SEVENTH AMENDMENT TO CREDIT AGREEMENT

THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT (this “ Amendment ”), dated as of September 30, 2009, is by and among   CHATTEM, INC., a Tennessee corporation (the “ Borrowe r”), each of the Borrower’s Domestic Subsidiaries (individually a “ Guarantor ” and collectively with the Borrower, the “ Credit Parties ”), the Lenders party hereto and BANK OF AMERICA, N.A., as agent for the Lenders (in such capacity, the “ Agent ”).

WHEREAS , the Credit Parties, the Lenders, and the Agent are parties to that certain Credit Agreement dated as of February 26, 2004 (as amended from time to time, the “ Credit Agreement ”);

WHEREAS , the Borrower has requested that the Lenders amend the Credit Agreement; and

WHEREAS , the Lenders have agreed to amend the Credit Agreement on the terms and conditions hereinafter set forth.

NOW, THEREFORE , in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

Unless otherwise defined herein or the context otherwise requires, terms used in this Amendment, including its preamble and recitals, have the meanings provided in the Credit Agreement.

SUBPART 2.1  The following definitions are hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order to read as follows:

“ Extending Revolving Lenders ” means those Lenders agreeing to extend their Revolving Commitments to January 2, 2013 pursuant to the Seventh Amendment, and any of their successors and permitted assigns of such Revolving Commitments in accordance with Section 11.3 .  The Extending Revolving Lenders as of the Seventh Amendment Effective Date are identified on Schedule 1.1(a).  The term “Extending Revolving Lender” shall also include any Lender agreeing to become an Extending Revolving Lender pursuant to an Assignment and Assumption with a Non-Extending Revolving Lender as contemplated by Section 11.3(i).

“ IDB ” means the Industrial Development Board of the City of Chattanooga, Tennessee.

“ Impacted Lender ” means any Lender as to which (a) the Issuing Lender has a good faith belief that the Lender has defaulted in fulfilling its obligations under one or more other syndicated credit facilities or (b) an entity that controls the Lender has been deemed insolvent or become subject to a bankruptcy or other similar proceeding.

“ Net Loss ” means, for any period, the net loss after taxes for such period of the Borrower and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP.

“ Non-Extending Revolving Lenders ” means those Lenders whose Revolving Commitments terminate on November 15, 2010 and any of their successors and permitted assigns of such Revolving Commitments in accordance with Section 11.3 .  The Non-Extending Lenders as of the Seventh Amendment Effective Date are identified on Schedule 1.1(a) hereto.

“ PILOT Program Property ” means that certain “ACT plant” of the Borrower located at 3350 Broad Street, Chattanooga, Tennessee 37408.

“ PILOT Program Sale and Leaseback Transaction ” means the sale and leaseback transaction entered into by the Borrower and the IDB with respect to the PILOT Program Property.

“ Seventh Amendment ” means that certain Seventh Amendment to Credit Agreement by and among the Borrower, the Guarantors, the Lenders party thereto and the Agent dated as of the Seventh Amendment Effective Date.

“ Seventh Amendment Effective Date ” means September 30, 2009.

SUBPART 2.2  The definition of “ Applicable Percentage ” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

“ Applicable Percentage ” means for purposes of calculating (a) the applicable interest rate for any day for Revolving Loans having a Termination Date of January 2, 2013, the applicable rate for any day for the Letter of Credit Fees with respect to any Lender’s Revolving Commitment that terminates on January 2, 2013 and the applicable rate for any day for the Unused Fee with respect to any Lender’s Revolving Commitment that terminates on January 2, 2013, the appropriate applicable percentages corresponding to the Leverage Ratio in effect as of the most recent Calculation Date as shown below:

(b) the applicable interest rate for any day for Revolving Loans having a Termination Date of November 15, 2010, the applicable rate for any day for the Letter of Credit Fees with respect to any Lender’s Revolving Commitment that terminates on November 15, 2010 and the applicable rate for any day for the Unused Fee with respect to any Lender’s Revolving Commitment that terminates on November 15, 2010, the appropriate applicable percentages corresponding to the Leverage Ratio in effect as of the most recent Calculation Date as shown below:

(c) the applicable interest rate for any day for the Term Loan, a percentage per annum equal to (i) 1.75% for Eurodollar Loans and (ii) 0.75% for Base Rate Loans and (d) the applicable interest rate for any day for the Incremental Term Loan, the percentage(s) per annum set forth in the Incremental Term Loan Joinder Agreement.  The Applicable Percentage for Revolving Loans, Letter of Credit Fees and the Unused Fee shall be determined and adjusted quarterly on the date (each a “ Calculation Date ”) five Business Days after the date by which the Borrower is required to provide the officer’s certificate in accordance with the provisions of Section 7.1(c); provided , however , if the Borrower fails to provide the officer’s certificate required by Section 7.1(c) on or before the most recent Calculation Date or fails to deliver a copy of such officer’s certificate to the Agent as required by Section 7.1(c), the Applicable Percentage for Revolving Loans, Letter of Credit Fees and the Unused Fee from such Calculation Date shall be based on Pricing Level IV in the applicable pricing grid above until such time that an appropriate officer’s certificate is provided whereupon the Applicable Percentage shall be determined by the then current Leverage   Ratio.  Each Applicable Percentage for Revolving Loans, Letter of Credit Fees and the Unused Fee shall be effective from one Calculation Date until the next Calculation Date.  Any adjustment in the Applicable Percentage shall be applicable to all existing Revolving Loans and Letters of Credit as well as any new Revolving Loans or Letters of Credit made or issued.  The Applicable Percentage in effect from the Seventh Amendment Effective Date through the first Business Day immediately following the date the officer’s certificate is delivered pursuant to Section 7.1(c)(i) for the fiscal quarter ending August 31, 2009 shall be determined based upon Pricing Level III in the applicable pricing grid set forth above.  Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Percentage for any period shall be subject to the provisions of Section 3.6(c) .

SUBPART 2.3  The definition of “ Base Rate ” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

“ Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate” and (c) the Eurodollar Base Rate plus 1.00%.  The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in the “prime rate” announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

SUBPART 2.4  The definition of “ Eligible Assignee ” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

“ Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 11.3(b)(v), (vi) and (vii) (subject to such consents, if any, as may be required under Section 11.3(b)(iii)).

SUBPART 2.5  The definition of “Eurodollar Base Rate” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

“ Eurodollar Base Rate ” means:

(a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.  If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such Interest Period shall be the rate per annum determined by the Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period; and

(b) for any interest rate calculation with respect to a Base Rate Loan, the rate per annum equal to (i) BBA LIBOR, at approximately 11:00 a.m. London time two Business Days prior to the date of determination (provided that if such day is not a Business Day, the next preceding Business Day) for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (ii) if such published rate is not available at such time for any reason, the rate per annum determined by the Agent to be the rate at which deposits in Dollars for delivery on the date of determination in same day funds in the approximate amount of the Base Rate Loan being made, continued or converted by Bank of America and with a term equal to one month would be offered by Bank of America’s London Branch to major banks in the London intrabank eurodollar market at their request at approximately 11:00 a.m., London time on the date of determination.

SUBPART 2.6  The definition of “ Interest Payment Date ” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

“ Interest Payment Date ” means (a) as to Base Rate Loans and Swingline Loans, the last Business Day of each fiscal quarter of the Borrower and on the applicable Termination Date, the Term Loan Maturity Date and the Incremental Term Loan Maturity Date (if any) and (b) as to Eurodollar Loans, on the last day of each applicable Interest Period and on the applicable Termination Date, the Term Loan Maturity Date and the Incremental Term Loan Maturity Date (if any) and in addition if the Interest Period for a Eurodollar Loan is more than 3 months, then at 3 month intervals beginning on the date 3 months from the beginning of the Interest Period.

SUBPART 2.7  Subclause (b) in the definition of “ Interest Period ” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

(b) no Interest Period with respect to any Revolving Loan shall extend beyond the applicable Termination Date with respect to such Revolving Loan,

SUBPART 2.8  The definition of “ Letter of Credit Expiration Date ” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

SUBPART 2.9  The definition of “ Permitted Liens ” in Section 1.1 of the Credit Agreement is hereby amended to add the following new clause (l) at the end thereof to read as follows:

and (l) Liens, if any, in favor of the Issuing Lender and/or the Swing Line Lender to cash collateralize or otherwise secure the obligations of a Defaulting Lender or an Impacted Lender to fund risk participations hereunder.

SUBPART 2.10  The definition of “ Revolving Commitment ” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

“ Revolving Commitment ” means, with respect to each Lender, the commitment of such Lender in an aggregate principal amount at any time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1.1(a) , or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement, (i) to make Revolving Loans in accordance with the provisions of Section 2.1(a), (ii) to purchase participation interests in Letters of Credit in accordance with the provisions of Section 2.2 and (iii) to purchase participation interests in Swingline Loans in accordance with the provisions of Section 2.3.

SUBPART 2.11  The definition of “ Revolving Committed Amount ” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

“ Revolving Committed Amount ” means the Revolving Commitments of all of the Lenders.  The aggregate principal amount of the Revolving Commitments in effect on the Seventh Amendment Effective Date is ONE HUNDRED MILLION DOLLARS ($100,000,000); provided such amount may be reduced pursuant to the terms hereof; provided further that such amount may be increased to up to ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) pursuant to Section 2.1(g).

SUBPART 2.12  The definition of “ Termination Date ” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

“ Termination Date ” means (a) with respect to the Revolving Commitment of each Non-Extending Revolving Lender, November 15, 2010 and (b) with respect to the Revolving Commitment of each Extending Revolver Lender, January 2, 2013.

SUBPART 2.13  The definition of “ Treasury Management Agreement ” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

“ Treasury Management Agreement ” means any agreement governing the provision of treasury or cash management services, including deposit accounts, overdraft, credit or debit card,

funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.

SUBPART 2.14  Section 2.1(a) of the Credit Agreement is hereby amended to read as follows:

(a)            Revolving Commitment .   Subject to the terms and conditions set forth herein, each Lender severally agrees to make revolving loans (each a “ Revolving Loan ” and collectively the “ Revolving Loans ”) to the Borrower, in Dollars, at any time and from time to time, during the period from and including the Closing Date to but not including the applicable Termination Date (or such earlier date if the applicable Revolving Commitments have been terminated as provided herein); provided , however , that (i) the sum of the aggregate amount of Revolving Loans outstanding plus the aggregate amount of LOC Obligations outstanding plus the aggregate amount of Swingline Loans outstanding shall not exceed the aggregate Revolving Commitments then in effect, and (ii) with respect to each individual Lender, such Lender’s outstanding Revolving Loans shall not exceed such Lender’s Commitment Percentage of the aggregate Revolving Commitments then in effect.

SUBPART 2.15  Section 2.2(a)(ii) of the Credit Agreement is hereby amended to read as follows:

(ii)           The Issuing Lender shall not issue any Letter of Credit if:

(A)            the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance, unless Lenders holding more than fifty percent (50%) of the Revolving Commitments have approved such expiry date; or

(B)           the expiry date of such requested Letter of Credit would occur after the applicable Letter of Credit Expiration Date, unless all the applicable Lenders with a Revolving Commitment have approved such expiry date.

SUBPART 2.16  Section 2.2(a)(iii)(F) of the Credit Agreement is hereby amended to read as follows:

(F)           a default of any Lender’s obligations to fund under Section 2.2(c) exists or any Lender is at such time a Defaulting Lender or an Impacted Lender hereunder, unless the Issuing Lender has entered into satisfactory arrangements with the Borrower or such Lender to eliminate the Issuing Lender’s risk with respect to such Lender.

SUBPART 2.17  The following subsection (vii) is hereby added at the end of Section 2.2(c) of the Credit Agreement to read as follows:

(vii)           It is understood and agreed that with respect to any Letters of Credit having an expiry date later than November 10, 2010, only the Extending Revolving Lenders shall have a participation interest in such Letters of Credit (each such participation interest to be based on such Extending Revolver Lender’s Commitment Percentage of only those Revolving Commitments with a Termination Date of January 2, 2013).

SUBPART 2.18  The first sentence in Section 2.3(a) of the Credit Agreement is hereby amended to read as follows:

Subject to the terms and conditions set forth herein, the Swingline Lender may, in its discretion and in reliance upon the agreements of the other Lenders set forth in this Section 2.3 , make swingline loans (each a “ Swingline Loan ” and collectively the “ Swingline Loans ”) to the Borrower, in Dollars, at any time and from time to time, during the period from and including the Closing Date to but not including the applicable Termination Date (or such earlier date if the Revolving Committed Amount has been terminated as provided herein) in an aggregate amount not to exceed at any time outstanding the amount of the Swingline Committed Amount, notwithstanding the fact that such Swingline Loans, when aggregated with the Commitment Percentages of the outstanding principal amount of Revolving Loans and LOC Obligations of the Swingline Lender in its capacity as a Lender of Revolving Loans, may exceed the amount of such Lender’s Revolving Commitment; provided , however , that (i) the sum of the aggregate amount of Revolving Loans outstanding plus the aggregate amount of LOC Obligations outstanding plus the aggregate amount of Swingline Loans outstanding shall not exceed the Revolving Committed Amount, and (ii) the outstanding Swingline Loans shall not exceed the Swingline Committed Amount, and provided , further , that the Borrower shall not use the proceeds of any Swingline Loan to refinance any outstanding Swingline Loan.

SUBPART 2.19  Section 3.4(a) of the Credit Agreement is hereby amended to read as follows:

(a)            Unused Fees .  In consideration of the Revolving Commitments of the Lenders hereunder, the Borrower agrees to pay to the Agent for the account of each Lender with a Revolving Commitment a fee (the “ Unused Fee ”) computed at a per annum rate on the Unused Revolving Committed Amount during the Unused Fee Calculation Period (hereinafter defined) equal to the Applicable Percentage for Unused Fees then in effect; provided , that (i) no Unused Fee shall accrue on the Revolving Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender and (ii) any Unused Fee accrued with respect to the Revolving Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender.  The Unused Fee shall commence to accrue on the Closing Date and shall be due and payable in arrears on the last business day of each March, June, September and December (and any date that the Revolving Committed Amount is reduced as provided in Section 2.1(d) and the applicable Termination Date) for the immediately preceding quarter (or portion thereof) (each such quarter or portion thereof for which the Unused Fee is payable hereunder being herein referred to as an “ Unused Fee Calculation Period ”), beginning with the first of such dates to occur after the Closing Date.

SUBPART 2.20  Section 3.5(a) of the Credit Agreement is each hereby amended to read as follows:

(a)            Revolving Loans .  (i) On November 15, 2010, the entire outstanding principal balance of all Revolving Loans having a Termination Date of November 15, 2010, together with accrued but unpaid interest and all other sums owing with respect thereto, shall be due and payable in full, unless accelerated sooner pursuant to Section 9, and (ii) on January 2, 2013, the entire outstanding principal balance of all Revolving Loans having a Termination Date of January 2, 2013, together with accrued but unpaid interest and all other sums owing with respect thereto, shall be due and payable in full, unless accelerated sooner pursuant to Section 9.

SUBPART 2.21  The first sentence of Section 3.6(a) of the Credit Agreement is hereby amended to read as follows:

Except for Base Rate Loans, in which case interest shall be computed on the basis of a 365 or 366 day year as the case may be, all computations of interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days.

SUBPART 2.22  Section 3.11 of the Credit Agreement is hereby amended to read as follows:

3.11             Inability To Determine Interest Rate .

If prior to the first day of any Interest Period, the Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Interest Period with respect to a proposed Eurodollar Rate Loan or in connection with a Base Rate Loan, the Agent shall promptly give telecopy or telephonic notice thereof to the Borrower and the Lenders.  If such notice is given (a) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as Base Rate Loans as to which the interest rate is not determined with reference to the Eurodollar Rate, (b) any Loans that were to have been converted on the first day of such Interest Period to