Document:

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                                                                    Exhibit 10.6

                        [LETTERHEAD OF BANK OF AMERICA]

September 15, 2000

Martin Moore
VP and Chief Financial Officer
Cost-U-Less, Inc.
8160 604th Ave. S.E.
Preston, WA 98050

Re:   Business Loan Agreement dated September 15, 2000.

Dear Martin,

Reference is made to the Business Loan Agreement dated September 15, 2000
between Cost-U-Less, Inc. ("Borrower") and Bank of America, N.A. ("Bank"). This
letter is intended to clarify the following:

o     Borrower may acquire property subject to purchase money liens or purchase
      money security interests in the ordinary course of business.

o     Borrower may not sell, transfer or grant a security interest in assets
      having an aggregate net book value in excess of $500,000 without the prior
      written consent of Bank.

o     From time to time, the Company may loan, invest in, or advance money or
      assets to (a) the Company's foreign subsidiaries, and (b) other persons in
      amounts not to exceed $100,000 in aggregate.

Bank of America, N.A.

/s/ John N. Austenson

John N. Austenson
Senior Vice President
<PAGE>

                            BUSINESS LOAN AGREEMENT

Borrower: Cost-U-Less, Inc.                 Lender:    BANK OF AMERICA, N.A.
          8160 304th Avenue SE                         STRATEGIES TEAM 2
          Preston, WA 98050                            C/O CLSC
                                                       800 FIFTH AVE (FAB-13)
                                                       SEATTLE, WA 98104

================================================================================

THIS BUSINESS LOAN AGREEMENT between Cost-U-Less, Inc. ("Borrower") and BANK OF
AMERICA, N.A. ("Lender") is made and executed on the following terms and
conditions. Borrower has received prior commercial loans from Lender or has
applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the "Loan"
and collectively as the "Loans." Borrower understands and agrees that: (a) In
granting, renewing, or extending any Loan, Lender is relying upon Borrower's
representations, warranties, and agreements, as set forth in this Agreement (b)
the granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender's sole judgment and discretion; and (c) all such Loans shall
be and shall remain subject to the following terms and conditions of this
Agreement.

TERM. This Agreement shall be effective as of September 15, 2000, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

      Agreement. The word "Agreement" means this Business Loan Agreement, as
      this Business Loan Agreement may be amended or modified from time to time,
      together with all exhibits and schedules attached to this Business Loan
      Agreement from time to time.

      Borrower. The word "Borrower" means Cost-U-Less, Inc.. The word "Borrower"
      also includes, as applicable, all subsidiaries and affiliates of Borrower
      as provided below in the paragraph titled "Subsidiaries and Affiliates."

      CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
      Compensation, and Liability Act of 1980, as amended.

      Collateral. The word Collateral means and includes without limitation all
      property and assets granted as collateral security for a Loan, whether
      real or personal property, whether granted directly or indirectly, whether
      granted now or in the future, and whether granted in the form of a
      security interest, mortgage, deed of trust, assignment, pledge, chattel
      mortgage, chattel trust, factor's lien, equipment trust, conditional sales
      trust receipt, lien, charge, lien or title retention contract, lease or
      consignment intended as a security device, or any other security or lien
      interest whatsoever, whether created by law, contract, or otherwise.

      ERISA. The word "ERISA" means the Employee Retirement income Security Act
      of 1974, as amended.

      Event of Default. The words "Event of Default" mean and include without
      limitation any of the Events of Default set forth below in the section
      titled "EVENTS OF DEFAULT."

      Grantor. The word "Grantor" means and includes without limitation each and
      all of the persons or entities granting a Security Interest in any
      Collateral for the Indebtedness, including without limitation all
      Borrowers granting such a Security Interest.

      Guarantor. The word "Guarantor" means and includes without limitation each
      and all of the guarantors, sureties, and accommodation parties in
      connection with any Indebtedness.

      Indebtedness. The word "Indebtedness" means and includes without
      limitation all Loans, together with all other obligations, debts and
      liabilities of Borrower to Lender, or any one or more of them, as well as
      all claims by Lender against Borrower, or any one or more of them; whether
      now or hereafter existing, voluntary or involuntary, due or not due,
      absolute or contingent, liquidated or unliquidated; whether Borrower may
      be liable individually or jointly with others; whether Borrower may be
      obligated as a guarantor, surety, or otherwise; whether recovery upon such
      Indebtedness may be or hereafter may become barred by any statute of
      limitations; and whether such Indebtedness may be or hereafter may become
      otherwise unenforceable.

      Lender. The word "Lender" means BANK OF AMERICA, NA, its successors and
      assigns.

      Loan. The word "Loan" or "Loans" means and includes without limitation any
      and all commercial loans and financial accommodations from Lender to
      Borrower, whether now or hereafter existing, and however evidenced,
      including without limitation those loans and financial accommodations
      described herein or described on any exhibit or schedule attached to this
      Agreement from time to time.

      Note. The word "Note" means and includes without limitation Borrower's
      promissory note or notes, if any, evidencing Borrower's Loan obligations
      in favor of Lender, as well as any substitute, replacement or refinancing
      note or notes therefor.

      Permitted Liens. The words "Permitted Liens" mean: (a) liens and security
      interests securing Indebtedness owed by Borrower to Lender, (b) liens for
      taxes, assessments, or similar charges either not yet due or being
      contested in good faith; (c) liens of materialmen, mechanics,
      warehousemen, or carriers, or other like liens arising in the ordinary
      course of business and securing obligations which are not yet delinquent
      (d) purchase money liens or purchase money security interests upon or in
      any property acquired or held by Borrower in the ordinary course of
      business to secure indebtedness outstanding on the date of this Agreement
      or permitted to be incurred under the paragraph of this Agreement titled
      "Indebtedness and Liens"; (e) liens and security interests which, as of
      the date of this Agreement, have been disclosed to and approved by the
      Lender in writing; and (f) those liens and security interests which in the
      aggregate constitute an immaterial and insignificant monetary amount with
      respect to the net value of Borrower's assets.

      Related Documents. The words "Related Documents" mean and include without
      limitation all promissory notes, credit agreements, loan agreements,
      environmental agreements, guaranties, security agreements, mortgages,
      deeds of trust, and all other instruments, agreements and documents,
      whether now or hereafter existing, executed in connection with the
      Indebtedness.

      Security Agreement. The words "Security Agreement" mean and include
      without limitation any agreements, promises, covenants, arrangements,
      understandings or other agreements, whether created by law, contract, or
      otherwise, evidencing, governing, representing, or creating a Security
      Interest.

      Security Interest. The words "Security Interest" mean and include without
      limitation any type of collateral security, whether in the form of a lien,
      charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
      chattel trust, factor's lien, equipment trust, conditional sale, trust
      receipt, lien or title retention contract, lease or consignment intended
      as a security device, or any other security or lien interest whatsoever,
      whether created by law, contract, or otherwise.
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                                                                          Page 2

                             BUSINESS LOAN AGREEMENT

                                   (Continued)

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      SARA. The word "SARA" means the Superfund Amendments and Reauthorization
      Act of 1986 as now or hereafter amended.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.

      Loan Documents. Borrower shall provide to Lender in form satisfactory to
      Lender the following documents for the Loan: (a) the Note, (b) Security
      Agreements granting to Lender security interests in the Collateral, (c)
      Financing Statements perfecting Lender's Security Interests; (d) evidence
      of insurance as required below; and (e) any other documents required under
      this Agreement or by Lender or its counsel.

      Borrower's Authorization. Borrower shall have provided in form and
      substance satisfactory to Lender properly certified resolutions, duly
      authorizing the execution and delivery of this Agreement, the Note and the
      Related Documents, and such other authorizations and other documents and
      instruments as Lender or its counsel, in their sole discretion, may
      require.

      Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
      charges, and other expenses which are then due and payable as specified in
      this Agreement or any Related Document.

      Representations and Warranties. The representations and warranties set
      forth in this Agreement, in the Related Documents, and in any document or
      certificate delivered to Lender under this Agreement are true and correct.

      No Event of Default. There shall not exist at the time of any advance a
      condition which would constitute an Event of Default under this Agreement.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:

      Organization. Borrower is a corporation which is duly organized, validly
      existing, and in good standing under the laws of the State of Washington
      and is validly existing and in good standing in all states in which
      Borrower is doing business. Borrower has the full power and authority to
      own its properties and to transact the businesses in which it is presently
      engaged or presently proposes to engage. Borrower also is duly qualified
      as a foreign corporation and is in good standing in all states in which
      the failure to so qualify would have a material adverse effect on its
      businesses or financial condition.

      Authorization. The execution, delivery, and performance of this Agreement
      and all Related Documents by Borrower, to the extent to be executed,
      delivered or performed by Borrower, have been duly authorized by all
      necessary action by Borrower do not require the consent or approval of any
      other person, regulatory authority or governmental body; and do not
      conflict with, result in a violation of, or constitute a default under (a)
      any provision of its articles of incorporation or organization, or bylaws,
      or any agreement or other instrument binding upon Borrower or (b) any law,
      governmental regulation, court decree, or order applicable to Borrower.

      Financial information. Each financial statement of Borrower supplied to
      Lender truly and completely disclosed Borrower's financial condition as of
      the date of the statement, and there has been no material adverse change
      in Borrower's financial condition subsequent to the date of the most
      recent financial statement supplied to Lender. Borrower has no material
      contingent obligations except as disclosed in such financial statements.

      Legal Effect. This Agreement constitutes, and any instrument or agreement
      required hereunder to be given by Borrower when delivered will constitute,
      legal, valid and binding obligations of Borrower enforceable against
      Borrower in accordance with their respective terms.

      Properties. Except as contemplated by this Agreement or as previously
      disclosed in Borrower's financial statements or in writing to Lender and
      as accepted by Lender, and except for property tax liens for taxes not
      presently due and payable, Borrower owns and has good title to all of
      Borrower's properties free and clear of all Security Interests, and has
      not executed any security documents or financing statements relating to
      such properties. All of Borrower's properties are titled in Borrower's
      legal name, and Borrower has not used, or filed a financing statement
      under, any other name for at least the last five (5) years.

      Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
      "disposal," "release," and "threatened release," as used in this
      Agreement, shall have the same meanings as set forth in the "CERCLA,"
      "SARA," the Hazardous Materials Transportation Act, 49 U.S.C. Section
      1801. et seq., the Resource Conservation and Recovery Act. 42 U.S.C.
      Section 6901, et seq., or other applicable state or Federal laws, rules,
      or regulations adopted pursuant to any of the foregoing. Except as
      disclosed to and acknowledged by Lender in writing, Borrower represents
      and warrants that (a) During the period of Borrower's ownership of the
      properties, there has been no use, generation, manufacture, storage,
      treatment, disposal, release or threatened release of any hazardous waste
      or substance by any person on, under, about or from any of the properties.
      (b) Borrower has no knowledge of, or reason to believe that there has been
      (i) any use, generation, manufacture, storage, treatment, disposal,
      release, or threatened release of any hazardous waste or substance on,
      under, about or from the properties by any prior owners or occupants of
      any of the properties, or (ii) any actual or threatened litigation or
      claims of any kind by any person relating to such matters. (c) Neither
      Borrower nor any tenant, contractor, agent or other authorized user of any
      of the properties shall use, generate, manufacture, store, treat, dispose
      of, or release any hazardous waste or substance on, under, about or from
      any of the properties; and any such activity shall be conducted in
      compliance with all applicable federal, state, and local laws,
      regulations, and ordinances, including without limitation those laws,
      regulations and ordinances described above. Borrower authorizes Lender and
      its agents to enter upon the properties to make such inspections and
      tests as Lender may deem appropriate to determine compliance of the
      properties with this section of the Agreement. Any inspections or tests
      made by Lender shall be at Borrower's expense and for Lender's purposes
      only and shall not be construed to create any responsibility or liability
      on the part of Lender to Borrower or to any other person. The
      representations and warranties contained herein are based on Borrower's
      due diligence in investigating the properties for hazardous waste and
      hazardous substances. Borrower hereby (a) releases and waives any future
      claims against Lender for indemnity or contribution in the event Borrower
      becomes liable for cleanup or other costs under any such laws, and (b)
      agrees to indemnify and hold harmless Lender against any and all claims,
      losses, liabilities, damages, penalties, and expenses which Lender may
      directly or indirectly sustain or suffer resulting from a breach of this
      section of the Agreement or as a consequence of any use, generation,
      manufacture, storage, disposal, release or threatened release of a
      hazardous waste or substance on the properties. The provisions of this
      section of the Agreement, including the obligation to Indemnify, shall
      survive the payment of the Indebtedness and the termination or expiration
      of this Agreement and shall not be affected by Lender's acquisition of any
      Interest in any of the properties, whether by foreclosure or otherwise.

      Litigation and Claims. No litigation, claim, investigation, administrative
      proceeding or similar action (including those for unpaid taxes) against
      Borrower is pending or threatened, and no other event has occurred which
      may materially adversely affect Borrower's financial condition or
      properties, other than litigation, claims, or other events, if any, that
      have been disclosed to and acknowledged by Lender in writing.

      Taxes. To the best of Borrower's knowledge, all tax returns and reports of
      Borrower that are or were required to be filed, have been filed, and all
      taxes, assessments and other governmental charges have been paid in full,
      except those presently being or to be contested by Borrower in good faith
      in the ordinary course of business and for which adequate reserves have
      been provided.

      Lien Priority. Unless otherwise previously disclosed to Lender in writing,
      Borrower has not entered Into or granted any Security Agreements, or
      permitted the fling or attachment of any Security Interests on or
      affecting any of the Collateral directly or indirectly securing repayment
      of Borrower's Loan and Note, that would be prior or that may in any way be
      superior to Lender's Security Interests and rights in and to such
      Collateral.
<PAGE>

                                                                          Page 3

                             BUSINESS LOAN AGREEMENT

                                   (Continued)

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      Binding Effect. This Agreement, the Note, all Security Agreements directly
      or indirectly securing repayment of Borrower's Loan and Note and all of
      the Related Documents are binding upon Borrower as well as upon Borrower's
      successors, representatives and assigns, and are legally enforceable in
      accordance with their respective terms.

      Commercial Purposes. Borrower intends to use the Loan proceeds solely for
      business or commercial related purposes.

      Employee Benefit Plans. Each employee benefit plan as to which Borrower
      may have any liability complies in all material respects with all
      applicable requirements of law and regulations, and (i) no Reportable
      Event nor Prohibited Transaction (as defined in ERISA) has occurred with
      respect to any such plan, (ii) Borrower has not withdrawn from any such
      plan or initiated steps to do so, (iii) no steps have been taken to
      terminate any such plan, and (iv) there are no unfunded liabilities other
      than those previously disclosed to Lender in writing.

      Location of Borrower's Offices and Records. Borrower's place of business,
      or Borrower's Chief executive office, if Borrower has more than one place
      of business, is located at 8160 304th Avenue SE, Preston, WA 98050. Unless
      Borrower has designated otherwise in writing this location is also the
      office or offices where Borrower keeps its records concerning the
      Collateral.

      Information. All Information heretofore or contemporaneously herewith
      furnished by Borrower to Lender for the purposes of or in connection with
      this Agreement or any transaction contemplated hereby is, and all
      information hereafter furnished by or on behalf of Borrower to Lender will
      be, true and accurate in every material respect on the date as of which
      such information is dated or certified; and none of such information is or
      will be incomplete by omitting to state any material fact necessary to
      make such information not misleading.

      Survival of Representations and Warranties. Borrower understands and
      agrees that Lender, without independent investigation, is relying upon the
      above representations and warranties in extending Loan Advances to
      Borrower. Borrower further agrees that the foregoing representations and
      warranties shall be continuing in nature and shall remain in full force
      and effect until such time as Borrower's Indebtedness shall be paid in
      full, or until this Agreement shall be terminated in the manner provided
      above, whichever is the last to occur.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect. Borrower will:

      Litigation. Promptly inform Lender in writing of (a) all material adverse
      changes in Borrower's financial condition, and (b) all existing and all
      threatened litigation, claims, investigations, administrative proceedings
      or similar actions affecting Borrower or any Guarantor which could
      materially affect the financial condition of Borrower or the financial
      condition of any Guarantor.

      Financial Records. Maintain its books and records in accordance with
      generally accepted accounting principles, applied on a consistent basis,
      and permit Lender to examine and audit Borrower's books and records at all
      reasonable times.

      Additional Information. Furnish such additional information and
      statements, lists of assets and liabilities, agings of receivables and
      payables, inventory schedules, budgets, forecasts, tax returns, and other
      reports with respect to Borrower's financial condition and business
      operations as Lender may request from time to time.

      Insurance. Maintain fire and other risk insurance, public liability
      insurance, and such other insurance as Lender may require with respect to
      Borrower's properties and operations, in form, amounts, coverages and with
      insurance companies reasonably acceptable to Lender. Borrower, upon
      request of Lender, will deliver to Lender from time to time the policies
      or certificates of insurance in form satisfactory to Lender, including
      stipulations that coverages will not be cancelled or diminished without at
      least forty five (45) days' prior written notice to Lender. Each insurance
      policy also shall include an endorsement providing that coverage in favor
      of Lender will not be impaired in any way by any act, omission or default
      of Borrower or any other person. In connection with all policies covering
      assets in which Lender holds or is offered a security interest for the
      Loans, Borrower will provide Lender with such loss payable or other
      endorsements as Lender may require.

      Insurance Reports. Furnish to Lender, upon request of Lender, reports on
      each existing insurance policy showing such information as Lender may
      reasonably request, including without limitation the following: (a) the
      name of the insurer, (b) the risks insured; (c) the amount of the policy;
      (d) the properties insured; (e) the then current property values on the
      basis of which insurance has been obtained, and the manner of determining
      those values; and (f) the expiration date of the policy. In addition, upon
      request of Lender (however not more often than annually), Borrower will
      have an independent appraiser satisfactory to Lender determine, as
      applicable, the actual cash value or replacement cost of any Collateral.
      The cost of such appraisal shall be paid by Borrower.

      Other Agreements. Comply with all terms and conditions of all other
      agreements, whether now or hereafter existing, between Borrower and any
      other party and notify Lender immediately in writing of any default in
      connection with any other such agreements.

      Loan Proceeds. Use all Loan proceeds solely for Borrower's business
      operations, unless specifically consented to the contrary by Lender in
      writing.

      Taxes, Charges and Liens. Pay and discharge when due all of its
      indebtedness and obligations, including without limitation all
      assessments, taxes, governmental charges, levies and liens, of every kind
      and nature, imposed upon Borrower or its properties, income, or profits,
      prior to the date on which penalties would attach, and all lawful claims
      that, if unpaid, might become a lien or charge upon any of Borrower's
      properties, income, or profits. Provided however, Borrower will not be
      required to pay and discharge any such assessment, tax, charge, levy, lien
      or claim so long as (a) the legality of the same shall be contested in
      good faith by appropriate proceedings, and (b) Borrower shall have
      established on its books adequate reserves with respect to such contested
      assessment, tax charge, levy, lien, or claim in accordance with generally
      accepted accounting practices. Borrower, upon demand of Lender, will
      furnish to Lender evidence of payment of the assessments, taxes, charges,
      levies, liens and claims and will authorize the appropriate governmental
      official to deliver to Lender at any time a written statement of any
      assessments, taxes, charges, levies, liens and claims against Borrower's
      properties, income, or profits.

      Performance. Perform and comply with all terms, conditions, and provisions
      set forth in this Agreement and in the Related Documents in a timely
      manner, and promptly notify Lender if Borrower learns of the occurrence of
      any event which constitutes an Event of Default under this Agreement or
      under any of the Related Documents.

      Operations. Maintain executive and management personnel with substantially
      the same qualifications and experience as the present executive and
      management personnel; provide written notice to Lender of any change in
      executive and management personnel; conduct its business affairs in a
      reasonable and prudent manner and in compliance with all applicable
      federal, state and municipal laws, ordinances, rules and regulations
      respecting its properties, charters, businesses and operations, including
      without limitation, compliance with the Americans With Disabilities Act
      and with all minimum funding standards and other requirements of ERISA and
      other laws applicable to Borrower's employee benefit plans.

      Inspection. Permit employees or agents of Lender at any reasonable time to
      inspect any and all Collateral for the Loan or Loans and Borrower's other
      properties and to examine or audit Borrower's books, accounts, and records
      and to make copies and memoranda of Borrower's books, accounts, and
      records. If Borrower now or at any time hereafter maintains any records
      (including without limitation computer generated records and computer
      software programs for the generation of such records) in the possession of
      a third party, Borrower, upon request of Lender, shall notify such party
      to permit Lender free access to such records at all reasonable times and
      to provide Lender with copies of any records it may request, all at
      Borrower's expense.
<PAGE>

                                                                          Page 4

                             BUSINESS LOAN AGREEMENT

                                   (Continued)

================================================================================

      Compliance Certificate. Unless waived in writing by Lender, provide Lender
      at least annually and at the time of each disbursement of Loan proceeds
      with a certificate executed by Borrower's chief financial officer, or
      other officer or person acceptable to Lender, certifying that the
      representations and warranties set forth in this Agreement are true and
      correct as of the date of the certificate and further certifying that, as
      of the date of the certificate, no Event of Default exists under this
      Agreement

      Environmental Compliance and Reports. Borrower shall comply in all
      respects with all environmental protection federal, state and local laws,
      statutes, regulations and ordinances; not cause or permit to exist, as a
      result of an intentional or unintentional action or omission on its part
      or on the part of any third party, on property owned and/or occupied by
      Borrower, any environmental activity where damage may result to the
      environment, unless such environmental activity is pursuant to and in
      compliance with the conditions of a permit issued by the appropriate
      federal, state or local governmental authorities; shall furnish to Lender
      promptly and in any event within thirty (30) days after receipt thereof a
      copy of any notice, summons, lien, citation, directive, letter or other
      communication from any governmental agency or instrumentality concerning
      any intentional or unintentional action or omission on Borrower's part in
      connection with any environmental activity whether or not there is damage
      to the environment and/or other natural resources.

      Additional Assurances. Make, execute and deliver to Lender such promissory
      notes, mortgages, deeds of trust, security agreements, financing
      statements, instruments, documents and other agreements as Lender or its
      attorneys may reasonably request to evidence and secure the Loans and to
      perfect all Security interests.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

      Indebtedness and Liens. (a) Except for trade debt incurred in the normal
      course of business and indebtedness to Lender contemplated by this
      Agreement, create, incur or assume indebtedness for borrowed money,
      including capital leases, (b) except as allowed as a Permitted Lien, sell,
      transfer, mortgage, assign, pledge, lease, grant a security interest in,
      or encumber any of Borrower's assets, or (c) sell with recourse any of
      Borrower's accounts, except to Lender.

      Continuity of Operations. (a) Engage in any business activities
      substantially different than those in which Borrower is presently engaged,
      (b) cease operations, liquidate, merge, transfer, acquire or consolidate
      with any other entity, change ownership, change its name, dissolve or
      transfer or sell Collateral out of the ordinary course of business, (c)
      pay any dividends on Borrower's stock (other than dividends payable In Its
      stock), provided, however that notwithstanding the foregoing, but only so
      long as no Event of Default has occurred and is continuing or would result
      from the payment of dividends, if Borrower is a "Subchapter S Corporation"
      (as defined in the Internal Revenue Code of 1986, as amended), Borrower
      may pay cash dividends on its stock to its shareholders from time to time
      in amounts necessary to enable the shareholders to pay income taxes and
      make estimated income tax payments to satisfy their liabilities under
      federal and state law which arise solely from their status as Shareholders
      of a Subchapter S Corporation because of their ownership of shares of
      stock of Borrower, or (d) purchase or retire any of Borrower's outstanding
      shares or alter or amend Borrower's capital structure.

      Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money
      or assets, (b) purchase, create or acquire any interest in any other
      enterprise or entity, or (c) incur any obligation as surety or guarantor
      other than in the ordinary course of business.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender, (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender; or (e) Lender in good faith deems itself insecure, even
though no Event of Default shall have occurred.

STATUTE OF FRAUDS PROVISION. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.

EXHIBIT "A". By this reference, the attached Exhibit "A" is hereby fully
incorporated herein.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

      Default on Indebtedness. Failure of Borrower to rake any payment when due
      on the Loans.

      Other Defaults. Failure of Borrower or any Grantor to comply with or to
      perform when due any other term, obligation, covenant or condition
      contained in this Agreement or in any of the Related Documents, or failure
      of Borrower to comply with or to perform any other term, obligation,
      covenant or condition contained in any other agreement between Lender and
      Borrower.

      Default in Favor of Third Parties. Should Borrower or any Grantor default
      under any loan, extension of credit, security agreement, purchase or sales
      agreement, or any other agreement, in favor of any other creditor or
      person that may materially affect any of Borrower's property or
      Borrower's or any Grantor's ability to repay the Loans or perform their
      respective obligations under this Agreement or any of the Related
      documents.

      False Statements. Any warranty, representation or statement made or
      furnished to Lender by or on behalf of Borrower or any Grantor under this
      Agreement or the Related Documents is false or misleading in any material
      respect at the time made or furnished, or becomes false or misleading at
      any time thereafter.

      Defective Collateralization. This Agreement or any of the Related
      Documents ceases to be in full force and effect (including failure of any
      Security Agreement to create a valid and perfected Security Interest) at
      any time and for any reason.

      Insolvency. The dissolution or termination of Borrower's existence as a
      going business, the insolvency of Borrower, the appointment of a receiver
      for any part of Borrower's property, any assignment for the benefit of
      creditors, any type of creditor workout, or the commencement of any
      proceeding under any bankruptcy or insolvency laws by or against Borrower.

      Creditor or Forfeiture Proceeding. Commencement of foreclosure or
      forfeiture proceedings, whether by judicial proceeding, self-help,
      repossession or any other method, by any creditor of Borrower, any
      creditor of any Grantor against any collateral securing the indebtedness,
      or by any governmental agency. This includes a garnishment, attachment, or
      levy on or of any of Borrower's deposit accounts with Lender.

      Events Affecting Guarantor. Any of the preceding events occurs with
      respect to any Guarantor of any of the Indebtedness or any Guarantor dies
      or becomes incompetent, or revokes or disputes the validity of, or
      liability under, any Guaranty of the Indebtedness.

      Change In Ownership. Any change in ownership of twenty-five percent (25%)
      or more of the common stock of Borrower.

      Adverse Change. A material adverse change occurs in Borrower's financial
      condition, or Lender believes the prospect of payment or performance of
      the Indebtedness is impaired.
<PAGE>

                                                                          Page 5

                             BUSINESS LOAN AGREEMENT

                                   (Continued)

================================================================================

      Insecurity. Lender, in good faith, deems itself insecure.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
Loan Advances or disbursements), and, at Lender's option, all Indebtedness
immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described
in the "Insolvency" subsection above, such acceleration shall be automatic and
not optional. In addition, Lender shall have all the rights and remedies
provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lender's rights and
remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect Lender's right to
declare a default and to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

      Amendments. This Agreement, together with any Related Documents,
      constitutes the entire understanding and agreement of the parties as to
      the matters set forth in this Agreement. No alteration of or amendment to
      this Agreement shall be effective unless given in writing and signed by
      the party or parties sought to be charged or bound by the alteration or
      amendment.

      Applicable Law. This Agreement has been delivered to Lender and accepted
      by Lender in the State of Washington. If there Is a lawsuit, Borrower
      agrees upon Lender's request to submit to the jurisdiction of the courts
      situated in King County, the State of Washington. This Agreement shall be
      governed by and construed in accordance with the laws of the State of
      Washington.

      Caption Headings. Caption headings in this Agreement are for convenience
      purposes only and are not to be used to interpret or define the provisions
      of this Agreement.

      Consent to Loan Participation. Borrower agrees and consents to Lender's
      sale or transfer, whether now or later, of one or more participation
      interests in the Loans to one or more purchasers, whether related or
      unrelated to Lender. Lender may provide, without any limitation
      whatsoever, to any one or more purchasers, or potential purchasers, any
      information or knowledge Lender may have about Borrower or about any other
      matter relating to the Loan, and Borrower hereby waives any rights to
      privacy it may have with respect to such matters. Borrower additionally
      waives any and all notices of sale of participation interests, as well as
      all notices of any repurchase of such participation Interests. Borrower
      also agrees that the purchasers of any such participation interests will
      be considered as the absolute owners of such interests in the Loans and
      will have all the rights granted under the participation agreement or
      agreements governing the sale of such participation Interests. Borrower
      further waives all rights of offset or counterclaim that it may have now
      or later against Lender or against any purchaser of such a participation
      interest and unconditionally agrees that either Lender or such purchaser
      may enforce Borrower's obligation under the Loans irrespective of the
      failure or insolvency of any holder of any interest in the Loans. Borrower
      further agrees that the purchaser of any such participation interests may
      enforce its interests irrespective of any personal claims or defenses that
      Borrower may have against Lender.

      Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
      expenses, including without limitation attorneys' fees, incurred in
      connection with the preparation, execution, enforcement, modification and
      collection of this Agreement or in connection with the Loans made pursuant
      to this Agreement. Lender may pay someone else to help collect the Loans
      and to enforce this Agreement, and Borrower will pay that amount. This
      includes, subject to any limits under applicable law, Lender's attorneys'
      fees and Lender's legal expenses, whether or not there is a lawsuit,
      including attorneys' fees for bankruptcy proceedings (Including efforts to
      modify or vacate any automatic stay or injunction), appeals, and any
      anticipated post-judgment collection services. Borrower also will pay any
      court costs, in addition to all other sums provided by law.

      Notices. All notices required to be given under this Agreement shall be
      given in writing, may be sent by telefacsimile (unless otherwise required
      by law), and shall be effective when actually delivered or when deposited
      with a nationally recognized overnight courier or deposited in the United
      States mail, first class, postage prepaid, addressed to the party to whom
      the notice is to be given at the address shown above. Any party may change
      its address for notices under this Agreement by giving formal written
      notice to the other parties, specifying that the purpose of the notice is
      to change the party's address. To the extent permitted by applicable law,
      if there is more than one Borrower, notice to any Borrower will constitute
      notice to all Borrowers. For notice purposes, Borrower will keep Lender
      informed at all times of Borrower's current address(es). Borrower will
      give Lender prior written notice of any change of either Borrower's legal
      structure or of any change of Borrower's chief executive office, or If
      Borrower has no place of business, Borrower's residence, and change of
      records location.

      Severability. If a court of competent jurisdiction finds any provision of
      this Agreement to be invalid or unenforceable as to any person or
      circumstance, such finding shall not render that provision invalid or
      unenforceable as to any other persons or circumstances. If feasible, any
      such offending provision shall be deemed to be modified to be within the
      limits of enforceability or validity however, if the offending provision
      cannot be so modified, it shall be stricken and all other provisions of
      this Agreement in all other respects shall remain valid and enforceable.

      Subsidiaries and Affiliates of Borrower. To the extent the context of any
      provisions of this Agreement makes it appropriate, including without
      limitation any representation, warranty or covenant, the word "Borrower"
      as used herein shall include all subsidiaries and affiliates of Borrower.
      Notwithstanding the foregoing however, under no circumstances shall this
      Agreement be construed to require Lender to make any Loan or other
      financial accommodation to any subsidiary or affiliate of Borrower.

      Successors and Assigns. Ad covenants and agreements contained by or on
      behalf of Borrower shall bind its successors and assigns and shall inure
      to the benefit of Lender, Its successors and assigns. Borrower shall not,
      however, have the right to assign its rights under this Agreement or any
      interest therein, without the prior written consent of Lender.

      Survival. All warranties, representations, and covenants made by Borrower
      in this Agreement or in any certificate or other instrument delivered by
      Borrower to Lender under this Agreement shall be considered to have been
      relied upon by Lender and will survive the making of the Loan and delivery
      to Lender of the Related Documents, regardless of any Investigation made
      by Lender or on Lender's behalf.

      Waiver. Lender shall not be deemed to have waived any rights under this
      Agreement unless such waiver is given in writing and signed by Lender. No
      delay or omission on the part of Lender in exercising any right shall
      operate as a waiver of such right or any other right. A waiver by Lender
      of a provision of this Agreement shall not prejudice or constitute a
      waiver of Lender's right otherwise to demand strict compliance with that
      provision or any other provision of this Agreement. No prior waiver by
      Lender, nor any course of dealing between Lender and Borrower, or between
      Lender and any Grantor, shall constitute a waiver of any of Lender's
      rights or of any obligations of Borrower or of any Grantor as to any
      future transactions. Whenever the consent of Lender is required under this
      Agreement, the granting of such consent by Lender in any instance shall
      not constitute continuing consent in subsequent instances where such
      consent is required, and in all cases such consent may be granted or
      withheld in the sole discretion of Lender.
<PAGE>

                                                                          Page 6

                            BUSINESS LOAN AGREEMENT

                                  (Continued)

================================================================================

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
SEPTEMBER 15, 2000.

BORROWER:

Cost-U-Less, Inc.

By: /s/ Jeffrey Meder
    ----------------------------------

LENDER:

BANK OF AMERICA, N.A.

By: /s/ John Austenson
    ----------------------------------
    Authorized Officer

================================================================================
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.27. (C) 2000 CFI ProServices, Inc.
All rights reserved. [WA-C40 E3.27 F3.27 P3.27 JW0822CU.LN.G2.OVL]
<PAGE>

EXHIBIT A TO BUSINESS LOAN AGREEMENT EXECUTED BY AND BETWEEN Cost-U-Less, Inc.
AND BANK OF AMERICA, N.A. AS OF September 15, 2000 ("AGREEMENT") This Exhibit A
is attached to and fully incorporated into the Agreement. Statements set forth
in this exhibit A supplement those set forth in the Agreement.

1.    FINANCIAL ACCOMMODATIONS. The Agreement applies to all commercial loans
      and other financial accommodations now or hereafter extended by Lender to
      Borrower, including but without limitation those described below in
      detail:

o     $8,000,000.00 Line of Credit. Subject to the terms of the Agreement,
      Lender agrees to make loans to Borrower under a revolving line of credit
      as follows:

      (a)   Advances: Direct advances shall be available under the revolving
            line of credit up to the Commitment Amount (as defined below) minus
            the aggregate outstanding principal amount of Letters of Credit
            outstanding under paragraph 1(b) below.

      (b)   With-in Line Letter of Credit Facility: Upon Borrower's execution of
            Lender's standard form Application and Agreement for Standby Letter
            of Credit or Commercial Letter of Credit (each an "L/C Agreement"),
            Lender shall issue on Borrower's behalf standby or commercial
            letters of credit ("Letters of Credit"), until August 1, 2001, in
            amounts not to exceed, in the aggregate, the lesser of (i) Two
            Million Dollars ($2,000,000.00) or (ii) the Commitment Amount minus
            the outstanding principal balance of all advances made under
            paragraph 1(a) above. Each Letter of Credit that is a commercial one
            shall have a maximum tenor of 180 days, and each Letter of Credit
            that is a standby one shall have a maximum tenor of 1 year, provided
            that in no event shall the final maturity of any standby letter of
            credit be later than February 1, 2002. Borrower shall be liable for
            reimbursement of all draws made under Letters of Credit and all fees
            relating to Letters of Credit. All draws shall be reimbursed to
            Lender immediately upon demand. Lender shall in addition have all
            rights provided in the L/C Agreement. Any default in an L/C
            Agreement shall be a default under this Agreement. Borrower shall
            pay to Lender issuance fees and transaction fees according to
            Lender's then-outstanding standard fee schedule on Letters of Credit
            and all drafts, transfers, extensions, and other transactions in
            regard to Letters of Credit, and reimburse Lender for all
            out-of-pocket costs, legal fees, and expenses.

      (c)   Commitment Amount: "Commitment Amount" shall mean $8,000,000.00.

      (d)   Purpose: Inventory Financing and Letter of Credit Issuance.

      (e)   Availability Period: Advances are available from the date of this
            Agreement through August 1, 2001. However, if loans are made and/or
            new promissory notes executed after the termination date, such
            advances will be subject to the terms of this Agreement until repaid
            in full unless a written statement signed by Lender and Borrower
            provides otherwise, or a replacement loan agreement is executed. The
            making of such additional advances alone, however, does not
            constitute a commitment by Lender to make any further advances or
            extend the availability period.

      (f)   Interest Rate: As set forth in a promissory note that documents this
            line of credit.

      (g)   Interest Rate Basis: As set forth in a promissory note that
            documents this line of credit.

      (h)   Repayment: As set forth in a promissory note that documents this
            line of credit.

      (i)   Loan Fee: Borrower shall pay a fee of 0.25% per annum on the unused
            portion of the commitment, payable quarterly in arrears, fully
            earned and non-refundable

      (j)   Collateral: This revolving line of credit shall be secured by a
            security interest, which is

                                      -1-
<PAGE>

            hereby granted, in favor of Lender in the following assets: all
            Inventory and Equipment of Borrower, whether now owned or hereafter
            acquired, and together with all products and proceeds of all of the
            foregoing. Also, collateral securing other financial accommodations
            with Lender may secure this revolving line of credit.

2.    ONGOING REPRESENTATIONS AND WARRANTIES. When Borrower signs the Agreement
      and until the Lender is repaid in full and all financial accommodations
      are cancelled, Borrower makes the following representations and warranties
      to Lender on the date of the Agreement and again at the time of each
      advance under the Agreement:

      2.1   Other Obligations. Borrower is not in default on any obligation for
            borrowed money, any purchase money obligation or any other material
            lease, commitment, contract, instrument or obligation.

      2.2   No Defaults. There is no event which is, or with notice or lapse of
            time or both would be, an Event of Default under the Agreement.

3.    ADDITIONAL CONDITIONS PRECEDENT TO EACH ADVANCE: Lender's obligation to
      make the initial advance under the Agreement as well as each subsequent
      advance under the Agreement shall be subject to the fulfillment to
      Lender's satisfaction of all the additional conditions set forth below:

      3.1   Delivery to Lender by Borrower of an executed Business Loan
            Agreement with Exhibit "A" and Promissory Note.

4.    ADDITIONAL COVENANTS. Borrower agrees, so long as credit is available
      under the Agreement and until the Lender is repaid in full and all
      financial accommodations are cancelled, to:

      4.1   Financial Information. To provide the following financial
            information and statements in form and content acceptable to Lender,
            and such additional information as requested by Lender from time to
            time:

            (a)   Within 90 days of Borrower's fiscal year end, Borrower's
                  annual financial statements. These financial statements must
                  be audited by a Certified Public Accountant acceptable to
                  Lender. The statements shall be prepared on a consolidated
                  basis.

            (b)   Within 45 days of the period's end, Borrower's quarterly
                  financial statements. These financial statements may be
                  Borrower prepared. The statements shall be prepared on a
                  consolidated basis.

            (c)   Within the period(s) provided in (a) and (b) above, a
                  compliance certificate of Borrower signed by an authorized
                  financial officer of Borrower setting forth (i) the
                  information and computations (in sufficient detail) to
                  establish that Borrower is in compliance with all financial
                  covenants at the end of the period covered by the financial
                  statements then being furnished and (ii) whether there existed
                  as of the date of such financial statements and whether there
                  exists as of the date of the certificate, any default under
                  this Agreement and, if any such default exists, specifying the
                  nature thereof and the action Borrower is taking and proposes
                  to take with respect thereto.

      4.2   Current Ratio. To maintain on a consolidated basis a ratio of
            current assets to current liabilities of at least the amounts
            indicated for each period specified below:

                                  Period                           Ratio
                                  ------                           -----

                                      -2-
<PAGE>

                                  September 30, 2000               0.9:1.0

                                  December 31, 2000                1.0:1.0
                                  March 31, 2001                   1.1:1.0
                                  June 30, 2001 forward            1.2:1.0

            "Current liabilities" shall include all obligations classified as
            current liabilities under generally accepted accounting principles.

      4.3   Tangible Net Worth. To maintain on a consolidated basis tangible net
            worth equal to at least Fourteen Million Dollars ($14,000,000.00),
            measured quarterly.

            "Tangible net worth" means the gross book value of Borrower's assets
            (excluding goodwill, patents, trademarks, trade names, organization
            expense, unmerited debt discount and expense, capitalized or
            deferred research and development costs, deferred marketing
            expenses, deferred receivables, and other like intangibles less
            total liabilities, including but not limited to accrued and deferred
            income taxes, and any reserves against assets.

      4.4   Total Liabilities to Tangible Net Worth. To maintain on a
            consolidated basis a ratio of total liabilities to tangible net
            worth not exceeding 2.0:1.0, measured quarterly.

            "Total liabilities" means the sum of current liabilities plus long
            term liabilities.

            "Tangible net worth" has the meaning set forth above.

      4.5   Notices to Lender. To promptly notify Lender in writing of any
            lawsuit or of any actual or potential contingent liabilities over
            Fifty Thousand Dollars ($50,000.00) against Borrower (or any
            guarantor.

      4.6   No Disposal of Assets Outside Ordinary Course of Business. Not to
            sell, assign, lease, transfer or otherwise dispose of any part of
            Borrower's business or Borrower's assets except in the ordinary
            course of Borrower's business.

      4.7   Not to Suspend Business. Not to, without Lender's written consent
            liquidate, dissolve, or voluntarily suspend its business for more
            than ___ days in any __, day period.

      4.8   Trusts. Not to transfer any of Borrower's assets to a trust unless
            the trust is acceptable to Lender in form and content, and the
            trustee guaranties payment of Borrower's obligations under this
            Agreement prior to any such transfer.

5.    DEFAULT. If any of the following events occurs, Lender may do one or more
      of the following: declare Borrower in default, stop making any additional
      credit available to Borrower, and require Borrower to repay its entire
      debt immediately and without prior notice.

      5.1   Judgments. Any judgments or arbitration awards are entered against
            Borrower (or any guarantor), or Borrower (or any guarantor) enters
            into any settlement agreements with respect to any litigation or
            arbitration, in an aggregate amount of Fifty Thousand Dollars
            ($50,000.00) or more in excess of any insurance coverage.

      5.2   Breach. If, in the Bank's opinion, the breach is capable of being
            remedied, the breach will not be considered an event of default
            under the Agreement for a period of fifteen (15) days as regards
            financial covenants and a period of thirty (30) days as regards a
            breach under any other agreement with Bank or its affiliates.

                                      -3-
<PAGE>

This Exhibit A to Agreement is executed as of the date stated on the Agreement.

BANK OF AMERICA, N.A.                         Cost-U-Less, Inc.

By /s/ John N. Austenson                      By /s/ Jeffrey Meder

Typed Name John N. Austenson                  Typed Name Jeffrey Mede
           ------------------------                      ---------------------
Title Senior Vice President                   Title Pres. & CEO
      -----------------------------                 --------------------------

                                      -4-<PAGE>

                                                                    EXHIBIT 10.7

                                                             DUE: August 1, 2001

                                PROMISSORY NOTE

                               Cost-U-Less. Inc.

$8,000,000.00                                          Dated: September 15, 2000
                                                             Seattle, Washington

      Cost-U-Less, Inc., a Washington corporation ("Maker") unconditionally
promises to pay to the order of BANK OF AMERICA, N.A. ("Bank"), at its
Strategies Team office, on or before August 1, 2001, in immediately available
funds, the principal sum of Eight Million and 00/100 Dollars ($8,000,000.00), or
such lesser sum as may be advanced hereunder. Maker further agrees to pay
interest on the daily unpaid principal balance, in arrears on the 1st day of
each month, beginning the 1st day of October, 2000, in accordance with the
terms, conditions, and definitions of Exhibit A attached, which are incorporated
herein. Also incorporated herein is Exhibit 1 attached hereto, regarding
prepayment fees.

      All advances under this Note, all conversions between the interest rate
options, and all payments of principal and interest may be reflected on a
schedule or a computer-generated statement which shall become a part hereof. All
unpaid principal and accrued but unpaid interest under this Note shall be paid
in full on August 1, 2001.

      Bank is authorized to automatically debit each required installment of
interest from Maker's checking account number 68338 813 at Bank, or such other
deposit account at Bank as Maker may authorize in the future.

      If all or any portion of the principal amount or any installment of
interest is not paid when due, interest shall accrue, at the option of the
holder of this Note, from the date of default at a floating rate per annum three
percent (3%) above the Prime Rate, as the Prime Rate may vary from time to time,
and the entire unpaid principal amount of this Note, together with all accrued
interest, shall become immediately due and payable at the option of the holder
hereof.

      Advances under this Note may be made by Bank at the oral or written
request of Renee Underwood, Martin Moore, Roy Sorenson any one acting alone, who
are authorized to request advances and direct the disposition of any such
advances until written notice of the revocation of such authority is received by
Bank at its office indicated above. Any such advance shall be conclusively
presumed to have been made to or for the benefit of Maker when made in
accordance with such requests and directions, or when said advances are
deposited to the credit of an account of Maker with Bank, regardless of the fact
that persons other than those authorized under this paragraph may have authority
to draw against such account.

      Maker hereby waives presentment, demand, protest, and notice of dishonor
hereof. Each party signing or endorsing this Note signs as maker and principal,
and not as guarantor, surety, or accommodation party; and is estopped from
asserting any defense based on any capacity other than maker or principal.

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

      ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.

                                                Cost-U-Less. Inc.

                                                By: /s/ Jeffrey Meder
                                                    ----------------------------
                                                Its: Pres. & CEO
                                                     ---------------------------

Page 1
<PAGE>

                                   EXHIBIT A
                              INTEREST PROVISIONS

                                   ARTICLE 1

                                  Definitions

      All terms defined below shall have the meaning indicated:

      1.1 Adjusted LIBOR Rate shall mean for any day that per annum rate equal
to the sum of (a) the applicable margin, (b) the Assessment Rate, and (c) the
quotient of (i) the LIBOR Rate as determined for such day, divided by (ii) the
Reserve Adjustment. The Adjusted LIBOR Rate shall change with any change in the
LIBOR Rate on the first day of each Interest Period and on the effective date of
any change in the Assessment Rate or Reserve Adjustment.

      1.2 Advances shall mean the disbursement of Loan proceeds under the Note.

      1.3 Applicable Margin shall be the following amounts per annum, based upon
the ratio of current assets to current liabilities (as defined in Exhibit A to
the Business Loan Agreement), as set forth in the most recent compliance
certificate received by the Bank as required in the Exhibit A; provided,
however, that, until the Bank receives the first compliance certificate, and
during any period when a compliance certificate has not been delivered to the
Bank as agreed, the applicable margin shall be the one indicated for pricing
Level 3 set forth below:

                 Pricing Level      Ratio              Applicable Margin
                 -------------      -----              -----------------
                    1               1.2:1 or higher               1.50%
                    2               1.0:1 to less than 1.2:1      1.75%
                    3               less than 1.0:1               2.00%

      1.4 Assessment Rate shall mean as of any day the minimum annual percentage
rate established by the Federal Deposit Insurance Corporation (or any successor)
for the assessment due from members of the Bank Insurance Fund (or any
successor) in effect for the assessment period during which said day occurs
based on deposits maintained at such members' offices located outside of the
United States. In the event of a retroactive reduction in the Assessment Rate
after a commencement of any Interest Period, Bank shall not retroactively adjust
as to such Interest Period any interest rate calculated using the Assessment
Rate.

      1.5 Available Amounts shall mean $8,000,000.00 less the outstanding
principal balance of the Note.

      1.6 Bank shall mean the holder of the Note.

      1.7 Borrower shall mean the maker of the Note.

      1.8 Business Day shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks in Seattle, Washington, are authorized or
required by law to close.

      1.9 Commencement Date shall mean the first day of any Interest Period as
requested by Borrower.

      1.10 Fixed Rate shall mean the Offshore Rate or Adjusted LIBOR Rate.

      1.11 Fixed Rate Loans shall mean Offshore Rate Loans and LIBOR Rate Loans.

      1.12 Grand Cayman Rate shall mean the interest rate (rounded upward to the
nearest 1/16th of one percent) at which Bank's Grand Cayman Branch, Grand
Cayman, British West Indies, would offer U.S. dollar deposits for the applicable
Interest Period to other major banks in the offshore dollar inter-bank markets.

      1.13 Interest Period shall mean the period commencing on the date of any
advance at or conversion to a Fixed Rate and ending on any date thereafter as
selected by Borrower, subject to the restrictions of Section 2.3. If any
Interest Period would end on a day which is not a Business Day, the Interest
Period shall be extended to the next succeeding Business Day.

      1.14 LIBOR Rate shall mean for any Interest Period the per annum rate,
calculated on the basis of actual number of days elapsed over a year of 360
days, for U.S. Dollar deposits for a period equal to the Interest Period
appearing on the display designated as "Page 3750" on the Telerate Service (or
such other page on that service or such other service designated by the British
Banker's Association for the display of that Association's Interest Settlement
Rates for U.S. Dollar deposits) as of 11:00 a.m., London time, on the day which
is two London Banking Days prior to the first day of the Interest Period. If
there is no period equal to the Interest Period on the display, the LIBOR Rate
shall be determined by straight-line interpolation to the

Page A-1
<PAGE>

nearest month (or week or day if expressed in weeks or days) corresponding to
the Interest Period between the two nearest neighboring periods on the display.

      1.15 LIBOR Rate Loans shall mean those portions of principal of the Note
accruing interest at the Adjusted LIBOR Rate.

      1.16 London Banking Day shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks in London, England, are authorized or
required by law to close.

      1.17 Note shall mean the promissory note to which this exhibit is
attached.

      1.18 Offshore Rate shall mean the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent (all
amounts in the calculation will be determined by Bank as of the Commencement
Date):

                (Grand Cayman Rate / Reserve Adjustment) + 1.50%

      1.19 Offshore Rate Loans shall mean those portions of principal of the
Note accruing interest at the Offshore Rate.

      1.20 Reserve Adjustment shall mean as of any day the remainder of one
minus that percentage (expressed as a decimal) which is the highest of any such
percentages established by the Board of Governors of the Federal Reserve System
(or any successor) for required reserves (including any emergency, marginal, or
supplemental reserve requirement) regardless of the aggregate amount of deposits
with said member bank and without benefit of any possible credit, proration,
executions, or offsets for time deposits established at offices of member banks
located outside of the united States or for eurocurrency liabilities, if any.

      1.21 Termination Date shall mean August 1, 2001, or such earlier date upon
which Bank makes demand for payment in full under the Note based on a default
under the Note.

                                   ARTICLE 2

                             Interest Rate Options

      2.1 Interest Rates and Payment Date. The Note shall bear interest from the
date of Advance on the unpaid principal balance outstanding from time to time at
the Fixed Rate as selected by Borrower and all accrued interest shall be payable
in arrears as provided in the Note.

      2.2 Procedure. Borrower may, before 9:30 a.m. on any Commencement Date,
request Bank to give an Offshore Rate or a Quoted Rate quote for a specified
loan amount and Interest Period. Borrower may, on any London Banking Day two
London Banking Days before a Commencement Date, request Bank to give an Adjusted
LIBOR Rate quote for a specified loan amount and Interest Period. Bank will then
quote to Borrower the available Fixed Rate. Borrower shall have two hours from
the time of the quote to elect a Fixed Rate by giving Bank irrevocable notice of
such election.

      2.3 Restrictions. Each Interest Period shall be one month or two months or
three months or six months or any other term acceptable to Bank in its sole
discretion. In no event shall an Interest Period extend beyond the Termination
Date. The minimum amount of a Fixed Rate Loan shall be $250,000.

      2.4 Prepayments. If Borrower prepays all or any portion of a Fixed Rate
Loan prior to the end of an Interest Period, there shall be due at the time of
any such prepayment the Prepayment Fee, determined in accordance with Form
51-6325 which is attached as Exhibit 1 to the Note.

      2.5 Inability to Participate in Market. If Bank in good faith cannot
participate in the Eurodollar market for legal or practical reasons, there shall
be no Fixed Rate option. Bank shall notify Borrower of and when it again becomes
legal or practical to participate in the Eurodollar market, at which time the
Fixed Rate option shall resume.

      2.6 Costs. Borrower shall reimburse Bank for all costs, taxes, and
expenses, and defend and hold Bank harmless for any liabilities, which Bank may
incur as a consequence of any changes in the cost of participating in, or in the
laws or regulations affecting, the Eurodollar market, including any additional
reserve requirements, except to the extent such costs are already calculated
into the Fixed Rate. This covenant shall survive the payment of the Note.

      2.7 Basis of Quotes. Borrower acknowledges that Bank may or may not in any
particular case actually match-fund a Fixed Rate Loan. FDIC assessments, and
Federal Reserve Board reserve requirements, if any are assessed, will be based
on Bank's best estimates of its marginal cost for each of these items. Whether

Page A-2
<PAGE>

such estimates in fact represent the actual cost to Bank for any particular
dollar or Eurodollar deposit or any Fixed Rate Loan will depend upon how Bank
actually chooses to fund the Fixed Rate Loan. By electing a Fixed Rate, Borrower
waives any right to object to Bank's means of calculating the Fixed Rate quote
accepted by Borrower.

                                   ARTICLE 3

                                    Advances

      3.1 Revolving Loan Facility. Bank shall until the earlier of demand or the
Termination Date make Advances to Borrower from time to time, to the extent of
the Available Amounts, with the aggregate principal amount at any one time
outstanding not to exceed $8,000,000.00. Borrower may borrow, prepay, and
reborrow the principal of the Note in whole or in part.

      3.2 Procedure for Advances. Borrower may borrow on any Business Day.
Borrower shall give Bank irrevocable notice (written or oral) specifying the
amount to be borrowed and the requested borrowing date. Bank must receive such
notice on or before 11:30 a.m., Seattle time, on the day borrowing is requested.
All Advances shall be discretionary to the extent notification by Borrower is
given subsequent to that time.

Page A-3
<PAGE>

                          Exhibit 1 -- PREPAYMENT FEES

      If the principal balance of this note is prepaid in whole or in part,
whether by voluntary prepayment, operation of law, acceleration or otherwise, a
prepayment fee, in addition to any interest earned, will be immediately payable
to the holder of this note.

      The amount of the prepayment fee depends on the following:

(1)   The amount by which interest reference rates as defined below have changed
      between the time the loan is prepaid and either a) the time the loan was
      made for fixed rate loans, or b) the time the interest rate last changed
      (repriced) for variable rate loans.

(2)   A prepayment fee factor (see "Prepayment Fee Factor Schedule" on reverse).

(3)   The amount of principal prepaid.

If the proceeds from a CD or time deposit pledged to secure the loan are used to
prepay the loan resulting in payment of an early withdrawal penalty for the CD,
a prepayment fee will not also be charged under the loan.

              Definition of Reference Rate for Variable Rate Loans

The "Reference Rate" used to represent interest rate levels for variable rate
loans shall be the index rate used to determine the rate on this loan having
maturities equivalent to the remaining period to interest rate change date
(repricing) of this loan rounded upward to the nearest month. The "Initial
Reference Rate" shall be the Reference Rate at the time of last repricing and a
new Initial Reference Rate shall be assigned at each subsequent repricing. The
"Final Reference Rate" shall be the Reference Rate at the time of prepayment.

               Definition of Reference Rate for Fixed Rate Loans

The "Reference Rate" used to represent interest rate levels on fixed rate loans
shall be the bond equivalent yield of the average U.S. Treasury rate having
maturities equivalent to the remaining period to maturity of this loan rounded
upward to the nearest month. The "Initial Reference Rate" shall be the Reference
Rate at the time the loan was made. The "Final Reference Rate" shall be the
Reference Rate at time of prepayment.

The Reference Rate shall be interpolated from the yields as displayed on Page
119 of the Dow Jones Telerate Service (or such other page or service as may
replace that page or service for the purpose of displaying rates comparable to
said U.S. Treasury rates) on the day the loan was made (Initial Reference Rate)
or the day of prepayment (Final Reference Rate).

An Initial Reference Rate of % has been assigned to this loan to represent
interest rate levels at origination.

                         CALCULATION OF PREPAYMENT FEE

If the Initial Reference Rate is less than or equal to the Final Reference Rate,
there is no prepayment fee.

If the Initial Reference Rate is greater than the Final Reference Rate, the
prepayment fee shall be equal to the difference between the Initial and Final
Reference Rates (expressed as a decimal), multiplied by the appropriate factor
from the Prepayment Fee Factor Schedule, multiplied by the principal amount of
the loan being prepaid.

Form 51-6325: Page 1 of 2
<PAGE>

                     Example of Prepayment Fee Calculation

Variable Rate Loan: A non-amortizing 6-month LIBOR based loan with principal of
$250,000 is fully prepaid with 3 months remaining until next interest rate
change date (repricing). An Initial Reference Rate of 7.0% was assigned to the
loan at last repricing. The Final Reference Rate (as determined by the 3-month
LIBOR index) is 6.5%. Rates therefore have dropped 0.5% since last repricing and
a prepayment fee applies. A prepayment fee factor of 0.31 is determined from
Table 3 below and the prepayment fee is computed as follows:

         Prepayment Fee = (0.07--O.065) x (0.31) x ($250,000) = $387.50

Fixed Rate Loan: An amortizing loan with remaining principal of $250,000 is
fully prepaid with 24 months remaining until maturity. An Initial Reference Rate
of 9.0% was assigned to the loan when the loan was made. The Final Reference
Rate (as determined by the current 24-month U.S. Treasury rate on Page 119 of
Telerate) is 7.5%. Rates therefore have dropped 1.5% since the loan was made
and a prepayment fee applies. A prepayment fee factor of 1.3 is determined from
Table 1 below and the prepayment fee is computed as follows:

         Prepayment Fee = (0.09 -- 0.075) x (1.3) x ($250,000) = $4,875

                         PREPAYMENT FEE FACTOR SCHEDULE

                        TABLE I: FULLY AMORTIZING LOANS

<TABLE>
<CAPTION>
Proportion of Remaining
Principal Amount Being Prepaid               Months Remaining To Maturity/Repricing(1)
------------------------------------------------------------------------------------------------------------------------------
               0        3        6        9       12       24       36       48       60       84       120      240      360
------------------------------------------------------------------------------------------------------------------------------
<S>            <C>      <C>      <C>      <C>     <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
90-100%        0        .21      .36      .52     .67      1.3      1.9      2.5      3.1      4.3      5.9      10.3     13.1
60-89%         0        .24      .44      .63     .83      1.6      2.4      3.1      3.9      5.4      7.5      13.2     17.0
30-59%         0        .28      .53      .78     1.02     2.0      3.0      4.0      5.0      7.0      9.9      18.5     24,4
0-29%          0        .31      .63      .92     1.22     2.4      3.7      5.0      6.3      9.0      13.4     28.3     41.8

<CAPTION>
                                           TABLE II: PARTIALLY AMORTIZING (BALLOON) LOANS

Proportion of Remaining Principal
Amount Being Prepaid                              Months Remaining To Maturity/Repricing(1)
------------------------------------------------------------------------------------------------------------------------------
               0        3       6        9        12       24       36       48       60       84      120      240      360
------------------------------------------------------------------------------------------------------------------------------
<S>            <C>      <C>      <C>      <C>     <C>      <C>      <C>      <C>      <C>     <C>      <C>      <C>      <C>
  90-100%      0        .26    .49       .71      .94      1.8      2.7      3.4      4.2      5.6     7.4      11.6     14.0
  60-89%       0        .30    .59       .86      1.15     2.2      3.3      4.3      5.3      7.1     9.4      15.0     18.1
  30-59%       0        .31    .63       .95      1.27     2.6      3.9      5.3      6.6      9.1     12.6     21.2     26.2
   0-29%       0        .31    .63       .95      1.27     2.6      4.0      5.4      7.0      10.2    15.7     33.4     46.0

<CAPTION>
                                           TABLE III: NONAMORTIZING (INTEREST ONLY) LOANS

Proportion of Remaining Principal
Amount Being Prepaid                              Months Remaining To Maturity/Repricing(1)
------------------------------------------------------------------------------------------------------------------------------
<S>            <C>      <C>      <C>      <C>     <C>      <C>      <C>      <C>      <C>     <C>      <C>      <C>      <C>
               0        3        6        9       12       24       36       48       60      84       120      240      360
------------------------------------------------------------------------------------------------------------------------------
   0-100%      0        .31      .61      .91     1.21     2.3      3.4      4.4      5.3     6.9      8.9      13.0     14.8
</TABLE>

(1) For the remaining period to maturity/repricing between any two
maturities/repricings shown in the above schedules, interpolate between the
corresponding factors to the closest month.

The holder of this note is not required to actually reinvest the prepaid
principal in any U.S. Government Treasury Obligations, or otherwise prove its
actual loss, as a condition to receiving a prepayment fee as calculated above.

Form 51-6325: Page 2 of 2

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