An Indenture Agreement, also known simply as an Indenture, is a formal contract between a bond issuer and a bondholder that describes and defines in detail the bond and amount at issue and the legal obligations of the bond issuer and the rights of the bondholder, such as the time period before repayment, amount of interest paid, if the bond is convertible (and if so, at what price or what ratio), if the bond is callable, and the amount of money that is to be repaid. A typical indenture agreement should be structured to into articles, and each article should be broken into paragraphs addressing specific issues within the broader article.

For instance, the agreement should describe in detail the rules governing the issuance of the bond notes. What bond notes are at issue? Other sections should discuss Redemption and Offers to Purchase Notes, Covenants, Defaults and Remedies, and the Trustee. Note that an indenture is usually a long, complex agreement laying out in great detail the rights and duties of bond issuers and bond holders, and must always be drafted by an experiences securities attorney.

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