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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.

<PAGE>

     (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.

<PAGE>

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.<PAGE>
                                                                    EXHIBIT 10.2

                                BRADY CORPORATION
                  DIRECTOR NONQUALIFIED STOCK OPTION AGREEMENT

     Option granted on ___________, ____, by Brady Corporation, a Wisconsin
corporation (hereinafter called the "Company"), to _____________________
(hereinafter called the "Director").

                                   WITNESSETH:

     WHEREAS, the Board of Directors of the Company, desiring to attract and
retain the services of experienced directors and to provide additional incentive
for such directors to continue to work for the best interest of the Company and
its shareholders, adopted the Brady Corporation 2005 Nonqualified Stock Option
Plan for Non-Employee Directors on November 17, 2005 ("the Plan");

     NOW, THEREFORE, it is agreed as follows:

     1. NUMBER OF SHARES OPTIONED; OPTION PRICE. The Company grants to the
Director the right and option to purchase, on the terms and conditions hereof,
all or any part of an aggregate of ____________ (_______) shares of the
presently authorized Class A Common Stock of the Company, $.01 par value,
whether unissued or issued and reacquired by the Company, at the price of
__________ Dollars and __________________ Cents (_________) per share (the
"Option Price").

     2. CONDITIONS OF EXERCISE OF OPTIONS DURING DIRECTOR'S LIFETIME; VESTING OF
OPTION. Except as provided hereinafter in this paragraph and in paragraph 3,
this Option may not be exercised (a) unless Director is at the date of the
exercise a Director of the Company and (b) until Director shall have been
continuously a Director 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):

<TABLE>
<CAPTION>
Number of Completed Years of             Maximum Percentage
Continuous Directorship with Company    of Shares for Which
After Date of Grant of this Option     Option is Exercisable
------------------------------------   ---------------------
<S>                                    <C>
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%
</TABLE>

     If Director shall cease to be a Director of the Company for any reason
(except death or disability, or if the Director has been a member of the Board
of Directors for at least three years)

                                        1

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after Director shall have been continuously a Director for one year after the
grant of this Option, Director may, at any time within three months of such
termination, but in no event later than the date of expiration of this Option,
exercise this Option to the extent Director was entitled to do so on the date of
such termination. This Agreement does not confer upon Director any right to
continue as a Director of the Company.

     3. TERMINATION OF EMPLOYMENT, ETC. A. Notwithstanding the provisions of
paragraph 2 hereof, in the event of the termination of the Directorship with the
Company prior to _______, ________ [third anniversary of grant date], due to
death or disability, or if the Director has been a member of the Board of
Directors for at least three years, this Option shall become 100% vested and
fully exercisable.

     For purposes of this Agreement, "Disability" means that the Director is
disabled as a result of sickness or injury, such that he is unable
satisfactorily to perform the Director's duties as determined by the Board of
Directors, on the basis of medical evidence satisfactory to it.

     B. If the Directorship is terminated by the death of the Director, any
unexercised, unexpired Stock Options granted hereunder to the Director shall be
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
Stock Options are transferred under the Director's last will and testament or
the applicable laws of descent and distribution. If the Directorship is
terminated as a result of the disability of the Director, any unexercised,
unexpired Stock Options granted hereunder to the Director shall be exercisable,
in whole or in part, at any time within one year after the date of disability.
If the Directorship is terminated after the Director has been a member of the
Board for at least three years, any unexercised, unexpired Stock Options granted
hereunder to the Director shall be exercisable, in whole or in part, at any time
within one year after the date of termination.

     C. In the event of (a) the merger or consolidation of the Company with or
into another corporation or corporations in which the Company is not the
surviving corporation, (b) the adoption of any plan for the dissolution of the
Company, or (c) the sale or exchange of all or substantially all the assets of
the Company for cash or for shares of stock or other securities of another
corporation, this Option shall become fully vested and exercisable immediately
prior to any such event in which the Company is not the surviving corporation.

     4. DEFERRAL OF EXERCISE. Although the Company 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 Federal
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 the
violation by the Company of any provision of the Act or of any state securities
law, the Company may require that such exercise be deferred until the Company
has taken appropriate action to avoid any such violation.

     5. METHOD OF EXERCISING OPTION. This Option shall be exercised by
delivering to the Company, 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 Company in full the Option Price of the shares being
acquired at the time.

                                        2

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     6. METHOD OF PAYMENT. Payment shall be made either (i) in cash or (ii) by
delivering shares of the Company's Class A Common Stock which have been
beneficially owned by the Director, the spouse of the Director, or both of them,
for a period of at least six months prior to the time of exercise ("Delivered
Stock") or (iii) by delivering a combination of cash and Delivered Stock.
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 Company may require payment of or withhold any
tax which it believes is payable as a result of the exercise of this Option, and
the Company may defer making delivery with respect to the shares until
arrangements satisfactory to the Company have been made with regard to any such
withholding obligations. In lieu of part or all of any such payment, the
Director, in satisfaction of all withholding taxes (including, without
limitation, Federal income, FICA (Social Security and Medicare) and any state
and local income taxes) payable as a result of such exercise, may elect, subject
to such rules and regulations as the Company may adopt from time to time, to
have the Company withhold that number of shares (valued at Fair Market Value on
the date of exercise and rounded upward) required to settle such withholding
taxes.

     9. METHOD OF VALUATION OF STOCK. The "Fair Market Value" of the Class A
Common Stock of the Company 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 sale prices
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.

     10. NO RIGHTS IN SHARES UNTIL CERTIFICATES ISSUED. Neither the Director nor
his heirs nor his personal representative shall have any of the rights or
privileges of a stockholder of the Company 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.

     11. OPTION NOT TRANSFERABLE DURING DIRECTOR'S LIFETIME. This Option shall
not be transferable by the Director other than by his will or by the laws of
descent and distribution and shall be exercisable during his lifetime only by
him.

     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 Company through merger, consolidation, reorganization,
recapitalization, stock

                                        3

<PAGE>

dividend, stock split, combination or exchange of shares, rights offering or any
other change affecting the Class A Common Stock of the Company, appropriate
changes shall be made by the Board of Directors of the Company, 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 Director.

     14. DISSOLUTION OR MERGER. Anything contained herein to the contrary
notwithstanding, upon the dissolution or liquidation of the Company, or upon any
merger in which the Company is not the surviving corporation, at any time prior
to the expiration date of the termination of this Option, the Director shall
have the right immediately prior to the effective date of such dissolution,
liquidation or merger, to surrender all or any unexercised portion of this
Option to the Company for cash, subject to the discretion of the Board of
Directors as to the exact timing of said surrender. Notwithstanding the
foregoing, however, in the event Director has retired or died, Director'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,
Director 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 Director 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 Company under the terms of this
Agreement shall be addressed to the Company in care of its Vice President and
Chief Financial Officer, and any notice to be given to the Director may be
addressed at the address as it appears on the Company's records, or at such
other address as either party may hereafter designate in writing to the other.
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. Terms defined in the Plan where used herein shall have the
meanings as so defined. Director 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.

                                        4

<PAGE>

     IN WITNESS WHEREOF, the Company has caused these presents to be executed on
its behalf by its President and to be sealed with its corporate seal, and
attested by its Secretary and the Director has hereunto set his hand and seal,
all as of the day and year first above written, which is the date of the
granting of this Option evidenced hereby.

                                        BRADY CORPORATION

                                        By:
                                            ------------------------------------
                                            President

                                        By:
                                            ------------------------------------
                                            Compensation Committee

                                        Attest:
                                                --------------------------------
                                                Secretary

                                        DIRECTOR:

                                        ----------------------------------------

                                        5

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