Exhibit 4.2


 


XYRATEX LTD


Restricted Stock Unit Agreement


Grant Notice


Xyratex
Ltd (the “Company”) hereby grants you, [Name]
(the “Employee”), an award of Restricted Stock Units (“RSUs”) under the Company’s
2006 Incentive Award Plan (the “Plan”), the terms of which are hereby
incorporated by reference.  Your award of
RSUs represents an unsecured right to acquire common shares of the Company at a
future date.  The date of this Restricted
Stock Unit Agreement, which includes Appendix A and  Appendix B attached
hereto and incorporated herein by reference (the “Agreement”), is [Date].  Subject to the
remaining terms of this Agreement and of the Plan, the principal features of
this award are as follows:


Number of RSUs:   [Number] (the
“Total Grant”)


Vesting of RSUs:   The RSUs will vest according to the
following schedule (the “Vesting Schedule”):


The number of RSUs
eligible for vesting shall be equal to the product of the Total Grant and the
Achievement Ratio (as defined in Appendix B) as determined on [Date] (the “Determination Date”) and rounded down to the
nearest whole unit (the “Vesting Eligible RSUs”).


So long as you remain in
Continuous Service through each such date, twenty-five percent (25%) of the Vesting
Eligible RSUs (rounding up to the nearest whole RSU) shall become vested on [Date](the “Vesting Start Date”) and on each anniversary of
the Vesting Start Date such that one hundred percent (100%) of the Vesting
Eligible RSUs are vested on the third (3rd) anniversary of the Vesting Start
Date.


For the purposes of this
Agreement, “Continuous Service” means that the Employee’s service with the
Company is not interrupted or terminated. 
The Employee’s Continuous Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Employee renders
service to the Company.  The Board or the
chief executive officer of the Company, in that party’s sole discretion, may
determine whether Continuous Service shall be considered interrupted in the
case of any leave of absence approved by that party, including sick leave,
military leave or any other personal leave


Unless otherwise
defined herein, in Appendix A or in Appendix B, capitalized terms
herein, in Appendix A or in Appendix B shall have the defined
meanings ascribed to them in the Plan.


Your signature
below indicates your agreement and understanding that this award is subject to
all of the terms and conditions contained in this Agreement (including Appendix A
and Appendix B) and the Plan.  For
example, important additional information on vesting and forfeiture of the RSUs
is contained in Paragraphs 4 through 6 of Appendix A and
important additional information on Taxes is contained in Paragraph 6(b) of
Appendix A.  PLEASE BE SURE TO READ
ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS
AGREEMENT AND APPENDIX B WHICH CONTAINS THE SPECIFIC FORMULA BY WHICH RSUs MAY
BECOME ELIGIBLE FOR VESTING.


	
  XYRATEX LTD

  	
   

  	
   

  	
   

  	
  EMPLOYEE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [NAME]

  	
   

  	
   

  	
   

  	
  [NAME]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [TITLE]

  	
   

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date: [Date]

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
									



 



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APPENDIX A


TERMS AND CONDITIONS OF RESTRICTED STOCK
UNITS


1.             Grant.  The Company hereby grants to the Employee
under the Plan an award of that number of RSUs set forth on the first page of
this Agreement, subject to all of the terms and conditions in this Agreement
and the Plan.


2.             Plan Governs.  The RSUs are issued pursuant to, and the
terms of this Agreement are subject to, all terms and provisions of the Plan.  In the event of a conflict between one or
more provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan will govern.


3.             Company’s Obligation to Pay.  Each RSU has a value equal to the Fair Market
Value of a Share on the date the Shares subject thereto are distributed.  Unless and until the RSUs will have vested in
the manner set forth in paragraphs 4 and 5, the Employee will have no
right to payment of any such RSUs.  Prior
to actual payment of any vested RSUs, such RSUs will represent an unsecured right
to acquire Shares in the Company, payable (if at all) only from the general
assets of the Company.


4.             Vesting Schedule.  Subject to paragraph 5, the RSUs awarded by
this Agreement will vest in the Employee according to the Vesting Schedule set
forth on the first page of this Agreement, subject to the Employee’s remaining
in Continuous Service through such vesting period(s) or date(s).


5.             Forfeiture.


(a)           Upon Failure to Attain Performance
Targets.  On the Determination Date,
that number of RSUs calculated by subtracting the Vesting Eligible RSUs from
the Total Grant shall be forfeited at no cost to the Company and the Employee
shall have no further rights thereunder.


(b)           Upon Termination as Service
Provider.  Notwithstanding any
contrary provision of this Agreement, if the Employee terminates Continuous
Service for any or no reason, the then-unvested RSUs awarded by this Agreement
will thereupon be forfeited at no cost to the Company and the Employee shall
have no further rights thereunder.  To
the extent not already paid, RSUs that vest in accordance with the Vesting
Schedule shall be paid following the Employee’s termination of Continuous
Service in accordance with Section 6 below.


6.             Payment of Shares after Vesting.


(a)           Shares subject to any RSUs that vest
in accordance with the Vesting Schedule will be paid to the Employee (or in the
event of the Employee’s death, to his or her estate) in whole Shares on the
Vesting Start Date and on each of the first three (3) anniversaries of the
Vesting Start Date  subject to 6(b) below
(the Vesting Start Date and each such anniversary a “Distribution Date”), in
each case not later than ten (10) days following each Distribution Date, with
respect to Shares subject to those RSUs that have vested prior to each such
date (without regard to whether the Employee is employed on such Distribution
Date).


(b)           The Employee hereby consents that to
the extent determined appropriate by the Company all taxes including but not
limited to, any federal, state, local and other withholding taxes with respect
to such RSUs, will be paid by reducing the number of Shares actually paid to
the Employee the Company shall withhold, or procure a withholding, from any
distribution or any payment hereunder, or require payment of, any taxes and
social security due in connection with the RSUs.  If appropriate, the Shares delivered to the
Employee in connection with this award of RSUs will be reduced to satisfy any
withholding obligations.


7.             Rights as Shareholder.


(a)
Prior to the Distribution Date, the Employee shall not be treated as the owner
of the Shares, the 



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Employee shall not
have any rights as a shareholder as to those Shares and the Employee shall have
only a contractual right to receive them, unsecured by any assets of the
Company or any affiliate.


(b) Neither
the Employee nor any person claiming under or through the Employee will have
any of the rights or privileges of a Shareholder of the Company in respect of
any Shares deliverable hereunder unless and until certificates representing
such Shares will have been issued, recorded on the records of the Company or
its transfer agents or registrars, and delivered to the Employee.


8.             No Effect on Employment.  This Agreement is not an employment contract,
and nothing herein shall be deemed to create in any way whatsoever any
obligation on the Employee’s part to continue in the employ of the Company, or
of the Company to continue the Employee’s employment with the Company.


9.             Address for Notices.  Any notice to be given to the Company under
the terms of this Agreement will be addressed to the Company (attention: Chief
Financial Officer, Langstone Road, Havant, P09 1SA, United Kingdom), or at such
other address as the Company may hereafter designate in writing.  Any notices provided for in this Agreement or
the Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by the Company to the Employee, ten
(10) days after deposit in the United States mail, postage prepaid, addressed
to the Employee at the address specified on the first page of this Agreement or
at such other address as the Employee may hereafter designate by written notice
to the Company.


10.           Transferability.  Except as approved by the Committee and to
the limited extent provided in Section 6, this grant and the rights and
privileges conferred hereby, including without limitation the Shares issuable
following the vesting of the RSUs, will not be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise) and will
not be subject to sale under execution, attachment or similar process until,
with respect to whole Shares issuable following the vesting of the RSUs, such
shares are issued pursuant to Section 6 above. 
Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this grant, or any right or privilege conferred hereby, or upon any
attempted sale under any execution, attachment or similar process, this grant
and the rights and privileges conferred hereby immediately will become null and
void.


11.           Binding Agreement.  Subject to the limitations on the
transferability of this grant contained herein, this Agreement will be binding
upon and inure to the benefit of the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.


12.           Additional Conditions to Issuance
of Shares.  If at any time the
Company will determine, in its discretion, that the listing, registration or
qualification of the Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition to the issuance of Shares
to the Employee (or his or her estate), such issuance will not occur unless and
until such listing, registration, qualification, consent or approval will have
been effected or obtained free of any conditions not acceptable to the
Company.  The Company will make all
reasonable efforts to meet the requirements of any such state or federal law or
securities exchange and to obtain any such consent or approval of any such
governmental authority.


13.           Committee Authority.  The Committee will have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan and this Agreement
as are consistent therewith and to interpret or revoke any such rules
(including, but not limited to, the determination of whether or not any RSUs
have vested).  All actions taken and all
interpretations and determinations made by the Committee in good faith will be
final and binding upon Employee, the Company and all other interested
persons.  No member of the Committee will
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Agreement.


14.           Captions.  Captions provided herein are for convenience
only and are not to serve as a basis for interpretation or construction of this
Agreement.



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15.           Agreement Severable.  In the event that any provision in this
Agreement will be held invalid or unenforceable, such provision will be
severable from, and such invalidity or unenforceability will not be construed
to have any effect on, the remaining provisions of this Agreement.


16.           Amendment.  The Committee may amend, terminate or revoke
this Agreement in any respect to the extent determined necessary or desirable
by the Committee in its discretion to comply with the requirements of Section
409A of the Internal Revenue Code of 1986, as amended.  Employee expressly understands and agrees
that no additional consent of Employee shall be required in connection with
such amendment, termination or revocation.


 



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APPENDIX B


ACHIEVEMENT RATIO


1.             Achievement Ratio.  The “Achievement Ratio” for any time period
shall be equal to the sum of the following Performance Condition Weightings at
its sole discretion, where the performance as determined by the Committee has
been successfully achieved.


2.             Performance Condition Weightings


[Performance
Criteria]


 



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