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                                                                    Exhibit 10.1

                                   CRAY INC.

              3.0% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2024

                         REGISTRATION RIGHTS AGREEMENT

                                                          December 6, 2004

Bear, Stearns & Co. Inc.
383 Madison Avenue
New York, New York 10179

Ladies and Gentlemen:

      Cray Inc., a Washington corporation (the "Company"), proposes to issue and
sell to the initial purchaser named in the purchase agreement (the "Initial
Purchaser"), upon the terms set forth in such purchase agreement dated December
1, 2004 (the "Purchase Agreement"), its 3.0% Convertible Senior Subordinated
Notes due 2024 (the "Securities"). As an inducement to the Initial Purchaser to
enter into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Initial Purchaser thereunder, the Company agrees with the
Initial Purchaser for the benefit of Holders (as defined herein) from time to
time of the Registrable Securities (as defined herein) as follows:

      1. Definitions.

      (a) Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Purchase Agreement. As used in this Agreement,
the following defined terms shall have the following meanings:

      "Additional Interest" has the meaning assigned thereto in Section 7(a)
hereof.

      "Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with such specified person. For purposes of this definition, control of a person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such person whether by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.

      "Applicable Amount" means, (i) with respect to the Securities, the
principal amount of the Securities and (ii) with respect to shares of Common
Stock issued upon conversion of the Securities pursuant to the Indenture, the
principal amount of Securities that would then be convertible into such number
of shares.

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      "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.

      "Commission" means the United States Securities and Exchange Commission,
or any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.

      "Common Stock" means the Company's common stock, par value $0.01 per
share.

      "DTC" means The Depository Trust Company.

      "Effectiveness Period" has the meaning assigned thereto in Section 2(b)(i)
hereof.

      "Effective Time" means the time at which the Commission declares any Shelf
Registration Statement effective or at which any Shelf Registration Statement
otherwise becomes effective.

      "Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.

      "Holder" means any person that is the record owner of Registrable
Securities (and includes any person that has a beneficial interest in any
Registrable Security in book-entry form).

      "Indenture" means the Indenture, dated as of December 6, 2004, between the
Company and Trustee, pursuant to which the Securities are to be issued, and as
amended and supplemented from time to time in accordance with its terms.

      "Issue Date" means the first date of original issuance of the Securities.

      "Majority of Holders" means Holders holding over 50% of the aggregate
principal amount of Registrable Securities outstanding; provided, that, for
purpose of this definition, a Holder of shares of Common Stock that constitute
Registrable Securities shall be deemed to hold an aggregate principal amount of
Securities (in addition to the principal amount of Securities held by such
Holder, if any) equal to the product of (x) the number of such shares of Common
Stock that constitute Registrable Securities held by such Holder and (y) the
Conversion Price in effect at the time of such calculation as determined in
accordance with the Indenture.

      "Notice and Questionnaire" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Appendix A
hereto.

      "Notice Holder" has the meaning assigned thereto in Section 3(a)(iii)
hereof.

      The term "person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

      "Prospectus" means the prospectus included in any Shelf Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by any Shelf Registration Statement and by

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all other amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.

      "Registrable Securities" means all or any portion of the Securities issued
from time to time under the Indenture in registered form and the shares of
Common Stock issuable upon conversion of such Securities until earlier of: (x)
the date on which such security has been registered under the Securities Act and
disposed of pursuant to an effective registration statement, (y) the date that
is two years after the later of (1) the last date of original issuance of the
Securities and (2) the last date that the Company or any of its Affiliates was
the owner of such Securities (or any predecessor thereto), or such shorter
period of time as permitted by Rule 144(k) under the Securities Act or any
successor provisions thereunder or (z) its sale to the public pursuant to Rule
144 under the Securities Act.

      "Registration Default" has the meaning assigned thereto in Section 7(a)
hereof.

      "Registration Default Period" has the meaning assigned thereto in Section
7(a) hereof.

      "Securities Act" means the United States Securities Act of 1933, as
amended.

      "Shelf Registration" means a registration effected pursuant to Section 2
hereof.

      "Shelf Registration Statement" means a "shelf" registration statement
filed under the Securities Act providing for the registration of, and the sale
on a continuous or delayed basis by the Holders of, all of the Registrable
Securities pursuant to Rule 415 under the Securities Act and/or any similar rule
that may be adopted by the Commission, filed by the Company pursuant to the
provisions of Section 2 of this Agreement, including the Prospectus contained
therein, any amendments and supplements to such registration statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in such registration statement, and any additional
"shelf" registration statements filed under the Securities Act to permit the
registration and sale of Registrable Securities pursuant to Section 3(a)(ii)
hereof.

      "Suspension Period" has the meaning assigned thereto in Section 2(c)
hereof.

      "Trust Indenture Act" means the Trust Indenture Act of 1939, or any
successor thereto, and the rules, regulations and forms promulgated thereunder,
as the same shall be amended from time to time.

      "Trustee" means The Bank of New York Trust Company, N.A., a national
banking association.

      The term "underwriter" means any underwriter, or any person deemed to be
an underwriter pursuant to the Securities Act and Exchange Act and the
respective rules and regulations thereunder, as in effect at any relevant time,
of Registrable Securities in connection with an offering thereof under a Shelf
Registration Statement.

      (b) Wherever there is a reference in this Agreement to a percentage of the
"principal amount" of Registrable Securities or to a percentage of Registrable
Securities, each share of

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Common Stock issued upon conversion of the Securities shall represent a
principal amount or percentage of Registrable Securities determined based on a
quotient, (i) the numerator of which shall be equal to the aggregate principal
amount of Securities issued, less the aggregate principal amount of Securities
outstanding as of the date of determination, and (ii) the denominator of which
shall be equal to the aggregate number of shares of Common Stock issued upon
conversion of the Securities as of the date of determination.

      2. Shelf Registration.

      (a) The Company shall, no later than 90 calendar days following the Issue
Date, file with the Commission a Shelf Registration Statement relating to the
offer and sale of the Registrable Securities by the Holders from time to time in
accordance with the methods of distribution elected by such Holders and,
thereafter, shall use its reasonable best efforts to cause such initial Shelf
Registration Statement to be declared effective under the Securities Act no
later than 210 calendar days following the Issue Date; provided, however, that
no Holder shall be entitled to be named as a selling securityholder in any Shelf
Registration Statement as of the date it is declared effective or to use the
Prospectus forming a part thereof for offers and resales of Registrable
Securities unless such Holder is a Notice Holder.

      (b) The Company shall use its reasonable best efforts:

            (i) to keep any Shelf Registration Statement effective, supplemented
      and amended as required by the provisions of Section 3(j) hereof, in order
      to permit the Prospectus forming a part thereof to be usable by Holders
      until the earlier of two years from the last date of original issuance of
      any Registrable Securities or such shorter period ending on the date that
      all Registrable Securities have ceased to be Registrable Securities (such
      period being referred to herein as the "Effectiveness Period"); and

            (ii) after the Effective Time of the initial Shelf Registration
      Statement, (x) as promptly as is practicable after the date a completed
      and signed Notice and Questionnaire is delivered to the Company, and in
      any event within 5 Business Days after such date, or (y) if the Company is
      required by applicable law to file with the Commission a post-effective
      amendment to the Shelf Registration Statement or an additional Shelf
      Registration Statement, as soon as reasonably practicable after the end of
      such fiscal quarter of the Company during which the completed and signed
      Notice and Questionnaire is delivered, and in any event within 10 Business
      Days after such date, take any action reasonably necessary to enable such
      Holder to use the Prospectus forming a part thereof for resales of
      Registrable Securities, including, without limitation, any action
      necessary to identify such Holder as a selling securityholder in a Shelf
      Registration Statement; provided, however, that nothing in this
      subparagraph shall relieve such Holder of the obligation to return a
      completed and signed Notice and Questionnaire to the Company in accordance
      with Section 3(a)(ii) hereof.

The Company shall be deemed not to have used its reasonable best efforts to keep
any Shelf Registration Statement effective during the Effectiveness Period if
the Company voluntarily takes any action that would result in Holders of
Registrable Securities covered thereby not being able to offer and sell any of
such Registrable Securities during that period, unless such action is

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(A) required by applicable law and the Company thereafter promptly complies with
the requirements of paragraph 3(j) below or (B) permitted pursuant to Section
2(c) below.

      (c) The Company may suspend the use of any Prospectus for a period not to
exceed 45 days in any 90-day period, and not to exceed an aggregate of 120 days
in any 12-month period, during the period beginning on the last date of original
issuance and ending on the second anniversary of the last issue date of any
Securities (each, a "Suspension Period") if:

            (i) the Prospectus, in the judgment of the Board of Directors of the
      Company, contains an untrue statement of a material fact or omits to state
      a material fact required to be stated therein or necessary to make the
      statements therein (in the light of the circumstances under which they
      were made) not misleading as a result of the happening of any event that
      has occurred or the existence of any state of facts that requires the
      making of any changes in any Shelf Registration Statement or the
      Prospectus; and

            (ii) the Board of Directors of the Company shall have determined in
      good faith (and not for the purpose of avoiding the Company's obligations
      hereunder) that the disclosure of material non-public information,
      including the acquisition or divestiture of assets, a pending material
      business transaction or similar events, would have a material adverse
      effect on the Company and its subsidiaries taken as a whole; provided,
      further, that the Company may extend the Suspension Period from 45
      calendar days to 60 calendar days in connection with an acquisition or
      divestiture of assets, a pending material business transaction or similar
      events, if the disclosure of such material non-public information would
      impede the Company's ability to consummate such transaction; provided,
      however, that prior to suspending such use the Company provides the
      Holders with written notice of such suspension, which notice need not
      specify the nature of the event nor the material non-public information
      giving rise to such suspension.

      3. Registration Procedures. In connection with the Shelf Registration
Statements, the following provisions shall apply:

      (a) (i) Not less than 30 calendar days prior to the intended Effective
      Time of the initial Shelf Registration Statement, the Company shall
      distribute the Notice and Questionnaire to the Holders of Registrable
      Securities. The Company shall take action to name each Holder (that is a
      Notice Holder as of the Effective Time and has returned a completed and
      signed Notice and Questionnaire within 20 calendar days of receipt
      thereof) as a selling securityholder in the initial Shelf Registration
      Statement at the time of its effectiveness so that such Holder is
      permitted to deliver the Prospectus forming a part thereof as of such time
      to purchasers of such Holder's Registrable Securities in accordance with
      applicable law. The Company shall not be required to take any action to
      name any Holder as a selling securityholder in the initial Shelf
      Registration Statement or to enable any Holder to use the Prospectus
      forming a part thereof for resales of Registrable Securities until such
      Holder has returned a completed and signed Notice and Questionnaire to the
      Company.

            (ii) From and after the Effective Time of the initial Shelf
      Registration Statement, the Company shall, upon the request of any Holder
      of Registrable Securities

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      that is not then a Notice Holder, promptly send a Notice and Questionnaire
      to such Holder. From and after the Effective Time of the initial Shelf
      Registration Statement, the Company shall use its reasonable best efforts
      to (A) as promptly as is practicable after the date a completed and signed
      Notice and Questionnaire is delivered to the Company, and (x) in any event
      within 5 Business Days after such date, prepare and file with the
      Commission a supplement to the Prospectus or (y) if the Company is
      required by applicable law to file with the Commission a post-effective
      amendment to the Shelf Registration Statement or an additional Shelf
      Registration Statement, as soon as reasonably practicable after the end of
      each fiscal quarter of the Company, and in any event within 10 Business
      Days after such date, and (z) any other document required by applicable
      law, so that the Holder delivering such Notice and Questionnaire is named
      as a selling securityholder in a Shelf Registration Statement and is
      permitted to deliver the Prospectus to purchasers of such Holder's
      Registrable Securities in accordance with applicable law, and (B) if the
      Company shall file a post-effective amendment to the Shelf Registration
      Statement, or an additional Shelf Registration Statement, use its
      reasonable best efforts to cause such post-effective amendment or such
      additional Shelf Registration Statement to become effective under the
      Securities Act as promptly as is practicable, but in any event by the date
      that is 45 calendar days after the date such additional Shelf Registration
      Statement is required to be filed; provided, however, that if a Notice and
      Questionnaire is delivered to the Company during a Suspension Period, the
      Company shall not be obligated to take the actions set forth in this
      clause (ii) until the termination of such Suspension Period.
      Notwithstanding the foregoing, the Company shall not be required to file
      more than one post-effective amendment to the Shelf Registration Statement
      in any one fiscal quarter.

            (iii) The term "Notice Holder" shall mean any Holder of Registrable
      Securities that has returned a completed and signed Notice and
      Questionnaire to the Company in accordance with Section 3(a)(i) or
      3(a)(ii) hereof.

      (b) Before filing any Shelf Registration Statement or Prospectus or any
amendments or supplements (other than supplements solely for the purpose of
naming one or more Notice Holders as selling securityholders) thereto with the
Commission, the Company shall furnish to the Initial Purchaser copies of all
such documents proposed to be filed and use reasonable best efforts to reflect
in each such document when so filed with the Commission such comments as the
Initial Purchaser reasonably shall propose within three (3) Business Days of the
delivery of such copies to the Initial Purchaser.

      (c) The Company shall promptly take such action as may be necessary so
that (i) each of the Shelf Registration Statements and any amendment thereto and
the Prospectus forming a part thereof and any amendment or supplement thereto
(and each report or other document incorporated therein by reference in each
case) complies in all material respects with the Securities Act and the Exchange
Act and the respective rules and regulations thereunder, as in effect at any
relevant time, (ii) each of the Shelf Registration Statements and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (iii) each of the
Prospectus forming a part of any Shelf Registration Statement, and any amendment
or supplement to such Prospectus, in the form delivered to

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purchasers of the Registrable Securities during the Effectiveness Period does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

      (d) The Company shall promptly advise each Notice Holder (and in the case
of clause (i) below with a copy to the Initial Purchaser), and shall confirm
such advice in writing if so requested by any such Notice Holder:

            (i) when the initial Shelf Registration Statement has been filed
      with the Commission and when the initial Shelf Registration Statement has
      become effective, in each case making a public announcement thereof by
      release made to Dow Jones & Company, Inc. or Bloomberg Business News or
      other similarly broad public medium that is customary for such releases;

            (ii) when any Prospectus supplement, Shelf Registration Statement or
      post-effective amendment to a Shelf Registration has been filed with the
      Commission and, with respect to a Shelf Registration Statement or any
      post-effective amendment, when the same has been declared effective by the
      Commission;

            (iii) of any request by the Commission for amendments or supplements
      to any Shelf Registration Statement or the Prospectus included therein or
      for additional information;

            (iv) of the issuance by the Commission of any stop order suspending
      the effectiveness of any Shelf Registration Statement or the initiation of
      any proceedings for such purpose;

            (v) of the receipt by the Company of any notification with respect
      to the suspension of the qualification of the securities included in any
      Shelf Registration Statement for sale in any jurisdiction or the
      initiation of any proceeding for such purpose; and

            (vi) of the happening of any event or the existence of any state of
      facts that requires the making of any changes in any Shelf Registration
      Statement or the Prospectus included therein so that, as of such date,
      such Shelf Registration Statement and Prospectus do not contain an untrue
      statement of a material fact and do not omit to state a material fact
      required to be stated therein or necessary to make the statements therein
      (in the case of the Prospectus, in the light of the circumstances under
      which they were made) not misleading (which advice shall be accompanied by
      an instruction to such Holders to suspend the use of the Prospectus until
      the requisite changes have been made, which notice need not specify the
      nature of the event giving rise to such suspension).

      (e) The Company shall use its reasonable best efforts to prevent the
issuance, and if issued to obtain the withdrawal at the earliest possible time,
of any order suspending the effectiveness of any Shelf Registration Statement.

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      (f) As promptly as reasonably practicable furnish to the Initial Purchaser
and to each Notice Holder and the Initial Purchaser, upon their request and
without charge, at least one (1) conformed copy of the Registration Statement
and any post-effective amendment thereto, including financial statements but
excluding schedules, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits (unless requested in writing to the
Company by such Notice Holder or the Initial Purchaser, as the case may be).

      (g) The Company shall, during the Effectiveness Period, deliver to each
Notice Holder, without charge, as many copies of each Prospectus in which the
Notice Holder is listed as a selling securityholder included in the applicable
Shelf Registration Statement and any amendment or supplement thereto as such
Notice Holder may reasonably request; and the Company consents (except during a
Suspension Period or during the continuance of any event described in Section
3(d) (iii) through (vi) above) to the use of the Prospectus and any amendment or
supplement thereto by each of the Notice Holders in connection with the offering
and sale of the Registrable Securities covered by the Prospectus and any
amendment or supplement thereto during the Effectiveness Period.

      (h) Prior to any offering of Registrable Securities pursuant to a Shelf
Registration Statement, the Company shall (i) register or qualify or cooperate
with the Notice Holders and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or "blue sky" laws of such jurisdictions within the United
States as any Notice Holder may reasonably request, (ii) keep such registrations
or qualifications in effect and comply with such laws so as to permit the
continuance of offers and sales in such jurisdictions for so long as may be
necessary to enable any Notice Holder or underwriter, if any, to complete its
distribution of Registrable Securities pursuant to such Shelf Registration
Statement, and (iii) take any and all other actions necessary or advisable to
enable the disposition in such jurisdictions of such Registrable Securities;
provided, however, that in no event shall the Company be obligated to (A)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to so qualify but for this
Section 3(h) or (B) subject itself to general or unlimited service of process or
to taxation in any such jurisdiction if they are not now so subject.

      (i) Unless any Registrable Securities shall be in book-entry only form,
the Company shall cooperate with the Notice Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to any Shelf Registration Statement, which certificates, if so
required by any securities market or exchange upon which any Registrable
Securities are quoted or listed, shall be penned, lithographed or engraved, or
produced by any combination of such methods, on steel engraved borders, and
which certificates shall be free of any restrictive legends and in such
permitted denominations and registered in such names as Notice Holders may
request in connection with the sale of Registrable Securities pursuant to such
Shelf Registration Statement.

      (j) Upon the occurrence of any fact or event contemplated by paragraphs
3(d)(iii) through (vi), above, subject to Section 2(c) hereof, the Company shall
promptly, but in any event within 5 Business Days following such occurrence,
prepare and file, a post-effective amendment to any Shelf Registration Statement
(and thereafter use its reasonable best efforts to cause such amendment to be
declared effective) or an amendment or supplement to the related Prospectus

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included therein or file any other document with the Commission so that, as
thereafter delivered to purchasers of the Registrable Securities, the Prospectus
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If the Company
notifies the Notice Holders of the occurrence of any fact or event contemplated
by paragraphs 3(d)(iii) through (vi) above, the Notice Holder shall suspend the
use of the Prospectus until the requisite changes to the Prospectus have been
made.

      (k) Not later than the Effective Time of a Shelf Registration Statement,
the Company shall provide a CUSIP number for the debt securities to be sold
pursuant to a Shelf Registration Statement.

      (l) The Company shall comply with the Securities Act and the Exchange Act
and the respective rules and regulations thereunder, as in effect at any
relevant time, and make generally available to its securityholders earnings
statements (which need not be audited) satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year), or such shorter period as required by the Securities Act and
the Exchange Act and the rules and regulations thereunder, as in effect at any
relevant time, commencing on the first day of the first fiscal quarter of the
Company commencing after (i) the effective date of a Shelf Registration
Statement, (ii) the effective date of each post-effective amendment to such
Shelf Registration Statement, or (iii) the date of each filing by the Company
with the Commission of an Annual Report on Form 10-K that is incorporated by
reference in such Shelf Registration Statement, which statements shall cover
said 12-month periods.

      (m) Not later than the Effective Time of the initial Shelf Registration
Statement, the Company shall cause the Indenture to be qualified under the Trust
Indenture Act; in connection with such qualification, the Company shall
cooperate with the Trustee under the Indenture and the Holders (as defined in
the Indenture) to effect such changes to the Indenture as may be required for
such Indenture to be so qualified in accordance with the terms of the Trust
Indenture Act; and the Company shall execute, and shall use its reasonable best
efforts to cause the Trustee to execute, all documents that may be required to
effect such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely manner.
In the event that any such amendment or modification referred to in this Section
3(m) involves the appointment of a new trustee under the Indenture, the Company
shall appoint a new trustee thereunder pursuant to the applicable provisions of
the Indenture.

      (n) The Company shall enter into such customary agreements (including, in
connection with an underwritten offering as provided in Section 9, an
underwriting agreement) and take all such other actions in connection therewith
(including those actions reasonably requested by the holders of a majority of
the Registrable Securities being sold) in order to expedite or facilitate
disposition of such Registrable Securities, including, without limitation, in
connection with the effectiveness of the initial Shelf Registration Statement,
furnishing to:

            (i) each Holder identified in the Shelf Registration Statement, a
      certificate, dated the date of the Effective Time of the initial Shelf
      Registration Statement, signed by

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      (x) the Chief Executive Officer or Executive Vice President and (y) the
      Chief Financial Officer of the Company confirming, as of the date thereof,
      such matters as such Holders may reasonably request in writing; and

            (ii) customary comfort letter(s), dated the date of the Effective
      Time of the initial Shelf Registration Statement, from the Company's
      independent accountants and from any other accountants whose report is
      contained or incorporated by reference in such Shelf Registration
      Statement, in the customary form and covering matters of the type
      customarily covered in comfort letters to underwriters in connection with
      primary underwritten offerings of securities.

      (o) If an underwriting agreement is entered into and the offering is an
underwritten offering, the Company shall:

            (i) upon request, furnish to each underwriter, in such substance and
      scope as they may reasonably request and as are customarily made by
      issuers to underwriters in primary underwritten offerings, upon the date
      of closing of any sale of Registrable Securities in an underwritten
      offering:

                  (A) a certificate, dated the date of such closing, signed by
            (x) the Chief Executive Officer or Executive Vice President and (y)
            the Chief Financial Officer of the Company confirming, as of the
            date thereof, such matters as such parties may reasonably request;

                  (B) opinions, each dated the date of such closing, of counsel
            to the Company covering such matters as are customarily covered in
            legal opinions to underwriters in connection with primary
            underwritten offerings of securities; and

                  (C) customary comfort letter(s), dated the date of such
            closing, from the Company's independent accountants and from any
            other accountants whose report is contained or incorporated by
            reference in the Shelf Registration Statement, in the customary form
            and covering matters of the type customarily covered in comfort
            letters to underwriters in connection with primary underwritten
            offerings of securities;

            (ii) set forth in full in the underwriting agreement, if any,
      customary indemnification provisions and procedures; and

            (iii) deliver such other documents and certificates as may be
      reasonably requested by such parties to evidence compliance with clause
      (i) above and with any customary conditions contained in the underwriting
      agreement or other agreement entered into by the Holders pursuant to this
      Section 3(o).

      (p) The Company shall (i) make reasonably available for inspection by one
or more representatives of the selling Holders, designated in writing by a
Majority of Holders whose Registrable Securities are included in a Shelf
Registration Statement, any underwriter participating in any disposition
pursuant to any Shelf Registration Statement, and any attorney, accountant or
other agent retained by such Notice Holders or any such underwriter all relevant

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financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and (ii) cause the Company's officers, directors
and employees to supply all information reasonably requested by such Notice
Holders or any such underwriter, attorney, accountant or agent in connection
with such Shelf Registration Statement, in each case, as is customary for
similar due diligence examinations; provided, however, that such persons shall,
at the Company's request, first agree in writing with the Company that any
information that is reasonably and in good faith designated by the Company in
writing as confidential at the time of delivery of such information shall be
kept confidential by such persons and shall be used solely for the purposes of
exercising rights under this Agreement, unless such disclosure is made in
connection with a court proceeding or required by law, or such records,
information or documents become available to the public generally or through a
third party without an accompanying obligation of confidentiality; and provided
further that, if the foregoing inspection and information gathering would
otherwise disrupt the Company's conduct of its business, such inspection and
information gathering shall, to the greatest extent possible, be coordinated on
behalf of the Notice Holders and the other parties entitled thereto by one
counsel designated by such Majority of Holders and on behalf of the Notice
Holders and other parties.

      (q) The Company will use its reasonable best efforts to cause the Common
Stock issuable upon conversion of the Securities to be quoted or listed on the
Nasdaq National Market or other market or stock exchange on which the Common
Stock primarily trades on or prior to the Effective Time of each Shelf
Registration Statement hereunder.

      (r) The Company will cooperate and assist in any filings or by taking any
other actions required to be made or taken with or by National Association of
Securities Dealers, Inc.

      (s) The Company shall use its reasonable best efforts to take all other
steps necessary to effect the registration, offering and sale of the Registrable
Securities covered by each Shelf Registration Statement contemplated hereby.

      4. Registration Expenses. The Company shall bear all fees and expenses
incurred in connection with the performance by the Company of its obligations
under Sections 2 and 3 of this Agreement whether or not any of the Shelf
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with federal and state securities or Blue Sky laws to the extent such
filings or compliance are required pursuant to this Agreement (including,
without limitation, reasonable fees and disbursements of the counsel specified
in the next sentence in connection with Blue Sky qualifications of the
Registrable Securities under the laws of such jurisdictions as the Notice
Holders of a majority of the Registrable Securities being sold pursuant to a
Shelf Registration Statement may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
in a form eligible for deposit with The Depository Trust Company), (iii)
duplication expenses relating to copies of any Shelf Registration Statement or
Prospectus delivered to any Holders hereunder, (iv) fees and disbursements of
counsel for the Company in connection with the Shelf Registration Statement, and
(v) reasonable fees and disbursements of the Trustee and its counsel and of the
registrar and transfer agent for the Common Stock. In addition, the Company
shall bear or reimburse the Notice Holders for the reasonable fees and
disbursements

                                       11
<PAGE>

of one firm of legal counsel for the Holders, which shall initially be counsel
to the Initial Purchaser, but which may, upon the written consent of the Initial
Purchaser (which shall not be unreasonably withheld), be another nationally
recognized law firm experienced in securities law matters designated by the
Company. In addition, the Company shall pay the internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange on which similar securities of
the Company are then listed and the fees and expenses of any person, including
special experts, retained by the Company.

      5. Indemnification and Contribution.

      (a) Indemnification by the Company. The Company shall indemnify and hold
harmless each Notice Holder, the Initial Purchaser, and each person, if any, who
controls any such Notice Holder or Initial Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, claim, damage, liability or expense whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commence or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as any such loss, claim, damage, liability or
expense (or action in respect thereof) arises out of, or is based upon, any
untrue statement or alleged untrue statement of a material fact contained in the
Shelf Registration Statement or any amendment thereto or any related preliminary
prospectus or the Prospectus or any amendment thereto of supplement thereof, or
arises out of, or is based upon, the omission or alleged omission to state
therein any material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company shall not
be liable to any such indemnified party in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of, or is based upon,
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such indemnified party
specifically for use therein; and provided further, however, that the Company
shall not be liable to any such indemnified party in any such case to the extent
that such loss, claim, damage, liability or expense arises from an offer or sale
by a Notice Holder of Registrable Securities during a Suspension Period, if such
indemnified party is a Notice Holder that received from the Company a notice of
the commencement of such Suspension Period prior to the making of such offer or
sale. The foregoing indemnity agreement is in addition to any liability that the
Company may otherwise have to any indemnified party.

      (b) Indemnification by the Notice Holders. Each Notice Holder, severally
and not jointly, shall indemnify and hold harmless the Company, the Initial
Purchaser, and each person, if any, who controls the Company or the Initial
Purchaser within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, from and against any loss, claim, damage, liability or
expense whatsoever as incurred (including but not limited to attorneys' fees and
any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commence or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become

                                       12
<PAGE>

subject under the Securities Act, the Exchange Act or otherwise, insofar as any
such loss, claim, damage, liability or expense (or action in respect thereof)
arises out of, or is based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement or
any amendment thereto or any related preliminary prospectus or the Prospectus or
any amendment thereto of supplement thereof, or arises out of, or is based upon,
the omission or alleged omission to state therein any material fact required to
be stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission made therein was made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Notice Holder specifically for use therein. In
no event shall the liability of any selling Notice Holder hereunder be greater
in amount than the dollar amount of the proceeds received by such Holder upon
the sale of the Registrable Securities pursuant to the Shelf Registration
Statement giving rise to such indemnification obligation. The foregoing
indemnity agreement is in addition to any liability that any Notice Holder may
otherwise have to the Company, the Initial Purchaser and any such controlling
person.

      (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
under this Section 5 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Section 5, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability that it may have under this Section 5. If any such claim or action
shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate, at its own expense in the defense of such action, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from the indemnified party, to assume the
defense thereof with counsel satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 5 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent
jointly the indemnified party and its respective directors, employees, officers
and controlling persons who may be subject to liability arising out of any claim
in respect of which indemnity may be sought by the indemnified party against the
indemnifying party under this Section 5 if (1) employment of such counsel has
been authorized in writing by the indemnifying party, or (2) such indemnifying
party shall not have employed counsel to have charge of the defense of such
proceeding within 30 days of the receipt of notice thereof, or (3) the
indemnifying party does not diligently defend such claim or action after
assumption of the defense or (4) such indemnified party shall have reasonably
concluded that the representation of such indemnified party and those directors,
employees, officers and controlling persons by the same counsel representing the
indemnifying party would be inappropriate under applicable standards of
professional conduct due to actual or potential differing interests between them
or where there may be one or more defenses available to them that are different
from, additional to or in conflict with those available to the indemnifying
party, and in any such event ((1), (2), (3) or (4)) the fees and expenses of
such separate counsel shall be paid by the indemnifying party as incurred. It is
understood that the indemnifying party shall not be liable for the fees and
expenses of more than one separate firm (in addition to local counsel in each

                                       13
<PAGE>

jurisdiction) for all indemnified parties in connection with any proceeding or
related proceedings. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 5 (whether or not the indemnified party or parties are actual or
potential parties thereto) unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of such indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include a statement as to or an admission of fault, culpability or failure
to act by or on behalf of any indemnified party, and (y) the indemnifying party
confirms in writing its indemnification obligations hereunder with respect to
such settlement, compromise or judgment.

      (d) Contribution. If the indemnification provided for in this Section 5 is
for any reason held to be unavailable or insufficient to hold harmless an
indemnified party under subsections (a) or (b) above, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of the aggregate losses, liabilities, claims, damages and expenses
of the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, liabilities, claims,
damages and expenses suffered by the Company, any contribution received by the
Company from persons, other than the indemnifying party, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) in (i)
such proportion as is appropriate to reflect the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other from the registration of the Registrable Securities pursuant to the
Shelf Registration, or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations. The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Holder or such other indemnified
party, as the case may be, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 5(d) were determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 5(d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any judicial, regulatory or other legal or
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding any other provision of this Section 5(d), the Holders
of the Registrable Securities shall not be required to contribute any amount in
excess of the amount by which the gross proceeds received

                                       14
<PAGE>

by such Holders from the sale of the Registrable Securities pursuant to the
Shelf Registration Statement exceeds the amount of damages which such Holders
have otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 5(d), (A) each
person, if any, who controls such indemnified party within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such indemnified party and (B) the respective
officers, directors, partners, employees, representatives and agents of any
indemnified party or any controlling person shall have the same rights to
contribution as such indemnified party and (1) each person, if any, who controls
the Company within the meaning of the Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Company and (2) the officers, directors, partners, employees, representatives
and agents of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) above. The Holders'
respective obligations to contribute pursuant to this Section 5 are several in
proportion to the respective amount of Registrable Securities they have sold
pursuant to a Registration Statement and not joint. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent, provided that such written consent was not unreasonably
withheld. The remedies provided for in this Section 5 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.

      (e) The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Initial Purchaser, any Holder or any person controlling such Initial
Purchaser or Holder, or by or on behalf of the Company, its officers or
directors or any person controlling the Company, and (iii) any sale of
Registrable Securities pursuant to the Shelf Registration Statement.

      6. Holder's Obligations. Each Holder agrees, by acquisition of the
Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Shelf
Registration Statement or to receive a Prospectus relating thereto, unless such
Holder has furnished the Company with a Notice and Questionnaire as required
pursuant to Section 3(a)(ii) hereof (including the information required to be
included in such Notice and Questionnaire) and the information set forth in the
next sentence. Each Notice Holder agrees promptly to furnish to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Notice Holder not misleading and any other
information regarding such Notice Holder and the distribution of such
Registrable Securities as the Company may from time to time reasonably request.
Any sale of any Registrable Securities by any Notice Holder shall constitute a
representation and warranty by such Notice Holder that the information relating
to such Notice Holder and its plan of distribution is as set forth in the
Prospectus delivered by such Notice Holder in connection with such disposition,
that such Prospectus does not as of the time of such sale contain any untrue
statement of a material fact relating to or provided by such Notice Holder or
its plan of distribution and that such Prospectus does not as of the time of
such sale omit to state any material fact relating to or provided by such Notice
Holder or its plan of distribution

                                       15
<PAGE>

necessary in order to make the statements in such Prospectus, in the light of
the circumstances under which they were made, not misleading.

      7. Additional Interest.

      (a) Notwithstanding any postponement of the effectiveness pursuant to
Section 2(a) hereof, if (i) on or prior to the 90th day following the Issue
Date, a Shelf Registration Statement has not been filed with the Commission,
(ii) on or prior to the 210th day following the Issue Date, such initial Shelf
Registration Statement is not declared effective by the Commission, (iii) after
the effectiveness date of any Shelf Registration Statement, (x) such Shelf
Registration Statement ceases to be effective or usable for the offer and sale
of Registrable Securities (other than due to a Suspension Period), and the
Company fails to file within five Business Days, a post-effective amendment to
such Shelf Registration Statement or amendment or supplement to the Prospectus
contained therein or such other document with the Commission to make such Shelf
Registration Statement effective or such Prospectus usable, or (y) the
Suspension Periods exceed 45 days (or 60 days if extended pursuant to Section
2(c)(ii) above), whether or not consecutive, in any 90-day period, or more than
120 days, whether or not consecutive, during any 12-month period during the
Effectiveness Period, or (iv) the Company shall have failed to timely comply
with any of its obligations set forth in Section 3(a)(ii) hereof (each, a
"Registration Default"), the Company shall be required to pay additional
interest ("Additional Interest"), from and including the day following such
Registration Default to but excluding the day on which such Registration Default
is cured (the "Registration Default Period"), at a rate per annum equal to an
additional one-quarter of one percent (0.25%) of the Applicable Amount to and
including the 90th day following such Registration Default, and one-half of one
percent (0.5%) thereof from and after the 91st day following such Registration
Default.

      (b) In the case of a Registration Default described in Sections
7(a)(i)-(iii) above, Additional Interest, if any, shall be payable only to
Notice Holders and, in respect of a Registration Default described in Section
7(a)(iv) above, Additional Interest, if any, shall be payable only to Notice
Holders to whom such Registration Default relates.

      (c) Any amounts to be paid as Additional Interest pursuant to paragraph
(a) of this Section 7 shall be paid in cash semiannually in arrears, with the
first semiannual payment due on the first interest payment date following the
date on which such Additional Interest begin to accrue, to the Notice Holders in
whose name the Securities or Common Stock issued upon conversion of the
Securities are registered at the close of business on May 15 or November 15,
whether or not a Business Day, immediately preceding the relevant interest
payment date.

      (d) Except as provided in Section 10(a) hereof, the Additional Interest as
set forth in this Section 7 shall be the exclusive monetary remedy available to
the Holders of Registrable Securities for such Registration Default. In no event
shall the Company be required to pay Additional Interest in excess of the
applicable maximum amount of one-half of one percent (0.5%) set forth above,
regardless of whether one or multiple Registration Defaults exist. All
obligations of the Company set forth in this Section 7 that are outstanding with
respect to any Registrable Security at the time such security ceases to be a
Registrable Security shall survive until such time as all such obligations with
respect to such Registrable Security shall have been satisfied in full. Each
Registration Default will constitute a Registration Default whatever the

                                       16
<PAGE>

reason for any such event and whether it is voluntary or involuntary or is
beyond the control of the Company or pursuant to operation of law or as a result
of any action or inaction by the Commission.

      8. Rule 144A. In the event the Company is not subject to Section 13 or
15(d) of the Exchange Act, the Company hereby agrees with each Holder, for so
long as any Registrable Securities remain outstanding, to make available to any
Holder in connection with any sale thereof and any prospective purchaser of such
Registrable Securities from such Holder, the information required by Rule
144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Securities pursuant to Rule 144A.

      9. Underwritten Offerings.

      (a) A Majority of Holders may, by written notice to the Company, request
to sell their Registrable Securities in an underwritten offering pursuant to any
Shelf Registration Statement; provided, that no underwritten offering shall
occur without the prior agreement of the Company.

      (b) No Holder may participate in any underwritten offering hereunder
unless such Holder:

            (i) agrees to sell such Holder's Registrable Securities on the basis
      provided in any underwriting arrangements approved by the majority of the
      Holders (calculated in the same manner as the Majority of Holders)
      participating in such underwritten offering (the "Participating
      Majority"); and

            (ii) completes and executes all reasonable questionnaires, powers of
      attorney, indemnities, underwriting agreements, lock-up letters and other
      documents required under the terms of such underwriting arrangements.

      (c) In any such underwritten offering, the investment banker or investment
bankers and manager or managers that will administer the offering will be
selected by the Participating Majority to be included in such underwritten
offering; provided, that such investment bankers and managers must be reasonably
satisfactory to the Company.

      10. Miscellaneous.

      (a) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if the Company fails to perform any of its
obligations hereunder and that the Initial Purchaser and the Holders from time
to time may be irreparably harmed by any such failure, and accordingly agree
that the Initial Purchaser and such Holders, in addition to any other remedy to
which they may be entitled at law or in equity and without limiting the remedies
available to the Notice Holders under Section 7 hereof, shall be entitled to
compel specific performance of the obligations of the Company under this
Registration Rights Agreement in accordance with the terms and conditions of
this Registration Rights Agreement, in any court of the United States or any
State thereof having jurisdiction.

      (b) Amendments and Waivers. This Agreement, including this Section 10(b),
may be amended, and waivers or consents to departures from the provisions hereof
may be given, only

                                       17
<PAGE>

by a written instrument duly executed by the Company and a Majority of Holders.
Each Holder of Registrable Securities outstanding at the time of any such
amendment, waiver or consent or thereafter shall be bound by any amendment,
waiver or consent effected pursuant to this Section 10(b), whether or not any
notice, writing or marking indicating such amendment, waiver or consent appears
on the Registrable Securities or is delivered to such Holder.

      (c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:

            (x) if to a Holder of Registrable Securities, at the most current
      address given by such Holder to the Company in a Notice and Questionnaire
      or any amendment thereto;

            (y) if to the Company, to:

            Cray Inc.
            411 First Avenue South, Suite 600
            Seattle, Washington 98104-2860
            Attention: Senior Vice President and General Counsel
            Telephone : (206) 701-2000
            Facsimile: (206) 701-2500

            With a copy to:

            Stoel Rives LLP
            600 University Street
            Suite 3600
            Seattle, Washington 98101
            Attn: L. John Stevenson, Jr.
            Facsimile: (206) 386-7500

            and

            (z) if to the Initial Purchaser, to:

            Bear, Stearns & Co. Inc.
            383 Madison Avenue
            New York, New York 10179
            Attention: Stephen Parish
            Facsimile: (212) 272-3485

            With a copy to:

            Latham & Watkins LLP
            135 Commonwealth Drive

                                       18
<PAGE>

            Menlo Park, California 94025
            Attn: Alan C. Mendelson
                  William Davisson
            Facsimile:  (650) 463-2600

      or to such other address as such person may have furnished to the other
persons identified in this Section 8(c) in writing in accordance herewith.

      (d) Parties in Interest. The parties to this Agreement intend that all
Holders of Registrable Securities shall be entitled to receive the benefits of
this Agreement and that any Notice Holder shall be bound by the terms and
provisions of this Agreement by reason of such election with respect to the
Registrable Securities which are included in a Shelf Registration Statement. All
the terms and provisions of this Agreement shall be binding upon, shall inure to
the benefit of and shall be enforceable by the respective successors and assigns
of the parties hereto and any Holder from time to time of the Registrable
Securities to the aforesaid extent. In the event that any transferee of any
Holder of Registrable Securities shall acquire Registrable Securities, in any
manner, whether by gift, bequest, purchase, operation of law or otherwise, such
transferee shall, without any further writing or action of any kind, be entitled
to receive the benefits of and, if a Notice Holder, be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement to the aforesaid extent.

      (e) 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.

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

      (g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

      (h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.

      (i) Survival. The respective indemnities, agreements, representations,
warranties and other provisions set forth in this Agreement or made pursuant
hereto shall remain in full force and effect, regardless of any investigation
(or any statement as to the results thereof) made by or on behalf of any Notice
Holder, any director, officer or partner of such Holder, any agent or
underwriter, any director, officer or partner of such agent or underwriter, or
any controlling person of any of the foregoing, and shall survive the transfer
and registration of the Registrable Securities of such Holder.

                                       19
<PAGE>

      (j) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its Affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.

      11. Submission to Jurisdiction; Appointment of Agent for Service

      The Company agrees that any suit, action or proceeding against the Company
arising out of or based upon this Agreement or the transactions contemplated
hereby may be instituted in any State or Federal court in The City of New York,
New York, and waives any objection which it may now or hereafter have to the
laying of venue of any such proceeding, and irrevocably submits to the
non-exclusive jurisdiction of such courts in any suit, action or proceeding. The
Company expressly accepts the non-exclusive jurisdiction of any such court in
respect of any such suit, action or proceeding. The Company agrees that a final
judgment in any such proceeding brought in any such court shall be conclusive
and binding thereupon and may be enforced in any other court in the jurisdiction
to which the Company is or may be subject by suit upon such judgment.

               [Remainder of this Page Intentionally Left Blank]

                                       20
<PAGE>

      Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.

                                        Very truly yours,

                                        Cray Inc.,
                                        a Washington corporation

                                        /s/ Kenneth W. Johnson

                                        By:_______________________________
                                           Name: Kenneth W. Johnson
                                           Title: Senior Vice President, General
                                           Counsel, Chief Financial Officer and
                                           Corporate Secretary

Accepted as of the date hereof:

      BEAR, STEARNS & CO. INC.

      /s/ Stephen J. Parish

      By:________________________________
      Name: Stephen J. Parish
      Title: Senior Managing Director

                                       21
<PAGE>

                                                                    Exhibit 10.1

                                                                      APPENDIX A

                                   CRAY INC.

                  FORM OF NOTICE OF REGISTRATION STATEMENT AND
               SELLING SECURITYHOLDER ELECTION AND QUESTIONNAIRE
              3.0% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2024

NOTICE

      Cray Inc. (the "Company") has filed, or intends shortly to file, with the
Securities and Exchange Commission (the "SEC") a registration statement on Form
S-3 or such other Form as may be available (the "Shelf Registration Statement")
for the registration and resale under Rule 415 of the Securities Act of 1933, as
amended (the "Securities Act"), of the Company's 3.0% Convertible Senior
Subordinated Notes due 2024 (CUSIP No. 225223 AA4) (the "Notes"), and common
stock, $0.01 par value, issuable upon conversion thereof (the "Shares" and
together with the Notes, the "Transfer Restricted Securities") in accordance
with the terms of the Registration Rights Agreement, dated as of December 6,
2004 (the "Registration Rights Agreement") between the Company and Bear, Stearns
& Co. Inc. A copy of the Registration Rights Agreement is available from the
Company. All capitalized terms not otherwise defined herein have the meanings
ascribed thereto in the Registration Rights Agreement.

      To sell or otherwise dispose of any Transfer Restricted Securities
pursuant to the Shelf Registration Statement, a beneficial owner of Transfer
Restricted Securities generally will be required to be named as a Selling
Securityholder in the related Prospectus, deliver a Prospectus to purchasers of
Transfer Restricted Securities, be subject to certain civil liability provisions
of the Securities Act and be bound by those provisions of the Registration
Rights Agreement applicable to such beneficial owner (including certain
indemnification rights and obligations, as described below). To be included in
the Shelf Registration Statement, this Election and Questionnaire must be
completed, executed and delivered to the Company at the address set forth herein
for receipt PRIOR TO OR ON THE 20TH CALENDAR DAY FROM THE RECEIPT HEREOF (THE
"ELECTION AND QUESTIONNAIRE DEADLINE"). BENEFICIAL OWNERS THAT DO NOT COMPLETE
THIS ELECTION AND QUESTIONNAIRE AND DELIVER IT TO THE COMPANY PRIOR TO THE
ELECTION AND QUESTIONNAIRE DEADLINE AS PROVIDED BELOW WILL NOT BE NAMED AS
SELLING SECURITYHOLDERS IN THE SHELF REGISTRATION STATEMENT AT THE TIME IT IS
DECLARED EFFECTIVE AND, THEREFORE, WILL NOT BE PERMITTED TO SELL ANY TRANSFER
RESTRICTED SECURITIES PURSUANT TO THE SHELF REGISTRATION STATEMENT UNTIL WE
PREPARE AND FILE A PROSPECTUS SUPPLEMENT OR, IF REQUIRED, A POST-EFFECTIVE
AMENDMENT TO THE SHELF REGISTRATION STATEMENT.

      Certain legal consequences arise from being named as a Selling
Securityholder in the Shelf Registration Statement and the related Prospectus.
Accordingly, holders and beneficial owners of Transfer Restricted Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a Selling Securityholder in the Shelf
Registration Statement and the related Prospectus.

                                    ELECTION

      The undersigned holder (the "Selling Securityholder") of Transfer
Restricted Securities hereby elects to include in the Prospectus forming a part
of the Shelf Registration Statement the Transfer Restricted Securities
beneficially owned by it and listed below in Item III (unless otherwise
specified under Item III). The undersigned, by signing and returning this
Election and Questionnaire, understands that it will be bound with respect to
such Transfer Restricted

<PAGE>

Securities by the terms and conditions of this Election and Questionnaire and
the Registration Rights Agreement.

      Pursuant to the Registration Rights Agreement, the Selling Securityholder
has agreed to indemnify and hold harmless the initial purchaser, the Company,
and each person, if any, who controls any such parties within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and each of their respective
directors, officers, employees, representatives and agents, from and against
certain losses arising in connection with statements concerning the Selling
Securityholder made in the Shelf Registration Statement or the related
Prospectus, or any amendment or supplement thereto or any state securities or
"Blue Sky" applications in reliance upon the information provided in this
Election and Questionnaire.

      The Selling Securityholder hereby provides the following information to
the Company and represents and warrants that such information is accurate and
complete:

                                 QUESTIONNAIRE

I. Identification of Selling Securityholder:

      A. Full legal name of Selling Securityholder:

      B. Full legal name of registered holder (if not the same as (A) above)
         through which Transfer Restricted Securities listed in Item III are
         held:

      C. Is the Selling Securityholder an SEC-reporting company? If not, list
         below the individual or individuals who have sole or shared dispositive
         power with respect to the Transfer Restricted Securities, and the
         individual or individuals who have sole or shared voting power with
         respect to the Transfer Restricted Securities. Describe the
         relationship of such individuals to the Selling Securityholder,
         including their relationships with any intermediate entities, naming
         such entities.

      D. Full legal name of DTC participant (if applicable and if not the same
         as (B) above) through which Transfer Restricted Securities listed in
         Item III are held:

      E. Are you a broker-dealer registered pursuant to Section 15 of the
         Exchange Act? (Please answer "Yes" or "No.")

      F. If your response to (E) above is "No," are you an "affiliate" of a
         broker-dealer registered pursuant to Section 15 of the Exchange Act?
         (Please answer "Yes" or "No.") For the purposes of this item (F), an
         "affiliate" of a registered broker-dealer shall include any company
         that directly, or indirectly through one or more intermediaries,
         controls, or is controlled by, or is under common control with, such
         broker-dealer, and does not include

<PAGE>

         any of the individuals employed by such broker-dealer or its
         affiliates.

II. Address for notices to Selling Securityholders:

         Telephone:

         Fax:

         Contact Person:

III. Beneficial ownership of Transfer Restricted Securities:

      A. Type of Transfer Restricted Securities beneficially owned and principal
         amount of Notes or number of shares of Common Stock, as the case may
         be, beneficially owned:

      B. CUSIP No(s). of such Transfer Restricted Securities beneficially owned:

IV. Beneficial ownership of the Company's securities owned by the Selling
Securityholder:

         EXCEPT AS SET FORTH BELOW IN THIS ITEM IV, THE UNDERSIGNED IS NOT THE
         BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE COMPANY OTHER
         THAN THE TRANSFER RESTRICTED SECURITIES LISTED ABOVE IN ITEM III
         ("Other Securities").

      A. Type and amount of Other Securities beneficially owned by the Selling
         Securityholder:

      B. CUSIP No(s). of such Other Securities beneficially owned:

V. Relationship with the Company:

      A. Except as set forth below, neither the undersigned nor any of its
         affiliates, officers, directors or principal equity holders (5% or
         more) has held any position or office or has had any other material
         relationship with the Company (or their predecessors or affiliates)
         during the past three years.

         State any exceptions here:

      B. If the Selling Securityholder is a registered broker-dealer, except as
         set forth below, (i) neither the undersigned nor any of its affiliates
         has purchased the Transfer Restricted Securities other than in the
         ordinary course of business and (ii) at the time of the purchase of the
         Transfer Restricted Securities to be registered, there was no agreement
         or

<PAGE>

         understanding, written or otherwise, with any person to distribute any
         such Transfer Restricted Securities.

         State any exception here:

VI. Plan of Distribution:

      Except as set forth below, the undersigned (including its donees or
      pledgees) intends to distribute the Transfer Restricted Securities listed
      above in Item III pursuant to the Shelf Registration Statement only as
      follows (if at all). Such Transfer Restricted Securities may be sold from
      time to time directly by the undersigned or, alternatively, through
      underwriters, broker-dealers or agents. If the Transfer Restricted
      Securities are sold through underwriters, broker-dealers or agents, the
      Selling Securityholder will be responsible for underwriting discounts or
      commissions or agent's commissions. Such Transfer Restricted Securities
      may be sold in one or more transactions at fixed prices, at prevailing
      market prices at the time of sale, at varying prices determined at the
      time of sale or at negotiated prices. Such sales may be effected in
      transactions (which may involve crosses or block transactions):

            1. on any national securities exchange or quotation service on which
      the Transfer Restricted Securities may be listed or quoted at the time of
      sale;

            2. in the over-the-counter market;

            3. in transactions otherwise than on such exchanges or services or
      in the over-the-counter market; or

            4. through the writing of options.

      In connection with sales of the Transfer Restricted Securities or
      otherwise, the undersigned may enter into hedging transactions with
      broker-dealers, which may in turn engage in short sales of the Transfer
      Restricted Securities and deliver Transfer Restricted Securities to close
      out such short positions, or loan or pledge Transfer Restricted Securities
      to broker-dealers that in turn may sell such securities. State any
      exceptions here:

      Note: In no event will such method(s) of distribution take the form of an
      underwritten offering of the Transfer Restricted Securities without the
      prior agreement of the Company.

      We advise each Selling Securityholder of the following Interpretation A.65
of the July 1997 SEC Manual of Publicly Available Telephone Interpretations
regarding short selling:

            "An issuer filed a Form S-3 registration statement for a secondary
      offering of common stock which is not yet effective. One of the selling
      shareholders wanted to do a short sale of common stock "against the box"
      and cover the short sale with registered shares after the effective date.
      The issuer was advised that the short sale could not be made before the
      registration statement becomes effective, because the shares underlying
      the short sale are deemed to be sold at the time such sale is made. There
      would, therefore, be a violation of Section 5 if the shares were
      effectively sold prior to the effective date."

      By returning this Election and Questionnaire, the Selling Securityholder
will be deemed to be aware of the foregoing interpretation.

      By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees it will comply, with the
prospectus delivery requirements and other provisions of the Securities Act and
the Exchange Act and the respective rules and regulations

<PAGE>

promulgated thereunder, particularly Regulation M thereunder (or any successor
rules or regulations), in connection with any offering of Transfer Restricted
Securities pursuant to the Shelf Registration Statement.

      If the Selling Securityholder transfers all or any portion of the Transfer
Restricted Securities listed in Item III above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Election and Questionnaire and the Registration Rights
Agreement.

      By signing below, the Selling Securityholder consents to the disclosure of
the information contained herein in its answers to Items I through VI above and
the inclusion of such information in the Shelf Registration Statement, the
related Prospectus and any state securities or "Blue Sky" applications. The
Selling Securityholder understands that such information will be relied upon by
the Company in connection with the preparation or amendment of the Shelf
Registration Statement, the related Prospectus and any state securities or "Blue
Sky" applications.

      In accordance with the Selling Securityholder's obligation under the
Registration Rights Agreement to provide such information as may be required by
law for inclusion in the Shelf Registration Statement, the Selling
Securityholder agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Shelf Registration Statement remains effective. All
notices hereunder and pursuant to the Registration Rights Agreement shall be
made in writing at the address set forth below.

      Once this Election and Questionnaire is executed by the Selling
Securityholders and received by the Company, the terms of this Election and
Questionnaire and the representations and warranties contained herein shall be
binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives and assigns of the
Company and the Selling Securityholder with respect to the Transfer Restricted
Securities beneficially owned by such Selling Securityholder and listed in Item
III above. This Election and Questionnaire shall be governed by, and construed
in accordance with, the laws of the State of New York.

      IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Election and Questionnaire to be executed and delivered either in person or
by its authorized agent.

Dated:

                                         Beneficial Owner

                                         By: ___________________________________

                                         Name: _________________________________

                                         Title: ________________________________

<PAGE>

      Please return the completed and executed Election and Questionnaire for
receipt PRIOR TO OR ON THE 20TH CALENDAR DAY FROM RECEIPT HEREOF to:

            Cray Inc.
            411 First Avenue South
            Suite 600
            Seattle, Washington 98104
            Attention: Kenneth W. Johnson,
            Senior Vice President and General Counsel

            with a copy to:

            Stoel Rives, LLP
            600 University Street
            Suite 3600
            Seattle, Washington 98101
            Attention: L. John Stevenson, Jr.