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Exhibit 4.88

# CONVERSION AGREEMENT

This
Conversion Agreement (this Agreement) is made and entered into
effective as of September  25, 2008 by and betweenTOWER SEMICONDUCTOR LTD.
(the Company or Tower), a company organized under
the laws of the State of Israel and BANK LEUMI LE-ISRAEL B.M., a banking corporation
organized under the laws of the State of Israel (the Bank).

WHEREAS,
Tower is an independent manufacturer of wafers whose Ordinary Shares are traded on the
Nasdaq Stock Market (NASDAQ) under the symbol TSEM and whose Ordinary
Shares and certain other securities are traded on the Tel-Aviv Stock Exchange
(TASE) under the symbol TSEM;

WHEREAS,
the Bank and Bank Hapoalim B.M. (collectively, the Banks) and Tower are
parties to a Facility Agreement dated January 18, 2001, as amended and restated on
August 24, 2006 and as further amended by Amendment No. 1 thereto dated
September 10, 2007 (the Facility Agreement); and

WHEREAS,
at the request of Tower, the Banks and Tower have entered into an Amending Agreement dated
September 25, 2008 (the Amending Agreement), the conditions to the
effectiveness of which include, inter alia,the conversion by each Bank of
US $100,000,000 (one hundred million US dollars) of its loans made to Tower pursuant
to the Facility Agreement and pursuant to an Equipment Facility Agreement dated
September 10, 2007 (the Loans) into a convertible capital note to
be issued to the Bank (a Capital Note) in the amount of
US $100,000,000 (one hundred million US dollars) which will in turn be convertible,
in whole or in part, by the Bank at any time and from time to time into 70,422,535
(seventy million, four hundred and twenty-two thousand, five hundred and thirty-five)
ordinary shares of Tower at a conversion price of US $1.42 (one US dollar and
forty-two cents) per share (such number of shares and conversion price, in each case,
subject to adjustment from time to time as provided in the Capital Note) and the entering
into by the Bank and Tower of a Registration Rights Agreement (the Registration
Rights Agreement) and of this Agreement, in each case, on the date of the
effectiveness of the Amending Agreement (the Amendment Closing Date);
and

WHEREAS,
prior to the date hereof, Jazz Technologies, Inc. and its subsidiaries have become
subsidiaries (as defined below), of Tower,

NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained herein and
for other good and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:

|1. | Interpretation.
|-- | ---------------

|1.1. | As used in Sections 3.8 and 5.1 of this Agreement:
|---- | --------------------------------------------------

| | 1.1.1. | control (including
the terms controlling,           controlled by or
under common control with, means: (i) direct or
indirect ownership of, or power to vote,           25% (twenty-five percent) or more of a
class of voting securities of a person;           (ii) the power to elect a majority
of the directors or trustees of a           person; or (iii) the possession direct
or indirect, of the power to direct           or cause the direction of the management
and policies of a person, whether           through the ownership of voting securities,
by contract or otherwise; and
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 1.1.2. | subsidiary of
a person means any company which is otherwise           directly or indirectly controlled
by such person. For the avoidance of doubt, a           subsidiary need not be
consolidated for financial statement purposes with such           person in order to be
deemed a subsidiary in this Agreement.
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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1.2.     Definitions.
Except as otherwise defined herein, terms and expressions           defined in the
Facility Agreement as amended and restated by the Amended           Agreement (the Restated
Facility Agreement) shall have the           same meanings when used in this
Agreement and all provisions of the Restated           Facility Agreement concerning
matters of construction and interpretation shall           apply to this Agreement.

1.3.     Preamble.
The preamble to this Agreement constitutes an integral part           thereof.

|2. | Conversion
of Loan and Issue of Capital Note on the Amendment Closing Date.
|-- | ---------------------------------------------------------------------------

| | The
Company hereby:
| | -------------------

2.1.    
          with effect as of the Amendment Closing Date, issues to the Bank, and the Bank
          hereby receives from the Company, in conversion of US $100,000,000 (one
          hundred million US dollars) of the Loans (being US $84,779,607
          (eighty-four million, seven hundred and seventy-nine thousand, six hundred and
          seven US dollars) of Loans under the Facility Agreement and
          US $15,220,393 (fifteen million, two hundred and twenty thousand, three
          hundred and ninety-three US dollars) of Loans under the Equipment Facility
          Agreement), an executed Capital Note in the principal amount of
          US $100,000,000 (one hundred million US dollars) in the form attached as
          Exhibit 1 hereto. For the avoidance of doubt
          (i) as of the Amendment Closing Date, the principal amount of Loans
          outstanding and owed by Tower to the Banks shall be as set forth in the second
          sentence of clause 2.1 of the Restated Facility Agreement and
          (ii) there shall be no further amounts (principal or interest) payable by
          the Company under the Equipment Facility Agreement referred to above and the
          Equipment Facility Agreement shall be terminated as at the Amendment Closing
          Date;

2.2.    
          furnishes to the Bank a copy of the approval of the TASE for listing the
          70,422,535 (seventy million, four hundred and twenty-two thousand, five hundred
          and thirty-five) shares issuable upon conversion of said Capital Note; and

2.3.    
          confirms that the Company has recorded such issuance of the Capital Note in the
          name of Bank on the records of the Company.

|3. | Representations
and Warranties of the Company.
|-- | ----------------------------------------------

| | The
Company hereby represents and warrants to the Bank on the Amendment Closing Date as
follows:
| | ------------------------------------------------------------------------------------------------

3.1.    
          Organization. The Company is duly organized and validly existing under
          the laws of its jurisdiction of incorporation and has full corporate power and
          authority to own, lease and operate its properties and assets and to conduct its
          business as now being conducted and to perform all its obligations under this
          Agreement.

3.2.    
          Share Capital. All issued and outstanding share capital of the Company
          has been duly authorized and is validly issued. The shares to be issued upon
          conversion of any Capital Note issued pursuant to this Agreement (the
          Conversion Shares) are duly authorized and reserved for
          issuance by the Company and, when issued in accordance with the terms of such
          Capital Note will be validly issued, fully paid, nonassessable and not subject
          to any pledge, lien or restriction on transfer, except for restrictions on
          transfer imposed by applicable securities laws. The entering into and
          performance of this Agreement and the issuance of any shares, or Capital Notes
          hereunder do not, and the issuance of any Conversion Shares will not, conflict
          with the Memorandum of Association or the Articles of Association of the Company
          nor with any outstanding convertible security, warrant, option, call, preemptive
          right or commitment of any type relating to the Companys capital stock
          (collectively, Equity Rights). The entering into and
          performance of this Agreement, the issuance of any shares or Capital Notes
          hereunder and the issuance of the Conversion Shares do not require, or give any
          holder of Equity Rights the right to have made, any adjustments to be made in
          the conversion or exercise price, the number of shares issuable upon conversion
          or exercise or any other provision of the aforegoing Equity Rights.



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3.3.    
          Authorization; Approvals. All corporate action on the part of the Company
          necessary for the execution, delivery and performance of this Agreement and the
          issuance of any shares, Capital Notes, and
Conversion Shares has been taken. Except as set forth in Schedule 3.3 hereto, save for any
consents, approvals, authorisations or exemptions already obtained, and filings already
made, no consent, approval or authorization of, exemption by, or filing with, any
governmental or regulatory authority, including any approval of, or filings with, the
Israeli Securities Authority (the ISA), the TASE or any third party is
required in connection with the execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated hereby,
including the issuance by way of private placement pursuant to this Agreement of any
Capital Notes, or shares. This Agreement and all Capital Notes issued hereunder on the
date which this representation is given have been executed and delivered by the Company,
and each constitutes the valid and legally binding obligations of the Company, legally
enforceable against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws
relating to creditors rights generally and general principles of equity.

3.4.     Cross-Default.
No Default or Event of Default exists under the Facility           Agreement.

3.5.     No
Conflicts. Neither the execution and delivery of this Agreement by           Tower,
nor the compliance with the terms and provisions of this Agreement on the           part
of Tower, including the issuance of shares, Capital Notes, or Conversion
          Shares, will: (i) violate any statute or regulation of any governmental
          authority, domestic or foreign, affecting Tower; (ii) require the issuance
          of any authorization, license, consent or approval of any governmental agency,
          or any other person which has not been obtained, save as set forth in Schedule
          3.5 hereto; or (iii) conflict with or result in a breach of any of the
          terms, conditions or provisions of any judgment, order, injunction, decree,
loan           agreement or other material agreement or instrument to which Tower is a
party,           or by which Tower is bound, or constitute a default thereunder, the
effect of           which might have a material adverse effect on Tower.

3.6.     No
Litigation. There are no actions, suits, proceedings, or injunctive           orders,
pending or threatened against or affecting Tower relating to the subject           matter
of this Agreement.

3.7.     No
Brokers. Tower has not engaged any broker or finder in connection with           the
transactions contemplated by this Agreement, and no broker or other person           is
entitled to any commission or finders fee in connection with such
          transactions.

|3.8. | Activities
in the United States.
|---- | --------------------------------

| | 3.8.1. | More
than 50% (fifty percent) of the consolidated assets of the Company as shown           or
would be shown on its consolidated financial statements (a) as of the last           day
of the immediately preceding calendar year and (b) as of the date hereof           are,
in each case, are located outside of the United States.
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.8.2. | More
than 50% (fifty percent) of the consolidated revenues of the Company as           shown
or would be shown on its consolidated financial statements (a) for the
          immediately preceding calendar year; and (b) during the current calendar
          year to date, in each case, are derived from outside the United States.
| | ------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.8.3. | For
the purposes of Section 3.8.1, Section 3.8.2, Section 5.1.1,
          Section 5.1.2, Section 5.1.6, Section 5.1.7 and Section 6.6 herein,
          assets and revenues of the Company will be deemed to be located or derived from
          outside the United States if they are recorded on the books of the
          Company or of any subsidiaries of the Company incorporated outside the United
          States (Non-U.S. Subsidiaries) (provided that such revenues
          are not recorded on the books of any offices of the Company or of its Non-U.S.
          Subsidiaries located in the United States (U.S. Offices)
and           will be deemed to be located in or derived from the United States if they
are           recorded on the books of any U.S. Offices or of any subsidiaries of the
Company           incorporated in the United States (U.S. Subsidiaries).
By way           of example, revenues recorded on the books of the Company itself (but
not on the           books of any U.S. Offices) will be considered revenues derived from
outside the           United States, even if the revenues derive from a sale of the
Companys           products to a U.S. person and even if the Companys U.S. Subsidiary
          was involved in marketing, sales or post-sales support efforts.
| | ------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 3.8.4. | The
activities, if any, of the Company and its Non-U.S. Subsidiaries within the
          United States and the activities of all U.S. Subsidiaries are the same kind as
          or support the Companys or its Non-U.S. Subsidiaries activities
          outside of the United States. For purposes of this Section 3.8.4, Section
          5.1.3, Section 5.1.6, Section 5.1.7 and Section 6.6 below           (a) the
same kind as shall mean activities that are within the           same establishment categories
of the North American Classification           System published by the United States
Census Bureau, and           (b) support shall mean supply,
distribution, sales, marketing,           servicing, research and development, licensing,
design, customer relations           and/or similar activities.
| | ------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.8.5. | Neither
the Company nor any of its subsidiaries conducts activities in the           United
States that consist of engaging in the business of banking, securities,
          insurance or real estate.
| | ------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.8.6. | Neither
the Company nor any of its subsidiaries engages, nor do either own more           than 5%
(five percent) of a class of voting securities of a person that engages,           in the
business of securities underwriting or distribution in the United States.
| | ------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3.9.     The
Company acknowledges that the Bank is acquiring the Capital Notes on the
          Amendment Closing Date in full reliance upon the representations and warranties
          made by the Company in this Agreement, including in Section 3.8 above.

|4. | Representations
and Warranties of the Bank.
|-- | -------------------------------------------

| | The
Bank hereby represents and warrants to the Company that it:
| | ---------------------------------------------------------------

4.1.    
          is acquiring the securities issued and to be issued to the Bank pursuant to this
          Agreement for investment and not with a view to distribution without
          registration under the U.S. Securities Act of 1933 (the Securities
          Act);

4.2.    
          has requisite knowledge and experience in financial and business matters to be
          capable of evaluating the merits and risks of an investment in the Company and
          is an accredited investor as defined in Rule 501(a) under the Securities Act;

4.3.    
          understands that none of the Capital Notes issued and to be issued under this
          Agreement have been, or will be, registered under the Securities Act, or the
          laws of any jurisdiction;

4.4.    
          agrees that none of the securities issued and to be issued to the Bank pursuant
          to this Agreement may be sold, offered for sale, transferred, pledged,
          hypothecated or otherwise disposed of except by registration under the
          Securities Act or otherwise in compliance with the Securities Act, the Israeli
          Securities Law or any applicable securities laws of any jurisdiction (including
          pursuant to an exemption therefrom); and

4.5.    
          acknowledges that the securities, upon issuance, will, unless in the reasonable
          opinion of counsel for the Company such legend is not required in order to
          ensure compliance under the Securities Act, bear the following legend:



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THESE
SECURITIES [(INCLUDING THE SECURITIES ISSUABLE PURSUANT HERETO)]1 HAVE NOT
BEEN REGISTERED OR QUALIFIED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR ANY
U.S. STATE OR OTHER JURISDICTIONS SECURITIES LAWS. THESE SECURITIES (INCLUDING THE
SECURITIES ISSUABLE PURSUANT HERETO) MAY NOT BE SOLD, OFFERED FOR SALE OR PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, (THE ACT) WITH
RESPECT TO ANY SUCH SECURITIES OR AN OPINION OF COUNSEL (REASONABLY SATISFACTORY TO THE
COMPANY) THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF THE
ACT OR ON THE TEL-AVIV STOCK EXCHANGE IN COMPLIANCE WITH REGULATION S UNDER THE ACT.

For
the avoidance of doubt, nothing in this Section 4 shall derogate from the
Companys obligations under the Registration Rights Agreement.

|5. | Undertakings
by the Company.
|-- | ----------------------------

5.1.     For so
long as (a) any shares or Capital Notes are issuable to the Bank and/or           its
subsidiaries (for the avoidance of doubt, as defined in Section 1.1.2
          above) pursuant to this Agreement and (b) any securities of the Company
          (including Capital Notes, Warrants and shares), constituting or convertible
into           5% or more of any class of voting securities (as defined in the United
States           Code of Federal Regulations  12 C.F.R. Section 225.2(q)) of the
Company           are beneficially owned by the Bank and/or its subsidiaries (for the
avoidance of           doubt, as defined in Section 1.1.2 above), the Company shall
use its best           efforts in order:

| | 5.1.1. | that
more than 50% (fifty percent) of the consolidated assets of the Company as           of
December 31 of each calendar year are located outside of the United           States
(the Asset Test);
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.1.2. | that
more than 50% (fifty percent) of the consolidated revenues of the Company           as of
December 31 of each calendar year are derived from outside the United
          States (the Revenue Test);
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.1.3. | that
the activities of the Company within the United States and the activities           of
the U.S. Subsidiaries are of the same kind as or support the activities of           the
Company or its Non-U.S. Subsidiaries outside the United States (the           SameLine of Business Test);
| | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.1.4. | that
neither the Company nor any of its subsidiaries will conduct activities in           the
United States that consist of engaging in the business of banking,           securities,
insurance or real estate (the Financial Activities           Test)
(for the avoidance of doubt, nothing in the aforesaid shall           derogate from the
obligations of the Company under the Restated Facility           Agreement);
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.1.5. | not
to engage, or permit any of its subsidiaries to engage, or to own or permit           any
of its subsidiaries to own more than 5% (five percent) of a class of voting
          securities of a person that engages, in the business of securities          underwriting
or distribution in the United States (the No UnderwritingTest)
(for the avoidance of doubt, nothing in the aforesaid           shall derogate from the
obligations of the Company under the Restated Facility           Agreement);
| | ------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|1 Following
the effective date of any registration statement covering the           Conversion Shares
or any of them, if applicable, bracketed language to be           removed from future
Capital Notes relating to such Conversion Shares and, at the           request of the
holder, a substitute Capital Note or Notes omitting the bracketed           language will
promptly be delivered to the holder.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 5.1.6. | Nothing
in Sections 5.1, 5.1.1, 5.1.2, 5.1.3, 5.1.4 or 5.1.5 above shall require           the
Company to prejudice the business or financial interests of the Company and           the
Company may take such actions or refrain from taking actions that may cause           it
not to satisfy the Asset Test, the Revenue Test, the Same Line of Business
          Test, the Financial Activities Test and/or the No Underwriting Test, provided
          that the taking of such actions, or refraining from taking such actions, are in
          the business or financial interests of the Company as reasonably determined by
          the Company;
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.1.7. | furnish
to the Bank, as soon as practicable (and, in any event, within thirty           (30) days
after the end of each calendar year), a certificate of the Chief           Financial
Officer of the Company, in a form reasonably satisfactory to the Bank           (i) confirming
whether the Company is in compliance with each of the Asset           Test, the Revenue
Test, the Same Line of Business Test, the Financial Activities           Test and the No
Underwriting Test, provided that if the Company is not in           compliance with the
Asset Test or the Revenue Test in a particular calendar           year, the Chief
Financial Officer shall describe the steps, if any, being taken           by the Company
to ensure compliance in the immediately following calendar year           (for the
removal of doubt, without derogating from Section 5.1.6 above); and           (ii) setting
out (a) the amount and percentage of the consolidated           revenues of the
Company derived from outside the United States during the           immediately preceding
calendar year, and (b) the amount and percentage of           the consolidated
assets of the Company located outside of the United States as           of December 31 of
such immediately preceding calendar year; and
| | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.1.8. | furnish
promptly to the Bank, such other information as such person may           reasonably
request in order to satisfy their obligations to file certain reports           or assess
its compliance with applicable legal or regulatory requirements           relating to the
transactions contemplated herein.
| | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.2.     The
Company shall fulfil all of its obligations under the Equity Documents,
          including the Capital Notes issued pursuant hereto and the under any
          registration rights agreement.

5.3.     In the
event that the adjustment provisions of any Capital Notes issued pursuant
          hereto result in additional Conversion Shares to be issued upon conversion of
          the Capital Notes, the Company shall promptly furnish the Bank with a copy of
          the approval of the TASE for listing such additional Conversion Shares (if the
          Companys shares are then traded on the TASE).

5.4.     To the
extent that ordinary shares (or other shares of capital stock substituted
          therefor) of the Company are listed on one or more securities exchanges,
          including the NASDAQ and the TASE, the Company shall maintain, at its expense,
          the listing of the shares of the Company issued pursuant to this Agreement
          (including upon conversion of Capital Notes issued pursuant to this Agreement)
          on such exchanges or, in the event such shares of the Company are listed on
only           one securities exchange, such exchange. Nothing in this Section 5.4 shall
          constitute an obligation of the Company to list or maintain the listing of its
          ordinary shares (or other shares of capital stock substituted therefor) on any
          securities exchanges, including the NASDAQ and the TASE.

5.5.     The
Company undertakes not to issue Shares or Securities (as defined in the
          Securities Law, 1968) of the Company, save on market terms and conditions.

|6. | Miscellaneous.
|-- | --------------

6.1.     Governing
Law; Jurisdiction. This Agreement shall be governed by and           shall be
construed in accordance with Israeli law and the courts of           Tel-Aviv-Jaffa shall
have exclusive jurisdiction to hear any matters, provided           that the Bank and any
other Affiliate of the Bank party to this Agreement shall           be entitled to sue
Tower in any jurisdiction in which it has an office or holds           assets.



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6.2.     Successors
and Assigns; Assignment. Except as otherwise expressly limited           herein, the
provisions hereof shall inure to the benefit of, and be binding           upon, the
successors and permitted assigns of the parties hereto. This Agreement           may not
be assigned by any party without the prior written consent of the other           party
hereto, provided that the Bank may assign this Agreement, in whole or in           part,
to any Affiliate of the Bank or add an Affiliate of the Bank as an           additional
party hereto, Nothing in this Agreement shall be deemed to restrict           the (a)
transferability of the shares, and Capital Notes to be issued pursuant           to this
Agreement or the Conversion Shares, in each case, in whole or in part at           any
time and from time to time, except for restrictions on transfer imposed by
          applicable securities laws or (b) the assignability of the registration rights
          in accordance with the Registration Rights Agreement.

6.3.     Expenses.
The Company shall bear the expenses and costs of all the           parties to the
transactions contemplated hereby (including the fees and expenses           of counsel to
the Bank).

6.4.     Entire
Agreement; Amendment and Waiver. This Agreement constitutes the           full and
entire understanding and agreement between the parties with regard to           the
subject matter hereof. Any term of this Agreement may be amended and the
          observance of any term hereof may be waived (either prospectively or
          retroactively and either generally or in a particular instance) only with the
          written consent of the parties to this Agreement.

6.5.     Notices,
etc. All notices and other communications required or permitted           hereunder
to be given to a party to this Agreement shall be in writing and shall           be faxed
or mailed by registered or certified mail, postage prepaid, or           otherwise
delivered by hand or by messenger, addressed to such partys           address as
set forth below:

| |                     |                                 
| | ------------------- | --------------------------------
|
|
|
|
| | If to the Bank:     | Corporate Division              
| |                     | 34 Yehuda Halevi Street         
| |                     | Tel-Aviv                        
| |                     | Israel                          
| |                     | Fax. 972-3-5149278              
| |                     | Attn: Head of Corporate Division
| |                    
| | If to the Company:  | Tower Semiconductor Ltd.        
| |                     | Ramat Gavriel Industrial Area   
| |                     | P.O. Box 619                    
| |                     | Migdal Haemek                   
| |                     | Israel 23105                    
| |                     | Fax. 972-4-6047242              
| |                     | Attn: Oren Shirazi, Acting CFO  
| | with a copy to     
| | (which shall not   
| | constitute notice): | Yigal Arnon & Co.               
| |                     | 1 Azrieli Center                
| |                     | 46th Floor                      
| |                     | Tel-Aviv, Israel, 67021         
| |                     | Fax: 972-3-6087714              
| |                     | Attn: David Schapiro, Adv.      

or
such other address with respect to a party as such party shall notify each other party in
writing as above provided. Any notice sent in accordance with this Section 8.5 shall
be effective (i) if mailed, five (5) business days after mailing, (ii) if sent by
messenger, upon delivery, and (iii) if sent via facsimile, one (1) business day following
transmission and electronic confirmation of receipt.

6.6.    
          Delays or Omissions. No delay or omission to exercise any right, power,
          or remedy accruing to any party upon any breach or default under this Agreement,
          shall be deemed a waiver of any other breach or default theretofore or
          thereafter occurring. Any waiver, permit, consent, or approval of any kind or
          character on the part of any party of any breach or default under this
          Agreement, or any waiver on the part of any party of any provisions or
          conditions of this Agreement, must be in writing and shall be effective only to
          the extent specifically set forth in such writing. Unless provided otherwise
          herein, all remedies, either under this Agreement or by law or otherwise
          afforded to any of the parties, shall be cumulative and not alternative.



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6.7.    
          Severability. If any provision of this Agreement is held by a court of
          competent jurisdiction to be unenforceable under applicable law, then such
          provision shall be excluded from this Agreement and the remainder of this
          Agreement shall be interpreted as if such provision were so excluded and shall
          be enforceable in accordance with its terms; provided, however, that in such
          event this Agreement shall be interpreted so as to give effect, to the greatest
          extent consistent with and permitted by applicable law, to the meaning and
          intention of the excluded provision as determined by such court of competent
          jurisdiction.

6.8.    
          Counterparts. This Agreement may be executed in any number of
          counterparts (including facsimile counterparts), each of which shall be deemed
          an original, and all of which together shall constitute one and the same
          instrument.

6.9.    
          Headings. The headings of the sections and paragraphs of this Agreement
          are inserted for convenience only and shall not be deemed to constitute part of
          this Agreement or to affect the construction hereof.

6.10.    
          Further Assurances. Each of the parties hereto shall perform such further
          acts and execute such further documents as may reasonably be necessary to carry
          out and give full effect to the provisions of this Agreement and the intentions
          of the parties as reflected thereby,

IN
WITNESS WHEREOF, each of the parties has signed this Agreement as of the date first
hereinabove set forth.

|TOWER SEMICONDUCTOR LTD. | BANK LEUMI LE-ISRAEL B.M.
|------------------------ | -------------------------

|By:Name:Title: | ________________________________________________________________________ | By:Name:Title: | ________________________________________________________________________
|-------------- | ------------------------------------------------------------------------ | -------------- | ------------------------------------------------------------------------



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# Schedules to
Conversion Agreement

# Schedule 3.3

# Schedule 3.5



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