EXHIBIT 10.1



                               BANDAG INCORPORATED
                           RESTRICTED STOCK GRANT PLAN

                          As Amended November 12, 1996

        1.  PURPOSE.  The purpose of the Bandag Incorporated Restricted Stock
   Grant Plan (the "Plan") of BANDAG, INCORPORATED and its subsidiaries (the
   "Company") is to promote the long-term financial interest of the Company,
   including its growth, through the award of Restricted Stock by the Board
   of Directors of Bandag, Incorporated (the "Board") in accordance with the
   terms and conditions of the Plan, by (i) attracting and retaining
   executive personnel possessing outstanding ability; (ii) motivating
   executive personnel, by means of growth-related incentives, to achieve
   long-range goals; (iii) providing incentive compensation opportunities
   which are competitive with those of other major corporations; and (iv)
   furthering the identity of interests of Participants with those of the
   Company's stockholders through opportunities for increased stock
   ownership.

        2.   DEFINITIONS.  The following definitions are applicable to this
   Plan:

             (a)  The term "Common Stock" means the Common Stock of the
   Company.

             (b)  The term "Non-Employee Director" means a person who is so
   defined for purposes of Rule 16b-3 under the Securities Exchange Act of
   1934, as amended.

             (c)  The term "Disability" shall mean a physical or mental
   condition which in the judgment of the Committee, based on medical
   examination by a doctor or clinic appointed by the Committee, totally and
   permanently prevents a Participant from engaging in any substantial
   gainful activity.

             (d)  The term "Participant" means any employee who is selected
   by the Board to participate in the Plan.

             (e)  The term "Plan Year" means the Company's fiscal year,
   beginning with its 1984 fiscal year.

             (f)  The term "Restricted Period" has the meaning ascribed to it
   in Section 5 hereof.

             (g)  The term "Restricted Stock" has the meaning ascribed to it
   in Section 5 hereof.

             (h)  The term "Subsidiary" means any corporation of which
   Bandag, Incorporated owns, directly or indirectly, 50% or more of the
   total combined voting power of all classes of stock entitled to vote.

        3.   ADMINISTRATION.  The Plan shall be administered by the Stock
   Option Committee (the "Committee") which shall consist of not less than
   two directors, each of whom shall qualify as a Non-Employee Director.  The
   Committee shall, subject to the express provisions of the Plan, have sole
   and complete authority to (i) select the Participants, (ii) determine the
   number of shares of Common Stock (subject to the limitations of Section 6
   hereof) to be awarded to each of the Participants in the Plan and (iii)
   interpret the Plan and make all determinations deemed necessary or
   advisable for the administration of the Plan.

        A majority of the Committee shall constitute a quorum, and the acts
   of a majority of the members present at any meeting at which a quorum is
   present, or acts approved in writing by a majority of the Committee
   without a meeting, shall be the acts of the Committee.

        4.   PARTICIPATION.  After the end of the third quarter of each Plan
   Year, and no later than the end of November of the Plan Year involved, the
   Committee shall select the persons who are to be Participants in the Plan
   for that Plan Year and shall determine the number of shares of Restricted
   Stock to be awarded to each participant in the Plan for that Plan Year. 
   Participants are to be selected from those employees of the Company who,
   in the opinion of the Committee, have the capacity for contributing in a
   substantial measure to the successful performance of the Company.  No
   director who is not also a full-time employee of the Company shall be
   selected to be a Participant.  The date that the Committee makes such
   selections and determinations shall be deemed to be the effective date of
   the awards of Restricted Stock for such Plan Year.

        5.   TERMS AND CONDITIONS OF AWARDS.  All shares of Common Stock
   awarded to Participants under the Plan (the "Restricted Stock") shall be
   subject to the following terms and conditions and to such other terms and
   conditions, not inconsistent with the Plan, as may be prescribed by the
   Committee in its sole discretion:

             (a)  Restricted Stock awarded to a Participant may not be sold,
   assigned, transferred, pledged or otherwise encumbered for a period (the
   "Restricted Period") ending as of the earlier of (i) seven (7) years after
   the effective date of the award of such stock or (ii) the Participant's
   termination of employment for any reason after attainment of age sixty
   (60) or (iii) the death or disability of the Participant.  So long as such
   shares are subject to such restrictions, they shall be held by a nominee
   of the Committee.  The nominee shall have no obligation to solicit proxies
   or vote shares.

             (b)  Within thirty (30) days after the effective date of an
   award of Restricted Stock, a Participant may file an election pursuant to
   and in accordance with Section 83(b) of the Internal Revenue Code of 1986,
   as amended, to have the appropriate value of such award included in gross
   income for the taxable year in which that award occurs.  In the event such
   an election is made, the Company shall, prior to the end of such taxable
   year, pay to the Participant the amount determined by the Committee to be
   sufficient remuneration for the resultant income tax consequences.  Any
   dividends paid on shares of Restricted Stock subject as to which an
   election has been made, shall be distributed to the Participant at such
   times as dividends on the Company's Common Stock are generally payable. 
   In the event the Participant does not exercise the Section 83(b) election,
   all dividends attributable to such shares shall be held by the nominee
   until distributed or forfeited as hereinafter provided.  The account in
   which these dividends are held need not be interest bearing.

             (c)  At the end of the Restricted Period as to any given
   Restricted Stock award, the shares constituting such award shall cease to
   be Restricted Stock, and shall be delivered free of all restrictions to
   the Participant [or, in the event such Restricted Period ends as a result
   of death, the Participant's legal representative, beneficiary or heir]. 
   The Committee shall deliver to the Participant a certificate or
   certificates for such shares and a check for all undistributed dividends
   accumulated on such shares during the Restricted Period.

             (d)  In the event of the death or disability of a Participant,
   the Restricted Period shall end as to any shares already awarded, but
   neither the Participant nor the legal representative of his estate, his
   beneficiary or his heir shall have any interest in awards of stock made
   after the date of death or disability.

             (e)  A Participant whose employment with the Company is
   terminated, whether voluntarily or involuntarily, for any reason other
   than death or disability, shall forfeit all shares of Restricted Stock and
   any undistributed dividends thereon then being held,  and any other rights
   under the Plan, upon such termination of employment.  Such shares shall be
   forfeited to the Company and may be awarded again to Participants in the
   Plan.

             (f)  The Participant shall enter into an Agreement with the
   Company in a form specified by the Committee agreeing to the terms and
   conditions of the award and such other matters as the Committee shall in
   its sole discretion determine.

        6.   SHARES SUBJECT TO THE PLAN; REGISTRATION UNDER THE SECURITIES
   ACT.  The shares to be awarded under the Plan shall be shares of Common
   Stock and may be authorized but unissued shares, or shares acquired by the
   Company and held in its treasury, as the Committee may from time to time
   determine.  Subject to adjustment in the number and kind of shares as
   provided in Section 7 hereof, fifty thousand (50,000)* shares of Common
   Stock may be awarded to Participants pursuant to the Plan.  All shares to
   be awarded under the Plan will be listed on such stock exchanges as the
   Common Stock of the Company is listed from time to time.

   _______________
   *  Due to issuance of the Class B Stock dividend and the Class A Stock
   dividend in 1987 and 1992, respectively, the number of shares authorized
   under the Plan consists of 100,000 shares of Common Stock and 100,000
   shares of Class A Common Stock.


        7.   CHANGES IN CAPITALIZATION AND SIMILAR CHANGES.  In the event of
   any change in the outstanding shares of Common Stock by reason of any
   stock dividend or split, recapitalization, merger, consolidation,
   combination or exchange of shares or other similar corporate change, the
   maximum aggregate number and class of shares as to which awards may be
   granted under the Plan shall be equitably adjusted by the Committee.  Any
   shares of stock or other securities distributable or deliverable with
   respect to Restricted Stock will be subject to the same restrictions as
   such Restricted Stock.

        If the Company shall be consolidated or merged with another
   corporation, any stock, securities or other property (including cash)
   distributable with respect to Restricted Stock or into which any share of
   Restricted Stock shall be converted, shall also be subject to the same
   restrictions as such Restricted Stock.

        If any person files a statement under Section 14(d) of the Securities
   Exchange Act of 1934, as amended ("Exchange Act") in connection with a
   tender offer [within the meaning of Section 14(d) of the Exchange Act or
   the Regulations thereunder] for Common Stock, the Participant shall have
   the right to direct the nominee which holds Restricted Stock awarded to
   the Participant whether or not to tender such Restricted Stock pursuant to
   the Offer, including tendering in whole or in part or conditionally or
   unconditionally; provided, however, no Participant shall have the
   foregoing right if counsel to the Company advises it that tendering such
   Restricted Stock would be prohibited by any provision of the Exchange Act
   or any Regulation thereunder, including without limitation Rule 10b-4. 
   Any consideration received with respect to Restricted Stock which is
   tendered shall be subject to the same restrictions as such Restricted
   Stock.

        In the event any cash is received in connection with the conversion
   or disposition of Restricted Stock, the Committee shall direct its nominee
   to invest such cash and any earnings thereon in such investment media as
   the Committee deems appropriate.  All earnings from such investments (and
   any loss thereon or diminution in the value there) shall be for the
   account of the Participant.

        If any of the events referred to in this Section occurs or is
   pending, and the Committee is advised by counsel to the Company that
   disposition of Restricted Stock will result in the recognition of taxable
   income to the Participant awarded such Restricted Stock, the Committee
   shall have discretion to enter into such arrangements as it deems
   appropriate to minimize or eliminate the recognition of such taxable
   income, provided that any property substituted for Restricted Stock
   pursuant to any such arrangement shall be subject to the same restrictions
   as Restricted Stock.

        8.   WITHHOLDING TAX.  With respect to any payments made to
   Participants under the Plan, the Company shall have the right to withhold
   any taxes required by law.

        9.   EMPLOYEE RIGHTS UNDER THE PLAN.  No employee or other person
   shall have any claim or right to be granted Common Stock under the Plan
   except as shall have been conferred in accordance with the terms and
   conditions of the Plan.  Neither the Plan nor any action taken thereunder
   shall be construed as giving any employee any right to be retained in the
   employ of the Company.

        10.  AMENDMENT OR TERMINATION.  The Board may amend, suspend or
   terminate the Plan or any portion thereof at any time, but no amendment
   shall be made without stockholder approval which shall (i) increase the
   total number of shares which may be awarded under Section 6 of the Plan
   (subject to Section 7 hereof) or (ii) withdraw the administration of the
   Plan from the Committee; provided that no amendment, suspension or
   termination shall impair the rights of any Participant, without his
   consent, in any Restricted Stock awarded pursuant to the Plan prior to
   such action by the Board.

        11.  EFFECTIVE DATE OF THE PLAN.  The Plan shall become effective as
   of January 1, 1984, if and only if approved by the stockholders of Bandag,
   Incorporated and shall continue in effect until the last expiration date
   of any Restricted Period operative under the Plan; provided, however, that
   no awards of Restricted Stock shall be made after the Company's fiscal
   year ending in 2000 or such earlier date as the Board may specify pursuant
   to Section 10 hereof.

        The Plan was adopted by the Board of Directors of Bandag,
   Incorporated on March 1, 1984.