EXHIBIT 10.5


                                 BROADLAKE PLAZA
                                 ---------------


                                  Office Lease



















                       360 22nd Street, Oakland, CA 94612
                                 (510) 832-7285


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                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

 1.   Parties                                                                 1
 2.   Lease of Premises                                                       1
 3.   Term                                                                    1
 4.   Minimum Rent                                                            1
 5.   Rental Adjustment                                                       2
 6.   Taxes Payable by Tenant                                                 4
 7.   Possession                                                              5
 8.   Use of Premises                                                         6
 9.   Security Deposit                                                        7
10.   Assignment, Subletting and Encumbering                                  8
11.   Maintenance and Repair                                                  9
12.   Service and Utilities                                                  10
13.   Compliance with Law                                                    12
14.   Alterations                                                            13
15.   Liens                                                                  14
16.   Fire and Casualty Insurance                                            14
17.   Damage and Destruction                                                 15
18.   Public Liability Insurance                                             15
19.   Subrogation                                                            16
20.   Eminent Domain                                                         16
21.   Indemnification of Landlord                                            16
22.   Entry by Landlord                                                      17
23.   Default                                                                17
24.   Remedies                                                               18
25.   Late Charges                                                           18
26.   Landlord's Right to Cure Default                                       19
27.   Default by Landlord                                                    19
28.   Landlord's Option to Relocate Tenant                                   20
29.   Sale of Premises                                                       20
30.   Estoppel Certificates                                                  20
31.   Nonmerger                                                              21
32.   Disclosure                                                             21
33.   Demolition of Premises                                                 21
34.   Subordination                                                          21
35.   Notices                                                                22
36.   General Provisions                                                     22

Exhibit A -- Plan Outlining Premises

Exhibit B -- Work Agreement

Exhibit C -- Rules and Regulations



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                                  OFFICE LEASE
                                  ------------
1.       PARTIES

         THIS  LEASE is made  this  20th day of April,  1999 at  Oakland  by and
between,  BROADLAKE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP as landlord,  and
VALUESTAR, INC as Tenant.

                                   WITNESSETH:
                                   -----------

2.       LEASE OF  PEMISES

         Landlord  does  hereby  lease to Tenant and Tenant  hereby  leases from
Landlord that certain office space (hereinafter  called "premises")  outlined in
red on Exhibit A attached  hereto and hereby by  reference  made a part  hereof,
said premises  comprising a rentable  area of 14,908 square feet,  more or less,
and being situated on the 2nd floor of that certain  building known as BROADLAKE
PLAZA in the City of Oakland,  County of Alameda,  State of California  and more
particularly described as:

                  360 22nd Street, 2nd Floor
                  Oakland, CA 94612

hereinafter referred to as "Building." This Lease is entered into subject to the
terms,  covenants  and  conditions  herein set forth and the Tenant  agrees as a
material  part of the  consideration  of this Lease to keep and perform each and
all of said terms,  covenants and  conditions by it to be kept and performed and
that this Lease is made upon the condition of such performance.

3.        TERM

         The term of the lease shall be for 5 years  commencing  on the 30th day
of June, 1999  (hereinafter  referred to as the  "Commencement  Date") or on any
such earlier date on which  Tenant  first takes  possession  of the Premises and
ending on the 29th day of June,  2004,  unless the term  hereof  shall be sooner
terminated as herein provided. * See attached Addendum items 2 & 4.

4.        MINIMUM RENT
Tenant shall pay to Landlord as rent for the use and  occupancy of the Premises,
at the times and in the  manner  hereinafter  provided,  the  following  sums of
money:

         (a) Minimum Rent.  Tenant shall pay to Landlord,  without  deduction or
offset and without  notice or demand,  minimum  rent in the amount of  Seventeen
Thousand Eight Hundred Ninety ($17,890.00) per month,  payable in advance on the
commencement of the term hereof and on or before the first day of each and every
successive  calendar month during the term hereof. If



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the term commences or ends on other than the first day of a calendar month,  the
payment of minimum rent shall be appropriately prorated.

                  (b) On the third  anniversary  of this lease the minimum  rent
payable  by  Tenant  under  this  Paragraph  4 shall be  increased  to an amount
determined by multiplying  the minimum rent specified in Paxagraph 4(a) above by
a fraction, the denominator of which shall be the Consumer Price Index-All Urban
Consumers (San Francisco-Oakland  Metropolitan Bay Area; All Items; 1982-1984 --
100) prepared by the Bureau of Labor Statistics of the United States  Department
of Labor,  published for the month immediately  preceding the month in which the
term of this Lease  commenced  and the numerator of vhich shall be said Consumer
Price  Index  published  for the month  immediately  preceding  the date of such
adjustment.  Should  Landlord  lack  sufficient  data to make the  determination
specified  in this  Paragraph  4(b) on the date of any such  adjustment,  Tenant
shall continue to pay the Monthly minimum rent payable immediately prior to such
adjustment  date.  As soon as Landlord  obtains  the  necessary  data,  it shall
determine  the minimum  rent  payable  from and after such  adjustment  data and
notify Tenant of the adjustment in writing.  Should the Monthly minimum rent for
the period  following such adjustment date exceed the amount  previously paid by
tenant for such period, Tenant shall forthwith pay. the difference  to-Landlord.
Should  the  monthly  minimum  rent  for such  period  be less  than the  amount
previously paid by Tenant for such period the  overpayment  shall be credited to
the next installment of rent due hereunder.  In the event the federal government
should cease to publish the Consumer Price Index-All  Urban Consumers  described
above,  Landlord and Tenant shall agree upon a similar  available price index to
be used in  lieu of such  the  Consumer  Price  Index-All  Urban  Consumers  for
determining adjusted rent hereunder.  If Landlord and Tenant are unable to agree
as to a replacement  index,  the question of designation of a replacement  index
shall  be  presented  for  arbitration  to a  single  neutral  arbitrator  to be
appointed  at the  request of either  Landlord  or Tenant by the  then-presiding
judge  of the  Superior  Court  of the  City and  County  of San  Francisco,  in
accordance  the laws of the  State of  California  then in  effect  relating  to
arbitration,  including,  without  limitation,  sections  1280 to  1294.2 of the
California  Code of Civil  Procedure  and any  amendments  thereto.  Each of the
parties  hereto shall pay for the services of its attorneys  and witnesses  plus
one half of any fee  charged  by the  arbitrator  appointed  and one half of all
other proper costs relatiug to arbitration. * See attached Addendim I, item #1.

5.       RENTAL ADJUSTMENT

         (a)  increases in operating  Expemses:  Tenant shall pay to Landlord as
additional  rent during the term of this Lease  Thirteen point Five Five percent
(13.55%)  of the amount by which the  annual  Operating  Expenses  of the office
Building exceed the operating  Expenses incurred by Landlord during the calendar
year 1999 (the "Base Year"). As used herein, the term "Operating Expenses" shall
include  all direct  costs of  operation,  maintenance,  and  management  of the
Building  that are  properly  allocable  to the  office  Building  and which are
determined by generally accepted accounting  practices.  By way of.illustration,
but not limitation, Operating Expenses shall include the cost or charges for the
following items: heat, light, water, power and steam,  environmental  surcharges
imposed by any governmental entity, waste disposal,  janitorial services, window
cleaning, air conditioning, materials and supplies, equipment and tools, service
agreements on equipment, insurance, licenses, permits and inspections, wages and
salaries,



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employee benefits and payroll taxes,  accounting and legal expenses,  management
fees,  landscaping and exterior  maintenance,  depreciation on personal property
including,  without  limitation,  window  draperies  provided  by  Landlord  and
carpeting in public  corridors  and common  areas,  the cost of  contesting  the
validity  or  applicability  of any  governmental  enactments  which may  affect
operating expenses,  and the reasonably  amortized costs of capital improvements
required  as a result  of  government  orders  rules  and  regulations.  For the
purposes of this Lease, Operating Expenses shall not include taxes covered under
sub-paragraph (b) below, interest expense,  leasing comissions,  depreciation on
the Building itself,  or the cost of capital  expenditures,  provided,  however,
that in the event Landlord makes capital  improvements  which have the effect of
reducing  operating  expenses,  Landlord  may amortize  its  investment  in said
improvements  as an operating  expense in accordance  with  standard  accounting
practices  provided  that such  amortization  is not at a rate  greater than the
anticipated  savings  in the  operating  expenses.  In the event  that less than
ninety-five percent (95%) of the office Building is occupied during any calendar
year,  all Operating  expenses on the  statements  provided by Landlord shall be
adjusted  for each  calendar  year to equal  Landlord's  reasonable  estimate of
operating  Expenses had ninety-five  percent (95%) of the total rentable area of
the office Building been occupied.  Statements of operating Expenses provided by
Landlord shall- be final and binding upon both Landlord and Tenant. Landlord and
Tenant  acknowledge  that  certain  of  the  costs  and  charges  of  operation,
maintenance, and management of the Building and certain of the costs and charges
are to be  allocated  among the Office  Building,  the retail  building  and the
parking garage or parking areas. The determination of such costs and charges and
their  allocation  shall be in accordance  with  generally  accepted  accounting
principles, consistently applied. *See attached Addendum item #13.

         (b) Increases in Taxes: Tenant shall pay to Landlord as additional rent
during each tax year (July I through June 30) or part thereof during the term of
this Lease subsequent to the tax year 1999 (the "Base Tax Year"), Thirteen Point
Five Five  percent  (13.55%) of the total dollar  increase,  if any, in real and
personal  property  taxes (and any tax levied  wholly or partly in lieu thereof)
levied by any  governmental  authority  (local,  state. or Federal)  against the
Building and any personal  property used in its operation for each such tax year
over such taxes for the base tax year.  The term "Taxes"  shall include all real
property taxes and  assessments on the Building,  the Parcel of land  underlying
and  surrounding  the Building,  and the various estates in the Building and the
land.

         (c) Manner of Payment of Any increase in Operating  Expenses and Taxes:
During  December of each  calendar year or as soon  thereafter  as  practicable,
Landlord  shall  give  Tenant  written  notice  of  Landlord's  estimate  of the
additional rent, if any, payable under this Paragraph 5 for the ensuing calendar
year. On or before the first day of each month during the ensuing calendar year,
Tenant shall pay to Landlord  one-twelfth  (1/12th) of such estimated additional
rent,  provided  that if such  notice is not  given in  December,  Tenant  shall
continue to pay on the basis of the prior year's  estimate until the month after
such notice is given.  If at any time it appears to Landlord that the additional
rent payable under this Paragraph 5 for the current calendar year will vary from
its estimate by more than ten percent (10%),  Landlord  shall, by



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written  notice to Tenant,  revise its  estimate for such year,  and  subsequent
payments by Tenant for such year shall be based upon such revised estimate.

         (d) Annual  Statement  and  Adjustments:  On or before ninety (90) days
after  the end of each  calendar  year,  or as soon  thereafter  as  practicable
Landlord  shall deliver to Tenant a statement of  additional  rent payable under
this Paragraph 5 f or the preceding  calendar  year. If such statement  shows an
amount that is less than the estimated payments made by Tenant for such calendar
year, it shall be  accompanied  by a refund of the excess by Landlord to Tenant,
or, at Landlord's election, by a notice that Landlord shall credit the excess to
the next  succeeding  monthly  installment of rent. If such  statement  shows an
amount  that is more  than  the  estimated  payments  made by  Tenant  f or such
calendar year,  Tenant shall pay the  deficiency to Landlord  within thirty (30)
days after delivery of such statement.

         (e) If, for any reason  other  than the  default of Tenant,  this Lease
shall  terminate  on a day  other  than  the last day of a  calendar  Year,  the
additional rent payable by Tenant  applicable to the calendar year in which such
termination shall occur shall be prorated according to the ratio that the number
of days  from the  commencement  of such  calendar  year to and  including  such
termination date bears to three hundred sixty-five (365).

6.       TAXES PAYABLE BY TENANT

         (a) In addition to the rent and additional rent and other charges to be
paid by Tenant under this Lease, Tenant shall reimburse Landlord upon demand for
any and all taxes  required to be paid by Landlord  (excluding  state,  local or
federal  personal and corporate  income taxes measured by the income of Landlord
from all sources and estate and inheritance taxes), whether or not now customary
or within the contemplation of the parties hereto, when:

                  (i) said taxes are measured by or reasonably  attributable  to
the cost or value of Tenant's equipment,  furniture, fixtures and other personal
property  located  in the  Premises  or by the cost or  value  of any  leasehold
improvements made in or to the Premises by or for Tenant,  regardless of whether
title to such improvements shall be vested in Tenant or Landlord;

                  (ii) said taxes are measured by or reasonably  attributable to
the rent and additional  rent payable  hereunder,  or either of them,  including
without  limitation,   any  gross  income  tax  or  excise  tax  levied  by  any
governmental  entity  (local,  state or federal)  with respect to the receipt of
such rent;

                  (iii)  said  taxes are  assessed  upon or with  respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion thereof; and

                  (iv) said  taxes are  assessed  upon this  transaction  or any
document to which Tenant is a party creating or  transferring  an interest or an
estate in the Premises.

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         (b) In the event that it shall not be lawful for tenant so to reimburse
landlord, the monthly rent payable to Landlord under this Lease shall be revised
to net Landlord the same net rent after imposition of any such tax upon Landlord
as would have been payable to Landlord  prior to the imposition of any such tax.
All taxes  payable by Tenant  under this  Paragraph 6 shall be deemed to be, and
shall be paid as, additional rent.



7.       POSSESSION

         If Landlord is unable to give  possession of the Premises to TTenant on
or before the Commencement Date,  Landlord shall not be subject to any liability
for the failure to deliver  possession on said date,  and such failure shall not
affect the validity of this lease nor the obligations of Tenant  hereunder,  but
the term hereof shall commence on the earlier of (a) ten (10) days following the
day that Landlord gives Tenant written notice that the  installations to be made
by Landlord in accordance with the Agreement for Completion of Premises attached
hereto as Exhibit  "B" have been  substantially  completed;  or (b) the day that
Tenant first  occupies the Premises,  whichever  first  occurs,  and the express
expiration date set forth above shall be extended by that amount of time between
the  Commencement  Date  and the date the term  hereof  actually  commences.  If
permission is given to Tenant to occupy the Premises  prior to the  Commencement
Date,  such  occupancy  shall be subject to all of the  Provisions of this lease
including the payment of rent and, if the term hereof  commences on a date later
than the  Commencement  Date  pursuant to the  provisions  set forth above,  the
parties  hereto agree to execute and  acknowledge  a written  statement  setting
forth the date of  commencement  and the date of expiration  of this lease,  but
this lease  shall not be  affected  in any manner  should  either  party fail or
refuse to execute such  statement.  (See Section 36.  General  Provisions pg. 25
under (s) for definition of "substantial completion.")

8.       USE OF PREMISES

         (a) The  premises  shall be used and  occupied for rall Call Center and
General-  Office and for no other purposes  without the prior written consent of
Landlord.  Any  unauthorized  use shall be a breach of this Lease.  Tenant,  its
employees,  agents,  customers and invitees are hereby granted the  nonexclusive
use of the common corridors and hallvays, stairwells,  elevators, rest rooms and
other  generally  understood  Public or common areas of the Building;  provided,
however, that Landlord reserves the right to regulate or restrict the use of any
such  public or common  areas,  whether or not  specifically  set f orth  above.
Tenant  shall not use the  Premises  or allow the  Premises  to be used so as to
create waste or constitute a nuisance,  or disturb other tenants  located in the
building.

         (b) Landlord reserves the right from time to time without  unreasonable
interference  with  Tenant's use of the Premises to alter or relocate any common
facilities,  to expand the Building, and to install, use, maintain,  repair, and
replace pipes, ducts, conduits,  wires, and appurtenant meters and equipment for
service to other parts of the  Building  above the ceiling  surfaces,  below the
floor surf aces, within the wall, and in the central core areas, and to relocate
any pipes, ducts,



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conduits,  wires, and appurtenant  meters and equipment included in the Premises
which are located in the Premises or located elsewhere outside the Premises.

         (c) Tenant  shall not do or permit  anything to be done in or about the
Premises  that will in any way  obstruct or  interfere  vith the rights of other
tenants or occupants  of the  Building or injure or annoy them,  or use or allow
the Premises to be used for any unlawful or objectionable purpose.  Tenant shall
not cause,  maintain or permit  anything.to be done in or about the Premises nor
bring or keep  anything  therein that will in any way increase the existing rate
or affect any fire or other  insurance upon the Building or any of its contents,
or cause a cancellation  of any insurance  policy  covering said Building or any
part  thereof  or any of its  contents,  nor shall  Tenant  sell or permit to be
kept,.  used,  or sold in or  about  said  Premises  any  articles  that  may be
prohibited by a standard form policy of fire insurance.  Tenant shall not use or
keep in the Premises or the Building any kerosene,  gasoline, or any inflammable
combustible or explosive  fluid,  chemical,  or substance,  or use any method of
heating or air conditioning  other than that supplied by Landlord.  Tenant shall
bear any increased  insurance costs resulting from a breach of this covenant and
shall upon written demand from Landlord cease any activity prohibited hereunder.

         (d) Tenant shall not place anything or allow anything to be placed near
the glass of any window, door, partition, or wall that may appear unsightly from
outside the Premises.  No awnings or other  projection  shall be attached to the
outside walls of the Building without the prior written consent of the Landlord.
No curtains, blinds, shades, or screens shall be attached to or hung in, or used
in connection with any window or door of the Premises  without the prior written
consent of Landlord.

         (e) Tenant shall not use,  keep,  or permit to be used or kept any food
or noxious gas substance in the premises, or permit or suffer the Premises to be
occupied or used in a manner  offensive or  objectionable  to other occupants of
the Building by reason of noise, odors, and vibrations,  or interfere in any way
with other tenants or those having business therein,  nor shall animals or birds
be brought in or kept in or about the Premises or the Building. Tenant shall not
make or permit to be made any  unseemly  or  disturbing  noises  or  disturb  or
interfere  with  occupants  of the  neighboring  buildings  or premises of those
having  business  with them whether by the use of any music  instrument,  radio,
phonograph,  unusual noise, or in any other way. Tenant shall not throw anything
out of doors or down the passageways.

         (f) Tenant shall not disturb,  solicit,  or canvass any occupant of the
Building and shall cooperate to prevent such activity by others.

         (g) No  vending  machine  or  machines  of  any  description  shall  be
installed, maintained, or operated upon the Premises without the written consent
of Landlord.

         (h) Tenant  shall see that the  windows and doors of the  Premises  are
closed and securely  locked  before  leaving the  Building.  Tenant must observe
strict care and caution that all water  faucets or other  apparatus are entirely
shut off before Tenant or Tenant's  employees  leave the



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Building, and that all electricity, gas, or air shall likewise be carefully shut
off so as to prevent  waste or  damage,  and for any  default  or  carelessness,
Tenant shall make good all injuries  sustained by other  Tenants or occupants of
the Building or Landlord.

9.       SECURITY DEPOSIT

         Tenant has, upon  execution of this lease and  concurrently  therewith,
deposited  with  Landlord the sum of Seventeen  Thousand  Eight  Hundred  Ninety
Dollars  ($17,890.00) as security for the full and faithful performance of every
provision  of this Lease to be  performed  by Tenant.  If Tenant  defaults  with
respect  to any  provision  of this  Lease,  including  but not  limited  to the
provisions  relating to the payment of rent,  Landlord may use, apply, or retain
all or any part of this  security  deposit  for the  payment  of any rent or any
other sum in default,  or for the payment of any other amount which Landlord may
spend or become obligated to spend by reason of tenants default.  If any portion
of said deposit is so used or applied,  Tenant shall, within five (5) days after
written demand  thereof,  deposit cash with Landlord in an amount  sufficient to
restore the security deposit to its original amount,  and Tanant's failure to do
so shall be a breach of this Lease.  Landlord shall not be required to keep this
security  deposit  separate  from its  general  funds  and  Tenant  shall not be
entitled to  interest  on such  deposit.  If Tenant  shall fully and  faithfully
perform  every  provision  of this Lease to be  performed  by it,  the  security
deposit or any balance  thereof  shall be returned to Tenant (or, at  Landlord's
option,  to the  last  transferee  of  Tenant's  interest  hereunder)  within  a
reasonable  time after both the  expiration  of the lease term and the  Tenant's
delivery of the  Premises to  Landlord,  provided,  however,  that  Landlord may
retain the  security  deposit,  until such time as any amount due from Tenant in
accordance with Article 5 hereof has been determined and paid in full.

10.      ASSIGNMENT, SUBLETTING, AND ENCUMBERING


         (a) Tenant  shall  not,  either  voluntarily  or by  operation  of law,
assign, transfer,  mortgage, pledge,  hypothecate, or encumber this Lease or any
interest herein and shall not sublease the said Premises or any part thereof, or
any right or privilege  appurtenant thereto, or suffer any other persons (agents
and servants of Tenant  excepted) to occupy or use said  Premises or any portion
thereof without the written consent of Landlord first had and obtained,  and any
such act done or suffered  without first  obtaining  Landlord's  written consent
shall be void, and shall, at the option of Landlord, terminate this Lease.

         (b) Tenant shall, by written  notice,  advise Landlord of its intention
from and after a stated date (which  shall not be less than ninety (90) days nor
more than one hundred  eighty (180) days after the date- of Tenant's  notice) to
sublet the  Premises or any portion  thereof for any part of the term hereof and
in such event Landlord  shall have the right,  to be exercised by giving written
notice to Tenant thirty (30) days after receipt of Tenant's notice, to terminate
this Lease as to the portion of the Premises  described in Tenant's notice,  and
such notice by Landlord  shall,  if given,  terminate this Lease with respect to
the portion of the Premises therein  described as of the date stated in Tenant's
notice.  Said notice by Tenant  shall state the name and address of the proposed
subtenant,  and Tenant shall deliver to Landlord a true and complete copy of the
proposed  sublease with said notice.  If said notice shall specify less than all
of the  Premises and Landlord  shall give said  termination  notice with respect
thereto,  this Lease shall  terminate  pursuant to the



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foregoing  with respect to less than all the Premises,  the rent,  the Operating
Expenses  and the direct  taxes as defined  and  reserved  hereinabove  shall be
adjusted  on a pro rata basis to the number of square  feet  retained by Tenant,
and this Lease as so amended shall continue thereafter in full force and effect.
If Landlord,  upon.  receiving  said notice by tenant with respect to any of the
Premises, shall not exercise right to terminate,  Landlord will not unreasonably
withhold  its consent to Tenant's  subletting  the  Premises  specified  in said
notice,  and landlord  shall be entitled to 5O% of any  additional  rent paid by
subtenant over and above the base rent.

         (c) Regardless of Landlord's consent, no subletting or assignment shall
release  Tenant  from  its  obligation  to  perform  the  terms,  covenants  and
conditions  of this Lease.  Furthermore,  as a  condition  to  Landlord's  prior
written consent, the subtenant or assignee shall agree in writing to comply with
and be bound by all the terms,  covenants  and  conditions  of this  lease,  and
Tenant shall deliver to Landlord,  promptly after execution thereof, an executed
copy of each such sublease and  assignment.  The  acceptance of rent by Landlord
from any  party  other  than  Tenant  shall  not be deemed to be a waiver of any
provision  of this Lease.  Furthermore,  Landlord's  consent to one  assignment,
transfer, mortgage, pledge, hypothecation,  encumbrance,  subletting, occupation
or use shall not be deemed to be a consent to any subsequent occurrence thereof.
See Addendum I, #9

11.      MAINTENANCE AND REPAIR

         (a) Landlord shall repair and maintain the  structural  portions of the
Building in which the  Premises are  situated,  including  the  exterior  walls,
underflooring and roof, basic plumbing, heating, air conditioning and electrical
systems  installed or furnished by Landlord,  unless such maintenance and repair
become necessary in whole or in part due to the act, neglect,  fault or omission
of any duty by the Tenant, its employees,  agents, customers or invitees, or due
to damage caused by a breaking and  entering,  in which case Tenant shall pay to
Landlord the reasonable cost of such maintenance and repair.  Landlord shall not
be liable  for any  failure to make any  repair or to  perform  any  maintenance
unless such failure shall persist for an unreasonable  time after written notice
of the need for such repair or maintenance is given to Landlord by Tenant. There
shall be no  abatement  of rent and no  liability  of  Landlord by reason of any
injury to Tenant's  business or interference with Tenant's business arising from
the making of any repairs,  alterations or  improvements  to any portion of such
Building  or to  fixtures,  appurtenances  and  equipment  therein.  At  time of
occupancy,  lighting,  electrical  outlets  and HVAC shall be in proper  working
order.

         (b) Tenant  shall keep the  Premises and every part thereof in good and
sanitary  condition and repair,  and Tenant's taking  possession of the Premises
shall  constitute  Tenant's  acknowledgment  that the  Premises  are in good and
tenantable  condition,  and Tenant  agrees to surrender  the  Premises  upon the
expiration  or  termination  of this Lease with said  appurtenances  in the same
condition  as when  received,  reasonable  wear  and tear  and  damage  by fire,
earthquake,  Act of God or the elements excepted.  Landlord has no obligation to
alter,  add to,  improve,  repair,  remodel  or paint  the  Premises  except  as
specified   herein.   Tenant  also   acknowledges  that  Landlord  has  made  no
representation  or  warranty  regarding  the  condition  of the  Premises or the
Building  except as set forth herein.  Should any standard or regulation  now or

                                       10
<PAGE>

hereafter be imposed on Landlord or Tenant by any  governmental  body,  state or
federal or local charged with the  establishment,  regulation and enforcement of
occupational,  health or safety standards for employers, employees, landlords or
tenants,  then Tenant  agrees,  at its sole cost and expense to comply  promptly
with such standards or regulations.

12.      SERVICE AND UTILITIES

         (a) Provided Tenant is not in breach hereof, Landlord agrees to furnish
to the Premises during reasonable hours of generally  recognized  business days,
to be  determined by Landlord at its sole  discretion,  and subject to the Rules
and  Regulations  of the  Building  (Exhibit C) of which the  Premises are part,
electricity for normal lighting and fractional horsepower office machines,  heat
and air  conditioning  required in Landlord's  judgement for the comfortable use
and  occupation of the Premises,  and  janitorial  service.  Landlord shall also
maintain and keep lighted the common stairs,  common entries and toilet rooms in
the Building. Landlord shall not be liable for, and Tenant shall not be entitled
to, any  reduction of rental by reason of  Landlord's  failure to furnish any of
the  foregoing  when such  failure  is caused by  accident,  breakage,  repairs,
strikes,  lockouts or other labor disturbances or disputes of any character,  or
by any other cause,  similar or  dissimilar,  beyond the  reasonable  control of
Landlord,  or by  rationing  or  restrictions  on the use of said  services  and
utilities  due to energy  shortages or other  causes,  whether or not any of the
above result from acts or omissions of Landlord.  Landlord  shall be entitled to
cooperate voluntarily in a reasonable manner with the efforts of national, state
or local governmental  bodies or utilities suppliers in reducing energy or other
resources  consumption.  Furthermore,  Landlord  shall not be  liable  under any
circumstances for a loss-or injury to property, however occurring, through or in
connection  with or incidental to failure to furnish any.of the foregoing.  *See
Addendum I #11.

         (b) Tenant shall not, without  Landlord's prior written consent,  which
shall not be unreasonably withheld, use heat generating machines or equipment or
lighting  other than Building  Standard  lights in the Premises which affect the
temperature otherwise maintained by the air conditioning system. If such consent
is  given,   Landlord  shall  have  the  right  to  install   supplementary  air
conditioning units in the Premises, and the cost thereof,  including the cost of
installation,  operating  and  maintenance  thereof,  shall be paid by Tenant to
Landlord  upon  billing  by  Landlord.  Said  cost  shall  include  the  cost of
electrical  metering  necessary  to  determine  the  additional  operating  cost
attributable  to  the  supplementary   equipment.   Tenant  shall  not,  without
Landlord's prior vritten consent,  install lighting requiring power in excess of
that  required  for normal  office  use in the  building  or  install  equipment
requiring power in excess of that required by normal desk-top office  equipment.
If such consent is given, Tenant shall pay Landlord upon billing for the cost of
such excess. All costs payable by Tenant under this Paragraph shall be deemed to
be, and shall be paid as, additional rent.

         (c)  Tenant  shall not  employ  any  person or  persons  other than the
janitorial  service  designated by Landlord from time to time for the purpose of
cleaning the Premises unless  otherwise  agreed to by Landlord.  Except with the
written  consent of Landlord,  no person or persons other than those approved by
Landlord  shall be  permitted  to enter the Building for the purpose of cleaning
the  same.  Tenant  shall  not  cause  any  unnecessary  labor by  reason of its

                                       11
<PAGE>

carelessness or indifference in the  preservation of good order and cleanliness.
Landlord  shall in no way be  responsible to any Tenant for any loss of property
on the Premises, however occurring, or for any damage done to the effects of any
Tdnant by the janitor or any other employee or any other person. Janitor service
shall include  ordinary  dusting and cleaning by the janitor assigned to do such
work and shall not include cleaning of carpets or rugs, except normal vacuuming,
or moving of furniture and other special  services.  Janitor service will not be
furnished on nights when rooms are occupied after 7:30 p.m. or to rooms that are
locked.  Window cleaning shall be done only by Landlord at Landlord's discretion
and only between 6:00 a.m. and 5:00 p.m.

         (d) On  Saturdays,  Sundays,  and  legal  holidays,  and on other  days
between the hours of 6:00 p.m. and 7:00 a.m. the  following  day,  access to the
Building, to the halls,  corridors,  elevators, or stairways in the Building, or
to the Premises shall be restricted.  Tenant may make arrangements with Landlord
to allow access,  in which case tenant shall be responsible  for seeing that the
access  doors are  properly  locked  after  entry and exit during  these  hours.
Landlord shall in no case be liable for damages for any error with regard to the
admission to or exclusion from the Building of any person.  In case of invasion,
mob, riot, public excitement, or other commotion, Landlord reserves the right to
prevent access to the Building during the continuance of the same by closing the
doors or  otherwise,  for safety of Tenants  and  protection  of property in the
Building and the Building.  Landlord reserves the right to close and keep locked
all entrance  and exit doors of the Building on Saturdays  and Sundays and legal
holidays,  and on other days between the hours of 6:00 p.m.  and 7:00 a.m.,  and
during  such  further  hours as Landlord  may deem  advisable  for the  adequate
protection of said Building and the property therein.

         (e)  The   requirements  of  Tenant  will  be  attended  to  only  upon
application  to the office of the  Building.  Employees  of  Landlord  shall not
perform any work or do anything  outside of their  regular  duties  unless under
special instructions from Landlord and no employee will admit any person (Tenant
or otherwise) to any office without specific instructions from Landlord.

         (f)  Tenant  agrees  that it shall  comply  with all fire and  security
regulations  that may be issued from time to time by  Landlord,  and Tenant also
shall  provide  Landlord with the name of a designated  responsible  employee to
represent  Tenant  in all  matters  pertaining  to  such  fire  or  security  re
regulations.

         (g) Landlord shall furnish heating and air  conditioning  during normal
business hours (7:00 a.m. to 6:00 p.m.), excluding Saturdays, Sundays, and legal
holidays. In the event Tenant requires heating and air conditioning during hours
other than these,  normal  business hours,  Landlord shall,  upon seven (7) days
written  notice,  provide  such  service at Tenant's  expense in an amount to be
agreed upon before said service is provided by Landlord.

         (h) Tenant shall pay for prior to  delinquency,  all  telephone and all
other  materials,  utilities,  and services not  expressly  the  obligation  -of
Landlord that are furnished to or used on or about the Premises  during the term
of this Lease.

                                       12
<PAGE>

         (i) Electric wires, telephones, telegraphs, or other electric apparatus
other than those  installed by Landlord at the time Tenant occupies the Premises
shall not be  installed in the  Premises,  except with the approval of Landlord,
and  no  such  installation  is to  be  made  without  first  obtaining  written
permission  from  Landlord  to do such vork.  Any  installation  of  telephones,
telegraphs,  electric wires, or other electric apparatus made without permission
shall be removed by Tenant at  Tenant's  own  expense.  No  machines  other than
standard  office  machines  such  as  personal   computers,   word   processors,
typewriters and calculators  shall be used in the Premises  vithout the approval
of Landlord.  Tenant will not, vithout Landlord's prior written consent, install
or use any  apparatus  or device in the  Premises  that require in excess of 110
volts,  or that in the  total  overload  the  Building's  electrical  system  in
Landlord's  reasonable  opinion,  or that will in any way increase the amount or
quality of  electricity  or water  usually  furnished or supplied for use of the
Premises  as general  office  space,  nor shall  Tenant  connect  with  electric
current,  except through existing  electrical outlets in the Premises,  or water
pipes, any apparatus or device for the purposes of using  electrical  current or
water.

13.      COMPLIANCE WITH LAW

         Tenant shall not do anything-or  suffer anything to be done in or about
the Premises which will in any way conflict with any law, statute,  ordinance or
other  governmental  rule,  regulation or requirement  now in force or which may
hereafter be enacted or promulgated.  At its sole cost and expense, Tenant shall
promptly  comply  with  all  said  governmental   measures  and  also  with  the
requirements  of any board of fire  underwriters  or other  similar  body now or
hereafter  constituted  to deal  with the  condition,  use or  occupancy  of the
Premises,  excluding  structural  changes  not  related or  affected by Tenant's
alterations,  additions or  improvements  or Tenant's  acts. The judgment of any
court of  competent  jurisdiction  or the  admission  of Tenant in any  judicial
action,  regardless  of whether  Landlord  is a party  thereto,  that Tenant has
violated  any of  the  said  governmental  measures  or  requirements  shall  be
conclusive of that fact as between Landlord and Tenant.

14.      ALTERATIONS

         (a)  Tenant  shall  make  no  alterations,  decorations,  additions  or
improvements in or to the Premises without Landlord's prior written consent, and
then only by contractors or mechanics approved by Landlord.  All such work shall
be done at such  times  and in such  manner  as  Landlord  may from time to time
designate.  Tenant covenants and agrees that all work done by or pursuant to the
direction and  instruction of Tenant shall be performed in full  compliance with
all laws, rules, orders, ordinances, directions, regulations and requirements of
all governmental  agencies,  offices,  departments,  bureaus,  and boards having
jurisdiction,  and in  full  compliance  with  the  rules,  orders,  directions,
regulations  and  requirements  of the Pacific  Fire Rating  Bureau,  and of any
similar body.  Before  commencing any work,  Tenant shall give landlord at least
five (5) days  written  notice  of the  proposed  commencement  of such work and
shall,  if required by  Landlord,  secure at Tenant's  own cost and  expense,  a
completion and lien indemnity  bond,  satisfactory  to Landlord,  for said work.
Tenant further  covenants and agrees that any mechanic's  lien filed against the
Premises  or against  the  Building  for work  claimed to have been done for, or
materials  claimed to have been  furnished  to  Tenant,  will be  discharged  by
Tenant, by bond or otherwise,  within ten (10) days after the filing thereof, at
the cost and  expense of Tenant.



                                       13
<PAGE>

Landlord shall have the right at all times to post notices of non-responsibility
on the Premises and record  verified  copies thereof in connection with all work
of any kind  upon the  Premises.  All  alterations,  decorations,  additions  or
improvements  upon  the  Premises,  made by  either  party,  including  (without
limiting the  generality of the foregoing) all  wallcovering,  draperies,  floor
coverings,  built-in cabinet work, paneling and the likes shall, unless Landlord
elects otherwise, become the property of Landlord, and shall remain upon, and be
surrendered  with the  Premises,  as part  thereof,  upon  expiration  or sooner
termination  of the term of this  Lease,  except that  Landlord  may, by written
notice to Tenant,  given at least thirty (30) days prior to the end of the term,
require  Tenant to  remove  all  partitions,  counters,  railings,  and the like
installed by or pursuant to the direction and instruction of Tenant,  and Tenant
shall repair the Premises or, at  Landlord's  option,  shall pay to the Landlord
all costs arising from such removal.

         (b) All  articles  of  personal  property  and all  business  and trade
fixtures,  machinery and equipment,  furniture and movable  partitions  owned by
Tenant or installed by Tenant at its expense in the Premises shall be and remain
the property of Tenant and may be removed by Tenant at any time during the lease
term when Tenant is not in default hereunder. If Tenant shall fail to remove all
of its effects from said  Premises upon  termination  of the Lease for any cause
whatsoever,  Landlord  may,  at its  option,  remove the same in any manner that
Landlord shall choose,  and store said effects  without  liability to Tenant for
loss thereof, and Tenant agrees to pay Landlord upon demand any and all expenses
incurred in such removal,  including court costs and attorneys' fees and storage
charges  on such  effects  for any  length  of time  that the  same  shall be in
Landlord's possession, or Landlord may, at its option, without notice, sell said
effects, or any of the same, at private sale and without legal process, for such
prices as  Landlord  may  obtain  and apply the  proceeds  of such sale upon any
amounts  due under the  Lease  from  Tenant  to  Landlord  and upon the  expense
incident to the removal and sale of said effects.

15.      LIENS

         Tenant shall keep the  Premises,  the  building,  and the property upon
which the Building is situated, free from any liens arising out of the work perf
ormed, materials furnished, or obligations incurred by Tenant.

16.      FIRE AND CASUALTY INSURANCE

         (a) At Landlord's option, Landlord may maintain during the term of this
lease a policy of insurance  insuring the Building against loss by or damage due
to fire and other  casualties  covered by a standard  extended  coverage policy.
Such  coverage  may  include the risks of  lightning,  vandalism  and  malicious
mischief,  and  it  may  include,  at the  option  of  Landlord,  the  risks  of
earthquakes and additional hazards.  Such policy may also include, at Landlord's
option,  a rental loss  endorsement  and one or more loss payee  endorsements in
favor  of the  holders  of any  mortgages  or deeds  of  trust  encumbering  the
interests of Landlord under this Lease.

         (b) Tenant  shall not use the  Premises  nor permit the  Premises to be
used or acts to be done  therein  which  will (i)  increase  the  premium of any
insurance  described  above or (ii) cause- a cancellation  of any such insurance
policies.  Tenant shall not keep in or about the Premises any article  which may
be prohibited by any standard form policy of fire insurance. If Tenant's


                                       14
<PAGE>


conduct or use of the  Premises  causes any  increase  in the  premium  for such
insurance  policies,  then Tenant shall pay as additional  rent hereunder all of
such  increase.  Tenant shall,  at Tenant's  expense,  comply with all insurance
company requirements  pertaining to the use of the Premises so that the Premises
shall at all  times be  insurable  for  fire,  extended  coverage  and the risks
specified above.

17.      DAMAGE AND DESTRUCTION

         If the Premises or the Building are damaged by fire or other  casualty,
Landlord  shall  forthwith  repair the same,  subject to the  provisions  of the
paragraph 16, provided such repairs can, in Landlord's  opinion,  be made within
one hundred twenty (120) days of such damage, and in such event this Lease shall
remain in full force and effect. If such repairs cannot, in Landlord's  opinion,
be made within one hundred  twenty  (120) days of such  damage,  Landlord at its
option shall give written notice to Tenant vithin sixty (60) days after the date
of such  damage  either (1) elect to repair or restore  such  damge,  this Lease
continuing  in full  force and effect or (2)  terminate  this Lease as of a date
specified in such notice, which date shall not be less than thirty (30) nor more
than sixty (60) days after the date such notice is given.  If such fire or other
casualty  shall have damaged the Premises or common areas  necessary to Tenant's
occupancy,  and if such  damage is not the result of the  negligence  or willful
misconduct of Tenant orTenant's employees, contractors,  licensees, or invitees,
then during the period the Premises are rendered  unusable by such damage Tenant
shall be entitled to a reduction in rent in the proportion  that the area of the
Premises  rendered  unusable  by such  damage  bears  to the  total  area of the
Premises.  Landlord  shall not be  required to repair any injury or damage or to
make any repairs or replacements of any  improvements  installed on the premises
by or for Tenant,  other than Landlord's work under Exhibit B, and Tenant shall,
at  Tenant's  sole cost and  expense,  repair and  restore  its  portion of such
improvements.  Tenant shall not be entitled to any  compensation or damages from
Landlord for damage to any of Tenant's fixtures or personal  property,  for loss
of use of the Premises or any part thereof, for any damage to Tenant's business,
or for any  disturbance  to Tenant caused by any casualty or the  restoration of
the Premises following such casualty.  Notwithstanding  anything to the contrary
contained in this Lease, Landlord shall have no obligation whatsoever to repair,
reconstruct or restore the Premises when the damage  resulting from any casualty
occurs during the last twelve (12) months of the term or any extension  thereof.
A total  destruction of the Building shall  automatically  terminate this Lease.
*SEE ADDENDUM I #15

18.      PUBLIC LIABILITY INSURANCE

         Tenant  agrees  to  purchase  at its own  expense  and to keep in force
during the term of this  Lease a policy or  policies  ofcomprehensive  liability
insurance,including  public liability and property damage, in the amount of Five
Hundred  Thousand  Dollars  ($500,000)  for  property  damage  and Five  Hundred
Thousand Dollars ($500,000) per person and One Million Dollars  ($1,000,000) per
occurrence for personal  injuries or deaths of persons occurring in or about the
Premises.  Said policy or policies  shall:  (a) name  Landlord as an  additional
insured and insure  Landlord's  contingent  liability  under this Lease;  (b) be
issued by an insurance  company  which is acceptable to landlord and licensed to
do business in the State of  California;  and (c)  provide  that said  insurance
shall not be  cancelled  unless ten (10) days' prior  written  notice shall have
been



                                       15
<PAGE>

given to  Landlord.  Said policy or policies or  certificates  thereof  shall be
delivered to landlord by Tenant upon  commencement of the term of this Lease and
upon each renewal of said insurance.

19.      SUBROGATION

         Landlord  and Tenant  hereby waive any right that each may have against
the  other on  account  of any loss or damage  arising  in any  manner  which is
covered by policies of insurance for fire and extended coverage,  theft,  public
liability,  workmen's  compensation or other insurance now or hereafter existing
during  the  term  hereof.  The  parties  each  agree to have  their  respective
insurance companies waive any rights of subrogation that such companies may havo
against landlord or Tenant, as the case may be.

20.      EMINENT DOMAIN

         If the  whole of  Premises  or more  than  fifty  percent  (50%) of the
rentable  area  thereof  is  taken  under  power  of  eminent  domain  or  sold,
transferred or conveyed in lieu thereof, both Landlord and Tenant shall have the
right to terminate this Lease as of the date of such  condemnation  or as of the
date possession is taken by the condemning authority, whichever is later. If any
part of the  Building  other than the  Premises  is taken under power of eminent
domain or sold, transferred or conveyed in lieu thereof,  Landlord may terminate
this Lease at its option as of the date of such  condemnation  or as of the date
possession is taken by the condemning  authority,  whichever is later. In either
of such events,  Landlord shall receive,  and Tenant hereby assigns to Landlord,
any award which may be made in such taking or  condemnation,  together  with any
and all rights of Tenant now or hereafter  arising in or to the same or any part
thereof  whether or not  attributable  to the value of the unexpired  portion of
this Lease; provided,  however, that nothing contained herein shall be deemed to
give Landlord any interest in or require  Tenant to assign to Landlord any award
made  payable  to  Tenant  for the  taking of  personal  property  and  fixtures
belonging to Tenant and removable by Tenant at the expiration of the term hereof
or for the  interruption  of or damage to  Tenant's  business  in the event of a
partial  taking,  or a sale,  transfer,  or conveyance in lieu thereof,  if this
Lease is not  terminated  by  Landlord  and/or  Tenant,  then the rent  shall be
apportioned  according  to the ratio  that the  remaining  rentable  area of the
Premises bears to the total rentable area of the Premises.

21.      INDEMNFIICATION OF LANDLORD

         (a) Tenant hereby waives all claims against  Landlord for damage to any
property  or  injury,  illness or death of any  person  in,  upon,  or about the
Premises and/or the Building  arising at any time and from any cause  whatsoever
other than solely by reason of gross negligence or willful act of Landlord,  its
employees or contractors.

         (b)  Tenant  shall hold  Landlord  harmless  from and  defend  Landlord
against any and all claims or  liability  for any injury or damage to any person
or property  whatsoever:  (1) occurring in, on or about the Premises or any part
thereof,  and (2) occurring in, on or about any facilities  (including,  without
prejudice to the  generality  of the term  "facilities,"  elevators,  stairways,
passageways,  hallways and parking  areas),  the use of which Tenant may have in
common with other tenants of the  Building,  when such injury or damage shall be
caused in part or in whole by the act, neglect, fault of or omission of any duty
with  respect  to the  same by  Tenant,  its  agents,



                                       16
<PAGE>

employees, customers or invitees. The provisions of this paragraph shall survive
the  expiration  or  termination  of the Lease  with  respect  to any  claims or
liability  occurring prior to such  expiration or termination.  * SEE ADDENDUM I
#12

22.      ENTRY BY LANDLORD

         Landlord  reserves  the  right at  reasonable  business  hours and upon
reasonable  notice to Tenant to enter the  Premises  to (1)  inspect  them,  (2)
perform services required of Landlord,  (3) take possession due to any breach of
this Lease as stated earlier, (4) submit the Premises to prospective purchasers,
mortgagees  or tenants (5) post  notices of  non-responsibility,  and (6) alter,
improve or repair  the  Premises  as  Landlord  deems  necessary  or  desirable.
Landlord may make such entries  vithout the  abatement of rent and may take such
reasonable  steps as required to accomplish the stated  purposes.  Tenant hereby
waives  any  claims  for  damages  or for  any  injuries  or  inconveniences  of
interference with Tenant's business, any loss of occupancy or quiet enjoyment of
the Premises, and any other loss occasioned thereby. Landlord to provide 48 hour
notice for entry except in any emergency.

23.      DEFAULT

The occurrence of any of the following shall  constitute a material  default and
breach of this Lease by Tenant:

         (a) Any  failure by Tenant to pay the rent or any other  monetary  sums
required  to be paid  hereunder  (where  such  failure  continues  for three (3)
business days after receipt of written notice by Landlord to Tenant;

         (b) The vacation of the Premises by Tenant;

         (c) A failure by Tenant to observe and perform any other  provision  of
this lease to be observed or performed by Tenant,  where such failure  continues
for three (3) days after written notice thereof by Landlord to Tenant;

         (d)  The  making  by  Tenant  of  any  general  assignment  or  general
arrangement  for the benefit of creditors;  the filing by or against Tenant of a
petition to have Tenant adjudged a bankrupt  (unless,  in the case of a petition
filed  against  Tenant,  the same if  dismissed  within  sixty (60)  days);  the
appointment of a trustee or receiver to take possession of substantially  all of
Tenant's  assets located at the Premises or of Temant's  interest in this Lease,
where  possession  is not  restored to Tenant  within  thirty (30) days;  or the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease, where such
seizure is not discharged within thirty (30) days.

24.       REMEDIES

         In the event of any such material default or breach by Tenant, Landlord
may at any time  thereafter,  without  limiting  Landlord in the exercise of any
right of remedy at law or in equity  which  Landlord  may have by reason of such
default or breach:

                                       17
<PAGE>

         (a) Terminate  the Lease and recover  damages as provided by California
Civil Code Section 1951.2, including but not limited to recovery of the worth at
the time of award of the amount by which the unpaid  rent for the balance of the
term  after the time of award  exceeds  the  amount of rental  loss for the same
period that the Tenant proves could have been  reasonably  avoided,  as computed
pursuant to subsection (b) of Section 1951.2;

         (b)  Continue  the Lease in effect and to enforce all of its rights and
remedies under the Lease,  as provided by California  Civil Code Section 1951.4,
including  the right to recover  rent as it becomes due, for so long as Landlord
does  not  terminate  Tenant's  right  to  possession.  Acts of  maintenance  or
preservation  efforts to re-let the Premises,  or the  appointment of a receiver
upon  Landlord's  initiative to protect its interest  under this Lease shall not
constitute a termination of Tenant's right to possession;

         (c) Enter the Premises and remove  therefrom  all persons and property,
store such  property in a public  warehouse  or elsewhere at the cost of and for
the account of Tenant,  and sell such property and apply the proceeds  therefrom
pursuant to applicable California law, all as attorney-in-fact for Tenant; and

         (d) Have a receiver appointed for Tenant, upon application by Landlord,
to take  possession of the Premises and to apply any rental  collected  from the
Premises and to exercise  all other  rights and remedies  granted to Landlord as
attorney-in-fact for Tenant pursuant to subparagraph (c) above.

25.      LATE CHARGES

         Tenant hereby  acknowledges  that late payment by Tenant to Landlord of
rent and  other  sums due  hereunder  will  cause  Landlord  to incur  costs not
contemplated  by this  Lease,  the  exact  amount  of  which  will be  extremely
difficult to ascertain.  Such costs include,  but are not limited to, processing
and accounting  charges and late charges which may be imposed on Landlord by the
terms of any mortgage or deed of trust  covering the Premises.  Accordingly,  if
any  installment  of rent or any other sun due from Tenant shall not be received
by Landlord or Landlord's designee withiu five (5)* days after such amount shall
be due, Tenant shall pay to Landlord a late charge equal to ten percent (10%) of
such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable  estimate of the costs Landlord will incur by reason of late
payment by Tenant.  Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant's default with respect to such overdue amount, nor
prevent  Landlord from  exercising any of the other rights and remedies  granted
hereunder. *business

26.      LANDLORD'S RIGHT TO CURE DEFAULT

         All  covenants  and  agreements to be kept or performed by Tenant under
the terms of this lease shall be performed  by Tenant at Tenant's  sole cost and
expense and without any  reduction of rent. If Tenant shall be in default on its
obligations  under  this  Lease to pay any sum of money  other  than  rent or to
perform any other act  hereunder,  and if such  default is not cured  within the
applicable grace.period provided in Patagraph 23 hereof, Landlord may, but shall
not be  obligated  to, make any such payment or perform any such act on Tenant's
part  without  waiving

                                       18
<PAGE>

its right based upon any default of Tenant and without releasing Tenant from any
obligations  hereunder.  All sums so paid by Landlord and all incidental  costs,
together with  interest  thereon at the rate of ten percent (10%) per annum from
the date of such payment or the incurrence of such costs by Landlord,  whichever
occurs first,  shall be paid to Landlord on demand.  In the event of non-payment
by Tenant,  Landlord  shall have,  in  addition to any other  rights or remedies
hereunder,  the same rights and remedies as in the case of default by Tenant for
nonpayment of rent.

27.        DEFAULT BY LANDLORD

         (a) Landlord shall not be in default  unless  landlord fails to perform
obligations required of Landlord vithin a reasonable time, but in no event later
than thirty  (30) days after  written  notice by Tenant to  Landlord  and to the
holder of any first  mortgage or deed of trust  covering the Premises whose name
and.  address  shall  have  theretofore  been  furnished  to Tenant in  writing,
specifying  wherein Landlord has failed to perform such  obligations;  provided,
however,  that if the  nature of  Landlord's  obligation  is such that more than
thirty (30) days are required for  performance,  then  landlord  shall not be in
default if Landlord commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion. Tenant agrees, however,
that any  damages  arising out of a money  judgment  against  Landlord  shall be
satisfied  only out of Landlord' s estate in the  Building,  and Landlord  shall
have no personal liability whatsoever with respect to any such judgment.  Tenant
hereby waives, to the extent waivable under law, any right to satisfy said money
judgment  against  Landlord  except from Landlord's  estate in the Building.  If
Landlord is a partnership, it is understood and agreed that any claims by Tenant
on  Landlord  shall be limited to the  assets of the  partnership;  furthermore,
Tenant  expressly  waives any and all rights to proceed  against the  individual
partners  of any  partnership  which  may  own  the  Building  or the  officers,
directors or  shareholders  of any  incorporated  partner or of any  corporation
which may own the Building.

28.      LANDLORD'S OPTION TO RELOCATE TENANT

         None

29.      SALE OF PREMISES

         Each  conveyance of the Premises  prior to  expiration  or  termination
hereof by  Landlord  shall (i) be  subject to this  lease and (ii)  relieve  the
grantor of any further  obligations  or  liability as  Landlord.  Tenant  hereby
agrees to attorn to Landlord's successor in interest.

30.      ESTOPPEL CERTIFICATES

         Within ten (10) days  following any written  request which Landlord may
make from time to time, Tenant shall execute and deliver to Landlord a statement
certifying:  (a) the date of commencement of this Lease;  (b) the fact that this
Lease is  unmodified  and in full  force  and  effect  (or,  if there  have been
modifications  hereto, that this Lease is in full force and effect, as modified,
and  stating the date and nature of such  modifications);  (c) the date to which
the rent and other sums  payable  under this Lease have been paid;  (d) the fact
that there are no current defaults under this lease by either Landlord or Tenant
except as specified in Tenant's statement;  and (e) such other matters requested
by Landlord. Landlord and Tenant intend that any statement



                                       19
<PAGE>

delivered  pursuant  to this  paragraph  may be  relied  upon by any  mortgagee,
beneficiary  purchaser or prospective  purchaser of the Building or any interest
therein.

31.      NONMERGER

         The  termination or mutual  cancellation of this Lease shall not work a
merger,  and shall,  at the option of the Landlord,  terminate all subleases and
subtenancies (to the extent same are permitted  hereunder) or may, at the option
of  Landlord,  operate as an  assigmment  to it of any or all such  subleases or
subtanancies.

32.      DISCLOSURE

         Detectable  amounts of chemicals  known to the State of  California  to
cause cancer,  birth  defects,  or other  reproductive  harm may be found in and
around the  building,  the premises,  and the common areas.  A report is on file
with the landlord prepared by the engineering firm of Dames & Moore which states
that the  building has been abated of all friable  asbestos  pursuant to federal
and state regulations as of April 17, 1990.  Tenant  acknowledges that a copy of
said report has been provided to Tenant.

33.      DEMOLITION OF PREMISES

         If at any time  du:ring  the term of this  Lease  Landlord  desires  to
demolish  the  building(s)  on  the  demised   premises  which  existed  at  the
commencement  of the term of this Lease in order to  construct a new building or
buildings, or if at any time during the term of this Lease, the buildings on the
demised  premises are totally or partially  destroyed by fire or other  casualty
and Landlord chooses not to reconstruct the existing  building,  notwithstanding
anything to the contrary  contained  herein,  upon written notice from Landlord,
Tenant shall  surrender  the premises  and Landlord and Tenant  hereby  mutually
agree that in such  circumstances  the Lease  shall be  terminated  and be of no
further  force or effect.  In the event that  Landlord  desires to demolish  the
building(s), Landlord shall give Tenant twelve (12) months written notice of his
intention  to  demolish  and  terminate  the Lease.  In the event that  Landlord
constructs a building for similar uses on the subject  property,  Landlord shall
offer Tenant comparable space in the building(s) upon their  completion.  Tenant
shall have 30 days to accept or reject said offer.  In the event Tenant  rejects
said offer,  Landlord shall reimburse Tenant for its moving expenses which shall
be limited to  reasonable  moving costs,  reprinting  costs for  letterhead  and
business cards, and telephone installation charges.

34.      SUBORDINATION

         Without the  necessity of any  additional  document  being  executed by
Tenant for the purpose of affecting a subordination, this Lease shall be subject
and  subordinate  at all times to: (a) all ground  leases or  underlying  leases
which may now exist or hereafter be executed  affecting the Building or the land
upon which the Building is situated,  or both,  and (b) the lien of any mortgage
or deed of trust which may now exist or  hereafter be executed in any amount for
which said  Building,  land,  ground leases or  underlying  leases or Landlord's
interest   or  estate  in  any  of  said  items  is   specified   as   security.
Notwithstanding  the foregoing,  Landlord shall have the right to subordinate or
cause to be subordinated any such ground leases or underlying leases or any such
liens to this  Lease.  In the event that any ground  lease or  underlying  lease
terminates  for any



                                       20
<PAGE>

reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of
foreclosure  is  made  for  any  reason,   Tenant  shall,   notwithstanding  any
subordination,  attorn to and become the Tenant of the  successor in interest to
Landlord,  at the option of such  successor in interest.  Tenant  covenants  and
agrees to execute and deliver, upon demand by Landlord and in the form requested
by Landlord,  any additional  documents evidencing the priority or subordination
of this Lease with respect to any such ground leases or underlying leases or the
lien of any such mortgage or deed of trust.

35.      NOTICES

         Notices,  requests,  demands  and  documents  required or desired to be
given  hereunder  shall be in writing  and  delivered  either  personally  or by
deposit into the United States Mail, first class postage  prepaid,  addressed as
follows or as Landlord or Tenant may from time to time  otherwise  designate  in
writing.

LANDLORD: BROADLAKE PARTNERS
          2960 Camino Diablo, Suite 300
          Walnut Creek, CA 94596
Attn:     Dale A. Frost

Tenant:   VALUESTAR, INC.
          360 22nd Street, Second Floor
          0akland, CA 94612
Attn:     Jim Stein

36.      General Provisions

         (a) Holding Over:  Any holding over after the expiration of the term of
this Lease or any extension  thereof with the written  consent of Landlord shall
be construed to be a tenancy from  month-to-month  at the rent,  additional rent
and other  terms and  conditions  herein  set  forth.  If  Tenant  shall  retain
possession  of the  Premises  or any part  thereof  without  Landlord's  consent
following  the  expiration or sooner  termination  of this Lease for any reason,
then Tenant shall pay to Landlord for each day of such retention * the amount of
the daily rent and additional rent for the last period prior to the date of such
expiration  or  termination.  Tenant  shall  also  indemnify  and hold  Landlord
harmless  from  any  loss  or  liability  resulting  from  delay  by  tenant  in
surrendering the Premises, including, without limitation, any claims made by any
succeeding tenant founded on such delay. *150%

         (b) Waiver: The waiver by Landlord of the breach of any term,  covenant
or condition herein contained shall not be deemed to be a waiver of a subsequent
breach of such term,  covenant or condition.  The subsequent  acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term,  covenant  or  condition  of this  Lease,  other than the
failure  of  Tenant  to pay the  particular  rent  so  accepted,  regardless  of
Landlord's  knowledge of such preceding breach at the time of acceptance of such
rent.

                                       21
<PAGE>

         (c) Rules and Regulations:  Tenant shall faithfully  observe and comply
with the rules and Regulations  attached as Exhibit C to this lease, as modified
by Landlord from time to time in writing.  Landlord  shall not be responsible to
Tenant for the non-performance of any of said rules and regulations by any other
tenants or occupants of the Building.

         (d)  Successors  and Assigns:  This Lease and all of the  covenants and
conditions herein contained shall be binding upon and shall inure to the benefit
of the  heirs,  executors,  administrators,  assigns  and  other  successors  in
interest (to the extent permitted under this Lease) of each of the parties.

         (e)  Captions:  The titles or captions in this Lease are for  reference
purposes only and have no effect upon the construction or  interpretation of any
part hereof.  The use herein of the singular includes the plural and vice versa,
and the use herein of the neuter gender  includes the masculine and the feminine
and vice versa, whenever and wherever the context so requires.

         (f)  Joint  obligations:   If  there  is  more  than  one  Tenant,  the
obligations imposed upon Tenant under this Lease shall be joint and several.

         (g) Authority:  If Tenant is a corporation,  each individual  executing
this Lease on behalf of said corporation represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of said  corporation,  in
accordance  with a duly  adopted  resolution  of the board of  directors of said
corporation or in accordance with the bylaws of said corporation,  and that this
Lease is binding upon said corporation in accordance with its terms.

         (h) Time:  Time is of the essence in the performance of all obligations
under this Lease.

         (i) Entire  Agreement:  This Lease sets forth the entire  understanding
between Landlord and Tenant with respect to all matters referred to herein,  and
the provisions  hereof may not be changed or modified except by an instrument in
writing  signed  by  both  Landlord  and  Tenant.  Tenant  acknowledges  that in
executing and delivering  this Lease it is not relying on. any verbal or written
understanding, promise or representation outside the scope of this Lease and not
described or referred to herein.

         (j) Attorneys' Fees: If either party commences  litigation  against the
other for the  specific  performance  of this Lease,  for damages for the breach
hereof or otherwise for  enforcement  of any remedy  hereunder,  the  prevailing
party  shall be  entitled  to  recover  from the  other  party  such  costs  and
reasonable attorneys' fees as may have been incurred.

         (k) Choice of Law: This Lease is made and delivered within the state of
California  and shall be construed and enforced in  accordance  with the laws of
the state of California.

         (l)  Effectiveness:  Delivery  of this Lease duly  executed  by Tenant,
constitutes  an offer to lease the  Premises  as herein set forth,  and under no
circumstances  shall such delivery be deemed to create an option or  reservation
to lease the  premises  for the  benefit of  Tenant.  This  Lease  shall



                                       22
<PAGE>

become effective and binding only upon execution hereof by Landlord and delivery
of a signed copy to Tenant.

         (m)  Severability:  If any  provision of this Lease or the  application
thereof to any person or circumstance  shall be invalid or  unenforceable to any
extent,  the remainder of this Lease and the  application  of such  provision to
other  persons  or  circumstances  shall not be  affected  thereby  and shall be
enforced to the greatest extent permitted by law.

         (n) Brokers:  Tenant warrants that it has had no dealings with any real
estate  broker  or  agent  in  connection  with the  negotiation  of this  Lease
excepting  only  Grubb & Ellis / Peggy  Roth and that it knows of no other  real
estate broker or agent who is entitled to a commission  in connection  with this
Lease.  Tenant agrees to indemnify  Landlord and hold Landlord harmless from and
against any and all claims, demands, losses, liabilities,  lawsuits,  judgments,
and costs and expenses (including without limitation reasonable attorneys' fees)
with respect to any leasing commission or equivalent  compensation alleged to be
owing on account of Tenant's dealings with any real estate broker or agent other
than that specified herein.

         (o)  Exhibits:  Exhibit  A (Plan  Outlining  the  Premises),  Exhibit B
(WorkAgreement),  Exhibit C (Rules and Regulations), and Addendum I are attached
to this Lease and by this reference made a part hereof.

         (p)  Additional  Provisions:  The attached  pages,  if any,  containing
Paragraphs  __----__ through  __----__ are  incorporated  herein and made a part
hereof. See Addendum I attached hereto and made a part hereof

         (q) Force Majeure:  Any prevention,  delay, or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain labor or materials or
reasonable  substitutes  therefor,   governmental   restrictions,   governmental
regulations,  governmental controls, enemy or hostile governmental action, civil
commotion,  fire or other  casualty,  and other  causes  beyond  the  reasonable
control of the party obligated to Perform,  shall excuse the performance by such
party for a period equal to any such prevention,  delay, or stoppage, except the
obligations  imposed with regard to Rent and other  charges to by paid by Tenant
pursuant to this Lease.

         (r) All first floor tenants shall be responsible  for replacing  broken
windows  that  are  part of  their  premises  resulting  from  vandalism,  fire,
accident,  robbery or any other cause.  Tenant shall be  responsible  for taking
whatever precautions are necessary to protect their premises.  Any actions taken
by tenant which would have visibility from the street or require  alterations to
the premises shall require advance written approval from Landlord.

         (s) For purposes of this Lease the definition of Substantial Completion
is as follows: Substantial completion of Landlord's work shall be deemed to have
occurred when the remaining  work to be done in the Premises will not materially
interfere  with  Tenant's use of the  Premises or access  thereto for the normal
conduct of Tenant's  business,  and the Premises  shall be deemed



                                       23
<PAGE>

substantially  completed   not-withstanding  the  fact  that  minor  details  of
construction, mechanical adjustment, or decoration remain to be performed.


IN WITNESS WHEREOF, this Lease has been executed as of the date set forth at the
beginning hereof.


BroadLake Partners, a CA Limited Partnership         TENANT:  VALUESTAR, INC.
By: Cragganmore Partners,a CA Limited Partnership
    Its General Partner                         -
    By:   Macallan Invesments, Inc.,                  BY:      /s/ James Stein
    By:   /s/ Dale A. Frost, President                         ---------------
          ----------------------------                Name:    James Stein
    Name: Dale A. Frost                               Its Managing Director
                                                      & President



                                       24
<PAGE>

                                    EXHIBIT B

                                 WORK AGREEMENT


The Landlord shall provide the following  Tenant  Improvements at no cost to the
Tenant:

1.       Upon request by Tenant,  "window  line" offices shall have door closers
         removed  or  adjusted  to be  non-operational  that are  located in the
         southeast suite.

2.       The Landlord  shall  install a double door entry - the location will be
         as shown on the attached Exhibit,  unless Tenant notifies Landlord of a
         different location within one (1) week of Lease execution.

3.       The Landlord shall provide one (1) standard lobby  directory  sign, one
         (1) elevator lobby sign and one (1) office suite sign. Signage shall be
         of Building standard.

4.       Landlord  to install a hallway  door in the Call Center area at the end
         of the west hallway (22nd street exit).  The hardware shall be Building
         standard.

5.       Call Center wall is to be fully  extended from the existing  sheer wall
         shown on the attached plan.

6.       In the southeast area,  demise the existing hallway along the southeast
         wall.  Remove  the wall and the  office  adjacent  to the  sheer  wall.
         Eliminate three (3) offices and the storage room. Leave two (2) offices
         with bullpen access. Permanently lock off three (3) doors providing the
         hallway access to the easterly  office and demolished  offices.  All as
         shown on the attached plan.

7.       Install  one (1) exit door at the  northeast  end of the hallway in the
         southeast suite as shown on the attached plan.

8.       Build a demising wall at the northeast end of the mailroom, as shown on
         the attached plan.

9.       Landlord  shall paint entire office area using  Building  standard type
         and color or Tenant can choose from Landlord approved samples.

10.      Landlord to install new carpet  throughout  entire office area.  Tenant
         shall choose from Landlord approved carpet samples.

11.      Landlord shall install three (3) new interior office doors opening into
         the conference room, storage room and office area from the Call Center,
         as shown on the attached plan.

                                       25
<PAGE>

12.      Landlord  to demo  the  existing  southwest  wall  and door in the Call
         Center.

13.      Landlord to replace any missing or damaged ceiling tiles.

14.      Any  other  Tenant  improvements  requested  by  the  Tenant  prior  to
         occupancy  not listed  herein will be provided by Landlord on an actual
         cost  basis in a lump sum  payable  by Tenant  prior to the time of the
         construction.

15.      The  existing  accordion  type door located in the Call Center shall be
         removed,  ceiling to be finished as deemed appropriate by Landlord.  No
         ceiling grid shall be replaced.

16.      Landlord shall install mini blinds where missing. The color shall match
         as close as possible to the existing mini blinds.

17.      The sink in the northwest suite shall remain.

18.      The  above   excludes   phones,   computers   and  special   electrical
         requirements.  Installation of phones,  conduit, phone lines, computers
         and computer lines are the  responsibility of the Tenant.  Tenant shall
         have the right to access the premises  during normal  Building hours or
         as otherwise approved, in writing, by the Landlord,  prior to the Lease
         commencement date for the purposes of planning and installing  Tenant's
         phones and computer lines.

         Tenant  agrees not to impede  Landlords  ability to complete the Tenant
         improvements by way of interference with Landlords requirements for the
         premises.

19.      Landlord and Tenant shall do a walk-thru  and punch list within  thirty
         (30) days or less after occupancy or after June 30, 1999.


                                       26
<PAGE>


                                    EXHIBIT C

                              RULES AND REGULATIONS


1. No sign, placard, picture, advertisement,  name or notice shall be inscribed,
displayed  or printed  or affixed on or to any part of the  outside or inside of
the Building without the written consent of Landlord first hand and obtained and
Landlord  shall  have  the  right to  remove  any such  sign,  placard,  picture
advertisement, name or notice to and at the expense of Tenant.

All approved signs or lettering on doors shall be printed,  painted,  affixed or
inscribed at the expense of Tenant by a person approved of by Landlord.

Tenant shall not place anything or allow anything to be placed near the glass of
any window,  door, partition or wall which may appear unsightly from outside the
Premises;  provided,  however,  that Landlord may furnish and install a Building
standard window covering at all exterior windows. Tenant shall not without prior
written consent of Landlord cover or otherwise sunscreen any window.

2. The sidewalks,  halls, passages,  exits,  entrances,  elevators and stairways
shall not be  obstructed  by any of the  Tenants or used by them for any purpose
other than for ingress and egress from their respective Premises.

3. Tenant shall not alter any lock or install any new or additional locks or any
bolts on any doors or windows of the  Premises  without the  written  consent of
Landlord.

4. The toilet rooms,  urinals,  wash bowls and other apparatus shall not be used
for any purpose other than that for which they were  constructed  and no foreign
substance of any kind whatsoever  shall be thrown therein and the expense of any
breakage,  stoppage or damage resulting from the violation of this rule shall be
borne by the Tenant who, or whose employees or invitees shall have caused it.

5. Tenant  shall not overload the floor of the Premises or in any way deface the
Premises or any part thereof.

6. No  furniture,  freight or  equipment  of any kind shall be brought  into the
Buildings  without  prior  notice to Landlord and all moving of the same into or
out of the Buildings  shall be done at such times and in such manner as Landlord
shall designate. Landlord shall have the right to prescribe the weight, size and
position of all safes and other heavy  equipment  brought into the Buildings and
also the times and manner of moving the same in and out of the Buildings.  Safes
or other heavy  objects  shall,  if considered  necessary by Landlord,  stand on
supports of such  thickness as is necessary to properly  distribute  the weight.
Landlord  will not be  responsible  for loss of or  damage  to any such  safe or
property  from any  cause  and all  damage  done to the  Buildings  by moving or
maintaining  any such safe or other property shall be repaired by the



                                       27
<PAGE>

expense of tenant.  There shall not be used in any space, or in the public halls
of the buildings,  either by any tenant or others,  any hand trucks except those
equipped with rubber tires and sideguards.

7. Tenant  shall not use,  keep or permit to be used or kept any foul or noxious
gas or  substance  in the  Premises,  or  permit or suffer  the  Premises  to be
occupied or used in a manner offensive or objectionable to the landlord or other
occupants  of the  Building  by reason of noise,  odors  and/or  vibrations,  or
interfere in any way with other tenants or those having  business  therein,  nor
shall any animals.or birds be brought in or kept in or about the Premises of the
Building.

8. No cooking shall be done or permitted by any Tenant on the Premise, nor shall
the Premises be used for the storage of merchandise, or for lodging, except with
the prior written consent of the Landlord.

9.  The  Tenant  shall  not do or  permit  anything  to be done  in the  demised
premises, or bring or keep anything therein, which shall in any way increase the
rate of fire  insurance on the building,  or on the property  kept  therein,  or
obstruct or interfere with the rights of other Tenants,  or in any way injure or
annoy them;  or conflict  with the  regulations  of the fire  department or fire
laws, or with any insurance  policy upon the building,  or any part thereof,  or
with any  rules  and  ordinances  established  by the  Board of  Health or other
governmental authority.

10.  Landlord  will  direct  electricians  as to  where  and how  telephone  and
telegraph  wires are to be  introduced.  No boring or cutting  for wires will be
allowed  without the consent of the Landlord.  The location of telephones,  call
boxes and other office equipment affixed to the Premises shall be subject to the
approval of Landlord.

11. On  Saturdays,  Sundays and legal  holidays,  and on other days  between the
hours of 6:00 p.m. and 7:00 a.m. the following day,  access to the Building,  or
to the halls,  corridors,  elevators or stairways  in the  Buildings,  or to the
Premises shall be restricted. Access shall be limited to tenant's employees. The
Landlord shall in no case be liable for damages for any error with regard to the
admission to or exclusion from the Buildings of any person. In case of invasion,
mob, riot, public excitement or other commotion, the Landlord reserves the right
to prevent access to the Buildings during the continuance of the same by closing
of the doors or otherwise,  for the safety of the tenants and  protection of the
Buildings and of property in the Buildings.

12.  Landlord  reserves  the right to exclude or expel  from the  Buildings  any
person who, in the judgment of Landlord,  is  intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any of
the rules and regulations of the Building.

13. No vending  machine  or  machines  of any  description  shall be  installed,
maintained,  or operated  upon the Premises  without the written  consent of the
Landlord.

                                       28
<PAGE>

14.  Landlord  shall  have the right,  exercisable  without  notice and  without
liability  to Tenant,  to change the name and street  address of the Building of
which the Premises are a part.

15. Tenant shall not disturb,  solicit,  or canvass any occupant of the Building
and shall cooperate to prevent same.

16.  Without the written  consent of Landlord,  Tenant shall not use the name of
the Building in connection  with or in promoting or advertising  the business of
Tenant except as Tenant's address.

17.  Landlord shall have the right to control and operate the public portions of
the Building,  and the public facilities,  and heating and air conditioning,  as
well as facilities furnished for the common use of the tenants in such manner as
it deems best for the benefit of the tenants generally.

18. Tenant shall see that the windows,  transoms,  and doors of the premises are
closed and securely  locked before  leaving the building and must observe strict
care  not to  leave  windows  open  when it  rains  and  Tenant  shall  exercise
extraordinary  care and caution that all water  faucets or water  apparatus  are
entirely shut off before Tenant or Tenant's  employees  leave the building,  and
that all electricity,  gas or air shall likewise be carefully shut off, so as to
prevent waste or damage,  and for any default or carelessness  Tenant shall make
all  injuries  sustained  by other  tenants  or  occupants  of the  building  or
Landlord.

19.  Tenant  agrees that it shall comply with all fire and security  regulations
that may be issued from time to time by Landlord  and Tenant also shall  provide
Landlord with the name of a designated  responsible employee to represent Tenant
in all matters pertaining to such fire or security regulations.

20. Landlord reserves the right by written notice to Tenant,  to rescind,  alter
or waive any rule or regulation* at any time  prescribed for the Buildings when,
in  Landlord's  judgment,  it is  necessary,  desirable  or proper  for the best
interest of the Buildings and its tenants. *in Exhibit C

21.  Tenant  shall not bring into or keep within the  buildings  or premises any
motorized vehicles or bicycles except in areas designated for same.

22. * SEE ADDENDUM I #13

23. Tenant assumes any and all  responsibility  for protecting its Premises from
theft,  robbery and  pilferage,  which  includes  keeping doors locked and other
means of entry to the premises closed.

24. Tenant shall be responsible for the observance of all of the foregoing Rules
and Regulations by Tenants employees,  agents, clients, customers,  invitees and
guests.

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<PAGE>

25.  Tenant  shall not employ any  person or persons  other than the  janitor of
Landlord for the purpose of cleaning the Premises unless  otherwise agreed to by
Landlord.  Except with the written  consent of Landlord,  no person or,  persons
other than those  approved by Landlord  shall be permitted to enter the Building
for the purpose of cleaning  the same.  Tenant  shall not cause any  unnecessary
labor by reason of Tenant's  carelessness or indifference in the preservation of
good  order and  cleanliness.  Landlord  shall in no way be  responsible  to any
Tenant for any loss of property on the Premises,  however occurring,  or for any
damage done to the effects of any Tenant by the janitor or any other employee or
any other person. Janitor service shall include ordinary dusting and cleaning by
the janitor  assigned to such work and shall not include  cleaning of carpets or
rugs,  except  normal  vacuuming,  or moving  of  furniture  and  other  special
services.



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<PAGE>

                                   ADDENDUM I

This  Addendum I is attached  hereto and made a part of that certain Lease dated
April  20,  1999  by  and  between  BroadLake  Partners,  A  California  Limited
Partnership as Landlord and VALUF-STAR, INC. as Tenant.

1.       The Minimum  Monthly  Rent shall be subject to an increase on the third
         (3rd)  anniversary date of said Lease, at an amount to be determined in
         paragraph  4(b) above;  except that the rent increase shall not be less
         than two (2%) percent nor more than ten (1O%) percent.

2.       Occupancy  of the Call Center block of space,  shall be made  available
         within  thirty  (30) days of the date this  Lease is  executed  by both
         parties.  The monthly  rent shall begin on this suite  thirty (30) days
         after the execution of this Lease by both parties,  so long as Landlord
         has delivered  the space ready to occupy as agreed to herein.  The rent
         for said  space  shall be One  Dollar  and  Twenty  Cents  ($1.20)  per
         rentable square foot,  which shall include a fifteen percent (15%) load
         factor.

3.       The cumulative  adjustment for any operating expenses and tax increases
         shall not exceed six percent  (6%) over the initial five (5) year Lease
         term.

4.       So long as Tenant  has not been in  default  under any of the terms and
         conditions  of said Lease,  including but not limited to the payment of
         rent,  Tenant  shall have the  option to extend  this Lease for two (2)
         successive  additional  periods of five (5) years  each (the  "Extended
         Term(s)").  The Minimum  Monthly Rent during each  Extended Term of the
         Lease  shall be equal to  ninety  five  percent  (95%) of the then fair
         market rent for  comparable  office  space at the  commencement  of the
         Extended  Term of the  lease;  except  that in no event  shall  the new
         Minimum  Monthly Rent be less than the total monthly rent being paid by
         Tenant in the last year preceding the Extended Term in question. Tenant
         shall notify Landlord in writing at least nine (9) months in advance of
         the Extended  Term in question of its desire to exercise this option to
         extend  the  Lease  term.   At  least  six  (6)  months  prior  to  the
         commencement  of the  Extended  Term in  question,  Landlord and Tenant
         shall  meet and  attempt  to agree upon the  rental  rate  during  such
         Extended  Term.  If the  parties are unable to agree on the fair market
         rent  for the  Extended  Term  within  ninety  (90)  days  prior to the
         commencement  of the Extended Term in question,  then the parties shall
         engage in binding  arbitration  to determine  the fair market rent.  In
         such  arbitration  each  party  shall at its own  cost,  and by  giving
         written notice to the other party, hire a real estate appraiser with at
         least five (5) years full time commercial  appraisal  experience who is
         familiar  with the rental value of  commercial  property in the city of
         Oakland to appraise and  determine  the fair market rent as of the date
         of the appraisal.  If a party does not appoint an appraiser  within ten
         (10) days  after the  other  party has given  notice of the name of its
         appraiser,  the single appraiser  appointed shall be the sole appraiser
         and shall set the fair market rent for the  Extended  Term.  If the two
         appraisers  are  appointed by the parties as stated in this  paragraph,
         the  appraisers  selected by Landlord  and Tenant  shall  independently
         report in writing on their  opinion as to the then

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<PAGE>

         fair market rent of the premises, no later than fifteen (15) days after
         such appraisers  have been selected by the parties  hereto.  Each party
         shall promptly upon receipt of the appraisal  report from its appraiser
         exchange same with the other party.  If the higher  appraisal  shall be
         equal to or less  than one  hundred  ten  percent  (110%)  of the lower
         appraisal,  the two (2)  appraisals  shall be added  together and their
         total divided by two (2); the resulting  quotient  shall be deemed fair
         market rent of  comparable  office  space.  If the higher  appraisal is
         greater  than one hundred ten  percent  (110%) of the lower  appraisal,
         then within ten (10) days after receipt of such  appraisals by Landlord
         and Tenant, the two (2) originally  selected  appraisers shall choose a
         third (3rd) appraiser,  meeting the above qualification,  who shall not
         later than fifteen (15) days after selection  determine the fair market
         rent of the premises.  If the two (2) appraisers are unable to agree on
         the third (3rd) appraiser within such ten (10) day period,  then either
         of the parties may petition to Alameda County  Superior  Court,  or the
         President  of the  Association  of Realtors,  for the  selection of the
         third (3rd)  appraiser.  The third (3rd) appraiser,  however  selected,
         shall be a person  who has not  acted in any  capacity  for or  against
         either  party.  The three (3)  appraisals  shall be added  together and
         their total be divided by three (3); the  resulting  quotient  shall be
         the fair market rent of comparable  office space. If, however,  the low
         appraisal  is less than ninety  percent  (90%) of the middle  appraisal
         and/or the high  appraisal is more than one hundred ten percent  (110%)
         of the middle  appraisal,  the low appraisal  and/or the high appraisal
         (as the case may be) shall be disregarded in the  calculation.  If only
         one appraisal is disregarded, the remaining two (2) appraisals shall be
         added  together  and their total be divided by two (2);  the  resulting
         quotient shall be the fair market rent of comparable  office space.  If
         both  the low  appraisal  and the high  appraisal  are  disregarded  as
         provided in this paragraph,  the middle  appraisal shall be fair market
         rent for  comparable  office space.  Each party shall pay for their own
         appraiser,  and  shall  pay  fifty  percent  (50%) of the  third  (3rd)
         appraiser cost if the third (3rd) appraiser is hired.

5.       So long as Tenant  has not been in  default  under any of the terms and
         conditions  of this Lease,  including but not limited to the payment in
         rent, Tenant shall be granted an option to lease the remaining unrented
         space  currently  available on the second floor of the  Building.  This
         option  shall expire at 5:00p.m.  on June 30,  2000.  If said option is
         exercised, Tenant shall notify Landlord in writing at least thirty (30)
         days prior to the option  expiration  date.  Landlord shall have thirty
         (30) days to make the space ready for Tenant.  The space shall be taken
         as-is by Tenant,  expect  that  Landlord  shall  provide new carpet and
         paint. If said option is exercised by Tenant,  the per square foot rent
         shall equal One Dollar and Twenty Cents  ($1.20) per square foot with a
         fifteen  percent (15%) load factor,  and the terms shall run concurrent
         with the  existing  Lease.  The new space  leased by Tenant  under this
         option shall be incorporated into this Lease by Addendum. All terms and
         conditions of the Lease shall remain the same, except where adjusted as
         a result of the additional square footage, additional percentage leased
         in the Building, and the additional rent.

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<PAGE>

6.       Until June 30, 2000 and so long as Tenant has not been in default under
         any of the  terms  and  conditions  of this  Lease,  including  but not
         limited to the payment of rent,  Landlord agrees to first notify Tenant
         in writing of  Landlord's  intention to lease space to a third party on
         the third floor of the Building.  Landlord  shall deliver to Tenant,  a
         copy of the proposed Lease,  Letter of Intent, or other written outline
         of  the  terms  and  conditions  for  leasing  said  space  (and  it is
         acknowledged  that such  document  shall not be a signed Lease or other
         binding document,  but rather any written outline of the proposed terms
         and conditions will suffice).

         If Tenant,  within seven (7) days after  receipt of  Landlords  written
         notice,  indicates in writing its  agreement to lease said space on the
         terms and  conditions  as  specified  in the notice  given by Landlord,
         Landlord  shall  lease said space on the third  floor to Tenant on said
         terms and conditions;  and the parties shall  immediately  enter into a
         Lease Agreement incorporating such terms and conditions. If within said
         seven (7) day period Tenant does not notify  Landlord in writing of its
         agreement to lease said space on terms and  conditions  as specified on
         Landlord's  notice to  Tenant,  Landlord  shall have the right to lease
         said space to a third  party on terms and  conditions  similar to those
         stated in Landlord's notice; provided that Landlord and third party may
         subsequently,   in  good   faith,   negotiate   and   make   previously
         unanticipated changes in such terms and conditions. If Landlord has not
         signed a Lease on said space within one hundred eighty (180) days after
         the date of Landlord's notice to Tenant, any further  transaction shall
         be deemed a new  determination  by Landlord to lease space on the third
         floor,  and the  provisions  of this  paragraph  shall  once  again  be
         applicable.  The provisions herein in this right of first refusal shall
         expire at 5:00p.m, June 30, 2000.

7.       The  operation  of the  Buildings  HVAC  systems  during  the  weekend,
         holidays and after normal Building hours shall be charged to the Tenant
         as additional rent, and billed on a monthly basis at the rate of $35.00
         per hour. This rate is subject to change depending on the actual costs.
         Tenant may audit costs if they desire.

         Tenant agrees to provide Landlord a written request not less than three
         (3) days  prior to the dates  required  for the  operation  of the HVAC
         during weekends, holidays or any time other than normal Building hours.

8.       Exterior  Building  signage is available to the Tenant at no additional
         charge once they  occupy and are paying  rent on 25,000  square feet or
         more in the  Building.  Tenant  would be  responsible  for all costs of
         installation and/or removal of same. At such time as they vacated or no
         longer lease 25,000 square feet in the Building,  The Building shall be
         returned  to its  previous  state at the sole cost of the  Tenant.  The
         signage  must be  pre-approved,  in writing,  by the Landlord and would
         comply with all governmental regulations.

9.       In the event Tenant  desires to  sub-lease  any portion of their space,
         the  approval to do so will be pursuant to Section #10 of the Lease but
         such approval,  by Landlord will not be



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<PAGE>

         unreasonably  withheld.  It is  agreed  by both  parties  it  would  be
         reasonable  for  Landlord to deny  Tenant's  ability to sublet space if
         Landlord  believes  the  sublessee  would  be  non-compatible  with the
         Building or would  disrupt  other Tenants in the Building or would make
         it more difficult for Landlord to lease space in the Building.

10.      Landlord   shall  request  from  its  lender  an  attornment   and  non
         disturbance  agreement in lender's  standard form, as soon as the Lease
         has  been   signed  by   Tenant.   Lender   has   informed   Landlord's
         representative that this will be acceptable.

11.      So long as Tenant is not in  default  of any  lease  term or  condition
         including the payment of rent,  the  electrical  power to Tenants suite
         shall be left on  twenty  four (24)  hours per day,  seven (7) days per
         week.  The rent  specified  in 4(a) is based on Tenants  usage of power
         during  normal  Building  hours as specified in 12(g).  While  Landlord
         agrees to provide  electrical power to the suite twenty four (24) hours
         per day,  seven (7) days per week,  this is subject  to the  conditions
         otherwise  specified  in Section 12 of the Lease.  If Tenant is running
         office  equipment after normal Building hours,  Landlord shall have the
         right to bill Tenant,  and Tenant  hereby  agrees to pay as  additional
         rent, all electricity  costs  associated  therewith,  including but not
         limited to lighting  usage,  if staff is working after normal  Building
         hours.   Landlord  may  inspect  office   equipment  to  determine  the
         electrical draw of such equipment.*

12.      Add to  Lease,  Paragraph  21(c)  to read  as  follows:  Other  than as
         provided for in this Lease,  Landlord  hereby waives all claims against
         Tenant for damage to any  property  or injury,  illness or death of any
         person  in  Tenants  suite  arising  at any time  and  from  any  cause
         whatsoever  other than solely by reason of gross  negligence or willful
         act of Tenant, its employees or contractors.

13.      In the event Tenant does not exercise  their first five (5) year option
         to renew their Lease,  Tenant shall agree to pay for any carpet  damage
         caused by chairs rolling directly on the carpets.

14.      The  initial  space as shown on Exhibit  A(2)  identified  as the "Call
         Center"  shall be made ready  within  (30) days of Lease  signing.  The
         monthly  rent for said space shall be Six  Thousand  Two  Hundred  Four
         Dollars and Forty Cents ($6,204.40)

15.      Paragraph  #17 shall be modified to include:  If more than thirty (30%)
         percent of Tenant space is destroyed and no other space in the Building
         is available,  Tenant may terminate  Lease but only after  Landlord has
         had the  opportunity to repair  premises  pursuant to the timeframes in
         Paragraph # 17.

* It is not the  Landlord's  intention to charge  tenant for minimal after hours
electricity  usage. This provision is to protect landlord from electricity usage
that is above normal for other tenants in the building.


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