Exhibit 10.8

AMENDMENT NUMBER FOUR TO CREDIT AGREEMENT AND CONSENT

This Amendment Number Four to Credit Agreement and Consent (“Amendment”) is
entered into as of October 29, 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 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) Schedule 1.1 of the Agreement is amended to include the following terms:

“Fourth Amendment Effective Date” has the meaning specified therefore in that
certain Amendment Number Four to Credit Agreement and Consent by and among
Borrower, Agent and Lenders have been satisfied.

“Term Loan A” has the meaning specified therefor in Section 2.2(a) of the
Agreement.

“Term Loan A Amount” means $15,000,000.

“Term Loan A Commitment” means, with respect to each Lender, its Term Loan A
Commitment, and, with respect to all Lenders, their Term Loan A Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-l or in the Assignment and Acceptance
pursuant to which such Lender became a Lender under the Agreement, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1 of the Agreement.

“Term Loan B” has the meaning specified therefor in Section 2.2(b) of the
Agreement.

“Term Loan B Amount” means $10,000,000.

“Term Loan B Commitment” means, with respect to each Lender, its Term Loan B
Commitment, and, with respect to all Lenders, their Term Loan B Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-l or in the Assignment and Acceptance
pursuant to which such Lender became a Lender under the Agreement, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1 of the Agreement.

“Term Loans” mean, collectively, Term Loan A and Term Loan B.

 

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(b) The following definitions set forth in Schedule 1.1 of the Agreement are
amended to read as follows:

“Base Rate Margin” means 3.00 percentage points with respect to Term Loan B Base
Rate Loans and 4.50 percentage points with respect to other Base Rate Loans.

“Commitment” means, with respect to each Lender, its Revolver Commitment, its
Term Loan A Commitment, its Term Loan B Commitment, or its Total Commitment, as
the context requires, and, with respect to all Lenders, their Revolver
Commitments, their Term Loan A Commitments, their Term Loan B Commitments, or
their Total Commitments, as the context requires, in each case as such Dollar
amounts are set forth beside such Lender’s name under the applicable heading on
Schedule C-l or in the Assignment and Acceptance pursuant to which such Lender
became a Lender under the Agreement, as such amounts may be reduced or increased
from time to time pursuant to assignments made in accordance with the provisions
of Section 13.1 of the Agreement.

“Credit Amount” means the result of (a) 0.50 times (b) TTM Recurring Revenue
calculated as of the last month for which financial statements have most
recently been delivered pursuant to Section 5.1 of the Agreement minus the
aggregate amount of reserves, if any, established by Agent under Section 2.1(c)
of the Agreement.

“LIBOR Rate Margin” means 3.00 percentage points with respect to Term Loan B
LIBOR Rate Loans and 4.50 percentage points with respect to other LIBOR Rate
Loans.

(c) Clause (c) of the definition of Pro Rata Share set forth in Schedule 1.1 of
the Agreement is amended to read as follows:

(c) with respect to (i) a Lender’s obligation to make Term Loan A and right to
receive payments of interest, fees, and principal with respect thereto,
(A) prior to the making of Term Loan A, the percentage obtained by dividing
(y) such Lender’s Term Loan A Commitment, by (z) the aggregate amount of all
Lenders’ Term Loan A Commitments, and (B) from and after the making of Term Loan
A, the percentage obtained by dividing (y) the principal amount of such Lender’s
portion of Term Loan A by (z) the principal amount of Term Loan A, and (ii) a
Lender’s obligation to make Term Loan B and right to receive payments of
interest, fees, and principal with respect thereto, (A) prior to the making of
Term Loan B, the percentage obtained by dividing (y) such Lender’s Term Loan B
Commitment, by (z) the aggregate amount of all Lenders’ Term Loan B Commitments,
and (B) from and after the making of Term Loan B, the percentage obtained by
dividing (y) the principal amount of such Lender’s portion of Term Loan B by
(z) the principal amount of Term Loan B, and

(d) The definitions of Term Loan, Term Loan Amount and Term Loan Commitment as
set forth in Schedule 1.1 of the Agreement are deleted, and all references to
the Term Loan in the Agreement, including Schedule 1.1 thereto, that are not
otherwise amended hereby are replaced with references to the Term Loans as
defined herein.

 

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(e) Section 2.2 of the Agreement is amended to read as follows:

2.2 Term Loans.

(a) Term Loan A. Subject to the terms and conditions of this Agreement, on the
Fourth Amendment Effective Date each Lender with a Term Loan A Commitment has
agreed (severally, not jointly or jointly and severally) to continue the term
loans (collectively, “Term Loan A”) to Borrower in an amount equal to such
Lender’s Pro Rata Share of the Term Loan A Amount. The principal of Term Loan A
shall be repaid on the following dates and in the following amounts:

 

Date

   Installment Amount  

October 31, 2010

   $ 562,500   

January 31, 2011

   $ 562,500   

April 30, 2011

   $ 562,500   

July 31, 2011

   $ 562,500   

October 31, 2010

   $ 562,500   

January 31, 2012

   $ 562,500   

April 30, 2012

   $ 562,500   

July 31, 2012

   $ 562,500   

October 31, 2012

   $ 562,500   

January 31, 2013

   $ 562,500   

April 30, 2013

   $ 562,500   

July 31, 2013

   $ 562,500   

October 31, 2013

   $ 562,500   

January 31, 2014

   $ 562,500   

April 30, 2014

   $ 562,500   

July 31, 2014

   $ 562,500   

The outstanding unpaid principal balance and all accrued and unpaid interest on
Term Loan A shall be due and payable on the earlier of (i) the Maturity Date and
(ii) the date of the acceleration of Term Loan A in accordance with the terms
hereof. Any principal amount of Term Loan A that is repaid or prepaid may not be
reborrowed. All principal of, interest on, and other amounts payable in respect
of Term Loan A shall constitute Obligations.

 

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(b) Term Loan B. Subject to the terms and conditions of this Agreement, on the
Fourth Amendment Effective Date each Lender with a Term Loan B Commitment agree
(severally, not jointly or jointly and severally) to make the term loans
(collectively, “Term Loan B”) to Borrower in an amount equal to such Lender’s
Pro Rata Share of the Term Loan B Amount. The principal of Term Loan B shall be
repaid on the following dates and in the following amounts:

 

Date

   Installment Amount  

April 30, 2011

   $ 375,000   

July 31, 2011

   $ 375,000   

October 31, 2010

   $ 375,000   

January 31, 2012

   $ 375,000   

April 30, 2012

   $ 375,000   

July 31, 2012

   $ 375,000   

October 31, 2012

   $ 375,000   

January 31, 2013

   $ 375,000   

April 30, 2013

   $ 375,000   

July 31, 2013

   $ 375,000   

October 31, 2013

   $ 375,000   

January 31, 2014

   $ 375,000   

April 30, 2014

   $ 375,000   

July 31, 2014

   $ 375,000   

The outstanding unpaid principal balance and all accrued and unpaid interest on
Term Loan B shall be due and payable on the earlier of (i) the Maturity Date and
(ii) the date of the acceleration of Term Loan B in accordance with the terms
hereof. Any principal amount of Term Loan B that is repaid or prepaid may not be
reborrowed. All principal of, interest on, and other amounts payable in respect
of Term Loan B shall constitute Obligations.

(f) Clause (I) and (J) of Section 2.4(b)(ii) of the Agreement are amended to
read as follows:

(I) ninth, ratably, to pay interest accrued in respect of the Advances (other
than Protective Advances), Term Loan A and Term Loan B until paid in full,

(J) tenth, ratably (i) to pay the principal of all Advances until paid in full,
(ii) to Agent, to be held by Agent, for the benefit of Issuing Lender (and for
the ratable benefit of each of the Lenders that have an obligation to pay to
Agent, for the account of the Issuing Lender, a share of each Letter of Credit
Disbursement), as cash collateral in an amount up to 105% of the Letter of
Credit Usage (to the extent permitted by applicable law, such cash collateral
shall be applied to the reimbursement of any Letter of Credit Disbursement as
and when such disbursement occurs and, if a Letter of Credit expires undrawn,
the cash collateral held by Agent in respect of such Letter of Credit shall, to
the extent permitted by applicable law, be reapplied pursuant to this
Section 2.4(b)(ii), beginning with tier (A) hereof), (iii) ratably, to the Bank
Product Providers based upon amounts then certified by the applicable Bank
Product Provider to Agent (in form and substance satisfactory to Agent) to be
due and payable to such Bank Product Providers on account of Bank Product
Obligations, (iv) to pay the outstanding principal balance of Term Loan A (in
the inverse order of the maturity of the installments due thereunder) until Term
Loan A is paid in full, and (v) to pay the outstanding principal balance of Term
Loan B (in the inverse order of the maturity of the installments due thereunder)
until Term Loan B is paid in full,

 

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(g) Clause (ii) of Section 2.4(c) of the Agreement is amended to read as
follows:

(ii) Term Loan Commitments. The Term Loan A Commitments shall terminate upon the
making of Term Loan A. The Term Loan B Commitments shall terminate upon the
making of Term Loan B.

(h) Clause (ii) of Section 2.4(d) of the Agreement is amended to read as
follows:

(ii) Term Loan A. Borrower may, upon at least 10 Business Days’ prior written
notice to Agent, prepay the principal of Term Loan A, in whole or in part. Each
such prepayment shall be in an amount which is not less than $1,000,000 unless
the principal of Term Loan A immediately prior to such prepayment is less than
$1,000,000. Each prepayment made pursuant to this Section 2.4(d)(ii) shall be
accompanied by the payment of accrued interest to the date of such payment on
the amount prepaid. Each such prepayment shall be applied against the remaining
installments of principal due on Term Loan A on a pro rata basis (for the
avoidance of doubt, any amount that is due and payable on the Maturity Date
shall constitute an installment).

(i) Clause (iii) of Section 2.4(d) of the Agreement is added to read as follows:

(iii) Term Loan B. Borrower may, upon at least 10 Business Days’ prior written
notice to Agent, prepay the principal of Term Loan B, in whole or in part. Each
such prepayment shall be in an amount which is not less than $1,000,000 unless
the principal of Term Loan A immediately prior to such prepayment is less than
$1,000,000. Each prepayment made pursuant to this Section 2.4(d)(iii) shall be
accompanied by the payment of accrued interest to the date of such payment on
the amount prepaid. Each such prepayment shall be applied against the remaining
installments of principal due on Term Loan B on a pro rata basis (for the
avoidance of doubt, any amount that is due and payable on the Maturity Date
shall constitute an installment).

(j) Clause (i) and (ii) of Section 2.4(f) of the Agreement are amended to read
as follows:

(i) Each prepayment pursuant to Section 2.4(e)(i) shall, (A) so long as no
Application Event shall have occurred and be continuing, be applied, first, to
the outstanding principal amount of the Advances until paid in full, second, to
the outstanding principal amount of Term Loan A and Term Loan B, ratably, until
paid in full, and third, to cash collateralize the Letters of Credit in an
amount equal to 105% of the then extant Letter of Credit Usage, and (B) if an
Application Event shall have occurred and be continuing, be applied in the
manner set forth in Section 2.4(b)(ii). Each such prepayment of Term Loan A and
Term Loan B shall be applied against the remaining installments of principal of
Term Loan A and Term Loan B, respectively, on a pro rata basis (for the
avoidance of doubt, any amount that is due and payable on the Maturity Date
shall constitute an installment).

(ii) Each prepayment pursuant to Section 2.4(e)(ii), 2.4(e)(iii), 2.4(e)(iv),
2.4(e)(v), or 2.4(e)(vi) above shall (A) so long as no Application Event shall
have occurred and be continuing, be applied, first, to the outstanding principal
amount of Term Loan A and Term Loan B, ratably, until paid in full, second, to
the outstanding principal amount of the Advances (with a corresponding permanent
reduction in the Maximum Revolver Amount), until paid in full, and third, to
cash collateralize the Letters of Credit in an amount equal to 105% of the then
extant Letter of Credit Usage (with a corresponding permanent reduction in the
Maximum Revolver Amount), and (B) if an Application Event shall have occurred
and be continuing, be applied in the manner set forth in Section 2.4(b)(ii).
Each such prepayment of Term Loan A and Term Loan B shall be applied against the
remaining installments of principal of Term Loan A and Term Loan B,
respectively, on a pro rata basis (for the avoidance of doubt, any amount that
is due and payable on the Maturity Date shall constitute an installment).

(k) Section 3.3 of the Agreement is amended to read as follows:

3.3 Maturity. This Agreement shall continue in full force and effect for a term
ending on October 29, 2014 (the “Maturity Date”). The foregoing notwithstanding,
the Lender Group, upon the election of the Required Lenders, shall have the
right to terminate its obligations under this Agreement immediately and without
notice upon the occurrence and during the continuation of an Event of Default.

 

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(1) Section 14.1(a)(xi) of the Agreement is amended to read as follows:

(xi) amend, modify, or eliminate the definition of Credit Amount or any of the
defined terms (including the definitions of TTM Recurring Revenue and TTM
EBITDA) that are used in such definition to the extent that any such change
results in more credit being made available to Borrower based upon the Credit
Amount, but not otherwise, or the definitions of Maximum Revolver Amount, Term
Loan A Amount or Term Loan B Amount, or change Section 2.1(c).

(m) The table set forth on Schedule 1.1 to the Agreement is amended to read as
follows:

 

Lender

   Revolver
Commitment      Term Loan A
Commitment      Term Loan B
Commitment      Total
Commitment  

Wells Fargo Capital Finance LLC

   $ 15,000,000       $ 15,000,000       $ 10,000,000       $ 40,000,000   

All Lenders

   $ 15,000,000       $ 15,000,000       $ 10,000,000       $ 40,000,000   

3. CONSENT. Borrower has informed Agent and Lenders that it intends to
(i) repurchase and retire a portion of the outstanding 2014 Notes (the “Note
Repurchase”) and in order to induce certain holders of the 2014 Notes into the
Note Repurchase, Borrower has proposed to pay each such holder an inducement fee
(an “Inducement Fee”), and (ii) repurchase certain of its common stock (the
“Stock Repurchase”). As the Note Repurchase, Stock Repurchase and the payment of
the Inducement Fees 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, the Stock Repurchase and the payment of the
Inducement Fees so long as: (i) no Default or Event of Default exists at the
time the Note Repurchase, the Stock Repurchase or an Inducement Fee is made or
will result therefrom, (ii) the amount of the Inducement Fees paid to the
holders of the 2014 Notes does not exceed an aggregate amount equal to 15% of
the face value of the 2014 Notes being repurchased, (iii) the Note Repurchase,
the Stock Repurchase and the payment of the Inducement Fees are completed by no
later than October 31, 2011, (iv) the aggregate amount of consideration paid
after the Fourth Amendment Effective Date for the Stock Repurchase and Note
Repurchase does not exceed $25,000,000, and (v) immediately before and after
giving effect to the Note Repurchase, the Stock Repurchase or the payment of an
Inducement Fee, Availability plus domestic Qualified Cash is in an amount equal
to or greater than $20,000,000. 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.

4. 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.

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

6. 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) a fully executed copy of the Amended
and Restated Fee Letter (the first date on which all such conditions have been
satisfied is referred hereto as, the “Fourth Amendment Effective Date”).

7. REAFFIRMATION. Borrower 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.

 

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8. 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.

9. 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.

10. 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 Four 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/ David Morihiro

Name: 

 

David Morihiro

Title:

 

VP

Amendment Number Four to Credit Agreement and Consent

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REAFFIRMATION OF GENERAL CONTINUING GUARANTY

Dated as of October 29, 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 among 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