EXHIBIT 10.1

EXECUTION COPY

FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

THIS FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”)
is entered into as of October 31, 2008, by and among the Borrowers party hereto,
the Loan Guarantors party hereto (and together with the Borrowers, the “Loan
Parties”), the Required Lenders party hereto, and THE CIT GROUP/BUSINESS CREDIT,
INC., as Administrative Agent and Collateral Agent for the Lenders under the
Credit Agreement described below (the “Administrative Agent”).

WHEREAS, The Parent Company, a Colorado corporation (“Parent”), BabyUniverse,
Inc., a Colorado corporation (“BabyUniverse”), eToys Direct, Inc., a Colorado
corporation (“eToys Direct”), PoshTots, Inc, a Colorado corporation
(“PoshTots”), Dreamtime Baby, Inc., a Colorado corporation (“Dreamtime”), My
Twinn, Inc., a Colorado corporation (“My Twinn”, and collectively with Parent,
BabyUniverse, eToys Direct, PoshTots and Dreamtime, the “Borrowers”), the other
Loan Parties from time to time party thereto, the Lenders from time to time
party thereto and the Administrative Agent have entered into that certain
Amended and Restated Credit Agreement dated as of October 12, 2007, as modified
by that certain letter agreement dated as of December 14, 2007, as amended by
that certain First Amendment to Amended and Restated Credit Agreement and
Consent dated as of January 8, 2008, as amended by that certain Second Amendment
to Amended and Restated Credit Agreement dated as of February 1, 2008, as
amended by that certain Third Amendment to Amended and Restated Credit Agreement
dated as of March 10, 2008 and as amended by that certain Fourth Amendment to
Amended and Restated Credit Agreement dated as of July 10, 2008 (as so modified
and amended, and as the same may be further amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), pursuant to which the
Lenders have made, and, subject to the terms and conditions set forth therein,
have agreed to continue to make, Loans (as defined in the Credit Agreement) to
the Borrowers and certain other financial accommodations available to the Loan
Parties; and

WHEREAS, the Loan Parties, the Administrative Agent and the Lenders desire to
amend certain provisions of the Credit Agreement as set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the agreements contained
herein, the parties agree that the Credit Agreement is hereby amended as
follows:

1. Capitalized Terms. Capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement.

2. Amendments to Credit Agreement. Subject to the satisfaction of the conditions
precedent set forth in Section 5 hereof, and in reliance on the representations,
warranties and covenants of the Loan Parties set forth in Section 3 of this
Amendment, the Credit Agreement is hereby amended as follows:

(a) Amendment to Section 1.01 of the Credit Agreement.

(i) Section 1.01 of the Credit Agreement is hereby amended by deleting the
definitions of “Alternate Base Rate”, “Availability Block”, “Pledged Account
Cash Balance”, “Revolving Commitment” and “Revolving Credit Maturity Date” in
their entirety and substituting the following therefor:

“Alternate Base Rate” means, for any date with respect to any ABR Borrowing, a
rate per annum equal to the greatest of (a) the Prime Rate in effect on such
day, (b) the Federal Funds Effective Rate in effect on such day plus  1/2 of 1%
and (c) 5.00%. Any change in the Alternate Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective from and
including the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.

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“Availability Block” means (a) for the period commencing on the Fifth Amendment
Date and continuing to and including November 23, 2008, $3,000,000, (b) for the
period commencing on November 24, 2008 and continuing to and including
November 30, 2008, $5,000,000, (c) for the period commencing on December 1, 2008
and continuing to and including December 7, 2008, $7,500,000 and (d) for the
period commencing on December 8, 2008 and continuing at all times thereafter,
$10,000,000.

“D. E. Shaw Lending Commitment Letter” means a written letter from D. E. Shaw
Lending addressed to each of Parent and the Administrative Agent, in form and
substance reasonably acceptable to the Administrative Agent, pursuant to which
D. E. Shaw Lending irrevocably (a) confirms that the “Specified Outside Date” as
such term is defined in Section 16 of the Limited Guaranty and Pledge Agreement
has been extended from “April 3, 2009” to “April 3, 2010”, (b) commits to cause
the balance of funds on deposit in the D. E. Shaw Lending Pledged Account and
pledged to the Administrative Agent to remain at an amount equal to or greater
than $15,000,000 until the “Termination Date” (as defined in the Limited
Guaranty and Pledge Agreement), and (c) commits to cause the New Capital
Infusion to be fully funded on or before January 31, 2009.”

“Pledged Account Cash Balance” means (a) at any time prior to the Revolving
Maturity Date, the lesser of (i) the aggregate amount of cash on deposit in the
D. E. Shaw Lending Pledged Account which has been pledged to the Administrative
Agent, and (ii) $15,000,000, and (b) at any time on or after the Revolving
Maturity Date, $0.

“Revolving Commitment” means, with respect to each Revolving Lender, the
commitment of such Lender to make Revolving Loans and to acquire participations
in Letters of Credit and Protective Advances hereunder, as such commitment may
be (i) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.05 or (ii) reduced from time to time in
accordance with Section 2.10. The initial amount of each Revolving Lender’s
Revolving Commitment is set forth on the Commitment Schedule, or in the
Assignment and Assumption pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Revolving Lenders’ Revolving Commitments is $25,000,000.”

“Revolving Maturity Date” means the earlier of (i) December 31, 2008 (provided
that (x) if the D. E. Shaw Lending Commitment Letter shall have been delivered
by December 15, 2008, the Revolving Maturity Date shall be extended to
January 31, 2009, and (y) if the D. E. Shaw Lending Commitment Letter shall have
been delivered by December 15, 2008 and the New Capital Infusion shall have been
fully funded by January 31, 2009, the Revolving Maturity Date shall be extended
to December 31, 2009); and (ii) the date on which the Revolving Commitments are
reduced to zero or otherwise terminated pursuant to the terms hereof.”

(ii) Section 1.01 of the Credit Agreement is hereby further amended by inserting
the following new definitions therein in appropriate alphabetical order:

“Fifth Amendment” means the Fifth Amendment to Amended and Restated Credit
Agreement dated as of the Fifth Amendment Date, among the Borrowers, the Loan
Guarantors party thereto, the Lenders party thereto, and the Administrative
Agent.

 

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“Fifth Amendment Date” means October 31, 2008.

(b) Amendment to Section 2.07 of the Credit Agreement. Section 2.07 of the
Credit Agreement is hereby amended by inserting the following therein as new
Section 2.07(i) thereof:

“(i) No Further Letters of Credit. Notwithstanding anything herein to the
contrary, from and at all times after the Fifth Amendment Date, the Borrowers
shall not have any right to request, and the Administrative Agent and the
Lenders shall not have any obligation to issue or cause to be issued, any
Letters of Credit under this Agreement.”

(c) Amendment to Section 2.10 of the Credit Agreement. Section 2.10 of the
Credit Agreement is hereby amended by inserting the following therein as new
Section 2.10(d) thereof:

“(d) In addition to any mandatory reductions under Section 2.10(a) and any
optional reductions under Section 2.10(b), the Revolving Commitments shall be
automatically and permanently reduced on a pro rata basis at the close of
business on each Revolving Commitment Reduction Date set forth below (each a
“Revolving Commitment Reduction Date”) by the amount set forth below opposite
such Revolving Commitment Reduction Date:

 

Revolving Commitment

Reduction Date

   Amount of Revolving
Commitment Reduction    Aggregate Revolving
Commitments After Giving
Effect to Reduction

December 8, 2008

   $ 5,000,000    $ 20,000,000

December 15, 2008

   $ 5,000,000    $ 15,000,000

December 22, 2008

   $ 5,000,000    $ 10,000,000

Notwithstanding anything to the contrary set forth herein, the Revolving
Commitments shall be automatically reduced to $0 on December 31, 2008; provided
that if the D. E. Shaw Lending Commitment Letter shall have been delivered by
December 15, 2008, the Revolving Commitments shall remain at $10,000,000 from
December 22, 2008 through January 31, 2009 and shall be automatically reduced on
January 31, 2009 to $0, except that if the D. E Shaw Lending Commitment Letter
shall have been delivered by December 15, 2008 and the New Capital Infusion
shall have been fully funded by January 31, 2009, the Revolving Commitments
shall remain at $10,000,000 from December 22, 2008 through December 31, 2009 and
shall be automatically reduced on December 31, 2009 to $0.

If at any time after giving effect to any reduction of the Revolving Commitments
as described in this Section 2.10(d), the Aggregate Revolving Exposure exceeds
the Revolving Commitments as so reduced, the Borrowers shall immediately repay
the Revolving Loans, and provide cash collateral for the Letter of Credit
Obligations, to the extent required to eliminate such excess.”

(d) Amendment to Section 2.22 of the Credit Agreement. Section 2.22 of the
Credit Agreement is hereby amended by deleting such Section 2.22 in its entirety
and substituting the following therefor:

“SECTION 2.22. [INTENTIONALLY OMITTED].”

 

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(e) Amendment to Section 6.12(a) of the Credit Agreement. Section 6.12(a) of the
Credit Agreement is hereby amended by deleting such Section 6.12(a) in its
entirety and substituting the following therefor:

“(a) [INTENTIONALLY OMITTED].”

3. No Default; Representations and Warranties, Etc. The Loan Parties hereby
represent, warrant, confirm and covenant that (a) after giving effect to this
Amendment, the representations and warranties of the Loan Parties contained in
Article III of the Credit Agreement, as amended hereby, are true and correct in
all material respects on and as of the date hereof except (i) to the extent that
any such representation or warranty specifically refers to an earlier date, in
which case they shall be true and correct in all material respects as of such
earlier date, and (ii) that any representation and warranty that is qualified as
to “materiality” or “Material Adverse Effect” shall be true and correct in all
respects, subject to the materiality qualification contained therein; (b) after
giving effect to this Amendment, the Loan Parties are in compliance with all of
the terms and provisions set forth in the Credit Agreement and the other Loan
Documents to be observed or performed thereunder and no Default or Event of
Default has occurred and is continuing; (c) the execution, delivery and
performance by the Loan Parties of this Amendment and all other documents,
instruments and agreements executed and delivered in connection herewith or
therewith, and the consummation of the transactions contemplated hereby (i) have
been duly authorized by all necessary corporate or other applicable
organizational action on the part of the Loan Parties, (ii) have not violated,
conflicted with or resulted in a default under any applicable law or regulation,
any term or provision of the organizational documents of any Loan Party or any
term or provision of any material indenture, agreement or other instrument
binding on any Loan Party or any of its assets and (iii) do not require any
consent, waiver or approval of or by any Person which has not been obtained.

4. Ratification and Confirmation. The Loan Parties hereby ratify and confirm all
of the terms and provisions of the Credit Agreement and the other Loan Documents
and agree that, except as expressly amended hereby, all of such terms and
provisions remain in full force and effect. Without limiting the generality of
the foregoing, the Loan Parties hereby acknowledge and confirm that all
obligations, liabilities and Indebtedness of the Loan Parties under the Credit
Agreement, as amended hereby, constitute “Obligations” under and as defined in
the Credit Agreement and are secured by and entitled to the benefits of the
Collateral Documents and the other Loan Documents and the Loan Parties hereby
ratify and confirm the grant of the liens and security interests in the
Collateral (as defined in the Security Agreement) in favor of the Collateral
Agent, for the benefit of the Lenders, pursuant to the Collateral Documents and
the other Loan Documents as security for such Obligations. The Loan Guarantors
hereby further acknowledge and confirm that all obligations, liabilities and
Indebtedness of the Borrowers under the Credit Agreement, as amended hereby,
constitute “Obligations” guarantied by and entitled to the benefits of the
guaranties of the Loan Guarantors set forth in Article X of the Credit
Agreement.

5. Conditions to this Amendment. The effectiveness of this Amendment shall be
subject to the satisfaction of the following conditions precedent:

(a) Counterparts of Amendment. The Administrative Agent shall have received from
each party hereto either (a) a counterpart of this Amendment signed on behalf of
such party or (b) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of this
Amendment) that such party has signed a counterpart of this Amendment.

(b) First Amendment to Limited Guaranty and Pledge Agreement. The Administrative
Agent shall have received counterparts of the First Amendment to Limited
Guaranty and Pledge Agreement (the “First Guaranty and Pledge Agreement
Amendment”) duly executed by D.E. Shaw Laminar Lending, Inc., which First
Guaranty and Pledge Agreement Amendment shall be in form and substance
satisfactory to the Agent.

 

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(c) Amendment Fee. The Administrative Agent, on behalf of the Lenders, shall
have received an amendment fee in the amount of $25,000 from the Borrowers,
which fee shall be for the ratable benefit of the Lenders and shall be
nonrefundable and deemed to be fully earned upon the date hereof.

(d) Other Documents. The Administrative Agent shall have received such other
documents as the Administrative Agent or its special counsel shall have
reasonably requested.

6. Fees and Expenses. The Borrowers agree to pay all fees and other amounts due
and payable to the Administrative Agent and Edwards Angell Palmer & Dodge LLP,
special counsel to the Administrative Agent, incurred in connection with any of
the Loan Documents, including this Amendment, and the transactions contemplated
thereby including without limitation, to the extent invoiced, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid by the
Borrowers hereunder.

7. Miscellaneous.

(a) Except as otherwise expressly set forth herein, nothing herein shall be
deemed to constitute an amendment, modification or waiver of any of the
provisions of the Credit Agreement or the other Loan Documents, all of which
remain in full force and effect as of the date hereof and are hereby ratified
and confirmed. The Loan Parties acknowledge and agree that nothing contained
herein shall be deemed to entitle the Loan Parties to a consent to, or a waiver,
amendment or modification of, any of the terms, conditions, obligations,
covenants or agreements contained in the Loan Documents in similar or different
circumstances. This Amendment shall be deemed to be a Loan Document.

(b) This Amendment may be executed in any number of counterparts, each of which,
when executed and delivered, shall be an original, but all counterparts shall
together constitute one instrument.

(c) Whenever the terms or sections amended hereby shall be referred to in the
Credit Agreement, Loan Documents or such other documents (whether directly or by
incorporation into other defined terms), such defined terms shall be deemed to
refer to those terms or sections as amended by this Amendment.

(d) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS, AND SHALL BE BINDING
UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS.

[Signature pages to follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 

BORROWERS: THE PARENT COMPANY By:   /s/ Michael Wagner   Name:   Michael Wagner
  Title:   CEO BABYUNIVERSE, INC. By:   /s/ Michael Wagner   Name:   Michael
Wagner   Title:   CEO eTOYS DIRECT, INC. By:   /s/ Michael Wagner   Name:  
Michael Wagner   Title:   CEO POSHTOTS, INC. By:   /s/ Michael Wagner   Name:  
Michael Wagner   Title:   CEO DREAMTIME BABY, INC. By:   /s/ Michael Wagner  
Name:   Michael Wagner   Title:   CEO MY TWINN, INC. By:   /s/ Michael Wagner  
Name:   Michael Wagner   Title:   CEO

[Signature page to Fifth Amendment to Amended and Restated Credit Agreement]

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LOAN GUARANTORS: eTOYS DIRECT 1, LLC By:   eTOYS DIRECT, INC.,   Its Managing
Member By:   /s/ Michel J. Wagner   Name:   Michel J. Wagner   Title:   Chief
Executive Officer eTOYS DIRECT 2, LLC By:   eTOYS DIRECT, INC.,   Its Managing
Member By:   /s/ Michel J. Wagner   Name:   Michel J. Wagner   Title:   Chief
Executive Officer eTOYS DIRECT 3, LLC By:   eTOYS DIRECT, INC.,   Its Managing
Member By:   /s/ Michel J. Wagner   Name:   Michel J. Wagner   Title:   Chief
Executive Officer GIFT ACQUISITION, L.L.C. By:   eTOYS DIRECT, INC.,   Its
Managing Member By:   /s/ Michel J. Wagner   Name:   Michel J. Wagner   Title:  
Chief Executive Officer

[Signature page to Fifth Amendment to Amended and Restated Credit Agreement]

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ADMINISTRATIVE AGENT AND REQUIRED LENDER:

THE CIT GROUP/BUSINESS CREDIT, INC.,

individually, as Administrative Agent, Collateral

Agent and Lender

By:   /s/ Frank Brown   Name:   Frank Brown   Title:   Senior Vice President

[Signature page to Fifth Amendment to Amended and Restated Credit Agreement]

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RATIFICATION OF LIMITED GUARANTY AND PLEDGE AGREEMENT

Dated as of October 31, 2008

D.E. Shaw Laminar Lending, Inc. (the “Guarantor”) hereby (a) acknowledges and,
to the extent such consent is required, consents to the Fifth Amendment to
Amended and Restated Credit Agreement dated as of the date hereof among The
Parent Company, a Colorado corporation (“Parent”), BabyUniverse, Inc., a
Colorado corporation (“BabyUniverse”), eToys Direct, Inc., a Colorado
corporation (“eToys Direct”), PoshTots, Inc, a Colorado corporation
(“PoshTots”), Dreamtime Baby, Inc., a Colorado corporation (“Dreamtime”), My
Twinn, Inc., a Colorado corporation (“My Twinn”, and collectively with Parent,
BabyUniverse, eToys Direct, PoshTots and Dreamtime, the “Borrowers”), the other
Loan Parties party thereto, the Lenders party thereto and The CIT Group/Business
Credit, Inc., as Administrative Agent and Collateral Agent for the Lenders (the
“Administrative Agent”), (b) ratifies and confirms the Limited Guaranty and
Pledge Agreement dated as February 1, 2008 by the Guarantor in favor of the
Administrative Agent, as amended by that certain First Amendment to Limited
Guaranty and Pledge Agreement of even date herewith (the “Guaranty”), and
ratifies and confirms all of its obligations and liabilities under the Guaranty
and (c) agrees that the Guaranty and all of such obligations and liabilities
remain in full force and effect.

[Signature Page to Follow]

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IN WITNESS WHEREOF, the undersigned has executed this Ratification of Limited
Guaranty and Pledge Agreement as an instrument under seal as of the day and year
above first written.

 

D. E. SHAW LAMINAR LENDING, INC. By:   /s/ Daniel Posner   Name:   Daniel Posner
  Title:   Authorized Signatory

[Signature page to Ratification of Limited Guaranty and Pledge Agreement]

 

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