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                                                                   EXHIBIT 10.12

                        THIRD AMENDMENT TO LOAN DOCUMENTS

      BUILD-A-BEAR WORKSHOP, INC. ("BABWI"), successor by merger to BUILD-A-BEAR
WORKSHOP, LLC, SHIRTS ILLUSTRATED, LLC ("SHIRTS"), BUILD-A-BEAR WORKSHOP
FRANCHISE HOLDINGS, INC. ("BABWF"), BUILD-A-BEAR ENTERTAINMENT, LLC ("BABE"),
and BUILD-A-BEAR RETAIL MANAGEMENT, INC. ("BABRM"), jointly and severally
(individually and collectively, the "Borrower"), BUILD-A-BEAR WORKSHOP CANADA,
INC. ("Guarantor" or "BABWC") and U.S. BANK NATIONAL ASSOCIATION, formerly known
as FIRSTAR BANK, NATIONAL ASSOCIATION ("Lender"), hereby agree as follows
effective as of May 31, 2004 (the "Effective Date"):

1.    RECITALS.

      1.1   Lender and Build-A-Bear Workshop, LLC entered into a Loan Agreement
            and related loan and security documents dated as of March 1, 2000
            pursuant to which the Lender extended a revolving credit facility to
            the Borrower (the "Loan");

      1.2   Lender, Build-A-Bear Workshop, LLC and Build-A-Bear Workshop, Inc.
            entered into an assumption and amendment agreement dated as of April
            3, 2000, whereby Build-A-Bear Workshop, Inc. assumed all of the
            obligations of its predecessor in interest, Build-A-Bear Workshop,
            LLC;

      1.3   Lender and Borrower amended the terms of the Loan by the First
            Amended and Restated Loan Agreement and related loan and security
            documents dated as of June 1, 2001 (the "Prior Loan Agreement");

      1.4   Lender and Borrower amended and restated the Prior Loan Agreement by
            the Second Amended and Restated Loan Agreement dated as of February
            13, 2002 (the "Loan Agreement") and Borrower delivered to Lender in
            connection therewith the First Amended and Restated Revolving Credit
            Note (the "Note") and the First Amended and Restated Security
            Agreement (the "Security Agreement") (the Note, Security Agreement
            and Loan Agreement, the Guarantee of BABWC, and all other loan and
            security documents executed in connection with the Loan from time to
            time are referred to herein as the "Loan Documents");

      1.5   Lender and Borrower amended the Loan Documents pursuant to the First
            Amendment to Loan Documents effective as of May 30, 2003 to add
            additional borrowers to the Loan Documents, to revise certain
            financial covenants in the Loan Documents, and to add BABWC as a
            guarantor of the obligations under the Loan Documents.

      1.6   Lender and Borrower amended the Loan Documents pursuant to the
            Second Amendment to Loan Documents effective as of December 31, 2003
            to add an additional borrower to the Loan Documents.

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      1.7   Capitalized terms used herein and not otherwise defined will have
            the meanings given such terms in the Loan Agreement.

      1.8   Borrower and Lender desire to further amend the Loan Documents
            pursuant to this Third Amendment to Loan Documents ("Amendment").

2.    AMENDMENTS.

      2.1   Section 2.1.2 of the Loan Agreement is hereby deleted and replaced
            with the following:

            2.1.2 MAXIMUM AMOUNT. The maximum amount that may be outstanding
            under the Revolving Credit Note at any particular time may not
            exceed the lesser of the following (the "Maximum Amount"): (A) the
            Total Facility; or (B) in the event that Lender determines in its
            sole discretion to limit the amount to be advanced under the
            Revolving Credit Note (after 30 days prior written notice to
            Borrower of such determination by Lender), an amount equal to the
            sum of (a) up to 75% of Borrower's Eligible Receivables, plus (b) up
            to the lesser of: (i) $12,000,000; or (ii) 50% of Borrower's
            Eligible Inventory, plus (c) up to 10% of the book value of
            Borrower's net fixed assets. Notwithstanding anything to the
            contrary contained herein, Lender in its sole discretion may, but
            will never be obligated to, increase the amount of the Total
            Facility or change or suspend the limits on the Maximum Amount.

      2.2   Section 2.1 of the Loan Agreement is hereby amended to add the
            following as Section 2.1.5:

            2.1.5 COMMITMENT FEE. Borrower will pay to Lender a commitment fee
            beginning effective June 1, 2004, computed at the rate of 0.125% per
            annum, on the average daily difference between: (i) the outstanding
            amount of the Note and (ii) the Maximum Amount, such Commitment Fee
            to be payable quarterly in arrears on the last day of each June,
            September, December and March and upon the Maturity Date of the Note
            and/or the date this Agreement is terminated.

      2.3   Section 6.1 of the Loan Agreement is hereby deleted and replaced
            with the following:

            6.1   DEBT. Incur any Indebtedness other than: (a) the Loans and any
            subsequent Indebtedness to Lender; (b) open account obligations
            incurred in the ordinary course of business having maturities of
            less than 150 days; (c) lease payments for real property; (d) lease
            and rental payments for personal property whose aggregate annual
            rental payments do not exceed $100,000 during any calendar year; and
            (e) Indebtedness secured by Permitted Liens.

      2.4   Section 6.4 of the Loan Agreement is hereby deleted and replaced
            with the following:

            6.4   MINIMUM TANGIBLE NET WORTH. Permit the Tangible Net Worth of

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            Borrower and Guarantor on a consolidated basis to be less than
            $54,000,000 at any time. Such amount shall be increased by the
            amount of all equity contributions made to the Borrower from time to
            time and shall be reduced by the amount of dividends, share
            repurchases, or any other return of capital contributions permitted
            under this Agreement; provided however, that such reductions shall
            not cause the Tangible Net Worth of Borrower and Guarantor on a
            consolidated basis to be less than $44,000,000 at any time.

      2.5   Section 6.6 of the Loan Agreement is hereby deleted and replaced
            with the following:

            6.6   DIVIDENDS. Declare or pay any dividends of any kind other than
            dividends payable solely in shares of its capital stock (including
            without limitation debt repayment, payment for goods and services);
            provided however, that Borrower may do so if such payment would not
            violate any of the other terms of this Agreement or the Security
            Documents and none of the following conditions exist or will exist
            as a result of any such payment: (i) an Event of Default or Default;
            and (ii) the difference between the Maximum Amount and the
            outstanding amount of the Revolving Credit Note is less than
            $5,000,000.

      2.6   Section 6.8 of the Loan Agreement is hereby deleted and replaced
            with the following:

            6.8   REDEMPTIONS. Purchase, retire, redeem or otherwise acquire for
            value, directly or indirectly, any shares of its capital stock now
            or hereafter outstanding; provided however, that Borrower may do so
            if such purchase, redemption or acquisition would not violate any of
            the other terms of this Agreement or the Security Documents and none
            of the following conditions exist or will exist as a result of any
            such purchase, redemption or acquisition: (i) an Event of Default or
            Default; and (ii) the difference between the Maximum Amount and the
            outstanding amount of the Revolving Credit Note is less than
            $5,000,000.

      2.7   Section 6.11 of the Loan Agreement is hereby deleted and replaced
            with the following:

            6.11  ADVANCES AND LOANS. Except as set forth in the Disclosure
            Schedule, lend money, give credit or make advances (other than
            ordinary, reasonable advances not to exceed $50,000 in the aggregate
            at any time) to any person, firm, joint venture or corporation,
            including, without limitation, Affiliates; provided however, that
            Borrower may make advances to BABWC so long as such advances shall
            not exceed $7,000,000 outstanding in the aggregate at any time.

      2.8   Notwithstanding the terms of the Loan Agreement requiring the
            regular submission of Borrowing Base Certificates to Lender,
            Borrower shall no longer be required to submit such Borrowing Base
            Certificates to Lender unless and until such time as Lender requires
            that Borrower do so by written notice to Borrower.

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      2.9   The Maturity Date set forth in Section 3 of the Note is hereby
            extended from May 31, 2004 to May 31, 2005.

3.    REPRESENTATIONS, WARRANTIES, AND COVENANTS. To induce Lender to enter into
      this Amendment, Borrower represents, warrants, and covenants as follows:

      3.1   The representations and warranties of Borrower contained in the Loan
            Documents are deemed to have been made again on and as of the date
            of execution of this Amendment.

      3.2   No Event of Default (as such term is defined in the Loan Documents)
            or Default exists on the date hereof.

      3.3   Each Borrower and Guarantor represents and warrants that it has no
            claims, counterclaims, setoffs, actions or causes of actions,
            damages or liabilities of any kind or nature whatsoever whether at
            law or in equity, in contract or in tort, whether now accrued or
            hereafter maturing (collectively, "Claims") against Lender, their
            direct or indirect parent corporations or any direct or indirect
            Affiliates of such parent corporations, or any of the foregoing's
            respective directors, officers, employees, agents, attorneys and
            legal representatives, or the heirs, administrators, successors or
            assigns of any of them (collectively, "Lender Parties") that
            directly or indirectly arise out of, are based upon or are in any
            manner connected with any Prior Related Event. As an inducement to
            Lender to enter into this Agreement, each Borrower and Guarantor on
            behalf of itself, and all of its successors and assigns hereby
            knowingly and voluntarily releases and discharges all Lender Parties
            from any and all Claims, whether known or unknown, that directly or
            indirectly arise out of, are based upon or are in any manner
            connected with any Prior Related Event. As used herein, the term
            "Prior Related Event" means any transaction, event, circumstance,
            action, failure to act, occurrence of any sort or type, whether
            known or unknown, which occurred, existed, was taken, permitted or
            begun at any time prior to the Effective Date or occurred, existed,
            was taken, was permitted or begun in accordance with, pursuant to or
            by virtue of any of the terms of the Loan Documents or any documents
            executed in connection with the Loan Documents or which was related
            to or connected in any manner, directly or indirectly to the
            extension of credit represented by the Loan Documents.

      3.4   Each Borrower and Guarantor has the full right, power and authority
            to enter into this Amendment and perform its obligations hereunder,
            and no information or material submitted to Lender in connection
            with this Amendment contains any material misstatement or
            misrepresentation nor omits to state any material fact or
            circumstance.

4.    CONDITIONS PRECEDENT. The consent of Lender to this Amendment is subject
      to the satisfaction of the following conditions precedent:

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      4.1   Lender will have been furnished copies, certified by the Secretary
            of Borrower and Guarantor, of resolutions of the Board of Directors
            of Borrower and Guarantor authorizing the execution of this
            Amendment and any related documentation.

      4.2   The representations and warranties of Borrower in Section 3 herein
            will be true.

      4.3   Lender will have received an updated schedule of all locations of
            Borrower and of each Borrower's intellectual property, along with an
            executed pledge agreement of such intellectual property in form
            acceptable to Lender.

5.    GENERAL.

      5.1   Except as expressly modified herein, the Loan Documents, as amended,
            are and remain in full force and effect. Nothing contained herein
            will be construed as waiving any Default or Event of Default under
            the Loan Documents or will affect or impair any right, power or
            remedy of Lender under or with respect to the Loan Documents, as
            amended, or any agreement or instrument guaranteeing, securing or
            otherwise relating to any of the Advances.

      5.2   All representations and warranties made by Borrower herein will
            survive the execution and delivery of this Amendment.

      5.3   This Amendment will be binding upon and inure to the benefit of
            Borrower and Lender and their respective successors and assigns.

      5.4   Borrower will pay attorneys' fees and expenses of Lender incurred in
            connection with this Amendment and related documentation. Such fees,
            expenses may be charged to Borrower by Lender as a Revolving
            Advance.

      5.5   This Amendment will in all respects be governed and construed in
            accordance with the laws of the State of Ohio.

      5.6   A copy of this Amendment may be attached to the Note as an allonge.

      5.7   This Amendment and the documents and instruments to be executed
            hereunder constitute the entire agreement among the parties with
            respect to the subject matter hereof and shall not be amended,
            modified or terminated except by a writing signed by the party to be
            charged therewith.

      5.8   Borrower agrees to execute such other instruments and documents and
            provide Lender with such further assurances as Lender may reasonably
            request to more fully carry out the intent of this Amendment.

      5.9   This Amendment may be executed in a number of identical
            counterparts. If so, each such counterpart shall collectively
            constitute one agreement. Any signature delivered by a party by
            facsimile transmission shall be deemed to be an original signature
            hereto.

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      5.10  No provision of this Amendment is intended or shall be construed to
            be for the benefit of any third party.

Executed as of the Effective Date.

BUILD-A-BEAR WORKSHOP, INC.                    U.S. BANK NATIONAL
                                               ASSOCIATION
BORROWER                                       LENDER

By: /s/ Maxine Clark                           By: /s/ Charles L. Thomas
    --------------------------                     --------------------------
Print Name: Maxine Clark                       Print Name: Charles L. Thomas
Title: Chief Executive Bear                    Title: Vice President

BUILD-A-BEAR                                   BUILD-A-BEAR WORKSHOP
ENTERTAINMENT, LLC                             FRANCHISE HOLDINGS, INC.
BORROWER                                       BORROWER

By: /s/ Maxine Clark                           By: /s/ Maxine Clark
    --------------------------                     --------------------------
Print Name: Maxine Clark                       Print Name: Maxine Clark
Title: Manager                                 Title: Chief Executive Bear

BUILD-A-BEAR RETAIL                            SHIRTS ILLUSTRATED, LLC
MANAGEMENT, INC.
BORROWER                                       BORROWER
                                                 By: Build-A-Bear Workshop, LLC,
                                                 its Managing Member

By: /s/ Maxine Clark                           By: /s/ Maxine Clark
    --------------------------                     --------------------------
Print Name: Maxine Clark                       Print Name: Maxine Clark
Title: Chief Executive Bear                    Title: Manager

BUILD-A-BEAR WORKSHOP
CANADA, INC.
GUARANTOR

By: /s/ Maxine Clark
    --------------------------
Print Name: Maxine Clark
Title: Chief Executive Bear

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