<PAGE>   1
 
                                                                       EXHIBIT A
 
                            CROWN BOOKS CORPORATION
                                3300 75th Avenue
                            Landover, Maryland 20785
                      -----------------------------------
 
                       INFORMATION STATEMENT PURSUANT TO
                              SECTION 14(F) OF THE
                  SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
                           AND RULE 14F-1 THEREUNDER
                      -----------------------------------
 
     This Information Statement is being mailed on or around June 2, 1998 to the
holders of record of outstanding shares of common stock, par value $.01 per
share (the "Common Stock" or the "Shares"), of Crown Books Corporation, a
Delaware corporation (the "Company"). You are receiving this Information
Statement in connection with the possible election or appointment of persons
designated by Richfood Holdings, Inc., a Virginia corporation ("Richfood"), to a
majority of the seats on the Board of Directors of the Company (the "Company
Board").
 
     On April 9, 1998, Dart Group Corporation ("Dart"), which owned
approximately 52% of the outstanding Shares of the Company, Richfood and DGC
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Richfood ("Merger Sub"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which (i) Richfood caused Merger Sub to commence
a tender offer (the "Offer") for all of the outstanding common stock, par value
$1.00 per share, of Dart (the "Dart Common Stock") at a price of $160.00 per
Share, net to the seller in cash, and (ii) Merger Sub merged with and into Dart
with Dart as the surviving corporation (the "Merger"). As a result of the Offer
and the Merger, Dart became a wholly owned subsidiary of Richfood and,
consequently, Richfood became the beneficial owner of approximately 52% of the
Shares of the Company.
 
     As the majority shareholder of the Company, Richfood has determined to
designate such number of directors so that affiliates of Richfood would
constitute a majority of directors, with the Company's current board members
remaining on the Company Board. This Information Statement is required by
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Rule 14f-1 promulgated thereunder.
 
     You are urged to read this Information Statement carefully. You are not,
however, required to take any action. The information contained in this
Information Statement concerning Richfood has been furnished to the Company by
Richfood and the Company assumes no responsibility for the accuracy or
completeness of such information.
 
GENERAL
 
     The Shares are the only class of outstanding voting securities. Each Share
is entitled to one vote. As of May 20, 1998, there were 5,288,473 Shares
outstanding.
 
RIGHT TO DESIGNATE DIRECTORS; THE RICHFOOD DESIGNEES
 
     Pursuant to the Offer and the Merger, Richfood, through its ownership of
the Dart Common Stock, obtained control of the Company. Approximately 96% of the
outstanding Dart Common Stock was accepted
<PAGE>   2
 
for payment by Richfood at the closing of the Tender Offer on May 13, 1998 at a
purchase price of $160 per share, net to the seller in cash. The remaining
shares were purchased for the same consideration in a parent-subsidiary merger
which was effective on May 18, 1998 (the "Effective Time"). Because Dart owns
approximately 52% of the Shares of the Company, Richfood's purchase of all of
the Dart Common Stock resulted in the transfer of ultimate ownership of Dart's
controlling interest in the Company to Richfood. The aggregate purchase price of
the Dart Common Stock acquired pursuant to the Offer and the Merger was
$201,116,325, which was funded from borrowings under credit facilities provided
by First Union National Bank ("First Union"), as lender and administrative agent
for a syndicate of banks, in an aggregate of $450 million, $250 million of which
is a five-year revolving credit facility and $200 million of which is an
eighteen month term loan. Borrowings under the facilities bear interest at a
variable rate per annum, which is initially equal to LIBOR plus 1%. The
representations, warranties and covenants set forth in the credit facilities are
substantially similar to those set forth in Richfood's previously existing
credit facilities with First Union, as lender and administrative agent for a
syndicate of banks. The new credit facilities contain provisions requiring early
repayment of the term loan with the net proceeds of new offerings of equity
securities or senior debt by Richfood and with the net proceeds of any sale of
Richfood's interest in (i) the Company, (ii) Trak Auto Corporation, a Delaware
corporation, (iii) Total Beverage Corp., a Delaware corporation and (iv) certain
real estate assets.
 
     Pursuant to the Merger Agreement, the parties thereto agreed that Messrs.
Stokely and Belknap would constitute the entire Board of Directors of Dart as of
the Effective Time. Following the commencement of the Offer but prior to the
Effective Time, the parties further agreed that Mr. Stone would also serve as a
Director of Dart.
 
     At the direction of Richfood, the Company Board intends to increase its
size to seven members, which will comprise the three current directors and four
members recommended by Richfood (the "Richfood Designees"), two of whom, John E.
Stokely and John C. Belknap, have already been elected as directors of the
Company.
 
     Set forth below is certain information with respect to the Richfood
Designees:
 
<TABLE>
<CAPTION>
       NAME           PRINCIPAL OCCUPATION OR EMPLOYMENT DURING LAST FIVE YEARS    AGE
       ----           ---------------------------------------------------------    ---
<S>                  <C>                                                           <C>
John E. Stokely....  President and Chief Executive Officer of Richfood (since      45
                     1996); former President and Chief Operating Officer
                     (1995-1996), Executive Vice President Finance and
                     Administration (1993-1995) and Senior Vice
                     President -- Finance and Chief Financial Officer (1991-1993)
                     of Richfood.
John C. Belknap....  Executive Vice President and Chief Financial Officer of       51
                     Richfood (since 1997); Executive Vice President and Chief
                     Financial Officer, OfficeMax, Inc. (1995-1997); Executive
                     Vice President and Chief Financial Officer, Zale Corporation
                     (1994-1995); independent financial consultant (1990-1994).
John D. Ryder......  President and Chief Operating Officer of Richfood's           50
                     METRO/BASICS Retail Division (since 1995); President and
                     Chief Operating Officer retail division of Super Rite Foods,
                     Inc. (1990-1995).
</TABLE>
 
                                        2
<PAGE>   3
 
<TABLE>
<CAPTION>
       NAME           PRINCIPAL OCCUPATION OR EMPLOYMENT DURING LAST FIVE YEARS    AGE
       ----           ---------------------------------------------------------    ---
<S>                  <C>                                                           <C>
Alec C.              President -- Wholesale Operations of Richfood (since          41
  Covington........  November 1997); Executive Vice President and Chief Operating
                     Officer -- Wholesale Operations of Richfood (April
                     1997-November 1997); President and Chief Operating Officer,
                     Richfood, Inc. (1996); Executive Vice President and Chief
                     Operating Officer, Richfood Inc. (1995-1996); President and
                     Chief Operating Officer, Houschens Industries, Inc.
                     (1993-1995); President, Quincy Florida division of SuperValu
                     Inc. and President, Greenville, Kentucky division of
                     Wetterau, Inc. (1990-1993).
</TABLE>
 
     Richfood has informed the Company that each of the individuals listed above
has consented to act as a director, if so designated. If necessary, Richfood may
choose additional or other Richfood Designees, subject to the requirements of
Rule 14f-1.
 
     There are no material legal proceedings to which any of the Richfood
Designees, or any associate of any such Richfood Designee, is a party adverse to
the Company or any of its subsidiaries. None of the Richfood Designees, or any
associate of any such Richfood Designee, has any material interest adverse to
the Company or any of its subsidiaries.
 
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
 
     The following table sets forth certain information with respect to the
current directors and executive officers of the Company as of May 20, 1998,
other than Messrs. Stokely and Belknap, who are described above.
 
RICHARD B. STONE
Chairman of the Board of Directors and Chief Executive Officer
Director since 1997
Age 69
 
     Richard B. Stone was appointed Chairman of the Board and Chief Executive
Officer in February 1998. He served as Acting Chief Executive Officer from
December 1997 to February 1998. He is also chairman of Dart and certain of its
affiliates, including Shoppers Food Warehouse Corp. and Trak Auto Corporation.
From December 1995 to February 17, 1998, Mr. Stone was the Voting Trustee of a
trust that held all of the voting stock of Dart. From 1992 to 1994, Mr. Stone
was a director of International Service System. He served as United States
Ambassador to Denmark from 1991 to December 1993, and he is currently a member
of the Council of American Ambassadors. He was Chief Operating Officer of
Capital Bank, N.A. from 1989 to 1991, and was Vice Chairman of the Board of
Directors of Capital Bank, N.A. from 1985 to 1991. Senator Stone served as
President Reagan's Special Envoy for Central American Affairs and
Ambassador-at-Large from 1983 to 1984. He was a United States Senator from 1975
to 1981, representing the State of Florida.
 
HARRY M. LINOWES
Director since 1997
Age 70
 
     Harry M. Linowes has been a Director of the Company and its subsidiaries
since October 21, 1997. Mr. Linowes is a consultant. Prior to his retirement,
Mr. Linowes served as a Senior Partner of BDO Seidman, L.L.P. Accountants and
Consultants ("BDO Seidman") from 1992 to 1996, and a Managing Partner from 1986
to 1992. In 1986, Mr. Linowes, then the Managing Partner of the Washington, D.C.
office of Leopold & Linowes, oversaw the merger of that firm with BDO Seidman.
Mr. Linowes has served as President of the
 
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<PAGE>   4
 
Greater Washington Society of Certified Public Accountants, as President of the
Washington, D.C. Estate Planning Counsel, and as Chairman of the Executive
Committee of CPA Associates (an international association of CPA firms). He has
been active in leadership roles in many civic organizations.
 
HOWARD M. METZENBAUM
Director since 1997
Age 80
 
     Howard M. Metzenbaum has been a Director of the Company and its
subsidiaries since October 21, 1997. He currently serves on the Board of the
Public Citizen and National Peace Garden and serves as Chairman of the Board of
the Consumer Federation of America. He served also as United States Senator for
the State of Ohio between 1977 and 1995, and from January 1974 to December 1974.
Senator Metzenbaum was a practicing attorney prior to joining the United States
Senate. He was head of the firm Metzenbaum, Gaines, Schwartz, Arupansky, Finley
and Stern. Senator Metzenbaum was chairman of the Board of COMCORP from 1969 to
1974. Prior to 1974, he served as Chairman of the Board of ITT Consumer Services
Corp. ("ITT") and as a director of Capital National Bank of Cleveland and
Society National Bank of Cleveland for several years. From 1958 to 1966, he
served as Chairman of the Board of the Airport Parking Company of America, which
later merged with ITT.
 
ANNA L. CURRENCE
President and Chief Operating Officer
Age 47
 
     Anna L. Currence was appointed President and Chief Operating Officer of the
Company on January 12, 1998. Immediately prior to joining the Company, Ms.
Currence was an executive recruiter. From 1993 to 1995, Ms. Currence was Chief
Executive Officer of Kitchen Bazaar Inc. In 1992, Kitchen Bazaar Inc. filed for
bankruptcy protection under the United States Bankruptcy Code. Six months later,
Ms. Currence became President and Chief Executive Officer. She successfully led
Kitchen Bazaar Inc.'s turnaround and emergence from Chapter 11. Kitchen Bazaar
Inc. filed again for bankruptcy protection under the United States Bankruptcy
Code after Ms. Currence had left Kitchen Bazaar Inc. From 1990 to 1992, Ms.
Currence was Vice President of Operations, Merchandising, and Marketing for a
chain of 175 video stores that also sold music. This chain was sold to
Blockbuster Video. Ms. Currence was with Barnes & Noble Inc. or B. Dalton
Bookseller Inc. from 1973 to 1990. At Barnes & Noble, Ms. Currence helped create
and launch the Barnes & Noble Superstores.
 
JOHN R. SUTTON
Vice President of Merchandising
Age 43
 
     John R. Sutton was appointed Vice President of Merchandising in September
1996. Since joining the Company in February 1978, Mr. Sutton has served in
various positions.
 
STEPHEN M. PETTY
Chief Financial Officer
Age 44
 
     Stephen M. Petty joined the Company in February 1998 as Chief Financial
Officer. Prior to joining the Company, Mr. Petty was President of Creative
Business Solutions, a business consulting group. From 1993 to 1996, Mr. Petty
was Senior Vice President and Chief Financial Officer of Waccamaw Corporation.
During the Previous 13 years, he served in various executive positions with The
May Company.
                                        4
<PAGE>   5
 
STEVEN A. PATE
Vice President of Operations
Age 45
 
     Steven A. Pate joined the Company in February 1998 as Vice President of
Operations. Prior to joining the Company, Mr. Pate was Director of Operations
Development at Barnes & Noble Inc. from 1996 to 1998. He was director of
Operations for B. Dalton Bookseller Inc. from 1990 to 1996.
 
MARK C. PAXTON
Chief Information Officer
Age 46
 
     Mark C. Paxton joined the Company in March 1998 as Chief Information
Officer. Prior to joining the Company, Mr. Paxton was Director Merchandise
Systems for Kmart from 1997 and 1998. From 1994 to 1997, Mr. Paxton was Director
of Product Planning and Manager of Product Development for Compuware. From 1989
to 1994, Mr. Paxton was Director of Applications of Frank's Nursery & Crafts.
 
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
     Section 16(a) of the Exchange Act requires directors and executive
officers, and persons who beneficially own more than ten percent of the issued
and outstanding Shares to file reports of ownership of the Company's securities
and changes in such ownership with the Securities and Exchange Commission (the
"SEC"). Officers, directors and greater than ten percent beneficial stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based solely upon its review of such forms
received by it, the Company believes that each of its directors, executive
officers and greater than ten percent beneficial shareholders complied with
Section 16(a) filing requirements applicable to them during the fiscal year
ended January 31, 1998, except that a Form 3 for each of Richard Stone, Howard
Metzenbaum and Harry Linowes was not timely filed.
 
                                        5
<PAGE>   6
 
                SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
 
     The following table sets forth certain information concerning all
stockholders known by the Company to be beneficial owners of five percent or
more of the Common Stock as of May 20, 1998.
 
<TABLE>
<CAPTION>
                                                               AMOUNT AND
                                                               NATURE OF
                                                               BENEFICIAL       PERCENT OF
                      NAME AND ADDRESS                        OWNERSHIP(1)        CLASS
                      ----------------                        ------------      ----------
<S>                                                           <C>               <C>
Richfood Holdings, Inc......................................   2,767,314           52.3%
4860 Cox Road
Suite 300
Glen Allen, VA 23060
Heartland Advisors, Inc.(2).................................     701,200           13.3%
790 N. Milwaukee Street
Milwaukee, WI 53203
Franklin Resources, Inc.(3).................................     389,600            7.4%
777 Mariners Island Boulevard
San Mateo, CA 94404
The TCW Group, Inc.(4)......................................     291,300            5.0%
865 South Figueroa Street
Los Angeles, CA 90017
</TABLE>
 
---------------
(1) Under the rules of the SEC, a person is deemed to be a beneficial owner of a
    security if such owner, directly or indirectly, has or shares the power to
    vote or direct the voting of such security or the power to dispose or direct
    the disposition of such security. Accordingly, more than one person may be
    deemed to be a beneficial owner of the same securities. Unless otherwise
    indicated by footnote, the persons named in the table have sole voting and
    investment power with respect to the shares of Common Stock beneficially
    owned.
(2) Based on holdings reported by Heartland Advisors, Inc. ("Heartland") on
    Schedule 13G/A, filed with the SEC on January 27, 1998. Heartland is a
    registered investment advisor under the Investment Advisors Act of 1940. In
    its Schedule 13G/A, Heartland has reported that it has sole voting power
    over 655,200 shares and sole investment power over 701,200 shares.
(3) Based on holdings reported on the most recent Schedule 13D filed with the
    SEC by Franklin Resources, Inc. ("FRI") on January 29, 1998. FRI has sole
    voting and investment power over the 389,600 shares.
(4) Based on holdings reported on the most recent Schedule 13G/A filed with the
    SEC by The TCW Group, Inc. ("TCW") on February 12, 1998. TCW has sole voting
    and investment power over the 291,300 shares.
 
                                        6
<PAGE>   7
 
                        SECURITY OWNERSHIP OF MANAGEMENT
 
     The following table sets forth information as of May 20, 1998 regarding the
ownership of the Common Stock by the following persons: (a) each of the
Company's current directors and nominees, (b) each of the executive officers
named in the Summary Compensation Table, and (c) all directors and executive
officers as a group.
 
<TABLE>
<CAPTION>
                                                                                       APPROXIMATE
                                                                          NO. OF       PERCENTAGE
                         NAME                            TITLE OF CLASS   SHARES        OF CLASS
                         ----                            --------------   ------       -----------
<S>                                                      <C>              <C>          <C>
Richard B. Stone.......................................  None
Chief Executive Officer
Chairman
Anna L. Currence.......................................  None
President
Donald J. Pilch........................................  None
Former Chief Financial Officer
E. Steve Stevens.......................................  None
Former Chief Executive Officer
John R. Sutton.........................................  Common Stock     3,950(1)          *
Vice President, Merchandising
Howard M. Metzenbaum...................................  None
Director
Harry M. Linowes.......................................  None
Director
John C. Belknap........................................  None
Richfood Designee
Alec C. Covington......................................  None
Richfood Designee
John D. Ryder..........................................  None
Richfood Designee
John E. Stokely........................................  None
Richfood Designee
All directors, Richfood Designees and current executive
  officers as a group (as of May 20, 1998) (11
  persons).............................................  Common Stock     3,950(1)          *
</TABLE>
 
---------------
 *  Less than one percent.
(1) Includes exercisable options for 3,950 shares.
 
                          POTENTIAL CHANGE IN CONTROL
 
     The new credit facilities with First Union provide that, in the event
Richfood's senior debt rating is downgraded below investment grade before the
term loan is repaid, then, at the lenders' request, Richfood will grant to the
lenders a perfected first priority security interest in, among other things, the
Common Stock owned by Dart. In the event any such pledge is required and,
thereafter, an event of default occurs and is continuing under the credit
facilities, the lenders could have the ability to cause a further change in
control of the Company.
 
                                        7
<PAGE>   8
 
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Some of the Company's general and administrative functions are obtained
directly from Dart, which holds Richfood's 52% interest in the Company. The
Company has been charged an amount which, in management's opinion, is equal to
costs incurred by Dart to provide these functions. During the year ended January
31, 1998, the Company was charged $2,126,000 by Dart for such services. It is
not practicable for the Company to estimate the cost it would have incurred for
these services if it had operated as an unaffiliated entity. In addition, Dart
charges the Company monthly for expenses that relate directly to the Company's
operations. Substantially all such charges are supported by invoices from
unrelated parties designating the Company as recipient of the related goods and
service or were for matters related to Dart and all of its affiliated companies
(including the Company) and were allocated on a judgmental basis. These charges
were $5,453,000 during the year ended January 31, 1998. Richard B. Stone, John
C. Belknap, and John E. Stokely are members of both the Dart board of directors
and the Company Board.
 
     Prior to various settlements with members of the Haft family (see the
Company's Annual Report on Form 10-K Item 3-Legal Proceedings for a discussion
of settlements with Haft family members, several of whom were formerly
affiliated with the Company), ten of the Company's stores were leased from
entities in which members of the Haft family own substantially all the
beneficial interests. These ten lease agreements with the Haft family provide
for various termination dates which, assuming renewal options are exercised,
range from 1998 to 2029, and require the payment of future minimum rentals
aggregating $34,159,000 at January 31, 1998. These agreements also require
payment of a percentage of sales in excess of a stated minimum. Annual fees and
rentals included in the consolidated statements of income for leases involving
the Haft family totaled $2,032,000 during the year ended January 31, 1998.
 
     The Company subleases from Dart 28,000 square feet of a warehouse and
office facility located in Landover, Maryland. The sublease, which commenced in
1985, is for a term of 30 years and six months and provides for rental payments
increasing approximately 15% every five years over the term of the sublease. The
current annual rental is $334,000. The sublease also requires payment of
maintenance, utilities, insurance and real estate taxes allocable to the
subleased space. Dart originally leased the entire 271,000 square foot warehouse
and office facility from a private partnership in which Haft family members
owned all of the partnership interests. However, as a result of the various Haft
family settlements, Dart now owns the warehouse and office facility. The
Company's sublease is on the same terms as Dart's original lease with the Haft
family partnership.
 
            THE BOARD OF DIRECTORS, ITS COMMITTEES AND COMPENSATION
 
     The Company Board held 12 meetings and took action by written consent on
two occasions during the year ended January 31, 1998. The Company Board has an
Audit Committee and a Compensation Committee. The Company does not have a
standing committee on nomination. In 1994, the Company Board established an
Executive Committee. All Directors attended at least seventy-five percent of the
meetings of the Company Board and the committees on which such Directors served
during fiscal 1998.
 
     The Audit Committee currently consists of Howard M. Metzenbaum and Harry M.
Linowes, who both joined the Audit Committee on October 21, 1997 (subject to
approval of the Delaware Chancery Court, in connection with the litigation
involving control of the Company, which was pending at that time). Richard Stone
was a member of the Audit Committee from October 21, 1997 (subject to approval
of the Delaware Chancery Court, in connection with the litigation involving
control of the Company, which was pending at that time) until he became Chief
Executive Officer, on February 17, 1998. The Audit Committee held four meetings
during fiscal 1998, one of which occurred after Sen. Metzenbaum and Mr. Linowes
joined the Audit Committee. The Audit Committee reviews potential conflicts of
interest, reviews the results of the annual
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<PAGE>   9
 
audit with the Company's independent auditors and the adequacy of the Company's
internal accounting controls and practices, and recommends to the Company Board
the independent auditors to be retained by the Company.
 
     The Compensation Committee currently consists of Howard M. Metzenbaum and
Harry M. Linowes, who both joined the Compensation Committee on October 21, 1997
(subject to approval of the Delaware Chancery Court, in connection with the
litigation involving control of the Company, which was pending at that time).
The members of the Compensation Committee met informally from time to time
during the last fiscal, but no formal meetings were held in fiscal 1998 and no
action was taken by written consent. The Company's Chief Executive Officer is to
consult with the Compensation Committee prior to exercising such officer's
authority to fix the compensation of the Company's officers. The Compensation
Committee also advises the Company Board as to the compensation of the Chief
Executive Officer.
 
     In 1994, the Company Board created the Executive Committee to conduct the
affairs of the Company with respect to matters that were the subject of disputes
involving the company and members of the Haft family, the former controlling
shareholders of Dart. Sen. Metzenbaum and Mr. Linowes joined the Executive
Committee on October 21, 1997 (subject to approval of the Delaware Chancery
Court, in connection with the litigation involving control of the Company, which
was pending at that time).
 
     On May 18, 1998, the Company Board established an Independent Committee,
composed of Howard M. Metzenbaum and Harry M. Linowes, which was charged with
responsibility for evaluating proposals to maximize shareholder value for the
Company's shareholders.
 
     Compensation.  Each director is compensated by the Company at the rate of
$15,000 per year and each outside director is compensated an additional $1,000
per meeting physically attended. When board meetings are held for affiliates of
the Company on the same day as a Company Board meeting, common directors are
entitled to a single $1,000 payment, allocated among each such affiliate. Those
directors who are members of the Company's audit committee receive an annual fee
of $5,000. Directors who are also members of the audit committee of certain
affiliates of the Company are entitled to a single fee of $5,000, attributable
pro rata to each such company.
 
     Members of the Independent Committee are compensated at a rate of $275 per
hour plus reimbursement of expenses. In addition, upon consummation of a
transaction that results in a change of control of the Company, members of the
Independent Committee will be entitled to a $25,000 bonus payment. Members of
the Executive Committee are compensated at a rate of $275 per hour plus
reimbursement of expenses. During fiscal 1998, the compensation paid by Dart and
its subsidiaries, including the Company, to members of the respective Executive
Committees for their services totaled $1,137,000, of which $379,000 was paid by
the Company. Of the total amount paid by the Company, the members of the current
Executive Committee received a total of approximately $30,000 in the last fiscal
year, with former members receiving the remaining $349,000.
 
     Crown Books Corporation 1993 Stock Option Plan.  The Crown Books
Corporation 1993 Stock Option Plan specifies that 2,500 Non-Qualified Stock
Options shall be granted during each calendar year to each non-employee
director. Such options are effective as of July 31 of each year, and expire five
years from the date of grant.
 
     Deferred Compensation Plan.  The Company adopted the 1988 Crown Books
Corporation Deferred Compensation Plan for Directors, effective January 1, 1988
(the "Compensation Plan"). The Compensation Plan permits the Company's directors
to defer the payment of all or a specified part of future compensation payable
for services as director, including fees for serving on or attending meetings of
committees of the Company Board. Each director may elect, on or before January
31 of any year, to defer payment of
 
                                        9
<PAGE>   10
 
compensation that is payable on or after the February 1st following such
election, for services to be performed during the twelve-month period commencing
on such February 1 and ending on January 31 of the following calendar year (the
"Plan Year"). After such an election, all subsequent compensation will be
deferred until the director notifies the Company, prior to the commencement of
any Plan Year, that compensation for future Plan Years is to be paid on a
current basis.
 
     Deferred compensation will not be paid to the director as earned, but will
be held in the Company's general funds and credited to a bookkeeping account
maintained by the Company in the name of the director. Each participating
director is treated as a creditor of the Company with respect to such funds.
Deferred compensation will be paid to directors in a lump sum on the February
15th of the Plan Year after retirement, unless the director elects, at the time
he exercises the deferral option, to be paid in up to ten annual installments.
 
                                       10
<PAGE>   11
 
                       COMPENSATION OF EXECUTIVE OFFICERS
 
SUMMARY COMPENSATION TABLE
 
     The following table sets forth in summary form all compensation for all
services rendered in all capacities to the Company and its subsidiaries for the
three years ended January 31, 1998 to (a) the Chief Executive Officer of the
Company, (b) the former Chief Executive Officer, (c) each executive officer
whose income exceeded $100,000, and (d) each former executive officer who earned
more than $100,000 and whose income would place such person among the four
highest compensated executives of the company (such persons, "Named Executive
Officers").
 
<TABLE>
<CAPTION>
                                                                                    LONG TERM
                                        ANNUAL COMPENSATION                       COMPENSATION
                                 ---------------------------------                   AWARDS
                                                         OTHER       ---------------------------------------
                                                         ANNUAL      RESTRICTED    SECURITIES    ALL OTHER
       NAME AND         FISCAL                        COMPENSATION     STOCK       UNDERLYING   COMPENSATION
  PRINCIPAL POSITION     YEAR     SALARY     BONUS        (1)          AWARDS       OPTIONS         (2)
  ------------------    ------   --------   -------   ------------   ----------    ----------   ------------
<S>                     <C>      <C>        <C>       <C>            <C>           <C>          <C>
Richard B. Stone......   1998        None        --      $3,750(3)      --               --            --
Chief Executive
Officer(3)
Anna L. Currence......   1998    $ 10,500        --          --         --               --            --
President(4)
John R. Sutton........   1998    $123,200                                             5,000       $ 3,000
Vice President,          1997    $102,900        --          --         --            9,000       $ 3,000
Merchandising            1996    $ 84,100                                               975       $ 3,000
Donald J. Pilch.......   1998    $149,600        --          --         --            7,000       $17,000(5)
Former Chief             1997    $162,800        --          --         --            9,000       $ 3,500
Financial Officer        1996    $ 31,100        --          --         --            3,000       $ 5,000(6)
E. Steve Stevens......   1998    $204,100        --          --         --               --       $40,400(7)
Former Chief             1997    $288,900        --          --         --           41,000       $ 4,000
Executive Officer        1996    $233,600   $37,500          --         --           22,500       $ 2,000
and President
</TABLE>
 
---------------
 
(1) Excludes perquisites and other personal benefits, unless the aggregate
    amount of such compensation is at least $50,000 or 10% of the total annual
    salary and bonus reported for the Named Executive Officer.
(2) Includes approximate allocation to the accounts of the Named Executive
    Officers pursuant to the 401(k) and/or the profit sharing plans of the
    Company, unless otherwise footnoted.
(3) Richard B. Stone became Chief Executive Officer of the Company in October
    1997. He received board fees of $3,750 in fiscal 1998 and was not otherwise
    compensated by the Company.
(4) Anna L. Currence joined the Company in January 1998. Her current annual
    salary is $260,000 with an automobile allowance of $650 per month and an
    annual bonus based on performance and review by the Company Board.
(5) Includes payment of accrued sick and vacation balances.
(6) Signing bonus.
(7) Includes payment of accrued sick and vacation balances.
 
                                       11
<PAGE>   12
 
    OPTION GRANTS IN LAST FISCAL YEAR
 
     The following table provides information with respect to grants of options
for shares of common stock of the Company to the Named Executive Officers during
fiscal 1998, and the exercise price, expiration date and estimates of the
potential realizable values of such options.
 
<TABLE>
<CAPTION>
                                              INDIVIDUAL GRANTS                      POTENTIAL REALIZABLE
                             ---------------------------------------------------       VALUE AT ASSUMED
                              NUMBER OF      % OF TOTAL                             ANNUAL RATES OF STOCK
                             SECURITIES       OPTIONS                               PRICE APPRECIATION FOR
                             UNDERLYING      GRANTED TO    EXERCISE                    OPTION TERM (2)
                               OPTIONS      EMPLOYEES IN   OR BASE    EXPIRATION    ----------------------
           NAME              GRANTED (1)    FISCAL YEAR     PRICE        DATE          5%           10%
           ----              -----------    ------------   --------   ----------    ---------    ---------
<S>                          <C>            <C>            <C>        <C>           <C>          <C>
Richard B. Stone...........      None
Anna L. Currence...........      None
Donald J. Pilch............     7,000(3)        4.2%        $9.375     7-31-02(3)    $18,100(3)   $40,100(3)
John R. Sutton.............     5,000           3.0%        $9.375     7-31-02       $13,000      $28,600
E. Steve Stevens...........      None
</TABLE>
 
---------------
 
(1) Options become exercisable over time. One-third become exercisable one year
    from the date of grant, an additional one-third become exercisable two years
    from the date of grant and the last third become exercisable three years
    from the date of grant. Options expire five years from the date of grant.
    Options are granted at market price on the date of grant. All options
    granted to executive officers are incentive stock options ("ISO's") under
    the Internal Revenue Code of 1986, as amended. ISO's entitle the option
    holder to special tax treatment provided that the option holder satisfies
    certain holding periods with respect to shares acquired on the exercise of
    options. In general, if the holding periods are satisfied, the option holder
    will incur no taxable income by reason of exercise of the option, and the
    Company will not receive an income tax deduction by reason of the exercise.
    The option holder will recognize gain or loss upon a subsequent sale of the
    common stock, based on the difference between the amount for which the stock
    is sold, and the option price paid.
 
(2) Potential realizable value is based on an assumption that the price of the
    Common Stock appreciates at the annual rate shown (compounded annually) from
    the date of grant until the end of the five year option term. These numbers
    are calculated based on the rules and regulations promulgated by the SEC and
    do not reflect the Company's estimate of future stock price growth.
 
(3) Due to termination of employment, these options expired April 2, 1998.
 
                                       12
<PAGE>   13
 
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
 
     For each of the Named Executive Officers, the following table provides
information regarding the exercise of options during fiscal 1998 and the number
and value of unexercised options as of January 31, 1998.
 
<TABLE>
<CAPTION>
                                                                             NUMBER OF
                                                                            SECURITIES       VALUE OF
                                                                            UNDERLYING      UNEXERCISED
                                                                            UNEXERCISED    IN-THE-MONEY
                                                                            OPTIONS AT      OPTIONS AT
                                                                            FISCAL YEAR     FISCAL YEAR
                                                                                END             END
                                                                           -------------   -------------
                                              SHARES ACQUIRED    VALUE     EXERCISABLE/    EXERCISABLE/
                    NAME                        ON EXERCISE     REALIZED   UNEXERCISABLE   UNEXERCISABLE
                    ----                      ---------------   --------   -------------   -------------
<S>                                           <C>               <C>        <C>             <C>
Richard B. Stone............................        --            --            -- / --       --/--
Anna L. Currence............................        --            --            -- / --       --/--
John R. Sutton..............................        --            --       3,950/11,250       --/--
Donald J. Pilch.............................        --            --       5,000/14,000(1)    --/--
E. Steve Stevens............................        --            --            -- / --       --/--
</TABLE>
 
---------------
 
(1) Due to termination of employment, these options expired April 2, 1998.
 
EMPLOYMENT AGREEMENTS
 
     On January 31, 1998, the Company entered into an employment agreement with
Anna L. Currence, President and Chief Operating Officer. Ms. Currence's
agreement is for a term of one year. The agreement is renewable for one
additional one year term, unless Ms. Currence is terminated with cause. The
agreement provides for an initial annual base salary of $260,000, subject to
increases following review and performance appraisal by the Compensation
Committee of the Company Board, an automobile allowance of $650 per month and a
performance-based bonus subject to approval of the Company Board.
 
     On February 6, 1998, the Company entered into an employment agreement with
Steven A. Pate. The agreement is for a one-year term, beginning February 6, 1999
and ending February 6, 1999 and is renewable for one additional one year term,
unless Mr. Pate is terminated pursuant to the agreement. The agreement provides
for an initial annual base salary of $175,000, an automobile allowance of $650
per month and a bonus based on performance and approval of the Company Board.
The annual compensation is subject to annual increases as recommended by the
Compensation Committee following review and performance appraisal by the
Compensation Committee and approved by the Company Board.
 
     On February 9, 1998, the Company entered into an employment agreement with
Stephen M. Petty. The agreement is for a two year term beginning February 9,
1998 and ending February 9, 2000, and is renewable for one additional one year,
term, unless Mr. Petty is terminated pursuant to the agreement. The agreement
provides for an initial annual base salary of $180,000, an automobile allowance
of $650 per month and a bonus based on performance and approval of the Company
Board. The annual base salary is subject to annual increases as recommended to
the Company Board by the Compensation Committee.
 
     On March 30, 1998, Crown Books entered into an employment agreement with
Mark C. Paxton. The agreement is for a one-year term, beginning March 30, 1998
and ending April 3, 1999, and is renewable for one additional one-year term,
unless Mr. Paxton is terminated pursuant to the agreement. The agreement
provides for an initial annual base salary of $170,000, an auto allowance of
$650 per month and a bonus based on performance and approval of the Company
Board. The annual base salary is subject to annual increases as recommended to
the Company Board by the Compensation Committee.
                                       13
<PAGE>   14
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     The Compensation Committee is currently comprised of the Company's outside,
non-employee directors (Howard M. Metzenbaum and Harry M. Linowes). No member of
the Compensation Committee has a relationship that would constitute an
interlocking relationship with executive officers or directors of another
entity.
 
         REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
 
     This report describes the Company's compensation policies applicable to its
executive officers during the fiscal year ended January 31, 1998. During fiscal
1998, executive compensation policies were formulated by the Compensation
Committee. An Executive Compensation Program was developed in fiscal 1996 and
was implemented in fiscal 1997. This new program shifts the former "base pay"
emphasis to one that is more closely tied to company performance.
 
     The key elements of the Company's executive compensation program consist of
base salaries that are determined based upon (a) concerns of competitive pay and
performance, (b) cash bonus awards that are driven solely by performance and (c)
ownership of stock options to align the interests of management with those of
stockholders. Each of these elements is described in more detail below.
 
     Executive compensation during fiscal 1998 consisted principally of salary.
Annual salary is determined by the person to whom such officer reports (in
consultation with the Chief Executive Officer and the Compensation Committee),
based on the officer's previous year's salary and his superior's subjective
assessment of the responsibilities of the position held, the competitive market
for retail executives with comparable levels of responsibility, the executive's
performance on the job and other factors that the superior deems relevant or
appropriate. The Compensation Committee also advises the Company Board as to the
compensation of the Chief Executive Officer.
 
     In fiscal 1998, the Company Board did not award any cash bonuses to the
Chief Executive Officer or other executive officers.
 
     The Compensation Committee believes that annual awards of stock options are
an effective means of aligning an executive's compensation with the interests of
shareholders, since the values of such options are tied directly to increases in
the market value of the Common Stock. The exercise price for such options is the
market value of the Common Stock on the date of grant. Options become
exercisable over time and expire five years after the date of grant. There is no
set number of options that can be awarded in any year or any formula for
allocating options among the officers. The amount of options awarded to each
executive officer is based on the Compensation Committee's subjective evaluation
of the relative contributions of the executives to the Company.
 
     Prior to Sen. Metzenbaum and Mr. Linowes joining the Compensation
Committee, the Company granted stock options to certain executive officers
during fiscal 1998 based upon performance during fiscal 1997.
 
FISCAL 1998 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
 
     Richard B. Stone, the current Chief Executive Office of the Company, does
not receive compensation from the Company other than director's fees, which were
$3,750 in fiscal 1998.
 
     E. Steve Stevens was Chief Executive Officer from December 1995 until
September 1997 and, under his employment agreement, his current annual base
salary was $291,500. During fiscal 1997, Mr. Stevens salary was increased to be
within the competitive range in the marketplace in order to retain his continued
service.
                                       14
<PAGE>   15
 
Mr. Stevens also received an automobile allowance and was eligible for a
performance-based bonus subject to approval of the Board of Directors. In fiscal
1997, the Company Board awarded Mr. Stevens options to purchase 20,000 shares of
Common Stock in lieu of a compensation increase in fiscal 1998. These options
terminated prior to vesting when Mr. Stevens departed the Company.
 
LIMIT ON DEDUCTIBILITY OF CERTAIN COMPENSATION
 
     It is the responsibility of the Company Board to address the issues raised
by a change in the federal income tax laws that has made certain non-performance
based compensation to executive officers of public companies in excess of $1
million non-deductible to such companies. In this regard, the Company Board must
determine whether any actions with respect to this new limit should be taken by
the Company. At this time, it is not anticipated that any executive officer of
the Company will receive any such compensation in fiscal 1999. Therefore, the
Company Board has not taken any action to comply with the $1 million limitation.
The Company Board will continue to monitor this situation and will take
appropriate action if it is warranted in the future.
 
                                          Compensation Committee
 
                                          Howard M. Metzenbaum
                                          Harry M. Linowes
 
                                       15
<PAGE>   16
 
                         STOCK PRICE PERFORMANCE GRAPH
 
     The following graph compares cumulative total returns (assuming
reinvestment of dividends) on the Common Stock, the S&P Composite-500 Stock
Index and a peer company index (the S&P Retail Store Specialty Index) for the
five-year period ending January 31, 1998. This stock price performance graph
assumes that the value of the investment in the Common Stock and each index was
$100 on January 31, 1993. Through January 31, 1998, no dividends were paid on
the Common Stock. The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
 
                COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
                      FOR THE YEAR ENDED JANUARY 31, 1998
 
<TABLE>
<CAPTION>
               MEASUREMENT PERIOD                   CROWN BOOKS        STANDARD &       RETAIL STORE
             (FISCAL YEAR COVERED)                  CORPORATION       POOR'S INDEX       COMPOSITE
<S>                                               <C>               <C>               <C>
1993                                                        100.00            100.00            100.00
1994                                                        100.00            112.99             99.69
1995                                                         62.82            119.92             96.64
1996                                                         48.72            166.24             90.04
1997                                                         50.64            210.12            102.73
1998                                                         35.26            223.20            138.71
</TABLE>
 
                                       16