10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

¨ TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to                                                           Commission file number 1-5881

BNS Co.

(Exact name of Registrant as specified in its charter)

DELAWARE	050113140
(State or other jurisdiction of incorporation of organization)	(I.R.S. Employer Identification No.)

25 Enterprise Center, Suite 103, Middletown, Rhode Island 02842

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code 401-848-6300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
CLASS A COMMON STOCK-PAR VALUE $.01	BOSTON STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS	BOSTON STOCK EXCHANGE

Securities registered pursuant to Section 12 (g) of the Act:

CLASS B COMMON STOCK—PAR VALUE $.01

(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x.

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and ask price of such common equity as of the last business day of the registrant’s most recently completed second fiscal quarter. $15,137,220.

There were 3,004,490 Shares of Class A Common Stock and 29,954 Shares of Class B Common Stock, each having a par value of $.01 per share, outstanding as of February 23, 2004.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2004 Annual Meeting of Stockholders (the “Proxy Statement”), to be filed within 120 days of the end of the fiscal year ended December 31, 2003, are incorporated by reference in Part III hereof. Except with respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as part hereof.

BNS Co.

INDEX

		Page
PART I
Item 1	Business	1
	General	1
	Sale of the Metrology Business, Xygent and North Kingstown Property	1
	Real Estate Management Business and Sale of U.K. Property	2
	Strategic Alternatives	2
	Competition	2
	Employees	2
	Availability of Filings with the SEC	3
Item 2	Properties	3
Item 3	Legal Proceedings	3
Item 4	Submission of Matters to a Vote of Security Holders	5
PART II
Item 5	Market for Registrant’s Common Stock and Related Stockholder Matters	6
Item 6	Selected Financial Data	7
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8-16
Item 7A	Qualitative and Quantitative Disclosures About Market Risk	17
Item 8	Financial Statements and Supplementary Data	18-40
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	41
Item 9A	Controls and Procedures	41
PART III
Item 10	Directors and Executive Officers of the Registrant	41
Item 11	Management Remuneration and Transactions	41
Item 12	Security Ownership of Certain Beneficial Owners and Management	42
Item 13	Certain Relationships and Related Transactions	42
Item 14	Principal Accountant Fees and Services	42
PART IV
Item 15	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	43
	Signatures	48

PART I

ITEM 1—BUSINESS

THE BUSINESS OF THE COMPANY

General

Prior to the sale of its Metrology Business in 2001, the sale of its interest in its development stage measuring software subsidiary, Xygent Inc., in 2002 and the sale of its North Kingstown, Rhode Island property which consisted of an industrial and office building along with the adjoining acreage in 2003, BNS Co. (the “Company”), which was founded in 1833, was previously engaged in the Metrology Business and the design, manufacture and sale of precision measuring tools and instruments and manual and computer controlled measuring machines.

The Company is at present a real estate management company deriving royalty revenues from an owned gravel extraction and landfill property in the United Kingdom (since December 2003 only a landfill property). As previously disclosed, it is the Company’s intention to sell its remaining assets and then liquidate or seek other strategic alternatives.

Subsequent to December 31, 2003, the Company has entered into an agreement to sell its real estate holdings in the U.K. for 5.5 million British Pounds. The transaction will be in the form of the sale of the stock of the Company’s U.K. subsidiary that holds title to the property and the sale of the Company’s note receivable from the U.K. subsidiary. There will also be a post-closing adjustment for the subsidiary’s net working capital at the time of closing. The sale of the U.K. subsidiary is deemed to constitute the sale of substantially all assets of the Company within the meaning of the Delaware General Corporation Law and therefore requires stockholder approval.

Sale of Metrology Business, Xygent and North Kingstown Property

On August 26, 2003, pursuant to a Purchase and Sales Agreement dated as of April 28, 2003, as amended between the Company and Wasserman RE Ventures LLC (“Wasserman”), the Company sold the North Kingstown property which consisted of an industrial and office building along with the adjoining acreage (a total of approximately 169 acres, all in Rhode Island) and reported a gain of $15.3 million net of expenses on the sale. The Company received proceeds of $18.7 million net of expenses. Additionally, the Company established an environmental escrow in the amount of $.3 million to cover certain environmental remediation costs. This escrow account is presented as restricted cash on the consolidated balance sheet except for the interest earned which is presented as part of the unrestricted cash. The purchase price was determined by arms-length negotiation between representatives of the Company and representatives of Wasserman. In connection with the sale of the North Kingstown property, the Company relocated its headquarters to its present business location in Middletown, Rhode Island.

On August 16, 2002, the Company entered into a Securities Purchase Agreement with a subsidiary of Hexagon AB of Stockholm, Sweden for the purchase of the Company’s 77% interest in Xygent Inc. (“Xygent”), a development stage measuring software business unit.

Hexagon paid the Company $2.3 million in cash on August 20, 2002, and was obligated to pay the Company a deferred purchase price of up to $.8 million subject to possible adjustment relating to an Xygent equity value calculation as of August 16, 2002, as specified in the Securities Purchase Agreement. Hexagon subsequently disputed the equity value calculation. The dispute was submitted to arbitration, as required by the Securities Purchase Agreement, and the arbitration determined a deferred purchase price payment of

1

$.6 million, which was paid on January 22, 2003. In connection with the sale of Xygent, the Company was released from its lease in Warwick, Rhode Island and relocated its headquarters to the Company’s North Kingstown property.

Real Estate Management Business and Sale of U.K. Property

The United Kingdom property consists of approximately 86.5 acres of land adjacent to the Heathrow airport. Until December 2003 the property was operated as a gravel extraction and landfill facility, for which the Company receives royalties. By the end of 2003, the gravel had been depleted and the facility is currently operated solely as a landfill. The property is subject to zoning restrictions which limit its development potential. The royalties are shared with the adjacent land owner under the terms of a partnership agreement. The operator of the property is responsible for restoring the property after the gravel extraction and landfill is complete. In the years 2003, 2002 and 2001, the Company’s revenues from this property were approximately $ .9 million, $1.0 million and $ .9 million, respectively.

As indicated above, subsequent to December 31, 2003 the Company has entered into an agreement to sell its real estate holdings in the U.K. for 5.5 million British Pounds (the “U.K. Agreement”). The transaction, which is subject to satisfaction of specified closing conditions, will be in the form of the sale of the stock of the Company’s U.K. subsidiary that holds title to the property and the sale of the Company’s note receivable from the U.K. subsidiary (together, sometimes referred to as the sale of the “U.K. subsidiary”. There will also be a post-closing adjustment for the subsidiary’s net working capital at the time of closing. The sale to Buyer under the U.K. Agreement is deemed to constitute the sale of substantially all assets of the Company within the meaning of the Delaware General Corporation Law and therefore requires stockholder approval.

Strategic Alternatives

The sale of the North Kingstown property and the pending sale of U.K. property are part of the Company’s plan to sell its remaining assets and then liquidate or seek other strategic alternatives. Such plan may involve one of the following alternatives: a) the sale of the Company through a merger or other change in control transaction; b) a liquidation, either through a dissolution, formation of a liquidating trust and liquidation proceedings in the Chancery Court in Delaware, or in a Chapter 11 federal bankruptcy reorganization proceeding, both of which would involve provisions for payments to creditors (including contingent claims) and contemplated distributions to stockholders; or c) continuation of the Company as a going-concern for either a limited or longer period of time while the Company devotes energies to resolving its contingent liabilities and makes investments which are permitted without requiring the Company to register as an “investment company” under the Investment Company Act of 1940. Such investments may include possible acquisitions of other operating businesses.

Competition

Since the Company is presently engaged in the real estate management business consisting of the United Kingdom property and has agreed to sell this property, the Company is not in significant direct competition with any other specific business. However, the Company may be deemed to be in competition generally with other businesses seeking to provide land fill services in the United Kingdom.

Employees

At February 28, 2004 the Company had one full time and one part time employee located in its corporate headquarters Middletown, Rhode Island, plus its President, CEO, and CFO, who is a consultant to the Company. The Company uses other outside consultants and contractors to provide certain management services for the Company, including accounting, information technology and managing the landfill operations for the Company in the United Kingdom. This compares with a total of 5 employees and the President, CEO, and CFO consultant as well as other outside consultants at December 31, 2002.

2

Availability of Filings with the SEC

In order to reduce expenses, the Company has decided not to maintain a web site. The Company’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, may be found on the SEC’s web site, which is www.sec.gov, or by contacting Michael Warren, President and Chief Executive Officer at the Company’s headquarters or by telephone (401) 848-6300.

ITEM 2—PROPERTIES

The following table sets forth certain information concerning the Company’s facilities:

Location	Owned/ Leased	Principal Use	Approximate Area
United Kingdom Heathrow, England	Owned	Landfill	86.5 Acres
United States Middletown, RI	Leased	Executive Office	1,540 Sq. Ft.

The Middletown, RI offices are leased for a term of three years commencing on July 1, 2003.

ITEM 3—LEGAL PROCEEDINGS

Environmental Matters

Subsequent to the 2002 sale of Xygent to Hexagon as discussed above, the nature of the Company’s operations are not affected by environmental laws, rules and regulations relating to these businesses. However, because the Company and its subsidiaries and predecessors, prior to the sale of the Company’s Metrology Business to Hexagon on April 27, 2001 (and prior to sales of other divisions made in prior years) conducted manufacturing operations in locations at which, or adjacent to which, other industrial operations were conducted, from time to time the Company is subject to environmental claims. As with any such operations that involved the use, generation, and management of hazardous materials, it is possible that prior practices, including practices that were deemed acceptable by regulatory authorities in the past, may have created conditions which could give rise to liability under current or future environmental laws.

A Phase II environmental investigation on the North Kingstown property, completed in June 2002, indicated certain environmental problems on the property. The results of the study showed that certain contaminants in the soil under the property and minor groundwater issues exceeded environmental standards set by the Rhode Island Department of Environmental Management (“RIDEM”). After extensive testing, the Company submitted a Remedial Action Work Plan (“RAWP”) to RIDEM, and on November 7, 2002, RIDEM issued a letter approving the RAWP.

In April 2003 the Company awarded a contract for the remediation work and engaged an environmental engineering firm to supervise the remediation work and perform ongoing monitoring of the affected areas. The remediation work was substantially complete as of September 2003, and in connection with the August 26, 2003 sale of the North Kingstown property to Wasserman the Company established an escrow account in the amount of $.3 million to cover any additional remediation costs that may arise. The Company has obtained insurance against additional known and unknown environmental liabilities at the North Kingstown site. However, there is no assurance that the Company will not incur additional costs for remediation above the escrowed amount and insurance limits, and that ongoing monitoring of contaminants will not indicate further environmental problems.

The Company has obtained contaminated land insurance coverage to insure against unknown environmental issues relating to its United Kingdom property. In addition, the Company received a report dated October 2000,

3

which was updated in July 2003, from an independent environmental consulting firm indicating no evidence of environmental issues relating to the property. As mentioned above, the Company has signed an agreement to sell its U.K. subsidiary which holds the property. The Company has made no environmental representations or indemnifications under this agreement.

Product Liability and Other Matters

The Company receives claims from time to time for toxic tort injuries related to past products manufactured by the Company and other business activities. Most of these claims are toxic tort claims resulting primarily from the use of small internal seals that allegedly contained asbestos and were used in small fluid pumps manufactured by the Company’s former pump division, which was sold in 1992. There have also been tort claims brought by owners and users of machine tools manufactured and sold by a division that was sold in 1993, and a few miscellaneous claims relating to employment activities, environmental issues, sales tax audits and personal injury claims. The Company has insurance coverage, but in general the coverage available has limitations. The Company expects, based on past experience, that it will continue to be subject to additional toxic tort claims in the future. As a matter of Delaware law, the directors are required to take the probability of future claims into consideration and provide for final resolution of them in any liquidation strategy. Thus far these claims have not resulted in any material exposure, but there is no assurance that this will be the result of all such future claims. Because the law in this area is developing rapidly, and because such environmental laws are subject to amendment and widely varying degrees of enforcement, the Company may be subject to, and cannot predict with any certainty the nature and amount of potential environmental liability related to these operations or locations (including its North Kingstown facility and property on which the North Kingstown facility is located, which was sold on August 26, 2003, and its Heathrow U.K. property which is agreed to be sold) that the Company may face in the future.

Litigation

During the year 2002, the Company reached settlement of an arbitration proceeding with executives as to the amounts due them under their 1999 Change-In-Control contracts that were triggered by the 2001 Hexagon transaction and their subsequent termination of employment, and in January 2003 made a payment to its former CEO and CFO settling a dispute as to the amount due him to settle a compensation arrangement which had not been finalized but was in the process of being finalized and to resolve a severance dispute at the same time. The settlement of these claims did not have a material effect on the Company’s consolidated results of operations or financial condition.

The Company is a defendant in a variety of legal claims that arise in the normal course of business, including toxic tort claims, other product liability claims, and the miscellaneous claims noted above. Since 1994 the Company has been named as a defendant in a total of 375 known toxic tort claims (as of February 23, 2004) relating to pumps used at customer facilities. In many cases these claims involve more than 100 other defendants. Fifty-four of those claims were filed prior to December 31, 2001. However, in 2002 the Company was named in 98 additional claims; in 2003 there were a total of 192 new claims filed; and the Company has received notice of another 31 claims through February 23, 2004. In 2002, 42 claims were settled for an aggregate amount of $30,000 exclusive of attorney’s fees, and in January 2004, a plaintiff’s attorney agreed to settle one claim for $500 and file for dismissal in another 67 claims. There are currently 265 claims that are open and active. However, under certain circumstances, some of the settled claims may be reopened.

The Company believes it has significant defenses to any liability for toxic tort claims on the merits. It should be noted that, to date, none of these toxic tort claims have gone to trial and therefore there can be no assurance that these defenses will prevail. Settlement and defense costs to date have been insignificant. However, there can be no assurance that the number of future claims and the related costs of defense, settlements or judgments will be consistent with the experience to date of existing claims.

4

It has become apparent that the uncertain prospect of additional toxic tort claims being asserted in the future, and the impact of this uncertainty on the valuation of the Company, has had and will continue to have, at least for the short term, some adverse effects on the Company’s ability to determine prospective distributions to shareholders or to negotiate a satisfactory merger or other change in control transaction with a third party. These claims also affect the ability of the Company to carry out a fairly rapid liquidation proceeding, either through a dissolution, formation of a liquidating trust and liquidation proceedings in the Chancery Court in Delaware, or in a Chapter 11 federal bankruptcy reorganization proceeding, both of which would involve provisions for payments to creditors and contemplated distributions to stockholders. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Factors.”

ITEM 4—SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable

5

PART II

ITEM 5—MARKET FOR REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The Company’s Class A Common Stock is listed on the Boston Stock Exchange and is traded on the NASD Over-the-Counter Bulletin Board, where market makers and other dealers provide bid and ask quotations. In each case, the Class A Common Stock trades under the symbol “BNSXA.” Prior to its delisting on February 8, 2002, the Class A Common Stock was listed on the New York Stock Exchange and traded under the symbol “BNS”. At December 31, 2003, the Company had approximately 1,432 shareholders of record of its Class A Common Stock and 579 shareholders of record of its Class B Common Stock. Set forth below are the high and low closing prices for the Class A Common Stock on the New York Stock Exchange, up through February 8, 2002 and then on the OTC Bulletin Board onwards (The volume of trades of the Company’s stock on the Boston Stock Exchange since February 11, 2002 has not been significant.)

Calendar Year	High		Low
2003
4th Quarter	$	5.75	$	5.03
3rd Quarter		5.03		4.40
2nd Quarter		5.10		2.60
1st Quarter		2.75		2.51
2002
4th Quarter	$	2.85	$	2.50
3rd Quarter		2.95		2.52
2nd Quarter		2.90		2.41
1st Quarter		2.45		2.09

In May of 2001 the Company made a cash distribution to shareholders following the sale of the Metrology Business to Hexagon. No other dividends or distributions have been paid by the Company since 1990. Currently, the Company intends to sell its remaining assets and then liquidate or seek other strategic alternatives. See also “Liquidity and Capital Resources” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Report.

6

ITEM 6—SELECTED FINANCIAL DATA

The following selected data should be reviewed in conjunction with Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes thereto in Item 8 of this Annual Report.

	Year ended December 31,
	2003			2002			2001			2000			1999
	(in thousands except per share information)
Statement of Operations Data
Revenue	$	948		$	1,018		$	949		$	726		$	758
Loss from continuing operations		(2,671	)		(2,433	)		(5,380	)		(14,439	)		(17,811	)
Net income (loss)	$	12,917		$	(5,919	)	$	21,170		$	(57,309	)	$	(42,874	)
Net loss per common share, Basic, from continuing operations	$	(0.91	)	$	(0.84	)	$	(1.88	)	$	(5.26	)	$	(6.62	)
Net income (loss) per common share, Basic	$	4.37		$	(2.03	)	$	7.38		$	(20.88	)	$	(15.93	)
Net loss per common share, diluted, from continuing operations	$	(0.91	)	$	(0.84	)	$	(1.88	)	$	(5.26	)	$	(6.62	)
Net income (loss) per common share, Diluted	$	4.37		$	(2.03	)	$	7.38		$	(20.88	)	$	(15.93	)
Average shares outstanding		2,954			2,920			2,867			2,745			2,691
Cash dividends per share		—			—		$	15.25			—			—
Balance Sheet Data
Total assets	$	16,617		$	9,263		$	19,283		$	250,645		$	302,177
Long-term debt including current maturity		—		$	2,360		$	3,317		$	65,176		$	69,030

(1) The 2003 net income includes a gain from the sale of the North Kingstown property of $15,255 or $5.16 per share

(2) The 2002 net income includes a loss from the disposal of the Company’s controlling interest in Xygent of $916 or $0.31 per share.

(3) The 2001 net income includes a gain from the disposal of the Metrology Business to Hexagon AB in the amount of $47,113 or $16.43 per share.

(4) The 2001 net income includes an extraordinary item of $6,566, which represents the payment of a prepayment penalty in connection with the repayment of the long-term senior debt and the write-off of debt acquisition costs previously capitalized.

(5) The 2000 loss includes a change in accounting principle as the Company adopted SEC Staff Accounting Bulletin No. 101 (“SAB 101”). The effect of applying this change in accounting principle was a charge for the cumulative effect of the change amounting to $27,401 (net of an income tax benefit of $600) or $9.98 per share.

(6) Effective May 10, 2001, the Company’s shareholders approved a one-for-five reverse stock split. Accordingly, all periods presented have been restated to reflect this reverse stock split.

7

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The Company is at present a real estate management company deriving royalty revenues from an owned gravel extraction and landfill property (from December 2003 only a landfill property) in the United Kingdom. As previously disclosed, it is the Company’s intention to sell its remaining assets and then liquidate or seek other strategic alternatives. See “Business—Strategic Alternatives” for discussion of strategic alternatives. In accordance with the above strategy, the Company signed an agreement on February 5, 2004 to sell the U.K. Property for 5.5 million British Pounds. The transaction will be in the form of the sale of the stock of the Company’s U.K. subsidiary that holds title to the property and the sale of the Company’s note receivable from the U.K. subsidiary. There will also be a post-closing adjustment for the subsidiary’s net working capital at the time of closing.

On November 16, 2000, the Company entered into an Acquisition Agreement with Hexagon AB of Stockholm, Sweden (Hexagon) for the sale of the Metrology Business assets, including the assumption of most related liabilities, which closed on April 27, 2001. On August 16, 2002, the Company entered into a Securities Purchase Agreement with a subsidiary of Hexagon for the sale of the Company’s interest in Xygent Inc. (“Xygent”), a development stage measuring software business. On August 26, 2003, pursuant to a Purchase and Sales Agreement dated as of April 28, 2003, as amended, between the Company and Wasserman, the Company sold the North Kingstown property which consisted of an industrial and office building along with the adjoining acreage (a total of approximately 169 acres, all in Rhode Island).

The accompanying financial statements present the North Kingstown property, Xygent and the Metrology Business as discontinued operations. The financial statements for prior periods have been restated. The discussions below relate only to the continuing operations of the Company, unless otherwise noted.

Forward-Looking Statements

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as other portions of this Report contain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of assumptions, risks, and uncertainties that could cause the actual results of the Company to differ materially from those matters expressed in or implied by such forward-looking statements. They involve known and unknown risks, uncertainties, and other factors, which are in some cases beyond the control of the Company. Additional information regarding these risk factors and uncertainties is described more fully in the Company’s SEC filings. A copy of all filings may be obtained from the SEC’s EDGAR web site, www.sec.gov, or by contacting: Michael Warren, President and Chief Executive Officer, at the Company’s headquarters or by telephone (401) 848-6300. The Company does not maintain a web site. This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the Company’s Consolidated Financial Statements and the Notes thereto included elsewhere in this Report.

Critical Accounting Policies

Management’s discussion and analysis of financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The accounting policies used in reporting the financial results are reviewed on a regular basis. The preparation of these financial statements requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, estimates, including those related to accounts receivable, contingencies and litigation are evaluated. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other

8

sources. Results may differ from these estimates due to actual outcomes being different from those on which we based our assumptions. These estimates are reviewed by management on an on-going basis. The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the consolidated financial statements.

Off-Balance Sheet Arrangements

The Company had no “off balance sheet arrangements” (as defined in the applicable SEC rule) during fiscal 2003.

Contractual Obligations

The following table summarizes our contractual obligations (as defined in the applicable SEC rule) as of December 31, 2003 and the anticipated effect of these obligations on our liquidity in future years (in thousands):

			Payments due by period
	Total		2004		2005		2006
Lease obligation	$	69	$	28	$	29	$	12
CEO incentive compensation obligation		148		148		0		0
Severance obligation to former CEO		13		13		0		0
Indemnification obligation related to sale of assets		1,351		0		1,351		0
Total contractual cash obligations	$	1,581	$	189	$	1,380	$	12

Allowance for Doubtful Accounts

Allowances for doubtful accounts are maintained for estimated losses resulting from the inability of customers to make required payments. If the financial condition of customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Contingencies

The Company periodically records the estimated impacts of various conditions, situations or circumstances involving uncertain outcomes. These events are called “contingencies,” and the Company’s accounting for such events is prescribed by SFAS 5, “Accounting for Contingencies.” SFAS 5 defines a contingency as “an existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur.”

SFAS 5 does not permit the accrual of gain contingencies under any circumstances. For loss contingencies, the loss must be accrued if (1) information is available that indicates it is probable that the loss has been incurred, given the likelihood of the uncertain future events; and (2) that the amount of the loss can be reasonably estimated.

The accrual of a contingency involves considerable judgment on the part of management. The Company uses its internal expertise, and outside experts (such as lawyers, tax specialists, insurance specialists and engineers), as necessary, to help estimate the probability that a loss has been incurred and the amount (or range) of the loss. To date incurred losses have not exceeded management’s estimates.

The Company is currently involved in certain legal disputes and environmental proceedings, including toxic tort claims, other product liability claims and claims relating to other business activities. See “Litigation” in Item 3 of this Report. An estimate of the probable costs for the resolution of these existing claims in the amount of $.4 million has been accrued. This estimate has been developed in consultation with outside counsel and other experts and is based upon an analysis of potential results, including a combination of litigation and settlement

9

strategies. It is believed that these existing proceedings will not have a material adverse effect on our consolidated results of operations or financial condition. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in our assumptions, or the effectiveness of our strategies, related to these proceedings. It is also possible that future results of operations for any particular quarterly or annual period could be materially affected by additional claims against the Company arising from new legal disputes, including future toxic tort claims, and environmental proceedings.

Recent Accounting Pronouncements

In January 2003 FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” was issued. This interpretation requires a company to consolidate a variable interest entity (“VIE”) if the enterprise is a primary beneficiary (holds a majority of the variable interest) of the VIE and the VIE passes specific characteristics. It also requires additional disclosures for parties involved with VIE’s. The provisions of this interpretation are effective in 2003. Accordingly, the Company adopted FASB Interpretation No. 46 effective for fiscal 2003 and does not expect the adoption of this interpretation will have an impact on its consolidated financial position or results of operations.

In December 2003, the FASB issued a revision of Interpretation No. 46 (the “Revised Interpretation 46”). Revised Interpretation 46 codifies both the proposed modifications and other decisions previously issued through certain FASB Staff Positions and supersedes the original Interpretation No. 46 to include: (1) deferring the effective date of the Interpretation’s provisions for certain variable interests, (2) providing additional scope exceptions for certain other variable interests, (3) clarifying the impact of troubled debt restructurings on the requirement to reconsider (a) whether an entity is a VIE or (b) which party is the primary beneficiary of a VIE, and (4) revising Appendix B of the Interpretation to provide additional guidance on what constitutes a variable interest. Accordingly, the Company will adopt Revised Interpretation No. 46 effective the first quarter 2004 and does not expect the adoption of this interpretation will have an impact on its consolidated financial position or results of operations.

Results of Operations

2003 Compared to 2002

The Company recorded net income of $12.9 million in 2003 and a net loss of $5.9 million in 2002. The 2003 and 2002 results include the following:

	In millions
	2003			2002
Loss from continuing operations	$	(2.7	)	$	(2.4	)
Income (loss) from discontinued operations		15.6			(3.5	)
Net income (loss)	$	12.9		$	(5.9	)

The loss from continuing operations in 2003 and 2002 includes the Company’s corporate headquarters activities, including legal and consulting fees associated with the investigation of strategic alternatives and activities associated with the proposed sale of the U.K. property, along with royalties from the gravel extraction and landfill property in the United Kingdom.

Gravel and landfill royalty revenue of $1.0 million in 2003 is approximately the same as that of 2002 of $1.0 million. Although the Company has decreased recurring general and administrative expenses, general and administrative expenses during 2003 were slightly higher than in 2002. In 2003 this increase was predominantly due to expenses of $.4 million for advisory services and commission related to the ongoing marketing of the U.K. property and the ongoing development of strategic alternatives for the remainder of the Company.

10

Interest expense amounted to $.1 million in 2003 compared with $.1 million in 2002. As a result of the rental operations of the North Kingstown facility being reclassified to discontinued operations, interest expense consists substantially of interest owed on an outstanding pension benefit liability owed to a former CEO of the Company and the settlement of a state sales and use tax examination. Interest expense attributable to the declining balance owed to the former CEO and the fact that the Company paid the entire balance due to the former CEO in the third quarter of 2003 resulted in a decrease of interest expense. However, this was offset by the interest paid related to the state sales and use tax examination.

Other income, net amounted to $.1 million in 2003. This is compared with $.2 million in 2002. Other income, net, consists predominantly of interest income. During 2002, other income, net contained a gain of $.1 million related to the receipt of shares received as a result of the demutualization of an insurance company.

Income tax expense represents United Kingdom income taxes associated with the subsidiary owning the gravel extraction and landfill facility. No income taxes are provided for the continuing U.S. operation as the Company has net operating losses.

Discontinued operations amounted to income of $15.6 million for the year 2003. This is compared with losses of $3.5 million in 2002. The loss reported in 2002 contains the loss from the Xygent operations along with the income from rental operations of the North Kingstown facility. The gain from the sale of the North Kingstown property is $15.3 million, recorded in the third quarter of 2003, related to the sale of the North Kingstown property. This gain has been recorded net of an income tax expense of $.2 million. Although the Company has sufficient net operating losses, this tax is attributable to the federal alternative minimum tax.

2002 Compared to 2001

In 2002 and 2001, the Company recorded a net loss of $5.9 million and net income of $21.2 million, respectively. The 2002 and 2001 results include the following:

	In millions
	2002			2001
Loss from continuing operations	$	(2.4	)	$	(5.4	)
Income (loss) from discontinued operations		(3.5	)		33.1
Extraordinary item		—			(6.5	)
Net loss	$	(5.9	)	$	21.2

The loss from continuing operations in 2002 and 2001 includes the Company’s corporate headquarters activities, along with royalties from the gravel extraction and landfill property in the United Kingdom.

Gravel and landfill royalty revenue of $1.0 million in 2002 is approximately the same as that of 2001.

Due to the sale of Xygent in August 2002 and the Metrology Business in April 2001, the Company has reduced the general and administrative (“G&A”) function of the Company, by eliminating corporate overhead expenses not otherwise reclassified as a part of “discontinued operations”. After the sale of Xygent, and conclusion in December 2002 of an arbitration proceeding to determine the deferred purchase price from the sale of Xygent in August 2002, the Company replaced the previous CEO on January 24, 2003 with a new CEO who has significant real estate management experience. In connection with this, the Company made a payment of approximately $1.7 million (as described in detail under Item 11) to the former chief executive officer to settle a compensation arrangement which had not yet been finalized but was in the process of being finalized and to resolve a severance dispute. The Company recorded additional charges of $.5 million during 2002 to increase the accrual related to the amount owed to a former CEO to an aggregate amount of $1.7 million at December 31, 2002.

11

Interest expense of $.1 million in 2002 decreased from 2001 by $.7 million. As a result of the rental operations of the North Kingstown Facility being reclassified to discontinued operations, interest expense consists substantially of interest owed on an outstanding pension benefit liability to a former CEO of the Company. The decrease in the amount of the interest expense is attributable to the declining balance owed to the former CEO. The only remaining debt of the Company at December 31, 2002 was the mortgage on the North Kingstown facility. The interest expense related to this mortgage is included in the income (loss) from discontinued operations.

Other income, net of $.2 million in 2002 decreased by approximately $1.0 million from 2001 primarily due to a reduction in interest income. This decrease in interest income is the result of a decrease in invested cash and cash equivalents along with a decrease in interest rates.

Results from continuing operations in 2002 included a $.3 million tax provision. This tax provision relates to the taxable income generated by the Company’s subsidiary owning the United Kingdom property. In prior years this asset was owned by a subsidiary of the Company that had losses available to shelter such income. As a result of the sale of the Metrology Business, this asset was retained and transferred to a new subsidiary that had no such losses available.

Liquidity and Capital Resources

Until the sale of the Company’s Metrology Business on April 27, 2001, the Company was obligated under a $50 million private placement of senior notes with principal payments due from November 2001 to November 2007 as well as other long-term debt amounting to $11 million. The Company also had, until April 27, 2001, a $30 million three-year syndicated multi-currency revolving Credit Agreement with four banks.

As a result of the sale of the Metrology Business to Hexagon on April 27, 2001, the Company paid all of the $50 million private placement notes, including accumulated interest and prepayment penalties totaling $8 million, and the balance of the $30 million Revolving Credit Agreement. In addition, all of the foreign short-term and long-term debt was assumed by Hexagon. After the sale of the Metrology Business and of the North Kingstown property, the Company has no external debt.

The Company had unrestricted cash of approximately $14.4 million at December 31, 2003. This is a significant increase from the cash balance at December 31, 2002 of $4.4 million. The increase is principally the result of the receipt of the net proceeds from the sale of North Kingstown property of $18.7 million, less the payment of $1.7 million to its former CEO relating to settlement of a compensation and severance dispute and termination of his 1999 Change-in-Control Agreement, the payment to another former CEO of the Company representing an unfunded pension liability of $1.9 million, and the payment of interest and the remaining principal balance of a mortgage on the North Kingstown property of $2.4 million.

There is no assurance that the future months’ expenses of the Company will not be greater than anticipated, or that its expected cash flow will not be less than anticipated, and that a liquidity problem may not arise as a result of poor economic conditions, lower investment returns, environmental problems, expenses and liabilities associated with product liability claims or expenses of maintaining the Company as a “public” reporting company (see Risk Factors: Liquidity Risk; There may not be adequate resources for funding the operations of the Company).

The Company’s ability to continue as a going-concern relies on its ability to achieve positive cash flow from the landfill operations on its United Kingdom property and from investment earnings on its undistributed cash, or possibly from earnings that may be generated by a business that may be acquired. See “Business—Strategic Alternatives” for discussion of strategic alternatives. Upon completion of the sale of the United Kingdom property, the Company will no longer have an active trade or business and may no longer continue as a going concern.

12

As previously disclosed, it is the Company’s intention to sell its remaining assets and then liquidate or seek other strategic alternatives.

Cash Flow

Net cash used in operations in 2003 was $7.2 million compared with $2.9 million in 2002 and $9.5 million in 2001. In the calculation of net cash used in operations for the year ended December 31, 2003, the net income of $12.9 million was reduced by gain on sale of the North Kingstown property of $15.3 million, by the establishment of environmental escrow of $.3 million, by the payment of $1.7 million settlement of a compensation and severance dispute to its former CEO and $1.9 million plus interest to another former CEO of the Company representing pension benefits. In the calculation of net cash used in operations for the year ended December 31, 2002, the net loss of $5.9 million was increased by the loss on the sale of Xygent of $.9 million, by the loss from the discontinued operations of $2.6 million and decreased by the payment of pension obligations of $.7 million. In the calculation of cash used in operations for the year ended December 31, 2001, the net income of $21.2 million was reduced by the gain on the sale of the Metrology Business of $47.1 million, by the loss from the discontinued operations of $14.0 million, increased by the extraordinary item related to the extinguishment of debt of $6.6 million and decreased by the payment of pension obligations of $4.4 million. Cash flows from working capital decreased in 2002 from 2001 by $1.9 million. This change was predominately due to the settlement of the compensation dispute with a former executive as discussed in Footnote 17 of the financial statements included in Item 8.

Net cash provided by investing transactions for 2003 was $19.5 million which included $.6 million as the final settlement of the Company received from Hexagon related to the sale of Xygent, $18.7 million from proceeds of the sale of the North Kingstown property, $.4 million as the final settlement received by the Company related to the disposal of the Electronics Division and $.1 million from the disposal of the available for sale securities. Net cash provided by investment transactions in 2002 was $2.0 million which included proceeds from the disposal of Xygent of $2.3 million offset by a net payment of $.3 million to complete the sale of the Metrology Business. Net cash provided by investment transactions in 2001 was $141.3 million which was the proceeds from the disposal of the Metrology Business in 2001.

Cash used in financing activities in 2003 was $2.4 million which pertains to the payment of the entire outstanding mortgage liability. Cash used in financing activities in 2002 was $.1 million. Financing transactions during 2002 consisted of $.9 million repayment on the mortgage offset by the April 2002 purchase of a net minority interest in Xygent by Hexagon of $1 million. Cash used in financing activities in 2001 was $126.2 million. Financing transactions during 2001 consisted of repayment of the $27.4 million principal balance due under the Company’s $30 million Revolving Credit Facility and the repayment of the long-term senior notes (including prepayment penalties) of $56.6 million; payment on the mortgage of $.9 million; distribution to the stockholders of $44.5 million; and equity contributions related to the exercise of stock options of $1.8 million; offset by proceeds from the purchase of a net minority interest in Xygent by Hexagon of $1.4 million.

Cash used by the discontinued operations amounted to $3.3 million and $5.8 million in 2002 and 2001, respectively.

Working Capital

The United Kingdom property has been classified as held for sale at December 31, 2003 as a result of the Company’s expressed intention to sell the property and the signing of an agreement on February 5, 2004 to sell the property. Excluding the assets related to discontinued operations and assets held for sale, the Company had working capital related to the continuing operations of $14.3 million at December 31, 2003 and $2.0 million at December 31, 2002. This increase in working capital is primarily the result of proceeds associated with the sale of the North Kingstown property.

The Company’s sole source of cash in the future is the royalty revenue from the United Kingdom property, until the U.K. subsidiary is sold, and the earnings on the Company’s cash balance and investments.

13

RISK FACTORS

After completing the sale of its Metrology Business to Hexagon on April 27, 2001, and after completing the sale on August 20, 2002 to a subsidiary of Hexagon of its interest in its Xygent development stage measuring software business, in which the Company had then held a 77% equity interest (with Hexagon holding the balance), and after completing the sale of the North Kingstown property to Wasserman on August 26, 2003, the Company now derives revenues only from royalty income from a landfill property (through December 2003, a gravel extraction and landfill property) in the United Kingdom which the Company is holding for sale under the U.K. Agreement (as defined earlier in this Report).

In addition to the foregoing, the risks remaining with respect to the Company’s sale of its former Metrology Business, the former development stage Xygent measuring software business, and the North Kingstown property are that the Company might have to make an indemnification payment to the respective buyers with respect to the Company’s representations and warranties concerning the businesses respectively sold or a payment to a third party with respect to a retained liability.

Risk of not Receiving Acceptable Offers for the Purchase of its United Kingdom Property

A principal risk facing the Company overall is the risk that continuing poor economic conditions (perhaps aggravated by international conditions) may prevent the Company from completing the sale of the Company’s U.K. subsidiary at an acceptable price. However, the Board believes that the price under the U.K. Agreement, which will be presented for stockholder approval at the Company’s Annual Meeting, is a fair and acceptable price to the Company.

Also, the Company faces an exchange risk with respect to the purchase price under the Agreement, which is denominated in British Pounds, should the U.S. dollar increase in value against the British Pound. The Company has not obtained hedging protection against such an exchange risk.

Environmental and Product Liability Risks

Subsequent to the sale of Xygent to Hexagon in 2002 as discussed above, the nature of the Company’s operations have not been affected by environmental laws, rules and regulations relating to these businesses. However, because the Company and its subsidiaries and predecessors, prior to the sale to Hexagon on April 27, 2001 (and prior to sales of other divisions made in prior years) conducted manufacturing operations in locations at which, or adjacent to which, other industrial operations were conducted from time to time by the Company, the Company is subject to environmental claims. As with any such operations that involved the use, generation, and management of hazardous materials, it is possible that prior practices, including practices that were deemed acceptable by regulatory authorities in the past, may have created conditions which could give rise to liability under current or future environmental laws. Because the law in these areas is developing rapidly, and because environmental laws are subject to amendment and widely varying degrees of enforcement, the Company may be subject to, and cannot predict with any certainty, the nature and amount of environmental and product liability claims related to these operations or locations including its North Kingstown property, which was sold on August 26, 2003 (but with certain environmental liabilities retained) that may arise in the future.

The Company has obtained contaminated land insurance coverage to insure against unknown environmental issues relating to the United Kingdom property. In addition, the Company received a report dated October 2000, which was updated in July 2003, from an independent environmental consulting firm indicating no evidence of environmental issues relating to that property. However, there is no assurance that such issues will not be identified in the future, through the actions or negligence of the land fill operator or the contemplated buyer of the U.K. subsidiary or other factors, as the Company or the buyer continues to operate the property as a land fill. Should the U.K. subsidiary be sold, there is no assurance that there will be no retained liabilities relating to the property, although the Company is not making any environmental representations or indemnifications under the U.K. Agreement.

14

In addition, as previously disclosed by the Company, the Company receives claims from time to time for toxic tort injuries related to the use of asbestos material in pumps sold by its hydraulic pump operations, and other product liability claims relating to the use of machine tools sold by a division of the Company which was itself sold many years ago. There have also been a few miscellaneous claims relating to employment activities, environmental issues, sales tax audits and personal injury claims. Most of these suits are toxic tort claims resulting primarily from the use of small internal seals that allegedly contained asbestos and were used in small fluid pumps manufactured by the Company’s former pump division, which was sold in 1992. The Company has insurance coverage, but in general the coverage available has limitations. The Company expects that it will continue to be subject to additional toxic tort claims in the future. As a matter of Delaware law the directors are required to take the probability of future claims into its consideration of various matters.

The contingent claims relating to the former pump division pose the most uncertainty. The Company has limited information concerning the number and location of pumps manufactured and, therefore, is unable to estimate the aggregate number of claims which might be filed in the future, which is necessary in order to reliably estimate any financial exposure. This product line was introduced in the late 1800’s. The materials alleged to contain asbestos were used for an undetermined period of time ending in the late 1960’s. The claims relate to exposure to this asbestos material. The Company sold its pump division in 1992 but remains subject to claims related to products manufactured prior to that date.

Since 1994 the Company has been named as a defendant in a total of 375 known claims (as of February 23, 2004) relating to these pumps. In many cases these claims involve more than 100 other defendants. Fifty-four of those claims were filed prior to December 31, 2001. However, in 2002 the Company was named in 98 additional claims; in 2003 there were a total of 192 new claims filed; and the Company has received notice of another 31 claims through February 23, 2004. In 2002, 42 claims were settled for an aggregate of $30,000 exclusive of attorney’s fees, and in January a plaintiff’s attorney agreed to settle one claim for $500 and file for dismissal in another 67 claims. There are currently 265 claims that are open and active. However, under certain circumstances, some of the settled claims may be reopened.

The Company believes it has significant defenses to any liability for toxic tort claims on the merits. It should be noted that, to date, none of these toxic tort claims have gone to trial and therefore there can be no assurance that these defenses will prevail. Settlement and defense costs to date have been insignificant. However, there can be no assurance that the number of future claims and the related costs of defense, settlements or judgments will be consistent with the experience to date of existing claims.

It has become apparent that the uncertain prospect of additional toxic tort claims being asserted in the future, and the impact of this uncertainty on the valuation of the Company, has had and will continue to have, at least for the short term, some adverse effects on the Company’s ability to determine prospective distributions to shareholders or to negotiate a satisfactory sale, merger or other change in control transaction with a third party. These claims would also affect the ability of the Company to carry out a fairly rapid liquidation proceeding, either through a dissolution, formation of a liquidating trust and liquidation proceedings in the Chancery Court in Delaware, or in a Chapter 11 federal bankruptcy reorganization proceeding, both of which would involve provisions for payments to creditors and contemplated distributions to stockholders. See “Business—Strategic Alternatives” for discussion of strategic alternatives.

Trading of the Company’s Class A Common Stock on the OTC Bulletin Board

The Company’s Class A Common Stock was de-listed from the New York Stock Exchange on February 8, 2002 and commenced trading on the OTC Bulletin Board under the Symbol “BNSXA” and was listed on the Boston Stock Exchange on February 11, 2002. There is no assurance that there will continue to be a sufficient number of securities firms prepared to make an active trading market in our stock, and the public perception of the value of the Class A Common Stock could be materially adversely affected.

15

The market price of the Company’s Common Stock could decline as a result of sales of shares by the Company’s existing shareowners, as a result of the Company’s possible failure to meet the listing standards of the Boston Stock Exchange.

The Company’s cumulative net operating losses (“NOL’s”) may become significantly limited

The Company had NOL’s of approximately $45 million at December 31, 2003, which were available to offset taxable earnings in the future. In the event of a “change of ownership” within the meaning of Section 382 of the Internal Revenue Code, the ability of the Company to use these NOL’s to offset future taxable earnings becomes significantly limited. While the Company’s management and tax advisors believe the Company has not, as of February 11, 2004, experienced such a “change of ownership,” based on their examination of public shareholder documents filed with the SEC, it appears that the Company is very close to the threshold for such a change.

“Going Concern” Qualifications in Audit Opinion

The Company received a report from its independent auditors for the year ended December 31, 2003, containing an explanatory paragraph stating that the Company’s recurring operating losses from continuing operations and the Company’s intention to sell its remaining assets and liquidate or seek other strategic alternatives raise substantial doubt about the Company’s ability to continue as a going concern.

Liquidity Risk: There may not be Adequate Resources for Funding the Operations of the Company

There is no assurance that the future expenses of the Company (including the expenses of maintaining the Company as a “public” reporting Company under SEC regulations and the expenses and liabilities associated with toxic tort asbestos claims against the Company, as discussed above) will not be greater than anticipated, or that the expected cash flow from its United Kingdom property (until its sale) and investment earnings (which are, as a practical matter, limited by the Company’s inability to make investments that would require it to register as an “investment company” under the Investment Company Act of 1940) on net proceeds of the contemplated sale of the United Kingdom property and the net proceeds of prior sales of assets (or the profits from any operating business that the Company may seek to acquire with such net proceeds) will not thereafter be less than anticipated and that, as a result, a liquidity problem may not arise.

16

ITEM 7A—QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has no derivative financial instruments or derivative commodity instruments. Since August 2003 the Company has had no long-term debt (the mortgage on the North Kingstown property was repaid when that property was sold on August 26, 2003. The Company does have exposure to fluctuations in foreign exchange rates relating to the sale of the United Kingdom property, the sales price of which is denominated in British Pounds.

17

ITEM 8—FINANCIAL STATEMENT AND SUPPLEMENTARY DATA

	Page Number
Report of Independent Auditors—Ernst & Young LLP	19
Consolidated Statements of Operations for the Years Ended December 31, 2003, 2002 and 2001	20
Consolidated Balance Sheets at December 31, 2003 and 2002	21
Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002 and 2001	22
Consolidated Statements of Shareowners’ Equity for the Years Ended December 31, 2003, 2002 and 2001	23
Notes to Consolidated Financial Statements	24 – 40

18

Report of Independent Auditors

To the Shareholders and Directors

of BNS Co.

We have audited the accompanying consolidated balance sheets of BNS Co. as of December 31, 2003 and 2002, and the related consolidated statements of operations, shareowners’ equity, and cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of BNS Co. at December 31, 2003 and 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that BNS Co. will continue as a going concern. As more fully described in Note 2, the Company has recurring operating losses from continuing operations. Additionally, the Company’s intention is to sell its remaining assets and liquidate or seek other strategic alternatives. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments to reflect the possible future effects of the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/ ERNST & YOUNG LLP

Providence, Rhode Island

February 13, 2004

19

PART I. FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS*

BNS Co.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2003, 2002 and 2001

(dollars in thousands, except per share data)

	2003			2002			2001
Gravel/landfill royalty revenue	$	948		$	1,018		$	949
General and administrative expenses		3,355			3,310			6,588
Operating loss		(2,407	)		(2,292	)		(5,639	)
Interest expense		140			121			820
Other income, net		98			227			1,218
Loss from continuing operations before income tax		(2,449	)		(2,186	)		(5,241	)
Income tax provision		222			247			139
Loss from continuing operations:		(2,671	)		(2,433	)		(5,380	)
Income (loss) from discontinued operations		333			(2,570	)		(13,997	)
Gain (loss) on sale of business		—			(916	)		47,113
Gain from sale of facility, net of income taxes of $210, $0, and $0		15,255			—			—
Income (loss) before extraordinary item		12,917		$	(5,919	)	$	27,736
Extraordinary item		—			—			(6,566	)
Net income (loss)	$	12,917		$	(5,919	)	$	21,170
Net income (loss) per share basic and diluted:
Continuing operations	$	(0.91	)	$	(0.84	)	$	(1.88	)
Discontinued operations		5.28			(1.19	)		11.55
Extraordinary item		—			—			(2.29	)
Net income (loss) per common share basic and diluted	$	4.37		$	(2.03	)	$	7.38
Shares used in computation		2,954			2,920			2,867

20

Item 1.    FINANCIAL STATEMENTS*

BNS Co.

CONSOLIDATED BALANCE SHEETS

December 31, 2003 and 2002

(dollars in thousands, except share data)

	2003			2002
ASSETS
Current Assets:
Cash	$	14,404		$	4,416
Other receivable, net of $37 and $87 allowance in 2003 and 2002, respectively		214			1,037
Assets held for sale or disposition		493			444
Assets related to discontinued operations		—			2,738
Available for sale securities		—			93
Prepaid expenses & other current assets		1,158			512
Total current assets		16,269			9,240
Equipment:
Equipment		37			37
Less accumulated depreciation		20			14
		17			23
Restricted cash		331			—
	$	16,617		$	9,263
LIABILITIES AND SHAREOWNERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	1,820		$	4,048
Liabilities related to discontinued operations		—			2,360
Total current liabilities		1,820			6,408
Long-term liabilities		1,351			2,527
Commitments and contingencies		—			—
Shareowners’ equity
Preferred stock; $1.00 par value; authorized 1,000,000 shares; none issued		—			—
Common Stock:
Class A, par value, $.01; authorized 30,000,000 shares; issued 3,000,342 shares in 2003 and 2,947,987 shares in 2002		30			29
Class B, par value, $.01; authorized 2,000,000 shares; issued 35,620 in 2003 and 52,975 in 2002		1			1
Additional paid-in capital		87,071			86,981
Retained deficit		(73,375	)		(86,292	)
Unamortized value of restricted stock awards		(40	)		(88	)
Accumulated other comprehensive income		214			152
Treasury stock: 8,518 shares in 2003 and 2002 at cost		(455	)		(455	)
Total shareowners’ equity		13,446			328
	$	16,617		$	9,263

* The accompanying notes are an integral part of the financial statements

21

BNS Co.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2003, 2002, and 2001

(dollars in thousands)

	2003			2002			2001
Cash Used in Operations:
Net income (loss)	$	12,917		$	(5,919	)	$	21,170
Adjustment to reconcile net earnings to net cash provided (used) in operating activities:
(Income) loss from discontinued operations		(333	)		2,570			13,997
(Gain) loss from disposal of business/property		(15,255	)		916			(47,113	)
Extraordinary item-extinguishment of debt		—			—			6,566
Restricted Cash for Environmental Escrow		(331	)		—			—
Investment shares received		—			(93	)		—
Depreciation and amortization		145			136			9
Unfunded pension		(1,886	)		(752	)		(4,380	)
Change in long-term liability		—			—			216
Changes in Working Capital:
(Increase) decrease in other receivables		77			(108	)		40
Decrease (increase) in prepaid expenses and other current assets		(646	)		(165	)		1,398
(Decrease) increase in accounts payable and accrued expenses		(1,856	)		519			(1,392	)
Increase in other assets		—			3			—
Net Cash Used In Operations		(7,168	)		(2,893	)		(9,489	)
Investment Transactions:
Capital expenditures		—			(14	)		(23	)
Proceeds from sale of business, net of expenses		1,028			3,175			141,285
Proceeds from sale of building, net of expenses		18,684			—			—
Payment related to sale of Electronics Division		(307	)		—			—
Payment related to sale of Metrology Business		—			(1,200	)		—
Proceeds from sale of available for sale securities		97			—			—
Cash Provided by Investment Transactions		19,502			1,961			141,262
Financing Transactions:
Payment of notes payable		(2,360	)		—			(27,400	)
Payment of long-term senior notes payable		—			—			(56,566	)
Payment on mortgage		—			(957	)		(883	)
Distribution to shareholders		—			—			(44,480	)
Equity contributions		—			—			1,772
Purchase of minority interest		—			(688	)		(1,116	)
Contribution from minority interest		—			1,500			2,500
Cash Used in by Financing Transactions		(2,360	)		(145	)		(126,173	)
Cash Provided by (Used in) Discontinued Operations		—			(3,288	)		(5,771	)
Effect of Exchange Rate Changes on Cash		14			125			(55	)
Cash and Cash Equivalents:
Increase (decrease) during the period		9,988			(4,240	)		(226	)
Beginning balance		4,416			8,656			8,882
Ending balance	$	14,404		$	4,416		$	8,656
Supplementary Cash Flow Information:
Interest Paid	$	222		$	361		$	3,378
Taxes Paid	$	365		$	290		$	230

The accompanying notes are an integral part of the financial statements

22

BNS Co.

CONSOLIDATED STATEMENTS OF SHAREOWNERS’ EQUITY

For the Years Ended December 31, 2003, 2002, and 2001

(in thousands)

	Shares *	Common Stock		Additional paid in capital			Retained deficit			Unamortized value of restricted stock awards			Accumulated other comprehensive income(loss)			Treasury stock			Total Equity
Balance Dec. 31, 2000	2,766	$	28	$	127,276		$	(101,543	)	$	—		$	(14,163	)	$	(455	)	$	11,143
Net income	—		—		—			21,170			—			—			—			21,170
Foreign currency translation adjustment	—		—		—			—			—			14,160			—			14,160
Comprehensive income																				35,330
Dividend Paid ($15.25 per share)	—		—		(44,480	)		—			—			—			—			(44,480	)
Exercise of stock options	159		2		1,770			—			—			—			—			1,772
Acquisition of subsidiary minority interest	—		—		1,384			—			—			—			—			1,384
Balance Dec. 31, 2001	2,925	$	30	$	85,950		$	(80,373	)	$	—		$	(3	)	$	(455	)	$	5,149
Net loss	—		—		—			(5,919	)		—			—			—			(5,919	)
Foreign currency translation adjustment	—		—		—			—			—			155			—			155
Comprehensive loss																				(5,764	)
Restricted stock awards	76		—		219			—			(219	)		—			—			—
Amortization of restricted stock awards	—		—		—			—			131			—			—			131
Acquisition of subsidiary minority interest	—		—		812			—			—			—			—			812
Balance Dec. 31, 2002	3,001	$	30	$	86,981		$	(86,292	)	$	(88	)	$	152		$	(455	)	$	328
Net income	—		—		—			12,917			—			—			—			12,917
Foreign currency translation adjustment	—		—		—			—			—			62			—			62
Comprehensive income																				12,979
Restricted stock awards	35		1		90			—			(91	)		—			—			—
Amortization of restricted stock awards	—		—		—			—			139			—			—			139
Balance Dec. 31, 2003	3,036	$	31	$	87,071		$	(73,375	)	$	(40	)	$	214		$	(455	)	$	13,446

* Number of shares have been restated to reflect the effect of the one-for-five reverse stock split in 2001

The accompanying notes are an integral part of the financial statements

23

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share and per share data)

1.    SIGNIFICANT ACCOUNTING POLICIES

Business

The Company completed the sale of its Metrology Business to Hexagon AB of Stockholm, Sweden (“Hexagon”) on April 27, 2001. After the sale, the Company continued the business of developing and producing measuring software through its controlled subsidiary, Xygent, Inc., formerly BSIS (“Xygent”). In August 2002, pursuant to a Securities Purchase Agreement dated August 16, 2002, Hexagon Holdings Inc., a subsidiary of Hexagon AB, acquired all of BNS Co.’s interest in Xygent. On August 28, 2003, pursuant to a Purchase and Sale Agreement dated as of April 28, 2003, the Company sold the North Kingstown facility to Wasserman RE Ventures LLC. The remaining business of the Company is the operation of a gravel extraction and landfill property in the U.K. (from which it derives royalties), which is owned by a U.K. subsidiary of BNS International, Ltd., a Cayman Islands wholly owned subsidiary of the Company. On February 5, 2004, the Company entered into an agreement to sell the gravel extraction and landfill property to Bath Road Holdings Limited.

Basis of Presentation

The consolidated financial statements of BNS Co. (the “Company”) include the accounts of BNS Co. and its wholly owned subsidiary, BNS Co. (PH) Ltd. All inter-company transactions have been eliminated from the consolidated financial statements.

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain account balances for the prior years have been reclassified to conform to the current year financial statement presentation.

Equipment

Equipment is carried at cost and is being depreciated principally on a straight-line basis over the estimated useful lives of the assets, which generally range from 5 to 7 years for machinery and equipment. Depreciation expense was $6, $5, and $9 in 2003, 2002 and 2001, respectively.

Foreign Currency

Assets and liabilities of those subsidiaries located outside the United States whose cash flows are primarily in local currencies are translated at year-end exchange rates, and income and expense items are translated at average monthly rates. Translation gains and losses are accounted for in a separate shareowners’ equity account titled accumulated other comprehensive income (loss).

There were no forward exchange contracts outstanding at December 31, 2003 and 2002.

24

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

Comprehensive Income

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting shareowners’ equity that, under accounting principles generally accepted in the United States of America, are excluded from net income (loss). For the Company, such items consist of foreign currency translation gains and losses. Accumulated other comprehensive income (loss) at December 31, 2003 and 2002 are comprised of currency translation adjustments of $214 and $152, respectively.

Stock Incentive Plans

The Company accounts for its stock compensation arrangements under the provisions of APB 25, Accounting for Stock Issued to Employees (see Footnote 10 for further details).

Income Taxes

The Company provides for income taxes under the provisions of SFAS No. 109, Accounting for Income Taxes. SFAS No. 109 requires an asset and liability based approach in accounting for income taxes.

Deferred income tax assets and liabilities are recorded to reflect the tax consequences on future years of temporary differences of revenue and expense items for financial statement and income tax purposes. Valuation allowances are provided against assets which are not likely to be realized. The Company has decided not to reinvest foreign funds and will repatriate available funds to the U.S. No deferred tax liability has been recorded related to the un-remitted funds as such repatriation will not generate additional U.S. taxation.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of cash on hand and deposits in banks with a maturity of three months or less. The carrying amount of cash and cash equivalents approximates fair value.

Restricted Cash

Restricted Cash represents an escrow account established in connection with the sale of the North Kingstown facility to reimburse the buyer for that portion of any post-closing remediation costs, should they arise, that not otherwise covered by insurance policies purchased by the Company. The amount of the escrow was equal to the amount of self insured retention under those policies.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, equity securities, receivables and trade payables. Fair value estimates have been determined by the Company, using available market information and appropriate valuation methodologies. The carrying value of cash and cash equivalents, equity securities, receivables and trade payables is considered to be representative of their respective fair value, due to the short term nature of these instruments.

Investments

The company classifies its investments held as available-for-sale and accounts for them at fair value with unrealized gains and losses, net of taxes, excluded from earnings and reported as other comprehensive income.

25

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

The Company classifies available-for-sale securities as current if the Company expects to sell the securities within one year or if the Company intends to utilize the securities for current operations. All other available-for-sale securities are classified as non-current. Gain or loss on sale of investments is based upon the specific identification method.

Receivables

Receivables are carried at original invoice amount less an estimate made for doubtful receivables resulting from the inability of customers to make required payment. This amount of the reserve is based on an analysis of the receivables outstanding. If the financial condition of the customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required which would result in an additional expense in the period such determination was made. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. No interest is recorded on receivables.

Stock-Based Compensation

The Company accounts for its stock-based compensation plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. See Note 10 for further information on stock-based compensation. The following table summarizes the effect on net income (loss) and net income (loss) per common share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation for the respective years. Since all options were either exercised or forfeited as a result of the sale of the Metrology Business to Hexagon, the remaining compensation expense has been recorded in 2001 for pro forma purposes:

	2001
Net income as reported	$	21,170
Deduct: Total stock-based employee compensation determined under fair value based method for all awards, net of related tax effects.		644
Pro forma net income	$	20,526
Net income per share: basic and diluted as reported	$	7.38
Pro forma net income per share: Basic and diluted	$	7.16

Recently Issued Accounting Pronouncements

In January 2003 FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” was issued. This interpretation requires a company to consolidate variable interest entities (“VIE”) if the enterprise is a primary beneficiary (holds a majority of the variable interest) of the VIE and the VIE passes specific characteristics. It also requires additional disclosures for parties involved with VIEs. The provisions of this interpretation are effective in 2003. Accordingly, the Company will adopt FASB Interpretation No. 46 effective fiscal 2003 and does not expect the adoption of this interpretation will have an impact on its consolidated financial position or results of operations.

In December, 2003, the FASB issued a revision of Interpretation No. 46 (the Revised Interpretation 46). Revised Interpretation 46 codifies both the proposed modifications and other decisions previously issued through certain FASB Staff Positions (FSPs) and supersedes the original Interpretation No. 46 to include: (1) deferring

26

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

the effective date of the Interpretation’s provisions for certain variable interests, (2) providing additional scope exceptions for certain other variable interests, (3) clarifying the impact of troubled debt restructurings on the requirement to reconsider (a) whether an entity is a VIE or (b) which party is the primary beneficiary of a VIE, and (4) revising Appendix B of the Interpretation to provide additional guidance on what constitutes a variable interest. Accordingly, the Company will adopt Revised Interpretation No. 46 effective the first quarter 2004 and does not expect the adoption of this interpretation will have an impact on its consolidated financial position or results of operations.

2.    GOING CONCERN

Since 2001 the Company has completed various business disposals affecting substantially all of the Company’s operations. At December 31, 2003 the Company is solely a real estate management company. Furthermore, subsequent to December 31, 2003 the Company entered into an agreement to sell the Company’s largest remaining asset, its interest in its U. K. property.

These disposal activities are part of the Company’s overall plan to sell its remaining assets and then liquidate or seek other strategic alternatives. As of February 13, 2004 no definitive determination has been made as to whether the Company will liquidate or will pursue other strategic alternatives utilizing the Company’s remaining assets (e.g., cash and NOL’s, to the extent they are available to offset future earnings). This uncertainty raises substantial doubt about the Company’s ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

3.    DISCONTINUED OPERATIONS

On March 5, 2001, the Company entered into an Asset Purchase Agreement to sell the assets of its Israeli electronics business to Orbotech, Ltd. On April 27, 2001, pursuant to an acquisition agreement dated November 16, 2000 with Hexagon AB of Stockholm, Sweden the Company completed the sale of the remaining Metrology Business assets, including the assumption of most related liabilities. The purchase price for the sale of the Metrology Business was $170,000 less a $12,800 cash adjustment based on the terms of the Asset Purchase Agreement. After the cash adjustment and payment of all U.S. bank debt and long-term senior note-holder obligations, the Company received net proceeds of approximately $70,000.

On August 16, 2002, the Company entered into a Securities Purchase Agreement with a subsidiary of Hexagon for the purchase of the Company’s interest in Xygent a development stage measuring software business unit. Hexagon paid the Company $2,250 in cash on August 20, 2002, and was obligated to pay the Company a deferred purchase price of up to $750 subject to possible adjustment relating to an Xygent equity value calculation as of August 16, 2002, as specified in the Agreement. Hexagon subsequently disputed the equity value calculation. The dispute was submitted to arbitration, as required by the Securities Purchase Agreement, which resulted in a deferred purchase price payment of $604, which was paid on January 22, 2003. In connection with the sale of Xygent, the Company was released from its lease in Warwick, Rhode Island and relocated its headquarters to the Company’s North Kingstown property.

The Asset Purchase Agreement requires that the Company indemnify Hexagon for certain matters, including matters concerning the Company’s representations and warranties concerning Xygent. Prior to the sale of the

27

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

Company’s interests to Hexagon, Hexagon held 23% of the issued and outstanding shares of Xygent and the Company held 77% of the issued and outstanding shares of Xygent. The purchase price was determined by arms-length negotiation between representatives of the Company and Hexagon.

On August 26, 2003, pursuant to a Purchase and Sales Agreement dated as of April 28, 2003, as amended between the Company and Wasserman RE Ventures LLC (“Wasserman”), the Company sold the North Kingstown property which consisted of an industrial and office building along with the adjoining acreage (a total of approximately 169 acres, all in Rhode Island) and reported a gain of $15,255 net of expenses on the sale. The Company received proceeds of $18,684 net of expenses. Additionally, the Company established an environmental escrow in the amount of $331 to cover certain environmental remediation costs. This escrow account is presented as restricted cash on the consolidated balance sheet except for the interest earned which is presented as part of the unrestricted cash. The purchase price was determined by arms-length negotiation between representatives of the Company and representatives of Wasserman. In connection with the sale of the North Kingstown property, the Company relocated its headquarters to its present business location in Middletown, Rhode Island.

The assets and liabilities related to the Metrology Business, Xygent, and the North Kingstown facility for all periods presented have been reclassified to assets and liabilities of discontinued operations.

The results of the discontinued operations have been reported separately on the consolidated statements of operations. Summarized results of the discontinued operations are as follows:

	2003		2002			2001
Revenues	$	1,336	$	2,508		$	92,263
Income (loss) from operations, net of income taxes		333		(2,570	)		(13,997	)
Gain (loss) on disposal		15,255		(916	)		47,113
Net Income (loss) from discontinued operations	$	15,588	$	(3,486	)	$	33,116

4.    ASSETS HELD FOR SALE

In conjunction with the sale of the North Kingstown property, the Company began actively marketing the U.K. property. Subsequent to year end, the Company has entered into an agreement to sell its real estate holdings in the U.K. for 5,500 British Pounds. The transaction will be in the form of the sale of the stock of the Company’s U.K. subsidiary that holds title to the property and the sale of the Company’s note receivable from the U.K. subsidiary. There will also be a post-closing adjustment for the subsidiary’s net working capital at the time of closing. The sale to Buyer under the Agreement is deemed to constitute the sale of substantially all assets of the Company within the meaning of the Delaware General Corporation Law and therefore requires stockholder approval. The Company has classified this property as asset held for sale on the Company’s Consolidated Balance Sheets. This sale is expected to be completed during 2004.

5.    AVAILABLE FOR SALE INVESTMENTS

During 2002 the Company received common shares of an insurance company as a result of the demutualization of that company. The receipt of these shares has been recorded in other income on the statement of operations. The fair market value of these shares was recorded in available for sale investments on the balance sheet. During the year ended December 31, 2003 these shares were disposed of and the Company realized a gain in the amount of $4 on this sale.

28

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

6.    INCOME TAXES

Income (loss) from continuing operations before income taxes consisted of the following:

	2003			2002			2001
Domestic	$	(3,127	)	$	(3,003	)	$	(5,722	)
Foreign		678			817			481
Loss from continuing operations before income taxes	$	(2,449	)	$	(2,186	)	$	(5,241	)

The following table reconciles the income tax provision (benefit) at the U.S. statutory rate to that in the financial statements:

	2003			2002			2001
Taxes Computed at 34%	$	(832	)	$	(163	)	$	(2,296	)
Foreign Taxes		222			247			139
Net operating losses not benefited		832			163			2,296
Income tax provision	$	222		$	247		$	139

The income tax provision (benefit) from continuing operations before discontinued operations and extraordinary items consisted of the following:

	2003			2002		2001
Current:
Federal	$	—		$	—	$	—
State		—			—		—
Foreign		249			230		133
	$	249		$	230	$	133
Deferred:
Federal		—			—		—
Foreign		(27	)		17		6
		(27	)		17		6
Income tax provision	$	222		$	247	$	139

The Company has reclassified the income taxes related to the Metrology Business and Xygent to the loss from discontinued operations. The Company has recorded an income tax provision related to discontinued operations of $0, $0, and $751 for the years ended December 31, 2003, 2002, and 2001, respectively.

29

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

The components of the Company’s deferred tax assets and liabilities as of December 31, 2003 and 2002 are as follows:

	2003		2002
Deferred tax assets:
Other receivable reserve	$	44	$	43
Depreciation		—		154
Loss carry forwards		16,270		22,027
Accrued expenses		290		794
Other		119		118
Gross deferred tax assets		16,723		23,136
Less valuation allowance		16,718		23,079
Deferred tax asset	$	5	$	57
Deferred tax liabilities:
Asset basis differences	$	4	$	57
Other		18		44
Deferred tax liability	$	22	$	101

A valuation allowance has been established due to the uncertainty of realizing certain tax credit and loss carry forwards and a portion of the other deferred tax assets. Deferred tax assets decreased along with a comparable amount of the valuation allowance due to the utilization of net operating losses.

For income tax purposes, the Company has a U.S. operating loss and capital loss carry forwards of $43,462 and $2,095, respectively. The U.S. net operating loss carry forward expires between 2018 and 2022.

The Inland Revenue Service in the United Kingdom is currently examining the U.K. income tax returns for 2000 and 2001. The Company believes the results of the examination will not have a material effect on the financial statements.

7.    RELATED PARTY TRANSACTIONS

During 2002 and 2001, the Company and Hexagon each had an ownership interest in Xygent. Therefore, Hexagon was a related party during 2002 and 2001. As presented above, during 2002 Hexagon acquired all of the Company’s interest in Xygent.

The Company leased a portion of its North Kingstown facility to Hexagon under a non-cancelable lease agreement for a period of five years commencing in April 2001. In addition to the rental payment the agreement provided that Hexagon would bear the cost of other expenses associated with the rented space. Total rental income from Hexagon received for the year ended December 31, 2002 and 2001 was $1,083 and $1,003, respectively.

The net balance of accounts receivable due from Hexagon as of December 31, 2002 was $746. This amount included $604 related to the acquisition of Xygent, which was subsequently paid in 2003.

The net balance of accounts receivable due from and accrued expenses due to Hexagon as of December 31, 2003 was $67. This amount was received subsequent to December 31, 2003.

30

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

A Director of the Company is a partner of a law firm that provides legal services to the Company. Total fees incurred to this law firm during 2003, 2002 and 2001 were $773, $1,081 and $1,343, respectively.

The CEO received incentive compensation related to the disposal of the North Kingstown property and incentive compensation to the CEO has been accrued related to the agreement to sell the U.K. property.

8.    OTHER INCOME AND EXPENSE

Other income (expense), net from continuing operations includes:

	2003		2002		2001
Interest income	$	78	$	102	$	1,231
Exchange losses		—		—		(7	)
Income from insurance company investment		—		93		—
Other income (expenses)		20		32		(6	)
Other income (expense), net	$	98	$	227	$	1,218

9.    ALLOWANCE FOR DOUBTFUL ACCOUNTS

The activity in the Company’s allowance for doubtful accounts is as follows:

	Balance at Beginning of Period		Amount Charged, net of Recoveries to Costs and Expenses			(1) Deductions		Balance at End of Period
2003	$	87	$	45		$	95	$	37
2002		826		(30	)		709		87
2001		4,461		826			4,461		826

(1) Write-offs of uncollectible accounts; in 2001 assets and related reserves were sold.

10.    INCENTIVE AND RETIREMENT PLANS

The Company has for many years utilized stock options and other stock-based awards as part of its overall management incentive compensation programs. The grant of options under the 1989 Equity Incentive Plan (the ’89 Plan), as amended, expired February 24, 1999 and the plan terminated following the sale of the Metrology Business. On February 12, 1999, the Company adopted the 1999 Equity Incentive Plan (the ’99 Plan).

Stock Incentive Plans

Under the provisions of the Company’s ’99 Plan, a variety of stock and stock based incentive awards, including stock options, are available to be granted to eligible key employees of the Company and its subsidiaries. The Plan permits the granting of stock options which qualify as incentive stock options under the Internal Revenue Code and non-statutory options which do not so qualify. No options were granted in 2001 or 2002. The options previously granted under the ’99 Plan were exercisable for a seven-year term, of Class A

31

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

Common Stock granted at exercise prices between $1.875 and $2.375 per share. As a result of the sale of the Metrology Business, all of the options previously granted under the ’99 Plan and the ’89 Plan became exercisable upon the closing date of the transaction. All options not exercised at that time have since expired.

Option activity is summarized as follows:

	2001
	Options (000)		Weighted- Average Exercise Price
Outstanding—beginning of year	378		$	29.15
Granted
Exercised	(160	)		11.20
Forfeited or canceled	(218	)		42.00
Outstanding—end of year	0			—
Exercisable at end of Year	0			—

The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related Interpretations in accounting for its employee stock options because, as discussed below, the alternative fair value accounting provided for under SFAS No. 123, Accounting for Stock-Based Compensation (FAS 123), requires use of valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is required by FAS 123, which also requires that the information be determined as if the Company has accounted for its employee stock options granted subsequent to December 31, 1994 under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for 2000: risk-free interest rates of 5.0%, volatility factors of the expected market price of the Company’s common stock of 128%, and a weighted-average expected life of the option of 4.25 years. No dividend yield was utilized due to the fact that the Company did not anticipate that it would pay dividends from continuing operations in the foreseeable future.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

In April 2002 the Board of Directors approved the award of an aggregate of 75,715 shares of restricted Class A common stock to members of the Board as payment of their Annual Retainer. In June 2002, 5,715 shares became fully vested and on July 18, 2003 the remaining 70,000 shares were fully vested. The entire award was recorded at fair market value on the date of issuance as deferred compensation and the related amount is being

32

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

amortized to operations over the vesting period. The entire amount has been amortized to operations as of July 2003 as all of these shares have fully vested. Compensation expense related to these restricted shares amounted to $88 during 2003.

In April 2003, the Company granted restricted stock awards covering 35,000 shares of common stock, respectively to directors of the Company as a means of retaining and paying directors’ retainer fees, thereby rewarding them for long-term performance and to increase their ownership in the Company. Shares awarded under the plan entitle the shareowners to all rights of common stock ownership except the shares may not be sold, transferred, pledged, assigned, or otherwise encumbered or disposed of during the restriction period. The shares shall vest on July 21, 2004 or upon any earlier dissolution, including any merger or sale of assets or other business combination (including a transaction done by way of tender offer or sale of stock) which constitutes the acquisition of control of the Company (including a transaction whereby a majority of the directors are replaced by representatives or nominees of such person or persons) by a person or persons owning less than a majority of the equity or voting power of the Company’s stock prior to the date of the occurrence of such event or adoption of a plan of liquidation. The shares were recorded at the fair market value on the date of issuance as deferred compensation and the related amount is being amortized to operations over the vesting period. Compensation expense related to these restricted shares amounted to $51 during 2003. 89,645 shares of Class A Common Stock or Class B Common Stock remain available for issuance under the ’99 Plan.

Profit Incentive Plan

Under the provisions of the Company’s Amended Profit Incentive Plan as originally approved in 1979, awards of cash could be made as bonuses to certain management employees. No awards were made under the plan for 2003, 2002 and 2001 respectively, based on performance objectives for the respective year.

Long-Term Deferred Cash Incentive Plan

The Brown & Sharpe Key Employee’s Long-Term Deferred Cash Incentive Plan (the “LTDCIP”) provided long-term deferred incentive compensation to key executive employees of the Company with award credits being established, subject to certain vesting requirements, in unfunded LTDCIP accounts for each LTDCIP participant. The LTDCIP was amended in 1998 to provide that beginning in 1998 participant award opportunities are individually determined by the Compensation and Nominating Committee of the Board of Directors administering the LTDCIP as a percentage of adjusted annual pre-tax profit. As a result of the sale of the Metrology Business, this plan was terminated and all amounts accrued under the plan were distributed to the participants. No expenses related to this plan were recorded in 2003, 2002, and 2001, respectively.

Savings Plans

The Company has a 401(k) plan for U.S. employees, which include retirement income features consisting of employer contributions and employee tax deferred contributions. Contributions under all plans are invested in professionally managed portfolios. The savings plans’ expense for the three years ended December 31, 2003 was $0, $0, and $192, respectively. The Company has terminated the plan effective June, 2003, and has discontinued making either employee or matching contributions to the plan. An application has been made to the Internal Revenue Service to approve termination and liquidation of the plan.

33

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

Stock Ownership Plan

Under the provisions of the Company’s Employee Stock Ownership Plan (“ESOP”), the Company may make contributions of common stock or cash to purchase common stock from the Company or otherwise, to be held in trust for employees meeting certain eligibility requirements until the employees reach retirement age. The ESOP may also borrow funds to purchase common shares, in which event the Company would contribute amounts as necessary to pay down the indebtedness. As a result of the disposition of the Metrology Business, the Company terminated the ESOP effective April 27, 2001. All funds under this plan were distributed to participants during 2001. The Company received in May 2002 the final termination determination from the Internal Revenue Service. No ESOP expense was recorded in 2003, 2002, and 2001.

Retirement Plans

Beginning in 1998 the Company had a Senior Executive Supplemental Umbrella Pension Plan covering certain key employees in the United States. In connection with the disposition of the Metrology Business, the benefits earned by certain key management under Senior Executive Supplemental Umbrella Pension Plan were either distributed during the year or provisions were made for such distribution, and the plan was terminated. The Defined Contribution Plan expense recorded in discontinued operations for the three years ended December 31, 2002 was $0, $0, and $452, respectively.

11.    NET INCOME (LOSS) PER SHARE

Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is the same as basic income (loss) per share in 2003, 2002 and 2001 because the computation of diluted income (loss) per share would have an anti-dilutive effect on income (loss) per share. The computation of basic and diluted income (loss) per share is as follows:

	2003			2002			2001
Numerator:
Loss from continuing operations before extraordinary item	$	(2,671	)	$	(2,433	)	$	(5,380	)
Income (loss) from discontinued operations		15,588			(3,486	)		33,116
Extraordinary item		—			—			(6,566	)
Net income (loss)	$	(12,917	)	$	(5,919	)	$	21,170
Denominator for basic and diluted income (loss) per share		2,954			2,920			2,867
Net income (loss) per share—basic and diluted
Loss from continuing operations	$	(0.91	)	$	(0.84	)	$	(1.88	)
Income (loss) from discontinued operations		5.28			(1.19	)		11.55
Extraordinary item		—			—			(2.29	)
Basic and diluted income (loss) per share	$	4.37		$	(2.03	)	$	7.38

34

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

12.    RESTRICTED CASH

Restricted Cash consists of the environmental escrow account established in connection with the sale of the North Kingstown property. It is anticipated that the funds in this escrow will not be released for more than one year (See note 2).

13.    DEBT

The Company had a mortgage payable on the North Kingstown facility with an original principal amount of $4,900. The mortgage was payable in monthly installments including interest computed at 8.12% per annum. The mortgage would mature in February 2005 and was secured by the North Kingstown Facility. The outstanding balance on the mortgage was $0 and $2,360 at December 31, 2003 and 2002, respectively. This mortgage payable had been classified as current in order to match the classification of the security for this debt. In 2003, the entire outstanding balance on the mortgage liability was paid. The repayment of the mortgage obligation resulted in the payment of a prepayment penalty. This penalty, in the amount of $281, has been recorded as a component of the gain on the sale of the North Kingstown facility.

Until the sale of the Company’s Metrology Business on April 27, 2001, the Company was obligated under a $50,000 private placement of senior notes with principal payments due from November 2001 to November 2007. Following the consummation of the sale to Hexagon, all of the debt to its private placement lenders was paid. The repayment of the note obligation resulted in the payment of a prepayment penalty. This penalty, together with the write-off of previously recorded debt acquisition costs, has been recorded as an extraordinary loss in the statements of operations in the amount of $6,566. No income taxes have been recorded related to this item.

Prior to April 2001, the Company had a $30,000 three-year syndicated multi-currency revolving credit arrangement with four banks. Following the consummation of sale to Hexagon on April 27, 2001, the Company paid the outstanding balance of $27,400.

14.    LONG-TERM LIABILITIES

Long-term liabilities consisted of the following:

	2003		2002
Unfunded accrued pension cost	$	—	$	1,127
Taxes payable		1,351		1,400
	$	1,351	$	2,527

15.    COMMON STOCK

At a special meeting held on April 27, 2001, the stockholders of BNS Co. approved the reduction of the par value per share of the Class A Common Stock and Class B Common Stock from $1.00 to $.01 and a one-for-five reverse stock split of the Company’s outstanding Class A Common Stock and Class B Common Stock. The record date for the one-for-five reverse stock split was May 10, 2001. All references to shares have been restated to reflect the stock split.

35

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

Both classes of common stock have equal rights upon liquidation. Class A Common Stock may not receive less cash dividends per share than Class B Common Stock, nor may such dividends be less frequent. The Class A Common Stock has one vote per share. Except as otherwise provided by the Certificate of Incorporation and by law, the Class B Common Stock has ten votes per share, and the Class B Common Stock is convertible into Class A Common Stock on a one-for-one basis, and can be transferred in Class B form only to specified transferees, generally members of a shareowner’s family and certain others affiliated with the shareowner. During 2003 and 2002, 17,355 shares and 11,032 shares respectively, were converted from Class B Common Stock to Class A Common Stock.

16.    PREFERRED STOCK PURCHASE RIGHTS

On February 13, 1998, the Board approved a new Rights Plan and declared a dividend purchase right (a Right) for every outstanding share of the Company’s Class A Common Stock and Class B Common Stock to be distributed on March 9, 1998 to stockholders of record as of the close of business on that date. The Rights expire on February 13, 2008 or upon the earlier redemption of the Rights, and they are not exercisable until a distribution date on the occurrence of certain specified events. On October 10, 2002 the Board approved an amendment to the Rights Plan to increase the percentage threshold which would trigger distribution of the Rights and reduce the exercise price of each Right under the Plan. On October 6, 2003, the Board approved an amendment to the Rights Plan to decrease the percentage threshold which would trigger distribution of the Rights.

Each Right entitles the holder to purchase from the Company one one-hundredth of a share of Series B Participating Preferred Stock, $1.00 par value per share, at a price of $12.00 per one one-hundredth of a share, subject to adjustment. The Rights will, on the distribution date, separate from the Common Stock and become exercisable ten days after a person has acquired beneficial ownership of 5% (or 20% in the case of stockholders, and certain of their transferees, who together with their affiliates beneficially held 20% or more of the Company’s outstanding Common Stock on October 6, 2003) or more of the outstanding shares of Common Stock of the Company or commencement of a tender or exchange offer that would result in any person owning 5% (or 20% in the case of stockholders, and certain of their transferees, who together with their affiliates beneficially held 20% or more of the Company’s outstanding Common Stock on October 6, 2003) or more of the Company’s outstanding Common Stock.

Each holder of a Right will in such event have the right to receive shares of the Company’s Class A Common Stock having a market value of two times the exercise price of the Right, which has been set at $12.00; and in the event that the Company is acquired in a merger or other business combination, or if more than 25% of its assets or earning power is sold, each holder of a Right would have the right to receive common stock of the acquiring company with a market value of two times the exercise price of the Right. Following the occurrence of any of these events, any Rights that are beneficially owned by any acquiring person will immediately become null and void. The Company, by a majority vote of the Board, may redeem the Rights at a redemption price of $.01 per Right.

17.    CONTINGENCIES

The Company is a defendant in a variety of legal claims that arise in the normal course of business. These include claims received for toxic tort injuries related to the use of asbestos material in pumps sold by its hydraulic pump operations, and other product liability claims relating to the use of machine tools sold by a division of the Company which was itself sold many years ago. There have also been a few miscellaneous claims relating to employment activities, environmental issues, sales tax audits and personal injury claims. Most of these

36

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

suits are toxic tort claims resulting primarily from the use of small internal seals that allegedly contained asbestos and were used in small fluid pumps manufactured by the Company’s former pump division, which was sold in 1992. The Company has insurance coverage, but in general the coverage available has limitations. The Company expects, based on past experience, that it will continue to be subject to additional toxic tort claims in the future. As a matter of Delaware law the directors are required to take the probability of future claims into its consideration of various matters.

The contingent claims relating to the former pump division pose the most uncertainty. The Company has limited information concerning the number and location of pumps manufactured and, therefore, is unable to estimate the aggregate number of claims which might be filed in the future, which is necessary in order to reliably estimate any financial exposure. This product line was introduced in the late 1800’s. The materials alleged to contain asbestos were used for an undetermined period of time ending in the late 1960’s. The claims relate to exposure to this asbestos material. The Company sold its pump division in 1992 but remains subject to claims related to products manufactured prior to that date.

Since 1994 the Company has been named as a defendant in a total of 375 known claims (as of February 23, 2004) relating to these pumps. In many cases these claims involve more than 100 other defendants. Fifty-four of those claims were filed prior to December 31, 2001. However, in 2002 the Company was named in 98 additional claims; in 2003 there were a total of 192 new claims filed; and the Company has received notice of another 31 claims through February 23, 2004. In 2002, 42 claims were settled for an aggregate of $30,000 exclusive of attorney’s fees, and in January, 2004 a plaintiff’s attorney agreed to settle one claim for $500 and file for dismissal in another 67 claims. There are currently 265 claims that are open and active. However, under certain circumstances some of the settled claims may be reopened.

The Company believes it has significant defenses to any liability for toxic tort claims on the merits. It should be noted that, to date, none of these toxic tort claims have gone to trial and therefore there can be no assurance that these defenses will prevail. Settlement and defense costs to date have been insignificant. However, there can be no assurance that the number of future claims and the related costs of defense, settlements or judgments will be consistent with the experience to date of existing claims.

It has become apparent that the uncertain prospect of additional toxic tort claims being asserted in the future, and the impact of this uncertainty on the valuation of the Company, has had and will continue to have, at least for the short term, some adverse effects on the Company’s ability to determine prospective distributions to shareholders or to negotiate a satisfactory sale, merger or other change in control transaction with a third party. These claims would also affect the ability of the Company to carry out a fairly rapid liquidation proceeding, either through a dissolution, formation of a liquidating trust and liquidation proceedings in the Chancery Court in Delaware, or in a Chapter 11 federal bankruptcy reorganization proceeding, both of which would involve provisions for payments to creditors and contemplated distributions to stockholders.

In January 2003 the Company reached a settlement and made a payment of $1.7 million to its former CEO and CFO to settle a dispute as to the amount due him to settle a compensation arrangement which had not been finalized but was in the process of being finalized, and to resolve a severance dispute. This entire amount had been accrued as of December 31, 2002.

During 2002, the Company settled a dispute with two former executives as to the amounts due them under their Change-In-Control contracts that were triggered by the 2001 Hexagon transaction. The terms of the

37

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands, except share and per share data)

settlement of an arbitration proceeding included payment of a negotiated amount plus reasonable and properly documented legal and accounting fees and disbursements incurred by the former employees. The Company had adequately provided for this liability.

A Phase II environmental study on the North Kingstown property completed in 2002 indicated the existence of certain environmental problems on the property. The results of the study showed that certain contaminants in the soil under the property and minor groundwater issues exceeded environmental standards set by the Rhode Island Department of Environmental Management (“RIDEM”). After extensive testing, the Company submitted two Remedial Action Work Plans (“RAWP’s”) to RIDEM, and on November 7, 2002, RIDEM issued a letter approving both RAWP’s. In September 2003 the Company received Interim Letters of Compliance from RIDEM for the completion of both RAWP’s.

18.    LEASES

The Company has a three year non-cancelable lease obligation for office space which began in 2003. Lease expense in 2003 was $16

Future minimum lease payments under this lease aggregate $69. Of this amount, annual minimum payments are $28, $29 and $12 for years 2004 through 2006, respectively.

19.    SUBSEQUENT EVENT

On February 5, 2004 the Company signed an agreement to sell the U.K. property for 5,500 British Pounds. This represents substantially all of the Company’s remaining assets. Upon sale of the U.K. property the Company’s remaining assets will predominantly be cash and cash equivalents. It is the Company’s intention to sell its remaining assets and then liquidate or seek other strategic alternatives. Such plan may involve one of the following alternatives: a) the sale of the Company through a merger or other change in control transaction; b) a liquidation, either through a dissolution, formation of a liquidating trust and liquidation proceedings in the Chancery Court in Delaware, or in a Chapter 11 federal bankruptcy reorganization proceeding, both of which would involve provisions for payments to creditors (including contingent claims) and contemplated distributions to stockholders; or c) continuation of the Company as a going-concern for either a limited or longer period of time while the Company devotes energies to resolving its contingent liabilities and makes investments which are permitted without requiring the Company to register as an “investment company” under the Investment Company Act of 1940. Such investments may include possible acquisitions of other operating businesses.

On February 23, 2004, 7,000 shares of restricted stock were awarded to directors under the 1999 Equity Incentive Plan in payment of the retainer fee for the 2004 year. The restricted shares granted are subject to forfeiture and do not vest until the director has continuously served as a director through April 30, 2005 (except that the forfeiture restrictions shall lapse and the shares shall vest immediately prior to termination of service as a director on account of death or disability) or, if earlier, on the day immediately prior to the happening of certain events, namely, a merger or other business combination or other change in control transaction, dissolution or filing by the Company under the bankruptcy laws for a liquidation. As of February 23, 2004, there were 82,645 shares of Class A common stock or Class B common stock available for issuance under the 1999 EIP.

38

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20.    QUARTERLY DATA (UNAUDITED)

	Previously Reported Mar 31			Restated Mar 31			Previously Reported Jun 30			Restated Jun 30			Sep 30			Dec 31
2003
Rental income	$	566		$	—		$	567		$	—		$	—		$	—
Gravel/landfill royalty revenue		188			188			252			252			236			272
Revenue	$	754		$	188		$	819		$	252		$	236		$	272
Loss from continuing operations		(132	)		(449	)		(875	)		(1,007	)		(656	)		(559	)
Income (loss) from discontinued operations, net of income taxes		(20	)		297			(8	)		124			15,214			(47	)
Net income (loss)	$	(152	)	$	(152	)	$	(883	)	$	(883	)	$	14,558		$	(606	)
Net income (loss) per share, basic and diluted, from continuing operations	$	(0.04	)	$	(0.15	)	$	(0.30	)	$	(0.34	)	$	(0.22	)	$	(0.19	)
Discontinued operations		(0.01	)		0.10			—			0.04			5.11			(0.02	)
Net income (loss) per common share-basic and diluted	$	(0.05	)	$	(0.05	)	$	(0.30	)	$	(0.30	)	$	4.89		$	(0.21	)

On August 26, 2003, the Company sold its North Kingstown Facility. As a result of this transaction, all activity related to the North Kingstown Facility is required to be presented as discontinued operations for all periods presented. The previously reported results included in the Company’s Form 10-Q for the three months ending March 31, 2003 and June 30, 2003 are restated here to reflect the classification of the North Kingstown Facility as discontinued operations.

39

BNS Co.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20.    QUARTERLY DATA (UNAUDITED) (continued)

	Previously Reported Mar 31			Restated Mar 31			Previously Reported June 30			Restated June 30			Sept 30			Dec 31
2002
Rental income	$	625		$	—		$	627		$	—		$	—		$
Gravel/landfill royalty revenue		225			225			252			252			304			237
Revenue		850			225			879			252			304			237
Loss from continuing operations		38			(365	)		(310	)		(799	)		(487	)		(782	)
Income (loss) from discontinued operations, net of income taxes		(1,650	)		(1,247	)		(2,599	)		(2,110	)		(997	)		868
Net income (loss)	$	(1,612	)	$	(1,612	)	$	(2,909	)	$	(2,909	)	$	(1,484	)	$	86
Net income (loss) per share, basic and diluted, from continuing operations	$	0.01		$	(0.13	)	$	(0.11	)	$	(0.27	)	$	(0.17	)	$	(0.27	)
Discontinued operations		(0.57	)		(0.43	)		(0.89	)		(0.73	)		(0.34	)		0.30
Net income (loss) per common share-basic and diluted	$	(0.56	)	$	(0.56	)	$	(1.00	)	$	(1.00	)	$	(0.51	)	$	0.03

On August 26, 2003, the Company sold its North Kingstown property. As a result of this transaction, all activity related to the North Kingstown property is required to be presented as discontinued operations for all periods presented. The previously reported results included in the Company’s Form 10-Q for the three months ending March 31, 2002 and June 30, 2002 are restated here to reflect the classification of the North Kingstown property as discontinued operations.

40

ITEM 9—CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None

ITEM 9A—CONTROLS AND PROCEDURES

The Company’s management, which consists of the Company’s President and Chief and Chief Executive Officer who is also the Company’s Chief Financial Officer, has evaluated the Company’s disclosure controls and procedures as of December 31, 2003, and has concluded that these controls and procedures are effective. There have been no significant changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

ITEM 10—DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

For information regarding our Directors, Executive Officers and compliance with Section 16(a) of the Securities Exchange Act of 1934, we direct you to the sections entitled “Proposal 2—Election of Directors,” and “Section 16(a) Beneficial Ownership Reporting Compliance,” respectively, in the Proxy Statement we will mail not later than April 28, 2004 to our stockholders in connection with our 2004 Annual Meeting of Stockholders. We are incorporating the information contained in those sections of our Proxy Statement here by reference.

The Company has adopted a Code of Business Conduct and Ethics (“Code”). The Code, in accordance with Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K, constitutes the Corporation’s Code of Ethics for Senior Financial Officers. The Code is intended to promote honest and ethical conduct, full and accurate reporting, and compliance with laws as well as other matters. A copy of the Code is included as the Exhibit 10.39 to this 10-K Annual Report.

ITEM 11—EXECUTIVE COMPENSATION

For information regarding our Executive Compensation, we direct you to the section entitled “Executive Compensation” in the Proxy Statement we will mail not later than April 28, 2004 to our stockholders in connection with our 2004 Annual Meeting of Stockholders. We are incorporating the information contained in that section of our Proxy Statement here by reference.

41

ITEM 12—SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

For information regarding Security Ownership of Certain Beneficial Owners and Management, we direct you to the section entitled “Security Ownership of Certain Beneficial Owners and Management,” which will appear in the Proxy Statement we will mail not later than April 28, 2004 to our stockholders in connection with our Annual Meeting of Stockholders. We are incorporating the information contained in that section here by reference.

The following table gives information about the Company’s Common Stock that may be issued upon the exercise of options, warrants and rights under the Company’s 1999 Equity Incentive Plan as of December 31, 2003. The Company’s 1999 Equity Incentive Plan was approved by the Company’s stockholders on April 30, 1999.

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders	0	0	89,645	(1)
Equity compensation plans not approved by security holders	0	0	0
Total			89,645

(1) 89,645 shares remain available for issuance under the Company’s 1999 Equity Incentive Plan as of December 31, 2003.

ITEM 13—CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

For information relating to certain relationships and related transactions, we direct you to the section entitled “Certain Relationships and Related Transactions” in the Proxy Statement we will mail, not later than April 28, 2004, to our stockholders in connection with our 2004 Annual Meeting of Stockholders. We are incorporating the information contained in that section here by reference.

ITEM 14—PRINCIPAL ACCOUNTANT FEES AND SERVICES

For information regarding Principal Accountant Fees and Services, we direct you to the “Audit Committee” report which will appear in the Proxy Statement we will mail, not later than April 28, 2004, to our stockholders in connection with our 2004 Annual Meeting of Stockholders. We are incorporating the information concerning the fees paid to our auditors contained in that report here by reference.

42

PART IV

ITEM 15—EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) (1) and (2) List of Financial Statements and Financial Statement Schedules

Financial Statements filed in Item 8 of this Annual Report:

Consolidated Statements of Operations for the Years Ended December 31, 2003, 2002 and 2001

Consolidated Balance Sheets at December 31, 2003 and 2002

Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002 and 2001

Consolidated Statements of Shareowners’ Equity for the Years Ended December 31, 2003, 2002 and 2001

Notes to Consolidated Financial Statements—December 31, 2003

All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are omitted because they are not required, are not inapplicable, or the information is included in the financial statements.

Reports on Form 8-K

A Form 8-K was filed on October 7, 2003 to report an amendment to the Shareholders Rights Plan, and a Form 8-K was filed on February 6, 2004 to report the agreement of the Company to sell its U.K. property.

43

Exhibit Index

Number
3.1	Joint Agreement of Merger between Brown & Sharpe Manufacturing Company, incorporated in Rhode Island, and Brown & Sharpe Manufacturing Company, the surviving corporation incorporated in Delaware, filed as the only Exhibit to Form 8-K for the month of January, 1969, and such is hereby incorporated by reference.
3.2	Amendment to Certificate of Incorporation, dated April 26, 1989, filed as Exhibit 13 to Form 10-K for the period ending December 29, 1989, and such is hereby incorporated by reference.
3.3	Amendment to Certificate of Incorporation, Dated April 25, 1980, filed as Exhibit 3.1 to Form 10-Q for the period ending June 28, 1980, and such is hereby incorporated by reference.
3.4	Amendment to Certificate of Incorporation dated April 24, 1987. Exhibit 3.7 was filed as Exhibit 10.4 to Form 10-Q for the period ended June 26, 1987, and such is hereby incorporated by reference.
3.5	Amendment to Certificate of Incorporation dated May 6, 1988 filed as Exhibit 1 to Current Report on Form 8-K filed May 9, 1988 and such is hereby incorporated by reference.
3.6	Certificate of Designation filed as Exhibit A to Exhibit 5 of Amendment on Form 8 filed on March 6, 1989, and such is hereby incorporated by reference.
3.7	Amendment to Certificate of Incorporation dated May 2, 1989. Exhibit 3.7 was filed as Exhibit 3.7 to the Form 10-K for the year ended December 30, 1989 and such is hereby incorporated by reference.
3.8	By-laws of Brown & Sharpe Manufacturing Company, as amended through July 29, 1994; previously filed as Exhibit 3.1 to the Form 10-Q for the quarter ended July 2, 1994 and such is hereby incorporated by reference.
3.9	Amendments to By-laws of Brown & Sharpe Manufacturing Company, as of September 28, 1994; previously filed as Exhibit 3 to the Form 10-Q for the quarter ended October 1, 1994 and such is hereby incorporated by reference.
3.10	Amendment to Certificate of Incorporation dated April 27, 2001 filed as Exhibit 99.2 to Report on Form 8-K filed May 10, 2001 and hereby incorporated by reference.
3.11	Amendment to Certificate of Incorporation dated April 27, 2001 filed as Exhibit 99.3 to Report on Form 8-K filed May 10, 2001 and hereby incorporated by reference.
3.12	Amendment to Section 14 of the By-laws adopted August 8, 2002. This exhibit was filed as Exhibit 3.12 to the Company’s 10-Q for the quarter ending September 30, 2002, and is hereby incorporated by reference.
+10.1	Amended 1983 Stock Option Plan, as amended through March 9, 1988. Exhibit 10.1 was filed as Exhibit 10.2 to the Form 10-K for the year ended December 31, 1988, and is hereby incorporated herein by reference.
+10.2	Amendment dated December 29, 1990 to the Brown & Sharpe Amended 1983 Stock Option Plan. Exhibit 10.2 was filed as Exhibit 10.3 to the Form 10-K for the year ended December 29, 1990 and such is herein incorporated by reference.
+10.3	Amended 1989 Equity Incentive Plan as amended through February 21, 1992. Exhibit 10.3 was filed as Exhibit 10.24 to the Form 10-K for the year ended December 28, 1991 and such is hereby incorporated by reference.
+10.4	Amendment dated November 11, 1992 to 1989 Equity Incentive Plan as amended through November 6, 1992. Exhibit 10.4 was filed as Exhibit 10.43 to the Form 10-K for the year ended December 26, 1992, and is hereby incorporated by reference.

44

Number	Exhibit Index
+10.5	Amended Profit Incentive Plan, as amended through February 14, 1994. Exhibit 10.5 was filed as Exhibit 10.53 to the Form 10-K for the year ended December 31, 1994, and is hereby incorporated by reference.
+10.6	Form of Indemnity Agreement with Alfred J. Corso dated May 3, 1995. Exhibit 10.6 was filed as Exhibit 10.62 to the Form 10-Q for the quarter ended September 30, 1995, and is hereby incorporated by reference.
+10.7	Form of Indemnity Agreement with Harry A. Hammerly dated October 25, 1996.
+10.8	Form of Indemnity Agreement with John Robert Held dated October 25, 1996.
+10.9	Form of Indemnity Agreement with Roger E. Levien dated October 25, 1996. (Also Form of Indemnity Agreement between Company and other Directors and Executive Officers)
	Exhibits 10.7, 10.8 and 10.9 were filed as Exhibits 10.79, 10.80 and 10.81, respectively, to the Form 10-K for the year ended December 31, 1996, and are hereby incorporated by reference.
10.10	Rights Agreement dated as of February 13, 1998 (“Rights Agreement”) between the Company and BankBoston N.A., as Rights Agent, filed as Exhibit 1 to Report on Form 8-K dated March 5, 1998, which is hereby incorporated by reference.
10.11	Form of Certificate of Designation with respect to the Series B Participating Preferred Stock, par value $1.00 per share, of the Company (filed as Exhibit A to the Rights Agreement, filed as Exhibit A to Report on Form 8-K dated March 5, 1998), which is hereby incorporated by reference.
10.12	Amendment to Rights Agreement dated February 13, 1998 filed as Exhibit 10.90.2 to Report on Form 10-Q for quarter ending September 30, 2001, and which is incorporated herein by reference.
+10.13	Key Employee’s Long-Term Deferred Cash Incentive Plan as amended through February 23, 1998.
+10.14	Supplemental Executive Retirement Plan as amended February 13, 1998.
+10.15	Senior Executive Supplemental Umbrella Pension Plan dated February 13, 1998.
	Exhibits 10.13 through 10.15 were filed as Exhibits 10.106, 10.107 and 10.108, respectively, to the Form 10-Q for the quarter ended June 30, 1998, and are hereby incorporated by reference.
+10.16	Brown & Sharpe Manufacturing Company 1999 Equity Incentive Plan dated February 12, 1999. Exhibit 10.16 was filed as Exhibit 10.109 to the Form 10-Q for the quarter ended June 30, 1999, and are hereby incorporated by reference.
10.17	Brown & Sharpe Savings and Retirement Plan for Management Employees dated December 23, 1998 and are hereby incorporated by reference.
10.18	First Amendment to Brown & Sharpe Savings and Retirement Plan for Management Employees dated as of April 30, 1999 and are hereby incorporated by reference.
10.19	Second Amendment to Brown & Sharpe Savings and Retirement Plan for Management Employees dated as of December 26, 2001 and are hereby incorporated by reference.
10.20	Brown & Sharpe Savings and Retirement Plan and BNS Co. Savings and Retirement Plan Instrument of Merger dated as of December 31, 2001 and are hereby incorporated by reference.
10.21	Brown & Sharpe Stock Ownership and Profit Participation Plan and Trust Agreement (1998 restatement) dated December 23, 1998, filed as Exhibit 10.1 to Registration Statement No. 333-666-22 on Form S-8 and hereby incorporated by reference.
10.22	First Amendment to Brown & Sharpe Stock Ownership and Profit Participation Plan and Trust Agreement (1998 restatement) dated as of April 30, 1999, filed as Exhibit 10.2 to Registration Statement No. 333-666-22 on Form S-8 and hereby incorporated by reference.

45

Number	Exhibit Index
10.23	Instrument of Termination and Amendment to Brown & Sharpe Stock Ownership and Profit Participation Plan and Trust Agreement (as amended) dated as of April 10, 2001, filed as Exhibit 10.3 to Registration Statement No. 333-666-22 on Form S-8 and hereby incorporated by reference.
10.24	First Amendment to Instrument of Termination and Amendment to First Amendment to Brown & Sharpe Stock Ownership and Profit Participation Plan and Trust Agreement dated as of November 14, 2001 and are hereby incorporated by reference.
10.25	Notice to Stockholders regarding Shareholder Rights Plan dated May 21, 2001 filed as Exhibit 99.1 to Report on Form 8-K filed May 21, 2001 and incorporated herein by reference.
10.29	Additional Amendment to Instrument of Termination and Amendment to Brown & Sharpe Stock Ownership and Profit Participation Plan and Trust Agreement dated as of February 12, 2002. This exhibit was previously filed as Exhibit 10.29 to the Company’s 10-Q for the quarter ending March 31, 2002, and is hereby incorporated by reference.
10.30	Stock Purchase Agreement, dated April 8, 2002, between Xygent Inc. and BNS Co. This exhibit was filed as Exhibit 10.31 to the Company’s 10-Q for the quarter ending June 30, 2002, and is hereby incorporated by reference.
10.31	2002 Stock Purchase Agreement, dated as of April 8, 2002, between Xygent Inc. and BNS Co. relating to the purchase of 13,206 shares of Common Stock of Xygent in connection of retirement of $1.5 million in intercompany debt. This exhibit was filed as Exhibit 10.31 to the Company’s 10-Q for the quarter ending June 30, 2002, and is hereby incorporated by reference.
10.32	Omnibus Agreement, dated April 19, 2002, by and among Xygent Inc., Brown & Sharpe Inc., Hexagon Holdings, Inc. and Hexagon AB. This exhibit was filed as Exhibit 10.32 to the Company’s 10-Q for the quarter ending June 30, 2002, and is hereby incorporated by reference.
10.33	Securities Purchase Agreement, dated as of August 16, 2002, by and among the Company, Xygent Inc. and Hexagon Holdings, Inc. This exhibit was filed as Exhibit 1 to the Company’s 8-K filed on September 3, 2002, and is hereby incorporated by reference.
10.34	Amendment No. 2, dated as of October 10, 2002, to the Rights Plan, dated as of February 13, 1998, as amended (the “Rights Plan”), originally between the Company and BankBoston N.A. This exhibit was filed as Exhibit 99.1 to the Form 8-K filed on October 15, 2002, and is hereby incorporated by reference.
+10.35	Agreement and Release, dated as of January 27, 2003, between the Company and Andrew C. Genor. The exhibit was filed as Exhibit 10.35 to the Report on Form 10-K for the year 2002 and is hereby incorporated by reference.
+10.36	Amended and Restated Engagement Letter, dated as of January 24, 2003, between Michael Warren Associates, Inc. and the Company. The exhibit was filed as Exhibit 10.36 to the Report on Form 10-K for the year 2002 and is hereby incorporated by reference.
+10.36.1	Amendment to Item 10.36 dated April 8, 2003. This Exhibit was filed as Exhibit 10.39 to the Report on Form 8-K filed September 10, 2003 and is hereby incorporated by reference.
+10.36.2	Amendment to Item 10.36 dated November 3, 2003. This Exhibit was filed as Exhibit 10.40 to the Report on Form 10-Q for the quarter ending September 30, 2003, and is hereby incorporated by reference.
+10.36.3	Amendment to Item 10.36 dated February 23, 2004 and filed herewith.
10.37	First Amendment to the BNS Co. Savings and Retirement Plan dated as of December 20, 2002. The exhibit was filed as Exhibit 10.37 to the Report on Form 10-K for the year 2002 and is hereby incorporated by reference.

46

Number	Exhibit Index
+10.38	Form of Indemnity Agreement with Michael Warren dated December 20, 2002. The exhibit was filed as Exhibit 10.38 to the Report on Form 10-K for the year 2002 and is hereby incorporated by reference.
10.39	Agreement relating to Gravel Extraction, Landfilling, Restoration and Aftercare Works at Harmondsworth Land Sipson in the London Borough of Hillingdon dated November 10, 2000, filed herewith.
10.40	Purchase and Sale Agreement dated as of April 28, 2003 between the Company and Wasserman RE Ventures LLC filed as Exhibit 99.1 to Report on Form 8-K filed September 10, 2003 and is hereby incorporated by reference.
10.41	Purchase and Sale Agreement dated as of February 5, 2004 between the Company, BNS International, Ltd. and Bath Road Holdings Limited filed herewith.
10.42	Amendment No. 3, dated as of October 6, 2003, to the Rights Plan. This exhibit was filed as Exhibit 99.1 to the Form 8-K filed on October 7, 2003, and is hereby incorporated by reference.
14.1	Code of Business Conduct and Ethics, filed herewith.
21	Subsidiaries of the Registrant.
23	Consent of Independent Auditors—Ernst & Young LLP.
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a), filed herewith.
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a), filed herewith.
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), filed herewith.

+ This identifies management contracts or compensatory plans.

Financial Statement Schedules – No financial statement schedules were filed for the year ended December 31, 2003.

47

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BNS Co.
	(REGISTRANT)
Date: February 27, 2004	By:	/s/ MICHAEL D. WARREN
	Michael D. Warren
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ KENNETH N. KERMES	2/27/2004	/s/ HOWARD K. FUGUET	2/27/2004
Kenneth N. Kermes Chairman of the Board and Director	Date	Howard K. Fuguet Director	Date
/s/ JOHN M. NELSON	2/27/2004	/s/ RICHARD M. DONNELLY	2/27/2004
John M. Nelson Director	Date	Richard M. Donnelly Director	Date
/s/ J. ROBERT HELD	2/27/2004	/s/ ROGER E. LEVIEN	2/27/2004
J. Robert Held Director	Date	Roger E. Levien Director	Date
/s/ HENRY D. SHARPE, III	2/27/2004	/s/ MICHAEL D. WARREN	2/27/2004
Henry D. Sharpe, III Director	Date	Michael D. Warren President and Chief Executive Officer Vice President and Chief Financial Officer (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer)	Date

48

EX-10.36.3

EXHIBIT 10.36.3

AMENDMENT

Amendment dated as of February 24, 2004 (the “Amendment”) to Amended and Restated Engagement Letter between Michael Warren Associates, Inc. (the “Firm” or “Warren”) and BNS Co. (the “Client” or the “Company”) dated January 24, 2003 as amended to date (the “Agreement”).

WHEREAS, the parties wish to amend the Agreement to allow for the extension of services subject to the Agreement.

NOW THEREFORE, in consideration of these premises and the mutual promises set forth below, and for good and valuable consideration, receipt of which is hereby given, the parties hereby agree as follows:

1. The “Assignment Length” set forth in Addendum I to the Agreement is hereby amended to delete the phrase “One year from January 24, 2003, unless earlier terminated” and replace the same with “From January 24, 2003 to and including December 31, 2004, unless earlier terminated”.

2. Except as modified above, the Agreement as amended shall remain in full force and effect.

IN WITNESS WHEREOF, each of the parties has caused this Amendment to be duly executed and delivered as of the day first above written.

Michael Warren Associates, Inc.
By:	/s/    MICHAEL WARREN
	Michael Warren
BNS Co.
By:	/s/    KENNETH N. KERMES
	Kenneth N. Kermes Chairman, Board of Directors

EX-10.39

EXHIBIT 10.39

DATED 10 November 2000

BROWN & SHARPE GROUP LIMITED

- and -

LANZ FARM LIMITED

- and -

S.I.T.A. PRODUCTS & SERVICES LIMITED

- and -

SITA SA

AGREEMENT

relating to

Gravel Extraction Landfilling Restoration and Aftercare Works

at Harmondsworth Lane Sipson

in the London Borough of Hillingdon

Nabarro Nathanson

Lacon House

Theobald’s Road

London WC1X 8RW

Tel: 020 7 524 6000

AGREEMENT

DATE 10 November 2000

PARTIES

(1) BROWN & SHARPE GROUP LIMITED (Company Registration Number 1409379) whose registered office is at Metrology House Halesfield 13 Telford Shropshire TF7 4PL (which expression shall include its successors in title and permitted assigns);

(2) LANZ FARM LIMITED (Company Registration Number 385147) whose registered office is at Galleymead House Bath Road Colnbrook Surrey SL3 0NT (which expression shall include its successors in title and permitted assigns);

(3) S.I.T.A. PRODUCTS & SERVICES LIMITED (Company Registration Number 1373225) whose registered office is at The Pickeridge Stoke Common Road Fulmer Buckinghamshire SL3 6HA; and

(4) SITA SA whose registered office is at 132 Rues des Trois Fontanot 92758 Nanterre Cedex France (company registration number: 552 149 908 RC Nanterre).

RECITALS

(A) Brown & Sharpe is the owner in fee simple of the First Land and the Pink-Hatched Land, Lanz is the owner in fee simple of the Second Land and SITA is the owner in fee simple of the Third Land.

(B) The parties wish to determine the First Gravel Agreement and to enter into this Agreement in substitution for the First Gravel Agreement.

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. DEFINITIONS AND INTERPRETATION

In this Agreement the following expressions shall where the context so allows have the following meanings:

“Account”

a written account setting out the types and quantities of each type of Waste tipped into the Void together with the charges made for each type of Waste during any one calendar month;

“Aftercare Works”

all works, operations, actions, monitoring, sampling and reporting required to be undertaken to comply with the conditions of the Waste Management Licence during the period after completion of the Restoration Works until surrender of the Waste Management Licence in accordance with section 39 of the Environmental Protection Act 1990;

“Baseline Value”

the value of the net assets of the Guarantor calculated in accordance with the current French standard accounting practice as at the last accounting year end before the date of this Agreement;

“Brown & Sharpe”

Brown & Sharpe Group Limited (Company Registration Number 1409379) (which expression shall include its successors in title and permitted assigns);

“Clay”

any clay extracted by SITA from the Owners’ Land;

“Deed of Counter-Indemnity”

a deed dated 22 August 1991 made between Brown & Sharpe (1) Lanz (2) SITA (then known as Drinkwater Sabey Limited) (3) and Attwoods PLC (4);

“Deed of Grant”

a deed of grant of easement in the form set out in Annex A the details including parties and land affected being altered as appropriate to the circumstances under this Agreement in which such grant is being made;

“Development Up-lift Value”

the increase in value of the whole or any part of the Owners’ Land resulting from the benefit of the Deed of Grant to be granted hereunder by SITA to be determined by calculating the difference in the value of the relevant area before

the granting of the Deed of Grant and after the granting of the Deed of Grant (such value to be calculated on the basis of a sale in the open market subject in all respects to the same incumbrances restrictions and benefits);

“Environment”

the meaning set out in section 1 of the Environmental Protection Act 1990;

“Environment Agency”

the body corporate so called and created pursuant to the Environment Act 1995 and charged with implementing and enforcing (inter alia) the provisions of the Environmental Protection Act 1990;

“Environmental Insurance Policy”

the policy for environmental insurance to be issued by Allianz Cornhill International a trading division of Cornhill Insurance plc whose registered office is at 32 Cornhill London EC3V 3LJ (Company No: 84638) in the form set out in Annex B;

“Environmental Law”

any legislation of the European Union and of the United Kingdom Government (including any local authority or other statutory body granted power to issue laws or regulations) any implementing legislation, any form of delegated legislation (including but not limited to, regulations, statutory guidance and any code of practice issued from time to time by any Government Department, Ministry and/or Government Agency), whether or not having effect at the date of this Agreement, and whether or not having retrospective effect, concerning the protection of human health or the Environment or the deposit, treatment, disposal, storage, containment or management of Waste together with all legal rules the common law of nuisance, negligence and the rule in Rylands -v- Fletcher;

“First Gravel Agreement”

an agreement dated 17 February 1988 and made between Brown & Sharpe (1) Lanz (2) SITA (then known as Drinkwater Sabey Limited) (3) and Attwoods PLC (4) as varied by an agreement dated 4 February 1994 contained in a letter from Brown & Sharpe and Lanz to SITA (then known as Drinkwater Sabey Limited) and Attwoods PLC;

“First Land”

all that land at Harmondsworth Lane, Sipson in the London Borough of Hillingdon shown for the purpose of identification only edged green on the Plan and vested in Brown & Sharpe;

“Guarantor”

SITA SA or such person firm or company who replaces SITA SA as guarantor of the performance of SITA’s obligations pursuant to this Agreement in accordance with the provisions of clause 15.2;

“Guarantee”

the form of guarantee to be executed by the Guarantor on execution of this Agreement as set out in Schedule 1;

“Gravel”

all materials including sand and gravel and all other mineral and aggregate deposits reasonably commercially removable from the Land (but excluding Clay);

“Income Threshold”

[ * ] this threshold being subject to review in accordance with clause 8.5;

“Land”

together the First Land the Second Land and the Third Land;

“Lanz”

Lanz Farm Limited (Company Registration Number 385147) (which expression shall include its successors in title and permitted assigns);

“Local Authority”

The London Borough of Hillingdon or any successor body which shall during the Term have jurisdiction under the Planning Acts in respect of the Land;

“Minimum Tonnage of Gravel”

[*] per annum or such lower rate required from time to time by the Local Authority and/or the Environment Agency as notified in writing to SITA and/or the Owners;

“Model”

SITA’s accounting model for undertaking and completing the Restoration Works and Aftercare Works set out in Schedule 2;

* Confidential portion has been omitted and filed separately with the Commission

“Monitoring Boreholes”

the monitoring boreholes in the stored sub-soil and top-soil on the Pink-Hatched Land and/or the monitoring boreholes (if any) required in accordance with the Removal Works Permission (as appropriate);

“Operative Works”

the works for the extraction of Gravel and Clay from the Land and the subsequent infilling and tipping of Waste into the Void by SITA under the provisions of this Agreement;

“Owners”

Brown & Sharpe and Lanz together and their respective successors in title to the First Land and the Second Land;

“Owners’ Land”

together the First Land and the Second Land;

“Owners’ Representative”

such person as the Owners shall appoint from time to time and shall notify to SITA in writing as being their representative for the purposes of clause 17;

“Payment Year”

a calendar year;

“Pink-Hatched Land”

all that land at Harmondsworth Lane Sipson in the London Borough of Hillingdon shown for the purpose of identification only edged and hatched pink on the Plan and vested in Brown & Sharpe;

“Plan”

the plan annexed hereto;

“Planning Acts”

the Town and Country Planning Act 1990 the Planning (Listed Building and Conservation Areas) Act 1990 the Planning (Hazardous Substances) Act 1990 and the Planning and Compensation Act 1991 and all statutory instruments made thereunder;

“Planning Agreement”

an agreement pursuant to Section 106 of the Town and Country Planning Act 1990 and made between Brown & Sharpe, Lanz, SITA and the Local Authority;

“Planning Permission”

the planning permission dated 16 September 1991 (Reference no. 43155/89/520) as varied on 20 October 1999 (Reference no. 43155H/99/326) and any further variations or amendments thereto agreed by the parties hereto and the Local Authority;

“Price for Clay”

[ * ] or such greater amount as is agreed or determined from time to time as a result of a review pursuant to clause 17.3;

“Put Option”

means the option granted to Brown & Sharpe and/or Lanz pursuant to clause 16.1 and/or 16.2 (as the case may be);

“Put Option Notice”

means the notice in writing from Brown & Sharpe and/or Lanz to SITA exercising the Put Option;

“Put Option Period”

means the period commencing on the date of this Agreement and ending on the date which is 20 years and 364 days thereafter;

“Quarter Days”

for the purposes of this Agreement shall mean January 1, April 1, July 1 and October 1 and the expression “Quarter Day” shall mean any one of such dates during any Payment Year;

“Quarterly Period”

shall mean the period commencing on a Quarter Day and ending on the day before the next successive Quarter Day;

“Removal Notice”

a notice issued by Brown & Sharpe to SITA requiring SITA forthwith to institute the procedure for agreeing and carrying out the Removal Works in accordance with clause 10.10;

“Removal Works”

works for the removal of stored soil and the relocation of the Monitoring Boreholes from the Pink-Hatched Land to such part of the Owners’ Land as is agreed between Brown & Sharpe and Lanz and notified to SITA in accordance with clause 10;

* Confidential portion has been omitted and filed separately with the Commission

“Restoration Works”

the full restoration of the Land in accordance with (i) the Waste Management Licence and (ii) the Planning Permission;

“Restoration Works and Aftercare Works Sum”

the amount of money required by SITA to undertake and complete the Restoration Works and Aftercare Works calculated in accordance with the Model;

“Second Land”

all that land at Harmondsworth Lane, Sipson in the London Borough of Hillingdon shown for the purpose of identification only edged pink on the Plan and vested in Lanz;

“S.106 Agreement”

the agreement made under S.106 of the Town and Country Planning Act 1990 between the London Borough of Hillingdon (1) SITA (then known as Drinkwater Sabey Limited) (2) Brown & Sharpe (3) and Lanz (4) and dated 22 August 1991;

“SITA”

S.I.T.A. Products and Services Limited (Company Registration Number 1373225) and its permitted assignees;

“Surrender Date”

the date on which the Environment Agency accepts surrender of the Waste Management Licence in accordance with section 39 of the Environmental Protection Act 1990;

“Term”

the period commencing on the date of this Agreement and ending on 16 October 2025 or the Surrender Date whichever is the earlier;

“Termination Date”

the date SITA receives a notice from the Owners pursuant to and in accordance with clause 11.1;

“Third Land”

all that piece of land at Harmondsworth Lane and Holloway Lane Sipson in the London Borough of Hillingdon shown for the purpose of identification only edged blue on the Plan and vested in SITA;

“Void”

the space under the Land created as a result of the extraction of Gravel and any Clay extracted all in accordance with this Agreement;

“Waste”

the types of materials permitted to be used for infilling of the Void as set out in the Planning Permission and the Waste Management Licence;

“Waste Management Licence”

the waste management licence or licences given under the Environmental Protection Act 1990 or any re-enactment thereof issued by the Environment Agency for the purposes of permitting tipping of Waste in or upon the Land (or part or parts thereof) in a form reasonably satisfactory to SITA and Brown & Sharpe and Lanz and any modifications thereof;

“Works”

together the Operative Works, the Restoration Works and the Aftercare Works;

1.1 In this Agreement:

1.1.1 clause headings are for convenience only and do not affect its construction;

1.1.2 words denoting the singular include the plural and vice versa;

1.1.3 words denoting one gender include each gender and all genders.

1.2 In this Agreement, unless otherwise specified or the context otherwise requires, a reference to:

1.2.1 a person is to be construed to include a reference to any individual, firm, partnership, company, corporation, association, organisation or trust (in each case whether or not having a separate legal personality);

1.2.2 a clause schedule or Annex is a reference to a clause of or schedule or Annex to this Agreement and a reference to this Agreement includes its Schedules and Annexes;

1.2.3 a paragraph is a reference to a paragraph of the Schedule or the Annex in which the reference appears;

1.2.4 a statutory provision is to be construed as a reference to such provision as amended, consolidated or re-enacted from time to time and to any orders, regulations, instruments or other subordinate legislation (and relevant codes of practice and statutory guidance) made under the relevant statute.

1.2.5 a reference to writing shall include any mode of reproducing words in a legible and non-transitory form; and

1.2.6 Save for clause 13.4 any reference to “party” or “parties” in this Agreement shall not include the Guarantor.

2. TERMINATION OF THE FIRST GRAVEL AGREEMENT AND OWNERSHIP OF GRAVEL

2.1 The First Gravel Agreement is hereby determined but without prejudice to any antecedent claim by any party against any other party.

2.2 The parties hereby acknowledge that with effect from 22 January 1992 all Gravel on the Third Land belongs to the Owners (jointly) until paid for by SITA pursuant to clause 7.

2.3 The parties hereby acknowledge that with effect from 22 January 1992 all Gravel extracted from the Land is subject to the provisions of this Agreement (and in particular the provisions of clause 7 hereof) and that any stocks of Gravel stored on the Third Land but extracted from the Land belong to the Owners (jointly) until paid for by SITA pursuant to clause 7.

3. RIGHT TO CARRY OUT THE WORKS

3.1 Brown & Sharpe and Lanz hereby grant to SITA during the Term the right subject to the provisions of the Planning Permission and the Waste Management Licence to enter onto the Owners’ Land for the purposes of executing and completing the Works and for all necessary purposes in connection therewith including the siting and retaining of plant machinery and vehicles the physical extraction of Gravel and Clay and its removal from the Owners’ Land the deposit on the Owners’ Land of Waste and its use for the infilling and restoration of the Void.

3.2 If by the 16 October 2025 SITA has not completed the Aftercare Works and surrendered the Waste Management Licence in accordance with the requirements of Environmental Law the Owners shall grant to SITA a licence to enter onto such part or parts of the Owners’ Land as are necessary to effect such surrender of the Waste Management Licence but for no other purpose whatsoever.

4. OWNERS’ OBLIGATIONS

4.1 Brown & Sharpe and Lanz shall (each in respect of its own portion of the Owners’ Land and/or the Pink-Hatched Land) keep SITA informed of any matters affecting the Owners’ Land and/or the Pink-Hatched Land which might have or be capable of having any material effect upon SITA’s ability to carry out the Works and/or the Removal Works including any notices received by Brown & Sharpe or Lanz in respect of their own portion of the Owners’ Land and/or the Pink-Hatched Land any changes in tenancies affecting the Owners’ Land or any change in the ownership of the Owners’ Land or any part or parts thereof.

4.2 Brown & Sharpe and Lanz hereby agree to enter into any Planning Agreement required by the Local Authority in connection with the Planning Permission on terms satisfactory to Brown & Sharpe and Lanz acting reasonably PROVIDED THAT any Planning Agreement contains an indemnity by SITA in favour of Brown & Sharpe and Lanz against all actions proceedings claims demands and loss of any kind whatever arising out

of and/or in connection with the performance or non-performance of any obligations on the part of SITA under the terms of the Planning Agreement.

4.3 Brown & Sharpe and Lanz shall pay the cost (if any) in excess of [ * ] in respect of the premium for the Environmental Insurance Policy.

4.4 The Owners shall not grant any new agricultural tenancies of the Owners’ Land during the Term save where they have obtained the prior written approval of SITA (such approval not to be unreasonably withheld or delayed) but shall be entitled to renew those agricultural tenancies in existence at the date of this Agreement being the Tenancy Agreement dated 14 January 1997 and made between Lanz (1) SITA (2) and Messrs. R. E. Barwick and R. D. Barwick (3) and the Tenancy Agreement dated 14 January 1997 and made between Brown & Sharpe (1) SITA (2) and Messrs. R. E. Barwick and R. D. Barwick (3)).

5. SITA’S OBLIGATIONS

SITA covenants with Brown & Sharpe and Lanz as follows:

5.1 SITA shall at all times proceed diligently with the Works so as to complete the Works in accordance with the Planning Permission and the Waste Management Licence and so as to complete the extraction of Gravel by 31 December 2006 or as soon as possible thereafter;

5.2 SITA shall procure and at all times until the end of the Term maintain with a reputable insurance company an insurance policy in respect of employers third party and public liability and SITA hereby covenants to indemnify and keep indemnified Brown & Sharpe and Lanz against any claim for death or injury to persons and/or loss and/or damage to property arising out of the Works and/or the Removal Works or otherwise in pursuance of this Agreement and SITA shall within 28 days of receipt and at all times upon reasonable request produce to Brown & Sharpe and Lanz and each of them the policy or a certified copy thereof and all up-to-date endorsements thereon and premium receipts.

5.3 SITA shall:

5.3.1 within 10 working days of receipt of a written demand in respect of the cost of the premium for effecting the Environmental Insurance Policy pay to the Owners a maximum payment of [ * ]; and

5.3.2 during the Term ensure that no act or omission on the part of SITA shall directly or indirectly invalidate the Environmental Insurance Policy or render it ineffective.

5.3.3 * Confidential portion has been omitted and filed separately with the Commission

5.3.4

5.4 SITA shall (at no cost to the Owners) ensure that all licences permits consents and the like required for the execution and completion of the Works are obtained so as to allow the Works to proceed in accordance with the Planning Permission. SITA shall not agree to the amendment revision or alteration of, or apply for, any licence permit consent or the like without the prior written consent of the Owners (such consent not to be unreasonably withheld).

5.5 SITA shall throughout the Term comply with all statutes notices requirements regulations conditions and all other legally binding obligations including in particular (but without prejudice to the generality of the foregoing) all Environmental Law the conditions imposed in the Planning Permission and the Waste Management Licence in connection with the carrying out of the Works and/or the Removal Works.

5.6 SITA shall be responsible at all times during the Term for the payment of all taxes (including for the avoidance of doubt any aggregates tax) outgoings or expenses of an annual or recurring nature arising out of or in connection with its use of the Owners’ Land for the execution and completion of the Works including without limitation general and water rates.

5.7 SITA shall provide at its own expense all plant machinery and civil engineering operations required for or in connection with the Works.

5.8 SITA shall undertake all negotiations with any agricultural contractors of either of the Owners working on the Owners’ Land or any part or parts thereof and where any part or parts of the Owners’ Land shall be in actual use for agricultural purposes shall give to the Owners (or either of them as the case may be) and to their agricultural contractors reasonable notice in writing of the requirement of such part or parts of the Owners’ Land for or in connection with the Works in accordance with the Planning Permission provided that if any such part or parts of the Owners’ Land shall at the time of the giving of such notice be under crop then Brown & Sharpe and Lanz (or either of them as the case may be) shall not be required to release such part or parts of the Owners’ Land until such crop shall have been fully harvested unless SITA shall pay full compensation for standing crops.

5.9 SITA shall take all proper precautions so as to not interfere with or in any way adversely affect the carrying out of farming of any part or parts of the Owners’ Land not yet required for the Works and shall indemnify and keep indemnified Brown & Sharpe and Lanz (and each of them as the case may be) against any loss or damage suffered either by Brown & Sharpe and Lanz or by their agricultural contractors tenants or any other person or persons as a result of any breach of or non-compliance with this obligation.

5.10 SITA shall provide to each of the Owners within 4 weeks of receipt thereof copies of all material correspondence reports, notices and the like sent by SITA to or received by SITA from the Environment Agency, the Local Authority or any other government or local government body or agency in connection with the execution of the Works by SITA. For the avoidance of doubt all correspondence, reports, notices and the like

which are sent or received in connection with any breach or potential breach of any condition or requirement of the Waste Management Licence and/or the Planning Permission shall be considered material for the purposes of this clause 5.10.

5.11 SITA shall forthwith assist the Owners in procuring the cancellation of entry number 3 of the charges register of title number MX150037.

6. PHASING OF THE WORKS

Brown & Sharpe and Lanz shall (each in respect of its own land):

6.1 after consultation with SITA take the appropriate steps to release portions of the Owners’ Land from the current use or uses thereof to enable SITA to carry out the Works in accordance with the Planning Permission; and

6.2 consult with SITA as to the appropriate crop to be planted on any portion of the Owners’ Land in the two calendar years before such portion is reasonably expected to be required for the Works so as to allow SITA to proceed with the Works in accordance with the Planning Permission and plant accordingly.

7. PAYMENT FOR GRAVEL

IT IS HEREBY AGREED by the parties as follows:

7.1 Subject to the provisions of clause 7.7 from 22 January 1992 onwards until all Gravel in or under the Land shall have been exhausted or until this Agreement shall be determined SITA shall purchase on the terms hereinafter described from the Owners in each Payment Year not less than the Minimum Tonnage of Gravel.

7.2 SITA shall purchase all Gravel extracted from the Land from the Owners at a price calculated in accordance with the following formula:

Price per tonne [ * ]

x   a

     b

Where a = the figure in the Department of the Environment, Transport and the Regions’ Monthly Bulletin Construction Indices for Civil Engineering Works index (Series 3) (aggregates) for the month immediately prior to the date of commencement of each year of the Term (the first year for the purposes of this clause commencing on the first day of the month in which excavation commenced on the Land and each subsequent year on the anniversary thereof) and where b = 834.0 being the index figure for the month of February 1986.

* Confidential portion has been omitted and filed separately with the Commission

7.3 Payments in respect of Gravel (calculated in accordance with Clause 7.2 and on the basis of the accounts provided by it to the Owners as provided by sub-clause 7.8 hereof) shall be made by SITA on a monthly basis and shall be due within 7 days of receipt of a VAT invoice from the Owners provided that such payment shall not be due before the date which is 28 days after the end of each calendar month (provided that if any such payment shall not be made within such period then the whole of such payment due shall bear interest at an annual rate equal to 4% over the base rate from time to time of Lloyds Bank plc from the date on which the same first became due until payment in full).

7.4 For the avoidance of doubt it is agreed that if more than the Minimum Tonnage of Gravel shall be sold in any Payment Year SITA shall make payment in full for the amount actually sold at the then prevailing price per tonne subject to the set-off provisions in sub-clause 7.7.

7.5 In the event that more than the Minimum Tonnage of Gravel shall be so sold in any one Payment Year the Owners shall have the option (a) to permit SITA to postpone payment for the whole or part of the excess over the Minimum Tonnage of Gravel until the following Payment Year without interest being payable and (b) to treat the excess over the Minimum Tonnage of Gravel as representing part performance of SITA’s obligation to extract the Minimum Tonnage of Gravel during the following Payment Year.

7.6 In the event that less than the Minimum Tonnage of Gravel shall be sold in any one Payment Year SITA shall within 28 days after the end of the relevant Payment Year pay to the Owners an amount equal to the difference between the price which would have been payable in respect of the Minimum Tonnage of Gravel and the price payable in respect of the amount actually sold provided that in the Payment Year during which exhaustion of the Gravel takes place this obligation shall not apply and SITA shall pay in accordance with the terms of this Agreement only for such Gravel as is actually sold.

7.7 In the event that less than the Minimum Tonnage of Gravel shall be sold by SITA in any one Payment Year SITA shall have the right to offset the difference between the amount actually sold and the Minimum Tonnage of Gravel against the excess sold above the Minimum Tonnage of Gravel for the purposes of this clause in ensuing Payment Years until the difference is extinguished.

7.8 All Gravel removed from the Land shall be weighed and recorded over SITA’s weighbridge on the Third Land and within 14 days from the end of each calendar month during the Term SITA shall provide to each of the Owners an account showing the quantities of such Gravel extracted during the preceding calendar month and it shall provide evidence satisfactory to the Owners as to the accuracy of the quantities stated for each month and the Owners or their agents shall at all times be entitled to enter upon the Land and any part or parts thereof with or without workmen or equipment to check or measure quantities of Gravel extracted or sold from the Land or to verify any accounts provided by SITA in respect thereof.

7.9 While the Works are in the process of being carried out if SITA shall during the Term extract minerals from or tip material on any land adjoining the Owners’ Land and SITA shall transport such minerals or materials over the Owners’ Land or over part or parts

thereof it shall request the Owners to permit such transportation and unless the same might substantially affect the Owners’ use or enjoyment of the Owners’ Land or any part or parts thereof the Owners shall permit the same over a strip of land in a position to be fixed by the Owners and not exceeding 10 metres in width (unless to do so would be in contravention of the conditions contained in the Waste Management Licence or imposed under the Planning Permission or any Planning Agreement or any regulations orders notices or requirements of any authority including the local planning and highway authorities) and SITA shall pay to the Owners within 28 days of the end of each calendar month during which such minerals or materials shall be so transported over the Owners’ Land a sum equal to a royalty of [ * ] of the revenue received by SITA for such minerals calculated in accordance with clause 7.2 of this Agreement and/or [ * ] of revenue calculated in accordance with clause 8 in respect of such materials (as the case may be) (provided that if any such payment shall not be made within such period then the whole of such payment due shall bear interest at an annual rate equal to 4% over the base rate from time to time of Lloyds Bank plc from the date on which the same first became due until payment in full).

7.10 In the first year and the last year of the Term, the amount of the Minimum Tonnage of Gravel shall be calculated pro rata based on the number of days in the Payment Year which fall within the first year or the last year of the Term (as the case may be) and SITA’s obligation to make payments to the Owners shall be adjusted accordingly.

8. TIPPING OF WASTE

8.1 SITA shall procure the tipping of Waste (and no other materials) into the Void in accordance with all conditions contained in the Planning Permission, any Planning Agreement, the Waste Management Licence and all relevant laws including but not limited to Environmental Law.

8.2 During each Payment Year SITA shall pay to the Owners within 7 days of receipt of a VAT invoice from the Owners in respect of each Account submitted in accordance with clause 8.3.1 (provided that no payment shall become due before the date which is 28 days from the end of each calendar month) (the “Due Date”):

8.2.1 until such time as the aggregate of all charges (excluding landfill tax and VAT) levied by SITA in that Payment Year for the tipping of Waste into the Void equals the Income Threshold from time to time for that Payment Year [ * ] of all such charges levied during the previous calendar month (as set out in the Account to be provided to the Owners in accordance with Clause 8.3); and

* Confidential portion has been omitted and filed separately with the Commission

8.2.2

8.2.3 after the aggregate of all charges (excluding landfill tax and VAT) levied by SITA in that Payment Year for the tipping of Waste into the Void exceeds the Income Threshold from time to time for that Payment Year [ * ] of all such charges levied during the previous calendar month (as set out in the Account to be provided to the Owners in accordance with Clause 8.3) in excess of such Income Threshold (if any)

Provided That if any payment due in accordance with this Clause 8.2 shall not be made by the Due Date then the whole of such payment due shall bear interest at an annual rate equal to 4% over the base rate from time to time of Lloyds Bank plc from the Due Date until such time as payment in full is received by the Owners.

8.3

8.3.1 SITA shall within 14 days from the end of each calendar month during the Term provide to each of the Owners a copy of the Account for the previous calendar month together with such evidence as is reasonably satisfactory to the Owners confirming the accuracy of the relevant Account and the Owners and their agents shall at all times after giving reasonable prior notice be entitled to enter upon the Land with or without workmen or equipment to check or measure quantities of Waste tipped in the Void or to verify any Account provided by SITA.

8.3.2 Once in every year during the Term SITA shall arrange for an independent auditor to certify the quantities of Waste tipped into the Void and charges made in respect thereof (the “Certificate”) and a copy of the Certificate shall be sent to each of the Owners no later than 28 days after the end of each calendar year after the date of this Agreement during the Term and in addition upon determination of this Agreement for whatever reason within 28 days from the date of such determination.

8.3.3 The Owners shall have the right to appoint their own auditors independently to verify the accuracy of any Account and/or any Certificate. SITA shall provide all necessary and reasonable assistance to such auditors including but not limited to the provision of copy documents and access to SITA’s operations on the Land. SITA agrees to reimburse the Owners for the cost of any such independent verification should any material discrepancy be identified between the amounts certified by the auditor appointed by the Owners and the amounts set out in the relevant Account and/or Certificate.

8.4 SITA shall (at no cost to the Owners) at all times during the execution and completion of the Works:

8.4.1 comply with all conditions contained in the Waste Management Licence and any further or additional requirements of the Environment Agency;

* Confidential portion has been omitted and filed separately with the Commission

8.4.2

8.4.3 without prejudice to the provisions of clause 8.4.1;

(a) ensure that all vehicles leaving the Land are properly cleaned so that no Waste or slurry is deposited on the public highway or on any adjoining land or road belonging to the Owners;

(b) provide adequate site supervision at the Owners’ Land and in particular (without limitation) supervise the types of Waste to be tipped in the Void (in accordance with the provisions of this Agreement) the standard of sealing and restoration of the Owners’ Land and the prevention of spread of Waste or unauthorised tipping of Waste (or any other materials) on the Owners’ Land or on any adjoining land owned by the Owners or any other person;

(c) maintain the low permeability clay (or such other material as is approved in writing by the Environment Agency) lining of each cell constructed to receive and contain Waste in accordance with the Waste Management Licence and upon completion of the deposit of Waste within each such cell maintain and protect the low permeability clay ( or such other material as is approved in writing by the Environment Agency) cap as required by the terms of the Waste Management Licence;

8.4.4 pay all rates taxes outgoings and assessments charged or imposed in respect of the Void and the infilling thereof and keep Brown & Sharpe and Lanz fully and effectually indemnified in respect of all claims requirements costs and demands whatsoever in respect of the same or otherwise in relation thereto;

8.4.5 not allow or cause or permit to be allowed or caused anything to be or become a nuisance or annoyance to the Owners or to the owners of land adjoining the Land in connection with the execution of the Works;

8.4.6 be responsible for and bear all the costs of and incidental to leachate control, disposal of waste water and other water emanating or discharging from the Void, gas monitoring and all other such systems as required by and in accordance with the Waste Management Licence and to provide all machinery and equipment for these purposes.

8.5 The Income Threshold shall be revised on each successive Quarter Day after the date of this Agreement (the date of each such revision being hereinafter referred to as the “Review Date”) so that the Income Threshold for each successive Quarterly Period is increased or decreased by the same proportion as the increase or decrease in the Index of Retail Prices as published by the Office for National Statistics (the “Index”) in accordance with the following formula:

y= a (b/c)

where:

y= the revised Income Threshold

a= the Income Threshold immediately prior to the Review Date

b= the value of the Index for the month which is two months earlier than the Review Date

c= the value of the Index for the month which is two months earlier than the date of this Agreement or (if later) the month which is two months earlier than the Review Date immediately preceding the current Review Date.

8.6 In the first year and the last year of the Term, the amount of the Income Threshold shall be calculated pro rata based on the number of days in the Payment Year which fall within the first year or the last year of the Term (as the case may be) and SITA’s obligation to make payments to the Owners shall be adjusted accordingly.

9. DEED OF GRANT

9.1 SITA shall grant to Brown & Sharpe and Lanz and each of them for the duration of this Agreement only a right to pass and repass with or without plant vehicles and employees for all purposes in connection with and in accordance with this Agreement on and at all times to pass and repass over a route across the Third Land or certain part or parts thereof position to be agreed by the parties and in the event of failure to agree to be determined by referral to arbitration in accordance with clause 12 hereof so as to afford to Brown & Sharpe and Lanz and each of them and their respective successors in title the owners and occupiers from time to time of the Owners’ Land and each and every part thereof access to and egress from Holloway Lane for all purposes as aforesaid and at all times.

9.2 Brown & Sharpe and/or Lanz may at any time prior to the date which is 20 years and 364 days after the date of this Agreement serve written notice on SITA requiring it to execute a Deed of Grant in favour of the Brown & Sharpe and/or Lanz or their respective successors in title as aforesaid to convert the right into a permanent easement for the purposes set out in the Deed of Grant.

9.3 If so requested SITA shall (at no cost to SITA) assist Brown & Sharpe and/or Lanz and each of them to register the Deed of Grant when granted in accordance herewith to bind the Third Land and each and every part thereof in the hands of third parties and this obligation shall include assistance by SITA in the registration of a caution to protect this Agreement and the option to enter into the Deed of Grant contained in clause 9.1 and clause 9.2 of this Agreement.

9.4 Without prejudice to the foregoing provisions of this Clause 9, it is agreed that such right shall so far as reasonably practicable be granted upon the Third Land in such a position as to minimise any interference with the development of the Third Land.

9.5 In addition to the above provisions each of the Owners hereby agrees with the other that where it shall be necessary for the due implementation of this Agreement it shall grant to the other a right of way with or without vehicles plant and workmen over each portion of the Owners’ Land for all purposes in connection with the implementation of this Agreement and at all times during the Term the position and extent of such right to be

determined by the Owners provided that the same shall not obstruct or interfere with the reasonable beneficial use or enjoyment of each portion of the Owners’ Land.

9.6.1 After the Deed of Grant has been entered into in accordance with sub-clause 9.2 Brown & Sharpe and Lanz shall on parting with any part or the whole of the Owners’ Land pay to SITA a sum amounting to [ * ] of the Development Up-lift Value of each such part or whole provided that the Development Up-lift Value shall be calculated in accordance with the market values prevailing at the time of the said alienation and not at the time of the Deed of Grant.

9.6.2 The Development Up-lift Value of each such part or whole as aforesaid shall be agreed between the parties or their respective surveyors but in the event of any disagreement or dispute the question shall be referred on the application of either party to an independent expert who shall be a Chartered Surveyor of not less than 15 years’ qualification and experience in the valuation of land for commercial industrial and residential development in the vicinity of the Owners’ Land such expert to be appointed by agreement of the parties or at the request of either party by the President for the time being of the RICS and whose decision shall be final and binding on the parties.

10. REMOVAL WORKS

10.1.1 Brown & Sharpe, Lanz, and SITA acknowledge that SITA have, in accordance with planning permission, the First Gravel Agreement and the Deed of Counter-Indemnity, stored sub-soil and top-soil and constructed Monitoring Boreholes on the Pink-Hatched Land.

10.1.2 SITA acknowledges that its right to retain the soil stores and Monitoring Boreholes on the Pink-Hatched Land is by licence from Brown & Sharpe which may be terminated during the Term in accordance with the provisions of this clause 10.

10.1.3 SITA acknowledges that the Pink-Hatched Land may be required by Brown & Sharpe in connection with the development of their adjoining land fronting Bath Road.

10.2 SITA shall not object to any application for planning permission for the development of such adjoining land nor to the inclusion in such application of the Pink-Hatched Land provided that such development shall not in any way interfere with SITA’s execution and completion of the Works in accordance with this Agreement.

* Confidential portion has been omitted and filed separately with the Commission

10.3

10.4 If Brown & Sharpe or any other party authorised by Brown & Sharpe seek planning permission for any form of development of the Pink-Hatched Land then SITA shall co-operate with Brown & Sharpe and shall as and when requested to do so by Brown & Sharpe or any party authorised by Brown & Sharpe enter into discussions and negotiations with the Local Authority and the Environment Agency with a view to facilitating the obtaining of all necessary consents for the Removal Works provided that:

10.4.1 such development shall not in any way interfere with SITA’s execution and completion of the Works in accordance with this Agreement; and

10.4.2 Brown & Sharpe shall meet all reasonable and proper costs incurred by SITA in relation thereto.

10.5 SITA shall keep Brown & Sharpe fully informed of any discussions and negotiations with the Local Authority and the Environment Agency in respect of SITA’s obligations under this clause 10 and shall send to Brown & Sharpe copies of all relevant correspondence and shall allow Brown & Sharpe and its planning consultants to attend and participate at any meetings held with the Local Authority and the Environment Agency provided that Brown & Sharpe and/or its planning consultants shall not be entitled to speak or to make any representations at such meetings.

10.6 Brown & Sharpe may give notice at any time during the Term to SITA requiring SITA to seek planning permission or a variation of the Planning Permission and modification of the Waste Management Licence together with any other required permits and/or consents (hereinafter referred to as the “Removal Works Permission”) to enable SITA to execute and complete the Removal Works.

10.7 Upon such a notice being served SITA shall then use all reasonable endeavours to obtain the Removal Works Permission in the shortest possible time and on the basis of establishing the most economical scheme for the Removal Works.

10.8 In seeking the Removal Works Permission SITA shall use all reasonable endeavours to agree with the Local Authority and/or the Environment Agency and/or the appropriate government body or agency (as appropriate) that the execution of the Removal Works need only be implemented when required by Brown & Sharpe.

10.9 SITA shall be under no obligation to appeal against any refusal of any of the Removal Works Permission save that Brown & Sharpe may require SITA to appeal against any such refusal as may be necessary for the execution of the Removal Works provided that Brown & Sharpe meets all SITA’s reasonable costs as and when arising and notified to Brown & Sharpe of any such appeal and provided that such appeal shall not in any way in SITA’s reasonable opinion jeopardise or adversely affect the ability of SITA to execute and complete the Works in accordance with this Agreement. Brown & Sharpe shall have a right of approval of the personnel to be used in the appeal and the method of conduct of it.

10.10

10.10.1 If immediate implementation of the Removal Works is required either by the Local Authority or by the Environment Agency then SITA shall proceed with the Removal Works in accordance with the Removal Works Permission; or

10.10.2 If SITA obtains the agreement of the Local Authority and/or (where necessary) the Environment Agency pursuant to sub-clause 10.7:

(a) SITA shall be under no obligation to implement the Removal Works unless and until a Removal Notice is served by Brown & Sharpe requiring SITA to implement the Removal Works;

(b) Brown & Sharpe shall be under no obligation to serve any Removal Notice but shall permit SITA at any time, at their own expense, to carry out the Removal Works; and

(c) the Removal Notice to be served by Brown & Sharpe shall only be served when the Removal Works Permission has been obtained and within any time limits contained in the Removal Works Permission, and the Removal Notice must be for a minimum period of six months expiring between 1 July and 30 September in any year.

10.11 Immediately following either the Local Authority and (where necessary) the Environment Agency stipulating immediate implementation of the Removal Works in accordance with the Removal Works Permission or, where they have allowed delay, service of a Removal Notice by Brown & Sharpe, SITA shall seek no less than 2 quotations for undertaking the Removal Works, and for any ancillary works such as fencing, relocation of boreholes or changes in operational methods, all in accordance with the Removal Works Permission. These quotations and the proposed timetable for incurring costs and for payments to be made by Brown & Sharpe to SITA shall be submitted to Brown & Sharpe for approval such approval not to be unreasonably withheld or delayed. Any revisions or amendments to the cost quotations and/or timetable shall also be submitted to Brown & Sharpe for their approval such approval not to be unreasonably withheld or delayed.

10.12 In the event of any dispute as to whether the scheme of removal proposed by SITA, or the necessity for, or level of, costs incurred by SITA are reasonable, this dispute shall be put to arbitration in accordance with clause 12 of this Agreement.

10.13 Following approval by Brown & Sharpe of all the costs and the timetable for expenditure for execution of the Removal Works SITA shall diligently procure that the Removal Works proceed within the notice period and are executed and completed in accordance with the Removal Works Permission and that the Pink-Hatched Land is left clean and tidy upon completion of the Removal Works so as to leave no restriction on the use for any purpose of the Pink-Hatched Land all in accordance with the Removal Works Permission.

10.14.1 SITA’s reasonable costs in applying for the Removal Works Permission shall be met by Brown & Sharpe.

10.14.2 SITA’s reasonable costs in connection with the execution and completion of the Removal Works and all ancillary works shall be met by Brown & Sharpe, in

accordance with the quotation and timetable for payments to be made by Brown & Sharpe to SITA or any amendments or revisions thereto previously approved by Brown & Sharpe in writing.

10.14.3 When SITA are entitled to repayment of costs in accordance with clauses 10.8 and/or 10.13 repayment shall be made by Brown & Sharpe within 14 days of receipt of SITA’s application for payment supported by evidence of the costs claimed provided that if any such payment shall not be made within such period then the whole of such payment due shall bear interest at an annual rate equal to 4% over the base rate from time to time of Lloyds Bank Plc from the date on which the same first became due until payment in full.

11. BREACH AND DETERMINATION

11.1 In the event that SITA shall commit any breach or fail to perform or observe any of its obligations under this Agreement and shall within one month after receiving written notice from the Owners of such breach non-performance or non-observance or (where circumstances so require such shorter notice as the Owners shall consider reasonable) fail to remedy such breach or perform or observe such obligation or obligations then the Owners shall be at liberty forthwith by notice in writing to SITA to terminate this Agreement whereupon SITA shall (save where they are served with a notice pursuant to clause 11.5.2) immediately vacate the Owners’ Land and remove all plant and equipment therefrom but without prejudice to SITA’s liability to make payment for all Gravel sold from the Land up to the date of such determination and further without prejudice to Brown & Sharpe and/or Lanz’ right to damages for any loss or liability incurred by them as a result of any such breach non-performance or non-observance.

11.2 In the event that either or both of the Owners shall enter into a contract for the sale or shall obtain planning permission for development of not less than three quarters in area of that part of the Owners’ Land at the date of such contract or the grant of such planning permission (as the case may be) then remaining unworked under this Agreement then the Owners shall be entitled by notice in writing to SITA to determine this Agreement forthwith whereupon SITA shall vacate and remove all plant and equipment from the Owners’ Land without prejudice to SITA’s liability to pay for all Gravel sold from the Land up to the date of such determination provided that the Owners shall in such circumstances be liable to pay to SITA a sum equivalent to SITA’s net anticipated profit (as defined in sub-clause 11.4 hereof) in relation to the remaining unworked reserves of Gravel and the tipping of Waste on the Owners’ Land at the date of determination of this Agreement.

11.3 In the event that after the Operative Works shall have been completed but there shall remain uncompleted certain Restoration Works thereof and the Owners shall obtain planning permission for some other form of development of the Owners’ Land or any part or parts thereof the Owners may by notice in writing to SITA terminate this Agreement whereupon SITA shall vacate the Owners’ Land and remove all plant and equipment therefrom without prejudice to SITA’s liability to pay for all Gravel sold therefrom up to the date of such determination whereupon the Owners shall forthwith

release SITA absolutely from any further liability in respect of the Restoration Works of the whole or such part or parts of the Owners’ Land (as the case may be).

11.4 For the purposes of sub-clause 11.2 hereof SITA’s net anticipated profit shall be calculated having regard to:

11.4.1 the price per tonne effective at the date of determination of this Agreement under this clause;

11.4.2 the tonnage of Gravel agreed by the parties as remaining unworked in the Land and the tipping in the Void so created in the Land or such part or parts thereof in relation to which this Agreement shall be determined (as the case may be);

11.4.3 the price prevailing at the date of such determination for the sale by SITA of processed gravel in the open market and the tipping revenue at that date in the open market;

11.4.4 all costs and expenses which SITA would or might have incurred in such processing; and

11.4.5 the value to SITA of its having been released from its restoration obligations hereunder

and in the event of any dispute as to the amount payable to SITA the same shall be submitted to arbitration under clause 12 hereof.

11.5 If this Agreement is terminated pursuant to clause 11.1 SITA shall upon receipt of a notice in writing from Brown & Sharpe and/or Lanz either:

11.5.1 assist the Owners in procuring the agreement of the Environment Agency to the transfer of the Waste Management Licence to Brown & Sharpe or Lanz or to the Owners or the Owners’ nominee (as the case may be) and SITA shall upon receiving confirmation of such agreement forthwith arrange for the transfer of the Waste Management Licence to the party approved by the Environment Agency under the terms of the agreed transfer; or

11.5.2 forthwith take all such steps as are necessary to ensure that the Waste Management Licence is surrendered in accordance with the requirements of Environmental Law as quickly as possible

and such notice shall expressly state whether SITA is to assist the Owners in accordance with clause 11.5.1 or surrender the Waste Management Licence in accordance with Clause 11.5.2

11.6

11.6.1 Where a notice terminating this Agreement is given to SITA pursuant to clause 11.1 stating that clause 11.5.1 applies SITA shall within 3 months of the transfer of the Waste Management Licence to Brown & Sharpe or Lanz or to the Owners or the Owners’ nominee (as the case may be) pursuant to clause 11.5.1 or within 6 months

of the service of the notice pursuant to clause 11.1 (whichever is the earlier) pay to the Owners the Restoration Works and Aftercare Works Sum.

11.6.2 The Restoration Works and Aftercare Works Sum shall be the limit of SITA’s liability to the Owners in respect of the completion of the Restoration Works and Aftercare Works following the Termination Date.

11.7

11.7.1 Either SITA or the Owners may serve a written notice (a “Review Notice”) on the other stating that they wish amendments to be made to the assumptions contained in the Model including all costs filling rates inflation and discount rates (the “Assumptions”) and setting out the proposed amendments to the Model PROVIDED THAT a Review Notice may only be served after the Termination Date and must be received by the Owners or by SITA (as the case may be) within 15 working days of the Termination Date and must set out the reason(s) for the proposed amendments to the Assumptions;

11.7.2 If within 30 days of the date of receipt of a Review Notice served in accordance with clause 11.7.1 the Owners or SITA (as appropriate) have not served a notice in writing on the other stating that they are unable to agree to the amendments proposed in the relevant Review Notice the amendments proposed therein shall be deemed to have been accepted by all the parties to this Agreement and shall apply for the purposes of calculating the Restoration Works and Aftercare Works Sum;

11.7.3 If upon receipt of a Review Notice served in accordance with clause 11.7.1 the Owners or SITA (as appropriate) serve a notice (a “Counter Notice”) in writing on the other before the expiration of a period of 30 days from the date of receipt of that Review Notice stating that they are unable to agree to the amendments proposed in that Review Notice SITA and the Owners shall forthwith use all reasonable endeavours to agree amendments to the Assumptions to reflect any changes in the value of the criteria upon which the Assumptions are based with a view to agreeing a revised set of Assumptions and therefore a revised Model for calculating the Restoration Works and Aftercare Works Sum and any such agreement shall apply for the purposes of calculating the Restoration Works and Aftercare Works Sum;

11.7.4 If after service of a Counter Notice pursuant to clause 11.7.3 the Owners and SITA are unable to agree amendments to the Model by the date which is 14 days from the date of service of the relevant Counter Notice either SITA or the Owners may serve a notice in writing (a “Referral Notice”) on the other requiring the review of the Assumptions triggered by the service of the relevant Review Notice pursuant to clause 11.7.1 be referred to a suitably qualified environmental consultant whose identity shall be agreed between the parties SAVE THAT where the parties are unable to agree the identity of such a person within 7 days of the date of the Referral Notice then either party may refer the matter to the President for the time being of the Royal Institution of Chartered Surveyors requesting that he nominate a suitably qualified person to determine the amendments to be made to the Assumptions proposed in the Review Notice served by the Owner or SITA (as the case may be)

and the parties hereby agree to be bound by the decision of the person selected in accordance with this clause 11.7.4.

11.8

11.8.1 Where a notice given to SITA pursuant to clause 11.1 states that SITA is to assist the Owners in accordance with clause 11.5.1 the Owners shall grant to SITA a licence to enter onto the Owners’ Land until such time as the Waste Management Licence is transferred to Brown & Sharpe or Lanz or to the Owners or the Owners’ nominee (as the case may be) for the purpose of complying with its obligations under the Waste Management Licence.

11.8.2 Where a notice given to SITA pursuant to clause 11.1 states that SITA is to take all steps to surrender the Waste Management Licence in accordance with clause 11.5.2 the Owners shall grant to SITA a licence to enter onto the Owners’ Land for the purpose of surrendering the Waste Management Licence in accordance with clause 11.5.2.

11.9 If this Agreement is terminated pursuant to clause 11.2 or clause 11.3 SITA shall upon receipt of a notice in writing from Brown & Sharpe and/or Lanz assist the Owners in procuring the agreement of the Environment Agency to the transfer of the Waste Management Licence to Brown & Sharpe or Lanz or to the Owners’ nominee and SITA shall upon receiving confirmation of such agreement forthwith arrange for the transfer of the Waste Management Licence to the party approved by the Environment Agency under the terms of the agreed transfer.

12. ARBITRATION

Except as provided in clause 9.6.2 hereof in the event that the parties shall disagree as to any matter under this Deed such matter may be referred to arbitration by any of the parties on giving one month’s notice to the other parties of their intention to do so. The arbitrator shall be a member of the Royal Institution of Chartered Surveyors having not less than 10 years experience since qualification relevant to the subject matter forming the reference to arbitration pursuant to this clause 12 and if the parties shall be unable to agree as to the appointment of the arbitrator then he shall be appointed by the President of the Royal Institution of Chartered Surveyors upon the application of any of the parties. Costs of the application shall be in the award of the arbitrator.

13. GENERAL

13.1 Any notices or proceedings in Court in respect of this Agreement shall be sufficiently served if sent by ordinary first class or registered or recorded delivery post to the parties at their address as hereinbefore set out or to their solicitors and service shall be deemed to be made on the day after posting and in proving such service it shall be sufficient to prove that the envelope containing the relevant document was properly addressed stamped and posted.

13.2 Brown & Sharpe and Lanz hereby covenant with SITA that if at any time during the Term either one of them (the “Selling Owner”) intends to dispose of their interest in their respective portion of the Owners’ Land to a third party (a “Purchaser”) the Selling Owner shall ensure that on or before the date of completion of such disposal the Purchaser enters into a deed of covenant with the other Owner and SITA to observe and perform all the obligations in this Agreement insofar as they apply to the Selling Owner and insofar as they relate to that part of the Owners’ Land which is to then vested in the Purchaser.

13.3 The benefit of the Agreement may be assigned in whole (but not in part) by SITA with the consent of Brown & Sharpe and Lanz such consent not to be unreasonably withheld or delayed; and

13.4

13.4.1 Subject to clause 13.4.2 each party to this Agreement shall keep confidential and not disclose to any third party any information supplied to them by the other parties or any adviser, consultant or employee of those parties or any subsidiary or holding company or subsidiary of such holding company of any party save to the extent the same is already in the public domain.

13.4.2 A party shall not be in breach of the requirement for confidentiality contained in clause 13.4.1 by reason of any disclosure where such disclosure is:

(a) required to be made pursuant to any legal or regulatory requirement;

(b) made to an adviser of any party to this Agreement; or

(c) made to a potential third party purchaser where such party has agreed to be bound on the same terms as this clause 13 regarding confidentiality.

14. INDEMNITY

14.1 The Deed of Counter-Indemnity is hereby determined but without prejudice to any antecedent claim by any party against any other party.

14.2 SITA hereby indemnifies and agrees to keep indemnified Brown & Sharpe and Lanz from and against all actions proceedings claims demands and loss of any kind whatsoever which arise out of or in connection with SITA’s performance or non-performance of its obligations pursuant to:

14.2.1 this Agreement;

14.2.2 the S.106 Agreement;

14.2.3 the Waste Management Licence;

14.2.4 the Removal Works; and

14.2.5 the Planning Permission.

14.3 If SITA is required to undertake the Removal Works in accordance with clause 10 of this Agreement then upon completion of the Removal Works SITA shall be released

from its obligations and liabilities under this clause 14 in respect of the Pink-Hatched Land and the indemnity given by SITA under this Agreement shall cease as regards the Pink-Hatched Land.

14.4 SITA hereby agrees to notify Brown & Sharpe and Lanz in writing immediately upon becoming aware of any event or omission which is (or may with the passage of time give rise to) a breach of the terms of any of the agreements and/or obligations set out in clause 14.2 and of any proceedings or steps or possible or threatened proceedings or steps taken or instituted by the Local Authority and/or the Environment Agency and/or any third parties in respect of any breach or alleged breach of such agreements and/or obligations.

15. GUARANTEE

15.1 The Guarantor hereby undertakes forthwith to execute and deliver to Brown & Sharpe and to Lanz the Guarantee.

15.2 Should the net asset value of the Guarantor at any time during the Term fall to a value which is less than half of the Baseline Value SITA hereby covenants with Brown & Sharpe and Lanz that it shall within a reasonable time (and in any event within 3 months) after receiving written notice from Brown & Sharpe or Lanz procure the execution of a new Guarantee by a new Guarantor whose current net worth is a least equal to the Baseline Value and, for the avoidance of doubt, the provision of this Clause 15.2 shall apply equally to that replacement Guarantor and to any subsequent Guarantors throughout the Term.

15.3

15.3.1 SITA SA and SITA shall, within two months of any resolution of the shareholders of SITA SA which is passed in order to extend the corporate existence of SITA SA (and in any event no later than 10/09/2017), deliver to BROWN & SHARP and to LANZ a certified copy of such shareholders’ resolution and a corporate registry certificate (extrait k-Bis or equivalent) providing evidence of such extension.

15.3.2 If SITA SA and SITA fail so deliver the items referred to in clause 15.3.1 by 10/09/2017 SITA SA and SITA must, within 60 working days of 10/09/2017, jointly deliver a duly executed and binding additional guarantee on the same terms as the Guarantee (but which shall not replace the Guarantee) given by a new Guarantor whose net worth at the time of delivery of such additional guarantee shall be at least equal to the Baseline value.

15.3.3 The provisions of Clause 15.3.1 and 15.3.2 above shall apply in the case of any extension of the corporate existence of SITA SA or any additional or replacement Guarantor which will itself expire before the end of the Term (save that references to the date of 10/09/2017 shall be deemed references to a date being 10 months before the expiry of such corporate existence).

15.4 The assignment of SITA’s obligations in accordance with clause 13.3 shall not release or be deemed to release SITA SA from the obligations contained in the Guarantee executed

pursuant to clause 15.1 and the Guarantee shall continue in full force and effect unless a substitute guarantor of at least equal standing to SITA SA as at the date of this Agreement and acceptable to both of the Owners has assumed SITA SA’s obligations under the Guarantee.

16. OPTION TO PURCHASE

16.1 SITA hereby grants to Brown & Sharpe an option to require SITA to take a transfer of the First Land (or such part thereof as Brown & Sharpe may require) on the terms of this clause 16.1.

16.1.1 The transfer referred to in Clause 16.1 shall be made with limited title guarantee and will be for a nominal consideration of One Pound (£1.00).

16.1.2 A Put Option may be exercised at any time in relation to the First Land (or such part thereof as Brown & Sharpe may require) by Brown & Sharpe signing and serving a Put Option Notice in respect of such land at any time within the Put Option Period.

16.1.3 A Put Option Notice may relate to the First Land or to any part thereof as Brown & Sharpe may require and there shall be no restriction upon the number of Put Option Notices which Brown & Sharpe may serve.

16.1.4 A Put Option may not be exercised by Brown & Sharpe more than once in relation to any particular parcel of the First Land.

16.2 SITA hereby grants to Lanz an option to require SITA to take a transfer of the Second Land (or such part thereof as Lanz may require) on the terms of this clause 16.2.

16.2.1 The transfer referred to in Clause 16.2 shall be made with limited title guarantee and will be for a nominal consideration of One Pound (£1.00).

16.2.2 A Put Option may be exercised in relation to the Second Land (or such part thereof as Lanz may require) by Lanz signing and serving a Put Option Notice in respect of such land at any time within the Put Option Period.

16.2.3 A Put Option Notice may relate to the Second Land or to any part thereof as Lanz may require and there shall be no restriction upon the number of Put Option Notices which Lanz may serve.

16.2.4 A Put Option may not be exercised by Lanz more than once in relation to any particular parcel of the Second Land.

16.3 If a Put Option Notice is served pursuant to either clause 16.1 or clause 16.2 the relevant transfer shall be completed on the date 10 working days after the date of the Put Option Notice and the transfer shall contain statements that the transfer is made with limited title guarantee, and that:

16.3.1 the disposition effected by the transfer is made subject to the matters contained or referred to in the contract between the transferor and the transferee providing for the transfer;

16.3.2 the land transferred will not enjoy any rights, easements or other matters over land retained by the transferor except those (if any) which are specifically granted by the transfer; and

16.3.3 the transferee covenants on its own behalf and on behalf of its successors in title to observe and perform the covenants and other matters contained or referred to in the registers of title of the land transferred so far as they affect the land transferred and are capable of being enforced and to indemnify the transferor and keep the transferor indemnified against any liability arising from any future failure to observe or perform them.

17. EXTRACTION OF AND PAYMENT FOR CLAY

17.1 During the course of executing and completing the Operative Works SITA may extract and purchase Clay from the Owners on the terms set out in this clause 17.

17.2 Subject to the provisions of clause 17.9 SITA shall purchase all Clay extracted during any Payment Year:

17.2.1 where used by SITA or a group company of SITA in connection with its landfill operations at another site at the Price for Clay prevailing for that Payment Year; or

17.2.2 where sold to a third party at a price equal to [* ] of the price at which such Clay is sold to that third party.

17.3 If the Owners’ Representative (acting reasonably) considers that the price for clay has on average over the course of any Payment Year (including for the avoidance of doubt the first Payment Year after the date of this Agreement) increased by a factor of 200% or more in comparison with the Price for Clay paid by SITA during that Payment Year he may during the final Quarterly Period in that Payment Year and in any event no later than 1^st December give notice (a “Review Notice”) to SITA pursuant to this clause 17.3 that the Price for Clay is to be reviewed in accordance with the provisions of clause 17.5 and 17.6.

17.4 For the avoidance of doubt if the Owners’ Representative has not during any Payment Year given a Review Notice to SITA in the final Quarterly Period of that Payment Year and on or before 1^st December the Price for Clay shall remain unchanged unless it is increased as result of a Review Notice being given to SITA in accordance with this clause 17 in any successive Payment Year;

17.5 On receipt of a Review Notice SITA and the Owners’ Representative shall negotiate in good faith in order to agree a fair Price for Clay taking into account:

(a) the average price for clay over the course of the preceding Payment Year as evidenced by prices taken from a minimum of 2 sources of clay to be selected by the Owners’ Representative from within south-east England; and

(b) * This confidential portion has been omitted and filed separately with the Commission

(c) the cost of transportation of such clay to the Owners’ Land

17.6 If SITA and the Owners’ Representative are unable to agree a reviewed Price for Clay in accordance with clause 17.5 within 21 days of receipt of the Review Notice by SITA then either party shall be entitled to refer the matter to the President for the time being of the Royal Institution of Chartered Surveyors with a request that a person with at least 10 years experience in dealing with disputes relating to clay or mineral extraction is selected as soon as possible and in any event no later than 5 working days after receipt of such request to determine the fair Price for Clay and that the person so selected shall be required to make such determination within 30 days of being selected and the parties hereby acknowledge that any such determination shall be final and binding upon them.

17.7 Following an increase in the Price for Clay as a result of a review in accordance with this clause 17 the increased Price for Clay shall apply to all Clay extracted and purchased by SITA during the Payment Year next following the Payment Year in which the Review Notice in consequence of which the Price for Clay has been increased was served and in subsequent Payment years until a further increase in the Price for Clay shall be agreed or determined.

17.8 If after a Review Notice has been given to SITA the revised Price for Clay has not been agreed in accordance with clause 17.5 or has not been determined in accordance with clause 17.6 by the beginning of the next Payment Year the Price for Clay shall remain unaltered until the Price for Clay is so agreed or determined and upon such agreement or determination the revised Price for Clay shall apply retrospectively from the beginning of the Payment Year in which such agreement or determination takes place.

17.9 SITA shall during the Term make payment to the Owners within 7 days of receipt of a VAT invoice from the Owners in respect of each Clay Account submitted in accordance with clause 17.10 provided that no payment shall be required to be made before the date which is 28 days from the end of the calendar month in respect of the relevant Clay Account (the “Due Date”) for Clay extracted from the Owners’ Land during the previous calendar month such payment to be calculated in accordance with clause 17.2 and on the basis of the accounts provided by SITA to the Owners pursuant to clause 17.10 (provided that if any such payment shall not be made within such period then the whole of such payment due shall bear interest at an annual rate equal to 4% over the base rate from time to time of Lloyds Bank plc from the date on which the same first became due until payment in full).

17.10 All Clay extracted from the Owners’ Land shall be weighed and recorded over SITA’s weighbridge on the Third Land and within 14 days from the end of each calendar month during the Term SITA shall provide to each of the Owners an account (the “Clay Account”) in accordance with the provisions of clause 17.11 showing for the preceding calendar month:

(a) the quantity of Clay extracted from the Owners’ Land;

(b) the quantity of Clay used by SITA for the purposes of its own landfill operations at another site; and

(c) the quantity of, and the price charged for, Clay sold to each and every third party.

17.11

17.11.1 SITA shall provide such evidence as is necessary to verify the accuracy of the relevant Clay Account provided to each of the Owners pursuant to clause 17.10

17.11.2 the Owners and their agents shall at all times after giving reasonable prior notice be entitled to enter upon the Land with or without workmen or equipment to check or measure quantities of Clay extracted from the Owners’ Land or to verify any Clay Account provided by SITA.

17.11.3 Once in every year during the Term SITA shall arrange for an independent auditor to certify the quantities of Clay extracted from the Owners’ Land and any payment received in respect thereof (the “Certificate”) and a copy of the Certificate shall be sent to each of the Owners no later than 28 days after the end of each calendar year after the date of this Agreement during the Term and in addition upon determination of this Agreement for whatever reason within 28 days from the date of such determination.

17.11.4 The Owners shall have the right to appoint their own auditors independently to verify the accuracy of any Clay Account and/or any Certificate. SITA shall provide all necessary and reasonable assistance to such auditors including but not limited to the provision of copy documents and access to SITA’s operations on the Land. SITA agrees to reimburse the Owners for the cost of any such independent verification should any material discrepancy be identified between the amounts certified by the auditor appointed by the Owners and the amounts set out in the relevant Clay Account and/or Certificate.

18. RIGHTS OF THIRD PARTIES

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement but this shall not affect any right or remedy of a third party which exists or is available apart from that Act.

19. NO LEASE

The parties hereby acknowledge that SITA has no right to exclusive possession of the Owners’ Land and that no tenancy or lease or partnership is created by or under the terms of this Agreement.

20. GOVERNING LAW

This agreement, and all disputes or claims arising out of or in connection with it, shall be governed by and construed in accordance with English law

IN WITNESS whereof the parties hereto have hereunto caused their respective Common Seals to be affixed the day and year first before written.

(    EXECUTED AS A DEED by BROWN &

(    SHARPE GROUP LIMITED in the

(presence of:

Director

Directory/Secretary

(    EXECUTED AS A DEED by LANZ FARM

(    LIMITED in the presence of:

Director

Director/Secretary

(    EXECUTED AS A DEED by S.I.T.A.

(    PRODUCTS AND SERVICES LIMITED

(    in the presence of:

Director

Director/Secretary

(    Executed as a Deed and delivered by

(    SITA SA by the signature of its President

(    and a director/a directeur general

President

Director/Directeur General

DATED 25^th April 2001

DEED OF ASSIGNMENT

BROWN & SHARPE GROUP LIMITED

and

BNS COMPANY (PROPERTY HOLDINGS) LIMITED

Robinsons Solicitors

83 Friar Gate

21. DERBY

DE1 1FL

Tel: (+44) (0)1332 291431

Fax: (+44) (0)1332 291461

http://www.robinsons-solicitors.co.uk

info@robinsons-solicitors.co.uk

DEED OF ASSIGNMENT

DATE 25^th April 2001

22. PARTIES

(1) Brown & Sharpe Group Limited (Company Registration No. 1409379) of Metrology House Halesfield 13 Telford Shropshire TF7 4PL (the “Brown & Sharpe”)

(2) BNS Company (Property Holdings) Limited (Company Registration No. 4129078) of Metrology House Halesfield 13 Telford Shropshire TF7 4PL (the “New Owner”)

22.1 RECITALS

(A) This deed is entered into pursuant to an agreement relating to gravel extraction, landfilling restoration and aftercare works (the “Consolidated Gravel Agreement”) dated 10^th November 2000 made between (1) Brown & Sharpe Group Limited, (2) Lanz Farm Limited, (3) S.I.T.A. Products & Services Limited and (4) SITA SA

(B) The New Owner has become the owner of the land on the north side of Bath Road Hillingdon and to the north of Bath Road Heathrow in H M Land Registry Title Numbers MX 150037 and AGL 3384

WITNESSES:

1 In this deed defined terms shall bear the same meaning as in the Consolidated Gravel Agreement a copy of which is annexed to the Partnership Deed

2 Subject to the terms and provisions of the Consolidated Gravel Agreement Brown & Sharpe Group Limited hereby assigns any and all benefits and rights under the Consolidated Gravel Agreement (whether accrued or not) to the New Owner.

I N W I T N E S S of which this deed has been executed and is delivered on the date appearing as the date of this deed

The Common Seal of Brown & Sharpe Group

Limited was hereunto affixed

in the presence of:

Director

Director/Secretary

EX-10.41

Exhibit 10.41

PURCHASE AND SALE AGREEMENT

between

BNS Co.

BNS INTERNATIONAL, LTD.

and

Bath Road Holdings Limited

Dated as of 5 February 2004

PURCHASE AND SALE AGREEMENT

THIS AGREEMENT is made and entered into as of this      day of February 2004 between BNS Co., a Delaware corporation (the “U.S. Vendor”), BNS INTERNATIONAL, LTD., a Cayman Islands corporation and a wholly owned subsidiary of the U.S. Vendor (“INTERNATIONAL”) and Bath Road Holdings Limited a company incorporated in England and Wales with registered number 5028827 and whose registered office is at Hush Willows, Wentworth Drive, Virginia Water, Surrey GU25 4NY (the “Purchaser”).

WHEREAS, the U.S. Vendor has agreed to sell to the Purchaser (by causing its wholly-owned subsidiary INTERNATIONAL, to transfer its legal and beneficial interest in the entire issued share capital of the Company (as defined) to the Purchaser), and the Purchaser has agreed to purchase, in accordance with this Agreement, all the issued share capital of BNS Company (Property Holdings) Ltd., an English company (the “Company”), namely one ordinary share of £1 (the “Share”), and purchase all inter-group indebtedness represented by a Promissory Note dated April 25^th 2001 as amended January 27^th 2003 and 23 December 2003 (the “Promissory Note”) and other amounts which are owed by the Company to the U.S. Vendor and remain outstanding on the Company’s balance sheet as of the Closing (as defined herein), together with all accrued interest on such amounts (together the “Intergroup Indebtedness”), all for a sum of £5,500,000 (Five Million Five Hundred Thousand Pounds Sterling), and subject to adjustment under Section 1.4 as adjusted (the “Final Purchase Price”), which shall be paid as set forth below in Sections 1.2 and 1.4.

NOW THEREFORE, in consideration of, and subject to, the mutual promises, agreements, terms and conditions made herein, and intending to be legally bound, the parties hereto do hereby agree as follows:

SECTION 1. PURCHASE AND SALE OF THE SHARE AND THE INTERGROUP INDEBTEDNESS.

1.1. Purchase and Sale of the Share and the Intergroup Indebtedness. At the Closing, subject to the terms and conditions of this Agreement and on the basis of the representations and warranties set forth herein, the U.S. Vendor shall sell to the Purchaser (by causing its wholly-owned subsidiary INTERNATIONAL to transfer its entire legal and beneficial interest in the Share to the Purchaser) and INTERNATIONAL shall sell to the Purchaser its entire legal and beneficial interest in the Share, free and clear of all Liens and to the intent that as from the Closing Date all rights and advantages accruing to the Share, including any dividends or distributions on the Share after that date, shall belong to the Purchaser, and the Purchaser shall so purchase from INTERNATIONAL the Share and the U.S. Vendor shall on the same basis sell to the Purchaser, and the Purchaser shall so purchase from the U.S. Vendor, the Intergroup Indebtedness free and clear of all Liens.

1.2. Payments at Closing.

1.2.1. Payment of Closing Purchase Price. At the Closing, in consideration for the sale of the Share, the Purchaser shall pay to INTERNATIONAL, in immediately available funds, by wire transfer to the account or accounts in the Cayman Islands or elsewhere designated by INTERNATIONAL, the full purchase price of £5,500,000 (Five Million Five Hundred Thousand Pounds Sterling) less:-

(i) the amount payable to the U.S. Vendor in relation to the purchase of the Intergroup Indebtedness pursuant to Section 1.2.2;

(ii) the amount of the Deposit (as defined in Section 1.5 below) which will be released to INTERNATIONAL at Closing in accordance with the provisions of Section 1.5; and

(iii) to the extent that a bank guarantee or letter of credit to the Purchaser’s reasonable satisfaction has not been delivered in accordance with Section 1.2.3 below, the sum of £615,820 (the “Escrow Sum”); the Escrow Sum shall be treated as set out in Section 1.2.3 below

(together “the Net Closing Remittance to INTERNATIONAL”). The Net Closing Remittance to INTERNATIONAL shall be subject to adjustment as provided in Section 1.4 below. Any payments made by the

2

U.S. Vendor or INTERNATIONAL to the Purchaser in respect of a breach of any of the warranties and representations set out in this Agreement or under the Tax Deed shall be deemed to give rise to a corresponding reduction in the purchase price.

1.2.2. Purchase of Inter Group Indebtedness. At the Closing, the Purchaser shall purchase from the U.S. Vendor the Intergroup Indebtedness by paying to the US Vendor an amount equal to the Intergroup Indebtedness, by wire transfer to an account in the U.S. designated by the U.S. Vendor. For the avoidance of any doubt, the Intergroup Indebtedness (including the accrued interest element) is neither being acquired at a premium nor a discount.

1.2.3. Bank guarantee/Escrow Sum. At Closing, the U.S. Vendor or INTERNATIONAL shall deliver to the Purchaser a bank guarantee or an irrevocable letter of credit in a form to the Purchaser’s reasonable satisfaction from a recognized United Kingdom bank promising to pay to the Purchaser up to £615,820 in the event that either the Purchaser and/or the Company incurs a Section 776 Liability and/or a Thin Capitalisation Liability (as each such term is defined in Schedule 4) prior to the Release Date (again as such term is defined in Schedule 4). In the event that the U.S. Vendor or INTERNATIONAL fail to deliver such a bank guarantee or an irrevocable letter of credit in a form to the Purchaser’s reasonable satisfaction at Closing, the Purchaser shall pay the Escrow Sum into an account to be set up in the joint names of Macfarlanes, the Purchaser’s English solicitors, (the “Purchaser’s English Solicitors”) and Robinsons, the U.S. Vendor’s English Solicitors, (the “Vendor’s English Solicitors”) (the “Escrow Account”) to be held and released according to the terms set out in Schedule 4 to this Agreement.

1.3. The Closing. The closing (the “Closing”) of the purchase and sale of the Share and the Intergroup Indebtedness contemplated hereby shall take place at the Derby, United Kingdom offices of the Vendor’s English Solicitors at 11.00 a.m., United Kingdom time, on such date as is five business days after the requisite approval of the transaction by the U.S. Vendor’s stockholders has been obtained (the “Condition”) or at such other date, time and/or location as may be agreed upon by the parties hereto. The date upon which the Closing occurs is referred to in this Agreement as the “Closing Date”. If the Closing Date is not fixed in accordance with this Section for a date which is within nine months of the date of this Agreement (the “Long-Stop Date”), this Agreement (save for the provisions of this Section 1.3 and of Sections 6, 9 and 10) shall be null and void and of no further effect and each of the parties hereto shall be released and discharged from their respective obligations under this Agreement. At the Closing, INTERNATIONAL will deliver to the Purchaser the Share, free and clear of all Liens and do or procure the acts, matters and things set out in Schedule One hereto. At the Closing, the Purchaser will deliver to INTERNATIONAL the Net Closing Remittance as set forth in Section 1.2.1 and the U.S. Vendor or INTERNATIONAL shall deliver a bank guarantee or irrevocable letter of credit to the Purchaser’s reasonable satisfaction as set out in Section 1.2.3 (or in the absence thereof, the Purchaser shall pay the Escrow Sum into the Escrow Account as set out in Section 1.2.3). At the Closing, the U.S. Vendor will deliver to the Purchaser the Intergroup Indebtedness, free and clear of all Liens, with a blank power duly executed by the U.S. Vendor and the original instrument of all promissory notes (together with any amendments thereto), and the Purchaser will deliver to the U.S. Vendor the amount of the Intergroup Indebtedness as set forth in Section 1.2.2. In connection with the Closing, each party hereto shall deliver to the other party such certificates, and other documents as are contemplated hereby. The U.S. Vendor shall use its best endeavors to achieve the satisfaction of the Condition as soon as possible after the date of this Agreement (and in any event in advance of the Long-Stop Date). The U.S. Vendor shall provide to the Purchaser copies of all documents connected with the satisfaction of the Condition (including, without limitation, copies of all proxy material sent to stockholders of the U.S. Vendor).

1.4. Adjustment to the Net Closing Remittance to INTERNATIONAL.

1.4.1. Within the time period provided for in this section 1.4.1 (or at such other time as provided for in Section 1.4.2 below), the Net Closing Remittance to INTERNATIONAL shall be adjusted as follows: if the aggregate of current assets less current and long-term liabilities (which shall not include either (i) the Intergroup Indebtedness being purchased by the Purchaser or (ii) the £100,000 deferred income detailed on

3

page 11 of the audited report and financial statements of the Company to 31 December 2003) of the Company on the Closing Date is positive or negative then the Net Closing Remittance to INTERNATIONAL shall be increased by the amount of such positive amount or decreased by the amount of such negative amount, provided always that any additional payment by the Purchaser shall not, in any circumstance, exceed £100,000. The U.S. Vendor shall deliver to the Purchaser a Balance Sheet of the Company as of the Closing Date (the “Closing Balance Sheet”) showing the current assets less current and long-term liabilities as at that date prepared in accordance with the historical cost convention and the bases and policies of accounting adopted in preparing the Last Accounts and subject thereto in accordance with UK GAAP by a date not later than 10 business days after the Closing. The Purchaser shall review in good faith the Company’s Closing Balance Sheet, and within 20 business days after receipt thereof shall deliver to the U.S. Vendor a statement in writing indicating its acceptance of the said calculations based on the Closing Balance Sheet or indicating any objections to said calculations. In the event that the Purchaser accepts said calculations based on the Closing Balance Sheet, then the adjustment to the Net Closing Remittance to INTERNATIONAL required by said Closing Balance Sheet calculations under this Section shall be made, and the Purchaser or INTERNATIONAL, as the case may be, shall promptly within 5 business days make the payment required to carry out the required adjustment to the Net Closing Remittance to INTERNATIONAL, provided always that any additional payment by the Purchaser shall not, in any circumstance, exceed £100,000. In the event that the Purchaser delivers no written objection to the U.S. Vendor within said twenty business day period, then the adjustment required to the Net Closing Remittance to INTERNATIONAL required by said Closing Balance Sheet calculations under this Section shall be made, and the Purchaser or INTERNATIONAL, as the case may be, shall promptly within 5 business days make the payment required to carry out the adjustment to the Net Closing Remittance to INTERNATIONAL, provided always that any additional payment by the Purchaser shall not, in any circumstance, exceed £100,000.

1.4.2. If the Purchaser timely objects to the said Closing Balance Sheet calculations, then the Purchaser and the U.S. Vendor shall, within the period of 20 business days after the date of such objection, seek to agree on the Closing Balance Sheet. If any matters remains unresolved at the expiry of this period, then the issues in dispute will be submitted within 20 business days after the delivery to the U.S. Vendor of the Purchaser’s Objection to a United Kingdom nationally recognized accounting firm (which firm shall be independent from both the Purchaser and the U.S. Vendor and their respective affiliates) to be agreed upon in good faith by the U.S. Vendor and the Purchaser (the “Accountants”) for resolution. If such issues in dispute, relating solely to said calculations under the Closing Balance Sheet, are submitted to the Accountants for resolution, (i) each party will furnish to the Accountants such work papers and other documents and information relating to the disputed issues as the Accountants may request and are available to that party (or its independent public accountants), and will be afforded the opportunity to present to the Accountants any material relating to the determination and to discuss the determination of said issues with the Accountants; (ii) the determination by the Accountants, as set forth in a written notice delivered to both the Purchaser and the U.S. Vendor by the Accountants (which shall be delivered no later than 10 business days or such longer period to be agreed upon by the parties after the submission of the dispute of said issues to the Accountants), will be binding and conclusive on the Purchaser and the U.S. Vendor; and the Net Closing Remittance to INTERNATIONAL shall be adjusted in accordance with such determination, and the Purchaser or INTERNATIONAL, as the case may be, shall promptly within 5 business days make the payment required to carry out the adjustment to the Net Closing Remittance to INTERNATIONAL called for by said determination, provided always that any additional payment by the Purchaser shall not, in any circumstance, exceed £100,000 and (iii) the Purchaser and the U.S. Vendor shall bear the Accountants’ fees in such proportion as the Accountants shall determine (and in the absence of a determination, shall bear the Accountant’s fees in the proportion 50:50).

1.5. Deposit. Immediately upon the execution and delivery of this Agreement, the Purchaser shall deliver to the Vendor’s English Solicitors the sum of £700,000 as earnest money hereunder (the “Deposit”). Any Deposit amount required hereunder shall be in the form of wire transfer. The Vendor’s English Solicitors shall place the

4

Deposit in an interest-bearing client account of the Vendor’s English Solicitors with National Westminster Bank plc to be held to the order of the Purchaser with all interest being paid to the Purchaser at the Closing. At the Closing, the Deposit will be applied toward the Purchase Price. If the acquisition of the Share and the Intergroup Indebtedness does not complete (other than in the circumstances set out in Section 7.1) by the Long-Stop Date, then the whole amount of the Deposit (together with all interest accrued thereon) shall be returned immediately by the Vendor’s English Solicitors to the Purchaser. If the acquisition of the Share and the Intergroup Indebtedness does not complete in the circumstances set out in Section 7.1, the provisions of that Section shall apply to the Deposit.

1.6. Authorization of Agreement. The Purchaser represents that the Purchaser has the full legal right, power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. No further authorization, whether corporate or otherwise, or approval of any person is necessary on the part of the Purchaser or the Parent to consummate the transactions contemplated hereby.

1.7. Status of Purchaser. The Purchaser represents that:-

(i) it has engaged in no business and agrees that it will engage in no business other than the execution of this Agreement prior to the Closing, and that it has no liabilities and will have no liabilities prior to the Closing, other than (i) its liabilities under this Agreement and incidental organizational liabilities and (ii) liabilities in relation to the funding of the Purchase Price; and

(ii) the Deposit is the Purchaser’s own funds.

1.8. Valid and Binding Agreement. The Purchaser represents that this Agreement constitutes the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except to the extent limited by bankruptcy, insolvency, reorganization and other laws affecting creditors’ rights generally and general principles of equity.

1.9. Accuracy of Representations and Warranties. The Purchaser agrees that all representations and warranties of the Purchaser are true and accurate in all respects and not misleading as at the date of this Agreement and will be fulfilled down to and will remain true and accurate in all respects and not misleading at the Closing Date as if they had been made or given afresh as at the Closing Date by reference to the facts and circumstances then existing

SECTION 2. REPRESENTATIONS AND WARRANTIES OF U.S. VENDOR AND INTERNATIONAL

In connection with the sale of the Share and the Intergroup Indebtedness to the Purchaser, and in order to induce the Purchaser to enter into this Agreement, each of the U.S. Vendor and INTERNATIONAL hereby represents and warrants to the Purchaser, as follows, except that INTERNATIONAL makes no representations relating to the U.S. Vendor:

2.1. Organization and Good Standing. The Company is a corporation (Registration #04129078) duly organized in 2001, with a registered office at Metrology House, Halesfield 13, Telford, Shropshire, TF7 4PL, ENGLAND, U.K., validly existing and in good standing (or the United Kingdom equivalent) under the laws of the United Kingdom, with full corporate power and authority to conduct its business as conducted on the date hereof. The Company has complied in all respects with relevant Companies Act (U.K.) requirements and Companies House (U.K.) filing requirements. The U.S. Vendor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, the state in which it is incorporated, with full corporate power and authority to conduct its business as conducted on the date hereof and has, subject to obtaining the requisite approval of its stockholders under Delaware law for a sale of substantially all assets, full corporate power and authority to enter into and perform this Agreement, including causing its subsidiary INTERNATIONAL to transfer the Share. INTERNATIONAL is a corporation duly incorporated and in good standing in the Cayman Islands and is the legal and beneficial owner of the Share.

5

2.2. Share Capital of the Company. The Company’s authorized share capital consists of 1,000 ordinary shares of £1, of which one ordinary share of £1 constitutes its entire issued share capital. All such issued share capital is fully paid and nonassessable and free of preemptive or similar rights, is held with all rights now or hereafter attaching to it, has been properly and validly allotted and has been issued in full compliance with all applicable laws, rules, regulations and ordinances. There exist no outstanding options, warrants or rights (or any agreements or arrangements for the same) to purchase or subscribe for any share or other ownership interests of the Company. No person is entitled to any preemptive or similar right with respect to the issuance of any shares or other equity securities of the Company.

2.3. Valid and Binding Agreement of the U.S. Vendor. Upon obtaining the requisite approval of its shareholders under Delaware law, for a sale of substantially all assets, as provided for in Section 6.1, this Agreement constitutes the legal, valid and binding obligation of the U.S. Vendor, enforceable against the U.S. Vendor in accordance with its terms (including Section 8), except to the extent limited by bankruptcy, insolvency, reorganization and other laws affecting creditors’ rights generally and general principles of equity. The U.S. Vendor has the full legal right, power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby, assuming that it has obtained the requisite approval of shareholders. Other than the approval of its shareholders, no further authorization, whether corporate, or otherwise, or approval of any person is necessary on the part of the U.S. Vendor to consummate the transactions contemplated hereby.

2.4. Valid and Binding Agreement of INTERNATIONAL. This Agreement constitutes the legal, valid and binding agreement of INTERNATIONAL, enforceable against INTERNATIONAL in accordance with its terms, except to the extent limited by bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights generally and general principles of equity. INTERNATIONAL has the full legal right, power and authority to execute and deliver this Agreement and to consummate the transaction contemplated hereby. No further authorization, whether corporate or otherwise, or approval of any person is necessary on the part of INTERNATIONAL to consummate the transactions contemplated hereby.

2.5. No Breach by the U.S. Vendor or INTERNATIONAL of Statute or Contract. Neither the execution and delivery of this Agreement by the U.S. Vendor or INTERNATIONAL, nor (assuming the approval of the U.S. Vendor’s shareholders under Delaware law as provided for in Section 6.1) compliance with the terms and provisions of this Agreement by the U.S. Vendor or INTERNATIONAL, will: (a) to its best knowledge violate any statute or regulation of any governmental authority, domestic or foreign, affecting respectively the U.S. Vendor or INTERNATIONAL; (b) require the issuance of any authorization, license, consent or approval of any U.S. federal or state governmental agency or any United Kingdom governmental agency or any other person; or (c) conflict with or result in a breach of any of the terms, conditions or provisions of any judgment, order, injunction, decree, agreement or instrument to which the U.S. Vendor or INTERNATIONAL, respectively, or the Company is a party, or by which the U.S. Vendor or INTERNATIONAL, respectively, or the Company is bound, or constitute a default thereunder, except where failure to obtain such authorization, license, consent, or approval, individually or in the aggregate, would not impair, in any material respect, the ability of the U.S. Vendor or INTERNATIONAL to perform its obligations under this Agreement, or prevent or materially delay the consummation of the transactions contemplated by this Agreement.

2.6. Title to the Share.

(a) The Share is legally and beneficially owned and held by INTERNATIONAL (registered stockholder), a wholly owned subsidiary of the U.S. Vendor, free and clear of any lien, claim, restriction upon transfer, option, charge, security interest or other encumbrance. The U.S. Vendor, and since October 10, 2003, INTERNATIONAL, has always been the sole stockholder of the Company.

(b) Upon delivery by INTERNATIONAL of the certificate representing the Share pursuant to this Agreement, and assuming the Purchaser acquires such Share without knowledge of any adverse claim thereto, the Purchaser will acquire good and valid title to the Share, free and clear of any Lien.

6

2.6.1. Title to the Intergroup Indebtedness.

(a) The Intergroup Indebtedness is legally and beneficially owned and held by the U.S. Vendor, free and clear of any lien, claim, restriction upon transfer, option, charge, security interest or other encumbrance. The U.S. Vendor has always been the sole holder of the Intergroup Indebtedness.

(b) Upon delivery by the U.S Vendor of the note representing part of the Intergroup Indebtedness pursuant to this Agreement, and assuming the Purchaser acquires such Intergroup Indebtedness without knowledge of any adverse claim thereto, Purchaser will acquire good and valid title to the Intergroup Indebtedness, free and clear of any Lien.

2.7. Ownership of the Land.

2.7.1. Subject to Section 2.7.2

(a) The Company has good and marketable title to approximately 86.5 acres of land situated at Bath Road, Heathrow and Harmondsworth Lane, Sipson, United Kingdom as registered at HM Land Registry with title absolute under title numbers MX150037 and AGL3384 (the “Land”).

(b) The Land comprises the only freehold or leasehold or other immovable property in any part of the world in which the Company has ever held any interest or which are otherwise occupied or used by the Company, and the Company has no liability or obligation in respect of any property (other than the Land) in any part of the world.

(c) The Company is solely entitled at law and in equity to the Land.

(d) The Land is not subject to or affected by any mortgage or charge (whether legal or equitable, fixed or floating), debenture, lien, pledge, security interest or other encumbrance including without limitation any which secure the payment of money or relate to any obligation or liability of any third party.

(e) The Land is not subject to any restrictive or other covenants, stipulations, restrictions or other encumbrances (whether public or private) which are onerous or of an unusual nature or which adversely affect their current use or which affect their value that has not been disclosed in the documents listed in Schedule 3.

(f) The Land is not affected by any dispute, claim, complaint or demand of any kind.

(g) The Company has not received notice of, nor is the U.S. Vendor or INTERNATIONAL aware of, any breach of any statutes, orders or regulations affecting the Land, its use and development. There are no outstanding notices of requirements or recommendations of any competent authority.

(h) The Company has not granted any rights for the grazing of horses on the Land or access of horses to the Land.

2.7.2. The warranties in Section 2.7.1 are subject to:-

(a) various agreements, documents and reports listed in Schedule 3, copies of which have been provided to the Purchaser

(b) all matters discoverable by inspection, whether or not carried out by the Purchaser (but without carrying out any tests samples or other investigations) of the Land before the date of this Agreement.

(c) all unregistered overriding interests.

(d) all matters disclosed or which would be disclosed by searches of (inter alia) public registers, or as a result of enquiries (formal or informal) and whether made in person by writing or orally made by or for the Purchaser or which a prudent purchaser ought to make.

7

(e) all notices, services and orders, demands, proposals or requirements made by any local, public or other competent authority whether before or after the date of this Agreement Provided that each of the US Vendor and INTERNATIONAL warrants that it has disclosed to the Purchaser all such matters of which it has had notice or of which it is aware.

(f) all actual or proposed charges, notices, orders, restrictions, agreements, conditions, contraventions or other matters arising under the enactments relating to Town and Country Planning and Environmental Law Provided that each of the US Vendor and INTERNATIONAL warrants that it has disclosed to the Purchaser all such matters of which it has had notice or of which it is aware.

(g) all easements, quasi-easements, rights, exceptions or other similar matters, whether or not apparent on inspection or disclosed in any of the documents referred to in this Agreement Provided that each of the US Vendor and INTERNATIONAL warrants that it has disclosed to the Purchaser all such matters of which it has had notice or of which it is aware.

2.7.3. A Third Party carries on gravel extraction and landfill business on the Land as it currently exists.

2.7.4. Encumbrances contained in the documents listed in Schedule 3 or arising out of Section 2.7.2.

2.8. The Company

2.8.1. The Company has no employees and also has no consultants other than Peter Stuart Freer, who have a claim for payments or benefits against the Company.

2.8.2. There are no agreements binding the Company that have not been disclosed in writing to the Purchaser.

2.8.3. The Company has engaged in no other business except relating to the Land.

2.9. December 31, 2003 Balance Sheet of the Company. The U.S. Vendor has delivered to the Purchaser the Company’s audited balance sheet as of December 31, 2003, as attached hereto (the “December 31 Balance Sheet”) and a letter from SITA UK Limited to the Company dated 30 January 2003, also as attached hereto (the “SITA Letter”). The December 31 Balance Sheet has been prepared from the books and records of the Company in accordance with U.K. GAAP subject to normal adjustments in the ordinary course and together with the SITA Letter presents fairly in all material respects the financial condition of the Company as of such date. All accounts, books, ledgers and official and other records material to the Company’s business have been properly and accurately kept in all material respects; and fairly and accurately reflect the financial position of the Company. To the best knowledge of the U.S. Vendor, INTERNATIONAL and the Company, there is, as of the date of execution of this Agreement, no litigation pending or threatened against the Company and no material liabilities or commitments of the Company other than those reflected in the December 31 2003 Balance Sheet (and notes) and the SITA Letter or those which have been disclosed to the Purchaser in writing.

2.10. Environmental. No environmental warranties or representations or indemnifications are made.

2.11. Exclusion of other warranties and representations and indemnifications. Except as expressly set out in this Agreement all other expressed or implied warranties and representations and indemnifications are excluded.

2.12 Accuracy of Representations and Warranties. All representations and warranties of the U.S. Vendor and INTERNATIONAL are true and accurate in all material respects and not misleading as at the date of this Agreement and will be fulfilled down to and will remain true and accurate in all material respects and not misleading in any material respect at the Closing Date as if they had been made or given afresh as at the Closing Date by reference to the facts and circumstances then existing.

2.13 Gross-up. If the Purchaser incurs a liability to Taxation (as such term is defined in the Tax Deed) which results from, or is calculated by reference to, any sum paid under this Agreement, the amount so payable

8

shall be increased by such amount as will ensure that, after payment of such Taxation, the Purchaser is left with a net sum equal to the sum it would have received had no such liability to Taxation arisen. If the Purchaser would, but for the availability of a relief or repayment in relation to Taxation (as such term is defined in the Tax Deed), incur a liability to Taxation falling within this Section, it shall be deemed for the purposes of this Section to have incurred and paid that liability.

SECTION 3. CLOSING CONDITIONS OF THE PURCHASER.

The Purchaser’s obligation to consummate the Closing is subject to the satisfaction, on or prior to the Closing Date, of the following conditions:

3.1. Conduct of the Company between the date of this Agreement and Closing.

3.1.1. The U.S. Vendor and INTERNATIONAL each undertakes to and covenants with the Purchaser that it will procure that between the date of this Agreement and the Closing Date:-

(i) no increase shall be made in the authorised, allotted or issued share capital of the Company;

(ii) no option, warrant or other convertible security shall be offered or granted by the Company over the whole or any part of its share capital, whether issued or unissued; and

(iii) no dividends or other distributions shall be declared, made or paid by the Company exclusive of any repayment of Inter-group Indebtedness.

3.1.2. The U.S. Vendor and INTERNATIONAL further undertake to and covenant with the Purchaser that they will procure that between the date of this Agreement and the Closing Date (save with the prior written consent of the Purchaser):-

(i) the business of the Company shall be carried on in the ordinary and usual course and so as to maintain the same as a going concern and with a view to profit;

(ii) the Company shall not:-

(a) alter or agree to alter or terminate or agree to terminate any agreement to which it is a party or enter or agree to enter into any unusual or abnormal contract or commitment;

(b) incur any expenditure or any commitment otherwise than in the ordinary course of business of the Company (as such business is carried on at the date of this Agreement) or dispose of or realize any asset or any interest in any such asset;

(c) create or agree to create any mortgage, charge, lien or encumbrance over all or any of its assets (other than liens arising in the ordinary course of business) or redeem or agree to redeem any existing security or give or agree to give any guarantee or indemnity;

(d) give or agree to give any guarantee, indemnity or other agreement to secure, or incur financial or other obligations with respect to, another person’s obligations;

(e) alter or agree to alter the terms of any existing borrowing facilities or arrange any additional borrowing facilities, provided that nothing herein shall prevent the extension of the term of the Promissory Note for a further 12 months, provided further that no other change shall be made as to the rate of interest or to any other monies on inter-company loan account without the Purchaser’s written consent;

(f) engage or employ or agree to engage or employ any person as an employee or consultant;

(g) take any other commercial action or pass any resolution whatsoever not required by this Agreement (including, but not limited to, any resolution to amend the memorandum and/or articles of association of the Company);

9

(iii) in respect of the policies of insurance of the Company or the policies of insurance in which it has an interest as at the date of this Agreement:-

(a) such policies shall be maintained in full force and effect;

(b) the Company shall not do or omit to do anything the doing or omission of which would make any of such policies void or voidable; and

(c) the Company shall notify the Purchaser of any claim arising under any of such policies on or after the date of this Agreement.

3.1.3. The Purchaser shall be entitled by written notice to the U.S. Vendor to terminate this Agreement if there is any breach of any of the provisions of this Section 3.1, which is not reasonably cured (to the extent it is capable of being cured) within the lesser of 14 days of the relevant breach, or 7 days prior to Closing (or such shorter period remaining until the Closing Date) after written notice thereof in reasonable detail to the U.S. Vendor. The exercise of this right shall not extinguish any right to damages to which the Purchaser may be entitled in respect of any such breach. Failure to exercise this right shall not constitute a waiver of any other rights of the Purchaser arising out of any such breach.

3.2. Performance by U.S. Vendor and INTERNATIONAL. The U.S. Vendor and INTERNATIONAL shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by them prior to or at the Closing, including obtaining the requisite approval of the U.S. Vendor’s shareholders under Delaware law with respect to the sale of substantially all assets of the U.S. Vendor, as described under Section 6.1.

3.3. Legal Opinions. The Purchaser shall have received immediately prior to Closing the opinions of (i) Ropes & Gray, U.S. counsel to the U.S. Vendor, to the effect that the U.S. Vendor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, the jurisdiction of its incorporation, and has obtained all necessary authorizations (corporate and otherwise) to carry out its obligations hereunder on the Closing Date and that the entry into of this Agreement is a valid and binding obligation of the U.S. Vendor and enforceable against the U.S. Vendor in accordance with its terms (except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity)) and (ii) Walkers, Cayman Islands counsel to the U.S. Vendor, to the effect that INTERNATIONAL is a corporation duly organized, validly existing and in good standing under the laws of the Cayman Islands, the jurisdiction of its incorporation, and has obtained all necessary authorizations (corporate and otherwise) to carry out its obligations hereunder on the Closing Date and that the entry into of this Agreement is a valid and binding obligation of INTERNATIONAL and enforceable against INTERNATIONAL in accordance with its terms (except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity)).

3.4. Stockholder Approval. It is a condition to the obligation of all parties that the U.S. Vendor shall have obtained the requisite approval by its stockholders of the sale of the Share and the Inter-group Indebtedness at the Closing.

SECTION 4. CLOSING CONDITIONS OF U.S. VENDOR AND INTERNATIONAL

4.1. Performance by the Purchaser. The Purchaser shall have performed or complied with all obligations and covenants required by this Agreement to be performed or complied with by it prior to or at the Closing.

4.2. Representations and Warranties of Purchaser. The Purchaser shall have complied with Section 1.8, which shall be a closing condition.

10

4.3. Stockholder Approval. It is a condition to the obligation of all parties that the U.S. Vendor shall have obtained the requisite approval by its stockholders of the sale of the Share and the Inter-group Indebtedness at the Closing.

SECTION 5. REPRESENTATIONS AND WARRANTIES; TAX INDEMNIFICATION

5.1. Time Limits for Representations and Warranties. No party shall bring a claim in relation to the representations and warranties given in this Agreement unless the party making the claim has notified each of the other parties in writing of such a claim on or before the date which is one year from the Closing Date.

5.2. Tax Indemnification. At the Closing the U.S. Vendor shall deliver to the Purchaser a duly engrossed Tax Deed as set out in Schedule Two hereto, provided that no claim may be made thereunder unless the Purchaser has notified the U.S. Vendor in writing of such claim on or before the date which is one year from the Closing Date.

5.3 Total Aggregate Liability of the U.S. Vendor and INTERNATIONAL. The total aggregate liability of the U.S. Vendor and INTERNATIONAL in relation to the representations and warranties given in this Agreement and in the Tax Deed shall not exceed £5,500,000. The Purchaser shall not be entitled to recover any amount in respect of a breach of the representations and warranties given in this Agreement or under the Tax Deed unless the amount recoverable, when aggregated with all other amounts recoverable for breach of the representations and warranties given in this Agreement and under the Tax Deed, exceeds £10,000 in which event this limitation shall cease to apply and the whole of such amounts shall be recoverable and not merely the excess over £10,000.

SECTION 6. OTHER MATTERS

6.1. Approval of Stockholders of the U.S. Vendor. In the event the stockholders of the U.S. Vendor do not provide such requisite approval as is required under U.S. law on or before nine months of signing and delivery of the Agreement, then either party shall have the right to terminate this Agreement by written notice to the other, in which event (i) the Deposit shall be returned to the Purchaser (together with all interest accrued thereon), (ii) the U.S. Vendor will promptly pay to the Purchaser £75,000 and (iii) neither party shall have any further right or obligation to the other.

The U.S. Vendor shall cause to be filed with the SEC, within 28 business days, following the execution of this Agreement by all parties, the Proxy Statement relating to the matter to be submitted to the Shareholders at a Special Shareholders Meeting. The U.S. Vendor shall use its good faith best efforts to have the Proxy Statement “cleared” by the SEC as soon as reasonably possible. The U.S. Vendor shall mail proxy material for a Special Stockholders Meeting for the purpose of voting upon the approval and adoption of this Agreement as soon as reasonably practicable after the date on which the Proxy Statement shall have been “cleared” by the SEC and, in any event, within seven (7) business days after the date of such “clearance”. Subject to the provisions of Section 8, the U.S. Vendor shall solicit from its Shareholders proxies in favor of approval and adoption of this Agreement (including the use of a recognized proxy solicitation firm), and, subject to the provisions of Section 8, the Board of Directors of the U.S. Vendor shall recommend that the Shareholders vote in favor of and approve and adopt this Agreement at the Shareholders Meeting.

6.2. Continued Access. The Purchaser has previously been given access to all of the books and papers of the Company in order to carry out due diligence on the Company and the Land and any other assets of the Company. The U.S. Vendor will cause INTERNATIONAL to cause the Company to continue at the request of the Purchaser to give the Purchaser such access, all at the Purchaser’s expense, and the Purchaser may make such inspections, interviews and audits of the Company and the Land as the Purchaser in its sole discretion deems appropriate, all at the Purchaser’s expense.

6.3. Further Assurances. Subject to the provisions of Section 8, each party undertakes to take such actions as may be reasonably required to give effect to the transaction contemplated by this Agreement.

11

SECTION 7. DEFAULT AND REMEDIES

7.1. Purchaser’s Default. If the Purchaser fails to close for any reason by the Long-Stop Date following satisfaction of the condition set out in Section 4.3 above, except (a) the U.S. Vendor’s or INTERNATIONAL’s default (which has not been cured) or (b) the permitted termination of this Agreement by the Purchaser as herein expressly provided, at a time when the U.S. Vendor and INTERNATIONAL are ready and able to close and to comply with all of their obligations in Section 1.3 of this Agreement and Schedule One, the U.S. Vendor and INTERNATIONAL shall be entitled to terminate this Agreement and to instruct the U.S. Vendor’s English Solicitors to deliver the Deposit and interest thereon to INTERNATIONAL as liquidated damages, which right shall be the U.S. Vendor’s and INTERNATIONAL’s sole remedy hereunder if the Agreement is terminated for said reasons.

7.2. The U.S. Vendor’s or INTERNATIONAL’S Default. If the U.S. Vendor or INTERNATIONAL fails to close for any reason, except (a) the Purchaser’s default (which has not been cured) or (b) the permitted termination of this Agreement by the U.S. Vendor or INTERNATIONAL as herein expressly provided (including the payment of £75,000 if such termination is due to the non-obtainment of the requisite stockholder approval pursuant to Section 6.1 hereof), the Purchaser shall be entitled to terminate this Agreement upon written notice to the U.S. Vendor’s English Solicitors, the U.S. Vendor and INTERNATIONAL and to instruct the U.S. Vendor’s English Solicitors to return the Deposit and interest thereon to the Purchaser. In lieu of such termination of this Agreement, the Purchaser shall be entitled to bring an action for specific performance of this Agreement, provided the Purchaser provides written notice of such election within 10 business days after the scheduled Closing Date.

7.3. Legal Fees. In the event of any litigation, subsequent to the date hereof, between the parties with respect to the subject matter of this Agreement or the entering into or termination or expiration of this Agreement, the prevailing party shall be entitled to recover its reasonable legal fees from the other party.

7.4. Discovery of Default. If either the U.S. Vendor or INTERNATIONAL or the Purchaser discovers, prior to or at the Closing, that any material representation or warranty of the other party is false, misleading or inaccurate in any material respect and which is not reasonably cured (to the extent it is capable of being cured) within the lesser of 14 days of the relevant breach, or 7 days prior to Closing (or such shorter period remaining until the Closing Date) after the giving of written notice thereof to the other party, the discovering party may (but shall not be obligated to), at such party’s option, terminate this Agreement by written notice and the parties hereto shall be relieved of all liabilities and obligations hereunder and (a) if the Purchaser is the discovering party, the Purchaser shall be entitled to the immediate return of the Deposit with interest and to pursue the Purchaser’s remedies under Section 7.2 of this Agreement (including the right to an Expense Reimbursement set out in Section 8.1(c) below) and (b) if the U.S. Vendor or INTERNATIONAL is the discovering party, the U.S. Vendor shall be entitled to pursue the U.S. Vendor’s remedies under Section 7.1 of this Agreement.

SECTION 8. “FIDUCIARY OUT” OF THE U.S. VENDOR

8.1(a) U.S. Vendor’s Fiduciary Obligations to its Stockholders. The Purchaser acknowledges and agrees that the U.S. Vendor is a “public company” and in connection with the sale of the Land which constitutes “substantially all assets” of the U.S. Vendor (under Delaware law), the U.S. Vendor is required to reserve the right to have a so-called “fiduciary out” to allow the U.S. Vendor to terminate this Agreement and to cause INTERNATIONAL to sell the stock of the Company or the Land, either directly or indirectly by a transaction relating to the U.S. Vendor in a Competing Transaction (as defined below), on terms more favorable to the U.S. Vendor in the good faith determination of the Board of Directors of the U.S. Vendor, than the terms set forth in this Agreement. Therefore, nothing contained in this Agreement shall prevent the Board of Directors of the U.S. Vendor from considering, negotiating, discussing, approving and recommending to the Shareholders or prevent the U.S. Vendor from entering into and closing a bona fide Competing Transaction provided such Competing Transaction shall not have been, after the date of this Agreement, initiated or solicited by the U.S. Vendor or any affiliate, and, after the date of this Agreement, such initiation shall not be encouraged by any officer, director or

12

employee of the U.S. Vendor or of any affiliate or by the U.S. Vendor’s authorized representative or agent (provided that the above limitations shall not prohibit the response to an offer arising after the date of this Agreement) and provided further (A) the Board of Directors and/or Officers of the U.S. Vendor, after consultation with and upon advice of outside legal counsel, determines in good faith that failure to take such action is reasonably likely to violate the directors’ fiduciary duties to the Shareholders under applicable law, (B) not later than the one business day after the day of entering into discussions or negotiations with such Person, the U.S. Vendor provides written notice to the Purchaser that it is entering into such discussion or negotiations with such Person, and (C) the U.S. Vendor keeps the Purchaser informed on a current basis of the status of any such discussions or negotiations. Prior to entering into any Competing Transaction, the U.S. Vendor will engage in good faith negotiations with the Purchaser, unless such Competing Transaction relates to the U.S. Vendor, and not merely to sale of the Share (and the Intercompany Indebtedness) or the Land. In addition, nothing contained in this Agreement shall prevent the U.S. Vendor from continuing in any manner discussions or negotiations existing with two third parties on the date of this Agreement or from completing a transaction which is a Competing Transaction which results from the continuation of such discussions or negotiations. Nothing contained in this Section shall prohibit the Board of Directors of the U.S. Vendor from complying with Rule 14e-2 promulgated under the Securities Exchange Act of 1934, as amended, with regard to any tender or exchange offer.

(b) Notwithstanding any provisions to the contrary herein, either the U.S. Vendor or the Purchaser may terminate this Agreement by giving written notice to the other party prior to the Closing if: (i) the Board of Directors of the U.S. Vendor shall have recommended to the Shareholders a Competing Transaction or resolves to do so; or (ii) a tender offer or exchange offer for more than 40% of the outstanding shares of capital stock of the U.S. Vendor is commenced (other than by the Purchaser or an affiliate of the Purchaser) and the Board of Directors of the U.S. Vendor recommends that the stockholders of the U.S. Vendor tender their shares in such tender or exchange offer; provided that the U.S. Vendor shall not be entitled to exercise any termination rights under this Section unless (A) the Board of Directors of the U.S. Vendor determines in good faith, after consultation with and upon the advice of outside legal counsel, that failure to take such action is reasonably likely to violate the directors’ fiduciary duty to the Shareholders under applicable law, and (B) the U.S. Vendor has complied with its obligations in the provisos in Section 8.1 above.

(c) If this Agreement is terminated pursuant to the first paragraph of Section 6.1, Section 7.2 or Section 8.1(b) prior to Closing, the U.S. Vendor shall reimburse the Purchaser for its actual and reasonable out-of-pocket professional and other fees, costs and expenses of the transaction within two (2) business days of submission of paid invoices or other appropriate documentation as may be reasonably required by the U.S. Vendor (but not exceeding payment in the aggregate of £110,000) (the “Expense Reimbursement”), provided that if the U.S. Vendor fails to obtain stockholder approval but there is no Competing Transaction or other default by the U.S. Vendor or INTERNATIONAL, then the Expense Reimbursement shall not exceed £75,000.

(d) The following definition shall apply to this Section 8

“Competing Transaction” means any of (i) a transaction or series of transactions pursuant to which any Person (or group of Persons) other than the Purchaser or its Affiliates (a “Third Party”) acquires or would acquire more than 40% of the outstanding shares of capital stock of the U.S. Vendor, whether from the U.S. Vendor or pursuant to a tender offer or exchange offer or otherwise; (ii) any acquisition or proposed acquisition of the U.S. Vendor by a merger, sale of all assets or other business combination (including any so-called “merger of equals” and whether or not the U.S. Vendor or a Third Party is the entity surviving any such merger or business combination), (iii) any acquisition of the stock (and the Intergroup Indebtedness) of the Company or of the Land by a Third Party or (iv) any other transaction pursuant to which any Third Party acquires or would acquire control of assets of the U.S. Vendor or its subsidiaries having a fair market value equal to more than 75% of the fair market value of all the assets of the U.S. Vendor and its subsidiaries, taken as a whole, immediately prior to such transaction.

13

SECTION 9. DEFINITIONS.

9.1. Certain Defined Terms. As used herein, the following terms shall have the meaning herein specified:

“Affiliate” means a person controlling another person or controlled by another person.

“Agreement” means this Agreement.

“Business Day” means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the United Kingdom or is a day on which banking institutions located in Providence, Rhode Island are authorized or required by law or other governmental action to close.

“Competing Transaction” has the meaning set forth herein at Section 8.

“Closing” has the meaning set forth herein at Section 1.3.

“Closing Date” has the meaning set forth herein at Section 1.3.

“Lien” means (as applied to the Share and the Intergroup Indebtedness and not as applied to the Land) any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

“Land” has the meaning set forth herein in Section 2.7.

“Person” means and includes any individual, partnership, joint venture, corporation, limited liability company, trust, joint-stock company, unincorporated entity, organization or other legal entity.

“Securities Act” means the Securities Act of 1933, as amended.

“SEC” means Securities and Exchange Commission.

“Tax Deed” means the agreed form annexed to this Agreement as Schedule 2.

SECTION 10. MISCELLANEOUS

10.1. Amendments and Waivers. The parties hereto may amend, modify, terminate, waive or consent to any provision of this Agreement if such amendment, modification, termination, waiver or consent is set forth in writing signed by all the parties hereto.

10.2. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and delivered personally, mailed by certified or registered mail, return receipt requested and postage prepaid, sent via a nationally recognized overnight courier, or via facsimile (with receipt confirmed by separate facsimile from the receiving party). Such notices, demands and other communications will be addressed and directed to the parties listed below as follows:

If to the U.S. Vendor or to INTERNATIONAL, to:

BNS Co.,

25 Enterprise Center, Suite 103,

Middletown, Rhode Island 02842,

U.S.A.

fax: (401) 848-6444,

Att: President.

14

With a copy to:

Ropes & Gray,

One INTERNATIONAL Place, Boston, MA 02110,

U.S.A.

fax: (617) 951-7050,

Att: Howard K. Fuguet, Esq..

If to the Purchaser, to:

Bath Road Holdings Limited

Hush Willows

Wentworth Drive

Virginia Water

Surrey

GU25 4NY

ENGLAND

Attn: Mr. S. Arora

With a copy to:

Macfarlanes

10 Norwich Street

London

EC4A 1BD

ENGLAND

Attn: Patrick Holmes, Esq.

or to such successor entity, other address or to the attention of such other Person as the recipient party shall have specified by prior written notice to the sending party; provided that the failure to deliver copies of notices as indicated above shall not affect the validity of any notice. Any such communication shall be deemed to have been received (i) when delivered, if personally delivered, (ii) one business day after being sent by nationally recognized overnight courier, (iii) in the case of transmission by facsimile, when confirmation of receipt is obtained, or (iv) on the fifth business day following the date on which the piece of mail containing such communication is posted if sent by air mail, certified or registered mail.

10.3. Severability. If and to the extent that any provision in this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions of the Agreement or obligations of the parties hereto under such provisions, or of such provision or obligation in any other jurisdiction, or of such provision to the extent not invalid, illegal or unenforceable shall not in any way be affected or impaired thereby.

10.4. Heading. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

10.5. Applicable Law. This Agreement shall be governed by, and shall be construed and enforced in accordance with, the laws of the State of Delaware without regard to the principles of its internal conflicts of laws.

10.6. Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and permitted assigns and shall inure to the benefit of the parties hereto and such successors and permitted assigns. No party may assign this Agreement without the written consent of each of the other parties,

15

which may be denied in their sole discretion, except that this Agreement may be assigned without consent by the U.S. Vendor in a merger, sale of substantially all assets or other business combination to which the U.S. Vendor is a party.

10.7. Consent to Jurisdiction. All judicial proceedings arising under or with respect to this Agreement, during its term or thereafter, must be brought in a State or Federal District Court of competent jurisdiction in the City of New York, State of New York, and by execution and delivery of this Agreement, the parties hereto accept for themselves and in connection with their properties, generally and unconditionally, the jurisdiction of the aforesaid courts, and irrevocably agree to be bound by any judgment rendered thereby in connection with this Agreement, subject, however, to rights of appeal.

10.8. WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT OR TRANSACTION CONTEMPLATED HEREBY OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT OF ANY OF THE FOREGOING.

10.9. Counterparts; Effectiveness. This Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. This Agreement shall become effective upon the execution and delivery of a counterpart hereof by each of the parties hereto.

10.10. Entirety. This Agreement and the Schedules thereto together embody the entire agreement among the parties and supersede all prior agreements, representations, warranties, indemnifications and understandings, if any, relating to the subject matter hereof and thereof, including without limitation the Memorandum of Sale.

10.11. Public Announcements. The parties may make such public announcement and other disclosures with respect to the transaction contemplated by this Agreement as they deem advisable, so long as they advise the other party of such announcements or disclosures.

REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK

16

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by the respective duly authorized officers of the undersigned as of the date first written above.

BNS Co.
By:	/s/    MICHAEL WARREN
Name:	Michael Warren
Title:	President and CEO
BNS INTERNATIONAL LTD.
By:	/s/    MICHAEL WARREN
Name:	Michael Warren
Title:	Director and President
Bath Road Holdings Limited
By:	/s/    S. ARORA
Name:	S. Arora
Title:	Chairman

17

EX-14.1

Exhibit 14.1

BNS Co.

Code of Business Conduct and Ethics

(Effective February 24, 2004)

I. Purpose

This Code of Business Conduct and Ethics (this “Code”) provides a general statement of the Company’s expectations regarding the ethical standards that each director, officer and employee should adhere to while acting on behalf of the Company. Each director, officer and employee is expected to read and become familiar with the ethical standards described in this Code and may be required, from time to time, to affirm his or her agreement to adhere to such standards by signing the Compliance Certificate that appears at the end of this Code.

II. Administration

The Company’s Board of Directors is responsible for setting the standards of business conduct contained in this Code and updating these standards as it deems appropriate to reflect changes in the legal and regulatory framework applicable to the Company, the business practices within the Company’s industry, the Company’s own business practices, and the prevailing ethical standards of the communities in which the Company operates. While the Company’s Chief Executive Officer will oversee the procedures designed to implement this Code to ensure that they are operating effectively, it is the individual responsibility of each director, officer and employee of the Company to comply with this Code.

III. Compliance with Laws, Rules and Regulations

The Company will comply with all laws, rules and regulations that are applicable to the Company’s activities, and expects that all directors, officers and employees acting on behalf of the Company will obey the law. Specifically, the Company is committed to:

• maintaining a safe and healthy work environment;

• promoting a workplace that is free from discrimination or harassment based on race, color, religion, sex, sexual orientation, or other factors that are unrelated to the Company’s business interests;

• supporting fair competition and laws prohibiting restraints of trade and other unfair trade practices;

• conducting its activities in full compliance with all applicable environmental laws;

• keeping the political activities of the Company’s directors, officers and employees separate from the Company’s business;

• prohibiting any illegal payments to any government officials or political party representatives of any country; and

• complying with all applicable state and federal securities laws.

IV. Conflicts of Interest; Corporate Opportunities

Directors, officers and employees should not be involved in any activity which creates or gives the appearance of a conflict of interest between their personal interests and the Company’s interests. In particular, other than arrangements in effect and disclosed to the Board of Directors prior to the effective date of this Code, no director, officer or employee shall:

• Be a consultant to, or a director, officer or employee of, or otherwise operate an outside business:

– that markets products or services in competition with the Company’s existing or potential products and services;

– that supplies products or services to the Company in amounts that are significant relative to the Company’s operations or in amounts that are significant relative to the outside business; or

– that purchases products or services from the Company in amounts that are significant relative to the Company’s operations or in amounts that are significant relative to the outside business.

• have any financial interest, including stock ownership, in any such outside business that is substantial enough, in light of the individual’s financial situation, to create a conflict of interest;

• seek or accept any personal loan or services from any such outside business, except from financial institutions or service providers offering similar loans or services to third parties under similar terms in the ordinary course of their respective businesses;

• be a consultant to, or a director, officer or employee of, or otherwise operate an outside business if the demands of the outside business would materially interfere with the director’s, officer’s or employee’s responsibilities with the Company;

• accept any personal loan or guarantee of obligations from the Company, except to the extent such arrangements are legally permissible;

• conduct business on behalf of the Company with immediate family members, which include spouses, children, parents, siblings and persons sharing the same home whether or not legal relatives; or

-2-

• use the Company’s property, information or position for personal gain.

Directors and officers shall notify the Chair of the Audit Committee of the Board of Directors, and employees who are not directors or officers shall notify the Chief Executive Officer, of the existence of any actual or potential conflict of interest of which they become aware.

The appearance of a conflict of interest may exist if an immediate family member of a director, officer or employee of the Company acts in a capacity that is restricted for a director, officer or employee under the first bullet point of this Section IV. Employees of the Company should notify the Chief Executive Officer, and officers and directors should notify the Chair of the Audit Committee, of any such situation. If in the judgment of the individual so notified a potential conflict of interest is implicated, that individual will bring such situation to the attention of the Chair of the Audit Committee of the Board of Directors.

V. Insider Trading

Employees, officers and directors who have material non-public information about the Company or other companies, including our suppliers and customers, as a result of their relationship with the Company are prohibited by law and Company policy from trading in securities of the Company or such other companies, as well as from communicating such information to others who might trade on the basis of that information. To help ensure that you do not engage in prohibited insider trading and avoid even the appearance of an improper transaction, the Company has an Insider Trading Policy, which must be distributed annually to all employees and directors, and which is available from the Chief Executive Officer.

If you are uncertain about the constraints on your purchase or sale of any Company securities or the securities of any other company that you are familiar with by virtue of your relationship with the Company, you should consult with the Company’s Chief Executive Officer (who may wish to consult with the Company’s outside securities law counsel) before making any such purchase or sale.

VI. Confidentiality; Protection and Proper Use of the Company’s Assets

Directors, officers and employees shall maintain the confidentiality of all information entrusted to them by the Company or its suppliers, customers or other business partners, except when disclosure is authorized by the Company or legally required.

Confidential information includes (1) information marked “Confidential,” “Private,” “For Internal Use Only,” or similar legends, (2) technical or scientific information relating to current and future products, services or research, (3) business or marketing plans or projections, (4) earnings and other internal financial data, (5) personnel information, (6) supply and customer lists, and (7) other non-public information that, if disclosed, might

-3-

be of use to the Company’s competitors, or harmful to the Company or its suppliers, customers or other business partners.

To avoid inadvertent disclosure of confidential information, directors, officers and employees shall not discuss confidential information with or in the presence of any unauthorized persons, including family members and friends.

Directors, officers and employees are personally responsible for protecting those Company assets that are entrusted to them and for helping to protect the Company’s assets in general.

Directors, officers and employees shall use the Company’s assets for the Company’s legitimate business purposes only.

VII. Fair Dealing

The Company is committed to promoting the values of honesty, integrity and fairness in the conduct of its business and sustaining a work environment that fosters mutual respect, openness and individual integrity. Directors, officers and employees are expected to deal honestly and fairly with the Company’s customers, suppliers, competitors and other third parties. To this end, directors, officers and employees shall not:

• make false or misleading statements to customers or suppliers;

• make false or misleading statements about competitors;

• solicit or accept any fee, commission or other compensation for referring customers to third-party vendors; or

• otherwise take unfair advantage of the Company’s customers, suppliers, or other third parties, through manipulation, concealment, abuse of privileged information or any other unfair-dealing practice.

VIII. Gifts and Gratuities

The use of Company funds or assets for gifts, gratuities or other favors to employees or government officials is prohibited, except to the extent such gifts are in compliance with applicable law, insignificant in amount and not given in consideration or expectation of any action by the recipient.

Employees, officers and directors must not accept, or permit any member of his or her immediate family to accept, any gifts, gratuities or other favors from any customer, supplier or other person doing or seeking to do business with the Company, other than items of insignificant value. Any gifts that are not of insignificant value should be returned immediately and, in the case of any employee, reported to the Chief Executive

-4-

Officer. If immediate return is not practical, they should be given to the Company for charitable disposition or such other disposition as the Company, in its sole discretion, believes appropriate.

Common sense and moderation should prevail in travel and business entertainment undertaken on behalf of the Company. Employees, officers and directors should provide, or accept, business entertainment to or from anyone doing business with the Company only if the entertainment is infrequent, modest and intended to serve legitimate business goals.

Bribes and kickbacks are criminal acts, strictly prohibited by law. You must not offer, give, solicit or receive any form of bribe or kickback anywhere in the world.

IX. Antitrust

Agreements or understandings with competitors to limit or restrict competition with respect to such matters as prices, terms or conditions of sale, production, distribution, territories or customers are not only bad business practices, but are usually unlawful and prohibited by the Company.

Any contracts or other arrangements which involve exclusive dealing or other restrictive agreements should not be entered into without approval of the Company’s Chief Executive Officer and legal counsel.

X. Political Contributions

The Company’s direct political activities are limited by law. Corporations may not make any contributions — whether direct or indirect — to candidates for federal office. Thus, the Company may not contribute any money or products, or lend the use of vehicles, equipment, or facilities, to candidates for federal office. Nor may the Company make contributions to political action committees that make contributions to candidates for federal office. Neither the Company, nor supervisory personnel within the Company, may require any employees to make any such contribution. Finally, the Company cannot reimburse its employees for any money they contribute to political candidates or campaigns. Many state laws also limit the extent to which corporations and individuals may contribute to political candidates. Any question about the propriety of political activity or contributions should be directed to the Company’s legal counsel.

XI. Business Dealings in Foreign Countries

The Foreign Corrupt Practices Act (the “FCPA”) is deemed to be law applying to the Company and all of its subsidiaries and affiliates worldwide. No illegal or questionable payments including bribery, political contributions, influence peddling, kickbacks and the like are permitted. The FCPA requires the Company to maintain books, records, and

-5-

accounts in “reasonable detail” which “accurately and fairly” reflect transactions, and to maintain a system of internal accounting controls.

All the accounting records must reflect transactions in conformity with accepted methods of recording economic events and thereby effectively prevent off-the-books slush fund and payments of bribes. Internal accounting controls must provide reasonable assurances that transactions are recorded as necessary to maintain accountability of assets. It is unlawful to falsify accounts or to furnish auditors with false or misleading information.

No person shall, directly or indirectly, falsify or cause to be falsified, any book, record or account which a reporting company is required to maintain under the reasonably detailed and accurate books, records, and accounts provisions of the FCPA. The rule is applicable to any audit of a reporting company or the preparation or filing of reports which the issuer is required to file with the Securities and Exchange Commission. It includes information furnished to the Company’s accountants in connection with reports filed on Form 10-Q and Form 10-K.

Under the FCPA, it is a criminal act to knowingly falsify any book, record, or account or to knowingly circumvent or fail to implement required system of internal controls. It is also unlawful for any reporting company, its officers, directors, employees, agents, or stockholders acting on its behalf through the use of the jurisdictional means to “corruptly” further a payment, offer to pay, or give anything of value to (1) a foreign official in his official capacity, (2) a foreign political party or candidate for foreign political office, or (3) any person knowing, or having reason to know, that a portion of such money or thing of value will be offered, given, or promised to any foreign official, political party, or candidate, if the purpose of the payment or proposed payment to any of the foregoing persons is to influence a decision or act of the foreign government (or an instrumentality thereof) and to assist in obtaining, retaining, or directing business.

XII. Accurate and Timely Periodic Reports

The Company is committed to providing investors with full, fair, accurate, timely and understandable disclosure in the reports that it is required to file and in its other public communications. To this end, the Company shall:

• comply with generally accepted accounting principles at all times;

• maintain a system of internal accounting controls that will provide reasonable assurances to management that all transactions are properly recorded;

• maintain books and records that accurately and fairly reflect the Company’s transactions;

• prohibit the establishment of any material undisclosed or unrecorded funds or assets;

-6-

• maintain a system of internal controls that will provide reasonable assurances to management that material information about the Company is made known to management, particularly during the periods in which the Company’s periodic reports are being prepared; and

• present information in a clear and orderly manner and avoid the use of unnecessary legal and financial jargon in the Company’s reports and public communications.

XIII. Dealing with Independent Auditors

No director, officer or employee shall, directly or indirectly, make or cause to be made a materially false or misleading statement to an accountant in connection with (or omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in light of circumstances under which such statements were made, not misleading to, an accountant in connection with) any audit, review or examination of the Company’s financial statements or the preparation or filing of any document or report with the Securities and Exchange Commission. No director, officer or employee shall, directly or indirectly, take any action to coerce, manipulate, mislead or fraudulently influence any independent public or certified public accountant engaged in the performance of an audit or review of the Company’s financial statements.

XIV. Reporting and Effect of Violations

You may report violations of this Code, on a confidential or anonymous basis, by contacting the Company’s Chief Executive Officer by mail or fax at: 25 Enterprise Center, Suite 103, Middletown, Rhode Island 02842; fax: 401-848-6444. In addition, the Company has established a telephone number [to be set up] where you can leave a recorded message about any violation or suspected violation of this Code. While we prefer that you identify yourself when reporting violations so that we may follow up with you, as necessary, for additional information, you may leave messages anonymously if you wish.

Directors and officers shall promptly report, in person, by telephone or in writing, any known or suspected violations of laws, rules or regulations of this Code to the Chair of the Audit Committee of the Company’s Board of Directors by mail or fax at: 25 Enterprise Center, Suite 103, Middletown, Rhode Island 02842; fax: 401-848-6444 or by calling him at [same as above].

The Company will not allow any retaliation against and will make all efforts to protect a director, officer or employee who acts in good faith in reporting any such violation.

Other than complaints with respect to accounting and auditing practices, which are handled according to procedures established by the Audit Committee, the designated individuals who receive reports of violations will investigate the reported violation and

-7-

will oversee an appropriate response, including corrective action and preventative measures. Directors, officers and employees who violate any laws, rules, regulations or this Code will face appropriate, case specific disciplinary action, which may include demotion or discharge. Enforcement under this Code will be applied in a prompt and consistent manner using the standards for compliance set forth herein to ensure a fair process by which violations may be determined.

XV. Waivers

The provisions of this Code may be waived for directors or executive officers only by a resolution of the Company’s directors who satisfy the applicable independence requirements. The provisions of this Code may be waived for employees who are not directors or executive officers by the resolution of the Board of Directors. Any amendment to or waiver of, including an implicit waiver resulting from the failure to take action in response to a violation of any provisions of this Code that applies to or is granted to a director or executive officer of the Company, including, but not limited to, the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, will be publicly disclosed to the extent and in the manner required by the securities exchange or association on which the Company’s securities are listed for trading or any applicable rule or regulation of the Securities and Exchange Commission.

XVI. Dissemination and Amendment

This Code shall be distributed to each new employee, officer and director of the Company upon commencement of his or her employment or other relationship with the Company and shall also be distributed annually to each employee, officer and director of the Company, and to each consultant where deemed appropriate by the Company’s Chief Executive Officer, and each employee, officer and director (and applicable consultant) shall be asked to certify that he or she has received, read and understood the Code and has complied with the terms.

The Company reserves the right to amend, alter or terminate this Code at any time for any reason.

This document is not an employment contract between the Company and any of its employees, officers or directors.

-8-

COMPLIANCE CERTIFICATE

I have read and understand the Company’s Code of Business Conduct and Ethics (the “Code”). I will adhere in all respects to the ethical standards described in the Code. I further confirm my understanding that any violation of the Code will subject me to appropriate disciplinary action, which may include demotion or discharge.

I certify to the Company that I am not in violation of the Code (assuming, if this certificate is executed prior to the effective date of this Code, that this Code is effective at such time), unless I have noted such violation in a signed Statement of Exceptions attached to this Compliance Certificate.

Date:
	Name: Title/Position:

Check one of the following:

¨ A Statement of Exceptions is attached.

¨ No Statement of Exceptions is attached.

-9-

EX-21

EXHIBIT 21

BNS Co.

SUBSIDIARIES OF THE REGISTRANT

Subsidiaries of the Registrant as of December 31, 2003, are as follows:

Name of Subsidiary	Jurisdiction of Incorporation	Percentage of Voting Power Owned by the Registrant
BNS INTERNATIONAL, LTD.	Cayman Islands	100%
BNS Company (Property Holdings) Ltd.	United Kingdom	100%*
Dandelion, Inc.	Delaware, USA	100%
Dandelion, Ltd.	Israel	100%**

  * Owned through BNS INTERNATIONAL, LTD.

** Owned through Dandelion, Inc.

EX-23

Exhibit 23

Consent of Independent Auditors

We consent to the incorporation by reference in Registration Statements (Form S-8 Nos. 333-91367 and 333-66622) pertaining to employee benefit plans, of BNS Co. of our report dated February 13, 2004, with respect to the consolidated financial statements of BNS Co. included in the Annual Report (Form 10-K) for the year ended December 31, 2003.

/s/    ERNST & YOUNG LLP

Providence, Rhode Island

February 25, 2004

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Michael Warren, certify that:

1. I have reviewed this Annual Report on Form 10-K of BNS Co.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Intentionally Omitted]

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial report; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors;

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2004

/s/ Michael Warren

Michael Warren

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Michael Warren, certify that:

1. I have reviewed this Annual Report on Form 10-K of BNS Co.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Intentionally Omitted]

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial report; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors;

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2004

/s/ Michael Warren

Michael Warren

Chief Financial Officer

EX-32

EXHIBIT 32

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350,

Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of BNS Co., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (the “Form 10-K”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 27, 2004	/s/ Michael Warren
	Michael Warren
	Chief Executive Officer
Date: February 27, 2004	/s/ Michael Warren
	Michael Warren
	Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-K or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to BNS Co. and will be retained by BNS Co. and furnished to the Securities and Exchange Commission or its staff upon request.