Exhibit 10.3


 


PAXMEDICA, INC.


 


EMPLOYMENT AGREEMENT


 


EMPLOYMENT AGREEMENT
(this “Agreement”) dated as of November 19, 2022, between Paxmedica, Inc., a Delaware corporation (the “Company”),
and Stephen D. Sheldon (the “Executive”).


 


W I T N E S S E T H


 


WHEREAS, the Company
desires to employ the Executive as the Chief Financial Officer of the Company; and


 


WHEREAS, the Company
and the Executive desire to enter into this Agreement as to the terms of the Executive’s employment with the Company.


 


NOW, THEREFORE, in
consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:


 


1.             POSITION AND DUTIES.


 


(a)            During the Employment Term (as defined in Section 2 hereof), the Executive shall serve as the Chief Financial Officer
of the Company. In this capacity, the Executive shall have the duties, authorities and responsibilities as are required by the Executive’s
position, and such other duties, authorities and responsibilities as may reasonably be assigned to the Executive that are not inconsistent
with the Executive’s position as Chief Financial Officer of the Company. The Executive’s principal place of employment with
the Company shall be in New York; provided that the Executive may perform the Executive’s duties and responsibilities to
the Company as required hereunder remotely from the Executive’s residence in Massachusetts; provided further that the Executive
understands and agrees that the Executive may be required to travel from time to time for business purposes. The Executive shall report
directly to the Chief Executive Officer of the Company.


 


(b)           During the Employment Term, the Executive shall devote all of the Executive’s business time, energy, business judgment,
knowledge and skill and the Executive’s best efforts to the performance of the Executive’s duties with the Company, provided
that the foregoing shall not prevent the Executive from (i) serving on the boards of directors of non-profit organizations and, with the
prior written approval of the Board of Directors of the Company (the “Board”), other for profit companies, (ii) participating
in charitable, civic, educational, professional, community or industry affairs and (iii) managing the Executive’s passive personal
investments so long as such activities in the aggregate do not interfere or conflict with the Executive’s duties hereunder or create
a potential business or fiduciary conflict.


 


2.             EMPLOYMENT TERM. The Company agrees to employ the Executive pursuant to the terms of this Agreement, and the
Executive agrees to be so employed, for a term of two (2) years (the “Initial Term”) commencing on November 1, 2022
(the “Effective Date”). On each anniversary of the Effective Date following the Initial Term, the term of this Agreement
shall be automatically extended for successive one-year periods, provided, however, that either party hereto may elect not
to extend this Agreement by giving written notice to the other party at least thirty (30) days prior to any such anniversary date. Notwithstanding
the foregoing, the Executive’s employment hereunder may be earlier terminated in accordance with Section 7 hereof, subject
to Section 8 hereof. The period of time between the Effective Date and the termination of the Executive’s employment hereunder
shall be referred to herein as the “Employment Term.”


 






    1


     


    

 


3.             BASE SALARY. During the Employment Term, the Company agrees to pay the Executive a base salary at an annual rate
of three hundred twenty-five thousand dollars ($325,000), payable in accordance with the regular payroll practices of the Company, but
not less frequently than monthly. The Executive’s Base Salary shall be subject to annual review by the Board (or a committee thereof),
and may be adjusted from time to time by the Board. The base salary as determined herein and adjusted from time to time shall constitute
 “Base Salary” for purposes of this Agreement.


 


4.             ANNUAL BONUS. During the Employment Term, the Executive shall be eligible to receive an annual discretionary
incentive payment under the Company’s annual bonus plan as may be in effect from time to time (the “Annual Bonus”)
based on a target bonus opportunity of thirty-five percent (35%) of the Executive’s Base Salary (the “Target Bonus”),
upon the attainment of one or more pre-established performance goals established by the Board or the Company’s Compensation Committee
(the “Committee”) in its sole discretion. Except as otherwise expressly stated herein, payment of any Annual Bonus
shall be subject to the Executive’s continuous employment with the Company through the date of any such payment.


 


5.             EQUITY AWARDS. During the Employment Term, the Executive shall be eligible to participate in the PaxMedica, Inc.
Amended and Restated 2020 Omnibus Equity Incentive Plan (the “Plan”). As soon as reasonably practicable following the
Effective Date, the Board will recommend to the Compensation Committee thereof that the Executive receive a grant of 135,000 restricted
stock units of the Company under the Plan having a fair market value as of the date of grant (as determined under the Plan). Such grant
shall be made pursuant to the applicable terms and conditions of the Plan and the applicable award agreement by and between the Company
and the Executive granting such restricted stock units.


 


6.             EMPLOYEE BENEFITS.


 


(a)            BENEFIT PLANS. During the Employment Term, the Executive shall be entitled to participate in any employee benefit
plan that the Company has adopted or may adopt, maintain or contribute to for the benefit of its employees generally, subject to satisfying
the applicable eligibility requirements, except to the extent such plans are duplicative of the benefits otherwise provided hereunder.
The Executive’s participation will be subject to the terms of the applicable plan documents and generally applicable Company policies.
Notwithstanding the foregoing, the Company may modify or terminate any employee benefit plan at any time.


 


(b)            PAID TIME OFF. During the Employment Term, the Executive shall be entitled to four (4 weeks of paid time off per
calendar year (as prorated for partial years) in accordance with the Company’s policy on accrual and use applicable to employees
as in effect from time to time.






    2


     


    

 


(c)           BUSINESS EXPENSES. Upon presentation of reasonable substantiation and documentation as the Company may specify from
time to time, the Executive shall be reimbursed in accordance with the Company’s expense reimbursement policy, for all reasonable
out-of-pocket business expenses incurred and paid by the Executive during the Employment Term and in connection with the performance of
the Executive’s duties hereunder.


 


7.            TERMINATION. The Executive’s employment and the Employment Term shall terminate on the first of the following
to occur:


 


(a)           DISABILITY. Upon ten (10) days’ prior written notice by the Company to the Executive of termination due to
Disability. For purposes of this Agreement, “Disability” shall be defined as the inability of the Executive to have
performed the Executive’s material duties hereunder due to a physical or mental injury, infirmity or incapacity for one hundred
eighty (180) days (including weekends and holidays) in any 365-day period as determined by the Board in its reasonable discretion. The
Executive shall cooperate in all respects with the Company if a question arises as to whether the Executive has become disabled (including,
without limitation, submitting to reasonable examinations by one or more medical doctors and other health care specialists selected by
the Company and authorizing such medical doctors and other health care specialists to discuss the Executive’s condition with the
Company).


 


(b)           DEATH. Automatically upon the date of death of the Executive.


 


(c)           CAUSE. Immediately upon written notice by the Company to the Executive of a termination for Cause. “Cause”
shall mean:


 


(i)            the Executive’s willful misconduct or gross negligence in the performance of the Executive’s duties to the Company;


 


(ii)           the Executive’s failure to perform the Executive’s duties to the Company or to follow the lawful directives
of the Board or any executive to which the Executive reports (other than as a result of death or Disability);


 


(iii)          commission
of, indictment for, conviction of, or pleading of guilty or nolo contendere to, a felony or any crime involving moral turpitude;


 


(iv)          the Executive’s failure to cooperate in any audit or investigation of the business or financial practices of the Company
or any of its subsidiaries;


 


(v)           the Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s
or any of its affiliates’ premises or while performing the Executive’s duties and responsibilities hereunder, regardless of
location;


 


(vi)          the Executive’s performance of any material act of theft, embezzlement, fraud, malfeasance, dishonesty or misappropriation
of the Company’s property; or


 






    3


     


    

 


(vii)         breach of this Agreement or any other agreement with the Company or its affiliates, or a violation of the Company’s
code of conduct or other written policy.


 


(d)           WITHOUT CAUSE. Immediately upon written notice by the Company to the Executive of an involuntary termination without
Cause (other than for death or Disability).


 


(e)           GOOD REASON. Upon written notice by the Executive to the Company of a termination for Good Reason. “Good
Reason” shall mean the occurrence of any of the following events, without the express written consent of the Executive, unless
such events are fully corrected in all material respects by the Company within thirty (30) days following written notification by the
Executive to the Company of the occurrence of one of the reasons set forth below:


 


(i)            material diminution in the Executive’s Base Salary or Target Bonus (which, for the avoidance of doubt, shall not include
any reduction in or nonpayment of Annual Bonus resulting from a failure to achieve the applicable target performance matrix or “across
the board” reductions affecting executive level employees of Company, or any of its affiliates); or


 


(ii)           material diminution in the Executive’s duties, authorities or responsibilities (other than temporarily while physically
or mentally incapacitated or as required by applicable law).


 


The Executive shall provide
the Company with a written notice detailing the specific circumstances alleged to constitute Good Reason within sixty (60) days after
the first occurrence of such circumstances, and actually terminate employment within thirty (30) days following the expiration of the
Company’s thirty (30)-day cure period described above. Otherwise, any claim of such circumstances as “Good Reason” shall
be deemed irrevocably waived by the Executive.


 


(f)            WITHOUT GOOD REASON. Upon thirty (30) days’ prior written notice by the Executive to the Company of the Executive’s
voluntary termination of employment without Good Reason (which the Company may, in its sole discretion, make effective earlier than any
notice date).


 


(g)           EXPIRATION OF EMPLOYMENT TERM; NON-EXTENSION OF AGREEMENT. Upon the expiration of the Employment Term due to a non-extension
of the Agreement by the Company or the Executive pursuant to the provisions of Section 2 hereof.


 


8.             CONSEQUENCES OF TERMINATION.


 


(a)           DEATH. In the event that the Executive’s employment and the Employment Term ends on account of the Executive’s
death, the Executive or the Executive’s estate, as the case may be, shall be entitled to the following (with the amounts due under
Sections 8(a)(i) through 8(a)(iv) hereof to be paid within sixty (60) days following termination of employment, or such
earlier date as may be required by applicable law):


 


(i)            any unpaid Base Salary through the date of termination;


 






    4


     


    

 


(ii)           any Annual Bonus earned but unpaid with respect to the fiscal year ending on or preceding the date of termination;


 


(iii)          reimbursement for any unreimbursed business expenses incurred through the date of termination;


 


(iv)          any accrued but unused vacation time in accordance with Company policy; and


 


(v)           all other accrued and vested payments, benefits or fringe benefits to which the Executive shall be entitled under the terms
of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant or this Agreement (collectively,
Sections 8(a)(i) through 8(a)(v) hereof shall be hereafter referred to as the “Accrued Benefits”).


 


(b)           DISABILITY. In the event that the Executive’s employment and/or Employment Term ends on account of the Executive’s
Disability, the Company shall pay or provide the Executive with the Accrued Benefits.


 


(c)           TERMINATION FOR CAUSE OR WITHOUT GOOD REASON OR AS A RESULT OF EMPLOYEE NON-EXTENSION OF THIS AGREEMENT. If the Executive’s
employment is terminated (x) by the Company for Cause, (y) by the Executive without Good Reason, or (z) as a result of the Executive’s
non-extension of the Employment Term as provided in Section 2 hereof, the Company shall pay to the Executive the Accrued Benefits
other than the benefit described in Section 8(a)(ii) hereof.


 


(d)           TERMINATION WITHOUT CAUSE OR FOR GOOD REASON OR AS A RESULT OF COMPANY NON-EXTENSION OF THIS AGREEMENT. If the Executive’s
employment by the Company is terminated (x) by the Company other than for Cause, (y) by the Executive for Good Reason, or (z) as a result
of the Company’s non-extension of the Employment Term as provided in Section 2 hereof, the Company shall pay or provide the
Executive with the following, subject to the provisions of Section 21 hereof:


 


(i)            the Accrued Benefits;


 


(ii)           subject to the Executive’s continued compliance with the obligations in Sections 9, 10 and 11
hereof, an amount equal to the Executive’s monthly Base Salary rate (but not as an employee), paid monthly for a period of six (6)
months following such termination; provided that to the extent that the payment of any amount constitutes “nonqualified deferred
compensation” for purposes of Code Section 409A (as defined in Section 22 hereof), any such payment scheduled to occur during
the first sixty (60) days following the termination of employment shall not be paid until the first regularly scheduled pay period following
the sixtieth (60th) day following such termination and shall include payment of any amount that was otherwise scheduled to
be paid prior thereto;


 


(iii)          subject to (A) the Executive’s timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), (B) the Executive’s continued copayment of premiums at the same level and
cost to the Executive as if the Executive were an employee of the Company (excluding, for purposes of calculating cost, an employee’s
ability to pay premiums with pre-tax dollars), and (C) the Executive’s continued compliance with the obligations in Sections
9, 10 and 11 hereof, continued participation in the Company’s group health plan (to the extent permitted under
applicable law and the terms of such plan) which covers the Executive (and the Executive’s eligible dependents) for a period of
six (6) months, provided that the Executive is eligible and remains eligible for COBRA coverage; and provided, further,
that in the event that the Executive obtains other employment that offers group health benefits, such continuation of coverage by the
Company under this Section 8(d)(iv) shall immediately cease. Notwithstanding the foregoing, the Company shall not be obligated
to provide the continuation coverage contemplated by this Section 8(d)(iii) if it would result in the imposition of excise taxes
on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable Care Act of 2010,
as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable) and, in such case, the
Company shall provide the Executive with a monthly lump sum cash payment equal to the monthly cost of such coverage during such six (6)-month
period.


 






    5


     


    

 


Payments and benefits provided
in this Section 8(d) shall be in lieu of any termination or severance payments or benefits for which the Executive may be eligible
under any of the plans, policies or programs of the Company or under the Worker Adjustment Retraining Notification Act of 1988 or any
similar state statute or regulation.


 


(e)            CODE SECTION 280G. Notwithstanding any other provision of this Agreement to the contrary, in the event that any payment
that is either received by the Executive or paid by the Company on the Executive’s behalf or any property, or any other benefit
provided to the Executive under this Agreement or under any other plan, arrangement or agreement with the Company or any other person
whose payments or benefits are treated as contingent on a change of ownership or control of the Company (or in the ownership of a substantial
portion of the assets of the Company) or any person affiliated with the Company or such person (but only if such payment or other benefit
is in connection with the Executive’s employment by the Company) (collectively the “Company Payments”), will
be subject to the tax imposed by Section 4999 of the Code (and any similar tax that may hereafter be imposed by any taxing authority),
then the Executive will be entitled to receive either (i) the full amount of the Company Payments, or (ii) a portion of the Company Payments
having a value equal to $1 less than three (3) times the Executive’s “base amount” (as such term is defined in Section
280G(b)(3)(A) of the Code), whichever of clauses (i) and (ii), after taking into account applicable federal, state, and local income taxes
and the excise tax imposed by Section 4999 of the Code, results in the receipt by the Executive on an after-tax basis, of the greatest
portion of the Company Payments. Any determination required under this Section 8(e) shall be made in writing by the independent
public accountant of the Company (the “Accountants”), whose determination shall be conclusive and binding for all purposes
upon the Company and the Executive. For purposes of making any calculation required by this Section 8(e), the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good-faith interpretations concerning
the application of Sections 280G and 4999 of the Code. If there is a reduction of the Company Payments pursuant to this Section 8(e),
such reduction shall occur in the following order: (A) any cash severance payable by reference to the Executive’s Base Salary or
Annual Bonus, (B) any other cash amount payable to the Executive, (C) any employee benefit valued as a “parachute payment,”
and (D) acceleration of vesting of any outstanding equity award.


 






    6


     


    

 


(f)            OTHER OBLIGATIONS. Upon any termination of the Executive’s employment with the Company, the Executive shall
promptly resign from any position as an officer, director or fiduciary of any Company-related entity.


 


(g)           EXCLUSIVE REMEDY. The amounts payable to the Executive following termination of employment and the Employment Term
hereunder pursuant to Sections 7 and 8 hereof shall be in full and complete satisfaction of the Executive’s rights
under this Agreement and any other claims that the Executive may have in respect of the Executive’s employment with the Company
or any of its affiliates, and the Executive acknowledges that such amounts are fair and reasonable, and are the Executive’s sole
and exclusive remedy, in lieu of all other remedies at law or in equity, with respect to the termination of the Executive’s employment
hereunder or any breach of this Agreement.


 


9.             RELEASE; NO MITIGATION. Any and all amounts payable and benefits or additional rights provided pursuant to this
Agreement beyond the Accrued Benefits (other than amounts described in Section 8(a)(ii) hereof) shall only be payable if the Executive
delivers to the Company and does not revoke a general release of claims in favor of the Company in substantially the form attached on
Exhibit A hereto. Such release shall be executed and delivered (and no longer subject to revocation, if applicable) within sixty
(60) days following termination. In no event shall the Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, nor shall the amount of any payment
hereunder be reduced by any compensation earned by the Executive as a result of employment by a subsequent employer, except as provided
in Section 8(d)(iii) hereof.


 


10.           RESTRICTIVE COVENANTS.


 


(a)            CONFIDENTIALITY. During the course of the Executive’s
employment with the Company, the Executive will have access to Confidential Information. For purposes of this Agreement, “Confidential
Information” means all data, information, ideas, concepts, discoveries, trade secrets, inventions (whether or not patentable
or reduced to practice), innovations, improvements, know-how, developments, techniques, methods, processes, treatments, drawings, sketches,
specifications, designs, plans, patterns, models, plans and strategies, and all other confidential or proprietary information or trade
secrets in any form or medium (whether merely remembered or embodied in a tangible or intangible form or medium) whether now or hereafter
existing, relating to or arising from the past, current or potential business, activities and/or operations of the Company or any of its
affiliates, including, without limitation, any such information relating to or concerning finances, sales, marketing, advertising, transition,
promotions, pricing, personnel, customers, suppliers, vendors, raw partners and/or competitors. The Executive agrees that the Executive
shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course
of the Executive’s assigned duties and for the benefit of the Company, either during the period of the Executive’s employment
or at any time thereafter, any Confidential Information or other confidential or proprietary information received from third parties subject
to a duty on the Company’s and its subsidiaries’ and affiliates’ part to maintain the confidentiality of such information,
and to use such information only for certain limited purposes, in each case, which shall have been obtained by the Executive during the
Executive’s employment by the Company (or any predecessor). The foregoing shall not apply to information that (i) was known to the
public prior to its disclosure to the Executive; (ii) becomes generally known to the public subsequent to disclosure to the Executive
through no wrongful act of the Executive or any representative of the Executive; or (iii) the Executive is required to disclose by applicable
law, regulation or legal process (provided that the Executive provides the Company with prior notice of the contemplated disclosure and
cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).


 






    7


     


    

 


(b)           NONCOMPETITION. The Executive acknowledges that (i) the Executive performs services of a unique nature for the Company
that are irreplaceable, and that the Executive’s performance of such services to a competing business will result in irreparable
harm to the Company, (ii) the Executive has had and will continue to have access to Confidential Information which, if disclosed, would
unfairly and inappropriately assist in competition against the Company or any of its affiliates, (iii) in the course of the Executive’s
employment by a competitor, the Executive would inevitably use or disclose such Confidential Information, (iv) the Company and its affiliates
have substantial relationships with their customers and the Executive has had and will continue to have access to these customers, (v)
the Executive has received and will receive specialized training from the Company and its affiliates, and (vi) the Executive has generated
and will continue to generate goodwill for the Company and its affiliates in the course of the Executive’s employment. Accordingly,
during the Executive’s employment hereunder and for a period of one (1) year thereafter, the Executive agrees that the Executive
will not, directly or indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant, independent contractor
or otherwise, and whether or not for compensation) or render services to any person, firm, corporation or other entity, in whatever form,
engaged in competition with the Company or any of its subsidiaries or affiliates or in any other material business in which the Company
or any of its subsidiaries or affiliates is engaged on the date of termination or in which they have planned, on or prior to such date,
to be engaged in on or after such date, in any locale of any country in which the Company conducts business. Notwithstanding the foregoing,
nothing herein shall prohibit the Executive from being a passive owner of not more than one percent (1%) of the equity securities of a
publicly traded corporation engaged in a business that is in competition with the Company or any of its subsidiaries or affiliates, so
long as the Executive has no active participation in the business of such corporation.


 


(c)           NONSOLICITATION; NONINTERFERENCE. (i) During the Executive’s employment with the Company and for a period of
one (1) year thereafter, the Executive agrees that the Executive shall not, except in the furtherance of the Executive’s duties
hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, solicit, aid or induce
any customer of the Company or any of its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of
its subsidiaries or affiliates from another person, firm, corporation or other entity or assist or aid any other persons or entity in
identifying or soliciting any such customer.


 


(ii)           During the Executive’s employment with the Company and for a period of two (2) years thereafter, the Executive agrees
that the Executive shall not, except in the furtherance of the Executive’s duties hereunder, directly or indirectly, individually
or on behalf of any other person, firm, corporation or other entity, (A) solicit, aid or induce any employee, representative or agent
of the Company or any of its subsidiaries or affiliates to leave such employment or retention or to accept employment with or render services
to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative
or agent, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or
soliciting any such employee, representative or agent, or (B) interfere, or aid or induce any other person or entity in interfering, with
the relationship between the Company or any of its subsidiaries or affiliates and any of their respective vendors, joint venturers or
licensors. An employee, representative or agent shall be deemed covered by this Section 10(c)(ii) while so employed or retained
and for a period of six (6) months thereafter.


 






    8


     


    

 


(iii)           Notwithstanding the foregoing, the provisions of this Section 10(c) shall not be violated by (A) general advertising
or solicitation not specifically targeted at Company-related persons or entities or (B) the Executive serving as a reference, upon request,
for any employee of the Company or any of its subsidiaries or affiliates so long as such reference is not for an entity that is employing
or retaining the Executive.


 


(d)           NONDISPARAGEMENT. The Executive agrees not to make negative comments or otherwise disparage the Company or its officers,
directors, employees, shareholders, agents or products other than in the good faith performance of the Executive’s duties to the
Company while the Executive is employed by the Company. The foregoing shall not be violated by truthful statements in response to legal
process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions
in connection with such proceedings).


 


(e)           INVENTIONS. (i) The Executive acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements,
work products, developments, software, know-how, processes, techniques, methods, works of authorship and other work product, whether patentable
or unpatentable, (A) that are reduced to practice, created, invented, designed, developed, contributed to, or improved with the use of
any Company resources and/or within the scope of the Executive’s work with the Company or that relate to the business, operations
or actual or demonstrably anticipated research or development of the Company, and that are made or conceived by the Executive, solely
or jointly with others, during the Employment Term, or (B) suggested by any work that the Executive performs in connection with the Company,
either while performing the Executive’s duties with the Company or on the Executive’s own time, but only insofar as the Inventions
are related to the Executive’s work as an employee or other service provider to the Company, shall belong exclusively to the Company
(or its designee), whether or not patent or other applications for intellectual property protection are filed thereon (the “Inventions”).
The Executive will keep full and complete written records (the “Records”), in the manner prescribed by the Company,
of all Inventions, and will promptly disclose all Inventions completely and in writing to the Company. The Records shall be the sole and
exclusive property of the Company, and the Executive will surrender them upon the termination of the Employment Term, or upon the Company’s
request. The Executive irrevocably conveys, transfers and assigns to the Company the Inventions and all patents or other intellectual
property rights that may issue thereon in any and all countries, whether during or subsequent to the Employment Term, together with the
right to file, in the Executive’s name or in the name of the Company (or its designee), applications for patents and equivalent
rights (the “Applications”). The Executive will, at any time during and subsequent to the Employment Term, make such
applications, sign such papers, take all rightful oaths, and perform all other acts as may be requested from time to time by the Company
to perfect, record, enforce, protect, patent or register the Company’s rights in the Inventions, all without additional compensation
to the Executive from the Company. The Executive will also execute assignments to the Company (or its designee) of the Applications, and
give the Company and its attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for the Company’s
benefit, all without additional compensation to the Executive from the Company, but entirely at the Company’s expense.


 






    9


     


    

 


(ii)           In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the United
States, on behalf of the Company and the Executive agrees that the Company will be the sole owner of the Inventions, and all underlying
rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations
to the Executive. If the Inventions, or any portion thereof, are deemed not to be Work for Hire, or the rights in such Inventions do not
otherwise automatically vest in the Company, the Executive hereby irrevocably conveys, transfers and assigns to the Company, all rights,
in all media now known or hereinafter devised, throughout the universe and in perpetuity, in and to the Inventions, including, without
limitation, all of the Executive’s right, title and interest in the copyrights (and all renewals, revivals and extensions thereof)
to the Inventions, including, without limitation, all rights of any kind or any nature now or hereafter recognized, including, without
limitation, the unrestricted right to make modifications, adaptations and revisions to the Inventions, to exploit and allow others to
exploit the Inventions and all rights to sue at law or in equity for any infringement, or other unauthorized use or conduct in derogation
of the Inventions, known or unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages
therefrom. In addition, the Executive hereby waives any so-called “moral rights” with respect to the Inventions. The Executive
hereby waives any and all currently existing and future monetary rights in and to the Inventions and all patents and other registrations
for intellectual property that may issue thereon, including, without limitation, any rights that would otherwise accrue to the Executive’s
benefit by virtue of the Executive being an employee of or other service provider to the Company.


 


(f)            RETURN OF COMPANY PROPERTY. On the date of the Executive’s termination of employment with the Company for any
reason (or at any time prior thereto at the Company’s request), the Executive shall return all property belonging to the Company
or its affiliates (including, but not limited to, any Company-provided laptops, computers, cell phones, wireless electronic mail devices
or other equipment, or documents and property belonging to the Company). The Executive may retain the Executive’s rolodex and similar
address books provided that such items only include contact information.


 


(g)           REASONABLENESS OF COVENANTS. In signing this Agreement, the Executive gives the Company assurance that the Executive
has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed under this Section
10 hereof. The Executive agrees that these restraints are necessary for the reasonable and proper protection of the Company and its
affiliates and their Confidential Information and that each and every one of the restraints is reasonable in respect to subject matter,
length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent the Executive from obtaining
other suitable employment during the period in which the Executive is bound by the restraints. The Executive acknowledges that each of
these covenants has a unique, very substantial and immeasurable value to the Company and its affiliates and that the Executive has sufficient
assets and skills to provide a livelihood while such covenants remain in force. The Executive further covenants that the Executive will
not challenge the reasonableness or enforceability of any of the covenants set forth in this Section 10, and that the Executive
will reimburse the Company and its affiliates for all costs (including reasonable attorneys’ fees) incurred in connection with any
action to enforce any of the provisions of this Section 10 if either the Company and/or its affiliates prevails on any material
issue involved in such dispute or if the Executive challenges the reasonableness or enforceability of any of the provisions of this Section
10. It is also agreed that each of the Company’s affiliates will have the right to enforce all of the Executive’s obligations
to that affiliate under this Agreement, including without limitation pursuant to this Section 10. The Executive acknowledges that
the Executive has the right to consult with counsel prior to signing this Agreement and that the Executive has had an opportunity to do
so. The Executive further acknowledges that the Executive has been given at least ten (10) business days to consider whether to sign this
Agreement.


 






    10


     


    

 


(h)           REFORMATION. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section
10 is excessive in duration or scope or is unreasonable or unenforceable under applicable law, it is the intention of the parties
that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the laws of
that state.


 


(i)            TOLLING. In the event of any violation of the provisions of this Section 10, the Executive acknowledges and
agrees that the post-termination restrictions contained in this Section 10 shall be extended by a period of time equal to the period
of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period
shall be tolled during any period of such violation.


 


(j)            SURVIVAL OF PROVISIONS. The obligations contained in Sections 10 and 11 hereof shall survive the termination
or expiration of the Employment Term and the Executive’s employment with the Company and shall be fully enforceable thereafter.


 


11.          COOPERATION. Upon the receipt of reasonable notice from the Company (including outside counsel), the Executive
agrees that while employed by the Company and thereafter, the Executive will respond and provide information with regard to matters in
which the Executive has knowledge as a result of the Executive’s employment with the Company, and will provide reasonable assistance
to the Company, its affiliates and their respective representatives in defense of any claims that may be made against the Company or its
affiliates, and will assist the Company and its affiliates in the prosecution of any claims that may be made by the Company or its affiliates,
to the extent that such claims may relate to the period of the Executive’s employment with the Company (collectively, the “Claims”).
The Executive agrees to promptly inform the Company if the Executive becomes aware of any lawsuits involving Claims that may be filed
or threatened against the Company or its affiliates. The Executive also agrees to promptly inform the Company (to the extent that the
Executive is legally permitted to do so) if the Executive is asked to assist in any investigation of the Company or its affiliates (or
their actions) or another party attempts to obtain information or documents from the Executive (other than in connection with any litigation
or other proceeding in which the Executive is a party-in-opposition) with respect to matters the Executive believes in good faith to relate
to any investigation of the Company or its affiliates, in each case, regardless of whether a lawsuit or other proceeding has then been
filed against the Company or its affiliates with respect to such investigation, and shall not do so unless legally required. During the
pendency of any litigation or other proceeding involving Claims, the Executive shall not communicate with anyone (other than the Executive’s
attorneys and tax and/or financial advisors and except to the extent that the Executive determines in good faith is necessary in connection
with the performance of the Executive’s duties hereunder) with respect to the facts or subject matter of any pending or potential
litigation or regulatory or administrative proceeding involving the Company or any of its affiliates without giving prior written notice
to the Company or the Company’s counsel. Upon presentation of appropriate documentation, the Company shall pay or reimburse the
Executive for all reasonable out-of-pocket travel, duplicating or telephonic expenses incurred by the Executive in complying with this
Section 11.


 






    11


     


    

 


12.          EQUITABLE RELIEF AND OTHER REMEDIES. The Executive acknowledges and agrees that the Company’s remedies
at law for a breach or threatened breach of any of the provisions of Section 10 or Section 11 hereof would be inadequate
and, in recognition of this fact, the Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies
at law, the Company, without posting any bond or other security, shall be entitled to obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available,
without the necessity of showing actual monetary damages. In the event of a violation by the Executive of Section 10 or Section
11 hereof, any severance being paid to the Executive pursuant to this Agreement or otherwise shall immediately cease, and any severance
previously paid to the Executive shall be immediately repaid to the Company.


 


13.          NO ASSIGNMENTS. This Agreement is personal to each of the parties hereto. Except as provided in this Section
13 hereof, no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the
other party hereto. The Company may assign this Agreement to any successor to all or substantially all of the business and/or assets of
the Company, provided that the Company shall require such successor to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used
in this Agreement, “Company” shall mean the Company and any successor to its business and/or assets, which assumes
and agrees to perform the duties and obligations of the Company under this Agreement by operation of law or otherwise.


 


14.          NOTICE. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery,
if delivered by hand, (b) on the date of transmission, if delivered by confirmed facsimile or electronic mail, (c) on the first business
day following the date of deposit, if delivered by guaranteed overnight delivery service, or (d) on the fourth business day following
the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:


 






    12


     


    

 


If to the Executive:


 


At the address (or to the facsimile number) shown
 in the books and records of the Company.


 


If to the Company:


 


PaxMedica, Inc.


303 South Broadway, Suite 125


Tarrytown,


NY 10591


Facsimile:


Attention: Howard Weisman


Email: hweisman@paxmedica.com 


 



or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.


 


15.          SECTION HEADINGS; INCONSISTENCY. The section headings used in
this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.
In the event of any inconsistency between the terms of this Agreement and any form, award, plan or policy of the Company, the terms of
this Agreement shall govern and control.


 


16.           SEVERABILITY. The provisions of this Agreement shall be deemed
severable. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity, legality
or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision
of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable
to the fullest extent permitted by applicable law.


 


17.           COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.


 


18.           GOVERNING LAW; JURISDICTION. This Agreement, the rights and obligations of the parties hereto, and any claims
or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Delaware (without regard
to its choice of law provisions). Each of the parties agrees that any dispute between the parties shall be resolved only in the courts
of the State of New York or the United States District Court for the Southern District of New York and the appellate courts having jurisdiction
of appeals in such courts. In that context, and without limiting the generality of the foregoing, each of the parties hereto irrevocably
and unconditionally (a) submits in any proceeding relating to this Agreement or the Executive’s employment by the Company or any
affiliate, or for the recognition and enforcement of any judgment in respect thereof (a “Proceeding”), to the exclusive
jurisdiction of the courts of the State of New York, the court of the United States of America for the Southern District of New York,
and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such Proceeding
shall be heard and determined in such New York State court or, to the extent permitted by law, in such federal court, (b) consents that
any such Proceeding may and shall be brought in such courts and waives any objection that the Executive or the Company may now or thereafter
have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court
and agrees not to plead or claim the same, (c) waives all right to trial by jury in any Proceeding (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the Executive’s employment by the Company or any affiliate of the Company,
or the Executive’s or the Company’s performance under, or the enforcement of, this Agreement, (d) agrees that service of process
in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to such party at the Executive’s or the Company’s address as provided in Section 14
hereof, and (e) agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted
by the laws of the State of New York.


 






    13


     


    

 


19.          MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by the Executive and such officer or director as may be designated by the Board. No waiver
by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. This Agreement together with all exhibits hereto sets forth the entire agreement of the parties hereto
in respect of the subject matter contained herein and supersedes any and all prior agreements or understandings between the Executive
and the Company with respect to the subject matter hereof. No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.


 


20.          REPRESENTATIONS. The Executive represents and warrants to the Company that (a) the Executive has the legal right
to enter into this Agreement and to perform all of the obligations on the Executive’s part to be performed hereunder in accordance
with its terms, and (b) the Executive is not a party to any agreement or understanding, written or oral, and is not subject to any restriction,
which, in either case, could prevent the Executive from entering into this Agreement or performing all of the Executive’s duties
and obligations hereunder. In addition, the Executive acknowledges that the Executive is aware of Section 304 (Forfeiture of Certain Bonuses
and Profits) of the Sarbanes-Oxley Act of 2002 and the right of the Company to be reimbursed for certain payments to the Executive in
compliance therewith.


 


21.          TAX MATTERS.


 


(a)           WITHHOLDING. The Company may withhold from any and all amounts
payable under this Agreement or otherwise such federal, state and local taxes as may be required to be withheld pursuant to any applicable
law or regulation.


 


(b)           SECTION 409A COMPLIANCE.


 


(i)            The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section 409A
and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the
maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. To the extent that any provision hereof is
modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably
possible, maintain the original intent and economic benefit to the Executive and the Company of the applicable provision without violating
the provisions of Code Section 409A. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that
may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A.


 






    14


     


    

 


(ii)           A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing
for the payment of any amounts or benefits that constitute “nonqualified deferred compensation” for purposes of Code Section
409A upon or following a termination of employment unless such termination is also a “separation from service” within the
meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination
of employment” or like terms shall mean “separation from service.” Notwithstanding anything to the contrary in this
Agreement, if the Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term
under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered deferred compensation
under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall not be made or provided
until the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation
from service” of the Executive, and (B) the date of the Executive’s death, to the extent required under Code Section 409A.
Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this Section 21(b)(ii) (whether
they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to
the Executive in a lump sum and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with
the normal payment dates specified for them herein.


 


(iii)          To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred
compensation” for purposes of Code Section 409A, (A) all expenses or other reimbursements hereunder shall be made on or prior to
the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (B) any right to reimbursement
or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible
for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or
in-kind benefits to be provided, in any other taxable year.


 


(iv)          For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement
shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a
payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion
of the Company.


 






    15


     


    

 


(v)           Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement
that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other
amount unless otherwise permitted by Code Section 409A.


 


22.          TRADE SECRETS; WHISTLEBLOWING. Notwithstanding anything to the contrary in this Agreement or otherwise, the Executive
understands and acknowledges that the Company has informed the Executive that an individual shall not be held criminally or civilly liable
under any federal or state trade secret law for (i) the disclosure of a trade secret that is made in confidence to a federal, state, or
local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law or (ii)
the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding if such filing is
made under seal. Additionally, notwithstanding anything to the contrary in this Agreement or otherwise, the Executive understands and
acknowledges that the Company has informed the Executive that an individual who files a lawsuit for retaliation by an employer for reporting
a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the
court proceeding if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except
pursuant to a court order. Nothing in this Agreement or any other agreement between the Executive and the Company shall be interpreted
to limit or interfere with the Executive’s right to report good faith suspected violations of law to applicable government agencies,
including the Equal Employment Opportunity Commission, National Labor Relation Board, the Occupational Safety and Health Administration,
the Securities and Exchange Commission or any other applicable federal, state or local governmental agency, in accordance with the provisions
of any “whistleblower” or similar provisions of local, state or federal law. The Executive may report such suspected violations
of law, even if such action would require the Executive to share the Company’s proprietary information or trade secrets with the
government agency, provided that any such information is protected to the maximum extent permissible and any such information constituting
trade secrets is filed only under seal in connection with any court proceeding. Lastly, nothing in this Agreement or any other agreement
between the Executive and the Company will be interpreted to prohibit the Executive from collecting any financial incentives in connection
with making such reports or require the Executive to notify or obtain approval by the Company prior to making such reports to a government
agency.


 


23.          RECOVERY OF AMOUNTS PAID. The Executive acknowledges and agrees that the Executive will be subject to any other
clawback policy that may be adopted by the Board during the Employment Term.


 


 


[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]


 






    16


     


    

 





IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the date first written above.


 


	 	PAXMEDICA, INC.  
	 	 
	 	 
	 	By:	/s/ Howard J. Weisman
	 	Name:	Howard J. Weisman
	 	Title:	Chief Executive Officer
	 	 
	 	 
	 	STEPHEN D. SHELDON.  
	 	 
	 	 
	 	/s/ Stephen D. Sheldon
	 	Stephen D. Sheldon




 


 


[Signature Page to Employment
Agreement]