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                                     FORM OF
                 DEED OF TRUST, MORTGAGE AND SECURITY AGREEMENT
                             MODIFICATION AGREEMENT

                                     between

                             PAYLESS CASHWAYS, INC.

                                       and

                      LASALLE NATIONAL BANK, AS TRUSTEE FOR
                           UBS MORTGAGE FINANCE, INC.


                          Dated: As of December 2, 1997


                       After recording, please return to:
                    FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
                               One New York Plaza
                            New York, New York 10004
                        Attention: Robert J. Sorin, Esq.



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PREPARED BY, RECORDED AT THE             )
REQUEST OF AND WHEN RECORDED             )
RETURN TO:                               )
                                         )
Joseph D'Angelo, Esq.                    )
Fried, Frank, Harris, Shriver & Jacobson )
One New York Plaza                       )
New York, New York 10004                 )
                                         )
-----------------------------------------)
                                       SPACE ABOVE THIS LINE FOR RECORDER'S USE


     THIS DEED OF TRUST, MORTGAGE AND SECURITY AGREEMENT  MODIFICATION AGREEMENT
(this  "Agreement")  made  as of the 2nd day of  December,  1997 by and  between
PAYLESS CASHWAYS,  INC., a Delaware corporation  (successor by merger to Payless
Cashways, Inc., an Iowa corporation ("Former Payless"),  having an office at Two
Pershing Square,  2300 Main Street,  Kansas City, Missouri 64108 ("Grantor") and
LASALLE  NATIONAL  BANK, AS TRUSTEE FOR UBS MORTGAGE  FINANCE,  INC.,  having an
address at 135 South LaSalle Street, Chicago, Illinois 60603 ("Beneficiary").

                                R E C I T A L S:

     WHEREAS, Grantor is the owner of each of the premises described in Schedule
I hereto (collectively, the "Premises");

     WHEREAS,  Ticor Title  Insurance  Company of California  ("Trustee") is the
holder of that certain  Deed of Trust,  Mortgage  and  Security  Agreement  (the
"Mortgage"), dated June 15, 1989 (effective June 20, 1989) described in Schedule
2, made by Former  Payless in favor of Trustee for the benefit of The Prudential
Insurance  Company  of  America,   a  New  Jersey   corporation  (the  "Original
Beneficiary"), which Mortgage encumbers the Premises;

     WHEREAS, Beneficiary has become the beneficiary under the Mortgage pursuant
to the terms of that certain  Assignment  of Security  Documents  and other Loan
Documents dated as of August 29, 1997, whereby the Original Beneficiary assigned
to  Beneficiary  all of its right,  title and  interest  in and to,  among other
things, the Mortgage and the Prior Notes (as hereinafter defined);

     WHEREAS,  Beneficiary is the holder of, and the Mortgage  secures,  certain
promissory notes in the original aggregate principal amount of $230,242,500 (the
"Prior  Notes"),  which Prior Notes  evidence that certain loan made by Original
Beneficiary to Former Payless (the "Loan");


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     WHEREAS,  simultaneously  herewith  Grantor is  executing  a  Consolidated,
Amended  and  Restated  Promissory  Note,  dated  the date  hereof,  in favor of
Beneficiary  in the aggregate  principal  amount of  $100,809,000  (the "Note"),
which Note modifies the terms of the Prior Notes so as to (i) consolidate into a
single note the outstanding  principal amount of the Prior Notes,  together with
accrued and unpaid  interest  thereon at the  non-default  rate, (ii) modify the
rate of interest on the Loan, (iii) extend the maturity of the Loan, (iv) modify
the  amortization  of principal of the Loan, and (v) otherwise  restate in their
entirety the terms of the Prior Notes.

     WHEREAS,  Beneficiary  and  Grantor  have  agreed to  modify  and amend the
Mortgage in the manner hereinafter set forth. The Mortgage,  as modified hereby,
the Note and the other documents  evidencing  and/or  securing  repayment of the
Loan and other obligations  evidenced by the Note shall be collectively referred
to herein as the "Loan Documents."

     NOW,  THEREFORE,  in  consideration  of the mutual  promises and agreements
herein contained,  the parties hereto covenant and agree to modify and amend the
Mortgage as follows:

     1.  Grantor  agrees  that the  principal  amount  due under the Note is One
Hundred  Million  Eight  Hundred and Nine Thousand  Dollars  ($100,809,000)  and
agrees that such amount, plus interest thereon at the interest rate set forth in
the  Amended  and  Restated  Loan  Agreement,  dated as of December 2, 1997 (the
"Amended Loan Agreement") between Grantor and UBS Mortgage Finance,  Inc., shall
be paid pursuant to the terms of such Amended Loan Agreement and of the Note.

     2. Grantor  warrants,  represents  and covenants that as of the date hereof
Grantor has no defenses,  offsets,  claims or deductions relating to the Note or
any sums  due  under  the  Mortgage,  as  modified  hereby,  or the  other  Loan
Documents,  and the Note, the Mortgage,  as modified hereby,  and the other Loan
Documents  are in full force and effect and are hereby  ratified,  confirmed and
approved.

     3. All references in the Mortgage to "Late Payment Rate" shall mean Default
Rate as such term is defined in the Amended Loan Agreement.

     4. All  references  in the  Mortgage  to "Loan  Agreement"  shall  mean the
Amended and Restated  Loan  Agreement,  dated  December 2, 1997 between  Payless
Cashways,  Inc. and UBS Mortgage  Finance,  Inc.,  as the same may  hereafter be
amended, modified, restated, extended, renewed or replaced.

     5. All references in the Mortgage to  "Prudential"  shall mean UBS (as such
term is defined therein).


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     6. Notwithstanding anything to the contrary contained in Section 2.1 of the
Mortgage,  Grantor shall not be  prohibited  from entering into an Assignment of
Leases  and  Rents in  connection  with,  and for the  purpose  of  collaterally
securing the  `indebtedness  secured by the Permitted Second Lien (as defined in
the Loan Agreement).

     7. The following Is hereby added to the end of the first full  paragraph of
the Mortgage following the words "set forth in Exhibit "A".

     ", it being  understood  that the  foregoing  property  shall  not  include
     inventory,  equipment,  goods or other tangible  personal property which is
     not  attached  or affixed to (or  otherwise  installed  or  intended  to be
     installed  the  buildings  or in the  other  improvements  now  erected  or
     hereafter to be erected on said land or otherwise  used in connection  with
     the operation (i.e. servicing) of the real estate and the improvements"

     8. The following is hereby  inserted at the end of the third full paragraph
of the Mortgage:

     "provided, however, that the term "Collateral" shall not include inventory,
     equipment, goods, or other tangible personal property which is not attached
     or affixed to (or  otherwise  installed or intended to be installed in) the
     Mortgaged  Property,  except as specifically  stated herein with respect to
     all  heating  and air  conditioning  equipment,  whether  or not  attached,
     affixed,  or  installed  if used in  connection  with the  operation  (i.e.
     servicing) of the Mortgaged Property."

     9.  Paragraph  1.1 of the  Mortgage is hereby  deleted in its  entirety and
replaced with the following:

     "1.1  Secured  Indebtedness.  This Deed of  Trust,  Mortgage  and  Security
     Agreement  (hereafter called this "Mortgage") is made to secure and enforce
     the payment of: (a) the obligations, indebtedness and liabilities evidenced
     by that certain  consolidated,  Amended and Restated Promissory Note, dated
     December  2, 1997 made by  Grantor,  and  payable  to the order of  LaSalle
     National  Bank, as Trustee for UBS Mortgage  Finance,  Inc.  ("UBS"),  with
     interest at the rate or rates therein provided, both principal and interest
     being payable as therein provided and all amounts  remaining unpaid thereon
     being finally due and payable on December 2, 2004,  such note  containing a
     provision for the payment of a reasonable  additional  amount as attorney's
     fees,   and  all  other  notes  given  in   substitution   therefor  or  in
     modification,  increase, renewal or extension thereof, in whole or in part,
     being  hereinafter   collectively  called  the  "Note",  and  UBS  and  all
     subsequent  holders of the Note or any part thereof or any interest therein
     or  any  of the  "secured  indebtedness"  (as  hereinafter  defined)  being
     hereinafter called the "Beneficiary";  and (b) all indebtedness incurred or
     arising  pursuant to the provisions of this Mortgage,  that certain Amended
     and Restated Loan Agreement (hereinafter called the "Loan Agreement") dated
     as of December 2, 1997


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     between UBS and  Grantor,  the Security  Documents  (as defined in the Loan
     Agreement) or any other instrument now or hereafter  evidencing,  governing
     or securing  the above  described  indebtedness  or any part  thereof.  The
     indebtedness referred to in this Paragraph -is hereinafter sometimes called
     the "secured indebtedness" or the "indebtedness secured hereby.""

     10. The second  sentence in Paragraph 3.3 of the Mortgage is hereby deleted
and replaced with the following:

     "All such costs,  expenses and  liabilities  incurred by the Beneficiary in
     collecting such rents and in managing, operating,  maintaining,  protecting
     or  preserving  the  Property,  if not paid  out of  rents  as  hereinabove
     provided,  shall constitute a demand  obligation owing by Grantor and shall
     bear interest from the date of  expenditure  until paid at the Default Rate
     as provided in the Loan Agreement,  all of which shall constitute a portion
     of the secured indebtedness."

     11. The last  sentence in Paragraph  3.6 of the Mortgage is hereby  deleted
and replaced with the following:

     "Any  money  advanced  by the  Beneficiary  in  connection  with  any  such
     receivership  shall  be  a  demand  obligation  owing  by  Grantor  to  the
     Beneficiary   and  shall  bear  interest  from  the  date  of  making  such
     advancement by the  Beneficiary  until paid at the Default Rate as provided
     in the Loan Agreement and shall be a part of the secured  indebtedness  and
     shall be secured by this Mortgage and by any other instrument  securing the
     secured indebtedness."

     12. The following is hereby  inserted  after the word  "SECOND," and before
the word "THIRD" in Paragraph 3.7 of the Mortgage:

     "to the  payment  in  full of  remaining  secured  indebtedness  (including
     specifically without limitation the principal, interest and attorney's fees
     and all in other  sums due and unpaid on the Note and the  amounts  due and
     unpaid and owed to the  Beneficiary  under this  Mortgage or any other Loan
     Document) in such order as the Beneficiary may elect, and"

     13. The address of the Beneficiary on the signature page of the Mortgage is
hereby deleted in its entirety and replaced with the following:

     "LaSalle National Bank
     135 South LaSalle Street
     Chicago, Illinois 60603
     Attention:
     Telecopy Number:


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     UBS Mortgage Finance, Inc.
     299 Park Avenue
     New York, New York 10171
     Attention:  Jonathan Ashley
     Telecopy Number:  (212) 821-5566

     with a copy to:

     Fried, Frank, Harris, Shriver & Jacobson
     One New York Plaza
     New York, New York 10004
     Attention:  Robert J. Sorin, Esq.
     Telecopy Number:  (212) 859-8582"

     14. All  references  in the Mortgage to "the note" or "the Note" shall mean
the Note (as such term is defined in this Agreement). Unless indicated otherwise
by the context  thereof,  all  references  in the  Mortgage to "this  Mortgage",
"herein",  "hereof'  or terms of  similar  import  shall  mean the  Mortgage  as
modified by this Agreement.

     15. Mortgage,  as modified  hereby,  secures the prompt payment in full and
performance  when due of all  obligations  of Grantor now or  hereafter e `sting
under the Note, the Mortgage, as modified hereby, and the other Loan Documents.

     16. This Agreement  shall be governed by the laws of the state in which the
Property  (as defined in the  Mortgage)  is located,  without  reference  to the
conflicts of law principles thereof.

     17. GRANTOR AND BENEFICIARY  HEREBY CERTIFY THAT THIS AGREEMENT SECURES THE
SAME  INDEBTEDNESS  SECURED BY THE  MORTGAGE AND NO FURTHER  INDEBTEDNESS.  THIS
AGREEMENT  SECURES (AND DOES NOT, AND MAY NOT,  SECURE UNDER ANY  CONTINGENCY IN
EXCESS OF) THE OUTSTANDING  PRINCIPAL  BALANCE OF THE NOTE AS OF THE DATE HEREOF
OF ONE HUNDRED  MILLION EIGHT HUNDRED AND NINE THOUSAND  DOLLARS  ($100,809,000)
TOGETHER WITH ANY INTEREST  ACCRUED AND NOT PAM THEREON AND ANY MONIES  ADVANCED
BY BENEFICIARY  (INCLUDING  INTEREST AND ADDITIONAL INTEREST THEREON AS PROVIDED
IN THIS  AGREEMENT)  TO  PROTECT  AND  PRESERVE  THE  LIEN  OF  THIS  AGREEMENT,
INCLUDING,  WITHOUT  LIMITATION,  (I) REAL  ESTATE  TAXES,  (II) WATER AND SEWER
ASSESSMENTS, (III) REASONABLE ATTORNEY'S FEES AND (IV) INSURANCE PREMIUMS.


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     18. The terms,  conditions and agreements contained in this Agreement shall
bind and inure to the  benefit  of  Grantor,  Beneficiary  and their  respective
heirs,  distributees,   executors,  administrators,   successors  and  permitted
assigns.

     19. In the event of any inconsistency between the terms of the Mortgage and
the terms of this Agreement, the terms of this Agreement shall be controlling to
the extent of such inconsistency.

     20. Except as otherwise  modified or amended hereby, all of the other terms
and conditions of the Mortgage shall remain in full force and effect.

     21. 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.

     22. The terms of this  Agreement may not be modified,  amended,  changed or
terminated  orally,  but only by an agreement  in writing  signed by the parties
against whom enforcement of such modification,  amendment, change or termination
is sought.

     23.  Notwithstanding  anything to the contrary contained in this Agreement,
the Mortgage, the Note or any other Loan Document, the collateral covered by any
of the Loan  Documents,  and the term  "Collateral"  as defined in the Mortgage,
shall  not  include  inventory,  equipment,  goods  or other  tangible  personal
property which is not attached or affixed to (or otherwise installed or intended
to be installed in) the Mortgaged Property (as defined in the Mortgage),  except
with  respect to all  heating  and air  conditioning  equipment,  whether or not
attached,  affixed, or installed if used in connection with the operation (i.e.,
servicing) of the Mortgaged Property.


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     IN WITNESS  WHEREOF,  this  Agreement has been duly executed by Grantor and
Beneficiary.


                                GRANTOR:

                                PAYLESS CASHWAYS, INC., a Delaware
                                corporation (successor by merger to Payless
                                Cashways, Inc.  Iowa corporation)



                                By:  
                                   ---------------------------------------
                                   Name:
                                   Title:



                                BENEFICIARY:

                                LASALLE NATIONAL BANK, a Trustee for UBS
                                Mortgage Finance, Inc., a New York corporation



                                By:  
                                   ---------------------------------------
                                   Name:
                                   Title:


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                                   SCHEDULE 1

                              Property Description