SHAREHOLDERS AGREEMENT
                                     BETWEEN
                       ALLIANCE SEMICONDUCTOR CORPORATION
                                       AND
                             THE ISRAEL CORPORATION

AGREEMENT (the "Agreement"),  dated as of August 29, 2000, by and among Alliance
Semiconductor Corporation ("Alliance") and The Israel Corporation ("TIC").

RECITALS

WHEREAS  Alliance has entered into an Agreement  with Tower  Semiconductor  Ltd.
dated August 29, 2000, in the form attached hereto as Exhibit A; and

WHEREAS  on  August  13,  2000,  TIC  and  SanDisk  Corporation  entered  into a
shareholders  agreement (the  "Shareholders  Agreement") in the form attached as
Exhibit B hereto; and

WHEREAS Alliance and TIC have agreed to enter into this Agreement.

NOW, THEREFORE,  in consideration of the premises and the covenants  hereinafter
contained, it is agreed as follows:

1.    Capitalized  terms used and not defined herein shall have the
meanings set forth in the Shareholders Agreement.

2.  Immediately  effective  upon the  signing of this  Agreement,  the terms and
conditions of the Shareholders Agreement as applicable to the term "Shareholder"
thereto  shall be binding on Alliance  and shall be  incorporated  by  reference
herein.

3.    Notwithstanding  the  provisions  of  Section  2 and  for the
purposes of this Agreement, the parties hereto agree as follows:

      a. In Section 1 (e) of the Shareholders  Agreement (Definition of the term
      "Shareholders"),  the word  "Alliance"  shall be inserted before the words
      "S, I".

      b.   One of the Wafer Partners  referred to in section 2.1.1.
      (e) shall be  Alliance  which  shall be entitled to appoint 1
      nominee as long as  Alliance  and its  Permitted  Transferees
      hold at least 5% of the outstanding Shares.

      c.  Alliance  undertakes  upon  itself  for as long as it is  entitled  to
      nominate a director to the Board of Directors,  as specified above, not to
      nominate to the Board of  Directors  of the  Company a director  who is an
      employee or consultant of the Company.

      d.   The  limitations set forth in section 3.1 shall apply to
      Alliance and its Permitted Transferees.

      Alliance shall be added to section 7.

      The words  "Share  Purchase  Agreement"  appearing  in  section 8 shall be
      replaced with the words "Agreement  between Alliance and the Company dated
      August 29, 2000.

      Notices to be sent to  Alliance  pursuant  to section  9.4 shall be to the
      following address:

           Alliance Semiconductor Corporation.
           2575 Augustine Drive
           Santa Clara, California 95054
           Attn: Bradley Perkins
           Tel: (408) 855-4900
           Fax: (408) 855-4999

      viii.The word "S" appearing  twice in the second line of Section 9.9 shall
      be replaced with the word "Alliance".

4.    This Agreement may be executed in one or more counterparts.

IN WITNESS  WHEREOF,  the parties have executed this Agreement as of the day and
year first above written.

Alliance Semiconductor Corporation           The Israel Corporation

By:   /s/ N. Damodar Reddy                   By: /s/ Yossi Rosen
      N. Damodar Reddy                           Yossi Rosen
      President and CEO                          Title: President and CEO