EXHIBIT 4.27


                              VALUESTAR CORPORATION
                          REGISTRATION RIGHTS AGREEMENT
                      AND SHAREHOLDERS AGREEMENT AMENDMENT

         THIS REGISTRATION RIGHTS AGREEMENT AND SHAREHOLDERS AGREEMENT AMENDMENT
(this  "Agreement")  is  dated  effective  as of July  21,  1999,  by and  among
VALUESTAR CORPORATION, a Colorado corporation (the "Company"),  SEACOAST CAPITAL
PARTNERS  LIMITED  PARTNERSHIP,  a Delaware  Limited  Partnership  ("Seacoast"),
PACIFIC  MEZZANINE  FUND,  L.P. a California  limited  partnership  ("Pacific"),
TANGENT GROWTH FUND, L.P., a California limited partnership  ("Tangent"),  James
A. Barnes ("Barnes"),  and Jerry E. Polis ("Polis"), and the additional entities
or individuals set forth on Schedule 1 attached hereto and  incorporated  herein
by reference who have entered into the ValueStar  Corporation Series A Preferred
Stock Purchase Agreement dated on even date herewith (the "Purchase  Agreement")
(individually,  each such  individual  or entity as well as  Seacoast,  Pacific,
Tangent, Barnes and Polis a "Holder" and collectively,  all such individuals and
entities, the "Holders").

                                     RECITAL
                                     -------

         A. On March 31, 1999, Seacoast, Pacific, Tangent, Barnes, Polis and Jim
Stein  ("Stein")  entered  into  a  Shareholders  Agreement  (the  "Shareholders
Agreement")  which granted certain  registration  rights pursuant to Article VII
thereunder (the "Registration Agreement").

         B.  Seacoast,  Pacific,  Tangent,  Polis and Barnes desire to amend and
restate the  Registration  Agreement  in  consideration  of the  purchase by the
Holders of shares of the Company's Series A Convertible Preferred Stock pursuant
to the Purchase Agreement.

                                    AGREEMENT
                                    ---------

         NOW, THEREFORE,  in consideration of the mutual agreements,  covenants,
representations and warranties  contained in this Agreement,  the parties hereto
hereby agree as follows:

         1.       Definitions.

                  a. "Commission"  means the Securities and Exchange  Commission
or any other Federal agency at the time administering the Securities Act.

                  b. "Capital  Stock" means the  Company's  common stock and any
other capital stock of the Company  authorized  from time to time, and any other
shares,  options,  interests,  participations,  or  other  equivalents  (however
designated)  of or in the  Company,  whether  voting  or  nonvoting,  including,
without limitation,  common stock, options,  warrants,  preferred stock, phantom
stock,  stock  appreciation  rights,   preferred  stock,  convertible  notes  or
debentures, stock purchase rights, and all agreements,  instruments,  documents,
and securities convertible,  exercisable, or exchangeable,  in whole or in part,
into any one or more of the foregoing.

                  c.  "Common  Stock"  means any and all (i) common stock of the
Corporation  issued or issuable upon  conversion of the  Corporation's  Series A
Convertible  Preferred Stock,  (ii) all common stock and Other Securities of the
Corporation issued or issuable pursuant to the Warrants issued under the Warrant
Purchase Agreement  (collectively,  (i) and (ii) the "Stock");  (iii) any common
stock of the Corporation issued as a dividend or other distribution with respect
to or in replacement of the Stock,  and (iv) any common stock of the Corporation
issued in any combination or subdivision of the Stock. In determining the amount
of Common Stock held by any Person,  the sum of (i), (ii),  (iii) and (iv) shall
be used.

                  d. "Exchange  Act" means the Securities  Exchange Act of 1934,
as amended or any similar  Federal  statue and the rules and  regulations of the
Commission thereunder all as the same shall be in effect at the time.

                  e. "Indebtedness"  means for any Person: (a) all indebtedness,
whether or not represented by bonds,  debentures,  notes,  securities,  or other
evidences  of  indebtedness,  for  the  repayment  of  money  borrowed,  (b) all
indebtedness  representing deferred payment of the purchase price of property or
assets,  (c) all indebtedness under any lease which, in conformity with GAAP, is
required to be capitalized  for balance sheet purposes and leases



                                       1
<PAGE>

of property or assets made as a part of any sale and  lease-back  transaction if
required to be capitalized, (d) all indebtedness under guaranties, endorsements,
assumptions, or other contractual obligations,  including any letters of credit,
or  the  obligations  in  respect  of,  or to  purchase  or  otherwise  acquire,
indebtedness  of others,  (e) all  indebtedness  secured by any lien existing on
property owned,  subject to such lien,  whether or not the indebtedness  secured
thereby shall have been assumed by the owner thereof, (f) trade accounts payable
more than one hundred twenty (120) days past due, (g) all amendments,  renewals,
extensions,  modifications  and  refundings of any  indebtedness  or obligations
referred to in clauses (a), (b), (c), (d), (e) or (f).

                  f. "Other  Securities" Any stock other than the  Corporation's
common stock, other securities,  property,  or other property or rights that the
Holders become entitled to receive upon exercise of the Warrants.

                  g.  "Person"  means  any   individual,   corporation,   trust,
partnership, association, or other entity.

                  h. "Public  Offering" A public offering of shares of any class
of Capital  Stock by the  Company  issued to the  general  public  pursuant to a
registration  statement  declared  effective by the United States Securities and
Exchange Commission.

                  i. "Registrable Securities" means the Common Stock.

                  j.  "Securities  Act"  means the  Securities  Act of 1933,  as
amended,  or any similar  Federal  statute and the rules and  regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  k.  "Senior  Obligations"  means  and  includes  any  and  all
Indebtedness and/or liabilities of the Company to each of Seacoast,  Pacific and
Tangent (each a "Noteholder")of  every kind,  nature and description,  direct or
indirect,  secured or unsecured,  joint, several, joint and several, absolute or
contingent,  due or to become due, now existing or hereafter arising, under that
certain "Note Purchase  Agreement" and any "Other Agreement" (as such agreements
are referenced under the Warrant Agreement) (regardless of how such Indebtedness
or liabilities arise or by what agreement or instrument they may be evidenced or
whether  evidenced by any agreement or  instrument)  and all  obligations of the
Company  and any of its  subsidiaries  to each  Noteholder  to  perform  acts or
refrain  from  taking  any  action  under any of the  aforementioned  documents,
together with all renewals, modifications,  extensions, increases, substitutions
or replacements of any of such Indebtedness.

                  l. "Series A Stock" means all issued and outstanding  Series A
Convertible  Preferred Stock of the Company and any common stock shares issuable
upon conversion thereof.

                  m.  "Subsidiary"  Each Person of which or in which the Company
or its other Subsidiaries own directly or indirectly  fifty-one percent (51%) or
more of (i) the combined  voting  power of all classes of stock  having  general
voting power under  ordinary  circumstances  to elect a majority of the board of
directors or equivalent  body of such Person,  if it is a corporation or similar
person; (ii) the capital interest or profits interest of such Person, if it is a
partnership,  joint venture, or similar entity; or (iii) the beneficial interest
of  such  Person,  if  it  is a  trust,  association,  or  other  unincorporated
organization.

                  n. "Warrant  Purchase  Agreement" means that certain agreement
by and among the parties  hereto and Jim Stein dated March 31,  1999.  Any terms
not defined  herein  shall have the  meaning  set forth in the Warrant  Purchase
Agreement.

                  o.  "Warrants"  means  collectively  the "A  Warrant,"  the "B
Warrant" and the "C Warrant" referred to in Section 2.01 of the Warrant Purchase
Agreement  and all  Warrants  issued upon the  transfer  or  division  of, or in
substitution for, such Warrants.

         2.       Registration Rights.

                  a. Required  Registration.  At any time, Holders of a majority
of the Registrable  Securities  held by Seacoast,  Pacific and Tangent may, upon
not more than two (2)  occasions and not more often than once during any 180-day
period, make a written request to the Company requesting that the Company effect
the  registration  of  Registrable  Securities so long as such request is for an
aggregate  offering  price of not less than Five Million  Dollars  ($5,000,000).
After  receipt of such a request,  the  Company  will,  as soon as  practicable,
notify  all  Holders  of such  request  and use its best  efforts  to effect the
registration  of all  Registrable  Securities  that  the  Company  has  been  so
requested  to  register  by any Holder for sale,  all to the extent  required to
permit  the  disposition  (in  accordance  with the  intended  method or methods
thereof) of the Registrable Securities so registered.

         Notwithstanding   the  foregoing,   if  the  managing   underwriter  or
underwriters,  if any, of such offering deliver a written opinion to each Holder
of such  Registrable  Securities  that the  success of the  offering  under this
Section 2.a. would be materially and adversely  affected by the inclusion of any
securities  requested  to be  included  in such  offering,  then the  amount  of
securities  to be offered for the  accounts  of any Persons  will be reduced (i)
first

                                       2
<PAGE>

according to the securities  proposed for registration by any Persons other than
the Holders to the extent  necessary to reduce the total amount of securities to
be  included  in such  offering  to the  amount  recommended  by  such  managing
underwriter  or  underwriters,  and then (ii) by any  Series A Stock held by any
Holder, and (iii) if such underwriter requires reduction of the securities to be
included in the offering in excess of all issued and outstanding  Series A Stock
held by such participating  Holders,  pro rata among all such Holders (according
to the securities proposed for such registration held by such Holders).

                  b.  Incidental  Registration.  If  the  Company  at  any  time
proposes  to file on its  behalf or on behalf of any of its  security  holders a
registration  statement  under  the  Securities  Act on any form  (other  than a
registration  statement  on Form S-4 or S-8 or any  successor  form  unless such
forms are being used in lieu of or as the functional equivalent of, registration
rights) for any class that is the same or similar to Registrable Securities,  it
will give written  notice  setting forth the terms of the proposed  offering and
such other  information as the Holders may reasonably  request to all holders of
Registrable  Securities at least twenty (20) days before the initial filing with
the  Commission  of such  registration  statement,  and offer to include in such
filing such Registrable Securities as any Holder may request. Each Holder of any
such Registrable  Securities desiring to have Registrable  Securities registered
under this Section 2.b. will advise the Company in writing  within ten (10) days
after the date of receipt of such notice  from the  Company,  setting  forth the
amount of such Registrable  Securities for which registration is requested.  The
Company  will  thereupon  include  in such  filing  the  number  of  Registrable
Securities for which registration is so requested, and will use its best efforts
to effect registration under the Securities Act of such Registrable Securities.

         Notwithstanding   the  foregoing,   if  the  managing   underwriter  or
underwriters,  if any, of such offering deliver a written opinion to each Holder
of such  Registrable  Securities  that  the  success  of the  offering  would be
materially and adversely affected by the inclusion of the Registrable Securities
requested to be included,  then the amount of  securities  to be offered for the
accounts  of Holders  will be reduced  pro rata  (according  to the  Registrable
Securities  proposed  for  registration)  to the extent  necessary to reduce the
total  amount of  securities  to be  included  in such  offering  to the  amount
recommended by such managing  underwriter or  underwriters;  provided,  however,
that if securities are being offered for the account of other Persons as well as
the Company,  then with  respect to the  Registrable  Securities  intended to be
offered  to  Holders,  the  proportion  by which  the  amount  of such  class of
securities  intended  to be offered  by  Holders is reduced  will not exceed the
proportion  by which  the  amount of such  class of  securities  intended  to be
offered by such other Persons (other than the Company) is reduced.

                  c. Form S-3  Registrations.  In addition  to the  registration
rights  provided in Sections 2.a. and 2.b.  above, if at any time the Company is
eligible to use Form S-3 (or any successor  form) for  registration of secondary
sales of  Registrable  Securities,  any  Holder of  Registrable  Securities  may
request in writing that the Company register shares of Registrable Securities on
such form so long as such request is for an aggregate offering price of at least
One Million Dollars ($1,000,000). Upon receipt of such request, the Company will
promptly notify all holders of Registrable  Securities in writing of the receipt
of such  request and each such  Holder may elect (by written  notice sent to the
Company within fifteen (15) days of receipt of the Company's notice) to have its
Registrable  Securities  included in such registration  pursuant to this Section
7.03. Thereupon, the Company will, as soon as practicable,  use its best efforts
to effect the  registration on Form S-3 of all  Registrable  Securities that the
Company has so been  requested to register by such Holder for sale.  The Company
will  use its best  efforts  to  qualify  and  maintain  its  qualification  for
eligibility to use Form S-3 for such purposes.

                  d. Rule 144 Availability.  Notwithstanding the foregoing,  the
Company will not be obligated to register any Registrable Securities as to which
counsel  reasonably  acceptable  to the  Holders  renders an opinion in form and
substance  satisfactory  to the  Holders  to the  effect  that such  Registrable
Securities are freely  saleable  without  limitation as to volume under Rule 144
under the Securities Act.

                  e.   Registration   Procedures.   In   connection   with   any
registration of Registrable  Securities under this Agreement,  the Company will,
as soon as practicable:

                  (i)  prepare  and file  with  the  Commission  a  registration
statement with respect to such  Registrable  Securities and use its best efforts
to cause such  registration  statement to become and remain  effective until the
earlier of such time as all Registrable  Securities subject to such registration
statement  have been disposed of or the  expiration of one hundred  eighty (180)
days;

                  (ii) prepare and file with the Commission  such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration  statement effective and
to comply with the  provisions of the Securities Act with respect to the sale or
other  disposition of all Registrable  Securities  covered by such  registration
statement until the earlier of such time as all of



                                       3
<PAGE>

such  Registrable  Securities  have been  disposed of or the  expiration  of one
hundred eighty (180) days;

                  (iii)  furnish  to each  Holder  such  number of copies of the
registration  statement  and  prospectus  (including,   without  limitation,   a
preliminary  prospectus) in conformity  with the  requirements of the Securities
Act (in each case  including  all  exhibits)  and each  amendment or  supplement
thereto,  together  with such  other  documents  as any  Holder  may  reasonably
request;

                  (iv)  use  its  best   efforts  to  register  or  qualify  the
Registrable  Securities covered by such registration  statement under such other
securities or blue sky laws of such  jurisdictions  within the United States and
Puerto  Rico as each  Holder  reasonably  requests,  and do such  other acts and
things as may be  reasonably  required of it to enable such holder to consummate
the  disposition  in  such  jurisdiction  of  the  securities  covered  by  such
registration statement,  except any particular jurisdiction in which the Company
would be  required  to  execute a general  consent  to  service  of  process  in
effecting such  registration,  qualification or compliance unless the Company is
already subject to service in such jurisdiction;

                  (v)  otherwise  use  its  best  efforts  to  comply  with  all
applicable  rules and regulations of the  Commission,  and make available to its
securities holders,  as soon as practicable,  an earnings statement covering the
period  of at least  twelve  months  beginning  with the first  month  after the
effective date of such  registration  statement,  which earnings  statement will
satisfy the provisions of Section 11(a) of the Securities Act;

                  (vi) provide and cause to be  maintained a transfer  agent and
registrar for Registrable Securities covered by such registration statement from
and  after a date  not  later  than  the  effective  date  of such  registration
statement;

                  (vii) if requested by the  underwriters  for any  underwritten
offering  or  Registrable  Securities  on  behalf  of a  Holder  of  Registrable
Securities  pursuant to a registration  requested under Section 2.a, the Company
will  enter  into an  underwriting  agreement  with such  underwriters  for such
offering,  such agreement to contain such  representations and warranties by the
Company and such other terms and  provisions  as are  customarily  contained  in
underwriting  agreements  with  respect to secondary  distributions,  including,
without  limitation,  provisions with respect to indemnities and contribution as
are reasonably satisfactory to such underwriters and the Holders; the Holders on
whose behalf  Registrable  Securities are to be distributed by such underwriters
will be parties to any such underwriting  agreement and the  representations and
warranties  by, and the other  agreements on the part of, the Company to and for
the  benefit of such  underwriters,  will also be made to and for the benefit of
such Holders of Registrable Securities;  and no Holder of Registrable Securities
will be required by the Company to make any  representations or warranties to or
agreements  with the  Company  or the  underwriters  other than  reasonable  and
customary representations, warranties, or agreements regarding such Holder, such
Holder's  Registrable  Securities,  such Holder's  intended method or methods of
disposition, and any other representation required by law;

                  (viii) furnish,  at the written request of any Holder,  on the
date that such Registrable Securities are delivered to the underwriters for sale
pursuant to such registration,  or, if such Registrable Securities are not being
sold through  underwriters,  on the date that the  registration  statement  with
respect to such Registrable Securities becomes effective, (i) an opinion in form
and substance  reasonably  satisfactory to such Holders,  and addressing matters
customarily   addressed  in  underwritten  public  offerings,   of  the  counsel
representing the Company for the purposes of such  registration (who will not be
an  employee  of the  Company  and who will be  satisfactory  to such  Holders),
addressed to the  underwriters,  if any, and to the selling Holders;  and (ii) a
letter (the "comfort letter") in form and substance  reasonably  satisfactory to
such Holders,  from the independent certified public accountants of the Company,
addressed to the  underwriters,  if any, and to the selling  Holders making such
request (and, if such  accountants  refuse to deliver the comfort letter to such
Holders,  then  the  comfort  letter  will  be  addressed  to  the  Company  and
accompanied by a letter from such accountants  addressed to such Holders stating
that they may rely on the comfort letter addressed to the Company); and

                  (ix)  during the period  when the  registration  statement  is
required to be  effective,  notify each selling  Holder of the  happening of any
event as a result of which the prospectus included in the registration statement
contains an untrue  statement of a material  fact or omits to state any material
fact required to be stated therein or necessary to make the  statements  therein
not  misleading,  and prepare a supplement  or amendment to such  prospectus  so
that, as thereafter delivered to the purchasers of such Registrable  Securities,
such prospectus will not contain an untrue  statement of a material fact or omit
to state any material  fact  required to be stated  therein or necessary to make
the statements therein not misleading.  It will be a condition  precedent to the
obligation  of the  Company to take any action  pursuant  to this  Agreement  in
respect of the  Registrable  Securities that are to be registered at the request
of any Holder of Registrable  Securities that such Holder furnish to the Company
such  information  regarding the Registrable  Securities held by such Holder



                                       4
<PAGE>

and the  intended  method of  disposition  thereof  as is  legally  required  in
connection  with the action taken by the Company.  The managing  underwriter  or
underwriters,  if  any,  for  any  offering  of  Registrable  Securities  to  be
registered pursuant to Section 2.a. or 2.c. will be selected by the Holders of a
majority of the Registrable Securities being so registered.

                  f. Allocation of Expenses. Except as provided in the following
sentence,  the Company will bear all expenses  arising or incurred in connection
with any of the transactions contemplated by this Agreement,  including, without
limitation, (a) all expenses incident to filing with the National Association of
Securities  Dealers,  Inc.; (b) registration  fees; (c) printing  expenses;  (d)
accounting  and legal fees and expenses;  (e) expenses of any special  audits or
comfort   letters   incident  to  or  required  by  any  such   registration  or
qualification;  and (f) expenses of complying  with the  securities  or blue sky
laws of any jurisdictions in connection with such registration or qualification.
Each Holder will severally bear the expense of its underwriting fees, discounts,
or commissions relating to its sale of Registrable Securities.

                  g. Listing on  Securities  Exchange.  If the Company lists any
shares  of  Capital  Stock  on  any  securities  exchange  or  on  the  National
Association of Securities  Dealers,  Inc. Automated  Quotation System or similar
system,  it will, at its expense,  list thereon,  maintain and, when  necessary,
increase such listing of, all Registrable Securities.

                  h. Holdback Agreements.

                  (i)  If  any  registration  pursuant  to  Section  2.b  is  in
connection  with an  underwritten  public  offering,  each Holder of Registrable
Securities agrees, if so required by the managing underwriter, not to effect any
public sale or  distribution  of Registrable  Securities  (other than as part of
such  underwritten  public  offering) during the period beginning seven (7) days
prior to the effective date of such registration statement and ending on the one
hundred  eightieth  (180th) day after the  effective  date of such  registration
statement; provided, however, that Jim Stein and each Person that is an officer,
director,  or beneficial  owner of five percent (5%) or more of the  outstanding
shares of any class of Capital Stock enters into such an agreement.

                  (ii) The  Company  agrees  not to effect  any  public  sale or
distribution  during the period seven (7) days (or such longer  period as may be
prescribed  by Regulation  M) prior to the  effective  date of the  registration
statement  employed in any  underwritten  public  offering and ending on the one
hundred eightieth (180th) day after any such registration statement contemplated
by  Sections  2.a.  or  2.c.  has  become  effective,  except  as  part  of such
underwritten public offering pursuant to such registration  statement and except
pursuant to securities  registered on Forms S-4 or S-8 of the  Commission or any
successor  forms,  and the Company  agrees to use its best efforts to cause each
holder  of  its  equity  securities  or  any  securities   convertible  into  or
exchangeable or exercisable for any of such  securities,  in each case purchased
from the Company at any time after the date of this  Agreement  (other than in a
public offering), to agree not to effect any such public sale or distribution of
such securities during such period.

                  i. Rule 144. At all times following  completion by the Company
of a Public  Offering,  the  Company  will take such  action as any  Holder  may
reasonably request,  all to the extent required from time to time to enable such
Holder to sell shares of Registrable Securities without registration pursuant to
and in accordance  with (a) Rule 144 under the Securities  Act, as such Rule may
be amended from time to time, or (b) any similar rule or  regulation  adopted by
the Commission.  Upon the request of any Holder of Registrable  Securities,  the
Company  will  deliver to such Holder a written  statement  as to whether it has
complied with such requirements.

                  j. Rule 144A. The Company agrees that, upon the request of any
Holder or any prospective  purchaser of Registrable  Securities  designated by a
Holder,  the Company will promptly  provide (but in any case within fifteen (15)
days of a request) to such Holder or potential purchaser, the following publicly
available information:

                  (i) a brief  statement  of the nature of the  business  of the
Company and any Subsidiaries and the products and services they offer;

                  (ii) the most recent  consolidated  balance  sheets and profit
and losses and retained earnings statements, and similar financial statements of
the  Company  for such  part of the two  preceding  fiscal  years  prior to such
request as the Company has been in operation (such financial information will be
audited, to the extent reasonably available); and

                  (iii)  such other  publicly  available  information  about the
Company, any Subsidiaries,  and their business, financial condition, and results
of operations as the requesting Holder or purchaser of such Warrants requests in
order to comply with Rule 144A, as amended,  and the antifraud provisions of the
federal and state securities laws. The Company hereby represents and warrants to
any such requesting Holder and any prospective  purchaser of Warrants or Warrant
Shares from such Holder that the information provided by the Company pursuant



                                       5
<PAGE>

to this Section 2.j. will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.

                  k. Limitations on Subsequent  Registration Rights. Until (i) a
Qualified Liquidity  Milestone,  (ii) a Qualified  Liquidation Event (as each is
defined in the  Company's  Certificate  of  Designation  filed with the Colorado
Secretary of State) (iii) the repayment of any and all Senior  Obligations  owed
to such  Noteholder  and the sale in excess of 80% of such  Noteholder's  common
stock shares and Other Securities issued or issuable under the Warrants from and
after the date of this  Agreement  or until the  provisions  of Section 2.d. are
applicable,  the  Company  will not,  without the prior  written  consent of the
Holders of a majority of the outstanding Registrable Securities,  enter into any
agreement with any holder or prospective holder of any securities of the Company
that  would  allow  such  holder  or  prospective  holder  (a) to  include  such
securities in any registration  filed under Section 2.a., unless under the terms
of such agreement, such holder or prospective holder may include such securities
in any such registration only to the extent that the inclusion of its securities
will not reduce the amount of the Registrable  Securities of the Holders that is
included  or (b) to  make a  demand  registration  that  could  result  in  such
registration  statement being declared  effective prior to the  effectiveness of
the first  registration  statement  effected  under  Section  2.a. or within one
hundred  twenty (120) days of the effective  date of any  registration  effected
pursuant to Section 2.a..

                  l.  Right to Delay a Demand  Registration.  If, at the time of
any  request  to  register  Registrable  Securities  hereunder,  the  Company is
preparing  a  registration  statement  for  a  Public  Offering  (other  than  a
registration  effected  solely  to  implement  an  employee  benefit  plan  or a
transaction  to  which  Rule  145 of the  Commission  is  applicable)  and  such
registration statement in fact is filed and becomes effective within ninety (90)
days after the  request,  then the Company may at its option  delay such request
for a period not more than in excess of one hundred  twenty  (120) days from the
effective  date of such  offering  or the  date of  commencement  of such  other
activity,  as the case may be.  Such right to delay  shall be  exercised  by the
Company  not more than once in any  twelve  (12) month  period.  Nothing in this
Section 2.l.  shall preclude a Holder of  Registrable  Securities  from enjoying
registration rights which it might otherwise possess under this this Agreement.

                  m. Indemnification by Holders of Registrable Securities.  Each
Holder of any Registrable Securities shall, by acceptance thereof, indemnify and
hold harmless each other holder of any Registrable Securities,  the Company, its
directors and officers, each above-described  underwriter who contracts with the
Company or its agents and each other Person, if any, who controls the Company or
such  underwriter,  against any liability,  joint or several,  to which any such
other Holder,  the Company,  underwriter  or any such director or officer of any
such Person may become  subject under the Securities Act or any other statute or
at common law, if such liability (or actions in respect hereof) arises out of or
is based upon (i) the disposition by such Holder of such Registrable  Securities
in  violation  of the  provisions  of this  Agreement,  (ii) any alleged  untrue
statement of any material fact  contained in any  registration  statement  under
which securities were registered under the Securities Act at the request of such
Holder, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement  thereto, or (iii) any alleged omission to state therein
a material fact required to be stated therein or necessary to make  statement(s)
therein not misleading. Notwithstanding any other provision of this Section, the
indemnification  rights set forth in this Section  shall be given in the case of
clause (ii) or (iii) only if such alleged untrue  statement or alleged  omission
supplement  thereto  was  made  (1) in  reliance  upon  and in  conformity  with
information  furnished  to the Company by such Holder  expressly  stated for use
therein,  and (2) not based on the  authority of an expert as to whom the holder
had no  reasonable  ground  to  believe,  and  did  not  believe,  that  (A) the
statements  made on the authority of such expert were untrue or (B) there was an
omission to state a material fact. Such Holder shall reimburse the Company, such
underwriter  or such  director,  officer,  other  Person or other Holder for any
reasonable legal fees incurred in investigating or defending any such liability;
provided, however, that no Holder of Registrable Securities shall be required to
indemnify any Person against any liability arising from any untrue or misleading
statement or omission  contained in any  prospectus or for any  liability  which
arises out of the failure of any Person to deliver a  prospectus  as required by
the Securities Act; and provided further, that the obligations of such Holder of
Registrable Securities for the indemnity hereunder shall be limited to an amount
equal to the net proceeds received by such Holder of Registrable Securities upon
disposition  thereof and shall not extend to any  settlement  of claims  related
thereto  without  the  express  written  consent of such  Holder of  Registrable
Securities, which consent shall not be unreasonably withheld.

         3.       Waiver of Certain Shareholder Agreement Rights.

                  a. Preemptive  Rights. In consideration of each of Seacoast's,
Pacific's  and  Tangent's  purchase  of the  Company's  Series A Stock under the
Purchase  Agreement,  each of Seacoast,  Pacific and Tangent hereby waive all of
their  rights set forth  under  Article  II of the  Shareholder  Agreement  with
respect to the Company's sale of

                                       6

<PAGE>


the Series A Stock  pursuant to the Purchase  Agreement and the rights  accorded
thereunder and this  Agreement (and any other Capital Stock issued  hereafter in
connection with the Series A Stock).

                  b. Dilution Fee. Each of Seacoast,  Pacific and Tangent hereby
agree  that the  "Dilution  Fee" set  forth in  Article  III of the  Shareholder
Agreement shall not apply with respect to any cash dividend or cash distribution
made by the Company on any shares of the Company's  Series A Stock (or any other
Capital Stock issued hereafter in connection with the Series A Stock).

                  c. Drag Along  Rights.  Each of Seacoast,  Pacific and Tangent
hereby  agree that for purposes of the drag along rights set forth in Article IV
of the  Shareholders  Agreement,  the issued and outstanding  shares of Series A
Stock (or any other Capital Stock issued hereafter in connection with the Series
A Stock)  shall  not be used in  either  the  numerator  or  denominator  of any
percentage  calculation to determine the percentage  ownership in the Company of
the number of issued and outstanding  voting stock shares of the Company held by
either Barnes, Polis, Stein or their affiliates.  For purposes of the definition
of "Shareholder" under the Shareholder Agreement, each of Seacoast,  Pacific and
Tangent agree that Shareholder shall collectively include for each of Barnes and
Polis those affiliated  entities  identified on the signature of the Shareholder
Agreement as being affiliated with each such individual.

                  d. First Refusal; and Co-Sale Rights. In addition to any other
equity excluded from the provisions of Article VI of the Shareholders Agreement,
each of Seacoast  ,Pacific and Tangent hereby agree that the Series A Stock (and
any other Capital Stock issued  hereafter in connection with the Series A Stock)
held by Barnes and Polis or their  affiliates  shall not be subject to the first
refusal or co-sale rights set forth in Article VI of the Shareholder Agreement.

                  e. Voting  Agreement.  Each of  Seacoast,  Pacific and Tangent
hereby agree that Barnes' and Polis'  voting  obligations  under Article VIII of
the Shareholders  Agreement with respect to the Capital Stock now owned or later
acquired by them shall  expire with respect to any shares of Series A Stock (and
any other Capital Stock issued  hereafter in connection with the Series A Stock)
at such  time  that  Barnes or  Polis,  as the case may be,  are no  longer  the
beneficial  owners with respect to such shares of Capital Stock,  whether or not
they continue to own other shares of Series A Stock

         4.       Miscellaneous.

                  a.   Headings.   The  headings  in  this   Agreement  are  for
convenience  and  reference  only  and are not  part  of the  substance  of this
Agreement.

                  b. Severability. The parties to this Agreement expressly agree
that it is not their intention to violate any public policy, statutory or common
law rules, regulations,  or decisions of any governmental or regulatory body. If
any provision of this Agreement is judicially or administratively interpreted or
construed  as being  in  violation  of any such  policy,  rule,  regulation,  or
decision, the provision, section, sentence, word, clause, or combination thereof
causing such violation  will be  inoperative  (and in lieu thereof there will be
inserted such provision,  sentence,  word, clause, or combination thereof as may
be valid and consistent with the intent of the parties under this Agreement) and
the  remainder  of this  Agreement,  as amended,  will remain  binding  upon the
parties  to  this  Agreement,  unless  the  inoperative  provision  would  cause
enforcement  of the  remainder  of this  Agreement to be  inequitable  under the
circumstances.

                  c.  Notices.  Whenever it is provided  herein that any notice,
demand, request, consent, approval, declaration, or other communication be given
to or served upon any of the parties by another, such notice,  demand,  request,
consent,  approval,  declaration,  or other communication will be in writing and
will be deemed to have been validly  served,  given, or delivered (and "the date
of such  notice"  or words of similar  effect  will mean the date) five (5) days
after  deposit  in the United  States  mails,  certified  mail,  return  receipt
requested,  with proper postage  prepaid,  or upon receipt  thereof  (whether by
non-certified  mail,  telecopy,   telegram,  express  delivery,  or  otherwise),
whichever is earlier, and addressed to the party to be notified as follows:

If to Seacoast, at        Seacoast Capital Partners Limited Partnership
                                    One Sansome Street, Suite 2100
                                    San Francisco, California  94104
                                    Attention:  Jeffrey J. Holland
                                    Fax:  (415) 956-1459

                                       7
<PAGE>

                          Seacoast Capital Partners Limited Partnership
                          c/o Seacoast Capital Corporation
                          55 Ferncroft Road
                          Danvers, Massachusetts  01923
                          Attention:  Walt Leonard
                          Fax: (508) 750-1301

If to Pacific, at         Pacific Mezzanine Fund, L.P.
                          2200 Powell Street, Suite 1250
                          Emeryville, California  94608
                          Attention: Dave Woodward
                          Fax:  (510) 595-9801

If to Tangent, at         Tangent Growth Fund, L.P.
                          1 Union Square
                          180 Geary Street, Suite 500
                          San Francisco, California  94108
                          Attention: Mark P. Gilles
                          Fax:  (415) 392-1928

with courtesy copies to:  Patton Boggs LLP
                          2200 Ross Avenue, Suite 900
                          Dallas, Texas  75201
                          Attention:  Charles P. Miller, Esq.
                          Fax:  (214) 871-2688

If to the Company, at     ValueStar Corporation
                          360 22nd Street, Suite 210
                          Oakland, CA  94612
                          FAX: (510) 808-1400
                          Attention: Jim Stein

with courtesy copies to:  Bay Venture Counsel, LLP
                          1999 Harrison Street, Suite 1300
                          Oakland, California  94612
                          Attention: Donald C. Reinke, Esq.
                          Fax:  (510) 834-7440


If to Barnes:             James A. Barnes
                          8617 Canyon View Drive
                          Las Vegas, NV 89117
                          Facsimile: (702) 254-4212

If to Polis:              Jerry E. Polis
                          980 American Pacific Drive, Suite 111
                          Henderson, Nevada  89014
                          Fax: (702) 737-6900

If to any other Holder:   As set forth on Schedule 1.

or to such other  address as each party may designate for itself by like notice.
Notice to any other  Holder will be  delivered as set forth above to the address
shown on the stock  transfer books of the Company unless such Holder has advised
the  Company in writing of a different  address to which  notices are to be sent
under this Agreement.  Failure or delay in



                                       8
<PAGE>

delivering  the  courtesy  copies  of  any  notice,  demand,  request,  consent,
approval, declaration, or other communication to the persons designated above to
receive  copies  of the  actual  notice  will  in no way  adversely  affect  the
effectiveness of such notice, demand, request, consent,  approval,  declaration,
or  other  communication.   No  notice,  demand,  request,  consent,   approval,
declaration,  or  other  communication  will be  deemed  to have  been  given or
received unless and until it sets forth all items of information  required to be
set forth therein pursuant to the terms of this Agreement.

                  d.  Successors.  This Agreement will be binding upon and inure
to the benefit of the  parties and their  respective  successors  and  permitted
assigns.

                  e. Remedies.  The failure of any party to enforce any right or
remedy under this  agreement,  or to enforce any such right or remedy  promptly,
will not constitute a waiver thereof, nor give rise to any estoppel against such
party, nor excuse any other party from its obligations under this Agreement. Any
waiver of any such right or remedy by any party must be in writing and signed by
the party against which such waiver is sought to be enforced.

                  f. Fees. Any and all fees,  costs,  and expenses,  of whatever
kind and nature, including attorneys' fees and expenses, incurred by the Holders
in  connection  with the defense or  prosecution  of any actions or  proceedings
arising out of or in connection with this Agreement will, to the extent provided
in this  Agreement,  be borne and paid by the  Company  within  ten (10) days of
demand by the Holders.

                  g. Counterparts.  This Agreement may be executed in any number
of  counterparts,  which  will  individually  and  collectively  constitute  one
agreement.

                  h. Choice of Law. THIS AGREEMENT HAS BEEN EXECUTED, DELIVERED,
AND ACCEPTED BY THE PARTIES AND WILL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF
CALIFORNIA AND WILL BE INTERPRETED  AND THE RIGHTS OF THE PARTIES  DETERMINED IN
ACCORDANCE  WITH  THE  LAWS OF THE  UNITED  STATES  APPLICABLE  THERETO  AND THE
INTERNAL  LAWS OF THE STATE OF CALIFORNIA  APPLICABLE TO AN AGREEMENT  EXECUTED,
DELIVERED AND PERFORMED THEREIN WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW RULES
THEREOF  OR ANY OTHER  PRINCIPLE  THAT  COULD  REQUIRE  THE  APPLICATION  OF THE
SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.

                  i.  Nominees  for  Beneficial  Owners.  In the event  that any
Registrable  Securities are held by a nominee for the  beneficial  owner of such
Registrable  Securities,  the beneficial owner of Registrable Securities may, at
its  election,  be  treated  as the Holder of such  Registrable  Securities  for
purposes of any request or other action by any Holder or Holders of  Registrable
Securities  pursuant to this  Agreement  or any  determination  of any number or
percentage of shares of Registrable  Securities held by any Holder or Holders of
Registrable Securities  contemplated by this Agreement.  If the beneficial owner
of any  Registrable  Securities  so elects,  the Company may require  assurances
reasonably  satisfactory  to it of such  owner's  beneficial  ownership  of such
Registrable  Securities.  In no event will a Holder be required to exercise  the
Warrant as a  condition  to the  registration  of such  Warrant  or  Registrable
Securities thereunder.

                  j. No Future Waiver.The Company hereby agrees and acknowledges
that the foregoing waivers and consents (a) shall in no event be construed or be
deemed  to  obligate  either  Seacoast,  Pacific  or  Tangent  to  agree  to any
subsequent waiver or consent; (b) shall in no event be construed or be deemed as
a waiver of any of the other terms and conditions of the Shareholder  Agreement;
and (c) shall in no event be construed or be deemed to (i) impair,  prejudice or
otherwise adversely affect Seacoast's,  Pacific's or Tangent's right at any time
to exercise any right,  privilege,  or remedy in connection with the Shareholder
Agreement,  (ii) amend or alter any provision of the Shareholder  Agreement,  or
(iii) constitute any course of dealing or other basis or altering any obligation
of the Company or any right, privilege or remedy of Seacoast, Pacific or Tangent
under the Shareholder Agreement.


                                       9
<PAGE>

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

                                   COMPANY:
                                   --------
                                   VALUESTAR CORPORATION
                                   By:    /s/ JAMES STEIN
                                          ---------------
                                   Name:  James Stein
                                   Its:   President and Chief Executive Officer

                                   /s/ JAMES A. BARNES
                                   -------------------
                                   James A. Barnes,  individually,  as President
                                   of Sunrise Capital,  Inc. and General Partner
                                   of  Tiffany   Investments,   and  as  General
                                   Partner   of  Tiffany   Investments   Limited
                                   Partnership

                                   /s/ JERRY E. POLIS
                                   ------------------
                                   Jerry E. Polis, individually, as President of
                                   Davric  Corporation  and Trustee of the Jerry
                                   E. Polis Family Trust

                                   SEACOAST CAPITAL PARTNERS LIMITED
                                   PARTNERSHIP
                                   By:      Seacoast Capital Corporation,
                                            its general partner
                                            By:  /s/ JEFFREY J. HOLLAND
                                                 ----------------------
                                            Name:  Jeffrey J. Holland
                                            Its:   Vice President

                                   PACIFIC MEZZANINE FUND, L.P.
                                   By:      Pacific Private Capital
                                            its general partner
                                            By:   /s/ DAVID WOODWARD
                                                  ------------------
                                            Name: David Woodward
                                            Its:  General Partner

                                   TANGENT GROWTH FUND, L.P.
                                   By:      Tangent Fund Management, LLC
                                            its general partner
                                            By:    /s/ MARK P. GILLES
                                                   ------------------
                                            Name:  Mark P. Gilles
                                            Its:   Vice President


                                       10
<PAGE>


                                   Schedule 1
                                   ----------


---------------------------------------
Name of Investor

---------------------------------------
Authorized Signature

---------------------------------------
Print Name and Title of Signatory


ADDRESS

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

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

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





                                       11