EXHIBIT 10.8

                                    AGREEMENT

             THIS AGREEMENT made this 12th day of September, 1995, by and
   between BANDAG, INCORPORATED, an Iowa Corporation, ("Bandag") and WILLIAM
   D. HERD ("Herd").

             WHEREAS, Herd has been employed by Bandag in a senior executive
   capacity for a number of years; and

             WHEREAS, the parties hereto desire to cease this relationship
   under the terms and conditions hereinafter set forth;

             NOW, THEREFORE, in consideration of the premises and the
   following mutual agreements, it is agreed between the parties hereto as
   follows:

             1.   Herd agrees to consult with an attorney prior to signing
   this agreement and shall have twenty-one (21) days within which to
   consider this agreement.  If this agreement is signed by Herd, he may
   revoke this agreement within seven (7) days following signing of this
   agreement by Bandag and this agreement will become effective and
   enforceable on, but not before, the date on which the seven-(7)-day
   revocation period has expired.

             2.   Herd has voluntarily resigned as an officer and employee of
   Bandag effective September 1, 1995.

             3.   Bandag agrees to pay Herd twelve (12) payments of
   $103,750.00 each, subject to withholding of applicable federal and state
   taxes.  Herd acknowledges receipt from Bandag on September 8, 1995, of the
   amount of $207,500.00 as an interest free loan due for repayment in full
   on January 1, 1996.  Effective January 1, 1996, Bandag shall accelerate
   the first four (4) of the above-mentioned twelve (12) payments.  Herd
   irrevocably authorizes and directs that $207,500.00 of the net after tax
   amount shall be retained by Bandag in full repayment of the above loan and
   the balance of the net after tax amount shall be remitted to Herd.  The
   remaining eight (8) payments shall be paid on a quarterly basis commencing
   April 1, 1996 and ending January 1, 1998.

             4.   Bandag shall retain an outplacement agency (selected by
   Herd) and pay the reasonable cost thereof through September 1, 1996.

             5.   Bandag shall provide or reimburse Herd for the reasonable
   and necessary costs of telephone and secretarial services associated with
   his employment search prior to September 1, 1996.

             6.   Herd and his eligible dependents shall continue to receive
   medical and dental insurance benefits under the group plan of Bandag until
   his qualification for immediate coverage under the plan of another
   employer or September 1, 1998, whichever first occurs.  Bandag agrees to
   waive COBRA premiums but shall not be responsible for any taxes on
   payments to Herd or his dependents other than withholding required under
   federal or state tax laws.

             7.   Subject to the performance by Bandag of its obligations
   under this agreement, Herd agrees as to Bandag and all corporations,
   divisions, subsidiaries, parent organizations, directors, officers,
   shareholders, employees, agents, consultants, predecessors, successors,
   assigns, heirs or other entities or persons that are now, have been, or
   may in the future be directly or indirectly related to or affiliated with
   Bandag in any way (the "Releasees") that he unconditionally releases,
   discharges, waives and promises not to sue with respect to all claims,
   demands, actions, causes of action, rights, obligations, liabilities,
   damages or losses or any kind, known or unknown, fixed or contingent
   ("Claims"), that he may have or subsequently claim to have against the
   Releasees or any one of them relating to his employment with Bandag or his
   separation from that employment, which released Claims include but are not
   limited to all Claims arising under any constitution, law, statute,
   ordinance, regulations, rule, guideline or common-law theory, and
   specifically all claims arising under all employment, discrimination, or
   wrongful discharge laws, regulations, or common-law theories, including
   but not limited to the Age Discrimination in Employment Act of 1967, the
   Iowa Statutes, the Employment Income Retirement Security Act of 1974, the
   Civil Rights Act of 1866, the Civil Rights Act of 1964, the Civil Rights
   Act of 1991, and the Americans with Disabilities Act of 1990 (all as
   amended from time to time).  He agrees that he cannot and will not bring
   any lawsuit or charges on his behalf, whether civil, criminal, or
   administrative, against the Releasees or any one of them with respect to
   such released Claims, and that he unconditionally releases, discharges,
   waives, and gives up his right to accept any relief obtained by any other
   party on his behalf with respect to such released Claims.

             8.   Herd agrees that in the event that Bandag becomes involved
   in any legal or administrative claims or other proceedings relating to
   events that occurred during his employment and as to which he might in the
   opinion of Bandag have personal knowledge, he will cooperate to the
   fullest extent possible in the preparation and presentation by Bandag of
   its prosecution or defense, including but not limited to the signing of
   affidavits or other documents providing information requested by Bandag.

             9.   Herd agrees that he will not attempt to cause or induce any
   employees to leave their employment with Bandag or otherwise interfere
   with their employment for a period of two (2) years.  He agrees that he
   will not at any time speak or act in any manner that is intended to or
   does damage to the goodwill or the business or personal reputations of the
   Releasees or any one of them, and that he will not engage in any other
   conduct or communications that disparages the Releasees or any one of
   them.

             10.  Herd agrees that he will treat as the confidential property
   of Bandag and will not disclose or use any information or knowledge
   obtained or developed by him during his employment with Bandag which is
   not in the public domain and which consists of or related to Bandag's
   products, inventions, discoveries, processes, techniques, formulas,
   substances, designs, patterns, improvements, plans, projects, programs,
   research, test results, writings, notes, patents, copyrights, trademarks,
   know-how, trade secrets, customer and supplier lists, or business,
   financial, marketing, sales, pricing, engineering, manufacturing, or other
   operational matters and plans.

             11.  Herd agrees to keep all matters concerning this agreement,
   including but not limited to the circumstances and contents of this
   agreement, completely confidential, except as may be otherwise
   specifically authorized in writing by Bandag.

             12.  Herd agrees to deliver to Bandag all information in any
   recorded or retrievable form, records, documents, drawings, materials,
   equipment, and other items belonging to Bandag which are in his possession
   or control.

             13.  Subject to the performance by Herd of his obligations under
   this agreement, Bandag unconditionally releases, discharges, waives, and
   promises not to sue with respect to all claims, demands, actions, causes
   of action, rights, obligations, liabilities, damages, or losses of any
   kind, known or unknown, fixed or contingent that Bandag may have or
   subsequently claim to have against Herd relating to his employment with
   Bandag or his separation from that employment.

             14.  Bandag and Herd agree that all vested benefits accrued
   under qualified benefit plans sponsored by Bandag are payable in
   accordance with the terms of such plans on the basis of his resignation
   and severance of employment effective September 1, 1995.  Herd agrees that
   neither the payments under this agreement nor the term thereof shall be
   considered as employment or service beyond September 1, 1995 for purposes
   of benefits provided by Bandag to any of its employees.  In this regard
   Herd expressly acknowledges that by virtue of Paragraph 5(e) of the
   Bandag, Incorporated Restricted Stock Grant Plan he shall forfeit all
   shares of Restricted Stock and any undistributed dividends thereon being
   held by the nominee of the Committee administering said Plan as of
   September 1, 1995 and shall have no other rights under the Plan.

             15.  Herd agrees that he shall not, prior to August 31, 1998
   (without express written consent of Bandag), engage directly or
   indirectly, whether as an employee, consultant or independent contractor,
   alone or in conjunction with others in any tire retreading venture, or in
   the manufacture, sale, or distribution of any machinery, equipment or
   product relating thereto, which is in competition with the process,
   products or retreading system, of Bandag.  This covenant not to compete
   shall extend to any geographical area within North America or Western
   Europe in which the products of Bandag or any Bandag affiliate are
   manufactured or marketed into any customers or markets of Bandag or any
   Bandag affiliates which now exist.  The parties agree that the
   aforementioned covenant not to compete shall be subject to specific
   performance in any jurisdiction selected by Bandag in which it conducts
   business.

             16.  This agreement constitutes the entire agreement between the
   parties and shall be binding upon the successors and assigns of the
   parties hereto.

             IN WITNESS WHEREOF, the parties hereto have executed this
   agreement as of the day and year first above written.

                                      /s/  William D. Herd          
                                      William D. Herd

                                      BANDAG, INCORPORATED

                                      By:
                                      /s/  Warren W. Heidbreder     
                                      Warren W. Heidbreder, Secretary

   <PAGE>

   William D. Herd
   Severance Payments

        12-Sep-95                   Loan     $207,500
        01-Jan-96         Loan Repayment     (207,500)
        01-Jan-96                      4      415,000*
        01-Apr-96                      1      103,750*
        01-Jul-96                      1      103,750*
        01-Oct-96                      1      103,750*
        01-Jan-97                      1      103,750*
        01-Apr-97                      1      103,750*
        01-Jul-97                      1      103,750*
        01-Oct-97                      1      103,750*
        01-Jan-98                      1      103,750*
                Total                      $1,245,000*
                                           ==========

                  *  Subject to Tax Withholding