<PAGE>1


                        SEVERANCE AGREEMENT, RESIGNATION,
                            AND FULL GENERAL RELEASE

     This Severance Agreement,  Resignation,  and Release  ("Agreement") is made
and  entered  into on January 23, 1998 by and  between  PAYLESS  CASHWAYS,  INC.
("PAYLESS") and E. J. HOLLAND, JR. ("HOLLAND").

     WHEREAS,  HOLLAND was employed by PAYLESS on June 30, 1992, and is entitled
to the benefits of an Executive Change in Control Agreement dated as of June 26,
1997, as amended as of August 20, 1997, (the "Control Agreement"); and

     WHEREAS,  PAYLESS and HOLLAND  mutually  wish to terminate  the  employment
status of HOLLAND,  and HOLLAND's  employment  with PAYLESS shall end on January
30, 1998, or such later date as HOLLAND and PAYLESS shall agree, and

     WHEREAS,  PAYLESS and HOLLAND  have agreed  that  HOLLAND  shall  resign as
Senior  Vice  President-Administration/Secretary,  but that for  purposes of his
severance benefits  HOLLAND's  termination shall be regarded as a termination of
his employment without cause by PAYLESS;

     NOW THEREFORE,  in  consideration  of the mutual  promises,  agreements and
releases contained in this Agreement, the parties agree as follows:

1.  A.  PAYLESS' AGREEMENTS

     1. EFFECTIVE DATE

     PAYLESS  acknowledges  that this Agreement will become effective on the 8th
day following  HOLLAND's execution of this Agreement (the "Effective Date"), and
that HOLLAND will not be required to perform  services for PAYLESS after January
30, 1998, or such later date as HOLLAND and PAYLESS shall agree.

     2. SEVERANCE BENEFITS

     PAYLESS agrees to provide HOLLAND the severance benefits set forth below.

          1. Lump Sum Payment

               (1) PAYLESS  agrees to pay HOLLAND on the  Effective  Date a lump
sum payment  (less  applicable  payroll  deductions)  in the amount set forth on
Schedule I hereto. As set forth in Schedule I, such lump sum payment consists of
(A) the amount that HOLLAND would have received as one year's annual Base Salary
from the Effective Date through February 1, 1999 (the "Severance Period") (based
on his base salary in effect on July 21,  1997),


<PAGE>2


(B) the remaining amount due HOLLAND under the PAYLESS Reorganization  Retention
Plan,  and (C) an amount for unused  earned  vacation days through the Effective
Date.  In  addition,  PAYLESS  shall pay  HOLLAND  on the  Effective  Date or as
promptly  thereafter  as is  practicable  an  amount  equal  to  any  previously
unreimbursed business expenses.

               (2) PAYLESS also agrees to pay, in lieu of matching contributions
to the Payless  Cashways,  Inc. Employee Savings Plan which would otherwise have
been made on HOLLAND's behalf during the Severance Period,  and in consideration
for the Release of Liability  contained  herein in Paragraph  B.2, an additional
lump sum payment (less applicable payroll deductions) of $10,000.00.

          2.  Continuation of Benefits  PAYLESS agrees that during the Severance
Period it will provide HOLLAND with health,  life (including  supplemental death
benefits),  and dental  benefits  substantially  equivalent to those received by
HOLLAND as of the date of the termination of his  employment.  Such benefits are
described in Schedule II and shall be provided during the Severance  Period (or,
if longer,  the period  during which such  benefits  would have been provided at
PAYLESS' expense under  applicable plans of PAYLESS.  Except as may be indicated
in Schedule II, such health,  life and dental  benefits shall be provided at the
same coverage  levels  provided to HOLLAND as of the date of the  termination of
his employment, and such benefits shall be provided at PAYLESS' expense, subject
to the same cost sharing  provisions,  if any,  applicable  to HOLLAND as of the
date of the  termination  of his  employment.  In addition,  PAYLESS agrees that
during the Severance  Period it will provide  HOLLAND with  disability  benefits
similar to those that HOLLAND was  receiving  or was entitled to receive  during
the period of his  employment,  except that during the  Severance  Period,  such
benefits will provide a maximum monthly benefit of $5,000.00.  Such benefits are
also listed in Schedule II. PAYLESS agrees to use its reasonable best efforts to
obtain an  additional  $5,000.00  of monthly  disability  benefits  on behalf of
HOLLAND during the Severance Period.  After the Severance Period,  HOLLAND shall
be eligible for COBRA continuation  coverage of health and dental benefits for a
period of 18 months or such period as may then be provided by law. HOLLAND shall
not be entitled  to receive  such  benefits to the extent that he obtains  other
employment  prior to the end of the Severance  Period that  provides  comparable
benefits,  provided,  however, that HOLLAND is under no obligation to seek other
employment during such period.

          3. Retirement Benefits PAYLESS agrees that for purposes of determining
the  benefits  payable to  HOLLAND  under the  Payless  Cashways,  Inc.  Amended
Retirement  Plan  (the  "Pension  Plan")  and  HOLLAND's  eligibility  therefor,
HOLLAND's  date of  separation  from  PAYLESS  shall be deemed to be February 1,
1999,  his  age  shall  be  deemed  to be his age on such  date  and the  amount
allocable  to base pay  included in the lump sum payment in  Paragraph  A.2.a(i)
shall be included in determining career average pay. If the terms of the Pension
Plan do not permit the  foregoing,  then on the Effective Date PAYLESS shall pay
HOLLAND  an  amount  equal to the  present  value of the  additional  retirement
benefits  that would have  accrued  had he  continued  to perform  services  for
PAYLESS through the Severance  Period at the same rate of compensation as was in
effect on the date of this Agreement.  The present value payable hereunder shall
be


<PAGE>3


calculated using GATT rate currently in effect under the Pension Plan.

          4.  Automobile  PAYLESS  also  agrees  to a  lump  sum  payment  (less
applicable payroll  deductions) of $8,158.00 in lieu of HOLLAND's car allowance,
to be paid on the Effective Date.  HOLLAND and PAYLESS agree that the lease, and
use, of his company car will be terminated as of the Effective Date.

     3. DEATH OF HOLLAND

     The death of HOLLAND  prior to the  expiration of this  Agreement  will not
void this Agreement,  but the terms thereof will survive his death. In the event
that HOLLAND dies prior to receipt of all sums set forth in section A.2.  above,
then any and all such remaining  sums not yet received by HOLLAND  otherwise due
under  this  Agreement  shall  become  due  and  payable  to  the  beneficiaries
hereinafter listed: Principal Beneficiary:  The Trustee(s) under Trust Agreement
created by Edward J. Holland Jr. dated  December  15, 1992,  as amended,  or the
successor(s) in trust, Beneficiary,  if the trust evidenced by said agreement is
in effect at HOLLAND's death. If said trust is not then in effect,  the proceeds
will be payable in one sum to HOLLAND's estate.

     4. STOCK INCENTIVE

     The parties acknowledge that HOLLAND has no vested stock incentives.

     5. OUTPLACEMENT

     PAYLESS will provide HOLLAND at PAYLESS'  expense with telephone  answering
and  e-mail  services  at  Payless  for a period of 60 days and  executive-level
outplacement  services  at an  outplacement  service of  PAYLESS'  choice in the
Kansas City area, including an office and telephone transfer services,  until he
obtains other employment, for a maximum of 18 months.

     6. INDEMNIFICATION

     Set forth as  Schedules  III  through V hereto  are  provisions  of PAYLESS
Certificate of Incorporation and Bylaws relating to indemnification of directors
and officers and an  Indemnification  Agreement dated December 2, 1997,  between
PAYLESS   and  HOLLAND   (collectively   "Indemnification   Provisions").   Such
Indemnification Provisions are incorporated by this reference and made a part of
this Agreement in their entirety.  PAYLESS  acknowledges and agrees that HOLLAND
and his estate are  entitled to the benefit of such  Indemnification  Provisions
notwithstanding his termination of service and that such provisions apply to his
service as an officer of PAYLESS and any of its  predecessors.  PAYLESS  further
acknowledges that the Indemnification  Provisions obligate PAYLESS,  among other
matters,  to indemnify HOLLAND against any and all expenses (including costs and
attorneys' fees) which he might incur as a witness or party with respect to that
certain  matter  pending in the United  States  District  Court for the Southern
District of Iowa captioned PAYLESS Cashways,  Inc. Partners [et. al.] v. PAYLESS
Cashways,  Inc. [et. al.]. PAYLESS agrees to honor such obligations with respect
to such


<PAGE>4


proceeding  or any  other  proceeding  to which  HOLLAND  may  become a party or
witness by reason of the fact that he served as an officer of PAYLESS, except as
may be provided in the Indemnification  Provisions.  PAYLESS further agrees that
as to HOLLAND,  any amendments or changes to the  Indemnification  Provisions or
the  insurance  coverages  described in paragraph  A.7 below will not  adversely
affect HOLLAND without HOLLAND's written consent,  and that breach by HOLLAND of
any provision of this AGREEMENT will not constitute grounds by PAYLESS to change
such coverages or to terminate its obligations under this Agreement or otherwise
with respect to the Indemnification  Provisions.  PAYLESS and HOLLAND agree that
said  Indemnification  Agreement is hereby amended to delete section 9.6 thereof
in its entirety.

     7. LIABILITY INSURANCE

     PAYLESS  currently  maintains  $30  million  in  directors'  and  officers'
liability  insurance  that provides  coverage for HOLLAND and other  officers of
PAYLESS.  The coverage  period,  including the run-off  provisions  provided for
thereunder,  continue through December 2, 2003.  PAYLESS agrees to maintain such
directors'  and officers'  liability  insurance  coverage or to provide  similar
coverage to HOLLAND so that HOLLAND will remain  insured under similar  coverage
at current levels until December 2, 2003 with respect to the period of time that
HOLLAND  served as an officer of PAYLESS.  PAYLESS  has given  HOLLAND a copy of
such policy and will give him a copy of any amendment or rider promptly after it
becomes effective.

     8. RELEASE OF LIABILITY

     PAYLESS  releases  HOLLAND of all claims and demands of any kind,  known or
unknown,  which it may have against HOLLAND as of the Effective Date or which it
may have had at any time before the  Effective  Date for any acts which  HOLLAND
committed or omitted during his  employment  with PAYLESS.  PAYLESS  understands
that it is releasing HOLLAND, to the maximum extent permissible by law, from any
liability which HOLLAND may have had to it, known or unknown,  at any time up to
and including the Effective Date.

2.  HOLLAND'S AGREEMENTS

     1. VOLUNTARY RESIGNATION

     HOLLAND  and  PAYLESS  acknowledge  that  HOLLAND  does and he hereby  does
voluntarily       resign      his       employment      as      Senior      Vice
President-Administration/Secretary,  effective as of the Effective  Date or such
later date as HOLLAND and PAYLESS shall agree.  HOLLAND and PAYLESS  acknowledge
that the resignation which is the subject of this Agreement has been effected by
the mutual and amicable agreement of both parties. Notwithstanding the foregoing
HOLLAND will, at PAYLESS'  request,  provide  transitional  advisory services to
PAYLESS for a period  ending  April 30,  1998.  Such  service  will be performed
without  compensation other than  reimbursement of business expenses.  The hours
(if any) during which HOLLAND


<PAGE>5


performs  such  transitional  advisory  services  on  any  given  day  shall  be
determined by him, although he will use reasonable  efforts to respond timely to
accommodate the reasonable requests of PAYLESS for his services.

     2. RELEASE OF LIABILITY

     HOLLAND  releases  PAYLESS  from the  terms of the  Control  Agreement  and
acknowledges  that  further  obligations  of HOLLAND and PAYLESS in that Control
Agreement  are  extinguished  upon  execution  of  this  Agreement,   except  as
specifically noted herein.  HOLLAND  understands that he is releasing PAYLESS to
the maximum extent permissible by law, from any liability which HOLLAND believes
PAYLESS may have had to him, at any time up to and  including  the date he signs
this Agreement. HOLLAND waives any legal right or claims HOLLAND may have or may
have had,  including claims of race, color,  national origin, sex or gender, age
or  disability  discrimination,  arising under the Title VII of the Civil Rights
Acts of 1964,  the  Rehabilitation  Act of 1973,  the Civil  Rights  Act of 1866
(Section  1981),  the  Americans  with  Disabilities  Act of 1990,  the Employee
Retirement  Income  Security Act of 1974, the Age  Discrimination  in Employment
Act, the Family and Medical  Leave Act of 1993,  the Missouri  Human Rights Act,
the Missouri  Workers  Compensation  Act and the Missouri Service Letter Act and
under any other federal, state, or local statute,  regulation,  or common law of
any state, including any and all claims in tort or contract;  provided, however,
that nothing  contained in this Release of Liability  shall modify or in any way
detract from the Indemnification provisions of Paragraph A.6 herein.

     3. COOPERATION AGREEMENT

     HOLLAND also agrees to cooperate  and assist  PAYLESS in the  investigation
and  handling  of  any  actual  or  threatened  court  action,   arbitration  or
administrative  proceeding  or dispute  involving  any matter that arose  during
HOLLAND's  employment  (including,  but not limited to, testifying in deposition
and/or court and providing  information to PAYLESS).  PAYLESS  acknowledges  and
agrees that it is  responsible  for any and all  expenses  (including  costs and
attorneys' fees) that HOLLAND may incur in connection with any such proceeding.

     4. ADEQUACY OF CONSIDERATION

     HOLLAND  acknowledges  that the sum paid by PAYLESS under this Agreement is
adequate  consideration for HOLLAND's  execution of this Agreement,  and further
acknowledges  that  the sum is in  excess  of the  amounts  to which he would be
entitled under the existing Control Agreement, policies or practices of PAYLESS.


<PAGE>6


3.  OTHER AGREEMENTS

     1. NON-DISPARAGEMENT

     HOLLAND  and PAYLESS  acknowledge  and agree that  disparaging  or critical
statements  made by HOLLAND  about  PAYLESS or its board  members,  officers and
employees or disparaging  statements made by board members or senior officers of
PAYLESS  about HOLLAND  would be uniquely  detrimental  to the interests of both
parties.  Therefore,  HOLLAND agrees to refrain from making such  disparaging or
critical statements about PAYLESS, or its board members, officers, and employees
of PAYLESS,  and PAYLESS agrees that PAYLESS' board members and senior executive
officers will refrain from making such disparaging or critical  statements about
HOLLAND. All other provisions of this Agreement notwithstanding,  PAYLESS agrees
that any statements made by HOLLAND during any testimony given by him as part of
any deposition, court hearing, trial, arbitration hearing or similar proceeding,
shall not be considered a disparaging  or critical  statement and HOLLAND agrees
that  any  statements  made by  PAYLESS  or its  board  members,  officers,  and
employees of PAYLESS  during any  testimony  given by any of them as part of any
deposition,  court hearing,  trial,  arbitration hearing, or similar proceeding,
shall not be considered a disparaging or critical statement.

     2. NO ADMISSION OF LIABILITY

     HOLLAND  acknowledges that this Agreement shall not in any way be construed
as an admission by PAYLESS of any liability on the part of PAYLESS, and that all
such liability is expressly denied by PAYLESS.  Likewise,  PAYLESS  acknowledges
that this Agreement shall not in any way be construed as an admission by HOLLAND
of any liability on the part of HOLLAND and that all such liability is expressly
denied by HOLLAND.

     3. VOLUNTARY NATURE OF AGREEMENT AND ADVICE OF COUNSEL

     HOLLAND  acknowledges  that he has read  this  Agreement  and any  attached
schedules,  understands their terms, and signs the Agreement  voluntarily of his
own free will,  without coercion or duress,  and with full  understanding of the
significance and binding effect of the Agreement. HOLLAND has consulted with his
attorney before signing this Agreement. HOLLAND further acknowledges that he has
been represented by counsel with respect to his pending and potential claims and
has thoroughly discussed all aspects of this Agreement with his attorney.

     4. CONSIDERATION PERIOD AND REVOCATION

     HOLLAND received this Agreement on January 23, 1998.  HOLLAND  acknowledges
that he has had a reasonable time, and has had adequate  opportunity to consider
the terms of the  Agreement  and  whether  or not to enter  into the  Agreement.
HOLLAND has twenty-one (21) calendar days,  after the date HOLLAND  received the
Agreement,  within  which to consider  the

<PAGE>7


Agreement,  although he may sign and deliver it to PAYLESS sooner if he desires.
HOLLAND may revoke the Agreement by delivering a written notice of revocation to
Louise Iennacaro,  Vice President of Human Resources,  within seven (7) calendar
days after HOLLAND signs the  Agreement.  The  provisions of this Agreement will
become  effective and enforceable on the eighth (8th) calendar day following the
date HOLLAND signs the Agreement.

     5. BINDING EFFECT

     This Agreement will be binding upon HOLLAND and his heirs,  administrators,
representatives,  executors,  successors  and  assigns,  and  will  inure to the
benefit of PAYLESS and its  successors  and assigns.  Similarly,  this Agreement
will be binding on PAYLESS, its officers,  agents and successors in interest and
assigns and will inure to the benefit of HOLLAND and his heirs,  administrators,
representatives, executors, successors and assigns.

     6. NEWS RELEASES

     PAYLESS agrees that before it makes any public announcements concerning the
resignation of HOLLAND in any newspaper,  trade publication,  radio, television,
or  other  form  of  public  communication,  it  will  submit  such  a  prepared
announcement to HOLLAND for his review and approval.  No such  announcement will
be made without the prior approval of HOLLAND.  HOLLAND agrees that his approval
shall not be unreasonably refused.

     7. GOVERNING LAW

     This Agreement will be interpreted and enforced in accordance with the laws
of the State of Missouri.

     8. SEVERABILITY

     Should any provision of this Agreement be declared or determined by a court
of  competent  jurisdiction  to  be  invalid  or  otherwise  unenforceable,  the
remaining  parts,  terms and provisions  shall  continue to be valid,  legal and
enforceable,  and will be performed and enforced to the fullest extent permitted
by law.

     9. COMPLETE AGREEMENT

     Except for the Indemnification  Provisions and rights and obligations under
directors' and officers'  liability  insurance  policy referred to in paragraphs
A.6 and A.7, which this Agreement merely  supplements but which otherwise remain
in full force and effect,  this Agreement  contains the entire agreement between
HOLLAND and PAYLESS with  respect to the subject  matter  hereof and,  except as
otherwise noted herein supersedes all prior agreements or understandings between
them. No change or waiver of any part of this  Agreement will be valid unless in
writing and signed by both HOLLAND and PAYLESS.


<PAGE>8


     10. ARBITRATION

     The parties  hereby agree that any dispute  arising  hereunder or any claim
for breach or violation  of any item hereof  shall be  submitted to  arbitration
pursuant to the rules of the American Arbitration Association ("AAA") to a panel
of three  arbitrators  selected  by mutual  agreement  of the parties or, if the
parties do not mutually agree on the  arbitrators,  in accordance with the rules
of the AAA.  The  award  determination  of the  arbitrators  shall be final  and
binding upon the parties  without  right of appeal.  Either party shall have the
right to bring an action in any court of competent  jurisdiction to enforce this
paragraph  and to enforce  any  arbitrators'  award  rendered  pursuant  to this
paragraph.  The venue for all  proceedings in arbitration  hereunder and for any
judicial proceedings related thereto shall be in Kansas City, Missouri.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year set forth first above written.


PAYLESS CASHWAYS, INC.                        E. J. HOLLAND, JR.

By:  /s/ Donald E. Roller                     /s/  E. J. Holland, Jr.
   ------------------------                   -------------------------     
Name:  Donald E. Roller                       Date:  January 23, 1998

Title:  Acting Chief Executive Officer

Date:  January 23, 1998


<PAGE>9


              Schedule I to E. J. Holland, Jr. Severance Agreement
                          Lump sum payment computation



Severance Period Base Salary                              $242,000.00
   (12 months at rate
     in effect on 7/21/97)

Unpaid Retention Bonus                                     $36,300.00
   (50% of 30% of $242,000)

Unused Vacation Days
   (4 weeks pay at $242,000 per annum)                      $18,615.38

Additional Lump Sum Payment pursuant to
  P.  A(2)(a)(ii)                                           $10,000.00

Additional Retirement Benefit, as                       [to be determined]
   described in P.  A(2)(c)

Automobile Allowance                                         $8,158.00
                                                            ----------

Total (exclusive of Additional Retirement Benefit          $315,073.38
   described in P.  A(2)(c)


<PAGE>10


              Schedule II to E. J. Holland, Jr. Severance Agreement
                              Benefit Continuation



Group Medical/Vision
Group Dental
Long Term Disability and Supplemental  Disability  (limited to a maximum monthly
     benefit of $5,000.00)
Combined Group Life Insurance and Supplemental Death Benefits of $810,000 during
     the Severance  Period,  and a $270,000  life  insurance  policy  thereafter
     Annual
Physical in early 1998 1997 Tax Preparation ($1,000 limit)


<PAGE>11


             Schedule III to E. J. Holland, Jr. Severance Agreement

                          CERTIFICATE OF INCORPORATION
                            INDEMNIFICATION PROVISION


                                  ARTICLE VIII
                           INDEMNIFICATION; INSURANCE

     The directors and officers of the  corporation  shall be indemnified to the
maximum extent permitted by law. Without limiting the foregoing, each person who
was or is made a party or is threatened  to be made a party to any action,  suit
or  proceeding,   whether  civil,  criminal,   administrative  or  investigative
(hereinafter a "proceeding"),  by reason of the fact that he or she, or a person
of whom he or she is the legal  representative,  is or was a director or officer
of the corporation,  or is or was serving, at the request of the corporation, as
a director, officer, employee, fiduciary or agent of another corporation or of a
partnership,  joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation, to the fullest extent which it is empowered to
do so by the  Delaware  General  Corporation  Law,  as the  same  exists  or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment  permits the corporation to provide broader  indemnification
rights  than  said  law  permitted  the  corporation  to  provide  prior to such
amendment),   against  all  expenses,  judgments,  fines  and  amounts  paid  in
settlement  actually and reasonably  incurred by such person in connection  with
such proceeding, including attorneys' fees, and such indemnification shall inure
to the  benefit of his or her heirs,  executors  and  administrators;  provided,
however,  that,  except  as  provided  in the  bylaws  of the  corporation,  the
corporation  shall  indemnify  any  such  person  seeking   indemnification   in
connection  with a proceeding  initiated by such person only if such  proceeding
was authorized by the board of directors of the corporation.  Expenses  incurred
by a director  or officer of the  corporation  in  defending a civil or criminal
action,  suit or proceeding  shall be paid by the  corporation in advance of the
final  disposition  of  such  action,  suit or  proceeding  upon  receipt  of an
undertaking  by or on behalf of the  director or officer to repay such amount if
it is ultimately  determined  that the director or officer is not entitled to be
indemnified by the corporation as authorized by the Delaware General Corporation
Law. The foregoing right of indemnification and advancement of expenses shall be
a  contract  right  and  shall in no way be  exclusive  of any  other  rights of
indemnification  and  advancement  of  expenses  to which any such  director  or
officer  may  be  entitled  by  law,  agreement,  vote  of  stockholders  or  of
disinterested  directors  or  otherwise.   All  rights  of  indemnification  and
advancement of expenses  hereunder  shall survive any repeal or  modification of
this  Article VIII as to any set of facts or  proceeding  then  existing,  shall
continue  as to a person who has ceased to be an officer or  director  and shall
inure to the  benefit  of the  heirs,  executors  and  administrators  of such a
director or officer. The procedures with respect to indemnification shall be set
forth in the bylaws of the corporation.


<PAGE>12


     The corporation may maintain  insurance,  at its expense, to protect itself
and any  person  who is or was a  director,  officer,  employee  or agent of the
corporation  or is or  was  serving  at the  request  of  the  corporation  as a
director, officer, employee or agent of another corporation,  partnership, joint
venture, trust or other enterprise against any such expense,  liability or loss,
whether or not the  corporation  would have the power to  indemnify  such person
against such expense,  liability or loss under the Delaware General  Corporation
Law.


<PAGE>13


              Schedule IV to E. J. Holland, Jr. Severance Agreement

                                     BYLAWS
                           INDEMNIFICATION PROVISIONS


                                    ARTICLE V
                INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

     Section 1.  Procedure for  Indemnification  of Directors and Officers.  Any
indemnification  of a  director  or  officer  of the  corporation  or advance of
expenses under Article VIII of the  certificate of  incorporation  shall be made
promptly,  and in any event within thirty days,  upon the written request of the
director or officer.  If a determination by the corporation that the director or
officer is entitled to  indemnification  pursuant to this Article V is required,
and the corporation  fails to respond within sixty days to a written request for
indemnity,  the corporation shall be deemed to have approved the request. If the
corporation  denies a  written  request  for  indemnification  or  advancing  of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within thirty days, the right to indemnification or advances as granted
by this Article V shall be  enforceable  by the director or officer in any court
of  competent  jurisdiction.  Such  person's  costs  and  expenses  incurred  in
connection with successfully  establishing his or her right to  indemnification,
in  whole or in  part,  in any such  action  shall  also be  indemnified  by the
corporation.  It shall be a defense  to any such  action  (other  than an action
brought to enforce a claim for expenses  incurred in defending any proceeding in
advance of its final  disposition  where the required  undertaking,  if any, has
been tendered to the corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed, but the burden
of  such  defense  shall  be on the  corporation.  Neither  the  failure  of the
corporation (including its board of directors,  independent legal counsel or its
stockholders)  to have made a  determination  prior to the  commencement of such
action  that  indemnification  of the  claimant  is proper in the  circumstances
because he or she has met the  applicable  standard  of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the corporation
(including   its  board  of   directors,   independent   legal  counsel  or  its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a  presumption  that the claimant has
not met the applicable standard of conduct.

     Section 2. Article Not  Exclusive.  The rights to  indemnification  and the
payment of expenses  incurred in defending a proceeding  in advance of its final
disposition  conferred  in this  Article V shall not be  exclusive  of any other
right  which  any  person  may have or  hereafter  acquire  under  any  statute,
provision  or the  certificate  of  incorporation,  bylaw,  agreement,  vote  of
stockholders or disinterested directors or otherwise.


<PAGE>14


     Section  3.  Employees  and  Agents.  Persons  who are not  covered  by the
foregoing  provisions of this Article V and who are or were  employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise,  may be indemnified to the extent authorized at any time or
from  time to time by the board of  directors.  Expenses  (including  attorneys'
fees)  incurred  by  employees  and  agents  may be paid  upon  such  terms  and
conditions, if any, as the board of directors deems appropriate;  provided, that
such expenses may only be paid by the  corporation  in advance of a proceeding's
final  disposition  upon  receipt  of an  undertaking  by or on  behalf  of such
employee or agent to repay such amount if it shall ultimately be determined that
he or she is not entitled to be indemnified by the corporation.

     Section 4.  Contract  Rights.  The  provisions  of this  Article V shall be
deemed to be a contract  right  between  the  corporation  and each  director or
officer who serves in any such capacity at any time while this Article V and the
relevant  provisions of the Delaware General Corporation Law or other applicable
law are in effect,  and any repeal or modification of this Article V or any such
law shall not affect any rights or obligations then existing with respect to any
state of facts or proceeding then existing.

     Section  5.  Merger or  Consolidation.  For  purposes  of this  Article  V,
references  to "the  corporation"  shall  include,  in addition to the resulting
corporation,  any  constituent  corporation  (including  any  constituent  of  a
constituent)  absorbed  in a  consolidation  or merger  which,  if its  separate
existence  had  continued,  would have had power and  authority to indemnify its
directors,  officers,  and  employees  or  agents,  so that any  person who is a
director,  officer,  employee or agent of such constituent  corporation or is or
was  serving  at the  request of such  constituent  corporation  as a  director,
officer, employee or agent of another corporation,  partnership,  joint venture,
trust or other enterprise, shall stand in the same position under this Article V
with respect to the resulting or surviving  corporation  as he or she would have
with  respect to such  constituent  corporation  if its separate  existence  had
continued.


<PAGE>15


              Schedule V to E. J. Holland, Jr. Severance Agreement

                            INDEMNIFICATION AGREEMENT