Exhibit 10-AE

 

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November 10, 2012

Mark Gelder, M.D.

Dear Mark:

It is with great pleasure that we extend an offer of employment with A.P.
Pharma, Inc. for the position of Chief Medical Officer of A.P. Pharma, Inc.,
reporting to the company’s Chief Executive Officer. If you accept, it is
expected that your first day of employment will be no later than November 26,
2012. Your employment will be “at-will,” meaning that either you or the Company
can terminate the employment relationship at any time, with or without cause.

You will receive an annual salary of $350,000.00, payable on a bi-weekly basis
in accordance with the Company’s normal payroll practices. In addition,
following your first day of employment you will receive a $40,000.00 hiring
bonus. Subject to your commencement of employment, you will be granted an option
to purchase up to 4,000,000 shares of A.P. Pharma Common Stock, with an exercise
price equal to the fair value of our common stock on the date of grant. The
option will vest over four years, with 25% cliff vesting at the end of the first
year, and then the remaining 75% vesting monthly over the final three years. You
will participate in the company’s annual management cash bonus program, and will
be eligible to receive an annual bonus in a target amount equal to 30% of your
annual salary. You will be eligible to participate in all of the company’s
employee benefit plans and programs and a summary of 2012 benefits accompanies
this letter.

If you elect to leave A.P. Pharma prior to your one-year anniversary, you agree
to repay your hiring bonus to the Company on your termination.

A Management Retention Agreement also accompanies this letter. This agreement
contains certain standard terms and conditions of your employment and severance
benefits in certain circumstances.

You will accrue 4.62 hours of vacation per pay period equivalent to 3 weeks
every 12 months of employment. In addition, the company typically provides
employees with 2 personal days, 9 fixed holidays and 8 days of sick time per
year.

Enclosed are copies of our At Will Statement, Confidential Disclosure Agreement,
Conflicts of Interest Agreement, and a list of acceptable documents needed to
complete an Employment Verification Form I-9 (which will be completed on your
first day of employment). All of these forms need to be completed prior to
initiating active employment.

123 Saginaw Drive  Ÿ   Redwood City, CA 94063  Ÿ  Phone: 650.366.2626  Ÿ  Fax:
650.365.6490  Ÿ  www.appharma.com

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This offer letter, along with the accompanying Management Retention Agreement,
constitute our entire agreement and supersede our prior agreements, negotiations
and understandings. This agreement may only be amended in writing by mutual
consent. This employment agreement will be governed by California laws, without
regard to conflict-of-law principles.

This offer will expire as of 5 p.m. (Pacific Time) on Friday, November 16, 2012.
If you decide to accept this offer, please scan and e-mail the signed offer
letter to my attention at jwhelan@appharma.com.

We look forward to having you join A.P. Pharma. If you have any questions
regarding any of the information above, please feel free to contact me.

Sincerely,

/s/ John Whelan

John Whelan

Chief Executive Officer

jwhelan@appharm.com

650.366.2626 x223

 

    The provisions of this offer of employment have been read, are understood,
and the offer is herewith accepted.

 

/s/ Mark Gelder, M.D.         Mark Gelder, M.D.       Date

123 Saginaw Drive  Ÿ  Redwood City, CA 94063  Ÿ   Phone: 650.366.2626  Ÿ  Fax:
650.365.6490  Ÿ  www.appharma.com