FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT

This Amendment, dated as of April 17 th, 2006, is made by and among COST-U-LESS,
INC., a Washington corporation (“CUL” or a “Borrower”), CULGUAM, INC., a Guam
corporation (“GUAM” or a “Borrower”), CULNEV, INC., a Nevada corporation (“NEV”
or a “Borrower”), CULUSVI, INC., a U.S. Virgin Islands corporation (“USVI” or a
“Borrower”, and together with CUL, GUAM and NEV, the “Borrowers”), and WELLS
FARGO BANK, N.A. (the “Lender”), acting through its Wells Fargo Business Credit
operating division.

Recitals

Each Borrower and the Lender are parties to a Credit and Security Agreement
dated as of April 9, 2003, as amended by that certain First Amendment to Credit
and Security Agreement dated as of October 17, 2003, that certain Second
Amendment to Credit and Security Agreement dated as of March 2, 2004, that
certain Third Amendment to Credit and Security Agreement dated as of November
11, 2004 and that certain Fourth Amendment dated as of May 18, 2005 (as so
amended, the “Credit Agreement”). Capitalized terms used in these recitals have
the meanings given to them in the Credit Agreement unless otherwise specified.

Each Borrower has requested that certain amendments be made to the Credit
Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:

1.          Defined Terms. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein.

2.    Section 6.2 of the Credit Agreement is hereby amended in its entirety to
read as follows:

“(a)          Minimum Book Net Worth . The Borrower will maintain, during each
period described below and for each month thereafter, its consolidated Book Net
Worth, determined as at the end of each month, at an amount not less than the
amount set forth opposite such period (numbers appearing between “< >” are
negative):

Period

Minimum Book Net Worth

 

The month ending April 2, 2006

$24,480,000

The month ending April 30, 2006

$24,530,000

The month ending May 28, 2006

$24,525,000

The month ending July 2, 2006

$24,740,000

The month ending July 30, 2006

$24,750,000

 

 

 

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Period

Minimum Book Net Worth

 

The month ending August 27, 2006

$24,790,000

The month ending October 1, 2006

$25,280,000

The month ending October 29, 2006

$25,340,000

The month ending November 26, 2006

$25,450,000

The month ending December 31, 2006 and thereafter

$25,760,000

 

               (b) Minimum Net Income. The Borrower will achieve during each
period described below, consolidated minimum Net Income, of not less than the
amount set forth opposite such period (numbers appearing between “< >” are
negative):

Period

Minimum Net Income

Year to date as of April 2, 2006

$360,000

Year to date as of July 2, 2006

$540,000

Year to date as of October 1, 2006

$1,000,000

Year to date as of December 31, 2006

$1,400,000

 

(c)          Capital Expenditures. The Borrower will not incur or contract to
incur aggregate Capital Expenditures of more than $7,000,000 during the
Borrower’s fiscal year ending December 31, 2006 and zero thereafter until the
Borrower and the Lender agree on Financial Covenants for periods after December
31, 2006.

(d)          New Financial Covenants. On or before December 31, 2006, the
Borrower and the Lender shall agree on the new dollar amount for such covenant
levels for Section 6.2(a), Section 6.2(b) and Section 6.2(c) for periods after
such date. The new Financial Covenants will be based on the Borrower’s
projections for such periods and shall be no less stringent than the present
Financial Covenants, but if the Borrower and the Lender do not agree after good
faith negotiations, the Lender may designate the required amounts in its sole
discretion and the failure by the Borrower to maintain the designated amounts
shall constitute an Event of Default.”

3.          No Other Changes. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any advance or letter of credit thereunder.

4.          Conditions Precedent. This Amendment shall be effective when the
Lender shall have received an executed original hereof, together with such other
matters as the Lender may require, each in substance and form acceptable to the
Lender in its sole discretion.

5.          Representations and Warranties. Each Borrower hereby represents and
warrants to the Lender as follows:

 

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(a)        Each Borrower has all requisite power and authority to execute this
Amendment and to perform all of its obligations hereunder, and this Amendment
has been duly executed and delivered by each Borrower and constitutes the legal,
valid and binding obligation of each Borrower, enforceable in accordance with
its terms.

(b)        The execution, delivery and performance by each Borrower of this
Amendment have been duly authorized by all necessary corporate action and do not
(i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of any
order, writ, injunction or decree presently in effect, having applicability to
any Borrower, or the articles of incorporation or by-laws of any Borrower, or
(iii) result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which any
Borrower is a party or by which it or its properties may be bound or affected.

(c)        All of the representations and warranties contained in Article V of
the Credit Agreement are correct on and as of the date hereof as though made on
and as of such date, except to the extent that such representations and
warranties relate solely to an earlier date.

6.          References. All references in the Credit Agreement to “this
Agreement” shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.

7.          No Waiver. The execution of this Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Amendment.

8.          Release. Each Borrower hereby absolutely and unconditionally
releases and forever discharges the Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, demands or causes of action of any kind, nature or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which such Borrower has had, now has or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this Amendment, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.

9.          Costs and Expenses. Each Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Loan Documents,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, each Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this

 

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Amendment and the documents and instruments incidental hereto. Each Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by any Borrower, make a loan to any
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses.

10.        Joint and Several Liability. All obligations of each Borrower under
this Amendment shall be joint and several. All references to the term “Borrower”
herein shall refer to each of them separately and to all of them jointly and all
such Persons shall be bound both severally and jointly with the other. Each
Borrower is responsible for all of the Borrower obligations under this
Amendment. Notices from the Lender to any Borrower shall constitute notice to
all Borrowers. Directions, instructions, representations, warranties or
covenants made by any Borrower to the Lender shall be binding on all Borrowers.

11.        Miscellaneous. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.

[This space intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.

 

WELLS FARGO BUSINESS CREDIT, INC.

 

 

 

By:  /s/ Robb L. Jacobs  

Name: Robb L. Jacobs

Its: Assistant Vice President

 

COST-U-LESS, INC.

 

 

 

By:  /s/ Martin P. Moore  

Name: Martin P. Moore

Its: Chief Financial Officer

 

 

CULGUAM, INC.

 

 

 

By:  /s/ Martin P. Moore  

Name: Martin P. Moore

Its: Authorized Agent

 

 

CULNEV, INC.

 

 

 

By:  /s/ Martin P. Moore  

Name: Martin P. Moore

Its: Authorized Agent

 

 

CULUSVI, INC.

 

 

 

By:  /s/ Martin P. Moore  

Name: Martin P. Moore

Its: Authorized Agent

 

 

 

 

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