Pledge and Security Agreement between BNS Holding, Inc. and Steel Partners II, L.P. dated October 30, 2006

 Exhibit 10.8 PLEDGE AND SECURITY AGREEMENT PLEDGE AND SECURITY AGREEMENT, dated as of October 30, 2006 (this "Agreement"), between BNS Holding, Inc., a Delaware corporation ("Pledgor"), and Steel Partners II, L.P., a Delaware limited partnership ("Secured Party"). WITNESSETH: WHEREAS, Secured Party and Pledgor, have entered into a Loan Agreement, dated as of the date hereof (the "Loan Agreement"); WHEREAS, it is a condition to Secured Party's obligations under the Loan Agreement that this Agreement be duly executed and delivered; and WHEREAS, Pledgor and Secured Party wish to enter into this Agreement in order to secure the obligations of Pledgor under the Loan Documents (such obligations, together with any obligations of Pledgor under this Agreement, the "Obligations"). NOW THEREFORE, in consideration of the premises and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. DEFINITIONS. Capitalized terms used but not defined herein shall have the meanings provided therefor in the Loan Agreement. 2. SECURITY INTEREST. Pledgor hereby pledges to Secured Party, as security for the Obligations, and grants to Secured Party a first priority continuing security interest in, lien on and right of set-off against the following described property (collectively referred to as the "Collateral"): (i) all right, title and interest in, to and under, all of the property and assets currently owned or owing to, or hereafter acquired or arising in favor of, Pledgor, wherever located, including, but not limited to, all accounts, deposit accounts, chattel paper, instruments, documents, securities, contract rights, receivables, equipment, goods, inventory, investment property, goodwill, general intangibles, intellectual property, patents, patent applications, trademarks, trademark applications, trade names, copyrights, copyright applications, Internet domain names, service marks, trade secrets, know-how, technology, software, hardware, commercial tort claims, warranties and guarantees, as any of the foregoing terms may be defined in the New York Uniform Commercial Code (the "UCC"), and including any products, proceeds (including insurance proceeds) or income derived therefrom, whether by disposition or otherwise; together with  (ii) the securities described in Schedule I hereto (such securities, together with any additional securities constituting Collateral described in subsection (iii) below, the "Pledged Securities"); and (iii) the products, proceeds and accessions of any of the foregoing. 3. DELIVERY OF COLLATERAL. Pledgor agrees that all Pledged Securities shall be evidenced by certificates and all such certificates shall be delivered to Secured Party in New York c/o Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th Street, New York, New York 10022. Such certificates shall be endorsed either to Secured Party or in blank by an effective endorsement within the meaning of the UCC and shall be in suitable form for transfer by delivery or accompanied by duly executed stock powers and any other instruments of transfer reasonably requested by Secured Party. All other property comprising part of the Collateral shall be accompanied by proper instruments of assignment duly executed by Pledgor, and by any such other instruments or documents as Secured Party may reasonably request. Certificates evidencing the Pledged Securities shall be delivered in accordance with this Section 3 upon the execution hereof. 4. REPRESENTATIONS AND AGREEMENTS OF PLEDGOR. Pledgor represents and agrees that: (a) Except for (i) the security interest granted hereby and (ii) any restriction on transfer under the Federal or State securities laws (the "Permitted Encumbrances"), Pledgor is, and as to Collateral acquired after the date hereof Pledgor will be, the owner and holder of the Collateral free from any adverse claim, security interest, encumbrance, lien, charge, or other right, title or interest of any person. Pledgor agrees that at all times the Collateral will be and remain free of all such adverse claims, security interests, or other liens or encumbrances, other than any Permitted Encumbrance. Pledgor will defend the Collateral against all claims and demands (other than any Permitted Encumbrance) of all persons at any time claiming the same or any interest therein. (b) Upon execution of this Agreement and delivery to Secured Party of certificates evidencing the Pledged Securities in accordance with Section 3, Secured Party will have a valid and perfected first priority security interest therein. Upon the filing of financing statements relating to the Collateral with the Office of the Secretary of State of Delaware, Secured Party will have a valid and perfected first priority security interest in all other Collateral (to the extent a security interest therein may be perfected by the filing of a financing statement). (c) Pledgor has not heretofore signed any financing statement or security agreement which covers any of the Collateral, and no such financing statement or security agreement is now on file in any public office. Pledgor will not enter into or execute any security agreement or any financing statement covering the Collateral, other than those security agreements and financing statements in favor of Secured Party hereunder, and Pledgor agrees that there will not be on file in any public office any financing statement or statements (or any documents or papers filed as such) covering the Collateral, other than financing statements in favor of Secured Party hereunder, unless in any case the prior written consent of Secured Party shall have been obtained. 2  (d) Pledgor has full legal capacity and lawful authority to enter into this Agreement and to grant to Secured Party the first priority security interest in the Collateral as herein provided and all corporate or other action on the part of Pledgor requisite for the due execution, delivery, and performance of this Agreement has been duly and effectively taken. (e) The execution, delivery and performance hereof are not in contravention of any agreement or undertaking to which Pledgor is a party or by which Pledgor, or its property, is bound and will not result in the imposition of any security interest or lien on any other property of Pledgor. 5. RIGHTS OF SECURED PARTY AND PLEDGOR RELATED TO COLLATERAL. (a) Secured Party may from time to time following the occurrence of an Event of Default with respect to Pledgor: (i) transfer any of the Collateral into the name of Secured Party or its nominee; (ii) notify parties obligated on any of the Collateral to make payment to Secured Party of any amounts due or to become due thereunder; (iii) enforce collection of any of the Collateral by suit or otherwise; surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligation of any nature of any party with respect thereto; and exercise all other rights of Pledgor in any of the Collateral (including, without limitation, the right to vote or exercise other consensual interests in the Collateral); and/or (iv) take possession or control of any proceeds of the Collateral. (b) Until the occurrence of an "Event of Default with respect to Pledgor" (as defined in Section 7 below), Pledgor shall have the right to receive all income from or interest on the Collateral, other than any such income or interest which would be prohibited by the Loan Agreement, (such income or interest distributed by way of a dividend or otherwise shall be promptly delivered to Secured Party to be held as additional Collateral hereunder (such delivery to be in the manner contemplated by Section 3 above)). Upon the occurrence of an Event of Default with respect to Pledgor, Pledgor will not demand or receive any income from or interest on the Collateral, and if Pledgor receives any such income or interest without any demand by it, the same shall be held by Pledgor in trust for Secured Party in the same medium in which received, shall not be commingled with any assets of Pledgor and shall be delivered to Secured Party in the form received, properly endorsed to permit collection, not later than the second Business Day following the day of its receipt. (c) So long as no Event of Default with respect to Pledgor shall have occurred, Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms or purpose of this Agreement or the Loan Agreement (and Secured Party shall exercise any voting and other consensual 3  rights it may have pertaining to the Collateral in accordance with any instructions of Pledgor in that regard). (d) In the event Secured Party shall pay any taxes, assessments, interests, costs, penalties or expenses incident to or in connection with the collection of the Collateral or protection or enforcement of the Collateral or any security therefor, Pledgor, upon demand of Secured Party, shall pay to Secured Party the full amount thereof with interest thereon from the date expended by Secured Party until repaid at a rate per annum (based on a 360-day year for the actual number of days involved) equal to 15%. (e) Pledgor shall not sell, assign, alienate, exchange, convey, transfer, hypothecate or otherwise dispose of or encumber the Pledged Securities, or cause Collins I Holding Corp., a Delaware corporation, to dissolve or liquidate, without the prior written consent of Secured Party. 6. FURTHER ASSURANCES; SECURED PARTY AS AGENT. Pledgor agrees to take such actions and to execute such stock or bond powers and such other or different writings as Secured Party may reasonably request (and irrevocably authorizes Secured Party to execute such writings as Pledgor's agent and attorney-in-fact) to create, preserve, perfect or validate Secured Party's security interest in the Collateral, or to enable Secured Party to exercise or enforce its rights under this Agreement with respect to the Collateral, including (without limitation) the right to receive, indorse and collect all instruments made payable to Pledgor representing any dividend, interest payment or other distribution in respect of the Collateral or any part thereof except for those distributions which the Pledgor is entitled to retain pursuant to Section 5(b). 7. EVENTS OF DEFAULT. The occurrence of any Event of Default with respect to Pledgor pursuant to any of the Loan Documents or a breach by Pledgor of the Obligations, shall constitute an "Event of Default with respect to Pledgor" hereunder. 8. RIGHTS AND REMEDIES OF SECURED PARTY UPON DEFAULT. (A) If an Event of Default with respect to Pledgor shall have occurred: (i) Secured Party shall have and may exercise with reference to the Collateral and the Obligations any or all of the rights and remedies of a secured party under the UCC, and as otherwise granted herein or under any other applicable law or any other agreement now or hereafter in effect executed by Pledgor, including, without limitation, the right and power to sell, at public or private sale or sales, or otherwise dispose of, or otherwise utilize the Collateral and any part or parts thereof in any manner authorized or permitted under the UCC after default by a debtor, and to apply the proceeds in accordance with Section 10 hereof. Without limiting the foregoing, Secured Party shall have the right to take possession of all or any part of the Collateral and of all books, records, papers and documents of Pledgor or in Pledgor's possession or control relating to the Collateral which are not already in Secured Party's possession. To the extent permitted by law, Pledgor expressly waives any notice of sale or other disposition of the Collateral and all other rights or remedies of Pledgor or formalities prescribed by law relative to sale or disposition of the Collateral or exercise of any other right or remedy of Secured Party existing after default hereunder; and to the extent any such 4  notice is required and cannot be waived, Pledgor agrees that if such notice is given in the manner provided in Section 14 hereof at least five (5) days before the time of the sale or disposition, such notice shall be deemed reasonable and shall fully satisfy any requirement for giving of said notice. Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale. (ii) Upon notice by Secured Party to Pledgor, Secured Party or its nominee or nominees shall have the sole and exclusive right to exercise all voting and consensual powers pertaining to the Collateral or any part thereof and may exercise such powers in such manner as Secured Party may elect. To extent that the terms and conditions of that certain Stockholders Agreement dated as of October 30, 2006 by and among Collins Holding, its Stockholders and Collins Industries, Inc. (the "Stockholders Agreement") provide that any rights that would otherwise be exercisable by the Secured Party under this Agreement may only be exercised by the Pledgor, Pledgor agrees to exercise such rights in accordance with the written directions of Secured Party given in accordance with this Section 8(a)(ii). (iii) All rights to marshalling of assets of Pledgor, including any such right with respect to the Collateral, are hereby waived by Pledgor. (iv) All recitals in any instrument of assignment or any other instrument executed by Secured Party incident to sale, lease, transfer, assignment or other disposition, lease or utilization of the Collateral or any part thereof under this Section 8(a) shall be full proof of the matters stated therein and no other proof shall be requisite to establish full legal propriety of the sale or other action taken by Secured Party or of any fact, condition or thing incident thereto and all prerequisites of such sale or other action or of any fact, condition or thing incident thereto shall be presumed conclusively to have been performed or to have occurred. (b) Secured Party shall never be under any obligation to collect, attempt to collect, protect or enforce the Collateral, which Pledgor agrees and undertakes to do at Pledgor's expense, but Secured Party may do so in its discretion at any time after the occurrence of an Event of Default with respect to Pledgor. All expenses (including, without limitation, attorneys' fees and expenses) incurred or paid by Secured Party in connection with or incident to any such collection or attempt to collect the Collateral or actions to protect or enforce the Collateral shall be borne by the Pledgor or reimbursed by the Pledgor to Secured Party upon demand. (c) The Secured Party will act in good faith and in a commercially reasonable manner in the exercise of any of its rights and remedies hereunder. 9. SPECIAL PROVISIONS. Pledgor hereby acknowledges that the sale by Secured Party of any Pledged Securities resulting from an exercise by Secured Party of its rights hereunder must be made in compliance with the Securities Act of 1933 (the "Securities Act"), as well as any applicable Blue Sky or other state securities laws that may impose limitations as to the manner in which Secured Party or any other person may dispose of securities. Pledgor acknowledges that any sale or disposition contemplated pursuant hereto may be at 5  prices and on terms less favorable to Secured Party than those obtainable through a public sale without any applicable restrictions, and, notwithstanding such circumstances, Pledgor agrees that any such sale or other disposition shall be deemed to have been made in a commercially reasonable manner. Secured Party shall have no obligation to engage in public sales and no obligation to delay the sale of any Collateral for any period of time; and Pledgor waives any claims against Secured Party arising by reason of the fact that the price that might have been obtainable in a public sale was greater than the price obtained in any such sale or disposition pursuant hereto, even if Secured Party accepts the first offer received and does not offer the Collateral to more than one offeree. 10. APPLICATION OF PROCEEDS. In the event Secured Party sells or otherwise disposes of the Collateral in the course of exercising the remedies provided for in this Agreement, any amounts held, realized or received by Secured Party pursuant to the provisions hereof, including the proceeds of the sale of any of the Collateral or any part thereof, shall be applied by Secured Party first toward the payment of any costs and expenses incurred by Secured Party in enforcing this Agreement, in realizing on or protecting any Collateral and in enforcing or collecting any Obligations or any guaranty thereof, including, without limitation, the actual attorneys' fees and expenses incurred by Secured Party, all of which costs and expenses Pledgor agrees to pay, and then to such other Obligations in such order as Secured Party may elect. Any amounts and any Collateral remaining after such application and after payment to Secured Party of satisfaction of all of the Obligations in full shall be paid or delivered to Pledgor, its successor or assigns, or as a court of competent jurisdiction may direct. 11. CARE OF COLLATERAL. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which Secured Party accords its own property, it being understood that Secured Party shall not have any responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not Secured Party has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any Collateral. Prior to an Event of Default, Secured Party agrees to follow Pledgor's reasonable instructions in connection with any action with respect to the Collateral, provided that such action is not prohibited hereby and such action would not impair the value or liquidity of the Collateral (or the relationship between the Collateral and the Obligations). 12. TERMINATION. This Agreement and the security interest created hereunder shall terminate upon such date on which all the Obligations have been paid in full. Upon termination hereof, Secured Party shall execute and deliver to Pledgor all documents which Pledgor shall reasonably request to evidence termination of such security interest and shall return physical possession of any Collateral then held by Secured Party to Pledgor; provided, however, that all indemnities of Pledgor contained in this Agreement shall survive, and remain in full force and effect regardless of the termination of the security interest or this Agreement. Notwithstanding the foregoing, this Agreement and the security interest granted hereunder shall be reinstated if at any time any payment or delivery pursuant to an Obligation, in whole or in part, is rescinded or must otherwise be returned by Secured Party under the application of the Bankruptcy Code or any other Debtor Law, all as though such payment or delivery had not been made. 6  13. ADDITIONAL INFORMATION. Pledgor agrees to furnish Secured Party from time to time with such additional information and copies of such documents relating to this Agreement and the Collateral, as Secured Party may reasonably request. 14. NOTICES. Any communication, notice or demand to be given hereunder shall be given in accordance with the Loan Agreement. 15. INDEMNITY AND EXPENSES. Pledgor agrees to indemnify Secured Party from and against any and all claims, losses and liabilities growing out of or resulting from this Agreement (including, without limitation, enforcement of any rights under this Agreement, and any claims or demands of any persons at any time claiming the Collateral or any interest therein), except claims, losses or liabilities resulting from Secured Party's gross negligence or willful misconduct. Pledgor agrees to pay on demand all out-of-pocket expenses (including the reasonable fees and expenses of Secured Party's legal counsel, experts and agents) in any way relating to the enforcement or protection of the rights of Secured Party hereunder. 16. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of Secured Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Secured Party of any right, remedy or power hereunder preclude any other or future exercise of any other right, remedy or power. Each and every right, remedy and power hereby granted to Secured Party or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by Secured Party from time to time. 17. APPLICABLE LAW. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such state. 18. ASSIGNMENT; BINDING EFFECT; BENEFIT. The rights and obligations of the parties under this Agreement are not assignable without the prior written consent of the other parties, except that Secured Party may assign all or any of its rights and benefits hereunder, and may delegate all or any of its obligations or liabilities (whether by assignment, merger, liquidation or otherwise), and upon any such assignment, Secured Party's rights, benefits, obligations and liabilities shall automatically cease. Subject to the immediately preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties and their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 19. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 7  IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. BNS HOLDING, INC. By: /s/ Michael Warren ------------------------------ Name: Michael Warren Title: President & CEO STEEL PARTNERS II, L.P. By: Steel Partners, L.L.C. General Partner By: /s/ Warren G. Lichtenstein ------------------------------ Name: Warren G. Lichtenstein Title: Managing Member 8  SCHEDULE I PLEDGED SECURITIES 26,400 shares of Collins I Holding Corp., a Delaware corporation, $0.01 par value per share, represented by certificate number 2 in the name of BNS Holding, Inc. 9