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EXHIBIT 10.7.1
MDMI HOLDINGS, INC.
PHANTOM STOCK AGREEMENT
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TABLE OF CONTENTS
1. GRANT OF PHANTOM STOCK...................................................1
2. REDEMPTION OF PHANTOM STOCK..............................................1
3. PAYMENT FOR PHANTOM STOCK................................................1
4. NON-TRANSFERABILITY OF PHANTOM STOCK.....................................2
5. CHANGES IN CAPITALIZATION................................................2
(a) Changes in Stock................................................2
(b) Reorganization in Which the Company Is the Surviving Company....3
(c) Adjustments.....................................................3
(d) No Limitations on Company.......................................3
6. EMPLOYMENT RIGHTS........................................................3
7. INTERPRETATION OF THIS PHANTOM STOCK AGREEMENT...........................3
8. GOVERNING LAW............................................................3
9. BINDING EFFECT...........................................................4
10. DEFINITIONS..............................................................4
11. NOTICE...................................................................4
12. ENTIRE AGREEMENT.........................................................5
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MDMI HOLDINGS, INC.
PHANTOM STOCK AGREEMENT
This MDMI Holdings, Inc. Phantom Stock Agreement (the "Phantom
Stock Agreement") is made and entered into as of [________,__] 2000, by and
between MDMI Holdings, Inc., a Colorado corporation (the "Company"), and
___________________, an individual who is employed by or otherwise has a
relationship with the Company or its subsidiaries (the "Participant").
WHEREAS, the Company has determined that it is desirable and
in its best interests to grant Phantom Stock ("Phantom Stock") to the
Participant, subject to the terms and conditions of the MDMI Holdings, Inc. 2000
Employee Phantom Stock Plan (the "Plan"), in order to provide the Participant
with an incentive to advance the interests of the Company, its subsidiaries and
its affiliates, all according to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties hereto do hereby agree as follows:
1. GRANT OF PHANTOM STOCK
These terms and conditions evidence the grant by the Company
to the Participant of Phantom Stock, which may be exercised in accordance with
the terms and subject to the conditions hereinafter set forth. The date of grant
of the Phantom Stock is [__________,__], 2000 the date on which the grant of the
Phantom Stock was approved in accordance with the Plan. The aggregate number of
shares of Class A-2 5% Convertible Preferred Stock ("Stock") of the Company
covered by the Phantom Stock in this Award is [________]. The Phantom Stock will
vest immediately.
2. REDEMPTION OF PHANTOM STOCK
Upon the occurrence of a Payment Event, the Company shall
redeem the Phantom Stock and make payment in accordance with the terms of
Section 3.
3. PAYMENT FOR PHANTOM STOCK
Promptly after the redemption of the Phantom Stock, 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
twelve dollars ($12.00). 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 the date
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such Phantom Stock was granted until the day it was redeemed. Notwithstanding
anything to the contrary, upon the occurrence of a Payment Event and at any time
after the occurrence of a Public Offering, the Board shall have the discretion
to make the Stock Payment and the payment for Accrued Dividends in any
combination of (a) cash, (b) common stock and (c) 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, the Fair Market
Value of the stock issued 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 a Participant shall mean the
difference between the Fair Market Value of the Company's common stock and the
exercise price of the discounted 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.
4. NON-TRANSFERABILITY OF PHANTOM STOCK
The Phantom Stock may not be transferred by the Participant
otherwise than by will or the laws of descent and distribution, and during the
Participant's lifetime the Phantom Stock may be redeemed only by the Participant
or the Participant's guardian or legal representative.
5. CHANGES IN CAPITALIZATION
(a) CHANGES IN STOCK
If the outstanding shares of Stock are increased or decreased
or changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of any recapitalization, reclassification,
stock split-up, combination of shares, exchange of shares, stock dividend or
other distribution payable in capital stock, or other increase or decrease in
such shares effected without receipt of consideration by the Company occurring
after the date the Phantom Stock is granted, a proportionate and appropriate
adjustment shall be made by the Company in the number and kind of shares subject
to the Phantom Stock, so that the proportionate interest of the Participant
immediately following such event shall, to the extent practicable, be the same
as immediately before such event. Any such adjustment in the Phantom Stock shall
not change the total redemption price with respect to the unexercised portion of
the
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Phantom Stock but shall include a corresponding proportionate adjustment in the
redemption price per share.
(b) REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING
COMPANY
Subject to Subsection 5(c), if the Company shall be
the surviving Company in any reorganization, merger, or consolidation of the
Company with one or more other Companies, the Phantom Stock shall pertain to and
apply to the securities to which a holder of the number of shares of stock
subject to Phantom Stock would have been entitled immediately following such
reorganization, merger, or consolidation, with a corresponding proportionate
adjustment of the redemption price per share so that the aggregate redemption
price thereafter shall be the same as the aggregate redemption price of the
shares remaining subject to the Phantom Stock immediately prior to such
reorganization, merger or consolidation.
(c) ADJUSTMENTS
Adjustments under this Section 5 related to stock or
securities of the Company shall be made by the Board, whose determination in
that respect shall be final, binding, and conclusive.
(d) NO LIMITATIONS ON COMPANY
The grant of the Phantom Stock shall not affect or
limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.
6. EMPLOYMENT RIGHTS
The grant of the Phantom Stock shall not confer upon the
Participant any right to continue as a Participant of, or consultant or advisor
to, the Company, its parent, or any subsidiary of either or affect in any way
the right of the Company, its parent, or a subsidiary of either to terminate the
Participant's relationship at any time or to interfere in any way with any
contractual or other right.
7. INTERPRETATION OF THIS PHANTOM STOCK AGREEMENT
All decisions and interpretations made by the Board with
regard to any question arising under this Phantom Stock Agreement shall be
final, binding and conclusive on the Company and the Participant and any other
person entitled to exercise the Phantom Stock as provided for herein.
8. GOVERNING LAW
This Phantom Stock Agreement shall be governed by the laws of
the State of Delaware (excluding its choice of law rules).
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9. BINDING EFFECT
Subject to all restrictions provided for in this Phantom Stock
Agreement and by applicable law limiting assignment and transfer of this Phantom
Stock Agreement and the Phantom Stock provided for herein, this Phantom Stock
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, executors, administrators, successors, and assigns.
10. DEFINITIONS
All capitalized terms used herein, but not defined herein,
shall have the meanings ascribed thereto in the Plan.
11. NOTICE
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:
If to the Company:
MDMI Holdings, Inc.
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▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Board of Directors
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
KRG Capital Partners, LLC
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Tower One, Suite 1500
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Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Participant:
At the address set forth below under Participant's
name at the foot of this Agreement.
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.
12. 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 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 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.
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IN WITNESS WHEREOF, the parties hereto have made and entered
into this Phantom Stock Agreement in their names and on their behalf, as of the
day and year first above written.
MDMI HOLDINGS, INC.
By:
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Title:
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PARTICIPANT:
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ADDRESS FOR NOTICE TO PARTICIPANT:
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Number Street
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City State Zip Code