<PAGE>   1
                                                                   EXHIBIT 10.36


                               MDMI Holdings, Inc.
                                200 W. 7th Avenue
                        Collegeville, Pennsylvania 19426

January 31, 2001

H. Stephen Cookston
3411 Mandeville Canyon Road
Brentwood, CA 90049

            RE: MDMI HOLDINGS, INC.

Dear Steve:

            The purpose of this letter is to confirm our mutually agreed upon
termination of the letter agreement, dated July 20, 1999, and any other related
agreements, arrangements or understandings, including your current director
indemnification agreement, between MDMI Holdings, Inc. (the "Company") and you
(collectively, the "Agreement"). The Agreement will terminate upon the closing
of the initial public offering of the common stock of the Company or its
successor (the "IPO"). For as long as you remain a director of the Company, the
Company will pay you an annual director's fee of $10,000, which fee is payable
quarterly in arrears. The Company will continue to reimburse you for any
out-of-pocket expenses incurred in connection with your services rendered as a
director on behalf of the Company. You will retain your existing option to
acquire 10,000 shares of the Company's common stock; however, the Company will
revise the vesting schedule to provide for vesting in equal installments over
three years. In place of the indemnification agreement being terminated, upon
the IPO, the Company or its successor will have in place a directors and
officers insurance policy which will cover you.

            In addition to the foregoing, as previously agreed the Company will
pay you a fee of 0.25% of the Transaction Value (as defined below) for the one
previously identified acquisition target and 0.50% of the Transaction Value for
the three previously identified acquisition targets. The fee paid to you may be
paid in cash or stock of the Company at your discretion. Any fee paid in stock
shall be based on the average closing price of the common stock of the Company
for the five trading days preceding, but not including, the closing date of such
acquisition. For purposes of this letter, "Transaction Value" means the
aggregate of all cash and non-cash consideration paid to the sellers of the
company or the business being acquired and the value of interest-bearing debt
assumed, directly or indirectly, by the Company. Any non-cash consideration will
be valued at the fair market value, and the value of any equity securities
issued will be the fair market value on the date of issuance, assuming such
equity securities are fully vested on such date.

            As we have stated previously, hopefully we will not have any
disputes in the determination of the fees payable to you, but we mutually agree
that any disputes will be arbitrated by an independent third party mutually
acceptable to the Board and you with any formal proceeding to be held in Denver,
Colorado.
<PAGE>   2
            If this letter accurately reflects our understanding, please execute
below and return a copy of this letter to us.


                                          Sincerely,

                                          MDMI Holdings, Inc.


                                          By: /s/ STEVEN D. NEUMANN
                                              ---------------------
                                          Name: Steven D. Neumann
                                          Title: Vice President




AGREED AND ACKNOWLEDGED:
this 31st day of January, 2001:


/s/ H. STEPHEN COOKSTON
-----------------------
H. Stephen Cookston