Exhibit 10.3

MAGMA DESIGN AUTOMATION EMPLOYMENT AND SEVERENCE AGREEMENT

This Amended and Restated Employment Agreement (the “Agreement”) is made and
entered into effective as of                     , 2008 by and between
                             (the “Employee”) and Magma Design Automation, Inc.,
a Delaware corporation (the “Company”).

RECITALS

 

  A. The Employee is and has been employed by the Company.

 

  B. The Company and the Employee desire to enter into this Agreement to provide
additional financial security and benefits to the Employee and to encourage the
Employee to continue his employment with the Company.

 

  C. Certain capitalized terms used in the Agreement are defined in Section 7
below.

AGREEMENT

In consideration of the mutual covenants herein contained, and in consideration
of the continuing employment of the Employee by the Company, the parties agree
as follows:

 

  1. Position. The Company shall employ the Employee in the position of
                                                 , as such position has been
defined in terms of responsibilities and compensation as of the effective date
of this Agreement; provided, however, that the Board of Directors (the “Board”)
shall have the right, at any time prior to the occurrence of a Change of
Control, to revise such responsibilities and compensation as the Board in its
discretion may deem necessary or appropriate. The Employee shall comply with and
be bound by the Company’s operating policies, procedures and practices from time
to time in effect during his employment. During the term of the Employee’s
employment with the Company, the Employee shall continue to devote his full
time, skill and attention to his duties and responsibilities, and shall perform
them faithfully, diligently and competently, and the Employee shall use his best
efforts to further the business of the Company and its affiliated entities.

 

  2. Base Compensation. The Company shall pay the Employee as compensation for
his services a base salary at an annualized rate in an amount to be determined
from time to time by the Board or the Compensation Committee of the Board. Such
salary shall be paid periodically in accordance with normal Company payroll
practices. The annualized compensation specified in this Section 2, as such
compensation may be increased or decreased by the Board or the Compensation
Committee, is referred to in this Agreement as “Base Compensation.”

 

  3. Annual Incentive. Beginning with the Company’s current fiscal year and for
each fiscal year thereafter during the term of this Agreement, the Employee
shall be eligible to receive additional cash compensation under the Company’s
annual incentive plan (the “Annual Incentive”) based upon specific financial
and/or other targets approved by the compensation committee of the Board (the
“Target Incentive”). The Annual Incentive payable hereunder shall be payable in
accordance with the Company’s normal practices and policies pursuant to the
terms of the annual incentive plan.

 

  4. Employee Benefits. The Employee shall be eligible to participate in the
employee benefit plans and executive compensation programs maintained by the
Company applicable to other key executives of the Company, including (without
limitation) retirement plans, savings or profit-sharing plans, stock option,
incentive or other bonus plans, life, disability, health, accident and other
insurance programs, paid vacations, and similar plans or programs, subject in
each case to the generally applicable terms and conditions of the applicable
plan or program in question and to the sole determination of the Board or any
committee administering such plan or program.

 

  5. Employment Relationship. The Company and the Employee acknowledge that the
Employee’s employment is and shall continue to be at-will, as defined under
applicable law. If the Employee’s employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company’s established employee plans and
policies at the time of termination.

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  6. Severance Benefits.

 

  (a.) Termination Following a Change of Control. If the Employee’s employment
with the Company terminates at any time within three (3) months prior to or
twelve (12) months after a Change of Control, then the Employee shall be
entitled to receive severance benefits as follows:

 

  (i.) Involuntary Termination. If the Employee’s employment terminates as a
result of Involuntary Termination other than for Cause, the Employee shall be
entitled to receive a severance payment equal to the sum of (x) two times the
Employee’s Base Compensation for the Company’s fiscal year then in effect or if
greater, two times the Employee’s Base Compensation for the Company’s fiscal
year immediately preceding the Termination Date, plus (y) two times the
Employee’s Target Incentive for the fiscal year then in effect (or, if no Target
Incentive is in effect for such year, the highest Target Incentive in the three
(3) preceding fiscal years). Any severance payments to which the Employee is
entitled pursuant to this Section 6(a) (i) shall be paid to the Employee (or to
the Employee’s estate or beneficiary in the event of Employee’s death) in a lump
sum not later than fifteen (15) days following the Employee’s Involuntary
Termination.

 

  (ii.) Voluntary Resignation; Termination for Cause. If the Employee
voluntarily resigns from the Company without Good Reason, or if the Company
terminates the Employee’s employment for Cause, then the Employee shall not be
entitled to receive severance or other benefits except for those (if any) to
which he may be entitled under the Company’s then existing severance and
benefits plans and policies at the time of such resignation or termination.

 

  (iii.) Disability; Death. If the Company terminates the Employee’s employment
as a result of the Employee’s Disability, or if the Employee’s employment
terminates due to the death of the Employee, then the Employee shall not be
entitled to receive severance or other benefits except for those (if any) to
which he may be entitled under the Company’s then existing severance and
benefits plans and policies at the time of such Disability or death.

 

  (b.) Equity Awards. In the event the Employee is entitled to severance
benefits pursuant to Section 6(a)(i), then in addition to such severance
benefits, the unvested portion of any stock option(s) or other equity awards
held by the Employee under the Company’s stock option plans and other equity
compensation plans or instruments shall vest and become exercisable in full, and
the Employee shall have the right to exercise such additional vested portion of
such stock option(s) or other equity awards at the time the Employee becomes
entitled to the benefits under Section 6(a)(i).

 

  (c.) Medical Benefits. In the event the Employee is entitled to severance
benefits pursuant to Section 6(a)(i), then in addition to such severance
benefits the Company shall pay the Employee a lump sum payment in an amount
equivalent to the reasonably estimated cost the Employee may incur to extend for
a period of twenty four (24) months medical coverage substantially similar to
that enjoyed by the Employee immediately prior to Involuntary Termination. The
Employee may use this payment, as well as any other payment made under this
Section 6, for such continuation coverage or for any other purpose. Such payment
will be made on the date that is six (6) months after the Employee’s Termination
of Employment.

 

  (d.) Release. Notwithstanding any other provision of this Section 6, no
amounts shall be payable pursuant to this Section 6 prior to the Employee
executing and delivering to the Company a waiver and release of claims in favor
of the Company, in form and substance satisfactory to the Company.

 

  (e.) Application of Section 409A. If (i) any severance benefits provided under
this Agreement fail to satisfy the distribution requirement of
Section 409A(a)(2)(A) of the Internal Revenue Code of 1986, as amended (the
“Code”) as a result of the application of Section 409A(a)(2)(B)(i) of the Code,
the payment of such benefits shall be delayed to the minimum extent necessary so
that such benefits are not subject to the provisions of Section 409(a)(1) of the
Code. The Company may attach conditions to or adjust the amounts paid pursuant
to the Section 6(g) to preserve, as closely as possible, the economic
consequences that would have applied in the absence of this Section 6(g);
provided, however, that no such condition shall result in the payments being
subject to Section 409A(a)(1) of the Code.

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  7. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:

 

  (a.) Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the
Employee in connection with his responsibilities as an employee and intended to
result in substantial personal enrichment of the Employee, (ii) conviction of a
felony that is injurious to the Company, (iii) a willful act by the Employee
which constitutes gross misconduct and which is injurious to the Company.

 

  (b.) Change of Control. “Change of Control” shall mean the occurrence of any
of the following events:

 

  (i.) The acquisition by any “person” (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) (other than the Company or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Company) of the “beneficial ownership” (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Company’s
then outstanding voting securities; or

 

  (ii.) A merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the approval by
the stockholders of the Company of a plan of complete liquidation of the Company
or of an agreement for the sale or disposition by the Company of all or
substantially all the Company’s assets.

 

  (c.) Disability. “Disability” shall mean that the Employee has been unable to
substantially perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such inability, at least 26
weeks after its commencement, is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the Employee
or the Employee’s legal representative (such Agreement as to acceptability not
to be unreasonably withheld).

 

  (d.) Exchange Act. “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended.

 

  (e.) Good Reason. “Good Reason” shall mean any of the following actions
undertaken without the Employee’s consent: (i) a significant reductions of the
Employee’s duties, authority or responsibilities relative to his duties,
authority or responsibilities immediately prior to such reduction, (ii) a
reduction by at least five (5)% in the Employee’s Base Compensation; (iv) a
relocation of the Employee’s primary place of business to a location more than
fifty (50) miles from the Employee’s primary place of business immediately prior
to such relocation; or (v) a material breach of this agreement by the Company or
any successor.

 

  (f.) Involuntary Termination. “Involuntary Termination” shall mean (i) any
Termination of Employment of the Employee by the Company which is not effected
for Disability or for Cause, or for which the grounds relied upon are not valid;
(ii) the failure of the Company to obtain the assumption of this agreement by
any successors contemplated in Section 8 below or (iii) the Employee’s
resignation for Good Reason, provided that the Employee’s Termination of
Employment occurs not later than twelve (12) months from the initial occurrence
of such Good Reason, the Employee has provided notice to the Company of the
event constituting Good Reason within ninety (90) days of its initial occurrence
and the Company has had at least thirty (30) days to cure the Good Reason event
and has failed to do so.

 

  (g.) Misconduct. “Misconduct” shall mean conduct on the part of the Employee
that is inimical, contrary or harmful to the interests of the Company,
including, but not limited to: (i) conduct related to the Employee’s employment
for which criminal or civil penalties against the Employee may be sought,
(ii) willful violation of the Company’s written policies, (iii) unauthorized
disclosure of confidential information or trade secrets of the Company,
(iv) engaging (directly or indirectly) in any business activity that is directly
competitive with the Company’s business; or (v) disparagement, defamation or
slander of the Company.

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  (h.) Termination Date. “Termination Date” shall mean (i) if the Employee’s
employment is terminated by the Company for Disability, thirty (30) days after
notice of termination is given to the Employee (provided that the Employee shall
not have returned to the performance of the Employee’s duties on a full-time
basis during such thirty (30)-day period), (ii) if the Employee’s employment is
terminated by the Company for any other reason, the date on which the Company
delivers notice of termination to the Company or such later date, not to exceed
ninety (90) days, specified in the notice of termination, or (iii) if the
Agreement is terminated by the Employee, the date on which the Employee delivers
notice of termination to the Company.

 

  (i.) Termination of Employment. “Termination of Employment” shall mean
“separation from service” within the meaning of Section 409A of the Code and
Section 1.409A-1(h) of the regulations promulgated under the Code or any
successor regulations.

 

  8. Successors.

 

  (a.) Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and assets
shall assume the obligations under this Agreement and agree expressly to perform
the obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term “Company” shall
include any successor to the Company’s business and assets which executes and
delivers the assumption agreement described in this Section 9(a) or which
becomes bound by the terms of this Agreement by operation of law.

 

  (b.) Employee’s Successors. The terms of this Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee’s personal or legal representatives, executors, administrators,
successors, heirs, devisees and legatees.

 

  9. Notice.

 

  (a.) General. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.

 

  (b.) Notice of Termination. Any termination by the Company for Cause or by the
Employee as a result of an Involuntary Termination shall be communicated by a
notice of termination to the other party hereto given in accordance with
Section 10(a) of this Agreement. Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the Termination
Date (which shall be not more than ninety (90) days after the giving of such
notice). The failure by the Employee to include in the notice any fact or
circumstance which contributes to a showing of Involuntary Termination shall not
waive any right of the Employee hereunder or preclude the Employee from
asserting such fact or circumstance in enforcing his rights hereunder.

 

  10. Miscellaneous Provisions.

 

  (a.) No Duty to Mitigate. The Employee shall not be required to mitigate the
amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor shall any such payment be reduced by any
earnings that the Employee may receive from any other source.

 

  (b.) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.

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  (c.) Choice of Law. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of California.

 

  (d.) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

 

  (e.) Employment Taxes. All payments made pursuant to this Agreement will be
subject to withholding of applicable income and employment taxes.

 

  (f.) Assignment by Company. The Company may assign its rights under this
Agreement to an affiliate, and an affiliate may assign its rights under this
Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case of
any such assignment, the term “Company” when used in a section of this Agreement
shall mean the corporation that actually employs the Employee.

 

  (g.) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.

   SIGNATURE OF EMPLOYEE    PRINTED NAME OF EMPLOYEE    MAILING ADDRESS Magma
Design Automation: