REGISTRATION RIGHTS AGREEMENT

     This  REGISTRATION  RIGHTS  AGREEMENT  (this  "Agreement"),  is  made as of
January  18,  2001,  by  and  between  Tower   Semiconductor  Ltd.,  an  Israeli
corporation (the "Company" or "T"), SanDisk Corporation,  a Delaware corporation
("S"),  Alliance  Semiconductor  Corp.  a  Delaware  corporation   ("Alliance"),
Macronix  International  Co., Ltd., a Taiwanese  corporation  (together with its
affiliates  referred  to as  "Macronix"),  QuickLogic  Corporation,  a  Delaware
corporation   ("QuickLogic")   and  The  Israel  Corporation  Ltd.,  an  Israeli
corporation ("TIC").

     WHEREAS, the Company and S entered into a Share Purchase Agreement dated as
of July 4, 2000 (the  "SPA") and an  Additional  Purchase  Obligation  Agreement
dated as of July 4, 2000 (the "Additional Purchase Obligation Agreement");

     WHEREAS,  the Company and Alliance entered into a Share Purchase  Agreement
dated as of August  29,  2000  (the  "Alliance  SPA"),  which  includes  certain
provisions  of the  Additional  Purchase  Obligation  Agreement  (the  "Alliance
Additional Purchase Obligation Agreement");

     WHEREAS,  the Company and Macronix entered into a Share Purchase  Agreement
dated as of December  12, 2000 (the  "Macronix  SPA"),  which  includes  certain
provisions  of the  Additional  Purchase  Obligation  Agreement  (the  "Macronix
Additional Purchase Obligation Agreement");

     WHEREAS, the Company and QuickLogic entered into a Share Purchase Agreement
dated as of December 12, 2000 (the  "QuickLogic  SPA"),  which includes  certain
provisions of the Additional  Purchase  Obligation  Agreement  (the  "QuickLogic
Additional Purchase Obligation Agreement");

     WHEREAS,  it is a condition  precedent  to the closing of the  transactions
contemplated  in the SPA, the Alliance SPA, the Macronix SPA and the  QuickLogic
SPA that the parties hereto execute and deliver this Agreement;

     NOW  THEREFORE,  in  consideration  of the  premises,  mutual  promises and
covenants  contained in this  Agreement and intending to be legally  bound,  the
parties hereto hereby agree as follows:

1.   DEFINITIONS
1.
2.   For purposes of this Agreement:
3.
4.   1.1   The term "Holder" shall mean a member of the
           Purchaser Group and/or TIC, as the case may be.
5.
6.         1.2 The term "Ordinary  Shares" means the ordinary shares,  par value
           NIS1.00  each of the Company (as may be adjusted for any stock split,
           stock  combination,  reclassification  or any other  recapitalization
           event).
7.
8.   1.3   The term "Closing" means Closing as such term is
           defined in the SPA.
9.
10.        1.4  The  term  "Purchaser   Group"  means  S,  Alliance,   Macronix,
           QuickLogic and any additional  parties that enter into share purchase
           agreements with T prior to the Closing and that close  simultaneously
           with  the  SPA or  any  successors  thereto  or  permitted  assignees
           thereof.
11.
12.        1.5 The term  "Registrable  Securities"  means  the  Purchaser  Group
           Registrable Securities and/or the TIC Registrable Securities,  as the
           case may be,  and any  securities  issued as a  dividend  on or other
           distribution  with respect to, or in exchange for or  replacement  of
           such secutities.
13.
14.  1.6   The term "Purchaser Group Registrable
           Securities" means the Ordinary Shares (a)
           purchased at the Closing under the SPA by S, (b)
           purchased at the closing under the Alliance SPA
           by Alliance, (c) purchased at the closing under
           the Macronix SPA by Macronix, (d) purchased at
           the closing under the QuickLogic SPA by
           QuickLogic, (e) purchased by any additional
           members of the Purchaser Group at the closing of
           any additional share purchase agreements with T
           that close simultaneously with the Closing of
           the SPA, (f) purchased by S pursuant to the
           Additional Purchase Obligation Agreement, (g)
           purchased by Alliance pursuant to the Alliance
           Additional Purchase Obligation Agreement, (h)
           purchased by Macronix pursuant to the Macronix
           Additional Purchase Obligation Agreement, (i)
           purchased by QuickLogic pursuant to the
           QuickLogic Additional Purchase Obligation
           Agreement, (j) purchased by any additional
           members of the Purchaser Group pursuant to an
           additional purchase obligation agreement entered
           into, prior to the Closing of the SPA, between T
           and such additional members of the Purchaser
           Group, (k) otherwise issued by the Company to S
           pursuant to the terms of the SPA or the
           Additional Purchase Obligation Agreement, (l)
           otherwise issued by the Company to Alliance
           pursuant to the terms of the Alliance SPA or the
           Alliance Additional Purchase Obligation
           Agreement, (m) otherwise issued by the Company
           to Macronix pursuant to the terms of the
           Macronix SPA or the Macronix Additional Purchase
           Obligation Agreement, (n) otherwise issued by
           the Company to QuickLogic pursuant to the terms
           of the QuickLogic SPA or the QuickLogic
           Additional Purchase Obligation Agreement, and
           (o) otherwise issued by the Company to any
           additional member of the Purchaser Group
           pursuant to the terms of any additional share
           purchase agreements with T that close
           simultaneously with the Closing or any
           additional purchase obligation agreement entered
           into, prior to the Closing of the SPA, between T
           and such additional members of the Purchaser
           Group. As to any particular Registrable
           Securities, such shares shall cease to be
           Registrable Securities for purposes of this
           Agreement when (i) a registration statement with
           respect to the sale of such shares shall have
           become effective under the Securities Act and
           such shares shall have been disposed of under
           such registration statement, (ii) such shares
           shall have been otherwise transferred or
           disposed of, and new certificates therefor not
           bearing a legend restricting further transfer
           shall have been delivered by the Company, and
           subsequent transfer or disposition of them shall
           not require their registration or qualification
           under the Securities Act or any similar state
           law then in force or (iii) such shares shall
           have ceased to be outstanding.
15.
16.  1.7   The terms "register," "registered" and
           "registration" refer to a registration effected
           by preparing and filing a registration statement
           or similar document in compliance with the
           Securities Act, and the declaration or ordering
           by the SEC of effectiveness of such registration
           statement or document, or the equivalent under
           the laws of another jurisdiction.
17.
18.  1.8   The term "Securities Act" means the United
           States Securities Act of 1933, as amended.
19.
20.  1.9   The term "SEC" means the United States
           Securities and Exchange Commission.
21.
22.  1.10  The term "TIC" means The Israel Corporation Ltd.
23.
24.        1.11 The term "TIC Registrable  Securities" means the Ordinary Shares
           held by TIC as of the date of the Closing.  As to any  particular TIC
           Registrable Securities, such shares shall cease to be TIC Registrable
           Securities  for purposes of this  Agreement  when (i) a  registration
           statement  with  respect to the sale of such shares shall have become
           effective  under the  Securities  Act and such shares shall have been
           disposed of under such registration statement, (ii) such shares shall
           have been otherwise  transferred or disposed of, and new certificates
           therefor not bearing a legend restricting further transfer shall have
           been delivered by the Company, and subsequent transfer or disposition
           of them shall not require their  registration or qualification  under
           the Securities Act or any similar state law then in force, (iii) such
           shares shall have ceased to be outstanding,  or (iv) such shares have
           been sold pursuant to Rule 144 or Rule 144A under the Securities Act.
           .
25.
26.        1.12 The term  "Additional  Purchase  Obligation"  means  each of the
           additional  obligations  to purchase  Ordinary  Shares of the Company
           issued to S pursuant to the Additional Purchase Obligation Agreement,
           the additional obligations to purchase Ordinary Shares of the Company
           issued to  Alliance  pursuant  to the  Alliance  Additional  Purchase
           Obligation Agreement, the additional obligations to purchase Ordinary
           Shares of the  Company  issued to Macronix  pursuant to the  Macronix
           Additional Purchase Obligation Agreement,  the additional obligations
           to  purchase  Ordinary  Shares of the  Company  issued to  QuickLogic
           pursuant to the QuickLogic  Additional Purchase Obligation  Agreement
           or any similar additional  obligations to purchase Ordinary Shares of
           the Company issued to any additional  members of the Purchaser  Group
           pursuant to an additional purchase obligation agreement entered into,
           prior to the Closing of the SPA, between T and such additional member
           of the Purchaser Group.

2.    DEMAND REGISTRATION

      2.1  At any time  following  the third  anniversary  of the  Closing  (the
           "Demand  Period"),  TIC and each of S,  Alliance  and  Macronix,  may
           request in writing that all or part of their  Registrable  Securities
           be  registered  under the  Securities  Act and/or  listed so as to be
           eligible for public trading on any  securities  exchange on which the
           Ordinary Shares are otherwise traded (a "Demand"); provided, however,
           the  initiation  of such a Demand  may not be made by a  Holder  that
           holds under  1,500,000  Ordinary  Shares.  In  addition,  at any time
           during the Demand  Period,  members of the Purchaser  Group holding a
           majority of the Purchaser  Group  Registrable  Securities may jointly
           initiate an additional Demand.  Notwithstanding the foregoing, in the
           event  that,  pursuant  to  Section  5.3 of the  Additional  Purchase
           Obligation  Agreement,  a member of the Purchaser Group that holds at
           least 800,000 Ordinary Shares does not exercise any of its Additional
           Purchase Obligations, the right of such member of the Purchaser Group
           to initiate a Demand shall be  accelerated to the tenth day after the
           date upon which the event  giving rise to the right of such member of
           the  Purchaser   Group  not  to  exercise  the  Additional   Purchase
           Obligation occurs. Upon receipt of a Demand of a member or members of
           the Purchaser Group, the Company will promptly give written notice of
           such Demand to TIC and to all other  members of the  Purchaser  Group
           and the Company  shall  effect the  registration  of all  Registrable
           Securities  for  which  registration  has  been  requested  including
           Registrable  Securities  which  the  Company  has been  requested  to
           register by TIC or members of the Purchaser  Group by written request
           given to the Company  within 30 days after the giving of such written
           notice by the Company. The Company shall use its best efforts to have
           a Demand  become  effective  by the 60th  day  after a member  of the
           Purchaser  Group  makes  such  Demand  and,  shall  keep such  Demand
           effective  until  the  distribution  of such  Registrable  Securities
           registered  pursuant  thereto  is  complete,  if  underwritten,   or,
           otherwise, for 180 days. Upon receipt of a Demand of TIC, the Company
           will  promptly  give written  notice of such Demand to all members of
           the Purchaser Group and the Company shall effect the  registration of
           all Registrable  Securities for which registration has been requested
           including Registrable Securities which the Company has been requested
           to  register  by members of the  Purchaser  Group by written  request
           given to the Company  within 30 days after the giving of such written
           notice by the Company. The Company shall use its best efforts to have
           a Demand become effective by the 60th day after TIC makes such Demand
           and, shall keep such Demand  effective until the distribution of such
           Registrable  Securities  registered pursuant thereto is complete,  if
           underwritten, or, otherwise, for 180 days.

      2.2  In the  event of a Demand  by a member or  members  of the  Purchaser
           Group  in  which  the  registration  of  Registrable   Securities  is
           underwritten and the managing underwriter of the offering advises the
           members  of the  Purchaser  Group and TIC in writing  that  marketing
           factors   require  a  limitation  of  the  number  of  shares  to  be
           underwritten, then there shall be excluded from such registration and
           underwriting  to the extent  necessary  to satisfy  such  limitation,
           first  shares  which the  Company  may wish to  register  for its own
           account or for the account of other shareholders of the Company,  and
           then shares  held by TIC,  and then shares held by the members of the
           Purchaser Group on a pro rata basis to the number of shares that each
           member of the Purchaser Group included in the Demand. In the event of
           a  Demand  by TIC  in  which  the  registration  of  the  Registrable
           Securities  is  underwritten  and  the  managing  underwriter  of the
           offering  advises  TIC and the  members  of the  Purchaser  Group  in
           writing that marketing  factors require a limitation of the number of
           shares to be  underwritten,  then there shall be  excluded  from such
           registration and underwriting to the extent necessary to satisfy such
           limitation,  first  shares which the Company may wish to register for
           its own  account  or for the  account  of other  shareholders  of the
           Company,  and then shares held by the members of the Purchaser  Group
           on a pro rata basis to the number of shares  that each  member of the
           Purchaser Group included in the Demand,  and then shares held by TIC.
           In the event that, following a receipt of a request by the members of
           the  Purchaser  Group  and/or  TIC,  as the case may be, as  detailed
           above,  the  managing  underwriter  advises the  Company  that due to
           marketing  factors the shares  requested to be registered for trading
           could not be sold,  and  accordingly  the  Company  does not effect a
           registration  statement,  then such  request  by the  members  of the
           Purchaser  Group  and/or  TIC,  as the  case  may  be,  shall  not be
           considered a Demand under this Section 2.

      2.3  Any  registration  proceeding  begun  pursuant to Section 2.1 that is
           subsequently withdrawn at the request of the members of the Purchaser
           Group that initiated such registration  proceeding and/or TIC, as the
           case may be, shall count toward the quota of registration  statements
           which the members of the Purchaser  Group and/or TIC, as the case may
           be,  have the right to Demand  pursuant  to  Section  2.1;  provided,
           however, that such withdrawn  registration shall not be so counted as
           a Demand  if such  withdrawal  is based  upon  (a)  material  adverse
           information  relating  to the Company or its  condition,  business or
           prospects  which  is  different  from  that  generally  known  to the
           member(s) of the  Purchaser  Group that were to  participate  in such
           registration  proceeding,  in the  event of a Demand  by a member  or
           members of the  Purchaser  Group and/or TIC, in the event of a Demand
           by TIC, as the case may be, at the time of its request or (b) general
           securities  market conditions which are different from that generally
           known  to  the  member(s)  of  the  Purchaser   Group  that  were  to
           participate in such registration proceeding, in the event of a Demand
           by a member or members of the  Purchaser  Group  and/or  TIC,  in the
           event of a  Demand  by TIC,  as the  case may be,  at the time of its
           request,  provided,  in  connection  with this clause  (b),  that the
           member(s) of the  Purchaser  Group that were to  participate  in such
           registration  proceeding,  in the  event of a Demand  by a member  or
           members of the  Purchaser  Group and/or TIC, in the event of a Demand
           by TIC, as the case may be,  reimburse  the Company for its  expenses
           incurred in connection with effecting such withdrawn registration.

      2.4  The Company may not cause any other  registration  of securities  for
           sale for its own account (other than a registration  of securities to
           be offered to  employees,  directors  or  consultants  pursuant  to a
           benefit  plan on Form  S-8 or a  registration  in  connection  with a
           merger, an exchange offer or any acquisition) to be initiated after a
           registration   requested  pursuant  to  Section  2.1  and  to  become
           effective  less  than  180  days  after  the  effective  date  of the
           registration requested pursuant to Section 2.1.

      2.5  Notwithstanding  the other provisions of this Section 2, in the event
           that at any time during the Demand  Period the Company  shall receive
           from a Holder,  or a group of  Holders,  a written  request  that the
           Company  effect  a  registration  on Form F-3 (or any  equivalent  or
           successor  form) with respect to Registrable  Securities  (the "F-3")
           where the aggregate  net proceeds  from the sale of such  Registrable
           Securities  equals  at least  three  million  United  States  Dollars
           (US$3,000,000),  the  Company  will  within  twenty  (20) days  after
           receipt  of any such  request,  file such  registration  and all such
           qualifications  and  compliance  as may be so requested  and as would
           permit or facilitate the sale and distribution of all or such portion
           of the Registrable  Securities as are specified in such request,  and
           use its best efforts to have such  registration on Form F-3 effective
           by the 60th day  after the  Holder,  or group of  Holders,  make such
           request and keep such  registration  on Form F-3 effective  until the
           distribution is complete,  if underwritten,  or,  otherwise,  for 270
           days; PROVIDED,  HOWEVER,  that the Company shall not be obligated to
           file any such registration,  qualification or compliance, pursuant to
           this  Section  2.5 if the  Company  has,  within  the 180 day  period
           preceding  the  date  of  such  request,  already  effected  one  (1)
           registration  for a requesting  Holder  pursuant to this Section 2.5.
           The Company  undertakes that it will use its best efforts to continue
           to comply with all necessary filings and other  requirements so as to
           maintain its qualification to use Form F-3.

      2.6  The  Company  shall not be  required  to effect  more than  three (3)
           registrations  initiated by TIC under  Section 2.1. The Company shall
           not be required to effect more than one (1) registration initiated by
           each  of S,  Alliance  and  Macronix  under  Section  2.1 and one (1)
           additional registration jointly initiated by members of the Purchaser
           Group  holding  a  majority  of  the  Purchaser   Group   Registrable
           Securities under Section 2.1. Concurrent  registrations in respect of
           multiple  exchanges shall be construed as a single  registration  for
           the purposes of this Section 2.6.

      2.7  The  Company  shall  have the  right to defer  filing a  registration
           statement  (a  "Registration  Deferral")  under  the  Securities  Act
           pursuant to this Section 2 not more than once in any 12-month  period
           if (i) the Board of Directors of the Company shall  determine that it
           would  be  seriously   detrimental   to  the  Company  to  file  such
           registration  statement  at the date the filing  would  otherwise  be
           required under this Agreement,  or (ii) the Board of Directors of the
           Company  determines  in  good  faith  that  (A)  the  Company  is  in
           possession  of  material,   non-public   information   concerning  an
           acquisition, merger, recapitalization,  consolidation, reorganization
           or other  material  transaction  by or of the  Company or  concerning
           pending  or  threatened   litigation   and  (B)  disclosure  of  such
           information  would  jeopardize any such  transaction or litigation or
           otherwise materially harm the Company.

      2.8  A  Registration  Deferral  shall end by the date that is 90 days from
           the date of such  determination  by the Company (the "90th Day"), or,
           in the case described in Section  2.7(ii)  above,  the earlier of the
           90th Day and the date such material  information  is disclosed to the
           public or ceases to be  material,  such  transaction  is completed or
           abandoned or such litigation is settled or finally determined. In the
           event a  Registration  Deferral  is  instituted,  the  members of the
           Purchaser  Group and/or TIC, as the case may be, shall be entitled to
           withdraw   such  request.   If  such  request  is   withdrawn,   such
           registration  shall not count as one of the  permitted  registrations
           under this Section 2. The Company shall  promptly  notify the members
           of the  Purchaser  Group  and/or  TIC of the  expiration  or  earlier
           termination of any Registration Deferral.

3.    INCIDENTAL REGISTRATION

      3.1  If the  Company  at any  time  proposes  to  register  (other  than a
           registration  of securities to be offered to employees,  directors or
           consultants  pursuant to a benefit plan on Form S-8 or a registration
           in connection  with a merger,  an exchange offer or any  acquisition)
           any of its  securities,  it shall give  notice to each Holder of such
           intention at least thirty (30) days prior to filing such registration
           statement.  Upon the written request of any Holder within twenty (20)
           days after  receipt of any such notice,  the Company shall include in
           such registration all of the Registrable Securities indicated in such
           request, so as to permit the disposition of the shares so registered.

      3.2  Notwithstanding  any other  provision of this Section 3, in the event
           that the Company is  undertaking  a  registration  of its  securities
           other than pursuant to a Demand under Section 2 of this Agreement and
           the  managing   underwriter  advises  the  Company  in  writing  that
           marketing  factors require a limitation of the number of shares to be
           underwritten, then there shall be excluded from such registration and
           underwriting,  to the extent  necessary to satisfy  such  limitation,
           first shares held by any  shareholders  other than the Holders,  then
           shares held by the Holders pro rata to their respective shareholdings
           in the  Company,  provided  that in the event that a Holder  does not
           wish to include the full pro rata  amount of shares it could  include
           in the relevant  registration,  then the remaining Holders shall have
           the right to include in such  registration  an amount of shares equal
           to their pro rata portion  plus the amount of the other  Holder's pro
           rata  portion  that such Holder has chosen not to  include;  and then
           shares which the Company may wish to register for its own account.

4.    OBLIGATIONS OF THE COMPANY
1.
2.    Whenever  required under this  Agreement to file a registration  statement
      with respect to the Registrable Securities, the Company shall:
3.
4.         4.1  Prepare  and  file  with  the SEC  (or  other  relevant  body) a
           registration  statement with respect to such  Registrable  Securities
           and use its best  efforts to cause  such  registration  statement  to
           become effective.
5.
6.   4.2   Promptly prepare and file with the SEC (or other
           relevant body) such amendments and supplements
           to such registration statement and the
           prospectus used in connection with such
           registration statement as may be necessary to
           comply with the provisions of the Securities Act
           (or other relevant legislation) with respect to
           the disposition of all securities covered by
           such registration statement.
7.
8.   4.3   Furnish to the Holders such number of copies of
           a prospectus, including a preliminary
           prospectus, in conformity with the requirements
           of the Securities Act (or other relevant
           legislation), and such other documents as it may
           reasonably request in order to facilitate the
           disposition of Registrable Securities owned by
           it.
9.
10.  4.4   Register and qualify the securities covered by
           such registration statement under such other
           securities or blue sky laws of such
           jurisdictions as shall be reasonably requested
           by the Holders, provided, however, that the
           Company shall not be required to qualify to do
           business as a foreign corporation or to file any
           general consent to service of process in any
           jurisdiction in which it has not already so
           qualified or filed.
11.
12.  4.5   In the event of any underwritten public
           offering, enter into and perform its obligations
           under an underwriting agreement with usual and
           customary terms that are generally satisfactory
           to the managing underwriter of such offer. The
           Holders shall also enter into and perform their
           obligations under such an agreement (the terms
           of which must be satisfactory to each Holder if
           such Holder is to participate in such
           offering).
13.
14.  4.6   Notify the Holders at any time when a prospectus
           relating to a registration statement filed
           pursuant hereto is required to be delivered
           under the Securities Act or the happening of any
           event as a result of which the prospectus
           included in such registration statement, as then
           in effect, includes 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 not misleading in
           the light of the circumstances then existing, in
           which event the Holders shall forthwith
           discontinue disposition of its Registrable
           Securities pursuant to such prospectus until it
           is advised in writing by the Company that the
           use of such prospectus may be resumed or until
           such holder receives copies of any supplement or
           amendment to such prospectus.
15.
16.  4.7   Cause all Registrable Securities registered
           pursuant thereunder to be listed on each
           securities exchange on which similar securities
           issued by the Company are then listed.
17.
18.        4.8  Provide a  transfer  agent  and  registrar  for all  Registrable
           Securities  registered  pursuant hereunder and a CUSIP number for all
           such Registrable Securities not later than the effective date of such
           registration.
19.
20.  4.9   Afford the Holders and their representatives the
           opportunity to make such examination of the
           business affairs of the Company and its
           subsidiaries as the Holders may reasonably deem
           necessary to satisfy itself as to the accuracy
           of the registration statement (subject to a
           reasonable confidentiality undertaking on the
           part of the Holders and their representatives).
21.
22.        4.10 Furnish,  at the request of the Holders in  connection  with the
           registration of Registrable Securities pursuant to this Agreement, on
           the date  that  such  Registrable  Securities  are  delivered  to the
           underwriters  for sale,  if such  securities  are being sold  through
           underwriters,  or,  if such  securities  are not being  sold  through
           underwriters,  on the  date  that  the  registration  statement  with
           respect to such securities becomes effective,  (i) an opinion,  dated
           such date, of the counsel  representing  the Company for the purposes
           of such  registration,  in form and substance as is customarily given
           to underwriters in an underwritten public offering,  addressed to the
           underwriters,  if any, and to the Holders,  and (ii) a letter,  dated
           such date, from the independent  certified public  accountants of the
           Company, in form and substance as is customarily given by independent
           certified  public  accountants  to  underwriters  in an  underwritten
           public offering,  addressed to the  underwriters,  if any, and to the
           Holders.
23.
24.  5.    INFORMATION
25.
26.   It shall be a condition  precedent  to the  obligations  of the Company to
      take any action  pursuant to this Agreement that each Holder shall furnish
      to  the  Company  such  information   regarding  itself,  the  Registrable
      Securities  held by it, and the  intended  method of  disposition  of such
      securities  as shall be  required  to  effect  the  registration  of their
      Registrable Securities.
27.
28.  6.    EXPENSES OF REGISTRATION
29.
30.   All expenses  incurred by the Company in connection with any  registration
      pursuant to this Agreement (other than underwriter's commissions and fees)
      including without  limitation all  registration,  filing and qualification
      fees,  printers' and accounting fees and fees and disbursements of counsel
      for the Company and fees and disbursements of one counsel for the Holders,
      shall be borne by the Company.
31.
32.  7.    INDEMNIFICATION
33.
34.  In the event any Ordinary Shares are included in a
      registration statement in accordance herewith:
35.
36.  7.1   To the extent permitted by law, the Company will
           indemnify and hold harmless the Holders, the
           officers and directors of any Holder, any
           underwriter (as defined in the Securities Act)
           for any Holder and each person, if any, who
           controls any Holder or underwriter within the
           meaning of the Securities Act or the 1934 Act
           against any losses, claims, damages, or
           liabilities to which they may become subject
           under the Securities Act, the Securities
           Exchange Act or other United States federal or
           state law or the securities laws of the State of
           Israel, insofar as such losses, claims, damages,
           or liabilities (or actions in respect thereof)
           arise out of or are based upon any of the
           following statements, omissions or violations
           (collectively a "Violation"): (i) any untrue
           statement of a material fact contained in such
           registration statement, including any
           preliminary prospectus or final prospectus
           contained therein or any amendments or
           supplements thereto; (ii) the omission to state
           therein a material fact required to be stated
           therein, or necessary to make the statements
           therein not misleading in light of the
           circumstances under which they were made, or
           (iii) any violation by the Company of the
           Securities Act, the Securities Exchange Act, any
           state securities law or any rule or regulation
           promulgated under the Securities Act, the
           Securities Exchange Act or any state securities
           law, or any of the securities laws of the State
           of Israel or any rule or regulation thereunder;
           and the Company will reimburse each such Holder,
           officer or director, underwriter or controlling
           person for any legal or other expenses
           reasonably incurred by them in connection with
           investigating or defending any such loss, claim,
           damage, liability, or action; provided, however,
           that the indemnity agreement contained in this
           Section 7, shall not apply to amounts paid in
           settlement of any such loss, claim, damage,
           liability, or action if such settlement is
           effected without the consent of the Company
           (which consent shall not be unreasonably
           withheld), nor shall the Company be liable to a
           Holder, underwriter or controlling person in any
           such case for any such loss, claim, damage,
           liability, or action to the extent that it
           arises out of or is based upon a Violation which
           occurs in reliance upon and in conformity with
           written information furnished to the Company
           expressly for use in connection with such
           registration by a Holder, underwriter or
           controlling person. Such indemnity shall remain
           in full force and effect regardless of any
           investigation made by or on behalf of a Holder,
           the underwriter or any controlling person of a
           Holder or the underwriter, and regardless of any
           sale in connection with such offering by a
           Holder.
37.
38.  7.2   To the extent permitted by law, each Holder will
           indemnify and hold harmless the Company, each of
           its directors, each of its officers who have
           signed the registration statement, each person,
           if any, who controls the Company within the
           meaning of the Securities Act, any underwriter
           (within the meaning of the Securities Act) for
           the Company, any person who controls such
           underwriter, and any other parties selling
           securities in such registration statement or any
           directors or officers or any persons controlling
           such parties, against any losses, claims,
           damages, or liabilities to which the Company or
           any such director, officer, controlling person,
           or underwriter or controlling person may become
           subject under the Securities Act, the Securities
           Exchange Act or other United States federal or
           state law, or any of the securities laws of the
           State of Israel, insofar as such losses, claims,
           damages, liabilities (or actions in respect
           hereto) arise out of or are based upon any
           Violation, in each case to the extent (and only
           to the extent) that such Violation occurs in
           reliance upon and in conformity with written
           information furnished to the Company by such
           Holder expressly for use in connection with such
           registration statement; and such Holder will
           reimburse any legal or other expenses reasonably
           incurred by the Company or any such director,
           officer, controlling person, underwriter or
           controlling person, in connection with
           investigating or defending any such loss, claim,
           damage, liability or action attributable to such
           Violation or alleged Violation; provided,
           however, that the indemnity agreement contained
           in this Section 7 shall not apply to amounts
           paid in settlement of any such loss, claim,
           damage, liability or action if such settlement
           is effected without the consent of such Holder,
           which consent shall not be unreasonably
           withheld. In no event shall the liability of a
           Holder hereunder exceed the net proceeds from
           the offering received by such Holder.
39.
40.  7.3   Promptly after receipt by an indemnified party
           under this Section 7.3 of notice of the
           commencement of any action (including any
           governmental action), such indemnified party
           will, if a claim in respect thereof is to be
           made against any indemnifying party under this
           Section 7, notify the indemnifying party in
           writing of the commencement thereof and the
           indemnifying party shall have the right to
           participate in, and, to the extent the
           indemnifying party so desires, jointly with any
           other indemnifying party similarly noticed, to
           assume the defense thereof with counsel mutually
           satisfactory to the parties; provided, however,
           that an indemnified party shall have the right
           to retain its own counsel, with the fees and
           expenses to be paid by the indemnifying party,
           if representation of such indemnified party by
           the counsel retained by the indemnifying party
           would be inappropriate due to actual or
           potential differing interests between such
           indemnified party and any other party
           represented by such counsel in such proceeding.
           The failure to notify an indemnifying party
           within a reasonable time of the commencement of
           any such action, if prejudicial to its ability
           to defend such action, shall relieve such
           indemnifying party of any liability to the
           indemnifying party under this Section 7, but the
           omission to so notify the indemnifying party
           will not relieve such indemnifying party of any
           liability that it may have to any indemnified
           party otherwise than under this Section 7.
41.
42.

<PAGE>


8.   CONTRIBUTION
43.
44.   If  for  any  reason  the  foregoing  indemnity  is  unavailable,   or  is
      insufficient to hold harmless an indemnified  party, then the indemnifying
      party shall  contribute  to the amount paid or payable by the  indemnified
      party as a result of such losses, claims, damages, liabilities or expenses
      (i) in such proportion as is appropriate to reflect the relative  benefits
      received  by the  indemnifying  party on the one hand and the  indemnified
      party  on the  other  from  the  registration  or (ii)  if the  allocation
      provided  by clause  (i) above is not  permitted  by  applicable  law,  or
      provides a lesser sum to the indemnified party than the amount hereinafter
      calculated,  in such  proportion as is appropriate to reflect not only the
      relative benefits  received by the indemnifying  party on the one hand and
      the  indemnified  party on the  other but also the  relative  fault of the
      indemnifying party and the indemnified party as well as any other relevant
      equitable considerations;  provided that in no event shall any amount paid
      or due by a Holder  pursuant to Sections 7 and 8 hereunder  exceed the net
      proceeds  from the offering  received by such Holder.  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.
45.
46.  9.    DESIGNATION OF UNDERWRITER
47.
48.  9.1   In the case of any registration effected
           pursuant to Section 2.1, should the offering be
           underwritten, the Company and the relevant
           member of the Purchaser Group and/or TIC, as the
           case may be, shall confer as to the selection of
           a managing underwriter. Should they fail to
           reach agreement, the selection shall be made by
           the relevant member of the Purchaser Group
           and/or TIC, as the case may be.
49.
50.  9.2   In the case of any registration initiated by the
           Company, the Company shall have the right to
           designate the managing underwriter in any
           underwritten offering.
51.
52.  10.   RULE 144 REPORTING
53.
54.   With a view  to  making  available  the  benefits  of  certain  rules  and
      regulations  of the SEC  that  may  permit  the  sale  of the  Registrable
      Securities to the public without  registration,  the Company agrees to use
      its best efforts to:
55.
56.  10.1  make and keep public information regarding the
           Company available as those terms are understood
           and defined in Rule 144 under the Securities
           Act, at all times;
57.
58.        10.2 file with the  Commission  in a timely  manner all  reports  and
           other documents  required of the Company under the Securities Act and
           the  Securities  Exchange Act at any time after it has become subject
           to such reporting requirements;
59.
60.        10.3 so long as a Holder owns any Registrable Securities,  furnish to
           such Holder forthwith upon written request a written statement by the
           Company as to its compliance with the reporting  requirements of Rule
           144, and of the  Securities  Act and the  Securities  Exchange Act, a
           copy of the most recent  annual or  quarterly  report of the Company,
           and such other  reports  and  documents  so filed as such  Holder may
           reasonably  request in availing  itself of any rule or  regulation of
           the SEC  allowing  such  Holder to sell any such  securities  without
           registration.
61.
62.

<PAGE>


11.  ASSIGNMENT OF REGISTRATION RIGHTS
63.
64.   A Holder may assign its rights and obligations under this Agreement to any
      person  or  entity  provided  that  such  assignment  may be made  only in
      connection with sale of at least 300,000  Ordinary Shares by a Holder to a
      person or an entity and that the  assignment  relates only to those shares
      transferred  to such  person or entity,  and  further  provided  that such
      assignee agrees to be bound by the terms of this Agreement.
65.
66.  12.   AMENDMENTS, WAIVERS, ETC.
67.
68.   This  Agreement  may not be  amended,  waived  or  otherwise  modified  or
      terminated  except by an instrument in writing signed by the Company and a
      Holder, if the amendment is to be effective against such Holder.
69.
70.  13.   MARKET STAND-OFF AGREEMENT.
71.
72.   Holders of  Registrable  Securities,  if  requested by the Company and the
      underwriters  of the Company's  securities,  shall enter into an agreement
      (the  "Market  Stand-off  Agreement")  not to sell,  sell any  option,  or
      otherwise  transfer or dispose of any Ordinary Shares or other  securities
      of the  Company  held by such  holders  during the 90-day  period (or such
      shorter period as is required by the underwriters) following the effective
      date of a registration statement of the Company filed under the Securities
      Act, provided that such restrictions shall not apply to Ordinary Shares or
      other  securities  of the Company that are  included in such  registration
      statement,   and  shall  apply  only  to  the  first  firmly  underwritten
      registered equity offering of the Company's securities occurring after the
      third  anniversary  of the date of the this  Agreement  and no such holder
      shall be  obligated  to enter  into a Market  Stand-off  Agreement  if any
      officer,  director  or  holder of 5% or more of the  outstanding  Ordinary
      Shares of the Company is not subject to a Market Stand-off  Agreement with
      substantially  similar terms.  The  underwriters  in connection  with such
      registration  statement  are intended  third party  beneficiaries  of this
      provision.
73.
74.   In order to  enforce  the  foregoing  covenant,  the  Company  may  impose
      stop-transfer  instructions  with respect to the  securities  held by each
      Holder (and the  securities of every other person subject to the foregoing
      restriction) until the end of such period.
75.
76.  14.   COUNTERPART
77.
78.  This Agreement may be executed in one or more
      counterparts, all of which shall be considered one
      and the same agreement. Each party need not sign the
      same counterpart.
79.
80.  15.   ENTIRE AGREEMENT
81.
82.   This Agreement  constitutes the entire  agreement and supersedes all prior
      agreements and  understandings,  both written and oral,  among the parties
      with respect to the subject  matter  hereof,  including  the  Registration
      Rights  Agreement,  dated  February  28,  1993,  by and among the Company,
      National  Semiconductor (IC) Ltd., and Tower Semiconductor Holdings (1993)
      Ltd.
83.
84.  16.   GOVERNING LAW AND JURISDICTION
85.
86.   This Agreement shall be governed by, and construed in accordance with, the
      laws  of the  State  of  California  regardless  of the  laws  that  might
      otherwise govern under applicable  principles of conflicts of law thereof.
      Any action or proceeding  seeking to enforce any provision of, or based on
      any right arising out of, this Agreement may be brought against any of the
      parties solely in the courts of the State of  California,  and each of the
      parties   consents  to  the  jurisdiction  of  such  courts  (and  of  the
      appropriate  appellate courts) in any such action or proceeding and waives
      any objection to venue laid  therein.  Process in any action or proceeding
      referred to in the preceding  sentence may be served on any party anywhere
      in the world.
87.
88.  17.   ADDITIONAL PARTIES
89.
90.   The  parties  hereto  agree  that by the  execution  of a joinder  to this
      Agreement,   any  additional   parties  that  enter  into  share  purchase
      agreements  with T  prior  to  the  Closing  of the  SPA  and  that  close
      simultaneously with the SPA may become parties to this Agreement and shall
      be members of the Purchaser Group.


      IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement to be
signed on its behalf by its officers  thereunto  duly  authorized as of the date
first written above.


                             Tower Semiconductor Ltd.

                             By:  /s/ Yoav Nissan-Cohen
                                  ----------------------
                             Name: Yoav Nissan-Cohen
                             Title: Co-CEO


                             SanDisk Corporation

                             By:  /s/ Eli Harari
                                  ----------------------
                             Name: Eli Harari
                             Title: CEO

                             The Israel Corporation Ltd.

                             By:  /s/ Yossi Rose
                                  ----------------------
                             Name: Yossi Rose
                             Title: President and CEO

                             Alliance Semiconductor Corp.

                             By:  /s/ N. Damodar Reddy
                                  ----------------------
                             Name: N. Damodar Reddy
                             Title: President and CEO

                             Macronix International Co.,
                             Ltd., on behalf of itself and
                             its affiliates

                             By:  /s/ Miin Wu
                                  ----------------------
                             Name: Miin Wu
                             Title: President

                             QuickLogic Corp.

                             By:  /s/ E. Thomas Hart
                                  ----------------------
                             Name: E. Thomas Hart
                             Title: President and CEO