<PAGE>   1
                                   FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)
     [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 1, 1997
                          -----------------------------------------------------

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the transition period from                            to
                               ---------------------------   ------------------
Commission file number  0-24328
                      ---------------------------------------------------------

                   Richman Gordman 1/2 Price Stores, Inc.
         ----------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                      Delaware                                47-0771211
-----------------------------------------------------    ----------------------
     State or other jurisdiction of                       (I.R.S. Employer
     incorporation or organization                       Identification No.)

12100 West Center Road, Omaha, Nebraska                            68144
-----------------------------------------------------    ----------------------
     (Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code  (402) 691-4000
                                                  -----------------------------
Securities registered pursuant to Section 12(b) of the Act:

     Title of each class               Name of each exchange on which registered
            None.
----------------------------------     -----------------------------------------
----------------------------------     -----------------------------------------

          Securities registered pursuant to section 12(g) of the Act:

                        Common Stock, Par Value $.01
     ----------------------------------------------------------------------
                                (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X   No
                                              -----   ----
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section  229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.  [X]

     As of April 8, 1997, an aggregate of 26,715,000 shares of Common Stock,
par value $.01, were outstanding, composed of 16,515,000 shares of Series A
Common Stock and 10,200,000 shares of Series B Option Common Stock.  The
registrant's stock is not publicly traded, and therefore there is no
ascertainable aggregate market value of voting stock held by non-affiliates.

             APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES  X     NO
   -----     ----
     Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended February 1, 1997, have been incorporated by reference into Parts I
and II of this Report.  Portions of the Registrant's Registration Statement on
Form S-1 (Commission File No. 33-79352) and Amendment No. 4 thereto, have been
incorporated by reference in Part IV of this report.

                                  Page 1 of 165

                            Exhibit Index on Page 35
  
<PAGE>   2







                                     PART 1


  ITEM 1. BUSINESS

                                  THE COMPANY

                                GENERAL HISTORY

       Richman Gordman 1/2 Price Stores, Inc. (the "Company") is the outgrowth
  of a retail clothing business in Omaha dating back almost to the turn of the
  century.  The Company's predecessor was formed in 1915 by Sam Richman.  In
  1936, his son-in-law, Dan Gordman, joined him in the business, later becoming
  his partner.  In 1948, the Gordman family purchased the Richman family's
  interests, with Dan Gordman becoming the Chairman and Chief Executive Officer
  of Richman Gordman Stores.  Until 1994, the Richman Gordman companies
  remained privately owned, with all of the stock owned by members of Dan
  Gordman's family.

  RICHMAN GORDMAN STORES, INC.

       Richman Gordman Stores, Inc. was the parent company of 1/2 Price Stores,
  a regional retailer in the Midwest that operated the 1/2 Price Stores, a
  chain of off-price stores offering first quality merchandise at one-half the
  traditional department store full retail prices or one-half of manufacturers'
  suggested retail price.  Richman Gordman Stores was also the parent company
  of Richman Gordman Department Stores which operated a separate chain of
  moderate-end and full-price department stores.  Richman Gordman Stores was a
  holding company owning all of the Common Stock of 1/2 Price Stores and
  Richman Gordman Department Stores.

  RICHMAN GORDMAN DEPARTMENT STORES, INC.

       Richman Gordman Department Stores, Inc. was a moderately priced
  department store chain which at its peak consisted of 15 stores located in
  five Midwestern states.  Occupying a niche between mass merchants and
  traditional department stores, Richman Gordman Department Stores was
  positioned as a promotional, popularly priced, branded, family department
  store.  The chain's merchandising strategy was to dominate the market for
  "main floor" (i.e. popularly priced) national brands in apparel and softline
  home furnishings by offering broad assortments and inventory depth in sizes
  and colors, and by promoting aggressively.

       Through the end of the 1980s, Richman Gordman Department Stores
  successfully maintained its market share in the face of growing competition
  from a variety of regional and national retailers.  However, three major
  factors led to Richman Gordman Department Stores' eventual loss in market
  share and financial stability:  (i) national retailing trends favoring
  discount

                                      2
<PAGE>   3

  shopping; (ii) a decision to upscale the merchandise offered by Richman
  Gordman Department Stores; and (iii) an increasing overhead burden.

       As part of the reorganization discussed below, and based on the above
  factors, management decided to convert many of the Richman Gordman Department
  Stores chain to the 1/2 Price Stores; those Richman Gordman Department Stores
  that were not converted to 1/2 Price Stores were closed.


                             1/2 PRICE STORES, INC.

       The first 1/2 Price store opened in 1972 as an outlet for marked-down
  Richman Gordman Department Stores merchandise.  The concept evolved into an
  independent chain with separate buying, operations, advertising and human
  resource staffs.

       The 1/2 Price concept is to offer top quality, name brand merchandise at
  half of department store and specialty store regular prices.  1/2 Price
  Stores is able to execute this concept through opportunistic buying
  strategies including the purchase of manufacturers' close-outs and
  overstocks, in season purchases, other retailers' canceled orders,
  merchandise made from excess piece goods and bulk production overruns.  The
  quality and negotiating strength of the 1/2 Price Stores' buying staff have
  enabled the 1/2 Price Stores to acquire merchandise at substantial discounts
  from normal wholesale prices, sell at not more than half of regular
  department store prices and achieve strong gross margins.  Please see "ITEM
  1. BUSINESS -- THE COMPANY -- MERCHANDISING" for a discussion of the
  Company's current merchandise strategy.


                                 THE BANKRUPTCY

  PLAN OF REORGANIZATION

       On June 17, 1992, Richman Gordman Stores, Richman Gordman Department
  Stores and 1/2 Price Stores filed for protection under the United States
  Bankruptcy Code in the United States Bankruptcy Court for the District of
  Nebraska.  During the bankruptcy proceedings, the Companies operated as
  debtors-in-possession.

       On October 5, 1993, the Bankruptcy Court confirmed the Debtors' First
  Amended Joint Plan of Reorganization Under Chapter 11, as modified (the
  "Plan"), and the Plan became effective on October 20, 1993 (the "Effective
  Date").  The Bankruptcy Court retains jurisdiction to interpret the terms of
  and settle disputes arising from the Plan through the five-year term of the
  Plan.  The Plan provided for the issuance of Common Stock to former
  shareholders and management (the "Series A Common Stock") and to unsecured
  creditors (the "Series B Option Common Stock").

                                      3

<PAGE>   4


       Under the Plan, the Creditors' Committee, as the representative of the
  Company's general unsecured creditors (the "Creditors"), will continue in
  existence during the term of the Plan for the following primary purposes:
  (1) monitoring compliance with the Plan; (2) monitoring defaults and granting
  waivers and modifications of the Plan; and (3) exercising rights and duties
  expressly granted in the Plan.

       The Company also issued a secured note in the amount of $4 million to
  Harris Trust and Savings Bank ("Harris Bank") in partial satisfaction of
  pre-bankruptcy obligations.  This note is payable in equal installments over
  five years, and it bears an interest rate of 7%.  The note is secured by most
  of the real property held by the Company in addition to furniture, machinery
  and equipment located in the Company's Distribution Center and corporate
  offices.  Events of default under the note include entering into voluntary
  bankruptcy proceedings, involuntary bankruptcy proceedings that are not
  dismissed within ninety days of their initiation, failure to pay principal or
  interest payments within ten days after their due date, and acceleration of
  annual payments to the Creditors by the Creditor's Committee.  Please see
  "ITEM 1. BUSINESS -- THE BANKRUPTCY -- PAYMENT OBLIGATIONS TO CREDITORS" for
  a description of the acceleration provisions.  Harris Bank was also the
  largest unsecured creditor and, at April 8, 1997, held approximately 10.4% of
  the Company's Series B Option Common Stock on a fully diluted basis.

       The Plan provided that Richman Gordman Stores and 1/2 Price Stores merge
  into Richman Gordman Department Stores.  These mergers took place on the
  Effective Date.  Additionally, pursuant to the Plan, the Company was formed
  and Richman Gordman Department Stores was merged into it.

       As contemplated by the Plan, on the Effective Date, the Company entered
  into a Credit Agreement with Congress Financial Corporation.  The original
  agreement was for a $25 million maximum facility with a four-year term
  through October 20, 1997, with provisions for annual renewals unless either
  party gives notice of non-renewal within 90 days prior to contract
  expiration.  The Credit Agreement is the Company's primary credit facility.
  The amount the Company may borrow is determined by a formula based on
  eligible inventory.  This line of credit is secured by substantially all of
  the current assets of the Company, including general intangibles.

       The Company subsequently amended and extended the Congress Credit
  Agreement in the  Fall of 1996.  The maximum facility was increased to $27.5
  million, the interest rate was reduced to 1% over the prime rate, the
  agreement was extended to October 20, 1999, the definition of eligible
  inventories was expanded, and the borrowing advance rate was increased.

  PAYMENT OBLIGATIONS TO CREDITORS

       On the Effective Date of the Plan, the Creditors (with claims in the
  approximate aggregate amount of $50,156,000) received cash in the total
  amount of $10,000,000.  In addition, the Creditors received 10,200,000 shares
  of Series B Option Common Stock, or 34% of the total authorized Common Stock.


                                      4
<PAGE>   5


       Under the Plan, the Company remains obligated to the Creditors.  The
  following is a summary of all of the material provisions of the Company's
  obligation to make payments to the Creditors.  The summary is qualified with
  reference to the complete terms and conditions of the obligation as contained
  in the Plan.

       ANNUAL MINIMUM PAYMENT OBLIGATION.  The Annual Minimum Payment
  obligation is an unconditional obligation to make payments in the amounts set
  forth in the first column, titled Annual Minimum Payment, on the schedule
  below.  All scheduled payments received on this obligation will be applied
  first to accrued stated interest and then payments of stated principal.  Any
  payments in excess of the cumulative total of stated principal and interest
  ($14,865,000) will be considered as payments of additional interest.  The
  Annual Minimum Payment obligation will be paid as set forth in the first
  column on the schedule below.  To the extent the cash flow contingencies as
  detailed below allow additional payments in excess of the Annual Minimum
  Payment column, such payments will be considered prepayments of the Annual
  Minimum Payment obligation to be applied first to accrued stated interest (if
  any) and then to stated principal.



<TABLE>
<CAPTION>
ANNUAL FISCAL YEAR  ANNUAL MINIMUM        CUMULATIVE MINIMUM    ANNUAL PLAN CASH      CUMULATIVE PLAN
                    PAYMENT               PAYMENT               BALANCE               CASH BALANCE
------------------  --------------        ------------------    ----------------      ---------------
<S>                 <C>                   <C>                   <C>                   <C>
       1993         $ 2,302,000           $   2,302,000           $ 2,708,000           $ 2,708,000
       1994           3,275,000               5,577,000             3,853,000             6,561,000
       1995           5,521,000              11,098,000             6,495,000            13,056,000
       1996           1,939,000              13,037,000             2,281,000            15,337,000
       1997           1,828,000              14,865,000             2,151,000            17,488,000
                    -----------                                   -----------
                    $14,865,000                                   $17,488,000
                    ===========                                   ===========
</TABLE>

  The Company operates on a fiscal year basis, and its Fiscal Years through
  1997 end on the dates shown below:


<TABLE>
<CAPTION>
             Fiscal Year                            Ends
             -----------                            ------
             <S>                                    <C>
             Fiscal Year 1993                       01/29/94
             Fiscal Year 1994                       01/28/95
             Fiscal Year 1995                       02/03/96
             Fiscal Year 1996                       02/01/97
             Fiscal Year 1997                       01/31/98
</TABLE>


       ACTUAL CASH BALANCE.  The Company is obligated to pay, for each of
  Fiscal Years 1993-1997: (1) 100% of Actual Cash Balance, as defined in the
  Plan, to a maximum of Cumulative Plan Cash




                                      5

<PAGE>   6

  Balance shown above, and (2) 50% of Excess Cash Balance, as defined in the
  Plan.  The fourth column represents the Company's estimate of Actual Cash
  Balance for the Fiscal Years indicated.

       OTHER TERMS.  In no event will the Company be required to pay with
  respect to any Fiscal Year an amount which, when added to prior payments of
  Actual Cash Balance and Excess Cash Balance, exceeds the greater of
  Cumulative Minimum Payments or Cumulative Actual Cash Balance.  The annual
  payment will be distributed to Creditors not later than 90 days after the end
  of the Fiscal Year. However, in January, 1997, the Creditors' Committee
  agreed to defer for up to one year the $1.9 million payment due for Fiscal
  Year 1996 under the Plan.

       Creditors are also entitled to tax refunds, if any, for the Fiscal Years
  ended prior to the bankruptcy filing date in excess of an aggregate of
  $500,000 for those years.  Also, the Creditors are entitled to payments of
  amounts equal to income tax benefits realized solely from the reduction of
  taxable income which would otherwise be reported on the Company's federal and
  state income tax returns for Fiscal Years 1993 through 1997 resulting from
  utilization of pre-bankruptcy tax attributes (i.e., net operating loss carry
  forwards, capital loss carry forwards (if any), alternative minimum tax
  credit carry forwards, charitable contribution carry forwards and general
  business credits including targeted job credits) and payments to Creditors.

       On April 29, 1994, the Creditors were sent the annual payment for Fiscal
  Year 1993 required by the Plan.  The payment totaled $4,152,613, composed of
  the following:

<TABLE> 
            <S>                                  <C>

            Annual Minimum Payment               $2,302,000
            Actual Cash Balance up to
            Plan Cash Balance                       406,000
                                                 ----------
            Annual Plan Cash Balance              2,708,000
            50% of Excess Cash Balance            1,444,613
                                                 ----------

            Total Payment to Creditors           $4,152,613
                                                 ==========
</TABLE>


       Payments to creditors required by the Plan for Fiscal Year 1994 in the
  total amount of $6,073,260 were paid on April 28, 1995, and consisted of the
  following amounts:

<TABLE>   
            <S>                                  <C>

            Annual Minimum Payment               $3,275,000
            Actual Cash Balance up to
            Plan Cash Balance                       578,000
                                                 ----------
             Annual Plan Cash Balance             3,853,000
            Tax Benefit in Excess
            of $500,000                             387,649
            50% of Excess Cash Balance            1,832,611
                                                 ----------

             Total Payment to Creditors          $6,073,260
                                                 ==========
</TABLE>



                                      6
<PAGE>   7


       Payments to creditors required by the Plan for Fiscal Year 1995 in the
  total amount of $1,480,477 consisted of the following amounts:


<TABLE>
            <S>                                  <C>
            Annual Minimum Payment               $1,259,776
            Tax Benefits                            220,701
                                                 ----------

             Total Payment to Creditors          $1,480,477
                                                 ==========
</TABLE>


  For Fiscal Year 1995, no Annual Cash Balance up to Plan Cash Balance or
  Excess Cash Balance were available.  The Annual Minimum Payment was computed
  by crediting the previous two years' payment up to Plan Cash Balance and
  Excess Cash Balance Payments to the required Cumulative Minimum Payment.

       For Fiscal Year 1996, no Annual Cash Balance up to Plan Cash Balance or
  Excess Cash Balance were available.  In addition, the Creditors' Committee
  agreed to allow the Company to defer the 1996 Minimum Payment of $1,939,000
  for up to one year in exchange for a subordinated security interest in
  certain real and personal property associated with the Company's distribution
  center facility.

                           SERIES B REPURCHASE OPTION

       The Series B Option Common Stock is subject to an option to purchase
  exercisable by the Company or the Trustee of the R.G. Stock Trust in 1998
  (the "Option").  The Option is noted upon the face of the Series B Option
  Common Stock certificates.  If the Option is exercised, the holder or holders
  of shares must sell them for a price equal to the fair value of the shares,
  as determined by an independent appraisal on February 2, 1998, less any
  payments of Excess Cash Balance that have been made to Creditors.  Holders of
  the Series B Option Stock will not have any rights of appraisal similar to
  dissenters' rights if they dispute the market value as determined by the
  independent appraisal.  Payments of Excess Cash Balance would result in
  shareholders having to sell their shares for less than fair market value.
  Holders of Series B Option Common Stock should note that the Excess Cash
  Balance previously paid to the Creditors shall be credited against, and shall
  reduce the exercise price for, the option whether or not the holder of any
  share of Series B Option Common Stock with respect to which the option is
  exercised received such Excess Cash Balance.

       Although with respect to the Company's Fiscal Years ended January 29,
  1994, and January 28, 1995, the Company made Excess Cash Balance payments of
  $1,444,613 and $1,832,611, respectively, to Creditors, the Company's cash
  position during Fiscal Year 1995 was such that all of the prior Excess Cash
  Balance payments were utilized to make a portion of the $5.5 million minimum
  payment to creditors required for Fiscal Year 1995.  No Excess Cash Balance
  payments were generated for Fiscal Year 1996.  Therefore, if the Option were
  exercised at this date, the Excess Cash Balance payments would result in no
  reduction from fair market value in the Option exercise price.  Additional
  payments of Excess Cash Balance may be created in the next  Fiscal


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<PAGE>   8

  Year which may reduce the Option exercise price.  For any given Fiscal Year,
  the Excess Cash Balance is the excess of the Company's actual year-end cash
  balance over the Cumulative Plan Cash Balance for that year.  The cumulative
  total of the Excess Cash Balance will be reported in the Company's annual and
  quarterly financial reports.

                      PLAN COVENANTS, DEFAULTS AND WAIVERS

       The Plan contains a number of covenants.  The covenants include the
  Company's agreement to maintain its corporate existence, to maintain its
  books in accordance with generally accepted accounting principles and provide
  reports to creditors, to pay its taxes, to keep its property free of certain
  liens, not to make prohibited investments, not to guarantee debts of third
  parties, not to make loans to other parties, not to make distributions on
  account of its stock, to maintain customary insurance and to comply with
  environmental and pension laws.  The breach of any of these covenants will
  result in an event of default.

       The Plan also describes certain occurrences that are defined as events
  of default.  These events include the failure to make payments pursuant to
  the annual Minimum Payment Obligation, the failure to perform or observe any
  of the terms or provisions of the Plan, the entering of an order of relief
  under the Bankruptcy Code is granted to or against the Company, the Company
  voluntarily or involuntarily makes an assignment for the benefit of
  creditors, applies for or consents to the appointment of a receiver, trustee,
  custodian or similar officer for all or for any substantial part of its
  assets, voluntarily or involuntarily institutes any bankruptcy, insolvency,
  liquidation, reorganization, readjustment, dissolution, or similar
  proceeding, the entry of a judgment against the Company in an amount
  exceeding the Company's insurance coverage by more than $200,000, and the
  failure of the Company's cumulative EBITDA to equal or exceed certain EBITDA
  levels. The Company did not meet the applicable EBITDA level at the end of
  Fiscal Year 1995.  However, the Creditors' Committee has waived the EBITDA
  covenant in its entirety for Fiscal Year 1995, as well as Fiscal Years 1996
  and 1997.   Also, as noted above, in January, 1997, the Creditors' Committee
  agreed to defer for up to one year the $1.9 million payment due for Fiscal
  Year 1996 under the Plan.

       Following an event of default, a majority of the Creditors' Committee
  may accelerate the Cumulative Minimum Payments due under the Plan.   The
  Creditor's Committee, by a two-thirds vote of its members, may waive for up
  to six months any payment required under the Plan and defer the due date of
  some payments.  The Creditors' Committee will, if requested in writing by a
  majority in number or dollar amount of the Creditors, declare an acceleration
  of any remaining unpaid annual payments, described above.

       Additional information in response to this Item 1 is incorporated by
  reference to the "Products and Services" section of the Company's Annual
  Report to Shareholders for the fiscal year ended February 1, 1997 (the "1996
  Annual Report").


                                      8
<PAGE>   9


  ITEM 2. PROPERTIES.

       Information in response to this Item 2 is incorporated by reference to
  the "Products and Services" Section of the 1996 Annual Report.

  ITEM 3. LEGAL PROCEEDINGS

       As noted above, the Company's predecessor entities filed for bankruptcy
  protection in 1992, and in 1993 the United States Bankruptcy Court for the
  District of Nebraska approved the Plan under which the Company continues to
  operate.  For a detailed discussion of the Plan, please see "ITEM 1. BUSINESS
  --  THE COMPANY -- THE BANKRUPTCY -- PLAN OF REORGANIZATION."  Additionally,
  the Bankruptcy Court has retained jurisdiction to insure that the purpose and
  intent of the Plan are carried out as well as to consider any modifications
  of the Plan and to hear any claims, controversies, suits and disputes against
  the Company that may arise during the five-year term of the Plan.

  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

       There are no items to report.

                                    PART II

  ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
  MATTERS.

       Information in response to this Item 5 is incorporated by reference to
  the 1996 Annual Report.



  ITEM 6. SELECTED FINANCIAL DATA.

       Information in response to this Item 6 is incorporated by reference to
  the "Selected Financial Data" section of the 1996 Annual Report.



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS
            OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS.


       Information in response to this Item 7 is incorporated by reference to
  the "Management's Discussion and Analysis of Financial Condition and Results
  of Operations" section of the 1996 Annual Report.






                                      9
<PAGE>   10


  ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


       Information in response to this Item 8 is incorporated by reference to
  the Consolidated Financial Statements, notes thereto and report thereon
  contained in the 1996 Annual Report.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
            ON ACCOUNTING AND FINANCIAL DISCLOSURE.


       There are no items to report.

                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS
          OF THE REGISTRANT


                                   MANAGEMENT

                                   DIRECTORS

       Three members of the Gordman family are Directors of the Company: Jerome
  P. Gordman, Nelson T. Gordman, and Jeffrey J. Gordman.  Nelson and Jerome
  Gordman are brothers; Jerome Gordman is the father of Jeffrey Gordman.
  Jeffrey Gordman is also President and Chief Executive Officer.  The table
  below sets forth the name, age and position of the Company's Directors as
  well as the means of designation pursuant to the Plan:


NAME                     AGE            POSITION
-----------------------  ---            --------

Paul M. Bass, Jr.(2)(5)   61            Chairman of the Board of Directors



Jeffrey J. Gordman (2)(4) 33            Director, President, and Chief   
                                        Executive Officer


Paul M. Buxbaum(1)(5)     42            Director

Jerome P. Gordman(4)      58            Director

Nelson T. Gordman(3)(4)   57            Director

Thomas J. Noonan, Jr.     57            Director
(2)(3)(5)





                                      10
<PAGE>   11

Philip Scheipe(1)(3)(5)   59            Director

Seth J. Lehr (1)          40            Director




(1) Member of the Compensation Committee.
(2) Member of the Executive Committee.
(3) Member of the Audit Committee.
(4) Designated as a member of the Board by the Gordman Trustee.
(5) Designated as a member of the Board by the Creditors' Committee.

       All Directors, other than Seth Lehr, were appointed on the Effective
  Date.  On October 1, 1996, Mr. Lehr was nominated by Jeffrey Gordman, as
  President and Chief Executive Officer, to fill the vacancy created by the
  resignation of Dennis Reaves, in accordance with the terms of the Plan.   Mr.
  Lehr was elected on October 29, 1996, by the Board of Directors to serve the
  remaining term of  Mr. Reaves' directorship.

       The Directors will serve during the term of the Plan which commenced on
  the Effective Date of the Plan and will end on the later of September 15,
  1998, or payment in full of amounts due under the Plan.  Accordingly,
  shareholders will not be able to vote on the election of Directors until
  expiration of the term of the Plan.

       In the event of the death, resignation, or incapacity of any of the
  initial Directors, a successor Director will be chosen as follows:

       - Successor Directors to Directors selected by the Creditors'
         Committee will be chosen by the remaining Directors selected by the
         Creditors' Committee and any successor Directors to Directors selected
         by the Creditors' Committee.

       - Successor Directors to the Directors selected by the Chief
         Executive Officer will be chosen by the Chief Executive Officer or any
         successor thereto.

       - Successor Directors to the Directors chosen by Dan Gordman will
         be selected by the Gordman Trustee.

     Within forty-five days after the expiration of the term of the Plan, the
then-Chairman of the Board of Directors shall call a special meeting to provide
for the election of new members of the Board of Directors.  Shareholders will
not have cumulative voting rights with respect to the election of Directors.






                                      11
<PAGE>   12


                                    OFFICERS

     The table below sets forth the name, age and position of the Company's
executive officers:


NAME                  AGE              POSITION
                      ---              --------

Paul M. Bass, Jr.     61               Chairman of the Board of Directors

Jeffrey J. Gordman    33               Director, President and Chief Executive
                                       Officer

James H. Cooke        48               Vice President, Stores

Norman J. Farrington  49               Vice President, Chief Information Officer

Donald L. DeGraeve    54               Vice President, General Merchandise
                                       Manager

John Simkins          49               Vice President, Distribution

Edward D. Williamson  42               Vice President, Human Resources

Ronald K. Hall        54               Vice President, Operations

Edward Pitkoff        56               Vice President, Marketing and Promotion



                     BIOGRAPHIES OF DIRECTORS AND OFFICERS

DIRECTORS

     Mr. Paul M. Bass, Jr. is the Chairman of the Board of Directors.  From
1988 to the present, he has been Vice Chairman of First Southwest Company, a
Dallas-based regional investment banking firm.  Mr. Bass specializes in
corporate finance, investment management and public finance.  Mr. Bass is also
presently a Director and Chairman of the Audit Committee and a member of the
Executive Committee of California Federal Savings Bank, a Director of Keystone
Consolidated Industries (also Chairman of Audit Committee), a Director of
Source Services, Inc. (also a member of Executive Committee) and is a Director
and Chairman of the Board of MACC Private Equities Inc., a business development
company making venture capital investments.  Mr. Bass holds a B.B.A. in Finance
from Southern Methodist University.





                                      12
<PAGE>   13


     Mr. Paul M. Buxbaum  is a Director of the Company.  From 1973 to 1978, Mr.
Buxbaum was a field representative for liquidators of retail discount specialty
and department stores.  In 1978 he opened a chain of mass merchandising
off-price retail men's clothing stores in greater Los Angeles and in 1982 he
sold the eight stores which were doing in excess of $8 million dollars in
annual sales.  Mr. Buxbaum is the President and Secretary Treasurer of Buxbaum,
Ginsberg & Associates, a national merchandising firm organized in 1983 as a
consulting firm which emphasizes restructuring needs and recovery services to
companies on a nationwide basis.  Mr. Buxbaum is also President of BGA
Consulting which provides loan evaluations for major banks, financial
institutions and insurance companies.  He is also a Director and Chairman of
the Board of Ames Department Stores, Inc. of Rockyhill, Connecticut and serves
on the Compensation and Finance/Audit committees.  Mr. Buxbaum attended
California State University in Northridge where he studied business and
finance.

     Mr. Jeffrey J. Gordman is a Director, President and Chief Executive
Officer for the Company.  At the Company, Mr. Gordman previously held positions
in merchandising, store operations and information technology.  In addition,
Mr. Gordman designed the Planning and Allocation function for 1/2 Price Stores,
including the organization structure and business processes, and oversaw its
implementation in 1994.  Prior to joining the Company in 1990, Mr. Gordman was
a mergers and acquisitions analyst for Shearson Lehman Brothers, a New
York-based investment banking firm now known as Lehman Brothers.  Mr. Gordman 
graduated cum laude from the harton School at the University of Pennsylvania 
in 1986 with a B.S. in Economics.  Mr. Gordman also earned a Masters of 
Management at the Sloan School, Massachusetts Institute of Technology in 1990.

     Mr. Jerome P. Gordman, Director, has 32 years of department store and
specialty store experience.  He joined Richman Gordman in 1962 after active
duty with the Army as a lieutenant.  He helped develop the Company into a
five-state retailer during his 23 years with Richman Gordman.  He rose to Chief
Operating Officer of Richman Gordman Department Stores and Executive Vice
President of Richman Gordman Stores.  In 1984, Mr. Gordman joined Kalico's,
Inc., a specialty store, as its President.  After the closing of Kalico's, Inc.,
in 1997, Mr. Gordman became the Managing Partner of Gordman Properties Company,
a company with diversified real estate holdings in Nebraska and Iowa.  Mr.
Gordman graduated from the Wharton School at the University of Pennsylvania
with a B.S. in Economics.

     Mr. Nelson T. Gordman, a Director of the Company, is currently involved in
real estate development and management.  He was previously President and COO of
Richman Gordman Department Stores and of Richman Gordman Stores, the parent
company of both Richman Gordman Department Stores and 1/2 Price Stores.  Mr.
Gordman joined the Company in 1962 after completing studies at the University
of Pennsylvania's Wharton School and, in various capacities, participated in
and directed Richman Gordman's growth to 30 stores, five states and $250
million in annual sales volume.






                                      13
<PAGE>   14


     Mr. Seth Lehr is a Director of the Company.   Mr. Lehr heads the
Philadelphia and New York Corporate Finance offices of Legg Mason Wood Walker,
Inc., a New York Stock Exchange-listed regional investment banking firm.  Mr.
Lehr specializes in general corporate finance with an emphasis on the retail,
apparel, merchandising and consumer products industries.  Mr. Lehr began his
investment banking career with The First Boston Corporation and Goldman, Sachs
& Co.  Mr. Lehr then became a vice president of Shearson Lehman Brothers.  Mr.
Lehr is on the Board of Directors of America's Best Contacts & Eyeglasses, L.P.
Mr. Lehr graduated with honors from the University of Pennsylvania and
received an MBA from The Wharton School of the University of Pennsylvania.

     Mr. Thomas J. Noonan, Jr. is a Director of the Company.  Mr. Noonan's
principal business experience over the past approximately ten years has been
managing and advising troubled and underperforming businesses.  In this regard
he is presently an Executive Vice-President and Chief Financial Officer of
Herman's Sporting Goods, Inc., a specialty sporting goods retailer which filed
for protection under the United States Bankruptcy Code while Mr. Noonan was an
executive officer.  Previously, he had served as a Managing Director of
Taggart/Fasola Group, a manager of troubled and underperforming businesses, and
as a Director and Executive Vice President of Intrenet, Inc.  Previously, Mr.
Noonan served as Vice President-Finance for Pilot Freight Carriers, Inc.,
Senior Vice President-Finance for Purolator Courier Corporation, and a number
of line and financial positions with Airco, Inc.  Mr. Noonan holds a B.S.
degree from Fordham University and an M.B.A. from St. John's University.

     Mr. Philip Scheipe is a Director of the Company.  Mr. Scheipe has over 30
years experience in the apparel and retail fields.  Prior to retiring in 1994,
for the last fifteen years he was employed by Levi Strauss & Co. in the
positions of General Manager of DAE Financial Services and Vice President of
the Elesco Factors Division.  Mr. Scheipe has broad experience in financial
disciplines and business reorganizations.  He graduated from Pennsylvania State
University and is presently active as a consultant.


OFFICERS

     Mr. James H. Cooke is the Vice President, Stores.  He joined the Company
in 1987 after a sixteen year career with an Ohio-based discount chain. While
with that company, he served in a variety of operational positions.  Prior to
that time, Mr. Cooke served in the United States Air Force.  He is a graduate
of Ohio University.

     Mr. Donald L. DeGraeve is the Vice President and General Merchandise
Manager of the Company.  Prior to joining the 1/2 Price Stores in 1995, Mr.
DeGraeve was the Executive Vice President of Merchandising and Marketing for
Elder Beerman Stores, Inc.  From 1983 to 1990 Mr. DeGraeve was the General
Merchandise Manager for Home, Mens and Childrens for the H.C. Prange Company.
He has also had a variety of merchandising positions with Federated Department
Stores, J.L. Brandeis Company, L.S. Ayres Company and Mercantile Stores






                                      14

<PAGE>   15

Company, Inc.  Mr. DeGraeve graduated from Kansas State University with a
Bachelor of Science in Business.

     Mr. Norman J. Farrington is the Vice President, Chief Information Officer
for the Company.  He received a B.S. and a M.S. in Computer Science from Iowa
State University.  For a period of nine years, he owned and operated a
successful computer consulting business.  Prior to joining the Company in 1984,
Mr. Farrington was on the faculty at Iowa State University teaching computer
science.  He has earned the professional designations of Certified Data
Processor and Certified Systems Professional.  Mr. Farrington is responsible
for the development and information strategy and support systems.

     Ronald K. Hall is the Vice President of Operations for the Company. Prior
to joining the Company in May 1994, he completed a 29-year career as a Colonel
in the United States Air Force.  His last assignment was as Deputy Director,
Command, Control, Communications, Computers and Intelligence for the United
States Strategic Command at Offutt Air Force Base, Nebraska.  In that position,
he had responsibility for an annual budget of over $150 million while providing
computer and communications support to the nation's nuclear war planners.  From
May 1994 until February 1997, he was Director of Systems Planning and
Development in the Information Technology Department of the Company.  Mr. Hall
holds a BS in Industrial Engineering from North Dakota State University and an
MS degree in Systems Analysis from the Air Force Institute of Technology.

     Mr. Edward Pitkoff joined the 1/2 Price Stores in October, 1996 as Vice
President Marketing and Sales Promotion.  For thirty-five years Mr. Pitkoff has
held senior management positions in retail businesses such as department and
specialty stores.  Most recently, Mr. Pitkoff was the Senior Vice President of
Marketing for Winkelman's, a 62 store women's specialty chain.  He also has
extensive advertising agency experience, and he founded and directed his own
agency in New York.  Mr. Pitkoff held the position of Senior Vice President
Marketing and Sales Promotion at Jordan Marsh in Miami as well as positions
with John Wanamaker and Gimbels in Philadelphia.  He received a Bachelor of
Arts Degree from Philadelphia Museum School of Art.

     Mr. John Simkins is the Vice President of Distribution for the Company.
Prior to joining the Company in July of 1993, he was director of operations for
Madigans in Chicago for two years.  Before then, he was Vice President of
Distribution Operations for Carson Pirie Scott, also in Chicago; with
distribution responsibility for 35 stores, a staff of about 700 and an annual
budget of approximately $15 million.  For eleven years prior to Carson's, Mr.
Simkins held increasingly responsible positions in operations and distribution
with the Bon Marche Corporation of Seattle.  Mr. Simkins holds a degree from
Olympic College in Bremerton, Washington.

     Mr. Edward D. Williamson is the Vice President of Human Resources for the
Company and is responsible for the human resources policy, training, benefits
and compensation.  Prior to joining the Company in October of 1989, he
originated and directed the human resources department of Grisanti's, a
restaurant chain, during the company's national expansion phase.  Mr.







                                      15
<PAGE>   16

Williamson received a B.G.S. degree in general administration from the
University of Nebraska at Omaha, and currently holds the certification of
Senior Professional in Human Resources (SPHR).


                                   COMMITTEES

     The Board of Directors has three standing committees:  the Executive
Committee, the Compensation Committee and the Audit Committee.

THE EXECUTIVE COMMITTEE

     Mr. Bass, Mr. Noonan and Mr. Jeffrey Gordman are members of the Executive
Committee.  The Executive Committee is intended generally to function on behalf
of the Board of Directors when the Board cannot be convened.  The Executive
Committee will not act independently of the Board on significant matters
impacting the Company.

THE COMPENSATION COMMITTEE

     Mr. Buxbaum, Mr. Scheipe and Mr. Lehr are members of the Compensation
Committee.  The compensation of the Company's two former senior executive
officers, Mr. Dennis Reaves and Mr. Roger Faust,  was established by the Plan
prior to the Effective Date and the seating of the present Board of Directors
and Compensation Committee.  The primary functions of the Compensation
Committee have been negotiating the employment agreement with the Company's
President and Chief Executive Officer, Mr. Jeffrey J. Gordman, considering
issues that were raised under the employment agreements with Messrs. Faust and
Reaves, including amendments to the employment agreements, monitoring
employment agreements with vice presidents, including considering changes to
base salary and contract extensions, monitoring the bonus program for vice
presidents, monitoring and granting awards pursuant to the 1997 Stock Option
Plan and establishing compensation for additional officers that may be hired in
the future.

          COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Of the three current members of the Compensation Committee, none are
executive officers of the Company, and no reportable interlocks exist with
respect to any such current members.  However, during fiscal 1996, Mr. Jeffrey
Gordman and Mr. Jerome Gordman were members of the Company's Compensation
Committee.  Mr. Jeffrey Gordman and Mr. Jerome Gordman are a present and former
employee of the Company, respectively, and are each beneficial owners of more
than 5% of the Common Stock.  Mr. Jeffrey Gordman is the Company's President
and Chief Executive Officer.  Mr. Jerome Gordman was an employee of the Company
for 23 years, ending in 1984.






                                      16

<PAGE>   17


THE AUDIT COMMITTEE

     Mr. Noonan, Mr. Scheipe and Mr. Nelson Gordman are members of the Audit
Committee.  The Audit Committee is responsible for recommending selection of
the independent auditors of the Company and reviewing audit results.  The
Committee has the authority to engage and retain its own professionals.

                     SECTION 16(A) REPORTING DELINQUENCIES

     Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and holders of
10% or more of the outstanding shares of the Company's Common Stock (together,
the "Reporting Persons") to file reports on Forms 3, 4 and 5 regarding their
transactions in the Company's Common Stock.  Based solely upon its review of
the Company's records, copies of such Forms sent to the Company and/or written
statements from Reporting Persons that no Form 5 was required, the Company
believes that all Reporting Persons have timely filed all forms required to be
filed during Fiscal Year 1996 pursuant to Section 16(a) of the Exchange Act.

ITEM 11. EXECUTIVE COMPENSATION.

                 EMPLOYMENT AGREEMENT WITH MR. JEFFREY GORDMAN

     On February 1, 1997, the Company entered into an employment agreement with
Jeffrey J. Gordman, the Company's President and Chief Executive Officer.  The
following describes the terms and conditions of Mr. Gordman's employment
agreement:

     BASE SALARY.  Mr. Gordman's employment agreement provides for an annual
     base salary of $225,000, subject to such increases and bonuses as the
     Compensation Committee of the Company's Board of Directors may from time
     to time determine.

     TERMINATION OF AGREEMENT AND SEVERANCE. Mr. Gordman's employment agreement
     provides for an initial term of three years, with annual extensions upon
     each anniversary of the date thereof if neither the Company nor Mr.
     Gordman gives notice of nonextension.  The employment agreement with Mr.
     Gordman provides for termination for cause upon 15 days' written notice
     and opportunity to be heard at a Board of Directors meeting.  The
     employment agreement further provides that Mr. Gordman or the Company may
     terminate the agreement with or without cause upon 30 days' written
     notice.   If Mr. Gordman's employment is terminated by the Company without
     cause, the employment agreement provides for severance payments equal to
     the then-present value of his then-current base salary and benefits for
     the remainder of the term of the employment agreement.  If Mr. Gordman's
     employment is terminated by the Company for nonperformance, Mr. Gordman
     shall receive severance payments equal to his then-current base salary and
     benefits for the lesser of 12 months or the remaining term of the
     Agreement.  If Mr. Gordman's employment is terminated by the





                                      17
<PAGE>   18

     Company for dishonesty or if Mr. Gordman resigns, Mr. Gordman shall
     receive base salary and benefits only through the termination date.

     EXECUTIVE BENEFITS.   Mr. Gordman's employment agreement also provides
     that he is entitled to the following executive benefits: (i) payment by
     the Company of premiums for short term disability insurance and director
     and officer liability insurance, and a bi-weekly benefits allowance
     determined in accordance with the Company's executive benefits policy
     currently in place; (ii) payment by the Company of membership dues in
     Prairie Life Club; (iii) contribution by the Company to 401(k) plans on
     terms applicable to other senior management; and (iv) all other then
     current executive benefits offered by the Company.  Mr. Gordman is also
     entitled to at least four weeks of paid vacation per year.

     NONCOMPETITION; TRADE SECRETS.  The employment agreement contains a
     covenant against competition with the Company for a period of one year
     within 50 miles of the Company's corporate offices and its stores if Mr.
     Gordman's employment is terminated for cause.  The employment agreement
     also prohibits Mr. Gordman from disclosing or benefiting from the
     Company's trade secrets during the term of the agreement and at all times
     thereafter.  Mr. Gordman is also prohibited by the employment agreement
     from hiring any employees of the Company within one year after the
     termination of his employment with the Company.

                           EMPLOYMENT AGREEMENTS WITH
                     MR. DENNIS REAVES AND MR. ROGER FAUST

     During Fiscal Year 1996, the Company was party to employment agreements
with Mr. Dennis Reaves and Mr. Roger Faust.  Mr. Reaves' employment agreement
was terminated by letter agreement dated May 15, 1996 (the "Letter Agreement").
Mr. Faust's employment agreement was terminated pursuant to a Termination of
Employment Agreement dated February 11, 1997 (the "Termination Agreement").
The following describes the terms and conditions of Messrs. Reaves' and Faust's
employment agreements, as amended by the Letter Agreement and Termination
Agreement, respectively.

     BASE SALARY.  Mr. Reaves' employment agreement provided for an annual base
     salary of $400,000.  Mr. Faust's employment agreement provided for an
     annual base salary, subject to annual adjustment, with a minimum increase
     equal to the increase, if any, in the Bureau of Labor Statistics Consumer
     Price Index (Urban Consumers-All City Average).  Mr. Faust's base salary
     for Fiscal Year 1995 was $211,150 and  $216,430 for Fiscal Year 1996.
     Mr. Reaves received a severance payment in accordance with the Letter
     Agreement equal to the present value of unpaid base salary through
     February 1, 1997.    In accordance with the terms of the Termination
     Agreement, Mr. Faust received a severance payment of approximately
     $113,000, representing the present value of Mr. Faust's base salary for
     the period January 11, 1997, through January 10, 1998, net of applicable
     taxes, as provided for in Mr. Faust's employment agreement.





                                      18
<PAGE>   19


     TERM OF AGREEMENT AND SEVERANCE.   Mr. Reaves' employment agreement was
     for a term extending through January 30, 1999; however, Mr. Reaves resigned
     effective May 15, 1996.   Mr. Faust's employment agreement had a three year
     duration, subject to annual extension, with severance payment to be the 
     greater of one year's base salary or the remaining balance of the 
     contract term.  Mr. Faust's employment agreement had been extended by the 
     Board through October 20, 1998; however, Mr. Faust resigned effective 
     January 10, 1997.

     MANAGEMENT STOCK.  Mr. Reaves' and Mr. Faust's employment agreements both
     provided for the issuance of  Series A Common Stock as part of their
     compensation.  The employment agreements provided that Messrs. Reaves and
     Faust may receive 9% and 3% on a fully diluted basis, respectively, of the
     Common Stock issued by the Company over five years in equal annual
     installments beginning in Fiscal Year 1994, subject to the following
     conditions:  (1) 75% of the annual installment of such stock would vest if
     Cumulative Minimum Payment were made; and (2) the remaining 25% of the
     annual installment of such stock would vest if the Cumulative Adjusted
     Plan Cash Flow were achieved.  Any missed installments could have been
     earned in subsequent years if the appropriate cumulative test had been met
     at that time.  Any Common Stock reserved for Messrs. Reaves and Faust
     which was  not earned within 90 days after January 31, 1998, was to be
     distributed pro rata to Creditors as provided by the Plan.  Any unvested
     Common Stock of Mr. Faust or Mr. Reaves, respectively, would automatically
     have been earned if (i) more than 50% of the Common Stock were sold or
     transferred or (ii) his employment were terminated by the Company without
     cause.  In accordance with the terms of the Letter Agreement, the unearned
     portion of Mr. Reaves' stock bonus as of May 15, 1996, was awarded as of
     that date, and all of the 2,565,000 shares of Series A Common Stock owned
     by Mr. Reaves after giving effect to such award were repurchased by the
     Company at a price equal to $.088 per share, for an aggregate price of
     $225,270.

     CASH BONUS COMPENSATION.  Mr. Reaves' employment agreement provided for a
     cash bonus, net of taxes, of $500,000 paid in October, 1995.  In
     accordance, with the Letter Agreement, Mr. Reaves retained all the cash
     bonus following the termination of his employment with the Company.    Mr.
     Faust's employment agreement provided for cash bonus payments in each year
     upon the following terms:  (1) 20% of base salary if the Cumulative
     Minimum Payment were met; (2) an additional 20% of base salary if
     Cumulative Adjusted Plan Cash Balance were met; (3) any missed bonus would
     have been earned and payable within 90 days after the end of any Fiscal
     Year in which the respective cumulative test had been satisfied by such
     date; (4) the Company would pay 5% of its 50% share of Excess Cash Balance
     to Mr. Faust; and (5) the bonuses referred to in this sentence would not
     have been earned in any year in which the Company's cumulative EBITDA is
     less than the following EBITDA requirements (the "EBITDA Requirements"):







                                      19
<PAGE>   20



<TABLE>
<CAPTION>
      FISCAL YEAR  MINIMUM CUMULATIVE EBITDA
      -----------  -------------------------
      <S>               <C>
         1993            $ 4,562,000
         1994              9,974,000
         1995             16,577,000
         1996             23,596,000
         1997             31,468,000
</TABLE>


     EXECUTIVE BENEFITS.  The employment agreements further required (1)
     current executive benefits, including short term disability insurance and
     a benefits allowance; (2) payment by the Company of membership dues in
     Prairie Life Club; (3) four weeks vacation annually; and (4) contribution
     by the Company to 401(k) plans on terms applicable to other participants.
     The Company did not make contributions to the 401(k) plan in Fiscal Year
     1995.  For Fiscal Year 1996, the Company authorized matching contributions
     equal to 25% of each employee's contribution, but not in excess of 4% of
     the employee's compensation.  In accordance with the Letter Agreement, the
     Company continued to pay the premiums for Mr. Reaves' health and dental
     insurance through February 1, 1997, and matched Mr. Reaves' 401(k)
     contribution with respect to the severance payment described above.  Mr.
     Reaves assumed the cost of his long-term disability and life insurance as
     of May 15, 1997.  In accordance with the Termination Agreement, Mr. Faust
     received a payment in the amount of approximately $9,700, representing
     four weeks and one day of vacation pay, net of applicable taxes.  The
     Termination Agreement also requires the Company to continue to pay the
     premiums for Mr. Faust's health and dental insurance through the coverage
     period ending January 10, 1998, and Mr. Faust's directors and officers
     liability insurance through January 10, 1998.  Mr. Faust assumed the cost
     of his long-term disability and life insurance as of January 10, 1997.

     TAX BONUS.  The employment agreements provided for the payment of  cash
     bonuses to Mr. Reaves and Mr. Faust for purposes of paying income tax on
     the stock bonuses received by them.  Such tax bonuses were not to exceed
     the tax savings attributable to the deduction available to the Company in
     connection with such transaction.  No such tax bonus was paid by the
     Company with respect to Mr. Reaves' award of unearned stock bonus as
     provided for in the Letter Agreement.

     MUTUAL RELEASE.  Both the Letter Agreement and the Termination Agreement
     provide for the mutual release of the Company and Mr. Reaves and Mr.
     Faust, respectively,  from any and all causes of action arising out of Mr.
     Reaves' and Mr. Faust's respective employments with the Company and the
     terminations thereof.

          BONUS PROGRAM AND EMPLOYMENT AGREEMENTS FOR VICE PRESIDENTS

     All of the Company's Vice Presidents except Mr. Williamson are parties to
employment agreements.  These employment agreements provide for three-year
terms, beginning February 1, 1997, with a minimum base salary level for each of
the three years.  The employment agreements






                                      20
<PAGE>   21

provide for severance payments  in an amount equal to the greater of
then-current salary for six months or for the remainder of the fiscal year
during which notice is given in the event of termination for any reason other
than expiration of the term of the employment agreement or the Vice President's
misconduct or breach of the employment agreement.   The employment agreements
also provide for a review and possible extension not less than one year prior
to expiration.

     The Company also adopted an Officer Incentive Program in March, 1997.   In
accordance with their employment agreements, all of the Vice Presidents
participate in this bonus program.  The bonus program includes the following
provisions:

     -   A bonus pool of $100,000 will be established if the Company
         achieves its planned operating profit for Fiscal Year 1997;

     -   Five percent of any operating profit in excess of planned
         operating profit will be added to the bonus pool;

     -   Of the available bonus pool, 75% will be distributed in equal
         shares to program participants, and the remaining 25% will be
         distributed as determined by the Chief Executive Officer.

     The Vice Presidents also participate in certain executive benefits,
including: (i) 60% of the Vice President's group health insurance premiums are
paid by the Company; (ii) Vice President life insurance premiums are paid by
the Company; and (iii) a 401(k) plan.  In Fiscal Year 1996, the Company made
matching contributions equal to 25% of each employee's contribution, but not in
excess of 4% of the employee's compensation.    For Fiscal Year 1997, the
Company has authorized matching contributions equal to 25% of each employee's
contribution, but not in excess of 4% of the employee's compensation.

                            COVENANT NOT TO COMPETE

     Pursuant to the Plan, Mr. Nelson Gordman, a Director, has executed a
covenant not to compete anywhere in the United States with the Company in
exchange for payments of $125,000 per annum through October 1998.

                                   DIRECTORS

     The Chairman of the Company's Board of Directors receives an annual fee of
$25,000, and all other Directors receive an annual fee of $20,000.  Each
Director also receives $1,500 per board meeting attended.  Directors attending
board meetings by telephone receive $750 per meeting.  Members of committees
receive $1,000 per committee meeting attended.  Committee members attending
committee meetings by telephone receive $500 per meeting.  Directors who are
also officers or employees of the Company do not receive Directors fees.  Such
Directors, however,







                                      21
<PAGE>   22

are reimbursed for expenses related to meeting attendance.  The Board of
Directors has adopted a policy requiring members to attend at least 75% of all
meetings each year in order to receive compensation as a Director.

OFFICERS COMPENSATION

     The following table summarizes the compensation of the Chief Executive
Officer and the four additional most highly compensated officers during the
Fiscal Years 1996, 1995 and 1994:

<TABLE>
<CAPTION>

                                                      ANNUAL COMPENSATION           
                                                -------------------------------       LONG-TERM
    NAME                                                          OTHER ANNUAL       COMPENSATION       ALL OTHER
 AND POSITION(1)           YEAR(2)    SALARY        BONUS        COMPENSATION(3)      PAYOUTS         COMPENSATION(4)
--------------             -----      ------        -----        -------------      ------------      -------------  
<S>                       <C>        <C>        <C>              <C>               <C>               <C>
Roger Faust(8)             1994       $205,800    $  224,151(5)   $  4,464            -0-                   -0-
Sr. V.P., Sec.,            1995       $211,150    $  195,125(5)   $  3,748            -0-                   -0-
Treas., and Chief          1996       $206,438    $      -0-      $  2,736            -0-             $ 228,913(9)
Financial Officer                                                   
                                                                    
Dennis Reaves(7)           1994       $257,250    $  387,992(6)   $  3,688            -0-                   -0-
Director, Pres., and       1995       $322,596    $1,336,254(6)   $  3,105            -0-                   -0-
Chief Executive            1996       $138,461    $   49,896(6)   $    123            -0-            $  410,438(10)
Officer                                                             
                                                                    
Jeffrey J. Gordman         1994       $ 75,000    $    8,167      $     92            -0-                   -0-
Director, President, and   1995       $ 93,644    $   15,000      $     49            -0-                   -0-
Chief Executive Officer    1996       $145,222    $      -0-      $    150            -0-            $    1,336
                                                                    
David Potter               1994       $127,115    $   23,000      $  3,100            -0-                   -0-
V.P. of Merchandising      1995       $150,000    $   25,000      $  3,066            -0-                   -0-
                           1996       $ 90,738    $      -0-      $    196            -0-            $   68,247(11)
                                                                   
James Cooke                1994       $145,000    $   26,000      $  4,263            -0-                   -0-
V.P., Stores               1995       $160,000    $   29,000      $  4,641            -0-                   -0-
                           1996       $180,718    $      -0-      $  1,635            -0-            $    1,335
                                                                   
Stanley Latacha            1994       $130,000    $   25,000      $  2,886            -0-                   -0-
V.P. of Marketing          1995       $140,000    $   26,000      $  3,027            -0-                   -0-
                           1996       $ 79,629    $      -0-           -0-            -0-            $      443
</TABLE>




(1)  The current or last position with the Company is given.  During the years
     listed the named persons held various positions with Richman Gordman
     Stores, Richman Gordman Department Stores and 1/2 Price Stores.

(2)  Represents Fiscal Years commencing in January or February of the stated
     year.

(3)  "Other Annual Compensation" is primarily in the form of other cash
     benefits, life insurance, reimbursement of health and dental insurance,
     health club memberships, value of company-paid automobiles, etc.

(4)  "All Other Compensation" represents 401(k) matching contributions made by
     the Company.

(5)  For Fiscal Year 1995, includes cash, stock and tax bonuses of $123,132,
     $51,372 and $20,621, respectively.  For Fiscal Year 1994, includes cash,
     stock, and tax bonuses of $152,230, $51,372, and $20,549, respectively.

(6)  For Fiscal Year 1996, includes stock bonus of $35,640 and tax bonus of
     $14,256.  For Fiscal Year 1995, includes cash, stock and tax bonuses of 
     $1,120,274, $154,116 and $61,864, respectively.  For Fiscal Year 1994, 
     includes cash, stock, and tax bonuses of $172,230, $154,116, and $61,646, 
     respectively.



                                      22
<PAGE>   23


(7)  The increase in the 1995 bonus compensation represents a bonus to Mr.
     Reaves under an employment agreement dated October 1, 1995.  The
     employment agreement provided for a cash bonus, net of taxes, in the
     amount of $500,000, covering a period of 40 months. Mr. Reaves resigned
     from the Company effective May 15, 1996.

(8)  Mr. Faust resigned from the Company effective January 10, 1997.

(9)  Includes severance payments of $227,311 and 401(k) matching contributions 
     made by the Company in the amount of $1,602.

(10) Includes severance payments of $408,991 and 401(k) matching contributions
     made by the Company in the amount of $1,602.

(11) Includes severance payments of $67,100 and 401(k) matching contributions
     made by the Company in the amount of $1,447.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN
           BENEFICIAL OWNERS AND MANAGEMENT.


     The table below represents shares of Common Stock held by management.
     Additionally, the table includes those Creditors who, as of April 8,
     1997, had been issued and hold shares of Common Stock in an amount that
     is equal to or greater than 5% of the Common Stock on a fully diluted
     basis.


NAME,                                      PERCENTAGE
TITLE,                                     OF TOTAL
ADDRESS                   NUMBER           AUTHORIZED(1)
-------                   ------           -----------

R.G. Stock Trust          16,200,000(2)       54.0%
Jeffrey J. Gordman,
 Trustee
Richman Gordman 1/2
 Price Stores, Inc.
12100 West Center Road
Omaha, NE  68144

Jeffrey J. Gordman        16,200,000(3)       54.0%
Richman Gordman 1/2
 Price Stores, Inc.
12100 West Center Road
Omaha, NE  68144

Nelson T. Gordman          6,302,939(4)       21.0%
10777 North 60th Street
Omaha, Nebraska 68152

Jerome P. Gordman          4,916,326(5)       16.4%
9925 Essex Drive
Omaha, Nebraska 68114







                                      23
<PAGE>   24

Harris Trust and           3,123,459          10.4%
 Savings Bank
200 West Monroe Street
P.O. Box 755
Chicago, Illinois  60603

Roger Faust                  315,0006          1.1%
7011 S. 140th St.
Omaha, Nebraska 68137

---------------------

(1) Presented on a fully-diluted basis assuming issuance of all 30,000,000
    authorized shares; 29,280,000 presently issued and 26,715,000 outstanding.
   
(2) These 16,200,000 shares of Series A Common Stock are the property of the
    R.G. Stock Trust created by Dan Gordman.  Mr. Jeffrey J. Gordman, the
    Gordman Trustee, is sole trustee of the trust and is Dan Gordman's designee
    for purposes of the Plan.  The Gordman Trustee has exclusive voting and
    investment power with respect to the 16,200,000 shares of Series A Common
    Stock.  There are three beneficiaries of the trust, Mr. Jeff Gordman, Mr.
    Nelson T. Gordman and Mr. Jerome P. Gordman, all members of the Board of
    Directors of the Company.
   
(3) See Note 2 above.  As sole trustee of the R.G. Stock Trust, Jeff Gordman has
    exclusive voting and investment power with respect to 16,200,000 shares of
    Series A Common Stock.  As a beneficiary of the trust with a 35% interest,
    Jeff Gordman in his individual capacity is the beneficial owner of 5,670,000
    shares, plus an additional 4,860,000 shares representing the 30% beneficial
    interest in the trust of his father, Jerome Gordman.
   
(4) Nelson Gordman is the beneficial owner of 5,670,000 shares of Series A
    Common Stock as a beneficiary of the R.G. Stock Trust with a 35% interest.
    Through his interest in Gordman family entities which are registered owners
    of shares of Series B Option Common Stock, Nelson Gordman is the beneficial
    owner of an additional 632,939 shares of Series B Option Common Stock.
   
(5) Jerome Gordman is the beneficial owner of 4,860,000 shares of Series A
    Common Stock as a beneficiary of the R.G. Stock Trust with a 30% interest.
    Through his interest in Gordman family entities which are registered owners
    of shares of Series B Option Common Stock, Jerome Gordman is the beneficial
    owner of an additional 56,326 shares of Series B Option Common Stock.
   
(6) Mr. Faust is the registered owner of 315,000 shares of Series A Common Stock
    issued pursuant to his Employment Agreement with the Company. Mr. Faust
    resigned from the Company effective January 10, 1997.
   





                                      24
<PAGE>   25


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The following table describes facilities that the Company leases from
entities owned or controlled by Mr. Nelson Gordman, Mr. Jerome Gordman
(both Directors of the Company) or the estate of Dan Gordman.  Nelson
and Jerome Gordman are Co-Personal Representatives of the Dan Gordman
estate.

<TABLE>

                     APPROXIMATE
                     FLOOR AREA       ANNUAL
LOCATION             (SQUARE FEET)    RENT        DESCRIPTION
--------             -------------    ------      -----------
<S>                  <C>              <C>         <C>
Omaha, NE                98,700       $450,288    Corporate Headquarters(1)
Omaha, NE               163,300        676,710    Distribution Center(2)
Bellevue, NE            100,000        701,060    Store Location(3)
Grand Island, NE         91,400        215,023    Store Location(4)
LaVista, NE              81,200        269,540    Store Location(5)
Omaha, NE               103,200        628,161    Store Location(6)
Lincoln, NE             101,400        175,226    Store Location(7)
</TABLE>

-------------


 (1) Lease expires July 31, 2009 with a single option to renew for twenty
     years.
     
 (2) The Distribution Center is composed of a total of 267,000 square feet
     (excluding internal mezzanine space of 111,400 square feet). The Company
     owns 103,700 square feet of the Distribution Center and the land beneath
     this portion ("Building 1").  Two portions totaling 163,300 square feet
     are leased from Gordman entities.  One lease for approximately 82,000
     square feet ("Building 2") expires April 30, 2003; the Gordman entity
     which leases Building 2 to the Company also owns the underlying land.
     The Company has four five-year options to extend the term of the
     Building 2 lease.  The second lease for approximately 81,000 square feet
     ("Building 3") expires July 31, 1999.  The land under Building 3 is
     owned by the Company and is leased to the Gordman entity lessor for a
     term also expiring July 31, 1999.  Upon expiration of the Building 3
     leases, the Company will own both the building and land for Building 3.
     The Company and the Gordman entity are also parties to an Option
     Agreement giving the Company the option to purchase Building 2 and its
     underlying real estate at the end of the term or any option term at fair
     market value.  If the Company does not exercise its purchase option on
     Building 2, the Gordman entity has the option to purchase Building 1
     and/or Building 3 from the Company at fair market value.
     
 (3) Lease expires October 31, 2003, with three renewal options of five
     years each.
     
 (4) Lease expires February 28, 1998, with no renewal options.
     






                                      25
<PAGE>   26



 (5) Lease expires July 31, 2005, with ten renewal options of five years
     each.
     
 (6) Lease expires July 31, 1998, with three renewal options of five years
     each.
     
 (7) Lease expires October 31, 2010, with a first privilege to negotiate a
     second twenty year term.
     
          During the bankruptcy proceedings, the Company conducted an extensive
     review of all locations.  As a result, many locations owned by Gordman
     family members and other lessors were closed and the leases rejected as
     being unsuitable.  Also during the bankruptcy proceedings, an independent
     third party analyzed the terms of remaining leases with Gordman family
     enterprises.  While some leases were found to be above market and others
     below, the portfolio as a whole was found to be comparable to those from
     unaffiliated parties in comparable real estate markets.

     While the Company is not materially dependent on one or several store
     locations, the Company is materially dependent on its Distribution
     Center located in Omaha, Nebraska.  The Distribution Center is
     comprised of three buildings, one of which is owned by the Company.
     The remaining two buildings are owned by entities controlled by members
     of the Gordman family.  Please see footnote 2 to the chart above.  As
     part of extension of the Building 2 lease, in February, 1996, the
     Company granted the Gordman entity which is the lessor of Building 2 an
     easement over a portion of the Company's property.  This easement
     provides for access to Building 2, including truck docking and parking.
     
     As a result of the bankruptcy proceedings, four Gordman family
     partnerships ("Gordman Partnerships") received unsecured claims of
     $3,697,749, relating to the rejection of three store leases.  Pursuant
     to these allowed unsecured claims, the Gordman Partnerships received
     the same treatment accorded other Class 3 Unsecured Claims under the
     Plan, namely Series B Option Common Stock, cash payments and the right
     to future cash payments to Creditors.
     
     Three additional issues involving members of the Gordman family and the
     Company were resolved during fiscal 1996.  First, the Company's claim
     against the Dan Gordman estate (the "Estate") approximating $77,000 and
     arising from a loan from the Company to Mr. Dan Gordman was settled
     pursuant to an Estate Claim Settlement Agreement (the "Estate Claim
     Agreement") between the Company and the Estate dated December 13, 1996.
     In accordance with the Estate Claim Agreement, the Estate paid the
     Company approximately $43,000 and agreed to pay up to an additional
     $34,000 from any dividends paid before April 15, 1999, on shares of the
     Company's Common Stock owned by the Estate.   Second, pursuant to an
     Agreement Regarding Dan Gordman Fund between the Estate of Esther
     Gordman, the Dan Gordman Fund and the Company, dated December 13, 1996,
     the Company agreed to pay to the Esther Gordman Estate approximately
     $347,000, arising out
     






                                      26
<PAGE>   27

     of the personal portion of an insurance policy on the life of Dan Gordman,
     which was paid to one of the Company's Creditors, Harris Bank, pursuant to
     a collateral assignment of the policy.  The Company will be obligated to
     make monthly payments following payment in full of Harris Bank.  Third,
     the Company released to Mr. Nelson Gordman its rights with regard to one
     or more insurance policies on the life of Mr. Nelson Gordman in exchange
     for approximately $13,500.


                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
     AND  REPORTS ON FORM 8-K.

(a)  Financial Statements.

(1)  A. The following financial statements are incorporated by
        reference to the 1996 Annual Report.

        Consolidated Balance Sheets as of February 1, 1997, and February 3, 1996
        Consolidated Statements of Operations for the fiscal years ended 
         February 1, 1997, February 3, 1996, and January 28, 1995
        Consolidated Statements of Stockholders' Equity for the fiscal years
         ended February 1, 1997, February 3, 1996 and January 28, 1995
        Consolidated Statements of Cash Flows for the fiscal years ended
         February 1, 1997, February 3, 1996, and January 28, 1995
        Notes to Consolidated Financial Statements for fiscal years ended 
         February 1, 1997, February 3, 1996, and January 28, 1995

     B. The Report of Independent Auditors with respect to the financial
        statements listed in A. above is also incorporated by reference to the
        1996 Annual Report.

(2)  A. The following financial statement schedules are incorporated by
        reference to the 1996 Annual Report

        Schedule II -- Valuation and Qualifying Accounts

     B. The Report of Independent Auditors with respect to the financial
        statement schedules listed in A. above is also incorporated by reference
        to the 1996 Annual Report.

(3)     The following exhibits are filed herewith or incorporated by reference 
        as set forth below:







                                      27
<PAGE>   28


(2)          Plan of acquisition, reorganization, arrangement, liquidation or
             succession (incorporated by reference to the Company's Registration
             Statement on Form S-1 (Commission File No. 33-79382), filed with 
             the Commission on May 26, 1994).

(3)(i)       Amended and Restated Certificate of Incorporation of Richman
             Gordman 1/2 Price Stores, Inc. (incorporated by reference to the
             Company's Registration Statement on Form S-1 (Commission File No.
             33-79382), filed with the Commission on May 26, 1994).
        
(3)(ii)      Bylaws of Richman Gordman 1/2 Price Stores, Inc. (incorporated
             by reference to the Company's Registration Statement on Form S-1
             (Commission File No. 33-79382), filed with the Commission on May
             26, 1994).
        
(4)(i)       Instruments defining the rights of security holders, including
             indentures -- Section 6.03(a), 7.09, and 10.03 of First Amended 
             Joint Plan of Reorganization under Chapter 11 of the Bankruptcy 
             Code for Richman Gordman Stores, Inc., Richman Gordman Department 
             Stores, Inc., and 1/2 Price Stores, Inc. -- Please see Exhibit 
             (99)(i).

(4)(ii)      Instruments defining the rights of security holders, including
             indentures -- Please see Exhibit (3)(i).

(4)(iii)     Instruments defining the rights of security holders, including
             indentures -- Specimen Stock Certificate (incorporated by 
             reference to the Company's Registration Statement on Form S-1 
             (Commission File No. 33-79382) filed with the Commission on May 
             26, 1994).

(9)          Voting trust agreement -- not applicable.

(10)(i)(a)   Material Contracts -- Credit Agreement between Richman Gordman 1/2
             Price Stores, Inc. and Congress Financial Corporation dated 
             October 20, 1993 (incorporated by reference to the Company's 
             Registration Statement on Form S-1 (Commission File No. 33-79382) 
             filed with the Commission on May 26, 1994).

(10)(i)(b)   Material Contracts -- Amendment No. 1 to Credit Agreement between
             Richman Gordman 1/2 Price Stores, Inc. and Congress Financial 
             Corporation, dated January 28, 1994 (incorporated by reference to 
             Amendment No. 4 to the Company's Registration






                                     28
<PAGE>   29

             Statement on Form S-1 (Commission File No. 33-79382) filed with 
             the Commission on March 6, 1995).

(10)(i)(c)   Material Contracts -- Amendment No. 2 to Credit Agreement between
             Richman Gordman 1/2 Price Stores, Inc. and Congress Financial 
             Corporation, dated February 24, 1994 (incorporated by reference to
             Amendment No. 4 to the Company's Registration Statement on Form 
             S-1 (Commission File No. 33-79382) filed with the Commission on 
             March 6, 1995).

(10)(i)(d)   Material Contracts -- Amendment No. 3 to Credit Agreement between
             Richman Gordman 1/2 Price Stores, Inc. and Congress Financial 
             Corporation, dated September 11, 1995 (incorporated by reference 
             to the Company's Annual Report on Form 10-K for the fiscal year 
             ended February 3, 1996).

(10)(i)(e)   Material Contracts -- Amendment No. 4 to Credit Agreement between
             Richman Gordman 1/2 Price Stores, Inc. and Congress Financial 
             Corporation, dated May 6, 1996 (incorporated by reference to the 
             Company's Quarterly Report on Form 10-Q for the quarterly period 
             ended August 3, 1996).

(10)(i)(f)   Material Contracts -- Amendment No. 5 to Credit Agreement between
             Richman Gordman 1/2 Price Stores, Inc. and Congress Financial 
             Corporation, dated September 12, 1996  (incorporated by reference 
             to the Company's Quarterly Report on Form 10-Q for the quarterly 
             period ended August 3, 1996).

(10)(i)(g)   Material Contracts -- Amendment No. 6 to Credit Agreement between
             Richman Gordman 1/2 Price Stores, Inc. and Congress Financial 
             Corporation, dated January 31, 1997.

(10)(i)(h)   Material Contracts -- Amendment No. 7 to Credit Agreement between
             Richman Gordman 1/2 Price Stores, Inc. and Congress Financial 
             Corporation, dated April 7, 1997.

(10)(ii)(a)  Material Contracts -- Employment Agreement dated October 1, 1995,
             between Richman Gordman 1/2 Price Stores, Inc. and Mr. Dennis 
             Reaves (incorporated by reference to the Company's Annual Report 
             on Form 10-K for the fiscal year ended February 3, 1996).

(10)(ii)(b)  Material Contracts -- Amendments dated January 17, 1996 to
             Employment Agreement between Richman Gordman 1/2 Price







                                     29
<PAGE>   30

             Stores, Inc. and Mr. Dennis Reaves (incorporated by reference to 
             the Company's Annual Report on Form 10-K for the fiscal year ended
             February 3, 1996).

(10)(ii)(c)  Material Contracts -- Letter Agreement between Richman Gordman 1/2
             Price Stores, Inc. and Dennis E. Reaves, dated May 15, 1996 
             modifying Employment Agreement (incorporated by reference to the 
             Company's Quarterly Report on Form 10-Q for the quarterly period 
             ended August 3, 1996).

(10)(iii)(a) Material Contracts -- Employment Agreement between Richman Gordman
             1/2 Price Stores, Inc. and Mr. Roger Faust (incorporated by 
             reference to the Company's Registration Statement on Form S-1 
             (Commission File No. 33-79382) filed with the Commission on May 
             26, 1994).

(10)(iii)(b) Material Contracts -- Amendments dated March 31, 1994 to
             Employment Agreement between Richman Gordman 1/2 Price Stores, 
             Inc. and Mr. Roger Faust (incorporated by reference to the 
             Company's Form 10-K for the Fiscal Year ended January 28, 1995, 
             filed with Commission on April 28, 1995).

(10)(iii)(c) Material Contracts -- Amendments dated January 17, 1996 to
             Employment Agreement between Richman Gordman 1/2 Price Stores, 
             Inc. and Mr. Roger Faust (incorporated by reference to the 
             Company's Annual Report on Form 10-K for the fiscal year ended 
             February 3, 1996).

(10)(iii)(d) Material Contracts -- Termination Agreement between Richman
             Gordman 1/2 Price Stores, Inc. and Roger Faust, dated February 11,
             1997, modifying Employment Agreement.

(10)(iv)     Material Contracts -- Covenant Not To Compete between Richman 
             Gordman 1/2 Price Stores, Inc. and Mr. Nelson Gordman 
             (incorporated by reference to the Company's Registration 
             Statement on Form S-1 (Commission File No. 33-79382) filed with 
             the Commission on May 26, 1994).

(10)(v)(a)   Material Contracts -- Vice President Incentive Program 
             (incorporated by reference to the Company's Registration 
             Statement on Form S-1 (Commission File No. 33-79382) filed with 
             the Commission on May 26, 1994).


                                     30
<PAGE>   31


(10)(v)(b)   Material Contracts -- Richman Gordman 1/2 Price Stores, Inc. 1997
             Officer Incentive Program

(10)(vi)     Material Contracts -- Employment Agreement between Richman Gordman
             1/2 Price Stores, Inc. and Jeffrey J. Gordman, dated February 1, 
             1997.

(10)(vii)    Material Contracts -- Employment Agreement between Richman Gordman
             1/2 Price Stores, Inc. and James Cooke dated February 1, 1997.

(10)(viii)   Material Contracts -- Junior Indenture of Mortgage, Deed of Trust
             and Security Agreement from Richman Gordman 1/2 Price Stores, Inc.
             to Chicago Title Insurance Company, in trust for the benefit of 
             Cathy Hershcopf, as agent for the Class 3 Creditors dated January 
             31, 1997.

(10)(ix)     Material Contracts -- Junior Security Agreement between Richman
             Gordman 1/2 Price Stores, Inc. and Cathy Hershcopf, as agent for 
             the Class 3 Creditors, dated as of January 31, 1997.

(10)(x)      Material Contracts -- Agreement Regarding Dan Gordman Fund, 
             between the Estate of Esther Gordman, the Dan Gordman Fund and 
             Richman Gordman 1/2 Price Stores, Inc., dated as of December 13, 
             1996.

(11)         Statement re computation of share earnings -- not applicable.

(12)         Statements re computations of ratios -- not applicable.

(13)         Annual report to security holders, Form 10-Q or
             quarterly report to security holders -- Annual Report to
             Shareholders for the Company's Fiscal Year ended February 1, 1997.

(16)         Letter re change in certifying accountant -- not applicable.

(18)         Letter re change in accounting principles -- not applicable.

(21)         Subsidiaries of the Registrant -- not applicable.

(22)         Published report regarding matters submitted to vote of security 
             holders -- not applicable.




                                     31
<PAGE>   32


(23)         Consents of Deloitte & Touche L.L.P.

(24)         Power of attorney -- not applicable.

(27)         Financial data schedule.

(28)         Information from reports furnished to state regulatory authorities
             -- not applicable.

(99)(i)      Additional Exhibit -- First Amended Joint Plan of Reorganization 
             under Chapter 11 of the Bankruptcy Code for Richman Gordman 
             Stores, Inc., Richman Gordman Department Stores, Inc., and 1/2 
             Price Stores, Inc. (incorporated by reference to the Company's 
             Registration Statement on Form S-1 (Commission File No. 33-79382) 
             filed with the Commission on May 26, 1994).

(99)(ii)     Additional Exhibit -- First Amended Disclosure Statement Pursuant 
             to Section 1125 of the Bankruptcy Code with Respect to the First 
             Amended Joint Plan of Reorganization Under Chapter 11 of the 
             Bankruptcy Code for Richman Gordman Stores, Inc., Richman Gordman 
             Department Stores, Inc., and 1/2 Price Stores, Inc. (incorporated
             by reference to the Company's Registration Statement on Form S-1 
             (Commission File No. 33-79382) filed with the Commission on May 
             26, 1994).

(b) Reports on Form 8-K.

    The Company filed no Reports on Form 8-K during the last quarter of Fiscal 
Year 1996.

               [Remainder of this page intentionally left blank].







                                     32
<PAGE>   33



                                   SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) of the
  Securities Exchange Act of 1934, the registrant has duly caused this
  report to be signed on its behalf by the undersigned, thereunto duly
  authorized.

                                     Richman Gordman 1/2 Price Stores, Inc.




Date: April 25  , 1997               By: /s/ Jeffrey J. Gordman
----------------------               -------------------------------------
                                     Jeffrey J. Gordman
                                     President and Chief Executive Officer



















                                     33
<PAGE>   34




       Pursuant to the requirements of the Securities Exchange Act of
  1934, this report has been signed by the following persons on behalf
  of the registrant and in the capacities and on the dates indicated.



/s/ Jeffrey J. Gordman                                  April 25, 1997
-----------------------------                           --------------
Jeffery J. Gordman
President and Chief Executive
Officer, Director


/s/ Paul M. Bass, Jr.                                   April 24, 1997
-----------------------------                           --------------
Paul M. Bass, Jr.
Chairman, Board of Directors


                                                        April   , 1997
-----------------------------                           --------------
Paul M. Buxbaum
Director


/s/ Jerome P. Gordman                                   April 25, 1997
-----------------------------                           --------------
Jerome P. Gordman
Director


/s/ Nelson T. Gordman                                   April 24, 1997
-----------------------------                           --------------
Nelson T. Gordman
Director


/s/ Thomas J. Noonan, Jr.                               April 25, 1997
-----------------------------                           --------------
Thomas J. Noonan, Jr.
Director


/s/ Philip Scheipe                                      April 25, 1997
-----------------------------                           --------------
Philip Scheipe
Director


/s/ Seth Lehr                                           April 25, 1997
-----------------------------                           --------------
Seth Lehr
Director





<PAGE>   35



                                 EXHIBIT INDEX



EXHIBIT                             DESCRIPTION                        PAGE
-------                             -----------                        ----

(10)(i)(g)                          Material Contracts --               37
                                    Amendment No. 6 to
                                    Credit Agreement between
                                    Richman Gordman 1/2
                                    Price Stores, Inc. and
                                    Congress Financial
                                    Corporation, dated
                                    January 31, 1996.

(10)(i)(h)                          Material Contracts --               40
                                    Amendment No. 7 to
                                    Credit Agreement between
                                    Richman Gordman 1/2
                                    Price Stores, Inc. and
                                    Congress Financial
                                    Corporation, dated
                                    April 7, 1997.

(10)(iii)(d)                        Material Contracts --               45
                                    Termination Agreement between
                                    Richman Gordman 1/2 Price
                                    Stores, Inc. and Roger Faust,
                                    dated February 11, 1997,
                                    modifying Employment
                                    Agreement.

(10)(v)(b)                          Material Contracts --               49
                                    Richman Gordman 1/2
                                    Price Stores, Inc. 1997
                                    Officer Incentive Program

(10)(vi)                            Material Contracts --               53
                                    Employment Agreement
                                    between Richman Gordman
                                    1/2 Price Stores, Inc. and
                                    Jeffrey J. Gordman, dated
                                    February 1, 1997.





<PAGE>   36

(10)(vii)                           Material Contracts -- Employment      62
                                    Agreement between Richman
                                    Gordman 1/2 Price Stores, Inc.
                                    and James Cooke, dated
                                    February 1, 1997.

(10)(viii)                          Material Contracts -- Junior          69
                                    Indenture of Mortgage, Deed of
                                    Trust and Security Agreement
                                    from Richman Gordman 1/2
                                    Price Stores, Inc. to Chicago
                                    Title Insurance Company in
                                    trust for the benefit of Cathy
                                    Hershcopf, as agent for The
                                    Class 3 Creditors, dated
                                    January 31, 1997.

(10)(ix)                            Material Contracts -- Junior          98
                                    Security Agreement between
                                    Richman Gordman 1/2 Price
                                    Stores, Inc. and Cathy
                                    Hershcopf, as agent for The
                                    Class 3 Creditors, dated
                                    January 31, 1997.

(10)(x)                             Material Contracts -- Agreement      115
                                    Regarding Dan Gordman Fund,
                                    between the Estate of Esther
                                    Gordman, The Dan Gordman
                                    Fund and Richman Gordman 1/2
                                    Price Stores, Inc., dated as of
                                    December 13, 1996.


(13)                                Annual Report to Security            118
                                    Holders, Form 10-Q or
                                    quarterly report to security
                                    holders -- Annual Report
                                    to Shareholders for the
                                    Company's Fiscal Year
                                    ended February 1, 1997.

(23)                                Consents of Deloitte &               162
                                    Touche L.L.P.

(27)                                Financial Data Schedule              164