Exhibit 10.3

THIS EMPLOYMENT LETTER AGREEMENT (“Agreement”) is entered into on this 7th day
of September, 2007, by and between (i) KMG AMERICA CORPORATION, a Virginia
corporation (“Employer”) and (ii) PAUL P. MOORE (“Executive”).

RECITALS:

A.        Employer has employed Executive in an executive position and has
determined that Executive holds an important position with Employer. In
anticipation of the merger of Hum VM, Inc. with and into Employer (the
“Merger”), whereby Employer will become a wholly-owned subsidiary of Humana
Inc., Executive is being asked to enter into this agreement.

B.        Management will be essential to maintain the stability of Employer
during the anticipation of the Merger and to promote the successful closing of
the Merger. Employer and Executive understand and agree that as part of and to
induce Humana Inc. and Hum VM, Inc. to enter into an Agreement and Plan of
Merger with Employer providing for the Merger (the “Merger Agreement”), it is
necessary to execute this Agreement and thereby to provide for the eventual
termination of any and all prior agreements and contracts between the parties
and for Executive to release and waive any and all claims, known or unknown,
that may arise from such agreements and contracts or the termination of such
agreements and contracts.

C.        Employer understands that anticipation of the Merger presents
significant concerns for Executive with respect to his financial and job
security. Employer desires to assure itself of Executive’s services during the
period in which it is confronting such a situation, and to provide Executive
certain financial assurances to enable Executive to perform the responsibilities
of his position without undue distraction and to exercise judgment without bias
due to personal circumstances.

D.        Employer further desires to assure itself that in the event the Merger
is consummated, its business is not harmed by Executive’s subsequent competition
with Employer’s business. To achieve these objectives, Employer and Executive
desire to enter into this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, it is agreed by and between Employer and Executive as follows:

1.         EFFECTIVE DATE, EFFECTIVE TIME AND EMPLOYMENT AT-WILL. The date upon
which Humana Inc., Hum VM, Inc. and Employer execute and deliver the Merger
Agreement shall constitute the effective date of this Agreement (“Effective
Date”). The Effective Time, and all other capitalized terms, unless otherwise
defined in this Agreement, shall have the same meaning as ascribed to such terms
in the Merger Agreement. EMPLOYER OFFERS AND EXECUTIVE ACCEPTS AND AGREES TO BE
EMPLOYED ON AN EMPLOYMENT AT-WILL BASIS FOLLOWING THE EFFECTIVE TIME. NOTHING IN
THIS AGREEMENT CONSTITUTES AN EMPLOYMENT CONTRACT BETWEEN EXECUTIVE AND EMPLOYER
THAT GUARANTEES TO EXECUTIVE EMPLOYMENT BEYOND THE EFFECTIVE TIME. Employment
at-will means that Employer and Executive may unilaterally terminate the
employment relationship and this Agreement at will, with or without notice or
Cause or Good Reason. Unless terminated sooner by Employer or Employee, this
Agreement shall expire on the later of the third anniversary of

 

1

--------------------------------------------------------------------------------

the Effective Time and December 31, 2010; provided, notwithstanding such
expiration, all compensation earned and payable to Executive pursuant to the
terms of this Agreement shall survive the expiration of this Agreement.

2.         TERMINATION OF AGREEMENT. Notwithstanding the provisions of this
Agreement, this Agreement shall automatically terminate and shall be void ab
initio in the event that the Merger Agreement terminates or the Merger
contemplated by the Merger Agreement is not consummated on or before April 30,
2008 or such later date as may be established as the date of termination of the
Merger Agreement by agreement of Employer, Humana Inc. and HumVM, Inc.

3.         EFFECT ON PRIOR AGREEMENTS. During the period commencing as of the
Effective Date and expiring immediately prior to the Effective Time (“the
Pre-Closing Period”), the terms of that certain Employment Agreement dated
December 21, 2004 by and between Employer and Executive, as amended (the
“Current Employment Agreement”), shall remain in full force and effect.
Notwithstanding the foregoing, Executive hereby waives all rights under, and all
claims for benefits, money or other compensation due Executive under, Sections
7(d) and 11 (but only to the extent of any “Gross-Up Payment” under the terms of
Section 11 relates to such claims for benefits, money or other compensation
under Section 7(d)) of his Current Employment Agreement in the event that
Executive terminates his employment, or claims that his employment was
constructively terminated without Cause (as such term is defined in the Current
Employment Agreement) by Employer, during the Pre-Closing Period and the reason
or cause of such termination was due to any of the following: (a) the
anticipated consummation of the Merger, (b) anticipated changes to the Employer
or to Executive’s position with Employer and its affiliates from and after the
Effective Time, (c) the anticipated termination of Executive’s Current
Employment Agreement at the Effective Time, or (d) anticipated changes to the
compensation, benefits, and other terms of Executive’s employment taking effect
from and after the Effective Time pursuant to the terms of this Agreement. From
and after the Effective Time, and without any further consideration or action by
Employer or Executive, this Agreement shall supersede, render void and terminate
the Current Employment Agreement and any other prior agreements Executive may
have had with Employer or its predecessor entities, provided, however, that such
termination shall not affect Executive’s rights to receive compensation and
benefits then accrued and unpaid, nor shall such termination affect Executive’s
rights to receive the Merger Consideration or the rights and benefits to which
Executive is entitled under the terms of the Merger Agreement or this Agreement.

4.         DUTIES. From and after the Effective Time, Executive shall have the
title and responsibilities of Market Vice President, Sales of Employer, shall
report to the President of Employer, and shall have his principal office in
Irvine, California. Executive agrees to devote full attention to the business
and affairs of Employer and to use best efforts to perform faithfully,
diligently and efficiently the duties and responsibilities as the Market Vice
President, Sales of Employer and such other duties and responsibilities
reasonably commensurate with Executive’s skills, ability, and training and that
may otherwise be assigned to Executive from time to time by Employer, consistent
with his title.

5.         BASE SALARY AND BENEFITS FROM AND AFTER EFFECTIVE TIME. From and
after the Effective Time:

 

2

--------------------------------------------------------------------------------

(a)       Base Salary. Employer shall pay Executive on a salary basis at a rate
equivalent to Two Hundred Twenty-Five Thousand Dollars ($225,000) per calendar
year (“Base Salary”), less tax withholdings as designated in the tax forms
submitted by Executive or otherwise required by law. Base Salary shall be paid
on a semi-monthly or biweekly basis. Executive is an exempt status employee
pursuant to federal and state wage and hour laws; accordingly, Executive will
not be paid overtime. Executive’s Base Salary shall be evaluated and subject to
annual increase, but not decrease, consistent with policy of Humana Inc. based
on an annual performance review. Employer and Executive understand and agree
that the description of payment on a calendar year or annual basis does not
affect the employment at-will status provided in Section 1, and therefore, it
does not create a presumption that employment is for any definite period of
time. Upon termination of Executive’s employment, Executive understands and
agrees that he is entitled to Base Salary provided in this paragraph earned up
to the date of termination, with the exception of the terms provided in Section
6.

(b)       Employee Benefit Plans. Executive shall participate, to the extent he
may be eligible, solely in the “employee benefit plans” (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended)
maintained from time to time by Employer for employees of Employer and its
subsidiaries. Executive will be required to pay his portion of premiums or
related payments as designated in such employee benefit plans and/or as
designated by Employer. Executive shall be required to comply with the
conditions attendant to coverage by such plans and shall comply with and be
entitled to benefits only in accordance with the terms and conditions of such
plans as they may be amended from time to time. Nothing herein contained shall
be construed as requiring Employer to establish or continue any particular
employee benefit plan in discharge of its obligations under this Agreement. At
Employer’s sole discretion, Employer may replace such employee benefit plans
with similar employee benefit plans available to Humana Inc. employees under the
same terms and conditions as provided in Humana Inc.’s employee benefits plans
and thereafter Executive shall be covered by Humana Inc.’s employee benefits
plans. Upon termination of Executive’s employment and the termination of this
Agreement, Executive’s active coverage or participation in such employee benefit
plans shall end, unless otherwise provided by the terms of such plans or by law.
Additionally, the determination of the level of benefits to which Executive
shall be entitled under Employer’s policies will be based on Executive’s date of
hire of December 20, 2004.

(c)       Management Incentive Plan. Subject to all terms, conditions,
provisions and obligations of Humana Inc.’s Management Incentive Plan, as
amended from time to time for all similarly situated executives of Humana Inc.
and its subsidiaries (“MIP”), and except as modified by Section 6, Executive
shall participate in the MIP, which shall be paid in cash on an annual basis.
Executive’s targeted incentive amount will be 40% of his Base Salary. MIP is
based upon meeting specific objectives, determined annually. For calendar years
2008 and 2009, and notwithstanding any amendment to the MIP which may be made in
calendar years 2008 and 2009, Executive shall receive guaranteed payouts under
the MIP of at least 75% and 50% of the targeted incentive, respectively. To
receive payment under the MIP, Executive must be a current employee of Employer
at the end of the calendar year for which the MIP is awarded, except as modified
by Section 6. Employer and Executive understand and agree that neither the MIP,
nor the “without Cause,” “Good Reason” or other similar qualifications herein,
nor the description of payment on an annual

 

3

--------------------------------------------------------------------------------

basis affects the employment at-will status provided in Section 1, and
therefore, does not create a presumption that employment is for any definite
period of time.

(d)       Special Incentive Compensation. Executive shall participate in an
additional performance-based cash incentive plan for three years: 2008, 2009,
and 2010, more fully described in this Section 5(d) and subject however to the
terms of Section 6 (such compensation being sometimes hereinafter referred to as
“SIC” and such plan or program as the “SIC Program”). Executive is eligible to
earn cash of $140,000 annually upon Employer achieving in calendar year 2008,
2009 and 2010 the Earnings Before Income Tax, Depreciation, and Amortization
(“EBITDA”) Targets set forth in Sections 3.2(c), 3.2(g) and 3.2(k),
respectively, of Executive’s Restricted Stock Agreement (defined in Section 5(e)
below). For calendar years 2008 and 2009, Executive shall receive guaranteed
payouts of SIC, regardless of meeting the EBITDA Targets for such calendar years
described above, of at least 75% and 50% of $140,000, respectively. Payouts of
SIC in calendar years 2008 and 2009 shall be made on a quarterly basis, in
advance, equal to 25% of the guaranteed payout for that calendar year. For
calendar year 2010, payouts of $35,000 shall be made on a quarterly basis, in
advance. For calendar years 2008, 2009 and 2010, a final payment of SIC shall be
made following the close of that calendar year to reflect any additional payment
due under this SIC Program once the EBITDA has been determined for that calendar
year. In the event Executive fails to meet the EBITDA target for calendar year
2010, any quarterly payout made during that calendar year shall be subject to
set-off against any other payment due Executive. Employer and Executive
understand and agree that neither the award of SIC, nor the description of
payment on a quarterly basis, nor the “without Cause,” “Good Reason” or other
similar qualifications herein, affect the employment at-will status provided in
Section 1, and therefore, does not create a presumption that employment is for
any definite period of time.

(e)       Equity Compensation. Subject to all terms, conditions and provisions
and obligations of, and only upon execution of, the Humana Inc. Restricted Stock
Agreement And Agreement Not to Compete or Solicit Under the 2003 Stock Incentive
Plan, attached hereto as Exhibit “A” (the “Restricted Stock Agreement”), issued
pursuant to the Humana Inc. Amended and Restated 2003 Stock Incentive Plan (for
purposes of this subsection “Plan”), Executive shall receive a grant of
performance-based restricted shares of Humana Inc. common stock trading on the
New York Stock Exchange (“Restricted Shares”) totaling $1,000,000 (the “Equity
Compensation”). Except as otherwise set forth in the Restricted Stock Agreement,
restrictions on the Restricted Shares will lapse solely at the end of a
three-year performance period if pre-determined levels of performance are
achieved. Performance metrics are defined in the Restricted Stock Agreement. The
specific number of Restricted Shares shall be determined on the Closing Date,
based on the average of the high and low prices of Humana, Inc. common stock on
the New York Stock Exchange on that day and the individual target award level.
The terms of the Restricted Stock Agreement shall govern and control any
conflict between the terms of this Agreement and the terms of the Restricted
Stock Agreement.

(f)       Other Bonuses. Subject to the terms set forth in this Section 5(f),
Executive or his heirs shall receive a cash bonus payment of $75,000 paid on the
Closing Date of the Merger. In addition, subject to the terms in this Section
5(f), Executive or his heirs shall receive a cash bonus payment of $125,000 paid
on the third anniversary of the Effective Time (or the first business day
immediately following such anniversary if the date of

 

4

--------------------------------------------------------------------------------

such anniversary is a banking holiday in Louisville, Kentucky) (“Other Bonus”).
Except as provided in Section 6, Executive shall receive the Other Bonus at the
time provided in the immediately preceding sentence. Employer and Executive
understand and agree that neither the award of these Bonuses, nor the
description of payment on a future date, nor the “without Cause,” “Good Reason”
or other similar qualifications set forth in this Agreement, affect the
employment at-will status provided in Section 1, and therefore, does not create
a presumption that employment is for any definite period of time.

(g)       Vacation, Holidays and Leave Days. Executive shall earn 20 vacation
days per annum on a pro rata basis, and other holiday and leave days, consistent
with Employer’s policies for employees of Employer and its subsidiaries.
Employer may replace its existing vacation, holidays and other leave days
policies with Humana Inc.’s vacation, holidays and other leave days policies;
provided, however, that Executive will continue to accrue 20 days of vacation
per annum on a pro rata basis under Humana Inc.’s vacation, holidays and other
leave days policies.

(h)       No Other Compensation. Executive understands and agrees that, except
as expressly provided in this Agreement, he is not entitled to and Employer is
under no obligation to provide him any other compensation, payment, bonus,
equity, property, or money pursuant to his employment.

 

6.

COMPENSATION UPON TERMINATION. From and after the Effective Time:

6.1       Termination Without Cause, Upon Death or Disability, or for Good
Reason. Employer and Executive understand and agree that if this Agreement and
Executive’s employment are terminated by Employer without Cause, or on account
of the death or Disability of Executive, or by Executive for Good Reason, then
Executive or his heirs shall receive the following:

(a)       any earned and unpaid Base Salary of Executive through the date of
such termination and all bonuses earned and relating to any prior year and not
yet paid;

(b)       with respect to the MIP, a pro rata portion (determined on a per diem,
with the numerator being the number of days lapsed during such year prior to
Executive’s termination of employment and the denominator being 365) of the
minimum guaranteed payout under the MIP for the calendar year of such
termination;

(c)       with respect to the SIC, Executive shall retain all quarterly
installments made to Executive prior to such termination and shall receive an
additional amount, if any, equal to the difference of (a) a pro rata portion
(determined on a per diem, with the numerator being the number of days lapsed
during such year prior to Executive’s termination of employment and the
denominator being 365) of the full annual amount that Executive could have
earned in the year of such termination less (b) all quarterly installments of
SIC made to Executive in the year of such termination;

(d)       the full amount of the Other Bonus;

(e)       if such termination occurs within twenty-four (24) months after the
Effective Time, Employer will continue to pay Executive’s Base Salary, in
semi-monthly

 

5

--------------------------------------------------------------------------------

or biweekly installments consistent with prior practice (net of applicable
withholdings), for a period of six (6) months following such termination; and

(f)        all other compensation and benefits payable upon such termination
under other plans and programs of Employer or as required by law, in accordance
with the terms of such plans and programs or applicable law.

Payments to Executive under subsections (b), (c), (d) and (e) of this Section
6.1 shall be conditioned upon the prior execution and delivery to Employer of a
customary release and waiver of claims from Executive (or Executive’s duly
appointed legal representative in the case of death or Disability). (A form of
customary release, which is subject to change, but substantially reflects the
form Executive would be required to execute and deliver, is attached hereto as
Exhibit “B”). Further, payments to Executive under subsection (a), (b), (c) and
(d) of this Section 6.1 (provided Executive or his heirs execute and deliver the
release attached as Exhibit B), shall be made to Executive or his heirs within
30 days after his employment terminates, in a lump sum net of applicable
withholdings. Except as provided in this Agreement, no further compensation,
benefits or obligations shall be due to the Executive upon such termination
under the terms of this Agreement.

6.2       Termination for Cause or other than for Death, Disability or Good
Reason. Employer and Executive understand and agree that if this Agreement and
Executive’s employment are terminated by Employer for Cause, or by Executive
other than on account of his death or Disability, or by Executive without Good
Reason, then the following shall apply:

(a)       Executive or his heirs shall receive his earned and unpaid Base Salary
through the date of such termination and all bonuses earned and relating to any
prior year and not yet paid;

(b)       No MIP or Other Bonus shall be due Executive;

(c)       With respect to the SIC, Executive or his heirs shall retain all
quarterly installments made to Executive prior to the date of such termination,
and no further payments of SIC shall be due or owing to Executive; and

(d)       Executive may receive all other compensation and benefits payable upon
such termination under other plans and programs of Employer or as required by
law, but only if and to the extent expressly permitted by the terms of such
plans and programs or required by applicable law.

Except as provided this Agreement, no further compensation, benefits or
obligations shall be due to the Executive upon such termination under the terms
of this Agreement.

 

6.3

Certain Definitions.

(a)       For purposes of this Agreement, “Disability” shall mean that Executive
(i) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment affecting Executive which
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or (ii) is, by reason of any medically
determinable physical or mental impairment affecting Executive which can be
expected to result in death or can be expected to last for a continuous

 

6

--------------------------------------------------------------------------------

period of not less than 12 months, receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan of Employer
covering its employees.

(b)       For purposes of this Agreement, “Cause” shall mean that Executive: (i)
has committed fraud or misappropriated, stolen or embezzled funds or property
from Employer or an affiliate of Employer or secured or attempted to secure
personally any profit in connection with any transaction entered into on behalf
of Employer or any affiliate of Employer; (ii) has been convicted of a felony or
failed to contest prosecution for a felony; or (iii) has willfully engaged in
misconduct or dishonesty which is determined by the Board of Directors of
Employer to be directly and materially harmful to the business or reputation of
Employer or any of its affiliates.

(c)       For purposes of this Agreement, “Good Reason” shall mean (i) a failure
by the Employer to comply in all material respects with any material provision
of this Agreement (other than the Employer’s payment obligations referred in
clause (v) below) which has not been cured within thirty (30) days after notice
of such noncompliance has been given by the Executive to the Employer, (ii) a
substantial diminution in the nature or status of the Executive’s
responsibilities without the consent of the Executive, (iii) without the consent
of the Executive, a material reduction in employee benefits other than a
reduction generally applicable to similarly situated executives of Employer,
(iv) without the consent of the Executive, relocation of the Executive’s
principal workplace outside a fifty (50) mile radius of Irvine, California, or
(v) any failure by the Employer to pay the Executive base salary within ten (10)
days after notice of such non-payment has been given by the Executive to
Employer, or to pay the Executive any earned bonus which has been determined and
to which he is entitled under any bonus plan or under the terms of this
Agreement within thirty (30) days after notice of such non-payment has been
given by the Executive to Employer.

7.         NON-COMPETITION OBLIGATION. In consideration of Executive’s
continuing employment opportunity with Employer after the Effective Time and the
MIP, SIC, Equity Compensation and Other Bonus to be provided by Employer
hereunder, Executive hereby covenants and agrees that for a period commencing on
the Effective Time and ending six (6) months after the effective date of
Executive’s termination of employment with Employer (the “Restricted Period”),
Executive directly or indirectly, personally, or as an employee, officer,
director, partner, member, owner, shareholder, investor or principal of, or
consultant or independent contractor with, another person, shall not: engage or
participate in, provide services for or on behalf of, or otherwise be connected
with, any entity which is engaged in a Competitive Business (defined below) in
the Restricted Territory (defined below); provided, however, that Executive’s
passive ownership of less than five percent (5%) of the securities of a publicly
traded company shall not be treated as an action in violation of the
restrictions set forth herein above. This restriction includes engaging in any
preparatory activities respecting the commencement of any Competitive Business,
including the discussion, either publicly or privately of Employer’s
development, invention, or creation of, product or service concepts, product or
service designs, underwriting techniques, policy and application forms,
marketing intelligence, inventions, technology, or other related information.
Executive further acknowledges and agrees that this restriction precludes
Executive at any time during the Restricted Period from making any statement or
from doing any act intended to cause any existing or potential customers or
clients of Employer or its subsidiaries to make use of the services or purchase
the products of any person engaged in a Competitive Business. During the
Restricted Period, Executive must obtain the advance written approval of
Employer prior to

 

7

--------------------------------------------------------------------------------

engaging in employment or other compensatory services (including services as an
agent or independent contractor) for any Competitive Business. For purposes of
this Agreement, “Competitive Business” shall mean any business or commercial
activity in which Employer or any of its subsidiaries is or has been engaged at
any time within the 12-month period prior to the Effective Time, including,
without limitation, sales, marketing, distribution, administration and third
party administration of supplemental life, disability, and health policies and
other supplemental insurance policies. For purposes of this Agreement,
“Restricted Territory” shall mean the geographical markets in which the Employer
has been engaged in business or commercial activities in the 12-month period
preceding termination of employment.

8.         NON-SOLICITATION OBLIGATION. In consideration of Executive’s
continuing employment opportunity with Employer after the Effective Time and the
MIP, SIC, Equity Compensation and Other Bonuses to be provided by Employer
hereunder, Executive hereby covenants and agrees that during the Restricted
Period, Executive covenants and agrees that he will not directly or indirectly
induce or solicit, or attempt to induce or solicit any employee of Employer to
discontinue working for Employer or any affiliate thereof, whether for the
purpose of working for any competitor of Employer or any affiliate thereof or
otherwise.

9.         CONFIDENTIALITY. Executive shall hold in a fiduciary capacity for the
benefit of Employer all proprietary, trade secret, or confidential information,
knowledge, or data relating to Employer or any of its affiliated companies, and
their respective businesses, (i) obtained by Executive during employment by
Employer or any of its affiliated companies and (ii) not otherwise public
knowledge (other than by reason of an unauthorized act by Executive). After
termination of Executive’s employment with Employer, Executive shall not,
without the prior written consent of Employer, unless compelled pursuant to an
order of a court or other body having jurisdiction over such matter, communicate
or divulge any such information, knowledge, or data to anyone other than
Employer and those designated by it.

10.       REASONABLENESS OF SCOPE AND DURATION. Executive represents that his
experience, capabilities and circumstances are such that the provisions
contained in Sections 7, 8 and 9 will not prevent him from earning a livelihood.
Executive hereby acknowledges that the limitations as to time, character or
nature and geographic scope placed on his subsequent employment by Sections 7, 8
and 9 of this Agreement are reasonable and fair. If the territorial scope or
time limitation of in Sections 7, 8 and 9 are deemed unreasonable by a court of
competent jurisdiction, they shall be reduced to the extent necessary to be
deemed reasonable and, as so reduced, shall be enforced. It is understood that
the covenants made by Executive in Sections 7, 8, 9, 10 and 11 shall survive the
expiration or termination of this Agreement, if it expires or terminates after
the Effective Time.

11.       REMEDIES AND ENFORCEABILITY.

(a)       Executive understands and agrees that Employer may not be adequately
compensated by damages for a breach by Executive of any of the covenants and
agreements contained herein, and that Employer shall, in addition to all other
remedies, be entitled to injunctive relief and specific performance. Executive
hereby affirmatively waives the requirement that Employer post any bond,
demonstrate the likelihood of irreparable damage to Employer or demonstrate that
any actual damages will be suffered by Employer or any other entity seeking
enforcement hereof as a result of Executive’s breach of any provision of this
Agreement. Nothing herein contained will be construed as prohibiting Employer
from

 

8

--------------------------------------------------------------------------------

pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of money damages, and if Employer prevails, it
shall also be entitled to the payment of any and all reasonable fees,
disbursements, and other charges of the attorneys and collection agents, court
costs, and all other costs of enforcement.

(b)       In the event that the Executive institutes any proceeding to enforce
his rights under, or to recover damages for breach of this Agreement, the
Executive, if he is the prevailing party, shall be entitled to recover from
Employer any and all reasonable fees, disbursements, and other charges of the
attorneys and collection agents, court costs, and all other costs of enforcement
incurred by him.

12.       GOVERNING LAW. This Agreement shall be governed by, and shall be
construed and enforced in accordance with, the laws of the Commonwealth of
Virginia, without giving effect to any conflict of law rule or principle of such
state or any other jurisdiction.

13.       TIME PERIODS. All time periods referenced in this Agreement shall be
computed by excluding from such computation any time during which Executive is
in violation of any provision of this Agreement and any time during which there
is pending in any court of competent jurisdiction any action (including any
appeal from any final judgment) brought by any person, whether or not a party to
this Agreement, in which action Employer seeks to enforce the agreements and
covenants in Sections 7, 8, and 9 of this Agreement or in which any individual
or entity contests the validity of such agreements and covenants or their
enforceability or seeks to avoid their performance or enforcement.

14.       ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein. There
are no promises, representations, inducements, or statements between the parties
other than those that are expressly contained herein.

15.       AMENDMENT. This Agreement may only be amended by an agreement in
writing signed by the party against whom enforcement is sought.

16.       BINDING EFFECT. This Agreement shall be binding upon, and shall inure
to the benefit of, the parties, their personal representatives, heirs, devisees,
successors and assigns. The duties and covenants of Executive under this
Agreement, being personal, may not be delegated.

17.       HEADINGS; SECTION REFERENCES; CONSTRUCTION. Section headings or
captions contained in this Agreement are inserted only as a matter of
convenience and reference and in no way define, limit, extend or describe the
scope of this Agreement, or the intent of any provision hereof. All references
herein to Sections shall refer to Sections of this Agreement unless the context
clearly otherwise requires. Unless the context clearly states otherwise, the use
of the singular or plural in this Agreement shall include the other and the use
of any gender shall include all others. The parties have participated jointly in
the negotiation and drafting of this Agreement. If any ambiguity or question of
intent or interpretation arises, no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.

18.       POLICIES, REGULATIONS AND GUIDELINES FOR EMPLOYEES. Employer may, from
time to time, issue policies, rules, regulations, guidelines, procedures or
other informational material, whether in the form of handbooks, memoranda or
otherwise, relating to Employer’s

 

9

--------------------------------------------------------------------------------

employees. Executive acknowledges and agrees that such material are general
guidelines for Executive’s information and shall not be construed to alter,
modify or amend this Agreement for any purpose whatsoever.

19.       SEVERABILITY OF PROVISIONS. If a court holds any provision of this
Agreement or its application to any person or circumstance invalid, illegal or
unenforceable, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those to which it was held to
be invalid, illegal or unenforceable, shall not be affected, and shall be valid,
legal and enforceable to the fullest extent permitted by law, but only if and to
the extent such enforcement would not materially and adversely frustrate the
parties’ essential objectives as expressed in this Agreement. Furthermore, in
lieu of any such invalid or unenforceable term or provision, the parties intend
that the court or arbitrator add to this Agreement a provision as similar in
terms to such invalid or unenforceable provision as may be valid and
enforceable, so as to effect the original intent of the parties to the greatest
extent possible.

20.       RELEASE. Subject to the condition that the Effective Time occur, and
taking effect automatically from and after the Effective Time without further
act or deed of Executive or Employer, Executive hereby waives and releases any
and all claims and causes of action against Employer, known or unknown, in any
way related directly or indirectly to Executive’s status as an employee, officer
or director of Employer, on or prior to the date hereof, together with any and
all claims related to the anticipated termination of the Current Employment
Agreement or other agreements, contracts, plans or promises with Employer upon
consummation of the Merger; provided, however, that nothing herein shall
constitute a waiver or release by Executive of any compensation or benefits
accrued and unpaid under the terms of the Current Employment Agreement or such
other agreements, contracts, plans or promises, or any claims or rights of
Executive under the terms of this Agreement or the terms of the Merger
Agreement. Employer and Executive understand and acknowledge that under the
terms of the Merger Agreement the stock options granted to Executive in prior
agreements will be cancelled upon the Effective Time. Executive understands and
acknowledges that, pursuant to the terms of the Merger Agreement, the stock
options granted in prior agreements are without value. In consideration of
Executive’s continuing employment opportunity with Employer after the Effective
Time and the MIP, SIC, the Equity Compensation and Other Bonus to be provided by
Employer hereunder, Executive further agrees at the Effective Time to sign a
second release of claims, which substitutes the Effective Time for the date of
this Agreement, but which is otherwise substantially similar in form and
substances to the above release in this Section 20.

 

[Signature Page Follows]

 

10

--------------------------------------------------------------------------------

            IN WITNESS WHEREOF, as their free and voluntary act, the parties
have executed this letter Agreement as of the date indicated.

 

KMG AMERICA CORPORATION

 

/s/   Paul P. Moore

 

 

 

PAUL P. MOORE

 

BY:   

/s/   Kenneth U. Kuk

 

September 7, 2007

 

Date

ITS:   

Chief Executive Officer

 

 

   

September 7, 2007

Date

11

--------------------------------------------------------------------------------