Exhibit 10.1
Cray 2007 Cash Incentive Plan
     The Cray 2007 cash incentive plan, as applicable to executive officers,
establishes multiple performance goals with varying weights (totaling 100) to
determine the amount of a potential cash award for each participant. The
performance goals, which differ for each executive officer depending on the
officer’s responsibilities, include such factors as product revenue, product
gross margin dollars, product bookings, total gross margin dollars, pre-award
operating income, departmental expenditure levels and specific product
development targets. For 2007, the percentage based on meeting the specific
performance goals varies from 75% to 90% for executive officers, and the amount
dependent upon qualitative and quantitative personal strategy and leadership
goals varies from 25% to 10% for executive officers. Each participant in the
Cray 2007 plan is assigned a percentage of his or her base salary as a target
award, as approved by the Board. For the executive officers, the target awards
are the same as last year: For Mr. Scott, Mr. Silverman and Mr. Johnson - 50%,
for Ms. Williams and Mr. Henry — 60% and for Mr. Ungaro -150%.
     Each performance goal will have a threshold level of performance, at which
a 50% award is payable, a plan level of performance, at which a 75% award is
payable, a target level of performance, at which a 100% award is payable and a
stretch goal, at which a 150% award is payable. Pro-rata interpolation will be
used for performance levels between these goals. Awards cannot exceed more than
100% of target award unless 2007 bookings exceed a pre-determined level. For
this purpose, bookings are defined as firm contracts entered into after
January 1, 2007, for new product sales expected to be recognized as revenue in
2007 or in 2008. Any award higher than 150% of target is at the Board’s
discretion.
     No award will be paid under the 2007 plan unless the Company has net income
on its 2007 audited financial statements.
     The Chief Executive Officer, subject to final approval by the Compensation
Committee, retains the right to adjust the formula award (from 0% to 125%) for
each other officer. The Board approves the final award for the Chief Executive
Officer.
     In addition, Mr. Ungaro, Mr. Henry and Ms. Williams will receive an
additional payment of $250,000, $75,000 and $75,000, respectively, if 2007
pre-award results from operations exceed a pre-determined level higher than
plan.
     For purposes of calculating the results from operations for the 2007 plan
and for the additional payment, any charges due to SFAS 123(R) stock
compensation, new restructuring plans, incentive plan awards, bonuses and
retention incentives, are excluded. To the extent there are other unplanned
significant transactions or charges, the Compensation Committee would determine
what adjustments, if any, are appropriate in determining the results from
operations for purposes of determining the payments.