8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

_________________

Date of Report
(Date of earliest
event reported):	March 23, 2007

Bandag, Incorporated

(Exact name of registrant as specified in its charter)

Iowa	1-7007	42-0802143
(State or other	(Commission File	(IRS Employer
jurisdiction of	Number)	Identification No.)
incorporation)

2905 North Highway 61, Muscatine, Iowa 52761-5886

(Address of principal executive offices, including zip code)

(563) 262-1400

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

_________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[   ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.      Entry Into A Material Definitive Agreement.

        As described in Item 8.01 below, Bandag, Incorporated (referred to as “we,” “us,” “our” or the “company”) and its board of directors have entered into a Memorandum of Understanding, dated as of March 23, 2007 (referred to as the “memorandum of understanding”), whereby the company and its board have agreed in principle to settle the putative class action lawsuit currently pending in the Iowa District Court for Muscatine County, styled Plumbers & Pipefitters Local 572 Pension Fund v. Bandag, Inc., et al. Pursuant to the memorandum of understanding, the company has agreed to amend Section 5.4(d)(iv)(3) of that certain Agreement and Plan of Merger, dated as of December 5, 2006 (referred to as the “merger agreement”), by and among Grip Acquisition Corporation (referred to as “Grip Acquisition”), Bridgestone Americas Holding, Inc. (referred to as “Bridgestone”) and the company, to shorten the time period stated therein from five business days to four business days.

        A copy of the Amendment to the Merger Agreement is attached to this Current Report on Form 8-K as Exhibit 2.1 and is incorporated by reference in this Current Report on Form 8-K.

Item 8.01.      Other Events.

        On March 23, 2007, the company and its board of directors agreed in principle to settle the putative class action lawsuit currently pending in the Iowa District Court for Muscatine County, styled Plumbers & Pipefitters Local 572 Pension Fund v. Bandag, Inc., et al. (referred to as the “complaint”), which challenged the proposed merger of Grip Acquisition with and into the company, with the company continuing as the surviving corporation in the merger and becoming a wholly owned subsidiary of Bridgestone (referred to as the “merger”).

        Under the terms of the proposed settlement, all claims against the company and its board of directors by or on behalf of any member of the settlement class relating to the merger agreement and the proposed merger will be discharged and dismissed with prejudice. The settlement is subject to the successful completion of the merger, including any amendment to the merger agreement and to court approval. As part of the proposed settlement, the company, on behalf of itself and the other defendants in the action, has agreed to pay $610,000 to plaintiff’s counsel for their fees and expenses, subject to final approval of the proposed settlement and such fees by the court.

         In connection with the proposed settlement, the company provided additional disclosures recommended by plaintiff's counsel in its proxy statement dated March 2, 2007 (referred to as the "proxy statement"), and the company agreed to modify and amend the merger agreement to shorten the number of days that Grip Acquisition has to propose amendments to the merger agreement in response to a “superior proposal” from five business days to four business days.

        Information concerning the proposed merger is set forth in, or incorporated by reference into, the proxy statement. The proxy statement is supplemented by, and should be read as part of, and in conjunction with, the following information filed in this current report on Form 8-K:

        1.     The information on pages 5 and 6 and on page 29 of the proxy statement relating to the complaint is supplemented with the information below.

        On December 8, 2006, a purported class action shareholder complaint was filed in the Muscatine County District Court in the State of Iowa (which we refer to as the “complaint”) by Plumbers and Pipefitters Local 572 Pension Fund, seeking to pursue a class action on behalf of all of our shareholders. The complaint names us, Martin G. Carver, our Chairman, President and Chief Executive Officer, and our other directors, Gary E. Dewel, R. Stephen Newman, Roy J. Carver, Jr., James R. Everline, Phillip J. Hanrahan and Amy P. Hutton, as defendants. The complaint alleges, among other things, that our directors breached their fiduciary duties of due care and good faith by failing to solicit bids from other potential bidders and failing to maximize shareholder value and by creating deterrents to third party offers. Among other things, the complaint seeks class action status, and a court order enjoining the consummation of the merger and directing the defendants to take appropriate steps to maximize shareholder value.

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        On March 23, 2007, we and our board of directors agreed in principle to settle the complaint. Under the terms of the proposed settlement, contained in a memorandum of understanding dated March 23, 2007, all claims against us and our board of directors by or on behalf of any member of the settlement class relating to the merger agreement and the merger will be discharged and dismissed with prejudice. In connection with the proposed settlement, we provided additional disclosures recommended by plaintiff’s counsel in the proxy statement dated March 2, 2007, and we agreed to amend the merger agreement to shorten the number of days that Grip Acquisition has to propose amendments to the merger agreement in response to a “superior proposal” from five business days to four business days.

        The memorandum of understanding contemplates, subject to the completion of certain confirmatory discovery by counsel to the plaintiffs, that the parties will enter into a stipulation of settlement. The stipulation of settlement will be subject to customary conditions, including court approval following notice to our shareholders and consummation of the merger. In the event that the parties enter into a stipulation of settlement, a hearing will be scheduled at which the court will consider the fairness, reasonableness and adequacy of the settlement which, if finally approved by the court, will resolve all of the claims that were or could have been brought in the action being settled, including all claims relating to the merger, the merger agreement and any disclosure made in connection therewith. In addition, in connection with the settlement, the parties contemplate that plaintiffs’ counsel will petition the court for an award of attorneys’ fees and expenses to be paid by us. As part of the proposed settlement, we have agreed to pay $610,000 to the plaintiffs’ counsel for their fees and expenses, subject to approval by the court. There can be no assurance that the parties will ultimately enter into a stipulation of settlement or that the court will approve the settlement even if the parties were to enter into such stipulation. In such event, the proposed settlement as contemplated by the memorandum of understanding may be terminated.

        The proposed settlement will not affect the amount of the merger consideration that you are entitled to receive in the merger.

        We and the other defendants vigorously deny all liability with respect to the facts and claims alleged in the lawsuit, and specifically deny that any modifications to the merger agreement or any further supplemental disclosure was required under any applicable rule, statute, regulation or law. However, to avoid the risk of delaying or otherwise imperiling the merger and the related transactions, to minimize the expense of defending the lawsuit, and to provide additional information to our shareholders at a time and in a manner that would not cause any delay of the merger, we and our directors agreed to the settlement described above. We and the other defendants further considered it desirable that the actions be settled to avoid the substantial burden, expense, risk, inconvenience and distraction of litigation and to fully and finally resolve the settled claims.

        2.     The information on pages 39 and 40 of the proxy statement relating to the solicitation of competing proposals is supplemented with the information below.

        The merger agreement provides that we, our subsidiaries and our respective officers and directors will not, and we will cause our and our subsidiaries’ employees, consultants, accountants, legal counsel, investment bankers, agents and other representatives not to, directly or indirectly:

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• initiate, solicit or knowingly encourage (including by way of providing information) or facilitate any inquiries, proposals or offers with respect to, or the making, or the completion of, a “takeover proposal” (as defined below);

• participate or engage in any discussions or negotiations with, or furnish or disclose any non-public information relating to us or any of our subsidiaries to, or otherwise cooperate with or assist any person in connection with a takeover proposal;

• withdraw, modify or amend the recommendation of our board of directors in any manner adverse to Grip Acquisition;

• approve, endorse or recommend any takeover proposal;

• enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement relating to a takeover proposal; or

• resolve, propose or agree to do any of the following.

        However, at any time prior to the approval of the merger agreement by our shareholders, we may:

• engage in discussions or negotiations with a person who has made a written takeover proposal not solicited in violation of our covenants not to solicit competing proposals if, prior to taking such action, (1) we enter into an acceptable confidentiality and standstill agreement with such person and (2) our board of directors determines in good faith (A) after consultation with its financial advisor and outside legal counsel, that such takeover proposal constitutes or is reasonably likely to result in a “superior proposal”) (as defined below) and (B) after consultation with its outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary obligations to our shareholders under applicable laws;

• furnish or disclose any non-public information relating to us or any of our subsidiaries to a person who has made a written takeover proposal not solicited in violation of our covenants not to solicit competing proposals if, prior to taking such action, our board of directors determines in good faith (1) after consultation with its financial advisor and outside legal counsel, that such takeover proposal constitutes or is reasonably likely to result in a superior proposal and (2) after consultation with its outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary obligations to our shareholders under applicable laws, but only so long as we (A) have caused such person to enter into an acceptable confidentiality and standstill agreement and (B) concurrently disclose such non-public information to Grip Acquisition if such non-public information has not previously been disclosed to Grip Acquisition;

• withdraw, modify or amend our board of directors’ recommendation that our shareholders approve the merger agreement in a manner adverse to Bridgestone or Grip Acquisition, if our board of directors has determined in good faith, after consultation with outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary obligations to our shareholders under applicable laws; provided that, if such action is in response to or relates to a takeover proposal, then our board of directors may only change its recommendation that our shareholders approve the merger agreement (which we refer to as a “recommendation change”) after having complied with the provisions in the merger agreement relating to our board of directors’change of recommendation; or

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• in response to a takeover proposal not solicited in violation of our covenants not to solicit competing proposals that our board of directors has determined in good faith, after consultation with its outside financial advisor, constitutes a superior proposal after giving effect to all of the adjustments that may be offered by Grip Acquisition pursuant to the merger agreement, (1) effect a recommendation change or (2) terminate the merger agreement to enter into a definitive agreement with respect to such superior proposal, such termination to be effective only if in advance of or concurrently with such termination we pay a termination fee in the manner provided for in the merger agreement.

        We may not make a recommendation change or terminate the merger agreement unless: (A) our board of directors has determined in good faith, after consultation with outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary obligations to our shareholders under applicable laws, (B) we give Grip Acquisition prompt written notice advising Grip Acquisition of (i) the decision of our board of directors to take such action and (ii) the material terms and conditions of the takeover proposal, including the identity of the party making the takeover proposal and, if available, a copy of the relevant proposed transaction agreements with such party and other material documents, (C) we give Grip Acquisition four business days (or three business days in the event of each subsequent material revision to such takeover proposal) after delivery of such notice to propose revisions to the terms of the merger agreement (or make another proposal) and shall have negotiated in good faith with Grip Acquisition with respect to such proposed revisions or other proposal, if any, and (D) at the end of such period, our board of directors has determined in good faith, after considering the results of such negotiations and giving effect to the proposals made by Grip Acquisition, if any, after consultation with outside legal counsel, that (i) in the case of a recommendation change, failure to take such action would be inconsistent with its fiduciary obligations to our shareholders under applicable laws and (ii) in the case of a termination of the merger agreement, that the takeover proposal remains a superior proposal relative to the merger, as supplemented by any counterproposals made by Grip Acquisition.

        For purposes of the merger agreement, the term “takeover proposal” means any proposal or offer from any person or group of persons other than Bridgestone, Grip Acquisition or their affiliates relating to any direct or indirect acquisition or purchase of (1) a business or division (or more than one of them) that in the aggregate constitutes 15% or more of the net revenues, net income or assets of us and our subsidiaries, taken as a whole, (2) 15% or more of the equity interest in us (by vote or value), (3) any tender offer or exchange offer that if consummated would result in any person or group of persons beneficially owning 15% or more of the equity interest (by vote or value) in us, or (4) any merger, reorganization, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving us (or any of our subsidiaries whose business constitutes 15% or more of the net revenues, net income or assets of us and our subsidiaries, taken as a whole).

        For purposes of the merger agreement, the term “superior proposal” means any bona fide written takeover proposal that our board of directors determines in good faith (after consultation with a financial advisor of nationally recognized reputation, which may be William Blair) to be more favorable (taking into account (1) any legal, financial, regulatory and other aspects of such takeover proposal and the merger and other transactions contemplated by the merger agreement deemed relevant by our board of directors, and (2) the anticipated timing, conditions (including financing conditions) and prospects for completion of such takeover proposal) to our shareholders than the merger and the other transactions contemplated by the merger agreement (taking into account all of the terms of any proposal by Bridgestone to amend or modify the terms of the merger and the other transactions contemplated by the merger agreement), except that the reference to “15%” in the definition of “takeover proposal” shall be deemed to be a reference to “50%.”

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Item 9.01.      Financial Statements and Exhibits.

        The following exhibit is being filed with this Current Report on Form 8-K:

2.1 Amendment to Agreement and Plan of Merger dated March 23, 2007.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

BANDAG, INCORPORATED

(Registrant)

By:  /s/ Warren W. Heidbreder

        Warren W. Heidbreder

        Vice President, Chief Financial Officer

Date: March 27, 2007

BANDAG, INCORPORATED

Exhibit Index to Current Report on Form 8-K

Exhibit Number	Description
2.1	Amendment to Agreement and Plan of Merger dated March 23, 2007.

EX-2.1

Exhibit 2.1

AMENDMENT TO AGREEMENT AND PLAN OF MERGER

        This Amendment (this “Amendment”) to that certain Agreement and Plan of Merger, dated as of December 5, 2006 (the “Merger Agreement”), by and among Grip Acquisition Corporation, an Iowa corporation (“MergerCo”), Bridgestone Americas Holding, Inc., a Nevada corporation (“ParentCo”), and Bandag, Incorporated, an Iowa corporation (the “Company”), is entered into by and among MergerCo, ParentCo and the Company as of March 23, 2007.

RECITALS

        WHEREAS, there is a putative class action lawsuit currently pending in the Iowa District Court for Muscatine County, styled Plumbers & Pipefitters Local 572 Pension Fund v. Bandag, Inc., et al., Case No. EQV017067 (the “Action”), which is purportedly brought on behalf of the shareholders of the Company against the Company and its Board of Directors (collectively, the “Defendants”); and

        WHEREAS, the Action challenges the sale of the Company to ParentCo in accordance with the terms and conditions of the Merger Agreement, pursuant to which ParentCo will acquire the Company for $50.75 per share; and

        WHEREAS, counsel for all parties to the Action have reached an agreement in principle, set forth in that certain Memorandum of Understanding, dated as of March 23, 2007 (the “Memorandum”), providing for the settlement of the Action between and among plaintiff, on behalf of itself and the putative Class (as defined in the Memorandum), and Defendants, on the terms and subject to the conditions set forth in the Memorandum (the “Settlement”); and

        WHEREAS, Defendants, to avoid the costs, disruption and distraction of further litigation, and without admitting, and specifically denying, the validity of any allegations made in the Action, or any liability with respect thereto, have concluded that it is desirable that the claims against them be settled and dismissed on the terms reflected in the Memorandum; and

        WHEREAS, Defendants have agreed as part of the Settlement to amend Section 5.4(d)(iv)(3) of the Merger Agreement to reduce the time period stated therein from five business days to four business days.

AGREEMENT

        NOW, THEREFORE, in consideration of the promises and the mutual agreements herein set forth, the parties hereby agree as follows:

        Section 1. Amendment to Merger Agreement. Section 5.4(d) of the Merger agreement is amended in its entirety to read as follows:

“(d) Notwithstanding the foregoing, the Company shall be permitted, if it has otherwise complied with its obligations under this Section 5.4, but only prior to the satisfaction of the condition set forth in Section 6.1(a), to:

(i) engage in discussions or negotiations with a Person who has made a written Takeover Proposal not solicited in violation of this Section 5.4 if, prior to taking such action, (A) the Company enters into an Acceptable Confidentiality Agreement with such Person and (B) the Company Board determines in good faith (1) after consultation with its financial advisor and outside legal counsel, that such Takeover Proposal constitutes or is reasonably likely to result in a Superior Proposal and (2) after consultation with its outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary obligations to the shareholders of the Company under applicable Laws;

(ii) furnish or disclose any non-public information relating to the Company or any of its Subsidiaries to a Person who has made a written Takeover Proposal not solicited in violation of this Section 5.4 if, prior to taking such action, the Company Board determines in good faith (A) after consultation with its financial advisor and outside legal counsel, that such Takeover Proposal constitutes or is reasonably likely to result in a Superior Proposal and (B) after consultation with its outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary obligations to the shareholders of the Company under applicable Laws, but only so long as the Company (x) has caused such Person to enter into an Acceptable Confidentiality Agreement and (y) concurrently discloses the same such non-public information to MergerCo if such non-public information has not previously been disclosed to MergerCo;

(iii) withdraw, modify or amend the Company Board Recommendation in a manner adverse to MergerCo or ParentCo (a “Recommendation Change”), if the Company Board has determined in good faith, after consultation with outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary obligations to the shareholders of the Company under applicable Laws; provided that, if such action is in response to or relates to a Takeover Proposal, then the Recommendation Change shall be taken only in compliance with Section 5.4(d)(iv);

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(iv) in response to a Takeover Proposal not solicited in violation of this Section 5.4 which the Company Board has determined in good faith, after consultation with its outside financial advisor, constitutes a Superior Proposal after giving effect to all of the adjustments which may be offered by MergerCo pursuant to the provisos to this paragraph, (x) effect a Recommendation Change or (y) terminate this Agreement to enter into a definitive agreement with respect to such Superior Proposal, such termination to be effective only if in advance of or concurrently with such termination the Company pays the Termination Fee in the manner provided for in Section 7.6(a); provided that the Company shall not make a Recommendation Change or terminate this Agreement unless: (1) the Company Board has determined in good faith, after consultation with outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary obligations to the shareholders of the Company under applicable Laws, (2) the Company shall have given MergerCo prompt written notice advising MergerCo of (A) the decision of the Company Board to take such action and (B) the material terms and conditions of the Takeover Proposal, including the identity of the party making such Takeover Proposal and, if available, a copy of the relevant proposed transaction agreements with such party and other material documents, (3) the Company shall have given MergerCo four Business Days (or three Business Days in the event of each subsequent material revision to such Takeover Proposal) after delivery of such notice to propose revisions to the terms of this Agreement (or make another proposal) and shall have negotiated in good faith with MergerCo with respect to such proposed revisions or other proposal, if any, and (4) at the end of such period, the Company Board shall have determined in good faith, after considering the results of such negotiations and giving effect to the proposals made by MergerCo, if any, after consultation with outside legal counsel, that (A) in the case of a Recommendation Change, failure to take such action would be inconsistent with its fiduciary obligations to the shareholders of the Company under applicable Laws and (B) in the case of a termination of this Agreement, that such Takeover Proposal remains a Superior Proposal relative to the Merger, as supplemented by any counterproposals made by MergerCo; provided that, in the event the Company Board does not make the determination referred to in clause (4) of this paragraph but thereafter determines to effect a Recommendation Change or to terminate this Agreement pursuant to this Section 5.4(d)(iv), the procedures referred to in clauses (1) — (4) above shall apply anew and shall also apply to any subsequent withdrawal, amendment or modification.”

        Section 2. Effectiveness and Continued Effectiveness. The amendment to the Merger Agreement set forth in Section 1 above is effective as of the date set forth above. The parties hereto hereby acknowledge and agree that, except as specifically supplemented and amended, changed or modified in Section 1 above, the Merger Agreement shall be unaffected by this Amendment and remain in full force and effect in accordance with its terms.

        Section 3. Execution in Counterparts. This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument.

        Section 4. Defined Terms. Except as otherwise expressly provided herein, or unless the context otherwise requires, all terms used but not defined herein shall have the meanings assigned to them in the Merger Agreement.

        Section 5. Governing Law. This Amendment will be governed by, and construed in accordance with, the laws of the State of Iowa, without giving effect to any applicable principles of conflict of laws that would cause the laws of another State to otherwise govern this Amendment.

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        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year above written.

GRIP ACQUISITION CORPORATION

By: /s/ Saul Solomon

      Name: Saul Solomon

      Title: President

BRIDGESTONE AMERICAS HOLDING, INC.

By: /s/ Saul Solomon

      Name: Saul Solomon

      Title: VP & General Counsel

BANDAG, INCORPORATED

By: /s/ Warren W. Heidbreder

      Name: Warren W. Heidbreder

      Title: Vice President, Chief Financial Officer

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