<PAGE>1

                           FIRST AMENDMENT TO AMENDED
                           AND RESTATED LOAN AGREEMENT


                  This First  Amendment to Amended and Restated  Loan  Agreement
(this "Amendment"),  dated as of the 26th day of February,  1998, by and between
PAYLESS CASHWAYS,  INC., a Delaware corporation (herein called "Borrower"),  and
UBS MORTGAGE FINANCE, INC. (herein called "Lender").

                  WHEREAS, the parties have previously entered into that certain
Amended and  Restated  Loan  Agreement,  dated as of December 2, 1997 (the "Loan
Agreement"),  pursuant to which  Borrower  executed in favor of Lender a certain
Consolidated,  Amended and Restated  Promissory Note in the principal  amount of
$100,809,000.00 (the "Note"),  which Note, among other things,  consolidated the
Prior  Notes  (as such  term is  defined  in the Loan  Agreement)  into a single
promissory  note and evidences a certain loan  transaction  (the "Loan") between
Borrower and Lender.

                  WHEREAS,  by assignments of even date herewith  (collectively,
the "Assignments"),  LaSalle National Bank, as Trustee for Lender has become the
owner and holder of a certain (i) mortgage  encumbering real property located in
Johnson County,  Kansas (the "Kansas Mortgage"),  (ii) mortgage encumbering real
property  located in Monroe County,  Indiana (the "Indiana  Mortgage") and (iii)
deed of trust  encumbering  real property in Clark  County,  Nevada (the "Nevada
DOT"; and collectively  with the Kansas Mortgage and the Indiana  Mortgage,  the
"Existing Mortgages") and the notes secured thereby (collectively, the "Existing
Notes") evidencing a debt with a principal  balance,  at the time of delivery of
the Assignments,  of $16,000,000,  which, immediately prior to the effectiveness
of the Reduction Letter (as such term is hereinafter  defined) was due and owing
without any offset, defense or counterclaim whatsoever;

                  WHEREAS, pursuant to a separate letter, dated the date hereof,
from Lender to Borrower (the "Reduction Letter"),  and immediately following the
delivery of the Assignments and prior to the  effectiveness of the modifications
contemplated  hereby,  Lender reduced the principal amount of the Existing Notes
to the  principal  amount of  $13,000,000.00  which is due and owing without any
offset, defense or counterclaim whatsoever;

                  WHEREAS,  Lender and Borrower desire,  after the effectiveness
of the reduction of the aggregate principal amounts of the Existing Notes as set
forth in the Reduction  Letter to (i) amend and restate the terms of each of the
Existing  Mortgages  (the Existing  Mortgages,  as so amended and restated shall
hereinafter  be  referred  to,  collectively,  as  the  "New  Mortgages"),  (ii)
consolidate  into  one  indebtedness  the  Existing  Notes  and the  Note in the
aggregate principal amount of $102,689,450 and (iii) amend and restate the terms
of the  Existing  Note and the Note  pursuant to a certain  Amended and Restated
Promissory Note, dated the date hereof,  in the principal amount of $102,689,450
from Borrower to Lender (the "New Note"); and

                  WHEREAS,   Lender  and  Borrower  desire  to  amend  the  Loan
Agreement  to reflect,  among other  things,  the  increased  amount of the Loan
evidenced thereby and by the New Note.

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                  NOW THEREFORE, in consideration of the premises and the mutual
agreements,  covenants and conditions hereinafter set forth, Borrower and Lender
agree as follows:

                  1. All capitalized terms used herein and not otherwise defined
are used as defined in the Loan Agreement.

                  2. The  definition  of "Loan"  contained in Section 1.1 of the
Loan  Agreement is hereby  deleted in its entirety  and the  following  shall be
substituted therefor:

                               "Loan" means the  indebtedness of the Borrower to
                         Lender evidenced by the terms of Borrower's  promissory
                         note dated  February 26, 1998, in the principal  amount
                         of One Hundred and Two Million Six Hundred  Eighty Nine
                         Thousand Four Hundred and Fifty Dollars ($102,689,450).

                  3. The  definition of  "Mortgage"  contained in Section 1.1 of
the Loan Agreement is hereby deleted in its entirety and the following  shall be
substituted therefor:

                               "Mortgage"   means   collectively,   all  of  the
                         mortgages  and deeds of trust  included in the Security
                         Documents and executed by the Borrower, as the same may
                         be  amended,   supplemented,   extended  or   otherwise
                         modified from time to time.

                  4. The  definition  of "Note"  contained in Section 1.1 of the
Loan  Agreement is hereby  deleted in its entirety  and the  following  shall be
substituted therefor:

                               "Note" means the Amended and Restated  Promissory
                         Note dated February 26, 1998 made by Borrower to Lender
                         in the principal  amount of One Hundred and Two Million
                         Six Hundred Eighty Nine Thousand Four Hundred and Fifty
                         Dollars ($102,689,450).

                  5. The  following  defined  terms shall be inserted in Section
1.1 of the Loan Agreement:

                         "Payment Notice" has the meaning given it in Section
                          2.3(e)."

                         "Sale Payment" has the meaning given it in Section
                          2.7(e)."

                         "Sale Payment Date" has the meaning given it in Section
                          2.7(e)."

                  6. Section  2.3 of the Loan  Agreement  is  hereby  amended
  by adding a new  subsection (e) thereto to read as follows:

                              "(e) Each  month  during  the term of the Loan,
                          Lender shall  calculate  the  amount  due on each  
                          Payment Date and provide  Borrower  with at least one
                          (1) Business  Day notice thereof (each, a "Payment
                          Notice"), provided  however,  that Lender  shall  not
                          in any way be liable to Borrower for its failure to
                          provide any such  Payment  Notice  pursuant to this
                          subsection  (e)

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                  and any such failure shall not, in any way relieve Borrower
                  from its obligation to timely make the payments on each 
                  Payment Date required under this Agreement or under the Note. 
                  If the amount set forth in any Payment  Notice provided by 
                  Lender pursuant to this subsection (e) shall be incorrect,  
                  Borrower shall remain obligated to pay to Lender the amount  
                  that  otherwise  should  have  been paid had such Payment 
                  Notice been correct, and Lender's failure to deliver a correct
                  Payment Notice shall not in any way be deemed a waiver by 
                  Lender of its right to receive the full, correct amount of 
                  such payment."

                  7.     Section  2.7 of the Loan  Agreement  is  hereby
amended  by adding a new  subsection (e)thereto to read as follows:

                               "(e)  Notwithstanding  anything  to the  contrary
                         contained  herein, in connection with any prepayment of
                         principal pursuant to Sections 2.7(a) or 2.7(b) hereof,
                         any and all interest  accrued on such  principal  being
                         prepaid,  through and including the date of prepayment,
                         shall be paid by  Borrower  on the first  Payment  Date
                         following such date of prepayment."

                  8. Exhibit C to the Loan Agreement is hereby amended by adding
thereto  the  properties  listed on  Exhibit A  attached  hereto and made a part
hereof.

                  9.  Lender's   obligation  to   consummate   the   transaction
contemplated  hereby is subject to the  satisfaction  by Borrower of each of the
following conditions:

                         a.  Borrower  shall have  obtained  all consents to the
                  transaction  contemplated  hereby  required  under the  Credit
                  Agreement,  which  consents  shall be in  recordable  form and
                  otherwise in form and  substance  reasonably  satisfactory  to
                  Lender in all respects;

                         b. No Event of Default shall exist and be continuing as
                  of the date hereof;

                         c. Lender shall have received an opinion of counsel for
                  Borrower in form and substance satisfactory to Lender;

                         d. Lender  shall have  received a  mortgagee  policy of
                  title  insurance  or title  commitment  to  issue a  mortgagee
                  policy  of title  insurance  with  respect  to each of the New
                  Mortgages, in form satisfactory to Lender in all respects;

                         e. Borrower shall have executed and delivered to Lender
                  the New Note,  the New Mortgages  (together  with  appropriate
                  Uniform  Commercial Code Financing  Statements) and such other
                  documents and items as Lender may reasonably request;

                         f. Lender shall have  received  from the holders of the
                  Permitted Second Lien, amendments to the mortgages or deeds of
                  trust that are  subordinate to the Existing  Mortgages,  which
                  amendments shall contain,  among other things,  the 

<PAGE>4


                  provisions set forth on  Exhibit B attached  hereto and which 
                  amendments shall otherwise be in form and substance 
                  satisfactory  to Lender in all respects;

                         g. Borrower  shall have provided  Lender with evidence,
                  reasonably  satisfactory  to Lender in all respects,  that (i)
                  all real estate taxes affecting the Property have been paid to
                  date or (ii) real  estate  taxes  that are due and owing as of
                  the date hereof and that have not been paid are being disputed
                  in good faith by Borrower; and

                         h. Borrower  shall have provided  Lender with evidence,
                  reasonably  satisfactory  to Lender in all respects,  that all
                  title insurance  premiums due and owing in connection with the
                  transaction  consummated on December 2, 1997 between  Borrower
                  and Lender, have been paid in full.

                  10. Borrower hereby  represents and warrants that (a) Borrower
is the sole legal and beneficial  owner of each of the properties  encumbered by
the Existing Mortgages (collectively, the "New Properties"); (b) Borrower is not
in Default in the  performance of any of the covenants and agreements  contained
in the Loan Agreement as amended hereby, or in the Loan Documents;  (c) no event
has occurred and is continuing  which  constitutes a Default;  (d) Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of its state or  organization,  having all  corporation  or  partnership  powers
required to carry on its business and enter into and carry out the  transactions
contemplated  hereby;  (e) Borrower has all requisite power and all governmental
certificates  of  authority,   licenses,   permits   qualifications   and  other
documentation  to own,  lease and operate the New Properties and to carry on its
business as now  conducted  and as  contemplated  to be  conducted  except where
failure to obtain  any such  governmental  certificate  of  authority,  license,
permit, qualification or other documentation would not have a Materially Adverse
Effect;  (f) Borrower is duly  qualified,  in good standing and authorized to do
business in each of the jurisdictions where the New Properties are located;  (g)
Borrower  had duly  taken  all  corporate  action  necessary  to  authorize  the
execution and delivery by it of this Agreement and all other documents  executed
in connection herewith (collectively, the "New Loan Documents") and to authorize
the consummation of the transactions contemplated thereby and the performance of
its  obligations  hereunder  and  thereunder;  (h) the execution and delivery by
Borrower of this Amendment and the New Loan  Documents,  the  performance of its
obligations   under  this  Amendment  and  the  New  Loan  Documents,   and  the
consummation of the transactions contemplated by this Amendment, do not and will
not (1) conflict with any provision of (A) any  application  domestic or foreign
law,  statute,  decree,  rule or  regulation,  except  where  failure  to comply
therewith  would not have a  Materially  Adverse  Effect,  (B) the  articles  or
certificates  of  incorporation,  bylaws,  charter or  partnership  agreement or
certificate of Borrower or (C) any agreement, judgment, license, order or permit
applicable to or binding upon Borrower,  (2) result in the  acceleration  of any
Debt owed by  Borrower,  (3) result in or require the  creation of any Lien upon
any assets or properties of Borrower  except as expressly  contemplated  in this
Amendment or the Loan  Documents,  or (4)  contravene,  result in a breach of or
constitute a default under any mortgage,  deed of trust, lease, promissory note,
loan  agreement  or other  material  contract  or  material  agreement  to which
Borrower is a party or by which  Borrower or any of its Properties may currently
be bound or affected;  (i) except as  otherwise  provided  herein,  no consent,
approval, authorization or order of, and no notice to or filing with, any court
or

<PAGE>5

governmental  authority  or third party is required in  connection  with the
execution, delivery or performance by Borrower of this Amendment or the New Loan
Documents or to consummate any transactions  contemplated by this Amendment; (j)
this Amendment and the New Loan  Documents are legal and binding  obligations of
Borrower,  enforceable  in accordance  with their  respective  terms,  except as
limited  by  bankruptcy,  insolvency  or  similar  laws of  general  application
relating to the enforcement of creditors'  rights;  and (k) all  representations
and warranties of Borrower set forth in the Loan Agreement are true and complete
in all material respects as of the date hereof. Borrower agrees to indemnify and
hold Lender  harmless  against any loss,  claim,  damage,  liability  or expense
(including  without  limitation  reasonable  attorneys' fees and  disbursements)
incurred as a result of any  representation  or warranty made by Borrower herein
proving to be untrue in any material respect.

                  11. Borrower agrees to execute such other and future documents
as may be reasonably  necessary or  appropriate  to consummate  the  transaction
contemplated  hereby or to perfect the liens and security  interests intended to
secure the payment of the New Note.

                  12. Except as provided herein,  the terms and revisions of the
Loan  Agreement and the other Loan  Documents  shall remain  unchanged and shall
remain in full force and effect.  Any modification  herein of the Loan Agreement
and the other Loan Documents  shall in no way affect the security of the payment
of the New Note. Borrower hereby agrees,  covenants and represents that the Loan
Agreement  and the other Loan  Documents as modified and amended  hereby are and
remain valid and that nothing herein shall affect the validity or enforceability
thereof.

                  13. Borrower hereby  acknowledges  that the liens and security
interests  created and  evidenced by the Mortgage are valid and  subsisting  and
further acknowledges and agrees that there are no offsets, claims or defenses to
the Note,  the Loan  Agreement  or any other Loan  Documents.  Borrower  further
acknowledges that it has no knowledge that there are any defects or deficiencies
with respect to the liens and security interests created and evidenced by any of
the Security Documents.

                  14.  Contemporaneously with the execution and delivery hereof,
Borrower shall pay, or cause to be paid, all costs and expenses  incident to the
preparation  hereof and the consummation of the transactions  specified  herein,
including  but not  limited to legal fees and  expenses  of outside  counsel and
title costs.
                  15.   This   Agreement   may  be   executed  in  one  or  more
counterparts,  each of which shall constitute an original of this Agreement, and
which, when taken together, shall constitute but one instrument.


<PAGE>6


                  IN  WITNESS  WHEREOF,  the  undersigned  parties  have
  executed  this  Agreement  this 26 day of February, 1998.

                               PAYLESS CASHWAYS, INC.


                               By: /s/ Richard G. Luse
                                  -------------------------
                               Name:  Richard G. Luse
                               Title: Sr. Vice President-Finance


                               UBS MORTGAGE FINANCE, INC.


                               By: /s/ Randy Nardone
                                  -------------------------
                               Name: Randy Nardone
                               Title:


                               By: /s/ Jonathan Ashley
                                  -------------------------
                               Name: Jonathan Ashley
                               Title: