APPLICATIONS

SEATTLE--Global supercomputer leader Cray Inc. today announced that it has raised $10 million from institutional investors in the form of common stock and warrants. These securities were sold under the Company's shelf-registration statement. The Company issued a total of 2,941,176 shares of Common Stock at $3.40 per share and four-year warrants covering 294,117 shares of Common Stock with an exercise price of $4.50 per share. The investors in this offering previously invested in the Company's fall 2001 convertible subordinated debenture financing. Those debentures were convertible at the holder's option at $2.35 per share or, if lower, an alternative floating conversion price equal to 94% of the volume weighted average price of the Company's Common Stock at the time of conversion. The holders have agreed to delete the floating conversion price provisions so that the debentures are convertible at the option of the holders only at a set price of $2.35 per share. The holders also agreed that the Company could redeem the debentures if the market price of the Cray common stock exceeded $6.00 per share for twenty consecutive trading days. The redemption price is 110% of the principal amount of the debentures plus accrued interest. The other terms of the debentures remain unchanged. "We are now engaged in multiple major projects which are sufficiently large that acquiring additional working capital is prudent," said James Rottsolk, Cray Chairman and Chief Executive Officer. "These amendments are indicative of the operational progress Cray has made, and ease the way ultimately to simplify our balance sheet by conversion of the convertible debt to straight equity. These changes and the additional investment are very strong positive statements by these investors about Cray and its future, and we appreciate their confidence."