<PAGE>

                                                                    Exhibit 10.1


                   FIRST AMENDMENT AND WAIVER WITH RESPECT TO
                   THIRD AMENDED AND RESTATED CREDIT AGREEMENT
                   -------------------------------------------

     This FIRST AMENDMENT AND WAIVER WITH RESPECT TO THIRD AMENDED AND RESTATED
CREDIT AGREEMENT (this "Amendment and Waiver") is entered into as of this 17th
day of October, 2001, by and among WILSONS LEATHER HOLDINGS INC., a Minnesota
corporation ("Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, as Lender, Swing Line Lender and as Agent ("Agent"), the Credit
Parties signatory hereto and the Requisite Lenders signatory hereto. Unless
otherwise specified herein, capitalized terms used in this Waiver shall have the
meanings ascribed to them by the Credit Agreement (as hereinafter defined).

                                    RECITALS
                                    --------

     WHEREAS, Borrower, certain Credit Parties, Agent and Lenders have entered
into that certain Third Amended and Restated Credit Agreement, dated as of June
19, 2001 (as further amended, supplemented, restated or otherwise modified from
time to time, the "Credit Agreement");

     NOW THEREFORE, in consideration of the foregoing recital, mutual agreements
contained herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Requisite Lenders, Borrower and
the Credit Parties agree as follows:

     SECTION 1. WAIVER REGARDING ADDITIONAL INDEBTEDNESS. Agent and Requisite
Lenders hereby waive the provisions of Section 6.3 of the Credit Agreement to
permit the Ultimate Parent to incur up to $35,000,000 of Indebtedness consisting
of short-term unsecured promissory notes issued on or before November 1, 2001
with a maturity date of 85 to 95 days following the date of issuance, in
accordance in all material respects with a letter agreement to be entered into
between Ultimate Parent and U.S. Bancorp Piper Jaffray Inc. substantially in the
form of Exhibit A attached hereto (the "Short-Term Notes"). This waiver is
limited to a single issuance of Short-Term Notes as described above.

     SECTION 2. FULL CASH DOMINION. Borrower hereby consents to Agent's issuance
of an Activation Notice to the Concentration Account Bank in accordance with
Schedule E to the Credit Agreement, regardless of whether an Event of Default
has occurred and is continuing.

     SECTION 3. CLEAN DOWN PERIOD. Clause (iv) of Section 1.1(a) of the Credit
Agreement is restated to read as follows:

     (iv) Borrower shall cause the outstanding principal balance of the
     Revolving Credit Advances and Swing Line Loan to be reduced to zero ($0)
     for the first ninety (90) consecutive days of each calendar year.
<PAGE>

     SECTION 4. GOB CAP. Clause (v) of Section 1.1(a) of the Credit Agreement is
restated to read as follows:

     (v) Notwithstanding any provision to the contrary set forth herein, in no
     event shall the sum of the outstanding Revolving Loan (including the Swing
     Line Loan) plus the outstanding principal balance of Term Loan B exceed
     ninety-five percent (95%) of the amount which could be realized upon a sale
     of Borrower's inventory pursuant to a going out of business sale as
     determined in accordance with the then most recent appraisal delivered to
     Agent pursuant to subsection (f) of Schedule H (the "GOB Cap"); provided
     that during the months of October, November and December of each year the
     GOB Cap shall be determined by reference to appraisals reflecting peak
     season liquidation values for Inventory.

     SECTION 5. INTEREST RATES. Section 1.6 of the Credit Agreement is restated
to read in its entirety as follows:

     The Applicable Swing Line Margin, Applicable Index Margin, Applicable LIBOR
     Margin and Applicable L/C Margin will be 2.75%, 1.50%, 2.75% and 2.25%,
     respectively, effective as of the date of the First Amendment and Waiver
     with Respect to Credit Agreement and shall not be subject to adjustment.
     The Seasonal Over-Advances shall bear interest (i) at the LIBOR Rate or the
     Index Rate, plus the Applicable Margin(s) or (ii) the Applicable L/C
     Margin, plus, in each case, 100 basis points per annum. For purposes of
     this Section, Advances, Letter of Credit Obligations or Eligible Trade L/C
     Obligations constituting Seasonal Over-Advances shall be deemed to
     constitute the last Advances made (or Letter of Credit Obligations or
     Eligible Trade L/C Obligations incurred) and the first Advances repaid (or
     Letter of Credit Obligations or Eligible Trade L/C Obligations discharged).

     SECTION 6. BORROWING BASE CERTIFICATE. Exhibit 4.1(b) to the Credit
Agreement is restated in the form of Exhibit 4.1(b) attached hereto.

     SECTION 7. COMPLIANCE CERTIFICATE. With respect to Borrower's Fiscal Year
ending on or about January 31, 2002, Borrower shall deliver to Agent and Lenders
a Compliance Certificate of the type described in Annex G, clause (d)(i) (based
on unaudited Financial Statements) on or before March 31, 2002.

     SECTION 8. PREPAYMENT OF OTHER INDEBTEDNESS. The following sentence is
added to Section 6.3:

                                       2
<PAGE>

     No Credit Party shall directly or indirectly voluntarily prepay, repurchase
     or redeem any Indebtedness other than the Obligations.

     SECTION 9. CONDITIONS TO EFFECTIVENESS. This Waiver shall be effective upon
execution and delivery hereof by Requisite Lenders and the Credit Parties listed
on the signature pages hereto.

     SECTION 10. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.

          (a) Except as specifically set forth above, the Credit Agreement and
     the other Loan Documents shall remain in full force and effect and are
     hereby ratified and confirmed.

          (b) The execution, delivery and effectiveness of this Waiver shall not
     operate as a waiver of any right, power or remedy of Agent or any Lender
     under the Credit Agreement or any Loan Document, nor constitute a waiver of
     any provision of the Credit Agreement or any Loan Document, except as
     specifically set forth herein. Upon the effectiveness of this Waiver, each
     reference in the Credit Agreement to "this Agreement", "hereunder",
     "hereof", "herein", or words of similar import shall mean and be a
     reference to the Credit Agreement as modified hereby.

     SECTION 11. COSTS AND EXPENSES. As provided in Section 11.3 of the Credit
Agreement, Borrower agrees to reimburse Agent for all fees, costs, and expenses,
including the fees, costs, and expenses of counsel or other advisors for advice,
assistance, or other representation in connection with this Waiver.

     SECTION 12. GOVERNING LAW. THIS WAIVER SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS.

     SECTION 13. HEADINGS. Section headings in this Waiver are included herein
for convenience of reference only and shall not constitute part of this Waiver
for any other purposes.

     SECTION 14. COUNTERPARTS. This Waiver may be executed in any number of
counterparts, each of which when so executed shall be deemed an original, but
all such counterparts shall constitute one and the same instrument.

     SECTION 15. CONFIDENTIALITY. The matters set forth herein are subject to
Section 11.18 of the Credit Agreement, which is incorporated herein by
reference.


                            (signature pages follow)

                                       3
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     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
First Amendment and Waiver With Respect to Third Amended and Restated Credit
Agreement as of the date first written above.


                                       BORROWER:

                                       WILSONS LEATHER HOLDINGS INC.


                                       By: /s/ Peter G. Michielutti
                                           -------------------------------------
                                       Name: Peter G. Michielutti
                                             -----------------------------------
                                       Title: Senior Vice President & CFO
                                              ----------------------------------


                                       AGENT:

                                       GENERAL ELECTRIC CAPITAL
                                       CORPORATION, as Agent, Lender and Swing
                                       Line Lender


                                       By: /s/ Leanne C. Manning
                                           -------------------------------------
                                       Name: Leanne C. Manning
                                             -----------------------------------
                                       Title Duly Authorized Signatory
                                             -----------------------------------


                                       LENDERS:

                                       FLEET NATIONAL BANK, as Lender


                                       By: /s/ Kathleen A. Dimock
                                           -------------------------------------
                                       Name: Kathleen A. Dimock
                                             -----------------------------------
                                       Title Director
                                             -----------------------------------


                                       THE CIT GROUP/BUSINESS CREDIT, INC.,
                                       as Lender


                                       By: /s/ Evelyn Kusold
                                           -------------------------------------
                                       Name: Evelyn Kusold
                                             -----------------------------------
                                       Title AVP
                                             -----------------------------------

                                       4
<PAGE>

                                       FIRST UNION NATIONAL BANK, as Lender


                                       By: /s/ Joan Anderson
                                           -------------------------------------
                                       Name: Joan Anderson
                                             -----------------------------------
                                       Title: Vice President
                                              ----------------------------------


                                       U.S. BANK NATIONAL ASSOCIATION, as Lender


                                       By: /s/ Scott Singer
                                           -------------------------------------
                                       Name: Scott Singer
                                             -----------------------------------
                                       Title Relationship Manager
                                             -----------------------------------


                                       HARRIS TRUST AND SAVINGS BANK, as
                                       Lender


                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title
                                             -----------------------------------

                                       5
<PAGE>

     The following Persons are signatories to this Waiver in their capacity as
Credit Parties and not as Borrowers.

                                       WILSONS THE LEATHER EXPERTS INC.


                                       By: /s/ Peter G. Michielutti
                                           -------------------------------------
                                       Name: Peter G. Michielutti
                                             -----------------------------------
                                       Title: Senior Vice President & CFO
                                              ----------------------------------


                                       WILSON'S CENTER, INC.


                                       By: /s/ Peter G. Michielutti
                                           -------------------------------------
                                       Name: Peter G. Michielutti
                                             -----------------------------------
                                       Title Senior Vice President & CFO
                                             -----------------------------------


                                       ROSEDALE WILSON'S, INC.


                                       By: /s/ Peter G. Michielutti
                                           -------------------------------------
                                       Name: Peter G. Michielutti
                                             -----------------------------------
                                       Title Senior Vice President & CFO
                                             -----------------------------------


                                       RIVER HILLS WILSONS, INC.


                                       By: /s/ Peter G. Michielutti
                                           -------------------------------------
                                       Name: Peter G. Michielutti
                                             -----------------------------------
                                       Title Senior Vice President & CFO
                                             -----------------------------------


                                       BERMANS THE LEATHER EXPERTS INC.


                                       By: /s/ Peter G. Michielutti
                                           -------------------------------------
                                       Name: Peter G. Michielutti
                                             -----------------------------------
                                       Title Senior Vice President & CFO
                                             -----------------------------------

                                       6