Item 1.01 Entry into a Material Definitive Agreement

As previously disclosed in a Form 8-K filed with the SEC on March 30, 2009, Advanced Life Sciences Holdings, Inc. ("ADLS") alleged in a notice of dispute delivered to Abbott Laboratories that Abbott had breached its obligations under the License Agreement for cethromycin entered into between the ADLS and Abbott on December 13, 2004 (as amended, the "License Agreement"). Subsequent to delivering the notice of dispute, ADLS initiated arbitration proceedings against Abbott under the alternative dispute resolution provisions of the License Agreement.

On September 30, 2009, prior to the completion of arbitration proceedings, ADLS and Abbott entered into a binding term sheet in settlement of the dispute. The binding term sheet provides for certain amendments to the License Agreement, summarized as follows:

† Section 6.2(a)(i) of the License Agreement was amended to reduce the royalty due from ADLS to Abbott by two (2) percentage points in each tier, such that ADLS would owe Abbott 15% on net sales of $200 million and above; 16% on net sales of $100 million to $200 million and; 17% on net sales of cethromycin of up to $100 million.

† Section 6.1 of the License Agreement was amended to restructure the $30 million lump sum milestone payment due from ADLS to Abbott upon U.S. regulatory approval of cethromycin, such that $20 million is payable within twenty days of U.S. regulatory approval, $5 million is payable within 6 months of U.S. regulatory approval and $5 million is payable within 12 months of U.S. regulatory approval.

The binding term sheet was entered into without any admission of liability by either party and provides for the mutual release of any existing claims that the parties may have against one another in connection with the License Agreement.

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