Document:

Exhibit 10.38

EXHIBIT 10.38

BRADY CORPORATION

2012 OMNIBUS INCENTIVE STOCK PLAN

I. INTRODUCTION

1.01 Purpose. This plan shall be known as the Brady Corporation 2012 Omnibus
Incentive Stock Plan. The purpose of the Plan is to provide an incentive for directors and
employees of Brady Corporation and its Affiliates to improve corporate performance on a long-term
basis, and to attract and retain directors and employees by enabling them to participate in the
future successes of the Corporation, and by associating the long term interests of directors and
employees with those of the Corporation and its shareholders. It is intended that the Plan and its
operation comply with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (or
any successor rule). The Plan is intended to permit the grant of Nonqualified Stock Options,
Incentive Stock Options, shares of Restricted Stock, Restricted Stock Units and shares of
Unrestricted Stock. The proceeds received by the Corporation from the sale of Corporation Stock
pursuant to the Plan shall be used for general corporate purposes.

1.02 Effective Date. The effective date of the Plan shall be September 1, 2011,
subject to approval of the Plan by holders of a majority of the outstanding voting common stock of
the Corporation. Any Award granted prior to such shareholder approval shall be expressly
conditioned upon shareholder approval of the Plan.

1.03 Effect on Prior Plan. After December 31, 2011, no further awards or grants will
be made under the Brady Corporation 2010 Omnibus Incentive Stock Plan or the 2010 Stock Option Plan
for Non-Employee Directors.

II. PLAN DEFINITIONS

For Plan purposes, except where the context clearly indicates otherwise, the following terms
shall have the meanings set forth below:

	 	(a)	 	“Administrator” means the administrator as described in
Section 4.01.

	 
	 	(b)	 	“Affiliates” means any “subsidiary corporation” or
“parent corporation” as such terms are defined in Section 424 of the Code.

	 
	 	(c)	 	“Agreement” means a written agreement (including any
amendment or supplement thereto) between the Corporation and a Participant
specifying the terms and conditions of an Award.

	 
	 	(d)	 	“Award” shall mean the grant of any form of Stock
Option, Restricted Stock, Restricted Stock Units or Unrestricted Stock.

	 
	 	(e)	 	“Board” shall mean the Board of Directors of the
Corporation.

 

 

 

	 	(f)	 	“Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time.

	 
	 	(g)	 	“Committee” shall mean the committee described in
Section 4.01.

	 
	 	(h)	 	“Corporation” shall mean Brady Corporation, a Wisconsin
corporation.

	 
	 	(i)	 	“Corporation Stock” shall mean the Corporation’s Class
A Non-Voting Common Stock, $.01 par value, and such other stock and securities
as may be substituted therefor pursuant to Section 3.02.

	 
	 	(j)	 	“Eligible Individual” shall mean any director or
regular salaried employee of the Corporation or an Affiliate, who satisfies the
requirements of Section 5.01.

	 
	 	(k)	 	“Exercise Period” shall mean the period of time
provided pursuant to Section 6.05 within which a Stock Option may be exercised.

	 
	 	(l)	 	“Fair Market Value” on any date shall mean, with
respect to Corporation 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 (rounding up to the nearest cent) or, if
such date is not a business day or if no sales of Corporation 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 shares on the relevant date.

	 
	 	(m)	 	“Participant” means an Eligible Individual who has been
granted an Award under this Plan.

	 
	 	(n)	 	“Performance Goals” means the performance goals
established by the Administrator prior to the grant of any Award of Stock
Options, Restricted Stock or Restricted Stock Units intended to qualify as
“performance-based compensation” under Section 162(m) of the Code. Performance
Goals may be established at the Company or business unit level and may be based
upon the attainment of goals relating to one or more of the following business
criteria measured on an absolute basis or in terms of growth or reduction:
revenue, expenses, net income (pre-tax or after-tax), earnings per share,
return on equity, return on assets, return on tangible book value, operating
income, earnings before interest, taxes, depreciation and amortization
(EBITDA), loss ratio, expense ratio, increase in stock price, total shareholder
return, economic value added and operating cash flow. The Administrator may
establish other subjective or objective performance goals, including individual
goals, which it deems appropriate. In measuring the degree of

 

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	 	 	 	attainment of a
Performance Goal, Unusual and Unforeseen Charges may be included or excluded as determined by the
Administrator in its discretion or as otherwise provided in an Award
Agreement. “Unusual and Unforeseen Charges” may include but are not limited
to any one of the following events creating positive or negative adjustments
to the attainment of a performance metric so long as the inclusion or
exclusion would not jeopardize the status of the compensation as
“performance-based compensation” under Section 162(m) of the Code: (i)
restructurings, discontinued operations, impairment of goodwill or
long-lived assets, follow on stock offerings, extraordinary items, and other
unusual or non-recurring charges, (ii) an event either not directly related
to the operations of the Corporation or not within the reasonable control of
the Corporation’s management, (iii) the cumulative effects of tax or
accounting changes in accordance with generally accepted accounting
principles, (iv) changes in tax regulations or laws, or (v) the effect of a
merger or acquisition.

	 
	 	(o)	 	“Person” means any individual or entity, and the heirs,
personal representatives, executors, administrators, legal representatives,
successors and assigns of such Person as the context may require.

	 
	 	(p)	 	“Plan” shall mean the Brady Corporation 2012 Omnibus
Incentive Stock Plan, as set forth herein, as it may be amended from time to
time.

	 
	 	(q)	 	“Restricted Stock” means shares of Corporation Stock
granted to a Participant under Article VII.

	 
	 	(r)	 	“Restricted Stock Unit” means an Award granted to a
Participant under Article VIII.

	 
	 	(s)	 	“Stock Option” means an option to purchase a stated
number of shares of Corporation Stock at the price set forth in an Agreement.
A Stock Option may be either a Nonqualified Stock Option or an Incentive Stock
Option.

	 
	 	(t)	 	“Unrestricted Stock” means shares of Corporation Stock
granted to a Participant under Article IX.

III. SHARES SUBJECT TO AWARD

3.01 Available Shares. Subject to adjustments under Section 3.02, the total number of
shares of Corporation Stock authorized for issuance shall not exceed five million five hundred
thousand (5,500,000) shares, all of which may be issued in the form of ISOs. No individual may be
granted an Award or Awards under the Plan covering more than five hundred thousand (500,000) shares
of Corporation Stock in any calendar year (determined without regard to grants under any other plan
or program). The shares authorized for issuance under the Plan may consist, in whole or in part,
of authorized but unissued Corporation Stock, or of treasury stock of the Corporation. Shares
subject to and not issued under an Award that expires, terminates, is canceled or forfeited for any
reason under the Plan shall again become available for the granting of Awards.

 

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3.02 Changes in Corporation Stock. In the event of any change in the Corporation
Stock resulting from a reorganization, recapitalization, stock split, stock dividend, merger,
consolidation, rights offering or like transaction, the Administrator shall proportionately and
appropriately adjust: (a) the aggregate number and kind of shares authorized for issuance under
the Plan; and (b) in the case of previously-granted Stock Options, the option price and the number
and kind of shares subject to the Stock Options, without any change in the aggregate purchase price
to be paid for the Stock Options.

IV. ADMINISTRATION

4.01 Administration. For purposes of the power to grant Awards to directors, the
Administrator shall consist of the entire Board, which may delegate any or all of its authority to
a committee of the Board. For purposes of the power to grant Awards to employees, the
Administrator shall be a committee designated by the Board to administer the Plan and shall
initially be the Compensation Committee of the Board. The Committee shall be constituted to permit
the Plan to comply with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (or
any successor rule) and Section 162(m) of the Code. A majority of the members of the Committee
shall constitute a quorum. The approval of such a quorum, expressed by a majority vote at a
meeting held either in person or by conference telephone call, or the unanimous consent of all
members in writing without a meeting, shall constitute the action of the Committee and shall be
valid and effective for all purposes of the Plan.

4.02 Administrator Powers. Subject to Section 11.06, the Administrator is empowered
to adopt, amend and rescind such rules, regulations and procedures and take such other action as it
shall deem necessary or proper for the administration of the Plan and, in its discretion, may
modify, extend or renew any Award theretofore granted. The Administrator shall also have authority
to interpret the Plan, and the decision of the Administrator on any questions concerning the
interpretation of the Plan shall be final and conclusive. The express grant in the Plan of any
specific power to the Administrator shall not be construed as limiting any power or authority of
the Administrator. The Administrator shall not incur any liability for any action taken in good
faith with respect to the Plan or any Award.

Subject to the provisions of the Plan, the Administrator shall have full and final authority
to:

	 	(a)	 	designate the Eligible Individuals to whom Awards shall be
granted;

	 
	 	(b)	 	grant Awards in such form and amount as the Administrator shall
determine;

	 
	 	(c)	 	impose such limitations, restrictions and conditions upon any
such Award as the Administrator shall deem appropriate, including conditions
(in addition to those contained in this Plan) (i) on the exercisability of all
or any portion of a Stock Option, (ii) on the transferability or forfeitability
of Restricted Stock or (iii) requiring an Eligible Individual to retain all or
a portion of the Corporation Stock for a period of time following the exercise of a Stock Option, the vesting of Restricted Stock or the payment
of Restricted Stock Units;

 

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	 	(d)	 	prescribe the form of Agreement with respect to each Award;

	 
	 	(e)	 	waive in whole or in part any limitations, restrictions or
conditions imposed upon any such Award as the Administrator shall deem
appropriate (including accelerating the time at which any Stock Option may be
exercised or the time at which Restricted Stock may become transferable or
nonforfeitable);

	 
	 	(f)	 	make adjustments in the terms and conditions of a Performance
Goal in recognition of unusual or nonrecurring events affecting the Company or
the financial statements of the Company or of changes in applicable laws,
regulations, or accounting principles, whenever the Administrator determines
that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, provided that no such adjustment shall be authorized to the
extent that such adjustment would be inconsistent with the Plan’s or any
Performance Award meeting the requirements of Section 162(m) of the Code; and

	 
	 	(g)	 	determine the extent to which leaves of absence for
governmental or military service, illness, temporary disability and the like
shall not be deemed interruptions of continuous service.

V. PARTICIPATION

5.01 Eligibility. Any director or employee of the Corporation and its Affiliates who,
in the sole opinion of the Administrator, has contributed or can be expected to contribute to the
profits, growth and success of the Corporation shall be eligible for Awards under the Plan. From
among all such Eligible Individuals, the Administrator shall determine from time to time those
Eligible Individuals to whom Awards shall be granted. No Eligible Individual shall have any right
whatsoever to receive an Award unless so determined by the Administrator.

5.02 No Employment or Service Rights. The Plan shall not be construed as conferring
any rights upon any person for a continuation of employment or service, nor shall it interfere with
the rights of the Corporation or any Affiliates to terminate the employment or service of any
person or to take any other action affecting such person.

VI. STOCK OPTIONS

6.01 Stock Options; General. Stock Options granted under the Plan shall be in the
form of Nonqualified Stock Options (“NSOs”), Incentive Stock Options (“ISOs”) or a combination
thereof; provided that incentive stock options may only be granted to individuals who are employed
by the Corporation or an Affiliate. Each Stock Option granted under the Plan shall be evidenced by
an Agreement which shall contain the terms and conditions required by this Article VI, and such
other terms and conditions, not inconsistent herewith, as the
Administrator may deem appropriate in each case. A Stock Option granted under the Plan shall
not be treated as an Incentive Stock Option unless the Stock Option Agreement specifically
designates the option as an Incentive Stock Option.

 

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6.02 Stock Option Holder’s Rights as a Shareholder. The holder of a Stock Option
shall not have any rights as a shareholder with respect to the shares covered by a Stock Option
until such shares have been delivered to him or her.

6.03 Option Price. The price at which each share of Corporation Stock covered by a
Stock Option may be purchased shall be not less than 100% of the Fair Market Value of such stock on
the date on which the option is granted. The option price shall be subject to adjustment as
provided in Section 3.02 hereof.

6.04 Date Stock Option Granted. For purposes of the Plan, a Stock Option shall be
considered as having been granted on the date on which the Administrator authorized the grant of
the Stock Option except where the Administrator has designated a later date, in which event the
later date shall constitute the date of grant of the Stock Option; provided, however, that notice
of the grant of the Stock Option shall be given to the Participant within a reasonable time.

6.05 Exercise Period. The Administrator shall have the power to set the time or times
within which each Option shall be exercisable, and to accelerate the time or times of exercise;
provided, however, that no Stock Option shall be exercisable after the expiration of ten (10) years
from the date the Stock Option is granted. Each Agreement with respect to a Stock Option shall
state the period or periods of time within which the Stock Option may be exercised by the
Participant, in whole or in part.

Subject to the foregoing, unless the Agreement with respect to a Stock Option expressly provides
otherwise, a Stock Option shall be exercisable in accordance with the following schedule:

	 	 	 	 	 
	Years After	 	 	 
	Date of Grant	 	Percentage of Shares	 
	 
	 	 	 	 
	Less than 1
	 	 	0	%
	 
	 	 	 	 
	1 but less than 2
	 	 	33-1/3	%
	 
	 	 	 	 
	2 but less than 3
	 	 	66-2/3	%
	 
	 	 	 	 
	3 or more
	 	 	100	%

6.06 Method of Exercise. Subject to Section 6.05, each Stock Option may be exercised
in whole or in part from time to time as specified in the Agreements provided, however, that each
Participant may exercise a Stock Option in whole or in part by giving written notice of the
exercise to the Corporation, specifying the number of shares to be purchased by payment in full of
the purchase price therefor. The purchase price may be paid (a) in cash, (b) by check, (c) with the
approval of the Administrator, or if the applicable Agreement so provides, by delivering shares of
Corporation Stock (“Delivered Stock”), (d) by surrendering to the Corporation shares
of Corporation Stock otherwise receivable upon exercise of the Stock Option (a “Net
Exercise”), or (e) any combination of the foregoing. For purposes of the foregoing, Delivered
Stock shall be valued at its Fair Market Value determined as of the business day immediately
preceding the date of exercise of the Stock Option and shares of Corporation Stock used in a Net
Exercise shall be valued at their Fair Market Value determined as of the date of exercise of the
Stock Option. No Participant shall be under any obligation to exercise any Stock Option hereunder.

 

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6.07 Dissolution or Liquidation. Anything contained herein to the contrary
notwithstanding, on the effective date of any dissolution or liquidation of the Corporation, any
unexercised Stock Options shall be deemed cancelled, and the holder of any such unexercised Stock
Options shall be entitled to receive payment under Section 12.04.

6.08 Special Rules for Incentive Stock Options. For so long as Section 422 ( or any
successor provision) of the Code so provides:

	 	(a)	 	The aggregate Fair Market Value of Corporation Stock
(determined as of the date the stock option is granted) with respect to which
ISOs are exercisable for the first time during a calendar year may not exceed
$100,000. To the extent that the value of the stock subject to options exceeds
that amount, the excess shall be considered to be NSOs, with the determination
to be made in the order the options are granted.

	 
	 	(b)	 	Employees who own, directly or indirectly, within the meaning
of Code Section 425(d), more than 10% of the voting power of all classes of
stock of the Corporation or any parent or subsidiary corporation shall not be
eligible to receive an ISO hereunder unless the purchase price per share under
such option is at least 110% of the Fair Market Value of the stock subject to
the option and such option by its terms is not exercisable after the expiration
of five (5) years from the date such option is granted

	 
	 	(c)	 	To obtain favorable ISO tax treatment, the option must be
exercised while the Participant is an employee, or within three months after
the Participant’s termination as an employee; provided that, in the case of
termination on account of disability (as defined in Section 22(e)(3) of the
Code), the exercise period may be extended to one year; and further provided
that the employment requirement is waived in the case of the participant’s
death.

VII. RESTRICTED STOCK

7.01 Administration. Shares of Restricted Stock may be issued either alone or in
addition to other Awards granted under the Plan. The Administrator shall determine the Eligible
Individuals to whom and the time or times at which grants of Restricted Stock will be made, the
number of shares to be granted, the time or times within which such Awards may be subject to
forfeiture or otherwise restricted and any other terms and conditions of the Awards. The
restrictions may be based upon specified Performance Goals, the Participant’s continued service
with the Corporation or its Affiliates or such other factors or criteria as the Administrator shall
determine. Subject to Sections 7.02 and 7.03 hereof the provisions of Restricted Stock Awards
need not be the same with respect to each recipient.

 

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7.02 Terms and Conditions. Shares of Restricted Stock shall be subject to the
following terms and conditions:

	 	(a)	 	Any Restricted Stock Award granted hereunder may be evidenced
in such manner as the Administrator may deem appropriate, including, without
limitation, book-entry registration or issuance of a stock certificate or
certificates.

	 
	 	(b)	 	Until the applicable restrictions lapse, the Participant shall
not be permitted to sell, assign, transfer, exchange, pledge, hypothecate or
otherwise dispose of or encumber shares of Restricted Stock.

	 
	 	(c)	 	Unless and until a forfeiture of the Restricted Stock, the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a shareholder of the Corporation, including the right to vote the
 shares (if applicable) and the right to receive any cash dividends. Unless
otherwise determined by the Administrator, cash dividends shall be
automatically paid in cash and dividends payable in Corporation Stock shall be
paid in the form of additional Restricted Stock.

	 
	 	(d)	 	Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and (e) below, all shares still subject to
restriction shall be forfeited by the Participant upon termination of a
Participant’s service for any reason.

	 
	 	(e)	 	In the event of hardship or other special circumstances of a
Participant whose service is involuntarily terminated (other than for cause),
the Administrator may waive in whole or in part any or all remaining
restrictions with respect to such Participant’s shares of Restricted Stock.

	 
	 	(f)	 	If and when the applicable restrictions lapse, unlegended
certificates for such shares shall be delivered to the Participant.

	 
	 	(g)	 	Each Award shall be confirmed by, and be subject to the terms
of, a Restricted Stock Agreement.

VIII. RESTRICTED STOCK UNITS

8.01 Administration. Restricted Stock Units may be issued either alone or in addition
to other Awards granted under the Plan. The Administrator shall determine the Eligible Individuals
to whom and the time or times at which grants of Restricted Stock Units will be made, the number of
units to be granted, the time or times within which such Awards may be subject to forfeiture or
otherwise restricted and any other terms and conditions of the Awards. The restrictions may be
based upon specified Performance Goals, the Participant’s continued service with the Corporation or
its Affiliates or such other factors or criteria as the Administrator
shall determine. The provisions of Restricted Stock Awards need not be the same with respect
to each recipient.

 

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8.02 Form and Timing of Payment of Restricted Stock Units. Timing of payment of
earned Restricted Stock Units shall be determined by the Administrator at its sole discretion. The
Administrator, in its sole discretion, may pay earned Restricted Stock Units in the form of cash or
in shares of Corporation Stock (or in a combination thereof), which have an aggregate Fair Market
Value equal to the value of the earned Restricted Stock Units.

IX. UNRESTRICTED STOCK

9.01 Administration. Shares of Unrestricted Stock may be issued either alone or in
addition to other Awards granted under the Plan. The Administrator shall determine the Eligible
Individuals to whom and the time or times at which grants of Unrestricted Stock will be made, the
number of shares to be granted, and any other terms and conditions of the Awards. It is
anticipated that shares of Unrestricted Stock will only be granted to directors.

X. WITHHOLDING TAXES

10.01 General Rule. Pursuant to applicable federal and state laws, the Corporation is
or may be required to collect withholding taxes upon the exercise of a Stock Option or the lapse of
stock restrictions. The Corporation may require, as a condition to the exercise of a Stock Option
or the issuance of a stock certificate, that the Participant concurrently pay to the Corporation
(either in cash or, at the request of Participant, but subject to such rules and regulations as the
Administrator may adopt from time to time, in shares of Delivered Stock) the entire amount or a
portion of any taxes which the Corporation is required to withhold by reason of such exercise or
lapse of restrictions, in such amount as the Administrator or the Corporation in its discretion may
determine. If and to the extent that withholding of any federal, state or local tax is required in
connection with the exercise of an Option or the lapse of stock restrictions, the Participant may,
subject to such rules and regulations as the Corporation may adopt from time to time, elect to have
the Corporation hold back from the shares to be issued upon the exercise of the Stock Option or the
lapse of stock restrictions, the number of shares of Corporation Stock having a Fair Market Value
equal to such withholding obligation.

10.02 Special Rule for Insiders. Any such request or election (to satisfy a
withholding obligation using shares) by an individual who is subject to the provisions of Section
16 of the Securities Exchange Act of 1934 (an “Insider”) shall be made in accordance with the rules
and regulations of the Securities and Exchange Commission promulgated thereunder.

XI. GENERAL

11.01 Nontransferability. No Award granted under the Plan shall be transferable or
assignable (or made subject to any pledge, lien, obligation or liability of a Participant) except
by last will and testament or the laws of descent and distribution. Upon a transfer or assignment
pursuant to a Participant’s last will and testament or the laws of descent and distribution, any
Stock Option must be transferred in accordance therewith. During the Participant’s lifetime, Stock
Options shall be exercisable only by the Participant or by the Participant’s guardian or legal
representative. Notwithstanding the foregoing, NSOs may be transferred by a Participant
to the Participant’s spouse, children or grandchildren or to a trust for the benefit of such
spouse, children or grandchildren; provided that the terms of any such transfer prohibit the resale
of shares acquired upon exercise of the option at a time during which the transferor would not be
permitted to sell such shares under the Corporation’s policy on trading by insiders.

 

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11.02 General Restriction. Each Award shall be subject to the requirement that if at
any time the Board or the Committee shall determine, in its discretion, that the listing,
registration, or qualification of securities upon any securities exchange or under any state or
federal law, or the consent or approval of any government regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such Stock Option or the issue
or purchase of securities thereunder, such Stock Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board or the Committee. The Administrator
shall have the right to rely on an opinion of its counsel as to whether any such listing,
registration, qualification, consent or approval shall have been effected or obtained.

11.03 Effect of Termination of Service, Disability or Death. Except as otherwise
provided by the Administrator upon any Award, all rights under any Stock Option granted to a
Participant shall terminate and any Restricted Stock or Restricted Stock Unit granted to a
Participant shall be forfeited on the date such Participant’s service with the Corporation or its
subsidiaries terminates, except that

	 	(a)	 	if the Participant’s service is terminated by the death of the
Participant, any unexercised, unexpired Stock Options granted hereunder to the
Participant 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 Participant’s personal
representative or by the person to whom the Stock Options are transferred under
the Participant’s last will and testament or the applicable laws of descent and
distribution;

	 
	 	(b)	 	if the Participant dies within 90 days after termination of
service by the Corporation or its Affiliates, other than for cause, any
unexercised, unexpired Stock Options granted hereunder to the Participant and
exercisable as of the date of such termination of service shall be exercisable,
in whole or in part, at any time within one year after the date of death, by
the Participant’s personal representative or by the person to whom the Stock
Options are transferred under the Participant’s last will and testament or the
applicable laws of descent and distribution;

	 
	 	(c)	 	if the Participant’s service is terminated as a result of the
disability of the Participant (a disability means that the Participant is
disabled as a result of sickness or injury, such that he or she is unable to
satisfactorily perform the material duties of his or her job, as determined by
the Board of Directors, on the basis of medical evidence satisfactory to it),
any unexercised, unexpired Stock Options granted hereunder to the Participant
shall become 100% vested and fully exercisable, in whole or in part, at any
time within one year after the date of disability;

 

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	 	(d)	 	Notwithstanding (a), (b), or (c) if a director’s service
terminates for any reason after serving on the Board for at least three years
or an employee’s service is terminated as a result of the Participant’s
retirement (after age 55 with ten years of service with the Corporation or an
Affiliate or after age 65), any unexercised, unexpired Stock Options granted
hereunder to the Participant shall continue to vest as provided in Section 6.05
hereof and any Stock Option that is or becomes vested may be exercised in whole
or in part prior to the expiration date of such Stock Option; and

	 
	 	(e)	 	if the Participant’s service is terminated by the Company or an
Affiliate for any reason other than the Participant’s death, disability or
retirement of the Participant or for cause, any unexercised, unexpired Stock
Options granted hereunder and exercisable as of the date of such termination of
service shall be exercisable in whole or in part at any time within 90 days
after such date of termination.

If a Participant’s service is terminated for cause (as determined by the Administrator in its sole
discretion), all of the Participant’s unexercised Stock Options shall expire and all of the
Participant’s Restricted Stock and Restricted Stock Units shall be forfeited. Notwithstanding the
foregoing, no Stock Option shall be exercisable after the date of expiration of its term.

11.04 Merger, Consolidation or Reorganization. In the event of (a) the merger or
consolidation of the Corporation with or into another corporation or corporations in which the
Corporation is not the surviving corporation, (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 Stock Options shall become fully exercisable, and all restrictions imposed on any
then-Restricted Stock and Restricted Stock Units shall terminate (such that any Restricted Stock
shall become fully transferable) immediately prior to any such merger or consolidation in which the
Corporation is not the surviving corporation. The Administrator may elect to cancel any
then-unexercised Stock Options. If any Stock Option is canceled, the Corporation, or the
corporation assuming the obligations of the Corporation hereunder, shall pay the Participant an
amount of cash or stock, as determined by the Administrator, equal to the Fair Market Value per
share of the Corporation Stock immediately preceding such cancellation over the option price,
multiplied by the number of shares subject to such cancelled Stock Option.

11.05 Expiration and Termination of the Plan. This Plan shall remain in effect until
all of the Awards made under the Plan have been exercised, the restrictions thereon have lapsed or
the Awards have expired, terminated, or been canceled or forfeited. Notwithstanding the foregoing,
no Awards shall be granted under the Plan, after that date which is ten years after the Plan is
approved by the Board; or such earlier date as the Board determines in its sole discretion.

11.06 Amendments. The Board may from time to time amend, modify, suspend or terminate
the Plan; provided, however, that no such action shall (a) impair without the Participant’s consent
any Award theretofore granted under the Plan or deprive any Participant of any shares of
Corporation Stock which he may have acquired through or as a result of the Plan or
(b) be made without shareholder approval where such approval would be required as a condition
of compliance with Rule 16b-3.

 

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11.07 Wisconsin Law. Except as otherwise required by applicable federal laws, the
Plan shall be governed by, and construed in accordance with, the laws of the State of Wisconsin.

11.08 Unfunded Plan. The Plan, insofar as it provides for Awards, shall be unfunded
and the Corporation shall not be required to segregate any assets that may at any time be
represented by Awards under this Plan. Any liability of the Corporation to any Person with respect
to any Award under this Plan shall be based solely upon any contractual obligations that may be
created pursuant to this Plan. No such obligation of the Corporation shall be deemed to be secured
by any pledge of, or other encumbrance on, any property of the Corporation.

11.09 Rules of Construction. Headings are given to the articles and sections of this
Plan solely as a convenience to facilitate reference. The reference to any statute, regulation, or
other provision of law shall be construed to refer to any amendment to or successor of such
provision of law.

11.10 Gender and Number. Except when otherwise required by the context, words in the
masculine gender shall include the feminine, the singular shall include the plural, and the plural
the singular.

11.11 Deferral. The Administrator may, in its discretion and as provided in the
applicable Award Agreement, permit a Participant to defer the recognition of income with respect to
an Award pursuant to the terms of any deferred compensation plan maintained by the Corporation.

11.12 Section 409A Compliance. To the extent applicable, it is intended that the
Plan and all Awards hereunder comply with the requirements of Section 409A of the Code, and the
Plan and all Agreements shall be interpreted and applied by the Administrator in a manner
consistent with this intent in order to avoid the imposition of any additional tax under Section
409A of the Code. In the event that any provision of the Plan or an Agreement is determined by the
Administrator to not comply with the applicable requirements of Section 409A of the Code, the
Administrator shall have the authority to take such actions and to make such changes to the Plan or
an Agreement as the Administrator deems necessary to comply with such requirements, provided that
no such action shall adversely affect any outstanding Award without the consent of the affected
Participant.

 

-12-Exhibit 10.39

EXHIBIT 10.39

BRADY CORPORATION

NONQUALIFIED STOCK OPTION

Upon management’s recommendation, the Compensation Committee (the “Committee”) of the Brady
Corporation Board of Directors has awarded to XXXXXX (“Employee”) a non-qualified stock option (the
“Option”) effective XXXXXXX, pursuant to the terms of the Brady Corporation 2012 Omnibus Incentive
Stock Plan (the “Plan”). The Corporation’s records shall be the official record of the Option
grant described herein and, in the event of any conflict between this description and the
Corporation’s records, the Corporation’s records shall control.

	1.	 	Number of Shares Optioned; Option Price

The Corporation grants to the Employee the right and option to purchase, on the terms and
conditions hereof, all or any part of an aggregate of XXXXXX shares of the presently
authorized Class A Common Stock of the Corporation, $.01 par value, whether unissued or
issued and reacquired by the Corporation, at the price of $XXXX per share (the “Option
Price”).

	2.	 	Conditions of Exercise of Options During Employee’s Lifetime; Vesting of Option

Except as provided in this paragraph and in paragraph 3, this Option may not be exercised
(a) unless Employee is at the date of the exercise in the employ of the Corporation or a
Subsidiary, and (b) until Employee shall have been continuously so employed for a period of
at least one year from the date hereof. Thereafter, this Option shall be exercisable for
any amount of shares up to the maximum percentage of shares covered by this Option (rounded
up to the nearest whole share), as follows (but in no event shall this Option be exercisable
for any shares after the expiration date provided in paragraph 7):

	 	 	 	 	 
	 	 	Maximum	 
	 	 	Percentage	 
	 	 	of Shares For	 
	Number of Completed Years After	 	Which Option is	 
	Date of Grant of this Option	 	Exercisable	 
	 
	 	 	 	 
	Less than 1
	 	Zero	 
	At least 1 but less than 2
	 	 	33-1/3	%
	At least 2 but less than 3
	 	 	66-2/3	%
	At least 3
	 	 	100	%

If Employee shall cease to be employed by the Corporation or a Subsidiary for any reason
other than as provided in paragraph 3 after Employee shall have been continuously so
employed for one year after the grant of this Option, Employee may, at any time within 90
days of such termination, but in no event later than the date of
expiration of this Option, exercise this Option to the extent Employee was entitled to do so
on the date of such termination. However, if Employee was dismissed for cause, of which the
Committee shall be the sole judge, this Option shall forthwith expire. This Agreement does
not confer upon Employee any right of continuation of employment by the Corporation or a
Subsidiary, nor does it impair any right the Corporation or any Subsidiary may have to
terminate the Employee’s employment at any time.

 

 

	3.	 	Termination of Employment

Notwithstanding the provisions of paragraph 2 hereof, if the Employee:

	 	(a)	 	is terminated by the death of the Employee, any unexercised, unexpired Stock
Options granted hereunder to the Employee 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
Employee’s personal representative or by the person to whom the Stock Options are
transferred under the Employee’s last will and testament or the applicable laws of
descent and distribution;

	 
	 	(b)	 	dies within 90 days after termination of employment by the Corporation or its
Affiliates, other than for cause, any unexercised, unexpired Stock Options granted
hereunder to the Employee and exercisable as of the date of such termination of
employment shall be exercisable, in whole or in part, at any time within one year after
the date of death, by the Employee’s personal representative or by the person to whom
the Stock Options are transferred under the Employee’s last will and testament or the
applicable laws of descent and distribution;

	 
	 	(c)	 	is terminated as a result of the disability of the Employee (a disability means
that the Employee is disabled as a result of sickness or injury, such that he or she is
unable to satisfactorily perform the material duties of Employee’s job, as determined
by the Board of Directors, on the basis of medical evidence satisfactory to it), any
unexercised, unexpired Stock Options granted hereunder to the Employee shall become
100% vested and fully exercisable, in whole or in part, at any time within one year
after the date of disability; or

	 
	 	(d)	 	is terminated as a result of the Employee’s retirement (after age 55 with ten
years of employment with the Corporation or an Affiliate or after age 65), any
unexercised, unexpired Stock Options granted hereunder to the Employee shall continue
to vest as provided in paragraph 2 hereof and any option that is or becomes vested may
be exercised in whole or in part prior to the expiration date of such option.

	4.	 	Deferral of Exercise

Although the Corporation intends to exert its best efforts so that the shares purchasable
upon the exercise of this Option will be registered under, or exempt from, the registration
requirements of, the Securities Act of 1933 (the “Act”) and any applicable state securities
law at the time or times this Option (or any portion of this Option) first becomes
exercisable, if the exercise of this Option would otherwise result in a violation by the
Corporation of any provision of the Act or of any state securities law, the Corporation may
require that such exercise be deferred until the Corporation has taken appropriate action to
avoid any such violation.

 

-2-

 

	5.	 	Method of Exercising Option

This Option shall be exercised by delivering to the Corporation, at the office of its
Treasurer, a written notice of the number of shares with respect to which this Option is at
the time being exercised and by paying the Corporation in full the Option Price of the
 shares being acquired at the time.

	6.	 	Method of Payment

Payment shall be made either (i) in cash; (ii) by delivering shares of the Corporation’s
Class A Common Stock which have been beneficially owned by the Employee, the spouse of the
Employee, or both of them, for a period of at least six months prior to the time of exercise
(“Delivered Stock”); (iii) by surrendering to the Corporation shares of Class A Common Stock
otherwise receivable upon exercise of the Option (a “Net Exercise”); or (iv) any combination
of the foregoing. Payment in the form of Delivered Stock shall be in the amount of the Fair
Market Value of the stock at the date of exercise, determined in accordance with paragraph
9.

	7.	 	Expiration Date

This Option shall expire ten years after the date on which this Option was granted.

	8.	 	Withholding Taxes

The Corporation may require, as a condition to the exercise of this Option, that the
Employee concurrently pay to the Corporation any taxes which the Corporation is required to
withhold by reason of such exercise. In lieu of part or all of any such payment, the
Employee may elect, subject to such rules and regulations as the Committee may adopt from
time to time, to have the Corporation withhold from the shares to be issued upon exercise
that number of shares having a Fair Market Value, determined in accordance with paragraph 9,
equal to the amount which the Corporation is required to withhold.

	9.	 	Method of Valuation of Stock

The “Fair Market Value” of the Class A Common Stock of the Corporation on any date shall
mean, 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 sales
price recorded in composite transactions for such date or, if such date is not a business
day or if no sales of shares 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 shares on the relevant date.

 

-3-

 

	10.	 	No Rights in Shares Until Certificates Issued

Neither the Employee nor his heirs nor his personal representative shall have any of the
rights or privileges of a stockholder of the Corporation in respect of any of the shares
issuable upon the exercise of the Option herein granted, unless and until certificates
representing such shares shall have been issued or shares in book entry form shall have been
recorded in the records of the Corporation’s transfer agent.

	11.	 	Option Not Transferable

No portion of the Option granted hereunder shall be transferable or assignable (or made
subject to any pledge, lien, obligation or liability of an Employee) except (a) by last will
and testament or the laws of descent and distribution (and upon a transfer or assignment
pursuant to an Employee’s last will and testament or the laws of descent and distribution,
any Option must be transferred in accordance therewith); (b) during the Employee’s lifetime,
nonqualified stock Options may be transferred by an Employee to the Employee’s spouse,
children or grandchildren or to a trust for the benefit of such spouse, children or
grandchildren, provided that the terms of any such transfer prohibit the resale of shares
acquired upon exercise of the option at a time during which the transferor would not be
permitted to sell such shares under the Corporation’s policy on trading by insiders.

	12.	 	Prohibition Against Pledge, Attachment, Etc.

Except as otherwise herein provided, the Option herein granted and the rights and privileges
pertaining thereto shall not be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to execution, attachment
or similar process.

	13.	 	Changes in Stock

In the event there are any changes in the Class A Common Stock of the Corporation through
merger, consolidation, reorganization, recapitalization, stock dividend, stock split,
combination or exchange of shares, rights offering or any other change affecting the Class A
Common Stock of the Corporation, appropriate changes will be made by the Committee in the
aggregate number of shares and the purchase price and kind of shares subject to this Option,
to prevent substantial dilution or enlargement of the rights granted to or available for
Employee.

 

-4-

 

	14.	 	Dissolution or Merger

Anything contained herein to the contrary notwithstanding, upon the dissolution or
liquidation of the Corporation, or upon any merger in which the Corporation is not the
surviving corporation, at any time prior to the expiration date of the termination of this
Option, the Employee shall have the right within 60 days prior to the effective date of
such dissolution, liquidation or merger, to surrender all or any unexercised portion of this
Option to the Corporation for cash, subject to the discretion of the Committee as to the
exact timing of said surrender. Notwithstanding the foregoing, however, in the event
Employee has retired or died, Employee’s right to surrender all or any unexercised portion
of this Option under this paragraph shall be available only to the extent that at the time
of any such surrender, Employee would have been entitled to exercise this Option under
paragraphs 2 or 3 hereof, as the case may be. The amount of cash to be paid to Employee for
the portion of this Option so surrendered, shall be equal to the number of shares of Class A
Common Stock subject to the surrendered Option multiplied by the difference between the
Option Price per share, as described in paragraph 1 hereof, and the Fair Market Value per
share, determined in accordance with paragraph 9 hereof, as of the time of surrender.

	15.	 	Notices

Any notice to be given to the Corporation under the terms of this Agreement shall be
addressed to the Corporation in care of its Chief Financial Officer, and any notice to be
given to the Employee may be addressed at the address as it appears on the Corporation’s
records, or at such other address as either party may hereafter designate in writing to the
other. Except as provided in paragraph 5 hereof, any such notice shall be deemed to have
been duly given, if and when enclosed in a properly sealed envelope addressed as aforesaid,
and deposited, postage prepaid, in the United States mail.

	16.	 	Provisions of Plan Controlling

This Option is subject in all respects to the provisions of the Plan. In the event of any
conflict between any provisions of this Option and the provisions of the Plan, the
provisions of the Plan shall control, except to the extent the Plan permits the Committee to
modify the terms of an Option grant and has done so herein. Terms defined in the Plan where
used herein shall have the meanings as so defined. Employee acknowledges receipt of a copy
of the Plan.

	17.	 	Wisconsin Contract

This Option has been granted in Wisconsin and shall be construed under the laws of that
state.

 

-5-

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