<PAGE>   1
                                                              EXHIBIT 10(xxxvii)

                               SECURITY AGREEMENT


                 THIS SECURITY AGREEMENT is entered into as of August 29, 1997
by and among Chrysalis International Corporation, a Delaware corporation,
Chrysalis International Preclinical Services Corporation, a Pennsylvania
corporation, Chrysalis DNX Transgenic Sciences Corporation, an Ohio
corporation, and Chrysalis International Clinical Services Corporation, a
Delaware corporation (each, a "Debtor" and together, the "Debtors"), and
CoreStates Bank, N.A. (the "Secured Party" or the "Bank").

                                   BACKGROUND

                 The Debtors and the Secured Party have entered into a Term
Loan and Security Agreement dated as of the date hereof (the "Loan Agreement").
Pursuant to the Loan Agreement, the Bank has agreed, subject to the terms and
conditions set forth therein, to make a term loan to the Debtors in the
aggregate principal amount of $5,000,000 (the "Loan"), which Loan is to be
secured by a continuing first priority lien and security interest in
substantially all of the property and assets of the Debtors, all as more fully
described in Section 3.1 of the Loan Agreement and in the Loan Documents (as
defined therein) entered into pursuant thereto.

                 It is a condition precedent to the making of the Loan by the
Secured Party pursuant to the Loan Agreement that the Debtors enter into this
Security Agreement in order to secure the prompt and complete payment,
observance and performance of all of the Debtors' Obligations.

                 The defined terms used in this Security Agreement shall have
the respective meanings set forth in Section 1 hereof unless elsewhere defined
or the context shall otherwise require.

                                     TERMS

                 NOW, THEREFORE, in order to induce the Secured Party to make
the Loan under the Loan Agreement and intending to be legally bound, the
Debtors hereby agrees with the Secured Party as follows:

1.       INTERPRETATION OF AGREEMENT: DEFINITIONS.

                 1.1.      Definitions.  Unless otherwise defined herein, each
capitalized term used herein that is defined in the Loan Agreement shall have
the meaning specified for such term in the Loan Agreement.  Unless the context
otherwise requires, the term hereinafter set forth when used herein shall have
the following meaning:
<PAGE>   2
                 "Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or intangible or tangible.

2.       GRANT OF SECURITY.

                 The Debtors hereby grant to the Secured Party to secure the
payment and performance of all Obligations, a continuing security interest in
and lien on all of the Debtors' Property wherever located, whether now owned or
hereafter acquired or arising, all proceeds and products thereof and all parts
thereof and all accessions thereto (all of the same being hereinafter called
the "Collateral"), including, without limiting the generality of the foregoing,
the following properties, assets and rights owned by the Debtors:

                 (a)       all goods, accounts, contract rights;

                 (b)       all rights to the payment of money, including tax
refund claims, insurance proceeds and indemnity, warranty and tort claims and
all rights to proceeds of any termination, including any partial termination,
of employee benefit plans;

                 (c)       all chattel paper, documents, instruments,
securities and general intangibles, together with all right, title and interest
of the Debtors in and to all patents and trademarks which the Debtors may
hereinafter acquire, the right to file and prosecute applications for patents
and trademarks, and similar intellectual property anywhere in the world and the
good will of the business connected with the use of and symbolized by any
patents and trademarks, together with all assets which uniquely reflect the
good will of the business of the Debtors, including but not limited to, the
Debtors' trade names, customer lists, trade secrets, corporate and other
business records, license rights, advertising materials, operating manuals,
methods, processes, know-how, sales literature, drawings, specifications,
descriptions, inventions, name plates, catalogues, copyrights, dealer
contracts, supplier contracts, distribution agreements, confidential
information, consulting agreements, engineering contracts and engineering
drawings; and

                 (d)       all furniture, fixtures, equipment, inventory, raw
materials, work in progress, goods returned or repossessed, books and records,
and real property and interests and rights in, on or over real property.


                                     - 2 -
<PAGE>   3
3.       GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.

                 The Debtors represent and warrant to the Secured Party that:

                 3.1.      Warranty of Title to Collateral.  The Debtors are
the owners of the Collateral free from any lien, security interest, encumbrance
or other right, title or interest of any other person, except for the security
interest, pledges and liens granted by the Borrowers to the Secured Party
hereby and pursuant to the Loan Documents and the Permitted Liens, and the
Debtors shall defend the Collateral against all claims and demands of all
persons at any time claiming the same or any interest therein adverse to the
Secured Party.

                 3.2.      No Financing Statements.  There is no financing
statement or similar notice now on file in any public office covering any
Property of any kind which is part of the Collateral hereunder, or intended so
to be, or in which any of the Debtors is named as or has signed as a debtor
except those naming the Secured Party as secured party or for which termination
statements are on file and except in connection with any Permitted Liens, and
so long as any Obligations remain unpaid or unperformed or this Security
Agreement remains in effect, the Debtors will not execute, and there will not
be on file in any public office any financing statement or statements except
the financing statements filed or to be filed in respect of and for the
security interests of the Secured Party granted hereunder and pursuant to the
other Loan Documents and except in connection with any Permitted Liens.  The
Debtors have no trade names.

                 3.3.      Location of Chief Places of Business, Accounts
and Equipment.  The locations of the Debtors' chief places of business,
accounts and equipment are at the addresses set forth on Exhibit A hereto.  In
the event that any of the Debtors discovers that any representation made in
this Section is untrue or incorrect for any reason, it will immediately notify
the Secured Party and take such actions as may be necessary to make such
representation true and correct.  No account is evidenced by a note or other
instrument.

                 3.4.      Valid Security Interest.  Upon the proper filing of
the financing statements prepared by the Bank covering the Collateral, this
Agreement creates a valid and perfected first priority security interest in the
Collateral (except for the Permitted Liens), securing the payment of the
Obligations.

                 3.5.      Consents.  No authorization, approval or other
action by, and no notice to or filing with any governmental





                                     - 3 -
<PAGE>   4
authority or regulatory body is required either (a) for the grant by the
Debtors of the security interest granted hereby or for the execution, delivery
or performance of this Agreement by the Debtors or (b) for the perfection of or
the exercise by the Secured Party of its rights and remedies hereunder, other
than the proper filing of the financing statements prepared by the Bank
covering the Collateral.

4.       PARTICULAR COVENANTS OF THE DEBTORS.

                 4.1.      Payment of Obligations.  The Debtor agrees to pay
all Obligations at the time and place and in the manner as provided therein and
in any Loan Document and in a timely fashion, comply with and perform and
fulfill the terms, covenants and conditions contained herein or in any Loan
Document.

                 4.2.      Maintenance of Lien; Recording.

                           (a)  The Debtors will, at its own expense, take all
actions requested by the Secured Party to maintain and preserve the lien of
this Security Agreement so long as any Obligations are outstanding.

                           (b)    The Debtors will, forthwith, upon the
execution and delivery of this Security Agreement and thereafter from time to
time, cause this Security Agreement and all required financing statements to be
filed, registered and recorded in such manner and in such places as shall be
necessary or as the Secured Party may reasonably request, in order to publish
notice of and fully protect the lien thereof as it relates to the Collateral,
and in order to continue such protection, refile, reregister and rerecord
whenever necessary, and from time to time upon the reasonable request of the
Secured Party will perform or cause to be performed any other act as provided
by law and will execute or cause to be executed any and all further instruments
for such publication and protection.  To the extent permitted by applicable
law, the Debtors will pay or cause to be paid all filing, registration and
recording taxes and fees incident to such filing, registration and recording,
any federal or state stamp taxes and other taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery of
this Security Agreement and all required financing statements and each such
instrument of further assurance.  Without limiting the foregoing, the Debtors
hereby authorize the Secured Party to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of the Debtors where permitted by law.  A
carbon, photographic or other reproduction of this Agreement or any financing
statement covering the





                                     - 4 -
<PAGE>   5
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.

                 4.3.      Further Assurances; After-Acquired Property.

                           (a)    The Debtors will do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, all such
further acts, deeds, conveyances, mortgages, assignments, transfers and
assurances as may be necessary or as the Secured Party reasonably may require
for the perfection of the lien being herein provided for in the Collateral.
Without limiting the generality of the foregoing, the Debtors will: (i) mark
conspicuously each document related to the Debtors' chattel paper and all other
documents or instruments related to accounts, contract rights or general
intangibles ("Related Contracts") and, at the request of the Secured Party,
each of its records pertaining to the Collateral with a legend, in form and
substance satisfactory to the Secured Party, indicating that such documents,
chattel paper, Related Contracts or Collateral is subject to the security
interest granted hereby; and (ii) if any account, contract right or general
intangible ("Receivables") shall be evidenced by a promissory note or other
instrument or chattel paper, deliver and pledge to the Secured Party hereunder
such note, instrument or chattel paper duly indorsed and accompanied by duly
executed instruments or transfer or assignment, all in form and substance
satisfactory to the Secured Party.

                           (b)    All right, title, and interest of the Debtors
in and to all extensions, improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Collateral or any
part thereof, hereafter constructed or acquired by the Debtors, immediately
upon such construction or acquisition, and without any further mortgage,
conveyance or assignment, shall become and be part of the Collateral and shall
be subject to the lien of this Security Agreement as fully and completely and
with the same effect as though now owned by the Debtors, but at any and all
times the Debtors will execute and deliver to the Secured Party any and all
such further assurances, mortgages, conveyances or assignments thereof and
financing statements and other instruments with respect thereto as shall be
necessary or desirable or as the Secured Party may reasonably require for the
purpose of expressly and specifically subjecting the same to the lien of this
Security Agreement.

                 4.4.      Right of Secured Party to Perform Covenants,
Etc.  In the event of the occurrence and during the continuance of an Event of
Default, the Secured Party, without waiving or





                                     - 5 -
<PAGE>   6
releasing any Obligation, may (but shall be under no obligation to) at any time
thereafter make such payment or perform such act for the account and at the
expense of the Debtors, and may enter upon any Property of the Debtors for such
purpose and take all such action thereon as, in the reasonable opinion of the
Secured Party, may be necessary or appropriate therefor.  All sums so paid by
the Secured Party and all costs and expenses (including without limitation,
reasonable attorneys' fees and expenses) so incurred, together with interest
thereon at the rate set forth in the Loan  Agreement for overdue payments from
the date of payment or incurrence, shall be secured hereby and shall be paid by
the Debtors to the Secured Party on demand.  The Secured Party in making any
payment authorized under this Section relating to taxes or assessments may do
so according to any bill, statement or estimate procured from the appropriate
public office without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax lien
or title or claim thereof.

                 4.5.      Limitation on Liens.  The Debtors agree not to
create or incur or suffer to be incurred or to exist, any mortgage, pledge,
security interest, encumbrance, lien or charge of any kind upon the Collateral
or upon any income or proceeds therefrom other than encumbrances specifically
permitted by the Loan Documents.

                 4.6.      As to Equipment.  The Debtors shall:

                           (a)    Keep all equipment at the places therefor
specified in Section 3.3 or, upon 30 days prior written notice to the Secured
Party, at such other places in jurisdictions where all action required by
Section 4.2 shall have been taken with respect to such equipment.

                           (b)    Cause all equipment to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with any manufacturer's manual, and
shall forthwith, or in the case of any loss or damage to any of the equipment
as quickly as practicable after the occurrence thereof, make or cause to be
made all repairs, replacements and other improvements in connection therewith
which are necessary or desirable to such end.  The Debtors shall promptly
furnish to the Secured Party a statement respecting any material loss or damage
to any of the equipment.

                           (c)    Pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and





                                     - 6 -
<PAGE>   7
supplies) against, the equipment and inventory, except to the extent the
validity thereof is being contested in good faith.

                 4.7.      Insurance.

                           (a)    The Debtors shall, at their own expense,
maintain insurance with respect to their equipment, inventory and other
Property in such amounts, against such risks, in such form and with such
insurers, as shall be reasonably satisfactory to the Secured Party from time to
time.  Each policy for (i) liability insurance shall provide for all losses to
be paid on behalf of the Secured Party and the Debtor as their respective
interests may appear and (ii) property damage insurance shall provide for all
losses (except for losses of less than $250,000 per occurrence) to be paid
directly to the Secured Party.  Each such policy shall in addition (1) name the
Debtor and the Secured Party as insured parties thereunder (without any
representation or warranty by or obligation upon the Secured Party) as their
interests may appear, (2) contain the agreement by the insurer that any loss
thereunder shall be payable to the Secured Party notwithstanding any action,
inaction or breach of representation or warranty by the Debtor, (3) provide
that there shall be no recourse against the Secured Party for payment of
premiums or other amounts with respect thereto and (4) provide that at least
thirty days prior written notice of cancellation or of lapse shall be given to
the Secured Party by the insurer.  The Debtor shall, if so requested by the
Secured Party, deliver to the Secured Party original or duplicate policies of
such insurance and, as often as the Secured Party may reasonably request, a
report of a reputable insurance broker with respect to such insurance.
Further, the Debtor shall, at the request of the Secured Party, duly execute
and deliver instruments or assignments of such insurance policies to comply
with the requirements of this Section 4.7 and cause the respective insurers to
acknowledge notice of such assignment.

                           (b)    Reimbursement under any liability insurance
maintained by the Debtor pursuant to this Section 4.7 may be paid directly to
the person who shall have incurred liability covered by such insurance.  In
case of any loss involving damage to Property when subsection (c) of this
Section 4.7 is not applicable, the Debtor shall make or cause to be made the
necessary repairs to or replacements of such Property and any proceeds of
insurance maintained by the Debtor pursuant to this Section 4.7 shall be paid
to the Debtor as reimbursement for the costs of such repairs or replacements.

                           (c)    Upon (i) the occurrence and during the
continuance of any Event of Default, or (ii) the actual or





                                     - 7 -
<PAGE>   8
constructive total loss (in excess of $1,000,000 per occurrence) of any
Property, all insurance payments in respect of such Property shall be paid to
and applied by the Bank as specified in Section 5.5.

                 4.8.      Maintenance of Office.  The Debtors shall keep its
chief places of business and the offices where it keeps its records concerning
the Receivables and Related Contracts and equipment at the locations therefor
specified on Exhibit A hereto or at such other locations in a jurisdiction
where all action required by Section 4.2 shall have been taken with respect to
such Property.  The Debtors will hold and preserve such records and chattel
paper and will permit representatives of the Secured Party at any time during
normal business hours to inspect and make abstracts from such records and
chattel paper.

                4.9.      As to Receivables.  The Debtors agree that with
respect to any Receivables:

                           (a)    Unless the Debtors have theretofore given the
Secured Party written notice to the contrary, as of the time any Receivable
becomes subject to the security interest provided for hereby, the Debtors shall
be deemed to have warranted as to each and all of such Receivables that each
Receivable and all papers and documents relating thereto are genuine and in all
respects what they purport to be; that each Receivable is valid and subsisting
and arises out of a bona fide sale of goods sold and delivered by the Debtors
to, or in the process of being delivered to, or out of and for services
theretofore actually rendered by the Debtors to the account debtor named in the
Receivable; that the amount of the Receivable represented as owing is the
correct amount actually owing from the account debtor, is not subject to any
setoffs or deductions (other than normal trade discounts) or any counter-claim
or other defense on the part of such account debtor; that no such Receivable is
evidenced by any note unless such instrument or chattel paper has theretofore
been endorsed and delivered to the Secured Party; and that no surety bond was
required or given in connection with said Receivable or the contracts or
purchase orders out of which the same arose.

                           (b)    Except as otherwise provided in this
subsection (b), the Debtors shall continue to collect, at their own expense,
all amounts due or to become due the Debtors under the Receivables.  The
Secured Party shall have the right at any time following an Event of Default
and during its continuance to notify any and all account debtors of the
assignment of such Receivables to the Secured Party and to direct such account
debtors or obligors to make payment of all amounts due or to become due to the
Debtors thereunder directly to the Secured





                                     - 8 -
<PAGE>   9
Party and, upon such notification and at the expense of the Debtors, to enforce
collection of any such Receivables, and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as the
Debtors might have done, and the Debtors shall not adjust, settle or compromise
the amount or payment of any Receivable, or release wholly or partly any
account debtor or obligor thereof, or allow any credit or discount thereon.
Following an Event of Default and during its continuance, the Receivables at
any time received by the Debtors shall (unless the Secured Party shall
otherwise elect in writing) be forthwith accounted for and transmitted to the
Secured Party to an account in its name in the same form as received (not less
often than once per week) by the Debtors, shall be received in trust for the
Secured Party and shall not be commingled with any other funds of the Debtors.
In the event that the Secured Party shall at any time elect in writing not to
have the proceeds transmitted to the Secured Party, the Secured Party
nevertheless shall have and retain the right at any time thereafter following
an Event of Default and during its continuance to demand that such proceeds be
delivered and transmitted to the Secured Party as set forth above.

                           (c)    The proceeds of the Receivables so
transmitted to the Secured Party or such designee bank may be handled and
administered by the Secured Party in and through a remittance or similar
account at the Secured Party and the Debtors acknowledges that the maintenance
of such an account by the Secured Party is solely for the Secured Party's own
convenience and that the Debtors do not have any right, title or interest in
such remittance or similar account or any amounts at any time credited thereto.
Except to the extent that the Secured Party may from time to time in its sole
discretion release proceeds to the Debtors for use in its business, all
proceeds received by the Secured Party shall be applied to the payment of the
Obligations (whether or not it shall then be due) such application to be made
at such intervals and in such manner as the Secured Party may determine, but
not less often than once each week.  The Secured Party need not apply or give
credit for any item included in such proceeds until the Secured Party has
received final payment thereof at its office in cash or solvent credit accepted
by it as such.  The Debtors shall accompany each transmission of proceeds to
the Secured Party with a report in such form as the Secured Party shall require
identifying the particular Receivables to which such proceeds apply.  Upon the
occurrence of an Event of Default, at the request of the Secured Party, the
Debtors will enter into such lock box arrangements for payments of Receivables
as the Secured Party shall request.





                                     - 9 -
<PAGE>   10
                           (d)    Upon the occurrence of an Event of Default
and during its continuance, the Secured Party shall have the right in its own
name or in the name of the Debtors to demand, collect, receive, receipt for,
sue for, compound and give acquittance for any and all amounts due or to become
due on the Receivables and to endorse the name of the Debtors on all commercial
paper given in payment or partial payment thereof and, in addition, may upon
the occurrence of an Event of Default and during its continuance, in its
discretion, file any claim or take any other action or proceeding which the
Secured Party may deem necessary or appropriate to protect and preserve and
realize upon the security interest of the Secured Party in the Receivables and
the proceeds thereof.

5.       DEFAULTS; REMEDIES OF THE SECURED PARTY.

                 5.1.      Completed Default; Acceleration of Maturity.  Upon
declaration by the Secured Party of the acceleration of maturity of the
Obligations in accordance with Section 7 of the Loan Agreement, the Debtors
shall pay to the Secured Party the whole amount which then shall have become
due on the Obligations.  In case the Debtors shall fail to pay the same
forthwith, the Secured Party shall be entitled to recover judgment for the
whole amount so due and unpaid against the Debtors.  The right of the Secured
Party to recover such judgment shall not be affected by the exercise of any
other right, power or remedy for the enforcement of the provisions of this
Security Agreement.

                 5.2.      Remedies.  In case of the happening of an Event of
Default and during its continuance, the Secured Party may exercise, in addition
to all other rights and powers described herein or permitted under applicable
law, all remedies available to a secured creditor under applicable law, all
remedies available to a secured creditor under any applicable Uniform
Commercial Code and all or any of the following powers:

                           (a)    The Secured Party may protect and enforce its
rights by bringing such actions, at law or in equity or before any
administrative tribunal, as the Secured Party, shall deem appropriate,
including, without limitation, actions for the specific performance of any
covenant hereof; and the Secured Party shall be entitled to recover judgment
for any and all sums then, or during any Default, becoming due and payable by
the Debtor under any provision hereof or of any Loan Document, including,
without limitation, any deficiency in the payment of all amounts due under the
provisions hereof or any Loan Document remaining after any sale of the
Collateral and, in addition thereto, such amounts as shall be sufficient to
cover the costs and expenses of collection, including reasonable attorneys'
fees,





                                     - 10 -
<PAGE>   11
and of other proceedings hereunder, and to collect out of the Property of the
Debtors in any manner provided by law all amounts adjudged or decreed to be
payable.

                           (b)    The Secured Party as a matter of contract
right and not as a penalty shall be entitled to the appointment of a receiver
of, or may enter upon and take possession of, all or any part of the
Collateral, and such receiver or the Secured Party shall thereupon be entitled
to operate all or any part of the Collateral and to make all expenditures and
to take all actions necessary or desirable therefor, and to collect and retain
all income and earnings arising from such Property or business.

                           (c)    Upon receipt by the Debtor or the Secured
Party of checks, drafts, cash and other remittance in payment of accounts
payable to the Debtors, the Secured Party may require the Debtors to provide
all necessary endorsements and deliver such remittance to the Secured Party to
be applied upon the Obligations.

                           (d)    The Secured Party may require the Debtors to
assemble the Collateral (other than fixtures) and make it available at a place
or places designated by the Secured Party which is mutually convenient to allow
the Secured Party to take possession or dispose of the Collateral.

                           (e)    Without notice except as specified below, the
Secured Party may sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Secured Party may deem commercially reasonable.  The Debtors agree
that, to the extent notice of sale shall be required by law, at least ten days
notice to the Debtors of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification.  The Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given.  The Secured Party
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it is so adjourned.

                 5.3.      Sale to Accelerate Obligations.  In the event of any
sale made under or by virtue of this Security Agreement, whether made under the
power of sale herein granted or under or by virtue of judicial proceedings or
of a valid judgment, the Obligations, if not previously due, immediately
thereupon shall





                                     - 11 -
<PAGE>   12
become due and payable, anything in this Security Agreement or any Loan
Document to the contrary notwithstanding.

                 5.4.      Application of Proceeds of Sale.  The purchase money
proceeds or avails of any sale of the Collateral shall be applied as follows:

                           First:  To the payment of the costs and expenses of
suit, if any, and of such sale, and to the extent permitted by applicable law,
the reasonable compensation of the Secured Party's agents, attorneys and
counsel, and of all proper expenses, liability and advances incurred or made
hereunder or any of the Loan Documents by the Secured Party, and of all taxes,
assessments or liens superior to the lien of these presents, except any taxes,
assessments or other superior lien subject to which said sale may have been
made;

                           Second:  To the amount then owing or unpaid on the
Obligations; and

                           Third:  To the payment of the surplus, if any, to
the Debtors and their successors or assigns or as may be directed by a court of
competent jurisdiction.

                 5.5.      Purchase of Collateral.  Upon any sale made under or
by virtue of this Security Agreement, the Secured Party may bid for and
purchase the Collateral being sold, and upon compliance with the terms of sale,
may hold, retain and possess and dispose of such Property in its own absolute
right without further accountability; and the Secured Party at any such sale
may, in paying the purchase price, apply any amount of the Obligations then
unpaid in lieu of cash to the amount which shall, upon distribution of the net
proceeds of such sale, be payable thereon.

                 5.6.      Waiver.  The Secured Party may waive any Event of
Default hereunder and its consequences which result from the failure of the
Debtors to comply with any provisions of this Security Agreement or any Loan
Document.  In case of any such waiver, or in case any proceedings taken on
account of any Event of Default shall be discontinued or abandoned or
determined adversely to the Secured Party, then and in every such case, the
Debtors and the Secured Party shall be restored to their former positions and
rights hereunder respectively.  No such waiver shall extend to any subsequent
Event of Default or impair any right consequent thereon.

                 5.7.      Remedies Cumulative.  No remedy herein conferred
upon or reserved to the Secured Party is intended to be exclusive





                                     - 12 -
<PAGE>   13
of any other remedy or remedies, and each and every such remedy shall be
cumulative, and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute.

                 5.8.      Delay or Omission Not a Waiver.  No delay or
omission of the Secured Party to exercise any right or power accruing upon any
Event of Default shall impair any such right or power or shall be construed to
be a waiver of any Event of Default or an acquiescence therein; and every power
and remedy given by this Security Agreement to the Secured Party may be
exercised from time to time and as often as may be deemed expedient by the
Secured Party.

                 5.9. Secured Party's Duties.  The powers conferred on the
Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon its to exercise any such powers.  Except for
the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Secured party shall have no duty
as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.

                 5.10. Secured Party Appointed Attorney-in-Fact.  The Debtors
hereby irrevocably appoint the Secured Party each Debtor's attorney-in-fact,
with full authority in the place and stead of such Debtor and in the name of
such Debtor, the Secured Party or otherwise, from time to time in the Secured
Party's discretion, to take any action and to execute any instrument which the
Secured Party may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation: (a) to obtain and adjust
insurance required to be paid to the Bank pursuant to Section 4.7, (b) to ask,
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral, (c) to receive, indorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clauses (a) and
(b) above, and (d) to file any claims or take any action or institute any
proceedings which the Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Secured Party with respect to any of the Collateral.

                 5.11. Expenses; Indemnity.  The Debtors hereby agree to
reimburse the Secured Party on demand, for all costs and expenses incurred by
the Secured Party in enforcing this Security Agreement (including reasonable
expenses of agents and attorneys employed by the Secured Party).  The Debtors
agree to indemnify





                                     - 13 -
<PAGE>   14
and save and hold the Secured Party harmless from and against any and all
claims, damages, loss, liability or judgments which may be incurred or
sustained by the Secured Party or asserted against the Secured Party directly
or indirectly, in connection with the existence of or the lawful exercise of
any of the rights under this Security Agreement or any Loan Document except
such claims, damages, loss, liability or judgments as may result from the bad
faith, gross negligence or willful misconduct of the Secured Party.


6.       DEFEASANCE.

                 If the Debtors shall pay and discharge or provide, in a manner
reasonably satisfactory to the Secured Party, for the payment and discharge of
the whole amount of the Obligations, then and in that case all Property, rights
and interests hereby conveyed or assigned or pledged shall revert to the
Debtors, and the estate, right, title and interest of the Secured Party shall
thereupon terminate; and the Secured Party, in such case, on demand of the
Debtors and at its expense, shall execute and deliver to the Debtors a proper
instrument or proper instruments acknowledging the satisfaction and termination
of this Security Agreement, and shall convey, assign and transfer, or cause to
be conveyed, assigned or transferred, and shall deliver or cause to be
delivered, to the Debtors, all Property, including money, then held by the
Secured Party, other than moneys deposited with the Secured Party for the
payment of the Obligations.

7.       MISCELLANEOUS PROVISIONS.

                 7.1.      Security Agreement for Benefit of Parties Hereto.
Nothing in this Security Agreement, expressed or implied, is intended or shall
be construed to confer upon or to give to, any Person other than the parties
hereto, any right, remedy or claim under or by reason of this Security
Agreement or any covenant, condition or stipulation hereof; and the covenants,
stipulations and agreements contained in this Security Agreement are and shall
be for the sole and exclusive benefit of the parties hereto, and their
successors and assigns.

                 7.2.      Severability.  In case any one or more of the
provisions contained in this Security Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.

                 7.3.      Notices.  All notices, requests, demands, directions
and other communications which may or are required to be given, served or sent
by the Debtors or the Secured Party to





                                     - 14 -
<PAGE>   15
the other shall be given, served or sent as provided in the Loan Agreement and
shall be effective in accordance with the terms of the Loan Agreement.

                 7.4.      Successors and Assigns.  Whenever in this Security
Agreement any of the parties hereto is named or referred to, the successors and
assigns of such party shall be deemed to be included, and all the covenants,
promises and agreements in this Security Agreement contained by or on behalf of
the Debtors, or on behalf of the Secured Party shall bind and inure to the
benefit of their respective successors and assigns, whether so expressed or
not.

                 7.5.      Counterparts; Descriptive Headings.  This Security
Agreement is being executed in any number of counterparts, each of which is an
original and all of which are identical.  Each counterpart of this Security
Agreement is to be deemed an original hereof and all counterparts collectively
are to be deemed but one instrument.  The descriptive headings of the several
Sections to this Security Agreement were inserted in this Security Agreement
for convenience only and shall not be deemed to affect the meaning or
construction of any of the provisions hereof.

                 7.6.      Amendments, Etc.        No amendment or waiver of
any provision of this Agreement nor consent to any departure by the Debtors
herefrom shall in any event be effective unless the same shall be in writing
and signed by the Secured Party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

                 7.7.      Governing Law; Terms.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
Pennsylvania, except to the extent that the validity or perfection of the
security interest hereunder, or remedies hereunder, in respect of any
particular Collateral are governed by the laws of a jurisdiction other than the
State of Pennsylvania.  Unless otherwise defined herein or in the Loan
Agreement, terms used in Article 9 of the Uniform Commercial Code in the State
of Pennsylvania are used herein as therein defined.





                                     - 15 -
<PAGE>   16
                 IN WITNESS WHEREOF, the parties hereto have executed this
Security Agreement as of the date first above written.

                                   CHRYSALIS INTERNATIONAL CORPORATION


                                   By: /s/ John G. Cooper
                                      --------------------------
                                      Name:  John G. Cooper
                                      Title: Senior Vice President and
                                             Chief Financial Officer

                                   CHRYSALIS INTERNATIONAL PRECLINICAL
                                           SERVICES CORPORATION

                                   By: /s/ John G. Cooper
                                      --------------------------
                                      Name:  John G. Cooper
                                      Title: Senior Vice President and
                                             Chief Financial Officer

                                   CHRYSALIS DNX TRANSGENIC SCIENCES
                                           CORPORATION

                                   By: /s/ John G. Cooper
                                      --------------------------
                                      Name:  /s/ John G. Cooper
                                      Title: Senior Vice President and
                                             Chief Financial Officer

                                   CHRYSALIS INTERNATIONAL CLINICAL
                                           SERVICES CORPORATION

                                   By: /s/ John G. Cooper
                                      --------------------------
                                      Name:  John G. Cooper
                                      Title: Senior Vice President and
                                             Chief Financial Officer

                                   CORESTATES BANK, N.A.


                                   By: /s/ Stephen McWilliams
                                      --------------------------
                                      Name:  Stephen McWilliams
                                      Title: Vice President





                                     - 16 -
<PAGE>   17

                                   SCHEDULE A
                                       to
                               Security Agreement




Location of Principal Offices and Equipment:

                 1)        Chrysalis International Corporation
                           Raritan, Somerset County, New Jersey

                 2)        Chrysalis International Preclinical Services
                           Corporation - Lackawanna County, Pennsylvania

                 3)        Chrysalis International Clinical Services
                           Corporation - Austin, Travis County, Texas

                 4)        Chrysalis DNX Transgenic Sciences Corporation -
                           Raritan, Somerset County, New Jersey Princeton,
                           Mercer and Middlesex Counties, New Jersey





                                     - 17 -