Linens ‘n Things, Inc., a Delaware Corporation (the “Company”), and Linens ‘n Things Canada Corp. (“Linens ‘n Things Canada”) entered into a Cdn.$40,000,000 3-Year Credit Agreement (the “Credit Agreement”), effective as of July 29, 2005, among the Company, as Guarantor, Linens ‘n Things Canada, as Borrower, National City Bank, Canada Branch, as lender and Administrative Agent (the “Agent”) and each other lender from time to time party thereto. The Credit Agreement is to be used to finance working capital associated with store expansions and for working capital and general corporate requirements for Linens ‘n Things Canada.

The Credit Agreement provides for a 3-year revolving term facility and allows for up to Cdn.$40 million of borrowings. The Credit Agreement includes a swingline facility in a maximum amount of Cdn.$3 million. Interest on borrowings is determined based upon several alternative fixed margins, between 0% and 1.25%, above the greater of (a) the variable per annum reference rate of interest announced and as adjusted by the Bank of Montreal from time to time for Canadian Dollar loans in Canada and (b) the sum of (i) the rate of interest per annum that is equal to the Reuters Screen CDOR Page on month BA Discount Rate of the Agent expressed as an annual yield rate and (ii) 1%. Linens ‘n Things Canada must repay in full all outstanding principal amounts under the Credit Agreement on or before July 29, 2008.

The Credit Agreement includes usual and customary events of default (subject to applicable grace periods) for facilities of this nature and provides that, upon the occurrence of an event of default, payment of all amounts payable under the Credit Agreement may be accelerated and/or the lenders’ commitments may be terminated. 

As of July 29, 2005, there were no loans outstanding or letters of credit outstanding under the Credit Agreement.

The foregoing summary of the Credit Agreement is qualified in its entirety by reference to the Credit Agreement, which is attached as Exhibit 10.1 to this Form 8-K.

In connection with the Credit Agreement, the Company executed a Guarantee, dated July 29, 2005. Pursuant to the Guarantee, the Company unconditionally and irrevocably guarantees the payment of all debts owed by Linens ‘n Things Canada under the Credit Agreement and agrees to indemnify the Agent and lenders against losses resulting from the failure of Linens ‘n Things Canada to pay its obligations under the Credit Agreement.

The Credit Agreement replaces two bilateral agreements (the “Prior Credit Agreements”) totaling Cdn.$35 million which expired or were terminated between June 15, 2005 and July 31, 2005 in connection with the execution of the Credit Agreement. The Prior Credit Agreements allowed for up to Cdn.$35 million of borrowings. The Prior Credit Agreements contained usual and customary events of default (subject to applicable grace periods) for facilities of its nature and provided that, upon the occurrence of an event of default, payment of all amounts payable under each could be accelerated and/or the lenders’ commitments could be terminated.