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                                                                   EXHIBIT 10.12

                          THIRD MODIFICATION AGREEMENT

         This MODIFICATION AGREEMENT ("Modification") is entered into as of
October 31, 2000 by and among FPF, Inc., a Colorado corporation ("FPF"),
FEDERATED PREMIUM FINANCE, INC., a Florida corporation, as originator (the
"Originator"), FLATIRON FUNDING COMPANY, LLC, a Delaware limited liability
company (the Lender"), FEDERATED FUNDING CORPORATION, a Florida corporation (the
"Residual Interest Holder") and FLATIRON CREDIT COMPANY, INC. ("Flatiron").

                                   WITNESSETH;

         WHEREAS, pursuant to that certain Revolving Credit and Term Loan
Agreement dated as of September 24, 1997 by and among the Lender and FPF (the
"Loan Agreement"), the Lender has loaned and will loan to FPF, subject to the
conditions thereof, funds for the acquisition by FPF of certain Premium Loans
originated by the Originator pursuant to that certain Sale and Assignment
Agreement dated as of September 24, 1997 by and between FPF, as purchaser and
the Originator, as seller (the "Sale and Assignment Agreement") and contingent
upon certain advances by the Residual Interest Holder under the Residual
Purchase and Funding Agreement dated September 24, 1997 (the "Residual
Agreement"), each as modifed by those certain Modification Agreements, the first
dated May 1, 1998, and the second dated January 25, 1999; and

         WHEREAS, the Agreement has definitions contained therein to which
reference is made to that certain Agreement of Definitions by and among the
parties to this Modification dated as of September 24, 1997 (the "Agreement of
Definitions"); and

         WHEREAS, the Loan Agreement, Sale and Assignment Agreement, the
Residual Agreement and the Agreement of Definitions and all exhibits to said
documents are collectively referred to herein as the "Documents"; and

         WHEREAS, all capitalized terms used herein and not otherwise defined in
the Documents shall have the meaning set forth herein; and

         WHEREAS, the parties desire to modify and amend the Documents as
hereinafter set forth.

         NOW THEREFORE, in consideration of the covenants, conditions and
agreements contained in the Documents, and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby amend the Agreement of Definitions and all other Documents as follows:

1.       AMENDED AND RESTATED PROMISSORY NOTE. All recitations and references to
         the Note in the Agreement of Definitions and in Section 1.05 of the


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         Loan Agreement shall refer to that certain Third Amended and Restated
         Promissory Note in the face principal amount of $9,000,000 dated as of
         the date hereof, executed by FPF in favor of Lender (the "Second
         Amended Note"). The Third Amended Note constitutes an amendment and
         restatement of the Promissory Note dated September 24, 1997 in the face
         principal amount of $5,000,000 executed by the FPF in favor of the
         Lender pursuant to the Loan Agreement (the "Amended Note") and
         supersedes and replaces the prior Amended Note.

2.       MAXIMUM CREDIT COMMITMENT as described in the Agreement of Definitions
         shall mean $9,000,000.

3.       DOCUMENT RATIFICATION. All terms, conditions and covenants of the
         Documents, not otherwise modified hereby, are hereby ratified and
         confirmed and this Agreement, when executed by the parties hereto,
         shall become a part of the Documents and shall have the same force and
         effect as if the terms and conditions hereof were originally
         incorporated in the Documents prior to the execution thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Modification Agreement
to be executed by their respective officers thereunder duly authorized as of the
date and year first above written.

                                              FLATIRON FUNDING COMPANY, LLC

                                              By:  /s/  Bruce Lundy
                                              Name:  Bruce Lundy
                                              Title:

FPF, INC.                                     FLATIRON CREDIT COMPANY, INC.

By:  /s/  Bruce Lundy                         By:  /s/ Bruce Lundy
Name:                                         Name:
Title:                                        Title:


FEDERATED FUNDING CORPORATION                 FEDERATED PREMIUM FINANC, INC.

By:  /s/ Edward J. Lawson                     By:  /s/  Stephen Young
Name:  Edward Lawson                          Name:  Stephen Young
Title:  President                             Title:  President



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