Exhibit 10.4

MATTEL, INC.

 

 

EXECUTIVE SEVERANCE PLAN

 

 

Effective June 30, 2009

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EXECUTIVE SEVERANCE PLAN

TABLE OF CONTENTS

 

          Page

1.

   ELIGIBILITY    1

2.

   DEFINITIONS    1

3.

   SEVERANCE BENEFIT    5    (a)    General    5    (b)    Covered Termination
Not Within Two Years Following a Change of Control    5    (c)    Covered
Termination Within Two Years Following a Change of Control    8    (d)   
Non-Covered Termination    10    (e)    Effect of Deferral Elections    10   
(f)    Equity Coordination    10

4.

   TAXES AND OTHER WITHHOLDINGS; PARACHUTE PAYMENTS    10    (a)    Tax
Withholding    10    (b)    Contingent Reduction of Parachute Payments    10

5.

   SECTION 409A    12

6.

   RELATION TO OTHER PLANS    13

7.

   PARTICIPANTS’ COVENANTS    13

8.

   CLAIMS PROCEDURES    15    (a)    Disputes    15    (b)    Time for Filing
Claims    15    (c)    Procedures    15

9.

   PLAN ADMINISTRATION    17    (a)    Discretion    17    (b)    Finality of
Determinations    17

10.

   NO SET OFF, PAYMENT OF FEES    18

11.

   ARBITRATION OF DISPUTES    18

12.

   PLAN AMENDMENT AND TERMINATION; LIMITATION ON EMPLOYEE RIGHTS    19

13.

   SUCCESSORS    19

14.

   GOVERNING LAW    20

15.

   NOTICES    20

16.

   MISCELLANEOUS    20

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MATTEL, INC.

EXECUTIVE SEVERANCE PLAN

The purpose of the Mattel, Inc. Executive Severance Plan (this “Plan”) is to
secure the continued services of selected key senior executives of Mattel, Inc.
(“Mattel”) and provide these executives with certain benefits in the event of a
Covered Termination (as defined in Section 2) and to encourage their continued
dedication to their duties in the event of any threat or occurrence of a Change
of Control (as defined in Section 2).

This Plan became effective June 30, 2009 (the “Effective Date”).

 

1. Eligibility

An executive is eligible for the benefits provided under this Plan only if
(i) the Compensation Committee of Mattel’s Board (as defined in Section 2)
designates the executive as eligible to participate in the Plan and (ii) Mattel
provides the executive with a letter agreement (the “Letter Agreement”) signed
by a duly authorized officer of Mattel confirming the executive’s eligibility
for this Plan. The Letter Agreement shall be in the form attached hereto (which
form may be modified by Mattel in the case of an executive not subject to an
employment agreement with Mattel at the time the executive is designated as a
“Participant” in the Plan to reflect the fact that no employment agreement is in
effect).

If an executive executes the Letter Agreement and returns it to Mattel within
thirty (30) days after receiving it:

(a) the executive will become a “Participant” on the date Mattel receives the
executive’s properly executed Letter Agreement, subject to the terms of the
Letter Agreement and this Plan; and

(b) the executive will continue to be a Participant as long as the executive’s
Letter Agreement remains in effect in accordance with its terms and those of
this Plan.

 

2. Definitions

For purposes of this Plan, the following terms shall have the respective
meanings set forth below:

(a) “Board” shall mean the Board of Directors of Mattel.

(b) “Cause” shall mean (i) a Participant’s willful neglect of significant duties
he or she is required to perform or a Participant’s willful violation of a
material Mattel policy; (ii) the commission by a Participant of a material act
of dishonesty, fraud, misrepresentation or other act of moral turpitude; (iii) a
Participant’s willful act or omission in the course of his or her employment
which constitutes gross negligence; or (iv) willful failure by a Participant to
obey a lawful direction of the Board; provided that, in each case, unless the
described activity cannot be cured, corrected or ceased, the Participant has
received written notice of the described activity in accordance with

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Section 15, has been afforded a reasonable opportunity to cure or correct the
activity described in the notice, and has failed to substantially cure, correct
or cease the activity, as appropriate.

(c) “Change of Control” shall mean the occurrence of any of the following
events:

(i) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either
(i) the then outstanding shares of common stock of Mattel (the “Outstanding
Company Common Stock”) or (ii) the combined voting power of the then outstanding
voting securities of Mattel entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that
for purposes of this subsection (i), the following shall not constitute a Change
of Control: (a) any acquisition directly from Mattel, (b) any acquisition by
Mattel or any corporation controlled by Mattel, (c) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by Mattel or
any corporation controlled by Mattel, (d) any acquisition by a Person of 35% or
more of either the Outstanding Company Common Stock or the Outstanding Company
Voting Securities as a result of an acquisition of common stock of Mattel by
Mattel which, by reducing the number of shares of common stock of Mattel
outstanding, increases the proportionate number of shares beneficially owned by
such Person to 35% or more of either the Outstanding Company Common Stock or the
Outstanding Company Voting Securities; provided, however, that if a Person shall
become the beneficial owner of 35% or more of either the Outstanding Company
Common Stock or the Outstanding Company Voting Securities by reason of a share
acquisition by Mattel as described above and shall, after such share acquisition
by Mattel, become the beneficial owner of any additional shares of common stock
of Mattel, then such acquisition shall constitute a Change of Control or (e) any
acquisition pursuant to a transaction which complies with clauses (a), (b) and
(c) of subsection (iii) of this Section 2(c); or

(ii) individuals who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Effective Date whose election, or nomination for election by Mattel’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

(iii) consummation by Mattel of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of Mattel or
the acquisition of assets of another entity (a “Business Combination”), in each
case, unless, following such Business Combination, (a) all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination

 

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beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns Mattel or all or substantially all of Mattel’s assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such Business Combination of
the Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (b) no Person (excluding any employee benefit plan (or
related trust) of Mattel or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 35% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (c) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or

(iv) approval by the shareholders of Mattel of a complete liquidation or
dissolution of Mattel.

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto, and any regulations and other administrative
guidance promulgated thereunder, in each case as they may be from time to time
amended or interpreted through further administrative guidance.

(e) “Covered Termination” shall mean that, at any time after a Participant’s
Eligibility Date, either (i) the Participant has resigned from Mattel for Good
Reason, or (ii) the Participant’s employment with Mattel is involuntarily
terminated by Mattel without Cause.

(f) “Date of Termination” shall mean the date specified in a Notice of
Termination provided by Mattel or the Participant to the other party, which date
shall be no more than fifteen (15) days after actual receipt of such notice.
Notwithstanding the foregoing, (i) if a Participant incurs a Disability and the
Participant’s employment is deemed terminated pursuant to Mattel’s then-current
employment policy with respect to employees receiving benefits under the Mattel
Long-Term Disability Plan, the Participant’s Date of Termination shall be the
Participant’s deemed termination date pursuant to such policy and (ii) if a
Participant’s employment is terminated due to the Participant’s death, the Date
of Termination shall be the date of death.

(g) “Disability” shall mean a disability as defined under the Mattel Long-Term
Disability Plan for exempt employees, as revised from time to time, but in no
event shall such revision or modification to the Mattel Long-Term Disability
Plan provide a Participant with a definition of “Disability” which is less
favorable in the aggregate than that in effect as of the Participant’s
Eligibility Date.

(h) “Eligibility Date” shall mean, with respect to each Participant, the
Eligibility Date set forth in such Participant’s Letter Agreement.

 

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(i) “Good Reason” shall mean the good faith determination by a Participant that
any one or more of the following have occurred, provided that (i) the
Participant provides Mattel with written notice of the Good Reason event in
accordance with Section 15 within ninety (90) days of the initial existence of
such event and (ii) such event is not remedied by Mattel within thirty (30) days
following the delivery of written notice of such Good Reason event:

(I) without the express written consent of the Participant, any material
diminution in any of the Participant’s duties, authority or responsibilities;

(II) a material diminution in the Participant’s base salary or a failure by
Mattel to pay the Participant’s annual base salary, other than an insubstantial
or inadvertent failure remedied by Mattel promptly after receipt of notice
thereof given by the Participant;

(III) any failure by Mattel to make the following plans, benefits and programs
available to the Participant, subject to the terms thereof, as in effect from
time to time with respect to executives employed by Mattel at the Participant’s
level so as to reflect the Participant’s responsibilities:

 

  (A) all cash, deferred bonus, annual bonus and long term bonus plans and
programs (“Bonus Programs”), such as the Mattel Incentive Plan and the Long Term
Incentive Program under the Mattel, Inc. 2005 Equity Compensation Plan; provided
that the Participant’s eligibility for and participation in each of the Bonus
Programs shall be at a level and on terms and conditions no less favorable than
those available to any other comparably situated executive;

 

  (B) all incentive plans and programs (other than the Bonus Programs),
including, but not limited to, stock option plans and other equity-based
incentive plans;

 

  (C) all pension, profit sharing, medical, dental, disability, group life,
accidental death, travel accident insurance, fringe benefit and vacation plans
and programs of Mattel; and

 

  (D) reimbursement for all reasonable expenses incurred by the Participant,

other than an insubstantial or inadvertent failure remedied by Mattel promptly
after receipt of notice thereof given by the Participant; provided, however that
Good Reason shall not exist as a result of Mattel amending, altering,
eliminating or reducing any plans, benefits or programs set forth in
sub-sections (A) through (D) so long as such actions do not result in a material
diminution in the aggregate value of such compensation and benefits, except for
across-the-board compensation and benefit reductions which affect all similarly
situated executives of Mattel;

 

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(IV) any other action or inaction that constitutes a breach by Mattel of
Section 12(a) or the Participant’s Letter Agreement; or

(V) any failure by Mattel to obtain the assumption and agreement to perform this
Plan by a successor as contemplated by Section 13, except where such assumption
and agreement occurs by operation of law.

A Participant may provide a Notice of Termination for a Good Reason event only
if Mattel does not timely and reasonably remedy such event within the prescribed
thirty (30) days.

(j) “Notice of Termination” shall mean a written notice delivered in accordance
with Section 15 which (i) if applicable, indicates the specific clause of the
definition of Cause or Good Reason relied upon; (ii) if applicable, sets forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of a Participant’s employment for Cause or Good Reason under the
provision so indicated; and (iii) specifies the Date of Termination. If Mattel
does not timely and reasonably remedy the Good Reason event specified by the
Participant in the notice to Mattel pursuant to Section 2(i), then the
Participant may resign for Good Reason by delivering a Notice of Termination
within sixty (60) days following the end of Mattel’s thirty (30) day cure period
set forth in Section 2(i). If the Participant does not cure, correct or cease
the activity described in the written notice to the Participant pursuant to
Section 2(b), then Mattel may terminate the Participant’s employment for Cause
by delivering a Notice of Termination to the Participant following the end of an
appropriate cure period.

(k) “Section 409A” shall mean Section 409A of the Code.

 

3. Severance Benefit

(a) General

A Participant will become entitled to a severance benefit pursuant to this Plan
if such Participant incurs a Covered Termination. The severance benefit
(“Severance Benefit”) shall be determined pursuant to this Section 3 and shall
be considered “Paid Leave in Lieu of Notice” in accordance with the requirements
of the Federal Worker Adjustment and Retraining Notification Act (29 U.S.C. §§
2101 et seq.), and any similar state worker protection law.

(b) Covered Termination Not Within Two Years Following a Change of Control

If a Participant experiences a Covered Termination other than within twenty-four
(24) months following a Change of Control as provided in Section 3(c)), subject
to Sections 3(e) and 3(f) and the Participant’s Letter Agreement:

(i) Mattel shall pay to the Participant on or as soon as administratively
practicable after the Date of Termination, if not theretofore paid or provided:

(I) the Participant’s base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given; and

(II) subject to submission by the Participant of supporting

 

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documentation, any unreimbursed expenses incurred through the Date of
Termination in accordance with Mattel policy (the amounts described in clauses
(I) and (II), collectively, the “Accrued Amounts”).

(ii) In addition, Mattel shall pay to the Participant any amounts and provide
the Participant with any benefits that are required, or to which the Participant
is entitled, under any plan, contract or arrangement of Mattel as of the end of
the Participant’s employment, excluding severance or termination plans, policies
and arrangements (together, the “Other Benefits”).

(iii) Mattel shall pay to the Participant an amount equal to two (2) times the
sum of (x) the Participant’s annual base salary at the rate in effect (or
required to be in effect before any diminution that is the basis of the
Participant’s termination for Good Reason) at the time the Notice of Termination
is given and (y) the average of the two (2) highest consecutive annual cash
bonuses received by the Participant for the five (5) fiscal years ending before
the Notice of Termination is given, including any years in which the Participant
was paid no bonus (the “Severance Payment”).

(I) For purposes of this subsection (iii), the Severance Payment shall be paid
in equal installments during the two (2) year period commencing on the Date of
Termination and at such times as base salary is customarily paid to Mattel’s
employees (each such payroll date, a “Payment Date”), but the Participant shall
not be considered to be paid on Mattel’s employee payroll for such period;
provided, however, that no installment shall be paid prior to the first payroll
coincident with or next following the fifty-fifth (55th) day after the Date of
Termination (or the first business day thereafter) and any installment that
would have been paid during such fifty-five (55) day period shall be paid with
the first installment paid to the Participant; provided, further, that if the
Participant dies while any portion of the Severance Payment is still payable to
the Participant hereunder, any unpaid portion of the Severance Payment shall be
paid, not later than the thirtieth (30th) day following the Participant’s death
(or the first business day thereafter), to the Participant’s estate, in a lump
sum in cash equal to the remaining portion of the Severance Payment.

(II) Notwithstanding anything to the contrary in this subsection (iii), if the
Participant is a “specified employee” (determined by Mattel in accordance with
Section 409A and Treasury Regulation Section 1.409A-3(i)(2)) on the Date of
Termination and the Severance Payment to be paid within the first six (6) months
following such date (the “Initial Payment Period”) exceeds the amount referenced
in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) (the “Limit”), then
(1) any portion of the Severance Payment that is payable during the Initial
Payment Period that does not exceed the Limit shall be paid on the Payment Dates
as specified above, (2) any portion of the Severance Payment that is a
“short-term deferral” within the meaning of Treasury Regulation
Section 1.409A-1(b)(4)(i) shall be paid on the Payment Dates as specified above,
(3) any portion of the Severance Payment that exceeds the Limit and is not a
“short-term deferral” (and would have been payable during the Initial Payment
Period but for the Limit) shall be paid on the first

 

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business day of the seventh (7th) month immediately following the Participant’s
“separation from service” with Mattel, as defined for purposes of Section 409A
(a “Separation from Service”) and (4) any portion of the Severance Payment that
is payable after the Initial Payment Period shall be paid on the Payment Dates
as specified above.

(iv) Mattel shall pay to the Participant the annual bonus that the Participant
would have received under the Mattel Incentive Plan or any successor plan (the
“MIP”) for the fiscal year in which the Participant’s Date of Termination occurs
as if he or she had remained employed through the payment date for such MIP
bonus (disregarding any exercise by the Board or any committee thereof of
negative discretion to reduce the amount payable by a percentage in excess of
that applied to the other senior executives of Mattel generally) multiplied by a
fraction, the numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the Date of Termination and the
denominator of which is three hundred sixty-five (365), which amount shall be
payable following the end of the fiscal year in which the Date of Termination
occurs in accordance with the applicable terms of the MIP;

(v) Any options granted to the Participant under Mattel’s equity-based
compensation plans (the “Equity Plans”) prior to the Participant’s Eligibility
Date shall be subject to the terms of the Equity Plans and the Participant’s
equity award agreements with respect to the exercisability of such options and
the period of time during which the Participant may exercise such options
following the Participant’s Date of Termination. Any options granted to the
Participant under the Equity Plans on or after the Participant’s Eligibility
Date shall become immediately vested and exercisable and the Participant shall
have a period of three (3) years following the Date of Termination (but in no
event past the expiration of the term of the option grant) to exercise such
options;

(vi) All restricted stock units and other equity-based compensation (other than
stock options) awarded by Mattel to the Participant under the Equity Plans prior
to the Participant’s Eligibility Date shall vest or become earned pursuant to
the terms of the Equity Plans and the Participant’s equity award agreements. Any
restricted stock units or any other equity-based compensation (other than stock
options) awarded by Mattel to the Participant under the Equity Plans on or after
the Participant’s Eligibility Date shall vest pro-rata or become earned based on
the number of full months of the Participant’s employment during the vesting or
performance period over the total number of months in the vesting or performance
period and shall become immediately payable; provided, however, that if the
number of shares that vest or become earned is based on the achievement of
pre-established performance goals or criteria, the number of shares that vest or
become earned shall be determined in accordance with the Participant’s equity
award agreements. Payment shall be in the form as provided for in the Equity
Plans;

(vii) Until the earlier of (A) the second anniversary of the Date of Termination
or (B) the date the Participant accepts other employment, Mattel shall provide
to the Participant:

(I) a monthly amount equal to the applicable COBRA premium

 

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for the level of coverage that the Participant has as of the Date of Termination
(i.e., single, single plus one, or family) under Mattel’s medical, dental,
prescription drug and vision care group insurance as in effect from time to
time, which payment shall be paid in advance on the first payroll day of each
month, commencing with the month immediately following the Participant’s Date of
Termination; provided, however, that any such payments otherwise payable to the
Participant within the first fifty-four (54) days following the Date of
Termination shall not be paid on the otherwise scheduled payment date but shall
instead accumulate and be paid on the first payroll date coincident with or next
following the fifty-fifth (55th) day following the Date of Termination (or the
first business day thereafter). During the period for which the Participant is
receiving payments pursuant to this clause (I), subject to the Participant’s
continued payment of premiums, Mattel will make available to the Participant and
the Participant’s eligible dependents, at the Participant’s cost (in an amount
equal to the COBRA premium cost therefor), coverage under Mattel’s medical,
dental, prescription drug and vision care group insurance (which shall be
concurrent with any health care continuation benefits to which the Participant
or his or her eligible dependents are entitled under COBRA) (the benefit
provided for by this clause (I) is referred to as “Additional Benefits”);

(II) outplacement services at the expense of Mattel (but in no event will the
aggregate cost of such services exceed $50,000) commensurate with those provided
to terminated executives of comparable level and made available through and at
the facilities of a reputable and experienced vendor (the benefit provided for
by this clause (II) is referred to as “Outplacement Services”); and

(viii) If the Participant is a participant in the Mattel, Inc. 2005 Supplemental
Executive Retirement Plan and/or the Mattel, Inc. Deferred Compensation and PIP
Excess Plan and/or eligible for the Mattel Retiree Medical Plan, the Participant
shall be given credit for two (2) years of service (in addition to actual
service) and for two (2) years of attained age to be added to the Participant’s
actual age for purposes of computing any service and age-related benefits for
which the Participant is eligible under such plans; provided, however, that such
credit for additional years of service and age shall not accelerate the time of
payment under such arrangements in a manner that would result in the imposition
of tax, interest and/or penalties upon the Participant under Section 409A (the
benefit provided for by this subsection (viii) is referred to as “Additional Age
and Service Credit”).

(c) Covered Termination Within Two Years Following a Change of Control

If a Participant experiences a Covered Termination within twenty-four
(24) months following a Change of Control, subject to Sections 3(e) and 3(f) and
the Participant’s Letter Agreement:

(i) Mattel shall pay to the Participant (I) on or as soon as administratively
practicable after the Date of Termination, if not theretofore paid, the Accrued
Amounts and (II) shall pay or provide the Other Benefits;

 

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(ii) Mattel shall pay to the Participant the Severance Payment in the form and
at the times specified in Section 3(b)(iii); provided, however, if the Change of
Control qualifies as an event described in Section 409A(a)(2)(A)(v) of the Code
and Treasury Regulation Section 1.409A-3(i)(5), the Severance Payment shall be
paid in a lump sum in cash on the first payroll date coincident with or next
following the fifty-fifth (55th) day after the Date of Termination (or the first
business day thereafter);

(iii) Mattel shall pay to the Participant in a lump sum in cash on the first
payroll date coincident with or next following the fifty-fifth (55th) day after
the Date of Termination (or the first business day thereafter) the Participant’s
current year target MIP bonus, multiplied by a fraction, the numerator of which
is the number of days in the fiscal year in which the Date of Termination occurs
through the Date of Termination and the denominator of which is three hundred
sixty-five (365);

(iv) Any options granted to the Participant under the Equity Plans prior to the
Participant’s Eligibility Date shall be subject to the terms of the Equity Plans
and the Participant’s equity award agreements with respect to the exercisability
of such options and the period of time during which the Participant may exercise
such options following the Participant’s Date of Termination. Any options
granted to the Participant under the Equity Plans on or after the Participant’s
Eligibility Date shall become immediately vested and exercisable and the
Participant shall have a period of three (3) years following the Date of
Termination (but in no event past the expiration of the term of the option
grant) to exercise such options;

(v) All restricted stock units and other equity-based compensation (other than
stock options) awarded by Mattel to the Participant under the Equity Plans prior
to the Participant’s Eligibility Date shall vest or become earned pursuant to
the terms of the Equity Plans and the Participant’s equity award agreements. Any
restricted stock units or any other equity-based compensation (other than stock
options) awarded by Mattel to the Participant under the Equity Plans on or after
the Participant’s Eligibility Date shall vest or become earned in full and shall
become immediately payable; provided, however, that if the number of shares that
vest or become earned is based on the achievement of pre-established performance
goals or criteria, the number of shares that vest or become earned shall be
determined in accordance with the Participant’s equity award agreements. Payment
shall be in the form as provided for in the Equity Plans;

(vi) Until the earlier of (x) the second anniversary of the Date of Termination
or (y) the date the Participant accepts other employment, Mattel shall provide
to the Participant:

(I) the Additional Benefits; and

(II) the Outplacement Services;

(vii) Mattel shall provide the Additional Age and Service Credit.

 

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(d) Non-Covered Termination

If a Participant’s employment terminates for any reason other than a Covered
Termination, the Participant will not be eligible for Severance Benefits under
Sections 3(b) or (c) and Mattel shall pay to the Participant (or the
Participant’s beneficiary or estate) on or promptly after the Date of
Termination, a lump-sum cash amount equal to the Accrued Amounts and shall pay
or provide the Other Benefits. For example, a Participant will not be eligible
for Severance Benefits under Sections 3(b) or (c) of this Plan if the Plan
Administrator (as defined in Section 9) determines, in its sole discretion, that
the Participant’s active employment has terminated by reason of —

(i) the Participant’s resignation without Good Reason;

(ii) the Participant’s death; or

(iii) the Participant’s discharge for Cause or Disability.

(e) Effect of Deferral Elections

If any payment payable pursuant to Section 3 is subject to a valid deferral
election under the terms of another plan or arrangement maintained by Mattel,
the payment of such amount shall be in accordance with the provisions of such
deferred compensation plan or arrangement (including a Participant’s deferral
elections regarding the form and timing of such deferrals).

(f) Equity Coordination

If any plan, program, or equity grant applicable to a Participant is more
favorable to the Participant than the provisions in Sections 3(b)(v), 3(b)(vi),
3(c)(iv) or 3(c)(v) of this Plan, the provisions of such plan, program, or
equity grant shall control over any provisions to the contrary in this Plan.

 

4. Taxes and Other Withholdings; Parachute Payments

(a) Tax Withholding

A Participant’s Severance Benefits will be subject to withholdings for taxes and
any other required payroll deductions.

(b) Contingent Reduction of Parachute Payments

(i) Anything in this Plan to the contrary notwithstanding, to the extent that
any Payment (as defined below) would be subject to the Excise Tax (as defined
below), then Mattel shall pay or provide to the Participant the greatest of the
following, whichever gives the Participant the highest net after-tax amount
(after taking into account federal, state, local and social security taxes):
(1) the Payments or (2) an amount equal to the Safe Harbor Amount (as defined
below). If a reduction in the Plan Payments (as defined below) is necessary so
that the Parachute Value (as defined below) of all Payments equals the Safe
Harbor Amount and none of the Payments is Nonqualified Deferred Compensation (as
defined in Section 5), then the reduction shall occur in the manner a
Participant elects in

 

10

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writing prior to the date of payment. If any Payment constitutes Nonqualified
Deferred Compensation or a Participant fails to elect an order, then the
reduction shall occur in the following order: (i) cancellation of acceleration
of vesting on any equity awards for which the exercise price exceeds the then
fair market value of the underlying equity; (ii) reduction in the benefits
described in Section 3(c)(vi) and (vii) (with such reduction being applied to
the benefits in the manner having the least economic impact to the Participant
and, to the extent the economic impact is equivalent, such benefits shall be
reduced in the reverse order of when the benefits would have been provided to
the Participant, that is, benefits payable later shall be reduced before
benefits payable earlier); (iii) reduction of cash payments (with such reduction
being applied to the payments in the reverse order in which they would otherwise
be made, that is, later payments shall be reduced before earlier payments);
(iv) cancellation of acceleration of vesting of equity awards not covered under
(i) above; provided, however, that in the event that acceleration of vesting of
equity awards is to be cancelled, such acceleration of vesting shall be
cancelled in the reverse order of the date of grant of such equity awards, that
is, later equity awards shall be canceled before earlier equity awards.

(ii) All determinations required to be made under this Section 4(b), including
whether and when Plan Payments are to be reduced to the Safe Harbor Amount and
the amount of such reduction and the assumptions to be utilized in arriving at
such determination, shall be made by PricewaterhouseCoopers LLP or such other
nationally recognized certified public accounting firm as may be designated by a
Participant (the “Accounting Firm”) which shall provide detailed supporting
calculations both to Mattel and the Participant within fifteen (15) business
days of the receipt of notice from the Participant that there has been a
Payment, or such earlier time as is requested by Mattel. All fees and expenses
of the Accounting Firm shall be borne solely by Mattel. Any determination by the
Accounting Firm shall be binding upon Mattel and the Participant. The
Participant shall cooperate, to the extent his or her reasonable out-of pocket
expenses are reimbursed by Mattel, with any reasonable requests by Mattel in
connection with any contests or disputes with the Internal Revenue Service in
connection with the Excise Tax.

(iii) The following terms shall have the following meanings for purposes of this
Section 4(b).

(I) A “Plan Payment” shall mean a Payment paid or payable pursuant to this Plan
(disregarding this Section 4(b)).

(II) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.

(III) “Parachute Value” of a Payment shall mean the present value as of the date
of the change of control for purposes of Section 280G of the Code of the portion
of such Payment that constitutes a “parachute payment” under Section 280G(b)(2),
as determined by the Accounting Firm for purposes of determining whether and to
what extent the Excise Tax will apply to such Payment.

 

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(IV) A “Payment” shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of a Participant, whether paid or payable pursuant to this Plan or
otherwise.

(V) The “Safe Harbor Amount” shall mean the maximum Parachute Value of all
Payments that a Participant can receive without any Payments being subject to
the Excise Tax.

 

5. Section 409A

(a) Mattel intends that the reimbursements, payments and benefits to which a
Participant could become entitled under this Plan be exempt from or comply with
Section 409A and the regulations and other guidance promulgated thereunder. The
provisions of this Section 5 shall qualify and supersede all other provisions of
this Plan as necessary to fulfill the foregoing intention. If Mattel believes,
at any time, that any of such reimbursement, payment or benefit is not exempt or
does not so comply, Mattel will promptly advise the Participant and will
reasonably and in good faith amend the terms of such arrangement such that it is
exempt or complies (with the most limited possible economic effect on the
Participant and on Mattel) or to minimize any additional tax, interest and/or
penalties that may apply under Section 409A if exemption or compliance is not
practicable. Mattel agrees that it will not, without a Participant’s prior
written consent, knowingly take any action, or knowingly refrain from taking any
action, other than as required by law, that would result in the imposition of
tax, interest and/or penalties upon the Participant under Section 409A, unless
such action or omission is pursuant to the Participant’s written request.

(b) To the extent applicable, each and every payment to be made pursuant to
Section 3 of this Plan shall be treated as a separate payment and not as one of
a series of payments treated as a single payment for purposes of Treasury
Regulation Section 1.409A-2(b)(2)(iii).

(c) If a Participant is a “specified employee” (determined by Mattel in
accordance with Section 409A and Treasury Regulation Section 1.409A-3(i)(2)) as
of the date that the Participant experiences a Separation from Service, and if
any reimbursement, payment or benefit to be paid or provided under this Plan or
otherwise both (i) constitutes a “deferral of compensation” within the meaning
of and subject to Section 409A (“Nonqualified Deferred Compensation”) and
(ii) cannot be paid or provided in a manner otherwise provided herein without
subjecting the Participant to additional tax, interest and/or penalties under
Section 409A, then any such reimbursement, payment or benefit that is payable
during the first six (6) months following the Participant’s Date of Termination
shall be paid or provided to the Participant in a lump sum cash payment to be
made on the earlier of (x) the Participant’s death and (y) the first business
day of the seventh (7th) month immediately following the Participant’s
Separation from Service.

(d) Except to the extent any reimbursement, payment or benefit to be paid or
provided under this Plan does not constitute Nonqualified Deferred Compensation,
(i) the amount of expenses eligible for reimbursement or the provision of any
in-kind benefit (as defined in Section 409A) to a Participant during any
calendar year will not affect the amount of expenses eligible for reimbursement
or provided as in-kind benefits to the Participant in any other calendar year
(subject to any lifetime and other annual limits provided under Mattel’s health
plans), (ii) the reimbursements

 

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for expenses for which a Participant is entitled shall be made on or before the
last day of the calendar year following the calendar year in which the
applicable expense is incurred and (iii) the right to payment or reimbursement
or in-kind benefits may not be liquidated or exchanged for any other benefit.

(e) Any reimbursement, payment or benefit to be paid or provided under Section 3
hereof or otherwise to be paid or provided due to a Separation from Service that
is exempt from Section 409A pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(v) will be paid or provided to a Participant only to the
extent the expenses are not incurred or the benefits are not provided beyond the
last day of the Participant’s second taxable year following the Participant’s
taxable year in which the Separation from Service occurs; provided, however,
that Mattel shall reimburse such expenses no later than the last day of the
third taxable year following the Participant’s taxable year in which the
Participant’s Separation from Service occurs.

(f) Mattel intends that the definition of Good Reason and the
separation-from-service procedures specified in Section 2(i) hereof satisfy the
conditions set forth in Treasury Regulation Section 1.409A-1(n)(2) for a
termination for Good Reason to be treated as an “involuntary separation from
service” for purposes of Section 409A.

(g) Subject to Section 3, any reimbursement, payment or benefit to be paid or
provided under this Plan that constitutes Nonqualified Deferred Compensation due
upon a termination of employment shall be paid or provided to a Participant only
in the event of a Separation from Service.

 

6. Relation to Other Plans

Except as otherwise expressly provided in Section 3(f) or in a Participant’s
Letter Agreement, by signing the Letter Agreement, the Participant recognizes
and agrees that any prior retention, severance or similar plan of Mattel that
might apply to the Participant is hereby revoked and ineffective as to the
Participant.

 

7. Participants’ Covenants

In consideration of and as a condition of the receipt of any Severance Benefits
by a Participant (other than payment of Accrued Amounts or payment or provision
of the Other Benefits), the Participant agrees to the following provisions:

(a) In the Participant’s capacity in management, the Participant has had a great
deal of exposure and access to a broad variety of commercially valuable
proprietary information which is vital to the success of Mattel’s business
including, by way of illustration, past, current and future products and product
concepts, marketing strategies, research and plans and information regarding
employees. As a result of the Participant’s knowledge of the above information
and in consideration for the benefits offered by Mattel under this Plan, the
Participant reaffirms and recognizes the Participant’s continuing obligations
with respect to the use and disclosure of confidential and proprietary
information of Mattel pursuant to Mattel’s policies as set forth in the
most-recent confidentiality and inventions agreement that the Participant has
executed with Mattel and by this reference made a part hereof. Pursuant thereto,
Mattel shall be entitled to injunctive relief to

 

13

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prevent a threatened misappropriation of one or more of Mattel’s trade secrets
or to halt an actual misappropriation of such trade secrets. The Participant
shall hold in a fiduciary capacity for the benefit of Mattel all secret or
confidential information, knowledge or data relating to Mattel or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Participant during the Participant’s employment by Mattel or any
of its affiliated companies and which shall not be public knowledge. After
termination of the Participant’s employment with Mattel, the Participant shall
not, without the prior written consent of Mattel, communicate or divulge any
such information, knowledge or data to anyone other than Mattel and those
designated by it. The foregoing shall not apply to any information which Mattel
discloses to the public.

(b) If the termination of the Participant’s employment occurs prior to a Change
of Control, eligibility for Severance Benefits under this Plan is contingent
upon the Participant’s agreement and compliance with Mattel’s requirement that
the Participant does not accept employment nor an engagement as a consultant
with a competitor within one year following the Date of Termination whereupon
such position is comparable to the position the Participant held with Mattel and
where the Participant can not reasonably satisfy Mattel that the new employer is
prepared to and/or does take adequate steps to preclude and to prevent
inevitable disclosure of trade secrets, as prohibited under Mattel’s policies
with respect to the use and disclosure of confidential and proprietary
information, as set forth in the most-recent confidentiality and inventions
agreement that the Participant has executed with Mattel and by this reference
made a part hereof. If the termination of the Participant’s employment occurs
prior to a Change of Control and if the Participant accepts employment or a
consulting relationship with a competitor within one year following the Date of
Termination and such position is comparable to the position the Participant held
with Mattel and where the Participant can not reasonably satisfy Mattel that the
new employer is prepared to and/or does take adequate steps to preclude and to
prevent inevitable disclosure of trade secrets, as prohibited under Mattel’s
policies with respect to the use and disclosure of confidential and proprietary
information, as set forth in the most-recent confidentiality and inventions
agreement that the Participant has executed with Mattel and by this reference
made a part hereof, then no further payments nor eligibility for benefits
continuation will be available to the Participant as of the date the Participant
commences such employment/consulting. It is a specific condition of this Plan
that for a period of one year following the Date of Termination with respect to
a termination of the Participant’s employment prior to a Change of Control, the
Participant is obligated to immediately notify Mattel as to the specifics of the
new position that the Participant is planning to commence as an employee or
consultant for any company which is a competitor of Mattel.

(c) For a period of twelve (12) months following the Date of Termination, the
Participant will not participate in recruiting any of Mattel’s employees or in
the solicitation of Mattel’s employees other than the Participant’s assistant on
the Date of Termination, and the Participant will not communicate to any other
person or entity, about the nature, quality or quantity of work, or any special
knowledge or personal characteristics of any person employed by Mattel. If the
Participant should wish to discuss possible employment with any then-current
Mattel employee other than the Participant’s assistant on the Date of
Termination during the twelve (12) month period set forth above, the Participant
may request written permission to do so from the senior human resources officer
of Mattel who may, in his or her discretion, grant a written exception to the no
solicitation agreement set forth above, provided, however, the Participant will
not discuss any such employment possibility with such employees prior to
securing Mattel’s permission. If Mattel

 

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should decline to grant such permission, the Participant will not at any time,
either during or after the non-solicitation period set forth above, advise the
employee concerned that he or she was the subject of a request under this
paragraph or that Mattel refused to grant the Participant the right to discuss
an employment possibility with him/her.

(d) For a period of twelve (12) months following the Date of Termination,
(i) the Participant shall not make or encourage or induce others to make
statements or representations that disparage or otherwise impair the reputation,
goodwill or commercial interests of Mattel or any of its affiliated entities or
its or their officers, directors, employees, shareholders, agents or products
and (ii) Mattel shall not issue any press release or other official, written
statement that disparages or otherwise impairs the Participant’s business
reputation. The foregoing shall not be violated by truthful statements in
connection with required governmental testimony or filings, or judicial,
administrative or arbitral proceedings (including, without limitation,
depositions or testimony in connection with such proceedings).

(e) Notwithstanding anything herein to the contrary, Mattel’s remedies at law
for a breach or threatened breach of any of the provisions of this Section 7
would be inadequate and, in recognition of this fact, in the event of such a
breach or threatened breach, in addition to any remedies at law, Mattel, without
posting any bond, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.

 

8. Claims Procedures

(a) Disputes

If any person (claimant) believes that Severance Benefits are being denied
improperly, that this Plan is not being operated properly, or that the
claimant’s legal rights are being violated with respect to this Plan, the
claimant must file a claim with the Plan Administrator within the time period
set forth in Section 8(b). The Plan Administrator will handle all such claims in
accordance with the procedures set forth in Section 8(c). This requirement
applies to all claims that any claimant has with respect to this Plan, except to
the extent the Plan Administrator determines, in its sole discretion, that it
does not have the power to grant all relief reasonably being sought by the
claimant.

(b) Time for Filing Claims

A claim must be filed within ninety (90) days after the date the claimant first
knew or should have known of the facts on which the claim is based, unless
Mattel in writing consents otherwise. The Plan Administrator will provide a
claimant, on request, with a copy of the claims procedures established under
subsection 8(c).

(c) Procedures

If the Plan Administrator does not offer a Participant the payment of Severance
Benefits under this Plan within ten (10) days after the Participant terminates
employment, the Participant must file a claim for benefits on a form prescribed
by the Plan Administrator and within

 

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the time frame set forth in subsection 8(b) above. If the claimant’s claim for a
benefit is wholly or partially denied, the Plan Administrator will furnish the
claimant with a written notice of the denial. This written notice must be
provided to the claimant within a reasonable period of time after the receipt of
the claimant’s claim by the Plan Administrator (generally within ninety
(90) days after receipt by the Plan Administrator of the claimant’s claim for
review, unless special circumstances require an extension of time for processing
the claim, in which case a period not to exceed one hundred and eighty
(180) days after receipt by the Plan Administrator of the claimant’s claim for
review). If such an extension of time is required, written notice of the
extension will be furnished to the claimant prior to the termination of the
initial ninety (90) day period, and will indicate the special circumstances
requiring the extension. Written notice of denial of the claimant’s claim must
contain the following information:

(i) the specific reason or reasons for the denial;

(ii) a specific reference to those provisions of this Plan on which such denial
is based;

(iii) a description of any additional information or material necessary to
perfect the claimant’s claim, and an explanation of why such material or
information is necessary; and

(iv) a copy of the appeals procedures under this Plan and the time limits
applicable to such procedures, including a statement of the claimant’s right to
bring a civil action under Section 502(a) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”) following an adverse determination of
the claimant’s claim.

If the claimant’s claim has been denied, and the claimant wishes to submit his
or her request for a review of his or her claim, the claimant must follow the
following Claims Review Procedure:

 

  1. Upon the denial of his or her claim for benefits, the claimant may file his
or her request for review of his or her claim, in writing, with the Plan
Administrator or claims processor;

 

  2. The claimant must file the claim for review not later than sixty (60) days
after he or she has received written notification of the denial of his or her
claim for benefits;

 

  3. The claimant has the right to review and obtain copies of all relevant
documents relating to the denial of his or her claim and to submit any issues
and comments, in writing, to the Plan Administrator;

 

  4.

If the claimant’s claim is denied, the Plan Administrator must provide the
claimant with written notice of this denial within sixty (60) days after the
Plan Administrator’s receipt of the claimant’s written claim for review. There
may be times when this sixty (60) day period may be extended. This extension may
only be made, however, where there are special circumstances which are
communicated to the claimant in writing within the sixty (60) day period. If
there is an extension, a decision will be

 

16

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made as soon as possible, but not later than one hundred and twenty (120) days
after receipt by the Plan Administrator of the claimant’s claim for review; and

 

  5. The Plan Administrator’s decision regarding the claimant’s claim for review
will be communicated to the claimant in writing, and if the claimant’s claim for
review is denied in whole or part, the decision will include:

 

  (A) the specific reason or reasons for the denial;

 

  (B) specific references to those provisions of this Plan on which such denial
is based;

 

  (C) a statement that the claimant may receive, upon request and free of
charge, reasonable access to and copies of, all documents, records and other
information relevant to the claimant’s claim for benefits; and

 

  (D) a statement of the claimant’s right to bring a civil action under
Section 502(a) of ERISA.

The procedure set forth in this Section 8(c) is intended to comply with United
States Department of Labor Regulation Section 2560.503-1 and should be construed
in accordance with such regulation. In no event shall the claims procedure be
interpreted as expanding the rights of a Participant beyond what is required by
United States Department of Labor Regulation

Section 2560.503-1.

 

9. Plan Administration

(a) Discretion

Mattel’s Compensation Committee is responsible for the general administration
and management of this Plan (“Plan Administrator”) and shall have all powers and
duties necessary to fulfill its responsibilities, including, but not limited to,
the discretion to interpret and apply the provisions of this Plan and to
determine all questions relating to eligibility for Plan benefits. The Plan
Administrator shall have the discretion to interpret or construe ambiguous,
unclear, or implied (but omitted) terms in any fashion it deems to be
appropriate in its sole and absolute discretion, and to make any findings of
fact needed in the administration of this Plan. The validity of any such
interpretation, construction, decision, or finding of fact shall be given de
novo review if challenged in court, by arbitration, or in any other forum, and
such de novo standard shall apply notwithstanding the grant of full discretion
hereunder to the Plan Administrator or characterization of any such decision by
the Plan Administrator as final or binding on any party.

(b) Finality of Determinations

Subject to the last sentence of Section 9(a), all actions taken and all
determinations by the Plan Administrator will be final and binding on all
persons claiming any interest in or under this Plan. To the extent the Plan
Administrator has been granted discretionary authority under this Plan, the Plan
Administrator’s prior exercise of such authority shall not obligate it to
exercise its

 

17

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authority in a like fashion thereafter.

 

10. No Set Off, Payment of Fees

Except as provided herein, Mattel’s obligation to make the payments provided for
in this Plan and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including without limitation any set-off,
counterclaim, recoupment, defense or other right which Mattel may have against a
Participant or others. Mattel agrees to pay, to the full extent permitted by
law, all legal fees and expenses which a Participant may reasonably incur as a
result of any contest (regardless of the outcome thereof) by Mattel or others of
the validity or enforceability of, or liability under, any provision of this
Plan unless there is no reasonable basis for the Participant’s claim; provided,
that, in the case of expenses relating to a claim by a Participant that he or
she terminated for Good Reason or that the termination for Cause was improper,
such fees and expenses shall be paid only if a Participant prevails in whole or
in part. If there is any dispute over whether a reasonable basis for the
Participant’s claim exists for purposes of the preceding sentence, the dispute
shall be resolved by an arbitrator in accordance with the provisions of
Section 11. In the event that a Participant shall in good faith give a Notice of
Termination for Good Reason and it shall thereafter be determined that Good
Reason did not exist, the employment of the Participant shall, unless Mattel and
the Participant shall otherwise mutually agree, be deemed to have terminated at
the Date of Termination specified in such purported Notice of Termination by
mutual consent of Mattel and the Participant and thereupon, the Participant
shall be entitled to receive only those payments and benefits which he or she
would have been entitled to receive at such date.

 

11. Arbitration of Disputes

(a) Subject to the Participant’s exhaustion of the administrative remedies under
Section 8 with respect to any claim brought by a Participant for any benefits
under this Plan, any disputes, controversies or claims which arise out of or
relate to this Plan, the Participant’s employment or the termination of his or
her employment, including, but not limited to, any claim relating to the
purported validity, interpretation, enforceability or breach of this Plan,
and/or any other claim or controversy arising out of the relationship between
the Participant and Mattel (or the nature of the relationship) or the
continuation or termination of that relationship, including, but not limited to,
claims that a termination was for Cause, or for Good Reason, claims for breach
of covenant, breach of an implied covenant of good faith and fair dealing,
wrongful termination, breach of contract, or intentional infliction of emotional
distress, defamation, breach of right of privacy, interference with advantageous
or contractual relations, fraud, conspiracy or other tort or property claims of
any kind, which are not settled by agreement between Mattel and the Participant,
shall be settled by arbitration under the labor arbitration rules of the
JAMS/Endispute (or any other mutually agreed arbitrator) before a board of three
arbitrators, as selected thereunder.

One arbitrator shall be selected by the Participant, one by Mattel and the third
by the two persons so selected, all in accordance with the labor arbitration
rules of the JAMS/Endispute then in effect. In the event that the arbitrator
selected by the Participant and the arbitrator selected by Mattel are unable to
agree upon a third arbitrator, then the third arbitrator shall be selected from
a list of seven provided by the office of JAMS/Endispute nearest to the
Participant’s residence with Mattel and the Participant striking names in order
and the party striking first to be determined by the flip of a coin. The
arbitration shall be held in a location to be mutually agreed upon by Mattel and

 

18

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the Participant. In the absence of agreement, the Chairman of the Board of
Mattel shall determine the location.

(b) In consideration of the agreement to submit to arbitration all disputes with
regard to this Plan and/or with regard to any alleged contract, or any other
claim arising out of their conduct, the relationship existing hereunder or the
continuation or termination of that relationship, and in further consideration
of the anticipated expedition and the minimizing of expense resulting from this
arbitration remedy, the arbitration provisions of this Plan shall provide the
exclusive remedy, and Mattel and the Participant expressly waive any right he or
she or it may have to seek redress in any other forum.

(c) Any claim which either party has against the other party which could be
submitted for resolution pursuant to this Section 11 must be presented in
writing by the claiming party to the other within one year of the date the
claiming party knew or should have known of the facts giving rise to the claim,
except that claims arising out of or related to the termination of a
Participant’s employment must be presented by him or her within one year after
the Date of Termination. Unless the party against whom any claim is asserted
waives the time limits set forth above, any claim not brought within the time
periods specified shall be waived and forever barred.

(d) Mattel will pay all costs and expenses of the arbitration.

(e) Any decision and award or order of a majority of the arbitrators shall be
final and binding upon Mattel and the Participant and judgment thereon may be
entered in the Superior Court of the State of California or any other court
having jurisdiction.

(f) Each of the above terms and conditions of this Section 11 shall have
separate validity and the invalidity of any part thereof shall not affect the
remaining parts.

 

12. Plan Amendment and Termination; Limitation on Employee Rights

(a) Mattel, acting through its Board or Compensation Committee, has the right in
its sole and absolute discretion to amend this Plan, to extend its term, or to
terminate this Plan, prospectively; provided, however, this Plan may not be
amended by the Board or the Compensation Committee in any manner which is
materially adverse to any Participant without such Participant’s written
consent. For the avoidance of doubt, the termination of this Plan shall not be
effective with respect to a Participant prior to the expiration of the
Participant’s status as a “Participant” in the Plan in accordance with the
Participant’s Letter Agreement without the Participant’s written consent.

(b) This Plan shall not give any employee the right to be retained in the
service of Mattel, and shall not interfere with or restrict the right of Mattel
to discharge or retire the employee for any lawful reason.

 

13. Successors

This Plan shall inure to the benefit of and be binding upon Mattel and its
successors. Mattel shall require any successor to all or substantially all of
the business and/or assets of Mattel, whether direct or indirect, by purchase,
merger, consolidation, acquisition of stock, or otherwise, expressly to

 

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assume and agree to perform this Plan in the same manner and to the same extent
as Mattel would be required to perform if no such succession had taken place.

 

14. Governing Law

This Plan is intended to be an unfunded “top-hat” welfare plan, within the
meaning of U.S. Department of Labor Regulation Section 2520.104-24 and shall be
interpreted, administered, and enforced in accordance with ERISA. It is
expressly intended that ERISA preempt the application of state laws to this
Plan, to the maximum extent permitted by Section 514 of ERISA. To the extent
that state law is applicable, the statutes and common laws of the State of
California (excluding its choice of laws principles) shall apply.

 

15. Notices

All notices and other communications hereunder shall be in writing; shall be
delivered by hand delivery to the other party, by recognized overnight
commercial courier or mailed by registered or certified mail, return receipt
requested, postage prepaid; shall be deemed delivered upon actual receipt (or
refusal of receipt); and shall be addressed as follows:

If to Mattel:

MATTEL, INC.

333 Continental Blvd.

El Segundo, CA 90245

Attention: Chief Executive Officer

If to a Participant:

to the last address shown on the payroll records of Mattel

or to such other address as either Mattel or the Participant shall have
furnished to the other in writing in accordance herewith. Any termination of a
Participant’s employment by Mattel or by a Participant for Good Reason shall be
communicated by Notice of Termination to the other party hereto given in
accordance with this Section 15. The failure by a Participant or Mattel to set
forth in such Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive any right of the
Participant or Mattel hereunder or preclude the Participant or Mattel from
asserting such fact or circumstance in enforcing the Participant’s or Mattel’s
rights hereunder.

 

16. Miscellaneous

Where the context so indicates, the singular will include the plural and vice
versa. Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Plan. Unless the context
clearly indicates to the contrary, a reference to a statute or document shall be
construed as referring to any subsequently enacted, adopted, or executed
counterpart.

 

20

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MATTEL, INC.

EXECUTIVE SEVERANCE PLAN

 

 

Form Letter Agreement

 

 

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

Mattel, Inc.

Letterhead

Employee Name

Employee Address

 

  Re: The Mattel, Inc. Executive Severance Plan

Dear [Employee Name]:

This letter agreement (“Letter Agreement”) relates to the Mattel, Inc. Executive
Severance Plan (the “Plan”).

Through this Letter Agreement, you are being offered the opportunity to become a
participant in the Plan (a “Participant”), and thereby to be eligible to receive
the severance benefits set forth therein. A copy of the Plan is attached to this
Letter Agreement. You should read it carefully and become comfortable with its
terms and conditions, and those set forth below.

By signing below, you will be acknowledging and agreeing to the following
provisions:

 

  (a) that you have received and reviewed a copy of the Plan;

 

  (b) that terms not defined in this Letter Agreement but beginning with a
capital letter shall have the meaning assigned to them in the Plan;

 

  (c) that participation in the Plan requires that you agree irrevocably and
voluntarily to the terms of the Plan (including, without limitation, the
covenants set forth in Section 7 of the Plan) and the terms set forth below; and

 

  (d) that you have had the opportunity to carefully evaluate this opportunity,
and desire to participate in the Plan according to the terms and conditions set
forth herein.

Subject to the foregoing, we invite you to become a Participant in the Plan.
Your participation in the Plan will be effective upon your signing and returning
this Letter Agreement to Mattel within thirty (30) days of your receipt of this
Letter Agreement.

NOW, THEREFORE, you and Mattel (hereinafter referred to as “the parties”) hereby
AGREE as follows:

1. Mattel and you have previously entered into that certain employment agreement
dated as of • and as thereafter supplemented and amended from time to time (the
“Employment Agreement”), which pursuant to the letter dated June     , 2009 from
Mattel to you is scheduled to generally expire on •, subject to the terms of the
Employment Agreement (the earlier of (i) the end of the “Employment Period,” as
defined in the Employment Agreement, or (ii) the end of the 18-month period
contemplated in Section 5(f) of the Employment Agreement, the “Expiration

 

1

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Date”). The day immediately following the Expiration Date shall be your
“Eligibility Date” for purposes of the Plan.

2. If, after the Expiration Date and while the Plan and this Letter Agreement
are in effect, you incur a Covered Termination, you will receive the Severance
Benefit set forth in Section 3(b) or (c) of the Plan, as applicable.

3. As a condition of receiving the Severance Benefit (other than the Accrued
Amounts and Other Benefits), you must (i) execute and accept the terms and
conditions of, and the effectiveness of, a General Release of All Claims (the
“Release”) in substantially the form attached hereto as Exhibit A (which form
may be modified by Mattel only to the extent Mattel determines in good faith
that any such modification is necessary to make it valid and encompassing under
applicable law) and such Release must become irrevocable within fifty-five
(55) days following your Date of Termination, (ii) comply with the covenants set
forth in Section 7 of the Plan and (iii) promptly resign from any position as an
officer, director or fiduciary of any Mattel-related entity.

4. In consideration of becoming eligible to receive the Severance Benefits
provided under the terms and conditions of the Plan, you agree to waive any and
all rights, benefits, and privileges to severance benefits that you might
otherwise be entitled to receive under any other plan or arrangement. The
foregoing shall not apply to any severance benefits you may be entitled to
receive under your Employment Agreement prior to the Expiration Date.

5. You understand that the waiver set forth in Section 4 above is irrevocable
for so long as this Letter Agreement is in effect, and that this Letter
Agreement and the Plan set forth the entire agreement between the parties with
respect to any subject matter covered herein.

6. This Letter Agreement shall terminate, and your status as a Participant in
the Plan shall end, on the first to occur of –

 

  (a) your termination of employment for a reason other than a “Covered
Termination” as defined in Section 2(e) of the Plan, and

 

  (b) the first anniversary of your Eligibility Date; provided that commencing
on the first day of the first month following the month in which your
Eligibility Date occurs and on the first day of each month thereafter (the most
recent of such dates is hereinafter referred to as the “Renewal Date”), your
participation in the Plan shall be automatically extended so as to terminate one
year from such Renewal Date, unless at least 90 days prior to any Renewal Date
(including prior to your Eligibility Date) Mattel shall give notice to you that
your participation in the Plan shall not be so extended beyond the first
anniversary of such Renewal Date. Accordingly, you shall retain your status as a
Participant for at least 15 months following any notice from Mattel that your
participation in the Plan is not being extended.

7. Notwithstanding anything herein to the contrary, if a Change of Control
occurs while you are a Participant in the Plan, in no event will your status as
a Participant in the Plan end prior to the end of the twenty-four (24) month
period beginning on a Change of Control regardless

 

2

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of when any written notification is given to you terminating your participation
in the Plan (including any written notification given prior to such Change of
Control) in accordance with Section 6(b).

8. Your participation in the Plan shall continue in effect following any Covered
Termination that occurs while you are a Participant in the Plan with respect to
all rights and obligations accruing as a result of such termination.

9. You recognize and agree that your execution of this Letter Agreement results
in your enrollment and participation in the Plan, that you agree to be bound by
the terms and conditions of the Plan and this Letter Agreement, and that you
understand that this Letter Agreement may not be amended or modified except
pursuant to Section 12 of the Plan.

 

    Mattel, Inc. Dated: June     , 2009           By    

ACCEPTED AND AGREED TO this      day of                 , 2009.

 

   Your Name (printed)    Your Signature

 

3

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EXHIBIT A TO PARTICIPATION LETTER AGREEMENT

GENERAL RELEASE

OF ALL CLAIMS

1. For valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the undersigned (the “Participant”) does hereby on behalf of the
Participant and the Participant’s successors, assigns, heirs and any and all
other persons claiming through the Participant, if any, and each of them,
forever relieve, release, and discharge Mattel, Inc. (“Mattel”) and its
respective predecessors, successors, assigns, owners, attorneys,
representatives, affiliates, Mattel corporations, subsidiaries (whether or not
wholly-owned), divisions, partners and their officers, directors, agents,
employees, servants, executors, administrators, accountants, investigators,
insurers, and any and all other related individuals and entities, if any, and
each of them (collectively, the “Released Parties”), in any and all capacities
from any and all claims, debts, liabilities, demands, obligations, liens,
promises, acts, agreements, costs and expenses (including, but not limited to
attorneys’ fees), damages, actions and causes of action, of whatever kind or
nature, including, without limiting the generality of the foregoing, any claims
arising out of, based upon, or relating to the hire, employment, remuneration
(including salary; bonus; incentive or other compensation; vacation, sick leave
or medical insurance benefits; or other benefits) or termination of the
Participant’s employment with Mattel.

2. This release (“Release”) includes a release of any rights or claims the
Participant may have under the Age Discrimination in Employment Act, which
prohibits age discrimination in employment as to individuals forty years of age
and older; the Older Workers Benefit Protection Act, which prohibits
discrimination against older workers in all executive benefits; Title VII of the
Civil Rights Act of 1964, as amended in 1991, which prohibits discrimination in
employment based on race, color, national origin, religion or sex; the
California Fair Employment and Housing Act, which prohibits discrimination based
on race, color, religion, national origin, ancestry, physical or mental
disability, medical condition, sex, pregnancy-related condition, marital status,
age or sexual orientation; the Equal Pay Act, which prohibits paying men and
women unequal pay for equal work; the American with Disabilities Act, which
prohibits discrimination against qualified individuals with disabilities; or any
other federal, state or local laws or regulations which prohibit employment
discrimination, restrict an employer’s right to terminate the Participant, or
otherwise regulate employment. This Release also includes a release by the
Participant of any claims for breach of contract, wrongful discharge and all
claims for alleged physical or personal injury, emotional distress relating to
or arising out of the Participant’s employment with Mattel or the termination of
that employment; any claims under the WARN Act or any similar law, which
requires, among other things, that advance notice be given of certain work force
reductions; and all claims under the Employee Retirement Income Security Act of
1974, such as claims relating to pension or health plan benefits.

3. Notwithstanding any other provision of this Release, this Release does not
apply to any rights or claims which arise after the execution of this Release.

4. This Release covers both claims that the Participant knows about and those
the Participant may not know about. The Participant expressly waives all rights
afforded by any statute (such as Section 1542 of the Civil Code of the State of
California) which limits the effect of a release

 

A-1

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with respect to unknown claims. The Participant understands the significance of
the Participant’s release of unknown claims and the Participant’s waiver of
statutory protection against a release of unknown claims (such as under
Section 1542). Section 1542 of the Civil Code of the State of California states
as follows:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”

Notwithstanding the provisions of Section 1542, the Participant expressly
acknowledges that this Release is intended to include both claims that the
Participant knows about and those the Participant does not know or suspect to
exist.

5. The Participant hereby represents and warrants that he or she has not filed,
initiated, or prosecuted (or caused to be filed, initiated, or prosecuted) any
lawsuit, complaint, charge, action, compliance review, investigation, or
proceeding with respect to any claim this Release purports to waive, and the
Participant covenants never to do so in the future, whether as a named
plaintiff, class member, or otherwise. The Participant understands that this
Release does not require him/her to withdraw, or prohibit him/her from filing, a
charge with any government agency (such as the U.S. Equal Employment Opportunity
Commission), as long as the Participant does not personally seek reinstatement,
damages, remedies, or other relief as to any claim that the Participant released
by signing this Release, as the Participant has waived any right the Participant
might have had to any of those things.

If the Participant is ever awarded or recovers any amount as to a claim the
Participant purported to waive in this Release, the Participant agrees that the
amount of the award or recovery shall be reduced by the amounts he or she was
paid under this Plan, increased appropriately for the time value of money, using
an interest rate of 10% per annum. The Participant covenants never directly or
indirectly to bring or participate in an action against any Released Party under
California Business & Professions Code Section 17200 or under any other unfair
competition law of any jurisdiction.

6. The provisions of this Release are severable, and if any part of it is found
to be unenforceable, the other paragraphs shall remain fully valid and
enforceable. This Release shall be construed in accordance with its fair meaning
and in accordance with the laws of the State of California, without regard to
conflicts of laws principles thereof.

7. The Participant is strongly encouraged to consult with an attorney before
signing this Release. The Participant acknowledges that the Participant has been
advised of this right to consult an attorney and the Participant understands
that whether to do so is the Participant’s decision. The Participant
acknowledges that Mattel has advised the Participant that the Participant has
twenty-one (21) days in which to consider whether the Participant should sign
this Release and has advised the Participant that if the Participant signs this
Release, the Participant has seven (7) days following the date on which the
Participant signs the Release to revoke it and that the Release will not be
effective until after this seven-day period had lapsed.

 

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PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.

 

Date:            Mattel, Inc. Date:            [Participant]

 

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