Toharot, Chapter Two, Mishnah Three
Our mishnah provides some basic rules as to the implications of the levels of impurity in common food, meaning non-sacred food, neither terumah nor sacrifices.
1) First [degree uncleanness] in common food is unclean and conveys uncleanness;
2) Second [degree uncleanness] invalidates but does not convey uncleanness.
3) And third [degree uncleanness] may be eaten in a dish mixed with terumah.
Section one: Hullin (regular or common food) that has first degree uncleanness can defile other foods, giving them second degree uncleanness.
Section two: Hullin that has second degree uncleanness invalidates other food. If the other food is terumah, the terumah is invalid. If the other food is hullin which the person wishes to eat with the sanctity of terumah, then it is invalid. But it doesn’t give other food third degree impurity.
Section three: Basically, there is no such thing as hullin with third degree impurity. If food came into contact with other hullin food with second degree impurity, that food can be eaten in a dish with terumah because it is not all impure.