<PAGE>   1
                                                                    EXHIBIT 10.6


================================================================================











                               MDMI HOLDINGS, INC.

                          STAR GUIDE PHANTOM STOCK PLAN










January 2000
================================================================================
<PAGE>   2
                               MDMI HOLDINGS, INC.

                          STAR GUIDE PHANTOM STOCK PLAN


1.                PURPOSE

                  The purpose of the Star Guide Phantom Stock Plan (the "Plan")
is to attract and retain employees and consultants at MDMI Holdings, Inc.
("MDMI") and its subsidiaries and affiliates (collectively, the "Company"), and
to provide such persons with incentives to continue in the long term service of
the Company and to create in such persons a more direct interest in the future
success of the operations of the Company by relating incentive compensation to
increases in stockholder value.

2.                STRUCTURE OF THE PLAN

                  The Plan is a phantom stock program under which eligible
persons may, at the discretion of the Board, be granted rights to receive awards
of Phantom Stock.

3.                DEFINITIONS

                  As used in this Plan:

                  A. "Award" means a grant made under this Plan in the form of
Phantom Stock.

                  B. "Board" means MDMI's Board of Directors.

                  C. "Committee" means any committee, individual or other entity
appointed or designated by the Board.

                  D. "Fair Market Value" means the offering price to the public
set forth on the final prospectus in connection with a Public Offering. Other
than in connection with a Public Offering, the Fair Market Value shall be the
value of MDMI's common stock, determined as follows: if listed on an established
national or regional stock exchange, admitted to quotation on the NASDAQ
National Market, or publicly traded on an established securities market, the
Fair Market Value of a share of common stock shall be the closing price of the
common stock on such exchange or in such market (the highest such closing price
if there is more than one such exchange or market) (or if there is no such
reported closing price, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices or between the high and low sale prices on
such trading day) or, if no sale of common stock is reported for such trading
day, on the next preceding day on which any sale shall have been reported. If no
Public Offering has occurred and if the common stock is not listed on an
exchange, quoted on a system or traded on a market of the type described in the
preceding sentence, the Fair Market Value shall be the value of the common stock
as determined by the Board in good faith.

<PAGE>   3


                  E. "Fundamental Change in Ownership" means (A) any sale or
transfer of more than 50% of the assets of MDMI and its subsidiaries on a
consolidated basis (measured either by book value in accordance with generally
accepted accounting principles consistently applied or by fair market value
determined in the reasonable good faith judgment of the Board) in any
transaction or series of transactions (other than sales in the ordinary course
of business), (B) any merger or consolidation to which MDMI is a party, except
for (i) a merger in which MDMI or any entity that is an affiliate of MDMI prior
to the merger is the surviving corporation or (ii) any transaction (including
without limitation a merger or reorganization) in which persons who are
shareholders or affiliates of MDMI at the time of such transaction continue to
own more than 50% of the combined voting power of all classes of stock of MDMI
or the successor entity, (C) any sale, transfer or exchange for cash of more
than 50% of the then existing shares of capital stock of MDMI or (D) dissolution
and liquidation of MDMI.

                  F. "Participant" means a person who is selected to receive an
Award under this Plan.

                  G. "Payment Event" means with respect to a particular
Participant the first of the following to occur: (A) a Fundamental Change in
Ownership; (B) a Public Offering; (C) the passing of ten years from the date of
the adoption of this Plan; and (D) the death of Participant. In addition, the
Board may deem a Payment Event to occur on the date Participant ceases to be
employed by, serve as independent contractor to, or be employed by an
independent contractor to the Company.

                  H. "Phantom Stock" shall have meaning provided in Section 6.

                  I. "Plan Effective Date" means the date on which this Plan was
approved by the Company's Board.

                  J. "Public Offering" means any bona fide, firm commitment
underwritten offering by MDMI of its capital stock or equity securities to the
public pursuant to an effective registration statement under the Securities Act
of 1933, as then in effect, or any comparable statement under any similar
federal statute then in force which results in gross proceeds in excess of
$50,000,000 and a price per share of common stock or equivalent thereof
(adjusting to take account for any stock split, combination or similar action on
the part of MDMI subsequent to the date hereof) of not less than $32.00 or any
other underwritten offering by MDMI designated a Public Offering by the Board.

                  K. "Stock" means MDMI's Class A-1 5% Convertible Preferred
Stock.

4.                ADMINISTRATION OF THE PLAN

                  A. Powers of the Board. The Board shall have full power and
authority to establish such rules and regulations as it may deem appropriate for
proper administration of this Plan and to make such determinations under, and
issue interpretations of, the provisions of this Plan and any outstanding Awards
as it may deem necessary or advisable, including but not limited to the power to
determine the Fair Market Value of the Company common stock. In addition, the
Board shall have full power and authority to administer and interpret the Plan
and


                                       2
<PAGE>   4


make modifications as it may deem appropriate to conform the Plan and all
actions pursuant to the Plan to any regulation or to any change in any law or
regulation applicable to this Plan.

                  B. Actions of the Board. All actions taken and all
interpretations and determinations made by the Board in good faith (including
determinations of the fair market value of the Company's common stock) shall be
final and binding upon all Participants, the Company and all other interested
persons. No member of the Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan, and
all members of the Board shall, in addition to their rights as directors, be
fully protected by the Company with respect to any such action, determination or
interpretation.

                  C. Delegation to the Committee. The Board may delegate its
authority under the Plan to a Committee.

5.                ELIGIBILITY

                  A. Persons Eligible. Persons eligible to participate in the
Phantom Stock Plan are Participants.

                  B. Selection of Participants. The Participants and their
Awards shall be designated upon the adoption of the Plan.

6.                PHANTOM STOCK UNDER THE PLAN

                  A. Grants of Awards. Awards under this Plan shall be granted
to a Participant in the form of Phantom Stock, which shall be credited to a
Phantom Stock Account to be maintained for such Participant. Each share of
Phantom Stock shall be deemed to be equivalent in value to one share of Stock.
The award of Phantom Stock under the Plan shall not entitle the recipient to any
dividend or voting rights or any other rights of a shareholder with respect to
such Phantom Stock. The Board shall determine the number of shares of Phantom
Stock to be awarded under the Plan. Each Award shall be represented by a written
agreement.

                  B. Timing of Payment. Each Participant shall be fully vested
in his/her Phantom Stock at all times; provided, that, a Participant shall have
no right to receive payment for any part of his/her Phantom Stock until the
occurrence of a Payment Event.

                  C. Form of Payment. Upon the occurrence of a Payment Event,
the Participant shall receive from the Company a payment with respect to each
share of Phantom Stock being redeemed. The payment shall have two components: a
payment for the Stock ("Stock Payment") and a payment for accrued dividends
("Accrued Dividends"). For each share of Phantom Stock being redeemed, the Stock
Payment shall be a cash payment equal to the greater of (i) the Fair Market
Value of one share of the Company's voting common stock, par value $.01 per
share or (ii) the lesser of the fair market value of one share of Stock or
$10.94. For each share of Phantom Stock being redeemed, the Accrued Dividends
shall mean the sum of all dividends that would have been paid or accrued to the
holders of a share of Stock that was held from July 6, 1999 until the day it was
redeemed. Notwithstanding anything to the contrary,


                                       3
<PAGE>   5


upon the occurrence of a Payment Event, the Board shall have the discretion to
make the Stock Payment and the payment for Accrued Dividends in any combination
of (a) cash and (b) discounted options to purchase the Company's common stock
where the exercise price of the options shall be no less than twenty-five
percent (25%) of the Fair Market Value of the Company's common stock; provided
that the sum of the amount of cash paid and the "in the money value" of the
discounted options granted equals the sum of the Stock Payment and the Accrued
Dividends. The "in the money" value of discounted options granted to Participant
shall mean the difference between the Fair Market Value of the Company's common
stock and the exercise price of the options granted multiplied by the number of
options. The parties hereto recognize that the Company or a subsidiary may be
obligated to withhold federal, state and local income taxes and Social Security
taxes to the extent that the Participant realizes ordinary income in connection
with the redemption of the Phantom Stock. The Participant agrees that the
Company or a subsidiary may withhold amounts needed to cover such taxes from
payments otherwise due and owing to the Participant, and also agrees that, to
the extent such amounts cannot be withheld, upon demand the Participant will
promptly pay to the Company or a subsidiary having such obligation any amounts
as may be necessary to satisfy such withholding tax obligation. Such payment
shall be made in cash or by check payable to the order of the Company or a
subsidiary. The Company shall not be obligated to deliver payment with respect
to the Phantom Stock unless and until, in the opinion of the Company's counsel,
all applicable withholding obligations have been satisfied. The Company shall
use its best efforts to achieve any such compliance and the Participant shall
take any action reasonably requested by the Company in such connection.

                  D. Dilution and Other Adjustments. In the event of any change
in the outstanding shares of Common Stock of the Company by reason of any stock
dividend or split, recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares or other similar corporate
change, then if the Board shall determine, in its sole discretion, that such
change equitably requires an adjustment in the number or kind of Phantom Stock
then held in Participant's Phantom Stock Accounts, such adjustments shall be
made by the Board and shall be conclusive and binding for all purposes of the
Plan.

                  E. Cancellation of Phantom Stock. The Board may cancel Phantom
Stock with the written consent of the Participant holding such Phantom Stock. In
the event of any cancellation, all rights of the former holder of such canceled
Phantom Stock in respect of such canceled Shares shall terminate.

7.                NON-TRANSFERABILITY OF PHANTOM STOCK

                  During the lifetime of the Participant, Phantom Stock shall
not be assignable or transferable. In the event of the Participant's death,
payment of Phantom Stock due under this Plan shall be made to his/her designated
beneficiary, or in the absence of such designation, by will or the laws of
descent and distribution.


                                       4
<PAGE>   6


8.                STOCKHOLDER RIGHTS

                  The holder of a share of Phantom Stock shall have no
stockholder rights with respect to any shares of Stock or Company common stock.

9.                TAX WITHHOLDING

                  The Company's obligation to make payment under the Plan shall
be subject to the satisfaction of all applicable federal, state and local income
and employment tax withholding requirements.

10.               EFFECTIVE DATE AND TERM OF THE PLAN

                  This Plan shall become effective upon adoption. This Plan
shall terminate upon the tenth (10th) anniversary of the Plan.

11.               AMENDMENT OR TERMINATION OF THE PLAN

                  The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects or to terminate the
Plan, unless shareholder approval of such amendments or modifications is
required under applicable law. No such amendment, modification, or termination
shall adversely affect the rights and obligations with respect to Awards
outstanding under the Plan at the time of such amendment, modification or
termination, unless the Participant consents to such amendment, modification or
termination.

12.               NO EMPLOYMENT/SERVICE RIGHTS

                  Nothing in this Plan shall confer upon any Participant any
right to continue in service for any period or specific duration or interfere
with or otherwise restrict in any way the rights of the Company or of the
Participant, which rights are hereby expressly reserved by each, to terminate
such person's service at any time for any reason, with or without cause. No
employee or other person shall have any claim or right to be granted an Award
under this Plan. Neither this Plan nor any action taken hereunder shall be
construed as giving any employee any right to be retained in the employ of any
participating Company.

13.               NOTICES

                  All notices or other communications which may be or are
required to be given by any party to any other party pursuant to this Phantom
Stock Agreement shall be in writing and shall be mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
transmitted by hand delivery, telecopier (fax) or telex, addressed as follows:


                                       5
<PAGE>   7


                          If to the Company:

                                  MDMI Holdings, Inc.
                                  200 West 7th Avenue
                                  Collegeville, PA 19426-0300
                                  Attn: Board of Directors
                                  Telephone: (610) 489-0300
                                  Facsimile: (610) 409-2470

                                  with a copy to:

                                  KRG Capital Partners, LLC
                                  The Park Central Building
                                  1515 Arapahoe Street
                                  Tower One, Suite 1500
                                  Denver, CO 80202
                                  Attn: Bruce L. Rogers & Steven D. Neumann
                                  Telephone: (303) 390-5001
                                  Facsimile: (303) 390-5015

                                  Hogan & Hartson L.L.P.
                                  1200 17th Street, Suite 1500
                                  Denver, CO 80202
                                  Attention: Steven A. Cohen
                                  Telephone: (303) 899-7300
                                  Facsimile: (303) 899-7333

                                  Eric Pollock
                                  c/o Star Guide Corporation
                                  5000 Independence Street
                                  Arvada, CO 80002

                          If to Participant:

                                  At the address in the Company's
                                  records with respect to such
                                  participant.

Each party may designate by notice in writing a new address to which any notice
or other communication may thereafter be so given. Each notice or other
communication which shall be mailed, delivered or transmitted in the manner
described above, shall be deemed sufficiently given for all purposes at such
time as it is delivered to the addressee with the return receipt, the delivery
receipt, the affidavit of personal courier or, with respect to a telex, upon
receipt of the answer back and with respect to a telecopy upon acknowledgment of
receipt there of and in all cases at such time as delivery is refused by the
addressee upon presentation.


                                       6
<PAGE>   8


14.               ENTIRE AGREEMENT

                  This Phantom Stock Agreement constitutes the entire agreement
and supersedes all prior understandings and agreements, written or oral, of the
parties hereto with respect to the subject matter hereof. Neither this Phantom
Stock Agreement nor any term hereof may be amended, waived, discharged or
terminated except by a written instrument signed by the Company and the
Participant; provided, however, that the Company unilaterally may waive any
provision hereof in writing to the extent that such waiver does not adversely
affect the interests of the Participant hereunder, but no such waiver shall
operate as or be construed to be a subsequent waiver of the same provision or a
waiver of any other provision hereof.

15.               EXECUTION

         To record adoption of the Plan by the Board as of January 1, 2000 the
Company has caused its authorized officer to execute the Plan.



                                            MDMI HOLDINGS, INC.



                                            By:     AUTHORIZED SIGNATURE
                                                   -----------------------------
                                            Title:
                                                   -----------------------------


                                       7