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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (AMENDMENT NO.(Amendment No.     )

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¨    Definitive Proxy Statement [ ]

¨    Definitive Additional Materials [ ]

¨    Soliciting Material Pursuant to sec.240.14a-11(c)(S) 240.14a-11(c) or sec.240.14a-12 (S) 240.14a-12

Barnes Group Inc. - -------------------------------------------------------------------------------- (Name

BARNES GROUP INC.

(Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name

BARNES GROUP INC.

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Notes:

Reg. (S) 240.14a-101.

SEC 1913 (3-99)


Barnes Group Inc.

Executive Office

123 Main Street

Post Office Box 489

Bristol, Connecticut 06011-0489 U.S.A.

Tel. (860) 583-7070 [LOGO]

LOGO

March 4, 1997 [    ], 2006

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD APRIL 2, 1997 The20, 2006

You are invited to attend the Annual Meeting of Stockholders of Barnes Group Inc. which will be held at The Travelers Education Center, 200 Constitution Plaza, Hartford,the Hartford/Windsor Marriott Airport Hotel, 28 Day Hill Road, Windsor, Connecticut 06103,06095, at 10:3011:00 a.m. on Wednesday,Thursday, April 2, 1997,20, 2006, for the following purposes: 1. to elect three directors for a three-year term; 2. to elect one director to fill a vacancy; 3. to act upon a proposed amendment to the Company's Restated Certificate of Incorporation increasing the number of authorized shares of common stock from 20 million shares to 60 million shares and reducing the par value of the Company's common stock and preferred stock from $1.00 per share to $0.01 per share; 4. to ratify the selection of independent accountants for 1997; and 5. to transact any other business that lawfully may come before the meeting or at any adjournment thereof.

1.To elect two directors for a two-year term and four directors for a three-year term;

2.To approve an amendment to the Barnes Group Inc. Restated Certificate of Incorporation to increase the number of authorized shares of common stock;

3.To approve the Amended Barnes Group Inc. Stock and Incentive Award Plan;

4.To approve the Barnes Group Inc. Performance-Linked Bonus Plan For Selected Executive Officers;

5.To ratify the selection of PricewaterhouseCoopers LLP as independent registered public accounting firm for 2006; and

6.To transact any other business that lawfully may come before the meeting or any adjournment thereof.

Stockholders of record at the close of business on February 4, 199721, 2006 will be entitled to vote at the meeting. Stockholders who do

Your vote is important. Please VOTE AS SOON AS POSSIBLE BY PROXY USING THE TELEPHONE OR INTERNET as described in the enclosed proxy card or, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED, whether or not expectyou plan to attend the meeting and wish their stock voted pursuant to the accompanying proxy are requested to date and sign the proxy and return it as soon as possible in the enclosed reply envelope addressed to Barnes Group Inc., Midtown Station, P. O. Box 946, New York, New York 10138-0746. /s/ MARY LOUISE BEARDSLEY - ------------------------- Mary Louise Beardsley meeting.

Signe S. Gates

Secretary 3


PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS

TABLE OF CONTENTS

Page

Election of Directors (Proxy Proposal 1)

1

Retiring Director

4

The Board and Its Committees

4

Compensation of Directors

7

Stock Ownership by Directors and Executive Officers

9

Beneficial Owners of More Than 5% of Shares

10

Audit Committee Report

11

Compensation and Management Development Committee Report

13

Compensation

17

Stock Options

19

Securities Authorized for Issuance Under Equity Compensation Plans

22

Pension Plans

23

Employment Agreement

24

Change-In-Control and Severance Arrangements

25

Certain Relationships

26

Performance Graph

26

Approval of an Amendment to the Barnes Group Inc. Restated Certificate of Incorporation to Increase the Number of Authorized Shares of Common Stock (Proxy Proposal 2)

27

Approval of the Amended Barnes Group Inc. Stock and Incentive Award Plan (Proxy Proposal 3)

28

Approval of the Barnes Group Inc. Performance-Linked Bonus Plan For Selected Executive Officers (Proxy Proposal 4)

35

Ratification of Selection of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm (Proxy Proposal 5)

37

Principal Accounting Fees and Services

37

Pre-Approval Policy and Procedures

38

Stockholder Proposals for 2007 Annual Meeting

39

General

40

Annex 1 – Audit Committee Charter

Annex 2 – Certificate of Amendment of the Restated Certificate of Incorporation

Annex 3 – Amended Stock and Incentive Award Plan

Annex 4 – Performance-Linked Bonus Plan For Selected Executive Officers


PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS

APRIL 2, 1997 20, 2006

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Barnes Group Inc. (the "Company"“Company”) of proxies to be voted at the Annual Meeting of Stockholders to be held on April 2, 199720, 2006 and at any adjournment thereof. A stockholder who votes by proxy using the telephone or the Internet as described in the proxy card, or signs and returns a proxy card in the accompanying form, may revoke it by notifying the Secretary of the meeting in person or in writing (including by delivery of a later dated proxy) at any time before it is voted. This Proxy Statement and the enclosed form of proxy are first being sent to stockholders on or about March 4, 1997. XX, 2006.

ELECTION OF DIRECTORS FOR A THREE-YEAR TERM Three(Proxy Proposal 1)

The Board of Directors Recommends a Vote “For” All Nominees.

Six Directors are nominated for re-election at the 2006 Annual Meeting.

Two directors are nominated for election at the 1997 Annual Meetingre-election for a two-year term and four directors are nominated for re-election for a three-year term (unless any of them earlier dies, resigns, retires or is removed, as provided in the Company's By-Laws)Company’s By-laws). Thomas O. Barnes, Gary G. BenanavWilliam C. Denninger and Marcel P. JosephGregory F. Milzcik are nominated for re-election to the Board of Directors for terms expiring at the Annual Meeting in 2000. K. Grahame Walker, whose term expires at the 1997 Annual Meeting, is not standing2008. Thomas O. Barnes, Gary G. Benanav, Donald W. Griffin and Mylle H. Mangum are nominated for re-election to the Board. In addition, Juan M. Steta, whose term would have expiredBoard of Directors for terms expiring at the Annual Meeting in 1998, is retiring at2009. Directors are elected by a plurality of the 1997 Annual Meeting pursuant tovotes cast. Proxies may be voted only for the number of nominees named by the Board of Directors' retirement policy. Directors.

Pertinent information concerning the nominees for re-election as directors and the five directors whose terms continue after the meeting is set forth below. Each director has been associated with his/his or her present organization for at least the past five years unless otherwise noted. Except as expressly stated below, noneNone of the organizations listed as business affiliates of the directors is a subsidiary or other affiliate of the Company. NOMINEES FOR RE-ELECTION

Nominees for Re-election

Two-Year Term

THOMAS O. BARNES - -------------------
LOGO

William C. Denninger

Director since 1978 PHOTO 02/2006

Current term expires 1997 - ------------------- 2006

Mr. Barnes, 48,Denninger, 55, is Senior Vice President, Finance and Chief Financial Officer of the Company. He joined the Company in 1993.March 2001 in that position. Mr. Denninger is a director of Graham Corporation.

LOGO

Gregory F. Milzcik

Director since 02/2006

Current term expires 2006

Mr. Milzcik, 46, is Executive Vice President and Chief Operating Officer of the Company and President, Associated Spring. He joined the Company in June 1999 as Vice President, Barnes Group Inc. and President, Barnes Aerospace. He was appointed President, Associated Spring in November 2004.

Three-Year Term

LOGO

Thomas O. Barnes

Director since 1978

Current term expires 2006

Mr. Barnes, 57, is Chairman of the Board of Directors and Senior Vice President-Administrationan employee of the Company. Prior to joining the Company, he was President of The Olson Brothers Company, a manufacturer of machined metal parts. He is also Chairman of the Benefits Committee and aan ex officio, non-voting member of the Executive Committee of the Board. GARYCompany’s Board of Directors. He is a director of Valley Bank.

LOGO

Gary G. BENANAV - ------------------- Benanav

Director since 1994 PHOTO

Current term expires 1997 - ------------------- 2006

Mr. Benanav, 51, is60, retired in March 2005 from New York Life International, LLC where he was the Chief Executive Officer and the Vice Chairman and a Director of Aeris Ventures, L.L.C., a venture capital firm. Since 1996, he has served as interim Chief Operating Officer of ProHealth Physicians, a newly-formed medical management services organization. From 1993 to 1996, he was an Executive Vice President of AetnaNew York Life & CasualtyInsurance Company. From 1992 to 1993, he was Group Executive of that company. He is Chairperson of the Compensation and Management Development Committee, and a member of the Audit Committee the Compensation Committee, the Executive Committee and the Management DevelopmentCorporate Governance Committee of the Board.Company’s Board of Directors. He is a director of Executive RiskExpress Scripts, Inc.

1 4 MARCEL P. JOSEPH - ------------------- , a full-service pharmacy benefit management company.

LOGO

Donald W. Griffin

Director since 1991 PHOTO 2001

Current term expires 1997 - ------------------- 2006

Mr. Joseph, 62, is theGriffin, 69, retired as Chairman of the Board Chief Executive Officer and President of Augat Inc.,Directors of Olin Corporation, a multi-national manufacturer of electromechanical connectors and other components.position that he held from 1996 until April, 2003. He is Chairperson of the Finance Committee, and a member of the Audit Committee and the Compensation Committee and the Management Development Committee of the Board.

CONTINUING DIRECTORS GEORGE T. CARPENTER - ------------------- Director since 1985 PHOTO Current term expires 1998 - ------------------- Mr. Carpenter, 56, is PresidentCompany’s Board of The S. Carpenter Construction Company, which is involved in real estate management and general contracting.Directors. He is a member of the Executive Committee and the Management Development Committee of the Board. He is a director of Eagle Financial Corp. and Eagle Federal Savings Bank. DONNA R. ECTON - ------------------- Director since 1987 PHOTO Current term expires 1998 - ------------------- Ms. Ecton, 49, is Chief Operating Officer of PETsMART, Inc., an international retailer of pet food and supplies. From 1995 to 1996, she was Chairman,also President and Chief Executive Officer of Business Mail Express, Inc., whichOlin from 1996 through 2001. He is engaged in providing expedited printa director of Eastman Chemical Company and mail services to corporations. From 1991 to 1994, she was President andOlin Corporation.

LOGO

Mylle H. Mangum

Director since 2002

Current term expires 2006

Ms. Mangum, 57, is the Chief Executive Officer of Van Houten North America, Inc. and Andes Candies Inc., manufacturersIBT Enterprises, LLC, a leading provider of confectionery products.branch banking solutions. She was formerly the Chief Executive Officer of True Marketing Services, focusing on consolidating marketing services companies. She is ChairmanChairperson of the CompensationAudit Committee, and a member of the Corporate Governance Committee on Directors and the Finance Committee of the Company’s Board of Directors. From 1999 to 2002, she was the Chief Executive Officer of MMS, a private equity company involved in developing and implementing marketing and loyalty programs in high-tech environments. She was President, Global Payment Systems and Senior Vice President, Strategic Planning and Expense Management for Carlson Wagonlit Travel from 1997 to 1999. She is a director of Scientific-Atlanta, Inc., Payless ShoeSource, Inc., Haverty Furniture Companies, Inc., Respironics, Inc., and Emageon Inc.

Continuing Directors

LOGO

John W. Alden

Director since 2000

Current term expires 2007

Mr. Alden, 64, retired as Vice Chairman, United Parcel Service of America, Inc. in 2000. He is Chairperson of the Corporate Governance Committee, and a member of the Finance Committee and the Compensation and Management Development Committee of the Board. SheCompany’s Board of Directors. From 1988 until his retirement, he served as a director of United Parcel Service. He is a director of Vencor,Silgan Holdings Inc., HThe Dun & R Block, Inc.Bradstreet Corporation and PETsMART, Inc. WILLIAMArkansas Best Corporation.

LOGO

William S. BRISTOW, JR. - ------------------- Bristow, Jr.

Director since 1978 PHOTO

Current term expires 1999 - ------------------- 2008

Mr. Bristow, 43,52, is President of W. S.W.S. Bristow & Associates, Inc., which is engaged in small business development. From 1992 to 1995, Mr. Bristow was New England Region Manager of Roberts Express, Inc., a provider of expedited transportation services. He is ChairmanChairperson of the Executive Committee, and a member of the AuditFinance Committee the Committee on Directors and the Management DevelopmentAudit Committee of the Board.

2 5 ROBERT J. CALLANDER - ------------------- Company’s Board of Directors.

LOGO

Edmund M. Carpenter

Director since 1991 PHOTO 1998

Current term expires 1999 - ------------------- 2008

Mr. Callander, 66, is Executive in Residence at the Columbia University School of Business. He retired as Vice Chairman of Chemical Banking Corporation in 1992. He is Chairman of the Management Development Committee and a member of the Committee on Directors and the Executive Committee of the Board. He is a director of Aramark, Inc., Beneficial Corporation, Omnicom, Inc., The Latin American Dollar Income Fund, Scudder New Asia Fund, Scudder World Income Opportunities Fund and the Korea Fund. THEODORE E. MARTIN - ------------------- Director since 1993 PHOTO Current term expires 1999 - ------------------- Mr. Martin, 57, isCarpenter, 64, became President and Chief Executive Officer of the Company. Prior to assuming that positionCompany in July 1995, Mr. Martin was Executive Vice President- Operations of the Company and prior to that, President and Chief Operating Officer of the Company's Associated Spring group.1998. He is aan ex officio, non-voting member of the Executive Committee of the Board. Mr. Martin is a directorCompany’s Board of Ingersoll-Rand Company and Unisys Corporation.

Directors are elected by a plurality of the vote cast in the election of directors. The Board of Directors unanimously recommends a vote FOR Messrs. Barnes, Benanav and Joseph (Item I on the proxy card). ELECTION OF ONE DIRECTOR TO FILL A VACANCY By resolution of the Board of Directors, the number of current directors of the Company is currently fixed at 10. The Board believes maintenance of a 10-director Board currently is in the best interests of the Company and its stockholders. Mr. Walker's determination not to stand for re-election to the Board and the retirement of Mr. Steta from the Board leave two vacancies on the Board. The Committee on Directors has identified a candidate to fill the vacancy created by the retirement of Mr. Steta, commencing in June, 1997. In addition, the Committee on Directors is engaged in a search process to identify a possible nominee to fill the vacancy left by Mr. Walker's departure from the Board and anticipates appointing a suitable candidate to serve on the Board in this connection within the next few months. Accordingly, Frank E. Grzelecki is nominated for election at the 1997 Annual Meeting, commencing in June, 1997, for a term expiring at the Annual Meeting in 1998 (unless he earlier dies, resigns or is removed, as provided in the Company's By-Laws). Pertinent information concerning Mr. Grzelecki is set forth below. None of the organizations listed as a business affiliate of Mr. Grzelecki is a subsidiary or other affiliate of the Company. 3 6 FRANK E. GRZELECKI - ------------------- PHOTO Mr. Grzelecki, 59, is President and Chief Operating Officer of Handy & - ------------------- Harman, a diversified manufacturer providing engineered products, systems components and precious metal fabrication. Prior to being named to his current post, he held the position of Vice Chairman of Handy & Harman from 1989 to 1992.Directors. He is a director of Campbell Soup Company and Dana Corporation.

LOGO

George T. Carpenter

Director since 1985

Current term expires 2007

Mr. Carpenter, 65, is President and a director of The S. Carpenter Construction Company, which is involved in general contracting, and The Carpenter Realty Company, which is involved in real estate management. He is a member of the Finance Committee, the Executive Committee, the Compensation and Management Development Committee and the Corporate Governance Committee of the Company’s Board of Directors. He is a director of Webster Financial Corporation.

LOGO

Frank E. Grzelecki

Director since 1997

Current term expires 2007

Mr. Grzelecki, 68, is retired from Handy & Harman, Chartwell Re Corporation, Morgan Group,a diversified industrial manufacturing company, where he last was a Director and Vice Chairman in 1998. He is a member of the Compensation and Management Development Committee, the Executive Committee, and the Audit Committee of the Company’s Board of Directors. He was a Managing Director of Saugatuck Associates, Inc. and Spinnaker Industries, Inc. , a private investment firm, from 1999 to 2000. Mr. Grzelecki is a trustee of The Phoenix Edge Series Fund.

A plurality of the votes cast on the proposal is required to elect

RETIRING DIRECTOR

Mr. Grzelecki toG. Jackson Ratcliffe, Jr., 69, who has served as a director since 2001 will be retiring from the Board of Directors. The BoardDirectors as of Directors unanimously recommends a vote FOR Mr. Grzelecki (Item 2 on the proxy card). date of the 2006 Annual Meeting of Stockholders.

LOGO

G. Jackson Ratcliffe, Jr.

Director since 2001

Current term expires 2008

Mr. Ratcliffe, 69, retired September 14, 2004 as Chairman of the Board of Directors of Hubbell Incorporated where he had also served as President and Chief Executive Officer from 1987 through July 1, 2001. He is a member of the Corporate Governance Committee, the Finance Committee, and the Compensation and Management Development Committee of the Company’s Board of Directors. He is a director of Sunoco, Inc., Praxair, Inc. and Hubbell Incorporated.

THE BOARD AND ITS COMMITTEES

The Board of Directors

In 1996,2005, the Board of Directors held eightsix regular meetings and the Executive Committeetwo special meetings which were held two meetings.telephonically. Each incumbent director of the Company attended in excess100% of 90% of the regular meetings of the Board of Directors and committeesin excess of 85% of the aggregate number of meetings of the Board of Directors and Board committees on which he or she served during 1996. 2005. All of the members of the Board of Directors attended the 2005 Annual Meeting of Stockholders. The Company’s Corporate Governance Guidelines provide that the Board of Directors should generally have no fewer than six and no more than 12 directors. The Board of Directors currently has 12 directors. Each director is required to resign from the Board no later than the annual meeting of stockholders following his or her 70th birthday. Each director is required to advise the Chairman of the Board of Directors of any change in his or her status, including without limitation, a change in employment or service on other boards of directors, or retirement from his or her principal occupation or another board of directors. Mr. Barnes, Chairman of the Board of Directors, is designated to preside at executive sessions of non-management members of the Board of Directors. Ms. Mangum, Chairman of the Audit Committee, or her delegate director is designated to preside at executive sessions of the independent directors.

The Board of Directors adopted Corporate Governance Guidelines which set forth requirements to be met by each director in order to be an independent director. Pursuant to the Corporate Governance Guidelines: An “independent” director of the Company shall be one who meets the qualification requirements for being an independent director under the corporate governance listing standards of the New York Stock Exchange (“NYSE”), including the requirement that the Board must have affirmatively determined that the Director has no material relationships with the Company, either directly or as a partner, stockholder, or officer of an organization that has a relationship with the Company. To guide its determination whether or not a business or charitable relationship between the Company and an organization with which a director is so affiliated is material, the Board has adopted the following categorical standards:

a.

A Director will not be Independent if (i) the Director is, or was within the preceding three years, employed by the Company; (ii) an immediate family member of the Director is, or was within the preceding three years, employed by the Company as an “executive officer” (as such term is defined by the NYSE) other than on an interim basis; (iii) the Director or any immediate family member has received from the Company, during any 12 consecutive months within the preceding three years, more than $100,000 in direct compensation from the Company, other than Director and committee fees and deferred compensation for prior service, provided, that such deferred compensation is not contingent on continued service; (iv) the Director is employed by the Company’s independent auditor; (v) an immediate family member of the Director is employed by the Company’s independent auditor (I) as a partner,

principal or manager, or (II) otherwise as an employee who participates in such independent auditor’s audit, assurance or tax compliance (but not tax planning) practice ; or (vi) the Director or an immediate family member was within the last three years (but is no longer) a partner, principal, manager or other employee of the Company’s independent auditor and personally worked on the Company’s audit within that time; or (vii) a Company executive officer is, or was within the preceding three years, on the board of directors of a company which, at the same time, employed the Company Director or an immediate family member of the Director as an executive officer.

b.The following commercial and charitable relationships will not be considered material relationships that would impair a Director’s independence: (i) if a Company Director is an employee, or an immediate family member is an executive officer, of another company that does business with the Company and, within any of the last three fiscal years, the annual sales to, or purchases from, the Company are less than 1% of the annual revenues of the other company; (ii) if a Company Director is an employee, or an immediate family member is an executive officer, of another company that is indebted to the Company, or to which the Company is indebted, and the total amount of either company’s indebtedness to the other is less than 1% of the total consolidated assets of the other company; and (iii) if a Company Director serves as an officer, director or trustee of a charitable organization, and the Company’s discretionary charitable contributions to the organization are less than 1% of such organization’s total annual charitable receipts, provided, that the amount of the Company’s contributions shall not include the matching of charitable contributions by Barnes Group Foundation, Inc. pursuant to the Matching Gifts Program.

The Board of Directors has determined that each of the following non-employee directors meets such categorical standards and therefore does not have a material relationship, directly or indirectly, with the Company and is independent as defined in the NYSE listing standards: Messrs. Alden, Benanav, Griffin, Grzelecki and Ratcliffe, and Ms. Mangum.

The independent members of the Board of Directors affirmatively determined that although the two other non-employee directors, Messrs. Bristow and G.T. Carpenter, do not meet such categorical standards due, in the case of Mr. Bristow, to an immediate family member receiving employee compensation greater than $100,000 from the Company and, in the case of Mr. G.T. Carpenter, to a commercial banking relationship between the Company and an institution for which Mr. G.T. Carpenter serves as a director, each such relationship is not material and each of them is independent as defined in the NYSE listing standards. In the case of Mr. Bristow, the determination was based on the following. The immediate family member employee does not set or influence the policies of the Company, does not have access to information with regard to Company policymaking, is not reliant on Mr. Bristow financially and is not a member of Mr. Bristow’s household. Further, there is no overlap or conflict in their respective roles with the Company.

In the case of Mr. G.T. Carpenter, the determination was based on the following. The board of directors of the commercial banking institution on which he serves does not determine whether or not the institution will provide banking services or credit facilities to the Company; the commercial banking institution is one of 11 banks in the Company’s credit facility and is not the agent bank for the facility; and the institution’s percentage participation in the Company’s credit facility is less than 10 percent of the aggregate facility.

The Company has a standing Audit Committee, Compensation and Management Development Committee and Corporate Governance Committee. The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The current charter for each of these committees is available on the Company’s Internet website. The Company’s website address iswww.barnesgroupinc.com. The Company has

posted its Policy Regarding Reporting of Complaints and Concerns on its website. The policy provides that stockholders and other interested parties may communicate with the Board of Directors by any of the following methods.

By telephone at:

1-800-300-1560

By internet:

https://www.compliance-helpline.com/welcomepagebarnesgroupinc.jsp

By regular mail:

Barnes Group Corporate Compliance Hotline
P.O. Box PMB 3667
13950 Ballantyne Corporate Place, Ste. 300
Charlotte, NC 28277-2712

All complaints and concerns reported by the above methods will be received by a third-party provider, who will forward each complaint or concern to the office of the General Counsel which will be responsible for relaying communications for the Board of Directors to them.

The Audit Committee

The Audit Committee members are:

Mylle H. Mangum, Chairperson

Gary G. Benanav

William S. Bristow, Jr.

Donald W. Griffin

Frank E. Grzelecki

The Audit Committee is responsible for matters relating tooverseeing accounting policies and practices, financial reporting and the internal control structure. Each year it recommends to the Board the appointment of a firm of independent accountants to audit the financial statements of the Company. It reviews with representatives of the independent accountants the scope of their audit of the Company's financial statements, results of audits, audit fees and any recommendations with respect to the internal control structure. The Audit Committee also reviews non-audit services rendered by the Company's independent accountants and periodically meets with or receives reports from principal corporate officers and the Director, Internal Audit, of the Company. The Audit Committee held threeeight meetings in 1996.2005. The Benefits Committee, which met two times last year, administers the Company's pension, profit-sharing, and welfare benefits plans. The Compensation Committee, which met three times last year, administers the incentive and stock plans referred to below, sets the salarycharter for the PresidentAudit Committee, was most recently amended and Chief Executive Officer andadopted by the other senior officersBoard of Directors on February 16, 2006. It is set forth in Annex 1 of this Proxy Statement.

The Board of Directors has determined that each of the Company and reviews and approves the compensationmembers of the Company's other officers. Audit Committee qualifies as an independent director under the NYSE listing standards.

The Corporate Governance Committee

The Corporate Governance Committee on Directors, which met three times last year,members are:

John W. Alden, Chairperson

Gary G. Benanav

George T. Carpenter

Mylle H. Mangum

G. Jackson Ratcliffe

The Corporate Governance Committee makes recommendations concerning Board membership, functions and compensation. The Board of Directors has determined that each of the members of the Corporate Governance Committee qualifies as an independent director under the NYSE listing standards. The Corporate Governance Committee serves as the nominating committee for the Company. The Corporate Governance Guidelines adopted by the Board of Directors provide that nominees for Directors are to be selected based on, Directorsamong other things, their character, wisdom, judgment, ability to make independent analytical inquiries, business experience and skills. In addition, consideration will be given to a nominee’s understanding of the Company’s business environment, time commitment, acumen and ability to act on behalf of the Company’s stockholders. The committee utilizes a third party in connection with identifying and reviewing potential nominees to the Board of Directors. Upon request of the

committee, the third party will identify candidates based on criteria specified by the committee, perform initial screenings of the candidates’ resumes, and conduct initial interviews. The committee will, as stated in the Process and Procedure for Identifying Director Candidates (the “Policy”) adopted by the committee, consider director candidates recommended by stockholders. If a stockholder recommends a candidate for nomination by the Corporate Governance Committee, the committee would evaluate that candidate in the same manner as all other candidates to be nominees for director. Any stockholder wishing to submit such a recommendation should do so in writing addressed to:

Chairperson, Corporate Governance Committee

c/o Signe S. Gates

Senior Vice President, General Counsel and Secretary

Barnes Group Inc.

123 Main Street

Bristol, CT 06010

In accordance with the Policy, recommendation letters must, at a minimum, provide the stockholder’s name, address, and number of shares owned (if the stockholder is not the registered holder of shares, a written statement from the record holder of shares (e.g., a broker or bank) verifying the stockholder’s beneficial ownership must be provided); the candidate’s biographical information, including name, residential and business addresses, telephone number, age, education, accomplishments, employment history (including positions held and current and former directorships); and the stockholder’s opinion as to whether the recommended candidate meets the definition of “independent” under the Company’s Corporate Governance Guidelines and is “financially literate” as contemplated by the New York Stock Exchange rules. The recommendation letter must also provide such other information, if any, that would be required to be disclosed with regard to a nominee for director in the solicitation of proxies for election of directors under federal securities laws. The stockholder must include the recommended candidate’s signed statement that he or she meets the qualifications of a director as described in the Policy; is willing to complete the questionnaire required of all officers, directors and candidates for nomination to the Board; will provide such other information as the committee may reasonably request; and consents to serve on the Board if elected. Stockholder nominations submitted by stockholdersmust be made in accordance with the procedures describedset forth in the Company’s By-laws. A summary of these procedures is set forth below in this proxy statement under the caption "Stockholder“Stockholder Proposals for 19982007 Annual Meeting." The Corporate Governance Committee held four meetings in 2005.

The Compensation and Management Development Committee

The Compensation and Management Development Committee is responsible for planning management successionmembers are:

Gary G. Benanav, Chairperson

John W. Alden

George T. Carpenter

Donald W. Griffin

Frank E. Grzelecki

G. Jackson Ratcliffe

The Compensation and Management Development Committee administers the Company’s incentive and stock plans, sets the salary of the Company's senior officers, reviewing the performance of thePresident and Chief Executive Officer, and monitoring management resourcesreviews and approves the performancecompensation of key executives.the other executive officers. The Compensation and Management Development Committee met onceheld five meetings in 1996. All of these committees are standing committees of the Board. 2005.

COMPENSATION OF DIRECTORS

The annual retainer for directors is $25,000.$45,000. In addition to the annual director retainer, committee chairpersons are paid an annual retainer as follows: Audit Committee Chair, $10,000; Compensation and Management Development Committee Chair, $5,000; and other committee chairs, $2,500. The fee for attending a board or committee meeting

is $1,500; provided, that the fee for a telephonic meeting or telephonic participation in a non-telephonic meeting is $1,000 ($1,500 if held outside of Connecticut or New York City), except that the committee chairman receives an additional $500 for each meeting at which he or she presides.$1,000. Messrs. T. O. Barnes, E.M. Carpenter, Denninger and MartinMilzcik do not receive noa retainer or meeting fees for service as directors. The grant of rightsPursuant to receive stock and the payment of dividend equivalents under the Non-Employee Director Deferred Stock Plan, are additional forms of director compensation. Under this plan,as further amended (the “Non-Employee Director Deferred Stock Plan”), each non-employee director has beenwas granted at the time he or she first joined the Board the right to receive 2,0006,000 shares of Common StockCompany common stock when his or her membership on the Board terminates. The plan provides that each newly elected director will receive the same grant.terminates or, if sooner, when a change of control occurs. The plan also provides for the payment of dividend equivalents equal to 2,0006,000 times the dividend per share for each dividend payment date.(1) - --------------- (1) Mr. T. O.date1. In 2005, each of the directors other than Messrs. E.M. Carpenter, Denninger and Milzcik was granted 2,000 restricted stock units under the Barnes became a participantGroup Inc. Stock and Incentive Award Plan. These restricted stock units vest as follows: 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date. Vesting accelerates in full in the plan when it was adopted in 1987. He became an employee in 1993 and continues to participateevent of a change of control or in the plan. 4 7 MANAGEMENT'S event the holder retires before the second anniversary of the grant date and after attaining age 70. Dividend equivalents equal to the dividend per share are paid on each restricted stock unit for each dividend payment date. Directors received a fee of $1,500 per meeting if they attended meetings of the senior managers of the Company. In 2005, Messrs. Alden, Benanav, G.T. Carpenter and Grzelecki each attended a senior managers meeting. Mr. Grzelecki received a fee of $500 for serving as the acting Chairperson at a meeting of the Compensation and Management Development Committee. Messrs. Benanav, Bristow, Griffin and Grzelecki each received a fee in 2005 of $1,500 in connection with meetings to evaluate Gregory F. Milzcik’s qualifications for promotion to the position of Executive Vice President and Chief Operating Officer. Mr. Barnes received $265,000 for serving as Chairman and performing various other duties as a nonexecutive employee of the Company. The other duties performed by Mr. Barnes include working with the President and Chief Executive Officer to develop relationships with possible strategic partners, engaging in various operational corporate activities when requested, chairing Barnes Group Foundation, Inc., and maintaining an active role in community affairs in the Bristol and Hartford areas.


1Mr. Barnes became a participant in the plan when it was initially adopted in 1987. He became an employee in 1993 and continues to participate in the plan.

STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS

As of February 4, 1997,January 1, 2006, the Company'sCompany’s directors, nominee for director, named executive officers (as identified in the Summary Compensation Table), and directors and officers as a group beneficially owned the number of shares of the Company'sCompany’s common stock, par value $1.00$0.01 per share (the "Common Stock"“Common Stock”), shown below:

Name of Person or Group  

Amount and Nature

of Beneficial Ownership1

  

Percent of

Common Stock

 

John W. Alden

  21,500  * 

John R. Arrington

  183,616  * 

Thomas O. Barnes

  1,840,595  7.6%

Gary G. Benanav

  36,199  * 

William S. Bristow, Jr.

  284,099  1.2%

Edmund M. Carpenter

  1,159,105  4.7%

George T. Carpenter

  146,191  * 

William C. Denninger

  210,418  * 

Signe S. Gates

  228,106  * 

Philip A. Goodrich

  131,012  * 

Donald W. Griffin

  14,885  * 

Frank E. Grzelecki

  21,000  * 

Mylle H. Mangum

  9,047  * 

Gregory F. Milzcik

  242,136  1.0%

G. Jackson Ratcliffe

  6,824  * 

Directors & executive officers as a group (22 persons)

  5,192,555  19.9%
Amount and Nature
*Less than 1% of Percent of Name of Person Beneficial Common or Group Ownership(1) Stock - ------------------------------------------------------------------------------------------------- Thomas O. Barnes(2) 458,887 6.9% Gary G. Benanav 2,609 * John E. Besser 22,877 * William S. Bristow, Jr. 207,962 3.1 Robert J. Callander 3,123 * Leonard M. Carlucci 36,652 * George T. Carpenter 61,030 * Donna R. Ecton 3,018 * Ali A. Fadel 22,341 * Frank E. Grzelecki 0 * Marcel P. Joseph 3,023 * John J. Locher 14,683 * Theodore E. Martin 90,482 1.4 Juan M. Steta 8,246 * K. Grahame Walker 3,219 * Directors & officers as a group(17 persons) 845,610 14.5 beneficially owned.
- -------------------------------------------------------------------------------- * Less than 1% of Common Stock beneficially owned. NOTES TO THE STOCK OWNERSHIP TABLE: (1) The

Note to the above table:

1Thenamed person or group has sole voting and investment power with respect to the shares listed in this column, except as set forth in this Note.

Mr. Barnes has sole voting and sole investment power with respect to the332,002 shares listed in this column, except as set forth in this Note. Mr. T. O. Barnes has sole voting power and no investment power with respect to 240,370 shares pursuant to a revocable power of attorney given to him by Mr. Wallace Barnes. These shares are also included in the holdings for Mr. W. Barnes set forth below under the caption "Beneficial Owners of More than 5% of Shares." Mr. T. O. Barnes also has sole voting and shared investment power with respect to 112,479 shares and no voting and shared investment power with respect to 25,0561,264,471 shares. Of these 25,056 shares, 3,000 shares are also included in the figure for Mr. Martin who shares investment power. Included in Mr. Carpenter'sG.T. Carpenter’s total are 55,482105,447 shares held by corporations through which he has voting control. Mr. Bristow has shared voting and shared investment power with respect to 160,560 shares. The remainder of Mr. Bristow's45,627 shares which are held in a trustvarious trusts which he has the power to revoke.

The shares listed for Messrs. T. O.Alden, Arrington, Barnes, Besser, Carlucci, Fadel, LocherBenanav, Bristow, E.M. Carpenter, G.T. Carpenter, Denninger, Goodrich, Griffin, Grzelecki, Milzcik and Martin,Ratcliffe and Mses. Gates and Mangum and the directors and officers as a group include 18,200, 14,340, 22,350, 11,250, 8,400, 48,92012,500; 139,745; 66,600; 26,000; 26,000; 703,028; 26,000; 134,788; 105,628; 7,500; 14,000; 169,195; 0; 164,644; 2,500 and 139,8352,049,767 shares, respectively, which they have the right to acquire within 60 days after February 4, 1997.January 1, 2006. The shares listed for Messrs. T. O.Arrington, Barnes, Besser, Carlucci, Fadel, LocherE.M. Carpenter, Denninger, Goodrich, Milzcik and MartinMs. Gates, and the directors and officers as a group also include 1,020, 5,561, 3,454, 2,024, 5,787, 2,8083,128; 10,053; 5,915; 4,029; 0; 3,269; 171 and 28,31950,836 shares, respectively, over which they have voting power and limitedshared investment power. These shares are held under the Company's Guaranteed Stock Plan (an employee stock ownership plan).Company’s Retirement Savings Plan. The shares listed for Messrs. T. O.Alden, Barnes, Benanav, Bristow, Callander,G.T. Carpenter, Ecton, Joseph, StetaGriffin, Grzelecki, and WalkerRatcliffe and Ms. Mangum include 2,0006,000 shares each that each of them havehas the right to receive under the Non-Employee Director Deferred Stock Plan described above. above under the heading “Compensation of Directors.”

The shares listed for Messrs. Carlucci, FadelArrington, E.M. Carpenter, Denninger, Goodrich, and MartinMs. Gates and the directors and officers as a group do not include 8,031, 9,06745,525; 162,627; 50,153; 45,525; 45,525; and 20,725 incentive stock units,598,791 shares, respectively, that each currentlythe holders may have the right to receive on February 16, 2001a future date pursuant to an 5 8 Incentive Stock Right Agreement. A descriptionawards of restricted stock units and performance share units.

The shares listed for each of Messrs. Alden, Barnes, Benanav, Bristow, G.T. Carpenter, Griffin, Grzelecki, and Ratcliffe and Ms. Mangum do include 5,550 restricted stock unit awards that the Incentive Stock Right Agreement is contained in Note (c)holders may have the right to receive on a future date pursuant to the Summary Compensation Table. Except for the shares under the Non-Employee Director Deferred Stock Plan and the incentive stock rights of Messrs. Carlucci, Fadel and Martin, theunderlying agreements.

The number of shares reported as beneficially owned havehas been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (2) Mr. T. O. Barnes's address is 123 Main Street, Bristol, Connecticut 06010. The Board of Directors believes that, except for matters required to be submitted to stockholders, the Company is controlled by its Board of Directors acting as such. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE The Company believes that its officers and directors have complied in 1996 with the filing requirements of Section 16(a) of the Exchange Act, except that Mr. T. O. Barnes was late in reporting one transaction involving a trust of which he is a co-trustee. amended.

BENEFICIAL OWNERS OF MORE THAN 5% OF SHARES As of December 31, 1996, in addition to Mr. T. O. Barnes, whose beneficial ownership of Common Stock is set forth above under the caption "Management's Stock Ownership," the

The individuals and institutions set forth below are the only persons known by the Company to be beneficial owners of more than 5% of the outstanding shares of Common Stock:
Amount and Nature of Percent of Name and Address Beneficial Common of Beneficial Owner Ownership Stock - ------------------------------------------------------------------------ Mr. Wallace Barnes(1) 682,465 10.2% 1875 Perkins Street Bristol, Connecticut 06010 Fleet National Bank(2) 868,675 13.0 777 Main Street Hartford, Connecticut 06115 State Street Bank and Trust Company(3) 1,173,422 17.9 225 Franklin Street Boston, Massachusetts 02110
- --------------- (1) AsStock (holdings as of December 31, 1996, Mr. Wallace2005):

Name and Address of Beneficial Owner  

Amount and Nature of

Beneficial Ownership

  

Percent of

Common Stock

 
Bank of America Corporation1
100 N. Tryon Street, Floor 25
Bank of America Corporate Center
Charlotte, North Carolina 28255
  2,998,026  12.6%
The Barnes Group Inc. Retirement Savings Plan2
123 Main Street
Bristol, Connecticut 06011-0489
  2,596,049  10.8%
Wachovia Corporation3
One Wachovia Center
Charlotte, North Carolina 28288-0013
  1,926,011  8.1%
Mr. Thomas O. Barnes
123 Main Street
Bristol, Connecticut 06011-0489
  1,840,595  7.6%

Notes to the above table:

1Asof December 31, 2005, as reported on a Schedule 13G filed with the Securities and Exchange Commission (“SEC”) on February 8, 2006, Bank of America Corporation had shared voting power with respect to 555,533 shares and shared investment power with respect to 2,998,026 shares.

2Asof December 31, 2005, as reported on a Schedule 13G filed with the SEC on February 3, 2006, the Barnes Group Inc. Retirement Savings Plan had shared investment power with respect to 2,596,049 shares.

3Asof December 31, 2005, as reported on Schedule 13G filed with the SEC on February 10, 2006, Wachovia Corporation had sole voting power with respect to 1,922,724 shares; sole investment power with respect to 1,923,011 shares; and shared investment power with respect to 3,000 shares.

AUDIT COMMITTEE REPORT

To Our Fellow Stockholders at Barnes reportedGroup Inc.:

We, the members of the Audit Committee of the Board of Directors, are independent directors, as defined by the New York Stock Exchange and the Company’s Corporate Governance Guidelines, and affirmatively determined by the Board of Directors. Management is responsible for the Company’s financial reporting process and internal controls. The responsibility of the Committee is to provide general oversight of the Company’s financial accounting, reporting and underlying internal controls. The Committee provides additional oversight of the Company’s Corporate Compliance Program. The Committee has the ultimate authority for the selection, evaluation, and retention of the independent registered public accountants (“independent auditors”).

The Audit Committee operates under a charter which was revised in 2005. A copy of the Committee’s revised charter was filed with the 2005 Proxy Statement. In 2005, the Committee operated in accordance with its charter. On February 16, 2006, the Audit Committee reviewed and reassessed the charter to ensure its adequacy and compliance with the rules of the Securities and Exchange Commission and the New York Stock Exchange in effect as of such date, and the Committee concluded that, he beneficially owned 682,465 (10.2%) shareswith the amendment to conform current terminology regarding independent registered public accountants, the charter was adequate and in full compliance with such rules.

During 2005, the Committee met eight times for the purpose of Common Stock. Heproviding a forum for communication among the Directors, the Company’s independent auditors, PricewaterhouseCoopers LLP, the Company’s internal audit function, and corporate management. During these meetings, the Committee reviewed and discussed with management and PricewaterhouseCoopers various matters in accordance with the provisions of the Audit Committee Charter, including the interim and the audited financial statements of the Company. In addition, the Committee met privately at its regular meetings with both the independent auditors and the internal audit function, as well as with the chief financial officer and the chief executive officer, each of whom has sole votingunrestricted access to the Audit Committee. The Committee was also advised, as contemplated by the Sarbanes-Oxley Act of 2002, of all critical accounting policies and investment powerpractices of the Company, and any alternative treatments of financial information within generally accepted accounting principles and the treatment preferred by PricewaterhouseCoopers. In accordance with Statement of Auditing Standards No. 61,Communication with Audit Committees,the Committee discussed all required matters with PricewaterhouseCoopers, including the conduct of the audit of the Company’s financial statements.

In addition, the Committee obtained formal, written disclosures from PricewaterhouseCoopers, including a letter affirming their independence as required by Independence Standards Board Standard No. 1. The information contained in this letter was discussed with PricewaterhouseCoopers.

The Committee reviewed fees related to aggregate services provided by PricewaterhouseCoopers for the year 2005, and concluded that the services rendered in 2005 that were neither audit nor audit-related did not impair the independence of PricewaterhouseCoopers.

Based on the reviews and discussions referred to above, the Committee recommended to the Board of Directors, and the Board has approved, inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2005, for filing with the Securities and Exchange Commission. The Committee has also selected, for the stockholders’ ratification, PricewaterhouseCoopers as the Company’s independent auditors for 2006.

As specified in the Audit Committee Charter, it is not the duty of the Audit Committee to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles or to plan or conduct an audit in accordance with generally the standards of the Public Company Accounting Oversight Board. That is the responsibility of management and the Company’s independent auditors, respectively. In giving our recommendation to the Board, we have relied on (i) management’s

representation that such financial statements have been prepared with integrity and objectivity and in conformity with generally accepted accounting principles, and (ii) the report of the Company’s independent auditors with respect to 164,094 shares, sole voting powersuch financial statements.

AUDIT COMMITTEE

Mylle H. Mangum, Chairperson

Gary G. Benanav

William S. Bristow, Jr.

Donald W. Griffin

Frank E. Grzelecki

COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT [to be updated]

To Our Fellow Stockholders at Barnes Group Inc.:

We, the members of the Compensation and shared investment powerManagement Development Committee of the Board of Directors of Barnes Group Inc. (the “Company”), are independent, non-employee directors with no “interlocking” relationships as defined by the Securities and Exchange Commission. We are committed to developing compensation strategies with strong ties to stockholder value creation. The overarching philosophy with respect to 278,001 shares,executive compensation, therefore, is to link compensation programs to the Company’s strategic business objectives and no votingtotal stockholder return. If the Company’s results against its goals and sole investment powertargets exceed preset performance targets, Barnes executives have an opportunity to realize significant additional compensation. This high degree of performance linkage, and the significant leverage and risk incorporated into the programs, give Barnes Group’s executive team a very strong financial incentive to build the lasting value through balanced, profitable, sustainable growth that creates stockholder wealth.

The Committee’s charter, which outlines its duties and key practices, is available on the Company’s website atwww.barnesgroupinc.com.

Barnes Group’s incentive strategies incorporate “stretch” operational goals. The Company’s Board of Directors has taken an active role in the determination of these goals, and participated in the development of compensation programs directly tied to these same goals. Our objective has been to ensure appropriate balance between short-term and long-term incentives.

During 2005, the Committee again retained an independent compensation consulting firm to review competitive compensation data for a group of comparative companies and for general industry, and the Company’s compensation practices in terms of competitiveness, appropriateness and alignment with respect to 240,370 shares. (2) AsCompany performance. The Committee met with members of December 31, 1996, Fleet National Bank ("Fleet") reported that it was the beneficial ownerindependent compensation consulting firm both with and without members of 868,675 (13.0%) sharesCompany management as part of Common Stock. Fleet reported that it had sole voting and sole investment power with respect to 157,419 shares, sole voting and shared investment power with respect to 4,373 shares, sole voting and no investment power with respect to 3,350 shares, shared voting and shared investment power with respect to 161,360 shares, shared voting and no investment power with respect to 234 shares, and no voting and shared investment power with respect to 541,939 shares. (3) Asthis review. The comparison group currently consists of December 31, 1996, State Street Bank and Trust Company ("State Street") reported that it held 1,149,622 (17.6%) sharescompanies in one or more of Common Stock in its capacity as trusteethe Company’s industries. The companies chosen for the Company's Guaranteed Stock Plan (an employee stock ownership plan). The plan provides thatcomparison group are not necessarily the same as those represented in the stock shall be voted byprice performance graph accompanying this report.

The key elements of Barnes Group’s executive compensation strategy are annual cash compensation, including salary and short-term incentives, and long-term incentives, including stock options, restricted stock units, and performance stock. Total direct compensation (total annual cash plus the Trustee as directed byexpected value of long-term incentives at grant) is targeted to fall between market median and 75th percentiles overall. Executive benefits also play a key role in attracting and retaining key executives; the participants inCommittee has oversight over such programs, and reviews these programs regularly.

Annual Cash Compensation

Executive officers receive a salary for ongoing performance throughout the plan. State Street also reported that it had sole voting and 6 9 investment power with respect to 23,600 shares and sole voting and shared investment power with respect to 200 shares. REPORT OF THE COMPENSATION COMMITTEE The Company's compensation program for executive officers is designed to attract, retain and motivate superior executive talent and to align ayear. Short-term incentives are generally provided based on annual performance periods. A significant portion of each officer's total compensation with the performancepercentage of the applicable business unit, the Company and the interestsannual cash compensation of the Company's stockholders. To this end, the Company has implemented a competitive total compensation program for executive officers composed of the following elements, each of which are separately discussed below: base salary; annual bonus; and long-term compensation, including both awardsBarnes Group executives is at risk under the Company's Long Term Incentive Plan and 1991 Barnes Group Stock Incentive Plan. BASE SALARY Base salaries for the President and ChiefInc. Performance-Linked Bonus Plan For Selected Executive Officer and the other executive officers are establishedOfficers, approved by considering competitive levels for positions of similar responsibility, the experience of the individual and the executive's expected contribution to the Company. Merit increases are determined based upon both the overall performance of the individual and the Company as a whole and changes in competitive compensation levels. Mr. Martin became President and Chief Executive Officer on July 1, 1995. His annual base salary was reviewed and increased to $500,000stockholders at the beginning of 1996. In reviewing and adjusting Mr. Martin's salary,April 12, 2001 Annual Meeting, or the Management Incentive Compensation Committee considered many factors, including the following: Mr. Martin's leadership of, and individual contribution to, the Company; the Company's progress with respect to financial and strategic targets and objectives; trends with respect to the Company's sales, earnings per share, return on equity, return on capital employed, operating margin and cash flow; and the salaries of chief executive officers of companies similar to the Company in size and complexity. ANNUAL BONUS Annual bonuses may be earned by executive officers and other key employees under the Company's annual bonus plans. Payments under these plansPlan. Award opportunities are based on the performance of the Company as a whole, or the business unit over which the individualexecutive has a direct influence. The Committee establishes annual financial measurements for the Companyinfluence, and each major operating unit, the achievement of which will determine the level of the bonus. The measurements for the Company, which are applicable to the President and Chief Executive Officer and the corporate staff officers, aregenerally paid in February based on the Company's consolidated net income. In addition, the plan allows for the exclusion of certain provisions such as restructuring charges. The measurements for operating units, which are applicable to officers having direct responsibilities relating to oneaudited financial results of the Company's three operating units, areprior year’s performance. For 2005, 85% of each participant’s award was based on the performance measure of earnings per share or, in the case of business unit executives, operating income of the applicable unitprofit after tax less a charge for the capital employed by the unit. Eachapplicable business unit, adjusted to disregard the effects of non-operating or out-of-period items and operating income or loss from acquisitions. The 15% balance of each participant’s award was based on corporate or business unit revenue results. Threshold, target, and maximum incentive opportunities are established early in the Company's officers is eligible to receive a percentage of his or her base salaryyear for each executive, stated as a bonus ifpercent of salary. Performance target, threshold, and maximum performance levels are also established early in the Company achieves its financial goals. The percentage varies depending onyear. If performance is below the individual's position withthreshold performance levels established, the Company. In 1996,payout is reduced to zero. If the threshold

levels of performance are attained, the threshold incentive award is earned. If the target performance levels are attained, the target incentive amounts are payable. If performance exceeds the applicable maximum performance levels, the maximum amountopportunity is awarded. For 2005, if performance exceeded the applicable maximum levels, the following percent of base salary payable as a bonus under the plan to each of the Company's officers was: 100%was payable: 225% for the President and Chief Executive Officer; 90%150% for the Group Presidents; 80%Presidents and for the Senior Vice President, Finance and Chief Financial Officer; 135% for all other Senior Vice Presidents; and 50%105% for Vice Presidents.

In 2005, the Company's other officersCompany’s revenues were between the target and senior executives. For exceptionalmaximum performance results,levels while its earnings per share (adjusted as discussed above) were above the Compensation Committee may award amounts in excess of maximum performance level. Business unit performance relative to any participant. Mr. Martin receivedthe preset revenue and adjusted operating profit after tax measures varied by business. As a bonus of $575,000 for 1996. LONG-TERM COMPENSATION Management andresult, the Committee believe that, overshort-term incentives shown on page X were paid, consistent with the long term, stockholder value is created by the generation of cash flow in excessperformance requirements of the risk-adjusted costCompany’s short-term incentive compensation plans.

Long-Term Incentives

We believe a substantial percentage of the stockholders' equity invested in the 7 10 Company. The Company's Long Term Incentive Plan ("LTIP") rewards executive officers for increasing over time the excess of cash flow from operations over the risk-adjusted cost of equity. Under the LTIP, the Committee grants performance units to executive officers, and cash payments are equaltotal compensation must be tied directly to the increasecreation of stockholder value. Historically, including the awards made in 2005, we have relied exclusively on stock-based long-term incentives, including stock options, restricted stock units, and performance share awards as the valuevehicles for long-term incentives.

Stock-based long-term incentives incorporate a higher level of the performance units over a three-year period.risk than other forms of executive compensation, and tie employees’ long-term economic interests directly to those of stockholders. The value of a performance unit for any single year is a function of cash flow from operations, less the risk-adjusted cost of equity capital, for the current year plus the previous four years. Awards for the three-year cycle are paid in the year following the end of the cycle. Awardslong-term incentive awards shown on Pages XX and XX were principally granted under the LTIP paid in 1996 were based on an increase inStock and Incentive Award Plan, which was approved at the valueApril 14, 2004 Annual Meeting of performance units overStockholders; the three-year period from 1993 to 1995 resulting from an increase in cash flow in excess ofEmployee Stock and Ownership Program, which was approved as amended by stockholders at the cost of equity capital. In 1996, Mr. Martin received an award of $72,480 for the 1993-1995 period. UnderApril 10, 2002 Annual Meeting; and the 1991 Barnes Group Stock Incentive Plan, which was approved as amended and restated in 1996. These plans allow for the Committee grantsuse of several long-term incentive vehicles, in addition to stock options, restricted stock units, and performance share awards.

Beginning in 2000, we instituted stock ownership guidelines under which every executive is expected to hold a substantial ownership stake in the Company for the duration of the executive’s tenure with the Company. Ownership includes stock owned directly and stock owned under the Barnes Group Inc. Retirement Savings Plan and Employee Stock Purchase Plan. In contrast to some companies’ ownership programs, restricted stock unit awards, stock options, and other stock-basedperformance share awards are excluded until the related stock is directly owned.

The current stock ownership guidelines that apply to executive officers and other key48 executives in an effort to align the interests of executives with those of the stockholders. ExceptCompany are:

Position


Multiple of
Annual Salary


Chief Executive Officer

5x

All Other Executive Officers

3x

Non-Officers (U.S./Non-U.S.)

1x/0.45x

We monitor ownership levels at least annually. Executives subject to the ownership guidelines are expected to make substantial progress toward the applicable guideline, with full compliance by the end of 2004, or 5 years from date of hire or promotion for one-timenew executives. The Committee is very pleased with the progress demonstrated by the management team through December, 2005. We will, at our discretion, pay future amounts under the Company’s short-term incentive compensation plans in stock or stock units if the guidelines are not met and if substantial progress is not apparent, or take other actions as we deem appropriate at that time to encourage compliance.

Prior to 2004, certain initial stock option grants (which are typically awarded at 85% of market value) to certain senior executive officers upon assumption of their positions were typically awarded at 85% of market value, and served as an effective vehicle for attracting key executive talent to the Company. Effective in 2004, all options generallygranted by the Committee have been granted on an annual basisawarded at the market price of the Commoncommon stock on the date of grant. The stock options granted in 2005 were awarded at the market price of the

stock on the date of grant. Such options become exercisable over time. Stock options issued at the market price of the stock on the date of grant result in gains to vest and become exercisable over time. In July, 1993, however, the Committee made special option grantsexecutive only when the stock appreciates for all stockholders. Stock options also encourage recipients to remain with the Company through the vesting periods associated with the options granted. As such, we believe that stock options are an effective incentive for executive officers and other key managersemployees, particularly when used in lieucombination with the ownership guidelines outlined above.

Restricted stock units, which are typically regarded as having the ability to maximize the retention capability of grants that would normallylong-term incentives, have been givengranted periodically. Each restricted stock unit entitles the recipient to receive one share of stock, provided the employee has remained with the Company over the four-yearfull restriction period. Restricted stock unit recipients also receive dividend equivalents on a quarterly basis equal to the quarterly dividend on Barnes Group stock. The restriction periods on grants of restricted stock units at the Company have historically been up to five years in length. In 2003 and 2004, we increased the restriction period 1994 through 1997. To ensure that option recipients were not rewarded unlessto seven years and six and one half years, respectively, for officers of the Company, and added an accelerated receipt feature. The acceleration of the 2003 and 2004 grants is tied to the Company’s achieving — and sustaining — substantial appreciation in the market pricevalue of the Common Stock experienced a significant increase, these options contained special provisions relating to exercisability. They did not become exercisable until 1997 at the earliest, and then only if the market price of the Common Stock reached $44 per share for at least 30 consecutive trading days beginning January 1, 1997. The market price threshold was achieved and sustained for the required 30-day period, and the options became exercisable on February 13, 1997. Mr. Martin received options under this special grant to purchase 14,800 shares at an exercise price of $31.25 per share, the market price of the Common StockBarnes Group stock on the date of grant.grant, thereby tying this incentive component directly to the Company’s ability to generate superior total stockholder returns. To date, the accelerated receipt feature has not been triggered. In January, 1994,2005, the restricted stock unit grants did not contain the accelerated receipt feature, and the restriction period was adjusted accordingly.

Performance share awards were also granted to all executive officers in recognition2005, the receipt of Mr. Martin's assumptionwhich is ordinarily wholly dependent on the Company’s meeting or exceeding preset earnings per share goals.

Factors Considered in Making Key Compensation Decisions

The decisions made regarding executive compensation incorporate the Committee’s judgment of the positionmanagement team’s leadership performance and potential to create sustainable growth in stockholder value. In addition to peer group comparison, we rely on judgment, not short-term operating or stock price performance, to determine the amount and mix of Executive Vice President-Operations, he received additional options to purchase 13,200 shares under substantiallyexecutive compensation. We also rely on the same terms as the 1993 special grant at an exercise price of $31.13 per share, the market priceinput of the Common Stockindependent compensation consulting firm retained to advise the Committee on such matters.

Key factors impacting our collective judgment include the datenature and complexity of grant. In addition, on June 30, 1995, in recognition of Mr. Martin's assumptioneach executive officer’s role, the challenging global economic business conditions the Company operates within, the effectiveness of the positionstrategies enacted to create enduring stockholder value, and the leadership demonstrated to create and promote a day-to-day working environment of unwavering integrity, compliance with applicable laws and the Company’s ethics policies, and global responsibility. Our judgment is also impacted by the progress demonstrated by the management team toward the stock ownership guidelines outlined under “Long-Term Incentives” above, which has resulted in an increase in owned shares by corporate officers. The success of this program has been instrumental in demonstrating management’s commitment to the Company’s stockholders.

Based on all factors we considered relevant, we believe it is in all stockholders’ best long-term interests to have set the overall and individual total cash compensation, long-term incentives, and executive benefits at the levels described in the accompanying compensation tables and supporting narratives.

Chief Executive Officer Compensation

Mr. E.M. Carpenter became President and Chief Executive Officer he received options to purchase 40,000 shareson December 8, 1998. His initial cash compensation, long-term incentives, and executive benefits were established in accordance with his Employment Agreement (which is described below under the termsheading “Employment Agreement”).

The Committee has increased Mr. Carpenter’s annual salary periodically during his six years with the Company, including a 4% increase effective April 1, 2005, to $785,000. In determining the magnitude of regular stock option grants at an exercise pricethe increase, the Committee considered the annual salaries of $40.25 per share, the market price on the date of grant. On February 16, 1996, Mr. Martin and two otherchief executive officers of the group of comparative companies, and of industrial companies of comparable size and complexity.

In 2005, the Company’s revenues were between the target and maximum performance levels established under the Barnes Group Inc. Performance-Linked Bonus Plan For Selected Executive Officers, while its earnings per share (adjusted as discussed above) were above the maximum performance level. As a result of this performance, Mr. Carpenter earned an award under the Plan between the target and maximum performance levels, which is shown on page X.

Also in 2005, we worked with the independent compensation consulting firm retained by the Committee to develop appropriate incentive programs for Mr. Carpenter for the remainder of his employment agreement which expires on December 31, 2006. The terms of Mr. Carpenter’s employment agreement are summarized under the heading “Employment Agreement” in this Proxy Statement. In determining the size and type of grants we considered the magnitude and types of grants to chief executive officers of industrial companies of comparable size and complexity, the importance of linking a significant part of Mr. Carpenter’s total compensation package to the future performance of the Company’s stock, the remaining term of his employment agreement and his role in leading the Company each were awarded incentiveto strong financial results and total stockholder returns. We granted Mr. Carpenter options to purchase common stock rights, with attached dividend equivalent rights,at 100% of the then current market value, as shown on page XX. We also granted to Mr. Carpenter restricted stock units described in footnote (c)the “Long-Term Incentives” section of this report. The final component of the long-term incentives granted to Mr. Carpenter in 2005 was a performance share award, as shown on page XX, the Summary Compensation Table. These awards, likereceipt of which is ordinarily wholly dependent on the special optionCompany’s meeting or exceeding preset financial goals. The 2005 grants serve as incentives for these key executive officers both to remain with the Company and to enhance stockholder value. In general, the number of performance units granted under the LTIP and the number of stock options and other stock-based awards granted under the 1991 Barnes Group Stock Incentive Plan arewere calculated based on the responsibilities and performanceCommittee’s stated intent that they serve as a two-year grant, to coincide with the expiration of the individual and the market medianMr. Carpenter’s employment agreement.

Policy on Deductibility of long-term incentive opportunities for persons in similar positions to the Company in size and complexity. OTHER Compensation

Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"“Code”), limits the Company'sCompany’s tax deduction to $1 million per year (the "Million Dollar Cap") for certain compensation paid to each of itsthe Chief Executive Officer ("CEO")and each other executive officer named in that year’s proxy statement unless certain conditions are met. One of those requirements is that compensation over $1 million annually must be based on stockholder-approved plans. The Barnes Group Inc. Performance-Linked Bonus Plan For Selected Executive Officers, which was approved in 2001, was designed to meet these requirements. The Stock and Incentive Award Plan, which was approved in 2004, the Employee Stock and Ownership Program, which was approved as amended in 2002, and the, four highest compensated executives other than1991 Barnes Group Stock Incentive Plan, which was approved as amended and restated in 1996, were also designed to meet these requirements. Generally, actions taken by the CEO namedCommittee have been intended to comply with Section 162(m) except where, in the proxy statement (the "Covered Executives"). Regulations issued underCommittee’s judgment, it was in the Code exclude frombest interests of the Million Dollar Capstockholders to grant forms of compensation that is calculated based on attainment of pre-established, objective performance goals, if certain other requirements are met. The Committee's policy is to 8 11 structure compensation awardsdid not qualify for Covered Executives that will be deductible without limitation where doing so will further the purposes of the Company's executive compensation programs. The Committee also considers it important, however, to retain flexibility to design compensation programs that recognize a full range of performance criteria important to the Company's success, even where compensation payable under such programs may not be fully deductible. CONCLUSION deductibility.

Summary

The Committee believes that the elements of theCompany’s executive compensation programs described above combine to provide competitive total compensation packages to the Company's executive officers. Most importantly, an executive's total compensation is heavily dependent on corporate performance in a manner which alignscreate strong links between the interests of the executiveCompany’s stockholders and its executives. Pay levels are intended to vary directly with thosethe stockholder value created under the management team’s leadership. The Committee also believes that relationship should be measured over a period of time sufficient to gauge the impact of the stockholders overstrategies developed and implemented, and the long term. levels of pay eventually received.

COMPENSATION COMMITTEE: Donna R. Ecton, Chairman AND MANAGEMENT

DEVELOPMENT COMMITTEE

Gary G. Benanav, Marcel P. Joseph Juan M. Steta 9 12 Chairman

John W. Alden

George T. Carpenter

Donald W. Griffin

Frank E. Grzelecki

G. Jackson Ratcliffe

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 1996, the Compensation Committee consisted of Ms. Ecton and Messrs. Benanav, Carpenter, Joseph and Steta. Companies in which Mr. Carpenter is a major stockholder acted as general contractor for construction work performed at the Company's Executive Office and at its manufacturing plants in Windsor and Bristol, Connecticut. The aggregate price for the construction work was $200,710. COMPENSATION

The following table sets forth compensation paid by the Company to itsthe Chief Executive Officer and to the four remainingother most highly-paidhighly paid persons who were executive officers at the end of 19962005 (the “named executive officers”).

SUMMARY COMPENSATION TABLE

Long-Term

Compensation


Annual Compensation

Awards2

Name and Principal Position


Year

Salary

Bonus

Other

Annual

Compensation1


Restricted

Stock

Awards3

($)


Securities

Underlying

Options

(#)


All Other

Compensation4


E.M. Carpenter

President and Chief

Executive Officer

2005
2004
2003
$

777,500
747,500
718,750
$

1,628,024
572,229
417,818
$

309,373
328,904
272,139
$

2,475,900
1,398,950
1,701,000
737,528
568,412
411,742
$

186,010
183,690
124,188

W.C. Denninger

Senior Vice President,

Finance and Chief Financial Officer

2005
2004
2003


363,750
337,500
312,500


511,566
174,321
108,921


30,552
30,038
28,093


340,605
342,600
415,800
140,038
95,741
60,973


47,700
39,108
37,496

S.S. Gates

Senior Vice President,

General Counsel and Secretary

2005
2004
2003


314,000
302,250
290,500


394,459
138,699
101,659


30,874
27,337
24,893


302,760
314,050
378,000
116,392
71,178
44,062


44,080
39,901
32,424

J.R. Arrington

Senior Vice President,

Human Resources

2005
2004
2003


308,250
297,250
286,750


386,993
136,425
136,350


38,610
39,467
33,805


302,760
314,050
378,000
99,633
67,959
44,915


56,234
45,435
38,736

P.A. Goodrich

Senior Vice President,

Corporate Development

2005
2004
2003


289,250
278,500
268,250


363,350
127,778
93,706


15,638
13,935
12,523


302,760
314,050
378,000
65,674
66,628
65,487


27,895
24,694
21,306

Notes to the above table:

1Otherannual compensation consists of reimbursement for taxes paid on perquisites, including life insurance premiums, and financial planning services paid by the Company. Included in “Other Annual Compensation” for Mr. E.M. Carpenter are perquisites, including $167,872, $160,368, and $154,710 in 2005, 2004 and 2003, respectively, for the personal usage of Company aircraft.

2Awardsto the executives were granted under the 1991 Barnes Group Inc. Stock Incentive Plan, the Barnes Group Inc. Employee Stock and Ownership Program and the Barnes Group Inc. Stock and Incentive Award Plan.

3Messrs.E.M. Carpenter, Denninger, Arrington, and Goodrich, and Ms. Gates were each awarded restricted stock units in the amounts of 32,000, 6,750, 6,000, 6,000 and 6,000, respectively, on February 16, 2005.These restricted stock units will vest one-third each in two and one-half years, three and one-half years, and four and one half years from the grant date; provided, that upon a change-in-control of the Company all restricted stock units will vest. Dividend equivalents are payable on each restricted stock unit on each dividend payment date equal to the dividend payable on the Common Stock on such date. Additionally, Mr. E.M. Carpenter was awarded 58,000 performance share units on March 7, 2005. Subject to meeting specified performance goals, the performance share units are to be earned as follows: for the 2005 fiscal year, 29,000 performance share units; the 2006 fiscal year, 29,000 performance share units; provided, that upon a change-in-control of the Company all of the performance share units shall be deemed to be earned. On March 1 of each year following the year in which the performance share units are earned, the number of shares of Common Stock equal to the number of earned performance share units will be delivered to him. He is entitled to receive dividend equivalents on all earned performance share units based upon dividends paid on outstanding shares of Common Stock. Messrs. Denninger, Arrington, and Goodrich, and Ms. Gates were awarded 6,750, 6,000, 6,000, and 6,000 performance share units, respectively, on February 16, 2005. These performance share units will vest, subject to meeting specified performance goals, one-third each for the fiscal years ended 2005, 2006, and 2007. On March 1 of each year following the year in which the performance share units are earned, the number of shares of Common Stock equal to the number of earned performance share units will be delivered to the holder. Each holder is entitled to receive dividend equivalents on all earned performance share units based upon dividends paid on outstanding shares of Common Stock.

Messrs. E.M. Carpenter, Denninger, Arrington, and Goodrich, and Ms. Gates were each awarded restricted stock units in the amounts of 25,000, 12,000, 11,000, 11,000, and 11,000, respectively, on salaryFebruary 11, 2004.These restricted stock units will vest six and any payments made underone-half years from the Company's annual bonus plan. Pursuant to applicable rules, compensation information is alsogrant date; provided, that in the event the fair market value of the Company’s common stock equals or exceeds $51.56 per share for John E. Besser who resigneda period of 30 consecutive trading days, then 50% of the restricted stock units will vest as an officerof the end of such 30-day period and the remainder

shall vest on the earlier of the one-year anniversary of such 30-day period or the normal vesting date; and provided further, that upon a change-in-control of the Company in 1996. SUMMARY COMPENSATION TABLE
Long Term Compensation ---------------------------------------- Awards Payouts ------------------------- ---------- Annual Compensation --------------------------------- Other Restricted Securities Annual Stock Underlying Compen- Awards(c) Options LTIP Name and Principal Position(a) Year Salary Bonus sation(b) ($) (#) Payouts(d) - ---------------------------------- ---- -------- -------- ------- ---------- ---------- ---------- T. E. Martin 1996 $500,004 $575,000 $18,764 $1,660,000 -0- $ 72,480 President and 1995 375,006 187,503 14,011 -0- 40,000 4,620 Chief Executive Officer 1994 280,008 139,164 8,866 -0- 13,200 3,060 A. A. Fadel 1996 240,012 183,202 1,248 726,250 -0- 34,500 Vice President, Barnes Group Inc. 1995 197,504 80,000 1,275 -0- -0- 1,344 and President, 1994 167,404 83,702 905 -0- 26,200 -0- Associated Spring T. O. Barnes 1996 230,004 184,003 1,696 -0- -0- 38,240 Chairman of the Board and 1995 212,502 106,251 1,611 -0- -0- 1,555 Senior Vice President- 1994 180,000 89,280 -0- -0- 23,200 -0- Administration L. M. Carlucci 1996 210,000 189,000 4,377 643,250 -0- 38,880 Vice President, Barnes Group Inc. 1995 176,374 88,187 3,613 -0- -0- 1,250 and President, Bowman 1994 151,849 74,323 2,916 -0- 4,000 -0- Distribution J. J. Locher 1996 152,316 76,158 4,139 -0- -0- 48,960 Vice President, Treasurer 1995 152,316 76,158 4,179 -0- -0- 1,782 1994 147,876 73,198 3,740 -0- -0- 1,404 J. E. Besser 1996 240,012 -0- 8,590 -0- -0- 67,200 Former Senior Vice President- 1995 240,012 120,006 8,649 -0- -0- 4,752 Finance and Law 1994 220,008 106,923 7,454 -0- 4,400 3,276 All Other Compen- Name and Principal Position(a) sation(e) - ---------------------------------- --------- T. E. Martin $29,984 President and 25,619 Chief Executive Officer 22,107 A. A. Fadel 6,536 Vice President, Barnes Group Inc. 6,580 and President, 6,122 Associated Spring T. O. Barnes 9,479 Chairman of the Board and 10,328 Senior Vice President- 9,596 Administration L. M. Carlucci 11,642 Vice President, Barnes Group Inc. 10,396 and President, Bowman 9,955 Distribution J. J. Locher 11,252 Vice President, Treasurer 11,252 11,084 J. E. Besser 18,516 Former Senior Vice President- 18,612 Finance and Law 18,133
(a) Mr. Martin was promoted to President and Chief Executive Officer in July, 1995. Mr. Carlucci assumed his current position in December, 1995. (b) Reimbursement for taxes paid on insurance premiums paid by the Company. The figure for Mr. Martin also includes "above-market" interest (as defined in rules promulgated by the Securities and Exchange Commission) paid on deferred compensation. (c) On February 16, 1996, Messrs. Martin, Fadel and Carlucci were each awarded incentive stock rights consisting of 40,000, 17,500 and 15,500 incentiveall restricted stock units respectively. Incentivewill vest. Dividend equivalents are payable on each restricted stock units are denominated in shares of Common Stock. Half of the rights awarded to each executive entitle the holder to receive, without payment to the Company, shares of Common Stock equal to the number of incentive stock units credited to the holderunit on February 16, 2001, provided that the holder is an 10 13 employee of the Company on that date. Units underlying these rights were credited to each executive as of the date of the award. The other half of the rights awarded to each executive entitle the holder to receive, without payment to the Company, shares of Common Stock equal to the number of incentive stock units credited to the holder on February 16, 2001, provided that the holder is an employee of the Company on that date and that specified performance targets for the Company's earnings per share are met. Units underlying these rights are credited in increments to each executive over the term of the award, commencing February 15, 1997, in accordance with a schedule based on the attainment by the Company of specified levels of earnings per share. Pursuant to the terms of the award, the holder is credited with dividend equivalents on all incentive stock units credited to him based upon dividends paid on outstanding shares of Common Stock. Such dividend equivalents, once credited, are converted into a number of additional incentive stock units, as of each dividend payment date equal to the amountdividend payable on the Common Stock on such date. Additionally, Mr. E.M. Carpenter was awarded 24,000 performance share units on February 11, 2004. Subject to meeting specified performance goals, the performance share units are to be earned as follows: for the 2004 fiscal year, 5,000 performance share units; for the 2005 fiscal year, 15,000 performance share units; and for the 2006 fiscal year, 4,000 performance share units; provided, that upon a change-in-control of dividends that would have been paid onthe Company all of the performance share units shall be deemed to be earned. On March 1 of each year following the year in which the performance share units are earned, the number of shares of Common Stock equal to the number of incentiveearned performance share units will be delivered to him. He is entitled to receive dividend equivalents on all earned performance share units based upon dividends paid on outstanding shares of Common Stock.

Messrs. E.M. Carpenter, Denninger, Arrington, and Goodrich, and Ms. Gates were each awarded restricted stock units credited toin the holder immediately prioramounts of 45,000, 22,000, 20,000, 20,000, and 20,000, respectively, on February 12, 2003.The restricted stock units will vest on the seventh anniversary of the grant date; provided, that in the event the fair market value of the Company’s common stock equals or exceeds 200% of the fair market value of the Company’s common stock on the grant date for a period of 30 consecutive trading days, then 50% of the restricted stock units will vest as of the end of such 30-day period and the remainder shall vest on the earlier of the one-year anniversary of such 30-day period or the normal vesting date; and provided further, that upon a change-in-control of the Company all restricted stock units will vest. Dividend equivalents are payable on each restricted stock unit on each dividend payment date equal to the dividend payment date divided by the market price ofpayable on the Common Stock on such date. Additionally, Mr. E.M. Carpenter was awarded 45,000 performance share units on February 12, 2003. Subject to meeting specified performance goals, the performance share units are to be earned as follows: for the 2004 fiscal year, 20,000 performance share units; for the 2005 fiscal year, 20,000 performance share units; and for the 2006 fiscal year, 5,000 performance share units; provided, that upon a change-in-control of the Company all of the performance share units shall be deemed to be earned. On March 1 of each year following the year in which the performance share units are earned, the number of shares of Common Stock equal to the number of earned performance share units will be delivered to him. He is entitled to receive dividend payment date. Asequivalents on all earned performance share units based upon dividends paid on outstanding shares of December 31, 1996, Messrs. Martin, Fadel and Carlucci were credited with 20,725, 9,067 and 8,031 incentiveCommon Stock.

The aggregate restricted stock units, respectively, having a valueunit holdings as of December 31, 19962005, for Messrs. E.M. Carpenter, Denninger, Arrington and Goodrich, and Ms. Gates totaled 208,727, 60,532, 53,963, 53,963 and 53,963 restricted stock units, respectively, based on the closing market price of $1,243,500, $544,020 and $481,860, respectively. (d) Payment$33.00 per share on December 31, 2005, or in the designated year with respect to three-year performance cycles ending the prior year. Thus, the payment made in 1996 covered the three-year cycle ending in 1995. (e) Includes Company matching contributions under the Guaranteed Stock Planaggregate $6,887,991, $1,997,556, $1,780,779, $1,780,779, and premiums paid for life insurance. In the case of Mr. Barnes, it also includes the amount of dividend equivalents that he received under the Company's Non-Employee Director Deferred Stock Plan described above under the caption "Non-Employee Director Deferred Stock Plan." 11 14 $1,780,779, respectively.

4Includedin “All Other Compensation” for 2005 are premiums paid for life insurance in the amounts of $179,710; $41,400; $49,319; $21,595; and $38,635 for Messrs. E.M. Carpenter, Denninger, Arrington and Goodrich, and Ms. Gates, respectively. The remainder of “All Other Compensation” for 2005 is matching contributions made by the Company under the Retirement Savings Plan.

STOCK OPTIONS No

The following table provides information on grants of stock options were granted in 19962005 pursuant to any of the Barnes Group Inc. Stock and Incentive Award Plan to the named executive officers listed inofficers.

   Individual Grants

         
   

Number of
Securities
Underlying
Options Granted1

(#)


  

Percent of
Total
Options
Granted to
Employees in

2005


  

Exercise Price2

      ($/Sh.)      


  

Expiration

Date


  

Potential Realizable Value at

Assumed Annual Rates of

Stock Price Appreciation to

          End of Option Term3             


Name


                 5%        

          10%        

E. M. Carpenter4

  6,442  0.3% $35.2805  2/06/2011  $65,793  $146,189

E. M. Carpenter4

  7,780  0.4%  35.2805  2/19/2009   47,111   99,541

E. M. Carpenter4

  7,569  0.4%  35.2805  2/10/2010   61,082   132,290

E. M. Carpenter4

  10,257  0.5%  35.2805  2/10/2010   82,774   179,270

E. M. Carpenter4

  2,198  0.1%  35.2805  2/10/2010   17,738   38,416

E. M. Carpenter4

  54,297  2.6%  35.2805  2/06/2011   554,546   1,232,168

E. M. Carpenter4

  22,371  1.1%  35.2805  2/13/2013   333,848   782,893

E. M. Carpenter4

  9,355  0.5%  35.2805  2/19/2009   56,648   119,692

E. M. Carpenter4

  16,878  0.8%  35.2805  2/10/2010   136,206   294,991

E. M. Carpenter4

  9,275  0.5%  35.2805  2/10/2010   74,849   162,107

E. M. Carpenter4

  2,072  0.1%  35.2805  2/10/2010   16,721   36,214

E. M. Carpenter4

  16,606  0.8%  35.2805  2/10/2010   134,011   290,237

E. M. Carpenter4

  16,125  0.8%  34.1750  2/06/2011   167,936   375,509

E. M. Carpenter4

  7,668  0.4%  34.1750  2/19/2009   48,611   103,334

E. M. Carpenter4

  9,461  0.5%  34.1750  2/06/2011   98,533   220,322

E. M. Carpenter4

  3,359  0.2%  34.1750  2/19/2009   21,294   45,266

E. M. Carpenter4

  31,398  1.5%  34.1750  2/19/2009   199,046   423,121

E. M. Carpenter4

  23,660  1.2%  34.1750  2/10/2010   196,710   428,675

E. M. Carpenter4

  1,171  0.2%  34.1750  2/10/2010   9,736   21,216

E. M. Carpenter4

  3,250  0.2%  34.1750  2/10/2010   27,021   58,884

E. M. Carpenter4

  15,444  0.8%  34.1750  2/10/2010   128,402   279,816

E. M. Carpenter4

  9,037  0.4%  34.1750  2/06/2011   94,117   210,448

E. M. Carpenter4

  30,081  1.5%  34.1750  2/06/2011   313,282   700,508

E. M. Carpenter4

  92,339  4.5%  34.1750  2/05/2012   1,166,966   2,679,413

E. M. Carpenter4

  49,480  2.4%  30.6750  2/05/2012   588,693   1,361,471

E. M. Carpenter4

  41,732  2.0%  30.6750  2/06/2011   412,135   928,092

E. M. Carpenter4

  10,249  0.5%  30.6750  2/19/2009   63,233   135,334

E. M. Carpenter4

  27,974  1.4%  30.6750  2/10/2010   222,825   488,964

E. M. Carpenter

  200,000  9.7%  27.5100  2/16/2015   3,437,445   8,698,144

E. M. Carpenter4

  54,868  2.7%  26.2800  2/05/2012   581,594   1,353,348

E. M. Carpenter4

  20,474  1.0%  26.2800  2/19/2009   115,518   248,684

E. M. Carpenter4

  31,020  1.5%  26.2800  2/10/2010   223,142   492,559

E. M. Carpenter4

  11,240  0.5%  26.2800  2/06/2011   99,456   225,319

E. M. Carpenter4

  19,158  0.9%  26.2800  2/06/2011   169,517   384,045

E. M. Carpenter4

  3,990  0.2%  26.2800  2/19/2009   22,512   48,464

E. M. Carpenter4

  46,276  2.3%  26.2800  2/06/2011   409,468   927,658

J.R. Arrington4

  370  0.0%  35.5700  2/06/2011   3,805   8,454

J.R. Arrington4

  794  0.0%  35.5700  2/19/2009   4,839   10,222

J.R. Arrington4

  516  0.0%  35.5700  2/10/2010   4,192   9,078

J.R. Arrington4

  555  0.0%  35.5700  2/10/2010   4,509   9,764

J.R. Arrington4

  645  0.0%  35.5700  2/10/2010   5,240   11,348

J.R. Arrington4

  619  0.0%  35.5700  2/06/2011   6,366   14,143

J.R. Arrington4

  1,878  0.1%  35.5700  2/10/2010   15,258   33,041

J.R. Arrington4

  10,728  0.5%  35.5700  2/19/2009   65,376   138,114

J.R. Arrington4

  737  0.0%  35.5700  2/10/2010   5,988   12,966

J.R. Arrington4

  1,864  0.1%  35.5700  2/10/2010   15,144   32,794

J.R. Arrington4

  4,659  0.2%  35.5700  2/06/2011   47,917   106,453

J.R. Arrington4

  5,877  0.3%  35.5700  2/10/2010   47,748   103,397

J.R. Arrington4

  10,715  0.5%  34.3500  2/05/2012   135,838   311,800

J.R. Arrington4

  6,967  0.3%  34.3500  2/06/2011   72,763   162,654

   Individual Grants

         
   

Number of
Securities
Underlying
Options Granted1

(#)


  

Percent of
Total
Options
Granted to
Employees in

2005


  

Exercise Price2

      ($/Sh.)      


  

Expiration

Date


  

Potential Realizable Value at

Assumed Annual Rates of

Stock Price Appreciation to

          End of Option Term3             


Name


                 5%        

          10%        

J.R. Arrington4

  181  0.0% $34.3500  2/06/2011  $1,890  $4,226

J.R. Arrington4

  2,497  0.1%  34.3500  2/10/2010   20,809   45,336

J.R. Arrington4

  5,877  0.3%  30.3150  2/10/2010   46,143   101,228

J.R. Arrington4

  17,650  0.9%  30.3150  2/05/2012   207,131   478,891

J.R. Arrington4

  2,591  0.1%  26.5000  2/10/2010   18,759   41,400

J.R. Arrington4

  135  0.0%  26.5000  2/10/2010   977   2,157

J.R. Arrington4

  4,324  0.2%  26.5000  2/10/2010   31,307   69,091

J.R. Arrington4

  5,081  0.2%  26.5000  2/06/2011   45,263   102,522

J.R. Arrington4

  4,373  0.2%  26.5000  2/10/2010   31,661   69,873

J.R. Arrington

  10,000  0.5%  25.2300  2/16/2015   158,670   402,101

W. C. Denninger4

  3,921  0.2%  34.7050  4/11/2010   32,383   70,410

W. C. Denninger4

  3,722  0.2%  34.7050  2/06/2011   37,304   82,864

W. C. Denninger4

  3,125  0.2%  34.7050  4/11/2010   25,809   56,116

W. C. Denninger4

  317  0.0%  34.7050  4/11/2010   2,618   5,692

W. C. Denninger4

  2,099  0.1%  34.7050  4/11/2010   17,335   37,692

W. C. Denninger4

  1,585  0.1%  34.7050  4/11/2010   13,090   28,462

W. C. Denninger4

  9,330  0.5%  34.2250  2/06/2011   97,366   217,729

W. C. Denninger4

  4,602  0.2%  34.2250  4/11/2010   39,920   87,371

W. C. Denninger4

  1,161  0.1%  34.2250  4/11/2010   10,071   22,042

W. C. Denninger4

  2,278  0.1%  34.2250  2/05/2012   28,845   66,235

W. C. Denninger4

  23,894  1.2%  34.2250  2/05/2012   302,560   694,745

W. C. Denninger4

  2,422  0.1%  34.2250  4/11/2010   21,010   45,983

W.C. Denninger4

  4,054  0.2%  34.2250  4/11/2010   35,167   76,967

W.C. Denninger4

  4,244  0.2%  34.2250  4/11/2010   36,815   80,574

W.C. Denninger4

  4,420  0.2%  34,2250  2/06/2011   46,126   103,147

W.C. Denninger4

  1,466  0.1%  34.2250  4/11/2010   12,717   27,833

W.C. Denninger4

  5,819  0.3%  30.1600  2/06/2011   56,347   126,843

W.C. Denninger4

  3,335  0.2%  30.1600  2/05/2012   38,919   89,975

W.C. Denninger4

  2,380  0.1%  30.1600  4/11/2010   19,307   42,532

W.C. Denninger4

  32,590  1.6%  25.6150  2/05/2012   336,865   783,931

W.C. Denninger4

  11,274  0.5%  25.6150  2/06/2011   97,284   220,415

W.D. Denninger

  12,000  0.6%  25.2300  2/16/2015   190,404   482,521

S.S. Gates4

  6,211  0.3%  35.1900  2/05/2012   78,156   178,569

S.S. Gates4

  5,661  0.3%  34.3500  2/05/2012   71,767   164,732

S.S. Gates4

  1,662  0.1%  34.3500  2/10/2010   13,851   30,175

S.S. Gates4

  3,158  0.2%  34.3500  6/01/2009   21,818   46,696

S.S. Gates4

  287  0.0%  34.3500  2/05/2012   3,638   8,352

S.S. Gates4

  14,391  0.7%  34.3500  2/06/2011   150,299   335,977

S.S. Gates4

  4,772  0.2%  34.3500  2/10/2010   39,769   86,641

S.S. Gates4

  6,361  0.3%  34.3500  2/10/2010   53,011   115,491

S.S. Gates4

  19,235  0.9%  34.3500  6/01/2009   132,892   284,419

S.S. Gates4

  4,833  0.2%  29.1150  2/05/2012   55,100   127,618

S.S. Gates4

  4,912  0.2%  26.5000  6/01/2009   30,031   65,096

S.S. Gates4

  20,044  1.0%  26.5000  2/05/2012   213,944   497,728

S.S. Gates4

  4,247  0.2%  26.5000  2/10/2010   30,749   67,860

S.S. Gates4

  172  0.0%  26.5000  2/06/2011   1,532   3,471

S.S. Gates4

  1,430  0.1%  26.5000  2/10/2010   10,353   22,849

S.S. Gates4

  631  0.0%  26.5000  2/10/2010   4,569   10,082

S.S. Gates4

  8,385  0.4%  26.5000  2/10/2010   60,709   133,979

S.S. Gates

  10,000  0.5%  25.2300  2/16/2015   158,670   402,101

P.A. Goodrich4

  1,263  0.1%  34.7050  2/05/2012   15,475   35,293

P.A. Goodrich4

  112  0.0%  34.7050  12/06/2009   845   1,820

P.A. Goodrich4

  11,279  0.5%  34.7050  2/05/2012   138,199   315,179

P.A. Goodrich4

  1,885  0.1%  34.7050  12/06/2009   14,215   30,636

P.A. Goodrich4

  1,626  0.1%  34.7050  12/06/2009   12,262   26,427

P.A. Goodrich4

  105  0.0%  34.7050  2/10/2010   831   1,800

   Individual Grants

         
   

Number of
Securities
Underlying
Options Granted1

(#)


  

Percent of
Total
Options
Granted to
Employees in

2005


  

Exercise Price2

      ($/Sh.)      


  

Expiration

Date


  

Potential Realizable Value at

Assumed Annual Rates of

Stock Price Appreciation to

          End of Option Term3             


Name


                 5%        

          10%        

P.A. Goodrich4

  3,212  0.2% $34.7050  2/10/2010  $25,425  $55,049

P.A. Goodrich4

  466  0.0%  35.1500  2/06/2011   5,040   11,284

P.A. Goodrich4

  738  0.0%  35.1500  2/10/2010   6,384   13,929

P.A. Goodrich4

  5,207  0.3%  35.1500  2/05/2012   68,253   156,908

P.A. Goodrich4

  9,770  0.5%  30.1600  2/05/2012   114,015   263,585

P.A. Goodrich4

  265  0.0%  30.1600  2/10/2010   2,069   4,538

P.A. Goodrich4

  7,594  0.4%  30.1600  2/06/2011   73,535   165,535

P.A. Goodrich4

  320  0.0%  30.1600  2/06/2011   3,099   6,975

P.A. Goodrich4

  2,898  0.1%  30.1600  12/06/2009   21,656   47,284

P.A. Goodrich4

  2,361  0.1%  30.1600  12/06/2011   22,862   51,465

P.A. Goodrich4

  436  0.0%  30.1600  12/06/2009   3,258   7,114

P.A. Goodrich4

  2,051  0.1%  30.1600  12/06/2009   15,327   33,464

P.A. Goodrich4

  4,086  0.2%  30.1600  12/06/2009   30,534   66,667

P.A. Goodrich

  10,000  0.5%  25.2300  2/16/2015   158,670   402,101

Notes to the Summary Compensation Table. above table:

1Optionsgranted under the Barnes Group Inc. Stock and Incentive Award Plan for Salary Grade 21 and above on February 16, 2005 become exercisable at the rate of 33.3334% on August 16, 2006 and 33.3333% on each of August 16, 2007 and August 16, 2008. Options granted to Mr. E.M. Carpenter on March 7, 2005 become exercisable at the rate of 33.3334% on August 16, 2006 and 33.3333% on each of August 16, 2007 and August 16, 2008.

2Foroptions granted under the Barnes Group Inc. Stock and Incentive Award Plan, the exercise price is defined as the mean between the highest and lowest sales prices per share of Common Stock traded on such date.

3Representstotal appreciation over the exercise price at the assumed annual appreciation rates of 5% and 10% compounded annually for the term of the option. The preceding calculations are not intended to be a prediction by the Company of the price of its shares in the future.

4Theseoption grants were made pursuant to the reload provisions under the 1991 Barnes Group Inc. Stock Incentive Plan and the Barnes Group Inc. Employee Stock and Ownership Program and the Barnes Group Inc. Stock and Incentive Award Plan. Under the reload feature, holders receive options to replace shares they use to (i) pay the Company for shares they are acquiring when they exercise a stock option and (ii) satisfy their tax withholding obligations. Reload options vest on the day they are awarded. They are granted at an exercise price that is equal to the fair market value of the Company’s Common Stock on the day of the award and expire at the date of expiration for the original grant.

AGGREGATED OPTION EXERCISES IN 2005 AND YEAR-END OPTION VALUES

The following table provides information relating to stock option exercises in 19962005 by the named executive officers and the number and value of each such officer'sofficer’s unexercised in-the-money options/SARsoptions on December 31, 1996,2005, based on the difference between the exercise price and the $60$33.00 per share, year-endthe closing market price of the Common Stock. AGGREGATED OPTION/SAR EXERCISES IN 1996 AND YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE- SHARES UNEXERCISED OPTIONS/SARS AT MONEY OPTIONS/SARS AT ACQUIRED FISCAL YEAR-END(#) FISCAL YEAR-END($) ON VALUE ------------------------------- ------------------------------- EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ----------- ----------- ----------- ------------- ----------- ------------- T. E. Martin 2,235 $ 27,237 19,970 58,950 $ 571,510 $ 1,425,684 A. A. Fadel -0- -0- 9,225 22,575 296,700 686,094 T. O. Barnes -0- -0- 2,500 18,200 83,850 548,784 L. M. Carlucci 5,000 54,193 11,600 10,750 382,575 309,280 J. J. Locher 7,600 63,284 1,600 6,800 34,592 195,200 J. E. Besser 15,600 253,461 2,600 14,340 89,700 412,787
LONG-TERM INCENTIVE PLAN AWARDS Stock on December 31, 2005.

Name


  

Shares
Acquired

on
Exercise(#)


  Value
Realized($)


  Number of Securities
Underlying Unexercised
Options at Fiscal Year-End(#)


  Value of Unexercised
In-The-Money Options at
Fiscal Year-End($)


      Exercisable

  Unexercisable

  Exercisable

  Unexercisable

E.M. Carpenter

  824,796  $4,881,741  669,695  316,666  $1,032,115  $2,196,324

J.R. Arrington

  138,192   1,139,347  136,412  22,733   393,126   191,216

W.C. Denninger

  146,825   897,692  129,788  30,667   284,345   262,028

S.S. Gates

  128,968   1,061,105  161,311  22,733   610,850   191,216

P.A. Goodrich

  65,575   472,293  102,295  22,733   334,601   191,216

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table providessets forth information relating to grants of performance units in 1996regarding securities authorized for issuance under the LTIP. LONG-TERM INCENTIVE PLANS -- AWARDS IN 1996
PERFORMANCE OR NUMBER OF OTHER PERIOD SHARES, UNITS UNTIL OR OTHER MATURATION NAME RIGHTS(#) OR PAYOUT -------------- -------------- T. E. Martin 47,400 units 1996-1998(a) A. A. Fadel 14,600 units 1996-1998(a) T. O. Barnes 12,000 units 1996-1998(a) L. M. Carlucci 13,300 units 1996-1998(a) J. J. Locher 2,600 units 1996-1998(a) J. E. Besser -0- N/A
(a) Under the LTIP, there are no thresholds, targets or maximums (as those terms are used in the Securities and Exchange Commission's rules). Payments are based on the increase in the valueCompany’s equity compensation plan as of performance units during the indicated performance period. The value of a performance unit over the three-year period ending December 31, 1996 increased by $5.38. However, this is not necessarily representative of the increase, if any, that will occur during the period 1996-1998. During 1996, the first year of the current performance period, the value of a performance unit increased by $2.91. Payments under the LTIP made in the prior three years are shown in the Summary2005.

Equity Compensation Table. Performance units granted under the LTIP are described above under the caption "Report of the Compensation Committee." 12 15 Plan Information

Plan category


    Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights


    Weighted-average
exercise price of
outstanding options,
warrants and rights


   Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))


     (a)    (b)   (c)
Equity compensation plans approved by security holders:               
1991 Barnes Group Stock Incentive Plan (1991 Plan)    508,824    $26.271  —  
Barnes Group Inc. Employees Stock and Ownership Program (2000 Plan)    1,146,151    $23.152  —  
Barnes Group Inc. Stock and Incentive Award Plan (2004 Plan)    2,332,086    $31.273  507,794
Employee Stock Purchase Plan (ESPP)    —       —     77,136
Non-Employee Director Deferred Stock Plan, As Further Amended    54,000     —     —  
Equity compensation plans not approved by security holders:               
Key Executive Stock Plan4    75,000    $26.30   —  
     
    


  

Total

    4,116,061    $—     584,930
     
    


  

Footnotes:

1Weighted-averageexercise price excludes 2,000 shares for restricted stock unit awards and 306 shares for dividend equivalents, both with zero exercise price.

2Weighted-averageexercise price excludes 417,081 shares for restricted stock unit awards and 22,736 shares for dividend equivalents, both with zero exercise price.

3Weighted-averageexercise price excludes 420,350 shares for restricted stock unit awards with a zero exercise price.

4KeyExecutive Stock Plan. In 1998, in accordance with Mr. E.M. Carpenter’s employment agreement and pursuant to the plan, 60,000 incentive stock units and 75,000 stock options to acquire shares of Common Stock were granted. The plan permitted Mr. E.M. Carpenter, and he elected, to meet payroll tax liabilities that arose under the plan with shares of Common Stock. As a result of the election, 13,135 shares remain for issuance; however, the plan does not provide for additional grants. The stock options have a 10-year term and vested over a period of four years. The incentive stock units vested over a five-year period.

PENSION PLANS

The following table gives examples of estimated annual retirement benefits payable to a named executive officer (other than Messrs. T. O. Barnes, Carlucci, Fadel and Martin, whose benefits are estimated in Pension Plan Table B below) as though he or she had retired in 19962005 at age 65 in specified compensation and years of service classifications under the Company'sCompany’s Salaried Retirement Income Plan, Retirement Benefit Equalization Plan and Supplemental Executive Retirement Plan.

PENSION PLAN TABLE A
Years of Service ------------------------------------------------------------------------- Remuneration 15 20 25 30 35 40 - ------------ -------- -------- -------- -------- -------- -------- $125,000 $ 43,508 $ 58,010 $ 72,513 $ 75,638 $ 78,763 $ 81,888 150,000 52,695 70,260 87,825 91,575 95,325 99,075 200,000 71,070 94,760 118,450 123,450 128,450 133,450 250,000 89,445 119,260 149,075 155,325 161,575 167,825 300,000 107,820 143,760 179,700 187,200 194,700 202,200 350,000 126,195 168,260 210,325 219,075 227,825 236,575 400,000 144,570 192,760 240,950 250,950 260,950 270,950 450,000 162,945 217,260 271,575 282,825 294,075 305,325 500,000 181,320 241,760 302,200 314,700 327,200 339,700 550,000 199,695 266,260 332,825 346,575 360,325 374,075 600,000 218,070 290,760 363,450 378,450 393,450 408,450

Years of Service

Remuneration


 

15 years


 

20 years


 

25 years


 

30 years


 

35 years


 

40 years


$125,000

 $41,618 $55,490 $69,363 $72,488 $75,613 $78,738

$150,000

 $50,805 $67,740 $84,675 $88,425 $92,175 $95,925

$200,000

 $69,180 $92,240 $115,300 $120,300 $125,300 $130,300

$250,000

 $87,555 $116,740 $145,925 $152,175 $158,425 $164,675

$300,000

 $105,930 $141,240 $176,550 $184,050 $191,550 $199,050

$350,000

 $124,305 $165,740 $207,175 $215,925 $224,675 $233,425

$400,000

 $142,680 $190,240 $237,800 $247,800 $257,800 $267,800

$450,000

 $161,055 $214,740 $268,425 $279,675 $290,925 $302,175

$500,000

 $179,430 $239,240 $299,050 $311,550 $324,050 $336,550

$550,000

 $197,805 $263,740 $329,675 $343,425 $357,175 $370,925

$600,000

 $216,180 $288,240 $360,300 $375,300 $390,300 $405,300

$650,000

 $234,555 $312,740 $390,925 $407,175 $423,425 $439,675

$700,000

 $252,930 $337,240 $421,550 $439,050 $456,550 $474,050

$750,000

 $271,305 $361,740 $452,175 $470,925 $489,675 $508,425

$800,000

 $289,680 $386,240 $482,800 $502,800 $522,800 $542,800

$850,000

 $308,055 $410,740 $513,425 $534,675 $555,925 $577,175

$900,000

 $326,430 $435,240 $544,050 $566,550 $589,050 $611,550

$950,000

 $344,805 $459,740 $574,675 $598,425 $622,175 $645,925

The compensationremuneration included in Pension Plan Table A in determining earnings for retirement plan purposes includes only annual salaries as shown in the column labeled "Salary"“Salary” in the Summary Compensation Table. Benefits are computed based on a straight-life annuity. The benefits listed in the table are not subject to a deduction for Social Security.

Messrs. T. O. Barnes, Carlucci, FadelArrington, E.M. Carpenter, Denninger and MartinGoodrich, and Ms. Gates all participate in the Company'sCompany’s Supplemental Senior Officer Retirement Plan. The following table gives examples of estimated annual retirement benefits payable under the Company'sCompany’s Supplemental Senior Officer Retirement Plan to each of these senior executive officers as though he or she had retired in 19962005 at age 65 in specified compensation and years of service classifications.

PENSION PLAN TABLE B
15 or More Remuneration Years of Service - ------------ ---------------- $ 125,000 $ 68,750 150,000 82,500 200,000 110,000 250,000 137,500 300,000 165,000 350,000 192,500 400,000 220,000 450,000 247,500 500,000 275,000 600,000 330,000 700,000 385,000 800,000 440,000 900,000 495,000 1,000,000 550,000 1,100,000 605,000 1,200,000 660,000 1,300,000 715,000
13 16

Remuneration

 

15 or More

Years of Service


$   125,000 $  68,750
     150,000     82,500
     200,000   110,000
     250,000   137,500
     300,000   165,000
     350,000   192,500
     400,000   220,000
     450,000   247,500
     500,000   275,000
     600,000   330,000
     700,000   385,000
     800,000   440,000
     900,000   495,000
  1,000,000   550,000
  1,200,000   660,000
  1,300,000   715,000
  1,400,000   770,000
  1,500,000   825,000

The compensationremuneration included in Pension Plan Table B in determining earnings for the Supplemental Senior Officer Retirement Plan includes only annual salary and bonus as shown in the columns labeled "Salary"“Salary” and "Bonus"“Bonus” in the Summary Compensation Table. Benefits are computed based on a straight-life annuity. This plan functions as an "umbrella"“umbrella” plan, and benefits listed in the table above are subject to deduction for Social Security benefits, benefits derived from other employers'employers’ pension plans and any benefits earned under the Company'sCompany’s other defined benefit plans, including, without limitation, the Salaried Retirement Income Plan, Retirement Benefit Equalization Plan and Supplemental Executive Retirement Plan.

Years of service as of December 31, 1996,2005, rounded to the nearest whole year, forcredited to the named executive officers for the purpose of the foregoing pension plans are as follows: T. E. Martin,Mr. J.R. Arrington, 8 years; Mr. E.M. Carpenter, 7 years1; Mr. W.C. Denninger, 6 years; A. A. Fadel, 5 years; T. O. Barnes, 6 years; L. M. Carlucci, 21 years; J. J. Locher, 15Ms. S.S. Gates, 7 years; and J. E. Besser, 16Mr. P.A. Goodrich, 7 years.

EMPLOYMENT AGREEMENT

On December 8, 1998, the Company entered into an employment agreement (the “Agreement”) with Mr. E.M. Carpenter under which he serves as the President and Chief Executive Officer of the Company. The Agreement provides for Mr. E.M. Carpenter’s employment through December 31, 2001, and for automatic annual extensions until Mr. E.M. Carpenter reaches age 65, unless either party furnishes 90 days prior written notice that the Agreement will not be extended. Mr. E.M. Carpenter was granted a one-time lump sum payment under the Agreement of $100,000 as a relocation allowance, with the amount grossed up for any applicable taxes. Mr. E.M. Carpenter also became entitled to receive reimbursement of expenses reasonably incurred in connection with his duties and to receive reimbursement of reasonable legal fees in connection with the negotiation and documentation of the Agreement and the enforcement of his rights under it. As part of the Agreement, Mr. E.M. Carpenter purchased on the open market $1,000,000 of Common Stock.

The Agreement provides for the following compensation benefits for Mr. E.M. Carpenter: (i) base salary in the first year of the Agreement, of $550,000, and thereafter on an annual basis the base salary is subject to increase at the


1

Mr. E.M.Carpenter’s employment agreement provides that, for the purpose of determining years of service, he is to earn two years of service for each year he is employed for each non-qualified plan in which he participates.

discretion of the Board of Directors; (ii) an annual bonus pursuant to the Company’s Management Incentive Compensation Plan (“MICP”) and any successor plan, up to a maximum of 150% of salary; and (iii) other benefits, consisting of the payment of life insurance premiums, a financial planning allowance, an automobile allowance, service credits under the Company’s non-qualified retirement plans, annual vacations, immediate participation in the Company’s welfare benefit plans, and country club membership expense reimbursement. Subsequent to the date of the Agreement, the Company adopted a successor plan to the MICP for certain executive officers, the Performance-Linked Bonus Plan for Selected Executive Officers (“PBP”). Pursuant to the PBP, Mr. E.M. Carpenter’s maximum annual bonus is currently 225% of salary. Pursuant to the Agreement, Mr. E.M. Carpenter was granted the following securities: (a) 90,300 Long-Term Incentive Plan (“LTIP”) units, (b) options to acquire 75,000 shares of Common Stock at an exercise price of 85% of fair market value on the date of grant, (c) 60,000 incentive stock units to receive shares of Common Stock that vested over a five-year period, and (d) 60,000 incentive stock units to receive shares of Common Stock that vested over a five-year period subject to specified performance goals being attained. Pursuant to Amendment 1 to the Agreement which was entered into as of July 2, 2003, following his retirement Mr. E.M. Carpenter and his spouse will be entitled to receive retiree medical coverage provided by the Company to its retirees.

The Agreement is subject to early termination by reason of Mr. E.M. Carpenter’s death or disability, by the Company for cause, by Mr. E.M. Carpenter for good reason, or by either party upon 30 days prior written notice. Upon termination, Mr. E.M. Carpenter would be entitled to any benefits due to him under any plan, program or policy of the Company which provides benefits after termination, other than any severance pay or salary continuation plan. In addition, if Mr. E.M. Carpenter’s employment were terminated without cause or for good reason, he would be entitled to continue receiving his salary and welfare plan benefits for a severance period extending through the end of the remaining employment period or two years, whichever is longer. He also would receive other benefits, including the payment of his target bonus, continued vesting of his stock options and incentive stock units, and continued service credits under the Company’s non-qualified plans through the end of the severance period. Payments to Mr. E.M. Carpenter would be subject to reduction under certain circumstances if necessary to avoid imposition of the golden parachute excise tax. Following termination for any reason, Mr. E.M. Carpenter is obliged not to compete with the Company for a two-year period and not to disparage the Company.

CHANGE-IN-CONTROL AND SEVERANCE ARRANGEMENTS

The Company has entered into change-in-control severance agreements (each a “CIC Agreement”) with Mr. E.M. Carpenter and each other named executive officer as of the following effective dates: Mr. J.R. Arrington, May 15, 1998; Mr. E.M. Carpenter, December 8, 1998; Mr. W.C. Denninger, March 31, 2000; Ms. S.S. Gates, June 1, 1999; and Mr. P.A. Goodrich, November 30, 1999. The CIC Agreements for Messrs. Arrington and Carpenter each has an initial term which ended on December 31, 1999 and the CIC Agreements for Messrs. Denninger and Goodrich, and Ms. Gates each has an initial term that ended on December 31, 2000, with each of the agreements providing for automatic annual extensions commencing on the immediately following January 1 and each January 1 thereafter, unless the Company or the executive provides written notice not later than September 30 of the preceding year of a determination not to extend the agreement.

Upon a “change in control” (as defined in the CIC Agreements), the executive is entitled to a cash payment equal to the pro rata amount that would be payable to the executive under the Company’s compensation plans and any long-term incentive plan, all options held by the executive would vest and all restrictions on stock-based awards would lapse. In the event of a change in control, an executive who is incapacitated and is not able to perform his or her full-time duties would be entitled to receive full salary and employment benefits (less any amounts received under the Company’s long-term disability plan) until terminated for reasons of disability.

An executive who is terminated following a change in control other than for cause or by reason of death, disability or voluntary termination, would be entitled to severance payments and benefits. These would consist of (i) a cash payment equal to a multiple (3 times in the case of Mr. E.M. Carpenter, 2 times for each other executive) of the executive’s most recent base salary and average annual bonus (as defined); (ii) continuation of participation in the

Company’s pension and welfare benefit plans for a number of months (36 or 24) corresponding to the multiple in (i), with the benefits reduced to the extent the executive subsequently receives coverage elsewhere; and (iii) a cash payment equal to the target award to which the executive would have been entitled under the Company’s incentive compensation plans to the date of termination (less any pro rata bonus previously paid for the same period). In addition, upon the occurrence of a change in control, (a) the executive would receive pro rata target awards under the Company’s other incentive compensation plans; (b) the executive’s options to acquire Company stock would vest and become exercisable; and (c) all restrictions on the executive’s stock-based awards would lapse. Payments to the executive would be subject to reduction under certain circumstances if necessary to avoid imposition of the golden parachute excise tax.

In addition, in the event of termination by the Company, the named executive officers, other than the President and Chief Executive Officer, may be eligible to receive under the Barnes Group Inc. Executive Separation Pay Plan, severance payments of up to 12 months of salary, accrued vacation pay, and continuation of certain other benefits for a period equal to the number of months of severance payments.

CERTAIN RELATIONSHIPS

A brother of William S. Bristow, a director of the Company, has been employed by the Company in a non-executive position since July 1980. Mr. Bristow’s brother received approximately $139,000 in total compensation from the Company in 2005 and participates in the Company’s benefit programs generally available to substantially all employees.

PERFORMANCE GRAPH

A stock performance graph based on cumulative total returns (price change plus reinvested dividends) for $100 invested on December 31, 19912000 is set forth below. COMPARISON

LOGO

The performance graph does not include a published industry or line-of-business index or peer group of similar issuers because the Company is in three major distinct lines of business and does not believe a meaningful such index or peer group can be reasonably identified. Accordingly, as permitted by SEC rules, the graph includes the S&P 600 Small Cap Index, which is comprised of issuers with generally similar market capitalizations to that of the Company.

APPROVAL OF FIVE-YEAR CUMULATIVE TOTAL RETURN OF BARNES GROUP INC.,AN AMENDMENT TO THE S&P 500 INDEX AND THE S&P MANUFACTURING (INDUSTRIAL DIVERSIFIED) INDEX
MEASUREMENT PERIOD (FISCAL YEAR COVERED) S&P 500 S&P MANUFACTURING BARNES GROUP INC. DEC-91 100 100 100 DEC-92 107.61 108.39 90.18 DEC-93 118.41 131.58 96.56 DEC-94 119.97 136.11 122.37 DEC-95 165.00 191.66 120.53 DEC-96 202.85 255.58 208.30
14 17 PROPOSAL TO AMENDCOMPANY’S

RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER

OF AUTHORIZED SHARES OF COMMON STOCK AND DECREASE PAR VALUES PER SHARE On February 21, 1997, the(Proxy Proposal 2)

The Board of Directors unanimously approvedRecommends a three-for-one stock split invote “For” this Proposal.

The Board of Directors adopted the form of a stock dividend of the Common Stock (the "Stock Split"), subject to the approval by the stockholders of a proposed amendment to the Company's Restated Certificate of Incorporation as amended (the "Certificate of Incorporation"), to increase the number of authorized shares of Common Stock from 20,000,000 shares to 60,000,000 shares and decrease the par values of the Common Stock and the Company's preferred stock (the "Preferred Stock") from $1.00 per share to $0.01 per share (the "Proposed Amendment"). In connection with the Stock Split, the Board of Directors unanimously approved the Proposed Amendment. If the Proposed Amendment is not approved by the stockholders of the Company, the Stock Split will not be effected. Accordingly, the Board of Directors recommends that the stockholders approve the Proposed Amendment to increase the number of authorized shares of Common Stock from 20,000,000 to 60,000,000 and decrease the par values of the Common Stock and Preferred Stock from $1.00 per share to $0.01 per share. Onat its February 21, 1997, the Board of Directors announced its approval of the Stock Split,16, 2006 meeting, subject to stockholder approval, and declared the proposal to be advisable. A copy of the Proposed Amendment, and also announced that, afterproposed amendment to the Annual Meeting, the Board intendsCompany’s Restated Certificate of Incorporation is attached to consider increasing the regular quarterly dividendthis Proxy Statement as Appendix 2. Accordingly, stockholders are asked to vote on the Common Stock by $0.0167 per share (or $0.05 per sharefollowing resolution:

RESOLVED, that the Company’s Restated Certificate of Common Stock before occurrence of the Stock Split). The determination of whetherIncorporation be amended to increase the regular quarterly dividend on the Common Stock is scheduled to be made by the Board of Directors at its regular May meeting. If the Proposed Amendment is approved by the stockholders, two additional shares of Common Stock (at the new, reduced par value) will be issued for each issued share of Common Stock, and two additional shares of Common Stock will be reserved for each share currently reserved for issuance pursuant to the Company's stock-based compensation plans. If the Proposed Amendment is approved by the stockholders, the payment date for the stock dividend effecting the Stock Split will be the close of business on April 25, 1997 (the "Effective Date"), and the record date for determination of holders of the Common Stock entitled to additional shares resulting from the Stock Split will be the close of business on April 3, 1997. A total of approximately 14,700,000 additional shares of Common Stock is expected to be issued as a result of the Stock Split. Approval of the Proposed Amendment will not affect the validity of Common Stock certificates outstanding on the Effective Date. Such certificates will continue to represent the number of shares of Common Stock shown thereon atcommon stock that the reducedCompany is authorized to issue to One Hundred Fifty Million (150,000,000) shares of common stock, par value $.01 per share and, accordingly, would not have to be surrendered toshare.

Reasons for the Amendment

Approval of the proposed amendment will allow the Company or any of its agents for exchange. The number of authorizedto maintain sufficient shares of Common Stock under the Certificate of Incorporation as presently in effect is 20,000,000 shares. As of February 4, 1997, 6,669,471 shares of Common Stock were issuedcommon stock for future business and outstanding (exclusive of treasury shares), and 1,268,440 shares of Common Stock were reserved for issuance pursuant to the Company's stock-based compensation plans. Thus, as of February 4, 1997, the maximum number of unreserved shares of Common Stock which may be issued (including treasury shares) was 12,062,089 shares.financial purposes. The Proposed Amendmentproposed amendment would increase the number of authorized shares of Common Stock tocommon stock from 60,000,000 shares to 150,000,000 shares. Authorized but unissued shares of Common Stock. Nocommon stock may be used by the Company for any purpose permitted under Delaware law, including but not limited to, paying a stock dividend to stockholders, raising capital, providing equity incentives to employees, officers and directors, and entering into transactions that the Board of Directors believes provide the potential for growth and profit. The Company periodically considers the advisability of paying a stock dividend when cash dividends are considered. If the proposed amendment to the Restated Certificate of Incorporation is approved, depending on market conditions and other factors, the Company might consider, but has not committed to, effecting a stock split of the outstanding common stock in the form of a stock dividend. Authorized but unissued shares of common stock may also be used to oppose a hostile takeover attempt or to delay or prevent a change in control of the numberCompany, although the Company has no present intention to issue shares for such purpose. The Company is not aware of any threat of takeover or change in control.

Under the proposed amendment, each of the newly authorized shares of Preferred Stock is proposed.common stock will have the same rights and privileges as currently authorized common stock. Adoption of the Proposed Amendment and effectuationproposed amendment will not affect the rights of the Stock Split would provide approximately 36,200,000holders of currently outstanding common stock of the Company nor will it change the par value of the common stock. Approval of this proposal requires the affirmative vote of the majority of shares of Common Stock (at a reducedoutstanding on the record date.

Background Information

The authorized capital of the Company currently consists of 60,000,000 shares of common stock, $0.01 par value of $0.01 per share) for future issuance. Although the unreserved shares would provide future flexibility, there are no present plans for their use. The additionalshare, and 3,000,000 shares of Common Stock resulting from the Stock Split will have one votepreferred stock, $0.01 par value per share. The holdersproposed amendment to increase the authorized number of Common Stock haveshares of common stock does not change the number of shares of preferred stock that the Company is authorized to issue. There are no preemptive rightsshares of preferred stock currently outstanding.

The number of shares of common stock outstanding as of the record date for the 2006 Annual Meeting was 24,157,167, which does not include 262,527 shares that the Company holds as treasury stock. As of such date 6,932,153 shares were reserved for issuance under its senior subordinated convertible notes and various benefit plans for employees and directors, of which 4,484,727 shares are subject to additional issuancesissuance pursuant to outstanding options and awards.

If the proposed amendment is adopted, it will become effective upon filing of Common Stock or securities convertible into or entitlinga Certificate of Amendment to the holder to purchase Common Stock. The Company intends to apply to The New York Stock Exchange, Inc., onCompany’s Restated Certificate of Incorporation with the Delaware Secretary of State, which the Common Stock is currently listed, forCompany expects to occur as soon as practicable after the listing thereon of the additional shares to be issued and reserved for future issuance as a result of the Stock Split.annual meeting. The Board of Directors believesreserves the right not to file the

proposed amendment, even if it is approved, if the Board determines, in its sole discretion, that the Stock Splitit is no longer in the best interests of the Company and its stockholders because it will place the market price of the Common Stock in a range more attractive to 15 18 investors, particularly individuals, and may broaden the market for, and increase the liquidity of, the Common Stock. If the Proposed Amendment is approved and the Stock Split effected, the authorized but unissued Common Stock would be available for issuance in the future for such corporate purposes as theCompany. The Board of Directors deems advisable from timealso reserves the right, even if the proposed amendment is approved, not to time without further action byeffect any of the stockholders, unlessforegoing transactions or other transactions involving authorized shares of common stock if it determines in its sole discretion that any such actiontransaction is required by applicable law, regulation or stock exchange rule. Undernot in the current rulesbest interests of the Company.

APPROVAL OF THE AMENDED BARNES GROUP INC. STOCK AND INCENTIVE AWARD PLAN

(Proxy Proposal 3)

The New YorkBoard of Directors Recommends a vote “For” this Proposal.

The Company is seeking approval to amend its Stock Exchange, Inc., stockholder approval is required as a prerequisiteand Incentive Award Plan (“Plan”) to listing shares in several instances, including, for example, acquisition transactions whereincrease the maximum aggregate number of shares of common stock, topar value $.01, of the Company which may be issued pursuant to Awards under the Plan from 950,000 to 1,900,000. No other amendments to the Plan are proposed. The Company’s Board of Directors has unanimously approved the amendment to the Plan, subject to stockholder approval, at the Company’s Annual Meeting.

Introduction

Long-term incentive compensation plays an integral part in the Company’s pay for performance strategy.

The Plan serves two primary purposes. First, it provides competitive incentives that enable the Company to attract, motivate and reward persons who render services that benefit the Company or other enterprises in which the Company has a significant interest. Second, the Plan aligns the long-term economic interests of such persons directly with the interests of the Company’s stockholders generally. The Plan is integral to the Company’s compensation strategies and programs, as the Board believes that the Plan will enhance the Company’s ability to attract and retain individuals of exceptional talent whose skills will enable the Company to continue to achieve sustainable, profitable growth.

Stockholder approval of the amendment to the Plan will permit the performance-based awards discussed below to qualify for deductibility under Section 162(m) of the Internal Revenue Code (the “Code”). An affirmative vote of a majority of shares of Common Stock voted is required to adopt this proposal. The Company is also requesting stockholder approval of the amendment to the Plan so that any options designated as incentive stock options will continue to qualify as such pursuant to Section 422 of the Code and to satisfy the stockholder approval requirements of the NYSE.

The primary features of the Plan are summarized below. The complete text of the Plan is set forth in Annex 3 to this Proxy Statement and the following discussion is qualified in its entirety by reference to the Plan.

General Description of the Plan

The Plan permits the issuance of incentive awards, stock option grants and stock appreciation rights (“SARs”). Incentive awards may include, but are not limited to, dividend equivalents, performance share awards, performance unit awards, restricted stock awards or restricted stock unit awards (each as described below). The foregoing are collectively referred to as “Awards.” Any Award may be linked to another Award, and linked Awards may be granted as either alternatives or supplements to each other. Under the Plan, the Company may issue Awards that qualify as performance-based compensation.

Eligibility.Those eligible for Awards under the Plan are referred to below as “Participants.” Participants include any person who renders, has rendered or who the Company expects to render services (each, a “Service Provider”) that benefit or will benefit the Company or one of its subsidiaries, or any other entity in which the Company has a significant interest. A Service Provider may be equalan employee, director, independent contractor, agent, advisor,

consultant, representative or otherwise. Service Providers include all employees of the Company and its subsidiaries, and all non-employee directors of the Company. The approximate number of individuals in each such class of eligible Participants is as follows: employees, 6,025; non-executive officer directors, nine; and an indeterminate number of other Service Providers.

Shares Available for Issuance. The Board initially reserved up to 950,000 shares of Common Stock for issuance pursuant to Awards, in addition to any unused shares that were available (or became available) on or after April 14, 2004 under the 1991 Barnes Group Inc. Stock Incentive Plan or the Barnes Group Inc. Employee Stock and Ownership Program (collectively, the “Prior Plans”). As of December 31, 2005, 507,794 shares remain available for issuance pursuant to grants of Awards under the Plan.

Substitution and Assumption of Awards. If, in excessconnection with an acquisition by the Company or a merger of 20%another company with the Company, the Company assumes the other company’s outstanding stock incentive awards or substitutes new awards for the other company’s outstanding stock incentive awards, any shares the Company issues pursuant to such assumed or substituted awards will not count against the shares available for issuance under the Plan.

Reusage. Shares covered by an Award under the Plan are not counted against the shares available for issuance under the Plan unless and until they are actually issued to a Participant. If an Option granted under the Plan expires or terminates, or is surrendered or canceled without having been fully exercised, or if Restricted Stock Units, Performance Shares, Performance Units or SARs granted under the Plan are forfeited or terminate without the issuance of all of the shares subject thereto, the shares covered by and not issued pursuant to such Awards will remain available for use under the Plan. Any Restricted Stock that is forfeited to the Company will again be available for issuance under the Plan. Any shares of Common Stock covered by a SAR will count against the shares available for issuance under the Plan only to the extent shares are actually issued to the Participant upon exercise of the SAR. Any shares which a Participant surrenders to the Company to pay the exercise or purchase price of an Award will be added back to the number of shares available for issuance under the Plan, so that only the net number of shares issued by the Company in connection with the Award will count against the shares available for issuance under the Plan. Likewise, shares withheld to pay withholding taxes in connection with the exercise, vesting or payment of an Award will be added back to the number of shares available for issuance under the Plan. Shares covered by an Award granted under the Plan that is settled in cash will not be counted against the number of shares available for issuance under the Plan.

Award Limits. Not more than 50% of the total number of shares subject to the Plan may be issued pursuant to Awards that are not appreciation-only Awards (as described below), and not more than 475,000 of the total number of shares subject to the Plan may be issued pursuant to stock options that are incentive stock options.

No Participant may be granted in any calendar year:

Options or SARs relating to more than 500,000 shares;

Awards (other than appreciation-only Awards and dollar-denominated Awards, described further below) relating to more than 250,000 shares; and

Dollar-denominated Awards in excess of $7 million (or the equivalent in shares of Common Stock, based on the fair market value of the Common Stock on the date as of which the number of shares is determined).

Appreciation-only Awards are options and SARs with an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant. Dollar-denominated Awards are Performance Unit Awards and any other incentive Awards based on a specified amount of money, which are not determined by reference to the fair market value of the Common Stock.

Administration. The Plan is administered by the Compensation and Management Development Committee of the Board of Directors (the “Committee”). The Committee is required to be comprised of at least two members, each of

which must be (i) an “independent director,” as defined in applicable rules or listing standards of the NYSE; (ii) a “non-employee director,” as defined in Rule 16b-3 under the Securities Exchange Act of 1934; and (iii) an “outside director,” as defined in Treasury Department regulations for purposes of Section 162(m) of the Code. This Committee may, under certain circumstances, delegate authority to (a) another committee of the Board, or (b) the Chief Executive Officer of the Company or the chairperson of the Committee. Such delegated authority shall be limited to the ability to grant Awards to employees or other Service Providers who are not officers or directors of the Company and are not “covered employees” within the meaning of Section 162(m). The Committee has exclusive power to:

select eligible persons to participate in the Plan,

determine the time when Awards will be made to eligible persons,

determine the nature and extent of Awards to be made to each Participant,

determine the duration of restriction periods and performance Award periods,

determine the conditions to which payment of Awards may be subject, including whether or not Awards are to be linked to each other,

establish performance goals for each Award period, and

determine whether or not a specific Award is intended to qualify as performance-based compensation.

In addition, the Committee has the authority to establish and revise all rules and regulations relating to the Plan, to interpret and construe the Plan and to make determinations with respect to the Plan that it considers to be necessary or advisable for the administration of the Plan.

Awards.

Options.The Plan authorizes the grant of options to purchase Common Stock which may be either incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”). ISOs and NSOs are collectively referred to as “Options.” ISOs must comply with Section 422 of the Code and may only be granted to employees of the Company or one of its subsidiaries.

Each ISO granted pursuant to the Plan must have an exercise price that is no less than the fair market value of the Common Stock underlying such ISO at the time of the grant (or no less than 110% of the fair market value in the case of ISOs that are granted to Participants, if any, who are holders of more than 10% of the Common Stock). Each NSO granted pursuant to the Plan must have an exercise price that is no less than the par value of the Common Stock.

The Committee shall determine when Options are exercisable and when they expire at the time such Options are granted. However, the term of an Option cannot exceed 10 years from the date of grant (or five years in the case of ISOs that are granted to Participants, if any, who are holders of more than 10% of the Common Stock).

Generally, for purposes of the Plan, fair market value means the average of the highest and lowest sales prices per share of Common Stock in trading on the date of the Award grant, as reported by Reuters or another source designated by the Committee.

Payment for shares purchased upon exercise of an Option must be made in full at the time of exercise. Payment may be made in cash or, if provided for in the Option grant, by any of the following methods or a combination thereof:

the transfer to the Company of shares owned by the Participant for at least six months or purchased on the open market, having a fair market value on the date of transfer equal to the exercise price; and/or

the delivery to the Company of a properly executed exercise notice together with a copy or irrevocable instructions to a broker to sell immediately some or all of the shares acquired by the exercise of the Option and to deliver promptly to the Company an amount of the sale proceeds sufficient to pay the purchase price; and/or

the election to have the Company retain some of the shares that would otherwise be issued pursuant to the option exercise, having a fair market value on the date of exercise equal to the exercise price.

In addition, the Committee may authorize any other manner of payment, so long as such method complies with all applicable laws and the NYSE listing standards. However, the Committee may not reduce the exercise price of any outstanding common stock. IfOption, except as discussed under “Adjustments,” below.

The Committee may grant Options which provide that the Proposed AmendmentParticipant shall be granted an NSO (referred to as a reload Option) to purchase shares in the event that the Participant:

exercises all or part of an existing Option by surrendering shares of Common Stock already owned by the Participant to pay the purchase price; and/or

has shares of Common Stock withheld to satisfy tax obligations in connection with the exercise of an Option.

The number of shares granted under any such reload Option shall not be greater than the number of shares surrendered or withheld. The exercise price of any reload Option shall be the fair market value on the grant date. Any reload Option will expire on the expiration date of the original Option whose exercise initiated the reload.

SARs. The Committee may grant SARs to Participants, and determine the number of the reload option SARs, the term of the SARs, the time or times at which the SARs may be exercised, and all other terms and conditions of the SARs. Each SAR entitles the Participant to receive, upon exercise of the SAR, without payment to the Company by the Participant, an amount, payable in shares, cash or a combination of shares and cash, that is approved,equal to the excess of:

the per share fair market value of the Common Stock on the date of exercise;over

the exercise price of the SAR.

SARs may be linked to Options under the Plan. Such SARs may be either a supplement or an alternative to the linked Options. SARs may also be issued as stand-alone Awards. For stand-alone SARs and SARs linked as a supplement to an Option, the exercise price shall be the fair market value of the Common Stock on the date of grant of the SARs unless the Committee specifies a different exercise price, which may not be less than the par value of the Common Stock. For SARs linked as an alternative to the related Option, the exercise price shall be the same as the exercise price of the related Option.

Incentive Awards. The Plan authorizes the grant of Incentive Awards in lieu of, or as a supplement to, any other compensation that may have been earned by a Service Provider. In general, the Committee determines all of the terms and conditions of Incentive Awards including whether they will be contingent upon completion of a period of service after the grant of the Awards or on achievement of a performance goal, and whether any transfer restrictions will apply to shares of Common Stock issued pursuant to Incentive Awards. The amount of an Incentive Award may be based upon a specified number of shares of Common Stock covered by each outstanding option issued underor the Company's option plans and the exercise pricefair market value of each such option will be proportionately adjusted to reflect the Stock Split. In addition, financial or other standards utilized in establishing performance targets under the Company's various employee benefit plans will be equitably restated, as appropriate, to take into account the effect of the Stock Split. Furthermore, thea specified number of shares awarded to non-employee directors under the Company's Non-Employee Director Deferred Stock Plan will also be adjusted to take into account the effect of the Stock Split. The present par values of the Common Stock and Preferred Stock are not consistent with current trends among public corporations whose common stock normally has nominal, if any, par value. Moreover, in reducing the par value of each share of Common Stock and Preferred Stock to $0.01, the Proposed Amendment would result in reduced mandatory capital accounts for both the Common Stock and Preferred Stock and reductions in certain filing fees. Because the Company is required to keep in its capital accountsor an amount equal toauthorized by the Committee. Any Incentive Award may be paid in cash or in excess of the par value for each share of capital stock issued, the lower par values included in the Proposed Amendment would enable the Company to reduce its stated capital. Specifically, as of April 3, 1997, the changed par value would allow the Company to transfer from stated capital to surplus an aggregate of approximately $15,500,000 after giving effect to the Stock Split, without any negative effect on the Company's cash position or other assets. Such a transfer may enhance the ability of the Company to pay a dividend at a future date, since, under Delaware law, the Company may only declare dividends out of surplus (or, in the event there is no surplus, out of net profits for the fiscal year in which the dividend is declared or the preceding fiscal year). On February 21, 1997, the Board of Directors voted to transfer an amount from stated capital to surplus as of the Effective Date, subject to stockholder approval of the Proposed Amendment, equal to the amount by which the current stated capital of the Company exceeds the minimum required stated capital. Also, the lower par values included in the Proposed Amendment would reduce the cost of certain filings which are based on the par value of the Company's stock (including principally Secretary of State filings relating to the Proposed Amendment and future amendments to the Certificate of Incorporation to increase the authorized shares of Common Stock, or Preferred Stock)a combination of cash and shares. Forms of Incentive Awards include, but are not limited to, Dividend Equivalents, Performance Share Awards, Performance Unit Awards, Restricted Stock Awards and Restricted Stock Unit Awards.

Dividend Equivalents. IfDividend Equivalents are the Proposed Amendment is approved and becomes effective,right to receive an amount of money equal to the first sentence of Article Fourth of the Certificate of Incorporation, which sets forth the Company's presently authorized capital stock, will be amendeddividends paid from time to read in its entirety as follows: FOURTH: The totaltime on a specified number of shares of all classes Common Stock. Dividend Equivalents may be paid in the form

of stock which the corporation shall have authority to issue is 63,000,000 shares, consisting of 3,000,000money or shares of preferred stockCommon Stock based on their fair market value on the payment date, or any combination of cash and shares. Any shares of Common Stock issued pursuant to Dividend Equivalents will be charged against the parmaximum number of shares which may be issued pursuant to Awards.

Performance Share and Performance Unit Awards. A Participant who is granted a Performance Share Award has the right to receive shares or cash or a combination of shares and cash equal to the fair market value of $0.01 per sharesuch shares at a future date in accordance with the terms of such grant and 60,000,000 sharesupon the attainment of common stockperformance goals specified by the Committee. The award of the par value of $0.01 per share. Under existing law and regulation, neither the Proposed Amendment nor the Stock Split will resultPerformance Shares to a Participant does not create any rights in any gain or loss or any other form of taxable income to the stockholderssuch Participant as a stockholder of the Company for federal income tax purposes. The laws of jurisdictions other thanuntil the United States may impose income taxes on the issuance of the additional shares in connection with the Stock Split, and stockholders subject to those laws are urged to consult their tax advisors. A stockholder's basis in his or her shares held before the Stock Split will be allocated between such shares and the new shares for the purpose of determining future gain or loss on a sale of any of the shares, and the holding period of new shares will include the holding period of the shares with respect to which they were issued. 16 19 Afteran Award. A Participant who is granted a Performance Unit Award has the Stock Split, purchases and salesright to receive a payment in cash upon the attainment of Common Stockperformance goals specified by an individual stockholderthe Committee. The Committee may be subject to somewhat higher brokerage charges and applicable stock transfer taxes than on a pre-split transaction of equivalent market value because of the greater number ofsubstitute actual shares of Common Stock outstanding afterfor the cash payment otherwise required to be made pursuant to a Performance Unit Award.

Restricted Stock Split. However,and Restricted Stock Unit Awards. Restricted Stock consists of shares which are transferred to or sold by the Company to a Participant, but are subject to risk of forfeiture provisions and restrictions on their sale or other transfer by the Participant. Restricted Stock Split should also reduceUnits are the expenses of buying or selling a single "round lot" of Common Stock in some cases. The Company will incur certain expenses in connection with the Stock Split, such as listing fees and the cost of preparing and deliveringright to stockholders new certificates representing the additional shares. Although an increase in the authorizedreceive shares of Common Stock could, underat a future date in accordance with the terms of such grant upon the attainment of certain circumstances, have an anti-takeover effect (for example,conditions specified by diluting the stock ownershipCommittee. The Committee determines the eligible Participants to whom, and the time or times at which, grants of a person seeking to effect a change in the composition of the Board of DirectorsRestricted Stock or contemplating a tender offer or other transaction for the combination of the Company with another company), immediately after theRestricted Stock Split,Units will be made, the number of shares or units to be granted, the price to be paid, if any, the time or times within which the shares covered by such grants will be subject to forfeiture, the time or times at which the restrictions will terminate, and all other terms and conditions of Common Stock available for future issuance would be, on a proportionate basis, the same as the number of shares of Common Stock available for future issuance priorgrants. Restrictions or conditions could include, but are not limited to, the attainment of performance goals, continuous service with the Company, or the passage of time.

Performance Goals. Restricted Stock Split.Awards, Restricted Stock Unit Awards, Performance Share Awards, Performance Unit Awards and other Incentive Awards that are intended to qualify as Performance-Based Compensation shall be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) of the Code. Such performance goals shall be based on targeted levels of, targeted levels of return on, or targeted levels of growth for: earnings per share, net income, operating income, performance profit (operating income minus an allocated charge approximating the Company’s cost of capital, before or after tax), gross margin, revenue, working capital, total assets, net assets, stockholders’ equity or cash flow. The Proposed Amendment is notforegoing may be referred to as performance criteria.

Any performance criteria may be used to measure the result of any specific effort to accumulate the Company's securities or to obtain controlperformance of the Company by meansas a whole, or the performance of any consolidated group, business unit or division. Unless the Committee directs otherwise at any time prior to payment of a merger, tender offer, solicitationPerformance-Based Compensation Award and subject to the Committee’s right to reduce the amount payable prior to payment, each of the following items will be disregarded in oppositiondetermining the extent to managementwhich the performance goal has been achieved if the effect would be to reduce the Award: extraordinary, unusual or otherwise. Moreover,non-recurring items; discontinued operations; effects of accounting changes; effects of currency fluctuations; effects of financing activities; expenses for restructuring or productivity initiatives; non-operating items; effects of acquisitions and acquisition expenses; and effects of divestitures and divestiture expenses.

Amendment and Termination. The Plan is effective for 10 years from the Proposed Amendment is not part of a plan by management to adopt a series of amendments to its Certificate of Incorporation, and management has no current intention to propose anti-takeover measures in future proxy solicitations. The Company's existing Certificate of Incorporation and By-Laws currently include certain other provisions which could be characterized as having an anti-takeover effect. For example, the By-Laws classify the Board of Directors into three classes of directors with staggered terms of office, provide that Board vacanciesdate it received stockholder approval, April 14, 2004, but may be filledterminated earlier by a majority of the directors remaining in office, provide that the number of directors shall be determined by the Board of Directors and provide that special meetings of stockholders may be called only by the President, the Chairman of the Board or the Board of Directors. In addition, the CertificateCommittee may at any time amend, suspend or reinstate the Plan, so long as any such amendment does not impair or adversely affect the rights of Incorporation statesthe holder of an Award without the holder’s consent and so long as such action complies with any applicable stockholder approval requirements of Delaware or federal law, the NYSE or the Code. Any amendment that no action which is requiredincreases the aggregate number of shares issuable under the Plan or permits the exercise price of outstanding Options or SARs to be takenreduced (except as set forth under “Adjustments”) must receive stockholder approval. A decrease in the exercise price of an Option or which maySAR where such exercise price is indexed to the decrease in a specified index shall not be taken at any annual or special meetingconsidered a reduction to the exercise price requiring stockholder approval.

Effect on Prior Plans. The Plan replaced the Prior Plans for purposes of stockholders may be taken by consent in writing without a meeting of stockholders. The Certificate of Incorporation also requires certain forms of consideration, minimum price and procedural requirements to be met, or alternatively,all Awards made after the vote of holders of 70 percent of the stock entitled to vote, in order for there to be consummated specified business combinations with certain stockholders, unless such combinations are approved by 66 2/3% of continuing directors who are not affiliated with such stockholders.effective date. The Company has also adopted a stockholder rights plan pursuantceased to grant awards under the Rights Agreement dated as of December 10, 1996 betweenPrior Plans, except for awards which the Company and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agreement") which could haveis contractually obligated to grant thereunder.

Change-In-Control.For any Award granted, the Committee may specify how such Award will be treated in the event a deterrent effect against a takeover ofchange-in-control occurs with respect to the Company. If the Proposed Amendment is approvedCommittee does not make specific provisions in any Award, such Award will fully vest and, in the case of Options and SARs, become fully exercisable, immediately. Change-in-control events include the ownership by one person or entity of 25% or more of the Common Stock, continuing directors or their nominees cease to constitute a majority of the Board of Directors, specified mergers or consolidations involving the Company and the Stock Split is effected, following the Stock Split and in accordance with the termsapproval of a plan of liquidation or of a sale of all or substantially all of the Rights Agreement,Company’s assets.

Adjustments. If there is any change in the Common Stock by reason of any stock split, stock dividend, spin-off, split-up, spin-out, recapitalization, merger, consolidation, reorganization, combination or exchange of shares, the total number of shares available for Awards, the maximum numbers of shares which may be subject to an Award in any calendar year and the number of shares subject to outstanding Awards, and the price of each of the foregoing, as applicable, will be equitably adjusted.

In the event of any merger, consolidation or reorganization of the Company with or into another corporation which results in the Company’s outstanding Common Stock being converted into or exchanged for different securities, cash or other property, there shall be substituted on an equitable basis as determined by the Committee, for each share of Common Stock (includingsubject to an Award, the number and kind of shares issuedof stock, other securities, cash or other property to which holders of Common Stock of the Company are entitled pursuant to the transaction.

Federal Income Tax Consequences

The following is a description of the U.S. federal income tax consequences as they relate to Awards:

ISOs. A Participant does not generally recognize taxable income upon the grant or upon the exercise of an ISO. Upon the sale of ISO shares, the Participant recognizes income in an amount equal to the difference, if any, between the exercise price of the ISO shares and the fair market value of those shares on the date of sale. The income is taxed at long-term capital gains rates if the Participant has not disposed of the stock within two years after the date of the grant of the ISO and has held the shares for at least one year after the date of exercise. The Company is not entitled to a federal income tax deduction. The holding period requirements are waived when a Participant dies.

The exercise of an ISO may in some cases trigger liability for the alternative minimum tax.

If a Participant sells ISO shares before having held them for at least one year after the date of exercise and two years after the date of grant of the ISO, the Participant recognizes ordinary income to the extent of the lesser of: (i) the gain realized upon the sale; or (ii) the difference between the exercise price and the fair market value of the shares on the date of exercise. Any additional gain is treated as long-term or short-term capital gain depending on how long the Participant held the ISO shares prior to disposition. In the year of disposition, the Company receives a federal income tax deduction in an amount equal to the ordinary income that the Participant recognizes as a result of the disposition.

NSOs. A Participant does not recognize taxable income upon the grant of an NSO. Upon the exercise of an NSO, the Participant recognizes ordinary income to the extent the fair market value of the shares received upon exercise of the NSO on the date of exercise exceeds the exercise price paid by the Participant. The Company receives an income tax deduction in an amount equal to the ordinary income that the Participant recognizes upon the exercise of the NSO.

Restricted Stock. A Participant who receives a Restricted Stock Split) will carry one-thirdAward does not generally recognize taxable income at the time of the Award. Instead, the Participant recognizes ordinary income in the first taxable year in which his or her interest in the shares becomes either (i) freely transferable, or (ii) no longer subject to substantial risk of forfeiture. The amount of taxable income is equal to the fair market value of the shares less the cash, if any, paid for the shares. A Participant may elect to recognize income at the time he or she receives Restricted Stock in an amount equal to the fair market value of the Restricted Stock (less any cash paid for the shares) on the date of the Award. The Company receives a compensation expense deduction in an amount equal to the ordinary income recognized by the Participant in the taxable year in which restrictions lapse (or in the taxable year of the Award if, at that time, the Participant files a timely election to accelerate recognition of income).

Other Awards. In the case of any exercise of a preferredSAR, a Restricted Stock Unit Award, a Performance Share Award or a Performance Unit Award, the Participant will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any shares received on the date of payment or delivery. In that taxable year, the Company will receive a federal income tax deduction in an amount equal to the ordinary income which the Participant has recognized.

Million Dollar Deduction Limit

Under Section 162(m) of the Code, the Company may not deduct compensation of more than $1,000,000 that is paid to an individual who, on the last day of the taxable year is either the company’s chief executive officer (the “CEO”) or is among one of the four other most highly compensated officers for that taxable year as reported in the Company’s proxy statement (“covered employees”). The limitation on deductions does not apply to certain types of compensation, including qualified performance-based compensation. The Company believes that Awards made under the Plan in the form of performance shares, performance units, stock purchaseoptions, SARs, performance-based restricted stock and performance-contingent restricted stock units will constitute qualified performance-based compensation and, as such, will be exempt from the $1,000,000 limitation on deductible compensation. However, as mentioned above, the Plan authorizes the Committee to grant awards that qualify as “performance-based compensation” as well as awards that do not. As a result, the Company may not be entitled to any tax deduction mentioned above if the individual in question is the CEO or another “covered employee,” the Award does not qualify as “performance-based compensation,” and the amount of the Award, when added to the covered employee’s other taxable compensation that is not “performance-based” in the same taxable year, exceeds one million dollars.

Tax Penalties Applicable to Certain Change in Control-Related Payments

If compensatory payments made to an officer, highly compensated employee or certain other “disqualified individuals,” including the vesting of stock options or other awards, are contingent, or deemed to be contingent, on a change in control of the Company under Section 280G of the Code, and if the amount of such payments exceeds the individual’s average annual taxable compensation from the Company during the preceding five years, the person who receives such payments may be subject to a 20% excise tax on most of such payments, payable in addition to regular income taxes, and the Company may be denied a deduction for the portion of the payments which is subject to such excise tax. If a change in control as defined in the Plan occurs, awards under the Plan may be subject to such excise tax, in whole or in part, and may be nondeductible by the Company. Compensation paid to the CEO or another “covered employee” that is non-deductible change in control-contingent compensation under Section 280G of the Code, may also reduce dollar for dollar, the one million dollar limit on such covered employee’s non-”performance-based” compensation that the Company may deduct under Section 162(m) of the Code.

Tax Penalties Applicable to Certain Deferred Compensation Agreements

Under Section 409A of the Code, an individual who has a right to compensation that is payable in a later year may be subject to certain tax penalties if the arrangement under which will trade automatically withthe compensation is payable does not qualify for an exemption from Section 409A or conform in terms and operation to the requirements of Section 409A. The tax penalties consist of (a) immediate taxation of the compensation in the year in which it is not considered to be

subject to a substantial risk of forfeiture within the meaning of Section 409A, even if the compensation is not payable in that year (i.e., no deferral of taxation), (b) imposition of a 20% surtax on the compensation in that year, payable in addition to ordinary income taxes, and (c) extra interest charges. In addition, the tax penalties may apply to the individual’s other compensation awards of the same character as the penalized award. Companies are required to report and withhold taxes on the penalized compensation.

Participants who are granted Awards under the Plan, other than Restricted Stock Awards and ISOs, may be subject to these tax penalties if the awards do not qualify for an exemption from Code Section 409A or conform in terms and operation to the requirements of Code Section 409A.

Plan Benefits

STOCK INCENTIVE AND AWARD PLAN

Equity awards granted under the Plan through December 31, 2005 are set forth in the table below.

Name and Position


Number of Shares

Of Common Stock

Underlying Awards


E.M. Carpenter

President and Chief

Executive Officer

1,419,240

W.C. Denninger

Senior Vice President, Finance

and Chief Financial Officer

220,979

S.S. Gates

Senior Vice President, General

Counsel and Secretary

178,133

J.R. Arrington

Senior Vice President

Human Resources

170,598

P.A. Goodrich

Senior Vice President

Corporate Development

131,949

Executive Officers as a Group

954,769

Non-Executive Director Group

31,950

Company employees as a group (including current officers who are not executive officers)

306,924

Total Award Through December 31, 2005

3,414,542

On February 21, 2006, the closing price of the Common Stock, as reported on the New York Stock Exchange, was $37.92.

APPROVAL OF THE BARNES GROUP INC. PERFORMANCE-LINKED BONUS PLAN

FOR SELECTED EXECUTIVE OFFICERS (Proxy Proposal 4)

The Board of Directors Recommends a Vote “For” this Proposal.

The Barnes Group Inc. Performance-Linked Bonus Plan for Selected Executive Officers (“Bonus Plan”) is being submitted to stockholders for re-approval so that the compensation paid pursuant to the Bonus Plan will continue to qualify as “performance-based” as defined in Section 162(m) of the Code and become exercisable only upontherefore will not be subject to the occurrence$1,000,000 deduction limit.

Current regulations under the Internal Revenue Code (the “Code”) limit the deductibility by the Company of certain eventstypes of compensation provided to employees to $1,000,000 per individual. However, performance-based compensation that meets certain conditions is not subject to the one million dollar deduction limit. One of these conditions is that the performance-based plan under which the compensation will be paid must be disclosed to and approved by stockholders. The Bonus Plan was approved by stockholders in 2001. Under the applicable tax regulations, in order to continue to meet the conditions, the Bonus Plan must be re-approved every five years.

Another requirement is that the performance-based plan must be administered by a committee of not less than two directors who are fully describednot employees of the Company and such committee must be comprised solely of directors who are “outside directors” within the meaning of the Code. The Bonus Plan will be administered by the Compensation and Management Development Committee of the Board of Directors of the Company (the “Committee”). The description of the Bonus Plan terms that follows is subject to and qualified by reference to the complete text of the Bonus Plan set forth in Annex 4 to this Proxy Statement. Approval of this Proposal requires the Rights Agreement. The affirmative vote of a majority of the outstanding shares entitledof Common Stock voted.

The persons who are eligible to votebe selected by the Committee to participate in the Bonus Plan are executive officers of the Company whose annual incentive compensation for any taxable year of the Company commencing on or after January 1, 2005 would not be deductible by the Company in whole or in part unless the incentive compensation qualifies as “performance-based” under section 162(m)(4)(C) of the Code. An eligible executive officer may (but need not) be selected to participate each year. For 2006, subject to stockholder approval of the Bonus Plan, Messrs. Arrington, E.M. Carpenter, Denninger, Dempsey, Goodrich and Milzcik, and Mses. Gates and Wolf are eligible to participate in the Bonus Plan. Approximately [xxxx] other executive officers and employees of the Company are eligible to be selected to participate in similar annual incentive compensation arrangements on terms that are less restrictive than the Plan terms.

Under the Bonus Plan, participants receive specified payments after the close of each Award Period if specified target performance objectives are attained during the Award Period. The Committee determines the percentage of salary that will be earned at a given level of performance and also determines the meetinglevel of performance that must be achieved. Performance at less than the target level of performance may result in a lesser percentage of salary than the target being earned, and performance in excess of the target performance objective may result in a higher percentage of salary than target being earned. Under no circumstances may the Award for a Participant’s service in any year exceed $7,000,000. Payment of any Award is requiredcontingent upon the Committee’s certifying in writing that the performance level applicable to approvesuch Award was in fact satisfied. Unless and until the Proposed Amendment. IfCommittee so certifies, no Award is paid. The Committee may not increase the Proposed Amendmentamount of an Award upon satisfaction of the performance level. Except for Bonus Plan participants who retire, die or become permanently disabled during the year, whose Award will be prorated to the date of such retirement, death or permanent disability, a participant must be employed by the Company on the date of payment of an Award. Unless the Committee determines otherwise, all payments pursuant to the Bonus Plan are to be made in cash.

No later than 90 days after the start of each year (or by such other deadline as may apply under the Code), the Committee will select the persons who will participate in the Bonus Plan in such year and establish in writing the performance goals for that year as well as the method for computing the amount of compensation which each such participant will be paid if such performance goals are attained in whole or in part. Such method will be stated in terms of an objective formula or standard that precludes discretion to increase the amount that will be due upon attainment of the goals.

Under the Bonus Plan, the performance goals for any Award Period may be based on any of the following criteria, either alone or in any combination, and on either a consolidated Company, consolidated Group, business unit or divisional level, as the Committee may determine: earnings per share, net income, operating income, performance profit (operating income minus an allocated charge approximating the Company’s cost of capital, before or after tax), gross margin, revenue, working capital, total assets, net assets, stockholders’ equity, or cash flow. The foregoing criteria shall be determined in accordance with generally accepted accounting principles, except to the

extent the Committee directs otherwise and may include or exclude any or all of the following items, as the Committee may specify: extraordinary, unusual or non-recurring items; discontinued operations; effects of accounting changes; effects of currency fluctuations; effects of financing activities (by way of example, without limitation, effect on earnings per share of issuing convertible debt securities); expenses for restructuring or productivity initiatives; non-operating items; effects of acquisitions and acquisition expenses; and effects of divestitures and divestiture expenses (the “Items”). Any such performance criterion or combination of such criteria may apply to the participant’s Award opportunity in its entirety or to any designated portion or portions of the Award opportunity, as the Committee may specify. Unless the Committee determines otherwise at any time prior to payment of a participant’s Award for an Award Period and subject to the Committee’s right to reduce an Award prior to payment, the Items, any of which affect any Performance criterion applicable to the Award (including but not limited to the criterion of earnings per share), shall be automatically excluded or included in determining the extent to which the Performance level has been achieved, whichever will produce the higher Award. This provision is included in the Bonus Plan because awards may qualify as “performance-based compensation” under Section 162(m) of the Code if the Committee has discretion to reduce an award, but not approved,if the Proposed Amendment will not become effective andCommittee has discretion to increase an award.

The Committee may amend or terminate the proposed Stock Split will not take place. Bonus Plan without stockholder approval at any time. Certain amendments may require re-approval of the Plan by stockholders for the performance-based compensation to continue to qualify for deductibility by the Company, as specified by the Code.

RATIFICATION OF SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Proxy Proposal 5)

The Board of Directors unanimously recommendsRecommends a vote FOR the approvalVote “For” this Proposal.

The Audit Committee of the Proposed Amendment (Item 3 onBoard of Directors has selected PricewaterhouseCoopers LLP as the proxy card). 17 20 RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTSCompany’s independent registered public accounting firm for the fiscal year ended December 31, 2006. Although not required by the Certificate of Incorporation or By-Laws itof the Company, the Company has been the Company's practice for many yearsdetermined to haveask the stockholders act on a proposal of the Board of Directors relating to ratify the selection of PricewaterhouseCoopers LLC as the independent accountants. registered public accounting firm for the year 2006 for the Company.

A representative of Price WaterhousePricewaterhouseCoopers LLP is expected to be present at the meeting withand will have the opportunity to make a statement, if the representative wishesdesired, and to be available to respond to appropriate questions.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Fees paid to PricewaterhouseCoopers LLP during 2005 and 2004 are set forth below:

   2005

  2004

Audit Fees1

  $1,857,892  $1,612,478

Audit-Related Fees2

   223,000   138,000

Tax Fees3

   797,819   601,212

All Other Fees4

   3,030   2,828
   

  

Total Fees

  $2,881,741  $2,354,517
   

  

1AuditFees for 2005 consist of fees for professional services provided in connection with the integrated audit of the Company’s financial statements and internal control over financial reporting, and review of financial statements included in Forms 10-Q, and includes services that generally only the external auditor can reasonably provide, such as comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC.

2Audit-RelatedFees consist of fees for due diligence reviews related to acquisitions and, for 2004, evaluation of Sarbanes-Oxley §404 project design and documentation.

3TaxFees include fees for tax compliance, tax consulting and tax planning services.

4AllOther Fees are license fees for PricewaterhouseCoopers LLP’s publication, Comperio.

PRE-APPROVAL POLICY AND PROCEDURES

The Audit Committee adopted the following policy:

Policy for Pre-Approval of

External Auditor Services

The Company shall engage external auditors for audit, audit-related, tax and other non-audit services in accordance with this policy and the procedures defined below. This policy shall not apply to any external auditor, whether or not registered with the Public Company Accounting Oversight Board, that has not prepared or issued, and is not reasonably expected in the foreseeable future to prepare or issue, any audit report or perform other audit, review or attest services for the Company or any of its subsidiaries.

Audit Services consist of services rendered by an external auditor for the audit of the Company’s annual consolidated financial statements (including tax services performed to fulfill the auditor’s responsibility under standards of the Public Company Accounting Oversight Board) and reviews of financial statements included in Form 10-Qs, and includes services that generally only an external auditor can reasonably provide, such as comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC.

Audit-Related Services consist of assurance and related services (e.g., due diligence) by an external auditor that are reasonably related to audit or review of financial statements, including employee benefit plan audits, due diligence related to mergers and acquisitions, accounting consultations and audits in connection with proposed or consummated acquisitions, internal control reviews, attest services related to financial reporting that are not required by statute or regulation, and consultation concerning financial accounting and reporting standards.

Tax Services consist of services not included in Audit Services above, rendered by an external auditor for tax compliance, tax consulting and tax planning.

Other Non-Audit Services are any other permissible work that is not an Audit, Audit-Related or Tax Service.

To establish compliance with applicable law and best practices, effective immediately, all services provided by an external auditor covered by this policy must be pre-approved by the Audit Committee of the Company’s Board of Directors unanimously recommends a vote FOR ratification(the “Audit Committee”), in accordance with the following procedures. The Audit Committee does not delegate its responsibilities to pre-approve services performed by an external auditor, to management.

Procedure 1. Annually, not later than April 30, management shall present to the Audit Committee its best estimate of the selectionparticular services for Audit, Audit-Related, Tax and Other Non-Audit Services, and the estimated fees therefor, to be performed by an external auditor during the audit engagement period for the then-current fiscal year. The external auditor shall provide such back-up documentation for each such service as the Audit Committee deems necessary or desirable to assess the impact of Price Waterhouse LLP as independent accountants (Item 4such service on the proxy card). external auditor’s independence. Prior to the engagement of an external auditor for such services and except as provided by Procedure 2, the Audit Committee shall, by resolution, pre-approve each such service to a maximum amount of estimated fees therefor.

Procedure 2. For any Audit, Audit-Related, Tax or Other Non-Audit Service to be obtained by the Company from an external auditor and not pre-approved in accordance with Procedure 1, the Audit Committee Chairperson (the “Delegatee”), is authorized to approve prior to the engagement of the external auditor for such service, any such service and expenditures therefor to a maximum of $100,000; provided, that said Chairperson has been determined to be an independent director by the Board of Directors of the Company. The Chief Financial Officer shall obtain written confirmation of any such pre-approval by the Delegatee and each such pre-approval by the Delegatee shall be reported to the Audit Committee at its next meeting.

Procedure 3. All Audit, Audit Related, Tax or Other Non-Audit Services to be obtained from an external auditor that are not pre-approved by the Audit Committee pursuant to Procedures 1 and 2 shall be pre-approved by resolution of the Audit Committee, prior to the engagement of the external auditor for such services. Further, any engagement for Tax and Other Non-Audit Services that qualify for the SEC regulations’ “de minimis” exception (i.e., they were not recognized as being non-audit services at the time of the engagement and in the aggregate do not exceed the amount specified in SEC rules) to the pre-approval requirement of Procedures 1 and 2, shall be promptly brought to the attention of the Audit Committee and approved by the Audit Committee or the Delegatee prior to the completion of the annual audit of the Company’s consolidated financial statements.

Procedure 4. The Chief Financial Officer will provide a quarterly report of external auditor services, by category, to the Audit Committee.

Procedure 5. This policy will be updated as requirements are further defined. The Audit Committee shall review this policy periodically, to assure its continued suitability to the needs of the Company.

Procedure 6. The external auditor appointed by the Audit Committee to audit and render its opinion of the Company’s annual consolidated financial statements is explicitly prohibited under current SEC regulations and the Sarbanes-Oxley Act from providing the following services:

Bookkeeping or other services related to the accounting records or financial statements.

Financial information systems design or implementation.

Appraisal or valuation services, fairness opinions, or contribution-in-kind reports.

Actuarial services.

Internal audit outsourcing.

Management functions or human resources.

Broker or dealer, investment adviser, or investment banking.

Legal services and expert services unrelated to the audit.

Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

Prior to the engagement of any external auditor covered by this policy, such external auditor shall confirm in writing that the services it proposes to provide are not prohibited by such law or regulations.

STOCKHOLDER PROPOSALS FOR 19982007 ANNUAL MEETING The Board of Directors requests that any stockholder who wishes to recommend nominees for directors submit names of such nominees in writing to the Secretary of the Company at its address given above prior to December 1, 1997.

Stockholders wishing to submit proposals for inclusion in the Company'sCompany’s proxy statement and form of proxy for the 19982007 Annual Meeting of Stockholders must submit proposals to the Company at suchits address given above by November 4, 1997.22, 2006. Stockholders wishing to present proposals for a formal vote (other than proposals included in the Company'sCompany’s proxy statement), or to nominate candidates for election as directors at a meeting of the Company'sCompany’s stockholders, must do so in accordance with the Company's By-Laws. The By-Laws provide that, inCompany’s By-laws. In order to be presented at the 19982007 Annual Meeting, the By-laws provide that such stockholder proposals or nominations may be made only by a stockholder of record as of the date such notice is given and as of the date for determination of stockholders entitled to vote at such meeting, who shall have given notice of the proposed business or nomination towhich is received by the Company between December 21, 2006 and January 2, 1998 and February 1, 1998.20, 2007. The notice must contain, among other things, the name and address of the stockholder, a brief description of the business desired to be brought before the Annual Meeting, and the reasons for conducting the business at the Annual Meeting, and the stockholder'sstockholder’s ownership of the Company'sCompany’s capital stock, and instock. In the case of nominations, the notice must contain the background and stock ownership

information with respect to each nominee. Stockholders may obtain a copy of the relevant provisions of the By-LawsBy-laws by writing to the Secretary of the Company at itsthe address given above. Proposals received after January 20, 2007 will not be considered “timely” for the purpose of determining whether the Company may use discretionary authority to ask stockholders to vote on any such proposals.

GENERAL

The cost of solicitation of proxies will be borne by the Company. Such solicitation will be made by mail and may also be made by the Company'sCompany’s officers and employees personally or by telephone, facsimile, Internet or telegram without additional compensation. The Company may also reimburse brokers, dealers, banks, voting trustees or their nominees for their reasonable expenses in sending proxies, proxy material and annual reports to beneficial owners. The Company has retained Georgeson & CompanyThe Altman Group Inc., 1200 Wall Street, Plaza,3rd Floor, Lyndhurst, New York, New York 10005,Jersey 07071 to aid in the solicitation of proxies. Georgeson & CompanyThe Altman Group will solicit proxies by personal interview, telephone, telecopyfacsimile and mail, and may request brokerage houses and other nominees and fiduciaries or custodians to forward soliciting materials to beneficial owners of the Company'sCompany’s stock. For these services, the Company will pay a fee of approximately $7,000,$8,500 plus out-of-pocket expenses.

The Company had outstanding 6,669,47124,157,167 shares of common stockCommon Stock as of February 4, 1997,21, 2006, each of which is entitled to one vote. Only holders of record at the close of business on February 4, 199721, 2006 will be entitled to vote.

Under applicable Delaware law, abstentions and broker non-votes are treated as to any proposalpresent at the meeting for purposes of determining a quorum. Abstention and broker non-votes will not be counted as having been voted on the proposal and will have noan effect on the outcome of the vote thereon. for directors. In voting on the proposal to amend the Barnes Group Inc. Stock and Incentive Award Plan and the proposal to approve the Barnes Group Inc. Performance-Linked Bonus Plan, abstentions will have the effect of votes against the proposals and broker non-votes will not have an effect on the outcome of the vote. In voting on the proposal to amend the Company’s Restated Certificate of Incorporation abstentions and broker non-votes will have the effect of votes against that proposal.

The Company will provide without charge upon written request from a stockholder, a copy of the Company’s Annual Report on Form 10-K, including financial statements and the financial statement schedules for the year ended December 31, 2005. Any such request should be sent to: Secretary, Barnes Group Inc., 123 Main Street, P.O. Box 489, Bristol, Connecticut 06011-0489.

The Company has posted on its Internet website and will make available in print to any stockholder who makes a request, its Corporate Governance Guidelines, its Code of Business Ethics and Conduct and the charters of the Audit Committee, Compensation and Management Development Committee and Corporate Governance Committee. The Company’s Internet website address iswww.barnesgroupinc.com.

If a nominee for director should become unavailable for any reason, it is intended that votes will be cast for a substitute nominee designated by the Board of Directors. The Board of Directors has no reason to believe the persons nominated will be unable to serve if elected. The Board of Directors does not know of any matters to be presented for consideration at the meeting other than the matters described in itemsProposals 1, 2, 3, 4 and 45 of the Notice of Annual Meeting; however,Meeting. However, if other matters are presented, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their judgment. All shares 18 21 represented by the accompanying proxy, if the proxy is given prior to the meeting, will be voted in the manner specified therein.

By order of the Board of Directors. /s/ MARY LOUISE BEARDSLEY - ------------------------- Mary Louise Beardsley

Signe S. Gates

Secretary

March 4, 1997 19 22 1997 - XX, 2006

APPENDIX 1

BARNES GROUP INC. - PROXY ANNUAL MEETING OF STOCKHOLDERS APRIL 2, 1997 - 10:30 A.M. THE TRAVELERS EDUCATION CENTER, 200 CONSTITUTION PLAZA, HARTFORD, CONNECTICUT 06103 U.S.A. THE UNDERSIGNED STOCKHOLDER OF BARNES GROUP INC. HEREBY APPOINTS WILLIAM V. GRICKIS, JR. AND MARY LOUISE BEARDSLEY, EACH WITH THE POWER TO APPOINT HIS OR HER SUBSTITUTE, AS THE UNDERSIGNED'S PROXIES AND ATTORNEYS-IN-FACT TO VOTE THE SHARES OF STOCK COVERED BY THIS PROXY AT THE ANNUAL MEETING OF STOCKHOLDERS ON APRIL 2, 1997, OR AT ANY ADJOURNMENT THEREOF, UPON THE MATTERS SET FORTH IN THE NOTICE OF SUCH MEETING, WITH ALL THE POWERS THE UNDERSIGNED WOULD POSSESS IF PERSONALLY PRESENT. EACH OF SAID PERSONS IS INDIVIDUALLY AUTHORIZED TO VOTE AS SPECIFIED ON ITEMS 1, 2, 3 AND 4 AND OTHERWISE IN HIS OR HER DISCRETION. (CONTINUED AND TO BE SIGNED, DATED AND VOTED ON THE REVERSE SIDE) 23 1997 -- BARNES GROUP INC. -- PROXY CHARTER

Audit Committee of the Board of Directors

The Board of Directors unanimously recommendsof Barnes Group Inc. (the “Company”) hereby sets forth a Charter for its Audit Committee, with membership and specific responsibilities as outlined below:

Membership

In accordance with the bylaws of the Company and upon the nomination by the Corporate Governance Committee (the “Committee”), the Board of Directors (the “Board”) shall appoint the members of the Audit Committee and the chairperson thereof, each of whom shall satisfy applicable independence requirements of the New York Stock Exchange and any other regulatory requirements, and otherwise be free from any relationship that, in the business judgment of the Board, would interfere with his or her exercise of business judgment as a Committee member. The Committee shall comprise not less than three such Directors. A Committee member shall not serve simultaneously on the audit committees of more than two other public companies. All members of the Audit Committee shall be financially literate and at least one member shall have accounting or related financial management expertise, as each such qualification is interpreted by the Board of Directors in its business judgment. To the extent practicable, at least one Committee member shall be an “audit committee financial expert,” as defined by the Securities and Exchange Commission (“SEC”). A Committee member may resign by delivering his or her written resignation to the Chairman of the Board, or may be removed by majority vote FORof the Board at any time. In the event of a vacancy on the Committee, the Board shall elect a Director who satisfies the foregoing qualifications, to replace the departed Director.

The Committee may fix its own rules of procedure; provided, that the Committee shall cause its proceedings to be recorded and minutes of Committee meetings shall be distributed to the Board of Directors. The Committee shall regularly report its findings, conclusions, recommendations and actions to the Board. The Committee may meet at such times (but not less than four times per year) and places as it shall determine. The majority of the members of the Committee shall constitute a quorum. A majority of the members present, if a quorum is present at the time, shall decide any question brought before the Committee. Any action required or permitted to be taken by the Committee may be taken by unanimous written consent in lieu of a meeting.

Responsibilities

The Board of Directors intends the Audit Committee to serve as its focal point for the oversight of the Company’s accounting policies and internal controls, financial reporting practices and legal and regulatory compliance, including, among other things:

the integrity of the Company’s financial statements;

the Company’s compliance with legal and regulatory requirements;

review of the independent registered public accounting firm’s qualifications and independence; and

the performance of the Company’s internal audit function and the Company’s independent registered public accounting firm (the “independent auditor”).

Through regularly scheduled meetings, the Committee will facilitate open communication among the Board of Directors, the Company’s independent and internal auditors and the Company’s financial management. The Committee shall prepare a report for inclusion in the Company’s annual proxy statement, as required by the SEC rules.

Specifically, the Audit Committee will, consistent with the Company’s Corporate Governance Guidelines:

1.Review and discuss the annual audited financial statements and the Company’s specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” with management and the independent auditor, and, based on such review, recommend to the Board whether the Company’s audited financial statements should be included in the Company’s annual report on Form 10-K for filing with the SEC. In connection with such review, the Audit Committee will:

Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 (as it may be modified or supplemented) relating to the conduct of the audit.

Review significant changes in accounting or auditing policies.

Review with the independent auditor any problems or difficulties encountered in the course of their audit, including any change in the scope of the planned audit work and any restrictions placed on the scope of such work and management’s response to such problems or difficulties.

Review (not less than annually) with the independent auditor, management and the Director, Internal Audit the adequacy of the Company’s internal controls, including without limitation information technology systems, any significant findings and recommendations with respect to such internal controls, and the Company’s internal controls report and the independent auditor’s attestation thereof prior to filing the Company’s annual report on Form 10-K.

Review reports required to be submitted by the independent auditor concerning: (a) all critical accounting policies and practices used; (b) all alternative treatments of financial information within generally accepted accounting principles (“GAAP”) that have been discussed with management, the ramifications of such alternatives, and the accounting treatment preferred by the independent auditors; and (c) any other material written communications with management.

Review and discuss with management and the independent auditor (a) major issues regarding accounting principles and financial statement presentation, including any significant changes in the Company’s selection or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls, any special audit steps adopted in light of material control deficiencies and the adequacy of disclosures about changes in internal control over financial reporting; and (b) analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements and the effects of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company.

Discuss earnings press releases (paying particular attention to any use of “non-GAAP financial measures,” as defined by SEC rules, and any other “pro forma” or “adjusted” non-GAAP information), and financial information and earnings guidance, if any, to be provided to, and the type of presentation to be made to, analysts and rating agencies.

Discuss with management and the independent auditor any correspondence with regulatory or governmental agencies and any published reports which raise material issues regarding the Company’s financial statements or accounting policies.

2.Review and discuss the quarterly financial statements and the Company’s specific disclosures provided in periodic quarterly reports including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” with management, the Director, Internal Audit, and the independent auditor.

3.

Oversee the external audit coverage. The Company’s independent auditor is ultimately accountable to the Committee, which has the direct authority and responsibility to appoint, retain, compensate, terminate, select,

evaluate and, where appropriate, replace the independent auditor. The independent auditor shall report directly to the Committee. In connection with its oversight of the external audit coverage, the Audit Committee will:

Have sole authority to appoint and replace (subject to stockholder approval or ratification, if deemed advisable by the Board of Directors) the independent auditor.

Have authority to approve the engagement letter and the fees to be paid to the independent auditor.

Pre-approve all audit, internal control-related and non-audit services to be performed by the independent auditor and the related fees for such services, in accordance with the Company’s Policy for Pre-Approval of External Auditor Services which the Committee shall review periodically and, as necessary, modify.

Obtain confirmation and assurance as to the independent auditor’s independence, including ensuring that they submit on a periodic basis (not less than annually) to the Committee a formal written statement delineating all relationships between the independent auditor and the Company, consistent with Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees” (as it may be modified or supplemented). The Committee is responsible for actively engaging in a dialogue with the independent auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditor and for taking appropriate action in response to the independent auditor’s report to satisfy itself of their independence.

At least annually, obtain and review a report by the independent auditor describing: the firm’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and, to assess the independent auditor’s independence, all relationships between the independent auditor and the Company.

Review and evaluate the performance of the independent auditor, as the basis for a decision to reappoint or replace the independent auditor.

Set clear Company hiring policies for employees or former employees of the independent auditor, considering, among other things, the requirements of all applicable laws and listing rules.

Assure regular rotation of the lead audit partner, as required by SEC rules, and consider whether rotation of the independent auditors is required to ensure independence.

Discuss with the independent auditor material issues on which the national office of the independent auditor was consulted.

4.Oversee internal audit coverage. In connection with its oversight responsibilities, the Committee will:

Review the appointment or replacement of the Director, Internal Audit.

Review, in consultation with management, the independent auditor and the Director, Internal Audit, the plan and scope of internal audit activities.

Review internal audit activities, budget and staffing.

Review significant reports to management prepared by the internal auditing department and management’s responses to such reports.

5.Resolve any differences between management and the independent auditor regarding financial reporting.

6.Establish procedures for (i) receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

7.Discuss policies and guidelines to govern the process by which risk assessment and risk management are handled. Meet periodically with management to review and assess the Company’s major financial risk exposures and the manner in which such risks are being monitored and controlled.

8.Meet periodically (not less than annually) in separate executive session with each of the Chief Financial Officer, the Director, Internal Audit, and the independent auditor, and have such other direct and independent interaction with such persons from time to time as the Company deems appropriate.

9.Review periodically with the Company’s General Counsel (i) legal and regulatory matters which may have a material effect on the financial statements, and (ii) the Company’s Corporate Compliance Program. Obtain from the independent auditor assurance that Section 10A(b) of the Securities Exchange Act of 1934 has not been implicated, such Section 10A(b), requiringinter alia the independent auditor, if it detects or becomes aware of any illegal act, to assure that the Committee is adequately informed and to provide a report if the independent auditor has reached specific conclusions with respect to such illegal acts.

10.Annually, evaluate the performance of this Committee, including a review of the Committee’s compliance with this Charter. Annually, review and assess the adequacy of this Charter and recommend any proposed changes to the Board for approval. Also affirm to the New York Stock Exchange in writing, annually and at such other times as there are changes in the composition of the Audit Committee, such review and assessment of the adequacy of this Charter; and the Board of Directors’ determination of the independence and financial literacy of the Audit Committee members, and the accounting or related financial management expertise of at least one such member.

11.The Chairman of the Committee will periodically (not less than annually), review the expense accounts of the Chairman of the Board and the Chief Executive Officer.

12.Perform such other activities as are requested from time to time by the Board.

The Committee shall have all powers and authority that are necessary or appropriate to fulfill its duties and responsibilities, including without limitation:

a.To retain, at its discretion and at the Company’s expense, without the approval of the Board, outside legal, accounting and other advisors, and approve the terms of engagement including the fees of such advisors.

b.To incur ordinary administrative expenses that are necessary or appropriate to carrying out its duties, at the Company’s expense.

While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with GAAP and applicable rules and regulations. These are the responsibilities of management and the independent auditor.

Amended and Approved by the Board of Directors: 2/16/06

APPENDIX 2

CERTIFICATE OF AMENDMENT

OF THE

RESTATED CERTIFICATE OF INCORPORATION

OF BARNES GROUP INC.

Barnes Group Inc., a Delaware corporation, (the “Corporation”) does hereby certify:

FIRST: The Board of Directors of the Corporation approved and adopted the following resolution for amending the Corporation’s Restated Certificate of Incorporation declaring it advisable, and recommended that the amendment be submitted to the stockholders of the Corporation for their consideration:

RESOLVED, that it is advisable to amend the Company’s Certificate of Incorporation in order to increase the number of shares of authorized Common Stock by amending the first paragraph of Article FOURTH (the remainder of Article FOURTH remaining unchanged) to read as follows:

FOURTH: The total number of shares of all classes of stock which the corporation shall have authority to issue is 153,000,000, consisting of 3,000,000 shares of preferred stock of the par value of $.01 per share and 150,000,000 shares of common stock of the par value of $.01 per share.

SECOND: This Amendment to the Restated Certificate of Incorporation was approved by the stockholders of the Corporation at a meeting in accordance with Section 242 of the General Corporation Law of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to the Restated Certificate of Incorporation to be executed by a duly authorized officer thisday of, 2006.

BARNES GROUP INC.
By:

Name: Signe S. Gates

Title: Senior Vice President,

General Counsel and Secretary


APPENDIX 3

AMENDED

BARNES GROUP INC.

STOCK AND INCENTIVE AWARD PLAN

1. Purposes.The purposes of this Plan are (a) to provide competitive incentives that will enable the Company to attract, retain, motivate and reward persons who render services that benefit the Company or other enterprises in which the Company has a significant interest, and (b) to align the interests of such persons with the interests of the Company’s shareholders generally.

2. Definitions. Unless otherwise required by the context, the following terms, when used in this Plan, shall have the meanings set forth in this Section 2.

(a) “Allied Enterprise” means a business enterprise, other than the Company or a Subsidiary, in which the Committee determines the Company has a significant interest, contingent or otherwise.

(b) “Appreciation-Only Award” means (i) Options and Stock Appreciation Rights the exercise price of which is equal to at least 100% of Fair Market Value on the date on which the Options or Stock Appreciation Rights are granted, and (ii) Linked Stock Appreciation Rights that are granted as an alternative to the related Option after the date of grant of such Option, the exercise price of which Stock Appreciation Rights is equal to at least 100% of Fair Market Value on the date on which such Option was granted.

(c) “Award” means an award granted under this Plan in one of the forms provided for in Section 3(a).

(d) “Beneficiary” means a person or entity (including but not limited to a trust or estate), designated in writing by a Service Provider or other rightful holder of an Award, on such forms and in accordance with such terms and conditions as the Committee may prescribe, to whom such Service Provider’s or other rightful holder’s rights under the Plan shall pass in the event of the death of such Service Provider or other rightful holder. In the event that the person or entity so designated is not living or in existence at the time of the death of the Service Provider or other rightful holder of the Award, or in the event that no such person or entity has been so designated, the “Beneficiary” shall mean the legal representative of the estate of the Service Provider or other rightful holder, or the person or entity to whom the Service Provider’s or other rightful holder’s rights with respect to the Award pass by will or the laws of descent and distribution.

(e) “Board” or “Board of Directors” means the Board of Directors of the Company, as constituted from time to time.

(f) “Change in Control” means that any of the following nomineesevents has occurred:

(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (A) of paragraph (iii) below; or

(ii) the following individuals cease for any reason to constitute a majority of the number of directors serving on the Board: individuals who, at the beginning of any period of two consecutive years (not including any period prior to the Effective Date), constitute the Board and proposals. (1) ELECTION OF DIRECTORS FORany new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or

recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of such period or whose appointment, election or nomination for election was previously so approved or recommended; or

(iii) there is consummated a merger or consolidation of the Company or any Subsidiary with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary, at least 60% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

(iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

For purposes of the foregoing provisions of this Section 2(f),

(A) the term “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act;

(B) the term “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under under the Exchange Act; and

(C) the term “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) any member of the Barnes family (by blood or marriage) or any entity for the benefit of, or controlled by, a member of the Barnes family (by blood or marriage), (ii) the Company or any of its subsidiaries, (iii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iv) an underwriter temporarily holding securities pursuant to an offering of such securities, or (v) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(g) “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time. References to a particular section of the Code shall include references to any related Treasury Regulations and to successor provisions of the Code.

(h) “Committee” means the committee appointed by the Board of Directors to administer the Plan pursuant to the provisions of Section 12(a) below.

(i) “Common Stock” means common stock of the Company, par value $.01 per share.

(j) “Company” means Barnes Group Inc., a Delaware corporation, and, except for purposes of determining under Section 2(f) hereof whether or not a Change in Control has occurred, shall include its successors.

(k) “Dividend Equivalents” means a right granted subject to and in accordance with the provisions of Section 5.III. and the other applicable provisions of the Plan (including, without limitation, Section 9).

(l) “Dollar-Denominated Awards” means Performance Unit Awards and any other Incentive Award the amount of which is based on a specified amount of money (other than an amount of money determined by reference to the Fair Market Value of a specified number of shares of Common Stock). Options and Stock Appreciation Rights are not Dollar-Denominated Awards.

(m) “Effective Date” means the first date (if any) on which the shareholders of the Company approve the Plan either (i) at a duly held stockholders’ meeting, or (ii) by the written consent of the holders of a majority of the securities of the Company entitled to vote, in accordance with any applicable provisions of the Delaware General Corporation Law.

(n) “Employee” means any person who is employed by the Company or a Subsidiary on a full-time or part-time basis, including an officer or director if he is so employed.

(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

(p) “Fair Market Value” on a particular date means as follows:

(i) If the principal market for the Common Stock is a national securities exchange or The NASDAQ Stock Market, the mean between the highest and lowest sale prices per share of Common Stock in trading on such date as reported by Reuters or another source designated by the Committee; or

(ii) If the principal market for the Common Stock is not a national securities exchange or The NASDAQ Stock Market, the mean between the highest and lowest sale prices per share of Common Stock in trading on such date in the over-the-counter market, as reported by the NASDAQ OTC Bulletin Board, the National Quotation Bureau or such other system then providing quotations with regard to trades in the Common Stock or, if on such date the Common Stock is publicly traded but not quoted by any such system, the mean between the highest bid and lowest asked prices per share of Common Stock on such date as furnished by a professional market maker making a market in the Common Stock; or

(iii) If in (i) or (ii) above, as applicable, there were no sales on such date reported as provided above, the mean between the respective prices on the most recent prior day for which sales were so reported.

If the foregoing method of determining fair market value should be inconsistent with Section 422, Section 162(m)(4)(C) or any other provision of the Code, then, with respect to Awards (including in particular but not limited to Incentive Stock Options) and transactions that are intended by the Committee to satisfy Section 422, Section 162(m)(4)(C) or any other provision of the Code, “Fair Market Value” shall be determined by the Committee in a manner consistent with Section 422, Section 162(m)(4)(C) or such other provision of the Code and shall mean the value as so determined.

(q) “General Counsel” means the General Counsel of the Company serving from time to time.

(r) “Incentive Award” means an amount of money that is paid or a number of shares of Common Stock that are issued, or a right to be paid an amount of money or to be issued a number of shares of Common Stock that is granted, subject to and in accordance with Section 5 and the other applicable provisions of the Plan (including, without limitation, Section 4 and Section 9). The term “Incentive Award” does not include Options or Stock Appreciation Rights.

(s) “Incentive Stock Option” means an option, including an Option as the context may require, intended to meet the requirements of Section 422 of the Code.

(t) “Linked Stock Appreciation Rights” means Stock Appreciation Rights that are linked to all or any part of an Option, subject to and in accordance with Section 8(a), 8(b) and the other applicable provisions of the Plan (including, without limitation, Section 9).

(u) “Non-Statutory Stock Option” means an option, including an Option as the context may require, which is not intended to be an Incentive Stock Option.

(v) “Option” means an option granted under this Plan to purchase shares of Common Stock. Options may be Incentive Stock Options or Non-Statutory Stock Options.

(w) “Performance-Based Compensation” means compensation that satisfies the requirements applicable to “performance-based compensation” under Code Section 162(m)(4)(C).

(x) “Performance Share Award” means a right granted subject to and in accordance with Section 5 and the other applicable provisions of the Plan (including, without limitation, Section 5.II., 5.II.(d), 6(e) and Section 9) to receive a specified number of shares of Common Stock, and/or an amount of money determined by reference to the Fair Market Value of a specified number of shares of Common Stock, at a future time or times if a specified performance goal is attained and any other terms and conditions set forth in the written instrument documenting the Performance Share Award are satisfied.

(y) “Performance Unit Award” means a right granted subject to and in accordance with Section 5 and the other applicable provisions of the Plan (including, without limitation, Section 5.II., 5.II.(d), 6(e) and Section 9) to receive a specified amount of money (other than an amount of money determined by reference to the Fair Market Value of a specified number of shares of Common Stock), or shares of Common Stock having a Fair Market Value equal to such specified amount of money, at a future time or times if a specified performance goal is attained and any other terms and conditions set forth in the written instrument documenting the Performance Unit Award are satisfied.

(z) “Plan” means the Barnes Group Inc. Stock and Incentive Award Plan set forth in these pages, as amended from time to time.

(aa) “Prior Plan” means the 1991 Barnes Group Stock Incentive Plan approved by stockholders of the Company at the 1991 Annual Meeting of Stockholders, as amended and in effect from time to time.

(bb) “Prior Program” means the Barnes Group Inc. Employee Stock and Ownership Program approved by stockholders of the Company at the 2000 Annual Meeting of Stockholders, as amended and in effect from time to time.

(cc) “Reloaded Option” means a Non-Statutory Stock Option that the Committee provides is to be granted pursuant to Section 7(g) below on the terms and subject to the conditions therein set forth.

(dd) “Restricted Stock Award” means shares of Common Stock which are issued to a Service Provider in accordance with Section 5.I. and the other applicable provisions of the Plan (including, without limitation, Section 9) subject to restrictions and/or forfeiture provisions specified by the Committee that will cease to apply at a future time or times if continued employment conditions and/or other terms and conditions set forth in the written instrument documenting the Restricted Stock Award are satisfied.

(ee) “Restricted Stock Unit Award” means shares of Common Stock that will be issued to a Service Provider at a future time or times subject to and in accordance with Section 5.I. below and the other applicable provisions of the Plan (including, without limitation, Section 9) if continued employment conditions and/or other terms and conditions set forth in the written instrument documenting the Restricted Stock Unit Award are satisfied.

(ff) “SEC Rule 16b-3” means Rule 16b-3 of the Securities and Exchange Commission promulgated under the Exchange Act, as such rule or any successor rule may be in effect from time to time.

(gg) “Section 16 Person” means a person subject to potential liability under Section 16(b) of the Exchange Act with respect to transactions involving equity securities of the Company.

(hh) “Service Provider” means a person who renders, has rendered or who the Committee expects to render services that benefit or will benefit the Company or a Subsidiary or an Allied Enterprise, in the capacity of employee, director, independent contractor, agent, advisor, consultant, representative or otherwise, and includes but is not limited to (i) Employees, (ii) personal service corporations, limited liability companies and similar entities through which any such person renders, has rendered or is expected to render such services, and (iii) members of the Board who are not Employees.

(ii) “Stock Appreciation Right” means a right granted subject to and in accordance with Section 8 and the other applicable provisions of the Plan (including, without limitation, Section 9).

(jj) “Subsidiary” means a corporation or other form of business association of which shares (or other ownership interests) having more than 50% of the voting power are owned or controlled, directly or indirectly, by the Company; provided, however, that in the case of an Incentive Stock Option, the term “Subsidiary” shall mean a Subsidiary (as defined by the preceding clause) which is also a “subsidiary corporation” as defined in Section 424(f) of the Code.

3. Grants of Awards

(a) Subject to the provisions of the Plan, the Committee may at any time, and from time to time, grant the following types of awards to any Service Provider:

(i) Incentive Awards, which may but need not be in the form of Dividend Equivalents, Performance Share Awards, Performance Unit Awards, Restricted Stock Awards, or Restricted Stock Unit Awards;

(ii) Options; and

(iii) Stock Appreciation Rights.

Any provision above of this Section 3(a) to the contrary notwithstanding, the Committee may grant Incentive Stock Options only to Service Providers who are Employees.

(b) After an Award has been granted,

(i) the Committee may waive any term or condition thereof that could have been excluded from such Award when it was granted, and

(ii) with the written consent of the affected participant, may amend any Award after it has been granted to include (or exclude) any provision which could have been included in (or excluded from) such Award when it was granted,

and no additional consideration need be received by the Company in exchange for such waiver or amendment.

(c) The Committee may (but need not) grant any Award linked to another Award, including, without limitation, Options linked to Stock Appreciation Rights, Dividend Equivalents linked to Options or Stock Appreciation Rights, and Dividend Equivalents linked to other Incentive Awards. Linked Awards may be granted as either alternatives or supplements to one another. The terms and conditions of any such linked Awards shall be determined by the Committee, subject to the provisions of the Plan.

(d) No Service Provider shall acquire any rights in or to or with respect to any Award unless and until a written instrument signed by an officer of the Company and setting forth the terms and conditions of such Award is delivered to the Service Provider and is returned to the designated Company representative subscribed by the Service Provider within the time, if any, prescribed therefor by the Committee or its delegate. Any such instrument shall be consistent with this Plan and incorporate it by reference. Subscribing such instrument and returning it to the designated Company representative as aforesaid shall constitute the Service Provider’s irrevocable agreement

to and acceptance of the terms and conditions of the Award set forth in such instrument and the terms and conditions of the Plan applicable to such Award.

(e) The Committee may rescind the grant of any Award, provided that after a written instrument documenting the grant of such Award has been issued and delivered to the Service Provider the Committee may rescind the grant of such Award only with the written consent of such Service Provider.

(f) The Committee may grant Awards that qualify as Performance-Based Compensation, as well as Awards that do not qualify as Performance-Based Compensation. Any provision of the Plan to the contrary notwithstanding, the Plan shall be interpreted, administered and construed to permit the Committee to grant Awards that qualify as Performance-Based Compensation as well as Awards that do not so qualify, and any provision of the Plan that cannot be so interpreted, administered or construed shall to that extent be disregarded.

(g) The Plan is intended to enable the Committee to grant Options that qualify for the tax treatment applicable to incentive stock options under Section 422 of the Code, as well as Options and other Awards that do not qualify for such tax treatment. Any provision of the Plan to the contrary notwithstanding, the Plan shall be interpreted, administered and construed to enable the Committee to grant Options that qualify for the tax treatment applicable to incentive stock options under Section 422 of the Code as well as Options and other Awards that do not qualify for such tax treatment, and any provision of the Plan that cannot be so interpreted, administered or construed shall to that extent be disregarded.

4. Stock Subject to this Plan; Award Limits

(a) Subject to the provisions below of Sections 4(c) and 4(d) and Section 10,

(i) the maximum aggregate number of shares of Common Stock which may be issued pursuant to Awards is 1,900,000 shares of Common Stock, plus (A) the number of shares of Common Stock, if any, that remain available on the Effective Date for grants of awards under the Prior Plan, plus (B) the number of shares of Common Stock, if any, that remain available on the Effective Date for grants of awards under the Prior Program, plus (C) the number of shares of Common Stock that become available after the Effective Date for grants of awards under either the Prior Plan or the Prior Program pursuant to the terms of the Prior Plan or the Prior Program, less (D) the number of shares of Common Stock necessary to satisfy any awards that the Company is obligated to grant under either the Prior Plan or the Prior Program after the Effective Date pursuant to agreements in force prior to the Effective Date which are not amended to provide for the awards to be granted under the Plan. Not more than 50% of such maximum aggregate number of shares may be issued pursuant to Awards that are not Appreciation-Only Awards, and not more than 475,000 of such maximum aggregate number of shares may be issued pursuant to Options that are Incentive Stock Options; and

(ii) the maximum number of shares of Common Stock with respect to which Options or Stock Appreciation Rights may be granted during any calendar year to any Employee or other Service Provider is 500,000 shares of Common Stock; and

(iii) the maximum number of shares of Common Stock with respect to which any and all Awards other than Appreciation-Only Awards and Dollar-Denominated Awards may be granted in any one calendar year to any Employee or other Service Provider is 250,000 shares of Common Stock; and

(iv) no Employee or other Service Provider may receive more than seven million dollars (or the equivalent thereof in shares of Common Stock, based on Fair Market Value on the date as of which the number of shares is determined) in payment of Dollar-Denominated Awards that are granted to such Employee or other Service Provider in any one calendar year.

If, after any Award is earned or exercised, the issuance or transfer of shares of Common Stock or payment of money is deferred, any amounts equivalent to dividends or other earnings during the deferral period (including shares which may be distributed in payment of any such amounts) shall be disregarded in applying the per

Employee or other Service Provider limitations set forth above in clauses (ii), (iii) and (iv) of this Section 4(a). If, in connection with an acquisition of another company or all or part of the assets of another company by the Company or a Subsidiary, or in connection with a merger or other combination of another company with the Company or a Subsidiary, the Company either (A) assumes stock options or other stock incentive obligations of such other company, or (B) grants stock options or other stock incentives in substitution for stock options or other stock incentive obligations of such other company, then the stock options or other stock incentive obligations so assumed or granted in substitution by the Company shall not be granted (or be deemed granted) under the Plan and therefore none of the shares of Common Stock that are issuable or transferable pursuant to such stock options or other stock incentives that are assumed or granted in substitution by the Company shall be charged against the limitations set forth in this Section 4(a) above.

(b) Shares which may be issued pursuant to Awards may be authorized but unissued shares of Common Stock, shares of Common Stock held in the treasury, whether acquired by the Company specifically for use under this Plan or otherwise, or shares issued or transferred to, or otherwise acquired by, a trust or other legal entity pursuant to Section 13(d) below, as the Committee may from time to time determine, provided, however, that any shares acquired or held by the Company for the purposes of this Plan shall, unless and until issued or transferred to a trust or other legal entity pursuant to Section 13(d) below or to a Service Provider or other rightful holder of an Award in accordance with the terms and conditions of such Award, be and at all times remain treasury shares of the Company, irrespective of whether such shares are entered in a special account for purposes of this Plan, and shall be available for any corporate purpose.

(c) Subject to Section 4(e) below, the maximum aggregate number of shares set forth in Section 4(a)(i) above shall be charged only for the number of shares which are actually issued under the Plan; if any shares of Common Stock subject to an Award shall not be issued to a Service Provider and shall cease to be issuable to a Service Provider because of the termination, expiration, forfeiture or cancellation, in whole or in part, of such Award or the settlement of such Award in cash or for any other reason, or if any such shares shall, after issuance, be reacquired by the Company because of a Service Provider’s failure to comply with the terms and conditions of an Award, the shares not so issued, or the shares so reacquired by the Company, as the case may be, shall no longer be charged against the limitations provided for in Section 4(a)(i) above and may again be made subject to Awards.

(d) Subject to Section 4(e) below, if the purchase price of shares subject to an Option is paid in shares of Common Stock in accordance with the provisions of clause (iv) of Section 7(b) below, or if shares of Common Stock that are issued or issuable pursuant to an Award are withheld by the Company in accordance with Section 13(f) below in full or partial satisfaction of withholding taxes due in respect of the Award or due in respect of the grant, exercise, vesting, distribution or payment of the Award, the number of shares surrendered to the Company in payment of the purchase price of the shares subject to the Option, or the number of shares that are withheld by the Company in payment of such withholding taxes, shall be added back to the maximum aggregate number of shares which may be issued pursuant to Awards under Section 4(a)(i) above, so that the maximum aggregate number of shares which may be issued pursuant to Awards under Section 4(a)(i) above shall have been charged only for the net number of shares that were issued by the Company pursuant to the Option exercise or the Award.

(e) If and to the extent that the General Counsel determines that Section 4(c) or Section 4(d) above or Section 8(f) below shall cause the Company or the Plan to fail to satisfy the rules or listing standards of the New York Stock Exchange as in effect from time to time, or shall prevent Incentive Stock Options granted under the Plan from qualifying as Incentive Stock Options under Code Section 422, then to that extent (and only to that extent) Section 4(c), Section 4(d) or Section 8(f) shall be disregarded. For example, if the General Counsel determines that one or more of the aforementioned Sections of the Plan will prevent Incentive Stock Options granted under the Plan from qualifying as Incentive Stock Options under Code Section 422 if such Sections of the Plan are applied in determining the number of shares of Common Stock that are available from time to time to be issued pursuant to Options that are Incentive Stock Options, and determines that such Sections of the Plan will not prevent Incentive Stock Options granted under the Plan from qualifying as Incentive Stock Options under Code Section 422 if such

Sections of the Plan are applied in determining the number of shares of Common Stock that are available from time to time to be issued pursuant to Options that are Non-Statutory Stock Options or other Awards that are not Incentive Stock Options, then such Sections of the Plan shall be disregarded for purposes of determining the number of shares of Common Stock that are available from time to time to be issued pursuant to Options that are Incentive Stock Options, but not for purposes of determining the number of shares of Common Stock that are available from time to time to be issued pursuant to Options that are Non-Statutory Stock Options or other Awards that are not Incentive Stock Options.

5. Incentive Awards

I. Generally. Except as otherwise provided in Section 13(e), Incentive Awards shall be subject to the following provisions:

(a) Incentive Awards may be granted in lieu of, or as a supplement to, any other compensation that may have been earned by the Service Provider prior to the date on which the Incentive Award is granted. The amount of an Incentive Award may be based upon (i) a specified number of shares of Common Stock or the Fair Market Value of a specified number of shares of Common Stock, or (ii) an amount of money not determined by reference to the Fair Market Value of a specified number of shares of Common Stock. Any Incentive Award may be paid in the form of money or shares of Common Stock valued at their Fair Market Value on the payment date, or a combination of money and such shares, as the Committee may provide. Dividend Equivalents, Performance Share Awards, Performance Unit Awards, Restricted Stock Awards and Restricted Stock Unit Awards are specific forms of Incentive Awards, but are not the only forms in which Incentive Awards may be made.

(b) Any shares of Common Stock that are to be issued pursuant to an Incentive Award, and any money to be paid in respect of an Incentive Award, may be issued or paid to the Service Provider at the time such Award is granted, or at any time subsequent thereto, or in installments from time to time, as the Committee shall determine. In the event that any such issuance or payment shall not be made to the Service Provider at the time an Incentive Award is granted, the Committee may but need not grant Dividend Equivalents in respect of the Award, or may provide that, until such shares are issued or money is paid in respect of the Award or until the Award is forfeited, and subject to such terms and conditions as the Committee may impose, the Award shall earn amounts equivalent to interest or another investment return specified by the Committee, which amounts may be paid as earned or deferred and reinvested, and which amounts may be paid either in money or shares of Common Stock, all as the Committee may provide.

(c) Incentive Awards shall be subject to such terms and conditions, including, without limitation, restrictions on the sale or other disposition of the shares issued or transferred pursuant to such Award, and conditions calling for forfeiture of the Award or the shares issued pursuant thereto in designated circumstances, as the Committee may determine; provided, however, that upon the issuance of shares pursuant to any such Award, the recipient shall, with respect to such shares, be and become a shareholder of the Company fully entitled to receive dividends, to vote and to exercise all other rights of a shareholder except to the extent otherwise provided in the Award. In the case of a Restricted Stock Award, the recipient shall pay the par value of the shares to be issued pursuant to the Award unless such payment is not required by applicable law.

II. Performance Share Awards and Performance Unit Awards

(a) Subject to the terms and conditions of the Plan, the Committee may grant any Service Provider a Performance Share Award and/or a Performance Unit Award. The Committee may but need not provide that a specified portion of the Performance Share Award or Performance Unit Award will be earned if the specified performance goal applicable to the Award is partially attained.

(b) Subject to Section 6(b) below, the specified performance goal applicable to a Performance Share Award or Performance Unit Award may but need not consist, without limitation, of any one or more of the following: completion of a specified period of employment with or other service that benefits the Company or a Subsidiary or

an Allied Enterprise, achievement of financial or operational goals, and/or the occurrence of a specified circumstance or event. The performance goal applicable to Performance Share Awards and Performance Unit Awards, and the other terms and conditions of such awards, need not be the same for each award or each Service Provider to whom an award is granted. A THREE-YEAR TERM: Thomas O. Barnes, Gary G. BenanavService Provider may (but need not) be granted Performance Share Awards and Marcel P. Joseph FOR WITHHOLD (INSTRUCTION: To withholdPerformance Unit Awards each year, and the performance period applicable to any such Award may overlap with one or more years included in the performance period applicable to any earlier- or later-granted Award. Subject to Section 6(d) below, the Committee may retain discretion to adjust the determinations of the degree of attainment of the performance objectives applicable to Performance Share Awards and Performance Unit Awards.

(c) Subject to Section 6(e) below, the Committee may but need not provide that, if the Service Provider’s death or disability or another circumstance or event specified by the Committee occurs before the performance goal applicable to a Performance Share Award or Performance Unit Award is attained, and irrespective of whether the performance goal is thereafter attained, the Performance Share Award or Performance Unit Award will be earned in whole or in part (as the Committee may specify).

(d) The Committee may but need not provide for a Service Provider’s Performance Share Award or Performance Unit Award to be forfeited in whole or in part if such Participant’s employment by or other service that benefits the Company, a Subsidiary or an Allied Enterprise terminates for any reason before shares are issued or money is paid (as applicable) in full settlement of such Performance Share Award or Performance Unit Award.

(e) Except as otherwise provided in the instrument evidencing a Performance Share Award or Performance Unit Award, Performance Share Awards and Performance Unit Awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or to a Beneficiary.

III. Dividend Equivalents.The Committee may grant any Service Provider the right to be paid, subject to such terms and conditions as the Committee may specify, an amount of money equal to the dividends paid from time to time on a specified number of shares of Common Stock (which may but need not be based on the number of shares that are subject to another Award, including without limitation an Option or Stock Appreciation Rights, and whether or not such other Award is vested or exercisable). The Committee may provide for such amount of money to be paid on each date on which such dividends are paid or at a subsequent future time or times. If it is not paid on each such date, then, if so provided by the Committee, and subject to such terms and conditions as the Committee may impose, until such money is paid or forfeited, it shall be credited to the Service Provider on the books of the Company and may earn amounts equivalent to interest or another investment return specified by the Committee, or may earn amounts equivalent to the dividends that would be paid on a number of shares of Common Stock having a Fair Market Value on its dividend payment date equal to such amount. Any such equivalent amounts may be paid as earned or may be deferred and reinvested until a future date or dates, as the Committee may specify, provided that any dividends deemed reinvested in shares of Common Stock shall be deemed reinvested at Fair Market Value on the applicable dividend payment date. Dividend Equivalents may be paid in the form of money or shares of Common Stock based on their Fair Market Value on the payment date, or in a combination of money and such shares, as the Committee may provide. Any shares of Common Stock issued in payment of Dividend Equivalents shall be charged against the maximum aggregate number of shares which may be issued pursuant to Awards under Section 4(a)(i) above.

6. Performance Measures and Other Provisions Applicable to Performance-Based Compensation Awards

(a) Awards that the Committee intends to qualify as Performance-Based Compensation shall be granted and administered in a manner that will enable such Awards to qualify as Performance-Based Compensation.

(b) The performance goal applicable to any Award (other than an Appreciation-Only Award) that the Committee intends to qualify as Performance-Based Compensation shall be based on targeted levels of, targeted levels of return on, or targeted levels of growth for, any one or more of the following performance measures on a

consolidated Company, consolidated Group, business unit or divisional level, as the Committee may specify: earnings per share, net income, operating income, performance profit (operating income minus an allocated charge approximating the Company’s cost of capital, before or after tax), gross margin, revenue, working capital, total assets, net assets, stockholders’ equity, or cash flow. The Committee shall select the performance measure or measures on which the performance goal applicable to any such Award shall be based and shall establish the levels of performance at which such Award is to be earned in whole or in part. Any such performance measure or combination of such performance measures may apply to the Service Provider’s Award in its entirety or to any designated portion or portions of the Award, as the Committee may specify. The foregoing performance measures shall be determined in accordance with generally accepted accounting principles (“GAAPs”) to the extent that GAAPs define such performance measures, and otherwise shall be determined in accordance with any customary and reasonable definition the Committee approves. However, notwithstanding the preceding sentence, unless the Committee determines otherwise prior to payment of an Award to which this Section 6(b) applies, and subject to any exercise of “negative discretion” by the Committee, extraordinary, unusual or non-recurring items; discontinued operations; effects of accounting changes; effects of currency fluctuations; effects of financing activities (by way of example, without limitation, effect on earnings per share of issuing convertible debt securities); expenses for restructuring or productivity initiatives; non-operating items; effects of acquisitions and acquisition expenses; and effects of divestitures and divestiture expenses, any of which affect any performance goal applicable to such Award (including, without limitation, earnings per share) shall be automatically excluded or included in determining the extent to which the performance goal has been achieved, whichever will produce the higher Award.

(c) Any provision of the Plan to the contrary notwithstanding, but subject to Section 6(e), Section 9 and Section 10 below, Awards to which Section 6(b) above applies shall (i) “be paid solely on account of the attainment of one or more preestablished, objective performance goals” (within the meaning of Treasury Regulation 1.162-27(e)(2) or its successor) over a period of one year or longer, which performance goals shall be based upon one or more of the performance measures set forth in Section 6(b) above, and (ii) be subject to such other terms and conditions as the Committee may impose.

(d) The terms of the performance goal applicable to any Award to which Section 6(b) above applies shall preclude discretion to increase the amount of compensation that would otherwise be due upon attainment of the goal.

(e) An Award to which Section 6(b) above applies may be earned in whole or in part if the Service Provider’s death or disability or a Change in Control or another circumstance or event specified by the Committee occurs before the performance goal applicable to the Award is attained, and irrespective of whether the performance goal applicable to the Award is thereafter attained, but only if and to the extent that (i) the Committee so provides with respect to such Award, and (ii) the Award will nevertheless qualify as Performance-Based Compensation if the performance goal applicable to such Award is attained and the Service Provider’s death or disability, a Change in Control or any such other circumstance or event specified by the Committee does not occur.

7. Options.Except as otherwise provided in Section 13(e), Options shall be subject to the following provisions and such other terms and conditions, consistent with the following provisions, as the Committee may provide in the instrument evidencing the Options:

(a) Subject to the provisions of Section 10, the purchase price per share shall be, in the case of an Incentive Stock Option, not less than 100% of the Fair Market Value of a share of Common Stock on the date the Incentive Stock Option is granted (or in the case of any optionee who, at the time such Incentive Stock Option is granted, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of his employer corporation or of its parent or subsidiary corporation, not less than 110% of the Fair Market Value of a share of Common Stock on the date the Incentive Stock Option is granted) and, in the case of a Non-Statutory Stock Option, not less than the par value of a share of Common Stock on the date the Non-Statutory Stock Option is granted. Subject to the foregoing limitations, the purchase price per share may, if the Committee so provides at the time of grant of an Option, be indexed to the increase or decrease in an index specified by the Committee.

(b) The purchase price of shares subject to an Option may be paid in whole or in part (i) in money, (ii) by bank-certified, cashier’s or personal check subject to collection, (iii) if so provided in the Option and subject to Section 402 of the Sarbanes-Oxley Act of 2002 as amended from time to time and subject to such terms and conditions as the Committee may impose, by delivering to the Company a properly executed exercise notice together with a copy of irrevocable instructions to a stockbroker to sell immediately some or all of the shares acquired by exercise of the option and to deliver promptly to the Company an amount of sale proceeds (or, in lieu of or pending a sale, loan proceeds) sufficient to pay the purchase price, (iv) if so provided in the Option and subject to such terms and conditions as may be specified in the Option, in shares of Common Stock which have been owned by the optionee for at least six months or which were acquired on the open market and which are surrendered to the Company actually or by attestation, or (v) if so provided in the Option and subject to such terms and conditions as may be specified in the Option, by electing to have the Company retain some of the shares of Common Stock that would otherwise be issued pursuant to the Option exercise. Any shares of Common Stock thus surrendered to or retained by the Company shall be valued at their Fair Market Value on the date of exercise. If so provided in the Option and subject to such terms and conditions as are specified in the Option, in lieu of the foregoing methods of payment, any portion of the purchase price of the shares to be issued may be paid by a promissory note secured by a pledge of the purchased shares in such form and containing such provisions (which may but need not provide for interest and for payment of the note at the election of the Service Provider in money or in shares of Common Stock or other property surrendered to the Company) as the Committee may approve; provided that (A) payment by promissory note may be made only if and to the extent that the General Counsel determines that it is permissible under the Delaware General Corporation Law and Section 402 of the Sarbanes-Oxley Act of 2002 as amended from time to time, and (B) if the Committee permits any such note to be paid by surrender of shares of Common Stock, such shares shall be valued at their Fair Market Value on the date of such surrender, and (C) if the Committee permits any such note to be paid by surrender of other property, such other property shall be valued at its fair market value on any reasonable basis established or approved by the Committee, and (D) in the case of an Incentive Stock Option, any such note shall bear interest at the minimum rate required to avoid imputation of interest under federal income tax laws applicable at the time of exercise and (E) any such note shall mature in ten years or such lesser period as may be specified by the Committee.

(c) Options may be granted for such lawful consideration, including but not limited to money or other property, tangible or intangible, or labor or services received or to be received by the Company, as the Committee may determine when the Option is granted. Property for purposes of the preceding sentence shall include an obligation of the Company unless prohibited by applicable law. Subject to the foregoing and the other provisions of this Section 7, each Option may be exercisable in full at the time of grant or may become exercisable in one or more installments and at such time or times and subject to such terms and conditions, as the Committee may determine. Without limiting the foregoing, an Option may (but need not) provide by its terms that it will become exercisable in whole or in part upon the completion of specified periods of service or earlier achievement of one or more performance objectives specified therein, or that it will become exercisable only if one or more performance goals specified therein are achieved. The Committee may at any time accelerate the date on which an Option becomes exercisable, and no additional consideration need be received by the Company in exchange for such acceleration. Unless otherwise provided in the instrument evidencing the Option, an Option, to the extent it becomes exercisable, may be exercised at any time in whole or in part until the expiration or termination of the Option.

(d) Subject to Section 13(a) below, each Option shall be exercisable during the life of the optionee only by him or his guardian or legal representative, and after death only by his Beneficiary. Notwithstanding any other provision of this Plan, (i) no Option shall be exercisable after the tenth anniversary of the date on which the Option was granted, and (ii) no Incentive Stock Option which is granted to any optionee who, at the time such Option is granted, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of his employer corporation or of its parent or subsidiary corporation, shall be exercisable after the expiration of five (5) years from the date such Option is granted. If an Option is granted for a term of less than ten years, the Committee may, at any time prior to the expiration of the Option, extend its term for a period ending not later than on the tenth anniversary of the date on which the Option was granted, and no additional consideration need be

received by the Company in exchange for such extension. Subject to the foregoing provisions of this Section 7(d), the Committee may but need not provide for an Option to be exercisable after termination of the Service Provider’s employment or other service for any period and subject to any terms and conditions that the Committee may determine.

(e) An Option may, but need not, be an Incentive Stock Option; provided that the aggregate Fair Market Value (determined as of the time the option is granted) of the stock with respect to which Incentive Stock Options may be exercisable for the first time by any Employee during any calendar year (under all plans, including this Plan, of his employer corporation and its parent and subsidiary corporations) shall not exceed $100,000 unless the Code is amended to allow a higher dollar amount.

(f) Shares purchased pursuant to the exercise of an Option shall be issued to the person exercising the Option as soon as practicable after the Option is properly exercised. However, the Committee may (but need not) permit the person exercising an Option to elect to defer the issuance of shares purchased pursuant to the exercise of the Option on such terms and subject to such conditions and for such periods of time as the Committee may in its discretion provide. In the event of such deferral, the Committee may (but need not) grant the person who exercised the Option Dividend Equivalents with respect to such shares. No person exercising an Option shall acquire any rights of a shareholder unless and until the shares purchased pursuant to the exercise of the Option are issued to him. If so provided in the instrument evidencing the Option, the shares issued pursuant to the exercise of the Option may be non-transferable and forfeitable to the Company in designated circumstances and for specified periods of time.

(g) The Committee may (but need not) provide, at the time of grant of an Incentive Stock Option or, with respect to a Non-Statutory Stock Option, at or after the time of grant, that the Service Provider to whom such Option is granted shall be granted a Non-Statutory Stock Option (a “Reloaded Option”) if and when (i) such Service Provider exercises all or part of an Option, including without limitation a previously granted Reloaded Option, (an “Original Option”) by surrendering shares of Common Stock already owned by him in full or partial payment of the option price under such Original Option and/or (ii) shares of Common Stock are withheld to satisfy tax obligations incident to the exercise of such Original Option. All Reloaded Options are subject to the availability of shares of Common Stock under the Plan at the time of such exercise. A Reloaded Option shall cover a number of shares of Common Stock not greater than the number of shares of Common Stock surrendered in payment of the option price under such Original Option and/or used to satisfy any tax obligation incident to the exercise of such Original Option. Each Reloaded Option shall have an option price equal to the Fair Market Value of the Common Stock on the date of grant of the Reloaded Option and shall expire on the stated expiration date of the Original Option. The date of grant of a Reloaded Option shall be the date on which the exercise of the Original Option results in the grant of such Reloaded Option. A Reloaded Option shall be exercisable at any time and from time to time from or after the date of grant of the Reloaded Option (or as the Committee in its sole discretion shall otherwise specify in the written instrument evidencing the Reloaded Option). The written instrument evidencing the Original Option or the Reloaded Option may contain such other terms and conditions as the Committee may in its discretion impose, which, without limitation, may (but need not) (A) make the grant or exercise of Reloaded Options contingent on the achievement of specified levels of stock appreciation on the Original Option or otherwise, (B) limit the number of Reloaded Options that may be granted or the intervals at which Reloaded Options may be granted, and (C) include a restriction on the transferability of the Common Stock received upon the exercise of the Original Option or any Reloaded Option.

(h) The Committee shall not have the authority to ALL AUTHORITY votereduce the purchase price of shares under outstanding Options, except as permitted by Section 10 below (relating to adjustments for changes in capitalization and similar adjustments). If the Committee grants an Option under which the purchase price of the optioned shares is indexed to the increase or decrease in a specified index, as permitted by Section 7(a) above, a reduction in the purchase price resulting from a decrease in the index shall not be deemed to violate the first sentence of this Section 7(h).

(i) No Employee shall make any elective contribution or employee contribution to the Plan (within the meaning of Treasury Regulation Section 1.401(k)-1(d)(2)(iv)(B)(4) or a successor thereto) during the six months after the

Employee’s receipt of a hardship distribution from a plan of the Company or a related party within the provisions of Code Sections 414(b), (c), (m) or (o) containing a cash or deferred arrangement under Section 401(k) of the Code. The preceding sentence shall not apply if and to the extent that the General Counsel determines it is not necessary to qualify any such plan as a cash or deferred arrangement under Section 401(k) of the Code.

(j) No option shall be exercisable unless and until the Company (i) obtains the approval of all regulatory bodies whose approval the General Counsel may deem necessary or desirable, and (ii) complies with all legal requirements deemed applicable by the General Counsel.

(k) An Option shall be considered exercised if and when written notice, signed by the person exercising the Option and stating the number of shares with respect to which the Option is being exercised, is received by the designated representative of the Company on a properly completed form approved for this purpose by the Committee, accompanied by full payment of the Option exercise price in one or more of the forms authorized in the instrument evidencing such Option and described in Section 7(b) above for the number of shares to be purchased. No Option may at any time be exercised with respect to a fractional share unless the instrument evidencing such Option expressly provides otherwise.

8. Stock Appreciation Rights. Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the Plan, as shall from time to time be determined by the Committee and to the following terms and conditions:

(a) Stock Appreciation Rights that are granted under the Plan may be linked to all or any part of an Option (“Linked Stock Appreciation Rights”), or may be granted without any linkage to an Option (“Free-Standing Stock Appreciation Rights”). Linked Stock Appreciation Rights may be granted on the date of grant of the related Option or on any date thereafter, as the Committee may determine.

(b) Linked Stock Appreciation Rights may be granted either as an alternative or a supplement to the Option to which they are linked (the “related” Option). Linked Stock Appreciation Rights that are granted as an alternative to the related Option may only be exercised when the related Option is exercisable, and at no time may a number of such Linked Stock Appreciation Rights be exercised that exceeds the number of shares with respect to which the related Option is then exercisable. Upon exercise of Linked Stock Appreciation Rights that are granted as an alternative to an Option, the holder shall be entitled to receive the amount determined pursuant to Section 8(e) below. Exercise of each such Linked Stock Appreciation Right shall cancel the related Option with respect to one share of Common Stock purchaseable under the Option. Linked Stock Appreciation Rights that are granted as a supplement to the related Option shall entitle the holder to receive the amount determined pursuant to Section 8(e) below if and when the holder purchases shares under the related Option or at any subsequent time specified in the instrument evidencing such Stock Appreciation Rights.

(c) Stock Appreciation Rights may be granted for such lawful consideration, including but not limited to money or other property, tangible or intangible, or labor or services received or to be received by the Company, as the Committee may determine when the Stock Appreciation Rights are granted. Property for purposes of the preceding sentence shall include an obligation of the Company unless prohibited by applicable law. Subject to the foregoing and the other provisions of this Section 8, Stock Appreciation Rights may be exercisable in full at the time of grant or may become exercisable in one or more installments and at such time or times and subject to such terms and conditions, as the Committee may determine. Without limiting the foregoing, Stock Appreciation Rights may (but need not) provide by their terms that they will become exercisable in whole or in part upon the completion of specified periods of service or earlier achievement of one or more specified performance objectives, or that they will become exercisable only if one or more specified performance goals are achieved. The Committee may at any time accelerate the date on which Stock Appreciation Rights become exercisable, and no additional consideration need be received by the Company in exchange for such acceleration. Unless otherwise provided in the Plan or the instrument evidencing the Stock Appreciation Rights, Stock Appreciation Rights, to the extent they become exercisable, may be exercised at any time in whole or in part until they expire or terminate.

(d) No Free-Standing Stock Appreciation Rights or Linked Stock Appreciation Rights that are granted as a supplement to the related Option shall be exercisable after the tenth anniversary of the date on which the Stock Appreciation Rights were granted, and no Linked Stock Appreciation Rights that are granted as an alternative to the related Option shall be exercisable after the related Option ceases to be exercisable. If the Committee grants Stock Appreciation Rights for a lesser term than that permitted by the preceding sentence, the Committee may, at any time prior to expiration of the Stock Appreciation Rights, extend their term to the maximum term permitted by the preceding sentence, and no additional consideration need be received by the Company in exchange for such extension. Subject to the foregoing provisions of this Section 8(d), the Committee may but need not provide for Stock Appreciation Rights to be exercisable after termination of the Service Provider’s employment or other service for any individual nominee, write NOMINEES FOR ALL NOMINEESperiod and subject to any terms and conditions that nominee's namethe Committee may determine.

(e) Upon exercise of Stock Appreciation Rights, the holder thereof shall be entitled to receive an amount of money, or a number shares of Common Stock that have a Fair Market Value on the line [ ] [ ]date of exercise of such Stock Appreciation Rights, or a combination of money and shares valued at Fair Market Value on such date, as the Committee may determine, equal to the amount by which the Fair Market Value of a share of Common Stock on the date of such exercise exceeds the Exercise Price (as hereafter defined) of the Stock Appreciation Rights, multiplied by the number of Stock Appreciation Rights exercised; provided below.) ---------------------------------------- (2) ELECTION OF ONE DIRECTOR TO FILL A VACANCY: Frank E. Grzelecki FOR WITHHOLD THE AUTHORITY NOMINEE FOR THE NOMINEE [ ] [ ] (3) PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED COMMON STOCK AND DECREASE PAR VALUES PER SHARE: FOR AGAINST ABSTAIN [ ] [ ] [ ] (4) RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS: FOR AGAINST ABSTAIN [ ] [ ] [ ] --------------------------------------------- "PLEASE MARK INSIDE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD YOUR VOTES" --------------------------------------------- THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. UNLESS OTHERWISE DIRECTED, THIS PROXY SHALL BE VOTED FOR ITEMS 1, 2, 3 AND 4. Please sign exactlythat in no event shall a fractional share be issued unless the instrument evidencing such Stock Appreciation Rights expressly provides otherwise. In the case of Linked Stock Appreciation Rights that are granted as name(s) appear hereon.an alternative to the related Option, the Exercise Price shall be the price at which shares may be purchased under the related Option. In the case of Linked Stock Appreciation Rights that are granted as a supplement to the related Option, and in the case of Free-Standing Stock Appreciation Rights, the Exercise Price shall be the Fair Market Value of a share of Common Stock on the date the Stock Appreciation Rights are granted, unless the Committee specifies a different price when the Stock Appreciation Rights are granted (which shall not be less than the par value of the Common Stock and which may be indexed to the increase or decrease in an index specified by the Committee). The Committee may provide that, notwithstanding the foregoing, upon exercise of Stock Appreciation Rights at any time during a period commencing on the third business day following the date of release for publication of any annual or quarterly summary statements of the Company’s sales and earnings and ending on the twelfth business day following such date (a “Window Period”), or during the thirty-day period following a Change in Control (a “Change in Control Period”), including, without limitation, upon exercise of Stock Appreciation Rights which expire before the end of the Window Period or Change in Control Period in which they are exercised (“Expiring Stock Appreciation Rights”), the amount of money or shares which a Section 16 Person shall be entitled to receive in settlement of such exercise shall equal the amount by which the highest Fair Market Value of Common Stock during such Window Period or such Change in Control Period (or, in the case of Expiring Stock Appreciation Rights, the highest Fair Market Value of Common Stock during the portion of such Window Period or Change in Control Period that precedes the expiration of such Stock Appreciation Rights) exceeds the Exercise Price of the Stock Appreciation Rights multiplied by the number of Stock Appreciation Rights exercised but, in the case of Stock Appreciation Rights that relate to an Incentive Stock Option, not in excess of the maximum amount that may be paid under Code Section 422 without disqualifying such Option as an incentive stock option as defined in that Code section.

(f) Subject to Section 4(e) above, (i) the limitations set forth in Section 4(a)(i) above shall be charged only for the number of shares which are actually issued in settlement of Stock Appreciation Rights; and (ii) in the case of an exercise of Linked Stock Appreciation Rights that were granted as an alternative to the related Option, if the number of shares of Common Stock previously charged against such limitations on account of the portion of the Option that is cancelled in connection with such exercise in accordance with Section 8(b) exceeds the number of shares (if any) actually issued pursuant to such exercise, the excess may be added back to the maximum aggregate number of shares available for issuance under the Plan.

(g) Subject to Section 13(a) below, Stock Appreciation Rights shall be exercisable during the life of the Service Provider only by him or his guardian or legal representative, and after death only by his Beneficiary.

(h) The Committee shall not have the authority to reduce the exercise price of outstanding Stock Appreciation Rights, except as permitted by Section 10 below (relating to adjustments for changes in capitalization and similar

adjustments). If the shares are registeredCommittee grants Stock Appreciation Rights the exercise price of which is indexed to the increase or decrease in a specified index, as permitted by Section 8(e) above, a reduction in the namesexercise price resulting from a decrease in the index shall not be deemed to violate the first sentence of this Section 8(h).

9. Certain Change in Control, Termination of Service, Death and Disability Provisions.

(a) Notwithstanding any provision of the Plan to the contrary, unless the instrument evidencing an Award provides otherwise, (i) any Award which is outstanding but not yet fully exercisable, vested, earned or payable at the time of a Change in Control shall become fully exercisable, vested, earned and payable at that time; provided that if such Change in Control occurs less than six months after the date on which such Award was granted and if the consideration for which such Award was granted consisted in whole or in part of future services, then such Award shall become fully exercisable, vested, earned and payable at the time of such Change in Control only if the participant agrees in writing (if requested to do so by the Committee in writing before such Change in Control) to remain in the employment or other applicable service that benefits the Company or a Subsidiary or an Allied Enterprise, at least through the date which is six months after the date such Award was granted, with substantially the same title, duties, authority, reporting relationships, compensation and indemnification as on the day immediately preceding the Change in Control; and (ii) any Option or Stock Appreciation Right which is outstanding at the time of a Change in Control shall remain exercisable for the full balance of its 10 year (or lesser) term, irrespective of any provision that would otherwise cause such Option or Stock Appreciation Right to terminate sooner.

(b) Subject to Section 9(a) above, the Committee may at any time, and subject to such terms and conditions as it may impose:

(i) authorize the holder of an Option or Stock Appreciation Rights to exercise the Option or Stock Appreciation Rights following the termination of the participant’s employment or other applicable service that benefits the Company or a Subsidiary or an Allied Enterprise, or following the participant’s death or disability, whether or not the Option or Stock Appreciation Rights would otherwise be exercisable following such event, provided that in no event may an Option or Stock Appreciation Rights be exercised after the expiration of their term;

(ii) grant Options and Stock Appreciation Rights which become exercisable only in the event of a Change in Control;

(iii) provide for Stock Appreciation Rights to be exercised automatically and only for money in the event of a Change in Control;

(iv) authorize any Award to become non-forfeitable, fully earned and payable following (A) the termination of the Service Provider’s employment with or other applicable service that benefits the Company or a Subsidiary or an Allied Enterprise, or (B) the Service Provider’s death or disability, whether or not the Award would otherwise become non-forfeitable, fully earned and payable following such event;

(v) grant Awards which become non-forfeitable, fully earned and payable only in the event of a Change in Control; and

(vi) provide in advance or at the time of a Change in Control for money to be paid in settlement of any Award in the event of a Change in Control, either at the election of the participant or at the election of the Committee.

10. Adjustment Provisions. In the event that any recapitalization, or reclassification, split-up, reverse split, or consolidation of shares of Common Stock shall be effected, or the outstanding shares of Common Stock shall be, in connection with a merger or consolidation of the Company or a sale by the Company of all or a part of its assets, exchanged for a different number or class of shares of stock or other securities or property of the Company or any other entity or person, or a spin-off or a record date for determination of holders of Common Stock entitled to receive a dividend or other distribution payable in Common Stock or other property (other than normal cash

dividends) shall occur, (a) the maximum aggregate number and class of shares or other securities or property that may be issued in accordance with Section 4(a)(i) above pursuant to (i) Awards thereafter granted, and (ii) Awards thereafter granted that are not Appreciation-Only Awards, (b) the maximum number and class of shares or other securities or property with respect to which Options or Stock Appreciation Rights, or Awards other than Appreciation-Only Awards and Dollar-Denominated Awards, may be granted during any calendar year to any Employee or other Service Provider pursuant to Section 4(a)(ii) or 4(a)(iii) above, (c) the number and class of shares or other securities or property that may be issued under outstanding Awards, (d) the exercise price or purchase price to be paid per share under outstanding and future Awards, and (e) the price to be paid per share by the Company or a Subsidiary for shares or other securities or property issued pursuant to Awards which are subject to a right of the Company or a Subsidiary to reacquire such shares or other securities or property, shall in each case be equitably adjusted; provided that with respect to Incentive Stock Options any such adjustments shall comply with Sections 422 and 424 of the Code.

11. Effective Date and Duration of Plan; Effect on Prior Plans. The Plan shall become effective on the Effective Date. No awards shall be granted under the Prior Plan or the Prior Program on or after the Effective Date, except for awards, if any, that the Company is contractually obligated to grant under the Prior Plan or the Prior Program on or after the Effective Date pursuant to agreements in force prior to the Effective Date which are not amended to provide for the awards to be granted under the Plan. If the Plan is not approved by shareholders of the Company, the Plan (including the preceding sentence) shall be null, void and of no force or effect. If the Plan is approved by shareholders of the Company, Awards may be granted within ten years after the Effective Date, but not thereafter. In no event shall an Incentive Stock Option be granted under the Plan more than ten (10) years from the date the Plan is adopted by the Board, or the date the Plan is approved by the shareholders of the Company, whichever is earlier.

12. Administration.

(a) The Plan shall be administered by a committee of the Board consisting of two or more directors appointed from time to time by the Board. No person shall be appointed to or shall serve as a member of such committee unless at the time of such appointment and service he shall be an “independent director” as defined in applicable rules or listing standards of the New York Stock Exchange and a “non-employee director” as defined in SEC Rule 16b-3. Unless the Board determines otherwise, such committee shall also be comprised solely of “outside directors” within the meaning of Section 162(m)(4)(C)(i) of the Code and Treasury Regulation Section 1.162-27(e)(3). Notwithstanding the foregoing, if and to the maximum extent permissible under applicable laws and regulations, including in particular but not limited to Sections 141(c) and 157(c) of the General Corporation Law of Delaware, and applicable rules or listing standards of the New York Stock Exchange, any or all of the authority and responsibility of the Committee under the Plan may be exercised with respect to Service Providers who at the time any such authority or responsibility is exercised are not and have never been (i) Section 16 Persons, or (ii) “covered employees” within the meaning of Section 162(m)(3) of the Code, by (A) another committee of the Board to which the Board delegates such authority or responsibility, the members of which committee may be officers or employees of the Company and need not be “independent directors”, “non-employee directors” or “outside directors” referred to above, or (B) a Chief Executive Officer of the Company and/or a chairperson of the Committee to whom the Board or the Committee delegates such authority or responsibility. To the extent that the Board or the Committee (as applicable) delegates the authority and responsibility of the Committee pursuant to the foregoing, all references to the Committee in the Plan shall be deemed to refer to the committee to which, or the person to whom, such authority and responsibility is so delegated.

(b) The Committee may establish such rules and regulations, not inconsistent with the provisions of the Plan, as it may deem necessary for the proper administration of the Plan, and may amend or revoke any rule or regulation so established. The Committee shall, subject to the provisions of the Plan, have full power and discretion to interpret, administer and construe the Plan and full authority to make all determinations and decisions thereunder including without limitation the authority and discretion to (i) determine the persons who are Service Providers and select the Service Providers who are to participate in the Plan, (ii) determine when Awards shall be

granted, (iii) determine the number of shares and/or amount of money to be made subject to each should sign. Executors, administrators, trustees, guardians, attorneys-in-fact, general partnersAward, (iv) determine the type of Award to grant, (v) determine the terms and conditions of each Award, including the exercise price, in the case of an Option or Stock Appreciation Rights, and whether specific Awards shall be linked to one another and if so whether they shall be alternative to or supplement one another, (vi) make any adjustments pursuant to Section 10 of the Plan, and (vii) determine whether or not a specific Award is intended to qualify as Performance-Based Compensation. Without limiting the generality of the foregoing, the Committee shall have the authority to establish and administer performance goals applicable to Awards, and the authority to certify that such performance goals are attained, within the meaning of Treasury Regulation Section 1.162-27(c)(4). The interpretation by the Committee of the terms and provisions of the Plan and any instrument issued thereunder, and its administration thereof, and all action taken by the Committee, shall be final, binding and conclusive on the Company, its stockholders, Subsidiaries, Allied Enterprises, all participants and Service Providers, and upon their respective Beneficiaries, successors and assigns, and upon all other persons claiming under or through any of them.

(c) Members of the Board of Directors and members of the Committee acting under this Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross or willful misconduct in the performance of their duties.

13. General Provisions.

(a) No Award, including without limitation any Option or Stock Appreciation Rights, shall be transferable by the Service Provider or other rightful holder of such Award other than by will or the laws of descent and distribution or to a representative capacity should add their titles. WhenBeneficiary. The preceding sentence and any other provision of the proxyPlan to the contrary notwithstanding, the Committee may (but need not) permit a Service Provider to transfer any Award, other than an Incentive Stock Option or any other Award that is givenlinked to an Incentive Stock Option, during his lifetime to such other persons and such entities and on such terms and subject to such conditions as the Committee may provide in the written instrument documenting such Award.

(b) Nothing in this Plan or in any instrument executed pursuant hereto shall confer upon any person any right to continue in the employment or other service of the Company or a Subsidiary or an Allied Enterprise, or shall affect the right of the Company or a Subsidiary or any Allied Enterprise to terminate the employment or other service of any person at any time with or without cause or assigning a reason therefor.

(c) No shares of Common Stock shall be issued or transferred pursuant to an Award unless and until all legal requirements applicable to the issuance or transfer of such shares have, in the opinion of the General Counsel, been satisfied. Any such issuance or transfer shall be contingent upon the person acquiring the shares giving the Company any assurances the General Counsel may deem necessary or desirable to assure compliance with all applicable legal requirements.

(d) No person (individually or as a member of a group) and no Beneficiary or other person claiming under or through him, shall have any right, title or interest in or to any shares of Common Stock (i) issued or transferred to, or acquired by, a corporation,trust or other legal entity pursuant to the next sentence of this Section 13(d), (ii) allocated, or (iii) reserved for the purposes of this Plan, or subject to any Award, except as to such shares of Common Stock, if any, as shall have been issued to him. The Committee may (but need not) provide at any time or from time to time (including without limitation upon or in contemplation of a Change in Control) for a number of shares of Common Stock, equal to the number of such shares subject to Awards then outstanding, to be issued or transferred to, or acquired by, a trust (which may but need not be a grantor trust) or other legal entity for the purpose of satisfying the Company’s obligations under such Awards, and, unless prohibited by applicable law, such shares held in trust or in such other legal entity shall be considered authorized and issued shares with full dividend and voting rights, notwithstanding that the Awards to which such shares relate shall not have been exercised or may not be exercisable or vested at that time.

(e) In the event the laws of a foreign country, in which the Company or a Subsidiary or any Allied Enterprise has Service Providers, prescribe certain requirements for stock incentives to qualify for advantageous tax treatment under the laws of that country (including, without limitation, laws establishing options analogous to Incentive Stock Options), the Board of Directors, may restate, in whole or in part, this Plan and may include in such restatement additional provisions for the purpose of qualifying the restated plan and stock incentives granted thereunder under such laws; provided, however, that (i) the terms and conditions of a stock incentive granted under such restated plan may not be more favorable to the recipient than would be permitted if such stock incentive had been granted under the Plan as herein set forth, (ii) all shares allocated to or utilized for the purposes of such restated plan shall be subject to the limitations of Section 4, and (iii) the provisions of the restated plan may give the Board less but not more discretion to amend or terminate such restated plan than is provided with respect to this Plan by the provisions of Section 14 hereof.

(f) The Company and its Subsidiaries and any Allied Enterprises may make such provisions as they may deem appropriate for the withholding of any taxes which they determine they are required to withhold in connection with any Award. Without limiting the foregoing, the Committee may, subject to such terms and conditions as it may impose, permit or require any withholding tax obligation arising in connection with any Award or the grant, exercise, vesting, distribution or payment of any Award, up to the minimum required federal, state and local withholding taxes, including payroll taxes, to be satisfied in whole or in part, with or without the consent of the Service Provider or other rightful holder of the Award, by having the Company withhold all or any part of the shares of Common Stock that vest or would otherwise be issued or distributed at such time. Any shares so withheld shall be valued at their Fair Market Value on the date of such withholding.

(g) Nothing in this Plan is intended to be a substitute for, or shall preclude or limit the establishment or continuation of, any other plan, practice or arrangement for the payment of compensation or fringe benefits to directors, officers, employees, consultants or Service Providers generally, or to any class or group of such persons, which the Company or any Subsidiary now has or may hereafter lawfully put into effect, including, without limitation, any incentive compensation, retirement, pension, group insurance, stock purchase, stock bonus or stock option plan. A Service Provider may be granted an Award whether or not he is eligible to receive similar or dissimilar incentive compensation under any other plan or arrangement of the Company.

(h) The Company’s obligation to issue shares of Common Stock or to pay money in respect of any Award shall be subject to the condition that such issuance or payment would not impair the Company’s capital or constitute a breach of or cause the Company to be in violation of any covenant, warranty or representation made by the Company in any credit agreement to which the Company is a party before the date of grant of such Award.

(i) By accepting any benefits under the Plan, each Service Provider, and each person claiming under or through him, shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, all provisions of the Plan and any action or decision under the Plan by the Company, its agents and employees, and the Board of Directors and the Committee.

(j) The validity, construction, interpretation and administration of the Plan and of any determinations or decisions made thereunder, and the rights of all persons having or claiming to have any interest therein or thereunder, shall be governed by, and determined exclusively in accordance with, the laws of the State of Delaware, but without giving effect to the principles of conflicts of laws thereof. Without limiting the generality of the foregoing, the period within which any action arising under or in connection with the Plan must be commenced, shall be governed by the laws of the State of Delaware, without giving effect to the principles of conflicts of laws thereof, irrespective of the place where the act or omission complained of took place and of the residence of any party to such action and irrespective of the place where the action may be brought. A Service Provider’s acceptance of any Award shall constitute his irrevocable and unconditional waiver of the right to a jury trial in any action or proceeding concerning the Award, the Plan or any rights or obligations of the Service Provider or the Company under or with respect to the Award or the Plan.

(k) The use of the masculine gender shall also include within its meaning the feminine. The use of the singular shall include within its meaning the plural and vice versa.

14. Amendment and Termination. Subject to any applicable shareholder approval requirements of Delaware or federal law, the New York Stock Exchange or the Code, the Plan may be amended by the Board of Directors at any time and in any respect, including without limitation to permit or facilitate qualification of Options theretofore or thereafter granted (a) as Incentive Stock Options under the Code, or (b) for such other special tax treatment as may be enacted on or after the date on which the Plan is approved by the Board, provided that, without stockholder approval, no amendment shall increase the aggregate number of shares which may be issued under the Plan, or shall permit the exercise price of outstanding Options or Stock Appreciation Rights to be reduced, except as permitted by Section 7(h), Section 8(h) and Section 10 hereof. The Plan may also be terminated at any time by the Board of Directors. No amendment or termination of this Plan shall adversely affect any Award granted prior to the date of such amendment or termination without the written consent of the holder of such Award.

APPENDIX 4

BARNES GROUP INC.

PERFORMANCE-LINKED BONUS PLAN

For Selected Executive Officers

SECTION 1. PURPOSE

The Performance-Linked Bonus Plan For Selected Executive Officers (the “Plan”) is designed to provide cash incentive compensation opportunities to key executives that contribute to the success of Barnes Group Inc. (the “Company”) and its subsidiaries. All employees (a) who are executive officers of the Company, (b) whose incentive compensation for any taxable year(s) of the Company commencing on or after January 1, 2001 the Committee (as hereafter defined) anticipates may not be deductible by the Company in whole or in part but for compliance with section 162(m)(4)(C) of the Internal Revenue Code of 1986 as amended (the “Code”), and (c) who are selected to participate in the Plan, including members of the Board of Directors of the Company who are such employees, are eligible to participate in the Plan.

SECTION 2. ADMINISTRATION

The Plan shall be administered by the Compensation and Management Development Committee of the Board of Directors of the Company, or its successor (the “Committee”). The Committee shall consist of not less than two directors who are not employees of the Company or any subsidiary of the Company and shall be comprised solely of directors who are “outside directors” within the meaning of Section 162(m)(4)(C)(i) of the Code. The Committee shall have authority, subject to the provisions of the Plan, to: select employees to participate in the Plan; establish and administer the performance objectives and the Award opportunities applicable to each participant and certify whether the goals have been attained; construe and interpret the Plan and any agreement or instrument entered into under the Plan; establish, amend, and waive rules and regulations for the Plan’s administration; and make all other determinations which may be necessary or advisable for the administration of the Plan. Any determination by the Committee pursuant to the Plan shall be final, binding and conclusive on all employees and participants and anyone claiming under or through any of them. Amounts paid or projected to be paid under the Plan are referred to herein as “Awards.”

SECTION 3. DEFINITIONS

3.1“Award Period” shall mean the period of time within which Performance is measured for the purpose of determining whether an Award has been earned.

3.2“CEO” shall mean the President and Chief Executive Officer of the Company.

3.3“Covered Employee” shall have the meaning set forth in Section 162(m) of the Code.

3.4“Group” shall mean the Executive Office, Associated Spring, Barnes Distribution, or Barnes Aerospace, or any business unit, division, or similar collection of cost centers, profit centers, or international subsidiaries that may be recognized as such by the Committee.

3.5“Individual Target” shall mean a percentage of salary for each individual participating in the Plan. The Committee will establish the Individual Target for each participant no later than the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has elapsed.

3.6“Maximum” shall mean a Performance level at or above which the amount paid or projected to be paid for an Award Period is equal to such maximum percentage of the Individual Targets as may be established by the Committee for each participant no later than the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has elapsed.

3.7“Performance” shall mean the performance objectives established by the Committee in advance, in writing, in terms of an objective formula or standard, with respect to each Group for an Award Period, for the purpose of determining whether, and to what extent, an Award has been earned by the Group for such Award Period. The terms of the objective formula or standard shall preclude discretion to increase the amount of the Award that would otherwise be due upon attainment of the Performance level. Performance objectives shall consist of targeted levels, targeted levels of return on, or targeted levels of growth for, one or more of the following on a consolidated Company, consolidated Group, business unit or divisional level: earnings per share, net income, operating income, performance profit (operating income minus an allocated charge approximating the Company’s cost of capital, before or after tax), gross margin, revenue, working capital, total assets, net assets, stockholders’ equity, or cash flow. The foregoing criteria shall be determined in accordance with generally accepted accounting principles, except to the extent the Committee directs otherwise within the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has elapsed, and may include or exclude any or all of the following items, as the Committee may specify: extraordinary, unusual or non-recurring items; discontinued operations; effects of accounting changes; effects of currency fluctuations; effects of financing activities (by way of example, without limitation, effect on earnings per share of issuing convertible debt securities); expenses for restructuring or productivity initiatives; non-operating items; effects of acquisitions and acquisition expenses; and effects of divestitures and divestiture expenses. Any such performance criterion or combination of such criteria may apply to the participant’s Award opportunity in its entirety or to any designated portion or portions of the Award opportunity, as the Committee may specify. Unless the Committee determines otherwise at any time prior to payment of a participant’s Award for an Award Period and subject to the Committee’s right to exercise negative discretion pursuant to Section 6.1, extraordinary, unusual or non-recurring items, discontinued operations, effects of accounting changes, effects of currency fluctuations, effects of financing activities, expenses for restructuring or productivity initiatives, non-operating items, effects of acquisitions and acquisition expenses, and effects of divestitures and divestiture expenses, any of which affect any Performance criterion applicable to the Award (including but not limited to the criterion of earnings per share) shall be automatically excluded or included in determining the extent to which the Performance level has been achieved, whichever will produce the higher Award.

3.8“Target” shall mean a Performance level above the Threshold and below the Maximum at which the amount paid or projected to be paid for an Award Period is equal to 100% of the Individual Targets for the members of the corresponding Group.

3.9“Threshold” shall mean a Performance level at or above which an Award is earned for an Award Period. For Threshold Performance, the amount paid or projected to be paid for an Award Period is equal to such minimum percentage of the Individual Targets as may be established by the Committee no later than the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has elapsed.

SECTION 4. GROUP PERFORMANCE LEVELS

If an Award Period is a calendar year, prior to March 31, the Committee shall establish the Threshold, Target and Maximum for each Group, and the method for computing the Award for each participant in the Group for such year if the Threshold, Target or Maximum is attained. If an Award Period is not a calendar year, then the Committee shall establish in writing no later than the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has elapsed, the Threshold, Target and Maximum for each Group and the method for computing the Award for each participant in the Group for such Award Period if the Threshold, Target or Maximum is attained. The Committee may also designate one or more intermediate levels of Performance between the Threshold and the Target, and the Target and the Maximum, for a Group, and the percentage of the corresponding Individual Targets that will be available for payment as an Award if Performance equals such intermediate level.

SECTION 5. PARTICIPANTS

If an Award Period is a calendar year, prior to March 31, the Committee shall designate the eligible participants and the respective Groups in which they shall participate. The CEO shall participate in the Executive Office Group for each Award Period. If an Award Period is not a calendar year, then the Committee shall designate the eligible participants, and the respective Groups, no later than the earlier of (a) 90 days after the start of the Award Period or (b) a date on which no more than one fourth of the Award Period has elapsed. Except for Plan participants who retire, die or become permanently disabled during the year, whose Award shall be prorated to the date of such retirement, death or permanent disability, a person must be employed by the Company or one of its subsidiaries on the date of payment of an Award in order to be eligible to receive an Award.

SECTION 6. AWARDS

6.1After the end of the Award Period and based on the final Performance of each Group, the Committee shall determine the Award for each participant, based in all instances on the participant’s Individual Target and the Performance level achieved. No provision of the Plan shall preclude the Committee from exercising negative discretion with respect to any Award hereunder, within the meaning of Treasury Regulation Section 1.162-27(e)(2)(iii)(A).

6.2Subject to Section 7, the Committee shall have the authority to refrain from making an Award to any participant.

SECTION 7. LIMITATIONS

Notwithstanding anything in the Plan to the contrary, no Award in excess of the calculated Award shall be made to any Covered Employee under any circumstances.

Awards at Target shall be greater than Awards at Threshold and less than Awards at Maximum.

Regulations under Section 162(m) of the Internal Revenue Code of 1986, as amended, require that a maximum individual Award be established for any Awards to Covered Employees that are intended to qualify as performance-based compensation. For purposes of qualifying Awards as performance-based compensation under such regulations, notwithstanding anything in the Plan to the contrary, no Award in excess of $7 million shall be paid to any Covered Employee for services rendered in any calendar year.

SECTION 8. PAYMENT OF AWARDS

Payment of any Award shall be contingent upon approval by the stockholders of the Company, prior to payment, of the material terms under which the Award is to be paid, in accordance with Section 162(m)(4)(C)(ii) of the Code and the related Treasury regulations. Unless and until such stockholder approval is obtained, no Award shall be paid.

Payment of any Award shall also be contingent upon the Committee’s certifying in writing that the Performance level and any other material terms applicable to such Award were in fact satisfied, in accordance with Section 162(m)(4)(C)(iii) of the Code and the related Treasury regulations. Unless and until the Committee so certifies, such Award shall not be paid.

Awards shall be paid in cash within 75 days after the expiration of the Award Period, unless otherwise decided by the Committee.

SECTION 9. GENERAL

9.1The interpretation of the Plan by the Committee and its decisions on all questions arising under the Plan shall be conclusive and binding on all Plan participants.

9.2The Plan may be amended at any time, including retroactively, by the Committee.

9.3The Plan supersedes all prior incentive plans, including without limitation the Management Incentive Compensation Plan, for all participants, effective as of January 1, 2001 for the Award Period of calendar year 2001 and Award Periods thereafter.

9.4Any provision of the Plan to the contrary notwithstanding, (a) Awards to Covered Employees under the Plan are intended to qualify as performance-based compensation under Code Section 162(m)(4)(C), and (b) any provision of the Plan that would prevent an Award to any Covered Employee from so qualifying shall be administered, interpreted and construed to carry out such intention and any provision that cannot be so administered, interpreted and construed shall, to that extent, be disregarded. No provision of the Plan, nor the selection of any eligible employee to participate in the Plan, shall constitute an employment agreement or affect the duration of any participant’s employment, which shall remain “employment at will” unless an employment agreement between the Company and the participant provides otherwise. Both the participant and the Company shall remain free to terminate employment at any time to the same extent as if the Plan had not been adopted.

Approved: 4/12/01

Barnes Group Inc.

Executive Office

123 Main Street

Post Office Box 489

Bristol, Connecticut 06011-0489 U.S.A.

LOGO


        2006 BARNES GROUP INC. PROXY

Please

Mark Here

for Address Change or Comments

¨
SEE REVERSE SIDE
The Board of Directors unanimously recommends a vote FOR the following nominees:FORAGAINSTABSTAIN

1.     ELECTION OF DIRECTORS FOR A TWO-YEAR TERM

2.AMEND RESTATED CERTIFICATE OF INCORPORATION¨¨¨
(01) William C. Denninger
(02) Gregory F. Milzcik

FOR the nominees listed to the left (except as marked to the contrary)

¨

WITHHOLD AUTHORITY to vote for the nominees listed to the left

¨

FORAGAINSTABSTAIN

ELECTION OF DIRECTORS

FOR A THREE-YEAR TERM

3.

APPROVE THE AMENDED BARNES GROUP INC. STOCK AND INCENTIVE AWARD PLAN

¨¨¨
FORAGAINSTABSTAIN

(03) Thomas O. Barnes

(04) Gary G. Benanav

(05) Donald W. Griffin

(06) Mylle H. Mangum

4.APPROVE THE BARNES GROUP INC. PERFORMANCE – LINKED BONUS PLAN FOR SELECTED EXECUTIVE OFFICERS¨¨¨
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee’s name in the space provided below.)FORAGAINSTABSTAIN

5.RATIFY SELECTION OF PRICEWATERHOUSE-COOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM¨¨¨
This proxy is solicited by the Board of Directors. This proxy will be voted in the manner specified herein by the undersigned stockholder(s). Unless otherwise directed, this proxy shall be voted for proposals 1, 2, 3, 4 and 5.

Choose MLinksmfor fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply log on to Investor ServiceDirect at www.melloninvestor.com/isd where step-by step instructions will prompt you through enrollment.

I plan to attend
the meeting.
¨

Signature Signature Date 

NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.

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ÙFOLD AND DETACH HEREÙ

Vote by Internet or Telephone or Mail

24 Hours a Day, 7 Days a Week

Internet and telephone voting is available through 11:59 PM Eastern Time

the day prior to annual meeting day.

Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner

as if you marked, signed and returned your proxy card.

InternetTelephoneMail

http://www.proxyvoting.com/b

Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.

OR    

(for residents of the USA or Canada with a touch-tone phone only)

1-866-540-5760

Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.

OR    

Mark, sign and date

your proxy card

and

return it in the

enclosed postage-paid

envelope.

If you vote by Internet or by telephone,

you do NOT need to mail back your proxy card.


2006 BARNES GROUP INC.

ANNUAL MEETING OF STOCKHOLDERS

APRIL 20, 2006 - 11:00 a.m.

HARTFORD/WINDSOR MARRIOTT AIRPORT HOTEL

28 DAY HILL ROAD, WINDSOR, CT 06095

The undersigned stockholder(s) of Barnes Group Inc. hereby appoints Signe S. Gates and Monique B. Marchetti, each with the power to appoint her substitute, as the undersigned’s proxies and attorneys-in-fact, to vote all the shares of common stock covered by this proxy at the Annual Meeting of Stockholders on April 20, 2006, or at any adjournment thereof, upon the matters set forth in the Notice of such meeting with all the powers the undersigned would possess if personally present. Either person is individually authorized to vote as specified on proposals 1, 2, 3, 4 and 5, and otherwise in her discretion.

This card also provides confidential voting instructions to the Trustee for shares held in the Barnes Group Inc. Retirement Savings Plan. If you are a participant and have shares of Barnes Group Inc. common stock allocated to your account under this plan, please read the following as to the voting of such shares.If you do not provide voting instructions to the Trustee by April 17, 2006, the shares allocated to your account will not be signed by an authorized officer. ------------------------------------- Signature ------------------------------------- ------------------------------------- ------------------------------------- Dated: ________________, 1997 PLEASE RETURN voted.

Trustee’s Authorization: The undersigned authorizes Fidelity Management Trust Company, as Trustee of the Barnes Group Inc. Retirement Savings Plan, to vote all shares of the common stock of the Company allocated to the undersigned’s account under such plan at the Annual Meeting of Stockholders or at any adjournment thereof, in accordance with the instructions on the reverse side.

THIS PROXY/VOTING INSTRUCTION CARD PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE. PLEASE SEEIS CONTINUED ON THE REVERSE SIDE.

PLEASE SIGN ON THE REVERSE SIDE.

Address Change/Comments (Mark the corresponding box on the reverse side)

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ÙFOLD AND DETACH HEREÙ

YOUR VOTE IS IMPORTANT!

For your convenience, you can vote your shares in one of three ways:

1.Vote By Internet: http://www.proxyvoting.com/b:Use the Internet to vote your proxy and help to reduce the Company’s costs. Have your proxy card in hand when you access the web site.

OR

2.Vote By Telephone:If you are a resident of the U.S.A. or Canada and have a touch tone telephone, you can call the proxy tabulator, Mellon Investor Services LLC, at the toll-free telephone number:1-866-540-5760and follow the instructions found on the reverse side of this card on how to vote your shares. There will be no charge to you for the call. If you are not a resident of the U.S.A. or Canada or do not have a touch tone telephone, please vote by Internet or by mailing your proxy. Please note that voting by telephone rather than by mail, will help to reduce the Company’s costs.

OR

3.Vote By Mail:Mark, sign and date your proxy and return it promptly in the enclosed envelope. Please sign exactly as the name(s) appears on the reverse side. If the shares are registered in the names of two or more persons, each should sign. Executors, administrators, trustees, guardians, attorneys-in-fact, general partners and other persons acting in a representative capacity should add their complete titles. When a corporation gives the proxy, an authorized officer should sign.

THANK YOU FOR VOTING