<PAGE>
                                                                    EXHIBIT 10.5



                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of the 25th day of
April, 2002 (the "Effective Date"), by and between TOWER FINANCIAL CORPORATION,
an Indiana corporation (the "Company"), and KEVIN J. HIMMELHAVER (the
"Executive").

                                    RECITALS

         1. The Company is engaged in the business of operating a bank.

         2. The Executive has demonstrated his ability to serve as Executive
Vice President, Chief Financial Officer and Secretary of the Company and Tower
Bank & Trust Company.

         3. The parties desire to set forth in writing the terms and conditions
upon which the Executive's employment with the Company will continue.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions set forth herein, the Company and the Executive agree
as follows:

                                    ARTICLE I
                                 EMPLOYMENT TERM

         Section 1.01. Term. The term of this Agreement (the "Employment Term")
shall be for a period of three (3) year(s), commencing on the Effective Date and
terminating on April 25, 2005. Notwithstanding the foregoing, the Employment
Term is subject to termination prior to the expiration thereof under the terms
and conditions set forth in Article VIII.

         Section 1.02. Renewal. The term of this Agreement shall automatically
be renewed for successive terms of equal duration to the initial Employment Term
(which period shall also be referred to as the "Employment Term"), unless either
party provides the other written notice of its intent not to renew for a
successive term at least sixty (60) days prior to the last day of the then
current term.

                                   ARTICLE II
                                   EMPLOYMENT

         During the Employment Term, the Executive shall be employed by the
Company and Tower Bank & Trust Company as its Executive Vice President, Chief
Financial Officer and Secretary or in such other capacity as shall be approved
by the Board of Directors of the Company. In such capacity, the Executive shall
have the duties, authority and powers granted to the Executive by the Company's
Chief Executive Officer from time to time.


<PAGE>
                                   ARTICLE III
                               DEVOTION TO DUTIES

         During the Employment Term, the Executive shall devote his full time,
attention, skill and effort to the operations of the Company and shall not
engage in any other business activity requiring any substantial amount of his
time (whether or not such business activity is pursued for gain, profit or
pecuniary advantage). With prior written approval from the highest ranking
officer of the Company, the Executive may engage in other business interests
which materially prevent the Executive from performing his contemplated services
hereunder on behalf of Company.

                                   ARTICLE IV
                              REGULAR COMPENSATION

         The Company shall pay to the Executive as compensation for his services
and for his covenants and other obligations hereunder an annual base salary (the
"Salary") in the amount of One hundred and twenty three thousand one hundred
dollars ($123,100), payable in accordance with the regular and customary payroll
practices of the Company. The Salary may be increased from time to time by
action of the Compensation Committee of the Board of Directors of the Company.

                                    ARTICLE V
                               BONUS COMPENSATION

         The Compensation Committee of the Board of Directors of the Company may
authorize the payment to the Executive of additional compensation by way of
salary, bonus or otherwise, as it deems appropriate, during the term of this
Agreement or any extension hereof. All compensation shall be subject to
customary withholding and other employment taxes required with respect to
compensation paid by a corporation to an employee.

                                   ARTICLE VI
                                  STOCK OPTIONS

         The Executive shall be eligible to participate in such stock option or
incentive plans as may be adopted by the Company from time to time; provided,
however, the Company reserves the right to determine the number of options, if
any, and the terms of such grant.





                                       2
<PAGE>

                                   ARTICLE VII
                          EXPENSES AND FRINGE BENEFITS

         The Company shall reimburse the Executive for all ordinary and
necessary business expenses incurred by him while carrying out his employment
responsibilities under this Agreement. The Executive shall be entitled to
participate in such vacation policies; medical, dental, life and disability
insurance programs; 401(k), profit sharing and any other retirement plans; and
other fringe benefit plans or programs as the Company from time to time shall
establish for its senior management and/or other full time employees, provided
he is otherwise qualified to participate in such plans or programs. The Company
retains the right to establish limits on the types or amounts of business
expenses that the Executive may incur and to abolish or alter the terms of any
fringe benefit plan or program that it may establish.

                                  ARTICLE VIII
                                   TERMINATION

         Section 8.01. Reasons for Termination. The Employment Term of the
Executive shall be terminated upon the occurrence of any of the following
events:

         (a) Immediately upon the death of the Executive.

         (b) At the Company's option, upon the Executive's (i) violation of a
material Company policy or failure to perform any of his material duties or
obligations under this Agreement; or (ii) upon any dishonesty or any kind of
willful misconduct of the Executive, including but not limited to, theft of or
other unauthorized personal use of Company funds (termination under (i) or (ii)
shall mean for "Cause"). The Executive may be terminated under paragraph
8.01(b)(i) only following thirty (30) days' written notice to the Executive
explaining the basis of the termination and his failure to cure such breach
within thirty (30) days of the date of the Company's notice. The Executive may
be terminated under paragraph 8.01(b)(ii) only following ten (10) days' written
notice to the Executive of the basis for the termination and an opportunity to
dispute the same.

         (c) At the Company's option, if the Executive shall suffer a permanent
disability. For purposes of this Agreement, "permanent disability" shall be
defined as the Executive's inability through physical or mental illness or other
cause to perform the essential functions of Executive's position, with or
without reasonable accommodation, in the reasonable opinion of the Company, for
a period of six months during the term of this Agreement.

         (d) At the Company's option, without Cause, upon thirty (30) days'
prior written notice.

         (e) At the Executive's option, without cause, at any time.

         (f) At the Executive's option, upon the Company's breach of any of its
material obligations under this Agreement or for Good Cause; provided that
Executive has given the Company at least ten (10) days' prior written notice of
the nature of such breach and the




                                       3
<PAGE>

Company has failed to cure such breach within a thirty (30) day period. For
purposes herein, "Good Cause" means without the Executive's express written
consent, the assignment to the Executive of any duties or responsibilities
inconsistent with the Executive's position, or a material change in the
Executive's reporting responsibilities, titles or offices as described under
Article II, or any removal of the Executive from, or any failure to re-elect the
Executive to, any such positions, except in connection with the termination of
the Executive's for Cause, or his disability, retirement or death.

         Section 8.02. Compensation Upon Termination.

         (a) Should the employment of the Executive be terminated under
subsection (a) or (c) of Section 8.01 of this Agreement, the Company shall pay
to the Executive (or his personal representative), within ten (10) business days
after the date of termination, a sum equal to the aggregate amount of Salary
that was paid to the Executive under this Agreement for the one-month period
preceding such date of termination, excluding any payments under Article V.

         (b) Should the employment of the Executive be terminated under
subsection (b) or (e) of Section 8.01 of this Agreement, the Executive shall be
paid his Salary up to the date of termination and any bonus compensation accrued
but unpaid for any prior Employment Year.

         (c) Should the employment of the Executive be terminated under
subsection (d) or (f) of Section 8.01 of this Agreement, the Company shall pay
to the Executive, within ten (10) business days after the date of termination, a
sum equal to the greater of two (2) times his Salary at the then-effective rate
paid to Executive or the remaining term of this Agreement times his Salary at
the then-effective rate.

         (d) Should the employment of the Executive be terminated under
subsection (a), (c), (d) or (f) of Section 8.01 of this Agreement, the Company
shall pay to the Executive (or his personal representative), in addition to the
Salary specified in subsection (a) or (c), as applicable, of this Section 8.02,
any bonus compensation accrued but unpaid for any prior Employment Year. Except
for a termination as a result of Executive's death, no pro-rated portion of any
bonus compensation for the current Employment Year shall be payable. In the
event of death, Executive's estate shall be eligible to receive a pro-rated
bonus, subject to the terms of the bonus program. Bonus compensation for the
prior Employment Year and, in the event of death, the current Employment Year
shall be paid within sixty (60) days after the end of such Employment Year.

         (e) If the Company provides notice under Section 1.02 of its intent not
to renew without Cause, then the Executive shall receive one hundred percent
(100%) of the amount determined under Section 8.02(c); provided, however, that
the Executive must continue to work until the last day of the Employment Term.

         (f) Payments to the Executive under this Section 8.02 shall be
considered severance pay in consideration of the Executive's past service and in
consideration of his continued service from the date hereof. The Company may, at
its discretion, withhold from such payments any federal, state, city, county or
other taxes. In the event of the termination of the employment of





                                       4
<PAGE>

the Executive for any reason described in Section 8.01 of this Agreement, the
severance pay provided for by this Section 8.02 shall constitute the entire
obligation of the Company to the Executive and full settlement of any claim
under law or in equity that the Executive might otherwise assert against the
Company or any of its employees, officers or directors on account of such
termination, except for any compensation or other payments to which the
Executive may be entitled under any termination benefits or similar agreement
then in effect between the Company and the Executive.

         (g) In order to receive any benefit under this Section 8.02, Executive
must execute a Release Agreement in the form attached as Exhibit A.

         (h) Notwithstanding any of the foregoing, upon his termination, the
Executive shall be entitled to any accrued but unused vacation days in
accordance with Company policy.

         Section 8.03. Reimbursement for Certain Litigation Expenses. In the
event of litigation to determine whether the Executive's employment was properly
terminated under subsection (b) or (f) of Section 8.01, the prevailing party
shall be entitled to recover all reasonable costs and expenses, including
reasonable attorneys' fees, incurred in connection with such litigation.

                                   ARTICLE IX
                        CONFIDENTIAL BUSINESS INFORMATION

         The Executive agrees and covenants that all confidential information
regarding the practices and procedures of the Company and its affiliates, their
methods of marketing, know-how, trade information, trade secrets, customer or
client lists, licensing arrangements, accounts and requirements, and other
information regarding the affairs of the Company and its affiliates
(collectively, the "Confidential Business Information") shall be received and
held in the strictest confidence. The Executive agrees not to divulge any such
Confidential Business Information to any person or entity except as authorized
in the normal execution of assigned duties on behalf of the Company, without the
prior consent of the Company. The Executive further agrees to surrender to the
Company any and all documents and records in whatever form that may be in his
possession or control containing Confidential Business Information upon the
expiration or termination of the Employment Term. The provisions of this Article
IX shall survive any termination or expiration of this Agreement.

                                    ARTICLE X
                                 NON-COMPETITION

         Section 10.01. Non-Competition.

         (a) During the Employment Term and for a period equal to the greater of
two (2) years or the period of time used to calculate his severance benefit
immediately following any termination of the Employment Term pursuant to Section
8.01 of this Agreement (except subsection (a) or (c) of Section 8.01), the
Executive shall not, directly or indirectly, anywhere within a one hundred (100)
mile radius around the City of Fort Wayne, Indiana, have any material (defined
for purposes of this Section to include any investment representing one percent



                                       5
<PAGE>

(1%) or more of the equity interest of any entity described in this Section)
investment in, or engage, directly or indirectly, whether as an individual or
sole proprietor or as owner, partner, principal, shareholder, officer, director,
manager, agent, consultant, formal or informal advisor, or by or through the
lending of any form of assistance, in any business offering products or services
the same as or competitive with the products or services that, during the
Employment Term, are (or are planned to be) offered or supplied by the Company
or its subsidiaries.

         (b) An Executive may request in writing that the Company allow
Executive to accept a position with another employer if his duties or
responsibilities with such employer are materially different than any of those
duties performed for the Company during the Employment Term. The Company shall
respond to any written request within ten (10) business days of its receipt;
provided such request is sent by U.S. certified mail. The Company must use its
reasonable discretion to determine whether such duties are materially different.
The Company may, from time to time, request that Executive certify in writing
that his duties for the new employer have not changed. If the Company fails to
respond, the request, as submitted, shall be deemed approved.

         Section 10.02. Non-Solicitation. During the Employment Term and for a
period equal to the greater of two (2) years or the period of time used to
calculate his severance benefit immediately following any termination of the
Employment Term pursuant to Section 8.01 of this Agreement (except for
subsection (a) or (c) of Section 8.01), the Executive shall not, directly or
indirectly, (i) solicit, take away, hire, employ or endeavor to employ any
person employed by the Company, or (ii) solicit, take away or attempt to take
away any of the existing or prospective customers or clients, vendors or
licensors of the Company or any of its affiliates as of the date of termination
for the purpose of conducting any business which directly or indirectly provides
financial services similar in nature to the financial services provided by Tower
Bank & Trust Company. As used herein, the term "prospective customers or
clients" shall mean individuals or entities whom the Company or its affiliates
have contacted within the twelve (12) months immediately preceding the
termination of the Employment Term for the purpose of conducting business with
the Company or such affiliate.

         Section 10.03. Specific Enforcement. The Executive acknowledges that
any violation of any provision of this Article X by him will cause irreparable
damage to the Company, that such damage will be incapable of precise
measurement, and that, as a result, the Company will not have an adequate remedy
at law to redress the harm which such violation will cause. Therefore, in the
event of any violation of any provision of this Article by the Executive, he
agrees that, in addition to all other remedies that the Company may have at law
or in equity, the Company shall be entitled to injunctive relief, including,
without limitation, temporary restraining orders and temporary injunctions to
restrain any violation of this Article. If a court of competent jurisdiction
finds that the Executive has violated any of the restrictions set forth in this
Article, then the period of all restrictions set forth in this Article
automatically shall be extended by the number of days that the court determines
the Executive to have been in violation of such restriction. In addition to
other relief to which it shall be entitled, the Company shall be entitled to
recover from the Executive the reasonable costs and reasonable attorneys' fees
incurred by the Company in seeking enforcement of this Article. In addition, if
the Executive should breach





                                       6
<PAGE>

Section 10.01 or 10.02, as determined by a court of competent jurisdiction,
Executive shall repay any and all benefits payable or paid under Section 8.02 or
Section 12.01(b).

                                   ARTICLE XI
                                     GENERAL

         Section 11.01. Severability. Should any clause, portion or section of
this Agreement be unenforceable or invalid for any reason, such unenforceability
or invalidity shall not affect the enforceability of validity of the remainder
of this Agreement. Should any particular covenant in this Agreement be held
unreasonable or unenforceable for any reason, including, without limitation, the
time period, geographical area, and scope of activity covered by such covenant,
then such covenant shall be given effect and enforced to whatever extent would
be reasonable and enforceable.

         Section 11.02. Assignment; Successors in Interest. This Agreement,
being personal to the Executive, may not be assigned by him. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company, and the heirs, executors and personal
representatives of the Executive.

         Section 11.03. Successors of the Company. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled
hereunder if the Executive terminated the Executive's employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" as hereinbefore and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Article 11.03 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.

         Section 11.04. Governing Law. This Agreement and the performance of the
parties under this Agreement shall be construed in accordance with the laws of
Indiana, and any action or proceeding that may be brought, arising out of, in
connection with, or by reason of this Agreement shall be governed by the laws of
Indiana, to the exclusion of the law of any other forum, and regardless of the
jurisdiction in which the action or proceeding may be instituted.

         Section 11.05. Waiver. Failure to insist upon strict compliance with
any of the terms, covenants or conditions of this Agreement shall not be deemed
a waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.



                                       7
<PAGE>

         Section 11.06. Modification and Entire Agreement. No modification,
amendments, extension or alleged waiver of this Agreement or any provision
thereof will be binding upon the Executive or the Company unless in writing and
signed by the Executive and a duly authorized officer of the Company. From and
after the Effective Date, this Agreement and any termination benefits agreement
or similar agreement between the Company and the Executive shall constitute the
entire employment arrangement between the Executive and the Company and shall
supersede and replace any and all prior agreements and understandings, written
or oral, relative to such employment.

         Section 11.07. Notices. All notices and other communications required
or permitted under this Agreement shall be in writing and shall be deemed to
have been properly given if delivered by hand, sent by telecopy, or mailed,
certified or registered mail with postage and fees prepaid:

         If to the Company, to:             TOWER FINANCIAL CORPORATION
                                            116 East Berry Street, Suite 100
                                            Fort Wayne, Indiana  46802

         If to the Executive, to:           KEVIN J. HIMMELHAVER
                                            6918 Mangrove Lane
                                            Fort Wayne, Indiana 46835

or to such other person or address as the party to whom such notice or
communication is to be given shall have notified the other party in accordance
with this Section 11.06. Any mailed communication shall be deemed to have been
given on the third "business day" (such term excluding, for purposes of this
Agreement, Saturdays, Sundays, and legal holidays) after the day of mailing. Any
communication sent by telecopy shall be deemed to have been given on the date
receipt of the telecopy transmission is confirmed.

                                   ARTICLE XII
                                CHANGE IN CONTROL

         Section 12.01. Termination After Change of Control Benefit. If within
four (4) months before or twenty four (24) months and one (1) day after a Change
of Control of the Company as defined in Section 12.01(a), the Company shall
terminate the Executive's employment other than pursuant to Section 8.01(a), (b)
or (c) hereof, or give notice under Section 1.02 of its intent not to renew
without Cause, or if the Executive shall terminate his employment for Good
Cause, then in any of such events, the Company shall pay to the Executive a
benefit as defined in Section 12.01(b).

         (a) Change of Control. The term Change of Control shall have the
following meaning:

                  (i) A reorganization, merger, consolidation or other form of
         corporate transaction or series of transactions, in each case, with
         respect to which persons who were the stockholders of the Company
         immediately prior to such reorganization, directly or




                                       8
<PAGE>

         indirectly, own less than fifty percent (50%) of the combined voting
         power entitled to vote generally in the election of directors of the
         reorganized, merged or consolidated entity's then outstanding voting
         securities;

                  (ii) A liquidation or dissolution of the Company;

                  (iii) The acquisition by any person, entity or "group," within
         the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
         Act of 1934, (excluding any employee benefit plan of the Company or its
         subsidiaries which acquires beneficial ownership (within the meaning of
         Rule 13d-3 promulgated under the Securities Exchange Act) of more than
         fifty percent (50%) of either the then outstanding shares of common
         stock or the combined voting power of the Company's then outstanding
         voting securities entitled to vote generally in the election of
         directors; or

                  (iv) As the result of, or in connection with, any tender or
         exchange offer, merger, consolidation or other business combination,
         sale or disposition of all or substantially all of the Company's
         assets, or contested election, or any combination of the foregoing
         transactions (a "Transaction"), the persons who were directors of the
         Company immediately before the Transaction shall cease to constitute a
         majority of the Board of Directors of the Company or any successor to
         the Company.

         (b) Amount. Upon a termination of the Executive's employment under the
circumstances described in this Section 12.01, the Executive will receive 2.99
times the sum of his Salary plus 2.99 times his "Average Bonus Payment." For
purposes herein, "Average Bonus Payment " shall be determined by adding the
Executive's awarded bonuses awarded by the Company under its incentive plan for
the three (3) complete calendar years prior to his termination (or such fewer
complete years if he has been employed less than three (3) complete calendar
years) and dividing by three (3) (or such fewer complete years if he was
employed less than three (3) complete calendar years).

         No other benefits or amounts shall be payable under Section 8.02.

         (c) Limitation of Benefit. Notwithstanding anything to the contrary in
this Agreement, if there are payments to the Executive which constitute
"parachute payments," as defined in Section 280G of the Code, then the payments
made to the Executive shall be limited to the greater of (x) One Dollar ($1.00)
less than the amount which would cause the payments to the Executive (including
payments to the Executive which are not included in this Agreement) to be
subject to the excise tax imposed by Section 4999 of the Code, and (y) the
payments to the Executive (including payments to the Executive which are not
included in the Agreement) after taking into account the excise tax imposed by
Section 4999 of the Code. The calculations shall be done by an outside party
directed by the Company.

         (d) Release. The Executive must execute and not rescind the Release
prior to receiving any payment under this Article.




                                       9
<PAGE>

         (e) Attorney's Fees. To the extent that the Executive prevails in a
court of competent jurisdiction regarding such dispute, the Company shall
reimburse Executive his reasonable attorney's fees and costs incurred in such
action. Any amounts to be reimbursed hereunder will be paid to the Executive
within fifteen (15) days of a written consent for the same.

         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.

                                              TOWER FINANCIAL CORPORATION


                                              By: /s/ Donald F. Schenkel
                                                 -------------------------------
                                              Donald F. Schenkel,
                                              President

                                                         ("Company")


                                              /s/ Kevin J. Himmelhaver
                                              ----------------------------------
                                              Kevin J. Himmelhaver

                                                         ("Executive")






                                       10