SEPARATION AGREEMENT 

This SeparationAgreement (this *"Agreement"*) is made and entered into asof the 24th day of January, 2007, by and between Integrity MutualFunds, Inc., a North Dakota corporation (the *"Company"*)and Robert E. Walstad, an individual residing at Minot, NorthDakota (*"Employee"*). 

WITNESSETH 

Whereas, Employeeand the Company entered into an employment agreement datedOctober 1, 2001 (the *"Employment Agreement"*); 

Whereas, Employeehas elected to retire from his employment with the Company andterminate the Employment Agreement on February 1, 2007; 

Whereas, inaccordance with the exhibits accompanying this Agreement,Employee hereby resigns as Chairman of the Board of Directors,director and Chief Executive Officer of the Company and asdirector, President and Treasurer of Integrity Money Management,Inc. and Integrity Fund Services, Inc. and accepts his positionas Chairman Emeritus of the Company; and 

Whereas, theCompany and Employee desire, pursuant to this Agreement, to setforth their respective obligations to one another and to settleall matters or claims relating to Employee's employment with andseparation from the Company which Employee may have against theCompany and its subsidiaries and affiliates, including, withoutlimitation, all matters or claims relating to salary, wages,bonuses, accrued vacation pay, employee benefits, fringebenefits, separation and expense reimbursement; 

Now, Therefore, inconsideration of the mutual covenants and premises set forthherein and the Separation Payment (hereinafter defined), andother good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged and confessed, theparties hereto hereby agree as follows:

1.         *SeparationPayment and Stock Options.*  (a) The Company agrees topay Employee, and Employee agrees to accept, Two Hundred SeventyFour Thousand Five Hundred Dollars ($274,500) (the *"SeparationPayment"*) in full and final settlement and satisfaction ofany Claims (hereinafter defined) which Employee may have againstEmployee Releasees (hereinafter defined).  The SeparationPayment shall be paid by the Company to Employee in equal,bi-weekly payments (less required withholding deductionsincluding federal and state taxes and FICA) commencing on thefirst regularly scheduled pay date of the Company after the dateof this Agreement and continuing until the Separation Payment ispaid in full on or before August 16, 2009 (the *"TerminationDate"*).  

(b)       The Company acknowledgesthat the stock options and warrants to purchase shares of theCompany's common stock granted to Employee prior to the date ofthis Agreement shall continue in effect as if Employee'semployment has not terminated. 

(c)       The Company shall pay tothe Employee the Employee's vested balance in the Company'sEmployee Stock Ownership Plan on the Termination Date, or as soonas practicable thereafter.  

(d)       On February 1, 2007,Employee shall receive options to purchase 60,000 shares of thecommon stock of the Company at a strike price equal to the higherof the highest asking price or highest trading price (asdetermined by NASDAQ Electronic Bulletin Board quotation) of theCompany's common stock on September 1, 2006.  On September1, 2007, Employee shall receive options to purchase 60,000 sharesof the common stock of the Company at a strike price equal to thehigher of the highest asking price or highest trading price (asdetermined by NASDAQ Electronic Bulletin Board quotation) of theCompany's common stock on September 1, 2007, or the next businessday if NASDAQ is closed on such day. 

(e)       In the event of anyreclassification, increase or decrease in the number of theissued shares of common stock of the Company by reason of asplit, reverse-split, sale or spin-off of any business unit ofthe Company, then Employee's proportionate interest in suchoptions and warrants shall be maintained as before the occurrenceof such event so that (i) as to the number of outstandingunexercised warrants or options granted to Employee, there shallbe a corresponding proportional adjustment as to the class andnumber of shares covered by each option and warrant and (ii) asto the exercise price under each such option and warrant, thereshall be a corresponding proportional adjustment in the totalexercise price applicable to said options and warrants. 

2.        *Benefits.*  (a)  The Company shall provide toEmployee from the date of this Agreement to and including theTermination Date coverage of group health, dental and visioninsurance afforded to other employees of the Company.  IfEmployee secures full-time employment elsewhere or becomesself-employed and obtains insurance coverage, Employee shallimmediately notify the Company in which event such insurancecoverage by the Company shall terminate to the extent permittedunder applicable law. 

(b)       Employee shall beentitled to participate in the Company's 401(k) Plan and to anyapplicable Company matching contributions thereunder prior to theTermination Date. 

(c)       Employee shall beentitled to 90% of all commissions collected by Employee as anagent to Capital Financial Services, Inc., a wholly-ownedsubsidiary of the Company, to and including the TerminationDate.  The Company shall pay the costs of an error andomissions insurance policy to cover Employee to and including theTermination Date relating to his business activities transactedthrough Capital Financial Services, Inc. 

(d)       The Company shall pay tothe Employee within sixty (60) days of this Agreementcompensation for any accrued vacation unused by the Employeeprior to the date of this Agreement. 

3.         *GeneralRelease. * (a)  Employee, on behalf of himself andhis spouse, dependents, agents, heirs, executors, administrators,personal representatives and assigns, and to the fullest extentpermitted by applicable law, hereby releases and foreverdischarges the Company, its subsidiaries and affiliates and theirrespective shareholders, their past and present officers,directors, agents and employees (hereinafter referred tocollectively as the *"Employee Releasees"*) from any and allclaims, demands, liabilities, obligations, damages, debts, causesof action, suits and disputes of any nature whatsoever, whetherknown or unknown, suspected or unsuspected, fixed or contingent(hereinafter referred to collectively as the *"Claims"*),which, as of the date hereof or any time prior thereto, Employeehas had or may have had against any of the Employee Releaseeswith respect to any and all matters whatsoever, including,without limitation, any and all Claims related to (i) theEmployment Agreement, (ii) salary, wages, bonuses, accruedvacation pay, employee benefits, separation or other compensationof any nature whatsoever or (iii) Employee's employment with theCompany, or the termination thereof, or arising under or basedupon, directly or indirectly, in whole or in part, Title VII ofthe Civil Rights Act of 1964 as amended, the Civil Rights Act of1991 as amended, the Americans with Disabilities Act of 1990 asamended, the Family and Medical Leave Act of 1993 as amended, theHuman Rights Act as amended, the Age Discrimination in EmploymentAct of 1967, as modified by the Older Workers Benefit ProtectionAct of 1990 as amended, Section 1981 of the Civil Rights Actof 1870 as amended, the Fair Labor Standards Act of 1938 asamended, the Equal Pay Act of 1963 as amended, the North DakotaEqual Pay Act as amended, the Employee Retirement Income SecurityAct of 1974 as amended, the Rehabilitation Act of 1973 asamended, the Equal Employment Opportunity Act of 1972 as amendedand any state or local equal employment opportunity or agediscrimination law, wage payment law or workers' compensationlaw, or any other federal, state or local law, statute,ordinance, decision, order, policy or regulation establishing orrelating to claims or rights of employees, including, withoutlimitation, any and all claims alleging interference with theattainment of any rights under any insurance, pension, profitsharing or other employee benefit plan, any and all claims intort or contract and any and all claims alleging breach of anexpress or implied, or oral or written, contract, policy manualor employee handbook, or alleging misrepresentation, defamation,interference with contract, duress, intentional or negligentinfliction of emotional distress, negligence or wrongfuldischarge, *provided, however,* that Employee is notreleasing any Employee Releasees in respect of Claims for breachof this Separation Agreement or any Claims relating to anyoutstanding options previously granted to Employee, or Claimsunder any Company's 401(k) Plan, Employee Stock Ownership Plan,or any other plan of the Company, all of which are fullypreserved. 

(b)       The Company on its ownbehalf and behalf of its subsidiaries, joint venturers,directors, officers, employees, agents, shareholders,representatives, successors and assigns (*"CompanyReleasees"*), and to the fullest extent permitted byapplicable law, hereby releases and forever discharges Employee,his spouse, dependents, agents, heirs, executors, administrators,personal representatives and assigns from any and all Claims,which, as of the date hereof or any time prior thereto, anyCompany Releasee has had or may have had against Employee withrespect to any and all matters whatsoever, including, withoutlimitation, any and all Claims related to (i) the EmploymentAgreement, and (ii) Employee's employment with the Company. 

(c)       *Covenant Not toSue.*** **Employee and the Company each covenant andagree not to file, institute, participate or aid in any legalsuit, arbitration or administrative proceeding (or execute, seekto impose, collect or recover upon, or otherwise enforce oraccept any judgment, decision, award, warrant or attachment)against any of the Employee Releasees and Company Releasees, asapplicable, upon any Claim released by Employee or the Companyunder this Agreement, except as required by applicable law. 

(d)       *No Limitation ofScope.*  Employee understands and agrees that thisAgreement constitutes a general release of all Claims of everykind and nature against the Employee Releasees, whether or notthey are specifically referred to herein, and that no referenceherein to a specific Claim, statute or law is intended to limitthe scope of the general agreement contained herein; *provided,however,* that this Agreement does not relate to any rights orclaims arising after the date hereof. 

4.        *Indemnification/Director and Officer Insurance.*  (a)The Company shall indemnify Employee against any claims, lossesor damages regardless of when such claims are asserted whichrelate to events or circumstances occurring during the period ofEmployee's employment with the Company, in accordance with theCompany's Bylaws. 

(b)       Employee shall be coveredby a director/officer liability insurance policy, if any,maintained by the Company to the fullest extent permitted by suchdirector/officer insurance policy to and including theTermination Date. 

5.         *Cooperationin Litigation, Claims, Etc.*  Employee agrees tocooperate with and assist and make himself available to theCompany or its subsidiaries and affiliates without furtherconsideration, except reimbursement for out-of-pocketexpenditures incurred at the request of the Company, in thedefense and prosecution of any litigation, claims, proceedings orcontroversies involving the Company arising from mattersoccurring in or involving the period during which he was anemployee of the Company. 

6*.         No PendingClaims, Etc.* Employee represents and affirms that at no timeprior to the execution of this Agreement has he filed, institutedor maintained, and at no time subsequent thereto will he file,institute or maintain, or cause or knowingly permit the filing,institution or maintenance, in any state, federal or foreigncourt, or before any local, state, federal or foreign arbitrationor administrative agency, or any other tribunal, any Claim, andhe hereby irrevocably grants to the Company his power ofattorney, which he hereby acknowledges and agrees is coupled withan interest, with full right, power and authority to take allactions necessary to dismiss or discharge with prejudice any suchClaim. 

7.        *Confidential Information. * Employee reaffirms andagrees that he will not at any time use, divulge, furnish or makeaccessible to any person outside of the Company any informationof a secret or confidential nature.  For purposes of thisparagraph 7, the term "information of a secret orconfidential nature" shall mean information of any nature and inany form which at the time or times concerned is not generallyknown to those persons engaged in a business similar to thatconducted or contemplated by the Company and its subsidiaries andaffiliates, and which relates to any one or more of the aspectsof the present or past business of the Company and itssubsidiaries and affiliates, including, without limitation, listsof customers, technical data, studies, policies, processes,formulas, techniques, know-how and other knowledge, data,databases, computer designs, information, trade secrets, tradepractices and/or facts relating to devices, computer programs(whether embodied in source or object code), sales, advertising,promotions, financial matters, suppliers, and other trade secretsrelating to the business of the Company and its subsidiaries andaffiliates.  Employee represents and warrants that Employeehas returned to the Company (i) all records, documents, files,writings, materials and other data pertaining to such secret orconfidential information, regardless by whomsuch records,documents, files, writings, materials and other data wereprepared including without limitation, documents, papers,records, financial information, customer lists, business plans,entertainment contact lists, and all other such materials and allcopies thereof relating to the business of the Company; and (ii)all keys, keycards, credit cards, and all other items which arethe property of the Company.  Employee agrees to use hisbest efforts to keep the terms of this Agreement (except for suchterms which are publicly disclosed) and the circumstancessurrounding this Agreement strictly confidential.  Employeemay disclose the terms of this Agreement to his spouse,accountant, attorney and taxing authorities only as may benecessary for his financial affairs as required by law. 

8.        *Non-Solicitation of Employees and Agents.*  During theperiod commencing on the date hereof and ending on theTermination Date, Employee shall not directly or indirectlyinduce or attempt to induce any of the employees orrepresentatives of the Company, its subsidiaries or affiliates toleave the employ of or association with the Company, itssubsidiaries or affiliates, or solicit the business of any clientor customer of the Company, its subsidiaries or affiliates. 

9.         *Merger,Consolidation, Bankruptcy, Etc.*  To the extent permittedby applicable law, in the event of the Company's (a) bankruptcy,general assignment or trust mortgage for the benefit ofcreditors, receivership or involuntary dissolution of the Companyor (b) change in management and/or control as a result of amerger, consolidation, sale of assets, or tender offer, Employeeshall be immediately entitled to the balance of the remainingunpaid Separation Payments due to the Employee set forth inSection 1 of this Agreement. 

10.      *Non-Competition. * From the date of this Agreement tothe Termination Date, Employee agrees that he will not (a) act asa manager, officer, director, employee, consultant, agent orrepresentative of Viking Mutual Funds or any of its subsidiariesor affiliates, or (b) assist in any way or in any capacity anyperson, firm, association, partnership corporation, limitedliability company or other entity that sells or provides productsor services to Viking Mutual Funds. 

11.      *Non-Admission.*  Nothing in this Agreementconstitutes or shall be interpreted as any admission of liabilityor wrongdoing on the part of either party. 

12.       *Voluntary Action/Rightto Revoke.*  Employee acknowledges and agrees that he isentering into this Agreement knowingly and voluntarily, withoutcoercion or duress of any nature whatsoever and has entered intothis Agreement with full knowledge of its significance. Employee further acknowledges that he has been advised of hisright to seek advice and counsel from others, including anattorney, before executing this Agreement and he waives thetwenty-one (21) day period to consider this Agreement. Employee further acknowledges that he has not relied upon anyrepresentation or statement made by the Company, or its attorneysor accountants with respect to the subject matter, basis oreffect of this Agreement.  Employee reserves the right torevoke this Agreement until January 31, 2007 after which timethis Agreement may not be revoked by the Company or Employee,subject to applicable law. 

13.       *Non-ConditionalSeparation.*  The Company hereby recognizes that, exceptas set forth in this Agreement, the Separation Payment and eachof the payments referred to in Section 1 of this Agreement shallnot be contingent on any ongoing duties or responsibilities ofEmployee to the Company, including, but not limited to, anyexecutive, employee, consultant, administrative, committee,directorship, sales or other similar relationship. 

14.      *Amendment/Waiver/Termination*.  No modification,termination or amendment of, or waiver under, this Agreementshall be valid unless in writing and signed by Employee and aduly authorized officer of the Company. 

15.       *GoverningLaw*.  This Agreement shall be construed, interpreted,governed and enforced in accordance with the substantive laws ofthe State of North Dakota and the Federal laws of the UnitedStates applicable to North Dakota, without regard to the conflictof law rules. 

16.       *Successors*. This Agreement shall be binding upon Employee and his heirs,executors, administrators, personal representatives and assigns,and shall inure to the benefit of each of the Employee Releaseesand their respective heirs, executors, administrators, personalrepresentatives, successors and assigns.  This Agreementshall be binding upon the Company and its successors and assignsand shall inure to the benefit of each of the Company Releaseesand their respective heirs, executors, administrators, personalrepresentatives, successors and assigns. 

17.       *Attorneys'Fees. * The parties agree that in the event of anylitigation respecting a breach of this Agreement, each partyshall pay its own court costs and attorneys' fees relating tosuch litigation. 

18.*       CompleteAgreement. * Other than as set forth herein, Employeewarrants that no promise or inducement has been offered for thisAgreement.  The parties agree that this Agreement sets forththe entire agreement between them and supersedes any otherwritten or oral understandings.  No other promises oragreements shall be binding unless reduced to writing and signedby the parties.  The parties further agree that if anyprovision of this Agreement is held invalid for any reason by acourt or other tribunal of competent jurisdiction, the remainingprovisions shall continue to be in full force and effect. 

In Witness Whereof,the parties hereto have executed this Agreement as of the day andyear first above written. 

COMPANY: 

INTEGRITY MUTUAL FUNDS,INC.                                              EMPLOYEE: 

By     /s/ Mark R. Anderson                                                                   /s/ Robert E. Walstad                   

Its      President                                                                                Robert E. Walstad

EXHIBIT ARESIGNATION AS CHAIRMAN, DIRECTOR AND CHIEF EXECUTIVE OFFICEROF INTEGRITY MUTUAL FUNDS, INC. 

January 24,2007 

Integrity MutualFunds, Inc.1 Main Street North				 Minot, North Dakota 58703

Board of Directors: 

The undersignedhereby resigns as Chairman of the Board of Directors, Directorand Chief Executive Officer of Integrity Mutual Funds, Inc.,effective February 1, 2007, pursuant to the terms and conditionsof that certain Separation Agreement by and between IntegrityMutual Funds, Inc. and the undersigned dated as of January 24,2007.  

Very trulyyours,

By    /s/ Robert E. Walstad                   

Robert E. WalstadChairman of the Board of Directors,Director and Chief Executive Officer

 

EXHIBIT BRESIGNATION AS DIRECTOR, PRESIDENT AND TREASUREROF INTEGRITY MONEY MANAGEMENT, INC. 

January 24,2007 

Integrity MoneyManagement, Inc.1 Main Street North Minot, North Dakota 58703 

Board of Directors: 

The undersignedhereby resigns as Director, President and Treasurer of IntegrityMoney Management, Inc., effective February 1, 2007, pursuant tothe terms and conditions of that certain Separation Agreement byand between Integrity Mutual Funds, Inc. and the undersigneddated as of January 24, 2007.  

Very trulyyours,  

 By    /s/ Robert E. Walstad                   

Robert E. WalstadDirector, President and Treasurer

 

EXHIBIT CRESIGNATION AS DIRECTOR, PRESIDENT AND TREASUREROF INTEGRITY FUND SERVICES, INC. 

January 24,2007 

Integrity Fund Services, Inc.				1 Main Street North				Minot, North Dakota 58703 

Board of Directors: 

The undersignedhereby resigns as Director, President and Treasurer of IntegrityFund Services, Inc., effective February 1, 2007, pursuant to theterms and conditions of that certain Separation Agreement by andbetween Integrity Mutual Funds, Inc. and the undersigned dated asof January 24, 2007.  

Very trulyyours,  

By    /s/ Robert E. Walstad                   

Robert E. WalstadDirector, President and Treasurer