SECOND AMENDMENT TO CREDIT AGREEMENT

         This SECOND AMENDMENT TO CREDIT  AGREEMENT (this  "Amendment") is dated
as of November 7, 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 "Borrowing  Base" 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:

              "Borrowing Base" means, at any time, an amount equal
              to (a) the sum of (i) the Advance Rate applicable to
              Eligible Accounts multiplied times the book value of
                           all  Eligible  Accounts  at such time,  plus (ii) the
                           Advance  Rate   applicable   to  Eligible   Inventory
                           multiplied times the amount of the Eligible Inventory
                           at such time  minus (b)  fifty  percent  (50%) of the
                           aggregate amount of Rentals for the prior twelve
                           months.

                  (ii) The  definition  of  "Change  in  Control"  set  forth in
         Article I of the Credit  Agreement is hereby  amended by inserting  the
         following at the end of such definition:

                           or a Change in Control as defined in the Subordinated
                           Note Indenture.

                  (iii) The definition of "Subordinated  Indebtedness" 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:

                "Subordinated Indebtedness" of a Person means any
               Indebtedness of such Person the payment of which is
                           subordinated  to  payment of the  Obligations  to the
                           written   satisfaction   of  the  Required   Lenders.
                           Subordinated   Indebtedness  shall  include,  without
                           limitation,  the  Indebtedness  of  the  Borrower  in
                           respect of the Subordinated Notes.

                  (iv) The  definitions  set forth in  Article  I of the  Credit
         Agreement are hereby  amended by inserting  the  following  definitions
         alphabetically in such Article:

                           "Subordinated  Debt Documents" means the Subordinated
                           Notes,  the  Purchase   Agreement  dated  as  of  the
                           November  ___, 1997 by and among the Borrower and the
                           other parties  signatory thereto and the Subordinated
                           Note Indenture.

                "Subordinated Note Indenture" means that certain
              Indenture entered into between the Borrower and State
              Street Bank and Trust Company of California, N.A., as
              trustee, dated as of November ___, 1997, as the same
               may be amended or modified after the date hereof as
                                permitted hereby.

              "Subordinated Notes" means those certain Convertible
               Subordinated Notes due 2004 issued by the Borrower
               pursuant to the Subordinated Note Indenture in the
                aggregate principal amount of up to $115,000,000.

                  (v) Section 5.3 of the Credit  Agreement is hereby  amended by
         inserting the words "and  Subordinated  Debt Documents" after the words
         "Transaction  Documents"  in the third line thereof and inserting a new
         sentence at the end of such Section which shall read as follows:

                           No order, consent, approval, license,  authorization,
                           or   validation   of,   or   filing,   recording   or
                           registration  with, or exemption by, any governmental
                           or  public  body  or  authority,  or any  subdivision
                           thereof, is required to authorize,  or is required in
                           connection   with   the   execution,   delivery   and
                           performance  of, or the legality,  validity,  binding
                           effect or enforceability  of, any of the Subordinated
                           Debt Documents other than a "shelf  registration"  of
                           the  Subordinated  Notes  under  the  Securities  and
                           Exchange  Act  of  1933,   as  amended,   appropriate
                           filings,   qualifications  or  approvals  with  state
                           securities  regulators,  appropriate NASD filings and
                           approvals, appropriate filings and approvals required
                           by the Trust  Indenture  Act of 1939 and  appropriate
                           filngs required by the Securities and Exchange Act of
                           1934.

                  (vi) Article V of the Credit  Agreement  is hereby  amended by
         inserting a new Section 5.21 which shall read as follows:

                           5.21 Subordinated Indebtedness.  The Borrower has the
                           corporate   power   and   authority   to  incur   the
                           Indebtedness evidenced by the Subordinated Notes. The
                           subordination  provisions  of the  Subordinated  Note
                           Indenture   and  the   Subordinated   Notes  will  be
                           enforceable  against the holders of the  Subordinated
                           Notes  by the  holder  of any  Notes  which  has  not
                           effectively   waived  the   benefits   thereof.   All
                           Obligations,   including  the   Obligations   to  pay
                           principal  of and  interest on the Loans,  constitute
                           senior  Indebtedness  entitled  to  the  benefits  of
                           subordination   created  by  the  Subordinated   Note
                           Indenture and the  Subordinated  Notes. The principal
                           of  and   interest   on  the   Notes  and  all  other
                           Obligations will constitute  "senior debt" as that or
                           any  similar  term  is or may be  used  in any  other
                           instrument  evidencing  or  applicable  to any  other
                           Subordinated   Indebtedness  of  the  Borrower.   The
                           Borrower  acknowledges that the Agent and each Lender
                           is amending the Credit  Agreement  and  continuing to
                           extend the Aggregate  Commitment in reliance upon the
                           subordination  provisions of the  Subordinated  Notes
                           and this Section 5.21.

                  (vii) Section 6.11 of the Credit  Agreement is hereby  amended
         by inserting an  additional  paragraph at the end of such Section which
         shall read as follows:

                (m) Indebtedness of the Borrower in an aggregate
              principal amount not to exceed $115,000,000 evidenced
               by the Subordinated Notes and incurred pursuant to,
               and having the terms, including without limitation
                 the subordination provisions, set forth in the
                           Subordinated Note Indenture.

                  (viii)  Section  6.20.1  of the  Credit  Agreement  is  hereby
         amended by deleting the last three lines of such Section and  inserting
         the following in its stead:

                           01/30/1999                                  67%
                           01/29/2000                                  67%
                           01/27/2001                                  67%.

                  (ix) Section 6.21 of the Credit Agreement is hereby amended by
         deleting  such Section in its entirety and  inserting  the following in
         its stead:

              6.21 Capital Expenditures. The Borrower will not, nor
                           will it  permit  any  Subsidiary  to,  expend,  or be
                           committed   to  expend   for   Capital   Expenditures
                           (including,  without limitation,  for the acquisition
                           of fixed assets) during the indicated  fiscal year of
                           the  Borrower  on  a  non-cumulative   basis  in  the
                           aggregate  for the Borrower and its  Subsidiaries  in
                           excess of the aggregate amounts set forth below:

                           Fiscal Year Ending                     Amount
                           01/31/1998                             $45,000,000
                           01/30/1999                             $65,000,000
                           01/29/2000                             $82,000,000
                           01/27/2001                             $82,000,000

                  (x) Article VI of the Credit  Agreement  is hereby  amended by
         inserting a new Section 6.24 and Section  6.25 into such Article  which
         shall read as follows:

                6.24 Subordinated Indebtedness. The Borrower will
              not, and will not permit any Subsidiary to, make any
                           amendment or modification  to the indenture,  note or
                           other   agreement   evidencing   or   governing   any
                           Subordinated  Indebtedness or any  Subordinated  Debt
                           Documents  (other than  amendments  or  modifications
                           which would extend the maturity, reduce the amount of
                           any payment of principal thereof,  reduce the rate or
                           extend the date for payment of interest thereon),  or
                           directly or indirectly voluntarily prepay, defease or
                           in substance  defease,  purchase,  redeem,  retire or
                           otherwise  acquire,  any  Subordinated   Indebtedness
                           prior to the date when due.

              6.25 Collateral Value Report. Upon the request of the
              Agent, which may be made not more than once each year
               prior to an Event of Default, and at any time while
                 and so long as an Event of Default should have
              occurred and be continuing, the Borrower will obtain
               and deliver to the Agent a report of an independent
               collateral auditor satisfactory to the Agent (which
              may be or be affiliated with a Lender) to perform an
               audit, using customary procedures and scope, of the
                accounts and inventory components included in the
               Borrowing Base, which report shall indicate whether
              or not, in the opinion of such auditor based on such
                audit, the information set forth in the Borrowing
              Base Certificate most recently delivered is accurate
               and complete in all material respects based upon a
               review by such auditors of the Accounts (including
                 verification with respect to the amount, aging,
              identity and credit of the respective account debtors
                 and the billing practices of the Borrower) and
                           Inventory  (including  verification  as to the value,
                           location and respective types).

                  (xi) Section 9.7 of the Credit  Agreement is hereby amended by
         inserting the words "the  Subordinated Debt Documents," after the words
         "Transaction Documents" where such words appear.

                  (xii) Exhibit B to the Credit  Agreement is hereby replaced by
         the document attached hereto as Exhibit B.

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 Requisite Lenders:

                  (i) Amendment. This Amendment shall have been duly executed by
         the Requisite Lenders and the Borrower 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)  Subordinated  Debt. The Borrower shall have  consummated
         the transactions  contemplated by that certain Purchase Agreement dated
         as of  November  , 1997  (the  "Subordinated  Note  Agreement")  by and
         between the Borrower and Prudential Securities  Incorporated,  and have
         received not less than  $75,000,000 and not more than  $115,000,000 (in
         each case before  deduction  of  discounts,  commissions  and  offering
         expenses)  from  the  issuance  of  the  securities   pursuant  to  the
         Subordinated  Note  Indenture  which  shall have  terms and  conditions
         acceptable to the Required Lenders,  including,  without limitation, an
         interest rate not exceeding five and three quarters percent (5.75%) per
         annum, and the Borrower shall have delivered to the Agent a copy of the
         Subordinated Note Agreement and the Subordinated Note Indenture.

                  (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 November 13,  1997,  this  Amendment
shall be of no force and effect.

3.  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.

4.       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,  except as
enforceability  may  be  limited  by  bankruptcy,  insolvency  or  similar  laws
affecting the enforcement of creditors' rights generally 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 Second 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
                                                      Irvine, California 92612
                                                      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


<PAGE>

                                         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:

<PAGE>


                                    EXHIBIT A


                            REAFFIRMATION OF GUARANTY


                  Each of the undersigned  acknowledges receipt of a copy of the
Second  Amendment  to  the  Credit  Agreement  (the  "Amendment")  dated  as  of
November 7,  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 November 7, 1997

                                      [GUARANTOR]

                                      By:

                                      Title:


<TABLE>
<CAPTION>


                                    EXHIBIT B
                                     FORM OF
                           BORROWING BASE CERTIFICATE
                    AS OF _________, ____ FOR HOMEBASE, INC.

<S>      <S> 
         (Capitalized  terms  have the  meaning  ascribed  thereto in the Credit
         Agreement  dated as of July 9, 1997 by and among  the  undersigned,  as
         Borrower, and the Agent and the Lenders defined therein)

I.       Accounts
---------- -------------------------------------------------------------------------------- ------------------------

           A.       Gross Accounts (include only those Accounts created in the ordinary
                    course of business arising out of the sale of goods)
                                                                                            $-----------
---------- -------------------------------------------------------------------------------- ------------------------
---------- -------------------------------------------------------------------------------- ------------------------

           B.       Ineligible Accounts:  Each Account which fails to meet any of the
                    following  criteria [List dollar amount of accounts which do
                    not meet these criteria]:
---------- -------------------------------------------------------------------------------- ------------------------
----------    -----------------------------------------------------------------------------    ---------------------

              (a)    Which is an "account" within the meaning of Section 9-106 of the UCC;
                                                                                               -------------
----------    -----------------------------------------------------------------------------    ---------------------
----------    -----------------------------------------------------------------------------    ---------------------

              (b) Which is denominated and payable only in United States dollars
in
                     the United States; and                                                    ______________
----------    -----------------------------------------------------------------------------    ---------------------
----------    -----------------------------------------------------------------------------    ---------------------

              (c)    In which the Agent, on behalf of the Lenders, has after the
                     Collateralization  Date, a first priority  fully  perfected
                     Lien,
                     subject to no other Liens (other than Permitted Liens).                   ______________
----------    -----------------------------------------------------------------------------    ---------------------
----------    -----------------------------------------------------------------------------    ---------------------

                       Total Ineligible Accounts                                               ______________
----------    -----------------------------------------------------------------------------    ---------------------
----------    -----------------------------------------------------------------------------    ---------------------

              C.     Total Eligible Accounts (A less B)                                        ______________
                                                ----
----------    -----------------------------------------------------------------------------    ---------------------

II.      Inventory

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

           A.       Gross Inventory (include only that Inventory which is held for sale)
                                                                                            $-----------
---------- -------------------------------------------------------------------------------- ------------------------
---------- -------------------------------------------------------------------------------- ------------------------

           B.       Ineligible Inventory: All Inventory which meets any of the following
                    criteria:
---------- -------------------------------------------------------------------------------- ------------------------
----------    -----------------------------------------------------------------------------    ---------------------

              (a)    Inventory in which the Agent, on behalf of the Lenders, does not
                     have, subsequent to the Collateralization Date, a first priority
                     fully perfected Lien, subject to no other Liens (other than
                     Permitted Liens);                                                         ____________
----------    -----------------------------------------------------------------------------    ---------------------
----------    -----------------------------------------------------------------------------    ---------------------

              (b)    Inventory   classified  by  a  Borrower  or  Subsidiary  as
                     "obsolete" or which,  in the Agents'  reasonable  judgment,
                     should be so classified;
                                                                                               ------------
----------    -----------------------------------------------------------------------------    ---------------------
----------    -----------------------------------------------------------------------------    ---------------------

              (c)    Supplies,  nonsaleable  goods,  goods  to  be  returned  to
                     suppliers,  goods in transit to third  persons  (other than
                     the Borrower's agents or warehouses); and ____________
----------    -----------------------------------------------------------------------------    ---------------------
----------    -----------------------------------------------------------------------------    ---------------------

              (d)    Any  reserves  required  by the  Agent  in  its  reasonable
                     discretion  for  special  order  goods,   goods  which  are
                     "slow-moving",  goods whose  market  value has declined and
                     goods on lay away sales.
                                                                                               ------------
----------    -----------------------------------------------------------------------------    ---------------------
----------    -----------------------------------------------------------------------------    ---------------------

                       Total Ineligible Inventory                                              ____________
----------    -----------------------------------------------------------------------------    ---------------------
----------    -----------------------------------------------------------------------------    ---------------------

              C.     Total Eligible Inventory (A less B)                                       ____________
                                                 ----
----------    -----------------------------------------------------------------------------    ---------------------

III.     Availability

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

A.              Total Availability:                                                         ____________
--------------- --------------------------------------------------------------------------- ------------------------
--------------- --------------------------------------------------------------------------- ------------------------

                         (a)      (I.C) multiplied by 70%                                   ____________
--------------- --------------------------------------------------------------------------- ------------------------
--------------- --------------------------------------------------------------------------- ------------------------

                         (b)      (II.C) multiplied by 60%                                  ____________
--------------- --------------------------------------------------------------------------- ------------------------
--------------- --------------------------------------------------------------------------- ------------------------

                         (c)      50% of Rentals for prior twelve months
--------------- --------------------------------------------------------------------------- ------------------------
--------------- --------------------------------------------------------------------------- ------------------------

                         (d)      Sum of (i) (a) plus (b) (ii) minus (c)                    $___________
                                                 ----          -----
--------------- --------------------------------------------------------------------------- ------------------------

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

B.                  Total Outstanding Revolving Advances and Facility Letter of Credit          $___________
                    Obligations
---------------     -----------------------------------------------------------------------     --------------------
---------------     -----------------------------------------------------------------------     --------------------

C.                  Total Outstanding amount of letters of credit obligations (excluding        $___________
                    amounts included in (III. B above))
---------------     -----------------------------------------------------------------------     --------------------
---------------     -----------------------------------------------------------------------     --------------------

D.                  Excess (Deficit) (III.A less III.B)                                         $___________
---------------     -----------------------------------------------------------------------     --------------------
</TABLE>

                                           HOMEBASE, INC.

                                           By:______________________________

                                           Title:_____________________________