<PAGE>   1
                                                                   EXHIBIT 10.36


                                AGENCY AGREEMENT

         This Agency Agreement is made as of this 6th day of May, 1997, by and
between HILCO/GREAT AMERICIAN GROUP, a joint venture comprised of Hilco Trading
Company, an Illinois corporation, with its principal place of business at 5
Revere Drive, Suite 206, Northbrook, Illinois 60062, and Garcel, Inc., a
California corporation, with a principal place of business at 6338 Variel
Avenue, Woodland Hills, California 91367, and doing business as Great American
Asset Management ("Agent") and Solo Serve Corporation, a Texas corporation,
with a principal place of business at 1610 Cornerway Blvd., San Antonio, Texas
78219 ("Merchant").

                                    RECITALS

         WHEREAS, Merchant desires that Agent act as Merchant's exclusive agent
for the limited purpose of selling all of the Merchandise (as hereinafter
defined) located in Merchant's 3 retail store location(s) listed on Exhibit 1
attached hereto (each individually a "Store," and collectively the "Stores") by
means of a Store Closing, Chainwide Inventory Liquidation Sale, or similar
theme sale (as further described below, the "Sale").

         NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Agent and Merchant hereby
agree as follows:

         Section 1. Defined Terms. The terms set forth below are defined in the
Sections referenced of this Agreement:

<TABLE>
<CAPTION>
Defined Term                                             Section Reference
------------                                             -----------------
<S>                                                      <C>
Additional Merchandise                                   Section 11.1(m)
Agency Accounts                                          Section 7.2
Agency Documents                                         Section 11.1(b)
Agent                                                    Preamble
Agent Claim                                              Section 12.5
Agent Indemnified Parties                                Section 13.1
Agent's Fee                                              Section 3.2
Agent's Goods                                            Section 16
Central Administrative Expenses                          Section 4.1
Defective Merchandise                                    Section 5.2(b)
Excluded Benefits                                        Section 4.1
Expenses                                                 Section 4.1
FF&E                                                     Section 5.2(a)
Guaranteed Amount                                        Section 3.1(a)
Inventory Date                                           Section 5.1
Inventory Taking                                         Section 5.1
</TABLE>
<PAGE>   2
<TABLE>
<S>                                                      <C>
Layaway Merchandise                                      Section 5.2(b)
Merchandise                                              Section 5.2(a)
Merchant                                                 Preamble
Occupancy Agreements                                     Section 8.7
Occupancy Expenses                                       Section 4.1
Proceeds                                                 Section 7.1
Recovery Amount                                          Section 3.1(a)
Retail Price                                             Section 5.3
Retained Employee                                        Section 9.1
Retention Bonus                                          Section 9.4
Sale                                                     Recitals
Sale Commencement Date                                   Section 6.1
Sale Term                                                Section 6.1
Sale Termination Date                                    Section 6.1
Sales Taxes                                              Section 8.3
Store(s)                                                 Recitals
WARN Act                                                 Section 9.1
</TABLE>

         Section 2.       Appointment of Agent. Merchant hereby irrevocably
appoints Agent, and Agent hereby agrees to serve, as Merchant's exclusive agent
for the limited purpose of conducting the Sale in accordance with the terms and
conditions of this Agreement.

         Section 3.       Payments to Merchant and Agent.

         3.1     Payments to Merchant.

                 (a)      (i) As a guaranty of Agent's performance hereunder,
Merchant shall receive from Agent the sum of 45.5% of the aggregate Retail
Price of the Merchandise ("Guaranteed Amount").

                          (ii)    To the extent that Proceeds exceeds 58.50% of
the aggregate Retail Price of the Merchandise, Merchant shall receive from
Agent 50% of such excess Proceeds ("Recovery Amount").

                          (iv)    Agent shall pay to Merchant the Guaranteed
Amount and the Recovery Amount, if any, in the manner and at the times
specified in Section 3.3 below.

         3.2     Payments to Agent. Agent shall receive as its compensation for
services rendered to Merchant all remaining Proceeds of the Sale after payment
of the Guaranteed Amount, the Recovery Amount and all Expenses. Subject to
Merchants rights with respect to the Recovery Amount, all Merchandise
remaining, if any, at the Sale Termination Date shall become the property of
Agent, free and clear of all liens, claims and encumbrances, provided however,
that Agent shall use its best efforts to



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sell all of the Merchandise during the Sale and provided further that any
proceeds received from the sale of any Merchandise which becomes the property
of Agent pursuant to this paragraph at the conclusion of the Sale shall be
deemed Proceeds under this Agreement.

         3.3     Time of Payments. Agent shall pay the Guaranteed Amount, with
respect to the Merchandise located in the Stores as of the Inventory Date, to
Merchant within one (1) business day of the issuance of the final audited
report of the Merchandise by the inventory taking service.

         Agent shall pay the Guaranteed Amount with respect to the Additional
Merchandise, within, one (1) business day of completion and verification of the
quantity and Retail Price of such Merchandise by Merchant and Agent.

         Within thirty (30) days after the end of the Sale Term Agent shall
prepare and deliver to Merchant a final reconciliation of the Sale including,
without limitation, a summary of Proceeds. Within ten (10) days of delivery of
such statement, Agent shall pay to Merchant the Recovery Amount due hereunder,
if any. All payments by Merchant to Agent hereunder shall be by bank wire
transfer of immediately available funds.

         Agent shall be entitled to a reduction in the Guaranteed Amount for
any amounts overpaid as a result of the markdowns referred to in Section
11.1(g) hereof having not been reflected on any Merchandise at the time the
Guaranteed Amount for such Merchandise is calculated.

         Section 4.       Expenses of the Sale.

         4.1     Expenses. Agent shall be responsible for all Expenses incurred
in conducting the Sale. As used herein, "Expenses" shall mean all Store-level
operating expenses of the Sale which arise during the Sale Term at the Stores,
limited to the following: (a) base payroll for Retained Employees for actual
days/hours worked in the conduct of the Sale; (b) amounts actually payable in
respect of payroll taxes, worker's compensation and benefits of Retained
Employees (other than Excluded Benefits), with such taxes, worker's
compensation and benefits being limited to no more than 17% of base payroll for
each Retained Employee; (c) 50% of the fees and costs of the inventory taking
service to conduct the Inventory Taking; (d) on-site supervision; (e)
advertising and signage (at Merchant's contract rates, if available); (f) long
distance telephone expenses incurred in the conduct of the Sale; (g) credit
card and bank card fees, chargebacks and discounts and check cashing fees; (h)
costs of security personnel; (i) a pro-rata portion of Merchant's casualty
insurance premiums attributable to the Merchandise; (j) costs of transfers of
Merchandise between the Stores during the Sale Term; (k) Retention Bonuses as
described in Section 9.4 below; and (l) (the costs and expenses of providing
such additional goods and services which Agent in its sole discretion deems
appropriate.





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<PAGE>   4
         "Expenses" shall not include: (i) Occupancy Expenses; (ii) Excluded
Benefits; (iii) any rent or occupancy expenses related to the Stores other than
the Occupancy Expenses; (iv) Central Service Expenses; (v) the cost of
transferring Additional Merchandise to the Stores; and (vi) any other costs,
expenses or liabilities payable by Merchant, all of which shall be paid by
Merchant promptly when due for and during the Sale Term.

         As used herein, the following terms have the following respective
meanings:

         "Central Service Expenses" means costs and expenses for Merchant's
central administrative services necessary for the Sale, including, but not
limited to, MIS services, payroll processing, inventory processing and handling
and data processing and reporting.

         "Excluded Benefits" means vacation days or vacation pay, sick days or
sick leave, maternity leave or other leaves of absence, termination or
severance pay, pension benefits, ERISA coverage and similar contributions, and
payroll taxes, worker's compensation and benefits in excess of the percentage
limitation provided in Section 4.1(b) above.

         "Occupancy Expenses" means base rent, percentage rent, HVAC,
utilities, base telephone charges, trash and snow removal, CAM, real estate and
use taxes, Merchant's association dues and expenses, Merchant's liability
insurance, cash register maintenance, building maintenance, landscaping and
structural repair, building insurance relating to the Stores, building alarm
service and alarm service maintenance, and rental for furniture, fixtures and
equipment.

         4.2     Payment of Expenses. All Expenses shall be paid by Agent to or
on behalf of Merchant by each Wednesday for the prior week's (i.e. Sunday
through Saturday) Expenses.

         Section 5.       Inventory Valuation; Merchandise.

         5.1     Inventory Taking. Merchant and Agent shall cause to be taken a
Retail Price physical inventory of the Merchandise located in the Stores on the
Inventory Date (the "Inventory Taking") commencing at the close of business at
each of the Stores on a date mutually agreed upon by Agent and Merchant, but in
no event later than May 8, 1997 (the date of the Inventory Taking at each Store
being the "Inventory Date" for such Store). Merchant and Agent shall jointly
employ RGIS to conduct the Inventory Taking. Agent shall be responsible for 50%
of the costs and fees of the inventory taking service as an Expense hereunder,
and the balance of such fees and expenses shall be paid by Merchant. Except as
provided in the immediately preceding sentence, Merchant and Agent shall each
bear their respective costs and expenses relative to the Inventory Taking.
Merchant and Agent shall each have representatives present during





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the Inventory Taking, and shall each have the right to review and verify the
listing and tabulation of the inventory taking service. Merchant agrees that
during the conduct of the Inventory Taking at each Store such Store shall be
closed to the public and no sales or other transactions shall be conducted.

         Within twenty-four hours of the delivery of Additional Merchandise to
the Stores, Merchant and Agent shall, pursuant to mutually acceptable
procedures, jointly count and verify the Retail Price of such Additional
Merchandise for purposes of calculating the Guaranteed Amount with respect to
such Additional Merchandise.

         5.2     Merchandise Subject to this Agreement.

         (a)     For purposes of this Agreement, "Merchandise" shall mean: (i)
all finished goods inventory owned by Merchant and located at the Stores as of
the Sale Commencement Date, including: (A) Defective Merchandise; (B) Layaway
Merchandise; and (C) Additional Merchandise. Notwithstanding the foregoing,
"Merchandise" shall not include: (1) goods in Merchant's leased fragrance
department; (2) goods which belong to sublesees, licensees or concessionaires
of Merchant; (3) goods held by Merchant on memo, on consignment, or as bailee;
(4) defective goods for which Merchant and Agent cannot agree upon a Retail
Price; and (5) furnishings, trade fixtures and improvements to real property
which are located in the Stores (collectively, "FF&E");

         (b)     As used in this Agreement, the following terms have the
respective meanings set forth below:

         "Defective Merchandise" means any item of Merchandise agreed upon and
identified by Agent and Merchant during the Inventory Taking as defective or
otherwise not salable in the ordinary course because it or its packaging is,
damaged, worn, scratched, broken, or affected by other similar defects
rendering it not first quality, and as to which Agent and Merchant mutually
agree on its value to define its Retail Price. Sample Merchandise, irregular
Merchandise clearly marked and sold by Merchant in the ordinary course of
business and Merchandise on display shall not per se be deemed to be Defective
Merchandise so long as the original packaging for such Merchandise is intact
and available if needed to make the item salable in the ordinary course.

         "Layaway Merchandise" means all items of Merchandise held at the
Stores on layaway, in each case pursuant to binding agreements, invoices or
other legal documentation, where (A) the documentation is clear as to the name,
address, telephone number, date of last payment and balance due from the
customer, and (B) the goods subject to layaway are fully described in the
documentation.





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<PAGE>   6
         5.3     Valuation. For purposes of this Agreement, "Retail Price"
shall mean, with respect to each item of Merchandise, the lowest ticketed
retail price for each item of Merchandise after the discounts referred to in
Section 11.1(g) hereof, except for:

         (i)     Defective Merchandise, where "Retail Price" shall mean such
value as to which Agent and Merchant shall agree.

         The Retail Price of any item of Merchandise shall exclude all Sales
Taxes, and Merchant represents that the ticketed prices of items of Merchandise
at the Stores do not and shall not include any Sales Taxes. If an item of
Merchandise has more than one ticketed price, or if multiple items of the same
SKU are marked at different prices, the lowest ticketed price on any such item
shall prevail for such item or for all such items within the same SKU, as the
case may be, unless it is clear that the lowest ticket price was mismarked and
infrequent.

         5.4     Excluded Goods. Merchant shall retain all responsibility for
any goods not included as "Merchandise" hereunder.

         Section 6.       Sale Term.

         6.1     Term. Subject to satisfaction of the conditions precedent set
forth in Section 10 hereof, the Sale shall commence at each Store no later than
May 8, 1997 ("Sale Commencement Date"). Agent shall complete the Sale on
approximately July 31, 1997, unless the Sale is extended by mutual written
agreement of Agent and Merchant (the "Sale Termination Date"; the period from
the Sale Commencement date to the Sale Termination Date as to each Store being
the "Sale Term"). Agent may, in its discretion, terminate the Sale at any Store
at any time within the Sale Term (i) upon the occurrence of an Event of Default
by Merchant, or (ii) upon not less than five (5) days' prior written notice to
Merchant.

         6.2     Vacating the Stores. Agent shall vacate the Stores on or
before the Sale Termination Date, at which time Agent shall surrender and
deliver the Store promises and Store keys to Merchant. Agent agrees to leave
the Stores in "broom clean" condition, ordinary wear and tear excepted. All
assets of Merchant used by Agent in the conduct of the Sale (e.g. FF&E,
supplies, etc.) shall be returned by Agent to Merchant at the end of the Sale
Term to the extent the same have not been used in the conduct of the Sale or
have not been otherwise disposed of through no fault of Agent.

         Section 7.       Sale Proceeds.

         7.1     Proceeds. For purposes of this Agreement, "Proceeds" shall
mean the aggregate of: (a) the total amount (in U.S. dollars) of all sales of
Merchandise made under this Agreement, exclusive of (i) Sales Taxes, (ii)
credit card and bankcard fees and bankcard fees and chargebacks, and (iii)
returns, allowances and customer credits;





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<PAGE>   7
and (b) all proceeds of Merchant's insurance for loss or damage to Merchandise
or loss of cash arising from events occurring during the Sale Term.

         7.2     Deposit of Proceeds. All cash Proceeds shall be deposited by
Agent in Agency Accounts established by Agent ("Agency Accounts"). Agent may in
its discretion designate new or existing accounts of Agent or Merchant as the
Agency Accounts, provided that such accounts are dedicated solely to the
deposit of Proceeds and the disbursement of Expenses and amounts payable to
Merchant pursuant to Section 3 hereof. Agent shall exercise sole signatory
authority and control with respect to the Agency Accounts. Merchant shall
promptly upon Agent's request execute and deliver all necessary documents to
open and maintain the Agency Accounts.

         7.3     Credit Card Proceeds. Agent shall have the right (but not the
obligation) to use Merchant's credit card facilities (including Merchant's
credit card terminals and processor(s), credit card processor coding, merchant
identification numbers and existing bank accounts) for credit card Proceeds. In
the event that Agent elects so to use Merchant's credit card facilities,
Merchant shall process credit card transactions on behalf of Agent, applying
customary practices and procedures. Without limiting the foregoing, Merchant
shall cooperate with Agent to down-load data from all credit card terminals
each day during the Sale Term and to effect settlement with Merchant's credit
card processor(s), and shall take such other actions necessary to process
credit card transactions under Merchant's merchant identification numbers. All
credit card Proceeds will constitute the property of Agent and shall be held by
Merchant, In Trust, for Agent, free and clear of all liens, claims or
encumbrances of Merchant or its creditors. Merchant shall deposit all credit
card Proceeds into a segregated designated account and shall transfer such
Proceeds to Agent daily (on the date received by Merchant if received prior to
12:00 noon, or otherwise within one (1) business day) by wire transfer of
immediately available funds. At Agent's request, Merchant shall cooperate with
Agent to establish merchant identification numbers under Agent's name and to
process all credit card Proceeds for Agent's account. Merchant shall not be
responsible for and Agent shall pay as an Expense hereunder, all credit card
fees, charges, and chargebacks related to the Sale, whether received during or
after the Sale Term.

         Section 8.       Conduct of the Sale.

         8.1     Rights of Agent. Agent shall be permitted to, in its sole
discretion, conduct the Sale (a) in the Store located in Shreveport, Louisiana
as a "store closing", or similar sale throughout the Sale Term, (b) in the
Stores located in Baton Rouge, Louisiana and Mobile, Alabama as a "chainwide
inventory liquidation" or similar theme sale. With the consent of Merchant,
Agent may conduct and advertise the Sale under any other sale theme at any time
during the Sale Term. Agent shall conduct the Sale in the name of and on behalf
of Merchant in a commercially reasonable manner and in compliance with the
terms of this Agreement. In addition to any other rights granted to Agent
hereunder, in conducting the Sale Agent, in the exercise of its sole
discretion, shall have the right:





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         (a)     to establish and implement advertising and promotion programs
consistent with the Sale themes described above provided, however, that Agent
shall deliver copies of all advertising materials for the Sale to Merchant,
Attn: Chuck Siegel, who shall have the right, within twenty-four hours of such
delivery, to approve such materials (which approval shall not be unreasonably
withhold or delayed); and provided further that the failure of such designee to
reasonably respond to any request for approval within twenty-four (24) hours
shall be deemed to be approval of the subject materials;

         (b)     to establish Sale prices and Store hours which are consistent
with the terms of applicable leases;

         (c)     to use without charge during the Sale Term all FF&E,
advertising materials, bank accounts, Store-level customer lists and mailing
lists, computer hardware and software, existing supplies located at the Stores,
intangible assets (including Merchant's name, logo and tax identification
numbers), Store keys, case keys, security codes, and safe and lock combinations
required to gain access to and operate the Stores, and any other assets of
Merchant located at the Stores (whether owned, leased, or licensed);

         (d)     to transfer Merchandise between Stores;

         (e)     to use without charge (i) Merchant's central office
facilities, central administrative services and personnel to process payroll,
perform MIS and provide other central office services necessary for the Sale,
and (ii) one (1) office located at Merchant's central office facility.

         8.2     Terms of Sales to Customers. All sales of Merchandise will be
"final sales" and "as is", and all advertisements and sales receipts will
reflect the same. Agent shall not warrant the Merchandise in any manner, but
will, to the extent legally permissible, pass on all manufacturer's warranties
to customers. All sales will be made only for cash and by nationally recognized
bank credit cards. Agent will not accept Merchant's gift certificates, Store
credits, due bills and rain checks issued by Merchant prior to the Sale
Commencement Date.

         8.3     Sales Taxes. During the Sale Term, all sales, excise, gross
receipts and other taxes attributable to sales of Merchandise (other than taxes
on income) payable to any taxing authority having jurisdiction (collectively,
"Sales Taxes") shall be added to the sales price of Merchandise and collected
by Agent at the time of sale. Agent shall draw checks on the Agency Accounts
payable to the applicable taxing authorities in the amount so collected, which
shall be delivered together with accompanying schedules to Merchant, In Trust,
on a timely basis for payment of Sales Taxes when due. Merchant





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shall promptly pay all Sales Taxes and file all applicable reports and
documents required by the applicable taxing authorities. Merchant will be given
access to the compilation of gross receipts for verification of all such tax
collections.

         8.4     Supplies. Agent shall have the right to use all existing
supplies (e.g. boxes, bags, twine) located at the Stores at no charge to Agent.
In the event that additional supplies are required in any of the Stores during
the Sale, Merchant agrees to promptly provide the same to Agent, if available,
for which Agent shall reimburse Merchant at Merchant's cost therefor. Supplies
have not been since April 1, 1997, and shall not be prior to the Sale
Commencement Date, transferred by Merchant between or from the Stores so as to
alter the mix or quantity of supplies at the Stores from that existing on such
date, other than in the ordinary course of business.

         8.5     Return of Merchandise. During the Sale Term Agent shall accept
returns of Merchandise sold by Merchant from the Stores prior to the Sale
Commencement Date ("Returned Merchandise"), provided such Merchandise is
accompanied by the original Store receipt and such return is otherwise in
accordance with the applicable return policy for such Store in effect prior to
the Sale Commencement Date. Merchant shall reimburse Agent in cash within five
(5) days after Agent's request for the amount of any Store credit or refund
given to any customer in respect of Returned Merchandise.  To the extent that
Returned Merchandise is salable as first-quality merchandise, it shall be
included in Merchandise and valued at the Retail Price applicable to such item
multiplied by the compliment of the prevailing Sale discount at the time of the
return. If the Returned Merchandise constitutes Defective Merchandise it shall
be included in Merchandise and assigned a Retail Price in accordance with the
applicable provisions of Section 5.3 above. Subject to Merchant's reimbursement
to Agent of the amount of any Store credit or refund granted for any Returned
Merchandise, the aggregate Retail Price of the Merchandise shall be increased
by the Retail Price of any Returned Merchandise included in Merchandise
(determined in accordance with this Section 8.5), and the Guaranteed Amount
shall be adjusted accordingly.  Any Returned Merchandise which is not included
in Merchandise shall be disposed of by Agent in accordance with instructions
received from Merchant or, in the absence of such instructions, returned to
Merchant at the end of the Sale Term. Any increases in the Guaranteed Amount
and any reimbursements due to Agent as a result of Returned Merchandise shall
be accounted for an paid by Agent and/or Merchant, as applicable, on a weekly
basis.

         8.6     Layaway Merchandise. Promptly after the execution of this
Agreement, Merchant shall notify each customer for which Merchant holds Layaway
Merchandise of the Sale and request such customers to pick up and pay for the
applicable item(s) within such period as designated by the applicable layaway
agreement with the customer. Subject to applicable law, any Layaway,
Merchandise unclaimed by customers by such date shall be returned to the
Store's sale floor as Merchandise for sale by Agent, and the Guaranteed Amount
shall be adjusted to account for such items in the manner prescribed for
Returned Merchandise in Section 8.5 above. Agent shall





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administer all Layaway Merchandise in accordance with the documents and
agreements relating thereto, provisions of applicable law, and Merchant's
historic policies provided to Agent. In the event that Agent is required to
issue refunds to customers in respect of Layaway Merchandise, Merchant shall
reimburse Agent in cash within five (5) days after Agent's request for all such
amounts. At the end of the Sale Term, Agent shall transfer responsibility for
remaining items of Layaway Merchandise back to Merchant after appropriate and
legally required communications to customers and reconciliation between Agent
and Merchant.

         8.7     Force Majeure. If any casualty or act of God prevents or
substantially inhibits the conduct of business in the ordinary course at any
Store, such Store and the Merchandise located at such Store shall be eliminated
from the Sale and considered to be deleted from this Agreement as of the date
of such event, and Agent and Merchant shall have no further rights or
obligations hereunder with respect thereto; provided, however, that (i) the
proceeds of any insurance attributable to such Merchandise or business
interruption shall constitute Proceeds hereunder, and (ii) the Guaranteed
Amount shall be reduced to account for any Merchandise eliminated from the Sale
which is not the subject of insurance proceeds, and Merchant shall reimburse
Agent for the amount the Guaranteed Amount is so reduced prior to the end of
the Sale Term.

         Section 9.       Employee Matters.

         9.1     Merchant's Employees. Agent may use Merchant's employees in
the conduct of the Sale to the extent Agent in its sole discretion deems
expedient, and Agent may select and schedule the number and type of Merchant's
employees required for the Sale. Agent shall identify any such employees to be
used in connection with the Sale (each such employee, a "Retained Employee")
prior to the Sale Commencement Date. Retained Employees shall at all times
remain employees of Merchant, and shall not be considered or deemed to be
employees of Agent. Merchant and Agent agree that, except to the extent that
wages and benefits of Retained Employees constitute Expenses hereunder, nothing
contained in this Agreement and none of Agent's actions taken in respect of the
Sale shall be deemed to constitute an assumption by Agent of any of Merchant's
obligations relating to any of Merchant's employees including, without
limitation, Excluded Benefits, Worker Adjustment Retraining Notification Act
("WARN Act") claims and other termination type claims and obligations, or any
other amounts required to be paid by statute or law; nor shall Agent become
liable under any collective bargaining or employment agreement or be deemed a
joint or successor employer with respect to such employees.  Merchant shall
not, without Agent's prior written consent, raise the salary or wages or
increase the benefits for, or pay any bonuses or make any other extraordinary
payments to, any of its employees in anticipation of the Sale or prior to the
Sale Termination Date. Merchant has not terminated and shall not during the
Sale Term terminate any employee benefits or benefit programs.





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         9.2     Termination of Employees. Agent may in its discretion stop
using any Retained Employee at any time during the Sale. In the event of
termination of any Retained Employee, Agent will use all reasonable efforts to
notify Merchant at least five (5) days prior thereto, except for termination
"for cause" (such as dishonesty, fraud or breach of employee duties), in which
event no prior notice to Merchant shall be required, provided Agent shall
notify Merchant as soon as practicable after such termination. From and after
the date of this Agreement and until the Sale Termination Date, Merchant shall
not transfer or dismiss employees of the Stores except "for cause" without
Agent's prior consent.

         9.3     Payroll Matters. During the Sale Term Merchant shall process
the base payroll for all Retained Employees. Each Wednesday during the Sale
Term Agent shall transfer from the Agency Accounts to Merchant's payroll
accounts an amount equal to the base payroll for Retained Employees plus
related payroll taxes, worker's compensation and benefits for such week which
constitute Expenses hereunder.

         9.4     Employee Retention Bonuses. In Agent's sole discretion
Proceeds may be used to pay, as an Expense, retention bonuses ("Retention
Bonuses") (which bonuses shall be inclusive of payroll taxes but as to which no
benefits shall be payable) to Retained Employees who do not voluntarily leave
employment and are not terminated "for cause". Such Retention Bonuses shall be
payable within thirty (30) days after the Sale Termination Date, and shall be
processed through Merchant's payroll system.

         Section 10. Conditions Precedent. The willingness of Agent and
Merchant to enter into the transactions contemplated under this Agreement are
directly conditioned upon the satisfaction of the following conditions at the
time or during the time periods indicated, unless specifically waived in
writing by the applicable party:

         (a)     The Inventory Taking shall have been completed at each of the
Stores on or before May 8, 1997 and the inventory taking service shall have
issued its final audited report of the Merchandise to Merchant and Agent on or
before May 10, 1997.

         (b)     All representations and warranties of Merchant and Agent
hereunder shall be true and correct in all material respects and no Event of
Default shall have occurred at and as of the date hereof and as of the Sale
Commencement Date.

         (c)     Merchant shall have provided Agent reasonable access at
Merchant's offices to all pricing and cost files, computer hardware, software
and data filed, inter-Store transfer logs, markdown schedules, invoices, style
runs and all other documents relative to the price, mix and quantities of
inventory located at the Stores.

         (d)     Agent has had the opportunity to inspect the Stores, and the
inventory on the date immediately preceding the Inventory Date.





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         (e)     Merchant shall have obtained any necessary landlord consents
and, with the assistance of Agent, shall have obtained all permits and licenses
necessary to conduct the Sale; provided however, that pursuant to Section
11.1(x) hereof, Merchant warrants that no landlord consents are necessary to
conduct the Sale pursuant to the terms of this Agreement.

         Section 11.      Representations, Warranties and Covenants.

         11.1    Merchant's Representations, Warranties and Covenants. Merchant
hereby represents, warrants and covenants in favor of Agent as follows:

         (a)     Merchant (i) is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation stated
above; (ii) has all requisite corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as presently
conducted; and (iii) is and during the Sale Term will continue to be duly
authorized and qualified as a foreign corporation to do business and in good
standing in each jurisdiction where the nature of its business or properties
requires such qualification, including all jurisdictions in which the Stores
are located.

         (b)     Merchant has the right, power and authority to execute and
deliver this Agreement and each other document and agreement contemplated
hereby (collectively, together with this Agreement, the "Agency Documents") and
to perform fully its obligations thereunder. Merchant has taken all necessary
actions required to authorize the execution, deliver and performance of the
Agency Documents, and no further consent or approval is required for Merchant
to enter into and deliver the Agency Documents, to perform its obligations
thereunder, and to consummate the Sale. Each of the Agency Documents has been
duly executed and delivered by Merchant and constitutes the legal, valid and
binding obligation of Merchant enforceable in accordance with its terms. No
court order or decree of any federal, state or local governmental authority or
regulatory body is in effect that would prevent or impair, or is required for
Merchant's consummation of, the transactions contemplated by this Agreement,
and no consent of any third party which has not been obtained is required
therefor. No contract or other agreement to which Merchant is a party of by
which the Merchant is otherwise bound will prevent or impair the consummation
of the Sale and the other transactions contemplated by this Agreement.

         (c)     Since March 1, 1997, Merchant (i) has operated the Stores in
the ordinary course of business consistent with historical operations, and (ii)
has not conducted any promotions or advertised sales at the Stores, except
promotions and sales in the ordinary course of business consistent with
historic promotions and sales for comparable periods last year.

         (d)     Merchant owns and will own at all times during the Sale Term,
good and marketable title to all of the Merchandise free and clear of all
liens, claims and





                                       12
<PAGE>   13
encumbrances of any nature except for the liens of Congress Financial
Corporation which shall be assigned to Agent or released upon payment of the
Guaranteed Amount. Merchant shall not create, incur, assume or suffer to exist
any security interest, lien or other charge or encumbrance upon or with respect
to any of the Merchandise or the Proceeds, except for the lien in favor of the
Agent granted pursuant to Section 15 below.

         (e)     Merchant has maintained its pricing files in the ordinary
course of business, and prices charged to the public for goods (whether
in-Store, by advertisement or otherwise) are the same in all material respects
set forth in such pricing files for the periods indicated therein, except for
the promotions and sales described in Section 11.1(c).  All pricing files and
records since January 1, 1997 relative to the Merchandise have been made
available to Agent. All such pricing files and records are true and accurate in
all material respects as to the actual cost to Merchant for purchasing the
goods referred to therein and as to the selling price to the public for such
goods as of the dates and for the periods indicated therein. There are no
material files, logs, schedules, data or other documents in Merchant's
possession or control relative to the price, mix and quantities of inventory
located at the Stores which have not been or will not be made available to
Agent.

         (f)     As of the Inventory Date, the levels of goods (as to quantity)
and the mix of goods (as to type, category, style, brand and description) at
the Stores are as heretofore disclosed to Agent.

         (g)     As of the Inventory Date, all markdowns on ladies goods
located at the Stores will have been taken on a basis consistent with
Merchant's historical practices and policies and pursuant to the markdown
schedule provided by Merchant to Agent. Merchant shall complete and take
markdowns for men's and children's goods and an additional markdown on certain
ladies goods within ten (10) days of the Sale Commencement Date. Such markdowns
shall be consistent with the markdowns at Merchant's remaining store locations
and with the markdown schedule provided to Agent. The Retail Price of the
Additional Merchandise shall reflect all applicable markdowns.

         (h)     Merchant has not, and shall not up to the Sale Commencement
Date, marked up or raised the price of any items of Merchandise, or removed or
altered any tickets or any indicia of clearance merchandise, except in the
ordinary course of business.

         (i)     Merchant shall ticket or mark all items of inventory received
at the Stores prior to the Sale Commencement Date in a manner consistent with
similar inventory located at the Stores and in accordance with Merchant's
historic practices and policies relative to pricing and marking inventory.





                                       13
<PAGE>   14
         (j)     All point of sale activity at the Stores has occurred and will
occur up to the Sale Commencement Date in the ordinary course of business and
consistent with promotions described in Section 11.1(c).

         (k)     Merchant has not and shall not purchase or transfer to or from
the Stores any inventory outside the ordinary course in anticipation of the
Sale or of the Inventory Taking.

         (l)     As of the Sale Commencement Date, inventory constituting
Merchandise located at the Stores shall be approximately $1,900,000 at the
Retail Price.

         (m)     Within fifteen (15) days of the Sale Commencement Date,
Merchant will transfer from its remaining store locations or its warehouse, no
more than $2,600,000 of additional merchandise (at Retail Price) to the Stores
to be included in the Sale (the "Additional Merchandise"). The Additional
Merchandise shall be of the same type and quality as currently in the Stores
and the Additional Merchandise shall not alter the mix or balance of the
Merchandise at the Stores.

         (n)     No action, arbitration, suit, notice, or legal, administrative
or other proceeding before any court or governmental body has been instituted
by or against Merchant, or has been settled or resolved, or to Merchant's
knowledge, is threatened against or affects Merchant, relative to Merchant's
business or properties, or which questions the validity of this Agreement, or
that if adversely determined, would adversely affect the conduct of the Sale.

         (o)     Merchant covenants to continue to operate the Stores in the
ordinary course of business from the date of this Agreement to the Sale
Commencement Date, (i) selling inventory during such period at customary
prices, (ii) not promoting or advertising any sales or in-Store promotions
(including POS promotions) to the public (iii) not returning inventory to
vendors and not transferring inventory or supplies between or among Stores, and
(iv) not making any management personnel moves or changes at the Stores without
Agent's prior written consent.

         (p)     To the best of Merchant's knowledge, all Merchandise is in
compliance with all applicable federal, state, or local product safety laws,
rules and standards. Merchant shall provide Agent with its historic policies
and practices regarding product recalls prior to the Inventory taking.

         (q)     No event of default or event which with the giving of notice,
the passage of time, or both has occurred on the part of Merchant under any
Store lease, reciprocal easement agreement or similar agreement relating to the
occupancy of the Stores. Through the Sale Term, Agent shall have the right to
the uninterrupted use and occupancy of, and peaceful and quiet possession of,
each of the Stores, the assets currently located at the Stores, and the
services provided at the Stores. Merchant shall throughout the Sale Term
maintain in good working order, condition and repair, at its





                                       14
<PAGE>   15
sole expense, all cash registers, heating systems, air condition systems,
elevators, escalators, Store alarm systems, and all other mechanical devices
used in the ordinary course of operation of the Stores.

         (r)     Merchant has paid and will continue to pay throughout the Sale
Term, (i) all self-insured or Merchant funded employee benefit programs for
employees, including health and medical benefits and insurance and all proper
claims made or to be made in accordance with such programs, (ii) all casualty,
liability, workers' compensation and other insurance premiums, (iii) all
utilities provided to the Stores, and (iv) all applicable taxes.

         (s)     Merchant has not and shall not throughout the Sale Term take
any actions the result of which is to increase the cost of operating the Sale,
including, without limitation, increasing salaries or other amounts payable to
employees.

         (t)     Merchant is not a party to any collective bargaining
agreements with its employees at the Stores and, to the best of Merchant's
knowledge, no labor unions represent Merchant's employees at the Stores.

         (u)     As of, the date of this Agreement, Merchant is current in the
payment of all rent, telephone, utilities, taxes, insurance and advertising
liabilities relating to the Stores. Merchant agrees that in the event that
Agent receives notice that any such liability is overdue or unpaid, or Agent is
unable to advertise the Sale with any newspapers, magazines, radio or
television stations or other media providers which target or serve the market
areas of the Stores or is unable to obtain Merchant's contract rate with any
such provider as a result of Merchant's failure to pay any outstanding balances
with such providers, Merchant shall immediately pay such balances in full. In
the event that Merchant shall fail to pay such balances in full within three
business days after notice by Agent, Agent may in its discretion pay any such
balance and offset the amount paid from the Guaranteed Amount, Expenses, the
Recovery Amount, or any other amounts due to Merchant under this Agreement.

         (v)     All information provided by Merchant to Agent in the course of
Agent's due diligence and preparation and negotiation of this Agreement
(including information as to the Store inventories and operating expenses) is
as of the date hereof and shall remain true and accurate in all material
respects.

         (w)     Merchant shall cooperate with Agent and not compete with Agent
or the Sale.

         (x)     No landlord consents are necessary to conduct the Sale at the
Stores pursuant to the terms of this Agreement.

         11.2    Agent's Representations and Warranties. Agent hereby
represents, warrants and covenants in favor of Merchant as follows:





                                       15
<PAGE>   16
         (a)     Agent (i) is a joint venture duly and validly existing and in
good standing under the laws of the State of Illinois; (ii) has all requisite
power and authority to consummate the transactions contemplated hereby; and
(iii) is and during the Sale Term will continue to be, duly authorized and
qualified to do business and in good standing in each jurisdiction where the
nature of its business or properties requires such qualification.

         (b)     Agent has the right, power and authority to execute and
deliver each of the Agency Documents to which it is a party and to perform
fully its obligations thereunder. Agent has taken all necessary actions
required to authorize the execution, delivery and performance of the Agency
Documents, and no further consent or approval is required on the part of Agent
for Agent to enter into and deliver the Agency Documents and to perform its
obligations thereunder. Each of the Agency Documents has been duly executed and
delivered by the Agent and, subject to the issuance of the Order, constitutes
the legal, valid and binding obligation of Agent enforceable in accordance with
its terms. No court order or decree of any federal, state or local governmental
authority or regulatory body is in effect that would prevent or impair or is
required for Agent's consummation of the transactions contemplated by this
Agreement, and no consent of any third party which has not been obtained is
required therefor, except for the Court. No contract or other agreement to
which Agent is a party or by which Agent is otherwise bound will prevent or
impair the consummation of the transactions contemplated by this Agreement.

         (c)     No action, arbitration, suit, notice, or legal administrative
or other proceeding before any court or governmental body has been instituted
by or against Agent, or has been settled or resolved, or to Agent's knowledge,
has been threatened against or affects Agent, which questions the action taken
or to be taken by Agent in connection with this Agreement, or which if
adversely determined, would have a material adverse effect upon Agent's ability
to perform its obligations under this Agreement.

         Section 12.      Insurance.

         12.1    Merchant's Liability Insurance. Merchant shall continue at its
cost and expense until the Sale Termination Date, in such amounts as it
currently has in effect, all of its liability insurance policies including, but
not limited to, products liability, comprehensive public liability, auto
liability and umbrella liability insurance, covering injuries to persons and
property in, or in connection with Merchant's operation of the Stores, and
shall cause Agent to be named an additional named insured with respect to all
such policies. Prior to the Sale Commencement Date, Merchant shall deliver to
Agent certificates evidencing such insurance setting forth the duration thereof
and naming Agent as an additional named insured, in form reasonably
satisfactory to Agent. All such policies shall require at least thirty (30)
days prior notice to Agent of cancellation, non-renewal or material change. In
the event of a claim under any such





                                       16
<PAGE>   17
policies Merchant shall be responsible for the payment of all deductibles,
retention's or self-insured amounts thereunder, unless it is determined that
liability arose by reason of the wrongful acts or omissions or negligence of
Agent, or Agent's employees, independent contractors or agents (other than
Merchant's employees).

         12.2    Merchant's Casualty Insurance. Merchant will provide
throughout the Sale Term, at Agent's cost as an Expense hereunder, fire, flood,
theft and extended coverage casualty insurance covering the Merchandise in a
total amount equal to no less than Merchant's cost thereof. From and after the
date of this Agreement until the Sale Termination Date, all such policies will
name Agent as loss payee. In the event of a loss to the Merchandise on or after
the date of this Agreement, the proceeds of such insurance attributable to the
Merchandise plus any self insurance amounts and the amount of any deductible
(which amounts shall be paid by Merchant), shall constitute Proceeds hereunder
and shall be paid to Agent. In the event of such a loss Agent shall have the
sole right to adjust the loss with the insurer. Prior to the Sale Commencement
Date, Merchant shall deliver to Agent certificates evidencing such insurance
setting forth the duration thereof and naming Agent as loss payee, in form and
substance reasonably satisfactory to Agent. All such policies shall require at
least thirty (30) days prior notice to Agent of cancellation, non-renewal or
material change. Merchant shall not make any change in the amount of any
deductibles or self insurance amounts prior to the Sale Termination Date
without Agent's prior written consent.

         12.3    Agent's Insurance. Agent shall maintain at Agent's cost and
expense throughout the Sale Term, in such amounts as it currently has in
effect, comprehensive public liability and automobile liability insurance
policies covering injuries to persons and property in or in connection with
Agent's agency at the Stores, and shall cause Merchant to be named an
additional insured with respect to such policies. Prior to the Sale
Commencement Date, Agent shall deliver to Merchant certificates evidencing such
insurance policies setting forth the duration thereof and naming Merchant as an
additional insured, in form and substance reasonably satisfactory to Merchant.
In the event of a claim under any such policies Agent shall be responsible for
the payment of all deductibles, retention's or self-insured amounts thereunder,
unless it is determined that liability arose by reason of the wrongful acts or
omissions or negligence of Merchant or Merchant's employees, independent
contractors or agents (other than Agent or Agent's employees, agents or
independent contractors).

         12.4    Worker's Compensation Insurance. Merchant shall at all times
during the Sale Term maintain in full force and effect worker's compensation
insurance (including employer liability insurance) covering all Retained
Employees in compliance with all statutory requirements. Prior to the Sale
Commencement Date, Merchant shall deliver to Agent a certificate of its
insurance broker or carrier evidencing such insurance.

         12.5    Risk of Loss. Without limiting any other provision of this
Agreement, Merchant acknowledges that Agent is conducting the Sale on behalf of
Merchant solely in the capacity of an agent, and that in such capacity (i)
Agent shall not be deemed to





                                       17
<PAGE>   18
be in possession or control of the Stores or the assets located therein or
associated therewith, or of Merchant's employees located at the Stores, and
(ii) except as expressly provided in this Agreement, Agent does not assume any
of Merchant's obligations or liabilities with respect to any of the foregoing.
Merchant and Agent agree that Merchant shall bear all responsibility for
liability claims of customers, employees and other persons arising from events
occurring at the Stores during and after the Sale Term, except to the extent
any such claim arises directly from the acts or omissions of Agent, or its
supervisors or employees located at the Stores (an "Agent Claim"). In the event
of any such liability claim other than an Agent Claim, Merchant shall
administer such claim and shall present such claim to Merchant's liability
insurance carrier in accordance with Merchant's historic policies and
procedures, and shall provide a copy of the initial documentation relating to
such claim to Agent. To the extent that Merchant and Agent agree that a claim
constitutes an Agent Claim, Agent shall administer such claim and shall present
such claim to its liability insurance carrier, and shall provide a copy of the
initial documentation relating to such claim to Merchant. In the event that
Merchant and Agent cannot agree whether a claim constitutes an Agent Claim,
each party shall present the claim to its own liability insurance carrier, and
a copy of the initial claim documentation shall be delivered to the other
party.

         Section 13.      Indemnification.

         13.1    Merchant Indemnification. Merchant shall indemnify and hold
Agent and its officers, directors, employees, agents and independent
contractors (collectively, "Agent Indemnified Parties") harmless from and
against all claims, demands, penalties, losses, liability or damage, including,
without limitation, reasonable attorneys' fees and expenses, directly or
indirectly asserted against, resulting from, or related to:

         (i)     Merchant's material breach of or failure to comply with any of
its agreements, covenants, representations or warranties contains in any Agency
Document;

         (ii)    any failure of Merchant to pay to its employees any wages,
salaries or benefits due to such employees during the Sale Term;

         (iii)   subject to Agent's compliance with its obligations under
Section 8.3 hereof, any failure by Merchant to pay any Sales Taxes to the
proper taxing authorities or to properly file with any taxing authorities any
reports or documents required by applicable law to be filed in respect thereof;

         (iv)    any consumer warranty or products liability claims relating to
Merchandise or Merchant Consignment Goods;

         (v)     any liability or other claims asserted by customers, any of
Merchant's employees, or any other person against any Agent Indemnified Party
(including, without





                                       18
<PAGE>   19
limitation, claims by employees arising under collective bargaining agreements,
worker's compensation or under the WARN Act), except for Agent Claims; and

         (vi)    the gross negligence or willful misconduct of Merchant or any
of its officers, directors, employees, agents or representatives.

         13.2    Agent Indemnification. Agent shall indemnify and hold Merchant
and its officers, directors, employees, agents and representatives harmless
from and against all claims, demands, penalties, losses, liability or damage,
including, without limitation, reasonable attorneys' fees and expenses,
directly or indirectly asserted against, resulting from, or related to:

         (i)     Agent's material breach of or failure to comply with any of
its agreements, covenants, representations or warranties contained in any
Agency Document;

         (ii)    any harassment or any other unlawful, tortuous or otherwise
actionable treatment of any employees or agents of Merchant by Agent or any of
its representatives;

         (iii)   any claims by any party engaged by Agent as an employee or
independent contractor arising out of such employment;

         (iv)    any Agent Claims; and

         (v)     the gross negligence or willful misconduct of Agent or any of
its officer, directors, employees, agents or representatives.

         Section 14.      Defaults. The following shall constitute "Events of
Default" hereunder:

         (a)     Merchant's or Agent's failure to perform any of their
respective material obligations hereunder, which failure shall continue uncured
seven (7) days after written notice thereof to the defaulting party; or

         (b)     Any representation or warranty made by Merchant or Agent
proves untrue in any material respect as of the date made; or

         (c)     The Sale is terminated or materially interrupted or impaired
at a Store for any reason other than (i) an Event of Default by Agent, or (ii)
any other material breach or action by Agent not authorized hereunder.

         In the event of an Event of Default, the non-defaulting party, or in
the case of an Event of Default under Section 14(c), the Agent may, in its
discretion, elect to terminate this Agreement upon two (2) business days'
written notice to the other party.





                                       19
<PAGE>   20
         Section 15.      Security Interest. In consideration of Agent's
payment of the Guaranteed Amount, the Recovery Amount, if any, and the
Expenses, and the provision of services hereunder to Merchant, Merchant hereby
grants to Agent a first priority security interest in and lien upon the
Merchandise and the Proceeds to secure all obligations of Merchant to Agent
hereunder. Merchant shall execute all such documents and take all such other
actions as are reasonably required to perfect and maintain such security
interest as a valid and perfected first priority security interest.

         Section 16.      Agent's Goods. Agent shall have the right to add
additional goods owned by or cosigned to Agent to the Sale during the Sale Term
("Agent's Goods"). Merchant shall be entitled to and receive a commission equal
to 10% of the Proceeds from the Sale of Agent's Goods at the Stores during the
Sale Term.

         Section 17.      Sale of FF&E. If requested by Merchant, Agent shall
advertise in the context of advertising for the Sale that FF&E at the Stores
are for sale, and shall contact and solicit known purchasers and dealers of
furniture and fixtures. Merchant shall notify Agent in writing if any such FF&E
are to be excluded from sale and/or if terms and conditions of sale are to be
set or restricted in any manner. In consideration of providing such services,
Agent shall retain 10% of receipts (net of sales taxes) from all sales or other
dispositions of FF&E. Agent shall have no liability to Merchant for its failure
to sell any or all of the FF&E. Agent may, at its option, at any time during
the Sale Term offer to purchase the FF&E.

         Section 18.      Miscellaneous.

         18.1    Notices.         All notices and communications provided for
pursuant to this Agreement shall be in writing, and sent by hand, by facsimile,
or a recognized overnight delivery service as follows:

         If to the Agent:         Hilco/Great American Group
                                  5 Revere Drive, Suite 206
                                  Northbrook, IL 60062
                                  Attn:    Harvey M. Yellen
                                           Executive Vice President
                                           Benjamin L. Nortman
                                           Vice President/General Counsel
                                  Telecopy No. (847)509-1150


         If to the Merchant:      Solo Serve Corporation
                                  1610 Cornerway Blvd.
                                  San Antonio, Texas 78219
                                  Attn:    Chuck Siegel
                                  Attn:    Ross Bacon





                                       20
<PAGE>   21
         18.2    Governing Law; Consent to Jurisdiction. This Agreement shall
be governed and construed in accordance with the laws of the State of Texas
without regard to conflict of laws principles thereof. The parties hereto agree
that any legal action or proceeding arising out of or in connection with this
Agreement shall be adjudicated by the courts of the State of Texas, and by
execution of this Agreement each party hereby irrevocably accepts and submits
to the jurisdiction of such Courts with respect to any such action or
proceeding.

         18.3    Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated hereby
and supersedes and cancels all prior agreements, including, but not limited to,
all proposals, letters of intent or representations, written or oral, with
respect thereto.

         18.4    Amendments. This Agreement may not be modified except in a
written instrument executed by each of the parties hereto.

         18.5     No Waiver. No consent or waiver by any party, express or
implied, to or of any breach of default by the other in the performance of its
obligations hereunder shall be deemed or construed to be a consent or waiver to
or of any other breach or default in the performance by such other party of the
same or any other obligation of such party.  Failure on the part of any party
to complain of any act or failure to act by the other party or to declare the
other party in default, irrespective of how long such failure continues, shall
not constitute a waiver by such party of its rights hereunder.

         18.6    Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon Agent and Merchant, and their respective
successors and assigns.

         18.7    Execution in Counterparts. This Agreement may be executed in
two (2) or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one agreement. This Agreement may be
executed by facsimile, and such facsimile signature shall be treated as an
original signature hereunder.

         18.8    Section Headings. The headings of sections of this Agreement
are inserted for convenience only and shall not be considered for the purpose
of determining the meaning or legal effect of any provisions hereof.

         18.9    Survival. All representations, warranties, covenants and
agreements made by the parties hereto shall be continuing, shall be considered
to have been relied upon by the parties and shall survive the execution,
delivery and performance of this Agreement.





                                       21
<PAGE>   22
         IN WITNESS WHEREOF, Agent and Merchant hereby execute this Agreement
by their duly authorized representatives as of the day and year first written
above.


                                        HILCO/GREAT AMERICAN GROUP



                                        By: /s/ Harvey M. Yellen 
                                           -----------------------------
                                            Harvey M. Yellen 
                                            Executive Vice President


                                        SOLO SERVE CORPORATION



                                        By: /s/ Ross E. Bacon 
                                           -----------------------------
                                            Ross E. Bacon
                                            Executive Vice President





                                       22
<PAGE>   23

                                  EXHIBIT 1




#10     Bon Marche Mall
        7389 Florida Blvd.
        Baton Rouge, LA  70806

#12     Springdale Mall
        E-27 Springdale
        Mobile, AL  36606

#39     9032 Mansfield Road
        Shreveport, LA  71118 



<PAGE>   24
                                                     VIA TELECOPY (847) 509-1150

                                  May 20, 1997




Hilco/Great American Group
5 Revere Drive, Suite 206
Northbrook, Illinois  60062

Attention:    Harvey M. Yellen,
              Executive Vice President

              Benjamin L. Nortman
              Vice President/General Counsel

                     Re:    Agency Agreement dated May 6, 1997 by and between
                            Hilco/Great American Group ("Agent") and Solo Serve
                            Corporation ("Merchant")

Gentlemen:

       Reference is made to the above referenced Agency Agreement (herein so
called).  Capitalized terms not otherwise defined herein shall have the same
meanings as in the Agency Agreement.  This letter is to confirm our mutual
agreement that the Agency Agreement is amended as follows:

       1.     With respect to the $646,808 of Additional Merchandise received
       at the Stores on or about May 19, 1997, (the "5/19 Additional
       Merchandise") Agent shall wire transfer $501,463 on or before May 20,
       1997 to an account of Congress Financial Corporation previously
       designated to Agent by Merchant, such amount being 95% of the Guaranteed
       Amount ($814,468) attributable to such merchandise, less $113,000, being
       the credit card sales (subject to final adjustment) for the period May
       8, 1997 through and including May 16, 1997 which were deposited in
       Merchant's bank accounts rather than the Agency Accounts.  All future
       credit card sales shall be run through the Agent's credit card accounts
       rather than those of Merchant.  The remaining five percent (5%) of such
       Guaranteed Amount with respect to the 5/19 Additional Merchandise shall
       be paid within one (1) business day of completion and verification of
       the quantity and Retail Price of such merchandise by Merchant and Agent,
       but in no event later than June 23, 1997.
<PAGE>   25
Hilco/Great American Group
May 20, 1997
Page 2



       2.     With respect to the portion of the Additional Merchandise which
       is due to be delivered to the Stores on or about May 23, 1997 (the "5/23
       Additional Merchandise") Agent shall pay 95% of the Guaranteed Amount
       (less adjustments for mark downs on all Inventory) with respect to the
       5/23 Additional Merchandise within one (1) business day of receipt by
       Agent of data verifying Merchant's mark downs but in no event later than
       May 29, 1997.  The remaining five percent (5%) of such Guaranteed Amount
       with respect to the 5/23 Additional Merchandise shall be paid within one
       (1) business day of completion and verification of the quantity and
       Retail Price of such merchandise by Merchant and Agent, but in no event
       later than June 23, 1997.

       If the foregoing modifications to the Agency Agreement are satisfactory
with Agent, please sign this letter where indicated below and return it at your
earliest convenience.



                                              Very truly yours,


                                              SOLO SERVE CORPORATION


                                              By: /s/ Ross E. Bacon       
                                                  --------------------------
                                                     Ross E. Bacon,
                                                     Chief Financial Officer

AGREED:

HILCO/GREAT AMERICAN GROUP


By: /s/ Benjamin L. Nortman          
    ---------------------------------
  Its: Vice President/General Counsel
       ------------------------------
<PAGE>   26
                   Congress Financial Corporation (Southwest)
                                1201 Main Street
                              Dallas, Texas  75250

                                  May 29, 1997

Solo Serve Corporation
1610 Cornerway Boulevard
San Antonio, Texas  78219

              Re:    Consent to Collateral Sales

Gentlemen:

       Congress Financial Corporation (Southwest) ("Lender") and Solo Serve
Corporation ("Borrower") have entered into certain financing arrangements
pursuant to the Loan and Security Agreement, dated June 20, 1995, between
Lender and Borrower, as amended by Amendment No. 1 to Loan and Security
Agreement, dated October 27, 1995, Amendment No. 2 to Loan and Security
Agreement, dated January 31, 1996, Amendment No. 3 to Loan and Security
Agreement, dated June 26, 1996, Amendment No. 4 to Loan and Security Agreement,
dated September 16, 1996, Amendment No. 5 to Loan and Security Agreement, dated
March 31, 1997 and Amendment No. 6 to Loan and Security Agreement, dated the
date hereof (as the same now exist or may hereafter be further amended,
modified, supplemented, extended, renewed, restated or replaced, the "Loan
Agreement", together with all agreements, documents and instruments at any time
executed and/or delivered in connection therewith or related thereto,
collectively, the "Financing Agreements").

       Borrower has requested that Lender consent to the liquidation sale of
inventories and other assets located at its store in Shreveport, Louisiana, and
liquidation/stock sales and/or stock reduction sales of inventories and other
assets located at its stores in, Baton Rouge, Louisiana and Mobile, Alabama
(the "Three Stores"), together with certain other inventory to be transported
to such stores from other retail locations of Borrower's, to be conducted by
Hilco/Great American Group, a joint venture, doing business as Great American
Asset Management ("Hilco"), as agent of Borrower, pursuant to the Agency
Agreement, dated as of May 6, 1997, by and between Hilco and Borrower, together
with all schedules and exhibits thereto (the "Agency Agreement"), which sales,
in the absence of this consent, would not be permitted under Section 9.7 of the
Loan Agreement.

       1.     Borrower hereby represents and warrants that, under the terms of
the Agency Agreement, Hilco is to conduct the sales and collect the proceeds of
such sales at the Three Stores as agent for Borrower, and is required to pay to
Borrower, subject to certain reductions, reconciliations and reimbursements as
provided for in the Agency Agreement, the following:
<PAGE>   27
              (a)    the Guaranteed Amount (as defined in the Agency
Agreement), constituting forty-five and five-tenths (45.5%) percent (the
"Guaranteed Percentage") of the aggregate Retail Price (as defined in the
Agency Agreement) of the Merchandise (as defined in the Agency Agreement) and
the Additional Merchandise (as defined in the Agency Agreement), the aggregate
Retail Price of which shall not exceed $4,500,000, in the following
installments:

                     (i)    by no later than May 19, 1997, the amount of
$1,023,643 (the "Initial Guaranteed Payment"), constituting one hundred (100%)
percent of the Guaranteed Percentage of the aggregate Retail Price of all
Merchandise located at the Three Stores as of the Inventory Date (as defined in
the Agency Agreement);

                     (ii)   by no later than May 20, 1997, $614,463 (the
"Second Guaranteed Payment"), constituting ninety-five (95%) percent of the
Guaranteed Percentage of the aggregate Retail Price (as determined by Borrower,
and subject to reconciliation as provided for in Section 1(b) hereof) of all
Additional Merchandise delivered to the Three Stores by Borrower after the
Inventory Date but on or prior to May 19, 1997, to be paid to Lender as
follows:

                            (A)    $501,463 of the Second Guaranteed Payment
                     shall be paid by direct wire transfer by Hilco to Lender
                     as provided in Section 3(c) hereof; and

                            (B)    $113,000 of the Second Guaranteed Payment
                     shall be paid by crediting thereto the credit card
                     proceeds referred to in Section 3(d) hereof, to the extent
                     actually received by Lender in accordance with such
                     Section 3(d);

                     (iii)  By no later than May 29, 1997, an amount equal to
ninety-five (95%) percent of the Guaranteed Percentage of the aggregate Retail
Price (as determined by Borrower and subject to reconciliation as provided for
in Section 1(b) hereof) of all Additional Merchandise delivered to the Three
Stores by Borrower after May 19, 1997 but in no event later than May 23, 1997,
minus an amount equal to the aggregate of all markdowns on the Merchandise and
Additional Merchandise taken pursuant to Section 11(g) of the Agency Agreement,
to the extent such markdowns shall not have previously or otherwise been
accounted for in determining Retail Price (the "Third Guaranteed Payment"); and


                     (iv)   By no later than June 23, 1997, the balance of the
Guaranteed Amount, after giving effect to the adjustments thereto provided for
in the Agency Agreement (the "Final Guaranteed Payment"), provided, that, in
the event that no Final Guaranteed Payment is then due under the Agency
Agreement, but, rather, a refund or credit is then due to Hilco for payments
previously made in excess of the Guaranteed Amount as so adjusted, Lender
shall, upon the written request of Borrower,




                                      2
<PAGE>   28
make such refund payment to Hilco as a loan for the account of Borrower under
the Loan Agreement subject to there being sufficient availability therefor at
such time under the lending formulas of the Loan Agreement after giving effect
to all Availability Reserves (as defined in the Loan Agreement) and sublimits
then in effect, as determined by Lender; and

              (b)    By no later than the fortieth (40th) day following the end
of the Sale Term (as defined in the Agency Agreement), but in no event later
than September 15, 1997, an amount equal to fifty (50%) percent of the amount,
if any, by which the aggregate Proceeds (as defined in the Agency Agreement) of
such liquidation/stock sales exceeds fifty-eight and five-tenths (58.5%)
percent of the aggregate Retail Price of the Merchandise and Additional
Merchandise, (such excess being hereinafter referred to as the "Recovery
Amount"); and

              (c)    certain additional amounts as provided for in the Agency
Agreement (the "Other Payments").

       2.     Subject to the conditions set forth below, Lender hereby consents
to the liquidation/stock sales of the Merchandise and the Additional
Merchandise at the Three Stores conducted by Hilco as agent for Borrower
pursuant to the Agency Agreement as in effect on the date hereof.

       3.     The effectiveness of the foregoing consent is conditioned upon
the satisfaction of each of the following in a manner satisfactory to Lender:

              (a)    All sales of Merchandise and Additional Merchandise shall
be conducted by Hilco in accordance with the terms of the Agency Agreement as
in effect on the date hereof;

              (b)    Lender shall have received a true, correct and complete
copy of the Agency Agreement (including all schedules and exhibits thereto)
duly authorized, executed and delivered by all parties thereto;

              (c)    All payments made or to be made by Hilco to Borrower
pursuant to the Agency Agreement, including, but not limited to, the Initial
Guaranteed Payment, the Second Guaranteed Payment (subject to Section 3(d)
below), the Third Guaranteed Payment, the Final Guaranteed Payment, the
Recovery Amount and the Other Payments, shall be paid when due and payable
under the Agency Agreement as outlined in Section 1 hereof, and shall be paid
by Hilco by direct wire transfer of immediately available funds in accordance
with written wire instructions received from Lender, to be applied by Lender to
the Obligations (as defined in the Loan Agreement) in such order as Lender may
determine in its sole discretion, provided, that, notwithstanding anything to
the contrary contained in this Section 3(c), payments of Sales Taxes (as
defined in the Agency Agreement) under Section 8.3 of the Agency Agreement
shall be paid by Hilco by checks drawn on the Agency Accounts (as defined





                                       3
<PAGE>   29
in the Agency Agreement) made payable to the applicable taxing authorities and
delivered to Borrower as provided for in such Section 8.3;

              (d)    Notwithstanding anything to the contrary contained in the
Agency Agreement, (i) the proceeds of all credit card transactions executed by
Hilco at the Three Stores from and including May 8, 1997 through and including
May 16, 1997 (which Borrower hereby represents and warrants are in the
approximate aggregate amount of $113,000), to the extent received by Lender,
shall be and be deemed credited to the payment of the Second Guaranteed Payment
as provided for in Section 1(a)(ii)(B) hereof and, as such, applied to the
Obligations by Lender in such order as Lender shall determine in its sole
discretion and shall not be refunded or otherwise paid to Hilco, (ii) after May
16, 1997, Hilco shall no longer use the credit card facilities of the Borrower
for any credit card transactions at the Three Stores or otherwise and (iii) by
its signature below, Hilco hereby confirms the representations and warranties
set forth in Section 1 and Section 3(d)(i) hereof and its acceptance of the
terms set forth in Sections 3(c), 3(d)(i) and 3(d)(ii) hereof;

              (e)    On and after May 8, 1997, none of the Merchandise or
Additional Merchandise nor any other assets of Borrower located at the Three
Stores, or in transit thereto or therefrom, shall be included as Eligible
Inventory (as defined in the Loan Agreement).

       4.     The foregoing consent shall apply only to the sales of
Merchandise and Additional Merchandise at the Three Stores pursuant to the
terms of the Agency Agreement as in effect on the date hereof and shall not
apply to any past, present or future sales of the same kind or of any other
nature, or to any other transaction or occurrence, not otherwise permitted
pursuant to the Loan Agreement, including, but not limited to, Section 9.7 of
the Loan Agreement.

       5.     By its signature below, Borrower represents, warrants and
covenants that the Agency Agreement provided to Lender is true, correct and
complete, and that it has not been, and will not be, amended, supplemented or
modified in any material respect without Lender's prior written consent.

       6.     Borrower hereby agrees that all representations and warranties
made by Borrower to Lender contained herein are and shall be deemed
representations and warranties made under the Financing Agreements and that
each of the following shall constitute an Event of Default (as defined in the
Loan Agreement) in addition to and not in limitation of any other Event of
Default:

              (a)    Hilco shall fail to make any payment when due and payable
under the Agency Agreement, as outlined in Section 1 hereof, and in accordance
with the provisions hereof, in any material amount.





                                       4
<PAGE>   30
              (b)    Either, Agent or Hilco shall materially breach the Agency
Agreement, or there shall otherwise occur any material default thereunder.

              (c)    For whatever reason, the liquidation/stock reduction sales
at the Three Stores are prevented from occurring and/or being transacted and/or
consummated in accordance with the terms of the Agency Agreement and/or
Borrower or Lender shall become liable to refund or reimburse to Hilco or any
other party any material portion of the amounts paid or to be paid to Borrower
under the Agency Agreement, except to the extent that any such refund or
reimbursement arises from a loss that shall be covered by Borrower's insurance
policies to the full amount of such refund or reimbursement.

       Please indicate your acknowledgment and agreement to the foregoing by
signing in the space provided below.  The consent of the Lender contained in
this letter is only effective upon the receipt by Lender of an original or
counterpart of this letter executed by Borrower, General Atlantic Corporation
and Hilco.



                                       Very truly yours,

                                       CONGRESS FINANCIAL CORPORATION
                                          (SOUTHWEST)


                                       By: /s/ BENJAMIN L. NORTMAN
                                           ----------------------------------
                                        Title: Vice President/General Counsel 
                                               ------------------------------



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<PAGE>   31
                   [SIGNATURES CONTINUED FROM PREVIOUS PAGE]


ACKNOWLEDGED AND AGREED:

SOLO SERVE CORPORATION


By: /s/ ROSS E. BACON                                              
    ----------------------------------
 Title: Executive Vice President                                          
        ------------------------------

ACKNOWLEDGED AND CONSENTED TO BY:

GENERAL ATLANTIC CORPORATION


By: /s/ JULIE LEFKOWITZ                                             
    ----------------------------------
 Title:  Vice President                                         
        ------------------------------


ACKNOWLEDGED AND AGREED
with respect to Section 3(d)(iii):

HILCO/GREAT AMERICAN GROUP


By:      /s/  Benjamin L. Nortman                 
   -----------------------------------
 Title: Vice President/General Counsel 
       -------------------------------





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