<PAGE>   1
                              EMPLOYMENT AGREEMENT

        This Employment Agreement is made and entered into between Tufco
Technologies, Inc., a Delaware corporation ("Tufco"), Louis LeCalsey, III (the
"Employee").

        WHEREAS, Tufco desires to employ the Employee, and the Employee desires
to become an employee of Tufco, upon the terms and conditions hereinafter set
forth.

                                  WITNESSETH:

        NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound
hereby, agree as follows:

1.      Employment.

        Tufco hereby employs the Employee as President and Chief Executive
Officer of Tufco and the Employee hereby accepts such employment, effective
September 19, 1996. During the term of employment under this Agreement (the
"Employment Term"), the Employee shall perform Employee's duties and
responsibilities hereunder in accordance with the terms and conditions
hereinafter set forth.

2.       Performance.

         During the Employment Term, the Employee shall perform all duties and
accept all responsibilities as may be assigned from time to time by the Board
of Directors of Tufco (the "Board") and that are consistent with the duties and
responsibilities of a President and Chief Executive Officer. During the
Employment Term, the Employee will diligently devote his entire business skill,
time and effort to the performance of his duties hereunder and will not alone
or as a member of a partnership or as an officer, director, employee or agent
of any other person, firm or business organization, engage in any other
business activities or pursuits requiring his personal services that might
conflict with his duties hereunder.

3.       Term.

         Unless otherwise terminated in accordance with Sections 6 or 7, the
Employment Term shall be for an initial term of three years commencing on
September 19, 1996 and continuing thereafter for successive one-year renewal
terms.

4.       Compensation for Employment.

         (a)      The basic annual compensation of the Employee for his
employment services to Tufco and to all of Tufco's subsidiaries and affiliated
companies during the Employment Term shall be $200,000 (the "Salary"), which
Tufco shall pay to the Employee in equal monthly installments. Tufco may adjust
the salary upward on an annual basis as the Board may determine, but the Salary
shall not be decreased.
<PAGE>   2
         (b)      Commencing as of October 1, 1996 and continuing during the
Employment Term, Tufco shall pay the Employee a bonus in accordance with this
paragraph (b). For each fiscal year during the Employment Term, the Board, in
its sole discretion, shall establish a budget for pre-tax income in accordance
with generally accepted accounting principles consistently applied and the
Employee's bonus will vary as a percentage of Salary in relation to the
percentage achievement of that budget as follows:

<TABLE>
<CAPTION>
     Percentage of         Percentage of Salary
    Budget Attained           Earned as Bonus
    -------------------------------------------
        <S>                     <C>
         <85%                      0%
          85%                     35%
          90%                     40%
         100%                     50%
         110%                     60%
         120%                     70%
         130%                     80%
         140%                     90%
         150%                    100%
</TABLE>

For a percentage of budget achievement between the benchmarks, the percentage
of Salary shall be linearly interpolated, provided that no bonus shall be paid
for achievement that constitutes less than 85% of the budget and the maximum
bonus shall be 100% of Salary in any event. In the case of a partial fiscal
year, Tufco shall adjust the bonus to correspond to Tufco's budget and the
salary for the portion of the applicable fiscal year that shall be included in
the Employment Term.

         (c)     During the Employment Term, Tufco shall also provide the
Employee with a $600 car allowance and health benefits consistent with those
provided to other senior executives of Tufco. The Employee will be entitled to
five (5) weeks of vacation for each year of the Employment Term. Tufco shall
also reimburse the Employee for any reasonable business expenses incurred on
Tufco's behalf in connection with the performance of his services during the
Employment Term.

         (d)      During the Employment Term and thereafter until the Employee
attains age 65, the Company will include the Employee, his wife and his
children under the age of twenty-five in whatever health care benefit plans
that the Company generally provides to its senior executive officers from time
to time, but only to the extent that the terms of such plans permit doing so.
Tufco will cease covering the Employee's children upon the earlier of the
child's attainment of the age 25 or graduation from college.

         (e)      During the Employment Term, the Company will provide the
Employee with term life insurance in the amount of $250,000. Upon termination
of the Employment Term, the Company will provide the Employee with term life
insurance in the amount of $125,000, until the Employee attains age 65.





                                      -2-
<PAGE>   3
5.       Agreement Not To Compete.

         (a)      During the Non-Competition Period (defined below), the
Employee shall not, within the United States of America, Canada and Mexico,
directly or indirectly, in any capacity, render his services, engage or have a
financial interest (other than an investor-only financial interest) in, any
business that is competitive with any of those business activities in which
Tufco shall have been engaged during his employment by it, including paper
converting, mill roll converting, paper sheeting, slitting and rewinding paper
rolls, facsimile rolls, and buying and reselling paper products, nor shall the
Employee assist any person or entity that is engaged in such business,
including by making Tufco Information (defined below) available to any such
person or entity. In addition, during the Non-Competition Period, the Employee
shall not directly or indirectly solicit or otherwise encourage any of Tufco's
employees to terminate their employment with Tufco. If a court determines that
the foregoing restrictions are too broad or otherwise unreasonable under
applicable law, including with respect to time or space, the court is hereby
requested and authorized by the parties hereto to review the foregoing
restriction to include the maximum restrictions allowable under applicable law.
The "Non-Competition Period" means the period equal to the Employment Term plus
an additional period of one year after the termination of the Employee's
employment with Tufco.

         (b)      The terms of this Section 5 shall apply to the Employee and
any persons or entities controlled by the Employee, including any member of the
Employee's household, corporation or other entity of which he is an officer,
director or shareholder, or any other affiliate of the Employee, to the same
extent as if they were parties hereto, and the Employee shall take whatever
actions may be necessary to cause any such persons or entities to adhere to the
terms of this Section 5.

6.       Termination Without Compensation.

         (a)      Non-Renewal of Term. The Employment Term may be terminated
by either party hereto as of the end of the initial term or any renewal term
then in effect by giving notice of the intention to terminate the Employment
Term at least 30 days prior to the termination date. Upon any such termination,
Tufco shall not have any further liability or obligation to the Employee
hereunder except for any unpaid Salary and Fringe Benefits accrued to the date
of termination.

         (b)      Partial or Total Disability. If the Employee is unable to
perform his duties and responsibilities hereunder to the full extent required
hereunder by reason of illness, injury or incapacity for six months (during
which time he shall continue to be compensated hereunder), Tufco may terminate
the Employment Term by notice to the Employee of the termination date, and
Tufco shall not have any further liability or obligation to the Employee
hereunder except for any unpaid Salary and Fringe Benefits accrued to the date
of termination. In the event of any dispute under this Section 6(b), the
Employee shall submit to a physical examination by a licensed physician
mutually satisfactory to Tufco and the Employee, the cost of such examination
to be paid by Tufco, and the determination of such physician shall be
determinative. If, after termination due to disability as provided herein, the
Employee obtains, at his sole expense, medical certification from a licensed
physician reasonably satisfactory to Tufco that such disability has ended,
Tufco shall offer to employ





                                      -3-
<PAGE>   4
the Employee pursuant to the terms of this Agreement for the remainder of the
initial term or any renewal term in effect at the time of termination, except
that Tufco shall not be required to reemploy the Employee at the same officer
position if Tufco shall have elected another person to such position during the
period of the Employee's disability and such other person continues in such
position at the time of the Employee's return to employment.

         (c)      Death. If the Employee dies, this Employment Agreement
(except for the provisions of Sections 5, 8 and 9 hereof) shall terminate, and
thereafter Tufco shall not have any further liability or obligation to the
Employee, his executors, administrators, heirs, assigns or any other person
claiming under or through him except for unpaid Salary and Fringe Benefits
accrued to the date of his death.

         (d)      Cause. Tufco may terminate the Employment Term for "cause"
by giving the Employee 30 days' notice of the termination date, and thereafter
Tufco shall not have any further liability or obligation to the Employee.  For
purposes of this Agreement, "cause" shall mean the failure of the Employee to
observe or perform (other than by reason of illness, injury or incapacity) any
of the material terms or provisions of this Agreement, dishonesty, willful
misconduct, material neglect of Tufco's business, conviction of a felony or
other crime involving moral turpitude, misappropriation of funds or habitual
insobriety.

7.       Termination With Compensation.

         Tufco shall have the right to terminate the Employment Term without  
cause at any time by giving the Employee 30 days' notice of the termination
date. Under such circumstances, Tufco shall continue to pay to the Employee the
Salary then in effect for the remainder of the initial term or any renewal term
then in effect; provided however, that the Employee shall not be entitled to
any compensation under this Section 7 unless the Employee executes and delivers
to Tufco after a notice of termination a release in a form satisfactory to
Tufco by which the Employee releases Tufco from any obligations and liabilities
of any type whatsoever, except for Tufco's obligation to provide the Salary
specified in this Section 7. The parties hereto acknowledge that the Salary to
be provided under this Section 7 is to be provided in consideration for the
above-specified release. Upon any termination under this Section 7, Tufco shall
not have any obligation to the Employee, his executors, administrators, heirs,
assigns or any other person claiming under or through him other than to pay to
the Employee the Salary specified in this Section 7 in exchange for the
above-mentioned release.

8.       Inventions, Designs and Product Developments.

         All inventions, innovations, designs, ideas and product developments
(collectively, the "Developments"), developed or conceived by the Employee,
solely or jointly with others, whether or not patentable or copyrightable, at
any time during the Employment Term and that relate to the actual or planned
business activities of Tufco and all of the Employee's right, title and
interest therein, shall be the exclusive property of Tufco or such subsidiary,
as the case may be. The Employee hereby assigns, transfers and conveys to Tufco
all of his right, title and interest in and to any and all such Developments.
As requested from time to time by the Board, the Employee shall





                                      -4-
<PAGE>   5
disclose fully, as soon as practicable and in writing, all Developments to the
Board. At any time and from time to time, upon the request of any of the Board,
the Employee shall execute and deliver to Tufco any and all instruments,
documents and papers, give evidence and do any and all other acts that, in the
opinion of counsel for Tufco, are or may be necessary or desirable to document
such transfer or to enable Tufco to file and prosecute applications for and to
acquire, maintain and enforce any and all patents, trademark registrations or
copyrights under United States or foreign law with respect to any such
Developments or to obtain any extension, validation, reissue, continuance or
renewal of any such patent, trademark or copyright. Tufco will be responsible
for the preparation of any such instruments, documents and papers and for the
prosecution of any such proceedings and will reimburse the Employee for all
reasonable expenses incurred by him in compliance with the provisions of this
Section.

9.       Confidential Information.

         (a)      The Employee has had and will have possession of or access
to confidential information relating to the business of Tufco, including
writings, equipment, processes, drawings, reports, manuals, invention records,
financial information, business plans, customer lists, the identity of or other
facts relating to prospective customers, inventory lists, arrangements with
suppliers and customers, computer programs, or other material embodying trade
secrets, customer or product information or technical or business information
of Tufco. All such information, other than any information that is in the
public domain through no act or omission of the Employee or which he is
authorized to disclose, is referred to collectively as the "Tufco Information."
During and after the Employment Term, the Employee shall not (i) use or exploit
in any manner the Tufco Information for himself or any person, partnership,
association, corporation or other entity other than Tufco, (ii) remove any
Tufco Information, or any reproduction thereof, from the possession or control
of Tufco or (iii) treat Tufco Information otherwise than in a confidential
manner.

         (b)      All Tufco Information developed, created or maintained by
the Employee, alone or with others while employed by Tufco, and all Tufco
Information maintained by the Employee thereafter, shall remain at all times
the exclusive property of Tufco. The Employee shall return to Tufco all Tufco
Information, and reproductions thereof, whether prepared by him or others, that
are in his possession immediately upon request and in any event upon the
completion of his employment by Tufco.

10.      Remedies.

         The Employee expressly acknowledges that the remedy at law for any
breach of Sections 5, 8 or 9 will be inadequate and that upon any such breach
or threatened breach, Tufco shall be entitled as a matter of right to
injunctive relief in any court of competent jurisdiction, in equity or
otherwise, and to enforce the specific performance of the Employee's
obligations under these provisions without the necessity of proving the actual
damage to Tufco or the inadequacy of a legal remedy. The rights conferred upon
Tufco by the preceding sentence shall not be exclusive of, but shall be in
addition to, any other rights or remedies which Tufco may have at law, in
equity or otherwise.





                                      -5-
<PAGE>   6
11.      Survival.

         Notwithstanding the termination of the Employment Term
pursuant to Section 6 or 7, the obligations of the Employee under Sections 5, 8
and 9 hereof shall survive and remain in full force and effect and Tufco shall
be entitled to relief against the Employee pursuant to the provisions of
Section 10 hereof.

12.      General.

         (a)      Governing Law. The terms of this Agreement shall be governed
by the laws of the State of Wisconsin.

         (b)      Tufco. For purposes of Sections 5, 7, 8, 9 and 10, the term
"Tufco" shall be deemed to include any incorporated or unincorporated
subsidiaries or affiliates of Tufco.

         (c)      Binding Effect. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit and be enforceable by
the respective heirs, representatives, successors (including any successor as a
result of a merger or similar reorganization) and assigns of the parties
hereto, except that the duties and responsibilities of the Employee hereunder
are of a personal nature and shall not be assignable in whole or in part by the
Employee.

         (d)      Notices. All notices required to be given under this
Agreement shall be in writing and shall be deemed to have been given when
personally delivered or when mailed by registered or certified mail, postage
prepaid, return receipt requested, or when sent by Federal Express or other
overnight delivery service, addressed as follows:

         TO EMPLOYEE:
                Mr. Louis LeCalsey, III
                4125 Dollar Lane
                DePere, WI 54115

         TO TUFCO:

                Tufco Technologies, Inc.
                c/o Mr. Greg Wilemon, Chief Financial Officer
                4800 Simonton Road
                Dallas, TX 75244
                
                        and





                                      -6-
<PAGE>   7
                  Tufco Technologies, Inc.
                  c/o Mr. Robert J. Simon, Chairman 
                  Bradford Ventures, Ltd.
                  1212 Avenue of the Americas 
                  Suite 1802
                  New York, NY 10036

         (e)      Entire Agreement; Termination of Prior Agreement 
Modification. This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof. This Agreement may not be
modified or amended in any way except in writing by the parties hereto.

         (f)      Duration. Notwithstanding the termination of the Employment
Term and of the Employee's relationship with Tufco, this Agreement shall
continue to bind the parties for so long as any obligations remain under this
Agreement, and in particular, the Employee shall continue to be bound by the
terms of Sections 5, 8, 9 and 10.

         (g)      Waiver. No waiver of any breach of this Agreement shall be
construed to be a waiver as to succeeding breaches.

         (h)      Severability. If any provision of this Agreement or  
application thereof to anyone under any circumstances is adjudicated to be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect any other provisions or applications of this
Agreement which can be given effect without the invalid or unenforceable
provision or application and shall not invalidate or render unenforceable such
provision in any other jurisdiction.

         (i)      Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures hereto were upon the same instrument.





                                      -7-
<PAGE>   8





         IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto duly executed this Agreement this 8th day of October, 1996.

                                                   TUFCO TECHNOLOGIES, INC.

ATTEST:

/s/ KATHY MANOS                                    By: /s/ GREG WILEMON
--------------------                                  --------------------

                                                   Title: CFO/COO
                                                          ----------------

WITNESS:

/s/ KATHY MANOS                                     /s/ LOUIS LECALSEY,III  
--------------------                               -----------------------
                                                   LOUIS LeCALSEY, III



                                      -8-
<PAGE>   9

                            TUFCO TECHNOLOGIES, INC.
                             3161 South Ridge Road
                              Green Bay, WI 54304

                                        October 8, 1996

Mr. Louis LeCalsey, III
4125 Dollar Lane
DePere, WI 54115

Dear Mr. LeCalsey:


         Pursuant to the 1992 Non-Qualified Stock Option Plan (the "Plan") of
Tufco Technologies, Inc. (the "Company"), the Board of Directors, as the Plan
Administrator, has granted to you as of the date above an option to purchase
50,000 shares of Common Stock of the Company (the "Stock Option") at the
purchase price of $7.00 per share (the "Option Price") subject to the terms and
conditions set forth below. The Stock Option is being granted to you in your
role as an employee of Tufco Technologies, Inc.

1.       Vesting and Option Price.

                 (a)      The Stock Option shall vest and become exercisable in
accordance with the following table.

<TABLE>
<CAPTION>
            Number of Shares               Exercisable
            ----------------               -----------
                 <S>                       <C>
                 17,000                    January 1, 1997
                 17,000                    October 1, 1997
                 16,000                    October 1, 1998
</TABLE>

                 (b)      The Stock Option will be exercisable as to each
installment (which becomes exercisable) for a period of five years after the
each vesting date and will not be exercisable after such date, notwithstanding
the extended periods specified in Paragraphs 3, 4 and 5.

         2.      Termination for Cause. The Stock Option may not be exercised
after the date of Termination of Employment if your employment with the Company
has been terminated for cause, such determination to be made by the Plan
Administrator in its sole discretion.

         3.      Death. If there is a Termination of Employment due to your
death while you are an employee of the Company, the Stock Option may be
exercised by your personal representative at any time prior to the expiration
of one year after the date of your death.

         4.      Retirement and Total Disability. If there is a Termination of
Employment by reason of your Retirement or Total Disability, the Stock Option
shall be exercisable at any time
<PAGE>   10
Mr. Louis LeCalsey, III
October 8, 1996
Page 2


prior to the expiration of three months in the case of Retirement and one year
in the case of Total Disability after the date of such Termination of
Employment. If you die during the three months following your Retirement or the
one year following your Total Disability, the Stock Option may be exercised by
your personal representative at any time prior to the expiration of one year
after the date of Termination of Employment.

         5.       Other Termination. If there is a Termination of Employment
for any reason other than those specified in Paragraphs 2, 3 and 4 above, you
may exercise the Stock Option for a 45-day period following the date of
Termination of Employment. If you die during this 45-day period, the Stock
Option may be exercised by your personal representative at any time prior to
the expiration of one year after the date of Termination of Employment.

         6.       Assignment and Transfer. The Stock Option may not be assigned
or transferred and (except as provided in paragraph 7 below) is exercisable
only by you.

         7.       Death. In the event of your death, your personal 
representative shall act on behalf of your estate for all purposes of this
Agreement, and all provisions herein that would impose obligations on or grant 
rights to you on or following your death shall be deemed to apply to your 
personal representative upon your death.

         8.       Payment Method. The Stock Option may be exercised in whole or
in part by tendering a check for the Option Price to the Company, or as
otherwise may be permitted under the Plan, together with a written notice
indicating that the Stock Option is being exercised and the number of shares
being purchased. The Company will then issue to you a certificate for the shares
being purchased by you.

                                   * * * * *

         By execution of this letter, you represent that you will be acquiring
the shares subject to the Stock Option for your own account and you acknowledge
that these shares have not been registered under the Securities Act of 1933, as
amended (the "1933 Act"), and agree that you will not sell, transfer or assign
these shares without an effective registration statement under the 1933 Act or
an opinion of counsel, satisfactory to the Company, that registration under the
1933 Act is not required.

         Unless otherwise defined herein, all capitalized terms in this letter
shall have the meanings given to them in the Plan. The Stock Option is subject
to the terms and conditions of the Plan, a copy of which has been given to you
along with this letter.
<PAGE>   11
Mr. Louis LeCalsey, III
October 8, 1996
Page 3

                                    TUFCO TECHNOLOGIES INC.
                                    
                                    By: /s/ ROBERT J. SIMON
                                        -------------------
                                        Robert J. Simon
                                        Chairman
AGREED:


/s/ LOUIS LeCALSEY, III
-----------------------
LOUIS LeCALSEY, III