TRANSACTION INCENTIVE AGREEMENT

Exhibit 10.1

Dave Coder

TRANSACTION INCENTIVE AGREEMENT

THIS TRANSACTION INCENTIVE AGREEMENT is entered into as of this 9^th day of February, 2006 by and between Linens ’n Things, Inc., a Delaware corporation (the “Company”) and David Coder (the “Executive”).

WHEREAS, the Board of Directors of the Company (the “Board”) has for a number of months been reviewing strategic alternatives and retained Credit Suisse First Boston (“CSFB”) to assist the Board in that strategic process; and

WHEREAS, as part of this strategic process, the Board and the Company’s representatives at CSFB have required the Executive to participate in all of the substantial work product and effort required to conduct this strategic process and to allow the strategic process to proceed in a productive and effective way, all the while maintaining the confidentiality of this process within the organization; and

WHEREAS, the Board at its meeting on November 7, 2005 approved the Agreement and Plan of Merger with Apollo Management L.P. (the “Buyer”) dated as of November 8, 2005 (the “Merger Agreement”); and

WHEREAS, the Executive will be required to perform substantial duties, over and above the Executive’s customary and expected duties, in connection with the transactions contemplated by the Merger Agreement, up to and including the closing and consummation of the Merger Agreement (the “Closing”); and

WHEREAS, the Compensation Committee of the Board has considered appropriate additional compensation for the Executive with respect to the substantial services and effort performed and to be performed by the Executive in achieving the results of this process to date as well as in connection with the transactions contemplated by the Merger Agreement and in connection with the continued success of the business of the Company in the period up to and including the Closing;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged by the parties, the Company and the Executive agree as follows:

1. Closing Incentive Compensation. In consideration of the substantial efforts that have been and will be needed from the Executive up through and including the Closing, the Company agrees to pay to the Executive, as additional compensation, the amount of $100,000, less applicable withholding and other taxes (the “Closing Incentive Compensation”), which will be payable to the Executive on the Closing, subject to the following:

Notwithstanding the above, payment of the Closing Incentive Compensation is subject to and wholly contingent upon: (X) the consummation of the Merger Agreement and the occurrence of the Closing; and (Y) the Executive remaining in the full time employ of the Company, using his diligent efforts, up through the Closing unless the Executive’s employment is terminated prior to the Closing by the Company other than for “Cause” or by reason of the Executive’s death.