Document:

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                                                                   EXHIBIT 10.12

                              EMPLOYMENT AGREEMENT

This Agreement is dated this 16 day of January, 2001, between Surety Capital
Corporation (the "Company"), Surety Bank, National Association (the "Bank") and
Charles M. Ireland ("Employee").

1.   That certain Change in Control Agreement dated October 18, 1999 between
the Company, the Bank and Employee is hereby terminated and is of no further
force and effect.

2.   Employee is currently employed by the Company and the Bank in the
following capacities: Chairman of the Board, President and Chief Executive
Officer of the Bank and the Company.

3.   In the event the employment of Employee is terminated by the Company and
the Bank for any reason whatsoever, other than for Cause (defined below), or
Employee terminates his employment with the Company and the Bank with Good
Reason (defined below), the Company and the Bank shall collectively pay to
Employee a lump sum cash payment in an amount equal to Employee's annual base
salary (but excluding all other compensation, including bonuses and fringe
benefits) in effect immediately before the effective day of termination of
employment of Employee (the "Annual Base Salary").

4.   In the event (a) Employee voluntarily terminates his employment with the
Company or the Bank for any reason other than Good Reason and (b) within two
(2) months following such termination of employment, either (i) Employee for
any reason does not accept employment with another employer or (ii) Employee
accepts employment with another employer at an annual base salary less than
Employee's Annual Base Salary, then the Company and the Bank shall collectively
pay Employee a lump sum cash payment in an amount equal to one-sixth (1/6th) of
Employee's Annual Base Salary.

5.   The lump sum payment pursuant to Paragraph 3 or 4 shall be collectively
paid by the Company and the Bank by certified check on the date of termination
of employment pursuant to Paragraph 3 and no later than two (2) months
following the date of termination of employment pursuant to Paragraph 4 and
shall be reduced by any deductions or withholdings required under applicable
law.

6.   For purposes of this Agreement:

(a)  "Cause" shall mean any act that is materially adverse to the best interests
of the Company or the Bank that constitutes, on Employee's part, common law
fraud, a felony or other gross malfeasance of duty.
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(b)  "Good Reason" shall mean: (i) a material reduction of Employee's duties,
responsibilities and status with the Company or the Bank as they existed as of
January 1, 2001, (ii) a reduction of Employee's base salary from that in effect
as of January 1, 2001, with any subsequent increases, or (iii) the relocation
of Employee's offices to offices of the Company or the Bank more than thirty
miles from Employee's office location as of January 1, 2001, at 1501 Summit
Avenue, Fort Worth, Texas. Anything herein to the contrary notwithstanding, a
reduction in the duties and responsibilities of Employee, a change in
Employee's titles, a modification of Employee's reporting obligations, or any
other reductions in the duties, responsibilities and status of Employee with the
Company or the Bank will not constitute a "material reduction" for purposes of
this Paragraph 6(b), so long as Employee remains an officer with the Company
and the Bank with a title of President or Executive Vice President (but not
less than the third highest ranking officer of the Company and the Bank in
responsibility and authority under the internal policies of the Company and
the Bank, behind only the Chairman of the Board and the Chief Executive
Officer), and with duties, responsibilities, status, authority and reporting
obligations consistent with such title.

7.   The lump sum payment provided for in this Agreement shall be in addition
to Employee's Annual Base Salary through the date of termination of employment
and any benefits payable to Employee under any employee benefit plan then in
effect.

8.   This Agreement constitutes the only agreement between the parties relating
to the subject matter of this Agreement and no prior or contemporaneous
representations, promises, understandings or agreements, oral or otherwise, not
herein contained shall be of any force or effect.

9.   Any notice required or permitted by any party to this Agreement shall be
in writing and may be delivered personally to the party being given notice or
to the person in charge of the office of the party being given such notice or
by certified mail, return receipt requested, at the party's address indicated
below, and any notice will be effective upon delivery in the case of personal
delivery and upon deposit in the mail, postage prepaid, in the case of delivery
by mail. The addresses of the parties are as follows:

          COMPANY:       Surety Capital Corporation
                         1501 Summit Avenue
                         Fort Worth, Texas 76102

          BANK:          Surety Bank, National Association
                         1501 Summit Avenue
                         Fort Worth, Texas 76102

          EMPLOYEE:      Charles M. Ireland
                         7408 Trinity Ranch Road
                         Benbrook, Texas 76126
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The names and addresses of persons to receive notice as stated in this
Paragraph 9 may be changed by notice given in accordance with this Paragraph 9.

10.  No waiver at any time of any provision of this Agreement shall be deemed a
waiver of any other provision of this Agreement at that time or a waiver of
that or any other provision at any other time.

11.  This Agreement may be amended only by an instrument in writing signed by
all the parties.

12.  If any provision of this Agreement is held to be illegal, invalid or
unenforceable, such provision shall be fully severable, and this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
were never a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance. In lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as part of
this Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.

13.  If any action at law or in equity is necessary to enforce or construe this
Agreement, the prevailing party shall be entitled to recover from the
non-prevailing party reasonable attorneys' fees, costs and other disbursements
reasonably incurred in such action in addition to all other relief to which the
prevailing party may be entitled.

14.  This Agreement is binding upon and inures to the benefit of the parties,
their successors and permitted assigns. The Company and the Bank shall be
jointly and severally responsible for their obligations under this Agreement.

15.  This Agreement and the rights and obligations hereunder are not assignable
without the prior written consent of the other party to this Agreement. Nothing
in this Agreement, express or implied, is intended to confer upon any person,
other than the parties hereto, and their respective heirs, legal
representatives, successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

16.  At any time and from time to time, each party agrees, without further
consideration, to take such actions and to execute and deliver such documents
as may be reasonably necessary to effect the purposes of this Agreement.

17.  This Agreement shall be governed by and construed and enforced in
accordance with the laws of the state of Texas.

18.  This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall become binding upon the
parties hereto when one or

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more counterparts of this Agreement, individually or taken together, bear the
signatures of all of the parties hereto.

19.  This Agreement shall not obligate the Company or the Bank to employ
Employee for a definite period of time. Employee's employment by Bank and the
Company remains on an at-will basis.

Executed as of the date first above written.

COMPANY:                             SURETY CAPITAL CORPORATION

                                     By:  /s/ Richard N. Abrams

                                     Its: Chairman and CEO

BANK:                                SURETY BANK, NATIONAL ASSOCIATION

                                     By:  /s/ Richard N. Abrams

                                     Its: Chairman and CEO

EMPLOYEE:                            /s/ Charles M. Ireland

                                     Charles M. Ireland<PAGE>   1
                                                                   EXHIBIT 10.13

THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE
SECURITIES MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
APPLICABLE SECURITIES LAWS.

                     REDEEMABLE CONVERTIBLE PROMISSORY NOTE

$[_____]                        Fort Worth, Texas                       [______]

         FOR VALUE RECEIVED, the undersigned Surety Capital Corporation, a
Delaware corporation (the "Company"), with its principal offices located at 1501
Summit Avenue, Fort Worth, Texas 76102, promises to pay to the order of Richard
N. Abrams (the "Holder") or his assigns, at 480 Central Avenue, Northfield,
Illinois 60093, the amount of [__________________________] (the "Original
Principal Amount") in legal and lawful money of the United States of America.
This Note shall bear no interest from the date hereof until maturity. All past
due principal will bear interest at the lower of ten percent (10%) per annum or
the highest lawful rate for which the Company may stipulate and agree to pay.

         This Note is payable as follows: the principal is due on December 31,
2001. Anything herein to the contrary notwithstanding, this Note shall become
immediately due and payable on the earliest to occur of the following: (i) a
Change in Control; (ii) a Bankruptcy; or (iii) a Sale.

         As used in this Note, the following terms, unless the context otherwise
requires, have the following meanings:

                  (a) "Bankruptcy" shall occur when the Company shall (i) apply
for, consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property; (ii) make a general assignment for
the benefit of creditors; (iii) commence a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect); (iv) be adjudicated a
bankrupt or insolvent; (v) file a petition seeking to take advantage of any
other law providing for the relief of debtors; (vi) acquiesce to, or fail to
have dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws; or (vii) take any action for the
purpose of effecting any of the foregoing.

                  (b) "Change in Control" shall be deemed to have occurred if
(A) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, the "Exchange Act"), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or

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indirectly, of securities of the Company representing more than twenty percent
(20%) of the combined voting power of the Company's then outstanding voting
securities; or (B) during the term of this Note, individuals who at the
beginning of such period constitute the Board of Directors of the Company cease
for any reason to constitute at least a majority thereof, unless the election of
each director who was not a director at the beginning of such period has been
approved in advance by directors representing at least two-thirds (2/3rds) of
the directors then in office who were directors at the beginning of the period.

                  (c) "Company" includes any corporation which shall succeed to
or assume the obligations of the Company under this Note.

                  (d) "Holder" shall mean any person who shall at the time be
the holder of this Note.

                  (e) "Sale" shall mean

                           (1) the merger or consolidation of the Company with,
or the sale of all or substantially all of the assets of the Company to, another
corporation or entity, whether in one or a series of related transactions, and
as a result of which merger, consolidation or sale less than eighty percent
(80%) of the voting stock or other interest in the surviving or acquiring
corporation or entity, as the case may be, continues to be owned by stockholders
who were stockholders of the Company immediately prior to such merger,
consolidation or sale; or

                           (2) the merger or consolidation of the Company's
wholly-owned subsidiary, Surety Bank, National Association (the "Bank"), with,
or the sale of all or substantially all of the assets of the Bank to, another
corporation or entity, whether in one or a series of related transactions, and
as a result of which merger, consolidation or sale less than eighty percent
(80%) of the voting stock or other interest in the surviving or acquiring
corporation or entity, as the case may be, continues to be owned by the Company
immediately prior to such merger, consolidation or sale; or

                           (3) any combination of any of the foregoing.

                  (f) "Unpaid Principal Balance" means the Original Principal
Amount less (i) any principal amount converted by Holder into Common Stock (as
herein defined) and (ii) any principal amount prepaid or redeemed by the
Company.

         Notwithstanding any provision herein to the contrary, Holder shall
never be entitled to receive or collect interest hereunder, nor shall or may
amounts received hereunder be credited to interest hereunder so that Holder
shall receive or be paid interest exceeding the maximum lawful rate which the
Company may stipulate and agree to pay as determined by a court of competent
jurisdiction.

         Payments under this Note shall be made in coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts.

                                      -2-
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         Holder has the unrestricted right, at Holder's option, to convert, in
whole or in part, the Unpaid Principal Balance of this Note into fully paid and
nonassessable shares of common stock, $0.01 par value, of the Company (the
"Common Stock"). Subject to the timing restrictions related to a redemption
notice given by the Company (as discussed below), the right to convert may be
exercised by Holder at any time after the date hereof up to and including the
maturity date of this Note. The number of shares of Common Stock into which this
Note may be converted (the "Conversion Shares") shall be determined by dividing
the Unpaid Principal Balance of this Note by the Conversion Price in effect at
the time of such conversion. The initial Conversion Price shall be equal to
$0.36.

         Before Holder shall be entitled to convert this Note into Conversion
Shares, he shall surrender this Note at the office of the Company and shall give
written notice to the Company of the election to convert this Note and shall
state therein the name or names in which the certificate or certificates for
Conversion Shares are to be issued.

         Such certificate or certificates shall bear such legends as are
required, in the opinion of counsel to the Company, by applicable state and
federal securities laws. The Company shall, as soon as practicable thereafter,
issue and deliver to Holder a certificate or certificates for the number of
Conversion Shares to which Holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of surrender of this Note, and the person or persons
entitled to receive the Conversion Shares issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Conversion
Shares as of such date.

         No fractional shares of Common Stock shall be issued on conversion of
this Note.

         In the event the Company should at any time or from time to time after
the date hereof fix a record date for the split or subdivision of the
outstanding shares of Common Stock or the determination of holders of Common
Stock to receive dividends or other distributions payable in additional shares
of Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional shares of Common
Stock ("Common Stock Equivalents") without payment of any consideration by such
holder for the additional shares of Common Stock or the Common Stock
Equivalents, then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price of this Note shall be appropriately decreased so that the number of
Conversion Shares issuable upon conversion of this Note shall be increased in
proportion to such increase or potential increase of outstanding shares of
Common Stock.

         If the number of shares of Common Stock outstanding at any time after
the date hereof is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date of such combination, the
Conversion Price for this Note shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion hereof shall be
decreased in proportion to such decrease in outstanding shares of Common Stock.

                                      -3-
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         The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of this Note, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of this Note;
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of the entire outstanding
principal of this Note, in addition to such other remedies as shall be available
to Holder of this Note, the Company will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.

         The Company, at its option, after giving notice to Holder, may prepay
or redeem this Note at any time in whole or in part, in the principal amount of
$1,000 or a multiple thereof, on payment of the principal amount being redeemed.
Before any redemption of this Note under the foregoing, the Company shall notify
Holder not less than ten (10) days nor more than thirty (30) days prior to the
date fixed by the Company for redemption. The notice shall specify: (i) the
principal amount to be redeemed; (ii) the date fixed for redemption; (iii) the
applicable Conversion Price on the date of the notice; and (iv) the location and
address of the office of the Company where this Note is required to be presented
for redemption. A redemption notice given by the Company does not restrict
Holder's conversion rights under this Note either before or after the redemption
date; provided, however, Holder may not exercise his conversion rights during
the period that is three (3) business days before the date fixed for redemption.

         This Note is being executed and delivered, and is intended to be
performed, in the State of Texas. The substantive laws of the State of Texas and
all applicable federal laws shall govern the validity, construction, enforcement
and interpretation of this Note.

         If this Note, or any part of this Note, is placed in the hands of an
attorney for collection or is collected through bankruptcy or other judicial
proceedings (including any proceedings, state or federal, for the relief of
debtors), the Company agrees to pay to Holder reasonable attorneys' fees and all
other costs and expenses incurred in connection with any such collection, suit
or proceeding, in addition to the principal and interest then due hereon.

         Except as otherwise provided in this Note, the Company and each
guarantor, surety, and endorser of this Note, jointly and severally, expressly
waive all notices, demands for payment, presentations for payment, notices of
acceleration and of intention to accelerate the maturity, protest and notice of
protest, as to this Note, and as to each, every and all installments of this
Note, and each agrees that their liability under this Note shall not be affected
by any renewal or extension in the time of payment hereof, or by any
indulgences, or by any release or change in any security for the payment of this
Note, and hereby consents to any and all renewals, extensions, indulgences,
releases, or changes, regardless of the number of such renewals, extensions,
indulgences, releases or changes.

                                      -4-
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         The Company shall use commercially reasonable efforts to file all
reports required to be filed by it under the Securities Act of 1933, as amended
(the "Securities Act"), and the Exchange Act and the rules and regulations
adopted by the Securities and Exchange Commission thereunder and shall take such
further action as the Holder may reasonably request, all to the extent required
to enable such Holder to sell Common Stock pursuant to Rule 144 adopted by the
Securities and Exchange Commission under the Securities Act (as such rule may be
amended from time to time) or any similar rule or regulation hereafter adopted
by the Securities and Exchange Commission. Anything herein to the contrary
notwithstanding, the Company shall not be obligated to remain subject to such
reporting requirements. Upon request, the Company shall deliver to any holder of
Restricted Securities a written statement as to whether it has complied with
such requirements. The Company agrees that its obligations under this paragraph
shall survive the repayment, redemption and conversion of this Note and shall
continue for so long as the Holder continues to own shares of Common Stock.

         No waiver by Holder or his assigns of any of his rights and remedies
hereunder or under any other document relating to or securing this Note or
otherwise shall be considered a waiver of any other subsequent right or remedy
of Holder or his assigns; no delay or omission in the exercise or enforceability
by Holder or his assigns of any rights or remedies shall ever be construed as a
waiver of any right or remedy of Holder or his assigns; and no exercise or
enforcement of any such rights or remedies shall ever be held to exhaust any
right or remedy of Holder or his assigns.

                                   SURETY CAPITAL CORPORATION

                                   By:
                                      ------------------------------------------
                                      Charles M. Ireland, Chairman of the Board

                                      -5-

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