THIRD AMENDMENT TO CREDIT AGREEMENT

Exhibit 10.1

EXECUTION COPY

THIRD AMENDMENT TO CREDIT AGREEMENT

     THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “ Amendment ”), dated February 23, 2009, is entered into by and among TWEEN BRANDS, INC., a Delaware corporation (the “ Borrower ”), each of the GUARANTORS (as hereinafter defined), the REVOLVING CREDIT LENDERS (as hereinafter defined), the TERM LOAN LENDERS (as hereinafter defined), and BANK OF AMERICA, N.A., a national banking association, in its capacity as administrative agent for the Secured Parties (as defined below) under this Agreement (hereinafter referred to in such capacity as the “ Agent ”).

BACKGROUND

     WHEREAS, reference is made to that certain Credit Agreement dated as of September 12, 2007 (as same has been amended prior to the date hereof, the “ Credit Agreement ”) by, among others, the Borrower, each of the Guarantors from time to time party thereto (collectively, the “ Guarantors ” and, together with the Borrower, the “ Loan Parties ”), the Revolving Credit Lenders and the Term Loan Lenders from time to time party thereto (collectively, the “ Lenders ”) the Agent, for its own benefit and the benefit of the other Secured Parties (as defined therein), National City Bank, as Syndication Agent, Fifth Third Bank, as Documentation Agent, Citicorp North America, Inc., as Managing Agent, Banc of America Securities LLC, as sole book runner, and Banc of America Securities LLC and National City Bank, as co-lead arrangers. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement; and

     WHEREAS, the Loan Parties have requested that the Lenders further amend certain provisions of the Credit Agreement, and the Lenders have agreed to do so, but only on the terms and conditions set forth herein.

     NOW, THEREFORE, intending to be legally bound hereby, in consideration of the foregoing and for other good and valuable consideration received, the parties hereto covenant and agree as follows:

     1.  Definitions . Terms which are defined in the Credit Agreement and not otherwise defined herein shall have the meanings given to them in the Credit Agreement.

     2.  Amendments to Article I of Credit Agreement . The provisions of Article I of the Credit Agreement are hereby amended as follows:

     (a) By deleting the definition of “Applicable Margin” in its entirety and substituting the following in its stead::

Applicable Margin shall mean, as applicable:

     (A) the percentage spread, to be added to Base Rate under the Base Rate Option equal to 3.75% per annum, or

     (B) the percentage spread, to be added to LIBO-Rate under the LIBOR Option equal to 3.50% per annum

     (b) By deleting the definition of “Augmenting Revolving Credit Lender” in its entirety.

     (c) By deleting the definition of “Consolidated EBITDAR” in its entirety and substituting the following in its stead:

Consolidated EBITDAR shall mean, for any period of determination, consolidated net income for such period plus, without duplication and to the extent deducted in determining such consolidated net income, the sum of Consolidated Interest Expense, income tax expense, depreciation expense, amortization expense, Consolidated Minimum Rent and other non-cash charges, the transaction costs, fees and expenses incurred in connection with this Agreement and the overnight share repurchase transaction to be consummated on or promptly after the Closing Date (but for the purposes of calculating Consolidated EBITDAR such transaction costs, fees and expenses shall not exceed $500,000), one-time restructuring charges, and the transaction costs, fees and expenses incurred in connection with the Third Amendment and minus consolidated interest income and non-cash credits, in each case of the Borrower and its Subsidiaries for such period determined and consolidated in accordance with GAAP.

     (d) By adding the words “and Section 7.02(o)” after the words “Section 7.02(n)” in the definition of “Consolidated Tangible Net Worth Limit”.

     (e) By deleting the definition of “Expiration Date” in its entirety and substituting the following in its stead:

Expiration Date shall mean the Initial Expiration Date.

     (f) By deleting the definition of “Extended Expiration Date” in its entirety.

     (g) By deleting the definition of “Increasing Revolving Credit Lender” in its entirety.

     (h) By deleting the definition of “Leverage Ratio” in its entirety and substituting the following in its stead:

Leverage Ratio shall mean the ratio of (a) Consolidated Senior Debt as of the end of the most recently ended fiscal quarter to (b) Consolidated EBITDAR for the period of four (4) consecutive fiscal quarters then ended.

     (i) By deleting the definition of “Permitted Acquisition” in its entirety.

     (j) By deleting the definition of “Release Event” in its entirety.

     (k) By deleting the last sentence of the definition of “Revolving Credit Commitment” in its entirety and substituting the following in its stead:

As of the Third Amendment Effective Date, the aggregate of all Revolving Credit Commitments is $50,000,000.

     (l) By deleting the definition of “Security Documents” in its entirety and substituting the following in its stead:

Security Documents shall mean the Security Agreement, the Ancillary Security Documents, all mortgages, deeds of trust and all other documents, instruments, and agreements sufficient to provide the Agent for the benefit of the Lenders with a first

priority perfected Lien, subject only to Permitted Liens having priority over the Lien of the Agent under applicable law, on all of the assets of the Loan Parties, including, without limitation, (a) all inventory, accounts, documents of title, deposit accounts, investment accounts, instruments, general intangibles, furniture, fixtures, equipment, chattel paper and commercial tort claims and the proceeds thereof, and (b) all real estate owned by the Loan Parties and the proceeds thereof, but excluding (i) any trademarks and trade names other than those trademarks and trade names set forth on Schedule 1 hereto, (ii) all leasehold interests, (iii) any assets of a foreign Subsidiary of the Loan Parties or assets in which perfection of Lien is governed by the laws of a jurisdiction other than the United States of America, its states and territories, (iv) the Designated Escrow Accounts, and (e) any voting equity interests in any direct or indirect foreign Subsidiary of the Borrower in excess of 65% of such equity interests.

     (m) By deleting the definition of “Specified Default” in its entirety and substituting the following in its stead:

Specified Default shall mean the occurrence of any Event of Default under any of (i) Section 8.01(a), (ii) Section 8.01(b) (but only with respect any financial statements or financial information delivered under this Agreement or with respect to representations concerning Solvency), (iii) Section 8.01(c) (but only with respect to Section 7.02(m) or Section 7.02(n) and not any other provisions covered by Section 8.01(c)), (iv) Section 8.01(d) (but only with respect to Section 7.01(a), Section 7.01(b), Section 7.01(c) and Section 7.01(d) and not any other provisions covered by Section 8.01(d)), (v) Section 8.01(g), (vi) Section 8.01(j), (vii) Section 8.01(l), (viii) Section 8.01(m), (ix) Section 8.01(n), or (x) Section 8.01(o).

     (n) By deleting the definition of “Triggering Event” in its entirety.

     (o) By adding the following definitions in appropriate alphabetical order:

     (i) Borrower’s Operating Account shall mean a deposit account maintained by the Borrower with Agent or another financial institution reasonably acceptable to Agent for the purpose of paying business expenses in the ordinary course and any other working capital needs in the ordinary course of business.

     (ii) Borrowing Base shall mean, at any time of calculation, an amount equal to

     (A) eighty percent (80%) multiplied by the net book value of the Borrower’s accounts receivable, plus

     (B) Sixty percent (60%) multiplied by the net book value of the Borrower’s inventory.

     (iii) Borrowing Base Certificate shall mean a certificate reflecting the calculation of the Borrowing Base in reasonable detail and certified by the Chief Executive Officer, President or Chief Financial Officer of the Borrower as being true and accurate in all material respects.

     (iv) Borrowing Base Testing Period shall mean any time (i) when an Event of Default exists and is continuing, or (ii) when the Revolving Facility Usage exceeds, or after giving effect to the making of a Revolving Credit Loan or Swing Loan or issuance of a Letter of Credit would exceed, the Revolving Loan Threshold.

     (v) Capital Expenditures shall mean with respect to the Borrower and its Subsidiaries on a consolidated basis for any period, (a) all expenditures made (whether made in the form of cash or other property) or costs incurred for the acquisition or improvement of fixed or capital assets, in each case that are set forth as capital expenditures in a consolidated statement of cash flows of such Person for such period, in each case prepared in accordance with GAAP, and (b) Capital Lease Obligations incurred by the Borrower or any of its Subsidiaries during such period. For purposes of this definition, the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment or with insurance proceeds shall be included in Capital Expenditures only to the extent of the gross amount of such purchase price less the credit granted by the seller of such equipment for the equipment being traded in at such time or the amount of such proceeds, as the case may be.

     (vi) Capital Lease Obligations shall mean, with respect to the Borrower and its Subsidiaries on a consolidated basis for any period, the obligations of the Borrower and its Subsidiaries to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as liabilities on a balance sheet of the Borrower and its Subsidiaries under GAAP and the amount of which obligations shall be the capitalized amount thereof determined in accordance with GAAP.

     (vii) Cash Dominion Event shall mean either (i) the occurrence and continuance of any Specified Default, or (ii) the acceleration of the time for payment of the Obligations as a result of the occurrence of an Event of Default and the commencement of the exercise of remedies against any of the property upon which the Agent has been granted a Lien under the Security Documents, or (iii) the outstanding Revolving Credit Loans exceed the Revolving Loan Threshold at any time. For purposes of this Agreement, the occurrence of a Cash Dominion Event shall be deemed continuing (i) until such Specified Default has been waived or any cure has not been rejected, (ii) such acceleration and exercise of remedies has been rescinded, and/or (iii) if the Cash Dominion Event arises as a result of the Revolving Credit Loans exceeding the Revolving Loan Threshold, until the outstanding Revolving Credit Loans have been less than the Revolving Loan Threshold for thirty (30) consecutive days, in which case a Cash Dominion Event shall no longer be deemed to be continuing for purposes of this Agreement; provided that a Cash Dominion Event shall be deemed continuing (even if a Specified Default is no longer continuing, acceleration and exercise of remedies has been rescinded, and/or the outstanding Revolving Credit Loans are less than the Revolving Loan Threshold for thirty (30) consecutive days) at all times after a Cash Dominion Event has occurred and been discontinued on four (4) occasions during any consecutive twelve month period. For purposes of this definition, the term “Revolving Credit Loans” shall mean and include Swing Loans.

     (viii) Consolidated Senior Debt shall mean, at any time of calculation, the sum of the principal amount then outstanding of all Loans under this Agreement plus six (6) times the Forward Minimum Rent Commitments of the Borrower and its Subsidiaries. In calculating Consolidated Senior Debt, adjustment shall be made on a quarterly basis to give effect to the actual amount of Forward Minimum Rent Commitments (and solely for purposes of calculating Consolidated Senior Debt and notwithstanding anything to the

contrary in the definition of Forward Minimum Rent Commitments, Forward Minimum Rent Commitments shall be calculated quarterly for the four fiscal quarter period following the Borrower’s most recently ended fiscal quarter, as reported or to be reported in the Borrower’s quarterly reports filed on Form 10-Q or annual report filed on Form 10-K, as applicable, with the Securities and Exchange Commission).

     (ix) Designated Asset Transaction means with respect to of any real property, trademarks or trade names owned by any Loan Party (whether or not the Agent has been granted a Lien in such property to secure the Obligations), any of the following: (a) the sale, transfer, license, lease or other disposition (including any Sale Leaseback transaction), (whether in one transaction or in a series of transactions) of any of such assets; (b) any insurance payment, condemnation award, or other recovery event with respect to any such assets, or (c) the incurrence of Indebtedness (other than the Obligations) secured by any such assets. Notwithstanding the foregoing, (i) the exclusive license by a Loan Party of trademarks or trade names owned by such Loan Party in the ordinary course of business shall not constitute a Designated Asset Transaction to the extent that the arrangement relates solely to a territory or territories outside the United States, and/or to a specified product category sold inside or outside the United States, and (ii) the non-exclusive license by a Loan Party of trademarks or trade names owned by such Loan Party in the ordinary course of business shall not constitute a Designated Asset Transaction; as long as no more than thirty percent (30%) of consolidated revenue of the Borrower and its Subsidiaries in any Fiscal Year shall be attributable to sales pursuant to all such exclusive and non-exclusive licenses in the aggregate.

     (x) Designated Escrow Accounts means collectively, the Tax Escrow Account and the Equity Proceeds Escrow Account.

     (xi) Equity Proceeds Escrow Account means a deposit account of the Borrower maintained with the Agent into which solely net proceeds from the issuance of equity interests by the Borrower shall be deposited.

     (xii) Excess Cash means all cash and cash equivalents of the Borrower (excluding amounts in the Designated Escrow Accounts) in excess of the Minimum Cash Amount .

     (xiii) Fiscal Year shall mean the fiscal year of the Borrower and the other Loan Parties ending on the Saturday nearest to the last business day of January of each calendar year. For purposes of this Agreement, any particular Fiscal Year shall be designated by reference to the calendar year in which such Fiscal Year begins.

     (xiv) Minimum Cash Amount means $20,000,000 (excluding amounts in the Designated Escrow Accounts) .

     (xv) Net Proceeds shall mean (a) with respect to any sale, transfer or other disposition (including any Sale-Leaseback Transaction, whether in one transaction or in a series of transactions, of any property by the Borrower or any of its Subsidiaries, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with such transaction (including any cash or cash equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by the applicable asset by a Lien permitted hereunder which is senior to

the Agent’s Lien on such asset and that is required to be repaid (or to establish an escrow for the future repayment thereof) in connection with such transaction, (B) the reasonable and customary out-of-pocket fees, costs and expenses incurred by the Borrower or such Subsidiary in connection with such transaction (including, without limitation, brokerage, legal, title and recording or transfer tax expenses and commissions) paid by the Borrower or any such Subsidiary to third parties (other than Affiliates)) and (C) income taxes reasonably estimated to be actually payable within one year of the date of such sale, transfer or other disposition as a result of any gain recognized in connection with such sale, transfer or other disposition; and (b) with respect to the incurrence or issuance of any Indebtedness by the Borrower or any of its Subsidiaries, the excess of (i) the sum of the cash and cash equivalents received in connection with such transaction over (ii) the underwriting discounts and commissions, and other reasonable and customary out-of-pocket fees, costs and expenses, incurred by the Borrower or such Subsidiary in connection therewith.

     (xvi) Revolving Loan Threshold shall mean $10,000,000 (without giving effect to the aggregate undrawn face amount of outstanding Letters of Credit up to $5,000,000 (any such amounts in excess of $5,000,000 being included in the calculation of the Revolving Loan Threshold)).

     (xvii) Tax Escrow Account means a deposit account of the Borrower maintained with the Agent into which solely that portion of the Net Proceeds from any sale, transfer or other disposition of any property of the Borrower or any of its Subsidiaries constituting income taxes reasonably estimated to be actually payable within one year of the date of such sale, transfer or other disposition as a result of any gain recognized in connection with such sale, transfer or other disposition; provided that any such amounts not utilized to pay such taxes shall be paid to the Agent and applied to the Term Loan in accordance with Section 4.05(d) hereof..

     (xviii) Third Amendment shall mean that certain Third Amendment to Credit Agreement dated as of February 23, 2009, by and among the Borrower, the Guarantors party thereto, the Revolving Credit Lenders party thereto, the Term Loan Lenders party thereto and the Agent.

     (xix) Third Amendment Effective Date shall mean February 24, 2009.

     3.  Amendments to Article II of Credit Agreement . The provisions of Article II of the Credit Agreement are hereby amended as follows:

     (a) The provisions of Section 2.01(a) of the Credit Agreement are hereby amended by deleting clause (ii) thereof and substituting the following in its stead:

     (ii) the Revolving Facility Usage at any one time outstanding shall not exceed the Revolving Credit Commitments of all of the Revolving Credit Lenders, provided that if a Borrowing Base Testing Period is then applicable, the Revolving Facility Usage at any one time outstanding shall not exceed the lesser of (A) the Revolving Credit Commitments of all of the Revolving Credit Lenders or (B) the Borrowing Base.

     (b) The provisions of Section 2.05 of the Credit Agreement are hereby amended by adding the following new clause (c) at the end thereof:

(c) Notwithstanding anything to the contrary herein contained, the Borrower may not request a Revolving Credit Loan or Swing Loan in excess of the Revolving Loan Threshold unless and until it has utilized its Excess Cash, if an