Exhibit
10.3


December 20, 2006


W. Bradford Middlekauff,
Esq.

Senior Vice President, General
Counsel & Secretary

Medarex, Inc.
707 State Road
Princeton, NJ 08450


Dear Mr. Middlekauff:


Medarex, Inc. (“Medarex”)
has previously granted to you the stock options set forth on the attached Exhibit
A (the “Options”) to purchase shares of Medarex’s common stock.  Medarex and you hereby agree to certain
amendments to your Options on the terms and conditions set forth in this letter
agreement.


1.             Determination of the Committee.  Medarex’s Special Investigation Committee
(the “Committee”) has determined that the Options were issued on terms
that did not reflect an exercise price equal to 100% of the fair market value
of Medarex’s common stock on the appropriate measurement date.  Exhibit A hereto sets forth the
determination of Medarex as to the appropriate measurement date (as determined
by Medarex, the “Revised Measurement Date”) and the average of high and
low sales price per share of Medarex’s common stock on the Revised Measurement
Date (such average being 100% of the fair market value of Medarex’s common
stock on that date and herein referred to as the “Corrected Exercise Price”).  Medarex and you acknowledge and agree that
the Revised Measurement Date and the Corrected Exercise Price set forth on Exhibit
A are subject to change and will not be considered final until included in
Medarex’s restated financial statements, which statements have not yet been
filed with the Securities and Exchange Commission (the “SEC”).  Upon such filing, Exhibit A shall be
automatically amended without any action by you or Medarex to reflect any
changes to the Revised Measurement Date, the Corrected Exercise Price and the
Per Share Discount as included in Medarex’s restated financial statements as
filed with the SEC.


2.             Amendment to the Options.   The applicable Corrected Exercise Price for
each Option is greater than the original exercise price per share set forth in
the applicable stock option agreement for each Option (as set forth on Exhibit
A, the “Original Exercise Price”). 
Based on the recommendations of the Committee, and as resolved by
Medarex’s Board of Directors, Medarex and you hereby amend each of your Options
to increase the exercise price of all of the shares subject to each Option that
have not yet been exercised (as set forth on Exhibit A, the “Outstanding
Unexercised Shares”) to the applicable Corrected Exercise Price and to
provide that each Option may not be exercised as to the “409A Shares” (as
defined below), if any, prior to the later of (a) the six (6) month anniversary
of the “Letter Agreement Date” (as defined below) and (b) the date on which
Medarex’s restated financial statements are filed with the SEC (the “Filing
Date”) (the later date of (a) and (b), the “Earliest Exercise Date”).  Notwithstanding the foregoing, you may
exercise the Options as to the 409A Shares prior to the six (6) month
anniversary of the Letter Agreement Date in the event of (i) the termination of
your employment (x) by Medarex without “Cause” (as defined in Medarex’s 2005
Equity Incentive Plan), (y) by you for “good reason” (as such term is defined
in Exhibit A hereto), provided your resignation occurs not later than 30 days
following the event giving rise to good reason, or (z) by either party by
reason of your death or “Disability” (as defined in Medarex’s 2005 Equity
Incentive Plan), or (ii) a “Change in Control” (as defined in the 2005 Equity
Incentive Plan), but in each case only if, by such time, the Filing Date has
occurred.  You acknowledge that you are
agreeing to the repricing of all of the Outstanding Unexercised Shares subject
to your Options, and not just those Outstanding Unexercised Shares that may be
subject to









 



adverse tax consequences
under Section 409A of the Internal Revenue Code of 1986, as amended (“Section
409A”) (such shares subject to Section 409A, as set forth on Exhibit A,
the “409A Shares”), as a result of such Outstanding Unexercised Shares
having been granted with an exercise price that is less than 100% of the fair market
value of Medarex common stock on the Revised Measurement Date.  In no event may you exercise the Options as
to any shares subject to the Options prior to the Filing Date.


In addition, as further
recommended by the Committee, and as resolved by Medarex’s Board of Directors,
you hereby agree to promptly pay to Medarex the sum of (1) the “Discount”
recognized by you in connection with the prior exercise(s) of your Option(s),
and (2) the interest accruing on the Discount from the applicable date of exercise
through the date of repayment calculated at the short-term adjusted applicable
federal rate (as determined pursuant to Section 1274(d) of the Internal Revenue
Code of 1986, as amended (the “AFR”)), compounding on a quarterly basis.
With respect to each Option, the “Discount” is equal to the product of
(a) the number of shares purchased upon the exercise of the Option and (b) the
difference between (i) the Corrected Exercise Price for that Option and (ii)
the Original Exercise Price per share for that Option ( such difference being
the “Per Share Discount,” as set forth on Exhibit A).  If the repayment is made prior to the Filing
Date, Medarex and you agree that within thirty (30) days following the Filing
Date, Medarex shall reimburse you, or you shall make any additional payments,
as applicable, based on any changes to the Discount, with such payments or
reimbursements reflecting the interest that accrued from the date of repayment
on such amounts as calculated in the manner described above).


3.             Effect of Option Amendments.  Except as expressly set forth in this letter
agreement, all other terms and conditions of your Options will remain
unchanged.  Nothing in this letter
agreement shall be deemed to extend the date on which your Options would
otherwise expire.  The amendment of your
Options will be effective as of the date you sign this letter agreement as
indicated below (the “Letter Agreement Date”).  Your ability to exercise the Options, as
amended, will remain subject to the terms of the applicable option agreements
(as amended by this letter agreement), your compliance with applicable laws and
requirements (including any legal limitations, requirements or restrictions
arising from Medarex’s legal situation in relation to its equity compensation
practices) and Medarex’s policies on trading in Medarex securities.


4.             Section 409A Consequences.  While we believe that the actions
contemplated by this letter agreement should minimize the potential adverse tax
consequences under Section 409A with respect to your Options, and should not
otherwise give rise to adverse tax consequences under Section 409A in respect
of the Options, such interpretation is not free from doubt.  You are encouraged to
consult with your personal financial, tax and legal advisors regarding this
letter agreement.  No representation or
warranty is made by Medarex with respect to the tax consequences of this letter
agreement.


5.             General Terms.  This letter agreement supersedes any or all
prior representations and agreements regarding the subject matter that are
inconsistent with the terms of this letter agreement.  However, this letter agreement does not
modify, amend or supersede written agreements that are consistent with the
enforceable provisions of this letter agreement.  Once effective and enforceable, this letter
agreement can be changed only by another written agreement signed by you and a
duly authorized executive of Medarex. 
Medarex and you acknowledge and agree that nothing in this letter agreement
shall be construed or interpreted as an admission or conclusion of wrongdoing
or liability (or the lack thereof) on the part of either Medarex or you, and
you expressly agree that you shall not use the offer or the acceptance of this
letter agreement as a defense in any proceeding or action that may be brought
or threatened at any time and to which Medarex is a party.  Should any provision of this letter agreement
be determined by any court of competent jurisdiction or arbitrator to be wholly
or partially invalid or unenforceable, the legality, validity and
enforceability of the remaining parts, terms, or provisions are intended to
remain in full force and effect.









 



Please sign this letter
agreement in the space provided below, and return an original copy to me on or
before December 29, 2006.  If you have
any questions regarding this letter agreement, please contact Brad Middlekauff
at (609) 430-2880.


Best regards,


/s/ Christian S. Schade


Christian
S. Schade

Senior Vice President and Chief
Financial Officer


ACKNOWLEDGED
& AGREED:


	
  /s/ W. Bradford Middlekauff.

  	
   

  
	
  W. Bradford Middlekauff, Esq.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  12/21/2006

  	
   

  
			



 









 



Exhibit A


List of Options 


	
  A

  	
   

  	
  B

  	
   

  	
  C

  	
   

  	
  D

  	
   

  	
  E

  	
   

  	
  F

  	
   

  	
  G

  	
   

  	
  H

  	
   

  
	
  Stock

  Plan

  	
   

  	
  Original

  Grant Date

  	
   

  	
  Revised

  Measurement

  Date

  	
   

  	
  Original

  Exercise

  Price

  	
   

  	
  Corrected

  Exercise Price

  	
   

  	
  Outstanding

  Unexercised

  Shares

  	
   

  	
  409A

  Shares

  	
   

  	
  Per Share

  Discount

  (E-D)

  	
   

  
	
  2001   

  	
   

  	
  9.19.01

  	
   

  	
  9.28.01

  	
   

  	
  $

  	
  12.90

  	
   

  	
  $

  	
  14.89

  	
   

  	
  100,000

  	
   

  	
  18,750

  	
   

  	
  $

  	
  1.99

  	
   

  
	
  2001(1)

  	
   

  	
  7.11.02

  	
   

  	
  7.31.02

  	
   

  	
  $

  	
  6.37

  	
   

  	
  $

  	
  8.11

  	
   

  	
  100,000

  	
   

  	
  79,167

  	
   

  	
  $

  	
  1.74

  	
   

  







(1)                                  Exercised
100,000 options and owed $174,000 (before interest). Paid in full in 12/2006.


For
purposes of this letter agreement, “good reason” shall mean the
occurrence of one or more of the following actions by Medarex without your
express written consent:  (a) the
assignment to you of any duties or responsibilities that result in a material
diminution in your position or function; provided, however,
that a change in your title or reporting relationships shall not provide the
basis for a termination with good reason; (b) a relocation of your business
office to a location more than fifty (50) miles from the location at which you
perform duties as of the Letter Agreement Date, except for required business
travel to the extent substantially consistent with your Medarex business travel
obligations as of the Letter Agreement Date; or (c) a material breach by
Medarex of any provision of this letter agreement or any other material
agreement between you and Medarex concerning the terms and conditions of your
employment or service with Medarex.