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EXECUTIVE
COMPENSATION AND BENEFITS AGREEMENT



J. Jeffrey
Meder ("Executive")
3316 81st Pl. SE 
Mercer Island, WA 98040



Cost-U-Less,
Inc.("Company")
3633 - 136th Place SE, Suite 110
Bellevue, WA 98006



	1. 	 Employment.







     The
Company hereby employs Executive as its President and Chief Executive Officer  and
Executive hereby accepts this Executive Compensation and Benefits Agreement  (the “Agreement”)
in conjunction with his employment with the  Company. 



	2. 	 Effective
Date.







     This
Agreement is effective as of September 1, 2004 (the “Effective  Date”),
and shall continue through September 1, 2007, unless  extended by mutual agreement
or terminated earlier as hereinafter provided. 



	3. 	 Duties
and Responsibilities.







        Executive
will, during the term of this Agreement, faithfully and diligently perform all
such acts and duties, and have such responsibilities and furnish such services,
as are generally associated with and required for the position of President and
Chief Executive Officer and such other duties as the Board of Directors of the
Company (the “Board”) or its designee(s) shall reasonably
direct. Executive will devote such time, energy and skill to the business of the
Company as shall reasonably be required for the performance of his/her duties.
Executive agrees, subject to his election as such, to serve as a director of the
Board during his term of employment. 



	4. 	 Salary
and Bonus.







     4.1
Salary. For the  first year of this Agreement, Executive will be paid a salary of
$310,000 on an  annualized basis, payable on regular Company paydays. For each year
thereafter  that this Agreement is in full force and effect, Executive’s annual
salary  shall be reviewed by the Board for adjustment and may be increased as determined
appropriate by the Board. Except as specifically stated herein, Executive  otherwise will
receive the same Company benefits and be, subject to the same  policies, practices, terms
and conditions of employment as are other senior  officers of the Company. 



     4.2
Bonus. In  addition to Executive’s base salary, Executive is eligible for a
maximum  annual bonus of up to $100,000 (hereinafter referred to as the “Bonus  Base”),
based on Company’s achievement of its EBITDA target, payable  upon 










completion of
the  annual audit following the end of the Company’s  fiscal year. In the first year
of  this Agreement, Executive’s bonus shall  be calculated by adjusting the Bonus
Base  upward or downward, as appropriate, by  an amount equal to 10% of the difference
between  the Company’s current and prior year EBITDA, based on net after
deducting  Executive’s bonus  payment. In each successive year during the term of
this  Agreement,  Executive’s eligibility for the Bonus Opportunity shall depend
upon  achievement of the EBITDA target to be established by the Board after consulting
with  Executive. In addition, beginning on September 1, 2005 and through the term  of
this  Agreement, Executive shall receive a bonus of $50,000 for each new store  opened,
payable  promptly upon the store’s opening unless otherwise mutually  agreed by
Executive and  the Board. 



     4.3
Car Allowance.  Executive shall receive a monthly car allowance of $600 for the
term of the  Agreement. 



     4.4
Vacation.  Executive shall be eligible for five weeks paid vacation, annually
during the  term of the Agreement. 



	5. 	 Confidential
Information. Non solicitation and Noncompetition.







     Executive
has executed the Confidentiality, Nonsolicitation and Noncompetltion Agreement and
reaffirms his agreement to  comply with the terms of such Agreement.



	6. 	 Termination
and Severance.







     6.1
Either party may terminate the employment relationship and this Agreement at any time and
for any reason, provided that the  party electing to terminate the employment
relationship and this Agreement shall give at least 30 days written notice to the other
party.



     6.2
Except as specifically  provided for in this Agreement, Executive shall not be eligible
for severance  pay or benefits under any other policy, program, plan, or practice of the
Company. 



     6.3
If Executive’s  employment is terminated by the Company prior to the end of the term
of this  Agreement other than for cause, as hereinafter defined, or pursuant to  Sections 6.6
(disability) or 7 (Change of Control) below, Executive  shall receive as severance
pay an amount equal to 12 months of Executive’s  base salary at the time of
termination. As an additional severance benefit, the  Company will pay up to 12 months of
COBRA premiums or until Executive becomes  eligible for comparable group health coverage
or Medicare, whichever is earlier.  Severance benefits shall not include payment in
connection with an award of any  stock option or grant, the eligibility for which will be
governed solely by the  terms of the Stock Plan. 









     6.4
If Executive’s  employment is terminated at the end of the term of this Agreement or
as a result  of Executive’s death or for cause by the Company or if Executive
terminates  his employment for any reason, Executive shall not be entitled to severance
pay  or benefits under this Agreement. 



     6.5
For purposes of this  Agreement, “cause” for termination includes, but is not
limited to,  the following types of conduct and circumstances: failure to perform
Executive’s duties under this Agreement; breach of the confidentiality,
nonsolicitation and noncompetition provisions of the Confidentiality,  Nonsolicitation
and Noncompetition Agreement signed by Executive; material  violation of any statutory or
common law duty of loyalty to the Company; conduct  or performance that, in the
reasonable judgment of the Company, adversely  affects the interests of the Company or
any of its Affiliates (as hereinafter  defined) or injures or tends to injure the
reputation of the Company or any of  its Affiliates; or conduct that, in the reasonable
judgment of the Company,  creates a conflict of interest or the appearance of a conflict
of interest  between Executive and the Company or any of its affiliated or related
entities.  If the basis for Executive’s termination for cause is capable of being
cured by Executive within 7 days, the Company will give Executive a 7-day period  to
cure. 



     6.6
The Company, in its  sole discretion, may elect to terminate this Agreement and Executive’s
employment in the event Executive is unable or unwilling to perform the  essential duties
and responsibilities of his position for a period of more than  a total of 180 days in
any one year period due to disability without any  obligation on the part of the Company
to provide severance pay or benefits to  Executive. 



     6.7
For purposes of this  paragraph 6, Executive’s employment shall not be
considered terminated  by the Company solely by reason of a change in Executive’s
position,  duties, responsibilities, compensation, benefits, or location of employment
provided Executive remains in a position deemed by the Company to be consistent  with his
area of expertise and at substantially the same compensation and  benefits as described
in paragraph 3 above. 



     6.8
Severance pay and  benefits under paragraph 6 are subject to applicable tax and
withholdings  and deductions. Severance pay and benefits shall be paid pro-rata on
regular  Company paydays. 



     6.9
In addition to the  foregoing conditions, eligibility for and, receipt of severance pay
and benefits  under paragraph 6 are subject to Executive executing and not revoking
a  Separation Agreement and Release of Claims in a form provided to Executive by  the
Company at the time of termination. 



     6.10
Severance pay and  benefits under paragraph 6 shall not be included as compensation
under any  retirement plan maintained by the Company or an Affiliate unless the
retirement  plan provides otherwise. 











     6.11
Notwithstanding the  foregoing, Executive shall not be eligible for severance pay and
benefits and  shall forfeit any outstanding severance pay and benefits under this
paragraph 6 if: 



          6.11.1
Executive is  terminated by the Company and is transferred to or offered employment by an
entity that directly or indirectly through one or more intermediaries, controls,  or is
controlled by, or is under common control with the Company  (“Affiliate”)
within 120 days after termination, unless Executive is  no longer in such employment on
the 120th day. 



          6.11.2
Executive fails to  execute any documents or satisfy conditions required by the Company
in order to  receive severance pay and benefits under this Agreement or fails to return
property of the Company or an Affiliate within the time period designated by the  Company
for acceptance of severance pay and benefits. 



          6.11.3
Executive fails to  execute or breaches any agreement required by the Company, including
but not  limited to cessation of severance pay and benefits in the event of rehire or
reemployment by the Company or an Affiliate or cessation and repayment of  severance pay
and benefits in the event of any material breach of any required  confidentiality,
nonsolicitation, nondisparagement, assistance to the Company or  assistance in defense of
litigation agreements or a provision of any Separation  Agreement and Release of Claims
signed by Executive. 



          6.11.4
Executive accepts  employment or enters into any business relationship with, or becomes,
or  acquires ownership of more than a five percent (5%) interest in, a competitor of  the
Company less than 12 months after termination with the Company. For these  purposes, the
term “competitor” means another warehouse club. 



          6.11.5
Executive is  eligible for severance pay and benefits under paragraph 7 of this
Agreement. 



	7. 	 Change
of Control.







     7.1
If, following a Change  of Control (as hereinafter defined), Executive’s employment
is terminated  by the Company other than for cause within 12 months following such Change
of  Control or if Executive resigns from employment following a material alteration  in
Executive’s position that has a detrimental impact on Executive (as  defined in
Section 7.3 below), Executive shall receive as severance pay an  amount equal to 12
months of Executive’s base compensation. As an  additional severance benefit, the
Company will pay up to 12 months of COBRA  premiums or until Executive becomes eligible
for comparable group health  coverage or Medicare, whichever is earlier. Severance
benefits shall not include  payment in connection with an award of any stock option or
grant, the  eligibility for which will be governed solely by the terms of the Stock Plan.
No  other severance pay or benefits shall be payable to Executive, including but not
limited to severance pay or benefits under paragraph 6 of this Agreement. 











     7.2
For the purposes of  this paragraph 7, a “Change in Control” shall occur
if any of the  following applies: 



          7.2.1
Any  “Person,” as such term is used in Sections 13(d) and (14(d)  of
the Securities Exchange Act of 1934, as amended (the “Exchange  Act”)
(other than the Company, any trustee or other fiduciary holding  securities under an
employee benefit plan of the Company, or any company owned,  directly or indirectly, by
the shareholders of the Company in substantially the  same proportions as their ownership
of stock of the Company), 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 more  than 50 percent of the combined voting power of the Company’s
then  outstanding securities; 



          7.2.2
The shareholders of  the Company approve a merger or other consolidation of the Company
with any  other company, other than (1) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto  continuing
to represent (either by remaining outstanding or by being converted  into voting
securities of the surviving entity) more than 50 percent of the  combined voting power of
the voting securities of the Company or such surviving  entity outstanding immediately
after such merger or consolidation or (2) a  merger or consolidation effected to
implement a recapitalization of the Company  (or similar transaction) in which no Person
acquires more than 50 percent of the  combined voting power of the Company’s then
outstanding securities; 



          7.2.3
A tender or exchange  offer is made for the common stock of the Company (or securities
convertible  into common stock of the Company) and such offer results in a portion of
those  securities being purchased and the offeror, after the consummation of the offer,
is the beneficial owner (as determined pursuant to Section 13(d) of the  Exchange
Act), directly or indirectly, of securities representing more than 50  percent of the
voting power of outstanding securities of the Company; or 



          7.2.4
The Company sells all  or substantially all its operating assets to a buyer that is not
an Affiliate of  the Company. 



     7.3
For the purposes of this paragraph 7, there is a material alteration in the employee's
position that has a detrimental  impact on the employee if:



          7.3.1
Executive's principal work location is moved more than 50 miles;



          7.3.2
Executive’s  salary is reduced by at least 15 percent of Executive’s base
salary and the  reduction is not the result of a general reduction in compensation for
reasons  unrelated to Executive’s assignment; or 



          7.3.3
There is a material  reduction in the scope of Executive’s responsibilities or
authority. 











     7.4
Severance pay and  benefits under paragraph 7 are subject to tax and other applicable
withholdings  and deductions. Severance pay and benefits shall be paid pro-rata on
regular  Company paydays. 



     7.5
In addition to the  foregoing conditions, eligibility for and receipt of severance pay
and benefits  under paragraph 7 are subject to Executive executing and not revoking
a  Separation Agreement and Release of Claims in a form provided to Executive by  the
Company at the time of termination. 



     7.6
Severance pay and  benefits under paragraph 7 shall not be included as compensation
under any  retirement plan maintained by the Company or an Affiliate unless the
retirement  plan provides otherwise. 



     7.7
Notwithstanding the  foregoing, Executive shall not be eligible for severance pay and
benefits and  shall forfeit any outstanding severance pay and benefits under this
paragraph 7  if: 



          7.7.1
Executive receives an  offer of severance benefits under any severance plan or program
maintained by  the Company or an Affiliate or enters into any individual severance
agreement  with the Company or an Affiliate that supersedes this Agreement; or Executive
is  terminated pursuant to paragraph 6 of this Agreement; or Executive  voluntarily
resigns from employment for any reason that does not constitute a  material alteration in
Executive’s position that has a detrimental impact  on Executive (as defined above). 



          7.7.2
Executive fails to  execute any documents or satisfy conditions required by the Company
in order to  receive severance pay and benefits under this Agreement or fails to return
property of the Company or an Affiliate within the time period designated by the  Company
for acceptance of severance pay and benefits. 



          7.7.3
Executive fails to  execute or breaches any agreement required by the Company, including,
but not  limited to, cessation of severance .pay and benefits in the event of rehire or
reemployment by the Company or an Affiliate, or cessation and repayment of  severance pay
and benefits in the event of any material breach of any required  confidentiality,
nonsolicitation, noncompetition, nondisparagement, assistance  to the Company or
assistance in defense of litigation agreements or a provision  of any Separation
Agreement and Release of Claims signed by Executive. 



          7.7.4
Executive becomes  employed by the Company or an Affiliate within 120 days after the
Change in  Control occurs, unless Executive is no longer in such employment on the  120th day. 



          7.7.5
Executive accepts  employment or enters into any business relationship with, or becomes,
or  acquires ownership of more than a five percent (5%) interest in, a competitor of  the
Company less than 12 months after termination with the Company. 










	8. 	 General
Provisions.







     8.1
Except as specifically  provided herein, Executive’s employment with the Company
shall be subject  to the same terms and conditions as applicable to other employees of
the  Company, including but not limited to the right of either party to terminate the
employment relationship at any time and for any reason upon prior notice as  provided in
Section 6.1. 



     8.2
This Agreement shall be  construed in accordance with and governed by the laws of the
State of  Washington. 



     8.3
Executive agrees that  any dispute (1) concerning the interpretation or construction
of this  Agreement, (2) relating to any compensation or benefits Executive may
claim, or (3) relating in any way to any claim by Executive for  reinstatement or
reemployment by the Company after execution of this Agreement  shall first be submitted
to confidential mediation before a mediator selected by  the parties. Should any dispute
not be resolved through mediation, it shall be  submitted and settled exclusively by
confidential binding arbitration before a  single arbitrator in accordance with the
Commercial Arbitration Rules of the  American Arbitration Association or such comparable
rules as may be agreed upon  by the parties. The parties shall be responsible for their
own costs and legal  fees in any mediation or arbitration proceeding. Both parties agree
that the  procedures outlined in this paragraph are the exclusive methods of dispute
resolution. 



     8.4
This Agreement and the  Confidentiality, Nonsolicitation and Noncompetition Agreement
dated August 24, 1999 contain the entire agreement between Executive and the Company
concerning  the subject matters discussed herein. Any modification of this Agreement
shall  be effective only if in writing and signed by each party or its duly authorized
representative. This Agreement supersedes all prior employment agreements  between the
parties. The terms of this Agreement are contractual and not mere  recitals. If, for any
reason, any provision of this Agreement shall be held  invalid in whole or in part, such
invalidity shall not affect the remainder of  this Agreement. 



     8.5
The waiver of any breach of this Agreement by one party shall not constitute waiver by
the non-breaching party of any other  breach of the Agreement.



     8.6
This Agreement is  subject to, and conditioned on, ratification of its terms by the Board
of  Directors of the Company. 











COST-U-LESS,
INC.


	By: /s/ George C. Textur







	 	 
	Its: Chairman of the Board 






	 	Date 10/20/04






	 
/s/ J. Jeffrey Meder

Executive Signature
	 	Date 10/20/04