<PAGE>
                                                                    EXHIBIT 10.3

                       AGREEMENT AMENDING AND RESTATING

                             EMPLOYMENT AGREEMENT
 





                                    BETWEEN



                              DRYPERS CORPORATION




                                      AND




                                 JOE D. TANNER




                                APRIL 22, 1998
<PAGE>
 
                               TABLE OF CONTENTS

                                                                            PAGE

1.   EMPLOYMENT............................................................    1

2.   SCOPE OF EMPLOYMENT...................................................    1

3.   VACATION..............................................................    2

4.   COMPENSATION..........................................................    2

5.   TERM..................................................................    2

6.   ADJUSTMENTS UPON TERMINATION BY EMPLOYER..............................    6

7.   EXPENSES..............................................................    7

8.   EMPLOYEE BENEFITS.....................................................    7

9.   NON-COMPETITION.......................................................    7

10.  DISCLOSURE OF CONFIDENTIAL INFORMATION................................   10

11.  TRADE SECRETS.........................................................   10

12.  LEGAL FEES AND EXPENSES...............................................   11

13.  ASSIGNMENT............................................................   11

14.  SUCCESSORS............................................................   11

15.  ENTIRE AGREEMENT......................................................   11

16.  GOVERNING LAW.........................................................   11

17.  WAIVER................................................................   11

18.  ENFORCEABILITY........................................................   11

19.  NOTICES...............................................................   12

20.  ARBITRATION...........................................................   12

                                       i
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                             EMPLOYMENT AGREEMENT

  THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of the 22nd day of April,
1998, between Drypers Corporation, a Delaware corporation (the "Employer"), and
Joe D. Tanner (the "Employee"),


                             W I T N E S S E T H:
                             - - - - - - - - - - 


  WHEREAS, the Employer desires to obtain the services of the Employee, and the
Employee desires to be employed by the Employer upon the terms and conditions
hereinafter set forth; and

  WHEREAS, the Employer and the Employee entered into an Employment Agreement
made as of March 17, 1997 (the "Employment Agreement"), by which Employer
employed the Employee, and the Employee agreed to serve the Employer, in the
capacity, for the term, and subject to the conditions specified therein, and

  WHEREAS, Employer and the Employee wish to amend and restate the Employment
Agreement and wish to enter into an agreement on a long-term basis for the full-
time services of Employee;

  NOW, THEREFORE, in consideration of the premises, the agreements herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree that the Employment Agreement is hereby
amended and restated effective as of the date hereof as follows:

     1. EMPLOYMENT. Subject to the terms and conditions hereinafter set forth,
  the Employer hereby agrees to employ the Employee, and the Employee hereby
  agrees to serve the Employer, in the capacity and for the Term of Employment
  specified herein.

     2. SCOPE OF EMPLOYMENT. During the Term of Employment hereunder, the
  Employee will serve as Executive Vice President and Chief Operating Officer --
  International of the Employer in accordance with the provisions of Article V,
  Section 5.8 of the By-Laws of the Employer. In that connection, the Employee
  will:

        (a) devote his full time, attention, and energies to the business of the
     Employer and will diligently and to the best of his ability perform all
     duties incident to his employment hereunder;

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<PAGE>
 
        (b) use his best efforts to promote the interests and goodwill of the
     Employer; and

        (c) perform such other duties commensurate with his office as the Board
     of Directors of the Employer may from time-to-time assign to him.

The foregoing shall not be construed as preventing the Employee from making
investments in other businesses or enterprises provided such investments do not
require the provision of substantial services by the Employee to the operations
or the affairs of such businesses or enterprises such that the provision thereof
would interfere in any respect with the performance of the Employee's duties
hereunder.


  3. VACATION. During the Term of Employment the Employee shall be entitled to
sick leave, holidays, and an annual four-week vacation, all in accordance with
the regular policy of the Employer, during which time his compensation shall be
paid in full. Each such vacation shall be taken by the Employee at such times as
may be mutually agreed upon by the Employee and Employer.

  4. COMPENSATION. As compensation for his services hereunder and in
consideration of his agreement not to compete as set forth in Section 9, the
Employer shall:

     (a) during the Term of Employment pay the Employee, subject to the terms
  and conditions of this Agreement, a base salary at the rate of not less than
  $175,000.00 per year, payable in accordance with the normal payroll practices
  of the Employer but in no less than equal bi-weekly installments; and

     (b) during the Term of Employment as additional compensation for services
  hereunder during the term of this Agreement, the Employee shall be entitled to
  an annual bonus in amount as shall be determined by the Co-Chief Executive
  Officers of the Employer for each of the Company's fiscal years ending after
  the date hereof.

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<PAGE>
 
  5. TERM.

     (a) The "Term of Employment", as used herein, shall mean a period
  commencing on the date hereof and ending on the third anniversary (the "Ending
  Date") of the receipt by the Employee of written notice of termination by the
  Employer given to the Employee; provided however that the occurrence of any of
  the following events set forth in this Section 5(a) prior to the Ending Date
  shall result in the immediate termination of the Term of Employment, but shall
  not result in the termination of this Agreement:

          (i) the commission by the Employee of an act constituting a dishonest
          or other act of material misconduct, or a fraudulent act or a felony
          under the laws of any state or of the United States to which the
          Employer or Employee is subject, and such act results (or is intended
          to result directly or indirectly) in the Employee's substantial gain
          or personal enrichment to the detriment of the Employer;
        
          or

          (ii) the death of the Employee;

          or

          (iii) the inability of the Employee to perform his duties hereunder,
          whether by reason of injury (physical or mental), illness or
          otherwise, incapacitating him for a continuous period exceeding three
          months, excluding any leaves of absence approved by the Employer;

          or

          (iv) the Employee resigns at any time other than after a Change in
          Control (as defined in Section 6(d)) without Good Cause ("Good Cause"
          being defined below).

          (b) The term "Good Cause" shall mean the occurrence of any of the
       following events:

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<PAGE>
 
          (i) the assignment by the Employer to the Employee of duties that are
          materially inconsistent with the Employee's office with Employer at
          the time of such assignment, or the removal by the Employer from the
          Employee of a material portion of those duties usually appertaining to
          the Employee's office with the Employer at the time of such removal;

          or

          (ii) a material change by the Employer, without the Employee's prior
          written consent, in the Employee's responsibilities to the Employer,
          as such responsibilities are ordinarily and customarily required from
          time to time of an executive vice president of a corporation engaged
          in the Employer's business;

          or

          (iii) any removal of the Employee from, or any failure to reelect or
          to reappoint the Employee to, the office stated in Section 2;

          or

          (iv) the Employer's direction that the Employee discontinue service
          (or not seek reelection or reappointment) as a director, officer or
          member of any corporation or association of which the Employee is a
          director, officer, or member at the date of this Agreement;

          or

                                       4
<PAGE>
 
          (v) a reduction by the Employer in the amount of the Employee's base
          salary as determined under this Agreement (or as subsequently
          increased), or the failure of the Employer to pay such base salary to
          the Employee at the time and in the manner specified in Section 4;

          or

          (vi) other than with respect to the annual performance bonus specified
          in Section 4(b) or, as made with the Employee's prior written consent,
          the discontinuance (without comparable replacement) or material
          reduction by the Employer of the Employee's participation in any bonus
          or other employee benefit arrangement (including, without limitation,
          any profit-sharing, thrift, life insurance, medical, dental,
          hospitalization, stock option or retirement plan or arrangement) in
          which the Employee is a participant under the terms of this Agreement,
          as in effect on the date hereof or as may be improved from time to
          time hereafter;

          or

          (vii) the moving by the Employer of the Employee's principal office
          space, related facilities, or support personnel, from the Employer's
          principal operating offices in Vancouver, Washington, or the
          Employer's requiring the Employee to perform a majority of his duties
          outside the Employer's principal operating offices in Vancouver,
          Washington for a period of more than 30 consecutive days;

          or

                                       5
<PAGE>
 
          (viii) the relocation, without the Employee's prior written consent,
          of the Employer's principal operating offices to a location outside
          the county in which such offices are located at the time of the
          signing of this Agreement;

          or

          (ix) in the event the Employer requires the Employee to reside at a
          location more than 25 miles from the Employer's principal operating
          offices, except for occasional travel in connection with the
          Employer's business to an extent and in a manner which is
          substantially consistent with the Employee's current business travel
          obligations;

          or

          (x) in the event the Employee consents to a relocation of the
          Employer's principal operating offices, the failure of the Employer to
          (A) pay or reimburse the Employee on an after-tax basis for all
          reasonable moving expenses incurred by the Employee in connection with
          such relocation or (B) indemnify the Employee on an after-tax basis
          against any loss realized by the Employee on the sale of his principal
          residence in connection with such relocation;

          or

          (xi) the failure of the Employer to provide the Employee with the
          benefits specified under Section 8;

          or

          (xii) the failure of the Employer to continue to provide the Employee
          with office space, related facilities and support personnel
          (including, without limitation, administrative and secretarial
          assistance) that are commensurate with the Employee's responsibilities
          to and position with the Employer;

                                       6
<PAGE>
 
          or

          (xiii) the failure by the Employer to promptly reimburse the Employee
          for the reasonable business expenses incurred by the Employee in the
          performance of his duties for the Employer, as set forth in Section 7.

  6.  ADJUSTMENTS UPON TERMINATION BY EMPLOYER.

     (a) Subject to the provisions of paragraph (b) of this Section 6, in the
  event of termination of the Term of Employment for any reason specified in
  Section 5(a) above, the Employer shall no longer be obligated to make the
  payments specified under Section 4 or to provide the benefits under Section 8;
  provided, however, any payments payable under Section 4 which shall have been
  earned but not yet paid shall be paid by the Employer to the Employee, and the
  Employee shall pay any amount or amounts then owed by the Employee to the
  Employer.

     (b) In the event of the termination of the Term of Employment for any
  reason other than pursuant to an event specified in Section 5(a) above, the
  Employer shall, until the third anniversary of the date of such termination
  continue to be obligated to (i) make the payments specified under Section 4,
  (ii) provide the benefits specified under Section 8(b), and (iii) maintain the
  Employee as a participant in, or provide benefits comparable to those of, the
  health insurance benefit plan specified under Section 8(a). In the event of
  such termination, the Employee may elect, upon 30 days prior written notice of
  such election delivered to the Employer to have the remaining amounts payable
  to him pursuant to this Section 6(b) paid in a lump sum amount, which amount
  shall be computed by discounting to present value such remaining amounts
  payable to the Employee at a rate of 8% per annum for each payment otherwise
  owed to the Employee through the remaining months in such Term of Employment.

                                       7
<PAGE>
 
     (c) Under no circumstances shall the Employee be required to mitigate the
  amount of payment specified in Section 4 which is payable during the Term of
  Employment specified in paragraph (b) of this Section 6.

     (d) A "Change in Control" shall be deemed to have occurred at any time
  after the date of this Agreement that (i) any person (other than those persons
  who own more than 10% of the combined voting power of the Employer's
  outstanding voting securities on the date hereof) becomes the beneficial
  owner, directly or indirectly, of 30% or more of the combined voting power of
  the Employer's then outstanding voting securities, or (ii) the individuals who
  at the beginning of any period of two consecutive years constitute the
  Employer's Board of Directors cease for any reason to constitute a majority of
  such Board of Directors at any time during such two-year period.

  7. EXPENSES. The Employer agrees that during the Term of Employment it will
reimburse the Employee for out-of-pocket expenses reasonably incurred by him in
connection with the performance of his service hereunder upon the presentation
by the Employee of an itemized monthly accounting of such expenditures,
including receipts where required for federal income tax regulations.

  8. EMPLOYEE BENEFITS.  During the Term of Employment:

     (a) Employee shall, upon satisfaction of any eligibility requirements with
  respect thereto, be entitled to participate in all employee benefit plans of
  Employer, including without limitation those health, dental, accidental death
  and dismemberment, and long term disability plans of Employer now or hereafter
  in effect that are made available to executive officers of the Employer; and

     (b)  Employer shall maintain for Employee the benefits summarized on
  Exhibit A attached hereto.

                                       8
<PAGE>
 
  9. NON-COMPETITION.

     (a) Employee acknowledges that he shall receive special training and
  knowledge from Employer. Employee acknowledges that included in the special
  knowledge received is the confidential information identified in Paragraph 10
  below. Employee acknowledges that this confidential information is valuable to
  Employer and, therefore, its protection and maintenance constitutes a
  legitimate interest to be protected by Employer by this covenant not to
  compete. Therefore, Employee agrees that for the period (the "Noncompetition
  Period") (i) during the Term of Employment and (ii) in the event of a
  termination of the Term of Employment upon the occurrence of an event set
  forth in Section 5(a) hereof, commencing upon the occurrence of such event set
  forth in Section 5(a) and ending upon the first anniversary thereof, in each
  case unless otherwise extended pursuant to the terms hereof, Employee will
  not, directly or indirectly, either as an employee, employer, consultant,
  agent, principal, partner, stockholder, corporate officer, director, or in any
  other individual or representative capacity, engage or participate in any
  business that is engaged in the manufacture or marketing of disposable baby
  diapers, disposable training pants or pre-moistened wipes within the United
  States of America or within any other geographic area of the world where the
  Employer engages or proposes at the time of the termination of the Term of
  Employment to engage in business. Employee represents to Employer that the
  enforcement of the restriction contained in this Section 9 would not be unduly
  burdensome to Employee and that in order to induce the Employer to provide for
  the Term of Employment as set forth in Section 5 hereof, Employee further
  represents and acknowledges that Employee has entered into this agreement not
  to compete and is willing and able to compete in other geographical areas not
  prohibited by this Section 9.

     (b) Employee agrees that a breach or violation of this covenant not to
  compete by such Employee shall entitle the Employer, as a matter of right, to
  an injunction issued by any court of competent jurisdiction, restraining any
  further or continued breach or violation of this covenant. Such right to an
  injunction shall be cumulative and in addition to, and not in lieu of, any
  other remedies to which the Employer may show

                                       9
<PAGE>
 
  itself justly entitled. Further, during any period in which Employee is in
  breach of this covenant not to compete, the time period of this covenant shall
  be extended for an amount of time that Employee is in breach hereof.

     (c) In addition to the restrictions set forth in paragraph (a) of this
  Section 9, Employee shall not for the Noncompetition Period, either directly
  or indirectly, (i) make known to any person, firm or corporation that is
  engaged in the manufacture or marketing of disposable baby diapers, disposable
  training pants or pre-moistened wipes, the names and addresses of any of the
  customers of the Employer or contacts of the Employer or any other information
  pertaining to such persons or (ii) call on, solicit, or take away, or attempt
  to call on, solicit or take away any of the customers of the Employer on whom
  Employee called or with whom Employee became acquainted during Employee's
  association with the Employer, whether for Employee or for any other person,
  firm or corporation.

     (d) The representation and covenants contained in this Section 9 on the
  part of Employee will be construed as ancillary to and independent of any
  other provision of this Agreement, and the existence of any claim or cause of
  action of Employee against Employer or any officer, director, or shareholder
  of Employer, whether predicated on this Agreement or otherwise, shall not
  constitute a defense to the enforcement by Employer of the covenants of the
  Employee contained in this Section 9. In addition, the provisions of this
  Section 9 shall continue to be binding upon Employee in accordance with its
  terms, notwithstanding the termination of Employee's employment for any
  reason.

     (e) If Employee violates any covenant contained in this Section 9 and
  Employer brings legal action for injunctive or other relief, the Employer
  shall not, as a result of the time involved in obtaining the relief, be
  deprived of the benefit of the full period of any such covenant. Accordingly,
  the covenants of Employee contained in this Section 9 shall be deemed to have
  durations as specified above, which periods shall commence upon the later of
  (i) the Ending Date and (ii) the date of entry by a court of competent
  jurisdiction of a final judgment enforcing the covenants of Employee in this
  Section 9.

                                       10
<PAGE>
 
     (f) The parties to this Agreement agree that the limitations contained in
  this Section 9 with respect to geographic area, duration, and scope of
  activity are reasonable. However, if any court shall determine that the
  geographic area, duration, or scope of activity of any restriction contained
  in this Section 9 is unenforceable, it is the intention of the parties that
  such restrictive covenant set forth herein shall not thereby be terminated but
  shall be deemed amended to the extent required to render it valid and
  enforceable.

  10. DISCLOSURE OF CONFIDENTIAL INFORMATION. During the Term of Employment, the
Employee will disclose to Employer all ideas and business plans developed by him
during such period which relate directly to the business of Employer. The
Employee recognizes and acknowledges that he may have access to certain
additional confidential information of Employer or of certain corporations
affiliated with Employer, and that all such information constitutes valuable,
special and unique property of Employer and its affiliates. The Employee agrees
that, during the Term of Employment and for a period of five years after the
termination of the Term of Employment, he will not, without the prior written
consent of Employer, disclose or authorize or permit anyone under his direction
to disclose to anyone not properly entitled thereto any of such confidential
information. For purposes of the immediately preceding sentence, persons
properly entitled to such information shall be (i) the Board of Directors of
Employer and such officers, employees and agents of Employer or any affiliate
thereof to whom such information is furnished in the normal course of business
under established policies approved by Employer and (ii) such outside parties as
are legally entitled to or are customarily furnished such information, including
banking, lending, collection, accounting, and data processing institutions or
agencies who or which are provided such information in the normal course of
business of Employer. The Employee further agrees that upon termination of the
Term of Employment he will not take with him or retain, without the prior
written authorization of Employer, any papers, procedural or technical manuals,
customer lists, customer account analyses (including, without limitation,
accounts receivable agings, customer payment histories and customer account
activity reports), price books, files or other documents or copies thereof
belonging to Employer or to any affiliate of Employer, or any materials,
supplies, equipment or furnishings belonging to Employer or to any affiliate of
Employer, or any other confidential information of any kind belonging to
Employer or any affiliate of Employer. In the event of a breach or threatened
breach by the Employee of the provisions of this Section 10, Employer and the
Employee 

                                       11
<PAGE>
 
agree that the remedy at law available to Employer and its affiliates would be
inadequate and that Employer and its affiliates shall be entitled to an
injunction, without the necessity of posting bond therefor, restraining the
Employee from disclosing, in whole or in part, such confidential information.
Nothing herein shall be construed as prohibiting Employer and its affiliates
from pursuing any other remedies, in addition to the injunctive relief available
under this Section 10, for such breach or threatened breach, including the
recovery of damages from the Employee.

  11. TRADE SECRETS. All patents, formulae, inventions, processes, copyrights,
proprietary information, trademarks or trade names, or future improvements to
patents, formulae, inventions, processes, copyrights, proprietary information,
trademarks or trade names, developed or completed by the Employee during the
Term of Employment (collectively, the "Items") shall be promptly disclosed to
Employer, and the Employee shall execute such instruments of assignment of the
Items to the Employer as Employer shall request. The Employee acknowledges that
a remedy at law for any breach by him of the provisions of this Section 11 would
be inadequate, and the Employee hereby agrees that Employer shall be entitled to
injunctive relief in case of any such breach.

  12. LEGAL FEES AND EXPENSES. In the event that either of the parties to this
Agreement contests the validity or enforceability of any of the provisions of
Sections 9, 10 or 11 hereof, then such contesting party hereby agrees to pay in
a timely and prompt manner any and all legal fees and expenses incurred by the
other party from time to time as a result of such contesting party's contesting
of the validity or enforceability of any provision of Sections 9, 10, or 11
hereof this Agreement; provided, however, nothing contained in this Section 12
shall obligate the Employer to pay any legal fees or expenses incurred by the
Employee in connection with any litigation by the Employer against the Employee
to enforce the terms of this Agreement against the Employee.

  13. ASSIGNMENT. This Agreement is a personal employment contract and the
rights and interests of the Employee hereunder may not be sold, transferred,
assigned, pledged, or hypothecated, directly or indirectly, or by operation of
law or otherwise.

  14. SUCCESSORS. This Agreement shall inure to the benefit of and be binding
upon the Employer and its successors and assigns and upon the Employee and his
legal representatives.

  15. ENTIRE AGREEMENT. This Agreement, which contains the entire contractual
understanding between the parties, may not be changed 

                                       12
<PAGE>
 
orally but only by a written instrument signed by the Employee and the Chairman
of the Board of Directors of the Employer.

  16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, and Employee agrees to subject
himself to the jurisdiction of the Southern District of Texas.

  17. WAIVER. The waiver of any breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any other breach of
the same or any other term or condition.

  18. ENFORCEABILITY. In the event any provision of this Agreement is found to
be unenforceable or invalid, such provision shall be severable from this
Agreement and shall not affect the enforceability or validity of any other
provision contained in this Agreement.

  19. NOTICES. Any notices or other communications required or permitted
hereunder shall be sufficiently given if sent by registered mail, postage
prepaid, and

     (a)  if to the Employee, addressed to him at 17507 N.E. 33rd Avenue,
  Ridgefield, Washington 98642, and

     (b) if to the Employer, addressed to it at 5300 Memorial, Suite 900,
  Houston, Texas 77007 (Attention: Chairman of the Board of Directors), or such
  other address as the party to whom or to which such notice or other
  communication is to be given shall have specified in writing to the other
  party, and any such notice or communication shall be deemed to have been given
  as of the date so mailed.

  20. ARBITRATION. Employer and Employee agree to submit to final and binding
arbitration any and all disputes, claims (whether in tort, contract, statutory,
or otherwise) and/or disagreements concerning the interpretation or application
of this Agreement and/or Employee's employment by Employer and/or the
termination of this Agreement and/or Employee's employment by Employer;
PROVIDED, HOWEVER, notwithstanding the foregoing, in no event shall any dispute,
claim or disagreement arising under Section 9 of this Agreement be submitted to
arbitration pursuant to this Section 18 or otherwise. Any such dispute, claim
and/or disagreement subject to arbitration pursuant to the terms of this Section
18 shall be resolved by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the 

                                       13
<PAGE>
 
"AAA"). Arbitration under this provision must be initiated within 30 days of the
action, inaction, or occurrence about which the party initiating the arbitration
is complaining. Within ten days of the initiation of an arbitration hereunder,
each party will designate an arbitrator pursuant to Rule 14 of the AAA Rules.
The appointed arbitrators will appoint a neutral arbitrator from the panel in
the manner prescribed in Rule 13 of the AAA Rules. Employee and Employer agree
that the decision of the arbitrators selected hereunder will be final and
binding on both parties. This arbitration provision is expressly made pursuant
to and shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections 
1-14. The parties hereto agree that pursuant to Section 9 of the Act that a
judgment of the United States District Court for the Southern District of Texas,
shall be entered upon the award made pursuant to the arbitration.

   IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed by
its duly authorized officer, and the Employee has executed this Agreement as of
the date first above written.



                         DRYPERS CORPORATION


                                  /s/ RAYMOND M. CHAMBERS
                         By_____________________________________________________
                                      Raymond M. Chambers
                                      Co-Chief Executive Officer


                         EMPLOYEE


                         /s/ JOE D. TANNER
                         -------------------------------------------------------
                                      Joe D. Tanner

                                       14
<PAGE>
 
                                   EXHIBIT A

                      HEALTH AND WELFARE BENEFITS SUMMARY
                                        

 .  Group comprehensive medical, dental, and term life insurance.  Eighty 
   percent of the premiums for Employee and his dependents are paid by Employer.

 .  Participation in the Company's 401k plan.


                           OTHER EMPLOYEE PERQUISITES
                                        

 .  Use of a car not more than (30 months old, with monthly lease payment not to
   exceed $750), such car to be equipped with a cellular phone, as well as all
   costs and expenses incurred in operating such car, including gas, service and
   maintenance charges, parts, fees for inspection and license plates, parking
   and tolls, and cellular phone equipment, installation and use charges.

 .  Income tax preparation costs.

 .  All reasonable costs for licensing and continuing education costs relating to
   Oregon and Washington Bar Association.



TANNER

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