Brady
Annual Report 2018

Plain-text annual report

Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-KxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended July 31, 2018OR¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number 1-14959 BRADY CORPORATION(Exact name of registrant as specified in charter)Wisconsin 39-0178960(State or other jurisdiction ofincorporation or organization) (IRS EmployerIdentification No.)6555 West Good Hope Road,Milwaukee, WI 53223(Address of principal executive offices) (Zip Code)(414) 358-6600(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredClass A Nonvoting Common Stock, ParValue $.01 per share New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ýIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T duringthe preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ýIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.Large accelerated filer ýAccelerated filer ¨Emerging growth company ¨Non-accelerated filer ¨Smaller reporting company ¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ýThe aggregate market value of the non-voting common stock held by non-affiliates of the registrant as of January 31, 2018, was approximately $1,733,322,847 based on theclosing sale price of $38.25 per share on that date as reported for the New York Stock Exchange. As of September 11, 2018, there were 48,465,547 outstanding shares of Class ANonvoting Common Stock (the “Class A Common Stock”), and 3,538,628 shares of Class B Common Stock. The Class B Common Stock, all of which is held by affiliates of theregistrant, is the only voting stock.Table of ContentsINDEXPART IPageItem.1 Business3General Development of Business3Financial Information About Industry Segments3Narrative Description of Business3Overview3Research and Development5Operations5Environment6Employees6Financial Information About Foreign and Domestic Operations and Export Sales6Information Available on the Internet6Item 1A. Risk Factors6Item 1B. Unresolved Staff Comments10Item 2. Properties11Item 3. Legal Proceedings11Item 4. Mine Safety Disclosures11PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities12Item 6. Selected Financial Data14Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations15Item 7A. Quantitative and Qualitative Disclosures About Market Risk26Item 8. Financial Statements and Supplementary Data27Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure57Item 9A. Controls and Procedures58Item 9B. Other Information60PART III Item 10. Directors, Executive Officers and Corporate Governance60Item 11. Executive Compensation64Compensation Discussion and Analysis64Management Development and Compensation Committee Interlocks and Insider Participation76Management Development and Compensation Committee Report76Compensation Policies and Practices76Summary Compensation Table77Grants of Plan-Based Awards for 201878Outstanding Equity Awards at 2018 Fiscal Year End79Option Exercises and Stock Vested for Fiscal 201882Non-Qualified Deferred Compensation for Fiscal 201882Potential Payments Upon Termination or Change in Control82CEO Pay Ratio Disclosure82Compensation of Directors86Director Compensation Table — Fiscal 201887Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters88Item 13. Certain Relationships, Related Transactions, and Director Independence89Item 14. Principal Accounting Fees and Services90PART IV Item 15. Exhibits and Financial Statement Schedules91Item 16. Form 10-K Summary95Signatures962PART IItem 1. Business(a) General Development of BusinessBrady Corporation (“Brady,” “Company,” “we,” “us,” “our”) was incorporated under the laws of the state of Wisconsin in 1914. The Company’scorporate headquarters are located at 6555 West Good Hope Road, Milwaukee, Wisconsin 53223, and the telephone number is (414) 358-6600.Brady Corporation is a global manufacturer and supplier of identification solutions and workplace safety products that identify and protect premises,products and people. The ability to provide customers with a broad range of proprietary, customized and diverse products for use in various applications,along with a commitment to quality and service, a global footprint, and multiple sales channels, have made Brady a leader in many of its markets.The Company’s primary objective is to build upon its market position and increase shareholder value by enabling a highly competent and experiencedorganization to focus on the following key competencies:•Operational excellence — Continuous productivity improvement, automation, and process transformation.•Customer service — Focus on the customer and understanding customer needs.•Innovation advantage — Technologically-advanced, internally-developed proprietary products that drive revenue growth and sustain grossprofit margins.•Global leadership position in niche markets.•Digital capabilities.•Compliance expertise.The long-term sales growth and profitability of our segments will depend not only on improved demand in end markets and the overall economicenvironment, but also on our ability to continuously improve operational excellence, focus on the customer, develop and market innovative new products,and to advance our digital capabilities. In our Identification Solutions ("ID Solutions" or "IDS") business, our strategy for growth includes an increased focuson certain industries and products, a focus on improving the customer buying experience, and increasing investment in research and development ("R&D") todevelop new products. In our Workplace Safety ("WPS") business, our strategy for growth includes a focus on workplace safety critical industries, innovativenew product offerings, compliance expertise, and improving our digital capabilities.The following were key initiatives supporting the strategy in fiscal 2018:•Increased our investment in R&D by 14.2% and enhanced our innovation development process and the speed to deliver high-value, innovativeproducts that align with our target markets.•Drove operational excellence and provided our customers with strong customer service.•Executed sustainable efficiency gains and increased the use of automation throughout our global operations as well as our selling, general, andadministrative structures demonstrated through a reduction in selling, general and administrative ("SG&A") expenses as a percentage of net sales.•Expanded our digital presence demonstrated through increased WPS digital sales.•Grew through focused sales and marketing actions in selected vertical markets and strategic accounts.•Enhanced our global employee development process to attract and retain key talent.(b) Financial Information About Industry SegmentsThe information required by this Item is provided in Note 8 of the Notes to Consolidated Financial Statements contained in Item 8 - FinancialStatements and Supplementary Data.(c) Narrative Description of BusinessOverviewThe Company is organized and managed on a global basis within two reportable segments: Identification Solutions and Workplace Safety.The IDS segment includes high-performance and innovative industrial and healthcare identification products that are manufactured under multiplebrands, including the Brady brand. Industrial identification products are sold through distribution to a broad range of maintenance, repair, and operations("MRO") and original equipment manufacturing ("OEM") customers and through other channels, including direct sales, catalog marketing, and digital.Healthcare identification products are sold direct and through distribution via group purchasing organizations ("GPO").3Table of ContentsThe WPS segment includes workplace safety and compliance products, which are sold under multiple brand names primarily through catalog anddigital channels to a broad range of MRO customers. Approximately half of the WPS business is derived from internally manufactured products and half isfrom externally sourced products.Below is a summary of sales by reportable segment for the fiscal years ended July 31: 2018 2017 2016IDS 72.1% 71.9% 71.0%WPS 27.9% 28.1% 29.0%Total 100.0% 100.0% 100.0%ID SolutionsWithin the ID Solutions segment, the primary product categories include:•Facility identification and protection, which includes safety signs, pipe markers, labeling systems, spill control products, lockout/tagout devices,and software and services for safety compliance auditing, procedure writing and training.•Product identification, which includes materials and printing systems for product identification, brand protection labeling, work in processlabeling, and finished product identification.•Wire identification, which includes hand-held printers, wire markers, sleeves, and tags.•People identification, which includes name tags, badges, lanyards, and access control software.•Patient identification, which includes wristbands and labels used in hospitals for tracking and improving the safety of patients.•Custom wristbands used in the leisure and entertainment industry such as theme parks, concerts and festivals.Approximately 67% of ID Solutions products are sold under the Brady brand. In the United States, identification products for the utility industry aremarketed under the Electromark brand; spill-control products are marketed under the SPC brand; and security and identification badges and systems aremarketed under the Identicard, PromoVision, and Brady People ID brands. Wire identification products are marketed under the Modernotecnica brand in Italyand lockout/tagout products are offered under the Scafftag brand in the U.K.; identification and patient safety products in the healthcare industry areavailable under the PDC Healthcare brand in the U.S. and Europe; and custom wristbands for the leisure and entertainment industry are available under thePDC brand in the U.S. and the B.I.G. brand in Europe.The ID Solutions segment offers high quality products with rapid response and superior service to provide solutions to customers. The business marketsand sells products through multiple channels including distributors, direct sales, catalog marketing, and digital. The ID Solutions sales force partners withend-users and distributors by providing technical application and product expertise.This segment manufactures differentiated, proprietary products, most of which have been internally developed. These internally developed productsinclude materials, printing systems, and software. IDS competes for business on several factors, including customer support, product innovation, productoffering, product quality, price, expertise, production capabilities, and for multinational customers, our global footprint. Competition is highly fragmented,ranging from smaller companies offering minimal product variety, to some of the world's largest major adhesive and electrical product companies offeringcompeting products as part of their overall product lines.ID Solutions serves customers in many industries, which include industrial manufacturing, electronic manufacturing, healthcare, chemical, oil, gas,automotive, aerospace, governments, mass transit, electrical contractors, leisure and entertainment and telecommunications, among others.Workplace SafetyWithin the Workplace Safety segment, the primary product categories include:•Safety and compliance signs, tags, and labels.•Informational signage.•Asset tracking labels.•First aid products.•Industrial warehouse and office equipment.•Labor law and other compliance posters.4Table of ContentsProducts within the Workplace Safety segment are sold under a variety of brands including: safety and facility identification products offered under theSeton, Emedco, Signals, Safety Signs, SafetyShop, Signs & Labels and Pervaco brands; first aid supplies under the Accidental Health and Safety, Trafalgar,and Securimed brands; wire identification products marketed under the Carroll brand; and labor law and compliance posters under the Personnel Conceptsand Clement Communications brands.The Workplace Safety segment manufactures a broad range of stock and custom identification products, and also sells a broad range of related resaleproducts. Historically, both the Company and many of our competitors focused their businesses on catalog marketing, often with varying product niches.However, the competitive landscape continues to evolve at an accelerating pace. Many of our competitors extensively utilize e-commerce to promote the saleof their products. A consequence of this shift is price transparency, as prices on non-proprietary products can be easily compared. Therefore, to competeeffectively, we continue to build out our e-commerce capabilities and focus on developing unique or customized solutions, dynamic pricing capabilities,enhancing customer experience, and providing compliance expertise as these are critical to retain existing customers and convert new customers. WorkplaceSafety primarily sells to businesses and serves many industries, including manufacturers, process industries, government, education, construction, andutilities.Research and DevelopmentThe Company focuses its R&D efforts on pressure sensitive materials, printing systems and software, and it mainly supports the IDS segment. Materialdevelopment involves the application of surface chemistry concepts for top coatings and adhesives applied to a variety of base materials. Systems designintegrates materials, embedded software and a variety of printing technologies to form a complete solution for customer applications. In addition, the R&Dteam supports production and marketing efforts by providing application and technical expertise.The Company owns patents and tradenames relating to certain products in the United States and internationally. Although the Company believes thatpatents are a significant driver in maintaining its position for certain products, technology in the areas covered by many of the patents continues to evolveand may limit the value of such patents. The Company's business is not dependent on any single patent or group of patents. Patents applicable to specificproducts extend for up to 20 years according to the date of patent application filing or patent grant, depending upon the legal term of patents in the variouscountries where patent protection is obtained. The Company's tradenames are valid ten years from the date of registration, and are typically renewed on anongoing basis.The Company spent $45.3 million, $39.6 million, and $35.8 million on its R&D activities during the fiscal years ended July 31, 2018, 2017, and 2016,respectively. The increase in R&D spending in fiscal 2018 compared to the prior year was due to the hiring of additional engineers as well as additionalspending on new product development within the IDS and WPS segments. As of July 31, 2018, 248 individuals were engaged in R&D activities for theCompany, an increase from 218 as of July 31, 2017.OperationsThe materials used in the products manufactured consist of a variety of plastic and synthetic films, paper, metal and metal foil, cloth, fiberglass, inks,dyes, adhesives, pigments, natural and synthetic rubber, organic chemicals, polymers, and solvents for consumable identification products in addition toelectronic components, molded parts and sub-assemblies for printing systems. The Company operates coating facilities that manufacture bulk rolls of labelstock for internal and external customers. In addition, the Company purchases finished products for resale.The Company purchases raw materials, components and finished products from many suppliers. Overall, we are not dependent upon any single supplierfor our most critical base materials or components; however, we have chosen in certain situations to sole source, or limit the sources of materials, components,or finished items for design or cost reasons. As a result, disruptions in supply could have an impact on results for a period of time, but we believe anydisruptions would simply require qualification of new suppliers and the disruption would be modest. In certain instances, the qualification process could bemore costly or take a longer period of time and in rare circumstances, such as a global shortage of critical materials or components, the financial impact couldbe material. The Company currently operates 39 manufacturing and distribution facilities globally.The Company carries working capital mainly related to accounts receivable and inventory. Inventory consists of raw materials, work in process andfinished goods. Generally, custom products are made to order while an on-hand quantity of stock product is maintained to provide customers with timelydelivery. Normal and customary payment terms range from net 10 to 90 days from date of invoice and vary by geography.The Company has a broad customer base, and no individual customer represents 10% or more of total net sales.5Table of ContentsAverage time to fulfill customer orders varies from same-day to one month, depending on the type of product, customer request, and whether theproduct is stock or custom-designed and manufactured. The Company's backlog is not material, does not provide significant visibility for future business andis not pertinent to an understanding of the business.EnvironmentCompliance with federal, state and local environmental protection laws during fiscal 2018 did not have a material impact on the Company’s business,financial condition or results of operations.EmployeesAs of July 31, 2018, the Company employed approximately 6,200 individuals. Brady has never experienced a material work stoppage due to a labordispute and considers its relations with employees to be good.(d) Financial Information About Foreign and Domestic Operations and Export SalesThe information required by this Item is provided in Note 8 of the Notes to Consolidated Financial Statements contained in Item 8 — FinancialStatements and Supplementary Data.(e) Information Available on the InternetThe Company’s Corporate Internet address is www.bradycorp.com. The Company makes available, free of charge, on or through its Internet websitecopies of its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to all such reports as soon asreasonably practicable after such reports are electronically filed with or furnished to the SEC. The Company is not including the information contained on oravailable through its website as part of, or incorporating such information by reference into, this Annual Report on Form 10-K.Item 1A. Risk FactorsInvestors should carefully consider the risks set forth below and all other information contained in this report and other documents we file with theSEC. The risks and uncertainties described below are those that we have identified as material, but are not the only risks and uncertainties facing us. Ourbusiness is also subject to general risks and uncertainties that affect many other companies, such as market conditions, geopolitical events, changes in lawsor accounting rules, fluctuations in interest rates, terrorism, wars or conflicts, major health concerns, natural disasters or other disruptions of expectedeconomic or business conditions. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impairour business and financial results.Business RisksFailure to compete effectively or to successfully execute our strategy may have a negative impact on our business and financial results.We actively compete with companies that produce and market the same or similar products, and in some instances, with companies that sell differentproducts that are designed for the same end user. Competition may force us to reduce prices or incur additional costs to remain competitive in an environmentin which business models are changing rapidly. We compete on the basis of several factors, including customer support, product innovation, product offering,product quality, price, expertise, digital capabilities, production capabilities, and for multinational customers, our global footprint. Present or futurecompetitors may develop and introduce new and enhanced products, offer products based on alternative technologies and processes, accept lower profit, havegreater financial, technical or other resources, or have lower production costs or other pricing advantages. Any of these could put us at a disadvantage bythreatening our share of sales or reducing our profit margins, which could adversely impact our business and financial results.Additionally, throughout our global business, distributors and customers may seek lower cost sourcing opportunities, which could result in a loss ofbusiness that may adversely impact our business and financial results.Our strategy is to expand into higher-growth adjacent product categories and markets with technologically advanced new products, as well as to growour sales generated through the digital channel. While traditional direct marketing channels such as catalogs are an important means of selling our products,an increasing number of customers are purchasing products on the internet. Our strategy to increase sales through the digital channel is an investment in ourinternet sales capabilities. There is a risk that we may not continue to successfully implement this strategy, or if successfully implemented, not realize itsexpected benefits due to the continued levels of increased competition and pricing pressure brought about by the internet. Our failure to successfullyimplement our strategy could adversely impact our business and financial results.6Table of ContentsFailure to develop technologically advanced products that meet customer demands, including price expectations, could adversely impact ourbusiness and financial results.Development of technologically advanced new products is targeted as a driver of our organic growth and profitability. Technology is changing rapidlyand our competitors are innovating quickly. If we do not keep pace with developing technologically advanced products, we risk product commoditization,deterioration of the value of our brand, and reduced ability to effectively compete. We must continue to develop innovative products, as well as acquire andretain the necessary intellectual property rights in these products. If we fail to make innovations, or we launch products with quality problems, or if customersdo not accept our products, then our business and financial results could be adversely affected.Our failure or the failure of third-party service providers to protect our sites, networks and systems against security breaches, or otherwise to protectour confidential information, could adversely affect our business and financial results.Our business systems collect, maintain, transmit and store data about our customers, vendors and others, including credit card information andpersonally identifiable information, as well as other confidential and proprietary information. We also employ third-party service providers that store, processand transmit proprietary, personal and confidential information on our behalf. We rely on encryption and authentication technology licensed from thirdparties in an effort to securely transmit confidential and sensitive information, including credit card numbers. Our security measures, and those of our third-party service providers, may not detect or prevent all attempts to hack our systems, denial-of-service attacks, viruses, malicious software, break-ins, phishingattacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in or transmittedby our sites, networks and systems or that we or our third-party service providers otherwise maintain.We and our service providers may not have the resources or technical sophistication to anticipate or prevent all types of attacks, and techniques used toobtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers. Inaddition, security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or by personswith whom we have commercial relationships. Although we maintain privacy, data breach and network security liability insurance, we cannot be certain thatour coverage will be adequate or cover liabilities actually incurred, or that insurance will continue to be available to us on economically reasonable terms, orat all. Any compromise or breach of our security measures, or those of our third-party service providers, could adversely impact our ability to conductbusiness, violate applicable privacy, data security and other laws, and cause significant legal and financial exposure, adverse publicity, and a loss ofconfidence in our security measures, which could have an adverse effect on our business and financial results.Demand for our products may be adversely affected by numerous factors, some of which we cannot predict or control. This could adversely affect ourbusiness and financial results.Numerous factors may affect the demand for our products, including:•Future economic conditions of major markets served.•Consolidation in the marketplace allowing competitors and customers to be more efficient and more price competitive.•Future competitors entering the marketplace.•Decreasing product life cycles.•Changes in customer preferences.•Ability to achieve operational excellence.If any of these factors occur, the demand for our products could suffer, and this could adversely impact our business and financial results.The loss of large customers or a significant reduction in sales to large customers could adversely affect our business and financial results.While we have a broad customer base and no individual customer represents 10% or more of total sales, we conduct business with several largecustomers and distribution companies. Our dependence on these customers makes relationships with them important. We cannot guarantee that theserelationships will be retained in the future. Because these large customers account for a significant portion of sales, they may possess a greater capacity tonegotiate reduced prices. If we are unable to provide products to our customers at the quality and prices acceptable to them, some of our customers may shifttheir business to competitors or may substitute another manufacturer's products. If one of our large customers consolidates, is acquired, or loses market share,the result of that event may have an adverse impact on our business. The loss of or reduction of business from one or more of these large customers could havean adverse impact on our business and financial results.7Table of ContentsWe are a global company headquartered in the United States. We are subject to extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities at various levels of the governing bodies. Failure to comply with laws and regulations could adversely affect our business and financialresults.Our operations are subject to the risks of doing business domestically and globally, including the following:•Delays or disruptions in product deliveries and payments in connection with international manufacturing and sales.•Regulations resulting from political and economic instability and disruptions.•Imposition of new, or change in existing, duties, tariffs and trade agreements.•Import, export and economic sanction laws.•Current and changing governmental policies, regulatory, and business environments.•Disadvantages from competing against companies from countries that are not subject to U.S. laws and regulations including the Foreign CorruptPractices Act.•Local labor regulations.•Regulations relating to climate change, air emissions, wastewater discharges, handling and disposal of hazardous materials and wastes.•Regulations relating to product content, health, safety and the protection of the environment.•Specific country regulations where our products are manufactured or sold.•Regulations relating to compliance with data protection and privacy laws throughout our global business.•Laws and regulations that apply to companies doing business with the government, including audit requirements of government contracts related toprocurement integrity, export control, employment practices, and the accuracy of records and recording of costs.Further, these laws and regulations are constantly evolving and it is difficult to accurately predict the effect they may have upon our business andfinancial results.We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees, agents orbusiness partners that would violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, anti-kickbackand false claims rules, competition, export and import compliance, money laundering and data privacy. Any such improper actions could subject us to civilor criminal investigations in the U.S. and in other jurisdictions, lead to substantial civil or criminal, monetary and non-monetary penalties and relatedlawsuits by shareholders and others, damage our reputation, and adversely impact our business and financial results.We depend on key employees and the loss of these individuals could have an adverse effect on our business and financial results.Our success depends to a large extent upon the continued services of our key executives, managers and other skilled employees. We cannot ensure thatwe will be able to retain our key executives, managers and employees. The departure of key personnel without adequate replacement could disrupt ourbusiness operations. Additionally, we need qualified managers and skilled employees with technical and industry experience to operate our businesssuccessfully. If we are unable to attract and retain qualified individuals or our costs to do so increase significantly, our business and financial results could beadversely affected.Divestitures, contingent liabilities from divested businesses and the failure to properly identify, integrate and grow acquired companies couldadversely affect our business and financial results.We continually assess the strategic fit of our existing businesses and may divest businesses that we determine do not align with our strategic plan, orthat are not achieving the desired return on investment. Divestitures pose risks and challenges that could negatively impact our business. When we decide tosell a business or assets, we may be unable to do so on satisfactory terms and within our anticipated time-frame, and even after reaching a definitiveagreement to sell a business, the sale is typically subject to pre-closing conditions which may not be satisfied. In addition, the impact of the divestiture onour revenue and net earnings may be larger than projected, which could distract management, and disputes may arise with buyers. We have retainedresponsibility for and have agreed to indemnify buyers against certain contingent liabilities related to a number of businesses that we have sold. Theresolution of these contingencies has not had a material adverse impact on our financial results, but we cannot be certain that this favorable pattern willcontinue.Our historical growth has included acquisitions, and our future growth strategy may include acquisitions. If our future growth strategy includes a focuson acquisitions, we may not be able to identify acquisition targets or successfully complete acquisitions due to the absence of quality companies in our targetmarkets, economic conditions, or price expectations from sellers. Acquisitions place significant demands on management, operational, and financialresources. Future acquisitions will require integration of operations, sales and marketing, information technology, and administrative operations, which coulddecrease the time available to focus on our other growth strategies. We cannot assure that we will be able to successfully integrate acquisitions, that these8Table of Contentsacquisitions will operate profitably, or that we will be able to achieve the desired sales growth or operational success. Our business and financial results couldbe adversely affected if we do not successfully integrate the newly acquired businesses, or if our other businesses suffer due to the increased focus on theacquired businesses.We are subject to litigation, including product liability claims that could adversely impact our business, financial results, and reputation.We are a party to litigation that arises in the normal course of our business operations, including product warranty, product liability and recall (strictliability and negligence) claims, patent and trademark matters, contract disputes and environmental, employment and other litigation matters. We face aninherent business risk of exposure to product liability and warranty claims in the event that the use of our products is alleged to have resulted in injury orother damage. In addition, we face an inherent risk that our competitors will allege that aspects of our products infringe their intellectual property or that ourintellectual property is invalid, such that we could be prevented from manufacturing and selling our products or prevented from stopping others frommanufacturing and selling competing products. To date, we have not incurred material costs related to these types of claims. However, while we currentlymaintain insurance coverage in amounts that we believe are adequate, we cannot be sure that we will be able to maintain this insurance on acceptable termsor that this insurance will provide sufficient coverage against potential liabilities that may arise. Any claims brought against us, with or without merit, mayhave an adverse effect on our business, financial results and reputation as a result of potential adverse outcomes. The expenses associated with defendingsuch claims and the diversion of our management’s resources and time may have an adverse effect on our business and financial results.Failure to execute facility consolidations or maintain acceptable operational service metrics may adversely impact our business and financialresults.We continually assess our global footprint and expect to implement additional measures to reduce our cost structure, simplify our business, andstandardize our processes, and these actions could result in unplanned operating costs and business disruptions in the future. In addition, the Company isreliant upon certain suppliers for certain raw or finished products. If we experience service disruptions with these suppliers, or if we fail to successfullyaddress these inefficiencies, their effects could adversely impact our business and financial results.Financial/Ownership RisksThe global nature of our business exposes us to foreign currency fluctuations that could adversely affect our business and financial results.Approximately 50% of our sales are derived outside the United States. Sales and purchases in currencies other than the U.S. dollar expose us tofluctuations in foreign currencies relative to the U.S. dollar, and may adversely affect our financial results. Increased strength of the U.S. dollar will increasethe effective price of our products sold in currencies other than U.S. dollars into other countries. Decreased strength of the U.S. dollar could adversely affectthe cost of materials, products, and services purchased overseas. Our sales and expenses are translated into U.S. dollars for reporting purposes, and thestrengthening or weakening of the U.S. dollar could result in unfavorable translation effects, which occurred during fiscal years 2016 and 2017. In addition,certain of our subsidiaries may invoice customers in a currency other than its functional currency or may be invoiced by suppliers in a currency other than itsfunctional currency, which could result in unfavorable translation effects on our business and financial results.Changes in tax legislation or tax rates could adversely affect results of operations and financial statements. Additionally, audits by taxingauthorities could result in tax payments for prior periods.We are subject to income taxes in the U.S. and in many non-U.S. jurisdictions. As such, our earnings are subject to risk due to changing tax laws and taxrates around the world. Our tax filings are subject to audit by U.S. federal, state and local tax authorities and by non-U.S. tax authorities. If these audits resultin payments or assessments that differ from our reserves, our future net earnings may be adversely impacted.On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “TaxReform Act”). The changes included in the Tax Reform Act are broad and complex. The final transition impacts of the Tax Reform Act may differ from theprovisional estimates provided due to changes in interpretations, any legislative action to address questions that arise, any changes in accounting standardsfor income taxes or related interpretations, or any updates or changes to estimates we have utilized to calculate the transition impacts. Additionally,longstanding international tax norms that determine each country’s jurisdiction to tax cross-border international trade are evolving as a result of the BaseErosion and Profit Shifting reporting requirements recommended by the G8, G20 and Organization for Economic Cooperation and Development. As theseand other tax laws and related regulations change, our financial results could be materially impacted. Given9Table of Contentsthe unpredictability of these possible changes and their potential interdependency, it is difficult to assess the overall effect of such potential tax changes onour earnings and cash flow, but such changes could adversely impact our financial results.We review the probability of the realization of our deferred tax assets quarterly based on forecasts of taxable income in both the U.S. and foreignjurisdictions. As part of this review, we utilize historical results, projected future operating results, eligible carry-forward periods, tax planning opportunities,and other relevant considerations. Adverse changes in profitability and financial outlook in both the U.S. and/or foreign jurisdictions, or changes in ourgeographic footprint may require changes in the valuation allowance for deferred tax assets. During the year ended July 31, 2018, we recorded a valuationallowance of $21.4 million against our foreign tax credit carryforwards primarily due to the passage of the Tax Reform Act, which modifies our ability toutilize foreign tax credits in future periods. At any point in time, there are a number of tax proposals at various stages of legislation throughout the globe.While it is impossible for us to predict whether some or all of these proposals will be enacted, it likely would have an impact on our results of operations andour consolidated financial statements.Failure to execute our strategies could result in impairment of goodwill or other intangible assets, which may negatively impact earnings andprofitability.We have goodwill of $419.8 million and other intangible assets of $42.6 million as of July 31, 2018, which represents 43.7% of our total assets. Weevaluate goodwill and other intangible assets for impairment on an annual basis, or more frequently if impairment indicators are present, based upon the fairvalue of each respective asset. These valuations include management's estimates of sales, profitability, cash flow generation, capital structure, cost of debt,interest rates, capital expenditures, and other assumptions. Significant negative industry or economic trends, disruptions to our business, inability to achievesales projections or cost savings, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assetsor in entity structure, and divestitures may adversely impact the assumptions used in the valuations. If the estimated fair value of our goodwill or otherintangible assets change in future periods, we may be required to record an impairment charge, which would reduce the earnings in such period.Substantially all of our voting stock is controlled by members of the Brady family, while our public investors hold non-voting stock. The interests ofthe voting and non-voting shareholders could differ, potentially resulting in decisions that unfavorably affect the value of the non-voting shares.Substantially all of our voting stock is controlled by Elizabeth P. Bruno, one of our Directors, and William H. Brady III, both of whom are descendantsof the Company's founder. All of our publicly traded shares are non-voting. Therefore, Ms. Bruno and Mr. Brady have control in most matters requiringapproval or acquiescence by shareholders, including the composition of our Board of Directors and many corporate actions. Such concentration of ownershipmay discourage a potential acquirer from making a purchase offer that our public shareholders may find favorable, which in turn could adversely affect themarket price of our common stock or prevent our shareholders from realizing a premium over our stock price. Certain mutual funds and index sponsors haveimplemented rules restricting ownership, or excluding from indices, companies with non-voting publicly traded shares. Furthermore, this concentration ofvoting share ownership may adversely affect the trading price for our non-voting common stock because investors may perceive disadvantages in owningstock in companies whose voting stock is controlled by a limited number of shareholders.Failure to meet certain financial covenants required by our debt agreements may adversely affect our business and financial results.As of July 31, 2018, we had $52.6 million in outstanding indebtedness. In addition, based on the availability under our credit facilities as of July 31,2018, we had the ability to borrow an additional $297.0 million under our revolving credit agreement. Our current revolving credit agreement and long-termdebt obligations also impose certain restrictions on us. Refer to Management's Discussion and Analysis of Financial Condition and Results of Operationswithin Item 7 for more information regarding our credit agreement and long-term debt obligations. If we breach any of these restrictions or covenants and donot obtain a waiver from the lenders then, subject to applicable cure periods, the outstanding indebtedness and any other indebtedness with cross-defaultprovisions could be declared immediately due and payable, which could adversely affect our financial results.Item 1B. Unresolved Staff CommentsNone.10Table of ContentsItem 2. PropertiesThe Company currently operates 39 manufacturing and distribution facilities across the globe and are split by reporting segment as follows:IDS: Thirty-one manufacturing and distribution facilities are used for our IDS business. Five are located in each of the United States and China; four inBelgium; three each in Mexico and the United Kingdom; two in Brazil; and one each in Canada, Germany, Hong Kong, India, Japan, Malaysia, Netherlands,Singapore, and South Africa.WPS: Eight manufacturing and distribution facilities are used for our WPS business. Three are located in France; two are located in Australia; and one each inGermany, the United Kingdom, and the United States.The Company’s present operating facilities contain a total of approximately 2.1 million square feet of space, of which approximately 1.5 million squarefeet is leased. The Company believes that its equipment and facilities are modern, well maintained, and adequate for present needs.Item 3. Legal ProceedingsThe Company is, and may in the future be, party to litigation arising in the normal course of business. The Company is not currently a party to anymaterial pending legal proceedings in which management believes the ultimate resolution would have a material effect on the Company’s consolidatedfinancial statements.Item 4. Mine Safety DisclosuresNot applicable.11Table of ContentsPART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities(a)Market InformationBrady Corporation Class A Nonvoting Common Stock trades on the New York Stock Exchange under the symbol BRC. The following table sets forththe range of high and low daily closing sales prices for the Company’s Class A stock as reported on the New York Stock Exchange for each of the quarters inthe fiscal years ended July 31: 2018 2017 2016 High Low High Low High Low4th Quarter $40.65 $36.10 $39.80 $33.05 $32.68 $26.293rd Quarter $39.00 $35.90 $39.75 $35.10 $27.82 $21.132nd Quarter $39.75 $36.60 $39.45 $32.55 $26.39 $20.841st Quarter $39.10 $31.95 $35.36 $31.86 $24.29 $19.52There is no trading market for the Company’s Class B Voting Common Stock.(b)HoldersAs of August 31, 2018, there were 1,080 Class A Common Stock shareholders of record and approximately 9,000 beneficial shareholders. There arethree Class B Common Stock shareholders.(c)Issuer Purchases of Equity SecuritiesThe Company has a share repurchase program for the Company’s Class A Nonvoting Common Stock. The plan may be implemented by purchasingshares in the open market or in privately negotiated transactions, with repurchased shares available for use in connection with the Company’s stock-basedplans and for other corporate purposes. On November 13, 2017, the Company's Board of Directors authorized a share repurchase program of 2,000,000 shares.The Company repurchased 5,100 shares at $36.00 per share during the three months ended July 31, 2018. As of July 31, 2018, there were 1,959,306 sharesauthorized to purchase in connection with this share repurchase program.The following table provides information with respect to the purchase of Class A Nonvoting Common Stock during the three months ended July 31,2018:Period Total Numberof SharesPurchased Average Pricepaid per share Total Numberof SharesPurchased AsPart of PubliclyAnnouncedPlans MaximumNumber ofShares ThatMay Yet BePurchasedUnder thePlansMay 1, 2018 - May 31, 2018 5,100 $36.00 5,100 1,959,306June 1, 2018 - June 30, 2018 — — — 1,959,306July 1, 2018 - July 31, 2018 — — — 1,959,306Total 5,100 $36.00 5,100 1,959,306(i)DividendsThe Company has historically paid quarterly dividends on outstanding common stock. Before any dividend may be paid on the Class B CommonStock, holders of the Class A Common Stock are entitled to receive an annual, noncumulative cash dividend of $0.01665 per share (subject to adjustment inthe event of future stock splits, stock dividends or similar events involving shares of Class A Common Stock). Thereafter, any further dividend in that fiscalyear must be paid on all shares of Class A Common Stock and Class B Common Stock on an equal basis. The Company believes that based on its historicdividend practice, this requirement will not impede it in following a similar dividend practice in the future.12Table of ContentsDuring the two most recent fiscal years and for the first quarter of fiscal 2019, the Company declared the following dividends per share on its Class Aand Class B Common Stock for the years ended July 31: 2019 2018 2017 1st Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th QtrClass A $0.2125 $0.2075 $0.2075 $0.2075 $0.2075 $0.2050 $0.2050 $0.2050 $0.2050Class B 0.19585 0.19085 0.2075 0.2075 0.2075 0.18835 0.2050 0.2050 0.2050(e)Common Stock Price Performance GraphThe graph below shows a comparison of the cumulative return over the last five fiscal years had $100 been invested at the close of business on July 31,2013, in each of Brady Corporation Class A Common Stock, the Standard & Poor’s (S&P) 500 Index, the Standard and Poor’s SmallCap 600 Index, and theRussell 2000 Index. 2013 2014 2015 2016 2017 2018Brady Corporation $100.00 $80.73 $74.99 $106.04 $112.15 $132.08S&P 500 Index 100.00 116.94 130.05 137.17 159.18 185.03S&P SmallCap 600 Index 100.00 111.04 124.33 131.61 154.85 190.64Russell 2000 Index 100.00 108.56 121.62 121.54 143.97 170.94Copyright (C) 2018, Standard & Poor’s, Inc. and Russell Investments. All rights reserved.13Table of ContentsItem 6. Selected Financial DataCONSOLIDATED STATEMENTS OF INCOME AND SELECTED FINANCIAL DATAYears Ended July 31, 2014 through 2018 2018 2017 2016 2015 2014 (In thousands, except per share amounts)Operating data(1) Net sales $1,173,851 $1,113,316 $1,120,625 $1,171,731 $1,225,034Gross margin 588,291 558,292 558,773 558,432 609,564Operating expenses: Research and development 45,253 39,624 35,799 36,734 35,048Selling, general and administrative(2) 390,342 387,653 405,096 422,704 452,164Restructuring charges(3) — — — 16,821 15,012Impairment charges(4) — — — 46,867 148,551Total operating expenses 435,595 427,277 440,895 523,126 650,775Operating income (loss) 152,696 131,015 117,878 35,306 (41,211)Other income (expense): Investment and other income (expense) 2,487 1,121 (709) 845 2,402Interest expense (3,168) (5,504) (7,824) (11,156) (14,300)Net other expense (681) (4,383) (8,533) (10,311) (11,898)Earnings (loss) from continuing operations before incometaxes 152,015 126,632 109,345 24,995 (53,109)Income tax expense (benefit)(5) 60,955 30,987 29,235 20,093 (4,963)Earnings (loss) from continuing operations $91,060 $95,645 $80,110 $4,902 $(48,146)(Loss) Earnings from discontinued operations, net ofincome taxes(6) — — — (1,915) 2,178Net earnings (loss) $91,060 $95,645 $80,110 $2,987 $(45,968)Earnings (loss) from continuing operations per CommonShare— (Diluted): Class A nonvoting $1.73 $1.84 $1.58 $0.10 $(0.93)Class B voting $1.72 $1.83 $1.56 $0.08 $(0.95)(Loss) Earnings from discontinued operations perCommon Share - (Diluted): Class A nonvoting $— $— $— $(0.04) $0.04Class B voting $— $— $— $(0.04) $0.05Cash Dividends on: Class A common stock $0.83 $0.82 $0.81 $0.80 $0.78Class B common stock $0.81 $0.80 $0.79 $0.78 $0.76Balance Sheet at July 31: Total assets $1,056,931 $1,050,223 $1,043,964 $1,062,897 $1,253,665Long-term obligations, less current maturities 52,618 104,536 211,982 200,774 159,296Stockholders’ investment 752,112 700,140 603,598 587,688 733,076Cash Flow Data: Net cash provided by operating activities $143,042 $144,032 $138,976 $93,348 $93,420Net cash (used in) provided by investing activities (2,905) (15,253) (15,416) (14,365) 10,207Net cash used in financing activities (90,680) (136,241) (99,576) (32,152) (115,387)Depreciation and amortization 25,442 27,303 32,432 39,458 44,598Capital expenditures (21,777) (15,167) (17,140) (26,673) (43,398)(1)Operating data has been impacted by the reclassification of the Die-Cut businesses into discontinued operations in fiscal 2014 and 2015. TheCompany has elected to not separately disclose the cash flows related to discontinued operations.14Table of Contents(2)During fiscal 2018, the Company recognized a gain of $4.7 million on the sale of its Runelandhs Försäljnings AB business.(3)During fiscal 2014, the Company approved a plan to consolidate facilities in the Americas, Europe, and Asia in order to enhance customer service,improve efficiency of operations, and reduce operating expenses. This plan resulted in restructuring charges during fiscal 2014 and fiscal 2015. Fiscal2014 also included restructuring charges from a business simplification project executed in a prior year.(4)The Company recognized impairment charges of $46.9 million and $148.6 million during the fiscal years ended July 31, 2015 and 2014,respectively. The impairment charges primarily related to the following reporting units: WPS Americas and WPS APAC in fiscal 2015 and People IDin fiscal 2014.(5)Fiscal 2018 was significantly impacted by the Tax Reform Act which resulted in total incremental tax expense of $21.1 million, which consisted of$1.0 million related to the recording of a deferred tax liability for future withholdings and income taxes on the distribution of foreign earnings, anincome tax charge of $3.3 million related to the deemed repatriation of the historical earnings of foreign subsidiaries, and the impact of the TaxReform Act on the revaluation of deferred tax assets and liabilities as well as the impact on the Company's fiscal 2018 earnings from the reduced taxrate was an additional income tax expense of $16.8 million. Fiscal 2015 was significantly impacted by the impairment charges of $46.9 million, ofwhich $39.8 million was non-deductible for income tax purposes. Fiscal 2014 was significantly impacted by the impairment charges of $148.6million, of which $61.1 million was non-deductible for income tax purposes.(6)The Die-Cut business was sold in two phases. The first phase closed in the fourth quarter of fiscal 2014 and the second and final phase closed in thefirst quarter of fiscal 2015. The loss from discontinued operations in fiscal 2015 includes a $0.4 million net loss on the sale of the Die-Cut business,recorded during the three months ended October 31, 2014. The earnings from discontinued operations in fiscal 2014 include a $1.2 million net losson the sale of the Die-Cut business recorded during the three months ended July 31, 2014.Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsOverviewWe are a global manufacturer and supplier of identification solutions and workplace safety products that identify and protect premises, products andpeople. The IDS segment is primarily involved in the design, manufacture, and distribution of high-performance and innovative identification and healthcareproducts. The WPS segment provides workplace safety and compliance products, approximately half of which are internally manufactured and half of whichare externally sourced. Approximately 50% of our total sales are derived outside of the United States. Foreign sales within the IDS and WPS segments areapproximately 40% and 70%, respectively.The ability to provide customers with a broad range of proprietary, customized and diverse products for use in various applications across multiplecustomers and geographies, along with a commitment to quality and service, have made Brady a leader in many of its markets. The long-term sales growthand profitability of our segments will depend not only on improved demand in end markets and the overall economic environment, but also on our ability tocontinuously improve the efficiency of our global operations, focus on the customer, develop and market innovative new products, and to advance ourdigital capabilities. In our IDS business, our strategy for growth includes an increased focus on certain industries and products, a focus on improving thecustomer buying experience, and increasing investments in R&D. In our WPS business, our strategy for growth includes a focus on workplace safety criticalindustries, innovative new product offerings, compliance expertise, and improving our digital capabilities.Results of OperationsA comparison of results of operating income for the fiscal years ended July 31, 2018, 2017, and 2016 is as follows:(Dollars in thousands) 2018 % Sales 2017 % Sales 2016 % SalesNet sales $1,173,851 $1,113,316 $1,120,625 Gross margin 588,291 50.1% 558,292 50.1% 558,773 49.9%Operating expenses: Research and development 45,253 3.9% 39,624 3.6% 35,799 3.2%Selling, general and administrative 390,342 33.3% 387,653 34.8% 405,096 36.1%Total operating expenses 435,595 37.1% 427,277 38.4% 440,895 39.3%Operating income $152,696 13.0% $131,015 11.8% $117,878 10.5%15Table of ContentsReferences in this Form 10-K to “organic sales” refer to net sales calculated in accordance with U.S. GAAP, excluding the impact of foreign currencytranslation. The Company’s organic sales disclosures exclude the effects of foreign currency translation as foreign currency translation is subject to volatilitythat can obscure underlying business trends. Management believes that the non-GAAP financial measure of organic sales is meaningful to investors as itprovides them with useful information to aid in identifying underlying sales trends in our businesses and facilitating comparisons of our sales performancewith prior periods.In fiscal 2018, net sales increased 5.4% to $1,173.9 million, compared to $1,113.3 million in fiscal 2017. The increase consisted of organic sales growthof 2.6% and a positive foreign currency impact of 3.0% due to the strengthening of certain currencies when compared to the U.S. dollar during the year,partially offset by a sales decline of 0.2% due to the divestiture of Runelandhs Försäljnings AB (“Runelandhs”), a business based in Kalmar, Sweden. Organicsales grew 3.4% and 0.7% in the IDS and WPS segment, respectively. The IDS segment realized sales growth in the Product ID, Wire ID, and the Safety andFacility ID product lines, partially offset by a sales declines in the Healthcare ID product line. Digital sales in the WPS segment improved, but were partiallyoffset by a sales decline in the traditional catalog and other direct sales channels.In fiscal 2017, net sales decreased 0.7% to $1,113.3 million, compared to $1,120.6 million in fiscal 2016, which consisted of organic sales growth of0.5% and a negative currency impact of 1.2% due to the strengthening of the U.S. dollar against certain other currencies during the year. Organic sales grew1.6% in the IDS segment and declined 2.0% in the WPS segment. The IDS segment realized sales growth in the Product ID and Wire ID product lines,partially offset by a sales declines in the Healthcare ID product line. Catalog sales in the WPS segment declined, but were partially offset by sales growth inthe digital channel.Gross margin increased 5.4% to $588.3 million in fiscal 2018 from $558.3 million in fiscal 2017. As a percentage of net sales, gross margin was 50.1%in both fiscal 2018 and fiscal 2017. Our on-going efforts to streamline manufacturing processes and drive operational efficiencies, including increasedautomation in our manufacturing facilities, reduced material and labor costs compared to the prior year, thus offsetting inflation and pricing pressures.Gross margin declined 0.1% to $558.3 million in fiscal 2017 from $558.8 million in fiscal 2016. As a percentage of net sales, gross margin increased to50.1% in fiscal 2017 from 49.9% in fiscal 2016. The increase in gross margin as a percentage of net sales was primarily due to our on-going efforts tostreamline manufacturing processes and drive operational efficiencies in manufacturing facilities. These efforts resulted in reduced material and labor costscompared to the prior year.R&D expenses increased to $45.3 million in fiscal 2018 from $39.6 million in fiscal 2017. The increase in R&D spending in fiscal 2018 compared tothe prior year was primarily due to the hiring of R&D personnel as well as additional spending on new product development in connection with our focus onincreasing new product sales within our IDS and WPS businesses.R&D expenses increased to $39.6 million in fiscal 2017 from $35.8 million in fiscal 2016. The increase in R&D spending in fiscal 2017 compared tothe prior year was primarily due to the hiring of R&D personnel as well as increased spending on printing and software solutions projects within our IDSbusinesses.Selling, general and administrative ("SG&A") expenses include selling and administrative costs directly attributed to the IDS and WPS segments, aswell as certain other corporate administrative expenses including finance, information technology, human resources, and other administrative expenses.SG&A expenses increased 0.7% to $390.3 million in fiscal 2018 compared to $387.7 million in fiscal 2017. SG&A expenses include a gain of $4.7 millionon the sale of Runelandhs which closed in the fourth quarter of fiscal 2018. The increase in SG&A expenses from the prior year was entirely due to the impactof foreign currency translation, partially offset by the gain on the sale of Runelandhs and the Company's continued efforts to reduce its SG&A cost structurethrough efficiency gains and ongoing efforts to control general and administrative costs. SG&A expense as a percentage of net sales was 33.3% in fiscal 2018compared to 34.8% in fiscal 2017. The decrease was a result of the Company's ongoing efficiency gains and continued efforts to control general andadministrative costs as well as the gain of $4.7 million from the sale of Runelandhs.SG&A expenses decreased 4.3% to $387.7 million in fiscal 2017 compared to $405.1 million in fiscal 2016. The decrease in SG&A expenses from theprior year was primarily due to reduced selling expenses from efficiency gains, continued efforts to control general and administrative costs, and foreigncurrency translation. These reductions were partially offset by increases in incentive-based compensation. SG&A expenses as a percentage of net sales was34.8% in fiscal 2017 compared to 36.1% in fiscal 2016. The decrease was a result of the Company's ongoing efficiency gains and continued efforts to controlgeneral and administrative costs.Operating income increased 16.5% to $152.7 million in fiscal 2018 compared to $131.0 million in fiscal 2017. Operating income includes a gain of$4.7 million on the sale of Runelandhs in fiscal 2018. The increase in operating income from prior year was primarily due to the 5.4% increase in net sales,5.4% increase in gross margin, reduced SG&A expense as a percentage of net sales, and the gain on the sale of Runelandhs. These improvements leading tothe increase in operating income in fiscal 2018 were partially offset by an increase in R&D spending.16Table of ContentsOperating income increased to $131.0 million in fiscal 2017 compared to $117.9 million in fiscal 2016. The increase of $13.1 million in operatingincome was primarily due to reduced SG&A expenses in both IDS and WPS segments, as well as reductions due to foreign currency translation. The decreasein SG&A expenses leading to the increase in operating income in fiscal 2017 was partially offset by an increase in R&D spending.OPERATING INCOME TO NET EARNINGS(Dollars in thousands) 2018 % Sales 2017 % Sales 2016 % SalesOperating income $152,696 13.0 % $131,015 11.8 % $117,878 10.5 %Other income and (expense): Investment and other income (expense) 2,487 0.2 % 1,121 0.1 % (709) (0.1)% Interest expense (3,168) (0.3)% (5,504) (0.5)% (7,824) (0.7)%Earnings before income taxes 152,015 13.0 % 126,632 11.4 % 109,345 9.8 %Income tax expense 60,955 5.2 % 30,987 2.8 % 29,235 2.6 %Net earnings $91,060 7.8 % $95,645 8.6 % $80,110 7.1 %Investment and Other Income (Expense)Investment and other income (expense) was $2.5 million in fiscal 2018 compared to $1.1 million in fiscal 2017 and an expense of $0.7 million in fiscal2016. The increase in investment and other income in 2018 compared to 2017 was primarily due to an increase in the market value of securities held inexecutive deferred compensation plans and an increase in interest income due to an increase in cash and cash equivalents. The increase in investment andother income (expense) in 2017 compared to 2016 was primarily due to an increase in the market value of securities held in deferred compensation plans.Interest ExpenseInterest expense decreased to $3.2 million in fiscal 2018 compared to $5.5 million in fiscal 2017 and $7.8 million in fiscal 2016. The decline since2016 was due to the Company's declining principal balance under its outstanding debt agreements.Income Tax ExpenseThe Company's effective income tax rate was 40.1% in fiscal 2018. The effective income tax rate was significantly impacted by the U.S. Tax Reform Actenacted in fiscal 2018, which resulted in total incremental tax expense of $21.1 million during fiscal 2018. This incremental tax expense consisted of $1.0million related to the recording of a deferred tax liability for future withholdings and income taxes on the distribution of foreign earnings, an income taxcharge of $3.3 million related to the deemed repatriation of the historical earnings of foreign subsidiaries, and the impact of the Tax Reform Act on therevaluation of deferred tax assets and liabilities as well as the impact on the Company's fiscal 2018 earnings from the reduced tax rate was an additionalincome tax expense of $16.8 million. As a result of the U.S. Tax Reform Act, at this time the Company estimates its effective income tax rate to be in the mid-twenties for fiscal 2019.The Company’s effective income tax rate was 24.5% in fiscal 2017. The effective income tax rate was reduced from the applicable U.S. statutory tax rateof 35.0% due to the generation of foreign tax credits from cash repatriations that occurred during the year and geographic profit mix, partially offset byadjustments to the reserve for uncertain tax positions.The Company’s effective income tax rate was 26.7% in fiscal 2016. The effective income tax rate was reduced from the applicable U.S. statutory tax rateof 35.0% due to certain adjustments to tax accruals and reserves, the generation of foreign tax credit carryforwards, R&D tax credits and the domesticmanufacturer’s deduction.Business Segment Operating ResultsThe Company is organized and managed on a global basis within two reportable segments: ID Solutions and Workplace Safety. The Company'sinternal measure of segment profit and loss reported to the chief operating decision maker for purposes of allocating resources to the segments and assessingperformance includes certain administrative costs, such as the cost of finance, information technology, human resources, and certain other administrativecosts. However, interest expense, investment and other income (expense), income tax expense, and certain corporate administrative expenses are excludedwhen evaluating segment performance.17Table of ContentsFollowing is a summary of segment information for the fiscal years ended July 31:(Dollars in thousands) 2018 2017 2016NET SALES ID Solutions $846,087 $800,392 $795,511Workplace Safety 327,764 312,924 325,114Total $1,173,851 $1,113,316 $1,120,625SALES GROWTH INFORMATION ID Solutions Organic 3.4 % 1.6 % (0.7)%Currency 2.3 % (1.0)% (3.1)%Total 5.7 % 0.6 % (3.8)%Workplace Safety Organic 0.7 % (2.0)% (0.7)%Currency 4.6 % (1.7)% (5.0)%Divestitures (0.6)% — % — %Total 4.7 % (3.7)% (5.7)%Total Company Organic 2.6 % 0.5 % (0.7)%Currency 3.0 % (1.2)% (3.7)%Divestitures (0.2)% — % — %Total 5.4 % (0.7)% (4.4)%SEGMENT PROFIT ID Solutions $143,411 $130,572 $112,276Workplace Safety 31,712 25,554 30,792Total $175,123 $156,126 $143,068SEGMENT PROFIT AS A PERCENT OF NET SALES ID Solutions 16.9 % 16.3 % 14.1 %Workplace Safety 9.7 % 8.2 % 9.5 %Total 14.9 % 14.0 % 12.8 %NET EARNINGS RECONCILIATION Years ended:(Dollars in thousands) July 31, 2018 July 31, 2017 July 31, 2016Total segment profit $175,123 $156,126 $143,068Unallocated costs: Administrative costs 27,093 25,111 25,190Gain on sale of business(1) (4,666) — —Investment and other (income) expense (2,487) (1,121) 709Interest expense 3,168 5,504 7,824Earnings before income taxes $152,015 $126,632 $109,345(1) Gain on the sale of Runelandhs Försäljnings AB relates to the WPS segment during the year ended July 31, 2018.ID SolutionsFiscal 2018 vs. 2017 Approximately 65% of net sales in the ID Solutions segment were generated in the Americas region, 25% in Europe, the Middle East and Africa("EMEA"), and 10% in Asia Pacific ("APAC"). IDS sales increased 5.7% to $846.1 million in fiscal 2018, compared to $800.4 million in fiscal 2017. Organicsales increased 3.4% and foreign currency fluctuations increased sales by 2.3% due to the strengthening of other currencies when compared to the U.S. dollarin fiscal 2018 compared to fiscal 2017.18Table of ContentsThe IDS business in the Americas realized low-single digit organic sales growth in fiscal 2018 compared to fiscal 2017. The increase was primarily due togrowth in the Wire ID, Product ID, and Safety and Facility ID product lines. Growth was driven by an increase in sales to distributor channel partners as wellas an overall increase in demand from diversified industrial customers. This organic growth was partially offset by a decline in the Healthcare ID product lineprimarily from pricing pressures caused by the consolidation of group purchasing organizations and healthcare systems along with a reduction in volume incertain product categories, compared to the same period in the prior year. Organic sales grew in the low-single digits in the United States, mid-single digits inBrazil and Canada, and high-single digits in Mexico.The IDS business in EMEA realized mid-single digit organic sales growth in fiscal 2018 as compared to fiscal 2017. Organic sales growth in 2018 wasprimarily due to sales increases in the Wire ID, Product ID, and Safety and Facility ID product lines. Organic sales growth was led by businesses based inWestern Europe and supplemented by businesses in emerging geographies; in particular, increased printer sales throughout the region drove the organic salesgrowth.Organic sales in Asia grew in the mid-single digits in fiscal 2018 compared to fiscal 2017. The IDS Asia region realized organic sales growth in theProduct and Wire ID product lines, partially offset by the Safety and Facility ID product line. Organic sales increased throughout most of Asia and was led byChina where organic sales increased in the mid-single digits.Segment profit increased to $143.4 million in fiscal 2018 from $130.6 million in fiscal 2017, an increase of $12.8 million or 9.8%. As a percent of netsales, segment profit increased to 16.9% in fiscal 2018, compared to 16.3% in the prior year. The increase in segment profit was primarily driven by salesgrowth, operational efficiencies in the Company's manufacturing processes, and efficiencies in SG&A expense in all regions, partially offset by pricingpressures in the healthcare product offerings in the Americas.Fiscal 2017 vs. 2016Approximately 70% of net sales in the ID Solutions segment were generated in the Americas region, 20% in EMEA, and 10% in APAC. IDS salesincreased 0.6% to $800.4 million in fiscal 2017, compared to $795.5 million in fiscal 2016. Organic sales increased 1.6% and foreign currency fluctuationsdecreased sales by 1.0% due to the strengthening of the U.S. dollar against certain other major currencies in fiscal 2017 compared to fiscal 2016.The IDS business in the Americas realized low-single digit organic sales growth in fiscal 2017 compared to fiscal 2016. The increase was primarily due togrowth in the Wire ID product line due to increased sales of printer consumables, which were partially offset by a sales decline in the Healthcare ID productlines due to pricing pressures within certain product categories from the consolidation of group purchasing organizations. Organic sales grew in the mid-single digits in Canada, low-single digits in Mexico and Brazil, and grew slightly in the United States.The IDS business in EMEA realized low-single digit organic sales growth in fiscal 2017 as compared to fiscal 2016. Organic sales growth in 2017 wasprimarily due to sales increases in the Product ID and Safety and Facility ID product lines. Organic sales growth in Western Europe was partially offset byorganic sales declines in certain emerging markets due to weak demand in the oil and gas industry.Organic sales in Asia grew in the high-single digits in fiscal 2017 compared to fiscal 2016. The IDS Asia region realized organic sales growth in both theOEM and MRO product categories in 2017 due to several new customer and project wins along with a general increase in activity within our existingcustomer base. Organic sales increased within all countries in the Asia region in 2017.Segment profit increased to $130.6 million in fiscal 2017 from $112.3 million in fiscal 2016, an increase of $18.3 million or 16.3%. As a percent of netsales, segment profit increased to 16.3% in fiscal 2017, compared to 14.1% in the prior year. The increase in segment profit was primarily driven byoperational efficiencies in our manufacturing processes in all regions, as well as a reduction in SG&A expense due to ongoing process improvementactivities.Workplace SafetyFiscal 2018 vs. 2017Approximately 50% of net sales in the WPS segment were generated in Europe, 35% in the Americas, and 15% in Australia. WPS sales increased 4.7% to$327.8 million in fiscal 2018, compared to $312.9 million in fiscal 2017. The increase consisted of organic sales growth of 0.7% and a positive foreigncurrency impact of 4.6%, partially offset by a sales decline of 0.6% due to the divestiture of the Runelandhs business.The WPS business in Europe realized low-single digit organic sales growth in fiscal 2018 compared to fiscal 2017. The growth in the region was drivenprimarily by businesses in the U.K. and France due to improvements in website functionality, growth in new customers, and key account management. Digitalchannel sales experienced double digit growth, partially offset by a low-single digit decline in traditional catalog sales in the Europe region in fiscal 2018compared to fiscal 2017.19Table of ContentsOrganic sales in the Americas declined in the low-single digits in fiscal 2018 compared to fiscal 2017. This decrease was primarily due to lower responserates to catalog promotions, even while large custom orders have been increasing. Traditional catalog channel sales declined in the low-single digits anddigital sales declined in the mid-single digits. The rate of decline in the catalog channel lessened in the final two quarters of fiscal 2018. The decline indigital sales was impacted by a transition to a new digital sales platform during fiscal 2018, which is expected to return to sales growth in the near-term.Organic sales in Australia grew in the low-single digits in fiscal 2018 compared to fiscal 2017. The WPS business has diversified its product offering intomany different industries in Australia as sales to the mining industry became less significant over the past several years. Its strategy is continuing to focus onenhancing its expertise in these industries to drive sales growth, while addressing its cost structure to improve profitability.Segment profit increased to $31.7 million in fiscal 2018 from $25.6 million in fiscal 2017, an increase of $6.1 million, or 23.8%. As a percentage of netsales, segment profit increased to 9.7% in fiscal 2018 compared to 8.2% in the prior year. The increase in segment profit was primarily due to sales growthand reduced SG&A expense.Fiscal 2017 vs. 2016Approximately 50% of net sales in the WPS segment were generated in Europe, 35% in the Americas, and 15% in Australia. WPS salesdecreased 3.7% to $312.9 million in fiscal 2017, compared to $325.1 million in fiscal 2016, which consisted of an organic sales decline of 2.0% and anegative foreign currency impact of 1.7%.The WPS business in Europe realized low-single digit organic sales growth in fiscal 2017 compared to fiscal 2016. The growth in the region was drivenprimarily by France and Sweden due to improvements in website functionality, digital sales, and key account management. Digital sales grew by doubledigits in the Europe region in fiscal 2017 compared to fiscal 2016.Organic sales in the Americas declined in the high-single digits in fiscal 2017 compared to fiscal 2016. This decrease was primarily in North America dueto lower response rates to catalog promotions and pricing pressures in industrial end markets. Although digital sales increased in the low-single digits, theincrease was not enough to balance the decline in sales through the catalog channel. In addition, pricing pressures from certain competitors have led to anacceleration of organic sales declines in the region from prior years.Organic sales in Australia were essentially flat in fiscal 2017 compared to fiscal 2016, following an extended period of organic sales declines. We havestarted to realize some sales growth by bringing our diverse product offering to many different industries in Australia as our sales to the mining industry havebecome less significant over the past several years. We continue to focus on enhancing our expertise in these industries to drive sales growth as well asaddressing our cost structure to improve profitability.Segment profit decreased to $25.6 million in fiscal 2017 from $30.8 million in fiscal 2016, a decrease of $5.2 million, or 16.9%. As a percentage of sales,segment profit decreased to 8.2% in fiscal 2017 compared to 9.5% in the prior year. The decrease in segment profit was primarily due to the decline in salesand reduced gross profit margins due to pricing challenges in the Americas region, which was partially offset by reduced selling, general and administrativeexpenses.Liquidity & Capital ResourcesCash and cash equivalents were $181.4 million at July 31, 2018, an increase of $47.5 million from July 31, 2017. The following summarizes the cashflow statement for fiscal years ended July 31:(Dollars in thousands)2018 2017 2016Net cash flow provided by (used in): Operating activities$143,042 $144,032 $138,976Investing activities(2,905) (15,253) (15,416)Financing activities(90,680) (136,241) (99,576)Effect of exchange rate changes on cash(1,974) 178 2,752Net increase (decrease) in cash and cash equivalents$47,483 $(7,284) $26,736Fiscal 2018 vs. 2017 Net cash provided by operating activities in fiscal 2018 was comparable with fiscal 2017. The change was driven by an increase in net earningsadjusted for non-cash items which was offset by a decrease in cash provided by working capital in support of growth and a higher incentive compensationpayment when compared to prior year.20Table of ContentsNet cash used in investing activities was $2.9 million during fiscal 2018, compared to $15.3 million in the prior year. The decrease in cash used ininvesting activities of $12.4 million was due to cash provided by the sale of Runelandhs offset by an increase in capital expenditures which were usedprimarily for manufacturing equipment and facility upgrades in the United States, Mexico, and Europe.Net cash used in financing activities was $90.7 million during fiscal 2018, compared to $136.2 million during the prior year. The change of $45.5million was primarily due to a decrease of $58.1 million in net credit facility and debt repayments in the current year resulting from the scheduled principalpayment on the private placement note during fiscal 2017, which was partially offset by a $7.6 million decrease in proceeds from stock option exercises inthe current year.The effect of fluctuations in exchange rates decreased cash balances by $2.0 million in fiscal 2018, primarily due to cash balances held in certaincurrencies that depreciated against the U.S. dollar.Fiscal 2017 vs. 2016Net cash provided by operating activities increased to $144.0 million during fiscal 2017 compared to $139.0 million in the prior year. The increase incash provided by operating activities of $5.0 million was primarily due to higher net earnings partially offset by lower non-cash depreciation andamortization.Net cash used in investing activities was $15.3 million during fiscal 2017, compared to $15.4 million in the prior year. Net cash used in financing activities was $136.2 million during fiscal 2017, compared to $99.6 million during the prior year. The increase in cash usedin financing activities of $35.1 million was primarily due to an increase of $75.3 million in credit facility and debt repayments in fiscal 2017, which waspartially offset by a $14.5 million increase in proceeds from stock option exercises in fiscal 2017. The remainder of the change was due to $23.6 million ofcash used for share repurchases in the prior year, while no shares were repurchased in fiscal 2017.The effect of fluctuations in exchange rates increased cash balances by $0.2 million in fiscal 2017, primarily due to cash balances held in certaincurrencies that appreciated against the U.S. dollar during the current fiscal year.The Company's cash balances are generated and held in numerous locations throughout the world. At July 31, 2018, approximately 54% of theCompany's cash and cash equivalents were held outside the United States. The Company's growth has historically been funded by a combination of cashprovided by operating activities and debt financing. The Company believes that its cash flow from operating activities and its borrowing capacity aresufficient to fund its anticipated requirements for working capital, capital expenditures, common stock repurchases, scheduled debt repayments, and dividendpayments for the next 12 months. Although the Company believes these sources of cash are currently sufficient to fund domestic operations, annual cashneeds could require repatriation of cash to the U.S. from foreign jurisdictions, which may result in additional tax payments.Refer to Item 8, Note 6, "Debt" for information regarding the Company's debt holdings.21Table of ContentsSubsequent Events Affecting Financial ConditionOn September 12, 2018, the Company announced an increase in the annual dividend to shareholders of the Company's Class A Common Stock, from$0.83 to $0.85 per share. A quarterly dividend of $0.2125 will be paid on October 31, 2018, to shareholders of record at the close of business on October 10,2018. This dividend represents an increase of 2.4% and is the 33rd consecutive annual increase in dividends.Off-Balance Sheet ArrangementsThe Company does not have material off-balance sheet arrangements. The Company is not aware of factors that are reasonably likely to adversely affectliquidity trends, other than the risk factors described in this and other Company filings. However, the following additional information is provided to assistthose reviewing the Company’s consolidated financial statements.Operating Leases — The leases generally are entered into for investments in facilities such as manufacturing facilities, warehouses and office space andCompany vehicles.Purchase Commitments — The Company has purchase commitments for materials, supplies, services, and property, plant and equipment as part of theordinary conduct of its business. In the aggregate, such commitments are not in excess of current market prices and are not material to the financial positionof the Company. Due to the proprietary nature of many of the Company’s materials and processes, certain supply contracts contain penalty provisions forearly termination. The Company does not believe a material amount of penalties will be incurred under these contracts based upon historical experience andcurrent expectations.Other Contractual Obligations — The Company does not have material financial guarantees or other contractual commitments that are reasonablylikely to adversely affect liquidity.Payments Due Under Contractual ObligationsThe Company’s future commitments at July 31, 2018, for long-term debt, operating lease obligations, purchase obligations, interest obligations, taxobligations and other obligations are as follows (dollars in thousands): Payments Due by PeriodContractual Obligations Total Less than1 Year 1-3Years 3-5Years Morethan5 Years UncertainTimeframeLong-term Debt Obligations and Notes Payable $52,618 $— $52,618 $— $— $—Operating Lease Obligations 51,210 14,826 18,725 13,612 4,047 —Purchase Obligations(1) 48,633 48,607 13 — 13 —Interest Obligations 4,466 2,233 2,233 — — —Tax Obligations 20,430 — — — — 20,430Other Obligations(2) 2,813 377 698 598 1,140 —Total $180,170 $66,043 $74,287 $14,210 $5,200 $20,430(1)Purchase obligations include all open purchase orders as of July 31, 2018.(2)Other obligations represent expected payments under the Company’s U.S. postretirement medical plan and international pension plans as disclosed inNote 4 to the Consolidated Financial Statements, under Item 8 of this report.Inflation and Changing PricesEssentially all of the Company’s revenue is derived from the sale of its products and services in competitive markets. Because prices are influenced bymarket conditions, it is not always possible to fully recover cost increases through pricing. Changes in product mix from year to year, timing differences ininstituting price changes, and the large amount of part numbers make it impracticable to accurately define the impact of inflation on profit margins.Critical Accounting EstimatesManagement’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s ConsolidatedFinancial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of thesefinancial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, andrelated disclosure of contingent assets and liabilities. The Company bases these estimates and judgments on historical experience and on various otherassumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates and judgments.22Table of ContentsThe Company believes the following accounting estimates are most critical to an understanding of its financial statements. Estimates are considered tobe critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accountingestimates are made, and (2) material changes in the estimates are reasonably likely from period to period. For a detailed discussion on the application of theseand other accounting estimates, refer to Note 1 to the Company’s Consolidated Financial Statements.Income TaxesThe Company operates in numerous taxing jurisdictions and is subject to regular examinations by U.S. federal, state and non-U.S. taxing authorities. Itsincome tax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which the Company doesbusiness. Due to the ambiguity of laws and rulings in each jurisdiction, the differences and interplay in tax laws between those jurisdictions, the uncertaintyof how underlying facts may be construed and the inherent uncertainty in estimating the final resolution of complex tax audit matters, the Company'sestimates of income tax liabilities may differ from actual payments or assessments.While the Company has support for the positions it takes on tax returns, taxing authorities may assert interpretations of laws and facts and maychallenge cross-jurisdictional transactions. The Company generally re-evaluates the technical merits of its tax positions and recognizes an uncertain taxbenefit when (i) there is completion of a tax audit; (ii) there is a change in applicable tax law including a tax case ruling or legislative guidance; or (iii) thereis an expiration of the statute of limitations. The gross liability for unrecognized tax benefits, excluding interest and penalties, was $20.4 million and $18.4million as of July 31, 2018 and 2017, respectively. The entire amount of unrecognized tax benefits as of July 31, 2018 and 2017, would affect the effectiveincome tax rate if recognized. Accrued interest and penalties related to unrecognized tax benefits were $5.8 million and $5.2 million as of July 31, 2018 and2017, respectively. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense on the ConsolidatedStatements of Earnings. The Company believes it is reasonably possible the amount of gross unrecognized tax benefits could be reduced by up to $9.7million in the next twelve months as a result of the resolution of worldwide tax matters, tax audit settlements, amended tax filings, and/or statute expirations,which would be the maximum amount that would be recognized through the Consolidated Statements of Earnings as an income tax benefit.On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted. Among the significant changes to the U.S. InternalRevenue Code, the Tax Reform Act reduces the U.S. federal corporate income tax rate from 35.0% to 21.0%, imposes a one-time tax on deemed repatriatedearnings of foreign subsidiaries, eliminates the domestic manufacturing deduction and moves to a partial territorial system by providing a 100% dividendreceived deduction on certain qualified dividends from foreign subsidiaries. As the Company has a July 31 fiscal year end, the lower corporate income taxrate will be phased in, resulting in a U.S. statutory federal income tax rate of 26.9% for the fiscal year ended July 31, 2018 and 21.0% for subsequent fiscalyears.As part of the transition to the partial territorial tax system, the Tax Reform Act imposes a one-time tax on the mandatory deemed repatriation ofhistorical earnings of foreign subsidiaries. Companies can claim certain credits for foreign taxes deemed paid on foreign earnings subject to the mandatorydeemed repatriation. The Company’s provisional calculations resulted in an income tax charge of $3.3 million related to the deemed repatriation of thehistorical earnings of foreign subsidiaries during the year ended July 31, 2018. Existing foreign tax credit carryforwards were used to fully offset this tax,resulting in no cash payments related to this charge.The reduction in the U.S. federal income tax rate requires the Company to remeasure its U.S. deferred tax assets and liabilities to the income tax rate atwhich the deductible or taxable event is expected to be realized, and changes the statutory U.S. federal tax from 35.0% to 26.9% for the entire year endedJuly 31, 2018. Additionally, the Company established a valuation allowance for deferred tax assets related to foreign tax credit carryforwards, primarilyrelated to the impact of the Tax Reform Act on the Company's ability to generate future foreign-source income. The provisional impact of the Tax Reform Actrelated to the remeasurement of deferred tax assets and liabilities, the impact on the Company’s fiscal 2018 earnings from the reduced tax rate, and theestablishment of the valuation allowance discussed above resulted in net income tax expense of $16.8 million for the year ended July 31, 2018.As a result of the Tax Reform Act, the Company expects that it will repatriate certain historical and future foreign earnings periodically, which in certainjurisdictions may be subject to withholding and income taxes. These additional withholding and income taxes are recorded as a deferred tax liabilityassociated with the basis difference in such jurisdictions. During the year ended July 31, 2018, the Company recorded a provisional income tax expenseof $1.0 million related to the recording of a deferred tax liability for future withholding and income taxes on the distribution of foreign earnings. Theuncertainty related to the taxation of such withholding and income taxes on distributions under the Tax Reform Act and the finalization of future cashrepatriation plans make the deferred tax liability a provisional amount.23Table of ContentsGoodwill and Other Indefinite-lived Intangible AssetsThe allocation of purchase price for business combinations requires management estimates and judgment as to expectations for future cash flows of theacquired business and the allocation of those cash flows to identifiable intangible assets in determining the estimated fair value for purchase price allocationpurposes. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result ina possible impairment of the intangible assets and goodwill or require acceleration of the amortization expense of finite-lived intangible assets. In addition,accounting guidance requires that goodwill and other indefinite-lived intangible assets be tested at least annually for impairment. If circumstances or eventsprior to the date of the required annual assessment indicate that, in management's judgment, it is more likely than not that there has been a reduction of fairvalue of a reporting unit below its carrying value, the Company performs an impairment analysis at the time of such circumstance or event. Changes inmanagement's estimates or judgments could result in an impairment charge, and such a charge could have an adverse effect on the Company's financialcondition and results of operations.The Company has identified six reporting units within its two reportable segments, IDS and WPS, with the following goodwill balances as of July 31,2018: IDS Americas & Europe, $292.2 million; People ID, $93.3 million; and WPS Europe, $34.3 million. The IDS APAC, WPS Americas, and WPS APACreporting units each have a goodwill balance of zero. The Company continues to believe the discounted cash flow model and market multiples modelprovide a reasonable and meaningful fair value estimate based upon the reporting units' projections of future operating results and cash flows and replicateshow market participants would value the Company's reporting units. The projections of future operating results, which are based on both past performanceand the projections and assumptions used in the Company's current and long range operating plans, are subject to change as a result of changing economicand competitive conditions. Significant estimates used by management in the discounted cash flows methodology include estimates of future cash flowsbased on expected growth rates, price increases, fluctuations in gross profit margins and SG&A expense as a percentage of sales, capital expenditures,working capital levels, income tax rates, and a weighted-average cost of capital reflecting the specific risk profile of the reporting unit being tested.Significant negative industry or economic trends, disruptions to the Company's business, loss of significant customers, inability to effectively integrateacquired businesses, unexpected significant changes or planned changes in use of the assets or in entity structure, and divestitures may adversely impact theassumptions used in the valuations.The Company completes its annual goodwill impairment analysis on May 1st of each fiscal year and evaluates its reporting units for potentialtriggering events on a quarterly basis in accordance with ASC 350, "Intangibles - Goodwill and Other." In addition to the metrics listed above, the Companyconsiders multiple internal and external factors when evaluating its reporting units for potential impairment, including (a) U.S. GDP growth, (b) industry andmarket factors such as competition and changes in the market for the reporting unit's products, (c) new product development, (d) hospital admission rates, (e)competing technologies, (f) overall financial performance such as cash flows, actual and planned revenue and profitability, and (g) changes in the strategy ofthe reporting unit. In the event the fair value of a reporting unit is less than the carrying value, including goodwill, the Company would then perform anadditional assessment that would compare the implied fair value of goodwill with the carrying amount of goodwill. The determination of the implied fairvalue of goodwill would require management to compare the fair value of the reporting unit to the estimated fair value of the assets and liabilities of thereporting unit. If necessary, the Company may consult valuation specialists to assist with the assessment of the estimated fair value of assets and liabilities forthe reporting unit. If the implied fair value of the goodwill is less than the carrying value, an impairment charge would be recorded.The Company considers a reporting unit’s fair value to be substantially in excess of its carrying value at 20% or greater. The annual impairment testingperformed on May 1, 2018, in accordance with ASC 350, “Intangibles - Goodwill and Other” (“Step One”) indicated that all of the reporting units passed StepOne of the goodwill impairment test, and each had a fair value substantially in excess of its carrying value.Other Indefinite-Lived Intangible AssetsOther indefinite-lived intangible assets were analyzed in accordance with the Company's policy outlined above using the income approach. Thevaluation was based upon current sales projections and profitability for each asset group, and the relief from royalty method was applied. As a result of theanalysis, all assets had a fair value in excess of carrying value.New Accounting StandardsThe information required by this Item is provided in Note 1 of the Notes to Consolidated Financial Statements contained in Item 8 — FinancialStatements and Supplementary Data.24Table of ContentsForward-Looking StatementsIn this annual report on Form 10-K, statements that are not reported financial results or other historic information are “forward-looking statements.”These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs,earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations.The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology aregenerally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees,uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady's control, that could cause actual results to differ materiallyfrom those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from:•Brady's ability to compete effectively or to successfully execute our strategy•Brady's ability to develop technologically advanced products that meet customer demands•Difficulties in protecting our sites, networks, and systems against security breaches•Decreased demand for the Company's products•Brady's ability to retain large customers•Extensive regulations by U.S. and non-U.S. governmental and self regulatory entities•Risks associated with the loss of key employees•Divestitures, contingent liabilities from divestitures and the failure to identify, integrate, and grow acquired companies•Litigation, including product liability claims•Brady's ability to execute facility consolidations and maintain acceptable operational service metrics•Foreign currency fluctuations•Changes in tax legislation and tax rates•Potential write-offs of Brady's substantial intangible assets•Differing interests of voting and non-voting shareholders•Brady's ability to meet certain financial covenants required by our debt agreements•Numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive, and regulatory naturecontained from time to time in Brady's U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the“Risk Factors” section within Item 1A of Part I of this Form 10-K.These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward-looking statements. Brady doesnot undertake to update its forward-looking statements except as required by law.Risk FactorsRefer to the information contained in Item 1A - Risk Factors.25Table of ContentsItem 7A. Quantitative and Qualitative Disclosures About Market RiskThe Company’s business operations give rise to market risk exposure due to changes in foreign exchange rates. To manage that risk effectively, theCompany enters into hedging transactions according to established guidelines and policies that enable it to mitigate the adverse effects of this financialmarket risk.The global nature of the Company’s business requires active participation in the foreign exchange markets. As a result of investments, productionfacilities and other operations on a global scale, the Company has assets, liabilities and cash flows in currencies other than the U.S. dollar. The objective ofthe Company’s foreign currency exchange risk management is to minimize the impact of currency movements on non-functional currency transactions. Toachieve this objective, the Company hedges a portion of known exposures using forward contracts. Main exposures are related to transactions denominatedin the British Pound, the Euro, Canadian dollar, Australian dollar, Mexican Peso, the Malaysian Ringgit, the Chinese Yuan, and Singapore dollar. As ofJuly 31, 2018, the notional amount of outstanding forward foreign exchange contracts designated as cash flow hedges was $27.2 million. The Company usesEuro-denominated debt of €45.0 million designated as a hedge instrument to hedge portions of the Company’s net investment in its Euro-denominatedbusinesses. The Company's revolving credit facility allows it to borrow up to $150.0 million in currencies other than U.S. dollars under an alternativecurrency sub-limit. The Company has periodically borrowed funds in Euros and British Pounds under this sub-limit. Debt issued in currencies other than U.S.dollars acts as a natural hedge to the Company's exposure to the associated currency.The Company also faces exchange rate risk from transactions with customers in countries outside the United States and from intercompany transactionsbetween affiliates. Although the Company has a U.S. dollar functional currency for reporting purposes, it has manufacturing sites throughout the world and asignificant portion of its sales are generated in foreign currencies. Costs incurred and sales recorded by subsidiaries operating outside of the United States aretranslated into U.S. dollars using exchange rates in effect during the respective period. As a result, the Company is exposed to movements in the exchangerates of various currencies against the U.S. dollar. In particular, the Company has more sales in European currencies than it has expenses in those currencies.Therefore, when European currencies strengthen or weaken against the U.S. dollar, operating profits are increased or decreased, respectively. Currencyexchange rates increased fiscal 2018 sales by 3.0% compared to fiscal 2017 as the U.S. dollar depreciated, on average, against other major currenciesthroughout the year.The Company is subject to the risk of change in foreign currency exchange rates due to its operations in foreign countries. The Company hasmanufacturing facilities and sells and distributes its products throughout the world. As a result, the Company’s financial results could be significantlyaffected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Companymanufactures, distributes and sells its products. The Company’s operating results are principally exposed to changes in exchange rates between the U.S.dollar and the Euro, the Australian dollar, the Canadian dollar, the Mexican Peso, the Singapore dollar, the British Pound, the Malaysian Ringgit, and theChinese Yuan. Changes in foreign currency exchange rates for the Company’s foreign subsidiaries reporting in local currencies are generally reported as acomponent of stockholders’ investment. The Company’s currency translation adjustment recorded in fiscal 2018, 2017, and 2016 as a separate component ofstockholders’ investment was unfavorable by $11.2 million, favorable by $8.6 million, and unfavorable by $1.4 million, respectively. As of July 31, 2018and 2017, the Company’s foreign subsidiaries had net current assets (defined as current assets less current liabilities) subject to foreign currency translationrisk of $170.0 million and $162.5 million, respectively. The potential decrease in net current assets as of July 31, 2018, from a hypothetical 10 percentadverse change in quoted foreign currency exchange rates would be approximately $17.0 million. This sensitivity analysis assumes a parallel shift in allmajor foreign currency exchange rates versus the U.S. dollar. Exchange rates rarely move in the same direction relative to the U.S. dollar due to positive andnegative correlations of the various global currencies. This assumption may overstate the impact of changing exchange rates on individual assets andliabilities denominated in a foreign currency.The Company could be exposed to interest rate risk through its corporate borrowing activities. The objective of the Company’s interest rate riskmanagement activities is to manage the levels of the Company’s fixed and floating interest rate exposure to be consistent with the Company’s preferred mix.The interest rate risk management program allows the Company to enter into approved interest rate derivatives if there is a desire to modify the Company’sexposure to interest rates. As of July 31, 2018, the Company had no interest rate derivatives and no variable rate debt outstanding.26Table of ContentsItem 8. Financial Statements and Supplementary DataBRADY CORPORATION & SUBSIDIARIESINDEX TO FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm28Financial Statements: Consolidated Balance Sheets — July 31, 2018 and 201729Consolidated Statements of Earnings — Years Ended July 31, 2018, 2017, and 201630Consolidated Statements of Comprehensive Income — Years Ended July 31, 2018, 2017, and 201631Consolidated Statements of Stockholders’ Investment — Years Ended July 31, 2018, 2017, and 201632Consolidated Statements of Cash Flows — Years Ended July 31, 2018, 2017, and 201633Notes to Consolidated Financial Statements — Years Ended July 31, 2018, 2017, and 20163427Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofBrady CorporationMilwaukee, WisconsinOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Brady Corporation and subsidiaries (the "Company") as of July 31, 2018 and 2017, therelated consolidated statements of earnings, comprehensive income, stockholders’ investment, and cash flows for each of the three years in the period endedJuly 31, 2018, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, thefinancial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2018 and 2017, and the results of itsoperations and its cash flows for each of the three years in the period ended July 31, 2018, in conformity with accounting principles generally accepted in theUnited States of America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of July 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated September 13, 2018, expressed an unqualified opinion on theCompany's internal control over financial reporting.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion./s/ DELOITTE & TOUCHE LLPMilwaukee, WisconsinSeptember 13, 2018We have served as the Company's auditor at least since 1981; however, an earlier year cannot be reliably determined.28Table of ContentsBRADY CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSJuly 31, 2018 and 2017 2018 2017 (Dollars in thousands)ASSETS Current assets: Cash and cash equivalents$181,427 $133,944Accounts receivable — net161,282 149,638Inventories: Finished products73,133 69,760Work-in-process19,903 18,117Raw materials and supplies20,035 19,147Total inventories113,071 107,024Prepaid expenses and other current assets15,559 17,208Total current assets471,339 407,814Other assets: Goodwill419,815 437,697Other intangible assets42,588 53,076Deferred income taxes7,582 35,456Other17,662 18,077Property, plant and equipment: Cost: Land6,994 7,470Buildings and improvements96,245 98,228Machinery and equipment270,989 261,192Construction in progress4,495 4,109 378,723 370,999Less accumulated depreciation280,778 272,896Property, plant and equipment — net97,945 98,103Total$1,056,931 $1,050,223LIABILITIES AND STOCKHOLDERS’ INVESTMENT Current liabilities: Notes payable$— $3,228Accounts payable66,538 66,817Wages and amounts withheld from employees67,619 58,192Taxes, other than income taxes8,318 7,970Accrued income taxes3,885 7,373Other current liabilities44,567 43,618Total current liabilities190,927 187,198Long-term obligations52,618 104,536Other liabilities61,274 58,349Total liabilities304,819 350,083Stockholders’ investment: Class A nonvoting common stock — Issued 51,261,487 shares at July 31, 2018 and 2017, respectively (aggregateliquidation preference of $42,803 at July 31, 2018 and 2017)513 513Class B voting common stock — Issued and outstanding 3,538,628 shares35 35Additional paid-in capital325,631 322,608Earnings retained in the business553,454 507,136Treasury stock — 2,867,870 and 3,446,669 shares at July 31, 2018 and 2017, respectively, of Class A nonvotingcommon stock, at cost(71,120) (85,470)Accumulated other comprehensive loss(56,401) (44,682)Total stockholders’ investment752,112 700,140Total$1,056,931 $1,050,223See Notes to Consolidated Financial Statements.29Table of ContentsBRADY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF EARNINGSYears Ended July 31, 2018, 2017 and 2016 2018 2017 2016 (In thousands, except per share amounts)Net sales$1,173,851 $1,113,316 $1,120,625Cost of products sold585,560 555,024 561,852Gross margin588,291 558,292 558,773Operating expenses: Research and development45,253 39,624 35,799Selling, general and administrative390,342 387,653 405,096Total operating expenses435,595 427,277 440,895Operating income152,696 131,015 117,878Other income (expense): Investment and other income (expense)2,487 1,121 (709)Interest expense(3,168) (5,504) (7,824)Earnings before income taxes152,015 126,632 109,345Income tax expense60,955 30,987 29,235Net earnings$91,060 $95,645 $80,110Net earnings per Class A Nonvoting Common Share: Basic$1.76 $1.87 $1.59Diluted$1.73 $1.84 $1.58Dividends$0.83 $0.82 $0.81Net earnings per Class B Voting Common Share: Basic$1.75 $1.86 $1.57Diluted$1.72 $1.83 $1.56Dividends$0.81 $0.80 $0.79Weighted average common shares outstanding: Basic51,677 51,056 50,541Diluted52,524 51,956 50,769See Notes to Consolidated Financial Statements.30Table of ContentsBRADY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEYears Ended July 31, 2018, 2017 and 2016 2018 2017 2016 (Dollars in thousands)Net earnings$91,060 $95,645 $80,110Other comprehensive (loss) income: Foreign currency translation adjustments: Net (loss) gain recognized in other comprehensive (loss) income(11,195) 8,621 (1,405) (11,195) 8,621 (1,405) Net investment hedge and long-term intercompany loan translation adjustments: Net loss recognized in other comprehensive (loss) income(2,480) (1,404) (2,280) (2,480) (1,404) (2,280) Cash flow hedges: Net gain (loss) recognized in other comprehensive (loss) income966 (225) (1,254)Reclassification adjustment for losses included in net earnings551 486 196 1,517 261 (1,058)Pension and other post-retirement benefits: Net gain (loss) recognized in other comprehensive (loss) income446 647 (293)Actuarial gain amortization(576) (483) (612)Prior service credit amortization— — (1,035) (130) 164 (1,940) Other comprehensive (loss) income, before tax(12,288) 7,642 (6,683)Income tax benefit (expense) related to items of other comprehensive (loss) income569 2,421 (3,028)Other comprehensive (loss) income, net of tax(11,719) 10,063 (9,711)Comprehensive income$79,341 $105,708 $70,399See Notes to Consolidated Financial Statements.31Table of ContentsBRADY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENTYears Ended July 31, 2018, 2017 and 2016 CommonStock AdditionalPaid-InCapital EarningsRetainedin theBusiness TreasuryStock AccumulatedOtherComprehensive(Loss)Income Other (In thousands, except per share amounts)Balances at July 31, 2015 $548 $314,403 $414,069 $(93,234) $(45,034) $(3,064)Net earnings — — 80,110 — — —Other comprehensive loss, net of tax — — — — (9,711) —Issuance of 308,059 shares of Class ACommon Stock under stock plan — (3,830) — 8,300 — —Other (Note 7) — (10) — (228) — (799)Tax shortfall from exercise of stock optionsand deferred compensation distributions — (1,716) — — — —Stock-based compensation expense (Note 7) — 8,154 — — — —Purchase of 1,153,689 shares of Class ACommon Stock — — — (23,552) — —Cash dividends on Common Stock Class A — $0.81 per share — — (38,001) — — —Class B — $0.79 per share — — (2,807) — — —Balances at July 31, 2016 $548 $317,001 $453,371 $(108,714) $(54,745) $(3,863)Net earnings — — 95,645 — — —Other comprehensive income, net of tax — — — — 10,063 —Issuance of 1,061,660 shares of Class ACommon Stock under stock plan — (5,868) — 23,591 — —Other (Note 7) — 1,943 — (347) — 3,863Tax shortfall from exercise of stock optionsand deferred compensation distributions — 37 — — — —Stock-based compensation expense (Note 7) — 9,495 — — — —Cash dividends on Common Stock Class A — $0.82 per share — — (39,037) — — —Class B — $0.80 per share — — (2,843) — — —Balances at July 31, 2017 $548 $322,608 $507,136 $(85,470) $(44,682) $—Net earnings — — 91,060 — — —Other comprehensive loss, net of tax — — — — (11,719) —Issuance of 842,305 shares of Class ACommon Stock under stock plan — (7,171) — 16,234 — —Tax benefit and withholdings from deferredcompensation distributions — 214 — (422) — —Stock-based compensation expense (Note 7) — 9,980 — — — —Purchase of 40,694 shares of Class ACommon Stock — — — (1,462) — —Adoption of ASU 2018-02 (Note 1) — — (1,869) — — —Cash dividends on Common Stock Class A — $0.83 per share — — (39,998) — — —Class B — $0.81 per share — — (2,875) — — —Balances at July 31, 2018 $548 $325,631 $553,454 $(71,120) $(56,401) $—See Notes to Consolidated Financial Statements.32Table of ContentsBRADY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSYears Ended July 31, 2018, 2017 and 2016 2018 2017 2016 (Dollars in thousands)Operating activities: Net earnings$91,060 $95,645 $80,110Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization25,442 27,303 32,432Non-cash portion of stock-based compensation expense9,980 9,495 8,154Gain on sale of business, net(4,666) — —Deferred income taxes33,656 (8,618) 2,085Changes in operating assets and liabilities (net of effects of business divestitures): Accounts receivable(16,612) 766 8,159Inventories(7,563) (5,687) 4,833Prepaid expenses and other assets1,747 1,812 475Accounts payable and accrued liabilities13,091 22,255 3,928Income taxes(3,093) 1,061 (1,200)Net cash provided by operating activities143,042 144,032 138,976Investing activities: Purchases of property, plant and equipment(21,777) (15,167) (17,140)Sale of business, net of cash transferred with business19,141 — —Other(269) (86) 1,724Net cash used in investing activities(2,905) (15,253) (15,416)Financing activities: Payment of dividends(42,873) (41,880) (40,808)Proceeds from exercise of stock options12,099 19,728 5,246Purchase of treasury stock(1,462) — (23,552)Proceeds from borrowing on credit facilities23,221 180,320 96,276Repayment of borrowing on credit facilities(78,419) (244,268) (91,759)Principal payments on debt— (49,302) (42,514)Debt issuance costs— — (803)Income tax on equity-based compensation, and other(3,246) (839) (1,662)Net cash used in financing activities(90,680) (136,241) (99,576)Effect of exchange rate changes on cash and cash equivalents(1,974) 178 2,752Net increase (decrease) in cash and cash equivalents47,483 (7,284) 26,736Cash and cash equivalents, beginning of period133,944 141,228 114,492Cash and cash equivalents, end of period$181,427 $133,944 $141,228Supplemental disclosures of cash flow information: Cash paid during the period for: Interest$2,976 $5,766 $8,528Income taxes33,267 31,885 28,497See Notes to Consolidated Financial Statements.33Table of ContentsBRADY CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears Ended July 31, 2018, 2017 and 2016(In thousands, except share and per share amounts)1. Summary of Significant Accounting PoliciesNature of Operations — Brady Corporation is a global manufacturer and supplier of identification solutions and workplace safety products thatidentify and protect premises, products and people. The ability to provide customers with a broad range of proprietary, customized, and diverse products foruse in various applications, along with a commitment to quality and service, a global footprint, and multiple sales channels, have made Brady a world leaderin many of its markets.Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Brady Corporation and its subsidiaries, allof which are wholly-owned. All intercompany accounts and transactions have been eliminated in consolidation.Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States ofAmerica requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets andliabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differfrom those estimates.Fair Value of Financial Instruments — The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accountsreceivable, notes payable, accounts payable, accrued liabilities and short-term and long-term debt) is a reasonable estimate of the fair value of theseinstruments due to their short-term nature. See Note 6 for more information regarding the fair value of long-term debt and Note 11 for fair valuemeasurements.Cash Equivalents — The Company considers all highly-liquid investments with original maturities of three months or less when acquired to be cashequivalents, which are recorded at cost.Accounts Receivables — Accounts receivables are stated net of allowances for doubtful accounts of $4,471 and $4,629 as of July 31, 2018 and 2017,respectively. No single customer comprised more than 10% of the Company’s consolidated net sales in fiscal 2018, 2017, or 2016, or 10% of the Company’sconsolidated accounts receivable as of July 31, 2018 or 2017. Specific customer provisions are made during review of significant outstanding amounts, inwhich customer creditworthiness and current economic trends may indicate that collection is doubtful. In addition, provisions are made for the remainder ofaccounts receivable based upon the age of the accounts receivable and the Company’s historical collection experience.Inventories — Inventories are stated at the lower of cost or market. Cost has been determined using the last-in, first-out (“LIFO”) method for certaininventories in the U.S. (15.0% of total inventories at July 31, 2018, and 13.5% of total inventories at July 31, 2017) and the first-in, first-out (“FIFO”) oraverage cost methods for other inventories. Had all inventories been accounted for on a FIFO basis instead of on a LIFO basis, the carrying value ofinventories would have increased by $7,015 and $6,807 as of July 31, 2018 and 2017, respectively.Goodwill — Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might beimpaired. The Company completes impairment reviews for its reporting units using a fair-value method based on management's judgments and assumptions.The fair value represents the amount at which a reporting unit could be bought or sold in a current transaction between market participants on an arms-lengthbasis. In estimating the fair value, the Company utilizes a discounted cash flow model and market multiples approach. The estimated fair value is comparedwith the carrying amount of the reporting unit, including goodwill. The annual impairment testing performed on May 1, 2018, in accordance with ASC 350,"Intangibles - Goodwill and Other" ("Step One") indicated that all reporting units with remaining goodwill had a fair value substantially in excess of itscarrying value. No goodwill impairment charges were recorded during the year ended July 31, 2018.Long-Lived and Other Intangible Assets — The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economicbenefits consumed on a straight-line basis, over the estimated periods benefited. Intangible assets with indefinite useful lives as well as goodwill are notsubject to amortization. These assets are assessed for impairment annually or more frequently as deemed necessary.The Company evaluates whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived and other finite-lived intangible assets may warrant revision or that the remaining balance of an asset may not be recoverable. If impairment is determined to exist, any relatedimpairment loss is calculated by comparing the fair value of the asset to its carrying value. In fiscal 2018, long-lived and other intangible assets wereanalyzed for potential impairment. As a result34Table of Contentsof the analysis, no material impairment charges were recorded. Refer to Note 2, "Goodwill and Other Intangible Assets" for further information.Property, Plant, and Equipment — Property, plant, and equipment are recorded at cost. The cost of buildings and improvements, computer systems, andmachinery and equipment are depreciated over their estimated useful lives using primarily the straight-line method for financial reporting purposes. Theestimated useful lives range from 3 to 33 years as shown below.Asset Category Range of Useful LivesBuildings & Improvements 10 to 33 YearsComputer Systems 5 YearsMachinery & Equipment 3 to 10 YearsFully depreciated assets are retained in property and accumulated depreciation accounts until disposal. Upon disposal, assets and related accumulateddepreciation are removed from the accounts and the net amount, less any proceeds from disposal, is charged to operations. Leasehold improvements aredepreciated over the shorter of the lease term or the estimated useful life of the respective asset. Depreciation expense was $19,009, $20,190, and $23,375 forthe years ended July 31, 2018, 2017 and 2016, respectively.Catalog Costs and Related Amortization — The Company accumulates all direct costs incurred, net of vendor cooperative advertising payments, in thedevelopment, production, and circulation of its catalogs on its balance sheet until such time as the related catalog is mailed. The catalog costs aresubsequently amortized into selling, general, and administrative expense over the expected sales realization cycle, which is one year or less. Consequently,any difference between the estimated and actual revenue stream for a particular catalog and the related impact on amortization expense is realized within aperiod of one year or less. The estimate of the expected sales realization cycle for a particular catalog is based on the Company’s historical sales experiencewith similar catalogs, and an assessment of prevailing economic conditions and various competitive factors. The Company tracks subsequent salesrealization, reassesses the marketplace, and compares its findings to the previous estimate, and adjusts the amortization of future catalogs, if necessary. AtJuly 31, 2018 and 2017, $6,154 and $7,299, respectively, of prepaid catalog costs were included in prepaid expenses and other current assets.Revenue Recognition — Revenue is recognized when it is both earned and realized or realizable. The Company’s policy is to recognize revenue whentitle to the product and risk of loss have transferred to the customer, persuasive evidence of an arrangement exists, and collection of the sales proceeds isreasonably assured, most of which occur upon shipment of goods to customers. The majority of the Company’s revenue relates to the sale of inventory tocustomers, and revenue is recognized when title and the risks and rewards of ownership pass to the customer. Given the nature of the Company’s business andthe applicable rules guiding revenue recognition, the Company’s revenue recognition practices do not contain estimates that materially affect the results ofoperations, with the exception of estimated returns and credit memos. The Company provides for an allowance for estimated product returns and creditmemos which is recognized as a deduction from net sales at the time of the sale. As of July 31, 2018 and 2017, the Company had a reserve for estimatedproduct returns and credit memos of $4,546 and $3,873, respectively.Sales Incentives — The Company accounts for cash consideration (such as sales incentives and cash discounts) given to its customers or resellers as areduction of revenue rather than an operating expense. Sales incentives for the years ended July 31, 2018, 2017, and 2016 were $40,671, $37,134, and$36,084, respectively.Shipping and Handling Fees and Costs — Amounts billed to a customer in a sale transaction related to shipping and handling fees are reported as netsales and the related costs incurred for shipping and handling are reported as cost of goods sold.Advertising Costs — Advertising costs are expensed as incurred, except catalog and mailing costs as outlined previously. Advertising expense for theyears ended July 31, 2018, 2017, and 2016 was $67,429, $68,268, and $74,204, respectively.Stock-Based Compensation — The Company has an incentive stock plan under which the Board of Directors may grant nonqualified stock options topurchase shares of Class A Nonvoting Common Stock, restricted stock units ("RSUs"), or restricted and unrestricted shares of Class A Nonvoting CommonStock to employees and non-employee directors. Certain awards may be subject to pre-established performance goals.The options issued under the plan have an exercise price equal to the fair market value of the underlying stock at the date of grant and generally vestover a three-year service period, with one-third becoming exercisable one year after the grant date and one-third additional in each of the succeeding twoyears. Options issued under the plan, referred to herein as “time-based” stock options, generally expire 10 years from the date of grant.Restricted and unrestricted shares and RSUs issued under the plan have a grant date fair value equal to the fair market value of the underlying stock atthe date of grant. Shares issued under the plan are referred to herein as either "time-based" or "performance-35Table of Contentsbased" restricted shares and RSUs. The time-based RSUs granted under the plan generally vest over a three-year service period, with one-third becomingexercisable one year after the grant date and one-third additional in each of the succeeding two years. The performance-based RSUs granted under the planvest at the end of a three-year service period provided specified Company financial performance metrics are met.In accordance with ASC 718 "Compensation - Stock Compensation," the Company measures and recognizes the compensation expense for all share-based awards made to employees and directors based on estimated grant-date fair values. The Black-Scholes option valuation model is used to determine thefair value of stock option awards on the date of grant. The Company recognizes the compensation cost of all share-based awards at the time it is deemedprobable the award will vest. This cost is recognized on a straight-line basis over the vesting period of the award. If it is determined that it is unlikely theaward will vest, the expense recognized to date for the award is reversed in the period in which this is evident and the remaining expense is not recorded.The Black-Scholes model requires the use of assumptions which determine the fair value of stock-based awards. The Company uses historical dataregarding stock option exercise behaviors to estimate the expected term of options granted based on the period of time that options granted are expected tobe outstanding. Expected volatilities are based on the historical volatility of the Company’s stock. The expected dividend yield is based on the Company’shistorical dividend payments and historical yield. The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the grant date for the lengthof time corresponding to the expected term of the option. The market value is calculated as the average of the high and the low stock price on the date of thegrant.The Company includes as part of cash flows from operating activities the benefits of tax deductions in excess of the tax-effected compensation of therelated stock-based awards for options exercised and restricted shares and RSUs vested during the period. See Note 7 “Stockholders' Investment” for moreinformation regarding the Company’s incentive stock plans.Research and Development — Amounts expended for R&D are expensed as incurred.Other Comprehensive Income — Other comprehensive income consists of foreign currency translation adjustments, net investment hedge and long-termintercompany loan translation adjustments, net unrealized gains and losses from cash flow hedges, and the unamortized gain on defined-benefit pensionplans net of their related tax effects.Foreign Currency Translation — Foreign currency assets and liabilities are translated into United States dollars at end of period rates of exchange, andincome and expense accounts are translated at the average rates of exchange for the period. Resulting translation adjustments are included in othercomprehensive income.Risk Management Activities — The Company does not hold or issue derivative financial instruments for trading purposes.Income Taxes — The Company accounts for income taxes in accordance with ASC 740 "Income Taxes", which requires an asset and liability approachto financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financialstatement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable tothe periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assetsto the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period indeferred tax assets and liabilities. The Company recognizes the effect of income tax positions only if sustaining those positions is more likely than not.Changes in recognition or measurement are reflected in the period in which a change in judgment occurs.Foreign Currency Hedging — The objective of the Company’s foreign currency exchange risk management is to minimize the impact of currencymovements on non-functional currency transactions and minimize the foreign currency translation impact on the Company’s foreign operations. While theCompany’s risk management objectives and strategies are driven from an economic perspective, the Company attempts, where possible and practical, toensure that the hedging strategies it engages in qualify for hedge accounting and result in accounting treatment where the earnings effect of the hedginginstrument provides substantial offset (in the same period) to the earnings effect of the hedged item. Generally, these risk management transactions willinvolve the use of foreign currency derivatives to protect against exposure resulting from transactions in a currency differing from the respective functionalcurrency.The Company recognizes derivative instruments as either assets or liabilities in the accompanying Consolidated Balance Sheets at fair value. Changesin the fair value (i.e., gains or losses) of the derivatives are recorded in the accompanying Consolidated Statements of Earnings as "Investment and otherincome (expense)" or as a component of Accumulated Other Comprehensive Income ("AOCI") in the accompanying Consolidated Balance Sheets and in theConsolidated Statements of Comprehensive Income, as discussed below.36Table of ContentsThe Company utilizes forward foreign exchange currency contracts to reduce the exchange rate risk of specific foreign currency denominatedtransactions. These contracts typically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future date, with maturities of less than 18months. These instruments may or may not qualify as hedges under the accounting guidance for derivative instruments and hedging activities based upon theintended objective of the contract. Hedge effectiveness is determined by how closely the changes in the fair value of the hedging instrument offset thechanges in the fair value or cash flows of the hedged item. Hedge accounting is permitted only if the hedging relationship is expected to be highly effectiveat the inception of the hedge and on an on-going basis. Gains or losses on the derivative related to hedge ineffectiveness are recognized in current earnings.The amount of hedge ineffectiveness was not material for the fiscal years ended July 31, 2018, 2017, and 2016.The Company has designated a portion of its foreign exchange contracts as cash flow hedges. For these instruments, the effective portion of the gain orloss on the derivative is reported as a component of AOCI and in the cash flow hedge section of the Consolidated Statements of Comprehensive Income, andreclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The remaining portion of its foreign exchangecontracts are not designated as hedge transactions, and accordingly, the mark-to-market impact of these derivative contracts is recorded each period in currentearnings.The Company also utilizes Euro-denominated debt designated as a hedge instrument to hedge portions of the Company’s net investments in Euro-denominated foreign operations. For net investment hedges that meet the effectiveness requirements, the net gains or losses attributable to changes in spotexchange rates are recorded as cumulative translation within AOCI and are included in the net investment hedge section of the Consolidated Statements ofComprehensive Income. Any ineffective portions are to be recognized in earnings. Recognition in earnings of amounts previously recorded in cumulativetranslation is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation.See Note 12 "Derivatives and Hedging Activities" for more information regarding the Company’s derivative instruments and hedging activities.New Accounting Standards — In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU")2018-02, "Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax effects from Accumulated Other Comprehensive Income," whichallows for reclassification of stranded tax effects on items resulting from the Tax Reform Act from AOCI to retained earnings. The guidance is effective forinterim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company elected to early adopt this standard andduring the three months ended July 31, 2018, the Company recorded an increase in AOCI and a decrease in retained earnings of $1,869, which was a result ofreduced future tax benefits from the reduction in the U.S. federal corporate tax rate. Refer to Note 3 "Other Comprehensive (Loss) Income" for moreinformation regarding the impact to the individual components of AOCI.In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,"which simplifies and reduces the complexity of the hedge accounting requirements and better aligns an entity's financial reporting for hedging relationshipswith its risk management activities. The guidance is effective for interim periods in fiscal years beginning after December 15, 2018, with early adoptionpermitted. This new guidance will require a modified retrospective adoption approach to existing hedging relationships as of the adoption date. TheCompany is currently evaluating the impact of this update on its consolidated financial statements and disclosures.In March 2017, the FASB issued ASU 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the presentation of Net Periodic PensionCost and Net Periodic Postretirement Benefit Cost," which requires entities to present the service cost component of net periodic pension cost and netperiodic postretirement benefit cost in the income statement line items where they report compensation cost. Entities will present all other components of netbenefit cost outside operating income, if this subtotal is presented. The amendment only impacts where those costs are reflected within the income statement.In addition, only the service cost component of net benefit cost is eligible for capitalization. This guidance is effective for annual periods beginning afterDecember 15, 2017, including interim reporting periods within those annual reporting periods. The Company does not expect the adoption of this update tohave a material impact on its consolidated financial statements.In January 2017, the FASB issued ASU 2017-04, "Goodwill and Other, Simplifying the Test for Goodwill Impairment," which simplifies the accountingfor goodwill impairment. The new guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Agoodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.All other goodwill impairment guidance will remain largely unchanged. This guidance is effective for annual periods beginning after December 15, 2019,and interim periods thereafter. However, early adoption is permitted for any impairment tests performed after January 1, 2017. This guidance will only impactthe Company's consolidated financial statements if there is a future impairment of goodwill.In February 2016, the FASB issued ASU 2016-02, "Leases," which replaces the current lease accounting standards. The update requires, among otheritems, lessees to recognize the assets and liabilities that arise from most leases on the balance sheet.37Table of ContentsThis guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The ASU allows for eithera full retrospective or a modified retrospective approach and early adoption is permitted. The Company expects the new lease standard to increase its totalassets and liabilities; however, it is evaluating the magnitude of the impact on its consolidated financial statements. The Company has formed a team toimplement the new lease standard and has selected a third-party software program to track and store its leases.In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers," which eliminates the transaction-and industry-specificrevenue recognition guidance under current GAAP and replaces it with a principles-based approach for determining revenue recognition. The new guidancerequires revenue recognition when control of the goods or services transfers to the customer, replacing the existing guidance which requires revenuerecognition when the risks and rewards transfer to the customer. Under the new guidance, companies should recognize revenues in amounts reflecting thepayment to which a company expects to be entitled in exchange for those goods or services.The Company adopted the new revenue standard on August 1, 2018, and assessed all potential impacts of this standard. The Company determined keyfactors from the five-step process to recognize revenue as prescribed by the new standard that may be applicable to each of the Company's operatingbusinesses that roll up into its two segments. Significant customers and contracts were identified and the Company completed the review of these contracts.The Company's assessment determined certain transactions with customers will require a change in the timing of when revenue and related expense isrecognized. The standard allows for either a full retrospective or a modified retrospective adoption approach. The Company has elected the modifiedretrospective method which will require a cumulative adjustment to retained earnings instead of retrospectively adjusting prior periods. The impact of thecumulative adjustment is a reduction of $2,850 to retained earnings in fiscal 2019.2. Goodwill and Other Intangible AssetsChanges in the carrying amount of goodwill by reportable segment for the years ended July 31, 2018 and 2017, were as follows: IDS WPS TotalBalance as of July 31, 2016$384,529 $45,342 $429,871Translation adjustments4,845 2,981 7,826Realignment of businesses between segments2,490 (2,490) —Balance as of July 31, 2017$391,864 $45,833 $437,697Translation adjustments(6,340) (1,487) (7,827)Current year divestiture— (10,055) (10,055)Balance as of July 31, 2018$385,524 $34,291 $419,815Goodwill at July 31, 2018 and 2017, is net of $118,637 and $209,392 of accumulated impairment losses within the IDS and WPS segments,respectively, for a total of $328,029. There were no impairment charges recorded during fiscal 2018. The decrease of $17,882 in the carrying amount ofgoodwill as of July 31, 2018, compared to July 31, 2017, was primarily due to the sale of our Runelandhs business within the WPS segment in May 2018 andthe effect of currency fluctuations during the fiscal year.The annual impairment testing performed on May 1, 2018, in accordance with ASC 350, “Intangibles - Goodwill and Other” (“Step One”) indicated thatall of the reporting units with remaining goodwill (IDS Americas & Europe, People ID, and WPS Europe) passed Step One of the goodwill impairment test aseach had a fair value substantially in excess of its carrying value.38Table of ContentsOther Intangible AssetsOther intangible assets include patents, tradenames, customer relationships, non-compete agreements and other intangible assets with finite lives beingamortized in accordance with the accounting guidance for other intangible assets. The net book value of these assets was as follows: July 31, 2018 July 31, 2017 WeightedAverageAmortizationPeriod(Years) GrossCarryingAmount AccumulatedAmortization Net BookValue WeightedAverageAmortizationPeriod(Years) GrossCarryingAmount AccumulatedAmortization Net BookValueAmortized other intangible assets: Patents5 $1,448 $(942) $506 5 $1,358 $(471) $887Tradenames and other9 4,497 (4,395) 102 9 4,528 (4,229) 299Customer relationships9 55,999 (33,535) 22,464 8 60,759 (31,909) 28,850Unamortized other intangibleassets: TradenamesN/A 19,516 — 19,516 N/A 23,040 — 23,040Total $81,460 $(38,872) $42,588 $89,685 $(36,609) $53,076The decrease in the gross carrying amount of other intangible assets as of July 31, 2018, compared to July 31, 2017, was primarily due to theelimination of $7,360 in certain intangible assets related to the sale of the Runelandhs business in the year ended July 31, 2018. The remaining decrease wasdue to the effect of currency translations during the fiscal year.Amortization expense on intangible assets during the fiscal years ended July 31, 2018, 2017, and 2016 was $6,433, $7,113 and $9,056, respectively.Amortization expense over each of the next five fiscal years is projected to be $5,724, $5,198, $5,157, $5,009 and $2,025 for the fiscal years ending July 31,2019, 2020, 2021, 2022 and 2023, respectively.3. Other Comprehensive (Loss) IncomeOther comprehensive (loss) income consists of foreign currency translation adjustments, net investment hedge and long-term intercompany loantranslation adjustments, net unrealized gains and losses from cash flow hedges, and the unamortized gain on defined-benefit pension plans net of their relatedtax effects.The following table illustrates the changes in the balances of each component of accumulated other comprehensive loss, net of tax, for the periodspresented: Unrealizedgain (loss) oncash flowhedges Gain onpostretirementplans Foreigncurrencytranslationadjustments AccumulatedothercomprehensivelossEnding balance, July 31, 2016$(857) $2,236 $(56,124) $(54,745)Other comprehensive income before reclassification670 867 8,713 10,250Amounts reclassified from accumulated other comprehensive loss296 (483) — (187)Ending balance, July 31, 2017$109 $2,620 $(47,411) $(44,682)Other comprehensive income (loss) before reclassification465 382 (14,242) (13,395)Amounts reclassified from accumulated other comprehensive loss383 (576) — (193)Adoption of accounting standard ASU 2018-02$(94) $876 $1,087 1,869Ending balance, July 31, 2018$863 $3,302 $(60,566) $(56,401)The increase in accumulated other comprehensive loss as of July 31, 2018, compared to July 31, 2017, was primarily due to the appreciation of the U.S.dollar against certain other currencies during the fiscal year. This was partially offset by the impact of early adopting ASU 2018-02 during the three monthsended July 31, 2018, in which stranded tax effects from items related to the Tax Reform Act were reclassified from AOCI to retained earnings. The foreigncurrency translation adjustments column in the table above includes foreign currency translation, foreign currency translation on intercompany notes and theimpact of settlements of net investment hedges, net of tax. Of the $193 reclassified from AOCI, the $383 loss on cash flow hedges was reclassified into cost ofproducts sold, and the $576 net gain on post-retirement plans was reclassified into selling, general, and administrative expense on the ConsolidatedStatement of Earnings in fiscal 2018.39Table of ContentsThe following table illustrates the income tax benefit (expense) on the components of other comprehensive (loss) income: 2018 2017 2016Income tax benefit (expense) related to items of other comprehensive (loss)income: Net investment hedge translation adjustments $(55) $1,170 $(1,804)Cash flow hedges (669) 705 192Pension and other post-retirement benefits (64) (4) 738Other income tax adjustments (512) 550 (2,154)Adoption of accounting standard ASU 2018-02 1,869 — —Income tax benefit (expense) related to items of other comprehensive (loss)income $569 $2,421 $(3,028)4. Employee Benefit PlansThe Company provides postretirement medical benefits (the “Plan”) for eligible regular full and part-time domestic employees (including spouses) whoretired prior to January 1, 2016, as outlined by the Plan.The accounting guidance on defined benefit pension and other postretirement plans requires full recognition of the funded status of defined benefit andother postretirement plans on the balance sheet as an asset or a liability. The guidance also requires that unrecognized prior service costs/credits, gains/losses,and transition obligations/assets be recorded in AOCI, thus not changing the income statement recognition rules for such plans.The Plan is unfunded and recorded as a liability in the accompanying Consolidated Balance Sheets as of July 31, 2018 and 2017. The following tableprovides a reconciliation of the changes in the Plan’s accumulated benefit obligation during the years ended July 31: 2018 2017Obligation at beginning of fiscal year $3,390 $3,800Interest cost 79 89Benefit payments (449) (499)Obligation at end of fiscal year $3,020 $3,390As of July 31, 2018 and 2017, amounts recognized as liabilities in the accompanying Consolidated Balance Sheets consist of: 2018 2017Current liability $377 $449Non-current liability 2,643 2,941 $3,020 $3,390As of July 31, 2018 and 2017, pre-tax amounts recognized in accumulated other comprehensive loss in the accompanying Consolidated BalanceSheets consist of net actuarial gains of $4,984 and $5,504, respectively.Net periodic benefit gain for the Plan for fiscal years ended July 31, 2018, 2017, and 2016, includes the following components: Years Ended July 31, 2018 2017 2016Net periodic postretirement benefit gain included the following components: Service cost $— $— $9Interest cost 79 89 114Amortization of prior service credit — — (1,035)Amortization of net actuarial gain (520) (544) (646)Periodic postretirement benefit gain $(441) $(455) $(1,558)The estimated net actuarial gain that will be amortized from accumulated other comprehensive income into net periodic postretirement benefit costover the next fiscal year is $497. No prior service credit remains due to the plan amendment to eliminate post-retirement benefits for employees retiring afterJanuary 1, 2016.40Table of ContentsThe following assumptions were used in accounting for the Plan: 2018 2017 2016Weighted average discount rate used in determining accumulated postretirement benefit obligation 2.50% 2.50% 2.50%Weighted average discount rate used in determining net periodic benefit cost 2.50% 2.50% 3.00%Assumed health care trend rate used to measure accumulated postretirement benefit obligation atJuly 31 7.00% 7.25% 7.50%Rate to which cost trend rate is assumed to decline (the ultimate trend rate) 5.50% 5.50% 5.50%Fiscal year the ultimate trend rate is reached 2024 2024 2018A one-percentage point change in assumed health care cost trend rates would have the following effects on the Plan:One-PercentagePoint IncreaseOne-PercentagePoint DecreaseEffect on future service and interest cost$4$(5)Effect on accumulated postretirement benefit obligation at July 31, 201817(18)The following benefit payments are expected to be paid during the years ending July 31: 2019$37720203592021339202230920232892024 through 20281,140The Company sponsors statutory defined benefit pension plans that are primarily unfunded and provide an income benefit upon termination orretirement for certain of its international employees. As of July 31, 2018 and 2017, the accumulated pension obligation related to these plans was $5,383 and$6,075, respectively. As of July 31, 2018 and 2017, pre-tax amounts recognized in accumulated other comprehensive loss in the accompanying ConsolidatedBalance Sheets were losses of $194 and $641, respectively. The net periodic benefit cost for these plans was $341, $665, and $795 during the years endedJuly 31, 2018, 2017 and 2016, respectively.The Company also has two deferred compensation plans, the Executive Deferred Compensation Plan and the Director Deferred Compensation Planwhich allow for compensation to be deferred into either the Company's Class A Nonvoting Common Stock or in other investment funds. Neither plan allowsfunds to be transferred between the Company's Class A Nonvoting Common Stock and the other investment funds. Additionally, the Company has a non-qualified deferred compensation plan, the Brady Restoration Plan, which allows an equivalent benefit to the Matched 401(k) Plan and the Funded RetirementPlan for executives' income exceeding the IRS limits of participation in a qualified 401(k) plan. At July 31, 2018 and 2017, $14,383 and $14,121,respectively, of deferred compensation was included in other long-term liabilities in the accompanying Consolidated Balance Sheets.The Company has retirement and profit-sharing plans covering substantially all full-time domestic employees and certain employees of its foreignsubsidiaries. Contributions to the plans are determined annually or quarterly, according to the respective plans, based on earnings of the respectivecompanies and employee contributions. Accrued retirement and profit-sharing contributions of $3,844 and $3,327 were included in other current liabilitieson the accompanying Consolidated Balance Sheets as of July 31, 2018 and 2017, respectively. The amounts charged to expense for these retirement andprofit sharing plans were $14,395, $13,750, and $10,407 during the years ended July 31, 2018, 2017 and 2016, respectively.41Table of Contents5. Income TaxesEarnings before income taxes consists of the following: Years Ended July 31, 2018 2017 2016United States $48,903 $43,561 $61,349Other Nations 103,112 83,071 47,996Total $152,015 $126,632 $109,345Earnings before income taxes in the United States increased to $48,903 in fiscal 2018 from $43,561 in fiscal 2017 primarily due to increased organicsales and expense management in the U.S. The increase in earnings before income taxes in Other Nations to $103,112 in fiscal 2018 from $83,071 in fiscal2017 was primarily due to increased organic sales and improved profitability in fiscal 2018 in both the Company's European and Asian-based businesses.The decrease in earnings before income taxes in the United States to $43,561 in fiscal 2017 from $61,349 in fiscal 2016 was primarily dueto intercompany royalty transactions that occurred in fiscal 2016 which increased U.S. earnings before income taxes by $21,003. The increase in earningsbefore income taxes in Other Nations to $83,071 in fiscal 2017 from $47,996 in fiscal 2016 was primarily due to intercompany royalty transactions thatoccurred in fiscal 2016 which decreased earnings before income taxes by $21,003, as well as improved profitability in fiscal 2017 in both the Company'sEuropean and Asian-based businesses.Income tax expense consists of the following: Years Ended July 31, 2018 2017 2016Current income tax expense: United States $2,830 $15,279 $5,048Other Nations 26,593 23,826 19,929States (U.S.) 910 1,163 1,348 $30,333 $40,268 $26,325Deferred income tax (benefit) expense: United States $30,267 $(8,173) $3,946Other Nations (1,462) (1,329) (1,387)States (U.S.) 1,817 221 351 $30,622 $(9,281) $2,910Total income tax expense $60,955 $30,987 $29,235On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted. Among the significant changes to the U.S. InternalRevenue Code, the Tax Reform Act reduces the U.S. federal corporate income tax rate from 35.0% to 21.0%, imposes a one-time tax on deemed repatriatedearnings of foreign subsidiaries, eliminates the domestic manufacturing deduction and moves to a partial territorial system by providing a 100% dividendreceived deduction on certain qualified dividends from foreign subsidiaries. As the Company has a July 31 fiscal year end, the lower corporate income taxrate will be phased in, resulting in a U.S. statutory federal income tax rate of 26.9% for the fiscal year ended July 31, 2018, and 21.0% for subsequent fiscalyears.42Table of ContentsThe tax effects of temporary differences are as follows as of July 31, 2018 and 2017: July 31, 2018 Assets Liabilities TotalInventories $3,095 $(53) $3,042Prepaid catalog costs — (978) (978)Employee benefits 3,772 (91) 3,681Accounts receivable 828 (1) 827Fixed assets 2,959 (4,911) (1,952)Intangible assets 1,073 (29,630) (28,557)Deferred and equity-based compensation 10,656 — 10,656Postretirement benefits 3,280 — 3,280Tax credit and net operating loss carry-forwards 64,348 — 64,348Less valuation allowance (56,866) — (56,866)Other, net 8,548 (8,962) (414)Total $41,693 $(44,626) $(2,933) July 31, 2017 Assets Liabilities TotalInventories $4,516 $(1) $4,515Prepaid catalog costs — (1,107) (1,107)Employee benefits 8,932 — 8,932Accounts receivable 1,141 (11) 1,130Fixed assets 2,819 (3,884) (1,065)Intangible assets 1,187 (37,681) (36,494)Deferred and equity-based compensation 16,743 — 16,743Postretirement benefits 4,144 — 4,144Tax credit and net operating loss carry-forwards 70,128 — 70,128Less valuation allowance (38,563) — (38,563)Other, net 12,630 (10,798) 1,832Total $83,677 $(53,482) $30,195Tax carry-forwards at July 31, 2018 are comprised of:•Foreign net operating loss carry-forwards of $108,540, of which $88,197 have no expiration date and the remainder of which expire within the nextfive years.•State net operating loss carry-forwards of $35,231, which expire from 2022 to 2038.•Foreign tax credit carry-forwards of $25,115, which expire from 2021 to 2027.•State R&D credit carry-forwards of $11,448, which expire from 2019 to 2033.The reduction in the U.S. federal income tax rate as a result of the Tax Reform Act requires the Company to remeasure its U.S. deferred tax assets andliabilities to the income tax rate at which the deductible or taxable event is expected to be realized. The Tax Reform Act also changes the statutory U.S.federal tax rate from 35.0% to 26.9% for the entire year ended July 31, 2018. Additionally, the Company established a valuation allowance against itsdeferred tax assets related to foreign tax credit carryforwards, primarily related to the impact of the Tax Reform Act on the Company's ability to utilize theseforeign tax credit carryforwards. The provisional impact of the Tax Reform Act related to the remeasurement of deferred tax assets and liabilities, the impacton the Company’s fiscal 2018 earnings from the reduced tax rate, and the establishment of the valuation allowance discussed above resulted in net incometax expense of $16,761 for the year ended July 31, 2018.The valuation allowance increased by $18,303 during the fiscal year ended July 31, 2018, primarily due to the establishment of a valuation allowanceon a significant portion of foreign tax credit carryforwards as a result of the Tax Reform Act. The net increase was partially offset by valuation allowancedecreases in China, India, Sweden, Brazil, and South Africa primarily due to the utilization of net operating loss carryforwards that had valuation allowancesapplied to them. If reversed in future periods, substantially all of the valuation allowance would impact the income tax rate.43Table of ContentsRate ReconciliationA reconciliation of the tax computed by applying the statutory U.S. federal income tax rate to earnings from continuing operations before income taxesto the total income tax expense is as follows: Years Ended July 31, 2018 2017 2016Tax at statutory rate 26.9 % 35.0 % 35.0 %State income taxes, net of federal tax benefit 1.6 % 1.0 % 0.8 %International rate differential (1.1)% (6.3)% 0.4 %Rate variances arising from foreign subsidiary distributions(1) 0.8 % (5.9)% 0.5 %Foreign tax credit carryforward valuation allowance(2) 14.1 % — % — %Divestiture of business(3) (0.8)% — % — %Adjustments to tax accruals and reserves(4) 2.2 % 3.6 % (3.7)%Research and development tax credits and domestic manufacturer’s deduction (2.0)% (1.8)% (3.6)%Deferred tax and other adjustments, net (1.6)% (1.1)% (2.7)%Effective tax rate 40.1 % 24.5 % 26.7 %(1)The year ended July 31, 2017, includes the generation of foreign tax credit carryforwards from cash repatriations that occurred during the fiscalyear.(2)The year ended July 31, 2018, includes the establishment of a valuation allowance against foreign tax credit carryforwards as a result of the TaxReform Act.(3)The year ended July 31, 2018, includes the divestiture of the Company's Runelandhs business based in Sweden. Refer to Note 13 - Divestitures foradditional information.(4)The years ended July 31, 2018 and 2017, include increases in current year uncertain tax positions, while the year ended July 31, 2016, includesreductions of uncertain tax positions resulting from the closure of audits and lapses in statutes of limitations.44Table of ContentsUncertain Tax PositionsThe Company follows the guidance in ASC 740, "Income Taxes" regarding uncertain tax positions. The guidance requires application of a more likelythan not threshold to the recognition and de-recognition of income tax positions. A reconciliation of unrecognized tax benefits (excluding interest andpenalties) is as follows:Balance at July 31, 2015$21,133Additions based on tax positions related to the current year3,093Additions for tax positions of prior years1,290Reductions for tax positions of prior years(9,369)Lapse of statute of limitations(344)Settlements with tax authorities(456)Cumulative Translation Adjustments and other(53)Balance as of July 31, 2016$15,294Additions based on tax positions related to the current year2,500Additions for tax positions of prior years1,124Reductions for tax positions of prior years(62)Lapse of statute of limitations(663)Settlements with tax authorities(118)Cumulative Translation Adjustments and other287Balance as of July 31, 2017$18,362Additions based on tax positions related to the current year2,467Additions for tax positions of prior years1,586Reductions for tax positions of prior years(23)Lapse of statute of limitations(489)Settlements with tax authorities(1,277)Cumulative Translation Adjustments and other(196)Balance as of July 31, 2018$20,430The $20,430 of unrecognized tax benefits, if recognized, would affect the Company's effective income tax rate. The Company has classified $13,238and $11,725, excluding interest and penalties, of the reserve for uncertain tax positions in Other Liabilities on the Consolidated Balance Sheets as of July 31,2018 and 2017, respectively. The Company has classified $7,192 and $6,637, excluding interest and penalties, as a reduction of long-term deferred incometax assets on the Consolidated Balance Sheets as of July 31, 2018 and 2017, respectively.Interest expense is recognized on the amount of potentially underpaid taxes associated with the Company's tax positions, beginning in the first periodin which interest starts accruing under the respective tax law and continuing until the tax positions are settled. The Company recognized an increase of $556,an increase of $674, and an increase of $3 in interest expense during the years ended July 31, 2018, 2017, and 2016, respectively. There was an $83 increaseto the reserve for uncertain tax positions for penalties during the year ended July 31, 2018, an increase of $218 during the year ended July 31, 2017, and anincrease of $66 during the year end July 31, 2016. These amounts are net of reversals due to reductions for tax positions of prior years, statute of limitations,and settlements. At July 31, 2018 and 2017, the Company had $2,762 and $2,239, respectively, accrued for interest on unrecognized tax benefits. Penaltiesare accrued if the tax position does not meet the minimum statutory threshold to avoid the payment of a penalty. At July 31, 2018 and 2017, the Companyhad $3,027 and $2,948, respectively, accrued for penalties on unrecognized tax benefits. Interest expense and penalties are recorded as a component ofincome tax expense in the Consolidated Statements of Earnings.The Company estimates that it is reasonably possible that the unrecognized tax benefits may be reduced by $9,686 within 12 months as a result of theresolution of worldwide tax matters, tax audit settlements, amended tax filings, and/or statute expirations. The maximum amount that would be recognized inthe Consolidated Statements of Earnings as an income tax benefit is $9,686 during the next twelve months.During the year ended July 31, 2018, the Company recognized $675 of tax benefits (including interest and penalties) associated with the lapse ofstatutes of limitations. The Company also recognized $1,742 of tax benefits (including interest and penalties) associated with the reduction of tax positionsfor prior years due to the closure of certain tax audits.45Table of ContentsThe Company and its subsidiaries file income tax returns in the U.S., various state, and foreign jurisdictions. The following table summarizes the opentax years for the Company's major jurisdictions:Jurisdiction Open Tax YearsUnited States — Federal F’15 — F’18France F’15 — F’18Unremitted EarningsAs part of the transition to the partial territorial tax system, the Tax Reform Act imposes a one-time tax on the mandatory deemed repatriation ofhistorical earnings of foreign subsidiaries. Companies can claim certain credits for foreign taxes deemed paid on foreign earnings subject to the mandatorydeemed repatriation. The Company’s provisional calculations resulted in an income tax charge of $3,327 related to the deemed repatriation of the historicalearnings of foreign subsidiaries during the year ended July 31, 2018. Existing foreign tax credit carryforwards were used to fully offset this tax, resulting inno cash payments related to this charge.As a result of the Tax Reform Act, the Company expects that it will repatriate certain historical and future foreign earnings periodically, which in certainjurisdictions may be subject to withholding and income taxes. These additional withholding and income taxes are recorded as a deferred tax liabilityassociated with the basis difference in such jurisdictions. During the year ended July 31, 2018, the Company recorded a provisional income tax expense of$984 related to the recording of a deferred tax liability for future withholding and income taxes on the distribution of foreign earnings. The uncertaintyrelated to the taxation of such withholding and income taxes on distributions under the Tax Reform Act and the finalization of future cash repatriation plansmake the deferred tax liability a provisional amount.Provisional DisclosureThe Company continues to review the anticipated impacts of the global intangible low taxed income (“GILTI”), foreign derived intangible income("FDII") and base erosion anti-abuse tax (“BEAT”) enacted under the Tax Reform Act, which are not effective until fiscal year 2019. The consolidatedfinancial statements for the year ended July 31, 2018, do not include a provisional estimate associated with either GILTI, FDII or BEAT.The final enactment impacts of the Tax Reform Act may differ from the above estimates due to changes in interpretation, legislative action to addressquestions that arise, changes in accounting standards for income taxes or related interpretations in response to the Tax Reform Act, or any updates or changesto information the Company has utilized to develop the estimates, including impacts from changes to current year earnings estimates and foreign exchangerates of foreign subsidiaries. The U.S. Securities and Exchange Commission has issued rules that would allow for a measurement period of up to one year afterthe enactment date of the Tax Reform Act to finalize the recording of the related tax impacts.6. DebtOn September 25, 2015, the Company and certain of its subsidiaries entered into an unsecured $300,000 multi-currency revolving loan agreement witha group of six banks. Under this revolving loan agreement, which has a final maturity date of September 25, 2020, the Company has the option to selecteither a base interest rate (based upon the higher of the federal funds rate plus one-half of 1%, the prime rate of Bank of America plus a margin based on theCompany’s consolidated leverage ratio, or the one-month LIBOR rate plus 1%) or a Eurocurrency interest rate (at the LIBOR rate plus a margin based on theCompany’s consolidated leverage ratio). At the Company’s option, and subject to certain conditions, the available amount under the revolving loanagreement may be increased from $300,000 up to $450,000. During fiscal 2018, the Company repaid $51,941 of its revolving loan agreement and themaximum amount outstanding throughout the year was $57,235. As of July 31, 2018, there were no borrowings outstanding on the credit facility. There was$296,957 available for future borrowing under the credit facility, which can be increased to $446,957 at the Company's option, subject to certain conditions.The revolving loan agreement has a final maturity date of September 25, 2020. As such, the borrowing is included in "Long-term obligations" on theConsolidated Balance Sheets.The Company has a multi-currency line of credit in China with capacity of $10,000. This line of credit supports USD-denominated or CNY-denominated borrowing to fund working capital and operations for the Company's Chinese entities and is due on demand. The borrowings under this facilitymay be made for a period up to one year from the date of borrowing with interest on the USD-denominated borrowings incurred equal to U.S. dollar LIBORon the date of borrowing plus a margin based upon duration and on the CNY-denominated borrowings incurred equal to the local China rate based uponduration. There is no ultimate maturity on the facility and it is subject to periodic review and repricing. The Company is not required to comply with anyfinancial covenants as part of this agreement. The maximum amount outstanding on this facility was $3,228 and the Company repaid $3,257 during fiscal2018. As of July 31, 2018, there were no borrowings outstanding on this line of credit in China and46Table of Contentsthere was $10,000 available for future borrowings. Due to the short-term nature of this credit facility, the borrowings are classified as "Notes payable" withincurrent liabilities in the accompanying Consolidated Balance Sheets.On May 13, 2010, the Company completed a private placement of €75.0 million aggregate principal amount of senior unsecured notes to accreditedinstitutional investors. The €75.0 million of senior notes consisted of €30.0 million aggregate principal amount of 3.71% Series 2010-A Senior Notes, whichwere repaid during fiscal 2017, and €45.0 million aggregate principal amount of 4.24% Series 2010-A Senior Notes, due May 13, 2020, with interest payableon the notes semiannually. This private placement was exempt from the registration requirements of the Securities Act of 1933. The notes have been fully andunconditionally guaranteed on an unsecured basis by the Company’s domestic subsidiaries.During fiscal 2006 and 2007, the Company completed two private placement note issuances totaling $350 million in ten-year fixed rate notes withvarying maturity dates to institutional investors at interest rates varying from 5.30% to 5.33%. Under the terms of the notes, the notes were required to berepaid equally over seven years, with interest payable on the notes due semiannually on various dates throughout the year. The private placements wereexempt from the registration requirements of the Securities Act of 1933. The notes were not registered for resale and may not be resold absent suchregistration or an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. The notes hadcertain prepayment penalties for repaying them prior to the maturity date. Under the debt agreement, the Company made scheduled principal payments of$16.4 million and $42.5 million in fiscal years 2017 and 2016, respectively. The final principal payment for the 2006 series of notes was made during fiscal2016, while the final principal payment for the 2007 series of notes was made during fiscal 2017.The Company’s debt agreements require it to maintain certain financial covenants, including a ratio of debt to the trailing twelve months EBITDA, asdefined in the debt agreements, of not more than a 3.25 to 1.0 ratio (leverage ratio) and the trailing twelve months EBITDA to interest expense of not lessthan a 3.0 to 1.0 ratio (interest expense coverage). As of July 31, 2018, the Company was in compliance with these financial covenants, with the ratio of debtto EBITDA, as defined by the agreements, equal to 0.3 to 1.0 and the interest expense coverage ratio equal to 58.7 to 1.0.Total debt consists of the following as of July 31: 2018 2017Euro-denominated notes payable in 2020 at a fixed rate of 4.24% $52,618 $53,202USD-denominated borrowing on revolving loan agreement at a weighted average rate of 0.00% and 1.94% as of July31, 2018 and 2017, respectively — 16,998EUR-denominated borrowing on revolving loan agreement at a weighted average rate of 0.00% and 0.75% as of July31, 2018 and 2017, respectively — 34,336CNY-denominated borrowing on China revolving loan agreement at a weighted average rate of 0.00% and 3.92% asof July 31, 2018 and 2017, respectively — 2,228USD-denominated borrowing on China revolving loan agreement at a weighted average rate of 0.00% and 2.63% asof July 31, 2018 and 2017, respectively — 1,000 $52,618 $107,764Less notes payable — (3,228)Total long-term debt $52,618 $104,536The Company had outstanding letters of credit of $3,043 and $4,067 at July 31, 2018 and 2017, respectively.The estimated fair value of the Company’s long-term obligations was $55,707 and $109,303 at July 31, 2018 and 2017, respectively, as compared tothe carrying value of $52,618 and $104,536 at July 31, 2018 and 2017, respectively. The fair value of the long-term obligations, which was determined usingthe market approach based upon the interest rates available to the Company for borrowings with similar terms and maturities, was determined to be Level 2under the fair value hierarchy. Due to the short-term nature and variable interest rate pricing of the Company's revolving debt in China, it is determined thatthe carrying value of the debt equals the fair value of the debt.Maturities on long-term debt are as follows:Years Ending July 31, 2019$—202052,618Total$52,61847Table of Contents7. Stockholders' InvestmentInformation as to the Company’s capital stock at July 31, 2018 and 2017 is as follows: July 31, 2018 July 31, 2017 SharesAuthorized SharesIssued (thousands)Amount SharesAuthorized SharesIssued (thousands)AmountPreferred Stock, $.01 par value 5,000,000 5,000,000 Cumulative Preferred Stock:6% Cumulative 5,000 5,000 1972 Series 10,000 10,000 1979 Series 30,000 30,000 Common Stock, $.01 par value: Class ANonvoting 100,000,000 51,261,487 $513 100,000,000 51,261,487 $513Class B Voting 10,000,000 3,538,628 35 10,000,000 3,538,628 35 $548 $548Before any dividend may be paid on the Class B Common Stock, holders of the Class A Common Stock are entitled to receive an annual,noncumulative cash dividend of $0.01665 per share. Thereafter, any further dividend in that fiscal year must be paid on each share of Class A Common Stockand Class B Common Stock on an equal basis.Other than as required by law, holders of the Class A Common Stock are not entitled to any vote on corporate matters, unless, in each of the threepreceding fiscal years, the $.01665 preferential dividend described above has not been paid in full. Holders of the Class A Common Stock are entitled to onevote per share for the entire fiscal year immediately following the third consecutive fiscal year in which the preferential dividend is not paid in full. Holdersof Class B Common Stock are entitled to one vote per share for the election of directors and for all other purposes.Upon liquidation, dissolution or winding up of the Company, and after distribution of any amounts due to holders of Preferred Stock, if any, holders ofthe Class A Common Stock are entitled to receive the sum of $0.835 per share before any payment or distribution to holders of the Class B Common Stock.Thereafter, holders of the Class B Common Stock are entitled to receive a payment or distribution of $0.835 per share. Thereafter, holders of the Class ACommon Stock and Class B Common Stock share equally in all payments or distributions upon liquidation, dissolution or winding up of the Company.The preferences in dividends and liquidation rights of the Class A Common Stock over the Class B Common Stock will terminate at any time that thevoting rights of Class A Common Stock and Class B Common Stock become equal.The following is a summary of other activity in stockholders’ investment for the fiscal years ended July 31, 2018, 2017, and 2016: Deferred Compensation Shares Held in RabbiTrust, at cost TotalBalances at July 31, 2015 $5,684 $(8,748) $(3,064)Shares at July 31, 2015 252,261 362,025 Sale of shares at cost $(1,238) $1,278 $40Purchase of shares at cost 178 (1,017) (839)Balances at July 31, 2016 $4,624 $(8,487) $(3,863)Shares at July 31, 2016 201,418 347,081 Sale of shares at cost $(1,247) $1,288 $41Purchase of shares at cost 315 (925) (610)Effect of plan amendment 4,432 — 4,432Balances at July 31, 2017 $8,124 $(8,124) $—Shares at July 31, 2017 314,082 314,082 Sale of shares at cost $(977) $977 $—Purchase of shares at cost 1,075 (1,075) —Balances at July 31, 2018 $8,222 $(8,222) $—Shares at July 31, 2018 299,916 299,916 48Table of ContentsDeferred Compensation PlansThe Company has two deferred compensation plans, the Executive Deferred Compensation Plan and the Director Deferred Compensation Plan thatallow for compensation to be deferred into either the Company's Class A Nonvoting Common Stock or in other investment funds. Both the Director DeferredCompensation Plan and the Executive Deferred Compensation Plan disallow transfers from other investment funds into the Company's Class A NonvotingCommon Stock.At July 31, 2018, the deferred compensation balance in stockholders’ investment represents the investment at the original cost of shares held in theCompany’s Class A Nonvoting Common Stock for the deferred compensation plans. The balance of shares held in the Rabbi Trust represents the investmentin the Company’s Class A Nonvoting Common Stock at the original cost of all the Company’s Class A Nonvoting Common Stock held in deferredcompensation plans.Incentive Stock PlansThe Company has an incentive stock plan under which the Board of Directors may grant nonqualified stock options to purchase shares of Class ANonvoting Common Stock, restricted stock units ("RSUs"), or restricted and unrestricted shares of Class A Nonvoting Common Stock to employees and non-employee directors. Certain awards may be subject to pre-established performance goals.As of July 31, 2018, the Company has reserved 2,955,586 shares of Class A Nonvoting Common Stock for outstanding stock options, RSUs andrestricted shares and 4,049,563 shares of Class A Nonvoting Common Stock remain for future issuance of stock options, RSUs and restricted and unrestrictedshares under the active plans. The Company uses treasury stock or will issue new Class A Nonvoting Common Stock to deliver shares under these plans.Total stock-based compensation expense recognized by the Company during the years ended July 31, 2018, 2017, and 2016, was $9,980 ($7,485 net oftaxes), $9,495 ($5,887 net of taxes), and $8,154 ($5,056 net of taxes), respectively. As of July 31, 2018, total unrecognized compensation cost related toshare-based compensation awards that are expected to vest was $10,898 pre-tax, net of estimated forfeitures, which the Company expects to recognize over aweighted-average period of 1.6 years.Stock OptionsThe stock options issued under the plan have an exercise price equal to the fair market value of the underlying stock at the date of grant and generallyvest ratably over a three-year period, with one-third becoming exercisable one year after the grant date and one-third additional in each of the succeeding twoyears. Options issued under the plan, referred to herein as “time-based” options, generally expire 10 years from the date of grant.The Company has estimated the fair value of its time-based stock option awards granted during the years ended July 31, 2018, 2017, and 2016, usingthe Black-Scholes option valuation model. The weighted-average assumptions used in the Black-Scholes valuation model are reflected in the followingtable:Black-Scholes Option Valuation Assumptions 2018 2017 2016Expected term (in years) 6.07 6.11 6.11Expected volatility 28.19% 29.55% 29.95%Expected dividend yield 2.72% 2.70% 2.59%Risk-free interest rate 1.96% 1.26% 1.64%Weighted-average market value of underlying stock at grant date $36.85 $35.14 $20.02Weighted-average exercise price $36.85 $35.14 $20.02Weighted-average fair value of options granted during the period $7.96 $7.56 $4.58The following is a summary of stock option activity for the fiscal year ended July 31, 2018: Option Price Options Outstanding Weighted Average ExercisePriceBalance as of July 31, 2017 $19.96—$38.83 2,879,801 $27.40Options granted 36.85—36.85 364,046 36.85Options exercised 19.96—38.31 (622,916) 28.84Options cancelled 19.96—38.31 (116,298) 31.42Balance as of July 31, 2018 $19.96—$38.83 2,504,633 $28.2349Table of ContentsThe total fair value of options vested during the fiscal years ended July 31, 2018, 2017, and 2016, was $3,006, $2,911, and $3,203, respectively. Thetotal intrinsic value of options exercised during the fiscal years ended July 31, 2018, 2017, and 2016, was $6,208, $7,901, and $811, respectively.There were 1,722,229, 1,859,959, and 2,488,527 options exercisable with a weighted average exercise price of $26.82, $28.20, and $30.18 at July 31,2018, 2017, and 2016, respectively. The cash received from the exercise of stock options during the fiscal years ended July 31, 2018, 2017, and 2016, was$12,099, $19,728, and $5,246, respectively. The tax benefit on options exercised during the fiscal years ended July 31, 2018, 2017, and 2016, was $1,893,$3,002, and $308, respectively.The following table summarizes information about stock options outstanding at July 31, 2018: Options Outstanding Options Outstanding and ExercisableRange of Exercise Prices Number of SharesOutstanding atJuly 31, 2018 Weighted AverageRemainingContractual Life(in years) WeightedAverageExercisePrice SharesExercisableat July 31,2018 Weighted AverageRemainingContractual Life(in years) WeightedAverageExercisePrice$19.96 - $26.99 846,353 6.7 $20.84 611,735 6.5 $21.16$27.00 - $32.99 978,233 3.3 29.24 977,506 3.3 29.24$33.00 - $38.83 680,047 8.4 35.97 132,988 7.2 35.13Total 2,504,633 5.8 $28.23 1,722,229 4.7 $26.82As of July 31, 2018, the aggregate intrinsic value (defined as the amount by which the fair value of the underlying stock exceeds the exercise price ofan option) of options outstanding and the options exercisable was $24,033 and $18,945, respectively.Restricted Shares and RSUsRestricted and unrestricted shares and RSUs issued under the plan have a grant date fair value equal to the fair market value of the underlying stock atthe date of grant. Shares issued under the plan are referred to herein as either "time-based" or "performance-based" restricted shares and RSUs. The time-basedRSUs issued under the plan generally vest ratably over a three-year period, with one-third becoming exercisable one year after the grant date and one-thirdadditional in each of the succeeding two years. The performance-based RSUs granted under the plan vest at the end of a three-year service period providedspecified Company financial performance metrics are met.50Table of ContentsThe following tables summarize the RSU and restricted share activity for the fiscal year ended July 31, 2018:Time-Based RSUs and Restricted Shares Shares Weighted AverageGrant Date Fair ValueBalance as of July 31, 2017 517,108 $25.61New grants 94,457 36.80Vested (219,389) 24.76Forfeited (49,320) 26.94Balance as of July 31, 2018 342,856 $29.05The time-based RSUs granted during the fiscal year ended July 31, 2017, had a weighted-average grant-date fair value of $35.15. The total fair value oftime-based RSU's vested during the years ended July 31, 2018 and 2017, was $8,237 and $6,512, respectively.Performance-Based RSUs Shares Weighted AverageGrant DateFair ValueBalance as of July 31, 2017 58,206 $32.03New grants 56,290 33.12Vested — —Forfeited (6,399) 32.57Balance as of July 31, 2018 108,097 $32.57The performance-based RSUs granted during the year ended July 31, 2017, had a weighted-average grant-date fair value of $32.03. The aggregateintrinsic value of unvested time-based and performance-based RSU's outstanding at July 31, 2018 and 2017, and expected to vest, was $17,249 and $19,100,respectively.8. Segment InformationThe Company is organized and managed on a global basis within three operating segments, Identification Solutions ("IDS"), Workplace Safety("WPS"), and People Identification ("People ID"), which aggregate into two reportable segments that are organized around businesses with consistentproducts and services: IDS and WPS. The Identification Solutions and People ID operating segments aggregate into the IDS reporting segment, while theWPS reporting segment is comprised solely of the Workplace Safety operating segment.The Company's internal measure of segment profit and loss reported to the chief operating decision maker for purposes of allocating resources to thesegments and assessing performance includes certain administrative costs, such as the cost of finance, information technology, human resources, and certainother administrative costs. However, interest expense, investment and other income (expense), income tax expense, and certain corporate administrativeexpenses are excluded when evaluating segment performance.51Table of ContentsFollowing is a summary of segment information for the years ended July 31, 2018, 2017 and 2016: 2018 2017 2016Sales to External Customers: ID Solutions $846,087 $800,392 $795,511WPS 327,764 312,924 325,114Total Company $1,173,851 $1,113,316 $1,120,625Depreciation & Amortization: ID Solutions $22,075 $23,092 $27,285WPS 3,367 4,211 5,147Total Company $25,442 $27,303 $32,432Segment Profit: ID Solutions $143,411 $130,572 $112,276WPS 31,712 25,554 30,792Total Company $175,123 $156,126 $143,068Assets: ID Solutions $737,174 $761,448 $748,408WPS 138,329 154,827 154,321Corporate 181,428 133,948 141,235Total Company $1,056,931 $1,050,223 $1,043,964Expenditures for property, plant & equipment: ID Solutions $17,283 $12,347 $11,640WPS 4,494 2,820 5,500Total Company $21,777 $15,167 $17,140Following is a reconciliation of segment profit to earnings before income taxes for the years ended July 31, 2018, 2017 and 2016: Years Ended July 31, 2018 2017 2016Total segment profit$175,123 $156,126 $143,068Unallocated costs: Administrative costs27,093 25,111 25,190Gain on sale of business(1)(4,666) — —Investment and other (income) expense(2,487) (1,121) 709Interest expense3,168 5,504 7,824Earnings before income taxes$152,015 $126,632 $109,345 (1) Gain on sale of business relates to the WPS segment during the year ended July 31, 2018. Revenues*Years Ended July 31, Long-Lived Assets**As of July 31, 2018 2017 2016 2018 2017 2016Geographic information: United States $663,935 $651,294 $663,511 $366,638 $367,418 $376,045Other 573,652 521,791 519,579 193,710 221,458 216,076Eliminations (63,736) (59,769) (62,465) — — —Consolidated total $1,173,851 $1,113,316 $1,120,625 $560,348 $588,876 $592,121 * Revenues are attributed based on country of origin.** Long-lived assets consist of property, plant, and equipment, other intangible assets and goodwill.52Table of Contents9. Net Earnings per Common ShareBasic net earnings per common share is computed by dividing net earnings (after deducting the applicable preferential Class A Common Stockdividends) by the weighted average Common Shares outstanding of 51,677 for fiscal 2018, 51,056 for fiscal 2017, and 50,541 for fiscal 2016. The Companyutilizes the two-class method to calculate earnings per share.Reconciliations of the numerator and denominator of the basic and diluted per share computations for the Company’s Class A and Class B commonstock are summarized as follows: Years ended July 31, 2018 2017 2016Numerator (in thousands): Earnings (Numerator for basic and diluted earnings per Class A Nonvoting Common Share)$91,060 $95,645 $80,110Less: Preferential dividends(799) (788) (783)Preferential dividends on dilutive stock options(14) (14) (1)Numerator for basic and diluted earnings per Class B Voting Common Share$90,247 $94,843 $79,326Denominator (in thousands): Denominator for basic earnings per share for both Class A and Class B51,677 51,056 50,541Plus: Effect of dilutive equity awards847 900 228Denominator for diluted earnings per share for both Class A and Class B52,524 51,956 50,769Net earnings per Class A Nonvoting Common Share: Basic$1.76 $1.87 $1.59Diluted$1.73 $1.84 $1.58Net earnings per Class B Voting Common Share: Basic$1.75 $1.86 $1.57Diluted$1.72 $1.83 $1.56Options to purchase 751,200, 669,036, and 3,172,755 shares of Class A Nonvoting Common Stock for the fiscal years ended July 31, 2018, 2017,and 2016, respectively, were not included in the computation of diluted net earnings per share as the impact of the inclusion of the options would have beenanti-dilutive.10. Commitments and ContingenciesThe Company has entered into various non-cancellable operating lease agreements. Rental expense charged to operating expenses on a straight-linebasis was $15,938, $17,495, and $17,253 for the years ended July 31, 2018, 2017, and 2016, respectively. Future minimum lease payments required undersuch leases in effect at July 31, 2018, were as follows:Years ending July 31, 2019$14,826202010,27020218,45620227,41920236,192Thereafter4,047 $51,210In the normal course of business, the Company is named as a defendant in various lawsuits in which claims are asserted against the Company. In theopinion of management, the liabilities, if any, which may ultimately result from lawsuits are not expected to have a material effect on the consolidatedfinancial statements of the Company.11. Fair Value MeasurementsThe Company follows the guidance in ASC 820, "Fair Value Measurements and Disclosures" as it relates to its financial and non-financial assets andliabilities. The accounting guidance applies to other accounting pronouncements that require or permit fair value measurements, defines fair value basedupon an exit price model, establishes a framework for measuring fair value, and expands the applicable disclosure requirements. The accounting guidanceindicates, among other things, that a fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market forthe asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.53Table of ContentsThe accounting guidance on fair value measurements establishes a fair market value hierarchy for the pricing inputs used to measure fair market value.The Company’s assets and liabilities measured at fair market value are classified in one of the following categories:Level 1 — Assets or liabilities for which fair value is based on unadjusted quoted prices in active markets for identical instruments that are accessible as ofthe measurement date.Level 2 — Assets or liabilities for which fair value is based on other significant pricing inputs that are either directly or indirectly observable.Level 3 — Assets or liabilities for which fair value is based on significant unobservable pricing inputs to the extent little or no market data is available,which result in the use of management's own assumptions.The following table sets forth by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fairvalue on a recurring basis at July 31, 2018 and July 31, 2017, according to the valuation techniques the Company used to determine their fair values. InputsConsidered As Quoted Prices in ActiveMarkets for IdenticalAssets (Level 1) Significant OtherObservable Inputs(Level 2) Fair Values Balance Sheet ClassificationsJuly 31, 2017 Trading securities$13,994 $— $13,994 Other assetsForeign exchange contracts— 1,354 1,354 Prepaid expenses and other current assetsTotal Assets$13,994 $1,354 $15,348 Foreign exchange contracts$— $1,577 $1,577 Other current liabilitiesTotal Liabilities$— $1,577 $1,577 July 31, 2018 Trading securities$14,383 $— $14,383 Other assetsForeign exchange contracts— 1,077 1,077 Prepaid expenses and other current assetsTotal Assets$14,383 $1,077 $15,460 Foreign exchange contracts$— $3 $3 Other current liabilitiesTotal Liabilities$— $3 $3 The following methods and assumptions were used to estimate the fair value of each class of financial instrument:Trading securities: The Company’s deferred compensation investments consist of investments in mutual funds. These investments were classified asLevel 1 as the shares of these investments trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoingbasis.Foreign exchange contracts: The Company’s foreign exchange contracts were classified as Level 2, as the fair value was based on the present value ofthe future cash flows using external models that use observable inputs, such as interest rates, yield curves and foreign exchange rates. See Note 12,“Derivatives and Hedging Activities” for additional information.There have been no transfers of assets or liabilities between the fair value hierarchy levels, outlined above, during the fiscal years ended July 31, 2018and July 31, 2017.The Company’s financial instruments, other than those presented in the disclosures above, include cash and cash equivalents, accounts receivable,notes payable, accounts payable, accrued liabilities and short-term and long-term debt. The fair values of cash and cash equivalents, accounts receivable,notes payable, accounts payable, and accrued liabilities approximated carrying values because of the short-term nature of these instruments. See Note 6 forinformation regarding the fair value of the Company's short-term and long-term debt.54Table of Contents12. Derivatives and Hedging ActivitiesThe Company utilizes forward foreign exchange contracts to reduce the exchange rate risk of specific foreign currency denominated transactions. Thesecontracts typically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future date, with maturities of less than 18 months, whichqualify as cash flow hedges or net investment hedges under the accounting guidance for derivative instruments and hedging activities. The primary objectiveof the Company’s foreign currency exchange risk management program is to minimize the impact of currency movements due to transactions in other thanthe respective subsidiaries’ functional currency and to minimize the impact of currency movements on the Company’s net investment denominated in acurrency other than the U.S. dollar. To achieve this objective, the Company hedges a portion of known exposures using forward foreign exchange contracts.As of July 31, 2018 and 2017, the notional amount of outstanding forward foreign exchange contracts was $32,667 and $81,195, respectively.The Company hedges a portion of known exposures using forward foreign exchange contracts. Main exposures are related to transactions denominatedin the British Pound, the Euro, Canadian dollar, Australian dollar, Mexican Peso, Chinese Yuan, Malaysian Ringgit and Singapore dollar. Generally, theserisk management transactions will involve the use of foreign currency derivatives to minimize the impact of currency movements on non-functional currencytransactions.Hedge effectiveness is determined by how closely the changes in fair value of the hedging instrument offset the changes in the fair value or cash flowsof the hedged item. Hedge accounting is permitted only if the hedging relationship is expected to be highly effective at the inception of the hedge and on anon-going basis. Gains or losses on the derivative related to hedge ineffectiveness are recognized in current earnings.Cash Flow HedgesThe Company has designated a portion of its forward foreign exchange contracts as cash flow hedges and recorded these contracts at fair value in theaccompanying Consolidated Balance Sheets. For these instruments, the effective portion of the gain or loss on the derivative is reported as a component ofother comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. AtJuly 31, 2018 and July 31, 2017, unrealized gain of $1,017 and loss of $500 have been included in OCI, respectively. These balances are expected to bereclassified from OCI to earnings during the next twelve months when the hedged transactions impact earnings. For the years ended July 31, 2018, 2017, and2016, the Company reclassified losses of $551, $486, and $199 from OCI into cost of goods sold, respectively.As of July 31, 2018 and 2017, the notional amount of outstanding forward foreign exchange contracts designated as cash flow hedges was $27,150 and$30,016, respectively.Net Investment HedgesThe Company has also designated certain third party-foreign currency denominated debt instruments as net investment hedges. On May 13, 2010, theCompany completed the private placement of €75.0 million aggregate principal amount of senior unsecured notes to accredited institutional investors. The€75.0 million of senior notes consisted of €30.0 million aggregate principal amount of 3.71% Series 2010-A Senior Notes, which were repaid during fiscal2017, and €45.0 million aggregate principal amount of 4.24% Series 2010-A Senior Notes, due May 13, 2020. This Euro-denominated debt obligation wasdesignated as a net investment hedge to selectively hedge portions of the Company's net investment in European foreign operations. As of July 31, 2018 and2017, the cumulative balance recognized in accumulated other comprehensive income were gains of $9,961 and $9,348, respectively, on the Euro-denominated debt obligations. The changes recognized in other comprehensive income during the years ended July 31, 2018, 2017 and 2016, were gains of$612, losses of $1,792, and $1,372, respectively, on the Euro-denominated debt obligations. The Company’s foreign denominated debt obligations arevalued under a market approach using publicized spot prices.Non-Designated HedgesDuring the fiscal years ended July 31, 2018, 2017, and 2016, the Company recognized gains of $24, losses of $2,508, and gains of $2,162, respectively,in “Investment and other income (expense)” in the accompanying Consolidated Statements of Earnings related to non-designated hedges.55Table of ContentsFair values of derivative and hedging instruments in the accompanying Consolidated Balance Sheets were as follows: Asset Derivatives Liability Derivatives July 31, 2018 July 31, 2017 July 31, 2018 July 31, 2017 BalanceSheetLocation FairValue BalanceSheetLocation FairValue BalanceSheetLocation FairValue BalanceSheetLocation FairValueDerivatives designated ashedging instruments: Cash flow hedges Foreign exchangecontractsPrepaid expensesand other currentassets $1,076 Prepaid expensesand other currentassets $1,067 Other currentliabilities $— Other currentliabilities $1,569Net investment hedges Foreign currencydenominated debtPrepaid expensesand other currentassets $— Prepaid expensesand other currentassets $— Long termobligations, lesscurrent maturities $52,668 Long termobligations, lesscurrent maturities $53,280Total derivatives designated ashedging instruments $1,076 $1,067 $52,668 $54,849Derivatives not designated ashedging instruments: Foreign exchangecontractsPrepaid expensesand other currentassets $1 Prepaid expensesand other currentassets $287 Other currentliabilities $3 Other currentliabilities $7Total derivatives notdesignated as hedginginstruments $1 $287 $3 $713. DivestitureOn May 31, 2018, the Company sold Runelandhs Försäljnings AB (“Runelandhs”), a business based in Kalmar, Sweden. Runelandhs is a directmarketer of industrial and office equipment. Its products include lifting, transporting, and warehouse equipment; workbenches and material handlingsupplies; products for environmental protection; and entrance, reception, and office furnishings. The Runelandhs business was part of the Company’s WPSsegment and its earnings were not material. The Company received proceeds of $19,141, net of cash transferred with the business. The transaction resulted ina pre-tax and after-tax gain of $4,666, which was included in SG&A expenses on the Consolidated Statements of Earnings for the year ended July 31, 2018.The divestiture of the Runelandhs business was part of the Company’s continued long-term growth strategy to focus the Company’s energies and resourceson growth of the Company’s core businesses.14. Unaudited Quarterly Financial Information Quarters First Second Third Fourth TotalFiscal 2017 Net sales $280,176 $268,001 $275,927 $289,212 $1,113,316Gross margin 140,358 134,158 139,909 143,867 558,292Operating income 33,208 29,962 31,550 36,295 131,015Net earnings 22,553 25,297 22,553 25,242 95,645Net earnings per Class A Nonvoting Common Share: Basic * $0.45 $0.50 $0.44 $0.49 $1.87Diluted $0.44 $0.49 $0.43 $0.48 $1.84Fiscal 2018 Net sales $290,151 $287,780 $298,421 $297,499 $1,173,851Gross margin 146,065 143,692 151,082 147,452 588,291Operating income 35,411 34,796 37,709 44,780 152,696Net earnings 25,836 4,273 26,000 34,951 91,060Net earnings per Class A Nonvoting Common Share: Basic * $0.50 $0.08 $0.50 $0.67 $1.76Diluted * $0.49 $0.08 $0.49 $0.66 $1.73* The sum of the quarters does not equal the year-to-date total for fiscal 2017 or 2018 due to the quarterly changes in weighted-average shares outstanding.56Table of Contents15. Subsequent EventsOn September 12, 2018, the Company announced an increase in the annual dividend to shareholders of the Company's Class A Common Stock, from$0.83 to $0.85 per share. A quarterly dividend of $0.2125 will be paid on October 31, 2018, to shareholders of record at the close of business on October 10,2018. This dividend represents an increase of 2.4% and is the 33rd consecutive annual increase in dividends.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.57Table of ContentsItem 9A. Controls and ProceduresDisclosure Controls and Procedures:Brady Corporation maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Companyin the reports filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized andreported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls andprocedures designed to ensure that information required to be disclosed by the Company in the reports the Company files under the Exchange Act isaccumulated and communicated to the Company’s management, including the Company’s principal executive and principal financial officers, or personsperforming similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company carried out an evaluation, under thesupervision and with the participation of its management, including its President and Chief Executive Officer and its Chief Financial Officer and Treasurer, ofthe effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based onthat evaluation, the Company’s President and Chief Executive Officer and Chief Financial Officer and Treasurer concluded that the Company’s disclosurecontrols and procedures are effective as of the end of the period covered by this report.Management’s Report on Internal Control Over Financial Reporting:The management of Brady Corporation and its subsidiaries is responsible for establishing and maintaining adequate internal control over financialreporting for the Company, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control overfinancial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles.With the participation of the President and Chief Executive Officer and Chief Financial Officer and Treasurer, management conducted an evaluation ofthe effectiveness of our internal control over financial reporting as of July 31, 2018, based on the framework and criteria established in Internal Control —Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, managementconcluded that, as of July 31, 2018, the Company’s internal control over financial reporting is effective based on those criteria.Because of the inherent limitations of internal control over financial reporting, misstatements may not be prevented or detected on a timely basis. Also,projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls maybecome inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.The Company’s internal control over financial reporting, as of July 31, 2018, has been audited by Deloitte & Touche LLP, an independent registeredpublic accounting firm, as stated in their report, which is included herein.Changes in Internal Control Over Financial Reporting:There were no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) thatoccurred during the Company’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, theCompany’s internal control over financial reporting.58Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofBrady CorporationMilwaukee, WisconsinOpinion on Internal Control over Financial ReportingWe have audited the internal control over financial reporting of Brady Corporation and subsidiaries (the “Company”) as of July 31, 2018, based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Inour opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2018, based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by COSO.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedfinancial statements as of and for the year ended July 31, 2018, of the Company and our report dated September 13, 2018, expressed an unqualified opinionon those financial statements.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ DELOITTE & TOUCHE LLPMilwaukee, WisconsinSeptember 13, 201859Table of ContentsItem 9B. Other InformationNone.PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceName Age TitleJ. Michael Nauman 56 President, CEO and DirectorAaron J. Pearce 47 Chief Financial Officer and TreasurerLouis T. Bolognini 62 Senior V.P., General Counsel and SecretaryBentley N. Curran 56 V.P. - Digital Business and Chief Information OfficerThomas J. Felmer 56 Senior V.P., President - Workplace SafetyHelena R. Nelligan 52 Senior V.P. - Human ResourcesRussell R. Shaller 55 Senior V.P., President - Identification SolutionsAnn E. Thornton 36 Chief Accounting Officer and Corporate ControllerPatrick W. Allender 71 DirectorGary S. Balkema 63 DirectorElizabeth P. Bruno 51 DirectorNancy L. Gioia 58 DirectorConrad G. Goodkind 74 DirectorFrank W. Harris 76 DirectorBradley C. Richardson 60 DirectorJ. Michael Nauman - Mr. Nauman has served on the Company’s Board of Directors and as the Company’s President and CEO since August 2014. Priorto joining the Company, Mr. Nauman spent 20 years at Molex Incorporated, where he led global businesses in the automotive, data communications,industrial, medical, military/aerospace and mobile sectors. In 2007, he became Molex's Senior Vice President leading its Global Integrated Products Divisionand was named Executive Vice President in 2009. Before joining Molex in 1994, Mr. Nauman was a tax accountant and auditor for Arthur Andersen andCompany and Controller and then President of Ohio Associated Enterprises, Inc. Mr. Nauman’s broad operational and financial experience and perspective asthe Company's CEO, as well as his leadership and strategic perspective, provide the Board with insight and expertise to drive the Company’s growth andperformance. Mr. Nauman holds a bachelor’s of science degree in management from Case Western Reserve University. He is a certified public accountant andchartered global management accountant. He is a board member of the Arkansas Science, Technology, Engineering and Math Coalition, and Museum ofDiscovery.Aaron J. Pearce - Mr. Pearce joined the Company in 2004 as Director of Internal Audit and currently serves as Chief Financial Officer and Treasurer.Mr. Pearce was appointed Senior Vice President and Chief Financial Officer in September 2014, and Chief Accounting Officer in July 2015. From 2006 to2008, he served as Finance Director for the Company’s Asia Pacific region, and from 2008 to 2010, served as Global Tax Director. In January 2010, Mr.Pearce was appointed Vice President, Treasurer, and Director of Investor Relations, and in April 2013, was named Vice President - Finance, withresponsibility for finance support to the Company’s Workplace Safety and Identification Solutions businesses, financial planning and analysis, and investorrelations. Prior to joining the Company, Mr. Pearce was an auditor with Deloitte & Touche LLP. He holds a bachelor’s degree in business administration fromthe University of Wisconsin-Milwaukee and is a certified public accountant.60Table of ContentsLouis T. Bolognini - Mr. Bolognini joined the Company as Senior Vice President, General Counsel and Secretary in January 2013. Prior to joining theCompany, he served as Senior Vice President, General Counsel and Secretary of Imperial Sugar Company from June 2008 through September 2012 and wasVice President and General Counsel of BioLab, Inc., a pool and spa manufacturing and marketing company from 1999 to 2008. Mr. Bolognini served as anofficer of BioLab, Inc. within a two-year period prior to the March 18, 2009 Chapter 11 bankruptcy petition filed by BioLab's parent company, ChemturaCorporation, on behalf of itself and 26 U.S. affiliates, including BioLab. He holds a bachelor's degree in political science from Miami University and a JurisDoctor degree from the University of Toledo.Bentley N. Curran - Mr. Curran joined the Company in 1999 and has served as Vice President of Digital Business and Chief Information Officer since2012. He has also served as Chief Information Officer and Vice President of Information Technology. Prior to joining Brady, Mr. Curran served in a variety oftechnology leadership roles for Compucom and the Speed Queen Company. He holds a bachelor's degree in business administration from Marian Universityand an associate of science degree in electronics and engineering systems.Thomas J. Felmer - Mr. Felmer joined the Company in 1989 and has served as Senior Vice President and President - Workplace Safety since 2014. Heheld several sales and marketing positions until being named Vice President and General Manager of Brady's U.S. Signmark Division in 1994. In 1999,Mr. Felmer assumed responsibility for the European Signmark business and then led the European direct marketing business. In 2003, Mr. Felmer assumedresponsibility for Brady's global sales and marketing processes, Brady Software businesses, and integration leader of the Emedco acquisition. In June 2004,he was appointed President - Direct Marketing Americas, and was named Chief Financial Officer in January 2008. In October 2013, Mr. Felmer was appointedInterim President and CEO, and served in these positions until August 2014. Mr. Felmer received a bachelor's degree in business administration from theUniversity of Wisconsin - Green Bay.Helena R. Nelligan - Ms. Nelligan joined the Company as Senior Vice President - Human Resources in November 2013. Prior to joining the Company,she was employed by Eaton Corporation beginning in 2005. At Eaton, she served as Vice President of Human Resources - Electrical Products Group, VicePresident - Human Resources, Electrical Sector and Director Human Resources - Electrical Components Division. From 1997 to 2005, Ms. Nelligan served inhuman resources leadership roles with Merisant Worldwide, Inc. and British Petroleum. She holds a bachelor’s degree in criminal justice and a master’sdegree in human resources and labor relations from Michigan State University.Russell R. Shaller - Mr. Shaller joined the Company in June 2015 as Senior Vice President and President - Identification Solutions. From 2008 to 2015,he served as President, Teledyne Microwave Solutions. Before joining Teledyne, Mr. Shaller held a number of positions of increasing responsibility at W.L.Gore & Associates, including Division Leader, Electronic Products Division from 2003 to 2008 and General Manager of Gore Photonics from 2001 to 2003.Prior to joining W.L. Gore in 1993, Mr. Shaller worked in engineering and program management positions at Westinghouse Corporation. He holds abachelor’s degree in electrical engineering from the University of Michigan, a master’s degree in electrical engineering from Johns Hopkins University and amaster’s degree in business administration from the University of Delaware.Ann E. Thornton - Ms. Thornton joined the Company in 2009 and has served as Chief Accounting Officer since 2016 and as Corporate Controller andDirector of Investor Relations since 2015. She held the positions of Corporate Accounting Supervisor, Corporate Accounting Manager, External ReportingManager, Corporate Finance Manager and Director of Global Accounting from 2009 to 2014. Prior to joining the Company, Ms. Thornton was an auditorwith PricewaterhouseCoopers from 2005 to 2009. She has a bachelor’s degree in business administration and a master of accountancy degree from theUniversity of Wisconsin-Madison and is a certified public accountant.Patrick W. Allender - Mr. Allender was elected to the Board of Directors in 2007. He serves as the Chair of the Finance Committee and as a member ofthe Audit and Corporate Governance Committees. He served as Executive Vice President and CFO of Danaher Corporation from 1998 to 2005 and ExecutiveVice President from 2005 to 2007. He has served as a director of Colfax Corporation since 2008 and Diebold Nixdorf, Inc. since 2011. Mr. Allender's strongbackground in finance and accounting, as well as his past experience as the CFO of a public company, provides the Board with financial expertise andinsight.Gary S. Balkema - Mr. Balkema was elected to the Board of Directors in 2010. He serves as the Chair of the Management Development andCompensation Committee and is a member of the Audit Committee. From 2000 to 2011, he served as the President of Bayer Healthcare LLC and WorldwideConsumer Care Division. He was also responsible for overseeing Bayer LLC USA's compliance program. He has over 20 years of general managementexperience. Mr. Balkema has served as a director of PLx Pharma, Inc. since 2016. Mr. Balkema brings strong experience in consumer marketing skills andmergers, acquisitions and integrations. His broad operating and functional experience are valuable to the Company given the diverse nature of theCompany's portfolio.Elizabeth P. Bruno, Ph.D - Dr. Bruno was elected to the Board of Directors in 2003. She serves as a member of the Corporate Governance andTechnology Committees. Dr. Bruno is the President of the Brady Education Foundation in Chapel Hill, North61Table of ContentsCarolina and a Research Associate Professor in the Developmental Psychology Program at the University of North Carolina at Chapel Hill. She is thegranddaughter of William H. Brady, Jr., the founder of Brady Corporation. As a result of her substantial ownership stake in the Company, as well as herfamily's history with the Company, she is well positioned to understand, articulate and advocate for the rights and interests of the Company's shareholders.Nancy L. Gioia - Ms. Gioia was elected to the Board of Directors in 2013. She serves as the Chair of the Technology Committee and is a member of theManagement Development and Compensation Committee. She was the Director, Global Electrical Connectivity and User Experience for Ford MotorCompany until her retirement in 2014, where she also held a variety of engineering and technology roles including, Director, Global Electrification; Director,Sustainable Mobility Technologies and Hybrid Vehicle Programs; Director, North America Current Vehicle Model Quality; Engineering Director,Visteon/Ford Due Diligence; Engineering Director, Small Front Wheel Drive/Rear Wheel Drive Car Platforms-North America; and Vehicle Programs Director,Lifestyle Vehicles. She has served as a director of Meggit PLC since 2017 and previously served as director of Exelon Corporation. Ms. Gioia's extensiveexperience in strategy, technology and engineering solutions, as well as her general business experience, provides the Board with important expertise inproduct development and operations.Conrad G. Goodkind - Mr. Goodkind was elected to the Board of Directors in 2007. He serves as the Chair of the Board of Directors, Chair of theCorporate Governance Committee and as a member of the Finance and Audit Committees. He previously served as Secretary of the Company from 1999 to2007. Mr. Goodkind was a partner in the law firm of Quarles & Brady, LLP, where his practice concentrated in corporate and securities law from 1979 to2009. Mr. Goodkind previously served as a director of Cade Industries, Inc. and Able Distributing, Inc. His extensive experience in advising companies on abroad range of transactional matters, including mergers and acquisitions and securities offerings, and historical knowledge of the Company provide theBoard with expertise and insight into governance, business and compliance issues that the Company encounters.Frank W. Harris, Ph.D - Dr. Harris was elected to the Board of Directors in 1991. He serves as a member of the Technology and ManagementDevelopment and Compensation Committees. He is the founder of several technology-based companies including Akron Polymer Systems, where he servesas Chair of the Board of Directors. Dr. Harris is the inventor of several commercialized products. He is an Emeritus Distinguished Professor of Polymer Scienceand Biomedical Engineering at The University of Akron, where he previously served as Director of the Maurice Morton Institute of Polymer Science. Dr.Harris’ extensive experience in technology and engineering solutions provides the Board with important expertise in new product development.Bradley C. Richardson - Mr. Richardson was elected to the Board of Directors in 2007. He serves as the Chair of the Audit Committee and is a memberof the Finance and Management Development and Compensation Committees. He is the Executive Vice President and CFO of PolyOne Corporation. Hepreviously served as the Executive Vice President and CFO of Diebold, Inc. and as Executive Vice President Corporate Strategy and CFO of ModineManufacturing. Prior to Modine, he spent 21 years with BP Amoco serving in various financial and operational roles. Mr. Richardson has served on theboards of Modine Manufacturing and Tronox, Inc. He brings to the Company extensive knowledge and global experience in the areas of operations, strategy,accounting, tax accounting and finance, which are areas of critical importance to the Company as a global company.All Directors serve until their respective successors are elected at the next annual meeting of shareholders. Officers serve at the discretion of the Boardof Directors. None of the Company's Directors or executive officers has any family relationship with any other Director or executive officer.Board Leadership Structure - The Board does not have a formal policy regarding the separation of the roles of Chief Executive Officer and Chair of theBoard, as the Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and themembership of the Board. In September 2015, upon the recommendation of the Corporate Governance Committee, the Board appointed a non-executiveChair in order to harmonize the Board’s leadership structure to prevailing governance practices. Prior to the appointment of the non-executive Chair, in theperiod beginning in fiscal 2010, the Board had formalized the position of Lead Independent Director. The duties of the non-executive Chair include, amongothers: chairing meetings of the Board and executive sessions of the non-management Directors; meeting periodically with the Chief Executive Officer andconsulting as necessary with management on current significant issues facing the Company; facilitating effective communication among the Chief ExecutiveOfficer and all members of the Board; and overseeing the Board's shareholder communication policies and procedures. Mr. Goodkind has served as Chair ofthe Board since September 2015.The Board believes that its current leadership structure has enhanced the Board's oversight of, and independence from, Company management; theability of the Board to carry out its roles and responsibilities on behalf of the Company’s shareholders; and the Company’s overall corporate governance.Risk Oversight - The Board oversees the Company's risk management processes directly and through its committees. In general, the Board oversees themanagement of risks inherent in the operation of the Company's businesses, the implementation of its strategic plan, its acquisition and capital allocationprogram and its organizational structure. Each of the Board's committees also oversees the management of Company risks that fall within the committee'sareas of responsibility. The Company's management62Table of Contentsis responsible for reporting significant risks to executive management as a part of the disclosure process. The significance of the risk is assessed by executivemanagement and escalation to the respective board committee and Board of Directors is determined. The Company reviews its risk assessment with the AuditCommittee annually.Audit Committee Financial Expert - The Company's Board of Directors has determined that at least one Audit Committee financial expert is serving onits Audit Committee. Messrs. Richardson, Chair of the Audit Committee, and Allender and Balkema, members of the Audit Committee, are financial expertsand are independent under the rules of the SEC and the New York Stock Exchange (“NYSE”).Director Independence - A majority of the Directors must meet the criteria for independence established by the Board in accordance with the rules ofthe NYSE. In determining the independence of a Director, the Board must find that a Director has no relationship that may interfere with the exercise of his orher independence from management and the Company. In undertaking this determination with respect to the Company’s Directors other than Mr. Nauman,the Board considered the commercial relationships of the Company, if any, with those entities that have employed the Company’s Directors. The commercialrelationships, which involved the purchase and sale of products on customary terms, did not exceed the maximum amounts proscribed by the directorindependence rules of the NYSE. Furthermore, the compensation paid to the Company’s Directors by their employers was not linked in any way to thecommercial relationships their employers had with the Company in fiscal 2018. After consideration of these factors, the Board concluded that the commercialrelationships were not material and did not prevent the Company’s Directors from being considered independent. Based on application of the NYSEindependence criteria, all Directors, with the exception of Mr. Nauman, President and CEO, are deemed independent. Additionally, Harold L. Sirkin, whoresigned as director on November 6, 2017, was previously determined to be an independent director. All members of the Audit, Management Developmentand Compensation, and Corporate Governance Committees are deemed independent.Meetings of Non-management Directors - The non-management Directors of the Board regularly meet alone without any members of managementpresent. As Chair of the Board, Mr. Goodkind is the presiding Director at these sessions. In fiscal 2018, there were five executive sessions. Interested partiescan raise concerns to be addressed at these meetings by calling the confidential Brady hotline at 1-800-368-3613.Audit Committee Members - The Audit Committee, which is a separately-designated standing committee of the Board of Directors, is composed ofMessrs. Richardson (Chair), Allender, Balkema, and Goodkind. Each member of the Audit Committee has been determined by the Board to be independentunder the rules of the SEC and NYSE.Code of Ethics - For a number of years, the Company has had a code of ethics for its employees. This code of ethics applies to all of the Company'semployees, officers and Directors. The code of ethics can be viewed at the Company's corporate website, www.bradycorp.com, or may be obtained in print byany person, without charge, by contacting Brady Corporation, Investor Relations, P.O. Box 571, Milwaukee, WI 53201. The Company intends to satisfy thedisclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of its code of ethics by placing suchinformation on its Internet website.Corporate Governance Guidelines - Brady's Corporate Governance Principles, as well as the charters of the Audit, Corporate Governance andManagement Development and Compensation Committees, are available on the Company's Corporate website, www.bradycorp.com. Shareholders mayrequest printed copies of these documents from Brady Corporation, Investor Relations, P.O. Box 571, Milwaukee, WI 53201.Director Qualifications - Brady's Corporate Governance Committee reviews the individual skills and characteristics of the Directors, as well as thecomposition of the Board as a whole. This assessment includes a consideration of independence, diversity, age, skills, expertise, and industry backgrounds inthe context of the needs of the Board and the Company. Although the Company has no policy regarding diversity, the Corporate Governance Committeeseeks a broad range of perspectives and considers both the personal characteristics and experience of Directors and prospective nominees to the Board so that,as a group, the Board will possess the appropriate talent, skills and expertise to oversee the Company's businesses. The Board does not discriminate on thebasis of race, national origin, gender, religion, disability, or sexual orientation in selecting director candidates.SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESection 16(a) of the Exchange Act requires the Company’s Directors and executive officers, and persons who own more than ten percent of a registeredclass of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and otherequity securities of the Company. Executive officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish theCompany with copies of all Section 16(a) forms they file. To the Company’s knowledge, based solely on a review of the copies of such reports furnished tothe Company and written representations that no other reports were required, during the fiscal year ended July 31, 2018, all Section 16(a) filing requirementswere complied with applicable to its officers, directors and greater than 10 percent beneficial owners.63Table of ContentsItem 11. Executive CompensationCompensation Discussion and AnalysisOverviewOur Compensation Discussion and Analysis focuses on the Company's total compensation philosophy, the role of the Management Development andCompensation Committee (for purposes of the Compensation Discussion and Analysis section, the “Committee”), total compensation components inclusiveof base salary, short-term incentives, long-term incentives, benefits, perquisites, severance amounts and change-in-control agreements for our executiveofficers, market and peer group data and the approach used by the Committee when determining each element of the total compensation package.For fiscal 2018, the following executive officers' compensation is disclosed and discussed in this section (the “named executive officers” or “NEOs”):•J. Michael Nauman, President, Chief Executive Officer and Director;•Aaron J. Pearce, Chief Financial Officer and Treasurer;•Louis T. Bolognini, Senior Vice President, General Counsel and Secretary;•Thomas J. Felmer, Senior Vice President and President - Workplace Safety; and•Russell R. Shaller, Senior Vice President and President - Identification Solutions.Executive SummaryFiscal 2018 Business HighlightsRefer to Item 1(a) "General Development of Business" for a business overview and key initiatives during fiscal 2018. Highlights for fiscal 2018 include:•Our fiscal 2018 earnings before income taxes were $152.0 million, an increase of $25.4 million over fiscal 2017. Excluding the gain on the sale ofRunelandhs, our fiscal 2018 earnings before income taxes were $147.3 million, an increase of $20.7 million over fiscal 2017;•Brady continues to demonstrate cash generation capabilities that meet ongoing business needs as we generated $143.0 million of cash flow fromoperating activities during the year ended July 31, 2018;•Our sales for the full year ended July 31, 2018 were $1,173.9 million, up $60.5 million from fiscal 2017. Organic sales increased 2.6% and foreigncurrency translation increased sales by 3.0% while the divestiture of the Runelandhs business decreased sales by 0.2%; and•Brady continues to focus on enhancing our innovation development process and the speed to deliver high-value, innovative products that alignwith our target markets in support of future growth as we invested $45.3 million in R&D expenses during the year ended July 31, 2018, an increaseof $5.6 million over fiscal 2017.Fiscal 2018 Compensation MattersFor fiscal 2018, the Board of Directors approved a 5.4% increase in base salary for Mr. Nauman. In addition, Mr. Nauman recommended and theCommittee approved increases in base salary for Messrs. Pearce, Shaller, Felmer and Bolognini. All increases were made to recognize the performance, currentscope of responsibilities and peer company data for each executive and, with regard to Messrs. Nauman and Pearce, to better align their base salary withindividuals holding comparable positions at peer companies.We had significant improvements in the profitability of the Company, exceeding our total Company fiscal 2018 pre-established goals. In addition, wecompleted the majority of the fiscal year objectives deemed critical to the execution of the Company's strategy. Therefore, all of our NEOs earned cashincentive awards for fiscal 2018. Overall, our NEOs received annual equity incentive awards greater than the median award sizes of those individuals holdingcomparable positions at our peer companies. In general, the grant date fair value of equity awards granted to our NEOs was consistent with the equity awardsin fiscal 2017. Because performance exceeded target in fiscal 2017, actual total compensation for our named executive officers in fiscal 2018 was above thetargeted median of our peer group companies.As a group, 76% of the compensation that we paid to our NEOs was in the form of incentive awards, and 56% of the total incentive awards were paid inthe form of equity. Fiscal 2018 equity grants were made in the form of time-based stock options, time-based restricted stock units ("RSUs") and performance-based RSUs. One-third of the award granted was in the form of stock options, which are inherently performance-based and have value only to the extent thatthe price of our stock increases. Another one-third of the award granted was in the form of performance-based RSUs, which reinforce the Company's “pay forperformance” philosophy where the level of rewards are aligned to Company performance. The performance-based RSU awards have a three-year performanceperiod with the number of shares issued at vesting determined by the Company’s achievement of organic revenue and operating income growth goals overthe three-year performance period. Payout opportunities will range from 0% to 200% of64Table of Contentsthe target award. The remaining one-third of the equity award granted was in the form of RSUs that vest equally over three years and are intended to facilitateretention and align with the creation of long-term shareholder value.Executive Compensation PracticesAs part of the Company's pay for performance philosophy, the Company's compensation program includes several features that maintain alignment withshareholders: Emphasis on Variable Compensation A significant portion of the named executive officers' possible compensation is tied to Company performance,which is intended to drive shareholder value. Ownership Requirements Mr. Nauman is required to own shares in the Company at a value equal to five times his base salary. Messrs.Pearce, Felmer and Shaller are required to own shares in the Company at a value equal to three times their basesalaries. Mr. Bolognini is required to own shares in the Company at a value equal to two times his base salary.Our NEOs are expected to obtain the required ownership levels within five years and may not sell shares, otherthan to cover tax withholding requirements associated with the vesting or exercise of the equity award, untilsuch time as they meet the requirements. Clawback Provisions Following a review and analysis of relevant governance and incentive compensation practices and policiesacross our compensation peer group and other public companies, the Committee instituted a recoupment policy,effective August 2013, under which incentive compensation payments and/or awards may be recouped by theCompany if such payments and/or awards were based on erroneous results. If the Committee determines that anexecutive officer or other key executive of the Company who participates in any of the Company's incentiveplans has engaged in intentional misconduct that results in a material inaccuracy in the Company's financialstatements or fraudulent or other willful and deliberate conduct that is detrimental to the Company or there is amaterial, negative revision of a performance measure for which incentive compensation was paid or awarded, theCommittee may take a variety of actions including, among others, seeking repayment of incentivecompensation (cash and/or equity) that is greater than what would have been awarded if the payments/awardshad been based on accurate results and the forfeiture of incentive compensation. As this policy suggests, theCommittee believes that any incentive compensation should be based only on accurate and reliable financialand operational information, and, thus, any inappropriately paid incentive compensation should be returned tothe Company for the benefit of shareholders. The Committee believes that this policy enhances the Company'scompensation risk mitigation efforts. While the policy affords the Committee discretion regarding theapplication and enforcement of the policy, the Company and the Committee will conform the policy to anyrequirements that may be promulgated by the national stock exchanges in the future, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Performance Thresholds and Caps Our cash incentive awards are determined based on financial results for organic revenue, earnings before incometaxes, division organic revenue, division operating income, and achievement of fiscal year objectives, whichaggregate to a maximum payout of 185% of target. Executive officers then receive a performance rating thatresults in a multiplier ranging from 0% to 150%, resulting in a maximum cash incentive award payout of 278%of target opportunities.We grant equity compensation to executive officers that promotes long-term financial and operatingperformance by delivering incremental value to the extent our stock price increases over time. In fiscal 2017, weincorporated an annual grant of performance-based RSUs to executive officers with the number of shares issuedat vesting determined by the achievement of certain financial performance goals achieved over a three-yearperiod. Securities Trading Policy Our Insider Trading Policy prohibits executive officers from trading during certain periods at the end of eachquarter until after we disclose our financial and operating results. We may impose additional restricted tradingperiods at any time if we believe trading by executives would not be appropriate because of developments thatare, or could be, material and which have not been publicly disclosed. The Insider Trading Policy also prohibitsthe pledging of Company stock as collateral for loans, holding Company securities in a margin account byofficers, directors or employees, and the hedging of Company securities. Annual Risk Reviews The Company conducts an annual compensation-related risk review and presents findings and suggested riskmitigation actions to both the Audit and Management Development and Compensation Committees.65Table of ContentsThe Company’s compensation programs also maintain alignment with shareholders by not including certain features:No Excessive Change of ControlPayments Mr. Nauman's maximum cash benefit is equal to two times salary and two times target bonus plus a proratedtarget bonus in the year in which the termination occurs. For all other NEOs, the maximum cash benefit is equalto two times salary and two times the average bonus payment received in the three years immediately prior tothe date the change of control occurs. In the event of a change of control, unexercised stock options becomefully exercisable or, if canceled, each named executive officer shall be given cash or stock equal to the in-the-money value of the canceled stock options. In the event of a change of control, performance-based (at target)and time-based RSUs become unrestricted and fully vested. No Employment Agreements The Company does not maintain any employment agreements with its executives. Both Mr. Nauman's offerletter and Mr. Shaller's offer letter provide that each is deemed an at-will employee, but will receive a severancebenefit in the event his employment is terminated by the Company without cause or for good reason asdescribed in the respective offer letter. No Reloads, Repricing, or OptionsIssued at a Discount Stock options issued are not repriced, replaced, or regranted through cancellation or by lowering the optionprice of a previously granted option.Compensation Philosophy and ObjectivesWe seek to align the interests of our executives with those of our shareholders by evaluating performance on the basis of key financial measurementsthat we believe closely correlate to long-term shareholder value. To this end, we have structured our compensation program to accomplish the following:•Allow the Company to compete for, retain and motivate talented executives;•Deliver compensation plans that are both internally equitable when comparing similar roles and levels within the Company and externallycompetitive when comparing to the external marketplace and the Company’s designated peer group;•Maintain an appropriate balance between base salary and short- and long-term incentive opportunities;•Provide integrated compensation programs aligned to the Company’s annual and long-term financial goals and realized performance;•Recognize and reward individual initiative and achievement with the amount of compensation each executive receives reflective of the executive’slevel of proficiency within his or her role and their level of sustained performance; and•Institute a “pay for performance” philosophy where level of rewards are aligned to Company performance.Determining CompensationManagement Development & Compensation Committee’s RoleThe Committee is responsible for monitoring and approving the compensation of the Company's named executive officers. The Committee approvescompensation and benefit policies and strategies, approves corporate goals and objectives relative to the chief executive officer and other executive officercompensation, oversees the development process and reviews development plans of key executives, reviews compensation-related risk, administers ourequity incentive plans, and consults with management regarding employee compensation generally. With respect to executive officers, at the beginning ofeach year, the Committee sets base salaries, approves the cash bonuses paid for the prior fiscal year, approves equity incentive awards and establishesperformance targets to be achieved for the new fiscal year. When a new executive officer is hired, the Committee is involved in reviewing and approving basesalary, annual incentive opportunity, sign-on incentives, annual equity awards, and other aspects of the executive's compensation.Consultants’ RoleThe Committee has historically utilized the services of an executive compensation consulting firm and legal counsel to assist with the review andevaluation of compensation levels and policies on a periodic basis, as well as to provide advice with respect to new or modified compensation arrangements.In fiscal 2018, the Committee utilized the services of Meridian Compensation Partners as compensation consultants and Quarles & Brady LLP, as legalcounsel, both of which were determined to be independent by the Corporate Governance Committee.66Table of ContentsManagement’s RoleTo aid in determining compensation for fiscal 2018, management obtained market data regarding comparable executive officer compensation througha standard data subscription with Equilar, Inc. and from other third parties. For fiscal 2018, Mr. Nauman used this data to make recommendations to theCommittee concerning compensation for each named executive officer other than himself. In setting compensation for our named executive officers, theCommittee takes into consideration these recommendations, along with the results of the Company during the previous fiscal year, the level of responsibility,demonstrated leadership capability, the compensation levels of executives in comparable roles from within our peer group and the results of annualperformance reviews which, for our chief executive officer, included a self-assessment and feedback from his direct reports and each member of the Board ofDirectors. In addition, during fiscal 2018, the Committee took into consideration the recommendations of its independent compensation consultant,particularly with respect to compensation elements for the chief executive officer. Mr. Nauman did not attend the portion of any committee meeting duringwhich the Committee discussed matters related specifically to his compensation.Tally SheetsThe Committee reviews executive officer compensation tally sheets each year. These summaries set forth the dollar amount of all components of eachnamed executive officer's annual compensation, which includes the following: base salary, target and actual cash incentive compensation, equity incentivecompensation, the value of outstanding equity, the value of Brady's contribution to retirement plans, the value of Company-provided health and welfarebenefits and social security taxes paid on the executive's behalf. Reviewing this information allows the Committee to determine an executive officer's totalcompensation, and how a potential change to an element of our compensation program would affect the officer's overall compensation.Components of CompensationOur total compensation program includes five components: base salary, annual cash incentives, long-term equity incentives, employee benefits andperquisites. Each component serves a particular purpose and, therefore, each is considered independent of the other components, although all fivecomponents combine into our total compensation approach. We use these components of compensation to attract, retain, motivate, develop and reward ourexecutives.The total of base salary, annual cash and long-term equity incentive components, in general, is targeted at market median for the achievement ofperformance goals, with an opportunity for upper quartile pay when upper quartile performance is achieved. Our compensation structure is balanced by thepayment of below market median compensation to our NEOs when actual fiscal results do not meet or exceed expected financial results. The following tabledescribes the purpose of each performance-based component and how that component is related to our pay-for-performance approach:Compensation Component Purpose of Compensation Component Compensation Component in Relation to PerformanceBase salary A fixed level of income security used toattract and retain employees bycompensating them for the primaryfunctions and responsibilities of theposition. The base salary increase an employee receives depends upon the employee'sindividual performance, the employee's displayed skills and competenciesand market competitiveness. Annual cash incentive award To attract, retain, motivate and rewardemployees for achieving or exceedingannual performance goals at total Companyand division levels. Financial performance as well as the achievement of fiscal year objectivesand the individual performance of each executive determines the actualamount of the executive's annual cash incentive award. Annual equity incentiveaward: Time-based stockoptions, time-based RSUs andperformance-based RSUs To attract, retain, motivate and reward toptalent for the successful creation of long-term shareholder value. An assessment of executive leadership, experience and expected futurecontribution, combined with market competitive grant information, are usedto determine the amount of equity granted to each executive.Stock options are inherently performance-based in that the value isdependent upon the increase in the stock price.Time-based RSUs are intended to facilitate retention and to align executiveswith the creation of long-term shareholder value.Performance-based RSUs are intended to align executives with long-termfinancial goals and the creation of long-term shareholder value.67Table of ContentsEstablishing Our Total Compensation Component LevelsThe Committee uses peer group data to test the reasonableness and competitiveness of several components of compensation, including base salaries,annual cash incentives, and long-term equity incentives of positions similar to those of our NEOs. The following 19 companies were included in the fiscal2018 total compensation analysis conducted using publicly available data sourced through Equilar, Inc:Actuant CorporationGraco Inc.Myers Industries Inc.Apogee Enterprises, Inc.HB Fuller CompanyNordson CorporationBarnes Group Inc.Hexcel CorporationPowell Industries, Inc.EnPro Industries, Inc.IDEX CorporationWatts Water Technologies, Inc.Entegris, Inc.II-VI IncorporatedZebra Technologies CorporationESCO Technologies Inc.Modine Manufacturing Company Federal Signal Corp.Mine Safety Appliances Company Based on our analysis of the fiscal 2018 peer group used for determining fiscal 2018 target compensation, performed in May 2017, the base salaries ofour named executive officers was slightly below our peers. Total compensation of our NEOs, inclusive of base salary, cash incentives and equity awards, wasabove the median of our peer companies.Fiscal 2018 Named Executive Officer CompensationBase SalariesThe table below reflects the base salary for each NEO in effect at the end of each fiscal year.Named Executive Officer Fiscal 2018 Fiscal 2017 Percentage IncreaseJ. Michael Nauman $775,000 $735,000 5.4%Aaron J. Pearce 374,000 340,000 10.0%Louis T. Bolognini 341,734 338,350 1.0%Thomas J. Felmer 390,807 386,937 1.0%Russell R. Shaller 360,887 347,006 4.0%Annual Cash Incentive AwardsThe Company is managed on a global basis with three business divisions, ID Solutions, Workplace Safety and People ID, which aggregate into tworeportable segments: ID Solutions and Workplace Safety. All named executive officers participate in an annual cash incentive plan, which is based on fiscalyear financial results of the Company or a division. Set forth below is a description of the fiscal 2018 financial measures for the annual cash incentive plan.68Table of ContentsPerformance Metric Definition Weighting NEOTotal Company organicrevenue Total Company organic revenue is measured as total company sales, at budgetedexchange rates, excluding all acquired and divested sales. Total Company organicrevenue is reported quarterly and annually in the Company's forms 10-Q and 10-Kfiled with the SEC. 30% Messrs.Nauman,Pearce andBologniniEarnings before incometaxes Earnings before income taxes is defined as total Company revenues at budgetedexchange rates minus total Company expenses for the cost of doing business beforededucting income tax expense. Earnings before income taxes excludes certain non-routine expenses such as income or loss from acquisitions or divestitures completedin fiscal 2018. 50% Messrs.Nauman,Pearce andBologniniDivision organic revenue Division organic revenue is measured as division customer sales, at budgetedexchange rates, excluding all acquired and divested sales. 30% Messrs.Felmer andShallerDivision operatingincome Division operating income is measured as division sales less cost of goods sold,selling expenses, research and development expenses, and administrative expenses,at budgeted exchange rates. Division operating income excludes certain non-routine expenses such as income or loss from acquisitions or divestitures completedin fiscal 2018. 50% Messrs.Felmer andShallerFiscal year objectives In fiscal 2018, the Company had seven fiscal year objectives that were establishedat the beginning of the fiscal year and viewed as critical to the execution of theCompany's strategy. The amount funded depends on the number of fiscal yearobjectives achieved in fiscal 2018. 20% All NEOsThe funding of the fiscal 2018 annual cash incentive plan was determined by the achievement of certain revenue and profit metrics compared to statedthresholds, as well as the achievement of seven fiscal year objectives that were established at the beginning of the fiscal year. Once the funding wasdetermined, the individual contribution of our named executive officers was assessed in order to conclude upon the amount of the annual cash incentiveearned by each executive in the fiscal year. The annual cash incentive plan was structured to include a minimum profit threshold that must be exceeded inorder for any cash incentive amount to be funded, regardless of the achievement of revenue or fiscal year objectives.Individual contribution is determined by assessing the level of achievement of each NEO’s individual annual goals combined with their ability todeliver on the competencies needed to achieve those goals. The competencies include items such as building strong customer relationships, creatinginnovative new product solutions, optimizing work processes through continuous improvement initiatives, and developing our people. Individual annualgoals and competencies are included in each NEO’s assessment to ensure they are focused on initiatives within their area of responsibility that will improvethe Company’s overall performance.While our objective is to set goals that are quantitative and measurable, certain elements of the performance assessment may be subjective. Assessmentsand a rating recommendation for all NEOs, except the CEO, is delivered to the Committee by the CEO in July. The CEO provides the Committee with a self-assessment of his own performance without a rating recommendation and the Committee determines the rating of the CEO.Our rating system consists of five performance levels, each with a predetermined maximum multiplier that is applied to the available bonus that isearned and payable to the NEO based upon their contribution to the fiscal year objectives and their individual annual goals: Needs Improvement - 0%; MeetsMost Objectives - 50%; Fully Meets Objectives - 100%; Exceeds Objectives - 125%; and Outstanding - 150%.The target annual cash incentive award that would be payable to each named executive officer is calculated as a percentage of the officer's eligiblecompensation defined as base salary paid during the fiscal year.69Table of ContentsMessrs. Nauman, Pearce and BologniniThe cash incentive payable to Messrs. Nauman, Pearce and Bolognini for fiscal 2018 was based on total Company organic revenue, earnings beforeincome taxes and achievement of the fiscal year objectives. We use organic revenue because we believe that the long-term value of our enterprise depends onour ability to grow revenue without regard for acquisitions. We use earnings before income taxes to focus on effectively managing our costs while growingour revenue and we use fiscal year objectives because the achievement of these objectives is critical to the execution of the Company's strategy.For fiscal 2018, a bonus was funded for these named executive officers for the achievement of our total Company organic revenue, earnings beforeincome taxes and fiscal year objective goals. The multiplier for individual performance is applied to the achievement of organic revenue, earnings beforeincome taxes and fiscal year objective goals to arrive at the final weighted average payout. The threshold, target, maximum and actual payout amounts forMessrs. Nauman, Pearce and Bolognini were as follows: Fiscal 2018 Actual ResultsPerformance Measure (weighting) Threshold Target Maximum Achievement ($) Achievement (%)Organic Revenue (30%)(millions) $1,108.9 $1,128.0 $1,142.2 or more $1,139.1 188%Earnings before income taxes (50%)(millions) $126.7 $136.3 $139.4 or more $142.5 200%Fiscal Year Objectives (20%) 0% 100% 125% 120%Individual Performance Multiplier 0% 100% 150% VariesFiscal 2018 Bonus Award: Threshold Target Maximum (% of BaseSalary) Actual Payout(% of Target) Actual Payout(% of Base Salary) Actual Payout($)J.M. Nauman 0% 100% 278% 226% 226% $1,712,933A.J. Pearce 0% 60% 167% 226% 135% $488,329L.T. Bolognini 0% 60% 167% 180% 108% $368,484Mr. Nauman's individual performance multiplier was the result of his contribution to several fiscal year objectives and individual annual goals asfollows:•Strategy - Objective focused on further aligning the Company’s personnel around the Company’s corporate and divisional strategies to driveimplementation and ensure accountability of the key elements of the respective strategies. The implementation of the respective strategies is focusedon delivering long-term sustainable improvements in organic sales, operating income, and cash generation.•Organic sales growth - Objective focused on accelerating the Company’s organic sales growth. The Company’s organic sales growth rate acceleratedfrom 0.5% in fiscal 2017 to 2.6% in fiscal 2018.•Earnings before income taxes - Objective focused on improving earnings before income taxes while making the investments necessary tosustainably increase the Company’s organic sales growth in future years. Excluding the $4.7 million gain on the sale of Runelandhs, earnings beforeincome taxes improved from $126.6 million in fiscal 2017 to $147.3 million in fiscal 2018 and from 11.4% of net sales in fiscal 2017 to 12.6% ofnet sales in fiscal 2018, while investments in research and development increased by 14.2%.After a review of Mr. Nauman’s performance, the Committee determined that Mr. Nauman’s resulting performance level was 125% for his individualperformance multiplier.Mr. Pearce's individual performance multiplier was the result of his contribution to several fiscal year objectives and individual annual goals as follows:•Cash flow - Objective focused on driving strong cash flow in relation to net earnings. The Company’s cash flow from operating activities was $143.0million in fiscal 2018, which equates to 157.1% of net earnings.•Selling, general and administrative expenses - Objective focused on reducing selling, general and administrative expenses throughout the Company,with a specific focus on general and administrative expenses. Excluding the impact of foreign currency exchange and the gain on sale of a business,selling, general and administrative expenses were reduced by 1.1% from fiscal 2017 to fiscal 2018 through ongoing efficiency gains and sustainableprocess improvement initiatives.•Earnings before income taxes - Objective focused on improving earnings before income taxes while making the investments necessary tosustainably increase the Company’s organic sales growth in future years. Excluding the $4.7 million gain on the sale of Runelandhs, earnings beforeincome taxes improved from $126.6 million in fiscal 2017 to $147.3 million in fiscal 2018 and from 11.4% of net sales in fiscal 2017 to 12.6% ofnet sales in fiscal 2018, while investments in research and development increased by 14.2%.70Table of ContentsAfter a review of Mr. Pearce's performance, the Committee determined that Mr. Pearce's resulting performance level was 125% for his individualperformance multiplier.Mr. Bolognini's individual performance multiplier was the result of his contribution to several fiscal year objectives and individual annual goals asfollows:•Sale of subsidiary - Objective focused on the successful completion of the sale of the Company's Runelandhs business in Sweden. On May 31, 2018,the Company completed the sale of its Runelandhs business.•Compliance - Objective focused on ensuring continued compliance with domestic and international laws and regulations, as well as maintaininginternal compliance programs.After a review of Mr. Bolognini's performance, the Committee determined that Mr. Bolognini's resulting performance level was 100% for his individualperformance multiplier.Messrs. Felmer and ShallerThe cash incentive payable to Mr. Felmer for fiscal 2018 was based on achievement of WPS division organic revenue, WPS division operating income,and achievement of fiscal year objectives. The cash incentive payable to Mr. Shaller for fiscal 2018 was based on achievement of IDS division organicrevenue, IDS division operating income, and achievement of fiscal year objectives. We use division organic revenue and division operating income goalsbecause we believe they align Messrs. Felmer and Shaller to the management of sales and expenses directly within their control as the President-WorkplaceSafety, and President-Identification Solutions, respectively.For fiscal 2018, the threshold, target, maximum and actual payout amounts for Mr. Felmer were as follows: Fiscal 2018 Actual ResultsPerformance Measure (weighting) Threshold Target Maximum Achievement ($) Achievement (%)WPS Division Organic Revenue (30%)(millions) $306.7 $309.7 $312.0 or more $311.7 176%WPS Division Operating Income (50%)(millions) $36.1 $37.0 $37.5 or more $39.9 200%Fiscal Year Objectives (20%) 0% 100% 125% 120%Individual Performance Multiplier 0% 100% 150% 125%Fiscal 2018 Bonus Award: Threshold Target Maximum (% of BaseSalary) Actual Payout(% of Target) Actual Payout(% of BaseSalary) Actual Payout($)T.J. Felmer 0% 80% 222% 221% 177% $688,315Mr. Felmer's individual performance multiplier was the result of his contribution to several fiscal year objectives and individual annual goals asfollows:•WPS strategic alignment - Objective focused on aligning the team around the key WPS objectives that are meant to improve the long-term financialresults of the WPS division. The key WPS activities related to improving our customers’ buying experience included, among other activities,increasing our customer interactions by providing extensive safety and compliance expertise, improving our ability to quickly customize products,and improving our portfolio of customized and proprietary products.•WPS organic sales growth - Objective focused on returning the WPS business to organic sales growth in fiscal 2018. Organic sales grew 0.7% infiscal 2018 compared to a 2.0% decline in fiscal 2017.•WPS operating income - Objective focused on improving operating income while making the investments to necessary sustainably increase WPS’sorganic sales growth in future years. Operating income in the WPS segment increased from $25.6 million in fiscal 2017 to $31.7 million in fiscal2018 and from 8.2% of sales in fiscal 2017 to 9.7% of sales in fiscal 2018, while making the necessary investments to complete the strategicrealignment of this business to deliver sustainable profit improvements.After a review of Mr. Felmer's performance, the Committee determined that Mr. Felmer's resulting performance level was 125% for his individualperformance multiplier.71Table of ContentsFor fiscal 2018, the threshold, target, maximum and actual payout amounts for Mr. Shaller were as follows: Fiscal 2018 Actual ResultsPerformance Measure (weighting) Threshold Target Maximum Achievement ($) Achievement (%)IDS Division Organic Revenue (30%)(millions) $572.5 $588.5 $600.5 or more $606.9 200%IDS Division Operating Income (50%)(millions) $120.5 $127.6 $131.5 or more $134.1 200%Fiscal Year Objectives (20%) 0% 100% 125% 120%Individual Performance Multiplier 0% 100% 150% 150%Fiscal 2018 Bonus Award: Threshold Target Maximum (% of BaseSalary) Actual Payout(% of Target) Actual Payout(% of BaseSalary) Actual Payout($)R.R. Shaller 0% 55% 153% 276% 152% $539,722Mr. Shaller's individual performance multiplier was the result of his contribution to several fiscal year objectives and individual annual goals asfollows:•Innovation development process - Objective focused on designing and implementing processes to grow the Company’s pipeline of new productsand deliver to market in a timely manner. Several new products were launched during fiscal 2018, including several printers. The new productpipeline was streamlined and improved which has reduced the time frame from new product idea to product launch.•IDS organic sales growth - Objective focused on accelerating organic sales growth in the IDS segment. Organic sales within the IDS segmentincreased by 1.6% in fiscal 2017 and organic growth accelerated to 3.4% in fiscal 2018.•Operational excellence - Objective focused on improving our manufacturing facilities to deliver gross margin improvements while improvingcustomer service levels. Improvements in the manufacturing and fulfillment process resulted in an improved gross profit margin and a 9.8% increasein segment profit in the IDS segment when compared to fiscal 2017.After a review of Mr. Shaller's performance, the Committee determined that Mr. Shaller's resulting performance level was 150% for his individualperformance multiplier.For fiscal 2018, the Committee reviewed the impact of unusual and unforeseen events on the payout of bonuses and determined that none would beconsidered in the calculation of bonus payouts other than removing the impact of the $4.7 million gain on the sale of the Company's Runelandhs business inSweden. In general, the Committee regularly reviews and makes decisions on the impact of unusual events on a case-by-case basis and continually evaluatescompensation policies and practices in light of ongoing developments and best practices in the area of incentive compensation.Long-Term Equity Incentive AwardsThe Company utilizes a variety of incentive vehicles including time-based stock options, time-based RSUs and performance-based RSUs to attract,retain and motivate key employees who directly impact the long-term performance of the Company. The size and type of equity awards for executives otherthan the chief executive officer are determined annually by the Committee with input from the chief executive officer. With regard to the award size grantedto the chief executive officer, the Committee uses its discretion in combination with market competitive information obtained from Equilar, Inc. and advicefrom its independent compensation consultant.For fiscal 2018, the Committee reviewed historical award sizes, median levels of equity awarded to similar positions at our peer companies and theestimated value of all proposed grants. The Committee then authorized fiscal 2018 awards consisting of a combination of time-based stock options, time-based RSUs and performance-based RSUs.Time-based Stock Options: Stock options generally vest one-third annually for three years and have a ten-year term. The Committee has the ability to varyboth the term and vesting schedule for new stock option grants in accordance with the terms of the plan. All stock options are granted following theCommittee's authorization, with an exercise price equal to the average of the high and low stock price on the date of grant.Performance-based RSUs: Performance-based RSUs vest based upon the achievement of average organic revenue growth and average operating incomegrowth performance over a three-year performance period. The organic revenue and operating income growth metrics are based on consideration of theCompany's annual operating plan, overall strategy and stretch goals in order to emphasize the importance of long-term decision-making to both the financialsuccess of the Company and to improve shareholder72Table of Contentsvalue. The performance-based RSUs have a fair value equal to the average of the high and low stock price on the date of grant, and will vest between 40%and 200% of target if the combination of average organic sales growth and average operating income growth over the three-year performance period are met.If the minimum vesting threshold of 40% is not achieved, then the performance-based RSUs will be forfeited.Time-based RSUs: RSUs generally vest one-third annually for three years. The Committee has the ability to vary both the term and vesting schedule fornew RSU grants in accordance with the terms of the plan. All RSUs are granted following the Committee's authorization, with a fair value equal to theaverage of the high and low stock price on the date of grant.No dividends are paid or accrued on the performance-based or time-based RSUs prior to the issuance of shares.The following is a summary of grants made to our NEOs of performance-based RSUs on August 1, 2017, and time-based stock options and RSUs onSeptember 22, 2017:Fiscal 2018 Annual Equity AwardsNamed Officers Total Grant Date FairValue Time-Based Stock OptionsGrant DateFair Value Performance-based RSUs(at target)Grant DateFair Value Time-BasedRSUsGrant DateFair ValueJ.M. Nauman $2,500,068 $833,340 $833,365 $833,363A.J. Pearce 880,045 293,338 293,344 293,363L.T. Bolognini 325,010 108,335 108,336 108,339T.J. Felmer 550,059 183,341 183,352 183,366R.R. Shaller 550,059 183,341 183,352 183,366Other Elements of CompensationHealth and Welfare Benefits: We provide subsidized health and welfare benefits which include medical, dental, life and accidental death or dismembermentinsurance, disability insurance and paid time off. Executive officers are entitled to participate in our health and welfare plans on generally the same terms andconditions as other employees, subject to limitations under applicable law. In addition, the Company maintains a supplemental disability policy forexecutives. The supplemental disability policy provides for an additional 15% of compensation, up to a maximum additional benefit of $5,000 per month.Brady Corporation pays the premiums for these benefits; therefore, these benefits are taxable to the executive.Retirement Benefits: Brady employees (including named executive officers) in the United States and certain expatriate employees working for itsinternational subsidiaries are eligible to participate in the Brady Corporation Matched 401(k) Plan (the “Matched 401(k) Plan”). In addition, namedexecutive officers in the United States and employees at many of our United States locations are also eligible to participate in the Brady Corporation FundedRetirement Plan (“Funded Retirement Plan”).Under the Funded Retirement Plan, the Company contributes 4% of the annual eligible earnings of each employee covered by the Funded RetirementPlan. In addition, participants may elect to defer up to 5% of their annual pay into the Matched 401(k) Plan, which is matched up to an additional 4%contribution from the Company. Participants may elect to contribute an additional 45% of their eligible earnings to their Matched 401(k) Plan account(without an additional matching contribution from the Company and subject to the maximum allowed by the Internal Revenue Service ("IRS")). The assets ofthe Matched 401(k) Plan and Funded Retirement Plan credited to each participant are invested by the trustee of the Plans as directed by each plan participantin a variety of investment funds as permitted by the Plans.Benefits are generally payable upon the death, disability, or retirement of the participant, or upon termination of employment before retirement,although benefits may be withdrawn from the Matched 401(k) Plan and paid to the participant for certain emergencies. Under certain specified circumstances,the Matched 401(k) Plan allows a participant to draw loans on their account. The participant is immediately fully vested with respect to employeecontributions; all other contributions become fully vested at the end of a two-year period of continuous service for the Matched 401(k) Plan and over sixyears of continuous service for the Funded Retirement Plan.Deferred Compensation Arrangements: During fiscal 2002, the Company adopted the Brady Corporation Executive Deferred Compensation Plan(“Executive Deferred Compensation Plan”), under which executives are permitted to defer portions of their salary and bonus into a plan account, the value ofwhich is measured by the fair value of the underlying investments. The assets of the Executive Deferred Compensation Plan are held in a Rabbi Trust and areinvested by the trustee as directed by the participant in several investment funds as permitted by the Executive Deferred Compensation Plan. The investmentfunds available in the Executive Deferred Compensation Plan include Brady Corporation Class A Nonvoting Common Stock and various mutual funds73Table of Contentsthat are provided in the Matched 401(k) Plan. On May 1, 2006, the plan was amended to require that deferrals into the Company's Class A NonvotingCommon Stock must remain in the Company's Class A Nonvoting Common Stock, and must be distributed in shares of the Company's Class A NonvotingCommon Stock. Executives may elect whether to receive their account balance following termination of employment in a single lump sum payment or bymeans of distribution under an annual installment method. Distributions of the Company Class A Nonvoting Common Stock are made in-kind; distributionsof mutual funds are in cash.In addition to the Executive Deferred Compensation Plan, the company also has a Director Deferred Compensation Plan. Both plans allow forcompensation to be deferred into either the Company's Class A Nonvoting Common Stock or in other investment funds. On February 21, 2017, the DirectorDeferred Compensation Plan was amended to disallow the transfer of other investment funds into the Company’s Class A Nonvoting Common Stock. TheExecutive Deferred Compensation Plan also disallows transfers from other investment funds into the Company's Class A Nonvoting Common Stock.Due to the IRS income limitations for participation in the Matched 401(k) Plan and the Funded Retirement Plan, executives are eligible to participatein the Brady Restoration Plan. The Brady Restoration Plan is a non-qualified deferred compensation plan that allows an equivalent benefit to the Matched401(k) Plan and the Funded Retirement Plan for executives' income exceeding the IRS limits of participation in a qualified 401(k) plan. On July 17, 2018, theBrady Restoration Plan was amended to allow additional unmatched employee contributions of up to 50% of compensation in excess of the IRS limit forparticipation in a qualified 401(k) plan.Perquisites: Brady provides the named executive officers with the following perquisites:•Financial planning and tax preparation;•Car allowance;•Physical examination;•Long-term care insurance; and•Personal liability insurance.Stock Ownership RequirementsWe believe that the interests of shareholders and executives become aligned when executives become shareholders in possession of a meaningfulamount of Company stock. Furthermore, this stock ownership encourages positive performance behaviors and discourages executive officers from takingundue risk. In order to encourage our executive officers and directors to acquire and retain ownership of a significant number of shares of the Company'sstock, stock ownership requirements have been established.The Board of Directors has established the following stock ownership requirements for our named executive officers: J.M. Nauman 5 times base salaryA.J. Pearce 3 times base salaryL.T. Bolognini 2 times base salaryT.J. Felmer 3 times base salaryR.R. Shaller 3 times base salaryThe stock ownership requirement for each director is five times the annual Board cash retainer.Our NEOs are expected to obtain the required ownership levels within five years and may not sell shares, other than to cover tax withholdingrequirements associated with the vesting or exercise of the equity award, until such time as they meet the requirements. All NEOs have achieved theirrespective ownership levels as of July 31, 2018. If an executive does not meet the above ownership level within five years of becoming subject to therequirements, the Committee may direct that the executive's after-tax payout on any incentive plans will be in Class A Nonvoting Common Stock to bringthe executive up to the required ownership level. The executive may not sell any shares of Class A Nonvoting Common Stock, other than to cover taxwithholding requirements associated with the exercise or vesting of time-based stock options, time-based RSUs or performance-based RSUs, until such timeas they meet the requirements.Actual stock ownership levels of each of the named executive officers are reviewed on an annual basis to ensure the guidelines are met. The followingequity balances are included for purposes of determining whether an executive meets the required ownership level: the values of Company stock owned,Company stock held in the Executive Deferred Compensation Plan, Company stock held in the Matched 401(k) Plan, time-based RSUs, and the spread valueof vested stock options that are “in the money." The value of performance-based RSUs are excluded from the determination of executive ownership levels.74Table of ContentsInsider Trading PolicyThe Company's Insider Trading Policy prohibits hedging and other monetization transactions in Company securities by officers, directors andemployees. The prohibition of hedging transactions includes financial instruments such as prepaid variable forwards, equity swaps, collars and exchangefunds. The Insider Trading Policy also prohibits the pledging of Company stock as collateral for loans or holding Company securities in a margin account byofficers, directors or employees.Employment and Change of Control AgreementsIn fiscal 2018, the Company did not have employment agreements with our executives. The offer letter entered into with Mr. Nauman on August 1,2014, provides that he is deemed an at-will employee, but will receive a severance benefit equal to two times the sum of his base salary and target bonus inthe event his employment is terminated without cause or he resigns for good reason as described therein. The offer letter also contains 24 month non-competition and non-solicitation provisions, as well as standard confidentiality, waiver and non-disparagement provisions. The offer letter entered into withMr. Shaller on June 22, 2015, provides that he is deemed an at-will employee, but will receive a severance benefit equal to his base salary plus target bonus inthe event his employment is terminated without cause or he resigns for good reason as described therein.The Board of Directors of Brady Corporation approved change of control agreements for all of the NEOs of the Company. The agreements applicable tothe named executive officers, other than Mr. Nauman, provide a payment of an amount equal to two times their annual base salary and two times the averagebonus payment received in the three years immediately prior to the date the change of control occurs in the event of termination or resignation for good cause(as defined in the change of control agreement) upon a change of control. Under the terms of the change of control agreement with Mr. Nauman, in the eventof a qualifying termination within 24 months following a change of control (as such events are defined in the change of control agreement), Mr. Nauman willreceive two times his annual base salary, two times his target bonus, and the amount of his target bonus prorated based on when the termination occurs. Theagreement for Mr. Felmer also provides for reimbursement of any excise taxes imposed. All of the NEO's agreements provide for up to $25,000 of attorneyfees to enforce the executive's rights under the agreement. Payments under the agreement will be spread over two years.Under the terms of the 2012 and 2017 Omnibus Incentive Stock Plans, in the event of (a) the merger or consolidation of the Company with or intoanother 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, allthen-unexercised stock options become fully exercisable and all restrictions placed on restricted stock, and performance-based and time-based restrictedstock units will lapse. If any stock option is canceled subsequent to the events described above, the Company or the corporation assuming the obligations ofthe Company, shall pay an amount of cash or stock equal to the in-the-money value of the canceled stock options. The awards granted under the 2017Omnibus Incentive Plan provide for accelerated vesting of stock options and RSUs upon termination due to retirement, for which the eligibility criteria is 60years of age and 5 years of service.Non-Compete/Non-Solicitation/ConfidentialityAgreements memorializing equity awards under the Company's 2012 Omnibus Incentive Stock and 2017 Omnibus Incentive Plans contain non-competition, non-solicitation and confidential information covenants applicable to the award recipients. The confidential information covenant prohibits theuse, disclosure, copying or duplication of the Company's confidential information other than in the course of authorized activities conducted in the course ofthe recipient's employment with the Company. The other covenants prohibit the NEOs for 12 months after termination of employment with the Company,from (i) performing duties for or as a competitor of the Company which are the same or similar to those performed by the recipient in the 24 months prior totermination of employment with the Company or (ii) inducing or encouraging employees, vendors or clients of the Company to breach, modify or terminaterelationships or agreements they had with the Company during the 24-month period prior to the recipient's termination of employment.Compliance with Tax Regulations Regarding Executive CompensationSection 162(m) of the Internal Revenue Code generally disallows a federal income tax deduction to publicly traded companies for compensation inexcess of $1 million per year paid to certain executive officers (and, beginning in 2018, certain former executive officers). Historically, the $1 milliondeduction limit generally has not applied to compensation that satisfies IRS requirements for qualified performance-based compensation. Effective for taxyears beginning after July 31, 2018, the exemption for qualified performance-based compensation from the deduction limitation of Code Section 162(m) hasbeen repealed, unless transition relief for certain compensation arrangements in place as of November 2, 2017 is available.The Committee's intent is to preserve the deductibility of executive compensation to the extent reasonably practicable and to the extent consistent withits other compensation objectives. However, the Committee believes Section 162(m) is only one of several relevant considerations in setting compensationand believes Section 162(m) implications should not compromise its ability to75Table of Contentsdesign and maintain executive compensation arrangements intended to, among other things, attract, motivate and help retain a highly qualified andsuccessful management team to lead the Company. As a result, the Committee retains the flexibility to provide compensation it determines to be in the bestinterests of the Company and its shareholders even if that compensation ultimately is not deductible for tax purposes. Moreover, even if we have in the pastintended to grant qualifying performance-based compensation for purposes of Section 162(m), we cannot guarantee that such compensation will so qualify orultimately will be deductible by us.Management Development and Compensation Committee Interlocks and Insider ParticipationDuring fiscal 2018, the Board's Management Development and Compensation Committee was composed of Messrs. Balkema, Harris and Richardson,and Ms. Gioia. None of these persons has at any time been an employee of the Company or any of its subsidiaries. There are no relationships among theCompany's executive officers, members of the Committee or entities whose executives serve on the Board that require disclosure under applicable SECregulations.Management Development and Compensation Committee ReportThe Committee has reviewed and discussed the Compensation Discussion and Analysis with management; and based on the review and discussions,the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company's annual report on Form10-K.Gary Balkema, ChairmanNancy GioiaFrank HarrisBradley RichardsonCompensation Policies and PracticesThe Company's compensation policies for executive officers and all other employees are designed to avoid incentives that create undue risks to theCompany. The Company's compensation programs are weighted towards offering long-term incentives that reward sustainable performance; do not offersignificant short-term incentives that might drive high-risk investments at the expense of long-term Company value; and are set at reasonable and sustainablelevels, as determined by a review of the Company's economic position, as well as the compensation offered by comparable companies. Under the oversight ofits Audit and Management Development and Compensation Committees, the Company reviewed its compensation policies, practices and procedures for allemployees to evaluate and ensure that they do not foster risk-taking beyond that deemed acceptable within the Company's business model. The Companybelieves that its compensation policies, practices and procedures do not encourage employees to take unnecessary or excessive risks that are reasonablylikely to have a material adverse effect on the Company.76Table of ContentsSummary Compensation TableThe following table sets forth compensation awarded to, earned by, or paid to the named executive officers, who served as executive officers during thefiscal year ended July 31, 2018, for services rendered to the Company and its subsidiaries during the fiscal years ended July 31, 2018, July 31, 2017 andJuly 31, 2016.Name and Principal Position FiscalYear Salary($) Bonus($) Time-based andPerformance-based RSUs($)(1) OptionAwards($)(2) Non-EquityIncentive PlanCompensation($)(3) All OtherCompensation($)(4) Total($)J.M. Nauman, President, CEO &Director 2018 $759,616 $— $1,666,728 $833,340 $1,712,933 $202,808 $5,175,425 2017 721,538 — 1,666,702 833,338 1,259,987 143,598 4,625,163 2016 693,750 — 733,350 1,466,668 528,984 89,017 3,511,769A.J. Pearce, CFO & Treasurer 2018 $360,923 $— $586,707 $293,338 $488,329 $97,767 $1,827,064 2017 332,308 — 586,712 293,337 417,811 74,651 1,704,819 2016 315,000 — 250,019 250,001 144,113 49,920 1,009,053L.T. Bolognini, Senior VP,General Counsel and Secretary 2018 $340,432 $— $216,675 $108,335 $368,484 $90,113 $1,124,039 2017 337,062 — 216,694 108,334 282,525 77,981 1,022,596 2016 333,725 — 162,514 162,502 122,143 52,220 833,104T.J. Felmer, Senior VP,President-Workplace Safety 2018 $389,319 $— $366,718 $183,341 $688,315 $69,355 $1,697,048 2017 386,937 — 366,701 183,338 — 78,155 1,015,131 2016 386,937 — 275,009 275,004 111,438 62,934 1,111,322R.R. Shaller, Senior VP &President - IdentificationSolutions 2018 $355,548 $— $366,718 $183,341 $539,722 $113,141 $1,558,470 2017 344,312 — 366,701 183,338 425,140 125,664 1,445,155 2016 340,000 — 225,009 225,003 171,806 188,467 1,150,285 (1)Represents the grant date fair value computed in accordance with accounting guidance for equity grants made or modified in the applicable year fortime-based RSUs and performance-based RSUs. The grant date fair value is calculated based on the number of shares of Class A Common Stockunderlying the time-based RSUs and performance-based RSUs (at target), times the average of the high and low stock price of Class A Common Stockon the date of grant. The actual value of a restricted stock award or RSU will depend on the market value of the Class A Common Stock on the datethe stock is sold. The table reflects the grant date fair value at target level of performance-based RSUs (100%). The grant date fair value of theseawards in fiscal 2018 assuming that the highest level of performance conditions will be achieved is as follows: Mr. Nauman, $1,666,731; Mr. Pearce,$586,688; Mr. Bolognini, $216,671; Mr. Felmer, $366,705; and Mr. Shaller, $366,705.(2)Represents the grant date fair value computed in accordance with accounting guidance for equity grants made or modified in the applicable year fortime-based stock options. The assumptions used to determine the value of the awards, including the use of the Black-Scholes method of valuation bythe Company, are discussed in Note 1 of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K, for the fiscal yearended July 31, 2018. The actual value, if any, which an option holder will realize upon the exercise of an option will depend on the excess of themarket value of the Class A Common Stock over the exercise price on the date the option is exercised.(3)Represents incentive plan compensation earned during the listed fiscal years, which was paid during the next fiscal year.(4)The amounts in this column include: matching contributions to the Company’s Matched 401(k) Plan, Funded Retirement Plan and Restoration Plan,the costs of group term life insurance for each named executive officer, use of a Company car or car allowance, and associated expenses, the cost oflong-term care insurance, the cost of personal liability insurance, the cost of disability insurance and other perquisites. The perquisites may includerelocation assistance and annual allowances for financial and tax planning. Refer to the table below.77Table of ContentsName FiscalYear RetirementPlanContributions($) CompanyCar($) GroupTermLifeInsurance($) Long-termCareInsurance($) Long-TermDisabilityInsurance($) Relocation ($) Other($) Total($)J.M. Nauman 2018 $159,522 $18,000 $1,728 $4,860 $5,212 $— $13,486 $202,808 2017 99,097 18,000 1,629 4,860 5,606 — 14,406 143,598 2016 54,808 18,000 1,087 4,860 4,311 — 5,951 89,017A.J. Pearce 2018 $61,988 $18,000 $810 $2,893 $3,618 $— $10,458 $97,767 2017 36,517 18,000 783 2,893 3,775 — 12,683 74,651 2016 24,606 13,468 505 2,893 2,800 — 5,648 49,920L.T. Bolognini 2018 $49,748 $18,000 $747 $3,946 $5,343 $— $12,329 $90,113 2017 36,646 18,000 779 3,946 5,557 — 13,053 77,981 2016 26,557 11,799 528 3,946 4,097 — 5,293 52,220T.J. Felmer 2018 $31,044 $18,000 $847 $3,737 $3,387 $— $12,340 $69,355 2017 39,870 18,000 900 3,737 3,648 — 12,000 78,155 2016 30,955 18,000 610 3,737 3,221 — 6,411 62,934R.R. Shaller 2018 $62,092 $18,000 $813 $3,427 $5,363 $7,257 $16,189 $113,141 2017 41,106 18,000 792 3,427 5,527 44,812 12,000 125,664 2016 29,600 18,000 537 3,427 4,103 127,244 5,556 188,467Grants of Plan-Based Awards for 2018The following table summarizes grants of plan-based awards made during fiscal 2018 to the named executive officers. GrantDate CompensationCommitteeApprovalDate Estimated Future Payouts UnderNon-Equity Incentive Plan Awards (1) Estimated Future Payouts UnderEquity Incentive Plan Awards (2) All OtherStock Awards:Number ofShares of Stockor Units (#) (3) All OtherOptionAwards:Number ofSecuritiesUnderlyingOptions (#) Exerciseor BasePrice ofStockorOptionAwards($) (4) GrantDate FairValueofStock andOptionAwards($)Name Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) J.M.Nauman $— $759,616 $2,107,933 8/1/2017 7/10/2017 10,065 25,162 50,324 $33.12 $833,365 9/22/2017 7/10/2017 22,615 36.85 833,363 9/22/2017 7/10/2017 96,792 36.85 833,340A.J. Pearce — 216,554 600,938 8/1/2017 7/10/2017 3,543 8,857 17,714 33.12 293,344 9/22/2017 7/10/2017 7,961 36.85 293,363 9/22/2017 7/10/2017 34,071 36.85 293,338L.T.Bolognini — 204,259 566,820 8/1/2017 7/10/2017 1,308 3,271 6,542 33.12 108,336 9/22/2017 7/10/2017 2,940 36.85 108,339 9/22/2017 7/10/2017 12,583 36.85 108,335T.J. Felmer — 311,455 864,287 8/1/2017 7/10/2017 2,214 5,536 11,072 33.12 183,352 9/22/2017 7/10/2017 4,976 36.85 183,366 9/22/2017 7/10/2017 21,295 36.85 183,341R.R. Shaller — 195,551 542,655 8/1/2017 7/10/2017 2,214 5,536 11,072 33.12 183,352 9/22/2017 7/10/2017 4,976 36.85 183,366 9/22/2017 7/10/2017 21,295 36.85 183,34178Table of Contents(1)At its May 2017 meeting, the Management Development and Compensation Committee approved the values of the annual cash incentive awardunder the Company's annual cash incentive plan. The structure of the plan is described in the Compensation Discussion and Analysis above and wasset prior to the beginning of the fiscal year.(2)This award represents performance-based restricted stock units awarded on August 1, 2017, as part of the annual fiscal 2018 equity grant. Theseperformance-based RSUs have a three-year performance period with the number of shares issued at vesting determined by the Company’s achievementof organic revenue and operating income growth goals over the three-year performance period. Payout opportunities will range from 0% to 200% ofthe target award. Target payout is set at 100% of award value, with threshold and maximum payouts set at 40% and 200% of target award value,respectively. The target number of performance stock units is used to determine the grant date fair value for this award.(3)The time-based RSU awards vest equally over three years.(4)The exercise price and base price is the average of the high and low prices of the Company’s Class A Common Stock as reported by the New YorkStock Exchange on the date of the grant.79Table of ContentsOutstanding Equity Awards at July 31, 2018 Option Awards Stock AwardsName Number ofSecuritiesUnderlyingUnexercisedOptionsExercisable(#) Number ofSecuritiesUnderlyingUnexercisedOptionsUnexercisable(#) OptionExercisePrice($) OptionExpiration Date Number of Units of StockThat Have NotVested(#) MarketValue of Unitsof Stock ThatHave NotVested($) Equity Incentive PlanAwards: Number ofUnearned Shares,Units, or Other RightsThat Have Not Vested(#) Equity Incentive PlanAwards: Market orPayout Value ofUnearned Shares, UnitsOr Other Rights ThatHave Not Vested($)J.M.Nauman 60,943 — $22.66 9/25/2024 140,653 100,466(1)19.96 9/25/2025 28,577 71,440(2)35.14 9/23/2026 — 96,792(3)36.85 9/22/2027 35,778(4)$1,368,509 12,247(5)468,448 15,810(6)604,733 22,615(7)865,024 26,018(8)$995,189 25,162(9)962,447 A.J. Pearce 9,000 — $30.21 9/21/2022 4,523 — 31.07 9/20/2023 34,825 — 22.66 9/25/2024 34,250 17,125(1)19.96 9/25/2025 12,574 25,147(2)35.14 9/23/2026 — 34,071(3)36.85 9/22/2027 4,868(10)$186,201 4,175(5)159,694 5,565(6)212,861 7,961(7)304,508 9,159(8)$350,332 8,857(9)338,780 L.T.Bolognini 25,000 — $34.64 1/7/2023 14,848 — 31.07 9/20/2023 6,892 — 22.66 9/25/2024 — 11,131(1)19.96 9/25/2025 4,644 9,287(2)35.14 9/23/2026 — 12,583(3)36.85 9/22/2027 2,714(5)$103,811 2,055(6)78,604 2,940(7)112,455 3,383(8)$129,400 3,271(9)125,116 80Table of ContentsT.J. Felmer 11,667 — $29.78 8/3/2019 35,000 — 28.73 9/25/2019 11,667 — 28.35 8/2/2020 40,000 — 29.10 9/24/2020 35,000 — 27.00 9/30/2021 45,500 — 30.21 9/21/2022 33,862 — 31.07 9/20/2023 47,159 — 22.66 9/25/2024 37,676 18,837(1)19.96 9/25/2025 7,859 15,717(2)35.14 9/23/2026 — 21,295(3)36.85 9/22/2027 6,666(11)$254,975 4,592(5)175,644 3,478(6)133,034 4,976(7)190,332 5,724(8)$190,037 5,536(9)211,752 R.R. Shaller 30,826 15,412(1)$19.96 9/25/2025 7,859 15,717(2)35.14 9/23/2026 — 21,295(3)36.85 9/22/2027 8,396(12)$321,147 3,757(5)143,705 3,478(6)133,034 4,976(7)190,332 5,724(8)$218,943 5,536(9)211,752(1)The remaining options vest on September 25, 2018.(2)One-half of the options vest on September 23, 2018, and the remaining options vest on September 23, 2019.(3)One-third of the options vest on September 22, 2018, one-third of the options vest on September 22, 2019, and one-third of the options vest onSeptember 22, 2020.(4)Mr. Nauman was awarded 53,668 shares of time-based restricted stock units effective August 4, 2014, the date of his appointment as Chief ExecutiveOfficer and Director of the Company. One-half of the units vested on August 4, 2018, and the remaining units vest on August 4, 2019.(5)This award represents time-based restricted stock units awarded on September 25, 2015, as part of the annual fiscal 2016 equity grant. The remainingunits vest on September 25, 2018.(6)This award represents time-based restricted stock units awarded on September 23, 2016, as part of the annual fiscal 2017 equity grant. One-half of theunits vest on September 23, 2018, and the remaining units vest on September 23, 2019.(7)This award represents time-based restricted stock units awarded on September 22, 2017, as part of the annual fiscal 2018 equity grant. One-third of theunits vest on September 22, 2018, one-third of the units vest on September 22, 2019, and one-third of the units vest on September 22, 2020.(8)This award represents performance-based RSUs awarded on August 1, 2016, as part of the annual fiscal 2017 equity grant. These performance-basedRSUs have a three-year performance period with the number of shares issued at vesting determined by the Company's achievement of organic revenueand operating income growth goals over the three-year performance period. Payout opportunities will range from 0% to 200% of the target award. Theamounts listed above are based on the target value of each award (100%).(9)This award represents performance-based RSUs awarded on August 1, 2017, as part of the annual fiscal 2018 equity grant. These performance-basedRSUs have a three-year performance period with the number of shares issued at vesting determined by the Company's achievement of organic revenueand operating income growth goals over the three-year performance period. Payout opportunities will range from 0% to 200% of the target award. Theamounts listed above are based on the target value of each award (100%).(10)Mr. Pearce was awarded 12,171 shares of time-based restricted stock units on July 15, 2015, for retention purposes. Forty percent of the units vest onJuly 15, 2019.81Table of Contents(11)Effective November 28, 2014, Mr. Felmer was awarded 10,000 shares of time-based restricted stock units for retention purposes. One-half of the unitsvest on November 28, 2018, and one-half of the units vest on November 28, 2019.(12)Mr. Shaller was awarded 20,992 shares of time-based restricted stock units on June 22, 2015, the date he joined the Company as an officer. One-half ofthe units vest on the fourth and fifth anniversaries of the award date, respectively.Option Exercises and Stock Vested for Fiscal 2018The following table summarizes option exercises and the vesting of restricted stock during fiscal 2018 to the named executive officers. Option Awards Stock AwardsName Number of SharesAcquired onExercise (#) Value Realizedon Exercise ($) Number of SharesAcquired on Vesting (#) Value Realizedon Vesting ($)J.M. Nauman 93,542 $1,613,768 51,334 $1,822,399A.J. Pearce — — 14,153 530,280L.T. Bolognini 11,131 225,570 5,846 215,184T.J. Felmer 21,667 131,970 16,133 603,949R.R. Shaller — — 9,697 370,583Non-Qualified Deferred Compensation for Fiscal 2018The following table summarizes the activity within the Executive Deferred Compensation Plan and the Brady Restoration Plan during fiscal 2018 forthe named executive officers. Name ExecutiveContribution in Fiscal2018($) CompanyContributions inFiscal 2018($) AggregateEarnings inFiscal 2018($) AggregateWithdrawals/Distributions($) AggregateBalance atJuly 31, 2018($)J.M. Nauman $69,784 $137,722 $5,320 $— $389,054A.J. Pearce 88,219 39,130 102,470 — 968,112L.T. Bolognini 14,040 28,080 2,131 — 100,811T.J. Felmer 4,683 9,367 610,761 — 4,227,887R.R. Shaller 20,107 40,214 626 — 96,764The executive contribution amounts included in this table are derived from the Salary and Non-Equity Incentive Plan Compensation columns of theSummary Compensation Table. The registrant contribution amounts included in this table are reported in the All Other Compensation columns of theSummary Compensation Table. See discussion of the Company's nonqualified deferred compensation plan in the Compensation Discussion and Analysis.Potential Payments Upon Termination or Change in ControlAs described in the Employment and Change of Control Agreements section of the Compensation Discussion and Analysis above, the Company hasentered into separate severance agreements and change of control agreements with certain named executive officers.The terms of severance arrangements are triggered if (i) the executive’s employment with the Company is involuntarily terminated by the Companywithout cause or (ii) the executive’s employment with the Company is voluntarily terminated by the executive subsequent to (a) any reduction in the total ofthe executive’s annual base salary and target bonus without the prior written agreement of the executive, (b) a significant diminution in the authority, dutiesor responsibilities of the executive without the executive’s prior written agreement, or (c) the relocation of the executive’s position to a principal worklocation more than 50 miles from Milwaukee, Wisconsin or from the executive’s principal place of residence, without the executive’s prior written agreement.Should Messrs. Nauman’s or Shaller’s employment be terminated under the circumstances described above, the Company would pay Mr. Nauman a severancebenefit equal to two times the sum of his base salary and target bonus and would pay Mr. Shaller a severance benefit equal to his base salary plus targetbonus. The other named executive officers are not covered by severance arrangements.82Table of ContentsThe terms of the change of control agreement are triggered if, within a 24 month period beginning with the date a change of control occurs, (i) theexecutive’s employment with the Company is involuntarily terminated other than by reason of death, disability or cause or (ii) the executive’s employmentwith the Company is voluntarily terminated by the executive subsequent to (a) any reduction in the total of the executive’s annual base salary, exclusive offringe benefits, and the executive’s target bonus in comparison with the executive’s annual base salary and target bonus immediately prior to the date thechange of control occurs, (b) a significant diminution in the responsibilities or authority of the executive in comparison with the executive’s responsibilityand authority immediately prior to the date the change of control occurs, or (c) the imposition of a requirement by the Company that the executive relocate toa principal work location more than 50 miles from the executive’s principal work location immediately prior to the date the change of control occurs.Following termination due to a change in control, executives shall be paid a multiplier of their annual base salary in effect immediately prior to thedate the change of control occurs, plus a multiplier of their average bonus payment received over a three-year period prior to the date the change of controloccurs. For Mr. Nauman, a multiplier of the target bonus amount in effect immediately prior to the date the change of control applies instead of the averagebonus payment received over the prior three-year period. For Mr. Felmer, the Company will also reimburse the executive for any excise tax incurred by theexecutive as a result of Section 280(g) of the Internal Revenue Code. If the payments upon termination due to change of control result in any excise taxincurred by Messrs. Nauman, Pearce, Bolognini and Shaller as a result of Section 280(g) of the Internal Revenue Code, the officer will be solely responsiblefor such excise tax. The Company will also reimburse a maximum of $25,000 of legal fees incurred by the executives in order to enforce the change of controlagreement, in which the executive prevails.The following information and tables set forth the amount of payments to each named executive officer in the event of termination of employment as aresult of a change of control. No other employment agreements have been entered into between the Company and any of the named executive officers infiscal year 2018.Assumptions and General PrinciplesThe following assumptions and general principles apply with respect to the tables that follow in this section.•The amounts detailed in the tables assume that each named executive officer terminated employment on July 31, 2018. Accordingly, the tablesreflect amounts earned as of July 31, 2018, and include estimates of amounts that would be paid to the named executive officer upon the terminationor occurrence of a change in control. The actual amounts that would be paid to a named executive officer can only be determined at the time oftermination.•The tables below include amounts the Company is obligated to pay the named executive officer as a result of the severance agreement and executedchange in control agreement. The tables do not include benefits that are paid generally to all salaried employees or a broad group of salariedemployees. Therefore, the named executive officers would receive benefits in addition to those set forth in the tables.•A named executive officer is entitled to receive base salary earned during his term of employment regardless of the manner in which the namedexecutive officer’s employment is terminated. As such, this amount is not shown in the tables.J. Michael NaumanThe following table details the amount payable assuming that the terms of the change of control agreement were triggered on July 31, 2018, and thenamed executive officer was required to legally enforce the terms of the agreement.Base Salary ($) (1) Bonus ($) (2) Restricted StockUnit AccelerationGain ($) (3) Stock OptionAccelerationGain ($) (4) Legal FeeReimbursement($) (5) Total ($)$1,550,000 $1,550,000 $5,264,348 $2,195,210 $25,000 $10,584,558(1)Represents two times the base salary in effect at July 31, 2018.(2)Represents two times the target bonus amount in effect at July 31, 2018.(3)Represents the closing market price of $38.25 on 137,630 unvested time-based and performance-based RSUs that would vest due to the change incontrol.(4)Represents the difference between the closing market price of $38.25 and the exercise price on 268,698 unvested, in-the-money stock options thatwould vest due to change in control.(5)Represents the maximum reimbursement of legal fees allowed.83Table of ContentsThe following table details the amount payable assuming that the severance terms of Mr. Nauman's offer letter were triggered on July 31, 2018, and thenamed executive officer was required to legally enforce the severance terms of the agreement.Base Salary ($) (1) Bonus ($) (2) Restricted StockUnit AccelerationGain ($) (3) Total ($)$1,550,000 $1,550,000 $1,368,508.5 $4,468,509(1)Represents two times the base salary in effect at July 31, 2018.(2)Represents two times the target bonus amount in effect at July 31, 2018.(3)Represents the closing market price of $38.25 on 35,778 unvested time-based RSUs that would vest due to termination without cause.Aaron J. PearceThe following table details the amount payable assuming that the terms of the change of control agreement were triggered on July 31, 2018, and thenamed executive officer was required to legally enforce the terms of the agreement.Base Salary ($) (1) Bonus ($) (2) Restricted StockUnit AccelerationGain ($) (3) Stock OptionAccelerationGain ($) (4) Legal FeeReimbursement($) (5) Total ($)$748,000 $374,616 $1,552,376 $439,123 $25,000 $3,139,115(1)Represents two times the base salary in effect at July 31, 2018.(2)Represents two times the average bonus payment received in the last three fiscal years ended July 31, 2018, 2017 and 2016.(3)Represents the closing market price of $38.25 on 40,585 unvested time-based and performance-based RSUs that would vest due to the change incontrol.(4)Represents the difference between the closing market price of $38.25 and the exercise price on 76,343 unvested, in-the-money stock options thatwould vest due to change in control.(5)Represents the maximum reimbursement of legal fees allowed.Louis T. BologniniThe following table details the amount payable assuming that the terms of the change of control agreement were triggered on July 31, 2018, and thenamed executive officer was required to legally enforce the terms of the agreement.Base Salary ($) (1) Bonus ($) (2) Restricted StockUnit AccelerationGain ($) (3) Stock OptionAccelerationGain ($) (4) Legal FeeReimbursement($) (5) Total ($)$683,468 $269,779 $549,385 $250,085 $25,000 $1,777,717(1)Represents two times the base salary in effect at July 31, 2018.(2)Represents two times the average bonus payment received in the last three fiscal years ended July 31, 2018, 2017 and 2016.(3)Represents the closing market price of $38.25 on 14,363 unvested time-based and performance-based RSUs that would vest due to the change incontrol.(4)Represents the difference between the closing market price of $38.25 and the exercise price on 33,001 unvested, in-the-money stock options thatwould vest due to change in control.(5)Represents the maximum reimbursement of legal fees allowed.Thomas J. FelmerThe following table details the amount payable assuming that the terms of the change of control agreement were triggered on July 31, 2018, and thenamed executive officer was required to legally enforce the terms of the agreement. Base Salary ($) (1) Bonus ($) (2) Restricted StockUnit AccelerationGain ($) (3) Stock OptionAccelerationGain ($) (4) Excise TaxReimbursement($) Legal FeeReimbursement($) (5) Total ($)$781,614 $74,292 $1,184,679 $423,222 $— $25,000 $2,488,807(1)Represents two times the base salary in effect at July 31, 2018.(2)Represents two times the average bonus payment received in the last three fiscal years ended July 31, 2018, 2017 and 2016.(3)Represents the closing market price of $38.25 on 30,972 unvested time-based and performance-based RSUs that would vest due to the change incontrol.84Table of Contents(4)Represents the difference between the closing market price of $38.25 and the exercise price on 55,849 unvested, in-the-money stock options thatwould vest due to change in control.(5)Represents the maximum reimbursement of legal fees allowed.Russell R. ShallerThe following table details the amount payable assuming that the terms of the change of control agreement were triggered on July 31, 2018, and thenamed executive officer was required to legally enforce the terms of the agreement.Base Salary ($) (1) Bonus ($) (2) Restricted StockUnit AccelerationGain ($) (3) Stock OptionAccelerationGain ($) (4) Legal FeeReimbursement($) (5) Total ($)$721,774 $596,946 $1,218,913 $360,578 $25,000 $2,923,211(1)Represents two times the base salary in effect at July 31, 2018.(2)Represents two times the average bonus payment received in the last three fiscal years ended July 31, 2018, 2017 and 2016.(3)Represents the closing market price of $38.25 on 31,867 unvested time-based and performance-based RSUs that would vest due to the change incontrol.(4)Represents the difference between the closing market price of $38.25 and the exercise price on 54,424 unvested, in-the-money stock options thatwould vest due to change in control.(5)Represents the maximum reimbursement of legal fees allowed.The following table details the amount payable assuming that the severance terms of Mr. Shaller's offer letter were triggered on July 31, 2018, and thenamed executive officer was required to legally enforce the severance terms of the agreement.Base Salary ($) (1) Bonus ($) (2) Total ($)$360,887 $195,551 $556,438(1)Represents one times the base salary in effect at July 31, 2018.(2)Represents one times the target bonus amount in effect at July 31, 2018.Potential Payments Upon Termination Due to Death or DisabilityIn the event of termination due to death or disability, all unexercised, unexpired stock options would immediately vest and all restricted stock unitawards would immediately become unrestricted and fully vested. The following table shows the amount payable to the named executive officers should thisevent occur on July 31, 2018.Name Unvested RestrictedStock Units as ofJuly 31, 2018 Restricted StockUnit AccelerationGain $ (1) Unvested, In-the-MoneyStock Optionsas ofJuly 31, 2018 Stock OptionAccelerationGain $ (2)J. Michael Nauman 137,630 $5,264,348 268,698 $2,195,210A.J. Pearce 40,585 1,552,376 76,343 439,123L.T. Bolognini 14,363 549,385 33,001 250,085T.J. Felmer 30,972 1,184,679 55,849 423,222R.R. Shaller 31,867 1,218,913 52,424 360,578(1)Represents the closing market price of $38.25 on unvested awards that would vest due to death or disability.(2)Represents the difference between the closing market price of $38.25 and the exercise price on unvested, in-the-money stock options that would vestdue to death or disability.85Table of ContentsPotential Payments Upon Termination Without CauseIn the event of termination without cause, as defined in the officer's offer letter or in the officer's equity agreements, as applicable, certain restrictedstock awards would immediately become unrestricted and fully vested. The following table shows the amount payable to the named executive officers shouldthis event occur on July 31, 2018.Name Unvested RestrictedStock Units as ofJuly 31, 2018 Restricted Stock UnitAccelerationGain $ (1)J. Michael Nauman 35,778 $1,368,509A.J. Pearce — —L.T. Bolognini — —T.J. Felmer — —R.R. Shaller — —(1)Represents the closing market price of $38.25 on unvested awards that would vest due to termination without cause.CEO Pay Ratio DisclosureAs required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, the Company isproviding the following information about the ratio of the annual total compensation of its CEO to the annual total compensation of its median employee.The Company used the following methodology and material assumptions to identify the median employee of its workforce:•A measurement date of May 31, 2018, which is within three months of the Company's fiscal year end, to identify the median employee. On this date,the Company's employee population consisted of 6,212 individuals (1,778 in the U.S. and 4,434 internationally)•The Company selected annual total compensation (base salary/wages and overtime pay, commissions, bonuses paid and allowance/fixed payments)as of May 31, 2018 as the compensation measure.•The Company annualized the compensation of employees to cover the full fiscal year.Under the de minimis exemption to the pay ratio rule, the Company may exclude non-United States employees up to a 5% threshold when identifyingthe median employee. The Company excluded 308 employees from the following jurisdictions, together comprising less than 5% of the Company's 6,212global employee population (with number of employees): Brazil (126), Malaysia (167), Philippines (4), and Turkey (11).After identifying the median employee, the Company calculated annual total compensation for such employee consistent with the same methodology itused for NEOs as set forth in the fiscal 2018 Summary Compensation Table, with the addition of Company paid contributions to health and welfare plans.The annual total compensation, including Company paid contributions to health and welfare plans, of the CEO is $5,185,513. The median of the annual totalcompensation of all employees, except the CEO, is $34,985. Accordingly, the CEO pay ratio is 148:1. The pay ratio reported by other companies may not becomparable to the pay ratio reported above due to variances in business mix, proportion of seasonal and part-time employees and distribution of employeesacross geographies.Compensation of DirectorsTo ensure competitive compensation for the Directors, surveys prepared by various consulting firms and the National Association of CorporateDirectors are reviewed by the Corporate Governance Committee and the Management Development and Compensation Committee, and they confer with theBoard’s independent compensation consultant, Meridian Compensation Partners, in making recommendations to the Board of Directors regarding Directorcompensation. Directors who are employees of the Company receive no additional compensation for service on the Board or on any committee of the Board.In fiscal 2018, the annual cash retainer paid to non-management Directors was $60,000. Each member of the Audit Committee received an annualretainer of $15,000, and an additional annual retainer of $15,000 was paid to the Chair; each member of the Management Development and CompensationCommittee received an annual retainer of $12,000, and an additional annual retainer of $12,000 was paid to the Chair; and each member of the CorporateGovernance, Finance and Technology Committees received an annual retainer of $10,000, and an additional annual retainer of $10,000 was paid to eachcommittee Chair. Non-management Directors do not receive meeting fees. Non-management Directors are eligible to receive compensation of up to $1,000per day for special assignments required by management or the Board of Directors, so long as the compensation does not impair independence and isapproved as required by the Board. No such special assignment fees were paid in fiscal year 2018.86Table of ContentsIn fiscal 2018, the Chair of the Board was paid an annual fee of $50,000, consistent with the evolving role of independent board leadership and theenhanced responsibilities of the position. Mr. Goodkind served as Chair of the Board in fiscal 2018. On September 12, 2018, based on the recommendation ofMeridian Compensation Partners, the Board approved an increase of $10,000 in the annual fee paid to the Chair of the Board, to $60,000, effective followingthe 2018 Annual Meeting of Shareholders.The Board has established stock ownership requirements for Directors. The ownership requirement for each director is five times the annual Boardretainer. All directors have achieved their stock ownership requirements.Under the terms of the Brady Corporation 2017 Omnibus Incentive Stock Plan, 5,000,000 shares of the Company's Class A Common Stock have beenauthorized for issuance to Directors and employees. The Board has full and final authority to designate the non-management Directors to whom awards willbe granted, the date on which awards will be granted and the number of shares of stock covered by each grant.On September 12, 2017, the Board approved an annual stock-based compensation award of $95,000 in unrestricted shares of Class A Common Stock(having a grant date fair value of $36.85 per share), for each non-management Director, effective September 22, 2017. On September 11, 2018, based on therecommendation of Meridian Compensation Partners, the Board approved an increase of $14,000 in the annual stock-based compensation award inunrestricted shares of Class A Common Stock to non-management Directors, to $109,000, effective September 25, 2018.Directors are also eligible to defer portions of their fees into the Brady Corporation Director Deferred Compensation Plan (“Director DeferredCompensation Plan”), the value of which is measured by the fair value of the underlying investments. The assets of the Director Deferred Compensation Planare held in a Rabbi Trust and are invested by the trustee as directed by the participant in several investment funds as permitted by the Director DeferredCompensation Plan. The investment funds available in the Director Deferred Compensation Plan include Brady Corporation Class A Nonvoting CommonStock and various mutual funds that are provided in the employee Matched 401(k) Plan. A Director may elect whether to receive his/her account balancefollowing termination in a single lump sum payment or by means of distribution under an annual installment method. Distributions of the Company Class ANonvoting Common Stock are made in-kind; distributions of mutual funds are in cash.Director Compensation Table — Fiscal 2018Name Fees Earnedor Paid inCash ($) Option Awards ($)(1) StockAwards ($) (2) Total ($)Patrick W. Allender $105,000 $— $95,036 $200,036Gary S. Balkema 101,500 — 95,036 196,536Elizabeth P. Bruno 83,000 — 95,036 178,036Nancy L. Gioia 92,000 — 95,036 187,036Conrad G. Goodkind 155,000 — 95,036 250,036Frank W. Harris 84,500 — 95,036 179,536Bradley C. Richardson 111,500 — 95,036 206,536Harold L. Sirkin(3) 20,500 — 95,036 115,536 (1)No stock options were awarded to non-management Directors in fiscal 2018. Outstanding option awards at July 31, 2018, for each individual whoserved as Director in fiscal 2018 include the following: Mr. Allender, 39,800; Mr. Balkema, 35,400; Ms. Bruno, 33,800; Ms. Gioia, 8,500; Mr.Goodkind, 39,800; Mr. Harris, 33,800; and Mr. Richardson, 12,750 shares. The actual value, if any, which an option holder will realize upon theexercise of an option will depend on the excess of the market value of the Company's common stock over the exercise price on the date the option isexercised.(2)Represents the fair value of shares of Brady Corporation Class A Non-Voting Common Stock granted in fiscal 2018 as compensation for their services.The shares of unrestricted stock and RSUs granted to the non-management directors were valued at the average of the high and low market price of$36.85 on September 22, 2017.(3)Mr. Sirkin resigned as a director on November 6, 2017.87Table of ContentsItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters(a) Security Ownership of Certain Beneficial OwnersThe following table sets forth the current beneficial ownership of shareholders who are known by the Company to own more than five percent (5%) ofany class of the Company’s voting shares on August 1, 2018. As of that date, nearly all of the voting stock of the Company was held by two trusts controlledby direct descendants of the Company’s founder, William H. Brady, as follows: Title of Class Name and Address of Beneficial Owner Amount of BeneficialOwnership Percent ofOwnership(2) Class B Common Stock EBL GST Non-Exempt Stock B Trust(1) c/o Elizabeth P.Bruno 2002 S. Hawick Ct. Chapel Hill, NC 27516 1,769,304 50% William H. Brady III Living Trust dated November 1,2013 (3) 1,769,304 50% c/o William H. Brady III249 Rosemont Ave.Pasadena, CA 91103 (1)The trustee is Elizabeth P. Bruno, who has sole voting and dispositive power and who is the remainder beneficiary. Elizabeth Bruno is the great-granddaughter of William H. Brady and currently serves on the Company’s Board of Directors.(2)An additional 20 shares are owned by a third trust with different trustees.(3)William H. Brady III is grantor of this revocable trust and shares voting and dispositive powers with respect to these shares with his co-trustee. WilliamH. Brady III is the grandson of William H. Brady.(b) Security Ownership of ManagementThe following table sets forth the current beneficial ownership of each class of equity securities of the Company by each Director and Named ExecutiveOfficer individually and by all Directors and Officers of the Company as a group as of August 1, 2018. Unless otherwise noted, the address for each of thelisted persons is c/o Brady Corporation, 6555 West Good Hope Road, Milwaukee, Wisconsin 53223. Except as otherwise indicated, all shares are owneddirectly. Title of Class Name of Beneficial Owner & Nature of Beneficial Ownership Amount ofBeneficialOwnership(3)(4)(5) Percent ofOwnershipClass A Common Stock Elizabeth P. Bruno (1) 1,242,867 2.6% J. Michael Nauman 494,743 1.0% Thomas J. Felmer 398,132 0.8% Aaron J. Pearce 177,318 0.4% Conrad G. Goodkind 164,092 0.3% Patrick W. Allender (2) 117,699 0.2% Louis T. Bolognini 94,961 0.2% Russell R. Shaller 90,852 0.2% Bradley C. Richardson 63,718 0.1% Frank W. Harris 60,490 0.1% Gary S. Balkema 53,709 0.1% Nancy L. Gioia 21,537 * All Officers and Directors as a Group (15 persons) 3,204,758 6.6% Class B Common Stock Elizabeth P. Bruno (1) 1,769,304 50.0%*Indicates less than one-tenth of one percent.(1)Ms. Bruno’s holdings of Class A Common Stock include 806,296 shares owned by a trust for which she is a trustee and has sole dispositive andvoting authority and 34,530 shares owned by trusts in which she is a co-trustee. Ms. Bruno’s holdings of Class B Common Stock include 1,769,304shares owned by a trust over which she has sole dispositive and voting authority.(2)Mr. Allender's holdings of Class A Common Stock include 20,000 shares owned by the Patrick and Deborah Allender Irrevocable Trust.88Table of Contents(3)The amount shown for all officers and directors individually and as a group (15 persons) includes options to acquire a total of 1,394,233 shares ofClass A Common Stock, which are currently exercisable or will be exercisable within 60 days of July 31, 2018, including the following: Ms. Bruno,33,800 shares; Mr. Nauman, 398,623 shares; Mr. Felmer, 339,185 shares; Mr. Pearce, 136,228 shares; Mr. Goodkind, 39,800 shares; Mr. Allender,39,800 shares; Mr. Bolognini, 71,354 shares; Mr. Shaller, 69,055 shares; Mr. Richardson, 12,750 shares; Mr. Harris, 33,800 shares; Mr. Balkema,35,400 shares; and Ms. Gioia, 8,500 shares. It does not include other options for Class A Common Stock which have been granted at later dates andare not exercisable within 60 days of July 31, 2018.(4)The amount shown for all officers and directors individually and as a group (15 persons) includes unvested restricted stock units to acquire 82,874shares of Class A Common stock, which will vest within 60 days of July 31, 2018, including the following: Mr. Nauman, 45,580 units; Mr. Felmer,7,990 units; Mr. Pearce, 9,612 units; Mr. Bolognini, 4,722 units; and Mr. Shaller, 7,155 units. No unvested restricted stock units were held bydirectors which will vest within 60 days of July 31, 2018. It does not include unvested restricted stock awards or restricted stock units to acquire ClassA Common Stock which have been granted at later dates and will not vest within 60 days of July 31, 2018.(5)The amount shown for all officers and directors individually and as a group (15 persons) includes Class A Common Stock owned in deferredcompensation plans totalling 207,424 shares of Class A Common Stock, including the following: Ms. Bruno, 2,588 shares; Mr. Nauman 0 shares; Mr.Felmer, 12,702 shares; Mr. Pearce, 3,628 shares; Mr. Goodkind, 67,596 shares; Mr. Allender, 57,506 shares; Mr. Bolognini, 0 shares; Mr. Shaller 0shares; Mr. Richardson, 45,798 shares; Mr. Harris, 0 shares; Mr. Balkema, 14,859 shares; and Ms. Gioia, 2,622 shares.(c) Changes in ControlNo arrangements are known to the Company, which may, at a subsequent date, result in a change in control of the Company.(d) Equity Compensation Plan Information As of July 31, 2018Plan Category Number of securitiesto be issued uponexercise ofoutstanding options,warrants and rights(a) Weighted-averageexercise price ofoutstanding options,warrants and rights(b) Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected incolumn (a))(c)Equity compensation plans approvedby security holders 2,955,586 $28.23 4,049,563Equity compensation plans notapproved by security holders None None NoneTotal 2,955,586 $28.23 4,049,563The Company’s equity compensation plan allows the granting of stock options, restricted stock, RSUs, and unrestricted stock to various officers,directors and other employees of the Company at prices equal to fair market value at the date of grant. The Company has reserved 5,000,000 shares of Class ANonvoting Common Stock for issuance under the Brady Corporation 2017 Omnibus Incentive Stock Plan. Generally, options will not be exercisable untilone year after the date of grant, and will be exercisable thereafter, to the extent of one-third per year and have a maximum term of ten years. Generally, RSUsvest one-third per year for the first three years.Item 13. Certain Relationships, Related Transactions, and Director IndependenceThe Company annually solicits information from its Directors in order to ensure there are no conflicts of interest. The information gathered annuallyis reviewed by the Company and if any transactions are not in accordance with the rules of the New York Stock Exchange or are potentially in violation ofthe Company’s Corporate Governance Principles, the transactions are referred to the Corporate Governance Committee for approval, ratification, or otheraction. Further, potential affiliated party transactions would be reported as a part of the Company’s quarterly disclosure process. In addition, pursuant to itscharter, the Company’s Audit Committee periodically reviews reports and disclosures of insider and affiliated party transaction with the Company, if any.Furthermore, the Company’s Directors are expected to be mindful of their fiduciary obligations to the Company and to report any potential conflicts to theCorporate Governance Committee for review. Based on the Company’s consideration of all relevant facts and circumstances, the Corporate GovernanceCommittee will decide whether or not to approve such transactions and will approve only those transactions that are in the best interest of the Company.Additionally, the Company has processes in place to educate executives and employees about affiliated transactions. The Company maintains ananonymous hotline by which employees may report potential conflicts of interest such as affiliated party transactions.89Table of ContentsIn undertaking its review of potential related party transactions, the Board considered the commercial relationships of the Company, if any, withthose entities that have employed the Company’s Directors. The commercial relationships, which involved the purchase and sale of products on customaryterms, did not exceed the maximum amounts proscribed by the director independence rules of the NYSE. Furthermore, the compensation paid to theCompany’s Directors by their employers, was not linked in any way to the commercial relationships their employers had with the Company in fiscal 2018.After consideration of these factors, the Board concluded that none of the Directors whose employers had a commercial relationship with the Company hada material interest in the transactions and the commercial relationships were not material to the Company. Based on these factors, the Company hasdetermined that it does not have material related party transactions that affect the results of operations, cash flow or financial condition. The Company hasalso determined that no transactions occurred in fiscal 2018, or are currently proposed, that would require disclosure under Item 404 (a) of Regulation S-K.See Item 10 above for a discussion of Director independence.Item 14. Principal Accountant Fees and ServicesThe following table presents the aggregate fees incurred for professional services by Deloitte & Touche LLP and Deloitte Tax LLP during the yearsended July 31, 2018 and 2017. Other than as set forth below, no professional services were rendered or fees billed by Deloitte & Touche LLP or Deloitte TaxLLP during the years ended July 31, 2018 and 2017. 2018 2017 (Dollars in thousands)Audit, audit-related and tax compliance Audit fees(1) $1,235 $1,200Tax fees — compliance 609 492Subtotal audit, audit-related and tax compliance fees 1,844 1,692Non-audit related Tax fees — planning and advice 320 189Subtotal non-audit related fees 320 189Total fees $2,164 $1,881 (1)Audit fees consist of professional services rendered for the audit of the Company’s annual financial statements, attestation of management’sassessment of internal control, reviews of the quarterly financial statements and statutory reporting compliance. 2018 2017Ratio of Tax Planning and Advice Fees to Audit Fees, Audit-Related Fees and Tax Compliance Fees 0.2 to 1 0.1 to 1Pre-Approval Policy — The services performed by the Independent Registered Public Accounting Firm (“Independent Auditors”) in fiscal 2018 werepre-approved in accordance with the pre-approval policy and procedures adopted by the Audit Committee. The policy requires the Audit Committee to pre-approve the audit and non-audit services performed by the Independent Auditors in order to assure that the provision of such services does not impair theauditor’s independence. All services performed for the Company by the Independent Auditor must be approved in advance by the Audit Committee. Anyproposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee.90Table of ContentsPART IVItem 15. Exhibits and Financial Statement SchedulesItem 15 (a) — The following documents are filed as part of this report:1) & 2) Consolidated Financial Statement Schedule -Schedule II Valuation and Qualifying AccountsAll other schedules are omitted as they are not required, or the required information is shown in the consolidated financial statements ornotes thereto.3) Exhibits — See Exhibit Index at page 92 of this Form 10-K.91Table of ContentsEXHIBIT INDEXExhibitNumberDescription2.1Agreement and Plan of Merger, dated as of December 28, 2012, by and among Brady Corporation, BC I Merger Sub Corporation,Precision Dynamics Corporation, and Precision Dynamics Holding LLC (29)2.2Share and Asset Purchase Agreement, dated as of February 24, 2014, by and among Brady Corporation and LTI Flexible Products,Inc. (d/b/a Boyd Corporation) (6)3.1Restated Articles of Incorporation of Brady Corporation (1)3.2By-laws of Brady Corporation, as amended (23)*10.1Form of Change of Control Agreement, amended as of December 23, 2008, entered into with Thomas J. Felmer (12)*10.2Brady Corporation BradyGold Plan, as amended (2)*10.3Executive Additional Compensation Plan, as amended (2)*10.4Executive Deferred Compensation Plan, as amended*10.5Directors’ Deferred Compensation Plan, as amended*10.6Forms of Nonqualified Employee Stock Option Agreement, Director Nonqualified Stock Option Agreement, and EmployeePerformance Stock Option Agreement under the Brady Corporation 2006 Omnibus Incentive Stock Plan (10)*10.7Brady Corporation 2017 Omnibus Incentive Plan (27)*10.8Form of Nonqualified Stock Option Agreement under the Brady Corporation 2017 Omnibus Incentive Plan for awards grantedprior to Fiscal 2019 (33)10.9Brady Corporation Automatic Dividend Reinvestment Plan (4)*10.10Brady Corporation 2005 Nonqualified Stock Option Plan for Non-Employee Directors, as amended (3)*10.11Form of Director Nonqualified Stock Option Agreement under the Brady Corporation 2005 Nonqualified Stock Option Plan forNon-Employee Directors, as amended (8)*10.12Form of Restricted Stock Unit Agreement under the Brady Corporation 2017 Omnibus Incentive Plan for awards granted prior toFiscal 2019 (33)*10.13Restricted Stock Unit Agreement, dated as of October 1, 2014, with Thomas J. Felmer (11)*10.14Form of Fiscal 2019 Performance-Based Restricted Stock Unit Agreement under the Brady Corporation 2017 Omnibus IncentivePlan*10.15Brady Corporation 2006 Omnibus Incentive Stock Plan, as amended (10)*10.16Restricted Stock Unit Agreement, dated as of November 28, 2014, with Thomas J. Felmer (20)*10.17Change of Control Agreement, dated as of August 28, 2015, with Russell R. Shaller (21)*10.18Change of Control Agreement, dated as of September 11, 2015, with Aaron J. Pearce (21)*10.19Form of Performance-Based Restricted Stock Agreement under the Brady Corporation 2006 Omnibus Incentive Stock Plan (7)*10.20Form of Fiscal 2015 Employee Restricted Stock Unit Agreement under the Brady Corporation 2012 Omnibus Incentive Plan (21)*10.21Restated Brady Corporation Restoration Plan, as amended*10.22Change of Control Agreement, dated as of February 28, 2013, with Louis T. Bolognini (30)*10.23Form of Performance-Based Restricted Stock Unit Agreement under the Brady Corporation 2017 Omnibus Incentive Plan (33)92Table of Contents*10.24Employment Offer Letter, dated as of June 2, 2015, with Russell Shaller (28)*10.25Restricted Stock Unit Agreement, dated as of July 15, 2015, with Aaron J. Pearce (34)10.26Note Purchase Agreement, dated May 13, 2010, by and among Brady Corporation, Brady Worldwide, Inc., Tricor Direct, Inc., andcertain Purchasers (19)*10.27Form of Amendment to 2005 Nonqualified Stock Option Agreement under the Brady Corporation 2004 Omnibus Incentive StockPlan, dated February 17, 2010 (18)*10.28Brady Corporation 2010 Omnibus Incentive Stock Plan, as amended (22)*10.29Brady Corporation 2010 Nonqualified Stock Option Plan for Non-Employee Directors (17)*10.30Form of Employee Nonqualified Stock Option Agreement and Employee Performance Stock Option Agreement under the BradyCorporation 2010 Omnibus Incentive Stock Plan (17)*10.31Form of Director Nonqualified Stock Option Agreement under the Brady Corporation 2010 Nonqualified Stock Option Plan forNon-Employee Directors (17)*10.32Brady Corporation Incentive Compensation Plan for Senior Executives (15)*10.33Restricted Stock Agreement, dated as of October 7, 2013, with Thomas J. Felmer (36)*10.34Change of Control Agreement, dated as of March 3, 2014, with Bentley N. Curran (13)*10.35Restricted Stock Unit Agreement, dated as of August 4, 2014, with Thomas J. Felmer (9)*10.36Change of Control Agreement, dated as of March 3, 2014, with Helena R. Nelligan (13)*10.37Form of Fiscal 2012 Performance Stock Option under the Brady Corporation 2010 Omnibus Incentive Stock Plan (26)*10.38Brady Corporation 2012 Omnibus Incentive Stock Plan (26)*10.39Form of Nonqualified Employee Stock Option Agreement under the Brady Corporation 2012 Omnibus Incentive Stock Plan (26)*10.40Form of Nonqualified Employee Performance Stock Option Agreement under the Brady Corporation 2012 Omnibus IncentiveStock Plan (26)*10.41Form of Director Stock Option Agreement under the Brady Corporation 2012 Omnibus Incentive Stock Plan (26)*10.42Form of Fiscal 2013Nonqualified Employee Stock Option Agreement under the Brady Corporation 2012 Omnibus IncentiveStock Plan (31)*10.43Form of Fiscal 2013 Director Nonqualified Stock Option Agreement under the Brady Corporation 2012 Omnibus Incentive StockPlan (31)10.44Credit Agreement, dated as of September 25, 2015, by and among Brady Corporation and certain of its subsidiaries, theGuarantors and Lenders listed therein and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (24)*10.45Employment Offer Letter, dated as of August 1, 2014, with J. Michael Nauman (35)*10.46Restricted Stock Unit Agreement, dated as of August 4, 2014, with J. Michael Nauman (35)*10.47Change of Control Agreement, dated as of August 4, 2014, with J. Michael Nauman (35)*10.48Form of Fiscal 2014 Nonqualified Employee Stock Option Agreement under the Brady Corporation 2012 Omnibus IncentiveStock Plan (32)*10.49Form of Fiscal 2014 Director Stock Option Agreement under the Brady Corporation 2012 Omnibus Incentive Stock Plan (32)*10.50Form of Fiscal 2014 Restricted Stock Unit Agreement under the Brady Corporation 2012 Omnibus Incentive Stock Plan (32)*10.51Form of Fiscal 2016 Nonqualified Employee Stock Option Agreement under the Brady Corporation 2012 Omnibus IncentiveStock Plan (21)*10.52Form of Fiscal 2016 Restricted Stock Unit Agreement under the Brady Corporation 2012 Omnibus Incentive Stock Plan (21)93Table of Contents*10.53Form of Fiscal 2015 Nonqualified Employee Stock Option Agreement under the Brady Corporation 2012 Omnibus IncentiveStock Plan (9)*10.54Form of Fiscal 2015 Director Nonqualified Stock Option Agreement under the Brady Corporation 2012 Omnibus Incentive StockPlan (9)*10.55Form of Fiscal 2015 Restricted Stock Unit Agreement under the Brady Corporation 2012 Omnibus Incentive Stock Plan (9)*10.56Restricted Stock Unit Agreement, dated as of June 22, 2015, with Russell R. Shaller (21)*10.57Form of Fiscal 2015 Employee Retention Restricted Stock Unit Agreement under 2012 Omnibus Incentive Plan (21)*10.58Form of Fiscal 2019 Nonqualified Employee Stock Option Agreement under the Brady Corporation 2017 Omnibus Incentive Plan*10.59Form of Fiscal 2019 Restricted Stock Unit Agreement under the Brady Corporation 2017 Omnibus Incentive Plan21Subsidiaries of Brady Corporation23Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm31.1Rule 13a-14(a)/15d-14(a) Certification of J. Michael Nauman31.2Rule 13a-14(a)/15d-14(a) Certification of Aaron J. Pearce32.1Section 1350 Certification of J. Michael Nauman32.2Section 1350 Certification of Aaron J. Pearce101Interactive Data File*Management contract or compensatory plan or arrangement(1)Incorporated by reference to Registrant’s Registration Statement No. 333-04155 on Form S-3(2)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 1989(3)Incorporated by reference to Registrant’s Current Report on Form 8-K filed November 25, 2008(4)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 1992(5)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2008(6)Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 25, 2014(7)Incorporated by reference to Registrant’s Current Report on Form 8-K filed January 9, 2008(8)Incorporated by reference to Registrant’s Current Report on Form 8-K filed December 4, 2006(9)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2014(10)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2008(11)Incorporated by reference to Registrant’s Current Report on Form 8-K filed October 2, 2014(12)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2009(13)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2014(14)Reserved(15)Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 2, 2011(16)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2011(17)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2009(18)Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 23, 2010(19)Incorporated by reference to Registrant’s Current Report on Form 8-K filed May 14, 2010(20)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2014(21)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2015(22)Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 27, 2010(23)Incorporated by reference to Registrant’s Current Report on Form 8-K filed July 18, 2014(24)Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 25, 2015(25)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2017(26)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2011(27)Incorporated by reference to Registrant’s Current Report on Form 8-K filed May 27, 2016(28)Incorporated by reference to Registrant’s Current Report on Form 8-K filed June 5, 2015(29)Incorporated by reference to Registrant's Current Report on Form 8-K filed December 31, 201294Table of Contents(30)Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2013(31)Incorporated by reference to Registrant's Annual Report on Form 10-K for the fiscal year ended July 31, 2012(32)Incorporated by reference to Registrants Annual Report on Form 10-K for the fiscal year ended July 31, 2013(33)Incorporated by reference to Registrant's Current Report on Form 8-K filed July 14, 2016(34)Incorporated by reference to Registrant's Current Report on Form 8-K filed July 16, 2015(35)Incorporated by reference to Registrant's Current Report on Form 8-K filed August 4, 2014(36)Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2013Item 16. Form 10-K SummaryNone.BRADY CORPORATION AND SUBSIDIARIESSCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS Year ended July 31,Description 2018 2017 2016 (Dollars in thousands)Valuation accounts deducted in balance sheet from assets to which they apply — Accountsreceivable — allowance for doubtful accounts: Balances at beginning of period $4,629 $5,144 $3,585Additions — Charged to expense 752 732 1,904Deductions — Bad debts written off, net of recoveries (910) (1,247) (345)Balances at end of period $4,471 $4,629 $5,144Inventory — Reserve for slow-moving inventory: Balances at beginning of period $14,322 $15,083 $13,269Additions — Charged to expense 2,797 4,608 4,950Deductions — Inventory write-offs (4,537) (5,369) (3,136)Balances at end of period $12,582 $14,322 $15,083Valuation allowances against deferred tax assets: Balances at beginning of period $38,563 $37,992 $39,922Additions during year 24,184 2,004 2,614Deductions — Valuation allowances reversed/utilized (5,881) (1,433) (4,544)Balances at end of period $56,866 $38,563 $37,99295Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized this 13th day of September 2018.BRADY CORPORATIONBy: /s/ AARON J. PEARCE Aaron J. Pearce Chief Financial Officer and Treasurer (Principal Financial Officer)Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrantand in the capacities and on the dates indicated.*Signature Title/s/ J. MICHAEL NAUMAN President and Chief Executive Officer; DirectorJ. Michael Nauman (Principal Executive Officer)/s/ ANN E. THORNTON Chief Accounting Officer and Corporate ControllerAnn E. Thornton (Principal Accounting Officer)/s/ PATRICK W. ALLENDER Patrick W. Allender Director/s/ GARY S. BALKEMA Gary S. Balkema Director/s/ NANCY L. GIOIA Nancy L. Gioia Director/s/ CONRAD G. GOODKIND Conrad G. Goodkind Director/s/ FRANK W. HARRIS Frank W. Harris Director/s/ ELIZABETH P. BRUNO Elizabeth P. Bruno Director/s/ BRADLEY C. RICHARDSON Bradley C. Richardson Director*Each of the above signatures is affixed as of September 13, 2018.96EXHIBIT 10.4BRADY CORPORATIONEXECUTIVE DEFERRED COMPENSATION PLANAS AMENDED AND RESTATED EFFECTIVE JULY 17, 2018ARTICLE IINTRODUCTIONFor periods prior to calendar year 2005, Brady Corporation has maintained the Brady Corporation Executive DeferredCompensation Plan by means of a series of individual deferred compensation agreements with covered executives. Amounts deferredprior to January 1, 2005 (which were all fully vested under Plan terms), including past and future earnings credited thereon, shallremain subject to the terms of those individual agreements as previously in effect (the “Frozen Agreements”) but no further amountsshall be deferred under the Frozen Agreements. All deferrals to the Plan for periods on or after January 1, 2005 shall be governed bythe terms and provisions of this document. Except as provided in Sections 4.2(b)(viii) and 6.1(a)(iii)(C) below, nothing in thisdocument shall apply to amounts deferred prior to 2005 and past and future earnings credited thereon. This document is intended tocomply with the provisions of Section 409A of the Internal Revenue Code and shall be interpreted accordingly. If any provision orterm of this document would be prohibited by or inconsistent with the requirements of Section 409A of the Code, then such provisionor term shall be deemed to be reformed to comply with Section 409A of the Code. This Plan is further amended and restated, effectiveas of the Effective Date, to revise certain Plan terms related to contributions and distributions.ARTICLE IIDEFINITIONSThe following definitions shall be applicable throughout the Plan:2.1“Account” means the account credited from time to time with bookkeeping amounts equal to the portions of aParticipant’s compensation deferred pursuant to Section 3.2 and earnings credited on such amounts in accordance with Article IV.2.2“Administrator” means the Compensation Committee of the Board of Directors of Brady Corporation.2.3“Beneficiary” means the person, persons, or entity designated by the Participant to receive any benefits payableunder the Plan on or after the Participant’s death. Each Participant shall be permitted to name, change or revoke the Participant’sdesignation of a Beneficiary in writing on a form and in the manner prescribed by the Corporation; provided, however, that thedesignation on file with the Corporation at the time of the Participant’s death shall be controlling. Should a Participant fail to make avalid Beneficiary designation or leave no named Beneficiary surviving, any benefits due shall be paid to such Participant’s spouse, ifliving; or if not living, then any benefits due shall be paid to such Participant’s estate. A Participantmay designate a primary beneficiary and a contingent beneficiary; provided, however, that the Corporation may reject any suchinstrument tendered for filing if it contains successive beneficiaries or contingencies unacceptable to it. If all Beneficiaries whosurvive the Participant shall die before receiving the full amounts payable hereunder, then the payments shall be paid to the estate ofthe Beneficiary last to die.2.4“Code” means the Internal Revenue Code of 1986, including any subsequent amendments.2.5“Corporation” means Brady Corporation, and each of its affiliates which has adopted the Plan or may adopt thePlan. The term “Corporation” as used throughout this Plan shall include references to those affiliates of Brady Corporation whichhave also adopted the Plan; provided, however, that for purposes of the power to amend or terminate the Plan or take any other actionunder or with respect to the Plan, except for the payment of benefits, the term “Corporation” shall refer only to Brady Corporation.2.6“Effective Date” means July 17, 2018.2.7“ERISA” means the Employee Retirement Income Security Act of 1974, including any subsequent amendments.2.8“Fiscal Year” means the period beginning August 1 and ending July 31.2.9“Participant” means a key management or highly compensated employee designated as eligible to participate in thePlan for a Plan Year under Section 3.1 (such persons shall be known as “Active Participants” for such Plan Year) and any personwho previously participated in the Plan and is entitled to benefits.2.10“Performance Based Bonus” means bonus compensation, the amount of which or entitlement to, is based onservices performed over a period of at least 12 consecutive months which is contingent on the satisfaction of pre-establishedorganizational or individual performance criteria, which performance criteria are not substantially certain to be met at the time adeferral election is permitted. Performance Based Bonus compensation may include payments based upon subjective performancecriteria, but (i) any subjective performance criteria must relate to the performance of the Participant service provider, a group ofservice providers that includes the Participant service provider, or a business unit for which the Participant provides services (whichmay include the entire organization) and (ii) the determination that any subjective performance criteria have been met must not bemade by the Participant or a family member of the Participant (as defined in Code Section 267(c)(4) applied as if the family of anindividual includes the spouse of any family member). Organizational or individual performance criteria are considered pre-established if established in writing by not later than 90 days after the commencement of the period of service to which the criteriarelate, provided that the outcome is substantially uncertain at the time the criteria are established. A Performance Based Bonus mayinclude payments based on performance criteria that are not approved by the Administrator or by the stockholders of the Corporation.A Performance Based Bonus shall not include any amount or portion of any amount that will be paid either regardless ofperformance, or based upon a level of performance that is substantially certain to be met at the time the criteria are established.Whether a bonus is performance based shall be determined in accordance with the requirements of IRS Reg. Section 1.409A-1 (e)which are summarized in part in this Section 2.10.2.11“Plan” means the Brady Corporation Executive Deferred Compensation Plan, as set forth herein, as applicable toamounts deferred on or after January 1, 2005, and as it may be amended from time to time.2.12“Plan Year” means the calendar year.2.13"Separation from Service" shall have the meaning set forth in IRS Regulation Section 1.409A-1 the requirementsof which are summarized in part as follows:(a)In General. The Participant shall have a Separation from Service with the Corporation if the Participant dies,retires, or otherwise has a termination of employment with the Corporation. However, for purposes of this Section 2.13, theemployment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fideleave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right toreemployment with the Corporation under an applicable statute or by contract. For purposes of this paragraph (a) of this Section2.13, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participantwill return to perform services for the Corporation. If the period of leave exceeds six months and the individual does not retaina right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on thefirst date immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to anymedically determinable physical or mental impairment that can be expected to result in death or can be expected to last for acontinuous period of not less than six months, where such impairment causes the Participant to be unable to perform the dutiesof their position of employment or any substantially similar position of employment, a 29-month period of absence may besubstituted for such six-month period.(b)Termination of Employment. Whether a termination of employment has occurred is determined based onwhether the facts and circumstances indicate that the Corporation and Participant reasonably anticipated that no further serviceswould be performed after a certain date or that the level of bona fide services the Participant would perform after such date(whether as an employee or as an independent contractor) would permanently decrease to no more than 20 percent of theaverage level of bona fide services performed (whether as an employee or an independent contractor) over the immediatelypreceding 36-month period (or, the full period of services to the Corporation if the Participant has been providing services tothe Corporation less than 36 months). Facts and circumstances to be considered in making this determination include, but arenot limited to, whether the Participant continues to be treated as an employee for other purposes (such as continuation of salaryand participation in employee benefit programs), whether similarly situated service providers have been treated consistently,and whether the Participant is permitted, and realistically available, to perform services for other service recipients in the sameline of business. The Participant is presumed to have Separated from Service where the level of bona fide services performeddecreases to a level equal to 20 percent or less of the average level of services performed by the employee during theimmediately preceding 36-month period. The Participant will be presumed not to have Separated from Service where the levelof bona fide services performed continues at a level that is 50 percent or more of the average level of service performed by theParticipant during the immediately preceding 36-month period. No presumption applies to a decrease in the level of bona fideservices performed to a level that is more than 20 percent and less than 50 percent of the average level of bona fide servicesperformed during the immediately preceding 36-month period. The presumption is rebuttable by demonstrating that theCorporation and the Participant reasonably anticipated that as of a certain date the level of bona fide services would be reducedpermanently to a level less than or equal to 20 percent of the average level of bona fide services provided during theimmediately preceding 36-month period or the full period of services to the Corporation if the Participant has been providingservices to the Corporation less than 36 months (or that the level of bona fide services would not be so reduced). For example,the Participant may demonstrate that the Corporation andthe Participant reasonably anticipated that the Participant would cease providing services, but that, after the original cessation ofservices, business circumstances such as termination of the Participant's replacement caused the Participant to return toemployment. Although the Participant's return to employment may cause the Participant to be presumed to have continued inemployment because the Participant is providing services at a rate equal to the rate at which the Participant was providingservices before the termination of employment, the facts and circumstances in this case would demonstrate that at the time theParticipant originally ceased to provide services, the Corporation reasonably anticipated that the Participant would not provideservices in the future. For purposes of this paragraph (b), for periods during which the Participant is on a paid bona fide leaveof absence (as defined in paragraph (a) of this Section 2.13) and has not otherwise terminated employment pursuant toparagraph (a) of this Section 2.13, the Participant is treated as providing bona fide services at a level equal to the level ofservices that the Participant would have been required to perform to receive the compensation paid with respect to such leave ofabsence. Periods during which the Participant is on an unpaid bona fide leave of absence (as defined in paragraph (a) of thisSection 2.13) and has not otherwise terminated employment pursuant to paragraph (a) of this Section 2.13, are disregarded forpurposes of this paragraph (b) of this Section 2.13 (including for purposes of determining the applicable 36-month (or shorter)period).(c)Asset Purchase Transactions. Where as part of a sale or other disposition of assets by the Corporation asseller to an unrelated service recipient (buyer), a Participant of the Corporation would otherwise experience a Separation fromService with the Corporation, the Corporation and the buyer may retain the discretion to specify, and may specify, whether aParticipant providing services to the Corporation immediately before the asset purchase transaction and providing services tothe buyer after and in connection with the asset purchase transaction has experienced a Separation from Service, provided thatthe asset purchase transaction results from bona fide, arm’s length negotiations, all service providers providing services to theCorporation immediately before the asset purchase transaction and providing services to the buyer after and in connection withthe asset purchase transaction are treated consistently (regardless of position at the Corporation) for purposes of applying theprovisions of any nonqualified deferred compensation plan, and such treatment is specified in writing no later than the closingdate of the asset purchase transaction. For purposes of this paragraph (c), references to a sale or other disposition of assets, or anasset purchase transaction, refer only to a transfer of substantial assets, such as a plant or division or substantially all the assetsof a trade or business.(d)Dual Status. If a Participant provides services both as an employee of the Corporation and as an independentcontractor of the Corporation, the Participant must separate from service both as an employee and as an independent contractorto be treated as having Separated from Service. If a Participant ceases providing services as an independent contractor andbegins providing services as an employee, or ceases providing services as an employee and begins providing services as anindependent contractor, the Participant will not be considered to have a Separation from Service until the Participant has ceasedproviding services in both capacities. Notwithstanding the foregoing, if a Participant provides services both as an employee ofthe Corporation and a member of the board of directors of the Corporation, the services provided as a director are not taken intoaccount in determining whether the Participant has a Separation from Service as an employee for purposes of this Plan unlessthis Plan is aggregated with any plan in which the Participant participates as a director under IRS Regulation Section 1.409A-1(c)(2)(ii).2.14“Specified Employee” shall have the meaning set forth in IRS Regulation Section 1.409A-1 the requirements ofwhich are summarized in part as follows:(a)In General. “Specified Employee” means a Participant who as of the date of their Separation from Service isa “key employee” as defined in Code Section 416(i) (disregarding Section 416(i)(5)), i.e., an employee who at any time duringthe 12 month period ending on an identification date is an officer of the Corporation or one of its affiliates having an annualcompensation as defined in IRS Regulation Section 1.409A-1(i)(2) greater than $130,000, a 5% owner of the Corporation orone of its affiliates or a 1% owner of the Corporation or one of its affiliates having compensation of more than $150,000. The$130,000 amount described in the preceding sentence shall be adjusted for cost of living increases in such amounts and at suchtimes as specified by the Internal Revenue Service. Further, no more than 50 employees (or, if lesser, the greater of 3 or 10% ofthe employees) shall be treated as officers. The foregoing definition shall be interpreted at all times in a manner consistent withsuch regulations as may be adopted from time to time by the Internal Revenue Service for purposes of applying the keyemployee definition of Section 416(i) to the requirements of Code Section 409A. If a person is a key employee as of anidentification date, the person is treated as a Specified Employee for the 12-month period beginning on the first day of thefourth month following the identification date. The “identification date” is December 31.(b)In the event of a public offering, merger, acquisition, spin-off, reorganization or other corporate transaction,"Specified Employees" shall be determined as provided in IRS Reg. Section 1.409A-(1)(i)(6).2.15 “Unforeseeable Emergency” means a severe financial hardship to a Participant resulting from an illness or accidentof the Participant or the Participant’s spouse or dependent (as defined in Section 152(a) of the Code), loss of the Participant’s propertydue to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example,as a result of a natural disaster), or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond thecontrol of the Participant. For example, the imminent foreclosure of or eviction from the Participant’s primary residence mayconstitute an Unforeseeable Emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, aswell as for the costs of prescription drug medication, may constitute an Unforeseeable Emergency. Finally, the need to pay for funeralexpenses of a spouse or a dependent (as defined in Code section 152(a)) may also constitute an Unforeseeable Emergency. Except asotherwise provided above, the purchase of a home and the payment of college tuition are not Unforeseeable Emergencies. Whether aParticipant is faced with an Unforeseeable Emergency is to be determined based on the relevant facts and circumstances of each case.ARTICLE IIIPARTICIPATION AND DEFERRALS3.1Determination of Participants. Within a reasonable period of time prior to the beginning of a Plan Year or at any timeduring a Plan Year, the Administrator will designate employees who will be eligible to become Active Participants in the Plan for thatPlan Year (or the remainder of such Plan Year). An employee designated as an Active Participant for a Plan Year shall remain anActive Participant until the employee’s Separation from Service or the Administrator or the Board of Directors of the Corporationtakes action to terminate such employee’s participation effective on the first day of any Plan Year subsequent to the date of suchaction by the Administrator or the Board.3.2Deferral Elections.(a)Salary Payments. An Active Participant may elect to defer a specified percentage of their salary for servicesperformed during a Plan Year by completing and filing such forms as required by the Corporation prior to the first day of thePlan Year. A Participant’s deferrals shall be taken at a uniform percentage rate from each of their salary payments during theyear. Compensation deferred shall be retained by the Corporation, credited to the Participant’s Account pursuant to Section 4.1and paid in accordance with the terms and conditions of the Plan. Notwithstanding the foregoing, an employee who is notalready eligible to participate in any other deferred compensation plan of the account balance type who becomes an ActiveParticipant for the first time during a Plan Year (for example, an employee designated to be a Participant by the Administratorupon hire or promotion) may within 30 days after the effective date of participation make an election to defer a specifiedpercentage of salary to be paid to them for services to be performed subsequent to the deferral election. (b)Bonus Payments. An Active Participant may elect to defer a portion of any and all bonus payments made tothem during a Plan Year by completing and filing such forms as required by the Corporation. To the extent a bonus paymentrepresents a payment of a Performance Based Bonus, to be effective the deferral election with respect to such bonus must befiled with the Corporation at least seven months prior to the end of the period in which the bonus payment is earned. If a bonuspayment is not a Performance Based Bonus but is calculated on a Fiscal Year basis, then to be effective the deferral electionmust be filed prior to the beginning of the Fiscal Year during which the Participant first renders any services giving rise to thepayment of the bonus. If a bonus is not a Performance Based Bonus and is not calculated on a Fiscal Year basis, to beeffective, the deferral election must be filed prior to the beginning of the first Plan Year in which are performed any services forwhich such bonus is payable. Notwithstanding the foregoing, an employee who is not already eligible to participate in anyother deferred compensation plan sponsored by the Corporation of the account balance type who becomes an ActiveParticipant for the first time during a Plan Year (for example, an employee designated to be a Participant by the Administratorupon hire or promotion) may within 30 days after the effective date of participation make an election to defer a specifiedpercentage of any bonus payment for which the service period has already begun and, in such event, the election shall apply tothe portion of bonus compensation equal to the total bonus compensation to be paid to the Participant with respect to thatservice period multiplied by a fraction of which the numerator is the number of days remaining in the performance period andthe denominator is the total number of days in the performance period.3.3Continued Effect of Elections.(a)Salary Payments. An Active Participant’s deferral election with respect to a Plan Year under Section 3.2(a)shall be irrevocable after the last date upon which it may be filed pursuant to Section 3.2(a) and shall continue in effect eachsubsequent Plan Year until prospectively revoked or amended in writing. For a revocation or amendment to be effective withrespect to salary payments during a Plan Year, it must be filed by the last date for which an effective deferral election ispermitted to be filed with respect to those salary payments under Section 3.2(a).(b)Bonus Payments. An Active Participant’s deferral election under Section 3.2(b) with respect to a bonus shallbe irrevocable after the last date upon which it may be filed pursuant to Section 3.2(b). For a revocation or amendment to beeffective for any bonus payment, it must be filed by the last date for which an effective deferral election is permitted to be filedwith respect to that bonus payment under Section 3.2(b). An Active Participant must make a new bonus deferralelection for each Plan Year. An Active Participant who does not complete a timely bonus deferral election for a Plan Year shallnot have any bonus deferred for the Plan Year.3.4Prior Deferral Elections. Any deferral election made prior to calendar year 2005 under a Frozen Agreement shall betreated as a deferral election described in Section 3.2(a) and/or Section 3.2(b), as the case may be, and shall continue in effect untilmodified as described in Section 3.3 above unless modified earlier pursuant to Section 8.14(a) below.3.5Unforeseeable Emergency. In the event that a Participant makes application for a hardship distribution under Section6.3 and the Administrator determines that an Unforeseeable Emergency exists, all deferral elections otherwise in effect under thisArticle III and any other nonqualified deferred compensation plan of the account balance type sponsored by the Corporation shallimmediately terminate upon such determination. To resume deferrals thereafter, a Participant must make an election satisfying theprovisions of Section 3.2(a) and/or (b), as the case may be, as those provisions apply to someone who is already an Active Participantin the Plan.3.6401(k) Hardship. Any deferral elections in effect under this Article III shall be cancelled as required due to ahardship distribution described in IRS Regulation Section 1.401(k)-1(d)(3) or any successor thereto. To resume deferrals after therequired suspension period, a Participant must make an election satisfying the provisions of Section 3.2(a) and/or (b), as the case maybe, as those provisions apply to someone who is already an Active Participant in the Plan.ARTICLE IVACCOUNTS4.1Credits to Account. Bookkeeping amounts equal to the amounts deferred by a Participant pursuant to Section 3.2shall be credited to such Participant’s Deferral Account as soon as practicable after the deferred compensation would otherwise havebeen paid to such Participant in the absence of deferral.4.2Valuation of Account.(a)The Participant’s Account shall be credited or charged with deemed earnings or losses as if it were investedin accordance with paragraph (b) below.(b)(i) The investment funds available hereunder for the deemed investment of the Account shall be the BradyStock Fund and such other funds as the Administrator shall from time to time determine. However, in no event shall theCorporation be required to make any such investment in the Brady Stock Fund or any other investment fund and, to theextent such investments are made, such investments shall remain an asset of the Corporation subject to the claims of itsgeneral creditors.(ii)On the date credited to the Participant’s Account, deferrals shall be deemed to be invested in one ormore of the investment funds designated by the Participant for such deemed investment. Once made, the Participant’sinvestment designation shall continue in effect for future deferrals until changed by the Participant. A Participant maychange the deemed allocation of their existing Participant Account at the times established by the Administrator.(iii)The value of the Brady Stock Fund on any particular date will be based upon the value of the sharesof Class A non-voting common stock of Brady Corporation which the Brady Stock Fund is deemed to hold on thatdate. The shares of such stock deemed to be held in the Brady Stock Fund shall be credited with dividends at the timethey are credited with respect to actual shares of Class A non-voting common stock of Brady Corporation and suchdividends shall be deemed to be used to purchase additional shares of Class A non-voting common stock of BradyCorporation on the day following the crediting of such dividends at the then fair market value price of such stock. TheBrady Stock Fund shall also be credited from time to time with additional shares of Class A non-voting common stockof Brady Corporation equal in number to the number of shares granted in any stock dividend or split to which theholder of a like number of shares of Class A non-voting common stock would be entitled. All other distributions withrespect to shares of Class A non-voting common stock of Brady Corporation shall be similarly applied. In the event of adistribution of preferred stock, such preferred stock shall be valued at its par value (or its voluntary liquidating price, if itdoes not have a par value).(iv)The valuation of the funds held in the investments other than the Brady Stock Fund shall beaccomplished in the same manner as though the deemed investment in such funds had actually been made and arevalued at their fair market value price on valuation dates hereunder.(v)A Participant’s Account shall be valued as of December 31 each year and at such other timesestablished by the Administrator, which shall be no less frequently than quarterly. Until such time as the Administratortakes action to the contrary, such valuation shall be at the same time as valuations made of Brady matched 401(k) planassets.(vi)All elections and designations under this section shall be made in accordance with proceduresprescribed by the Administrator. The Administrator may prescribe uniform percentages for such elections anddesignations.(vii)A Participant may elect to reallocate their Account balance among the investment funds at the timesestablished by the Administrator. Notwithstanding any other provision of this Plan to the contrary, a Participant may notmake (i) any election or transaction in the Brady Stock Fund at a time when the Participant is in possession of anymaterial non-public information or at a time not permitted under the Corporation’s policy on insider trading.(viii)Notwithstanding subparagraph (vii) above, and notwithstanding Article I and Section 2.11 of thisPlan to the contrary, with respect to all amounts held for a Participant, from and after May 1, 2006, a Participant maynot transfer any amount to or from the portion of their account held in the Brady Stock Fund. The preceding sentenceshall not apply to a Participant who has had a Separation from Service prior to May 1, 2006.(c)The Corporation shall provide annual reports to each Participant showing (a) the value of the Account as ofthe most recent December 31st, (b) the amount of deferral made by the Participant for the Plan Year ending on such date and(c) the amount of any investment gain or loss and the costs of administration credited or debited to the Participant’s Account.(d)Notwithstanding any other provision of this Agreement that may be interpreted to the contrary, the deemedinvestments are to be used for measurement purposes only and shall not beconsidered or construed in any manner as an actual investment of the Participant’s Account balance in any such fund. In theevent that Brady Corporation or the trustee of any grantor trust which Brady Corporation may choose to establish to financesome or all of its obligations hereunder, in its own discretion, decides to invest funds in any or all of the funds, the Participantshall have no rights in or to such investments themselves. Without limiting the foregoing, the Participant’s Account balanceshall at all times be a bookkeeping entry only and shall not represent any investment made on the Participant’s behalf by theCorporation or any trust; the Participant shall at all times remain an unsecured creditor of the Corporation.ARTICLE VVESTING5.1Full Vesting. A Participant shall be fully vested and nonforfeitable at all times in their Account hereunder.ARTICLE VIMANNER AND TIMING OF DISTRIBUTION6.1Payment of Benefits.(a)After a Participant’s Separation from Service the Participant’s Account shall be paid to the Participant (or inthe event of the Participant’s death, to the Participant’s Beneficiary). Payment shall be made in one of the following forms asspecified in the Participant’s payment election pursuant to Section 6.2:(i)Single Sum. A single sum distribution of the value of the balance of the Account on the first day ofOctober following the Participant’s Separation from Service; or(ii)Installments. The value of the balance of the Account shall be paid in annual installments on the firstday of October each year with the first of such installments to be paid on the first day of October following theParticipant’s Separation from Service. Annual installments shall be paid in one of the alternative methods specifiedbelow over the number of years selected by the Participant in the payment election made pursuant to Section 6.2, butnot to exceed 10. The earnings (or losses) provided for in Section 4.2 shall continue to accrue on the balance remainingin the Account during the period of installment payments. The annual installment shall be calculated by multiplying themost recent value of the Account by a fraction, the numerator of which is one, and the denominator of which is theremaining number of annual payments due the Participant. By way of example, if the Participant elects a 10 year annualinstallment method, the first payment shall be one-tenth (1/10) of the Account balance. The following year, the paymentshall be one-ninth (1/9) of the Account balance; or(iii)Other Methods and Prior Elections. Any other method authorized by the Plan Administrator asreflected on the Participant's payment election and elected by the Participant. Payment methods previously allowableunder the Plan, such as the percentage or fixed dollarmethod of payment, and previously elected by a Participant will remain in effect unless the Participant elects analternative payment schedule pursuant to Section 6.2(c); or(iv)In Cash or In Stock. Subject to such withholding rules as the Corporation may establish, paymentsshall be made in cash and/or Class A non-voting common stock of Brady Corporation pursuant to the following:(A) If distribution is made in a single sum, the value of the portion of the Participant’s Account whichconsists of the investments other than the Brady Stock Fund shall be paid in cash while the value of the portionof the Account which consists of the Brady Stock Fund shall be paid by distributing the number of shares ofClass A non-voting stock of Brady Corporation which represent the number of deemed shares held in the BradyStock Fund, except, however, that any fractional shares shall be valued and distributed in cash.(B) If distribution is made in installments or other method (as authorized by the Plan Administrator andelected by the Participant in their payment election as describe in 6.1(a)(iii), above), a portion of each paymentshall be distributed in cash and a portion in Class A non-voting shares of common stock of Brady Corporation.The portion to be distributed in cash shall be that portion of the particular payment which is the same percentageas derived by dividing the value of the Balance in investments (other than the Brady Stock Fund) by the valueof the total Account balance and the portion to be distributed in stock shall be the same percentage asdetermined by dividing the value of the balance of the Brady Stock Fund by the value of the total Accountbalance. The number of shares of Class A non-voting shares of common stock of Brady Corporation to bedistributed shall be the number having the same value as the portion of the installment to be paid in such stock,except, however, that any fractional shares shall be distributed in cash.(C) Notwithstanding Article I and Section 2.11 of this Plan to the contrary, the rule of this sub-paragraph (iv) shall apply to amounts held for a Participant under a Frozen Agreement from and after May 1,2006. The preceding sentence shall not apply to a Participant who has had a Separation from Service prior toMay 1, 2006.(b)In the case of a Participant who is a Specified Employee, payment pursuant to paragraph (a) above shallcommence no earlier than the first day of the seventh month following the Participant’s Separation from Service. This delay indistribution rule does not apply if the payment is being made as a result of the Participant’s death or disability. For this purpose,"disability" means that the Participant:(i)is unable to engage in any substantial gainful activity by reason of any medically determinablephysical or mental impairment which can be expected to result in death or can be expected to last for a continuousperiod of not less than 12 months, or(ii)is, by reason of any medically determinable physical or mental impairment which can be expected toresult in death or can be expected to last for a continued period of not less than 12 months, receiving incomereplacement benefits for a period of not less than three months under an accident and health plan covering theemployees of the Corporation or one of its affiliates in which the Participant is covered.6.2Payment Election.(a)For each Plan Year, an individual who is or becomes an Active Participant at the beginning of such PlanYear who is or has been provided with prior written notice of their participation for such Plan Year shall complete a paymentelection form specifying the form of payment applicable to the portion of such Participant’s Account under the Plan attributableto participation for such Plan Year. In the event that a Participant does not make a timely payment election, a lump sumpayment election will apply for the Plan Year in which the contributions are made.(b)An individual who first becomes an Active Participant other than on the first day of a Plan Year shallcomplete a payment election form specifying the form of payment applicable to the portion of such Participant’s Accountattributable to participation for such Plan Year no later than 30 days after the effective date of participation. In the event aParticipant does not make a timely payment election, a lump sum payment election will apply for the Plan Year in which thecontributions are made.(c)A Participant may change the form of payment (for example, from installments to lump sum) or time ofcommencement of distribution (for example, from termination to ten years after termination) with respect to contributionsrelated to any specific Plan Year by completing and filing a new payment election form with the Corporation. Such electionwill apply to the amount contributed for such Plan Year and the earnings on such amount.(i)The payment election form on file with the Corporation with respect to a particular portion of theirAccount as of the date of the Participant’s Separation from Service shall be controlling. Notwithstanding the foregoing,an election to change the form of payment with respect to a particular portion of a Participant's Account shall not beeffective if they have a Separation from Service within twelve (12) months after the date on which they file the electionchange with the Corporation.(a)For example, if a Participant elected to change from receiving a portion of their Account ininstallments (commencing on the October 1 following termination of employment) to receivingthat portion in a lump sum (on the October 1 following five (5) years after termination), but thenterminated ten months after making that new election, that new election would not be effective.The Participant would receive that portion of their Account in the installment method previouslyin effect.(ii)Any change in payment method with respect to a particular portion of a Participant's Account mustresult in delaying the commencement of payments with respect to such portion of their Account to a date which is atleast five (5) years following the previously scheduled commencement date.(a)For example, if a Participant was to receive a particular portion of their Account in installmentscommencing on the October 1 following termination, they could not receive a lump sum of thatportion of their Account until at least five (5) years after the installments were to commence (thatis, the October 1 following five (5) years after termination).(iii)For purposes of compliance with Section 409A of the Internal Revenue Code, a series of five yearinstallment payments, ten year installment payments, twenty year installment payments, or any other series ofinstallment payments are each designated as a single payment on the date the first installment payment is due to be paidrather than a right to a series of separate payments; therefore, a Participant who has elected (or is deemed to haveelected) any option under Section 6.1 with respect to a particular portion of their Account may substitute any of theother options for the option originally elected with respect to such portion of their Account as long as the foregoing one-year and five year rules are satisfied.(iv)For purposes of the right to change the form of payment or time of commencement of distributionunder Section 6.2(c) above, all amounts credited to a Participant's Account (and earnings and losses on such amounts)with respect to Plan Years commencing prior to January 1, 2019 shall be treated as made in a single Plan Year, suchthat a change in the Plan Year commencing prior to January 1, 2019 will apply to all Plan Years of such Participantcommencing prior to January 1, 2019.(d)The five year delay rule does not apply with respect to a particular portion of their Account if the revisedpayment method applies only upon the Participant’s death or disability. For this purpose, disability has the same meaning as inSection 6.1(b). In the event that the Participant's new payment election with respect to a particular portion of their Accountwould not be effective under the foregoing rules, the payment election previously in effect shall with respect to such portion oftheir Account be controlling.6.3Financial Hardship. A partial or total distribution of the Participant’s Account shall be made prior to Separation fromService upon the Participant’s request and a demonstration by the Participant of severe financial hardship as a result of anUnforeseeable Emergency. Such distribution shall be made in a single sum as soon as administratively practicable following theAdministrator’s determination that the foregoing requirements have been met. In any case, a distribution due to UnforeseeableEmergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation frominsurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severefinancial hardship, or by cessation of deferrals under Section 3.2 and any other nonqualified deferred compensation plan of theaccount balance type sponsored by the Corporation. Distributions because of an Unforeseeable Emergency must be limited to theamount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, or localincome taxes or penalties reasonably anticipated to result from the distribution). Determinations of amounts reasonably necessary tosatisfy the emergency need must take into account any additional compensation that is available because of cancellation of a deferralelection under Section 3.2 and any other nonqualified deferred compensation plan of the account balance type sponsored by theCorporation upon a payment due to an Unforeseeable Emergency. The payment may be made from any arrangement in which theParticipant participates that provides for payment upon an Unforeseeable Emergency, provided that the arrangement under which thepayment was made must be designated at the time of payment.6.4Delayed Distribution.(a)A payment otherwise required to be made pursuant to the provisions of this Article VI shall be delayed if theCorporation reasonably anticipates that the Corporation’s deduction with respect to such payment would be limited oreliminated by application of Code Section 162(m); provided, however that such payment shall be made on the earliest date onwhich the Corporation anticipates that the deduction of the payment of the amount will not be limited or eliminated byapplication of Code Section 162(m). In any event, such payment shall be made no later than the last day of the calendar year inwhich the Participant has a Separation from Service or, in the case of a Specified Employee, the last day of the calendar year inwhich occurs the six (6) month anniversary of such Separation from Service.(b)A payment otherwise required under this Article VI shall be delayed if the Corporation reasonablydetermines that the making of the payment will jeopardize the ability of the Corporation to continue as a going concern;provided, however, that payments shall be made on the earliest date on which the Corporation reasonably determines that themaking of the payment will not jeopardize the ability of the Corporation to continue as a going concern.(c)A payment otherwise required under this Article VI shall be delayed if the Corporation reasonably anticipatesthat the making of the payment will violate federal securities laws or other applicable law; provided, however, that paymentsshall nevertheless be made on the earliest date on which the Corporation reasonably anticipates that the making of the paymentwill not cause such violation. (The making of a payment that would cause inclusion in gross income or the applicability of anypenalty provision or other provision of the Code is not treated as a violation of applicable law.)(d)A payment otherwise required under this Article VI shall be delayed upon such other events and conditionsas the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.6.5Inclusion in Income Under Section 409A. Notwithstanding any other provision of this Article VI, in the event thisPlan fails to satisfy the requirements of Code Section 409A and regulations thereunder with respect to any Participant, there shall bedistributed to such Participant as promptly as possible after the Administrator becomes aware of such fact of noncompliance suchportion of the Participant’s Account balance hereunder as is included in income as a result of the failure to comply, but no more. Anysuch distribution shall be taken on a pro rata basis from the Participant’s Brady Stock Fund balance and the Participant's otherinvestments in the manner described in Section 6.1(a)(iv)(B).6.6Domestic Relations Order. Notwithstanding any other provision of this Article VI, payments shall be made from anaccount of a Participant in this Plan to such individual or individuals (other than the Participant) and at such times as are necessary tocomply with a domestic relations order (as defined in Code Section 414(p)(1)(B)). Any such distribution shall be taken on a pro ratabasis from the Participant’s Brady Stock Fund balance and the Participant's other investments in the manner described inSection 6.1(a)(iv)(B).6.7De Minimis Amounts. Notwithstanding any other provision this Article VI, a Participant’s Account balance underthis Plan and all other nonqualified deferred compensation plans of the account balance type shall automatically be distributed to theParticipant on or before the later of: December 31 of the calendar year in which occurs the Participant’s Separation from Service orthe 15th day of the third month following the Participant’s Separation from Service if the total amount in such Account balance at thetime of distribution, when aggregated with all other amounts payable to the Participant under all arrangements benefiting theParticipant described in Section 1.409A-1(c) or any successor thereto, do not exceed the amount described in Code Section 402(g)(1)(B). The foregoing lump sum payment shall be made automatically and any other distribution elections otherwise applicable withrespect to the individual in the absence of this provision shall not apply.6.8Overpayments.(a)Any overpayments must be returned to the Plan by the recipient.(b)The Plan and its agents are authorized to (A) recoup overpayments plus any earnings or interest, and (B) ifnecessary and permissible consistent with Section 409A, offset any overpayments that are not returned against other Planbenefits to which the recipient is or becomes entitled.ARTICLE VIIADMINISTRATION7.1Compensation Committee as Administrator. The Plan shall be administered by the Administrator, which shall be theCompensation Committee of the Corporation’s Board of Directors. The Administrator shall have all authority that may be appropriatefor administering the Plan, including the authority to adopt rules and regulations for the conduct of its affairs and for implementing,amending and carrying out the Plan, interpreting the provisions of the Plan and determining a Participant’s entitlement to benefitshereunder. The Administrator shall be entitled to rely upon the Corporation’s records as to information pertinent to calculations ordeterminations made pursuant to the Plan.The Administrator may also delegate any of its clerical or other administrative duties to one or more officers or employees ofthe Corporation, who may assist the Administrator in the performance of any of its functions hereunder. In the event of suchdelegation, a reference to the Administrator shall be deemed to refer to such officer(s) or employee(s).7.2Authority of Administrator. The Administrator shall have full and complete discretionary authority to determineeligibility for benefits under the Plan, to construe the terms of the Plan and to decide any matter presented through the claimsprocedure. Any final determination by the Administrator shall be binding on all parties and afforded the maximum deference allowedby law. If challenged in court, such determination shall not be subject to de novo review and shall not be overturned unless proven tobe arbitrary and capricious based upon the evidence considered by the Administrator at the time of such determination.7.3Administrator Actions. The Administrator may authorize one or more of its members to execute on its behalfinstructions or directions to any interested party, and any such interested party may rely upon the information contained therein. Themembers may also act at a meeting or by unanimous written consent. A majority of the members shall constitute a quorum for thetransaction of business and shall have full power to act hereunder. All decisions shall be made by vote of the majority present at anymeeting at which a quorum is present, except for actions in writing without a meeting, which must be unanimous.7.4Minor or Incompetent Payees. If a person to whom a benefit is payable is a minor or is otherwise incompetent byreason of a physical or mental disability, the Corporation may cause the payments due to such person to be made to another personfor the first person’s benefit without any responsibility to see to the application of such payment. Such payments shall operate as acomplete discharge of the obligations to such person under the Plan.7.5No Liability. Except as otherwise provided by law, neither the Administrator, nor any member thereof, nor anydirector, officer or employee of the Corporation involved in the administration of the Plan shall be liable for any error of judgment,action or failure to act hereunder or for any good faith exercise of discretion, excepting only liability for gross negligence or willfulmisconduct. The Corporation shall hold harmless and defend any individual in the employment of the Corporation and any director ofthe Corporation against any claim, action or liability asserted against them in connection with any action or failure to act regarding thePlan, except as and to the extent that any such liability may be based upon the individual’s own gross negligence or willfulmisconduct. This indemnification shall not duplicate but may supplement any coverage available under any applicable insurance.7.6Claims Procedure.(a)If the Participant or the Participant’s Beneficiary (hereinafter referred to as a “Claimant”) is denied all or aportion of an expected benefit under the Plan for any reason, they may file a claim with the Administrator or its designee. TheAdministrator or its designee shall notify the Claimant within 60 days of allowance or denial of the claim, unless the Claimantreceives written notice prior to the end of the sixty (60) day period stating that special circumstances require an extension of thetime for decision and specifying the expected date of decision. The notice of the such decision shall be in writing, sent by mailto the Claimant’s last known address, and if a denial of the claim, must contain the following information:(i)the specific reasons for the denial;(ii)specific reference to pertinent provisions of the Plan on which the denial is based;(iii)if applicable, a description of any additional information or material necessary to perfect the claim, anexplanation of why such information or material is necessary, and an explanation of the claims review procedure; and(iv)a description of the Plan’s claims review procedure, including a statement of the Claimant’s right tobring a civil action under Section 502 of ERISA if the Claimant’s claim is denied upon review.(b)A Claimant is entitled to request a review of any denial of their claim. The request for review must besubmitted in writing to the Administrator within 60 days after receipt of the notice of the denial. The timely filing of such arequest is necessary to preserve any legal recourse which may be available to the Claimant and, absent the submission ofrequest for review within the 60-day period, the claim will be deemed to be conclusively denied. Upon submission of a writtenrequest for review, the Claimant or their representative shall be entitled to review all pertinent documents, and to submit issuesand comments in writing for consideration by the Administrator. The Administrator shall fully and fairly review the matter andshall consider all information submitted in the review request, without regard to whether or not such information was submittedor considered in the initial claim determination. The Administrator shall promptly respond to the Claimant, in writing, of itsdecision within 60 days after receipt of the review request. However, due to special circumstances, if no response has beenprovided within the first 60 days, and notice of the need for additional time has been furnished within such period, the reviewand response may be made within the following 60 days. The Administrator’s decision shall include specific reasons for thedecision, including references to the particular Plan provisions upon which the decision is based, notificationthat the Claimant can receive or review copies of all documents, records and information relevant to the claim, and informationas to the Claimant’s right to file suit under Section 502(a) of ERISA.(c)If a determination of disability for purposes of Section 6.1(b) or 6.2 becomes necessary and if suchdetermination is considered to be with respect to a claim for benefits based on disability for purposes of 29 CFR Section2560.503-1, then the Administrator shall adopt and administer a special procedure for considering such disability claimsmeeting the requirements of 29 CFR Section 2560.503-1 for disability benefit claims.(d) Additional claims requirements: Except as required by law or except to the extent the following would violateSection 409A:(i)A Claimant must exhaust all administrative remedies under the Plan before seeking judicial review;(ii)A Claimant must bring a legal action (including, but not limited to, a civil action under Section 502(a) ofERISA with respect to any ERISA Plan) within a reasonable period following a final decision of anadverse benefit determination (or, in the absence of such a final decision, within a reasonable periodfollowing the date the final decision should have been issued under the Plan); and(iii)Claimant may not present in any legal action evidence not timely presented to the Plan Administrator aspart of the Plan’s administrative review process.ARTICLE VIIIMISCELLANEOUS8.1Amendment or Termination. The Corporation (through its Board of Directors or authorized officers or employeesand/or the Compensation Committee) reserves the right to alter or amend the Plan, or any part thereof, in such manner as it maydetermine, at any time and for any reason. Further, the Board of Directors of the Corporation reserves the right to terminate the Plan,at any time and for any reason. Notwithstanding the foregoing, in no event shall any amendment or termination deprive anyParticipant or Beneficiary of any amounts credited to them under this Plan as of the date of such amendment or termination; provided,however, that the Corporation may prospectively change the manner in which earnings are credited or discontinue the crediting ofearnings and, further, the Corporation may make any amendment it deems necessary or desirable for purposes of compliance with therequirements of Code Section 409A and regulations thereunder.If the Plan is amended to freeze benefit accruals, no additional deferrals or contributions shall be credited to any ParticipantAccount hereunder. Following such a freeze of benefit accruals, Participants’ Accounts shall be paid at such time and in such form asprovided under Article VI of the Plan. If the Corporation terminates the Plan and if the termination is of the type described inregulations issued by the Internal Revenue Service pursuant to Code Section 409A, then the Corporation shall distribute the thenexisting Account balances of Participants and beneficiaries in a lump sum within the time period specified in such regulations and,following such distribution, there shall be no further obligation to any Participant or beneficiary under this Plan. However, if thetermination is not of the type described in such regulations,then following Plan termination Participants’ Accounts shall be paid at such time and in such form as provided under Article VI of thePlan.8.2Applicable Law. This Plan shall be governed by the laws of the State of Wisconsin, except to the extent preemptedby the provisions of ERISA or other applicable federal law.8.3Relationship to Other Programs. Participation in the Plan shall not affect a Participant’s rights to participate in andreceive benefits under any other plans of the Corporation, nor shall it affect the Participant’s rights under any other agreement enteredinto with the Corporation, unless expressly provided otherwise by such plan or agreement. Any amount credited under or paidpursuant to this Plan shall not be treated as wages, salary or any other type of compensation or otherwise taken into account in thedetermination of the Participant’s benefits under any other plans of the Corporation, unless expressly provided otherwise by suchplan.8.4Non-Assignability by Participant. No Participant or Beneficiary shall have any right to commute, sell, assign,pledge, convey, or otherwise transfer any rights or claims to receive benefits hereunder, nor shall such rights or claims be subject togarnishment, attachment, execution or levy of any kind except to the extent otherwise required by law.8.5Status of Plan Under ERISA. The Plan is intended to be an unfunded plan maintained by the Corporation primarilyfor the purpose of providing deferred compensation for a select group of management or highly compensated employees, as describedin Section 201(2), Section 301(a)(3), Section 401(a)(1) and Section 4021(b)(6) of ERISA.8.6Withholding. The Corporation shall comply with all applicable tax and governmental withholding requirements.8.7No Right to Continued Employment. Neither participation in this Plan, nor the payment of any benefit hereunder,shall be construed as giving to a Participant any right to be retained in the service of the Corporation, or limiting in any way the rightof the Corporation to terminate the Participant’s service at any time. Nor does participation in this Plan guarantee the Participant theright to be continued in service in any particular position or at any particular rate of compensation.8.8Assignability by Corporation. The Corporation shall have the right to assign all of its right, title and obligation in andunder this Plan upon a merger or consolidation in which the Corporation is not the surviving entity or to the purchaser of substantiallyits entire business or assets or the business or assets pertaining to a major product line, provided such assignee or purchaser assumesand agrees to perform after the effective date of such assignment all of the terms, conditions and provisions imposed by this Plan uponthe Corporation. Upon such assignment, all of the rights, as well as all obligations, of the Corporation under this Plan shall thereuponcease and terminate.8.9Unsecured Claim; Grantor Trust. The right of a Participant to receive payment hereunder shall be an unsecuredclaim against the general assets of the Corporation, and no provisions contained herein, nor any action taken hereunder shall beconstrued to give any individual at any time a security interest in any asset of the Corporation, of any affiliated corporation, or of thestockholders of the Corporation. The liabilities of the Corporation to a Participant hereunder shall be those of a debtor pursuant tosuch contractual obligations as are created hereunder and to the extent any person acquires a right to receive payment from theCorporation hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation.The Corporation may establish a grantor trust (but shall not be required to do so) to which the Corporation may in its discretioncontribute (subject to the claims of the general creditors of the Corporation) the amounts credited to the Account. If a grantor trust is soestablished, payment by the trust of the amounts due the Participant or their Beneficiary hereunder shall be considered a payment bythe Corporation for purposes of this Plan.8.10Notices or Filings. Any notice or filing required or permitted to be given to the Administrator hereunder shall besufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:Corporate TreasurerBrady CorporationP.O. Box 571Milwaukee, WI 53201-0571Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on thepostmark on the receipt for registration or certification.Any notice or filing required or permitted to be given to a Participant hereunder shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.8.11Special rules for 2005-2007. Notwithstanding the usual rules required regarding the deferral elections anddistribution elections:(a)A Participant may on or before March 15, 2005 make a new deferral election to apply to amounts whichwould otherwise be paid in calendar year 2005; provided that such amounts have not been paid or become payable at the timeof the election. Such election shall remain in effect for future years until modified pursuant to Section 3.3(a) and/or (b), as thecase may be.(b) On or before December 31, 2007, a Participant may make an election as to distribution of their Account fromamong the choices described at Section 6.1 hereof without complying with the rules described in Section 6.2 hereof as long asthe effect of the election is not to accelerate payments into 2006 or to defer payments which would otherwise have been madein 2006, and as long as the effect of the election is not to accelerate the payments into 2007 or to defer payments which wouldotherwise have been made in 2007. Such election shall become effective after the last day upon which it is permitted to bemade. However, in order to subsequently change such special election after December 31, 2007, the requirements of Section6.2 hereof must be satisfied. (This election will not apply to distribution of the Participant’s accounts holding amounts earnedand vested prior to January 1, 2005, if any, (and earnings credited thereon) since such accounts are not governed by thisdocument but are governed by the Frozen Plan.)IN WITNESS WHEREOF, the Corporation has caused its duly authorized officer to execute this Plan document on its behalfas of the 17th day of July, 2018.BRADY CORPORATIONBy: /s/ J. MICHAEL NAUMANAttest: /s/ AARON J. PEARCEEXBHIBIT 10.5BRADY CORPORATIONDIRECTORS' DEFERRED COMPENSATION PLANAS AMENDED AND RESTATED EFFECTIVE JULY 17, 2018ARTICLE IINTRODUCTION1.1For periods prior to calendar year 2005, Brady Corporation has maintained the Brady Corporation Directors’Deferred Compensation Plan by means of a series of individual deferred compensation agreements with covered directors. Thisamended and restated document shall apply to those prior agreements with respect to both investment and distribution of amountsdeferred before 2005 and after 2004 and with respect to rules for making deferrals after 2004. This document is intended to complywith the provisions of Section 409A of the Internal Revenue Code and shall be interpreted accordingly. If any provision or term of thisdocument would be prohibited by or inconsistent with the requirements of Section 409A of the Code, then such provision or term shallbe deemed to be reformed to comply with Section 409A of the Code. This Plan is amended and restated, effective as of the EffectiveDate, to revise certain Plan terms related to contributions and distributions.ARTICLE IIDEFINITIONSThe following definitions shall be applicable throughout the Plan:2.1“Account” means the account credited from time to time with bookkeeping amounts equal to the portions of aParticipant’s compensation deferred pursuant to Section 3.1 and earnings credited on such amounts in accordance with Article IV.2.2“Administrator” means the Board of Directors of Brady Corporation.2.3“Beneficiary” means the person, persons, or entity designated by the Participant to receive any benefits payableunder the Plan on or after the Participant’s death. Each Participant shall be permitted to name, change or revoke the Participant’sdesignation of a Beneficiary in writing on a form and in the manner prescribed by the Corporation; provided, however, that thedesignation on file with the Corporation at the time of the Participant’s death shall be controlling. Should a Participant fail to make avalid Beneficiary designation or leave no named Beneficiary surviving, any benefits due shall be paid to such Participant’s spouse, ifliving; or if not living, then any benefits due shall be paid to such Participant’s estate. A Participant may designate a primarybeneficiary and a contingent beneficiary; provided, however, that the Corporation may reject any such instrument tendered for filing ifit contains successive beneficiaries or contingencies unacceptable to it. If all Beneficiaries who survive Participant shall die beforereceiving the full amounts payable hereunder, then the payments shall be paid to the estate of the Beneficiary last to die. 2.4“Code” means the Internal Revenue Code of 1986, including any subsequent amendments.2.5“Corporation” means Brady Corporation.2.6“Distribution Date” means the October 1 following the Payment Event. For distribution elections prior to February17, 2011, the Distribution Date was the quarterly date specified by the Participant upon which distribution would be made orcommenced following the Participant’s Separation from Service or the In-Service Payment Event Date, as the case may be. Alldistribution elections in effect on February 17, 2011 shall remain in effect unless the Participant consents to a Distribution Date that isthe October 1 following the Participant's Payment Event; provided that no change in Distribution Date may change the calendar yearof the distribution. If the distribution is payable other than in a single installment, subsequent installments shall be paid on anniversariesof the Distribution Date.2.7“Effective Date” means July 17, 2018.2.8“In-Service Payment Event Date” means the date, if any, specified by the Participant as the reference date followingwhich distribution of their Account shall begin. An In-Service Payment Event Date may be no earlier than January 1, 2007. Fordistribution elections following February 17, 2011, a Participant may not elect an In-Service Payment Event Date.2.9“Participant” means a director of Brady Corporation currently eligible to make deferrals (an “Active Participant”)and any former director who previously participated in the Plan and is entitled to benefits.2.10“Payment Event” means the date of a Participant’s Separation from Service. For distribution elections prior toFebruary 17, 2011, a Participant could elect a Payment event that was the earlier of the date of a Participant's Separation from Serviceor the date the Participant specified as their In-Service Payment Event Date.2.11“Plan” means the Brady Corporation Directors’ Deferred Compensation Plan, as set forth herein and as it may beamended from time to time.2.12“Plan Year” means the calendar year.2.13“Separation from Service” means expiration or termination of the arrangement with the Corporation pursuant towhich the Participant performed services as a director of the Corporation if such expiration or termination constitutes a good faith andcomplete termination of the relationship and all other independent contractor relationships the Participant has with the Corporation. Agood faith and complete termination of a relationship shall not be deemed to have occurred if the Corporation anticipates a renewal of acontractual relationship or anticipates that the Participant shall become an employee of the Corporation. For this purpose, theCorporation is considered to anticipate the renewal of a contractual relationship with the Participant if it intends to contract again for theservices provided under the expired arrangement, and neither the Corporation nor the Participant has eliminated the Participant as apossible provider of services under any such new arrangement. Further, the Corporation is considered to intend to contract again forthe services provided under an expired arrangement if the Corporation’s doing so is conditioned only upon incurring a need for theservices, the availability of funds or both. The foregoing requirements are deemed satisfied if no amount will be paid to the Participantbefore a date at least 12 months after the day on which the arrangement expires pursuant to which the Participant performed servicesfor the Corporation (or, in the case of more than one arrangement, all such arrangements expire) and no amount payable to theParticipanton that date will be paid to the Participant if, after the expiration of the arrangement (or arrangements) and before that date, theParticipant performs services for the Corporation as a director or other independent contractor or an employee). If a Participantprovides services both as an employee of the Corporation and as a member of the board of directors of the Corporation, the servicesprovided as an employee are not taken into account in determining whether the Participant has a Separation from Service as a directorfor purposes of this Plan because this Plan is not aggregated with any plan in which the Participant participates as an employeepursuant to IRS Regulation Section 1.409A-1(c)(2)(ii).2.14“Unforeseeable Emergency” means a severe financial hardship to a Participant resulting from an illness or accidentof the Participant or the Participant’s spouse or dependent (as defined in Section 152(a) of the Code), loss of the Participant’s propertydue to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, asa result of a natural disaster), or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond thecontrol of the Participant. For example, the imminent foreclosure of or eviction from the Participant’s primary residence may constitutean Unforeseeable Emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as forthe costs of prescription drug medication, may constitute an Unforeseeable Emergency. Finally, the need to pay for funeral expenses ofa spouse or a dependent (as defined in Code section 152(a)) may also constitute an Unforeseeable Emergency. Except as otherwiseprovided above, the purchase of a home and the payment of college tuition are not Unforeseeable Emergencies. Whether a Participantis faced with an Unforeseeable Emergency is to be determined based on the relevant facts and circumstances of each case.ARTICLE IIIDEFERRALS3.1Deferral Elections. An Active Participant may elect to defer a specified percentage of their fees for servicesperformed as a director of the Corporation during a Plan Year by completing and filing such forms as required by the Corporation priorto the first day of the Plan Year. The Corporation may permit a Participant to make one deferral election with respect to compensationpayable in cash and a separate deferral election with respect to compensation payable in the form of Brady Corporation common stock.A Participant’s deferrals shall be taken at a uniform percentage rate from each of the payments made to them by the Corporation duringthe Plan Year. Compensation deferred shall be retained by the Corporation, credited to the Participant’s Account pursuant to Section4.1 and paid in accordance with the terms and conditions of the Plan. Notwithstanding the foregoing, a director who is not alreadyeligible to participate in any other deferred compensation plan of the account balance type sponsored by the Corporation who becomesan Active Participant for the first time during a Plan Year (i.e., first becomes a director) may within 30 days after the effective date ofparticipation make an election to defer a specified percentage of compensation to be paid to them for services to be performedsubsequent to the deferral election.3.2Continued Effect of Elections. An Active Participant’s deferral election with respect to a Plan Year under Section3.1 shall be irrevocable after the last date upon which it may be filed pursuant to Section 3.1 and shall continue in effect eachsubsequent Plan Year until prospectively revoked or amended in writing. For a revocation or amendment to be effective with respect topayments during a Plan Year, it must be filed by the last date for which an effective deferral election is permitted to be filed withrespect to those payments under Section 3.1.3.3Prior Deferral Elections. Any deferral election made prior to calendar year 2005 under an individual agreement shallbe treated as a deferral election described in Section 3.1 and shall continue in effect until modified as described in Section 3.2 aboveunless modified earlier pursuant to Section 8.12(a) below.3.4Unforeseeable Emergency. In the event that a Participant makes application for a hardship distribution under Section6.3 and the Administrator determines that an Unforeseeable Emergency exists, all deferral elections otherwise in effect under thisArticle III and any other nonqualified deferred compensation plan of the account balance type sponsored by the Corporation shallimmediately terminate upon such determination. To resume deferrals thereafter, a Participant must make an election satisfying theprovisions of Section 3.1, as the case may be, as those provisions apply to someone who is already an Active Participant in the Plan.ARTICLE IVACCOUNTS4.1Credits to Account. Bookkeeping amounts equal to the amounts deferred by a Participant pursuant to Section 3.1shall be credited to such Participant’s Deferral Account as soon as practicable after the deferred compensation would otherwise havebeen paid to such Participant in the absence of deferral.4.2Valuation of Account.(a)The Participant’s Account shall be credited or charged with deemed earnings or losses as if it were investedin accordance with paragraph (b) below.(b)(i) The investment funds available hereunder for the deemed investment of the Account shall be the BradyStock Fund and such other funds as the Administrator shall from time to time determine. However, in no event shall theCorporation be required to make any such investment in the Brady Stock Fund or any other investment fund and, to theextent such investments are made, such investments shall remain an asset of the Corporation subject to the claims of itsgeneral creditors.(ii)On the date credited to the Participant’s Account, deferrals shall be deemed to be invested in one ormore of the investment funds designated by the Participant for such deemed investment. Once made, the Participant’sinvestment designation shall continue in effect for future deferrals until changed by the Participant. A Participant maychange the deemed allocation of their existing Participant Account at the times established by the Administrator.(iii)The value of the Brady Stock Fund on any particular date will be based upon the value of the sharesof Class A non-voting common stock of Brady Corporation which the Brady Stock Fund is deemed to hold on thatdate. The shares of such stock deemed to be held in such Brady Stock Fund shall be credited with dividends at the timethey are credited with respect to actual shares of Class A non-voting common stock of Brady Corporation and suchdividends shall be deemed to be used to purchase additional shares of Class A non-voting common stock of BradyCorporation on the day following the crediting of such dividends at the then fair market value price of such stock. TheBrady Stock Fund shall alsobe credited from time to time with additional shares of Class A non-voting common stock of Brady Corporation equalin number to the number of shares granted in any stock dividend or split to which the holder of a like number of sharesof Class A non-voting common stock would be entitled. All other distributions with respect to shares of Class A non-voting common stock of Brady Corporation shall be similarly applied. In the event of a distribution of preferred stock,such preferred stock shall be valued at its par value (or its voluntary liquidating price, if it does not have a par value).(iv)The valuation of the funds held in the investments other than the Brady Stock Fund shall beaccomplished in the same manner as though the deemed investment in such funds had actually been made and arevalued at their fair market value price on valuation dates hereunder.(v)A Participant’s Account shall be valued as of December 31 each year and at such other timesestablished by the Administrator, which shall be no less frequently than quarterly. Until such time as the Administratortakes action to the contrary, such valuation shall be at the same time as valuations made of Brady matched 401(k) planassets.(vi)All elections and designations under this section shall be made in accordance with proceduresprescribed by the Administrator. The Administrator may prescribe uniform percentages for such elections anddesignations.(vii)A Participant may elect to reallocate their Account balance among the investment funds at the timesestablished by the Administrator. Notwithstanding any other provision of this Plan to the contrary, a Participant may notmake (i) any election or transaction in the Brady Stock Fund at a time when the Participant is in possession of anymaterial non-public information or at a time not permitted under the Corporation’s policy on insider trading.(viii)Notwithstanding subparagraph (vii) above, from and after February 21, 2017, a Participant may nottransfer any amount to or from the portion of their account held in the Brady Stock Fund.(c)The Corporation shall provide annual reports to each Participant showing (a) the value of the Account as ofthe most recent December 31st, (b) the amount of deferral made by the Participant for the Plan Year ending on such date and(c) the amount of any investment gain or loss and the costs of administration credited or debited to the Participant’s Account.(d)Notwithstanding any other provision of this Agreement that may be interpreted to the contrary, the deemedinvestments are to be used for measurement purposes only and shall not be considered or construed in any manner as an actualinvestment of the Participant’s Account balance in any such fund. In the event that Brady Corporation or the trustee of anygrantor trust which Brady Corporation may choose to establish to finance some or all of its obligations hereunder, in its owndiscretion, decides to invest funds in any or all of the funds, the Participant shall have no rights in or to such investmentsthemselves. Without limiting the foregoing, the Participant’s Account balance shall at all times be a bookkeeping entry only andshall not represent any investment made on the Participant’s behalf by the Corporation or any trust; the Participant shall at alltimes remain an unsecured creditor of the Corporation.ARTICLE VVESTING5.1Full Vesting. A Participant shall be fully vested and nonforfeitable at all times in their Account hereunder.ARTICLE VIMANNER AND TIMING OF DISTRIBUTION6.1Payment of Benefits.(a)After a Participant’s Payment Event the Participant’s Account shall be paid to the Participant (or in the eventof the Participant’s death, to the Participant’s Beneficiary). Payment shall be made in a Single Sum or Installments as specifiedin the Participant’s payment election pursuant to Section 6.2:(i)Single Sum. A single sum distribution of the value of the balance of the Account on the DistributionDate following the Participant’s Payment Event. If the Participant receives a single sum distribution before Separationfrom Service with the result that additional amounts are subsequently deposited in the Participant’s Account, adistribution shall be made on each succeeding Distribution Date of the entire value of the then balance of the Account.(ii)Installments. The value of the balance of the Account shall be paid in annual installments on theDistribution Date each year with the first of such installments to be paid on the Distribution Date following theParticipant’s Payment Event. Annual installments shall be paid in one of the alternative methods specified below overthe number of years selected by the Participant in the payment election made pursuant to Section 6.2, but not to exceed10. The earnings (or losses) provided for in Section 4.2 shall continue to accrue on the balance remaining in theAccount during the period of installment payments. The annual installment shall be calculated by multiplying the mostrecent value of the Account by a fraction, the numerator of which is one, and the denominator of which is the remainingnumber of annual payments due the Participant. By way of example, if the Participant elects a 10 year annualinstallment method, the first payment shall be one-tenth (1/10) of the Account balance. The following year, the paymentshall be one-ninth (1/9) of the Account balance. Further, regardless of the method selected by the Participant, the finalinstallment payment will include 100% of the then remaining Account value; or(iii)Other Methods and Prior Elections. Any other method authorized by the Plan Administrator asreflected on the Participant's payment election and elected by the Participant. Payment methods previously allowableunder the Plan, such as the percentage or fixed dollar method of payment, and previously elected by a Participant willremain in effect unless the Participant elects an alternative payment schedule pursuant to Section 6.1(b)(iii). (iv)In Cash or In Stock. Payments shall be made in cash and/or Class A non-voting common stock ofBrady Corporation pursuant to the following:(A) If distribution is made in a single sum, the value of the portion of the Participant’s Account whichconsists of the investments other than the Brady Stock Fund shall be paid in cash while the value of the portionof the Account which consists of the Brady Stock Fund shall be paid by distributing the number of shares ofClass A non-voting stock of Brady Corporation which represent the number of deemed shares held in the BradyStock Fund, except, however, that any fractional shares shall be valued and distributed in cash.(B) If distribution is made in installments or other method (as authorized by the Plan Administrator andelected by the Participant in their payment election as describe in 6.1(a)(iii), above), a portion of each paymentshall be distributed in cash and a portion in Class A non-voting shares of common stock of Brady Corporation.The portion to be distributed in cash shall be that portion of the particular payment which is the same percentageas derived by dividing the value of the Balance in investments (other than the Brady Stock Fund) by the valueof the total Account balance and the portion to be distributed in stock shall be the same percentage asdetermined by dividing the value of the balance of the Brady Stock Fund by the value of the total Accountbalance. The number of shares of Class A non-voting shares of common stock of Brady Corporation to bedistributed shall be the number having the same value as the portion of the installment to be paid in such stock,except, however, that any fractional shares shall be distributed in cash.(b)Payment Election.(i)For each Plan Year, an individual who is or becomes a Participant at the beginning of such Plan Yearshall, prior to their date of participation for such Plan Year, shall complete a payment election form specifying the formof payment applicable to the portion of such Participant’s Account under the Plan attributable to participation for suchPlan Year. In the event that a Participant does not make a timely payment election, a lump sum payment election willapply for the Plan Year in which the contributions are made.(ii)An individual who first becomes a Participant other than on the first day of a Plan Year shall, no laterthan 30 days after the effective date of participation, complete a payment election form specifying the form of paymentapplicable to the portion of such Participant’s Account attributable to participation for such Plan Year. A “paymentelection form” shall mean the form established from time to time by the Administrator which a Participant completes,signs and returns to the Administrator to make an election under the Plan. To the extent authorized by theAdministrator, such form may be provided electronically and, in such case, need not be signed by the Participant. In theevent that a Participant does not make a timely payment election, a lump sum payment election will apply for the PlanYear in which the contributions are made.(iii)A Participant may change the form of payment (for example, from installments to lump sum) or timeof commencement of distribution (for example, from termination to ten years after termination) with respect tocontributions related to any specific Plan Year bycompleting and filing a new payment election form with the Corporation. Such election will apply to the amountcontributed for such Plan Year and the earnings on such amount.(A) The payment election form on file with the Corporation with respect to a particular portion of theirAccount as of the date of the Participant’s Payment Event shall be controlling. Notwithstanding the foregoing,an election to change the form of payment with respect to a particular portion of a Participant's Account shallnot be effective if the Participant has a Payment Event within twelve (12) months after the date on which theyfile the election change with the Corporation.(1)For example, if a Participant elected to change from receiving a portion of their Account ininstallments (commencing on the October 1 following termination of employment) toreceiving that portion in a lump sum (on the October 1 following five (5) years aftertermination), but then terminated ten months after making that new election, that newelection would not be effective. The Participant would receive that portion of their Accountin the installment method previously in effect.(B) Any change in payment method with respect to a particular portion of a Participant's Account mustresult in delaying the commencement of payments with respect to such portion of their Account to a date whichis at least five (5) years after the previously scheduled commencement date. Any change in the Distribution Datewith respect to a particular portion of a Participant's Account must result in delaying the commencement ofpayments with respect to such portion of their Account to a date which is at least five (5) years after thepreviously scheduled Distribution Date.(1)For example, if a Participant was to receive a particular portion of their Account ininstallments commencing on the October 1 following termination, they could not receive alump sum of that portion of their Account until at least five (5) years after the installmentswere to commence (that is, the October 1 following five (5) years after termination).(C) For purposes of compliance with Code Section 409A, a series of installment payments isdesignated as a single payment on the date the first installment payment is due to be made rather than a right to aseries of separate payments; therefore, a Participant who has elected (or is deemed to have elected) any optionunder Section 6.1(a)(i), (ii) or (iii) with respect to a particular portion of their Account may substitute any of theother options for the option originally selected with respect to such portion of their Account as long as theforegoing one-year and five year rules are satisfied.(D) For purposes of the right to change the form of payment or time of commencement of distributionunder Section 6.1(b)(iii) above, all amounts credited to a Participant's Account (and earnings and losses on suchamounts) with respect to Plan Years commencing prior to January 1, 2019 shall be treated as made in a singlePlan Year, such that a change in the Plan Year commencing prior to January 1, 2019 will apply to all PlanYears of such Participant commencing prior to January 1, 2019.(iv)The five year delay rule does not apply with respect to a particular portion of their Account if therevised payment method applies only upon the Participant’s death or disability. For this purpose, "disability" means thatthe Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physicalor mental impairment which can be expected to result in death or can be expected to last for a continuous period of notless than 12 months.6.2Financial Hardship. A partial or total distribution of the Participant’s Account shall be made prior to a PaymentEvent upon the Participant’s request and a demonstration by the Participant of severe financial hardship as a result of an UnforeseeableEmergency. Such distribution shall be made in a single sum as soon as administratively practicable following the Administrator’sdetermination that the foregoing requirements have been met. In any case, a distribution due to Unforeseeable Emergency may not bemade to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, byliquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or bycessation of deferrals under Section 3.1 and any other nonqualified deferred compensation plan of the account balance type sponsoredby the Corporation. Distributions because of an Unforeseeable Emergency must be limited to the amount reasonably necessary tosatisfy the emergency need (which may include amounts necessary to pay any Federal, state, or local income taxes or penaltiesreasonably anticipated to result from the distribution). Determinations of amounts reasonably necessary to satisfy the emergency needmust take into account any additional compensation that is available because of cancellation of a deferral election under Section 3.1and any other nonqualified deferred compensation plan of the account balance type sponsored by the Corporation upon a payment dueto an Unforeseeable Emergency. The payment may be made from any arrangement in which the Participant participates that providesfor payment upon an Unforeseeable Emergency, provided that the arrangement under which the payment was made must bedesignated at the time of payment.6.3Delayed Distribution.(a)A payment otherwise required under this Article VI shall be delayed if the Corporation reasonably anticipatesthat the making of the payment will violate a term of a loan agreement to which the Corporation is a party, or other similarcontract to which the Corporation is a party, and such violation will cause material harm to the Corporation; provided,however, that payments shall be made on the earliest date on which the Corporation reasonably anticipates that the making ofthe payment will not cause such violation, or such violation will not cause material harm to the Corporation, and provided thatthe facts and circumstances indicate that the Corporation entered into the loan agreement (including such covenant) or othersimilar contract for legitimate reasons, and not to avoid the restrictions on deferral elections and subsequent deferral electionsunder Code Section 409A.(b)A payment otherwise required under this Article VI shall be delayed if the Corporation reasonablydetermines that the making of the payment will jeopardize the ability of the Corporation to continue as a going concern;provided, however, that payments shall be made on the earliest date on which the Corporation reasonably determines that themaking of the payment will not jeopardize the ability of the Corporation to continue as a going concern.(c)A payment otherwise required under this Article VI shall be delayed upon such other events and conditionsas the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.6.4Inclusion in Income Under Section 409A. Notwithstanding any other provision of this Article VI, in the event thisPlan fails to satisfy the requirements of Code Section 409A and regulations thereunder with respect to any Participant, there shall bedistributed to such Participant as promptly as possible after the Administrator becomes aware of such fact of noncompliance suchportion of the Participant’s Account balance hereunder as is included in income as a result of the failure to comply, but no more. Anysuch distribution shall be taken on a pro rata basis from the Participant’s Brady Stock Fund balance and the Participant's otherinvestments in the manner described in Section 6.1(a)(iv)(B).6.5Domestic Relations Order. Notwithstanding any other provision of this Article VI, payments shall be made from anaccount of a Participant in this Plan to such individual or individuals (other than the Participant) and at such times as are necessary tocomply with a domestic relations order (as defined in Code Section 414(p)(1)(B)). Any such distribution shall be taken on a pro ratabasis from the Participant’s Brady Stock Fund balance and the Participant's other investments in the manner described in Section 6.1(a)(iv)(B).6.6De Minimis Amounts. Notwithstanding any other provision of this Article VI, a Participant’s entire Account balanceunder this Plan and all other nonqualified deferred compensation plans of the account balance type shall automatically be distributed tothe Participant on or before the later of December 31 of the calendar year in which occurs the Participant’s Separation from Service orthe 15th day of the third month following the Participant’s Separation from Service if the total amount in such Account balance at thetime of distribution, when aggregated with all other amounts payable to the Participant under all arrangements benefiting the Participantdescribed in Section 1.409A-1(c) or any successor thereto, do not exceed the amount described in Code Section 402(g)(1)(B). Theforegoing lump sum payment shall be made automatically and any other distribution elections otherwise applicable with respect to theindividual in the absence of this provision shall not apply.6.7Overpayments.(a)Any overpayments must be returned to the Plan by the recipient.(b)The Plan and its agents are authorized to (A) recoup overpayments plus any earnings or interest, and (B) ifnecessary and permissible consistent with Section 409A, offset any overpayments that are not returned against other Planbenefits to which the recipient is or becomes entitled.ARTICLE VIIADMINISTRATION7.1Administrator. The Plan shall be administered by the Administrator, which shall be the Corporation’s Board ofDirectors. The Administrator shall have all authority that may be appropriate for administering the Plan, including the authority toadopt rules and regulations for the conduct of its affairs and for implementing, amending and carrying out the Plan, interpreting theprovisions of the Plan and determining a Participant’s entitlement to benefits hereunder. The Administrator shall be entitled to relyupon the Corporation’s records as to information pertinent to calculations or determinations made pursuant to the Plan.The Administrator may also delegate any of its clerical or other administrative duties to one or more officers or employees ofthe Corporation, who may assist the Administrator in the performance of any of its functions hereunder. In the event of suchdelegation, a reference to the Administrator shall be deemed to refer to such officer(s) or employee(s).7.2Authority of Administrator. The Administrator shall have full and complete discretionary authority to determineeligibility for benefits under the Plan, to construe the terms of the Plan and to decide any matter presented through the claimsprocedure. Any final determination by the Administrator shall be binding on all parties and afforded the maximum deference allowedby law. If challenged in court, such determination shall not be subject to de novo review and shall not be overturned unless proven tobe arbitrary and capricious based upon the evidence considered by the Administrator at the time of such determination.7.3Administrator Actions. The Administrator may authorize one or more of its members to execute on its behalfinstructions or directions to any interested party, and any such interested party may rely upon the information contained therein. Themembers may also act at a meeting or by unanimous written consent. A majority of the members shall constitute a quorum for thetransaction of business and shall have full power to act hereunder. All decisions shall be made by vote of the majority present at anymeeting at which a quorum is present, except for actions in writing without a meeting, which must be unanimous.7.4Minor or Incompetent Payees. If a person to whom a benefit is payable is a minor or is otherwise incompetent byreason of a physical or mental disability, the Corporation may cause the payments due to such person to be made to another person forthe first person’s benefit without any responsibility to see to the application of such payment. Such payments shall operate as acomplete discharge of the obligations to such person under the Plan.7.5No Liability. Except as otherwise provided by law, neither the Administrator, nor any member thereof, nor anydirector, officer or employee of the Corporation involved in the administration of the Plan shall be liable for any error of judgment,action or failure to act hereunder or for any good faith exercise of discretion, excepting only liability for gross negligence or willfulmisconduct. The Corporation shall hold harmless and defend any individual in the employment of the Corporation and any director ofthe Corporation against any claim, action or liability asserted against them in connection with any action or failure to act regarding thePlan, except as and to the extent that any such liability may be based upon the individual’s own gross negligence or willful misconduct.This indemnification shall not duplicate but may supplement any coverage available under any applicable insurance.7.6Claims Procedure.(a)If the Participant or the Participant’s Beneficiary (hereinafter referred to as a “Claimant”) is denied all or aportion of an expected benefit under the Plan for any reason, they may file a claim with the Administrator or its designee. TheAdministrator or its designee shall notify the Claimant within 60 days of allowance or denial of the claim, unless the Claimantreceives written notice prior to the end of the sixty (60) day period stating that special circumstances require an extension of thetime for decision and specifying the expected date of decision. The notice of the such decision shall be in writing, sent by mailto the Claimant’s last known address, and if a denial of the claim, must contain the following information:(i)the specific reasons for the denial;(ii)specific reference to pertinent provisions of the Plan on which the denial is based;(iii)if applicable, a description of any additional information or material necessary to perfect the claim, anexplanation of why such information or material is necessary, and an explanation of the claims review procedure; and(iv)a description of the Plan’s claims review procedure, including a statement of the Claimant’s right tobring a civil action under Section 502 of ERISA if the Claimant’s claim is denied upon review.(b)A Claimant is entitled to request a review of any denial of their claim. The request for review must besubmitted in writing to the Administrator within 60 days after receipt of the notice of the denial. The timely filing of such arequest is necessary to preserve any legal recourse which may be available to the Claimant and, absent the submission ofrequest for review within the 60-day period, the claim will be deemed to be conclusively denied. Upon submission of a writtenrequest for review, the Claimant or their representative shall be entitled to review all pertinent documents, and to submit issuesand comments in writing for consideration by the Administrator. The Administrator shall fully and fairly review the matter andshall consider all information submitted in the review request, without regard to whether or not such information was submittedor considered in the initial claim determination. The Administrator shall promptly respond to the Claimant, in writing, of itsdecision within 60 days after receipt of the review request. However, due to special circumstances, if no response has beenprovided within the first 60 days, and notice of the need for additional time has been furnished within such period, the reviewand response may be made within the following 60 days. The Administrator’s decision shall include specific reasons for thedecision, including references to the particular Plan provisions upon which the decision is based, notification that the Claimantcan receive or review copies of all documents, records and information relevant to the claim, and information as to theClaimant’s right to file suit under Section 502(a) of ERISA.(c)If a determination of disability for purposes of Section 6.1(b) or 6.2 becomes necessary and if suchdetermination is considered to be with respect to a claim for benefits based on disability for purposes of 29 CFR Section2560.503-1, then the Administrator shall adopt and administer a special procedure for considering such disability claimsmeeting the requirements of 29 CFR Section 2560.503-1 for disability benefit claims.(d)Additional claims requirements: Except as required by law or except to the extent the following wouldviolate Section 409A:(i)A Claimant must exhaust all administrative remedies under the Plan before seeking judicial review;(ii)A Claimant must bring a legal action (including, but not limited to, a civil action under Section 502(a)of ERISA with respect to any ERISA Plan) within a reasonable period following a final decision of an adverse benefitdetermination (or, in the absence of such a final decision, within a reasonable period following the date the finaldecision should have been issued under the Plan); and(iii)Claimant may not present in any legal action evidence not timely presented to the Plan Administratoras part of the Plan’s administrative review process.7.7Conflict of Interest. No person who is covered under the Plan may vote or decide upon any matter relating solely tohimself or vote in any case in which their individual right to any benefit under the Plan is particularly involved. Decisions shall bemade by remaining members of the Corporation’s Board of Directors.ARTICLE VIIIMISCELLANEOUS8.1Amendment or Termination. The Corporation (through its Board of Directors or authorized officers or employees)reserves the right to alter or amend the Plan, or any part thereof, in such manner as it may determine, at any time and for any reason.Further, the Board of Directors of the Corporation reserves the right to terminate the Plan, at any time and for any reason.Notwithstanding the foregoing, in no event shall any amendment or termination deprive any Participant or Beneficiary of any amountscredited to them under this Plan as of the date of such amendment or termination; provided, however, that the Corporation mayprospectively change the manner in which earnings are credited or discontinue the crediting of earnings and, further, the Corporationmay make any amendment it deems necessary or desirable for purposes of compliance with the requirements of Code Section 409Aand regulations thereunder.If the Plan is amended to freeze benefit accruals, no additional contributions shall be credited to any Participant Accounthereunder. Following such a freeze of benefit accruals, Participants’ Accounts shall be paid at such time and in such form as providedunder Article VI of the Plan. If the Corporation terminates the Plan and if the termination is of the type described in regulations issuedby the Internal Revenue Service pursuant to Code Section 409A, then the Corporation shall distribute the then existing Accountbalances of Participants and beneficiaries in a lump sum within the time period specified in such regulations and, following suchdistribution, there shall be no further obligation to any Participant or beneficiary under this Plan. However, if the termination is not ofthe type described in such regulations, then following Plan termination Participants’ Accounts shall be paid at such time and in suchform as provided under Article VI of the plan.8.2Applicable Law. This Plan shall be governed by the laws of the State of Wisconsin, except to the extent preemptedby the provisions of ERISA or other applicable federal law.8.3Relationship to Other Programs. Participation in the Plan shall not affect a Participant’s rights to participate in andreceive benefits under any other plans of the Corporation, nor shall it affect the Participant’s rights under any other agreement enteredinto with the Corporation, unless expressly provided otherwise by such plan or agreement. Any amount credited under or paidpursuant to this Plan shall not be treated as any type of compensation or otherwise taken into account in the determination of theParticipant’s benefits under any other plans of the Corporation, unless expressly provided otherwise by such plan.8.4Non-Assignability by Participant. No Participant or Beneficiary shall have any right to commute, sell, assign,pledge, convey, or otherwise transfer any rights or claims to receive benefits hereunder,nor shall such rights or claims be subject to garnishment, attachment, execution or levy of any kind except to the extent otherwiserequired by law.8.5No Right to Continued Service. Neither participation in this Plan, nor the payment of any benefit hereunder, shall beconstrued as giving to a Participant any right to be retained in the service of the Corporation, or limiting in any way the right of theCorporation to terminate the Participant’s service at any time.8.6Assignability by Corporation. The Corporation shall have the right to assign all of its right, title and obligation in andunder this Plan upon a merger or consolidation in which the Corporation is not the surviving entity or to the purchaser of substantiallyits entire business or assets or the business or assets pertaining to a major product line, provided such assignee or purchaser assumesand agrees to perform after the effective date of such assignment all of the terms, conditions and provisions imposed by this Plan uponthe Corporation. Upon such assignment, all of the rights, as well as all obligations, of the Corporation under this Plan shall thereuponcease and terminate.8.7Unsecured Claim; Grantor Trust. The right of a Participant to receive payment hereunder shall be an unsecuredclaim against the general assets of the Corporation, and no provisions contained herein, nor any action taken hereunder shall beconstrued to give any individual at any time a security interest in any asset of the Corporation, of any affiliated corporation, or of thestockholders of the Corporation. The liabilities of the Corporation to a Participant hereunder shall be those of a debtor pursuant to suchcontractual obligations as are created hereunder and to the extent any person acquires a right to receive payment from the Corporationhereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation. The Corporation mayestablish a grantor trust (but shall not be required to do so) to which the Corporation may in its discretion contribute (subject to theclaims of the general creditors of the Corporation) the amounts credited to the Account. If a grantor trust is so established, payment bythe trust of the amounts due the Participant or their Beneficiary hereunder shall be considered a payment by the Corporation forpurposes of this Plan.8.8Notices or Filings. Any notice or filing required or permitted to be given to the Administrator hereunder shall besufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:Corporate TreasurerBrady CorporationP.O. Box 571Milwaukee, WI 53201-0571Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on thepostmark on the receipt for registration or certification.Any notice or filing required or permitted to be given to a Participant hereunder shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.8.9Special rules for 2005-2007. Notwithstanding the usual rules required regarding the deferral elections anddistribution elections:(a)A Participant may on or before March 15, 2005 make a new deferral election to apply to amounts whichwould otherwise be paid in calendar year 2005; provided that such amounts havenot been paid or became payable at the time of the election. Such election shall remain in effect for future years until modifiedpursuant to Section 3.2.(b)On or before December 31, 2007, a Participant may elect an In-Service Payment Event Date and/or make anelection as to distribution of their Account from among the choices described at Section 6.1 hereof without complying with therules described in Section 6.2 hereof as long as the effect of the election is not to accelerate payments into 2006 or to deferpayments which would otherwise have been made in 2006 and not to accelerate payments into 2007 or to defer paymentswhich would otherwise have been made in 2007. Such election shall become effective after the last day upon which it ispermitted to be made or, if earlier, the first day of the calendar year in which payments under the election are scheduled tocommence. In order to change any such election after December 31, 2007, the requirements of Section 6.2 hereof must besatisfied. Any individual who has on or before December 31, 2006 elected an In-Service Payment Event Date of January 1,2007 and a Distribution Date of April 1, may on or before December 31, 2007 elect to change the Distribution Date to beapplicable in calendar year 2008 and subsequent years from April 1 to January 1.IN WITNESS WHEREOF, the Corporation has caused its duly authorized officer to execute this Plan document on its behalfas of the 17th day of July, 2018, to replace any prior version of this Plan previously adopted by the Corporation.BRADY CORPORATIONBy: /s/ J. MICHAEL NAUMANAttest: /s/ AARON J. PEARCEEXHIBIT 10.14BRADY CORPORATIONPERFORMANCE-BASED RESTRICTED STOCK UNITSIn accordance with the terms of the Brady Corporation 2017 Omnibus Incentive Plan (the "Plan"), the ManagementDevelopment and Compensation Committee (the “Committee”) of the Brady Corporation Board of Directors hereby grants to you,_______________ (“Employee”), an award of Performance-Based Restricted Stock Units involving the number of such Units setforth in the table below. Brady Corporation’s (the “Corporation”) records shall be the official record of the grant described hereinand, in the event of any conflict between this description and the Corporation’s records, the Corporation’s records shall control.The terms and conditions of this Award are set forth in this Agreement, the attached Exhibit A, Exhibit B and in the Plandocument, a copy of which has been provided to you.Number of Performance-based Restricted Stock UnitsGranted at Target (the “Units”): Grant Date: Scheduled Vesting Date:The date described in Section 2(a) ofthe AgreementPerformance Period: Performance Goals:See Exhibit AAll terms, provisions and conditions applicable to Performance-based Restricted Stock Unit Awards set forth in the Plan and not setforth in this Agreement are incorporated by reference into this Agreement.1.Award of Performance Restricted Stock UnitsThe Corporation hereby confirms the grant to you, as of the Grant Date and subject to the terms and conditions of thisAgreement and the Plan, of the number of Performance Restricted Stock Units identified in the table above (the "Units").Each Unit represents the right to receive one Share of the Corporation’s Class A Nonvoting Common Stock of theCorporation, $.01 par value. The Units granted to you will be credited to an account in your name maintained by theCorporation. This account shall be unfunded and maintained for bookkeeping purposes only, with the Units simplyrepresenting an unfunded and unsecured obligation of the Corporation until they become vested or have been forfeited.2.Vesting and Forfeiture of UnitsThe Units shall vest at the earliest of the following times and to the degree specified. For purposes of this Section 2, use ofthe terms “employment” and “employed” refers to providing services to the Corporation and its Affiliates in the capacity ofan Employee.(a)Scheduled Vesting. The number of Units that have been earned during the Performance Period shall be eligible to veston the Scheduled Vesting Date, so long as the Employee’s employment has been continuous since the Grant Date. Theactual number of earned Units that will vest on the Scheduled Vesting Date will be determined by the Committee asprovided in Exhibit A. For these purposes, the “Scheduled Vesting Date” means the date the Committee certifies (i) thedegree to which the applicable performance goals for the Performance Period have been satisfied, and (ii) the numberof Units that have been earned during the Performance Period as provided in Exhibit A, which certification shall occurno later than October 15 of the fiscal year immediately following the fiscal year during which the Performance Periodended.(b)Retirement. If employment is terminated as a result of the Employee’s retirement (after age 60 with five years ofemployment with the Corporation or a Subsidiary) and after the Employee has been employed for at least one yearafter the Grant Date, the Employee will receive a pro rata portion of the Units that would otherwise have beendetermined to vest on the Scheduled Vesting Date in accordance with Exhibit A if the Employee had remainedcontinuously employed until the Scheduled Vesting Date. The pro rata portion shall be determined as follows: (a) ifEmployee is employed for at least one year, but less than two years after the Grant Date, the Employee shall earn 2/3of the number of Units that would otherwise have been determined to vest and (b) if Employee is employed for at leasttwo years after the Grant Date, the Employee shall earn 100% of the Units that would otherwise have been determinedto vest.(c)Death. If employment is terminated by the death of the Employee prior to the last day of the Performance Period, theUnits granted hereunder to the Employee shall be 100% vested at target. If employment is terminated by death on orafter the last day of the Performance Period, the number of Units determined to have been earned as of the end of thePerformance Period in accordance with Exhibit A shall vest. Vested Units shall be payable to the Employee’s personalrepresentative or to the person to whom the Units are transferred under the Employee’s last will and testament or theapplicable laws of descent and distribution within 60 days of the Employee's death(d)Disability. If employment is terminated as a result of the Disability of the Employee prior to the last day of thePerformance Period, the Units granted hereunder to the Employee shall be 100% vested at target and payable within60 days of the Employee's Disability. If employment is terminated by Disability on or after the last day of thePerformance Period, the number of Units determined to have been earned as of the end of the Performance Period inaccordance with Exhibit A shall vest.(e)Change in Control. If a Change in Control occurs while the Employee continues to be employed, then the Units shallvest as of the Date of the Change in Control to the extent provided below:(i)If the Change in Control occurs on or after the last day of the Performance Period, the number of Unitsdetermined to have been earned as of the end of the Performance Period in accordance with Exhibit A shallvest.(ii)In the event of a Change in Control prior to the end of the Performance Period, the Units shall become 100%vested at target and the conditions described under Section 2 and Exhibit A shall cease to apply.(iii)For purposes of this Award, the term "Change in Control" shall have the meaning set forth in Exhibit B. Noevent described in Section 13.05 of the Plan shall cause the Units to become vested unless such event is aChange in Control.(f)Forfeiture of Unvested Units. If employment is terminated prior to the Scheduled Vesting Date under circumstancesother than as set forth in Sections 2(a) through (e), all unvested Units shall immediately be forfeited.3.Settlement of UnitsAfter any Units vest pursuant to Appendix A or Section 2 of this Agreement, the Corporation shall, as soon as practicable (butno later than October 15 of the year following the fiscal year in which such Units vest), cause to be issued and delivered to theEmployee, or to the Employee’s designated beneficiary or estate in the event of death, one Share in payment and settlement ofeach vested Unit. Delivery of the Shares shall be effected by the electronic delivery of the Shares to a designated brokerageaccount, shall be subject to satisfaction of withholding tax obligations as provided in Section 4 and compliance with allapplicable legal requirements as provided in Section 13.03 of the Plan, and shall be in complete satisfaction and settlement ofsuch vested Units. The Corporation will pay any original issue or transfer taxes with respect to the issuance and delivery of theShares to the Employee, and all fees and expenses incurred by it in connection therewith.4.Withholding TaxesThe Corporation may require, as a condition to the issuance of a stock certificate, that the Employee concurrently pay to theCorporation (either in cash or, at the request of Employee, but subject to such rules and regulations as the Administrator mayadopt from time to time, in Shares of Delivered Stock) the entire amount or a portion of any taxes which the Corporation isrequired to withhold by reason of the vesting or settlement of the Units, in such amount as the Administrator or theCorporation in its discretion may determine. If and to the extent that withholding of any federal, state or local tax is required inconnection with the vesting or settlement of the Units, the Employee may, subject to such rules and regulations as theCorporation may adopt from time to time, elect to have the Corporation hold back from the Shares to be issued upon thevesting or settlement of the Units, Shares, the Fair Market Value of which is to be applied to the Employee's withholdingobligations; provided that the Shares withheld may not have a Fair Market Value exceeding the maximum statutory tax rates inthe Employee’s applicable jurisdictions.5.No DividendsNo dividends will be paid or accrued on any Performance-based Restricted Stock Units prior to the issuance of Shares.6.No Shareholder RightsThe Units subject to this Award do not entitle the Employee to any rights of a shareholder of the Corporation’s Class ANonvoting Common Stock. The Employee will not have any of the rights of a shareholder of the Corporation in connectionwith the grant of Units subject to this Agreement unless and until Shares are issued to the Employee upon settlement of theUnits as provided in Section 3.7.Transfer RestrictionsThis Award is non-transferable and may not be assigned, pledged or hypothecated and shall not be subject to execution,attachment or similar process. Upon any attempt to effect any such disposition, or upon the levy of any such process, theAward shall immediately become null and void and the Performance-based Restricted Stock Units shall be forfeited.8.Confidentiality, Non-Solicitation and Non-CompeteAs consideration for the grant of this Award, Employee agrees to, understands and acknowledges the following:(a)During Employee's employment with the Corporation and its Affiliates (the "Company"), the Company will provideEmployee with Confidential Information relating to the Company, its business and clients, the disclosure or misuse ofwhich would cause severe and irreparable harm to the Company. During Employee’s employment with Company, andfor a two (2)-year period thereafter, Employee agrees not to use or disclose Company’s Confidential Informationexcept as necessary in executing Employee’s duties for Company. Employee shall keep Confidential Informationconstituting a trade secret under applicable law confidential for so long as such information constitutes a trade secret(i.e., protection as to trade secrets shall not necessarily expire at the end of the two (2)-year period). Upon thetermination of Employee's employment with the Company for any reason, Employee shall immediately return to theCompany all documents and materials that contain or constitute Confidential Information, in any form whatsoever,including but not limited to, all copies, abstracts, electronic versions, and summaries thereof. As to any electronicallystored copies of Confidential Information, Employee shall contact their supervisor or Company’s General Counsel todiscuss the proper method for returning such items. Employee hereby consents and agrees that Company may accessany of Employee’s personal computers and other electronic storage devices (including personal phones) and anyelectronic storage accounts (such as dropbox) so as to allow Company to ascertain the presence of Company’sConfidential Information and how such information has been used by Employee and to remove any such items fromsuch devices and accounts. Employee further agrees that, without the written consent of the Chief Executive Officer ofthe Corporation or, in the case of the Chief Executive Officer of the Corporation, without the written approval of theBoard of Directors of the Corporation, Employee will not disclose, use, copy or duplicate, or otherwise permit the use,disclosure, copying or duplication of any Confidential Information of the Company, other than in connection with theauthorized activities conducted in the course of Employee's employment with the Company. Employee agrees to takeall reasonable steps and precautions to prevent any unauthorized disclosure, use, copying or duplication ofConfidential Information. For purposes of this Agreement,Confidential Information means any and all financial, technical, commercial or other information concerning thebusiness and affairs of the Company that is confidential and proprietary to the Company, including without limitation,(i)information relating to the Company’s past and existing customers and vendors and development ofprospective customers and vendors, including specific customer product requirements, pricing arrangements,payments terms, customer lists and other similar information;(ii)inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed orotherwise produced, acquired or used by the Company;(iii)the Company’s proprietary programs, processes or software, consisting of but not limited to, computerprograms in source or object code and all related documentation and training materials, including all upgrades,updates, improvements, derivatives and modifications thereof and including programs and documentation inincomplete stages of design or research and development;(iv)the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, servicemarks, trade names, trade dress, manuals, operating instructions, training materials, and other industrialproperty, including such information in incomplete stages of design or research and development; and(v)other confidential and proprietary information or documents relating to the Company’s products, business andmarketing plans and techniques, sales and distribution networks and any other information or documents whichthe Company reasonably regards as being confidential.(vi)Confidential Information does not include information which: (i) is already available to the public withoutwrongful act or breach by Employee; (ii) becomes available to the public through no fault of Employee; or (iii)is required to be disclosed pursuant to a court order or order of government authority, provided that Employeepromptly notifies Company of such request so Company may seek a protective order.(b)Post-Employment Customer Non-Solicitation Agreement. For one (1) year following Employee’s separation fromCompany, Employee will not contact-or support others in contacting-customers of Company with whom Employeehad business contact during the last two (2) years of Employee’s employment with Company, for the purpose ofselling or providing products or services competitive with those offered by Company (“Competitive Products”).“Competitive Products” shall mean products and services competitive with those products and services for whichEmployee was responsible during the last two (2) years of Employee’s employment with Company.(c)Post-Employment Non-Solicitation Agreement Based Upon Customer Knowledge. For one (1) year followingEmployee’s separation from Company, Employee will not contact-or support others in contacting-customers ofCompany about whom Employee possesses Confidential Information or for whom Employee supervised others inserving during thelast two (2) years of Employee’s employment with Company, for the purpose of selling or providing products orservices competitive with those offered by Company (“Competitive Products”). “Competitive Products” shall meanproducts and services competitive with those products and services for which Employee was responsible during thelast two (2) years of Employee’s employment with Company.(d)Post-Employment Non-Compete Agreement. For one (1) year following Employee’s separation from Company,Employee will not, directly or indirectly, within the United States, provide services similar to any of those Employeeprovided to Company during the last two (2) years of Employee’s employment with Company to a competitor ofCompany or a person or entity preparing to compete with Company. If Employee’s services to Company at all timesduring their last two (2) years of employment were limited to particular subsidiaries or affiliates (Tricor Direct, Inc.,Precision Dynamics Corporation, etc.) or divisions (WPS, IDS, PeopleID, etc.), then the term “competitor” as used inthis paragraph will be limited to competitors of all such subsidiaries, affiliates, and divisions.(e)Post-Employment Restriction on Working With Competitive Products. For one (1) year following Employee’sseparation from Company, Employee will not, work in the development, design, modification, improvement, orcreation of products or services competitive with any products or services with which Employee was involved in thedevelopment, design, modification, improvement or creation for Company during the last two (2) years of Employee’semployment.(f)Post-Employment Restriction on Advising Investors. For one (1) year following Employee’s separation fromCompany, Employee will not, directly or indirectly, advise a private equity firm or other investor regarding buying,investing in, or divesting from Company or any of its competitors.(g)Post-Employment Restriction on Soliciting Employees. For one (1) year following Employee’s separation fromCompany, Employee will not solicit or encourage Key Employees of Company to provide services to a competitor ofCompany or to otherwise terminate their relationship with Company. “Key Employees” are employees or contractorswhom Employee supervised, who supervised Employee, or with whom Employee had significant business contactduring Employee’s last year of employment with Company and who work for or serve Company as an engineer,manager, executive, sales employee, professional, or director.(h)Duty of Loyalty and Related Obligations. Employee acknowledges and agrees that Employee owes Company a dutyof loyalty while employed by Company. During Employee’s employment with Company, Employee agrees not to takeaction that will harm Company, such as, encouraging employees, vendors, suppliers, contractors, or customers toterminate their relationships with Company, usurping a business opportunity from Company, engaging in conduct thatwould injure Company’s reputation, providing services or assistance to a competitive enterprise, or otherwisecompeting with Company.(i)Non-Disparagement and Social Media. Employee agrees not to disparage Company or any of its officers, directors, oremployees on social media, on any public platform, or to persons external to Company when such comments have thepotential to harm Company (i.e., making disparaging comments about Company to distributors, customers, suppliers,etc.).(j)Other Business Relationships. Employee agrees, for a one (1)-year period following Employee’s separation fromCompany, not to encourage or advise any vendors, suppliers, or others possessing a business relationship withCompany to terminate that relationship or to otherwise modify that relationship to Company’s detriment.(k)Employee acknowledges and agrees that compliance with this Section 8 is necessary to protect the Company, and thata breach of any of this Section 8 will result in irreparable and continuing damage to the Company for which there willbe no adequate remedy at law. In the event of a breach of this Section 8, or any part thereof, the Company, and itssuccessors and assigns, shall be entitled to injunctive relief and to such other and further relief as is proper under thecircumstances. The Company shall institute and prosecute proceedings in any Court of competent jurisdiction either inlaw or in equity to obtain damages for any such breach of this Section 8, or to enjoin Employee from performingservices in breach of Section 8(b) during the term of employment and for a period of 12 months following thetermination of employment. Employee hereby agrees to submit to the jurisdiction of any Court of competentjurisdiction in any disputes that arise under this Agreement.(l)Employee further agrees that, in the event of a breach of this Section 8, the Corporation may elect to recover all or anypart of the value of any amounts previously paid or payable or any Shares (or the value of any Shares) delivered ordeliverable to Employee pursuant to any Company bonus program, this Agreement, and any other Company plan orarrangement.(m)Employee agrees that the terms of this Section 8 shall survive the termination of Employee's employment with theCompany.(n)EMPLOYEE HAS READ THIS SECTION 8 AND AGREES THAT THE CONSIDERATION PROVIDED BYTHE CORPORATION IS FAIR AND REASONABLE AND FURTHER AGREES THAT GIVEN THEIMPORTANCE TO THE COMPANY OF ITS CONFIDENTIAL AND PROPRIETARY INFORMATION, THEPOST-EMPLOYMENT RESTRICTIONS ON EMPLOYEE'S ACTIVITIES ARE LIKEWISE FAIR ANDREASONABLE.9.ClawbackThis Award is subject to the terms of the Corporation's recoupment, clawback or similar policy as it may be in effect from timeto time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment orforfeiture of Awards or any Shares or other cash or property received with respect to the Awards (including any valuereceived from a disposition of the Shares acquired upon payment of the Awards).10.Binding EffectThis Agreement will be binding in all respects on heirs, representatives, successors and assigns of the Employee, and on thesuccessors and assigns of the Corporation.11.Provisions of Plan ControllingThis Award is subject in all respects to the provisions of the Plan. In the event of any conflict between any provisions of thisAward and the provisions of the Plan, the provisions of the Plan shall control, except to the extent the Plan permits theCommittee to modify the terms of an Award grant and has done so herein. Terms defined in the Plan where used herein shallhave the meanings as so defined. Employee acknowledges receipt of a copy of the Plan.12.Wisconsin ContractThis Award has been granted in Wisconsin and shall be construed under the laws of that state.13.SeverabilityWherever possible, each provision of this Award will be interpreted in such manner as to be effective and valid underapplicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision will beineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or theremaining provisions hereof. A court of competent jurisdiction is expressly authorized to modify overbroad provisions so as tomake them enforceable to the maximum extent permitted by law and is further authorized to strike whole provisions thatcannot be so modified.14.No ContractNothing in this Agreement is intended to change Employee’s status as an at-will employee. Employee understands thatEmployee is an at-will employee and that Employee’s employment can be terminated at any time, with or without notice orcause, by either Employee or Corporation.15.Notice of ImmunityIn accordance with the Defend Trade Secrets Act, Employee is hereby advised that:An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of atrade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose ofreporting or investigating a suspected violation of law. An individual shall not be held criminally or civilly liable under anyfederal or state trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in alawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employerfor reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secretinformation in the court proceeding, ifthe individual files any document containing the trade secret under seal; and does not disclose the trade secret, except pursuantto court order.IN WITNESS WHEREOF, the Corporation has granted this Award as of the day and year first above written.BRADY CORPORATIONBy: J. MICHAEL NAUMANName: J. Michael NaumanIts: President and Chief Executive OfficerEXHIBIT APerformance GoalsEXIBIT BChange in Control DefinitionA “Change in Control” means the occurrence of any one of the following events:(a)A direct or indirect acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaningof Rule 13d-3 of the Exchange Act) of voting securities of the Company where such acquisition causes any such Person to own morethan 50% of the combined voting power of the Company’s voting securities entitled to vote generally in the election of directors (the“Outstanding Company Voting Securities”); provided, however, that the following shall not be deemed to result in a Change inControl, (i) any acquisition or holding by the members of the family of William H. Brady Jr. and their descendants or trusts for theirbenefit, and the William H. Brady III Living Trust, (ii) any acquisition directly from the Company, other than an acquisition by virtueof the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (iii)any acquisition by the Company or a wholly owned Subsidiary, (iv) any acquisition by any employee benefit plan (or related trust)sponsored or maintained by the Company or any entity controlled by the Company, (v) any underwriter temporarily holding securitiespursuant to an offering of such securities, or (vi) any acquisition by any entity pursuant to a transaction which complies with clauses(i), (ii) and (iii) of subsection (c) of this definition; or(b)A change in the composition of the Board such that the individuals who, as of August 1, 2016, constitute the Board(the “Incumbent Board”) cease for any reason to constitute a majority of the Board; provided, however, that any individual whobecomes a member of the Board subsequent to August 1, 2016, whose election, or nomination for election by the Company’sshareholders, was approved by a vote of a majority of those individuals then comprising the Incumbent Board shall be considered asthough such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initialassumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal ofdirectors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not beso considered as a member of the Incumbent Board; provided, further, however, that a director who has been approved by membersof the family of William H. Brady Jr. and their descendants or trusts for their benefit, and the William H. Brady III Living Trust whilethey beneficially own collectively more than 50% of the combined voting power of the then outstanding voting securities of theCompany entitled to vote generally in the election of directors shall be deemed to be an Incumbent Director; or(c)Approval by the shareholders of the Company and the subsequent consummation of a reorganization, merger orconsolidation (a “Business Combination”), in each case, unless, following such Business Combination: (i) all or substantially all of theindividuals and entities who were the beneficial owners, respectively, of the total number of outstanding shares of both Class ACommon Stock and Class B Common Stock (the “Outstanding Company Common Stock”) and Outstanding Company VotingSecurities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of,respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securitiesentitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination(including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or through one or more subsidiaries); (ii) no Person (excluding any employee benefit plan (or relatedtrust) of the Company orsuch corporation resulting from such Business Combination) beneficially owns, directly or indirectly, fifty percent (50%) or more of,respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or thecombined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existedprior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the corporation resultingfrom such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of theaction of the Board, providing for such Business Combination, or(d)Approval by the shareholders of the Company and the subsequent consummation of(i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of theCompany, unless the sale or other disposition is to a corporation, with respect to which following such sale or other disposition, (A)all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the total number of outstandingshares of both Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale orother disposition beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares ofcommon stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election ofdirectors of such other corporation,(B) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation) beneficially owns, directlyor indirectly, fifty percent (50%) or more of, respectively, the then outstanding shares of common stock of such corporation or thecombined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existedprior to the sale or other disposition, and (C) at least a majority of the members of the board of directors of such corporation weremembers of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing forsuch sale or other disposition of assets of the Company or were elected, appointed or nominated by the Board.Notwithstanding the foregoing, for purposes of any Award subject to Section 409A of the Code, no Change in Control shalldeemed to have occurred upon an event described in this definition unless the event constitutes a change in ownership of theCompany, a change in effective control of the Company, a change in ownership of a substantial portion of the Company’s assets,each under Section 409A of the Code or otherwise constitutes a change on control within the meaning of Section 409A of the Code;provided, however, if the Company treats an event as a Change in Control that does not meet the requirements of Section 409A of theCode, such Award shall be paid when it would otherwise have been paid but for the Change in Control.EXHIBIT 10.21BRADY CORPORATION RESTORATION PLANRestated Effective as of July 17, 2018TABLE OF CONTENTS PAGE ARTICLE IINTRODUCTION1 1.1Establishment and Effective Date11.2Purpose11.3Section 409A1 ARTICLE IIDEFINITIONS2 2.1Account22.2Additional Employer Contribution22.3Additional Matching Contribution22.4Affiliate22.5Beneficiary22.6Board22.7Code22.8Committee22.9Compensation22.10Elective Deferral32.11Elective Deferral Account32.12Eligible Employee32.13Employee32.14Employer32.15Employer Contribution32.16Employer Contribution Account32.17Excess Compensation32.18Matching Contribution32.19Matching Contribution Account32.20Participant32.21Plan32.22Plan Year32.23Qualified 401(k) Plan32.24Separation from Service42.25Specified Employee62.26Unforeseeable Emergency7 ARTICLE IIIPARTICIPATION8 3.1Eligibility to Participate83.2Continuation of Eligibility8 ARTICLE IVDEFERRALS9 4.1Elective Deferrals94.2Additional Rules Governing Deferral Elections9i4.3Matching Contribution104.4Employer Contribution104.5Additional Matching Contribution104.6Additional Employer Contribution11 ARTICLE VACCOUNTS AND CREDITS12 5.1Credits to Accounts125.2No Funding125.3Deemed Investment of Accounts125.4Reports to Participants13 ARTICLE VIVESTING14 ARTICLE VIIMANNER AND TIMING OF DISTRIBUTION15 7.1Payment of Benefits157.2Payment Election167.3Financial Hardship177.4Delayed Distribution187.5Inclusion in Income Under Section 409A197.6Domestic Relations Order197.7De Minimis Amounts197.8Overpayments19 ARTICLE VIIIPLAN OPERATION AND ADMINISTRATION20 8.1Administrator208.2Committee208.3Authority to Act208.4Information from Participants208.5Committee Discretion208.6Committee Members’ Conflict of Interest218.7Governing Law218.8Expenses218.9Minor or Incompetent Payees218.10Withholding218.11Indemnification21 ARTICLE IXCLAIMS PROCEDURE22 9.1Claims229.2Review229.3Additional claims requirements23 ARTICLE XAMENDMENT AND TERMINATION24 ARTICLE XIMISCELLANEOUS PROVISIONS25 11.1Headings2511.2No Contract of Employment25ii11.3Rights of Participants and Beneficiaries2511.4Nonalienation of Benefits2511.5Tax Treatment2511.6Other Plans and Agreements2511.7Number and Gender2611.8Plan Provisions Controlling2611.9Severability2611.10Evidence Conclusive2611.11Status of Plan Under ERISA2611.12Name and Address Changes2711.13Assignability by Corporation2711.14Special Rule for 2005-200727iiiARTICLE IINTRODUCTION1.1Establishment and Effective DateBrady Corporation established the Brady Corporation Restoration Plan effective as of January 1, 2000, and it is hereby restatedeffective as of July 17, 2018. This document describes how this Plan has been administered for periods after 2004 and prior toJuly 17, 2018 and how it shall be administered for periods after such date.1.2PurposeThe Plan is intended to restore to key management employees of Brady and its affiliates income deferral opportunities andemployer contributions they would have had under the Company’s tax qualified Brady Matched 401(k) Plan and BradyFunded Retirement Plan but for the limitations of the Internal Revenue Code of 1986, as amended and to provide certainadditional benefits.1.3Section 409AThis document is intended to comply with the provisions of Section 409A of the Internal Revenue Code and shall beinterpreted accordingly. If any provision or term of this document would be prohibited by or inconsistent with the requirementsof Section 409A of the Code, then such provision or term shall be deemed to be reformed to comply with Section 409A of theCode.1ARTICLE IIDEFINITIONSThe following terms, when used in the Plan with initial capital letters, shall have the meaning given to them in this Article.2.1Account shall mean the account maintained to record a Participant’s interest in the Plan and shall be composed of the followingsubaccounts: Elective Deferral Account, Matching Contribution Account and Employer Contribution Account.2.2Additional Employer Contribution shall mean the amount credited to a Participant pursuant to Section 4.6.2.3Additional Matching Contribution shall mean the amount credited to a Participant pursuant to Section 4.5.2.4Affiliate shall mean each incorporated or unincorporated trade or business in which Brady Corporation directly or indirectlyowns, as applicable, eighty percent (80%) of the voting stock or eighty percent (80%) of the capital or profits interest.2.5Beneficiary means the person, persons, or entity designated by the Participant to receive any benefits payable under the Planon or after the Participant’s death. Each Participant shall be permitted to name, change or revoke the Participant’s designationof a Beneficiary in writing on a form and in the manner prescribed by the Employer; provided, however, that the designationon file with the Employer at the time of the Participant’s death shall be controlling. Should a Participant fail to make a validBeneficiary designation or leave no named Beneficiary surviving, any benefits due shall be paid to such Participant’s spouse, ifliving; or if not living, then any benefits due shall be paid to such Participant’s estate. A Participant may designate a primarybeneficiary and a contingent beneficiary; provided, however, that the Employer may reject any such instrument tendered forfiling if it contains successive beneficiaries or contingencies unacceptable to it. If all Beneficiaries who survive the Participantshall die before receiving the full amounts payable hereunder, then the payments shall be paid to the estate of the Beneficiarylast to die.2.6Board shall mean the Board of Directors of Brady Corporation.2.7Code shall mean the Internal Revenue Code of 1986, as amended, and any regulations issued thereunder.2.8Committee shall mean the Compensation Committee of the Board.2.9Compensation shall mean the total compensation payable to a Participant by the Employer for any period (prior to electivedeferrals under this Plan or any other plan or deferral agreement) required to be reported as wages on the Employee’s Form W-2 for income tax purposes, but reduced by all of the following items (even if includable in gross income):2reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses and welfare benefits.2.10Elective Deferral shall mean the portion of a Participant’s Compensation that is reduced and credited to their Elective DeferralAccount pursuant to their election under Section 4.1.2.11Elective Deferral Account shall mean the account maintained to record a Participant’s interest in the Plan attributable to theirElective Deferrals.2.12Eligible Employee shall mean an Employee eligible under Section 3.1 and 3.2(a).2.13Employee shall mean an employee of the Employer.2.14Employer shall mean Brady Corporation and any Affiliate that adopts the Plan with the approval of the Board.2.15Employer Contribution shall mean the amount credited to a Participant pursuant to Section 4.4.2.16Employer Contribution Account shall mean the account maintained to record a Participant’s interest in the Plan attributableto Employer Contributions and Additional Employer Contributions on their behalf.2.17Excess Compensation shall mean the portion of Compensation earned by a Participant during a Plan Year after the date theCompensation they have earned during the Plan Year equals the limit in Code Section 401(a)(17) for such Plan Year.2.18Matching Contribution shall mean the amount credited to a Participant pursuant to Section 4.3.2.19Matching Contribution Account shall mean the account maintained to record a Participant’s interest in the Plan attributable toMatching Contributions and Additional Matching Contributions on their behalf.2.20Participant shall mean (i) an Eligible Employee under Section 3.1 and 3.2(a) or (ii) a former Eligible Employee who has anAccount under the Plan.2.21Plan shall mean the Brady Corporation Restoration Plan, as set forth in this document, as the same may be amended or restatedfrom time to time.2.22Plan Year shall mean the calendar year.2.23Qualified 401(k) Plan shall mean the Brady Matched 401(k) Plan (or any successor plan thereto qualified under Code §§401(a) and 401(k)).32.24Separation from Service shall have the meaning set forth in IRS Regulation Section 1.409A-1 the requirements of which aresummarized in part as follows:(a)In General. The Participant shall have a Separation from Service with the Employer if the Participant dies, retires, orotherwise has a termination of employment with the Employer. However, for purposes of this Section 2.24, theemployment relationship is treated as continuing intact while the individual is on military leave, sick leave, or otherbona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individualretains a right to reemployment with the Employer under an applicable statute or by contract. For purposes of thisparagraph (a) of this Section 2.24, a leave of absence constitutes a bona fide leave of absence only if there is areasonable expectation that the Participant will return to perform services for the Employer. If the period of leaveexceeds six months and the individual does not retain a right to reemployment under an applicable statute or bycontract, the employment relationship is deemed to terminate on the first date immediately following such six-monthperiod. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical ormental impairment that can be expected to result in death or can be expected to last for a continuous period of not lessthan six months, where such impairment causes the Participant to be unable to perform the duties of their position ofemployment or any substantially similar position of employment, a 29-month period of absence may be substituted forsuch six-month period.(b)Termination of Employment. Whether a termination of employment has occurred is determined based on whether thefacts and circumstances indicate that the Employer and Participant reasonably anticipated that no further services wouldbe performed after a certain date or that the level of bona fide services the Participant would perform after such date(whether as an employee or as an independent contractor) would permanently decrease to no more than 20 percent ofthe average level of bona fide services performed (whether as an employee or an independent contractor) over theimmediately preceding 36-month period (or, the full period of services to the Employer if the Participant has beenproviding services to the Employer less than 36 months). Facts and circumstances to be considered in making thisdetermination include, but are not limited to, whether the Participant continues to be treated as an employee for otherpurposes (such as continuation of salary and participation in employee benefit programs), whether similarly situatedservice providers have been treated consistently, and whether the Participant is permitted, and realistically available, toperform services for other service recipients in the same line of business. The Participant is presumed to have Separatedfrom Service where the level of bona fide services performed decreases to a level equal to 20 percent or less of theaverage level of services performed by the employee during the immediately preceding 36-month period. TheParticipant will be presumed not to have Separated from Service where the level of bona fide services performed4continues at a level that is 50 percent or more of the average level of service performed by the Participant during theimmediately preceding 36-month period. No presumption applies to a decrease in the level of bona fide servicesperformed to a level that is more than 20 percent and less than 50 percent of the average level of bona fide servicesperformed during the immediately preceding 36-month period. The presumption is rebuttable by demonstrating that theEmployer and the Participant reasonably anticipated that as of a certain date the level of bona fide services would bereduced permanently to a level less than or equal to 20 percent of the average level of bona fide services providedduring the immediately preceding 36-month period or the full period of services to the Employer if the Participant hasbeen providing services to the Employer less than 36 months (or that the level of bona fide services would not be soreduced). For example, the Participant may demonstrate that the Employer and the Participant reasonably anticipatedthat the Participant would cease providing services, but that, after the original cessation of services, businesscircumstances such as termination of the Participant's replacement caused the Participant to return to employment.Although the Participant's return to employment may cause the Participant to be presumed to have continued inemployment because the Participant is providing services at a rate equal to the rate at which the Participant wasproviding services before the termination of employment, the facts and circumstances in this case would demonstratethat at the time the Participant originally ceased to provide services, the Employer reasonably anticipated that theParticipant would not provide services in the future. For purposes of this paragraph (b), for periods during which theParticipant is on a paid bona fide leave of absence (as defined in paragraph (a) of this Section 2.24) and has nototherwise terminated employment pursuant to paragraph (a) of this Section 2.24, the Participant is treated as providingbona fide services at a level equal to the level of services that the Participant would have been required to perform toreceive the compensation paid with respect to such leave of absence. Periods during which the Participant is on anunpaid bona fide leave of absence (as defined in paragraph (a) of this Section 2.24) and has not otherwise terminatedemployment pursuant to paragraph (a) of this Section 2.24, are disregarded for purposes of this paragraph (b) of thisSection 2.24 (including for purposes of determining the applicable 36-month (or shorter) period).(c)Asset Purchase Transactions. Where as part of a sale or other disposition of assets by the Employer as seller to anunrelated service recipient (buyer), a Participant of the Employer would otherwise experience a Separation from Servicewith the Employer, the Employer and the buyer may retain the discretion to specify, and may specify, whether aParticipant providing services to the Employer immediately before the asset purchase transaction and providing servicesto the buyer after and in connection with the asset purchase transaction has experienced a Separation from Service,provided that the asset purchase transaction results from bona fide, arm’s length negotiations, all service providersproviding services to the Employer immediately before the asset purchase transaction and providing services to thebuyer after and in connection with the asset purchase transaction are treated consistently5(regardless of position at the Employer) for purposes of applying the provisions of any nonqualified deferredcompensation plan, and such treatment is specified in writing no later than the closing date of the asset purchasetransaction. For purposes of this paragraph (c), references to a sale or other disposition of assets, or an asset purchasetransaction, refer only to a transfer of substantial assets, such as a plant or division or substantially all the assets of atrade or business.(d)Dual Status. If a Participant provides services both as an employee of the Employer and as an independent contractor ofthe Employer, the Participant must separate from service both as an employee and as an independent contractor to betreated as having Separated from Service. If a Participant ceases providing services as an independent contractor andbegins providing services as an employee, or ceases providing services as an employee and begins providing services asan independent contractor, the Participant will not be considered to have a Separation from Service until the Participanthas ceased providing services in both capacities. Notwithstanding the foregoing, if a Participant provides services bothas an employee of the Employer and a member of the board of directors of the Employer, the services provided as adirector are not taken into account in determining whether the Participant has a Separation from Service as an employeefor purposes of this Plan unless this Plan is aggregated with any plan in which the Participant participates as a directorunder IRS Regulation Section 1.409A-1(c)(2)(ii).2.25Specified Employee shall have the meaning set forth in IRS Regulation Section 1.409A‑1 the requirements of which aresummarized in part as follows:(a)In General. “Specified Employee” means a Participant who as of the date of their separation from service is a “keyemployee” as defined in Code Section 416(i) (disregarding Section 416(i)(5)), i.e., an employee who at any time duringthe 12 month period ending on an identification date is an officer of the Employer or one of its affiliates having anannual compensation as defined in IRS Regulation Section 1.409A-1(i)(2) greater than $130,000, a 5% owner of theEmployer or one of its affiliates or a 1% owner of the Employer or one of its affiliates having compensation of morethan $150,000. The $130,000 amount described in the preceding sentence shall be adjusted for cost of living increasesin such amounts and at such times as specified by the Internal Revenue Service. Further, no more than 50 employees(or, if lesser, the greater of 3 or 10% of the employees) shall be treated as officers. The foregoing definition shall beinterpreted at all times in a manner consistent with such regulations as may be adopted from time to time by the InternalRevenue Service for purposes of applying the key employee definition of Section 416(i) to the requirements of CodeSection 409A. If a person is a key employee as of an identification date, the person is treated as a Specified Employeefor the 12-month period beginning on the first day of the fourth month following the identification date. The“identification date” is December 31.6(b)In the event of a public offering, merger, acquisition, spin-off, reorganization or other corporate transaction, "SpecifiedEmployees" shall be determined as provided in IRS Reg. Section 1.409A-(1)(i)(6).2.26Unforeseeable Emergency means a severe financial hardship to a Participant resulting from an illness or accident of theParticipant or the Participant’s spouse or dependent (as defined in Section 152(a) of the Code), loss of the Participant’s propertydue to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, forexample, as a result of a natural disaster), or other similar extraordinary and unforeseeable circumstances arising as a result ofevents beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant’sprimary residence may constitute an Unforeseeable Emergency. In addition, the need to pay for medical expenses, includingnon-refundable deductibles, as well as for the costs of prescription drug medication, may constitute an UnforeseeableEmergency. Finally, the need to pay for funeral expenses of a spouse or a dependent (as defined in Code section 152(a)) mayalso constitute an Unforeseeable Emergency. Except as otherwise provided above, the purchase of a home and the payment ofcollege tuition are not Unforeseeable Emergencies. Whether a Participant is faced with an Unforeseeable Emergency is to bedetermined based on the relevant facts and circumstances of each case.7ARTICLE IIIPARTICIPATION3.1Eligibility to ParticipateAn Employee shall be eligible to elect deferrals and receive Employer contributions in accordance with the provisions ofArticle IV beginning on the date the Committee advises the Employee they are eligible because the Committee in its discretionhas determined that the Employee may reasonably be anticipated to earn Compensation from the Employer in excess of thelimit described in Code Section 401(a)(17).3.2Continuation of Eligibility(a)An Employee shall continue to be eligible to elect deferrals and receive Employer contributions in accordance with theprovisions of Article IV only for so long as they continue in employment with the Employer.(b)An individual who has a Separation from Service shall cease to be eligible and shall again be eligible to elect deferralsand receive Employer contributions in accordance with the provisions of Article IV only in accordance with Section3.1.8ARTICLE IVDEFERRALS4.1Elective Deferrals(a)An Eligible Employee may elect an Elective Deferral of up to fifty percent (50%) of their Excess Compensation forservices performed during a Plan Year by completing and filing such forms as may be required by the Employer.(b)An Eligible Employee’s Elective Deferral election under paragraph (a) of this Section shall apply to and reduce theirExcess Compensation, i.e., the portion of their Compensation earned during a Plan Year after the date theCompensation they have earned during the Plan Year equals the limit in Code Section 401(a)(17) for such Plan Year.4.2Additional Rules Governing Deferral Elections(a)An Eligible Employee’s election under Section 4.1 shall (i) if made within the thirty (30) day period following the datethey are first eligible to participate in any account balance-type deferred compensation plan of the Employer, beeffective for that portion of their Excess Compensation to be paid for services performed subsequent to the election, and(ii) if not made within said thirty (30) day period, be effective for Excess Compensation paid for services performedduring the Plan Year following the date the election is received by the Employer, or its designee.(b)An Eligible Employee’s election for a Plan Year under this Article IV shall be irrevocable after the last day upon whichsuch election is permitted to be made for such Plan Year and shall continue in effect for subsequent Plan Years untilchanged or revoked pursuant to paragraph (c) below.(c)An Eligible Employee may change or revoke their election which would otherwise be effective for a Plan Year bycompleting and filing such forms as may be required by the Employer by the last day of the preceding Plan Year.(d)In the event that during enrollment in the Plan a Participant does not make a payment election, a lump sum paymentelection will be automatically applied for the Plan Year in which the contributions are made.(e)Notwithstanding paragraphs (a), (b) (c) and (d), in the event that a Participant makes application for a hardshipdistribution under Section 7.3 and the Administrator determines that an Unforeseeable Emergency exists, their deferralelection otherwise in effect under this Article IV and any other nonqualified deferred compensation plan of the accountbalance type shall immediately terminate upon such determination. To resume deferrals thereafter, a Participant mustmake an election satisfying the provisions of paragraph (c).9(f)Notwithstanding paragraphs (a), (b) (c) and (d), if an Eligible Employee receives a withdrawal of their electivecontributions under the Qualified 401(k) Plan or any other 401(k) plan (i.e., a qualified cash or deferred arrangement) ofthe Employer (or any affiliate treated under the Code as a single employer with the Employer for purposes of the 401(k)plan) due to financial hardship pursuant to IRS Regulation Section 1.40(k)-1(d)(3) or its successor, their deferralelection under this Section 4.1 shall be revoked automatically (effective on the date such hardship withdrawal is paid).In addition, such Eligible Employee shall not be eligible to have another deferral election in effect until the first day ofthe Plan Year which begins after a six month suspension period that begins on the first day of the calendar monthfollowing the date the hardship withdrawal is paid. Such Eligible Employee may then resume deferrals by making anelection, pursuant to the rules of paragraph (c) above, effective for any Plan Year which begins after the end of suchsuspension period.4.3Matching ContributionAn Eligible Employee shall be credited with a Matching Contribution for a Plan Year in an amount equal to the lesser of: (a)4% of the Eligible Employee’s Excess Compensation or (b) the Elective Deferral made on the Eligible Employee’s behalf forthe Plan Year, provided that in order to receive the Matching Contribution such Eligible Employee must remain employed withthe Employer on the last day of such Plan Year.4.4Employer ContributionAn Eligible Employee shall be credited with an Employer Contribution for a Plan Year in an amount equal to 4% of theEligible Employee’s Excess Compensation for the Plan Year; provided the Eligible Employee remains employed with theEmployer on the last day of such Plan Year.4.5Additional Matching ContributionThere shall be credited to the Participant’s Matching Contribution Account for a Plan Year an amount in addition to amountscredited under Section 4.3 for the same year. The amount credited under this Section 4.5 shall be equal to .04(X-(Y-Z)) whereX is the limit in Code Section 401(a)(17) for such Plan Year, Y is the Participant’s Compensation for the Plan Year as definedin Section 2.9 and Z is the amount of elective deferrals for the Plan Year under all nonqualified deferred compensation plansand agreements (including this Plan) of the Employer covering the Participant. No amount shall be credited under this Sectionif X does not exceed the remainder of Y minus Z. For example, if a Participant's Compensation as defined in Section 2.9 is$300,000, they defer $50,000 (that is, under all nonqualified deferred compensation plans of the Employer), and the 401(a)(17)limit is $275,000, they receive .04($275,000-($300,000-$50,000)) = .04($25,000) = $1,000 under this Section 4.5. If they onlydeferred $10,000, they receive $0 under this provision because .04($275,000-($300,000-$10,000)) = .04($275,000-$290.000)so X is not greater than Y minus Z.104.6Additional Employer ContributionAs of the last day of a Plan Year, there shall be credited to the Participant’s Employer Contribution Account an amount inaddition to amounts credited under Section 4.4 for the same year. The amount credited under this Section 4.6 shall be equal to.04(X-(Y-Z)) where X is the limit in Code Section 401(a)(17) for such Plan Year, Y is the Participant’s Compensation for thePlan Year as defined in Section 2.9 and Z is the amount of elective deferrals for the Plan Year under all nonqualified deferredcompensation plans and agreements (other than this Plan) of the Employer covering the Participant. No amount shall becredited under this Section if X does not exceed the remainder of Y minus Z.11ARTICLE VACCOUNTS AND CREDITS5.1Credits to Accounts(a)An amount equal to the amount by which a Participant’s Compensation has been reduced pursuant to their deferralelection under Section 4.1 shall be credited to their Elective Deferral Account.(b)Matching Contributions and Additional Matching Contributions on a Participant’s behalf shall be credited to theirMatching Contribution Account.(c)Employer Contributions and Additional Employer Contributions on a Participant’s behalf shall be credited to theirEmployer Contribution Account.(d)Said credits shall be made at times established by the Committee but no later than 60 days after the last day of the PlanYear to which they relate.(e)Each Account shall also be credited or charged with deemed earnings and losses as if it were invested in accordancewith Section 5.3.5.2No Funding(a)The right of any individual to receive payment under the provisions of this Plan shall be an unsecured claim against thegeneral assets of the Employer, and no provisions contained in this Plan, nor any action taken pursuant to this Plan,shall be construed to give any individual at any time a security interest in any asset of the Employer, of any affiliatedcompany, or of the stockholders of the Employer. The liabilities of the Employer to any individual pursuant to this Planshall be those of a debtor pursuant to such contractual obligations as are created by this Plan and, to the extent anyperson acquires a right to receive payment from the Employer under this Plan, such right shall be no greater than theright of any unsecured general creditor of the Employer.(b)The Employer may establish a grantor trust (but shall not be required to do so) to which shall be contributed (subject tothe claims of the general creditors of the Employer) the amounts credited to the Accounts. If a grantor trust is soestablished, except as specifically provided otherwise by the terms of the trust agreement for the trust, payment by thetrust of the amounts due to a Participant or their Beneficiary under the Plan shall be considered a payment by theEmployer for purposes of the Plan.5.3Deemed Investment of Accounts(a)The Committee shall select one or more investment funds for the deemed investment of Accounts. However, in noevent shall the Employer be required to make any such12investment in the investment funds, and to the extent such investments are made, such investments shall remain an assetof the Employer subject to the claims of its general creditors.(b)On the date credited to the respective Account, a Participant’s Elective Deferrals, Matching Contributions, AdditionalMatching Contributions, Employer Contributions and Additional Employer Contributions shall be deemed to beinvested in one or more of the investment funds designated by the Participant for such deemed investment. Once made,the Participant’s investment designation shall continue in effect for future Elective Deferrals, Matching Contributions,Additional Matching Contributions, Employer Contributions and Additional Employer Contributions until changed bythe Participant. A Participant may change the deemed allocation of their existing Participant Account at timesestablished by the Administrator.(c)A Participant may elect to reallocate the balance of their Accounts deemed to be invested in the investment funds underthis Section at the times established by the Committee.(d)All elections and designations under this Section shall be made in accordance with procedures prescribed by theCommittee. The Committee may prescribe uniform percentages for such elections and designations.(e)Any distribution of a Participant’s Account which is not a distribution of the entire account shall be taken pro rata fromeach of the investment funds in which the account is deemed to be invested.5.4Reports to ParticipantsThe Employer shall provide annual reports to each Participant showing (a) the value of the Account as of the most recentDecember 31st (b) the amount of contributions made by the Employer for the year ending on such date and (c) the amount ofany investment earnings or loss credited or debited to the Participant’s Account.13ARTICLE VIVESTINGA Participant shall be fully vested and nonforfeitable at all times in all of their Accounts herein.14ARTICLE VIIMANNER AND TIMING OF DISTRIBUTION7.1Payment of Benefits(a)After a Participant’s Separation from Service the Participant’s Account shall be paid to the Participant (or in the event ofthe Participant’s death, to the Participant’s Beneficiary). Payment shall be made in one of the following forms asspecified in the Participant’s payment election pursuant to Section 7.2:(i)Single Sum. A single sum distribution of the value of the balance of the Account on the first day of the secondmonth following the Participant’s Separation from Service; or(ii)Installments. This subparagraph (ii) shall only be applicable after April 30, 2006. The value of the balance ofthe Account shall be paid in annual installments with the first of such installment to be paid on the first day ofthe second month following the Participant’s Separation from Service and with subsequent annual installmentsto be paid on an anniversary of the payment of the first installment. Annual installments shall be paid in one ofthe alternative methods specified below over the number of years selected by the Participant in the paymentelection made pursuant to Section 7.2, but not to exceed 10. The earnings (or losses) provided for in Section5.1(e) shall continue to accrue on the balance remaining in the Account during the period of installmentpayments. The annual installment shall be calculated by multiplying the most recent value of the Account by afraction, the numerator of which is one, and the denominator of which is the remaining number of annualpayments due the Participant. By way of example, if the Participant elects a 10 year annual installment method,the first payment shall be one-tenth (1/10) of the Account balance. The following year, the payment shall beone-ninth (1/9) of the Account balance; or(iii)Other Methods and Prior Elections. Any other method authorized by the Plan Administrator as reflected on theParticipant's payment election and elected by the Participant. Payment methods previously allowable under thePlan, such as the percentage or fixed dollar method of payment, and previously elected by a Participant willremain in effect unless the Participant elects an alternative payment schedule pursuant to Section 7.2(c).(b)In the case of a Participant who is a Specified Employee, payment pursuant to paragraph (a) above shall commence noearlier than the first day of the seventh month following the Participant’s Separation from Service. This delay indistribution rule does not apply if the payment is being made as a result of the Participant’s death.157.2Payment Election(a)For each Plan Year, an individual who is or becomes a Participant at the beginning of such Plan Year shall, prior totheir date of participation for such Plan Year, complete a payment election form specifying the form of paymentapplicable to the portion of such Participant’s Account under the Plan attributable to participation for such Plan Year. Inthe event that a Participant does not make a timely payment election, a lump sum payment election will apply for thePlan Year in which the contributions are made.(b)An individual who first becomes a Participant other than on the first day of a Plan Year shall, no later than 30 days afterthe effective date of participation, complete a payment election form specifying the form of payment applicable to theportion of such Participant’s Account attributable to participation for such Plan Year. A “payment election form” shallmean the form established from time to time by the Administrator which a Participant completes, signs and returns tothe Administrator to make an election under the Plan. To the extent authorized by the Administrator, such form may beprovided electronically and, in such case, need not be signed by the Participant. In the event that a Participant does notmake a timely payment election, a lump sum payment election will apply for the Plan Year in which the contributionsare made.(c)A Participant may change the form of payment (for example, from installments to lump sum) or time of commencementof distribution (for example, from termination to ten years after termination) with respect to contributions related to anyspecific Plan Year by completing and filing a new payment election form with the Corporation. Such election willapply to the amount contributed for such Plan Year and the earnings on such amount.(i)The payment election form on file with the Corporation with respect to a particular portion of their Accountas of the date of the Participant’s Separation from Service shall be controlling with respect to such portionof their Account. Notwithstanding the foregoing, an election to change the form of payment with respect toa particular portion of a Participant's Account shall not be effective if they have a Separation from Servicewithin twelve (12) months after the date on which they file the election change with the Corporation.(A)For example, if a Participant elected to change from receiving a portion of their Account ininstallments (commencing on the October 1 following termination of employment) to receivingthat portion in a lump sum (on the October 1 following five (5) years after termination), but thenterminated ten months after making that new election, that new election would not be effective.The Participant would receive that portion of their Account in the installment method previouslyin effect.16(ii)Any change in payment method with respect to a particular portion of a Participant's Account mustresult in delaying the commencement of payments with respect to such portion of their Account to a datewhich is at least five (5) years following the previously scheduled commencement date.(A)For example, if a Participant was to receive a particular portion of their Account in installmentscommencing on the October 1 following termination, they could not receive a lump sum of thatportion of their Account until at least five (5) years after the installments were to commence (thatis, the October 1 following five (5) years after termination).(iii)For purposes of compliance with Code Section 409A, a series of installment payments is designated as asingle payment on the date the first installment payment is due to be made rather than a right to a seriesof separate payments; therefore, a Participant who has elected (or is deemed to have elected) any optionunder Section 7.1(a)(i), (ii) or (iii) with respect to a particular portion of their Account may substitute anyof the other options for the option originally selected with respect to such portion of their Account aslong as the foregoing one-year and five year rules are satisfied.(iv)For purposes of the right to change the form of payment or time of commencement of distribution underSection 7.2(c) above, all amounts credited to a Participant's Account (and earnings and losses on suchamounts) with respect to Plan Years commencing prior to January 1, 2019 shall be treated as made in asingle Plan Year, such that a change in the Plan Year commencing prior to January 1, 2019 will apply toall Plan Years of such Participant commencing prior to January 1, 2019.(d)The five year delay rule does not apply with respect to a particular portion of their Account if the revised paymentmethod applies only upon the Participant’s death. In the event that the Participant’s new payment election would not beeffective under the foregoing rules, the payment election previously in effect shall be controlling.7.3Financial HardshipA partial or total distribution of the Participant’s Account shall be made prior to Separation from Service upon the Participant’srequest and a demonstration by the Participant of severe financial hardship as a result of an Unforeseeable Emergency. Suchdistribution shall be made in a single sum as soon as administratively practicable following the Committee’s determination thatthe foregoing requirements have been met. In any case, a distribution due to Unforeseeable Emergency may not be made to theextent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by17liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, orby cessation of deferrals under Article IV and any other nonqualified deferred compensation plan of the account balance typesponsored by the Employer. Distributions because of an Unforeseeable Emergency must be limited to the amount reasonablynecessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, or local income taxesor penalties reasonably anticipated to result from the distribution). Determinations of amounts reasonably necessary to satisfythe emergency need must take into account any additional compensation that is available because of cancellation of a deferralelection under Article IV and any other nonqualified deferred compensation plan of the account balance type sponsored by theEmployer upon a payment due to an Unforeseeable Emergency. The payment may be made from any arrangement in whichthe Participant participates that provides for payment upon an Unforeseeable Emergency, provided that the arrangement underwhich the payment was made must be designated at the time of payment.7.4Delayed Distribution(a)A payment otherwise required to be made pursuant to the provisions of this Article VII shall be delayed if the Employerreasonably anticipates that the Employer’s deduction with respect to such payment would be limited or eliminated byapplication of Code Section 162(m); provided, however that such payment shall be made on the earliest date on whichthe Employer anticipates that the deduction of the payment of the amount will not be limited or eliminated byapplication of Code Section 162(m). In any event, such payment shall be made no later than the last day of the calendaryear in which the Participant has a Separation from Service or, in the case of a Specified Employee, the last day of thecalendar year in which occurs the six (6) month anniversary of such Separation from Service.(b)A payment otherwise required under this Article VII shall be delayed if the Employer reasonably determines that themaking of the payment will jeopardize the ability of the Employer to continue as a going concern; provided, however,that payments shall be made on the earliest date on which the Employer reasonably determines that the making of thepayment will not jeopardize the ability of the Employer to continue as a going concern.(c)A payment otherwise required under this Article VII shall be delayed if the Employer reasonably anticipates that themaking of the payment will violate federal securities laws or other applicable law; provided, however, that paymentsshall nevertheless be made on the earliest date on which the Employer reasonably anticipates that the making of thepayment will not cause such violation. (The making of a payment that would cause inclusion in gross income or theapplicability of any penalty provision or other provision of the Code is not treated as a violation of applicable law.)18(d)A payment otherwise required under this Article VII shall be delayed upon such other events and conditions as theInternal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.7.5Inclusion in Income Under Section 409ANotwithstanding any other provision of this Article VII, in the event this Plan fails to satisfy the requirements of Code Section409A and regulations thereunder with respect to any Participant, there shall be distributed to such Participant as promptly aspossible after the Administrator becomes aware of such fact of noncompliance such portion of the Participant’s Accountbalance hereunder as is included in income as a result of the failure to comply, but no more.7.6Domestic Relations OrderNotwithstanding any other provision of this Article VII, payments shall be made from the Account of a Participant in this Planto such individual or individuals (other than the Participant) and at such times as are necessary to comply with a domesticrelations order (as defined in Code Section 414(p)(1)(B)).7.7De Minimis AmountsNotwithstanding any other provision of this Article VII hereof, a Participant’s Account balance under this Plan and all othernonqualified deferred compensation plans of the account balance type shall automatically be distributed to the Participant on orbefore the later of December 31 of the calendar year in which occurs the Participant’s Separation from Service or the 15th dayof the third month following the Participant’s Separation from Service if the total amount in such Account balance at the time ofdistribution, when aggregated with all other amounts payable to the Participant under all arrangements benefiting the Participantdescribed in IRS Regulations Section 1.409A-1(c) (or any successor thereto), do not exceed the amount described in CodeSection 402(g)(1)(B). The foregoing lump sum payment shall be made automatically and any other distribution electionsotherwise applicable with respect to the individual in the absence of this provision shall not apply.7.8Overpayments(a)Any overpayments must be returned to the Plan by the recipient.(b)The Plan and its agents are authorized to (A) recoup overpayments plus any earnings or interest, and (B) if necessaryand permissible consistent with Section 409A, offset any overpayments that are not returned against other Plan benefitsto which the recipient is or becomes entitled.19ARTICLE VIIIPLAN OPERATION AND ADMINISTRATION8.1AdministratorThe Committee shall be the plan administrator and shall be responsible for and perform the duties imposed on a planadministrator.8.2CommitteeThe Committee shall have the power and duty to administer the Plan in accordance with its terms, including, but not limited to,the following:(a)to make and enforce such rules and regulations as it may deem necessary or desirable for the efficient administration ofthe Plan;(b)to interpret the Plan, including the right to remedy possible ambiguities, inconsistencies or omissions;(c)to decide all questions related to participation in, and payment of amounts under, the Plan, including all factualquestions related thereto; and(d)to maintain all necessary records for the administration of the Plan.8.3Authority to ActBrady Corporation or the Committee may authorize one or more of Brady Corporation’s employees, members, representativesor agents, as applicable, to execute on its behalf instructions or directions to any interested party, and any such interested partymay rely thereupon and the information contained therein.8.4Information from ParticipantsEach Participant and Beneficiary shall furnish the Committee in the form prescribed by it and at its request, such personal data,affidavits, authorizations to obtain information, or other information as the Committee deems necessary or desirable for theadministration of the Plan.8.5Committee DiscretionThe Committee has full and complete discretionary authority to determine eligibility for benefits, to construe the terms of thePlan and to decide any matter presented through the claims review procedure. Any final determination by the Committee(including claims decisions made pursuant to Article IX) shall be binding on all parties and afforded the maximum deferenceallowed by law. If challenged in court, such determination shall not20be subject to de novo review and shall not be overturned unless proven to be arbitrary and capricious upon the evidenceconsidered by the Committee at the time of such determination.8.6Committee Members’ Conflict of InterestA member of the Committee who is covered hereunder may not vote or decide upon any matter relating solely to himself orvote in any case in which their individual right to any benefit under the Plan is particularly involved. Decisions shall be madeby remaining Committee or Board members even if there is no quorum under normal Committee or Board rules.8.7Governing LawThis Plan shall be construed in accordance with the laws of the State of Wisconsin to the extent not preempted by theprovisions of the Employee Retirement Income Security Act of 1974, as amended, or other federal law.8.8ExpensesAll expenses and costs incurred in connection with the administration and operation of the Plan shall be borne by the Employerand/or the Trust.8.9Minor or Incompetent PayeesIf a person to whom a benefit is payable is a minor or is otherwise incompetent by reason of a physical or mental disability, theCommittee may cause the payments due to such person to be made to another person for the first person’s benefit without anyresponsibility to see to the application of such payment. Such payments shall operate as a complete discharge of the obligationsto such person under the Plan.8.10WithholdingThe Employer shall comply with all applicable tax and governmental withholding requirements.8.11IndemnificationExcept as otherwise provided by law, neither the Board nor the Committee nor any individual member of the Board or theCommittee, nor the Employer, nor any officer, shareholder or employee of the Employer shall be liable for any error ofjudgment, action or failure to act hereunder or for any good faith exercise of discretion, excepting only liability for grossnegligence or willful misconduct. Such individuals and entities shall be indemnified and held harmless by the Employer againstany and all claims, damages, liabilities, costs and expenses (including attorneys’ fees) arising by reason of any good faith errorof omission or commission with respect to any responsibility, duty or action hereunder. Nothing herein contained shall precludethe Employer from purchasing insurance to cover potential liability of one or more persons who serve in an administrativecapacity with respect to the Plan.21ARTICLE IXCLAIMS PROCEDURE9.1ClaimsIf the Participant or the Participant’s Beneficiary (hereinafter referred to as a “Claimant”) is denied all or a portion of anexpected benefit under the Plan for any reason, they may file a claim with the Committee or its designee. The Committee or itsdesignee shall notify the Claimant within 60 days of allowance or denial of the claim, unless the Claimant receives writtennotice prior to the end of the sixty (60) day period stating that special circumstances require an extension of the time fordecision and specifying the expected date of decision. The notice of such decision shall be in writing, sent by mail to theClaimant’s last known address, and if a denial of the claim, must contain the following information:(a)the specific reasons for the denial;(b)specific reference to pertinent provisions of the Plan on which the denial is based;(c)if applicable, a description of any additional information or material necessary to perfect the claim, an explanation ofwhy such information or material is necessary, and an explanation of the claims review procedure; and(d)a description of the Plan’s claims review procedure, including a statement of the Claimant’s right to bring a civil actionunder Section 502 of ERISA if the Claimant’s claim is denied upon review.9.2ReviewA Claimant is entitled to request a review of any denial of their claim. The request for review must be submitted in writing tothe Committee within 60 days after receipt of the notice of the denial. The timely filing of such a request is necessary topreserve any legal recourse which may be available to the Claimant and, absent the submission of request for review within the60-day period, the claim will be deemed to be conclusively denied. Upon submission of a written request for review, theClaimant or their representative shall be entitled to review all pertinent documents, and to submit issues and comments inwriting for consideration by the Committee. The Committee shall fully and fairly review the matter and shall consider allinformation submitted in the review request, without regard to whether or not such information was submitted or considered inthe initial claim determination. The Committee shall promptly respond to the Claimant, in writing, of its decision within 60 daysafter receipt of the review request. However, due to special circumstances, if no response has been provided within the first 60days, and notice of the need for additional time has been furnished within such period, the review and response may be madewithin the following 60 days. The Committee’s decision shall include specific reasons for the decision, including references tothe particular Plan provisions upon which the decision is based, notification that the Claimant can receive or review copies ofall documents, records and information22relevant to the claim, and information as to the Claimant’s right to file suit under Section 502(a) of ERISA.9.3Additional claims requirementsExcept as required by law or except to the extent the following would violate Section 409A:(a)A Claimant must exhaust all administrative remedies under the Plan before seeking judicial review;(b)A Claimant must bring a legal action (including, but not limited to, a civil action under Section 502(a) of ERISA withrespect to any ERISA Plan) within a reasonable period following a final decision of an adverse benefit determination(or, in the absence of such a final decision, within a reasonable period following the date the final decision should havebeen issued under the Plan); and(c)Claimant may not present in any legal action evidence not timely presented to the Plan Administrator as part of thePlan’s administrative review process.23ARTICLE XAMENDMENT AND TERMINATIONBrady Corporation (through its Board of Directors or authorized officers or employees and/or the Committee) reserves the rightto alter or amend the Plan, or any part thereof, in such manner as it may determine, at any time and for any reason. Further, the Boardof Directors of Brady Corporation reserves the right to terminate the Plan, at any time and for any reason. Notwithstanding theforegoing, in no event shall any amendment or termination deprive any Participant or Beneficiary of any amounts credited to themunder this Plan as of the date of such amendment or termination; provided, however, that Brady Corporation may prospectively changethe manner in which earnings are credited or discontinue the crediting of earnings and, further, Brady Corporation may make anyamendment it deems necessary or desirable for purposes of compliance with the requirements of Code Section 409A and regulationsthereunder.If the Plan is amended to freeze benefit accruals, no additional deferrals or contributions shall be credited to any ParticipantAccount hereunder. Following such a freeze of benefit accruals, Participants’ Accounts shall be paid at such time and in such form asprovided under Article VII of the Plan. If the Employer terminates the Plan and if the termination is of the type described in regulationsissued by the Internal Revenue Service pursuant to Code Section 409A, then the Employer shall distribute the then existing Accountbalances of Participants and beneficiaries in a lump sum within the time period specified in such regulations and, following suchdistribution, there shall be no further obligation to any Participant or beneficiary under this Plan. However, if the termination is not ofthe type described in such regulations, then following Plan termination Participants’ Accounts shall be paid at such time and in suchform as provided under Article VII of the plan.24ARTICLE XIMISCELLANEOUS PROVISIONS11.1HeadingsThe headings of the Plan have been inserted for convenience of reference and shall be ignored in the construction of theprovisions herein.11.2No Contract of EmploymentThe existence of the Plan shall not create or change any contract, express or implied, between the Employer and its employeesand shall not affect the Employer’s right to take any action with respect to its employees.11.3Rights of Participants and BeneficiariesThe interest and rights of a Participant and Beneficiary under the Plan shall be those of a general unsecured creditor of theEmployer, and with respect to the creditors of the Employer, no Participant or Beneficiary shall have any preferred claims on,or any beneficial ownership in, the assets of the Employer, including any assets in which the Employer may invest to aid inmeeting its obligations under the Plan.11.4Nonalienation of BenefitsAll benefits payable hereunder are for the sole use and benefit of the Participants and their Beneficiaries and, to the extentpermitted by law, shall be free, clear and discharged of and from, and are not to be in any way liable for, debts, contracts oragreements, now contracted or which may hereafter be contracted and from all claims and liabilities now or hereafter incurredby any Participant or Beneficiary covered by this Plan. No Participant or Beneficiary covered by this Plan shall have the rightto anticipate, surrender, encumber, alienate or assign, whether voluntarily or involuntarily, any of the benefits to become duehereunder unto any person or person upon any terms whatsoever, and any attempt to do so shall be void.11.5Tax TreatmentThere is no commitment or guarantee with respect to the tax treatment to be accorded to a Participant or Beneficiary under thePlan.11.6Other Plans and Agreements(a)Participation in the Plan shall not affect a Participant’s rights to participate in and receive benefits under any other plansof the Employer, nor shall it affect their rights under any other agreement entered into with the Employer, unlessexplicitly provided otherwise by such agreement.25(b)Any amount credited under or paid pursuant to the Plan shall not be treated as wages, salary or any other type ofcompensation or otherwise taken into account in the determination of the Participant’s benefits under any other plans ofthe Employer, unless explicitly provided otherwise by such plan.11.7Number and GenderThe use of the singular shall be interpreted to include the plural and the plural the singular, as the context shall require. The useof the masculine, feminine or neuter shall be interpreted to include the masculine, feminine or neuter, as the context shallrequire.11.8Plan Provisions ControllingIn the event of any conflict between the provisions of the Plan and the provisions of a summary or description of the Plan or theterms of any agreement or instrument related to the Plan, the provisions of the Plan shall be controlling.11.9SeverabilityIf any provisions of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect theremaining parts of the Plan, but this Plan shall be construed and enforced as if the illegal and invalid provisions had never beenincluded herein.11.10Evidence ConclusiveThe Employer, the Committee and any person or persons involved in the administration of the Plan shall be entitled to relyupon any certification, statement, or representation made or evidence furnished by any person with respect to any facts requiredto be determined under any of the provisions of the Plan, and shall not be liable on account of the payment of any monies or thedoing of any act or failure to act in reliance thereon. Any such certification, statement, representation, or evidence, upon beingduly made or furnished, shall be conclusively binding upon the person furnishing it but not upon the Employer, the Committeeor any other person involved in the administration of the Plan. Nothing herein contained shall be construed to prevent any ofsuch parties from contesting any such certification, statement, representation, or evidence or to relieve any person from the dutyof submitting satisfactory proof of any fact.11.11Status of Plan Under ERISAThe Plan is intended to be an unfunded plan maintained by an Employer primarily for the purpose of providing deferredcompensation for a select group of management or highly compensated employees, as described in Section 201(2), Section301(a)(3), Section 401(a)(1) and Section 4021(b)(6) of the Employee Retirement Income Security Act of 1974, as amended.2611.12Name and Address ChangesEach Participant shall keep their name and address on file with the Employer and shall promptly notify the Employer of anychanges in their name or address. All notices required or contemplated by this Plan shall be deemed to have been given to aParticipant if mailed with adequate postage prepaid thereon addressed to them at their last address on file with the Employer. Ifany check in payment of a benefit hereunder (which was mailed to the last address of the payee as shown on the Employer’srecords) is returned unclaimed, further payments shall be discontinued unless evidence is furnished that the recipient is stillalive.11.13Assignability by CorporationThe Employer shall have the right to assign all of its right, title and obligation in and under this Plan upon a merger orconsolidation in which the Employer is not the surviving entity or to the purchaser of substantially its entire business or assetsor the business or assets pertaining to a major product line, provided such assignee or purchaser assumes and agrees to performafter the effective date of such assignment all of the terms, conditions and provisions imposed by this Plan upon the Employer.Upon such assignment, all of the rights, as well as all obligations, of the Employer under this Plan shall thereupon cease andterminate.11.14Special Rule for 2005-2007Notwithstanding the usual rules regarding distribution elections contained in Article VII, a Participant, on or before December31, 2007, may make an election as to distribution of their Account from among the choices described in Section 7.1 hereofwithout complying with the rules described in Section 7.2 hereof as long as the effect of the election is not to acceleratepayments into 2006 or to defer payments which would otherwise have been made in 2006 or to accelerate payments into 2007or to defer payments which would otherwise have been made in 2007. Such election shall become effective after the last dayupon which it is permitted to be made. In order to change any such election after it has become effective, the requirements ofSection 7.2 hereof must be satisfied.IN WITNESS WHEREOF, the Employer has caused its duly authorized officer to execute this Plan document on its behalfthis 17th day of July, 2018.BRADY CORPORATIONBy: /s/ J. MICHAEL NAUMANAttest: /s/ AARON J. PEARCE 27EXHIBIT 10.58BRADY CORPORATIONNONQUALIFIED STOCK OPTIONUpon management’s recommendation, the Management Development and Compensation Committee (the “Committee”) ofthe Brady Corporation Board of Directors has awarded to _______________ (“Employee”) a non-qualified stock option (the“Option”) effective _______________, 20__, pursuant to the terms of the Brady Corporation 2017 Omnibus Incentive Plan (the“Plan”). The Corporation’s records shall be the official record of the Option grant described herein and, in the event of any conflictbetween this description and the Corporation’s records, the Corporation’s records shall control.1.Number of Shares Optioned; Grant PriceThe Corporation grants to the Employee the right and option to purchase, on the terms and conditions hereof, all or any part ofan aggregate of X,XXX 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 $XX.XX per Share (the “Grant Price”).2.Conditions of Exercise of Options During Employee’s Lifetime; Vesting of OptionExcept as provided in this Section and in Section 3, this Option may not be exercised (a) unless Employee is at the date of theexercise in the employ of the Corporation or an Affiliate, and (b) until Employee shall have been continuously so employedfor a period of at least one year from the date hereof. Thereafter, this Option shall be exercisable for any amount of Shares upto the maximum percentage of Shares covered by this Option (rounded up to the nearest whole Share), as follows (but in noevent shall this Option be exercisable for any Shares after the expiration date provided in Section 7):Number of Completed Years After Grant DateMaximum Percentage of Shares ForWhich Option is ExercisableLess than 1ZeroAt least 1 but less than 233-1/3%At least 2 but less than 366-2/3%At least 3100%If Employee shall cease to be employed by the Corporation or an Affiliate for any reason other than as provided in Section 3after Employee shall have been continuously so employed for one year after the grant of this Option, Employee may, at anytime within 90 days of such termination, but in no event later than the date of expiration of this Option, exercise this Option tothe extent Employee was entitled to do so on the date of such termination. Notwithstanding the foregoing, this Option shallimmediately expire if Employee is terminated for Cause; provided that for purposes of this Agreement a termination for poorperformance shall not be considered a termination for Cause. This Agreement does not confer upon Employee any right ofcontinuation of employment by the Corporation or an Affiliate, nor does it impair any right the Corporation or any Affiliatemay have to terminate the Employee’s employment at any time.3.Termination of EmploymentNotwithstanding the provisions of Section 2 hereof, if the Employee:a)is terminated by the death of the Employee, any unexercised, unexpired Stock Options granted hereunder to theEmployee shall be 100% vested and fully exercisable, in whole or in part, at any time within one year after the date ofdeath, by the Employee’s personal representative or by the person to whom the Stock Options are transferred under theEmployee’s last will and testament or the applicable laws of descent and distribution;b)is terminated as a result of the Disability of the Employee, any unexercised, unexpired Stock Options grantedhereunder to the Employee shall become 100% vested and fully exercisable, in whole or in part, at any time within oneyear after the date of Disability; orc)is terminated as a result of the Employee’s retirement (after age 60 with five years of employment with the Corporationor an Affiliate), any unexercised, unexpired Stock Options granted hereunder to the Employee shall continue to vest asprovided in Section 2 hereof and any Stock Options that are or become vested may be exercised, in whole or in part, atany time prior to the expiration date of such option.4.Deferral of ExerciseAlthough the Corporation intends to exert its best efforts so that the Shares purchasable upon the exercise of this Option willbe registered under, or exempt from, the registration requirements of, the Securities Act of 1933 (the “Act”) and any applicablestate securities law at the time or times this Option (or any portion of this Option) first becomes exercisable, if the exercise ofthis 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 anysuch violation.5.Method of Exercising OptionThis Option shall be exercised by delivering to the Corporation, at the office of its Treasurer, a written notice of the number ofShares with respect to which this Option is at the time being exercised and by paying the Corporation in full the Grant Price ofthe Shares being acquired at the time.6.Method of PaymentPayment shall be made either: (a) in cash, (b) by check, (c) by tendering (either by actual delivery or by attestation) previouslyacquired Shares (“Delivered Stock”), (d) by surrendering to the Corporation Shares otherwise receivable upon exercise of theStock Option (a "Net Exercise"), (e) by a cashless (broker-assisted) exercise, (f) any combination of the foregoing or (g) byany other method approved or accepted by the Administrator. Payment in the form of Delivered Stock shall be in the amountof the Fair Market Value of the Shares at the date of exercise and Shares used in a Net Exercise shall be valued at their FairMarket Value determined as of the date of exercise of the Stock Option, with Fair Market Value determined in accordancewith Section 9.7.Expiration DateThis Option shall expire ten years after the date on which this Option was granted.8.Withholding TaxesThe Corporation may require, as a condition to the exercise of this Option, that the Employee concurrently pay to theCorporation (either in cash or, at the request of Employee, but subject to such rules and regulations as the Administrator mayadopt from time to time, in Shares of Delivered Stock) the entire amount or a portion of any taxes which the Corporation isrequired to withhold by reason of such exercise, in such amount as the Administrator or the Corporation in its discretion maydetermine. The Employee may, subject to such rules and regulations as the Corporation may adopt from time to time, elect tohave the Corporation hold back from the Shares to be issued upon the exercise of the Option, Shares, the Fair Market Value ofwhich is to be applied to the Employee's withholding obligations; provided that the Shares withheld may not have a FairMarket Value exceeding the maximum statutory tax rates in the Employee’s applicable jurisdictions.9.Method of Valuation of StockThe “Fair Market Value” of a Share on any date shall mean, if the stock is then listed and traded on a registered nationalsecurities exchange, or is quoted in the NASDAQ National Market System, the average of the high and low sales pricerecorded in composite transactions for such date or, if such date is not a business day or if no sales of Shares shall have beenreported with respect to such date, the next preceding business date with respect to which sales were reported. In the absenceof reported sales or if the stock is not so listed or quoted, but is traded in the over-the-counter market, Fair Market Value shallbe the average of the closing bid and asked prices for such Shares on the relevant date.10.Confidentiality, Non-Solicitation and Non-CompeteAs consideration for the grant of this Option, Employee agrees to, understands and acknowledges the following:During Employee's employment with the Corporation and its Affiliates (the "Company"), the Company will provideEmployee with Confidential Information relating to the Company, its business and clients, the disclosure or misuse of whichwould cause severe and irreparable harm to the Company. During Employee’s employment with Company, and for a two (2)-year period thereafter, Employee agrees not to use or disclose Company’s Confidential Information except as necessary inexecuting Employee’s duties for Company. Employee shall keep Confidential Information constituting a trade secret underapplicable law confidential for so long as such information constitutes a trade secret (i.e., protection as to trade secrets shall notnecessarily expire at the end of the two (2)-year period). Upon the termination of Employee's employment with the Companyfor any reason, Employee shall immediately return to the Company all documents and materials that contain or constituteConfidential Information, in any form whatsoever, including but not limited to, all copies, abstracts, electronic versions, andsummaries thereof. As to any electronically stored copies of Confidential Information, Employee shall contact their supervisoror Company’s General Counsel to discuss the proper method for returning such items. Employee hereby consents and agreesthat Company may access any of Employee’s personal computers and other electronic storage devices (including personalphones) and any electronic storage accounts (such as dropbox) so as to allow Company to ascertain the presence ofCompany’s Confidential Information and how such information has been used by Employee and to remove any such itemsfrom such devices and accounts. Employee further agrees that, without the written consent of the Chief Executive Officer ofthe Corporation or, in the case of the Chief Executive Officer of the Corporation, without the written approval of the Board ofDirectors of the Corporation, Employee will not disclose, use, copy or duplicate, or otherwise permit the use, disclosure,copying or duplication of any Confidential Information of the Company, other than in connection with the authorized activitiesconducted in the course of Employee's employment with the Company. Employee agrees to take all reasonable steps andprecautions to prevent any unauthorized disclosure, use, copying or duplication of Confidential Information. For purposes ofthis Agreement, Confidential Information means any and all financial, technical, commercial or other information concerningthe business and affairs of the Company that is confidential and proprietary to the Company, including without limitation,(i)information relating to the Company’s past and existing customers and vendors and development ofprospective customers and vendors, including specific customer product requirements, pricing arrangements,payments terms, customer lists and other similar information;(ii)inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed orotherwise produced, acquired or used by the Company;(iii)the Company’s proprietary programs, processes or software, consisting of but not limited to, computerprograms in source or object code and all related documentation and training materials, including all upgrades,updates, improvements, derivatives and modifications thereof and including programs and documentation inincomplete stages of design or research and development;(iv)the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, servicemarks, trade names, trade dress, manuals, operating instructions, training materials, and other industrialproperty, including such information in incomplete stages of design or research and development; and(v)other confidential and proprietary information or documents relating to the Company’s products, business andmarketing plans and techniques, sales and distribution networks and any other information or documents whichthe Company reasonably regards as being confidential.(vi)Confidential Information does not include information which: (i) is already available to the public withoutwrongful act or breach by Employee; (ii) becomes available to the public through no fault of Employee; or (iii)is required to be disclosed pursuant to a court order or order of government authority, provided that Employeepromptly notifies Company of such request so Company may seek a protective ordera)Post-Employment Customer Non-Solicitation Agreement. For one (1) year following Employee’s separation fromCompany, Employee will not contact-or support others in contacting-customers of Company with whom Employeehad business contact during the last two (2) years of Employee’s employment with Company, for the purpose ofselling or providing products or services competitive with those offered by Company (“Competitive Products”).“Competitive Products” shall mean products and services competitive with those products and services for whichEmployee was responsible during the last two (2) years of Employee’s employment with Company.b)Post-Employment Non-Solicitation Agreement Based Upon Customer Knowledge. For one (1) year followingEmployee’s separation from Company, Employee will not contact-or support others in contacting-customers ofCompany about whom Employee possesses Confidential Information or for whom Employee supervised others inserving during the last two (2) years of Employee’s employment with Company, for the purpose of selling orproviding products or services competitive with those offered by Company (“Competitive Products”). “CompetitiveProducts” shall mean products and services competitive with those products and services for which Employee wasresponsible during the last two (2) years of Employee’s employment with Company.c)Post-Employment Non-Compete Agreement. For one (1) year following Employee’s separation from Company,Employee will not, directly or indirectly, within the United States, provide services similar to any of those Employeeprovided to Company during the last two (2) years of Employee’s employment with Company to a competitor ofCompany or a person or entity preparing to compete with Company. If Employee’s services to Company at all timesduring their last two (2) years of employment were limited to particular subsidiaries or affiliates (Tricor Direct, Inc.,Precision Dynamics Corporation, etc.) or divisions (WPS, IDS, PeopleID, etc.), then the term “competitor” as used inthis paragraph will be limited to competitors of all such subsidiaries, affiliates, and divisions.d)Post-Employment Restriction on Working With Competitive Products. For one (1) year following Employee’sseparation from Company, Employee will not, work in the development, design, modification, improvement, orcreation of products or services competitive with any products or services with which Employee was involved in thedevelopment, design, modification, improvement or creation for Company during the last two (2) years of Employee’semployment.e)Post-Employment Restriction on Advising Investors. For one (1) year following Employee’s separation fromCompany, Employee will not, directly or indirectly, advise a private equity firm or other investor regarding buying,investing in, or divesting from Company or any of its competitors.f)Post-Employment Restriction on Soliciting Employees. For one (1) year following Employee’s separation fromCompany, Employee will not solicit or encourage Key Employees of Company to provide services to a competitor ofCompany or to otherwise terminate their relationship with Company. “Key Employees” are employees or contractorswhom Employee supervised, who supervised Employee, or with whom Employee had significant business contactduring Employee’s last year of employment with Company and who work for or serve Company as an engineer,manager, executive, sales employee, professional, or director.g)Duty of Loyalty and Related Obligations. Employee acknowledges and agrees that Employee owes Company a dutyof loyalty while employed by Company. During Employee’s employment with Company, Employee agrees not totake action that will harm Company, such as, encouraging employees, vendors, suppliers, contractors, or customers toterminate their relationships with Company, usurping a business opportunity from Company, engaging in conduct thatwould injure Company’s reputation, providing services or assistance to a competitive enterprise, or otherwisecompeting with Company.h)Non-Disparagement and Social Media. Employee agrees not to disparage Company or any of its officers, directors, oremployees on social media, on any public platform, or to persons external to Company when such comments have thepotential to harm Company (i.e., making disparaging comments about Company to distributors, customers, suppliers,etc.).i)Other Business Relationships. Employee agrees, for a one (1)-year period following Employee’s separation fromCompany, not to encourage or advise any vendors, suppliers, or others possessing a business relationship withCompany to terminate that relationship or to otherwise modify that relationship to Company’s detriment.j)Employee acknowledges and agrees that compliance with this Section 10 is necessary to protect the Company, andthat a breach of any of this Section 10 will result in irreparable and continuing damage to the Company for which therewill be no adequate remedy at law. In the event of a breach of this Section 10, or any part thereof, the Company, andits successors and assigns, shall be entitled to injunctive relief and to such other and further relief as is proper under thecircumstances. The Company shall institute and prosecute proceedings in any Court of competent jurisdiction either inlaw or in equity to obtain damages for any such breach of this Section 10, or to enjoin Employee from performingservices in breach of Section 10(b) during the term of employment and for a period of 12 months following thetermination of employment. Employee hereby agrees to submit to the jurisdiction of any Court of competentjurisdiction in any disputes that arise under this Agreement.k)Employee further agrees that, in the event of a breach of this Section 10, the Corporation may elect to recover all orany part of the value of any amounts previously paid or payable or any Shares (or the value of any Shares) delivered ordeliverable to Employee pursuant to any Company bonus program, this Agreement, and any other Company plan orarrangement.l)Employee agrees that the terms of this Section 10 shall survive the termination of Employee's employment with theCompany.m)EMPLOYEE HAS READ THIS SECTION 10 AND AGREES THAT THE CONSIDERATION PROVIDEDBY THE CORPORATION IS FAIR AND REASONABLE AND FURTHER AGREES THAT GIVEN THEIMPORTANCE TO THE COMPANY OF ITS CONFIDENTIAL AND PROPRIETARY INFORMATION, THEPOST-EMPLOYMENT RESTRICTIONS ON EMPLOYEE'S ACTIVITIES ARE LIKEWISE FAIR ANDREASONABLE.11.ClawbackThis Option is subject to the terms of the Corporation's recoupment, clawback or similar policy as it may be in effect from timeto time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment orforfeiture of Awards or any Shares or other cash or property received with respect to the Awards (including any valuereceived from a disposition of the Shares acquired upon payment of the Awards).12.No Rights in Shares Until Certificates IssuedNeither the Employee nor his heirs nor his personal representative shall have any of the rights or privileges of a stockholder ofthe Corporation in respect of any of the Shares issuable upon the exercise of the Option herein granted, unless and untilcertificates representing such Shares shall have been issued or Shares in book entry form shall have been recorded in therecords of the Corporation’s transfer agent.13.Option Not TransferableNo portion of the Option granted hereunder shall be transferable or assignable (or made subject to any pledge, lien, obligationor liability of an Employee) except (a) by last will and testament or the laws of descent and distribution (and upon a transfer orassignment pursuant to an Employee’s last will and testament or the laws of descent and distribution, any Option must betransferred in accordance therewith); (b) during the Employee’s lifetime, nonqualified stock Options may be transferred by anEmployee to the Employee’s spouse, children or grandchildren or to a trust for the benefit of such spouse, children orgrandchildren, provided that the terms of any such transfer prohibit the resale of Shares acquired upon exercise of the option ata time during which the transferor would not be permitted to sell such Shares under the Corporation’s policy on trading byinsiders.14.Prohibition Against Pledge, Attachment, Etc.Except as otherwise herein provided, the Option herein granted and the rights and privileges pertaining thereto shall not betransferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subjectto execution, attachment or similar process.15.Change in ControlAnything contained herein to the contrary notwithstanding, in the event of a Change in Control (as defined in Exhibit A), thisOption shall become fully vested and exercisable. The Administrator may elect to cancel the Option. If the Option is canceled,the Corporation, or the corporation assuming the obligations of the Corporation hereunder, shall pay the Employee an amountof cash or stock, as determined by the Administrator, equal to the number of Shares subject to the canceled Option multipliedby the difference between the Grant Price per Share, as described in Section 1 hereof, and the Fair Market Value per share,determined in accordance with Section 9 hereof, as of the time of surrender. No event described in Section 13.05 of the Planshall cause the Option to become fully vested and exercisable unless such event is a Change in Control (as defined in ExhibitA).16.NoticesAny notice to be given to the Corporation under the terms of this Agreement shall be addressed to the Corporation in care ofits Chief Financial Officer, and any notice to be given to the Employee may be addressed at the address as it appears on theCorporation’s records, or at such other address as either party may hereafter designate in writing to the other. Except asprovided in Section 5 hereof, any such notice shall be deemed to have been duly given, if and when enclosed in a properlysealed envelope addressed as aforesaid, and deposited, postage prepaid, in the United States mail.17.Provisions of Plan ControllingThis Option is subject in all respects to the provisions of the Plan. In the event of any conflict between any provisions of thisOption and the provisions of the Plan, the provisions of the Plan shall control, except to the extent the Plan permits theCommittee to modify the terms of an Option grant and has done so herein. Terms defined in the Plan where used herein shallhave the meanings as so defined. Employee acknowledges receipt of a copy of the Plan.18.Wisconsin ContractThis Option has been granted in Wisconsin and shall be construed under the laws of that state.19.SeverabilityWherever possible, each provision of this Option will be interpreted in such manner as to be effective and valid underapplicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision will beineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or theremaining provisions hereof. A court of competent jurisdiction is expressly authorized to modify overbroad provisions so as tomake them enforceable to the maximum extent permitted by law and is further authorized to strike whole provisions thatcannot be so modified.20.At-Will Employment.Nothing in this Agreement is intended to change Employee’s status as an at-will employee. Employee understands thatEmployee is an at-will employee and that Employee’s employment can be terminated at any time, with or without notice orcause, by either Employee or Corporation.21.Notice of Immunity.In accordance with the Defend Trade Secrets Act, Employee is hereby advised that:An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a tradesecret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose ofreporting or investigating a suspected violation of law. An individual shall not be held criminally or civilly liable under anyfederal or state trade secret law for the disclosure of a trade secretthat is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Anindividual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the tradesecret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files anydocument containing the trade secret under seal; and does not disclose the trade secret, except pursuant to court order.IN WITNESS WHEREOF, the Corporation has granted this Option as of the day and year first above written.BRADY CORPORATIONBy: J. MICHAEL NAUMAN Name: J. Michael NaumanIts: President and Chief Executive OfficerEMPLOYEE'S ACCEPTANCEI, _______________, hereby accept the foregoing Option Award and agree to the termsand conditions thereof, including the restrictions contained in Section 10 of thisAgreement.EMPLOYEE:Signature: _______________Print Name: _______________ EXHIBIT AChange in Control DefinitionA “Change in Control” means the occurrence of any one of the following events:(a)A direct or indirect acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaningof Rule 13d-3 of the Exchange Act) of voting securities of the Company where such acquisition causes any such Person to own morethan 50% of the combined voting power of the Company’s voting securities entitled to vote generally in the election of directors (the“Outstanding Company Voting Securities”); provided, however, that the following shall not be deemed to result in a Change inControl, (i) any acquisition or holding by the members of the family of William H. Brady Jr. and their descendants or trusts for theirbenefit, and the William H. Brady III Living Trust, (ii) any acquisition directly from the Company, other than an acquisition by virtueof the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (iii)any acquisition by the Company or a wholly owned Subsidiary, (iv) any acquisition by any employee benefit plan (or related trust)sponsored or maintained by the Company or any entity controlled by the Company,(i)any underwriter temporarily holding securities pursuant to an offering of such securities, or(ii)any acquisition by any entity pursuant to a transaction which complies with clauses (i), (ii) and(iii) of subsection (c) of this definition; or(b)A change in the composition of the Board such that the individuals who, as of August 1, 2016, constitute the Board(the “Incumbent Board”) cease for any reason to constitute a majority of the Board; provided, however, that any individual whobecomes a member of the Board subsequent to August 1, 2016, whose election, or nomination for election by the Company’sshareholders, was approved by a vote of a majority of those individuals then comprising the Incumbent Board shall be considered asthough such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initialassumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal ofdirectors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not beso considered as a member of the Incumbent Board; provided, further, however, that a director who has been approved by membersof the family of William H. Brady Jr. and their descendants or trusts for their benefit, and the William H. Brady III Living Trust whilethey beneficially own collectively more than 50% of the combined voting power of the then outstanding voting securities of theCompany entitled to vote generally in the election of directors shall be deemed to be an Incumbent Director; or(c)Approval by the shareholders of the Company and the subsequent consummation of a reorganization, merger orconsolidation (a “Business Combination”), in each case, unless, following such Business Combination: (i) all or substantially all of theindividuals and entities who were the beneficial owners, respectively, of the total number of outstanding shares of both Class ACommon Stock and Class B Common Stock (the “Outstanding Company Common Stock”) and Outstanding Company VotingSecurities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of,respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securitiesentitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination(including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or through one or more subsidiaries); (ii) no Person (excluding anyemployee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficiallyowns, directly or indirectly, fifty percent (50%) or more of, respectively, the then outstanding shares of common stock of thecorporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of suchcorporation except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of themembers of the board of directors of the corporation resulting from such Business Combination were members of the IncumbentBoard at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination, or(d)Approval by the shareholders of the Company and the subsequent consummation of(i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of theCompany, unless the sale or other disposition is to a corporation, with respect to which following such sale or other disposition, (A)all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the total number of outstandingshares of both Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale orother disposition beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares ofcommon stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election ofdirectors of such other corporation, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or suchcorporation) beneficially owns, directly or indirectly, fifty percent (50%) or more of, respectively, the then outstanding shares ofcommon stock of such corporation or the combined voting power of the then outstanding voting securities of such corporation exceptto the extent that such ownership existed prior to the sale or other disposition, and (C) at least a majority of the members of the boardof directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of theaction of the Board, providing for such sale or other disposition of assets of the Company or were elected, appointed or nominated bythe Board.Notwithstanding the foregoing, for purposes of any Award subject to Section 409A of the Code, no Change in Control shalldeemed to have occurred upon an event described in this definition unless the event constitutes a change in ownership of theCompany, a change in effective control of the Company, a change in ownership of a substantial portion of the Company’s assets,each under Section 409A of the Code or otherwise constitutes a change on control within the meaning of Section 409A of the Code;provided, however, if the Company treats an event as a Change in Control that does not meet the requirements of Section 409A of theCode, such Award shall be paid when it would otherwise have been paid but for the Change in Control.EXHIBIT 10.59BRADY CORPORATIONRESTRICTED STOCK UNIT AGREEMENTUpon management’s recommendation, the Management Development and Compensation Committee (the “Committee”) ofthe Brady Corporation Board of Directors has awarded to _______________ (“Employee”) a restricted stock unit award effective_______________, 20__, pursuant to the terms of the Brady Corporation 2017 Omnibus Incentive Plan (the “Plan”). TheCorporation’s records shall be the official record of the grant described herein and, in the event of any conflict between thisdescription and the Corporation’s records, the Corporation’s records shall control.1.Number of UnitsThis Restricted Stock Unit Award applies to X,XXX Shares of the presently authorized Class A Nonvoting Common Stockof the Corporation, $.01 par value (the “Restricted Stock Units”). The Restricted Stock Units granted under this Agreementare units that will be reflected in a book account maintained by the Corporation until they become vested or have beenforfeited.2.Service Vesting RequirementThe vesting of this Award (other than pursuant to accelerated vesting in certain circumstances as provided in Section 3 below)shall be subject to the satisfaction of the condition set forth in Section 2(a) below:(a)Vesting. The Award shall be subject to the following service vesting requirement. If the Employee continues inemployment through the vesting dates listed below, the Restricted Stock Units shall be vested as listed in the followingtable:Number of Completed Years After Grant DateMaximum Percentage of Shares ForWhich Option is ExercisableLess than 1ZeroAt least 1 but less than 233-1/3%At least 2 but less than 366-2/3%At least 3100%(b)Forfeiture of Restricted Stock Units. Except as provided in Section 3, if the Employee terminates employment prior tothe satisfaction of the vesting requirements set forth in Section 2(a) above, any unvested Restricted Stock Units shallimmediately be forfeited. The period of time during which the Restricted Stock Units covered by this Award areforfeitable is referred to as the “Restricted Period.”3.Accelerated Vesting.Notwithstanding the terms and conditions of Section 2 hereof:(a)in the event of the termination of the Employee’s employment with the Corporation (and any Affiliate) prior to the endof the Restricted Period due to (i)death or Disability, the Restricted Stock Units shall become fully vested, and (ii)retirement (after age 60 with five years of employment with the Corporation or an Affiliate), the Restricted Stock Unitsshall continue to vest as provided in Section 2 hereof(b)In the event of a Change in Control (as defined in Exhibit A), all restrictions imposed on any then-outstandingRestricted Stock Units shall terminate such that any Restricted Stock Units shall become fully vested immediately priorto the Change in Control (as defined in Exhibit A). No event described in Section 13.05 of the Plan shall cause theRestricted Stock Units to become unrestricted and fully vested unless such event is a Change in Control (as defined inExhibit A).4.No DividendsNo dividends will be paid or accrued on any Restricted Stock Units prior to the issuance of the Shares.5.Settlement of Restricted Stock Units.As soon as practicable after Restricted Stock Units become vested, the Company shall deliver to the Employee one Share foreach Restricted Stock Unit which becomes vested.6.Transfer RestrictionsThis Award is non-transferable and may not be assigned, pledged or hypothecated and shall not be subject to execution,attachment or similar process. Upon any attempt to effect any such disposition, or upon the levy of any such process, theAward shall immediately become null and void and the Restricted Stock Units shall be forfeited.7.Withholding TaxesThe Corporation may require, as a condition to the issuance of a stock certificate, that the Employee concurrently pay to theCorporation (either in cash or, at the request of Employee, but subject to such rules and regulations as the Administrator mayadopt from time to time, in Shares of Delivered Stock) the entire amount or a portion of any taxes which the Corporation isrequired to withhold by reason of the lapse of stock restrictions, in such amount as the Administrator or the Corporation in itsdiscretion may determine. If and to the extent that withholding of any federal, state or local tax is required in connection withthe lapse of stock restrictions, the Employee may, subject to such rules and regulations as the Corporation may adopt fromtime to time, elect to have the Corporation hold back from the Shares to be issued upon the lapse of stock restrictions, Shares,the Fair Market Value of which is to be applied to the Employee's withholding obligations; provided that the Shares withheldmay not have a Fair Market Value exceeding the maximum statutory tax rates in the Employee’s applicable jurisdictions.8.Death of EmployeeIf the Restricted Stock Units shall vest upon the death of the Employee, the Shares shall be issued and paid to the estate of theEmployee unless the Corporation shall have theretofore received in writing a beneficiary designation, in which event theyshall be issued and paid to the designated beneficiary.9.Confidentiality, Non-Solicitation and Non-CompeteAs consideration for the grant of this Award, Employee agrees to, understands and acknowledges the following:(a)During Employee's employment with the Corporation and its Affiliates (the "Company"), the Company will provideEmployee with Confidential Information relating to the Company, its business and clients, the disclosure or misuse ofwhich would cause severe and irreparable harm to the Company. During Employee’s employment with Company, andfor a two (2)-year period thereafter, Employee agrees not to use or disclose Company’s Confidential Informationexcept as necessary in executing Employee’s duties for Company. Employee shall keep Confidential Informationconstituting a trade secret under applicable law confidential for so long as such information constitutes a trade secret(i.e., protection as to trade secrets shall not necessarily expire at the end of the two (2)-year period). Employee agreesthat all Confidential Information is and shall remain the sole and absolute property of the Company. Upon thetermination of Employee's employment with the Company for any reason, Employee shall immediately return to theCompany all documents and materials that contain or constitute Confidential Information, in any form whatsoever,including but not limited to, all copies, abstracts, electronic versions, and summaries thereof. As to any electronicallystored copies of Confidential Information, Employee shall contact their supervisor or Company’s General Counsel todiscuss the proper method for returning such items. Employee hereby consents and agrees that Company may accessany of Employee’s personal computers and other electronic storage devices (including personal phones) and anyelectronic storage accounts (such as dropbox) so as to allow Company to ascertain the presence of Company’sConfidential Information and how such information has been used by Employee and to remove any such items fromsuch devices and accounts. Employee further agrees that, without the written consent of the Chief Executive Officer ofthe Corporation or, in the case of the Chief Executive Officer of the Corporation, without the written approval of theBoard of Directors of the Corporation, Employee will not disclose, use, copy or duplicate, or otherwise permit the use,disclosure, copying or duplication of any Confidential Information of the Company, other than in connection with theauthorized activities conducted in the course of Employee's employment with the Company. Employee agrees to takeall reasonable steps and precautions to prevent any unauthorized disclosure, use, copying or duplication ofConfidential Information. For purposes of this Agreement, Confidential Information means any and all financial,technical, commercial or other information concerning the business and affairs of the Company that is confidential andproprietary to the Company, including without limitation,(i)information relating to the Company’s past and existing customers and vendors and development ofprospective customers and vendors, including specific customer product requirements, pricing arrangements,payments terms, customerlists and other similar information;(ii)inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed orotherwise produced, acquired or used by the Company;(iii)the Company’s proprietary programs, processes or software, consisting of but not limited to, computerprograms in source or object code and all related documentation and training materials, including all upgrades,updates, improvements, derivatives and modifications thereof and including programs and documentation inincomplete stages of design or research and development;(iv)the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, servicemarks, trade names, trade dress, manuals, operating instructions, training materials, and other industrialproperty, including such information in incomplete stages of design or research and development; and(v)other confidential and proprietary information or documents relating to the Company’s products, business andmarketing plans and techniques, sales and distribution networks and any other information or documents whichthe Company reasonably regards as being confidential.(vi)Confidential Information does not include information which: (i) is already available to the public withoutwrongful act or breach by Employee; (ii) becomes available to the public through no fault of Employee; or (iii)is required to be disclosed pursuant to a court order or order of government authority, provided that Employeepromptly notifies Company of such request so Company may seek a protective order(b)Post-Employment Customer Non-Solicitation Agreement. For one (1) year following Employee’s separation fromCompany, Employee will not contact-or support others in contacting-customers of Company with whom Employeehad business contact during the last two (2) years of Employee’s employment with Company, for the purpose ofselling or providing products or services competitive with those offered by Company (“Competitive Products”).“Competitive Products” shall mean products and services competitive with those products and services for whichEmployee was responsible during the last two (2) years of Employee’s employment with Company.(c)Post-Employment Non-Solicitation Agreement Based Upon Customer Knowledge. For one (1) year followingEmployee’s separation from Company, Employee will not contact-or support others in contacting-customers ofCompany about whom Employee possesses Confidential Information or for whom Employee supervised others inserving during the last two (2) years of Employee’s employment with Company, for the purpose of selling orproviding products or services competitive with those offered by Company (“Competitive Products”). “CompetitiveProducts” shall mean products and services competitive with those products and services for which Employee wasresponsible during the last two (2) years of Employee’s employment with Company.(d)Post-Employment Non-Compete Agreement. For one (1) year following Employee’s separation from Company,Employee will not, directly or indirectly, within the United States, provide services similar to any of those Employeeprovided to Company during the last two (2) years of Employee’s employment with Company to a competitor ofCompany or a person or entity preparing to compete with Company. If Employee’s services to Company at all timesduring their last two (2) years of employment were limited to particular subsidiaries or affiliates (Tricor Direct, Inc.,Precision Dynamics Corporation, etc.) or divisions (WPS, IDS, PeopleID, etc.), then the term “competitor” as used inthis paragraph will be limited to competitors of all such subsidiaries, affiliates, and divisions.(e)Post-Employment Restriction on Working With Competitive Products. For one (1) year following Employee’sseparation from Company, Employee will not, work in the development, design, modification, improvement, orcreation of products or services competitive with any products or services with which Employee was involved in thedevelopment, design, modification, improvement or creation for Company during the last two (2) years of Employee’semployment.(f)Post-Employment Restriction on Advising Investors. For one (1) year following Employee’s separation fromCompany, Employee will not, directly or indirectly, advise a private equity firm or other investor regarding buying,investing in, or divesting from Company or any of its competitors.(g)Post-Employment Restriction on Soliciting Employees. For one (1) year following Employee’s separation fromCompany, Employee will not solicit or encourage Key Employees of Company to provide services to a competitor ofCompany or to otherwise terminate their relationship with Company. “Key Employees” are employees or contractorswhom Employee supervised, who supervised Employee, or with whom Employee had significant business contactduring Employee’s last year of employment with Company and who work for or serve Company as an engineer,manager, executive, sales employee, professional, or director.(h)Duty of Loyalty and Related Obligations. Employee acknowledges and agrees that Employee owes Company a dutyof loyalty while employed by Company. During Employee’s employment with Company, Employee agrees not totake action that will harm Company, such as, encouraging employees, vendors, suppliers, contractors, or customers toterminate their relationships with Company, usurping a business opportunity from Company, engaging in conduct thatwould injure Company’s reputation, providing services or assistance to a competitive enterprise, or otherwisecompeting with Company.(i)Non-Disparagement and Social Media. Employee agrees not to disparage Company or any of its officers, directors, oremployees on social media, on any public platform, or to persons external to Company when such comments have thepotential to harm Company (i.e., making disparaging comments about Company to distributors, customers, suppliers,etc.).(j)Other Business Relationships. Employee agrees, for a one (1)-year period following Employee’s separation fromCompany, not to encourage or advise any vendors, suppliers, or others possessing a business relationship withCompany to terminate that relationship or to otherwise modify that relationship to Company’s detriment.(k)Employee acknowledges and agrees that compliance with this Section 9 is necessary to protect the Company, and thata breach of any of this Section 9 will result in irreparable and continuing damage to the Company for which there willbe no adequate remedy at law. In the event of a breach of this Section 9, or any part thereof, the Company, and itssuccessors and assigns, shall be entitled to injunctive relief and to such other and further relief as is proper under thecircumstances. The Company shall institute and prosecute proceedings in any Court of competent jurisdiction either inlaw or in equity to obtain damages for any such breach of this Section 9, or to enjoin Employee from performingservices in breach of Section 9(b) during the term of employment and for a period of 12 months following thetermination of employment. Employee hereby agrees to submit to the jurisdiction of any Court of competentjurisdiction in any disputes that arise under this Agreement.(l)Employee further agrees that, in the event of a breach of this Section 9, the Corporation may elect to recover all or partof the value of any amounts previously paid or payable or any Shares (or the value of any Shares) delivered ordeliverable to Employee pursuant to any Company bonus program, this Agreement, and any other Company plan orarrangement.(m)Employee agrees that the terms of this Section 9 shall survive the termination of Employee's employment with theCompany.(n)EMPLOYEE HAS READ THIS SECTION 9 AND AGREES THAT THE CONSIDERATION PROVIDED BYTHE CORPORATION IS FAIR AND REASONABLE AND FURTHER AGREES THAT GIVEN THEIMPORTANCE TO THE COMPANY OF ITS CONFIDENTIAL AND PROPRIETARY INFORMATION, THEPOST-EMPLOYMENT RESTRICTIONS ON EMPLOYEE'S ACTIVITIES ARE LIKEWISE FAIR ANDREASONABLE.10.ClawbackThis Award is subject to the terms of the Corporation's recoupment, clawback or similar policy as it may be in effect from timeto time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment orforfeiture of Awards or any Shares or other cash or property received with respect to the Awards (including any valuereceived from a disposition of the Shares acquired upon payment of the Awards).11.Provisions of Plan ControllingThis Award is subject in all respects to the provisions of the Plan. In the event of any conflict between any provisions of thisAward and the provisions of the Plan, the provisions of the Plan shall control, except to the extent the Plan permits theCommittee to modify the terms of an Award grant and has done so herein. Terms defined in the Plan where used herein shallhave the meanings as so defined. Employee acknowledges receipt of a copy of the Plan.12.Wisconsin ContractThis Award has been granted in Wisconsin and shall be construed under the laws of that state.13.SeverabilityWherever possible, each provision of this Award will be interpreted in such manner as to be effective and valid underapplicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision will beineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or theremaining provisions hereof. A court of competent jurisdiction is expressly authorized to modify overbroad provisions so as tomake them enforceable to the maximum extent permitted by law and is further authorized to strike whole provisions thatcannot be so modified.14.At-Will EmploymentNothing in this Agreement is intended to change Employee’s status as an at-will employee. Employee understands thatEmployee is an at-will employee and that Employee’s employment can be terminated at any time, with or without notice orcause, by either Employee or Corporation.15.Notice of ImmunityIn accordance with the Defend Trade Secrets Act, Employee is hereby advised that:An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of atrade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose ofreporting or investigating a suspected violation of law. An individual shall not be held criminally or civilly liable under anyfederal or state trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in alawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employerfor reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secretinformation in the court proceeding, if the individual files any document containing the trade secret under seal; and does notdisclose the trade secret, except pursuant to court order.IN WITNESS WHEREOF, the Corporation has granted this Award as of the day and year first above written.BRADY CORPORATIONBy: J. MICHAEL NAUMANName: J. Michael NaumanIts: President and Chief Executive OfficerEMPLOYEE'S ACCEPTANCEI, _______________ (“Employee”), hereby accept the foregoing Award and agree tothe terms and conditions thereof, including the restrictions contained in Section 9 of thisAgreement.EMPLOYEE:Signature: _______________Print Name: _______________EXHIBIT AChange in Control DefinitionA “Change in Control” means the occurrence of any one of the following events:(a)A direct or indirect acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaningof Rule 13d-3 of the Exchange Act) of voting securities of the Company where such acquisition causes any such Person to own morethan 50% of the combined voting power of the Company’s voting securities entitled to vote generally in the election of directors (the“Outstanding Company Voting Securities”); provided, however, that the following shall not be deemed to result in a Change inControl, (i) any acquisition or holding by the members of the family of William H. Brady Jr. and their descendants or trusts for theirbenefit, and the William H. Brady III Living Trust, (ii) any acquisition directly from the Company, other than an acquisition by virtueof the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (iii)any acquisition by the Company or a wholly owned Subsidiary, (iv) any acquisition by any employee benefit plan (or related trust)sponsored or maintained by the Company or any entity controlled by the Company,(i)any underwriter temporarily holding securities pursuant to an offering of such securities, or(ii)any acquisition by any entity pursuant to a transaction which complies with clauses (i), (ii) and(iii) of subsection (c) of this definition; or(b)A change in the composition of the Board such that the individuals who, as of August 1, 2016, constitute the Board(the “Incumbent Board”) cease for any reason to constitute a majority of the Board; provided, however, that any individual whobecomes a member of the Board subsequent to August 1, 2016, whose election, or nomination for election by the Company’sshareholders, was approved by a vote of a majority of those individuals then comprising the Incumbent Board shall be considered asthough such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initialassumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal ofdirectors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not beso considered as a member of the Incumbent Board; provided, further, however, that a director who has been approved by membersof the family of William H. Brady Jr. and their descendants or trusts for their benefit, and the William H. Brady III Living Trust whilethey beneficially own collectively more than 50% of the combined voting power of the then outstanding voting securities of theCompany entitled to vote generally in the election of directors shall be deemed to be an Incumbent Director; or(c)Approval by the shareholders of the Company and the subsequent consummation of a reorganization, merger orconsolidation (a “Business Combination”), in each case, unless, following such Business Combination: (i) all or substantially all ofthe individuals and entities who were the beneficial owners, respectively, of the total number of outstanding shares of both Class ACommon Stock and Class B Common Stock (the “Outstanding Company Common Stock”) and Outstanding Company VotingSecurities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of,respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securitiesentitled to vote generally in the election of directors, as the case may be, of thecorporation resulting from such Business Combination (including, without limitation, an entity which as a result of such transactionowns the Company or all or substantially all of the Company’s assets eitherdirectly or through one or more subsidiaries); (ii) no Person (excluding any employee benefit plan (or related trust) of the Company orsuch corporation resulting from such Business Combination) beneficially owns, directly or indirectly, fifty percent (50%) or more of,respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or thecombined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existedprior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the corporation resultingfrom such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of theaction of the Board, providing for such Business Combination, or(d)Approval by the shareholders of the Company and the subsequent consummation of(i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of theCompany, unless the sale or other disposition is to a corporation, with respect to which following such sale or other disposition, (A)all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the total number of outstandingshares of both Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale orother disposition beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares ofcommon stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election ofdirectors of such other corporation, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or suchcorporation) beneficially owns, directly or indirectly, fifty percent (50%) or more of, respectively, the then outstanding shares ofcommon stock of such corporation or the combined voting power of the then outstanding voting securities of such corporation exceptto the extent that such ownership existed prior to the sale or other disposition, and (C) at least a majority of the members of the boardof directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of theaction of the Board, providing for such sale or other disposition of assets of the Company or were elected, appointed or nominated bythe Board.Notwithstanding the foregoing, for purposes of any Award subject to Section 409A of the Code, no Change in Control shalldeemed to have occurred upon an event described in this definition unless the event constitutes a change in ownership of theCompany, a change in effective control of the Company, a change in ownership of a substantial portion of the Company’s assets,each under Section 409A of the Code or otherwise constitutes a change on control within the meaning of Section 409A of the Code;provided, however, if the Company treats an event as a Change in Control that does not meet the requirements of Section 409A of theCode, such Award shall be paid when it would otherwise have been paid but for the Change in Control.EXHIBIT 21SCHEDULE OF SUBSIDIARIES OF BRADY CORPORATIONJuly 31, 2018 State (Country) Percentage of VotingName of Company Of Incorporation Securities OwnedBrady Corporation Wisconsin ParentTricor Direct, Inc. Delaware 100%Doing Business As: Seton Seton Name Plate Company D&G Sign and Label Seton Identification Products Emedco Champion America DAWG, Inc. Worldmark of Wisconsin Inc. Delaware 100%AIO Acquisition Inc. Delaware 100%Doing Business As: All-In-One Products Personnel Concepts Personnel Concepts Limited Personnel Concepts Ltd. PC Limited USA Printing & Mailing Dual Core LLC Wisconsin 100%Doing Business As: Identicard Systems Worldwide Brady People ID JAM Plastics Promo Vision Palomino Temtec BIG Badges Brady Holdings Mexico LLC Delaware 100%Clement Communications, Incorporated Pennsylvania 100%Brady International Co. Wisconsin 100%Brady Worldwide, Inc. Wisconsin 100%Doing Business As: Brandon International Sorbent Products Company TISCOR Electromark Precision Dynamics Corporation California 100%Doing Business As: Pharmex TimeMed Labeling Systems PDMX LLC California 100%Idem Indemnity, Inc. Vermont 100%Brady Australia Holdings Pty. Ltd. Australia 100%Brady Australia Pty. Ltd. Australia 100%Doing Business As: Scafflag Australia Seton Australia Trafalgar First Aid Visisign Accidental Health & Safety Pty. Ltd. Australia 100%Carroll Australasia Pty. Ltd. Australia 100%ID Warehouse Pty. Ltd. Australia 100%PDC Belgium Holdings Sprl Belgium 100%PDC Europe Sprl Belgium 100%Transposafe Systems Belgium NV/SA Belgium 100%W.H. Brady N.V. Belgium 100%W.H.B. do Brasil Ltda. Brazil 100%BRC Financial Canada 100%W.H.B. Identification Solutions Inc. Canada 100%Doing Business As: Brady IDenticard IDenticard Systems Seton Brady (Beijing) Co. Ltd. China 100%Brady (Xiamen) Co., Ltd. China 100%Brady Investment Management (Shanghai) Co., Ltd. China 100%Brady Printing (Shenzhen) Co., Ltd. China 100%Brady Technology (Dongguan) Co., Ltd. China 100%Brady Technology (Wuxi) Co. Ltd. China 100%Brady A/S Denmark 100%Braton Europe S.A.R.L. France 100%Brady Groupe S.A.S. France 100%Doing Business As: Seton Signals BIG Securimed S.A.S. France 100%Brady GmbH Germany 100%Doing Business As: Seton Transposafe Systems Deutschland GmbH Germany 100%Bakee Metal Manufactory Company Limited Hong Kong 100%Brady Corporation Hong Kong Limited Hong Kong 100%Brady Company India Private Limited India 100%Brady Italia, S.r.l. Italy 100%Nippon Brady K.K. Japan 100%Brady Finance Luxembourg S.à.r.l. Luxembourg 100%Brady Luxembourg S.à.r.l. Luxembourg 100%Brady S.à.r.l. Luxembourg 100%Brady Technology SDN. BHD. Malaysia 100%Brady Mexico, S. de R.L. de C.V. Mexico 100%W.H. Brady S. de R.L. de C.V. Mexico 100%Brady B.V. Netherlands 100%Brady Finance B.V. Netherlands 100%Transposafe Systems Holland B.V. Netherlands 100%Brady AS Norway 100%Pervaco AS Norway 100%Brady Philippines Direct Marketing Inc. Philippines 100%Transposafe Systems Polska Sp. Z.o.o. Poland 100%Brady ID Solutions SRL Romania 100%Brady LLC Russia 100%Brady Asia Holding Pte. Ltd. Singapore 100%Brady Asia Pacific Pte. Ltd. Singapore 100%Brady Corporation Asia Pte. Ltd. Singapore 100%Brady s.r.o. Slovakia 100%Grafo Wiremarkers Pty. Ltd. South Africa 100%Wiremarkers Africa Pty. Ltd. South Africa 100%Brady IDS Korea LLC South Korea 100%Brady Identificación S.L.U. Spain 100%Brady AB Sweden 100%Brady Sweden Holding AB Sweden 100%Brady (Thailand) Co., Ltd. Thailand 100%Brady Etiket ve Isaretleme Ticaret Ltd. Sirketi Turkey 100%Brady Middle East FZE United Arab Emirates 100%B.I. (UK) Limited United Kingdom 100%Brady Corporation Limited United Kingdom 100%Brady European Holdings Limited United Kingdom 100%EXHIBIT 23CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statement Nos. 333-38857, 333-92417, 333-134503, 333-137686, 333-141402, 333-162538,333-177039 and 333-212625 on Form S-8 and 333-220442 on Form S-3 of our reports dated September 13, 2018, relating to the consolidated financialstatements and financial statement schedule of Brady Corporation and the effectiveness of Brady Corporation’s internal control over financial reporting,appearing in this Annual Report on Form 10-K of Brady Corporation for the year ended July 31, 2018./s/ DELOITTE & TOUCHE LLPMilwaukee, WisconsinSeptember 13, 2018EXHIBIT 31.1RULE 13a-14(a)/15d-14(a) CERTIFICATIONI, J. Michael Nauman, certify that:(1) I have reviewed this annual report on Form 10-K of Brady Corporation;(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervisionto provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: September 13, 2018 /s/ J. MICHAEL NAUMAN J. Michael Nauman President and Chief Executive Officer EXHIBIT 31.2RULE 13a-14(a)/15d-14(a) CERTIFICATIONI, Aaron J. Pearce, certify that:(1) I have reviewed this annual report on Form 10-K of Brady Corporation;(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material act necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervisionto provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: September 13, 2018 /s/ AARON J. PEARCE Aaron J. Pearce Chief Financial Officer and Treasurer EXHIBIT 32.1SECTION 1350 CERTIFICATIONPursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of BradyCorporation (the “Company”) certifies to his knowledge that:(1) The Annual Report on Form 10-K of the Company for the year ended July 31, 2018 fully complies with the requirements of Section 13(a) or 15(d) ofthe Securities Exchange Act of 1934; and(2) The information contained in that Form 10-K fairly presents, in all material respects, the financial conditions and results of operations of theCompany. Date: September 13, 2018 /s/ J. MICHAEL NAUMAN J. Michael Nauman President and Chief Executive Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting thesignature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company andwill be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This certification accompanies thisreport pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the SecuritiesExchange Act of 1934, as amended.EXHIBIT 32.2SECTION 1350 CERTIFICATIONPursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of BradyCorporation (the “Company”) certifies to his knowledge that:(1) The Annual Report on Form 10-K of the Company for the year ended July 31, 2018 fully complies with the requirements of Section 13(a) or 15(d) ofthe Securities Exchange Act of 1934; and(2) The information contained in that Form 10-K fairly presents, in all material respects, the financial conditions and results of operations of theCompany. Date: September 13, 2018 /s/ AARON J. PEARCE Aaron J. Pearce Chief Financial Officer and Treasurer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting thesignature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company andwill be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This certification accompanies thisreport pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the SecuritiesExchange Act of 1934, as amended.

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