SEPARATION AGREEMENT 

			THIS SEPARATION AGREEMENT (this "Agreement") is made and entered into as of the 13th day of July, 2006, by and between INTEGRITY MUTUAL FUNDS, INC., a North Dakota corporation (the "Company") having an office at 1 North Main Street, Minot, North Dakota  58703 and JERRY J. SZILAGYI ("Employee"),
residing at 5 Abbington Drive, Lloyd Harbor, NY  11743. 

			WITNESSETH:

			WHEREAS, Employee and the Company entered into an employment agreement dated April 1, 2004 (the "Employment Agreement")
which replaced, in its entirety, the employment agreement dated
May 1, 2003 by and between the parties hereto;
 

			WHEREAS, Employee's employment with the Company and the Employment Agreement shall terminate on July 16, 2006;
 

			WHEREAS, Employee hereby resigns as Senior Vice President, Business Development of the Company; and
 

			WHEREAS, the Company and Employee desire, pursuant to this Agreement, to set forth their respective obligations to one another and to settle all matters or claims relating to Employee's employment with and separation from the Company which Employee may have against the Company and its subsidiaries and affiliates, including, without limitation, all matters or claims relating to salary, wages, bonuses, accrued vacation pay, employee benefits, fringe benefits, success or finder's fees, and separation and expense reimbursement;
 

			NOW, THEREFORE, in consideration of the mutual covenants and premises set forth herein and the Separation Payment (hereinafter defined), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the parties hereto hereby agree as follows:
 

			
1.      Separation
Payment. 
 

			
(a)     The Company agrees to pay Employee,
and Employee agrees to accept, Two Hundred Ten Thousand Dollars
($210,000.00) (the "Separation Payment") in full and final
settlement and satisfaction of any Claims (hereinafter defined)
which Employee may have against Employee Releasees (hereinafter
defined).  The Separation Payment shall be paid by the
Company to Employee in equal, monthly payments on the fifteenth
(15th) day of each month commencing on July 15, 2006 and
continuing until the Separation Payment is paid in full on or
before April 15, 2007.
 

			
(b)     The Separation Payment shall be
evidenced in the promissory note of the Company in the form
attached hereto as Exhibit A and made a part hereof (the
"Promissory Note").
 

			
(c)     The Separation Payment shall be paid
at 5 Abbington Drive, Lloyd Harbor, New York 11743, or such other
place as Employee may designate in writing, including written
direction to make payment by wire transfer as instructed by
Employee.
 

			
(d)     The Separation Payment is not being
made in respect of Employee's employment with the Company or his
Employment Agreement.
 

			
(e)     The Company agrees to pay Employee
the following: (1) all forms of compensation, bonuses and fees
the Employee earned through and including June 30, 2006, based
upon the terms of the Employment Agreement, all of which shall be
paid at the time and in accordance with past practices (such
Employee's bonuses for June 2006 amount to $41,337.82) and (2)
for the period from July 1, 2006 through March 31, 2007 (i) one
basis point (.0001) per month on the net assets in the Saratoga
Energy & Basic Materials Portfolio as long as the Company is
the adviser to such Fund and (ii) in lieu of all the Bonuses,
Finder's Fees and Royalty payments that would have otherwise
accrued and been payable to Employee under the Employment
Agreement from July 1, 2006 through March 31, 2007, ten basis
points (.0010) computed on the aggregate net assets in the
Integrity High Income Fund and the All Season Fund in excess of
$135,000,000.  The calculation of net assets for Section
1(e)(2) purposes shall be made as of the close of business on the
last business day of each month.  The amount due, if any,
under Section 1(e)(2)(ii) shall be calculated monthly and any
amount owed by the Company and not previously paid shall be
payable as set forth in the next succeeding sentence.  Any
payments due pursuant to Section 1(e)(2) shall be paid to
Employee on or before the 15th day of the month next succeeding
the end of the month for which an amount is owed. 
Commencing on August 15, 2006, and on the 15th day of each month
thereafter through and including April 15, 2007, the Company
shall provide Employee with a report containing the following
information with respect to the Saratoga Energy & Basic
Materials Portfolio, the Integrity High Income Fund and the
Integrity All Season Fund:  the net assets in each such Fund
as of the close of business on the last business day of the month
immediately preceding the date of the report, each of which shall
be calculated in accordance with GAAP and on a basis consistent
with past practice, and each of which shall be certified by the
Chief Financial Officer of the Company.  If the Employee
disputes the method of calculation, he shall give notice to the
Company and the parties shall meet and attempt in good faith to
resolve any such dispute. 

			
2.      Benefits.  In
accordance with the requirements of the Consolidated Omnibus
Budget Reconciliation Act ("COBRA"), the Company shall
provide to Employee, if Employee so elects in writing delivered
to the Company, coverage of group medical and health insurance
afforded to other employees of the Company, and all premiums
therefor (plus any additional charges authorized by COBRA) shall
be paid by Employee prior to the first day of each month
commencing August 1, 2006.  Through July 31, 2006, Employee
shall be entitled to all health, dental and vision benefits that
he was entitled to receive under the Employment Agreement at the
same cost to Employee as existed prior to the date hereof. 

			
3.      Release. 
 

			
(a)     Subject to and conditioned upon
timely payment in full of the (1) Separation Payment, (2)
Promissory Note, (3) the payments specified in Section 1(e), and
(4) any Finder's Fee, Success Payment, Royalty Payment and Bonus
Override relating to the Saratoga Transaction, and except as
hereinafter provided, Employee, on behalf of himself and his
spouse, dependents, agents, heirs, executors, administrators,
personal representatives and assigns, and to the fullest extent
permitted by applicable law, hereby releases and forever
discharges the Company, its subsidiaries and affiliates and their
respective shareholders, their past and present officers,
directors, agents and employees (hereinafter referred to
collectively as the "Employee Releasees") from any and all
claims, demands, liabilities, obligations, damages, debts, causes
of action, suits and disputes whether known 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, Employee has had or may have
had against any of the Employee Releases, solely, with respect to
(i) the Employment Agreement, (ii) salary, wages, bonuses,
accrued vacation pay, employee benefits, separation or other
compensation of any nature whatsoever or (iii) Employee's
employment with the Company, or the termination thereof, or
arising under or based upon, directly or indirectly, in whole or
in part, Title VII of the Civil Rights Act of 1964 as amended,
the Civil Rights Act of 1991 as amended, the Americans with
Disabilities Act of 1990 as amended, the Family and Medical Leave
Act of 1993 as amended, the Human Rights Act as amended, the Age
Discrimination in Employment Act of 1967, as modified by the
Older Workers Benefit Protection Act of 1990 as amended,
Section 1981 of the Civil Rights Act of 1870 as amended, the
Fair Labor Standards Act of 1938 as amended, the Equal Pay Act of
1963 as amended, the North Dakota Equal Pay Act as amended, the
Employee Retirement Income Security Act of 1974 as amended, the
Rehabilitation Act of 1973 as amended, the Equal Employment
Opportunity Act of 1972 as amended and any state or local equal
employment opportunity or age discrimination law, wage payment
law or workers' compensation law, or any other federal, state or
local law, statute, ordinance, decision, order, policy or
regulation establishing or relating to claims or rights of
employees, including, without limitation, any and all claims
alleging interference with the attainment of any rights under any
insurance, pension, profit sharing or other employee benefit
plan, any and all claims in tort or contract and any and all
claims alleging breach of an express or implied, or oral or
written, contract, policy manual or employee handbook, or
alleging misrepresentation, defamation, interference with
contract, duress, intentional or negligent infliction of
emotional distress, negligence or wrongful discharge,
provided, however, that Employee is not releasing any
Employee Releasees in respect of Claims for breach of this
Separation Agreement or the Promissory Note, or any Claims
relating to any outstanding options previously granted to
Employee, or Claims under any 401(k) Plan, Employee Stock
Ownership Plan, or any other plan of the Company, all of which
are fully preserved.
 

			
(b)     The Company on its own behalf and
behalf of its subsidiaries, joint venturers, directors, officers,
employees, agents, shareholders, representatives, successors and
assigns ("Company Releasees"), and to the fullest extent
permitted by applicable 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, any Company Releasee has had or may have had
against Employee with respect to any and all matters whatsoever,
including, without limitation, any and all Claims related to (i)
the Employment Agreement, and (ii) Employee's employment with the
Company.
 

			
(c)     Covenant Not to Sue.
 Employee and the Company each covenant and agree not
to file, institute, participate or aid in any legal suit,
arbitration or administrative proceeding (or execute, seek to
impose, collect or recover upon, or otherwise enforce or accept
any judgment, decision, award, warrant or attachment) against any
of the Employee Releasees and Company Releasees, as applicable,
upon any Claim released by Employee or the Company under this
Agreement, except as required by applicable law. 

			
4.      Indemnification/Director and
Officer Insurance. 
 

			
(a)     The Company shall indemnify Employee
against any claims, losses or damages regardless of when such
claims are asserted which relate to events or circumstances
occurring during the period of Employee's employment with the
Company, in accordance with the Company's Bylaws.
 

			
(b)     Employee shall be covered by a
director/officer liability insurance policy, if any, maintained
by the Company to the fullest extent permitted by such
director/officer insurance policy. 

			
5.      Saratoga
Transaction.  In the event a merger, acquisition or a
similar transaction closes between the Company and Saratoga
Capital Management, LLC (the "Saratoga Transaction") on or
prior to June 30, 2007, Employee shall be entitled to the
following: 

			
(a)     Success Fee.  Employee
will receive a success fee (the "Success Fee") calculated
as follows: (i) five percent (5%) of the first one million
dollars ($1,000,000) of the Saratoga Transaction value; plus,
(ii) four percent (4%) of the second one million dollars
($1,000,000) of the Saratoga Transaction value; plus, (iii) three
percent (3%) of the third million dollars ($1,000,000) of the
Saratoga Transaction value; plus, (iv) two percent (2%) of the
fourth million dollars ($1,000,000) of the Saratoga Transaction
value; and, plus (v) one percent (1%) of the aggregate amount in
excess of the fourth million dollars of the Saratoga Transaction
value.
 

			
(b)     Royalty Payment. 
Employee will receive a royalty payment (the "Royalty
Payment") equal to an annual rate, prorated from the time of
closing of the Saratoga Transaction through June 30, 2007, of
five (5) basis points (0.0005) multiplied by the Company's assets
under management in products related solely to the Saratoga
Transaction.  The Royalty Payment will be paid monthly to
Employee beginning within thirty (30) days of the closing of the
Saratoga Transaction.
 

			
(c)     Bonus Override.  Employee
will receive a bonus override (the "Bonus Override") equal
to two percent (2.0%) of the revenue associated with the
Company's mutual fund business segment excluding commission and
Rule 12b-1 fee revenue received by such fund's distribution with
respect to revenues generated from the Saratoga Transaction from
the time of closing of the Saratoga Transaction through June 30,
2007.  The Bonus Override shall be determined and paid as
provided in the Employment Agreement. 

			
6.      Cooperation in Litigation,
Claims, Etc.  Employee agrees to cooperate with and
assist and make himself available to the Company or its
subsidiaries and affiliates without further consideration, except
reimbursement for out-of-pocket expenditures incurred at the
request of the Company, in the defense and prosecution of any
litigation, claims, proceedings or controversies involving the
Company arising from matters occurring in or involving the period
during which he was an employee of the Company. 

			
7.      No Pending Claims, Etc.
Employee represents and affirms that at no time prior to the
execution of this Agreement has he filed, instituted or
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 foreign
court, or before any local, state, federal or foreign arbitration
or administrative agency, or any other tribunal, any Claim, and
he hereby irrevocably grants to the Company his power of
attorney, which he hereby acknowledges and agrees is coupled with
an interest, with full right, power and authority to take all
actions necessary to dismiss or discharge with prejudice any such
Claim. 

			
8.      Return of Company
Information.  Employee represents and warrants that
Employee has returned to the Company (i) all records, documents,
files, writings, materials and other tangible data in his
possession or control relating to the business of the Company and
its subsidiaries and affiliates; and (ii) all keys, keycards,
credit cards, and all other items which are the property of the
Company. 

			
9.     
Non-Admission.  Nothing in this Agreement
constitutes or shall be interpreted as any admission of liability
or wrongdoing on the part of either party. 

			10.   
Voluntary Action/Right to Revoke.  Employee acknowledges and agrees that he is entering into this Agreement knowingly and voluntarily, without coercion or duress of any nature whatsoever and has entered into this Agreement with full knowledge of its significance.  Employee further acknowledges that he has been advised of his right to seek advice and counsel from others, including an attorney, before executing this Agreement and he waives the twenty-one (21) day period to consider this Agreement.  Employee further acknowledges that he has not relied upon any representation or statement made by the Company, or its attorneys or accountants with respect to the subject matter, basis or effect of this Agreement.  Employee reserves the right to revoke this Agreement until July 20, 2006 upon delivering written notice to the Company of such revocation, together with all amounts already paid hereunder to Employee. 

			11.   
Amendment/Waiver.  No modification or amendment of,
or waiver under, this Agreement shall be valid unless in writing
and signed by Employee and a duly authorized officer of the
Company. 

			12.   
Governing Law and Venue.  This Agreement shall be
construed, interpreted, governed and enforced in accordance with
the substantive laws of the State of New York and the Federal
laws of the United States applicable to New York, without regard
to the conflict of law rules.  Any action brought concerning
this contract shall be venued in the County of Suffolk, State of
New York. 

			13.   
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 Releasees and their respective heirs,
executors, administrators, personal representatives, successors
and assigns.  This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the
benefit of each of the Company Releasees and then respective
heirs, executors, administrators, personal representatives,
successors and assigns. 

			14.   
Complete Agreement.  Other than as set forth herein,
Employee warrants that no promise or inducement has been offered
for this Agreement.  The parties agree that this Agreement
and the Promissory Note set forth the entire agreement between
them and supersedes any other written or oral
understandings.  No other promises or agreements shall be
binding unless reduced to writing and signed by the
parties.  The parties further agree that if any provision of
this Agreement is held invalid for any reason by a court or other
tribunal of competent jurisdiction, the remaining provisions
shall continue to be in full force and effect.  The parties
specifically agree that all restrictions contained in the
Employment Agreement, including but not limited to the
restrictions contained in Sections 15, 16, 17 and 18, are of no
further force or effect. 

			15.   
Notices.  All notices hereunder shall be in writing
and sent by first class mail or recognized international courier
and addressed to the applicable party at the address set forth
above. 

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

			COMPANY:                                                               EMPLOYEE: 

				INTEGRITY MUTUAL FUNDS, INC.

			  

			By:  /s/  Robert E. Walstad                                             By: /s/ Jerry J. Szilagyi

				Robert E.
Walstad                                     
                 
Jerry J. Szilagyi

				Its: Chief Executive Officer

			EXHIBIT A 

			PROMISSORY NOTE

			PROMISSORY NOTE 

			
$200,000.00                                                                                                         
As of July 13, 2006 

			FOR VALUE RECEIVED, the undersigned, Integrity Mutual Funds, Inc., a North Dakota corporation ("Payor"), having an
office at 1 North Main Street, Minot, North Dakota 58703 
promises to pay to the order of Jerry J. Szilagyi
("Payee") at his address located at 5 Abbington Drive,
Lloyd Harbor, New York 11743, or at such other place as the
holder hereof may designate in writing, in lawful money of the
United States of America and in immediately available funds, the
principal sum of Two Hundred Thousand Dollars ($200,000.00),
together with interest thereon as set forth herein.
 

			
This Promissory Note (this "Note") is issued under the
terms and provisions of that certain Separation Agreement dated
July 13, 2006, between Payor and Payee and such parties are
entitled to all of the benefits, and subject to all of the
obligations, provided for by the Separation Agreement.
 

			REPAYMENT AND PREPAYMENT: 

			
(a)       
Repayment.  Principal shall be payable in equal,
monthly installments in the amount of Twenty Thousand Dollars
($20,000.00) each on the fifteenth (15th) day of each month
commencing on July 15, 2006, together with interest as
provided below, and with a final installment consisting of all
remaining unpaid principal due and payable in full on
April 15, 2007.
 

			
(b)        Optional
Prepayment.  Payor may prepay the entire amount of
principal on this Note in full; provided, however, that
the full amount of interest owed and outstanding as of April 1,
2007, shall also be paid.
 

			
(c)        Mandatory
Prepayment.  The full remaining balance on this Note
together with interest as provided below shall be paid in full in
the event of the occurrence of an Event of Default (as provided
below) or Change in Control.  For purposes of this Note, a
"Change in Control" shall mean the occurrence of any of
the following events with respect to Payor:
 

			
(i)      The acquisition by a single
person or entity or group of affiliated persons or entities of
the beneficial ownership, as defined under the Securities
Exchange Act of 1934, as amended, of thirty-three and one-third
percent (33 1/3%) or more of the Payor's voting
securities or securities convertible into such percentage of the
Payor's voting securities, or the acquisition of all or
substantially all of the assets of the Payor in one or more
transactions; or
 

			
(ii)     The merger, consolidation or
combination of Payor with an unaffiliated corporation in which
the directors of Payor as applicable immediately prior to such
merger, consolidation or combination constitute less than a
majority of the board of directors of the surviving, new or
combined entity unless at least one‐half of the board of
directors of the surviving, new or combined entity were directors
of Payor immediately prior to such transaction and Payor's chief
executive officer immediately prior to such transaction continues
as the chief executive officer of the surviving, new or combined
entity; or
 

			
(iii)    The transfer of all or substantially all
of Payor's assets; provided, however, that any transaction
between Payor and Saratoga Capital Management, LLC shall be
excluded from the definition of Change in Control.
  

			INTEREST: 

			
The outstanding principal balance of this Note shall bear
interest equaling Ten Thousand Dollars ($10,000.00) and shall be
payable in monthly installments of One Thousand Dollars
($1,000.00) on the fifteenth (15) day of each month commencing on
July 15, 2006, and with a final installment consisting of all
remaining unpaid interest due and payable in full on April 15,
2007.
 

			EVENTS OF DEFAULT: 

			
The occurrence of any of the following shall constitute an "Event
of Default" under this Note:
 

			
(a)     The failure to pay any installment of
principal or interest when due, provided that such failure is not
cured within five (5) business days after Payee gives written
notice of such failure to pay to Payor; 

			
(b)     The filing of a petition by or
against Payor, under any provisions of the Bankruptcy Reform Act,
Title 11 of the United States Code, as amended or recodified from
time to time, or under any similar or other law relating to
bankruptcy, insolvency, reorganization or other relief for
debtors; the appointment of a receiver, trustee, custodian or
liquidator of or for any part of the assets or property of Payor;
Payor becomes insolvent, makes a general assignment for the
benefit of creditors or is generally not paying its debts as they
become due; or any attachment or like levy on any property of
Payor; or 

			
(c)     The dissolution or liquidation of
Payor. 

			MISCELLANEOUS: 

			
(a)     Remedies.  Upon the
occurrence of any Event of Default, the holder of this Note, at
the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable
without presentment, demand, notice of nonperformance, notice of
protest, protest or notice of dishonor, and without discount, all
of which are expressly waived by Payor. 

			
(b)     Governing Law.  This Note
shall be governed, interpreted and enforced in accordance with
the internal laws of the State of New York without regard to
principles of conflict of laws. 

			
(c)     Jurisdiction.  Payor submits to the exclusive jurisdiction of the State of New York for the purpose of all legal proceedings arising out of or relating to this Note.  Any such proceeding shall be venued in the County of Suffolk, State of New York. 

			
(d)     Assignment.  Neither
Payor nor Payee may assign or delegate any of its or his rights,
duties or obligations owing hereunder to any other person or
entity, except that Payee may assign its right to Payee's estate
or personal representative. 

			
(e)     Notices.  All notices
hereunder shall be in writing and sent by first class mail or
recognized international courier and addressed to the applicable
party at the address set forth above. 

			IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above. 

			INTEGRITY MUTUAL FUNDS, INC.

			 

			By:  /s/  Robert E. Walstad


				Robert E. Walstad,
Chief Executive Officer