NOVELL, INC. DEFERRED COMPENSATION PLAN

Exhibit 10.3

NOVELL, INC.

DEFERRED COMPENSATION PLAN

Original effective Date: November 1, 1994

Amended and Restated effective November 1, 1999 and January 1, 2003

Amended and Restated effective January 1, 2005 for IRC §409A

TABLE OF CONTENTS

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NOVELL, INC.

DEFERRED COMPENSATION PLAN

(Amended and Restated for IRC §409A effective January 1, 2005)

ARTICLE 1

INTRODUCTION

1.1 Establishment of Plan. Novell, Inc. established the Novell, Inc. Deferred Compensation Plan (“Prior Plan”) effective as of November 1, 1994. This document is a continuation of the Prior Plan.

1.2 Purpose of Plan. Novell, Inc. established this Plan to provide select employees with the opportunity to defer the receipt of compensation and a vehicle through which to do so. Novell, Inc. intends to maintain the Plan primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. The Plan will be interpreted in a manner consistent with these intentions.

1.3 Restatement of Plan. This document is a restatement in full of the Prior Plan, effective January 1, 2005. It incorporates all amendments to the Prior Plan that have been adopted by the Company. Those amendments include:

First Amendment, adopted October 13, 2000, to be effective November 1, 2000;

Second Amendment, adopted March 31, 2001, to be effective November 1, 2000;

Third Amendment, adopted November 1, 2001, to be effective January 1, 2002; and

Fourth Amendment, adopted November 20, 2002, to be effective January 1, 2003.

To the extent the First through Fourth Amendments provide for effective dates after November 1, 1994, this document shall refer to the respective amendments for the specific dates.

1.4 Transition Rule for Benefits Subject to Code §409A. This document includes additional provisions which are intended to satisfy the requirements of Code §409A and the final regulations issued thereunder. Those provisions are identified throughout this document and shall be effective as of the Effective Date of this restated Plan, unless another date is specifically referenced. Pre-409A Amounts in a Participant’s Deferral Account shall be subject only to the terms of the Plan as they existed before the Effective Date. Only Post-409A Amounts in the Participant’s Deferral Account shall be subject to the provisions of this Plan which become effective on the Effective Date.

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ARTICLE 2

DEFINITIONS

Definitions are contained in this article and throughout other sections of the Plan. The location of a definition is for convenience only and should not be given any significance. A word or term defined in this article (or in any other article) will have the same meaning throughout the Plan unless the context clearly requires a different meaning.

2.1 Base Salary means the total amount of annual remuneration paid to an employee on a periodic basis throughout the Plan Year as basic pay, calculated prior to any bonus or commission payment or any other supplemental payment or fringe benefit, regardless of the nature or basis for payment.

2.2 Beneficiary means the individual(s) or entity designated by a Participant, or by the Plan, to receive any benefit payable upon the death of a Participant or Beneficiary. A Beneficiary designation may be signed by the Participant and delivered to the Committee on a form specified by the Committee for that purpose or may be completed electronically and submitted by the Participant to the Plan in conformance with procedures established by the Plan. In the absence of a valid or effective Beneficiary designation, the Beneficiary designated by the Participant in the beneficiary designation form which has been submitted to the Novell 401(k) Plan shall govern. In the absence of a valid or effective beneficiary designation form for the Novell 401(k) Plan, the beneficiary shall be (in the following order): the Participant’s surviving spouse or, if there is no surviving spouse, the Participant’s children, by representation, and if there are no surviving children or issue thereof, the Participant’s estate.

2.3 Board means the Board of Directors of the Company.

2.4 Bonus means the quarterly bonus amounts (effective January 1, 2003, regularly-scheduled bonuses) payable to a Participant with respect to a Plan Year in accordance with the applicable, written bonus program sponsored by the Company. Bonus also includes any performance based compensation (as that term is defined in I.R. Reg. §1.409A-1(e)) paid or payable to the Participant for the Plan Year, except to the extent the performance based compensation could be deemed to include equity based pay, but excludes any payments made under the Company’s long term cash bonus awards program.

2.5 Change in Control Event means the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, as defined in accordance with this Section.

In order for a Change in Control Event to occur with respect to a Participant, except as otherwise provided in part (b)(ii) of this Section, the Change in Control Event must relate to the Company for which the Participant is providing services, the Company that is liable for payment of the Participant’s Deferral Account (or the Company and all affiliated companies liable for payment,

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if more than one), as identified by the Committee in accordance with Reg. §1.409A-3(i)(5)(ii)(A)(2), or another corporation, identified by the Committee in accordance with Reg. §1.409A-3(i)(5)(ii)(A)(3), which is a majority shareholder of the Company or is in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending with the Company for which the Participant is providing services or the Company that is liable for payment of the Participant’s Deferral Account.

In determining whether an event is a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, the following provisions shall apply:

(a) A “change in the ownership” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by the person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, as determined in accordance with Reg. §1.409A-3(i)(5)(v). If a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of the Company, or to have effective control of the Company within the meaning of part (b) below, and the person or group acquires additional stock of the Company, the acquisition of additional stock by the person or group shall not be considered to cause a “change in the ownership” of the Company.

(b) A “change in the effective control” of the applicable corporation shall occur on either of the following dates:

(i) The date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of such corporation possessing 30% or more of the total voting power of the stock of such corporation, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi). If a person or group is considered to possess 30% or more of the total voting power of the stock of a corporation, and such person or group acquires additional stock of such corporation, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the effective control” of such corporation; or

(ii) The date on which a majority of the members of the applicable corporation’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such corporation’s board of directors before the date of the appointment or election, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi). In determining whether the event described in the preceding sentence has occurred, the applicable corporation to which the event must relate shall only include a corporation identified in accordance with Treas. Reg. §1.409A-3(i)(5)(ii) for which no other corporation is a majority shareholder.

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(c) A “change in the ownership of a substantial portion of the assets” of the applicable corporation shall occur on the date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately before such acquisition or acquisitions, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii). A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the transferor corporation, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii)(B).

2.6 Code means the Internal Revenue Code of 1986, as amended from time to time.

2.7 Commissions means the total remuneration earned by an Eligible Employee for the Plan Year where a substantial portion of the services provided by the Eligible Employee to the Company consist of the direct sale of a product or service to an unrelated customer of the Company, plus remuneration paid by the Company to the Eligible Employee which consists of either a portion of the purchase price for the product or service or an amount substantially all of which is calculated by reference to the volume of sales, and payment of the remuneration is either contingent upon the Company receiving payment from an unrelated customer for the product or services or, if applied consistently to all similarly situated Eligible Employees, is contingent upon the closing of the sales transaction and such other requirements as may be specified by the Company before the closing of the sales transaction. Commissions shall also include remuneration which is not otherwise a Bonus (as defined in Section 2.4), but which is designated by the Company as one or more incentive payments made under the Company’s sales compensation plans as part of the total remuneration earned by an Eligible Employee.

2.8 Committee means the Compensation Committee of the Board. The Committee will serve as the “plan administrator” to manage and control the operation and administration of the Plan, within the meaning of ERISA Section 3(16)(A).

2.9 Company means Novell, Inc., a corporation organized under the laws of the state of Delaware, any successor of Novell, Inc., and any affiliate thereto designated by the Committee as a participating employer.

2.10 Compensation means the total of the employee’s Base Salary, Commissions and Bonuses for the Plan Year. For purposes of this Plan Compensation excludes all other forms of remuneration from the Company for services, including by way of illustration, but not limited to, special incentive payments, non-standard or ad-hoc bonuses, restricted stock payments, proceeds from stock options, stock appreciation rights, severance payments, moving expenses, car or other special allowances, or any other amounts included in an Eligible Employee’s taxable income on account of the Eligible Employee’s employment relationship with the Company.

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2.11 Deferral Account means a bookkeeping account established for and maintained on behalf of a Participant to which deferred Compensation amounts, Company Matching contributions, and net income (or losses) thereon, are credited.

2.12 Deferred Compensation Agreement means an agreement entered into by a Participant and the Company to reduce the Participant’s Compensation described in Section 3.4 for a specified period and contribute such amounts to the Plan, in accordance with Article III.

2.13 Disability means, when determining a distribution right applicable to a Pre-409A Account, the term “disability” (or any similar term) as defined in the Company’s long-term disability program and which results in payments to the Participant under such program.

For benefits which become payable under this Plan on account of disability and which are not attributable to any Pre-409A Account, the term disability means a condition which causes the Participant to be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. A Participant shall also be deemed disabled if (i) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, the Participant has been receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company, or (ii) the Participant has been determined to be to be totally disabled by the Social Security Administration.

2.14 Effective Date means the January 1, 2005, the effective date of the restatement of this Plan to comply with the requirements of Code §409A.

2.15 Employee means an individual who provides personal services to the Company as a common law employee of the Company. An individual who provides services to the Company only as an independent contractor (as determined in the sole discretion of the Committee) or only as a member of the Board shall not be deemed an Employee for purposes of this Plan.

2.16 Eligible Employee means an Employee who is either (i) designated in writing by the Committee as eligible to participate in the Plan, or (ii) eligible to participate in the Novell 401(k) Plan, designated in writing by the Committee as eligible to participate in the Plan and either a Vice President (or more senior officer) of the Company or an Employee whose Base Salary equals or exceeds $150,000. Effective January 1, 2002, Eligible Employee means an Employee who is either (iii) identified by the Committee (or one or more persons designated by the Committee for that purpose) as eligible to participate in the Plan, or (iv) eligible to participate in the Novell 401(k) Plan, identified by the Committee (as provided in (iii) above) as eligible to participate in the Plan and whose Base Salary plus Commissions for the Plan Year is or is expected to be equal to or in excess of $200,000 (as indexed each year thereafter under IRC §401(a)(17)). For purposes of calculating whether an Employee’s Base Salary plus Commissions will satisfy the minimum required amount for

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the Plan Year the Plan may anticipate or estimate the amount of Commissions an Employee may reasonably expect to be paid. Except as otherwise provided in Section 3.1 (concerning an Employee who ceases to be an Eligible Employee) and Section 3.3 (in connection with an Employee who first becomes an Eligible Employee), an Employee’s status as an Eligible Employee for a Plan Year shall be determined immediately prior to the first day of such Plan Year. Notwithstanding the foregoing, the Committee may determine in writing that an otherwise Eligible Employee shall not be eligible to participate in this Plan.

2.17 ERISA means the Employee Retirement Income Security Act of 1974, as amended.

2.18 Hardship means, with respect to distribution on account of hardship of amounts attributable to the Participant’s Pre-409A Account, an unforeseeable and unanticipated emergency which is caused by an event beyond the control of the Participant and which creates a severe financial need for the Participant. The emergency must result from (a) an illness or accident of the Participant, the Participant’s spouse or the Participant’s dependent; (b) loss of the Participant’s property due to casualty; (c) imminent foreclosure of or eviction from the Participant’s primary residence; (d) the need to pay for medical expenses, including non-refundable deductibles and prescription drug medication, (e) funeral expenses of a family member of the Participant; or (f) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Except in extraordinary circumstances, the purchase of a home or the payment of college tuition are not unforeseeable emergencies.

For a distribution of all other amounts on account of hardship, “hardship” shall mean an unforeseeable emergency causing severe adverse financial consequences to the Participant which result from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in Code §152, without regard to §§152(b)(1), (b)(2), and (d)(1)(B)); loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Except as otherwise provided in this paragraph, the purchase of a home and the payment of college tuition are not unforeseeable emergencies.

2.19 Insolvent means the Company is (i) unable to pay its debts as they become due, or (ii) subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

2.20 Investment Fund or Funds mean the investment funds designated by the Committee as the basis for determining the investment return to the allocated Participants’ Deferral Accounts. The Committee may change the Investment Funds at such times as it deems appropriate.

2.21 Novell 401(k) Plan means the Novell, Inc. 401(k) Retirement and Savings Plan.

2.22 Participant means an Eligible Employee who is eligible to participate in the Plan as provided in Section 3.1 and who has made an election to defer compensation pursuant to the Plan.

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2.23 Plan means the Novell, Inc. Deferred Compensation Plan, as set forth in this document, as amended from time to time.

2.24 Plan Year means, through October 31, 2000, the Company’s fiscal year. The Plan Year commencing November 1, 2000, shall be a short year and shall end December 31, 2000. The following Plan Year shall commence January 1, 2001, and shall continue through and end as of December 31, 2001. Thereafter the Plan Year shall be the calendar year. The short Plan Year for the period November 1, 2000 through December 31, 2000 shall not trigger any election right or any other right of the Participant to modify any deferral election or choice made effective November 1, 2000.

2.25 Post-409A Amount or Amounts means all amounts deferred to and payable from the Participant’s Deferral Account under this restated Plan which are not Pre-409A Amounts.

2.26 Pre-409A Amount or Amounts means all amounts deferred to and payable from the Participant’s Deferral Account under this restated Plan, which accrued before the January 1, 2005 effective date, including all earnings credited thereon after the effective date. In applying this provision amounts deferred shall be deemed accrued on the date when first credited to the Participant’s Deferral Account, except that amounts credited on or after January 1, 2005 shall nevertheless be deemed credited prior to that date, if the Participant to whose Deferral Account the amount is credited had a legally binding right prior to January 1, 2005 to be paid the amount, the right was earned and vested, and the amount would have been paid to the Participant, but for the provisions of a prior Deferred Compensation Agreement of the Participant directing deferral of the amount to this Plan. A right to be paid an amount was earned and vested prior to January 1, 2005 only if the amount was not subject to a substantial risk of forfeiture (as defined in I.R. Reg. §1.409A-1(d)) or a requirement to perform further services for the Company.

2.27 Retirement Age means, while employed by the Company, attaining age 55 with 10 Years of Vesting Service, or attaining age 65.

2.28 Specified Employee means a common law employee of the Company who on the date he or she separates from employment has been determined to be a Specified Employee as of the most recent Specified Employee Effective Date, because on the immediately prior Specified Employee Identification Date he or she was (i) an officer of the Company having Specified Employee Compensation greater than $130,000, (ii) a 5% owner of the Company (within the meaning of Code §416(I)(1)(B)(i)), or a 1 percent owner of the Company having Specified Employee Compensation of more than $150,000 (within the meaning of Code §416(i)(1)(B)(ii). In no event shall more than 50 employees (or, if lesser, the greater of 3 or 10 percent of the employees in the Company) be deemed Specified Employees on any Specified Employee Identification Date. The $130,000 amount in clause (i) above shall be adjusted from year to year in the same manner provided under Code §415(d).

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An employee who is designated on a Specified Employee Identification Date as a Specified Employee shall be deemed a Specified Employee as of the Specified Employee Effective Date and for the 12 month period immediately following.

2.29 Specified Employee Compensation means, solely for purposes of determining whether an employee is a Specified Employee under Section 2.24, the total compensation (as defined in Section 7.01(b) of the Novell 401(k) Plan) paid or payable to the employee for the Plan Year containing the Specified Employee Identification Date.

2.30 Specified Employee Effective Date means the first day of the fourth month immediately following the Specified Employee Identification Date.

2.31 Specified Employee Identification Date means December 31.

2.32 Year of Vesting Service means, with respect to a Participant, a “year of vesting service” as credited to such Participant under the Novell, Inc. Employee Retirement and Savings Plan or any successor plan thereto.

ARTICLE 3

PARTICIPATION

3.1 Eligibility. An Eligible Employee of the Company shall participate in the Plan only to the extent and for the period that the Eligible Employee is selected by the Committee and is a member of a select group of management or highly compensated employees as such group is described under Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. An individual who is an Eligible Employee as of the first day of the Plan Year but who ceases to be an Eligible Employee during the Plan Year for any reason other than separation from employment, death or disability (a “disqualifying event”) shall be permitted to terminate immediately his participation in the plan by notifying the Committee in writing within 60 days of the disqualifying event of his election. In the absence of an election within this period the individual shall continue to participate in the Plan with respect to any Deferred Compensation Agreements in effect for such Plan Year, but shall not be permitted to enter into any new Deferred Compensation Agreements with the Company unless and until the individual again becomes an Eligible Employee. An individual who is an Eligible Employee and who has participated in the Plan for the Plan Year ended December 31, 2001, shall be permitted to continue to participate for the Plan Year commencing January 1, 2002, if so elected by the Eligible Employee, without regard to whether the Eligible Employee satisfies the new eligibility requirements of Section 2.12 effective January 1, 2002. The Eligible Employee may continue to participate for each Plan Year thereafter, so long as no break in participation occurs and the Eligible Employee otherwise continues to satisfy the requirements of this Section 3.1.

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From and after the Effective Date an Employee whose Base Salary plus Commissions for the Plan Year (and anticipated Base Salary plus Commissions in the succeeding Plan Year) will equal or exceed the dollar limit under IRC §401(a)(17), as indexed and increased each Plan Year thereafter) shall also be an Eligible Employee. An Employee’s initial compliance with the foregoing requirements and status as an Eligible Employee shall be determined by the Committee at least semi-annually. For purposes of calculating whether an Employee’s Base Salary plus Commissions will satisfy the minimum required amount for the Plan Year the Committee may anticipate or estimate the amount of Commissions an employee may reasonably expect to be paid, even though such amounts may be contingent on events which have not yet and may not occur. An Employee who is an Eligible Employee as of the first day of the Plan Year but who ceases to be an Eligible Employee during the Plan Year for any reason other than separation from employment, death or disability (a “disqualifying event”) shall continue to participate in the Plan for the remainder of the Plan Year with respect to any Deferred Compensation Agreements in effect for the Plan Year, but deferral of the Participant’s Compensation shall cease as of the end of that Plan Year and the Participant shall not be permitted to continue deferral of Compensation or enter into any new Deferred Compensation Agreements with the Company unless and until the Employee again becomes an Eligible Employee.

3.2 Participation. An Eligible Employee who participates in the Plan may elect to defer under an agreement described in Section 3.4 the receipt of Compensation subsequently earned by the Eligible Employee. The Eligible Employee may make his or her election in accordance with Section 3.3. The Company shall withhold amounts deferred by the Participant in accordance with this election. The Participant’s deferred amounts shall be credited to the Deferral Account as provided in Article V and distributed in accordance with Article VI. An election to defer receipt of Compensation shall continue in effect for a given Plan Year unless the Participant separates from employment.

From and after the Effective Date an election to defer made by an Eligible Employee shall only apply to Compensation first earned in the following Plan Year. Notwithstanding the foregoing, if the Employee is determined to be an Eligible Employee for the first time on a semi-annual or other date applied by the Committee during a Plan Year, the Eligible Employee may make his or her initial deferral election within 30 days after the date he or she becomes eligible to participate. The deferral election shall apply to Compensation paid during the same Plan Year, but only to the extent it constitutes Compensation paid for services performed after the election. A Participant who incurs a disqualifying event and ceases to be an Eligible Employee and defer Compensation, but who again becomes an Eligible Employee may participate in the Plan and make a new election to defer Compensation first earned in the following Plan Year. A former Eligible Employee who has again become an Eligible Employee during the Plan Year may recommence participation as of July 1, provided he or she has made a new deferral election no later than June 30. The election shall apply to Compensation paid during the same Plan Year, but only to the extent it constitutes Compensation paid for services performed after June 30 and only if the Eligible Employee has not been eligible to defer Compensation to the Plan at any time during the 24 month period ending on the date the Employee again becomes eligible to participate in the plan.

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3.3 Election Procedure. An election to defer Compensation under an agreement described in Section 3.4 shall be made through any electronic me