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Separation And Release Agreement

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Sectors: Manufacturing
Governing Law: Iowa, View Iowa State Laws
Effective Date: January 01, 1998
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Exhibit 10.8


SEPARATION AND GENERAL RELEASE AGREEMENT


THIS SEPARATION AND GENERAL RELEASE AGREEMENT (the "Agreement") is made as of this ____ day of August, 1998, by and between Henry H. Li ("Li"), residing at #8A Old Peak Road, 19 B Garden Terrace 3, Hong Kong, and Bandag, Inc. ("Bandag"), located at 2905 N. Hwy. 61, Muscatine, Iowa 52761.


WHEREAS, on or about July 29, 1996, Li commenced employment with Bandag as Vice President of Asian Operations;


WHEREAS, Bandag and Li executed an Expatriate Agreement effective July 29, 1996 (the "Expatriate Agreement"), which recited certain benefits and entitlements afforded to Li, including participation in Bandag's pension and profit sharing programs;


WHEREAS, in the Employment Offer for Henry Li, dated May 24, 1996 (the "Offer Letter"), Bandag made assurances to Li that he would be entitled to a "Special Termination Payment" if Bandag initiated Li's termination for reasons other than unlawful or deliberately negligent conduct by Li;


WHEREAS, Bandag terminated Li's employment effective July 31, 1998;


WHEREAS, Bandag is providing Li with severance compensation, continuation of health care coverage, outplacement, and other benefits which exceed what Li is entitled to by law or under Bandag's policies; and


WHEREAS, Li and Bandag wish to settle and resolve all disputes and all claims or potential claims and demands whatsoever that Li may have against Bandag on the terms set forth herein, and for that reason have entered into this Agreement;


NOW, THEREFORE, for good and valuable consideration, Li and Bandag hereby agree as follows:


1. Severance: In consideration of the covenants undertaken and the release given herein by Li, Bandag agrees to pay Li a lump sum payment of three months salary, in the amount of Eighty-Seven Thousand, One Hundred and Twenty Dollars and No Cents ($87,120.00), less standard income and payroll tax withholdings and deductions, with such payment to be made within ten (10) days of the expiration of the revocation period described below in paragraph 12.


2. Special Termination Payment: In further consideration of the covenants undertaken and the release given herein by Li, Bandag agrees to pay Li a special termination payment in the gross amount of Five Hundred and Thirteen Thousand, Two Hundred and Ninety-Six Dollars and No Cents ($513,296.00), less standard income and payroll tax withholdings and deductions. This special termination payment has been calculated pursuant to the formula set forth in the Offer Letter, which is the difference between the Kodak Pension Benefit Li would have received from Kodak at age 55 and the Kodak/Bandag Pension Benefit


value at the date of termination. The special termination payment as described herein will be paid out to Li in two (2) lump sum payments; One Hundred Sixty-Nine Thousand, Three Hundred Eight-Eight Dollars and No Cents ($169,388.00) will be paid within ten (10) days of the expiration of the revocation period described below in paragraph 12; and Three Hundred Three Thousand, Nine Hundred Eight Dollars and No Cents ($343,908.00) will be paid on January 1, 1999. In addition, Bandag agrees to pay Li a lump sum of Thirty-Two Thousand, Four Hundred and Fifty-One and No Cents ($32,451.00), less standard income and payroll tax withholdings and deductions, such amount being equal to the pension benefit to which Li would have been entitled had he vested in the Bandag pension plan, with such payment to be made within ten (10) days of the expiration of the revocation period described below in paragraph 12.


3. Health-Care Benefits and COBRA: In further consideration of the covenants undertaken and the release given herein by Li, Bandag agrees to provide Li with three months continuation of CIGNA health care benefits, or to pay Li's premiums for such continued coverage under the Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Bandag will provide Li with these health-care benefits, without regard to whether Li elects benefits pursuant to his rights as set forth in COBRA. Bandag will provide Li with a COBRA notice upon his termination.


4. Housing Allowance: In further consideration of the covenants undertaken and the release given herein by Li, Bandag agrees to pay Li a lump sum housing allowance in the amount of Thirty-Seven Thousand, Four Hundred and Seventy-Seven Dollars and Ninety Cents ($37,477.90), and further agrees to directly pay reasonable utility bills upon receipt from Li. Such payments are to be made within ten (10) days of the expiration of the revocation period described below in paragraph 12.


5. Outplacement: In further consideration of the covenants undertaken and the release given herein by Li, Bandag agrees to reimburse Li for the costs reasonably associated with his outplacement services, in an amount not to exceed Sixty Thousand Dollars and No Cents ($60,000.00). Li agrees to provide Bandag with all invoices associated with these costs, and Bandag's obligation to reimburse Li for such outplacement services is conditioned on Li providing such documentation.


6. Accrued Vacation: Bandag agrees to pay Li his accrued vacation in the amount of Twenty-Seven Thousand Dollars and No Cents ($27,000.00), less standard income and payroll tax withholdings and deductions, with such payment to be made within ten (10) days of the expiration of the revocation period described below in paragraph 12.


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