COST-U-LESS, INC.
                            EXECUTIVE SEVERANCE PLAN

     Cost-U-Less, Inc., a Washington corporation (the "Company") has adopted
this Executive Severance Plan (the "Plan"), effective as of April 17, 2003, for
the benefit of certain key employees of the Company.

     The Company considers it essential to the best interests of its
shareholders to take reasonable steps to retain its key management personnel.
Further, the Board of Directors of the Company (the "Board") recognizes that the
uncertainty and questions which might arise among management in the context of a
Change of Control of the Company could result in the departure or distraction of
management personnel to the detriment of the Company and its shareholders.

     The Board has determined, therefore, that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of its members
of management of the Company to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from any possible Change of
Control of the Company.

     The Company hereby adopts this Executive Severance Plan for the benefit of
its employees who are eligible as provided in the Plan.

Section 1. Definitions.

          1.1 "Accounting Firm" shall mean Deloitte & Touche, LLP or, if such
firm is unable or unwilling to perform the calculations required under this
Plan, such other national accounting firm as shall be designated by agreement
between the Participant to whom Section 4.1 applies and the Company.

          1.2 "Base Salary" means the Participant's annual base salary as in
effect during the last regularly scheduled payroll period immediately preceding
such Participant's Termination Date. Base Salary does not include any bonuses,
commissions, fringe benefits, overtime, car allowances, other irregular payments
or any other compensation except base salary.

          1.3 "Cause" shall mean any of the following:

               (a) The Employee's theft, dishonesty, misconduct or intentional
falsification of any employment or Company records;

               (b) The Employee's intentional and improper disclosure or use of
the Company's confidential or proprietary information;

               (c) Any action by the Employee that has a material detrimental
effect on the Company's reputation or business;

               (d) The Employee's failure or inability to perform any assigned
duty reasonably expected of a person holding the Employee's position after
written notice from the Board to the Employee of, and a reasonable opportunity
to cure, such failure or inability; or



               (e) The Employee's conviction (including any plea of guilty or
nolo contendere) for any criminal act that impairs the Employee's ability to
perform his duties for the Company.

          1.4 "Change in Control" shall mean the occurrence of either of the
following events:

               (a) Any "person' (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the total combined voting power represented by the Company's then
outstanding voting securities; or

               (b) (A) a merger or consolidation of the Company with any other
corporation or other business entity, other than 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 or parent
thereof) more than fifty percent (50%) of the total combined voting power
represented by the voting securities of the Company or such surviving or parent
entity outstanding immediately after such merger or consolidation; or (B) the
complete liquidation of the Company; or (C) the sale or disposition by the
Company of all or substantially all the Company's assets.

          1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended,
and any successor provisions thereto.

          1.6 "Common Stock" shall mean the common stock of the Company.

          1.7 "Company" means Cost-U-Less, Inc., and, except in determining
under Section 1.4 hereof whether or not any Change of Control has occurred,
shall include any successor to its business and/or assets.

          1.8 "Disability" shall mean a Participant's (a) incapacity due to
physical or mental illness which causes such Participant's absence from the
full-time performance of his or her duties with the Company for six (6)
consecutive months and (b) such Participant's failure to return to full-time
performance of his or her duties for the Company within thirty (30) days after
written Notice of Termination due to Disability is given to a Participant. Any
question as to the existence of Disability upon which a Participant and the
Company cannot agree shall be determined by a qualified independent physician
selected by the Participant (or, if such Participant is not able to select a
physician, such selection shall be made by any adult member of the Participant's
immediate family), and approved by the Company. The determination of such
physician made in writing to the Company shall be final and conclusive for all
purposes of this Plan.

          1.9 "Effective Date" means April 17, 2003.

          1.10 "Equity Awards" shall mean options, restricted stock, bonus stock
or other grants or awards which consist of, or relate to, equity securities of
the Company and which have been granted to Participant's under the Equity Plans.
For purposes of this Plan, Equity Awards shall also include any securities
acquired upon the exercise of an option, warrant or similar right that
constitutes an Equity Award.

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          1.11 "Equity Plans" shall mean the Cost-U-Less, Inc. Amended and
Restated 1989 Stock Option Plan, the Cost-U-Less 1998 Stock Incentive
Compensation Plan and any other equity-based incentive plan or arrangement
adopted by the Company and any future equity-based incentive plan or arrangement
adopted by the Company, but shall not include any plan intended to be qualified
under Section 423 of the Code.

          1.12 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

          1.13 "Good Reason" shall mean a Participant's resignation of
employment as a result of any of the following:

               (a) Without the Employee's express written consent, the
assignment to the Employee of any significant duties or the significant
reduction of the Employee's duties, either of which is materially inconsistent
with the Employee's position with the Company and responsibilities in effect
immediately prior to such assignment, or the removal of the Employee from such
position and responsibilities, which is not effected for death, Disability or
for Cause;

               (b) Without the Employee's express written consent, any reduction
by the Company in an amount greater than 10% in the base salary and/or or
maximum incentive bonus (subject, however, to satisfaction of applicable goals
with respect to the actual amount of incentive bonus earned) as in effect
immediately prior to such reduction, other than a reduction applied generally to
executive officers of the Company;

               (c) Without the Employee's express written consent, any reduction
by the Company in the kind or level of employee benefits to which the Employee
is entitled immediately prior to such reduction, other than a reduction applied
generally to executive officers of the Company;

               (d) Without the Employee's express written consent, the
relocation of the Employee to a facility or a location more than 40 miles from
the Employee's then present location, without the Employee's express written
consent; or

               (e) The failure of the Company to obtain the assumption of the
terms of this Agreement by any successors contemplated in Section 8 below,
provided, however, that the Employee's resignation as a result of any of the
foregoing conditions shall be a voluntary resignation, and not an involuntary
termination, unless the Employee gives written notice of any such condition(s)
to the Board and allows the Company at least 10 days thereafter to correct such
condition(s).

          1.14 "Group I Participant" shall mean the Chief Executive Officer,
Chief Financial Officer and Chief Operating Officer of the Company.

          1.15 "Group II Participant" shall mean each senior management-level
employee of a Company who on the Change of Control Date, is classified as a Vice
President of the Company.

          1.16 "Involuntary Termination" shall mean (i) a Participant's
involuntary termination of employment with the Company other than for death,
Disability or Cause or (ii) a Participant's resignation of employment with the
Company for Good Reason.

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          1.17 "Participant" shall mean, each Group I Participant and each Group
II Participant.

          1.18 "Plan" means this Cost-U-Less, Inc. Executive Severance Plan.

          1.19 "Plan Administrator" means the Company or such committee as
appointed by the Board of Directors of the Company.

          1.20 "Plan Year" means the calendar year and the last day of such year
is December 31.

          1.21 "Severance Benefits" means those benefits provided to a
Participant under this Plan on account of a Change of Control, as determined in
accordance with Section 2 after the execution of a release of claims as required
by Section 3.

          1.22 "Termination Date" means the date of a Participant's termination
of employment with the Company as determined in accordance with Section 3.6.

          1.23 "Year of Service" shall mean each period of twelve
(12)-consecutive months of employment with the Company during which a
Participant is in active status as a regularly-paid employee of the Company.

Section 2. Severance Benefits. In the event of a Participant's Involuntary
Termination in connection with or within twelve (12) months following a Change
in Control (the "Term"), the terminated Participant shall be entitled to the
following:

          2.1 Payment of Wages and Accrued Vacation. The Company shall pay to
such terminated Participant within five (5) days of the date of such Involuntary
Termination the full amount of any earned but unpaid Base Salary through the
Termination Date at the rate in effect at the time of the Notice of Termination,
plus a cash payment (calculated on the basis of such Participant's Base Salary)
for all unused vacation time which such Participant may have accrued as of the
Termination Date.

          2.2 Severance Benefits. Subject to execution of a release of claims as
described in Section 3 below, the terminated Participant will receive severance
pay according to the following schedule:

               (a) if the Participant is a Group I Participant, the Participant
will receive a lump sum payment equal to twelve (12) months of the Participant's
Base Salary payable within thirty (30) days following the date such terminated
Participant executes the release described in Section 3 (or on the Termination
Date, if later).

               (b) if the Participant is a Group II Participant, the Participant
will receive a severance payment equal to one month of Base Salary for each Year
of Service, payable in one lump sum, up to a maximum of twelve (12) months and
not less than six (6) months.

               (c) This severance payment shall be in lieu of any other cash
severance payments which such terminated Participant is entitled to receive
under any other severance pay and/or retention plan or arrangement sponsored by
any Company.


                                       4


          2.3 Vesting and Exercise of Equity Awards. Subject to execution of a
release of claims as described in Section 3 below, and notwithstanding anything
to the contrary contained in an applicable Equity Award, all Equity Awards
granted to a terminated Participant under the Equity Plans (except performance
share unit awards, which shall continue to be governed by their current terms)
shall vest in full and become exercisable, upon the Participant's Involuntary
Termination during the Term. Notwithstanding anything in this Plan to the
contrary, in no event shall the vesting and exercisability provisions applicable
to a terminated Participant under the terms of an Equity Award be less favorable
to such Participant than the terms and provisions of such awards in effect on
the Change of Control Date.

          2.4 Benefits Continuation. Subject to execution of a release of claims
as described in Section 3 below, and subject to the terminated Participant
and/or his or her eligible dependents electing continued medical insurance
coverage in accordance with the applicable provisions of federal law (commonly
referred to as "COBRA"), the Company shall pay the terminated Participant's
COBRA premiums for a period of: (a) twelve (12) months, if the Participant is a
Group I Participant, or (b) for one month for each Year of Service, up to a
maximum of twelve (12) months and not less than six (6) months, if the
Participant is a Group II Participant. If the terminated Participant's medical
coverage immediately prior to the Termination Date included the terminated
Participant's dependents, the Company paid COBRA premiums shall include the
premiums necessary for such dependents as have elected COBRA coverage.
Notwithstanding the above, in the event the terminated Participant becomes
covered under another employer's group health plan during the period provided in
this Section 2.4, the Company shall cease payment of the COBRA premiums.

          2.5 Other Benefit Plans. A terminated Participant's participation and
rights in other benefit plans as may be provided by the Company at the time of
his/her Involuntary Termination shall be governed solely by the terms and
conditions of such plans, if any.

          2.6 No Mitigation or Offset. A terminated Participant shall not be
required to mitigate the amount of any payment provided for in this Plan by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Plan be reduced by any compensation earned by such
a terminated Participant as the result of employment by another employer or by
retirement benefits paid by the Company or another employer after the
Termination Date or otherwise.

          2.7 Withholding. Amounts paid to a Participant hereunder shall be
subject to all applicable federal, state and local withholding taxes.

          2.8 Waiver of Any Other Participating Company Retention/Severance
Agreement. A terminated Participant may elect, in his or her sole discretion, to
waive each and every prior retention and/or severance agreement entered into
between a Participating Company and such terminated Participant in order to
participate and receive the Severance Benefits provided under this Plan. Such
waiver shall be in writing in such form as may reasonably be specified by the
Company.

Section 3. Release of Claims. No Severance Benefits shall be paid to a
Participant under this Plan unless and until the Participant shall, in
consideration of the payment of such Severance Benefits, execute a release of
claims in a form satisfactory to the Company; provided, however, that such
release shall not apply to any right a Participant may have to be indemnified by
the Company.


                                       5


Section 4. Limitation on Payment of Benefits.

          4.1 Parachute Payments. In the event that it is determined by the
Accounting Firm that any amount payable to a Participant under this Plan, alone
or when aggregated with any other amount payable or benefit provided to such
Participant pursuant to any other plan or arrangement of the Company, would
constitute an "excess parachute payment" within the meaning of Section 280G of
the Code, then the aggregate present value of all such payments and benefits
shall be reduced to the amount, expressed as a present value, which, as
determined by the Accounting Firm, maximizes the aggregate present value of the
payments without causing any payment to be nondeductible by the Company under
Section 280G of the Code.

          4.2 Non-Duplication of Benefits. Notwithstanding any other provision
in the Plan to the contrary, the benefits provided hereunder shall be in lieu of
any other severance plan and/or retention agreement benefits provided by any
Company and the Severance Benefits and other benefits provided under this Plan
shall be reduced by any severance paid or provided to a Participant by a Company
under any other plan or arrangement.

          4.3 Indebtedness of Participant. If a Participant is indebted to the
Company at his or her Termination Date, the Company reserves the right to offset
any benefits under this Plan by the amount of such indebtedness.

Section 5. Plan Administration, Amendment and Termination.

          5.1 Plan Administration. As the Plan Administrator, the Company shall
have all powers necessary to enable it properly to carry out its duties with
respect to the complete control of the administration of the Plan. Not in
limitation, but in amplification of the foregoing, the Company shall have the
power and authority in its discretion to:

               (a) construe the Plan to determine all questions that shall arise
as to interpretations of the Plan's provisions, including determination of which
individuals are eligible for Severance Benefits, the amount of Severance
Benefits to which any employee may be entitled, the determination of which type
of Participant any individual is (i.e., Group I Participant or Group II
Participant) and all other matters pertaining to the Plan

               (b) Adopt amendments to the Plan document which are deemed
necessary or desirable bring these documents into compliance with all applicable
laws and regulations.

          5.2 Decisions of the Plan Administrator. Decisions of the Plan
Administrator shall be final, conclusive and binding upon all persons, including
Participants and their legal representatives.

          5.3 Plan Amendment. The Plan may be amended by the Company (i) for the
purposes specified in Section 5.1, (ii) to increase the amount and/or type of
Severance Benefits provided by the Plan, and (iii) to extend the Plan
termination date as provided in Section 5.4. Except as otherwise provided in
this Section 5.4 the Plan may not be amended prior to its termination.

          5.4 Plan Termination. This Plan shall terminate automatically five (5)
years from the Effective Date unless extended by the Company or unless a Change
of Control shall have

                                       6


occurred prior thereto, in which case the Plan shall terminate following the
later of the date which is at least twelve (12) months after the occurrence of a
Change of Control or the payment of all Severance Benefits due under the Plan.

Section 6. Claims for Benefits. Any person who believes he or she is entitled to
benefits under this Plan may submit a claim for benefits. The claim must be in
writing and should state the claimant's reasons for claiming these benefits. The
claims should be sent to the Plan Administrator. If the claim is denied, in
whole or in part, written notice of the denial will be provided within ninety
(90) days of initial receipt of the claim. Such notice will include an
explanation of the factors on which the denial is based and what, if any,
additional information is needed to support the claim. Further review of the
claim may be obtained by filing a written request for review. An individual
whose claim for benefits is denied may file a request for review with the Plan
Administrator within sixty (60) days. After receiving a request for review, the
Plan Administrator will render a final decision within sixty (60) days, unless
circumstances require an extension of an additional sixty (60) days for the
review. In this case, the Plan Administrator will notify the claimant in writing
of the need for an extension. The Plan Administrator's decision will be in
writing, setting forth the specific reasons for the decision, as well as
specific references to the Plan provisions upon which the decision is based.

Section 7. Miscellaneous.

          7.1 No Contract of Employment. Nothing in this Plan shall be construed
as giving any Participant any right to be retained in the employ of the Company
or shall affect the terms and conditions of a Participant's employment with the
Company prior to the commencement of the Term.

          7.2 ERISA Plan. This Plan is intended to be (a) an employee welfare
plan as defined in Section 3(1) of ERISA and (b) a "top-hat" plan maintained for
the benefit of a select group of management or highly compensated employees of
the Company.

          7.3 Source of Payments. All payments provided under this Plan, other
than payments made pursuant to any other Company employee benefit plan which
provides otherwise, shall be paid in cash from the general funds of the Company,
and no special or separate fund shall be established, and no other segregation
of assets made, to assure payment. To the extent that any person acquires a
right to receive payments from the Company hereunder, such right shall be no
greater than the right of an unsecured creditor of the Company.

          7.4 Nonalienation of Benefits. No benefit under the Plan may be
assigned, transferred, pledged as security for indebtedness or otherwise
encumbered by any Participant or subject to any legal process for the payment of
any claim against a Participant.

          7.5 Validity. The invalidity or unenforceability of any provision of
this Plan shall not affect the validity or enforceability of any other provision
of this Plan, which shall remain in full force and effect.

          7.6 Headings. The headings contained in this Plan are intended solely
for convenience of reference and shall not affect the rights of the parties to
this Plan.

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          7.7 Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the State of Washington to the extent such laws are
not preempted by ERISA.

Section 8. Successors; Binding Agreement.

          8.1 Assumption by Successor. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company expressly to
assume and to agree to perform the obligations under this Plan in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place; provided, however, that no such
assumption shall relieve the Company of its obligations hereunder. As used in
this Section 8, the "Company" shall include the Company as defined in Section
1.7 and any successor to its business and/or assets which assumes and agrees to
perform the obligations arising under this Plan by operation of law or
otherwise.

          8.2 Enforceability; Beneficiaries. This Plan shall be binding upon and
inure to the benefit of each Participant (and such Participant's personal
representatives and heirs) and the Company and any organization which succeeds
to substantially all of the business or assets of the Company, whether by means
of merger, consolidation, acquisition of all or substantially all of the assets
of the Company or otherwise, including, without limitation, as a result of a
Change of Control or by operation of law. This Plan shall inure to the benefit
of and be enforceable by each Participant' personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If a Participant should die while any amount would still be payable
hereunder if such Participant had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Plan to such Participant's devisee, legatee or other designee or, if there is no
such designee, to such Participant's estate.


                                     COST-U-LESS, INC.


Dated: April ___, 2003               _________________________________

                                     By: J. Jeffrey Meder
                                     Its:  President and Chief Executive Officer