MEMORANDUM OF AGREEMENT
                             -----------------------

        Whereas Lechters and Local 99 are partners to a union contract which was
effective July 1, 1997 to June 30, 2000 as extended for an additional  period to
permit continued negotiations for a renewal agreement; and

        Whereas,  the parties have agreed to renew and extend the union contract
covering the office employees and desire to incorporate the terms of the renewal
in this memorandum of agreement.

        Now, therefore it is agreed:
1.      The office contract  is  renewed and  extended from July 1, 2000 to June
        30, 2003 except as modified hereby.

2.      Company   proposal   regarding   paragraph 7,   paragraph  36  shall  be
        incorporated (attached hereto)

3.      The post probationary increase shall be changed from $0.20 to $0.30

4.      Election  day will be  converted  to a personal  day which  can be  used
        for day after  Thanksgiving  subject to scheduling  in  accordance  with
        the Company business needs and requirements.

5.      Vacation time to be modified as per attached proposal for paragraph 14.

6.      Minimum Hiring start rates to be adjusted as follows:

        $7.50/hr. for mailroom; $8.50/hr for all others (plus $0.30/hr. after
        probation)

7.      Benefit Fund Contribution to be adjusted as per attached schedule:


                   Lechters Office Benefit Fund Contributions

(1)     The increase in  contributions  to the Local 99 H & W Fund, as set forth
        in paragraph (3) below, is inclusive of an increase of 1/2 % towards the
        employee's  obligation to contribute to the Eastern  States Welfare Fund
        for the  improved  prescription  plan  and  coverage  by that  fund  for
        retirees.  The  required  contribution  for coverage is forwarded by the
        Local 99 H & W Fund from the contribution received from the Employer.

(2)     Effective 9/1/99 Contributions to the  retirement fund  shall be reduced
        from 9% to 6%.  Effective 7/1/00  contributions  to the  retirement (NRF
        2000) fund will be capped at 35 hours/wk/Employee.

(3)     Contributions  to  the  Local  99  H & W  Fund  shall  be  increased  by
        1.5% (to 21 - 15%) effective 7/1/00. Waiting period eligibility shall be
        reduced  by 3 months  effective  7/1/00  (individual)  and 6 months  for
        family.

(4)     The  retirement  contribution   shall   reflect  continued   payment  of
        2.2%  for the  existing  plan and  3.8%  for  participation  in NRF 2000
        effective  1/1/00. The 3.8% shall be converted to the  following  hourly
        contribution  rates  effective  7/1/00 - .43; 7/1/01 - .45; and 7/1/02 -
        .47.

8.      Wage adjustments to be implemented as follows:

        7/1/00  -  .50/hr           7/1/01  -  .50/hr.         7/1/02  -  .50/hr

9.      Labor  Management  Committee to be established for office to meet twice/
        year.  Equal  number  of  union  and  management representation to be on
        Committee.



        For the Company                             For the Union

        ----------------------------                ----------------------------
        Janice Cartwright                           Luis M. Ramos

                                                    ---------------------------
                                                    Charles Waiters

                                                    ---------------------------
                                                    Jacqueline Stuart

Dated:  August 8, 2000

Service / Seniority (proposal)
Paragraph 7 (a)

An employee rehired within six (6) months of the date that his or her employment
was terminated,  where such termination was voluntary, shall be entitled to full
credit  for the time of  previous  service  with the  Employer  with  respect to
seniority  and full credit after the  expiration  of one (1) year of  additional
service for the time of  previous  service  with the  Employer  with  respect to
vacation eligibility. An employee rehired after the expiration of six (6) months
after the date that his or her employment was terminated, where such termination
was voluntary, shall not receive any credit for past service with Employer.


Leave of Absence (proposed)
Paragraph 7 (b)

Leave of absence in case of  sickness,  pregnancy,  jury duty or Union  business
shall be granted for  reasonable  periods.  Other leaves of absence for personal
needs may be requested and shall not be unreasonably withheld.

To  be  eligible  for  bereavement   leave  with  pay,  an  employee  must  have
satisfactorily completed six (6) months of service. At least five (5) days leave
of absence  with pay shall be  granted in case of death in a worker's  immediate
family which includes  spouse,  parent and  grandparent,  child and  grandchild,
sister and  brother.  At least two (2) days  leave of absence  with pay shall be
granted in case of death of a worker's father-in-law or mother-in-law.

Two days leave of absence  with pay shall be granted to a covered male worker in
connection  with  the  birth  of his  child.  Proof  of such  occurrence  may be
required.

The employment rights of veterans,  reservists and members of the National Guard
guaranteed by law are incorporated into this Agreement.

Employees  of the  Employer  who may be called upon to perform  business for the
Union which requires  absence from duty with the Employer,  shall,  upon written
notice to the Employer,  be allowed to absent themselves for a reasonable period
of time.

Family and Medical Leave Act (FMLA).  Employees eligible to receive family leave
under the  federal  FMLA or the New  Jersey  Family  Leave Act shall be  granted
leaves of absence in accordance with the terms of those statutes.

An employee  shall not be required  to use his/her  accrued or current  vacation
time in order to take FMLA leave for a personal  illness or disability.  For all
other purposes,  an employee must use his/her current  vacation time only, which
time will run concurrently with an employee's FMLA entitlement. An employee must
use his/her  current  accrued  vacation  entitlement  for any non-FMLA  personal
leave. Non-FMLA personal leave has a maximum of 30 days.

Disability  leave shall run  concurrently  with any FMLA  entitlement;  26 weeks
maximum leave.

For the  purpose of  adjusting  any  inequities,  the  Employer or the Union may
request a review of a worker's  continuing status of employment when an extended
layoff period or an extended leave of absence exists.

Vacation Time (proposal)
Paragraph 14

To be  eligible for  full vacation benefits, an  employee must work 660 hours in
the prior year. If an employee works less than 660 hours but more than 310 hours


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he shall  receive vacation  prorated to the number of hours actually worked.  If
an employee works  less  than 310 hours,  they are not entitled  to vacation for
that year.

There shall be no  carrying  forward of vacation  beginning  with 2000  vacation
accruals.  All vacation  earned in 2000 must be used by December  31, 2000.  All
pre-2000accrued  vacation may be used without  deadline.  Current vacation to be
charged against entitlement before pre-2000 accrued vacation entitlement.


No Discrimination (proposal)
Paragraph 36

There shall be no discrimination in hiring, promotions, discipline, discharge or
in any term and condition of employment because of race, creed, color,  national
origin, sex age, handicap,  disability or religion.  Further, the Company agrees
that  it  will  not  violate  the  following  statutes  in  hiring,  promotions,
discipline, discharge or in any term or condition of employment.

The Americans with Disabilities Act, 42 U.S.C. `12101, et seq.; the Consolidated
Omnibus  Budget  Reconciliation  Act, 29  U.S.C. ` 1161, et seq.;  the  Employee
Retirement  Income  Security Act of 1974, as  amended, 29 U.S.C. `1001, et seq.;
the Conscientious Employee  Protection  Act, N.J.S.A. 34:19-1, et seq.; the  New
Jersey   Workers   Compensation   Act,   N.J.S.A.  34:15-1,  et  seq.;  the  Age
Discrimination in  Employment  Act, 29 U.S.C. ` 621, et seq.; the Reconstruction
Era Civil Rights act, as amended, 42 U.S.C. `1981, et seq.; the Civil Rights Act
of 1991, as amended, 42 U.S.C. ` 1981a, et  seq.;  the  Family and Medical Leave
Act, 29 U.S.C. `2601, et seq.; The Fair Labor Standards Act, 29 U.S.C. ` 201, et
seq.; Title VII of the Civil rights  Act of 1964, as amended, 42 U.S.C. ` 2000e,
et seq.; the  New  Jersey  Law Against Discrimination, N.J.S.A. 10:5-1, et seq.;
and/or any other federal, state or  local  statutes, laws, rules and regulations
pertaining to employment, as well as any and all claims under  state and federal
contract or tort law, including breach of contract  and  breach of a covenant of
good faith and fair dealing.

The Union, on behalf of the Union and all members of the bargaining unit, agrees
that the exclusive  remedy for  violations of the agreements set forth above and
for  violations of the statutes  listed above shall be either (1) the submission
of a  grievance  to the  grievance  procedure  herein,  and if not  satisfactory
resolved,  the  submission of the grievance to the  arbitration  provisions  and
procedures  set  forth in this  agreement;  or (2)  proceeding  to file a charge
and/or complaint before the appropriate state or federal agency or court.

The Union, on behalf of the Union and on behalf of all members of the bargaining
unit,  further agrees that once the employee  and/or the Union elects either (1)
or (2), above, as the exclusive remedy for alleged  violations of the agreements
set forth above and for  violations  of the  statutes  listed  above,  the Union
and/or the  employee  waives its  rights to proceed  under the other  remedy set
forth in (1) and (2), above.


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