RHODES INC, S-8 POS, 1994-09-20

RHODES INC
S-8 POS, 1994-09-20
FURNITURE STORES

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<PAGE> 1

As filed with the Securities and Exchange Commission on September 20, 1994

REGISTRATION NO. 33-53969

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

POST-EFFECTIVE AMENDMENT NO.1
TO

FORM S-8

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
RHODES, INC.

(Exact Name of Registrant as Specified in Charter)

GEORGIA 58-0536190
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

4370 PEACHTREE ROAD
ATLANTA, GEORGIA 30319
(404) 264-4600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

RHD HOLDINGS CORP. 1988 STOCK OPTION PLAN
RHODES, INC. 1991 STOCK OPTION PLAN
RHODES, INC. 1994 STOCK PURCHASE PLAN
DIRECTORS' AGREEMENTS
(Full Titles of Plans)

JOEL H. DUGAN
SENIOR VICE PRESIDENT
FINANCE AND ADMINISTRATION
4370 PEACHTREE ROAD
ATLANTA, GEORGIA 30319
(404) 264-4600
(Name, address, including zip code, and telephone
number, including area code, of agent for service)

COPIES TO:

E. WILLIAM BATES, II
KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA 30303
(404) 572-4600

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

CALCULATION OF REGISTRATION FEE

(1) Estimated solely for purposes of calculating the registration
fee in accordance with Rule 457(h) under the Securities Act of
1933, based upon the average of the high and low reported sales
price of the Registrant's common stock on the New York Stock
Exchange.

(2) In addition, pursuant to Rule 416(c) under the Securities Act of
1933, this registration statement also covers an indeterminate
amount of interests to be offered or sold pursuant to the
Rhodes, Inc. 1994 Stock Purchase Plan described herein.

(3) Also registered hereby are 530,922 shares of the Registrant's
common stock to be sold pursuant to resales.

<PAGE> 2

RHODES, INC.

CROSS-REFERENCE SHEET
Part I of Form S-3

<TABLE>
<CAPTION>
Item
Number Item Heading in Prospectus
- ------ ------------------------------------------------------------------ ---------------------
<S> <C> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus . . . . . . . . . . . . . . . . Outside Front Cover Page

2. Inside Front and Outside Back Cover Pages of
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents; Available
Information; Incorporation of Certain
Documents by Reference

3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . . Investment Considerations

4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . *

5. Determination of Offering Price. . . . . . . . . . . . . . . . *

6. Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . *

7. Selling Security-Holders . . . . . . . . . . . . . . . . . . . Selling Shareholders

8. Plan of Distribution . . . . . . . . . . . . . . . . . . . . . Method of Sale

9. Description of Securities to be Registered . . . . . . . . . . *

10. Interests of Named Experts and Counsel . . . . . . . . . . . . *

11. Material Changes . . . . . . . . . . . . . . . . . . . . . . . *

12. Incorporation of Certain Information by Reference . . . . . . Incorporation of Certain Documents by
Reference
13. Disclosure of Commission Position on Indemnification
For Securities Act Liabilities . . . . . . . . . . . . . . . . *
</TABLE>

_________________________

* Inapplicable or response would be negative.

(i)
<PAGE> 3
PROSPECTUS FOR RESALES

The material which follows, up to but not including the page beginning
Part II of this Registration Statement, constitutes a prospectus, prepared on
Form S-3, in accordance with General Instruction C to Form S-8, to be used in
connection with resales of securities (i) acquired under the RHD Holdings Corp.
(predecessor to Rhodes, Inc.) 1988 Stock Option Plan, (ii) acquired or to be
acquired under the Rhodes, Inc. 1991 Stock Option Plan, (iii) to be acquired
under the Rhodes, Inc. 1994 Stock Purchase Plan or (iv) to be acquired by
certain directors pursuant to certain option agreements.

(ii)
<PAGE> 4

PROSPECTUS

530,922

RHODES, INC.

COMMON STOCK

____________________

This Prospectus relates to up to 530,922 shares of Common Stock,
without par value (the "Common Stock"), of Rhodes, Inc., a Georgia corporation
("Rhodes" or the "Company"), which may be offered for sale by the persons
listed or referred to under the heading "Selling Shareholders." Such shares
have been (i) acquired by the Selling Shareholders under the Company's 1988
Stock Option Plan, (ii) have been or will be acquired by the Selling
Shareholders under the Company's 1991 Stock Option Plan, (iii) will be
acquired by the Selling Shareholders under the Company's 1994 Stock Purchase
Plan or (iv) will be acquired by certain directors pursuant to certain option
agreements. Such shares may be offered by the Selling Shareholders from time
to time in ordinary brokerage transactions on the New York Stock Exchange at
market prices prevailing at the time of the sale or in one or more private
transactions at negotiated prices. Each Selling Shareholder will pay any
brokerage fees or commissions relating to sales by it. The Company will
receive no part of the proceeds of any such sales.

For information concerning certain factors that should be considered by
prospective investors, see "Investment Considerations."

____________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

_________________________

No person has been authorized to give any information or to make any
representation, other than as contained or incorporated by reference herein or
delivered as described herein, in connection with the offering described in
this Prospectus and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company. This Prospectus
does not constitute an offer by the Selling Shareholders to sell any securities
other than those to which it relates or in any jurisdiction to any person to
whom it is unlawful to make such an offer in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstance, create any implication that there has been no change in the
affairs of the Company or the information herein since the date hereof.

THE DATE OF THIS PROSPECTUS IS JUNE 3, 1994.

<PAGE> 5
TABLE OF CONTENTS

<TABLE>
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Investment Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Method of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

</TABLE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C., or at certain of the
Commission's Regional Offices: Seven World Trade Center, 13th Floor, New York,
New York 10048 and Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661.

The Company has filed with the Commission a registration statement (the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect to the shares of Common Stock offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to the Company and the shares of Common Stock offered hereby, reference
is made to the Registration Statement and to the exhibits and schedules filed
therewith. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. A copy of the Registration
Statement may be inspected without charge at the offices of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part
of the Registration Statement may be obtained from the Public Reference Section
of the Commission, Washington, D.C. 20549 upon the payment of the fees
prescribed by the Commission.

The shares of Common Stock offered hereby are listed on the New York Stock
Exchange ("NYSE") and reports, proxy statements and other information
concerning the Company can be inspected at the public reference facilities
maintained by the NYSE.

The Company's principal executive offices are located at 4370 Peachtree
Road, Atlanta, Georgia 30319, and its telephone number is (404) 264-4600.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed by the Company under the Exchange
Act are incorporated into this Prospectus by reference:

(a) The Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1994; and

(b) The description of the Company's Common Stock, without par value,
contained in the Company's registration statement on Form 8-A under the
Exchange Act (File No. 1-9308), including any amendment or report filed for
the purpose of updating such description.

-2-
<PAGE> 6

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the filing of a post-effective amendment which indicates that all securities
offered hereunder have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of those documents.

The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of
any or all of the documents listed above, other than exhibits. Written or
telephone requests for such copies should be directed to: Rhodes, Inc., 4370
Peachtree Road, Atlanta, Georgia 30319, (404) 264-4600, Attention: Joel H.
Dugan, Senior Vice President-Finance and Administration.

INVESTMENT CONSIDERATIONS

Prospective purchasers of the Common Stock should carefully consider the
specific factors set forth below, as well as other information contained in
this Prospectus, before investing in the Common Stock.

RECENT LOSSES AND LIMITATIONS UNDER FINANCING AGREEMENTS

Recent Losses. The Company experienced net losses of $4.2 million, $13.0
million, $13.5 million, $10.0 million and $9.8 million in the period beginning
September 28, 1988 and ending February 28, 1989, fiscal years 1990, 1991, 1992
and 1993, respectively. The Company had net income of $3.3 million for the
fiscal year 1994. The Company expects to generate sufficient cash flow from
operations to meet its debt service requirements, working capital needs and
capital expenditures; however, there can be no assurance as to its ability to
do so.

Limitations Imposed under Financing Agreements. The Company's revolving
credit agreement with Wachovia Bank of Georgia, N.A. (the "Revolving Credit
Agreement") and its outstanding senior secured notes (the "Senior Notes"),
impose operating and financial restrictions on the Company. Such restrictions
may affect, and in some respects may limit significantly or prohibit, among
other things, the ability of the Company to incur additional indebtedness or
create liens on its assets, sell assets or engage in mergers or consolidations,
make investments, pay dividends or engage in transactions with affiliates.
These restrictions could limit the ability of the Company to effect future
financings or otherwise may restrict corporate activities, including the
ability of the Company to take actions that require funds in excess of those
available to the Company.

CONTROL BY SIGNIFICANT SHAREHOLDER

As of May 1, 1994, WPS Investors, L.P., which is controlled by Holcombe T.
Green, Jr., Chairman of the Board of Directors of the Company, beneficially
owned approximately 29.8% of the shares of outstanding Common Stock.
Accordingly, Mr. Green will continue to have the ability to exercise
significant influence over the business and affairs of the Company.

RETAIL FURNITURE INDUSTRY

The retail furniture industry has historically been cyclical, fluctuating
significantly with general economic conditions. During economic downturns, the
retail furniture industry tends to experience longer periods of recession and
greater declines than the general economy. There can be no assurance that an
economic downturn would not have a material adverse effect on the Company.

COMPETITION

The retail furniture industry is highly competitive and fragmented. The
Company competes with a large number of independent furniture stores which
operate in single markets, other regional and national furniture store chains,
and various department stores and mass merchandisers. Certain of the companies
which compete directly with Rhodes have greater financial and other resources
that the Company.

-3-
<PAGE> 7
PLANNED EXPANSION AND STORE IMPROVEMENTS

The Company's continued growth depends to a significant degree on its
ability to open new stores in existing or increase the productivity of its
existing stores. The Company intends to add 23 net new stores in fiscal 1995,
1996 and 1997, some of which will be in new metropolitan markets, and to
remodel or refurbish 37 existing stores over that period. However, the Company
opened only three new stores in fiscal 1994 and one new store in each of fiscal
1992 and 1993 and instituted its remodeling and refurbishing program in fiscal
1993. There can be no assurance that the Company will be able to locate
favorable store sites and arrange favorable leases for new stores; open new
stores in a timely manner; hire, train and integrate employees and managers in
these new stores; expand its distribution facilities; adapt its distribution,
management information and other operating systems to the extent necessary to
grow in a successful and profitable manner; or successfully remodel and
refurbish existing stores. The Company's expansion and remodeling and
refurbishing programs could be delayed or limited if it does not generate
sufficient cash flow from operations or if the Company is unable to obtain
other sources of capital.

RESTRICTIONS ON PAYMENT OF DIVIDENDS; NO RECENT DIVIDEND PAYMENTS

The Company has not paid a cash dividend on the Common Stock since 1988 and
it has no plans to commence paying cash dividends on the Common Stock. The
Revolving Credit Agreement and the Senior Notes contain significant
restrictions on the payment of dividends.

ANTI-TAKEOVER EFFECT OF THE COMPANY'S BYLAWS

The Company's Bylaws include provisions which make applicable to the
Company a two-thirds super-majority shareholder vote on business combinations
and the protections afforded by Part 2 and Part 3 of Article 11 of the Georgia
Business Corporation Code. These provisions could impede any merger,
consolidation, takeover or other business combination involving the Company or
discourage a potential acquiror from making a tender offer or otherwise
attempting to obtain control of the Company.

-4-
<PAGE> 8
SELLING SHAREHOLDERS

The following table sets forth certain information as of May 1, 1994
with respect to the Selling Shareholders:
<TABLE>
<CAPTION> Number of
Number of Shares of Number of Shares
Number of Options for Common Stock of Common Stock
Shares of Shares of Registered Owned After
Selling Common Stock Common Stock for Resale All Registered
Stockholder Owned Owned Herein Shares are Sold(1)
- ----------- ------------ ------------ ----------- ----------------
<S> <C> <C> <C> <C>
Irwin Lowenstein (2) 37,915 125,000 136,250 26,665
Don Chapman 2,000 7,500 7,500 2,000
James Napier 1,000 7,500 7,500 1,000
Joel Lanham 13,725 85,000 91,948 6,777
Joel Dugan 18,640 55,000 61,838 11,802
Jack Hurst 3,375 7,500 10,875 -0-
Don Parker 4,875 35,000 38,375 1,500
Michael Beindorff 3,500 40,000 40,000 3,500
Barbara Snow (3) 1,350 10,000 11,350 -0-
Nathan Averett 3,375 17,500 3,375 -0-
Perry Biggs 3,375 35,000 3,375 -0-
Eric Citron 1,350 17,500 1,350 -0-
David Fiske 1,350 -0- 1,350 -0-
William Griffith 1,350 10,000 1,350 -0-
George Harris 11,811 17,500 7,536 4,275
Ray Hunnicutt 1,350 17,500 1,350 -0-
Keith Kassel 1,350 10,000 1,350 -0-
Gloria Simpson 1,350 -0- 1,350 -0-
Jay Tenebaum 1,500 -0- 1,500 -0-
John Torre 1,350 10,000 1,350 -0-
James Welch 1,350 17,500 1,350 -0-
Frank Wentz 1,350 17,500 1,350 -0-
Ambrose Woods 1,350 7,500 1,350 -0-
</TABLE>
__________

(1) Each Selling Shareholder will beneficially own less than 1% of the
Common Stock after all shares registered herein are sold.

(2) Excludes 400 shares of Common Stock owned by Mr. Lowenstein's daughters
as to which Mr. Lowenstein disclaims beneficial ownership.

(3) Excludes 300 shares of Common Stock owned by Ms. Snow's children as to
which Ms. Snow disclaims beneficial ownership.

Each of the first nine of the Selling Shareholders is an executive
officer or director of the Company. With the exception of Mr. Tenebaum, the
remaining Selling Shareholders are current employees of the Company. The
Selling Shareholders may also use this Prospectus for reoffers and resales of
shares of Common Stock acquired upon the exercise of options issued to them
under the 1988 Stock Option Plan, the 1991 Stock Option Plan or acquired
pursuant to the 1994 Stock Purchase Plan prior or subsequent to the date of
this Prospectus.

Because the Selling Shareholders may offer all or some part of the
number of shares of Common Stock registered herein indicated in the table above
pursuant to the offering contemplated by this Prospectus, no estimates can be
given as to the amount of Common Stock that will be held by each Selling
Shareholder after completion of this offering. See "Method of Sale."

METHOD OF SALE

Sales of the shares of Common Stock offered by this Prospectus may be
made from time to time through the New York Stock Exchange, where the Company's
Common Stock is listed for trading, at market prices prevailing at the time of
the sale or in one or more private transactions at negotiated prices. Sales
may involve payment of brokers' fees or commissions by the Selling Shareholder.
There is no present plan of distribution.

-5-
<PAGE> 9
EXPERTS

The historical financial statements and schedules as of February
28, 1993 and February 28, 1994 and for the three years ended February 28, 1994
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen & Co., independent public accountants, as indicated in their reports
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said reports.

-6-
<PAGE> 10

Part II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Certain Documents by Reference

The following documents filed by Rhodes, Inc. (the "Company") with
the Securities and Exchange Commission are hereby incorporated by reference
into this Registration Statement:

(1) The Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1994; and

(2) The description of the Company's common stock, without par value,
contained in the Form 8-A Registration Statement filed under the
Exchange Act (File No. 1-9308), including any amendment or report
filed for the purposes of updating such description.

All documents filed by the Company subsequent to the date of this
Registration Statement pursuant to sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act and prior to the filing of a post-effective amendment which
indicates that all securities offered hereunder have been sold or which
deregisters all such securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents.

Item 4. Description of Securities

Inapplicable

Item 5. Interest of Named Experts and Counsel.

Inapplicable.

Item 6. Indemnification of Directors and Officers.

Article IX of the Company's Amended Bylaws, as well as Article 8,
Part 5 of the Georgia Business Corporation Code, provide for the
indemnification by the Company of, and advancement of expenses to, its
directors, officers, employees and agents. The Company maintains insurance
coverage of its directors and officers with respect to certain liabilities
incurred in their capacities as such and insuring the Company against payments
which it becomes obligated to make to such persons under the foregoing
indemnification provisions.

Statutory Authority

14-2-850. PART DEFINITIONS.

As used in this part, the term:

(1) "Corporation" includes any domestic or foreign
predecessor entity of a corporation in a merger or
other transaction in which the predecessor's
existence ceased upon consummation of the
transaction.

-7-
<PAGE> 11
(2) "Director" means an individual who is or was a
director of a corporation or an individual who, while
a director of a corporation, is or was serving at the
corporation's request as a director, officer,
partner, trustee, employee or agent of another
foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other
enterprise. A director is considered to be serving
an employee benefit plan at the corporation's request
if his duties to the corporation also impose duties
on, or otherwise involve services by, him to the plan
or to participants in or beneficiaries of the plan.
Director includes, unless the context requires
otherwise, the estate or personal representative of a
director.

(3) "Expenses" include attorneys' fees.

(4) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax
assessed with respect to an employee benefit plan),
or reasonable expenses incurred with respect to a
proceeding.

(5) "Party" includes an individual who was, is, or is
threatened to be made a named defendant or respondent
in a proceeding.

(6) "Proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative and
whether formal or informal.

14-2-851. AUTHORITY TO INDEMNIFY.

(a) Except as provided in subsections (d) and (e) of this
Code section, a corporation may indemnify or obligate
itself to indemnify an individual made a party to a
proceeding because he is or was a director against
liability incurred in the proceeding if he acted in a
manner he believed in good faith to be in or not
opposed to the best interests of the corporation and,
in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.

(b) A director's conduct with respect to an employee
benefit plan for a purpose he believed in good faith
to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies
the requirement of subsection (a) of this Code
section.

(c) The termination of a proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo
contendere or its equivalent is not, of itself,
determinative that the director did not meet the
standard of conduct set forth in subsection (a) of
this Code section.

(d) A corporation may not indemnify a director under this
Code section:

(1) in connection with a proceeding by
or in the right of the corporation
in which the director was adjudged
liable to the corporation; or

(2) In connection with any other
proceeding in which he was adjudged
liable on the basis that personal
benefit was improperly received by
him.

(e) Indemnification permitted under this Code section in
connection with a proceeding by or in the right of
the corporation is limited to reasonable expenses
incurred in connection with the proceeding.

-8-
<PAGE> 12
14-2-852. MANDATORY INDEMNIFICATION.

Unless limited by its articles of incorporation, to the extent
that a director has been successful, on the merits or otherwise, in the defense
of any proceeding to which he was a party, or in defense of any claim, issue,
or matter therein, because he is or was a director of the corporation, the
corporation shall indemnify the director against reasonable expenses incurred
by him in connection therewith.

14-2-853. ADVANCE FOR EXPENSES.

(a) A corporation may pay for or reimburse the reasonable
expenses incurred by a director who is a party to a
proceeding in advance of final disposition of the
proceeding if:

(1) The director furnishes the corporation a
written affirmation of his good faith belief
that he has met the standard of conduct set
forth in subsection (a) of Code Section
14-2-851; and

(2) The director furnishes the corporation a
written undertaking, executed personally or
on his behalf, to repay any advances if it is
ultimately determined that he is not entitled
to indemnification under this part.

(b) The undertaking required by paragraph (2) of
subsection (a) of this Code section must be an
unlimited general obligation of the director but need
not be secured and may be accepted without reference
to financial ability to make repayment.

14-2-854. COURT-ORDERED INDEMNIFICATION AND ADVANCES FOR
EXPENSES.

Unless a corporation's articles of incorporation provide
otherwise, a director of the corporation who is a party to a proceeding may
apply for indemnification or advances for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court after giving any notice the court considers necessary
may order indemnification or advances for expenses if it determines:

(1) The director is entitled to mandatory
indemnification under Code Section 14-2-852,
in which case the court shall also order the
corporation to pay the director's reasonable
expenses incurred to obtain court ordered
indemnification;

(2) The director is fairly and reasonably
entitled to indemnification in view of all
the relevant circumstances, whether or not he
met the standard of conduct set forth in
subsection (a) of Code Section 14-2-851 or
was adjudged liable as described in
subsection (d) of Code Section 14-2-851, but
if he wad adjudged so liable his
indemnification is limited to reasonable
expenses incurred unless the articles of
incorporation or a bylaw, contract, or
resolution approved or ratified by the
shareholders pursuant to Code Section
14-2-856 provides otherwise; or

(3) In the case of advances for expenses, the
director is entitled, pursuant to the
articles of incorporation, bylaws, or any
applicable resolution or agreement, to
payment or reimbursement of his reasonable
expenses incurred as a party to a proceeding
in advance of final disposition of the
proceeding.

14-2-855. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION.

(a) A corporation may not indemnify a director under Code
Section 14-2-851 unless authorized thereunder and a
determination has been made in the specific case that
indemnification of the director is permissible in the
circumstances because he has met the standard of
conduct set forth in subsection (a) of Code Section
14-2-851.

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<PAGE> 13
(b) The determination shall be made:

(1) By the board of directors by majority vote of
a quorum consisting of directors not at the
time parties to the proceeding;

(2) If a quorum cannot be obtained under
paragraph (1) of this subsection, by majority
vote of a committee duly designated by the
board of directors (in which designation
directors who are parties may participate),
consisting solely of two or more directors
not at the time parties to the proceeding;

(3) By special legal counsel:

(A) Selected by the board of directors
or its committee in the manner
prescribed in paragraph (1) or (2)
of this subsection; or

(B) If a quorum of the board of
directors cannot be obtained under
paragraph (1) of this subsection and
a committee cannot be designated
under paragraph (2) of this
subsection, selected by majority
vote of the full board of directors
(in which selection directors who
are parties may participate); or

(4) By the shareholders, but shares owned by or
voted under the control of directors who are
at the time parties to the proceeding may not
be voted on the determination.

(c) Authorization of indemnification or an obligation to
indemnify and evaluation or as to reasonableness of
expenses shall be made in the same manner as the
determination that indemnification is permissible,
except that if the determination is made by special
legal counsel, authorization of indemnification and
evaluation as to reasonableness of expenses shall be
made by those entitled under paragraph (3) of
subsection (b) of this Code section to select
counsel.

14-2-856. SHAREHOLDER APPROVED INDEMNIFICATION.

(a) If authorized by the articles of incorporation or a
bylaw, contract, or resolution approved or ratified
by the shareholders by a majority of the votes
entitled to be cast, a corporation may indemnify or
obligate itself to indemnify a director made a party
to a proceeding including a proceeding brought by or
in the right of the corporation, without regard to
the limitations in other Code sections of this part.

(b) The corporation shall not indemnify a director under
this Code section for any liability incurred in a
proceeding in which the director is adjudged liable
to the corporation or is subjected to injunctive
relief in favor of the corporation:

(1) For any appropriation, in violation of his
duties, of any business opportunity of the
corporation;

(2) For acts or omissions which involve
intentional misconduct or a knowing violation
of law;

(3) For the types of liability set forth in Code
Section 14-2-832; or

(4) For any transaction from which he received an
improper personal benefit.

(c) Where approved or authorized in the manner described
in subsection (a) of this Code section, a corporation
may advance or reimburse expenses incurred in advance
of final disposition of the proceeding only if:

-10-
<PAGE> 14

(1) The director furnishes the corporation a
written affirmation of his good faith belief
that his conduct does not constitute behavior
of the kind described in subsection (b) of
this Code section; and

14-2-857. INDEMNIFICATION OF OFFICERS, EMPLOYEES AND AGENTS.

Unless a corporation's articles of incorporation provide otherwise:

(1) An officer of the corporation who is not a
director is entitled to mandatory
indemnification under Code Section 14-2-852
and is entitled to apply for court ordered
indemnification under Code Section 14-2-854,
in each case to the same extent as a
director; and

(2) A corporation may also indemnify and advance
expenses to an officer, employee, or agent
who is not a director to the extent,
consistent with public policy, that may be
provided by its articles of incorporation,
bylaws, general or specific action of its
board of directors, or contract.

14-2-858. INSURANCE.

A corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee, or agent of the
corporation or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise against liability asserted against or incurred by him in that
capacity or arising from his status as a director, officer, employee, or agent,
whether or not the corporation would have power to indemnify him against the
same liability under Code Section 14-2-851 or Code Section 14-2-852.

14-2-859. APPLICATION OF PART.

(a) A provision treating a corporation's indemnification
of or advance for expenses to directors that is
contained in its articles of incorporation, bylaws, a
resolution of its shareholders or board of directors,
or in a contract or otherwise, is valid only if and
to the extent the provision is consistent with this
part. If articles of incorporation limit
indemnification or advance for expenses,
indemnification and advance for expenses are valid
only to the extent consistent with the articles.

(b) This part does not limit a corporation's power to pay
or reimburse expenses incurred by a director in
connection with his appearance as a witness in a
proceeding at a time when he has not been made a
named defendant or respondent to the proceeding.

Articles of Incorporation Authority

ARTICLE VI OF RHODES, INC.'S RESTATED AND AMENDED ARTICLES OF
INCORPORATION PROVIDES:

A director of the Corporation shall not be liable to the
Corporation or its shareholders for monetary damages, for breach of duty of
care or other duty as a director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Georgia Business
Corporation Code as currently in effect or as the same may hereafter be
amended.

No amendment, modification or repeal of this Article VI shall
adversely affect any right or protection of a director that exists at the time
of such amendment, modification or repeal.

-11-
<PAGE> 15
Bylaw Authority

ARTICLE IX OF RHODES, INC.'S AMENDED BYLAWS PROVIDES:

Section 1. Indemnification. The corporation shall indemnify each
person who is or was a director, officer, employee or agent of the corporation
(including the heirs, executors, administrators or estate of such person) or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise to the fullest extent permitted under Section 14-2-156 of the
Official Code of Georgia Annotated or any successor provisions of the laws of
the State of Georgia. If any such indemnification is requested pursuant to
sections 14-2-156(a) or (b) of said Code or laws or any successor provisions,
the Board of Directors shall cause a determination to be made (unless a court
has ordered the indemnification) in one of the manners prescribed in section
14-2-156(d) of said Code or laws as to whether indemnification of the party
requesting indemnification is proper in the circumstances because he has met
the applicable standard of conduct set forth in sections 14-2-156(a) or (b) of
said Code or laws. Upon any such determination that such indemnification is
proper, the corporation shall make indemnification payments of liability, cost,
payment or expense asserted against, or paid or incurred by, him in his
capacity as such a director, officer, employee or agent to the maximum extent
permitted by said sections of said Code or laws. The right to indemnification
under this article is granted in consideration of service to the corporation
and shall be a contract right. The indemnification obligation of the
corporation set forth herein shall not be deemed exclusive of any other rights,
in respect of indemnification or otherwise, to which any party may be entitled
under any other bylaw provision, agreement, or resolution approved by the
shareholders pursuant to section 14-2-156(b) of said Code or laws.

Section 2. Insurance. The corporation may purchase and maintain
insurance at its expense, to protect itself and any such person against any
such liability, cost, payment or expense whether or not the corporation would
have the power to indemnify such person against such liability.

Item 7. Exemptions from Registration Claimed

Restricted securities to be reissued or resold pursuant to this registration
statement were issued from time to time to employees of the Company upon
exercise of options to purchase Common Stock granted to such employees pursuant
to the 1988 Stock Option Plan and 1991 Stock Option Plan in transactions exempt
from registration under the Securities Act pursuant to Section 4(2) thereof.

Item 8. Exhibits

<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
4.1 Restated and Amended Articles of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 to
the Registrant's Registration Statement on Form S-1 (File No. 33-60962)).

4.2 Amended Bylaws of Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Registration
Statement on Form S-1 (File No. 33-60962)).

5.1 Opinion of King & Spalding.

23.1 Consent of Arthur Andersen & Co.

23.2 Consent of King & Spalding (included in Exhibit 5.1).

99.1 Rhodes, Inc. 1991 Stock Option Plan (incorporated by reference to Exhibit 10.35 to the Registrant's Annual
Report on Form 10-K for the year ended February 28, 1991).
</TABLE>

-12-
<PAGE> 16

<TABLE>
<S> <C>
99.2 RHD Holdings Corp. (predecessor to the Registrant) 1988 Stock Option Plan (incorporated by reference to
Exhibit 10.34 and 34.1 to the Registrant's Annual Report on Form 10-K for the year ended February 28,
1991).

99.3 Form of the Rhodes, Inc. 1994 Stock Purchase Plan.
</TABLE>

Experts

The consolidated financial statements and schedules incorporated
by reference in this Registration Statement have been audited by Arthur
Andersen & Co., independent public accountants, as indicated in their reports
with respect thereto, and are incorporated by reference herein in reliance upon
the authority of said firm as experts in giving said reports. Future
consolidated financial statements of the Company and the reports thereon of
Arthur Andersen & Co. also will be incorporated by reference in this
Registration Statement in reliance upon the authority of that firm as experts
in giving those reports to the extent said firm has audited those financial
statements and consented to the use of their reports thereon.

Item 9. Undertakings

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:

(A) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;

(B) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement; and

(C) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement;

provided, however, that paragraphs (a)(1)(A)
and (a)(1)(B) do not apply if the
Registration Statement is on Form S-3 or Form
S-8, and the information required to be
included in a post-effective amendment by
those paragraphs is contained in periodic
reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.

(2) That for purposes of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.

(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.

-13-
<PAGE> 17
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's Annual Report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's Annual
Report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.

-14-

<PAGE> 18
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing this Amendment to its Form S-8 and has
duly caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia on the 6th day of September, 1994.

RHODES, INC.

By: *
---------------------------
Irwin L. Lowenstein
Chairman of the Board of
Directors

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant as administrator of the Rhodes, Inc. 1994 Stock Purchase Plan,
has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Atlanta, State of Georgia, on the 6th day of September, 1994.

RHODES, INC. 1994 STOCK PURCHASE PLAN

By: RHODES, INC.

By: /s/ Joel H. Dugan
----------------------------
Joel H. Dugan, Senior
Vice President, Finance
and Administration

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Registration Statement has been signed by the following
persons in the capacity indicated on the 6th day of September, 1994.

-15-

<PAGE> 19

Signature Title
- --------- -----
<S> <C>
* Chairman of the Board of Directors
- ------------------------------------ (Principal Executive Officer)
Irwin L. Lowenstein

/s/ Joel H. Dugan Senior Vice President, Finance &
- ------------------------------------ Administration (Principal Financial
Joel H. Dugan Officer)

* Corporate Controller (Principal
- ------------------------------------ Accounting Officer)
Barbara Snow

* Director
- ------------------------------------
Holcombe T. Green, Jr.

* Director
- ------------------------------------
James R. Kuse

* Director
- ------------------------------------
Don L. Chapman

* Director
- ------------------------------------
James V. Napier

*By /s/ Joel H. Dugan
-------------------------------
Joel H. Dugan
Attorney-in-Fact
</TABLE>

-16-

<PAGE> 20

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Description Page No.
- ------- ----------- --------
<S> <C> <C>
4.1 Restated and Amended Articles of
Incorporation of Registrant
(incorporated by reference to
Exhibit 3.1 to the Registrant's
Registration Statement on Form S-1
(File No. 33-60962)).

4.2 Amended Bylaws of Registrant
(incorporated by reference to
Exhibit 3.2 to the Registrant's
Registration Statement on Form S-1
(File No. 33-60962)).

5.1 Opinion of King & Spalding.

23.1 Consent of Arthur Andersen & Co.

23.2 Consent of King & Spalding (included
in Exhibit 5.1)

99.1 Rhodes, Inc. 1991 Stock Option
Plan (incorporated by reference to
Exhibit 10.35 to the Registrant's
Annual Report on Form 10-K for the
year ended February 28, 1991).

99.2 RHD Holdings Corp. (predecessor to the
Registrant) 1988 Stock Option Plan
(incorporated by reference to
Exhibit 10.34 and 34.1 to the
Registrant's Annual Report on
Form 10-K for the year ended
February 28, 1991).

99.3 Form of the Rhodes, Inc. 1994 Stock Purchase Plan.
</TABLE>

-17-

<PAGE> 1

EXHIBIT 5.1

September 15, 1994

Rhodes, Inc.
4370 Peachtree Road
Atlanta, Georgia 30319

RE: Rhodes, Inc. -- Post-Effective Amendment
No. 1 to Form S-8 Registration Statement
----------------------------------------

Gentlemen:

We have acted as counsel for Rhodes, Inc., a Georgia corporation (the
"Company"), in connection with the preparation of Post-Effective Amendment No.
1 to the Registration Statement on Form S-8 (File No. 33-53969) (such
Registration Statement, as amended, shall hereinafter be referred to as the
"Registration Statement") to be filed with the Securities and Exchange
Commission. The Registration Statement relates to (i) 62,272 shares of the
Company's common stock, without par value ("Common Stock"), issued pursuant to
the RHD Holding Corp. (predecessor of the Company) 1988 Stock Option Plan (the
"1988 Stock Option Plan"), (ii) 700,000 shares of Common Stock issued or to be
issued pursuant to the Company's 1991 Stock Option Plan (the "1991 Stock Option
Plan"), (iii) 250,000 shares of Common Stock to be issued pursuant to the
Company's 1994 Stock Purchase Plan (the "1994 Stock Purchase Plan"), (iv)
15,000 shares to be issued to certain directors pursuant to options granted
under certain option agreements (the "Director Agreements"), and (v) an
indeterminate amount of interests which may be offered or sold by the Company
pursuant to the Company's 1994 Stock Purchase Plan (the "Interests").

As such counsel, we have examined and relied upon such records,
documents, certificates and other instruments as in our judgment are necessary
or appropriate to form the basis for the opinion hereinafter set forth. In all
such examinations, we have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies submitted
to us as certified, conformed or photographic copies, and as to certificates of
public officials, we have assumed the same to have been properly given and to
be accurate.
<PAGE> 2
Rhodes, Inc.

September 15, 1994

Page 2
- -----------------

This opinion is limited in all respects to the federal laws of the
United States of America and the Corporate law of the State of Georgia, and no
opinion is expressed with respect to the laws of any other jurisdiction or any
effect which such laws may have on the opinions expressed herein. This opinion
is limited to the matters stated herein, and no opinion is implied or may be
inferred beyond the matters expressly stated herein.

Based upon the foregoing and subject to the limitations, qualifications
and assumptions set forth herein, we are of the opinion that the shares of
Common Stock to be issued pursuant to the 1994 Stock Purchase Plan, the
Interests of plan participants thereunder and the shares of Common Stock to be
issued upon the exercise of stock options ("Options") granted or to be granted
under the 1988 Stock Option Plan, the 1991 Stock Option Plan and the Director
Agreements are duly authorized and, assuming (i) the Board of Directors takes no
action after the date of this opinion that would cause the shares not be duly
authorized on the dates of exercise, (ii) on the dates of exercise, any Options
not heretofore granted will have been duly granted in accordance with
then-applicable law and the terms of the 1991 Stock Option Plan, and (iii) no
change occurs in the applicable law or the pertinent facts, then, when such
shares are issued pursuant to (a) the 1994 Stock Purchase Plan against payment
therefor as provided in the 1994 Stock Purchase Plan or (b) any Options upon
exercise in accordance with their terms and the terms of the 1988 Stock Option
Plan, the 1991 Stock Option Plan or any Director Agreement, as applicable,
against payment therefor as provided in such Options or the 1988 Stock Option
Plan, the 1991 Stock Option Plan or any Director Agreement, as applicable, such
shares of Common Stock so issued will be validly issued, fully paid and
nonassessable.

<PAGE> 3
Rhodes, Inc.

September 15, 1994

Page 3
- -----------------

We consent to the filing of this opinion as an Exhibit to the
Registration Statement.

Very truly yours,

KING & SPALDING

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our report dated
April 22, 1994 in the Rhodes, Inc. Form 10-K for the fiscal year ended
February 28, 1994 and to all references to our Firm included in this
Registration Statement.

Arthur Andersen & Co.

Atlanta, Georgia
June 3, 1994

<PAGE> 1
EXHIBIT 99.3

RHODES, INC.

FORM OF 1994 EMPLOYEE STOCK PURCHASE PLAN

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
sec. 1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

sec. 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3. Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5. Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6. Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7. Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8. Exercise Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9. Offering Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10. Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.11. Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12. Participating Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13. Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.14. Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.15. Purchase Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.16. Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.17. Rhodes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.18. Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.19. Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

sec. 3. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

sec. 4. Offerings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

sec. 5. Stock Available for Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

sec. 6. Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

sec. 7. Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

sec. 8. Payroll Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Initial Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Subsequent Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Account Credits, General Assets and Taxes . . . . . . . . . . . . . . . . . . . . . 8
(d) No Cash Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

sec. 9. Granting of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Statutory Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Available Shares of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>

-i-
<PAGE> 3

<TABLE>
<S> <C> <C>
sec. 10. Exercise of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Partial Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Automatic Refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

sec. 11. Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

sec. 12. Voluntary Account Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

sec. 13 Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Death, Disability or Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Other Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

sec. 14. Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

sec. 15. Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

sec. 16. Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

sec. 17. Securities Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

sec. 18. Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

sec. 19. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

sec. 20. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

sec. 21. Headings, References and Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>

-ii-
<PAGE> 4

RHODES, INC.

1994 EMPLOYEE STOCK PURCHASE PLAN

sec. 1. Purpose

The primary purpose of this Plan is to encourage Stock ownership by each
Eligible Employee of Rhodes and each Subsidiary in the belief that such
ownership will increase his or her interest in the success of Rhodes and will
provide an additional incentive for him or her to remain in the employ of Rhodes
or such Subsidiary. Rhodes intends that this Plan constitute an "employee stock
purchase plan" within the meaning of sec. 423 of the Code and, further, intends
that any ambiguity in this Plan or any related offering be resolved to effect
such intent.

sec. 2. Definitions

2.1 The term Account shall mean the separate bookkeeping account which
shall be established and maintained by the Plan Administrator for each
Participant for each Purchase Period to record the payroll deductions made on
his or her behalf to purchase Stock under this Plan.

2.2 The term Authorization shall mean the participation election and
payroll deduction authorization form which an Eligible Employee shall be
required to properly complete in writing and timely file with the Plan
Administrator before the end of an Offering Period in order to participate in
this Plan for the related Purchase Period.

<PAGE> 5

2.3. The term Beneficiary shall mean the person described in sec. 14.

2.4. The term Board shall mean the Board of Directors of Rhodes.

2.5. The term Code shall mean the Internal Revenue Code of 1986, as
amended.

2.6. The term "Disability" shall mean a condition which the Plan
Administrator in his or her discretion determines would be treated as a total
and permanent disability under sec. 22(e)(3) of the Code.

2.7. The term Eligible Employee shall mean each employee of Rhodes or
a Subsidiary except--

(a) an employee who has been employed less than one year (within
the meaning of Code sec. 423(b)(4)(A)) by Rhodes or such Subsidiary,

(b) an employee who customarily is employed 20 hours or less per
week (within the meaning of Code sec. 423(b)(4)(B)) by Rhodes or such
Subsidiary,

(c) an employee who (after completing at least one year of
employment as an employee of Rhodes or such Subsidiary) customarily is
employed for not more than 5 months in any calendar year (within the
meaning of Code sec. 423(b)(4)(C)) by Rhodes or such Subsidiary, and

(d) an employee who would own (immediately after the grant of an
option under this Plan) stock possessing 5% or more of the total combined
voting power or value of all

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<PAGE> 6

classes of stock of Rhodes based on the rules set forth in # 423(b)(3)
and sec. 424 of the Code.

An Employee's continuous employment by Rhodes or by a Subsidiary shall
not be treated as interrupted by a transfer directly between Rhodes and any
Subsidiary or between one Subsidiary and another Subsidiary.

2.8. The term Exercise Date shall mean for each Purchase Period the
last day of such Purchase Period.

2.9. The term Offering Period shall mean a period which (1) shall be
set by the Board or its delegate, (2) shall come before the related Purchase
Period and (3) shall continue for no more than 30 days.

2.10. The term Option Price shall mean for each Purchase Period the
lesser of 85% of the closing price for a share of Stock on the first day of such
Purchase Period or 85% of the closing price for a share of Stock on the last day
of such Purchase Period, as such closing price is accurately reported in The
Wall Street Journal or in any successor to The Wall Street Journal or, if there
is no such successor, any similar trade publication selected by the Board or, if
the Board makes no such selection, as such closing price is determined in good
faith by the Board; provided, if no closing price is so accurately reported for
any such day, the closing price for such day shall be deemed to be the last
closing price for a share of Stock which was so accurately reported before such
day.

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<PAGE> 7

2.11. The term Participant shall mean for each Purchase Period an
Eligible Employee who has satisfied the requirements set forth in sec. 7 of this
Plan for such Purchase Period.

2.12. The term Participating Employer shall for each Participant, as of
any date, mean Rhodes or a Subsidiary, whichever employs such Participant as of
such date.

2.13. The term Plan shall mean this Rhodes, Inc. 1994 Employee Stock
Purchase Plan as effective as of the date set forth in sec. 3 and as thereafter
amended from time to time.

2.14. The term Plan Administrator shall mean the person or persons
appointed by the Board to administer this Plan.

2.15. The term Purchase Period shall mean a 6 consecutive month period
which shall begin on a date (within the 15 day period which immediately follows
the end of the related Offering Period) set by the Board or its delegate on or
before the beginning of the related Offering Period.

2.16. The term Retirement shall mean a termination of employment after
reaching at least age 55 and completing at least 5 years of continuous
employment with Rhodes or a Subsidiary (where such continuous employment shall
be determined using the same rules used to determine whether an employee is an
Eligible Employee).

2.17. The term Rhodes shall mean Rhodes, Inc., a corporation
incorporated under the laws of the State of Georgia, and any successor to
Rhodes.

2.18. The term Stock shall mean the no par value voting common stock of
Rhodes.

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2.19. The term Subsidiary shall mean each corporation (1) which is in
an unbroken chain of corporations beginning with Rhodes in which each
corporation in such chain (except for the last corporation in such chain) owns
stock possessing 80% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain and (2) which the Plan
Administrator has designated as eligible to participate in this Plan.

sec. 3. Effective Date

This Plan shall be first effective as of the date adopted by the Board.
However, if any options are granted under this Plan under sec. 9 before the date
the shareholders of Rhodes (acting at a duly called meeting of such
shareholders) are treated under sec. 423(b)(2) of the Code as having approved
the adoption of this Plan, such options shall be granted subject to such
approval and, if such shareholders fail to approve such adoption before the
first anniversary of such effective date, all such options and this Plan
automatically shall be null and void.

sec. 4. Offerings

Options to purchase shares of Stock shall be offered to Participants in
accordance with this Plan from time to time at the discretion of the Board or
its delegate; provided, however, there shall be no more than one Offering Period
in effect at any time and no more than one Purchase Period in effect at any
time.

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sec. 5. Stock Available for Options

There initially shall be 250,000 shares of Stock available for purchase
from Rhodes upon the exercise of options granted under sec. 9 of this Plan. Any
shares of Stock which are subject to options granted as of the first day of a
Purchase Period but which are not purchased on the related Exercise Date shall
again become available under this Plan.

sec. 6. Administration

The Plan Administrator shall be responsible for the administration of
this Plan and shall have the power in connection with such administration to
interpret this Plan and to take such other action in connection with such
administration as the Plan Administrator deems necessary or equitable under the
circumstances. The Plan Administrator also shall have the power to delegate the
duty to perform such administrative functions as the Plan Administrator deems
appropriate under the circumstances. Any person to whom the duty to perform an
administrative function is delegated shall act on behalf of and shall be
responsible to the Plan Administrator for such function. Any action or inaction
by or on behalf of the Plan Administrator under this Plan shall be final and
binding on each Eligible Employee, each Participant and on each other person who
makes a claim under this Plan based on the rights, if any, of any such Eligible
Employee or Participant under this Plan.

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<PAGE> 10

sec. 7. Participation

Each person who is an Eligible Employee on the first day of an Offering
Period shall satisfy the requirements to be a Participant in this Plan for the
related Purchase Period if

(1) he or she properly completes in writing and files an
Authorization with the Plan Administrator on or before the
last day of such Offering Period to purchase shares of Stock
pursuant to the option granted under sec. 9, and

(2) he or she remains an Eligible Employee throughout the period
which begins on the first day of such Offering Period and ends
on the first day of the related Purchase Period.

An Authorization shall require an Eligible Employee to provide such
information and to take such action as the Plan Administrator in his or her
discretion deems necessary or helpful to the orderly administration of this
Plan, including specifying (in accordance with sec. 8) his or her payroll
deductions to purchase shares of Stock pursuant to the option granted under
sec. 9 and designating a Beneficiary. A Participant's status as such shall
terminate for a Purchase Period (for which he or she has an effective
Authorization) at such time as his or her Account has been withdrawn under sec.
12 or sec. 13 or the purchases and distributions contemplated under sec. 10 or
sec. 13 with respect to his or her Account have been completed, whichever
comes first.

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<PAGE> 11

sec. 8. Payroll Deductions

(a) Initial Authorization. Each Participant's Authorization made under
sec. 7 shall specify the specific dollar amount which he or she authorizes his
or her Participating Employer to deduct from his or her compensation each pay
day during the Purchase Period for which such Authorization is in effect to
purchase shares of Stock pursuant to the option granted under sec. 9, provided
for each Purchase Period

(1) the total of such dollar amount shall not be less than $150.00,
and

(2) the total of such dollar amount shall not be more than
$12,500.00.

(b) Subsequent Authorization. A Participant shall have the right to
amend an Authorization after the end of an Offering Period to reduce or to stop
the payroll deductions which he or she previously had authorized for the related
Purchase Period, and such reduction shall be effective as soon as practicable
after the Plan Administrator actually receives such amended Authorization.

(c) Account Credits, General Assets and Taxes. All payroll deductions
made for a Participant shall be credited to his or her Account as of the pay day
as of which the deduction is made. All payroll deductions shall be held by
Rhodes, by Rhodes's agent or by one, or more than one, Subsidiary (as determined
by the Plan Administrator) as part of the general assets of Rhodes or any such
Subsidiary, and each Participant's right to the payroll deductions credited to
his or her Account shall be those of a general and unsecured creditor. Rhodes,
Rhodes's agent or such

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<PAGE> 12

Subsidiary shall have the right to withhold on payroll deductions to the
extent such person deems necessary or appropriate to satisfy applicable tax
laws.

(d) No Cash Payments. A Participant may not make any contribution to
his or her Account except through payroll deductions made in accordance with
this sec. 8.

sec. 9. Granting of Option

(a) General Rule. Subject to sec. 9(b) and sec. 9(c), each person
who is a Participant for a Purchase Period automatically shall be granted by
operation of this Plan an option as of the first day of such Purchase Period
to purchase the number of shares of Stock determined by the Plan Administrator
by dividing the total payroll deductions which he or she has elected to make
for such Purchase Period under sec. 8 by the Option Price for a share of Stock
as determined as of the first day of such Purchase Period, and rounding down
to the nearest whole number. Each such option shall be exercisable only in
accordance with the terms of this Plan.

(b) Statutory Limitation. No option granted by operation of this Plan
to any Eligible Employee under sec. 9(a) shall permit his or her rights to
purchase shares of Stock under this Plan or under any other employee stock
purchase plan (within the meaning of sec. 423 of the Code) or any other shares
of Stock under any other employee stock purchase plans (within the meaning

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<PAGE> 13

of sec. 423 of the Code) of Rhodes and any of its subsidiaries (within the
meaning of sec. 424(f) of the Code) to accrue (within the meaning of sec. 423
(b)(8) of the Code) at a rate which exceeds $25,000 of the fair market value
of such Stock for any calendar year. Such fair market value shall be
determined as of the first day of the Purchase Period for which the option is
granted.

(c) Available Shares of Stock. If the number of shares of Stock
available for purchase at the end of any Purchase Period is insufficient to
cover the number of shares which Participants actually are scheduled otherwise
to purchase under sec. 10, then each Participant's option to purchase shares of
Stock for such Purchase Period shall be reduced as of the last day of such
Purchase Period to equal the number of shares of Stock (rounded down to nearest
whole number) which the Plan Administrator shall determine by multiplying the
number of shares of Stock available for purchase as of such date by a fraction,
the numerator of which shall be the number of shares of Stock for which such
Participant would have been granted an option under sec. 9(a) if sufficient
shares were available for purchase and the denominator of which shall be the
total number of shares of Stock for which options would have been granted to all
Participants under sec. 9(a) who are scheduled under sec. 10 to make purchases
if sufficient shares were available for such purchases.

sec. 10. Exercise of Option

(a) General Rule. Unless a Participant files an amended
Authorization under sec. 10(b) or sec. 12 on or before the Exercise Date for a
Purchase Period for which he or she has an effective Authorization, his or her
option shall be exercised

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<PAGE> 14

(subject to sec. 9) automatically on such Exercise Date for the purchase of
as many whole shares of Stock subject to such option as the balance credited to
his or her Account as of that date will purchase at the Option Price for such
shares of Stock if he or she also is an Eligible Employee on such Exercise Date.

(b) Partial Exercise. A Participant may file an amended
Authorization under this sec. 10 with the Plan Administrator on or before an
Exercise Date to elect, effective as of such Exercise Date, to exercise his or
her option for a specific number of whole shares of Stock (which shall be less
than the whole number subject to his or her option) and to withdraw in cash the
remaining balance credited to his or her Account (without interest) as of such
date after giving effect to such partial exercise, and any such amended
Authorization shall be effective only if such Participant is an Eligible
Employee on such Exercise Date.

(c) Automatic Refund. If a Participant's Account has a remaining
balance after his or her option has been exercised as of an Exercise Date under
this sec. 10, such balance automatically shall be refunded to the Participant in
cash (without interest) as soon as practicable following such Exercise Date.

sec. 11. Delivery

A stock certificate representing any shares of Stock purchased upon the
exercise of an option under this Plan shall be delivered to a Participant
registered in (1) his or her name or, if the Participant so directs on his or
her Authorization filed

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<PAGE> 15

with the Plan Administrator on or before the Exercise Date for such
option and if permissible under applicable law, (2) the names of the Participant
and one such other person as may be designated by the Participant, as joint
tenants with rights of survivorship. No Participant (or any person who makes a
claim through a Participant) shall have any interest in any shares of Stock
subject to an option until such option has been exercised and the related shares
of Stock actually have been delivered to such person.

sec. 12. Voluntary Account Withdrawal

A Participant may elect to withdraw the entire balance credited to his
or her Account for a Purchase Period by completing in writing and filing an
amended Authorization with the Plan Administrator on or before the Exercise Date
for such period. If a Participant makes such a withdrawal election, such
balance shall be paid to him or her in cash (without interest) as soon as
practicable after such amended Authorization is filed, and no further payroll
deductions shall be made on his or her behalf for the remainder of such Purchase
Period.

sec. 13. Termination of Employment

(a) Death, Disability or Retirement. If a Participant's employment by
a Participating Employer terminates as a result of his or her death, Disability
or Retirement on or before the Exercise Date for a Purchase Period and if such
Participant or, in the event he or she dies, his or her

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<PAGE> 16

Beneficiary timely makes an irrevocable election in writing under this sec.
13(a), such person shall have the right

(1) to withdraw the Participant's entire Account in cash (without
interest), or

(2) to apply the Participant's entire Account to purchase whole
shares of Stock at the Option Price for such Purchase Period
as of the related Exercise Date.

Any election made under this sec. 13(a) shall be irrevocable and shall be
timely only if actually delivered to the Plan Administrator on or before the
earlier of (i) the Exercise Date for such Purchase Period or (ii) the last day
of the 3 consecutive months period which begins on the last day the Participant
was an Eligible Employee. If no timely election is made under this sec. 13(a),
a Participant shall be deemed to have elected the cash alternative set forth
in sec. 13(a)(1). If the purchase alternative set forth in sec. 13(a)(2) is
elected, the certificate representing the shares of Stock purchased shall be
delivered as soon as administratively practicable to the Participant or, in
the event he or she dies, to his or her Beneficiary. Finally, if a
Participant's Account has a remaining balance after his or her option has been
exercised under this sec. 13(a), such balance automatically shall be refunded
to the Participant or, in the event he or she dies, to his or her Beneficiary
in cash (without interest) as soon as practicable after such exercise.

(b) Other Terminations. If a Participant's employment as an Eligible
Employee terminates on or before the Exercise Date

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<PAGE> 17

for a Purchase Period for any reason whatsoever other than his or her
death, Disability or Retirement, his or her Account automatically shall be
distributed as if he or she had elected to withdraw his or her Account in cash
under sec. 12 immediately before the date his or employment had so terminated.

(c) Transfers. If a Participant is transferred directly between Rhodes
and a Subsidiary or between one Subsidiary and another Subsidiary while he or
she has an Authorization in effect, his or her employment shall not be treated
as terminated merely by reason of such transfer and any such Authorization shall
(subject to all the terms and conditions of this Plan) remain in effect after
such transfer.

sec. 14. Designation of Beneficiary

A Participant shall designate on his or her Authorization a Beneficiary
(1) who shall act on his or her behalf if the Participant dies before the end of
a Purchase Period and (2) who shall receive the Stock, if any, and cash, if any,
to the Participant's credit under this Plan if the Participant dies after the
end of a Purchase Period but before the delivery of the certificate representing
such shares of Stock, if any, and the cash, if any, to his or her credit in such
Account. Such designation may be revised in writing at any time by the
Participant by filing an amended Authorization, and his or her revised
designation shall be effective at such time as the Plan Administrator receives
such amended Authorization. If a deceased Participant fails to designate a
Beneficiary or, if no person so

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designated survives a Participant or, if after checking his or her last
known mailing address, the whereabouts of the person so designated are unknown,
then the Participant's Beneficiary shall be the Participant's estate.

sec. 15. Transferability

Neither the balance credited to a Participant's Account nor any rights
to the exercise of an option or to receive shares of Stock under this Plan may
be assigned, encumbered, alienated, transferred, pledged, or otherwise disposed
of in any way by a Participant during his or her lifetime or by his or her
Beneficiary or by any other person during his or her lifetime, and any attempt
to do so shall be without effect; provided, however, that the Plan Administrator
in its absolute discretion may treat any such action as an election by a
Participant to withdraw the balance credited to his or her Account in accordance
with sec. 12. A Participant's right, if any, to transfer any interest in this
Plan at his or her death shall be determined exclusively under sec. 14.

sec. 16. Adjustment

The number of shares of Stock covered by outstanding options granted
pursuant to this Plan and the related Option Price and the number of shares of
Stock available under this Plan shall be adjusted by the Board in an equitable
manner to reflect any change in the capitalization of Rhodes, including, but not
limited to such changes as dividends paid in the form of Stock or Stock splits.
Furthermore, the Board shall adjust (in a manner

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which satisfies the requirements of sec. 424(a) of the Code) the number of
shares of Stock available under this Plan and the number of shares of Stock
covered by options granted under this Plan and the related Option Prices in the
event of any corporate transaction described in sec. 424(a) of the Code. If any
adjustment under this sec. 16 would create a fractional share of Stock or a
right to acquire a fractional share, such fractional share shall be
disregarded and the number of shares of Stock subject to options granted
pursuant to this Plan shall be the next lower number of whole shares of Stock,
rounding all fractions downward. An adjustment made under this sec. 16 by the
Board shall be conclusive and binding on all affected persons.

sec. 17. Securities Registration

If Rhodes shall deem it necessary to register under the Securities Act
of 1933, as amended, or any other applicable statutes any shares of Stock with
respect to which an option shall have been exercised under this Plan or to
qualify any such shares of Stock for an exemption from any such statutes, Rhodes
shall take such action at its own expense before delivery of the certificate
representing such shares of Stock. If shares of Stock are listed on any national
stock exchange at the time an option to purchase shares of Stock is exercised
under this Plan, Rhodes whenever required shall register shares of Stock for
which such option is exercised under the Securities Exchange Act of 1934, as
amended, and shall make prompt application for the listing on such

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national stock exchange of such shares, all at the expense of Rhodes.

sec. 18. Amendment or Termination

This Plan may be amended by the Board from time to time to the extent
that the Board deems necessary or appropriate in light of, and consistent, with
sec. 423 of the Code and the laws of the State of Georgia, and any such
amendment shall be subject to the approval of Rhodes's shareholders to the
extent such approval is required under sec. 423 of the Code or the laws of the
State of Georgia or to the extent such approval is required to meet the
security holder approval requirements under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. However, no provision of this Plan shall be
amended more than once every 6 months if amending such provision more
frequently would result in the loss of an exemption under Section 16(b) of the
Securities Exchange Act of 1934, as amended. The Board also may terminate
this Plan or any offering made under this Plan at any time; provided, however,
the Board shall not have the right to modify, cancel, or amend any option
outstanding after the beginning of a Purchase Period unless (1) each
Participant consents in writing to such modification, amendment or
cancellation, (2) such modification only accelerates the Exercise Date for the
related Purchase Period or (3) the Board acting in good faith deems that such
action is required under applicable law.

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sec. 19. Notices

All Authorizations and other communications from a Participant to the
Plan Administrator under, or in connection with, this Plan shall be deemed to
have been filed with the Plan Administrator when actually received in the form
specified by the Plan Administrator at the location, or by the person,
designated by the Plan Administrator for the receipt of such Authorizations and
communications.

sec. 20. Employment

No offer under this Plan shall constitute an offer of employment, and no
acceptance of an offer under this Plan shall constitute an employment
agreement. Any such offer or acceptance shall have no bearing whatsoever on
the employment relationship between any Eligible Employee and Rhodes or any
subsidiary of Rhodes, including a Subsidiary. Finally, no Eligible Employee
shall be induced to participate in this Plan by the expectation of employment
or continued employment.

sec. 21. Headings, References and Construction

The headings to sections in this Plan have been included for convenience
of reference only. Except as otherwise expressly indicated, all references to
sections (sec.) in this Plan shall be to sections (sec.) of this Plan. This
Plan shall be

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<PAGE> 22

interpreted and construed in accordance with the laws of the State of
Georgia.

RHODES, INC.

By:___________________________

Title:________________________

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