FIRST AMENDMENT TO CREDIT AGREEMENT

         This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated as
of October 28, 1997 by and among  HOMEBASE,  INC.,  THE FIRST  NATIONAL  BANK OF
CHICAGO,  BANKBOSTON,  N.A.,  WELLS  FARGO BANK,  N.A.  and THE  SUMITOMO  BANK,
LIMITED.

                       RECITALS

                  WHEREAS, the parties hereto are parties to that certain Credit
Agreement  dated as of July 9,  1997 (as from  time to time  amended,  restated,
supplemented or otherwise modified,  the "Credit  Agreement";  capitalized terms
used but not otherwise  defined herein having the definitions  provided therefor
in the Credit Agreement); and

                  WHEREAS,  the  parties  hereto  desire  to  amend  the  Credit
Agreement on the terms and conditions herein set forth.

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
mutual  covenants  hereinafter  contained,  and  for  other  good  and  valuable
consideration,  the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

1. Amendment to Credit Agreement.  Subject to the terms and conditions set forth
in  Section  2 of this  Amendment,  upon  the  Effective  Date  (as  hereinafter
defined), the Credit Agreement shall be hereby amended as follows:

                  (i) The  definition  of "EBITR"  set forth in Article I of the
         Credit  Agreement is hereby amended by deleting such  definition in its
         entirety and inserting the following in its stead:

                           "EBITR"  means,  for  any  period,   earnings  before
                           interest  expense,  income  taxes  and  Rentals,  all
                           determined on a  consolidated  basis for the Borrower
                           and Subsidiaries;  provided,  however, there shall be
                           excluded from such  calculation  a special  charge to
                           earnings  taken by the  Borrower in the third  fiscal
                           quarter  of 1998 in the  aggregate  amount  of Twenty
                           Seven   Million   Dollars   ($27,000,000)    incurred
                           primarily  due to the closure of three  stores of the
                           Borrower.

                  (ii) Section 2.7 of the Credit  Agreement is hereby amended by
deleting the fifth  sentence of such Section in its entirety and  inserting  the
following in its stead:

                           Notwithstanding  anything to the  contrary  contained
                           herein,  the Borrower's Status (i) from the Execution
                           Date  until the end of the third  fiscal  quarter  of
                           1998 of the  Borrower  shall be Level III  Status and
                           (ii) for the  fourth  fiscal  quarter of 1998 and the
                           first,  second and third  fiscal  quarters of 1999 of
                           the Borrower shall be Level IV Status.

                  (iii) Paragraph (d) of Section 6.13 of the Credit Agreement is
hereby  renumbered  to be paragraph  (e) and a new  paragraph (d) is inserted in
Section 6.13 in its stead which shall read as follows:

                           (d) the sale or other disposition of Inventory having
                           a book  value of less  than  Twelve  Million  Dollars
                           ($12,000,000)   in  the  aggregate,   which  sale  or
                           disposition  was  made  due to the  closure  of up to
                           three stores of the Borrower.

2. Conditions.  The  effectiveness of the amendments stated in this Amendment is
subject to on or prior to the date hereof,  that the following  conditions shall
have been satisfied in a manner, and in form and substance,  as the case may be,
reasonably acceptable to Lenders:

                  (i) Amendment. This Amendment shall have been duly executed by
         all parties hereto and delivered to Agent.

                  (ii) No  Default.  No Default  or Event of  Default  under the
         Credit  Agreement,  as  amended  hereby,  shall  have  occurred  and be
         continuing.

                  (iii)  Warranties  and  Representations.  The  warranties  and
         representations of the Borrower contained in this Amendment, the Credit
         Agreement,  as amended  hereby,  and the other Loan Documents  shall be
         true and correct as of the date hereof,  with the same effect as though
         made on such  date,  except  to the  extent  that such  warranties  and
         representations expressly relate to an earlier date, in which case such
         warranties and  representations  shall have been true and correct as of
         such earlier date.

                  (iv) Work Fee. The Borrower shall have paid to the Agent,  for
the ratable account of the Lenders in accordance with their  Percentages,  a fee
in the aggregate amount of Sixty Two Thousand Five Hundred Dollars ($62,500).

                  (v) Reaffirmation of Guaranty. Each Real Estate Subsidiary and
Operating  Subsidiary  shall have executed the  Reaffirmation of Guaranty in the
form of Exhibit A hereto.

The date on which all of the above events have occurred is the "Effective Date".
If the Effective Date has not occurred by October 31, 1997, this Amendment shall
be of no force and effect.

3.  Collateralization.  Notwithstanding  this Amendment,  and effective upon the
effectiveness   of  the   Amendment,   the   parties   hereto   agree  that  the
Collateralization Date (as defined in the Credit Agreement) shall have occurred.
The Borrower  agrees,  at its expense,  to execute,  acknowledge and deliver and
take such further action, including without limitation, the delivery of opinions
of counsel and  establishing  an appropriate  reserve in the Borrowing  Base, as
reasonably requested by the Agent to assure,  preserve,  protect and perfect the
first priority,  perfected  security  interest granted by the Loan Documents and
the  practical  ability to obtain and  enforce the rights and  remedies  created
thereby.  Failure to comply with this  covenant  shall be  considered  a Default
under the Credit  Agreement if not remedied  within 20 days after written notice
from the Agent.

4.  Continuing  Credits.  Notwithstanding  this  Amendment,  the Loans  owing to
Lenders by Borrower under the Credit Agreement that remain outstanding as of the
date hereof shall  constitute  continuing  Obligations of the Borrower under the
Credit Agreement and this Amendment shall not be deemed to evidence or result in
a novation, or a repayment or reborrowing, of such Loans.

5.       Miscellaneous.

         (a)  Captions.   Section  captions  used  in  this  Amendment  are  for
convenience only, and shall not affect the construction of this Amendment.

         (b) Governing  Law. THIS  AMENDMENT  SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED  AND ENFORCED IN  ACCORDANCE  WITH,  THE INTERNAL LAWS OF THE STATE OF
ILLINOIS,  WITHOUT  REGARD TO CONFLICT OF LAWS  PRINCIPLES  BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.  Whenever  possible each provision of
this Amendment  shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Amendment shall be prohibited
by or invalid under such law, such provision  shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provision or the remaining provisions of this Amendment.

         (c)  Counterparts.  This  Amendment  may be  executed  in any number of
counterparts  and by the different  parties on separate  counterparts,  and each
such counterpart  shall be deemed to be an original,  but all such  counterparts
shall together constitute but one and the same instrument.

         (d) Successors and Assigns.  This Amendment  shall be binding upon, and
shall inure to the sole benefit of the  Borrower,  Agent and Lenders,  and their
respective successors and assigns.

         (e) References.  Any reference to the Credit Agreement contained in any
notice,  request,  certificate,  or other document executed concurrently with or
after the  execution and delivery of this  Amendment  shall be deemed to include
this Amendment unless the context shall otherwise require.

         (f) Continued Effectiveness. Notwithstanding anything contained herein,
the terms of this  Amendment  are not  intended  to and do not serve to effect a
novation of the Credit  Agreement;  instead,  it is the express intention of the
parties hereto to reaffirm the  Obligations  created under the Credit  Agreement
which is evidenced by the Notes. The Credit  Agreement,  as amended hereby,  and
each of the other Loan Documents remain in full force and effect.

         (g) Costs and Expenses.  Borrower affirms and acknowledges that Section
9.7 of the Credit  Agreement  applies to this Amendment and the transactions and
agreements and documents contemplated hereunder.

5. Representations and Warranties. The Borrower represents and warrants to Agent
and Lenders that the execution, delivery and performance by the Borrower of this
Amendment are within the Borrower's  corporate powers, have been duly authorized
by all necessary corporate action (including,  without limitation, all necessary
shareholder   approval)  of  the  Borrower,  do  not  require  any  governmental
approvals,  consents or filings and do not and will not  contravene  or conflict
with any  provision  of law  applicable  to the  Borrower,  the  certificate  of
incorporation or bylaws of the Borrower or any order,  judgment or decree of any
court or other agency of government or any contractual  obligation  binding upon
the Borrower, and this Amendment,  the Credit Agreement,  as amended hereby, and
each Loan  Document is the legal,  valid and binding  obligation of the Borrower
enforceable  against  the  Borrower  in  accordance  with its terms and that the
conditions  set forth in Sections  2(ii) and (iii) hereof are true,  correct and
complete as of the Effective Date.

                                              [signature pages follow]

         IN WITNESS  WHEREOF,  this First Amendment to Credit Agreement has been
duly executed and delivered as of the day and year first above written.

                     HOMEBASE, INC.

                       By:________________________________

                       Print Name: _________________________

                       Title: ______________________________

                       3345 Michelson Drive
                       Irving, California 92715
                       Phone: (714) 442-5000
                       Fax:   (714) 442-5127




                       THE FIRST NATIONAL BANK OF CHICAGO,
                       Individually and as Agent

                       By:________________________________

                       Print Name: _________________________

                       Title: ______________________________

                       One First National Plaza
                       Chicago, Illinois  60670
                       Phone:  (312) 732-7101
                       Fax:      (312) 732-1117

                       Attention:  John D. Runger, Managing Director


                       BANKBOSTON, N.A.,
                       Individually and as Syndication Agent
 
                       By: _________________________
 
                       Print Name: Linda Thomas
                       Title: Managing Director
                       100 Federal Street
                       Mail Stop 01-09-05
                       Boston, Massachusetts 02110
                       Phone: (617) 434-7000
                       Fax:      (617) 434-0816

                       WELLS FARGO BANK, N.A.
                       Individually and as Documentation Agent

                       By:
  
                       Print Name: Kathleen Barnes
                       Title: Vice President

                       By:_______________________________

                       Name:_____________________________

                       Title:______________________________
                       707 Wilshire Boulevard, 16th Floor
                       MAC 2818-163
                       Los Angeles, California 90017
                       Phone: (213) 614-7782
                       Fax:     (213) 614-2569

                       THE SUMITOMO BANK, LIMITED
    
                       By:

                       Print Name:__________________

                       Title:

 
                       By:

                       Print Name:__________________
  
                       Title:

                                    EXHIBIT A


                            REAFFIRMATION OF GUARANTY


                  Each of the undersigned  acknowledges receipt of a copy of the
First Amendment to the Credit  Agreement (the  "Amendment")  dated as of October
28, 1997,  consents to such amendment,  and each of the transactions  referenced
therein and hereby reaffirms its obligations under the Subsidiary Guaranty dated
as of July 9, 1997 in favor of The First National Bank of Chicago, as Agent, and
the Lenders (as defined in the Amendment).


Dated as of October 28, 1997

                                                     [GUARANTOR]


                                                     By:

                                                     Title: