The Kelpo toy is a free toy SpongeBob receives in the mail in the episode "Waiting."
The toy is small and light green. It has big blue eyes and wears a purple shirt on its body. It has an orange button on its shirt and is always smiling, showing a single tooth, rosy cheeks, and its tongue, and it wears black shoes.
The toy's head looks like a four-leaf clover and is supposed to have wires coming out of it. Lastly, the button on its chest can be pushed for its legs and arms to spring in and out.
Role in episode
SpongeBob is extremely determined to obtain the toy, which he can only receive if he mails in 99 box tops from the Kelpo cereal. So, he buys a large quantity of Kelpo boxes and works very hard to receive his prize.
Eventually, Norton the mailman delivers the toy to SpongeBob. SpongeBob thinks that Patrick broke the toy when he presses the orange button and its legs and arms spring out, ultimately culminating in a fight between the duo.
Squidward, enraged by their constant annoyance, intervenes and takes action by pushing the toy's head and legs back onto its body, which proves to them that it is not broken. SpongeBob and Patrick are delighted that Squidward has "fixed" the toy and asks if they could do anything for him. Squidward simply replies "Move to another neighborhood."
When Patrick first "breaks" the toy, he taps its head rather than pressing the button, which is what should cause the "breakage" (as SpongeBob first thought had happened), and when Squidward makes its limbs spring out, he only taps its head, then it comes together again.