<PAGE>   1
                                                                EXHIBIT 10.86


                         GREENFIELD INDUSTRIES, INC.



                            AMENDED AND RESTATED

                      1995 RESTRICTED STOCK BONUS PLAN
<PAGE>   2
                                TABLE OF CONTENTS


<TABLE>
<S>     <C>                                                                   <C>
SECTION 1.  PURPOSE AND DURATION ..........................................    1
            1.1  Adoption and Purpose of the Plan .........................    1
            1.2  Effective Date ...........................................    1

SECTION 2.  DEFINITIONS ...................................................    1
            2.1  Definitions ..............................................    1

SECTION 3.  ADMINISTRATION ................................................    6
            3.1  The Board of Directors ...................................    6
            3.2  Authority of the Board ...................................    7
            3.3  Delegation by the Board ..................................    7
            3.4  Decisions Binding ........................................    7

SECTION 4.  ELIGIBILITY AND ELECTION TO PARTICIPATE .......................    7
            4.1  Eligible Employees .......................................    7
            4.2  Election by Eligible Employee to
                   Participate ............................................    8

SECTION 5.  SHARES SUBJECT TO THE PLAN ....................................    8
            5.1  Number of Shares .........................................    8
            5.2  Restrictions on Shares ...................................    9
            5.3  Lapsed Awards ............................................    9
            5.4  Adjustments in Awards and Authorized
                   Shares .................................................    9

SECTION 6.  TERMS AND CONDITIONS OF AWARDS ................................    9
            6.1  Award Agreement ..........................................    9
            6.2  Period of Restriction ....................................   10
            6.3  Timing and Irrevocability of Election ....................   10
            6.4  Transferability ..........................................   10
            6.5  Legend on Certificates ...................................   11
</TABLE>
<PAGE>   3

<TABLE>
<S>         <C>                                                               <C>
            6.6   Removal of Restrictions ..................................  11
            6.7   Voting Rights ............................................  11
            6.8   Dividends and Other Distributions ........................  11
            6.9   Cancellation of Shares ...................................  12
            6.10  Change in Control ........................................  12
            6.11  No Fractional Shares .....................................  13

SECTION 7.  MISCELLANEOUS .................................................   13
            7.1   No Effect on Employment or Service .......................  13
            7.2   Participation ............................................  13
            7.3   Successors ...............................................  13
            7.4   Beneficiary Designations .................................  13


SECTION 8.  AMENDMENT, TERMINATION AND DURATION ...........................   14
            8.1   Amendment, Suspension or Termination .....................  14
            8.2   Duration of this Plan ....................................  14

SECTION 9.  TAX WITHHOLDING ...............................................   14
            9.1   Withholding Requirements ................................   14
            9.2   Withholding Arrangements ................................   14

SECTION 10. LEGAL CONSTRUCTION ............................................   15
            10.1  Gender and Number .......................................   15
            10.2  Severability ............................................   15
            10.3  Requirements of Law .....................................   15
            10.4  Securities Law Compliance ...............................   15
            10.5  Legend on Certificates ..................................   16
            10.6  Governing Law ...........................................   16
            10.7  Captions ................................................   16
            10.8  Reservation of Shares ...................................   16
</TABLE>




                                       2
<PAGE>   4
                           GREENFIELD INDUSTRIES, INC.
                              AMENDED AND RESTATED
                        1995 RESTRICTED STOCK BONUS PLAN

                                    SECTION 1
                              PURPOSE AND DURATION

1.1      Adoption and Purpose of the Plan. Greenfield Industries, Inc. (the
         "Company") hereby adopts this 1995 Restricted Stock Bonus Plan (the
         "Plan"). The Plan is intended to motivate and retain certain key
         Employees (as hereinafter defined) of the Company by enabling them to
         acquire shares of the Company's common stock, $.01 par value per share
         (the "Shares" or singularly, a "Share") under the terms and conditions
         of and in accordance with this Plan, thereby furthering the growth and
         financial success of the Company by aligning the interests of such
         Employees with the interests of the Company's stockholders.

1.2      Effective Date. The effective date (the "Effective Date") of the Plan
         shall be the date of approval by the Company's stockholders. If such
         approval is not obtained on or before December 31, 1996, the Plan shall
         terminate on such date and all Awards (as hereinafter defined) of
         Shares made prior to such date shall be rescinded and the portion of
         the Incentive Bonus (as hereinafter defined) elected to be received in
         Shares shall be paid in full to the Employee without interest. In
         addition, prior to stockholder approval, no Shares issued pursuant to
         the Plan shall be considered issued or outstanding.


                                    SECTION 2
                                   DEFINITIONS

2.1      Definitions. The following words and phrases shall have the following
         meanings unless a different meaning is plainly required by the context:


            (a)   "1934 Act" means the Securities Exchange Act of 1934, as
                  amended. Reference to a specific section of the 1934 Act or
                  regulation thereunder shall include such section or
                  regulation, any valid regulation 
<PAGE>   5
                  promulgated under such section, and any comparable provision
                  of any future legislation or regulation amending,
                  supplementing or superseding such section or regulation.

            (b)   "Act" means the Securities Act of 1933, as amended. Reference
                  to a specific Section of the Act or regulation thereunder
                  shall include such section or regulation, any valid regulation
                  promulgated under such section, and any comparable provision
                  of any future legislation or regulation amending,
                  supplementing or superseding such section or regulation.

            (c)   "Affiliate" means any corporation or other entity (including,
                  but not limited to, partnerships and joint ventures)
                  controlling, controlled by or under common control with, the
                  Company.

            (d)   "Award" means a grant of Shares under Section 4.2 of this
                  Plan.

            (e)   "Award Agreement" means the written agreement setting forth
                  the terms and provisions applicable to each Award granted
                  under this Plan.

            (f)   "Board" or "Board of Directors" means the Board of Directors
                  of the Company.

            (g)   A "Change in Control" of the Company shall be deemed to have
                  occurred if any of the following events occur on or after the
                  Effective Date:

                  (i)      any corporation, Person, other entity or group
                           becomes the "beneficial owner" (as defined in Rule
                           13d-3 under the 1934 Act) of more than fifty percent
                           (50%) of the then outstanding voting stock of the
                           Company otherwise than through a transaction arranged
                           by, or consummated with, the prior approval of the
                           Board;

                  (ii)     the stockholders of the Company approve a definitive
                           agreement to merge or consolidate with 


                                       2
<PAGE>   6
                           or into another corporation in a transaction in which
                           neither the Company nor any of its subsidiaries or
                           Affiliates will be the surviving corporation, or to
                           sell or otherwise dispose of all or substantially all
                           of the Company's assets to any person or group other
                           than the Company or any of its subsidiaries or
                           Affiliates, other than a merger or a sale which will
                           result in the voting securities of the Company
                           outstanding prior to the merger or sale continuing to
                           represent at least fifty percent (50%) of the
                           combined voting power of the voting securities of the
                           corporation surviving the merger or sale; or


                  (iii)    during any period of two (2) consecutive years,
                           individuals who at the beginning of such period
                           constitute the Board of Directors of the Company (and
                           any new Director whose election by the Board of
                           Directors of the Company or whose nomination for
                           election by the Company's stockholders was approved
                           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
                           election or nomination for election was previously so
                           approved) cease for any reason to constitute a
                           majority of the Company's Board of Directors.


            (h)   "Code" means the Internal Revenue Code of 1986, as amended.
                  Reference to a specific section of the Code or regulation
                  thereunder shall include such section or regulation, any valid
                  regulation promulgated under such section, and any comparable
                  provision of any future legislation or regulation amending,
                  supplementing or superseding such section or regulation.


            (i)   [reserved]


            (j)   "Company" means Greenfield Industries, Inc., a Delaware
                  corporation, and any successor thereto.


                                       3
<PAGE>   7
            (k)   "Deferred Bonus" means the amount, measured in dollars on the
                  Grant Date, that the Participant has elected to defer.

            (l)   "Director" means any individual who is a member of the Board
                  of Directors of the Company.

            (m)   "Disability" means a permanent and total disability within the
                  meaning of Code Section 22(e)(3).

            (n)   "Effective Date" shall have the meaning assigned to such term
                  in Section 1.2.

            (o)   "Election" shall have the meaning assigned to such term in
                  Section 6.1.

            (p)   "Eligible Employee" shall have the meaning assigned to such
                  term in Section 4.1.

            (q)   "Employee" means any employee of the Company, whether such
                  employee is so employed at the time this Plan is adopted or
                  becomes so employed subsequent to the adoption of this Plan.

            (r)   "Fair Market Value" means, if the Shares are listed on a
                  national securities exchange, the closing sales price of a
                  Share as published on a national securities exchange on which
                  the Shares are traded on such date or, if there is no sale of
                  the Shares on such date, the average of the bid and asked
                  prices on such exchange at the close of trading on such date
                  or, if Shares are not listed on a national securities exchange
                  but are authorized for quotation in the National Association
                  of Securities Dealers Automated Quotation System National
                  Market (the "Nasdaq National Market"), the last transaction
                  price per share as reported by the Nasdaq National Market on
                  such date or, if there is no sale of the Shares on such date,
                  the average of the bid and asked prices as reported by the
                  Nasdaq National Market on such date or, if Shares are not
                  authorized for quotation on the Nasdaq National Market on such
                  date, the average of the bid and asked prices as reported in
                  the over the counter 


                                       4
<PAGE>   8
                  market or, if the Shares are not listed on a national
                  securities exchange, quoted on the Nasdaq National Market or
                  quoted in the over the counter market, the Fair Market Value
                  of a Share on such date as shall be determined by the majority
                  vote of the Board of Directors. In rendering its determination
                  of the Shares' Fair Market Value, the Board of Directors shall
                  comply with Section 422(b)(4) of the Code and the applicable
                  regulations promulgated thereunder. For purposes of the Plan,
                  the Board of Directors' determination of the Fair Market Value
                  of a Share shall be conclusive.


            (s)   "Fiscal Year" means the fiscal year of the Company.

            (t)   "Grant Date" means the date that an Incentive Bonus is granted
                  to an Employee.

            (u)   "Incentive Bonus" means a bonus paid to an Employee under the
                  incentive compensation plan as adopted and operated by the
                  Board of Directors and/or the Compensation and Options
                  Committee, and as such program may be amended from time to
                  time, or such other program utilized by the Board of Directors
                  and/or the Compensation and Options Committee from time to
                  time to grant annual bonuses to the officers of the Company
                  which program is designated by the Board and/or the
                  Compensation and Options Committee as the substitute for the
                  incentive compensation plan for purposes of this Plan.

            (v)   "Participant" means an Eligible Employee who has an
                  outstanding Award.

            (w)   "Period of Restriction" means the period during which Shares
                  are subject to transfer and additional restrictions and,
                  therefore, are subject to a substantial risk of forfeiture.

            (x)   "Person" shall have the meaning given in Section 3(a)(9) of
                  the 1934 Act, as modified and used in Sections 13(d) and 14(d)
                  thereof; provided, however, a person shall not include (1) the
                  Company or any of its 


                                       5
<PAGE>   9
                  subsidiaries, (2) a trustee or other fiduciary holding
                  securities under an employee benefit plan of the Company or
                  any of its subsidiaries, (3) an underwriter temporarily
                  holding securities pursuant to an offering of such securities,
                  or (4) a corporation owned, directly or indirectly, by the
                  stockholders of the Company in substantially the same
                  proportions as their ownership of stock of the Company.

            (y)   "Retirement" means, in the case of an Employee, a Termination
                  of Service by reason of the Employee's retirement at or after
                  age sixty-five (65).

            (z)   "Section 16 Person" means a person who, with respect to the
                  Shares, is subject to Section 16 of the 1934 Act.

            (aa)  "Share" or "Shares" shall have the meaning assigned to such
                  term in Section 1.1.

            (ab)  "Termination of Service" means a cessation of the
                  employee-employer relationship between an Employee and the
                  Company for any reason, including, but not limited to, a
                  cessation by resignation, discharge, death, Disability or
                  Retirement, but excluding any such cessation where there is a
                  simultaneous reemployment by the Company.


                                    SECTION 3
                                 ADMINISTRATION

3.1      The Board of Directors. This Plan shall be administered by the Board of
         Directors or such committee as may be designated by the Board from time
         to time. Any such committee shall consist of not less than two (2)
         Directors. The members of the committee shall be appointed from time to
         time by, and shall serve at the pleasure of, the Board of Directors.
         The committee shall be comprised solely of Directors who are
         "Non-Employee Directors" within the meaning of Rule 16b-3 of the 1934
         Act. Any reference to the Board of Directors contained herein shall
         mean and include any such duly authorized committee thereof.


                                       6
<PAGE>   10
3.2      Authority of the Board. It shall be the duty of the Board to administer
         this Plan in accordance with its provisions. The Board shall have all
         powers and discretion necessary or appropriate to administer this Plan
         and to control its operation, including, but not limited to, the power
         to (a) determine who shall be deemed to be an Eligible Employee under
         the Plan (b) prescribe the terms and conditions of Awards, (c)
         interpret this Plan, (d) adopt rules for the administration,
         interpretation and application of this Plan as are consistent
         therewith, (e) interpret, amend or revoke any such rules and (f)
         prescribe the form, which shall be consistent with this Plan, of the
         instruments evidencing any Awards of Shares hereunder. Any action taken
         by the Board in the interpretation or administration of the Plan shall,
         as between the Company and the Participants, be final and conclusive.

3.3      Delegation by the Board. The Board, in its sole discretion and on such
         terms and conditions as it may provide, may delegate all or any part of
         its authority and powers under this Plan to one or more Directors or
         officers of the Company; provided, however, that the Board may not
         delegate its authority and powers (a) with respect to Section 16
         Persons, or (b) in any way which would jeopardize this Plan's
         qualification under Rule 16b-3 of the 1934 Act.

3.4      Decisions Binding. All determinations and decisions made by the Board
         and any delegate of the Board pursuant to Section 3.3 shall be final,
         conclusive, and binding on all persons, and shall be given the maximum
         deference permitted by law.


                                    SECTION 4
                     ELIGIBILITY AND ELECTION TO PARTICIPATE

4.1      Eligible Employees. The Employees eligible to participate in this Plan
         shall include all Employees who (i) are designated by the Board and/or
         the Compensation and Options Committee as eligible to receive an
         Incentive Bonus and to participate in this Plan and (ii) have made a
         timely Election (as hereinafter defined) to participate in the Plan
         (the "Eligible Employees").



                                       7
<PAGE>   11
4.2      Election by Eligible Employee to Participate.

            (a)   Each Eligible Employee will receive annual notification that
                  he or she may elect (the "Election") to defer up to fifty
                  percent (50%) of his or her Incentive Bonus and receive in
                  lieu thereof Shares of the Company in an amount determined
                  pursuant to paragraph 4.2(c) or 4.2(d) hereof, in either case
                  valued at the Fair Market Value of such Shares on the Grant
                  Date.

            (b)   The Election shall be made pursuant to the terms of Section
                  6.3 hereof. All Shares received pursuant to the Plan (an
                  "Award") shall be subject to a Period of Restriction of either
                  three (3) or five (5) years, at the election of the
                  Participant.

            (c)   In consideration of the foregoing of cash compensation, if the
                  Participant elects a three (3) year Period of Restriction, he
                  or she will receive Shares (the "Three Year Restricted
                  Shares") having a Fair Market Value on the Grant Date equal to
                  one hundred twenty (120%) percent of the amount of the
                  Deferred Bonus.

            (d)   In consideration of the foregoing of cash compensation, if the
                  Participant elects a five (5) year Period of Restriction, he
                  or she will receive Shares (the "Five Year Restricted Shares")
                  having a Fair Market Value on the Grant Date equal to one
                  hundred thirty-five (135%) percent of the Deferred Bonus.

                                    SECTION 5
                           SHARES SUBJECT TO THE PLAN

5.1      Number of Shares. Subject to adjustment as provided in Section 5.3, an
         aggregate of 250,000 Shares will be authorized and reserved for
         issuance under this Plan. The Shares granted under this Plan may be
         either authorized and unissued Shares or previously issued Shares
         reacquired by the Company and held in treasury, or any combination
         thereof.




                                       8
<PAGE>   12
5.2      Restrictions on Shares. Shares issued to Participants pursuant to this
         Plan shall be subject to the terms, conditions and restrictions        
         specified in Section 6 hereof and to such other terms, conditions and
         restrictions as the Board in its discretion may provide.

5.3      Lapsed Awards. If an Award is canceled, terminates, expires or lapses
         for any reason, any Shares subject to such Award thereafter shall be
         available for the grant of an Award under the Plan. Subject to the
         provisions of Section 8.2 hereof, the Plan shall remain in effect until
         all Awards now or hereafter subject to the Plan shall have vested or
         lapsed.

5.4      Adjustments in Awards and Authorized Shares. In the event that a
         dividend shall be declared payable in Shares, the number of Shares
         reserved for issuance pursuant to this Plan but not yet subject to
         grant shall be adjusted by adding to each such Share the number of
         Shares which would be distributable in respect thereof if such Shares
         had been outstanding on the record date for the issuance of such stock
         dividend. In the event that the outstanding Shares shall be converted
         into or exchanged for a different number of Shares or other securities
         of the Company or of another corporation, whether through stock split,
         recapitalization, split-up, merger, consolidation, reorganization,
         combination or other issuance or exchange of shares, then there shall
         be substituted for each Share granted pursuant to this Plan and for
         each Share reserved for issuance pursuant to the Plan but not yet
         subject to grant, the number and kind of Shares or other securities
         which each Share shall have been so converted into or for which each
         Share shall have been so exchanged, in such manner as the Board shall
         determine to be advisable or appropriate to prevent the dilution or
         diminution of such Shares.


                                   SECTION 6
                         TERMS AND CONDITIONS OF AWARDS

6.1      Award Agreement. Shares granted pursuant to the Plan shall be evidenced
         by an Award Agreement, substantially in the form set forth on Exhibit A
         hereto, that shall specify the number of Shares received and such other
         terms and conditions as the Board shall determine. Unless the Board, 




                                       9
<PAGE>   13

         in its sole discretion, determines otherwise, Shares shall be held     
         by the Company as escrow agent until the end of the applicable Period
         of Restriction.

6.2      Period of Restriction.

            (a)   The Period of Restriction with respect to Three Year
                  Restricted Shares will be (i) one year from the Grant Date for
                  one-third of the Three Year Restricted Shares, (ii) two years
                  from the Grant Date for one-third of the Three Year Restricted
                  Shares and (iii) three years from the Grant Date for the
                  remaining one-third of the Three Year Restricted Shares.

            (b)   The Period of Restriction with respect to Five Year Restricted
                  Shares will be (i) one year from the Grant Date for one-fifth
                  of the Five Year Restricted Shares, (ii) two years from the
                  Grant Date for one-fifth of the Five Year Restricted Shares,
                  (iii) three years from the Grant Date for one-fifth of the
                  Five Year Restricted Shares, (iv) four years from the Grant
                  Date for one-fifth of the Five Year Restricted Shares, and (v)
                  five years from the Grant Date for the remaining one-fifth of
                  the Five Year Restricted Shares.

6.3      Timing and Irrevocability of Election. The Election for each Fiscal
         Year must be made annually (1) no later than the date determined by the
         Board, which date shall be prior to the commencement of the Fiscal Year
         for which the Incentive Bonus will be granted, or (2) within thirty
         (30) days of the commencement of an Employee's eligibility to
         participate in the Plan; provided, however, that Elections for the
         Incentive Bonus for the Company's Fiscal Year ended December 31, 1995
         must be made no later than December 31, 1995. All Elections hereunder
         shall be irrevocable.

6.4      Transferability. Except as provided in this Section 6, Shares may not
         be sold, transferred, gifted, bequeathed, pledged, assigned, or
         otherwise alienated or hypothecated, voluntarily or involuntarily,
         until the end of the applicable Period of Restriction; provided,
         however, that in no event may the restrictions on Shares issued to a
         Section 16 Person lapse prior to six (6) months following the Grant


                                       10
<PAGE>   14
         Date (or such shorter period as may be permissible while maintaining
         compliance with Rule 16b-3 of the 1934 Act).

6.5      Legend on Certificates. The Board, in its sole discretion, may legend
         the certificates representing Shares to give appropriate notice of such
         restrictions. For example, the Board may determine that some or all
         certificates representing Shares shall bear the following legend:

         "THE SALE OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS
         CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS
         SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
         GREENFIELD INDUSTRIES, INC. 1995 RESTRICTED STOCK BONUS PLAN. A COPY OF
         THIS PLAN MAY BE OBTAINED FROM THE SECRETARY OF GREENFIELD INDUSTRIES,
         INC."

6.6      Removal of Restrictions. The Board, in its sole discretion, may
         accelerate the time at which any restrictions shall lapse and remove
         any restrictions; provided, however, that the Period of Restriction on
         Shares granted to a Section 16 Person may not lapse until at least six
         (6) months after the Grant Date (or such shorter period as may be
         permissible while maintaining compliance with Rule 16b-3 of the 1934
         Act). After the termination of the applicable Period of Restriction,
         the Participant shall be entitled to have any legend under Section 6.5
         removed from his or her Share certificate, and the Shares shall be
         freely transferable by the Participant.

6.7      Voting Rights. Commencing with the Effective Date, Participants holding
         Shares issued hereunder may, during the Period of Restriction, exercise
         full voting rights with respect to those Shares.

6.8      Dividends and Other Distributions. Commencing with the Effective Date,
         Participants holding Shares shall, during the Period of Restriction, be
         entitled to receive all dividends and other distributions paid with
         respect to such Shares. If any such dividends or distributions are paid
         in Shares, the Shares received in such dividend or distribution shall
         be subject to all of the same restrictions, including, but not limited
         to, restrictions on transferability and forfeitability as the Shares
         with respect to which they were paid.




                                       11
<PAGE>   15

         With respect to Shares issued to a Section 16 Person, any dividend or
         distribution that constitutes a "derivative security" or an "equity    
         security" under Section 16 of the 1934 Act shall be subject to a
         Period of Restriction equal to the longer of (a) the remaining Period
         of Restriction on the Shares with respect to which the dividend or
         distribution is paid, or (b) six (6) months (or such shorter period as
         may be permissible while maintaining compliance with Rule 16b-3 of the
         1934 Act).

6.9      Cancellation of Shares.

            (a)   On the date of the Participant's Termination of Service for
                  cause, as determined by the Board of Directors, all Shares
                  held by such Participant for which the Period of Restriction
                  has not lapsed shall revert to the Company and thereafter
                  shall be available for issuance under this Plan.

            (b)   In the event of a Participant's Termination of Service by
                  reason of Retirement, resignation or termination not for
                  cause, all Shares held by such Participant for which the
                  Period of Restriction has not lapsed shall revert to the
                  Company and thereafter shall be available for issuance under
                  the Plan; provided, however, that the Board may, in its sole
                  discretion, cause all or a portion of the Shares held by a
                  Participant for which the Period of Restriction has not lapsed
                  to immediately vest in full and remove all restrictions.

            (c)   In the event of a Participant's Termination of Service by
                  reason of death or Disability, all Shares held by such
                  Participant for which the Period of Restriction has not lapsed
                  shall immediately vest in full and all restrictions shall be
                  removed.

6.10     Change in Control. In the event of a Change in Control prior to a
         Participant's Termination of Service, the Board may, in its sole
         discretion, cause all or a portion of the Shares held by a Participant
         for which the Period of Restriction has not lapsed to immediately vest
         in full and remove all restrictions; provided, however that the Period
         of Restriction on Shares granted to a Section 16 Person may 





                                       12
<PAGE>   16

         not lapse until at least six (6) months after the Grant Date (or such  
         shorter period as may be permissible while maintaining compliance with
         Rule 16b-3 of the 1934 Act).

6.11     No Fractional Shares. The Company will not be obligated to deliver
         fractional Shares but may round the number of Shares to be delivered
         down to the next whole number.


                                    SECTION 7
                                  MISCELLANEOUS

7.1      No Effect on Employment or Service. Nothing in this Plan shall
         interfere with or limit in any way the right of the Company to
         terminate any Participant's employment or service at any time, with or
         without cause. For purposes of this Plan, transfer of employment of a
         Participant between the Company and any of its Affiliates (or between
         Affiliates) shall not be deemed a Termination of Service.

7.2      Participation. No Employee shall have the right to be selected to
         participate in this Plan, or, having been so selected, to be selected
         to participate in the future.

7.3      Successors. All obligations of the Company under this Plan, with
         respect to Shares issued hereunder, shall be binding on any successor
         to the Company, whether the existence of such successor is the result
         of a direct or indirect purchase, merger, consolidation or otherwise,
         of all or substantially all of the business or assets of the Company.

7.4      Beneficiary Designations. If permitted by the Board, a Participant
         under this Plan may name a beneficiary or beneficiaries to whom any
         Shares, shall be distributed in the event of the Participant's death.
         Each such designation shall revoke all prior designations by the
         Participant and shall be effective only if given in a form and manner
         acceptable to the Board. In the absence of any such designation, any
         Shares subject to a Period of Restriction at the Participant's death
         shall be distributed to the Participant's estate.





                                       13
<PAGE>   17
                                    SECTION 8
                       AMENDMENT, TERMINATION AND DURATION

8.1      Amendment, Suspension or Termination. The Board, in its sole
         discretion, may amend or terminate this Plan, or any part thereof, at
         any time and for any reason; provided, however, that if and to the
         extent required to maintain this Plan's qualification under Rule 16b-3
         of the 1934 Act, any such amendment shall be subject to stockholder    
         approval. The amendment, suspension or termination of this Plan shall
         not, without the consent of the Participant, alter or impair any
         rights or obligations under any Shares theretofore granted to such
         Participant. No grants of Shares may be made during any period of
         suspension or after termination of this Plan.

8.2      Duration of this Plan. This Plan shall become effective on the
         Effective Date and, subject to Section 8.1, shall remain in effect for
         a period of ten (10) years.

                                    SECTION 9
                                 TAX WITHHOLDING

9.1      Withholding Requirements. The Company shall have the power and the
         right to deduct or withhold, or require a Participant to remit to the
         Company, an amount sufficient to satisfy federal, state and local taxes
         (including the Participant's FICA obligation) required to be withheld
         with respect to an Award of Shares or any dividends or other
         distributions payable with respect thereto.

9.2      Withholding Arrangements. Subject to the requirements of Rule 16b-3 of
         the 1934 Act, the Board, in its sole discretion and pursuant to such
         procedures as it may specify from time to time, may permit a
         Participant to satisfy such tax withholding obligation, in whole or in
         part, by (a) electing to have the Company withhold otherwise
         deliverable Shares, or (b) delivering to the Company Shares then owned
         by the Participant having a Fair Market Value equal to the amount
         required to be withheld. The amount of the withholding requirement
         shall be deemed to include any amount that the Board agrees may be
         withheld at the time any such election is made, not to exceed the
         minimum required amount of withholding applicable to the Participant
         with respect to the Shares on the date that the amount of tax to 




                                       14
<PAGE>   18
         be withheld is determined. The Fair Market Value of the Shares to 
         be withheld or delivered shall be determined as of the date that the 
         taxes are required to be withheld.                                     

                                   SECTION 10
                               LEGAL CONSTRUCTION

10.1     Gender and Number. Except where otherwise indicated by the context, any
         masculine term used herein also shall include the feminine, the plural
         shall include the singular, and the singular shall include the plural.

10.2     Severability. In the event any provision of this Plan shall be held
         illegal or invalid for any reason, the illegality or invalidity shall
         not affect the remaining parts of this Plan, and this Plan shall be
         construed and enforced as if the illegal or invalid provision had not
         been included.

10.3     Requirements of Law. The issuance of Shares under this Plan shall be
         subject to all applicable laws, rules and regulations, and to such
         approvals by any governmental agencies or national securities exchanges
         as may be required from time to time.

10.4     Securities Law Compliance. With respect to Section 16 Persons, grants
         under this Plan are intended to comply with all applicable conditions
         of Rule 16b-3 of the 1934 Act. To the extent any provision of this Plan
         or action by the Board fails to so comply, it shall be deemed null and
         void, to the extent permitted by law and deemed advisable or
         appropriate by the Board in its sole discretion.



                                       15
<PAGE>   19
10.5     Legend on Certificates. In the event that at any time Shares issued
         pursuant to the Plan shall not have been registered under the Act, at
         the time of issuance such Shares shall be subject to stop transfer
         instructions and shall be inscribed with the following legend:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
         SOLD OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH
         SHARES IS EFFECTIVE UNDER THE ACT OR (II) THE TRANSACTION IS EXEMPT
         FROM REGISTRATION UNDER THE ACT AND, IF GREENFIELD INDUSTRIES, INC.
         ("GREENFIELD") REQUESTS, AN OPINION SATISFACTORY TO GREENFIELD TO SUCH
         EFFECT HAS BEEN RENDERED BY COUNSEL."

         Shares will not be transferred unless such transfer has been registered
         under the Act and any applicable securities laws of other
         jurisdictions, or an exemption from registration is available and
         evidence of such registration or exemption from registration reasonably
         satisfactory to the Company is furnished to the Company.

10.6     Governing Law . This Plan and any related documents or instruments
         shall be construed in accordance with and governed by the laws of the
         State of Delaware.

10.7     Captions . Captions are provided herein for convenience of reference
         only, and shall not serve as a basis for interpretation or construction
         of this Plan.

10.8     Reservation of Shares. The Company during the term of the Plan, will at
         all times reserve and keep available the number of Shares as shall be
         sufficient to satisfy the requirements of the Plan. The inability of
         the Company to obtain the necessary approvals from any regulatory body
         having jurisdiction or approval deemed necessary by the Company's
         counsel to the lawful issuance and sale of any Shares under the Plan
         shall relieve the Company of any liability in respect of the
         nonissuance or sale of such Shares as to which such requisite authority
         shall not have been obtained.

                                      16