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                                                                    EXHIBIT 4.16

                               THIRD AMENDMENT AND
                              FORBEARANCE AGREEMENT

     THIS THIRD AMENDMENT AND FORBEARANCE AGREEMENT, dated as of May 24, 2001
(this "Third Amendment") to the Credit Agreement, dated as of May 22, 1998 (as
heretofore amended and as may be further amended, restated, modified and
supplemented from time to time, the "Credit Agreement"), is among THERMADYNE
HOLDINGS CORPORATION, a Delaware corporation ("Holdco"), THERMADYNE MFG. LLC, a
Delaware limited liability company (the "Company"), COMWELD GROUP PTY. LTD. (the
"Initial Australian Borrower"), GENSET S.P.A. (the "Initial Italian Borrower"),
THERMADYNE WELDING PRODUCTS CANADA LIMITED (the "Initial Canadian Borrower" and,
together with the Company, the Initial Australian Borrower and the Initial
Italian Borrower, the "Borrowers"), the several lenders from time to time party
to the Credit Agreement (the "Lenders"), CREDIT SUISSE FIRST BOSTON ("CSFB"), as
Syndication Agent for the Lenders (the "Syndication Agent"), SOCIETE GENERALE,
as Documentation Agent for the Lenders (the "Documentation Agent"), ABN AMRO
BANK N.V., as Administrative Agent (the "Administrative Agent", and together
with the Syndication Agent and the Documentation Agent, the "Agents"), and the
Subsidiary Co-Obligors identified in the Credit Agreement.

                                   WITNESSETH:

     WHEREAS, the Borrowers, the Agents and the Lenders are party to that
certain Credit Agreement dated May 22, 1998 as amended by the First Amendment to
Credit Agreement dated as of November 10, 1999 and by the Waiver and Second
Amendment to Credit Agreement dated as of March 31, 2000; and

     WHEREAS, (i) an Event of Default has occurred and is continuing as a result
of the Borrowers' failure to comply with subsections (b) through (d), inclusive,
of Section 7.2.4 of the Credit Agreement as at March 31, 2001, (ii) an Event of
Default has occurred and is continuing as a result of the Company's failure to
comply with, or cause to be complied with, the terms of Section 7.1.12 of the
Credit Agreement in respect of the property located in Gallman, Mississippi and
listed on Schedule 7.1.12 of the Disclosure Schedule, (iii) a Default has
occurred and is continuing as a result of the Company's failure to comply with
Section 7.1.1 (b) of the Credit Agreement by having delivered to the Agents and
the Lenders a certification from its public accountants, regarding the annual
audit report of the Company and its Subsidiaries for the Fiscal Year ended
December 31, 2001, that contained an Impermissible Qualification, (iv) one or
more Defaults or Events of Default may occur as a result of the non-payment of
interest on (a) the Subordinated Notes and (b) Holdco's 10-3/4% Senior
Subordinated Notes due 2003, and (v) one or more Defaults or Events of Default
may occur as a result of the determination of the Borrower's compliance with
Section 7.2.4 as at June 30, 2001 (the events referred to in clauses (i) through
(v) above are collectively referred to herein as the "Specified Events of
Default"); and

     WHEREAS, the Borrowers have requested that the Lenders and the Agents
forbear from exercising certain rights in respect of the Specified Events of
Default, and the Agents and the Lenders have agreed to do so on the terms and
subject to the conditions contained herein.

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     NOW, THEREFORE, in consideration of the foregoing premises, the covenants
set forth in this Third Amendment and for other valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

                                   ARTICLE I

                                  DEFINED TERMS

SECTION 1.1. Defined Terms. Unless otherwise defined herein or the context
otherwise requires, capitalized terms used in this Third Amendment, including
its preamble and recitals, have the respective meanings given to such terms in
the Credit Agreement.

                                   ARTICLE II

                           ACKNOWLEDGMENT OF EVENTS OF
                              DEFAULT; FORBEARANCE

SECTION 2.1. Acknowledgment of Events of Default. The Borrowers have delivered
to the Administrative Agent a Compliance Certificate executed by an Authorized
Officer of the Company showing the calculation of the financial covenants in
subsections (a) through (d) inclusive of Section 7.2.4 of the Credit Agreement
as at March 31, 2001 and evidencing the Specified Events of Default occurring as
a result of the non-compliance by the Borrowers with subsections (b) through
(d), inclusive, of Section 7.2.4 of the Credit Agreement as at March 31, 2001.
Each of Holdco, the Borrowers and the Subsidiary Co-Obligors acknowledges that
the Events of Default described in clauses (i) and (ii), and the Default
described in clause (iii), of the definition of Specified Events of Default have
occurred and are continuing.

SECTION 2.2. Forbearance. On the terms and subject to the conditions set forth
in this Third Amendment, the Agents and the Lenders agree to forbear from taking
any action or exercising any right or remedy permitted to be taken or exercised
by them under the Credit Agreement or the other Loan Documents with respect to
the Specified Events of Default (including requiring cash collateral in respect
of outstanding Letters of Credit) for the period (the "Forbearance Period")
commencing on the Effective Date (as defined below) and terminating on the
Termination Date (as defined below); provided, however, that such forbearance
shall extend only to the Specified Events of Default and not to any other
Defaults or Events of Default now existing or occurring after the Effective Date
and shall not in any way or manner restrict the Agents or the Lenders from
exercising any rights or remedies they may have with respect to the Specified
Events of Default from and after the expiration or termination of the
Forbearance Period or with respect to any other Default or Event of Default at
any time. "Termination Date" shall mean the earliest to occur of any of the
following events: (i) 5:00 p.m. (New York time) on July 31, 2001; (ii) the
occurrence and continuance of an Event of Default other than the Specified
Events of Default, and (iii) the Borrowers' failure to comply with any of the
provisions of this Third Amendment or any other documents or agreements to be
entered into or delivered in connection with this Third Amendment. The
Forbearance Period shall automatically terminate and expire on the Termination
Date without any requirement for notice to Holdco, the Borrowers, the Subsidiary
Co-Obligors or any other Person and all rights, remedies and privileges of the
Agents and the Lenders under the Credit Agreement and the other Loan Documents
shall be available to, and capable of exercise by, the Agents and the Lenders.

SECTION 2.3. Loan Documents Still in Force. Each of Holdco, the Borrowers and
the Subsidiary Co-Obligors hereby (a) ratifies and affirms in their entirety the
Credit Agreement and the other Loan

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Documents and (b) subject to the forbearance in respect of the Specified Events
of Default set forth in Section 2.2 above, agrees that the Credit Agreement and
other Loan Documents shall remain in full force and effect throughout the
Forbearance Period and from and after the expiration or termination thereof.
Each of Holdco, the Borrowers and the Subsidiary Co-Obligors agrees that nothing
in this Third Amendment shall, or shall be construed to: (i) impair the
validity, perfection or priority of the lien and security interest created under
or evidenced by any Mortgage, any Pledge Agreement, any Security Agreement or
any of the other Loan Documents to which it is a party; (ii) waive or impair any
rights, powers or remedies of the Agents or the Lenders under the Loan Documents
upon termination of the Forbearance Period, all of which are expressly reserved;
(iii) require the Agents or the Lenders to extend the Forbearance Period, or
grant additional cure or forbearance periods, extend the Stated Maturity Date
for any Loan or extend the term of or otherwise modify this Third Amendment; or
(iv) waive the Specified Events of Default.

                                  ARTICLE III

                             COVENANTS OF BORROWERS

SECTION 3.1. Lenders Not Required to Make Loans; Issuers Not Required to Issue
Letters of Credit. In consideration of the forbearance provided for herein, the
Borrowers hereby agree that, during the Forbearance Period, (a) no Lender shall
be obligated or required to make, and no Borrower shall request that any Lender
make, any Loan, and (b) no Issuer shall be required to issue, and no Borrower
shall request that any Issuer issue, any Letter of Credit other than Letters of
Credit ("Replacement Letters of Credit") issued to replace, renew or extend
Letters of Credit outstanding on the date hereof, provided that the aggregate
Stated Amounts of such Replacement Letters of Credit does not exceed the
aggregate Stated Amounts of the Letters of Credit replaced, renewed or extended
thereby by more than $100,000. Nothing in this Section 3.1 to this Third
Amendment shall impair, affect or diminish the obligations of the Borrowers to
pay the fees set forth in Section 3.3 of the Credit Agreement.

                                   ARTICLE IV

                         AMENDMENTS TO CREDIT AGREEMENT

SECTION 4.1. Amendments.

     (a) Section 1.1 of the Credit Agreement is hereby amended by adding thereto
in the appropriate alphabetical order the following definition of "Payment Date"
and each reference to "Quarterly Payment Date" set forth in the Credit Agreement
and other Loan Documents (other than such references in Section 3.1.1 (i), (j)
and (k) of the Credit Agreement) is hereby amended to refer to "Payment Date":

          "Payment Date" means the last Business Day of each calendar month,
          without regard to the expiration of any then current Interest
          Period.".

     (b) Section 1.1 of the Credit Agreement is hereby further amended by adding
thereto in the appropriate alphabetical order the following definitions:

          "Third Amendment" means the Third Amendment and Forbearance Agreement
          dated as of May 24, 2001, among Holdco, the Borrowers, the Subsidiary
          Co-Obligors, the Agents and the Lenders parties thereto.

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<PAGE>   4

          "Third Amendment Date" has the meaning given to the term "Effective
          Date" in the Third Amendment.

     (c) The definition of "Applicable Margin" in Section 1.1 of the Credit
Agreement is hereby deleted in its entirety and replaced with the following:

          "Applicable Margin" means, on and after the Third Amendment Date, with
          respect to each type of Loan described below, the rate per annum set
          forth opposite such Loan:

<Table>
<Caption>
                                                     BASE RATE LOAN                 LIBO RATE LOAN
                                                     --------------                 --------------

<S>                                                  <C>                            <C>
Term-C Loan                                              2.00%                          3.25%

Term-B Loan                                              1.75%                          3.00%

Term-A Loan                                              1.50%                          2.75%

Committed Revolving Loan                                 1.50%                          2.75%

Swingline Loan (U.S. Dollar denominated                  1.50%                           N/A
Base Rate Loan only)
</Table>

     (d) The definition of "Interest Period" in Section 1.1 of the Credit
Agreement is hereby amended (i) by deleting the phrase "date one, two, three,
six or, if available in the Administrative Agent's reasonable determination,
nine or twelve months thereafter as selected by the applicable Borrower in its
Borrowing Request or its Conversion/Continuation Notice;" on the third, fourth,
fifth and sixth line of clause (a) thereof and replacing such phrase with the
phrase "numerically corresponding date occurring one month thereafter;", and
(ii) by deleting the phrase "the Stated Maturity Date for such Loan" in
subclause (iii) of clause (a) thereof and replacing such phrase with the phrase
"July 31, 2001".

     (e) The definition of "Obligations" in Section 1.1 of the Credit Agreement
is hereby amended by adding at the end thereof the following parenthetical
phrase:

         "(including all such amounts which would become due but for the
         operation of the automatic stay under Section 362(a) of the United
         States Bankruptcy Code, 11 U.S.C. Section 362(a), and the operation of
         Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
         U.S.C. Section 502(b) and Section 506(b))."

     (f) Section 3.1.1(d) of the Credit Agreement is hereby amended by deleting
in its entirety the proviso at the end thereof and replacing such proviso with
the following:

          "; provided that, notwithstanding the foregoing, within one Business
          Day after the receipt of Net Disposition Proceeds from the sale of the
          property in Gallman, Mississippi and identified on Schedule 7.1.12 of
          the Disclosure Schedule, the Company shall deliver to the
          Administrative Agent a calculation of the amount of such Net
          Disposition Proceeds and make, or cause to be

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          made, a mandatory prepayment of the Term Loans in an amount equal to
          100% of such Net Disposition Proceeds, to be applied as set forth in
          Section 3.1.2,"

     (g) Section 3.1.2(b) of the Credit Agreement is hereby amended by deleting
the phrase "in direct order of maturity" on the sixth line thereof and replacing
such phrase with the following:

          "in the inverse order of maturity".

     (h) Section 3.2.3(d) of the Credit Agreement is hereby amended by deleting
the parenthetical phrase on the second and third lines thereof and inserting in
lieu thereof the phrase "and on each Payment Date".

     (i) Section 7.1.1(j) is hereby amended by re-lettering such subsection new
subsection "(l)", deleting the word "and" at the end of subsection "(i)" and
inserting new subsections (j) and (k) as follows:

          "(j) on the first Business Day of each calendar month, commencing with
          June 1, 2001, a cash flow projection for the Company and its
          Subsidiaries on a consolidated basis for the thirteen calendar week
          period commencing on such first Business Day of each such calendar
          month, certified by an Authorized Officer of the Company;"

          "(k) promptly and in any event within five Business Days after the
          president, chief financial officer, chief executive officer or
          treasurer of the Company becomes aware of or obtains knowledge of the
          occurrence of any event or circumstance which could reasonably be
          expected to have Material Adverse Effect, notice thereof and of the
          action which the Company has taken or proposes to take with respect
          thereto; and".

     (j) Section 7.1.8 of the Credit Agreement is hereby amended by deleting in
subsection (b) thereof the phrase "having a value as determined in good faith by
the Administrative Agent in excess of $3,000,000 in the aggregate" on the second
and third line thereof.

     (k) Section 7.1.10 of the Credit Agreement is hereby deleted in its
entirety and the phrase "Intentionally Omitted" is inserted in lieu thereof.

     (l) Section 7.2.2(c) of the Credit Agreement is hereby amended by deleting
the reference to "$25,000,000" set forth on the last line thereof and replacing
it with $10,000,000".

     (m) Section 7.2.2(d) of the Credit Agreement is hereby amended by deleting
in its entirety the following phrase at the end thereof:

          "or otherwise entered into by the Company or any Subsidiary to hedge
          against interest rate, currency exchange rate or commodity price risk,
          in each case arising in the ordinary course of business of the Company
          and its Subsidiaries and not for speculative purposes"

     (n) Section 7.2.2(e) of the Credit Agreement is hereby amended by inserting
the following phrase on the fifth line thereof after the comma and before the
word "the":

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          "such Indebtedness shall only be permitted to the extent it is
          incurred in connection with the purchase or sale of raw materials,
          inventory or equipment in the ordinary course of business and"

     (o) Section 7.2.2(f) of the Credit Agreement is hereby amended by deleting
the reference to "$207,000,000 at any time outstanding;" on the last line
thereof and replacing it with the following phrase:

          "the aggregate principal amount outstanding thereunder on the Third
          Amendment Date;"

     (p) Section 7.2.2(g) of the Credit Agreement is hereby amended by adding to
the end thereof the following phrase:

          "and outstanding on the Third Amendment Date;"

     (q) Section 7.2.2(h) of the Credit Agreement is hereby amended by deleting
the phrase "in an aggregate principal amount at any time outstanding not to
exceed $20,000,000" and replacing such phrase with the following:

          "and outstanding on the Third Amendment Date;"

     (r) Section 7.2.2(j) of the Credit Agreement is hereby amended by deleting
the reference to "$20,000,000" on the last line thereof and replacing such
reference with "$17,500,000".

     (s) Section 7.2.2(l) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:

          "(l) other unsecured Indebtedness of the Company and its U.S.
          Subsidiaries outstanding on the Third Amendment Date;"

     (t) Section 7.2.2 of the Credit Agreement is hereby further amended by
adding after the proviso at the end thereof a new last sentence as follows:

          "Notwithstanding the foregoing, during the Forbearance Period (as
          defined in the Third Amendment) only, Indebtedness permitted to be
          incurred or created under clauses (c), (e), (i) and (j) of this
          Section 7.2.2 may be incurred or created notwithstanding the
          occurrence and continuance of the Specified Events of Default (as
          defined in the Third Amendment)."

     (u) Section 7.2.5(l) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:

          "(l) equity Investments of the Company or any U.S. Subsidiary in
          Non-U.S. Subsidiaries which are (i) outstanding on the Third Amendment
          Date, or (ii) made after the Third Amendment Date but solely in
          connection with the purchase or sale of raw materials, inventory or
          equipment in the ordinary course of business;"

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<PAGE>   7

     (v) Section 7.2.5(m) of the Credit Agreement is hereby deleted, in its
entirety, and replaced with the following:

          "(m) Investments made by the Company or any of its Subsidiaries in
          accordance with, and in reliance upon, the terms and conditions of
          subsection 7.2.5(m) (as written prior to the Third Amendment Date) and
          which Investments are outstanding on the Third Amendment Date;"

     (w) Section 7.2.6(c) of the Credit Agreement is hereby amended by deleting
in their entirety clauses (iii), (iv) and (v) thereof.

     (x) Section 7.2.6 is further amended by deleting in their entirety
subsections (d) and (e) thereof.

     (y) Section 8.1.4 of the Credit Agreement is hereby amended by deleting the
phrase at the end thereof "after notice thereof shall have been given to the
Company by the Administrative Agent at the direction of the Required Lenders"
and replacing such phrase with the following "after the president, chief
executive officer, chief financial officer or treasurer of any Obligor becomes
aware of or obtains knowledge of such default."

     (z) Section 8.3 of the Credit Agreement is hereby amended by (i) deleting
the phrase ", upon the direction of the Required Lenders, shall" appearing on
the third and fourth lines thereof and inserting in lieu thereof the phrase
"may, and upon the direction of the Required Lenders shall," (ii) inserting
before the first occurrence of the word "the" on the eighth line thereof the
phrase "one hundred five (105%) percent of" and (iii) inserting after the word
"to" on the penultimate line thereof the phrase "one hundred five (105%) percent
of".

     (aa) Section 11.3 of the Credit Agreement is hereby amended by inserting at
the end of the parenthetical phrase on the sixth line of the last full paragraph
thereof the following:

          "and the reasonable fees and expenses of the financial advisor to
          counsel for the Administrative Agent."

     (bb) Section 11.11.1 of the Credit Agreement is hereby amended by (i)
deleting the phrase "the Company and the Agents" on the first line of subsection
(a) thereof and inserting in its place the phrase "the Administrative Agent",
(ii) closing the parenthetical phrase on the third line of subsection (a)
thereof by inserting a ")" after the word "withheld", (iii) deleting the phrase
"and (ii) of the Company shall not be required upon the occurrence and during
the continuance of an Event of Default)" on the third, fourth and fifth line of
subsection (a) thereof, (iv) deleting the phrase "the Company, the Agents," on
the first line of subsection(b) thereof and inserting in its place the phrase
"the Administrative Agent" and (v) adding as a new last sentence of such Section
11.11.1 the following:

          "Upon the Company's written request, from time to time, the
          Administrative Agent shall provide to the Company a list identifying
          the identity of all Lenders shown in the Register".

SECTION 4.2. Amendments to Exhibits and Schedules.

     (a) Each of Exhibits B-1, B-3 and C of the Credit Agreement is hereby
amended such that each reference to an election by the applicable Borrower of
the duration of an Interest Period shall reflect the limitation, set forth in
Section 4.1(c) of this Third Amendment, to one-month Interest Periods only.

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<PAGE>   8

     (b) Exhibit E-2 to the Credit Agreement is hereby amended to reflect the
amendments to Section 7.2.6 to the Credit Agreement set forth in Section 4.1(w)
of this Third Amendment.

                                   ARTICLE V

                            FEES, COSTS AND EXPENSES

SECTION 5.1. Forbearance Fee. The Borrowers agree to pay to the Administrative
Agent, for the ratable benefit of those Lenders which shall have executed and
delivered counterparts of this Third Amendment by or before 5:00 p.m. (New York
time) on the Effective Date (as defined below) (each such Lender, a "Consenting
Lender") by wire transfer of immediately available funds, a non-refundable
forbearance fee (the "Forbearance Fee") in an amount equal to $200,000. The
Forbearance Fee shall be due and payable on the Effective Date.

SECTION 5.2. Costs and Expenses. The Borrowers agree that their obligations set
forth in Section 11.3 of the Credit Agreement shall extend to the preparation,
execution and delivery of this Third Amendment (whether or not this Third
Amendment becomes effective or the transactions contemplated hereby are
consummated), including, but not limited to, the reasonable fees and
disbursements of Clifford Chance Rogers & Wells LLP, counsel for the
Administrative Agent, and FTI Policano & Manzo, financial advisor to Clifford
Chance Rogers & Wells LLP.

                                   ARTICLE VI

                           CONDITIONS TO EFFECTIVENESS

SECTION 6.1. Effective Date. This Third Amendment shall become effective on that
date (the "Effective Date") when all of the conditions set forth in this Article
VI have been satisfied.

     (a) The Administrative Agent shall have received counterparts of this Third
Amendment executed on behalf of Holdco, the Borrowers and each Subsidiary
Co-Obligor, and the Administrative Agent shall have confirmed to the Company
that it has received from the Required Lenders their respective executed
counterparts hereto.

     (b) The Administrative Agent shall have received, by wire transfer of
immediately available funds, for the ratable benefit of the Consenting Lenders,
the Forbearance Fee.

     (c) The Administrative Agent shall have received, in sufficient number for
each Lender, the financial statements and related reports and certificates
(including, without limitation, a Compliance Certificate) required to be
delivered under Section 7.1.1(a) and (c) of the Credit Agreement for the Fiscal
Quarter ended March 31, 2001.

     (d) The Administrative Agent shall have received favorable written opinions
from counsel to Holdco, the Borrowers and Subsidiary Co-Obligors in form and
substance satisfactory to the Administrative Agent.

     (e) The Agents, the Lenders, counsel for the Administrative Agent and the
financial advisor to such counsel shall have received, by wire transfer of
immediately available funds, the amounts invoiced to the Borrowers and required
to be paid pursuant to Section 5.2 of this Third Amendment.

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<PAGE>   9

     (f) The Administrative Agent and its counsel shall have received such other
information, materials, and documents as either of the Administrative Agent or
its counsel may reasonably request, which information, materials and documents
shall be satisfactory in form and substance to the Administrative Agent and its
counsel.

     (g) Holdco, each Borrower and each Subsidiary Co-Obligor shall have
obtained all consents and waivers from any Person necessary for the execution,
delivery and performance of this Third Amendment.

     (h) All legal matters in connection with this Third Amendment, the Credit
Agreement and the other Loan Documents shall be reasonably satisfactory to
Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent.

                                   ARTICLE VII

                         REPRESENTATIONS AND WARRANTIES

SECTION 7.1. Representations and Warranties. In order to induce the
Administrative Agent and the Lenders to enter into this Third Amendment, Holdco,
each Borrower and each Subsidiary Co-Obligor represents and warrants, as to
itself, to the Agents and the Lenders as follows:

     (a) The execution, delivery and performance by it of this Third Amendment
and the performance by it of the Credit Agreement and other Loan Documents to
which it is a party (i) have been duly authorized by all requisite corporate or
other action, and (ii) do not (x) contravene such Obligor's Organic Documents,
(y) contravene, breach or result in a default with respect to any contractual
provision (other than any contractual provision that shall have been waived on
or prior to the Effective Date), law or governmental regulation or court decree
or order binding on or affecting such Obligor where such contravention,
individually, or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or (z) result in, or require the creation or imposition
of, any Lien on any property or assets of such Obligor except pursuant to the
terms of the Loan Documents;

     (b) Upon the Effective Date, this Third Amendment and each of the Credit
Agreement and the other Loan Documents to which each Obligor is a party will
constitute the legal, valid and binding obligation of such Obligor, enforceable
in accordance with its terms, in each case subject, as to enforceability, to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
at law or in equity) and an implied covenant of good faith;

     (c) Except with respect to the occurrence of the Specified Events of
Default, the representations and warranties set forth in Article VI of the
Credit Agreement and in each other Loan Document are true and correct in all
material respects with the same effect as if made on the Effective Date (unless
stated to relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects as if made on
and as of such earlier date); and;

     (d) Except with respect to the occurrence of the Specified Events of
Default, after giving effect to the amendments set forth in this Third
Amendment, no Default or Event of Default has occurred and is continuing.

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<PAGE>   10

     (e) Note 7 to the Condensed Consolidated Financial Statements of the
Company set forth in the Company's quarterly report on Form 10-Q, inadvertently
misstates that the outstanding amount of secured indebtedness under the Credit
Agreement as of March 31, 2001is "$336 million". The correct amount of
outstanding indebtedness under the Credit Agreement as of March 31, 2001 is
$356,700,000.

                                  ARTICLE VIII

                           ACKNOWLEDGEMENT AND RELEASE

SECTION 8.1. Acknowledgement and Release. Holdco, the Borrowers and the
Subsidiary Co-Obligors hereby confirm and acknowledge as of the date hereof that
they are validly and justly indebted to the Agents and the Lenders for the
payment of all Obligations, without defense, counterclaim, offset,
cross-complaint, claim or demand of any kind or nature whatsoever. Holdco, the
Borrowers and the Subsidiary Co-Obligors on their own behalf, and on behalf of
their successors and assigns, hereby release, waive and forever discharge the
Agents, the Lenders and all of their officers, directors, employees, attorneys,
financial advisors and agents from any and all actions, causes of action, debts,
dues, claims, demands, liabilities and obligations of every kind and nature,
both in law and equity, known or unknown, whether matured or unmatured, absolute
or contingent arising from the beginning of the world through the date hereof
with respect to the Credit Agreement, the other Loan Documents and the
transactions contemplated thereby.

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.1. Cross-References. References in this Third Amendment to any Section
is, unless otherwise specified, to such Section of this Third Amendment.

SECTION 9.2. Loan Document Pursuant to Credit Agreement. This Third Amendment is
a Loan Document executed pursuant to the Credit Agreement and shall (unless
otherwise expressly indicated therein) be construed, administered and applied in
accordance with the terms and provisions of the Credit Agreement, including
Article XI thereof. Each of Holdco, the Borrowers and the Subsidiary Co-Obligors
hereby agrees that its failure to comply with any provision of this Third
Amendment shall cause the forbearance granted hereunder to cease to be in effect
immediately and without the requirement of any prior notice from or further
action on the part of the Agents or any of the Lenders.

SECTION 9.3. Counterparts, etc. This Third Amendment may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument. Delivery of an executed counterpart of a signature page of this
Third Amendment by facsimile shall be effective as delivery of a manually
executed counterpart of this Third Amendment.

SECTION 9.4. Governing Law. THIS THIRD AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.

SECTION 9.5. Successors and Assigns. This Third Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.

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<PAGE>   11

SECTION 9.6. Entire Agreement. This Third Amendment and the other Loan Documents
set forth the entire understanding and agreement of the parties hereto in
relation to the subject matter hereof and thereof and supercede any prior
negotiations and agreements among the parties relative to such subject matter.
No promise, condition, representation or warranty, express or implied, not
herein or therein set forth shall bind any party hereto, and no one of them has
relied on any such promise, condition, representation or warranty. Each of the
parties hereto acknowledges that, except as otherwise expressly stated in this
Third Amendment, no representations, warranties or commitments, express or
implied, have been made by any party to any other party with respect to the
subject matter of this Third Amendment.

SECTION 9.7. Full Force and Effect. This Third Amendment shall be limited
precisely as written and shall not be deemed (a) to be a consent granted
pursuant to, or a waiver or modification of, any other term or condition of the
Credit Agreement, the other Loan Documents or any of the instruments or
agreements referred to therein or a waiver of, or forbearance with respect to,
any other Default or Event of Default under the Loan Documents, whether or not
known to any of the Agents or the Lenders or (b) to prejudice any other right or
rights which the Agents or the Lenders may now have or have in the future under
or in connection with the Credit Agreement, the other Loan Documents or any of
the instruments or agreements referred to therein. Subject to the forbearance in
respect of the Specified Events of Default in Section 2.2 above, the Credit
Agreement and each of the other Loan Documents shall continue in full force and
effect in accordance with the provisions thereof on the Effective Date. As used
in the Credit Agreement, the terms "Credit Agreement," "this Agreement,"
"herein," "hereafter," "hereto," "hereof," and words of similar import shall,
unless the context otherwise requires, mean the Credit Agreement as modified by
this Third Amendment. References to the terms "Agreement" or "Credit Agreement"
appearing in the Exhibits or Schedules to the Credit Agreement or in the other
Loan Documents shall, unless the context otherwise requires, mean the Credit
Agreement as modified by this Third Amendment.

SECTION 9.8. Invalidity; Severability. Whenever possible, each provision of this
Third Amendment shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. Any provision of this Third Amendment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

SECTION 9.9. Headings. The headings of this Third Amendment are for the purposes
of reference only and shall not affect the construction of, or be taken into
consideration in interpreting, this Third Amendment.

SECTION 9.10. Further Assurances. Each of Holdco, the Borrowers and the
Subsidiary Co-Obligors expressly acknowledges and agrees to enter into such
other or further documents, and to take such other or further actions that may
be necessary or, in the opinion of the Administrative Agent, desirable to
perfect, preserve or protect the liens and security interests created, permitted
or contemplated under any of the Loan Documents.

SECTION 9.11. Consultation with Advisors. The Obligors acknowledge that they
have consulted with counsel and with such other experts and advisors as they
have deemed necessary in connection with the negotiation, execution and delivery
of this Third Amendment. This Third Amendment shall be construed without regard
to any presumption or rule requiring that it be construed against the party
causing this Third Amendment or any part hereof or thereof to be drafted.

                                       11
<PAGE>   12

SECTION 9.12. Survival. All representations, warranties, covenants, agreements,
undertakings, waivers and releases of each of the Obligors contained herein
shall survive the Termination Date and the indefeasible payment in full in cash
of the Obligations.

SECTION 9.13. Amendment. No amendment, modification, rescission, waiver or
release of any provision of this Third Amendment shall be effective unless made
in accordance with the terms of the Credit Agreement.

                         [SIGNATURES ON FOLLOWING PAGE]

                                       12
<PAGE>   13

     IN WITNESS WHEREOF, the Borrower, each Subsidiary Co-Obligor, the Lenders
and the Agents have caused this Third Amendment to be duly executed by their
respective officers on the day and year first above written.

                                     BORROWERS

                                     THERMADYNE MFG. LLC.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     COMWELD GROUP PTY. LTD.

                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     GENSET S.P.A.

                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     THERMADYNE WELDING PRODUCTS CANADA LIMITED

                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                       13
<PAGE>   14

                                     HOLDCO

                                     THERMADYNE HOLDINGS CORPORATION

                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     SUBSIDIARY CO-OBLIGORS

                                     THERMADYNE CAPITAL CORP.

                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     THERMADYNE INDUSTRIES, INC.

                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     VICTOR EQUIPMENT COMPANY


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     THERMADYNE INTERNATIONAL CORP.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer




                                       14
<PAGE>   15

                                     THERMADYNE CYLINDER COMPANY


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     THERMAL DYNAMICS CORPORATION


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     C&G SYSTEMS HOLDING, INC.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     MECO HOLDING COMPANY


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     TWECO PRODUCTS, INC.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer




                                       15
<PAGE>   16

                                     TAG REALTY, INC.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     VICTOR COYNE INTERNATIONAL, INC.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     VICTOR GAS SYSTEMS, INC.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     STOODY COMPANY


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     THERMAL ARC, INC.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer




                                       16
<PAGE>   17

                                     C&G SYSTEMS, INC.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     MARISON CYLINDER COMPANY


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     WICHITA WAREHOUSE CORPORATION


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     COYNE NATURAL GAS SYSTEMS, INC.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                     MODERN ENGINEERING COMPANY, INC.


                                     By: /s/ James H. Tate
                                         ---------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer




                                       17
<PAGE>   18

                                   AGENTS


                                   ABN AMRO BANK N.V., AS ADMINISTRATIVE AGENT


                                   By:      /s/  Steven C. Wimpenny
                                       -----------------------------------------
                                       Name:  Steven C. Wimpenny
                                       Title: Group Senior Vice President


                                   By:      /s/ William J. Fitzgerald
                                       -----------------------------------------
                                       Name:  William J. Fitzgerald
                                       Title: Senior Vice President


                                   CREDIT SUISSE FIRST BOSTON, AS SYNDICATION
                                   AGENT AND AS A LENDER


                                   By:      /s/ Dana F. Klein
                                       ----------------------------------------
                                       Name:  Dana F. Klein
                                       Title: Director


                                   SOCIETE GENERALE, AS DOCUMENTATION AGENT AND
                                   AS A LENDER


                                   By:      /s/ Cynthia A. Jay
                                       -----------------------------------------
                                       Name:  Cynthia A. Jay
                                       Title: Managing Director


                                   LENDERS


                                   ABN AMRO BANK N.V., MILAN BRANCH


                                   By:      /s/ Silvana Baccaglini
                                       -----------------------------------------
                                       Name:  Silvana Baccaglini
                                       Title: Senior Vice President



                                       18
<PAGE>   19

                                   ADDISON CDO, LIMITED (ACCT 1279)
                                   By: Pacific Investment Management Company
                                       LLC, as its Investment Adviser


                                   By:      /s/ Jeffrey H. Aronson
                                       -----------------------------------------
                                       Name: Jeffrey H. Aronson
                                       Title: Managing Director


                                   AIM FLOATING RATE FUND
                                   By: INVESCO Senior Secured Management, Inc.,
                                       as Attorney in Fact


                                   By:      /s/ Thomas H. B. Ewald
                                       -----------------------------------------
                                       Name:  Thomas H. B. Ewald
                                       Title: Authorized Signatory


                                   AVIARY ASSOCIATES LP
                                   By: Aviary Capital Enterprises Inc.,
                                       General Partner


                                   By:      /s/ Steven C. Taub
                                       -----------------------------------------
                                       Name:  Steven C. Taub
                                       Title: Executive Vice President

                                   BANK OF NEW YORK

                                   By:      /s/ Christine T. Rio
                                       -----------------------------------------
                                       Name:  Christine T. Rio
                                       Title: Vice President



                                       19
<PAGE>   20

                                   THE BANK OF NOVA SCOTIA


                                   By:      /s/ M.D. Smith
                                       -----------------------------------------
                                       Name:  M.D. Smith
                                       Title: Agent Operations


                                   BANK OF SCOTLAND


                                   By:      /s/ Joespeh Fratus
                                       -----------------------------------------
                                       Name:  Joseph Fratus
                                       Title: Vice President


                                   BEDFORD CDO, LIMITED (ACCT 1276)
                                   By: Pacific Investment Management Company
                                       LLC, as its Investment Advisor


                                   By:      /s/ Raymond G. Kennedy
                                       -----------------------------------------
                                       Name:  Raymond G. Kennedy
                                       Title: Executive Vice President


                                   CAPTIVA III FINANCE LTD. (ACCT 275),
                                   By: As advised by Pacific Investment
                                       Management Company LLC


                                   By:      /s/ David Egglishaw
                                       -----------------------------------------
                                       Name:  David Egglishaw
                                       Title: N/A


                                   CAPTIVA IV FINANCE LTD. (ACCT 1275),
                                   By: As advised by Pacific Investment
                                       Management Company LLC


                                   By:      /s/ David Dyer
                                       -----------------------------------------
                                       Name:  David Dyer
                                       Title: Director




                                       20
<PAGE>   21

                                   CITY NATIONAL BANK


                                   By:      /s/ Illegible
                                       -----------------------------------------
                                       Name:  Illegible
                                       Title: Vice President



                                   DELANO COMPANY (ACCT 274)
                                   By: Pacific Investment Management Company
                                       LLC, as its Investment Advisor


                                   By:      /s/ Raymond G. Kennedy
                                       -----------------------------------------
                                       Name:  Raymond G. Kennedy
                                       Title: Executive Vice President


                                   EATON VANCE SENIOR INCOME TRUST
                                   By: Eaton Vance Management,
                                       as Investment Advisor


                                   By:      /s/ Scott H. Page
                                       -----------------------------------------
                                       Name:  Scott H. Page
                                       Title: Vice President

                                   ELC (CAYMAN), LTD.


                                   By:      /s/ Amos N. Beason
                                       -----------------------------------------
                                       Name:  Amos N. Beason
                                       Title: Director


                                   ELC (CAYMAN), LTD. CDO SERIES 1999 - I


                                   By:      /s/ Amos N. Beason
                                       -----------------------------------------
                                       Name:  Amos N. Beason
                                       Title: Director




                                       21
<PAGE>   22

                                   ELC (CAYMAN), LTD. CDO SERIES 1999 - III


                                   By:      /s/ Amos N. Beason
                                       -----------------------------------------
                                       Name:  Amos N. Beason
                                       Title: Director


                                   ELC (CAYMAN), LTD. CDO SERIES  2000 - I


                                   By:      /s/ Amos N. Beason
                                       -----------------------------------------
                                       Name:  Amos N. Beason
                                       Title: Director


                                   FINOVA CAPITAL CORPORATION
                                   As Successor to Fremont Financial Corporation


                                   By:      /s/ Bruce Mettel
                                       -----------------------------------------
                                       Name:  Bruce Mettel
                                       Title: Vice President

                                   FRANKLIN FLOATING RATE TRUST


                                   By:      /s/ Chauncey Lufkin
                                       -----------------------------------------
                                       Name:  Chauncy Lufkin
                                       Title: Vice President


                                   HIGHLAND LEGACY LIMITED
                                   By: Highland Capital Management, L.P.,
                                       as Collateral Manager


                                   By:      /s/ Todd Travers
                                       -----------------------------------------
                                       Name:  Todd Travers
                                       Title: Senior Portfolio Manager



                                       22
<PAGE>   23

                                   IMPERIAL BANK


                                   By:      /s/ Cynthia B. Jones
                                       -----------------------------------------
                                       Name:  Cynthia B. Jones
                                       Title: Vice President


                                   INDOSUEZ CAPITAL FUNDING IIA, LIMITED
                                   By: Indosuez Capital as Portfolio Advisor

                                   By:      /s/ Melissa Mareno
                                       -----------------------------------------
                                       Name:  Melissa Mareno
                                       Title: Vice President


                                   INDOSUEZ CAPITAL FUNDING III, LIMITED
                                   By: Indosuez Capital as Portfolio Advisor

                                   By:      /s/ Melissa Mareno
                                       -----------------------------------------
                                       Name:  Melissa Mareno
                                       Title: Vice President


                                   INDOSUEZ CAPITAL FUNDING IV, L.P.
                                   By: Indosuez Capital as Portfolio Advisor

                                   By:      /s/ Melissa Mareno
                                       -----------------------------------------
                                       Name:  Melissa Mareno
                                       Title: Vice President


                                   THE INDUSTRIAL BANK OF JAPAN, LIMITED


                                   By:      /s/ Noel P. Purcell
                                       -----------------------------------------
                                       Name:  Noel P. Purcell
                                       Title: Senior Vice President


                                   JACKSON NATIONAL LIFE INSURANCE CO.
                                   By: PPM America, Inc., as attorney in fact,
                                       on behalf of Jackson National Life
                                       Insurance Company


                                   By:      /s/ David C. Wagner
                                       -----------------------------------------
                                       Name:  David C. Wagner
                                       Title: Managing Director



                                       23
<PAGE>   24

                                   KZH PAMCO LLC


                                   By:      /s/ Illegible
                                       -----------------------------------------
                                       Name:  Illegible
                                       Title: Authorized Agent


                                   ML CBO IV (CAYMAN) LTD.
                                   By: Highland Capital Management, L.P.,
                                       as Collateral Manager

                                   By:      /s/ Todd Travers
                                       -----------------------------------------
                                       Name:  Todd Travers
                                       Title: Senior Portfolio Manager


                                   MOUNTAIN CAPITAL CLO I LIMITED


                                   By:      /s/ Darren P. Riley
                                       -----------------------------------------
                                       Name:  Darren P. Riley
                                       Title: Director


                                   NATIONAL CITY BANK


                                   By:      /s/ Mark J. Ringel
                                       -----------------------------------------
                                       Name:  Mark J. Ringel
                                       Title: Vice President


                                   NORSE CBO, LTD.
                                   By:   Regiment Capital Management LLC,
                                         As its Investment Advisor
                                   By:   Regiment Capital Advisors, LLC,
                                         its Manager Pursuant to delegated
                                         authority


                                   By:      /s/ Timothy S. Peterson
                                       -----------------------------------------
                                       Name:  Timothy S. Peterson
                                       Title: President



                                       24
<PAGE>   25

                                   NORTHWOODS CAPITAL, LIMITED
                                   By: Angelo, Gordon & Co., L.P.,
                                       as Investment Advisor


                                   By:      /s/ Jeffrey H. Aronson
                                       -----------------------------------------
                                       Name:  Jeffrey H. Aronson
                                       Title: Managing Director


                                   PAMCO CAYMAN LTD.
                                   By: Highland Capital Management, L.P.,
                                       as Collateral Manager


                                   By:      /s/ Todd Travers
                                       -----------------------------------------
                                       Name:  Todd Travers
                                       Title: Senior Portfolio Manager


                                   ROYALTON COMPANY (ACCT. 280)
                                   By: Pacific Investment Management Company,
                                       LLC, as its Investment Manager


                                   By:      /s/ Raymond G. Kennedy
                                       -----------------------------------------
                                       Name:  Raymond G. Kennedy
                                       Title: Executive Vice President


                                   SENIOR DEBT PORTFOLIO
                                   By: Boston Management and Research,
                                       as Investment Advisor


                                   By:      /s/ Scott H. Page
                                       -----------------------------------------
                                       Name:  Scott H. Page
                                       Title: Vice President


                                   SRF TRADING, INC.


                                   By:      /s/ Ann E. Morris
                                       -----------------------------------------
                                       Name:  Ann E. Morris
                                       Title: Assistant Vice President




                                       25
<PAGE>   26

                                   STEIN ROE & FARNHAM INCORPORATED,
                                   as Agent for Keyport Life Insurance Company


                                   By:      /s/ James R. Fellows
                                       -----------------------------------------
                                       Name:  James R. Fellows
                                       Title: Sr. V.P. and Portfolio Manager


                                   STEIN ROE FLOATING RATE LIMITED LIABILITY
                                   COMPANY
                                   By: Stein Roe & Farnham Incorporated,
                                       as Advisor


                                   By:      /s/ James R. Fellows
                                       -----------------------------------------
                                       Name:  James R. Fellows
                                       Title: Sr. V.P. and Portfolio Manager


                                   VAN KAMPEN CLO II, LIMITED
                                   By: Van Kampen Management, Inc.,
                                       as Collateral Manager


                                   By:      /s/ Darvin D. Pierce
                                       -----------------------------------------
                                       Name:  Darvin D. Pierce
                                       Title: Principal



                                       26

<PAGE>   27


                           [ABN AMRO BANK LETTERHEAD]

July 24, 2001


Thermadyne Mfg. LLC
101 South Hanley Road
St. Louis, Missouri 63105

Re: Forbearance Extension

Ladies and Gentlemen:

Reference is made to the Third Amendment and Forbearance Agreement dated as of
May 24, 2001 (the "Third Amendment") to the Credit Agreement dated as of May 22,
1998 (as heretofore amended, and as may be further amended, restated, modified
or supplemented from time to time, the "Credit Agreement") among Thermadyne Mfg.
LLC, Comweld Group Pty. Ltd., Genset S.P.A., Thermadyne Welding Products Canada
Limited (collectively, the "Borrowers"), Thermadyne Holding Corporation
("Holdco"), the several lenders from time to time party to the Credit Agreement
(the "Lenders"), Credit Suisse First Boston, as Syndication Agent, Societe
Generale, as Documentation Agent, ABN AMRO Bank, N.V., as Administrative Agent
and the Subsidiary Co-Obligors identified in the Credit Agreement. Capitalized
terms used but not defined herein shall have the respective meanings given to
such terms in the Credit Agreement.

The Borrowers have requested that the Forbearance Period (as defined in the
Third Amendment) be extended and, by execution of this letter agreement, the
Administrative Agent, on behalf of the Required Lenders, hereby agrees with the
Borrowers that the date "July 31, 2001" set forth in clause (i) of the
definition of Termination Date in Section 2.2 of the Third Amendment is hereby
deleted and the date "September 28, 2001" is hereby inserted in its place.

In consideration for extension of the Forbearance Period, the Borrowers agree to
pay to the Administrative Agent, for the ratable benefit of those Lenders which
shall have executed and delivered its written consent to the execution and
delivery of this letter agreement by the Administrative Agent by or before 5:00
p.m. (New York time) on JULY 31, 2001 (each such Lender, a "Consenting Lender"),
by wire transfer of immediately available funds, a non-refundable extension fee
(the "Extension Fee") in an amount equal to US $250,000. Payment of the
Extension Fee by JULY 31, 2001 is a condition to the effectiveness of the
extension of the Forbearance Period.

The Borrowers agree that their obligations set forth in Section 11.3 of the
Credit Agreement shall extend to the preparation, execution and delivery of this
letter agreement extending the Forbearance Period (whether or not this extension
becomes effective or the transactions contemplated hereby are consummated),
including, but not limited to, payment of the reasonable fees and disbursements
of Clifford Chance Rogers & Wells LLP, counsel for the Administrative Agent, and
FTI Policano & Manzo, financial advisor to Clifford Chance Rogers & Wells LLP.
Accordingly, it is a condition to the


<PAGE>   28

effectiveness of the extension of the Forbearance Period that the Administrative
Agent, counsel for the Administrative Agent, and the financial advisor to such
counsel shall have received, by wire transfer or immediately available funds,
the amounts invoiced to the Borrowers and required to be paid pursuant to this
paragraph.

Except as expressly modified hereby, all other terms and provisions of the Third
Amendment are unmodified and remain in full force and effect. The
Representations and Warranties set forth in Section 7.1 of the Third Amendment
and the Acknowledgment and Release set forth in Section 8.1 of the Third
Amendment are hereby incorporated herein and reaffirmed as of the date hereof.

Each of the Borrowers, the Subsidiary Co-Obligors and Holdco acknowledges and
agrees that the extension of the Forbearance Period set forth herein is limited
to the express modification set forth above and the Lenders are not, and shall
not be construed to be, required or obligated in any manner to grant any
additional or further extension of the Forbearance Period or grant any
additional or further cure or forbearance periods.

This letter agreement shall be governed by and construed in accordance with the
laws of the State of New York for an agreement to be wholly performed within the
State of New York without reference to conflicts of laws principles. This letter
agreement may be executed in multiple counterparts, each of which shall
constitute an original and all of which shall constitute one and the same
agreement. Delivery of an executed counterpart signature page of this letter
agreement by facsimile shall be effective as delivery of a manually executed
counterpart signature page of this letter agreement. This letter agreement may
not be amended of modified except by a written instrument executed by each of
the parties hereto. Kindly countersign this letter agreement where indicated
below and return a fully executed counterpart to the undersigned.

                                    Very truly yours,

                                    ABN AMRO BANK N.V.,
                                    as Administrative Agent

                                    By:  /s/  Steven C. Wimpenny
                                        ----------------------------------------
                                        Name:  Steven C. Wimpenny
                                        Title: Group Senior Vice President


                                    By:      /s/ William J. Fitzgerald
                                        ----------------------------------------
                                        Name:  William J. Fitzgerald
                                        Title: Senior Vice President

                                    Accepted and Agreed to as of the date set
                                       forth above:

                                    BORROWERS

                                    THERMADYNE MFG. LLC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


<PAGE>   29

                                    COMWELD GROUP PTY. LTD.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    GENSET S.P.A.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    THERMADYNE WELDING PRODUCTS CANADA LIMITED


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    HOLDCO


                                    THERMADYNE HOLDINGS CORPORATION


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    SUBSIDIARY CO-OBLIGORS


                                    THERMADYNE CAPITAL CORP.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer



<PAGE>   30

                                    THERMADYNE INDUSTRIES, INC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer

                                    VICTOR EQUIPMENT COMPANY


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    THERMADYNE INTERNATIONAL CORP.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    THERMADYNE CYLINDER COMPANY


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                         Name:  James H. Tate
                                         Title: Senior Vice President and Chief
                                                Financial Officer


                                    THERMAL DYNAMICS CORPORATION


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer



<PAGE>   31




                                    C&G SYSTEMS HOLDING, INC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    MECO HOLDING COMPANY


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    TWECO PRODUCTS, INC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer

                                    TAG REALTY, INC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    VICTOR COYNE INTERNATIONAL, INC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer

                                    VICTOR GAS SYSTEMS, INC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:   James H. Tate
                                        Title:  Senior Vice President and Chief
                                                Financial Officer


<PAGE>   32

                                    STOODY COMPANY


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    THERMAL ARC, INC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    C&G SYSTEMS, INC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    MARISON CYLINDER COMPANY


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    WICHITA WAREHOUSE CORPORATION


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer



<PAGE>   33




                                    COYNE NATURAL GAS SYSTEMS, INC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer


                                    MODERN ENGINEERING COMPANY, INC.


                                    By:      /s/ James H. Tate
                                        ----------------------------------------
                                        Name:  James H. Tate
                                        Title: Senior Vice President and Chief
                                               Financial Officer