NOTE 7. NOTES PAYABLE

Total debt outstanding at December 31, 2012 and 2011 was:



DOLLARS IN MILLIONS	2012		2011
Senior Notes at Amortized Cost:
6.00% Senior Notes due May 15, 2017	$	357.3	$	356.8
6.00% Senior Notes due November 30, 2015	248.6		248.2
Mortgage Note Payable at Amortized Cost	5.5		5.6
Notes Payable at Amortized Cost	$	611.4	$	610.6

NOTE 7. NOTES PAYABLE (Continued)

Interest Expense, including facility fees, accretion of discount and write-off of unamortized credit agreement issuance costs for the years ended December 31, 2012, 2011 and 2010 was:



DOLLARS IN MILLIONS	2012			2011			2010
Notes Payable under Revolving Credit Agreement	$	1.9		$	2.0		$	2.0
Senior Notes Payable:
6.00% Senior Notes due May 15, 2017	22.1			22.0			22.0
6.00% Senior Notes due November 30, 2015	15.4			15.4			1.6
4.875% Senior Notes due November 1, 2010	—			—			8.4
Mortgage Note Payable	0.4			0.4			0.4
Interest Expense before Capitalization of Interest	39.8			39.8			34.4
Capitalization of Interest	(1.8		)	(2.5		)	(1.8		)
Total Interest Expense	$	38.0		$	37.3		$	32.6

Interest Paid on Notes Payable, including facility fees, for the years ended December 31, 2012, 2011 and 2010 was:



DOLLARS IN MILLIONS	2012		2011		2010
Notes Payable under Revolving Credit Agreement	$	2.3	$	1.2	$	1.2
Senior Notes Payable:
6.00% Senior Notes due May 15, 2017	21.6		21.6		21.6
6.00% Senior Notes due November 30, 2015	15.0		15.2		—
4.875% Senior Notes due November 1, 2010	—		—		9.8
Mortgage Note Payable	0.4		0.4		0.4
Total Interest Paid	$	39.3	$	38.4	$	33.0

On March 7, 2012, Kemper entered into the 2016 Credit Agreement, a four-year, $325.0 million, unsecured, revolving credit agreement, expiring March 7, 2016, with a group of financial institutions. The 2016 Credit Agreement replaced Kemper’s Former Credit Agreement, a $245.0 million, unsecured, revolving credit agreement which was scheduled to expire on October 30, 2012 and was terminated on March 7, 2012. There were no borrowings under the Former Credit Agreement at either December 31, 2011 or at its termination. The 2016 Credit Agreement provides for fixed and floating rate advances for periods up to six months at various interest rates. The 2016 Credit Agreement contains various financial covenants, including limits on total debt to total capitalization, consolidated net worth and minimum risk-based capital ratios for Kemper’s largest insurance subsidiaries, United Insurance and Trinity. Proceeds from advances under the 2016 Credit Agreement may be used for general corporate purposes, including repayment of existing indebtedness. There were no outstanding borrowings under the 2016 Credit Agreement at December 31, 2012, and accordingly, $325.0 million was available for future borrowings.

During the third quarter of 2011, Kemper borrowed $95.0 million under the Former Credit Agreement. The proceeds from the borrowing were used, in part, to make a voluntary contribution of $83.7 million to fully fund the Company’s defined benefit pension plan under the funding requirements of Employee Retirement Income Security Act of 1974, as amended (”ERISA”). The contribution consisted of cash of $32.2 million and 7,309,764 shares of Intermec common stock purchased from Kemper’s subsidiary, Trinity (see Note 17, “Pension Benefits,” to the Consolidated Financial Statements). Kemper repaid $30.0 million and $65.0 million of the borrowing in September and October of 2011, respectively. Kemper had no outstanding advances under the Former Credit Agreement at December 31, 2011.

In the fourth quarter of 2010, Kemper borrowed $140 million under the Former Credit Agreement. As discussed below, Kemper used a portion of the proceeds from the issuance of its 2015 Senior Notes to repay in full the borrowings under the Former Credit Agreement.

In 2010, Kemper issued $250 million of its 6.00% senior notes due November 30, 2015. The 2015 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time at Kemper’s option at specified redemption prices. Kemper issued the 2015 Senior Notes for proceeds of $247.8 million, net of transaction costs, for an effective yield of 6.21%.

NOTE 7. NOTES PAYABLE (Continued)

Kemper used a portion of the proceeds from the sale of the 2015 Senior Notes to repay borrowings of $140 million under the Former Credit Agreement and to make a capital contribution of $60 million to its subsidiary, United Insurance.

In 2007, Kemper issued $360 million of its 6.00% senior notes due May 15, 2017. The 2017 Senior Notes are unsecured and may be redeemed in whole at any time or in part from time to time at Kemper’s option at specified redemption prices. Kemper issued the 2017 Senior Notes for proceeds of $354.8 million, net of transaction costs, for an effective yield of 6.19%.

In 2003, Kemper issued $200 million of its 4.875% senior notes due November 1, 2010 for an effective yield of 5.04%. The 2010 Senior Notes were repaid and retired on November 1, 2010.