Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) On September 18, 2009, Tower Financial Corporation entered into a new employment agreement with Richard R. Sawyer, the Company's Chief Financial Officer, effective November 27, 2009. Mr. Sawyer's existing contract, dated November 27, 2007, will remain in full force and effect until the commencement of the new contract.

Mr. Sawyer will receive an annual base salary of $135,000, which is the same base salary, without any increase for 2010, as that provided under his current employment agreement but will be subject from time to time to periodic review. He will also be eligible for consideration of a discretionary bonus, if approved by the Board of Directors on the recommendation of the Compensation Committee. Concurrently with his execution of the new employment agreement, Mr. Sawyer received a one-time payment of $5,400.

The term of the employment agreement may be extended for additional two year periods, on the same terms and conditions, at the Company's election, by giving Mr. Sawyer timely notice of extension on or prior to the ninetieth (90th) day prior to the expiration of the term (or any extended term), subject, however, to Mr. Sawyer's concurrence within thirty days after the notice date. If the Company does not provide such notice, or if Mr. Sawyer does not concur, the contract will terminate on the expiration date.

In the event that the Company does not elect to extend Mr. Sawyer's contract, he will be entitled to receive, following the expiration of the term or any extended term, a Post-Employment Payment, payable in cash within thirty days of his separation from service, but subject to delayed payment as required by
Section 409A of the Internal Revenue Code, equal to nine months of his base salary. In the event that, although the Company opted to extend the contract, Mr. Sawyer declines, he would be entitled, following expiration of the contract, only to any earned but unpaid base salary, any pro rate bonus for the calendar year to the date of separation from service, and any unpaid vacation pay and unreimbursed expenses.

Should the Company terminate Mr. Sawyer's contract mid-term and without cause, as defined in the contract, then, in addition to immediate vesting of all unvested stock options, if any, or restricted stock, Mr. Sawyer would be entitled to receive any earned but unpaid base salary to the date of termination, any earned but unpaid vacation and unreimbursed expenses, and a Severance Amount, payable in cash within thirty days following his separation from service (but subject to any required delayed payment under IRC Section 409A) equal to the greater of (i) his base salary, pro rated monthly, multiplied by the number of remaining months of the unexpired term, or (ii) twelve months base salary. A similar Post-Employment Payment would be payable to Mr. Sawyer, and the same automatic vesting benefits, in the event that during the contract period, and within three months prior or twelve months after a Change in Control, as defined, his employment is terminated by the Company without Cause.

Item 9.01 Financial Statement and Exhibits

A copy of Employment Agreement is attached hereto as exhibit 99.1

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