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                            INDEMNIFICATION AGREEMENT


     This  Agreement,  dated as of March , 1998, is made by and between  Payless
Cashways, Inc., a Delaware corporation (the "Company"),  and ________________who
is serving as a director and/or officer of the Company ("Indemnitee").

                                    RECITALS

     WHEREAS,  Indemnitee  is currently  serving in the  capacity or  capacities
described above.

     WHEREAS,  the Company  desires to attract and retain the services of highly
qualified  individuals,  such as  Indemnitee,  to serve as directors,  officers,
employees and agents of the Company and to indemnify these  individuals so as to
provide them with the maximum protection permitted by law.

     WHEREAS,  the Company and Indemnitee  recognize the substantial increase in
corporate litigation in general, subjecting directors,  officers, employees, and
agents to expensive  litigation risk at the same time that the  availability and
coverage of liability insurance has been severely limited.

     WHEREAS, Indemnitee is currently entitled to indemnification under Delaware
General Corporation Law and the Certificate of Incorporation of the Company.

         WHEREAS, Indemnitee regards the protection extended by Delaware law and
the  Certificate  of  Incorporation  as  beneficial,  but  Indemnitee may not be
willing to serve or  continue  to serve as  director  or officer of the  Company
without additional  inducements,  and the Company desires Indemnitee to serve in
such capacity and in other capacities.

                                    AGREEMENT

1.  Definitions.

     1.1 "Agent"  means any person who is or was a director,  officer, employee,
agent or fiduciary of the Company or a subsidiary  of the Company,  or is or was
serving at the request of, for the convenience of, or to represent the interests
of the Company or a subsidiary of the Company as a director,  officer, employee,
agent or fiduciary of another corporation,  partnership, joint venture, trust or
other  enterprise  or entity,  including  service  with  respect to an  employee
benefit plan.

     1.2 "Disinterested Director" means a director of the Company who is not and
was not a party to the proceeding for which  indemnification  is being sought by
the claimant.


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     1.3 "Expenses" includes all direct and indirect costs of any type or nature
whatsoever  (including,  without  limitation,  all  attorneys'  fees and related
disbursements,  other out-of-pocket  costs and reasonable  compensation for time
spent by Indemnitee for which he/she is not otherwise compensated by the Company
or any third party) actually and reasonably incurred by Indemnitee in connection
with either the investigation, defense or appeal of a proceeding or establishing
or enforcing a right to indemnification under this Agreement, Section 145 of the
General Corporation Law of Delaware or otherwise.

     1.4 "Independent Legal Counsel" means a law firm, a member of a law firm,
or an independent practitioner,that is experienced in matters of corporation law
and shall include any person who, under the applicable standards of professional
conduct then  prevailing,  would not have a conflict of interest in representing
either the Company or Indemnitee in an action to determine  Indemnitee's  rights
under this Agreement.

     1.5 "Proceeding" means any threatened, pending, or completed action, suit
or other proceeding, whether civil, criminal, administrative, investigative
or any other type whatsoever.

     1.6 "Subsidiary" means any corporation, partnership, joint venture or other
enterprise,  a majority  of whose  equity  interests  are owned by the  Company,
directly or through one or more other subsidiaries.

2.  Agreement to Serve. Indemnitee agrees to serve or to continue to serve as an
Agent of the Company in the capacity Indemnitee  currently serves as an agent of
the Company,  so long as he/she is duly  appointed  or elected and  qualified in
accordance with the applicable provisions of the Certificate of Incorporation of
the Company or any  Subsidiary of the Company or until such time he/she  tenders
his/her resignation in writing.

3.  D&O Insurance.

     3.1  Maintenance of D&O Insurance.  So long as Indemnitee shall continue to
serve in any capacity  described in Section 2 and thereafter so long as there is
any reasonable possibility that Indemnitee shall be subject to any proceeding by
reason of the fact that Indemnitee served in any of such capacities, the Company
will use  reasonable  efforts to purchase and maintain in effect for the benefit
of Indemnitee one or more valid,  binding and enforceable policies of directors'
and officers' liability insurance ("D&O Insurance") providing,  in all respects,
coverage and amounts as reasonably determined by the Board of Directors.

     3.2  Unavailability  or  Impracticality  of D&O Insurance.  Notwithstanding
subsection  3.1, the Company  shall not be required to maintain D&O Insurance if
(a) such insurance is not reasonably available or (b) in the reasonable business
judgment of the Board of  Directors  of the Company as it may exist from time to
time,   either  (i)  the  premium  cost  for  such  insurance  is  substantially
disproportionate  to the amount of  insurance or (ii) the coverage is so limited
by exclusions that there is insufficient benefit provided by such insurance.


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4. Limitation of Indemnity.  Notwithstanding  anything in Section 7 or Section 8
to the contrary,  the Company  shall not be liable under this  Agreement to make
any  indemnity  payment  or  advancement  of  expenses  in  connection  with any
Proceeding  (a) to the extent that  payment is actually  made to or on behalf of
Indemnitee under a valid and collectible  insurance policy, except in respect of
any amount in excess of the limits of liability of such policy or any applicable
deductible under such policy; (b) to the extent that payment has been or will be
made to Indemnitee  other than pursuant to this  Agreement;  (c) with respect to
acts  or  omissions  listed  in  Section   102(b)(7)  of  the  Delaware  General
Corporation  Law, as amended from time to time; and (d) if a final decision by a
Court   having   jurisdiction   in  the  matter   shall   determine   that  such
indemnification is not lawful.

5.  Notice and Defense of Claim.

     5.1  Notification of Proceeding.  Promptly  after receipt by Indemnitee of
notice of the  commencement  or the threat of  commencement  of any  Proceeding,
Indemnitee   shall  notify  the  Company  of  the   commencement  or  threat  of
commencement thereof. The failure to notify or promptly notify the Company shall
not  relieve  the  Company  from any  liability  that it may have to  Indemnitee
otherwise than under this Agreement and shall relieve the Company from liability
hereunder  only to the extent the Company has been  prejudiced in its defense of
such Proceeding as a result of Indemnitee's failure to notify the Company.

     5.2  Notice to  Insurer.  If, at the time of the receipt of a notice of the
commencement  of a Proceeding  pursuant to  subsection  5.1, the Company has D&O
Insurance in effect, the Company shall give prompt notice of the commencement of
such  proceeding to the insurers in accordance  with the procedures set forth in
the D&O Insurance  policy.  The Company shall  thereafter  take all necessary or
desirable  action to cause such insurers to pay, to or on behalf of  Indemnitee,
all amounts  payable as a result of such proceeding in accordance with the terms
of such policy.

     5.3  Assumption of Defense.  In the event the Company shall be obligated to
pay any expenses or costs of any Proceedings against Indemnitee, the Company, if
appropriate,  shall be entitled to assume the defense of such  proceeding,  with
counsel  approved by  Indemnitee,  upon the  delivery to  Indemnitee  of written
notice of its election to assume the defense. After delivery of such notice, the
Company will not be liable to  Indemnitee  under this  Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same Proceeding,
provided,  however,  that (a) Indemnitee shall have the right to employ separate
counsel  in any  such  Proceeding  at  Indemnitee's  expense,  or (b) if (i) the
employment  of counsel  by  Indemnitee  has been  previously  authorized  by the
Company,  (ii) Indemnitee  shall have  reasonably  concluded that there may be a
conflict of interest  between the Company and  Indemnitee in the conduct of such
defense,  or (iii) the Company  shall not,  in fact,  have  employed  counsel to
assume  the  defense  of  such  Proceeding,   then  the  fees  and  expenses  of
Indemnitee's  counsel shall be at the expense of the Company.  The Company shall
not be  entitled to assume the  defense of any  Proceeding  brought by or in the
right of the Company or as to which  Indemnitee  shall have made the  conclusion
provided for in (b)(ii) above.


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     5.4  Cooperation and Settlement of Claim. In defense of any claim or threat
thereof,  Indemnitee  shall give the Company such information and cooperation as
the Company may reasonably request. The Company shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any action
or claim effected without the prior written consent of the Company.  The Company
shall not settle any action or claim in any manner which will impose any penalty
or limitation on Indemnitee without Indemnitee's prior written consent. Both the
Company and  Indemnitee  agree that they will not  unreasonably  withhold  their
consent to any proposed  settlement.  In the event that consent is not given and
the  parties  hereto are unable to agree on a proposed  settlement,  Independent
Legal Counsel shall be retained by the Company, at its expense (with the consent
of  Indemnitee,  which  consent  shall not be  unreasonably  withheld),  for the
purpose of  determining  whether or not the proposed  settlement  is  reasonable
under all the  circumstances;  and if Independent  Legal Counsel  determines the
proposed  settlement is reasonable under all the  circumstances,  the settlement
may be consummated without the consent of the other party.

6.  Determination of Right to Indemnification.

     6.1 Procedure. The Secretary of the Company shall, promptly upon receipt of
a request for  indemnification,  advise the Board of  Directors  in writing that
Indemnitee  has  requested  indemnification.  Indemnitee  shall be  entitled  to
indemnification  if: (i)  Indemnitee is in fact an Agent of the Company or is or
was serving at the request of the  Company as an Agent of another  entity,  (ii)
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in or not opposed to the best interests of the Company, (iii) with respect to
any criminal  action or proceeding,  Indemnitee had no reason to believe his/her
conduct  was  unlawful,  and (iv) the  indemnification  would not  otherwise  be
prohibited  under Delaware law. The  determination  with respect to Indemnitee's
entitlement  to  indemnification  shall be made in the specific case as follows:
(a) by a majority  vote of  Disinterested  Directors,  even  though  less than a
quorum,  (b)  by  Independent  Legal  Counsel  selected  by  such  Disinterested
Directors,  or (c) if Disinterested Directors cannot be obtained, by vote of the
stockholders of the Company.

     6.2 Notice of  Determination.  Following the determination  with respect to
Indemnitee's  entitlement to indemnification under subsection 6.1, the Secretary
or any other officer of the Company shall provide  written  notice to Indemnitee
of such determination.

     6.3 Payment of Indemnification.  After a  determination  that Indemnitee is
entitled to  indemnification,  whether  under  subsection  6.1 or pursuant to an
adjudication or arbitration under Section 9, the Company shall pay all costs and
expenses  reasonably  incurred by Indemnitee in  investigating,  defending,  and
appealing any Proceeding against Indemnitee. Such payment shall be made within a
reasonable  time after the Company's  receipt of evidence that an  indemnifiable
expense has been incurred.

     6.4  Payment  of  Independent  Legal  Counsel.   If  the  determination  of
entitlement to  indemnification is to be made by Independent Legal Counsel under
subsection 6.1


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of this  Agreement,  the  Company  shall  pay any and all  reasonable  fees  and
expenses incurred by such independent counsel in connection with acting pursuant
to this Agreement.

     6.5 Payment of Expenses Incurred by Indemnitee in Making Determination. All
reasonable  costs or  expenses  (including  attorneys'  fees and  disbursements)
incurred by Indemnitee in cooperating  with the persons  responsible  for making
the determination called for under subsection 6.1 shall be borne by the Company,
irrespective   of  the   determination   as  to   Indemnitee's   entitlement  to
indemnification.

     6.6   Presumption  of  Entitlement   to  Indemnification.   In  making  any
determination  under subsection 6.1 or subsection 9.1, it shall be presumed that
Indemnitee is entitled to indemnification under this Agreement,  and the Company
shall have the burden of proof to  overcome  this  presumption.  As is  provided
under Section 145 of the General Corporation Law of Delaware, the termination of
any Proceeding  covered by this  Agreement,  by judgment,  order,  settlement or
conviction,  or upon a plea of nolo contendere or its equivalent,  shall not, of
itself,  create a  presumption  for the purpose of  subsection  6.1 or any other
provision of this Agreement  that  Indemnitee did not act in good faith and in a
manner that Indemnitee  reasonably  believed to be in or not opposed to the best
interests of the Company and, with respect to any criminal action or proceeding,
had reasonable cause to believe that the conduct was unlawful.

7. Mandatory Indemnification.  Subject to the limitations set forth in Section 4
and the  determination to be made under Section 6, if Indemnitee is a person who
was or is a  party  or is  threatened  to be  made  a  party  to or is  involved
(including involvement as a witness) in a Proceeding, including any action by or
in the right of the Company,  by reason of the fact that he/she is or was or has
agreed to become an Agent, or by reason of any action alleged to have been taken
or omitted by him/her in any capacity,  the Company shall  indemnify  Indemnitee
against  all  expense,  liability  and  loss  (including,  but not  limited  to,
judgements,  fines,  ERISA excise  taxes or penalties  and amounts paid or to be
paid in settlement),  actually and reasonably  incurred by him/her in connection
with the  investigation,  defense,  settlement  or  appeal  of such  Proceeding;
provided,  however,  that except as provided in subsection 9.1 of this Agreement
with respect to remedies of Indemnitee,  the Company shall indemnify  Indemnitee
in connection  with a Proceeding (or part thereof)  initiated by Indemnitee only
if such  Proceeding  (or any  part  thereof)  was  authorized  by the  Board  of
Directors of the Company.

8. Mandatory Advancement of Expenses.  The Company shall pay in advance of final
determination  all costs and  expenses  reasonably  incurred  by  Indemnitee  in
connection  with  the  investigation,  defense,  settlement  or  appeal  of  any
Proceeding to which Indemnitee is a party or is threatened to be made a party or
with respect to which Indemnitee is otherwise involved (including involvement as
a witness) as an Agent.  An  advancement  of expenses  incurred by Indemnitee in
his/her  capacity as an Agent shall be made only upon  receipt by the Company of
(a) a written  affirmation by Indemnitee of Indemnitee's  good faith belief that
Indemnitee  has met the standard of conduct  necessary  for  indemnification  as
outlined in Section 6 and Section 7, and (b) an  undertaking  by or on behalf of
Indemnitee to repay all amounts so advanced if it shall ultimately be determined
by final  judicial  decision from which there is no


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further right to appeal that  Indemnitee is not entitled to be  indemnified  for
such  expenses  under this  Agreement  or  otherwise.  The  advances  to be made
hereunder shall be paid within a reasonable time after the Company's  receipt of
a written request for reimbursement for incurred costs and expenses.

9.  Remedies of Indemnitee.

     9.1 In the event (a) the Company determines pursuant to subsection 6.1 that
Indemnitee is not entitled to  indemnification  under this  Agreement or (b) the
Company fails to make the  determination  called for in subsection 6.1 within 60
days of the Company's receipt of the request for indemnification, Indemnitee may
seek an adjudication in an appropriate court of the State of Delaware, or in any
other court of competent jurisdiction, for the purpose of enforcing Indemnitee's
right to  indemnification  or the advance  payment of expenses  pursuant to this
Agreement. Alternatively,  Indemnitee may, at Indemnitee's option, seek an award
in arbitration to be conducted by a single  arbitrator  pursuant to the rules of
the American Arbitration Association.  Indemnitee must exercise the rights under
this  subsection  within 180 days of the  earlier of (x) the date of notice of a
determination that Indemnitee is not entitled to indemnification or (y) the date
60 days after the Company receives the request for indemnification.

     9.2 In the event  that a  determination  shall  have been made  pursuant to
Section 6 of this Agreement that Indemnitee is not entitled to  indemnification,
any judicial  proceeding  or  arbitration  commenced  pursuant to this Section 9
shall be  conducted in all  respects as a de novo trial or  arbitration,  on the
merits,  and  Indemnitee  shall not be  prejudiced  by  reason  of that  adverse
determination.

     9.3 If a determination  shall have been made  pursuant to Section 6 of this
Agreement that Indemnitee is entitled to  indemnification,  the Company shall be
bound by such determination in any judicial proceeding or arbitration  commenced
pursuant  to this  Section  9,  absent (a) a  misstatement  by  Indemnitee  of a
material fact, or an omission of a material fact necessary to make  Indemnitee's
statement  not  materially  misleading,  in  connection  with  the  request  for
indemnification  or (b) a prohibition of such  indemnification  under applicable
law.

     9.4The Company shall be precluded from asserting in any judicial proceeding
or  arbitration  commenced  pursuant to this Section 9 that the  procedures  and
presumptions of this Agreement are not valid,  binding and enforceable and shall
stipulate  in any such court or before any such  arbitrator  that the Company is
bound by all the provisions of this Agreement.

     9.5 The obligations of the Company to make the payments required to be made
hereunder and to perform and observe the other  agreements on its part contained
herein, shall not be subject to diminution by set off,  counterclaim,  abatement
or otherwise;  provided, however, that Indemnitee shall not be released from any
liability or obligation that Indemnitee may owe the Company,  whether  hereunder
or otherwise.


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     9.6  Indemnitee's  expenses incurred in successfully  establishing  his/her
right to  indemnification  or  advancement  of expenses under this Section 9, in
whole or in part, in any such action (or  settlement  thereof)  shall be paid by
the Company.

10. Notice. All notices, requests, demands, and other communications relating to
this  Agreement  shall be in writing and shall be deemed to be duly given if (a)
delivered  by hand  and  receipted  for by the  party  to  whom  the  notice  or
communication  shall have been directed or (b) mailed by certified or registered
mail with postage prepaid,  on the third business day after the date on which it
is so mailed:

     if to Indemnitee, to:


-------------------------------------

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     or to such  other  address  as may have been  furnished  to the  Company by
     Indemnitee and

     if to the Company, to:

             Payless Cashways, Inc.
             2300 Main
             Kansas City, MO  64108
             Attention: Secretary/Assistant Secretary

             with a copy to:

             Blackwell Sanders Matheny Weary & Lombardi LLP
             2300 Main
             Kansas City, MO 64108
             Attention:  Gary D. Gilson

     or to such other  address as may have been  furnished to  Indemnitee by the
     Company.

11. Severability.  If this Agreement, or any portion hereof, shall be held to be
invalid  or  unenforceable  for  any  reason,  the  Company  shall  nevertheless
indemnify  Indemnitee as to all expenses,  judgments,  fines and penalties  with
respect to any action, suit or proceeding,  whether threatened or commenced,  to
the full extent  permitted by any portion of this  Agreement that shall not have
been held to be invalid or  unenforceable  under the General  Corporation Law of
Delaware and the Certificate of Incorporation of the Company. Such invalidity or
unenforceability  shall not otherwise affect the validity or  enforceability  of
the other provisions hereof.


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12.  Modification and Waiver. No supplement,  modification, or amendment of this
Agreement shall be binding unless executed in writing by both parties. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions  (whether or not similar);  nor shall such waiver
constitute a continuing waiver.

13.  Continuation  of Indemnity.  All agreements  and obligations of the Company
contained in this  Agreement  shall  continue  during the period  Indemnitee has
consented  to be or is a director or officer of the Company or is or was serving
at the  request of the  Company as a  director,  officer,  employee  or agent of
another corporation,  partnership,  joint venture, trust or other enterprise and
shall continue thereafter so long as Indemnitee shall be subject to any possible
claim or threatened,  pending or completed Proceeding by reason of the fact that
Indemnitee has consented to be or is or was a director or officer of the Company
or is or was serving in any other capacity referred to in this Agreement.

14.  Binding  Effect.  This  Agreement shall be binding upon the Company and its
successors  and assigns and shall inure to the benefit of Indemnitee and his/her
heirs, assigns and personal representatives.

15.  Non-exclusivity.  The  indemnification, contribution and advance payment of
expenses  provided  by any  provision  of this  Agreement  shall  not be  deemed
exclusive  of any other  rights to which  Indemnitee  may be entitled  under any
provision of law, the Certificate of Incorporation,  any Bylaw, other agreement,
vote of stockholders or disinterested directors or otherwise,  both as to action
in Indemnitee's  official  capacity and as to action in any other capacity after
consenting  to serve as a director or while  occupying  any of the  positions or
having any of the relationships referred to in this Agreement.

16.  Subrogation  Rights.  In the event of any payment under this Agreement, the
Company  shall be  subrogated to the extent of such payment to all of the rights
of recovery of  Indemnitee  against any person or  organization  and  Indemnitee
shall  execute  all  papers  required  and  shall  do  everything  that  may  be
reasonablely necessary to secure such rights.

17. Document to Supersede.This Agreement shall supersede any other prior written
Indemnification Agreement between the Company and Indemnitee.

18. Governing  Law. The parties agree that this Agreement shall be construed and
enforced in  accordance  with and  governed by the laws of the State of Delaware
applicable to contracts made and to be performed in that state.

19.  Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall constitute the original.

20.  Headings. The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction of it.


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


                                       PAYLESS CASHWAYS, INC.

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Name:                                  By: 
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Address:                               Title:  

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