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                                                                  EXECUTION COPY

                                 FIRST AMENDMENT
                                       TO
                               SECURITY AGREEMENT

         THIS FIRST AMENDMENT TO SECURITY AGREEMENT (this "Amendment"), dated as
of December 1, 2003, is entered into by and among aaiPHARMA INC., a Delaware
corporation (the "Borrower"), the other Obligors signatory hereto and BANK OF
AMERICA, N.A., as Administrative Agent for the Lenders (in such capacity, the
"Administrative Agent").

                                    RECITALS

         A.       The Borrower, certain domestic Subsidiaries of the Borrower,
the Lenders and the Administrative Agent are party to that certain Credit
Agreement dated as of March 28, 2002 (as amended by that certain First Amendment
dated as of the date hereof (the "First Amendment to Credit Agreement") and as
otherwise amended and modified, the "Credit Agreement").

         B.       As a condition precedent to the original effectiveness of the
Credit Agreement and the obligations of the Lenders to make their respective
Loans and other extensions of credit under the Credit Agreement, the Obligors
executed and delivered that certain Security Agreement dated as of March 28,
2002 among the Borrower, the other Obligors and the Administrative Agent, (as
previously amended and modified, the "Existing Security Agreement"). Unless
otherwise defined herein or the context otherwise requires, terms used in this
Amendment, including its preamble and recitals, have the meanings provided in
(or by reference in) the Existing Security Agreement.

         C.       The Borrower has requested certain modifications to the
Existing Security Agreement.

         D.       Such modifications require the consent of the Administrative
Agent, which will be evidenced by its execution of this Amendment, and of the
Required Lenders, which will be evidenced by their execution of the First
Amendment to Credit Agreement.

         E.       The Administrative Agent and the Required Lenders have
consented to the requested modifications on the terms and conditions set forth
herein.

                                    AGREEMENT

         NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

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I.       AMENDMENTS TO SECURITY AGREEMENT

         Subject to the satisfaction of the conditions precedent set forth in
Section 4 in Article II hereof, the Obligors and the Administrative Agent, on
behalf of the Lenders, hereby agree as follows:

         1.       Amendment to Section 1(b). The following shall be added as a
new definition:

                  "First Amendment Effective Date": December 1, 2003.

         2.       Amendment to Section 4. Section 4 of the Existing Security
Agreement is hereby deleted in its entirety and replaced with the following:

                  "4.      Representations and Warranties. Each Obligor hereby
         represents and warrants to the Administrative Agent, for the benefit of
         the Lenders, that until such time as the Credit Party Obligations are
         Fully Satisfied:

                           (a)      Legal Name and Location of Obligor. As of
                  the date hereof, each Obligor's exact legal name is as shown
                  in this Security Agreement and its state of formation is (and
                  for the prior four months have been) as set forth on Schedule
                  4(a) attached hereto. As of the date hereof, the principal
                  place of business and chief executive office of such Obligor
                  is set forth on Schedule 4(a) attached hereto. Each Obligor
                  has not in the four months prior to the date hereof changed
                  its name, been party to a merger, consolidation or other
                  change in structure or used any tradename except as set forth
                  on Schedule 4(a) attached hereto.

                           (b)      Location of Collateral. As of the date
                  hereof all Collateral consisting of Goods is located solely in
                  the states identified on Schedule 4(b) hereto, except those
                  Goods in transit to and from such states.

                           (c)      Ownership. Each Obligor is the legal and
                  beneficial owner of all material Collateral which it purports
                  to own, and each Obligor has the right to pledge, sell, assign
                  or transfer such Collateral, except in the case of Documents
                  and other contracts that by their terms prohibit pledge,
                  assignment or transfer.

                           (d)      Security Interest/Priority. This Security
                  Agreement creates a valid security interest in favor of the
                  Administrative Agent, for the benefit of the Lenders, in the
                  Collateral of such Obligor and, when properly perfected by
                  filing, shall constitute a valid perfected security interest
                  in such Collateral, to the extent such security can be
                  perfected by filing under the UCC, free and clear of all Liens
                  except for Permitted Liens.

                           (e)      Types of Collateral. No material amount of
                  the Collateral constitutes, consists of or is the Proceeds of,
                  (i) As-Extracted Collateral, (ii) Consumer Goods, (iii) Farm
                  Products, (iv) Manufactured Homes or (v) Standing Timber.

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                           (f)      Accounts. Except in the case of immaterial
                  Accounts, (i) each Account of the Obligors and the papers and
                  documents relating thereto are genuine and in all material
                  respects what they purport to be, (ii) each Account arises out
                  of (A) a bona fide sale of goods sold and delivered by such
                  Obligor (or is in the process of being delivered) or (B)
                  services theretofore actually rendered or being rendered by
                  such Obligor to, the account debtor named therein, (iii) no
                  Account of an Obligor is evidenced by any Instrument or
                  Chattel Paper unless such Instrument or Chattel Paper has been
                  theretofore endorsed over and delivered to, or submitted to
                  the control of, the Administrative Agent and (iv) no surety
                  bond was required or given in connection with any Account of
                  an Obligor or the contracts or purchase orders out of which
                  they arose.

                           (g)      Inventory. No material amount of Inventory
                  is held by an Obligor pursuant to consignment, sale or return,
                  sale on approval or similar arrangement.

                           (h)      Copyrights, Patents and Trademarks.

                                    (i)      Schedule 1(b) hereto includes all
                           Copyrights, Copyright Licenses, Patents, Patent
                           Licenses, Trademarks and Trademark Licenses owned by
                           the Obligors in their own names as of the date
                           hereof.

                                    (ii)     To the best of each Obligor's
                           knowledge and except as set forth on Schedule 1(b)
                           hereto, each material Copyright, Patent and Trademark
                           of such Obligor is valid, subsisting, unexpired,
                           enforceable and has not been abandoned.

                                    (iii)    Except as set forth in Schedule
                           1(b) hereto, as of the date hereof, none of such
                           Copyrights, Patents and Trademarks is the subject of
                           any licensing or franchise agreement.

                                    (iv)     No holding, decision or judgment
                           has been rendered by any Governmental Authority which
                           would limit, cancel or question the validity of any
                           material Copyright, Patent or Trademark.

                                    (v)      Except as set forth in Schedule 6.9
                           of the Credit Agreement, no action or proceeding is
                           pending seeking to limit, cancel or question the
                           validity of any Copyright, Patent or Trademark, or
                           which, if adversely determined, would reasonably be
                           expected to have a material adverse effect on the
                           value of any material Copyright, Patent or Trademark.

                                    (vi)     All applications pertaining to the
                           Copyrights, Patents and Trademarks of each Obligor
                           have been duly and properly filed, and all
                           registrations or letters pertaining to such
                           Copyrights, Patents and Trademarks have been duly and
                           properly filed and issued, and all of such
                           Copyrights, Patents and Trademarks are valid and
                           enforceable.

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                                    (vii)    No Obligor has made any assignment
                           or agreement in conflict with the security interest
                           in the Copyrights, Patents or Trademarks of each
                           Obligor hereunder, except for the sale, lease,
                           license or transfer of patents in the ordinary course
                           of an Obligor's business and as permitted under the
                           Credit Agreement.

                           (i)      Specified Assigned Agreements. True and
                  complete copies of each Specified Assigned Agreement, as in
                  effect on the First Amendment Effective Date, have been
                  furnished to the Administrative Agent. Each of the Specified
                  Assigned Agreements (i) have been duly authorized, executed
                  and delivered by the Obligor party thereto, (ii) as of the
                  date hereof, have not been amended, amended and restated,
                  supplemented or otherwise modified from the copies delivered
                  to the Administrative Agent, (iii) as of the First Amendment
                  Effective Date, are in full force and effect and (iv) as of
                  the First Amendment Effective Date, are binding upon and
                  enforceable against each Obligor party thereto and, to the
                  Obligor's knowledge, are binding upon and enforceable against
                  all other parties thereto in accordance with their terms, in
                  each case subject to applicable bankruptcy, insolvency,
                  reorganization, moratorium or other laws affecting creditors'
                  rights generally and subject to general principles of equity,
                  regardless of whether considered in a proceeding in equity or
                  at law. No Obligor is in default in any material respect under
                  any Specified Assigned Agreement to which such Obligor is a
                  party and, to the knowledge of any Obligor, none of the other
                  parties to any Specified Assignment Agreement is in default in
                  any material respect (except as has been disclosed to the
                  Administrative Agent)."

         3.       Amendment to Schedules. Schedule 2(l) of the Existing Security
Agreement is amended in its entirety to read in the form of such Schedule 2(l)
attached hereto as Exhibit B to this Amendment.

II.      MISCELLANEOUS

         1.       Representations and Warranties. Each of the Obligors
represents and warrants to the Administrative Agent as follows:

                  (i)      It has taken all necessary action to authorize the
         execution, delivery and performance of this Amendment.

                  (ii)     This Amendment has been duly executed and delivered
         by such Obligor and constitutes such Obligor's legal, valid and binding
         obligation, enforceable in accordance with its terms, except as such
         enforceability may be limited (x) by general principles of equity and
         conflicts of laws (whether enforcement is sought by proceedings in
         equity or at law) or by principles of good faith and fair dealing or
         (y) by bankruptcy, reorganization, insolvency, moratorium or other laws
         of general application relating to or affecting the enforcement, of
         creditors' rights.

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                  (iii)    No consent, approval, authorization or order of, or
         filing, registration or qualification with, any court or governmental
         authority or third party is required in connection with the execution,
         delivery or performance by such Obligor of this Amendment (except for
         those which have been obtained on or prior to the date hereof and
         filings and other actions to perfect the Liens created by the
         Collateral Documents).

                  (iv)     The execution and delivery of this Amendment does not
         diminish or reduce its obligations under the Existing Security
         Agreement in any manner, except as specifically set forth herein.

                  (v)      Such Obligor has no claims, counterclaims, offsets,
         or defenses to the Existing Security Agreement and the performance of
         its obligations thereunder, or if such Obligor has any such claims,
         counterclaims, offsets, or defenses to the Existing Security Agreement
         or any transaction related to the Existing Security Agreement, the same
         are hereby waived, relinquished and released in consideration of the
         Lenders' execution and delivery of this Amendment.

                  (vi)     The representations and warranties of the Obligors
         set forth in Section 4 of the Existing Security Agreement, after giving
         effect to the amendments described in Article I hereof, are true and
         correct in all material respects as of the date hereof (except those
         that expressly relate to an earlier date, in which case such
         representations and warranties are true and correct in all material
         respects as of such earlier date) and all of the provisions of the
         Existing Security Agreement, except as amended hereby, are in full
         force and effect.

                  (vii)    Subsequent to the execution and delivery of this
         Amendment and after giving effect hereto, no unwaived event has
         occurred and is continuing on the date hereof which constitutes a
         Default or an Event of Default.

         2.       Liens. Each Obligor affirms the liens and security interests
created and granted by it in the Existing Security Agreement and agrees that
this Amendment shall in no manner adversely affect or impair such liens and
security interests.

         3.       Effect of Amendment. Except as expressly modified and amended
in this Amendment, all of the terms, provisions and conditions of the Existing
Security Agreement shall remain unchanged and in full force and effect. The
Existing Security Agreement and any and all other documents heretofore, now or
hereafter executed and delivered pursuant to the terms of the Existing Security
Agreement are hereby amended so that any reference to the Existing Security
Agreement shall mean a reference to the Existing Security Agreement as amended
by this Amendment.

         4.       Condition Precedent. This Amendment shall become effective as
of the date first above written when, and only when, the following condition
shall have been satisfied (it being understood that the satisfaction of the
following condition may occur concurrently with the effectiveness of this
Amendment):

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                  (a)      Execution of Counterparts of Amendment. The
         Administrative Agent shall have received counterparts of this
         Amendment, which collectively shall have been duly executed on behalf
         of the Borrower and each of the other Obligors.

                  (b)      Execution of First Amendment to Credit Agreement. The
         Administrative Agent shall have received counterparts of the First
         Amendment to Credit Agreement, which collectively shall have been duly
         executed on behalf of the Borrower and each of the other parties
         thereto, including the Required Lenders.

         5.       Construction. This Amendment is a Credit Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
therein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.

         6.       Counterparts. This Amendment may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument.

         7.       GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         8.       Binding Effect. This Amendment, the Existing Security
Agreement as amended hereby and the other Credit Documents embody the entire
agreement between the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof. These Credit
Documents represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. Except as expressly modified and amended in this Amendment, all
the terms, provisions and conditions of the Credit Documents shall remain
unchanged and shall continue in full force and effect.

         9.       Severability. If any provision of this Amendment is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

                  [Remainder of Page Intentionally Left Blank]

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         IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date first above
written.

BORROWER:                            aaiPHARMA INC.

                                     By: /s/ Philip S. Tabbiner
                                         ------------------------------------
                                     Name: Philip S. Tabbiner
                                     Title: President and CEO

OBLIGORS:                            APPLIED ANALYTICAL INDUSTRIES
                                          LEARNING CENTER, INC.
                                     AAI TECHNOLOGIES, INC.
                                     AAI DEVELOPMENT SERVICES, INC. (f/k/a
                                          AAI INTERNATIONAL, INC.)
                                     AAI PROPERTIES, INC.
                                     KANSAS CITY ANALYTICAL SERVICES,
                                     INC.
                                     AAI DEVELOPMENT SERVICES, INC. (f/k/a
                                         AAI INTERNATIONAL CLINICAL TRIALS,
                                         INC. f/k/a MEDICAL & TECHNICAL
                                         RESEARCH ASSOCIATES, INC.)
                                     AAI JAPAN, INC.
                                     aaiPHARMA LLC (f/k/a NEOSAN
                                     PHARMACEUTICALS, INC.)

                                     By: /s/ William L. Ginna, Jr.
                                         ------------------------------------
                                     Name: William L. Ginna, Jr.
                                     Title: Vice President

                      First Amendment to Security Agreement

                                                                  aaiPharma Inc.
                                                                   December 2003

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ADMINISTRATIVE AGENT:                BANK OF AMERICA, N.A.,
                                     in its capacity as Administrative Agent

                                     By: /s/ Craig Murless
                                         -----------------------------------
                                     Name: Craig Murless
                                     Title: Vice President

                      First Amendment to Security Agreement

                                                                  aaiPharma Inc.
                                                                   December 2003