10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2009

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              To             

Commission File Number: 0-12906

RICHARDSON ELECTRONICS, LTD.

(Exact name of registrant as specified in its charter)

Delaware	36-2096643
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

40W267 Keslinger Road, P.O. Box 393	LaFox, Illinois 60147-0393
(Address of principal executive offices)

Registrant’s telephone number, including area code: (630) 208-2200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	¨	Accelerated Filer	x
Non-Accelerated Filer	¨  (Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

As of April 6, 2009, there were outstanding 14,865,370 shares of Common Stock, $0.05 par value and 3,048,258 shares of Class B Common Stock, $0.05 par value, which are convertible into Common Stock of the registrant on a share for share basis.

TABLE OF CONTENTS

		Page
Part I.	Financial Information
Item 1.	Financial Statements	2
	Unaudited Condensed Consolidated Balance Sheets	2
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	3
	Unaudited Condensed Consolidated Statements of Cash Flows	4
	Unaudited Condensed Consolidated Statement of Stockholders’ Equity	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
Part II.	Other Information
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 5.	Other Information	31
Item 6.	Exhibits	31
Signatures		32
Exhibit Index		33

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

	February 28, 2009			May 31, 2008
Assets
Current assets:
Cash and cash equivalents	$	32,585		$	40,042
Accounts receivable, less allowance of $1,859 and $1,635		92,468			109,520
Inventories		94,420			93,858
Prepaid expenses		4,662			4,300
Deferred income taxes		1,929			2,121
Total current assets		226,064			249,841
Non-current assets:
Property, plant and equipment, net		20,008			28,635
Goodwill		1,432			1,483
Other intangible assets, net		480			758
Non-current deferred income taxes		3,493			3,875
Assets held for sale		—			105
Other non-current assets		256			1,538
Total non-current assets		25,669			36,394
Total assets	$	251,733		$	286,235
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	53,255		$	58,860
Accrued liabilities		17,376			21,818
Total current liabilities		70,631			80,678
Non-current liabilities:
Long-term debt		52,353			55,683
Long-term income tax liabilities		4,900			6,768
Other non-current liabilities		1,437			1,676
Total non-current liabilities		58,690			64,127
Total liabilities		129,321			144,805
Commitments and contingencies		—			—
Stockholders’ equity
Common stock, $0.05 par value; issued 15,930 shares at February 28, 2009, and 15,929 shares at May 31, 2008		797			797
Class B common stock, convertible, $0.05 par value; issued 3,048 shares at February 28, 2009, and 3,048 shares at May 31, 2008		152			152
Preferred stock, $1.00 par value, no shares issued		—			—
Additional paid-in-capital		120,208			119,735
Common stock in treasury, at cost, 1,065 shares at February 28, 2009, and 1,065 shares at May 31, 2008		(6,310	)		(6,310	)
Retained earnings		8,283			11,098
Accumulated other comprehensive income (loss)		(718	)		15,958
Total stockholders’ equity		122,412			141,430
Total liabilities and stockholders’ equity	$	251,733		$	286,235

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Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Statements of Operations

and Comprehensive Income (Loss)

(in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	February 28, 2009			March 1, 2008			February 28, 2009			March 1, 2008
Statements of Operations
Net sales	$	110,316		$	138,866		$	381,814		$	413,316
Cost of sales		86,590			107,625			292,191			315,637
Gross profit		23,726			31,241			89,623			97,679
Selling, general, and administrative expenses		27,686			32,029			84,089			93,312
(Gain) loss on disposal of assets		5,778			(81	)		5,856			(70	)
Operating income (loss)		(9,738	)		(707	)		(322	)		4,437
Other (income) expense:
Interest expense		1,130			1,371			3,489			5,615
Investment (income) loss		33			45			(337	)		(571	)
Foreign exchange (gain) loss		(153	)		(249	)		(2,636	)		1,552
Gain on retirement of long-term debt		—			—			(849	)		—
Other, net		74			25			(92	)		33
Total other (income) expense		1,084			1,192			(425	)		6,629
Income (loss) from continuing operations before income taxes		(10,822	)		(1,899	)		103			(2,192	)
Income tax provision		563			267			1,861			1,045
Loss from continuing operations		(11,385	)		(2,166	)		(1,758	)		(3,237	)
Income (loss) from discontinued operations, net of tax		—			(10	)		—			45
Net loss	$	(11,385	)	$	(2,176	)	$	(1,758	)	$	(3,192	)
Net loss per common share – basic:
Loss from continuing operations	$	(0.65	)	$	(0.12	)	$	(0.10	)	$	(0.18	)
Income (loss) from discontinued operations		0.00			(0.00	)		0.00			0.00
Net loss per common share – basic	$	(0.65	)	$	(0.12	)	$	(0.10	)	$	(0.18	)
Net loss per Class B common share – basic:
Loss from continuing operations	$	(0.58	)	$	(0.11	)	$	(0.09	)	$	(0.17	)
Income (loss) from discontinued operations		0.00			(0.00	)		0.00			0.01
Net loss per Class B common share – basic	$	(0.58	)	$	(0.11	)	$	(0.09	)	$	(0.16	)
Net loss per common share – diluted:
Loss from continuing operations	$	(0.65	)	$	(0.12	)	$	(0.10	)	$	(0.18	)
Income (loss) from discontinued operations		0.00			(0.00	)		0.00			0.00
Net loss per common share – diluted	$	(0.65	)	$	(0.12	)	$	(0.10	)	$	(0.18	)
Net loss per Class B common share – diluted:
Loss from continuing operations	$	(0.58	)	$	(0.11	)	$	(0.09	)	$	(0.17	)
Income (loss) from discontinued operations		0.00			(0.00	)		0.00			0.01
Net loss per Class B common share – diluted	$	(0.58	)	$	(0.11	)	$	(0.09	)	$	(0.16	)
Weighted average number of shares:
Common shares - basic		14,858			14,805			14,856			14,790
Class B common shares - basic		3,048			3,048			3,048			3,048
Common shares - diluted		14,858			14,805			14,856			14,790
Class B common shares - diluted		3,048			3,048			3,048			3,048
Dividends per common share	$	0.020		$	0.020		$	0.060		$	0.100
Dividends per Class B common share	$	0.018		$	0.018		$	0.054		$	0.090
Statements of Comprehensive Income (Loss)
Net loss	$	(11,385	)	$	(2,176	)	$	(1,758	)	$	(3,192	)
Foreign currency translation		(2,213	)		3,233			(16,560	)		12,033
Fair value adjustments on investments		17			111			(116	)		(244	)
Comprehensive income (loss)	$	(13,581	)	$	1,168		$	(18,434	)	$	8,597

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Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	Three Months Ended						Nine Months Ended
	February 28, 2009			March 1, 2008			February 28, 2009			March 1, 2008
Operating activities:
Net loss	$	(11,385	)	$	(2,176	)	$	(1,758	)	$	(3,192	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization		1,103			1,367			3,462			3,940
Gain on retirement of long-term debt		—			—			(849	)		—
(Gain) loss on disposal of assets		5,778			(81	)		5,856			(70	)
Write-off of deferred financing costs		—			—			—			643
Stock compensation expense		164			176			468			523
Deferred income taxes		319			49			259			(930	)
Accounts receivable		6,647			2,401			8,719			7,801
Inventories		4,177			10,115			(6,221	)		8,686
Prepaid expenses		808			685			(414	)		1,217
Accounts payable		(8,207	)		(10,010	)		(2,800	)		1,681
Accrued liabilities		(1,505	)		(1,745	)		(3,737	)		(8,590	)
Other		86			(1,186	)		(1,428	)		(3,451	)
Net cash provided by (used in) operating activities		(2,015	)		(405	)		1,557			8,258
Investing activities:
Capital expenditures		(389	)		(301	)		(887	)		(4,193	)
Proceeds from sale of assets		124			620			175			1,007
Contingent purchase price		165			(160	)		26			(160	)
(Gain) loss on sale of investments		2			121			(8	)		129
Proceeds from sales of available-for-sale securities		25			188			124			345
Purchases of available-for-sale securities		(25	)		(31	)		(124	)		(188	)
Net cash provided by (used in) investing activities		(98	)		437			(694	)		(3,060	)
Financing activities:
Proceeds from borrowings		34,400			51,800			92,300			163,200
Payments on debt		(34,400	)		(41,800	)		(92,300	)		(218,840	)
Retirement of long-term debt		—			—			(2,364	)		—
Restricted cash		—			—			—			61,899
Proceeds from issuance of common stock		—			—			5			69
Cash dividends		(353	)		(351	)		(1,057	)		(1,756	)
Other		—			—			—			(95	)
Net cash provided by (used in) financing activities		(353	)		9,649			(3,416	)		4,477
Effect of exchange rate changes on cash and cash equivalents		(429	)		661			(4,904	)		3,431
Increase (decrease) in cash and cash equivalents		(2,895	)		10,342			(7,457	)		13,106
Cash and cash equivalents at beginning of period		35,480			20,200			40,042			17,436
Cash and cash equivalents at end of period	$	32,585		$	30,542		$	32,585		$	30,542

4

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Statement of Stockholders’ Equity

(in thousands)

	Common	Class B Common	Par Value		Additional Paid In Capital		Common Stock in Treasury			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance May 31, 2008:	15,929	3,048	$	949	$	119,735	$	(6,310	)	$	11,098		$	15,958		$	141,430
Net loss	—	—		—		—		—			(1,758	)		—			(1,758	)
Foreign currency translation	—	—		—		—		—			—			(16,560	)		(16,560	)
Fair value adjustments on investments	—	—		—		—		—			—			(116	)		(116	)
Share-based compensation:
Non-vested restricted stock	—	—		—		25		—			—			—			25
Stock options	—	—		—		443		—			—			—			443
Common stock issued	1	—		—		5		—			—			—			5
Dividends paid to:
Common ($0.060 per share)	—	—		—		—		—			(892	)		—			(892	)
Class B ($0.054 per share)	—	—		—		—		—			(165	)		—			(165	)
Balance February 28, 2009:	15,930	3,048	$	949	$	120,208	$	(6,310	)	$	8,283		$	(718	)	$	122,412

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RICHARDSON ELECTRONICS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE COMPANY

Richardson Electronics, Ltd. (“we”, “us”, and “our”) was originally incorporated in the state of Illinois in 1947 and is currently incorporated in the state of Delaware. We are a global provider of engineered solutions and a global distributor of electronic components to the radio frequency (“RF”), wireless and power conversion, electron device, and display systems markets. Utilizing our core engineering and manufacturing capabilities, we are committed to a strategy of providing specialized technical expertise and value-added products, or “engineered solutions,” in response to our customers’ needs. These solutions include products which we manufacture or modify and products which are manufactured to our specifications by independent manufacturers under our own private labels. Additionally, we provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, and logistics for end products of our customers. Design-in support includes component modifications or the identification of lower-cost product alternatives or complementary products.

Our products include RF and microwave components, power semiconductors, electron tubes, microwave generators, and data display monitors. These products are used to control, switch or amplify electrical power signals, or are used as display devices in a variety of industrial, commercial, and communication applications.

Our sales and marketing, product management, and purchasing functions are organized as follows:

RF, Wireless & Power Division (“RFPD”) serves the global RF and wireless communications market, including infrastructure, wireless networks, and the power conversion market.

Electron Device Group (“EDG”) provides engineered solutions and distributes electronic components to customers in diverse markets including the steel, automotive, textile, plastics, semiconductor manufacturing, and broadcast industries.

Canvys (formerly the Display Systems Group or “DSG”) provides global integrated display products, systems and digital signage solutions serving financial, corporate enterprise, healthcare, and industrial markets.

We currently have operations in the following major geographic regions:

• North America;

• Asia/Pacific;

• Europe; and

• Latin America.

2. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Item 10 of Regulation S-K. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements.

6

In the opinion of management, all adjustments necessary for a fair presentation of the results of interim periods have been made. All inter-company transactions and balances have been eliminated. The unaudited condensed consolidated financial statements presented herein include the accounts of our wholly owned subsidiaries. The results of operations and cash flows for the three and nine months ended February 28, 2009, are not necessarily indicative of the results that may be expected for the fiscal year ending May 30, 2009.

During the second quarter of fiscal 2009, we renamed our DSG business unit to Canvys. This change from DSG to Canvys signifies its evolution to a market-driven solutions group.

During the first quarter of fiscal 2009, we moved our Cathode Ray Tube (“CRT”) product line from our Canvys segment to our EDG segment. As a result of implementing a new business plan for Canvys during the third quarter of fiscal 2008, the CRT product line more closely aligned with the existing EDG business model. Prior period segment information has been restated to reflect this change.

Our fiscal quarter ends on the Saturday nearest the end of the quarter ending month. The first nine months of fiscal 2009 and 2008 each contain 39 weeks.

The financial information contained in this report should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended May 31, 2008.

3. DISCONTINUED OPERATIONS / ASSETS HELD FOR SALE

Discontinued Operations Held for Sale:

On May 31, 2007, we completed the sale of the Security Systems Division/Burtek Systems (“SSD/Burtek”) to Honeywell International Incorporated (“Honeywell”). We present SSD/Burtek as a discontinued operation in accordance with the criteria of Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”), and prior period results and disclosures have been restated to reflect this reporting.

The sale agreement of SSD/Burtek to Honeywell contemplated a post-closing working capital-based purchase price adjustment. During the second quarter of fiscal 2008, we received notification from Honeywell seeking a purchase price adjustment in the amount of $6.4 million. During the third and fourth quarters of fiscal 2008, we reviewed and responded to Honeywell’s notice. We believe this claim to be without merit and intend to vigorously defend our position with respect to this claim. Should we ultimately pay Honeywell all, or a significant portion, of the requested amount, it could have a material adverse impact on results of our discontinued operations and cash flows.

Net sales, gross profit, income tax provision (benefit), and income (loss) from discontinued operations for the three and nine months ended March 1, 2008, are presented in the following table (in thousands):

	Three Months March 1, 2008			Nine Months March 1, 2008
Net Sales	$	167		$	736
Gross profit		41			209
Income tax provision (benefit)		(4	)		21
Income (loss), net of tax		(10	)		45

The net sales, gross profit, income tax provision (benefit), and income (loss) from discontinued operations during the three and nine months ended March 1, 2008, represent the operations of our Colombia location which were included in the SSD/Burtek sale agreement with Honeywell, but were not transferred as part of the May 31, 2007, closing. During the first quarter of fiscal 2008, we mutually agreed with Honeywell that Honeywell would not purchase the SSD/Burtek Colombia business, and that we would wind down the SSD/Burtek Colombia business in exchange for a payment from Honeywell equal to a portion of the value of the SSD/

7

Burtek business in Colombia on May 31, 2007, including reimbursement of related employee severance expenses. We ceased operations of the SSD/Burtek business in Colombia during the third quarter of fiscal 2008. Results of the operation of the SSD/Burtek business in Colombia are included in discontinued operations in accordance with SFAS No. 144.

Assets Held for Sale:

On February 20, 2009, we sold our building in Mexico City, Mexico, for $0.1 million. We recorded an immaterial gain during the third quarter of fiscal 2009 with respect to the sale of this property.

4. ASSET DISPOSALS

During the third quarter of fiscal 2009, management made the decision to not implement various modules of enterprise resource management software that were in the development stage and were capitalized in accordance with Accounting Standards Executive Committee State of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. As a result, we recorded a loss on disposal of $5.8 million during the third quarter of fiscal 2009.

5. INVESTMENT IN MARKETABLE EQUITY SECURITIES

Our investments are primarily equity securities, all of which are classified as available-for-sale and are carried at their fair value, based on the quoted market prices. The fair value of our equity securities, which are included in other non-current assets, were $0.3 million as of February 28, 2009, and $0.4 million as of May 31, 2008. Proceeds from the sale of securities were an immaterial amount during the third quarter of fiscal 2009 and $0.2 million during the third quarter of fiscal 2008. Proceeds from the sale of securities were $0.1 million and $0.3 million during the first nine months of fiscal 2009 and 2008, respectively. During the third quarter of fiscal 2008, we retained $0.2 million of proceeds from the sale of securities. In prior periods, all proceeds from the sale of securities were reinvested. Gross realized gains on those sales were an immaterial amount during the third quarter and first nine months of fiscal 2009 and 2008. Gross realized losses on those sales were an immaterial amount during the third quarter and first nine months of fiscal 2009. Gross realized losses on those sales were $0.2 million for both the third quarter and first nine months of fiscal 2008. Net unrealized holding losses of $0.1 million during the first nine months of fiscal 2009 have been included in accumulated other comprehensive income for fiscal 2009. Net unrealized holding losses of $0.1 million and $0.4 million during the third quarter and first nine months of fiscal 2008, respectively, have been included in accumulated comprehensive income for fiscal 2008.

The following table presents the disclosure under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, for the investment in marketable equity securities with fair values less than cost basis (in thousands):

	Marketable Security Holding Length
	Less Than 12 Months				More Than 12 Months				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
February 28, 2009
Common Stock	$	12	$	15	$	26	$	16	$	38	$	31
May 31, 2008
Common Stock	$	25	$	3	$	46	$	5	$	71	$	8

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6. GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill during the first nine months ended February 28, 2009, by reportable segment were as follows (in thousands):

	Goodwill
	RFPD			EDG			Canvys		Total
Balance at May 31, 2008	$	551		$	932		$	—	$	1,483
Contingent purchase price consideration		(26	)		—			—		(26	)
Foreign currency translation		7			(32	)		—		(25	)
Balance at February 28, 2009	$	532		$	900		$	—	$	1,432

Intangible assets subject to amortization were as follows (in thousands):

	Intangible Assets Subject to Amortization
	February 28, 2009				May 31, 2008
	Gross Amounts		Accumulated Amortization		Gross Amounts		Accumulated Amortization
Deferred financing costs	$	1,115	$	635	$	2,744	$	1,986
Trademarks		478		478		478		478
Total	$	1,593	$	1,113	$	3,222	$	2,464

Deferred financing costs decreased during the first nine months of fiscal 2009 due primarily to the write-off of previously capitalized deferred financing costs of $0.1 million related to the retirement of $3.3 million of the 8% convertible senior subordinated notes (“8% notes”) on November 7, 2008, and the write-off of fully amortized deferred financing costs.

Amortization expense during the three and nine month periods ended February 28, 2009, and March 1, 2008, was as follows (in thousands):

	Amortization Expense for Three Months				Amortization Expense for Nine Months
	February 28, 2009		March 1, 2008		February 28, 2009		March 1, 2008
Deferred financing costs	$	48	$	58	$	161	$	216
Total	$	48	$	58	$	161	$	216

The amortization expense associated with the intangible assets subject to amortization for the next five years is presented in the following table (in thousands):

Fiscal Year	Amortization Expense
2009	$	48
2010	$	190
2011	$	190
2012	$	52
2013	$	—
Thereafter	$	—

The weighted average number of years of amortization expense remaining is 2.52.

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7. WARRANTIES

We offer warranties for specific products we manufacture. We also provide extended warranties for some products we sell that lengthen the period of coverage specified in the manufacturer’s original warranty. Our warranty terms generally range from one to three years.

We estimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product sale. We record expense related to our warranty obligations as cost of sales in our unaudited condensed consolidated statements of operations and comprehensive income (loss). Each quarter, we assess actual warranty costs incurred on a product-by-product basis and compare the warranty costs to our estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products, the extended warranty period, and warranty experience.

Warranty reserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty reserves are included in accrued liabilities on our unaudited condensed consolidated balance sheets. The warranty reserves are determined based on known product failures, historical experience, and other available evidence.

Changes in the warranty reserve during the first nine months of fiscal 2009 were as follows (in thousands):

	Warranty Reserve
Balance at May 31, 2008	$	377
Accruals for products sold		362
Utilization		(399	)
Adjustment		(70	)
Foreign currency translation		(17	)
Balance at February 28, 2009	$	253

The reserve adjustment was a result of lower sales volume of products under warranty and lower than estimated failure rates.

8. DEBT

Long-term debt for the periods ended February 28, 2009, and May 31, 2008, was as follows (in thousands):

	February 28, 2009		May 31, 2008
7 3/4% convertible senior subordinated notes, due December 2011	$	44,683	$	44,683
8% convertible senior subordinated notes, due June 2011		7,670		11,000
Revolving credit agreement, due July 2010		—		—
Total debt		52,353		55,683
Less: current portion		—		—
Long-term debt	$	52,353	$	55,683

As of February 28, 2009, we maintained $52.4 million in long-term debt in the form of two series of convertible notes. On November 7, 2008, we retired $3.3 million of the 8% notes at approximately 71% of par value, which resulted in a gain of $0.8 million, net of deferred financing costs of $0.1 million. As the revolving credit agreement allows us to retire up to $15.0 million of our outstanding notes, we did not need to obtain a waiver from our lending group to permit the retirement of $3.3 million of the 8% notes. The retirement was financed through the use of cash available as of November 7, 2008.

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We entered into a revolving credit agreement on July 27, 2007, which included a Euro sub-facility of $15.0 million and a Singapore sub-facility of $5.0 million. Pursuant to an amendment to the revolving credit agreement entered into on February 29, 2008, the Euro sub-facility and Singapore sub-facility individual limits were increased to $20.0 million each; however, the total amount of the combined Euro sub-facility and Singapore sub-facility is limited to $25.0 million. The U.S. facility is reduced by the amounts drawn on the Euro sub-facility and Singapore sub-facility, maintaining a total capacity of $40.0 million on the revolving credit agreement. This revolving credit agreement expires in July 2010 and bears interest at applicable LIBOR, SIBOR, or prime rates plus a margin varying with certain quarterly borrowings under the revolving credit agreement. This revolving credit agreement is secured by a lien on our U.S. assets and also contains a financial covenant requiring us to maintain a leverage ratio of less than 2.0 to 1.0. Pursuant to an amendment to the revolving credit agreement entered into on November 29, 2007, the leverage ratio was increased to 3.0 to 1.0 for the fiscal quarters ended December 1, 2007, and March 1, 2008. The commitment fee related to the revolving credit agreement is 0.25% per annum payable quarterly on the average daily unused portion of the aggregate commitment. As of February 28, 2009, there were no amounts outstanding under the revolving credit agreement. Outstanding letters of credit were approximately $0.1 million and we also had $1.1 million reserved for usage on our commercial credit card program, leaving an unused line of $38.8 million as of February 28, 2009. Based on our loan covenants, actual available credit as of February 28, 2009, was $40.0 million.

Pursuant to an amendment to the revolving credit agreement entered into on July 29, 2008, the definition of the leverage ratio was modified to exclude the goodwill impairment charge in the calculation of adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”), for the fiscal year ended May 31, 2008. We were in compliance with our loan covenants as of May 31, 2008, without this amendment to our revolving credit agreement.

Interest expense decreased to $1.1 million and $3.5 million during the three and nine month periods ended February 28, 2009, respectively, as compared with $1.4 million and $5.6 million during the three and nine months periods ended March 1, 2008, respectively. The components of interest expense from continuing operations are shown in the following table (in thousands):

	Three Months				Nine Months
	February 28, 2009		March 1, 2008		February 28, 2009		March 1, 2008
7 3/4% convertible senior subordinated notes interest expense	$	866	$	866	$	2,597	$	2,597
8% convertible senior subordinated notes interest expense		157		220		575		660
Multi-currency revolving credit agreement interest expense		—		—		—		556
Revolving credit agreement interest expense		39		210		86		885
Deferred financing costs amortization		48		58		161		216
Write-off of deferred financing costs		—		—		—		643
Other		20		17		70		58
Total interest expense	$	1,130	$	1,371	$	3,489	$	5,615

Interest expense incurred on the multi-currency revolving credit agreement (“credit agreement”) during the first nine months of fiscal 2008 was due primarily to borrowings to support working capital investments. During the first quarter of fiscal 2008, we wrote off $0.6 million of deferred financing costs due to the extinguishment of the credit agreement on July 27, 2007.

9. INCOME TAXES

The effective income tax rate for the third quarter and first nine months of fiscal 2009 was a provision of 5.2% and 1806.8%, respectively, as compared with a provision of 14.1% and 47.7% for the third quarter and first nine months of fiscal 2008, respectively. The difference between the effective tax rates as compared to the U.S. federal statutory rate of 34% primarily results from our

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geographical distribution of taxable income or losses and valuation allowances related to net operating losses. For the first nine months of fiscal 2009, we incurred tax expense due to an increase in valuation allowances related to an increase in net operating losses of approximately $7.0 million. We realized a tax benefit from the reduction in tax reserves of approximately $1.0 million, including interest and penalties. The tax provision for the first nine months of fiscal 2009 includes $0.6 million related to prior years income tax of one of our foreign jurisdictions.

In the normal course of business, we are subject to examination by taxing authorities throughout the world. We are no longer subject to either U.S. federal, state, or local tax examinations by tax authorities for years prior to fiscal year 2004. With few exceptions, we are no longer subject to non-U.S. income tax examinations by tax authorities for years prior to fiscal year 2002. Our primary foreign tax jurisdictions are the United Kingdom, Germany, Singapore, and the Netherlands. We have tax years open in Singapore beginning in fiscal year 2002; in the Netherlands, Germany and the U.S. beginning in fiscal year 2004; and in the United Kingdom beginning in fiscal year 2006.

As of February 28, 2009, our worldwide liability for uncertain tax positions, excluding interest and penalties, is $4.4 million as compared to $5.0 million as of May 31, 2008. We record penalties and interest relating to uncertain tax positions in the income tax expense line item within the unaudited condensed consolidated statements of operations and comprehensive income (loss). The net liability for uncertain tax positions decreased in the three months ended February 28, 2009, primarily due to closure of certain statutes of limitation.

It is reasonably possible that there will be a change in the unrecognized tax benefits, excluding interest and penalties, in the range of $0 to approximately $1.0 million due to the expiration of various statutes of limitations within the next 12 months.

10. CALCULATION OF EARNINGS PER SHARE

We have authorized 30,000,000 shares of common stock, 10,000,000 shares of Class B common stock, and 5,000,000 shares of preferred stock. The Class B common stock has ten votes per share and has transferability restrictions; however, Class B common stock may be converted into common stock on a share-for-share basis at any time. With respect to dividends and distributions, shares of common stock and Class B common stock rank equally and have the same rights, except that Class B common stock cash dividends are limited to 90% of the amount of common stock cash dividends.

In accordance with Emerging Issues Task Force (“EITF”) Issue No. 03-6, Participating Securities and the Two-Class Method under FASB Statement No. 128 (“EITF No. 03-6”), our Class B common stock is considered a participating security requiring the use of the two-class method for the computation of basic and diluted earnings per share. The two-class computation method for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated undistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock. Basic and diluted earnings per share were computed using the two-class method as prescribed in EITF No. 03-6. The shares of Class B common stock are considered to be participating convertible securities since the shares of Class B common stock are convertible on a share-for-share basis into shares of common stock and may participate in dividends with common stock according to a predetermined formula which is 90% of the amount of common stock cash dividends.

Diluted earnings per share is calculated by dividing net income, adjusted for interest savings, net of tax, on assumed conversion of convertible debentures and notes, by the actual shares outstanding and share equivalents that would arise from the exercise of stock options, certain restricted stock awards, and the assumed conversion of convertible debentures and notes when dilutive. For third quarter and first nine months of fiscal 2009 and 2008, the assumed conversion and the effect of the interest savings of our 8% notes and 7 ³/4% convertible senior subordinated notes (“7 ³/4 % notes”) were excluded because their inclusion would have been anti-dilutive.

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The amounts per share presented in our unaudited condensed consolidated statements of operations and comprehensive income (loss) are based on the following amounts (in thousands, except per share amounts):

	Three Months Ended
	February 28, 2009						March 1, 2008
	Basic			Diluted			Basic			Diluted
Numerator for basic and diluted EPS:
Loss from continuing operations	$	(11,385	)	$	(11,385	)	$	(2,166	)	$	(2,166	)
Less dividends:
Common stock		298			298			296			296
Class B common stock		55			55			55			55
Undistributed losses	$	(11,738	)	$	(11,738	)	$	(2,517	)	$	(2,517	)
Common stock undistributed losses	$	(9,909	)	$	(9,909	)	$	(2,124	)	$	(2,124	)
Class B common stock undistributed losses		(1,829	)		(1,829	)		(393	)		(393	)
Total undistributed losses	$	(11,738	)	$	(11,738	)	$	(2,517	)	$	(2,517	)
Loss from discontinued operations	$	—		$	—		$	(10	)	$	(10	)
Less dividends:
Common stock		298			298			296			296
Class B common stock		55			55			55			55
Undistributed losses	$	(353	)	$	(353	)	$	(361	)	$	(361	)
Common stock undistributed losses	$	(298	)	$	(298	)	$	(305	)	$	(305	)
Class B common stock undistributed losses		(55	)		(55	)		(56	)		(56	)
Total undistributed losses	$	(353	)	$	(353	)	$	(361	)	$	(361	)
Net loss	$	(11,385	)	$	(11,385	)	$	(2,176	)	$	(2,176	)
Less dividends:
Common stock		298			298			296			296
Class B common stock		55			55			55			55
Undistributed losses	$	(11,738	)	$	(11,738	)	$	(2,527	)	$	(2,527	)
Common stock undistributed losses	$	(9,909	)	$	(9,909	)	$	(2,132	)	$	(2,132	)
Class B common stock undistributed losses		(1,829	)		(1,829	)		(395	)		(395	)
Total undistributed losses	$	(11,738	)	$	(11,738	)	$	(2,527	)	$	(2,527	)
Denominator for basic and diluted EPS:
Denominator for basic EPS:
Common stock weighted average shares		14,858			14,858			14,805			14,805
Class B common stock weighted average shares, and shares under if-converted method for diluted earnings per share		3,048			3,048			3,048			3,048
Effect of dilutive securities
Unvested restricted stock awards					—						—
Dilutive stock options					—						—
Conversion of 8% notes					—						—
Conversion of 7 3/4% notes					—						—
Denominator for diluted EPS adjusted for weighted average shares and assumed conversions					17,906						17,853
Loss from continuing operations per share:
Common stock	$	(0.65	)	$	(0.65	)	$	(0.12	)	$	(0.12	)
Class B common stock	$	(0.58	)	$	(0.58	)	$	(0.11	)	$	(0.11	)
Loss from discontinued operations per share:
Common stock	$	0.00		$	0.00		$	(0.00	)	$	(0.00	)
Class B common stock	$	0.00		$	0.00		$	(0.00	)	$	(0.00	)
Net loss per share:
Common stock	$	(0.65	)	$	(0.65	)	$	(0.12	)	$	(0.12	)
Class B common stock	$	(0.58	)	$	(0.58	)	$	(0.11	)	$	(0.11	)

Note: Common stock options that were anti-dilutive and not included in dilutive earnings per common share for the third quarter of fiscal 2009 and fiscal 2008 were 1,784,623 and 1,727,589, respectively.

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	Nine Months Ended
	February 28, 2009						March 1, 2008
	Basic			Diluted (1)			Basic			Diluted
Numerator for basic and diluted EPS:
Loss from continuing operations	$	(1,758	)	$	(1,758	)	$	(3,237	)	$	(3,237	)
Less dividends:
Common stock		892			892			1,481			1,481
Class B common stock		165			165			275			275
Undistributed losses	$	(2,815	)	$	(2,815	)	$	(4,993	)	$	(4,993	)
Common stock undistributed losses	$	(2,376	)	$	(2,376	)	$	(4,212	)	$	(4,212	)
Class B common stock undistributed losses		(439	)		(439	)		(781	)		(781	)
Total undistributed losses	$	(2,815	)	$	(2,815	)	$	(4,993	)	$	(4,993	)
Income from discontinued operations	$	—		$	—		$	45		$	45
Less dividends:
Common stock		892			892			1,481			1,481
Class B common stock		165			165			275			275
Undistributed losses	$	(1,057	)	$	(1,057	)	$	(1,711	)	$	(1,711	)
Common stock undistributed losses	$	(892	)	$	(892	)	$	(1,443	)	$	(1,443	)
Class B common stock undistributed losses		(165	)		(165	)		(268	)		(268	)
Total undistributed losses	$	(1,057	)	$	(1,057	)	$	(1,711	)	$	(1,711	)
Net loss	$	(1,758	)	$	(1,758	)	$	(3,192	)	$	(3,192	)
Less dividends:
Common stock		892			892			1,481			1,481
Class B common stock		165			165			275			275
Undistributed losses	$	(2,815	)	$	(2,815	)	$	(4,948	)	$	(4,948	)
Common stock undistributed losses	$	(2,376	)	$	(2,376	)	$	(4,174	)	$	(4,174	)
Class B common stock undistributed losses		(439	)		(439	)		(774	)		(774	)
Total undistributed losses	$	(2,815	)	$	(2,815	)	$	(4,948	)	$	(4,948	)
Denominator for basic and diluted EPS:
Denominator for basic EPS:
Common stock weighted average shares		14,856			14,856			14,790			14,790
Class B common stock weighted average shares, and shares under if-converted method for diluted earnings per share		3,048			3,048			3,048			3,048
Effect of dilutive securities
Unvested restricted stock awards					—						—
Dilutive stock options					—						—
Conversion of 8% notes					—						—
Conversion of 7 3/4% notes					—						—
Denominator for diluted EPS adjusted for weighted average shares and assumed conversions					17,904						17,838
Loss from continuing operations per share:
Common stock	$	(0.10	)	$	(0.10	)	$	(0.18	)	$	(0.18	)
Class B common stock	$	(0.09	)	$	(0.09	)	$	(0.17	)	$	(0.17	)
Income from discontinued operations per share:
Common stock	$	0.00		$	0.00		$	0.00		$	0.00
Class B common stock	$	0.00		$	0.00		$	0.01		$	0.01
Net loss per share:
Common stock	$	(0.10	)	$	(0.10	)	$	(0.18	)	$	(0.18	)
Class B common stock	$	(0.09	)	$	(0.09	)	$	(0.16	)	$	(0.16	)

Note: Common stock options that were anti-dilutive and not included in dilutive earnings per common share for the first nine months of fiscal 2009 and fiscal 2008 were 1,784,623 and 1,727,589, respectively.

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11. SHARE BASED COMPENSATION

During the first quarter of fiscal 2007, we adopted SFAS No. 123 (Revised 2004), Share-Based Payment, which requires the measurement and recognition of compensation cost at fair value for all share-based payments, including stock options. We estimate fair value using the Black-Scholes option-pricing model, which requires assumptions such as expected volatility, risk-free interest rate, expected life, and dividends. Compensation cost is recognized using a graded-vesting schedule over the applicable vesting period or the date on which retirement eligibility is achieved, if shorter (non-substantive vesting period approach). Share-based compensation totaled $0.2 million and $0.4 million during the third quarter and first nine months of fiscal 2009, respectively, and $0.2 million and $0.5 million during the third quarter and first nine months of 2008, respectively.

12. SEGMENT REPORTING

Based on our interpretation of SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS No. 131”), we have identified three reportable segments: the RF, Wireless & Power Division (RFPD), the Electron Device Group (EDG), and Canvys.

RFPD serves the global RF and wireless communications market, including infrastructure, and wireless networks, and the power conversion market.

EDG provides engineered solutions and distributes electronic components to customers in diverse markets including the steel, automotive, textile, plastics, semiconductor manufacturing, and broadcast industries.

Canvys provides global integrated display products, systems and digital signage solutions serving financial, corporate enterprise, healthcare, and industrial markets.

Each segment is directed by a Vice President and General Manager who reports to the Chief Executive Officer (“CEO”) or the Executive Vice President of Business Development. The CEO evaluates performance and allocates resources, in part, based on the direct operating contribution of each segment. Direct operating contribution is defined as gross profit less direct selling, general, and administrative expenses.

During the second quarter of fiscal 2009, we renamed our DSG business unit to Canvys. This change from DSG to Canvys signifies its evolution to a market-driven solutions group.

During the first quarter of fiscal 2009, we moved our CRT product line from our Canvys segment to our EDG segment. As a result of implementing a new business plan for Canvys during the third quarter of fiscal 2008, we felt that the CRT product line more closely aligned with the existing EDG business model. Prior period segment information has been restated to reflect this change.

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Operating results and assets by segment are summarized in the following table (in thousands):

	Net Sales		Gross Profit (1)		Direct Operating Contribution (Loss)			Assets (2)
Third Quarter Fiscal 2009
RFPD	$	80,565	$	17,786	$	7,856		$	124,542
EDG		17,993		5,383		2,028			44,226
Canvys		11,743		636		(2,669	)		15,251
Total	$	110,301	$	23,805	$	7,215		$	184,019
Third Quarter Fiscal 2008
RFPD	$	93,415	$	20,990	$	10,449		$	129,517
EDG		25,915		8,375		4,603			48,590
Canvys		18,506		2,316		(1,766	)		38,007
Total	$	137,836	$	31,681	$	13,286		$	216,114
Nine Months Fiscal 2009
RFPD	$	270,882	$	59,955	$	29,153		$	124,542
EDG		65,254		20,823		10,451			44,226
Canvys		45,676		9,122		(1,438	)		15,251
Total	$	381,812	$	89,900	$	38,166		$	184,019
Nine Months Fiscal 2008
RFPD	$	273,207	$	62,457	$	30,812		$	129,517
EDG		80,765		26,077		14,882			48,590
Canvys		55,880		10,028		(2,778	)		38,007
Total	$	409,852	$	98,562	$	42,916		$	216,114

(1) Included in gross profit and direct operating contribution (loss) during the third quarter and first nine months of fiscal 2009 are inventory write-downs of $0.2 million in EDG and $1.8 million in Canvys. Included in gross profit and direct operating contribution (loss) during the third quarter and first nine months of fiscal 2008 are inventory write-downs of $0.9 million in RFPD and $1.9 million in Canvys.

(2) Accounts receivable, inventory, and goodwill are identified by segment. Cash, net property plant and equipment, and other assets are not identifiable by segment.

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A reconciliation of net sales, gross profit, operating income, and assets to the relevant consolidated amounts is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	February 28, 2009			March 1, 2008			February 28, 2009			March 1, 2008
Segment net sales	$	110,301		$	137,836		$	381,812		$	409,852
Corporate		15			1,030			2			3,464
Net sales	$	110,316		$	138,866		$	381,814		$	413,316
Segment gross profit (1)	$	23,805		$	31,681		$	89,900		$	98,562
Manufacturing variances and other costs		(79	)		(440	)		(277	)		(883	)
Gross profit	$	23,726		$	31,241		$	89,623		$	97,679
Segment direct operating contribution	$	7,215		$	13,286		$	38,166		$	42,916
Manufacturing variances and other costs		(79	)		(440	)		(277	)		(883	)
Administrative expenses (2) (3)		(11,096	)		(13,634	)		(32,355	)		(37,666	)
Gain (loss) on disposal of assets (4)		(5,778	)		81			(5,856	)		70
Operating income (loss)	$	(9,738	)	$	(707	)	$	(322	)	$	4,437
	February 28, 2009			May 31, 2008
Segment assets	$	184,019		$	199,634
Cash and cash equivalents		32,585			40,042
Other current assets (5)		10,892			11,648
Net property		20,008			28,635
Other assets (6)		4,229			6,276
Total assets	$	251,733		$	286,235

(1) Included in gross profit during the third quarter and first nine months of fiscal 2009 are inventory write-downs of $0.2 million in EDG and $1.8 million in Canvys. Included in gross profit during the third quarter and first nine months of fiscal 2008 are inventory write-downs of $0.9 million in RFPD and $1.9 million in Canvys.

(2) Included in administrative expenses for the third quarter and first nine months of fiscal 2009 is the write-off of $0.7 million of a long-term note receivable.

(3) Included in administrative expenses for the third quarter and first nine months of fiscal 2008 is severance expense of $1.3 million and $2.1 million, respectively, primarily relating to the refocusing of Canvys.

(4) Included in (gain) loss on disposal of assets is a loss on disposal for $5.8 million during the third quarter and first nine months of fiscal 2009, related to the disposal of various modules of enterprise resource management software. See Note 4 “Asset Disposals” of our unaudited condensed consolidated financial statements for additional discussion on disposal of assets.

(5) Other current assets include miscellaneous receivables, manufacturing inventories, prepaid expenses, and current deferred income taxes.

(6) Other assets include investments, assets held for sale, non-current deferred income taxes, and other assets.

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Geographic net sales information is primarily grouped by customer destination into five areas: North America; Asia/Pacific; Europe; Latin America; and Corporate. Europe includes sales to the Middle East and Africa. Net sales to Mexico are included as part of Latin America.

Net sales and gross profit by geographic region are summarized in the following table (in thousands):

	Three Months Ended						Nine Months Ended
	February 28, 2009			March 1, 2008			February 28, FY 2009			March 1, FY 2008
Net Sales
North America	$	37,949		$	55,193		$	136,218		$	167,033
Asia/Pacific		40,936			40,536			133,705			121,829
Europe		28,511			38,034			98,973			109,951
Latin America		2,958			4,037			11,787			12,571
Corporate		(38	)		1,066			1,131			1,932
Total	$	110,316		$	138,866		$	381,814		$	413,316
Gross Profit
North America	$	7,121		$	14,326		$	32,198		$	43,913
Asia/Pacific		9,988			9,563			30,675			28,462
Europe		7,278			9,983			25,734			28,620
Latin America		931			1,219			3,762			3,781
Corporate		(1,592	)		(3,850	)		(2,746	)		(7,097	)
Total	$	23,726		$	31,241		$	89,623		$	97,679

We sell our products to customers in diversified industries and perform periodic credit evaluations of our customers’ financial condition. Terms are generally on open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe, and Latin America. Estimates of credit losses are recorded in the financial statements based on periodic reviews of outstanding accounts.

13. FAIR VALUE MEASUREMENTS

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. We have adopted the provisions of SFAS No. 157 for financial instruments as of June 1, 2008. The adoption of SFAS No. 157 did not materially impact our financial condition, results of operations, or cash flow.

SFAS No. 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists; therefore requiring an entity to develop its own assumptions.

As of February 28, 2009, we held investments that are required to be measured at fair value on a recurring basis. Our investments (available-for-sale) primarily consist of equity securities of publicly traded companies for which market prices are readily available.

Investments measured at fair value on a recurring basis subject to the disclosure requirements of SFAS No. 157 as of February 28, 2009, were as follows (in thousands):

	Level 1		Level 2		Level 3
Equity securities	$	256	$	—	$	—

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In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159 allows an entity to irrevocably elect fair value for the initial and subsequent measurement of certain financial instruments and other items that are not currently required to be measured at fair value. When the fair value option is elected and a company chooses to record eligible items at fair value, the company must report unrealized gains and losses on those items in results of operations at each subsequent reporting date. Additionally, the transition provisions of SFAS No. 159 permit a one-time election for existing positions at the adoption date, with a cumulative-effect adjustment included in opening retained earnings. All future changes in fair value would be reported in results of operations. SFAS No. 159 became effective for us June 1, 2008, and we did not elect the fair value option for any eligible items as allowed by SFAS No. 159.

14. RECENT ACCOUNTING PRONOUNCEMENTS

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an Amendment of FASB Statement No. 133 (“SFAS 161”). SFAS 161 expands the disclosure requirements for derivative instruments and hedging activities. This statement specifically requires entities to provide enhanced disclosures addressing the following: how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. We adopted SFAS 161 during the third quarter of fiscal year 2009. The adoption of SFAS 161 had no impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141-R, Business Combinations (“SFAS No. 141-R”) which revises SFAS No. 141, Business Combinations (“SFAS No. 141”). Under SFAS No. 141, organizations utilize the announcement date as the measurement date for the purchase price of the acquired entity. SFAS No. 141-R requires the measurement at the date the acquirer obtains control of the acquiree, generally referred to as the acquisition date. SFAS No. 141-R will have a significant impact on the accounting of transaction costs, restructuring costs as well as the initial recognition of contingent assets and liabilities assumed during a business combination. Under SFAS No. 141-R, adjustments to the acquired entity’s deferred tax assets and uncertain tax position balances occurring outside the measurement period are recorded as a component of the income tax expense, rather than goodwill. SFAS No. 141-R will become effective for our fiscal year 2010. As the provisions of SFAS No. 141-R are applied prospectively, the impact for us cannot be determined unless a transaction occurs.

In May 2008, the FASB issued FASB Staff Position (“FSP”) No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlements) (“FSP No. APB 14-1”), which will change the accounting treatment for convertible securities which the issuer may settle fully or partially in cash. Under FSP No. APB 14-1, cash settled convertible securities will be separated into their debt and equity components. The value assigned to the debt component will be the estimated fair value, as of the issuance date, of a similar debt instrument without the conversion feature, and the difference between the proceeds for the convertible debt and the amount reflected as a debt liability will be recorded as additional paid-in-capital. As a result, the debt will be recorded at a discount reflecting its below market coupon interest rate. The debt will subsequently be accreted to its par value over its expected life, with the rate of interest that reflects the market rate at issuance being reflected on the income statement. This change in methodology will affect the calculations of net income and earnings per share for many issuers of cash settled convertible securities. FSP No. APB 14-1 will become effective for our fiscal year 2010. We are currently evaluating the impact of the adoption of FSP No. APB 14-1 on our consolidated financial statements.

In June 2008, the FASB issued FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities (“FSP EITF 03-6-1”). The Staff Position provides that unvested share-based payment

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awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and must be included in the earnings per share computation. FSP EITF 03-6-1 will become effective for our fiscal year 2010. All prior-period earnings per share data presented must be adjusted retrospectively. We are currently evaluating the impact of the adoption of FSP EITF 03-6-1 on our consolidated financial statements.

In June 2008, the FASB ratified EITF Issue No. 07-5, Determining Whether an Instrument (or an Embedded Feature) is indexed to an Entity’s Own Stock (“EITF 07-5”), which supersedes EITF Issue No. 01-6, The Meaning of ‘Indexed to a Company’s Own Stock’. SFAS No. 133 specifies that a contract issued or held by a company that is both indexed to its own stock and classified in stockholders’ equity is not considered a derivative instrument for purposes of applying SFAS No. 133. EITF 07-5 provides further guidance in requiring that both an instrument’s contingency exercise provisions and its settlement provisions be evaluated for determining whether the instrument (or embedded feature) is indexed solely to an entity’s own stock. EITF 07-5 will become effective for any outstanding or new arrangements for our fiscal year 2010. We are currently evaluating the impact of the adoption of EITF 07-5 on our consolidated financial statements.

In June 2008, the FASB issued EITF Issue No. 08-4, Transition Guidance for Conforming Changes to Issue No. 98-5 (“EITF 08-4”). The objective of EITF 08-4 is to provide transition guidance for conforming changes made to EITF Issue No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios that result from EITF Issue No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, and SFAS Issue No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. EITF 08-4 will become effective for our fiscal year 2010. We are currently evaluating the impact of the adoption of EITF 08-4 on our consolidated financial statements.

In December 2008, the FASB issued FSP FAS No. 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets (“FSP FAS 132(R)-1”), which requires additional disclosures for employers’ pension and other postretirement benefit plan assets. As pension and other postretirement benefit plan assets were not included within the scope of SFAS No. 157, FSP FAS 132(R)-1 requires employers to disclose information about fair value measurements of plan assets similar to the disclosures required under SFAS No. 157, the investment policies and strategies for the major categories of plan assets, and significant concentrations of risk within plan assets. FSP FAS 132(R)-1 will become effective for our fiscal year 2010. As FSP FAS 132(R)-1 provides only disclosure requirements, the adoption of this standard will not have a material impact on our financial statements.

15. STOCK REPURCHASE PROGRAM

On January 6, 2009, our Board of Directors approved a share repurchase program authorizing us to purchase up to $12.6 million of our outstanding common stock. Stock repurchases under this program may be made on the open market or in privately negotiated transactions, depending on factors including market conditions and other factors. During the third quarter of fiscal 2009, we did not repurchase any shares of our common stock under the share repurchase program. The stock repurchase program does not have an expiration date and may be suspended or discontinued at any time.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in this report may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. The terms “may,” “should,” “could,” “anticipate,” “believe,” “continues,” “estimate,” “expect,” “intend,” “objective,” “plan,” “potential,” “project” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These statements are based on management’s current expectations, intentions or beliefs and are subject to a number of factors, assumptions and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include the risk factors set forth in Item 1A of our Annual Report on Form 10-K. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise. You should consider carefully the risk factors described in our Annual Report on Form 10-K, in addition to the other information included and incorporated by reference in this Quarterly Report on Form 10-Q.

In addition, while we do, from time to time, communicate with securities analysts, it is against our policy to disclose to them any material non-public information or other confidential commercial information. Accordingly, stockholders should not assume that we agree with any statement or report issued by any analyst irrespective of the content of the statement or report. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts, or opinions, such reports are not our responsibility.

INTRODUCTION

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to assist the reader in better understanding our business, results of operations, financial condition, changes in financial condition, critical accounting policies and estimates, and significant developments. MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and the accompanying notes thereto appearing elsewhere herein. This section is organized as follows:

• Business Overview

• Results of Continuing Operations – an analysis and comparison of our consolidated results of operations for the three and nine month periods ended February 28, 2009, and March 1, 2008, as reflected in our unaudited condensed consolidated statements of operations and comprehensive income (loss).

• Liquidity, Financial Position, and Capital Resources – a discussion of our primary sources and uses of cash for the nine month period ended February 28, 2009, and March 1, 2008, and a discussion of selected changes in our financial position.

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BUSINESS OVERVIEW

Richardson Electronics, Ltd. (“we”, “us”, and “our”) was originally incorporated in the state of Illinois in 1947 and is currently incorporated in the state of Delaware. We are a global provider of engineered solutions and a global distributor of electronic components to the radio frequency (“RF”), wireless and power conversion, electron device, and display systems markets. Utilizing our core engineering and manufacturing capabilities, we are committed to a strategy of providing specialized technical expertise and value-added products, or “engineered solutions,” in response to our customers’ needs. These solutions include products which we manufacture or modify and products which are manufactured to our specifications by independent manufacturers under our own private labels. Additionally, we provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, and logistics for end products of our customers. Design-in support includes component modifications or the identification of lower-cost product alternatives or complementary products.

Our products include RF and microwave components, power semiconductors, electron tubes, microwave generators, and data display monitors. These products are used to control, switch or amplify electrical power signals, or are used as display devices in a variety of industrial, commercial, and communication applications.

Our sales and marketing, product management, and purchasing functions are organized as follows:

RF, Wireless & Power Division (“RFPD”) serves the global RF and wireless communications market, including infrastructure, wireless networks, and the power conversion market.

Electron Device Group (“EDG”) provides engineered solutions and distributes electronic components to customers in diverse markets including the steel, automotive, textile, plastics, semiconductor manufacturing, and broadcast industries.

Canvys (formerly the Display Systems Group or “DSG”) provides global integrated display products, systems and digital signage solutions serving financial, corporate enterprise, healthcare, and industrial markets.

We currently have operations in the following major geographic regions:

• North America;

• Asia/Pacific;

• Europe; and

• Latin America.

During the second quarter of fiscal 2009, we renamed our DSG business unit to Canvys. This change from DSG to Canvys signifies its evolution to a market-driven solutions group.

During the first quarter of fiscal 2009, we moved our Cathode Ray Tube (“CRT”) product line from our Canvys segment to our EDG segment. As a result of implementing a new business plan for Canvys during the third quarter of fiscal 2008, we felt that the CRT product line more closely aligned with the existing EDG business model. Prior period segment information has been restated to reflect this change.

The recent capital and credit market crisis is adversely affecting the U.S. and global economies. Slower economic growth could lead to lower demand for the products we sell. Lower demand for our products could also lead to lower margins on the products that we sell. In addition, our customers may not be able to pay, or may delay payment of accounts receivable that we are owed. Management believes it has taken steps to mitigate this risk through heightened collection efforts.

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RESULTS OF CONTINUING OPERATIONS

Overview – Three Months Ended February 28, 2009

• Net sales for the third quarter of fiscal 2009 were $110.3 million, down 20.6%, compared to net sales of $138.9 million during the third quarter of last year.

• Gross margin as a percent of net sales decreased to 21.5% during the third quarter of fiscal 2009, compared to 22.5% during the third quarter of last year. The gross margin percent of 21.5% includes $2.0 million of additional inventory reserves recorded during the third quarter.

• SG&A expenses decreased to $27.7 million during the third quarter of fiscal 2009, including $1.2 million of severance expense and $0.7 million of expense related to the write-off of a note receivable, compared to $32.0 million during the third quarter of last year.

• Operating loss during the third quarter of fiscal 2009 was $9.7 million, compared to an operating loss of $0.7 million during the third quarter of last year.

• Net loss during the third quarter of fiscal 2009 was $11.4 million versus a net loss of $2.2 million during the third quarter of last year.

Overview – Nine Months Ended February 28, 2009

• Net sales for the first nine months of fiscal 2009 were $381.8 million, down 7.6%, compared to net sales of $413.3 million during the first nine months of last year.

• Gross margin as a percent of net sales decreased slightly to 23.5% during the first nine months of fiscal 2009, compared to 23.6% during the first nine months of last year.

• SG&A decreased to $84.1 million during the first nine months of fiscal 2009, compared to $93.3 million during the first nine months of last year.

• Operating loss during the first nine months of fiscal 2009 was $0.3 million, compared to operating income of $4.4 million during the first nine months of last year.

• Net loss during the first nine months of fiscal 2009 was $1.8 million, compared to a net loss of $3.2 million during the first nine months of last year.

Net Sales and Gross Profit Analysis

During the third quarter and first nine months of fiscal 2009, consolidated net sales decreased 20.6% and 7.6%, respectively, as all three segments experienced a decline compared to prior year.

Net sales by segment and percent change during the third quarter and first nine months of fiscal 2009 and 2008 were as follows (in thousands):

Net Sales
	FY 2009		FY 2008		% Change
Third Quarter
RFPD	$	80,565	$	93,415	(13.8	)%
EDG		17,993		25,915	(30.6	)%
Canvys		11,743		18,506	(36.5	)%
Corporate		15		1,030
Total	$	110,316	$	138,866	(20.6	)%
Nine Months
RFPD	$	270,882	$	273,207	(0.9	)%
EDG		65,254		80,765	(19.2	)%
Canvys		45,676		55,880	(18.3	)%
Corporate		2		3,464
Total	$	381,814	$	413,316	(7.6	)%

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Consolidated gross profit decreased during both the third quarter and first nine months of fiscal 2009 as compared to the third quarter and first nine months of fiscal 2008. Consolidated gross margin as a percentage of net sales declined to 21.5% and 23.5% during the third quarter and first nine months of fiscal 2009, respectively, as compared to 22.5% and 23.6% during the third quarter and first nine months of fiscal 2008, respectively, due primarily to sales within our higher-margin businesses, specifically EDG and Canvys, declining at a faster rate than sales for RFPD. We incurred inventory write-downs of $2.0 million and $2.8 million during the third quarter of fiscal 2009 and 2008, respectively. EDG and Canvys incurred inventory write-downs of $0.2 million and $1.8 million, respectively, during the third quarter of fiscal 2009, due primarily to exiting certain markets and product lines, low-margin customers, and the analog to digital broadcast conversion. RFPD and Canvys incurred inventory write-downs of $0.9 million and $1.9 million, respectively, during the third quarter of fiscal 2008, due primarily to the exiting of certain geographic markets and low-margin customers.

Gross profit reflects the distribution and manufacturing product margin less manufacturing variances, inventory obsolescence charges, customer returns, scrap and cycle count adjustments, engineering costs, and other provisions. Corporate gross profit includes certain freight costs and other miscellaneous charges.

Gross profit by segment and percent of segment net sales during the third quarter and first nine months of fiscal 2009 and 2008 were as follows (in thousands):

Gross Profit	FY 2009			% of Net Sales		FY 2008			% of Net Sales
Third Quarter
RFPD	$	17,786		22.1	%	$	20,990		22.5	%
EDG		5,383		29.9	%		8,375		32.3	%
Canvys		636		5.4	%		2,316		12.5	%
Corporate		(79	)				(440	)
Total	$	23,726		21.5	%	$	31,241		22.5	%
Nine Months
RFPD	$	59,955		22.1	%	$	62,457		22.9	%
EDG		20,823		31.9	%		26,077		32.3	%
Canvys		9,122		20.0	%		10,028		17.9	%
Corporate		(277	)				(883	)
Total	$	89,623		23.5	%	$	97,679		23.6	%

RF, Wireless & Power Division

RFPD net sales decreased 13.8% and 0.9% to $80.6 million and $270.9 million during the third quarter and first nine months of fiscal 2009, respectively, from $93.4 million and $273.2 million during the third quarter and first nine months of fiscal 2008, respectively. The decline in net sales, which was the result of the weakened economic conditions, included declines in both the net sales of our network access and passive/interconnect products, partially offset by an increase in infrastructure products. Infrastructure net sales increased 1.2% and 9.4% to $24.9 million and $77.0 million during the third quarter and first nine months of fiscal 2009, respectively, from $24.6 million and $70.4 million during the third quarter and first nine months of fiscal 2008, respectively. The net sales growth for infrastructure products was in Asia/Pacific, which was due primarily to the reorganization of the mobile telecom industry in China, which included the deployment of the next infrastructure build-out of the Time Division-Synchronous Code Division Multiple Access (“TD-SCDMA”). Gross margin as a percent of net sales decline to 22.1% during both the third quarter and first nine months of fiscal 2009 from 22.5% and 22.9% during the third quarter and first nine months of fiscal 2008, respectively. The decline in gross margin as a percent of net sales was due primarily to the lower margins generated from the TD-SCDMA project in China. During the third quarter of fiscal 2008, RFPD incurred inventory write-downs of $0.9 million.

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Electron Device Group

EDG net sales decreased 30.6% and 19.2% to $18.0 million and $65.3 million during the third quarter and first nine months of fiscal 2009, respectively, from $25.9 million and $80.8 million during the third quarter and first nine months of fiscal 2008, respectively, due primarily to a decline in semiconductor fabrication equipment products. The semiconductor fabrication equipment industry has experienced an overall decline during the past couple of years, in addition to the weakening global economy. In terms of geographic regions, North America experienced a decline in tube sales, during both the third quarter and first nine months of fiscal 2009, primarily due to the conversion from analog to digital television which is scheduled to take place in June 2009. Gross margin as a percent of net sales decreased to 29.9% and 31.9% during the third quarter and first nine months of fiscal 2009, respectively, as compared to 32.3% during both the third quarter and first nine months of fiscal 2008. The decline in gross margin as a percentage of net sales for both periods was due primarily to $0.2 million of inventory write-downs during the third quarter of fiscal 2009 related to the broadcast conversion from analog to digital and higher levels of unabsorbed manufacturing costs.

Canvys

Canvys net sales decreased 36.5% and 18.3% to $11.7 million and $45.7 million during the third quarter and first nine month of fiscal 2009, respectively, from $18.5 million and $55.9 million during the third quarter and first nine months of fiscal 2008, respectively, due primarily to a decline in medical imaging and digital signage products. The decline of both product lines was due primarily to lower capital investments as a result of the weakening global economy. During the third quarter of fiscal 2008, Canvys implemented a new business plan, part of which included exiting unprofitable market segments and the distribution of low margin business, and realigning sales and marketing operations for better utilization. Gross margin declined to 5.4% during the third quarter of fiscal 2009 from 12.5% during the third quarter of fiscal 2008, due primarily to inventory write-downs. The inventory write-downs of $1.8 million (15.4% of net sales) during the third quarter of fiscal 2009 had a larger impact on our gross margin percentage as compared to the inventory write-downs of $1.9 million (10.3% of net sales) during the third quarter of fiscal 2008, due primarily to the 36.5% decline in net sales. Gross margin increased to 20.0% during the first nine months of fiscal 2009 from 17.9% during the first nine months of fiscal 2008, which was due primarily to shifts in customer and geographic mix.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses (“SG&A”) decreased during the third quarter and first nine months of fiscal 2009 to $27.7 million and $84.1 million, respectively, from $32.0 million and $93.3 million during the third quarter and first nine months

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of fiscal 2008, respectively. The decrease in SG&A expense during the third quarter and first nine months of fiscal 2009 was due primarily to a decline in consulting, employee-related (including severance), travel, and facility expenses, partially offset by an increase in bad debt expense and the write-off of a note receivable. SG&A as a percent of net sales increased to 25.1% of net sales during the third quarter of fiscal 2009, as compared with 23.1% during the third quarter of fiscal 2008, which was due primarily to the 20.6% decline in net sales during the third quarter. SG&A as a percentage of net sales decreased to 22.0% during the first nine months of fiscal 2009, as compared with 22.6% of net sales during the first nine months of fiscal 2008.

(Gain) Loss on disposal of assets

(Gain) loss on disposal of assets was a loss of $5.8 million and $5.9 million during the third quarter and first nine months of fiscal 2009, respectively, as compared to a gain of $0.1 million during both the third quarter and first nine months of fiscal 2008. See Note 4 “Asset Disposals” of our unaudited condensed consolidated financial statements for additional discussion on disposal of assets.

Other (Income) Expense

Other (income) expense was an expense of $1.1 million during the third quarter of fiscal 2009 as compared to an expense of $1.2 million during the third quarter of fiscal 2008. Other (income) expense was $0.4 million of income during the first nine months of fiscal 2009 as compared to an expense of $6.6 million the first nine months of fiscal 2008, respectively. The change to income from expense during the first nine months of fiscal 2009 was due primarily to favorable changes in foreign currency exchange rates, a gain related to the retirement of a portion of our long-term debt, and a decrease in interest expense. Other (income) expense included a foreign exchange gain of $2.6 million during the first nine months of fiscal 2009 as compared to a foreign exchange loss of $1.6 million during the first nine months of fiscal 2008. The first nine months of fiscal 2009 included a gain of $0.8 million related to the retirement of $3.3 million of our 8% notes. See Note 8 “Debt” of our unaudited condensed consolidated financial statements for additional discussion on the retirement. Interest expense decreased to $1.1 million and $3.5 million during the third quarter and first nine months of fiscal 2009, respectively, as compared to $1.4 million and $5.6 million during the third quarter and first nine months of fiscal 2008, respectively. See Note 8 “Debt” of our unaudited condensed consolidated financial statements for additional discussion on interest expense.

Income Tax Provision

The effective income tax rate for the third quarter and first nine months of fiscal 2009 was a provision of 5.2% and 1806.8%, respectively, as compared with a provision of 14.1% and 47.7% for the third quarter and first nine months of fiscal 2008, respectively. The difference between the effective tax rates as compared to the U.S. federal statutory rate of 34% primarily results from our geographical distribution of taxable income or losses and valuation allowances related to net operating losses. For the first nine months of fiscal 2009, we incurred tax expense due to an increase in valuation allowances related to an increase in net operating losses of approximately $7.0 million. We realized a tax benefit from the reduction in tax reserves of approximately $1.0 million, including interest and penalties. The tax provision for the first nine months of fiscal 2009 includes $0.6 million related to prior years income tax of one of our foreign jurisdictions.

In the normal course of business, we are subject to examination by taxing authorities throughout the world. We are no longer subject to either U.S. federal, state, or local tax examinations by tax authorities for years prior to fiscal year 2004. With few exceptions, we are no longer subject to non-U.S. income tax examinations by tax authorities for years prior to fiscal year 2002. Our primary foreign tax jurisdictions are the United Kingdom, Germany, Singapore, and the Netherlands. We have tax years open in Singapore beginning in fiscal year 2002; in the Netherlands, Germany and the U.S. beginning in fiscal year 2004; and in the United Kingdom beginning in fiscal year 2006.

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As of February 28, 2009, our worldwide liability for uncertain tax positions, excluding interest and penalties, is $4.4 million as compared to $5.0 million as of May 31, 2008. We record penalties and interest relating to uncertain tax positions in the income tax expense line item within the unaudited condensed consolidated statements of operations and comprehensive income (loss). The net liability for uncertain tax positions decreased in the three months ended February 28, 2009, primarily due to closure of certain statutes of limitation.

It is reasonably possible that there will be a change in the unrecognized tax benefits, excluding interest and penalties, in the range of $0 to approximately $1.0 million due to the expiration of various statutes of limitations within the next 12 months.

Net Income (Loss) and Per Share Data

Net loss during the third quarter of fiscal 2009 was $11.4 million, or $0.65 per diluted common share and $0.58 per Class B diluted common share as compared to a net loss of $2.2 million during the third quarter of fiscal 2008, or $0.12 per diluted common share and $0.11 per Class B diluted common share. Net loss during the first nine months of fiscal 2009 was $1.8 million, or $0.10 per diluted common share and $0.09 per Class B diluted common share as compared with a net loss of $3.2 million during the first nine months of fiscal 2008, or $0.18 per diluted common share and $0.16 per Class B diluted common share.

LIQUIDITY, FINANCIAL POSITION, AND CAPITAL RESOURCES

We have financed our growth and cash needs largely through income from operations, borrowings under the revolving credit facilities, issuance of convertible senior subordinated notes, and sale of assets. Liquidity is reduced by working capital requirements, debt service, capital expenditures, dividends, and business acquisitions. Liquidity is increased by proceeds from borrowings, disposition of businesses and assets, and improved working capital management.

Cash and cash equivalents were $32.6 million as of February 28, 2009, as compared to $40.0 million as of May 31, 2008.

Cash Flows from Operating Activities

Cash provided by operating activities during the first nine months of fiscal 2009 was $1.6 million, due primarily to lower accounts receivable, partially offset by higher inventory balances, lower accounts payable and lower accrued liability balances. The decline in accounts receivable balances of $8.7 million, excluding the impact of foreign currency exchange of $8.2 million, during the first nine months of fiscal 2009 was due primarily to a decline in sales volume. The increase in inventory balances of $6.2 million, excluding the impact of foreign currency exchange of $5.0 million, during the first nine months of fiscal 2009 was due primarily to inventory purchased during the first half of the fiscal year for anticipated future sales growth, partially offset by write-downs of $2.0 million. The decrease in accounts payable balances of $2.8 million, excluding the impact of foreign currency exchange of $2.1 million, during the first nine months of fiscal 2009 was due primarily to a reduction in inventory purchased during the third quarter of fiscal 2009. The decline in accrued liability balances of $3.7 million, excluding the impact of foreign currency exchange of $0.8 million, during the first nine months of fiscal 2009 was due primarily to the timing and payment of accrued payroll.

Cash provided by operating activities during the first nine months of fiscal 2008 was $8.3 million, due primarily to lower inventory, lower accounts receivable, and higher accounts payable balances, partially offset by lower accrued liability balances. The decline in inventory balances of $8.7 million, excluding the impact of foreign currency exchange of $5.8 million, during the first nine months of fiscal 2008 was due primarily to the implementation of stricter purchasing discipline and write-downs of $2.8 million. The decline in accounts receivable balances of $7.8 million, excluding the impact of foreign currency exchange of $5.9 million, during the

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first nine months of fiscal 2008 was due primarily to improved cash collections. The increase in accounts payable balances of $1.7 million, excluding the impact of foreign currency exchange of $1.5 million, during the first nine months of fiscal 2008 was due primarily to negotiating payment terms with many of our vendors. The decline in accrued liabilities balances of $5.9 million, excluding the impact of foreign exchange of $0.3 million, during the first nine months of fiscal 2008 was due primarily to the timing of payments of interest on long-term debt.

Cash Flows from Investing Activities

Net cash used by investing activities was $0.7 million during the first nine months of fiscal 2009, due primarily to capital expenditures of $0.9 million and partially offset by proceeds from the sales of assets of $0.2 million.

Net cash used in investing activities was $3.1 million during the first nine months of fiscal 2008, due primarily to capital expenditures of $4.2 million for information technology projects and building improvements, partially offset by proceeds from the sale of assets of $1.0 million.

Cash Flows from Financing Activities

Net cash used in financing activities of $3.4 million during the first nine months of fiscal 2009 and net cash provided by financing activities of $4.5 million during the first nine months of fiscal 2008, are summarized in the following table (in thousands):

	Nine Months Ended
	February 28, 2009			March 1, 2008
Net debt borrowings on revolving credit agreement	$	—		$	10,000
Net debt payments on multi-currency revolving credit agreement (“credit agreement”)		—			(65,711	)
Retirement of long-term debt		(2,364	)		—
Use of restricted cash to pay down credit agreement		—			61,899
Cash dividends paid		(1,057	)		(1,756	)
Other		5			45
Cash provided by (used in) financing activities	$	(3,416	)	$	4,477

As of February 28, 2009 we maintained $52.4 million in long-term debt in the form of two series of convertible notes. On November 7, 2008, we retired $3.3 million of the 8% notes at approximately 71% of par value, which resulted in a gain of $0.8 million, net of deferred financing costs of $0.1 million. As the revolving credit agreement allows us to retire up to $15.0 million of our outstanding notes, we did not need to obtain a waiver from our lending group to permit the retirement of $3.3 million of the 8% notes. The retirement was financed through the use of cash available as of November 7, 2008.

We entered into a revolving credit agreement on July 27, 2007, which included a Euro sub-facility of $15.0 million and a Singapore sub-facility of $5.0 million. Pursuant to an amendment to the revolving credit agreement entered into on February 29, 2008, the Euro sub-facility and Singapore sub-facility individual limits were increased to $20.0 million each; however, the total amount of the combined Euro sub-facility and Singapore sub-facility is limited to $25.0 million. The U.S. facility is reduced by the amounts drawn on the Euro sub-facility and Singapore sub-facility, maintaining a total capacity of $40.0 million on the revolving credit agreement. This revolving credit agreement expires in July 2010 and bears interest at applicable LIBOR, SIBOR, or prime rates plus a margin varying with certain quarterly borrowings under the revolving credit agreement. This revolving credit agreement is secured by a lien on our U.S. assets and also contains a financial covenant requiring us to maintain a leverage ratio of less than 2.0 to 1.0. Pursuant to an amendment to the revolving credit agreement entered into on November 29, 2007, the leverage ratio was increased to 3.0 to 1.0 for the fiscal quarters ended December 1, 2007, and March 1, 2008. The commitment fee related to the revolving credit

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agreement is 0.25% per annum payable quarterly on the average daily unused portion of the aggregate commitment. As of February 28, 2009, there were no amounts outstanding under the revolving credit agreement. Outstanding letters of credit were approximately $0.1 million and we also had $1.1 million reserved for usage on our commercial credit card program, leaving an unused line of $38.8 million as of February 28, 2009. Based on our loan covenants, actual available credit as of February 28, 2009, was $40.0 million.

Pursuant to an amendment to the revolving credit agreement entered into on July 29, 2008, the definition of the leverage ratio was modified to exclude the goodwill impairment charge in the calculation of adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”), for the fiscal year ended May 31, 2008. We were in compliance with our loan covenants as of May 31, 2008, without this amendment to our revolving credit agreement.

We believe that the existing sources of liquidity, including current cash, as well as cash provided by operating activities, supplemented as necessary with funds available under credit arrangements, will provide sufficient resources to meet known capital requirements and working capital needs for the fiscal year ending May 30, 2009.

29

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management and Market Sensitive Financial Instruments

Certain operations, assets, and liabilities of ours are denominated in foreign currencies subjecting us to foreign currency exchange risk. In addition, some of our debt financing varies with market rates exposing us to the market risk from changes in interest rates. In order to provide the user of these financial statements guidance regarding the magnitude of these risks, the Securities and Exchange Commission requires us to provide certain quantitative disclosures based upon hypothetical assumptions. Specifically, these disclosures require the calculation of the effect of a 10% increase in market interest rates and an unfavorable 10% change in the U.S. dollar against foreign currencies on the reported net earnings and financial position. We believe that there were no material changes in our market risk since our fiscal year ended May 31, 2008. For an additional description of our market risk, see “Item 7A – Quantitative and Qualitative Disclosures about Market Risk – Risk Management and Market Sensitive Financial Instruments” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2008.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Management of the Company, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of February 28, 2009. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the third quarter of fiscal 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

30

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in several pending judicial proceedings concerning matters arising in the ordinary course of our business. We cannot predict the outcome of any pending legal matters, and an unfavorable outcome of any one or more of these matters could have a material adverse impact on our business, results of operations, cash flows, and financial position.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended May 31, 2008, which could materially affect our business, financial condition or future results. There have been no material changes in the risk factors from those described in our Annual Report, except as set forth below:

Current worldwide economic conditions may adversely affect our business, operating results and financial condition.

As widely reported, global financial markets have been experiencing extreme disruptions in recent months, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. There can be no assurance that there will not be further deterioration in the global financial markets and decreased consumer confidence in economic conditions. We are unable to predict the likely duration and severity of the current disruptions in the financial markets and the adverse global economic conditions, and if the current uncertainty continues or economic conditions further deteriorate, our business, operating results and financial condition could be materially and adversely affected.

ITEM 5. OTHER INFORMATION

Results of Operation and Financial Condition and Declaration of Dividend

On April 8, 2009, we issued a press release reporting results for our third quarter ended February 28, 2009, and the declaration of a cash dividend. A copy of the press release is furnished as Exhibit 99.1 to this Form 10-Q and incorporated by reference herein.

ITEM 6. EXHIBITS

See exhibit index which is incorporated by reference herein.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		RICHARDSON ELECTRONICS, LTD.
Date: April 9, 2009	By:	/s/ Kathleen S. Dvorak
		Kathleen S. Dvorak
		Chief Financial Officer
		(on behalf of the Registrant and as Principal Financial Officer)

32

Exhibit Index 

(c) EXHIBITS

Exhibit Number	Description
3.1	Restated Certificate of Incorporation of the Company, incorporated by reference to Appendix B to the Proxy Statement / Prospectus dated November 13, 1986, incorporated by reference to the Company’s Registration Statement on Form S-4.
3.2	Amended and Restated By-Laws of the Company, incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended November 29, 2008.
10.1	Richardson Electronics, Ltd. Employee Stock Ownership Plan, amended and restated effective June 1, 2002.
31.1	Certification of Edward J. Richardson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed pursuant to Part I).
31.2	Certification of Kathleen S. Dvorak pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed pursuant to Part I).
32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed pursuant to Part I).
99.1	Press release, dated April 8, 2009.

33

EX-10.1

Exhibit 10.1

RICHARDSON ELECTRONICS, LTD.

EMPLOYEES STOCK OWNERSHIP PLAN

As Amended and Restated

Effective June 1, 2002

TABLE OF CONTENTS

PREAMBLE		1
ARTICLE I—TITLES AND PURPOSE		2
1.1	Titles	2
1.2	Purpose	2
1.3	Exclusive Benefit	2
1.4	Status of Plan	2
ARTICLE II—DEFINITIONS		3
2.1	Account	3
2.2	Account Balance	3
2.3	Administrator	3
2.4	Anniversary Date	3
2.5	Annual Addition	3
2.6	Beneficiary	4
2.7	Benefit Commencement Date	4
2.8	Break in Service	4
2.9	Code	5
2.10	Committee	5
2.11	Compensation	5
2.12	Computation Period	5
2.13	Effective Date	6
2.14	Employee	6
2.15	Employer	6
2.16	Entry Date	6
2.17	ERISA	6
2.18	Hour of Service	6
2.19	Key Employee	8
2.20	Leave of Absence	9
2.21	Limitation Year	9
2.22	Non-Key Employee	9
2.23	Normal Retirement Date	9
2.24	Participant	9
2.25	Permanent Disability	9
2.26	Plan	9
2.27	Plan Year	10
2.28	Qualified Domestic Relations Order	10
2.28A	Qualified Military Service	10
2.29	Related Employer	10
2.30	Richardson	10
2.31	Spouse	11

2.32	Stock	11
2.33	Termination of Employment	11
2.34	Top-Heavy Determination Date	11
2.35	Top-Heavy Year	12
2.36	Trust	13
2.37	Trust Agreement	13
2.38	Trustee or Trustees	13
2.39	Valuation Date	13
2.40	Vested Account Balance	13
2.41	Year of Service	13
ARTICLE III—PARTICIPATION		15
3.1	Eligibility to Participate	15
3.2	Duration of Participation; Re-Employment	15
ARTICLE IV—CONTRIBUTIONS BY EMPLOYER		17
4.1	Amount	17
4.2	Time for Payment	17
ARTICLE V—CONTRIBUTIONS BY PARTICIPANTS		18
5.1	Contributions by Participants	18
ARTICLE VI—ALLOCATION OF EMPLOYER CONTRIBUTIONS		19
6.1	Manner of Allocation	19
6.2	Allocations in Top-Heavy Years	20
6.3	Administrator to Notify Trustee	21
ARTICLE VII—ACCOUNTS OF PARTICIPANTS		22
7.1	Separate Accounts	22
7.2	Adjustments to Accounts	22
7.3	Crediting of Employer Contributions	23
7.4	Crediting of Forfeitures	23
7.5	Limitation on Allocations	24
7.6	[Reserved]
7.7	Correction of Error	25
7.8	Transfer Accounts	26

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ARTICLE VIII—VESTING OF INTEREST IN TRUST		27
8.1	Normal Retirement	27
8.2	Disability Retirement	27
8.3	Death	27
8.4	Other Termination of Employment	27
8.5	Treatment of Forfeited Amounts; Reinstatement	28
8.6	Computation of Years of Service	28
8.7	Vesting on Termination of Trust or Termination of Employer’s Agreement to Contribute	29
8.8	Vesting Following Plan Amendment	29
8.9	Vesting Following Partial Distributions	29
ARTICLE IX—PAYMENT OF VESTED ACCOUNT BALANCES		31
9.1	Benefit Commencement Date	31
9.2	Payment to Participants	32
9.3	Payment to Beneficiaries	33
9.4	Extent of Further Participation in Trust	35
9.5	Payment to Persons under Legal Disability	36
9.6	Payment in Installments	36
9.7	Compliance with Regulations	38
9.8	Distributions of Stock and Dividends	38
9.9	Right of First Refusal and Options on Stock	41
9.10	Direct Rollovers	42
9.11	Withdrawals Due to Permanent Disability	43
ARTICLE X—DESIGNATION OF BENEFICIARIES		44
10.1	Participants to Name Beneficiaries	44
10.2	No Beneficiary Designated; Death of Beneficiary	44
10.3	No Liability for Payment to Beneficiaries	44
10.4	Qualified Domestic Relations Orders	45
ARTICLE XI—FIDUCIARY CAPACITY AND RESPONSIBILITY		46
11.1	General Fiduciary Standard of Conduct	46
11.2	Allocation of Responsibility among Fiduciaries	46
11.3	Administrator	47
11.4	Powers and Duties of Administrator	47
11.5	Claims Procedure	48
11.6	Indemnification by Employer	49
11.7	Service in Multiple Capacities	49
11.8	Voting of Stock by Participants and Beneficiaries	49

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ARTICLE XII—THE COMMITTEE		50
12.1	Appointment and Membership	50
12.2	Compensation and Expenses	50
12.3	Committee Procedures and Actions	50
12.4	Resignation or Removal of Committee Member	51
12.5	Committee/Administrator Decisions Final	51
ARTICLE XIII—THE TRUST		52
13.1	Trust Agreement	52
ARTICLE XIV—LOANS TO PARTICIPANTS; DIVERSIFICATION ELECTIONS		53
14.1	Loans to Participants	53
14.2	[Reserved]
14.3	Diversification Elections	54
ARTICLE XV—AMENDMENT		56
15.1	Right to Amend	56
15.2	Retroactivity of Amendments	56
15.3	Limitations on Right to Amend	56
ARTICLE XVI—ADOPTION, WITHDRAWAL AND TERMINATION		57
16.1	Adoption of Plan	57
16.2	Withdrawal from Plan	57
16.3	Termination	57
ARTICLE XVII—MISCELLANEOUS		58
17.1	No Reversion to Employer	58
17.2	Evidence of Action by Necessary Parties	59
17.3	Rights of Participants Limited	59
17.4	Assignment and Alienation	59
17.5	Missing Participants or Beneficiaries	61
17.6	Merger and Consolidation of Plan	62
17.7	Severability	62
17.8	Applicable Law	62
17.9	Method of Accounting	62
17.10	Qualified Military Service	62
17.11	Valuation of Stock Not Readily Tradable on an Established Market	62

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ARTICLE XVIII—REVISED VESTING PROVISIONS		63
18.1	Scope and Effective Date	63
18.2	Definitions	63
18.3	General Vesting Rules	64
18.4	Transitional Rules	66
ARTICLE XIX—REQUIRED MINIMUM DISTRIBUTIONS		67
19.1	Applicability and Effective Date	67
19.2	Requirements of Treasury Regulations Incorporated	67
19.3	Time and Manner of Distribution	67
19.4	Forms of Distribution	68
19.5	Required Minimum Distributions during Participant’s Lifetime	68
19.6	Required Minimum Distributions after Participant’s Death	68
19.7	Miscellaneous	70
19.8	Definitions	70
19.9	Inapplicability for 2009	71

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PREAMBLE

THIS PLAN is executed at LaFox, Illinois, this 16th day of January, 2009 by RICHARDSON ELECTRONICS, LTD., a corporation organized and existing under the laws of the State of Delaware (“Richardson”).

W I T N E S S E T H:

WHEREAS, effective as of June 1, 1987, Richardson adopted the Richardson Electronics, Ltd. and Subsidiaries Employees Stock Ownership Plan and Trust (the “Plan”), a stock bonus plan qualified under Section 401(a) of the Internal Revenue Code of 1986 (the “Code”) and entitled to tax exemption under Section 501(a) of the Code and an employee stock ownership plan within the meaning of Section 4975(e)(7) of the Code, with William G. Seils and Scott Hodes, as Trustees; and

WHEREAS, Richardson has reserved the right to amend the Plan at any time and has amended the Plan on various occasions; and

WHEREAS, as Richardson now desires further to amend and restate the Plan order to incorporate all amendments required in order to comply with the applicable provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 other applicable legislation and applicable regulations and rulings thereunder.

NOW, THEREFORE, the Plan is hereby amended restated effective June 1, 2002 (except as otherwise stated herein) to read as follows:

ARTICLE I

TITLES AND PURPOSE

1.1 Titles

The Plan shall continue to be known as the RICHARDSON ELECTRONICS, LTD. EMPLOYEES STOCK OWNERSHIP PLAN.

1.2 Purpose

The purpose of the Plan is to establish a retirement fund out of the profits of the Employer which will help to provide for the future security of the Participants.

1.3 Exclusive Benefit

The Trust shall be for the exclusive benefit of the Participants and their Beneficiaries. In no event shall the income or principal of the Trust be paid or revert to the Employer or any Related Employer, except as otherwise provided in Section 17.1.

1.4 Status of Plan

The Plan is intended to continue to be a stock bonus plan qualified under Section 401(a) of the Code which is an employee stock ownership plan within the meaning of Code Section 4975(e)(7). As such, the Plan shall invest primarily in qualifying employer securities [within the meaning of Section 4975(e)(8) of the Code].

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ARTICLE II

DEFINITIONS

When used herein, the following words and terms shall have the respective meanings hereinafter set forth, unless a different meaning is clearly required by the context. Whenever appropriate, words used in the singular shall be deemed to include the plural, and vice versa, and the masculine gender shall be deemed to include the feminine and neuter genders, unless a different meaning is clearly required by the context.

2.1 “Account”: Collectively, all of the following separate accounts maintained under the Plan for the benefit of a Participant, including all adjustments thereto under Article VII, unless a specific reference is made to one of such separate accounts:

(a) The separate Employer Contribution Account maintained for each Participant for the purpose of recording his share of the contributions made by the Employer and forfeitures;

(b) In the case of a Participant who is re-employed after incurring a Break in Service, the separate Pre-Break Account, if any, required to be maintained under Section 8.9(b); and

(c) In the case of a Participant for whom a Transfer Account is being maintained under Section 7.8 for the purpose of recording his share of the assets transferred from the Richardson Electronics, Ltd. Employees Profit-Sharing Plan, such Transfer Account.

The term “Account” shall not, unless otherwise specifically provided herein, include the Excess Contribution Account, if any, or the Excess Forfeiture Account, if any, established pursuant to Section 7.5. There shall also be maintained, in the case of a Participant who incurs a Break in Service, a Forfeiture Suspense Account in accordance with Section 18.3(d).

2.2 “Account Balance”: The total amount held for the benefit of a Participant in his Account (or in the specific separate account referred to), as determined on the immediately preceding Anniversary Date in accordance with the provisions of Article VII.

2.3 “Administrator “: The person administering the Plan pursuant to Section 11.3.

2.4 “Anniversary Date”: The last day of each Plan Year.

2.5 “Annual Addition”: With respect to a Participant for any Limitation Year, the sum of (a) Employer contributions allocated on behalf of such Participant for such Limitation Year under the Plan and under any other qualified defined contribution plan maintained by the Employer; (b) forfeitures, if any, allocated on behalf of such Participant for such Limitation Year under any such qualified defined contribution plan; (c) such Participant’s voluntary non-deductible contributions under any qualified plan of the Employer for such Limitation Year; (d) amounts allocated on behalf of such Participant for such Limitation Year to an individual

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medical account, as defined in Section 415(1)(2) of the Code, which is part of a pension or annuity plan maintained by the Employer; and (e) amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after said date, which are attributable to post-retirement medical benefits allocated for such Limitation Year to the separate account of such Participant under a welfare fund, as defined in Section 419(e) of the Code, maintained by the Employer, if he is a Key Employee for such year. For purposes of this Section 2.5, “Employer” shall include any Related Employer.

2.6 “Beneficiary”: Any person (natural or otherwise) entitled to receive any benefits which may become payable upon or after a Participant’s death.

2.7 “Benefit Commencement Date”: The date on which the payment of a Participant’s Vested Account Balance commences, as determined in accordance with the provisions of Section 9.1.

2.8 “Break in Service”:

(a) Except as otherwise provided under Section 2.8(b), the term “Break in Service” shall mean one or more consecutive Computation Periods during each of which an Employee has not completed more than 500 Hours of Service. For eligibility purposes, an Employee shall not incur a Break in Service solely because he fails to complete more than 500 Hours of Service during the Computation Period beginning on his hire date.

(b) Notwithstanding Section 2.8(a), a Computation Period beginning in 1985 or thereafter shall not be included in a Break in Service if the sum of the Employee’s Hours of Service completed during such Computation Period plus the Employee’s “Childbirth Leave Hours” (as hereafter defined) attributable to such Computation Period exceeds 500. For purposes of this Section 2.8(b), an Employee’s Childbirth Leave Hours shall be the number of Hours of Service (but not in excess of 501 for any one continuous period of absence) which the Employee would have completed but for the fact that the Employee is absent from the employment of the Employer and all Related Employers for a period commencing on or after the first day of the Computation Period beginning in 1985 (1) by reason of the pregnancy of the Employee, (2) by reason of the birth of a child of the Employee, (3) by reason of the placement of a child with the Employee in connection with the adoption of such child by the Employee or (4) for purposes of caring for such child for the period beginning immediately following such birth or placement; provided, however, that in the case of any Employee with respect to whom it is not possible to determine the number of Hours of Service which such Employee would have completed but for such absence, such Employee shall be credited with 8 Childbirth Leave Hours for each work day of such absence; and provided further, that an hour which is considered an Hour of Service under Section 2.18(b) shall not also be considered a Childbirth Leave Hour. All Childbirth Leave Hours for any period of absence shall be attributed to the Computation Period during which such period of absence begins if the result of such attribution is to prevent such Computation Period from being considered a Break in Service; otherwise, all Childbirth Leave Hours shall be attributed to the immediately following Computation Period. The Administrator shall adopt regulations under which an Employee may be required to furnish reasonable information on a timely basis establishing the number of Childbirth Leave Hours to which such Employee is entitled with respect to any period of absence from employment, and any Employee who fails to furnish such information with respect to any period of absence shall not be credited with any Childbirth Leave Hours for such period of absence.

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(c) Notwithstanding Section 2.8(a), a Computation Period shall not be included in a Break in Service if the Employee would have completed at least 500 Hours of Service but for a period of absence due to layoff (for not more than 6 months), jury duty or Leave of Absence, other than a period of absence described in Section 2.8(b).

2.9 “Code”: The Internal Revenue Code of 1986, as now in effect or as hereafter amended, and any regulation issued pursuant thereto by the Internal Revenue Service. Whenever any provision of the Code is renumbered or otherwise amended, this Plan shall, to the extent possible, be construed by reference to the successor to such provision.

2.10 “Committee”: The committee established pursuant to the provisions of Article XII to assist the Administrator in the administration of the Plan.

2.11 “Compensation”: The term “Compensation” shall mean wages, within the meaning of Section 3401(a) of the Code, and all other payments of compensation paid to a Participant by the Employer (during the course of the Employer’s trade or business) during a Plan Year for services rendered by him as an Employee for which the Employer is required to furnish the Employee a written statement under Sections 6041(d) and 6051(a)(3) of the Code, determined without regard to any rules under Section 3401(a) which limit the remuneration included in wages based upon the nature or location of the employment or the services performed [such as the exception for agricultural labor in Section 3401(a)(2)], together (i) any elective deferral [as defined in Section 402(g)(3) of the Code] on behalf of such Participant and (ii) any amount which is contributed or deferred by the Employer at the election of such Participant and which is not includable in the gross income of such Participant by reason of Sections 125, 132(f)(4) or 457 of the Code. Except as provided in Section 6.1(e), in the case of an individual who was a Participant for a period consisting of less than the entire Plan Year, his Compensation shall be deemed to include only the taxable remuneration paid to him for the period while he was a Participant. The Compensation of each Participant taken into account for any Plan Year shall not exceed $200,000 [subject to cost-of-living adjustments pursuant to Section 401(a)(17)(B) of the Code]. Effective for Plan Years beginning after December 31, 2007, there shall be included in a Participant’s Compensation any payment after termination of his employment only if such payment (i) is regular compensation for services during his regular working hours, or compensation for services outside such regular working hours (such as overtime), bonuses or other similar payments; (ii) would have been paid to him before termination of employment if he had continued in employment with the Employer; and (iii) is paid by the later of 2 ¹/2 months after termination of employment or the end of the Limitation Year including the date of termination of employment.

2.12 “Computation Period”: For eligibility purposes, the Computation Period is the 12-month period beginning on an Employee’s employment date or re-employment date, subject to Sections 2.40 and 3.2(b) and (c). For all other purposes under the Plan, including without limitation vesting, the Computation Period is the Plan Year.

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2.13 “Effective Date”: June 1, 2002 (except as otherwise set forth herein).

2.14 “Employee”: Any person employed by and receiving Compensation from the Employer or any Related Employer (or who would be receiving such remuneration except for a Leave of Absence). The term “Employee” shall not include any person who is a “leased employee” within the meaning of Code Section 414(n)(2). For purposes of the preceding sentence, the term “leased employee” means any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person has performed services for the recipient [or for the recipient and related persons determined in accordance with Section 414(n)(6) of the Code] on a substantially full-time basis for a period of at least one year, and such services are performed under primary direction or control by the recipient.

2.15 “Employer”: Richardson and any successor to it. The term “Employer” shall also include any corporation or other unincorporated business organization which adopts the Plan for the exclusive benefit of its Employees pursuant to the provisions of Section 16.1. Anything to the contrary notwithstanding, a mere change in the identity, form or organization of the Employer shall not affect its status under the Plan or the Trust in any manner.

2.16 “Entry Date”: November 30 of each Plan Year and the last day of each Plan Year. Effective October 1, 2005, notwithstanding the preceding sentence, the Entry Date shall be October 1, 2005 for any individual formerly employed by Image Systems Corporation who became an Employee on said date and who satisfied the requirements of Section 3.1(a), taking into account Section 2.18(c) of the Plan, as of said date.

2.17 “ERISA”: The Employee Retirement Income Security Act of 1974, as now in effect or as hereafter amended, and any regulation issued pursuant thereto by the Internal Revenue Service, the Department of Labor or the Pension Benefit Guaranty Corporation. Whenever any provision of ERISA is renumbered or otherwise amended, this Plan shall, to the extent possible, be construed by reference to the successor to such provision.

2.18 “Hour of Service”:

(a) Each Employee shall be credited with an Hour of Service for:

(1) Each hour for which he is directly or indirectly paid or entitled to payment by the Employer or any Related Employer for the performance of duties. Service rendered at overtime or other premium rates shall be credited at the rate of one Hour of Service for each hour worked, regardless of the rate of compensation in effect. These hours shall be credited to the Employee for the Computation Period(s) during which the duties are performed. An Employee who is not compensated on an hourly basis, or for whom information regarding the number of hours worked is not readily available, shall be credited with the following number of Hours of Service for each payroll period during which he completes at least one Hour of Service:

(i) 45 Hours of Service for each weekly payroll period;

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(ii) 90 Hours of Service for each bi-weekly payroll period;

(iii) 95 Hours of Service for each semi-monthly payroll period; or

(iv) 190 Hours of Service for each monthly payroll period.

Hours of Service credited to a payroll period which includes an Anniversary Date shall be credited entirely to the Plan Year commencing on the date following such Anniversary Date. An Employee who is not compensated on the basis of a regular payroll period shall be credited with 10 Hours of Service for each day on which he completes at least one Hour of Service.

(2) Each hour (up to a maximum of 501 hours in any one continuous period) for which he is directly or indirectly paid or entitled to payment by the Employer or any Related Employer on account of a period during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), lay-off, jury duty, military duty or leave of absence. In the case of payments which are computed on the basis of specific periods of time during which no duties are performed, the Employee shall receive credit for Hours of Service as if he had actually worked during such periods of time, computed and credited as provided in Section 2.18(a)(1). In the case of all other payments, the Employee’s Hours of Service shall be computed and credited in the manner prescribed in 29 C.F.R. Sections 2530.200b-2(b) and (c), which are hereby incorporated herein by reference.

(3) Each hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by the Employer or any Related Employer. These hours shall be credited to the Employee for the computation period (or periods) to which the award, agreement or payment pertains rather than the computation period (or periods) during which the award, agreement or payment was made.

(b) Notwithstanding the foregoing, no credit shall be granted for any period with respect to which an Employee receives payment or is entitled to payment under a plan maintained solely for the purpose of complying with applicable worker’s compensation or disability insurance laws; or for a payment which solely reimburses an Employee for medical or medically related expenses incurred by the Employee.

(c) Service by an individual on behalf of any of the following entities before he became an Employee shall be considered service on behalf of the Employer for purposes of this Section 2.18, to-wit: Amperex Division of North American Phillips Corp.; B-Scan, Inc.; Calvert Electronics, Inc.; Calvert Holding Co., Inc.; Calvert Semi-Conductor, Inc.; Ceco Communications, Inc.; Cetron

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Electronic Corporation; National Electronics Division of Varian Associates, Inc.; TubeMaster, Inc.; Compucon Distributors, Inc.; Burtek Systems (USA), Inc.; AFP Imaging Corporation; Eternal Graphics, Inc., (effective June 1, 1998 and including service prior to that date); TRL Technologies, Inc. (effective June 23, 1998 and including service prior to that date); Adler Video Systems, Inc. (effective November 28, 1998 and including service prior to that date); Pixielink Corporation (effective March 8, 1999 and including service prior to that date); and Broadcast Richmond, Inc. (effective May 31, 2000 and including service prior to that date). Service by an individual on behalf of Baron Electronic Sales Co., Inc. before he became an Employee shall be considered service on behalf of the Employer for purposes of this Section 2.18, effective May 8, 2001, and including service prior to that date. Effective October 1, 2005, service by an individual on behalf of Image Systems Corporation before he became an Employee shall be considered service on behalf of the Employer for purposes of this Section 2.18, effective October 1, 2005 and including service prior to that date.

2.19 “Key Employee”:

(a) Except as otherwise provided in this Section 2.19, an Employee shall be considered a “Key Employee” for any Plan Year if, at any time during the Key Employee Test Period [as defined in Section 2.19(c)], he is or was:

(1) An officer of the Employer having an annual Compensation greater than $130,000 [subject to cost-of-living adjustments pursuant to Code Section 416(i)(1)(A)];

(2) A person who owns [or is considered as owning within the meaning of Code Section 318, as modified by Code Section 416(i)(1)(B)(iii)] more than 5% of the outstanding stock of the Employer or stock possessing more than 5% of the total combined voting power of all stock of the Employer; or

(3) A person whose annual Compensation from the Employer is more than $150,000 and who owns (or is considered as owning within the meaning of said Section 318, as so modified) more than 1% of the outstanding stock of the Employer or more than 1% of the total combined voting power of all stock of the Employer.

If a Participant is a Key Employee, his Beneficiary, if any, shall also be deemed a Key Employee.

(b) The number of Employees classified as Key Employees solely because they are described in Section 2.19(a)(1) shall not exceed the greater of (1) 3 or (2) 10% of the largest number of Employees during any of the Plan Years in the Key Employee Test Period; provided, however, that in no event shall such number exceed 50. If more than such number of Employees would otherwise be classified as Key Employees by reason of being described in Section 2.19(a)(1), the Employees classified as Key Employees by reason of being described in Section 2.19(a)(1) shall be those described in Section 2.19(a)(1) who had the highest Compensation during any of the Plan Years in the Key Employee Test Period during which they were described in Section 2.19(a)(1).

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(c) The term “Key Employee Test Period” for any Plan Year shall mean the period consisting of the Plan Year containing the Determination Date for such Plan Year.

(d) The purpose of this Section 2.19 is to conform to the definition of “key employee” set forth in Section 416(i)(1) of the Code, which is incorporated herein by reference, and to the extent that this Section 2.19 shall be inconsistent with Section 416(i)(1) of the Code, either by excluding Employees who would be classified as “key employees” thereunder or by including Employees who would not be so classified, the provisions of Section 416(i)(1) of the Code shall govern and control.

2.20 “Leave of Absence”: Authorized leave of absence, sick or disability leave, service in the Armed Forces of the United States (provided that the absence is caused by war or other emergency or provided that the Employee is required to serve under the laws of conscription in time of peace) or any absence with the advance approval of the Employer or any Related Employer; provided, however, that the Employee retires or returns to work for the Employer or any Related Employer within the time specified in his Leave of Absence (or, in the case of a military absence, within the period provided by law). In granting such leaves, the Employer and any Related Employer shall treat all Employees under similar circumstances alike under rules uniformly and consistently applied.

2.21 “Limitation Year”: The period coinciding with the Plan Year.

2.22 “Non-Key Employee”: Any Employee who for any Plan Year is not a Key Employee.

2.23 “Normal Retirement Date”: The date a Participant attains age 65.

2.24 “Participant”: Any Employee who participates in the Plan as provided in Article III.

2.25 “Permanent Disability”: The inability of a Participant to perform a substantial portion of his duties by reason of any medically determinable physical or mental impairment which can be expected to be of long-continued and indefinite duration. Permanent Disability shall be determined solely by the Administrator upon medical evidence from a physician selected by the Administrator. A determination of Permanent Disability pursuant to the provisions of the Plan shall not be construed to be an admission of disability by the Employer in regard to any other claim of disability brought by the Participant against the Employer. A Participant who is receiving disability benefits under the Social Security Act shall be presumed to be Permanently Disabled. Effective October 15, 2003, the preceding provisions of this Section 2.25 are deleted and the following is substituted in its place:

“Permanent Disability”: The inability of a Participant to perform a substantial portion of his duties by reason of any medically determinable physical or mental impairment, as evidenced by his satisfaction of the requirements to receive Social Security disability benefits.

2.26 “Plan”: The Richardson Electronics, Ltd. Employee Stock Ownership Plan, as amended and restated herein.

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2.27 “Plan Year”: The fiscal year adopted by the Employer for Federal income tax purposes.

2.28 “Qualified Domestic Relations Order”:

(a) Except as provided in Section 2.28(b), the term “Qualified Domestic Relations Order” shall mean any order (including a judgment, a decree or an approval of a property settlement agreement entered by any court) which the Administrator determines (1) is made pursuant to any state domestic relations law (including a community property law), (2) relates to the provision of child support, alimony payments or marital property rights of a spouse, former spouse, child or other dependent of a Participant (an “Alternate Payee”) and (3) clearly specifies (i) the name and last known mailing address (if any) of the Participant and the name and mailing address of each Alternate Payee covered by the order, (ii) the amount or percentage of the Participant’s benefits to be paid by the Plan to each Alternate Payee, or the manner in which such amount or percentage is to be determined, (iii) the number of payments or period to which such order applies and (iv) the employee benefit plan to which such order applies.

(b) An order shall in no event be considered a Qualified Domestic Relations Order if the Administrator determines that such order (1) requires the Plan to provide benefits to Alternate Payees, the actuarial present value of which in the aggregate is greater than the benefits which would otherwise have been provided to the Participant, (2) requires the Plan to pay benefits to an Alternate Payee, which benefits are required to be paid to a different Alternate Payee under another order previously determined to be a Qualified Domestic Relations Order or (3) requires the Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan, except that a Qualified Domestic Relations Order may require the Trustee to distribute a portion of the Participant’s Vested Account Balance prior to the time the Participant has incurred a Termination of Employment but after the Participant has attained the age of 50. Notwithstanding the preceding sentence, effective May 31, 1998 a Qualified Domestic Relations Order may require the Trustee to distribute all or a portion of the Participant’s Vested Account Balance prior to the time the Participant has incurred a Termination of Employment and without regard to the Participant’s age.

2.28A “Qualified Military Service”: Any service in the “uniformed services” (as defined in Chapter 43 of Title 38, United States Code) by any individual if such individual is entitled to reemployment rights under such chapter as to such service.

2.29 “Related Employer”: Any trade or business (whether or not incorporated) that is, along with the Employer, a member of a controlled group of related entities [as defined in Sections 414(b) and (c) of the Code, as modified for purposes of Sections 7.5 and 7.6 by Section 415(h) of the Code] or a member of an affiliated service group [as defined in Section 414(m) of the Code]. Anything to the contrary notwithstanding, a mere change in the identity, form or organization of a Related Employer shall not affect its status under the Plan or the Trust in any manner and, if the corporate name of a Related Employer is hereafter changed, all references herein to such Related Employer shall be deemed to refer to such Related Employer as it is then known.

2.30 “Richardson”: Richardson Electronics, Ltd., a Delaware corporation.

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2.31 “Spouse”: The person who is married to the Participant at the time relevant to such determination except to the extent that a Qualified Domestic Relations Order provides that a former spouse is to be treated as the Participant’s Spouse; provided, however, that, solely for purposes of Section 9.3(c), the person to whom a Participant is married at the time of his death shall be considered his Spouse only if they had been married at least one year prior to his death.

2.32 “Stock”: Capital stock issued by the Employer [or by a corporation which is a member of the same “controlled group” (as defined in Section 409(1)(4) of the Code) of the Employer] and which is either:

(a) Common stock which is readily tradable on an established securities market; or

(b) If no such corporation has common stock outstanding which is readily tradable on an established securities market, common stock which has a combination of voting power and dividend rights equal to or in excess of that class of common stock of any such corporation which has the greatest voting power and that class of common stock of any such corporation which has the greatest dividend rights; or

(c) Preferred stock which is noncallable and which is convertible at any time into common stock described in either Sections 2.32(a) or (b) at a conversion price which is reasonable (at the time such stock is acquired by the Trust). To the extent provided in regulations issued under Section 409(l)(3) of the Code, preferred stock shall be treated as noncallable if after the call there will be a reasonable opportunity for such a conversion.

2.33 “Termination of Employment”: An Employee shall be deemed to have incurred a “Termination of Employment” as a result of:

(a) A retirement, a resignation or a dismissal for any reason;

(b) A failure to return to work promptly upon the request of the Employer or Related Employer at the end of a layoff; or

(c) A failure to retire or return to work at the end of a Leave of Absence.

A transfer of employment between the Employer and any Related Employer, or between Related Employers, or a transfer from a job category eligible to participate in the Plan to one not so eligible or vice versa, shall not be considered to be a Termination of Employment.

2.34 “Top-Heavy Determination Date”: For any Plan Year, the Anniversary Date of the immediately preceding Plan Year.

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2.35 “Top-Heavy Year”:

(a) Except as otherwise provided in Section 2.35(b) below, the term “Top-Heavy Year” shall be any Plan Year if, as of the Top-Heavy Determination Date for such Plan Year, the aggregate Account Balances of all Key Employees under the Plan exceed 60% of the aggregate Account Balances of all Participants under the Plan.

(b) Notwithstanding Section 2.35(a), if during any Plan Year (1) at least one Participant is a Key Employee, (2) as of the Top-Heavy Determination Date for such Plan Year the Employer or any Related Employer has adopted any other employee plan qualified under Section 401(a) of the Code and (3) either (i) a Key Employee participates in such other plan or (ii) the Plan or such other plan has satisfied the requirements of Section 401(a)(4) or Section 410 of the Code only by treating the Plan and such other plan as a single plan, then such Plan Year shall be considered a Top-Heavy Year if and only if the Account Balances of all Key Employees under the Plan and the aggregate balances in the accounts of all Key Employees under all such other plans exceed 60% of the aggregate balances in the accounts of all Participants under the Plan and all such other plans.

(c) Notwithstanding Sections 2.35(a) and (b), if as of any Top-Heavy Determination Date the Employer or any Related Employer has adopted any other employee plan qualified under Section 401(a) of the Code which is not a plan described in Section 2.35(b), but which plan may be considered as a single plan with the Plan and all plans described in Section 2.35(b) without causing any of such plans to violate the requirements of either Section 401(a)(4) or Section 410 of the Code, the Plan Year shall not be considered a Top-Heavy Year if the Account Balances of all Key Employees under the Plan and the aggregate balances in the accounts of all Key Employees under all plans described in Section 2.32(b) and all plans described in this Section 2.35(c) do not exceed 60% of the aggregate balances in the accounts of all Participants under all such plans.

(d) If any of the plans described in either Sections 2.35(b) or (c) are defined benefit plans, then the tests set forth in said sections shall be applied by using the present value of all benefits accrued under such plans (as determined by the Administrator, using actuarial assumptions which are uniform for all such plans and are reasonable in the aggregate) in lieu of the account balances in such plans. The accrued benefits of the Non-Key Employees under such plans shall be determined in accordance with Section 416(g)(4)(F) of the Code. If any of such plans have a “determination date” [as defined in Section 416(g)(4)(C) of the Code] for purposes of determining top-heavy status which is different from the Top-Heavy Determination Date, the account balances (or the present value of the accrued benefits, in the case of a defined benefit plan) in such plan shall be determined as of the determination date for such plan which occurs in the same Plan Year as the Top-Heavy Determination Date.

(e) For purposes of this Section 2.35, account balances shall include (1) all contributions which the Employer or any Related Employer has paid or is legally obligated to pay to any employee plan as of the Top-Heavy Determination Date (including contributions made thereafter if they are allocated as of the Top-Heavy Determination Date) and all forfeitures allocated as of the Top-Heavy Determination Date and (2) all distributions made to a Participant or his Beneficiary during the one-year period ending on the Determination Date. If any plan that was terminated within the Key Employee Test Period would, if it had not been terminated,

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be a plan described in Section 2.35(b), distributions made under such plan shall also be taken into account. In the case of any distribution made for a reason other than severance from employment, death or disability, the second preceding sentence shall be applied by substituting “five-year period” for “one-year period.” For purposes of this Section 2.32, account balances shall also include amounts which are attributable to contributions made by the Participants (other than deductible voluntary contributions under Section 219 of the Code) but shall not include any rollover [as defined in Section 402(a) (5) of the Code] or a direct transfer from the trust of any employee plan qualified under Section 401(a) of the Code if such plan is not maintained by the Employer or any Related Employer and such rollover or transfer is made at the request of the Participant after December 31, 1983.

(f) Anything to the contrary notwithstanding, if an Employee has not performed any services for the Employer or any Related Employer at any time during the one-year period ending on the Determination Date, his account balance (in the case of a defined contribution plan) or his accrued benefit (in the case of a defined benefit plan) shall not be taken into account.

(g) The purpose of this Section 2.35 is to conform to the definition of “top-heavy plan” set forth in Section 416(g) of the Code, which is incorporated herein by reference, and to the extent that this Section 2.35 shall be inconsistent with Section 416(g) of the Code, either by causing any Plan Year during which the Plan would be classified as a “top-heavy plan” not to be a Top-Heavy Year or by causing any Plan Year during which it would not be classified as a “top-heavy plan” to be a Top-Heavy Year, the provisions of Section 416(g) of the Code shall govern and control.

2.36 “Trust”: The trust forming a part of the Plan and known as the Richardson Electronics, Ltd. Employees Stock Ownership Trust.

2.37 “Trust Agreement”: The agreement dated February 23, 1990 by and between Richardson and Marine Midland Bank, N.A. (known as HSBC Bank USA, effective March 29, 1999).

2.38 “Trustee” or “Trustees”: The person or persons who shall from time to time be acting as the Trustee under the Trust Agreement and their duly appointed successors.

2.39 “Valuation Date”: The Anniversary Date and each other date during the Plan Year specified by the Administrator [in a manner which does not discriminate in favor of Participants who are “highly compensated employees,” as defined in Section 414(q) of the Code] as to which Accounts are adjusted pursuant to Article VII.

2.40 “Vested Account Balance”: At any date, the portion of a Participant’s Account Balance which would be nonforfeitable if the Participant incurred a Termination of Employment on such date, as determined under Article VIII.

2.41 “Year of Service”: Any Computation Period during which an Employee has completed at least 1,000 Hours of Service. For purposes of Article III, as soon as an Employee completes at least 1,000 Hours of Service during the initial Computation Period specified in Section 2.12, he shall be credited with a Year of Service even if fewer than 12 consecutive calendar months have passed.

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If such Employee fails to complete at least 1,000 Hours of Service during the initial 12-month Computation Period specified in Section 2.12, the second 12-month Computation Period shall consist of the Plan Year which includes the first anniversary of his employment or re-employment commencement date, and the succeeding 12-month Computation Periods shall also be based on the Plan Year.

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ARTICLE III

PARTICIPATION

3.1 Eligibility to Participate

(a) Each Employee shall be eligible to participate in the Plan, provided that he (1) has completed at least one Year of Service; (2) is not a member of a collective bargaining unit in which retirement benefits were the subject of good faith bargaining between the Employer or any Related Employer and one or more employee representatives; (3) is not a nonresident alien described in Code Section 410(b)(3)(C); and (4) is not a United States citizen employed by the Employer in a nation other than the United States (the “Foreign Country”) who would be subject to tax under the laws of such Foreign Country upon receiving an allocation to his Account pursuant to Section 6.1.

(b) Each Employee who participated in the Plan in accordance with its terms prior to the Effective Date shall continue as a Participant. Each other Employee who satisfies the eligibility requirements of Section 3.1(a) shall become a Participant on the later of the Effective Date or the Entry Date coincident with or immediately following the date on which he satisfies such eligibility requirements, provided that he is still employed by the Employer on such date.

3.2 Duration of Participation; Re-Employment

(a) Subject to the provisions of Sections 3.2(b) and (c), an Employee shall cease to be a Participant for purposes of Section 6.1 upon ceasing to be employed by the Employer, but shall remain a Participant for all other purposes hereunder until such time as his Vested Account Balance is paid to him (or his Beneficiaries) in full in accordance with Article IX, at which time his participation in the Plan shall cease.

(b) Each Participant who incurs a Termination of Employment and is re-employed after incurring a Break in Service shall again become a Participant as of his re-employment date for all purposes under the Plan except Sections 4.1(a) and 7.4, and shall again become a Participant for purposes of Sections 4.1(a) and 7.4 on the Entry Date coincident with or immediately following the date on which he completes one Year of Service following such re-employment; provided, however, that if either (1) such Participant had a vested right to any portion of his Account Balance when he incurred his Termination of Employment, (2) the number of Computation Periods in such Break in Service is fewer than the number of Years of Service completed by the Participant prior to such Break in Service or (3) the number of Computation Periods such Break in Service is fewer than 5, then his participation for all purposes under the Plan shall be retroactive to his date of re-employment.

(c) Each Employee or each Participant who incurs a Termination of Employment and is re-employed prior to incurring a Break in Service shall be treated, for purposes of eligibility to participate in the Plan, as though he never incurred a Termination of Employment.

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(d) An Employee’s participation in the Plan shall not be affected by the fact that he continues to be employed after his Normal Retirement Date.

(e) Sections 3.2(a) through 3.2(d) are deleted and the following sections are substituted in their place effective June 2, 2002, as to Plan Years beginning on or after that date:

(a) An Employee shall cease to be a Participant for purposes of Section 6.1 upon ceasing to be employed by the Employer, but shall remain a Participant for all other purposes hereunder until such time as his Vested Account Balance is paid to him (or his Beneficiaries) in full in accordance with Article IX, at which time his participation in the Plan shall cease.

(b) Each Participant who incurs a Termination of Employment and is re-employed after incurring a Break in Service shall again become a Participant as of the day he first completes an Hour of Service following his re-employment.

(c) An Employee’s participation in the Plan shall not be affected by the fact that he continues to be employed after his Normal Retirement Date.

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ARTICLE IV

CONTRIBUTIONS BY EMPLOYER

4.1 Amount

(a) The Board of Directors of the Administrator shall determine the aggregate amount to be contributed by all Employers for each Plan Year. Subject to Section 4.1(d), each Employer hereby agrees to contribute to the Trust for a Plan Year its share of the aggregate amount, in the proportion that the total Compensation paid or accrued by such Employer to all Participants for such Plan Year bears to the total Compensation paid or accrued to all Participants by all Employers for such Plan Year; provided, however, that he contribution made by any Employer for any Plan Year shall not exceed the maximum amount deductible by such Employer for that Plan Year under the provisions of Section 404 of the Code.

(b) If any Employer is unable to make its full contribution for any Plan Year, the remaining Employers may (but shall not be obligated to) make all or a portion of such Employer’s contribution on its behalf, subject to the foregoing limitations.

(c) The Employer’s contribution shall be in the form of cash or stock at its fair market value, or a combination thereof; provided that at all times at least 51% of the total balance in all Employer Contribution Accounts and the Suspense Account (excluding amounts held to make current debt payments and dividends held pending distribution pursuant to Section 9.6) shall be in the form of Stock or other stock of the Employer.

(d) The Employer shall be required to contribute [in the same proportion as provided in Section 4.1(a)] the amount of any previously forfeited amounts which are require to be restored to any re-employed Participant’s Employer Contribution Account during such Plan Year pursuant to Section 8.5(b), reduced by any forfeitures for such Plan Year and by any excess Employer contributions and any excess forfeitures allocated pursuant to Sections 7.5(c), (d) and (e).

(e) The determination of the Administrator as to the amount to be contributed by each Employer hereunder shall in all respects be final, binding and conclusive upon all persons or parties claiming any rights either under the Plan or the Trust.

4.2 Time for Payment

All contributions by the Employer shall be delivered to the Trustee not later than the date fixed by law for the filing of the Employer’s Federal income tax return for the Plan Year which includes the Anniversary Date as of which such contribution is to be allocated (including any extensions of time granted by the Internal Revenue Service for the filing of such return).

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ARTICLE V

CONTRIBUTIONS BY PARTICIPANTS

5.1 Contributions by Participants

Participants shall not be required or permitted to make any contributions to the Plan.

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ARTICLE VI

ALLOCATION OF EMPLOYER CONTRIBUTIONS

6.1 Manner of Allocation

(a) All contributions made by any Employer under Section 4.1(a) for a Plan Year shall be allocated among the Employer Contribution Accounts of the eligible Participants [as defined in Section 6.1 (b)] in the proportion that the Compensation paid or accrued to each Participant during such Plan Year bears to the total Compensation paid or accrued to all such Participants during such Plan Year.

(b) The Participants who shall be eligible to receive an allocation under this Section 6.1 with respect to a Plan Year shall be limited to: (1) Participants who are Employees on the last work day of such Plan Year (including Participants who incurred a Termination of Employment on such date) and who are credited with a Year of Service for such Plan Year, (2) Participants who retired on or after their Normal Retirement Date during such Plan Year, and (3) Participants who terminated employment during such Plan Year due to death, Permanent Disability or involuntary Termination of Employment (other than Termination of Employment for cause). Effective for Plan Years beginning on or after June 2, 2002, the preceding sentence shall read as follows: “The Participants who shall be eligible to receive an allocation under this Section 6.1 with respect to a Plan Year shall be limited to Participants who are Employees on the last work day of such Plan Year (including Participants who incurred a Termination of Employment on such date) and who are credited with a Year of Service for such Plan Year.”

(c) Anything to the contrary notwithstanding, the allocation of the Employer’s contributions shall subject to the limitations set forth in Sections 7.5 and 7.6, and, in any Top-Heavy Year, the limitations of Section 6.2.

(d) Contributions required by Section 4.1(d) shall be restored to the Employer Contribution Account of the re-employed Participant.

(e) For purposes of Sections 6.1(a) and 7.4, there shall be included in the Compensation of a Participant who commenced participation in the Plan during a Plan Year the portion of his Compensation paid or accrued prior to the Entry Date on which he became a Participant.

(f) Section 6.1(b) is deleted and the following is substituted in its place effective June 2, 2002, as to Plan Years beginning on or after that date:

(b) The Participants who shall be eligible to receive an allocation under this Section 6.1 with respect to a Plan Year shall be limited to Participants who are Employees on the last work day of such Plan Year (including Participants who incurred a Termination of Employment on such date) and who are credited with at least 1,000 Hours of Service for such Plan Year.

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6.2 Allocations in Top-Heavy Years

(a) Notwithstanding any herein to the contrary, for any Plan Year which is a Top-Heavy Year, the aggregate allocation of the Employer’s contribution to the Employer Contribution Account of each Non-Key Employee who is a Participant (including those who are employed by the Employer on the last work day of such Plan Year but who are not credited with a Year of Service for such Plan Year) shall not be less than 3% of such Non-Key Employee’s Compensation for such Plan Year.

(b) If, in any Top-Heavy Year, the Key Employee Percentage (as hereinafter defined) for each Key Employee who is a Participant is less than 3%, the highest Key Employee Percentage shall be substituted for 3% in Section 6.2(a) unless a defined benefit plan [as defined in Section 414(j) of the Code] which is described in Section 2.35(d) must be combined with the Plan in order to satisfy the requirements of Section 401(a) or Section 410 of the Code. For purposes of this Section 6.2, the “Key Employee Percentage” for each Key Employee shall be the aggregate amount of the Employer’s contribution allocated to such Key Employee’s Employer Contribution Account for such Plan Year (taking into account adjustments pursuant to this Section 6.2) as a percentage of such Key Employee’s Compensation.

(c) In the event that the allocation of the Employer’s contribution to any Non-Key Employee under Section 6.1 in a Top-Heavy Year would otherwise violate the provisions of this Section 6.2, the aggregate amount allocated to the Employer Contribution Accounts of the Key Employees shall be reallocated (in proportion to the amount otherwise allocated to each Key Employee) to the Company Contribution Accounts of the Non-Key Employees (in proportion to the difference between the amount otherwise allocated to each Non-Key Employee and the amount required to be allocated under this Section 6.2) until the requirements of this Section 6.2 are satisfied.

(d) In the event that a Non-Key Employee is a participant in any other defined contribution plan [as defined in Section 414(i) of the Code] maintained by the Employer or any Related Employer, the amount required to be allocated to such Non-Key Employee under this Section 6.2 shall be reduced by the aggregate amount allocated to the Non-Key Employee’s accounts under all such other plans.

(e) In the event that a Non-Key Employee is a participant in any defined benefit plan [as defined in Section 414(j) of the Code] maintained by the Employer or any Related Employer which is a “top-heavy plan” [as defined in Section 416(g) of the Code], then, if the accrued benefit of such plan satisfies the requirements of Section 416(c)(1) of the Code [taking into account the modifications required by Section 416(h)(2)(A)(ii) of the Code if Section 6.2(e) applies], then Section 6.2(a) shall not apply to such Non-Key Employee. If such accrued benefit does not satisfy such requirements, then “5%” shall be substituted for “3%” in Section 6.2(a) with respect to such Non-Key Employee, and Section 6.2(b) shall not apply to such Non-Key Employee.

(f) If Section 7.6(c) applies for any Plan Year, then “4%” shall be substituted for “3%” in Section 6.2(a), and “7.5%” shall be substituted for “5%” in Section 6.2(e).

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(g) For purposes of this Section 6.2, contributions by the Employer shall include forfeiture allocations.

6.3 Administrator to Notify Trustee

As soon as practicable after the close of each Plan Year, the Administrator shall furnish the Trustee with a statement showing the Compensation paid to each Participant for such Plan Year.

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ARTICLE VII

ACCOUNTS OF PARTICIPANTS

7.1 Separate Accounts

The Administrator shall create and maintain adequate records to disclose the interest in the Trust of each Participant (or Beneficiary of a deceased Participant). For accounting purposes, a separate Account shall be maintained for each Participant, reflecting his proportionate share of all contributions, forfeitures, net increases or decreases in the value of the Trust assets and distributions to the Participant (or his Beneficiary). Credits and charges shall be made to such Accounts in the manner described herein. The maintenance of such separate Accounts shall not require the segregation of any assets from any other assets held in the Trust.

7.2 Adjustments to Accounts

(a) As of each Valuation Date, the Administrator shall:

(1) First, charge to the proper Accounts all payments or distributions made from the Accounts since the immediately preceding Valuation Date.

(2) Second, adjust the Account Balances upward or downward, on a proportional basis, according to the net gain or loss of the Trust assets from investments (as reflected by interest payments, dividends, realized and unrealized gains and losses on securities and other investment transactions) and from the payment of expenses, so that the aggregate Account Balances equal the fair market value, as determined by the Trustee, of the Trust assets on such Valuation Date. For purposes of this Section 7.2(a)(2), Account Balances shall not include (i) any Account which has been segregated for the payment of installments pursuant to Section 9.4(b) or (ii) any asset of an Account the gain or loss from which is, pursuant to Article XIV, allocated to a specific Participant’s Account. All gain or loss (whether realized or unrealized) attributable to an Account described in the preceding sentence shall be allocated directly to such Account, and the fair market value of the balance in all such Accounts, after such allocation (or, in the case of an asset allocated to a specific Participant’s Account, the fair market value of such asset) shall be subtracted from the fair market value of the Trust’s assets (and, if applicable, from the Account Balance to which such asset is allocated), prior to the adjustment set forth herein.

(3) Third, if such Valuation Date is an Anniversary Date, allocate and credit the balances, if any, in the Excess Contribution Account and the Excess Forfeiture Account in accordance with Sections 7.5(d) and (e).

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(4) Fourth, if such Valuation Date is an Anniversary Date, allocate and credit the Employer contributions and Stock released from the Suspense Account in accordance with Section 7.3 and forfeitures, if any, in accordance with Section 7.4, in either case except to the extent modified by Sections 7.5, 7.6 and 7.7.

(b) Every adjustment made pursuant to this Section 7.2 shall be considered as having been made as of the Anniversary Date of the applicable Plan Year regardless of the dates of actual entries or receipt by the Trustee of the contribution made by the Employer for such Plan Year; provided, however, that Employer contributions pursuant to Section 4.1(a) for the Plan Years ending in 1988 through 1992, inclusive, as well as the Employer contribution made in 1992 for the Plan Year ended May 29, 1993, shall be considered as having been made as of the first day of the applicable Plan Year regardless of the dates of actual entries or receipt by the Trustee of such contributions.

(c) The determination as to the value of the assets of the Trust and the charges or credits to the Accounts of the Participants shall be conclusive and binding on all persons.

7.3 Crediting of Employer Contributions

Each Participant’s Employer Contribution Account shall be credited with that portion of the Employer’s contribution for the current Year and Stock released from the Suspense Account for the current year to which such Participant is entitled, as provided in Section 6.1.

7.4 Crediting of Forfeitures

(a) Forfeitures, if any, occurring during the Plan Year pursuant to Section 18.3(d) and allocated from the Forfeiture Suspense Accounts shall be allocated among the Employer Contribution Accounts of all Participants eligible to receive an allocation of the Employer’s contribution under Section 6.1(a) in the proportion that the Compensation paid or accrued to each such Participant during such Plan Year bears to the Compensation paid or accrued to all such Participants during such Plan Year. Forfeitures to be allocated with respect to the Plan Year ending June 1, 2002 shall include the amounts treated as forfeitures pursuant to Section 18.3(g). This Section 7.4(b) shall not apply to Plan Years beginning on or after June 2, 2002.

(b) Forfeitures occurring in Plan Years beginning on or after June 2, 2002 shall be used to pay the expenses of administering the Plan (including reimbursing the Employer for such expenses paid by it) and to restore the Accounts of Participants in accordance with Section 18.3(i). Any forfeitures arising during such a Plan Year but not utilized pursuant to the preceding sentence shall be allocated among the Employer Contribution Accounts of all Participants eligible to receive an allocation of the Employer’s contribution under Section 6.1(a) in the proportion that the Compensation paid or accrued to each such Participant during such Plan Year bears to the Compensation paid or accrued to all such Participants during such Plan Year.

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7.5 Limitation on Allocations

(a) Notwithstanding any other provisions of the Plan, the Annual Additions with respect to a Participant for any Limitation Year shall not exceed the lesser of (1) $40,000, or such higher amount as may be permitted at the relevant time under applicable law, or (2) 100% of the Compensation paid to the Participant by the Employer (or any Related Employers) during such year. The limitations in the preceding sentence shall not apply to amounts credited to a Participant’s Employer Contribution Account pursuant to Section 8.5(b). An amount credited to a Participant’s Account in order to correct an error made in a previous Limitation Year shall be treated for purposes of this Section 7.5(a) as having been credited to such Account in the Limitation Year to which the error relates.

(b) If the allocation of the Employer’s contribution to a Participant’s Employer Contribution Account in a particular Limitation Year would cause the limitations of Section 7.5(a) to be exceeded with respect to such Participant, the excess contribution shall, subject to the limitations of Section 7.5(a), be reallocated among the Employer Contribution Accounts of all other Participants eligible to share in the Employer’s contribution for the Plan Year ending in or coinciding with such Limitation Year, in proportion to their Compensation for such Plan Year. If, following such reallocation, there remains an excess portion of the Employer’s contribution which cannot be allocated to the Employer Contribution Account of any eligible Participant without exceeding the limitations of Section 7.6(a), such excess portion shall be placed in a suspense account, designated the “Excess Contribution Account.”

(c) If, following the allocation of the Employer’s contribution for a particular Plan Year [including all reallocations required pursuant to Section 7.5(b)], the allocation of forfeitures to a Participant’s Employer Contribution Account would cause the limitations of Section 7.5(a) to be exceeded with respect to such Participant, the excess forfeiture shall, subject to the limitations of Section 7.5(a), be reallocated among the Employer Contribution Accounts of all other Participants eligible to share in forfeitures for such Plan Year, in accordance with Section 7.4. If, following such reallocation, there remains an excess portion of the forfeitures which cannot be allocated to the Employer Contribution Account of any eligible Participant without exceeding the limitations of Section 7.5(a), such excess portion shall be placed in a suspense account, designated the “Excess Forfeiture Account.”

(d) As of the Anniversary Date for a Plan Year, the balance in the Excess Contribution Account shall first be applied to reduce the Employer’s contribution under Section 4.1(b). The balance, if any, remaining in the Excess Contribution Account shall be included in the Employer’s contribution for such Plan Year for purposes of Section 6.1. Section 7.5(b) shall apply to any amount which cannot be allocated pursuant to the preceding sentences.

(e) As of the Anniversary Date for a Plan Year, the balance in the Excess Forfeiture Account shall first be applied to reduce the Employer’s contribution under Section 4.1(b) after the application of Section 7.5(d). Any remaining balance in such Excess Forfeiture Account shall be allocated as a forfeiture under Section 7.4. Section 7.5(c) shall apply to any amount which cannot be allocated pursuant to the preceding sentences.

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(f) For purposes of Section 7.5(a)(2) and Section 7.6, “Compensation” shall have the meaning set forth in Section 2.11; provided, however, that notwithstanding any provision of Section 2.11, for purposes of Section 7.5(a)(2) Compensation shall not include: any contributions made by the Employer or any Related Employer to this Plan or any other plan qualified under Section 401(a) of the Code to the extent excludable from the Employee’s income, or any distributions from this Plan or any such qualified plan; contributions made to any simplified employee pension plan described in Section 408(k) of the Code, to the extent deductible by the Employee; amounts included in the Employee’s income under Section 83 of the Code [other than by reason of an election under Section 83(b)]; amounts realized from the sale, exchange or other disposition of stock acquired upon exercise of a qualified stock option; or other amounts which receive special tax benefits under the Code, such as contributions to a health or accident plan which are excludable from the Employee’s income or contributions towards the purchase of an annuity contract described in Section 403(b) of the Code (whether or not excludable from the Employee’s income). Notwithstanding the foregoing, Compensation shall include any amounts deferred under a nonqualified, unfunded plan of deferred compensation in the Plan Year received by the Employee. If so elected by the Administrator pursuant to Treasury Regulations 1.415-2(d)(5), items of compensation shall be included in Compensation for purposes of this Section 7.5 and Section 7.6 in the Limitation Year in which they are accrued by the Employer or a Related Employer rather than the Limitation Year in which they are received by or made available to the Participant, provided that the making or revocation of such an election shall not have the effect of causing any such item to be included in Compensation for more than one Limitation Year. The preceding sentence shall not apply to Limitation Years beginning after December 31, 2007.

(g) The Administrator of this Plan shall co-ordinate the application of this Section 7.5 with the application of the corresponding provisions of the instrument establishing Richardson Electronics, Ltd. Employees Profit-Sharing Plan (the “Profit-Sharing Plan”) by the administrator of Profit-Sharing Plan in circumstances where the limitations under Section 7.5(a) and the corresponding provisions of the instrument establishing the Profit-Sharing Plan would be exceeded, so as to determine under which of the 2 plans (or both plans, if such administrators so determine) the adjustments required by Sections 7.5(b) and (c) and the corresponding provisions of the instrument establishing the Profit-Sharing Plan shall be made.

7.6 [Reserved]

7.7 Correction of Error

In the event of an error in the adjustment of a Participant’s Account, the Administrator, in its sole discretion, may correct such error either by crediting or charging the adjustment required to make such correction to or against the income and expenses of the Trust for the Plan Year in which the correction is made or the Employer may make an additional contribution to permit the correction of the error. Except as provided in this Section 7.7, the Accounts of other Participants shall not be readjusted on account of such error.

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7.8 Transfer Accounts

(a) The Plan shall accept from the Trustees of the Richardson Electronics, Ltd., Employees Profit-Sharing Trust (the “Profit-Sharing Trust”) all of the Stock held by the Profit-Sharing Trust (the “Transfer Stock”) as of the Transfer Date. For purposes of this Section 7.8, the term “Transfer Date” shall mean a date selected by Richardson, as Administrator of both this Plan and of the Richardson Electronics, Ltd. Profit-Sharing Plan (the “Profit-Sharing Plan”), in its sole and absolute discretion; provided, however, in no event shall the Transfer Date be any earlier than 30 days after the date on which the notice required by Code Section 6058(b) has been filed with the Internal Revenue Service nor any later than December 31, 1989.

(b) The Transfer Stock shall be credited among the Transfer Accounts created and maintained under this Plan for the purpose of recording each Participant’s share, if any, of such Transfer Stock. The Transfer Account of each Employee who participated in the Profit-Sharing Plan on the Transfer Date shall initially be credited with that number of shares of Transfer Stock which is identical to the number of shares of Transfer Stock credited to his account in the Profit-Sharing Plan as of the Transfer Date. Separate sub-accounts shall be established with respect to those shares of Transfer Stock acquired with Employer contributions to the Profit-Sharing Trust and those shares of Transfer Stock acquired with Participants’ after-tax contributions to said trust. Thereafter, each such sub-account shall be credited with all dividends on the Transfer Stock allocated to such sub-account and all net increases or decreases in the value of such Transfer Stock and shall be debited with all distributions to the Participant (or his Beneficiary) on whose behalf such sub-account was established. A Participant shall always be 100% vested in that sub-account of his Transfer Account which is attributable to Transfer Stock acquired with his after-tax contributions to the Profit-Sharing Trust.

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ARTICLE VIII

VESTING OF INTEREST IN TRUST

8.1 Normal Retirement

The Vested Account Balance of a Participant who attains his Normal Retirement Date while an Employee shall be 100% of his Account Balance.

8.2 Disability Retirement

The Vested Account Balance of a Participant who retires prior to his Normal Retirement Date because of a Permanent Disability shall be 100% of his Account Balance.

8.3 Death

The Vested Account Balance of a Participant who dies prior to incurring a Termination of Employment shall be 100% of his Account Balance.

8.4 Other Termination of Employment

Except when Sections 8.1, 8.2 or 8.3 apply, a Participant’s Vested Account Balance shall be the sum of:

(a) 100% of his Pre-Break Account Balance; plus

(b) 100% of the balance in the sub-account of his Transfer Account which is described in the last sentence of Section 7.8(b); plus

(c) A percentage of his Employer Contribution Account Balance, and that portion of his Transfer Account Balance other than the sub-account balance referred to in the last sentence of Section 7.8(b), based upon the number of completed Years of Service according to the following schedule:

Completed Years of Service	Vested Percentage
Less than 2 years	0	%
2 years but less than 3 years	20	%
3 years but less than 4 years	40	%
4 years but less than 5 years	60	%
5 years but less than 6 years	80	%
6 years or more	100	%

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8.5 Treatment of Forfeited Amounts; Reinstatement

(a) The excess of a Participant’s Account Balance over his Vested Account Balance shall be forfeited as of the date of the Participant’s Termination of Employment. The forfeited amount shall be allocated as provided in Section 7.4 as of the Anniversary Date coincident with or immediately following the date the Participant incurs such a Termination of Employment (or, if later, the date the Participant fails to return to work following a layoff or a Leave of Absence as provided in Section 2.20).

(b) If a Participant returns to the employment of the Employer or any Related Employer before incurring a Break in Service consisting of at least 5 Years, any amount forfeited upon such Participant’s Termination of Employment shall be reinstated by using forfeitures in accordance with Section 7.4 and thereafter, to the extent necessary, by an additional Employer contribution allocated to the Participant’s Employer Contribution Account.

8.6 Computation of Years of Service

All Years of Service with the Employer or any Related Employer (including the Plan Year in which a Termination of Employment occurs, if the Participant completes 1,000 Hours of Service in such Plan Year) shall be taken into account in computing Years of Service for purposes of this Article VIII, except that:

(a) If an Employee incurs a Break in Service, Years of Service before such Break in Service shall be disregarded until he has completed one Year of Service after his re-employment by the Employer or any Related Employer.

(b) If a Participant who does not have a nonforfeitable right to any portion of his Employer Contribution Account Balance incurs a Break in Service consisting of at least 5 Computation Periods, Years of Service before such Break in Service shall be disregarded if the number of Computation Periods in such Break in Service equals or exceeds the aggregate number of Years of Service completed prior to such Break in Service.

(c) In any Plan Year during which a Participant completes more than 500 Hours of Service but less than 1,000 Hours of Service, the Participant shall not receive credit for a Year of Service for such Plan Year, but shall continue to be a Participant, shall be credited with earnings of the Trust and shall remain in his present position on the vesting schedule in Section 8.4 without advancement.

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8.7 Vesting on Termination of Trust or Termination of Employer’s Agreement to Contribute

The Vested Account Balance of each Participant shall be 100% of such Participant’s Account Balance in the event that (a) the Plan is terminated or partially terminated, (b) the Employer shall permanently discontinue contributions to the Trust or (c) the Employer’s agreement to make contributions to the Trust shall be permanently or partially terminated, whether by withdrawal from the Plan, by amendment to the Plan or by bankruptcy, liquidation or discontinuance of the business of such Employer, or by merger, consolidation or reorganization of such Employer without the adoption of this Plan within 180 thereafter by such merged, consolidated or reorganized corporation, or by operation of law or otherwise. If the Plan is partially terminated, the provisions of this Section 8.7 shall apply only to Participants affected by the partial termination.

8.8 Vesting Following Plan Amendment

In the event that any amendment is adopted to the Plan which affects, directly or indirectly, the computation of the Participants’ Vested Account Balances:

(a) The Vested Account Balance of each Participant shall not, as a result of such amendment, be less than it would have been had the Participant incurred a Termination of Employment on the day immediately preceding the day such amendment was adopted; and

(b) The Vested Account Balance of a Participant who, on the day the amendment is adopted, had completed at least 3 Years of Service shall thereafter be equal to the greater of the amount determined under the Plan as so amended or the amount determined under the Plan without regard to such amendment.

8.9 Vesting Following Partial Distributions

(a) If a Participant receives a distribution of all or a portion of his Employer Contribution Account Balance at a time when it is possible for him to increase the vested percentage of his Employer Contribution Account (including a Participant who received a distribution upon incurring a Termination of Employment, who returns to the employment of the Employer or any Related Employer before incurring a Break in Service consisting of at least 5) Computation Periods, then such Participant’s Vested Account Balance at any time after he is re-employed shall be determined by (1) increasing the Participant’s Employer Contribution Account Balance at such time by the Adjusted Distribution (as hereafter defined), (2) then multiplying the Employer Contribution Account Balance (as so increased) by the relevant vesting percentage under Section 8.4, and (3) then subtracting the Adjusted Distribution from the product obtained. For purposes of this Section 8.9(a), the “Adjusted Distribution” shall be equal to the amount of the distribution multiplied by a fraction, the numerator of which is the Participant’s Account Balance at the time the formula is applied and the denominator of which is the Account Balance immediately following the distribution (without regard to forfeitures).

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(b) If a Participant returns to the employment of the Employer or any Related Employer after incurring a Break in Service consisting of at least 5 Computation Periods, and such Participant did not receive payment of the full amount of his Vested Account Balance, his Vested Account Balance remaining unpaid shall be placed in a separate Pre-Break Account for the Participant. The Pre-Break Account shall be treated in the same manner as the Employer Contribution Account of the Participant, except that it shall not be credited with the Employer’s contributions and the Participant shall be 100% vested in such Pre-Break Account.

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ARTICLE IX

PAYMENT OF VESTED ACCOUNT BALANCES

9.1 Benefit Commencement Date

(a) Subject to the remaining provisions of this Section 9.1, the Benefit Commencement Date for each Participant shall be as soon as practicable after the Participant has incurred both a Termination of Employment and a Break in Service consisting of at least 5 years.

(b) Unless the Participant requests, in writing, a later commencement date, the Benefit Commencement Date shall not be later than one Plan Year after the close of the Plan Year in which the latest of the following events occurs:

(1) Termination of Employment due to having retired upon reaching the Participant’s Normal Retirement Date, disability, or death; or

(2) The Participant’s Termination of Employment for any other reason (provided the Participant has not been re-employed by the Employer or any Related Employer prior to that time).

(c) Except as provided in Section 9.8, a Participant’s Benefit Commencement Date shall not be later than the April 1 of the calendar year following the calendar year determined below:

(1) In the case of a Participant not described in any other clause of this Section 9.1(b), the calendar year in which he attains the age of 70 ¹/2.

(2) In the case of a Participant who attained the age of 70 ¹/2 prior to January 1, 1988, and who was not described in Section 2.19(a)(3) during the Plan Year which included the last day of the calendar year in which he attained the age of 66 ¹/2 or any subsequent Plan Year, the later of (i) the calendar year in which he attains the age of 70 ¹/2 or (ii) the calendar year in which he retires.

(3) In the case of a Participant who attained the age of 70 ¹/2 prior to January 1, 1988, and who was described in Section 2.19(a)(3) during the Plan Year which included the last day of the calendar year in which he attained the age of 66 ¹/2 or a subsequent Plan Year, the later of (i) the calendar year in which he attains the age of 70 ¹/2 or (ii) the earlier of the calendar year in which he retires or the calendar year which includes the last day of the Plan Year in which he was first described in Section 2.19(a)(3).

(4) In the case of a Participant who attained the age of 70 ¹/2 during the calendar year 1988, who was not described in Section 2.19(a)(3) during the Plan Year which includes the last day of the calendar year in which he attained the age of 66 ¹/2 or any subsequent Plan Year, and who is still alive on January 1, 1989, the calendar year 1989.

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The provisions of this Section 9.1(b) shall apply to all Participants whose Account Balances were not completely distributed prior to January 1, 1985, subject, however, to the transitional rules set forth in Proposed Treasury Regulations Section 1.401(a)(9)-1, Part I, which are hereby incorporated herein.

(d) The Benefit Commencement Date of a Participant whose Vested Account Balance does not exceeds $5,000 shall be as soon as practicable after his Termination of Employment and payment therefor shall be in a lump sum. The Benefit Commencement Date of a Participant whose Vested Account Balance exceeds $5,000 shall not be earlier than his Normal Retirement Date unless the Participant consents in writing to an earlier date. A Participant who requests, in writing, the distribution of his Vested Account Balance prior to his Normal Retirement Date shall be considered to have consented to such distributions.

(e) The date upon which the payment of a deceased Participant’s Vested Account Balance to his Beneficiary commences shall be determined under Section 9.3.

(f) Notwithstanding any other provision of the Plan, but subject to Section 9.1(c), unless a Participant otherwise elects, the payment of benefits under the Plan to him shall begin not later than the 60th day after the close of the Plan Year in which (1) occurs the date on which he attains his Normal Retirement Date, (2) occurs the 10th anniversary of the year in which he commenced participation in the Plan or (3) he terminates his service with the Employer.

(g) This Section 9.1(g), rather than Section 9.1(d), shall apply to amounts distributable from the Plan on or after March 28, 2005. The Benefit Commencement Date of a Participant whose Vested Account Balance does not exceeds $1,000 shall be as soon as practicable after his Termination of Employment and payment therefor shall be in a lump sum. The Benefit Commencement Date of a Participant whose Vested Account Balance exceeds $1,000 shall not be earlier than his Normal Retirement Date unless the Participant consents in writing to an earlier date. A Participant who requests, in writing, the distribution of his Vested Account Balance prior to his Normal Retirement Date shall be considered to have consented to such distribution.

9.2 Payment to Participants

(a) Each Participant who does not elect to receive installment payments under Section 9.2(b) shall receive a single lump sum payment on his Benefit Commencement Date equal to his Vested Account Balance on such date.

(b) Any Participant whose Vested Account Balance on his Benefit Commencement Date exceeds $5,000 may elect to receive his Vested Account Balance in a series of not more than 10 annual installments determined in accordance with Section 9.6 commencing with his Benefit Commencement Date; provided, however, that the number of installments shall not be more than the number of years of the Participant’s remaining life expectancy (or the remaining joint and last survivor life expectancy of the Participant and his designated Beneficiary) as of the Benefit Commencement Date; and provided further, that except as otherwise provided in Section 9.6

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the amount of any installment shall not be less than the Participant’s remaining Vested Account Balance as of the date on which such installment is paid, divided by the remaining life expectancy of the Participant (or by the remaining joint and last survivor life expectancy of the Participant and his designated Beneficiary), determined as of the first day of the calendar year in which such installment payment is made. For purposes of this Section 9.2(b), life expectancy shall be determined by the Administrator in accordance with the regulations promulgated under Section 72 of the Code. The first such installment shall be paid for the calendar year which is not later than the calendar year specified in the applicable clause of Section 9.1(b). An election pursuant to this Section 9.2(b) may be made or revoked at any time prior to the Benefit Commencement Date in accordance with rules established by the Administrator. After installment payments have commenced, a Participant may revoke his election, in which event his full remaining Vested Account Balance shall be distributed to him in a single lump sum as soon as practicable, but in no event later than the date upon which the next installment payment would have been required to have been made. Effective for amounts distributable on or after March 28, 2005, the first sentence of this Section 9.2(b) shall read as follows: “Any Participant whose Vested Account Balance on his Benefit Commencement Date exceeds $1,000 may elect to receive his Vested Account Balance in a series of not more than 10 annual installments determined in accordance with Section 9.6 commencing with his Benefit Commencement Date; provided, however, that the number of installments shall not be more than the number of years of the Participant’s remaining life expectancy (or the remaining joint and last survivor life expectancy of the Participant and his designated Beneficiary) as of the Benefit Commencement Date; and provided further, that except as otherwise provided in Section 9.6 the amount of any installment shall not be less than the Participant’s remaining Vested Account Balance as of the date on which such installment is paid, divided by the remaining life expectancy of the Participant (or by the remaining joint and last survivor life expectancy of the Participant and his designated Beneficiary), determined as of the first day of the calendar year in which such installment payment is made.”

9.3 Payment to Beneficiaries

(a) If a Participant dies after his Benefit Commencement Date but before his Vested Account Balance has been distributed in full, all remaining payments which would have been made to the Participant shall be made instead at the same time and in the same amounts to his Beneficiaries; provided, however, that either the Participant prior to his death, or all Beneficiaries following his death, may elect to have the remaining Vested Account Balance distributed in a single lump sum payment, subject to the provisions of Section 9.3(c).

(b) If a Participant dies prior to his Benefit Commencement Date (whether or not still employed by the Employer), then his Vested Account Balance shall be paid to his Beneficiaries as follows:

(1) If neither the Participant nor his Beneficiaries elect installment payments under Section 9.3(b)(2), then the Participant’s Vested Account Balance shall be distributed to his Beneficiaries in a single lump sum payment as soon as practicable, but in no event later than 5 years after the Participant’s death.

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(2) If either the Participant prior to his death, or his Beneficiaries following his death, so elect in accordance with the provisions of Section 9.3(c), then each Beneficiary’s share of such Vested Account Balance shall be distributed in a series of annual installment payments which meet either of the following requirements:

(i) The Beneficiary’s entire share of such Vested Account Balance shall be distributed within 5 years after the Participant’s death; or

(ii) The first installment payment shall be made to the Beneficiary within one year after the Participant’s death, and each installment payment made to such Beneficiary shall be at least equal to such Beneficiary’s share of the Participant’s remaining Vested Account Balance divided by such Beneficiary’s remaining life expectancy as of the first day of the calendar year in which such payment is made (determined in accordance with regulations promulgated under Section 72 of the Code).

In the case of a Beneficiary who is the surviving Spouse of the Participant, the first payment made under Section 9.3(b)(2)(ii) may be made not later than the day on which the Participant would have attained age 70 ¹/2, and if such surviving Spouse dies before such date, such surviving Spouse’s share of the Participant’s Vested Account Balance shall be distributed in accordance with the provisions of this Section 9.3(b) as though such surviving Spouse were the Participant. For purposes of the preceding sentence, the Administrator may, to the extent of regulations promulgated under Section 401(a)(9)(F) of the Code, treat amounts payable to a child of the Participant as made to his surviving Spouse if such amounts will become payable to such Spouse upon such child reaching the age of majority or upon such other event occurring as may be specified in such regulations.

(c) Any election and any revocation of any election made under this Section 9.3 shall be in accordance with rules established by, and shall be subject to the approval of, the Administrator; provided that any election which has the effect of causing any portion of the Vested Account Balance to be paid to any Beneficiary other than the surviving Spouse of the Participant, shall be effective only if (1) such election identifies the designated Beneficiary, and is consented to, in writing, by the Spouse and the Spouse’s signature is witnessed either by a representative designated by the Administrator or by a notary public, or (2) it is established, to the satisfaction of the Administrator, that the Participant had no surviving Spouse, or that the consent of the Spouse cannot be obtained because the Spouse cannot be located or because of such other circumstances as may be specified in regulations promulgated under Section 417(a)(2)(B) of the Code. The Spouse’s consent, if given, shall be irrevocable, but shall not be binding upon any future Spouse. Such election may be revoked by the Participant at any time prior to his Benefit Commencement Date without the Spouse’s consent, but any change in such election (including any change in the Beneficiary specified therein) shall require the Spouse’s consent as set forth above.

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(d) Anything else in this Section 9.3 to the contrary notwithstanding, if a Participant’s Beneficiary is his estate pursuant to Section 10.2, his Vested Account Balance shall be paid to his estate in a single lump sum.

(e) Section 9.3(b) is deleted and the following is substituted in its place effective January 1, 2003:

(b) If a Participant dies prior to his Benefit Commencement Date (whether or not still employed by the Employer), then his Vested Account Balance shall be paid to his Beneficiaries as follows:

(1) If neither the Participant nor his Beneficiaries elect installment payments under Section 9.3(b)(2), then the Participant’s Vested Account Balance shall be distributed to his Beneficiaries in a single lump sum payment as soon as practicable, but in no event later than 5 years after the Participant’s death.

(2) If either the Participant prior to his death, or his Beneficiaries following his death, so elect in accordance with the provisions of Section 9.3(c), then each Beneficiary’s share of such Vested Account Balance shall be distributed in a series of annual installment payments which satisfy the requirements of Article XIX.

9.4 Extent of Further Participation in Trust

(a) Upon the distribution of the full amount of a Participant’s Vested Account Balance in a lump sum pursuant to the provisions of Sections 9.2(a) or 9.3(b)(1), such Participant (and his Beneficiaries) shall cease to have any interest in the Trust and all obligations hereunder of the Trustee and the Employer or any Related Employer to them shall cease.

(b) In the event that the distribution of a Participant’s Vested Account Balance is made in installments pursuant to the provisions of Sections 9.2(b) or 9.3(b)(2), such Participant’s Vested Account Balance remaining payable from time to time shall constitute a liability of the Trust and at the election of the Participant or his Beneficiary, as the case may be, shall either (1) continue to share in the gains and losses of the Trust pursuant to Section 7.2 until it is completely distributed or (2) shall be segregated and placed in an account at a national bank or other comparable financial institution insured by the Federal Deposit Insurance Corporation and shall be credited with any interest earned on such account. Such Participant’s Vested Account Balance remaining payable from time to time, after it is segregated, shall not participate in gains or losses of the Trust or in the Employer’s contributions thereto. The Administrator shall adopt such rules as it deems necessary or advisable to permit Participants to make elections and, if it so determines, to revoke or to modify such elections under this Section 9.4(b).

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(c) Each Account of a Participant who dies or incurs a Termination of Employment shall continue to share in all allocations of gains and losses of the Trust pursuant to Section 7.2 until it is completely distributed or segregated pursuant to Sections 9.4(a) or (b), as the case may be.

9.5 Payment to Persons under Legal Disability

In the event that any amount hereunder shall become payable to a minor or to a person under legal or other disability who, in the opinion of the Administrator, is unable to administer such distribution, such amount may be paid to any person(s) the Administrator deems best for the maintenance, care, support and education of such minor or disabled person. Any such payment in accordance with the provisions of this Section 9.5 shall be a complete discharge of any liability for the making of such payment under the provisions of the Plan.

9.6 Payment in Installments

(a) If a Participant or Beneficiary elects to have an Account distributed in annual installments pursuant to Section 9.2(b) or 9.3(b)(2), the installment for each calendar year shall be paid not later than December 31 of such calendar year. Notwithstanding the foregoing, if the first calendar year for which an installment payment is to be made pursuant to Section 9.2(b) is the calendar year specified under the applicable clause of Section 9.1(c), payment of such installment may be deferred until not later than the date set forth in Section 9.1(c), but such deferral shall not affect the date by which the installment for the next succeeding year must be paid.

(b) The amount of the installment payment for any calendar year shall be equal to the Vested Account Balance as of the Anniversary Date which occurs in the immediately preceding calendar year, divided by the divisor determined under Section 9.6(c). For purposes of determining the amount of the installment payment, the Vested Account Balance shall include all income, expenses, gains, losses, contributions and forfeitures allocated as of such Anniversary Date, and shall be reduced by distributions made after the Anniversary Date only (1) if the Anniversary Date is other than a December 31 and such distributions are made on or before December 31 of the calendar year in which the Anniversary Date occurs, or (2) to the extent that, as permitted by the second sentence of Section 9.6(a), a portion of the first installment payment required under Section 9.2(b) is paid after the end of the calendar year for which such installment is required. To the extent that any amount is distributed for any calendar year in excess of the installment payment required for such calendar year, such excess shall not reduce the amount of the installment payment required for any subsequent year.

(c) The divisor used to determine the amount of each installment payment shall be determined as follows:

(1) Unless the person making the election elects to redetermine life expectancies each year in accordance with Section 9.6(c)(2), the divisor for the first year for which an installment payment is to be made (hereinafter the “initial divisor”) shall be a number specified by the person making the election, and the divisor for each succeeding year shall be equal to the divisor for the immediately preceding year reduced by one. If the first year for which an

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installment payment will be made is the latest calendar year for which installment payments are allowed to commence pursuant to Section 9.2(b) or Section 9.2(c)(2), the initial divisor shall not be greater than, in the case of installments payable under Section 9.2(b), the life expectancy of the Participant (or, if applicable, the joint and last survivor life expectancy of the Participant and Beneficiary) or, in the case of installments payable under Section 9.3(b)(2), the life expectancy of the Beneficiary, determined as of the Participant’s and/or Beneficiary’s birthday which occurs in such calendar year. If installments commence in a calendar year earlier than the latest calendar year for which they are required to begin, the initial divisor shall not be greater than the maximum initial divisor as set forth in the preceding sentence, increased by one for each calendar year prior to the latest year for which installments are required to begin. If the person making the election fails to specify the initial divisor, or specifies an improper initial divisor, the initial divisor shall be the largest initial divisor that the person making the election could have specified.

(2) If the person electing to receive installments is either the Participant or the Participant’s Spouse, such person may also elect to redetermine the life expectancy of the Participant, the Participant’s Spouse, or both, on an annual basis. Such election may be made or revoked, in writing, at any time prior to the time at which the first installment is required to be paid pursuant to Section 9.2(b) or Section 9.3(b)(2). Thereafter, such election or failure to elect shall be irrevocable. If such election is made, then the divisor for each year for installments payable pursuant to Section 9.2(b) shall be the remaining life expectancy of the Participant (or, if applicable, the remaining joint and last survivor life expectancy of the Participant and his Beneficiary) determined as of their respective birthdays attained in such year; provided, however, that if the Participant’s Beneficiary is other than the Participant’s Spouse, or if the Participant has not elected to redetermine his Spouse’s life expectancy, then the divisor shall be determined in accordance with Proposed Treasury Regulations Section 1.401(a)(9)-1, Q & A-E-8(b). The divisor for each year for installments payable to the Participant’s surviving Spouse under Section 9.3(b)(2) shall be the remaining life expectancy of the surviving Spouse as of his birthday attained in such year.

(3) For all purposes of this Section 9.6, life expectancies shall be determined in accordance with the expected return multiplies set forth in Tables V and VI of Treasury Regulations Section 1.72-9 as in effect at the time the life expectancy is being determined.

(4) Anything else contained herein to the contrary notwithstanding, the divisor for any year shall not be less than the divisor required by the minimum distribution incidental benefit requirement as set forth in Proposed Treasury Regulations Section 1.401(a)(9)-2, Q & A-4.

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(d) Installments may be paid at regular intervals of less than a year, provided that the total amount paid in any year shall not be less than the annual installment required for such year pursuant to this Section 9.6.

(e) Section 9.6(c) of the Plan is deleted and the following is substituted in its place effective January 1, 2003:

(c) The divisor used to determine the amount of each installment payment shall be determined in accordance with Article XIX.

9.7 Compliance with Regulations

The provisions of this Article IX are intended to comply with the minimum distribution requirements of Section 401(a)(9) of the Code and of Proposed Treasury Regulations Section 1.401(a)(9)-1 promulgated thereunder, including the incidental death benefit requirement as set forth in Proposed Treasury Regulations Section 1.401(a)(9)-2. Anything else contained in this Plan to the contrary notwithstanding, all distributions shall be made in accordance with Section 401(a)(9) and said Regulations, which shall override any provisions of this Plan which are inconsistent therewith. Upon the promulgation of final Treasury Regulations replacing Proposed Treasury Regulations Section 1.401(a)(9)-1 and -2, the provisions of this Article IX shall be construed by reference to such final Treasury Regulations and shall be implemented accordingly.

9.8 Distributions of Stock and Dividends

(a) Anything else in this Article IX to the contrary notwithstanding, any Stock held in the Account of a Participant as of his Benefit Commencement Date or the date of his death shall be distributed to such Participant or his Beneficiaries in kind, unless such Participant or his Beneficiaries affirmatively elect, in writing, to receive a distribution of the value of such Stock in cash; provided, however, that the value of any fractional share of Stock shall be distributed in cash. To the extent the value of such Stock is distributed in cash, such Stock shall be reallocated among the Employer Contribution Accounts of the remaining Participants, and the amount of such cash distribution shall be charged against such Employer Contribution Accounts, in proportion to the balances therein.

(b) If any dividend is paid on Stock held by the Trust, the Administrator may, in its discretion, direct the Trustee to distribute such dividend among the Participants in proportion to the Stock allocated to their Accounts as of the end of the Plan Year in which such dividend is paid, not later than 90 days after the end of such Plan Year. This Section 9.8(b) shall not apply to dividends on Stock paid to the Trust in Plan Years beginning on or after June 2, 2002.

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(c) Effective with respect to dividends on Stock paid to the Trust in Plan Years beginning on or after June 2, 2002, the following procedures shall govern the distribution and reinvestment of dividends paid on Stock:

(1) All dividends on Stock received by the Trust during a Plan Year shall be held by the Trustee in a short-term interest-bearing bank account or in a money market mutual fund (the “Dividend Fund”) pending disposition in accordance with this Section 9.8(c). Expenses of administering the Plan may be charged against the Dividend Fund, to the extent forfeitures available pursuant to Section 7.4(b) are insufficient for this purpose. Any administration expense paid from the Dividend Fund shall first be charged against the earnings received from said bank account or mutual fund and the remainder shall be charged against dividends on Stock paid to said bank account or mutual fund.

(2) As of the last day of each Plan Year, the balance in the Dividend Fund (including earnings thereon) shall be divided into “Part I” and “Part II.” Part I shall consist of that portion of such balance multiplied by a fraction whose numerator is the total shares of Stock held in the Employer Contribution Accounts as of such day of Participants who are not 100% vested in such accounts as of such day and whose denominator is the total shares of Stock held in the Employer Contribution Accounts as of such day of all Participants. For this purpose, shares of Stock held in Employer Contribution Accounts as of such day shall be determined without regard to any Employer contributions or forfeiture allocations for the Plan Year ending on such day and without regard to the Dividend Fund. Part II shall consist of the remainder of the balance in the Dividend Fund as of such day. The term “Part I Participant” as used herein shall mean, with respect to a Plan Year, a Participant whose Employer Contribution Account was used in the numerator of the fraction used to determine Part I of the Dividend Fund for such Plan Year. The term “Part II Participant” as used herein shall mean, with respect to a Plan Year, a Participant whose Employer Contribution Account was used in the denominator of the fraction used to determine Part I of the Dividend Fund for such Plan Year and who is not a Part I Participant.

(3) As of the last day of each Plan Year, there shall be allocated to the Employer Contribution Account of each Part I Participant and each Part II Participant for such Plan Year their respective portions of the balance of the Dividend Fund on that day. Each such Participant’s portion shall be determined by multiplying such balance by a fraction whose numerator is the number of shares of Stock held in his Employer Contribution Account as of such day and whose denominator is the total number of shares of Stock held in the Employer Contribution Accounts as of such day of all such Participants. For this purpose, shares of Stock held in Employer Contribution Accounts as of such day shall be determined without regard to any Employer contributions or forfeiture allocations for the Plan Year ending on such day and without regard to the Dividend Fund.

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(4) No later than the last day of the 90-day period following the end of each Plan Year, Part I of the Dividend Fund shall be used to purchase additional shares of Stock. Notwithstanding the preceding sentence, there shall be subtracted from Part I any expenses incurred by the Plan in connection with purchasing Stock. The shares so purchased shall be allocated pro rata among the Employer Contribution Accounts of each Part I Participant according to such Participants’ respective portions of the balance of the Dividend Fund, determined in accordance with Section 9.8(c)(3).

(5) No later than the last day of the 90-day period following the end of each Plan Year, that portion of Part II of the Dividend Fund not consisting of dividends on Stock shall be used to purchase additional shares of Stock. Notwithstanding the preceding sentence, there shall be subtracted from such portion of Part II any expenses incurred by the Plan in connection with purchasing Stock. The shares so purchased shall be allocated pro rata among the Employer Contribution Accounts of each Part II Participant according to such Participants’ respective portions of the balance of the Dividend Fund, determined in accordance with Section 9.8(c)(3).

(6) As soon as practicable following the last day of each Plan Year, the Administrator shall notify each Part II Participant of his share of the balance of the Dividend Fund as of such day, other than that portion of such share which is to be reinvested in Stock pursuant to Section 9.8(c)(5). The notification shall advise such Participant that he may irrevocably elect in writing what whole-number percentage of the amount indicated in such notification should be distributed to him in cash and what whole-number percentage should be invested by the Plan in Stock (net of any expenses incurred by the Plan in connection with such distribution or investment) and that in the event he does not return to the Administrator his written election within a reasonable period (as specified by the Administrator in such notification), the entire amount indicated in such notification shall be invested by the Plan in Stock. No later than the last day of the 90-day period following the end of such Plan Year, that portion of Part II for a Plan Year which is subject to such elections:

(i) Shall be (A) distributed to Part II Participants in cash, (B) used to purchase shares of Stock on behalf of Part II Participants or (C) some combination of Clauses (A) and (B), in accordance which such elections; and

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(ii) Shall be used to purchase additional Stock in the case of any such Participant not returning an election for such Plan Year to the Administrator in a timely fashion.

Notwithstanding the preceding sentence, there shall be subtracted from the amount distributed and the amount used to purchase additional Stock any expenses incurred by the Plan in connection with making cash distributions or purchasing Stock, as the case may be. Stock which is purchased shall be allocated to the Employer Contribution Accounts of the Part II Participants for whose benefit such Stock was purchased.

(7) Stock allocated to the Employer Contribution Accounts of Part I Participants pursuant to Section 9.8(c)(4) shall be subject to the vesting provisions of Section 8.4(c) and shall not be Annual Additions. Stock allocated to the Employer Contribution Accounts of Part II Participants pursuant to Section 9.8(c)(5) shall be 100% vested and shall not be Annual Additions. Cash distributions to Part II Participants pursuant to Section 9.8(c)(6) shall not be Eligible Rollover Distributions [within the meaning of Section 9.10(b)(4)] and shall not be subject to the requirements of Section 9.1(d).

9.9 Right of First Refusal and Options on Stock

(a) Subject to Section 9.9(c), all shares of Stock distributed to any Participant or Beneficiary may, as determined by the issuer of the Stock or the Administrator, be subject to a right of first refusal. Such right shall provide that prior to any subsequent transfer, the Stock must first be offered by written offer to the Trust, and then, if refused by the Trust, to the issuer. In the event that the proposed transfer constitutes a gift or other transfer at less than fair market value, the price per share shall be determined by an independent appraiser (appointed by the Administrator) as of the Anniversary Date coinciding with or immediately preceding the date of exercise. In the event of a proposed purchase by a prospective bona fide purchaser, the price shall be the greater of the fair market value, as so determined, or the price offered by the prospective bona fide purchaser. Valuations must be made in good faith and based on all relevant factors for determining the fair market value of securities. The Trust may accept the offer at any time during a period not exceeding seven days after receipt of such offer. In the event the Trust does not accept such offer, the issuer may accept such offer at any time during a period not exceeding seven days thereafter. Payment for Stock purchased pursuant to a right of first refusal with respect to a proposed gift shall be either in cash, not later than 30 days after the right is exercised, or in not more than five annual installments, the first to be paid within 30 days of exercise, and the remaining four to bear interest at the rate designated under Section 483(c)(l)(B) of the Code from time to time. In the case of a proposed sale, payment shall be made in accordance with the payment terms offered by the proposed purchaser.

(b) Any Participant (or Beneficiary) to whom Stock is distributed shall have the right to require the issuer of such Stock to purchase such Stock, by written notice delivered to such issuer, either within 60 days after such distribution is received or within the first 60 days of the next succeeding Plan Year. The purchase price in either case shall be the fair market value [determined as

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provided in Section 9.9(a)] as of the Anniversary Date preceding the exercise of the option. The purchase price shall be paid either in cash within 30 days of exercise or in not more than 5 annual installments, the first to be paid within 30 days of exercise, and the remaining 4 to bear interest at the rate designated under Section 483(c)(l)(B) of the Code from time to time. If any Participant notifies such issuer that he is exercising his option, such issuer shall notify the Trustee, which shall have the right to assume the rights and obligations of such issuer under this Section 9.9(b).

(c) Sections 9.9(a) and (b) shall not apply to any Stock which is readily tradable on an established market.

(d) Except as otherwise provided in this Section 9.7, no Stock shall be subject to any option, right of first refusal, buy-sell agreement or similar restriction. No amendment shall be adopted to the Plan which shall cause any Stock to be subject to any such restriction, whether or not the Plan continues to be an employee stock ownership plan as defined in Code Section 4975(a).

9.10 Direct Rollovers

(a) Notwithstanding any other provision of the Plan to the contrary which would otherwise limit the election of a Distributee (as hereinafter defined) under this Section 9.10, a Distributee may elect, at the time and in the manner permitted by the Administrator, to have any portion of an Eligible Rollover Distribution (as hereinafter defined) paid directly to an Eligible Retirement Plan (as hereinafter defined) specified by the Distributee in a Direct Rollover (as hereinafter defined).

(b) For purposes of this Section 9.10, the following terms shall have the meanings indicated:

(1) “Direct Rollover”: A payment by the Plan to the Eligible Retirement Plan specified by a Distributee.

(2) “Distributee”: A Participant who is an Employee or former Employee. In addition, (i) such a Participant’s spouse or former spouse who is the alternate payee under a “qualified domestic relations order,” as defined in section 414(p) of the Code, and (ii) the surviving spouse of a deceased Participant who was an Employee or former Employee, are Distributees with regard to the interest of such spouse or former spouse in the Plan.

(3) “Eligible Retirement Plan”: An individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, which accepts a Distributee’s Eligible Rollover Distribution. The term “Eligible Retirement Plan” shall also include (i) an annuity contract described in Section 403(b) of the Code and (ii) an eligible plan which is maintained under Section 457(b) of the Code and which is maintained by a state or political subdivision of a state or instrumentality of a state and which agrees to separately

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account for amounts transferred to such plan from this Plan. The definition of “Eligible Retirement Plan” shall apply in the case of a distribution to a surviving spouse of a Participant or to a spouse or former spouse of a Participant who is an alternate payee under a Qualified Domestic Relations Order.

(4) “Eligible Rollover Distribution”: Any distribution of all or any portion of the balance to the credit of the Distributee under the Plan, except that an Eligible Rollover Distribution shall not include: (i) any distribution which is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated beneficiary, or for a specified period of 10 years or more; (ii) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and (iii) the portion of any distribution which is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to Employer securities). The enumeration in the preceding sentence of any form of payment shall not imply that any person has the right to receive benefits under the Plan in such form unless otherwise specifically provided under the Plan. If all or any portion of a distribution during 2009 is treated as an Eligible Rollover Distribution but would not be so treated if the minimum distribution requirements under section 401(a)(9) and Article X had applied during 2009, such distribution shall not be treated as an Eligible Rollover Distribution for purposes of this Section 9.10.

(c) Effective for distributions after 2006, the term “Eligible Rollover Distribution” shall also include a direct trustee-to-trustee transfer of all or any portion of a distribution from the Plan from the Account of a deceased Participant to an individual retirement account described in Code Section 408(a), or an individual retirement annuity described in Code Section 408(b) (other than an endowment contract), established for the purposes of receiving such distribution or portion thereof on behalf of an individual who is a Designated Beneficiary, within the meaning of Section 19.8(a), who is not the surviving spouse of such Participant.

9.11 Withdrawals Due to Permanent Disability

In the event a Participant becomes Permanently Disabled, but has not yet incurred a Termination of Employment, he or his legal representative may withdraw all or a portion of his Vested Account Balance. The form of any such withdrawal shall be determined pursuant to Section 9.2.

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ARTICLE X

DESIGNATION OF BENEFICIARIES

10.1 Participants to Name Beneficiaries

Each Participant may file with the Administrator, in such form as the Administrator shall from time-to-time require, a written designation of a Beneficiary or Beneficiaries (including contingent or successive Beneficiaries) who shall be entitled to receive any benefits which may become payable upon the Participant’s death. If more than one Beneficiary is designated, such designation shall also specify the manner in which payments are to be divided. In the absence of such designation, all payments shall be divided per capita, or, if the Beneficiaries are the Participant’s descendants, per stirpes. The Beneficiaries may be changed at any time or times by the filing of a new designation with the Administrator, without the necessity of obtaining the written consent of any Beneficiary, subject to the rights of the Participant’s spouse under Section 9.3(c). No designation of a Beneficiary or change thereof shall be effective until it has been received by the Administrator. The Administrator shall be entitled to rely upon the last designation filed by the Participant prior to his death.

10.2 No Beneficiary Designated; Death of Beneficiary

If a Participant dies without having a Beneficiary designation in force, or if at the time of the Participant’s death (or the date on which a subsequent installment payment is due) all designated Beneficiaries have died or are no longer in existence (in the case of Beneficiaries who are not individuals), payment shall be made to the deceased Participant’s surviving Spouse; or if there is no surviving Spouse (or if the surviving Spouse dies before a subsequent installment payment is due), to the deceased Participant’s descendants (including adopted descendants), per stirpes; or if there are no living descendants, to the deceased Participant’s estate.

10.3 No Liability for Payment to Beneficiaries

The Administrator shall determine the identity of Beneficiaries, and in so doing, may act upon such information as, on reasonable inquiry, it may deem reliable with respect to heirship, relationship, survivorship, or any other fact relative to the distributes; and the Trustee and Administrator shall be indemnified and saved harmless by the Employer with respect to all payments required to be made hereunder, if made in good faith and without actual notice or knowledge of the changed condition or status of any person receiving payments. The Administrator may rely on any list or notice furnished by the Employer or any Related Employer as to the facts, the occurrence of any events, or the existence of any situation, and shall not be bound to inquire as to the basis of any such decision, list, or notice, and shall be indemnified and saved harmless by the Employer for any action taken or suffered to be taken by him in reliance thereon. In the event any question or dispute shall arise as to the proper person or persons to whom any payment shall be made, the Trustee may withhold such payment until a determination of such question or dispute shall have been made, or until the Trustee shall have been adequately indemnified against loss to his satisfaction. In consideration of being permitted to designate his Beneficiaries, the Participant hereby waives, for himself and all persons claiming by or through him, any claim

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against the Administrator, the Committee, the Trustee and the Employer or any Related Employer as a result of any determination made in good faith as to the persons entitled to receive any distribution of the Participant’s Vested Account Balance.

10.4 Qualified Domestic Relations Orders

To the extent provided in any Qualified Domestic Relations Order, and subject to the provisions of Section 17.4(b), the person or persons named therein shall be considered the Participant’s Beneficiary.

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ARTICLE XI

FIDUCIARY CAPACITY AND RESPONSIBILITY

11.1 General Fiduciary Standard of Conduct

Each fiduciary under the Plan shall discharge his duties hereunder solely in the interest of the Participants and their Beneficiaries and for the exclusive purpose of providing benefits to the Participants and their Beneficiaries and defraying the reasonable expenses of administering the Plan and the Trust. Each fiduciary shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims, in accordance with the documents and instruments governing the Plan and the Trust, insofar as such documents and instruments are consistent with this standard.

11.2 Allocation of Responsibility among Fiduciaries

(a) The fiduciaries shall have only those specific powers, duties, responsibilities and obligations as are specifically given to them under this Plan. The Employer shall have the sole responsibility for making the contributions provided for under Article IV, and to amend or terminate, in whole or in part, the Plan and the Trust. The Committee shall have the sole responsibility for assisting the Administrator in the administration of the Plan, which responsibility is specifically described in the Plan. The Trustee shall have the sole responsibility for the administration of the Trust and the management of the assets held under the Trust (unless otherwise managed by an investment manager), all as specifically provided in the Trust. Each fiduciary warrants that any directions given, information furnished or action taken by him shall be in accordance with the provisions of the Plan or the Trust authorizing or providing for such direction, information or action. Each fiduciary may rely upon any such direction, information or action of another fiduciary as being proper under the Plan and the Trust, and is not required to inquire into the propriety of any such direction, information or action. No fiduciary guarantees the Trust in any manner against investment loss or depreciation in asset value. The Administrator, the members of the Committee, the Trustee and any investment manager shall each be a “named fiduciary” as defined in Section 402(a)(2) of ERISA. The Administrator may appoint such other named fiduciaries as it may determine are necessary or appropriate for the administration of the Plan.

(b) A fiduciary shall not be liable for the acts or omissions of another fiduciary unless (1) the fiduciary knowingly participates in, or knowingly attempts to conceal the act or omission of, another fiduciary and knows the act or omission is a breach of a fiduciary responsibility by the other fiduciary; or (2) the fiduciary has knowledge of a breach by the other fiduciary and shall not make reasonable efforts to remedy the breach; or (3) the fiduciary’s breach of his own fiduciary responsibility permits the other fiduciary to commit a breach.

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11.3 Administrator

(a) Richardson, or such person as the Employer shall designate pursuant to paragraph (b), shall serve as the Administrator of the Plan. The Administrator shall be the “plan administrator” as defined in Section 414(g) of the Code, and the “administrator” as defined in Section 3(16)(A) of ERISA. The Administrator shall have the duty to file such plan descriptions and annual reports as may be required by ERISA or similar legislation and shall be designated to accept service of legal process and any other notices for the Plan. The Administrator shall also furnish each Participant with a summary plan description and provide each Participant with a statement of his Account Balance and his Vested Account Balance as of each Anniversary Date. The Administrator shall provide the notice required by Section 402(f) of the Code, with each distribution made after December 31, 1984, which constitutes a qualifying rollover distribution as defined by Section 402(a)(5)(E) of the Code.

(b) The Employer shall have the authority to appoint another corporation or one or more persons to serve as the Administrator hereunder, in which event such corporation or person (or persons) shall exercise all of the powers, duties, responsibilities and obligations of the Administrator hereunder.

11.4 Powers and Duties of Administrator

The Administrator shall have all necessary power to accomplish its duties under the Plan in its discretion, including without limitation the power to:

(a) Construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder (which determinations shall, in the absence of abuse of discretion, be binding upon all parties);

(b) Prescribe procedures to be followed by Participants or Beneficiaries filing applications for benefits;

(c) Assist any Participant regarding any rights, benefits or elections available under the Plan;

(d) Adopt reasonable procedures for determining whether any order, judgment or decree constitutes a Qualified Domestic Relations Order, and notify the Participant and all alternate payees affected or their designated representatives as to the results of its determinations;

(e) Determine whether to permit assets of the Trust to be used for loans to Participants pursuant to Section 14.1 and, if such use is to be permitted, adopt reasonable procedures to implement such determination and give all instructions to the Trustee relating thereto;

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(f) Direct the Trustee with respect to the amount and type of benefits to which any Participant or Beneficiary shall be entitled hereunder and with respect to other disbursements from the Trust;

(g) Receive from the Employer and from Participants such information as shall be necessary for the proper administration of the Plan;

(h) Maintain all the necessary records for the administration of the Plan;

(i) Receive, review and keep on file (as it deems convenient and proper) reports of benefit payments made by the Trustee and reports of disbursements for expenses directed by it;

(j) Make, or instruct the Trustee to make, equitable adjustments for any mistakes or errors made in the administration of the Plan; and

(k) Do all other acts which the Administrator deems necessary or proper to accomplish and implement its responsibilities under the Plan.

11.5 Claims Procedure

(a) A Participant or Beneficiary, or an authorized representative acting on his behalf (hereinafter called the “Claimant”), may notify the Administrator of a claim for benefits under the Plan. Such notice shall be in writing and may be in any form provided by or acceptable to the Administrator and shall set forth the basis of such claim and shall authorize the Administrator to conduct such examinations as may be necessary to determine the validity of the claim and to take such steps as may be necessary to facilitate the payment of any benefits to which the claimant may be entitled under the terms of the Plan. A Claimant shall have no right to seek review of a denial of benefits, or to bring any action in any court to enforce a claim for benefits prior to his filing a claim for benefits and exhausting his rights to review under this Section 11.5.

(b) When a claim for benefits has been filed properly, such claim for benefits shall be evaluated and the Claimant shall be notified of the approval or the denial within 90 days after the receipt of such claim unless special circumstances require an extension of time for processing the claim. If such an extension of time for processing is required, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 90-day period which shall specify the special circumstances requiring an extension and the date by which a final decision will be reached (which date shall not be later than 180 days after the date on which the claim was filed). A Claimant shall be given a written notice in which the Claimant shall be advised as to whether the claim is granted or denied, in whole or in part. If a claim is denied, in whole or in part, the Claimant shall be given written notice which shall contain (1) the specific reasons for the denial, (2) references to pertinent plan provisions upon which the denial is based, (3) a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary and (4) the Claimant’s rights to seek review of the denial.

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(c) If a claim is denied, in whole or in part, the Claimant shall have the right to request that the Administrator review the denial, provided that the Claimant files a written request for review with the Administrator within 60 days after the date on which the Claimant received written notification of the denial. A Claimant (or his duly authorized representative) may review pertinent documents and submit issues and comments in writing to the Administrator. Within 60 days after a request for review is received, the review shall be made and the Claimant shall be advised in writing of the decision on review, unless special circumstances require an extension of time for processing the review, in which case the Claimant shall be given a written notification within such initial 60-day period specifying the reasons for the extension and when such review shall be completed (provided that such review shall be completed within 120 days after the date on which the request for review was filed). The decision on review shall be forwarded to the Claimant in writing and shall include specific reasons for the decision and references to plan provisions upon which the decision is based. A decision on review shall be final and binding on all persons for all purposes. If a Claimant shall fail to file a request for review in accordance with the procedures described in this Section 11.5, such Claimant shall have no right to review and shall have no right to bring action in any court and the denial of the claim shall become final and binding on all persons for all purposes.

11.6 Indemnification by Employer

The Employer shall indemnify the members of the Committee, the Administrator and each Trustee for, and hold them harmless from and against, any and all liabilities, losses, costs or expenses (including reasonable attorneys fees) of whatsoever kind and nature which may be imposed on, incurred by or asserted against them at any time by reason of their service under the Plan or the Trust as long as they did not act dishonestly or engage in willful misconduct or gross negligence in their official capacities hereunder.

11.7 Service in Multiple Capacities

Any person may serve in more than one fiduciary capacity hereunder, including but not limited to service both as a member of the Committee and as a Trustee.

11.8 Voting of Stock by Participants and Beneficiaries

With respect to any Stock which is entitled to vote and which is a “registration-type class of securities,” within the meaning of Code Section 409(e)(4), each Participant or Beneficiary to whose Account shares of such Stock have been allocated shall be entitled to direct the Trustee as to the manner in which such shares are to be voted. With respect to any Stock not described in the preceding sentence, each Participant or Beneficiary to whose Account shares of such Stock have been allocated shall be entitled to direct the Trustee as to the manner in which the voting rights with respect to such Stock are to be exercised with respect to any corporate matter which involves the voting of such shares with respect to the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all of the assets of a trade or business or such similar transaction as the Secretary of the Treasury may prescribe in regulations.

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ARTICLE XII

THE COMMITTEE

12.1 Appointment and Membership

The Administrator shall appoint a Committee to assist it in its administration of the Plan. The Committee shall consist of such number of members as the Administrator shall determine, who shall be appointed by and serve at the pleasure of the Administrator. The Administrator may delegate to the Committee any of its specific duties, rights and authorities under the Plan, or may delegate the Committee general authority to administer the Plan, in which event this Plan shall be construed as though the term “Committee” were substituted for “Administrator” wherever the latter appears other than in this Article XII; provided that neither the Committee nor any member of the Committee shall be deemed to be the Administrator pursuant to Section 11.3(a) unless the Committee or such member is specifically so designated.

12.2 Compensation and Expenses

The members of the Committee shall serve without compensation for their services hereunder. All expenses of the Committee, including expenses incurred in the hiring of consultants, advisors, investment managers, attorneys and accountants, shall be paid by the Employer to the extent that such expenses are not paid out of the Trust.

12.3 Committee Procedures and Actions

(a) The Committee shall act by a majority of its members at the time in office and such action may be taken either by vote at a meeting or in writing without a meeting.

(b) The Committee may adopt such by-laws, rules and regulations as it deems necessary, desirable or appropriate for the conduct of its affairs. All rules and decisions of the Committee shall be uniformly and consistently applied to all Participants and Beneficiaries in similar circumstances. When making a determination or calculation, the Committee shall be entitled to rely upon information furnished by a Participant or Beneficiary, the Employer or any Related Employer, the Administrator or the Trustee, and shall have no duty or responsibility to verify such information.

(c) The Committee may authorize any one or more of its members to execute any instrument or document on its behalf.

(d) The Committee shall periodically (but no less frequently than annually) consult with the Trustee (or any investment manager) with regard to the investment policy of the Plan and the methods to be used to carry out the Plan’s objectives.

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12.4 Resignation or Removal of Committee Member

(a) Any member of the Committee may resign from office at any time by notifying the Administrator, the other members of the Committee and the Trustee in writing, at least 10 days in advance, of such resignation; provided, however, that such notice may, at the option of the parties, be waived.

(b) Any member of the Committee may be removed from office by the Administrator at any time, with or without cause. Such removal shall be effectuated by the tendering to such member, the other members of the Committee and the Trustee of a written notice of removal, to take effect on the date specified therein; provided, however, that such notice may, at the option of the parties, be waived. A member of the Committee who is a Participant shall automatically be removed from the Committee upon his retirement, Permanent Disability or Termination of Employment.

(c) Upon such resignation or removal of a member of the Committee, or upon his death, the Administrator shall promptly appoint a successor member of the Committee, who may be any individual, whether or not a Participant, and shall give prompt written notice thereof to the other members of the Committee and the Trustee. In the event of the failure of the Administrator to appoint such successor by the effective date of such resignation or removal, or within 10 days after such death, the remaining members of the Committee may appoint such successor.

(d) Each successor member of the Committee shall have all the powers, duties, responsibilities and obligations conferred by the Plan as if originally named to the Committee. No successor member of the Committee shall be personally liable for any act or failure to act of his predecessor or have any duty to review the actions of his predecessor.

12.5 Committee/Administrator Decisions Final

The Committee and the Administrator have discretionary authority to determine matters within their jurisdiction and the decisions of the Committee and of the Administrator in matters within its jurisdiction shall be final, binding and conclusive upon the Employer and the Trustee and upon each Employee, Participant, former Participant, Beneficiary and every other person or party interested or concerned.

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ARTICLE XIII

THE TRUST

13.1 Trust Agreement

All matters relating to the establishment of the Trust, the investment of the Trust assets and the appointment, resignation or removal, compensation, powers and duties of the Trustees are set forth in the Trust Agreement, except to the extent Article XIV applies.

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ARTICLE XIV

LOANS TO PARTICIPANTS; DIVERSIFICATION ELECTIONS

14.1 Loans to Participants

(a) If the Administrator determines, in its sole discretion, to permit loans to Participants, it shall specify a form of loan application. After receiving and reviewing a Participant’s application for a loan and such other material as may reasonably be required, the Administrator may, in its sole discretion, direct the Trustee to make a loan to a Participant. Any borrowing by a Participant shall not affect his participation in the Plan. Loans shall be made available to all Participants on a reasonably equivalent basis, and shall not be made available to Highly Compensated Employees [as defined in Section 414(q) of the Code] in an amount greater than that which is made available to other Participants.

(b) Each Participant may borrow not more than the lesser of (1) $50,000 reduced by the excess, if any, of (i) the highest outstanding balance of loans made to the Participant from the Plan during the one year period ending on the day before the date on which such loan was made, over (ii) the outstanding balance of loans made to the Participant from the Plan on the date on which such loan was made, or (2) 50% of his Vested Account Balance. In determining if these limitations have been exceeded, all loans previously made to a Participant from the Plan [or from any other employee plan qualified under Section 401(a) of the Code maintained by the Employer or any Related Employer] shall be taken into consideration, to the extent of the highest outstanding balances of such loans during the one year period ending on the date on which the loan from this Plan is made.

(c) Anything to the contrary notwithstanding, all loans from the Plan shall be deemed to be a directed investment of the Participant’s Account. For purposes of determining the annual value of the assets of the Trust, the amount of any loan to a Participant shall be valued separately from the other assets of the Trust as provided in Section 7.2(a)(2), although any loan shall be considered at all times to be part of a Participant’s Account for all other purposes of the Plan.

(d) All loans from the Plan shall be at a reasonable rate of interest as determined from time to time by the Administrator. All interest paid by a Participant on a loan shall be credited directly to his Account.

(e) All loans shall be evidenced by a written promissory note executed by the Participant which shall contain the terms of repayment. As security for a loan, the Participant shall execute an irrevocable pledge and assignment to the Trustee of his entire right, title and interest in and to his Account.

(f) All loans shall be repaid by the Participant in such manner and upon such terms as shall be elected by the Participant and approved by the Administrator in accordance with guidelines established from time to time by the Administrator; provided, however, that any repayment terms shall be subject to the following guidelines:

(1) Any loan [other than a loan described in Section 14.1(f)(2)] shall be required, by its terms, to be repaid by the Participant within 5 years.

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(2) Any loan which is used by the Participant to acquire any dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as a principal residence of the Participant shall be required, by its terms, to be repaid by the Participant within a period of time as determined by the Administrator.

(3) Any loan shall be required, by its terms, to be amortized in level payments, made not less frequently than quarterly, over the term of the loan. Such amortization may be made by level payments of combined interest and principal, or by equal payments of principal with interest actually earned.

(g) The Administrator shall have the authority to adopt such rules and procedures as may be necessary in its sole discretion to implement the provisions contained in this Section 14.1, provided that such rules and procedures are not inconsistent with the provisions of ERISA.

14.2 [Reserved]

14.3 Diversification Elections

(a) Each Qualified Participant may make an election (the “Election”) within 90 days after each Anniversary Date during the Qualified Election Period to direct the Plan to distribute to him, or on his behalf, a portion of his Account Balance equal to his Diversification Amount. An Election shall be made in, in writing, on a form to be supplied by the Administrator for such purpose. A Participant shall become a “Qualified Participant” on the first day on or after which he has both attained age 55 and completed 10 years of participation in the Plan. The “Qualified Election Period” shall be the 6-year period commencing with the Plan Year in which the Participant first becomes a Qualified Participant. During any one of the first 5 Plan Years of the Qualified Election Period, the “Diversification Amount” shall be an amount equal to the excess, if any, of 25% of:

(1) The number of shares of Stock credited to the Qualified Participant’s Account on or before the last Anniversary Date preceding the Plan Year for which such Election is made, less

(2) The number of shares of Stock previously distributed to such Qualified Participant (or, where he had requested a distribution in cash, the number of shares of Stock in connection with such a cash distribution to him).

In the last Plan Year of the Qualified Election Period, the preceding sentence shall be applied by substituting “50%” for “25%.” In applying either such percentage, any resultant fractional share under .5 shall be disregarded and any resultant fractional share of .5 or more shall be considered as an additional full share.

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(b) Not later than 90 days after the close of each 90-day period described in Section 14.3(a), the Administrator shall implement such Qualified Participant’s Election by distributing to him Stock equal to the Diversification Amount, or, if so directed by him, the Administrator shall cause such Stock to be sold on the open market and the net proceeds distributed to him, or on his behalf, subject to Section 9.10.

(c) The Administrator shall have the sole responsibility for and complete discretion in establishing and, if it deems it necessary, amending the rules and procedures governing the time and manner in which Qualified Participants may make, modify or revoke any Election pursuant to this Section 14.3. The discretion of the Administrator in this regard shall only be limited by the general requirement that such discretion be exercised in a non-discriminatory manner and in compliance with the requirements of Code Section 401(a)(28) and any regulations promulgated thereunder.

(d) The purpose of this Section 14.3 is to conform to the requirements of Code Section 401(a)(28). To the extent that this Section 14.3 is inconsistent with Section 401(a)(28), the provisions of Section 401(a)(28) shall control.

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ARTICLE XV

AMENDMENT

15.1 Right to Amend

Richardson shall have the right at any time or times to amend this Plan, in whole or in part.

15.2 Retroactivity of Amendments

No amendment to this Plan may be made effective retroactively to a date prior to the beginning of the Plan Year in which it is adopted, except amendments which are necessary to establish or maintain, without interruption, the qualification of the Plan for tax exemption under the provisions of the Code.

15.3 Limitations on Right to Amend

No amendment shall be made to this Plan which shall:

(a) Directly or indirectly operate to give the Employer or any Related Employer any interest in the Trust or to deprive any Participant or Beneficiary of his interest in the Trust, or cause any part of the income or corpus of the Trust to be used for, or diverted to, purposes other than for the exclusive benefit of the Participants or their Beneficiaries, except as provided in Section 17.1.

(b) Impose any duties, responsibilities or obligations on the Trustee without its written consent; or

(c) Eliminate an optional form of benefit or eliminate or reduce an “early retirement benefit” or a “retirement-type subsidy” [as defined in Section 411(d)(6)(B) of the Code].

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ARTICLE XVI

ADOPTION, WITHDRAWAL AND TERMINATION

16.1 Adoption of Plan

(a) With the written consent of the Administrator, any other corporation, including a Related Employer, may adopt this Plan for the exclusive benefit of its eligible employees by appropriate resolution, which shall specify the effective date of such adoption and which may contain such changes and variations in the Plan and Trust as the Administrator shall approve, and by agreeing to be bound by the terms of this Plan.

(b) Each participating Employer shall pay a proportionate part of the expenses incurred in the administration of the Plan and the Trust to the extent that such expenses are not paid directly out of the Trust.

16.2 Withdrawal from Plan

A participating Employer may withdraw from the Plan by giving written notice to the Administrator and the Trustee, which notice shall specify the effective date of the withdrawal, which, unless such requirement is waived by the Administrator, shall not be less than 30 days after such notice is given. If the date of withdrawal is not an Anniversary Date, the Trustee shall value all Trust assets as of the effective date of the withdrawal in the manner provided in Section 7.2 as if such date were an Anniversary Date, but shall not allocate the participating Employers’ contribution. The withdrawal by an Employer shall be treated as a termination of the Plan with respect to Participants employed by the withdrawing Employer, and such Participants shall be 100% vested in their Account Balance as of the date of withdrawal, and such Account Balance shall be distributed as provided in Article IX.

16.3 Termination

(a) The Agreement may be terminated at any time by Richardson.

(b) Upon termination of the Plan and Trust, the Administrator shall direct the Trustee to value the Trust in accordance with Section 7.2 and to distribute in accordance with the terms of the Plan all assets remaining in the Trust (after payment or reserving funds for payment of any fees, taxes and expenses properly chargeable against the Trust) to the Participants in accordance with the value of the credits standing to each Participant’s Accounts as of the date of such termination, in cash or in kind valued at fair market at the date of distribution, in such manner as the Trustee shall determine.

(c) In the event of the sale by an Employer of substantially all of its assets and business, the successor to the Employer shall be substituted for and shall exercise and have all the rights and obligations of the Employer hereunder upon the filing, in writing, of its election to do so with the Trustee.

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ARTICLE XVII

MISCELLANEOUS

17.1 No Reversion to Employer

No part of the corpus or income of the Trust shall revert to the Employer or any Related Employer or be used for, or diverted to, purposes other than for the exclusive benefit of the Participants and their Beneficiaries; provided, however, that:

(a) Any balance remaining in the Excess Contribution Account or the Excess Forfeiture Account at the time the Plan is terminated, and which cannot be allocated in the final Plan Year of the Plan without violating the limitations of Section 7.6, shall be returned to the Employer (and, in the event that there is more than one participating Employer, such reversion shall be in the proportion that the aggregate contributions made by each such Employer in all Plan Years with respect to which amounts were credited to either of such accounts bears to the aggregate contributions made by all participating Employers in all such Plan Years).

(b) In the event that any portion of a contribution is made by the Employer to the Plan because of either a good faith mistake of fact or a good faith mistake in determining that such contribution is deductible under Section 401 of the Code, the Trustee shall return to the Employer, upon written notice thereof, an amount equal to the portion of such contribution which would not have been made but for such mistake of fact, or which is determined to be non-deductible, as the case may be, subject to the following conditions and limitations. No amount shall be returned to the Employer pursuant to this Section 17.1(b) unless such amount is returned not later than one year after the date on which the contribution was made in the case of a contribution based on a mistake of fact was made, or the date on which the deduction is disallowed in case of a contribution mistakenly believed to be deductible. For purposes of the preceding sentence, a deduction shall be considered to be disallowed on either (1) the day on which the Employer voluntarily files an amended federal income tax return correcting the error; (2) the day on which the Internal Revenue Service issues a statutory notice of deficiency, notice of final partnership or S corporation administrative adjustment, or other determination from which no further administrative appeal is possible, which notice is based in whole or part upon disallowance of such deduction, provided that, if applicable, no person files a timely petition for judicial review of such determination; or (3) if such a petition for judicial review is filed, the day on which a final judgment is entered dismissing such petition or upholding the disallowance of such deduction from which judgment no further appeal is possible, or as to which the time for filing an appeal expires. The amount returned to the Employer shall not include any earnings attributable to the erroneous contribution, but shall be reduced by any losses attributable thereto. Notwithstanding the provisions of Article VIII, an erroneous contribution may be returned in accordance with this Section 17.1(b) after such contribution has been allocated and credited to the Participants’ Accounts, in which event the amount so returned shall be charged to the Accounts in the

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same proportion that the contribution was originally allocated; provided, however, that in no event shall the Account Balance of any Participant be reduced as a result of the return of an erroneous contribution to less than it would have been had the erroneous contribution not been made, and the amount returned to the Employer shall be reduced to the extent necessary to avoid such a reduction.

17.2 Evidence of Action by Necessary Parties

(a) Any action by the Employer pursuant to the provisions of this Plan shall be evidenced by a resolution of its Board of Directors, or by written instrument executed by any person authorized by its Board of Directors to take such action.

(b) Necessary parties to any accounting, litigation or other proceedings shall include only the Trustee and the Employer, and the settlement or judgment in any such case in which the Employer is duly served or cited shall be binding upon all persons entitled to benefits under the Plan, the estate of any such person, and upon all persons claiming by, through or under them.

17.3 Rights of Participants Limited

Neither the adoption of the Plan nor anything contained in the Plan or the Trust shall be construed as giving any Participant, Beneficiary or Employee any equity or other interest in the assets, business or affairs of the Employer or any Related Employer, or the right to complain about any action taken by the officers, directors or stockholders of, or about any policy adopted or pursued by, the Employer or any Related Employer, or the right to examine the books and records of the Employer or any Related Employer, or as giving any Employee the right to be retained in the service of the Employer or any Related Employer, and all Employees shall remain subject to discharge to the same extent as if the Plan and the Trust had never been executed. Prior to the time that distributions are made in conformity with the provisions of the Plan, neither the Participants, nor their spouses, Beneficiaries, heirs-at-law, or legal representatives shall receive cash or any other thing of current exchangeable value from the Employer or any Related Employer or the Trustee as a result of the Trust.

17.4 Assignment and Alienation

(a) No payment to any person under any of the provisions of the Plan or the Trust, nor the right to receive such payment or payments, nor any interest in the Trust, shall be subject to assignment, alienation, transfer or anticipation, either by the voluntary or involuntary act of any Participant or Beneficiary or by operation of law, nor, except for the repayment of loans to Participants authorized under Section 14.1 and payments pursuant to a Qualified Domestic Relations Order in accordance with Section 17.4(b), shall such payment or right or interest be subject to the demands or claims of any creditor of such person, nor be liable in any way for such person’s debts, obligations or liabilities.

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(b) Upon receiving any order, judgment or decree which may be a Qualified Domestic Relations Order, the Administrator shall promptly notify the Participant involved and any Alternate Payee [as defined in Section 2.28(a)] who may be affected by such order of the receipt of the order and of the Plan’s procedure for determining whether the order is a Qualified Domestic Relations Order, and shall proceed to determine whether the order is a Qualified Domestic Relations Order. During the period during which it is being determined whether such order is a Qualified Domestic Relations Order, any payments which would, under such order, be payable to an Alternate Payee, shall be placed in a separate account in the Trust. If, within 18 months after receipt of such order, the Administrator determines that such order is a Qualified Domestic Relations Order, the amount of such separate account, with any earnings thereon, shall be paid to the Alternate Payees as provided in such order. If the status of such order has not been established within such 18-month period, or if it is determined that the order is not a Qualified Domestic Relations Order, the amount of such separate account shall be paid to the Participant, or, if it would not otherwise have been payable currently, shall be restored to the Participant’s Account. Any determination made more than 18 months after the receipt of such order that such order is a Qualified Domestic Relations Order shall be applied prospectively only.

(c) In the event that any Participant’s benefits are garnished or attached by order of any court, the Trustee may bring an action for a declaratory judgment in a court of competent jurisdiction to determine the proper recipient of the benefits to be paid by the Trust. During the pendency of said action, any benefits that become payable shall be paid into the court as they become payable, to be distributed by the court to the recipient it deems proper at the close of said action.

(d) Section 17.4(a) shall not apply to any offset of a Participant’s benefits provided under the Plan against an amount that he is ordered or required to pay to the Plan if:

(1) The order or requirement to pay arises (i) under a judgment of conviction for a crime involving the Plan; (ii) under a civil judgment (including a consent order or decree) entered by a court in an action brought in connection with a violation (or alleged violation) of Part 4 of Subtitle B of Title I of ERISA; or (iii) pursuant to a settlement agreement between the Secretary of Labor and such Participant, or a settlement agreement between the Pension Benefit Guaranty Corporation and such Participant, in connection with a violation (or alleged violation) of Part 4 of such subtitle by a fiduciary or any other person;

(2) Such judgment, order, decree, or settlement agreement expressly provides for the offset of all or part of the amount ordered or required to be paid to the Plan against such Participant’s benefits provided under the Plan; and

(3) In a case in which the survivor annuity requirements of Section 401(a)(11) of the Code apply with respect to distributions from the Plan to such Participant, if such Participant has a spouse at the time at which such offset is to be made, (i) either such spouse has consented in writing to such offset and such consent is witnessed by a notary public or representative of the Plan [or it is established to the satisfaction of a Plan representative that such consent may not be obtained by reason of circumstances described in Section 417(a)(2)(B) of the Code], or an election to

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waive the right of such spouse to either a “qualified joint and survivor annuity” [within the meaning of Section 417(b) of the Code] or a “qualified preretirement survivor annuity” [within the meaning of section 417(c) of the Code] is in effect in accordance with the requirements of Section 417(a) of the Code; (ii) such spouse is ordered or required in such judgment, order, decree or settlement to pay an amount to the Plan in connection with a violation of Part 4 of such subtitle; or (iii) in such judgment, order, decree, or settlement, such spouse retains the right to receive the survivor annuity under such a qualified joint and survivor annuity provided pursuant to Section 401(a)(11)(A)(i) of the Code and under such a qualified preretirement survivor annuity provided pursuant to Section 401(a)(11)(A)(ii) of the Code, determined in accordance with Section 401(a)(13)(D) of the Code.

This Section 17.4(d) shall apply to judgments, orders and decrees issued, and settlement agreements entered into, on or after August 5, 1997.

17.5 Missing Participants or Beneficiaries

(a) Each Participant shall file with the Employer, in writing, his post office address, the post office address of each of his Beneficiaries, and each change of post office address. Any communication, statement or notice addressed to Participant or Beneficiary with postage prepaid at his last post office address filed with the Employer, or if no address is filed with the Employer, then at his last post office address as shown on the Employer’s records, will be binding on the Participant and his Beneficiary for all purposes of the Plan. Neither the Trustee nor the Administrator is required to search for or locate Participant or Beneficiary.

(b) If the Administrator or Trustee shall send by registered or certified mail, postage prepaid, to the last known address of a Participant or Beneficiary, a notification that he is entitled to a distribution hereunder and if either (1) such notification is returned because the addressee cannot be located at such address and neither the Employer nor the Trustee shall have any knowledge of such Participant’s or Beneficiary’s whereabouts within 3 years from the date such notification was mailed, or (2) within 3 years after such notification was mailed to such Participant or Beneficiary, he does not respond thereto by informing the Trustee of his whereabouts, then, upon the Anniversary Date coincident with or immediately following the third anniversary of the mailing of said notification, the then undistributed Account Balance of such Participant or Beneficiary shall be paid to the person or persons who would have been entitled to take in the event of the death of the Participant or Beneficiary whose whereabouts is unknown, assuming that such death had occurred on the Anniversary Date immediately succeeding the third anniversary of the mailing of said notification.

(c) If any check in payment of a benefit hereunder which has been mailed by regular United States mail to the last address of the payee furnished the Trustee by the Administrator is returned unclaimed, the Trustee shall notify the Administrator and shall discontinue further payments to such payee until it receives the further instructions of the Administrator.

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17.6 Merger and Consolidation of Plan

In the case of any merger or consolidation with, or transfer of assets and liabilities to, any other employee plan qualified under Section 401(a) of the Code, provisions shall be made so that each Participant in the Plan on the date thereof would receive a benefit immediately after the merger, consolidation or transfer (if the other employee plan terminated on that date) which is equal to or greater than the benefit he would have been entitled to receive immediately prior to the merger, consolidation or transfer (if the Plan had then terminated).

17.7 Severability

In case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions, but shall be fully severable and this Agreement shall be construed and enforced as if said illegal or invalid provision had never been inserted herein.

17.8 Applicable Law

This Plan shall be construed and enforced and the Trust shall be administered in accordance with the laws of the State of Illinois, to the extent that such laws are not preempted by the laws of the United States of America.

17.9 Method of Accounting

The Plan shall use the accrual method of accounting.

17.10 Qualified Military Service

(a) Effective December 12, 1994, notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit as to Qualified Military Service be provided in accordance with Section 414(u) of the Code.

(b) Effective as to deaths occurring on or after January 1, 2007, in the case of a Participant who dies while performing Qualified Military Service, his survivors shall be entitled to any additional benefits (other than benefit accruals related to the period of Qualified Military Service) that may be provided under the Plan had he then resumed and terminated employment on account of death.

17.11 Valuation of Stock Not Readily Tradable on an Established Market

All valuations of Stock which is not readily tradable on an established securities market with respect to activities carried on by the Plan shall be by an independent appraiser. The term “independent appraiser” shall mean any appraiser meeting requirements similar to the requirements of the regulations promulgated under Section 170(a)(1) of the Code.

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ARTICLE XVIII

REVISED VESTING PROVISIONS

18.1 Scope and Effective Date

As to each Employee who is actively employed by the Employer on or after June 1, 1996, the vested interest of such Employee in his Account shall be determined in accordance with this Article XVIII notwithstanding any other provision of the Plan to the contrary; provided, however, Sections 8.1, 8.2, 8.3, 8.4, 8.7 and 8.8 of the Plan shall continue to apply.

18.2 Definitions

For purposes of this Article XVIII, the following terms shall have the meanings set forth, notwithstanding any definition of any such term elsewhere in the Plan:

(a) “Break in Service” A Period of Severance of at least 12 consecutive months. In the case of an individual who is absent from work for maternity or paternity reasons, the 12-consecutive month period beginning on the first anniversary of the first date of such absence shall not constitute a Break in Service. An “absence from work for maternity or paternity reasons” shall mean an absence (1) by reason of the pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement.

(b) “Hour of Service”: Each hour for which an Employee is paid or entitled to payment for the performance of duties for the Employer or a Related Employer.

(c) “Period of Service”: An Employee’s period of service commencing on the date he first completes an Hour of Service, and ending on the date a Break in Service begins; provided, however, that for purposes of Section 18.2(c), any Employee to whom Section 18.4 applies shall be deemed to have a hire date of May 31, 1997.

(d) “Period of Severance”: A continuous period of time during which an Employee is not employed by the Employer. Such period begins on the date such Employee retires, quits or is discharged, or if earlier, the 12-month anniversary of the date on which such Employee was otherwise first absent from service.

(e) “Years of Service”: The number of whole years of an Employee’s Period of Service with the Employer or a Related Employer.

For purposes of this Article XVIII, service by an individual on behalf of any of the following entities before he became an Employee shall be considered service on behalf of the Employer, to-wit: Amperex Division of North American Phillips Corp.; B-Scan, Inc.; Calvert Electronics, Inc.; Calvert Holding Co., Inc.; Calvert Semi-Conductor, Inc.; Ceco Communications, Inc.; Cetron Electronic

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Corporation; National Electronics Division of Varian Associates, Inc.; TubeMaster, Inc.; Compucon Distributors, Inc.; AFP Imaging Corporation; Burtek Systems (USA), Inc.; AFP Imaging Corporation; Eternal Graphics, Inc., (effective June 1, 1998 and including service prior to that date); TRL Technologies, Inc. (effective June 23, 1998 and including service prior to that date); Adler Video Systems, Inc. (effective November 28, 1998 and including service prior to that date); and Pixielink Corporation (effective March 8, 1999 and including service prior to that date); and Broadcast Richmond, Inc. (effective May 31, 2000 and including service prior to that date).

18.3 General Vesting Rules

(a) For purposes of determining his Years of Service, an Employee shall receive credit for any Period of Severance of less than 12 consecutive months. Nonconsecutive Periods of Service shall be aggregated. Additionally, fractional periods of a year shall be expressed in terms of days, and less-than-whole-year Periods of Service shall be aggregated on the basis that 365 days of service shall equal a whole Year of Service.

(b) In the case of a Participant who has 5 consecutive Breaks in Service, all Years of Service after such Breaks in Service shall be disregarded for the purpose of determining his vesting in his Account balance which accrued before such breaks, but both pre-break and post-break service shall count for the purposes of vesting the Employer-derived Account balance that accrues after such breaks. Both such balances shall share in the earnings and losses of the Trust.

(c) In the case of a Participant who does not have 5 consecutive Breaks in Service, both the pre-break and post-break service shall count in vesting both the pre-break and post-break Employer-derived Account balances.

(d) The excess of a Participant’s Account Balance over his Vested Account Balance shall be transferred from such Participant’s Employer Contribution Account to his Forfeiture Suspense Account as of the date on which such Participant incurs a Break in Service, and shall be forfeited on the date on which such Participant incurs 5 consecutive Breaks in Service. If such a Participant returns to the employment of the Employer or any Related Employer before incurring 5 consecutive Breaks in Service, any amount transferred to his Forfeiture Suspense Account from his Employer Contribution Account pursuant to the preceding sentence shall be restored to his Employer Contribution Account.

(e) If a Participant receives a distribution of all or a portion of his Employer Contribution Account Balance at a time when it is possible for him to increase the vested percentage of his Employer Contribution Account (including a Participant who received a distribution upon incurring a Termination of Employment and who returns to the employment of the Employer or any Related Employer before incurring at least 5 consecutive Breaks in Service), then such Participant’s Vested Account Balance at any time after he is re-employed shall be determined by (1) increasing the Participant’s Employer Contribution Account Balance at such time by the Adjusted Distribution (as hereafter defined), (2) then multiplying the Employer Contribution Account Balance (as so increased) by the relevant vesting percentage under Section 8.4, and (3) then subtracting the Adjusted Distribution from the product obtained. The

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“Adjusted Distribution” shall be equal to the amount of the distribution multiplied by a fraction, the numerator of which is the Participant’s Account Balance at the time the formula is applied and the denominator of which is the Account Balance immediately following the distribution (without regard to forfeitures).

(f) If a Participant returns to the employment of the Employer or any Related Employer after incurring at least 5 Breaks in Service, and such Participant did not receive payment of the full amount of his Vested Account Balance, his Vested Account Balance remaining unpaid shall be placed in a separate Pre-Break Account for the Participant. The Pre-Break Account shall be treated in the same manner as the Employer Contribution Account of the Participant, except that it shall not be credited with the Employer’s contributions and the Participant shall be 100% vested in such Pre-Break Account.

(g) Section 18.3(d) shall not apply to Participants who terminate employment on or after June 2, 2002. Notwithstanding Section 18.3(d), the balances in all Forfeiture Suspense Accounts at June 1, 2002 shall be treated as forfeitures and shall be allocated in accordance with Section 7.4(a) for the Plan Year ending on said date as if all Participants as to whom such Forfeiture Suspense Accounts had been established had incurred 5 consecutive Breaks in Service on said date. In the event any Participant described in the preceding sentence returns to the employment of the Employer or any Related Employer on or after June 2, 2002 and before incurring 5 consecutive Breaks in Service, there shall be credited to his Employer Contribution Account (by using accumulated forfeitures for this purpose and thereafter, to the extent necessary, by means of a special contribution from Employer for this purpose) the amount which had been transferred to his Forfeiture Suspense Account.

(h) If a Participant terminates his employment on or after June 2, 2002, any portion of his Account (including any amounts credited after his termination of employment) not payable to him under Section 9.1 shall be forfeited by him upon the complete distribution to him of the vested portion of his Account, if any, subject to the possibility of reinstatement as described in Section 18.3(i). For purposes of this Section 18.3(h), if the value of a Participant’s Vested Account Balance is zero, he shall be deemed to have received a distribution of his vested interest immediately following termination of employment. All amounts so forfeited shall be held in a short-term interest-bearing bank account or in a money market mutual fund pending disposition in accordance with Section 7.4(b).

(i) If a Participant forfeits any portion of his Account under Section 18.3(h) but again becomes an Employee after such date, the amount so forfeited shall be re-credited to his Account, but only if he repays to the Plan (without interest) the amount previously distributed to him under Section 9.1, before the earlier of:

(1) 5 years after the date of his re-employment; or

(2) The date he incurs 5 consecutive Breaks in Service following the date of the distribution.

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If a Participant is deemed to have received a distribution pursuant to Section 18.3(h) and resumes employment before 5 consecutive Breaks in Service, he shall be deemed to have repaid such distribution on the date of his re-employment. Upon such an actual or deemed repayment, the provisions of the Plan shall thereafter apply as if no forfeiture had occurred. The amount to be re-credited pursuant to this Section 18.3(i) shall be derived first from the forfeitures, if any, which as of the date of re-crediting have yet to be applied as provided in Section 7.4(b) and, to the extent such forfeitures are insufficient, from a special contribution to be made by the Employer for this purpose.

(j) If a Participant elects not to receive the vested portion of his Account following his termination of employment, the non-vested portion of his Account shall be forfeited after the Participant has incurred 5 consecutive Breaks in Service. The amount so forfeited shall be held in a short-term interest-bearing bank account or in a money market mutual fund pending disposition in accordance with Section 7.4(b).

18.4 Transitional Rules

Each Employee described in Section 18.1 who was actively employed by the Employer on May 31, 1996 shall receive credit for a Period of Service equal to the sum of:

(a) A number of years equal to the number of Years of Service credited to him under the Plan (determined without regard to this Article XVIII) as of the Computation Period ended May 31, 1996; and

(b) The greater of (1) the Period of Service which would be credited to him under this Article XVIII during the Computation Period ending May 30, 1997 or (2) the service which would be taken into account under the Plan (determined without regard to this Article XVIII) during the Computation Period ended May 30, 1997.

In addition, each such Employee shall receive credit for service determined under this Article XVIII commencing on May 31, 1997.

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ARTICLE XIX

REQUIRED MINIMUM DISTRIBUTIONS

19.1 Applicability and Effective Date

The provisions of this Article XIX shall apply in lieu of Sections 9.1(c) and 9.7 and notwithstanding any other provision of the Plan (except as indicated in this Article XIX) for purposes of determining required minimum distributions from the Plan for calendar years beginning after December 31, 2002.

19.2 Requirements of Treasury Regulations Incorporated

All distributions required under this Article XIX shall be determined and made in accordance with the Treasury regulations under Code Section 401(a)(9).

19.3 Time and Manner of Distribution

(a) A Participant’s entire vested interest in the Plan shall be distributed, or begin to be distributed, to him no later than his Required Beginning Date.

(b) If a Participant dies before his Required Beginning Date, his entire vested interest in the Plan shall be distributed, or begin to be distributed, no later than as follows:

(1) If such Participant’s surviving spouse is his sole Designated Beneficiary, then distributions to such surviving spouse shall begin by December 31 of the calendar year immediately following the calendar year in which such Participant died, or by December 31 of the calendar year in which such Participant would have attained age 70 ¹/2, if later.

(2) If such Participant’s surviving spouse is not his sole Designated Beneficiary, then distributions to his Designated Beneficiary shall begin by December 31 of the calendar year immediately following the calendar year in which such Participant died.

(3) If there is no Designated Beneficiary as of September 30 of the year following the year of such Participant’s death, such Participant’s entire vested interest in the Plan shall be distributed by December 31 of the calendar year containing the fifth anniversary of such Participant’s death.

(4) If such Participant’s surviving spouse is his sole Designated Beneficiary and his surviving spouse dies after him but before distributions to such surviving spouse begin, this Section 19.3(b), other than Section 19.3(b)(1), shall apply as if such surviving spouse were such Participant.

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For purposes of this Section 19.3(b) and Section 19.6, unless Section 19.3(b)(4) applies, distributions are considered to begin on a Participant’s Required Beginning Date. If Section 19.3(b)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse of a Participant under Section 19.3(b)(1).

(c) The required minimum distribution for a Participant’s first Distribution Calendar Year shall be made on or before his Required Beginning Date. The required minimum distribution for any Distribution Calendar Year, including the required minimum distribution for the Distribution Calendar Year in which the Participant’s Required Beginning Date occurs, shall be made on or before December 31 of such Distribution Calendar Year.

19.4 Forms of Distribution

Unless a Participant’s vested interest in the Plan is distributed in a single sum on or before his Required Beginning Date, as of the first Distribution Calendar Year distributions shall be made in accordance with Sections 19.5 and 19.6 of this Article XIX.

19.5 Required Minimum Distributions during Participant’s Lifetime

(a) During the lifetime of a Participant, the minimum amount that shall be distributed for each Distribution Calendar Year is the lesser of:

(1) The quotient obtained by dividing the vested balance in such Participant’s Accounts by the distribution period in the Uniform Lifetime Table set forth in Treasury Regulation Section 1.401(a)(9)-9, using his age as of his birthday in such Distribution Calendar Year; or

(2) If such Participant’s sole Designated Beneficiary for the Distribution Calendar Year is his spouse, the quotient obtained by dividing the vested balance in such Participant’s Accounts by the number in the Joint and Last Survivor Table set forth in Treasury Regulation Section 1.401(a)(9)-9, using his and spouse’s attained ages as of their respective birthdays in such Distribution Calendar Year.

(b) Required minimum distributions as to a Participant shall be determined under this Section 19.5 beginning with the first Distribution Calendar Year and up to and including the Distribution Calendar Year that includes such Participant’s date of death.

19.6 Required Minimum Distributions after Participant’s Death

(a) If a Participant dies on or after his Required Beginning Date and there is a Designated Beneficiary as of September 30 of the year after the year of his death, the minimum amount which shall be distributed for each Distribution Calendar Year after the year of his death is the quotient obtained by dividing the vested balance in the Participant’s Accounts by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of his Designated Beneficiary, determined as follows:

(1) Such Participant’s remaining life expectancy is calculated using his age in the year of death, reduced by one for each subsequent year.

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(2) If such Participant’s surviving spouse is his sole Designated Beneficiary, the remaining life expectancy of such surviving spouse shall be calculated for each Distribution Calendar Year after the year of his death using the surviving spouse’s age as of such surviving spouse’s birthday in such year. For Distribution Calendar Years after the year of such surviving spouse’s death, the remaining life expectancy of such surviving spouse is calculated using the age of such surviving spouse as of such surviving spouse’s birthday in the calendar year of such surviving spouse’s death, reduced by one for each subsequent calendar year.

(3) If such Participant’s surviving spouse is not his sole Designated Beneficiary, the Designated Beneficiary’s remaining life expectancy shall be calculated using the age of such Designated Beneficiary in the year following the year of such Participant’s death, reduced by one for each subsequent year.

(b) If a Participant dies on or after his Required Beginning Date and there is no Designated Beneficiary as of September 30 of the year after the year of his death, the minimum amount which shall be distributed for each Distribution Calendar Year after the year of his death shall be the quotient obtained by dividing the vested balance in his Accounts by his remaining life expectancy calculated using his age in the year of death, reduced by one for each subsequent year.

(c) If a Participant dies before his Required Beginning Date and there is a Designated Beneficiary as of September 30 of the year after the year of his death, the minimum amount which shall be distributed for each Distribution Calendar Year after the year of his death shall be the quotient obtained by dividing the vested balance in his Accounts by the remaining life expectancy of his Designated Beneficiary, determined as provided in Section 19.6(a).

(d) If a Participant dies before his Required Beginning Date and there is no Designated Beneficiary as of September 30 of the year after the year of his death, distribution of such Participant’s entire vested interest in the Plan shall be completed by December 31 of the calendar year containing the fifth anniversary of his death.

(e) If (1) a Participant dies before his Required Beginning Date, (2) his surviving spouse is his sole Designated Beneficiary and (3) such surviving spouse dies before distributions are required to begin to such surviving spouse under Section 19.3(b)(1), Sections 19.6(c) and 19.6(d) shall apply as if such surviving spouse were such Participant.

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19.7 Miscellaneous

(a) Life expectancy shall be computed by use of the Single Life Table in Treasury Regulation Section 1.401(a)(9)-9.

(b) For purposes of a Distribution Calendar Year, the balance in a Participant’s Accounts shall be determined as the balance as of the last Valuation Date in the Valuation Calendar Year with respect to such Distribution Calendar Year, increased by the amount of any contributions made and allocated or forfeitures allocated to such balance as of dates in such Valuation Calendar Year after such Valuation Date and decreased by distributions made in such Valuation Calendar Year after such Valuation Date. An Account balance for a Valuation Calendar Year with respect to a Distribution Calendar Year shall include any amounts rolled over or transferred to the Plan either in such Valuation Calendar Year or in such Distribution Calendar Year if distributed or transferred in such Valuation Calendar Year.

19.8 Definitions

For purposes of this Article XIX, the following terms shall have the meanings indicated:

(a) “Designated Beneficiary”: Collectively, the individual or individuals who are designated as the Beneficiary under Section 2.6 and who are the “designated beneficiary” under Code Section 401(a)(9) and Treasury Regulation Section 1.401(a)(9)-1, Q&A-4.

(b) “Distribution Calendar Year”: A calendar year for which a minimum distribution is required under this Article XIX. For distributions beginning before a Participant’s death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains his Required Beginning Date. For distributions beginning after a Participant’s death (where he dies prior to his Required Beginning Date), the first Distribution Calendar Year is the calendar year in which distributions are required to begin under Section 19.3(b).

(c) “Required Beginning Date”: With respect to a Participant, April 1 of the calendar year following the calendar year determined below:

(1) In the case of a Participant not described in any other clause of this Section 19.8(c), the calendar year in which he attains the age of 70 ¹/2.

(2) In the case of a Participant who attained the age of 70 ¹/2 prior to January 1, 1988, and who was not described in Section 2.19(a)(3) during the Plan Year which included the last day of the calendar year in which he attained the age of 66 ¹/2 or any subsequent Plan Year, the later of (i) the calendar year in which he attains the age of 70 ¹/2 or (ii) the calendar year in which he retires.

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(3) In the case of a Participant who attained the age of 70 ¹/2 prior to January 1, 1988, and who was described in Section 2.19(a)(3) during the Plan Year which included the last day of the calendar year in which he attained the age of 66 ¹/2 or a subsequent Plan Year, the later of (i) the calendar year in which he attains the age of 70 ¹/2 or (ii) the earlier of the calendar year in which he retires or the calendar year which includes the last day of the Plan Year in which he was first described in Section 2.19(a)(3).

(4) In the case of a Participant who attained the age of 70 ¹/2 during the calendar year 1988, who was not described in Section 2.19(a)(3) during the Plan Year which includes the last day of the calendar year in which he attained the age of 66 ¹/2 or any subsequent Plan Year, and who is still alive on January 1, 1989, the calendar year 1989.

Notwithstanding the preceding provisions of this Section 19.8(c), a Participant who is not a “5-percent owner” (as defined in Code Section 416), who has attained age 70 ¹/2 and who has not commenced receiving minimum distributions from the Plan required under Code Section 401(a)(9) may irrevocably elect in a written instrument submitted to the Administrator to defer receiving such minimum required distributions until not later than April 1 of the calendar year following the calendar year in which he terminates employment. Such an election must be submitted to the Administrator no later than April 1 of the calendar year following the calendar year in which the Participant making such election attained age 70 ¹/2. For purposes of this Section 19.8(c), the “Required Beginning Date” of a Participant making such an election shall be April 1 of the calendar year following the calendar year in which he terminates employment.

(d) “Valuation Calendar Year”: With respect to a Distribution Calendar Year, the calendar year immediately preceding such Distribution Calendar Year.

19.9 Inapplicability for 2009

(a) The provisions of this Article XIX shall not apply to the 2009 calendar year.

(b) The Required Beginning Date as to any individual shall be determined without regard to this Section 19.9 for purposes of applying this Article XIX for calendar years after 2009.

(c) If Section 19.3(b)(3) applies, the 5-year period therein shall be determined without regard to the 2009 calendar year.

(d) If Section 19.6(d) applies, the calendar year 2009 shall not be taken into account in determining December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

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IN WITNESS WHEREOF, Richardson has caused this Plan to be executed as of the date and year first written above.

RICHARDSON ELECTRONICS, LTD.
By:	/s/ Kyle C. Badger
	Kyle C. Badger
	Executive Vice President,
	General Counsel and Secretary

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Edward J. Richardson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Richardson Electronics, Ltd. for the period ended February 28, 2009;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

34

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 9, 2009
Signature:	/s/ Edward J. Richardson
Edward J. Richardson
Chairman of the Board and Chief Executive Officer

35

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Kathleen S. Dvorak, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Richardson Electronics, Ltd. for the period ended February 28, 2009;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

36

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 9, 2009
Signature:	/s/ Kathleen S. Dvorak
Kathleen S. Dvorak
Chief Financial Officer

37

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Richardson Electronics, Ltd. (the “Company”) on Form 10-Q for the period ended February 28, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward J. Richardson, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Edward J. Richardson

Edward J. Richardson

Chairman of the Board and Chief Executive Officer

April 9, 2009

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Richardson Electronics, Ltd. (the “Company”) on Form 10-Q for the period ended February 28, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kathleen S. Dvorak, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Kathleen S. Dvorak

Kathleen S. Dvorak

Chief Financial Officer

April 9, 2009

38

EX-99.1

		Corporate Headquarters 40W267 Keslinger Road PO Box 393
For Immediate Release
For Details Contact:		LaFox, IL 60147-0393
Edward J. Richardson	Kathleen S. Dvorak	USA
Chairman and CEO	EVP & CFO	Phone:	(630) 208-2200
Phone: (630) 208-2340	(630) 208-2208	Fax:	(630) 208-2550
E-mail: info@rell.com

RICHARDSON ELECTRONICS REPORTS THIRD QUARTER FISCAL

2009 RESULTS AND DECLARES CASH DIVIDEND

LaFox, IL, April 8, 2009: Richardson Electronics, Ltd. (NASDAQ: RELL) today reported net sales for the third quarter ended February 28, 2009, of $110.3 million, a 20.6% decrease from net sales of $138.9 million for the third quarter of fiscal 2008. The net loss for the third quarter of fiscal 2009 was $11.4 million, compared to a net loss of $2.2 million in the prior year. The net loss of $11.4 million for the third quarter of fiscal 2009 includes $9.7 million of significant charges primarily due to the write-off of $5.8 million of software development costs as a result of the decision that it would be too costly and disruptive to proceed with the related system implementation. Excluding the $9.7 million of significant charges, net loss would have been $1.7 million. A complete reconciliation of these items is provided within this press release under the heading “Certain Non-GAAP Financial Information.”

Gross margin was $23.7 million, or 21.5%, during the third quarter of fiscal 2009, which includes $2.0 million of expense for increased inventory reserves related to exiting certain markets and product lines, low-margin customers, and the analog to digital broadcast conversion. The gross margin percentage during the third quarter reflects the fact that sales within the Company’s higher-margin businesses, specifically the Electron Device Group and Canvys, declined at a faster rate than sales for the RF, Wireless and Power Division.

Selling, general, and administrative (“SG&A”) costs during the third quarter of fiscal 2009 were $27.7 million, or 25.1% of net sales. The SG&A costs for the third quarter of fiscal 2009 include $1.2 million of severance expense and $0.7 million of expense related to the write-off of a long-term note receivable. Excluding these items, SG&A for the third quarter would have been $25.8 million.

“Given our sales decline, we aggressively reduced our operating cost structure. We accelerated staffing reductions, acted upon underperforming business lines and customers, and reduced discretionary spending. We believe these actions, the majority of which are permanent, should lead to significantly improved financial performance,” said Edward J. Richardson, Chairman, Chief Executive Officer and President of Richardson Electronics, Ltd.

1

FINANCIAL SUMMARY — THREE MONTHS ENDED FEBRUARY 28, 2009

• Net sales for the third quarter of fiscal 2009 were $110.3 million, down 20.6%, compared to net sales of $138.9 million during the third quarter of last year.

• Gross margin as a percent of net sales decreased to 21.5% during the third quarter of fiscal 2009, compared to 22.5% during the third quarter of last year. The gross margin percent of 21.5% includes $2.0 million of additional inventory reserves recorded during the third quarter.

• SG&A expenses decreased to $27.7 million during the third quarter of fiscal 2009, including $1.2 million of severance expense and $0.7 million of expense related to the write-off of a note receivable, compared to $32.0 million during the third quarter of last year.

• Operating loss during the third quarter of fiscal 2009 was $9.7 million, compared to an operating loss of $0.7 million during the third quarter of last year.

• Net loss during the third quarter of fiscal 2009 was $11.4 million versus a net loss of $2.2 million during the third quarter of last year.

FINANCIAL SUMMARY — NINE MONTHS ENDED FEBRUARY 28, 2009

• Net sales for the first nine months of fiscal 2009 were $381.8 million, down 7.6%, compared to net sales of $413.3 million during the first nine months of last year.

• Gross margin as a percent of net sales decreased slightly to 23.5% during the first nine months of fiscal 2009, compared to 23.6% during the first nine months of last year.

• SG&A decreased to $84.1 million during the first nine months of fiscal 2009, compared to $93.3 million during the first nine months of last year.

• Operating loss during the first nine months of fiscal 2009 was $0.3 million, compared to operating income of $4.4 million during the first nine months of last year.

• Net loss during the first nine months of fiscal 2009 was $1.8 million, compared to a net loss of $3.2 million during the first nine months of last year.

FOCUS ON WORKING CAPITAL MANAGEMENT AND CASH FLOWS

Cash flows used in operating activities were $2.0 million during the third quarter of fiscal 2009, compared to cash flows used in operating activities of $0.4 million during the third quarter of last year.

“Despite the challenges of the current global economy and market conditions, we have maintained a strong cash position. Improvements in working capital, combined with stronger financial performance will allow us to return positive operating cash flow during the fourth quarter,” said Kathleen S. Dvorak, Executive Vice President and Chief Financial Officer.

2

During the third quarter, the Company did not repurchase any shares of its common stock under the share repurchase program. The share repurchase program was approved by the Company’s Board of Directors in January 2009. The share repurchase program does not have an expiration date and may be cancelled at any time.

OUTLOOK

“Despite the weakening economy, our focus for the fourth quarter and for fiscal 2010 will continue to be on capturing new sales opportunities while keeping tight controls on expenses. We believe that our lower cost structure positions us to significantly improve profitability as the industry and overall economic conditions improve,” concluded Mr. Richardson.

CERTAIN NON-GAAP FINANCIAL INFORMATION

Richardson Electronics, Ltd.

Unaudited Gross Profit, Operating Loss, and Net Loss Reconciliations

(In millions)

	Three Months Ended February 28, 2009					Three Months Ended March 1, 2008
	Amount			Percent of Net Sales		Amount			Percent of Net Sales
GAAP Gross Profit, as reported	$	23.7		21.5	%	$	31.2		22.5	%
Adjustments:
Inventory write-downs		2.0		1.8	%		2.8		2.0	%
Adjusted Gross Profit	$	25.7		23.3	%	$	34.0		24.5	%
GAAP Operating Loss, as reported	$	(9.7	)	(8.8	)%	$	(0.7	)	(0.5	)%
Adjustments:
Inventory write-downs		2.0		1.8	%		2.8		2.0	%
Write-off of long-term note receivable		0.7		0.6	%		—		—	%
Severance expense		1.2		1.1	%		1.5		1.1	%
(Gain) loss on disposal of assets *		5.8		5.3	%		(0.1	)	(0.1	)%
Adjusted Operating Income	$	—		—		$	3.5		2.5	%
GAAP Net Loss, as reported	$	(11.4	)	(10.3	)%	$	(2.2	)	(1.6	)%
Adjustments:
Inventory write-downs		2.0		1.8	%		2.8		2.0	%
Write-off of long-term note receivable		0.7		0.6	%		—		—	%
Severance expense		1.2		1.1	%		1.5		1.1	%
(Gain) loss on disposal of assets *		5.8		5.3	%		(0.1	)	(0.1	)%
Adjusted Net Income (Loss)	$	(1.7	)	(1.5	)%	$	2.0		1.4	%

* Represents the write-off of software development costs.

In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles (“GAAP”), we provide certain non-GAAP financial information relating to gross profit, operating income(loss), and net income(loss) adjusted for certain charges, credits and losses that we believe impacts the comparability of our results of operations.

3

CASH DIVIDEND

The Company today also announced that its Board of Directors voted to declare a $0.02 cash dividend per share to all holders of common stock and a $0.018 cash dividend per share to all holders of Class B common stock. The dividend will be payable on May 22, 2009, to all common stockholders of record on May 8, 2009. The Company currently has 14,865,370 outstanding shares of common stock and 3,048,258 outstanding shares of Class B common stock.

CONFERENCE CALL INFORMATION

On Thursday, April 9, 2009, at 9:00 a.m. CT, Edward J. Richardson, Chairman and Chief Executive Officer, and Kathleen S. Dvorak, Chief Financial Officer, will host a conference call to discuss the Company’s third quarter fiscal 2009 results. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 800-688-0796 and enter passcode 10391141 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:00 a.m. CT on April 9, 2009, for seven days. The telephone numbers for the replay are (USA) 888-286-8010 and (International) 617-801-6888; access code 18111104.

FORWARD-LOOKING STATEMENTS

This release includes certain “forward-looking” statements as defined by the Securities and Exchange Commission. Statements in this press release regarding the Company’s business which are not historical facts represent “forward-looking” statements that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, “Risk Factors” in the Company’s 2008 Annual Report on Form 10-K. The Company assumes no responsibility to update the forward-looking statements in this release as a result of new information, future events, or otherwise.

ABOUT RICHARDSON ELECTRONICS, LTD.

Richardson Electronics, Ltd. is a global provider of engineered solutions and a global distributor of electronic components to the radio frequency (“RF”), wireless and power conversion, electron device, and display systems markets. Utilizing its core engineering and manufacturing capabilities, the Company is committed to a strategy of providing specialized technical expertise and value-added products, or “engineered solutions,” in response to its customers’ needs. These solutions include products which it manufactures or modifies and products which are manufactured to the Company’s specifications by independent manufacturers under its own private labels. Additionally, the Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, and logistics for end products of its customers. More information is available online at www.rell.com.

Richardson Electronics common stock trades on the NASDAQ Global Market under the ticker symbol RELL.

4

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	February 28, 2009			March 1, 2008			February 28, 2009			March 1, 2008
Statements of Operations
Net sales	$	110,316		$	138,866		$	381,814		$	413,316
Cost of sales		86,590			107,625			292,191			315,637
Gross profit		23,726			31,241			89,623			97,679
Selling, general, and administrative expenses		27,686			32,029			84,089			93,312
(Gain) loss on disposal of assets		5,778			(81	)		5,856			(70	)
Operating income (loss)		(9,738	)		(707	)		(322	)		4,437
Other (income) expense:
Interest expense		1,130			1,371			3,489			5,615
Investment (income) loss		33			45			(337	)		(571	)
Foreign exchange (gain) loss		(153	)		(249	)		(2,636	)		1,552
Gain on retirement of long-term debt		—			—			(849	)		—
Other, net		74			25			(92	)		33
Total other (income) expense		1,084			1,192			(425	)		6,629
Income (loss) from continuing operations before income taxes		(10,822	)		(1,899	)		103			(2,192	)
Income tax provision		563			267			1,861			1,045
Loss from continuing operations		(11,385	)		(2,166	)		(1,758	)		(3,237	)
Income (loss) from discontinued operations, net of tax		—			(10	)		—			45
Net loss	$	(11,385	)	$	(2,176	)	$	(1,758	)	$	(3,192	)
Net loss per common share – basic:
Loss from continuing operations	$	(0.65	)	$	(0.12	)	$	(0.10	)	$	(0.18	)
Income (loss) from discontinued operations		0.00			(0.00	)		0.00			0.00
Net loss per common share – basic	$	(0.65	)	$	(0.12	)	$	(0.10	)	$	(0.18	)
Net loss per Class B common share – basic:
Loss from continuing operations	$	(0.58	)	$	(0.11	)	$	(0.09	)	$	(0.17	)
Income (loss) from discontinued operations		0.00			(0.00	)		0.00			0.01
Net loss per Class B common share – basic	$	(0.58	)	$	(0.11	)	$	(0.09	)	$	(0.16	)
Net loss per common share – diluted:
Loss from continuing operations	$	(0.65	)	$	(0.12	)	$	(0.10	)	$	(0.18	)
Income (loss) from discontinued operations		0.00			(0.00	)		0.00			0.00
Net loss per common share – diluted	$	(0.65	)	$	(0.12	)	$	(0.10	)	$	(0.18	)
Net loss per Class B common share – diluted:
Loss from continuing operations	$	(0.58	)	$	(0.11	)	$	(0.09	)	$	(0.17	)
Income (loss) from discontinued operations		0.00			(0.00	)		0.00			0.01
Net loss per Class B common share – diluted	$	(0.58	)	$	(0.11	)	$	(0.09	)	$	(0.16	)
Weighted average number of shares:
Common shares - basic		14,858			14,805			14,856			14,790
Class B common shares - basic		3,048			3,048			3,048			3,048
Common shares - diluted		14,858			14,805			14,856			14,790
Class B common shares - diluted		3,048			3,048			3,048			3,048
Dividends per common share	$	0.020		$	0.020		$	0.060		$	0.100
Dividends per Class B common share	$	0.018		$	0.018		$	0.054		$	0.090

5

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

	February 28, 2009			May 31, 2008
Assets
Current assets:
Cash and cash equivalents	$	32,585		$	40,042
Accounts receivable, less allowance of $1,859 and $1,635		92,468			109,520
Inventories		94,420			93,858
Prepaid expenses		4,662			4,300
Deferred income taxes		1,929			2,121
Total current assets		226,064			249,841
Non-current assets:
Property, plant and equipment, net		20,008			28,635
Goodwill		1,432			1,483
Other intangible assets, net		480			758
Non-current deferred income taxes		3,493			3,875
Assets held for sale		—			105
Other non-current assets		256			1,538
Total non-current assets		25,669			36,394
Total assets	$	251,733		$	286,235
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	53,255		$	58,860
Accrued liabilities		17,376			21,818
Total current liabilities		70,631			80,678
Non-current liabilities:
Long-term debt		52,353			55,683
Long-term income tax liabilities		4,900			6,768
Other non-current liabilities		1,437			1,676
Total non-current liabilities		58,690			64,127
Total liabilities		129,321			144,805
Commitments and contingencies		—			—
Stockholders’ equity
Common stock, $0.05 par value; issued 15,930 shares at February 28, 2009, and 15,929 shares at May 31, 2008		797			797
Class B common stock, convertible, $0.05 par value; issued 3,048 shares at February 28, 2009, and 3,048 shares at May 31, 2008		152			152
Preferred stock, $1.00 par value, no shares issued		—			—
Additional paid-in-capital		120,208			119,735
Common stock in treasury, at cost, 1,065 shares at February 28, 2009, and 1,065 shares at May 31, 2008		(6,310	)		(6,310	)
Retained earnings		8,283			11,098
Accumulated other comprehensive income (loss)		(718	)		15,958
Total stockholders’ equity		122,412			141,430
Total liabilities and stockholders’ equity	$	251,733		$	286,235

6

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	Three Months Ended						Nine Months Ended
	February 28, 2009			March 1, 2008			February 28, 2009			March 1, 2008
Operating activities:
Net loss	$	(11,385	)	$	(2,176	)	$	(1,758	)	$	(3,192	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization		1,103			1,367			3,462			3,940
Gain on retirement of long-term debt		—			—			(849	)		—
(Gain) loss on disposal of assets		5,778			(81	)		5,856			(70	)
Write-off of deferred financing costs		—			—			—			643
Stock compensation expense		164			176			468			523
Deferred income taxes		319			49			259			(930	)
Accounts receivable		6,647			2,401			8,719			7,801
Inventories		4,177			10,115			(6,221	)		8,686
Prepaid expenses		808			685			(414	)		1,217
Accounts payable		(8,207	)		(10,010	)		(2,800	)		1,681
Accrued liabilities		(1,505	)		(1,745	)		(3,737	)		(8,590	)
Other		86			(1,186	)		(1,428	)		(3,451	)
Net cash provided by (used in) operating activities		(2,015	)		(405	)		1,557			8,258
Investing activities:
Capital expenditures		(389	)		(301	)		(887	)		(4,193	)
Proceeds from sale of assets		124			620			175			1,007
Contingent purchase price		165			(160	)		26			(160	)
(Gain) loss on sale of investments		2			121			(8	)		129
Proceeds from sales of available-for-sale securities		25			188			124			345
Purchases of available-for-sale securities		(25	)		(31	)		(124	)		(188	)
Net cash provided by (used in) investing activities		(98	)		437			(694	)		(3,060	)
Financing activities:
Proceeds from borrowings		34,400			51,800			92,300			163,200
Payments on debt		(34,400	)		(41,800	)		(92,300	)		(218,840	)
Retirement of long-term debt		—			—			(2,364	)		—
Restricted cash		—			—			—			61,899
Proceeds from issuance of common stock		—			—			5			69
Cash dividends		(353	)		(351	)		(1,057	)		(1,756	)
Other		—			—			—			(95	)
Net cash provided by (used in) financing activities		(353	)		9,649			(3,416	)		4,477
Effect of exchange rate changes on cash and cash equivalents		(429	)		661			(4,904	)		3,431
Increase (decrease) in cash and cash equivalents		(2,895	)		10,342			(7,457	)		13,106
Cash and cash equivalents at beginning of period		35,480			20,200			40,042			17,436
Cash and cash equivalents at end of period	$	32,585		$	30,542		$	32,585		$	30,542

7

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the Third Quarter and First Nine Months of Fiscal 2009 and 2008

(in thousands)

By Business Unit:

	Net Sales						Gross Profit
	FY 2009		FY 2008		% Change		FY 2009			% of Sales		FY 2008			% of Sales
Third Quarter
RF, Wireless & Power Division	$	80,565	$	93,415	(13.8	)%	$	17,786		22.1	%	$	20,990		22.5	%
Electron Device Group		17,993		25,915	(30.6	)%		5,383		29.9	%		8,375		32.3	%
Canvys		11,743		18,506	(36.5	)%		636	*	5.4	%		2,316	*	12.5	%
Corporate		15		1,030				(79	)				(440	)
Total	$	110,316	$	138,866	(20.6	)%		23,726		21.5	%	$	31,241		22.5	%
	Net Sales						Gross Profit
	FY 2009		FY 2008		% Change		FY 2009			% of Sales		FY 2008			% of Sales
Nine Months
RF, Wireless & Power Division	$	270,882		273,207	(0.9	)%	$	59,955		22.1	%	$	62,457		22.9	%
Electron Device Group		65,254		80,765	(19.2	)%		20,823		31.9	%		26,077		32.3	%
Canvys		45,676		55,880	(18.3	)%		9,122	*	20.0	%		10,028	*	17.9	%
Corporate		2		3,464				(277	)				(883	)
Total	$	381,814	$	413,316	(7.6	)%	$	89,623		23.5	%	$	97,679		23.6	%

* Includes inventory write-downs of $1.8 million and $1.9 million, during the third quarters of fiscal 2009 and fiscal 2008, respectively.

8