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                                                                    EXHIBIT 10.1


                             DISTRIBUTION AGREEMENT

        This Agreement is entered into as of February 28, 2001, between NEC
Corporation, a Japanese corporation with its principal place of business at 7-1,
Shiba 5-chome, Minato-ku, Tokyo 108-8001, Japan ("NEC"), and Cray Inc., a
Washington corporation with its principal place of business at 411 First Avenue
South, Suite 600, Seattle, WA 98104-2860, U.S.A. ("Cray").

                                    RECITALS:

        A. NEC is in the business of manufacturing and selling high-performance
vector supercomputers. Cray has expertise and capabilities for the distribution
of such computers.

        B. NEC desires to appoint Cray as its exclusive North American
distributor for NEC's vector supercomputers, as described more particularly in
Section 3, and the software, component parts, and spare parts associated with
such vector supercomputers, and as a non-exclusive distributor of the Products
elsewhere in the world, and Cray is willing to be such distributor, all in
accordance with the terms and conditions of this Agreement.

        C. Concurrently with this Agreement, the parties are entering into a
Preferred Stock Purchase Agreement (the "Stock Purchase Agreement") and certain
other related agreements (collectively the "Other Agreements"). Except as
otherwise defined in this Agreement, all capitalized terms shall have the
meanings assigned to them in the Stock Purchase Agreement.

        Now, therefore, in consideration of the premises and covenants contained
herein, the parties agree as follows:

1.      Term. The initial term of this Agreement (the "Term") shall be
        conditioned upon and commence upon the closing under the Stock Purchase
        Agreement, and continue through March 31, 2011. Within ninety (90) days
        after the fifth anniversary of this Agreement, the parties shall, at the
        request of either party, meet to review the performance of the parties
        with regard to their obligations hereunder. If, pursuant to such
        meeting, it is found that either party has materially breached its
        obligations hereunder, the other party may terminate this Agreement upon
        thirty (30) days prior written notice to the breaching party. If neither
        party gives the other such notice of termination, this Agreement shall
        continue in effect for the Term; provided, however, that the Term shall
        be subject to early termination as provided in Sections 9, 14 and 19.11.

2.      Products. As used herein, the term "Products" means (i) NEC vector
        supercomputers, present and future, including the SX-5, the SX-5X, and
        any other NEC supercomputers using vector processors, including spare
        parts, and (ii) their software products. The Products shall be specified
        in the product list to be separately provided by NEC from time to time.
        Nothing herein shall be construed


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        as obligating NEC to continue development of vector supercomputers
        beyond SX-5X. NEC reserves the right to discontinue supplying all or
        some of the Products at its option and at any time during the Term,
        provided that (i) NEC discontinues all sales of such Product in all
        countries, (ii) notwithstanding that a final decision on discontinuance
        has not been made, NEC gives Cray NEC's informal plan with respect to
        the expected date of discontinuance promptly after NEC believes that (A)
        all or some of the Products are likely to be discontinued, or (B) the
        date or any other material provision of any prior notice of
        discontinuance has changed, and (iii) NEC gives at least three (3)
        months prior notice to Cray of the date on which NEC will no longer
        accept purchase orders for such Products. The discontinuance of a
        Product shall not excuse NEC's obligation to fill accepted orders.

3.      Territory/Exclusivity. Subject to the terms and conditions of this
        Agreement, NEC hereby grants Cray and Cray hereby accepts (i) the
        exclusive right to sell and distribute the Products in the United
        States, Canada and Mexico (together, the "Exclusive Territory") and (ii)
        to the extent permissible under EU and other applicable antitrust laws
        and regulations (as confirmed by opinions or other legal advice of
        qualified counsel to the respective parties) the non-exclusive right to
        sell and distribute the Products in the rest of the world (the
        "Non-Exclusive Territory" and together with the Exclusive Territory the
        "Territory"). In the event that the parties are unable to confirm that
        distribution in a particular territory is permissible under such laws
        and regulations, the parties will discuss in good faith the feasibility
        of amending this Agreement as it relates to such territory to the
        minimum extent necessary so that the grant of non-exclusive rights is
        permissible under such laws and regulations. Cray's non-exclusive
        distribution rights in the Non-Exclusive Territory are subject to NEC's
        existing exclusive distributor agreements, which are listed in the
        attached Exhibit A. During the Term, NEC will not without Cray's consent
        (i) sell Products knowingly (directly or indirectly) into the Exclusive
        Territory, (ii) appoint any other distributor of the Products for the
        Exclusive Territory, or (iii) sell the Products to any reseller that it
        knows is selling the Products for installation in the Exclusive
        Territory. During the Term, Cray will not sell vector supercomputers
        manufactured by any party unrelated to Cray or NEC. A vector
        supercomputer is any computer with a vector hardware unit as an integral
        part of its central processing unit boards.

4.      Pricing.

        4.1    Determination of Prices. NEC will sell the Products (excluding
               spare parts, the purchase prices for which are provided for in
               Section 2.2.4 of Schedule A of the Maintenance Agreement) to Cray
               at *% of the List

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* Confidential material has been intentionally omitted at this point pursuant to
a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.


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               Prices for SX-5 computers and *% of the List Prices for SX-5X
               computers and Products released by NEC following the commencement
               of the Term. For this purpose the term "List Prices" refers to
               NEC's standard international list prices for the Products (which
               prices shall be the same for all countries, except Japan), as
               published from time to time (such publication, the "Price List").
               NEC reserves the right to change any List Price at any time upon
               not less than thirty (30) days prior notice. Cray will have the
               exclusive right to control prices to its customers. NEC shall
               consider in good faith on a case-by-case basis any request by
               Cray to lower prices to Cray for special competitive situations;
               provided, that the final determination to lower prices shall be
               within NEC's sole discretion. In connection with any such
               request, Cray shall provide NEC with reasonably detailed
               information regarding the special situation. All transfer prices
               of the Products are CIP at Cray's designated port/airport in the
               Territory, provided, however, that NEC shall pay all export and
               shipping costs. "CIP" means "Carriage And Insurance Paid To" as
               defined in INCOTERMS 2000.

        4.2    Most Favored Nation. The Marketing Coordination Board created
               pursuant to the Sales and Marketing Services Agreement shall meet
               twice during each year of the Term to discuss whether during the
               preceding twelve months the parties have achieved the objective
               that *. In the event that the parties agree that this objective
               has not been achieved, then the parties shall discuss what
               adjustments, if any, to the transfer prices set forth in Section
               4.1 are appropriate.

        4.3    RPQ. In the event that Cray receives a request from a customer or
               prospective customer for a special, nonstandard feature or
               capability of the Products supplied by Cray, and Cray determines
               that there is no reasonable alternative method of satisfying the
               request for such feature or capability without requesting that
               NEC modify the Product, and NEC agrees to such determination,
               Cray may submit to NEC a Request for Price Quotation ("RPQ") that
               NEC modify such Product. Provided that the Product in question is
               designed and manufactured by NEC, and has not been subsequently
               modified other than by NEC, NEC shall negotiate such RPQ in good
               faith with Cray and shall, if mutual agreement is reached as to
               terms and conditions, including reasonable charges for such RPQ,
               use its reasonable efforts to modify the Product in the manner
               requested by Cray. Cray shall also pay NEC's reasonable charges
               for consulting with Cray with respect to a proposed RPQ.
               Notwithstanding the foregoing, if the requested feature or
               capability is, in NEC's judgment, commonly applied to the
               Products for NEC customers, NEC will bear the cost.

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* Confidential material has been intentionally omitted at this point pursuant to
a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.


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        4.4    Improvement and Enhancement. In the event Cray requests of NEC
               any improvements or modifications of the software products
               included in the Products or listed in NEC's Price List (the
               "Software Products"), NEC shall discuss with Cray in good faith
               the technical possibility of such requested improvements or
               modifications and, if they are technically possible, NEC and Cray
               shall further discuss in good faith (i) the specifications of
               such requested improvements or modifications, (ii) the possible
               time schedule of delivery of Software Products which include such
               requested improvements or modifications and (iii) the costs to be
               borne by Cray for such requested improvements or modifications.
               In the event that NEC produces Software Products with
               improvements or modifications, NEC shall not be obligated to
               furnish Software Products which include all accumulated
               improvements and modifications more frequently than twice a year.

5.      Title; Delivery. Title to and risk of loss or damage to the Products
        ordered by Cray shall pass to Cray upon NEC's delivery of the Products
        to the carrier in Japan (the "Delivery"). Unless otherwise agreed upon
        between the parties, NEC shall pack the Products in accordance with
        NEC's standard overseas packing.

6.      Forecasts; Orders; Shipment.

        6.1    Forecast. On or before 5th business day of each month during the
               Term, Cray shall provide NEC with an eighteen (18) month rolling
               forecast which will state the number of the Products by model
               number and system configuration of which Cray reasonably
               forecasts it will request delivery. Such forecasts shall not
               constitute a firm order to purchase by Cray nor a firm commitment
               to sell by NEC. Cray shall use commercially reasonable efforts to
               provide NEC with accurate forecasts. Commitment to sell a
               particular Product shall arise only upon the acceptance by NEC of
               Cray's purchase order for such Product (such purchase order and
               acceptance, a "Contract").

        6.2    Orders. Cray shall make purchases by submitting firm purchase
               orders to NEC in such form and manner as NEC may reasonably
               request, provided, that the terms of such form comply with the
               terms of this Agreement, and NEC will promptly accept or reject
               such purchase orders. NEC shall accept such purchase orders with
               a requested delivery date at least six (6) months after the date
               of NEC's receipt of such purchase orders. Each purchase order
               that NEC is obligated to accept pursuant to the foregoing
               sentence is a "Standard Purchase Order." NEC may, at its sole
               discretion, accept purchase orders with an delivery date six (6)
               months or less from the date of NEC's receipt of such purchase
               orders. If a shortage of production capacity due to prior pending
               contracts will prevent NEC from delivering a Product by the
               delivery date requested in a Standard Purchase Order, then: (i)
               NEC shall promptly notify Cray that NEC will not be able


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               to meet the requested delivery date and provide Cray with a list
               of available delivery dates and (ii) the Standard Purchase Order
               shall become a Contract upon Cray's notice to NEC of Cray's
               acceptance of an available delivery date. If none of the
               available delivery dates provided by NEC are satisfactory to Cray
               or Cray's customer, Cray and NEC shall attempt to agree on an
               acceptable date. Cray's minimum order obligations pursuant to
               Section 9 shall be reduced by the amount of any Firm Orders (as
               defined in Section 9.1) lost due to NEC's inability to deliver
               Products by the requested delivery date in a Standard Purchase
               Order. The terms and conditions of this Agreement shall prevail
               over any inconsistent terms of sale in any Contract, unless such
               inconsistency is agreed to in a writing signed by both parties
               expressly stating that it is a deviation from this Agreement.
               Unless otherwise expressly agreed upon between the parties in
               writing, once accepted by NEC, a Contract will be binding upon
               the parties.

        6.3    Shipment. NEC shall deliver the ordered Products to Cray in
               accordance with the relevant Contract and this Agreement. If NEC
               is unable to meet the requested delivery date specified in any
               Contract, the parties will promptly establish a date mutually
               acceptable to the parties; provided, however, that NEC shall
               deliver such Products to Cray as quickly as reasonably possible.
               Shipment will be by air freight from Japan to locations within
               the Territory reasonably specified by Cray.

        6.4    Approvals. Export licenses and other legally required approvals
               for the Products shipped by NEC hereunder shall be the
               responsibility of NEC, and import licenses and other legally
               required import approvals shall be the responsibility of Cray
               (all such licenses and approvals, the "Approvals"). Each party
               shall use commercially reasonable efforts to promptly obtain the
               Approvals for which it is responsible, and NEC shall not be
               required to ship any Product until its receipt of all required
               Approvals. If shipment of the Products is delayed due to delays
               in granting or securing Approvals (other than by reason of a
               breach of the foregoing sentence), then the parties will seek to
               establish a mutually agreeable alternate date of shipment without
               penalty by reason thereof.

        6.5    Restrictions on Use of Products. Cray agrees that the Products
               supplied hereunder shall not be used, sold and/or otherwise
               disposed for the development and/or manufacture of weapons of
               mass destruction, or for use in or as any other type of weapons.
               Should the Products be used for the development and/or
               manufacturing of weapons of mass destruction or for use in or as
               any other type of weapons, NEC shall have the right to
               immediately terminate the relevant Contract, disclaiming all
               liability on the part of NEC, and Cray shall indemnify NEC for
               all damages and losses of any nature caused by or arising out of
               Cray's breach of this Section 6.5. In connection with Cray's
               distribution of Products to its customers


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               hereunder, Cray shall first obtain from such customers a written
               contract with a provision having the same kind of disclaimer and
               indemnification as in this Section 6.5.

7.      Acceptance. Prior to Delivery, NEC will test the Products for
        conformance to their respective specifications in accordance with its
        standard test procedures, certify all Products which pass as having
        passed such tests, and supply appropriate test details and results to
        Cray along with the Products. Cray may perform confirmation tests using
        NEC test procedures at Cray's or Cray's customer's site. Upon request,
        NEC will cooperate reasonably with Cray for such tests.

8.      Payment. The purchase price for the Products will be paid in United
        States dollars within sixty (60) days following the Delivery by means of
        document against acceptance ("D/A"). Amounts not paid when due will bear
        a late payment charge of 1.5% percent per month or the maximum legal
        rate, whichever is less. If installation of any Product by Cray at the
        customer's site is delayed due to the fault of NEC, including without
        limitation any nonconformance of the Product with the warranty in
        Section 10.1, then NEC will pay Cray interest on the amount actually
        paid to NEC for such Product at the rate of 1.5% per month or the
        maximum legal rate, whichever is less, for any period of delay exceeding
        60 days. In the event that D/A payment is not accepted by a bank or NEC
        cannot obtain cargo insurance for reasons attributable to Cray, both
        parties shall discuss in good faith and agree upon alternatives,
        including increase of the transfer price, opening a security account, or
        provision of letters of credit or other financial assurance, for
        reducing NEC's risks arising therefrom.

9.      Cray Performance Requirements.

        9.1    Minimum Orders. During each overlapping two-year period during
               the Term (each an "Order Period"), Cray must submit to NEC Firm
               Orders for Products to be sold that satisfy at least one of the
               two minimum volume options in Sections 9.1.1 and 9.1.2. For
               purposes of this Section 9, "Firm Orders" means all Standard
               Purchase Orders (as defined in Section 6.2) and any other
               purchase orders that are accepted by NEC hereunder. The initial
               Order Period runs from April 1, 2001 through March 31, 2003; the
               second Order Period runs from April 1, 2002 through March 31,
               2004; and the third Order Period runs from April 1, 2003 through
               March 31, 2005, and so on throughout the Term.

               9.1.1  Minimum Order Volume Option. To satisfy this option,
                      during each Order Period Cray must submit Firm Orders that
                      total at least


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                      $* during the first Order Period, $* during the second
                      Order Period, and $* during the third Order Period and
                      each subsequent Order Period (each of the foregoing
                      amounts, a "Minimum Order Volume"). To satisfy the
                      requirements of this Section 9.1.1, not less than *% of
                      the Minimum Order Volume for each Order Period must be
                      attributable to sales by Cray in the Exclusive Territory.
                      The balance of the Minimum Order Volume for each Order
                      Period may be attributable to Incremental Sales.
                      "Incremental Sales" are sales by Cray in the Non-Exclusive
                      Territory (i) for which NEC did not submit a Best and
                      Final Order (BAFO) in procurements for which a BAFO is
                      required, or (ii) where no BAFO is required, sales in
                      which NEC did not submit an offer equivalent to a BAFO.
                      The parties shall consult regarding the identification of
                      Incremental Sales. For the avoidance of doubt, Minimum
                      Order Volumes shall be calculated on the basis of the
                      transfer prices actually paid to NEC by Cray for the
                      Products.

               9.1.2  Percentage Order Volume Option. To satisfy this option,
                      during each Order Period, Cray must submit Firm Orders to
                      NEC representing Cray Revenues of at least the Minimum
                      Percentage of SX Revenues. "Minimum Percentage" means,
                      during the first Order Period, *%; during the second Order
                      Period, *%; and during the third Order Period and each
                      following Order Period, *%. "SX Revenues" means worldwide
                      gross revenues from all sales of the Products, including,
                      without limitation, revenues from sales by Cray of the
                      Products hereunder, but excluding (i) revenues from sales
                      by NEC in Japan and sales to NEC or to its majority-owned
                      subsidiaries (to the extent that NEC or such subsidiaries
                      are intended to be the end-users of the Products sold)
                      and, (ii) revenues from Incremental Sales. "Cray Revenues"
                      means Cray's gross revenues from Firm Orders for sales of
                      Products in the Exclusive Territory. For purposes of this
                      Section 9.1.2, revenue shall equal the price at which the
                      Products are sold to end-users.

        If in any Order Period Cray fails to satisfy both of the minimum order
volume options set forth above, NEC may as its exclusive remedy, after at least
ninety (90) days written notice to Cray, (i) change the exclusive
distributorship of Cray in North America into a non-exclusive distributorship,
(ii) terminate Cray's distributorship in North America, or (iii) terminate this
Agreement.

        The parties recognize that the above figures are minimums only, and that
Cray's objective in entering into this Agreement is to sell greater volumes of
Products as

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* Confidential material has been intentionally omitted at this point pursuant to
a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.


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follows: Firm Orders to NEC of $* in the first Order Period, $* in the second
Order Period, and $* in the third and each subsequent Order Period.

        9.2    Revenue Determination.

               9.2.1  Cray Revenues and SX Revenues shall be determined by
                      reference to the vector computer sales data published by
                      the International Data Corporation ("IDC") following the
                      close of each Order Period relating to such Order Period
                      (the "Sales Data"). If either party disputes the Sales
                      Data, it may request IDC investigate the Sales Data, in
                      which event any adjusted Sales Data republished by IDC
                      shall be the Sales Data; provided, that neither party is
                      obligated to wait for IDC to investigate or publish
                      adjusted Sales Data before pursuing the remedy set forth
                      in Section 9.2.4 below.

               9.2.2  NEC shall provide IDC with accurate information regarding
                      its sales to the extent necessary to permit IDC to
                      determine the SX Revenues. Cray shall provide IDC with
                      accurate information regarding its sales to the extent
                      necessary to permit IDC to determine the Cray Revenues.

               9.2.3  In the event that the Sales Data published by IDC is
                      insufficient to calculate SX Revenues or Cray Revenues or
                      is not available or timely at the close of an Order
                      Period, the parties shall request IDC prepare and publish
                      a bulletin containing sufficient Sales Data to determine
                      the SX Revenues and Cray Revenues.

               9.2.4  In the event that either party disputes the Sales Data or
                      cannot obtain all necessary Sales Data within thirty (30)
                      days following the close of an Order Period, either party
                      may submit the determination of the SX Revenues and Cray
                      Revenues to determination by arbitration in accordance
                      with Section 18.1.

        9.3    Sales Efforts. Cray shall use commercially reasonable efforts to
               sell and promote the sale of the Products in the Exclusive
               Territory, which shall be at least equivalent to Cray's efforts
               to sell and promote the sale of its supercomputers in the
               Exclusive Territory. NEC's exclusive remedy for Cray's breach of
               this Section 9.3 shall be termination of this Agreement;
               provided, that Cray has acted diligently and in good faith to
               sell and promote the sale of Products.

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* Confidential material has been intentionally omitted at this point pursuant to
a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.


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        9.4    Licenses and Regulations. Cray shall obtain and maintain in full
               force and effect all licenses and consents required to carry on
               business as a distributor of the Products hereunder, and shall in
               all material respects comply with any and all applicable laws,
               regulations and orders of governmental authorities and agencies
               in performing its obligations hereunder.

        9.5    Export Control. Cray shall not re-export, directly or indirectly,
               any Product to any country for which the U.S. government or any
               agency of the U.S. government at the time of re-export requires a
               license or other government approval without first obtaining such
               license or approval, or otherwise export or re-export the Product
               in violation of U.S. or Japanese law.

10.     Warranty/Warranty Claim Procedures/General Failures.

        10.1   Warranty. NEC warrants to Cray that each Product and part thereof
               will (i) be in good working order and free of error or defect
               that materially impairs use, and (ii) conform in all material
               respects to NEC's published specifications for such Product. THIS
               WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES OR OBLIGATIONS,
               EXPRESS OR IMPLIED. NEC EXPRESSLY DISCLAIMS ALL IMPLIED
               WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
               PURPOSE.

        10.2   Warranty Claims Procedures. Cray shall notify NEC in writing and
               reasonable detail of any nonconformance with the warranty in
               Section 10.1 with respect to a particular Product or part within
               three months after its Delivery in accordance with the procedures
               set forth in the Operational Plan (as defined in the Maintenance
               Agreement). In the event that the Product or part does not
               conform to the warranty in Section 10.1, NEC shall, as Cray's
               exclusive remedy, deliver a replacement for the nonconforming
               Product or part within ten (10) business days from NEC's receipt
               of such notification from Cray. If NEC cannot with commercially
               reasonable efforts deliver the replacement Product or part within
               such ten (10) business day period, NEC shall, prior to the
               expiration of such period, deliver to Cray a written schedule for
               delivery of the replacement and use commercially reasonable
               efforts to comply with such schedule.

        10.3   Warranty Exclusions. The warranties for the Products shall not
               apply to defects resulting from (i) improper or inadequate
               maintenance by Cray or its customers; (ii) modification of the
               Products in a manner which is not expressly authorized by NEC;
               (iii) misuse; (iv) Cray or customer supplied parts, software or
               interfacing not authorized by NEC; or (v) operation outside the
               environmental specification for the Products.


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        10.4   Third Party Beneficiaries. All warranties that NEC provides to
               Cray hereunder are solely for Cray's benefit. Cray shall not
               transfer or assign any of such warranties to any other party,
               including Cray's customers.

11.     Confidentiality.

        11.1   Confidential Information. Each party agrees to keep all
               Confidential Information (as defined below) confidential and not
               to use or disclose such information except as required by law or
               stock exchange rule or regulation, authorized by this Agreement
               or otherwise authorized by the disclosing party in writing, and
               to accord such Confidential Information the same standards and
               protections that it uses to protect its own confidential business
               information. Each party will limit dissemination of Confidential
               Information to its employees, contractors and agents who
               reasonably require access in order to carry out the terms of this
               Agreement and who have been informed of and are obligated to
               maintain confidentiality. Except for Confidential Information
               necessary for the performance of obligations or exercise of
               rights under this Agreement, all materials or documents in the
               receiving party's possession containing Confidential Information
               will be returned to the disclosing party promptly following
               written request therefor. If the receiving party is subpoenaed or
               ordered by any court or governmental agency to disclose
               Confidential Information, it will provide prompt written notice
               to the other party so as to allow the other party to seek a
               protective order to protect the confidentiality of such
               information. As used herein, "Confidential Information" means (y)
               the terms of this Agreement and the Other Agreements, and (z) all
               data and information received by one party from the other
               (whether received orally or in electronic, written or other form)
               including, without limitation, know-how and trade secrets
               relating to or contained or embedded in the Products.
               Confidential Information does not include information: (i) that
               is or becomes generally available to the public through no fault
               or breach by the receiving party; (ii) that the receiving party
               can document was already known to it prior to disclosure by the
               disclosing party; (iii) that was independently developed by the
               receiving party without use of any of the other party's
               Confidential Information; and (iv) that the receiving party
               rightly obtained from a third-party who did not transfer or
               disclose it in violation of a confidentiality obligation to the
               other party.

        11.2   Survival. The obligations of this Section 11 will survive
               expiration or termination of this Agreement for a period of two
               (2) years.

12.     Indemnity.

        12.1   By NEC. NEC will defend, indemnify and hold Cray harmless from
               all costs of any claim that Products infringe any patent,
               copyright or other


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               intellectual property right of any third party. If any such claim
               has occurred, or in NEC's opinion is likely to occur, NEC shall,
               at its option and its expense, either (i) procure for Cray the
               right to continue selling the relevant Product hereunder, (ii)
               replace or modify the relevant Product so that it becomes
               non-infringing, or (iii) if neither of the foregoing is
               practicable, refund the depreciated value of the relevant Product
               and accept return of the same. This Section 12 states the entire
               liability of NEC for infringement of intellectual property rights
               for the Products provided hereunder.

        12.2   By Cray. Cray will defend, indemnify and hold NEC harmless from
               all costs of any claim (whether for infringement of patents,
               copyrights or other intellectual property rights or otherwise)
               resulting from (i) NEC's compliance with Cray's specifications,
               instructions or designs, (ii) modification of the Products by
               Cray or a third party, (iii) use of the Products other than as
               specified in relevant specifications provided by NEC, (iv) use of
               the Products with products not approved or supplied by NEC, if
               such infringement could have been avoided by the exclusive use of
               the Products, and (v) the improper furnishing of any information,
               service or technical support by Cray.

        12.3   Notification and Procedures. In connection with any indemnity
               hereunder, the party seeking an indemnity shall: (i) promptly
               notify the indemnifying party of any claim or proceeding, or
               threatened claim or proceeding; (ii) permit the indemnifying
               party to take full control of such claim or proceeding; (iii)
               cooperate in the investigation and defense of such claim or
               proceeding; (iv) not compromise or otherwise settle such claim or
               proceeding without the prior written consent of the indemnifying
               party, which consent shall not be unreasonably withheld,
               conditioned or delayed; and (v) take all reasonable steps to
               mitigate any loss or liability in respect of any such claim or
               proceeding. In any action in which the indemnifying party assumes
               control, the indemnifying party shall not enter into any
               settlement without the prior written consent of the indemnified
               party, which shall not be unreasonably withheld, conditioned or
               delayed.

13.     Trademarks.

        13.1   NEC Marks. To the extent it has the right to do so, NEC grants
               Cray, during the Term and in the Territory, a nonexclusive
               license to use NEC trademarks, including NEC model nomenclature,
               applicable to the Products (the "Marks") solely in connection
               with, and only to the extent reasonably necessary for, the
               marketing, distribution and support of Products during the Term,
               provided that any such use and display shall comply with NEC's
               then current trademark usage policies. NEC shall have the right
               to object to any use of its Marks by Cray in its sole discretion
               by providing written notice to Cray and Cray shall promptly


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<PAGE>   12

               cease any such objectionable use. Cray hereby acknowledges that
               the Marks and all goodwill associated therewith are the property
               of NEC and that except as expressly provided in this Section 13,
               Cray shall not acquire any rights in or to the Marks. Cray agrees
               to fully cooperate with NEC with respect to the protection of
               NEC's rights in the Marks.

        13.2   Co-Branding. The parties may brand certain of the Products with
               both Cray trademarks and the SX-5 and SX-5X model nomenclature
               (each a "Contribution"). In the event that such co-branding
               becomes a trademark (a "New Mark" ), such New Mark shall be
               jointly owned by NEC and Cray and each of NEC and Cray shall have
               the right to use the New Mark during the term of this Agreement
               solely in connection with Products distributed hereunder.
               Following the termination or expiration of this Agreement,
               neither party shall have the right to use the New Mark without
               the other party's written consent; provided that this Section
               13.2 shall not (i) confer on either party any rights to the other
               party's Contribution following the expiration or termination of
               this Agreement or (ii) restrict either party's right to use its
               Contribution in association with products or services other than
               the Products during the Term or following the termination or
               expiration of this Agreement.

14.     Termination.

        14.1   Material Breach. Except for Cray's failure to satisfy the minimum
               order requirement provided for in Section 9.1 (which shall be
               governed by Section 9.1), either party may terminate this
               Agreement if the other party materially breaches any term of this
               Agreement and such breach is not cured (i) in the case of a
               breach of Section 8 within five (5) business days after receipt
               of notice of such breach or (ii) in the case of a breach of any
               other provision of this Agreement within thirty (30) days after
               receipt of notice of such breach.

        14.2   Other. Either party may terminate this Agreement and any existing
               Contracts immediately if (i) the other party files a petition in
               bankruptcy or makes a general assignment for the benefit of
               creditors or otherwise acknowledges insolvency, (ii) the other
               party is adjudged bankrupt or goes into liquidation, (iii) a
               receiver is appointed for the benefit of the other party, or (iv)
               there shall occur a Change of Control of the other party. "Change
               of Control" means (a) (i) the merger or consolidation of a party
               into or with one or more entities, (ii) the merger or
               consolidation of one or more entities into or with a party or
               (iii) a completed tender offer or other business combination if,
               in the case of (i), (ii) or (iii), the stockholders of such party
               prior to such merger, consolidation or business combination do
               not retain at least a majority of the voting power of the
               surviving entity or (b) the voluntary sale, conveyance,


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<PAGE>   13

               exchange or transfer to another entity of (i) the voting capital
               stock of a party if, after such sale, conveyance, exchange or
               transfer, the stockholders of such party prior to such sale,
               conveyance, exchange or transfer do not retain at least a
               majority of the voting power of such party or (ii) all or
               substantially all of the assets of a party.

        14.3   Continuing Obligations. Termination of this Agreement or any
               Contract by expiration or otherwise shall not affect any
               obligation of Cray to pay for the Products shipped prior to such
               termination. Upon termination of this Agreement or any Contract,
               all payments required to be made by Cray to NEC hereunder or
               thereunder shall become immediately due and payable.

15.     Software License.

        15.1   Cray. NEC hereby grants Cray, during the Term and in the
               Territory, a non-exclusive license to distribute the Software
               Products in accordance with the terms and conditions of this
               Agreement. Section 4 shall be applied to the pricing of the
               Software Products. NEC hereby grants Cray, during the Term and in
               the Territory, a nonexclusive license to use the Software
               Products solely for internal use for purposes of marketing,
               distribution, sale, services and support of Products. Other than
               the rights provided above in this Section 15.1, nothing herein
               shall be construed as granting Cray any right or license to NEC's
               software products, including, without limitation, rights to copy,
               reproduce and modify. Cray agrees (i) not to reverse assemble or
               reverse engineer any Product, or decompile or otherwise attempt
               to derive source code from the Software Products, (ii) not to
               authorize or permit others to do so, and (iii) to promptly inform
               NEC of any such action taken by third parties of which Cray
               becomes aware.

        15.2   Customers. NEC shall grant Cray's customers of the Products all
               software licenses NEC normally grants to NEC customers for the
               same Products, subject to any necessary third party consents in
               the case of any Software Product that is third-party software.
               Cray shall obtain customer signatures on such software license
               agreements, as required by NEC. All fees for such licenses shall
               be included in the price of the associated Products. If a Cray
               customer needs software source code, the parties shall agree, on
               a transaction-by-transaction basis, for NEC to license the
               applicable source code to such customer; provided, however, that
               (i) Cray will obtain and pay for any third party consents
               required for such license, with the reasonable assistance and
               cooperation of NEC, and (ii) the customer agrees to enter into
               any relevant NEC or third-party source code license(s). If such
               source code is NEC's source code, NEC will grant such a customer
               license for the source code to the extent NEC normally grants
               such licenses to its customers for the same Software Products.
               NEC shall not unreasonably refuse to license such a customer, but
               if NEC should


                                       13
<PAGE>   14

               nonetheless refuse to license the source code, Cray's minimum
               order obligations pursuant to Section 9.1 shall be reduced by the
               amount of any Firm Orders lost as a result.

16.     Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
        OTHER FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
        INCLUDING LOSS OF PROFITS, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
        LEGAL THEORY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. Except
        for claims arising out of third party tort claims where a Product is
        determined by a court of competent jurisdiction to have caused bodily
        injury, death or property damage, or claims pursuant to Section 12.1,
        NEC's maximum liability arising out of or relating to the Products sold
        to Cray hereunder for any cause whatsoever, regardless of the form of
        any claim or action, whether based on contract, tort or any other legal
        theory, shall not exceed the transfer price paid by Cray for the
        relevant Product.

17.     Contact Persons. Each party will appoint a senior management person to
        be its principal contact person for communications regarding the
        relationship between the parties created by this Agreement, and the
        contact persons will meet regularly to discuss plans, issues, and
        concerns. Each party may change its contact person at any time by
        written notice to the other party. The initial contact person for each
        party will be:

        CRAY INC.

        Rene G. Copeland
        411 First Avenue South, Suite 600
        Seattle, WA 98104-2860
        Phone: (206) 701-2152
        Fax: (206) 701-2218
        Email: renec@cray.com

        With a copy to:

        Kenneth W. Johnson
        411 First Avenue South, Suite 600
        Seattle, WA 98104-2860
        Phone: (206) 701-2091
        Fax: (206) 701-2218
        Email: ken@cray.com


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<PAGE>   15

        NEC CORPORATION

        Tadashi Watanabe
        7-1 Shiba 5-chome
        Minato-ku, Tokyo 108-8001
        Phone: 81-3-3798-9139
        Fax: 81-3-3798-9130
        Email: watanabe@sxsmd.ho.nec.co.jp

18.     Dispute Resolution.

        18.1   Arbitration. Any dispute, controversy or claim arising out of or
               in connection with this Agreement that the parties are unable to
               resolve amicably shall be determined and settled by arbitration
               in London, U.K. in accordance with the rules then in effect of
               the International Chamber of Commerce, and both parties hereby
               consent to the jurisdiction thereof. Any award rendered shall be
               final and conclusive upon the parties and a judgment thereon may
               be entered in a court having competent jurisdiction.

        18.2   Performance Not Excused by Dispute. Except where clearly
               prevented by the matter in dispute, both parties agree to
               continue performing their respective obligations under this
               Agreement while any dispute is being resolved.

19.     Miscellaneous.

        19.1   Succession and Assignment. This Agreement shall be binding upon
               and inure to the benefit of the parties named herein and their
               respective successors and permitted assigns. No party may assign
               either this Agreement or any of its rights, interests or
               obligations hereunder without the prior written approval of the
               other party; provided, however, that (i) without the consent of
               the other party, a party may assign any or all of its rights and
               delegate its obligations hereunder to any entity controlling,
               controlled by or under common control with such party, in which
               event the assigning party shall remain fully liable for the
               performance of all its obligations hereunder; and (ii) subject to
               Section 14.2, a successor in interest by merger, by operation of
               law, or by assignment, purchase or other acquisition of all or
               substantially all of the business of such party may acquire the
               respective rights and obligations of such party under this
               Agreement. Any prohibited assignment shall be null and void.

        19.2   Construction. This Agreement is the result of negotiation between
               sophisticated parties and no provision hereof shall be construed
               against a party solely because that party was responsible for
               drafting the provision.


                                       15
<PAGE>   16

        19.3   Entire Agreement. This Agreement and the Other Agreements
               constitute the entire agreement between the parties with respect
               to the subject matter hereof and thereof and supersede all prior
               agreements and understandings between the parties with respect to
               such subject matter.

        19.4   Severability. If any provision contained herein, or the
               application thereof in any circumstance, is held invalid, illegal
               or unenforceable in any respect for any reason, the validity,
               legality and enforceability of such provision in every other
               respect and of the remaining provisions hereof shall not be in
               any way impaired, unless the provision held invalid, illegal or
               unenforceable shall substantially impair the benefits to either
               party of the remaining provisions hereof.

        19.5   Waiver and Amendment. No waiver of any violation or
               nonperformance of this Agreement in one instance will be deemed
               to be a waiver of any subsequent violation or nonperformance. All
               waivers must be in writing and signed by the party making such
               waiver. This Agreement may not be modified or amended except in
               writing signed by both parties.

        19.6   Notice. All notices, demands and other communications provided
               for or permitted hereunder shall be made in writing and shall be
               by registered or certified first class mail, return receipt
               requested, telecopier, courier or personal delivery to the
               address below:

        If to Cray:

               Cray Inc.
               411 First Avenue South, Suite 600
               Seattle, WA 98104-2866
               Telecopy: (206) 701-2218
               Attention: Kenneth W. Johnson

        With a copy to:

               Stoel Rives LLP
               900 SW Fifth Avenue, Suite 2600
               Portland, OR 97204-1268
               Telecopy: (503) 220-2480
               Attention: Jere M. Webb


                                       16
<PAGE>   17

        If to NEC:

               NEC Corporation
               1-10, Nisshincho
               Fuchu City
               Tokyo 183-8501 Japan
               Telecopy: 81-42-333-6382
               Attention: General Manager, Supercomputer Marketing
                          Promotion Division

        With a copy to:

               Paul, Weiss, Rifkind, Wharton & Garrison
               1285 Avenue of the Americas
               New York, NY 10019
               Telecopy: (212) 757-3990
               Attention: Marc E. Perlmutter

All such notices, demands and other communications shall be deemed to have been
duly given when delivered by hand, if personally delivered; when delivered by a
recognized international express courier service, if delivered by courier: five
(5) business days after being deposited in the mail, postage prepaid if mailed;
and when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 19.6 designate another address or
person for receipt of notices hereunder.

        19.7   Survival. The provisions contained in this Agreement that by
               their sense and context are intended to survive the termination
               of this Agreement shall survive any such termination.

        19.8   Counterparts. This Agreement may be executed in any number of
               counterparts and by the parties hereto in separate counterparts,
               each of which when so executed shall be deemed to be an original
               and all of which taken together shall constitute one and the same
               agreement.

        19.9   Headings. The headings in this Agreement are for convenience or
               reference only and shall not limit or otherwise affect the
               meaning hereof.

        19.10  Choice of Law. This Agreement will be governed by the internal
               laws of the State of New York without regard to the conflicts of
               laws principles thereof.

        19.11  Force Majeure. If the whole or any part of the performance by
               either party of any part of its obligations under this Agreement
               is prevented, hindered or delayed or otherwise made impracticable
               by reason of strikes, labor troubles, floods, fires, accidents,
               earthquakes, riots, explosions, wars, hostilities, acts of
               government, customs barriers or taxes, export/import


                                       17
<PAGE>   18

               control regulations, interruption or shortage of or delay in
               transportation, inability to obtain key raw materials, components
               or supplies or other causes of like character beyond the
               reasonable control of that party, such party shall be excused
               from such performance (other than payment obligations) during the
               continuance of such contingency and for so long as such
               contingency shall continue to prevent, hinder or delay such
               performance. If the contingency specified in this Section 19.11
               shall continue for more than six (6) months from its occurrence,
               either party may terminate this Agreement forthwith without any
               liability (subject to Section 14.3) by giving a written notice to
               the other party. Notwithstanding the foregoing, (i) Cray's
               minimum order obligation pursuant to Section 9.1 shall be reduced
               to the extent that NEC is unable to accept Cray purchase orders
               due to a force majeure and (ii) Cray may cancel any Contract if
               the corresponding order is cancelled by Cray's customer due to
               NEC's delay caused by a force majeure.

        19.12  No Third-Party Beneficiaries. Nothing in this Agreement shall
               confer any rights upon any person or entity other than the
               parties and each party's respective successors and permitted
               assigns.

        19.13  Disclaimer of Agency. Cray is and shall remain an independent
               contractor of NEC. Neither party has the authority to make any
               statement, representation, warranty or other commitment on behalf
               of the other party. Nothing contained herein or done pursuant to
               this Agreement shall constitute the parties as entering into a
               joint venture or partnership, or shall constitute either party as
               the agent of the other party for any purpose whatsoever and
               neither party shall represent or hold itself out otherwise.


               [THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]



                                       18
<PAGE>   19

               IN WITNESS WHEREOF, the parties hereto have caused this
Distribution Agreement to be executed in duplicate by their duly authorized
representatives as of the date first above written.

                                        CRAY INC.

                                        By   /s/  James E. Rottsolk
                                          -------------------------------------
                                          Name: James E. Rottsolk
                                          Title: President and CEO

                                        NEC CORPORATION

                                        By /s/  Kazuhiko Kobayashi
                                          -------------------------------------
                                           Name: Kazuhiko Kobayashi
                                           Title: Senior Vice President



                                       19
<PAGE>   20

                                    EXHIBIT A

NEC EXCLUSIVE DISTRIBUTION RIGHTS

1.      *

2.      *

3.      *

4.      *





--------
* Confidential material has been intentionally omitted at this point pursuant to
a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.



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