Exhibit 10.5

AMENDMENT NUMBER ONE TO CREDIT AGREEMENT AND CONSENT

This Amendment Number One to Credit Agreement and Consent (“Amendment”) is
entered into as of June 24, 2010, by and among the lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), and WELLS FARGO CAPITAL FINANCE,
LLC, a Delaware limited liability company, as the agent for the Lenders (in such
capacity, together with its successors and assigns in such capacity, “Agent”),
on the one hand, and MAGMA DESIGN AUTOMATION, INC., a Delaware corporation
(“Borrower”), on the other hand, with reference to the following facts:

A. Borrower, Agent, and Lenders have previously entered into that certain Credit
Agreement, dated as of March 19, 2010 (as amended and modified, from time to
time, the “Agreement”).

B. Borrower has requested that Agent and Lenders provide certain consents and
make certain amendments to the Agreement as provided for and on the conditions
set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby amend and supplement
the Agreement as follows:

1. DEFINITIONS. All initially capitalized terms used in this Amendment shall
have the meanings given to them in the Agreement unless specifically defined
herein.

2. AMENDMENTS.

(a) Clause (ix) of the definition of “EBITDA” set forth in Schedule 1.1 of the
Agreement is hereby amended to read as follows

“ix. to the extent not capitalized, losses relating to foreign currency
fluctuations, to the extent actually incurred in such fiscal period; provided
that, the cash losses from such fluctuations, together with any cash charges
described in clause (vii) preceding, shall not exceed $1,250,000 in the
aggregate in any fiscal year,”

(b) Clause (c) of Schedule 3.6 of the Agreement is hereby amended to read as
follows:

“(c) To the extent any Inactive Subsidiary has not been dissolved within 60 days
of the Closing Date (or by July 31, 2010 with respect to Aplus Design
Technologies Inc.), Borrower shall (i) deliver to Agent all necessary documents
to join such Inactive Subsidiary, as (x) a Guarantor under the Guaranty, (y) an
Obligor under the Intercompany Subordination Agreement, and (z) a Grantor under
the Security Agreement, and (ii) deliver to Agent the original certificates
representing the shares of Stock pledged under the Security Agreement with
respect to such Inactive Subsidiary, together with powers endorsed in blank with
respect to such certificates.”

(c) Clause (f) of Schedule 5.1 to the Agreement is hereby amended to read as
follows:

“(f) copies of Borrower’s Projections for the remaining term of the Agreement,
year by year, and for the forthcoming fiscal year, quarter by quarter, certified
by the chief financial officer of Borrower as being such officer’s good faith
estimate of the financial performance of Borrower during the period covered
thereby.”

 

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(d) Clauses (a), (b), (c), (d) and (e) of Schedule 5.2 to the Agreement is
hereby amended to read as follows:

 

Monthly (not later than

the 15 days (45 days in

the case of a month that is

the end of a fiscal quarter

or fiscal year) after the

end of each month)

  

(a) a Credit Amount Certificate, together

with supporting schedules and documentation,

and

 

(b) Borrower’s consolidating and

consolidated balance sheet for the prior month.

Quarterly (no later than

45 days following the end

of each fiscal quarter)

  

(c) a report that (i) segregates trailing twelve

months revenue into licenses revenue,

maintenance revenue, and services revenue, and

(ii) within licenses revenue, includes (A) sub-

totals for perpetual and time-based licenses, and

(B) further sub-totals for up-front, ratable, due

and payable, and cash receipts revenue,

  

(d) a backlog report delineating scheduled

vs. unscheduled backlog, and segmented by

estimated period of recognition, and

  

(e) a lost material customer report, with

identified cause (if known) and trailing twelve

months revenue contribution for each lost

customer.

3. AMENDMENT FEE. Borrower shall pay to Agent an amendment fee in the amount of
$30,000 for the approval, preparation and execution of this Amendment, which fee
shall be fully earned, due and payable upon the execution of this Amendment.

4. CONSENT. Borrower has informed Agent and Lenders that it intends to
(i) repurchase and retire a portion of the outstanding 2014 Notes (“Note
Repurchase”), and (ii) repurchase certain of its common stock (“Stock
Repurchase”). As the Note Repurchase and Stock Repurchase are prohibited by the
terms of the Agreement, Borrower has requested that Agent and Lenders consent
thereto. Agent and Lenders hereby consent to the Note Repurchase and Stock
Repurchase so long as: (i) the total purchase price paid for the Stock
Repurchase does not exceed the aggregate amount of $10,000,000 and the total
purchase price paid for the Note Repurchase and Stock Repurchase does not exceed
the aggregate amount of $20,000,000, (ii) the purchase price for the 2014 Notes
repurchased pursuant to the Note Repurchase does not exceed 190% of the par
value of the 2014 Notes being repurchased, (iii) the Note Repurchase and Stock
Repurchase are completed by no later than July 31, 2010, and immediately before
and after giving effect to either the Note Repurchase or the Stock Repurchase,
Availability plus domestic Qualified Cash is in an amount equal to or greater
than $15,000,000. This consent shall be effective only in this specific instance
and for the specific purpose for which it is given, and shall not entitle
Borrower to any other or further consent or waiver in any similar or other
circumstances.

5. REPRESENTATIONS AND WARRANTIES. Borrower hereby affirms to Agent and Lenders
that all of Borrower’s representations and warranties set forth in the Agreement
are true, complete and accurate in all respects as of the date hereof.

6. NO DEFAULTS. Borrower hereby affirms to Agent and Lenders that no Event of
Default has occurred and is continuing as of the date hereof.

7. CONDITIONS PRECEDENT. The effectiveness of this Amendment is hereby
conditioned upon receipt by Agent of (i) a fully executed copy of this Amendment
from each party hereto (ii) a fully executed copy of the attached Reaffirmation
of General Continuing Guaranty, and (iii) the amendment fee set forth in
Paragraph 3 above.

 

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8. REAFFIRMATION. Borrower hereby acknowledges and reaffirms (i) all of its
obligations and duties under the Loan Documents, and (ii) that the Agent, for
the ratable benefit of the Lender Group, has and shall continue to have valid,
perfected Liens in the Collateral as provided in the Security Agreement.

9. COSTS AND EXPENSES. Borrower shall pay to Agent and Lenders all of Agent’s
and Lenders’ out-of-pocket costs and expenses (including, without limitation,
the fees and expenses of its counsel, which counsel may include any local
counsel deemed necessary, search fees, filing and recording fees, documentation
fees, appraisal fees, travel expenses, and other fees) arising in connection
with the preparation, execution, and delivery of this Amendment and all related
documents.

10. LIMITED EFFECT. In the event of a conflict between the terms and provisions
of this Amendment and the terms and provisions of the Agreement, the terms and
provisions of this Amendment shall govern. In all other respects, the Agreement,
as amended and supplemented hereby, shall remain in full force and effect.

11. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
when so executed and delivered shall be deemed to be an original. All such
counterparts, taken together, shall constitute but one and the same Amendment.
This Amendment shall become effective upon the execution of a counterpart of
this Amendment by each of the parties hereto. This Amendment is a Loan Document
and is subject to all the terms and conditions, and entitled to all the
protections, applicable to Loan Documents generally.

[remainder of page left blank intentionally; signatures to follow]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first set forth above.

 

MAGMA DESIGN AUTOMATION, INC.,

a Delaware corporation

By:

 

/s/ Peter S. Teshima

Name: 

 

Peter S. Teshima

Title:

 

CFO

Amendment Number One to Credit Agreement and Consent

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WELLS FARGO CAPITAL FINANCE, LLC,

a Delaware limited liability company,

as Agent and Lender

By:

 

/s/ Daniel Morihiro

Name: 

 

Daniel Morihiro

Title:

 

VP

Amendment Number One to Credit Agreement and Consent

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REAFFIRMATION OF GENERAL CONTINUING GUARANTY

Dated as of June 24, 2010

The undersigned (the “Guarantor”), has executed a General Continuing Guaranty,
dated as of March 19, 2010 (the “Guaranty”), in favor of Wells Fargo Capital
Finance, LLC (“Agent”), respecting the obligations of Magma Design Automation,
Inc., a Delaware corporation (“Borrower”) pursuant to that certain Credit
Agreement dated as of March 19, 2010 by and between Borrower, the Lenders
signatory thereto and Agent, and other Loan Documents. Guarantor acknowledges
the terms of the above Amendment and reaffirms and agrees that: (a) its Guaranty
remains in full force and effect; (b) nothing in the Guaranty obligates Agent to
notify the undersigned of any changes in the loans and financial accommodations
made available to Borrower or to seek reaffirmation of the Guaranty; and (c) no
requirement to so notify any of the undersigned or to seek reaffirmation in the
future shall be implied by the execution of this reaffirmation.

 

GUARANTOR:     MAGMA SERVICES, INC.,    

a Delaware corporation

     

By:

 

/s/ Peter S. Teshima

     

Name: 

 

Peter S. Teshima

     

Title:

 

CFO

Reaffirmation of General Continuing Guaranty