Exhibit 10(Z)(2)

IMPORTANT NOTE: THIS IS CLAIMS MADE COVERAGE. PLEASE READ THIS POLICY CAREFULLY.

THIS POLICY, SUBJECT TO THE DECLARATIONS, INSURING AGREEMENTS, TERMS,
CONDITIONS, LIMITATIONS AND AMENDMENTS, APPLIES ONLY TO CLAIM OR CLAIMS THAT ARE
FIRST MADE AGAINST THE INSURED AND REPORTED TO THE INSURER DURING THE POLICY
PERIOD OR DISCOVERY PERIOD (IF APPLICABLE).

THE LIMIT OF LIABILITY AVAILABLE TO PAY JUDGMENTS OR SETTLEMENTS SHALL BE
REDUCED AND MAY BE EXHAUSTED BY AMOUNTS INCURRED FOR DEFENSE COSTS, CHARGES AND
EXPENSES. THE RETENTION(S) APPLY(IES) TO DEFENSE COSTS, CHARGES AND EXPENSES

ST. PAUL MERCURY
INSURANCE COMPANY

EXCESS DIRECTORS AND OFFICERS LIABILITY AND CORPORATE
INDEMNIFICATION POLICY

DECLARATIONS St. Paul, Minnesota 55102
A Capital Stock Company
Herein Called the Insurer

Policy No.: 0512CM0014

Item 1. Named Insured: The Directors and Officers of Richardson Electronics,
Ltd.

Item 2. Address (No., Street, City, State and Zip Code):40W267 Keslinger Road
LaFox, IL 60147

Item 3. Policy Period: From: 5/31/01 To: 5/31/02(12:01 A.M. Standard time at the
address stated in Item 2).

Item 4.Limit of Liability: $15,000,000 each Policy Period in excess of Item
7(E). The limit of liability available to pay judgments or settlements shall be
reduced and may be exhausted by amounts incurred for legal defense costs,
charges and expense.

Item 5. Retentions (Applicable to Section 2(B)(2)):

$250,000
$0
$0 Corporate Indemnification Each Loss
Each Insured Each Loss
Aggregate All Insureds Each Loss

Item 6. Premium: $ 61,000

Item 7. Schedule of Underlying Insurer(s):

 1. Underlying Insurer: Federated Insurance Company
 2. Policy Number: 8125-64-60F
 3. Policy Period: From: 5/31/98 To: 5/31/99
 4. Limit of Liability: $15,000,000
 5. Retentions:
    
    
    $250,000
    $0
    $0 Corporate Indemnification Each Loss
    Each Insured Each Loss
    Aggregate All Insureds Each Loss

Total amount of Underlying Limit of Liability $15,000,000 and any retentions or
deductibles as applicable under the policy(ies) as stated in this Item 7.

Item 8. Subject to the Terms, Conditions and Limitations of this policy as
hereinafter provided, this policy follows the form of:

Insurer's Name: Federated Insurance Company
Policy Number: 8125-64-60F

Item 9. Forms Attached

 1. St. Paul Mercury Insurance Company Policy, Form #50408
 2. Endorsements one through four
 3. St. Paul Mercury Insurance Company Renewal Application, Form #50264
    

INSURING CLAUSE

In consideration of the payment of the premium, in reliance upon the statements
made to the Insurer by application including its attachments, a copy of which is
attached to and forms a part of this policy, and any material submitted
therewith (which shall be retained on file by the Insurer and to be deemed
attached hereto), and except as hereinafter otherwise provided or amended, this
policy is subject to the same Insuring Agreement(s), Terms, Conditions and
Limitations as provided by the policy stated in Item 8 of the Declarations and
any amendments thereto, provided:

A.

 1. the Insurer has received prior written notice from the Insured(s) of any
    amendments to the policy stated in Item 8 of the Declarations, and
 2. the Insurer has given to the Insured(s) its written consent to any
    amendments to the policy stated in Item 8 of the Declarations, and
 3. the Insured has paid any required additional premium.

B. This policy is not subject to the same premium or the amount and Limit of
Liability of the policy stated in Item 8 of the Declarations.

TERMS, CONDITIONS AND LIMITATIONS

Section 1. UNDERLYING INSURANCE

A. It is a condition precedent to the Insured(s) rights under this policy that
the Insured(s) notify the Insurer, as soon as practicable in writing, of a
failure to maintain in full force and effect, except as provided for under
Section 2(B), and without alteration of any Terms, Conditions, Limit of
Liability or Retentions, any of the underlying insurance policies as stated in
Item 7 of the Declarations.

B. Failure to maintain, as set forth above, any of the underlying insurance:
policies as stated in Item 7 of the Declarations, except as provided for under
Section 2(B), shall not invalidate this policy, but the liability of the Insurer
for loss under this policy shall apply only to the same extent it would have
been liable had the underlying insurance policies been maintained as set forth
above. In no event shall the Insurer be liable to pay loss under this policy
until the total amount of the Underlying Limit of Liability, as stated in Item
7(E) of the Declarations, has been paid solely by reason of the payment of loss.

Section 2. LIMIT OF LIABILITY

A. The Insurer shall only be liable to make payment under this policy after the
total amount of the Underlying Limit of Liability as stated in Item 7(E) of the
Declarations has been paid solely by reason of payment of loss.

B. In the event of the reduction or exhaustion of the total amount of the
Underlying Limit of Liability as stated in Item 7(E) of the Declarations solely
by reason of the payment of loss, this policy shall:

 1. in the event of such reduction pay excess of the reduced amount of the
    Underlying Limit of Liability but not to exceed the amount stated in Item 4
    of the Declarations, or
 2. in the event of exhaustion continue in force provided always that this
    policy shall only pay the excess over the Retention amount stated in Item 5
    of the Declarations as respects each and every loss hereunder, but not to
    exceed the amount stated in Item 4 of the Declarations.

C. The Insurers' liability for loss subject to paragraphs (A) and (B) above
shall be the amount in Item 4 of the Declarations which shall be the maximum
liability of the Insurer in the Policy Period stated in Item 3 of the
Declarations. The Limit of Liability of the Insurer for the Discovery Period, if
elected, shall be part of, and not in addition to, the Limit of Liability as
stated in Item 4 of the Declarations.

Section 3. LOSS PROVISIONS

The Insured(s) shall as a condition precedent to the right to be indemnified
under this policy give to the Insurer notice in writing, as soon as practicable
and during the Policy Period or during the Discovery Period, if effective, of
any claim made against the Insured(s).

Section 4. NOTICE

Notice hereunder shall be given to St. Paul Mercury Insurance Company, 385
Washington Street, St. Paul, MN 55102.

Section 5. CANCELLATION

This policy may be cancelled by the Corporation at any time by mailing written
notice to the Insurer at the address shown in Section 4 stating when thereafter
such cancellation shall be effective or by surrender of this policy to the
Insurer or its authorized agent. This policy may also be cancelled by or on
behalf of the Insurer by delivering to the Corporation or by mailing to the
Corporation by registered, certified, or other first class mail, at the
Corporation's address as shown in Item 2 of the Declarations, written notice
stating when, not less than sixty (60) days thereafter, the cancellation shall
be effective. The mailing of such notice as aforesaid shall be sufficient proof
of notice. The Policy Period terminates at the date and hour specified in such
notice, or at the date and time of surrender.

If the period of limitation relating to the giving of notice is prohibited or
made void by law controlling the construction thereof, such period shall be
deemed to be amended so as to be equal to the minimum period of limitation
permitted by such law.

Section 6. DISCOVERY PERIOD

If the Insurer shall cancel or refuse to renew (refusal to renew is hereafter
referred to as non-renewal) this policy, the Corporation or the Insureds shall
have the right, upon payment to the additional premium of 75% of the premium
hereunder, to an extension of the cover granted by this policy to report any
claim or claims in accordance with Section 3, which claim or claims are made
against the Insureds during the period of twelve (12) months after the effective
date of cancellation or non-renewal, herein called the Discovery Period, but
only for any Wrongful Act committed before the effective date of such
cancellation or non-renewal and otherwise covered by this policy.

This right shall terminate, however, unless the Corporation of the Insureds
provide written notice of such election together with the payment of the
additional premium due and this is received by the Insurer at the address shown
in Section 4 within ten (10) days after the effective date of cancellation or
non-renewal.

Discovery Period wherever used in this policy shall also mean optional extension
period or extended reporting period as defined by the policy stated in Item 8 of
the Declarations.

The offer by the Insurer of renewal terms, conditions, limits of liability
and/or premiums different from those of the expiring policy shall not constitute
non-renewal.

The provisions of this Section 6 and the rights granted herein to the
Corporation or the Insureds shall not apply to any cancellation resulting from
non-payment of premium.

Section 7. NUCLEAR ENERGY LIABILITY EXCLUSION

It is agreed that:

A. This policy does not apply:

 1. Under any Liability Coverage, to bodily injury or property damage
    
    a. with respect to which an Insured under this policy is also an Insured
    under a nuclear energy liability policy issued by Nuclear Energy Liability
    Insurance Association, Mutual Atomic Energy Underwriters or Nuclear
    Insurance Association of Canada, or would be an Insured under any such
    policy but for its termination upon exhaustion of its limit of liability; or
    
    b. resulting from the hazardous properties of nuclear material and with
    respect to which (1) any person or organization is required to maintain
    financial protection pursuant to the Atomic Energy Act of 1954, or any law
    amendatory thereof, or (2) the Insured is, or had this policy not been
    issued would be, entitled to indemnity from the United States of America, or
    an agency thereof, under any agreement entered into by the United States of
    America, or any agency thereof with any person or organization.
    
    
 2. Under any Medical Payments coverage, or under any Supplementary Payments
    provision relating to first aid, to expenses incurred with respects to
    bodily injury resulting from the hazardous properties of nuclear material
    and arising out of the operation of a nuclear facility by any person or
    organization.
    
    
 3. Under any Liability Coverage, to bodily injury or property damage resulting
    from the hazardous of nuclear material, if
    
    a. the nuclear material (1) is at any nuclear facility owned by, or operated
    by or on behalf of an Insured or (2) has been discharged or dispersed
    therefrom;
    b. the nuclear material is contained in spent fuel or waste at any time
    possessed, handled, used, processed, stored, transported or disposed of by
    or on behalf of an Insured, or
    c. the bodily injury or property damage arises out of the furnishing by an
    Insured of services, materials, parts or equipment in connection with the
    planning, construction, maintenance, operation or use of any nuclear
    facility, but if such facility is located within the United States of
    America, its territories or possessions or Canada, this exclusion (c)
    applies only to property damage to such nuclear facility and any property
    thereat.

B. As used in this exclusion:

"hazardous properties" include radioactive, toxic or explosive properties;

"nuclear material" means source material, special nuclear material or by-pro
duct material;

"source material," "special nuclear material," and by-product material have the
meanings given them in the Atomic Energy Act of 1954 or in any law amendatory
thereof;

"spent fuel" means any fuel element or fuel component, solid or liquid, which
has been used or exposed to radiation in a nuclear reactor;

"waste means any waste material (1) containing by-product material and (2)
resulting from the operation by any person or organization of any nuclear
facility included within the definition of nuclear facility under paragraph
(1)or (2) thereof;

"nuclear facility" means

(1) any nuclear reactor,

(2) any equipment or device designed or used for (1) separating the isotopes of
uranium or plutonium, (2)processing or utilizing spent fuel, or (3) handling,
processing or packaging waste,

(3) any equipment or device used for the processing, fabricating or alloying of
special nuclear material if at any time the total amount of such material in the
custody of the Insured and the premises where such equipment or device is
located consists of or contains more than 25 grams of plutonium or uranium 233
or any combination thereof, or more than 250 grams of uranium 235,

(4) any structure, basin, excavation, premises or place prepared or used for the
storage or disposal of waste and includes the site on which any of the foregoing
is located, and operations conducted on such site and all premises used for such
operations;

Anuclear reactor" means any apparatus designed or used to sustain nuclear
fission in a self-supporting chain reaction or to contain critical mass of
fissionable material, "property damage" includes all forms of radioactive
contamination of property.

Section 8. ACTION AGAINST THE INSURER

No action shall lie against the Insurer unless, as a condition precedent
thereto, there shall have been full compliance with all of the terms of this
policy, not until the amount of the Corporation's obligation to pay and/or the
Insured's obligation to pay have been finally determined either by judgment
against the Insureds after actual trial or by written agreement of the
Corporation and/or the Insureds, the claimant and the Insurer.

Any person or organization or the legal representative thereof who has secured
such judgment or written agreement shall thereafter be entitled to recover under
this policy to the extent of the insurance afforded by this policy. No person or
organization shall have any right under this policy to join the Insurer as a
party to any action against the Corporation and/or Insureds to determine the
Insureds' liability, nor shall the Insurer be impleaded by the Corporation
and/or Insureds of their legal representatives. Bankruptcy or insolvency of the
Corporation or the Corporation's estate, or bankruptcy or insolvency of the
Insureds' estate shall not relieve the Insurer of any of its obligations
hereunder.

IN WITNESS WHEREOF, the Insurer designated on the Declarations page has caused
this policy to be signed by its President and Secretary and countersigned on the
Declarations page by a duly authorized representative of the Insurer.

Secretary President
Paul D. Zicarelli Deufetherdale

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ENDORSEMENT OR RIDER NO. 4

The following spaces preceded by an (*)need not be completed if this endorsement
or rider and the Bond or Policy have the same inception date.

ATTACHED TO AND FORMING PART DATE ENDORSEMENT OR EFFECTIVE DATE OF BOND OR
POLICY NO.: 512CM0014

DATE ENDORSEMENT OR RIDER EXECUTED: 5/31/98

* EFFECTIVE DATE OF ENDORSEMENT OR RIDER: 12:01 A.M. STANDARD TIME AS SPECIFIED
IN THE BOND OR POLICY

REPORTED INCIDENTS EXCLUSION
M1117 Ed. 3-90

In consideration of the premium charged, it is hereby understood and agreed that
under this policy the Insurer shall not be liable to make any payment for Loss
in connection with any claim or claims made against the Insured(s) arising from
any circumstances of which notice has been given under any insurance in force
prior to the inception date of this policy including any applicable discovery
period.

[  ] (If this box is x'd, the signature requested below is required.)
ACCEPTED BY INSURED By:________________________
Title:________________________________

Nothing herein contained shall be held to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Bond or Policy, other than as above stated.

ST. PAUL MERCURY INSURANCE COMPANY
In Witness Hereof the company has caused this endorsement
to be signed by a duly authorized representative of the Company.

By:_________________________
Authorized Representative
AGENT

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ENDORSEMENT OR RIDER NO. 3

The following spaces preceded by an (*) need not be completed if this
endorsement or rider and the Bond or Policy have the same inception date.

ATTACHED TO AND FORMING PART DATE ENDORSEMENT OR EFFECTIVE DATE OF BOND OR
POLICY NO.: 512CM0014

DATE ENDORSEMENT OR RIDER EXECUTED: 5/31/98

* EFFECTIVE DATE OF ENDORSEMENT OR RIDER: 12:01 A.M. STANDARD TIME AS SPECIFIED
IN THE BOND OR POLICY

SPECIFIC EVENT EXCLUSION
M1316 Ed. 12/92

In consideration of the premium charged, it is hereby understood and agreed that
under this policy the Insurer shall not be liable to make any payment for Loss
in connection with any claim or claims made against the Insured(s) based upon,
arising out of or attributable to or in any way involving the

 1. Panache Broadcasting of Pennsylvania, Inc. v. Richardson Electronics, Ltd.;
    Varian Associates, Inc.; and Varian Supply Company ( Case No. 90 C 6400); or
    
    
 2. A contract to supply tubes to the United States Government which was
    completed in 1989 as described in Note K -Litigation on page 23 of the
    Richardson Electronics, Ltd. 1994 Annual Report; or
    
    
 3. Arius, Inc. v. Richardson Electronics, Ltd., Flint Cooper, William
    Alexander, Kevin Dutton (case number Cl. 95-202 in the Circuit Court of the
    Ninth Judicial Circuit in and for Orange County, Florida)

[  ] (If this box is x'd, the signature requested below is required.)
ACCEPTED BY INSURED By:___________________________
Title:__________________________

Nothing herein contained shall be held to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Bond or Policy, other than as above stated.

ST. PAUL MERCURY INSURANCE COMPANY
In Witness Hereof the company has caused this endorsement
to be signed by a duly authorized representative of the Company.

By:___________________________
Authorized Representative
AGENT

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ENDORSEMENT OR RIDER NO. 2

The following spaces preceded by an (*) need not be completed if this
endorsement or rider and the Bond or Policy have the same inception date.

ATTACHED TO AND FORMING PART DATE ENDORSEMENT OR EFFECTIVE DATE OF BOND OR
POLICY NO.: 512CM0014

DATE ENDORSEMENT OR RIDER EXECUTED: 5/31/98

* EFFECTIVE DATE OF ENDORSEMENT OR RIDER: 12:01 A.M. STANDARD TIME AS SPECIFIED
IN THE BOND OR POLICY

PRIOR AND PENDING LITIGATION EXCLUSION
M1150 Ed. 3-90

In consideration of the premium charged, it is hereby understood and agreed that
the Insurer shall not be liable to make any payment for loss in connection with
any claim or claims made against the Insured(s) arising from any prior or
pending litigation as of 5-31-90, as well as all future claims or litigation
based upon the pending or prior litigation or derived from the same or
essentially the same facts (actual or alleged) that gave rise to the prior or
pending litigation.

[  ] (If this box is x'd, the signature requested below is required.)
ACCEPTED BY INSURED By:________________________
Title:____________________________

Nothing herein contained shall be held to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Bond or Policy, other than as above stated.

ST. PAUL MERCURY INSURANCE COMPANY
In Witness Hereof the company has caused this endorsement
to be signed by a duly authorized representative of the Company.

By:_________________________________
Authorized Representative
AGENT

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ENDORSEMENT I

The following spaces preceded by an asterisk (*) need not be completed if this
endorsement and the policy have the same inception date.

ATTACHED TO AND FORMING PART OF POLICY NO.: 512CM0014

* EFFECTIVE DATE OF ENDORSEMENT OR RIDER: 5/31/98

* ISSUED TO: RICHARDSON ELECTRONICS

ILLINOIS AMENDATORY ENDORSEMENT
M 1137 Ed. 6-90

In Consideration of the premium charged, it is hereby understood and agreed
that:

1. The first paragraph under Section 5. CANCELLATION is and substituted with the
following:

This policy may be cancelled by the Corporation at any time by mailing written
notice the Insurer at the address shown in Section 4 stating when thereafter
such cancellation shall be effective or by surrender of this policy to the
Insurer or its authorized agent. This policy may also be cancelled by or on
behalf of the Insurer by mailing to the Corporation, by registered, certified or
other first class mail, at the last mailing adress known to the Insurer, written
notice stating when, not less than sixty (60) days thereafter, the cancellation
shall be effective. All such notices shall contain the specific reason(s) for
cancellation. If this policy has been in effect, for more than sixty (60) days
the cancellation must be for one of the following reasons:

A. Nonpayment of premium;
B. Misrepresentation or fraud made by or with the knowledge of the Corporation
or Insureds in obtaining the policy or in pursuing a claim under the policy;
C. A violation by any Insured of any of the terms and conditions of the policy;
D. A substantial increase in the risk originally assumed;
E. Loss of reinsurance by the Insurer which provided coverage to the insurer for
a significant amount of the underlying risk insured. Certification of the loss
of reinsurance must be given to the Director of Insurance.
F. A determination by the Director of Insurance that the continuation of the
policy would place the Insurer in violation of the insurance law of the State of
Illinois.

Nothing herein contained shall be hold to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned policy, other than as above stated.

In Witness Whereof, the Company
has caused this endorsement to
*Agency Name and Address be signed by a duly authorized representative of the
Company

___________________________
Authorized Representative
AGENT

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ENDORSEMENT 1

The following spaces preceded by an asterisk (*) need not be completed if this
endorsement and the policy have the same inception date.

ATTACHED TO AND FORMING PART OF POLICY NO.: 512CM0014

* EFFECTIVE DATE OF ENDORSEMENT OR RIDER: 5/31/98

* ISSUED TO: RICHARDSON ELECTRONICS

It is further agreed that this policy may be non renewed by or on behalf of the
Insurer by mailing written notice to the Corporation, by registered, certified,
or other first class mail, at the last mailing address known to the Insurer. All
such notices shall contain the specific reason(s) for non renewal. It is further
agreed that non renewal of this policy will be effective sixty (60) days after
receipt of the Insured of written notice from the Insurer of its desire to non
renew this policy, or at the time and date set forth in the notice of non
renewal, provided sixty (60) day notice has been given the Corporation prior to
said date.

2. It is further understood and agreed that Section 6. DISCOVERY PERIOD is
hereby deleted in its entirety and replaced with the following:

If the Insurer or the Insured(s) shall cancel or refuse to renew (refusal to
renew is hereafter referred to as non-renewal) this policy, the Corporation or
the Insured(s)shall have the right, upon payment of the a additional premium of
seventy five percent (75%) of the expiring annual premium hereunder to report
any claim or claims in accordance with Section 3, which claim or claims are made
against the Insured(s) during the period of twelve (12) months after the
effective date of cancellation or non-renewal, herein called the Discovery
Period, but only for any Wrongful Act committed before the effective date of
such cancellation or non-renewal and otherwise covered by this policy.

This right shall terminate, however, unless the Corporation or the Insured(s)
provide written notice of such election together with the additional premium due
and this is received by the Insurer at the address shown in Section 4 within
thirty (30)days after the effective date of cancellation or non-renewal.

The additional premium for the Discovery Period shall be fully earned at the
inception of the Discovery Period. The Discovery Period is not cancellable.

Nothing herein contained shall be hold to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned policy, other than as above stated.

In Witness Whereof, the Company
has caused this endorsement to by
*Agency Name and Address a duly be signed authorized representative of the
Company

_________________________
Authorized Representative
AGENT