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                                                                    EXHIBIT 10.1

                                BRADY CORPORATION
                       2005 NONQUALIFIED STOCK OPTION PLAN
                           FOR NON-EMPLOYEE DIRECTORS

1.   PURPOSE.

     The 2005 Stock Option Plan for Non-Employee Directors (the "Plan) is
intended to attract and retain the services of experienced and knowledgeable
non-employee directors of Brady Corporation (the "Corporation") for the benefit
of the Corporation and its shareholders and to provide additional incentive for
such directors to continue to work for the best interest of the Corporation and
its shareholders.

2.   SHARES SUBJECT TO THE PLAN.

     There are reserved for issuance upon the exercise of options granted under
the Plan 300,000 Class A Non-Voting Common Shares $.01 par value, of the
Corporation (the "Stock"). Such Stock may be authorized and unissued Stock or
previously outstanding Stock then held in the Corporation's treasury. If any
option granted under the Plan shall expire or terminate for any reason without
having been exercised in full, the Stock subject to the unexercised portion
thereof shall again be available for the purposes of issuance upon the exercise
of options granted under the Plan.

3.   ADMINISTRATION.

     The Plan shall be administered by the Board of Directors of the Corporation
(the "Board"), which may delegate any or all of its authority to a Committee of
the Board. Subject to the express provisions of the Plan, the Board shall have
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the option
grants and agreements (which shall comply with and be subject to the terms and
conditions of the Plan) and to make all other determinations necessary or
advisable for the administration of the Plan. The Board's determination of the
matters referred to in this Paragraph 3 shall be conclusive.

4.   ELIGIBILITY.

     For purposes of the Plan, "Non-Employee Director" means a member of the
Board who is not an employee of the Corporation or a subsidiary of the
Corporation. After the effective date of the Plan, each Non-Employee Director
who first becomes a Director after July 26, 2005 shall automatically be granted
an option to purchase 10,000 shares of Stock on the first day of such
individual's first term of office as an Non-Employee Director, or if later, the
effective date of the Plan. On the date of each annual meeting of the
shareholders of the Corporation on or subsequent to the effective date of the
Plan, each Non-Employee Director who will continue to serve as an Non-Employee
Director after such annual meeting shall automatically be granted an option to
purchase 6,000 shares of Stock.

     Only non-statutory stock options shall be granted under the Plan.

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5.   OPTION GRANTS.

     (a) The purchase price of the Stock under each option granted under the
Plan shall be 100% of the Fair Market Value of the Stock on the date such option
is granted. For purposes of the Plan "Fair Market Value" on any date shall mean,
with respect to Stock, if the stock is then listed and traded on a registered
national securities exchange, or is quoted in the NASDAQ National Market System,
the average of the high and low sale prices recorded in composite transactions
for such date or, if such date is not a business day or if no sales of the Stock
shall have been reported with respect to such date, the next preceding business
date with respect to which sales were reported. In the absence of reported sales
or if the stock is not so listed or quoted, but is traded in the
over-the-counter market, Fair Market Value shall be the average of the closing
bid and asked prices for such Stock on the relevant date.

     (b) All options shall be exercisable in accordance with the following
schedule:

<TABLE>
<CAPTION>
   Years After
  Date of Grant     Percentage of Shares
-----------------   --------------------
<S>                           <C>
Less than 1                   0%
1 but less than 2          33-1/3%
2 but less than 3          66-2/3%
3 or more                    100%
</TABLE>

          The term of each option shall be ten years from the date of grant, or
such shorter period as is prescribed in Paragraphs 5(c) and 5(d). Except as
provided in Paragraphs 5(c) and 5(d), no option may be exercised at any time
unless the holder is then a director of the Corporation.

     Upon exercise, the option price is to be paid in full in cash or, at the
discretion of the Board, in Stock owned by the optionee having a Fair Market
Value on the date of exercise equal to the aggregate option price or, at the
discretion of the Board, in a combination of cash and Stock.

     (c) All rights under any option shall terminate on the date such
Participant ceases to be a Director of the Corporation, except that (a) if the
Directorship is terminated by the death of the Director, any unexercised,
unexpired Stock Options granted hereunder to the Director shall be 100% vested
and fully exercisable, in whole or in part, at any time within one year after
the date of death, by the Director's personal representative or by the person to
whom the options are transferred under the Director's last will and testament or
the applicable laws of descent and distribution; (b) if the Directorship is
terminated as a result of the disability of the Director (a disability means
that the Director is disabled as a result of sickness or injury, such that he or
she is unable satisfactorily to perform the Director duties, as determined by
the Board of Directors, on the basis of medical evidence satisfactory to it),
any unexercised, unexpired options granted hereunder to the Director shall
become 100% vested and fully exercisable, in whole or in part, at any time
within one year after the date of disability; (c) if the Directorship is
terminated and the Director has been a member of the Board of Directors for at
least three years, any unexercised, unexpired options granted hereunder to the
Director shall become 100% vested and fully exercisable, in whole or in part, at
any time within one year after such date of termination; and (d) if the
Directorship is terminated for any reason other than (a), (b) or (c) above, any
unexercised, unexpired options granted hereunder and exercisable as of the date
of such termination shall be exercisable in whole or in part at any time within
90 days after such date of termination.

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     (d) In the event of (a) a merger, consolidation, or reorganization with
another corporation in which the Corporation is not the surviving corporation or
a merger, consolidation or reorganization with another corporation in which the
Corporation is the surviving corporation, but the Stock ceases to be publicly
traded, (b) the adoption of any plan for the dissolution of the Corporation, or
(c) the sale or exchange of all or substantially all the assets of the
Corporation for cash or for shares of stock or other securities of another
corporation, all then-unexercised options shall become fully exercisable
immediately prior to any such event.

     (e) Nothing in the Plan or in any option granted pursuant to the Plan shall
confer on any individual any right to continue as a director of the Corporation.

6.   TRANSFERABILITY AND SHAREHOLDER RIGHTS OF HOLDERS OF OPTIONS.

     No options granted under the Plan shall be transferable otherwise than by
will or by the laws of descent and distribution, and an option may be exercised,
during the lifetime of an optionee, only by the optionee or optionee's guardian
or legal representative. An optionee shall have none of the rights of a
shareholder of the Corporation until the option has been exercised and the Stock
subject to the option has been registered in the name of the optionee on the
transfer books of the Corporation.

7.   ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

     Notwithstanding any other provisions of the Plan, the number and class of
shares subject to the options and the option prices of options covered thereby
shall be proportionately adjusted in the event of changes in the outstanding
Stock by reason of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, split-ups, split-offs,
spin-offs, liquidations or other similar changes in capitalization, or any
distribution to common shareholders other than cash dividends and, in the event
of any such change in the outstanding Stock, the aggregate number and class of
shares available under the Plan and the number of shares as to which options may
be granted shall be appropriately adjusted by the Board.

8.   AMENDMENT AND TERMINATION.

     Unless the Plan shall theretofore have been terminated as hereinafter
provided, the Plan shall terminate on, and no awards of options shall be made
after, the tenth anniversary of the effective date of the Plan; provided,
however, that such termination shall have no effect on options granted prior
thereto. The Plan may be terminated, modified or amended by the shareholders of
the Corporation. The Board may also terminate the Plan or modify or amend the
Plan in such respects as it shall deem advisable in order to conform to any
change in any law or regulation applicable thereto, or in other respects which
shall not change (i) the total number of shares of Stock as to which options may
be granted, (ii) the class of persons eligible to receive options under the
Plan, (iii) the manner of determining the option prices, (iv) the period during
which options may be granted or exercised or (v) the provisions relating to the
administration of the Plan by the Board.

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9.   WITHHOLDING.

     Upon the issuance of Stock as a result of the exercise of an option, the
Corporation shall have the right to retain or sell without notice sufficient
Stock to cover the amount of any tax required by any government to be withheld
or otherwise deducted and paid with respect to such Stock being issued,
remitting any balance to the optionee; provided, however, that the optionee
shall have the right to provide the Corporation with the funds to enable it to
pay such tax.

10.  EFFECTIVENESS OF THE PLAN.

     The Plan shall become effective on the day following the date the Plan is
approved by the vote of the holders of a majority of the outstanding shares of
the Corporation's Class B Voting Common Stock. The Board may in its discretion
authorize the granting of options which shall be expressly subject to the
conditions that (i) the Stock reserved for issue under the Plan shall have been
duly listed, upon official notice of issuance, upon each stock exchange in the
United States upon which the Stock is traded and (ii) a registration statement
under the Securities Act of 1933 with respect to such shares shall have become
effective.