There's a strikingly beautiful woman looking at herself in the mirror. She's wearing fur, and not much else underneath. Don is watching her, smoking a cigarette and giving her instructions. It looks like they're in a hotel room. Don tells her it's a $15,000 chinchilla coat. "How does it feel?" he asks.
After a few minutes, the camera cuts out to reveal she's actually in the office, and Ted Chaough and Pete Campbell are in there with their new conglomerate partners, all grinning from ear-to-ear. They call the next girl in.
After a night out with Roger Sterling and the casting girls, Don arrives at home and has a new girl walk in to his apartment. As they fall onto the sheets on the floor, she finds one of Meghan's ear rings on the floor. He tells her it's his ex-wife's.
Joan Harris and Peggy Olson are working on their Topaz pantyhose client. According to them, they're getting beat up by the rest of the competition since Topaz is only sold in drug stores. They think that a solution is to have McCann, their new corporate owner, network some big department stores like Macy's to distribute Topaz.
When Peggy and Joan make their pitch to McCann, the guys make crude sexual jokes to them-- not taking them very seriously. Still, they get a yes. Joan is very upset about the way she was treated.
This episode is called "Severance" because Ken Cosgrove gets fired. One of the execs from McCann told Roger Sterling to do it, and he did. Cosgrove worked with McCann previously and had a falling out with the company. Roger tells Ken to give over his Dow Chemical account to Pete.
At the conclusion of the episode, Ken walks in to a meeting between Pete and Roger uninvited. He says he won't be collecting severance, because he's just been given a signing bonus from Dow Chemical. According to Ken, they value their relationships much more at Dow. Ken is taking over his father-in-law's post as head of advertising. Pete asks if he's going to fire them. Ken replies that he's going to make it much worse than that-- he's going to be their client, and he's very hard to please.
Peggy gets set up for a blind date by one of her young copywriter's brother-in-law. After some initial restraint, Peggy goes out with him and ends up liking him. The two set up a date for Paris in the near future.
Don's old love affair from seasons past, Rachel Menken, has passed away from Leukemia. Don't secretary informed him of the news, and he seemed very distressed by it. He later shares it with a waitress at a diner, who seems to be his new love obsession.