<PAGE>

                                                                  EXHIBIT 10.54

                                                                      EXHIBIT H

                                                          Omega Holdings, Inc.
                                                          1205 Peters Drive
                                                          Waterloo, IA  50703
                                                          Phone (319) 235-5721
                                                          Fax     (319) 235-5820


                                November 3, 2000



BY CERTIFIED MAIL
RETURN RECEIPT REQUESTED
------------------------

Mr. Robert L. Moran
4014 Briarwood Road
Waterloo, Iowa 50613

Dear Robert:

     As we have discussed, your employment with Omega Holdings, Inc. (the
"Company") will terminate as of August 1, 2000 (the "Separation Date"). Provided
that you accept it, this letter (the "Agreement") contains the agreement between
you and the Company concerning your severance arrangements, as follows:

    1.  In signing this Agreement, you resign all positions and offices held by
you with the Company and its Affiliates effective as of the Separation Date and
you acknowledge receipt of all pay due to you for all work performed for the
Company and its Affiliates through the Separation Date.  You also acknowledge
receipt of pay for all vacation time you had earned, but not used, as of the
Separation Date, as reflected on the books of the Company.  It is understood
that the Company will take actions in reliance on your resignation and that it
shall become irrevocable on the Effective Date (as defined in Section 16 below).
As used in this Agreement, (a) "Affiliates" means each of Butler Capital
Corporation, a New York corporation, Mezzanine Lending Associates I, II & III,
L.P., Senior Lending Associates I & II, L.P., and any other entity with which
the Company has a management or advisory contract or relationship, any direct or
indirect investor in any of the foregoing entities, any entity in which any such
entity has an investment, any officer or director of the Company, and any Person
directly or indirectly controlling, controlled by or under common control with
the Company (including, without limitation, Gilbert Butler), where control may
be by either


<PAGE>

management authority or equity interest, and (b) "Person" means an individual, a
corporation, a limited liability company, an association, a partnership
(including, without limitation, a limited partnership), an estate, a trust and
any other entity or organization.

2.  In consideration of your acceptance of this Agreement and subject to your
fully meeting your obligations under this Agreement:

          (a) The Company will provide you severance pay, in the form of salary
     continuation, at your current base rate of pay, for the period of 12 months
     following the Separation Date (the "Severance Pay Period"). Payments will
     be made in the form of salary continuation at the Company's regular payroll
     periods in accordance with the Company's regular payroll practices,
     beginning on the next regular payday following the Effective Date;
     provided, however, that any and all payments made to you by the Company
     after the Separation Date and prior to the Effective Date shall be credited
     against and shall reduce the amounts payable to you under this Section
     2(a). Payments will be calculated at your final base rate of pay. If this
     Agreement takes effect after the Separation Date, the first payment will
     nonetheless be retroactive to the Separation Date.

          (b) If you elect to continue your participation in the Company's group
     medical and dental plans under applicable federal law ("COBRA") by signing
     and returning in a timely manner the election form that will be provided
     you, then, until the conclusion of the Severance Pay Period or, if earlier,
     until the date you cease to be eligible for participation under COBRA, the
     Company will contribute to the premium cost of your coverage and that of
     your eligible dependents under the plans at the same rate that it has
     previously contributed to the premium cost of your coverage and that of
     your eligible dependents, provided you pay the remainder of the premium
     cost, at the rate that you have previously contributed to the premium cost
     of your coverage and that of your eligible dependents, by payroll
     deduction. After the Company's contributions end, you may continue coverage
     for the remaining 6 month COBRA period, if any, by paying the full premium
     cost plus a small administrative fee. The benefits of the plans are subject
     to the conditions and limitations of the plans themselves and any disputes
     concerning eligibility for, or payment of benefits under, the plans shall
     be settled in accordance with the terms thereof and neither the Company nor
     any of its Affiliates shall be liable to you, your heirs or beneficiaries,
     or anyone else claiming through you, for payment of benefits under the
     plans.

          (c) Within 90 days after receipt by the Company of its audited
     financial statements for the fiscal year ended December 30, 2000 (such date
     being selected by the Company and being referred to herein as the
     "Repurchase Date"), the Company will repurchase, and you agree to sell to
     the Company, on the Repurchase Date, all of the shares of Common Stock,
     $.01 par value per share (the "Common Stock"), of the Company, and options
     to purchase shares of Common Stock of the Company, originally issued to
     you, which shares and options are listed on Schedule I attached hereto (the
     "Management Shares").  The Company will repurchase the Management Shares on
     the

<PAGE>

     Repurchase Date at a price per share equal to the fair market value on
     December 30, 2000, as determined in good faith by the Board of Directors of
     the Company, less any applicable exercise price associated with such
     Management Shares.  Payment for the Management Shares will be by a
     combination of cash and the delivery of a call note in substantially the
     form attached hereto as Exhibit A (the "Call Note").  The Company will pay
     you cash equal to the amount permitted to be paid for repurchases of equity
     securities of the Company on such Repurchase Date, as determined by
     reference to the Indenture dated as of July 24, 1997, as supplemented and
     amended, among Omega Cabinets, Ltd., Home Crest Corporation, Panther
     Transport, Inc. and the Chase Manhattan Bank, as trustee.  The cash portion
     of the purchase price will be paid by  wire transfer in immediately
     available funds in accordance with the wire transfer instructions provided
     by you in writing to the Company prior to the Repurchase Date (the "Bank
     Account").

          (d) Set forth in Exhibit B attached hereto, are the Company's
     financial targets for the fiscal year ended December 30, 2000  (the
     "Financial Targets") and the percentage of the target bonus that will
     become payable upon the Company meeting each such Financial Target.  If the
     Company meets the Financial Targets, as evidenced by reference to the
     Company's final internal financial statements for the fiscal year ended
     December 30, 2000 prepared by the Company in accordance with past practices
     (the "Company Financial Statements"), the Company will pay to you at the
     same time that it makes payments to active management with respect to
     amounts payable for meeting the Financial Targets, but in no event later
     than March 31, 2001, the bonus corresponding to such Financial Target, as
     set forth on Exhibit B.  The bonus will be paid by wire transfer of
     immediately available funds to the Bank Account in full and complete
     satisfaction of any and all amounts due or owing to you as a bonus for the
     fiscal year ended December 30, 2000 and in lieu of any obligations to grant
     to you at any time after the Effective Date any options to purchase shares
     of the Company's Common Stock.

          (e) If the Company does not meet or exceed the Financial Targets as
     evidenced by reference to the Company Financial Statements, the Company
     will not, and will have no obligation under Section 2(d) to, pay to you any
     of the amounts described in Section 2(d).

          (f) You hereby represent and warrant to the Company that other than
     the Management Shares set forth on Schedule I attached hereto, you own no
     equity interest in the Company and have no right to acquire any such
     interest.  Concurrently with returning this Agreement to the Company, you
     hereby agree to deliver to Ropes & Gray at the address set forth below its
     name in Section 15, the original Option Certificates dated April 24, 1998,
     March 26, 1999 and January 27, 2000 and referenced in Schedule I, the
     original Option Letter dated March 5, 1998 and the original Receipt dated
     April 29, 1998 acknowledging the exchange of the Option Letter dated March
     5, 1998 for the Option Certificate dated April 24, 1998, each in
     substantially the form attached hereto as Exhibit C, each to be held in
     escrow on your

<PAGE>

     behalf until the Repurchase Date, together with irrevocable
     instructions and consent to the transfer to the Company of all of the
     Management Shares referenced in Schedule I in accordance with the terms of
     this Agreement, including irrevocable instructions to Bancone & Company, as
     successor trustee to the American National Bank and Trust Company of
     Chicago (the "Rabbi Trustee") under the Rabbi Trust Agreement dated as of
     June 13, 1997 by and between the Company and the American National Bank and
     Trust Company of Chicago, regarding such transfer, all such instructions
     and consents to be substantially in the forms attached hereto as Exhibit D.

          3.  All payments by the Company under this Agreement will be reduced
by all taxes and other amounts that the Company is required to withhold under
applicable law and all other deductions authorized by you.

          4.  You agree that the payments provided under Section 2 of this
Agreement are in full and complete satisfaction of any and all sums which are
now or might hereafter have become owing to you from the Company for services
rendered by you to the Company or otherwise.  You will not continue to earn
vacation or other paid time off after the Separation Date and except as
expressly provided in Section 2(b), your participation in all employee benefit
plans of the Company will end as of the Separation Date, in accordance with the
terms of those plans.

          5.  Your obligations under the Non-Competition Agreement dated as of
June 13, 1997 among Omega Merger Corp., a Delaware corporation ("Merger Corp")
and you, a copy of which is attached hereto as Exhibit E (the "Non-Competition
Agreement"), shall remain in full force and effect in accordance with its terms,
including without limitation your obligation not to disclose confidential
information of the Company and its Affiliates and your obligation not to solicit
the employees, clients and active prospects of the Company as provided therein.
As you know, Merger Corp. merged with and into the Company on June 13, 1997 and
your obligations to Merger Corp. are obligations to the Company.

          6.  You agree that you will not disclose this Agreement or any of its
terms or provisions, directly or by implication, except to members of your
immediate family and to your legal and tax advisors, and then only on condition
that they agree not to further disclose this Agreement or any of its terms or
provisions to others.

          7.  You agree that you will continue to support the good reputation of
the Company in the community; that you will not disparage the Company or any of
the people or organizations connected with it; and that you will not otherwise
do or say anything that could disrupt the good morale of the employees of the
Company or any of its Affiliates or otherwise harm their interests or
reputation.  You further agree to cooperate fully with the Company to assure a
smooth transition of your duties and responsibilities.

          8.  You agree to cooperate with the Company hereafter with respect to
all matters arising during or related to your employment, including but not
limited to all matters in connection with any governmental investigation,
litigation or regulatory or other proceeding

<PAGE>

which may have arisen or which may arise following the signing of this
Agreement. In addition, you agree to execute and deliver all other documents
reasonably requested by the Company in connection with consummation of the
transactions contemplated hereby.

          9.  In signing this Agreement, you give the Company assurance that you
have returned to the Company any and all documents, materials and information
related to the business, whether present or otherwise, of the Company and its
Affiliates, and all keys and other property of the Company and its Affiliates,
in your possession or control.  Recognizing that your employment with the
Company has terminated, you agree that you will not, for any purpose, attempt to
access or use any computer or computer network or system of the Company or any
of its Affiliates, including without limitation their electronic mail systems.

          10.  In order to be certain that this Agreement will resolve any and
all concerns that you might have, the Company requests that you carefully
consider its terms, including the release of claims set forth in Section 12
below and, in that regard, encourages you to seek the advice of an attorney
before signing this Agreement.

          11.  This Agreement contains the entire agreement between you and the
Company and replaces all prior and contemporaneous agreements, communications
and understandings, whether written or oral, with respect to your employment and
its termination and all related matters, excluding only the Non-Competition
Agreement.  This Agreement will be governed by and interpreted in accordance
with the laws of the Commonwealth of Massachusetts, without regard to the
conflict of laws principles thereof.

          12.  Release of Claims
          (a) In exchange for the special severance pay and benefits provided
     you under this Agreement, and for other good and valuable consideration the
     receipt of which is hereby acknowledged, you, on your own behalf and on
     behalf of each Person who is or was or may become a beneficiary, heir,
     executor, administrator, legatee, devisee, representative, or assign, and
     all others connected with you (each a "Moran Affiliate"), hereby release
     and forever discharge the Company and its Affiliates, and each Person who
     is or was or may become an officer, director, shareholder, employee, agent,
     general or limited partner, advisory board member, representative,
     predecessor, successor, or assign of the Company or any of its Affiliates
     and all others connected with any of them, both individually and in their
     official capacities (each a "Released Party" and collectively, the
     "Released Parties"), from liability for any and all causes of action,
     rights and claims, of whatever type or description, in law and in equity
     (collectively, the "Claims"), which you have ever had in the past, now
     have, or might now have, through the date you sign this Agreement,
     including without limitation (i) Claims in any way arising out of or
     connected with your relationship with the Company as an officer, director,
     employee, shareholder, or optionholder or pursuant to Title VII of the
     Civil Rights Act, the Americans with Disabilities Act, the Age
     Discrimination in Employment Act, the fair employment practices statutes of
     the states in which you have provided services to the Company or its
     Affiliates, or any other federal, state or local employment law, regulation
     or other requirement, and (ii) Claims relating to the

<PAGE>

     purchase, ownership or sale of the capital stock of the Company, excluding
     only the Surviving Claims (as hereinafter defined). Without limiting the
     foregoing in any fashion, you acknowledge and agree that by executing this
     Agreement you hereby waive any rights, statutory or otherwise, to any
     Claims (other than Surviving Claims) that you do not know or suspect to
     exist at the time of executing this Agreement.

          (b) Nothing contained in this Agreement shall operate to release or
     discharge the Company or any of the other Released Parties of or from or
     otherwise affect any of your rights in respect of any Claim arising out of
     or relating to the performance of the Company's obligations under Section 2
     of this Agreement (the "Surviving Claim").

          (c) You further represent and warrant to the Company and to each other
     Released Party, on your own behalf and on behalf of each of the Moran
     Affiliates, that neither you nor any of the Moran Affiliates have made or
     suffered to be made or will make any assignment or transfer of any Claim
     (other than a Surviving Claim).

     13.  It is expressly understood and agreed that, if the Company reasonably
determines that you have materially violated any of your obligations under this
Agreement, including without limitation, (i) the failure to deliver to the
Company prior to the Effective Date the Management Shares (other than stock
certificate number 113 representing 340 shares of the Company's Common Stock
held by the Rabbi Trustee for your benefit) and the irrevocable instructions and
consents regarding the transfer of the Management Shares to the Company as
contemplated by this Agreement, or (ii) a breach of the Non-Competition
Agreement, the Company, in addition to any other remedies to which it may be
entitled by law or in equity, shall be entitled to reimbursement, upon demand,
of all sums paid to you or on your behalf under this Agreement and the Company
shall have no further obligation to you thereafter.  You agree not to contest
your obligation to make reimbursement pursuant to such demand.  It is further
expressly understood and agreed that reimbursement by you pursuant to this
Section 13 shall not relieve you of any of your other obligations under this
Agreement.

     14.  In signing this Agreement, you give the Company assurance that you
have signed it freely and voluntarily and with a full understanding of its terms
and that you have had sufficient opportunity to consider this Agreement and to
consult with any of the persons referenced in Section 6 of this Agreement before
signing it.  In addition, by signing this Agreement, you represent and affirm
that you have not relied on any promises or representations, written or oral,
express or implied, by anyone connected with the Company or any of its
Affiliates that are not set forth expressly in this Agreement.

     15.  Any notice or demand which is required or provided to be given under
this Agreement shall be deemed to have been sufficiently given and received for
all purposes when delivered by hand, telecopy, telex or other method of
facsimile, or, if sent by certified or registered mail, postage and charges
prepaid, return receipt requested, when deposited in a United States mailbox, or
one days after being sent by overnight delivery providing receipt of delivery,
to the following addresses:

<PAGE>

     (i)  If to the Company, to:

          Omega Holdings, Inc.
          1205 Peters Drive
          Waterloo, IA  50703
          Attention:  President

     with a copy to:

          Butler Capital Corporation
          767 Fifth Avenue
          New York, NY  10153
          Attention:  Donald E. Cihak

     and a copy to:

          Ropes & Gray
          One International Place
          Boston, MA  02110
          Attention:  Craig E. Marcus, Esq.

     (ii)  If to Robert L. Moran, to you at:

          Mr. Robert L. Moran
          4014 Briarwood Road
          Waterloo, Iowa 50613

or to such other address as may have been furnished by any party to the other
party and actually received.

     16.  If the terms of this Agreement are acceptable to you, please sign,
date and return it to me within twenty-one days of the date you receive it.  You
may revoke this Agreement at any time during the seven-day period immediately
following the date of your signing, provided that you do so in writing.  If you
do not revoke it, then, at the expiration of that seven-day period (such date
being the "Effective Date"), this Agreement will take effect as a legally-
binding agreement between you and the Company on the basis set forth above.
This Agreement may only be amended by a writing signed by you and an expressly
authorized representative of the Company.  The enclosed copy of this Agreement,
which you should also sign and date, is for your records.

<PAGE>

                              Sincerely,

                              OMEGA HOLDINGS, INC.



                              By:    /s/ John S. Horton
                                   --------------------------
                              Name:    John S. Horton
                              Title:  Chief Financial Officer

Accepted and agreed:


/s/ Robert L. Moran
-------------------
Robert L. Moran

Dated:  November 3, 2000

<PAGE>

                                   SCHEDULE I

                               Management Shares


1.   Stock Certificate No. 65 representing 450 shares of the Company's Common
     Stock, a copy of which is attached hereto as part of Exhibit C.

2.   Stock Certificate No. 113 representing 340 shares of the Company's Common
     Stock held for the benefit of Robert L. Moran by Bancone & Company, as
     trustee.

3.   Option Certificate dated April 24, 1998 representing an option to purchase
     32.7538 shares of the Company's Common Stock at an exercise price per share
     equal to $1,000, a copy of which is attached hereto as part of Exhibit C.

4.   Option Certificate dated March 26, 1999 representing an option to purchase
     92.8521 shares of the Company's Common Stock at an exercise price per share
     equal to $1,000, a copy of which is attached hereto as part of Exhibit C.

5.   Option Certificate dated January 27, 2000 representing an option to
     purchase 146.0387 shares of the Company's Common Stock at an exercise price
     per share equal to $1,000, a copy of which is attached hereto as part of
     Exhibit C.
<PAGE>

                                FIRST AMENDMENT
                                      TO
                              SEVERANCE AGREEMENT



     This First Amendment (this "Amendment") to that certain Severance Agreement
dated as of November 3, 2000 (the "Severance Agreement") by and between Robert
L. Moran and Omega Holdings, Inc. (the "Company") is entered into as of this
30th day of November 2000 by and between Robert L. Moran and the Company.
Terms used and not defined herein shall have the meanings ascribed to such terms
in the Severance Agreement.

     The Severance Agreement is hereby amended to the extent set forth below,
such amendment to be effective upon the execution hereof by the Company and
Robert L. Moran.  All other provisions of the Severance Agreement shall remain
in full force and effect.

     1.  Equity Repurchase. The equity repurchase provision set forth in Section
         2(c) of the Severance Agreement is hereby amended to read in its
         entirety as follows:

            On Friday, December 1, 2000, (the "First Repurchase Date") the
            Company will repurchase, and you agree to sell to the Company, 450
            shares of Common Stock $.01 par value per share (the "Common Stock")
            represented by stock certificate number 65. The Company will
            repurchase the 450 shares represented by stock certificate number 65
            on the First Repurchase Date at a price per share equal to $2,412
            per share, which represents the fair market value on September 30,
            2000. Payment for the 450 shares represented by stock certificate
            number 65 will be by a combination of $468,056.70 in cash and by
            cancellation of $676,245.59 of indebtedness, owed by you to the
            Company pursuant to the promissory note issued by you to the Company
            on February 26, 1999 (the "Promissory Note").

            Within 90 days after receipt by the Company of its audited financial
            statements for the fiscal year ended December 30, 2000 (such date
            being selected by the Company and being referred to herein as the
            "Second Repurchase Date"), the Company will repurchase, and you
            agree to sell to the Company, on the Second Repurchase Date, 340
            shares of Common Stock of the Company represented by stock
            certificate number 113 held for your benefit by Bancone & Company,
            as trustee, and options to purchase an aggregate of 271.6446 shares
            of Common Stock of the Company, originally issued to you and
            represented by the Option Certificates dated February 24, 1998,
            March 26, 1999 and January 27, 2000 (the "Options"). The Company
            will repurchase the 340 shares
<PAGE>

            represented by stock certificate number 113 and the Options on the
            Second Repurchase Date at a price per share equal to the fair market
            value on December 30, 2000, as determined in good faith by the Board
            of Directors of the Company, less any applicable exercise price
            associated with such shares and options. Payment for the 340 shares
            represented by stock certificate number 113 and the Options will be
            by a combination of cash and the delivery of a call note in
            substantially the form attached hereto as Exhibit A (the "Call
            Note"). The Company will pay you cash equal to the amount permitted
            to be paid for repurchases of equity securities of the Company on
            such Second Repurchase Date, as determined by reference to the
            Indenture dated as of July 24, 1997, as supplemented and amended,
            among Omega Cabinets, Ltd., Home Crest Corporation, Panther
            Transport, Inc. and the Chase Manhattan Bank, as trustee (the
            "Indenture"). The cash portion of the purchase price will be paid by
            wire transfer in immediately available funds in accordance with the
            wire transfer instructions provided by you in writing to the Company
            prior to the Repurchase Date (the "Bank Account"). The Call Note
            will mature on the date set forth in such Call Note. The Company
            will use its commercially reasonable efforts to repay the Call Note
            no later than October 29, 2001 or such later date as the Company is
            permitted to repay the Call Note, after giving effect to the
            restrictions on the repurchases of equity securities of the Company
            set forth in the Indenture.

     2.  Miscellaneous. The Severance Agreement is confirmed as being in full
         force and effect. This Amendment and the Severance Agreement constitute
         the entire agreement between the parties hereto, and supersede any and
         all prior communications, agreements and understandings, written or
         oral.
<PAGE>

       IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to Severance Agreement as of the date first above written.


                                            OMEGA HOLDINGS, INC.



                                            By: /s/ John S. Horton
                                               ---------------------------
                                            Name:   John S. Horton
                                            Title:  Chief Financial Officer


                                            /s/ Robert L. Moran
                                            ------------------------------
                                            Robert L. Moran