Third Debenture Clause Samples
The Third Debenture clause establishes the terms and conditions under which a third debenture—a type of secured loan instrument—is issued by the borrower to the lender. This clause typically outlines the amount secured, the ranking of the debenture in relation to other existing or future security interests, and the specific assets or property over which the security is granted. For example, it may specify that the third debenture ranks behind two prior debentures but ahead of unsecured creditors, and detail the collateral covered. Its core practical function is to clearly define the rights and priorities of the lender holding the third debenture, thereby reducing uncertainty and potential disputes regarding repayment and security enforcement in the event of default.
Third Debenture. Provided that no Event of Default (as defined in the Debenture) has occurred under the Debenture (provided that Holder may, in its sole and absolute discretion waive the occurrence of such Event of Default with respect to this Section), Holder shall, in Holder’s sole and absolute discretion, select a date during the Third Debenture Period (as defined below) (with such date as selected by Holder referred to herein as the “Third Debenture Date”) at which the Company shall sell and the Holder shall purchase a debenture in the principal amount of $1,500,000 in exchange for a purchase price of $1,500,000 (the “Third Debenture”), with such purchase price paid via a cash payment of $400,000 and the issuance of a promissory note in the principal amount of $1,100,000 (the “Third Promissory Note”), with the form of and terms of the Third Debenture and the Third Promissory Note and payment of the purchase price subject to the same terms and conditions of this Agreement, the Debenture and the Promissory Note, as applicable, entered into in connection with this Agreement and the Debenture, and when the Third Debenture is issued, the term “Debenture” as used in this Agreement shall be deemed to include the Third Debenture in all respects and when the Third Promissory Note is issued, the term “Promissory Note” as used in this Agreement shall be deemed to include the Third Promissory Note in all respects. The closing of the purchase and sale of the Third Debenture and the issuance of the Third Promissory Note shall occur within thirty days of the Third Debenture Date. For the purposes of this Agreement, the “Third Debenture Period” shall mean the period that commences on the date of the issuance of the Second Debenture to Holder and terminates upon the date that the remaining Principal Amount of the Second Debenture is equal to an amount not greater than $250,000.