Document:

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                                                                    EXHIBIT 10.9

                         EXECUTIVE EMPLOYMENT AGREEMENT

  THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into on
January 31, 2000 and effective as of April 1, 1999 (the "Effective Date")
between Mattel, Inc., a Delaware corporation ("Mattel") and Matthew C.
Bousquette (the "Executive").

     1.   Employment Period.  Mattel hereby agrees to employ and continue in its
          -----------------
employ the Executive, and the Executive hereby accepts such employment and
agrees to remain in the employ of Mattel, for the period commencing on the
Effective Date and ending on the third anniversary of such date, subject to
earlier termination as provided herein (the "Employment Period"); provided that
commencing on the first day of the month next following the effective date
hereof, and on the first day of each month thereafter (the most recent of such
dates is hereinafter referred to as the "Renewal Date"), the Employment Period
shall be automatically extended so as to terminate three years from such Renewal
Date, unless at least 60 days prior to any Renewal Date Mattel or the Executive
shall give notice to the other that the Employment Period shall not be so
extended and shall be terminated.

     2.   Duties.
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          (a)   Executive's Position and Duties. During the Employment Period,
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the Executive's position shall be that of President of the Boys/Entertainment/
Wheels/Games Division of Mattel and the Executive shall have the authority and
responsibilities similar to those held by the Executive on the date hereof with
such additions and modifications, and consistent with responsibilities generally
assigned to officers of Mattel as the Chief Executive Officer of Mattel may in
her discretion and acting in good faith from time to time assign to the
Executive. The Executive's services shall be performed in the greater Los
Angeles, California area, provided, however, that the Executive may be required
to travel on business from time to time generally consistent with the
Executive's travel requirements as of the date of this Agreement.

          (b)   Full Time. The Executive agrees to devote the Executive's full
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business time to the business and affairs of Mattel and to use the Executive's
best efforts to perform faithfully and efficiently the responsibilities assigned
to the Executive hereunder to the extent necessary to discharge such
responsibilities, except for (i) services on corporate, civic or charitable
boards or committees not significantly interfering with the performance of such
responsibilities which services have been approved by the Chief Executive
Officer; (ii) periods of vacation and sick leave to which the Executive is
entitled; and (iii) the management of personal investments and affairs. The
Executive will not engage in any outside business activity (as distinguished
from personal investment activity and affairs), including, but not limited to,
activity as a consultant, agent, partner or officer, or provide business
services of any nature directly or indirectly to a corporation or other business
enterprise.
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     3.   Compensation and Benefits.
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          (a)   Base Salary. During the Employment Period, the Executive shall
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receive a base salary ("Base Salary") at a bi-weekly rate at least equal to the
bi-weekly salary paid to the Executive by Mattel on the date of this Agreement.
The Base Salary shall be reviewed from time to time in accordance with Mattel's
policies and practices, but no less frequently than once every eighteen (18)
months and may be increased at any time and from time to time by action of the
Board of Directors of Mattel or the Compensation/Options Committee thereof or
any individual having authority to take such action in accordance with Mattel's
regular practices. Any increase in the Base Salary shall not serve to limit or
reduce any other obligation of Mattel hereunder and, after any such increase,
the Base Salary shall not be reduced.

          (b)   Bonus Programs. In addition to the Base Salary, the Executive
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shall be eligible to participate throughout the Employment Period in such cash,
deferred bonus, annual bonus and long term bonus plans and programs ("Bonus
Programs"), such as Mattel's Management Incentive Plan (the "MIP") and Long Term
Incentive Plan (the "LTIP"), as may be in effect from time to time in accordance
with Mattel's compensation practices and the terms and provisions of any such
plans or programs as in effect from time to time; provided that the Executive'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 or consultant.

          (c)   Incentive Plans. In addition to the Base Salary and
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participation in the Bonus Programs, during the Employment Period the Executive,
shall be eligible to participate, subject to the terms and conditions thereof,
in all incentive plans and programs, including, but not limited to, stock option
plans and other equity based incentive plans, as may be in effect from time to
time with respect to executives employed by Mattel at the Executive's level so
as to reflect the Executive's responsibilities.

          (d)   Pension and Welfare Benefit Plans. During the Employment Period,
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the Executive and/or the Executive's dependents, as the case may be, shall be
eligible to participate in, subject to the terms and conditions thereof, all
pension, profit sharing, medical, dental, disability, group life, accidental
death and travel accident insurance plans and programs of Mattel as in effect
from time to time with respect to executives employed by Mattel at the
Executive's level so as to reflect the Executive's responsibilities. In
addition, the Executive shall be credited for all years of employment service
with Mattel for purposes of such plans and programs of Mattel, unless such
crediting is prohibited by law or would adversely affect the tax status of the
plan or program.

          (e)   Expenses.  During the Employment Period, the Executive shall be
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entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies and practices of Mattel as in
effect from time to time.

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          (f)   Fringe Benefits. During the Employment Period, the Executive
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shall be entitled to fringe benefits (including automobile benefits, financial
counseling, membership in one city or country club and related expenses) of the
kind and quality which are provided to executives at the Executive's level in
accordance with the policies of Mattel as in effect from time to time with
respect to executives employed by Mattel at the Executive's level so as to
reflect the Executive's responsibilities.

          (g)   Vacation. During the Employment Period, the Executive shall be
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entitled to paid vacation in accordance with the policies and practices of
Mattel as in effect from time to time.

          (h)   Stock Options. During the Employment Period, the Executive shall
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be entitled to participate in Mattel's stock option plans in accordance with the
policies and practices of Mattel as in effect from time to time with respect to
executives employed by Mattel at the Executive's level so as to reflect the
Executive's responsibilities.

          (i)   Certain Amendments. Nothing herein shall be construed to prevent
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Mattel from amending, altering, eliminating or reducing any plans, benefits or
programs set forth in Sections 3(b) through (h) 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 to
which the Executive agrees and which affect all similarly situated executives of
Mattel.

          (j)   Retention Loan.  Mattel and the Executive have entered into that
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certain Loan Agreement (the "Loan Agreement") dated as of October 29, 1999,
which provided, among other things, that the definitions of "Cause," "Change of
Control," "Disability" and "Good Reason" contained in this Agreement supercede
the definitions of such terms as set forth in the Loan Agreement.

     4.   Termination.
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          (a)   Death or Disability. This Agreement shall terminate
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automatically upon the Executive's death; provided that the Executive's Base
Salary will be continued and paid for a period of six months thereafter. Mattel
may terminate this Agreement, after having established the Executive's
Disability, by giving to the Executive written notice of its intention to
terminate the Executive's employment, and the Executive's employment with Mattel
shall terminate effective on the 90th day after receipt of such notice (the
"Disability Effective Date"). For purposes of this Agreement, the Executive's
Disability shall occur and shall be deemed to have occurred only in the event
that the Executive suffers a disability due to illness or injury which
substantially and materially limits the Executive from performing each of the
essential functions of the Executive's job, even with reasonable accommodation
and becomes entitled to receive disability benefits under the Mattel Long-Term
Disability Plan for exempt employees.

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          (b)   Cause. Mattel may terminate the Executive's employment for
"Cause" upon a determination of the Chief Executive Officer of Mattel that
"Cause" exists. For purposes of this Agreement, "Cause" means (i) one or more
factually substantiated willful acts of dishonesty on the Executive's part which
are intended to result in the Executive's substantial personal enrichment at the
expense of Mattel; (ii) repeated violations by the Executive of the Executive's
obligations under Section 2 of this Agreement which are demonstrably willful and
deliberate on the Executive's part and which resulted in material injury to
Mattel; (iii) conduct of a factually substantiated criminal nature (commonly
defined as a "felony" in criminal statutes) which has or which is more likely
than not to have a material adverse effect on Mattel's reputation or standing in
the community or on its continuing relationships with its customers or those who
purchase or use its products; or (iv) factually substantiated fraudulent conduct
in connection with the business or affairs of Mattel, regardless of whether said
conduct is designed to defraud Mattel or others; provided that, in each case,
the Executive has received written notice of the described activity, 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)   Good Reason. The Executive may terminate the Executive's
employment at any time for Good Reason. For purposes of this Agreement, "Good
Reason" means the good faith determination by the Executive that any one or more
of the following have occurred:

                (i)     without the express written consent of the Executive,
any change(s) in any of the duties, authority, or responsibilities of the
Executive which is (are) inconsistent in any substantial respect with the
Executive's position, authority, duties, or responsibilities as contemplated by
Section 2 of this Agreement;

                (ii)    any failure by Mattel to comply with any of the
provisions of Section 3 of this Agreement, other than an insubstantial and
inadvertent failure remedied by Mattel promptly after receipt of notice thereof
given by the Executive;

                (iii)   any proposed termination by Mattel of the Executive's
employment other than as permitted by this Agreement;

                (iv)    any failure by Mattel to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated by Section
11(b); or

                (v)     transferring the Executive outside of the greater Los
Angeles, California area without the Executive's express written consent.

          (d) Change of Control.  "Change of Control" means:
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                (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

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"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the
then outstanding shares of common stock of Mattel, including the shares of
common stock of Mattel issuable upon an exchange of Softkey Exchangeable Shares
that are not owned by Mattel or any corporation controlled by 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 20% 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 or of Softkey Exchangeable Shares by Softkey
which, by reducing the number of shares of common stock of Mattel or Softkey
Exchangeable Shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 20% 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 20% or more of
either the Outstanding Company Common Stock or the Outstanding Company Voting
Securities by reason of a share acquisition by Mattel or by Softkey as described
above and shall, after such share acquisition by Mattel or Softkey, 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 4(d); provided, further, however, that for purposes of
this subsection (i), any Investing Person (as such term is defined in the Rights
Agreement) shall be deemed not to be a beneficial owner of any Investment Shares
(as such term is defined in the Rights Agreement) and the holder of the Mattel
Special Voting Preferred Share (as such term is defined in the Rights Agreement)
shall be deemed not to be a beneficial owner of such Mattel Special Voting
Preferred Share; or

                (ii)    individuals who, as of the date hereof, 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 date hereof 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
through 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

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who were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination 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, 20% or more of, respectively, the then outstanding share
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 the 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.

          For the purposes of this Section 4(d), (a) "Rights Agreement" means
the Rights Agreement, dated as of February 7, 1992, as amended by an amendment
dated as of May 13, 1999 and an amendment dated as of November 4, 1999 by and
between Mattel and BankBoston N.A., a national banking association, formerly,
The First National Bank of Boston, and not giving effect to any amendments
subsequent to November 4, 1999, (b) "Softkey" means Softkey Software Products
Inc., an Ontario corporation, and (c) "Softkey Exchangeable Shares" means the
Exchangeable Shares in the capital stock of Softkey.

          (e)   Notice of Termination. Any termination of the Executive's
                ---------------------
employment by Mattel for Cause or following a Change of Control or by the
Executive for Good Reason shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 15(b). Any termination by
Mattel due to Disability shall be given in accordance with Section 4(a). For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon; (ii) except in the event of a termination following a Change of Control,
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated; and (iii) specifies the Date of Termination (defined below).

          (f)   Date of Termination. "Date of Termination" means the date of
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actual receipt of the Notice of Termination or any later date specified therein
(but not more than fifteen

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(15) days after the giving of the Notice of Termination), as the case may be;
provided that (i) if the Executive's employment is terminated by Mattel for any
reason other than Cause or Disability, the Date of Termination is the date on
which Mattel notifies the Executive of such termination; (ii) if the Executive's
employment is terminated due to Disability, the Date of Termination is the
Disability Effective Date; and (iii) if the Executive's employment is terminated
due to the Executive's death, the Date of Termination shall be the date of
death.

     5.   Obligations of Mattel upon Termination. Other than as specifically set
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forth or referenced in this Agreement, the Executive shall not be entitled to
any benefits on or after the Date of Termination.

          (a)   Death.  If the Executive's employment is terminated by reason of
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the Executive's death, this Agreement shall terminate without further
obligations by Mattel to the Executive's legal representatives under this
Agreement other than those obligations accrued hereunder or under the terms of
the applicable Mattel plan or program which takes effect at the date of the
Executive's death or as otherwise provided in Section 4(a) or this Section 5(a).
As of the Date of Termination, the Executive's family shall be entitled to
healthcare coverage and financial counseling benefits until the third
anniversary of the Date of Termination.

          (b)   Disability. If the Executive's employment is terminated by
                ----------
reason of the Executive's Disability, the Executive shall be entitled to receive
after the Disability Effective Date (i) disability benefits, if any, at least
equal to those then provided by Mattel to disabled executives and/or their
families and (ii) until the earlier of the third anniversary of the Date of
Termination or the date the Executive accepts other employment, those other
benefits on the terms described in Section 5(d)(v).

          (c)   Cause. If the Executive's employment is terminated for Cause or
                -----
if the Executive terminates the Executive's employment without Good Reason,
Mattel shall pay the Executive the Executive's full Base Salary through the Date
of Termination at the rate in effect at the time Notice of Termination is given,
and Mattel shall have no further obligations to the Executive under this
Agreement.

          (d)   Good Reason; Other Than for Cause or Disability. If Mattel
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terminates the Executive's employment other than for Cause or Disability or the
Executive terminates the Executive's employment for Good Reason (in each case,
other than within 18 months following a Change of Control as provided in Section
5(e):

                (i)     Mattel shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:

                        (A)   if not theretofore paid, the Executive's Base
Salary through the Date of Termination at the rate in effect at the time of
Notice of Termination was given;

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                        (B)   a current year bonus (the "Bonus") equal to the
greater of (x) the average of the two highest annual bonuses received by the
Executive under the MIP, or any successor plan, in the three years prior to the
Date of Termination, including any years in which the Executive was paid no
bonus, (the "Average Annual Bonus") and prorated to reflect the total number of
full months the Executive is employed on an active and full time basis in the
year in which termination occurs, (y) the annual bonus paid to the Executive,
under the MIP or any successor plan, if any, for the 2000 or 2001 calendar year,
whichever is greater, without proration, or (z) the target annual bonus (50%)
for the Executive under the MIP for the 2000 calendar year;

                        (C)   three times the sum of (x) the Executive's annual
Base Salary at the rate in effect at the time the Notice of Termination is given
and (y) the Bonus defined in Section 5(d)(i)(B), but without proration (and, in
each such case, without regard to any contributions by Mattel for the
Executive's benefit to any retirement or other investment plans).

                (ii)    Mattel shall pay the Executive a portion of any long-
term incentive compensation that Executive would have received under the LTIP
with respect to any performance period which is pending as of the Executive's
Date of Termination as if the Executive had remained employed for the entire
performance period, pro rated based on the number of full months of Executive's
employment during the performance period over the total number of months in the
performance period, which amount shall be payable at the end of the period in
accordance with the terms of the LTIP and shall be net of any interim payments
previously made to the Executive.

                (iii)   Any options granted to the Executive under Mattel's
stock option plans, other than Mattel's 1997 Premium Price Stock Option Plan or
any successor thereto (the "Stock Option Plans"), shall become immediately
exercisable and the Executive shall have a period of 90 days following the Date
of Termination (but in no event past the expiration of the term of the option
grant) to exercise all options granted under the Stock Option Plans then
exercisable or which become exercisable pursuant to this clause (iii).

                (iv)    Mattel shall, promptly upon submission by the Executive
of supporting documentation, pay or reimburse to the Executive any costs and
expenses paid or incurred by the Executive which would have been payable under
Section 3(e) if the Executive's employment had not terminated.

                (v)     Until the earlier of (x) the third anniversary of the
Date of Termination or (y) the date the Executive becomes gainfully employed in
a substantially similar employment position, Mattel shall provide to the
Executive at Mattel's expense:

                        (A)   coverage under Mattel's medical, dental,
prescription drug and vision care group insurance as in effect from time to time
on the same terms and conditions as such insurance is available to active
employees of Mattel (the last 18 months of the

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Executive's coverage under such insurance shall be deemed to be participation
under an election to continue such benefits under the Consolidated Omnibus
Budget Reconciliation Act at Mattel's expense);

                        (B)   outplacement services at the expense of Mattel
commensurate with those provided to terminated executives of comparable level
and made available through and at the facilities of a reputable and experienced
vendor;

                        (C)   financial counseling and tax preparation services
through the vendor engaged and paid for by Mattel;

                        (D)   automobile benefits; provided however, that if
such automobile is leased by Mattel, such benefits shall expire upon expiration
of such lease. Upon expiration of the automobile benefits, at which time the
Executive may purchase the car for either $100, if the automobile benefits
terminate at the end of the lease term, or Mattel's book value, if the
automobile benefits terminate on either the third anniversary of the Date of
Termination or the date on which the Executive accepts other employment. As of
the Date of Termination, all expenses related to such automobile, including but
not limited to insurance, repairs, maintenance, gasoline, and car phone and
associated expenses, shall be the sole responsibility of the Executive; and

                        (E)   membership in one city or country club and related
expenses. Mattel shall cause the membership to be transferred to the Executive
at no cost to the Executive.

                (vi)    If the Executive is a participant in the Mattel
Supplemental Executive Retirement Plan, the Mattel Deferred Compensation Plan or
the Mattel Retiree Medical Plan, the Executive shall be given credit for three
years of service (in addition to actual service) and for three years of attained
age to be added to the Executive's actual age for purposes of computing any
service and age-related benefits for which the Executive is eligible under such
plans.

Notwithstanding the foregoing, if Mattel terminates the Executive's employment
other than for Cause or Disability or if the Executive terminates the
Executive's employment for Good Reason and such termination occurs within 18
months after the date upon which Mattel changes the person to whom the Executive
immediately reports, then (a) the Executive's "Average Annual Bonus" for the
purpose of calculating the amounts provided by clauses (d)(i)(B) and (d)(i)(C)
above shall be equal to the Executive's maximum targeted MIP bonus for the year
in which the termination of employment occurs and (b) the amount payable to the
Executive under clause (d)(ii) above shall be based on the maximum LTIP payment
that the Executive could have received with respect to the pending performance
period, rather than amount which would have been payable to the Executive had
the Executive remained employed for the entire performance period.
Notwithstanding the foregoing, the amounts payable with respect to a termination
of

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employment which is subject to the preceding sentence shall be prorated as
set forth in clauses (d)(i)(B) and (d)(ii).

          (e)   Change of Control. If, within 18 months following a Change of
                -----------------
Control, the Executive terminates the Executive's employment for Good Reason or
Mattel or the surviving entity terminates the Executive's employment other than
for Cause or Disability or within the 30 day period immediately following the
six (6) month anniversary of a Change of Control the Executive terminates the
Executive's employment for any reason:

                (i)     Mattel shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:

                        (A)   if not theretofore paid, the Executive's Base
Salary through the Date of Termination at the rate in effect at the time of
Notice of Termination was given;

                        (B)   a current year bonus (the "Bonus Amount") equal to
the greater of (x) the average of the two highest annual bonuses received by the
Executive under the MIP, or any successor plan, in the three years prior to the
Date of Termination, including any years in which the Executive was paid no
bonus, and prorated to reflect the total number of full months the Executive is
employed on an active and full time basis in the year in which termination
occurs, (y) the annual bonus paid to the Executive, under the MIP or any
successor plan, if any, for the 2000 or 2001 calendar year, whichever is
greater, without proration, or (z) the target annual bonus (50%) for the
Executive under the MIP for the 2000 calendar year;

                        (C)   three times the sum of (x) the Executive's annual
Base Salary at the rate in effect at the time the Notice of Termination is given
and (y) the Bonus Amount defined in Section 5(e)(i)(B), but without proration
(and, in each such case, without regard to any contributions by Mattel for the
Executive's benefit to any retirement or other investment plans).

                (ii)    Any options granted to the Executive under Mattel's
stock option plans, other than Mattel's 1997 Premium Price Stock Option Plan or
any successor thereto (the "Stock Option Plans"), shall become immediately
exercisable and the Executive shall have a period of 90 days or such longer
period of time as specified in the Stock Option Plans following the Date of
Termination (but in no event past the expiration of the term of the option
grant) to exercise all options granted under the Stock Option Plans then
exercisable or which become exercisable pursuant to this clause (ii).

                (iii)   Mattel shall, promptly upon submission by the Executive
of supporting documentation, pay or reimburse to the Executive any costs and
expenses paid or incurred by the Executive which would have been payable under
Section 3(e) if the Executive's employment had not terminated.

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                (iv)    Until the earlier of (x) the third anniversary of the
Date of Termination or (y) the date the Executive becomes gainfully employed in
a substantially similar employment position, Mattel shall provide to the
Executive at Mattel's expense:

                        (A)   coverage under Mattel's medical, dental,
prescription drug and vision care group insurance as in effect from time to time
on the same terms and conditions as such insurance is available to active
employees of Mattel (the last 18 months of the Executive's coverage under such
insurance shall be deemed to be participation under an election to continue such
benefits under the Consolidated Omnibus Budget Reconciliation Act at Mattel's
expense);

                        (B)   outplacement services at the expense of Mattel
commensurate with those provided to terminated executives of comparable level
and made available through and at the facilities of a reputable and experienced
vendor;

                        (C)   financial counseling and tax preparation services
through the vendor engaged and paid for by Mattel;

                        (D)   automobile benefits; provided however, that if
such automobile is leased by Mattel, such benefits shall expire upon expiration
of such lease. Upon expiration of the automobile benefits, at which time the
Executive may purchase the car for either $100, if the automobile benefits
terminate at the end of the lease term, or Mattel's book value, if the
automobile benefits terminate on either the third anniversary of the Date of
Termination or the date on which the Executive accepts other employment. As of
the Date of Termination, all expenses related to such automobile, including but
not limited to insurance, repairs, maintenance, gasoline, and car phone and
associated expenses, shall be the sole responsibility of the Executive; and

                        (E)   membership in one city or country club and related
expenses. Mattel shall cause the membership to be transferred to the Executive
at no cost to the Executive.

                (v)     If the Executive is a participant in the Mattel
Supplemental Executive Retirement Plan, the Mattel Deferred Compensation Plan or
the Mattel Retiree Medical Plan, the Executive shall be given credit for three
years of service (in addition to actual service) and for three years of attained
age to be added to the Executive's actual age for purposes of computing any
service and age-related benefits for which the Executive is eligible under such
plans.

     6.  Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or
         -------------------------
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by Mattel and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any stock option or other

                                       11
<PAGE>

agreement with Mattel or any of its affiliated companies. Except as otherwise
provided herein, amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of Mattel at or
subsequent to the Date of Termination shall be payable in accordance with such
plan or program.

     7.  No Set Off, Payment of Fees.  Except as provided herein, Mattel's
         ---------------------------
obligation to make the payments provided for in this Agreement 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 the Executive or others.  Mattel
agrees to pay, to the full extent permitted by law, all legal fees and expenses
which the Executive 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 Agreement other than expenses
relating to a claim by the Executive that the Executive terminated for Good
Reason or that the termination for Cause was improper, in which case such fees
and expenses shall be paid only if the Executive prevails in whole or in part.
In the event that the Executive 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 Executive shall, unless Mattel and the Executive
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 Executive and thereupon, the Executive shall be entitled to
receive only those payments and benefits which the Executive would have been
entitled to receive at such date.

     8.   Arbitration of Disputes.
          -----------------------

          (a)   The parties agree that any disputes, controversies or claims
which arise out of or relate to this Agreement, the Executive's employment or
the termination of the Executive's employment, including, but not limited to,
any claim relating to the purported validity, interpretation, enforceability or
breach of this Agreement, and/or any other claim or controversy arising out of
the relationship between the Executive 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 the parties, shall be settled by expedited arbitration
under the then applicable arbitration rules of JAMS/Endispute (or any other
mutually agreed arbitrator) before a board of three arbitrators, as selected
thereunder.

          One arbitrator shall be selected by the Executive, one by Mattel and
the third by the two persons so selected, all in accordance with the then
applicable arbitration rules of JAMS/Endispute then in effect. In the event that
the arbitrator selected by the Executive 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 (each of whom shall be a member of the
"Independent List"

                                       12
<PAGE>

of retired judges with experience in resolving employment disputes) provided by
the Los Angeles office of JAMS/Endispute with the parties 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 mutually agreed upon by the parties. In
the absence of agreement, the arbitration shall be held in Los Angeles,
California.

          (b)   In consideration of the parties' agreement to submit to
arbitration all disputes with regard to this Agreement 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 Agreement shall provide the exclusive remedy, and each party
expressly waives any right the Executive 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 8 must be presented
in writing by the claiming party to the other within the period of the
applicable statue of limitations.

          (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 binding upon the parties hereto 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 8 shall
have separate validity and the invalidity of any part thereof shall not affect
the remaining parts.

          (g)   Any decision and award or order of a majority of the arbitrators
shall be final and binding between the parties as to all claims which were
raised in connection with the dispute to the full extent permitted by law. In
all other cases, the parties agree that a decision of a majority of arbitrators
shall be a condition precedent to the institution or maintenance of any legal,
equitable, administrative, or other formal proceeding by Mattel or the Executive
in connection with the dispute, and that the decision and opinion of the board
of arbitrators may be presented in any other forum on the merits of the dispute.

     9.   General Release.  The Executive acknowledges and agrees that this
          ---------------
Agreement includes the entire agreement and understanding between the parties
with regard to the Executive's employment, the termination thereof during the
Employment Period, and all amounts to which the Executive shall be entitled
whether during the term of employment or upon termination thereof.  The
Executive also acknowledges and agrees that the Executive's right to receive
severance pay and other benefits pursuant to subsections (b), (d) and (e) of
Section 5 of this Agreement is contingent upon the Executive's compliance with
the covenants set forth in Section 10 of this Agreement and the Executive's
execution and acceptance of the terms and

                                       13
<PAGE>

conditions of, and the effectiveness of the General Release of All Claims (the
"Release") attached hereto as Exhibit "A." If the Executive fails to comply with
the covenants set forth in Section 10 or if the Executive fails to execute the
Release within twenty-one (21) days of receipt of such Release, then the
Executive shall not be entitled to any severance payments or other benefits to
which the Executive would otherwise be entitled under subsections (b), (d) and
(e) of Section 5 of this Agreement.

     10.  The Executive's Covenants.
          -------------------------

          (a)   The Executive acknowledges that in the Executive's capacity in
management, the Executive 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. The Executive acknowledges that as a
result of the Executive's knowledge of the above information and in
consideration for the benefits offered by Mattel under this Agreement, the
Executive hereby agrees to reaffirm and recognize the Executive's continuing
obligations with respect to the use and disclosure of confidential and
proprietary information of Mattel pursuant to the Mattel's policies as set forth
in Mattel's form Executive Patent and Confidence Agreement, as revised from time
to time, and by this reference made a part hereof. Pursuant thereto, the
Executive acknowledges and agrees that Mattel shall be entitled to injunctive
relief to prevent a threatened misappropriation of one or more of the Mattel's
trade secrets or to halt an actual misappropriation of such trade secrets. The
Executive 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 Executive during the Executive's employment by Mattel or
any of its affiliated companies and which shall not be public knowledge. After
termination of the Executive's employment with Mattel, the Executive 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 Executive further represents and agrees that, unless otherwise
required by law, the Executive will keep the terms, amount and fact of this
Agreement completely confidential, and that the Executive will not hereafter
disclose any information concerning this Agreement to anyone other than
Executive's immediate family and professional representatives who will be
informed of and bound by this confidentiality clause.

          (b)   If the termination of the Executive's employment occurs prior to
a Change of Control, the Executive agrees that eligibility for severance
payments and other benefits under this Agreement are contingent upon the
Executive's agreement and compliance with Mattel's requirement that the
Executive does not accept employment nor an engagement as a consultant with a
competitor whereupon such position is comparable to the position the Executive
held with Mattel and where the Executive 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 the
Mattel's policies with respect to the use and disclosure of

                                       14
<PAGE>

confidential and proprietary information, as set forth in Mattel's form
Executive Patent and Confidence Agreement, as revised from time to time, and by
this reference made a part hereof. If the Executive accepts employment or a
consulting relationship with a competitor as described above, no further
payments nor eligibility for benefits continuation will be available to the
Executive as of the date the Executive commences such employment/consulting. It
is a specific condition of this Agreement that so long as the Executive is
receiving any payments or benefits under this Agreement with respect to a
termination of the Executive's employment prior to a Change of Control, the
Executive is obligated to immediately notify Mattel as to the specifics of the
new position that the Executive is planing to commence as an employee or
consultant for any company which is a competitor of Mattel.

          (c)   The Executive agrees that so long as the Executive is receiving
any payments or benefits under this Agreement and for a period of 12 months
thereafter, the Executive will not participate in recruiting any of Mattel's
employees or in the solicitation of Mattel's employees, and the Executive 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 Executive should wish to discuss possible
employment with any then-current Mattel employee during the 12-month period set
forth above, the Executive may request written permission to do so from the
senior human resources officer of Mattel who may, in his/her discretion, grant a
written exception to the no solicitation agreement set forth above, provided,
however, the Executive agrees that the Executive will not discuss any such
employment possibility with such employees prior to securing Mattel's
permission. If Mattel should decline to grant such permission, the Executive
agrees that the Executive will not at any time, either during or after the non-
solicitation period set forth above, advise the employee concerned that he/she
was the subject of a request under this paragraph or that Mattel refused to
grant the Executive the right to discuss an employment possibility with him/her.

     11.  Successors.
          ----------

          (a)   This Agreement is personal to the Executive and without the
prior written consent of Mattel shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.

          (b)   This Agreement 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, by an agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent as Mattel would be required to perform if no such succession
had taken place.

     12.  Amendment; Waiver.  This Agreement contains the entire agreement
          ---------  ------
between the parties with respect to the subject matter hereof and may be
amended, modified or changed only

                                       15
<PAGE>

by a written instrument executed by the Executive and Mattel. No provision of
this Agreement may be waived except by a writing executed and delivered by the
party sought to be charged. Any such written waiver will be effective only with
respect to the event or circumstance described therein and not with respect to
any other event or circumstance, unless such waiver expressly provides to the
contrary.

     13.  Long Term Incentive Compensation Plan Payments After a Change of
          ----------------------------------------------------------------
Control.
-------

          (a)   In the event of a Change of Control during the Employment
Period, Mattel shall pay the Executive a cash payment as provided under the
provisions of the LTIP, as in effect immediately prior to the Change of Control.

          (b)   In addition, in the event of a Change of Control during the
Employment Period, within thirty (30) days after the date of such Change of
Control, Mattel shall pay the Executive any unpaid amounts to which the
Executive is entitled with respect to any performance period under the LTIP, or
any other successor long-term incentive compensation plan of Mattel, that has
been completed as of the date of the Change of Control.

     14.  Certain Additional Payments by Mattel.
          -------------------------------------

          (a)   Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any Payment
(as defined below) would be subject to the Excise Tax (as defined below), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.  Notwithstanding the foregoing provisions of this
Section 14(a), if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Parachute Value of Payments (as defined below)
does not exceed 110% of the Safe Harbor Amount (as defined below), then no
Gross-Up Payment shall be made to the Executive and the Agreement Payments (as
defined below), in the aggregate, shall be reduced to (but not below zero) such
that the Parachute Value of all Payments equals the Safe Harbor Amount,
determined in such a manner as to maximize the Value of all Payments (as defined
below) actually made to the Executive.

          (b)   Subject to the provisions of Section 14(c), all determinations
required to be made under this Section 14, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by
PricewaterhouseCooper LLP or such other nationally recognized certified public
accounting firm as may be designated by the Executive (the "Accounting Firm")
which shall provide detailed supporting calculations both to Mattel and the
Executive within 15

                                       16
<PAGE>

business days of the receipt of notice from the Executive 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. Subject to Section 14(e)
below, any Gross-Up Payment, as determined pursuant to this Section 14, shall be
paid by Mattel to the Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon Mattel and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by Mattel should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Mattel exhausts
its remedies pursuant to Section 14(c) and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by Mattel to or for the benefit of the Executive.

          (c)   The Executive shall notify Mattel in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
Mattel of the Gross-Up Payment.  Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise Mattel of the nature of such claim
and the date on which such claim is requested to be paid.  The Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which it gives such notice to Mattel (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due).  If
Mattel notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:

                (i)     give Mattel any information reasonably requested by
Mattel relating to such claim,

                (ii)    take such action in connection with contesting such
claim as Mattel shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by Mattel,

                (iii)   cooperate with Mattel in good faith in order effectively
to contest such claim, and

                (iv)    permit Mattel to participate in any proceedings relating
to such claim;

provided, however, that Mattel shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.  Without limitation on the foregoing provisions
of this Section 14(c), Mattel shall control all proceedings taken in connection
with such contest and, at

                                       17
<PAGE>

its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as Mattel shall determine; provided, however, that if Mattel
directs the Executive to pay such claim and sue for a refund, Mattel shall
advance the amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, Mattel's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

          (d)   If, after the receipt by the Executive of an amount advanced by
Mattel pursuant to Section 14(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to Mattel's
complying with the requirements of Section 14(c)) promptly pay to Mattel the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto).  If, after the receipt by the Executive of an amount
advanced by Mattel pursuant to Section 14(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and
Mattel does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.

          (e)   Notwithstanding any other provision of this Section 14, Mattel
may withhold and pay over to the Internal Revenue Service for the benefit of the
Executive all or any portion of the Gross-Up Payment that it determines in good
faith that it is or may be in the future required to withhold, and the Executive
hereby consents to such withholding.

          (f)   Definitions.  The following terms shall have the following
                -----------
meanings for purposes of this Section 14.

                (i)     An "Agreement Payment" shall mean a Payment paid or
payable pursuant to this Agreement (disregarding this Section 14) and any
payment relating to the Loan Agreement.

                (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.

                                       18
<PAGE>

                (iii)   The "Net After-Tax Amount" of a Payment shall mean the
Value of a Payment net of all taxes imposed on the Executive with respect
thereto under Sections 1 and 4999 of the Code and applicable state and local
law, determined by applying the highest marginal rates that are expected to
apply to the Executive's taxable income for the taxable year in which the
Payment is made.

                (iv)    "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.

                (v)     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 the Executive, whether paid or payable pursuant
to this Agreement or otherwise.

                (vi)    The "Safe Harbor Amount" means the maximum Parachute
Value of all Payments that the Executive can receive without any Payments being
subject to the Excise Tax.

                (vii)   "Value" of a Payment shall mean the economic present
value of a Payment as of the date of the change of control for purposes of
Section 280G of the Code, as determined by the Accounting Firm using the
discount rate required by Section 280G(d)(4) of the Code.

     15.  Miscellaneous.
          -------------

          (a)   This Agreement shall be governed by and construed in accordance
with the laws of the State of California, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.

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

          If to Mattel:
          ------------

                              MATTEL, INC.
                              333 Continental Blvd.
                              El Segundo, CA 90245

          If to Executive:
          ---------------

                                       19
<PAGE>

                              Mr. Matthew Bousquette
                              MATTEL, INC.
                              333 Continental Blvd.
                              El Segundo, CA 90245

or to such other address as either party shall have furnished to the other in
writing in accordance herewith.

          (c)   Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction.

          (d)   Mattel may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

          (e)   Mattel agrees to reimburse the Executive for the reasonable
attorneys' fees and costs incurred by the Executive in connection with this
Agreement and the Loan Agreement, in an aggregate amount not to exceed $10,000.

                                       20
<PAGE>

     IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first set forth above.

EXECUTIVE:
                              MATTHEW C. BOUSQUETTE

                              /s/ Matthew C Bousquette
                              ----------------------------------

MATTEL:                       MATTEL, INC.,
                              a Delaware corporation

                              By:  /s/ Jill E. Barad  1/31/00
                                 -------------------------------

                              Its: Chief Executive Officer
                                  ------------------------------

ATTEST:

-------------------
Assistant Secretary
<PAGE>

                                  Exhibit "A"

                                GENERAL RELEASE
                                 OF ALL CLAIMS

1.   For valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the undersigned ("Executive") does hereby  on behalf of Executive
and Executive's successors, assigns, heirs and any and all other persons
claiming through Executive, 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, 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 Executive's employment with Mattel.

2.   This release includes a release of any rights or claims Executive 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 Americans 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 Executives, or otherwise regulate employment.
This also includes a release by Executive 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 Executive'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, such as claims relating to pension or health
plan benefits.
<PAGE>

3.   Notwithstanding any other provision of this Agreement, this release does
not apply to any rights or claims which arise after the execution of this
Agreement or to any rights or claims with respect to any breach of that certain
Executive Employment Agreement (the "Employment Agreement") by between Executive
and Mattel.

4.   This release, as contained within this Agreement, covers both claims that
Executive knows about and those Executive may not know about.  Executive
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 with
respect to unknown claims.  Executive understands the significance of
Executive's release of unknown claims and Executive'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 favor at the time of executing the
   release, which if known by him must have materially affected his settlement
   with the debtor."

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

5.   The provisions of this Agreement are severable, and if any part of it is
found to be unenforceable, the other paragraphs shall remain fully valid and
enforceable.  This Agreement 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.

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

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

Date:
     --------------------              ---------------------
                                            Executive

                                    2 of 2<PAGE>

                                                                  EXHIBIT 10.10

                                 LOAN AGREEMENT

          THIS LOAN AGREEMENT (the "Agreement") is entered into as of October
29, 1999, by and between Mattel, Inc., a Delaware corporation ("Lender") and
Matthew C. Bousquette ("Borrower").  Borrower and Lender are sometimes referred
to in this Agreement as a "Party" or, collectively, as the "Parties."

                                    RECITALS
                                    --------

          WHEREAS, Borrower desires to obtain from Lender a loan in the
principal amount of One Million Dollars ($1,000,000.00) (the "Loan"); and

          WHEREAS, as an additional incentive to retain Borrower in the employ
of Lender for a period of at least three years from the date hereof, Lender
desires to grant Borrower the Loan.

          NOW, THEREFORE, in consideration of the terms and conditions herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

                                   AGREEMENT
                                   ---------

          1.  Loan Terms.
              ----------

              (a) Principal Amount. Lender shall pay to the order of Borrower,
                  ----------------
on October 29, 1999, the principal sum of One Million Dollars ($1,000,000.00)
(the "Principal").

              (b) Interest.  Interest shall accrue on the outstanding Principal
                  --------
amount at the rate of seven percent (7%) per annum, compounded annually.

              (c) Promissory Note. Borrower's obligation to repay the Loan shall
                  ---------------
be evidenced by a promissory note substantially in the form attached as Exhibit
                                                                        -------
A hereto (the "Note").  Borrower shall execute and deliver to Lender the Note
-
concurrently with execution and delivery of this Agreement.

              (d) Repayment.  Borrower shall pay to the order of Lender the
                  ---------
Principal and accrued interest under the Note on October 30, 2002, provided,
however, that all Principal and accrued but unpaid interest shall become
immediately due and payable thirty (30) days after the date of  Borrower's
termination of employment with Lender for any reason prior to October 30, 2002,
unless Borrower commences arbitration with respect to the grounds for such
termination of employment within such thirty (30) day period, in which case all
Principal and accrued but unpaid interest shall be due and payable five (5) days
after notice to Borrower of the entry of a final judgement in such arbitration.
Interest shall continue to accrue during any such arbitration. The Loan shall be
subject to forgiveness as provided below.  The Loan shall be unsecured but with
full recourse against Borrower.
<PAGE>

          (e) Forgiveness.  The Loan, and Borrower's obligation to repay all
              -----------
outstanding Principal and accrued interest thereunder, shall be forgiven and
cancelled by Lender and the Note shall be cancelled on October 29, 2002 if
Borrower is employed by Lender on October 29, 2002, or earlier upon the date of
the termination of Borrower's employment with Lender prior to October 29, 2002
if such termination is by Lender without Cause (as defined below), by Borrower
for Good Reason (as defined below) or by reason of Borrower's death or
Disability (as defined below).  In addition, if the Loan is forgiven pursuant to
the preceding sentence and if Borrower is employed by Lender on October 29, 2002
and continues to be employed by Lender, on April 1, 2003, or such earlier date
as Borrower shall be required to pay federal, state or local income taxes with
respect to the forgiveness of the Loan, Lender shall pay Borrower an additional
payment (the "Gross-Up Payment") in an amount required to fully reimburse
Borrower with respect to all federal, state and local income taxes and
employment taxes with respect to the forgiveness of the Loan and with respect to
such taxes, such that upon receipt of the Gross-Up Payment Borrower shall have
no remaining obligations with respect to such taxes.   In addition, the Loan
shall be forgiven by Lender on the date of a Change of Control (as defined
below) of Lender if Borrower is employed by Lender on such date and Lender shall
pay Borrower the Gross-Up Payment with respect to the forgiveness of the Loan on
April 1, of the year following the year of the Change of Control, or such
earlier date as Borrower shall be required to pay federal, state or local income
taxes with respect to the forgiveness of the Loan.

               (f) Definitions.  For purposes of this Agreement, the following
                   -----------
terms shall have the meanings indicated below:

               "Cause" shall mean a reasonable determination of the Chief
Executive Officer of Lender that at least one of the following has occurred: (i)
one or more factually substantiated willful acts of dishonesty on Borrower's
part which are intended to result in Borrower's substantial personal enrichment
at the expense of Lender; (ii) repeated violations by Borrower of Borrower's
employment obligations to Lender which are demonstrably willful and deliberate
on Borrower's part and which resulted in material injury to Lender; (iii)
conduct of a factually substantiated criminal nature (commonly defined as a
"felony" in criminal statutes) which has or which is more likely than not to
have a material adverse effect on Lender's reputation or standing in the
community or on its continuing relationships with its customers or those who
purchase or use its products; or (iv) factually substantiated fraudulent conduct
in connection with the business or affairs of Lender, regardless of whether said
conduct is designed to defraud Lender or others; provided that, in each case,
Borrower has received written notice of the described activity, 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.

               "Change of Control" shall be deemed to have occurred if:

                   (i)  any "Person," which shall mean a "person" as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (other than Lender, any trustee or other fiduciary
holding securities under an employee benefit plan of Lender) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Lender representing 20% or more of the combined
voting power of Lender's then outstanding voting securities;

                                       2
<PAGE>

                   (ii)  during any period of 24 consecutive months,
individuals, who at the beginning of such period constitute the Board of
Directors of Lender, and any new director whose election by the Board of
Directors, or whose nomination for election by Lender's stockholders, was
approved by a vote of at least one-half (1/2) of the directors then in office
(other than in connection with a contested election), cease for any reason to
constitute at least a majority of the Board of Directors;

                   (iii) the stockholders of Lender approve (I) a plan of
complete liquidation of Lender or (II) the sale or other disposition by Lender
of all or substantially all of Lender's assets unless the acquirer of the assets
or its board of directors shall meet the conditions for a merger or
consolidation in subparagraphs (iv)(I) or (iv)(II) below; or

                   (iv)  the consummation of a merger or consolidation of Lender
with any other entity other than:

                         (I)    a merger or consolidation which results in the
voting securities of Lender outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the surviving entity's outstanding voting securities immediately after such
merger or consolidation; or

                         (II)   a merger or consolidation which would result in
the directors of Lender (who were directors immediately prior thereto)
continuing to constitute at least 50% of all directors of the surviving entity
immediately after such merger or consolidation.

                 In this paragraph (iv), "surviving entity" shall mean only an
entity in which all of Lender's stockholders immediately before such merger or
consolidation (determined without taking into account any stockholders properly
exercising appraisal or similar rights) become stockholders by the terms of such
merger or consolidation, and the phrase "directors of Lender (who were directors
immediately prior thereto)" shall include only individuals who were directors of
Lender at the beginning of the 24 consecutive month period preceding the date of
such merger or consolidation.

          "Disability" shall mean that Borrower suffers a disability due to
illness or injury which substantially and materially limits Borrower from
performing each of the essential functions of Borrower's job, even with
reasonable accommodation and becomes entitled to receive disability benefits
under Lender's Long-Term Disability Plan for exempt employees.

          "Good Reason" shall mean the good faith determination by Borrower that
any one or more of the following have occurred:

                   (i)   without the express written consent of Borrower, any
change(s) in any of the employment duties, authority, or responsibilities of
Borrower which is (are) inconsistent in any substantial respect with Borrower's
position, authority, duties, or responsibilities as of the date of this
Agreement;

                                       3
<PAGE>

                   (ii)  any failure by Lender to pay Borrower Borrower's salary
or earned bonuses, other than an insubstantial and inadvertent failure remedied
by Lender promptly after receipt of notice thereof given by Borrower; or

                   (iii) transferring Borrower outside of the greater Los
Angeles, California area without Borrower's express written consent.

          (g) Notwithstanding any other provision in this Agreement, in the
event that Borrower and Lender enter into an employment agreement after the date
of this Agreement, the definition of "Cause," "Change of Control," "Disability,"
and "Good Reason" as provided in such employment agreement (or any amendments
thereto) shall supercede the definitions in Section 1(f) of this Agreement.

      2.  Transfer of Notes.  Borrower shall not assign or transfer any of
          -----------------
Borrower's benefits or obligations arising under the Notes.   Lender reserves
the right to assign or transfer all or any part of, or any interest in, Lender's
rights and benefits under this Agreement or the Note to any successor to all or
part of its business or assets so long as any assignee or transferee expressly
agrees to assume and perform this Agreement in the same manner and to the same
extent as Lender would be required to perform if no such assignment or transfer
had taken place.

      3.  Amendment; Waiver.  This Agreement and the Note contain the entire
          -----------------
agreement between the Parties with respect to the subject matter hereof and may
be amended, modified or changed only by a written instrument executed by the
Parties.  No provision of this Agreement or the Note may be waived except by a
writing executed and delivered by the Party sought to be charged.  Any such
written waiver will be effective only with respect to the event or circumstance
described therein and not with respect to any other event or circumstance,
unless such waiver expressly provides to the contrary.

      4.  Choice of Law.  This Agreement shall be construed in accordance
          -------------
with and governed by the internal laws of the State of California, without
reference to principles of conflict of laws.

      5.  Headings.  The paragraph headings contained in this Agreement are
          --------
for reference purposes only and shall not affect in any way the meaning or
interpretation of the provisions hereof.

      6.  Notices.  All notices and other communications hereunder shall be
          -------
in writing; shall be delivered by hand delivery to the other party or mailed by
registered or certified mail, return receipt requested, postage prepaid; shall
be deemed delivered upon actual receipt; and shall be addressed as follows:

          If to Lender:
          ------------
                              MATTEL, INC.
                              333 Continental Blvd.
                              El Segundo, CA 90245
          If to Borrower:
          --------------
                              Mr. Matthew Bousquette

                                       4
<PAGE>

                              MATTEL, INC.
                              333 Continental Blvd.
                              El Segundo, CA 90245

or to such other address as either party shall have furnished to the other in
writing in accordance herewith.

          7.  Counterparts.  This Agreement may be executed in one or more
              ------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

          8.  Severability.  If any provision in or obligation under this
              ------------
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

          9.  No Third-Party Beneficiary Rights.  The Parties do not intend to
              ---------------------------------
confer and this Agreement shall not be construed to confer any rights or
benefits to  any person, firm, group, corporation or entity other than the
Parties.

                            [Signature Page Follows]

                                       5
<PAGE>

          IN WITNESS WHEREOF, this Agreement has been duly executed by the
Parties on the date first written above.

                                 LENDER

                                 By: /s/ Alan Kaye
                                    ------------------------------------------

                                 Its: Senior Vice President, Human Resources
                                     -----------------------------------------

                                 BORROWER

                                 /s/ Matthew C. Bousquette
                                 ---------------------------------------------
                                 Matthew C. Bousquette

                                      S-1
<PAGE>

                                   EXHIBIT A
                                   ---------

                                Promissory Note

$1,000,000.00                                            Date:  October 29, 1999

          Mattel, Inc. (herein referred to as "Holder") has agreed to advance to
Matthew C. Bousquette (herein referred to as "Maker") on October 29, 1999,
$1,000,000.00, and for said value received Maker promises to repay to the order
of Holder, the principal sum of $1,000,000.00 on or before October 30, 2002.
Maker shall owe to Holder interest on the principal sum in an amount equal to 7%
per annum, commencing on October 29, 1999, compounded annually, payable with
principal on October 30, 2002.

          If Maker fails to make any payment set forth above when due, Holder
may elect to declare the entire unpaid principal amount, including all unpaid
interest, immediately due and payable with or without notice.

          In the event of the termination of Maker's employment with Holder for
any reason, all outstanding principal and accrued interest hereunder is
immediately due and payable, with or without notice, thirty (30) days after the
date of such termination  unless Maker commences arbitration as provided in that
certain Loan Agreement (the "Loan Agreement"), dated as of October 29, 1999,
between Holder and Maker, unless this note and the loan it evidences shall have
been cancelled and forgiven pursuant to the terms of the Loan Agreement.

          In the event of commencement of legal action to enforce payment of
this note, the non-prevailing party agrees to pay the prevailing party's
reasonable attorney's fees and court costs in connection therewith.

                                      By: /s/ Matthew C. Bousquette
                                         --------------------------------------
                                         Matthew C.Bousquette      Date

Witnessed by:

/s/ Alan Kaye   12-21-99
----------------------------
                Date

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