Draft of 10/23/97 HON INDUSTRIES INC. (an Iowa corporation) 3,395,000 Shares of Common Stock U.S. PURCHASE AGREEMENT Dated: October 23, 1997 TABLE OF CONTENTS

Draft of 10/23/97

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HON INDUSTRIES INC.

(an Iowa corporation)

3,395,000 Shares of Common Stock

U.S. PURCHASE AGREEMENT

Dated: October 23, 1997

================================================================================

TABLE OF CONTENTS

PURCHASE AGREEMENT.................................................................................. 1

SECTION 1. Representations and Warranties.......................................................... 4

(a) Representations and Warranties by the Company........................................... 4

(i) Compliance with Registration Requirements....................................... 4
(ii) Incorporated Documents.......................................................... 5
(iii) Independent Accountants......................................................... 5
(iv) Financial Statements............................................................ 5
(v) No Material Adverse Change in Business.......................................... 5
(vi) Good Standing of the Company.................................................... 6
(vii) Good Standing of Subsidiaries................................................... 6
(viii) Capitalization.................................................................. 6
(ix) Authorization of Agreement...................................................... 7
(x) Authorization and Description of Securities..................................... 7
(xi) Absence of Defaults and Conflicts............................................... 7
(xii) Absence of Labor Dispute........................................................ 8
(xiii) Absence of Proceedings.......................................................... 8
(xiv) Accuracy of Exhibits............................................................ 8
(xv) Possession of Intellectual Property............................................. 8
(xvi) Absence of Further Requirements................................................. 9
(xvii) Possession of Licenses and Permits.............................................. 9
(xviii) Title to Property............................................................... 9
(xix) Absence of Manipulation......................................................... 10
(xx) Investment Company Act.......................................................... 10
(xxi) Environmental Laws.............................................................. 10

(b) Representations and Warranties by Bandag and the Selling Shareholder.................... 10

(i) Accurate Disclosure............................................................. 10
(ii) Authorization of Agreement...................................................... 11
(iii) Good and Marketable Title....................................................... 11
(iv) Absence of Manipulation......................................................... 12
(v) Absence of Further Requirements................................................. 12
(vi) No Association with NASD........................................................ 12

SECTION 2. Sale and Delivery to U.S. Underwriters; Closing......................................... 12

(a) Initial U.S. Securities................................................................. 12
(b) U.S. Option Securities.................................................................. 13
(c) Payment................................................................................. 13
(d) Denominations; Registration............................................................. 14

SECTION 3. Covenants of the Company................................................................ 14

(a) Compliance with Securities Regulations and Commission Requests.......................... 14
(b) Filing of Amendments.................................................................... 15
(c) Delivery of Registration Statements..................................................... 15
(d) Delivery of Prospectuses................................................................ 15
(e) Continued Compliance with Securities Laws............................................... 15
(f) Blue Sky Qualifications................................................................. 16
(g) Rule 158................................................................................ 16
(h) Use of Proceeds......................................................................... 16
(i) Listing................................................................................. 17
(j) Restriction on Sale of Securities....................................................... 17
(k) Reporting Requirements.................................................................. 17

SECTION 4. Payment of Expenses..................................................................... 17

(a) Expenses................................................................................ 17
(b) Expenses of Bandag and the Selling Shareholder.......................................... 18
(c) Termination of Agreement................................................................ 18
(d) Allocation of Expenses.................................................................. 18

SECTION 5. Conditions of Underwriters' Obligations................................................. 18

(a) Effectiveness of Registration Statement; Filing of Registration Statement............... 19
(b) Opinion of Counsel for Company.......................................................... 19
(c) Opinion of Counsel for Bandag and the Selling Shareholder............................... 19
(d) Opinion of Counsel for U.S. Underwriters................................................ 19
(e) Officers' Certificate................................................................... 19
(f) Certificate of Bandag and the Selling Shareholder....................................... 20
(g) Accountant's Comfort Letter............................................................. 20
(h) Bring-down Comfort Letter............................................................... 20
(i) Approval of Listing..................................................................... 20
(j) No Objection............................................................................ 20
(k) Purchase of Initial International Securities............................................ 20
(l) Lock-up Agreements...................................................................... 21
(m) Conditions to Purchase of U.S. Option Securities........................................ 21

(n) Additional Documents.................................................................... 21
(o) Termination of Agreement................................................................ 22

SECTION 6. Indemnification......................................................................... 22

(a) Indemnification of U.S. Underwriters by the Company..................................... 22
(b) Indemnification of U.S. Underwriters and the Company by Bandag and the
Selling Shareholder..................................................................... 23
(c) Indemnification of Company, Directors and Officers, Bandag and the
Selling Shareholder..................................................................... 23
(d) Actions against Parties; Notification................................................... 24
(e) Settlement without Consent if Failure to Reimburse...................................... 24
(f) Other Agreements with Respect to Indemnification........................................ 25

SECTION 7. Contribution............................................................................ 25

SECTION 8. Representations, Warranties and Agreements to Survive Delivery.......................... 26

SECTION 9. Termination of Agreement................................................................ 26

(a) Termination; General.................................................................... 26
(b) Liabilities............................................................................. 27

SECTION 10. Default by One or More of the U.S. Underwriters........................................ 27

SECTION 11. Default by the Selling Shareholder or the Company...................................... 28

SECTION 12. Notices................................................................................ 28

SECTION 13. Parties................................................................................ 28

SECTION 14. Governing Law and Time................................................................. 29

SECTION 15. Effect of Headings..................................................................... 29

iii

SCHEDULES
Schedule A - List of Underwriters......................................................... Sch A-1
Schedule B - Shares to be sold by the Company and the Selling Shareholder................. Sch B-1
Schedule C - Pricing Information.......................................................... Sch C-1
Schedule D - List of Subsidiaries......................................................... Sch D-1
Schedule E - Persons Executing Lock-up Agreements......................................... Sch E-1

EXHIBITS
Exhibit A-1 - Form of Opinion of Company's In-House Counsel................................... A-1
Exhibit A-2 - Form of Opinion of Company's Counsel............................................ A-2
Exhibit A-3 - Form of Opinion of Company's Counsel............................................ A-3
Exhibit B - Form of Opinion of Bandag's and Selling Shareholder's Counsel..................... B-1
Exhibit C - Form of Opinion of Counsel for U.S. Underwriters.................................. C-1
Exhibit D - Form of Lock-up Letter............................................................ D-1

ANNEXES

Annex A - Form of Accountant's Comfort Letter................................................. A-1

HON INDUSTRIES INC.

(an Iowa corporation)

3,395,000 Shares of Common Stock

(Par Value $1.00 Per Share)

U.S. PURCHASE AGREEMENT
-----------------------

October 23, 1997

XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxx Xxxxx & Company, L.L.C.
Xxxxxx X. Xxxxx & Co. Incorporated
XxXxxxxx & Company Securities, Inc.
as Representatives of the several U.S. Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000

Ladies and Gentlemen:

HON INDUSTRIES Inc., an Iowa corporation (the "Company"), and Bandag,
Incorporated, an Iowa corporation ("Bandag"), and BTC, Inc., a Delaware
corporation (the "Selling Shareholder"), confirm their respective agreements
with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("Xxxxxxx Xxxxx") and each of the other U.S. Underwriters named in Schedule A
hereto (collectively, the "U.S. Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Xxxxxxx Xxxxx and Xxxxxxx Xxxxx & Company, L.L.C., Xxxxxx X. Xxxxx & Co.
Incorporated and XxXxxxxx & Company Securities, Inc. are acting as
representatives (in such capacity, the "U.S. Representatives"), with respect to
(i) the sale by the Company and the Selling Shareholder, acting severally and
not jointly, and the purchase by the U.S. Underwriters, acting severally and not
jointly, of the respective numbers of shares of Common Stock, par value $1.00
per share, of the Company ("Common Stock") set forth in Schedules A and B hereto
and (ii) the grant by the Company to the U.S. Underwriters, acting severally and
not jointly, of the option described in Section 2(b) hereof to purchase all or
any part of 407,400 additional shares of Common Stock solely to cover over-
allotments, if any. The aforesaid 2,716,000 shares of Common Stock (the
"Initial U.S. Securities") to be purchased by the U.S. Underwriters and all or
any part of the

407,400 shares of Common Stock subject to the option described in Section 2(b)
hereof (the "U.S. Option Securities") are hereinafter called, collectively, the
"U.S. Securities".

It is understood that the Company, Bandag and the Selling Shareholder are
concurrently entering into an agreement dated the date hereof (the
"International Purchase Agreement") providing for the offering by the Company
and the Selling Shareholder acting severally and not jointly of an aggregate of
679,000 shares of Common Stock (the "Initial International Securities") through
arrangements with certain underwriters outside the United States and Canada (the
"International Managers") for which Xxxxxxx Xxxxx International and Xxxxxxx
Xxxxx & Company, L.L.C., Xxxxxx X. Xxxxx & Co. Incorporated and XxXxxxxx &
Company Securities, Inc. are acting as lead managers (the "Lead Managers") and
the grant by the Company to the International Managers, acting severally and not
jointly, of an option to purchase all or any part of the International Managers'
pro rata portion of up to 101,850 additional shares of Common Stock solely to
cover overallotments, if any (the "International Option Securities" and,
together with the U.S. Option Securities, the "Option Securities"). The Initial
International Securities and the International Option Securities are hereinafter
called the "International Securities". It is understood that neither the
Company nor the Selling Shareholder is obligated to sell, and the U.S.
Underwriters are not obligated to purchase, any Initial U.S. Securities unless
all of the Initial International Securities are contemporaneously purchased by
the International Managers.

The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities".

The Underwriters will concurrently enter into an Intersyndicate Agreement of
even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Xxxxxxx Xxxxx & Co. (in such capacity, the "Global Coordinator").

The Company, Bandag and the Selling Shareholder understand that the U.S.
Underwriters propose to make a public offering of the U.S. Securities as soon as
the U.S. Representatives deem advisable after this Agreement has been executed
and delivered.

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-36433) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of

Rule 430A ("Rule 430A") of the rules and regulations of the Commission under the
1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely
upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term
sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule
424(b). Two forms of prospectus are to be used in connection with the offering
and sale of the Securities: one relating to the U.S. Securities (the "Form of
U.S. Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of International Prospectus is identical to
the Form of U.S. Prospectus, except for the front cover and back cover pages and
the information under the caption "Underwriting" and the inclusion in the Form
of International Prospectus of a section under the caption "United States
Taxation of Foreign Shareholders." The information included in such prospectus
or in any such Term Sheet, as the case may be, that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective (a) pursuant
to paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information."
Each Form of U.S. Prospectus and Form of International Prospectus used before
such registration statement became effective, and any prospectus that omitted,
as applicable, the Rule 430A Information or the Rule 434 Information, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of U.S.
Prospectus and the Final Form of International Prospectus, including the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the form first furnished to the Underwriters for use in
connection with the offering of the Securities is herein called the "U.S.
Prospectus" and the "International Prospectus", respectively, and collectively,
the "Prospectuses." If Rule 434 is relied on, the terms "U.S. Prospectus" and
"International Prospectus" shall refer to the preliminary U.S. Prospectus dated
October 3, 1997 and preliminary International Prospectus dated October 3, 1997,
respectively, each together with the applicable Term Sheet and all references in
this Agreement to the date of the Prospectuses shall mean the date of the
applicable Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the U.S. Prospectus, the
International Prospectus or any Term Sheet or any amendment or supplement to any
of the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("XXXXX").

All references in this Agreement to financial statements and schedules and
other information which is "disclosed," "contained," "referred to," "included"
or "stated" in the Registration Statement, any preliminary prospectus (including
the Form of U.S. Prospectus and Form of International Prospectus) or the
Prospectuses (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated by reference in the Registration Statement, any preliminary
prospectus (including the Form of U.S. Prospectus and Form of International
Prospectus) or the Prospectuses, as the case

may be; and all references in this Agreement to amendments or supplements to the
Registration Statement, any preliminary prospectus or the Prospectuses shall be
deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934 (the "1934 Act") which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectuses, as the
case may be.

SECTION 1. Representations and Warranties.

(a) Representations and Warranties by the Company. The Company
represents and warrants to each U.S. Underwriter as of the date hereof, as of
the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each U.S.
Underwriter, as follows:

(i) Compliance with Registration Requirements. The Company meets the
requirements for use of Form S-3 under the 1933 Act. Each of the Registration
Statement and any Rule 462(b) Registration Statement has become effective
under the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the Commission
for additional information has been complied with.

At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectuses nor any amendments or supplements
thereto, at the time the Prospectuses or any amendments or supplements were
issued and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434 is used,
the Company will comply with the requirements of Rule 434. The representations
and warranties in this subsection shall not apply to information stated in or
omitted from the Registration Statement or U.S. Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing by
any U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement or the U.S. Prospectus.

Each preliminary prospectus and the prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters for
use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T.

(ii) Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectuses, at the time they were or hereafter are filed with the Commission
(assuming for purposes hereof that the Company's Annual Report on Form 10-K
for the year ended December 28, 1996 (the "Form 10-K") included, at the time
such Form 10-K was originally filed, the information set forth in the
Company's Form 10-K/A filed with the Commission on October 6, 1997), complied
and will comply in all material respects with the requirements of the 1934 Act
and the rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), and, as modified, superseded and read together with the other
information in the Prospectuses, at the time the Registration Statement became
effective, at the time the Prospectuses were issued and at the Closing Time
(and, if any U.S. Option Securities are purchased, at the Date of Delivery),
did not and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.

(iii) Independent Accountants . The accountants who certified the
financial statements and supporting schedules, if any, included in the
Registration Statement are independent public accountants as required by the
1933 Act and the 1933 Act Regulations.

(iv) Financial Statements . The financial statements included in the
Registration Statement and the Prospectuses, together with the related
schedules and notes, present fairly the financial position of the Company and
its consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated therein.
The selected financial data and the summary financial information included in
the Prospectuses present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial statements
included in the Registration Statement.

(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and the
Prospectuses, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its

subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its subsidiaries, other
than those in the ordinary course of business, which are material with respect
to the Company and its subsidiaries considered as one enterprise, and (C)
except for regular quarterly dividends on the Common Stock in amounts per
share that are consistent with the current dividend policy and past practice
of the Company, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.

(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Iowa and has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to qualify
or to be in good standing would not result in a Material Adverse Effect.

(vii) Good Standing of Subsidiaries. Each of the entities listed on
Schedule D hereto (each a "Subsidiary" and, collectively, the "Subsidiaries")
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectuses and is duly qualified as
a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect; except as otherwise disclosed in the Registration Statement,
all of the issued and outstanding capital stock of each such Subsidiary has
been duly authorized and validly issued, is fully paid and non-assessable and
is owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity;
none of the outstanding shares of capital stock of any Subsidiary was issued
in violation of the preemptive or similar rights of any securityholder of such
Subsidiary. The only subsidiaries of the Company that constitute "significant
subsidiaries" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) are the subsidiaries listed on Schedule D hereto.

(viii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectuses in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee or director benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities or options
referred to in the Prospectuses). The shares of issued and outstanding capital
stock of the Company, including

the Securities to be purchased by the Underwriters from the Selling
Shareholder, have been duly authorized and validly issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of the
Company, including the Securities to be purchased by the Underwriters from the
Selling Shareholder, was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.

(ix) Authorization of Agreement. This Agreement and the International
Purchase Agreement have been duly authorized, executed and delivered by the
Company.

(x) Authorization and Description of Securities. The Securities to
be purchased by the U.S. Underwriters and the International Managers from the
Company have been duly authorized for issuance and sale to the U.S.
Underwriters pursuant to this Agreement and the International Managers
pursuant to the International Purchase Agreement and, when issued and
delivered by the Company pursuant to this Agreement and the International
Purchase Agreement, respectively, against payment of the consideration set
forth herein and the International Purchase Agreement, respectively, will be
validly issued and fully [CAPTION] paid and non-assessable; the Common Stock
conforms in all material respects to all statements relating thereto contained
in the Prospectuses and such description conforms in all material respects to
the rights set forth in the instruments defining the same; no holder of the
Securities will be subject to personal liability by reason of being such a
holder; and the issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Company.

(xi) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its charter or by-laws or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of them
may be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments") except for
such defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the International
Purchase Agreement and the consummation of the transactions contemplated in
this Agreement, the International Purchase Agreement and in the Registration
Statement (including the issuance and sale of the Securities and the use of
the proceeds from the sale of the Securities as described in the Prospectuses
under the caption "Use of Proceeds") and compliance by the Company with its
obligations under this Agreement and the International Purchase Agreement have
been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances or Repayment
Events that would not result in a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or by-laws of
the

Company or any subsidiary or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government instrumentality
or court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations (except for any
such violation as would not reasonably be expected to result in a Material
Adverse Effect). As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.

(xii) Absence of Labor Dispute. No labor dispute with the employees of
the Company or any subsidiary exists or, to the knowledge of the Company, is
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.

(xiii) Absence of Proceedings. Except as otherwise disclosed in the
Registration Statement, there is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any subsidiary, which is
required to be disclosed in the Registration Statement, or which might
reasonably be expected to result in a Material Adverse Effect, or which may
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated in this
Agreement and the International Purchase Agreement or the performance by the
Company of its obligations hereunder or thereunder; all pending legal or
governmental proceedings to which the Company or any subsidiary is a party or
of which any of their respective property or assets is the subject, including
ordinary routine litigation incidental to the business, are, in the aggregate,
not reasonably likely to result in a Material Adverse Effect.

(xiv) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectuses or the documents incorporated by reference therein or to be filed
as exhibits thereto which have not been so described and filed as required
(assuming for purposes hereof that the Form 10-K included, at the time such
Form 10-K was originally filed, the information set forth in the Company's
Form 10-K/A filed with the Commission on October 6, 1997).

(xv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on in all material respects, the business now
operated by them, and neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would render any Intellectual Property
invalid

or inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.

(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification
or decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder or
the consummation of the transactions contemplated by this Agreement and the
International Purchase Agreement, except such as have been already obtained or
as may be required under the 1933 Act or the 1933 Act Regulations or any
foreign or state securities laws.

(xvii) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, and are in compliance
with the terms and conditions of all such Governmental Licenses, except where
the failure to possess such Governmental Licenses or to so comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.

(xviii) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them and which
are material to the business of the Company and its subsidiaries, considered
as one enterprise, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any kind
except such as (a) are described in the Prospectuses or (b) do not, singly or
in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its subsidiaries; and all of the leases and subleases
material to the business of the Company and its subsidiaries, considered as
one enterprise, and under which the Company or any of its subsidiaries holds
properties described in the Prospectuses, are in full force and effect, and
neither the Company nor any subsidiary has any notice of any material claim of
any sort that has been asserted by anyone adverse to the rights of the Company
or any subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary to the
continued possession of the leased or subleased premises under any such lease
or sublease.

(xix) Absence of Manipulation. The Company has not taken, and will
not take, directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of, and neither the Company nor any
affiliated purchaser (as such term is defined in Rule 100 under Regulation M)
has or will, directly or indirectly, bid for, purchased or attempted to induce
any person to bid for or purchase, any security of the Company to facilitate
the sale or resale of the Securities.

(xx) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectuses will not be, an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").

(xxi) Environmental Laws. Except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company nor
any of its subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (C) there
are no events or circumstances that may reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.

(b) Representations and Warranties by Bandag and the Selling Shareholder.
Bandag and the Selling Shareholder each represents and warrants to each U.S.
Underwriter as of the date hereof and as of the Closing Time and agrees with
each U.S. Underwriter, as follows:

(i) Accurate Disclosure. To the best knowledge of Bandag and the
Selling Shareholder, the representations and warranties of the Company
contained in Section 1(a) hereof are true and correct; each of Bandag and the
Selling Shareholder has reviewed and is familiar with the Registration
Statement and the Prospectuses and neither the Prospectuses nor any amendments
or supplements thereto includes any untrue statement of a material fact or
omits

to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(provided, that this representation and warranty shall only apply to
statements in or omissions from the Registration Statement and the
Prospectuses made in reliance upon and in conformity with information
furnished to the Company in writing by Bandag or the Selling Shareholder
expressly for use in the Registration Statement and the Prospectuses); the
Selling Shareholder is not prompted to sell the Securities to be sold by the

Selling Shareholder hereunder by any information concerning the Company or
any subsidiary of the Company which is not set forth in the Prospectuses.

(ii) Authorization of Agreements. Each of Bandag and the Selling
Shareholder has the full right, power and authority to enter into this
Agreement and the International Purchase Agreement and to sell, transfer and
deliver the Securities to be sold by the Selling Shareholder under this
Agreement and the International Purchase Agreement. The execution and delivery
of this Agreement and the International Purchase Agreement and the sale and
delivery of the Securities to be sold by the Selling Shareholder and the
consummation of the transactions contemplated herein and under the
International Purchase Agreement and compliance by each of Bandag and the
Selling Shareholder with its obligations hereunder and under the International
Purchase Agreement have been duly authorized by each of Bandag and the Selling
Shareholder and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any tax, lien,
charge or encumbrance upon the Securities to be sold by the Selling
Shareholder or any property or assets of Bandag or the Selling Shareholder
pursuant to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, license, lease or other agreement or instrument to which
Bandag or the Selling Shareholder is a party or by which Bandag or the Selling
Shareholder may be bound, or to which any of the property or assets of Bandag
or the Selling Shareholder is subject, nor will such action result in any
violation of the provisions of the charter or by-laws or other organizational
instrument of Bandag or the Selling Shareholder, if applicable, or any
applicable treaty, law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over Bandag or the Selling Shareholder or any of
its properties.

(iii) Good and Marketable Title. The Selling Shareholder has and will
at the Closing Time have good and marketable title to the Securities to be
sold by the Selling Shareholder hereunder and under the International Purchase
Agreement, free and clear of any security interest, mortgage, pledge, lien,
charge, claim, equity or encumbrance of any kind, other than pursuant to this
Agreement and the International Purchase Agreement; and upon delivery of such
Securities and payment of the purchase price therefor as herein contemplated,
assuming each such Underwriter has no notice of any adverse claim, each of the
Underwriters will receive good and marketable title to the Securities
purchased by it from the Selling

Shareholder, free and clear of any security interest, mortgage, pledge, lien,
charge, claim, equity or encumbrance of any kind.

(iv) Absence of Manipulation. Neither Bandag nor the Selling
Shareholder has taken, and neither will take, directly or indirectly, any
action which is designed to or which has constituted or which might reasonably
be expected to cause or result in stabilization or manipulation of the price
of, and none of Bandag, the Selling Shareholder or any affiliated purchaser
(as such term is defined in Rule 100 under Regulation M) has or will, directly
or indirectly, bid for, purchased or attempted to induce any person to bid for
or purchase, any security of the Company to facilitate the sale or resale of
the Securities.

(v) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign, is necessary
or required for the performance by either Bandag or the Selling Shareholder of
their respective obligations hereunder or under the International Purchase
Agreement, or in connection with the sale and delivery of the Securities
hereunder or under the International Purchase Agreement or the consummation of
the transac tions contemplated by this Agreement or the International Purchase
Agreement, except such as may have previously been made or obtained or as may
be required under the 1933 Act or the 1933 Act Regulations or state securities
laws.

(vi) No Association with NASD. Except for Xxxxx X. Xxxxxxxx, Senior
Director at Xxxxxxx Xxxxx & Company, L.L.C. and a director of Bandag, none of
Bandag, the Selling Stockholder nor any of its affiliates directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, or has any other association with (within the
meaning of Article I, Section 1(m) of the By-laws of the National Association
of Securities Dealers, Inc.), any member firm of the National Association of
Securities Dealers, Inc.

(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the U.S.
Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by the Company to each U.S. Underwriter as to the
matters covered thereby; and any certificate signed by or on behalf of Bandag or
the Selling Shareholder as such and delivered to the Global Coordinator, the
U.S. Representatives or to counsel for the U.S. Underwriters pursuant to the
terms of this Agreement shall be deemed a representation and warranty by Bandag
or the Selling Shareholder, as the case may be, to each U.S. Underwriter as to
the matters covered thereby.

SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.

(a) Initial U.S. Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, (i) the Company and (ii) Bandag and the Selling Shareholder, severally
and not jointly, each agrees to sell to each U.S. Underwriter, severally and not
jointly, and each U.S. Underwriter,

severally and not jointly, agrees to purchase from the Company and Bandag and
the Selling Shareholder, at the price per share set forth in Schedule C, that
proportion of the number of Initial U.S. Securities set forth in Schedule B
opposite the name of the Company or the Selling Shareholder, as the case may be,
which the number of Initial U.S. Securities set forth in Schedule A opposite the
name of such U.S. Underwriter, plus any additional number of Initial U.S.
Securities which such U.S. Underwriter may become obligated to purchase pursuant
to the provisions of Section 10 hereof, bears to the total number of Initial
U.S. Securities, subject, in each case, to such adjustments among the U.S.
Underwriters as the U.S. Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional securities.

(b) U.S. Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the U.S.
Underwriters, severally and not jointly, to purchase up to an additional 407,400
shares of Common Stock, as set forth in Schedule B, at the price per share set
forth in Schedule C, less an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial U.S. Securities
but not payable on the U.S. Option Securities (but only if the Company
establishes a record date for such dividend or distribution which is prior to
the Date of Delivery (as defined below) for the U.S. Option Securities). The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Company setting forth the number of U.S. Option Securities as
to which the several U.S. Underwriters are then exercising the option and the
time and date of payment and delivery for such U.S. Option Securities. Any such
time and date of delivery (a "Date of Delivery") shall be determined by the
Global Coordinator, but shall not be later than seven full business days after
the exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
U.S. Option Securities, each of the U.S. Underwriters, acting severally and not
jointly, will purchase that proportion of the total number of U.S. Option
Securities then being purchased which the number of Initial U.S. Securities set
forth in Schedule A opposite the name of such U.S. Underwriter bears to the
total number of Initial U.S. Securities, subject in each case to such
adjustments as the Global Coordinator in its discretion shall make to eliminate
any sales or purchases of fractional shares.

(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial U.S. Securities shall be made at the offices of
Sidley & Austin, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, or at such
other place as shall be agreed upon by the Global Coordinator, the Company,
Bandag and the Selling Shareholder, at 9:00 A.M. (Eastern time) on the third
business day (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on
any given day business day) after the date hereof (unless postponed in
accordance with the provisions of Section 10), or such other time not later than
ten business days after such date as shall be agreed upon by the Global
Coordinator, the Company and Bandag and the Selling Shareholder (such time and
date of payment and delivery being herein called "Closing Time").

In addition, in the event that any or all of the U.S. Option Securities are
purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.

Payment shall be made to the Company and the Selling Shareholder by wire
transfer of immediately available funds to the bank accounts designated by the
Company and the Selling Shareholder, as the case may be, against delivery to the
U.S. Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Xxxxxxx Xxxxx, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.

(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in The City of New
York not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.

SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:

(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Global Coordinator
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectuses or any amended Prospectuses shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectuses or for additional
information, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of

the initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to Rule
424(b) and will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.

(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or to
the Prospectuses, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Global Coordinator or counsel for the U.S. Underwriters shall reasonably
object.

(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the U.S. Representatives and counsel for the U.S.
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the U.S.
Representatives, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without
exhibits) for each of the U.S. Underwriters. The copies of the Registration
Statement and each amendment thereto furnished to the U.S. Underwriters will
be identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation
S-T.

(d) Delivery of Prospectuses. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary prospectus as
such U.S. Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each U.S. Underwriter, without charge, during the
period when the U.S. Prospectus is required to be delivered under the 1933
Act or the 1934 Act, such number of copies of the U.S. Prospectus (as amended
or supplemented) as such U.S. Underwriter may reasonably request. The U.S.
Prospectus and any amendments or supplements thereto furnished to the U.S.
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.

(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934
Act

Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement, the International Purchase
Agreement and in the Prospectuses. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the U.S. Underwriters or
for the Company, to amend the Registration Statement or amend or supplement
any Prospectus in order that the Prospectuses will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement any Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to
Section 3(b), such amendment or supplement as may be necessary to correct
such statement or omission or to make the Registration Statement or the
Prospectuses comply with such requirements, and the Company will furnish to
the U.S. Underwriters such number of copies of such amendment or supplement
as the U.S. Underwriters may reasonably request.

(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the U.S. Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the Global Coordinator may
reasonably designate and to maintain such qualifications in effect for a
period of not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement; provided,
however, that the Company shall not be obligated to file any general consent
to service of process or to qualify as a foreign corporation or as a dealer
in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement and any Rule 462(b) Registration
Statement.

(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.

(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds".

(i) Listing. The Company will use its best efforts to effect the
quotation of the Securities on the Nasdaq National Market.

(j) Restriction on Sale of Securities. During a period of 90 days from
the date of the Prospectus, the Company will not, without the prior written
consent of the Global Coordinator, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act (other than on Form S-8) with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (A) the Securities to
be sold hereunder or under the International Purchase Agreement, (B) any
shares of Common Stock issued by the Company upon the exercise of an option,
right or warrant or the conversion of a security outstanding on the date
hereof and referred to in the Prospectuses, (C) any shares of Common Stock,
or other securities convertible into or exercisable or exchangeable for
Common Stock, issued or options or contracts to purchase Common Stock granted
or entered into pursuant to existing employee benefit plans of the Company
referred to in the Prospectuses or (D) any shares of Common Stock, or other
securities convertible into or exercisable or exchangeable for Common Stock,
issued or options or contracts to purchase Common Stock pursuant to any non-
employee director stock plan or dividend reinvestment plan or the Company's
shareholder rights plan.

(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to
the 1934 Act within the time periods required by the 1934 Act and the 1934
Act Regulations.

SECTION 4. Payment of Expenses

(a) Expenses. The Company and Bandag and the Selling Shareholder will pay or
cause to be paid all expenses incident to the performance of their obligations
under this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters

and the transfer of the Securities between the U.S. Underwriters and the
International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, if any, (v) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing
and delivery to the Underwriters of copies of each preliminary prospectus, any
Term Sheets and of the Prospectuses and any amendments or supplements thereto,
(vii) the preparation, printing and delivery to the Underwriters of copies of
the Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of
any transfer agent or registrar for the Securities and (ix) the filing fees
incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Securities
and (x) the fees and expenses incurred in connection with the inclusion of the
Securities being issued by the Company in the Nasdaq National Market.

It is understood, however, that except as provided in this Section and Section
6 hereof, the Underwriters will pay all their own costs and expenses, including
the fees and disbursements of their counsel, and any advertisement expenses
connected with any offers they may make.

(b) Expenses of Bandag and the Selling Shareholder. Bandag and the Selling
Shareholder will pay all expenses incident to the performance of their
obligations under, and the consummation of the transactions contemplated by this
Agreement, including (i) any stamp duties, capital duties and stock transfer
taxes, if any, payable upon the sale of the Securities to the Underwriters, and
their transfer between the Underwriters pursuant to an agreement between such
Underwriters, and (ii) the fees and disbursements of their counsel and
accountants.

(c) Termination of Agreement. If this Agreement is terminated by the U.S.
Representatives in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11 hereof, the Company and Bandag and the Selling Shareholder shall
reimburse the U.S. Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the U.S.
Underwriters.

(d) Allocation of Expenses. The provisions of this Section 4 shall not affect
any agreement that the Company and Bandag and the Selling Shareholders may make
for the sharing of such costs and expenses.

SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several U.S. Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and Bandag and the Selling
Shareholder contained in Section 1 hereof or in certificates of any officer of
the Company or any subsidiary of the Company or Bandag or the Selling
Shareholder delivered pursuant to the provisions hereof, to the performance by
the Company and Bandag and the Selling Shareholder of their respective covenants
and other obligations hereunder, and to the following further conditions:

(a) Effectiveness of Registration Statement; Filing of Prospectus. The
Registration Statement, including any Rule 462(b) Registration Statement, has
become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission,
and any request on the part of the Commission for additional information
shall have been complied with to the reasonable satisfaction of counsel to
the Underwriters. A prospectus containing the Rule 430A Information shall
have been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if
the Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).

(b) Opinion of Counsel for Company. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Xxxxxxx, Xxxxx & Xxxxxx, counsel for the Company, Xxxxx,
Day, Xxxxxx & Xxxxx, counsel for the Company, and Xxxxx X. Xxxxxxx, Vice
President, General Counsel and Secretary of the Company, in form and
substance satisfactory to counsel for the U.S. Underwriters, together with
signed or reproduced copies of each such letter for each of the other U.S.
Underwriters to the effect set forth in Exhibits X-0, X-0 and A-3 hereto,
respectively.

(c) Opinion of Counsel for Bandag and the Selling Shareholder. At
Closing Time, the U.S. Representatives shall have received the favorable
opinion, dated as of Closing Time, of Xxxxx & Xxxxxxx, counsel for Bandag and
the Selling Shareholder, in form and substance satisfactory to counsel for
the U.S. Underwriters, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters to the effect set forth in
Exhibit B hereto.

(d) Opinion of Counsel for U.S. Underwriters. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Sidley & Austin, counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other U.S.
Underwriters with respect to the matters set forth in Exhibit C. In giving
such opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal law
of the United States, upon the opinions of counsel satisfactory to the U.S.
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.

(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information
is given in the Prospectuses, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the U.S.
Representatives shall

have received a certificate of the President or a Vice President of the
Company and of the chief financial or chief accounting officer of the
Company, dated as of Closing Time, to the effect that (i) there has been no
such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or
are threatened by the Commission.

(f) Certificate of Bandag and the Selling Shareholder. At Closing Time,
the U.S. Representatives shall have received certificates of a duly
authorized officer of each of Bandag and the Selling Shareholder, dated as of
Closing Time, to the effect that (i) the representations and warranties of
each of Bandag and the Selling Shareholder contained in Section 1(b) hereof
are true and correct in all respects with the same force and effect as though
expressly made at and as of Closing Time and (ii) the Selling Shareholder has
complied in all material respects with all agreements and all conditions on
its part to be performed under this Agreement at or prior to Closing Time.

(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the U.S. Representatives shall have received from Xxxxxx Xxxxxxxx
LLP a letter dated such date, in form and substance satisfactory to the U.S.
Representatives to the effect set forth in Annex A hereto, together with
signed or reproduced copies of such letter for each of the other U.S.
Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained in the
Registration Statement and the Prospectuses.

(h) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Xxxxxx Xxxxxxxx LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (g) of this Section, except that the
specified date referred to shall be a date not more than three business days
prior to Closing Time.

(i) Approval of Listing. At Closing Time, the Securities to be issued by
the Company shall have been approved for inclusion in the Nasdaq National
Market, subject only to official notice of issuance.

(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.

(k) Purchase of Initial International Securities. Contemporaneously
with the purchase by the U.S. Underwriters of the Initial U.S. Securities
under this Agreement, the

International Managers shall have purchased the Initial International
Securities under the International Purchase Agreement.

(l) Lock-up Agreements. At the date of this Agreement, the U.S.
Representatives shall have an agreement substantially in the form of Exhibit
D hereto signed by the persons listed on Schedule E hereto.

(m) Conditions to Purchase of U.S. Option Securities. In the event that
the U.S. Underwriters exercise their option provided in Section 2(b) hereof
to purchase all or any portion of the U.S. Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company or any subsidiary of
the Company hereunder shall be true and correct as of each Date of Delivery
and, at the relevant Date of Delivery, the U.S. Representatives shall have
received:

(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(e) hereof remains true and correct as of such
Date of Delivery.

(ii) Opinion of Counsel for Company. The favorable opinion of
Xxxxxxx, Xxxxx & Xxxxxx, counsel for the Company, Xxxxx, Day, Xxxxxx
& Xxxxx, counsel for the Company, and Xxxxx X. Xxxxxxx, Vice
President, General Counsel and Secretary of the Company, in form and
substance satisfactory to counsel for the U.S. Underwriters, dated
such Date of Delivery, relating to the U.S. Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect
as the opinions required by Section 5(b) hereof.

(iv) Opinion of Counsel for U.S. Underwriters. The favorable opinion
of Sidley & Austin, counsel for the U.S. Underwriters, dated such
Date of Delivery, relating to the U.S. Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect
as the opinion required by Section 5(d) hereof.

(v) Bring-down Comfort Letter. A letter from Xxxxxx Xxxxxxxx LLP, in
form and substance satisfactory to the U.S. Representatives and dated
such Date of Delivery, substantially in the same form and substance
as the letter furnished to the U.S. Representatives pursuant to
Section 5(g) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than
five days prior to such Date of Delivery.

(n) Additional Documents. At Closing Time and at each Date of Delivery
counsel for the U.S. Underwriters shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the

Securities as herein contemplated, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company and
Bandag and the Selling Shareholder in connection with the issuance and sale
of the Securities as herein contemplated shall be reasonably satisfactory in
form and substance to the U.S. Representatives and counsel for the U.S.
Underwriters.

(o) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of U.S. Option
Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant U.S.
Option Securities, may be terminated by the U.S. Representatives by notice
to the Company at any time at or prior to Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section 4
and except that Sections 1, 6, 7 and 8 shall survive any such termination
and remain in full force and effect.

SECTION 6. Indemnification.

(a) Indemnification of U.S. Underwriters by the Company. The Company agrees
to indemnify and hold harmless each U.S. Underwriter and each person, if any,
who controls any U.S. Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act as follows:

(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule
434 Information, if applicable, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;

(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 6(d)
below) any such settlement is effected with the written consent of the
Company; and

(iii) against any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), reasonably
incurred in investigating,

preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense (i) to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto) and
(ii) with respect to any preliminary prospectus to the extent that any such
loss, liability, claim, damage or expense of such U.S. Underwriter results
solely from the fact that such U.S. Underwriter sold Securities to a person as
to whom the Company shall establish that there was not sent by commercially
reasonable means, at or prior to the written confirmation of such sale, a copy
of the appropriate Prospectus in any case where such delivery is required by the
1933 Act, if the Company has previously furnished copies thereof in sufficient
quantity to such U.S. Underwriter and the loss, claim, damage or liability of
such U.S. Underwriter results from an untrue statement or omission of a material
fact contained in a preliminary prospectus that was corrected in the appropriate
Prospectus (not including the documents incorporated by reference therein).

(b) Indemnification of U.S. Underwriters and the Company by Bandag and the
Selling Shareholder. Bandag and the Selling Shareholder, jointly and severally,
agree to indemnify and hold harmless each U.S. Underwriter and each person, if
any, who controls any U.S. Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act and the Company and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by Bandag or the
Selling Shareholder expressly for use therein; and will reimburse each U.S.
Underwriter and the Company for any legal or other expenses reasonably incurred
by such U.S. Underwriter or the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.

(c) Indemnification of Company, Directors and Officers and Bandag and the
Selling Shareholder. Each U.S. Underwriter severally agrees to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who

controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act, and Bandag and the Selling Shareholder and each person, if
any, who controls either Bandag or the Selling Shareholder within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary U.S.
prospectus or the U.S. Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such U.S. Underwriter through the U.S. Representatives expressly for
use in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto).

(d) Actions against Parties; Notification. Each indemnified party shall give
notice as promptly as reasonably practicable to each indemnifying party of any
action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) or 6(b)
above, counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx,
and, in the case of parties indemnified pursuant to Section 6(c) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. An indemnifying party may,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), if such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

(e) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement. Notwithstanding the immediately preceding sentence, if at any time
an indemnified party shall have

requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, an indemnifying party shall not be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
consent if such indemnifying party (i) reimburses such indemnified party in
accordance with such request to the extent it considers such request to be
reasonable and (ii) provides written notice to the indemnified party
substantiating the unpaid balance as unreasonable, in each case prior to the
date of such settlement.

(f) Other Agreements with Respect to Indemnification. The provisions of this
Section shall not affect any agreement among the Company and Bandag and the
Selling Shareholder with respect to indemnification.

SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and Bandag
and the Selling Shareholder on the one hand and the U.S. Underwriters on the
other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and Bandag and the Selling Shareholder on the one hand and of the U.S.
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.

The relative benefits received by the Company and Bandag and the Selling
Shareholder on the one hand and the U.S. Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the U.S. Securities pursuant to this Agreement (before
deducting expenses) received by the Company and Bandag and the Selling
Shareholder and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus, or,
if Rule 434 is used, the corresponding location on the Term Sheet bear to the
aggregate initial public offering price of the U.S. Securities as set forth on
such cover.

The relative fault of the Company and Bandag and the Selling Shareholder
on the one hand and the U.S. Underwriters on the other hand shall be determined
by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or Bandag and the Selling
Shareholder or by the U.S. Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

The Company, Bandag or the Selling Shareholder and the U.S. Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the U.S. Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The aggregate amount of losses, liabilities,
claims, damages and expenses

incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company, Bandag or the Selling Shareholder within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company or Bandag and the Selling Shareholder, as the case
may be. The U.S. Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial U.S.
Securities set forth opposite their respective names in Schedule A hereto and
not joint.

The provisions of this Section shall not affect any agreement among the
Company and Bandag and the Selling Shareholder with respect to contribution.

SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or Bandag and the Selling Shareholder submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Company or Bandag and the Selling Shareholder,
and shall survive delivery of the Securities to the U.S. Underwriters.

SECTION 9. Termination of Agreement.

(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by notice to the Company and Bandag and the Selling Shareholder, at
any time at or prior to Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the U.S. Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets

in the United States, any outbreak of hostilities or escalation of any existing
hostilities or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the U.S. Representatives, impracticable to market the U.S.
Securities or to enforce contracts for the sale of the U.S. Securities, or (iii)
if trading in any securities of the Company has been suspended or materially
limited by the Commission or the Nasdaq National Market, or if trading generally
on the New York Stock Exchange or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by such exchange or
by such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.

(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.

SECTION 10. Default by One or More of the U.S. Underwriters. If one or more
of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the U.S. Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the U.S.
Representatives shall not have completed such arrangements within such 24-hour
period, then:

(a) if the number of Defaulted Securities does not exceed 10% of the
number of U.S. Securities to be purchased on such date, each of the non-
defaulting U.S. Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting U.S. Underwriters, or

(b) if the number of Defaulted Securities exceeds 10% of the number of
U.S. Securities to be purchased on such date, this Agreement or, with respect
to any Date of Delivery which occurs after the Closing Time, the obligation
of the U.S. Underwriters to purchase and of the Company to sell the U.S.
Option Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting U.S.
Underwriter.

No action taken pursuant to this Section shall relieve any defaulting U.S.
Underwriter from liability in respect of its default.

In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the U.S.
Underwriters to purchase and the Company to sell the relevant U.S.

Option Securities, as the case may be, either (i) the U.S. Representatives or
(ii) the Company or Bandag and the Selling Shareholder shall have the right to
postpone Closing Time, or the Company or the U.S. Representatives shall have the
right to postpone the relevant Date of Delivery, as the case may be, for a
period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "U.S. Underwriter" includes any person substituted for
an Underwriter under this Section 10.

SECTION 11. Default by Bandag and the Selling Shareholder or the Company.
(a) If Bandag and the Selling Shareholder shall fail at Closing Time to sell and
deliver the number of Securities which the Selling Shareholder is obligated to
sell hereunder, then the U.S. Underwriters may, at the option of the U.S.
Representatives, by notice from the U.S. Representatives to the Company and
Bandag and the Selling Shareholder, either (a) terminate this Agreement without
any liability on the fault of any non-defaulting party except that the
provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect or
(b) elect to purchase the Securities which the Company has agreed to sell
hereunder. No action taken pursuant to this Section 11 shall relieve Bandag and
the Selling Shareholder from liability, if any, in respect of such default.

In the event of a default by Bandag and the Selling Shareholder as referred
to in this Section 11, each of the U.S. Representatives and the Company shall
have the right to postpone Closing Time or Date of Delivery for a period not
exceeding seven days in order to effect any required change in the Registration
Statement or Prospectus or in any other documents or arrangements.

(b) If the Company shall fail at Closing Time or at the Date of Delivery to
sell the number of Securities that it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any non-
defaulting party; provided, however, that the provisions of Sections 1, 4, 6, 7
and 8 shall remain in full force and effect. No action taken pursuant to this
Section shall relieve the Company from liability, if any, in respect of such
default.

SECTION 12. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
by any standard form of telecommunication. Notices to the U.S. Underwriters
shall be directed to the U.S. Representatives at 000 Xxxxx Xxxxxx Xxxxx, 0000
Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, attention of Xxxxxxx X. X'Xxxxx; notices
to the Company shall be directed to it at 000 Xxxx Xxxxx Xxxxxx, X.X. Xxx 0000,
Xxxxxxxxx, Xxxx 00000-0000, attention of General Counsel; notices to Bandag
shall be directed to it at 0000 Xxxxx Xxxxxxx 00, Xxxxxxxxx, Xxxx 00000,
attention of Xxxxxx X. Xxxxxxxxxx, Vice President, Finance; and notices to the
Selling Shareholder shall be directed to it c/o Bandag, Incorporated at 0000
Xxxxx Xxxxxxx 00, Xxxxxxxxx, Xxxx 00000, attention of Xxxxx X. Xxxx, Secretary.

SECTION 13. Parties. This Agreement shall each inure to the benefit of and
be binding upon the U.S. Underwriters, the Company and Bandag and the Selling
Shareholder and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the U.S. Underwriters, the Company and Bandag and the
Selling Shareholder and their respective successors and the controlling persons
and officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or

equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the U.S.
Underwriters, the Company and Bandag and the Selling Shareholder and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any U.S.
Underwriter shall be deemed to be a successor by reason merely of such purchase.

SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.

SECTION 15. Effect of Headings. The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction hereof.

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company, Bandag and the Selling Shareholder a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement among the U.S. Underwriters, the Company and Bandag
and the Selling Shareholder in accordance with its terms.

Very truly yours,

HON INDUSTRIES INC.

By_________________________________
Title:

BANDAG, INCORPORATED

By_________________________________
Title:

BTC, INC.

By_________________________________
Title:

CONFIRMED AND ACCEPTED,
as of the date first above written:

XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXXXX X. XXXXX & CO. INCORPORATED
XXXXXXXX & COMPANY SECURITIES, INC.

By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED

By: __________________________
Authorized Signatory

For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.

SCHEDULE A

Name of U.S. Underwriter Number of
------------------------ Initial U.S.
Securities
----------

Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated.........................................
Xxxxxxx Xxxxx & Company, L.L.C..........................
Xxxxxx X. Xxxxx & Co. Incorporated......................
XxXxxxxx & Company Securities, Inc......................

----------

Total................................................... ==========

Sch A-1

SCHEDULE B

Number of Initial U.S. Maximum Number of U.S.
Securities to be Sold Option Securities to Be Sold
---------------------- ----------------------------

HON INDUSTRIES INC. 800,000 407,400
BANDAG, 1,916,000
INCORPORATED
________________ _______________
Total 2,716,000 407,400
=============== ================

Sch B-1

SCHEDULE C

HON INDUSTRIES INC.
3,395,000 Shares of Common Stock
(Par Value $1.00 Per Share)

1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $______.

2. The purchase price per share for the U.S. Securities to be paid by the
several U.S. Underwriters shall be $___, being an amount equal to the initial
public offering price set forth above less $______ per share; provided that the
purchase price per share for any U.S. Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial U.S. Securities but not payable on the U.S.
Option Securities (but only if the Company establishes a record date for such
dividend or distribution which is prior to the Date of Delivery for the U.S.
Option Securities).

Sch C-1

SCHEDULE D

Hearth Technologies, Inc.
Holga Inc.
BPI Inc.
The Gunlocke Company
T.M. Export Inc.
Allsteel, Inc.

Sch D-1

SCHEDULE E

Xxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. XxXxxxx
Xxxxxxx X. Xxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxxxxxxx III
Xxxxxx X. Xxx
W. Xxxxx Xxxxxxx
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxx
Xxx Xxx
Xxxxxxx Xxxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx

Sch E-1

Exhibit A-1

FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)

FORM OF OPINION OF XXXXXXX, XXXXX & XXXXXX
-------------------------------------------

A1-1

Exhibit A-2

FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(b)

FORM OF OPINION OF XXXXX, DAY, XXXXXX & XXXXX
---------------------------------------------

A2-1

Exhibit A-3

FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(b)

FORM OF OPINION OF XXXXX X. XXXXXXX
-----------------------------------

A3-1

Exhibit B

FORM OF OPINION OF COUNSEL FOR BANDAG AND THE SELLING SHAREHOLDER TO BE
DELIVERED PURSUANT TO SECTION 5(c)

B-1

Exhibit C

FORM OF OPINION OF COUNSEL
FOR THE U.S. UNDERWRITERS

Exhibit C-1

Exhibit D

[Form of lock-up from directors and executive officers pursuant to Section 5(l)]

October __, 1997

XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
Xxxxxxx Xxxxx & Company, L.L.C.
Xxxxxx X. Xxxxx & Co. Incorporated
XxXxxxxx & Company Securities, Inc.
as Representatives of the several
Underwriters to be named in the within-mentioned U.S. Purchase Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000

XXXXXXX XXXXX INTERNATIONAL
Xxxxxxx Xxxxx & Company, L.L.C.
Xxxxxx X. Xxxxx & Co. Incorporated
XxXxxxxx & Company Securities, Inc.
as Lead Managers of the several International Managers to be named in the
within-mentioned International Purchase Agreement
c/o Merrill Xxxxx International
Ropemaker Place
00 Xxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx

Re: Proposed Public Offering by HON INDUSTRIES Inc.
-----------------------------------------------

Dear Sirs:

D-1

The undersigned, a stockholder and an officer and/or director of HON
INDUSTRIES Inc., an Iowa corporation (the "Company"), understands that Xxxxxxx
Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx
Xxxxx"), Xxxxxxx Xxxxx & Co., L.L.C., Xxxxxx X. Xxxxx & Co. Incorporated and
XxXxxxxx & Company Securities, Inc. propose to enter into a U.S. Purchase
Agreement and an International Purchase Agreement (collectively, the "Purchase
Agreements") with the Company, Bandag, Incorporated and the Selling Shareholder
(as defined in the Purchase Agreements) providing for the public offering of
shares (the "Securities") of the Company's common stock, par value $1.00 per
share (the "Common Stock"). In recognition of the benefit that such an offering
will confer upon the undersigned as a stockholder and an officer and/or director
of the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the Purchase Agreements that, during a period of 90
days from the date of the Purchase Agreements, the undersigned will not, without
the prior written consent of Xxxxxxx Xxxxx, directly or indirectly, in any open
market transaction (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of, or otherwise dispose of or transfer any shares
of the Company's Common Stock or any securities convertible into or exchangeable
or exercisable for Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, or file any registration statement under the
Securities Act of 1933, as amended, with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock, whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise.

Very truly yours,

Signature: ___________________________

Print Name: __________________________

D-2

Annex A

[FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(g)]

We are independent public accountants with respect to the Company within
the meaning of the 1933 Act and the applicable published 1933 Act Regulations.

(i) in our opinion, the audited financial statements and the related
financial statement schedules included or incorporated by reference in the
Registration Statement and the Prospectuses comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder;

(ii) on the basis of procedures (but not an examination in accordance with
generally accepted auditing standards) consisting of a reading of the unaudited
interim consolidated financial statements of the Company for the three month
periods ended March 29, 1997 and March 29, 1996, the three and six month periods
ended June 28, 1997 and June 29, 1996, included or incorporated by reference in
the Registration Statement and the Prospectuses (collectively, the "10-Q
Financials"), a reading of the minutes of all meetings of the stockholders and
directors of the Company and its subsidiaries and the committees of the
Company's Board of Directors and any subsidiary committees since January 1,
1997, inquiries of certain officials of the Company and its subsidiaries
responsible for financial and accounting matters, a review of interim financial
information in accordance with standards established by the American Institute
of Certified Public Accountants in Statement on Auditing Standards No. 71,
Interim Financial Information ("SAS 71"), with respect to the description of
relevant periods and such other inquiries and procedures as may be specified in
such letter, nothing came to our attention that caused us to believe that:

(A) the 10-Q Financials incorporated by reference in the
Registration Statement and the Prospectuses do not comply as to form
in all material respects with the applicable accounting requirements
of the 1934 Act and the 1934 Act Regulations applicable to unaudited
financial statements included in Form 10-Q or any material
modifications should be made to the 10-Q Financials incorporated by
reference in the Registration Statement and the Prospectuses for them
to be in conformity with generally accepted accounting principles;

A-1

(B) at a specified date not more than five days prior to the
date of this Agreement, there was any change in the capital stock of
the Company and its subsidiaries or any decrease in the consolidated
net current assets or shareholders' equity of the Company and its
subsidiaries or any increase in the long-term debt of the Company and
its subsidiaries, in each case as compared with amounts shown in the
latest balance sheet included in the Registration Statement, except in
each case for changes, decreases or increases that the Registration
Statement discloses have occurred or may occur; or

(C) for the period from June 28, 1997 to a specified date not
more than five days prior to the date of this Agreement, there was any
decrease in consolidated net sales, total or per share amounts of
income before extraordinary items or of net income, in each case as
compared with the comparable period in the preceding year, except in
each case for any decreases that the Registration Statement discloses
have occurred or may occur;

(iii) based upon the procedures set forth in clause (ii) above and a
reading of the Selected Consolidated Financial and Operating Data included in
the Registration Statement, nothing came to our attention that caused us to
believe that the Selected Financial and Operating Data included in the
Registration Statement do not comply as to form in all material respects with
the disclosure requirements of Item 301 of Regulation S-K of the 1933 Act;

(iv) we have compared the information in the Registration Statement under
selected captions with the disclosure requirements of Regulation S-K of the 1933
Act and, on the basis of limited procedures specified herein. nothing came to
our attention that caused us to believe that this information does not comply as
to form in all material respects with the disclosure requirements of Items 302,
402 and 503(d), respectively, of Regulation S-K;

::ODMA\PCDOCS\CHICAGO4\449314\6 October 23, 1997 (1:25am)

A-2

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Table of Contents

Draft of 10/23/97 HON INDUSTRIES INC. (an Iowa corporation) 3,395,000 Shares of Common Stock U.S. PURCHASE AGREEMENT Dated: October 23, 1997 TABLE OF CONTENTS

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