which expire between 2003 and 2007. Dura's other pharmaceutical products
are not protected by patents. Additionally, see "Business of Spiros Corp.
II--Patents and Proprietary Rights."

GOVERNMENT REGULATION

The manufacturing and marketing of Dura's products are subject to regulation
by Federal and state government authorities, including the FDA, the
Environmental Protection Agency and the Occupational Safety and Health
Administration, in the U.S. and other countries. In the U.S., pharmaceuticals
and drug delivery systems, including Spiros, are also subject to rigorous FDA
regulation and may be subject to regulation by other jurisdictions, including
the State of California. The Federal Food, Drug, and Cosmetic Act and the Public
Health Service Act govern the testing, manufacture, safety, efficacy, labeling,
storage, record keeping, approval, advertising and promotion of Dura's products.
Product development and approval within this regulatory framework takes a number
of years and involves the expenditure of substantial resources.

To obtain FDA approval for each of the Spiros Products, Dura is required to
conduct each of the following steps and possibly others: (i) preclinical testing
(laboratory and possibly animal tests), (ii) the submission to the FDA of an IND
application, which must become effective before human clinical trials may
commence, (iii) adequate and well-controlled human clinical trials to establish
safety and efficacy, (iv) the submission of an NDA to the FDA for marketing
approval, and (v) FDA approval of the NDA prior to any commercial sale or
shipment. The NDA must include, in addition to a compilation of preclinical and
clinical data, complete information about product performance and manufacturing
facilities and processes. Prior to completion of the NDA review process, the FDA
may conduct an inspection of the facility, manufacturing procedures, operating
systems and personnel qualifications. In addition to obtaining FDA approval for
each product, each domestic drug and/or device manufacturing facility must be
registered with and approved by the FDA. Domestic manufacturing facilities are
subject to biennial inspections by the FDA and inspections by other
jurisdictions and must comply with cGMPs for both drugs and devices. To supply
products for use in the U.S., foreign manufacturing establishments must comply
with cGMP and other requirements and are subject to periodic inspection by the
FDA or by regulatory authorities in such countries under reciprocal agreements
with the FDA.

Preclinical testing includes laboratory evaluation of product chemistry and
animal studies, if appropriate, to assess the safety and efficacy of the product
and its formulation. The results of the preclinical tests are submitted to the
FDA as part of an IND application, and unless the FDA objects, the IND
application will become effective 30 days following its receipt by the FDA, thus
allowing the product to be tested in humans.

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Clinical trials involve the administration of the pharmaceutical product to
healthy volunteers or to patients identified as having the condition for which
the pharmaceutical agent is being tested. The pharmaceutical product is
administered under the supervision of a qualified principal investigator.
Clinical trials are conducted in accordance with Good Clinical Practice and
protocols previously submitted to the FDA (as part of the IND application) that
detail the objectives of the study, the parameters used to monitor safety and
the efficacy criteria evaluated. Each clinical study is conducted under the
auspices of an independent Institutional Review Board ("IRB") at the institution
at which the study is conducted. The IRB considers, among other things, the
design of the study, ethical factors, the safety of the human subjects and the
possible liability risk for the institution.

Clinical trials for new products are typically conducted in three sequential
phases that may overlap. In Phase I, the initial introduction of the
pharmaceutical into healthy human volunteers, the emphasis is on testing for
safety (adverse effects), dosage tolerance, metabolism, distribution, excretion
and clinical pharmacology. Phase II involves studies in a limited patient
population to determine the initial efficacy of the pharmaceutical for specific
targeted indications, to determine dosage tolerance and optimal dosage and to
identify possible adverse side effect and safety risks. Once a compound is found
to be effective and to have an acceptable safety profile in Phase II
evaluations, Phase III trials are undertaken to more fully evaluate clinical
outcomes. The FDA reviews both the clinical plans and the results of the trials
and may require the study to be discontinued at any time if there are
significant safety issues.

The results of the preclinical and clinical trials for pharmaceutical drug
products such as those currently marketed by Dura or being developed by Dura are
submitted to the FDA in the form of an NDA for marketing approval. FDA approval
can take several months to several years, or approval may be denied. The
approval process can be affected by a number of factors, including the severity
of the side effects, the availability of alternative treatments and the risks
and benefits demonstrated in clinical trials. Additional animal studies or
clinical trials may be requested during the FDA review process and may delay
marketing approval. After FDA approval for the initial indication, further
clinical trials are necessary to gain approval for the use of the product for
any additional indications. The FDA may also require post-marketing testing and
surveillance to monitor for adverse effects, which can involve significant
additional expense.

Although the FDA has considerable discretion to decide what requirements
must be met prior to approval, Dura believes, based upon the FDA's historical
practice with respect to drug inhalers, that the FDA is likely to regulate each
combination of Spiros with a compound as a discrete pharmaceutical or drug
product requiring separate approval as a new drug. Dura believes that the
approval process for each drug/delivery combination now under development may be
shorter than the full NDA process described above because the safety and
efficacy of the compounds have already been established in currently marketed
formulations and delivery mechanisms.

The Drug Price Competition and Patent Restoration Term Act of 1984, known as
the Waxman-Hatch Act, established abbreviated application procedures for
obtaining FDA approval for many brand name drugs that are off-patent and whose
marketing exclusivity has expired. Approval to manufacture these drugs is
obtained by filing abbreviated drug applications. As a substitute for conducting
full-scale preclinical and clinical studies required of the brand name drug, the
FDA requires data establishing that the drug formulation which is the subject of
an abbreviation application is either bioequivalent or has the same therapeutic
effect as the previously approved drug, among other requirements.

The type of abbreviated application that Dura intends to file is a section
505(b)(2) application, which is a reference to the statutory provision of the
Waxman-Hatch Act that applies to the type of abbreviated application being
submitted. Section 505(b)(2) applicants are required to certify to the FDA that
any patent which has been listed with the FDA as covering the brand name drug
product is invalid and will not be infringed by the sale of the applicant's
product. The patent holder may challenge a notice of noninfringement or
invalidity by filing a suit for patent infringement, which would prevent FDA
approval

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<PAGE>
until the suit is resolved or until at least 30 months had elapsed. Should any
entity commence a lawsuit with respect to any alleged patent infringement by
Dura, uncertainties inherent in patent litigation make the outcome of such
litigation difficult to predict.

By their very nature, section 505(b)(2) applications rely at least to some
extent on the preclinical and clinical studies of the approved, innovator or
brand name drug to demonstrate that Dura's product is safe and effective for its
intended use. In the past, innovator drug manufacturers have challenged, by way
of petitions to the FDA, the use of a section 505(b)(2) application of data from
an innovator's approved NDA that is considered propriety by the original
manufacturer and was submitted to the FDA as part of an original new drug
application. Thus far, none of these petitions or other challenges to the
section 505(b)(2) application procedure have been successful. No assurances
exist that the 505(b)(2) application procedure that Dura plans to utilize will
not result in similar challenges to Dura's products and such challenges, if they
occur, may have a significant adverse effect on Dura's ability to obtain
approvals under such abbreviated procedures.

For both currently marketed and future products, failure to comply with
applicable regulatory requirements after obtaining regulatory approval can,
among other things, result in the suspension of regulatory approval, as well as
possible civil and criminal sanctions. In addition, changes in regulations could
have a material adverse effect on Dura.

Since completion of the pivotal trials, Dura has made, and is proposing to
make, a number of additional modifications to the Spiros system, some of which
address problems encountered with the mechanical features of the Spiros delivery
system during the pivotal trials. These changes are intended to improve the
reliability, performance, manufacturability, and customer acceptance of the
mechanical features of the Spiros delivery system. Dura expects that it will be
required to complete testing and validation pursuant to cGMP requirements of the
Spiros system as modified for commercial distribution, which could be costly and
time-consuming. There can be no assurance that the FDA will not require Dura to
undertake further laboratory testing, field testing and/or clinical studies in
order to insure the safety and effectiveness of the Albuterol Product intended
to be commercialized by Dura and to insure that it can be reliably manufactured.
If a proposed change is deemed to be a major modification by the FDA, Dura could
be required to repeat one or more of the clinical studies. Moreover, because of
the time necessary to validate the changes to the Spiros system, there can be no
assurance that Dura will be prepared for any FDA preapproval inspection of
Dura's manufacturing facilities in a timely manner. If Dura is required to
undertake additional laboratory testing and/or clinical studies or to postpone
the preapproval inspection, or if Dura fails to complete the open label study in
a timely manner, Dura could receive a non-approvable letter and, in any event,
there could be a substantial delay in completion of the approval process.

The Federal Food, Drug, and Cosmetic Act requires that any "new drug" must
be approved pursuant to an NDA. The term "new drug" is defined as any drug which
is not generally recognized among qualified experts as safe and effective for
its labeled intended uses. Certain exemptions from this definition exist for
products marketed without change since prior to 1938 (the date of enactment of
the Federal Food, Drug, and Cosmetic Act) or, with respect to the need to show
effectiveness, for drug products marketed prior to October 10, 1962 (the date of
enactment of the "Drug Amendments of 1962"). Dura presently markets 21 drug
products for which the FDA has not yet made a determination as to their status
as new drugs under the Federal Food, Drug, and Cosmetic Act. The FDA is
continuing an evaluation of the effectiveness of all products containing
ingredients marketed prior to 1962 that are not the subject of an approved NDA
as part of its DESI program and will determine which are new drugs requiring
approval through an NDA for marketing. The existence of currently-marketed
prescription pharmaceuticals that contain one or more active ingredients first
introduced in the marketplace before 1962 and that are marketed based on their
manufacturers' belief that such products are not subject to the new drug
provisions of the Act is recognized in paragraph B of the Food and Drug
Administration's Compliance Policy Guide, 440.100. This Policy Guide indicates
that the FDA will implement procedures to determine whether the new drug
provisions are or are not applicable to these products. The Policy Guide
requires that products covered by paragraph

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B not be similar or related to any drug included in the DESI program, or have a
different formulation or conditions for use than products marketed before
November 13, 1984. If a product is not covered by paragraph B, the FDA could
make a determination as to whether or not the new drug provisions are applicable
to it without first implementing the procedures called for by the Policy Guide.
Dura believes that nine of its prescription pharmaceutical products may be
covered by paragraph B of the Policy Guide and it is aware that one of its
products may be considered to be similar or related to a DESI drug. Also, it is
not aware of evidence to substantiate that three of its products have the same
formulation or conditions for use as products marketed before November 13, 1984.
These products could be subject at any time to an FDA determination that an NDA
is required. If a final determination is made that a particular drug requires an
approved NDA, such approval will be required for marketing to continue. If such
a determination is made, the FDA might impose various requirements: for example,
it might require that the current product be the subject of an approved NDA,
that the product be reformulated and NDA approval obtained, that the product
must be sold on an over-the-counter basis rather than as a prescription drug, or
that the product must be removed from the market. There can be no assurance as
to which of these courses the FDA will require or whether Dura will be able to
obtain any approvals which the FDA may deem necessary. If any of these actions
are taken by the FDA, such actions could have a material adverse effect on
Dura's business.

In April 1996, the export provisions of the Federal Food, Drug, and Cosmetic
Act were relaxed to permit the export of unapproved drugs to a foreign country,
provided the product complies with the laws of that country and has valid
marketing authorization in at least one of a list of designated "Tier 1"
countries. Once a product is exported to a qualified foreign country, Dura will
be subject to the applicable foreign regulatory requirements governing human
clinical trials and marketing approval in that country. The requirements
relating to the conduct of clinical trials, product licensing, pricing and
reimbursement vary widely from country to country and there can be no assurance
that Dura or any of its collaborators will be able to meet and fulfill the
statutory requirements in a particular country.

Health Script is subject to regulation by state regulatory authorities,
principally state boards of pharmacy. In addition, Health Script is subject to
regulation by other state and Federal agencies with respect to reimbursement for
prescription drug benefits provided to individuals covered primarily by publicly
funded programs.

MANUFACTURING

Dura's principal manufacturing facility is located near its headquarters in
San Diego, California. The facility initially is intended to be used to
formulate, mill, blend and manufacture drugs to be used with Spiros, pending
regulatory approval. Equipment purchases and validation are currently scheduled
through 1998. Dura's manufacturing facility must be registered with and licensed
by various regulatory authorities and must comply with cGMP requirements
prescribed by the FDA and the State of California. Dura is currently expanding
its facilities to provide additional manufacturing capabilities. Dura will need
to significantly scale up its current manufacturing operations from clinical
supply scale to commercial scale and comply with cGMPs and other regulations
prescribed by various regulatory agencies in the U.S. and other countries to
achieve the prescribed quality and required levels of production of such
products and to obtain marketing approval. The initial scale-up of Dura's
manufacturing operations and completion of the regulatory compliance review
process are scheduled to be completed during the first half of 1998. Dura
expects that the cost to complete these tasks will not exceed $3 million. Spiros
Corp. II is completely reliant on Dura for all of its manufacturing needs. Any
failure or significant delay in the validation of or obtaining a satisfactory
regulatory inspection of the new facility or failure to successfully scale up
could have a material adverse effect on the ability of Dura and Spiros Corp. II
to manufacture products in connection with Spiros.

Dura has limited experience manufacturing products for commercial purposes
and currently does not have the capability to manufacture its pharmaceutical
products and therefore is dependent on contract

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manufacturers for the production of such products for development and commercial
purposes. Dura's current dependence upon others for the manufacture of its
products may adversely affect the future profit margin, if any, on the sale of
those products and Dura's ability to develop and deliver products on a timely
and competitive basis.

FACILITIES

Dura owns and occupies a new 77,000 square foot headquarters facility in San
Diego, California, on a parcel of land that it purchased in 1996. In addition,
Dura owns two buildings that are situated on another parcel of land near its
headquarters. One building, consisting of approximately 31,000 square feet, is
currently vacant. The second building, consisting of approximately 49,000 square
feet, contains Dura's manufacturing facility that will be used to formulate,
mill, blend and fill drugs to be used with Spiros, laboratory and research
facilities and warehouse space. Dura also occupies an additional 34,000 square
feet of office and laboratory space pursuant to a short-term lease. Dura expects
to commence construction of a 125,000 square foot facility beginning in late
1997 adjacent to the new 77,000 square foot facility, to be used initially for
research and development purposes.

Dura also leases approximately 16,660 square feet of space in Denver,
Colorado which houses the operations of Health Script's mail service pharmacy.
The lease term expires in January 2001 with one five-year renewal option.

HUMAN RESOURCES

Dura employed 611 employees (of which 600 are full-time) as of September 30,
1997, consisting of 347 people in sales and marketing (of which 315 constitute
the field sales force and the managed care group), 60 in administration and
finance, 79 in clinical, regulatory and research and development, 34 in
operations and 91 at Health Script. None of Dura's employees are represented by
a labor union and Dura believes it maintains positive relations with both field
and corporate personnel.

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DURA SELECTED CONSOLIDATED FINANCIAL DATA

The statement of operations data set forth below for each of the three years
in the period ended December 31, 1996, and the balance sheet data at December
31, 1996, are derived from, and are qualified by reference to, Dura audited
financial statements incorporated by reference in this Prospectus and should be
read in conjunction with those financial statements and notes thereto. The
statement of operations data for the fiscal years ended December 31, 1992 and
1993 are derived from audited financial statements of Dura not included or
incorporated by reference herein. The management of Dura believes that the
unaudited information at September 30, 1997, and for the nine-month periods
ended September 30, 1996 and 1997, contains all adjustments, consisting of only
normal recurring accruals, necessary for a fair presentation of the financial
position at such date and the results of operations for such periods. Operating
results for the nine-month period ended September 30, 1997, are not necessarily
indicative of results to be expected for the fiscal year ending December 31,
1997 or any other interim period. The information set forth below should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations of Dura," included elsewhere in this Prospectus and
Dura's financial statements and related notes incorporated by reference in this
Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
YEAR ENDED DECEMBER 31,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:(1)
Revenues:
Sales...................................... $ 9,561 $ 15,816 $ 22,199 $ 39,308 79,563 $ 45,900 $ 105,437
Contract................................... -- 2,297 10,481 12,194 24,556 17,407 22,430
--------- --------- --------- --------- --------- --------- ---------
Total revenues............................... 9,561 18,113 32,680 51,502 104,119 63,307 127,867
--------- --------- --------- --------- --------- --------- ---------
Operating costs and expenses:
Cost of sales.............................. 2,700 3,782 3,894 10,618 21,301 12,553 23,373
Clinical, development and regulatory....... 1,354 2,819 9,354 8,408 18,540 12,121 18,160
Selling, general and administrative........ 12,523 17,437 17,976 25,955 42,631 26,460 49,485
Other charges(2)........................... -- 2,315 -- 43,773 -- -- --
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss)...................... (7,016) (8,240) 1,456 (37,252) 21,647 12,173 36,849
Other income-net............................. 247 67 514 1,880 6,220 4,060 8,903
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes............ (6,769) (8,173) 1,970 (35,372) 27,867 16,233 45,752
Provision for income taxes................... -- -- 34 406 3,539 1,762 16,357
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)(2)......................... $ (6,769) $ (8,173) $ 1,936 $ (35,778) $ 24,328 $ 14,471 $ 29,395
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) per share(2)............... $ (0.47) $ (0.55) $ 0.10 $ (1.53) $ 0.60 $ 0.37 $ 0.62
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Weighted average number of common and common
equivalent shares.......................... 14,506 14,988 19,860 23,440 40,479 38,890 47,392
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------- -------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments................................... $ 240,345 $ 454,710
Working capital..................................................................... 219,864 457,276
Total assets........................................................................ 504,670 821,105
Long-term obligations (excluding current portion)................................... 6,670 294,535
Shareholders' equity(3)............................................................. 443,577 482,297
</TABLE>

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

(1) Dura's selected financial data include Health Script subsequent to its
acquisition on March 22, 1995, the Rondec product line subsequent to its
acquisition on June 30, 1995, the Entex product line subsequent to its
acquisition on July 3, 1996, the Ceclor CD and Keftab products subsequent
to their acquisition on September 5, 1996, and the Nasarel and Nasalide
products subsequent to their acquisition on May 7, 1997.

(2) The 1993 charge of $2.3 million represents the charge for the option to
acquire all of the outstanding stock of DDSI. The 1995 charge of $43.8
million represents the $30.8 million charge for acquired in-process
technology associated with the DDSI acquisition and the $13.0 million charge
for the contribution to Spiros Corp. If these charges were excluded, Dura
would have reported a net loss of $5.9 million, or $0.39 per share, for 1993
and net income of $8.0 million, or $0.28 per share, for 1995.

(3) No cash dividends were declared or paid during the periods presented.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF SPIROS CORP. II

Spiros Corp. II was formed in September 1997 and has not yet commenced
operations. Assuming completion of the Offerings, Spiros Corp. II expects to
receive approximately $75 million from the Contribution and approximately $69.2
million in net proceeds, assuming an offering price of $16.00 per Unit, from the
Offerings ($79.6 million if the Underwriters' over-allotment option is exercised
in full). Spiros Corp. II anticipates that it will use the Contribution and
substantially all of such net proceeds to undertake research, clinical
development, product development and commercialization of the Spiros Products.
See "Use of Proceeds."

Dura will conduct the Development in accordance with an annual workplan and
budget which is subject to approval and acceptance by Spiros Corp. II's Board of
Directors. Dura must report any significant deviations from an annual workplan
and budget in a timely manner. Further, reimbursement for expenditures from
Spiros Corp. II may not exceed in any calendar year 120% of the amount allocated
in the applicable workplan and budget, unless otherwise approved by Spiros Corp.
II.

Payments to Dura under the Development Agreement for Dura's work in
performing the Development will be made for the full amount of the Development
Costs, which consists of all of Dura's research and development expenses,
general and administrative expenses, capital equipment costs and all other costs
and expenses incurred by Dura in performing the activities described in "The
Agreements and the Purchase Options--Development Agreement," up to the maximum
amount of the funds available to Spiros Corp. II, which include substantially
all of the Available Funds. Development Costs will include development expenses
(including salaries, benefits, supplies, and facilities and overhead
allocations) that are billed at a rate of fully burdened cost plus 25%;
provided, however, that services provided by third parties will be billed at a
rate of cost plus 20%. Development Costs also include costs, estimated to be
approximately $4 million, for the Development conducted by Dura from October 10,
1997 through the date of the closing of the Offerings. Spiros Corp. II will also
pay $100,000 per quarter to Dura for management and administrative services
provided pursuant to the Services Agreement.

A proposed budget providing estimates of Spiros Corp. II's cash flow through
April 2001, assuming the net proceeds of the Offerings and the Contribution
together with interest thereon total $154.2 million, is set forth under "Use of
Proceeds."

Spiros Corp. II intends to invest its excess cash in short-term
interest-bearing or other debt securities with strong credit ratings. Spiros
Corp. II intends to establish guidelines with respect to the diversification and
maturities in order to maintain safety and liquidity.

It is anticipated that Spiros Corp. II's only source of revenue will be
interest income on the unused portion of the Contribution and the net proceeds
from the Offerings. As a result, Spiros Corp. II will incur substantial
recurring losses.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF DURA

The following comments should be read in conjunction with Dura's
Consolidated Financial Statements and Notes incorporated herein by reference.
See "Risk Factors" for trends and uncertainties known to Dura that could cause
reported financial information not to be necessarily indicative of future
results, including discussion of the effects of seasonality on Dura.

RECENT DEVELOPMENTS

During the second half of 1996 and the first half of 1997, Dura made
significant acquisitions of product rights and licenses. In July 1996, Dura
acquired the worldwide rights to the Entex products, consisting of four
prescription upper respiratory drugs. In September 1996, Dura acquired the U.S.
marketing rights to the patented antibiotics Ceclor CD and Keftab. In May 1997,
Dura acquired the U.S.

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rights to the intranasal steroid products Nasarel and Nasalide. The acquisition
of these products has had a material impact on Dura's financial position and
results of operations.

In the third quarter of 1997, Dura issued $287.5 million principal amount of
its 3 1/2% Notes due July 15, 2002 with interest payable semiannually January 15
and July 15. Proceeds from the offering of the Notes are expected to be used for
general corporate purposes, including (i) to acquire, in-license, co-promote,
develop and commercialize pharmaceuticals targeted at Dura's physician base or
in areas related or otherwise complementary to Dura's existing business; (ii) to
fund product develop programs, including Spiros products; and (iii) for working
capital and facilities expansion. To date, no proceeds from the Notes have been
used. The Notes are convertible, at the option of the holder, into shares of
Dura's Common Stock at any time prior to maturity or redemption at a conversion
price of $50.635 per share, subject to adjustment under certain conditions. The
Notes are unsecured and subordinated to all existing and future senior
indebtedness of Dura. The Notes can be redeemed by Dura from time to time, in
whole or in part, at specified redemption prices after July 15, 2000.

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996

Total revenues for the nine months ended September 30, 1997 were $127.9
million, an increase of $64.6 million as compared to the same period in 1996.
Net income for the nine months ended September 30, 1997 was $29.4 million, an
increase of $14.9 million, or $0.25 per share, over the same period in 1996. The
principal factors causing these increases are discussed below.

Pharmaceutical sales for the nine months ended September 30, 1997 were
$105.4 million, an increase of 130% over the same period in 1996. This increase
is due primarily to the acquisition of the Entex products, Ceclor CD, Keftab,
Nasarel and Nasalide, which resulted in an increase in pharmaceutical sales of
$52.9 million, and the expansion of Dura's sales force.

Gross profit for the nine months ended September 30, 1997 was $82.1 million,
an increase of $48.7 million as compared to the same period in 1996. Gross
profit as a percentage of sales for the nine month period ended September 30,
1997 was 78%, as compared to 73% for the same period in 1996. This increase is
due primarily to higher average gross margins earned on sales of the Entex
products, Ceclor CD, Keftab, Nasarel and Nasalide as compared to the average
gross margins earned on Dura's other products.

Contract revenues for the nine months ended September 30, 1997 were $22.4
million, an increase of $5.0 million, or 29%, as compared to the same period in
1996. Dura, under agreements with several companies, conducts feasibility
testing and development work on various compounds for use with Spiros. Contract
revenues from Spiros-related development and feasibility agreements for the nine
months ended September 30, 1997 were $21.2 million, including $18.3 million from
Spiros Corp., as compared to $14.4 million, including $12.8 million from Spiros
Corp., for the same period in 1996. Dura also earns contract revenues under
various agreements for the co-promotion of pharmaceutical products. Contract
revenues from such agreements were $1.2 million for the nine months ended
September 30, 1997 compared to $3.0 million for the same period in 1996.

Clinical, development and regulatory expenses for the nine months ended
September 30, 1997 were $18.2 million, an increase of $6.0 million over the same
period in 1996. The increase reflects additional expenses incurred by Dura under
feasibility and development agreements covering the use of various compounds
with Spiros.

Selling, general and administrative expenses for the nine months ended
September 30, 1997 were $49.5 million, an increase of $23.0 million as compared
to the same period in 1996, but decreased as a percentage of total revenues to
39% as compared to 42% for the same period in 1996. The dollar increase is
primarily due to increased costs incurred to support Dura's sales and contract
revenue growth, including a $9.4 million increase in selling expenses primarily
associated with the expansion of Dura's sales force,

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higher marketing costs relating to the newly-acquired products (increase of $3.8
million), and amortization of newly-acquired product rights (increase of $4.2
million). The decrease as a percentage of revenues reflects the growth of
pharmaceutical sales due to new product acquisitions and the growth of contract
revenues.

Other income--net for the nine months ended September 30, 1997 was $8.9
million, an increase of $4.8 million as compared to the same period in 1996.
This increase is due to a $6.8 million increase in interest income due primarily
to higher balances of cash and short-term investments resulting from public
stock offerings completed in May and November 1996 and the Notes offering
completed in July 1997, as well as cash generated from operations. Interest
expense for the nine months ended September 30, 1997 increased by $1.9 million
over the same period in 1996 due to interest accrued on the Notes.

Dura's effective tax rate was 36% for the nine month period ended September
30, 1997 compared to 11% for the same period in 1996. This increase is primarily
due to the utilization of net operating loss carryforwards in 1996. Net
operating loss carryforwards available in 1997 relate primarily to tax
deductions for previously exercised stock options and, as such, the related
benefit from their utilization has been credited directly to shareholders'
equity.

Dura records interim provisions for income taxes based on the estimated
effective combined tax rate to be applicable for the fiscal year. This estimate
is reevaluated by management each quarter based on forecasts of income before
income taxes for the year as well as anticipated modifications to statutory
federal and state tax rates. During the three months ended September 30, 1997,
Dura reduced its estimate of the combined effective tax rate expected to be
applicable for fiscal 1997 from 39% to 36%.

FISCAL YEAR 1996 ("1996") COMPARED TO FISCAL YEAR 1995 ("1995")

Total revenues in 1996 increased $52.6 million, up 102%, as compared to
1995. Net income for 1996 was $24.3 million as compared with a net loss of $35.8
million for 1995, a change of $60.1 million or $2.13 per share. The 1995 net
loss of $35.8 million was due to charges totalling $43.8 million relating to
Dura's Spiros development program, consisting of a $30.8 million noncash charge
for in-process technology acquired in connection with Dura's acquisition of DDSI
and a $13.0 million purchase option charge resulting from the cash contribution
to Spiros Corp..

Pharmaceutical sales in 1996 increased by $40.3 million, or 102%, as
compared to 1995 due primarily to sales of products acquired in 1996, which
resulted in an increase in pharmaceutical sales of $30.7 million, as well as a
$6.4 million increase in sales at Health Script, acquired in March 1995.

Gross profit for 1996 increased by $29.6 million, or 103%, as compared to
1995 due to the increase in pharmaceutical sales. Gross profit as a percentage
of sales remained steady at 73%.

Contract revenues in 1996 increased by $12.4 million, or 101%, as compared
to 1995. Dura, under agreements with several companies, conducts feasibility
testing and development work on various compounds for use with Spiros. In
addition, Dura receives royalties primarily from the co-promotion of
pharmaceutical products. Contract revenues from Spiros-related development and
feasibility agreements generated $21.2 million in 1996, including $19.1 million
from Spiros Corp., compared to $9.5 million, including $8.0 million from DDSI,
in 1995. Contract revenues from royalties were $3.4 million in 1996 as compared
to $2.6 million for 1995.

Clinical, development and regulatory expenses for 1996 increased by $10.1
million to $18.5 million as compared to 1995. The increase reflects expenses
incurred by Dura under feasibility and development agreements covering the use
of various compounds with Spiros.

Selling, general and administrative expenses in 1996 increased $16.7 million
to $42.6 million as compared to 1995, and decreased as a percent of total
revenues to 41% in 1996 from 50% in 1995. The dollar increase results primarily
from marketing and amortization costs related to newly acquired products
(increase of $4.9 million and $3.7 million, respectively) as well as higher
costs at Health Script (increase of

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$2.6 million) to support its increased sales. The decrease as a percentage of
revenues reflects increased productivity of the sales force, the growth of
pharmaceutical sales due to product acquisitions, and the growth of contract
revenues.

Other income-net (primarily interest income) for 1996 increased $4.3 million
to $6.2 million as compared to 1995. The increase is due to an increase in
interest income of $4.1 million from cash generated from the August 1995 and May
and November 1996 public stock offerings as well as cash generated from
operations.

Dura recorded an income tax provision of $3.5 million for 1996 as compared
to $406,000 for 1995. The increased provision is due to the increase in income
before income taxes in 1996. The 1996 provision reflects the expected combined
federal and state tax rate of approximately 40% largely offset by the benefit
from the utilization of net operating loss carryforwards.

FISCAL YEAR 1995 ("1995") COMPARED TO FISCAL YEAR 1994 ("1994")

Total revenues in 1995 increased $18.8 million, or 58%, over 1994. However,
Dura incurred a net loss in 1995 of $35.8 million, or $1.53 per share, due to
charges totaling $43.8 million related to Dura's Spiros development program. The
charges consisted of a $30.8 million non-cash charge for in-process technology
acquired in connection with Dura's acquisition of DDSI and a $13.0 million
purchase option charge resulting from the cash contribution to Spiros Corp.. If
the charges were excluded, Dura would have reported net income in 1995 of $8.0
million or $0.28 per share.

Pharmaceutical sales in 1995 increased by $17.1 million, or 77%, over 1994
due primarily to the $15.3 million in sales generated by Health Script, 1995
product acquisitions and internally-developed products that were launched in the
second half of 1994. The remaining increase was generated by the pre-existing
product line for which sales growth was impacted by the relatively weak
cough/cold season experienced across the country in the first quarter of 1995.

Gross profit for 1995 increased by $10.4 million, or 57%, as compared to
1994. Gross profit as a percentage of sales decreased to 73% in 1995 from 82% in
1994 due primarily to the lower margins generated on sales by Health Script in
addition to the impact of contract pricing to managed care organizations.

Contract revenues in 1995 increased by $1.7 million as compared to 1994. In
1995 and 1994, Dura recorded contract revenues of $1.6 million and $400,000,
respectively, relating to an agreement with Drug Royalty Corporation USA Inc.
("DRC") under which Dura received funding through December 1995 to expand its
sales force. In addition, Dura conducts development work under contracts with
several companies and receives royalties. The development contracts relate to
the testing and development of various compounds for use with Spiros and
generated revenues in 1995 and 1994 of $9.5 million and $9.9 million,
respectively, including $8.0 million and $9.2 million from DDSI. Dura recorded
royalties under the co-promotion arrangement with Bausch & Lomb Pharmaceuticals,
Inc. ("Bausch & Lomb") of $813,000 in 1995.

Clinical, development and regulatory expenses in 1995 decreased by $946,000,
or 10%, from 1994. Under an agreement with DDSI, Dura managed the development of
DDSI products and incurred development expenses on behalf of DDSI in 1995 and
1994 of $6.4 million and $8.3 million, respectively, for which it received
contract revenues. The decrease in DDSI development expenses resulted primarily
from the shift from use of outside contractors to Dura employed personnel and
resources. This decrease was partially offset by increased expenses associated
with work being performed under development contracts, for which Dura recorded
contract revenues of $1.0 million in 1995, and by costs associated with the
internal development of respiratory pharmaceutical products.

Selling, general and administrative expenses in 1995 increased by $8.0
million over 1994 and decreased as a percentage of revenues from 55% in 1994 to
50% in 1995. The dollar increase results

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primarily from the operating costs of Health Script, acquired in March 1995, and
increased sales and contracting levels. The decrease as a percentage of revenues
reflects an increase in the productivity of the sales force, the growth of
pharmaceutical sales due to product acquisitions and the growth of contract
revenues.

Other income-net (primarily interest income) in 1995 increased by $1.4
million as compared to 1994. The increase resulted primarily from interest
income on cash balances generated by the November 1994 and August 1995 stock
offerings which was partially offset by interest expense resulting from
obligations incurred in connection with 1995 acquisitions.

Dura recorded income tax provisions of $406,000 and $34,000 in 1995 and
1994, respectively. The provisions reflect the expected combined federal and
state tax rate of 40% offset by the benefit from utilization of net operating
loss carryforwards, which are generally limited to 90% of taxable income.

LIQUIDITY AND CAPITAL RESOURCES

Cash, cash equivalents and short-term investments increased by $214.4
million to $454.7 million at September 30, 1997 from $240.3 million at December
31, 1996. The increase resulted primarily from the net proceeds of the offering
of the Notes as well as from cash generated from operations, partially offset by
the acquisition of the intranasal steroid products Nasarel and Nasalide for $70
million in May 1997 and capital expenditures of $18.8 million. Working capital
increased by $237.4 million to $457.3 million at September 30, 1997 from $219.9
million at December 31, 1996.

At September 30, 1997, Dura had an aggregate of $297.7 million in long-term
obligations, of which $2.9 million is to be paid during the next 12 months. As
of September 30, 1997, additional future contingent obligations totaling $97.9
million relating to product acquisitions are due through 2004.

In April 1997, Dura entered into a loan agreement which provides for the
borrowing of up to $50 million on an unsecured basis through May 1, 1999. As of
September 30, 1997, no borrowings were outstanding under this loan.

Dura provides development and management services to Spiros Corp. pursuant
to various agreements for the development of Spiros for use with certain
respiratory drugs. Dura records contract revenues from Spiros Corp. equal to
amounts due for such services, less a pro rata amount allocated to warrant
subscriptions receivable. On October 10, 1997, Dura announced its intention to
exercise, prior to the completion of the Offerings and subject to providing
formal notice of exercise, its option to acquire all of the callable common
stock of Spiros Corp. for an aggregate purchase price estimated to be $45.7
million, payable in cash, shares of Dura Common Stock, or any combination
thereof.

Dura anticipates that its existing capital resources, together with cash
expected to be generated from operations and available bank borrowings, should
be sufficient to finance the transactions discussed above and its operations
through at least the next 12 months. Significant additional resources, however,
may be required in connection with product or company acquisitions or
in-licensing opportunities. At present, Dura is actively pursuing the
acquisition of rights to several products and/or companies which may require the
use of substantial capital resources; however, there are no present agreements
or commitments with respect to such acquisitions.

Assuming the completion of the Offerings and the Spiros Corp. Purchase, Dura
expects to incur charges to earnings for the amount of the Contribution and for
purchased in-process technology, in an amount approximating the Spiros Corp.
Purchase price, that will be recorded in the periods in which these transactions
are consummated. Dura will also record warrant subscriptions receivable and a
corresponding increase to additional paid-in capital reflecting the estimated
fair value of the Warrants issued pursuant to the Offerings. Thereafter, cash
received from Spiros Corp. II pursuant to the Development Agreement will be
pro-rated between contract revenue and the warrant subscriptions receivable.

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DESCRIPTION OF THE WARRANTS

Each Unit includes a Warrant to purchase one-fourth of one share of Dura
Common Stock. The Warrants will be issued pursuant to a Warrant Agreement (the
"Warrant Agreement") to be entered into between Dura and ChaseMellon Shareholder
Services, as warrant agent (the "Warrant Agent") on the closing date of the
Offerings. Except as described below, the Warrants will be exercisable from the
Separation Date until December 31, 2002 (the "Warrant Expiration Date"), at an
exercise price equal to $ per share of Dura Common Stock (the "Exercise
Price")(currently anticipated to be 125% of the closing price of Dura Common
Stock on the date of the Prospectus), subject to certain adjustments, as
described below. Warrants not exercised on or prior to the Warrant Expiration
Date will become void and all rights in respect thereof will cease as of such
time. The Warrants will trade only with shares of Spiros Corp. II Common Stock
as Units until the Separation Date. On and after the Separation Date the
Warrants will trade separately from the Spiros Corp. II Common Stock.

In the event of (i) certain reorganizations of Dura or reclassifications of
Dura Common Stock, (ii) certain mergers, consolidations or other business
combinations of Dura with any person, other than a merger or consolidation with
a subsidiary of Dura in which Dura is the surviving entity, (iii) a sale, lease,
transfer or conveyance by Dura of all or substantially all of its property or
assets or (iv) the announcement or commencement of a tender or exchange offer
for securities of Dura pursuant to which the acquiror would beneficially own
securities of Dura representing 50% or more of the aggregate voting power of
Dura (each an "Acceleration Event"), the Separation Date will be accelerated to
the date of such event and the Warrants will become immediately exercisable.

The Warrant Agreement provides that the Exercise Price and the number of
shares of Dura Common Stock issuable upon exercise of each Warrant will be
adjusted in the event of any stock split, stock combination, rights offering,
stock dividend or certain other special dividends with respect to Dura Common
Stock. The Warrant Agreement further provides that in case of any capital
reorganization of Dura, any reclassification of Dura Common Stock, any
consolidation or merger or any other business combination of Dura with or into
another corporation or any sale, lease or transfer to any person of all or
substantially all of the assets of Dura, the holder of each outstanding Warrant
will have the right, upon subsequent exercise of the Warrant, to receive the
kind and amount of shares of stock, other securities or property receivable upon
the capital reorganization, reclassification, consolidation, merger, sale, lease
or transfer that would have been received by such holder upon the exercise of
the Warrant had such Warrant been exercised immediately prior to that event, and
the Exercise Price will be appropriately adjusted.

Fractional shares of Dura Common Stock will not be issued upon exercise of
the Warrants. In lieu thereof, a cash adjustment based on the last sale price of
the Dura Common Stock as reported on the Nasdaq National Market (or as reported
on a national securities exchange, if applicable) on the date of the exercise
will be made. The Warrants do not confer upon the holder thereof any voting,
preemptive or other rights as a stockholder of Dura.

Warrants may be exercised following the Separation Date and through the
Warrant Expiration Date by the surrender to the Warrant Agent of a duly executed
certificate evidencing the Warrants accompanied by payment in full by a
certified or official bank check, payable to the order of Dura, for the Exercise
Price multiplied by the number of shares of Dura Common Stock to be acquired
pursuant to such exercise.

Certificates evidencing the Warrants will be a legend substantially as
follows:

"Until December 31, 1999 or such earlier date as the Purchase Option is
exercised or expires unexercised (the "Separation Date"), the Warrants
represented by this Certificate may be traded, exchanged or otherwise
transferred only together with the Common Stock of Spiros Corp. II issued
herewith. The holder hereof may, but need not, submit this Certificate for
the removal of this legend after the Separation Date."

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DURA CAPITAL STOCK

The authorized capital stock of Dura consists of 100,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, par value $.001 per share
("Preferred Stock").

COMMON STOCK

At September 30, 1997, there were 43,890,806 shares of Dura Common Stock
outstanding and held of record by approximately 360 stockholders. The holders of
Dura Common Stock are entitled to one vote for each share held of record on all
matters submitted to a vote of the stockholders. Subject to the prior or equal
rights of holders of all classes of stock at the time outstanding having prior
or equal rights as to dividends, the holders of Dura Common Stock are entitled
to receive, when and as declared by the Board of Directors of Dura, out of any
assets of Dura legally available therefor, such dividends as may be declared
from time to time by the Board of Directors of Dura. See "Price Range of Dura
Common Stock and Dividend Policies." In the event of liquidation, dissolution or
winding up of Dura, holders of Dura Common Stock are entitled to share ratably
in all assets remaining after payment of liabilities and the liquidation
preference of any outstanding Preferred Stock of Dura. Holders of Dura Common
Stock have no preemptive rights and no right to convert their Dura Common Stock
into any other securities. All outstanding shares of Dura Common Stock are fully
paid and nonassessable.

PREFERRED STOCK

The Board of Directors of Dura has the authority to issue Preferred Stock in
one or more series and to fix the rights, priorities, preferences,
qualifications, limitations and restrictions, including the dividend rates,
conversion rights, voting rights, terms of redemption, terms of sinking funds,
liquidation preferences and the number of shares constituting any series of the
designation of such series, without any further vote or action by the
stockholders, which could decrease the amount of earnings and assets available
for distribution to holders of Dura Common Stock or adversely affect the rights
and powers, including voting rights, of the holders of Dura Common Stock. The
issuance of Preferred Stock by Dura may have the effect of delaying, deferring
or preventing a change in control of Dura without further action by the
stockholders, may discourage bids for Dura Common Stock at a premium over the
market price of Dura Common Stock and may adversely affect the market price of
and the voting and other rights of the holders of Dura Common Stock. At present,
Dura has no plans to issue any Preferred Stock.

WARRANTS TO PURCHASE COMMON STOCK

At September 30, 1997, there were outstanding warrants (other than the
Series W Warrants and the Series S Warrants, described below) to purchase an
aggregate of 3,000 shares of Dura Common Stock at $.25 per share; 1,014 shares
at $2.44 per share; 600,000 shares at $4.38 per share; and 200,000 shares at
$6.48 per share. Such warrants expire on April 2, 1999, September 27, 1998,
April 17, 2001, and September 21, 1999, respectively. Each such warrant contains
provisions for the adjustment of the exercise price and the aggregate number of
shares issuable upon exercise of the warrant under certain circumstances,
including stock dividends, stock splits, reorganization, reclassifications or
consolidations. The holders of certain of the warrants are entitled to certain
registration rights with respect to Dura Common Stock issued or issuable upon
exercise thereof. Dura has registered the resale of 204,014 shares of Dura
Common Stock issuable upon exercise of the warrants on a "shelf registration
statement" on Form S-3 filed with the Commission. See "--Registration Rights."

Also outstanding at September 30, 1997 were Series W Warrants to purchase an
aggregate of 812,000 shares of Dura Common Stock at $2.38 per share and Series S
Warrants to purchase an aggregate of 2,240,000 shares of Dura Common Stock at an
exercise price of $19.47 per share, subject to adjustment as defined in the
warrants (collectively, the Series W Warrants and the Series S Warrants are
referred to herein as the "Dura Warrants"). The Series W Warrants are currently
exercisable through September 27, 2000. The Series S Warrants will be
exercisable after December 29, 1997 or sooner under certain circumstances (the
"Series S Exercise Date"), through December 29, 2000. The Dura Warrants contain
provisions for the adjustment of the exercise price and the aggregate number of
shares of Dura Common

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Stock issuable upon exercise of the Warrants under certain circumstances,
including stock splits, stock combinations, rights offerings, stock dividends or
certain special dividends with respect to the Dura Common Stock. In addition,
the exercise price and the number of shares issuable upon exercise of the Series
W Warrants and the Series S Warrants will be appropriately adjusted, with
respect to the Series W Warrants, in the event of the issuance of Dura Common
Stock at a per share price less than the exercise price of the Series W
Warrants, and, with respect to the Series S Warrants, in the event of the
issuance of Dura Common Stock below "fair market value" (as defined in the
Series S Warrants). Dura has registered the resale of shares of Dura Common
Stock issuable upon exercise of the Series W Warrants on a "shelf registration
statement" on Form S-3 filed with the Commission. Dura is obligated to register
the shares of Dura Common Stock issuable upon exercise of the Series S Warrants,
and in certain circumstances, the Series W Warrants, upon demand or with the
registration of its other securities. See "--Registration Rights."

NOTES CONVERTIBLE INTO COMMON STOCK

In the third quarter of 1997, Dura issued $287.5 million of principal amount
of its 3 1/2% Notes due 2002. The Notes are convertible, at the option of the
holder, into shares of Dura's Common Stock at any time prior to maturity or
redemption at a conversion price of $50.635 per share, subject to adjustment
under certain conditions. Interest is payable semi-annually, commencing on
January 15, 1998. The Notes can be redeemed by Dura from time to time, in whole
or in part, at specified redemption prices after July 15, 2000.

REGISTRATION RIGHTS

Pursuant to an Investors' Rights Agreement dated as of September 27, 1993
(the "1993 Registration Rights Agreement"), Dura has registered on a shelf
registration statement on Form S-3 the resale of the 812,000 shares of Dura
Common Stock (the "Series W Shares") issuable upon exercise of all of the
currently outstanding Series W Warrants. Dura is further obligated to file a
registration statement with respect to the resale of the Series W Warrants and
the Series W Shares within 30 days after a registration statement on Form S-3
becomes available for use by Dura with respect to the registration of the resale
of the Series W Warrants. Moreover, if, prior to the earlier of (i) September
27, 1996 (or, in the case of any holder who cannot resell his Series W Warrants
under Rule 144(k), September 27, 1998) or (ii) the effective date of a
registration statement on Form S-3 with respect to the resale of the Series W
Warrants, Dura registers any of its securities, the holders of the Series W
Warrants will have the right to include their Series W Warrants in such
registration.

Pursuant to the Registration Rights Agreement dated as of April 17, 1994,
the holder of 914,024 outstanding shares of Dura Common Stock (and 600,000
shares of Dura Common Stock issuable upon exercise of an outstanding warrant) is
entitled to notice of registration of any of the Dura's securities under the
Securities Act and is entitled to include its registrable securities in such
registration. In addition, such holder is entitled to request registration of at
least 51% of its registrable securities on Form S-3 (or other successor form)
under the Securities Act. All registration expenses in connection with Dura
registrations will be borne by Dura, and all registration expenses in connection
with the holder's requested registration on Form S-3 will be borne by the
holder, up to a maximum of $100,000. All selling expenses will be borne by the
holder. Dura is required to indemnify the holder and the underwriters for such
holder, if any, under certain circumstances. Registration rights may be
transferred only to a transferee of registrable securities who, after such
transfer, holds 200,000 shares of Dura registrable securities. The registration
rights granted under this agreement terminate on April 17, 1999 (or, with
respect to registration on Form S-3, if earlier, the date on which the holder is
able to sell all registrable securities under Rule 144(k)).

Pursuant to an Investors' Rights Agreement dated as of December 29, 1995
(the "1995 Registration Rights Agreement"), Dura is obligated to use its best
efforts to file a registration statement on Form S-3 with respect to the resale
of the shares of Dura Common Stock issuable upon exercise of the Series S
Warrants (the "Series S Shares") on or before December 29, 1997. In addition, if
at any time after

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December 29, 1997, Dura registers its securities, the holders of the Series S
Warrants will have the right to include the resale of the Series S Shares in
such registration.

Pursuant to the 1993 Registration Rights Agreement and the 1995 Registration
Rights Agreement, Dura is required to bear all the registration expenses. Dura
is required to indemnify the holders and the underwriters for such holders, if
any, under certain circumstances. Dura's respective obligations to register the
Series W Warrants and the Series S Shares will each terminate in certain
circumstances.

POSSIBLE ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS

CERTIFICATE OF INCORPORATION AND BYLAWS

Dura's Certificate of Incorporation authorizes its Board of Directors
("Board") to establish one or more series of undesignated Preferred Stock, the
terms of which can be determined by the Board at the time of issuance. See
"--Preferred Stock." The Certificate of Incorporation also provides that all
stockholder actions must be effected at a duly called meeting of stockholders
and not by a consent in writing. Dura's Bylaws provide that Dura's Board will be
classified into two classes of directors serving staggered two-year terms, with
one class of directors to be elected at each annual meeting of stockholders. In
addition, Dura's Bylaws do not permit stockholders to call a special meeting of
stockholders; only Dura's Chief Executive Officer or the Chairman of the Board,
or the President or Secretary at the written request of a majority of the Board,
are permitted to call a special meeting of stockholders. The Bylaws also require
that stockholders give advance notice to Dura's secretary of any nominations for
director or other business to be brought by stockholders at any stockholders'
meeting and require a majority vote of members of Dura's Board or stockholders
to amend Bylaw provisions. These provisions of the Dura Certificate of
Incorporation and Bylaws could discourage potential acquisition proposals and
could delay or prevent a change in control. Such provisions may also have the
effect of preventing changes in Dura's management.

DELAWARE TAKEOVER STATUTE

Dura is subject to Section 203 of the Delaware General Corporation Law
("Section 203") which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder (defined as any person or entity that is the beneficial owner of at
least 15% of a corporation's voting stock) for a period of three years following
the time that such stockholder became an interested stockholder, unless: (i)
prior to such time, the board of directors of the corporation approved either
the business combination or the transaction that resulted in the stockholder's
becoming an interested stockholder; (ii) upon consummation of the transaction
that resulted in the stockholder's becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding, for purposes of
determining the number of shares outstanding, those shares owned (x) by persons
who are directors and also officers and (y) by employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer;
or (iii) at or subsequent to such time, the business combination is approved by
the board and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least two-thirds of the
outstanding voting stock that is not owned by the interested stockholder.

Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, lease, exchange, mortgage, transfer, pledge or other disposition involving
the interested stockholder and 10% or more of the assets of the corporation;
(iii) subject to certain exceptions, any transaction which results in the
issuance or transfer by the corporation of any stock of the corporation to the
interested stockholder; (iv) any transaction involving the corporation that has
the effect of increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested stockholder; or
(v) the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or through
the corporation.

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SPIROS CORP. II CAPITAL STOCK

The authorized capital stock of Spiros Corp. II will consist of 6,500,000
shares of Common Stock, par value $0.001 per share, and 1,000 Special Shares,
par value $1.00 per share. It is not expected that Spiros Corp. II will pay any
dividends for the foreseeable future.

COMMON STOCK

GENERAL. Upon completion of the Offerings all of the outstanding shares of
Spiros Corp. II Common Stock will be duly authorized, fully paid and validly
issued. See "The Agreement and the Purchase Options--Stock Purchase Option."
Holder of Spiros Corp. II Common Stock are entitled to receive such dividends as
may be recommended by the Board of Directors and approved by the holders of a
majority of the Special Shares. It is expected that Spiros Corp. II will not pay
dividends on the Spiros Corp. II Common Stock. In a winding-up or liquidation of
Spiros Corp. II, the assets available for distribution shall be distributed pro
rata among the holders of shares of Spiros Corp. II Common Stock . Shares of
Spiros Corp. II Common Stock have no conversion or redemption rights. Prior to
the Offerings, no shares of Spiros Corp. II Common Stock were outstanding.

VOTING RIGHTS. The Amended and Restated Certificate of Incorporation of
Spiros Corp. II provides that the holders of Spiros Corp. II Common Stock are
entitled to one vote per share, either in person or by proxy, at stockholder
meetings. Two or more stockholders present in person or by proxy holding not
less than one third of the issued and outstanding Spiros Corp. II Common Stock
constitute a quorum at such meetings. A majority of votes cast is required for
most items of business placed before a general meeting of stockholders. The
consent of the holder of Special Shares is required for certain actions. See
"Risk Factors--Business Risks Related to Spiros Corp. II--Limitation on Certain
Spiros Corp. II Activities" and "--Special Shares." Stockholders do not have
cumulative voting rights for the election of directors, which means that the
holders of a majority of the shares elect all of the directors, except for those
directors elected by the Special Shares.

SPECIAL SHARES. There are currently issued 1,000 shares of Spiros Corp. II
common stock, all of which are held by Dura. Immediately prior to the closing of
the Offerings, the authorized and outstanding shares of Spiros Corp. II common
stock will be renamed Special Shares. Following the issuance of the Spiros Corp.
II Common Stock, the Special Shares do not confer on the holders thereof the
right to vote at any meeting of Spiros Corp. II stockholders except as referred
to in the next paragraph and except that holders of a majority of Special Shares
are entitled to elect two directors. Nor do these shares have the right to any
profits of Spiros Corp. II. In the event of the winding up of Spiros Corp. II,
the Spiros Corp. II Common Stock shall have a priority over the Special Shares
with respect to return of capital, and the Special Shares shall not otherwise be
entitled to participate in any way in the profits or assets of Spiros Corp. II.
Spiros Corp. II does not presently intend to issue any additional Special
Shares.

Until the expiration of the Purchase Option, no resolution or act of Spiros
Corp. II to authorize or permit any of the following will be effective without
the prior written approval of the holders of a majority of the outstanding
Special Shares: (i) the allotment or issue of shares or other securities of
Spiros Corp. II or the creation of any right to such an allotment or issue; (ii)
the reduction of Spiros Corp. II's authorized share capital; (iii) outstanding
borrowings by Spiros Corp. II over an aggregate of $1 million; (iv) the sale or
other disposition of or the creation of any lien or liens on the whole or a
material part of Spiros Corp. II's business or assets; (v) the declaration or
payment of dividends or the making of any other distributions to stockholders;
(vi) any merger, liquidation or sale of all or substantially all of its assets
of Spiros Corp. II; and (vii) any alteration of the Purchase Option. See "The
Agreements and the Purchase Options--Stock Purchase Option."

Thus Dura, as the holder of a majority of the outstanding Special Shares,
could preclude the holders of a majority of the majority of the shares of Spiros
Corp. II Common Stock and the Board of Directors of Spiros Corp. II from taking
any of the foregoing actions during such period. Dura, as holder of all of the

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outstanding Special Shares, may transfer or sell all, but not less than all, of
such shares. As a result, an unrelated third party may acquire rights associated
with the Special Shares, including the rights discussed in this section. In
addition, there can be no assurance that any transferee of the Special Shares
will have the same financial resources or development, manufacturing or
marketing capabilities as Dura, which may have a material adverse effect on the
likelihood of the exercise of the Albuterol Option, the Product Option or the
Purchase Option. In addition, any resolution to wind up the affairs of or
liquidate Spiros Corp. II will confer upon the holders of the Special Shares a
right to vote and such Special Shares will carry a number of votes equal to the
total number of votes carried by the Spiros Corp. II Common Stock at the time
outstanding.

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THE AGREEMENTS AND THE PURCHASE OPTIONS

The following is a summary of certain provisions of the Stock Purchase
Option, the Technology Agreement, the Albuterol and Product Option Agreement,
the Development Agreement, the Manufacturing and Marketing Agreement and the
Services Agreement. The summary is qualified in its entirety by reference to the
full text of such agreements, copies of which may be obtained upon request to
Dura.

STOCK PURCHASE OPTION

Dura, as the holder of all of the issued and outstanding Special Shares will
have the right, as set forth in Spiros Corp. II's Amended and Restated
Certificate of Incorporation, to purchase all, but not less than all, of the
Spiros Corp. II Common Stock outstanding at the time such right is exercised.
The Purchase Option will be exercisable upon the Exercise Notice given at any
time beginning on the closing date of the Offerings and ending on the earlier of
(i) December 31, 2002 or (ii) the 90th day after the date Spiros Corp. II
provides Dura (as such holder) with the Financial Notice, although following the
receipt of the Financial Notice Dura may, at its election, extend such period by
providing additional funding for the continued development of Spiros Products
(but in no event beyond December 31, 2002). If the Purchase Option is exercised,
the Purchase Option Exercise Price, calculated on a per share basis, assuming an
offering price of $16.00 per Unit, will be as follows:

On or after January 1, 2000 and on or before March 31, 2000.................. 25.26
On or after April 1, 2000 and on or before June 30, 2000..................... 26.57
On or after July 1, 2000 and on or before September 30, 2000................. 27.96
On or after October 1, 2000 and on or before December 31, 2000............... 29.41

On or after January 1, 2001 and on or before March 31, 2001.................. 31.10
On or after April 1, 2001 and on or before June 30, 2001..................... 32.88
On or after July 1, 2001 and on or before September 30, 2001................. 34.77
On or after October 1, 2001 and on or before December 31, 2001............... 36.76

On or after January 1, 2002 and on or before March 31, 2002.................. 38.87
On or after April 1, 2002 and on or before June 30, 2002..................... 41.10
On or after July 1, 2002 and on or before September 30, 2002................. 43.46
On or after October 1, 2002 and on or before December 31, 2002............... 45.95
</TABLE>

The Purchase Option Exercise Price per share of Spiros Corp. II Common Stock
will increase or decrease if the offering price per Unit is more or less than
$16.00 per Unit.

The Purchase Option Exercise Price may be paid in cash or shares of Dura
Common Stock, or any combination of the foregoing, at Dura's sole discretion.
Any such shares of Dura Common Stock will be valued based upon the average of
the closing price for Dura Common Stock on the Nasdaq National Market for ten
trading days immediately preceding the date of the Exercise Notice. In the event
the Purchase Option were transferred, the payment by the subsequent holder of
the majority of the Special Shares could be made in cash or, if such holder or
its parent is a company whose common equity securities are listed on a national
securities exchange or admitted to unlisted trading privileges or listed on the
Nasdaq National Market, in the sole discretion of such holder, in shares of such
listed common equity security.

Dura owns all of the issued and outstanding Special Shares, which grants
Dura the Purchase Option and confers certain voting and other rights, including
the right to elect two of the five directors of Spiros Corp. II. Under its
Amended and Restated Certificate of Incorporation, Spiros Corp. II will be
prohibited, until the expiration of the Purchase Option, from taking or
permitting certain actions inconsistent with Dura's rights under the Purchase
Option. For example, until the expiration of the Purchase Option, Spiros

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Corp. II will not be able to, among other things, without the consent of Dura,
pay any dividends, issue additional shares of capital stock, have outstanding
borrowings in excess of an aggregate of $1 million, or merge, liquidate or sell
all or substantially all of its assets or alter the Purchase Option. At present,
Dura has no intention of transferring such Special Shares. See "Spiros Corp. II
Capital Stock."

TECHNOLOGY LICENSE AGREEMENT

Dura, Spiros Corp. and Spiros Corp. II will enter into the Technology
Agreement, under which Dura and Spiros Corp. will grant Spiros Corp. II an
exclusive, worldwide, perpetual, royalty-bearing license to use the Core
Technology in research, development and commercialization (except with respect
to beclomethasone in Asia) of the Spiros Products, including rights to patents,
patent applications and other intellectual property rights.

In consideration for these license rights granted to Spiros Corp. II by Dura
and Spiros Corp., Spiros Corp. II will pay Dura and Spiros Corp. a technology
access fee equal to the greater of (a) 5% of the Net Sales of each Spiros
Product or (b) $2 million for all Spiros Products in any calendar year beginning
in 1998. Spiros Corp. II's obligation will terminate, on a country-by-country
basis, (a) within 10 years from the first sale of such Spiros Product in those
countries where no patents covering such product are issued and (b) in those
countries where patents covering the Spiros Products are issued, upon the
expiration of the last-to-expire patent covering such Spiros Product in such
country.

In addition, Spiros Corp. II will grant Dura (a) a worldwide, exclusive,
royalty-free license to use the Core Technology and the Program Technology to
develop the Spiros Products pursuant to the terms of the Development Agreement;
(b) a worldwide, exclusive, royalty-bearing license to use the Program
Technology to sell Spiros Products worldwide pursuant to the terms of the
Manufacturing and Marketing Agreement; (c) upon Dura's exercise of the Albuterol
Option, a worldwide, exclusive, royalty-free, irrevocable, perpetual license to
the Program Technology to develop, manufacture and commercialize the Albuterol
Product; (d) upon Dura's exercise of the Product Option, a worldwide, exclusive,
royalty-free, irrevocable, perpetual license to the Program Technology to
develop, manufacture and commercialize sell the Spiros Product for which the
Product Option is exercised; and (e) a worldwide, exclusive, royalty-free,
irrevocable, perpetual license to the Program Technology, including technology
relating to enhancements to the existing Spiros technology or any next
generation inhaler system, to develop, manufacture and commercialize products
other than the Spiros Products, including products that compete with the Spiros
Products.

Under the Technology Agreement, Dura must use commercially reasonable
efforts to secure the rights of third parties in technology that is necessary or
useful to the development of the Spiros Products. Spiros Corp. II will have no
obligation to accept any grant of such rights or to assume any obligation
without its prior written consent. If Spiros Corp. II desires to obtain any such
rights, Dura and Spiros Corp. II agree to negotiate in good faith regarding the
allocation of any royalty, license fee or other payments payable to the third
party and the assumption of any obligations applicable to such license.

Until the expiration of the Purchase Option, Dura will direct and cause, at
Spiros Corp. II's expense, appropriate patent applications to be prepared,
prosecuted and maintained with respect to patents licensed to Spiros Corp. II
and with respect to any technology developed or acquired on behalf of Spiros
Corp. II by Dura. Upon the termination unexercised of the Purchase Option, all
patents and patent applications developed or acquired on behalf of Spiros Corp.
II will be assigned to Spiros Corp. II.

Pursuant to the terms of the Technology Agreement, if Spiros Corp. II or
Dura receives notice of alleged infringement of any patent, it shall notify the
other party of such infringement and all amounts recovered in any action to
enforce patent rights shall be retained by the parties in proportion to the
respective portion of expenses borne by the parties in enforcing such action.

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Spiros Corp. II has agreed to indemnify Dura against certain third party
claims, including patent infringement claims, relating to the Spiros Corp. II's
use of the Program Technology or breach of the Technology Agreement, Development
Agreement or Manufacturing and Marketing Agreement. Dura has agreed to indemnify
Spiros Corp. II against certain third party claims, including patent
infringement claims, relating to Dura's use of the Program Technology,
performance of the Development or breach of the Technology Agreement,
Development Agreement or Manufacturing and Marketing Agreement.

Prior to the expiration of the Purchase Option, Spiros Corp. II cannot
without Dura's prior written consent (a) license, sublicense, encumber or
otherwise transfer any rights in the Program Technology; (b) make, use or sell
any of the Program Technology; or (c) authorize, cause or assist in any way any
other person to do any of the foregoing. Following the expiration or termination
of the Purchase Option, the foregoing limitations will cease to be applicable
and Spiros Corp. II will have the right to license, sublicense, encumber or
otherwise transfer the Program Technology for use with any Spiros Products that
have not been acquired by Dura through the exercise of either the Albuterol
Option or the Product Option. Dura may assign its rights and delegate its
obligations under the Technology Agreement only to an affiliate of Dura, certain
successors of Dura or certain persons that acquired substantially all of the
assets of Dura.

The Technology Agreement will remain in full force and effect indefinitely,
unless terminated by (a) mutual agreement of the parties or (b) Dura's exercise
of the Purchase Option.

Either Dura or Spiros Corp. II may terminate the Technology Agreement prior
to its expiration if the other party (a) breaches any material obligation under
the Technology Agreement or the Development Agreement, which breach continues
for a period of 60 days after written notice thereof, (b) enters into any
voluntary proceeding in bankruptcy, reorganization or an arrangement for the
benefit of its creditors, or its Board of Directors or stockholders authorize
such action or (c) fails to dismiss any such proceeding within 60 days after the
same is involuntarily commenced. If Spiros Corp. II terminates the Technology
Agreement, Spiros Corp. II's license to use the Program Technology will continue
(except with respect to any Spiros Products that have been previously acquired
by Dura through exercise of the Albuterol Option or the Product Option), and
Spiros Corp. II will be free to enter into arrangements with third parties to
research, develop and commercialize the Spiros Products. If Dura terminates the
Technology Agreement, (a) Spiros Corp. II's license to use the Core Technology
under the Technology Agreement will terminate, (b) all of Spiros Corp. II's
rights to the Program Technology will revert to Dura, and (c) all rights to
develop, use and sell the Spiros Products will revert to Dura. Dura and Spiros
Corp. II will use reasonable efforts for a period of 120 days after the
Technology Agreement is terminated by Dura to reach agreement on royalties and
other compensation to be paid by Dura to Spiros Corp. II solely with respect to
the Spiros Products and the Program Technology and, in the absence of such
agreement, the matter will be submitted to binding arbitration. There can be no
assurance that, upon termination of the Technology Agreement by Spiros Corp. II,
that it will be able to make alternative arrangements for the research,
development and commercialization of some or all of the Spiros Products.

ALBUTEROL AND PRODUCT OPTION AGREEMENT

Dura and Spiros Corp. II will enter into the Albuterol and Product Option
Agreement pursuant to which Dura will obtain (a) the Albuterol Program Assets
and (b) the Spiros Product Program Assets.

The Albuterol Program Assets include (a) the Albuterol Product, (b)
albuterol as formulated for use in the Albuterol Product, (c) a perpetual,
sublicensable, non-exclusive, royalty-free license to the technology owned by
Dura or developed or acquired by Dura during the term of the Development
Agreement applicable to the Albuterol Product for use solely with the Albuterol
Product, and (d) all applications and documents filed with the FDA or a foreign
regulatory authority to obtain regulatory approval to commence commercial sale
or use of the Albuterol Product. The Albuterol Option is exercisable commencing
on the date of the closing of the Offerings and ending on the earlier of (i) 360
days after receipt of FDA approval

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to market the Albuterol Product or (ii) the date Dura ceases to manufacture or
market the Albuterol Product in accordance with the terms of the Manufacturing
and Marketing Agreement.

Upon exercise of the Albuterol Option, Dura will make a single payment to
Spiros Corp. II in cash equal to (a) the aggregate Purchase Option Exercise
Price, assuming acquisition of all shares of Spiros Corp. II Common Stock issued
pursuant to the Offerings four years following closing of the Offerings,
multiplied by (b) a fraction, the numerator of which will equal the development
and commercialization costs and expenses incurred by Spiros Corp. II in
connection with the development and commercialization of the Albuterol Product
and the denominator of which will equal the Available Funds (excluding the
proceeds, if any, from the exercise of the Albuterol Option or the Product
Option) set forth in the proposed budget contained herein. See "Use of
Proceeds."

The Spiros Product Program Assets include (a) the Option Product, (b) the
compound to be delivered by the Option Product, as formulated for use
specifically in the Option Product, (c) a perpetual, sublicensable,
non-exclusive, royalty-free license to the technology owned by Dura or developed
or acquired by Dura during the term of the Development Agreement applicable to
the Option Product for use solely with the Option Product, and (d) all
applications and documents filed with the FDA or a foreign regulatory authority
to obtain regulatory approval to commence commercial sale or use of the Option
Product. The Product Option is exercisable with respect to each Spiros Product
commencing on the date of the closing of the Offerings and ending 90 days after
receipt of FDA approval to market such Spiros Product; provided, however, that
the Product Option may only be exercised with respect to a single Spiros
Product.

Upon exercise of the Product Option, Dura will make a single payment to
Spiros Corp. II in cash equal to 110% of (a) the aggregate Purchase Option
Exercise Price, assuming acquisition of all shares of Spiros Corp. II Common
Stock issued pursuant to the Offerings four years following closing of the
Offerings, multiplied by (b) a fraction, the numerator of which will equal the
development and commercialization costs and expenses incurred by Spiros Corp. II
in connection with the development of the Option Product and the denominator of
which will equal the Available Funds (excluding the proceeds, if any, from the
exercise of the Albuterol Option or the Product Option) set forth in the
proposed budget contained herein. See "Use of Proceeds."

Any payments received by Spiros Corp. II with respect to the exercise of the
Albuterol Option and the Product Option will become part of the Available Funds.

The Albuterol and Product Option Agreement will automatically terminate in
the event that Spiros Corp. II terminates the Technology Agreement, the
Development Agreement or the Manufacturing and Marketing Agreement, consistent
with the terms of those agreements. Additionally, the Albuterol and Product
Option Agreement will terminate on the date the Purchase Option terminates,
whether by exercise or otherwise.

DEVELOPMENT AGREEMENT

Dura and Spiros Corp. II will enter into the Development Agreement under
which Dura will agree to use commercially reasonable efforts to develop the
Program Technology for the purpose of the Development and to make the Other
Expenditures. Dura will furnish all labor, supervision, services, supplies, and
materials necessary to perform the Development.

Dura also agrees to use commercially reasonable efforts to obtain the rights
to, and to sublicense to Spiros Corp. II, any patent or technology license held
by a third party that Dura reasonably determines to be necessary or useful to
enable Dura to conduct the Development. Dura will act as Spiros Corp. II's
exclusive agent for the filing and prosecuting of all regulatory applications
and permits required to obtain FDA approval in Dura's name and any other
necessary regulatory approvals for the Spiros Products. In the event that the
Purchase Option expires unexercised, Dura will use its reasonable efforts to
cause all

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applications and documents filed with the FDA or a foreign regulatory authority
to obtain regulatory approvals for the Spiros Products, with respect to which
Dura has not acquired exclusive rights, to be assigned to Spiros Corp. II.

Dura will conduct the Development in accordance with an annual workplan and
budget. At the closing, Dura will provide Spiros Corp. II with a workplan and
budget covering the period from the closing date through December 31, 1998.
Thereafter, Dura and Spiros Corp. II will prepare annual workplans and budgets.
The annual workplans and budgets are subject to approval and acceptance by
Spiros Corp. II's Board of Directors. Dura must report any significant
deviations from an annual workplan and budget in a timely manner. Further,
reimbursement for expenditures from Spiros Corp. II may not exceed in any
calendar year 120% of the amount allocated in the applicable annual workplan and
budget, unless otherwise approved by Spiros Corp. II.

During the term of the Development Agreement, each of Dura and Spiros Corp.
II will provide the other with quarterly reports with respect to all payments
due and all credits taken for such quarter, including, in the case of Dura, a
statement of the Development Costs incurred during such quarter and a summary of
work performed for Spiros Corp. II. Additionally, each of Spiros Corp. II and
Dura is required to maintain and make available for inspection by an independent
public accountant selected by the requesting party, once in each calendar year
and upon reasonable notice and during regular business hours, such records of
the other party as may be necessary to verify the accuracy of reports and
payments made in respect of the Development Agreement.

Payments to Dura under the Development Agreement for Dura's work in
performing the Development will be made for the full amount of all of Dura's
research and development expenses, general and administrative expenses, capital
equipment costs and all other costs and expenses (the "Development Costs")
incurred by Dura in performing the activities described above, up to the maximum
amount of the funds available to Spiros Corp. II, which include substantially
all of the Available Funds. Development Costs will include development expenses
(including salaries, benefits, supplies, and facilities and overhead
allocations) that are billed at a rate of fully burdened cost plus 25%;
provided, however, that services provided by third parties will be billed at a
rate of cost plus 20%. This pricing structure is considered by Dura to be
consistent with contractual relationships it has had with other third parties.
Development Costs also include costs, estimated to be approximately $4 million,
for the Development conducted by Dura from October 10, 1997 through the date of
the closing of the Offerings.

If Spiros Corp. II or Dura determines that the development of a particular
Spiros Product should be discontinued because continued development is not
feasible or is uneconomic, or that the development should be expanded to include
one or more Designated Compounds, then Spiros Corp. II and Dura will use
reasonable efforts to agree on the nature of the Development and the identity of
any other compound on which unexpended Available Funds will be spent.

Under the Development Agreement, the manufacture and sale of Spiros Products
for the sole purpose of conducting clinical trials necessary to obtain FDA
approval or any other required regulatory approval will be charged to Spiros
Corp. II as Development Costs. Dura will remit to Spiros Corp. II any revenue
received by it from the sale of such Spiros Products prior to receipt of FDA
approval to market.

Either Dura or Spiros Corp. II may terminate the Development Agreement prior
to its expiration if the other party (a) breaches any material obligation under
the Technology Agreement or the Development Agreement, which breach continues
for a period of 60 days after written notice thereof, (b) enters into any
voluntary proceeding in bankruptcy, reorganization or an arrangement for the
benefit of its creditors, or its Board of Directors or stockholders authorize
such action or (c) fails to dismiss any such proceeding within 60 days after the
same is involuntarily commenced.

Dura's obligation to perform development work under the Development
Agreement will terminate at such time as Spiros Corp. II has cash or cash
equivalents of less than $5 million, which is projected by

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Spiros Corp. II to occur on or about February 28, 2001. Upon receipt of notice
from Spiros Corp. II, Dura may elect to provide additional funding for the
development of the Spiros Products.

Dura may assign its rights and delegate its obligations under the
Development Agreement only to an affiliate of Dura, certain successors of Dura
or certain persons that acquired substantially all of the assets of Dura. Spiros
Corp. II may not assign its rights or delegate its obligations under the
Development Agreement.

MANUFACTURING AND MARKETING AGREEMENT

Dura and Spiros Corp. II will enter into the Manufacturing and Marketing
Agreement under which Spiros Corp. II will grant to Dura an exclusive, worldwide
license to manufacture and market the Spiros Products. Dura will pay Spiros
Corp. II on a quarterly basis a royalty of 7% of the Net Sales of each Spiros
Product beginning upon receipt of FDA approval to market such product; provided,
however, that prior to the expiration of the Albuterol Option, no royalty
payment will be made with respect to Net Sales of the Albuterol Product.

Under the Manufacturing and Marketing Agreement, Dura will agree to use
diligent efforts to commence sales of each Spiros Product promptly upon
receiving FDA approval for such product. Dura will be responsible for
maintaining competent, qualified sales personnel, and will agree not to make any
representations inconsistent with the approved labeling of each Spiros Product.

"Net Sales" for purposes of the Manufacturing and Marketing Agreement and
the Technology Agreement will be defined as the gross amount invoiced for sales
of the 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. See "Business of Spiros Corp.
II--Patents." Net Sales will 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.

The Manufacturing and Marketing Agreement will terminate (a) upon the
exercise or termination of the Purchase Option or (b) by mutual agreement of the
parties at any time. In the event Dura exercises the Albuterol Option or the
Product Option, the Manufacturing and Marketing Agreement will terminate with
respect to the Albuterol Product or the Option Product, as the case may be, but
will otherwise continue in full force and effect.

SERVICES AGREEMENT

Spiros Corp. II will enter into the Services Agreement with Dura under which
Dura will provide certain management and administrative services to Spiros Corp.
II at the rate of $100,000 per calendar quarter for services to be performed
internally by Dura and for services performed by third parties for Dura on
Spiros Corp. II's behalf. In addition, Spiros Corp. II will reimburse Dura for
all costs and expenses incurred by Dura in connection with the Offerings
(currently estimated to be approximately $600,000). The Services Agreement
terminates on the earlier of (i) the exercise of the Purchase Option or (ii) 12
months after expiration of the Purchase Option.

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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

In the opinion of Brobeck, Phleger & Harrison LLP, counsel for Dura and
Spiros Corp. II ("Counsel"), the following summary accurately sets forth under
currently applicable law all the material U.S. federal income tax consequences
of the purchase, ownership and disposition of the Units, the Spiros Corp. II
Common Stock, the Warrants and the Dura Common Stock (the "Securities") to U.S.
Holders. The following discussion is based on the Internal Revenue Code of 1986,
as amended (the "Code"), judicial decisions, administrative pronouncements, and
existing and proposed regulations issued by the U.S. Department of the Treasury
as now in effect. Each prospective investor should understand that future
legislative, administrative and judicial changes could modify the tax
consequences described below, possibly with retroactive effect.

As used herein, the term U.S. Holder means a beneficial holder of Securities
that (i) owns the Securities as capital assets and (ii) is a U.S. citizen or
resident, a U.S. corporation, an estate the income of which is subject to U.S.
federal income taxation regardless of its source, or a trust that meets the
following two tests: (A) a U.S. court is able to exercise primary supervision
over the administration of the trust, and (B) one or more U.S. fiduciaries have
the authority to control all substantial decisions of the trust.

This summary is necessarily general and may not apply to U.S. Holders who
are subject to special treatment under U.S. tax law (including, but not limited
to, insurance companies, tax-exempt organizations, U.S. expatriates, financial
institutions, broker-dealers, and persons whose functional currency is not the
U.S. dollar). The discussion is also not applicable to foreign entities or
individuals who are not U.S. Holders. In addition, this summary is based on the
assumption that the investment in the Units and the transactions related thereto
will be characterized for federal income tax purposes in a manner consistent
with the form of such transactions under the governing documents. While counsel
believes that such characterizations should be given to the transactions, there
can be no assurance that the IRS will not assert that a different
characterization should obtain.

EACH U.S. HOLDER IS URGED TO CONSULT HIS, HER OR ITS OWN TAX ADVISOR WITH
RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO HIM, HER OR IT OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE SECURITIES, INCLUDING THE TAX CONSEQUENCES
UNDER STATE, LOCAL, AND FOREIGN TAX LAWS, ESTATE TAX LAWS AND PROPOSED CHANGES
IN APPLICABLE LAWS.

TAXATION OF UNITS

In accordance with the governing documents, immediately upon the purchase of
the Units, Dura will acquire an option to acquire the Spiros Corp. II Common
Stock pursuant to the Purchase Option as well as the right to purchase assets
from Spiros Corp. II under the Albuterol Option and the Product Option. At the
same time, Dura will contribute the Contribution together with the proceeds from
the sale of the Warrants to Spiros Corp. II (the "Dura Contribution"). Under
these circumstances, it is likely that, for U.S. federal income tax purposes,
the Dura Contribution will be treated as having been made in consideration for
the grant of the Purchase Option, the Albuterol Option and the Product Option.
In such event, each U.S. Holder of Units should be treated as receiving a
substantial portion of the Dura Contribution in return for the grant to Dura of
the Purchase Option (the "Stock Option Consideration") even though the Stock
Option Consideration is in fact being transferred directly to Spiros Corp. II.
In such case, each U.S. Holder of Units would be treated as having paid the
amount of the Stock Option Consideration to Spiros Corp. II as part of their
cost of acquiring the Spiros Corp. II Common Stock. Neither the deemed receipt
of the Stock Option Consideration nor the deemed transfer of the Stock Option
Considerations to Spiros Corp. II will subject U.S. Holders to current taxation.
See discussion below with regard to the treatment of the Stock Option
Consideration on the sale of the Units or the Spiros Corp. II Common Stock or on
lapse of the Purchase Option.

Upon the sale of a Unit, a U.S. Holder will recognize capital gain or loss
measured by the difference between the amount realized and the U.S. Holder's tax
basis in the Unit. For this purpose, the U.S. Holder's aggregate tax basis in a
Unit will include the amount paid for the Unit plus any Stock Option
Consideration the U.S. Holder is deemed to have received in respect of the grant
of the Purchase Option.

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The amount realized on the sale of the Units will be the price at which the
Units were sold plus the Stock Option Consideration deemed to have been
received. The inclusion of the Stock Option Consideration in the basis of the
Units will offset the inclusion of such amount in the amount realized upon sale.
Therefore, a U.S. Holder who sells Units will not recognize either gain or loss
solely as a result of the deemed receipt of the Stock Option Consideration or
the inclusion of the Stock Option Consideration in the amount realized upon
sale. The holding period for each Unit will begin on the acquisition date of
such Unit. In the case of an individual U.S. Holder, any such capital gain will
be taxable at various preferential rates, if the holding period for the Units is
more than one year, depending on the actual holding period of the Units at the
time of sale. Any capital loss will be long-term if the holding period for the
Unit is more than one year. To the extent that gain realized upon the sale of a
Unit is attributable to its constituent shares of Spiros Corp. II Common Stock,
however, such gain may be treated as ordinary income if Spiros Corp. II were
determined to be a "collapsible corporation" as described below.

A U.S. Holder of the Units will not recognize gain or loss at the time that
the shares of Spiros Corp. II Common Stock and the Warrant become separately
tradeable. The basis of the Units will be allocated between the Spiros Corp. II
Common Stock and the Warrants after separation in proportion to the relative
fair market value of the Spiros Corp. II Common Stock and the Warrants on the
date the U.S. Holder acquired the Units. The respective holding period of each
constituent part of a Unit on and after the Separation Date will include the
holding period for the Unit prior to the Separation Date.

TAXATION OF WARRANTS

A U.S. Holder of a Warrant will not recognize taxable income or loss upon
exercise of the Warrant. If the Warrant expires unexercised, the U.S. Holder
will recognize a capital loss equal to the U.S. Holder's tax basis in the
Warrant (which will include the portion of the U.S. Holder's basis in the Unit
allocable thereto). Such loss will generally be a capital loss and will be
long-term if the U.S. Holder's holding period for the Warrant is more than one
year. Gain or loss upon a sale of a Warrant will be capital gain or loss. In the
case of an individual U.S. Holder, any such capital gain will be taxable at
various preferential rates, if the holding period for the Warrants is more than
one year, depending on the actual holding period of the Warrants at the time of
sale. Any such loss will be long-term if the holding period for the Warrant was
more than one year on the date of sale. The holding period of the Warrant
acquired as part of the Units should commence on the date the U.S. Holder
acquires the Units.

Adjustments to the exercise price of the Warrants pursuant to the
anti-dilution provisions of the Warrant Agreement, or the failure to make
adjustments to the exercise price upon the occurrence of certain events, may
result in constructive dividends to the U.S. Holders of the Warrants or the
shares of Dura Common Stock under Section 305 of the Code regardless of whether
there is a distribution of cash or property to the U.S. Holder.

TAXATION OF SPIROS CORP. II COMMON STOCK

Upon the sale of shares of Spiros Corp. II Common Stock acquired as part of
a Unit, including a sale pursuant to the Purchase Option, the U.S. Holder will,
except as otherwise discussed in this paragraph, recognize capital gain or loss
equal to the difference between his tax basis in the shares of Spiros Corp. II
Common Stock and the amount realized from such sale. For this purpose, the
amount realized will equal the sum of the cash plus the fair market value of
other property received in such sale (including Dura Common Stock). In addition,
if the sale occurs pursuant to the Purchase Option or prior to the lapse of the
Purchase Option, the amount realized will also include any Stock Option
Consideration the U.S. Holder was deemed to have received. However, the
inclusion of the Stock Option Consideration in the basis of the Spiros Corp. II
Common Stock will offset the inclusion of such amount in the amount realized
upon sale. Therefore, any such U.S. Holder will not recognize either gain or
loss solely as a result of the deemed receipt of the Stock Option Consideration.
In the case of an individual U.S. Holder, any such capital gain will be taxable
at various preferential rates, if the holding period for the Spiros Corp. II
Common Stock is more than one year, depending on the actual holding period of
the Warrants at the time of sale. Any capital loss will be long-term if the
holding period for the Spiros Corp. II Common Stock was more than one year on
the date of sale. The holding period of Spiros Corp. II Common Stock acquired as
part of a

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Unit should commence on the date the U.S. Holder acquired the Unit. However, a
gain realized upon a sale of shares of Spiros Corp. II Common Stock by a U.S.
Holder owning (or considered as owning pursuant to certain "attribution rules")
more than 5% of the Spiros Corp. II Common Stock may be treated as ordinary
income if Spiros Corp. II is determined to be a "collapsible corporation" within
the meaning of Section 341 of the Code based on the facts in existence on the
date of such sale. In addition, the IRS may assert, under certain circumstances
where, in the aggregate, U.S. Holders transferring shares of Spiros Corp. II
Common Stock pursuant to the Purchase Option own, directly or indirectly, a
controlling interest in Dura, that U.S. Holders of the shares of Spiros Corp. II
Common Stock should recognize ordinary income upon the exercise of the Purchase
Option on the theory that payment of the exercise price should be treated as a
dividend distribution by Dura under Sections 301 and 304 of the Code.

Neither the exercise nor the lapse of the Albuterol Option and the Product
Option should have any direct tax consequences on the U.S. Holders. However,
Spiros Corp. II will recognize gain on the exercise of the Albuterol Option and
the Product Option in an amount equal to the amount received on exercise over
the basis of the purchased assets. For this purpose, the amount received should
include the portion of the Dura Contribution which is attributable to the
Albuterol Option and the Product Option. If the Albuterol Option and the Product
Option expire unexercised, the portion of the Dura Contribution attributable to
the Albuterol Option and the Product Option would be included in income by
Spiros Corp. II at the time of such expiration.

The U.S. Holder of Units who is deemed to have received Stock Option
Consideration on the purchase of Units will recognize a short-term capital gain
if the Purchase Option expires unexercised in an amount equal to the Stock
Option Consideration notwithstanding that no cash or other consideration will be
received by the U.S. Holder at such time. However, the basis of the U.S.
Holders' Spiros Corp. II Common Stock will still include the amount of the Stock
Option Consideration. That additional basis will reduce the gain or increase the
loss recognized on the eventual sale of the Spiros Corp. II Common Stock. If
stock is sold in the same year that the Purchase Option expires, the gain
recognized on the expiration of the Purchase Option should be fully offset by
the increased loss (or reduced gain) recognized on the sale of the stock as a
result of the inclusion of the Stock Option Consideration in the basis of the
Spiros Corp. II Common Stock. As a result, the net taxable gain (or loss) for
the year will equal the U.S. Holders' economic gain or loss from the investment.
If the Spiros Corp. II Common Stock is not sold in the same year that the
Purchase Option lapses, U.S. Holders will incur an additional income tax
liability for the year of lapse which will not be offset until a later year when
such stock is sold. Finally, significant limitations apply to the deductibility
of capital losses. If the additional basis attributable to the Stock Option
Consideration results in the recognition of a capital loss (as opposed to a
reduction in gain), these limitations could significantly affect the ability of
the U.S. Holders to utilize such loss.

UNITED STATES TAXATION OF NON-U.S. PERSONS

The following is a general discussion of certain anticipated United States
federal income tax consequences of the purchase, ownership and disposition of
the Units, the Spiros Corp. II Common Stock, the Warrants and the Dura Common
Stock (the "Securities") by a "Non-U.S. Holder." A Non-U.S. Holder is a person
that, for United States federal income tax purposes, (1) is not a "United States
person," (2) is not, and has not been, engaged in a United States trade or
business, and (3) in the case of an individual, is not present in the United
States for 183 days or more during the relevant tax year of the ownership and
disposition of the Securities. A United States person means a citizen or
resident of the United States for United States federal income tax purposes, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any state thereof, an estate the income of which is
subject to U.S. federal income taxation regardless of its source, or a trust
that meets the following two tests: (A) a U.S. court is able to exercise primary
supervision over the administration of the trust, and (B) one or more U.S.
fiduciaries have the authority to control all substantial decisions of the
trust.

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other than for investment. In addition, the following discussion assumes that
the investment in the Spiros Corp. II Common Stock and the transactions related
thereto, including the transactions between Spiros Corp II and Dura will be
characterized for United States federal income tax purposes in a manner
consistent with the form of such transactions under their governing documents.
While counsel believes that such characterization should be given to the
transactions, there can be no assurance that the IRS will not assert that a
different characterization should apply.

The discussion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), judicial decisions, administrative pronouncements, and existing
and proposed United States Treasury Regulations issued by the U.S. Department of
the Treasury now in effect. Each prospective investor should understand that
future legislative, administrative and judicial changes could modify the tax
consequences described below, possibly with retroactive effect. The following
discussion is limited to United States federal income tax consequences and does
not address any state, local or non-U.S. tax consequences of the purchase,
ownership and disposition of the Securities.

EACH NON-U.S. HOLDER IS URGED TO CONSULT HIS, HER OR ITS OWN TAX ADVISOR
WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO HIM, HER OR IT OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE SECURITIES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL AND FOREIGN TAX LAWS, ESTATE LAWS AND PROPOSED
CHANGES IN APPLICABLE LAWS.

DIVIDENDS

Neither Spiros Corp. II nor Dura anticipates paying a dividend to
stockholders in the foreseeable future. In the event a dividend is paid by
Spiros Corp. II or Dura, the payment will be a taxable dividend for United
States federal income tax purposes to the extent of the current or accumulated
earnings and profits of the payor. Each Non-U.S. Holder who receives a taxable
dividend will be subject to withholding of United States federal income tax
equal to 30% of the taxable dividend unless such Holder is eligible for a
reduced tax rate or tax exemption under an applicable income tax treaty.
Satisfaction of certain certification requirements may be necessary in order to
claim the benefit of any applicable treaty.

GAIN ON DISPOSITIONS

A Non-U.S. Holder of the Unit will not recognize gain or loss at the time
that the shares of Spiros Corp. II Common Stock and the Warrant become
separately tradeable or upon exercise of the Dura Warrant.

Non-U.S. Holders may recognize gain if the Purchase Option lapses without
having been exercised and on the sale or other disposition of a Security.
However, a Non-U.S. Holder will not be subject to United States federal income
tax (and no tax will generally be withheld) with respect to such gain.

FEDERAL ESTATE TAXES

Securities held by an individual Non-U.S. Holder at the date of his or her
death will be included in his or her gross estate for United States federal
estate tax purposes unless an applicable estate tax treaty provides otherwise.

BACKUP WITHHOLDING

Under United States Treasury Regulations, dividends payable prior to 1999 at
an address outside of the United States to a Non-U.S. Holder are not subject to
backup withholding (which is generally imposed at a rate of 31% on payment to
which applicable). Dividends payable after 1998 will require additional evidence
of a person's foreign status in order to be exempt from backup withholding.

Backup withholding may also apply to the gross proceeds paid by or through
certain brokers (not including non-U.S. offices or brokers) to a Non-U.S. Holder
upon a sale or other disposition of a Security unless such Holder certifies its
foreign status or otherwise establishes an exemption. A Non-U.S. Holder may
obtain a refund of amounts withheld under the backup withholding rules by filing
the appropriate claim for refund with the IRS.

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UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement (the
"U.S. Purchase Agreement") among Dura, Spiros Corp. II and each of the
underwriters named below (the "U.S. Underwriters"), Dura and Spiros Corp. II
have agreed to sell to each of the U.S. Underwriters, and each of the U.S.
Underwriters severally has agreed to purchase, the number of Units set forth
opposite its name below:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF UNITS
---------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................
Donaldson, Lufkin & Jenrette Securities Corporation..........................

---------------
3,750,000
---------------
---------------
</TABLE>

Merrill Lynch, Pierce, Fenner & Smith Incorporated and Donaldson, Lufkin &
Jenrette Securities Corporation are acting as representatives (the "U.S.
Representatives") of the U.S. Underwriters.

Dura and Spiros Corp. II also have entered into a purchase agreement (the
"International Purchase Agreement") with certain international underwriters (the
"International Underwriters"), for whom Merrill Lynch International and
Donaldson, Lufkin & Jenrette Securities Corporation are acting as
representatives (the "International Representatives" and, together with the U.S.
Representatives, the "Representatives"), providing for the concurrent offer and
sale of 937,500 Units in the International Offering. The closings with respect
to the U.S. Offering and the International Offering are conditional upon one
another.

In the U.S. Purchase Agreement, the several U.S. Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
Units being sold pursuant to such agreement if any Units being sold pursuant to
such agreement are purchased. Under certain circumstances, the commitments of
non-defaulting U.S. Underwriters may be increased. Dura and Spiros Corp. II have
been advised by the U.S. Underwriters that the U.S. Underwriters propose
initially to offer the Units to the public at the public offering price set
forth on the cover page of this Prospectus and to certain selected dealers at
such price less a discount not in excess of $ per Unit. The U.S.
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per Unit on sales to certain other dealers. After the initial public
offering, the offering price, concession and discount may be changed. The public
offering price, concession and discount per Unit are identical under the U.S.
Purchase Agreement and the International Purchase Agreement.

The U.S. Underwriters do not intend to sell Units offered hereby to any
accounts over which they exercise discretionary authority.

The U.S. Underwriters and International Underwriters have entered into an
Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
International Underwriters and any dealer to whom they sell Units will not offer
to sell or sell Units to United States or Canadian persons or to persons they
believe intend to resell to United States or Canadian persons, and the U.S.
Underwriters and any dealer to whom they sell Units will not offer to sell or
sell Units to non-United States or Canadian persons or to persons they believe
intend to resell to non-United States or Canadian persons, except, in each case,
for transactions pursuant to the Intersyndicate Agreement. The Intersyndicate
Agreement also provides, among other

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things, that sales may be made between the U.S. Underwriters and the
International Underwriters of such number of Units as may be mutually agreed.
The price of any Units so sold shall be the public offering price, less an
amount not greater than the selling concession.

Dura and Spiros Corp. II have granted to the U.S. Underwriters an option
exercisable in whole or in part for 30 days after the date hereof to purchase up
to 562,500 additional Units to cover over-allotments, if any, at the initial
public offering price, less the underwriting discount. To the extent that the
U.S. Underwriters exercise this option, each of the U.S. Underwriters will have
a firm commitment, subject to certain conditions, to purchase approximately the
same percentage of such Units that the number of Units to be purchased by it
shown in the foregoing table bears to the total number of Units initially
offered to the U.S. Underwriters hereby. Dura and Spiros Corp. II have granted
to the International Underwriters an option to purchase up to an aggregate of
140,625 additional Units, exercisable in whole or in part for 30 days after the
date hereof, solely to cover over-allotments, if any, in terms similar to those
granted to the U.S. Underwriters. All or a portion of an over-allotment option
in either of the Offerings may be allocated to cover an over-allotment in the
other Offering.

Prior to the Offerings, there has been no public market for the Units, the
Spiros Corp. II Common Stock or the Warrants. The initial public offering price
for the Units and the Warrant Exercise Price have been determined by
negotiations among Dura, Spiros Corp. II and the Representatives. Among the
factors considered in such negotiations were the number of Units to be issued,
the stock price of the Dura Common Stock, an assessment of Dura's recent results
of operations, the future prospects of Dura and Spiros Corp. II and their
industry in general, the price-earnings ratios and market prices of securities
of companies engaged in activities similar to those of Dura and Spiros Corp. II,
the agreements between Dura and Spiros Corp. II, the present state of Dura's
business operations, an assessment of Dura and Spiros Corp. II management,
interest rates, the volatility for the market price of Dura Common Stock and
prevailing conditions in the securities market. There can be no assurance that
an active trading market will develop for the Units or that the Units will trade
in the public market subsequent to the Offerings at or above the initial public
offering price.

The amounts of the Purchase Option Exercise Prices were determined by Dura
and Spiros Corp. II, giving consideration to the Spiros Products, the agreements
between Dura and Spiros Corp. II, such other factors as Dura and Spiros Corp. II
deemed appropriate and advice given by the Representatives.

Dura and its officers and directors and Spiros Corp. II's officers and
directors have agreed not to offer, sell, contract to sell, grant any option to
purchase or otherwise dispose of Dura Common Stock (or, in the case of Dura,
rights to acquire Dura Common Stock) without the prior written consent of the
Representatives, for a period of 90 days after the date of this Prospectus.

In the U.S. Purchase Agreement, Dura and Spiros Corp. II have agreed to
indemnify the U.S. Underwriters against certain civil liabilities, including
liabilities under the Act, and contribute to payments the U.S. Underwriters may
be required to make in respect thereof.

At the request of Dura and Spiros Corp. II, the U.S. Underwriters have
reserved up to 328,125 Units for sale at the initial public offering price to
directors, officers, employees, business associates and related persons of Dura
and Spiros Corp. II. The number of Units available for sale to the general
public will be reduced to the extent such persons purchase such reserved shares.
Any reserved shares which are not so purchased will be offered by the U.S.
Underwriters to the general public on the same basis as the other shares offered
hereby. Certain individuals purchasing reserved Units may be required to agree
not to sell, offer or otherwise dispose of any Units for a period of three
months after the date of this Prospectus.

Until the distribution of the Units is completed, rules of the Securities
and Exchange Commission may limit the ability of the U.S. Underwriters, the
International Underwriters and certain selling group members to bid for and
purchase the Units. As an exception to these rules, the Representatives are

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permitted to engage in certain transactions that stabilize the price of the
Units. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Units.

If the U.S. Underwriters or the International Underwriters create a short
position in the Units in connection with the Offerings, i.e., if they sell more
shares of Units than set forth on the cover page of this Prospectus, the
Representatives may reduce that short position by purchasing Units in the open
market. The Representatives may also elect to reduce any short position by
exercising all or part of the over-allotment option described above.

The Representatives also may impose a penalty bid on certain U.S.
Underwriters, International Underwriters and selling group members. This means
that if the Representatives purchase Units in the open market to reduce the U.S.
Underwriters' or the International Underwriters' short position or to stabilize
the price of the Units, they may reclaim the amount of the selling concession
from the U.S. Underwriters, International Underwriters and selling group members
who sold those shares as part of the Offerings.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.

None of Dura, Spiros Corp. II nor any of the U.S. Underwriters or the
International Underwriters makes any representation or prediction as to the
direction or magnitude of any effect that the transactions described above may
have on the price of the Units. In addition, none of Dura, Spiros Corp. II nor
any of the U.S. Underwriters or the International Underwriters makes any
representation that the U.S. Underwriters or the International Underwriters will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Dura Common Stock and the Units is
ChaseMellon Shareholder Services.

LEGAL MATTERS

Certain legal matters relating to the Offerings will be passed upon by
Brobeck, Phleger & Harrison LLP, San Diego, California, counsel for Dura and
Spiros Corp. II. Certain legal matters in connection with the Offerings will be
passed upon for the Underwriters by Shearman & Sterling, New York, New York,
counsel for the Underwriters.

EXPERTS

The consolidated financial statements of Dura incorporated in this
Prospectus by reference from Dura's Annual Report on Form 10-K for the year
ended December 31, 1996 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.

The financial statements of Spiros Development Corporation as of December
31, 1995 and 1996 and for the periods then ended incorporated in this Prospectus
by reference from Dura's Current Report on Form 8-K filed on October 10, 1997,
as amended, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

79
<PAGE>
The balance sheet of Spiros Corp. II at September 30, 1997, appearing in
this Prospectus has been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report included herein, and has been so included in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.

The statements concerning U.S. federal regulatory process for investigating
and obtaining FDA clearance of drugs and medical devices in this Prospectus
under the caption "Risk Factors--Business Risks Related to Spiros Corp. II and
Dura--Government Regulation; No Assurance of FDA Approval," "Business of Spiros
Corp. II--Government Regulation," "Business of Dura--Government Regulation" and
other references herein relating to such processes have been reviewed and
approved by Kleinfeld, Kaplan and Becker, regulatory counsel for Dura and Spiros
Corp. II, as an expert in such matters, and are included herein in reliance upon
that review and approval. In conducting this review, Kleinfeld, Kaplan and
Becker assumed the accuracy and adequacy of the factual statements and
conclusions in this Prospectus, including those concerning Dura's manufacturing
capabilities and procedures, compliance with regulatory requirements, the status
of marketed drugs and drugs under development and the potential significance of
such drugs in targeting the disease states identified.

80
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Independent Auditors' Report.......................................................... F-2

Balance Sheet of Spiros Development Corporation II, Inc. as of September 30, 1997..... F-3

Notes to Balance Sheet of Spiros Development Corporation II, Inc...................... F-4
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholder of
Spiros Development Corporation II, Inc.:

We have audited the accompanying balance sheet of Spiros Development
Corporation II, Inc. (a development stage enterprise) (the "Company") as of
September 30, 1997. This balance sheet is the responsibility of the Company's
management. Our responsibility is to express an opinion on this balance sheet
based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of the Company as of September 30, 1997 in
conformity with generally accepted accounting principles.

The Company is in the development stage as of September 30, 1997. As
discussed in Note 1 to the balance sheet, the Company has not yet commenced
operations, and its only activity to date has been the initial capitalization
provided by Dura Pharmaceuticals, Inc., which owns all of the Company's common
stock.

DELOITTE & TOUCHE LLP

San Diego, California
October 9, 1997

F-2
<PAGE>
SPIROS DEVELOPMENT CORPORATION II, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

BALANCE SHEET

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------

<S> <C>
ASSETS

Cash.......................................................................................... $ 1,000
------
Total Asssets................................................................................. $ 1,000
------
------

SHAREHOLDER'S EQUITY

Common stock, par value $.001, 1,000 shares authorized; issued and outstanding................ $ 1
Additional paid-in capital.................................................................... 999
------
Total Shareholder's Equity.................................................................... $ 1,000
------
------
</TABLE>

See accompanying notes to balance sheet.

F-3
<PAGE>
SPIROS DEVELOPMENT CORPORATION II, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO BALANCE SHEET

SEPTEMBER 30, 1997

1. ORGANIZATION AND INCORPORATION

Spiros Development Corporation II, Inc. (the "Company") was incorporated on
September 23, 1997 in the state of Delaware for the purpose of continuing the
development of Spiros, a pulmonary drug delivery system, and to conduct
formulation work, clinical trials and commercialization for certain leading
asthma drugs with the Spiros system.

The Company has not yet commenced operations. Its only activity to date has
been the initial capitalization provided by Dura Pharmaceuticals, Inc., ("Dura")
which owns all of the Company's common stock. Accordingly, no statement of
operations or statement of cash flows is presented. The Company's fiscal year
end is December 31.

2. COMMON STOCK

All issued and outstanding shares of the Company's common stock as of
September 30, 1997 are held by Dura. The Company is in the process of filing a
Registration Statement on Form S-1 with the Securities and Exchange Commission
in contemplation of an initial public offering of units consisting of shares of
the Company's callable common stock and warrants to purchase shares of Dura's
common stock. The Company expects to exchange the shares of common stock held by
Dura with newly issued Special Shares of stock which will provide Dura with
certain voting rights as well as the right to acquire all of the shares of the
callable common stock to be offered by the Prospectus included in the
Registration Statement.

3. AGREEMENTS WITH DURA

The Company intends to enter into various agreements relating to Spiros with
Dura, including a technology license agreement, a development and management
agreement, and a manufacturing and marketing agreement. Substantially all of the
net proceeds from the initial public offering contemplated by the Prospectus,
together with a contribution from Dura and interest earned thereon, are expected
to be paid to Dura for development and administrative services provided by Dura
pursuant to these agreements.

F-4
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 1, 1997

PROSPECTUS

4,687,500 UNITS

SPIROS DEVELOPMENT CORPORATION II, INC.
DURA PHARMACEUTICALS, INC.

The Callable Common Stock, par value $.001 per share (the "Spiros Corp. II
Common Stock"), of Spiros Development Corporation II, Inc. ("Spiros Corp. II")
and the Warrants (the "Warrants") to purchase one-fourth of one share of Common
Stock, par value $.001 per share (the "Dura Common Stock"), of Dura
Pharmaceuticals, Inc. ("Dura") which comprise the units (the "Units") will trade
only as units (and not separately) through December 31, 1999 or such earlier
date as the Purchase Option (as defined below) is exercised or expires
unexercised. Of the 4,687,500 Units offered hereby, 937,500 Units are being
offered initially outside the United States and Canada by the International
Underwriters (the "International Offering") and 3,750,000 Units are being
offered in a concurrent offering in the United States and Canada by the U.S.
Underwriters (the "U.S. Offering" and, together with the International Offering,
the "Offerings"). The initial public offering price and the underwriting
discount per Unit will be identical for both Offerings. See "Underwriting." It
is currently estimated that the public offering price will be between $15.00 and
$17.00 per Unit. Application has been made to have the Units listed for
quotation on the Nasdaq National Market under the symbol "SDCO." The Warrants
are exercisable at any time from January 1, 2000 through December 31, 2002. The
exercise price of the Warrants is $ per share of Dura Common Stock
(currently anticipated to be 125% of the closing price of Dura Common Stock on
the date of the Prospectus). See "Description of the Warrants." On November 28,
1997 the last reported sales price of a share of Dura Common Stock on the Nasdaq
National Market was $43 7/8.

Immediately prior to the consummation of the Offerings, Dura will contribute
$75 million in cash to Spiros Corp. II. See "Prospectus Summary--The
Contribution."

SEE "RISK FACTORS" BEGINNING ON PAGE 17 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN CONSIDERATIONS RELATED TO AN INVESTMENT IN THE UNITS.
-----------------

(1) Spiros Corp. II and Dura have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."

(2) Before deducting expenses, estimated at $600,000 payable by Spiros Corp. II.

(3) Spiros Corp. II and Dura have granted the International Underwriters and the
U.S. Underwriters options, exercisable within 30 days after the date hereof,
to purchase up to an additional 140,625 and 562,500 Units, respectively, on
the same terms as set forth above solely to cover over-allotments, if any.
If the option is exercised in full, the total Price to Public, Underwriting
Discount, and Proceeds to Spiros Corp. II will be $ , $ and
$ , respectively. See "Underwriting."
------------------------

The Units are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by the Underwriters, and subject to the
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the Units will be made in New York, New York on or about ,
1997.
------------------------
MERRILL LYNCH INTERNATIONAL DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
-------------------

The date of this Prospectus is , 1997.
<PAGE>

UNITED STATES TAXATION OF NON-U.S. PERSONS

Certain United States federal income tax consequences may be applicable to
the receipt of dividends, if any, or the sale of Warrants, the Spiros Corp. II
Common Stock or the Dura Common Stock. See "United States Taxation of Non-U.S.
Persons."
USE OF PROCEEDS
The net proceeds from the Offerings, assuming an offering price of $16.00
per Unit, are expected to be approximately $69.2 million ($79.6 million if the
Underwriters' over-allotment option is exercised in full), all of which will be
received by Spiros Corp. II. Spiros Corp. II expects to use substantially all of
the net proceeds of the Offerings, the Contribution and interest to be earned
thereon, less $1 million to be used as working capital, to engage Dura to
undertake research, clinical development, product development, including
regulatory approval, and commercialization of the Spiros Products under the
Development Agreement, including to make the Other Expenditures. Spiros Corp. II
expects that during the term of the Development Agreement, unless Dura exercises
the Albuterol Option or the Product Option, it will have very limited sources of
revenue other than the net proceeds of the Offerings, the Contribution and the
interest earned thereon. Any funds received by Spiros Corp. II as a result of
Dura's exercise of the Albuterol Option or the Product Option will become part
of the Available Funds and are intended to be paid to Dura pursuant to the
Development Agreement. See "Use of Proceeds."

14
<PAGE>
UNITED STATES TAXATION OF NON-U.S. PERSONS

The following discussion does not consider specific facts and circumstances
that may be relevant to the taxation of a particular Non-U.S. Holder.
Specifically, this discussion does not address the United States tax
consequences to any person who might own, or be considered as owning under
certain attribution rules, 5% or more of the outstanding shares of Spiros Corp.
II or Dura or who acquired or holds the Securities other than for investment. In
addition, the following discussion assumes that the investment in the Spiros
Corp. II Common Stock and the transactions related thereto, including the
transactions between Spiros Corp II and Dura will be characterized for United
States federal income tax purposes in a manner consistent with the form of such
transactions under their governing documents. While counsel believes that such
characterization should be given to the transactions, there can be no assurance
that the IRS will not assert that a different characterization should apply.

DIVIDENDS

73
<PAGE>
GAIN ON DISPOSITIONS

FEDERAL ESTATE TAXES

BACKUP WITHHOLDING

74
<PAGE>
UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement (the
"International Purchase Agreement") among Dura, Spiros Corp. II and each of the
underwriters named below (the "International Underwriters"), Dura and Spiros
Corp. II have agreed to sell to each of the International Underwriters, and each
of the International Underwriters severally has agreed to purchase, the number
of Units set forth opposite its name below:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF UNITS
---------------
<S> <C>
Merrill Lynch International..................................................
Donaldson, Lufkin & Jenrette Securities Corporation..........................

-------
937,500
-------
-------
</TABLE>

Merrill Lynch International and Donaldson, Lufkin & Jenrette Securities
Corporation are acting as representatives (the "International Representatives")
of the International Underwriters.

Dura and Spiros Corp. II also have entered into a purchase agreement (the
"U.S. Purchase Agreement") with certain United States underwriters (the "U.S.
Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Donaldson, Lufkin & Jenrette Securities Corporation are acting as
representatives (the "U.S. Representatives" and, together with the International
Representatives, the "Representatives"), providing for the concurrent offer and
sale of 3,750,000 Units in the U.S. Offering. The closings with respect to the
International Offering and the U.S. Offering are conditional upon one another.

In the International Purchase Agreement, the several International
Underwriters have agreed, subject to the terms and conditions set forth therein,
to purchase all of the Units if any Units being sold pursuant to such agreement
are purchased. Under certain circumstances, the commitments of non-defaulting
International Underwriters may be increased. Dura and Spiros Corp. II have been
advised by the International Underwriters that the International Underwriters
propose initially to offer the Units to the public at the public offering price
set forth on the cover page of this Prospectus and to certain selected dealers
at such price less a discount not in excess of $ per Unit. The
International Underwriters may allow, and such dealers may reallow, a discount
not in excess of $ per Unit on sales to certain other dealers. After the
initial public offering, the offering price, concession and discount may be
changed. The public offering price, concession and discount per Unit are
identical under the International Purchase Agreement and the U.S. Purchase
Agreement.

The International Underwriters do not intend to sell Units offered hereby to
any accounts over which they exercise discretionary authority.

The International Underwriters and U.S. Underwriters have entered into an
Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
U.S. Underwriters and any dealer to whom they sell Units will not offer to sell
or sell Units to non-United States or Canadian persons or to persons they
believe intend to resell to non-United States or Canadian persons, and the
International Underwriters and any dealer to whom they sell Units will not offer
to sell or sell Units to United States or Canadian persons or to persons they
believe intend to resell to United States or Canadian persons, except, in each
case, for transactions pursuant to the

75
<PAGE>
Intersyndicate Agreement. The Intersyndicate Agreement also provides, among
other things, that sales may be made between the International Underwriters and
the U.S. Underwriters of such number of Units as may be mutually agreed. The
price of any Units so sold shall be the public offering price, less an amount
not greater than the selling concession.

Dura and Spiros Corp. II have granted to the International Underwriters an
option exercisable in whole or in part for 30 days after the date hereof to
purchase up to 140,625 additional Units to cover over-allotments, if any, at the
initial public offering price, less the underwriting discount. To the extent
that the International Underwriters exercise this option, each of the
International Underwriters will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage of such Units that the
number of Units to be purchased by it shown in the foregoing table bears to the
total number of Units initially offered to the International Underwriters
hereby. Dura and Spiros Corp. II have granted to the U.S. Underwriters an option
to purchase up to an aggregate of 562,500 additional Units, exercisable in whole
or in part for 30 days after the date hereof, solely to cover over-allotments,
if any, on terms similar to those granted to the International Underwriters. All
or a portion of an over-allotment option in either of the Offerings may be
allocated to cover an over-allotment in the other Offering.

In the International Purchase Agreement, Dura and Spiros Corp. II have
agreed to indemnify the International Underwriters against certain civil
liabilities, including liabilities under the Act, and contribute to payments the
International Underwriters may be required to make in respect thereof.

Each International Underwriter has represented and agreed that (i) it has
not offered or sold and, during the period of six months from the date of this
Prospectus, will not offer or sell any Units to persons in the U.K. except to
persons whose ordinary activities involve them in acquiring, holding, managing
or

76
<PAGE>
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the U.K. within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act of 1986 with respect to
anything done by it in relation to the Units in, from or otherwise involving the
U.K.; and (iii) it has only issued or passed on and will only issue and pass on
in the U.K. any documents received by it in connection with the Offering to a
person who is of a kind described in Article II(3) of the Financial Services Act
of 1986 (Investment Advertisements)(Exemptions) Order 1995 or is a person to
whom the document may otherwise lawfully be issued or passed on.

Until the distribution of the Units is completed, rules of the Securities
and Exchange Commission may limit the ability of the International Underwriters,
the U.S. Underwriters and certain selling group members to bid for and purchase
the Units. As an exception to these rules, the Representatives are permitted to
engage in certain transactions that stabilize the price of the Units. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Units.

If the International Underwriters or the U.S. Underwriters create a short
position in the Units in connection with the Offerings, i.e., if they sell more
shares of Units than set forth on the cover page of this Prospectus, the
Representatives may reduce that short position by purchasing Units in the open
market. The Representatives also may elect to reduce any short position by
exercising all or part of the over-allotment option described above.

The Representatives also may impose a penalty bid on certain International
Underwriters, U.S. Underwriters and selling group members. This means that if
the Representatives purchase Units in the open market to reduce the
International Underwriters' or U.S. Underwriters' short position or to stabilize
the price of the Units, they may reclaim the amount of the selling concession
from the International Underwriters, the U.S. Underwriters, and selling group
members who sold those shares as part of the Offerings.

None of Dura, Spiros Corp. II nor any of the International Underwriters or
U.S. Underwriters makes any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the Units. In addition, none of Dura, Spiros Corp. II nor any of the
International Underwriters or U.S. Underwriters makes any representation that
the International Underwriters or U.S. Underwriters will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Dura Common Stock and the Units is
ChaseMellon Shareholder Services.

LEGAL MATTERS

77
<PAGE>
EXPERTS

The balance sheet of Spiros Corp. II at September 30, 1997, appearing in
this Prospectus has been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report included herein, and has been so included in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.

78
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY DURA OR
SPIROS CORP. II. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THE UNITS TO WHICH ITS RELATES OR AN OFFER TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF. THIS DOCUMENT IS BEING DISTRIBUTED IN THE UNITED KINGDOM ONLY
TO PERSONS OF A KIND DESCRIBED IN ARTICLE 11(3) OF THE FINANCIAL SERVICES ACT OF
1988 (INVESTMENT ADVERTISEMENTS) (EXEMPTIONS) ORDER 1995 OR TO WHOM IT OTHERWISE
WOULD BE LAWFUL SO TO DO.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
Prospectus Summary........................................................ 4
Risk Factors.............................................................. 17
Use of Proceeds........................................................... 30
Price Range of Dura Common Stock and Dividend Policies.................... 31
Dura Capitalization....................................................... 32
Spiros Corp. II Capitalization............................................ 33
Business of Spiros Corp. II............................................... 34
Business of Dura.......................................................... 45
Dura Selected Consolidated Financial Data................................. 55
Management's Discussion and Analysis of Financial Condition and Results of
Operations of Spiros Corp. II........................................... 56
Management's Discussion and Analysis of Financial Condition and Results of
Operations of Dura...................................................... 56
Description of the Warrants............................................... 61
Dura Capital Stock........................................................ 62
Spiros Corp. II Capital Stock............................................. 65
The Agreements and the Purchase Options................................... 67
United States Taxation of Non-U.S. Persons................................ 73
Underwriting.............................................................. 75
Transfer Agent and Registrar.............................................. 77
Legal Matters............................................................. 77
Experts................................................................... 78
Index to Financial Statements............................................. F-1
</TABLE>

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

UNTIL , 1998 (THE 25TH DAY AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE UNITS, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

4,687,500 UNITS

[LOGO]

SPIROS DEVELOPMENT
CORPORATION II, INC.

[LOGO]

DURA PHARMACEUTICALS, INC.

UNITS CONSISTING OF ONE SHARE OF
CALLABLE COMMON STOCK OF
SPIROS DEVELOPMENT
CORPORATION II, INC. AND ONE
WARRANT TO PURCHASE
ONE-FOURTH OF ONE SHARE OF
COMMON STOCK OF
DURA PHARMACEUTICALS, INC.

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

PROSPECTUS

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

MERRILL LYNCH INTERNATIONAL

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.* OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Spiros Corp. II in connection
with the registration, issuance and distribution of the securities being
registered hereby. All the amounts shown are estimates, except for the SEC
registration fee, the Nasdaq National Market listing fee and the NASD filing
fee.

<TABLE>
<S> <C>
SEC registration fee............................................. $ 93,251
Nasdaq National Market listing fee............................... 50,000
NASD filing fee.................................................. 30,500
Blue Sky qualification fees and expenses......................... 10,000
Printing and engraving expenses.................................. 100,000
Legal fees and expenses.......................................... 200,000
Transfer Agent and Registrar fees................................ 10,000
Accounting fees and expenses..................................... 60,000
Miscellaneous expenses........................................... 46,249
-----------
Total........................................................ $ 600,000
-----------
-----------
</TABLE>

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

* Pursuant to the Services Agreement, Dura and Spiros Corp. II have agreed
that Spiros Corp. II will pay all expenses associated with the Offerings.

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Except as hereinafter set forth, there is no charter provision, by-law,
contract, arrangement or statute under which any director or officer of either
of the Registrants is insured or indemnified in any manner against all liability
that he may incur in his capacity as such.

With respect to Dura:

(a) Section 145 of the Delaware General Corporation Law permits
indemnification of officers and directors of Dura under certain conditions
and subject to certain limitations. Section 145 of the Delaware General
Corporation Law also provides that a corporation has the power to purchase
and maintain insurance on behalf of its officers and directors against any
liability asserted against such person and incurred by him or her in such
capacity, or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify him or her against such
liability under the provisions of Section 145 of the Delaware General
Corporation Law.

(b) Dura's Bylaws (Article VII, Section (1)) provide that Dura shall
indemnify its directors and executive officers to the fullest extent not
prohibited by the Delaware General Corporation Law. The rights to indemnity
thereunder continue as to a person who has ceased to be a director, officer,
employee or agent and inure to the benefit of the heirs, executors and
administrators of the person. In addition, expenses incurred by a director
or executive officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact that he or
she is or was a director or officer of Dura (or was serving at Dura's
request as a director or officer of another corporation) shall be paid by
Dura in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or officer
to repay such amount if it shall ultimately be determined that he or she is
not entitled to be indemnified by Dura as authorized by the relevant section
of the Delaware General Corporation Law.

II-1
<PAGE>
(c) As permitted by Section 102(b)(7) of the Delaware General
Corporation Law, Article V, Section (A) of Dura's Certificate of
Incorporation provides that a director of Dura shall not be personally
liable for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
Dura or its stockholders, (ii) for acts or omissions not in good faith or
acts or omissions that involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived any improper
personal benefit.

(d) Dura entered into indemnification agreements with each of its
directors and executive officers, effective upon the reincorporation of Dura
in Delaware in July 1997.

(e) There is directors and officers liability insurance now in effect
which insures directors and officers of Dura.

With respect to Spiros Corp. II:

(a) Section 145 of the Delaware General Corporation Law permits
indemnification of officers and directors of Spiros Corp. II under certain
conditions and subject to certain limitations. Section 145 of the Delaware
General Corporation Law also provides that a corporation has the power to
purchase and maintain insurance on behalf of its officers and directors
against any liability asserted against such person and incurred by him or
her in such capacity, or arising out of his or her status as such, whether
or not the corporation would have the power to indemnify him or her against
such liability under the provisions of Section 145 of the Delaware General
Corporation Law.

(b) Spiros Corp. II's Bylaws (Article VII, Section (1)) provide that
Spiros Corp. II shall indemnify its directors and executive officers to the
fullest extent not prohibited by the Delaware General Corporation Law. The
rights to indemnity thereunder continue as to a person who has ceased to be
a director, officer, employee or agent and inure to the benefit of the
heirs, executors and administrators of the person. In addition, expenses
incurred by a director or executive officer in defending any civil,
criminal, administrative or investigative action, suit or proceeding by
reason of the fact that he or she is or was a director or officer of Spiros
Corp. II (or was serving at Spiros Corp. II's request as a director or
officer of another corporation) shall be paid by Spiros Corp. II in advance
of the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he or she is not entitled
to be indemnified by Spiros Corp. II as authorized by the relevant section
of the Delaware General Corporation Law.

(c) As permitted by Section 102(b)(7) of the Delaware General
Corporation Law, Article V, Section (A) of Spiros Corp. II's Certificate of
Incorporation provides that a director of Spiros Corp. II shall not be
personally liable for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to Spiros Corp. II or its stockholders, (ii) for acts or omissions
not in good faith or acts or omissions that involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law or (iv) for any transaction from which the director
derived any improper personal benefit.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since its incorporation on September 23, 1997, Spiros Corp. II has sold and
issued the following unregistered securities:

(1) On September 30, 1997, Spiros Corp. II sold 1000 Special Shares with
an aggregate value of $1000 to Dura.

The sales and issuance of securities in the above transaction was deemed to
be exempt under the Securities Act by virtue of Section 4(2) thereof and/or
Regulation D promulgated thereunder. The

II-2
<PAGE>
purchasers in each case represented their intention to acquire the securities
for investment only and not with a view to the distribution thereof. Appropriate
legends were affixed to the stock certificates issued in such transactions.
Similar representations of investment intent were obtained and similar legends
imposed in connection with any subsequent transfers of any such securities.
Spiros Corp. II believes that all recipients had adequate access, through
employment or other relationships, to information about Spiros Corp. II to make
an informed investment decision.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of U.S. Purchase Agreement.
1.2 Form of International Purchase Agreement.
3.1++ Certificate of Incorporation of Spiros Corp. II.
3.2++ By-laws of Spiros Corp. II.
3.3++ Amended and Restated Certificate of Incorporation of Spiros Corp. II (to be effective immediately
prior to closing).
3.4+ Amended and Restated By-laws of Spiros Corp. II (to be effective immediately prior to closing).
4.1 Purchase Option (included in Exhibit 3.3).
4.2++ Form of Warrant Agreement, including form of Warrant.
4.3 Form of Warrant (included in Exhibit 4.2).
4.4+ Specimen Unit Certificate.
4.5+ Specimen Stock Certificate for Dura Common Stock.
4.6+ Specimen Stock Certificate for Spiros Corp. II Common Stock.
4.7+ Specimen Stock Certificate for Spiros Corp. II Special Shares.
5.1+ Opinion of Brobeck, Phleger & Harrison LLP as to legality of the securities being registered,
including consent.
8.1+ Opinion of Brobeck, Phleger & Harrison LLP as to certain tax matters, including consent.
10.1++ Form of Technology License Agreement.
10.2++ Form of Development Agreement.
10.3++ Form of Albuterol and Product Option Agreement.
10.4++ Form of Manufacturing and Marketing Agreement.
10.5++ Form of Services Agreement.
10.6++ Spiros Corp. II 1997 Stock Option Plan.
10.7++ Form of Spiros Corp. II Notice of Grant of Stock Option
10.8++ Form of Spiros Corp. II Stock Option Agreement
10.9++ Form of Addendum to Stock Option Agreement
23.1+ Consent of Brobeck, Phleger & Harrison LLP (included in Exhibits 5.1 and 8.1).
23.2 Consent of Deloitte & Touche LLP, Independent Auditors.
23.3 Consent of Kleinfeld, Kaplan and Becker, regulatory counsel.
24.1++ Powers of Attorney.
27.1++ Financial Data Schedule of Spiros Corp. II.
</TABLE>

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

+ To be filed by amendment.

++ Previously filed.

II-3
<PAGE>
(b) Financial Statement Schedules included separately in the Registration
Statement.

None

All other schedules are omitted because they are not required, are not
applicable or the information is included in the Financial Statements or Notes
thereto.

ITEM 17. UNDERTAKINGS.

The undersigned Registrants hereby undertake:

(1) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination
of the offering.

(4) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrants pursuant to the provisions described
in Item 15, or otherwise, each of the Registrants has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by a registrant of expenses incurred or
paid by a director, officer or controlling person of a Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, such registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

(5) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by either of the Registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.

(6) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

Dura hereby undertakes that, for purposes of determining any liability under
the Securities Act of 1933, each filing of Dura's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.

II-4
<PAGE>
Dura hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therin, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Rule 3-19 of Regulation S-X at the start of
any delayed offering or throughout a continuous offering.

II-5
<PAGE>
SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SPIROS
DEVELOPMENT CORPORATION II, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ON THE 1ST DAY OF
DECEMBER, 1997.

SPIROS DEVELOPMENT CORPORATION II, INC.

By: /s/ DAVID S. KABAKOFF
-----------------------------------------
DAVID S. KABAKOFF
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED OF BEHALF OF SPIROS DEVELOPMENT
CORPORATION II, INC. BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- ----------------

Chairman, President and
/s/ DAVID S. KABAKOFF Chief Executive Officer
- ------------------------------ (Principal Executive December 1, 1997
DAVID S. KABAKOFF Officer)

Vice President and Chief
* Financial Officer
- ------------------------------ (Principal Financial and December 1, 1997
ERLE T. MAST Accounting Officer)

*
- ------------------------------ Director December 1, 1997
CAM L. GARNER

*/s/ DAVID S. KABAKOFF
- ------------------------------
BY: DAVID S. KABAKOFF,
ATTORNEY-IN-FACT

II-6
<PAGE>
SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, DURA
PHARMACEUTICALS, INC. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT
IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ON THE 1ST DAY OF DECEMBER, 1997.

<TABLE>
<S> <C> <C>
DURA PHARMACEUTICALS, INC.

BY: /S/ CAM L. GARNER
-----------------------------------------
CAM L. GARNER
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
</TABLE>

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON BEHALF OF DURA PHARMACEUTICALS, INC.
BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- ----------------

<C> <S> <C>
Chairman, President and
/s/ CAM L. GARNER Chief Executive Officer
- ------------------------------ (Principal Executive December 1, 1997
CAM L. GARNER Officer)

Senior Vice President,
Finance and
/s/ JAMES W. NEWMAN Administration, and Chief
- ------------------------------ Financial Officer December 1, 1997
JAMES W. NEWMAN (Principal Financial and
Accounting Officer)

/s/ DAVID S. KABAKOFF
- ------------------------------ Executive Vice President December 1, 1997
DAVID S. KABAKOFF and Director

* Senior Vice President,
- ------------------------------ Sales and Marketing, and December 1, 1997
WALTER F. SPATH Director

*
- ------------------------------ Director December 1, 1997
JAMES C. BLAIR

*
- ------------------------------ Director December 1, 1997
HERBERT J. CONRAD
</TABLE>

II-7
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- ----------------

<C> <S> <C>
*
- ------------------------------ Director December 1, 1997
JOSEPH C. COOK, JR.

*
- ------------------------------ Director December 1, 1997
DAVID F. HALE

*
- ------------------------------ Director December 1, 1997
GORDON V. RAMSEIER

*
- ------------------------------ Director December 1, 1997
CHARLES G. SMITH

*/s/ CAM S. GARNER
- ------------------------------
BY: CAM L. GARNER,
ATTORNEY-IN-FACT
</TABLE>

II-8
<PAGE>
EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Amendment No. 3 to
Registration Statement No. 333-37673 of Spiros Development Corporation II, Inc.
on Form S-1 and to Amendment No. 3 to Registration Statement No. 333-37673-01 of
Dura Pharmaceuticals, Inc. on Form S-3 (collectively, the "Registration
Statement") of our report dated January 20, 1997, relating to the consolidated
financial statements of Dura Pharmaceuticals, Inc., incorporated by reference in
the Annual Report on Form 10-K of Dura Pharmaceuticals, Inc. for the year ended
December 31, 1996.

We also consent to the incorporation by reference in this Registration
Statement of our report dated March 21, 1997 (November 6, 1997 as to Note 7),
relating to the financial statements of Spiros Development Corporation (a
development stage enterprise) as of December 31, 1995 and 1996 and for the
periods then ended appearing in the Current Report of Dura Pharmaceuticals, Inc.
on Form 8-K filed on October 10, 1997, as amended. We also consent to the use of
our report dated October 9, 1997, relating to the balance sheet of Spiros
Development Corporation II, Inc. (a development stage enterprise) as of
September 30, 1997 appearing in this Registration Statement.

We also consent to the references to us under the heading "Experts" in the
Prospectus, which is a part of this Registration Statement.

DELOITTE & TOUCHE LLP

San Diego, California
December 1, 1997

<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of U.S. Purchase Agreement.
1.2 Form of International Purchase Agreement.
3.1++ Certificate of Incorporation of Spiros Corp. II.
3.2++ By-laws of Spiros Corp. II.
3.3++ Amended and Restated Certificate of Incorporation of Spiros Corp. II (to be effective immediately
prior to closing).
3.4+ Amended and Restated By-laws of Spiros Corp. II (to be effective immediately prior to closing).
4.1 Purchase Option (included in Exhibit 3.3).
4.2++ Form of Warrant Agreement, including form of Warrant.
4.3 Form of Warrant (included in Exhibit 4.2).
4.4+ Specimen Unit Certificate.
4.5+ Specimen Stock Certificate for Dura Common Stock.
4.6+ Specimen Stock Certificate for Spiros Corp. II Common Stock.
4.7+ Specimen Stock Certificate for Spiros Corp. II Special Shares.
5.1+ Opinion of Brobeck, Phleger & Harrison LLP as to legality of the securities being registered,
including consent.
8.1+ Opinion of Brobeck, Phleger & Harrison LLP as to certain tax matters, including consent.
10.1++ Form of Technology License Agreement.
10.2++ Form of Development Agreement.
10.3++ Form of Albuterol and Product Option Agreement.
10.4++ Form of Manufacturing and Marketing Agreement.
10.5++ Form of Services Agreement.
10.6++ Spiros Corp. II 1997 Stock Option Plan.
10.7++ Form of Spiros Corp. II Notice of Grant of Stock Option
10.8++ Form of Spiros Corp. II Stock Option Agreement
10.9++ Form of Addendum to Stock Option Agreement
23.1+ Consent of Brobeck, Phleger & Harrison LLP (included in Exhibits 5.1 and 8.1).
23.2 Consent of Deloitte & Touche LLP, Independent Auditors.
23.3 Consent of Kleinfeld, Kaplan and Becker, regulatory counsel.
24.1++ Powers of Attorney.
27.1++ Financial Data Schedule of Spiros Corp. II.
</TABLE>

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

+ To be filed by amendment.

++ Previously filed.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

EXHIBITS
TO
AMENDMENT NO. 1
FORM S-1/S-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

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

SPIROS DEVELOPMENT CORPORATION II, INC.
DURA PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(This page has been left blank intentionally.)

<PAGE>

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

SPIROS DEVELOPMENT CORPORATION II, INC.
(a Delaware corporation)

DURA PHARMACEUTICALS, INC.
(a Delaware corporation)

Units
---------

Each Unit Consisting of
One Share of Common Stock of Spiros Development Corporation II, Inc.
and One Warrant
to Purchase One-Fourth of One Share of Common Stock of Dura
Pharmaceuticals, Inc.

U.S. PURCHASE AGREEMENT

Dated: , 1997
----------------

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

<PAGE>

TABLE OF CONTENTS

U.S. PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 4
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANIES . . . . . . 4
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. . . . . 4
(ii) INCORPORATED DOCUMENTS . . . . . . . . . . . . . . 5
(iii) INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . 5
(iv) FINANCIAL STATEMENTS . . . . . . . . . . . . . . . 5
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS . . . . . . 6
(vi) GOOD STANDING OF THE COMPANIES . . . . . . . . . . 7
(vii) GOOD STANDING OF SUBSIDIARIES. . . . . . . . . . . 7
(viii) CAPITALIZATION . . . . . . . . . . . . . . . . . . 8
(ix) AUTHORIZATION OF AGREEMENTS. . . . . . . . . . . . 8
(x) AUTHORIZATION AND DESCRIPTION OF U.S. SECURITIES . 9
(xi) REGISTRATION OR SIMILAR RIGHTS WAIVED. . . . . . . 10
(xii) ABSENCE OF DEFAULTS AND CONFLICTS. . . . . . . . . 10
(xiii) COMPLIANCE WITH LAWS.. . . . . . . . . . . . . . . 11
(xiv) ABSENCE OF LABOR DISPUTE . . . . . . . . . . . . . 11
(xv) ABSENCE OF PROCEEDINGS . . . . . . . . . . . . . . 11
(xvi) ACCURACY OF EXHIBITS . . . . . . . . . . . . . . . 12
(xvii) POSSESSION OF INTELLECTUAL PROPERTY. . . . . . . . 12
(xviii) ABSENCE OF FURTHER REQUIREMENTS. . . . . . . . . . 13
(xix) POSSESSION OF LICENSES AND PERMITS . . . . . . . . 13
(xx) TITLE TO PROPERTY. . . . . . . . . . . . . . . . . 13
(xxi) COMPLIANCE WITH CUBA ACT . . . . . . . . . . . . . 14
(xxii) INVESTMENT COMPANY ACT . . . . . . . . . . . . . . 14
(xxiii) ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . 14
(xxiv) TAXES. . . . . . . . . . . . . . . . . . . . . . . 14
(xxv) INSURANCE. . . . . . . . . . . . . . . . . . . . . 15
(xxvi) ACCOUNTING CONTROLS. . . . . . . . . . . . . . . . 15
(xxvii) LOCK-UP AGREEMENTS . . . . . . . . . . . . . . . . 15
(xxviii) AFFILIATE TRANSACTIONS . . . . . . . . . . . . . . 15
(xxix) DISTRIBUTION OF PROSPECTUS . . . . . . . . . . . . 15
(b) OFFICER'S CERTIFICATES. . . . . . . . . . . . . . . . . . . 16
SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING . . . . . . 16
(a) INITIAL U.S. UNITS. . . . . . . . . . . . . . . . . . . . . 16
(b) U.S. OPTION UNITS . . . . . . . . . . . . . . . . . . . . . 16
(c) PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(d) DENOMINATIONS; REGISTRATION . . . . . . . . . . . . . . . . 17
SECTION 3. COVENANTS OF THE COMPANIES. . . . . . . . . . . . . . . . . 17
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) FILING OF AMENDMENTS . . . . . . . . . . . . . . . . . . . 18

i
<PAGE>

(c) DELIVERY OF REGISTRATION STATEMENTS . . . . . . . . . . . . 18
(d) DELIVERY OF PROSPECTUSES. . . . . . . . . . . . . . . . . . 18
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS . . . . . . . . . 18
(f) BLUE SKY QUALIFICATIONS . . . . . . . . . . . . . . . . . . 19
(g) RULE 158. . . . . . . . . . . . . . . . . . . . . . . . . . 19
(h) USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . 19
(i) LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(j) RESTRICTION ON SALE OF U.S. UNITS . . . . . . . . . . . . . 20
(k) REPORTING REQUIREMENTS. . . . . . . . . . . . . . . . . . . 20
SECTION 4. PAYMENT OF EXPENSES . . . . . . . . . . . . . . . . . . . . 20
(a) EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . 21
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. . . . . . . . 21
(a) EFFECTIVENESS OF REGISTRATION STATEMENT . . . . . . . . . . 21
(b) OPINION OF COUNSEL FOR THE COMPANIES. . . . . . . . . . . . 21
(c) OPINION OF PATENT COUNSEL FOR THE COMPANIES . . . . . . . . 21
(d) OPINION OF REGULATORY COUNSEL FOR THE COMPANIES . . . . . . 22
(e) OPINION OF COUNSEL FOR THE U.S. UNDERWRITERS. . . . . . . . 22
(f) OFFICERS' CERTIFICATE . . . . . . . . . . . . . . . . . . 22
(g) ACCOUNTANTS' COMFORT LETTERS. . . . . . . . . . . . . . . . 23
(h) BRING-DOWN COMFORT LETTERS. . . . . . . . . . . . . . . . . 23
(i) APPROVAL OF LISTING . . . . . . . . . . . . . . . . . . . 23
(j) NO OBJECTION. . . . . . . . . . . . . . . . . . . . . . . . 23
(k) LOCK-UP AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 23
(l) CONDITIONS TO PURCHASE OF U.S. OPTION UNITS . . . . . . . . 23
(i) OFFICERS' CERTIFICATE . . . . . . . . . . . . . . . 23
(ii) OPINIONS OF COUNSEL FOR THE COMPANIES . . . . . . . 23
(iii) OPINION OF COUNSEL FOR THE U.S. UNDERWRITERS. . . . 24
(iv) BRING-DOWN COMFORT LETTERS . . . . . . . . . . . . 24
(m) ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . . . . . . . 24
(n) TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . 24
SECTION 6. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 24
(a) INDEMNIFICATION OF U.S. UNDERWRITERS. . . . . . . . . . . . 24
(b) INDEMNIFICATION OF THE COMPANIES AND DIRECTORS AND
OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) ACTIONS AGAINST PARTIES; NOTIFICATION . . . . . . . . . . . 26
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. . . . . 26
SECTION 7. CONTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9. TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . 28
(a) TERMINATION; GENERAL. . . . . . . . . . . . . . . . . . . . 28
(b) LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS. . . . . . 29
SECTION 11. DEFAULT BY THE COMPANIES . . . . . . . . . . . . . . . . . 29

ii
<PAGE>

SECTION 12. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 13. PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 14. GOVERNING LAW AND TIME . . . . . . . . . . . . . . . . . . 30
SECTION 15. EFFECT OF HEADINGS . . . . . . . . . . . . . . . . . . . . 30

SCHEDULES
Schedule A - List of U.S. Underwriters. . . . . . . . . . . . . . . Sch A-1
Schedule B - Pricing Information. . . . . . . . . . . . . . . . . . Sch B-1
Schedule C - List of Persons and Entities Subject to Lock-up. . . . Sch C-1

EXHIBITS
Exhibit A - Form of Opinion of Counsel for Dura . . . . . . . . . . . . A-1
Exhibit B - Form of Opinion of Intellectual Property
Counsel for Dura . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Form of Opinion of U.S. Regulatory Counsel
for the Companies. . . . . . . . . . . . . . . . . . . . C-1
Exhibit D - Form of Lock-up Letter . . . . . . . . . . . . . . . . . . D-1

iii
<PAGE>

SPIROS DEVELOPMENT CORPORATION II, INC.
(a Delaware corporation)

DURA PHARMACEUTICALS, INC.
(a Delaware corporation)

Units
---------

Each Unit Consisting of
One Share of Common Stock of Spiros Development Corporation II, Inc.
and One Warrant
to Purchase One-Fourth of One Share of Common Stock of Dura
Pharmaceuticals, Inc.

U.S. PURCHASE AGREEMENT

, 1997
---------

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209

Ladies and Gentlemen:

<PAGE>

Pierce, Fenner & Smith ("Merrill Lynch") and each of the other U.S. Underwriters
named in Schedule A hereto (collectively, the "U.S. Underwriters", which term
shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Merrill Lynch and Donaldson, Lufkin & Jenrette
Securities Corporation are acting as representatives (in such capacity, the
"U.S. Representatives"), with respect to the issue and sale by the Companies,
and the purchase by the U.S. Underwriters, acting severally and not jointly, of
the respective number of units set forth in said Schedule A, each unit composed
of one share of common stock, par value $.001 per share, of SDC II ("SDC II
Common Stock") and one warrant (each a "Warrant") that will entitle the
registered owner thereof to purchase one-fourth of one share of common stock,
par value $.001 per share, of Dura ("Dura Common Stock") at a per share exercise
price as set forth in Schedule A hereto, pursuant to and subject to certain
adjustments as set forth in the Warrant certificate to be issued as part of the
Unit Certificate (as hereinafter defined), and with respect to the grant by SDC
II and Dura to the U.S. Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of________
additional units to cover over-allotments, if any. The SDC II Common Stock and
the Warrants will be paired for sale as units by SDC II and Dura and then sold
to the U.S. Underwriters. The aforesaid _____________ units (the "Initial U.S.
Units") to be purchased by the U.S. Underwriters and all or any part of the
______ units subject to the option described in Section 2(b) (the "U.S. Option
Units") are hereinafter called, collectively, the "U.S. Units".

It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of ______ units
composed of one share of SDC II Common Stock and one Warrant (the "Initial
International Units") through arrangements with certain underwriters outside the
United States and Canada (the "International Managers") for which Merrill Lynch
International and Donaldson, Lufkin & Jenrette Securities Corporation are acting
as lead managers (the "Lead Managers") and the grant by the Company to the
International Managers, acting severally and not jointly, of an option to
purchase all or any part of the International Managers' pro rata portion of up
to ______ additional units composed of one share of SDC II Common Stock and one
Warrant solely to cover over-allotments, if any (the "International Option
Units" and, together with the U.S. Option Units, the "Option Units"). The
Initial International Units and the International Option Units are hereinafter
called the "International Units". It is understood that the Company is not
obligated to sell and the U.S. Underwriters are not obligated to purchase, any
Initial U.S. Units unless all of the Initial International Units are
contemporaneously purchased by the International Managers.

The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Units and the Initial
International Units are hereinafter collectively called the "Initial Units", and
the U.S. Units and the International Units are hereinafter collectively called
the "Units".

The Underwriters concurrently will enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions

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among the Underwriters under the direction of Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated (in such capacity, the "Global
Coordinator").

The Companies understand that the U.S. Underwriters propose to make a
public offering of the U.S. Units as soon as the U.S. Representatives deem
advisable after this Agreement has been executed and delivered.

Each Unit initially will be represented by a certificate representing one
or more Warrants and one or more shares of SDC II Common Stock (a "Unit
Certificate"). Each Unit will be transferable only as a whole and as described
in the Prospectus (as hereinafter defined) through December 31, 1999 or such
earlier date on which the Purchase Option (as defined in the Prospectus) is
exercised or expires unexercised, after which date the Warrants and the SDC II
Common Stock will trade separately. The SDC II Common Stock, the Warrants and
the U.S. Units are more fully described in the Registration Statement (as
hereinafter defined) and the Prospectus.

The Companies and the U.S. Underwriters agree that up to _______ shares of
the Initial U.S. Units to be purchased by the U.S. Underwriters (the "Reserved
Units") shall be reserved for sale by the Underwriters to certain eligible
employees and persons having business relationships with the Companies, as part
of the distribution of the Units by the Underwriters, subject to the terms of
this Agreement, the applicable rules, regulations and interpretations of the
National Association of Securities Dealers, Inc. and all other applicable laws,
rules and regulations. To the extent that such Reserved Units are not orally
confirmed for purchase by such eligible employees and persons having business
relationships with the Companies by the end of the first business day after the
date of this Agreement, such Reserved Units may be offered to the public as part
of the public offering contemplated hereby.

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<PAGE>

of International Prospectus is identical to the Form of U.S. Prospectus, except
for the front cover and back cover pages and the information under the caption
"Underwriting" and the inclusion in the Form of International Prospectus of a
section under the caption "Certain United States Tax Considerations for
Non-United States Holders". The information included in any such prospectus or
in any such Term Sheet, as the case may be, that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective (A) pursuant
to paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (B)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information".
Each Form of U.S. Prospectus and Form of International Prospectus used before
such registration statement became effective, and any prospectus that omitted,
as applicable, the Rule 430A Information or the Rule 434 Information, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus". Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement". Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement", and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of U.S.
Prospectus and the final Form of International Prospectus, including the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the forms first furnished to the Underwriters for use in
connection with the offering of the Units (the "Unit Offering") are herein
called the "U.S. Prospectus" and the "International Prospectus", respectively,
and, collectively, the "Prospectuses". If Rule 434 is relied on, the term "U.S.
Prospectus" and "International Prospectus" shall refer to the preliminary U.S.
Prospectus dated __________, 1997 and the preliminary International Prospectus
dated __________, 1997, respectively, each together with the applicable Term
Sheet and all references in this Agreement to the date of such Prospectuses
shall mean the date of the applicable Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the U.S. Prospectus, the International Prospectus or any Term Sheet
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").

Prior to the Closing Time (as defined), Dura intends to acquire all of the
outstanding capital stock of Spiros Development Corporation ("SDC") for an
aggregate purchase price of approximately $___________, payable in cash, shares
of Dura Common Stock, or any combination thereof (the "SDC Purchase").

4
<PAGE>

by reference in the Registration Statement, any preliminary prospectus
(including the Form of U.S. Prospectus and the Form of International Prospectus)
or the Prospectuses, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectuses shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectuses, as the case may be.

SECTION 1. REPRESENTATIONS AND WARRANTIES.

(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANIES. The Companies
jointly and severally represent and warrant to each U.S. Underwriter as of the
date hereof, as of the Closing Time referred to in Section 2(c) hereof, and as
of each Date of Delivery (if any) referred to in Section 2(b) hereof, and agree
with each U.S. Underwriter, as follows:

(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Dura meets the
requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Companies, are contemplated by the Commission, and any request on the part
of the Commission for additional information has been complied with.

At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto become
effective and at the Closing Time (and, if any U.S. Option Units are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Neither of the Prospectuses nor any amendments or
supplements thereto, at the time the Prospectuses or any amendments or
supplements were issued and at the Closing Time (and, if any U.S. Option
Units are purchased, at the Date of Delivery), included or will include an
untrue statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If
Rule 434 is used, the Companies will comply with the requirements of Rule
434. The representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or the U.S.
Prospectus made in reliance upon and in conformity with information
furnished to the Companies in writing by any U.S. Underwriter through
Merrill Lynch expressly for use in the Registration Statement or the U.S.
Prospectus.

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<PAGE>

Each preliminary prospectus and the prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectuses, when they became effective or at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations or the Securities Exchange Act of 1934 (the "1934 Act") and the
rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), as applicable, and, when read together with the other
information in the Prospectuses, at the time the Registration Statement
became effective, at the time the Prospectuses were issued and at the
Closing Time (and, if any U.S. Option Units are purchased, at the Date of
Delivery), did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.

(iii) INDEPENDENT ACCOUNTANTS. Deloitte & Touche LLP, which are
reporting upon the audited financial statements and supporting schedules
with respect to Dura, Spiros Development Corporation ("SDC") and SDC II
incorporated by reference or included in the Registration Statement, are
independent accountants as required by the 1933 Act and the 1933 Act
Regulations.

(iv) FINANCIAL STATEMENTS. (A) The financial statements of Dura
incorporated by reference or included in the Registration Statement and the
Prospectuses, together with the related schedules and notes, present fairly
the financial position of Dura (and, for relevant periods consistent with
the Commission's rules and regulations, Dura's Subsidiaries (as defined in
clause (vii) below)) at the dates indicated and the statements of
operations, shareholders' equity and cash flows of Dura (and, for relevant
periods consistent with the Commission's rules and regulations, each of the
Subsidiaries) for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved. The supporting
schedules, if any, included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and summary financial information for Dura and the
Subsidiaries included in the Prospectuses present fairly in accordance with
GAAP the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements of Dura and the
Subsidiaries included in the Registration Statement. Other than the
financial statements

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<PAGE>

and schedules referred to in this paragraph (iv), no other financial
statements or schedules are required to be included in the Registration
Statement or incorporated therein by reference.

(B) The financial statements of SDC included in the Registration
Statement and the Prospectuses, together with the related schedules and
notes, present fairly the financial position of SDC at the dates indicated
and the statements of operations, shareholders' equity and cash flows of
SDC for the periods specified; EXCEPT AS OTHERWISE STATED IN THE
REGISTRATION STATEMENT, said financial statements have been prepared in
conformity with GAAP applied on a consistent basis throughout the periods
involved.

(C) The financial statements of SDC II included in the Registration
Statement and the Prospectuses, together with the related schedules and
notes, present fairly the financial position of SDC II at the date
indicated; except as otherwise stated in the Registration Statement, said
financial statements have been prepared in conformity with GAAP.

(D) The pro forma financial statements and the related notes
thereto included in the Registration Statement and the Prospectuses or
incorporated therein by reference present fairly in accordance with GAAP
the information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.

(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of Dura and the
Subsidiaries (as defined below), considered as one enterprise, whether or
not arising in the ordinary course of business (a "Dura Material Adverse
Effect"), (B) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of SDC, whether or not arising in the ordinary course of business
(an "SDC Material Adverse Effect"), (C) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of SDC II, whether or not arising in
the ordinary course of business (an "SDC II Material Adverse Effect"), (D)
there have been no transactions entered into by Dura or any Subsidiary, SDC
or SDC II, other than in the ordinary course of business, which are
material with respect to Dura and the Subsidiaries, considered as one
enterprise, SDC or SDC II, respectively, and (D) there has been no dividend
or distribution of any kind declared, paid or made by each of SDC, SDC II
or Dura, on any class of its respective capital stock. As used in this
Agreement on the date

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<PAGE>

hereof, a "Material Adverse Effect" shall mean both a Dura Material Adverse
Effect and an SDC Material Adverse Effect.

(vi) GOOD STANDING OF THE COMPANIES. (A) Dura has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its obligations
under this Agreement; and Dura is duly qualified as a foreign corporation
to transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to
so qualify or to be in good standing would not result in a Dura Material
Adverse Effect.

(B) SDC II has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectuses and to enter
into and perform its obligations under this Agreement; and SDC II is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or to be in good standing
would not result in an SDC II Material Adverse Effect.

(vii) GOOD STANDING OF SUBSIDIARIES. Dura Delivery Systems, Inc., a
Delaware corporation ("DDSI"), Health Script Pharmacy Services, Inc., a
Colorado corporation ("Health Script"), Healthco Solutions, Inc., a
Colorado corporation ("Healthco"), HS Wholesaler, Inc., a Colorado
corporation ("HS Wholesaler"), Scandi Acquisition Corp., a Delaware
corporation ("Scandi"), DCI, Ltd., a corporation organized under the laws
of the Cayman Islands ("DCI") Dura (Bermuda) Trading Company Ltd., a
corporation organized under the laws of Bermuda ("Dura (Bermuda)") are the
only subsidiaries of Dura (DDSI, Health Script, Healthco, HS Wholesaler,
DCI, Dura (Bermuda) and, unless otherwise indicated, SDC, are hereinafter
referred to as the "Subsidiaries"). Except for the Subsidiaries, neither
the Company nor any Subsidiary owns any shares of stock or any other equity
securities of any corporation or has any equity interests in any firm,
partnership, association or other entity other than 775,193 shares of
Common Stock of Trega Biosciences, Inc. and 754,799 shares of Common Stock
of Cosmederm Technologies, Inc., each held by Dura. Each Subsidiary has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectuses and is duly qualified
as a foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would

8
<PAGE>

not result in a Material Adverse Effect; all of the issued and outstanding
capital stock of each Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and (other than with respect to
SDC) is owned solely by Dura or another Subsidiary free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity;
none of the outstanding shares of capital stock of any Subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary arising by operation of law, under the
charter or by-laws of such Subsidiary or under any agreement to which Dura
or such Subsidiary is a party.

(B) Upon the consummation of the SDC Purchase, all of the
outstanding shares of capital stock of SDC will be owned by Dura free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity.

(viii) CAPITALIZATION. The authorized, issued and outstanding capital
stock of each of Dura and SDC II is as set forth in the Prospectuses under
the column "Actual" under the captions "Dura Capitalization" and "Spiros
Corp. II Capitalization", respectively (except, in the case of Dura, for
subsequent issuances, if any, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectuses or incorporated by
reference therein or pursuant to the exercise of convertible securities,
warrants or options referred to in the Prospectuses or incorporated by
reference therein). The shares of issued and outstanding capital stock of
each of Dura and SDC II have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
capital stock of Dura or SDC II was issued in violation of the preemptive
or other similar rights of any securityholder of Dura or SDC II,
respectively, arising by operation of law, under the charter or by-laws of
Dura or SDC II, as the case may be, or under any agreement to which Dura or
SDC II is a party. Except as disclosed in the Prospectuses or incorporated
by reference therein, there are no outstanding options, warrants or other
rights calling for the issuance of, and no commitments, plans or
arrangements to issue, any shares of capital stock of Dura, SDC II or any
Subsidiary or any security convertible into or exchangeable for capital
stock of Dura, SDC II or any Subsidiary.

(ix) AUTHORIZATION OF AGREEMENTS. (A) This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by each of Dura and SDC II.

(B) The Warrant Agreement (as hereinafter defined) has been duly
authorized by Dura, and when executed and delivered by Dura and the Warrant
Agent thereunder, will constitute a valid and binding agreement of Dura,
enforceable against Dura in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).

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<PAGE>

(C) Each of the Development Agreement, the Technology Agreement,
the Albuterol and Product Option Agreement, the Manufacturing and Marketing
Agreement and the Services Agreement (each as defined in the Prospectuses,
and collectively referred to herein as the "Transaction Agreements") has
been duly authorized by Dura and SDC II and, in the case of the Technology
Agreement, Dura, SDC II, SDC and DDSI, and when executed and delivered by
Dura and SDC II, and, in the case of the Technology Agreement, Dura, SDC
II, SDC and DDSI, will constitute valid and binding agreements of each of
Dura, SDC II, SDC and DDSI, as the case may be, enforceable against Dura,
SDC II, SDC and DDSI in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).

(x) AUTHORIZATION AND DESCRIPTION OF UNITS. (A) The SDC II Common
Stock to be issued by SDC II as a component of the Units has been duly
authorized for issuance and sale to the U.S. Underwriters pursuant to this
Agreement and to the International Managers pursuant to the International
Purchase Agreement, respectively, and, when issued and delivered by SDC II
against payment of the purchase price therefor as provided in this
Agreement and the International Purchase Agreement, respectively, will be
validly issued, fully paid and non-assessable; the SDC II Common Stock
conforms in all material respects to the statements relating thereto
contained in the Prospectuses and such description conforms to the rights
set forth in the instruments defining the same; no holder of SDC II Common
Stock will be subject to personal liability by reason of being such a
holder; and the issuance of the SDC II Common Stock is not subject to the
preemptive or other similar rights of any securityholder of SDC II.

(B) The Warrants to be issued as a component of the Units have been
duly authorized by Dura for issuance and sale to the U.S. Underwriters
pursuant to this Agreement and to the International Managers pursuant to
the International Purchase Agreement, respectively, and, when duly
executed, issued and delivered by Dura and duly countersigned by the
Warrant Agent (as hereinafter defined) in the manner provided for in the
Warrant Agreement (the "Warrant Agreement") to be entered into between Dura
and Chase Mellon Shareholder Services, as warrant agent (the "Warrant
Agent"), and, when issued and delivered by Dura against payment of the
purchase price therefor as provided in this Agreement, will constitute
valid and binding obligations of Dura, entitled to the benefits of the
Warrant Agreement, and will be enforceable in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law); such Warrants are not

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<PAGE>

subject to the preemptive rights of any stockholder of Dura and all
corporate action required to be taken for the authorization, issue and sale
of such Warrants has been validly and sufficiently taken.

(C) Dura shall have available such number of shares of Dura Common
Stock deliverable upon exercise of the Warrants as is sufficient to permit
the exercise in full of the Warrants. All shares of Dura Common Stock
issued upon exercise of the Warrants, when issued and paid for in
accordance with the terms of the Warrant Agreement, will be duly
authorized, validly issued, fully paid and nonassessable; shares of Dura
Common Stock are not subject to the preemptive rights of any stockholder of
Dura; and all corporate action required to be taken for such authorization,
issue and sale of the Dura Common Stock will have been validly and
sufficiently taken upon the issuance of the Warrants; such shares of Dura
Common Stock conform in all material respects to the descriptions thereof
contained or incorporated by reference in the Prospectuses and all
corporate action required to be taken for the authorization, issue and sale
of such shares of Dura Common Stock has been validly and sufficiently
taken.

(xi) REGISTRATION OR SIMILAR RIGHTS WAIVED. There are no persons
with registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the
Company under the 1933 Act who have not waived such rights.

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<PAGE>

creation or imposition of any lien, charge or encumbrance upon any property
or assets of Dura or any Subsidiary pursuant to, the Agreements and
Instruments (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation of the provisions of
the charter or by-laws of Dura or any Subsidiary or any applicable material
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over Dura or any Subsidiary or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by Dura or any Subsidiary.

(B) SDC II is not in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which SDC II is a party or by which it may be bound, or to
which any of the property or assets of SDC II is subject (collectively,
"SDC II Agreements and Instruments") except for such defaults that would
not result in an SDC II Material Adverse Effect; and the execution,
delivery and performance of each of this Agreement, the International
Purchase Agreement and the Transaction Agreements by SDC II and the
consummation BY SDC II of the transactions contemplated herein, therein and
in the Registration Statement (including the issuance and sale of the SDC
II Common Stock as part of the Units and the use of the proceeds from the
sale of the Units as described in the Prospectuses under the caption "Use
of Proceeds") and compliance by SDC II with its obligations under this
Agreement, the International Purchase Agreement and each of the Transaction
Agreements have been duly authorized by all necessary corporate action and
do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or SDC II Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of SDC II pursuant to, the SDC II Agreements and
Instruments (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not result in an SDC II Material Adverse
Effect), nor will such action result in any violation of the provisions of
the charter or by-laws of SDC II or any applicable material law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over SDC II or any of its assets, properties or operations.
As used herein, an "SDC II Repayment Event" means any event or condition
which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by SDC II.

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(xiii) COMPLIANCE WITH LAWS. Except as set forth in the Prospectuses,
Dura and the Subsidiaries and SDC II are in compliance in all material
respects with all applicable laws, statutes, ordinances, rules or
regulations, the enforcement of which, individually or in the aggregate,
would be reasonably expected to have a Material Adverse Effect or an SDC II
Material Adverse Effect, as the case may be.

(xiv) ABSENCE OF LABOR DISPUTE. No labor dispute with the employees
of Dura or any Subsidiary exists or, to the knowledge of Dura, is imminent,
and Dura is not aware of any existing or imminent labor disturbance by the
employees of any of its or any Subsidiary's principal suppliers,
manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Dura Material Adverse Effect or an
SDC II Material Adverse Effect.

(xv) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation (except applications for regulatory approval for
marketing of pharmaceutical products) before or brought by any court or
governmental agency or body, domestic or foreign, now pending or, to the
knowledge of either Dura or SDC II, threatened against or affecting Dura or
any Subsidiary or SDC II that is required to be disclosed in the
Registration Statement or that might reasonably be expected to have a
Material Adverse Effect, or an SDC II Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
properties or assets of either Dura and the Subsidiaries (other than SDC),
considered as one enterprise, or SDC II or SDC, as the case may be, or the
consummation of the transactions contemplated in this Agreement, the
International Purchase Agreement, the Warrant Agreement and the Transaction
Agreements or the performance by Dura or SDC II of its obligations
hereunder or thereunder; the aggregate of all pending legal or governmental
proceedings to which Dura or any Subsidiary or SDC II, as the case may be,
is a party or which affect any of their respective property or assets is
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to its business, could not
reasonably be expected to result in a Material Adverse Effect or an SDC II
Material Adverse Effect, as the case may be.

(xvi) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectuses or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been described and filed as
required.

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Prospectuses, nothing has come to the attention of Dura or the Subsidiaries
to the effect that (1) any product, process, method, substance, part or
other material presently contemplated to be sold by or employed by Dura or
any of the Subsidiaries in connection with Dura's or such Subsidiary's
business may infringe any patent, trademark, service mark, trade name,
copyright, license or other right owned by others, (2) there is pending or
threatened any claim or litigation against or affecting Dura and the
Subsidiaries contesting their right to sell or use any such product,
process, method, substance, part or other material or (3) there is, or
there is pending, any patent, invention, device, application or any
applicable statute, law, rule, regulation, standard or code, in the case of
each of clause (1), (2) or (3) above, which could have Material Adverse
Effect.

(B) SDC II will, to the extent provided for in the Technology
Agreement, have the right to use all patents, patent rights, licenses,
inventions, copyrights, know how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) owned or controlled by Dura or the Subsidiaries,
which are necessary for the operation of its business as described in the
Prospectuses. SDC II has not received any notice of proceedings relating
to revocation or modification of any such licenses, permits, certificates,
consents, orders, approvals or authorizations which singularly or in the
aggregate, if the subject of an unfavorable ruling or finding, could have a
SDC II Material Adverse Effect.

(xviii) ABSENCE OF FURTHER REQUIREMENTS. (A) No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Companies of their
obligations under this Agreement, the International Purchase Agreement, the
Warrant Agreement and the Transaction Agreements, in connection with the
offering, issuance, sale and delivery of the shares of SDC II Common Stock,
the Warrants or the shares of Dura Common Stock deliverable upon exercise
of the Warrants or the consummation of the transactions contemplated by
this Agreement, the International Purchase Agreement, the Warrant Agreement
and the Transaction Agreements, except such as have been already obtained
or as may be required under the 1933 Act or the 1933 Act Regulations and
foreign or state securities or blue sky laws.

(B) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the consummation by SDC
and DDSI of the transactions contemplated by this agreement, except such as
have already been obtained.

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in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect or a SDC II Material Adverse
Effect, as the case may be; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect or a SDC II Material
Adverse Effect, as the case may be; and neither Dura nor any Subsidiary nor
SDC II has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect or an SDC II Material Adverse
Effect; provided, however, that no FDA approval has been received with
respect to products that SDC II currently is not permitted to market.

(xx) TITLE TO PROPERTY. Dura and the Subsidiaries have good and
marketable title to all material properties and assets owned by Dura and
the Subsidiaries, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any kind
except such as (a) are described or incorporated by reference in the
Prospectuses or (b) do not, singly or in the aggregate, materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by Dura or the affected Subsidiaries,
as the case may be; and all properties held under lease by Dura or any
Subsidiary are held under valid, subsisting and enforceable leases.

(B) SDC II has good and marketable title to all material properties
and assets described in the Prospectuses as owned by it, free and clear of
all mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Prospectuses or (b) do not, singly or in the aggregate, materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by SDC II.

(xxi) COMPLIANCE WITH CUBA ACT. Dura has complied with, and is and
will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.

(xxii) INVESTMENT COMPANY ACT. Neither of the Companies is and, upon
the issuance and sale of the Units as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses,
will not be an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").

(xxiii) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Dura Material Adverse Effect,

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(A) neither Dura nor any Subsidiary is in material violation of any
federal, state, local or foreign law, rule, regulation, ordinance or any
judicial or administrative interpretation thereof, including any judicial
or administrative order, consent, decree or judgment, relating to pollution
or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) Dura and the Subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental
Laws and are each in compliance with their requirements, (C) there are no
pending or, to the best knowledge of Dura, threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against Dura or any of the Subsidiaries
and (iv) to the best knowledge of Dura, there are no events or
circumstances that could form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting Dura or any Subsidiary
relating to Hazardous Materials or any Environmental Laws.

(xxiv) TAXES. Dura and the Subsidiaries have filed all federal,
state, local and foreign tax returns that are required to be filed or have
duly requested extensions thereof and have paid all taxes required to be
paid by any of them and any related assessments, fines or penalties, except
for any such tax, assessment, fine or penalty that is being contested in
good faith and by appropriate proceedings; and adequate charges, accruals
and reserves have been provided for in the financial statements referred to
in Section 1(a)(iv)(A) above in respect of all federal, state, local and
foreign taxes for all periods as to which the tax liability of Dura or any
Subsidiary has not been finally determined or remains open to examination
by applicable taxing authorities.

(xxv) INSURANCE. Dura and the Subsidiaries carry or are entitled to
the benefits of insurance in such amounts and covering such risks as is
generally maintained by companies of established repute engaged in the same
or similar business and all such insurance is in full force and effect.

(xxvi) ACCOUNTING CONTROLS. Dura and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's general and specific authorizations; (B) transactions are
recorded as necessary to permit preparations of financial statements in
conformity with GAAP and to maintain accountability for assets; (C) access
to assets is permitted only in accordance with management's general or
specific authorizations; and

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(D) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect
to any differences.

(xxvii) LOCK-UP AGREEMENTS. The Companies have obtained and delivered
to the U.S. Underwriters the agreements, in the form of Exhibit D hereto,
of the persons and entities named in Schedule C annexed hereto to the
effect that each such person will not, for a period of 90 days from the
date of this Agreement and except as otherwise provided in their respective
agreement, without the prior written consent of Merrill Lynch, directly or
indirectly, offer to sell, grant any option for the sale of, or otherwise
dispose of any shares of Dura Common Stock or any securities convertible
into or exercisable for shares of Dura Common Stock owned by such person or
entity or with respect to which such person has the power of disposition.

(xxviii) AFFILIATE TRANSACTIONS. No relationship, direct or indirect,
exists between or among any of Dura or any affiliate of Dura, on the one
hand, and any director, officer, shareholder, customer or supplier of any
of them, on the other hand, which is required by the 1933 Act or by the
1933 Act Regulations to be described in the Registration Statement or the
Prospectuses and which is not so described or is not described as required
or is not incorporated by reference therein.

(xxix) DISTRIBUTION OF PROSPECTUSES. The Companies have not
distributed and, prior to the later to occur of (A) Closing Time and (B)
completion of the distribution of the Units, will not distribute any
prospectus (as such term is defined in the 1933 Act and the 1933 Act
Regulations) in connection with the offering and sale of the Units other
than the Registration Statement, any preliminary prospectus, the
Prospectuses or other materials, if any, permitted by the 1933 Act or by
the 1933 Act Regulations and approved by the U.S. Representatives.

(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of Dura
or any Subsidiary or SDC II, delivered to the Global Coordinator, the U.S.
Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by Dura or SDC II, as the case may be, to each U.S.
Underwriter as to the matters covered thereby.

SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING.

(a) INITIAL UNITS. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Companies, severally and not jointly, agree to sell to each U.S. Underwriter,
and each U.S. Underwriter, severally and not jointly, agrees to purchase from
the Companies, at the price per Unit set forth in Schedule B, the number of
Initial U.S. Units set forth in Schedule A opposite the name of such U.S.
Underwriter, plus any additional number of Initial U.S. Units which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.

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(b) OPTION UNITS. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Companies, acting severally and not jointly, hereby grant an option
to the U.S. Underwriters, severally and not jointly, to purchase up to an
additional __________ Units at the same price per Unit set forth in Schedule B
for the Initial U.S. Units. The option hereby granted will expire 30 days after
the date hereof and may be exercised in whole or in part from time to time only
for the purpose of covering over-allotments which may be made in connection with
the offering and distribution of the Initial U.S. Units upon notice by the
Global Coordinator to the Companies setting forth the number of U.S. Option
Units as to which the several U.S. Underwriters are then exercising the option
and the time and date of payment and delivery for such U.S. Option Units. Any
such time and date of delivery (a "Date of Delivery") shall be determined by the
Global Coordinator, but shall not be later than seven full business days after
the exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
U.S. Option Units, each of the U.S. Underwriters, acting severally and not
jointly, will purchase that proportion of the total number of U.S. Option Units
then being purchased which the number of Initial U.S. Units set forth in
Schedule A opposite the name of such U.S. Underwriter bears to the total number
of Initial U.S. Units, subject in each case to such adjustments as the Global
Coordinator in its discretion shall make to eliminate any sales or purchases of
fractional Units.

(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial U.S. Units shall be made at the offices of
Brobeck, Phleger & Harrison, LLP, 550 West C Street, Suite 1300, San Diego,
California 92101, or at such other place as shall be agreed upon by the Global
Coordinator and the Companies, at 7:00 A.M. (California time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Global Coordinator and the
Companies (such time and date of payment and delivery being herein called
"Closing Time").

In addition, in the event that any or all of the U.S. Option Units are
purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Units shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Companies, on each Date of Delivery as specified in
the notice from the Global Coordinator to the Companies.

Payment shall be made to the Companies by wire transfer of immediately
available funds to a bank account designated by the Companies against delivery
to the U.S. Representatives of certificates for the Units to be purchased by
them. It is understood that each U.S. Underwriter has authorized the U.S.
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Initial U.S. Units and the U.S. Option
Units, if any, which it has agreed to purchase. Merrill Lynch, individually and
not as representative of the U.S. Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Initial U.S. Units or the U.S.
Option Units, if any, to be purchased by any U.S. Underwriter

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<PAGE>

whose funds have not been received by the Closing Time or the relevant Date of
Delivery, as the case may be, but such payment shall not relieve such U.S.
Underwriter from its obligations hereunder.

(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial U.S. Units
and the U.S. Option Units, if any, shall be in such denominations and registered
in such names as the U.S. Representatives may request in writing at least one
full business day before the Closing Time or the relevant Date of Delivery, as
the case may be. The certificates for the Initial U.S. Units and the U.S.
Option Units, if any, will be made available for examination and packaging by
the U.S. Underwriters in The City of New York not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.

SECTION 3. COVENANTS OF THE COMPANIES. Each of the Companies covenants
with each U.S. Underwriter as follows:

(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Companies, subject to Section 3(b), will comply with the requirements
of Rule 430A or Rule 434, as applicable, and will notify the Global
Coordinator immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectuses or any amended
Prospectuses shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to
the Prospectuses or for additional information and (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Units for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Companies
will promptly effect the filings necessary pursuant to Rule 424(b) and will
take such steps as they deem necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was received
for filing by the Commission and, in the event that it was not, will
promptly file such prospectus. The Companies will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.

(b) FILING OF AMENDMENTS. The Companies will give the Global
Coordinator notice of their intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)), any
Term Sheet or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectuses, whether pursuant to the 1933 Act, the
1934 Act or otherwise, will furnish the Global Coordinator with copies of
any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and

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<PAGE>

will not file or use any such document to which the Global Coordinator or
counsel for the U.S. Underwriters shall object.

(c) DELIVERY OF REGISTRATION STATEMENTS. The Companies have
furnished or will deliver to the U.S. Representatives and counsel for the
U.S. Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) and signed
copies of all consents and certificates of experts, and will also deliver
to the U.S. Representatives, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the U.S. Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the U.S.
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.

(d) DELIVERY OF PROSPECTUSES. The Companies have delivered to each
U.S. Underwriter, without charge, as many copies of each preliminary
prospectus as such U.S. Underwriter reasonably requested, and the Companies
hereby consent to the use of such copies for purposes permitted by the 1933
Act. The Companies will furnish to each U.S. Underwriter, without charge,
during the period when the U.S. Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the U.S.
Prospectus (as amended or supplemented) as such U.S. Underwriter may
reasonably request. The U.S. Prospectus and any amendments or supplements
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Companies will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the distribution
of the Units as contemplated in this Agreement, the International Purchase
Agreement and in the Prospectuses. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Units, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the U.S. Underwriters or for
the Companies, to amend the Registration Statement or amend or supplement
any Prospectus in order that the Prospectuses will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time any such Prospectus is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at
any such time to amend the Registration Statement or amend or supplement
any Prospectus in order to comply with the requirements of the 1933 Act or
the 1933 Act Regulations, the Companies will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment

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or supplement as may be necessary to correct such statement or omission or
to make the Registration Statement or the Prospectuses comply with such
requirements, and the Companies will furnish to the U.S. Underwriters such
number of copies of such amendment or supplement as the U.S. Underwriters
may reasonably request.

(f) BLUE SKY QUALIFICATIONS. The Companies will use their best
efforts, in cooperation with the U.S. Underwriters, to qualify the Units
for offering and sale under the applicable securities laws of such states
and other jurisdictions (domestic or foreign) as the Global Coordinator may
designate and to maintain such qualifications in effect for a period of not
less than one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; PROVIDED, HOWEVER,
that neither Dura nor SDC II shall be obligated to file any general consent
to service of process or to qualify as a foreign corporation or as a dealer
in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject. In each jurisdiction in which the
Units have been so qualified, the Companies will file such statements and
reports as may be required by the laws of such jurisdiction to continue
such qualification in effect for a period of not less than one year from
the effective date of the Registration Statement and any Rule 462(b)
Registration Statement. The Companies will also supply the U.S.
Representatives with such information as is necessary for the determination
of the legality of the Units for investment under the laws of such
jurisdictions as the U.S. Underwriters may reasonably request.

(g) RULE 158. The Companies will timely file such reports pursuant
to the 1934 Act as are necessary in order to make generally available to
their securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.

(h) USE OF PROCEEDS. SDC II will use the net proceeds received by
it from the sale of the Units in the manner specified in the Prospectuses
under "Use of Proceeds".

(i) LISTING. The Companies will use their best efforts to effect
and maintain the quotation of the Units on the Nasdaq National Market and
will file with the Nasdaq National Market all documents and notices
required by the Nasdaq National Market of companies that have securities
that are traded in the over-the-counter market and quotations for which are
reported by the Nasdaq National Market.

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of Dura Common Stock or file any registration statement under the 1933 Act
with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of Dura
Common Stock whether any such swap or transaction described in clause (i)
or (ii) above is to be settled by delivery of shares of Dura Common Stock
or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Units to be sold hereunder or under the
International Purchase Agreement, (B) any shares of Dura Common Stock
issued by Dura upon the exercise of an option or warrant or the conversion
of a security outstanding on the date hereof and referred to in the
Prospectuses, (C) any shares of Dura Common Stock issued or options to
purchase Dura Common Stock granted pursuant to existing employee benefit
plans of Dura referred to in the Prospectuses or (D) any shares of Dura
Common Stock issued to securityholders of Scandipharm, Inc.

(k) REPORTING REQUIREMENTS. The Companies, during the period when
the Prospectuses are required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.

SECTION 4. PAYMENT OF EXPENSES.

(a) EXPENSES. SDC II will pay or cause to be paid all expenses incident
to the performance of the Companies' obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters, the Warrant
Agreement and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Units, (iii) the
preparation, issuance and delivery of the certificates for the Units to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Units to the
Underwriters and the transfer of the Units between the U.S. Underwriters and the
International Managers, (iv) the fees and disbursements of the Companies'
counsel, accountants and other advisors, (v) the fees and disbursements of SDC's
counsel, accountants and other advisors, (vi) the qualification of the Units
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vii) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectuses and any amendments or supplements thereto, (viii)
the preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (ix) the fees and expenses of any
transfer agent or registrar for the Units, (x) all charges of the Warrant Agent,
(xi) the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, the review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of
the Units,

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(xii) the fees and expenses incurred in connection with the listing of the
Units, the SDC II Common Stock and the Warrants on the Nasdaq National Market
and (xiii) all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, in connection with matters
related to the Reserved Units which are designated by the Companies for sale to
employees and others having a business relationship with the Companies.

(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the U.S.
Representatives in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11, the Companies shall reimburse the U.S. Representatives for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the U.S. Underwriters.

SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The obligations
of the several U.S. Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Companies contained in Section 1 hereof or
in certificates of any officer of the Companies or any Subsidiary delivered
pursuant to the provisions hereof, to the performance by the Companies of their
covenants and other obligations hereunder, and to the following further
conditions:

(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the U.S.
Underwriters. A prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of Rule 430A)
or, if the Companies have elected to rely upon Rule 434, a Term Sheet shall
have been filed with the Commission in accordance with Rule 424(b).

(b) OPINION OF COUNSEL FOR THE COMPANIES. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Brobeck, Phleger & Harrison LLP, counsel for Dura and SDC
II, in form and substance satisfactory to counsel for the U.S.
Underwriters, and, to the extent provided in Exhibit A hereto, Mitchell R.
Woodbury, General Counsel for Dura, together with signed or reproduced
copies of such letters for each of the other U.S. Underwriters, to the
effect set forth in Exhibit A hereto.

(c) OPINION OF PATENT COUNSEL FOR THE COMPANIES. At Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated
as of Closing Time, of Lyon & Lyon LLP (solely with respect to patents
concerning the Spiros product), patent counsel for the Companies, in form
and substance satisfactory to counsel for the U.S.

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<PAGE>

Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters, to the effect set forth in Exhibit B
hereto.

(d) OPINION OF REGULATORY COUNSEL FOR THE COMPANIES. At Closing
Time, the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time, of Kleinfeld, Kaplan and Becker, regulatory
counsel for the Companies, in form and substance satisfactory to counsel
for the U.S. Underwriters, together with signed or reproduced copies of
such letter for each of the other U.S. Underwriters, to the effect set
forth in Exhibit C hereto.

(e) OPINION OF COUNSEL FOR THE U.S. UNDERWRITERS. At Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated
as of Closing Time, of Shearman & Sterling, counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters, with respect to the matters set forth
in clauses of Exhibit A hereto. In giving such opinion, such counsel may
rely, as to all matters governed by the laws of jurisdictions other than
the law of the State of New York and the federal law of the United States
upon the opinions of counsel satisfactory to the U.S. Representatives.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Companies and the Subsidiaries and
certificates of public officials.

(f) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any Dura Material Adverse Effect,
SDC Material Adverse Effect or SDC II Material Adverse Effect, whether or
not arising in the ordinary course of business, and the U.S.
Representatives shall have received a certificate of the President or a
Vice President of Dura and of the chief financial or chief accounting
officer of Dura, and the President or a Vice President of SDC II and of the
chief financial or chief accounting officer of SDC II, dated as of the
Closing Time, to the effect that (i) there has been no such material
adverse effect, (ii) the representations and warranties of Dura and SDC II
set forth in Section 1(a) hereof are true and correct with the same force
and effect as though expressly made at and as of the Closing Time, (iii)
each of Dura and SDC II shall have complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or are contemplated by the
Commission.

(g) ACCOUNTANTS' COMFORT LETTERS. At the time of the execution of
this Agreement, the U.S. Representatives shall have received from each of
Deloitte & Touche LLP and [Ernst & Young], a letter, each dated such date,
in form and substance satisfactory to the U.S. Representatives, together
with signed or reproduced copies of such letters for each of the other U.S.
Underwriters, containing statements and information of

24
<PAGE>

the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectuses.

(h) BRING-DOWN COMFORT LETTERS. At Closing Time, the U.S.
Representatives shall have received from each of Deloitte & Touche LLP and
[Ernst & Young], a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished pursuant to
subsection (g) of this Section 5, except that the specified date referred
to shall be a date not more than three business days prior to Closing Time.

(i) APPROVAL OF LISTING. At Closing Time, the Units shall have
been approved for inclusion in the Nasdaq National Market, subject only to
official notice of issuance.

(j) NO OBJECTION. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.

(k) LOCK-UP AGREEMENTS. At the date of this Agreement, the U.S.
Underwriters shall have received an agreement substantially in the form of
Exhibit D hereto signed by the persons listed on Schedule C hereto.

(l) PURCHASE OF INITIAL INTERNATIONAL UNITS. Contemporaneously
with the purchase by the U.S. Underwriters of the Initial U.S. Units under
this Agreement, the International Managers shall have purchased the Initial
International Units under the International Purchase Agreement.

(m) CONDITIONS TO PURCHASE OF U.S. OPTION UNITS. In the event that
the U.S. Underwriters exercise their option provided in Section 2(b) hereof
to purchase all or any portion of the U.S. Option Units, the
representations and warranties of the Companies contained herein and the
statements in any certificates furnished by the Companies and any
Subsidiary hereunder shall be true and correct as of each Date of Delivery
and, at the relevant Date of Delivery, the U.S. Representatives shall have
received:

(i) OFFICERS' CERTIFICATE. A certificate, dated such Date
of Delivery, of the President or a Vice President of each of the
Companies and of the chief financial or chief accounting officer of
each of the Companies confirming that the certificate delivered at the
Closing Time pursuant to Section 5(f) remains true and correct as of
such Date of Delivery.

25
<PAGE>

counsel for the Companies, each in form and substance satisfactory to
counsel for the U.S. Underwriters, dated such Date of Delivery,
relating to the U.S. Option Units to be purchased on such Date of
Delivery and otherwise to the same effect as the opinions required by
Sections 5(b), 5(c) and 5(d).

(iii) OPINION OF COUNSEL FOR THE U.S. UNDERWRITERS. The
favorable opinion of Shearman & Sterling, counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the U.S. Option
Units to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(e).

(iv) BRING-DOWN COMFORT LETTERS. A letter from Deloitte &
Touche LLP and [Ernst & Young], in form and substance satisfactory to
the U.S. Representatives and dated such Date of Delivery,
substantially in the same form and substance as the letters furnished
to the U.S. Representatives pursuant to Section 5(h), except that the
"specified date" in the letters furnished pursuant to this paragraph
shall be a date not more than five days prior to such Date of
Delivery.

(n) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished with
such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Units as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Companies in connection
with the issuance and sale of the Units as herein contemplated shall be
reasonably satisfactory in form and substance to the U.S. Representatives
and counsel for the U.S. Underwriters.

(o) TERMINATION OF AGREEMENT. If any condition specified in this
Section 5 shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the purchase
of U.S. Option Units, on a Date of Delivery which is after the Closing
Time, the obligations of the U.S. Underwriters to purchase the relevant
U.S. Option Units, may be terminated by the U.S. Representatives by notice
to the Companies at any time at or prior to Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section 4
and except that Sections 1, 6, 7 and 8 shall survive any such termination
and remain in full force and effect.

SECTION 6. INDEMNIFICATION.

(a) INDEMNIFICATION OF U.S. UNDERWRITERS. The Companies, jointly and
severally, agree to indemnify and hold harmless each U.S. Underwriter and each
person, if any, who controls any

26
<PAGE>

U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act as follows:

(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Companies; and

(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;

PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Companies by
any U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto).

(b) INDEMNIFICATION OF THE COMPANIES AND DIRECTORS AND OFFICERS. Each
U.S. Underwriter severally agrees to indemnify and hold harmless the Companies,
their directors, each of their officers who signed the Registration Statement,
and each person, if any, who controls either of the Companies within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section 6, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration

27
<PAGE>

Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary U.S. prospectus or
the U.S. Prospectus (or any amendment or supplement thereto) in reliance upon
and in conformity with written information furnished to the Companies by such
U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the U.S. Prospectus (or any amendment or supplement thereto).

(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Companies. An indemnifying party
may participate at its own expense in the defense of any such action; PROVIDED,
HOWEVER, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

28
<PAGE>

(e) INDEMNIFICATION FOR RESERVED UNITS. In connection with the offer and
sale of the Reserved Units, the Companies agree, promptly upon a request in
writing, to indemnify and hold harmless the Underwriters from and against any
and all losses, liabilities, claims, damages and expenses incurred by them as a
result of the failure of eligible directors, officers, employees, business
associates and related of the Companies to pay for and accept delivery of
Reserved Units which, by the end of the first business day following the date of
this Agreement, were subject to a properly confirmed agreement to purchase.

SECTION 7. CONTRIBUTION. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Companies on the
one hand and the U.S. Underwriters on the other hand from the offering of the
Units pursuant to this Agreement or (ii) if the allocation provided by clause
(i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Companies on the one hand and of the U.S. Underwriters
on the other hand in connection with the statements or omissions that resulted
in such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.

The relative benefits received by the Companies on the one hand and the
U.S. Underwriters on the other hand in connection with the offering of the Units
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Units pursuant to
this Agreement (before deducting expenses) received by the Companies and the
total underwriting discount received by the U.S. Underwriters, in each case as
set forth on the cover of the U.S. Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Units as set forth on such cover.

The relative fault of the Companies on the one hand and the U.S.
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Companies or by the U.S. Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

The Companies and the U.S. Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the U.S. Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or

29
<PAGE>

other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.

Notwithstanding the provisions of this Section 7, no U.S. Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Units underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such U.S.
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 7, each person, if any, who controls a U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of each of the Companies, each officer of each of
the Companies who signed the Registration Statement, and each person, if any,
who controls the Companies within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Companies. The U.S. Underwriters' respective obligations to contribute pursuant
to this Section are several in proportion to the number of Initial U.S. Units
set forth opposite their respective names in Schedule A hereto and not joint.

SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Companies or any Subsidiary submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Companies, and shall survive delivery of the
Units to the U.S. Underwriters.

SECTION 9. TERMINATION OF AGREEMENT.

(a) TERMINATION; GENERAL. The U.S. Representatives may terminate this
Agreement, by notice to the Companies, at any time at or prior to Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the U.S. Prospectus,
any Dura Material Adverse Effect or SDC II Material Adverse Effect, whether or
not arising in the ordinary course of business, or (ii) if there has occurred
any material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the

30
<PAGE>

U.S. Representatives, impracticable to market the Units or to enforce contracts
for the sale of the Units, or (iii) if trading in any securities of the
Companies has been suspended or materially limited by the Commission or the
Nasdaq National Market, or if trading generally on the American Stock Exchange
or the New York Stock Exchange or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the NASD or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal or New York or California authorities.

(b) LIABILITIES. If this Agreement is terminated pursuant to this Section
9, such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.

SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Units which it or they are obligated to purchase under this
Agreement (the "Defaulted Units"), the U.S. Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Units in such amounts as may be agreed
upon and upon the terms herein set forth; if, however, the U.S. Representatives
shall not have completed such arrangements within such 24-hour period, then:

(a) if the number of Defaulted Units does not exceed 10% of the
number of Units to be purchased on such date, the non-defaulting U.S.
Underwriters shall be obligated, each severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting U.S. Underwriters, or

(b) if the number of Defaulted Units exceeds 10% of the number of
Units to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after Closing Time, the obligation of the
U.S. Underwriters to purchase and of the Company to sell the U.S. Option
Units to be purchased and sold on such Date of Delivery shall terminate
without liability on the part of any non-defaulting U.S. Underwriter.

No action taken pursuant to this Section 10 shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.

31
<PAGE>

be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectuses or in any other documents
or arrangements. As used herein, the term "U.S. Underwriter" includes any
person substituted for a U.S. Underwriter under this Section.

SECTION 11. DEFAULT BY THE COMPANIES. If the Companies shall fail at
Closing Time or at the Date of Delivery to sell the number of Units that they
are obligated to sell hereunder, then this Agreement shall terminate without any
liability on the part of any nondefaulting party; PROVIDED, HOWEVER, that the
provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect.
No action taken pursuant to this Section 11 shall relieve the Companies from
liability, if any, in respect of such default.

SECTION 12. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives at North Tower, World
Financial Center, New York, New York 10281, attention of Cara Londin; notices to
either of the Companies shall be directed to them at:

Dura Pharmaceuticals, Inc.
5880 Pacific Center Boulevard
San Diego, California 92121- 4204
Attn: Mitchell R. Woodbury

with a copy to:

Brobeck, Phleger & Harrison LLP
550 West "C" Street, Suite 1300
San Diego, California 92101
Attn: Faye H. Russell

SECTION 13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the U.S. Underwriters and the Companies and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the U.S.
Underwriters and the Companies and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the U.S. Underwriters and the
Companies and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Units from any
U.S. Underwriter shall be deemed to be a successor by reason merely of such
purchase.

32
<PAGE>

SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

SECTION 15. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

33
<PAGE>

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to each of Dura and SDC II a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the U.S. Underwriters, Dura and SDC II in accordance with its
terms.

Very truly yours,

DURA PHARMACEUTICALS, INC.

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

SPIROS DEVELOPMENT CORPORATION II, INC.

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

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED

DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION

By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED

By:
--------------------------
Authorized Signatory

For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.

34
<PAGE>
SCHEDULE A

Number of
Initial U.S.
Name of U.S. Underwriter Units
------------------------ ------------

Merrill Lynch, Pierce, Fenner & Smith
Incorporated. . . . . . . . . . . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . .

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

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
------------
------------

Sch A - 1
<PAGE>

SCHEDULE B

SPIROS DEVELOPMENT CORPORATION II, INC.
DURA PHARMACEUTICALS, INC.

Units
---------
Each Unit Consisting of
One Share of Common Stock of Spiros Development Corporation II, Inc.
and One Warrant
to Purchase One-Fourth of One Share of Common Stock of Dura
Pharmaceuticals, Inc.

1. The initial public offering price per Unit, determined as provided in
Section 2, shall be $_____.

2. The purchase price per U.S. Unit to be paid by the U.S. Underwriters
shall be $_____, being an amount equal to the initial public offering price set
forth above less $______ per Unit.

3. The exercise price of the Warrants shall be $_____ per share of Dura
Common Stock.

Sch B - 1
<PAGE>

SCHEDULE C

[List of persons and entities
subject to lock-up]

Sch C - 1
<PAGE>

EXHIBIT A

FORM OF OPINION OF COUNSEL FOR DURA, SDC II and SDC
TO BE DELIVERED PURSUANT TO
SECTION 5(b)

[For purposes of this opinion, to be delivered at the Closing Time, the
term "Subsidiaries" includes SDC.]

(i) Each of Dura, and SDC II has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.

(ii) Each of Dura, and SDC II has full corporate power and authority to own
or lease its properties and conduct its business as described in the
Registration Statement and Prospectuses and, to enter into and perform its
obligations under the U.S. Purchase Agreement and the International Purchase
Agreement.

(iii) Each of Dura, and SDC II is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Dura Material Adverse Effect or a
SDC II Material Adverse Effect, as the case may be (which opinion as to Dura may
be given by the General Counsel of Dura).

(iv) The authorized capital stock of Dura conforms as to legal matters in
all material respects to the description thereof contained in the Registration
Statement and Prospectuses. The outstanding shares of capital stock of Dura
have been duly and validly authorized and issued, are, to our knowledge, fully
paid and non-assessable, and are not subject to any preemptive rights (the
opinion called for by the last sentence of this paragraph (iv) may be given by
the General Counsel of Dura).

(v) The authorized, capital stock of SDC II is as set forth in the
Prospectuses under the caption "SDC II Capitalization", and the SDC II Common
Shares conform in all material respects to the descriptions thereof contained in
the Registration Statement and Prospectuses under the caption "Description of
SDC II Capital Stock".

(vi) The outstanding shares of capital stock of SDC II have been duly and
validly authorized and issued, are, to our knowledge, fully paid and
nonassessable, and are not subject to any preemptive rights.

(vii) The Warrant Agreement has been duly authorized, executed and
delivered by Dura and constitutes a legal, valid and binding obligation of
Dura, enforceable against Dura in accordance to its terms.

A-1
<PAGE>

(viii) The issue of the Warrants has been duly authorized by Dura and, when
duly executed, issued and delivered by Dura and countersigned by the Warrant
Agent and when payment of the purchase price for the Units has been made, the
Warrants will constitute valid and binding obligations of Dura entitled to the
benefits of the Warrant Agreement. The Warrants are not subject to the
preemptive rights of any shareholder of Dura. The Warrants conform as to legal
matters in all material respects to the description thereof contained in the
Registration Statement and the Prospectuses under the caption "Description of
the Warrants."

(ix) The shares of Dura Common Stock issuable upon exercise of the Warrants
have been duly and validly reserved for the issuance and, when issued upon such
exercise and upon payment of the exercise price, in accordance with the terms of
the Warrant Agreement, will be duly authorized, validly issued, fully paid,
nonassessable, and will not be subject to any preemptive or similar rights of
any stockholder of Dura.

(x) The issuance of the SDC II Common Stock Shares has been duly authorized
and, when issued and paid for as part of the Units, will be validly issued,
fully paid and non-assessable. Such SDC II Common Stock is not subject to the
preemptive or similar rights of any stockholder of SDC II.

(xi) To our knowledge, the Subsidiaries, are Dura's sole subsidiaries.
Each Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own or lease and its
properties and to conduct its business as described in the Registration
Statement and Prospectuses and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Dura Material Adverse Effect; all
of the issued and outstanding capital stock of each Subsidiary and SDC has been
duly and validly authorized and issued, are fully paid and non-assessable and,
to the best of our knowledge and information is owned by Dura free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and
none of the outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive rights of any securityholder of such Subsidiary (the
opinion called for by the last sentence of this paragraph (ix) may be given by
the General Counsel of Dura).

(xii) The U.S. Purchase Agreement and the International Purchase Agreement
have been duly authorized, executed and delivered by Dura and SDC II.

(xiii) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the Act. Any required
filing of the Prospectuses pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b). To our knowledge, no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the Act.

A-2
<PAGE>

(xiv) All descriptions in the Prospectuses of agreements and other
instruments to which the Company or the Subsidiaries are a party are accurate in
all material respects. To our knowledge, no breach or default exists under any
agreement or instrument to which the Company, any Subsidiary is a party and
which is filed as an Exhibit to the Registration Statement or incorporated by
reference therein (the opinion called for by the last sentence of this paragraph
(xiii) may be given by the General Counsel of the Company).

(xv) The form of certificate used to evidence the Units complies in all
material respects with all applicable statutory requirements, and the
requirements of the Nasdaq National Market.

(xvi) To our knowledge, there is no legal or governmental proceeding
pending or threatened to which Dura, any Subsidiary or SDC II is a party or to
which any of the properties of Dura, any Subsidiary or SDC II is subject that is
required to be described in the Registration Statement or the Prospectuses and
is not so described, or of any statute or regulation, contract or other document
that is required to be described in the Registration Statement or the
Prospectuses or to be filed as an exhibit to the Registration Statement that is
not described or filed as required.

(xvii) The statements in the Registration Statement under Items 14 and 15,
to the extent that such statements constitute matters of law, summaries of
documents contained therein, summaries of legal matters have been prepared by or
reviewed by us and are correct in all material respects.

(xviii) None of Dura, any Subsidiary or SDC is in violation of its charter
or by-laws and no default by Dura or any subsidiary exists in the due
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectuses or filed or incorporated by reference
as an exhibit to the Registration Statement (which opinion as to Dara may be
given by the General Counsel of Dura).

(xix) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority or
agency, domestic or foreign, (other than under the Act and the 1933 Act
Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which no opinion is
requested or given) is necessary or required in connection with the due
authorization, execution and delivery of the Units, the Dura SDC II Common
Stock, the Warrants, or the Dura Common Stock issuable upon exercise of the
Warrants.

(xx) The execution, delivery and performance by Dura of its obligation
under the U.S. Purchase Agreement or the International Purchase Agreement and
the Warrant Agreement will not contravene any provision of applicable law or the
certificate of incorporation or bylaws of Dura or any Subsidiaries, or, to our
knowledge, any judgment, order or decree of any governmental body, agency or
court having jurisdiction over Dura or any of its property or any

A-3
<PAGE>

Subsidiaries or any of their property, or, to our knowledge, constitute a breach
or default or a Dura Repayment Event (as defined in section 1(a)(xi) of the
Purchase Agreement) under any agreement or other instrument binding upon Dura or
any of the Subsidiaries, to which Dura or any of the Subsidiaries is a party and
filed as an exhibit to the Registration Statement or an Incrorporated Document.

(xxi) The execution and delivery of, and the performance by Dura of its
obligations under, the U.S. Purchase Agreement, the International Agreement and
the Warrant Agreement will not contravene any provision of applicable law or the
certificate of incorporation or bylaws of Dura or any Subsidiaries, or, to our
knowledge, any judgment, order or decree of any governmental body, agency or
court having jurisdiction over Dura or any of its property or any Subsidiaries
or any of their property, or, to our knowledge, constitute a breach or default
or a Dura Repayment Event (as defined in section 1(a)(xi) of the Purchase
Agreement) under any agreement or other instrument binding upon Dura or any of
the Subsidiaries and filed as an exhibit to the Registration Statement or an
Incorporated Document.

(xxii) Each of the Major Agreements has been duly authorized, executed and
delivered by Dura, SDC, DDSI and SDC II as applicable.

(xxiii) To our knowledge, no holders of securities of Dura have rights
against Dura which have not been waived to the registration of shares of Dura
Common Stock or other securities, because of the filing of the Registration
Statement by Dura or the offering contemplated thereby.

(xxiv) The Units have been duly authorized for quotation on the Nasdaq
National Market, subject to notice of official issuance.

(xxv) The statements in the Registration Statement and Prospectuses under
the caption "Federal Tax Consequences" to the extent they constitute matters of
law or legal conclusions with respect thereto, have been prepared or reviewed by
us and are correct in all material respects.

(xxvi) Neither Dura nor SDC II is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the 1940
Act.

We may state, however, that based upon our participation as desribed
in the preceding paragraph, (i) we believe that each of the Incorporated
Documents (except for financial statements and schedules and other financial
data included therein or omitted therefrom, as to which no opinion is requested
or given), when they became effective or were filed with the Commission in all
material respects with the requirements of the Act and the 1934 Act, as
applicable, and the rules and regulations of the Commission thereunder; (ii) we
believe that the Registration Statement, the Prospectus and each amendment or
supplement to the Registration Statement and Prospectus (except for financial
statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which no opinion is requested or
given), as of their respective effective or issue dates, complied as to form in
all

A-4
<PAGE>

material respects with the requirement of the Act and the applicable rules and
regulations of the Commission thereunder; (iii) we confirm that nothing has come
to our attention that has caused us to conclude that (except for financial
statements and schedules and other financial data included or incorporated by
referrence therein or omitted therefrom, as to which we need make no statement)
the Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), at the time such
Registration Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in the lights
of the circumstances under which they were made, not misleading or that (except
for financial statements and schedules and other financial data included or
incorporated by reference therein or omitted therefrom, as to which we need make
no statement) the Prospectus, on the date hereof, includes an untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were made
not misleading.

In rendering such opinion, such counsel may rely (A) upon the opinions
of Lyon & Lyon and Kleinfeld, Kaplan & Becker and Mitchell R. Woodbury, Esq.
With respect to the matters opined upon by each, and (B), as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of Dura or SDC II and public officials.
Such opinion shall not state that it is to be governed or qualified by, or that
it is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).

A-5
<PAGE>

EXHIBIT B

FORM OF OPINION OF PATENT COUNSEL
FOR DURA AND SDC II DELIVERED PURSUANT TO SECTION 5(C)

(i) The Company owns U.S. patents and U.S. Foreign patent applications
which are directed to the Spiros and to certain uses of the Spiros product
necessary to conduct the business of Dura and Spiros Corp. II as described in
the Prospectuses. With regard to the business presently and as proposed to be
conducted by teh Company and Spiros Corp. II relating to the Spiros product as
described in the Registration Statement and the Prospectuses, and, except as
described therein, we have not received any notice of infringement of or
conflict with, and does not otherwise know of any basis for notice of any such
infringement of or conflict with, asserted rights of others with respect to any
patents, trademarks, service marks, trade names, copyrights, technology or
know-how relating to the Spiro product.

(ii) To the extent that the statements relating to the Spiros product
contained in the Registration Statement and Prospectuses under the
subheadings "Risk Factors--Business Risks Related to Spiros Corp. II and
Dura--Uncertainty Regarding Patents and Proprietary Technology;
Unpredictability of Patent Protection -- Spiros Corp. II," "Risk Factors -
Business Risks Related to Spiros Corp. II and Dura" and the first paragraph
of "Business of Spiros Corp. II --Patents" refer to opinions of counsel or
matters of law, patents or patent applications or purport to summarize the
status of litigation or the provisions of statutes, regulations, contracts,
agreements or other documents, such statements (A) have been prepared or
reviewed by us and accurately reflect the status of any such patent
applications, litigation, the provisions purported to be summarized and any
of our opinions and (B) do not contain any untrue statements of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.

B-1
<PAGE>

EXHIBIT C

FORM OF OPINION OF REGULATORY COUNSEL
FOR DURA AND SDC II
TO BE DELIVERED PURSUANT
TO SECTION 5(d)

(i) The descriptions in the Registration Statement of the statutes,
regulations and legal or governmental proceedings or procedures relating to the
FDA and the approval process relating to Dura's and SDC II's products are
accurate in all material respects and are a fair summary of those statutes,
regulations, proceedings or procedures.

(ii) Nothing has come to our attention that leads us to believe that the
descriptions of federal laws, regulations or rules relating to the manufacture
or sale of the Company's products and the approval process relating thereto
contained in the Registration Statement and the Prospectus, including, without
limitation, the portions of the Registration Statement and Prospectus entitled
"Risk Factors - Business Risks Related to Spiros Corp, II and Dura - Government
Regulation; No Assurance of FDA Approval," and "Business of Dura - Government
Regulation," contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading.

C-1
<PAGE>

EXHIBIT D

November ____, 1997

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DONALDSON,
LUFKIN & JENRETTE SECURITIES CORPORATION
as U.S. Representatives of the several
U.S. Underwriters to be named in the
within mentioned U.S. Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209

Re: Proposed Public Offering by Dura Pharmaceuticals, Inc. and Spiros
Development Corporation II

Ladies and Gentlemen:

The undersigned, a stockholder and/or officer and/or director of Dura
Pharmaceuticals, Inc. ("Dura") understands that Merrill Lynch & Co., and
Donaldson, Lufkin & Jenrette (each, a "U.S. Underwriter" and, together, the
"U.S. Underwriters") propose to enter into a U.S. Purchase Agreement (the "U.S.
Purchase Agreement") with the Companies providing for the public offering of
units each composed of one share of common stock, par value $.001 per share, of
SDC II and one warrant, which will entitle the registered owner thereof to
purchase one share of common stock, par value $.001 per share, of Dura ("Dura
Common Shares"). In recognition of the benefit that such an offering will
confer upon the undersigned as a stockholder and an officer and/or director of
one or both of the Companies, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned agrees
with the U.S. Underwriters that, during a period of 90 days from the date of the
U.S. Purchase Agreement, the undersigned will not, without the prior written
consent of the U.S. Underwriters, directly or indirectly, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer any Dura Common Shares or any securities
convertible into or exchangeable or exercisable for Dura Common Shares, whether
now owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other

D-1
<PAGE>

agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of Dura Common Shares, whether
any such swap or transaction is to be settled by delivery of Dura Common Shares
or other securities, in cash or otherwise.

Very truly yours,

Signature:
----------------------------

Print Name:
----------------------------

D-2

<PAGE>

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

SPIROS DEVELOPMENT CORPORATION II, INC.
(a Delaware corporation)

DURA PHARMACEUTICALS, INC.
(a Delaware corporation)

Units
---------

Each Unit Consisting of
One Share of Common Stock of Spiros Development Corporation II, Inc.
and One Warrant
to Purchase One-Fourth of One Share of Common Stock of Dura
Pharmaceuticals, Inc.

INTERNATIONAL PURCHASE AGREEMENT

Dated: , 1997
-------------

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

<PAGE>

TABLE OF CONTENTS

INTERNATIONAL PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Representations and Warranties . . . . . . . . . . . . . . 4
(a) Representations and Warranties by the Companies. . . . . . 4
(i) Compliance with Registration Requirements . . . . 5
(ii) Incorporated Documents. . . . . . . . . . . . . . 5
(iii) Independent Accountants . . . . . . . . . . . . . 6
(iv) Financial Statements. . . . . . . . . . . . . . . 6
(v) No Material Adverse Change in Business. . . . . . 7
(vi) Good Standing of the Companies. . . . . . . . . . 7
(vii) Good Standing of Subsidiaries . . . . . . . . . . 8
(viii) Capitalization. . . . . . . . . . . . . . . . . . 8
(ix) Authorization of Agreements . . . . . . . . . . . 9
(x) Authorization and Description of Units. . . . . . 10
(xi) Registration or Similar Rights Waived . . . . . . 11
(xii) Absence of Defaults and Conflicts . . . . . . . . 11
(xiii) Compliance with Laws. . . . . . . . . . . . . . . 12
(xiv) Absence of Labor Dispute. . . . . . . . . . . . . 12
(xv) Absence of Proceedings. . . . . . . . . . . . . . 12
(xvi) Accuracy of Exhibits. . . . . . . . . . . . . . . 13
(xvii) Possession of Intellectual Property . . . . . . . 13
(xviii) Absence of Further Requirements . . . . . . . . . 14
(xix) Possession of Licenses and Permits. . . . . . . . 14
(xx) Title to Property . . . . . . . . . . . . . . . . 14
(xxi) Compliance with Cuba Act. . . . . . . . . . . . . 15
(xxii) Investment Company Act. . . . . . . . . . . . . . 15
(xxiii) Environmental Laws. . . . . . . . . . . . . . . . 15
(xxiv) Taxes . . . . . . . . . . . . . . . . . . . . . . 15
(xxv) Insurance . . . . . . . . . . . . . . . . . . . . 16
(xxvi) Accounting Controls . . . . . . . . . . . . . . . 16
(xxvii) Lock-up Agreements. . . . . . . . . . . . . . . . 16
(xxviii) Affiliate Transactions. . . . . . . . . . . . . . 16
(xxix) Distribution of Prospectuses. . . . . . . . . . . 16
(b) Officer's Certificates . . . . . . . . . . . . . . . . . . 17
SECTION 2. Sale and Delivery to International Managers; Closing . . . 17
(a) Initial Units. . . . . . . . . . . . . . . . . . . . . . . 17
(b) Option Units . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Payment . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Denominations; Registration. . . . . . . . . . . . . . . . 18
SECTION 3. Covenants of the Companies . . . . . . . . . . . . . . . . 18
(a) Compliance with Securities Regulations and Commission
Requests . . . . . . . . . . . . . . . . . . . . . . . . . 18

i
<PAGE>

(b) Filing of Amendments . . . . . . . . . . . . . . . . . . . 19
(c) Delivery of Registration Statements. . . . . . . . . . . . 19
(d) Delivery of Prospectuses . . . . . . . . . . . . . . . . . 19
(e) Continued Compliance with Securities Laws. . . . . . . . . 20
(f) Blue Sky Qualifications. . . . . . . . . . . . . . . . . . 20
(g) Rule 158 . . . . . . . . . . . . . . . . . . . . . . . . . 20
(h) Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . 21
(i) Listing. . . . . . . . . . . . . . . . . . . . . . . . . . 21
(j) Restriction on Sale of Dura Common Stock . . . . . . . . . 21
(k) Reporting Requirements . . . . . . . . . . . . . . . . . . 21
SECTION 4. Payment of Expenses. . . . . . . . . . . . . . . . . . . . 22
(a) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Termination of Agreement . . . . . . . . . . . . . . . . . 22
SECTION 5. Conditions of International Managers' Obligations. . . . . 22
(a) Effectiveness of Registration Statement. . . . . . . . . . 22
(b) Opinion of Counsel for the Companies . . . . . . . . . . . 23
(c) Opinion of Patent Counsel for the Companies. . . . . . . . 23
(d) Opinion of Regulatory Counsel for the Companies. . . . . . 23
(e) Opinion of Counsel for the International Managers. . . . . 23
(f) Officers' Certificate. . . . . . . . . . . . . . . . . . . 23
(g) Accountants' Comfort Letters . . . . . . . . . . . . . . . 24
(h) Bring-down Comfort Letters . . . . . . . . . . . . . . . . 24
(i) Approval of Listing. . . . . . . . . . . . . . . . . . . . 24
(j) No Objection . . . . . . . . . . . . . . . . . . . . . . . 24
(k) Lock-up Agreements . . . . . . . . . . . . . . . . . . . . 24
(l) Purchase of Initial U.S. Units . . . . . . . . . . . . . . 24
(m) Conditions to Purchase of International Option Units . . . 25
(i) Officers' Certificate. . . . . . . . . . . . . . . 25
(ii) Opinions of Counsel for the Companies. . . . . . . 25
(iii) Opinion of Counsel for the International Managers. 25
(iv) Bring-down Comfort Letters . . . . . . . . . . . . 25
(n) Additional Documents. . . . . . . . . . . . . . . . . . . 25
(o) Termination of Agreement . . . . . . . . . . . . . . . . . 26
SECTION 6. Indemnification. . . . . . . . . . . . . . . . . . . . . . 26
(a) Indemnification of International Managers. . . . . . . . . 26
(b) Indemnification of the Companies and Directors
and Officers . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Actions against Parties; Notification. . . . . . . . . . . 27
(d) Settlement without Consent if Failure to Reimburse . . . . 28
SECTION 7. Contribution . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 9. Termination of Agreement . . . . . . . . . . . . . . . . . 30
(a) Termination; General . . . . . . . . . . . . . . . . . . . 30
(b) Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 30

ii
<PAGE>

SECTION 10. Default by One or More of the International Managers. . . 30
SECTION 11. Default by the Companies. . . . . . . . . . . . . . . . . 31
SECTION 12. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 13. Parties . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 14. GOVERNING LAW AND TIME. . . . . . . . . . . . . . . . . . 32
SECTION 15. Effect of Headings. . . . . . . . . . . . . . . . . . . . 32

SCHEDULES
Schedule A - List of International Managers. . . . . . . . . . . . Sch A-1
Schedule B - Pricing Information . . . . . . . . . . . . . . . . . Sch B-1
Schedule C - List of Persons and Entities Subject to Lock-up . . . Sch C-1

EXHIBITS
Exhibit A - Form of Opinion of Counsel for Dura.. . . . . . . . . . . A-1
Exhibit B - Form of Opinion of Intellectual Property
Counsel for Dura. . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Form of Opinion of U.S. Regulatory Counsel
for the Companies . . . . . . . . . . . . . . . . . . . C-1
Exhibit D - Form of Lock-up Letter. . . . . . . . . . . . . . . . . . D-1

iii
<PAGE>

SPIROS DEVELOPMENT CORPORATION II, INC.
(a Delaware corporation)

DURA PHARMACEUTICALS, INC.
(a Delaware corporation)

Units
---------

Each Unit Consisting of
One Share of Common Stock of Spiros Development Corporation II, Inc.
and One Warrant
to Purchase One-Fourth of One Share of Common Stock of Dura
Pharmaceuticals, Inc.

INTERNATIONAL PURCHASE AGREEMENT

, 1997
---------

MERRILL LYNCH INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
as Lead Managers of the several International
Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England

Ladies and Gentlemen:

Spiros Development Corporation II, Inc., a Delaware corporation ("SDC II"),
and Dura Pharmaceuticals, Inc., a Delaware corporation ("Dura" and, together
with SDC II, the "Companies"), confirm their respective agreements with Merrill
Lynch International ("Merrill Lynch") and each of the other International
Underwriters named in Schedule A hereto (collectively, the "International
Managers," which term shall also include any underwriter

<PAGE>

substituted as hereinafter provided in Section 10 hereof), for whom Merrill
Lynch and Donaldson, Lufkin & Jenrette Securities Corporation are acting as
representatives (in such capacity, the "Lead Managers"), with respect to the
issue and sale by the Companies, and the purchase by the International Managers,
acting severally and not jointly, of the respective number of units set forth in
said Schedule A, each unit composed of one share of common stock, par value
$.001 per share, of SDC II ("SDC II Common Stock") and one warrant (each a
"Warrant") that will entitle the registered owner thereof to purchase one-fourth
of one share of common stock, par value $.001 per share, of Dura ("Dura Common
Stock") at a per share exercise price as set forth in Schedule A hereto,
pursuant to and subject to certain adjustments as set forth in the Warrant
certificate to be issued as part of the Unit Certificate (as hereinafter
defined), and with respect to the grant by SDC II and Dura to the International
Managers, acting severally and not jointly, of the option described in Section
2(b) hereof to purchase all or any part of _________ additional units to cover
over-allotments, if any. The SDC II Common Stock and the Warrants will be
paired for sale as units by SDC II and Dura and then sold to the International
Managers. The aforesaid _________ units (the "Initial International Units") to
be purchased by the International Managers and all or any part of the _________
units subject to the option described in Section 2(b) (the "International Option
Units") are hereinafter called, collectively, the "International Units."

It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement") providing for
the offering by the Company of an aggregate of ______ units composed of one
share of SDC II Common Stock and one Warrant (the "Initial U.S. Units") through
arrangements with certain underwriters in the United States and Canada (the
"U.S. Underwriters") for which Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation are acting
as representatives (the "U.S. Representatives") and the grant by the Company to
the U.S. Underwriters, acting severally and not jointly, of an option to
purchase all or any part of the U.S. Underwriters' pro rata portion of up to
______ additional units composed of one share of SDC II Common Stock and one
Warrant solely to cover over-allotments, if any (the "U.S. Option Units" and,
together with the International Option Units, the "Option Units"). The Initial
U.S. Units and the U.S. Option Units are hereinafter called the "U.S. Units."
It is understood that the Company is not obligated to sell and the International
Managers are not obligated to purchase, any Initial International Units unless
all of the Initial U.S. Units are contemporaneously purchased by the U.S.
Underwriters.

The Underwriters concurrently will enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").

2
<PAGE>

The Companies understand that the International Managers propose to make a
public offering of the International Units as soon as the Lead Managers deem
advisable after this Agreement has been executed and delivered.

The Companies have filed with the Securities and Exchange Commission (the
"Commission") a combined registration statement (Nos. 333-37673 and
333-37673-01) covering the registration of the U.S. Units under the Securities
Act of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, (a) with respect to SDC II, on Form S-1, relating to
the SDC II Common Stock comprising a portion of the U.S. Units, and (b) with
respect to Dura, on Form S-3, relating to the Warrants comprising a portion of
the U.S. Units, the Dura Common Stock underlying the Warrants and the Dura
Common Stock issuable upon exercise of the Purchase Option. Promptly after
execution and delivery of this Agreement, the Companies will either (i) prepare
and file a prospectus in accordance with the provisions of Rule 430A ("Rule
430A") of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the
1933 Act Regulations or (ii) if the Companies have elected to rely upon Rule 434
("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Units: one relating to the U.S. Units (the "Form of U.S. Prospectus") and
one relating to the International Units (the "Form of International
Prospectus"). The Form of International Prospectus is identical to the Form of
U.S. Prospectus, except for the front cover and back cover pages and the
information under the caption "Underwriting" and the inclusion in the Form of
International Prospectus of a section under the caption "Certain United States
Tax Considerations for Non-United States Holders." The information included in
any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (A) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (B) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of U.S. Prospectus and Form of International
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto,
schedules thereto, if any, and the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act,

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at the time it became effective and including the Rule 430A Information and the
Rule 434 Information, as applicable, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the
1933 Act Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final Form of U.S.
Prospectus and the final Form of International Prospectus, including the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the forms first furnished to the Underwriters for use in
connection with the offering of the Units (the "Unit Offering") are herein
called the "U.S. Prospectus" and the "International Prospectus," respectively,
and, collectively, the "Prospectuses." If Rule 434 is relied on, the term "U.S.
Prospectus" and "International Prospectus" shall refer to the preliminary U.S.
Prospectus dated _________ , 1997 and the preliminary International Prospectus
dated _________ , 1997, respectively, each together with the applicable Term
Sheet and all references in this Agreement to the date of such Prospectuses
shall mean the date of the applicable Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the U.S. Prospectus, the International Prospectus or any Term Sheet
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").

All references in this Agreement to financial statements and schedules and
other information which is "contained", "included" or "stated" in the
Registration Statement, any preliminary prospectus (including the Form of U.S.
Prospectus and the Form of International Prospectus) or the Prospectuses (or
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus
(including the Form of U.S. Prospectus and the Form of International Prospectus)
or the Prospectuses, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectuses shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectuses, as the case may be.

SECTION 1. REPRESENTATIONS AND WARRANTIES.

(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANIES. The Companies
jointly and severally represent and warrant to each International Manager as of
the date hereof, as of the Closing Time referred to in Section 2(c) hereof, and
as of each Date of Delivery (if any) referred to in Section 2(b) hereof, and
agree with each International Manager, as follows:

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At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto become
effective and at the Closing Time (and, if any International Option Units
are purchased, at the Date of Delivery), the Registration Statement, the
Rule 462(b) Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. Neither of the Prospectuses nor any
amendments or supplements thereto, at the time the Prospectuses or any
amendments or supplements were issued and at the Closing Time (and, if any
International Option Units are purchased, at the Date of Delivery),
included or will include an untrue statement of a material fact or omitted
or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If Rule 434 is used, the Companies will comply with
the requirements of Rule 434. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the International Prospectus made in reliance
upon and in conformity with information furnished to the Companies in
writing by any International Manager through Merrill Lynch expressly for
use in the Registration Statement or the International Prospectus.

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applicable, and, when read together with the other information in the
Prospectuses, at the time the Registration Statement became effective, at
the time the Prospectuses were issued and at the Closing Time (and, if any
U.S. Option Units are purchased, at the Date of Delivery), did not and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.

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Registration Statement, said financial statements have been prepared in
conformity with GAAP.

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(ix) AUTHORIZATION OF AGREEMENTS. (A) This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by each of Dura and SDC II.

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principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).

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shares of Dura Common Stock conform in all material respects to the
descriptions thereof contained or incorporated by reference in the
Prospectuses and all corporate action required to be taken for the
authorization, issue and sale of such shares of Dura Common Stock has been
validly and sufficiently taken.

(xii) ABSENCE OF DEFAULTS AND CONFLICTS. (A) Neither Dura nor any
Subsidiary is in violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which Dura or any Subsidiary is a party or by which it or any of them may
be bound, or to which any of the property or assets of Dura or any
Subsidiary is subject (collectively, "Agreements and Instruments") except
for such defaults that would not result in a Material Adverse Effect; and
the execution, delivery and performance of each of this Agreement, the U.S.
Purchase Agreement, the Warrant Agreement and the Transaction Agreements by
Dura, SDC and DDSI, as the case may by, the issuance and delivery of the
Warrants and the issuance of shares of Dura Common Stock upon the exercise
of the Warrants and the consummation by Dura, SDC and DDSI, as the case may
be, of the transactions contemplated in this Agreement, the U.S. Purchase
Agreement, the Warrant Agreement and the Transaction Agreements and in the
Registration Statement (including the issuance and sale of the Warrants as
part of the Units) and compliance by Dura, SDC and DDSI, as the case may
be, with their respective obligations under this Agreement, the U.S.
Purchase Agreement, the Warrant Agreement and each of the Transaction
Agreements to which they are a party have been duly authorized by all
necessary corporate action and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of Dura or any Subsidiary pursuant
to, the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or by-laws of Dura or any Subsidiary or any
applicable material law, statute, rule, regulation, judgment, order, writ
or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over Dura or any Subsidiary or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by Dura or any Subsidiary.

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(xvii) POSSESSION OF INTELLECTUAL PROPERTY. (A) Except as set forth
in the Prospectuses, each of Dura and the Subsidiaries owns or possesses
adequate licenses or other rights to use the patents, patent rights,
licenses, inventions, copyrights, know how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), which are necessary for the operation
of their businesses as presently conducted except where the failure to so
own or have the right to use would not have a Material Adverse Effect.
Except as disclosed in the Prospectuses, nothing has come to the attention
of Dura or the Subsidiaries to the effect that (1) any product, process,
method, substance, part or other material presently contemplated to be sold
by or employed by Dura or any of the Subsidiaries in connection with Dura's
or such Subsidiary's business may infringe any patent, trademark, service
mark, trade name, copyright, license or other right owned by others, (2)
there is pending or threatened any claim or litigation against or affecting
Dura and the Subsidiaries contesting their right to sell or use any such
product, process, method, substance, part or other material or (3) there
is, or there is pending, any patent, invention, device, application or any
applicable statute, law, rule, regulation, standard or code, in the case of
each of clause (1), (2) or (3) above, which could have Material Adverse
Effect.

(B) SDC II will, to the extent provided for in the Technology
Agreement, have the right to use all patents, patent rights, licenses,
inventions, copyrights, know how

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(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) owned or
controlled by Dura or the Subsidiaries, which are necessary for the
operation of its business as described in the Prospectuses. SDC II has not
received any notice of proceedings relating to revocation or modification
of any such licenses, permits, certificates, consents, orders, approvals or
authorizations which singularly or in the aggregate, if the subject of an
unfavorable ruling or finding, could have a SDC II Material Adverse Effect.

(xix) POSSESSION OF LICENSES AND PERMITS. Dura and the Subsidiaries
and SDC II possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
material to the conduct of the business now operated by Dura, the
Subsidiaries and SDC II, respectively; Dura and the Subsidiaries and SDC II
are in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect or a SDC II Material Adverse
Effect, as the case may be; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect or a SDC II Material
Adverse Effect, as the case may be; and neither Dura nor any Subsidiary nor
SDC II has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect or an SDC II Material Adverse
Effect; provided, however, that no FDA approval has been received with
respect to products that SDC II currently is not permitted to market.

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(xxiii) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Dura Material Adverse Effect, (A) neither Dura nor any Subsidiary is in
material violation of any federal, state, local or foreign law, rule,
regulation, ordinance or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) Dura and the
Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or, to the best knowledge of Dura,
threatened

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administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against Dura
or any of the Subsidiaries and (iv) to the best knowledge of Dura, there
are no events or circumstances that could form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting Dura or any
Subsidiary relating to Hazardous Materials or any Environmental Laws.

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(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of Dura
or any Subsidiary or SDC II, delivered to the Global Coordinator, the Lead
Managers or to counsel for the International Managers shall be deemed a
representation and warranty by Dura or SDC II, as the case may be, to each
International Managers as to the matters covered thereby.

SECTION 2. SALE AND DELIVERY TO INTERNATIONAL MANAGERS; CLOSING.

(a) INITIAL UNITS. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Companies, severally and not jointly, agree to sell to each International
Manager, and each International Manager, severally and not jointly, agrees to
purchase from the Companies, at the price per Unit set forth in Schedule B, the
number of Initial International Units set forth in Schedule A opposite the name
of such International Manager, plus any additional number of Initial
International Units which such International Manager may become obligated to
purchase pursuant to the provisions of Section 10 hereof.

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said option, nor in any event prior to the Closing Time, as hereinafter defined.
If the option is exercised as to all or any portion of the International Option
Units, each of the International Managers, acting severally and not jointly,
will purchase that proportion of the total number of International Option Units
then being purchased which the number of Initial International Units set forth
in Schedule A opposite the name of such International Managers bears to the
total number of Initial International Units, subject in each case to such
adjustments as the Global Coordinator in its discretion shall make to eliminate
any sales or purchases of fractional Units.

In addition, in the event that any or all of the International Option Units
are purchased by the International Managers, payment of the purchase price for,
and delivery of certificates for, such International Option Units shall be made
at the above-mentioned offices, or at such other place as shall be agreed upon
by the Global Coordinator and the Companies, on each Date of Delivery as
specified in the notice from the Global Coordinator to the Companies.

Payment shall be made to the Companies by wire transfer of immediately
available funds to a bank account designated by the Companies against delivery
to the Lead Managers of certificates for the Units to be purchased by them. It
is understood that each International Manager has authorized the Lead Managers,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Initial International Units and the International Option
Units, if any, which it has agreed to purchase. Merrill Lynch, individually and
not as representative of the International Underwriters, may (but shall not be
obligated to) make payment of the purchase price for the Initial International
Units or the International Option Units, if any, to be purchased by any
International Manager whose funds have not been received by the Closing Time or
the relevant Date of Delivery, as the case may be, but such payment shall not
relieve such International Manager from its obligations hereunder.

(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial
International Units and the International Option Units, if any, shall be in such
denominations and registered in such names as the Lead Managers may request in
writing at least one full business day before the Closing Time or the relevant
Date of Delivery, as the case may be. The certificates for the Initial
International Units and the International Option Units, if any, will be made
available for examination and packaging by the International Managers in The
City of New York not later than

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10:00 A.M. (Eastern time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.

SECTION 3. COVENANTS OF THE COMPANIES. Each of the Companies covenants
with each International Manager as follows:

(c) DELIVERY OF REGISTRATION STATEMENTS. The Companies have
furnished or will deliver to the Lead Managers and counsel for the
International Managers, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) and signed
copies of all consents and certificates of experts, and will also deliver
to the Lead Managers, without charge, a conformed copy of the Registration
Statement as originally

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filed and of each amendment thereto (without exhibits) for each of the
International Managers. The copies of the Registration Statement and each
amendment thereto furnished to the International Managers will be identical
to the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(d) DELIVERY OF PROSPECTUSES. The Companies have delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the
Companies hereby consent to the use of such copies for purposes permitted
by the 1933 Act. The Companies will furnish to each International Manager,
without charge, during the period when the International Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the International Prospectus (as amended or supplemented) as such
International Manager may reasonably request. The International Prospectus
and any amendments or supplements thereto furnished to the International
Managers will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.

(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Companies will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the distribution
of the Units as contemplated in this Agreement, the International Purchase
Agreement and in the Prospectuses. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Units, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the International Managers
or for the Companies, to amend the Registration Statement or amend or
supplement any Prospectus in order that the Prospectuses will not include
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time any such Prospectus is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or amend
or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Companies will promptly
prepare and file with the Commission, subject to Section 3(b), such
amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectuses comply
with such requirements, and the Companies will furnish to the International
Managers such number of copies of such amendment or supplement as the
International Managers may reasonably request.

(f) BLUE SKY QUALIFICATIONS. The Companies will use their best
efforts, in cooperation with the International Managers, to qualify the
Units for offering and sale under the applicable securities laws of such
states and other jurisdictions (domestic or foreign) as the Global
Coordinator may designate and to maintain such qualifications in effect for
a period of not less than one year from the later of the effective date of
the

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Registration Statement and any Rule 462(b) Registration Statement;
PROVIDED, HOWEVER, that neither Dura nor SDC II shall be obligated to file
any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Units have been so qualified, the Companies
will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for a period of
not less than one year from the effective date of the Registration
Statement and any Rule 462(b) Registration Statement. The Companies will
also supply the U.S. Representatives with such information as is necessary
for the determination of the legality of the Units for investment under the
laws of such jurisdictions as the U.S. Underwriters may reasonably request.

(h) USE OF PROCEEDS. SDC II will use the net proceeds received by
it from the sale of the Units in the manner specified in the Prospectuses
under "Use of Proceeds."

(j) RESTRICTION ON SALE OF DURA COMMON STOCK. During a period of
90 days from the date of the Prospectuses, Dura will not, without the prior
written consent of the Global Coordinator, (i) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of any shares of
Dura Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Dura Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of Dura Common Stock whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of shares of Dura Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (A) the Units to
be sold hereunder or under the International Purchase Agreement, (B) any
shares of Dura Common Stock issued by Dura upon the exercise of an option
or warrant or the conversion of a security outstanding on the date hereof
and referred to in the Prospectuses, (C) any shares of Dura Common Stock
issued or options to purchase

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Dura Common Stock granted pursuant to existing employee benefit plans of
Dura referred to in the Prospectuses, (D) any shares of Dura Common Stock
issued to securityholders of Scandipharm, Inc., or (E) any shares of Dura
Common Stock issued to stockholders of SDC in connection with the
acquisition of all of the outstanding stock of SDC pursuant to a
registration statement on Form S-3 filed with the Commission on October 15,
1997 (No. 333-37955).

SECTION 4. PAYMENT OF EXPENSES.

(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the Lead
Managers in accordance with the provisions of Section 5, Section 9(a)(i) or
Section 11, the Companies shall reimburse the Lead Managers for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the International Managers.

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SECTION 5. CONDITIONS OF INTERNATIONAL MANAGERS' OBLIGATIONS. The
obligations of the several International Managers hereunder are subject to
the accuracy of the representations and warranties of the Companies contained
in Section 1 hereof or in certificates of any officer of the Companies or any
Subsidiary delivered pursuant to the provisions hereof, to the performance by
the Companies of their covenants and other obligations hereunder, and to the
following further conditions:

(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
International Managers. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule 424(b)
(or a post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of Rule
430A) or, if the Companies have elected to rely upon Rule 434, a Term Sheet
shall have been filed with the Commission in accordance with Rule 424(b).

(b) OPINION OF COUNSEL FOR THE COMPANIES. At Closing Time, the
Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of Brobeck, Phleger & Harrison LLP, counsel for Dura and SDC
II, in form and substance satisfactory to counsel for the International
Managers, and, to the extent provided in Exhibit A hereto, Mitchell R.
Woodbury, General Counsel for Dura, together with signed or reproduced
copies of such letters for each of the other International Managers, to the
effect set forth in Exhibit A hereto.

(c) OPINION OF PATENT COUNSEL FOR THE COMPANIES. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of Lyon & Lyon LLP (solely with respect to patents concerning
the Spiros product), patent counsel for the Companies, in form and
substance satisfactory to counsel for the International Managers, together
with signed or reproduced copies of such letter for each of the other
International Managers, to the effect set forth in Exhibit B hereto.

(d) OPINION OF REGULATORY COUNSEL FOR THE COMPANIES. At Closing
Time, the Lead Managers shall have received the favorable opinion, dated as
of Closing Time, of Kleinfeld, Kaplan and Becker, regulatory counsel for
the Companies, in form and substance satisfactory to counsel for the
International Managers, together with signed or reproduced copies of such
letter for each of the other International Managers, to the effect set
forth in Exhibit C hereto.

(e) OPINION OF COUNSEL FOR THE INTERNATIONAL MANAGERS. At Closing
Time, the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time,

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of Shearman & Sterling, counsel for the International Managers, together
with signed or reproduced copies of such letter for each of the other
International Managers, with respect to the matters set forth in clauses of
Exhibit A hereto. In giving such opinion, such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the
State of New York and the federal law of the United States upon the
opinions of counsel satisfactory to the Lead Managers. Such counsel may
also state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of officers
of the Companies and the Subsidiaries and certificates of public officials.

(f) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any Dura Material Adverse Effect,
SDC Material Adverse Effect or SDC II Material Adverse Effect, whether or
not arising in the ordinary course of business, and the Lead Managers shall
have received a certificate of the President or a Vice President of Dura
and of the chief financial or chief accounting officer of Dura, and the
President or a Vice President of SDC II and of the chief financial or chief
accounting officer of SDC II, dated as of the Closing Time, to the effect
that (i) there has been no such material adverse effect, (ii) the
representations and warranties of Dura and SDC II set forth in Section 1(a)
hereof are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, (iii) each of Dura and SDC II
shall have complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or are contemplated by the Commission.

(g) ACCOUNTANTS' COMFORT LETTERS. At the time of the execution of
this Agreement, the Lead Managers shall have received from each of Deloitte
& Touche LLP and [Ernst & Young], a letter, each dated such date, in form
and substance satisfactory to the Lead Managers, together with signed or
reproduced copies of such letters for each of the other Lead Managers,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectuses.

(h) BRING-DOWN COMFORT LETTERS. At Closing Time, the Lead Managers
shall have received from each of Deloitte & Touche LLP and [Ernst & Young],
a letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (g) of this
Section 5, except that the specified date referred to shall be a date not
more than three business days prior to Closing Time.

(i) APPROVAL OF LISTING. At Closing Time, the Units shall have
been approved for inclusion in the Nasdaq National Market, subject only to
official notice of issuance.

24
<PAGE>

(j) NO OBJECTION. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.

(k) LOCK-UP AGREEMENTS. At the date of this Agreement, the
International Managers shall have received an agreement substantially in
the form of Exhibit D hereto signed by the persons listed on Schedule C
hereto.

(l) PURCHASE OF INITIAL U.S. UNITS. Contemporaneously with the
purchase by the International Managers of the Initial International Units
under this Agreement, the International Managers shall have purchased the
Initial U.S. Units under the U.S. Purchase Agreement.

(m) CONDITIONS TO PURCHASE OF INTERNATIONAL OPTION UNITS. In the
event that the International Managers exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the International
Option Units, the representations and warranties of the Companies contained
herein and the statements in any certificates furnished by the Companies
and any Subsidiary hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Lead Managers shall
have received:

(ii) OPINIONS OF COUNSEL FOR THE COMPANIES. The favorable
opinions of Brobeck, Phleger & Harrison LLP, counsel for the
Companies, Lyon & Lyon, patent counsel for the Companies, and
Kleinfeld, Kaplan and Becker, regulatory counsel for the Companies,
each in form and substance satisfactory to counsel for the
International Managers, dated such Date of Delivery, relating to the
International Option Units to be purchased on such Date of Delivery
and otherwise to the same effect as the opinions required by Sections
5(b), 5(c) and 5(d).

(iii) OPINION OF COUNSEL FOR THE INTERNATIONAL MANAGERS. The
favorable opinion of Shearman & Sterling, counsel for the
International Managers, dated such Date of Delivery, relating to the
International Option Units to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section
5(e).

(iv) BRING-DOWN COMFORT LETTERS. A letter from Deloitte &
Touche LLP and [Ernst & Young], in form and substance satisfactory to
the Lead Managers and dated such Date of Delivery, substantially in
the same form and substance as the

25
<PAGE>

letters furnished to the Lead Managers pursuant to Section 5(h),
except that the "specified date" in the letters furnished pursuant to
this paragraph shall be a date not more than five days prior to such
Date of Delivery.

(n) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery, counsel for the International Managers shall have been furnished
with such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Units as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Companies in connection
with the issuance and sale of the Units as herein contemplated shall be
reasonably satisfactory in form and substance to the U.S. Representatives
and counsel for the U.S. Underwriters.

(o) TERMINATION OF AGREEMENT. If any condition specified in this
Section 5 shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the purchase
of International Option Units, on a Date of Delivery which is after the
Closing Time, the obligations of the International Managers to purchase the
relevant International Option Units, may be terminated by the Lead Managers
by notice to the Companies at any time at or prior to Closing Time or such
Date of Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section 4
and except that Sections 1, 6, 7 and 8 shall survive any such termination
and remain in full force and effect.

SECTION 6. INDEMNIFICATION.

(a) INDEMNIFICATION OF INTERNATIONAL MANAGERS. The Companies, jointly and
severally, agree to indemnify and hold harmless each International Manager and
each person, if any, who controls any International Manager within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or

26
<PAGE>

any investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such settlement
is effected with the written consent of the Companies; and

PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Companies by
any International Manager through the Lead Managers expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the International Prospectus (or any amendment or supplement
thereto).

(b) INDEMNIFICATION OF THE COMPANIES AND DIRECTORS AND OFFICERS. Each
International Manager severally agrees to indemnify and hold harmless the
Companies, their directors, each of their officers who signed the Registration
Statement, and each person, if any, who controls either of the Companies within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section 6, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary International prospectus or the Internatinal Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Companies by such International Manager
through the Lead Managers expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the International
Prospectus (or any amendment or supplement thereto).

27
<PAGE>

participate at its own expense in the defense of any such action; PROVIDED,
HOWEVER, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

SECTION 7. CONTRIBUTION. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Companies on the
one hand and the International Managers on the other hand from the offering of
the Units pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Companies on the one hand and of the
International Managers on the other hand in connection with the statements or
omissions that resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

The relative benefits received by the Companies on the one hand and the
International Managers on the other hand in connection with the offering of the
Units pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Units pursuant to
this Agreement (before deducting expenses) received by the

28
<PAGE>

Companies and the total underwriting discount received by the International
Managers, in each case as set forth on the cover of the International
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Units as set
forth on such cover.

The relative fault of the Companies on the one hand and the International
Managers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Companies or by the International Managers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

The Companies and the International Managers agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the International Managers were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

Notwithstanding the provisions of this Section 7, no U.S. Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Units underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such International
Manager has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.

For purposes of this Section 7, each person, if any, who controls an
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of each of the Companies, each officer
of each of the Companies who signed the Registration Statement, and each person,
if any, who controls the Companies within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Companies. The International Managers' respective obligations to contribute
pursuant to this Section are several in proportion to the number of Initial
International Units set forth opposite their respective names in Schedule A
hereto and not joint.

29
<PAGE>

SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Companies or any Subsidiary
submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any U.S.
Underwriter or controlling person, or by or on behalf of the Companies, and
shall survive delivery of the Units to the International Managers.

SECTION 9. TERMINATION OF AGREEMENT.

(a) TERMINATION; GENERAL. The Lead Managers may terminate this Agreement,
by notice to the Companies, at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the International Prospectus, any Dura
Material Adverse Effect or SDC II Material Adverse Effect, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Lead Managers, impracticable to market the Units or to enforce
contracts for the sale of the Units, or (iii) if trading in any securities of
the Companies has been suspended or materially limited by the Commission or the
Nasdaq National Market, or if trading generally on the American Stock Exchange
or the New York Stock Exchange or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the NASD or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal or New York or California authorities.

SECTION 10. DEFAULT BY ONE OR MORE OF THE INTERNATIONAL MANAGERS. If
one or more of the U.S. Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the Units which it or they are obligated to purchase
under this Agreement (the "Defaulted Units"), the Lead Managers shall have
the right, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting International Managers, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Units in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Lead Managers shall not have completed such arrangements within such 24-hour
period, then:

(a) if the number of Defaulted Units does not exceed 10% of the
number of Units to be purchased on such date, the non-defaulting
International Managers shall be

30
<PAGE>

obligated, each severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
International Managers, or

(b) if the number of Defaulted Units exceeds 10% of the number of
Units to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after Closing Time, the obligation of the
International Managers to purchase and of the Company to sell the U.S.
Option Units to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting U.S.
Underwriter.

No action taken pursuant to this Section 10 shall relieve any defaulting
International Manager from liability in respect of its default.

In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after Closing
Time, which does not result in a termination of the obligation of the U.S.
Underwriters to purchase and the Companies to sell the relevant U.S. Option
Units, as the case may be, either the Lead Managers or the Companies shall have
the right to postpone Closing Time or the relevant Date of Delivery, as the case
may be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectuses or in any other documents
or arrangements. As used herein, the term "International Manager" includes any
person substituted for an International Manager under this Section.

SECTION 11. DEFAULT BY THE COMPANIES. If the Companies shall fail at
Closing Time or at the Date of Delivery to sell the number of Units that they
are obligated to sell hereunder, then this Agreement shall terminate without
any liability on the part of any nondefaulting party; PROVIDED, HOWEVER, that
the provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and
effect. No action taken pursuant to this Section 11 shall relieve the
Companies from liability, if any, in respect of such default.

SECTION 12. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers at Ropemaker
Place, 25 Ropemaker Street, London, EC2Y 92Y, England; notices to either of
the Companies shall be directed to them at:

Dura Pharmaceuticals, Inc.
5880 Pacific Center Boulevard
San Diego, California 92121- 4204
Attn: Mitchell R. Woodbury

31
<PAGE>

with a copy to:

Brobeck, Phleger & Harrison LLP
550 West "C" Street, Suite 1300
San Diego, California 92101
Attn: Faye H. Russell

SECTION 13. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the International Managers and the Companies and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the International Managers and the Companies and their respective
successors and the controlling persons and officers and directors referred to
in Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the
International Managers and the Companies and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Units from any International Manager shall be deemed to be a
successor by reason merely of such purchase.

SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW
YORK CITY TIME.

SECTION 15. EFFECT OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.

32
<PAGE>

Very truly yours,

DURA PHARMACEUTICALS, INC.

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

SPIROS DEVELOPMENT CORPORATION II, INC.

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

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION

By: MERRILL LYNCH INTERNATIONAL

By:
--------------------------
Authorized Signatory

For themselves and as Lead Managers of the other International Managers named in
Schedule A hereto.

33
<PAGE>

SCHEDULE A

Number
of Initial
International
Name of International Underwriter Units
--------------------------------- -------------

Merrill Lynch International . . . . . . . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . .

-------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-------------
-------------

Sch A - 1
<PAGE>

SCHEDULE B

SPIROS DEVELOPMENT CORPORATION II, INC.
DURA PHARMACEUTICALS, INC.

1. The initial public offering price per Unit, determined as provided in
Section 2, shall be $______.

2. The purchase price per International Unit to be paid by the
International Managers shall be $______, being an amount equal to the initial
public offering price set forth above less $______ per Unit.

3. The exercise price of the Warrants shall be $______ per share of Dura
Common Stock.

Sch B - 1
<PAGE>

SCHEDULE C

[List of persons and entities
subject to lock-up]

Sch C - 1
<PAGE>
EXHIBIT A

FORM OF OPINION OF COUNSEL FOR DURA, SDC II and SDC
TO BE DELIVERED PURSUANT TO
SECTION 5(b)

[For purposes of this opinion, to be delivered at the Closing Time, the
term "Subsidiaries" includes SDC.]

(i) Each of Dura, and SDC II has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.

(vii) The Warrant Agreement has been duly authorized, executed and
delivered by Dura and constitutes a legal, valid and binding obligation of Dura,
enforceable against Dura in accordance to its terms.

A-1
<PAGE>

(xii) The U.S. Purchase Agreement and the International Purchase Agreement
have been duly authorized, executed and delivered by Dura and SDC II.

(xiii) The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the Act. Any required filing of the
Prospectuses pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424(b). To our knowledge, no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the Act.

A-2
<PAGE>

(xv) The form of certificate used to evidence the Units complies in all
material respects with all applicable statutory requirements, and the
requirements of the Nasdaq National Market.

A-3
<PAGE>

(xxii) Each of the Major Agreements has been duly authorized, executed and
delivered by Dura, SDC, DDSI and SDC II as applicable.

(xxiv) The Units have been duly authorized for quotation on the Nasdaq
National Market, subject to notice of official issuance.

(xxvi) Neither Dura nor SDC II is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the 1940
Act.

A-4
<PAGE>

A-5
<PAGE>

EXHIBIT B

FORM OF OPINION OF PATENT COUNSEL
FOR DURA AND SDC II DELIVERED PURSUANT TO SECTION 5(C)

(i) The Company owns U.S. patents and U.S. Foreign patent
applications which are directed to the Spiros and to certain uses of the
Spiros product necessary to conduct the business of Dura and Spiros Corp.
II as described in the Prospectuses. With regard to the business presently
and as proposed to be conducted by teh Company and Spiros Corp. II relating
to the Spiros product as described in the Registration Statement and the
Prospectuses, and, except as described therein, we have not received any
notice of infringement of or conflict with, and does not otherwise know of
any basis for notice of any such infringement of or conflict with, asserted
rights of others with respect to any patents, trademarks, service marks,
trade names, copyrights, technology or know-how relating to the Spiro
product.

(ii) To the extent that the statements relating to the Spiros
product contained in the Registration Statement and Prospectuses under the
subheadings "Risk Factors--Business Risks Related to Spiros Corp. II and
Dura--Uncertainty Regarding Patents and Proprietary Technology;
Unpredictability of Patent Protection - Spiros Corp. II," "Risk Factors -
Business Risks Related to Spiros Corp. II and Dura" and the first paragraph
of "Business of Spiros Corp. II -- Patents" refer to opinions of counsel or
matters of law, patents or patent applications or purport to summarize the
status of litigation or the provisions of statutes, regulations, contracts,
agreements or other documents, such statements (A) have been prepared or
reviewed by us and accurately reflect the status of any such patent
applications, litigation, the provisions purported to be summarized and any
of our opinions and (B) do not contain any untrue statements of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.

B-1

<PAGE>

EXHIBIT C

FORM OF OPINION OF REGULATORY COUNSEL
FOR DURA AND SDC II
TO BE DELIVERED PURSUANT
TO SECTION 5(d)

C-1
<PAGE>

EXHIBIT D

November ____ , 1997

MERRILL LYNCH INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
as Lead Managers of the several International
Managers of the several U.S. Underwriters
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England

Re: Proposed Public Offering by Dura Pharmaceuticals, Inc. and Spiros
Development Corporation II

Ladies and Gentlemen:

The undersigned, a stockholder and/or officer and/or director of Dura
Pharmaceuticals, Inc. ("Dura") understands that Merrill Lynch International, and
Donaldson, Lufkin & Jenrette (each, an "International Manager" and, together,
the "International Managers") propose to enter into an International Purchase
Agreement (the "International Purchase Agreement") with the Companies providing
for the public offering of units each composed of one share of common stock, par
value $.001 per share, of SDC II and one warrant, which will entitle the
registered owner thereof to purchase one share of common stock, par value $.001
per share, of Dura ("Dura Common Shares"). In recognition of the benefit that
such an offering will confer upon the undersigned as a stockholder and an
officer and/or director of one or both of the Companies, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with the International Managers that,
during a period of 90 days from the date of the International Purchase
Agreement, the undersigned will not, without the prior written consent of the
International Managers, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any Dura Common Shares or any securities
convertible into or exchangeable or exercisable for Dura Common Shares, whether
now owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in

D-1
<PAGE>

whole or in part, directly or indirectly, the economic consequence of ownership
of Dura Common Shares, whether any such swap or transaction is to be settled by
delivery of Dura Common Shares or other securities, in cash or otherwise.

Very truly yours,

Signature:
-----------------------------

Print Name:
----------------------------

D-2

<PAGE>
EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We also consent to the references to us under the heading "Experts" in the
Prospectus, which is a part of this Registration Statement.

DELOITTE & TOUCHE LLP

San Diego, California
December 1, 1997

<PAGE>

[KLEINFELD, KAPLAN AND BEACKER LETTERHEAD]

EXHIBIT 23.3

CONSENT FORM

The undersigned hereby consent to the use of our name and the statement
with respect to us that appears under the heading "Experts" contained in the
Registration Statement on Forms S-1/S-3 and related Prospectus of Spiros
Development Corporation II Inc. and Dura Pharmaceuticals, Inc.

KLEINFELD, KAPLAN AND BECKER

/s/ Richard S. Morey
----------------------
Richard S. Morey

Dated December 1, 1997