<PAGE>1

                     AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT


         THIS  AGREEMENT,  made and entered into as of August 20, 1997,  between
Payless Cashways,  Inc., an Iowa corporation (the "Company"),  and David Stanley
(the "Executive").

         WHEREAS,  the Company and the Executive have entered into an employment
agreement dated June 16, 1995 (the "Employment Agreement");

         NOW,  THEREFORE,  in consideration of these premises and other good and
valuable consideration, the parties agree as follows:

1. Term of  Employment.  The last  sentence  of  Paragraph  2 of the  Employment
Agreement is hereby deleted.

2. Severance Benefits.

         (a) Paragraph 6(e) of the Employment  Agreement,  and all references to
Paragraph  6(e)  in the  Employment  Agreement,  are  hereby  deleted  in  their
entirety.

         (b) A new sentence is hereby inserted at the end of Paragraph 6(g)(iii)
of the Employment Agreement as follows:

         "Notwithstanding the foregoing,  the Executive shall not be entitled to
         receive such  benefits to the extent that the  Executive  obtains other
         employment  that  provides  comparable  benefits  during  the 12 months
         following termination of employment."

         (c) Paragraph 6(i) of the Employment Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:

         "Definition of Severance Period. The term "Severance Period" shall mean
         the longer of (x) the period  from the date of the  termination  of the
         Executive's  employment  through  March 1,  1999,  if such  termination
         occurs prior to December 1, 1998,  or from the date of the  termination
         of  the  Executive's   employment   through  March  1,  2000,  if  such
         termination  occurs after November 30, 1998, or (y) the period from the
         date of the termination of the Executive's  employment through one year
         after the date of such  termination,  and in any case regardless of the
         death  or  disability  of  the  Executive  subsequent  to the  date  of
         termination of his employment."

         (d) A new Paragraph 6(j) is hereby inserted in the Employment Agreement
as follows:

         "Participation  in Retention Plan. The Executive  shall  participate in
         the key employee retention plan adopted by the Company as of August 20,
         1997,  subject  to the terms and  conditions  of such  plan;  provided,
         however, that if the Executive is entitled to receive a retention bonus
         for a fiscal  year,  the  Executive  shall be  entitled  to receive any
         unpaid portion of the bonus regardless of any termination of employment
         by the Company  without Cause or by the Executive for Good Reason prior
         to the date the unpaid  portion of the bonus would be payable under the
         retention plan."

         (e) A new Paragraph 6(k) is hereby inserted in the Employment Agreement
as follows:
<PAGE>2

          "Retention  Payments Excluded From Severance.  Any retention  payments
          paid  pursuant to  Paragraph  6(j) above  shall be  excluded  from the
          calculation of severance  payments  provided under other Paragraphs of
          this Agreement."

         (f) A new Paragraph 6(l) is hereby inserted in the Employment Agreement
as follows:

          "Lump  Sum  Payment.  Notwithstanding  any  other  provision  of  this
          Agreement,  any Base  Salary,  Incentive  Compensation,  or  Retention
          Payment payable to the Executive upon  termination of employment shall
          be paid in a lump sum within  fifteen (15) days of the  termination of
          employment."

3. Waiver of Claims.  A new  Paragraph 15 is hereby  inserted in the  Employment
Agreement as follows:
         "Waiver of Claims. The Executive shall execute a waiver of claims under
         the Employment Agreement,  as the Employment Agreement existed prior to
         this Amendment No.1, in the form attached hereto as Exhibit A."

          IN WITNESS WHEREOF,  the parties have executed this Amendment No. 1 to
Employment Agreement as of the day and year written above.

PAYLESS CASHWAYS, INC.                                  EXECUTIVE

      /s/ Susan M. Stanton                             /s/ David Stanley
By:---------------------------------                ----------------------------
   President and Chief Operating Officer             David Stanley


Approval by the Compensation  Committee of the Board of Directors of the Company
is hereby confirmed.


   /s/ John H. Weitnauer, Jr.
------------------------------


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                                WAIVER OF CLAIMS

         THIS WAIVER OF CLAIMS  ("Waiver") is made and entered into as of August
20, 1997,  between Payless Cashways,  Inc., an Iowa corporation (the "Company"),
and David Stanley (the "Executive").

         WHEREAS,  the Company and the Executive have entered into an employment
agreement dated June 16, 1995 (the "Employment Agreement");

          WHEREAS,  the Company and the  Executive  have amended the  Employment
Agreement by entering into Amendment No. 1 to Employment  Agreement  dated as of
August 20, 1997 ("Amendment No. 1");

          WHEREAS,  one of the terms and  conditions  of Amendment No. 1 is that
the Company and the Executive enter into this Waiver.

         NOW, THEREFORE, in consideration of these premises and in consideration
of the Company and the Executive  entering into  Amendment No. 1, and other good
and valuable consideration, the parties agree as follows:

         1. The  Executive,  and  anyone  claiming  through  or on behalf of the
Executive,  waives  any and all claims  the  Executive  may have or may have had
against the Company and the Company's affiliates,  their successors and assigns,
and the Company's past and present employees, officers, directors and agents, or
any of them,  under the  Employment  Agreement,  to the  extent  the  Employment
Agreement is inconsistent with the terms of Amendment No. 1.

         2.  Nothing  under this  Agreement  is intended to waive,  terminate or
otherwise  affect the  Executive's  eligibility  for or receipt of any rights or
benefits the Executive may have under the  Employment  Agreement,  to the extent
not inconsistent with terms of Amendment No. 1.

         3. The Executive expressly  acknowledges that he was advised to consult
with his attorney before signing this Waiver and that he has had the opportunity
to be advised by independent legal counsel before signing. The Executive further
acknowledges that he has completely read and understands every provision of this
Waiver and of Amendment No. 1, and that he has executed this Waiver  voluntarily
and of his own free will.

         4. This Waiver shall be interpreted  and enforced under the laws of the
State of Missouri.


<PAGE>4



         IN WITNESS WHEREOF, the parties have executed this Waiver as of the day
and year written above.

PAYLESS CASHWAYS, INC.                                        EXECUTIVE


      /s/ Susan M. Stanton                               /s/ David Stanley
By:---------------------------------------            --------------------------
    President and Chief Operating Officer              David Stanley

Approval by the Compensation  Committee of the Board of Directors of the Company
is hereby confirmed.


  /s/ John H. Weitnauer, Jr.
------------------------------