EXHIBIT 10.3

April 7, 2010

Denise Esposito, Esquire
c/o Paul F. Mickey, Jr., Esquire
Steptoe & Johnson LLP
1330 Connecticut Avenue, NW
Washington, DC 20036-1765

Re:  Letter Agreement and Release

Dear Denise:

This Letter Agreement sets forth the terms and conditions of the agreement
between you and Emergent BioSolutions Inc. (the “Company”) with respect to your
separation from the Company.  If you accept the terms of this Letter Agreement,
please sign and return it to Donald N. Sperling, Esquire at Stein Sperling et
al., 25 West Middle Lane, Rockville, Maryland  20850, no later than 5 pm on
April 28, 2010.

You are advised to consult with an attorney of your choosing before signing this
Letter Agreement, and you may take up to 21 days to do so.  If you sign the
Letter Agreement, you may change your mind and revoke your acceptance during the
seven-day period after you have signed it by notifying Donald N. Sperling,
Esquire in writing.  If you timely sign and return this Letter Agreement, and do
not revoke your signature within the seven-day period after you sign it, the
following terms and conditions will become binding:

1.       Termination of Employment – The parties agree that your employment with
the Company ended as of March 12, 2010 (the “Termination Date”).  Effective as
of the Termination Date, you no longer hold your positions as SVP, Legal Affairs
and General Counsel; Chief Legal Officer; Secretary; or any other positions as
an employee, officer and/or director of the Company or any of the Company’s
subsidiaries.
 
2.       Severance and Compensation – You and the Company agree that your
separation from the Company constitutes a qualifying event under the Severance
Plan and Termination Protection Program (the “SPTPP”).  The Company agrees to
provide you with the severance benefits described in the SPTPP and you agree to
be bound by the conditions and obligations of the SPTPP. Accordingly, the
Company will pay or provide you with the following compensation and other
payments, less appropriate deductions for federal and state withholding and
other applicable taxes and any lawfully authorized or required payroll
deductions, in full satisfaction of the severance benefits payable under the
SPTPP and in consideration for this Letter Agreement:
 
a.  
$315,016.00 which represents your annual base salary in effect as of the
Termination Date;

 
b.  
$27,571.78 for 2010 pro rata target annual bonus calculated as follows:
$315,016.00 (2010 base salary) x 45% (2010 bonus opportunity) x 19.45% (portion
of year calculated from January 1 – March 12, 2010);

 
c.  
$8,362.50 in lieu of the Company match to your 401(k) contributions calculated
as follows: $6,300 representing the balance of the maximum matching contribution
for 2010 plus $2,062.50 representing the matching contribution for 2011 based on
the same maximum amount ($8,250.00);

d.  
Extended health benefits for you and your eligible dependants for twelve (12)
months after the Termination Date, except where the provision of such benefits
would result in a duplication of benefits provided by a subsequent employer; and

e.  
Reimbursement of the premiums for your current level of life insurance coverage
for twelve (12) months after the Termination Date.

The severance benefits described in subparagraphs (a) through (e) above are
payable only if this Letter Agreement becomes irrevocable.  The severance
payments described in subparagraphs (a) through (c) of this Section 2 will be
paid out provided that you have not exercised your right to revoke this Letter
Agreement as follows: $175,475.14 on September 13, 2010 and $29,245.86 shall be
paid to you on the same date of each of the six (6) consecutive months
thereafter.  Because you are a specified employee within the meaning of Section
409A(2)(B)(i) of the Internal Revenue Code (the “Code”), no amounts shall be
paid to you pursuant to subparagraphs (a) through (c) until that date which is
six (6) months and one (1) day after your “separation from service” within the
meaning of Section 409A(a)(2)(A)(i).  In the event the United States Food and
Drug Administration (“FDA”) requires you to divest or liquidate your right to
receive severance payments under this agreement as a condition of employment
with the FDA, the Company agrees to consider your request to accelerate any
remaining installments hereunder to the extent permitted in accordance with
Treasury Regulation Section 1.409A-3(j)(4)(iii) and in a manner consistent with
any agreement between you and the FDA ethics office.  The health benefits
described in subparagraph (d) of this Section 2 will be paid directly on your
behalf.

In addition, you are entitled to the following payments, regardless of whether
you sign and return this Letter Agreement, and you agree that you have received
such payments:

·  
$109,633.68 which represents your bonus for calendar year 2009;

 
·  
All earned but unpaid salary and accrued but unused paid time off earned during
the 2010 calendar year through the Termination Date, at your current base salary
of $315,016.00, less all applicable employment taxes and other withholding
pursuant to federal and state regulations.  Such payments have been made in the
normal payroll period following the Termination Date; and

 
·  
Reimbursement for any unreimbursed reasonable business expenses that you
incurred before the Termination Date, which will be paid within thirty days of
submission of the required expense reports and supporting documentation.

 
3.         Release - In consideration of the payment of the severance benefits
described in Section 3(a) of the SPTPP and in Sections (a) through (e) of
Paragraph 2 above, you hereby fully, forever, irrevocably and unconditionally
release, remise and discharge the Company and all affiliates, subsidiaries, and
parent companies and their respective owners, officers, directors, employees,
and agents (each in their individual and corporate capacities), and all employee
benefit plans and plan fiduciaries (hereinafter, the "Released Parties") from
any and all claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts, reckonings, covenants,
contracts, agreements, promises, doings, omissions, damages, executions,
obligations, liabilities, and expenses (including attorneys' fees and costs), of
every kind and nature that you ever had or now have against any or all of the
Released Parties, including, but not limited to, any and all claims arising out
of or relating to your employment with and/or separation from the Company,
including, but not limited to, all employment discrimination claims under Title
VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans
with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Age Discrimination
in Employment Act, 29 U.S.C. § 621 et seq., the Rehabilitation Act of 1973, 29
U.S.C. § 701 etseq., Executive Order 11246, Executive Order 11141, the Maryland
Fair Employment Practices Act, Md. Ann. Code art. 49B, § 1 et seq., the Maryland
Anti-Discrimination Act (96 DLR A-2, 5/17/01), the Maryland Regulations on
Anti-Discrimination Relating to Persons with Disabilities, Md. Regs. Code tit.
14, § 03.02.01 et seq., the Maryland Equal Pay Law, Md. Code Ann., Lab. & Empl.
§ 3-301 et seq. all as amended, all as amended, all claims arising out of the
Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., the Employee Retirement
Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and Section 806
of the Corporate and Criminal Fraud Accountability Act of 2002, 18 U.S.C. §
1514(A), all as amended, all common law claims including, but not limited to,
actions in defamation, intentional and negligent infliction of emotional
distress, misrepresentation, fraud, wrongful discharge and breach of contract,
all claims to any non-vested ownership interest in the Company, contractual or
otherwise, including, but not limited to, claims to stock or equity
compensation, all claims with respect to any bonus or other incentive
compensation with respect to a sale of the Company or any affiliate thereof or
to any termination protection pay under the SPTPP, and any claim or damage
arising out of your employment with and/or separation from the Company
(including a claim for retaliation) under any common law theory or any federal,
state or local statute or ordinance not expressly referenced above; provided,
however, that nothing in this Letter Agreement prevents you from filing,
cooperating with, or participating in any proceeding before the Equal Employment
Opportunity Commission or a state fair employment practices agency (except that
you acknowledge that you may not be able to recover any monetary benefits in
connection with any such claim, charge or proceeding).  To implement a full and
complete release and discharge, you expressly acknowledge that this Release is
intended to include in its effect, without limitation, all claims you do not
know or suspect to exist in your favor at the time of execution of this
Release.  You agree that this Release contemplates the extinguishment of any
such claim or claims.
 
4.         Confidentiality; Continuing Obligations - You acknowledge and
reaffirm your obligation to maintain the confidentiality of all non-public
information concerning the Company and its affiliates that you acquired during
the course of your employment with the Company.  You reconfirm and agree that
you remain bound by the terms and conditions of the Non-Disclosure and Invention
Assignment Agreement that you signed on December 2, 2004 and the Confidentiality
and Non-Solicitation Agreement that you signed on the same date.  You further
acknowledge the continuing effect of the obligations set forth in Exhibit I to
the letter dated August 11, 2006 by which you elected to participate in the
SPTPP and you hereby agree to comply with such obligations for a period of
twelve (12) consecutive months after the Termination Date (instead of the six
(6) month period set forth therein).
 
5.         Return of Company Property - You confirm that you have returned to
the Company in good working order all Company property including, but not
limited to, keys, files, records, books, manuals, lists, printouts, and any
other documents (and copies thereof), equipment (including, but not limited to,
computer hardware, software and accessories, printers, wireless handheld
devices, zip drives, diskettes, flashdrives, cellular phones, pagers, etc.),
Company identification, Company vehicles, Company confidential and proprietary
information and any other Company-owned property that is in your possession or
control.  You further confirm that you have left intact and agree to leave
intact all electronic Company documents, including, but not limited to, those
that you developed or helped to develop during your employment, except for those
electronic Company documents that you deleted in accordance with the Company’s
written records management policy.  You also confirm that you have cancelled all
accounts for your benefit, if any, in the Company’s name, including, but not
limited to, credit cards, telephone charge cards, cellular phone and/or pager
accounts and computer accounts.

6.           Compensation; Loans - You acknowledge and agree that you have
received all payments to which you are entitled for all services rendered to
date in conjunction with your employment and that no other compensation,
including salary, bonuses, or severance payments or benefits pursuant to any
plan, policy or practice, are owed to you, other than those described
herein.  You also represent that you do not have any outstanding loans,
advances, or extensions of credit under which you are or may be liable to the
Company or its affiliates.

7.           Non-Disparagement - You understand and agree that you shall not
make any false, disparaging or derogatory statements to any media outlet,
industry group, financial institution or current or former employee, consultant,
client or customer of the Company or to any other person or entity regarding the
Company or any of its stockholders, directors, officers, employees, agents or
representatives or about the Company’s business affairs and financial
condition.  The Company agrees that it shall not make any false, disparaging or
derogatory statements about you to any media outlet, industry group, financial
institution or current or former employee, consultant, client or customer of the
Company or to any other person or entity.
 
8.           Cooperation - You agree to cooperate fully with the Company in the
defense or prosecution of any litigation currently pending or that may be
brought in the future against or on behalf of the Company, whether before a
state or federal court, in an arbitral forum or before a state or federal
agency, or any investigation relating to the Company, if, in the judgment of the
Company or its counsel, your assistance or cooperation is needed due to your
personal involvement in or knowledge about the circumstances to which the
litigation or investigation relates.  Your full cooperation in connection with
such litigation or investigation shall include, but not be limited to, being
available to meet with counsel to prepare the Company’s claims or defenses, to
prepare for trial, arbitration, discovery or an administrative hearing and to
act as a witness when requested by the Company at reasonable times designated by
the Company.  In consideration for such cooperation, the Company agrees to pay
you at your reasonable and customary hourly rate as authorized in advance by the
Company.  For the purposes of any payments made to and retained by you pursuant
to this Section 8, you acknowledge that you shall be treated as an independent
contractor and not as an employee.  You further acknowledge and agree that the
company shall not be liable for any withholding taxes, including, without
limitation, worker's compensation, unemployment insurance, employers' liability,
employer's FICA, social security, or other withholding tax for payments made and
retained by you pursuant to this Section 8.  All such costs shall be your
responsibility. You agree that you will notify the Company promptly in the event
that you are served with a subpoena or in the event that you are asked to
provide a third party with information concerning any actual or potential
complaint or claim against the Company, dispute with the Company or
investigation or inquiry relating to the Company.  You agree to maintain the
confidentiality of all non-public information concerning the Company and its
affiliates that you acquire during the course of your engagement with the
Company pursuant to this Section 8.  Notwithstanding the foregoing, any services
that you provide to the Company in connection with the litigation against
Protein Sciences Corporation shall be compensated in accordance with the terms
and conditions of that certain Consulting Agreement effective April 7, 2010,
between you and the Company.

 
9.           References – You agree to copy Paula Lazarich on all reference
requests to the Company.  The Company will thereafter respond to any such
reference request by providing the inquiring party with confirmation of your
dates of employment, positions held, salary, and other information as you and
Company may agree in writing.  You acknowledge that no representative of the
Company is authorized to provide a further reference on behalf of the
Company.  You further acknowledge and agree that to the extent any employee of
the Company provides a personal reference for you, you will not make or threaten
to make any claim or to take any other action against such Company employee
based on or relating to such personal reference.
 
10.           Amendment - This Letter Agreement shall be binding upon the
parties and may not be modified in any manner, except by an instrument in
writing of concurrent or subsequent date signed by duly authorized
representatives of the parties hereto.  This Letter Agreement is binding upon
and shall inure to the benefit of the parties and their respective agents,
assigns, heirs, executors, successors and administrators.

11.           Tax Provision – In connection with the severance benefits provided
to you pursuant to this Letter Agreement, the Company shall withhold and remit
to the tax authorities the amounts required under applicable law, and you shall
be responsible for all applicable taxes with respect to such severance benefits
under applicable law.  You acknowledge that you are not relying upon advice or
representation of the Company with respect to the tax treatment of any of the
severance benefits set forth herein.

12.           Section 409A - This Letter Agreement shall be interpreted to
ensure that the payments made to you are exempt from, or comply with, Section
409A of the Code; provided, however, that nothing in this Letter Agreement shall
be interpreted or construed to transfer any liability for any tax (including a
tax or penalty due as a result of a failure to comply with Section 409A) from
you to the Company or to any other individual or entity.
 
13.           Waiver of Rights - No delay or omission by the Company in
exercising any right under this Letter Agreement shall operate as a waiver of
that or any other right.  A waiver or consent given by the Company on any one
occasion shall be effective only in that instance and shall not be construed as
a bar to or waiver of any right on any other occasion.
 
14.           Validity - Should any provision of this Letter Agreement be
declared or be determined by any court of competent jurisdiction to be illegal
or invalid, the validity of the remaining parts, terms or provisions shall not
be affected thereby and said illegal or invalid part, term or provision shall be
deemed not to be a part of this Letter Agreement.
 
15.           Confidentiality - To the extent permitted by law, you understand
and agree that you and your agents and representatives shall maintain as
confidential the terms and contents of this Letter Agreement, and the contents
of the negotiations and discussions resulting in this Letter Agreement, and
shall not disclose such terms, contents, negotiations or discussions except to
the extent required by federal or state law or as otherwise agreed to in writing
by the Company or as specifically disclosed by the Company in any public
disclosure or public filing.  You are to advise any such person with whom you
have discussed this Letter Agreement of the existence and requirements of this
confidentiality provision, and you shall instruct any such person that he/she
shall not disclose the existence of this Letter Agreement or its terms to any
other person.  Disclosure by you to any other person or entity in violation of
the provisions of this Letter Agreement shall be deemed to be a breach of this
Letter Agreement.
 
16.           Nature of Agreement - You understand and agree that this Letter
Agreement is a severance agreement and does not constitute an admission of
liability or wrongdoing on the part of the Company.

17.           Indemnification - The Company agrees that you are not releasing
any claims you may have for indemnification under state law, the charter,
articles, or by-laws of the Company and/or its affiliates, or under the
Indemnity Agreement with the Company, which you signed on January 26, 2005, or
any applicable insurance policy providing directors’ and officers’ coverage;
provided, however, that (i) the Company’s execution of this Agreement is not a
concession or guaranty that you have any such rights to indemnification, (ii)
this Agreement does not create any additional rights to indemnification, and
(iii) the Company retains any defenses it may have to such indemnification or
coverage.

18.           Accrual of Benefits.  The parties acknowledge and agree that,
following the Termination Date, you shall not receive or accrue any benefits
other than those described herein and those required by law, including but not
limited to paid time off, insurance, holiday pay, or other benefits as provided
by the Company.

19.           No Workplace Injury.  You acknowledge that you have suffered no
workplace injuries during your employment by the Company and its
affiliates.  You agree that, as of the date of this Letter Agreement, you were
able to perform the essential functions of your job.

20.           Acknowledgments - You acknowledge that you have at least 21 days
to consider this Letter Agreement and that the Company hereby advises you in
writing to consult with an attorney of your own choosing prior to signing this
Letter Agreement.  You understand that you may revoke this Letter Agreement for
a period of seven days after you sign this Letter Agreement by notifying Donald
N. Sperling, Esquire in writing, and the Letter Agreement shall not be effective
or enforceable until the expiration of this seven-day revocation period.  You
understand and agree that by entering into this Letter Agreement, you are
waiving any and all rights or claims you might have under the Age Discrimination
in Employment Act, as amended by the Older Workers Benefits Protection Act, and
that you have received consideration beyond that to which you were previously
entitled.

21.           Voluntary Assent - You affirm that no other promises or agreements
of any kind have been made to or with you by any person or entity whatsoever to
cause you to sign this Letter Agreement and that you fully understand the
meaning and intent of this Letter Agreement.  You state and represent that you
have had an opportunity to fully discuss and review the terms of this Letter
Agreement with an attorney.  You further state and represent that you have
carefully read this Letter Agreement understand the contents herein, freely and
voluntarily assent to all of the terms and conditions hereof, and sign your name
of your own free act.

22.           Applicable Law - This Letter Agreement shall be interpreted and
construed by the laws of the State of Maryland, without regard to conflict of
laws provisions.

23.           Dispute Resolution - The parties agree to first submit any claims
against the other party or against any directors, officers, employees, agents or
representatives of the Company or its affiliates, relating in any way to this
Letter Agreement, to your retention by or services for the Company, to the
termination of such retention or services, or to any or all other claims that
one party might have against the other party, including, without limitation,
claims for employment or other discrimination under any federal, state or local
law, regulation, ordinance or executive order to nonbinding mediation.  Only
after the completion of such nonbinding mediation efforts may either party
initiate legal proceedings against the other party.  Notwithstanding the
foregoing, either party may institute legal proceedings against the other party
for claims for injunctive relief related to Paragraphs 4, 5, 7, and 15
herein.  The parties hereby irrevocably submit to and acknowledge and recognize
the exclusive jurisdiction of the courts of the State of Maryland, or if
appropriate, a federal court located in Maryland (which courts, for purposes of
this Letter Agreement, are the only courts of competent jurisdiction), over any
suit, action or other proceeding arising out of, under or in connection with
this Letter Agreement or the subject matter hereof, except as otherwise provided
herein.

24.           Entire Agreement - This Letter Agreement contains and constitutes
the entire understanding and agreement between the parties hereto with respect
to your severance benefits and the settlement of claims against the Company and
cancels and supersedes all previous oral and written negotiations, agreements
and commitments in connection therewith. Nothing in this Paragraph, however,
shall modify, cancel or supersede any of the documents referenced herein except
that your continuing obligations under Exhibit I to the letter dated August 11,
2006 shall be modified by Paragraph 4 herein.  Notwithstanding the foregoing,
the Consulting Agreement between you and the Company effective April 7, 2010
shall not be modified, canceled or superseded by this Letter Agreement.

* * * * *

If you are in agreement with the terms of this Letter Agreement, please sign the
Agreement on Page 7 and return it to Donald N. Sperling, Esquire at Stein
Sperling et al., 25 West Middle Lane, Rockville, Maryland  20850.  The Agreement
must be signed and returned to Donald N. Sperling, Esquire no later than 5pm on
April 28, 2010.

If you choose not to timely sign and return this Letter Agreement, or if you
timely revoke your acceptance of it in writing, you will not receive the
severance benefits described in Sections (a) through (e) of Paragraph 2,
above.  Regardless of whether you sign and return this Letter Agreement, or if
you sign it but timely revoke your acceptance, you are entitled to receive
unpaid salary and accrued but unused paid time off earned during the 2010
calendar year through the termination of your employment, less all applicable
employment taxes and other withholdings pursuant to federal and state
regulations, and reimbursement of outstanding business expenses.

If you have any questions about the matters covered in this Letter Agreement,
please contact Donald N. Sperling, Esquire at 301-838-3202.

Sincerely,
 
/s/Paula Lazarich

Paula Lazarich
Vice President Human Resources

NOTE:  THIS LETTER AGREEMENT CONTAINS A GENERAL RELEASE OF CLAIMS.  PLEASE READ
IT CAREFULLY BEFORE SIGNING BELOW.

I hereby agree to the terms and conditions set forth above.  I have been given
at least 21 days to consider the terms set forth in this Letter Agreement, and I
have chosen to execute it on the date below.  I agree and intend that this
Letter Agreement is a binding agreement between the Company and me if I do not
revoke my acceptance within seven days of my execution of the document.
 

 
/s/Denise Esposito_                                      4/28/10
Denise Esposito                                             Date

Please execute and return to return it to Donald N. Sperling, Esquire at Stein
Sperling et al., 25 West Middle Lane, Rockville, Maryland  20850, no later than
5pm on April 28, 2010.

 
 

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