Document:

exv10w309

 

Exhibit 10.309

20 October 2006

Name

Address

City, State Zip

Dear                     :

          The purpose of this letter agreement is to document the terms of the severance package to
which you will be entitled should your employment with Ligand Pharmaceuticals Incorporated (the
“Company”) terminate under certain specified circumstances.

          Part One of this letter agreement sets forth certain definitional provisions to be in effect
for purposes of determining your benefit entitlements. Part Two specifies the terms and conditions
upon which you may become entitled to receive severance benefits. Severance benefits accrue under
this letter agreement in the event your employment with the Company were to be terminated
involuntarily in connection with certain changes in control of the Company. Part Three concludes
this letter agreement with a series of general terms and conditions applicable to your severance
benefits.

     PART ONE — DEFINITIONS

          Definitions. For purposes of this letter agreement, including in particular the application
of the special benefit limitations of Part Three, the following definitions will be in effect:

1. Average Compensation means your average W-2 wages from the Company for the five (5)
calendar years (or for the number of years you have been a Company employee, if less than
five) completed immediately prior to the calendar year in which the Change in Control is
effected. Any W-2 wages for a partial year of employment will be annualized, in accordance
with the frequency with which such wages are paid during such partial year, before inclusion
within your Average Compensation.

2. Board means the Company’s Board of Directors.

3. Change in Control means any of the following events:

 

 

                    (i) a merger or consolidation in which the Company is not the surviving entity, except
for a transaction the principal purpose of which is to change the state in which the Company
is incorporated,

                    (ii) the sale, transfer or other disposition of all or substantially all of the assets
of the Company other than in the ordinary course of business,

                    (iii) any reverse merger in which the Company ceases to exist as an independent
corporation and becomes the subsidiary of another corporation, except where there is an
insubstantial change in the de facto voting control of the Company (e.g. the creation of a
holding company),

                    (iv) any Hostile Take-Over,

                    (v) the acquisition by any person (or related group of persons), whether by tender or
exchange offer made directly to the Company’s stockholders, private purchases from one or
more of the Company’s stockholders, open market purchases or any other transaction, of
beneficial ownership of securities possessing more than thirty percent (30%) of the total
combined voting power of the Company’s outstanding securities,

                    (vi) the acquisition by any person (or related group of persons), whether by tender or
exchange offer made directly to the Company’s stockholders, private purchases from one or
more of the Company’s stockholders, open market purchases or any other transaction, of
additional securities of the Company which increase the total holdings of such person (or
group) to a level of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities, or

                    (vii) the acquisition by any person (or related group of persons), whether by tender or
exchange offer made directly to the Company’s stockholders, private purchases from one or
more of the Company’s stockholders, open market purchases or any other transaction, of
securities of the Company possessing sufficient voting power in the aggregate to elect an
absolute majority of the members of the Board (rounded up to the nearest whole number).

4. COBRA means the continuation-of-coverage provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.

5. Code means the Internal Revenue Code of 1986, as amended.

6. Common Stock means the Company’s common stock, par value $0.001 per share.

7. Equity Incentive Plans means any of the following equity incentive plans of the Company:
1992 Stock Option/Stock Issuance Plan, the 2002 Stock Incentive Plan, and the Restricted
Stock Purchase Plan, together with any amendments or successors to such plans.

 

 

8. Equity Parachute Payment means, with respect to any Option (whether
Acquisition-Accelerated or Severance-Accelerated) or unvested Stock Issuance, the portion
deemed to be a parachute payment under Code Section 280G and the Treasury Regulations issued
thereunder. Such Equity Parachute Payment shall be calculated in accordance with the
valuation provisions established under Code Section 280G and the applicable Treasury
Regulations and will include an appropriate dollar adjustment to reflect the lapse of your
obligation to remain in the Company’s employ as a condition to your vesting in the
accelerated portion of such Option or Stock Issuance.

9. ERISA means the Employee Retirement Income Security Act of 1974, as amended.

10. Health Care Coverage means the health care benefits provided by the Company to you and
your eligible dependents for which you are eligible to continue coverage under the
provisions of COBRA.

11. Hostile Take-Over means either of the following events:

                    (i) the acquisition by any person (or related group of persons) whether by tender or
exchange offer made directly to the Company’s stockholders, private purchases from one or
more of the Company’s stockholders, open market purchases or any other transaction, of
beneficial ownership of securities possessing more than thirty percent (30%) of the total
combined voting power of the Company’s outstanding securities pursuant to a tender offer
made directly to the Company’s stockholders which the Board does not recommend such
stockholders to accept, or

                    (ii) a change in the composition of the Board over a period of thirty-six (36)
consecutive months or less such that a majority of the Board members (rounded up to the next
whole number) ceases, by reason of one or more contested elections for Board membership, to
be comprised of individuals who either (a) have been Board members continuously since the
beginning of such period or (b) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in clause (a) who
were still in office at the time such election or nomination was approved by the Board.

12. Involuntary Termination means the termination of your employment with the Company:

                    (i) upon your involuntary discharge or dismissal, or

                    (ii) upon your resignation in connection with any of the following changes to the terms
and conditions of your employment: (A) a change in your position with the Company which
materially reduces your level of responsibility, (B) a greater than ten percent (10%)
reduction in your level of compensation (including base salary, fringe benefits and
participation in non-discretionary bonus programs under which awards are payable pursuant to
objective financial or performance standards, but excluding equity compensation) or (C) a
relocation of your principal place of employment by more than fifty (50) miles.

 

 

               The following guidelines shall determine whether one or more reductions in compensation
should be taken into account for purposes of clause (ii)(B):

               (a) Any reduction in compensation which occurs in connection with an across-the-board
reduction in the level of compensation payable to the Company’s executive officers or senior
management shall not constitute grounds for a clause (ii)(B) resignation, unless implemented
within eighteen (18) months after a Change in Control.

               (b) In the event of a Hostile Take-Over, the greater than ten percent (10%) standard of
clause (ii)(B) shall be reduced to zero percent (0%) so that any reduction in the level of
your compensation shall constitute grounds for a clause (ii)(B) resignation.

               In no event shall an Involuntary Termination be deemed to occur should your employment
terminate by reason of death or permanent disability.

13. Option means any option granted to you under any of the Equity Incentive Plans which is
outstanding at the time of your Involuntary Termination or any earlier Change in Control.
Your outstanding options are to be divided into two separate categories as follows:

               (i) Acquisition-Accelerated Options: any outstanding Option (or installment thereof)
which accelerates upon a Change in Control in accordance with the automatic acceleration
provisions of the Equity Incentive Plans.

               (ii) Severance-Accelerated Options: any outstanding Option (or installment thereof)
which is not an Acquisition-Accelerated Option but which accelerates upon your Involuntary
Termination, whether or not in connection with a Change in Control, as part of your
severance benefits under this letter agreement.

14. Other Parachute Payments mean any payments in the nature of compensation to which you
may become entitled under this letter agreement (other than the Equity Parachute Payment) or
any other arrangement with the Company, to the extent such payments qualify as parachute
payments within the meaning of Code Section 280G(b)(2) and the Treasury Regulations issued
thereunder or would so qualify if the aggregate present value of such payments exceeded the
amount specified in Code Section 280G(b)(2)(ii).

15. Stock Issuance means the issuance of unvested shares of Common Stock under the Company’s
Restricted Stock Plan or any other Equity Incentive Plan.

17. Termination for Cause means an Involuntary Termination or resignation of your employment
with the Company by reason of your conviction of any felony or other criminal act, your
commission of any act of fraud or embezzlement, your unauthorized use or disclosure of
confidential or proprietary information or trade secrets of the Company or its subsidiaries,
or any other intentional misconduct on your part which adversely affects the business or
affairs of the Company in a material manner.

 

 

PART TWO — INVOLUNTARY TERMINATION BENEFITS

          You will be entitled to receive the severance benefits specified below should there occur an
Involuntary Termination of your employment during the term of this letter agreement effected in
connection with a Change in Control, other than a Termination for Cause. However, in the absence
of a Hostile Take-Over, these benefits will be paid you only if (a) you agree to provide any
consulting services required of you under Part Two, Paragraph 4, (b) abide by the restrictive
covenants set forth in Part Two, Paragraph 5 and (c) execute a general release of claims against
the Company.

1. Severance Payments. You will receive severance payments from the Company in an aggregate
amount equal to the sum of (A) one (1) times the annual rate of base salary in effect for
you at the time of your Involuntary Termination or at the time of the relevant Change in
Control, whichever is higher plus (B) one (1) times the average of the bonuses (excluding
any signing bonus) paid to you for services rendered in the two (2) fiscal years immediately
preceding the fiscal year of your Involuntary Termination (annualized if paid for a partial
fiscal year). If a bonus is paid to you for only one of those years, then the bonus amount
under Clause (B) will be equal to one (1) times such bonus amount. The aggregate severance
payments shall be paid to you in a lump sum paid within 10 days of your Involuntary
Termination. In the event your Involuntary Termination occurs in connection with a Hostile
Take-Over, the provisions of Sections 4 and 5 of this Part Two will not apply.

2. Health Care Coverage. The Company will, in addition, pay you the estimated total of any
COBRA payments for you and your eligible dependents in order to continue your Health Care
Coverage for twelve (12) months after the effective date of your Involuntary Termination
(other than a Termination for Cause). This amount will be paid in a lump sum within 10 days
of your Involuntary Termination. The estimated payment will be the final and only payment
for Health Care Coverage and shall not be subject to later adjustment.

3. Option Acceleration and Lapse of Restrictions. Each of your outstanding Options under
the Equity Incentive Plans will (to the extent not then otherwise exercisable) automatically
accelerate so that each such Option will become immediately exercisable for the total number
of shares of Common Stock at the time subject to that Option. Each such accelerated Option,
together with all of your other vested Options, will remain exercisable for a period equal
to the greater of (i) the 15th day of the 3rd month, or (ii) December 31, after the date
the option otherwise would have expired following your Involuntary Termination. Such
Option(s) may be exercised for any or all of the option shares in accordance with the
exercise provisions of the option agreement evidencing the grant. In addition, all
restrictions applicable to the Stock Issuances you hold (to the extent those restrictions
have not previously lapsed in accordance with the terms of the issuance agreements) will
automatically lapse upon your Involuntary Termination (except a Termination for Cause).

 

 

4. Consulting Services. Unless your Involuntary Termination occurs in connection with a
Hostile Take-Over, in order to receive the severance under Paragraph 2 you may, at the
Company’s option, be required to enter into a consulting agreement making yourself available
to perform consulting services reasonably requested of you during the twelve (12)-month
period following your Involuntary Termination. You will be compensated at an hourly rate to
be agreed upon by you and the Company at the time such consulting services are to be
rendered, and you will be reimbursed for all reasonable out-of-pocket expenses incurred in
rendering such services upon your submission of appropriate documentation for those
expenses.

5. Restrictive Covenants. For the one hundred twenty (120)-day period following your
Involuntary Termination:

               (i) You will not directly or indirectly, whether for your own account or as an
employee, director, consultant or advisor, provide services to any business enterprise which
is at the time in competition with any of the Company’s then existing or formally planned
product lines and which is located geographically in an area where the Company maintains
substantial business activities, unless you obtain the prior written consent of the Board of
Directors.

               (ii) You will not directly or indirectly encourage or solicit any individual to leave
the Company’s employ for any reason or interfere in any other manner with the employment
relationships at the time existing between the Company and its current or prospective
employees.

               (iii) You will not induce or attempt to induce any customer, supplier, distributor,
licensee or other business relation of the Company to cease doing business with the Company
or in any way interfere with the existing business relationship between any such customer,
supplier, distributor, licensee or other business relation and the Company.

You acknowledge that monetary damages may not be sufficient to compensate the Company for
any economic loss which may be incurred by reason of your breach of the foregoing
restrictive covenants. Accordingly, in the event of any such breach, the Company shall be
entitled to recover all severance benefits provided you under this letter agreement as well
as any other remedies available to the Company at law, including equitable relief in the
form of an injunction precluding you from continuing to engage in such breach.

None of the foregoing restrictive covenants in this section 5 shall be applicable in the
event your Involuntary Termination occurs in connection with a Hostile Take-Over.

6. Benefit Reduction.

               (i) Benefit Reduction. If the Change in Control does not constitute a Hostile
Take-Over, first the dollar amount of your severance payment under Paragraph 1 of this Part
Two will be reduced to the extent necessary to assure that the present value of those
benefits will not, when added to the present value of your Equity

 

 

Parachute Payment and your Other Parachute Payments, exceed 2.99 times your Average
Compensation. For the avoidance of doubt, your severance payment will be reduced hereunder
only to the extent necessary to provide you with the maximum after-tax benefit available.
In the event of a Hostile Take-Over, no reduction will be made to your severance payment (or
any other benefit to which you become entitled hereunder), unless necessary to provide you
with the maximum after-tax benefit available, after taking into account any parachute excise
tax which might otherwise be payable by you under Code Section 4999 and any analogous State
income tax provision.

               (ii) Resolution of Disputes. In the event there is any disagreement between you and
the Company as to whether one or more benefits to which you become entitled (whether under
this letter agreement or otherwise) in connection with a Change in Control constitute Equity
Parachute Payments or Other Parachute Payments, such dispute is to be resolved as follows:

                    A. The matter shall be submitted for resolution to independent counsel mutually
acceptable to you and the Company (“Independent Counsel”). The resolution reached by
Independent Counsel shall be final and controlling. However, should the Independent Counsel
determine that the status of the benefits in dispute can be resolved by obtaining a private
letter ruling from the Internal Revenue Service, a formal and proper request for such ruling
shall be prepared and submitted by Independent Counsel, and the determination made by the
Internal Revenue Service in the issued ruling shall be controlling. All expenses incurred
in connection with the retention of Independent Counsel and (if applicable) the preparation
and submission of the ruling request shall be paid by the Company.

                    B. The present value of each Equity Parachute Payment and each of the Other Parachute
Payments (including your severance payment and Health Care Coverage) shall be determined in
accordance with the provisions of Code Section 280G(d)(4) and the Treasury Regulations
issued thereunder using reasonable assumptions and approximations concerning applicable
taxes and relying on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code, provided that such determinations must be made with
substantial authority (within the meaning of Section 6662 of the Code) and provided,
however, that you shall be assumed to pay federal, state and local income taxes at
the highest marginal bracket..

The full amount of your severance benefit under Paragraph 1 of this Part Two shall not be
paid to you until any amounts in dispute under this Paragraph 6(ii) have been resolved in
accordance herewith. However, any portion of such severance payment which would not
otherwise exceed the benefit limitation of Paragraph 6(i) even if all amounts in dispute
under this Paragraph 6(ii) were to be resolved against you will be paid to you in accordance
with the applicable provisions of this letter agreement.

               (iii) Overriding Limitation. You will in all events be entitled to receive the full
amount of your severance payment under Paragraph 1, to the extent those benefits, when added
to the present value of your Equity Parachute Payment and your Other

 

 

Parachute Payments (excluding such severance payment), will nevertheless qualify as
reasonable compensation within the standards established under Code Section 280G(b)(4).

               (iv) Interpretation. The provisions of this Section 6 shall in all events be
interpreted in such manner as will avoid the imposition of excise taxes under Code Section
4999, and the disallowance of deductions under Code Section 280G(a), with respect to your
severance benefits under this letter agreement.

     PART THREE — MISCELLANEOUS PROVISIONS

1. Termination for Cause. Should your termination constitute a Termination for Cause, then
the Company shall only be required to pay you (i) any unpaid compensation earned for
services previously rendered through the date of such termination and (ii) any accrued but
unpaid vacation benefits or sick days, (iii) any reimbursements then owed to you by the
Company and no benefits will be payable to you under this letter agreement.

2. Term of Agreement. The provisions of this letter agreement will continue in effect until
<DATE>.

3. General Creditor Status. The benefits to which you may become entitled under this letter
agreement (except those attributable to your Options or Stock Issuances) will be paid, when
due, from the general assets of the Company. Your right (or the right of the executors or
administrators of your estate) to receive any such payments will at all times be that of a
general creditor of the Company and will have no priority over the claims of other general
creditors of the Company.

4. Death. Should you die before receipt of all benefits to which you become entitled under
this letter agreement, then the payment of such benefits will be made, on the due date or
dates hereunder had you survived, to the executors or administrators of your estate. Should
you die before you exercise your Severance-Accelerated Options (if any) or any other of your
outstanding vested Options, then each such Option may be exercised, during the applicable
exercise period in effect hereunder for those options at the time of your death, by the
executors or administrators of your estate or by person to whom the Option is transferred
pursuant to your will or in accordance with the laws of inheritance.

5. Miscellaneous. The provisions of this letter agreement will be construed and interpreted
under ERISA. To the extent ERISA is inapplicable, then the laws of the State of California
shall control, without regard to that state’s choice of law provisions. This letter
agreement incorporates the entire agreement between you and the Company relating to the
subject of change-of-control severance benefits and merges and supersedes all prior
agreements and understandings with respect to such subject matter. For the avoidance of
doubt, this letter does not alter or supersede other written, general severance agreements
you may have with the Company. This letter agreement may only be amended by written
instrument signed by you and another duly-authorized officer of the Company. If any
provision of this letter agreement as applied to any party or to any circumstance should be
adjudged by an arbitrator or court of competent jurisdiction to be void or unenforceable for
any reason, the

 

 

invalidity of that provision shall in no way affect (to the maximum extent permissible by
law) the application of such provision under circumstances different from those so
adjudicated, the application of any other provision of this letter agreement, or the
enforceability or invalidity of this letter agreement as a whole. Should any provision of
this letter agreement become or be determined to be invalid, illegal or unenforceable in any
jurisdiction by reason of the scope, extent or duration of its coverage, then such provision
shall be deemed amended to the extent necessary to conform to applicable law so as to be
valid and enforceable or, if such provision cannot be so amended without materially altering
the intention of the parties, then such provision shall be stricken and the remainder of
this letter agreement shall continue in full force and effect.

6. Remedies. All rights and remedies provided pursuant to this letter agreement or by law
will be cumulative, and no such right or remedy will be exclusive of any other. A party may
pursue any one or more rights or remedies hereunder or may seek damages or specific
performance in the event of another party’s breach hereunder or may pursue any other remedy
by law or equity, whether or not stated in this letter agreement.

7. Arbitration. Any controversy which may arise between you and the Company with respect to
the construction, interpretation or application of any of the terms, provisions or
conditions of this letter agreement or any monetary claim arising from or relating to this
letter agreement will be submitted to and exclusively decided by final and binding
arbitration in San Diego, California in accordance with the rules of the American
Arbitration Association then in effect.

8. No Employment or Service Contract. Nothing in this letter agreement shall confer upon
you any right to continue in the employment of the Company for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the Company or
you, which rights are hereby expressly reserved by each, to terminate your employment at any
time for any reason whatsoever, with or without cause.

9. Proprietary Information. You hereby acknowledge that the Company may, from time to time
during your employment with the Company, disclose to you confidential information pertaining
to the Company’s business and affairs. All information and data, whether or not in writing,
of a private or confidential nature concerning the business or financial affairs of the
Company is and will remain subject to a separate Proprietary Information and Inventions
Agreement (or the like) between you and the Company.

          Please indicate your acceptance of the foregoing provisions of this severance agreement by
signing the enclosed copy of this letter agreement and returning it to the Company.

Very truly yours,

LIGAND PHARMACEUTICALS INCORPORATED

 

 

Henry F. Blissenbach

Chairman, President and interim CEO

ACCEPTED BY AND AGREED TO

	 	 	 	 	 
	Signature:
	 	 	 	 
	 

	 
 
	 	 
	Dated:SEPARATION AGREEMENT 

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

			WITNESSETH 

			Whereas, Employee
and the Company entered into an employment agreement dated
October 1, 2001 (the "Employment Agreement"); 

			Whereas, Employee
has elected to retire from his employment with the Company and
terminate the Employment Agreement on February 1, 2007; 

			Whereas, in
accordance 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 as
director, President and Treasurer of Integrity Money Management,
Inc. and Integrity Fund Services, Inc. and accepts his position
as Chairman Emeritus 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, 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 and Stock Options.  (a) The Company agrees to
pay Employee, and Employee agrees to accept, Two Hundred Seventy
Four Thousand Five Hundred Dollars ($274,500) (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,
bi-weekly payments (less required withholding deductions
including federal and state taxes and FICA) commencing on the
first regularly scheduled pay date of the Company after the date
of this Agreement and continuing until the Separation Payment is
paid in full on or before August 16, 2009 (the "Termination
Date").  

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

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

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

			
(e)       In the event of any
reclassification, increase or decrease in the number of the
issued shares of common stock of the Company by reason of a
split, reverse-split, sale or spin-off of any business unit of
the Company, then Employee's proportionate interest in such
options and warrants shall be maintained as before the occurrence
of such event so that (i) as to the number of outstanding
unexercised warrants or options granted to Employee, there shall
be a corresponding proportional adjustment as to the class and
number of shares covered by each option and warrant and (ii) as
to the exercise price under each such option and warrant, there
shall be a corresponding proportional adjustment in the total
exercise price applicable to said options and warrants. 

			
2.        
Benefits.  (a)  The Company shall provide to
Employee from the date of this Agreement to and including the
Termination Date coverage of group health, dental and vision
insurance afforded to other employees of the Company.  If
Employee secures full-time employment elsewhere or becomes
self-employed and obtains insurance coverage, Employee shall
immediately notify the Company in which event such insurance
coverage by the Company shall terminate to the extent permitted
under applicable law. 

			
(b)       Employee shall be
entitled to participate in the Company's 401(k) Plan and to any
applicable Company matching contributions thereunder prior to the
Termination Date. 

			
(c)       Employee shall be
entitled to 90% of all commissions collected by Employee as an
agent to Capital Financial Services, Inc., a wholly-owned
subsidiary of the Company, to and including the Termination
Date.  The Company shall pay the costs of an error and
omissions insurance policy to cover Employee to and including the
Termination Date relating to his business activities transacted
through Capital Financial Services, Inc. 

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

			
3.         General
Release.  (a)  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 of any nature whatsoever, 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 Releasees
with respect to any and all matters whatsoever, including,
without limitation, any and all Claims related 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 any Claims relating to any
outstanding options previously granted to Employee, or Claims
under any Company's 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. 

			
(d)       No Limitation of
Scope.  Employee understands and agrees that this
Agreement constitutes a general release of all Claims of every
kind and nature against the Employee Releasees, whether or not
they are specifically referred to herein, and that no reference
herein to a specific Claim, statute or law is intended to limit
the scope of the general agreement contained herein; provided,
however, that this Agreement does not relate to any rights or
claims arising after the date hereof. 

			
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 to and including the
Termination Date. 

			
5.         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. 

			
6.         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. 

			
7.        
Confidential Information.  Employee reaffirms and
agrees that he will not at any time use, divulge, furnish or make
accessible to any person outside of the Company any information
of a secret or confidential nature.  For purposes of this
paragraph 7, the term "information of a secret or
confidential nature" shall mean information of any nature and in
any form which at the time or times concerned is not generally
known to those persons engaged in a business similar to that
conducted or contemplated by the Company and its subsidiaries and
affiliates, and which relates to any one or more of the aspects
of the present or past business of the Company and its
subsidiaries and affiliates, including, without limitation, lists
of customers, technical data, studies, policies, processes,
formulas, techniques, know-how and other knowledge, data,
databases, computer designs, information, trade secrets, trade
practices and/or facts relating to devices, computer programs
(whether embodied in source or object code), sales, advertising,
promotions, financial matters, suppliers, and other trade secrets
relating to the business of the Company and its subsidiaries and
affiliates.  Employee represents and warrants that Employee
has returned to the Company (i) all records, documents, files,
writings, materials and other data pertaining to such secret or
confidential information, regardless by whomsuch records,
documents, files, writings, materials and other data were
prepared including without limitation, documents, papers,
records, financial information, customer lists, business plans,
entertainment contact lists, and all other such materials and all
copies thereof relating to the business of the Company; and (ii)
all keys, keycards, credit cards, and all other items which are
the property of the Company.  Employee agrees to use his
best efforts to keep the terms of this Agreement (except for such
terms which are publicly disclosed) and the circumstances
surrounding this Agreement strictly confidential.  Employee
may disclose the terms of this Agreement to his spouse,
accountant, attorney and taxing authorities only as may be
necessary for his financial affairs as required by law. 

			
8.        
Non-Solicitation of Employees and Agents.  During the
period commencing on the date hereof and ending on the
Termination Date, Employee shall not directly or indirectly
induce or attempt to induce any of the employees or
representatives of the Company, its subsidiaries or affiliates to
leave the employ of or association with the Company, its
subsidiaries or affiliates, or solicit the business of any client
or customer of the Company, its subsidiaries or affiliates. 

			
9.         Merger,
Consolidation, Bankruptcy, Etc.  To the extent permitted
by applicable law, in the event of the Company's (a) bankruptcy,
general assignment or trust mortgage for the benefit of
creditors, receivership or involuntary dissolution of the Company
or (b) change in management and/or control as a result of a
merger, consolidation, sale of assets, or tender offer, Employee
shall be immediately entitled to the balance of the remaining
unpaid Separation Payments due to the Employee set forth in
Section 1 of this Agreement. 

			
10.      
Non-Competition.  From the date of this Agreement to
the Termination Date, Employee agrees that he will not (a) act as
a manager, officer, director, employee, consultant, agent or
representative of Viking Mutual Funds or any of its subsidiaries
or affiliates, or (b) assist in any way or in any capacity any
person, firm, association, partnership corporation, limited
liability company or other entity that sells or provides products
or services to Viking Mutual Funds. 

			
11.      
Non-Admission.  Nothing in this Agreement
constitutes or shall be interpreted as any admission of liability
or wrongdoing on the part of either party. 

			
12.       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 January 31, 2007 after which time
this Agreement may not be revoked by the Company or Employee,
subject to applicable law. 

			
13.       Non-Conditional
Separation.  The Company hereby recognizes that, except
as set forth in this Agreement, the Separation Payment and each
of the payments referred to in Section 1 of this Agreement shall
not be contingent on any ongoing duties or responsibilities of
Employee to the Company, including, but not limited to, any
executive, employee, consultant, administrative, committee,
directorship, sales or other similar relationship. 

			
14.      
Amendment/Waiver/Termination.  No modification,
termination 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. 

			
15.       Governing
Law.  This Agreement shall be construed, interpreted,
governed and enforced in accordance with the substantive laws of
the State of North Dakota and the Federal laws of the United
States applicable to North Dakota, without regard to the conflict
of 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 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 their respective heirs, executors, administrators, personal
representatives, successors and assigns. 

			
17.       Attorneys'
Fees.  The parties agree that in the event of any
litigation respecting a breach of this Agreement, each party
shall pay its own court costs and attorneys' fees relating to
such litigation. 

			
18.       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 sets 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. 

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

			COMPANY: 

			INTEGRITY MUTUAL FUNDS,
INC.                                              
EMPLOYEE: 

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

			
Its      President                                                                                Robert E. Walstad

		
			EXHIBIT A

RESIGNATION AS CHAIRMAN, DIRECTOR AND CHIEF EXECUTIVE OFFICER

OF INTEGRITY MUTUAL FUNDS, INC. 

			January 24,
2007 

			Integrity Mutual
Funds, Inc.

1 Main Street North

				 Minot, North Dakota 58703

			Board of Directors: 

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

			Very truly
yours,

			
By    /s/ Robert E. Walstad                   

			Robert E. Walstad

Chairman of the Board of Directors,

Director and Chief Executive Officer

			 

			EXHIBIT B

RESIGNATION AS DIRECTOR, PRESIDENT AND TREASURER

OF INTEGRITY MONEY MANAGEMENT, INC. 

			January 24,
2007 

			Integrity Money
Management, Inc.

1 Main Street North

 Minot, North Dakota 58703 

			Board of Directors: 

			The undersigned
hereby resigns as Director, President and Treasurer of Integrity
Money Management, Inc., effective February 1, 2007, pursuant to
the terms and conditions of that certain Separation Agreement by
and between Integrity Mutual Funds, Inc. and the undersigned
dated as of January 24, 2007.  

			Very truly
yours,  

			 By    /s/ Robert E. Walstad                   

			Robert E. Walstad

Director, President and Treasurer

			 

			EXHIBIT C

RESIGNATION AS DIRECTOR, PRESIDENT AND TREASURER

OF INTEGRITY FUND SERVICES, INC. 

			January 24,
2007 

			Integrity Fund Services, Inc.

				1 Main Street North

				Minot, North Dakota 58703 

			Board of Directors: 

			The undersigned
hereby resigns as Director, President and Treasurer of Integrity
Fund Services, Inc., effective February 1, 2007, pursuant to the
terms and conditions of that certain Separation Agreement by and
between Integrity Mutual Funds, Inc. and the undersigned dated as
of January 24, 2007.  

			Very truly
yours,  

			By    /s/ Robert E. Walstad                   

			Robert E. Walstad

Director, President and Treasurer

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