employment terminates. In addition, if at any time following August 1, 2006 Interpublic terminates Mr. Mergenthaler’s employment other than for “cause” or Mr. Mergenthaler terminates his employment for “good reason”, the Initial Equity Awards will vest in full.

If Mr. Mergenthaler’s employment terminates for any reason, he will not, for a period of 12 months following the termination of his employment, (a) solicit any employee of Interpublic or any of its subsidiaries to leave such employ to enter into his employ, or into the employ of any person or entity with which he is associated, (b) solicit or handle, on his own behalf or on behalf of any person or entity, the event marketing, public relations, advertising, sales promotion or market research business of any person or entity which is a client of Interpublic, or (c) accept any form of employment with any competitor of Interpublic.

Severance Agreement

Under the terms of the Severance Agreement, Mr. Mergenthaler is entitled to receive a cash severance payment if, within two years after a “change of control,” (i) his employment is terminated by Interpublic other than for “cause” (as defined in the Severance Agreement”) or (ii) he resigns for “good reason” (as defined in the Severance Agreement). The Severance Agreement provides that a “change of control” occurs if, among other occurrences: (a) any person (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act on 1934, as amended (the “Exchange Act”)) other than Interpublic or any of its subsidiaries, becomes the beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act) of 30% or more of the combined voting power of Interpublic's then outstanding voting securities; (b) Interpublic’s stockholders approve an agreement to merge or consolidate with another corporation (other than a subsidiary of Interpublic) or an agreement to sell or dispose of all or substantially all of the business or assets of Interpublic; or (c) during any period of two consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by Interpublic's stockholders of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

The severance payment to which Mr. Mergenthaler would be entitled under the Severance Agreement is equal to two times his average annual compensation during the two calendar years ended prior to the date of a change of control. In addition, he would be entitled to receive a partial annual bonus based on the bonus paid to him in the year preceding his termination of employment, prorated for the elapsed portion of the year in which employment was terminated. If Mr. Mergenthaler did not receive a bonus in the year immediately preceding the year in which his employment terminated, he would be entitled to receive an amount equal to the bonus paid to him during the second year preceding the year in which his employment terminated, multiplied by one plus the portion of the elapsed portion of the year in which his employment was terminated. The average compensation used in calculating the severance payment would be Mr. Mergenthaler’s taxable compensation plus any deferred compensation accrued during the two relevant years, but would not include any deferred compensation earned in prior years but paid during the two years and would not include any taxable compensation relating to any stock option or restricted stock plan of Interpublic.