**EXECUTIVE
      COMPENSATION AND BENEFITS AGREEMENT**




J.
      Jeffrey Meder (“Executive”)


3316
      81 st Pl.
      SE


Mercer
      Island, WA 98040




Cost-U-Less,
      Inc.(“Company”)


3633
      81st
      Pl SE




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 March 1, 2007 (the " Effective
      Date "),
      and
      shall continue through February 28, 2011, 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.  Compensation .




4.1  Salary .
      For the
      first year of this Agreement, Executive will be paid a salary of $385,000 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, 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 for reasons other than for cause, as hereinafter defined,
      or
      pursuant to Sections 6.6 (disability) or 7 (Change of Control) below;
      or if Executive resigns his employment for Good Reason (as defined in Section
      6.7), Executive shall receive as severance pay an amount equal to 24 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 after reasonable notice and opportunity
      to cure; 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 30 days, the Company will give
      Executive a 30 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, Good Reason exists if:




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




6.7.2  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




6.7.3  There
      is
      a material reduction in the scope of Executive's responsibilities or authority;
      or




6.7.4  Employer
      breaches any material term of this Agreement.




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 standard form
      utilized by the Company and 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 comparable
      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 120 th 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
      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.




6.11.4  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 for Good Reason
      (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. In addition
      to severance pay and COBRA premium payments,  the parties agree
      that (a) all options or other rights to acquire Common Stock or other
      equity securities of Employer then held by Employee shall immediately and
      automatically vest and become exercisable in full as to all such Common Stock
      and other equity securities subject thereto, notwithstanding any term or
      provision to the contrary in any plans, agreements or other documents evidencing
      the options and other rights or pursuant to which the options and other rights
      were granted, (b) all restrictions with respect to such Common Stock and
      other equity securities under any plans, agreements or other documents
      evidencing the options and other rights or pursuant to which the options and
      other rights were granted (other than restrictions on transfer under federal
      and
      applicable state securities laws), including but not limited to contractual
      restrictions on transfer, rights of repurchase or first refusal in favor of
      Employer and restrictions on certificates for such Common Stock and other equity







securities
      (other than restrictions on certificates designed to promote compliance with
      federal and applicable state securities laws) shall automatically terminate,
      and
      (c) such options and other rights shall remain exercisable for until a
      period of eighteen (18) months has elapsed following the Change of Control
      or until the respective dates provided for exercise of such options and other
      rights under any plans, agreements and other documents by which they are
      evidenced, whichever is later, notwithstanding any term or provision to the
      contrary in any plans, agreements or other documents evidencing the options
      and
      other rights or pursuant to which the options and other rights were
      granted.




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, Good Reason exists 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;
      or




7.3.4  Employer
      breaches any material term of this Agreement.




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
      120 th 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 the date hereof 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/ Bob C Donegan
              Its:
                Director,Chair
                Compensation Committee
            Date3-26-07/s/
                J. Jeffrey Meder
              Executive
                Signature
            Date3-26-07