EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

THIS  AGREEMENT  is  entered  into  effective  as of the 1st day of July,  1998,
between VALUESTAR CORPORATION, a Colorado publicly traded corporation and/or its
operating subsidiary (the "Company"), and James Stein ("Employee").

Employee,   in  consideration  of  the  covenants  and  agreements   hereinafter
contained,  agrees as follows with respect to the  employment  of the Company of
Employee and Employee's future business activities.

1.  Employment:  Term of Employment.  The Company  hereby  employs  Employee and
Employee   hereby  accepts  such   employment  upon  the  terms  and  conditions
hereinafter set forth.  Subject to the provisions for termination as hereinafter
provided, Employee's term of employment by the Company shall be from the date of
this  Agreement  until June 30, 2001, and said  employment  shall continue after
such date until either  party shall  deliver  written  notice to the other party
hereto to the effect that the employment  hereunder shall terminate  thirty (30)
days from the giving of such notice.  This  Agreement  will  supersede all prior
written and oral  agreements  entered  into by and between  Company and Employee
concerning  employment  other than any and all outstanding  stock option,  stock
warrant  and  stock  agreements.  These  include  but  are  not  limited  to two
agreements  dated  May 10,  1995 and other  agreements  dated  August  2,  1995,
December 9, 1997 and March 4, 1998.

2.  Services  to be  Rendered  by  Employee.  Employee  shall be  subject to the
direction of the Board of Directors,  or a duly authorized committee thereof and
his duties shall be those generally  vested in the office of President and Chief
Executive Officer for the Company and he shall have such other powers and duties
as may be reasonably prescribed by the Board of Directors,  or a duly authorized
committee  thereof,  and shall  perform  such duties as from time to time may be
decided upon by the Board of Directors,  or a duly authorized committee thereof,
of the Company,  including  but not limited to,  speaking for and  promoting the
sale of the Company's  services and products as public  spokesman both in print,
television ads and other media.

The Company shall have the non-exclusive  right to use Employee's name,  picture
or other likeness and biographical  material  concerning him, in connection with
advertising,  promotion and publicizing the Company and its activities,  so long
as this Agreement is in effect (and for a reasonable  period,  not to exceed one
year,  thereafter to utilize  expendable  materials and  supplies).  The Company
shall have the right to use  non-expendable  media  thereafter at its discretion
(e.g.  historical media, media productions for consumers and businesses,  etc.).
Such use shall be fair and not  misleading or  unflattering  and when  practical
indicate Employee is not affiliated with the Company.  Employee shall be allowed
to review and approve all such uses prior to initial use or publication.

The  Employee  agrees  that he will serve the  Company  faithfully,  diligently,
competently  and to the best of his  abilities,  devoting all his business time,
efforts,  energy,  skills and attention to the activities of the Company and the
promotion of its  interests.  Employee shall not serve as an officer or director
or similar  capacity  with any other entity except with the prior consent of the
Company.

3. Compensation.

(a) For the  services to be rendered by Employee  during his  employment  by the
Company,  the Company  shall pay  Employee a Base  Salary of One Hundred  Twenty
Thousand  Dollars  ($120,000)  per  annum  during  the  term of this  Agreement,
prorated for any partial period and paid in conformity with the Company's normal
payroll period.  Employee's  salary shall be reviewed by the Board of Directors,
or a duly authorized committee thereof, from time to time in its discretion, and
Employee will receive such salary increases,  if any, as the Board of Directors,
or a duly authorized committee thereof, in their sole discretion determines.

(b) Employee  shall be shall be eligible  for bonuses,  at such time and in such
amounts as shall be determined at the discretion of the Board of Directors, or a
duly  authorized  committee  thereof,  based  on its  assessment  of  Employee's
performance of his duties and on the financial performance of the Company.

(c) The  Employee's  place of  employment  shall be considered  Alameda  County,
California (or other mutually agreed upon location).

(d) Employee shall be entitled to participate in and receive  benefits under the
Company's  executive  benefit  plans as in effect from time to time,  including,
medical  insurance,  sick leave,  and vacation  time,  subject to and on a basis
consistent with the 

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terms, conditions and overall administration of such plans and Company policies.
Should this  Agreement be  terminated  for any reason,  Employee  shall have the
option,  to the extent  allowable by the policies,  to continue any insurance in
force by taking over the payment of the premiums for Employee and his family.

(e) The  Company  shall pay or  reimburse  Employee  for all  expenses  normally
reimbursed by the Company and  reasonably  incurred by him in furtherance of his
duties hereunder and authorized by the Company,  including  without  limitation,
expenses   for   entertainment,    traveling,   meals,   hotel   accommodations,
out-of-pocket  home  office  expenses  and the like  upon  submission  by him of
vouchers or an itemized list thereof as the Company; may from time to time adopt
and authorize, and as may be required in order to permit such payments as proper
deductions to the Company under the Internal  Revenue Code of 1986 and the rules
and regulations adopted pursuant thereto now or hereafter in effect.

(f) All amounts  payable or which  become  payable  under any  provision of this
Agreement  will be subject to any  deductions  authorized in writing by Employee
and any deductions and withholdings required by law.

(g) The  Company  shall  pay  costs of and use of an  automobile  primarily  for
business  use  on  terms  as  approved  by the  Board  of  Directors,  or a duly
authorized  committee thereof,  from time to time. Employee shall pay reasonable
amounts for personal use as required under the Internal Revenue Code of 1986 and
the rules and regulations adopted pursuant thereto now or hereafter in effect.

4. Indemnification.

(a) If,  after  the  date of the  commencement  of the  Employment  Period,  the
Employee is made a party or is threatened to be made a party to any action, suit
or proceeding,  whether civil,  criminal,  administrative  or  investigative  (a
"Proceeding"), by reason of the fact that he is or was an officer of the Company
or is or was  serving at the  request of the  Company  as a  director,  officer,
member, employee or agent of another corporation or partnership,  joint venture,
trust or other  enterprise,  including  service with respect to employee benefit
plans,  whether or not the basis of such Proceeding is an alleged act or failure
to act in an  official  capacity  as a director,  officer,  member,  employee or
agent,  he shall be indemnified  and held harmless by the Company to the fullest
extent  authorized  by  Colorado  law, as the same  exists or may  hereafter  be
amended, against all expense, liability and loss (including, without limitation,
attorneys' fees, judgments,  fines and amounts paid or to be paid in settlement)
reasonably  incurred  or  suffered  by the  Employee  in  connection  therewith,
including,  without  limitation,  payment of expenses  incurred  in  defending a
Proceeding prior to the final disposition of such Proceeding (subject to receipt
of an undertaking by the Employee to repay such amount if it shall ultimately be
determined  that the Employee is not entitled to be  indemnified  by the Company
under Colorado law), and such indemnification  shall continue as to the Employee
even if he has ceased to be an officer, member, employee or agent of the Company
or other  enterprise and shall inure to the benefit of his heirs,  executors and
administrators.

(b) The  right of  indemnification  and the  payment  of  expenses  incurred  in
defending a  Proceeding  in advance of its final  disposition  conferred in this
Section 4 shall not be  exclusive  of any other right that the Employee may have
or hereafter  may acquire  under any statute,  provision of the  Certificate  of
Incorporation  or Bylaws of the  Company,  agreement,  vote of  shareholders  or
disinterested directors or otherwise.

5. Termination of Employment.
(a) The Company shall have the right at its option to terminate  the  employment
of Employee  hereunder by giving  written  notice thereof to the Employee in the
event of any of the following:

         (1) The  Company may  terminate  this  Agreement  at any time with good
         cause,  as  determined  by the Board of Directors of the Company,  or a
         duly  authorized  committee  thereof,  acting  in good  faith  and upon
         reasonable grounds,  whereupon all compensation to Employee shall cease
         as of the effective date of termination. As used in this paragraph, the
         term "good cause" shall mean (i) dishonesty by Employee  detrimental to
         the best interests of the Company,  (ii)  continuing  inattention to or
         neglect  of the  duties to be  performed  by  Employee,  (iii)  willful
         disloyalty of Employee to Company,  (iv) engaging in any  substantiated
         act involving  moral  turpitude (v)  conviction by a court of competent
         jurisdiction  of Employee in any fraud or felony,  (vi) engaging in any
         act which, in each case, subjects, or if generally known would subject,
         the  Company to gross  public  ridicule or gross  embarrassment,  (vii)
         willful  failure or refusal to perform  such duties as may be relegated
         to Employee commensurate with Employee's position, (viii) the imparting
         of any material  confidential  information  by Employee in violation of
         this Agreement, or (ix) any breach of this Agreement by Employee.

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         (2) If the Company gives Employee thirty days advance written notice of
         termination of employment.

         (3) If the Employee dies during the term of employment,  the Employee's
         employment hereunder and Employee's compensation and other rights under
         this  Agreement  and  as an  employee  of  the  Company  (except  as to
         compensation  and rights  accrued prior thereto and except as expressly
         provided in the next succeeding  sentence) shall terminate  thirty (30)
         days following the date of death. In such event,  the Company shall pay
         to  the  Employee's   designated   executor  or  administrator  of  the
         Employee's  estate,  all compensations and benefits accrued which would
         otherwise be payable to the  Employee  through the  thirtieth  (30) day
         following the date of death.  Indemnification rights endure as provided
         for in Section 4.

         (4) If the Employee is unable for any reason to carry out or to perform
         the duties  required  of him  hereunder  and does not resume his duties
         prior to the termination date specified in the Company's written notice
         of termination;  provided, however, if the Employee shall fail to carry
         out or to  perform  the  duties  required  of him  because of mental or
         physical  disability for a six consecutive month period during the term
         hereof and  following  such  period he is unable to perform  his duties
         hereunder  because of mental or physical  disability,  as determined by
         the Board of Directors of the Company,  or a duly authorized  committee
         thereof,  acting in good faith and upon reasonable grounds, he shall be
         entitled to receive his then Base Salary he would otherwise be entitled
         to pursuant to Paragraph 3 hereof for a period of not longer than three
         (3) months after the  termination  of his  employment  pursuant to this
         Paragraph  5(a) (4). If Employee  shall  receive any amount  during the
         time of any  incapacity  by reason of any  disability  insurance or any
         other  insurance  plan,   senior   executive  loss  or  income  policy,
         disability  policy or any other plan or scheme of a like nature  funded
         by the Company, any payments of Base Salary or benefits of this section
         may be reduced by a like amount.

         (5) If  this  Agreement  is  terminated  by  the  Company  pursuant  to
         Paragraph 5(a)(2) hereof,  then Employee shall be entitled to severance
         payments  equal to twelve (12) months of his then  monthly  Base Salary
         plus a bonus payment  (prorated based on progress to bonus goals,  i.e.
         if 30% of a revenue  goal is achieved a 30% payout of the bonus is made
         for that goal) within thirty (30) days after such effective termination
         of Employee's employment by the Company.

(b) The Employee shall have the right at his sole option to terminate employment
hereunder under the following conditions:

         (1) at any time upon thirty (30) days written notice.

         (2) upon written  notice by Employee to the Company  within thirty (30)
         days  of and  indicating  that  a  change  in  control  of the  Company
         ("Corporate Transaction") has occurred and therefore Employee elects to
         terminate  as  provided  herein.  A  Corporate   Transaction  or  other
         qualifying  event shall be deemed to have  occurred if (i) any "person"
         (as such term is used in Sections  13(d) and 14(d) of the Exchange Act)
         is or becomes  the  "beneficial  owner" (as defined in Rule 13d-3 under
         the Exchange Act), directly or indirectly, of securities of the Company
         representing  50% or more of the combined voting power of the Company's
         then outstanding  securities;  or (ii) the Company sells,  transfers or
         otherwise  disposes  of all or  substantially  all of the assets of the
         Company;  or (iii) a merger or  acquisition in which the Company is not
         the  surviving   entity  (except  for  a  merger  into  a  wholly-owned
         subsidiary,  and except for a transaction  the sole purpose of which is
         to change domicile).

         (3) if  termination  by the  Employee  is pursuant to 5 (b) (1) then no
         severance or termination  payments shall be payable.  If termination is
         noticed pursuant to 5 (b) (2) hereof then Employee shall be entitled to
         a  payment  equal  to the  greater  of the  remaining  months  of  this
         Agreement  multiplied  by the then  monthly  Base Salary or twelve (12)
         multiplied  by the then monthly  Base  Salary,  plus any bonus based on
         prorata  performance  as described in Section 5 (b) (2), all payable in
         one lump sum within sixty (60) days. In addition, the Employee shall be
         entitled to recover  legal fees and costs  incurred by Employee  should
         the Company  not make timely  payment  prescribed  by this  section and
         should the Employee prevail in any action filed thereabouts.

(c) Upon termination of this Agreement,  Employee shall  immediately  resign all
offices held with the Company and all Affiliates  (any entity with a 30% or more
equity ownership by or of the Company) thereof, and, except as set forth in this
Section  5,  Employee  shall not be  entitled  to  receive  any  termination  or
severance  payment or compensation for loss of office or otherwise.  If Employee
fails to  immediately  resign  as herein  provided,  then  Employee  irrevocably
appoints the  Secretary of the Company in his name and on his behalf to sign any
resignation confirmation or do anything necessary or requisite to give effect to
such  resignation(s).  On the effective date of  termination of this  Agreement,
Employee  will deliver to the  Company,  in

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a reasonable  state of repair,  all property and equipment of the Company,  both
real and  personal  owned,  leased or bailed to  Employee  and used by or in the
possession of Employee.

6.  Confidential  Information and Trade Secrets.  Employee  covenants and agrees
with the Company that Employee will not,  during the term of this  Agreement and
thereafter directly or indirectly use,  communicate,  disclose or disseminate to
anyone  (except to the  extent  reasonably  necessary  for  Employee  to perform
Employee's  duties  hereunder,  except as required by law or except if generally
available to the public otherwise than through use, communication, disclosure or
dissemination by Employee) any Confidential Information (as hereinafter defined)
concerning  the businesses or affairs of the Company or of any of its affiliates
or subsidiaries which Employee may have acquired in the course of or as incident
to Employee's  employment or prior  dealings with the Company or with any of its
affiliates or subsidiaries.

"Confidential  Information"  shall  mean  (a)  all  knowledge,  information  and
material  concerning  the Company or its  business or the business of any of its
affiliates or subsidiaries  that shall become known to Employee as a consequence
of Employee's  relationship with the Company,  (b) all information that has been
disclosed to the Company by any third party under an agreement or  circumstances
requiring  such  information  to be kept  confidential,  and (c) all  knowledge,
information or material  concerning  Inventions  that are, under this Agreement,
owned by Company or assigned by Employee to Company; provided, that Confidential
Information  shall not include  knowledge,  information  or material  that is or
becomes  generally known or available to others in businesses  engaged in by the
Company  or  to  the  public  (other  than  through  unauthorized   disclosure).
Confidential  Information shall include without  limitation (a) information of a
technical  nature,  such as  information  regarding  past,  present  and  future
research,  financial  data,  product  information,   marketing  plans,  computer
programs  (whether  in  source or object  code  form or other  form and  whether
contained on program listings,  magnetic tape,  magnetic disks, CD ROMs or other
media), logic, flow charts, specifications,  documentation and ideas relating to
the  activities  of  Company,  (b)  information  of a business  nature,  such as
information  regarding past, present and future client or consumer  development,
strategies,  procurement  specifications,  cost and financial  data,  contracts,
quotations and names of actual and prospective clients,  consumers or customers,
and (c) all documents,  drawings,  reports, client and consumer lists, and other
physical embodiments of all such information.

"Inventions"  shall  mean each of the  following,  but only to the  extent  they
relate to the business of commerce conducted by the Company or its Affiliates or
are made by Employee with the  equipment,  supplies,  facilities or trade secret
information  of the  Company  or which  result  from any work  performed  by the
Employee for the Company:  all  inventions,  discoveries,  developments,  ideas,
works, improvements,  enhancements,  works of authorship,  products and computer
software,  whether or not  patentable,  and anything  else that is subject to or
potentially  subject  to the  patent,  copyright  or  trade  secret  laws of any
jurisdiction.

The Employee agrees that as to any Inventions made by him during the term of his
employment,  solely or jointly with others,  shall belong to the Company and the
Employee  promises to assign such  Inventions to the Company.  The Employee also
agrees that the Company  shall have the right to keep such  Inventions  as trade
secrets,  if the Company  chooses.  The Employee agrees to assign to the Company
the Employee's  rights in any other  Inventions where the Company is required to
grant those rights to the United  States  government or any agency  thereof.  In
order to permit the  Company to claim  rights to which it may be  entitled,  the
Employee  agrees to disclose to the Company in confidence all  Inventions  which
the  Employee  makes  arising out of the  Employee's  employment  and all patent
applications  filed by the Employee within one year after the termination of his
employment.  The Employee  shall assist the Company in obtaining  patents on all
Inventions,  designs, improvements, and discoveries patentable by the Company in
the United States and in all foreign countries,  and shall execute all documents
and do all things  necessary to obtain letters patent,  to vest the Company with
full and extensive title thereto,  and to protect the same against  infringement
by others.

7. Non-Competition Covenant.  Employee acknowledges that Employee's services and
responsibilities  are  of  particular  significance  to  the  Company  and  that
Employee's  position  with the  Company has given and will give  Employee  close
knowledge of its policies and trade secrets.  Since the Company is in a creative
and competitive information business, Employee's continued and exclusive service
to Company under this Agreement is of a high degree of importance.

Employee  covenants and agrees with the Company that  Employee will not,  during
the term of this  Agreement and for a period of two years after the  termination
of Employee's  employment hereunder in any manner,  directly or indirectly,  (i)
induce or attempt to influence any present or future officer,  employee, lessor,
lessee, licensor or licensee of Company or its subsidiaries or its affiliates to
leave its respective employ; further,  during the term described,  Employee will
not be involved in or  participate  in a  competitive  company that  solicits or
diverts or services any of the customers,  consumers or clients that the Company
or its subsidiaries or its affiliates has or had in the one (1) year previous to
the  date of  termination  of this  Agreement, 

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(ii) engage, in the state of California where the Company currently  operates or
the other 49 states in America that the Company is planning to do  business,  in
any  businesses  that  during  the term of this  Agreement  is engaged in by the
Company or its subsidiaries or affiliates,  and (iii) except for ownership of no
more than 1% of the capital  stock,  be a  stockholder  of any  corporation,  or
directly or indirectly own, manage, operate,  conduct, control or participate in
the ownership,  management,  operation,  conduct,  control of, accept employment
with,  or be connected in any other manner with,  any business  which engages in
any direct competitive  activity  including,  without  limitation,  any business
which  engages  in rating  local  service  and  professional  businesses  in any
geographic region indicated in this paragraph.

8. Right to Injunctive Relief.  Employee acknowledges that the remedy at law for
any breach or  threatened  breach by  Employee  of the  covenants  contained  in
paragraphs 6 and 7 would be wholly inadequate,  and therefore the Company or its
subsidiaries  or its affiliates  shall be entitled to preliminary  and permanent
injunctive  relief  and  specific  performance  thereof.   Paragraphs  6  and  7
constitute  independent  and  separable  covenants  that  shall  be  enforceable
notwithstanding  rights or remedies that the Company or its  subsidiaries  or it
affiliates may have under any other provision of this  Agreement,  or otherwise.
If any or all of the  foregoing  provisions of paragraphs 6 and 7 are held to be
unenforceable for any reason  whatsoever,  it shall not in any way invalidate or
affect the  remainder  or this  Agreement  which shall  remain in full force and
effect.  If the period of time or  geographical  areas specified in paragraphs 6
and 7 are determined to be unreasonable in any judicial  proceeding,  the period
of time or areas of  restriction  shall be reduced so that this Agreement may be
enforced in such areas and during such period of time as shall be  determined to
be reasonable.

9. Employee  Acknowledgment.  Employee has  carefully  read and  considered  the
provisions  hereof,  and having done so, agrees that  restrictions  set forth in
paragraphs  6, 7, and 8  (including,  but not  limited  to, the time  periods of
restrictions)  are fair  and  reasonable  and are  reasonably  required  for the
protection of the interests of Company.

10.  Severability.  Each paragraph and  subparagraph  of this Agreement shall be
construed  and   considered   separate  and  severable  from  the  validity  and
enforceability of any other provision contained in this Agreement.

11.  Assignment.  The rights of the Company (but not its obligations) under this
Agreement may,  without the consent of the Employee,  be assigned by the Company
to any parent,  subsidiary,  or  successor of the  Company;  provided  that such
parent, subsidiary or successor acknowledges in writing that it is also bound by
the terms and obligations of this Agreement. Except as provided in the preceding
sentence,  the  Company  may not  assign  all or any of its  rights,  duties  or
obligations  hereunder  without prior written consent of Employee.  The Employee
may not assign all or any of his rights, duties or obligations hereunder without
the prior written consent of the Company.

12. Notices. All notices, requests, demands and other communications shall be in
writing and shall be defined to have been duly given if  delivered  or if mailed
by registered mail, postage prepaid: 
(a) If to Employee, addressed to him at the  following address as may be changed
in writing from time to time:
         James Stein
         7009 Baker Lane
         Sebastopol, California 95472

(b) If to the Company, addressed to:
         ValueStar Corporation
         1120A Ballena Blvd.
         Alameda, California 94501

or to such other  address as any party  hereto  may  request by notice  given as
aforesaid to the other parties hereto.

13.  Title and  Headings.  Titles  and  headings  to  paragraphs  hereof are for
purposes  of  references  only and shall in no way  limit,  define or  otherwise
affect the provisions hereof.

14.  Governing  Law.  This  Agreement  is being  executed and  delivered  and is
intended to be  performed in the State of  California,  and shall be governed by
and construed in accordance with the laws of the State of California.

15. Counterparts.  This Agreement may be executed  simultaneously in two or more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument. It shall not be necessary
in making  proof of this  Agreement  to  produce  or  account  for more than one
original counterpart.

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16. Cumulative Rights.  Each and all of the various rights,  powers and remedies
of the Company and Employee in this Agreement shall be considered as cumulative,
with and in addition to any other  rights,  powers or remedies of the Company or
the  Employee  and no one of them as  exclusive of the others or as exclusive of
any other  rights,  powers and remedies  allowed by law. The exercise or partial
exercise of any right,  power or remedy shall  neither  constitute  the election
thereof nor the waiver of any other right, power or remedy. Sections 4, 6, 7 and
8 hereof shall continue in full force and effect  notwithstanding the Employee's
termination of employment and the termination of this Agreement.

17.  Remedies.  The Employee and the Company both acknowledge that each may have
no  adequate  remedy at law if either  violates  any of the terms  contained  in
Sections  6, 7 and 8. In such  event,  either  party  shall have the  right,  in
addition  to any other  rights it may have,  to obtain  relief to  restrain  any
breach hereof or otherwise to specifically enforce any of the provisions hereof.

18. Waiver of Breach.  The waiver by one party to this  Agreement of a breach of
any  provision  of this  Agreement  by the other  party  shall not operate or be
construed as a waiver of any subsequent breach by the said party .

19.  Entire  Agreement.  This  Agreement  contains  the entire  agreement of the
parties  hereto  and may be  modified  or amended  only by a written  instrument
executed by parties hereto.  Effective on the date hereof,  any prior employment
agreements between the Company and the Employee shall terminate.

20.  Attorney's Fees. In the event that either party must institute legal action
to compel the other to comply with the terms of this  Agreement,  the prevailing
party shall be entitled to reasonable attorneys' fees and costs.

21. Good Faith.  Each of the  parties  hereto  agrees that he or it shall act in
good faith in all actions taken under this Agreement.

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


/s/JAMES A. BARNES                                            July 1, 1998
ValueStar Corporation
James A. Barnes, Treasurer and Director



/s/JAMES STEIN                                                July 1, 1998
James Stein, Employee

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