<PAGE>   1
                                                                    Exhibit 10.8

                                AMENDMENT NO. 5

                                       TO

                        DEFERRED COMPENSATION AGREEMENT

     Amendment No. 5, effective the 2nd day of February, 2001, between LECHTERS,
INC. (hereinafter referred to as the "Corporation") and DONALD JONAS
(hereinafter referred to as "Employee") to Deferred Compensation Agreement,
dated December 9, 1987, as amended June 16, 1989, August 15, 1989, June 15,
1995 and April 8, 1996 (hereinafter referred to as the "Agreement").

     WHEREAS, the Corporation, Employee, and the owners of certain life
insurance policies on the life of Employee and Employee's spouse have agreed to
terminate the split dollar agreements related to the said life insurance
policies and to the cancellation of collateral assignments to the corporation
of the said life insurance policies; and

     WHEREAS, the Corporation has executed a release of any right to the said
life insurance policies in consideration of Employee's agreement to release the
Corporation from the obligation to make additional premium payments for the
said life insurance policies and to make pension payments to Employee; and

     WHEREAS, the parties desire to further amend said Agreement as follows:

     1.  Employee hereby releases the Corporation from its obligation to make
the payment to Employee under Paragraph 3 thereof as amended; however nothing
in this amendment shall be construed as to relieve the Corporation of its
obligation to provide the Employee or his spouse, as the case may be, with
services similar to those currently being provided to the Employee consisting
of a secretary, an office, driver and car, or the cost equivalent of such
services all as provided in Paragraph 1 of Amendment No. 3, and the right to
<PAGE>   2
participate in the Corporation provided insurance plans, as provided by
Paragraphs 2 and 3 of Amendment No. 3.

     2.  Employee hereby releases the Corporation from its obligation under
Paragraph 4 of Amendment No. 3 to pay the insurance premiums on the
split-dollar life insurance policies of Prudential Life Insurance Company,
Policy Numbers 79,699,276 and 79,713,181. The Corporation, for the sum of $1.00
and in consideration of the assumption of responsibility to pay insurance
premiums, less the P.S. 58 costs, for the life of the policies, hereby assigns
to Employee or Employee's assignees all rights to any outlays under such
policies and to the benefit payments of such policies.

     3.  Employee hereby releases the Corporation from its obligation under
Paragraph 4 of Amendment No. 3 to pay the insurance premiums on the
split-dollar life insurance policy of Metropolitan Life Insurance Company,
Policy Number 960450106PR. The Corporation, for the sum of $1.00 and in
consideration of the assumption of responsibility to pay insurance premiums,
less the P.S. 58 costs, for the life of the policy hereby assigns to Employee
or Employee's assignees all rights to any outlays to the extent of current cash
value under such policies and to the benefit payments of such policies.

     4.  Except as hereby amended, the Agreement is in all respects approved,
ratified and confirmed.

     IN WITNESS WHEREOF, the parties have caused this Amendment No. 5 to be
executed as of the date first written above.


                                             LECHTERS, INC.


                                             BY: /s/ David K. Cully
                                                 ---------------------------
                                                 Name:
                                                 Title:



                                             /s/ Donald Jonas
                                             -------------------------------
                                             DONALD JONAS