Item 1.01. Entry into a Material Definitive Agreement

On April 20, 2009, Magma Design Automation, Inc. ("Magma") entered into an amendment to the Credit Agreement between Magma and Wells Fargo Bank, National Association ("Wells Fargo"), effective as of October 31, 2008, as well as two related revolving line of credit notes and a related security agreement with Wells Fargo (collectively, the "Amendment").

The two revolving line of credit notes allow for a maximum borrowing of $7.5 million each and replace the existing $15.0 million line of credit facility. The Amendment expires on December 31, 2009, and is secured by collateral that includes a $7.5 million certificate of deposit and first priority interests in all the Company's accounts receivable, intangible assets, inventory and equipment.

Outstanding borrowings under the first note shall not exceed the lesser of $7.5 million or 80% of the Company's eligible accounts receivable plus an additional amount not to exceed (i) $2.0 million up to and including May 3, 2009; and
(ii) $1.0 million from May 4, 2009 up to and including August 2, 2009; and
(iii) zero thereafter. The note bears an annual interest rate equal to a fluctuating rate of 3.5% above Wells Fargo's prime rate or a fixed rate of 3.5% above LIBOR, at management's election, on outstanding borrowings.

Outstanding borrowings under the second note shall not exceed $7.5 million, including two existing letters of credit, which total $1.7 million. The note bears an annual interest rate equal to a fluctuating rate of 1.5% above Wells Fargo's prime rate or a fixed rate of 1.5% above LIBOR, at management's election, on outstanding borrowings.

The Company is required to pay interest and fees monthly, with the outstanding principal amount plus all accrued but unpaid interest and fees payable in full at the expiration of the Amendment.

Pursuant to the Amendment, the Company has pledged to grant to Wells Fargo a security interest in deposits equal to the amount of outstanding borrowings and letters of credit outstanding in excess of the maximum allowable. The Amendment also requires that the Company maintain certain financial conditions.

A copy of the Amendment will be filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ending May 3, 2009.

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