NOTE 17. DEBT

In the fourth quarter of 2011, United Fire & Casualty Company entered into a credit agreement with a syndicate of financial institutions as lenders party thereto, KeyBank National Association as administrative agent, lead arranger, sole book runner, swingline lender, and letter of credit issuer, and Bankers Trust Company as syndication agent. The four-year credit agreement provides for a $100,000,000 unsecured revolving credit facility that includes a $20,000,000 letter of credit subfacility and a swing line subfacility in the amount of up to $5,000,000.

During the term of this credit facility, we have the right to increase the total facility from $100,000,000 up to $125,000,000, provided that no event of default has occurred and is continuing and certain other conditions are satisfied. The credit facility is available for general corporate purposes, including working capital, acquisitions and liquidity purposes. Principal of the credit facility is due in full at maturity, on December 22, 2015. The interest rate is based on our monthly choice of either the London Interbank Offered Rate (“LIBOR”) or a base rate plus, in each case, a calculated margin amount. A commitment fee on each lender's unused commitment under the credit facility is also payable quarterly. The credit facility replaced a $50,000,000 revolving credit facility with Bankers Trust Company, which was repaid and terminated in connection with entering into the new credit agreement.

The credit agreement contains customary representations, covenants and events of default, including certain covenants that limit or restrict our ability to engage in certain activities. Subject to certain exceptions, these activities include restricting our ability to sell or transfer assets or enter into a merger or consolidate with another company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary dividends, enter into leaseback transactions, or incur certain indebtedness. The credit agreement contains certain financial covenants including covenants that require us to maintain a minimum consolidated net worth, a debt to capitalization ratio and minimum stockholders equity. The credit agreement contains terms that allowed the agreement to continue after the formation of the holding company, United Fire Group, Inc., which was completed on February 1, 2012.

We were in compliance with all covenants for the credit agreement as of December 31, 2011.