RESTRICTED STOCK AGREEMENT

RESTRICTED STOCK AGREEMENT

     This Restricted Stock Agreement ("Agreement") is made effective as of                      , 200                      , by and between Cray Inc., a Washington corporation ("Cray" or "the Company"), and                      ("Employee").

RECITALS

     WHEREAS, Cray has awarded a restricted stock grant to Employee pursuant to 2006 Long-Term Equity Compensation Plan (the "Plan"), and Employee desires to accept the grant subject to the terms and conditions of this Agreement.

AGREEMENT

     NOW, THEREFORE, in consideration of the promises and the mutual agreements contained herein, the parties hereby agree as follows:

     1.  Grant of Restricted Stock . Subject to the terms and conditions of this Agreement, Cray hereby grants to Employee [ • ] shares of Cray common stock (the "Restricted Shares"). The Restricted Shares are subject to forfeiture to Cray as set forth in Section 3 below.

     2.  Vesting. All of the Restricted Shares initially shall be unvested. Except as provided in Section 3, the Restricted Shares shall vest as follows:

     (a) 50% of the Restricted Shares shall vest on , and 50% of the Restricted Shares shall vest on [dates selected shall be two and four years after grant and tied to filing of 10-Q or 10-K with SEC to permit trading of stock in an open window period];

     (b) If, prior to the Restricted Shares vesting in full, Employee ceases to be employed by the Company as a result of death or Disability, or if the Company fails to have this Agreement assumed pursuant to Section 10 or if, following a Change of Control, in addition to death or Disability, the Employee’s employment is terminated without Cause or for Good Reason, as such terms are defined below, all of the Restricted Shares not then vested shall immediately vest; and

     (c) If paragraph (b) does not apply and, on or after 18 months* following the date of this Agreement, the Company terminates Employee’s employment for any reason, other than for Cause, or the Employee terminates his or her employment due to retirement on or after reaching age 62*, then in such event a pro-rata portion of the then unvested Restricted Shares shall vest, with the number determined by multiplying the number of Restricted Shares covered by this Agreement by a fraction, the numerator of which is the number of whole months that have passed since the date of this Agreement (purely for example, from a date certain in one month to the same date in the immediately succeeding month shall be considered one full month) to the date of termination of employment, and the denominator of

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which is 48 (rounded to the nearest whole share), and from that number so determined subtracting the number of Restricted Shares, if any, that then had previously vested under clause 2(a) above.

     [*The Chief Executive Officer, in his discretion, may in particular cases lower the requirement for 18 months of service to 12 months and lower the retirement age from age 62 to 59.5 years and may request a non-competition agreement for such changes.]

Nothing contained in this Agreement shall confer upon Employee any right to be employed by Cray or to continue to provide services to Cray or to interfere in any way with the right of Cray to terminate Employee’s services at any time for any reason, with or without Cause.

     3.  Forfeiture upon Termination . If Employee ceases to be employed by Cray for any reason, then except as expressly set forth in Section 2 any unvested Restricted Shares shall be automatically forfeited and cancelled by Cray, and Employee shall have no further right, title or interest in or to any of the unvested Restricted Shares.

     4.  Restriction on Transfer . Employee shall not sell, assign, pledge or in any manner transfer unvested Restricted Shares, or any right or interest in unvested Restricted Shares, whether voluntarily or by operation of law, or by gift, bequest or otherwise. Any sale or transfer, or purported sale or transfer, of unvested Restricted Shares, or any right or interest in unvested Restricted Shares, in violation of this Section 4 shall be null and void.

     5.  Tax Withholding and Section 83(b) Election . Employee acknowledges that any income recognized as a result of receiving the Restricted Shares will be treated as ordinary compensation income subject to federal, state and local income, employment and other tax withholding. Employee understands that if he or she makes an election under Section 83(b) of the Internal Revenue Code of 1986, as amended (a "Section 83(b) Election") with respect to some or all of the Restricted Shares, Employee will recognize ordinary compensation income at the time such Restricted Shares are received, in an amount equal to the fair market value of the Restricted Shares on that date. If Employee does not make a Section 83(b) Election with respect to some or all of the Restricted Shares, Employee will recognize ordinary compensation income at the time any portion of such Restricted Shares vest in accordance with Section 2 of this Agreement, in an amount equal to the fair market value of those Restricted Shares on the vesting date.

Within one day after notification by Cray, and prior to or concurrently with the delivery of the certificates representing the Restricted Shares, Employee shall pay to Cray the amount necessary to satisfy any applicable federal, state and local tax withholding requirements arising in connection with Employee’s receipt of the Restricted Shares, including any amounts required to be withheld at the time any portion of the Restricted Shares vest in accordance with Section 2 of this Agreement. Employee shall pay such amounts in cash. Employee also may pay through irrevocable instructions to a stock broker to deliver the amount of sales proceeds necessary to pay the applicable withholding tax in accordance with applicable governmental regulations and reasonably satisfactory to Cray. If additional withholding becomes required beyond any amount paid before delivery of the certificates

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representing the Restricted Shares, Employee shall pay such amount to Cray upon demand. To raise funds to pay applicable withholding taxes through sales of certain of the Restricted Shares, (a) if requested by Cray, Employee will arrange to sell certain of the Restricted Shares necessary as part of a block trade or similar coordinated event with other holders of Restricted Shares, and (b) Cray will cooperate with Employee to arrange and implement a suitable Rule 10b5-1 Plan. Employee shall sign and deliver such documents as Cray reasonably requests.

If Employee fails to pay any amount demanded, Cray shall have the right to withhold such amount from other amounts payable by Cray to Employee, including salary, subject to applicable law. In addition, Cray at its option and in its discretion shall have the right to cancel vested Restricted Shares with a value equal to the required withholding amount without any further action by Employee, all as reasonably determined by Cray.

EMPLOYEE UNDERSTANDS THAT TO BE VALID, A SECTION 83(b) ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE WITHIN 30 DAYS OF THE DATE THE OWNERSHIP OF THE RESTRICTED SHARES IS TRANSFERRED TO EMPLOYEE, A COPY OF THE ELECTION MUST BE PROVIDED TO CRAY, AND A COPY OF THE ELECTION MUST BE ATTACHED TO EMPLOYEE’S FEDERAL (AND POSSIBLY STATE) INCOME TAX RETURN FOR THE YEAR OF THE ELECTION. EMPLOYEE ACKNOWLEDGES THAT IF HE OR SHE CHOOSES TO FILE A SECTION 83(b) ELECTION, IT IS EMPLOYEE’S SOLE RESPONSIBILITY, AND NOT CRAY’S, TO MAKE A VALID AND TIMELY ELECTION. EMPLOYEE IS ENCOURAGED TO CONSULT HIS OR HER TAX ADVISOR REGARDING THE ADVISABILITY OF, AND PROCEDURE FOR, MAK