EMPLOYMENT AGREEMENT

Exhibit 10.3

EMPLOYMENT AGREEMENT

AGREEMENT (this “Agreement”) made this 14th day of August, 2007 by and between Peter Levine (the “Executive”) and Citrix Systems, Inc. and its affiliates, subsidiaries, divisions, successors and assigns, including, but not limited to, the Surviving Entity (as defined below) (collectively, “Citrix” or the “Company”).

WHEREAS, XenSource, Inc. (“XenSource”), Citrix Systems, Inc., PVA Acquisition Corporation, a wholly-owned subsidiary of Citrix Systems, Inc. (the “Merger Sub”), PVA Acquisition LLC, a wholly-owned subsidiary of Citrix Systems, Inc. (the “LLC”), and the Stockholder Representative named therein have executed an Agreement and Plan of Merger and Reorganization dated as of August 14, 2007 (the “Merger Agreement”) whereby the Merger Sub shall be merged (the “Merger”) with and into XenSource, with XenSource to be the surviving corporation of the Merger and whereby the surviving corporation shall subsequently be merged (the “LLC Merger”) with and into LLC, with the LLC to be the surviving entity and a wholly-owned subsidiary of XenSource (the “Surviving Entity”);

WHEREAS, Citrix’s business is conducted throughout the world and Citrix’s reputation and goodwill are an integral part of its business success;

WHEREAS, the Executive’s position with the Company shall require that he be trusted with extensive confidential and trade secret information about the Company, and that he develop a thorough and comprehensive knowledge of all details of the Company’s business, including, but not limited to, information relating to research, development, inventions, financial and strategic planning, research, marketing, distribution and licensing of the Company’s products and services;

WHEREAS, execution of this Agreement by the Executive is a condition to Parent’s execution of the Merger Agreement, and the execution by the Executive of the Executive Confidentiality, Non-Solicitation and Non-Competition Agreement (attached hereto as Exhibit A ) (the “Non-Solicitation Agreement”) is a condition to the execution by Citrix of this Agreement and the Merger Agreement;

WHEREAS, this Agreement shall not become effective or enforceable until the Effective Time (as defined in the Merger Agreement);

WHEREAS, as a material inducement to Citrix entering into the Merger Agreement and consummating the Merger, and in consideration of the covenants and agreements set forth in the Merger Agreement, and in order to provide Citrix with the full benefits of the Merger, the Executive has agreed to execute and deliver this Agreement and the Non-Solicitation Agreement because he wishes to induce XenSource and Citrix to consummate the Merger, which would not occur absent his executing this Agreement and the Non-Solicitation Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the mutual covenants and obligations herein contained, the parties hereto agree as follows:

1. Position and Responsibilities . During the term of this Agreement, the Executive agrees to initially serve as Senior Vice President and General Manager, XenSource Division of Citrix, reporting to Mark Templeton, or in such other comparable positions and with such other title or reporting structure as may be assigned from time to time. The Executive agrees to devote substantially all of his business time and efforts to the performance of his duties hereunder. The Executive shall exercise such powers and comply with and perform, faithfully and to the best of his ability, such directions and duties in relation to the business and affairs of the Company as may from time to time be vested in or requested of him. The Executive shall devote substantially all of his business time, attention and energies to the Company’s business and shall not engage in any other business activity which (i) interferes with the performance of his duties hereunder, (ii) creates a conflict of interest or the appearance of a conflict of interest, or (iii) competes with the business activities, products or services of the Company. The Executive shall perform his services under this Agreement at such locations as may be required by the Company.

2. Merger-related Payments . The parties hereto acknowledge that in connection with the Merger, the Executive is eligible to receive a transaction bonus payment, subject to the terms and conditions of the Transaction Bonus Plan as described in this Section 2. Prior to the Merger, the XenSource Board of Directors will have adopted a 2007 Transaction Bonus Plan (the “TB Plan”) and allocated the Executive a bonus award thereunder of $7,671,068 (a “Bonus Award”). At the Effective Time, Citrix will have assumed the TB Plan. The Executive’s receipt of a cash payment in respect of the Bonus Award under the TB Plan is contingent upon the Executive signing a General Release in the form and substance satisfactory to Citrix and is otherwise subject to the terms and conditions of the TB Plan.

3. Compensation: Salary, Bonus and Other Benefits . During the term of this Agreement, the Company shall pay to the Executive, as consideration for the Executive’s satisfactory performance of his duties, the following compensation:

(A) Salary . In consideration of the services to be rendered by the Executive to the Company, the Company initially will pay to the Executive a semi-monthly salary of $12,500 (annualized, $300,000) (the Executive’s “Base Salary”) during the term of this Agreement. Such Base Salary shall be payable in conformity with the Company’s customary practices for executive compensation, as such practices shall be established or modified from time to time.

(B) Fringe Benefits . During the term hereof and subject to any contribution therefor generally required of executives of XenSource, the Executive shall be eligible to participate in all employee benefits plans of XenSource from time to time adopted by XenSource and in effect for executives of XenSource in similar positions. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable policies of XenSource, and (iii) the discretion of XenSource, the Company and/or the Company’s board of directors (the “Board”) or any administrative or other committee provided for in or contemplated in any such plan. XenSource’s current plans and policies shall govern all

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benefits. Commencing after XenSource’s benefits plans have been terminated, and subject to eligibility requirements under Citrix’s employee and/or executive benefits plans, the Executive will be eligible to participate in Citrix’s employee and/or executive benefits plans. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable policies of Citrix, and (iii) the discretion of Citrix and/or the Board or any administrative or other committee provided for in, or contemplated by, any such plan. The Company may alter, modify, add to, or delete its or their employee benefits plans at any time as they and/or the Board, in their sole judgment, determine to be appropriate.

(C) Vacation . During the term hereof, the Executive shall be eligible to accrue paid vacation per calendar year, to be taken at such times and intervals as shall be agreed to by the Company and the Executive in their reasonable discretion. The accrual and use of the Executive’s vacation days will be in accordance with the Company’s regular vacation policy in effect from time to time. Vacation days accrued but unused by the Executive prior to the Effective Time of the Merger shall be carried over as already accrued vacation after the Effective Time.

(D) Target Based Bonus . During the term hereof, the Executive also may be eligible to receive a bonus of up to $210,000 for each calendar year of full-time employment as an executive (beginning January 1, 2008). Such bonus, if any, shall be based on the Company’s and the Executive’s achievement (as determined by the Company) of goals and objectives, which are to be mutually determined by the Company and the Executive at their reasonable discretion. No bonus under this paragraph shall be payable to the Executive with respect to any calendar year during which his employment is terminated, regardless of the manner of such termination, except as set forth in Section 5(G). To be eligible for a bonus, the Executive must be employed by the Company on the date that the bonus is paid, except as set forth in Section 5(G). The Executive agrees and acknowledges that he is not eligible for any bonus or incentive payment under any XenSource plan, and that all such plans have been terminated.

(E) Expenses . The Company shall pay or reimburse the Executive for all reasonable business expenses incurred or paid by the Executive in the performance of his responsibilities hereunder in accordance with the Company’s prevailing policy and practice relating to reimbursements as established, modified or amended from time to time. The Executive must provide substantiation and documentation of these expenses to the Company in order to receive reimbursement.

(F) Tax Withholding . All payments in this Agreement shall be subject to all applicable federal, state and local withholding, payroll and other taxes, and the Company may withhold from any such amounts due to the Executive in order to satisfy such withholding obligations.

4. Term . Subject to the earlier termination as hereafter provided in Section 5, the term of this Agreement shall commence at the Effective Time and shall continue until two (2) years therefrom. At the end of the term, the Agreement will expire and, if the parties mutually

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desire for the Executive to remain employed, such employment will continue solely on an “at-will” basis, which means that either the Company or the Executive can terminate the Executive’s employment at any time, for any or no reason, and with or without cause or prior notice.

5. Termination . The Agreement and the Executive’s employment under this Agreement may be terminated as follows:

(A) By Expiration of the Agreement . If this Agreement expires as set forth in Section 4 hereof, the Executive shall be entitled to no further payments or benefits pursuant to this Agreement, but the Executive’s employment shall continue solely on an “at-will” basis, as described in Section 4 above.

(B) At the Executive’s Option. The Executive may terminate his employment under this Agreement at any time by giving at least thirty (30) business days’ advance written notice to the Company. In the event of a termination at the Executive’s option, the Company may accelerate the Executive’s departure date and will have no obligation to pay the Executive after his actual departure date. In the event of termination at the Executive’s option, the Executive shall be entitled to no payments, salary continuation, severance or other benefits, except for earned but unpaid Base Salary and vacation to the extent accrued but unused through the Executive’s actual departure date, and reimbursement for any previously incurred expenses as set forth in Section 3(E).

(C) At the Election of the Company or the Board for Cause . The Company or the Board may, immediately and unilaterally, terminate the Executive’s employment under this Agreement for “Cause” at any time during the term of this Agreement without any prior notice to the Executive, except as set forth below. Termination by the Company or the Board shall constitute a termination for Cause under this Section 5(C) if such termination is for one or more of the following causes: