Contractual restriction on a borrower in a credit agreement. Maintenance covenants are tested quarterly against a financial threshold (e.g., Total Debt/EBITDA ≤ 5.0×, Interest Coverage ≥ 2.0×) and a breach triggers default even with no action by the borrower. Incurrence covenants are tested only when the borrower takes a specified action (issue debt, pay a dividend, make an acquisition) and require the borrower to demonstrate compliance pro forma. Maintenance covenants typically use declining leverage thresholds and increasing coverage thresholds over the term, reflecting expected deleveraging.