Document:

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                                                                   EXHIBIT 10.45
                                 MATTEL, INC.

                           PERSONAL INVESTMENT PLAN

                          October 1, 2001 Restatement

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                               TABLE OF CONTENTS
                                                                            Page
                                                                            ----
ARTICLE I GENERAL..............................................................1
     1.1  Plan Name............................................................1
     1.2  Plan Purpose.........................................................1
     1.3  Effective Date.......................................................1
     1.4  Plan Mergers.........................................................1
ARTICLE II DEFINITIONS.........................................................3
     2.1  Accounts.............................................................3
     2.2  Affiliated Company...................................................5
     2.3  After-Tax Contributions..............................................5
     2.4  Before-Tax Contributions.............................................5
     2.5  Beneficiary..........................................................6
     2.6  Board of Directors...................................................6
     2.7  Code.................................................................6
     2.8  Committee............................................................6
     2.9  Company..............................................................6
     2.10 Company Contributions................................................6
     2.11 Company Matching Contributions.......................................6
     2.12 Company Stock........................................................6
     2.13 Compensation.........................................................7
     2.14 Deferral Limitation..................................................8
     2.15 Distributable Benefit................................................9
     2.16 Early Retirement Date................................................9
     2.17 Effective Date.......................................................9
     2.18 Eligible Employee....................................................9
     2.19 Employee.............................................................9
     2.20 Employment Commencement Date........................................10
     2.21 ERISA...............................................................10
     2.22 Fort Wayne Plan.....................................................10
     2.23 F-P Savings Plan....................................................10
     2.24 Highly Compensated Employee.........................................10
     2.25 Hour of Service.....................................................13
     2.26 Investment Manager..................................................14
     2.27 Murray Hourly Employee..............................................14
     2.28 Normal Retirement...................................................14
     2.29 Normal Retirement Date..............................................14
     2.30 Participant.........................................................14
     2.31 Participation Commencement Date.....................................14
     2.32 Participating Company...............................................14
     2.33 Period of Severance.................................................15
     2.34 Plan................................................................15
     2.35 Plan Administrator..................................................15
     2.36 Plan Year...........................................................15
     2.37 Pleasant Plan.......................................................15

                                       i
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     2.38 PrintPaks Plan......................................................15
     2.39 Severance Date......................................................15
     2.40 Total and Permanent Disability......................................16
     2.41 Trust or Trust Fund.................................................16
     2.42 Trustee.............................................................16
     2.43 Tyco Plan...........................................................16
     2.44 Valuation Date......................................................16
     2.45 Year of Service.....................................................17
ARTICLE III ELIGIBILITY AND PARTICIPATION.....................................18
     3.1  Eligibility to Participate..........................................18
     3.2  Commencement of Participation.......................................18
     3.3  Former Participants in F-P Savings Plan.............................19
     3.4  Former Participants in Tyco Plan....................................19
     3.5  Former Participants in PrintPaks Plan...............................19
     3.6  Former Participants in Pleasant Plan................................19
ARTICLE IV TRUST FUND.........................................................20
     4.1  Trust Fund..........................................................20
ARTICLE V EMPLOYEE CONTRIBUTIONS..............................................20
     5.1  Employee Contributions..............................................20
     5.2  Amount Subject to Election..........................................21
     5.3  Termination of, Change in Rate of, or Resumption of Deferrals.......22
     5.4  Limitation on Before-Tax Contributions by Highly Compensated
            Employees.........................................................23
     5.5  Provisions for Disposition of Excess Before-Tax Contributions by
            Highly Compensated Employees......................................26
     5.6  Provisions for Return of Annual Before-Tax Contributions in
            Excess of the Deferral Limitation.................................28
     5.7  Character of Amounts Contributed as Before-Tax Contributions........30
     5.8  Participant Transfer/Rollover Contributions.........................30
ARTICLE VI COMPANY CONTRIBUTIONS..............................................31
     6.1  General.............................................................31
     6.2  Requirement for Net Profits.........................................33
     6.3  Special Limitations on After-Tax Contributions and Company
            Matching Contributions............................................33
     6.4  Provision for Return of Excess After-Tax Contributions and Company
            Matching Contributions on Behalf of Highly Compensated Employees..36
     6.5  Forfeiture of Company Matching Contributions Attributable to Excess
            Deferrals or Contributions........................................38
     6.6  Investment and Application of Plan Contributions....................38
     6.7  Irrevocability......................................................40
     6.8  Company, Committee and Trustee Not Responsible for Adequacy of
             Trust Fund.......................................................40
ARTICLE VII PARTICIPANT ACCOUNTS AND ALLOCATIONS..............................41
     7.1  General.............................................................41
     7.2  Participants' Accounts..............................................41
     7.3  Revaluation of Participants' Accounts...............................41
     7.4  Treatment of Accounts Following Termination of Employment...........41
     7.5  Accounting Procedures...............................................42

                                       ii
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ARTICLE VIII VESTING; PAYMENT OF PLAN BENEFITS................................42
     8.1  Vesting.............................................................42
     8.2  Distribution Upon Retirement........................................44
     8.3  Distribution Upon Death Prior to Termination of Employment..........45
     8.4  Death After Termination of Employment...............................46
     8.5  Termination of Employment Prior to Normal Retirement Date...........46
     8.6  Withdrawals.........................................................48
     8.7  Form of Distribution................................................52
     8.8  Election for Direct Rollover of Distributable Benefit to Eligible
            Retirement Plan...................................................52
     8.9  Designation of Beneficiary..........................................54
     8.10 Facility of Payment.................................................55
     8.11 Requirement of Spousal Consent......................................56
     8.12 Additional Documents................................................56
     8.13 Company Stock Distribution..........................................56
     8.14 Valuation of Accounts...............................................57
     8.15 Forfeitures; Repayment..............................................58
     8.16 Loans...............................................................59
     8.17 Special Rule for Disabled Employees.................................61
     8.18 Election for Fully Vested Employees Transferred to Fisher-Price,
          Inc. ...............................................................63
     8.19 Provision for Small Benefits........................................63
     8.20 Special Provisions Applicable to Tyco Plan Accounts.................63
     8.21 Special Provisions Applicable to PrintPaks Plan Accounts............64
     8.22 Special Provisions Applicable to Fort Wayne Plan Accounts...........65
     8.23 Special Provisions Applicable to Pleasant Plan Nonelective Account..65
ARTICLE IX OPERATION AND ADMINISTRATION OF THE PLAN...........................66
     9.1  Plan Administration.................................................66
     9.2  Committee Powers....................................................66
     9.3  Investment Manager..................................................68
     9.4  Periodic Review.....................................................68
     9.5  Committee Procedure.................................................68
     9.6  Compensation of Committee...........................................69
     9.7  Resignation and Removal of Members..................................69
     9.8  Appointment of Successors...........................................69
     9.9  Records.............................................................70
     9.10 Reliance Upon Documents and Opinions................................70
     9.11 Requirement of Proof................................................71
     9.12 Reliance on Committee Memorandum....................................71
     9.13 Multiple Fiduciary Capacity.........................................71
     9.14 Limitation on Liability.............................................71
     9.15 Indemnification.....................................................71
     9.16 Allocation of Fiduciary Responsibility..............................72
     9.17 Bonding.............................................................72
     9.18 Against Certain Actions.............................................73
     9.19 Plan Expenses.......................................................73

                                      iii
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ARTICLE X SPECIAL PROVISIONS CONCERNING COMPANY STOCK EFFECTIVE AS
            OF OCTOBER 1, 1992................................................73
     10.1 Securities Transactions.............................................73
     10.2 Valuation of Company Securities.....................................74
     10.3 Allocation of Stock Dividends and Splits............................74
     10.4 Reinvestment of Dividends...........................................75
     10.5 Voting of Company Stock.............................................75
     10.6 Confidentiality Procedures..........................................76
     10.7 Securities Law Limitation...........................................76
ARTICLE XI MERGER OF COMPANY; MERGER OF PLAN..................................76
     11.1 Effect of Reorganization or Transfer of Assets......................76
     11.2 Merger Restriction..................................................76
ARTICLE XII PLAN TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS..............77
     12.1 Plan Termination....................................................77
     12.2 Discontinuance of Contributions.....................................77
     12.3 Rights of Participants..............................................78
     12.4 Trustee's Duties on Termination.....................................78
     12.5 Partial Termination.................................................79
     12.6 Failure to Contribute...............................................79
ARTICLE XIII APPLICATION FOR BENEFITS.........................................80
     13.1 Application for Benefits............................................80
     13.2 Action on Application...............................................80
     13.3 Appeals.............................................................80
ARTICLE XIV LIMITATIONS ON CONTRIBUTIONS......................................81
     14.1 General Rule........................................................81
     14.2 Annual Additions....................................................82
     14.3 Other Defined Contribution Plans....................................82
     14.4 Combined Plan Limitation (Defined Benefit Plan).....................82
     14.5 Adjustments for Excess Annual Additions.............................83
     14.6 Disposition of Excess Amounts.......................................85
     14.7 Affiliated Company..................................................85
ARTICLE XV RESTRICTION ON ALIENATION..........................................85
     15.1 General Restrictions Against Alienation.............................85
     15.2 Nonconforming Distributions Under Court Order.......................86
ARTICLE XVI PLAN AMENDMENTS...................................................87
     16.1 Amendments..........................................................87
     16.2 Retroactive Amendments..............................................88
     16.3 Amendment of Vesting Provisions.....................................88
ARTI15.2 VII TOP-HEAVY PROVISIONS.............................................88
     17.1 Minimum Company Contributions.......................................88
     17.2 Compensation........................................................89
     17.3 Top-Heavy Determination.............................................89
     17.4 Aggregation.........................................................91
ARTICLE XVIII MISCELLANEOUS...................................................92
     18.1 No Enlargement of Employee Rights...................................92
     18.2 Mailing of Payments; Lapsed Benefits................................92

                                       iv
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     18.3  Addresses..........................................................94
     18.4  Notices and Communications.........................................94
     18.5  Reporting and Disclosure...........................................94
     18.6  Governing Law......................................................94
     18.7  Interpretation.....................................................94
     18.8  Certain Securities Laws Rules......................................95
     18.9  Withholding for Taxes..............................................95
     18.10 Limitation on Company; Committee and Trustee Liability.............95
     18.11 Successors and Assigns.............................................95
     18.12 Counterparts.......................................................95

                                       v
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                            PERSONAL INVESTMENT PLAN

                                   ARTICLE I
                                    GENERAL

1.1  Plan Name.
     ---------

     This instrument evidences the terms of a tax-qualified retirement plan for
the Eligible Employees of Mattel, Inc. and its participating affiliates to be
known as the "Mattel, Inc. Personal Investment Plan" ("Plan").

1.2  Plan Purpose.
     ------------

     This Plan is intended to qualify under Code Section  401(a) as a profit
sharing plan, although contributions may be made to the Plan without regard to
profits, and with respect to the portion hereof intended to qualify as a
Qualified Cash or Deferred Arrangement, to satisfy the requirements of Code
Section 401(k).

1.3  Effective Date.
     --------------

     The original effective date of this Plan is November 1, 1983.  This
amendment and restatement of the Plan reflects the provisions of the Plan as in
effect as of October 1, 2001, except as otherwise expressly provided herein.

1.4  Plan Mergers.
     ------------

     Effective April 1, 1997, the Fisher-Price, Inc. Matching Savings Plan (the
"F-P Savings Plan") has been merged with and into this Plan and the account
balances under the former F-P Savings Plan have been transferred to
corresponding accounts under this Plan as follows:
<TABLE>
<CAPTION>
            F-P Savings Plan Account                      Corresponding Plan Account
<S>                                                <C>

Employee Contribution Account                      Before-Tax Contributions Account

Company Matching Account                           Company Matching Account

Discretionary Contribution Account                 Company Matching Account

Profit Sharing Account                             Transfer/Rollover Account

Rollover Contributions Account                     Transfer/Rollover Account
</TABLE>

                                       1
<PAGE>

     Effective January 2, 1998, the Tyco Toys, Inc. 401(k) Savings Plan ("Tyco
Plan") has been merged with and into this Plan and the account balances under
the former Tyco Plan have been transferred to corresponding accounts under this
Plan as follows:
<TABLE>
<CAPTION>
                Tyco Plan Account                         Corresponding Plan Account
<S>                                                <C>

Deferral Contributions Account                     Tyco Before-Tax Contributions Account

Regular Matching Contributions Account             Tyco Company Matching Account

Rollover Contribution Account                      Transfer/Rollover Account
</TABLE>

     Effective June 30, 2000, the PrintPaks, Inc. 401(k) Plan ("PrintPaks Plan")
has been merged with and into this Plan and the account balances under the
former PrintPaks Plan have been transferred to corresponding accounts under this
Plan as follows:
<TABLE>
<CAPTION>
             PrintPaks Plan Account                       Corresponding Plan Account
<S>                                                <C>

Elective Deferrals Account                         PrintPaks Before-Tax Contributions
                                                   Account

Matching Contributions Account                     PrintPaks Company Matching Account

Rollover Contributions Account                     Transfer/Rollover Account
</TABLE>

     Effective December 15, 2000, the Mattel-Fort Wayne Hourly 401(k) Plan (the
"Fort Wayne Plan") has been merged with and into this Plan and the account
balances under the former Fort Wayne Plan have been transferred to corresponding
accounts under this Plan as follows:
<TABLE>
<CAPTION>
             Fort Wayne Plan Account                      Corresponding Plan Account
<S>                                                <C>

Elective Deferrals Account                         Fort Wayne Plan Before-Tax
                                                   Contributions Account

Matching Contributions Account                     Fort Wayne Plan Company Matching
                                                   Account

Nonelective Contributions Account                  Fort Wayne Plan Nonelective Account

Rollover Contributions Account                     Transfer/Rollover Account
</TABLE>

                                       2
<PAGE>

     Effective October 1, 2001, the Pleasant Company Retirement Savings Plan
(the "Pleasant Plan") has been merged with and into this Plan and the account
balances under the former Pleasant Plan have been transferred to corresponding
accounts under this Plan as follows:
<TABLE>
<CAPTION>
              Pleasant Plan Account                       Corresponding Plan Account
<S>                                                    <C>

Employer Nonelective Contributions                      Pleasant Plan Nonelective Account
Account

Rollover Contributions Account                          Transfer/Rollover Account
</TABLE>

                                   ARTICLE II
                                  DEFINITIONS

2.1  Accounts.
     --------

          "Accounts" or "Participant's Accounts" means the following Plan
accounts maintained by the Committee for each Participant as required by Article
VII:

          (a) "Before-Tax Contributions Account" shall mean the account
     established and maintained for each Participant under Article VII for
     purposes of holding and accounting for amounts held in the Trust Fund which
     are attributable to Participant Before-Tax Contributions, and any earnings
     thereon, in accordance with Article V.

          (b) "After-Tax Contributions Account" shall mean the account
     established and maintained for each Participant under Article VII to
     reflect amounts held in the Trust Fund on behalf of such Participant which
     are attributable to Participant After-Tax Contributions and any earnings
     thereon, in accordance with Article V.

          (c) "Company Matching Account" shall mean the account established and
     maintained for each Participant under Article VII for purposes of holding
     and accounting for amounts held in the Trust Fund which are attributable to
     Company Matching Contributions, and any earnings thereon, pursuant to
     Section 6.1(d).

          (d) "Company Contributions Account" shall mean the account established
     and maintained for each Participant under Article VII for purposes of
     holding and accounting for amounts held in the Trust Fund which are
     attributable to Company Contributions, and any earnings thereon, pursuant
     to Section 6.1(a).

                                       3
<PAGE>

          (e) "Transfer/Rollover Account" shall mean the account established and
     maintained for each Participant under Article VII for purposes of holding
     and accounting for amounts held in the Trust Fund which are attributable to
     amounts distributed to the Participant from any other plan qualified under
     Code Section 401(a), or from an Individual Retirement Account attributable
     to employer contributions under another plan qualified under Code Section
     401(a), and any earnings on such amounts, as provided in Section 5.8.

          (f) "Tyco Before-Tax Contributions Account" shall mean the account
     established and maintained for each Participant under Article VII for
     purposes of holding and accounting for amounts held in the Trust Fund which
     are attributable to Participant before-tax contributions to the Tyco Plan,
     and any earnings thereon, in accordance with Article V.

          (g) "Tyco Company Matching Account" shall mean the account established
     and maintained for each Participant under Article VII for purposes of
     holding and accounting for amounts held in the Trust Fund which are
     attributable to matching contributions to the Tyco Plan, and any earnings
     thereon, in accordance with Article V.

          (h) "PrintPaks Before-Tax Contributions Account" shall mean the
     account established and maintained for each Participant under Article VII
     for purposes of holding and accounting for amounts held in the Trust Fund
     which are attributable to Participant before-tax contributions to the
     PrintPaks Plan, and any earnings thereon, in accordance with Article V.

          (i) "PrintPaks Company Matching Account" shall mean the account
     established and maintained for each Participant under Article VII for
     purposes of holding and accounting for amounts held in the Trust Fund which
     are attributable to matching contributions to the PrintPaks Plan, and any
     earnings thereon, in accordance with Article V.

          (j) "Fort Wayne Plan Before-Tax Contributions Account" shall mean the
     account established and maintained for each Participant under Article VII
     for purposes of holding and accounting for amounts held in the Trust Fund
     which are attributable to Participant before-tax contributions to the Fort
     Wayne Plan, and any earnings thereon, in accordance with Article V.

                                       4
<PAGE>

          (k) "Fort Wayne Plan Company Matching Account" shall mean the account
     established and maintained for each Participant under Article VII for
     purposes of holding and accounting for amounts held in the Trust Fund which
     are attributable to matching contributions to the Fort Wayne Plan, and any
     earnings thereon, in accordance with Article V.

          (l) "Fort Wayne Plan Nonelective Account" shall mean the account
     established and maintained for each Participant under Article VII for
     purposes of holding and accounting for amounts held in the Trust Fund which
     are attributable to nonelective contributions to the Fort Wayne Plan, and
     any earnings thereon, in accordance with Article V.

          (m) "Pleasant Plan Nonelective Account" shall mean the account
     established and maintained for each Participant under Article VII for
     purposes of holding and accounting for amounts held in the Trust Fund which
     are attributable to nonelective contributions to the Pleasant Plan, and
     earnings thereon, in accordance with Article V.

2.2  Affiliated Company.
     ------------------

     "Affiliated Company" shall mean:

          (a) Any corporation that is included in a controlled group of
     corporations, within the meaning of Section 414(b) of the Code, that
     includes the Company,

          (b) Any trade or business that is under common control with the
     Company within the meaning of Section 414(c) of the Code,

          (c) Any member of an affiliated service group, within the meaning of
     Section 414(m) of the Code, that includes the Company, and

          (d) Any other entity required to be aggregated with the Company
     pursuant to regulations under Section 414(o) of the Code.

2.3  After-Tax Contributions.
     -----------------------

     "After-Tax Contributions" shall mean those contributions by a Participant
to the Trust Fund in accordance with Article V which do not qualify as Before-
Tax Contributions.

2.4  Before-Tax Contributions.
     ------------------------

     "Before-Tax Contributions" shall mean those amounts contributed to the Plan
as a result of a salary or wage reduction election made by the Participant in
accordance with Article V, to

                                       5
<PAGE>

the extent such contributions qualify for treatment as contributions made under
a "qualified cash or deferred arrangement" within the meaning of Section 401(k)
of the Code.

2.5  Beneficiary.
     -----------

     "Beneficiary" or "Beneficiaries" shall mean the person or persons last
designated by a Participant as set forth in Section 8.9 or, if there is no
designated Beneficiary or surviving Beneficiary, the person or persons
designated in Section 8.9 to receive the interest of a deceased Participant in
such event.

2.6  Board of Directors.
     ------------------

     "Board of Directors" shall mean the Board of Directors (or its delegate) of
Mattel, Inc. as it may from time to time be constituted.

2.7  Code.
     ----

     "Code" shall mean the Internal Revenue Code of 1986, as in effect on the
date of execution of this Plan document and as thereafter amended from time to
time.

2.8  Committee.
     ---------

     "Committee" shall mean the Committee described in Article IX hereof.

2.9  Company.
     -------

     "Company" shall mean Mattel, Inc., or any successor thereof, if its
successor shall adopt this Plan.

2.10  Company Contributions.
      ---------------------

     "Company Contributions" shall mean amounts paid by a Participating Company
into the Trust Fund in accordance with Section 6.1(a).

2.11  Company Matching Contributions.
      ------------------------------

     "Company Matching Contributions" shall mean amounts paid by a Participating
Company into the Trust Fund in accordance with Section 6.1(d).

2.12  Company Stock.
      -------------

     "Company Stock" shall mean whichever of the following is applicable:

          (a) So long as the Company has only one class of stock, that class of
     stock.

                                       6
<PAGE>

          (b) In the event the Company at any time has more than one class of
     stock, the class (or classes) of the Company's stock constituting "employer
     securities" as that term is defined in Section 409(1) of the Code.

2.13  Compensation.
      ------------

          (a) "Compensation" shall mean the full salary and wages (including
     overtime, shift differential and holiday, vacation and sick pay) and other
     compensation paid by a Participating Company during a Plan Year by reason
     of services performed by an Employee, subject, however, to the following
     special rules and to the provisions of Subsections 2.13(b) through (e):

               (i) Except as specified in (ii) below, fringe benefits and
          contributions by the Participating Company to and benefits under any
          employee benefit shall not be taken into account in determining
          compensation;

               (ii) Amounts deducted pursuant to authorization by an Employee or
          pursuant to requirements of law (including amounts of salary or wages
          deferred in accordance with the provisions of Section 5.1 and which
          qualify for treatment under Code Section 401(k) or amounts deducted
          pursuant to Code Section 125, 129 or 132(f)(4)) shall be included in
          "Compensation" except as specifically provided to the contrary
          elsewhere in this Plan;

               (iii)  Amounts paid or payable by reason of services performed
          during any period in which an Employee is not a Participant under the
          Plan shall not be taken into account in determining Compensation;

               (iv) Amounts deferred by the Employee pursuant to non-qualified
          deferred compensation plans, regardless of whether such amounts are
          includable in the Employee's gross income for his current taxable
          year, shall not be taken into account in determining Compensation;

               (v) Amounts included in any Employee's gross income with respect
          to life insurance as provided by Code Section 79 shall not be taken
          into account in determining compensation; and

               (vi) Amounts paid to Employees as "bonuses" shall not be taken
          into account in determining compensation.

                                       7
<PAGE>

          (b) To the extent permitted by Code Section 415(c)(3), in the case of
     a Participant who ceases actively to perform services for a Participating
     Company prior to January 1, 1989 because such person has sustained a Total
     and Permanent Disability, such Participant shall be deemed to have
     "Compensation" to the extent provided in the provisions of Section 8.17(d),
     for the limited purposes of determining the amount of certain contributions
     to this Plan.

          (c) The term "Compensation," for purposes of Article XIV of this Plan,
     shall mean wages as defined in Section 3401(a) and all other payments of
     compensation to an Employee by the Company (in the course of the Company's
     trade or business) for which the Company is required to furnish the
     Employee a written statement under Code Sections 6041(d) and 6051(a)(3).
     Compensation for purposes of this Subsection (c) shall be determined
     without regard to any rules under Code Section 3401(a) that limit the
     remuneration included in wages based on the nature or location of the
     employment or the services performed (such as the exception for
     agricultural labor in Code Section 3401(a)(2)).

          (d) In the event that this Plan is deemed a Top-Heavy Plan as set
     forth in Article XVII, the term "Compensation" shall not include amounts
     excluded by reason of and to the extent provided by Sections 17.1 and 17.2.

          (e) Effective for Plan Years commencing on and after January 1, 1994,
     the "Compensation" of any Employee taken into account under the Plan for
     any Plan Year shall not exceed $150,000 (or such adjusted amount as may be
     prescribed for such Plan Year pursuant to Section 401(a)(17) of the Code).
     Effective for Plan Years commencing on and after January 1, 2002, the
     "Compensation" of any Employee taken into account under the Plan for any
     Plan Year shall not exceed $200,000 (or such adjusted amount as may be
     prescribed for such Plan Year pursuant to Section 401(a)(17) of the Code).

2.14  Deferral Limitation.
      -------------------

     "Deferral Limitation" shall mean the dollar limitation on the exclusion of
elective deferrals from a Participant's gross income under Section 402(g) of the
Code, as in effect with respect to the taxable year of the Participant, or such
greater limitation on the exclusion of elective deferrals permitted under
Section 5.2(f) and Section 414(v) of the Code, if applicable.

                                       8
<PAGE>

2.15  Distributable Benefit.
      ---------------------

     "Distributable Benefit" shall mean the vested interest of a Participant in
this Plan which is determined and distributable in accordance with the
provisions of Article VIII following the termination of the Participant's
employment.

2.16  Early Retirement Date.
      ---------------------

     "Early Retirement Date" shall mean the later of the Participant's 55th
birthday or the date on which the Participant completes three Years of Service.

2.17  Effective Date.
      --------------

     "Effective Date" shall mean November 1, 1983, which shall be the original
effective date of this Plan.

2.18  Eligible Employee.
      -----------------

     "Eligible Employee" shall include any individual who (i) prior to October
1, 2001 is at least age twenty and one-half (20-1/2) or on or after October 1,
2001 is at least age twenty (20) and (ii) is employed by a Participating
Company, except

          (a) any Employee who is covered by a collective bargaining agreement
     to which a Participating Company is a party if there is evidence that
     retirement benefits were the subject of good faith bargaining between the
     Participating Company and the collective bargaining representative, unless
     the collective bargaining agreement provides for coverage under this Plan,

          (b) any Employee who is a "leased employee," within the meaning of
     Code Section 414(n),

          (c) any Employee who is an intern, toy tester, department aide,
     associate retail services representative or in the following pay groups:
     AFL or MAG, or

          (d)  Contracted Labor.

2.19  Employee.
      --------

          (a) "Employee" shall mean each person currently employed in any
     capacity by the Company or Affiliated Company any portion of whose income
     is subject to withholding of income tax and/or for whom Social Security
     contributions are made by the Company.  The term "Employee" also includes a
     "leased employee," to the extent required by Code Section 414(n).

                                       9
<PAGE>

          (b) Although Eligible Employees are the only class of Employees
     eligible to participate in this Plan, the term "Employee" is used to refer
     to persons employed in a non-Eligible Employee capacity as well as Eligible
     Employee category.  Thus, those provisions of this Plan that are not
     limited to Eligible Employees, such as those relating to Hours of Service,
     apply to both Eligible and non-Eligible Employees.

2.20  Employment Commencement Date.
      ----------------------------

     "Employment Commencement Date" shall mean each of the following:

          (a) The date on which an Employee first performs an Hour of Service in
     any capacity for the Company or an Affiliated Company with respect to which
     the Employee is compensated or is entitled to compensation by the Company
     or the Affiliated Company.

          (b) In the case of an Employee who has a one-year Period of Severance
     and who is subsequently reemployed by the Company or an Affiliated Company,
     the term "Employment Commencement Date" shall also mean the first day
     following such one-year Period of Severance on which the Employee performs
     an Hour of Service for the Company or an Affiliated Company with respect to
     which he is compensated or entitled to compensation by the Company or
     Affiliated Company.

2.21  ERISA.
      -----

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

2.22  Fort Wayne Plan.
      ---------------

     "Fort Wayne Plan" shall mean the Mattel-Fort Wayne Hourly 401(k) Plan,
which was merged with and into this Plan effective December 15, 2000.

2.23  F-P Savings Plan.
      ----------------

     "F-P Savings Plan" shall mean the Fisher-Price, Inc. Matching Savings Plan,
which was merged with and into this Plan effective April 1, 1997.

2.24  Highly Compensated Employee.
      ---------------------------

          (a) "Highly Compensated Employee" shall mean any Employee who performs
     services for the Company or an Affiliated Company during the Determination
     Year (as defined below) and who:

                                       10
<PAGE>

                (i)   was at any time during the Determination Year or the Look
          Back Year a five percent (5%) owner described in Section 17.3; or
                (ii)  for the Look Back Year:
                      (A)  received Compensation from the Company or an
                Affiliated Company in excess of eighty thousand dollars
                ($80,000) (adjusted for any cost-of-living increase as permitted
                by Section 414(q) of the Code); and
                      (B)  was in the "top-paid group."
     The determination of which Employees are Highly Compensated Employees shall
     be made in accordance with the provisions of Section 414(q) of the Code.
           (b)  Determination of a Highly Compensated Employee shall be in
     accordance with the following definitions and special rules:
                (i)   "Determination Year" means the Plan Year for which the
          determination of Highly Compensated Employee is being made.
                (ii)  "Look Back Year" is the twelve (12) month period preceding
          the Determination Year.
                (iii) An Employee shall be treated as a 5% owner for any
          Determination Year or Look Back Year if at any time during such Year
          such Employee was a 5% owner (as defined in Section 17.3).
                (iv)  An Employee is in the "top-paid group" of Employees for
          any Determination Year or Look Back Year if such Employee is in the
          group consisting of the top twenty percent (20%) of the Employees when
          ranked on the basis of Compensation paid during such Year.
                (v)   For purposes of this Section the term "Compensation" means
          Compensation as defined in Code Section 415(c)(3), as set forth in
          Section 2.13(c), without regard to the limitations of Section 2.13(e);
          provided, however, the determination under this Paragraph (vi) shall
          be made without regard to Code Sections 125, 132(f)(4), 402(a)(8), and
          401(h)(1)(B), and in the case of Participant contributions made
          pursuant to a salary reduction agreement, without regard to Code
          Section 403(b).
                (vi)  For purposes of determining the number of Employees in the
          "top-paid" group under this Section, the following Employees shall be
          excluded:

                                       11
<PAGE>

                      (A)  Employees who have not completed six (6) months of
               service,
                      (B)  Employees who normally work less than 17 1/2 hours
               per week,
                      (C)  Employees who normally work not more than six (6)
               months during any Plan Year, and
                      (D)  Employees who have not attained age 20,
                      (E)  Except to the extent provided in Treasury
               Regulations, Employees who are included in a unit of employees
               covered by an agreement which the Secretary of Labor finds to be
               a collective bargaining agreement between Employee
               representatives and the Company, and
                      (F)  Employees who are nonresident aliens and who receive
               no earned income (within the meaning of Code Section 911(d)(2))
               from the Company which constitutes income from sources within the
               United States (within the meaning of Code Section 861(a)(3)).
                      The Company may elect to apply Subparagraphs (A) through
               (D) above by substituting a shorter period of service, smaller
               number of hours or months, or lower age for the period of
               service, number of hours or months, or (as the case may be) than
               as specified in such Subparagraphs.
               (vii)  A former Employee shall be treated as a Highly Compensated
          Employee if
                      (A)  such Employee was a Highly Compensated Employee when
               such Employee incurred a severance, or
                      (B)  such Employee was a Highly Compensated Employee at
               any time after attaining age fifty-five (55).
               (viii) Code Sections 414(b), (c), (m) and (o) shall be applied
          before the application of this Section.  Also, the term "Employee"
          shall include "leased employees," within the meaning of Code Section
          414(n), unless such leased Employee is covered under a "safe harbor"
          plan of the leasing organization and not covered under a qualified
          plan of the Affiliated Company.

                                       12
<PAGE>

          (c)  To the extent permissible under Code Section 414(q), the
      Committee may determine which Employees shall be categorized as Highly
      Compensated Employees by applying a simplified method and calendar year
      election prescribed by the Internal Revenue Service.

2.25  Hour of Service.
      ---------------

          (a)  "Hour of Service" of an Employee shall mean the following:
               (i)   Each hour for which the Employee is paid by the Company or
          an Affiliated Company or entitled to payment for the performance of
          services as an Employee.
               (ii)  Each hour in or attributable to a period of time during
          which the Employee performs no duties (irrespective of whether he has
          terminated his Employment) due to a vacation, holiday, illness,
          incapacity (including pregnancy or disability), layoff, jury duty,
          military duty or a Leave of Absence, for which he is so paid or so
          entitled to payment, whether direct or indirect.  However, no such
          hours shall be credited to an Employee if such Employee is directly or
          indirectly paid or entitled to payment for such hours and if such
          payment or entitlement is made or due under a plan maintained solely
          for the purpose of complying with applicable workmen's compensation,
          unemployment compensation or disability insurance laws or is a payment
          which solely reimburses the Employee for medical or medically related
          expenses incurred by him.
               (iii) Each hour for which he is entitled to back pay,
          irrespective of mitigation of damages, whether awarded or agreed to by
          the Company or an Affiliated Company, provided that such Employee has
          not previously been credited with an Hour of Service with respect to
          such hour under paragraphs (i) or (ii) above.
          (b)  Hours of Service under Subsections (a)(ii) and (a)(iii) shall be
     calculated in accordance with Department of Labor Regulation 29 C.F.R. (S)
     2530.200b-2(b).  Hours of Service shall be credited to the appropriate
     computation period according to the Department of Labor Regulation (S)
     2530.200b-2(c).  However, an Employee will not be considered as being
     entitled to payment until the date when the Company or the

                                       13
<PAGE>

      Affiliated Company would normally make payment to the Employee for such
      Hour of Service.
2.26  Investment Manager.
      ------------------

      "Investment Manager" means the one or more Investment Managers, if any,
that are appointed pursuant to Section 9.3.
2.27  Murray Hourly Employee.
      ----------------------

      "Murray Hourly Employee" shall mean an Employee at the Murray, Kentucky
location of Mattel Operations, Inc. who is compensated on a per hour basis.
2.28  Normal Retirement.
      -----------------

      "Normal Retirement" shall mean a Participant's termination of employment
on or after attaining the Plan's Normal Retirement Date.
2.29  Normal Retirement Date.
      ----------------------

      "Normal Retirement Date" shall be the Participant's sixty-fifth birthday.
2.30  Participant.
      -----------

      "Participant" shall mean any Eligible Employee who has satisfied the
participation eligibility requirements set forth in Section 3.1 and has begun
participation in this Plan in accordance with the provisions of Section 3.2.
2.31  Participation Commencement Date.
      -------------------------------

      "Participation Commencement Date" shall mean the day on which an
Employee's participation in this Plan may commence in accordance with the
provisions of Article III.
2.32  Participating Company.
      ---------------------

      "Participating Company" shall mean Mattel, Inc., Mattel Sales, Inc. and
each other Affiliated Company (or similar entity) that has been granted
permission by the Board of Directors to participate in this Plan, provided that
contributions are being made hereunder for the Employees of such Participating
Company.  Permission to become a Participating Company shall be granted under
such conditions and upon such conditions as the Board of Directors deems
appropriate.  Effective April 1, 1997, Fisher-Price, Inc. and each other
adopting employer in the F-P Savings Plan shall be a Participating Company in
this Plan.  Effective January 2, 1998, Tyco Toys, Inc. and each other adopting
employer in the Tyco Plan shall be a Participating Company

                                       14
<PAGE>

in this Plan. Effective March 1, 1998, PrintPaks, Inc. and each other adopting
employer in the PrintPaks Plan shall be a Participating Company in this Plan.
Effective October 1, 2001, Pleasant Company and such other adopting employer in
the Pleasant Plan shall be a Participating Company in this Plan.
2.33  Period of Severance.
      -------------------

      "Period of Severance" shall mean the period of time commencing on the
Participant's Severance Date and continuing until the first day, if any, on
which the Participant completes one or more Hours of Service following such
Severance Date.
2.34  Plan.
      ----

      "Plan" shall mean the Mattel, Inc. Personal Investment Plan herein set
forth, and as it may be amended from time to time.
2.35  Plan Administrator.
      ------------------

      "Plan Administrator" shall mean the administrator of the Plan, within the
meaning of Section 3(16)(A) of ERISA.  The Plan Administrator shall be Mattel,
Inc.
2.36  Plan Year.
      ---------

      "Plan Year" shall mean the fiscal year of the Company.  Effective as of
January 1, 1992, the fiscal year of the Company is the twelve consecutive month
period ending December 31.
2.37  Pleasant Plan.
      -------------

      "Pleasant Plan" shall mean the Pleasant Company Retirement Savings Plan,
which was merged with and into this Plan effective October 1, 2001.
2.38  PrintPaks Plan.
      --------------

      "PrintPaks Plan" shall mean the PrintPaks, Inc. 401(k) Plan, which was
merged with and into this Plan effective June 30, 2000.
2.39  Severance Date.
      --------------

      "Severance Date" shall mean the earlier of (a) the date on which an
Employee quits, retires, is discharged, or dies; or (b) the first anniversary of
the first date of a period in which an Employee remains absent from service
(with or without pay) with the Company or an Affiliated Company for any reason
other than quit, retirement, discharge or death (such as vacation, holiday,
sickness, disability, leave of absence or layoff).

                                       15
<PAGE>

      In the case of an Employee who has a maternity or paternity absence
described in Code Sections 410(a)(5)(E) and 411(a)(6)(E), the Employee's Period
of Severance will begin on the second anniversary of the date the Employee is
first absent for a maternity or paternity leave, provided the Employee does not
perform an Hour of Service during such period.  The first one-year period of the
absence will be included in the Employee's period of service and the second one-
year period is neither part of the period of service nor part of the Period of
Severance.  The Committee may require that the Employee furnish such timely
information as the Committee may reasonably require to establish that the
absence from work is for such a maternity or paternity absence, and the number
of days for which there was such an absence.
2.40  Total and Permanent Disability.
      ------------------------------

      An individual shall be considered to be suffering from a Total and
Permanent Disability if he is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to last for a continuous period of not less than 12
months.  An individual's disabled status shall be determined by the Committee,
based on such evidence as the Committee determines to be sufficient.  The rules
of this Section 2.44 shall be applied by the Committee in accordance with
Treasury Regulations, if any, promulgated under Code Section 415 or Code Section
22(e)(3).
2.41  Trust or Trust Fund.
      -------------------

      "Trust" or "Trust Fund" shall mean the one or more trusts created for
funding purposes under the Plan.
2.42  Trustee.
      -------

      "Trustee" shall mean the corporation appointed by the Company to act as
Trustee of the Trust Fund, or any successor or other corporation acting as a
trustee of the Trust Fund.
2.43  Tyco Plan.
      ---------

     "Tyco Plan" shall mean the Tyco Toys, Inc. 401(k) Savings Plan, which was
merged with and into this Plan effective January 2, 1998.
2.44  Valuation Date.
      --------------

      "Valuation Date" shall mean the last day of each calendar month and such
additional dates as may be determined in rules prescribed by the Committee.

                                       16
<PAGE>

2.45  Year of Service.
      ---------------

      "Year of Service" means three hundred sixty five (365) days included in a
period of service recognized under this Section 2.45.
          (a)  Subject to the succeeding provisions of this Section 2.45, a
      Participant shall be credited with a period of service equal to the
      elapsed time between his Employment Commencement Date and his subsequent
      Severance Date.
          (b)  A Participant additionally shall receive credit for a Period of
      Severance in computing his service hereunder if such Participant completes
      an Hour of Service prior to the first anniversary of his Severance Date.
      Except as provided in this Section 2.45(b), a Period of Severance shall
      not be included in a Participant's period of service hereunder.
          (c)  If a Participant who does not have any vested interest in his
      accounts under the Plan has five (5) consecutive one-year Periods of
      Severance, any prior period of service shall be disregarded for all
      purposes of the Plan.  Periods of service credited under this Section 2.45
      before such five (5) consecutive one-year Periods of Severance shall not
      include any period or periods of service that are not required to be taken
      into account under this Section 2.45(c) by reason of any prior Periods of
      Severance.
          (d)  The number of a Participant's Years of Service for vesting shall
      be determined by reference to each three hundred sixty five day period of
      service recognized under this Section 2.45, whether or not consecutive.
          (e)  Notwithstanding any other provision of this Plan, service
      performed by Employees for employers other than the Company or Affiliated
      Companies may be taken into account in computing service for any purpose
      of this Plan to the extent and in the manner determined by resolution of
      the Committee in its sole discretion.
          (f)  Notwithstanding any other provision of this Plan, service
      performed for an Affiliated Company prior to such entity becoming an
      Affiliated Company may be taken into account for purposes of computing
      service for any purpose of this Plan to the extent and in the manner
      determined by resolution of the Board of Directors of the Company in its
      sole discretion.
          (g)  In the case of a Participant who was actively employed by Tyco
      Toys, Inc. or its affiliates on the date of acquisition of Tyco Toys, Inc.
      by the Company, service performed by such Participant for Tyco Toys, Inc.
      and its affiliates for periods prior to

                                       17
<PAGE>

      the date of such acquisition shall be taken into account for purposes of
      determining such Participant's vested interest in his Accounts under this
      Plan.
          (h)  In the case of a Participant who was actively employed by
      PrintPaks, Inc. or its affiliates on the date of acquisition of PrintPaks,
      Inc. by the Company, service performed by such Participant for PrintPaks,
      Inc. and its affiliates for periods prior to the date of such acquisition
      shall be taken into account for purposes of determining such Participant's
      vested interest in his Accounts under this Plan.
          (i)  In the case of a Participant who was actively employed by
      Pleasant Company or its affiliates on the date of acquisition of Pleasant
      Company by the Company, service performed by such Participant for Pleasant
      Company and its affiliates for periods prior to the date of such
      acquisition shall be taken into account for purposes of determining such
      Participant's vested interest in his Accounts under this Plan.

                                  ARTICLE III
                         ELIGIBILITY AND PARTICIPATION

3.1   Eligibility to Participate.
      --------------------------

          (a)  Every Eligible Employee who is not a Murray Hourly Employee shall
      become eligible to participate in the Plan on the date he becomes an
      Eligible Employee. Every Eligible Employee who is a Murray Hourly Employee
      shall become eligible to participate in the Plan on the later of (i) the
      date he becomes an Eligible Employee or (ii) the date he completes ninety
      (90) days of service.
          (b)  If an Eligible Employee ceases to be an Eligible Employee he
      shall again become eligible to participate in the Plan on the date he
      again becomes an Eligible Employee.
          (c)  Notwithstanding the preceding rules of this Section 3.1, the
      actual date upon which an Employee will commence participation will be
      determined pursuant to the rules of Section 3.2.
3.2   Commencement of Participation.
      -----------------------------

          (a)  Each Eligible Employee shall be entitled automatically to
      commence participation in this Plan with respect to the Company
      Contributions described in Section 6.1(a) and (b).

                                       18
<PAGE>

          (b)  From January 1, 1987 to June 30, 1988, each Eligible Employee
      shall be entitled to commence Employee contributions as set forth in
      Article V and Company Matching Contributions as set forth in Section
      6.1(d) on the January 1 after their Employment Commencement Date.
          (c)  Effective July 1, 1988, each Eligible Employee shall be entitled
      to commence After-Tax Contributions and Company Matching Contributions as
      set forth in Section 6.1(d) as of the date he becomes an Eligible
      Employee.
          (d)  Effective January 1, 1989, each Eligible Employee shall be
      entitled to commence Before-Tax Contributions and Company Matching
      Contributions as set forth in Section 6.1(d) as of the date he becomes an
      Eligible Employee.
          (e)  The Committee may prescribe such rules as it deems necessary or
      appropriate regarding times and procedures for Participants to make
      elections to contribute a portion of Compensation as provided in Section
      5.1.
3.3   Former Participants in F-P Savings Plan.
      ---------------------------------------

      Notwithstanding anything in this Article to the contrary, any individual
who was a participant in the F-P Savings Plan on March 31, 1997 shall
automatically become a Participant in this Plan effective as of April 1, 1997.
3.4   Former Participants in Tyco Plan.
      --------------------------------

      Notwithstanding anything in this Article to the contrary, any individual
who was a participant in the Tyco Plan on December 31, 1997, shall automatically
become a Participant in this Plan effective as of January 1, 1998.
3.5   Former Participants in PrintPaks Plan.
      -------------------------------------

      Notwithstanding anything in this Article to the contrary, any individual
who was a participant in the PrintPaks Plan on February 28, 1998, shall
automatically become a Participant in this Plan effective as of March 1, 1998.
3.6   Former Participants in Pleasant Plan.
      ------------------------------------

      Notwithstanding anything in this Article to the contrary, any individual
who was a participant in the Pleasant Plan on September 30, 2001, shall
automatically become a Participant in this Plan effective as of October 1, 2001.

                                       19
<PAGE>

                                  ARTICLE IV
                                  TRUST FUND

4.1  Trust Fund.
     ----------

          (a)  The Company has entered into a Trust Agreement for the
     establishment of a Trust to hold the assets of the Plan.  Simultaneously
     with the establishment of this Plan the Company shall pay to the Trustee a
     specified sum of money as its initial contribution to the Trust Fund.  The
     Trustee shall acknowledge receipt of this contribution and shall agree to
     hold and administer this contribution together with such additional funds
     and assets that may be subsequently deposited with the Trustee pursuant to
     the terms of this Plan.
          (b)  The Trust Fund is authorized to invest in either Company Stock or
     such other assets as the Committee or the Investment Manager (if
     applicable) may direct.  Participants may direct the investment of the
     assets in their Accounts in the Trust Fund from among the acceptable
     investment alternatives which the Committee may from time to time make
     available.
          (c)  The Committee shall not be required to engage in any transaction,
     including without limitation, directing the purchase or sale of Company
     Stock, which it determines in its sole discretion, might tend to subject
     itself, its members, the Plan, the Company, or any Participant to liability
     under federal or state securities law.

                                   ARTICLE V
                            EMPLOYEE CONTRIBUTIONS

5.1  Employee Contributions.
     ----------------------

     In accordance with rules which the Committee shall prescribe from time to
time, each Participant shall be given an opportunity to elect to have a
percentage of his or her Compensation contributed to the Plan.  A contribution
election by a Participant shall remain in effect from year to year
(notwithstanding salary or wage rate changes) until changed by the Participant.
Effective January 1, 1987, at the election of the Participant, contributions
shall be made as Before-Tax Contributions, After-Tax Contributions or a
combination thereof.

                                       20
<PAGE>

5.2  Amount Subject to Election.
     --------------------------

          (a)  Effective for Plan Years commencing on and after January 1, 1989,
     but prior to January 1, 1997, and for the period January 1, 1997 through
     March 31, 1997, subject to the limitations of this Article V, the amount of
     an individual's Compensation that may be contributed subject to the
     election provided in Section 5.1 shall be a whole percentage of the
     individual's Compensation, which percentage is not less than one percent
     (1%) nor more than the difference between (i) the Participant's Company
     Contributions percentage determined under Section 6.1(a) and (ii) seventeen
     percent (17%).
          (b)  Effective April 1, 1997, but prior to January 1, 2002, subject to
     the limitations of this Article V, the amount of a Participant's
     Compensation that may be contributed subject to the election provided in
     Section 5.1 shall be a whole percentage of the Participant's Compensation,
     which percentage is not less than one percent (1%) nor more than: (i) in
     the case of a Participant employed by Fisher-Price, Inc. or the Mattel
     Operations-East Aurora, Mattel Operations-Medina or Mattel Operations-
     Murray divisions, fifteen percent (15%); and (ii) in the case of any other
     Participant, the difference between (x) the Participant's Company
     Contributions percentage determined under Section 6.1(a) and (y) seventeen
     percent (17%).
          (c)  Effective January 1, 2002, subject to the limitations of Article
     V, the amount of a Participant's Compensation that may be contributed
     subject to the election provided in Section 5.1 shall be a whole percentage
     of the Participant's Compensation, which percentage is not less than one
     percent (1%) nor more than (i) in the case of a Highly Compensated
     Employee, twenty percent (20%) or (ii) in the case of a Participant who is
     not a Highly Compensated Employee, eighty percent (80%).
          (d)  No Participant shall be permitted to make Before-Tax
     Contributions in excess of the Deferral Limitation. Any election by a
     Participant to make Before-Tax Contributions shall be deemed to include an
     election to automatically substitute After-Tax Contributions for such
     Before-Tax Contributions, effective for the period starting on the date
     immediately following

                                       21
<PAGE>

     December 31. In the event a Participant's Before-Tax Contributions exceed
     the Deferral Limitation, excess contributions shall be subject to the
     provisions of Section 5.6.
          (e) For purposes of satisfying one of the tests described under
     Section 5.4 and Section 6.3, the Committee may prescribe such rules as it
     deems necessary or appropriate regarding the maximum amount that a
     Participant may elect to contribute and the timing of such an election.
     These rules may prescribe a maximum percentage of Compensation that may be
     contributed, or may provide that the maximum percentage of Compensation
     that a Participant may contribute will be a lower percentage of his
     Compensation above a certain dollar amount of Compensation than the maximum
     deferral percentage below that dollar amount of Compensation.  These rules
     shall apply to all individuals eligible to make the election described in
     Section 5.1, except to the extent that the Committee prescribes special or
     more stringent rules applicable only to Highly Compensated Employees.
          (f) Notwithstanding the foregoing, all employees who are eligible to
     make Before-Tax Contributions under this Plan and who have attained age
     fifty (50) before the close of a Plan Year shall be eligible to make catch-
     up contributions during such Plan Year in accordance with, and subject to
     the limitations of, Code Section 414(v).  Such catch-up contributions shall
     not be taken into account for purposes of the provisions of the Plan
     implementing the required limitations of Section 402(g) and 415 of the
     Code.  The Plan shall not be treated as failing to satisfy the provisions
     of the Plan implementing the requirements of Section 401(k)(3), 401(k)(11),
     401(k)(12), 410(b) or 416 of the Code, as applicable, by reason of the
     making of such catch-up contributions.
5.3  Termination of, Change in Rate of, or Resumption of Deferrals.
     -------------------------------------------------------------

          (a) A Participant may at any time submit a request to the Committee to
     terminate his contributions made pursuant to this Article V.
          (b) A Participant may at any time (but not more frequently than once
     every two weeks) submit a request to the Committee to alter the rate of, or
     resume his contributions made pursuant to this Article V.
          (c) A request for termination, alteration, or resumption or alteration
     of the rate of contributions shall be in form satisfactory to the
     Committee.  The Committee may

                                       22
<PAGE>

     require at least thirty (30) days notice prior to commencement of the
     payroll period for which such change is to be effective.
5.4  Limitation on Before-Tax Contributions by Highly Compensated Employees.
     ----------------------------------------------------------------------

     With respect to each Plan Year, Participant Before-Tax Contributions under
the Plan for the Plan Year shall not exceed the limitations on contributions on
behalf of Highly Compensated Employees under Section 401(k) of the Code, as
provided in this Section.  In the event that Before-Tax Contributions under this
Plan on behalf of Highly Compensated Employees for any Plan Year exceed the
limitations of this Section for any reason, such excess contributions and any
income allocable thereto shall be returned to the Participant or recharacterized
as Participant After-Tax Contributions, as provided in Section 5.5.
          (a)  The Before-Tax Contributions by a Participant for a Plan Year
     shall satisfy the Average Deferral Percentage test set forth in (i)(A)
     below, or the alternative Average Deferral Percentage test set forth in
     (i)(B) below.  To the extent required by regulations under Code Section
     401(m), the Before-Tax Contributions by a Participant for any Plan Year
     ending prior to January 1, 2002, also shall satisfy the test identified in
     (ii) below.
               (i)  (A)  The "Actual Deferral Percentage" for Eligible Employees
               who are Highly Compensated Employees for a Plan Year shall not be
               more than the "Actual Deferral Percentage" of all other Eligible
               Employees for the Comparison Year multiplied by 1.25, or
               (i)  (B)  The excess of the "Actual Deferral Percentage" for
               Eligible Employees who are Highly Compensated Employees for a
               Plan Year over the "Actual Deferral Percentage" for all other
               Eligible Employees for the Comparison Year shall not be more than
               two (2) percentage points, and the "Actual Deferral Percentage"
               for Eligible Employees who are Highly Compensated Employees for a
               Plan Year shall not be more than the "Actual Deferral Percentage"
               of all other Eligible Employees for the Comparison Year
               multiplied by 2.00.
               (ii) The Average Contribution Percentage for any Plan Year ending
               prior to January 1, 2002 for Highly Compensated Employees
               eligible to participate in this Plan and a plan of the Company or
               an Affiliated

                                       23
<PAGE>

               Company that is subject to the limitations of Section 401(m) of
               the Code including, if applicable, this Plan, shall be reduced in
               accordance with Section 6.4, to the extent necessary to satisfy
               the requirements of Treasury Regulations Section 1.401(m)-2. The
               multiple use test described in Treasury Regulations Section
               1.401(m)-2 shall not apply for Plan Years beginning after
               December 31, 2001.
     The "Comparison Year" is the Plan Year being tested.
          (b)  For the purposes of the limitations of this Section 5.4, the
     following definitions shall apply:
               (i) "Actual Deferral Percentage" means, with respect to Eligible
          Employees who are Highly Compensated Employees and all other Eligible
          Employees for a Plan Year, the average of the ratios, calculated
          separately for each Eligible Employee in such group, of the amount of
          Before-Tax Contributions under the Plan allocated to each Eligible
          Employee for such Plan Year to such Employee's "Compensation" for such
          Plan Year.  An Eligible Employee's Before-Tax Contributions may be
          taken into account for purposes of determining his Actual Deferral
          Percentage for a particular Plan Year only if such Before-Tax
          Contributions relate to Compensation that either would have been
          received by the Eligible Employee in the Plan Year (but for the
          deferral election), or is attributable to services performed in the
          Plan Year and would have been received by the Eligible Employee within
          two and one-half (2 1/2) months after the close of the Plan Year (but
          for the deferral election), and such Before-Tax Contributions are
          allocated to the Eligible Employee as of a date within that Plan Year.
          For purposes of this rule, an Eligible Employee's Before-Tax
          Contributions shall be considered allocated as of a date within a Plan
          Year only if (A) the allocation is not contingent upon the Eligible
          Employee's participation in the Plan or performance of services on any
          date subsequent to that date, and (B) the Before-Tax Contribution is
          actually paid to the Trust no later than the end of the twelve month
          period immediately following the Plan Year to which the contribution
          relates.  To the extent determined by the Committee and in accordance
          with regulations  issued by the Secretary of the Treasury,
          contributions on behalf of an

                                       24
<PAGE>

          Eligible Employee that satisfy the requirements of Code Section
          401(k)(3)(C)(ii) may also be taken into account for the purpose of
          determining the Actual Deferral Percentage of such Eligible Employee.
               (ii) "Compensation" means Compensation determined by the
          Committee in accordance with the requirements of Section 414(s) of the
          Code, including, to the extent elected by the Committee, amounts
          deducted from an Employee's wages or salary that are excludable from
          income under Sections 125, 129, 132(f)(4) or 402(a)(8) of the Code.
          (c) In the event that as of the last day of a Plan Year this Plan
     satisfies the requirements of Section 401(a)(4) or 410(b) of the Code only
     if aggregated with one or more other plans which include arrangements under
     Code Section 401(k), then this Section 5.4 shall be applied by determining
     the Actual Deferral Percentages of Eligible Employees as if all such plans
     were a single plan, in accordance with regulations prescribed by the
     Secretary of the Treasury under Section 401(k) of the Code.
          (d) For the purposes of this Section, the Actual Deferral Percentage
     for any Highly Compensated Employee who is a participant under two or more
     Code Section 401(k) arrangements of the Company or an Affiliated Company
     shall be determined by taking into account the Highly Compensated
     Employee's Compensation under each such arrangement and contributions under
     each such arrangement which qualify for treatment under Code Section
     401(k), in accordance with regulations prescribed by the Secretary of the
     Treasury under Section 401(k) of the Code.
          (e) For purposes of this Section, the amount of Before-Tax
     Contributions by a Participant who is not a Highly Compensated Employee for
     a Plan Year shall be reduced by any Before-Tax Contributions in excess of
     the Deferral Limitation which have been distributed to the Participant
     under Section 5.6, in accordance with regulations prescribed by the
     Secretary of the Treasury under Section 401(k) of the Code.
          (f) The determination of the Actual Deferral Percentage of any
     Participant shall be made after applying the provisions of Section 14.5
     relating to certain limits on Annual Additions under Section 415 of the
     Code.

                                       25
<PAGE>

          (g) The determination and treatment of Before-Tax Contributions and
     the Actual Deferral Percentage of any Participant shall satisfy such other
     requirements as may be prescribed by the Secretary of the Treasury.
          (h) The Committee shall keep or cause to have kept such records as are
     necessary to demonstrate that the Plan satisfies the requirements of Code
     Section 401(k) and the regulations thereunder, in accordance with
     regulations prescribed by the Secretary of the Treasury.
5.5  Provisions for Disposition of Excess Before-Tax Contributions by Highly
     -----------------------------------------------------------------------
     Compensated Employees.
     ---------------------

          (a) The Committee shall determine, as soon as is reasonably possible
     following the close of each Plan Year, the extent, if any, to which
     deferral treatment under Code Section 401(k) may not be available for
     Before-Tax Contributions by Highly Compensated Employees.  If, pursuant to
     the determination by the Committee, any or all of a Participant's Before-
     Tax Contributions are not eligible for tax-deferral treatment, then any
     excess Before-Tax Contributions shall be disposed of in accordance with (i)
     below or any Excess Before-Tax Contribution and any income for the Plan
     Year ("Non-Gap Period Income") allocable thereto shall be disposed of in
     accordance with (ii) below.
              (i)  To the extent permissible under Section 6.3, excess Before-
          Tax Contributions by the Highly Compensated Employee in a Plan Year
          may be recharacterized as After-Tax Contributions for the Plan Year
          not later than two and one-half (2-1/2) months following the close of
          the Plan Year. Any recharacterization shall be effective retroactive
          to the date of the Highly Compensated Employee's earliest Before-Tax
          Contributions during the Plan Year in which the excess Before-Tax
          Contributions were made. To the extent required by Treas. Reg. Section
          1.401(k)-1(f)(3), Before-Tax Contributions recharacterized as After-
          Tax Contributions shall continue to be treated as Before-Tax
          Contributions for purposes of Article VIII.
              (ii) To the extent a Participant's Before-Tax Contributions cannot
          be recharacterized in accordance with (i) above, any excess Before-Tax
          Contributions (and any Non-Gap Period income allocable thereto) in a
          Plan Year

                                       26
<PAGE>

          shall, if administratively feasible, be distributed to the Participant
          not later than two and one-half (2-1/2) months following the close of
          the Plan Year in which such excess Before-Tax Contributions were made,
          but in any event no later than the close of the first Plan Year
          following the Plan Year in which such excess Before-Tax Contributions
          were made after withholding any applicable income taxes due on such
          amounts.
          (b) For purposes of this Section, the amount of excess Before-Tax
     Contributions to be distributed to a Participant for a Plan Year or
     recharacterized shall be reduced by the amount of any Before-Tax
     Contributions in excess of the Deferral Limitation (for the Participant's
     taxable year that ends with or within the Plan Year) which have been
     distributed to the Participant under Section 5.6, in accordance with
     regulations prescribed by the Secretary of the Treasury under Section
     401(k) of the Code.
          (c) The Committee shall determine the aggregate amount of any excess
     Before-Tax Contributions by Highly Compensated Employees for a Plan Year by
     application of the leveling method set forth in Treasury Regulation Section
     1.401(k)-1(f)(2) under which the Deferral Percentage of the Highly
     Compensated Employee who has the highest Deferral Percentage for such Plan
     Year is reduced to the extent required (i) to enable the Plan to satisfy
     the Actual Deferral Percentage test, or (ii) to cause such Highly
     Compensated Employee's Deferral Percentage to equal the Deferral Percentage
     of the Highly Compensated Employee with the next highest Deferral
     Percentage.  The recharacterization or distribution (as the case may be) of
     any excess Before-Tax Contributions shall be made on the basis of the
     dollar amounts (rather than the individual Deferral Percentages) of the
     Before-Tax Contributions by Highly Compensated Employees, beginning with
     the highest such amount.
          (d) For purposes of satisfying the Actual Deferral Percentage test,
     Non-Gap Period income allocable to a Participant's excess Before-Tax
     Contributions, as determined under (b) above, shall be determined in
     accordance with any reasonable method used by the Plan for allocating
     income to Participant Accounts, provided such method does not discriminate
     in favor of Highly Compensated Employees and is consistently applied to all
     Participants for all corrective distributions or recharacterizations under
     the Plan for a Plan Year.  The Committee shall not be liable to

                                       27
<PAGE>

     any Participant (or his Beneficiary, if applicable) for any losses caused
     by misestimating the amount of any Before-Tax Contributions in excess of
     the limitations of this Article V and any income allocable to such excess.
          (e)  To the extent required by regulations under Section 401(k) or 415
     of the Code, any excess Before-Tax Contributions with respect to a Highly
     Compensated Employee shall be treated as Annual Additions under Article XIV
     for the Plan Year for which the excess Before-Tax Contributions were made,
     notwithstanding the distribution or recharacterization of such excess in
     accordance with the provisions of this Section.
5.6  Provisions for Return of Annual Before-Tax Contributions in Excess of the
     -------------------------------------------------------------------------
     Deferral Limitation.
     -------------------

          (a)  In the event that due to error or otherwise, a Participant's
     Before-Tax Contributions under this Plan exceed the Deferral Limitation for
     any calendar year (but without regard to amounts of compensation deferred
     under any other plan), the excess Before-Tax Contributions for the Plan
     Year, if any, together with any Non-Gap Period income allocable to such
     amount shall be distributed to the Participant on or before the first April
     15 following the close of the calendar year in which such excess
     contribution is made. The amount of excess Before-Tax Contributions that
     may be distributed to a Participant under this Section for any taxable year
     shall be reduced by any excess Before-Tax Contributions previously
     distributed or recharacterized in accordance with Section 5.5 for the Plan
     Year beginning with or within such taxable year.
               (i)   Income on Before-Tax Contributions in excess of the
          Deferral Limitation shall be calculated in accordance with Section
          5.5(e), except calculations of allocable Non-Gap Period income shall
          be made with reference to the calendar year (if the Plan Year is not
          the calendar year).
               (ii)  For the 1987 calendar year only, income shall be calculated
          on a reasonable and consistent basis; provided, however, if there is a
          loss allocable to the excess Before-Tax Contributions, the amount
          distributed shall be the excess amount adjusted to reflect such loss.

               (iii) The Committee shall not be liable to any Participant or
          his Beneficiary, if applicable, for any losses caused by misestimating
          the amount of

                                       28
<PAGE>

          any Before-Tax Contributions in excess of the limitations of this
          Article V and any income allocable to such excess.
          (b) If in any calendar year a Participant makes Before-Tax
     Contributions under this Plan and additional elective deferrals, within the
     meaning of Code Section 402(g)(3), under any other plan maintained by the
     Company or an Affiliated Company, and the total amount of the Participant's
     elective deferrals under this Plan and all such other plans exceed the
     Deferral Limitation, the Company and each Affiliated Company maintaining a
     plan under which the Participant made any elective deferrals shall notify
     the affected plans in writing, and corrective distributions of the excess
     elective deferrals, and any income allocable thereto, shall be made from
     one or more such plans, to the extent determined by the Company and each
     Affiliated Company.  The determination of the amount of a Participant's
     elective deferrals for any calendar year shall be made after applying the
     provisions of Section 14.5 relating to certain limits on Annual Additions
     under Section 415 of the Code.  All corrective distributions of excess
     elective deferrals shall be made on or before the first April 15 following
     the close of the calendar year in which the excess elective deferrals were
     made.
          (c) In accordance with rules and procedures as may be established by
     the Committee, a Participant may submit a claim to the Committee in which
     he certifies in writing the specific amount of his Before-Tax Contributions
     for the preceding calendar year which, when added to amounts deferred for
     such calendar year under any other plans or arrangements described in
     Section 401(k), 408(k) or 403(b) of the Code (other than a plan maintained
     by the Company or an Affiliated Company), will cause the Participant to
     exceed the Deferral Limitation for the calendar year in which the deferral
     occurred.  Any such claim must be submitted to the Committee no later than
     the March 1 of the calendar year following the calendar year of deferral.
     To the extent the amount specified by the Participant does not exceed the
     amount of the Participant's Before-Tax Contributions under the Plan for the
     applicable calendar year, the Committee shall treat the amount specified by
     the Participant in his claim as a Before-Tax Contribution in excess of the
     Deferral Limitation for such calendar year and return such excess and any
     income allocable thereto to the Participant, as provided in (a) above.  In
     the event that for any reason such Participant's Before-Tax Contributions
     in excess of the Deferral Limitation

                                       29
<PAGE>

     for any calendar year are not distributed to the Participant by the time
     prescribed in (a) above, such excess shall be held in the Participant's
     Before-Tax Contribution Account until distribution can be made in
     accordance with the provisions of this Plan.
          (d) To the extent required by regulations under Section 402(g) or 415
     of the Code, Before-Tax Contributions with respect to a Participant in
     excess of the Deferral Limitation shall be treated as Annual Additions
     under Article XIV for the Plan Year for which the excess contributions were
     made, notwithstanding the distribution of such excess in accordance with
     the provisions of this Section.
5.7  Character of Amounts Contributed as Before-Tax Contributions.
     ------------------------------------------------------------

     Unless otherwise specifically provided to the contrary in this Plan,
amounts deferred pursuant to a Participant's election to make Before-Tax
Contributions in accordance with Section 5.1 (and which qualify for treatment
under Code Section 401(k) and are contributed to the Trust Fund pursuant to
Article VI) shall be treated, for federal and state income tax purposes, as
Participating Company contributions.
5.8  Participant Transfer/Rollover Contributions.
     -------------------------------------------

     Effective as of an Eligible Employee's Employment Commencement Date, or
such later date as may be determined by the Administrator, amounts, if any,
distributed to such Eligible Employee or payable to such Eligible Employee from
another plan that satisfies the requirements of Code Section 401(a), or held in
an individual retirement account which is attributable solely to a rollover
contribution within the meaning of Code Section 408(d)(3), may be transferred to
this Plan, including by direct rollover from another plan that satisfies the
requirements of Code Section 401(a), and credited to the Participant's
Transfer/Rollover Account in accordance with Code Section 402 and rules which
the Committee shall prescribe from time to time; provided, however, the
Committee determines that the continued qualification of this Plan under Code
Section 401(a) or 401(k) would not be adversely affected by such transfer, or
would cause this Plan to become a "transferee plan," within the meaning of Code
Section 401(a)(11).  Effective January 1, 2002, amounts, if any, distributed to
such Eligible Employee or payable to such Eligible Employee from (i) a qualified
plan described in Section 401(a) or 403(a) of the Code (including after-tax
employee contributions), (ii) an annuity contract described in Section 403(b) of
the Code (excluding after-tax employee contributions), (iii) an eligible plan
under Section 457(b) of the Code which is maintained by a state, political
subdivision of a state, or any agency

                                       30
<PAGE>

or instrumentality of a state or political subdivision of a state, and (iv) an
individual retirement account or annuity described in Section 408(a) or 408(b)
of the Code that is eligible to be rolled over and would otherwise be includable
in gross income, may be transferred to this Plan and credited to the
Participant's Transfer/Rollover Account in accordance with Code Section 402 and
rules which the Committee shall prescribe from time to time. Any amounts
transferred in accordance with this Section 5.8, which shall be in cash, shall
not be subject to distribution to the Participant except as expressly provided
under the terms of this Plan.
     An Eligible Employee who prior to April 1, 1997 has transferred employment
to the Company (or other Participating Company) from Fisher-Price, Inc., and who
has elected to transfer directly to this Plan his entire account balance in the
Fisher-Price, Inc. Matching Savings Plan in accordance with the terms of such
plan, shall be permitted to transfer such account balance directly to this Plan.
The transfer must be made in cash, except that any promissory note evidencing an
outstanding loan to such Eligible Employee from the Fisher-Price, Inc. Matching
Savings Plan may be transferred to this Plan in kind.  Any transferred
promissory note shall thereafter be repayable by the Participant to the Plan in
accordance with its terms.  Any amounts transferred from the Fisher-Price, Inc.
Matching Savings Plan shall not be subject to distribution to the Participant
except as expressly provided under the terms of this Plan.

                                   ARTICLE VI
                             COMPANY CONTRIBUTIONS
6.1  General.
     -------

     Subject to the requirements and restrictions of this Article VI and Article
XIV, and subject also to the amendment or termination of the Plan or the
suspension or discontinuance of contributions as provided herein, a
Participating Company shall contribute for each Participant who is an Employee
of such Participating Company, as follows:
          (a) In the case of a Participating Company other than Fisher-Price,
     Inc. and the Mattel Operations-East Aurora, Mattel Operations-Medina and
     Mattel Operations-Murray divisions, for each month of each Plan Year
     commencing on and after January 1, 1989 but prior to April 1, 1997, an
     amount to the Participant's Company Contributions Account equal to a
     percentage of the Participant's Compensation during such month

                                       31
<PAGE>

     according to the Participant's attained age as of the last day of the
     preceding month, as follows:
                    Age as of Last Day   Percentage of
                    of Preceding Month   Compensation
                    ------------------   ------------

                          Under 40            2%
                          40 - 44             4%
                          45 - 49             5%
                          50 - 54             6%
                            55+               7%

          (b) In the case of a Participating Company other than Fisher-Price,
     Inc., the Mattel Operations-East Aurora, Mattel Operations-Medina and
     Mattel Operations-Murray divisions and the Pleasant Company, for each month
     of each Plan Year commencing on and after April 1, 1997, an amount to the
     Participant's Company Contributions Account equal to a percentage of the
     Participant's Compensation during such month according to the Participant's
     attained age as of the last day of the preceding month, as follows:
                    Age as of Last Day
                    of Preceding Month  Percentage of Compensation
                    ------------------  --------------------------
                          Under 30                 3%
                          30 - 39                  4%
                          40 - 44                  5%
                          45 - 49                  6%
                          50 - 54                  7%
                            55+                    8%

          (c) An amount to the Participant's Before-Tax Contributions Account
     which is equal to the amount of the Participant's Before-Tax Contributions
     pursuant to Section 5.1 and which qualify for tax treatment under Code
     Section 401(k).
          (d) An amount to the Participant's Company Matching Account which is
     the sum of the amounts in (i) and (ii) below:
              (i)  A dollar amount equal to the dollar amount of the first two
          percent (2%) of the sum of a Participant's Before-Tax and After-Tax
          Contributions pursuant to Section 5.1.

                                       32
<PAGE>

                    (ii) A dollar amount equal to 50% of the dollar amount of
          the next four percent (4%) of the sum of a Participant's Before-Tax
          and After-Tax Contributions pursuant to Section 5.1.

               The maximum Company Matching Contribution pursuant to this
     Section 6.1(d) shall be four percent (4%) of the Participant's Compensation
     (such Compensation to be determined prior to reduction for Before-Tax
     Contributions pursuant to Section 5.1).

6.2  Requirement for Net Profits.
     ---------------------------

     Contributions by a Participating Company shall be made without regard
to current or accumulated profits for the year; provided, however, that the Plan
is intended to be designed to qualify as a profit sharing plan for purposes of
Sections 401(a) et. seq. of the Code.
                --- ----

6.3  Special Limitations on After-Tax Contributions and Company Matching
     -------------------------------------------------------------------
     Contributions.
     -------------

     With respect to each Plan Year, After-Tax Contributions and Company
Matching Contributions under the Plan for the Plan Year shall not exceed the
limitations on contributions on behalf of Highly Compensated Employees under
Section 401(m) of the Code, as provided in this Section.  For purposes of this
Section, excess Before-Tax Contributions recharacterized as After-Tax
Contributions after the close of a Plan Year shall be treated as After-Tax
Contributions in a Plan Year as provided in Section 5.5(a)(i).  In the event
that After-Tax Contributions and Company Matching Contributions under this Plan
on behalf of Highly Compensated Employees for any Plan Year exceed the
limitations of this Section for any reason, such excess contributions and any
income allocable thereto shall be disposed of in accordance with Section 6.4.
For purposes of this Section 6.3, the meaning of the term "Compensation" shall
be as defined in Section 5.4(b).

          (a) After-Tax Contributions and Company Matching Contributions on
     behalf of Participants under Section 6.1(d) for a Plan Year shall satisfy
     the Average Contribution Percentage test set forth in (i)(A) below, or the
     Average Contribution Percentage test set forth in (i)(B) below:

               (i) (A)  The "Average Contribution Percentage" for Eligible
               Employees who are Highly Compensated Employees for a Plan Year
               shall not be more than the "Average Contribution Percentage" of
               all other Eligible Employees for the Comparison Year multiplied
               by 1.25, or

                                       33
<PAGE>

               (i) (B)  The excess of the "Average Contribution Percentage" for
               Eligible Employees who are Highly Compensated Employees for a
               Plan Year over the "Average Contribution Percentage" for all
               other Eligible Employees for the Comparison Year shall not be
               more than two (2) percentage points, and the "Average
               Contribution Percentage" for Eligible Employees who are Highly
               Compensated Employees for a Plan Year shall not be more than the
               "Average Contribution Percentage" of all other Eligible Employees
               for the Comparison Year multiplied by 2.00. The "Comparison Year"
               is the Plan Year being tested.

               (ii) The Average Contribution Percentage for any Plan Year ending
               prior to January 1, 2002 for Highly Compensated Employees
               eligible to participate in this Plan and a plan of the Company or
               an Affiliated Company that satisfies the requirements of Section
               401(k) of the Code, including, if applicable, this Plan, shall be
               reduced to the extent necessary to satisfy the requirements of
               Treasury Regulations Section 1.401(m)-2 or similar such rule.
               The multiple test described in Treasury Regulations Section
               1.401(m)-2 shall not apply for Plan Years beginning after
               December 31, 2001.

          (b) For purposes of this Section, "Average Contribution Percentage"
     means, with respect to a group of Eligible Employees for a Plan Year, the
     average of the "Contribution Percentage," calculated separately for each
     Eligible Employee in such group.  The "Contribution Percentage" for any
     Eligible Employee is determined by dividing the sum of After-Tax
     Contributions during the Plan Year and Company Matching Contributions under
     the Plan on behalf of each Eligible Employee for such Plan Year, by such
     Eligible Employee's Compensation for such Plan Year.  "Company Matching
     Contributions" for purposes of the Average Contribution Percentage test
     shall include a Company Matching Contribution only if it is allocated to
     the Participant's Company Matching Contributions Account during the Plan
     Year and is paid to the Trust Fund by the end of the twelfth month
     following the close of the Plan Year.  To the extent determined by the
     Committee and in accordance with regulations issued by the Secretary of the
     Treasury under Code Section 401(m)(3), the Before-Tax Contributions on
     behalf

                                       34
<PAGE>

     of an Eligible Employee and any "qualified nonelective contributions,"
     within the meaning of Code Section 401(m)(4)(c), on behalf of an Eligible
     Employee may also be taken into account for purposes of calculating the
     Contribution Percentage of such Eligible Employee, but shall not otherwise
     be taken into account. However, any Company Matching Contributions taken
     into account for purposes of determining the Actual Deferral Percentage of
     an Eligible Employee under Section 5.4(a) shall not be taken into account
     under this Section 6.3.

          (c) In the event that as of the last day of a Plan Year this Plan
     satisfies the requirements of Section 410(b) of the Code only if aggregated
     with one or more other plans, or if one or more other plans satisfy the
     requirements of Section 410(b) of the Code only if aggregated with this
     Plan, then this Section 6.3 shall be applied by determining the
     Contribution Percentages of Eligible Employees as if all such plans were a
     single plan, in accordance with regulations prescribed by the Secretary of
     the Treasury under Section 401(m) of the Code.

          (d) For the purposes of this Section, the Contribution Percentage for
     any Eligible Employee who is a Highly Compensated Employee under two or
     more Code Section 401(a) plans of the Company or an Affiliated Company to
     the extent required by Code Section 401(m), shall be determined in a manner
     taking into account the participant contributions and matching
     contributions for such Eligible Employee under each of such plans.

          (e) The determination of the Contribution Percentage of any
     Participant shall be made after first applying the provisions of Section
     14.5 relating to certain limits on Annual Additions under Section 415 of
     the Code, then applying the provisions of Section 5.6 relating to the
     return of Before-Tax Contributions in excess of the Deferral Limitation,
     then applying the provisions of Section 5.5 relating to certain limits
     under Section 401(k) of the Code imposed on Pre-Tax Contributions of Highly
     Compensated Employees, and last, applying the provisions of Section 6.5
     relating to the forfeiture of Company Matching Contributions attributable
     to excess Before-Tax or After-Tax Contributions.

                                       35
<PAGE>

          (f) The determination and treatment of the Contribution Percentage of
     any Participant shall satisfy such other requirements as may be prescribed
     by the Secretary of the Treasury.

          (g) The Committee shall keep or cause to have kept such records as are
     necessary to demonstrate that the Plan satisfies the requirements of Code
     Section 401(m) and the regulations thereunder, in accordance with
     regulations prescribed by the Secretary of the Treasury.

6.4  Provision for Return of Excess After-Tax Contributions and Company Matching
     ---------------------------------------------------------------------------
     Contributions on Behalf of Highly Compensated Employees.
     -------------------------------------------------------

          (a) The Committee shall determine, as soon as is reasonably possible
     following the close of the Plan Year, the extent (if any) to which After-
     Tax and Company Matching Contributions on behalf of Highly Compensated
     Employees may cause the Plan to exceed the limitations of Section 6.3 for
     such Plan Year.  If, pursuant to the determination by the Committee, After-
     Tax and Company Matching Contributions on behalf of a Highly Compensated
     Employee may cause the Plan to exceed such limitations, then the Committee
     shall take the following steps:

               (i) First, any excess After-Tax Contributions that were not
          matched by Company Matching Contributions, and any Non-Gap Period
          income allocable thereto, shall be distributed to the Highly
          Compensated Employee (after withholding any applicable income taxes on
          such amounts).

               (ii) Second, if any excess remains after the provisions of (i)
          above are applied, to the extent necessary to eliminate the excess,
          Company Matching Contributions on behalf of the Highly Compensated
          Employee, and any Non-Gap Period income allocable thereto, shall be
          forfeited, to the extent forfeitable under the Plan, or distributed to
          the Highly Compensated Employee, to the extent non-forfeitable under
          the Plan (after withholding any applicable income taxes on such
          amounts).  Any corresponding After-Tax Contributions, and any Non-Gap
          Period income allocable thereto, shall be distributed to the Highly
          Compensated Employee (after withholding any applicable income taxes on
          such amounts).

               (iii)  If administratively feasible, excess After-Tax
          Contributions and Company Matching Contributions which are
          nonforfeitable under the Plan,

                                       36
<PAGE>

          including any Non-Gap Period income allocable thereto, shall be
          distributed to Highly Compensated Employees, or, to the extent
          forfeitable, forfeited, within two and one-half (2-1/2) months
          following the close of the Plan Year for which the excess
          Contributions were made, but in any event no later than the end of the
          first Plan Year following the Plan Year for which the excess
          Contributions were made, notwithstanding any other provision in this
          Plan. Amounts of excess Company Matching Contributions forfeited by
          Highly Compensated Employees under this Section, including any income
          allocable thereto, shall be applied, to the maximum extent
          practicable, to reduce Company Matching Contributions for the Plan
          Year for which such excess Contributions were made and thereafter
          shall be applied as soon as possible to reduce Company Matching
          Contributions for succeeding Plan Years.

          (b) The Committee shall determine the amount of any excess After-Tax
     Contributions and Company Matching Contributions made by or on behalf of
     Highly Compensated Employees for a Plan Year by application of the leveling
     method set forth in Treasury Regulation Section 1.401(m)-1(e)(2) under
     which the Contribution Percentage of the Highly Compensated Employee who
     has the highest such Contribution Percentage for such Plan Year is reduced,
     to the extent required (i) to enable the Plan to satisfy the Average
     Contribution Percentage test, or (ii) to cause such Highly Compensated
     Employee's Contribution Percentage to equal the Contribution Percentage of
     the Highly Compensated Employee with the next highest Contribution
     Percentage.  The distribution or forfeiture (as the case may be) of any
     excess After-Tax Contributions or Company Matching Contributions shall be
     made on the basis of dollar amounts (rather than the individual
     Contribution Percentages) of the After-Tax Contributions and Company
     Matching Contributions by Highly Compensated Employees beginning with the
     highest such amounts.

          (c) For purposes of satisfying the Average Contribution Percentage
     test, Non-Gap Period income allocable to a Participant's excess After-Tax
     Contributions or Company Matching Contributions, as determined under (b)
     above, shall be determined by applying procedures comparable to those
     provided under Section 5.5.

                                       37
<PAGE>

          (d) To the extent required by regulations under Section 414(m) or 415
     of the Code, any excess After-Tax Contributions or matching Company
     Contribution forfeited by or distributed to a Highly Compensated Employee
     in accordance with this Section shall be treated as an Annual Addition
     under Article XIV for the Plan Year for which the excess contribution was
     made, notwithstanding such forfeiture or distribution.

6.5  Forfeiture of Company Matching Contributions Attributable to Excess
     -------------------------------------------------------------------
     Deferrals or Contributions.
     --------------------------

          To the extent any Company Matching Contributions allocated to a
     Participant's Company Matching Contributions Account are attributable to
     excess Before-Tax Contributions required to be distributed to the
     Participant in accordance with Section 5.5 or 5.6, or excess After-Tax
     Contributions required to be distributed to the Participant in accordance
     with Section 6.4, such Company Matching Contributions, including any Non-
     Gap Period income allocable thereto, shall be forfeited, notwithstanding
     that such Company Matching Contributions may otherwise be nonforfeitable
     under the terms of the Plan.  Any Company Matching Contributions forfeited
     by a Participant in accordance with this Section 6.5 shall be applied to
     reduce Company Matching Contributions.

6.6  Investment and Application of Plan Contributions.
     ------------------------------------------------

          (a) Subject to the provisions of Section 4.1(b), all contributions to
     the Trust Fund under Section 6.1 (including Before-Tax Contributions) and
     Participant After-Tax Contributions under Section 5.1 shall be invested as
     provided in this Section 6.6, subject to such rules as the Committee may
     adopt, in its sole discretion, to implement the provisions of this Section
     6.6.  The Committee may establish a choice of investment alternatives for
     Accounts from which each Participant may select in determining the manner
     in which his Account will be invested.  In its sole discretion, the
     Committee may establish an investment alternative consisting of Company
     Stock.  If investment alternatives are established in accordance with this
     Section 6.6, the following provisions of this Section 6.6 shall apply,
     including, in the event the Committee establishes a Company Stock
     alternative, the limitations of (iv) below and the provisions of Article X
     relating to investments in Company Stock.

               (i) A Participant may elect at any time to change an investment
          election with respect to the allocation of future contributions made
          by him or on

                                       38
<PAGE>

          his behalf (such election to apply to all such contributions without
          regard to any distinction between Company contributions or Participant
          contributions) among the investment alternatives. The Committee may
          require at least thirty (30) days notice prior to the commencement of
          the payroll period for which such change is to be effective. Any such
          election shall be made in any whole percentage, subject to the
          provisions of Subsection (iv) below.

               (ii) Separate Trust Fund Subaccounts shall be established for
          each investment alternative selected by a Participant, and each such
          Subaccount shall be valued separately.

               (iii)  A Participant may elect twice per calendar quarter to
          change the investment of his Accounts and reallocate such Accounts
          among the investment alternatives in any whole percentage, subject to
          the limitations of (iv) below.  Subject to such rules as the Committee
          may prescribe, any such election to change shall be effective as soon
          as practical following receipt of the Participant's election.  Any
          such change shall be implemented by the Committee in accordance with
          practices and procedures established by the Committee to provide for
          the orderly liquidation and/or purchase of investments.

               (iv) If a Company Stock alternative is established by the
          Committee, each Participant may elect to invest up to a maximum of
          fifty percent (50%) of contributions made by him or on his behalf
          (such limitation to apply to all contributions without regard to any
          distinction between Company contributions and Participant
          contributions) in the Company Stock alternative in accordance with
          this Section 6.6; provided, however, that the 50% limitation shall not
          apply to Company Stock held in the F-P Savings Plan on March 31, 1997
          and transferred to this Plan on April 1, 1997.  Such a Participant may
          also elect to transfer amounts from his Accounts held in other
          investment alternatives to the Company Stock alternative in accordance
          with this Section 6.6, provided, however, that no such transfer shall
          be implemented to the extent that such transfer would result in the
          value of the Participant's interest in the Company Stock Fund
          exceeding fifty percent (50%) of the value of his interest in all
          investment alternatives held under the Plan.  Notwithstanding the
          preceding

                                       39
<PAGE>

          sentence, neither the Company nor the Committee, nor any
          representative of the Company, the Committee or of the Plan shall have
          any obligation to monitor the value of a Participant's interest in the
          Company Stock Fund, or to manage said fund, and no person shall or
          shall have any authority to dispose of any Participant's interest in
          the Company Stock Fund except in accordance with a Participant's valid
          election or otherwise in accordance with express provisions of this
          Plan.

               (v) In the case of a Participant who fails to make an effective
          election, for any reason whatsoever, as to how all or any portion of
          his interest therein shall be invested, the Committee shall prescribe
          rules which shall require that the Accounts of such Participant be
          invested in the stable asset fund.

6.7    Irrevocability.
       --------------

       A Participating Company shall have no right or title to, nor interest
in, the contributions made to the Trust Fund, and no part of the Trust Fund
shall revert to the Participating Company except that on and after the Effective
Date funds may be returned to a Participating Company as follows:

          (a) In the case of a Participating Company contribution which is made
     by a mistake of fact, that contribution may be returned to the
     Participating Company within one (1) year after it is made.

          (b) All contributions to the Trust Fund are conditioned on
     deductibility under Code Section 404. In the event deduction is disallowed
     for any such contribution, such contribution may be returned to the
     Participating Company.

6.8  Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund.
     -------------------------------------------------------------------------

     The Company, Committee and Trustee shall not be liable or responsible for
the adequacy of the Trust Fund to meet and discharge any or all payments and
liabilities hereunder. All Plan benefits will be paid only from the Trust
assets, and neither the Company, the Committee nor the Trustee shall have any
duty or liability to furnish the Trust with any funds, securities or other
assets except as expressly provided in the Plan. Except as required under the
Plan or Trust or under Part 4 or Title I of ERISA, the Company shall not be
responsible for any decision, act or omission of the Trustee, the Committee,
or the Investment Manager (if applicable), and shall not

                                       40
<PAGE>

be responsible for the application of any moneys, securities, investments or
other property paid or delivered to the Trustee.

                                  ARTICLE VII
                      PARTICIPANT ACCOUNTS AND ALLOCATIONS

7.1  General.
     -------

          (a) All contributions under this plan shall be held in the Trust Fund.

          (b) All gains, losses, dividends and other property acquisitions
     and/or transfers that occur with respect to the Trust Fund shall be held,
     charged, credited, debited or otherwise accounted for under said fund on an
     unallocated basis until allocated to Participants' Accounts as of a
     Valuation Date as provided under this Plan or otherwise used or applied in
     accordance with the provisions of this Plan.

7.2  Participants' Accounts.
     ----------------------

     In order to account for the allocated interest of each Participant in the
Trust Fund, there shall be established and maintained the Accounts described in
Section 2.1.

7.3  Revaluation of Participants' Accounts.
     -------------------------------------

     As of each Valuation Date, the Accounts of each Participant shall be
revalued so as to reflect a proportionate share in any increase or decrease in
the fair market value of the assets in the Trust Fund as of that date as
compared with the value of the assets in the Trust Fund as of the immediately
preceding Valuation Date. The valuation and allocation provisions of this
Section 7.3 shall be applied and implemented in accordance with the following
rules:

          (a) As of each Valuation Date the Accounts holding such assets shall
     be revalued so as to reflect to each such Account a proportionate share in
     the net income or loss of the assets since the immediately preceding
     Valuation Date.

          (b) The Company, Committee and Trustee do not in any manner or to any
     extent whatsoever warrant, guarantee or represent that the value of a
     Participant's Accounts shall at any time equal or exceed the amount
     previously contributed thereto.

7.4  Treatment of Accounts Following Termination of Employment.
     ---------------------------------------------------------

     Following a Participant's termination of employment, pending distribution
of the Participant's Distributable Benefit pursuant to the provisions of Article
VIII below, the

                                       41
<PAGE>

Participant's Plan Accounts shall continue to be maintained and accounted for in
accordance with all applicable provisions of this Plan.

7.5  Accounting Procedures.
     ---------------------

     The Committee and the Trustee shall establish accounting procedures for the
purpose of making the allocations, valuations and adjustments to Participants'
Accounts provided for in this Article VII.  From time to time the Committee and
Trustee may modify such accounting procedures for the purpose of achieving
equitable, nondiscriminatory, and administratively feasible allocations among
the Accounts of Participants in accordance with the general concepts of the Plan
and the provisions of this Article VII.

                                  ARTICLE VIII
                       VESTING; PAYMENT OF PLAN BENEFITS

8.1  Vesting.
     -------

     Each Participant's vested interest in his Accounts shall be determined as
follows:

          (a) Each Participant shall at all times be one hundred percent (100%)
     vested in his Before-Tax Contributions Account, his After-Tax Contributions
     Account and his Transfer/Rollover Account under the Plan.

          (b) Except as provided in (c) and (d) below, each Participant shall
     become vested in his Company Matching Account and his Company Contributions
     Account according to the applicable table set forth below:

          Except as provided in the next paragraph, the applicable table is as
     follows (the "3-Year Vesting Schedule"):

                      Number of            Vesting
                    Years of Service      Percentage
                    ----------------      ----------
                      Less than 3              0%
                       3 or more             100%

     provided, however, if the Participant was eligible to participate in the
     --------  -------
     Plan before April 1, 2000 and has two (2) Years of Service as of April 1,
     2000, the 3-Year Vesting Schedule shall be modified as follows:

                                       42
<PAGE>

                       Number of           Vesting
                    Years of Service      Percentage
                    ----------------      ----------
                      Less than 2              0%
                      2                       25%
                      3 or more              100%

          Notwithstanding the foregoing, if the Participant participated in the
     Plan before April 1, 2000 and is not an Employee on April 1, 2000, the
     Participant's vested interest (if any) in his Company Matching Account and
     his Company Contributions Account shall be determined under the following
     table (the "5-Year Vesting Schedule"):

                        Number of          Vesting
                    Years of Service      Percentage
                    ----------------      ----------
                      Less than 2              0%
                      2                       25%
                      3                       50%
                      4                       75%
                      5 or more              100%

     The 3-Year Vesting Schedule shall not apply to such Participant until such
     Participant resumes employment as an Employee after April 1, 2000, in which
     event:

              (i) The 3-Year Vesting Schedule shall apply to the portion of his
          Company Matching Account and his Company Contributions Account that is
          attributable to his post-March 31, 2000 participation in the Plan (if
          any); and

              (ii) The 3-Year Vesting Schedule shall apply to the remainder of
          his Company Matching Account and his Company Contributions Account
          only (A) if the 5-Year Vesting Schedule had not been applied to
          forfeit any of his Company Matching Account or his Company
          Contributions Account prior to his resumption of employment or (B) if
          the 5-Year Vesting Schedule had been so applied, there has been a
          restoration of the resulting forfeited amount pursuant to Section
          8.15(b) following his resumption of employment.

          (c) Notwithstanding the foregoing, each Participant who completed an
     Hour of Service prior to July 1, 1989 shall at all times be one hundred
     percent (100%) vested in his Company Contributions Account.

          (d) Notwithstanding the foregoing, each Participant who was eligible
     to participate in the F-P Savings Plan on March 31, 1997, shall at all
     times be one hundred percent (100%) vested in his Company Matching Account.

                                       43
<PAGE>

          (e) Additionally a Participant shall become one hundred percent (100%)
     vested in his Company Matching Account and his Company Contributions
     Account upon attainment of Normal Retirement Date while an Employee, or in
     the event of death or Total and Permanent Disability while an Employee.

          (f) Notwithstanding the foregoing, each Participant who was a
     participant in the Tyco Plan on January 1, 1998, shall at all times be one
     hundred percent (100%) vested in his Tyco Before-Tax Contributions Account
     and his Tyco Company Matching Account.

          (g) Notwithstanding the foregoing, each Participant who was a
     participant in the PrintPaks Plan on January 31, 1999, shall at all times
     be one hundred percent (100%) vested in his PrintPaks Before-Tax
     Contributions Account and his PrintPaks Company Matching Account.

          (h) Notwithstanding the foregoing, each Participant who was a
     participant in the Fort Wayne Plan on December 14, 2000, shall at all times
     be one hundred percent (100%) vested in his Fort Wayne Plan Before-Tax
     Contributions Account, his Fort Wayne Plan Company Matching Account and his
     Fort Wayne Plan Nonelective Account.

          (i) Notwithstanding the foregoing, each Participant who was a
     participant in the Pleasant Plan on September 30, 2001, shall at all times
     be one hundred percent (100%) vested in his Pleasant Plan Nonelective
     Contributions Account.

          (j) Additionally, each Participant who (i) was employed at the Mattel-
     Customer Care Center, Phoenix, Arizona division of the Company on March 27,
     2001, (ii) was employed at the Mattel Operations-Murray division of the
     Company on April 3, 2001 or (iii) was employed at the Mattel-Hebron,
     Kentucky division of the Company on April 24, 2001 shall at all times be
     one hundred percent (100%) vested in his Company Matching Account and his
     Company Contributions Account.

8.2  Distribution Upon Retirement.
     ----------------------------

          (a) A Participant may retire from the employment of the Company on his
     Normal Retirement Date.  Subject to the required distribution rules under
     (b) below, if the Participant continues in the service of the Company
     beyond his Normal Retirement Date, he shall continue to participate in the
     Plan in the same manner as Participants who have not reached their Normal
     Retirement Dates.  At the subsequent termination of the

                                       44
<PAGE>

     Participant's employment on his late retirement date, his Distributable
     Benefit shall be based upon the value of his Accounts as of the applicable
     Valuation Date determined with reference to the date of distribution. After
     a Participant has reached his Normal Retirement Date, any termination of
     the Participant's employment (other than by reason of death or disability)
     shall be deemed a Normal Retirement.

          (b) Upon Normal Retirement a Participant shall be entitled to a
     distribution of his Distributable Benefit in the Trust Fund.  Such
     distribution shall be made or commence to be made as soon as practicable
     but no later than the sixtieth day after the close of the Plan Year in
     which occurs the Participant's termination of employment with the Company
     and all Affiliated Companies, unless a later date is specified by the
     Participant in a written election filed with the Plan Administrator on or
     after April 1, 1997.  Notwithstanding the foregoing, in the case of a
     Participant who is a "5-percent owner" (within the meaning of Section
     401(a)(9) of the Code) distribution shall be made or commence to be made
     not later than April 1 following the calendar year in which such
     Participant attains age 70-1/2, whether or not the Participant's employment
     has terminated.

          (c) With respect to distributions under the Plan made for calendar
     years beginning on or after January 1, 2002, the Plan will apply the
     minimum distribution requirements of Section 401(a)(9) of the Code in
     accordance with the regulations under Section 401(a)(9) that were proposed
     on January 17, 2001, notwithstanding any provision of the Plan to the
     contrary.  This provision shall continue in effect until the end of the
     last calendar year beginning before the effective date of final regulations
     under Section 401(a)(9) or such other date as may be specified in guidance
     published by the Internal Revenue Service.

8.3  Distribution Upon Death Prior to Termination of Employment.
     ----------------------------------------------------------

          (a) Upon the death of a Participant during his employment the
     Committee shall direct the Trustee to make a distribution of the
     Participant's Distributable Benefit in the Trust Fund in a single lump sum
     to the Beneficiary designated by the deceased Participant, or as otherwise
     determined under Section 8.9.

          (b) Distribution as provided in Section 8.3(a) shall be made as soon
     as practicable but in no event later than sixty (60) days after the close
     of the Plan Year in

                                       45
<PAGE>

     which all facts required by the Committee to be established as a condition
     of payment shall have been established to the satisfaction of the Committee
     (provided that, to the extent required by Section 401(a)(9) of the Code,
     his entire Distributable Benefit shall be distributed within five (5) years
     of such Participant's death).

8.4  Death After Termination of Employment.
     -------------------------------------

          (a) Upon the death of a former Participant after his retirement or
     other termination of employment, but prior to the distribution of his
     entire Distributable Benefit in the Trust Fund to which he is entitled, the
     Committee shall direct the Trustee to make a distribution of the balance to
     which the deceased Participant was entitled, in a single lump sum, to the
     Beneficiary designated by the deceased Participant or as otherwise
     determined under Section 8.9.

          (b) Distribution as provided in Section 8.4(a) shall be made as soon
     as practicable but in no event later than sixty (60) days after the close
     of the Plan Year in which all facts required by the Committee to be
     established as a condition of payment shall have been established to the
     satisfaction of the Committee (provided that, to the extent required by
     Section 401(a)(9) of the Code, his entire Distributable Benefit shall be
     distributed within five (5) years of such Participant's death).

8.5  Termination of Employment Prior to Normal Retirement Date.
     ---------------------------------------------------------

          (a) Subject to the provisions of Section 8.5(b) below, if a
     Participant's employment for the Company and all Affiliated Companies
     terminates prior to his Normal Retirement Date, his Distributable Benefit
     in the Trust Fund shall be paid as soon as administratively feasible
     following his Normal Retirement Date, unless a later date is specified by
     the Participant in a written election filed with the Plan Administrator on
     or after April 1, 1997.  Unless elected otherwise, in no event shall such
     distribution be later than sixty (60) days after the close of the Plan Year
     in which occurs the Participant's Normal Retirement Date.  Notwithstanding
     the foregoing, in the case of a Participant who is a "5-percent owner"
     (within the meaning of Section 401(a)(9) of the Code) distribution shall be
     made or commence to be made not later than April 1 following the calendar
     year in which such Participant attains age 70-1/2.

          (b) If the Participant makes a valid written election in accordance
     with (c) below, payment of his Distributable Benefit pursuant to this
     Section 8.5 may be made

                                       46
<PAGE>

     on an earlier date which is not later than sixty (60) days after the close
     of the Plan Year in which occurs the later of (i) the Participant's
     termination of employment with the Company and all Affiliated Companies, or
     (ii) a date specified by the Participant in the valid written election
     filed by the Participant, on or after April 1, 1997, to the extent
     administratively feasible. For purposes of Section 72(t) of the Code, any
     distribution to a Participant in accordance with this Section 8.5 during or
     following the year in which he attains age fifty-five (55) shall be deemed
     to be on account of an event enumerated in Code Section 72(t)(2).

          (c) Effective as of January 1, 1989, any written election by a
     Participant to receive payment of his Distributable Benefit prior to Normal
     Retirement Date shall not be valid unless such election is made both (A)
     after the Participant receives a written notice advising him of his right
     to defer payment to Normal Retirement Date and (B) within the ninety (90)
     day period ending on the Participant's "Benefit Starting Date."  The notice
     to the Participant advising him of his right to defer payment shall be
     given no less than thirty (30) nor more than ninety (90) days prior to the
     Participant's Benefit Starting Date.  For purposes of this Subsection (c),
     "Benefit Starting Date" shall mean the first day of the first period for
     which the Participant's Distributable Benefit is paid.  Notwithstanding the
     foregoing, payment of the Participant's Distributable Benefit may commence
     less than thirty (30) days after receipt of the notice, provided that the
     Plan Administrator clearly informs the Participant that the Participant has
     a right to a period of at least thirty (30) days after receiving the notice
     to consider the decision of whether or not to elect to receive payment and
     the Participant, after receiving the notice, affirmatively elects to
     receive payment.

          (d) In the event a Participant is not fully vested in all of his
     Company Contributions Account or Company Matching Account under the Plan,
     the portion of such Accounts which is not vested shall be forfeited as of
     the earlier of the date the vested portion of such Accounts is completely
     distributed to him or the date he incurs five (5) consecutive one-year
     Periods of Severance.

          (e) Notwithstanding the foregoing, if a Participant ceases to be an
     Employee by reason of the disposition by the Company or an Affiliated
     Company of either (i) substantially all of the assets used by the Company
     or an Affiliated Company, as the

                                       47
<PAGE>

     case may be, in a trade or business, or (ii) the interest of the Company or
     an Affiliated Company, as the case may be, in a subsidiary, such
     Participant shall be entitled to distribution of his Distributable Benefit
     as if, for purposes of this Plan only, such event constitutes a termination
     of employment.

8.6  Withdrawals.
     -----------

          (a) Subject to the succeeding provisions of this Section 8.6, while he
     is still an Eligible Employee, a Participant may withdraw amounts from his
     Accounts under the Plan; provided, however, that not more than one
     withdrawal may be made by a Participant from his Accounts within any single
     quarter of a Plan Year and a withdrawal must be for at least $200 (or the
     entire amount available for withdrawal, if less).  A withdrawal other than
     on account of Hardship shall be made from the Participant's Accounts in the
     following order, in each case up to the amount available for withdrawal in
     such Accounts (i) After-Tax Contributions Account; (ii) Transfer/Rollover
     Account; and (iii) Company Matching Account.  Payment of a withdrawal shall
     be made only in cash and shall be allocated pro rata among the
     Participant's investment fund subaccounts, including any Company Stock
     subaccount.  In no event may any amount be withdrawn by a Participant after
     he ceases to be an Eligible Employee.

          (b) A withdrawal from a Participant's Transfer/Rollover Account may be
     made in accordance with rules of uniform application which the Committee
     may from time to time prescribe; provided, however, that, except in the
     case of a Participant who is determined to have a Total and Permanent
     Disability and who is ineligible to make further contributions under
     Section 5.1, no amount representing Employee contributions made within the
     preceding six months to the Mattel Investment Plan which were matched by
     Company matching contributions under said Plan may be withdrawn from such
     Account; and provided further, that unless the Participant has completed an
     aggregate of at least sixty (60) months of participation in this Plan and
     the Mattel Investment Plan as of the date of withdrawal or has attained age
     59-1/2 or is determined by the Committee to have a Total and Permanent
     Disability, the withdrawal shall not include amounts attributable to
     Company contributions made under the Mattel Investment Plan within the two
     (2) year period preceding withdrawal.

                                       48
<PAGE>

          (c) A withdrawal from a Participant's After-Tax Contribution Account
     may be made in accordance with rules of uniform application which the
     Committee may from time to time prescribe; provided, however, that except
     in the case of a Participant who is determined to have a Total and
     Permanent Disability and who is ineligible to make further contributions
     under Section 5.1, no amount representing After-Tax Contributions made
     within the preceding six months to the Plan which were matched by Company
     Matching Contributions may be withdrawn from such Account.

          (d) A withdrawal from a Participant's Before-Tax Contributions Account
     may be made in accordance with rules of uniform application which the
     Committee may from time to time prescribe; provided, however, that no
     Participant may make a withdrawal from his Before-Tax Contributions Account
     prior to attaining age 59-1/2, or a determination by the Committee that
     such Participant has a Total and Permanent Disability or that the
     withdrawal is necessary to relieve a hardship of the Participant or his
     family.  A Participant may receive a withdrawal due to hardship only if the
     withdrawal both is made due to an immediate and heavy financial need of the
     Participant within the meaning of (i) below and is necessary to satisfy
     such financial need within the meaning of (ii) below.

               (i) For purposes of this Section 8.6(d), a withdrawal will be
          considered to be on account of an immediate and heavy financial need
          of the Participant only if the withdrawal is for: (A) expenses for
          medical care described in Code Section 213(d) previously incurred by
          the Participant, or his Spouse or dependents (as defined in Code
          Section 152), or expenses which are necessary for such persons to
          obtain medical care (as defined above); (B) costs directly related to
          the purchase of a principal residence for the Participant (excluding
          mortgage payments); (C) payment of tuition, related educational fees,
          and room and board expenses for the next 12 months of post-secondary
          education for the Participant, or his Spouse, children, or dependents
          (as defined above); (D) payments necessary to prevent the eviction of
          the Participant from his principal residence or foreclosure on the
          mortgage on such residence; or (E) such other deemed immediate and
          heavy financial needs as are set forth by the Internal Revenue

                                       49
<PAGE>

          Service through the publication of revenue rulings, notices, and other
          documents of general applicability.

               (ii) For purposes of this Section 8.6(d), a distribution shall be
          considered to be necessary to satisfy an immediate and heavy financial
          need of the Participant only if all of the following conditions are
          satisfied: (A) the distribution is not in excess of the amount of the
          immediate and heavy financial need of the Participant, which may
          include amounts necessary to pay federal, state, or local income taxes
          or penalties reasonably anticipated to result from the distribution;
          (B) the Participant has obtained all distributions (other than
          hardship distributions) and all non-taxable loans (at the time of the
          loan) currently available under all plans maintained by the Company;
          (C) the Deferral Limitation for the Participant for the Participant's
          taxable year following the taxable year of the hardship distribution
          shall be reduced by the amount of the Participant's Before-Tax
          Contributions for the taxable year of the hardship distribution
          withdrawal; and (D) the Participant's Before-Tax Contributions and
          After-Tax Contributions to the Plan and employee contributions under
          all qualified and non-qualified plans of deferred compensation
          maintained by the Company, including a stock option, stock purchase,
          or similar plan, or a cash-or-deferred arrangement that is part of a
          cafeteria plan (within the meaning of Code Section 125), will be
          suspended under the terms of each such plan, or in accordance with the
          terms of an otherwise legally enforceable agreement, for twelve (12)
          months (six (6) months effective January 1, 2002) following the
          receipt of the hardship distribution.

          Notwithstanding the foregoing, the amount of any hardship withdrawal
     shall not exceed a Participant's `distributable amount,' which consists of
     the total of such Participant's Before-Tax Contributions as of the date of
     the hardship withdrawal, including earnings credited thereon before
     December 31, 1988 (if any), reduced by the amount of any previous hardship
     withdrawals.  The Committee will determine whether a hardship withdrawal
     satisfies the foregoing standards in a uniform and nondiscriminatory manner
     consistent with Code Section 401(k) and the regulations promulgated
     thereunder.

          (e) A withdrawal from a Participant's vested interest in his Company
     Contributions Account may be made in accordance with rules of uniform
     application

                                       50
<PAGE>

     which the Committee may from time to time prescribe; provided, however,
     that no participant may withdraw from his Company Contributions Account
     prior to attaining age 59-1/2 or a determination by the Committee that such
     Participant has a Total and Permanent Disability or that the withdrawal is
     necessary to relieve a hardship of the Participant or his family within the
     meaning of Section 8.6(d) of the Plan.

          (f) A withdrawal from the vested portion of a Participant's Company
     Matching Account may be made in accordance with rules of uniform
     application which the Committee may from time to time prescribe; provided,
     however, that unless the Participant has completed an aggregate of at least
     sixty (60) months of participation in this Plan and the Mattel Investment
     Plan, the F-P Savings Plan, the Tyco Plan, the PrintPaks Plan or the
     Pleasant Plan as of the date of withdrawal or has attained age 59-1/2 or is
     determined by the Committee to have Total and Permanent Disability, any
     withdrawal from such Company Matching Account shall not include amounts
     attributable to Company contributions made within the two (2) year period
     preceding withdrawal.

          (g) Notwithstanding anything in this Article to the contrary, a
     Participant can elect to receive all or any portion of his vested Accounts
     once such Participant attains age 70-1/2.

          (h) If a Participant makes an in-service withdrawal from his Company
     Contributions Account or Company Matching Account at a time when the
     Participant does not have a one hundred percent (100%) vested interest in
     the value of such Account, and the Participant may increase his vested
     interest in the Account:

               (i) such account shall be established as a separate Account as of
          the date of distribution, and

               (ii) at any relevant time the Participant's vested interest in
          the value of such separate Account shall be equal to an amount ("X")
          determined by the formula:

                               X = P (AB + D) - D

          For purposes of applying the formula above: P is the nonforfeitable
          percentage at the relevant time, AB is the Account balance at the
          relevant time, and D is the amount of the withdrawal.

                                       51
<PAGE>

          (i) Disbursement of withdrawals shall be as soon as administratively
     practicable after the submission of a request for withdrawal in form
     satisfactory to the Committee.

8.7  Form of Distribution.
     --------------------

          (a) Unless a Participant makes a written election in accordance with
     Section 8.7 (c) or 8.8 below, a Participant's Distributable Benefit shall
     be payable in the form of a single sum distribution.  Except for any
     portion of such Distributable Benefit that is payable in the form of
     Company Stock in accordance with Section 8.13, such distribution shall be
     in cash.

          (b) In the case of any cash disbursement from a Participant's
     Accounts, such disbursement shall be made ratably from such investment
     funds or investment vehicles in which such Participant's Accounts affected
     by such disbursement are invested.

          (c) Effective April 1, 1997, a Participant who terminates employment
     on or after his Normal Retirement Date, Early Retirement Date or by reason
     of Total and Permanent Disability may elect to receive his benefit in
     installments payable monthly, quarterly or annually for a period of five,
     ten or fifteen years (but no longer than the Participant's life expectancy
     determined as of his Benefit Starting Date).  The installments for each
     year shall not be less than the annual installment determined under the
     requirements of Section 401(a)(9) of the Code.  All such installments shall
     be paid in cash or Company Stock and the installment or installments for
     the year in which the Participant attains age 70-1/2 and all subsequent
     years shall be paid to the Participant on or before December 31 of such
     year.

8.8  Election for Direct Rollover of Distributable Benefit to Eligible
     -----------------------------------------------------------------
     Retirement Plan.
     ---------------

          (a) To the extent required by Section 401(a)(31) of the Code, a
     Participant who is eligible to receive payment of his Distributable Benefit
     shall be entitled to elect a direct rollover of all or part of his
     Distributable Benefit.  For purposes of this Section, an "eligible
     retirement plan" shall mean any plan described in Code Section
     402(c)(8)(B), including an annuity contract described in Section 403(b) of
     the Code and an eligible plan under Section 457(b) of the Code which is
     maintained by a state, political subdivision of a state or any agency or
     instrumentality of a state or political subdivision of a state and which
     agrees to separately account for amounts transferred to such plan from the
     Plan,

                                       52
<PAGE>

     the terms of which permit the acceptance of a direct rollover from a
     qualified plan.  The portion of a Participant's Distributable Benefit
     consisting of after-tax contributions which are not includible in income
     shall be eligible for a direct rollover in accordance with the provisions
     of this Section.  However, such portion may be transferred only to an
     individual retirement account or annuity described in Section 408(a) or (b)
     of the Code, or to a qualified defined contribution plan described in
     Section 401(a) or 403(a) of the Code, that agrees to separately account for
     amounts so transferred, including separately accounting for the portion of
     such Distributable Benefit which is includible in gross income and the
     portion of such Distributable Benefit which is not so includible in gross
     income.

          (b) A Participant's direct rollover election under this Section shall
     be in writing and shall be made in accordance with rules and procedures
     established by the Committee.  Such election shall specify the dollar or
     percentage amount of the Distributable Benefit to be rolled over, the name
     of the eligible retirement plan selected by the Participant, and such
     additional information as the Committee deems necessary or appropriate in
     order to implement the election.  It shall be the Participant's
     responsibility to confirm that the eligible retirement plan designated in
     his direct rollover election will accept the direct rollover of his
     Distributable Benefit.  The Committee shall be entitled to direct the
     rollover based on its reasonable reliance on information provided by the
     Participant, and shall be not required to independently verify such
     information, unless it is clearly unreasonable not to do so.

          (c) At least thirty (30) days, but not more than ninety (90) days,
     prior to the date a Participant's Distributable Benefit becomes payable,
     the Participant shall be given written notice of any right he may have to
     elect a direct rollover of the taxable portion of his Distributable Benefit
     to an eligible retirement plan.  Notwithstanding the foregoing, a direct
     rollover of the Participant's Distributable Benefit may be made less than
     thirty (30) days after receipt of the notice, provided that the Plan
     Administrator clearly informs the Participant that the Participant has a
     right to a period of at least thirty (30) days after receiving the notice
     to consider the decision of whether or not to elect a direct rollover and
     the Participant, after receiving the notice, affirmatively elects a direct
     rollover.

                                       53
<PAGE>

          (d) If a Participant who attained his Normal Retirement Date or whose
     Distributable Benefit does not exceed $5,000 fails to file a written
     election with the Committee within ninety (90) days after notice is given,
     or if the Committee cannot effect the direct rollover within a reasonable
     time after the election is filed due to the failure of the Participant to
     take such actions as may be required by the eligible retirement plan before
     it will accept the direct rollover, the Participant's Distributable Benefit
     shall be paid to him after withholding applicable income taxes.

          (e) If a Participant has made a direct rollover election with respect
     to any portion of his Distributable Benefit that is payable in Company
     Stock, as provided in Section 8.13, unless the eligible retirement plan
     specified by the Participant will accept a direct rollover of such Stock,
     the Stock will be distributed to the Participant, notwithstanding the
     Participant's direct rollover election.

          (f) To the extent required by Section 401(a)(31) of the Code, if all
     or a portion of a Participant's Distributable Benefit is payable to the
     Participant's surviving Spouse, or to a former Spouse in accordance with a
     "qualified domestic relations order," such surviving Spouse or former
     Spouse shall be entitled to elect a direct rollover of all or a portion of
     such distribution in accordance with the provisions of this Section.

          (g) Notwithstanding the foregoing, a Participant's direct rollover
     shall not include any hardship withdrawal described in Section 8.6(d) of
     the Plan and Code Section 401(k)(2)(B), and the Participant may not elect
     to have any portion of such a distribution paid directly to an eligible
     retirement plan.

8.9  Designation of Beneficiary.
     --------------------------

          (a) Subject to the provisions of Section 8.11, each Participant shall
     have the right to designate a Beneficiary or Beneficiaries to receive his
     interest in the Trust Fund in the event of his death before receipt of his
     entire interest in the Trust Fund.  This designation is to be made on the
     form prescribed by and delivered to the Committee.

          (b) Subject to the provisions of Section 8.11, a Participant shall
     have the right to change or revoke any such designation by filing a new
     designation or notice of revocation with the Committee.  Subject to the
     provisions of Section 8.11, no notice to any Beneficiary nor consent by any
     Beneficiary shall be required to effect any such change or revocation.

                                       54
<PAGE>

          (c)  If a deceased Participant shall have failed to designate a
      Beneficiary, or if the Company shall be unable to locate a designated
      Beneficiary after reasonable efforts have been made, or if for any reason
      the designation shall be legally ineffective, or if the Beneficiary shall
      have predeceased the Participant without effectively designating a
      successor Beneficiary, any distribution required to be made under the
      provisions of this Plan shall commence within three (3) years after the
      Participant's death to the person or persons included in the highest
      priority category among the following, in order of priority:

               (i)   The Participant's surviving spouse;

               (ii)  The Participant's surviving children, including adopted
                     children;

               (iii) The Participant's surviving parents; or

               (iv)  The Participant's estate.

      The determination by the Committee as to which persons, if any, qualify
      within the foregoing categories shall be final and conclusive upon all
      persons.

          (d)  In the event that the deceased Participant was not a resident of
      California at the date of his death, the Committee, in its discretion, may
      require the establishment of ancillary administration in California. In
      the event that a Participant shall predecease his Beneficiary and on the
      subsequent death of the Beneficiary a remaining distribution is payable
      under the applicable provisions of this Plan, the distribution shall be
      payable in the same order of priority categories as set forth above but
      determined with respect to the Beneficiary, subject to the same provisions
      concerning non-California residency, the unavailability of an estate
      representative and/or the absence of administration of the Beneficiary's
      estate as are applicable on the death of the Participant.

8.10  Facility of Payment.
      -------------------

      If any payee under the Plan is a minor or if the Committee reasonably
believes that any payee is legally incapable of giving a valid receipt and
discharge for any payment due him, the Committee may have the payment, or any
part thereof, made to the person (or persons or institution) whom it reasonably
believes is caring for or supporting the payee, unless it has received due
notice of claim therefor from a duly appointed guardian or committee of the
payee.  Any payment shall be a payment from the Accounts of the payee and shall,
to the extent thereof, be a complete discharge of any liability under the Plan
to the payee.

                                       55
<PAGE>

8.11  Requirement of Spousal Consent.
      ------------------------------

      Notwithstanding any Beneficiary designation submitted by a Participant,
any distribution required to be made under the terms of the Plan by reason of
the death of the Participant shall be paid in full to the Participant's
surviving spouse, unless there is no surviving spouse or the spouse consents in
writing to the beneficiary designation, acknowledging the effect of the
election. Any such spousal consent, to be valid, must be witnessed by a plan
representative or a notary public. The spousal consent requirement of this
Section 8.11 shall be waived and the Participant's Beneficiary designation shall
be made effective if the Participant establishes to the satisfaction of the
Committee that the required consent cannot be obtained because there is no
spouse or the spouse cannot be located.

8.12  Additional Documents.
      --------------------

          (a) The Committee or Trustee, or both, may require the execution and
      delivery of such documents, papers and receipts as the Committee or
      Trustee may determine necessary or appropriate in order to establish the
      fact of death of the deceased Participant and of the right and identity of
      any Beneficiary or other person or persons claiming any benefits under
      this Article VIII.

          (b) The Committee or the Trustee, or both, may, as a condition
      precedent to the payment of death benefits hereunder, require an
      inheritance tax release and/or such security as the Committee or Trustee,
      or both, may deem appropriate as protection against possible liability for
      state or federal death taxes attributable to any death benefits.

8.13  Company Stock Distribution.
      --------------------------

      Except in the case of a withdrawal in accordance with Section 8.6, payment
of any portion of a Participant's Distributable Benefit held in his Company
Stock subaccount shall be paid in cash, unless the Participant elects in writing
in accordance with procedures established by the Committee that payment shall be
made in Company Stock in lieu of cash (which election may apply to a payment to
the trustee of an "eligible retirement plan" in accordance with Section 8.8).
Within a reasonable period of time prior to the date such Participant's
Distributable Benefit is to be paid, the Committee shall notify the Participant
of his right to elect to have payment of the value of his Company Stock
subaccount made in the form of a cash distribution in lieu of a Company Stock
distribution.  Upon being so notified, the Participant shall have a

                                       56
<PAGE>

reasonable time (at least thirty (30) days) in which to file a written election
to have such payment made in cash. Any such election shall be irrevocable and
shall operate to require the Trustee to value such Company Stock as of the
immediately following Valuation Date at the then prevailing purchase price.
Neither the Company, the Committee, nor the Trustee shall be required to time
the distribution or sale of Company Stock to anticipate fluctuations in the
purchase price. If a Participant fails to file a written election to receive an
in kind payment of the value of the portion of his Distributable Benefit
attributable to his Company Stock subaccount within thirty (30) days of
receiving notification, payment shall be made in cash.

8.14  Valuation of Accounts.
      ---------------------

          (a)  For purposes of determining a Participant's Distributable Benefit
      under this Plan, the value of a Participant's Accounts shall be determined
      in accordance with rules prescribed by the Committee, subject, however, to
      the following provisions:

               (i)   Unless the provisions of (ii) below apply, if a
          Participant's employment terminates for any reason other than death,
          the value of a Participant's Accounts shall be determined as of the
          Valuation Date coinciding with or next following the date on which a
          properly completed application for payment or transfer of the
          Participant's Distributable Benefit, and such other forms as may be
          required by the Committee in order to process the distribution or
          transfer, are received by the Committee.

               (ii)  If a Participant's employment terminates for any reason
          other than death and the Committee does not receive the Participant's
          properly completed application for the payment or transfer of the
          Participant's Distributable Benefit, and such other forms as may be
          required by the Committee to process the payment or transfer, and the
          value of such Participant's Accounts at the applicable Valuation Date
          does not exceed $5,000, the applicable Valuation Date shall be the
          Valuation Date coinciding with or next following the expiration of a
          reasonable period of time after the Participant is furnished with such
          application and forms, including any tax notice required under Code
          Section 402(f).

               (iii) In the case of a Participant's death, the value of a
          Participant's Accounts for purposes of determining the Participant's
          Distributable Benefit shall be determined as of the Valuation Date
          coinciding with or next following the date

                                       57
<PAGE>

           on which the Committee has been furnished with all documents and
           information (including but not limited to proof of death, facts
           demonstrating the identity and entitlement of any Beneficiary or
           other payee, and any and all releases) necessary to distribute such
           Participant's Accounts.

                (iv) In the case of any withdrawal or loan, the value of a
           Participant's Accounts under the Plan shall be determined as of the
           Valuation Date coinciding with or next following the date on which
           the Participant submits a request for such withdrawal or loan in a
           form satisfactory to the Committee and the withdrawal or loan is
           approved.

                (v)  The value of a Participant's Accounts shall be increased or
           decreased (as appropriate) by any contributions, forfeitures, or
           distributions properly allocable under the terms of this Plan to his
           Accounts that occurred on or after the most recent Valuation Date or
           for any other reason were not otherwise reflected in the valuation of
           his Accounts on such Valuation Date.

           (b) Neither the Committee, the Company, nor the Trustee shall have
      any responsibility for any increase or decrease in the value of a
      Participant's Accounts as a result of any valuation made under the terms
      of this Plan after the date of his termination of employment and before
      the date of the distribution of his Accounts to him. Also, neither the
      Committee, the Company, nor the Trustee shall have any responsibility for
      failing to make any interim valuation of a Participant's Accounts between
      the date of distribution to the Participant of his Accounts and the
      applicable Valuation Date, even though the Plan assets may have been
      revalued in that interim for a purpose other than to revalue the Accounts
      under this Plan.

8.15  Forfeitures; Repayment.
      ----------------------

           (a) Amounts forfeited in accordance with Section 8.5(d) shall be
      applied as soon as practicable to reduce future Company contributions.

           (b) A Participant who elects to receive a distribution pursuant to
      Subsection 8.5(b) may, in the case of his reemployment as an Eligible
      Employee, repay the total amount distributed and shall in such case be
      fully restored in amounts forfeited in accordance with Section 8.5(d);
      provided, however, that no such repayment shall be permitted unless such
      repayment is made prior to the date the Participant incurs five (5)

                                       58
<PAGE>

      consecutive one-year Periods of Severance and prior to the second
      anniversary of his Employment Commencement Date following the Period of
      Severance.

8.16  Loans.
      -----

          (a) From time to time, the Committee may adopt procedures whereby a
      Participant may borrow from his Accounts under the Plan. In no event may
      any amount be borrowed by a Participant after he ceases to be an Eligible
      Employee. In addition to such other requirements as may be imposed by
      applicable law, any such loan shall bear a reasonable rate of interest,
      shall be adequately secured by proper collateral, and shall be repaid
      within a specified period of time according to a written repayment
      schedule that calls for substantially level amortization over the term of
      the loan.

          (b) In connection with the requirements set forth in Subsection (a)
      above, the Committee shall establish the applicable interest rate, which
      shall be reasonably equivalent to interest rates available commercially
      with respect to similar loans. Without prejudice to the right of any
      Participant and the Trustee to enter into other appropriate arrangements
      to secure repayment of a loan pursuant to this Section 8.16, a loan to a
      Participant hereunder may be secured by an interest in the Participant's
      vested interest in his Accounts under this Plan. Any loan shall by its
      terms require repayment within five (5) years in substantially level
      payments made no less frequently than quarterly, except that the repayment
      period may be up to a maximum of fifteen (15) years in the case of a loan
      certified by the Participant to be used to acquire any dwelling unit which
      within a reasonable time is to be used (determined at the time the loan is
      made) as a principal residence of the Participant.

          (c) In no event shall the principal amount of a loan hereunder, at
      the time the loan is made, together with the outstanding balance of all
      other loans to the Participant under this Plan, exceed the lesser of:

              (i) fifty percent (50%) of the value of the Participant's vested
          interest in his Accounts under this Plan (provided, however, for loans
          granted or renewed prior to October 19, 1989, the amount determined
          under this Subsection 8.16(c)(i) shall not be less than the lesser of
          ten thousand dollars ($10,000) or the full value of all such Accounts
          of the Participant where such value is less than twenty thousand
          dollars ($20,000)), or

                                       59
<PAGE>

               (ii) fifty thousand dollars ($50,000), reduced by the highest
          outstanding loan balance of the Participant from the Plan during the
          1-year period ending on the day before the date on which such loan was
          made.

     No loan less than two thousand dollars ($2,000) will be made.  Unless
     otherwise determined by the Committee, no Participant may have more than
     one loan outstanding under this Plan on any date; provided, however, that a
     Participant who was a participant in the F-P Savings Plan on March 31, 1997
     may apply for one additional loan on or before December 31, 1997, even if
     he then has one or more loans outstanding.

          (d) Each Participant desiring to enter into a loan arrangement
     pursuant to this Section 8.16 shall apply for a loan by submitting a loan
     request in form satisfactory to the Committee.  The Committee shall notify
     the Participant within a reasonable time whether the request is approved or
     denied.  Upon arrival of the request by the Committee, the Participant
     shall enter into a loan agreement with the Trustee.  Such a Participant
     shall execute such further written agreements as may be necessary or
     appropriate to establish a bona fide debtor-creditor relationship between
     such Participant and the Trustee and to protect against the impairment of
     any security for said loan.

          (e) Any loan made to a Participant shall be secured by a pro rata
     portion of his vested investment fund subaccounts, including any Company
     Stock subaccount.  Repayments of a loan by a Participant shall be invested
     among the Participant's investment fund subaccounts in accordance with the
     Participant's investment election then in effect under Section 6.6(a)(i).

          (f) Loans shall be repaid in accordance with the repayment schedule
     provided under the terms of the loan agreement.  Notwithstanding the
     repayment schedule provided in a loan agreement, however, the amount of any
     outstanding loan shall be due and payable on the earlier to occur of (a)
     the date on which distribution is made or commences to be made of the
     participant's vested interest under the Plan or (b) the expiration of one
     hundred eighty (180) days following the date the Participant ceases to be
     an Employee.  Following a Participant's Severance Date, any outstanding
     loan amount which has become due and payable under the foregoing rule or
     otherwise, and which is secured by the Participant's vested interest in his
     Accounts, shall be treated as distributed from the Plan to the Participant.

                                       60
<PAGE>

          (g) In the event a Participant fails to repay a loan in accordance
      with the terms of a loan agreement, such loan shall be treated as in
      default. The date of the enforcement of the security interest due to a
      loan in default shall be determined by the Committee, provided no loss of
      principal or income shall result due to any delay in the enforcement of
      the security interest due to the default. As of the Participant's
      Severance Date, the Participant's Distributable Benefit shall be reduced
      by the outstanding amount of a loan which is then in default, including
      any accrued interest thereon, that is secured by the Participant's vested
      interest in his Accounts. Any reasonable costs related to collection of a
      loan made hereunder shall be borne by the Participant.

          (h) To the extent required to comply with the requirements of Section
      401(a)(4) of the Internal Revenue Code, loans hereunder shall be made in a
      uniform and non-discriminatory manner.

8.17  Special Rule for Disabled Employees.
      -----------------------------------

          (a) Subsection 8.17(b) shall apply to any Participant whose active
      performance of services for a Participating Company has ceased by reason
      of disability, and who has not subsequently resumed the active performance
      of such services. Subsections 8.17(c) and (d) shall apply only to a
      Participant whose active performance of services for a Participating
      Company ceases prior to January 1, 1989 by reason of disability, and who
      has not subsequently resumed the active performance of such services.

          (b) In the case of a Participant to whom this Section 8.17(b) applies,
      so long as such Participant continues to receive Compensation from a
      Participating Company, but in no event for longer than a period of six (6)
      months commencing with the date of such Participant's cessation of active
      service, such Participant may continue to participate in this Plan in the
      same manner as any other Participant.

          (c) In the case of a Participant to whom this Section 8.17 applied by
      reason of a disability prior to January 1, 1989 and who, on or after
      expiration of the period described in Section 8.17(b) above, commences to
      receive payments under the long term disability benefit coverage provided
      by a Participating Company and who also is determined to be suffering from
      a Total and Permanent Disability, contributions shall be made by the
      Participating Company pursuant to Section 6.1(a) (relating to
      contributions

                                       61
<PAGE>

     to Participants' Company Contributions Accounts) with respect to the
     Participant's "Compensation" as defined in Subsection 8.17(d) below, but
     the Participant shall not be eligible to make any contributions with
     respect to his own Compensation, and shall not be entitled to share in any
     other Participating Company contributions to the Plan (including but not
     limited to contributions to the Company Matching Account).  Contributions
     by a Participating Company pursuant to this Section 8.17(c) shall be
     subject to amendment or termination of the Plan or other suspension or
     discontinuance of contributions, and in any event shall cease to be made
     with respect to any Participant after the earlier to occur of such
     Participant's death or termination of employment for any other reason,
     cessation of Total and Permanent Disability, or attainment of age sixty-
     five (65).

          (d) In the case of a Participant to whom Section 8.17 applied by
     reason of a disability prior to January 1, 1989 and who is eligible to
     share in contributions of a Participating Company as provided in Subsection
     8.17(c) above, the Compensation of such Participant for a Plan Year shall
     be deemed to equal the amount of Compensation which the Participant was
     paid (and which was taken into account for purposes of Sections 5.1 and 6.1
     hereof) immediately before sustaining such Total and Permanent Disability,
     provided, however, that such amounts shall be included in Compensation only
     upon the following conditions:

               (i) the Participant is not an officer, owner, or highly
          compensated individual (within the meaning of such terms under Code
          Section 415(c)(3));

               (ii) the payments to such Participant under such long term
          disability benefit coverage shall be treated as "Compensation" only to
          the extent that such payments do not exceed the Participant's wage or
          salary rate paid immediately before becoming disabled to an extent
          constituting a Total and Permanent Disability; and

               (iii)  the Participant's accounts under the Plan, to the extent
          attributable to contributions made during a period of Total and
          Permanent Disability shall be nonforfeitable.

          (e) For purposes of this Plan, a Participant shall not be deemed to
     have terminated employment prior to his ceasing to be eligible for
     contributions under this

                                       62
<PAGE>

      Section 8.17, and upon such cessation of eligibility shall be deemed to
      have terminated employment only if he did not then begin or recommence
      employment for the Company or an Affiliated Company.

8.18  Election for Fully Vested Employees Transferred to Fisher-Price, Inc.
      ---------------------------------------------------------------------

      A fully vested Participant who prior to April 1, 1997 transfers employment
from the Company (or other Participating Company) to Fisher-Price, Inc. and who
is eligible to participate in the Fisher-Price, Inc. Matching Savings Plan may
elect to transfer his entire vested account balance in the Plan to the Fisher-
Price, Inc. Matching Savings Plan by filing an election form at the time and in
the manner prescribed by the Committee.  The transfer must be made in cash
except that any promissory note evidencing an outstanding loan to the
Participant from the Plan may be transferred in kind.  Any transferred
promissory note shall thereafter be repayable by the Participant to the Fisher-
Price, Inc. Matching Savings Plan in accordance with its terms.

8.19  Provision for Small Benefits.
      ----------------------------

      Notwithstanding anything in this Article to the contrary, a Participant
who terminates employment with the Company and all Affiliated Companies shall
receive a distribution of his Distributable Benefit in a single lump sum payment
no later than sixty (60) days after the close of the Plan Year in which the
Participant's termination of employment occurs to the extent administratively
feasible, provided that the value of such Distributable Benefit is equal to or
less than $5,000, determined as of the Valuation Date coincident with or
immediately preceding his termination of employment. Effective January 1, 2002,
for purposes of this Section 8.19, the value of a Participant's Distributable
Benefit shall be determined without regard to that portion of the Participant's
Distributable Benefit that is attributable to the Participant's
Transfer/Rollover Account. If the value of the Participant's Distributable
Benefit as so determined is $5,000 or less, the Participant shall receive a
distribution of his Distributable Benefit in a single lump sum payment.

8.20  Special Provisions Applicable to Tyco Plan Accounts.
      ---------------------------------------------------

      The provisions of this Section 8.20 shall apply to the balance of a
Participant's Tyco Before-Tax Contributions Account and Tyco Company Matching
Account ("Tyco Accounts").

          (a) While he is still an Eligible Employee, a Participant may withdraw
      amounts from his Tyco Before-Tax Contributions Account to the extent that
      the

                                       63
<PAGE>

     Participant would be permitted to make a withdrawal from his Before-Tax
     Contributions Account in accordance with Section 8.6 and a Participant may
     withdraw amounts from his Tyco Company Matching Account to the extent that
     the Participant would be permitted to make a withdrawal from his Company
     Matching Account in accordance with Section 8.6.  For this purpose, a
     Participant shall be deemed to have incurred a Total and Permanent
     Disability if because of a physical or mental disability, he will be unable
     to perform the duties of his customary position of employment (or is unable
     to engage in any substantial activity) for an indefinite period which the
     Committee considers will be of long continued duration.

        (b) A Participant may, in addition to the other forms of payment
     available under Section 8.7, elect to receive distribution of any amount
     payable from the Participant's Tyco Accounts or Transfer/Rollover Account
     paid in the form of either monthly, quarterly or annual installments over a
     fixed period of time not to exceed the life expectancy of the Participant
     or the joint life and last survivor expectancy of the Participant and the
     Participant's Beneficiary.  A Beneficiary of a deceased Participant may, in
     addition to the other forms of payment available under Section 8.3 or 8.4,
     elect to receive distribution of any amount payable from the Participant's
     Tyco Accounts or Transfer/Rollover Account paid in the form of either
     monthly, quarterly or annual installments over a fixed reasonable period of
     time not to exceed the life expectancy of the Beneficiary.  Any
     distribution made under this Section 8.20(b) shall be subject to the
     limitations of Section 401 (a)(9) of the Code.

8.21 Special Provisions Applicable to PrintPaks Plan Accounts.
     ---------------------------------------------------------

     The provisions of this Section 8.21 shall apply to the balance of a
Participant's PrintPaks Before-Tax Contributions Account and PrintPaks Company
Matching Account ("PrintPaks Accounts").

          (a) While he is still an Eligible Employee, a Participant may withdraw
     amounts from his PrintPaks Before-Tax Contributions Account to the extent
     that the Participant would be permitted to make a withdrawal from his
     Before-Tax Contributions Account in accordance with Section 8.6 and a
     Participant may withdraw amounts from his PrintPaks Company Matching
     Account to the extent that the Participant would be permitted to make a
     withdrawal from his Company Matching Account in accordance with

                                       64
<PAGE>

      Section 8.6. A Participant who has reached age 55 shall also be eligible
      to withdraw amounts from his PrintPaks Company Matching Account while he
      is an Eligible Employee to the extent otherwise permitted by Section 8.6.

          (b) A Participant may, in addition to the other forms of payment
      available under Section 8.7, elect to receive distribution of any amount
      payable from the Participant's PrintPaks Accounts or Transfer/Rollover
      Account paid in the form of either monthly, quarterly or annual
      installments over a fixed reasonable period of time not to exceed the life
      expectancy of the Participant or the joint life and last survivor
      expectancy of the Participant and the Participant's Beneficiary. A
      Beneficiary of a deceased Participant may, in addition to the other forms
      of payment available under Section 8.3 or 8.4, elect to receive
      distribution of any amount payable from the Participant's PrintPaks
      Account or Transfer/Rollover Account paid in the form of either monthly,
      quarterly or annual installments over a fixed reasonable period of time
      not to exceed the life expectancy of the Beneficiary. Any distribution
      made under this Section 8.21(b) shall be subject to the limitations of
      Section 401(a)(9) of the Code.

8.22  Special Provisions Applicable to Fort Wayne Plan Accounts.
      ----------------------------------------------------------

      With respect to the balance of a Participant's Fort Wayne Plan Before-Tax
Contributions Account, Fort Wayne Plan Company Matching Account and Fort Wayne
Plan Nonelective Account ("Fort Wayne Plan Accounts"), while the Participant is
still an Eligible Employee, a Participant may withdraw amounts from his Fort
Wayne Plan Before-Tax Contributions Account to the extent that the Participant
would be permitted to make a withdrawal from his Before-Tax Contributions
Account in accordance with Section 8.6 and a Participant may withdraw amounts
from his Fort Wayne Plan Company Matching Account to the extent that the
Participant would be permitted to make a withdrawal from his Company Matching
Account in accordance with Section 8.6.

8.23  Special Provisions Applicable to Pleasant Plan Nonelective Account.
      -------------------------------------------------------------------

      With respect to the balance of a Participant's Pleasant Plan Nonelective
Account, while the Participant is still an Eligible Employee, a Participant may
withdraw amounts from his Pleasant Plan Nonelective Account to the extent that
the Participant would be permitted to make a withdrawal from his Company
Matching Account in accordance with Section 8.6.

                                       65
<PAGE>

                                   ARTICLE IX
                    OPERATION AND ADMINISTRATION OF THE PLAN

9.1  Plan Administration.
     -------------------

          (a) Authority to control and manage the operation and administration
     of the Plan shall be vested in a committee ("Committee") as provided in
     this Article IX.

          (b) The members of the Committee shall be appointed by the Board of
     Directors and shall hold office until resignation, death or removal by the
     Board of Directors.  Members of the Committee may, but need not be,
     appointed by appropriate designation of a Committee heretofore constituted
     pursuant to the provisions of another employee benefit plan maintained by
     the Company.

          (c) For purposes of ERISA Section 402(a), the members of the Committee
     shall be Named Fiduciaries of this Plan.

          (d) The Secretary of the Committee shall cause to be attached to the
     copy of the Plan maintained in the office of the Committee for the purpose
     of inspection an accurate schedule listing the names of all persons from
     time to time serving as the Named Fiduciaries of the Plan.

          (e) Notwithstanding the foregoing, a Trustee with whom Plan assets
     have been placed in trust or an Investment Manager appointed pursuant to
     Section 9.3 may be granted exclusive authority and discretion to manage and
     control all or any portion of the assets of the Plan.

9.2  Committee Powers.
     ----------------

     The Committee shall have all powers and discretion necessary to supervise
the administration of the Plan and control its operations.  In addition to any
powers and authority conferred on the Committee elsewhere in the Plan or by law,
the Committee shall have, by way of illustration but not by way of limitation,
the following powers and authority:

          (a) To allocate fiduciary responsibilities (other than trustee
     responsibilities) among the Named Fiduciaries and to designate one or more
     other persons to carry out fiduciary responsibilities (other than trustee
     responsibilities).  However, no allocation or delegation under this Section
     9.2(a) shall be effective until the person or persons to whom the
     responsibilities have been allocated or delegated agree to assume the
     responsibilities.  The term "trustee responsibilities" as used herein shall
     have the meaning set forth in

                                       66
<PAGE>

     Section 405(c) of ERISA. The preceding provisions of this Section 9.2(a)
     shall not limit the authority of the Committee to appoint one or more
     Investment Managers in accordance with Section 9.3.

          (b) To designate agents to carry out responsibilities relating to the
     Plan, other than fiduciary responsibilities.

          (c) To employ such legal, actuarial, medical, accounting, clerical and
     other assistance as it may deem appropriate in carrying out the provisions
     of this Plan, including one or more persons to render advice with regard to
     any responsibility any Named Fiduciary or any other fiduciary may have
     under the Plan.

          (d) To establish rules and regulations from time to time for the
     conduct of the Committee's business and the administration and effectuation
     of this Plan.

          (e) To administer, interpret, construe and apply this Plan in its
     discretion and to decide all questions which may arise or which may be
     raised under this Plan by any Employee, Participant, former Participant,
     Beneficiary or other person whatsoever, including but not limited to all
     questions relating to eligibility to participate in the Plan, the amount of
     service of any Participant, and the amount of benefits to which any
     Participant or his Beneficiary may be entitled by reason of his service
     prior to or after the Effective Date hereof.

          (f) To determine the manner in which the assets of this Plan, or any
     part thereof, shall be disbursed.

          (g) To direct the Trustee, in writing, from time to time, to invest
     and reinvest the Trust Fund, or any part thereof, or to purchase, exchange,
     or lease any property, real or personal, which the Committee may designate.
     This shall include the right to direct the investment of all or any part of
     the Trust in any one security or any one type of securities permitted
     hereunder.  Among the securities which the Committee may direct the Trustee
     to purchase are "employer securities" as defined in Code Section 409(1) or
     any successor statute thereto.

          (h) To perform or cause to be performed such further acts as it may
     deem to be necessary, appropriate or convenient in the efficient
     administration of the Plan.

          (i) Effective as of December 12, 1994, to take such action as is
     necessary to have the Plan comply with Section 414(u) of the Code
     (regarding the reemployment of

                                       67
<PAGE>

     military veterans), and in such regard, and notwithstanding any provision
     of the Plan to the contrary, contributions, benefits and service credit
     with respect to qualified military service will be provided in accordance
     with Section 414(u) of the Code.

     Any action taken in good faith by the Committee in the exercise of
authority conferred upon it by this Plan shall be conclusive and binding upon
the Participants and their Beneficiaries.  All discretionary powers conferred
upon the Committee shall be absolute.

9.3  Investment Manager.
     ------------------

          (a) The Committee, by action reflected in the minutes thereof, may
     appoint one or more Investment Managers, as defined in Section 3(38) of
     ERISA, to manage all or a portion of the assets of the Plan.

          (b) An Investment Manager shall discharge its duties in accordance
     with applicable law and in particular in accordance with Section 404(a)(1)
     of ERISA.

          (c) An Investment Manager, when appointed, shall have full power to
     manage the assets of the Plan for which it has responsibility, and neither
     the Company nor the Committee shall thereafter have any responsibility for
     the management of those assets.

9.4  Periodic Review.
     ---------------

          (a) At periodic intervals, not less frequently than annually, the
     Committee shall review the long-run and short-run financial needs of the
     Plan and shall determine a funding policy for the Plan consistent with the
     objectives of the Plan and the minimum funding standards of ERISA, if
     applicable.  In determining the funding policy the Committee shall take
     into account, at a minimum, not only the long-term investment objectives of
     the Trust Fund consistent with the prudent management of the assets
     thereof, but also the short-run needs of the Plan to pay benefits.

          (b) All actions taken by the Committee with respect to the funding
     policy of the Plan, including the reasons therefor, shall be fully
     reflected in the minutes of the Committee.

9.5  Committee Procedure.
     -------------------

          (a) A majority of the members of the Committee as constituted at any
     time shall constitute a quorum, and any action by a majority of the members
     present at any

                                       68
<PAGE>

     meeting, or authorized by a majority of the members in writing without a
     meeting, shall constitute the action of the Committee.

          (b) The Committee may designate certain of its members as authorized
     to execute any document or documents on behalf of the Committee, in which
     event the Committee shall notify the Trustee of this action and the name or
     names of the designated members.  The Trustee, Company, Participants,
     Beneficiaries, and any other party dealing with the Committee may accept
     and rely upon any document executed by the designated members as
     representing action by the Committee until the Committee shall file with
     the Trustee a written revocation of the authorization of the designated
     members.

9.6  Compensation of Committee.
     -------------------------

          (a) Members of the Committee shall serve without compensation unless
     the Board of Directors shall otherwise determine.  However, in no event
     shall any member of the Committee who is an Employee receive compensation
     from the Plan for his services as a member of the Committee.

          (b) All members shall be reimbursed for any necessary or appropriate
     expenditures incurred in the discharge of duties as members of the
     Committee.

          (c) The compensation or fees, as the case may be, of all officers,
     agents, counsel, the Trustee, or other persons retained or employed by the
     Committee shall be fixed by the Committee.

9.7  Resignation and Removal of Members.
     ----------------------------------

     Any member of the Committee may resign at any time by giving written notice
to the other members and to the Board of Directors effective as therein stated.
Any member of the Committee may, at any time, be removed by the Board of
Directors.

9.8  Appointment of Successors.
     -------------------------

          (a) Upon the death, resignation, or removal of any Committee member,
     the Board of Directors may appoint a successor.

          (b) Notice of appointment of a successor member shall be given by the
     Secretary of the Company in writing to the Trustee and to the members of
     the Committee.

          (c) Upon termination, for any reason, of a Committee member's status
     as a member of the Committee, the member's status as a Named Fiduciary
     shall concurrently

                                       69
<PAGE>

     be terminated, and upon the appointment of a successor Committee member the
     successor shall assume the status of a Named Fiduciary as provided in
     Section 9.1.

9.9  Records.
     -------

          (a) The Committee shall keep a record of all its proceedings and shall
     keep, or cause to be kept, all such books, accounts, records, or other data
     as may be necessary or advisable in its judgment for the administration of
     the Plan and to properly reflect the affairs thereof.

          (b) However, nothing in this Section 9.9 shall require the Committee
     or any member thereof to perform any act which, pursuant to law or the
     provisions of this Plan, is the responsibility of the Plan Administrator,
     nor shall this Section relieve the Plan Administrator from such
     responsibility.

9.10  Reliance Upon Documents and Opinions.
      ------------------------------------

          (a) The members of the Committee, the Board of Directors, the Company
     and any person delegated under the provisions hereof to carry out any
     fiduciary responsibilities under the Plan ("delegated fiduciary"), shall be
     entitled to rely upon any tables, valuations, computations, estimates,
     certificates and reports furnished by any consultant, or firm or
     corporation which employs one or more consultants, upon any opinions
     furnished by legal counsel, and upon any reports furnished by the Trustee.
     The members of the Committee, the Board of Directors, the Company and any
     delegated fiduciary shall be fully protected and shall not be liable in any
     manner whatsoever for anything done or action taken or suffered in reliance
     upon any such consultant or firm or corporation which employs one or more
     consultants, Trustee, or counsel.

          (b) Any and all such things done or actions taken or suffered by the
     Committee, the Board of Directors, the Company and any delegated fiduciary
     shall be conclusive and binding on all Employees, Participants,
     Beneficiaries, and any other persons whomsoever, except as otherwise
     provided by law.

          (c) The Committee and any delegated fiduciary may, but are not
     required to, rely upon all records of the Company with respect to any
     matter or thing whatsoever, and may likewise treat those records as
     conclusive with respect to all Employees, Participants, Beneficiaries, and
     any other persons whomsoever, except as otherwise provided by law.

                                       70
<PAGE>

9.11  Requirement of Proof.
      --------------------

      The Committee or the Company may require satisfactory proof of any matter
under this Plan from or with respect to any Employee, Participant, or
Beneficiary, and no person shall acquire any rights or be entitled to receive
any benefits under this Plan until the required proof shall be furnished.

9.12  Reliance on Committee Memorandum.
      --------------------------------

      Any person dealing with the Committee may rely on and shall be fully
protected in relying on a certificate or memorandum in writing signed by any
Committee member or other person so authorized, or by the majority of the
members of the Committee, as constituted as of the date of the certificate or
memorandum, as evidence of any action taken or resolution adopted by the
Committee.

9.13  Multiple Fiduciary Capacity.
      ---------------------------

      Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.

9.14  Limitation on Liability.
      -----------------------

          (a) Except as provided in Part 4 of Title I of ERISA, no person shall
      be subject to any liability with respect to his duties under the Plan
      unless he acts fraudulently or in bad faith.

          (b) No person shall be liable for any breach of fiduciary
      responsibility resulting from the act or omission of any other fiduciary
      or any person to whom fiduciary responsibilities have been allocated or
      delegated, except as provided in Part 4 of Title I of ERISA.

          (c) No action or responsibility shall be deemed to be a fiduciary
      action or responsibility except to the extent required by ERISA.

9.15  Indemnification.
      ---------------

          (a) To the extent permitted by law, the Company shall indemnify each
      member of the Board of Directors and the Committee, and any other Employee
      of the Company with duties under the Plan, against expenses (including any
      amount paid in settlement) reasonably incurred by him in connection with
      any claims against him by reason of his conduct in the performance of his
      duties under the Plan, except in relation to

                                       71
<PAGE>

      matters as to which he acted fraudulently or in bad faith in the
      performance of such duties. The preceding right of indemnification shall
      pass to the estate of such a person.

          (b) The preceding right of indemnification shall be in addition to any
      other right to which the Board member or Committee member or other person
      may be entitled as a matter of law or otherwise.

9.16  Allocation of Fiduciary Responsibility.
      --------------------------------------

          (a) Part 4 of Title I of ERISA permits the division, allocation and
      delegation between Plan fiduciaries of the fiduciary responsibilities owed
      to the Plan Participants.  Under this concept, each fiduciary, including a
      Named Fiduciary, is accountable only for his own functions, except to the
      extent of his co-fiduciary liability under Section 405 of ERISA.

          (b) Under the preceding provisions of this Article IX, the day-to-day
      operational, administrative and investment aspects of the Plan have been
      delegated to the Committee. Except to the extent expressly provided to the
      contrary in the Plan document, the responsibilities delegated to the
      Committee include, by way of illustration but not by way of limitation,
      such matters as:

               (i)   Satisfying accounting and auditing requirements;

               (ii)  Satisfying insurance and bonding requirements;

               (iii) Administering the Plan's claims and procedure; and

               (iv)  Appointing Investment Managers.

9.17  Bonding.
      -------

          (a) Except as is prescribed by the Board of Directors, as provided in
      Section 412 of ERISA, or as may be required under any other applicable
      law, no bond or other security shall be required by any member of the
      Committee, or any of her fiduciary under this Plan.

          (b) Notwithstanding the foregoing, for purposes of satisfying its
      indemnity obligations under Section 9.15, the Company may (but need not)
      purchase and pay premiums for one or more policies of insurance.  However,
      this insurance shall not release the Company of its liability under the
      indemnification provisions.

                                       72
<PAGE>

9.18  Prohibition Against Certain Actions.
      -----------------------------------

          (a) To the extent prohibited by law, in administering this Plan the
      Committee shall not discriminate in favor of any class of Employees and
      particularly it shall not discriminate in favor of highly compensated
      Employees, or Employees who are officers or shareholders of the Company.

          (b) The Committee shall not cause the Plan to engage in any
      transaction that constitutes a nonexempt prohibited transaction under
      Section 4975(c) of the Code or Section 406(a) of ERISA.

          (c) All individuals who are fiduciaries with respect to the Plan (as
      defined in Section 3(21) of ERISA) shall discharge their fiduciary duties
      in accordance with applicable law, and in particular, in accordance with
      the standards of conduct contained in Section 404 of ERISA.

9.19  Plan Expenses.
      -------------

          (a) All expenses incurred in the establishment, administration and
      operation of the Plan, including but not limited to the expenses incurred
      by the members of the Committee in exercising their duties, shall be
      charged to the Trust Fund and allocated to Participants Accounts as
      determined by the Committee, but shall be paid by the Company if not paid
      by the Trust Fund.

          (b) Notwithstanding the foregoing, the cost of interest and normal
      brokerage charges which are included in the cost of securities purchased
      by the Trust Fund (or charged to proceeds in the case of sales) or other
      charges relating to specific assets of the Plan shall be charged and
      allocated in a fair and equitable manner to the Accounts to which the
      securities (or other assets) are allocated.

                                   ARTICLE X
                               SPECIAL PROVISIONS
                            CONCERNING COMPANY STOCK
                        EFFECTIVE AS OF OCTOBER 1, 1992

10.1  Securities Transactions.
      -----------------------

      Subject to the limitations of Section 6.6(a)(iv), the Trustee shall
acquire Company Stock in the open market or from the Company or any other
person, including a party in interest, pursuant to a Participant's election to
invest any Company contributions on his behalf (including

                                       73
<PAGE>

Before-Tax Contributions), or Participant After-Tax Contributions, in the
Company Stock alternative established by the Committee in accordance with
Section 6.6, or to transfer amounts held in other investment alternatives to
such Company Stock alternative. No commission will be paid in connection with
the Trustee's acquisition of Company Stock from a party in interest. Pending
acquisition of Company Stock and pursuant to a Participant's investment
election, elected amounts shall be allocated to the Participant's Company Stock
subaccount in cash and may be invested in any short-term interest fund of the
Trustee. Neither the Company, nor the Committee, nor any Trustee have any
responsibility or duty to time any transaction involving Company Stock in order
to anticipate market conditions or changes in Company Stock value. Neither the
Company, nor the Committee nor any Trustee have any responsibility or duty to
sell Company Stock held in the Trust Fund in order to maximize return or
minimize loss.

10.2  Valuation of Company Securities.
      -------------------------------

      When it is necessary to value Company Stock held by the Plan, the value
will be the current fair market value of the Company Stock, determined in
accordance with applicable legal requirements.

      If the Company Stock is publicly traded, fair market value will be based
on the most recent closing price in public trading, as reported in The Wall
                                                                   --------
Street Journal or any other publication of general circulation designated by the
--------------
Committee, unless another method of valuation is required by the standards
applicable to prudent fiduciaries.

      If the Company Stock cannot be valued on the basis of its closing price in
recent public trading, fair market value will be determined by the Company in
good faith based on all relevant factors for determining the fair market value
of securities.  Relevant factors include an independent appraisal by a person
who customarily makes such appraisals, if an appraisal of the fair market value
of the Company Stock as of the relevant date was obtained.

      In the case of a transaction between the Plan and a party in interest, the
fair market value of the Company Stock must be determined as of the date of the
transaction rather than as of some other Valuation Date occurring before or
after the transaction.  In other cases, the fair market value of the Company
Stock will be determined as of the most recent Valuation Date.

10.3  Allocation of Stock Dividends and Splits.
      ----------------------------------------

      Company Stock received by the Trust as a result of a Company Stock split
or Company Stock dividend on Company Stock held in Participants' Accounts will
be allocated as of the

                                       74
<PAGE>

Valuation Date coincident with or following the date of such split or dividend,
to each Participant who has such an Account. The amount allocated will bear
substantially the same proportion to the total number of shares received as the
number of shares in the Participant's Account bears to the total number of
shares allocated to such Accounts of all Participants immediately before the
allocation. The shares will be allocated to the nearest thousandth of a share.

10.4  Reinvestment of Dividends.
      -------------------------

      Upon direction of the Committee, cash dividends may be reinvested as soon
as practicable by the Trustee in shares of Company Stock for Participants'
Accounts.  Cash dividends may be reinvested in Company Stock purchased as
provided in Section 10.1 or purchased from the Accounts of Participants who
receive cash distributions of a fractional share or a fractional interest
therein.

10.5  Voting of Company Stock.
      -----------------------

      The Trustee shall have no discretion or authority to vote Company Stock
held in the Trust on any matter presented for a vote by the stockholders of the
Company except in accordance with timely directions received by the Trustee from
Participants, unless otherwise required by applicable law.

          (a) Each Participant shall be entitled to direct the Trustee as to the
      voting of all Company Stock allocated and credited to his Account.

          (b) All Participants entitled to direct such voting shall be notified
      by the Company, pursuant to its normal communications with shareholders,
      of each occasion for the exercise of such voting rights within a
      reasonable time before such rights are to be exercised. Such notification
      shall include all information distributed to shareholders either by the
      Company or any other party regarding the exercise of such rights. If a
      Participant shall fail to direct the Trustee as to the exercise of voting
      rights arising under any Company Stock credited to his Accounts, or if any
      Company Stock held in the Plan has not been allocated to Participants'
      Accounts, the Trustee shall not be required to vote such Company Stock
      except as otherwise required by applicable law. The Trustee shall maintain
      confidentiality with respect to the voting directions of all Participants.

          (c) Each Participant shall be a Named Fiduciary (as that term is
      defined in ERISA Section 402(a)(2)) with respect to Company Stock for
      which he has the right to

                                       75
<PAGE>

      direct the voting under the Plan but solely for the purpose of exercising
      voting rights pursuant to this Section 10.5.

10.6  Confidentiality Procedures.
      --------------------------

      The Committee shall establish procedures intended to ensure the
confidentiality of information relating to Participant transactions involving
Company Stock, including the exercise of voting, tender and similar rights.  The
Committee shall also be responsible for ensuring the adequacy of the
confidentiality procedures and monitoring compliance with such procedures.  The
Committee may, in its sole discretion, appoint an independent fiduciary to carry
out any activities that it determines involve a potential for undue Company
influence on Participants with respect to the exercise of their rights as
shareholders.

10.7  Securities Law Limitation.
      -------------------------

      Neither the Committee nor the Trustee shall be required to engage in any
transaction, including, without limitation, directing the purchase or sale of
Company Stock, which it determines in its sole discretion might tend to subject
itself, its members, the Plan, the Company, or any Participant or Beneficiary to
a liability under federal or state securities laws.

                                   ARTICLE XI
                       MERGER OF COMPANY; MERGER OF PLAN

11.1  Effect of Reorganization or Transfer of Assets.
      ----------------------------------------------

      In the event of a consolidation, merger, sale, liquidation, or other
transfer of the operating assets of the Company to any other company, the
ultimate successor or successors to the business of the Company shall
automatically be deemed to have elected to continue this Plan in full force and
effect, in the same manner as if the Plan had been adopted by resolution of its
Board of Directors, unless the successor(s), by resolution of its Board of
Directors, shall elect not to so continue this Plan in effect, in which case the
Plan shall automatically be deemed terminated as of the applicable effective
date set forth in the board resolution.

11.2  Merger Restriction.
      ------------------

      Notwithstanding any other provision in this Article, this Plan shall not
in whole or in part merge or consolidate with, or transfer its assets or
liabilities to any other plan unless each affected Participant in this Plan
would receive a benefit immediately after the merger, consolidation, or transfer
(if the Plan then terminated) which is equal to or greater than the

                                       76
<PAGE>

benefit he would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).

                                  ARTICLE XII
                              PLAN TERMINATION AND
                        DISCONTINUANCE OF CONTRIBUTIONS

12.1  Plan Termination.
      ----------------

          (a) (i)  Subject to the following provisions of this Section 12.1,
          the Company may terminate the Plan and the Trust Agreements at any
          time by an instrument in writing executed in the name of the Company
          by an officer or officers duly authorized to execute such an
          instrument, and delivered to the Trustee.
              (ii) The Plan and Trust Agreements may terminate if the Company
          merges into any other corporation, if as the result of the merger the
          entity of the Company ceases, and the Plan is terminated pursuant to
          the rules of Section 11.1.
          (b) Upon and after the effective date of the termination, the Company
      shall not make any further contributions under the Plan and no
      contributions need be made by the Company applicable to the Plan year in
      which the termination occurs, except as may otherwise be required by law.
          (c) The rights of all affected Participants to benefits accrued to the
      date of termination of the Plan, to the extent funded as of the date of
      termination, shall automatically become vested as of that date.

12.2  Discontinuance of Contributions.
      -------------------------------

          (a) In the event the Company decides it is impossible or inadvisable
      for business reasons to continue to make contributions under the Plan, the
      Company by resolution of its Board of Directors may discontinue
      contributions to the Plan.  Upon and after the effective date of this
      discontinuance, no Participating Company or Participant shall make any
      further contributions under the Plan and no contributions need to be made
      by a Participating Company with respect to the Plan Year in which the
      discontinuance occurs, except as may otherwise be required by law. A
      Participant shall be released from any salary reduction agreement under
      the Plan as of the effective date of a discontinuance of contributions.

                                       77
<PAGE>

          (b) The discontinuance of contributions on the part of the Company
      shall not terminate the Plan as to the funds and assets then held by the
      Trustee, or operate to accelerate any payments of distributions to or for
      the benefit of Participants or Beneficiaries, and the Trustee shall
      continue to administer the Trust Fund in accordance with the provisions of
      the Plan until all of the obligations under the Plan shall have been
      discharged and satisfied.
          (c) However, if this discontinuance of contributions shall cause the
      Plan to lose its status as a qualified plan under Code Section 401(a), the
      Plan shall be terminated in accordance with the provisions of this Article
      XII.
          (d) On and after the effective date of a discontinuance of
      contributions, the rights of all affected Participants to benefits accrued
      to that date, to the extent funded as of that date, shall automatically
      become fully vested as of that date.

12.3  Rights of Participants.
      ----------------------

      In the event of the termination of the Plan, for any cause whatsoever, all
assets of the Plan, after payment of expenses, shall be used for the exclusive
benefit of Participants and their Beneficiaries and no part thereof shall be
returned to the Company, except as provided in Section 6.7 of this Plan.

12.4  Trustee's Duties on Termination.
      -------------------------------

          (a) On or before the effective date of termination of this Plan, the
      Trustee shall proceed as soon as possible, but in any event within six
      months from the effective date, to reduce all of the assets of the Trust
      Fund to cash and other securities in such proportions as the Committee
      shall determine (after approval by the Internal Revenue Service, if
      necessary or desirable, with respect to any portion of the assets of the
      Trust Fund held in common stock or securities of the Company).
          (b) After first deducting the estimated expenses for liquidation and
      distribution chargeable to the Trust Fund, and after setting aside a
      reasonable reserve for expenses and liabilities (absolute or contingent)
      of the Trust, the Committee shall make required allocations of items of
      income and expense to the Accounts.
          (c) Following these allocations, the Trustee shall promptly, after
      receipt of appropriate instructions from the Committee, distribute in
      accordance with Section 8.7 to

                                       78
<PAGE>

      each former Participant in Company stock or cash an amount equal to the
      amount credited to his Accounts as of the date of completion of the
      liquidation.
          (d) The Trustee and the Committee shall continue to function as such
      for such period of time as may be necessary for the winding up of this
      Plan and for the making of distributions in accordance with the provisions
      of this Plan.
          (e) Notwithstanding the foregoing, distributions to Participants upon
      Plan termination in accordance with this Section 12.4 shall only be made
      if a "successor plan," within the meaning of regulations under Code
      Section 401(k)(10), is not established. In the event a "successor plan" is
      established prior to or subsequent to the termination of the Plan, the
      Committee shall direct the Trustee to continue to hold any assets of the
      Trust Fund not payable upon the termination until such assets may, at the
      direction of the Committee, be transferred to and held in the successor
      plan until distributable under the terms of that successor plan.

12.5  Partial Termination.
      -------------------

          (a) In the event of a partial termination of the Plan within the
      meaning of Code Section 411(d)(3), the interests of affected Participants
      in the Trust Fund, as of the date of the partial termination, shall become
      nonforfeitable as of that date.
          (b) That portion of the assets of the Plan affected by the partial
      termination shall be used exclusively for the benefit of the affected
      Participants and their Beneficiaries, and no part thereof shall otherwise
      be applied.
          (c) With respect to Plan assets and Participants affected by a partial
      termination, the Committee and the Trustee shall follow the same
      procedures and take the same actions prescribed in this Article XII in the
      case of a total termination of the Plan.

12.6  Failure to Contribute.
      ---------------------

      The failure of a Participating Company to contribute to the Trust in any
year, if contributions are not required under the Plan for that year, shall not
constitute a complete discontinuance of contributions to the Plan.

                                       79
<PAGE>

                                  ARTICLE XIII
                            APPLICATION FOR BENEFITS

13.1  Application for Benefits.
      ------------------------

      The Committee may require any person claiming benefits under the Plan to
submit an application therefor, together with such documents and information as
the Committee may require.  In the case of any person suffering from a
disability which prevents the claimant from making personal application for
benefits, the Committee may, in its discretion, permit another person acting on
his behalf to submit the application.

13.2  Action on Application.
      ---------------------

          (a) Within ninety days following receipt of an application and all
      necessary documents and information, the Committee's authorized delegate
      reviewing the claim shall furnish the claimant with written notice of the
      decision rendered with respect to the application.
          (b) In the case of a denial of the claimant's application, the written
      notice shall set forth:
              (i) The specific reasons for the denial, with reference to the
          Plan provisions upon which the denial is based;
              (ii) A description of any additional information or material
          necessary for perfection of the application (together with an
          explanation why the material or information is necessary); and
              (iii)  An explanation of the Plan's claim review procedure.
          (c) A claimant who wishes to contest the denial of his application for
      benefits or to contest the amount of benefits payable to him shall follow
      the procedures for an appeal of benefits as set forth in Section 13.3
      below, and shall exhaust such administrative procedures prior to seeking
      any other form of relief.

13.3  Appeals.
      -------

          (a)  (i)  A claimant who does not agree with the decision rendered
          with respect to his application may appeal the decision to the
          Committee.
               (ii) The appeal shall be made, in writing, within sixty days
          after the date of notice of the decision with respect to the
          application.

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<PAGE>

               (iii)  If the application has neither been approved nor denied
          within the ninety day period provided in Section 13.2 above, then the
          appeal shall be made within sixty days after the expiration of the
          ninety day period.
          (b) The claimant may request that his application be given full and
      fair review by the Committee.  The claimant may review all pertinent
      documents and submit issues and comments in writing in connection with the
      appeal.
          (c) The decision of the Committee shall be made promptly, and not
      later than sixty days after the Committee's receipt of a request for
      review, unless special circumstances require an extension of time for
      processing, in which case a decision shall be rendered as soon as
      possible, but not later than one hundred twenty days after receipt of a
      request for review.
          (d) The decision on review shall be in writing and shall include
      specific reasons for the decision, written in a manner calculated to be
      understood by the claimant with specific reference to the pertinent Plan
      provisions upon which the decision is based.

                                  ARTICLE XIV
                          LIMITATIONS ON CONTRIBUTIONS

14.1  General Rule.
      ------------

          (a) Except to the extent permitted under Section 5.2(f) of the Plan
      and Section 414(v) of the Code, the total Annual Additions under this Plan
      to a Participant's Plan Accounts shall not exceed:
              (i)  for any Limitation Year ending before January 1, 2002, the
          lesser of (A) Thirty Thousand Dollars ($30,000) (as adjusted for
          increases in the cost-of-living under Section 415(d) of the Code) or
          (B) twenty-five percent (25%) of the Participant's total Compensation
          from the Company and any Affiliated Companies for the year, excluding
          amounts otherwise treated as Annual Additions under Section 14.2; and
              (ii) for any Limitation Year beginning after December 31, 2001,
          the lesser of (A) Forty Thousand Dollars ($40,000) (as adjusted for
          increases in the cost-of-living under Section 415(d) of the Code) or
          (B) one hundred percent (100%) of the Participant's total Compensation
          from

                                       81
<PAGE>

          the Company and any Affiliated Companies for the year, excluding
          amounts otherwise treated as Annual Additions under Section 14.2.
               The limitation in Section 14.1(a)(ii)(B) shall not apply to any
          contribution for medical benefits after separation from Service
          (within the meaning of Section 401(h) or Section 419A(f)(2) of the
          Code) which is otherwise treated as an Annual Addition."
          (b) For purposes of this Article XIV, the Company has elected a
     "Limitation Year" corresponding to the Plan Year.

14.2  Annual Additions.
      ----------------

      For purposes of Section 14.1, the term "Annual Additions" shall mean, for
any Limitation Year, the sum of:
          (a) the amount credited to the Participant's Accounts from Company
      contributions for such Limitation Year;
          (b) any Employee contributions for the Limitation Year; and
          (c) any amounts described in Section 415(1)(1) or 419(A)(d)(2) of the
      Code.
      Annual Additions for Limitation Years commencing prior to 1987 shall not
be recalculated to take into account all Employee contributions.

14.3  Other Defined Contribution Plans.
      --------------------------------

      If the Company or an Affiliated Company is contributing to any other
defined contribution plan (as defined in Section 415(k) of the Code) for its
Employees, some or all of whom may be Participants in this Plan, then
contributions to the other plan shall be aggregated with contributions under
this Plan for the purposes of applying the limitations of Section 14.1.

14.4  Combined Plan Limitation (Defined Benefit Plan).
      -----------------------------------------------

      In the event a Participant hereunder also is a participant in any
qualified defined benefit plan (within the meaning of Section 415(k) of the
Code) of the Company or an Affiliated Company, then the benefit payable under
such other defined benefit plan, or any of them, shall be reduced for so long
and to the extent necessary to provide that the sum of the "defined benefit
fraction" and the "defined contribution fraction," for any Limitation Year, as
defined in Section 415(e) of the Code, shall not exceed one (1). The limitation
of this Section 14.4 shall not apply to any Plan Year beginning on or after
January 1, 2000.

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<PAGE>

14.5  Adjustments for Excess Annual Additions.
      ---------------------------------------

      In general, the amount of excess for any Limitation Year under this Plan
and any other defined contribution plan (as defined in Code Section 414(i)) or
defined benefit plan (as defined in Code Section 414(j)) maintained by the
Company or an Affiliated Company will be determined so as to avoid Annual
Additions in excess of the limitations set forth in Sections 14.1 through 14.4.
However, if as a result of an administrative error, the Annual Additions to a
Participant's Accounts under this Plan (after giving effect to the maximum
permissible adjustments under the other plans) would exceed the applicable
limitations described in Sections 14.1 through 14.4, the excess amount shall be
subject to this Section 14.5.
          (a) For Plan Years commencing prior to January 1, 1993, the following
      rules shall apply:
              (i) If the Participant made any after-tax contributions to any
          defined contribution plan that is maintained by the Company or an
          Affiliated Company, which after-tax contributions were not matched by
          matching contributions, these contributions shall be returned to the
          Participant to the extent of any excess Annual Additions arising under
          Section 14.1(a)(ii).
              (ii) If excess Annual Additions remain after the application of
          the above rule, such excess amounts (if any) allocated to the
          Participant's Company Contributions Account shall be reduced to the
          extent necessary to eliminate (if possible) any remaining excess
          Annual Additions.
              (iii)  If excess Annual Additions remain after the application of
          (i) and (ii) above, such excess amounts (if any) allocated to the
          Participant's Company Matching Contribution Account shall be reduced
          to the extent necessary to eliminate (if possible) any remaining
          excess Annual additions.
              (iv) If any excess Annual Additions remain after the application
          of (i), (ii) and (iii) above, such excess amounts (if any) allocated
          to the Participant's Before-Tax Contributions Account shall be reduced
          to the extent necessary to eliminate (if possible) any remaining
          excess Annual Additions.
          (b) For Plan Years commencing on or after January 1, 1993, the
      following rules shall apply:

                                       83
<PAGE>

              (i) If the Participant made any after-tax contributions to this
          or any other defined contribution plan that is maintained by the
          Company or an Affiliated Company, which after-tax contributions were
          not matched by matching contributions, within the meaning of Code
          Section 401(m), such after-tax contributions and any earnings thereon
          shall be returned to the Participant to the extent of any excess
          Annual Additions.
              (ii) If excess Annual Additions remain after the application of
          the above rule, if the Participant made any Before-Tax Contributions
          for the Plan Year to this or any other defined contribution plan that
          is maintained by the Company or an Affiliated Company, which Before-
          Tax Contributions were not matched by matching contributions, within
          the meaning of Code Section 401(m), Before-Tax Contributions and any
          earnings thereon shall be returned to the Participant to the extent of
          any excess Annual Additions.
              (iii)  If excess Annual Additions remain after the application of
          the above rule, if the Participant made any after-tax contributions
          for the Plan Year to this or any other defined contribution plan that
          is maintained by the Company or an Affiliated Company, which after-tax
          contributions were matched by matching contributions, within the
          meaning of Code Section 401(m), any such after-tax contributions and
          any earnings thereon shall be returned to the Participant and any
          matching contributions attributable thereto shall be reduced to the
          extent necessary to eliminate any remaining excess Annual Additions.
              (iv) If excess Annual Additions remain after the application of
          the above rule, if the Participant made any Before-Tax Contributions
          for the Plan Year to this or any other defined contribution plan that
          is maintained by the Company or an Affiliated Company, which Before-
          Tax Contributions were matched by matching contributions, within the
          meaning of Code Section 401(m), any such Before-Tax Contributions and
          any earnings thereon shall be returned to the Participant and any
          matching contributions attributable thereto shall be reduced to the
          extent necessary to eliminate any remaining excess Annual Additions.

                                       84
<PAGE>

              (v) If excess Annual Additions remain after the application of
          the above rule, any other Company contributions for the Plan Year
          shall be reduced to the extent necessary to eliminate any remaining
          excess Annual Additions.

14.6  Disposition of Excess Amounts.
      -----------------------------

      Any excess amounts contributed by a Participating Company on behalf of a
Participant for any Plan Year (other than Before-Tax Contributions) shall be
held unallocated in a suspense account for the Plan Year and applied, to the
extent possible, first to reduce the Participating Company contributions for the
Plan Year, and next, to reduce the Participating Company contributions for the
succeeding Plan Year, or Years, if necessary.  No investment gains or losses
shall be allocated to a suspense account.

14.7  Affiliated Company.
      ------------------

      For purposes of this Article XIV, the status of an entity as an Affiliated
Company shall be determined by reference to the percentage tests set forth in
Code Section 415(h).

                                   ARTICLE XV
                           RESTRICTION ON ALIENATION

15.1  General Restrictions Against Alienation.
      ---------------------------------------

          (a) The interest of any Participant or Beneficiary in the income,
      benefits, payments, claims or rights hereunder, or in the Trust Fund shall
      not in any event be subject to sale, assignment, hypothecation, or
      transfer. Each Participant and Beneficiary is prohibited from
      anticipating, encumbering, assigning, or in any manner alienating his or
      her interest under the Trust Fund, and is without power to do so, except
      as may otherwise be provided for in the Trust Agreement. The interest of
      any Participant or Beneficiary shall not be liable or subject to his
      debts, liabilities or obligations, now contracted, or which may be
      subsequently contracted. The interest of any Participant or Beneficiary
      shall be free from all claims, liabilities, bankruptcy proceedings, or
      other legal process now or hereafter incurred or arising; and the interest
      or any part thereof, shall not be subject to any judgment rendered against
      the Participant or Beneficiary.
          (b) In the event any person attempts to take any action contrary to
      this Article XV, that action shall not be effective, and all Participants
      and their Beneficiaries, may disregard that action and shall not suffer
      any liability for any disregard of that action, and

                                       85
<PAGE>

      shall be reimbursed on demand out of the Trust Fund for the amount of any
      loss, cost or expense incurred as a result of disregarding or of acting in
      disregard of that action.
          (c) The preceding provisions of this Section 15.1 shall be interpreted
      and applied by the Committee in accordance with the requirements of Code
      Section 401(a)(13) as construed and interpreted by authoritative judicial
      and administrative rulings and regulations.
          (d) The provisions of Subsections 15.1(a) and 15.1(b) are expressly
      subject to qualified domestic relations orders, as provided in Code
      Section 401(a)(13)(B).

15.2  Nonconforming Distributions Under Court Order.
      ---------------------------------------------

          (a) In the event that a court with jurisdiction over the Plan and the
      Trust Fund shall issue an order or render a judgment requiring that all or
      part of a Participant's interest under the Plan and in the Trust Fund be
      paid to a spouse, former spouse and/or children of the Participant by
      reason of or in connection with the marital dissolution and/or marital
      separation of the Participant and the spouse, and/or some other similar
      proceeding involving marital rights and property interests, then
      notwithstanding the provisions of Section 15.1 the Committee may, in its
      absolute discretion, direct the applicable Trustee to comply with that
      court order or judgment and distribute assets of the Trust Fund in
      accordance therewith.  Pending distribution to an alternate payee of any
      portion of a Participant's vested interest in the Trust Fund, pursuant to
      a court order or judgment, such portion shall be segregated and invested
      in accordance with rules prescribed by the Committee, and neither the
      Participant nor the alternate payee shall be entitled to make an election
      with respect to the investment of such segregated portion.
          (b) The Committee's decision with respect to compliance with any such
      court order or judgment shall be made in its absolute discretion and shall
      be binding upon the Trustee and all Participants and their Beneficiaries;
      provided, however, that the Committee in the exercise of its discretion
      shall not make payments in accordance with the terms of an order which is
      not a qualified domestic relations order or which the Committee determines
      would jeopardize the continued qualification of the Plan and Trust under
      Section 401 of the Code.  Notwithstanding the foregoing, the Committee may
      make a distribution to an alternate payee prior to the date the
      Participant attains age fifty (50), if such distribution is required by a
      qualified domestic relations order.

                                       86
<PAGE>

          (c) Neither the Plan, the Company, the Committee nor the Trustee shall
      be liable in any manner to any person, including any Participant or
      Beneficiary, for complying with any such court order or judgment.
          (d) Nothing in this Section 15.2 shall be interpreted as placing upon
      the Company, the Committee or any Trustee any duty or obligation to comply
      with any such court order or judgment.  The Committee may, if in its
      absolute discretion it deems it to be in the best interests of the Plan
      and the Participants, determine that any such court order or judgment
      shall be resisted by means of judicial appeal or other available judicial
      remedy, and in that event the Trustee shall act in accordance with the
      Committee's directions.
          (e) The Committee shall adopt procedures and provide notifications to
      a Participant and alternate payees in connection with a qualified domestic
      relations order, to the extent required under Code Section 414(p).

                                  ARTICLE XVI
                                PLAN AMENDMENTS

16.1  Amendments.
      ----------

      The Board of Directors may at any time, and from time to time, amend the
Plan by an instrument in writing executed in the name of the Company by an
officer or officers duly authorized to executed such instrument, and delivered
to the applicable Trustee.  However, to the extent required by law, no amendment
shall be made at any time, the effect of which would be:
          (a) To cause any assets of the Trust Fund to be used for or diverted
      to purposes other than providing benefits to the Participants and their
      Beneficiaries, and defraying reasonable expenses of administering the
      Plan, except as provided in Section 6.7;
          (b) To have any retroactive effect so as to deprive any Participant or
      Beneficiary of any accrued benefit to which he would be entitled under
      this Plan, in contravention of Code Section 411(d)(6), if his employment
      were terminated immediately before the amendment;
          (c) To eliminate or reduce an optional form of benefit to the extent
      so doing would contravene Code Section 411(d)(6); or

                                       87
<PAGE>

          (d)  To increase the responsibilities or liabilities of a Trustee or
      an Investment Manager without his written consent.
16.2  Retroactive Amendments.
      ----------------------
      Notwithstanding any provisions of this Article XVI to the contrary, the
Plan may be amended prospectively or retroactively (as provided in Section
401(b) of the Code) to make the Plan conform to any provision of ERISA, any Code
provisions dealing with tax-qualified employees' trusts, or any regulation under
either.
16.3  Amendment of Vesting Provisions.
      -------------------------------
      Effective January 1, 1989, if the Plan is amended in any way that directly
or indirectly affects the computation of a Participant's vested interest in his
Accounts, each Participant who has completed at least three (3) Years of Service
may elect, within a reasonable time after the adoption of the amendment, to
continue to have his vested interest computed under the Plan without regard to
such amendment.  The period during which the election may be made shall commence
when the date of the amendment is adopted and shall end on the latest of: (i) 60
days after the amendment is adopted; (ii) 60 days after the amendment is
effective; or (iii) 60 days after the Participant is issued written notice of
the amendment.
      In the event that the Plan's vesting schedule is amended, the
nonforfeitable percentage of every Employee who is a Participant on the date the
amendment is adopted, or the date the amendment is effective, if later, in his
Company Matching Account and/or Company Contributions Account shall be not less
than his percentage computed under the Plan without regard to the amendment.
                                 ARTICLE XVII
                             TOP-HEAVY PROVISIONS
17.1  Minimum Company Contributions.
      -----------------------------
      In the event that this Plan is deemed a Top-Heavy plan with respect to any
Plan Year, each Non-Key Employee who is a Participant shall receive Company
contributions that in the aggregate are at least equal to the lesser of three
percent (3%) of Compensation or the percentage at which Company contributions
are made for the Key Employee (under any plan required to be included in an
Aggregation Group) for whom such percentage is the highest for the Plan Year,
regardless of whether the Non-Key Employee elected to make Before-Tax
Contributions to the

                                       88
<PAGE>

Plan for the Plan Year, completed less than 1,000 Hours of Service during such
Plan Year, or the Non-Key Employee's level of Compensation. For purposes of this
Section 17.1, Company contributions shall include (i) amounts considered
contributed by Key Employees and which qualify for treatment under Code Section
401(k) and (ii) any Company contributions for Key Employees or Non-Key Employees
taken into account under Section 401(k)(3) or 401(m) of the Code. For purposes
of this Section 17.1, Company contributions shall not include amounts considered
as contributed by Non-Key Employees and which qualify for treatment under Code
Section 401(k). Further, in determining the percentage at which Company
contributions are made for the Plan Year for the Key Employee for whom such
percentage is the highest, the contributions for a Key Employee shall be divided
by so much of a Key Employee's compensation for the Plan Year as does not exceed
$200,000, as that amount is adjusted each year by the Secretary of the Treasury.
      In the event a Participant is covered by both a defined contribution and a
defined benefit plan maintained by the Company, both of which are determined to
be Top-Heavy Plans, the defined benefit minimum, offset by the benefits provided
under the defined contribution plan, shall be provided under the defined benefit
plan.
17.2  Compensation.
      ------------
      For the purpose of calculating Company contributions to be made to a
Participant for Plan Years commencing prior to January 1, 1989, the annual
Compensation taken into account for any Employee shall not exceed $200,000
(increased by any adjustments made pursuant to Section 416(d)(2) of the Code or
regulations thereunder) if the Plan is deemed a Top-Heavy Plan with respect to
any Plan Year.
17.3  Top-Heavy Determination.
      -----------------------
      This Plan shall be deemed a Top-Heavy Plan with respect to any Plan Year
in which, as of the Determination Date: (a) the aggregate of the Accounts of Key
Employees under the Plan exceeds 60% of the aggregate of the Accounts of all
Employees; or (b) the aggregate of the Accounts of Key Employees under all
defined contribution plans and the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans includable in an
Aggregation Group exceed 60% of a similar sum for all employees in such group.
As used above, the term "Aggregation Group" includes all plans of Participating
Companies having one or more Key Employees as Participants and any other defined
contribution plan of a Participating

                                       89
<PAGE>

Company that permits a plan of a Participating Company having one or more Key
Employees to meet the qualification requirements of Sections 401(a)(4) or 410 of
the Code.
     The present value of account balances under a defined contribution plan
shall be determined as of the most recent valuation date that falls within or
ends on the Determination Date.  The present value of accrued benefits under a
defined benefit plan shall be determined as of the same valuation date used for
computing plan costs for minimum funding.  The present value of the cumulative
accrued benefits of a Non-Key Employee shall be determined under either:
          (i)  the method, if any, that uniformly applies for accrual purposes
     under all plans maintained by affiliated companies, within the meaning of
     Code Sections 414(b), (c), (m) or (o); or
          (ii) if there is no such method, as if such benefit accrued not more
     rapidly than the lowest accrual rate permitted under the fractional accrual
     rate of Section 411(b)(1)(C) of the Code.
     For purposes of this Article XVII, "Determination Date" shall mean, with
respect to any Plan Year, the last day of the preceding Plan Year, or, in the
case of the first Plan Year, the last day of such Plan Year.
     The term, "Key Employee" shall mean, for purposes of this Article XVII, any
Employee or former Employee (including any deceased Employee) who, at any time
during the Plan Year that includes the Determination Date was:
               (1) an officer of a Participating Company having annual
          compensation in excess of $130,000 (as adjusted under Section
          416(i)(1) of the Code for Plan Years beginning after December 31,
          2002);
               (2) a 5% owner of a Participating Company; or
               (3) a 1% owner of a Participating Company having annual
          compensation in excess of than $150,000.
     For this purpose, annual compensation means compensation within the meaning
of Section 415(c) of the Code.
     For purposes of (1) above, no more than 50 Employees (or, if lesser, the
greater of 3 or 10% of the Employees) shall be treated as officers.

                                       90
<PAGE>

      A 5% (or 1%, if applicable) owner means any person who owns (or is
considered as owning within the meaning of Section 318 of the Code) more than 5%
(1%) of the outstanding stock of the Participating Company or stock possessing
more than 5% (1%) of the total combined voting power of all stock of the
Participating Company.
      For purposes of applying the constructive ownership rules under Section
318(a)(2) of the Code, subparagraph (C) of such Section shall be applied by
substituting "5 percent" for "50 percent."
      For purposes of determining "5% owners" and/or "1% owners," the
aggregating rules of Sections 414(b), (c) and (m) of the Code shall not apply.
For purposes of determining whether an Employee has compensation of more than
$150,000, however, compensation from each entity required to be aggregated under
Sections 414(b), (c) and/or (m) of the Code shall be taken into account.
      For purposes of determining the amount of a Participant's Account for
purposes of this Section 17.3, the amount shall include the aggregate
distributions under the Plan made to or with respect to the Participant during
the one year period ending on the Determination Date.  In the case of a
distribution made for a reason other than separation from Service, death or
disability, this paragraph shall be applied by substituting "five year period"
for "one year period."
      The following shall not be taken into account for purposes of determining
whether this Plan is a Top-Heavy Plan: (1) any rollover to the Plan that is
initiated by a Participant; (2) the account value of any Participant who is not
a Key Employee with respect to any Plan Year but was a Key Employee with respect
to any prior Plan Year; and (3) the account value of a Participant who has not
performed services for any Participating Company during the one year period
ending on the Determination Date.
17.4  Aggregation.
      -----------
      Each Plan of a Participating Company required to be included in an
"Aggregation Group" shall be treated as a Top-Heavy Plan if such group is a
"Top-Heavy Group."
      For purposes of this Article XVII, an "Aggregation Group" shall mean: (i)
each plan of a Participating Company in which a Key Employee is a Participant,
and (ii) each other plan of a Participating Company which enables any plan
described in (i) above to meet the requirements of Section 401(a)(4) or 410 of
the Code.

                                       91
<PAGE>

      Any plan of a Participating Company that is not required to be included in
an Aggregation Group may be treated as part of such group if such group would
continue to meet the requirements of Section 401(a)(4) and 410 of the Code with
such plan taken into account.
      For purposes of this Section 17.4, a "Top-Heavy Group" means any
Aggregation Group if the sum (as of the Determination Date) of the present value
of the cumulative accrued benefits for Key Employees under all defined benefit
plans included in such group and the aggregate of the accounts of Key Employees
under all defined contribution plans included in such group exceed 60% of a
similar sum determined for all Employees.

                                 ARTICLE XVIII
                                 MISCELLANEOUS

18.1  No Enlargement of Employee Rights.
      ---------------------------------
          (a) This Plan is strictly a voluntary undertaking on the part of the
      Company and shall not be deemed to constitute a contract between the
      Company and any Employee, or to be consideration for, or an inducement to,
      or a condition of, the employment of any Employee.
          (b) Nothing contained in this Plan or the Trust shall be deemed to
      give any Employee the right to be retained in the employ of the Company or
      to interfere with the right of the Company to discharge or retire any
      Employee at any time.
          (c) No Employee, nor any other person, shall have any right to or
      interest in any portion of the Trust Fund other than as specifically
      provided in this Plan.
18.2  Mailing of Payments; Lapsed Benefits.
      ------------------------------------
          (a) All payments under the Plan shall be delivered in person or mailed
      to the last address of the Participant (or, in the case of the death of
      the Participant, to the last address of any other person entitled to such
      payments under the terms of the Plan) furnished pursuant to Section 18.3
      below.
          (b) In the event that a benefit is payable under this Plan to a
      Participant or any other person and after reasonable efforts such person
      cannot be located for the purpose of paying the benefit for a period of
      three (3) consecutive years, the Committee, in its sole discretion, may
      determine that such person conclusively shall be presumed dead and upon
      the termination of such three (3) year period the benefit shall be
      forfeited and as

                                       92
<PAGE>

      soon thereafter as practicable shall be applied to reduce future Company
      Contributions; provided, however, should any person entitled to such
      benefit thereafter claim such benefit, such benefit shall be restored.
      Alternatively, benefits that cannot be paid may escheat to the state in
      accordance with applicable state law.
          (c)  For purposes of this Section 18.2, the term "Beneficiary" shall
      include any person entitled under Section 8.9 to receive the interest of a
      deceased Participant or deceased designated Beneficiary.  It is the
      intention of this provision that the benefit will be distributed to an
      eligible Beneficiary in a lower priority category under Section 8.9 if no
      eligible Beneficiary in a higher priority category can be located by the
      Committee after reasonable efforts have been made.
          (d)  The Accounts of a Participant shall continue to be maintained
      until the amounts in the Accounts are paid to the Participant or his
      Beneficiary. Notwithstanding the foregoing, in the event that the Plan is
      terminated, the following rules shall apply:
               (i)   All Participants (including Participants who have not
          previously claimed their benefits under the Plan) shall be notified of
          their right to receive a distribution of their interests in the Plan;
               (ii)  All Participants shall be given a reasonable length of
          time, which shall be specified in the notice, in which to claim their
          benefits;
               (iii) All Participants (and their Beneficiaries) who do not claim
          their benefits within the designated time period shall be presumed to
          be dead. The Accounts of such Participants shall be forfeited at such
          time. These forfeitures shall be disposed of according to rules
          prescribed by the Committee, which rules shall be consistent with
          applicable law.
               (iv)  The Committee shall prescribe such rules as it may deem
          necessary or appropriate with respect to the notice and forfeiture
          rules stated above.
          (e)  Should it be determined that the preceding rules relating to
     forfeiture of benefits upon Plan termination are inconsistent with any of
     the provisions of the Code and/or ERISA, these provisions shall become
     inoperative without the need for a Plan amendment and the Committee shall
     prescribe rules that are consistent with the applicable provisions of the
     Code and/or ERISA.

                                       93
<PAGE>

18.3  Addresses.
      ---------
      Each Participant shall be responsible for furnishing the Committee with
his correct current address and the correct current name and address of his
Beneficiary or Beneficiaries.
18.4  Notices and Communications.
      --------------------------
          (a) All applications, notices, designations, elections, and other
      communications from Participants shall be in writing, on forms prescribed
      by the Committee and shall be mailed or delivered to the office designated
      by the Committee, and shall be deemed to have been given when received by
      that office.
          (b) Each notice, report, remittance, statement and other communication
      directed to a Participant or Beneficiary shall be in writing and may be
      delivered in person or by mail.  An item shall be deemed to have been
      delivered and received by the Participant when it is deposited in the
      United States Mail with postage prepaid, addressed to the Participant or
      Beneficiary at his last address of record with the Committee.
18.5  Reporting and Disclosure.
      ------------------------
      The Plan Administrator shall be responsible for the reporting and
disclosure of information required to be reported or disclosed by the Plan
Administrator pursuant to ERISA or any other applicable law.
18.6  Governing Law.
      -------------
      All legal questions pertaining to the Plan shall be determined in
accordance with the provisions of ERISA and the laws of the State of California.
All contributions made hereunder shall be deemed to have been made in
California.
18.7  Interpretation.
      --------------
          (a)  Article and Section headings are for convenient reference only
      and shall not be deemed to be part of the substance of this instrument or
      in any way to enlarge or limit the contents of any Article or Section.
      Unless the context clearly indicates otherwise, masculine gender shall
      include the feminine, and the singular shall include the plural and the
      plural the singular.
          (b) The provisions of this Plan shall in all cases be interpreted in a
      manner that is consistent with this Plan satisfying:

                                       94
<PAGE>

                (i)  The requirements (of Code Section 401(a) and related
          statutes) for qualification as a Profit Sharing Plan; and
               (ii)  The requirements (of Code Section 401(k) and related
          statutes) for qualification as a Qualified Cash or Deferred
          Arrangement.
18.8   Certain Securities Laws Rules.
       -----------------------------
       Any election or direction made under this Plan by an individual who is or
may become subject to liability under Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), may be conditioned upon such
restrictions as are necessary or appropriate to qualify for an applicable
exemption under Section 16(b) of the Exchange Act, or any rule promulgated
thereunder.  To the extent required by Section 401(a)(4) of the Code, the rules
under this Section 18.8 shall be administered in a non-discriminatory manner.
18.9   Withholding for Taxes.
       ---------------------
       Any payments out of the Trust Fund may be subject to withholding for
taxes as may be required by any applicable federal or state law.
18.10  Limitation on Company; Committee and Trustee Liability.
       ------------------------------------------------------
       Any benefits payable under this Plan shall be paid or provided for solely
from the Trust Fund and neither the Company, the Committee nor the Trustee
assume any responsibility for the sufficiency of the assets of the Trust to
provide the benefits payable hereunder.
18.11  Successors and Assigns.
       ----------------------
       This Plan and the Trust established hereunder shall inure to the benefit
or, and be binding upon, the parties hereto and their successors and assigns.
18.12  Counterparts.
       ------------
       This Plan document may be executed in any number of identical
counterparts, each of which shall be deemed a complete original in itself and
may be introduced in evidence or used for any other purpose without the
production of any other counterparts.

                                       95
<PAGE>

     IN WITNESS WHEREOF, in order to record the adoption of this Plan, Mattel,
Inc. has caused this instrument to be executed by its duly authorized officers
this 8th day of November, 2001, effective, however, as of October 1, 2001,
except as otherwise expressly provided herein.

                                        MATTEL, INC.

                                        By: /s/ Alan Kaye
                                           ---------------------------
                                           Alan Kaye, Senior Vice President
                                           Human Resources

                                       96<PAGE>

                                                                   EXHIBIT 10.49

                             AMENDED AND RESTATED
                         MATTEL 1990 STOCK OPTION PLAN
                               Effective 5/10/95

1. Objectives.

     The purpose of the MATTEL 1990 Stock Option Plan (the "Plan") is to promote
the long-term success of the Company and the creation of incremental stockholder
value by (a) encouraging Participants to focus on critical long-range
objectives, (b) attracting and retaining Participants with exceptional
qualifications and (c) linking Participants directly to stockholder interests
through increased stock ownership.  The Plan seeks to achieve this purpose by
providing for Awards in the form of Stock Options, Stock Appreciation Rights and
stock or cash awards, which may be issued in combination or in tandem or may
constitute incentive stock options or nonstatutory stock options.  The Plan was
adopted by the Board on May 10, 1989, subject to approval by the Company's
stockholders.  In the event of such approval this Plan replaces the 1978 Stock
Option Plan and 1982 Stock Option and Restricted Stock Award Plan, but awards
under such plans shall continue to be administered in accordance with the
applicable plan.

2. Definitions.

     (a) "Award"  The grant of any form of stock option, stock appreciation
right, stock or cash award whether granted singly, in combination or in tandem
to a Participant pursuant to such terms, conditions and limitations as the
Committee may establish in order to fulfill the objectives of the Plan.

     (b) "Award Agreement"  An agreement between the Company and a Participant
that sets forth the terms, conditions and limitations applicable to an Award.

     (c) "Board"  The Board of Directors of Mattel, Inc.

     (d) "Capital Stock" or "stock"  Authorized and issued or unissued Capital
Stock of the Company.

     (e) "Code"  The Internal Revenue Code of 1986, as amended from time-to-
time.

     (f) "Committee"  The Compensation/Options Committee of the Board, or such
other committee of the Board that is designated by the Board to administer the
Plan.  The Committee shall be constituted to permit the Plan to comply with Rule
16b-3 promulgated under the Securities Exchange Act of 1934 or any successor
rule and shall initially consist of not less than three members of the Board,
all of whom shall be "disinterested persons" within the meaning of said Rule
16b-3.

     (g) "Company"  Mattel, Inc. and its subsidiaries including subsidiaries of
subsidiaries.

     (h) "Fair Market Value"  Unless a different method or a different value is
determined by the Committee, the Fair Market Value for purposes of this Plan
shall be the closing price of the Capital Stock as reported on the New York
Stock Exchange Composite Tape for that day or, if the New York Stock Exchange

                                       1
<PAGE>

is closed on the date in question, then the next preceding date on which the New
York Stock Exchange was open.

     (i)  "Participant"  An employee of the Company to whom an Award has been
made under the Plan.

     (j)  "Retirement Date"  The date a Participant has accumulated five years
of continuous service with the Company and has reached his/her 55th birthday.

3. Eligibility.

     Employees of the Company eligible for an Award under the Plan are those who
hold positions of responsibility and whose performance, in the judgment of the
Committee or the management of the Company, can have a significant effect on the
success of the Company.

4. Capital Stock Available for Awards.

     Up to 1% of the outstanding Capital Stock as determined on December 31 of
the preceding year shall be available for Awards granted wholly or partly in
stock during each calendar year in which the Plan is in effect; provided,
however, an additional 3,000,000 and 1,375,000 shares of Capital Stock
(collectively, the "Additional Awards") shall be available for such Awards for
the years 1993 and 1994, respectively.  From time-to-time, the Board of
Directors and appropriate officers of the Company shall take whatever actions
are necessary to file required documents with governmental authorities and stock
exchanges to make shares of Capital Stock available for issuance pursuant to
Awards.  Capital Stock related to Awards that are forfeited, terminated, expire
unexercised, settled in cash in lieu of stock or in such manner, that all or
some of the Capital Stock covered by an Award are not issued to a Participant,
or are exchanged for Awards that do not involve Capital Stock, shall immediately
become available for Awards.  Any Capital Stock not so used, as well as any
unused portion of the percentage limit in any calendar year or of the Additional
Award Shares, shall be carried forward and available for Awards in succeeding
calendar years.

5. Administration.

     The Plan shall be administered by the Committee which shall have full and
exclusive power to interpret the Plan, to grant waivers of Plan restrictions and
to adopt such rules, regulations and guidelines for carrying out the Plan as it
may deem necessary or proper, all of which powers shall be exercised in the best
interests of the Company and in keeping with the objectives of the Plan.  These
powers include, but are not limited to, the adoption of modifications,
amendments, procedures, subplans and the like as are necessary to comply with
provisions of the laws of other countries in which the Company may operate in
order to assure the viability of Awards granted under the Plan and to enable
Participants employed in such other countries to receive advantages and benefits
under the Plan and such laws.

6. Delegation of Authority.

     The Board may delegate to a member of the Board who is an officer of the
Company authority to act between meetings of the Committee to grant options
under the Plan pursuant to such conditions or limitations as the Board may
establish, except that only the Committee may select Participants and grant
Awards to Participants who are subject to Section 16 of the Securities Exchange
Act of 1934.

                                       2
<PAGE>

7. Awards.

     The Committee shall determine the type or types of Award(s) to be made to
each Participant and shall set forth in the related Award Agreement the terms,
conditions and limitations applicable to each Award.  Awards may include but are
not limited to those listed in this Section 7.  Awards may be granted singly, in
combination or in tandem.  Awards may also be made in combination or in tandem
with, in replacement of, or as alternatives to, grants or rights under any other
employee plan of the Company, including the plan of any acquired entity.

     (a) Stock Option.   A grant of a right to purchase a specified number of
shares of Capital Stock at not less than 100% of Fair Market Value on the date
of grant during a specified period as determined by the Committee.  A stock
option may be in the form of an incentive stock option ("ISO") which, in
addition to being subject to applicable terms, conditions and limitations
established by the Committee, complies with Section 422A of the Code.  The
number of shares of Capital Stock that shall be available for ISO's granted
under the Plan is limited to 500,000.

     (b) Stock Appreciation Right.   A right to receive a payment, in cash
and/or Capital Stock, equal to the excess of the Fair Market Value or other
specified valuation of a specified number of shares of Capital Stock on the date
the stock appreciation right (SAR) is exercised over the Fair Market Value or
other specified valuation on the date of grant of the SAR as set forth in the
applicable Award Agreement.

     (c) Stock Award.   An Award made in stock or denominated in units of stock.
All or part of any stock award may be subject to conditions established by the
Committee, and set forth in the Award Agreement, which may include, but are not
limited to, continuous service with the Company, achievement of specific
business objectives, increases in specified indices, attaining growth rates and
other measurements of performance.  Such Awards may be based on Fair Market
Value or other specified valuation.

     (d) Cash Award.   An Award denominated in cash or denominated in units with
a cash value with the eventual payment amount subject to such restrictions and
conditions as may be established by the Committee, and as set forth in the Award
Agreement, which may include, but are not limited to, continuous service with
the Company, achievement of specific business objectives, increases in specified
indices, attaining growth rates and other measurements of performance.

8. Payment of Awards.

     Payment of Awards may be made in the form of cash, stock or combinations
thereof and may include such restrictions as the Committee shall determine,
including in the case of stock, restrictions on transfer and forfeiture
provisions.  When transfer of stock is so restricted or subject to forfeiture,
it is referred to as "Restricted Stock."  Further, with Committee approval,
payments may be deferred, either in the form of installments or a future lump
sum payment.  The Committee may permit selected Participants to elect to defer
payments of some or all types of Awards in accordance with procedures
established by the Committee to assure that such deferrals comply with
applicable requirements of the Code including, at the choice of Participants,
the capability to make further deferrals for payment after retirement. Any
deferred payment, whether elected by the Participant or specified by the Award
Agreement or by the Committee, may require the payment be forfeited in
accordance with the provisions of Section 13 of the Plan.  Dividends or dividend

                                       3
<PAGE>

equivalent rights may be extended to and made part of any Award denominated in
stock or units of stock, subject to such terms, conditions and restrictions as
the Committee may establish.  The Committee may also establish rules and
procedures for the crediting of interest on deferred cash payments and dividend
equivalents for deferred payments denominated in stock or units of stock.  At
the discretion of the Committee, a Participant may be offered an election to
substitute an Award for another Award or Awards of the same or different type.

9. Stock Option Exercise.

     The exercise price of shares of Capital Stock issuable upon exercise of a
stock option shall be paid in full at the time of the exercise in cash or, if
permitted by the Committee, by means of tendering Capital Stock (including
shares of Capital Stock issuable upon the exercise of the subject stock option)
or surrendering another Award, including Restricted Stock, valued at Fair Market
Value on the date of exercise, or any combination thereof. The Committee shall
determine acceptable methods for tendering Capital Stock or other Awards and may
impose such conditions on the use of Capital Stock or other Awards to exercise a
stock option as it deems appropriate.  In the event shares of Restricted Stock
are tendered as consideration for the exercise of a stock option, a number of
the shares issued upon the exercise of the stock option, equal to the number of
shares of Restricted Stock used as consideration therefor, may be subject to the
same restrictions as the Restricted Stock so submitted plus any additional
restrictions that may be imposed by the Committee.  An Award involving a stock
option or similar right is only exercisable during a Participant's lifetime only
by the Participants or the Participant's legal guardian but in no event shall
such an Award be exercisable for at least six months after grant unless death or
disability of the Participant should occur within such six-month period.

10. Tax Withholding.

     The Company shall have the right to deduct applicable taxes from any Award
payment and withhold, at the time of delivery or vesting of shares under the
Plan, an appropriate number of shares for payment of taxes required by law or to
take such other action as may be necessary in the opinion of the Company to
satisfy all obligations for withholding of such taxes.  If Capital Stock is used
to satisfy tax withholding, such stock shall be valued based on the Fair Market
Value of the Capital Stock on the date the applicable tax is required to be
withheld.

11. Amendment, Modification, Suspension or Discontinuance of this Plan.

     The Board may amend, modify, suspend or terminate the Plan for the purpose
of meeting or addressing any changes in requirements or for any other purpose
permitted by law and if required by law or the rules of any national securities
exchange, any such amendment or modification shall be approved by the holders of
a majority of shares voting on the question; provided that at least 50% of the
outstanding shares entitled to vote, vote on the question.

12. Termination of Employment.

     If the employment of a Participant terminates, other than pursuant to
paragraphs (a) through (c) of this Section 12, all unexercised, deferred and
unpaid Awards shall be cancelled immediately, unless the Award Agreement
provides otherwise.

                                       4
<PAGE>

     (a) Retirement.  When a Participant's employment terminates on or after the
Participant's Retirement Date, the Committee may permit Awards to continue in
effect beyond the date of such termination in accordance with the applicable
Award Agreement or such shorter period as the Committee may determine and the
exercisability and vesting of any Award may be accelerated.

     (b) Resignation in the Best Interests of the Company.  When a Participant
resigns from the Company and, in the judgment of the Chief Executive Officer or
other senior officer designated by the Committee, the acceleration and/or
continuation of outstanding Awards would be in the best interests of the
Company, the Committee may (i) authorize, where appropriate, the acceleration
and/or continuation of all or any part of Awards granted prior to such
termination and (ii) permit the exercise, vesting and payment of such Awards for
such period as may be set forth in the applicable Award Agreement, subject to
earlier cancellation pursuant to Section 13 or at such time as the Committee
shall deem that the continuation of all or any part of the Participant's Awards
are not in the Company's best interests.

     (c) Death or Disability of a Participant.  In the event of a Participant's
death or disability, the Committee may permit awards to continue in effect
beyond the date of such death or disability whether or not in accordance with
the applicable Award Agreement or for such shorter period as the Committee may
determine and the exercisability and vesting and payment of an Award may be
accelerated.

          (i) In the event of a Participant's death, the Participant's estate or
     beneficiaries shall have a period up to one year, but not beyond the
     expiration date specified in the Award Agreement, within which to exercise
     any outstanding Award held by the Participant under such terms as may be
     specified in the applicable Award Agreement.  Rights to any such
     outstanding Awards shall pass by will or the laws of descent and
     distribution.

          (ii) In the event a Participant is deemed by the Company to be
     disabled and eligible for benefits pursuant to the terms of the Mattel,
     Inc., Personal Investment Plan or any successor plan, Awards and rights to
     any such Awards may be paid to or exercised by the Participant, if legally
     competent, or such legally designated guardian or representative if the
     Participant is legally incompetent by virtue of such disability.

13. Cancellation and Rescission of Awards.

     Unless the Award Agreement specifies otherwise, the Committee may cancel
any unexpired, unpaid, or deferred Awards at any time if the Participant is not
in compliance with all applicable provisions of the Award Agreement and the Plan
including the following conditions:

     (a) A Participant shall not render services for any organization or engage
directly or indirectly in any business which, in the judgment of the Chief
Executive Officer of the Company or other senior officer designated by the
Committee, is or becomes competitive with the Company, or which organization or
business, or the rendering of services to such organization or business, is or
becomes otherwise prejudicial to or in conflict with the interests of the
Company.  For Participants whose employment has terminated, the judgment of the
Chief Executive Officer shall be based on the Participant's position and
responsibilities while employed by the Company, the Participant's post-
employment responsibilities and position with the other organization or
business, the extent of past, current and potential competition or conflict
between the Company and the other organization or business, the effect on the
Company's customers, suppliers and

                                       5
<PAGE>

competitors of the Participant assuming the post-employment position and such
other considerations as are deemed relevant given the applicable facts and
circumstances. A Participant who has retired shall be free, however, to purchase
as an investment or otherwise, stock or other securities of such organization or
business so long as they are listed upon a recognized securities exchange or
traded over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than 5 percent equity interest in the
organization or business.

     (b) A Participant shall not, without prior written authorization from the
Company, disclose to anyone outside the Company, or use in other than the
Company's business, any confidential information or material, as those terms are
used in the Company's Employee Patent and Confidence Agreement, relating to the
business of the Company, acquired by the Participant either during or after
employment with the Company.

     (c) A Participant, pursuant to the Company's Employee Patent and Confidence
Agreement, shall disclose promptly and assign to the Company all right, title,
and interest in any invention or idea, patentable or not, made or conceived by
the Participant during employment by the Company, relating in any manner to the
actual or anticipated business, research or development work of the Company and
shall do anything reasonably necessary to enable the Company to secure a patent
where appropriate in the United States and in foreign countries.

     (d) Upon exercise, payment or delivery pursuant to an Award, the
Participant shall certify on a form acceptable to the Committee that he or she
is in compliance with the terms and conditions of the Plan.  Failure to comply
with the provisions of paragraph (a), (b) or (c) of this Section 13 prior to, or
during the six months after, any exercise, payment or delivery pursuant to an
Award shall cause such exercise, payment or delivery to be rescinded.  The
Company shall notify the Participant in writing of any such rescission within
two years after such exercise, payment or delivery.  Within ten days after
receiving such a notice from the Company, the Participant shall pay to the
Company the amount of any gain realized or payment received as a result of the
rescinded exercise, payment or delivery pursuant to an Award.  Such payment
shall be made either in cash or by returning to the Company the number of shares
of Capital Stock that the Participant received in connection with the rescinded
exercise, payment or delivery.

14. Assignability and Dispositions.

     Except pursuant to paragraph (c) of Section 12, no Award or any other
benefit under the Plan shall be assignable or transferable, or payable to or
exercisable by anyone other than the Participant to whom it was granted.

15. Adjustments.

     In the event of any change in the outstanding Capital Stock of the Company
by reason of a stock split, stock dividend, combination or reclassification of
shares, recapitalization, merger, or similar event, the Committee shall adjust
proportionally (a) the number of shares of Capital Stock (i) reserved under the
Plan, (ii) available for ISO's and (iii) covered by outstanding Awards
denominated in stock or units of stock; (b) the stock prices related to
outstanding Awards; and (c) the appropriate Fair Market Value and other price
determinations for such Awards.  In the event of any other change affecting the
Capital Stock or any distribution (other than normal cash dividends) to holders
of Capital Stock, such adjustments as may be deemed equitable by the Committee,
including adjustments to avoid fractional shares, shall be made to give

                                       6
<PAGE>

proper effect to such event. In the event of a corporate merger, consolidation,
acquisition of property or stock, or reorganization where Mattel is the
survivor, the Committee shall be authorized to issue or assume stock options,
whether or not in a transaction to which Section 425(a) of the Code applies, by
means of substitution of new options for previously issued options or an
assumption of previously issued options.

16. Notice.

     Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Corporate Secretary of the Company, and shall
become effective when it is received by the office of the Corporate Secretary.

17. Unfunded Plan.

     Insofar as it provides for Awards of cash and Capital Stock, the Plan shall
be unfunded.  Although bookkeeping accounts may be established with respect to
Participants who are entitled to cash, Capital Stock or rights thereto under the
Plan, any such accounts shall be used merely as a bookkeeping convenience.  The
Company shall not be required to segregate any assets that may at any time be
represented by cash, Capital Stock or rights thereto, nor shall the Plan be
construed as providing for such segregation, nor shall the Company nor the Board
nor the Committee be deemed to be a trustee of any cash, Capital Stock or rights
thereto to be granted under the Plan.  Any liability of the Company to any
Participant with respect to a grant of cash, Capital Stock or rights thereto
under the Plan shall be based solely upon any contractual obligations that may
be created by the Plan and any Award Agreement; no such obligation of the
Company shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company.  Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by the Plan.

18. Employment.

     Neither the Plan nor any Award granted under the Plan shall be deemed to
give any individual a right to remain employed by the Company.  The Company
reserves the right to terminate the employment of any employee at any time, with
or without cause, subject only to a written employment agreement (if any).

19. Effect of Change in Control.

     The Committee, at its sole discretion, may determine, at the time of
granting an Award or thereafter, that in the event that a Change of Control
occurs with respect to the Company, such Award shall become fully exercisable in
the case of stock options and SAR's as to all Capital Stock subject to such
stock option and SAR, and all restrictions and conditions shall be deemed to
have been met or lapsed in the case of Stock Awards and Cash Awards as to all
Capital Stock or cash subject to such Stock Awards or Cash Awards.  A Change of
Control shall be determined by reference to the Company's Rights Agreement
adopted by the Board of Directors on November 6, 1986 and shall be deemed to
have occurred on the Distribution Date as defined in the Rights Agreement or, if
the Rights have been redeemed on the date the Distribution Date would have
occurred under Section 23 of the Rights Agreement had the Rights not been
redeemed.

20. Governing Law.

                                       7
<PAGE>

     The Plan and all determinations made and actions taken pursuant hereto, to
the extent not otherwise governed by the Code or the securities laws of the
United States, shall be governed by the laws of the State of California and
construed accordingly.

21. Effective and Termination Dates.

     The Plan shall become effective upon its adoption by the Board; provided,
however, that if the Plan is not approved by the stockholders of the Company at
or before the Annual Meeting of Stockholders to be held in 1990, the Plan and
all Awards granted hereunder shall be of no effect.  Stockholder approval shall
be obtained, at a meeting held to take such action at which a quorum is present,
by the affirmative vote of the holders of a majority of the shares of Capital
Stock of the Company present in person or by proxy and entitled to vote.  The
Plan shall terminate ten years later, subject to earlier termination by the
Board pursuant to Section 11.

                                       8

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