MENTOR GRAPHICS CORPORATION THIRD AMENDMENT TO CREDIT AGREEMENT AND LIMITED WAIVER

Exhibit 4(A)

MENTOR GRAPHICS CORPORATION

THIRD AMENDMENT

TO CREDIT AGREEMENT AND LIMITED WAIVER

This THIRD AMENDMENT TO CREDIT AGREEMENT AND LIMITED WAIVER (this “ Amendment ”) is dated as of April 12, 2007 and entered into by and among Mentor Graphics Corporation, an Oregon corporation (the “ Company ”), the financial institutions from time to time party to the Credit Agreement (as defined below) (the “ Banks ”) and Bank of America, N.A., as administrative agent for the Banks (the “ Agent ”), and is made with reference to that certain Credit Agreement dated as of June 1, 2005 (the “ Credit Agreement ”), as amended by that certain First Amendment to Credit Agreement dated as of November 8, 2005 and that certain Second Amendment to Credit Agreement dated as of June 20, 2006 (the “ Credit Agreement ”), by and among the Company, the Banks, KeyBank National Association, as documentation agent, and the Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement.

RECITALS

WHEREAS, the Company has requested that the Banks agree to certain amendments to the negative covenants set forth in the Credit Agreement as set forth below and the Banks have agreed to such request, subject to the terms and conditions of this Amendment;

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

The Credit Agreement and the Annexes thereto are hereby amended by deleting the word “calendar” each time it appears therein (other than in the definitions of “ Interest Payment Date ”, “ Interest Period ” and “ Multiemployer Plan ” and Sections 2.09(b) and 10.07) and substituting the word “fiscal” therefor.

Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Consolidated EBITDA” contained therein and substituting the following therefor:

“ Consolidated EBITDA ” means, with respect to the Company and its Subsidiaries on a consolidated basis for any rolling four-fiscal quarter period, Consolidated Net Income for such period plus , to the extent deducted in computing such net income, the sum of (a) income tax expense, (b) interest expense, and (c) depreciation and amortization expense, all as determined in accordance with GAAP; provided that for the fiscal periods ending January 31, 2007, April 30, 2007, July 31, 2007 and October 31, 2007, Consolidated EBITDA shall be deemed to be Consolidated Net Income for the thirteen-month period ended on such date plus , to the extent deducted in computing such net income, the sum of (a) income tax expense, (b) interest expense, and (c) depreciation and amortization expense, all as determined in accordance with GAAP divided by 13 and multiplied by 12.

Sections 7.14(a), (b), (c), (d) and (e) of the Credit Agreement are hereby amended by deleting them in their entirety and substituting the following therefor:

“(a) Adjusted Quick Ratio . The Company shall not as of the end of any fiscal quarter suffer or permit its ratio (determined in respect of the Company and its Subsidiaries on a consolidated basis) of (i) cash

plus the value (valued in accordance with GAAP) of all Cash Equivalents plus net current accounts receivable (valued in accordance with GAAP), less Restricted Amounts, to (ii) Consolidated Current Liabilities (excluding all liabilities that will be satisfied by Restricted Amounts) (the “ Adjusted Quick Ratio ”), to be less than 0.75 to 1.00. If on or prior to the end of any fiscal quarter, the Company has repaid, repurchased, redeemed or otherwise retired Subordinated Indebtedness in an aggregate amount (for all such repayments, repurchases, redemptions and other retirements since the Closing Date) equal to or greater than (i) $37,500,000 but less than $75,000,000 with cash on hand (other than cash on hand that constitutes, or is replaced by, Offset Proceeds) or the proceeds of Senior Indebtedness, then the minimum Adjusted Quick Ratio as of the end of such fiscal quarter shall be increased by 0.05; or (ii) $75,000,000 with cash on hand (other than cash on hand that constitutes, or is replaced by, Offset Proceeds) or the proceeds of Senior Indebtedness, then the minimum Adjusted Quick Ratio as of the end of such fiscal quarter shall be increased by 0.10. For purposes of this paragraph, “ Offset Proceeds ” shall mean Net Cash Issuance Proceeds from an issuance of new equity or new Subordinated Indebtedness consummated within 120 days before or after the date of such repayment, repurchase, redemption or other retirement of Subordinated Indebtedness; provided that (x) with respect to any fiscal quarter which ends during such 120-day period, if the Company has delivered written notice that it intends to issue new equity or new Subordinated Indebtedness within such 120-day period, then the increase in the minimum Adjusted Quick Ratio shall not apply to such fiscal quarter, and (y) if sufficient new equity or new Subordinated Indebtedness is not issued during such 120-day period then the increase in the minimum Adjusted Quick Ratio shall be retroactively applicable as of the end of each fiscal quarter during such 120-day period.

(b) Minimum Tangible Net Worth . The Company shall not as of the end of any fiscal quarter permit Consolidated Tangible Net Worth to be less than the sum of (i) $30,000,000, plus (ii) for each fiscal quarter commencing with the fiscal quarter ending March 31, 2005 (to the extent Consolidated Net Income for any such fiscal quarter is positive), 70% of Consolidated Net Income for such fiscal quarter, plus (iii) 100% of the amortization of intangible assets for each fiscal quarter commencing with the fiscal quarter ending March 31, 2005, plus (iv) 100% of the Net Issuance Proceeds of any new equity issued by the Company after December 31, 2004 (excluding (A) equity issued under employee stock option or purchase plans and (B) equity issued to finance an Acquisition, provided that such amount is in fact applied to transaction costs relating to such Acquisition and such Acquisition is consummated no later than 120 days after the date of such issuance), minus (v) goodwill and other intangibles arising during such fiscal quarter from Acquisitions permitted pursuant to Section 7.04, minus (vi) without duplication, the lesser of (A) the actual goodwill and other intangibles arising from cash Acquisitions consummated during the period from January 1, 2005 through the Closing Date and (B) $30,000,000; provided that (A) for purposes of clauses (ii) and (iii) above, the fiscal quarter ended January 31, 2007 shall be deemed to be the period commencing on January 1, 2007 and ending on January 31, 2007, (B) the aggregate amount of goodwill and other intangibles excluded under clause (v) above in connection with any Acquisition shall be the product of (1) the Net Cash Consideration given in respect of such Acquisition divided by the total fair market value of all cash and non-cash consideration given in respect of such Acquisition multiplied by (2) the aggregate amount of all goodwill and other intangibles acquired in such Acquisition, and (C) the aggregate amount of all goodwill and other intangibles excluded under clause (v) above in any fiscal year shall in no case exceed the amount of Net Cash Consideration permitted to be given in respect of Acquisitions in such fiscal year under Section 7.04(d)(i).

(c) Leverage Ratio . The Company shall not as of the end of any fiscal quarter suffer or permit the Leverage Ratio to be greater than 2.20 to 1.00.

(d) Senior Leverage Ratio . The Company shall not as of the end of any fiscal quarter suffer or permit the Senior Leverage Ratio to be greater than 0.90 to 1.00.

(e) Minimum Cash and Accounts Receivable . The Company shall not as of the end of any fiscal quarter suffer or permit its ratio (determined on a consolidated basis) of (i) cash plus the value (valued in accordance with GAAP) of all Cash Equivalents plus 47.5% of current accounts receivable (valued in accordance with GAAP), less Restricted Amounts, to (ii) the then outstanding principal amount of the Loans, to be less than 1.25 to 1.00. “

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Exhibit C to the Credit Agreement is hereby deleted and Annex I hereto substituted therefor.

Section 2. WAIVER

Subject to the terms and conditions set forth herein and in reliance on the representations and warranties of the Company herein contained, the Banks hereby waive compliance with the provisions of Section 7.13 of the Credit Agreement to the extent necessary to permit the Company to change its fiscal year end to January 31 from December 31. Without limiting the generality of the provisions of Section 10.01 of the Credit Agreement, the waiver set forth above shall be limited precisely as written and relates solely to the noncompliance by the Company with the provisions of Section 7.13 of the Credit Agreement in the manner and to the extent described above, and nothing in this Amendment shall be deemed to:

(i) constitute a waiver of compliance by the Company with respect to (i) Section 7.13 of the Credit Agreement in any other instance or (ii) any other term, provision or condition of the Credit Agreement or any other instrument or agreement referred to therein; or

(ii) prejudice any right or remedy that the Banks may now have (except to the extent such right or remedy was based upon existing defaults that will not exist after giving effect to this Amendment) or may have in the future under or in connection with the Credit Agreement or any other instrument or agreement referred to therein.

Section 3. COMPANY’S REPRESENTATIONS AND WARRANTIES

In order to induce the Banks to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, the Company represents and warrants to each Bank that the following statements are true, correct and complete:

A. Corporate Power and Authority . The Company has all requisite corporate power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the “ Amended Agreement ”).

B. Authorization of Agreements . The execution and delivery of this Amendment and the performance of the Amended Agreement have been duly authorized by all necessary corporate action on the part of the Company.

C. No Conflict . The execution and delivery by the Company of this Amendment and the performance by the Company of the Amended Agreement do not and will not (i) contravene the terms of the Company’s Organization Documents; (ii) conflict with or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation to which the Company is a party or any order, injunction, writ or decree of any Governmental Authority to which the Company or its property is subject; or (iii) violate any Requirement of Law; except, in each case referred to in the foregoing clauses (ii) and (iii), where the conflict, breach, contravention, creation or violation is not reasonably expected to have a Material Adverse Effect.

D. Governmental Consents . No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution and delivery of the Amendment by the Company or the performance by, or enforcement against, the Company of the Amended Agreement.

E. Binding Effect . This Amendment has been duly executed and delivered by the Company and this Amendment and the Amended Agreement are the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.

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F. Incorporation of Representations and Warranties From Credit Agreement . The representations and warranties contained in Article V of the Credit Agreement are and will be true and correct in all material respects on and as of the date hereof with the same effect as if made on and as of that date, (except to the extent such representations and warranties expressly refer to an earlier date, in which case they were true and correct in all material respects as of such earlier date).

G. Absence of Default . No Default or Event of Default exists or shall result from this Amendment.

Section 4. MISCELLANEOUS

A. Reference to and Effect on the Credit Agreement and the Other Loan Docu