Note 5.

Long-term Debts and Lines of Credit

The Company’s outstanding note payable indebtedness was as follows as of (in thousands):

	June 30,		December 31,
	2015		2014
	(unaudited)
Hannoversche Volksbank credit line #1	$	1,163	$	1,880
Hannoversche Volksbank credit line #2		384		465
Hannoversche Volksbank term loan #1		93		135
Hannoversche Volksbank term loan #2		49		81
Hannoversche Volksbank term loan #3		216		270
Ventana Medical Systems, Inc. Promissory Note		21		21
Denture DZ Equity Partners Participation right		832		912
	$	2,758	$	3,764

In July 2006, MEDITE GmbH, Burgdorf, entered into a master line of credit agreement #1 with Hannoversche Volksbank. The line of credit was amended in 2012 and was later amended to increase the credit limit to Euro 1.8 million ($2.0 million as of June 30, 2015). In January 2015, the master credit line was reduced to Euro 1.6 million ($1.8 million as of June 30, 2015) and further reduced to the original Euro 500,000 ($554,720 as of June 30, 2015) to Euro 1.1 million ($1.2 million as of June 30, 2015) effective July 1, 2015. Borrowings on the master line of credit agreement #1 bears interest at a variable rate based on Euribor (Euro Interbank Offered Rate) depending on the type of advance elected by the company and defined in the agreement. Interest rates depending on the type of advance elected range from 3.77 – 8.00 % during the period ended June 30, 2015. The line of credit has no stated maturity date. The line of credit is collateralized by the accounts receivable and inventory of MEDITE GmbH, Burgdorf, a mortgage on the buildings owned by the Company and is guaranteed by Michaela Ott and Michael Ott, the former sole shareholders of the Company.

In June 2012, CytoGlobe, GmbH, Burgdorf, entered into a line of credit agreement #2 with Hannoversche Volksbank. The line of credit granted a maximum borrowing authority of Euro 400,000 ($443,776 as of June 30, 2015). Borrowings on the master line of credit agreement #2 bears interest at a variable rate based on Euribor (Euro Interbank Offered Rate) depending on the type of advance elected by the Company and defined in the agreement. Interest rates depending on the type of advance elected range from 3.77 – 8.00 % during the period ended June 30, 2015. The line of credit has no stated maturity date. The line of credit is collateralized by the accounts receivable and inventory of CytoGlobe GmbH, Burgdorf and is guaranteed by Michaela Ott and Michael Ott, the former sole shareholders of the Company and the state of Lower Saxony (Germany) to support high-tech companies in the area.

In December 2006, MEDITE GmbH, Burgdorf, entered into a Euro 500,000 ($554,720 as of June 30, 2015) term loan agreement #1 with Hannoversche Volksbank with an interest rate of 3.4% per annum. The term loan has a maturity of September 2016 and requires semi-annual principal payments of approximately Euro 27,780 ($30,820 as of June 30, 2015). The term loan is guaranteed by Michaela Ott and Michael Ott, the former sole shareholders of the Company and also a mortgage on the property of the Company.

In June 2006, MEDITE GmbH, Burgdorf, entered into a Euro 400,000 ($443,776 as of June 30, 2015) term loan #2 with Hannoversche Volksbank with an interest rate of 3.6 % per annum. The term loan has a maturity of June 2016, requires 18 semi-annual principal repayments of approximately Euro 22,220 ($24,652 as of June 30, 2015). The term loan is guaranteed by Michaela Ott and Michael Ott, the former sole shareholders of the Company and is collateralized by subordinated assignments of all of the receivables and inventories of MEDITE GmbH, Burgdorf and also has a subordinated pledge of share term life insurance policies.

In November 2008, MEDITE GmbH, Burgdorf, entered into a Euro 400,000 ($443,776 as of June 30, 2015) term loan #3 with Hannoversche Volksbank with a variable interest rate of approximately 4.7% per annum as of December 31, 2014. The term loan has a maturity of December 31, 2018, and requires quarterly principal repayments of Euro 13,890 ($15,410 as of June 30, 2015). The term loan is guaranteed by Michaela Ott and Michael Ott, the former sole shareholders of the Company, and is collateralized by a partial subordinated pledge of the receivables and inventory of MEDITE GmbH, Burgdorf.

In March 2009, the Company entered into a participation rights agreement in the form of a debenture with a mezzanine lender who advanced the Company up to Euro 1.5 million, ($1.7 million as of June 30, 2015) in two tranches of Euro 750,000 each, ($832,000 as of June 30, 2015). The first tranche was paid to the Company at closing with the second tranche being conditioned on MEDITE GmbH, Burgdorf and its subsidiaries hitting certain performance targets. Those targets were not met and the second tranche was never called. The debenture pays interest at the rate of 12.15% per annum and matures at December 31, 2016.

As of the date of filing, the remaining balance of approximately $21,000 on the note payable to Ventana Medical Systems, Inc. was in default. However, on February 23, 2015, the Company reached an agreement with Ventana Medical Systems, Inc. whereby both parties have agreed that Ventana Medical Systems, Inc. will accept $38,281 as payment in full for all outstanding principal and accrued interest. The $38,281 has been included in current portion of long-term debt on the consolidated balance sheet. As part of this agreement, Ventana Medical Systems, Inc. has agreed to convert $1.75 million stated value of Series D Preferred stock and all outstanding accrued dividends of $656,250 for 12,000 shares of the Company’s common stock. Prior to the execution of this agreement, the Company had failed to make principal and interest payments when due and is in breach of certain warranties and representations under the notes included above.

During 2015 the Company reduced their working line and term loans with Hannoversche Volksbank by $1,006 net of currency fluctuations, $666 and $340 in the second and first quarters of 2015, respectively. (See the “liquidity” comment on page 19.)