<PAGE>   1
                              EMPLOYMENT AGREEMENT

         This Agreement is made as of the 1st day of October, 1996 between
Tufco Technologies, Inc., a Delaware corporation ("Tufco"), and Gregory L.
Wilemon (The "Employee").

                                    RECITALS

         Tufco desires to employ the Employee, and the Employee desires to
become an employee of Tufco, upon the terms and conditions hereinafter set
forth. Tufco Technologies, Inc., is a Delaware corporation ("Tufco").

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 its Chief Operating Officer, and
the Employee hereby accepts such employment. During the term of employment
under this Agreement (the "Employment Term"), the Employee shall perform such
duties as are required from time to time by the Chairman of the Board of Tufco
Technologies, the Board of Directors of Tufco Technologies (the "Board") or any
senior officer of Tufco Technologies, Inc.

2.       Performance.

         During the Employment Term, the Employee shall devote his entire 
business efforts to the performance of his duties hereunder.

3.       Term.

         Unless otherwise terminated in accordance with Sections 5 or
6, the Employment Term shall be for an initial term of two years commencing on
October 1, 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 its affiliated companies during the
Employment Term shall be $150,000 (the "Salary"), which Tufco shall pay to the
Employee in accordance with its normal payroll policy. Tufco may adjust the
Salary upward on an annual basis as the Board may determine, but the Salary
shall not be decreased.

         (b)      Commencing as of October 1, 1996, (the "Bonus Starting Date")
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 ("GAAP") and the Employee's bonus will vary as a
percentage of Salary in relation to the percentage achievement of that budget
as follows:
<PAGE>   2
<TABLE>
<CAPTION>
              Percentage of                      Percentage of Salary
             Budget Attained                       Earned as Bonus
             ---------------                       ---------------
                 <S>                                      <C>
             Less than 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 less than 90% of 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.
Notwithstanding the foregoing, the Employee's initial bonus period (the
"Initial Bonus Period") shall be the period starting with October 1, 1996, and
ending September 30, 1997, and Tufco shall use its budget for that period to
determine the Employee's eligibility for a bonus, and then apply the applicable
bonus percentage to that portion of the Employee's annual Salary that relates
to the Initial Bonus Period. The Employee's second bonus period shall be the
period beginning October 1, 1997 and ending with the last day of Tufco's fiscal
year, and Tufco shall prepare a budget for that period and determine the
Employee's eligibility for a bonus in the manner described for the Initial
Bonus Period.

         (c)      During the Employment Term, Tufco shall also provide the
Employee with those fringe benefits that are specified on Exhibit "A" hereto
(the "Fringe Benefits"). 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)      Stock Options. Options are granted periodically to selected
executives at the sole discretion of the Chairman of the Board of Directors. The
timing, the exercise price, as well as the vesting period and the number of
options (if any) will be determined annually by the Chairman of the Board of
Directors.

5.       Termination Without Compensation.

         (a)      Non-Renewal of Term. The Employment Term may be terminated
by Employee hereto as of the end of the initial term or any renewal term then in
effect by giving written notice of the intention to terminate the Employment
Term at least 30 days prior to the proposed termination date.

         (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, 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 the Employee pursuant to the terms of this





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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 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 6, 10 and 11 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. Any such willful misconduct or material neglect shall constitute
"cause" only if the action (or omission) at issue shall be continuing 30 days
after Tufco gives the Employee notice of such willful misconduct or material
neglect.

6.       Termination With 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 written notice of the intention to terminate the
Employment Term at least 90 days prior to the proposed termination date. If
Tufco terminated the Employment Term under such circumstances, Tufco shall
provide the Employee with the Termination Compensation specified in Section
6(c).

         (b)      Without Cause. 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 provide the
Employee with the Termination Compensation specified in Section 6(c).

         (c)      Termination Compensation. The "Termination Compensation"
shall consist of the following: (1) in the case of a termination by Tufco under
Section 6(a), payment of the Employee's Salary under Section 4(a), at the level
in effect at the date of termination, for the longer of (A) any remaining part
of the initial two-year term of the Employment Term or (B) one year. The
Employee shall not be entitled to any Termination Compensation under this
Section 6 unless the Employee executes and delivers to the Company after a
notice of termination a release in a form satisfactory to the Company in its
sole discretion by which the Employee releases the Company from any obligations
and liabilities of any type whatsoever, except for Tufco obligation to provide
the Salary specified in this Section 6. The parties hereto acknowledge that the
Salary to be provided under this Section 6 are to be provided in consideration
for the above-specified release.

         (d)      Exclusivity. Upon any termination by Tufco under Section
6(a), or Section 6(b), 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 provide the Termination Compensation under the terms
and conditions of Section 6(c). Upon any termination by the Employee under
Section 6(a), 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 to provide to the Employee any unpaid
Salary and Fringe Benefits that shall have accrued through the date of
termination.





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<PAGE>   4
7.       Agreement Not to Compete.

         (a)      During the non-Competition Period (defined below), the
Employee shall not, within the Restricted Area (defined below), directly or
indirectly, in any capacity, render his services, engage or have a financial
interest in, any business that is competitive with any of those business
activities in which Tufco, Tufco Industries, Inc. and Tufco Technologies, Inc.
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 the employees of any Tufco
Party (defined below) to terminate their employment with the applicable Tufco
Party. As used herein, the "Restricted Area" means the United States of America.
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 sum
of (A) the period of the Employee's employment hereunder, (B) any period during
which the Employee is paid any Termination Compensation (defined above) and (C)
an additional one year after the end of the later of the period in clauses (A)
and (B).

         (b)      The terms of this Section 5 shall apply to Employee and any
person, partnership, association, corporation or other entity (collectively, a
"Person") controlled by the Employee, including any relative 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.

         (c)      In the event of the voluntary or involuntary bankruptcy of
Employer or the filing of a plan for reorganization by Employer resulting in the
termination of the contract of employment or a situation giving rise to
circumstances by which Employer fails to make any payment of compensation set
forth in the Employment Agreement, Employee shall be relieved of all obligations
under the Employment Agreement relating to covenants against competition as set
forth in Section 7 of the Agreement.

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, Tufco or any person controlled by either or both
of them (any such party is referred to herein as a "Tufco Party") and all of the
Employee's right, title and interest therein, shall be the exclusive property of
the applicable Tufco Party. The Employee hereby assigns, transfers and conveys
to any applicable Tufco Party 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 disclose fully, as soon as practicable and in writing, all
Developments to the Board. At any time and from time to time, upon 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 any be necessary or desirable
to document such transfer or to enable any applicable Tufco Party to file and
prosecute applications for and to acquire, maintain and enforce any and all
patients, 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. The applicable Tufco Party will be responsible for the preparation of
any such instruments, documents and paper 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.





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<PAGE>   5
9.       Confidential Information.

         (a)      The Employee has had and will have possession of or access
to confidential information relating to the business of one or more Tufco
Parties, 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 customer, computer programs, or other material
embodying trade secrets, customer or product information or technical or
business information of certain Tufco Parties.  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 (1) use or exploit in any manner the Tufco Information for himself or
any Person other than a Tufco Party, (ii) remove any Tufco Information, or any
reproduction thereof, from the possession or control of any Tufco Party 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 the applicable Tufco Party. 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 7, 8 or 9 will be inadequate and that upon any such
breach or threatened breach, Tufco (or the applicable Tufco Party) 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 or the inadequacy of a legal remedy. Subject to the
remainder of this Section 10, the rights conferred upon Tufco (and any Tufco
Party) 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.

11.      Survival.

         Notwithstanding the termination of the Employment Term pursuant to 
Section 5 or 6, the obligations of the Employee under Sections 7, 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)      Interpretation. Unless the context of this Agreement
clearly requires otherwise, (i) references to the plural include the singular,
and to the singular include the plural, (ii) "or" has the inclusive meaning
frequently identified with the phrase "and/or" and (iii) "Including" has the
inclusive meaning frequently identified with the phrase "but not limited to."
The section and other headings contained in this Agreement are for reference
purposes only and shall not control or affect the construction or this Agreement
or the interpretation thereof in any respect. Section, subsection, schedule and
exhibit references are to this Agreement unless otherwise specified. Each
accounting term used herein that is not specifically defined herein shall have
the meaning given to it under GAAP.





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<PAGE>   6
         (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.
Any Tufco Party other than Tufco is a third party beneficiary of this Agreement
and may enforce the provisions of this Agreement that pertain to such Tufco
Party, including Sections 7, 8 and 9, to the same extent as if a party hereto.

         (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:                               TO:TUFCO

         Mr. Gregory L. Wilemon                     Tufco Technologies     
         One Shadowridge Court                      Attn: President/CEO    
         Frisco, TX 75034                           P.0. Box 23500         
                                                    Green Bay WI 54305-3500
        
                                       
                                       
                                       



         (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 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 7, 8 and 9.

         (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 validity 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.





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<PAGE>   7
         IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto duly executed this Agreement the day and year first written
above.

                                        TUFCO TECHNOLOGIES, INC.

                                        By: /s/ LOUIS LECALSEY
                                           -------------------------
                                              LOUIS LeCALSEY

                                            /s/ GREGORY L. WILEMON
                                           -------------------------
                                              GREGORY L. WILEMON
<PAGE>   8
                ADDENDUM TO EMPLOYMENT CONTRACT OF: Greg Wilemon

Tufco Technologies agrees to provide the benefits listed below to Greg Wilemon,
as a supplement to the employment contract dated 1 October 1996.

   -   Company paid health insurance, dental insurance, and disability
       insurance.

   -   Company paid life insurance policy in the amount of $1,000,000.
           
   -   Company paid country club membership.

   -   Immediate vesting of all stock option grants upon any significant change
       of ownership in Tufco Technologies.


                                                                  
                                       


   Agreed to by Tufco Technologies:
   
   PRINTED NAME OF EMPLOYEE: Greg Wilemon



   
   TUFCO TECHNOLOGIES:
   
   /s/ LOUIS LECALSEY
   -------------------
   LOUIS LECALSEY