Exhibit 10.1

                             DISTRIBUTION AGREEMENT

   DISTRIBUTION AGREEMENT, dated as of December 11, 2000, by and between VALLEY
FORGE SCIENTIFIC CORP. a Pennsylvania corporation ("Valley Forge"), and Codman
& Shurtleff, Inc. ("CODMAN") a corporation existing under the laws of
Massachusetts.

   WHEREAS, CODMAN develops, manufactures, and markets medical instruments,
implants and accessories for the diagnosis and treatment of conditions
affecting the central nervous system; and

   WHEREAS, Valley Forge develops, manufactures and supplies medical devices
and related instrumentation and accessories used for the bipolar electrical and
radio frequency surgical treatment of bodily tissues and titanium mesh products
related to surgery; and

   WHEREAS, the parties desire that CODMAN distribute Valley Forge's Products
(as defined below) under the Valley Forge Patents (as defined below) pursuant
to the terms of this Agreement.

   NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereinafter set forth, the parties hereto agree as follows:

                                  ARTICLE ONE
                                  DEFINITIONS

   As used throughout this Agreement, each of the following terms shall have
the respective meaning set forth below:

  "Affiliate" of a party shall mean any entity or person that directly or
indirectly controls, is controlled by or is under common control with such
party.  For purposes of this definition, "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise.

  "Average Selling Price" ("ASP") for a product shall mean the actual average
price realized by CODMAN from its direct customers and shall be determined by
dividing the total Net Sales in dollars by the number of units sold during a
particular time period.

  "Calendar Quarter" shall mean the calendar quarter customarily used by CODMAN
for internal accounting purposes consisting of approximately three months in
which each of the first two months consists of four weeks and the third month
consists of five weeks.

   "Valley Forge Patents" shall mean (i) all of the Patents as defined below,
(ii) all other patents and applications for patents that cover the manufacture,
use, importation or sale of any Product, in which Valley Forge (or any
Affiliate of Valley Forge) has any rights, any foreign counterparts thereof, as
well as all continuations, continuations-in-part, divisions and renewals
thereof, all patents which may be granted thereon, and all reissues,
reexaminations and extensions.

   "Field" shall mean any products indicated for use in neurocranial and
neurospinal surgery.

  "Improvement" shall mean any adaptation, change, redesign, improvement,
modification of any Product (as defined below), the Specifications (as defined
below) therefor, the Raw Materials (as defined below) or the method or process
of manufacture or production of any Product provided, however, any adaptation,
change, redesign, improvement or modification of any Product which results in
such Product being indicated for use in applications other than those within
the field shall not be considered an improvement.

  "Know-How" shall mean all know-how relating to the development, manufacture,
sale or use of any Product, including, without limitation, processes,
techniques, methods, products, apparatuses, biological materials and other
materials and compositions which are reasonably related thereto.

  "Manufacturing Costs" shall mean the direct labor, direct overhead and Raw
Materials costs incurred in the manufacture of Product.

  "Net Sales" means the gross revenues received from the sale of Products to
independent third parties during the applicable period less (i) discounts and
rebates, (ii) credits or allowances granted upon claims or returns, (iii)
freight charges paid for delivery and (iv) taxes and other governmental charges
levied on or measured by the invoiced amount.

  "Patents" shall mean the U.S. Patents set forth on Schedule B, along with any
foreign counterparts thereof, as well as all continuations,
continuations-in-part, divisions and renewals thereof, all patents which may be
granted thereon, and all reissues, reexaminations, extensions, patents of
addition, and any subsequent improvement patents or applications, such
improvement patents and applications being those the practice of which falls
within the claims any of said patents.

  "Products" shall mean the medical devices and related instrumentation
indicated for use in the Field as described in Schedule A attached hereto.

  "Raw Materials" shall mean the materials, components, and packaging required
to manufacture and to package any Product in accordance with the
Specifications.

  "Specifications" shall mean the specifications for the design, composition,
product safety assurance, manufacture, packaging, and/or quality control of any
Product, as set forth on Schedule D attached hereto and made a part hereof, as
the same may hereafter be modified by mutual agreement of the parties in
writing.

                                  ARTICLE TWO
                            SUPPLY OF PRODUCT, PRICE

   2.01 Distribution Rights. Valley Forge hereby appoints CODMAN, and CODMAN
hereby accepts appointment, as Valley Forge's exclusive worldwide distributor
of the Products in the Field during the term of this Agreement.  Valley Forge
understands and agrees that during the term of this Agreement, CODMAN may
utilize its Affiliates to act as distributor hereunder in certain geographic
areas, provided that CODMAN shall at all times remain responsible for
performance of all of its obligations under this Agreement.

   (a) The parties acknowledge that Valley Forge develops, manufactures and
markets through other distributors medical devices and related instrumentation
indicated for use outside the Field, and that it is in the parties' mutual
interest to ensure that such other products are not used in the Field.  In the
event Valley Forge becomes aware that any of its other distributors of its
medical devices and related instrumentation intended for use outside the Field
are promoting the use of such devices and/or instrumentation in the Field,
Valley Forge shall take all such reasonable actions as may be permitted by law
to prevent or discourage such promotion in the Field.

   (b) Valley Forge acknowledges that CODMAN and Dr. Leonard Malis have entered
into a trademark/license agreement and Valley Forge consents to CODMAN using
the "Malis" trademark in accordance with the terms of that agreement.

   2.02 Supply of Product.  During the term of this Agreement, Valley Forge
shall supply CODMAN (and its Affiliates) with all of those quantities of
Product as ordered by CODMAN (and its Affiliates) for distribution for use in
the Field pursuant to this Agreement.  Each such Product shall be manufactured
and packaged by Valley Forge or its suppliers in accordance with the
Specifications.

   2.03 Prices.

   (a) The initial price (the "Price") for each Product (other than sample,
special or prototype products) during the term of this Agreement is as set
forth on Schedule C attached hereto.  The Prices set forth in Schedule C
include all costs of manufacturing and packaging in accordance with the
Specifications and such prices are F.O.B. Valley Forge's facilities in
Philadelphia, PA or Oaks, PA.

   (b) The Prices set forth on Schedule C shall remain in effect for the 2001
calendar year.  Thereafter the "Prices" may be adjusted by Valley Forge on an
individual Product basis with such adjustment becoming effective on January 1
of each calendar year.  Price adjustments resulting in price increases or
decreases for each subsequent year of the Agreement, including any extensions
thereof in the absence of an improvement in the particular Product, shall be
limited to the percentage increase, or decrease, if any, of the United States
Government Wholesale Price Index (GWPI) measured as of October 1st of the
current calendar year compared to the GWPI measured as of October 1 of the
prior calendar year.  Price increases resulting from Improvements in a
particular product shall be negotiated in good faith by both parties. Valley
Forge shall revise Schedule C in accordance with this section 2.03 and shall
provide an original of the revised Schedule C to the contact person at CODMAN
no later than October 5th of each year.  From time to time, the parties may
agree to special promotional pricing, and in such event, the terms and
conditions of such promotional pricing shall be in writing and signed by the
parties.

   (c) Valley Forge hereby agrees that it shall use its good faith efforts to
minimize its Manufacturing Costs of producing the Products to the extent it may
do so without compromising the quality of the Products or compliance with terms
of this Agreement.

   2.04 Forecasts. The parties understand and agree that certain critical
Product components have significant procurement lead times.  As such the
parties agree to cooperate in a mutual effort to predict the demand for the
Products in order to maintain high levels of fulfillment service to end user
customers.  On or before September 30th of each calendar year, CODMAN shall
provide to Valley Forge its projected quarterly requirements for the upcoming
calendar year for generators and accessories and the first six months of the
upcoming calendar year for disposable instruments.  On or before March 31st of
each calendar year CODMAN shall provide to Valley Forge its projected quarterly
requirements for disposable Products for the second six months of each calendar
year.  CODMAN will confirm these projections with the issuance to Valley Forge
of its official purchase order.

   2.05 Orders.  CODMAN shall place any binding orders for Product by written
or electronic purchase order (or by any other means agreed to by the parties)
to Valley Forge.  Such purchase orders shall set forth the desired date of
delivery with respect to the Products ordered and shall be placed at least
ninety (90) days prior to such desired date of delivery for all equipment
products and at least thirty (30) days prior to such desired date of delivery
for all instruments and accessories.  To the extent there is any conflict or
inconsistency between this Agreement and any purchase order, purchase order
release, confirmation, acceptance or any similar document, the terms of this
Agreement shall govern.  Valley Forge shall be obligated to supply up to 110%
of the quantity forecasted pursuant to Section 2.04.  Orders in excess of such
110% shall be subject to acceptance by Valley Forge; provided that Valley Forge
will accept such excess orders to the extent it has the manufacturing capacity
to supply them.

   2.06 Delivery.  All charges for final packaging and transport packaging are
included in the Price.  All shipments must be accompanied by a packing slip
that describes the articles, states the purchase order number and shows the
shipment's destination.  Valley Forge agrees to promptly forward the original
bill of lading or other shipping receipt for each shipment in accordance with
CODMAN's instructions.  Valley Forge further agrees to promptly render correct
and complete invoices to CODMAN, and to accept payment by check or, at CODMAN's
discretion, cash or electronic transfer of funds.  All invoices submitted by
Valley Forge shall be payable net within thirty (30) days after the date of
such invoices.  The date of invoice with respect to any Product shall not be
earlier than the date of shipment of such Product.

   2.07 Shipment.  Valley Forge shall ship Product, at CODMAN's cost to the
extent set forth in Section 2.03, to any location chosen by CODMAN utilizing
carriers approved by CODMAN.  The risk of loss with respect to all Products
shall remain with Valley Forge until the products to be shipped are loaded on
to the carrier specified by CODMAN.  Valley Forge will package all Products in
accordance with the packaging requirements included in the Specifications.

   2.08 Minimum Purchase Requirements:

   (a)  Products. CODMAN shall purchase Products from Valley Forge for the
calendar year 2001 in the minimum dollar amount of $4.0 million dollars
("Minimum Dollar Purchase Obligations").  On or before September 30 of each
calendar year during the term of this Agreement, CODMAN and Valley Forge shall
conduct good faith negotiations regarding any change in the Minimum Dollar
Purchase Obligations for thesucceeding calendar year based on changes in
circumstances which had occurred to date in the then current year.  If the
parties are not able to come to an agreement after conducting good faith
negotiations, the Minimum Dollar Purchase Obligations shall revert to those for
the prior year.

   (b) The Minimum Dollar Purchase Obligations for any given calendar year
shall be proportionally reduced for that calendar year on a unit-for-unit
Product basis to the extent (i) Valley Forge is for any reason unable to supply
Product in accordance with the terms of this Agreement, (ii) the particular
Product is recalled or withdrawn from the market for reasons of product safety,
efficacy, reliability or deviation from the Specifications, or (iii) a third
party infringes any of the Patents and such infringement is deemed the cause
for the Minimum Dollar Purchase Obligations not to be met.  The Minimum Dollar
Purchase Obligations for the particular Product or Products shall be reduced to
zero in any given year in which the Product or Products are the subject of a
formal claim filed in a proceeding in the U.S. by a third party asserting that
the manufacture, importation, use or sale of the Product or Products infringes
the intellectual property rights of a third party and will be adjusted
prospectively upon final resolution of such claim.  If the claim is filed in a
proceeding outside the U.S. for a particular product, then the Minimum Dollar
Purchase Obligations for the particular Product shall be reduced on a
proportionate basis based on sales of the particular Product in the country
where the claim is filed as compared to the total worldwide sales of the same
Product.

   (c) For any year in which CODMAN does not meet its Minimum Dollar Purchase
Obligations under this Section 2.08, CODMAN may, at its option, nevertheless be
deemed to have fulfilled such obligations by paying Valley Forge an amount (the
"shortfall amount") equal to 50% of the difference between (A) the amount
CODMAN would have paid to Valley Forge had it fulfilled its purchase
obligations and (B) the amount CODMAN has paid (or will pay) for Product
actually purchased during the applicable year.  Such payment, if made, shall be
due within 30 days following the end of the applicable year in which CODMAN did
not fulfill its Minimum Dollar Purchase Obligations.

   (d) If CODMAN does not meet its Minimum Dollar Purchase Obligations (or pay
the applicable shortfall amount pursuant to Section 2.08(c)), Valley Forge
shall have the right, as its sole and exclusive remedy to either (A) convert
CODMAN's distribution rights hereunder to become non-exclusive or (B) terminate
this Agreement, upon written notice to CODMAN, which notice must be given, if
at all, within 90 days following the end of the year in which CODMAN did not
fulfill its Minimum Dollar Purchase Obligations.

   2.09 Research and Development.  Valley Forge shall, at its own expense
conduct ongoing research and development for Product Improvements and new
products in the Field.  CODMAN acknowledges that there can be no assurance any
Product Improvements or new products will be developed, and the lack thereof
shall not constitute a breach of this Agreement by Valley Forge.  Areas for
Improvements include, without limitation, system accuracy, stability,
mechanical, electrical, and electronic integrity and strength, data display,
calibration processes and any product shelf-life (providing such shelf-life is
applicable). If CODMAN requests Valley Forge to pursue a particular research
and development project, such project shall be subject to the mutual agreement
of the parties with respect to the scope, methodology and costs thereof. For
those research and development projects requested by CODMAN and accepted by
Valley Forge, CODMAN shall review the final design and manufacturing plans
before the product is manufactured.

   2.10 New Products.

   (a) Subject to paragraph (b) below, new products shall be added to Schedule
A of this Agreement, after the parties have negotiated in good faith and have
agreed on: (i) the projected amount of product purchases in accordance with
section 2.04 herein, (ii) the Specifications of such new product is to be
included in Schedule D, and (iii) the date the new product is to be included in
Schedule A.

   (b) If Valley Forge develops or acquires rights to any new product indicated
for use in the Field, then prior to offering such new product to a third party,
Valley Forge shall offer CODMAN the right of first refusal to market the new
product in the Field by giving CODMAN written notice ("New Product Notice") of
the product specifications, intended use, projected availability and estimated
cost, after which CODMAN shall have 90 days to inform Valley Forge in writing
of its decision to market such Product under the terms proposed, or such other
terms as agreed to by CODMAN and Valley Forge in writing during such 90 day
period.  During the 90 day period, Valley Forge shall provide to CODMAN all
information it reasonably requires regarding the new product, subject to
confidentiality and non-disclosure provisions in this Agreement, and shall
negotiate in good faith with CODMAN.  In the event CODMAN gives written notice
to Valley Forge of its decision not to exercise its right of first re al, or
fails to give written notice to Valley Forge of its decision to exercise its
right of first refusal within said 90 day period, then Valley Forge may pursue
other distribution opportunities in the Field for the new Product on price
terms that are, in the aggregate, not less favorable to Valley Forge than the
price terms specified by Valley Forge in the notice or contained in the last
subsequent proposal by Valley Forge to CODMAN, if any, and, in such event then
Valley Forge shall be required (each time such situation arises), pursuant to
this Section 2.10(b), to give a new notice to CODMAN and comply with the right
of first refusal set forth herein for an additional 30-day period following the
receipt of such new notice by CODMAN. The provisions of this Section 2.10 shall
survive the termination or expiration of this Agreement with respect to any new
product for which the initial notice was given during the term hereof
(including any extensions or renewals hereof).  In the event CODMAN elects to
market the new Products, the parties shall use their best reasonable efforts to
agree upon reasonable terms, conditions and other material provisions within 60
days of CODMAN's written notice to Valley Forge of its intention to market said
new products.

                                 ARTICLE THREE
                     ADDITIONAL OBLIGATIONS OF THE PARTIES

   3.01 Sales of Product.  All business decisions relating to the sale, price,
marketing and promotion of any Product supplied under this Agreement shall be
within the sole discretion of CODMAN.  Valley Forge further agrees that (i)
payment by CODMAN to Valley Forge of the Prices set forth in Section 2.03
hereof for purchased Product, and (ii) satisfying the Minimum Dollar Purchase
Obligations, or paying the shortfall amount, in accordance with Section 2.08,
shall constitute complete satisfaction of any duty, whether express or implied,
which could be imposed upon CODMAN to commercially exploit its rights under
this Agreement and are accepted by Valley Forge in lieu of any best efforts
obligations on the part of CODMAN, and the remedies for the failure to fulfill
any such obligations shall be limited, as applicable, to loss of exclusivity,
termination or the payment of the Price for purchased Product as expressly set
forth herein.

   3.02 Package Labeling. CODMAN shall be responsible for the text and
regulatory compliance of all package labels, labeling and Product inserts used
in connection with the Products.  For purposes of this Agreement the terms
"label" and "labeling" shall have the meanings set forth in Sections 201(k) and
201(m) respectively of the U.S. Federal Food, Drug and Cosmetics Act.

   3.03 Provision of Information by Valley Forge.  Valley Forge shall, at the
request of CODMAN, provide CODMAN with the following information relating to
the Products and to the extent reasonably available to Valley Forge, at no cost
to CODMAN:

   (i) provide all relevant information on product safety, efficacy,
reliability and performance characteristics;

   (ii) the Device Master Record and Device History Record, as defined in 21
Code of Federal Regulations, Part 820, for the Products and components thereof;

   (iii) copies of all U.S. and foreign regulatory submissions, including any
510(k) submissions for the Products;

   (iv) supply the written text of a technical service manual and user manual
for each PRODUCT in "print ready" form at no cost to CODMAN.  CODMAN will
supply SUPPLIER with a quantity of technical service manuals and user manuals
at its cost and SUPPLIER will ship the same with each unit of PRODUCT
purchased.

   3.04 Changes.  In no event shall any change in form, fit or function,
safety, efficacy or reliability, or the appearance of a Product ("Significant
Change") be made without the prior written approval of CODMAN.  If the parties
agree on any such change, they shall modify the Specifications to reflect the
same.  Valley Forge further agrees that no significant changes to the method or
process of manufacture or production of any Product or the Raw Materials shall
be made without prior written notification to and approval of CODMAN. As used
in this Section 3.04, the term "significant change" shall mean any change that
(i) results in a change to the Specifications (ii) affects Product performance,
labeling, physical appearance or configuration, software (other than debugging
or other error correction which does not otherwise affect on the performance of
the software), packaging, or sterilization processes, (iii) affects Product
safety, reliability or integrity or (iv) requires a submissio o or approval
from a governmental body.  In the event of any significant change, CODMAN shall
have the responsibility to establish an appropriate qualification protocol, if
required by CODMAN, and CODMAN and Valley Forge shall determine an appropriate
inventory level for the pre-change Product in order to cover on-going
requirements during the qualification process.  The parties will negotiate in
good faith to determine the change in the purchase price, if any, which may be
required by the change.

   3.05 Insurance.  Valley Forge agrees to procure and maintain in full force
and effect during the term of this Agreement valid and collectible insurance
policies in connection with its activities as contemplated hereby which
policies shall provide Comprehensive General Liability coverage including
Products and Contractual Liability coverage in an amount not less than $5
million per occurrence.  Such policy shall name CODMAN as an insured or an
additional insured.  Upon CODMAN's request, Valley Forge shall provide to
CODMAN certificate of coverage or other written evidence reasonably
satisfactory to CODMAN of such insurance coverage.  Such insurance policy shall
provide that in the event such insurance coverage should be materially
adversely changed or terminated for any reason, the insurer thereunder will
give Valley Forge and CODMAN ten (10) days' prior notice. The existence of such
coverage shall in no way limit Valley Forge's liability or obligations
hereunder.

   3.06 Training.  CODMAN shall develop and implement training programs for its
sales representatives and customers with respect to the operation and
maintenance of the Products.  Valley Forge shall be responsible for the
technical accuracy of all training materials and shall assist CODMAN in
preparing the technical aspects of such training programs.  Valley Forge shall
actively participate in training CODMAN trainers, who will in turn train CODMAN
sales representatives and customers.

   3.07 Governmental Registrations. CODMAN shall apply, in its name and at its
cost, for all governmental registrations required for CODMAN to market Products
as a distributor in those countries where CODMAN desires to market Product,
unless the applicable laws of a particular country require that such
registrations be obtained by and in the name of the manufacturer of the
applicable product, in which event Valley Forge shall apply for such approvals
at CODMAN's cost.  Valley Forge shall reasonably cooperate with CODMAN in its
efforts to obtain such approvals.  Valley Forge agrees that CODMAN shall have
access to all of Valley Forge regulatory submissions and technical files for
the Products to the extent necessary to exercise its rights or fulfill its
obligations hereunder.

   3.08 CODMAN will:

   i. advertise the PRODUCT in those medical journals and/or Direct Mail which
in its judgment are best suited for sale of the PRODUCT, a copy of such
advertisement will be reviewed by Valley Forge prior to its release.  In
disagreements as to marketing or sales content, CODMAN shall prevail.  On
matters of technical description or medical use or practice, Valley Forge shall
prevail.

   ii. show the PRODUCT at a minimum of four (4) trade shows per year.

   iii. Valley Forge and CODMAN will review the advertising plan semi-annually
commencing within forty-five (45) days of the signing of this Agreement.

                                  ARTICLE FOUR
                 QUALITY/DEFECTIVE PRODUCT/INSPECTIONS/TESTING

   4.01 Inspections.  CODMAN shall have the right, upon reasonable notice to
Valley Forge and during regular business hours, to inspect and audit the
facilities being used by Valley Forge (or any third party) for production and
storage of Product to assure compliance by Valley Forge (and its suppliers)
with (i) all applicable statutes, laws and regulations, including, without
limitation, Quality System Regulations ("QSRs") enforced by the United States
Food and Drug Administration (the "FDA"), (ii) CODMAN Quality Assurance
Policies, (iii) Johnson & Johnson Corporate Quality Assurance Requirements, and
(iv) the terms and provisions of this Agreement.  Valley Forge shall within
fourteen days remedy or cause the remedy of any deficiencies which may be noted
in any such audit or, if any such deficiencies can not reasonably be remedied
within such fourteen day period, present to CODMAN a written plan to remedy
such deficiencies as soon as possible; and the failure by Valley Forge to
remedy or cause the remedy of any such deficiencies within such fourteen day
period or to present such a plan within such fourteen day period and then use
its best efforts to remedy or cause the remedy of such deficiencies in
accordance with such written plan, as the case may be, shall be deemed a
material breach of this Agreement.  Valley Forge acknowledges that the
provisions of this Section 4.01 granting CODMAN certain audit rights shall in
no way relieve Valley Forge of any of its obligations under this Agreement, nor
shall such provisions require CODMAN to conduct any such audits.

   4.02 Acceptance; Disposition of Non-Compliant Product.  CODMAN shall have no
obligation to pay for any Product that is subject to such a claim of
non-compliance with the specifications; provided CODMAN shall pay for Product
within 30 days of receipt unless such Product has been rejected within such
30-day period.  Valley Forge shall replace at its own cost and expense,
including reimbursement of freight costs incurred by CODMAN, Product that fails
to comply with the Specifications or other warranties made in Article Five,
which replacement shall constitute CODMAN's sole and exclusive remedy therefor
(but in no way limiting Valley Forge's indemnity obligations under Section
6.01).  CODMAN shall notify Valley Forge of the existence and nature of any
non-compliance with the specifications that comes to its attention and shall
return such non-compliant Product to Valley Forge.  Valley Forge shall have a
reasonable opportunity, not to exceed ten (10) days from receipt of such
Product, to i nspect such non-compliant product and provide CODMAN an
explanation of the non-compliance and proposed course of action (i.e. repair
(including the nature of the repair) or replacement of the Product).  The
acceptance (or non-rejection) of any Products shall in no way limit CODMAN's
rights under Valley Forge Product warranty or for indemnification hereunder;
provided however that Valley Forge shall replace non-compliant product (i)
under this Section 4.02 if found to be non-compliant within 60 days following
receipt thereof by CODMAN and (ii) under Section 5.01 if found to be
non-compliant after such 60 day period.

   4.03 Independent Testing.  If, after Valley Forge's inspections of any
Product, the parties disagree as to whether such Product conforms to the
Specifications, either party may deliver the item to an independent third-party
laboratory, mutually and reasonably acceptable to both parties, for analytical
testing to confirm such item's conformance to the Specifications.  All costs
associated with such third-party testing shall be at CODMAN's expense unless
the tested item is deemed by such third-party to be not in compliance with the
Specifications, in which case all such costs, including reimbursement of
freight and disposition costs, shall be promptly paid by Valley Forge.  No
inspection or testing of or payment for Product by CODMAN or any third-party
agent of CODMAN shall constitute acceptance by CODMAN thereof, nor shall any
such inspection or testing be in lieu or substitution of any obligation of
Valley Forge for testing, inspection and quality control as provided in the
Specificati ons or under applicable local, state, or federal laws, rules,
regulations, standards, codes or statutes.

   4.04 Corrective Action.  In the event any governmental agency having
jurisdiction shall request or order, or if CODMAN shall reasonably determine to
undertake, any corrective action with respect to any Product, including any
recall, corrective action or market action, and the cause or basis of such
recall or action is attributable to a breach by Valley Forge of any of its
warranties, guarantees, representations, obligations or covenants relating to
that Product, then Valley Forge shall actively cooperate with CODMAN in
executing such corrective action relating to Product quality and performance,
and Valley Forge shall reimburse CODMAN for the reasonable out of pocket costs
of such action, including the cost of replacing any Product which is so
recalled, whether or not any such specific unit of Product shall be established
to be in breach of any warranty by Valley Forge hereunder.

   4.05 Notice of Audit or Inquiry.  Each party agrees to promptly notify the
other of any FDA audit, or any audit by any other regulatory body, of its
facilities used for the manufacture, storage or distribution of Products, or
any request for information from the FDA, or other regulatory body, related to
the manufacture of Products, as soon as practicable after it received notice of
such audit or request.

   4.06. Warranty Service.  With the exception of disposable and limited-use
products, Valley Forge agrees to perform repair, maintenance, modification and
other services (including warranty repairs) on a timely basis on Products
purchased by CODMAN, its Affiliates, or its customers.  All requests for
service from customers shall be directed to CODMAN, who will arrange for the
customer to ship the applicable Product directly to Valley Forge.  Valley Forge
will repair and return product in accordance with CODMAN instructions.  In the
case of out-of-warranty service, Valley Forge will bill CODMAN, who in turn
will bill the customer.  The rates for out-of-warranty service shall be agreed
upon from time-to-time by CODMAN and Valley Forge.  Subject to the availability
of specific parts from suppliers, Valley Forge agrees to maintain an inventory
for spare and replacement parts for each Product sold under this Agreement if
and when production ceases for a period of at least three (3) years f owing the
delivery date of the particular Product.

                                  ARTICLE FIVE
                         REPRESENTATIONS AND WARRANTIES

   5.01 (a) Valley Forge warrants to CODMAN that the Products will meet the
Specifications and will be free from material defects in material, workmanship
and design, PROVIDED THAT:

   1. The Product has been installed, stored, used and maintained in strict
compliance with the safety procedures, Operating Instructions and storage and
handling requirements provided with the Product.

   2. Valley Forge or an authorized Valley Forge representative is notified,
and the Product taken out of service, as soon as a defect appears.

   3. The Product has not been subject to (i) neglect, misuse or operation
contrary to the Operating Instructions provided with the Product or (ii)
improper storage or handling contrary to the storage and handling requirements
provided with the Product.

   4. No repairs have been attempted or parts replaced by anyone not authorized
by Valley Forge to perform such repair, and that the Product serial number,
date stamp or other identification marks have not been removed or defaced.

   Valley Forge's liability under this warranty is limited to the supply of
replacement parts or Product, or labor and parts repair at an authorized Valley
Forge facility, to a value not exceeding the original Valley Forge invoice
price of the Product.

The warranty does not include:

   i) Packaging, freight and insurance to and from authorized Valley Forge
repair facility.

   ii) Products not provided by Valley Forge or damage to the Valley Forge
Product that is caused by any such products.

   (b) Valley Forge represents and warrants that it complies and shall comply
with applicable statutes, laws, ordinances, rules and regulations relating to
the manufacture, assembly and supply of the Product, including, without
limitation, those enforced by the FDA (including compliance with QSRs and GMPs)
and International Standards Organization (ISO) Rules 9,000 et seq.  Valley
Forge represents and warrants that it has obtained ISO 9001 certification and
has where required by the applicable regulations, submitted to the FDA an
application for 510K clearance for the Product and that the applications for
such certification and clearance contain (or prior to certification or
clearance will contain) complete and accurate information and that the
information contained therein, obtained in good faith in compliance with all
applicable statutes, laws, ordinances, rules and regulations.

   5.02 Execution and Performance of Agreement.  Valley Forge and CODMAN each
represents and warrants to the other that it has full right, power and
authority to enter into and perform its obligations under this Agreement.
Valley Forge and CODMAN each `further represents and warrants to the other that
the performance of its obligations under this Agreement will not result in a
violation or breach of, and will not conflict with or constitute a default
under any agreement, contract, commitment or obligation to which such party or
any of its Affiliates is a party or by which it is bound and that it has not
granted and will not grant during the term of this Agreement or any renewal
thereof, any conflicting rights, license, consent or privilege with respect to
the rights granted herein.

   5.03 Intellectual Property.  Valley Forge represents and warrants to CODMAN
that Valley Forge owns all of the rights, title and interest in and to the
Valley Forge Patents and Know-How and all other Valley Forge intellectual
property that appear on Valley Forge intellectual property or used in
connection with the Products; no academic institution, member of an academic
institution, corporation or other entity, or any local, state or federal
government holds any property rights through it in any Product; Valley Forge is
able to consummate this Agreement in the capacity of a free agent; the
manufacture, use and sale of the Products in accordance with the terms of this
Agreement does not and will not infringe any third party's rights under any
patent; the use of the Valley Forge Trademarks by CODMAN hereunder does not and
will not infringe the rights of any third party; and Valley Forge is presently
aware of no infringement by any third party of any Valley Forge Patent or any
Valley Forge Trademark.

   5.04 (a) VALLEY FORGE MAKES NO WARRANTY OTHER THAN THOSE EXPRESSLY MADE
HEREIN, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE.

   (b) THE ABOVE WARRANTY SHALL SUPERSEDE THE DISCLAIMER OF WARRANTIES
STATEMENT WHICH IS INCLUDED IN THE OPERATING INSTRUCTIONS, OR ANY OTHER
DOCUMENTATION PROVIDED WITH THE PRODUCT, TO THE EXTENT THE PROVISIONS OR SUCH
DISCLAIMER OF WARRANTIES ARE INCONSISTENT WITH THIS WARRANTY.

   (c)  NOTHING CONTAINED IN THE ARTICLE 5 SHALL IN ANY WAY LIMIT VALLEY FORGE
INDEMNITY OBLIGATIONS UNDER SECTION 6.01.

                                  ARTICLE SIX
                                INDEMNIFICATION

   6.01 Indemnification by Valley Forge.  Valley Forge shall indemnify and hold
harmless CODMAN and its Affiliates and their respective officers, directors and
employees from and against any and all claims, damages, lawsuits, liabilities,
costs, charges, judgments and expenses (including interest, penalties and
reasonable attorneys' fees) (collectively "Damages") incurred by such party
arising out of or resulting from (i) material breach by Valley Forge of any of
its representations, warranties, guarantees, covenants or obligations contained
herein; or (ii) manufacturing defects in Products Valley Forge supplied to
CODMAN pursuant to this Agreement, except to the extent caused by CODMAN's
distribution practices, CODMAN's advertising or promotional material for the
Products that has not been approved by Valley Forge, or misrepresentations of
the Products by CODMAN, or improper use of the Products.  Except for the
parties to this Agreement and their affiliates, no other persons shall be third
party beneficiary of this Section 6.01.

   6.02 Indemnification by CODMAN.  CODMAN shall indemnify and hold harmless
Valley Forge and its Affiliates and their respective officers, directors and
employees from and against any and all Damages incurred by such party arising
out of or resulting from (i) any material breach by CODMAN of any of its
representations, warranties, guarantees, covenants or obligations contained
herein or (ii) the use of the Products (including personal injury and product
liability claims) to the extent caused by CODMAN's distribution practices,
CODMAN's advertising or promotional material for the Products that has not been
approved by Valley Forge, or misrepresentations of the Products by CODMAN.
Except for the parties to this Agreement and their affiliates, no other persons
shall be a third party beneficiary of this Section 6.02.

   6.03 Claims.  Each indemnified party agrees to give the indemnifying party
prompt written notice of any matter upon which such indemnified party intends
to base a claim for indemnification (an "Indemnity Claim") under this Article
Six.  The indemnified party shall have the right to participate with the
indemnifying party in the indemnifying party's defense, settlement or other
disposition of any Indemnity Claim, subject to the ultimate control of the
indemnifying party.  With respect to any Indemnity Claim relating solely to the
payment of money damages and which could not result in the indemnified party's
becoming subject to injunctive or other equitable relief or otherwise
materially adversely affect the business of the indemnified party in any
manner, and as to which the indemnifying party shall have acknowledged in
writing the obligation to indemnify the indemnified party hereunder, the
indemnifying party shall have the sole right to defend, settle or otherwise
dispose of such I mnity Claim, on such terms as the indemnifying party, in its
sole discretion, shall deem appropriate, provided that the indemnifying party
shall provide reasonable evidence of its ability to pay any damages claimed and
with respect to any such settlement shall have obtained the written release of
the indemnified party from the Indemnity Claim.  The indemnifying party shall
obtain the written consent of the indemnified party prior to ceasing to defend,
settling or otherwise disposing of any Indemnity Claim if as a result thereof
the indemnified party would become subject to injunctive or other equitable
relief or the business of the indemnified party would be adversely affected in
any manner.

   6.04 Survival.  This Article 6 shall survive any termination of this
Agreement.

                                 ARTICLE SEVEN
                    INABILITY TO MANUFACTURE, FORCE MAJEURE

   7.01  Failure to Supply.  (a) Should Valley Force be unable to or fail for
any reason, other than as set forth in paragraph 7.02 hereof, to manufacture a
PRODUCT in accordance with the agreed upon Specifications or quantities or to
comply with applicable Good Manufacturing Practices as specified in paragraph
5.01 (a) (hereinafter referred to as a "Manufacturing Deficiency"), CODMAN
within 60 days of the discovery of the Manufacturing Deficiency, on 90 days
prior written notice to Valley Forge, may: (i) remove the particular PRODUCT
from the terms of this Agreement; or (ii) exercise the right to designate a
manufacturer set forth in Section 7.01(b) herein.  During the ninety day notice
period set forth in the preceding sentence, Valley Forge will have the right to
cure such Manufacturing Deficiency in order to keep the particular Product in
compliance with the terms of this Agreement, in which event the notice shall be
null and void.

   (b) In the event that Valley Forge fails to cure the Manufacturing
Deficiency, CODMAN may at CODMAN's option require Valley Forge to find another
source (approved and qualified by CODMAN) within 30 days to manufacture the
Product in accordance with the Specifications set forth in Schedule A.

   7.02 Force Majeure.   Valley Forge shall not be liable for any failure to
supply, deliver or for any delay in the delivery of the Products hereunder,
when any such failure or delay is caused, directly or indirectly, by fires,
floods, accidents, explosions, strikes or other labor disturbances (regardless
of the reasonableness of the demands or labor), wars, shortages of fuel, power,
or raw materials, inability to obtain or delays of transportation facilities,
acts of God, or any cause, whether similar or dissimilar, to the foregoing
beyond the reasonable control of Valley Forge, as the case may be affecting
Valley Forge's production and/or delivery of the Products covered by this
Agreement or CODMAN's acceptance or resale thereof.  Such failure will be
excused for three months or as long as such event shall be continuing
(whichever period is shorter) provided that Valley Forge gives immediate
written notice to CODMAN of the Force Majeure Event. Valley Forge shall
exercise all reasona efforts to eliminate the Force Majeure event and to resume
performance.  In the event the failure continues beyond three months then
CODMAN may at CODMAN's option require Valley Forge to find another source
(approved and qualified by CODMAN) within thirty (30) days from the end of the
three month period to manufacture and supply the Products in accordance with
the Specifications. The provisions of this paragraph shall not serve to modify
any rights CODMAN may have under paragraph 7.01 concerning Valley Forge's
inability to manufacture.

                                 ARTICLE EIGHT
                                CONFIDENTIALITY

   8.01 Confidential Information.  As used herein, "Confidential Information"
shall mean the Specifications, the Know-How, the Manufacturing Costs, the raw
material, and all other confidential or proprietary information that is reduced
to writing, marked as confidential and given to one party by the other party
relating to such other party or any of its Affiliates, including information
regarding any of the products of such other party or any of its Affiliates,
information regarding its advertising, distribution, marketing or strategic
plans or information regarding its costs, productivity or technological
advances.  Neither party shall, during the term of this Agreement and for a
period of five years following the termination or expiration of this Agreement
for any reason, use or disclose to third parties any Confidential Information
of the other (except to the extent reasonably necessary to exercise its rights
or comply with its obligations under this Agreement) and each party shall inure
that its employees, officers and agents shall not use or disclose to third
parties any Confidential Information of the other (except to the extent
reasonably necessary to exercise its rights or comply with its obligations
under this Agreement); provided, however, that CODMAN may disclose Confidential
Information of Valley Forge to CODMAN's Affiliates and consultants if such
persons are informed of the confidential nature of such information and are
under contractual obligation to CODMAN to keep such information confidential.
Confidential Information shall not include information that (i) was already
known to the receiving party at the time of its receipt thereof, as evidenced
by its written records, (ii) is disclosed to the receiving party after its
receipt thereof by a third party who has a right to make such disclosure
without violating any obligation of confidentiality, (iii) is or becomes part
of the public domain through no fault of the receiving party or (iv) is
required t be disclosed to comply with applicable laws or regulations or an
order of a court or regulatory body having competent jurisdiction.  Nothing
contained herein shall prevent CODMAN from marketing and, if applicable
pursuant to Sections 7.01, having one or more Products manufactured by third
parties and CODMAN shall be permitted to disclose such Confidential Information
as is reasonably necessary in connection with such activities, provided such
third parties enter into a suitable confidentiality agreement with Valley Forge
and CODMAN.

                                  ARTICLE NINE
                                 LICENSE RIGHTS

   9.01 License Upon Bankruptcy.  Valley Forge hereby grants to CODMAN an
exclusive worldwide license, with the right to grant sub-licenses to its
Affiliates, under the Valley Forge Patents and Know How in the Field, to use,
sell, make and have made the Products, and to use the Valley Forge Trademarks
in connection therewith (collectively the "Bankruptcy License Rights");
provided, however, that the Bankruptcy License Rights granted hereunder shall
be subject to the terms of Section 9.02, and shall be effective only if (i) a
Title 11 proceeding has been voluntarily filed by Valley Forge, or filed by a
third party and not dismissed within 60 days thereafter, and (ii) this
Agreement has been rejected in the Title 11 proceeding (a "Bankruptcy Event").
Notwithstanding anything in this Article 9 to the contrary, CODMAN shall not
have any Bankruptcy License Rights, nor shall it exercise any Bankruptcy
License Rights, other than after the occurrence of a Bankruptcy Event.
Furthermore, notwi standing anything in this Article 9 to the contrary, any and
all Bankruptcy License Rights shall terminate at the end of the term of this
Agreement.

   9.02 Rights Upon Bankruptcy.  All rights and licenses to Valley Forge
Patents and Know-How granted under this Agreement by Valley Forge to CODMAN
are, for all purposes of Section 365(n) of Title 11 of the U.S. Code ("Title
11"), licenses of rights to intellectual property as defined in Title 11.
Valley Forge agrees during the term of this Agreement to create and maintain
current copies or, if not amenable to copying, detailed descriptions or other
appropriate embodiments, of all such Valley Forge Patents and Know-How.  If a
case is commenced by or against Valley Forge under Title 11, then, unless and
until this Agreement is rejected as provided in Title 11, Valley Forge (in any
capacity, including debtor-in-possession) and its successors and assigns
(including, without limitation, a Title 11 trustee) at its option shall either
perform all of the obligations provided in this Agreement to be performed by
Valley Forge or provide to CODMAN all such intellectual property reasonably
requ ed to make or have made, use and sell Products in the Field (including all
embodiments thereof) held by Valley Forge and such permitted successors and
assigns, as CODMAN may elect in a written request, immediately upon such
request.  If a Title 11 case is commenced by or against Valley Forge, this
Agreement is rejected as provided in Title 11 and CODMAN elects to retain its
rights hereunder as provided in Title 11, then Valley Forge (in any capacity,
including debtor-in-possession) and its successors and assigns (including,
without limitation, a Title 11 trustee) shall provide to CODMAN all such
intellectual property (including all embodiments thereof) held by Valley Forge
and such successors and assigns immediately upon CODMAN's written request
therefor.  All rights, powers and remedies of CODMAN, as a licensee hereunder,
provided herein are in addition to and not in substitution for any and all
other rights, powers and remedies now or hereafter existing at law or in equity
(including, without limitation, Title 11) in the event of the commencement of a
Title 11 case by or against Valley Forge.  CODMAN, in addition to the rights,
powers and remedies expressly provided herein, shall be entitled to exercise
all other such rights and powers and resort to all other such remedies as may
now or hereafter exist at law or in equity (including Title 11) in such event.

   9.03 Prosecution of Patents.  Valley Forge agrees to, at its expense,
prosecute, or cause to be prosecuted to allowance or rejection, and reasonably
maintain, in the United States and such other countries selected by mutual
agreement of Valley Forge and CODMAN, the patents and patent applications
included in the Valley Forge Patents.  Valley Forge shall issue as a patent
each such application prosecuted to allowance.  Valley Forge shall pay all
government fees required to keep in force patents and applications therefor
included in the Valley Forge Patents and shall submit evidence to CODMAN, upon
request, that said government fees have been timely paid.

   9.04 Third-Party Infringement.  In the event there is infringement by a
third party of any Valley Forge Patent and CODMAN becomes aware of such
infringement, CODMAN shall give Valley Forge written notice to that effect,
including with such written notice evidence establishing a prima facie case of
infringement by such third party.  Valley Forge shall bear all expenses of any
suit brought by it based upon such infringement and shall retain all damages or
other monies awarded or received in settlement of such suit.  If, after the
expiration of ninety (90) days from the date of such notice, Valley Forge has
not obtained a discontinuance of such infringement or brought suit against the
third party infringer, then CODMAN shall have the right, but not the
obligation, to bring suit against such infringer.  Valley Forge will cooperate
with CODMAN in any such suit for infringement brought by CODMAN against a third
party, and shall have the right to consult with CODMAN and to participate in
and be represented by independent counsel in such litigation at its own
expense.  CODMAN shall bear all expenses of such suit, and shall retain any
damages or other monies awarded or received in consequence of such litigation.

   9.05  Ownership of Developments.

   (a) All inventions made, conceived or acquired by Valley Forge, and the
intellectual property related thereto, shall be the exclusive property of
Valley Forge.  Valley Forge will pay all expenses relating to the securing and
maintaining of appropriate intellectual property protection with respect to
such inventions.

   (b) All inventions made, conceived or acquired by CODMAN, and the
intellectual property related thereto, will be the exclusive property of CODMAN
and that CODMAN will pay all expenses relating to the securing and maintaining
of appropriate intellectual property protection with respect to such
inventions.

   (c) In the event that personnel of Valley Forge and CODMAN jointly
participate in an invention, such invention, and the intellectual property
related thereto shall be owned jointly by the parties.  The parties shall
jointly own and share in the expenses of obtaining intellectual property
protection of the invention.  The parties shall agree on a single attorney to
prepare and prosecute such intellectual property on behalf of both parties.

   (d) For any intellectual property protection in any country that one of the
parties refuses to share in such costs, that party shall assign all right,
title and interest in such invention to the other party retaining only a paid
up, non-exclusive license to make (or have made), use and sell products using
or incorporating such invention, without the right to grant sublicenses (except
to Affiliates) other than in the normal course of a distribution arrangement,
e.g., sub-licensing marketing rights to a distributor.

                                  ARTICLE TEN
                              TERM AND TERMINATION

   10.01 Initial Term.  The initial term of this Agreement (the "Initial Term")
shall commence on January 01, 2001 and continue for a three year term through
December 31, 2003.

   10.02 Renewal.  This Agreement may be renewed for one two year term upon
such conditions as may be mutually agreed upon in writing by the parties.

   10.03 Termination for Breach.  If either Valley Forge, on the one hand, or
CODMAN, on the other hand, shall materially breach any covenant, agreement or
obligation under this Agreement, then the other party may give notice to
terminate this Agreement by giving such party notice of such breach.  The party
receiving such notice shall have ninety (90) days from the date of receipt
thereof to cure such breach.  If such breach is not cured within such ninety
(90) day period, then the non-breaching party shall have the right to terminate
this Agreement effective as of the end of such period.  In the event such
breach is cured during such period, such notice shall be of no force or effect
and this Agreement shall not be terminated.

   10.04 Termination for Insolvency.  Either party may terminate this Agreement
upon notice if the other party makes an assignment for the benefit of
creditors, is the subject of proceedings in voluntary or involuntary bankruptcy
instituted on behalf of or against such party, or has a receiver or trustee
appointed for all or substantially all of its property; provided that in the
case of an involuntary bankruptcy proceeding, such right to terminate shall
only become effective if the other party consents to the involuntary bankruptcy
or such proceeding is not dismissed within sixty (60) days after the filing
thereof.

   10.05 Termination for Patent Infringement.  CODMAN may terminate this
Agreement at the end of a 90-day period following Valley Forge's receipt of
written notice from CODMAN if a judgement from a court of competent
jurisdiction in the United States holds that the manufacture, use, importation
or sale of the generators, which have not been discontinued or otherwise
removed from Schedule A, infringe the patents rights of a third party.

   10.06 Effect of Termination.  Notwithstanding the termination of this
Agreement for any reason, each party hereto shall be entitled to recover any
and all damages (other than consequential damages) that such party shall have
sustained by reason of the breach by the other party hereto of any of the terms
of this Agreement.  Termination of this Agreement for any reason shall be
without prejudice to Valley Forge's right to receive all payments accrued and
unpaid on the effective date of termination and shall not release either party
hereto from any liability which at such time has already accrued or which
thereafter accrues from a breach or default prior to such expiration or
termination, nor affect in any way the survival of any other right, duty or
obligation of either party hereto which is expressly stated elsewhere in this
Agreement to survive such termination.  In the event of termination for any
reason, CODMAN shall have the right to continue to market and distribute the
Products until its inventory is fully depleted.

   10.07 Survival of Certain Provisions.  The provisions of this Agreement set
forth in Sections 10.06 and 8.01 and Articles Six and Eleven, and any remedies
for the breach thereof, shall survive the termination of this Agreement under
the terms hereof.

                                 ARTICLE ELEVEN
                                 MISCELLANEOUS

   11.01 Arbitration.

   a)  Any dispute, claim or controversy arising from or related in any way to
this Agreement or the interpretation, application, breach, termination or
validity thereof, including any claim of inducement of this Agreement by fraud
or otherwise, will be submitted for resolution to final and binding arbitration
pursuant to the commercial arbitration rules then pertaining of the Center for
Public Resources ("CPR"), except where those rules conflict with these
provisions, in which case these provisions control.  The arbitration will be
held in Philadelphia, Pennsylvania.

   b)  The panel shall consist of three arbitrators chosen from the CPR Panels
of Distinguished Neutrals each of whom is a lawyer specializing in business
litigation with at least 15 years experience with a law firm of over 25 lawyers
or was a judge of a court of general jurisdiction.  In the event the aggregate
damages sought by the claimant are stated to be less than $5 million, and the
aggregate damages sought by the counterclaimant are stated to be less than $5
million, and neither side seeks equitable relief, then a single arbitrator
shall be chosen, having the same qualifications and experience specified above.

   c) The parties agree to cooperate (1) to obtain selection of the
arbitrator(s) within 30 days of initiation of the arbitration, (2) to meet with
the arbitrator(s) within 30 days of selection and (3) to agree at that meeting
or before upon procedures for discovery and as to the conduct of the hearing
which will result in the hearing being concluded within no more than 9 months
after selection of the arbitrator(s) and in the award being rendered within 60
days of the conclusion of the hearings, or of any post-hearing briefing, which
briefing will be completed by both sides with 20 days after the conclusion of
the hearings.  In the event no such agreement is reached, the CPR will select
arbitrator(s), allowing appropriate strikes for reasons of conflict or other
cause and three peremptory challenges for each side.  The arbitrator(s) shall
set a date for the hearing, commit to the rendering of the award within 60 days
of the conclusion of the evidence at the hearing, or of any post-hear briefing
(which briefing will be completed by both sides in no more than 20 days after
the conclusion of the hearings), and provide for discovery according to these
time limits, giving recognition to the understanding of the parties hereto that
they contemplate reasonable discovery, including document demands and
depositions, but that such discovery be limited so that the time limits
specified herein may be met without undue difficulty.  In no event will the
arbitrator(s) allow either side to obtain more than a total of 40 hours of
deposition testimony from all witnesses, including both fact and expert
witnesses.  In the event multiple hearing days are required, they will be
scheduled consecutively to the greatest extent possible.

   d) The arbitrator(s) shall render their award following the substantive law
of New Jersey.  The arbitrator(s) shall render an opinion setting forth
findings of fact and conclusions of law with the reasons therefor stated.  A
transcript of the evidence adduced at the hearing shall be made and shall, upon
request, be made available to either party.

   e) To the extent possible, the arbitration hearings and award will be
maintained in confidence.

   f) The United States District Court for New Jersey may enter judgment upon
any award.  In the event the panel's award exceeds $5 million in monetary
damages or includes or consists of equitable relief, then the court shall
vacate, modify or correct any award where the arbitrators' findings of fact are
clearly erroneous, and/or where the arbitrators' conclusions of law are
erroneous; in other words, it will undertake the same review as if it were a
federal appellate court reviewing a district court's findings of fact and
conclusions of law rendered after a bench trial.  An award for less than $5
million in damages and not including equitable relief may be vacated, modified
or corrected only upon the grounds specified in the Federal Arbitration Act.
The parties consent to the jurisdiction of the above-specified Court for the
enforcement of these provisions, the entry of judgment on any award, and the
vacatur, modification and correction of any award as above specified.  In the
event h Court lacks jurisdiction, then any court having jurisdiction of this
matter may enter judgment upon any award and provide the same relief, and
undertake the same review, as specified herein.

   g) Each party has the right before or during the arbitration to seek and
obtain from the appropriate court provisional remedies such as attachment,
preliminary injunction, replevin, etc. to avoid irreparable harm, maintain the
status quo, or preserve the subject matter of the arbitration.

   h) EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY JURY.

   i) EACH PARTY HERETO WAIVES ANY CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES FROM
THE OTHER.

   j) EACH PARTY HERETO WAIVES ANY CLAIM OF CONSEQUENTIAL DAMAGES FROM THE
OTHER EXCEPT WITH RESPECT TO ANY BREACH OF SECTION 8.01; IT BEING AGREED THAT A
PARTY MUST PROVE THE EXISTANCE OF, AND ITS ENTITLEMENT TO, CONSEQUENTIAL
DAMAGES WITH RESPECT TO A BREACH OF SECTION 8.01 IN ACCORDANCE WITH APPLICABLE
LAW.

   11.02 Publicity.  Except as provided in Section 3.02, and excepting public
press releases describing material events as required under applicable
regulations of the Securities and Exchange Commission, neither party hereto
shall originate any publicity, news release, or other announcement, written or
oral, whether to the public press, the trade, CODMAN's or Valley Forge's
customers or otherwise, relating to this Agreement, or to performance hereunder
or the existence of an arrangement between the parties without the prior
written approval of the other party hereto.  Valley Forge shall not use the
name of Johnson & Johnson, CODMAN, or any of its Affiliates for advertising or
promotional purposes without the prior written consent of CODMAN.

   11.03 Headings.  The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning and interpretation of this Agreement.

   11.04 Notices.  All notices and other communications hereunder shall be in
writing.  All notices hereunder of an Indemnity Claim, a Force Majeure Event,
default or breach hereunder, or, if applicable, termination of the term hereof,
or any other notice of any event or development material to this Agreement
taken as a whole, shall be delivered personally, or sent by national overnight
delivery service or postage pre-paid registered or certified U.S. mail, and
shall be deemed given when delivered, if by personal delivery or overnight
delivery service, or three business days after deposit in the mail, if sent by
U.S. mail, and shall be addressed as follows:

 If to Valley Forge:  Valley Forge Scientific Corp.
                      136 Green Tree Road
                      P.O. Box 1179
                      Oaks, PA  19456
                      Fax: (610) 666 7565
                      Attention:  President

 If to CODMAN: Codman & Shurtleff, Inc.
               325 Paramount Drive
               Raynham, MA 02767-0350
               Attention:  President

 with a copy to: Russell U. Schenkman, Esq.
                 Hale & Schenkman
                 13 Roszel Road
                 Suite C225
                 Princeton, NJ  08540

 with a copy to: General Counsel
                 Johnson & Johnson
                 One Johnson & Johnson Plaza
                 New Brunswick, NJ  08933

or to such other place as either party may designate by written notice to the
other in accordance with the terms hereof.

   11.05 Failure to Exercise.  The failure of either party to enforce at any
time for any period any provision hereof shall not be construed to be a waiver
of such provision or of the right of such party thereafter to enforce each such
provision.

   11.06 Assignment.  This Agreement, or any of the rights and obligations
created herein, shall not be assigned or transferred, in whole or in part, by
either party hereto without the prior written consent of the other party;
provided, however, that either party shall have the right to assign any or all
of its rights or obligations under this Agreement to any Affiliate, or a
successor to that part of its business to which this Agreement relates.  Any
attempted assignment or transfer of such rights or obligations without such
consent, except as provided herein, shall be void.  Subject to the foregoing
sentence, this Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns.

   11.07 Severability.  In the event that any one or more of the provisions (or
any part thereof) contained in this Agreement or in any other instrument
referred to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument.  Any term or provision of this
Agreement which is invalid, illegal or unenforceable in any jurisdiction shall,
to the extent the economic benefits conferred by this Agreement to both parties
remain substantially unimpaired, not affect the validity, legality or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction.

   11.08 Relationship of the Parties.  The relationship of CODMAN and Valley
Forge established by this Agreement is that of independent contractors, and
nothing contained herein shall be construed to (i) give either party any right
or authority to create or assume any obligation of any kind on behalf of the
other or (ii) constitute the parties as partners, joint venturers, co-owners or
otherwise as participants in a joint or common undertaking.

   11.09 Competing Products.  Valley Forge recognizes and acknowledges that
CODMAN (and its Affiliates) has been, and will continue to be, actively
involved in the design, development and marketing of instruments and
accessories for the treatment of neurological and spinal disorders.  Except for
the Products in Schedule A, CODMAN shall not, during the term of this Agreement
market for specific use in the central nervous system (i.e. the cranial cavity
and spinal column), itself or through any third parties, bipolar generators and
associated products for use with the bipolar generators: irrigators, integrated
cord and tubing sets (except as noted in Schedule A), footswitches, footpedals,
footswitch cables, generator remote controls, or disposable hand-held surgical
bipolar electrosurgery pens, disposable hand-held surgical bipolar
electrosurgery coagulation balls, or disposable hand-held surgical bipolar
electrosurgery loops; it being agreed by Valley Forge that nothing contained in
this S ection 11.09 shall restrict an Affiliate of CODMAN from engaging in any
of the above described activities independently of CODMAN, provided such
Affiliates do not have access to, or use, Valley Forge's confidential
information.

   11.10 Entire Agreement.  It is the desire and intent of the parties to
provide certainty as to their future rights and remedies against each other by
defining the extent of their undertakings herein.  This Agreement constitutes
and sets forth the entire agreement and understanding between the parties with
respect to the subject matter hereof and is intended to define the full extent
of the legally enforceable undertakings of the parties hereto, and no promise,
agreement or representation, written or oral, which is not set forth explicitly
in this Agreement is intended by either party to be legally binding.  Each
party acknowledges that in deciding to enter into this Agreement and to
consummate the transactions contemplated hereby it has not relied upon any
statements, promises or representations, written or oral, express or implied,
other than those explicitly set forth in this Agreement.  This Agreement
supersedes all previous understandings, agreements and representations between
the parties, written or oral, with respect to the subject matter hereof.

   11.11 Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

   11.12 Expenses.  Each party shall pay all of its own fees and expenses
(including all legal, accounting and other advisory fees) incurred in
connection with the negotiation and execution of this Agreement and the
arrangements contemplated hereby.

   11.13 Modifications and Amendments.  This Agreement shall not be modified or
otherwise amended except pursuant to an instrument in writing executed and
delivered by each of the parties hereto.

   11.14 Construction.  The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement.

   11.15 Governing Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New Jersey, without giving effect to
the choice of law provisions thereof.

   11.16 Incorporation of Exhibits and Schedules.  The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

     IN WITNESS WHEREOF, the parties hereto intending legally to be bound
hereby, have each caused this Agreement to be duly executed as of the date
first above written.

                                   VALLEY FORGE SCIENTIFIC CORP.

                                   By: /s/ Jerry L. Malis
                                   Jerry L. Malis
                                   President

                                   Date: 12/12/00


                                   CODMAN & SHURTLEFF, INC.

                                   By: /s/ David M. Hable
                                   David M. Hable
                                   President

                                   Date: 12/11/00