EXHIBIT 10.27

             STRATEGIC DEVELOPMENT, MARKETING AND SERVICES AGREEMENT

         THIS  STRATEGIC  DEVELOPMENT,  MARKETING AND SERVICES  AGREEMENT  (this
"Agreement") by and between First Data Merchant Services Corporation,  a Florida
corporation   ("FDMS"),   and   ValueStar,   Inc.,  a   California   corporation
("ValueStar"), is made this 29th day of September, 2000 (the "Effective Date").

         WHEREAS,  ValueStar  provides a  merchant  rating  service,  a merchant
benefits service and a cardholder benefits service (collectively, the "ValueStar
System" or "ValueStar Benefits");

         WHEREAS,   FDMS  is  in  the  business  of  providing  certain  payment
processing services for credit and debit card transactions for merchants through
its Channels;

         WHEREAS,  FDMS is in the process of enhancing a system  proprietary  to
FDMS that will allow FDMS to match credit card numbers registered with ValueStar
with  transactions  at merchants  registered  with  ValueStar  paid for with the
registered credit card numbers (the "FDMS System"); and

         WHEREAS,  ValueStar is in the process of enhancing a system proprietary
to ValueStar that creates  customer  surveys,  provides  benefits that stimulate
customer survey responses and tabulates and posts rating results (the "ValueStar
System");

         NOW, THEREFORE,  in consideration of the foregoing,  the parties hereto
hereby agree as follows:

1.       Definitions.  The following capitalized words shall have  the following
         meanings when used herein.

    a)   "Affiliate" shall mean any entity which,  directly or indirectly,  owns
         or controls,  is owned or is controlled by or is under common ownership
         or con trol with FDMS, and includes Alliances.

    b)   "Alliance" shall mean any venture (in any form, including in corporate,
         partnership or limited liability company form) or contractual  alliance
         now or hereafter  entered into between FDMS (or any of its  Affiliates)
         and one or more third  parties  for the  provision  of any  bankcard or
         other  credit  card  processing  services  pursuant  to an  arrangement
         whereby FDMS or its Affiliate  shares the economic benefit of ownership
         of merchant  contracts  through  profit  sharing,  revenue  sharing,  a
         royalty interest, or otherwise.

    c)   "Channel"  shall mean an Alliance  or FDMS Bank that has  relationships
         with FDMS Merchants.

    d)   "Channel Participation  Agreement" shall mean an agreement between FDMS
         and a Channel  pursuant  to which  such  Channel  agrees to market  the
         Program  to  its  respective  FDMS  Merchants  pursuant  to a  Merchant
         Participation  Agreement,  and shall be substantially in the form to be
         attached hereto as Exhibit A and approved by ValueStar,  which approval
         will not be unreasonably  withheld.  The parties  acknowledge and agree

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         that  a  Channel  Participation  Agreement  may be in  the  form  of an
         addendum  to the  extent  FDMS or an  Affiliate  already  has a  master
         services  or  alliance  agreement  with  such  Channel.   "Confidential
         Information"  shall  have the  meaning  set forth in Section 17 of this
         Agreement.

    e)   "Consumer  Registration  Terms"  shall  mean  those  certain  terms and
         conditions that a Registered Consumer must access and agree to prior to
         participating in the Program.

    f)   "FDMS  Bank"  shall  mean a bank  and/or  other  third  party and their
         authorized  agents/members  with whom  FDMS  and/or  an  Affiliate  has
         entered into an agreement  under which FDMS or its  Affiliate  provides
         bankcard  issuing  services and/or a bank or other third party or their
         authorized  agents/members  with whom FDMS or an Affiliate  has entered
         into an agreement to provide certain bankcard processing services.

    g)   "FDMS  Merchant"  shall  mean a  merchant  that  has  entered  into  an
         agreement  with FDMS and/or a Channel  under which FDMS or such Channel
         provides  the Payment  Processing  Services  or other  services to such
                merchant.

    h)   "FDMS System" shall mean the FDMS proprietary software and systems that
         allow FDMS to tag and/or  identify  ValueStar  Transactions,  and shall
         include all  technology,  software,  hardware and all other  components
         comprising  the FDMS System,  and all  enhancements  and  modifications
         thereto.

    i)   "Matching  Services"  shall mean the services  provided by FDMS and the
         FDMS  System   hereunder   that  allows  FDMS  to  identify   ValueStar
         Transactions,

    j)   "Participating Issuer" shall mean a bankcard issuer which has signed an
         agreement with ValueStar to offer the Program to its cardholders and to
         enable them to become Registered Consumers.

    k)   "Payment  Processing  Services"  shall mean the  services  FDMS and its
         Channels  provide  to FDMS  Merchants,  including  but not  limited  to
         authorization,  data capture, processing, settlement and reconciliation
         of credit and debit card transactions.

    l)   "Program"  shall mean the  service  offering,  including  the  Matching
         Services,  and related  services  that the parties will provide to FDMS
         Merchants,  consumers,  and third parties, through use of the ValueStar
         System and the FDMS System as more fully described in Exhibit B.

    m)   "Registered Consumer" shall mean a consumer / cardholder that registers
         its credit card number in order to be eligible for  ValueStar  Benefits
         and has agreed to participate  in the Program or a cardholder  that has
         been  registered  by  a  Participating  Issuer  or  that  has  directly
         registered with ValueStar.

    n)   "Registered  Consumer  Information"  shall mean the information  that a
         Registered   Consumer  provides  to  ValueStar  with  respect  to  such
         Registered Consumer.

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    o)   "Registered  Credit Card Number " shall mean those numbers  provided by
         ValueStar to FDMS of Registered Consumers.

    p)   "Registered  Participating  Merchant"  shall mean an FDMS Merchant that
         was  registered for the ValueStar  Services  while the FDMS  Merchant's
         Channel was party to a Channel Participation Agreement.

    q)   "Registered Merchant  Participation  Agreement" shall mean an agreement
         between  ValueStar  and an FDMS  Merchant  pursuant  to which such FDMS
         Merchant  agrees to  participate  in the  Program  pursuant to standard
         terms and conditions where a Channel Participation Agreement does exist
         between  FDMS and the Channel.  No  Registered  Merchant  Participation
         Agreement  shall  be  effective  until  approved  by  ValueStar,  which
         approval shall not be unreasonably withheld.

    r)   "Transaction Data" shall mean *****.

    s)   "ValueStar  Transactions"  shall mean  transactions  that a  Registered
         Consumer  initiates  at an FDMS  Merchant  location  using a Registered
         Credit Card Number that match a Registered Participating Merchant.

2)   Term. The Agreement shall commence on the Effective Date and continue for a
     term of five (5) years (the  "Initial  Term")  subject  to the  termination
     provisions  set forth  herein.  After the Initial Term the  Agreement  will
     renew  for  additional  terms of two (2) years  each  unless  either  party
     provides  the other one hundred  twenty  (120) days  written  notice of its
     intent not to renew prior to the end of the then-current term.

3)   Pre-Launch  Obligations.  The parties  anticipate  that the Program will be
     commercially  available  and  operable  on ***** or such  other date as the
     parties may mutually  agree upon (the "Launch  Date").  In order to achieve
     the Launch  Date,  the parties have  prepared a Task Plan  attached to this
     Agreement as Exhibit B. The Task Plan sets forth the tasks each party plans
     to complete between the Effective Date and the Launch Date. Each party will
     use commercially reasonable efforts to meet the time frames and obligations
     set forth in the Task Plan.

4)   Development.  The Task Plan sets forth each party's specific obligations to
     modify or  enhance  the FDMS  System in order to meet the  Launch  Date and
     provide a commercially viable Program.

         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.

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<PAGE>

    a)   FDMS  will use  commercially  reasonable  and  good  faith  efforts  to
         undertake  reasonable  development  efforts required to meet the Launch
         Date,  which shall be *****.  FDMS has  attached  hereto a  preliminary
         estimate of the funding required for such development.  FDMS will begin
         development only after ValueStar approves such estimate,  provided that
         such approval  will not be  unreasonably  withheld.  FDMS shall invoice
         ValueStar on a monthly basis for development  work conducted during the
         prior  month.  In the  event  any such  invoice  is not paid in full by
         ValueStar within 30 days from receipt of the invoice,  FDMS shall cease
         its  development  efforts until all  outstanding  amounts are received,
         which  ValueStar  acknowledges  may affect the Launch  Date.  FDMS will
         notify  ValueStar  in the event,  during  such  development,*****.  All
         development by FDMS under this Section shall be considered  part of the
         FDMS System and shall be  proprietary  to FDMS.  If by operation of law
         any of such  development,  including the  intellectual  property rights
         incorporated   therein,   is  not  owned  in  its   entirety   by  FDMS
         automatically  upon creation  thereof,  then ValueStar  shall assign to
         FDMS the specific work product that results from such development.

    b)   FDMS  acknowledges  that ValueStar  will  undertake  development of the
         ValueStar System, software modules or other technological  improvements
         ("ValueStar  Improvements")  to its software and/or hardware,  based in
         part on proprietary technical  specifications  provided by FDMS to help
         integrate the ValueStar program and ValueStar Benefits with information
         supplied to or by FDMS. FDMS  acknowledges  and agrees that, as between
         FDMS and  ValueStar,  any  software or hardware  developed  and used by
         ValueStar  shall remain the  exclusive  property of ValueStar  and that
         ValueStar will retain all right,  title and interest therein during the
         term of this Agreement and thereafter.  Notwithstanding  the foregoing,
         nothing herein shall give ValueStar any right, title or interest in any
         information,  including technical specifications,  proprietary to FDMS.
         Except for technical  specifications  proprietary to FDMS, copyright to
         all of the source  code,  object code and any other  embodiment  of any
         ValueStar improvement belongs to and shall remain with ValueStar.

    c)   Other Enhancements.  Either party may propose in writing an enhancement
         to the Program  (technical or otherwise),  including but not limited to
         making the Program available on FDMS' Omaha platform, that requires the
         participation  and cooperation of the other party.  The party receiving
         such  proposal  shall  consider the  proposal in good faith,  and if it
         believes,   in  its  reasonable   discretion,   that  the  proposal  is
         beneficial,  the parties will enter into an amendment to this Agreement
         setting forth the terms of the development of such enhancement.  Unless
         otherwise  agreed to in writing  by the  parties,  all such  additional
         development shall be*****.  Neither party shall be obligated to propose
         such  enhancement  or to elect to proceed to develop such  enhancement,
         and if the  parties do not agree to develop the  enhancement  the party
         proposing the  enhancement  may develop the  enhancement  independently
         with no  obligation  to account to or obtain the  participation  of the
         other party.

         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.

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<PAGE>

    d)   Exclusive Rights.  Any  developments,  modifications,  derivatives,  or
         enhancements  to the FDMS  System  made under  Section 4 whether or not
         they are ***** shall be owned by FDMS but shall not be used for service
         rating other than through ValueStar for a period of five (5) years from
         the date such development is completed and commercially available. This
         exclusivity shall not apply *****.

5)   Program  Implementation.  The parties acknowledge that the Program requires
     each party to undertake certain obligations and to cooperate with the other
     as  reasonably  requested  Exhibit  B,  which  is  incorporated  herein  by
     reference,  outlines the parties' specific responsibilities with respect to
     each component of the Program.

6)   Marketing.  FDMS and  ValueStar  shall each market and promote the Program.
     FDMS will use commercially  reasonable efforts to market the Program to its
     Channels  pursuant  to a Channel  Participation  Agreement,  under  which a
     Channel will market the Program to the applicable  FDMS Merchants  pursuant
     to the terms of the Merchant  Participation  Agreement  and refer such FDMS
     Merchants to ValueStar.  ValueStar shall provide such  assistance,  support
     and  cooperation  to FDMS as may be reasonably  requested in such marketing
     activities.  The Channels,  at their discretion,  will determine whether to
     participate  in the Program.  FDMS, at its own expense,  will  develop,  in
     conjunction with ValueStar  marketing,  appropriate  materials for merchant
     and  Channel   distribution.   Internal  marketing  will  include  periodic
     teleconference with participating Channels, Product Days, sales sheets etc.

    a)   Marketing  Materials.  ValueStar shall develop marketing  materials and
         related  designs  for the  Program as may be required to enable FDMS to
         sufficiently perform under this Section (the "Marketing  Materials") in
         marketing  and  promoting  the  Program  to the  Channels  and  for the
         Channels to utilize in promoting  the Program to  Merchants.  ValueStar
         may retain  the  services  of an  advertising  agency to  provide  such
         design,   materials  and   assistance   as   necessary.   FDMS  or  its
         participating Channels will bear the cost of copying and/or customizing
         the  Marketing  Materials  for  use by the  participating  Channels  in
         marketing  to  FDMS  Merchants.   ValueStar  shall  provide  reasonable
         assistance to the participating Channels to enroll the FDMS Merchants.

    b)   Channel  Access.  Except  as  otherwise  set  forth  in  Section  7(b),
         ValueStar will not initiate a sales call to a Channel without obtaining
         the  prior  consent  of FDMS,  and FDMS  may,  in its sole  discretion,
         require that it participate in any sales call made to a Channel. In the
         event ValueStar  identifies a Channel to whom FDMS has not marketed the
         Program, ValueStar may request cooperation and assistance from FDMS and
         FDMS shall provide such reasonable  cooperation and assistance in order
         to introduce such Channel to the Program.

         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.

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<PAGE>

    c)   Co-Op Dollars.  *****
         --------------

         d.      Related Promotions. *****
         --      ------------------

7)       Exclusivity. *****
         ------------


8)   Costs/Fees/Commissions.  Except as otherwise  described in this  Agreement,
     the costs,  fees and  commissions due under this Agreement are set forth in
     Exhibit E, attached hereto.

9)   Reports.  During the term of the Agreement  ValueStar will generate certain
     monthly reports related to the Program, the Channels and the FDMS Merchants
     as FDMS may reasonably  request.  In addition,  FDMS will generate  certain
     ValueStar  Transaction  reports  in the form set  forth  in  Exhibit  D and
     provide them to ValueStar  on a daily basis  beginning  the first day after
     the Launch  Date.  Such  reports  shall be  considered  to be  Confidential
     Information  and neither  party shall share such  reports or the content of
     such  reports  with a third party  (other than the  Participating  Issuers,
     Channels or FDMS Merchants)  without the prior written consent of the other
     party.  Aggregate  transaction  reports  which  do not  contain  personally
     identifiable  information  may be provided to ValueStar  partners  that are
     receiving a transaction fee on specific transaction types.

10)  FDMS  Matching  Fee.  In  consideration  for FDMS's  provision  of Matching
     Services, ValueStar shall owe FDMS a Matching Fee as set forth in Exhibit E
     for each ValueStar Transaction.

11)  ValueStar  Merchant  Qualification.   Only  ValueStar  will  determine  the
     criteria  and  award  of the  ValueStar  brand to  merchants.  FDMS and its
     Partners  are not  responsible  for  evaluating  a  merchant  based  on the
     ValueStar criteria. Acceptance of a merchant for ValueStar branding will be
     the sole responsibility of ValueStar.

a)       ValueStar  shall be  responsible  for  providing  all customer  service
         relating to the Program to merchants and consumers. Notwithstanding the
         foregoing,  FDMS shall  cooperate with ValueStar in  investigating  and
         resolving issues relating to the matching (or mismatching) of data. All
         other  issues  relating to the  Program,  including  but not limited to
         status  inquiries,  billing  issues and other  Registered  Consumer and
         Registered   Participant   Merchant   disputes   will   be   the   sole
         responsibility  of ValueStar to investigate and resolve.  Additionally,
         ValueStar  shall be required to  reimburse an FDMS Channel in the event
         that the Channel is charged for customer  service  support  provided by
         FDMS related to the Program.

12)      Payments.  *****
         ---------

13)      Referrals .  *****
         -----------

         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.

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<PAGE>

14)  Non-Solicitation Obligation. Except as expressly provided herein, ValueStar
     (i) shall not knowingly  solicit any FDMS Merchants for services similar to
     or competitive with the Payment Processing Services and/or the Program; and
     (ii) shall not engage or retain a third party to solicit the FDMS Merchants
     pursuant to the  foregoing  prohibitions.  FDMS (i) shall  neither  utilize
     ValueStar's  Confidential  Information to solicit nor systematically target
     any of ValueStar's Registered  Participating Merchants for services similar
     to or competitive  with the ValueStar  System and/or the Program;  and (ii)
     shall  not  engage  or  retain  a third  party  to  solicit  the  ValueStar
     Registered  Participating Merchants pursuant to the foregoing prohibitions;
     ValueStar's and FDMS' obligations under this paragraph shall be referred to
     hereinafter as the "Non-Solicitation Obligations".

15)  Registered Credit Card Numbers,  Registered Participating Merchants and Use
     of Transaction Data.

     a)  ValueStar shall provide FDMS with an initial list of Registered  Credit
         Card  Numbers  and  Registered  Participating  Merchants  that shall be
         updated on a daily  basis.  ValueStar  represents  and warrants to FDMS
         that all credit card numbers it provides to FDMS under this section are
         Registered  Credit Card Numbers and that all merchant names it provides
         to FDMS under this Section are Registered Participating Merchants.

     b)  Transaction Data shall not be accessed or used by FDMS or ValueStar for
         any purpose without the prior express  authorization of each Registered
         Consumer (or Participating  Issuer) to whom it relates and in any event
         shall be  accessed  or used by  ValueStar  solely for  purposes  of the
         Program as described  in this  Agreement.  Each  Channel  Participation
         Agreement  and  Merchant  Participation   Agreement  shall  include  an
         authorization by such Channel and FDMS Merchant, respectively, to allow
         FDMS and  ValueStar  to  access  and use the  Transaction  Data for the
         purposes  contemplated by the Program.  Notwithstanding  the foregoing,
         FDMS and/or its Channel owns all data collected or accessed through use
         of the FDMS System,  including but not limited to the Transaction Data.
         Except for access to and use of the  Transaction  Data for the purposes
         of carrying out the Program as  expressly  provided  herein,  ValueStar
         will not  use,  disclose  or sell  any  Transaction  Data  without  the
         authorizations   described  above,  and  without  FDMS'  prior  written
         consent, which FDMS may elect not to give in its sole discretion.

16)  Privacy  Policy.  ValueStar  shall  draft a privacy  policy  related to the
     Program  and the  use of  Registered  Consumer  Information  (the  "Program
     Privacy  Policy"),  which in no event  shall be less  stringent  than FDMS'
     privacy  policy as it may be changed from time to time and which shall have
     received  written  approval  from FDMS.  In  addition,  any site at which a
     consumer registers his information shall include a prominent privacy policy
     that complies with all  applicable  law and is no less  stringent  than the
     Program  Privacy  Policy.  The Consumer  Registration  Terms shall  include
     clear,  prominent  authorization  by the Registered  Consumer  allowing the
     applicable Program provider the right to use and/or disclose (i) Registered
     Consumer  Information  for the  purposes of  providing  the Program to such
     Registered  Consumer and providing the Matching Services;  and (ii) certain
     aggregate Registered Consumer Information to third parties for the purposes


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<PAGE>

     of providing information to such third parties related to the effectiveness
     of the Program. The Consumer  Registration Terms shall also include a means
     by which a Registered  Consumer may cease  participation in the Program and
     remove its Registered  Consumer  Information from the ValueStar System. The
     Consumer  Registration  Terms, and any changes to them, shall be subject to
     review and  approval by FDMS.  The parties  acknowledge  and agree that the
     Program shall be expressly  designed to comply with all applicable laws and
     regulations  related  to  privacy  and each  party  shall  take  all  steps
     necessary  to comply  with such laws and abide by the terms of the  Program
     Privacy  Policy and the  Consumer  Registration  Terms.  In no event  shall
     either  party  violate  the  Consumer  Registration  Terms as it relates to
     privacy,  and a  breach  of the  Consumer  Registration  Terms  shall  be a
     material breach of this Agreement as well.

17)  Confidential Information.

     (a) Each party (the  "Disclosing  Party")  may from time to time during the
         term of this  Agreement  disclose  to the other  party (the  "Receiving
         Party") certain non-public information regarding the Disclosing Party's
         business ("Confidential  Information").  Confidential Information shall
         also include:  any data or information that is competitively  sensitive
         material  and not  generally  known to the  public,  including  but not
         limited  to,  products,  planning  information,  marketing  strategies,
         finance, operations,  customer relationships,  customer profiles, sales
         estimates,  business plans and internal performance results relating to
         the past, present or future business activities of FDMS or ValueStar or
         any of  their  affiliated  companies  and the  customers,  clients  and
         suppliers of any of the  foregoing,  including in the case of FDMS, the
         Alliances;  any scientific or technical information,  design,  process,
         procedure,  formula or improvement  that is  commercially  valuable and
         secret in the sense that its confidentiality  affords FDMS or ValueStar
         a competitive  advantage  over its  competitors;  all  confidential  or
         proprietary concepts,  documentation,  reports,  data,  specifications,
         computer  software,  source code, object code, flow charts,  databases,
         inventions, information and trade secrets, whether or not patentable or
         copyrightable; all documents, inventions,  substances,  engineering and
         laboratory notebooks,  drawings,  diagrams, computer programs and data,
         specifications,  bills of material,  equipment,  prototypes and models,
         and any other  tangible  manifestation  (including  data in computer or
         other digital format) of the foregoing which now exist or come into the
         control  or  possession  of the  party;  and  Registered  Consumer  and
         Merchant   information.   Additionally,   Transaction   Data  shall  be
         considered  Confidential  Information of FDMS. Information shall not be
         considered  Confidential  Information  to the  extent,  but only to the
         extent,  that such  information  is: (i) already known to the receiving
         party  free  of  any  restriction  at the  time  it is  obtained;  (ii)
         subsequently  learned  from  an  independent  third  party  free of any
         restriction  and  without  breach of this  Agreement;  (iii) or becomes
         publicly available through no wrongful act of the receiving party; (iv)
         independently developed by the receiving party without reference to any
         Confidential  Information of the other; or (v) required to be disclosed
         by law.

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<PAGE>

     (b) The party receiving the Confidential Information shall: (i) maintain it
         in confidence, except to the extent necessary to carry out the purposes
         of this Agreement, in which event written confidentiality  restrictions
         shall be imposed  upon the parties to whom such  disclosures  are made;
         (ii) use at least the same degree of care in maintaining its secrecy as
         it uses in maintaining the secrecy of its own Confidential Information,
         but in no event less than a reasonable degree of care; and (iii) return
         all copies, notes,  packages,  diagrams,  computer memory media and all
         other materials containing any portion of the Confidential  Information
         to the  disclosing  party upon its  request,  unless such  Confidential
         Information is necessary to continue to perform obligations pursuant to
         this  Agreement.  The  specific  terms of this  Agreement,  but not the
         general  relationship  of the parties or that the parties  have entered
         into an agreement, shall be considered Confidential Information.


18)  No Implied  Licenses.  Except as  expressly  provided  herein,  no grant or
     conveyance  under  any of  FDMS'  or  ValueStar's  respective  intellectual
     property rights is hereby given or intended, including, but not limited to,
     any license whether by implication, estoppel, or otherwise.

19)  Termination.  Either  party may at its option  immediately  terminate  this
     Agreement by giving  written notice thereof to the other party in the event
     of the occurrence of any of the following:

     a)  If the other party  becomes  insolvent,  or a petition in bankruptcy is
         filed, or any similar relief is filed by or against the other party, or
         a receiver is appointed  with respect to any of the assets of the other
         party, or a liquidation proceeding is commenced by or against the other
         party; or

     b)  A material  breach by the other party of Section 17  (Confidentiality),
         Section 15 (Registered  Credit Card Numbers,  Registered  Participating
         Merchants and Use of Transaction Data), or Section 16 (Privacy Policy),
         - unless such breach is not willful or intentional (with respect to the
         officers or management of the breaching  party) and the breaching party
         (i) immediately takes action to cause such breach to cease and (ii) can
         provide  to the  non-breaching  party  satisfactory  evidence  (in  the
         reasonable  determination of the non-breaching  party) of the breaching
         party's plan to ensure that a similar  breach will not recur,  provided
         that in the event of a second  breach  under this  Section  that is not
         willful or intentional  within any  consecutive  six month period,  the
         non-breaching party may terminate immediately; or

     c)  Failure to correct or cure any  material  breach by the other  party of
         this  Agreement  within  ninety (90) calendar days after receipt by the
         other party of a written notice from such party specifying such breach,
         provided  that the  breaching  party is obligated to commence a cure as
         soon as practicable after receiving notice thereof. Provided,  however,
         that the decision to terminate  must be exercised and  communicated  to
         the  other  party   within  90  days  after   receipt  of   information
         establishing  the  right to  terminate  or 180 days  after  receipt  of
         information  establishing  the  right  to  terminate  for  breaches  of
         Sections 12 (Payments), 15 (Registered Credit Card Numbers,  Registered
         Participating  Merchants  and Use of  Transaction  Data),  16  (Privacy
         Policy), or 17 - (Confidentiality),  or the right to terminate for that
         occurrence (but not future occurrences) is waived.

                                       9
<PAGE>

20)  Ownership.  FDMS owns all rights in or to the FDMS  System,  as well as all
     enhancements to the foregoing  (together,  the "FDMS Property").  ValueStar
     owns all  rights in or to the  ValueStar  Benefits  Program  and  ValueStar
     System,  as  well  as all  enhancements  to the  foregoing  (together,  the
     "ValueStar Property")

21)  General  Indemnification.  Each party shall indemnify and hold harmless the
     other,  its  shareholders,  officers,  directors  and  employees,  from and
     against  any  losses or  damages  incurred  by the other  party,  including
     reasonable  attorney fees, as a result of third party claims related to (a)
     such party's breach of any representation or warranty contained herein; (b)
     such party's performance under this Agreement or any agreement between such
     party and a third  party  under which such party  provides  its  respective
     System and/or  services,  except to the extent such loss or claim is due to
     the gross  negligence  or willful  misconduct  of the other party;  and (c)
     disclosure or use of Transaction Data or Registered  Consumer  Information.
     The indemnity obligations of both parties under this Section are contingent
     upon the party seeking  indemnity (i) giving prompt  written  notice to the
     indemnifying  party of any such claim, (ii) allowing the indemnifying party
     to control the defense and settlement of such claim,  and (iii)  reasonably
     co-operating  with the indemnifying  party in the defense and settlement of
     such claim.

22)  Limitation  of  Liability.  Except for  liability for breach of Sections 12
     (Payments),  15 (Registered Credit Card Numbers,  Registered  Participating
     Merchants  and  Use  of  Transaction  Data),  16  (Privacy  Policy),  or 17
     (Confidentiality),  the cumulative  aggregate liability of either party for
     all losses, claims, suits, controversies, breaches or damages for any cause
     whatsoever and  regardless of the form of action or legal theory,  shall be
     limited to the actual  direct out of pocket  expenses  that are  reasonably
     incurred by either party and shall not exceed *****.

23)  Exclusion. EXCEPT FOR LIABILITY FOR BREACH OF SECTION 15 (Registered Credit
     Card Numbers,  Registered  Participating  Merchants and USE OF  TRANSACTION
     DATA), SECTION 16 (PRIVACY POLICY), OR SECTION 17 (CONFIDENTIALITY),  IN NO
     EVENT  SHALL  EITHER  PARTY  TO  THIS  AGREEMENT  OR ANY OF ITS  DIRECTORS,
     OFFICERS, OR EMPLOYEES BE LIABLE UNDER ANY THEORY OF TORT, CONTRACT, STRICT
     LIABILITY OR OTHER LEGAL OR EQUITABLE  THEORY FOR LOST PROFITS,  EXEMPLARY,
     PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL DAMAGES OR THE LIKE,
     EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES  REGARDLESS OF
     WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY
     HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.

                                       10
<PAGE>

24)  Audit  Rights.  Each party  shall  have the right to retain an  independent
     third party to audit copies of all relevant  books and records of the other
     no more than one time in any twelve  month  period for the sole  purpose of
     verifying  the  accuracy of  calculations  made under this  Agreement  with
     respect to fees payable  hereunder.  The auditing party shall bear the cost
     of such audit, provided that in the event the audit reveals an error in the
     auditing  party's  favor in excess of $5,000,  then the audited party shall
     bear the cost of the audit.  In the event the audit  reveals a shortfall in
     any amount, the party owing such shortfall shall promptly pay it.

25)  Dispute  Resolution.  Each party agrees that, unless otherwise  required in
     order to comply  with  deadlines  under the law, it will not file action or
     institute legal  proceedings with respect to any dispute,  controversy,  or
     claim arising out of,  relating to, or in connection  with, this Agreement,
     until:  (i) it has given the other party written  notice of its  grievance;
     (ii) the other party has failed to provide a prompt and  effective  remedy;
     (iii) it has  requested  senior  executives  for both  parties  to meet and
     discuss  the matter in order to consider  informal  and  amicable  means of
     resolution; and (iv) either such meeting failed to occur within thirty (30)
     days  after  such  request  or the  meeting  did  not  produce  a  mutually
     satisfactory  resolution of the matter.  The foregoing  provision shall not
     apply to the extent a party requires an equitable remedy and time is of the
     essence.

26)  Press Release.  Neither party shall make a press release or other statement
     to the general public regarding this Agreement or the parties' relationship
     without  first  obtaining  the prior  written  approval of such  release or
     statement from the other party.  Notwithstanding  the foregoing,  it is the
     parties'  intent to issue a mutually  agreed-upon  press release  within 30
     days of the  Effective  Date in which the parties  describe the Program and
     its launch.

27)  Required Disclosure.  Notwithstanding  anything contained in this Agreement
     to the contrary, if either party, or any of its employees, shall be under a
     legal   obligation  in  any   administrative,   governmental   or  judicial
     circumstance  involuntarily to disclose any Confidential Information of the
     other, it shall give the party that owns such Confidential Information (the
     "Disclosing  Party") prompt notice thereof so that the Disclosing Party may
     seek  an  appropriate   protective   order.  If  the  Disclosing  Party  is
     unsuccessful in obtaining such protective order, and if the party receiving
     such Confidential  Information (the "Receiving Party") or any such employee
     would,  in the opinion of its counsel,  be held in contempt or suffer other
     censure or penalty  for  failure to  disclose,  disclosure  pursuant to the
     order or decree of an  administrative,  governmental or judicial  authority
     with jurisdiction over such party may be made by the Receiving Party or its
     employees without liability hereunder.

28)  Non-Exclusive.  Except  as  expressly  provided  herein,  nothing  in  this
     Agreement  will  prohibit or restrict  either  party from  entering  into a
     similar  arrangement with a third party and/or from developing on its own a
     product or  service  similar to the  ValueStar  System or the FDMS  System,
     subject to the terms of Section 16 (Confidentiality).

29)  Compliance  with Law. Each party will comply with all  applicable  laws and
     regulations  of  governmental  bodies or  agencies in  connection  with its
     performance under this Agreement.

                                       12
<PAGE>


30)  Relationship  of  the  Parties.  The  parties  are  acting  as  independent
     contractors  and not as  partners  or in the  capacity of any type of joint
     venture.

31)  Force Majeure.  Neither party shall be in default if failure to perform any
     obligation hereunder,  except for any obligation to make payment, is caused
     solely by supervening  conditions  beyond that party's  control,  including
     acts of God, civil commotion, and strikes.

32)  Entire  Agreement.  This Agreement and the exhibits  hereto  constitute the
     entire   agreement   between   the   parties   hereto   and  there  are  no
     representations,  warranties,  covenants or obligations except as set forth
     herein. This Agreement supersedes all prior or contemporaneous  agreements,
     understandings,  negotiations  and  discussions,  written  or oral,  of the
     parties hereto, relating to any transaction contemplated by this Agreement.
     Nothing in this  Agreement is intended or shall be construed to confer upon
     or to give any person other than the parties  hereto any rights or remedies
     under or by reason of this Agreement.

33)  Assignment.  Neither  party shall  assign any  interest  in this  Agreement
     without the prior written consent of an authorized executive officer of the
     other,  provided that FDMS may assign this  Agreement to an Affiliate  (not
     including Alliances) without ValueStar's prior consent.

34)  Governing  Law.  The  rights  and  obligations  of the  parties  under this
     Agreement shall be governed by law of the State of New York, without regard
     to that state's choice of law provisions.

35)  Survival.  The  following  provision  shall  survive  termination  of  this
     Agreement:   Sections   4(d)   Exclusive   Rights,   14   (Non-Solicitation
     Obligation),  15 (Registered Credit Card Numbers,  Registered Participating
     Merchants  and  Use  of  Transaction   Data),  16  (Privacy   Policy),   17
     (Confidential  Information),  18 (No Implied License),  20 (Ownership),  21
     (General  Indemnification),  22 (Limitation of Liability),  23 (Exclusion),
     and 25 (Dispute Resolution).

36)  Waiver.  Any  failure of either  party to  enforce,  at any time or for any
     period  of time,  any of the  provisions  of this  Agreement  shall  not be
     construed as a waiver of the right of that party to enforce such provisions
     unless  said waiver is in writing,  and signed by an  authorized  executive
     officer.

37)  Notices.  Any notice required or permitted to be given under this Agreement
     shall be sent in writing, by prepaid,  certified, return receipt requested,
     first-class  air mail to the respective  party at the address below,  or to
     such other  address as each party may  hereafter  specify in writing to the
     other.

         If to ValueStar:           Jim Stein, Chief Executive Officer
                                    ValueStar, Inc.
                                    360 22nd Street
                                    Oakland, California  94612
                                    Fax: (510) 808-1400

                                       13
<PAGE>



         with a copy to:            Roger Metzler, General Counsel
                                    ValueStar, Inc.
                                    360 22nd Street
                                    Oakland, California  94612
                                    Fax: (510) 808-1400

         If to FDMS:

         with a copy to:            General Counsel
                                    First Data Merchant Services Corp.
                                    12500 East Belford Avenue, Suite M16-S
                                    Englewood, Colorado 80112
                                    Fax: (720) 332-0033

         All such notices shall be deemed to have been given upon receipt.

38)  Severability  of  Provisions.  Each  provision of this  Agreement  shall be
     considered  severable  and if for any reason any  provision  or  provisions
     herein are  determined  to be invalid or contrary to any existing or future
     law, such  invalidity  shall not impair the operation of this  Agreement or
     affect those portions of this Agreement which are valid.

39)  Enumerations and Headings.  The enumerations and headings contained in this
     Agreement  are for  convenience  of reference  only and are not intended to
     have any substantive significance in interpreting this Agreement.

         IN WITNESS WHEREOF,  and intending to be legally bound, the undersigned
parties have duly executed this Agreement on the Effective Date.

FIRST DATA MERCHANT SERVICES CORPORATION

By:               /s/ Steven L. VanFleet
                  ---------------------------
Name:             Steven L. VanFleet
Title:            Senior Vice President

VALUESTAR INCORPORATED

By:               /s/ Jim Stein
                  ---------------------------
Name:             Jim Stein
Title:            Chief Executive Officer




                                       14
<PAGE>



                                    EXHIBIT A

                     FORM OF CHANNEL PARTICIPATION AGREEMENT


*****










         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.


                                       15
<PAGE>


                                    EXHIBIT B

                 DESCRIPTION OF PROGRAM AND PARTIES' OBLIGATIONS

ValueStar has created a local rating  system for local service and  professional
companies called ValueStar Ratings or ValueStar Real-Time Ratings and a benefits
program for consumers and businesses called ValueStar Benefits.

ValueStar Ratings currently consist of a rating  methodology that entails rating
local  brick  and  mortar  service   companies  on   credentials   and  customer
satisfaction  and assigning one of three  ValueStar  Ratings brands based on the
amount of information ValueStar has verified on each company and a comparison of
that information to ValueStar Ratings standards.

Companies that earn the ValueStar Verified or ValueStar  Top-Rated rating brands
are  invited  to become  ValueStar  Authorized.  To  qualify  for the  ValueStar
Authorized,  the company  must agree to  participate  in  ValueStar's  Real-Time
Ratings,  to maintain  high  customer  satisfaction,  to maintain  high customer
satisfaction,  to  follow  ValueStar's  comlint  resolution  process  and to pay
ValueStar a fee.

ValueStar  Benefits  are  provided  either  directly to  consumers  that join or
through credit card issuing banks that add the ValueStar  Benefits to their card
offering.  Members are called  ValueStar  Rating  Partners and are encouraged to
purchase from and rate ValueStar Authorized  companies.  Rating Partners receive
free access to ValueStar  Ratings and other ValueStar Buying content,  ValueStar
Rating Points  (redeemable  for  products,  charitable  donations,  services and
travel), complaint resolution services and a money-back satisfaction program (up
to $500).

Roles/Responsibilities

The table below highlights examples of various responsibilities between FDMS and
ValueStar.

Value Star

         A) Will  provide  the  ValueStar  Benefits  and  Program to  Registered
         Participating Merchants and Registered Consumers.

         B) Marketing:

               -  Will provide marketing materials and develop/implement  market
                  awareness for the ValueStar brand.

               -  Establish  internet  presence  with Program  descriptions  and
                  explanations.

         C) Funding/Commissions: *****


         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.

                                       16
<PAGE>

FDMS

         A)  Marketing:

         -        Wiil provide marketing materials and develop/implement  market
                  awareness for the ValueStar brand to its Partner/Client base.

         -        FDMS will provide leads for the ValueStar  proposition through
                  the exisiting sales and other client contact channels.

B)       Funding/Commissions:
         *****




         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.


<PAGE>


                                    EXHIBIT C

                                    TASK PLAN

                                      *****











         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.


                                       17
<PAGE>

                                    EXHIBIT D

                                  REPORT DETAIL



                                      *****








         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.




                                       18
<PAGE>



                                    EXHIBIT E

                               FEES / Commissions

                                      *****













         PORTIONS OF THIS  EXHIBIT  DENOTED  HEREIN BY ***** HAVE BEEN  OMMITTED
         (BASED UPON A REQUEST FOR  CONFIDENTIAL  TREATMENT) AND HAVE BEEN FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
         24B-2.


                                       19