Document:

<PAGE>

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                                                   EXHIBIT 10.20

                       FOUNDRY AGREEMENT FOR SHARE HOLDERS

         This Foundry Agreement (this "Agreement") is made and entered into as
of December 11, 2000 by and between QuickLogic Corporation, a Delaware, USA
corporation having its principal place of business at 1277 Orleans Drive,
Sunnyvale, CA 94089, USA ("CUSTOMER") and TOWER SEMICONDUCTOR LTD. an Israel
Corporation having its principal place of business at Ramat Gavriel Industrial
Zone, P.O. Box 619, Migdal Haemek 23105 ISRAEL ("TOWER").

                                   WITNESSETH:

         WHEREAS, CUSTOMER is a fabless semiconductor manufacturer and desires
to contract with a semiconductor manufacturer with the capability to supply
CUSTOMER with certain CUSTOMER designed products in wafer form in accordance
with CUSTOMER's design and product specifications;

         WHEREAS, Tower is a manufacturer that sells silicon wafers containing
client designed integrated circuits to these clients, provides other
manufacturing and relating design and turn-key services, as well as
manufacturing process adaptation and customization to such clients; and

         WHEREAS, TOWER plans to develop the capability of manufacturing certain
CUSTOMER designed products in sorted wafer form in the new Fab 2 it plans to
construct or such other locations agreed upon in writing by both parties, and
desires to manufacture and test such products for CUSTOMER in accordance with
CUSTOMER's design and product specifications;

         WHEREAS, CUSTOMER desires to buy certain Products in Wafer form, or as
otherwise agreed to between the parties, from TOWER, and Customer is willing to
enter the Share Purchase Agreement between TOWER and CUSTOMER, dated December
11, 2000 in consideration

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

<PAGE>

for TOWER's selling same to CUSTOMER pursuant to the terms and conditions set
forth below, including TOWER's obligations regarding Base Capacity and pricing
as defined herein;

         NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein, the parties hereto agree as follows:

1.0  DEFINITIONS

As used in this Agreement, the following terms shall have the following
respective meanings:

     1.1   FAB 2 shall mean the new eight inch semiconductor manufacturing
           facility contemplated in the Share Purchase Agreement, as defined in
           Section 1.11.

     1.2   MANUFACTURING PROCESS shall mean TOWER's 0.18 micron or smaller
           geometries semiconductor manufacturing process and method to the
           extent such process and method is required to be used in the
           manufacture of Products for CUSTOMER under this Agreement.

     1.3   MARKET PRICE for Wafers or sorted die (whichever is applicable) shall
           mean the average foundry price for similar (feature size, number of
           layers, size, technology, etc.) wafers or sorted die (whichever is
           applicable) in other foundries.

     1.4   NOTICE OF QUALIFICATION shall mean the receipt by TOWER of written
           notice sent by CUSTOMER, followed by written acknowledgment and
           concurrence by TOWER in which CUSTOMER states that TOWER has
           satisfied the final qualification criteria set forth in Appendix I
           hereto. Neither CUSTOMER nor TOWER shall withhold such Notice or
           written acknowledgment for reasons not pertaining to product quality,
           reliability or matters set forth in the qualification criteria.
           Appendix I criteria shall be developed by the parties and added to
           this Agreement as soon as practical following the execution hereof,
           but prior to the start of production activities.

     1.5   PRE-PRODUCTION WAFERS shall mean Wafers that are produced by TOWER
           hereunder prior to the issuance by CUSTOMER of a Notice of
           Qualification therefore and which may conform only to the electrical
           parameters to be provided by CUSTOMER.

     1.6   PRODUCTION WAFERS shall mean Wafers in sorted wafer form that are
           manufactured in
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -2-

<PAGE>

           TOWER's Fab 2 and delivered to CUSTOMER after Notice of Qualification
           and which conform to the manufacturing criteria set forth in Appendix
           II. Appendix II criteria shall be developed by the parties and added
           to this Agreement as soon as practical following the execution
           hereof, but prior to the start of production activities.

     1.7   PRODUCT shall mean a CUSTOMER's designed device, for which the
           CUSTOMER has manufacturing rights, targeted for manufacture at TOWER
           using a Tower Manufacturing Process and/or its derivatives.

     1.8   RETICLE MASK SET shall mean the reticle masks required to produce a
           fully functional Product.

     1.9   CUSTOMER TECHNICAL INFORMATION shall mean any and all design rules,
           electrical test structures, device designs, process knowledge,
           process flow, test flow, test software, drawings, bills of materials,
           specifications, data, descriptions and all other technical
           information (including, without limitation, trade secrets, inventions
           (whether or not patented or patentable) and know-how), all pertaining
           to the Products or otherwise proprietary to CUSTOMER, including
           CUSTOMER'S metal to metal amorphous silicon antifuse technology, and
           ViaLink (R), and any such process or successor processes, and
           improvements, that are disclosed to, jointly developed with or
           provided by CUSTOMER to TOWER under this Agreement and which is
           needed to be disclosed in order to manufacture the Wafers.

     1.10  TOWER TECHNICAL INFORMATION shall mean any and all design rules,
           electrical test structures, device designs, process knowledge,
           process flow, test flow, test software, drawings, bills of materials,
           specifications, data, descriptions and all other technical
           information (including, without limitation, trade secrets, inventions
           (whether or not patented or patentable) and know-how, or otherwise
           proprietary to TOWER, including any such process or successor
           processes and improvements that are disclosed to, jointly developed
           with or provided by TOWER to CUSTOMER under this Agreement and which
           is needed to be disclosed in order to manufacture the Wafers.

     1.11  SHARE PURCHASE AGREEMENT, or SPA shall mean the Share Purchase
           Agreement made as of July 4, 2000 by and between SanDisk Corporation
           and Tower and incorporated by reference into the Share Purchase
           Agreement made as of December 11, 2000 by and
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -3-

<PAGE>

           between CUSTOMER and TOWER. In the event the terms in the SPA, this
           Agreement and/or the CUSTOMER SPA conflict, the terms of the CUSTOMER
           SPA shall take precedence.

     1.12  WAFER(S) shall mean an eight inch silicon wafer processed by TOWER in
           Fab 2 and in accordance with specification agreed upon in this
           Agreement, so that the processed wafer(s) will embody a Product.
           Unless otherwise specifically mentioned herein wafers shall mean
           wafer starts.

2.0  FABRICATION FACILITIES AND GENERAL SCOPE

     2.1   TOWER shall fabricate at Fab 2 or at other locations agreed upon in
           writing by both parties, Pre-Production Wafers and Production Wafers
           ordered by CUSTOMER pursuant to this Agreement, and provided any such
           third party location has entered into a written agreement containing
           terms as least as restrictive as those stated herein, including but
           not limited those regarding confidentiality and the restrictions on
           use of CUSTOMER'S Technical Information. TOWER hereby represents and
           warrants that the actual fabrication of all Wafers shall be performed
           at its semiconductor facilities in Israel or such other locations
           agreed upon in writing by both parties. *.

     2.2   This Agreement does not constitute a forecast, purchase order or
           release for the services set forth in Section 2.1. TOWER shall not
           undertake or incur any expenses or perform any services or acts on
           CUSTOMER's behalf except as specified in a release against a CUSTOMER
           purchase order.

     2.3   *.
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -4-

<PAGE>

     2.4   All terms and conditions otherwise not dealt with in the body of this
           Agreement shall be governed by Appendixes and Schedules, attached
           hereto.

3.0  TERM AND TERMINATION

     3.1   TERM OF THE AGREEMENT. This Agreement shall become effective on
           the Closing Date, as that term is defined in the Share Purchase
           Agreement, and shall expire * thereafter, unless earlier
           terminated by one or both parties pursuant to the terms of this
           Agreement. * prior to its termination, the parties will review
           this Agreement in good faith and, if mutually agreed to by both
           parties in writing, the term of this Agreement may be extended or
           its scope expanded.

     3.2   TERMINATION FOR DEFAULT. In the event that either party has committed
           a material breach of this Agreement, the other party shall have the
           right to terminate this Agreement if the party in breach fails to
           cure such breach within * of written notice thereof.

     3.3   In the event of termination, both parties shall be relieved from
           their obligations under this Agreement except (i) for CUSTOMERS duty
           to perform all payments due to Tower under this agreement, (ii) for
           confidentiality under section 13.0, and (iii) Tower shall complete
           any outstanding orders as of the date of termination and CUSTOMER
           shall pay for such orders in accordance with the terms of this
           Agreement, and (iv) for the parties obligations under section 11
           (PATENTS AND OTHER PROPRIETARY RIGHTS).

4.0  PROCESS INTEGRATION

     4.1   Promptly following execution of this Agreement, representatives of
           TOWER and CUSTOMER will meet to establish definitive schedules and
           staffing requirements for completing CUSTOMER's Product designs into
           TOWER's CMOS process, as well as the necessary modifications as
           defined for CUSTOMER's process, contemplated to be utilized in Fab 2.
           In connection with such Product design and process customization,
           CUSTOMER shall transfer CUSTOMER Technical Information described in
           Appendix IV and TOWER shall transfer TOWER Technical Information.
           Appendix IV criteria shall be mutually agreed upon by the parties and
           added to this Agreement as soon as practical following the execution
           hereof, but prior to the start of production activities.
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -5-

<PAGE>

     4.2   CUSTOMER will provide all commercially reasonable design engineering
           support at CUSTOMER's expense during the period of Product design and
           pre-production. TOWER will be responsible for developing at its own
           expense the Manufacturing Process(es) contemplated for use in Fab2.

     4.3   TOWER will fabricate and provide Pre-Production Wafers to CUSTOMER at
           CUSTOMER's expense, in such amounts and on the time schedule
           specified in Appendix I and as amended from time-to-time by mutual
           agreement of the parties. CUSTOMER will provide, at CUSTOMER's own
           cost and expense, one (1) Reticle Mask Set, for each new Product to
           be manufactured at Tower on behalf of CUSTOMER. TOWER shall replace
           at its own cost and expense masks which must be replaced due to
           process changes initiated by TOWER. CUSTOMER will replace at its cost
           and expense masks which must be replaced due to process and/or design
           changes initiated by CUSTOMER. Replacement production Reticle Mask
           Sets for normal wear and tear shall be made by * at its own cost
           and expense. All such Pre-Production Wafers are provided to CUSTOMER
           "as-is" and TOWER makes no warranty what-so-ever relative to such
           Pre-Production Wafers.

     4.4   CUSTOMER shall have the right to order, at CUSTOMER's expense,
           Pre-Production Wafers that meet the manufacturing acceptance
           criteria in Appendix II, even though such wafers have not yet
           passed CUSTOMER qualification. Subject to Section 6.3.1, the price
           for such Pre-Production Wafers shall be *. Any purchase order for
           such Pre-Production Wafers shall indicate that such order is for
           Pre-Production Wafers that meet the manufacturing acceptance
           criteria in Appendix II but for which a Notice of Qualification
           has not yet been issued. If CUSTOMER orders such Pre-Production
           Wafers, CUSTOMER shall have the right to reject only such
           Pre-Production Wafers that do not meet the manufacturing
           acceptance criteria in Appendix II, and CUSTOMER shall not be
           obligated to pay for any such Pre-Production Wafers that are
           rejected by CUSTOMER for such cause. Other than the above, all
           such Pre-Production Wafers are provided to CUSTOMER "as-is" and
           TOWER makes no warranty what-so-ever in relation to such
           Pre-Production Wafers.

     4.5   Each party shall appoint a technology project manager. Such managers
           shall consult regularly to review the progress of the design and
           implementation of the fabrication process for the Product and shall,
           in good faith, attempt to jointly solve any problems that may arise
           during the design and implementation phase. The initial manager for
           TOWER shall be
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -6-

<PAGE>

           *. The initial manager for CUSTOMER shall be *.

     4.6   *.

     4.7   TOWER will be deemed to have successfully completed the design and
           implementation phase of the fabrication process for the Product only
           after all qualification tests have been successfully completed for
           the Product pursuant to the qualification criteria set forth in
           Appendix I, or once the Notice of Qualification for this Product has
           been issued by CUSTOMER and acknowledged by TOWER.

     4.8   TOWER will offer a version of the 0.18 micron process as specified in
           CUSTOMER's SPA, Section 7.

5.0  PRODUCT FABRICATION

     5.1   TOWER shall cause Production Wafers to be fabricated in accordance
           with the integrated fabrication process developed pursuant to Section
           4 above. Both parties acknowledge that such fabrication process may
           be changed from time to time only upon the mutual written agreement
           of TOWER and CUSTOMER, which agreement shall not be unreasonably
           withheld. CUSTOMER and TOWER agree that if one party proposes a
           change to such fabrication process to the other party, such other
           party must approve or disapprove, in writing, of such proposed change
           within * after receiving notification of such proposed change. *.

     5.2   Appendix II shall be updated and revised, if necessary and as
           mutually agreed upon by both parties, within thirty (30) days after
           CUSTOMER's issuance of a Notice of Qualification for a Product as
           well as mutually agreed to by the parties. Terms and Conditions of
           Sales not specifically mentioned in this Agreement shall be governed
           by the provisions of Appendix III hereto.

     5.3   TOWER shall maintain records of all Production Wafers manufactured
           for CUSTOMER
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -7-

<PAGE>

           for a period of *, after which, at CUSTOMER's prior written
           request, TOWER will transfer such information to CUSTOMER. TOWER
           shall provide Work in Process (WIP) reports to CUSTOMER *.

     5.4   During the ramp-up period described in Business Plan agreed upon by
           the parties as part of the Share Purchase Agreement, in Chapter 3,
           Financial Plan, Version 11.00, the chart entitled FAB-2 FINANCIAL
           ASSUMPTIONS - Base, PRODUCTION Plan, 1. CAPACITY PER MONTH ("INITIAL
           RAMP-UP PERIOD"), and thereafter, TOWER shall make available to
           CUSTOMER up to * of available wafers starts specified in said chart,
           but TOWER is not committed to exceed * Wafer starts per month ("Base
           Capacity"). The actual capacity referenced in said chart may be
           changed and/or updated pursuant to Section 5.6, or 11.3 of the Share
           Purchase Agreement. If CUSTOMER fails to exercise any of the Series
           A-1 through A-5 Additional Purchase Obligations (the Mandatory
           Additional Purchase Obligations) within the time periods specified in
           the Share Purchase Agreement, including any applicable Grace Periods
           (as defined in the Share Purchase Agreement), the Base Capacity shall
           be reduced by * Wafers per month for each such Series A of the
           Additional Purchase Obligations (the Mandatory Additional Purchase
           Obligations) not so exercised. Notwithstanding the foregoing TOWER
           may limit the month to month ramp up of the new fab and of new
           processes to a mutually agreed upon number of wafers.

     5.5   Subject to the volume restrictions imposed on CUSTOMER in Section
           5.4, TOWER shall start the exact quantity of Production Wafers
           ordered by CUSTOMER. CUSTOMER shall pay only for the total quantity
           of Wafers delivered by TOWER and accepted in good faith by CUSTOMER.
           The Parties acknowledge that actual capacity may be reduced as a
           result of unexpected occurrences in excess of TOWER's normal planning
           allowances, including by way of example and without limitation,
           abnormal equipment down-time, abnormal process problems or events
           such as those set forth in section 14 hereof. In addition, TOWER may
           reduce actual capacity as a result of planned shutdowns to facilitate
           process or equipment upgrades or for other reasonable purposes. In
           all such cases, TOWER shall use commercially reasonable efforts to
           restore capacity in the shortest practicable time. During such
           periods, TOWER shall be entitled to reduce CUSTOMER's capacity by a
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -8-

<PAGE>

           percentage equal to the percentage reduction that occurs in TOWER's
           aggregate capacity after all otherwise available slack capacity has
           been taken up at the facility.

     5.6   * months prior to the contemplated completion of the design and
           implementation of the fabrication process for the first Products and
           in each month, on the twenty-fifth day thereof, during the remaining
           term of this Agreement, CUSTOMER shall provide TOWER with a * rolling
           forecast of anticipated purchase orders for Products. The first *
           months of each forecast will constitute a binding, firm purchase
           order ("Firm Purchase Order"), subject to the rescheduling rights
           described below. TOWER's acceptance, based on the provisions of this
           Agreement, of each Firm Purchase Order or release hereunder shall be
           communicated to CUSTOMER in writing within seven (7) business days of
           its receipt thereof.

           TOWER shall provide CUSTOMER with a response to each forecast within
           seven (7) business days and a schedule of wafer delivery dates for
           the first * months deliveries of Firm Purchase Orders within seven
           (7) business days of its acceptance of a Firm Purchase Order or
           release. Such schedule shall be updated by TOWER on *.

           If TOWER fails to meet its delivery dates on * successive
           deliveries by more than *, a senior officer of CUSTOMER will
           discuss the cause of the delay with the CEO of TOWER and discuss
           the means to correct the failures and TOWER shall take specific
           steps to prevent similar events in the future, thus ensuring that
           TOWER meets it commitments in the shortest possible time.

           CUSTOMER may allocate certain of its capacity *.

________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -9-

<PAGE>

           If CUSTOMER's forecast falls below the Base Capacity per month, or as
           a result of rescheduling actual Wafer consumption falls below the
           Base Capacity per month, then TOWER may sell the unused portion of
           CUSTOMER's capacity to other customers, provided *.

     5.7   CUSTOMER may reschedule starts of Pre-Production Wafers and
           Production Wafers, based on TOWER's schedule of wafer delivery dates
           provided pursuant to Section 5.6, as indicated below:

           5.7.1  *: No rescheduling of Wafers for the * of any forecast is
                  permitted.

           5.7.2  *: Rescheduling of no more than * of the number of Wafers
                  scheduled in current forecast and no more than * of the number
                  of Wafers originally scheduled is permitted.

           5.7.3  *: Rescheduling of no more than * of the number of Wafers
                  originally scheduled is permitted.

           In no event may the number of Wafers for a given month fall below *
           of the highest
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -10-

<PAGE>

           forecast given by CUSTOMER for that month.

           In no event shall TOWER be committed to provide more than the Base
           Capacity allocated to CUSTOMER. All increases in the number of wafers
           ordered pursuant to Section 5.7.2 and 5.7.3 above will be subject to
           TOWER's then current obligations to its customers.

           The total number of Wafers ordered for a given process in a given
           month may be rescheduled by CUSTOMER only once. However, at any time,
           CUSTOMER may change by written notification to TOWER the mix of
           Products utilizing the same manufacturing process, provided the
           Wafers have not been started.

           For the purpose of illustration, Appendix VI provides an example of
           the forecasting schedule on a month to month basis.

           Cycle times for Wafers shall be agreed upon by the parties, but
           shall be competitive with industry standards for similar
           technologies, with a current guideline of an average of *, to
           become effective twelve (12) months after the start of the Initial
           Ramp-Up Period. Once Wafer production begins, the parties intend
           to conduct quarterly "business partner" meetings to monitor the
           foundry relationship contemplated by this Agreement, and in these
           meetings, cycle time status and/or improvement will be reviewed.

     5.8   Each Wafer lot will be inspected by TOWER prior to shipment to ensure
           compliance with the acceptance criteria set forth in Appendix II and
           TOWER will include the resulting parametric and visual data with each
           Wafer lot shipped to CUSTOMER. CUSTOMER may perform incoming
           inspection of each Product Wafer lot to likewise ensure compliance
           with the acceptance criteria set forth in Appendix II within thirty
           (30) days after the delivery date of the Wafer lot. In the event any
           Wafer is found to be incomplete or broken or fails the foregoing
           inspection criteria, CUSTOMER shall have the right to reject such
           Wafers within thirty (30) days after the delivery date thereof and
           return such Wafers to TOWER for full credit or replacement at TOWER's
           option.

     5.9   CUSTOMER may, at its option, periodically utilize life test and other
           mutually agreed upon reliability monitors to evaluate Products and/or
           Production Wafers; the specific details of such monitors will be
           mutually agreed upon in writing in advance and no later than such
           time as CUSTOMER issues a Notice of Qualification for each Product.
           If these
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -11-

<PAGE>

           tests and monitors indicate that TOWER's Manufacturing Process is not
           meeting the required standards and criteria, TOWER will promptly
           correct any such problems and CUSTOMER reserves the right to return
           for full credit any Wafers manufactured under procedures that do not
           satisfy such tests and monitors

     5.10  No Wafers shall be returned to TOWER pursuant to this Agreement
           without TOWER's prior written consent which shall not be unreasonably
           withheld.

     5.11  TOWER may choose to offer for sale to CUSTOMER at a reduced price
           mutually agreed to by both parties in writing, any Production Wafers
           rejected *.

     5.12  TOWER, upon mutual agreement with CUSTOMER, will wafer probe all
           or certain of the Products, pursuant to the requirements of
           Appendix V and using the wafer sort programs provided by CUSTOMER,
           and backgrind all Products to a mutually agreed upon industry
           standard thickness, and in accordance with CUSTOMER
           specifications, prior to shipment. Wafer probe price is *.
           Backgrinding to thickness other than industry standard thickness
           may be subject to additional costs, or subject to price
           adjustments.

     5.13  Masks requiring replacement due to normal wear and tear shall be
           replaced by TOWER at its own cost and expense, provided that the
           respective Product is continuing volume production at TOWER, and that
           such Product has a current Notice of Qualification. Masks requiring
           replacement due to CUSTOMER changes, amendments, bug fixing and the
           like shall be borne solely by CUSTOMER. CUSTOMER may subcontract mask
           making to TOWER, and TOWER may, in turn, subcontract mask making to a
           subcontractor. At its discretion, TOWER may place masks of Products
           not ordered by CUSTOMER for six (6) months or more in storage at
           CUSTOMER's cost and expense. After twelve (12) months in storage, and
           with three (3) months advanced notice to CUSTOMER, or if mask must be
           replaced, TOWER may dispose of the mask pursuant to CUSTOMER's
           written instructions, or if such were not provided by the end of such
           three (3) months period, Tower will be free to discard the mask.
           CUSTOMER's intellectual property rights in the masks, demonstrated by
           the CUSTOMER's portions of the GDS2 representation, will be owned by
           CUSTOMER. Any
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -12-

<PAGE>

           other intellectual property created or otherwise attached to the mask
           shall be the sole property of TOWER and/or its respective owner.

     5.14  TOWER may discontinue any of its Manufacturing Processes ("Obsolete
           Process") provided that:

           (a)    Eighteen (18) months prior to the last planned production day
                  using such Obsolete Process CUSTOMER will be notified in
                  writing of TOWER's intent to discontinue the process; and

           (b)    Twelve to fifteen (12-15) months prior to the last planned
                  production day using such Obsolete Process CUSTOMER will have
                  the option to enter Life Time Purchase Orders ("LTPO") with
                  scheduled deliveries to extend over a twelve (12) months
                  period prior to the last planned production day using such
                  Obsolete Process; and

           (c)    Tower will produce Wafers under an LTPO in quantities not
                  exceeding the quantities to which TOWER is committed in
                  accordance with this Agreement. In special cases where
                  additional capacity may be necessary, the parties will
                  negotiate in good faith in attempt to achieve a mutually
                  acceptable production schedule.

6.0  PRICES AND PAYMENT

     6.1   As long as CUSTOMER continues to own at least * shares of the
           Ordinary Shares of TOWER (subject to adjustment for the events
           listed in clauses (a) through (d) in Section 4.1.1 of the
           Additional Purchase Obligation Agreement), the prices for up to
           the first * Wafers purchased per month by CUSTOMER shall not
           exceed *. The prices for Wafers in excess of * Wafers per month
           shall not exceed *, or otherwise another price mutually agreed
           upon by the parties.

           All prices are Ex Works (as defined by Incoterms 2000) Tower's
           manufacturing facility. Tower shall take care to ship Wafers in
           industry standard packaging to protect Wafers in transit, and shall
           be responsible for the loading of the Wafers on departure and will
           bear the risks and costs of such loading.
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -13-

<PAGE>

           CUSTOMER shall have the right, at its sole cost and expense, to have
           an agreed upon independent certified public accountant conduct,
           during normal business hours, with at least two weeks advanced
           notice, and not more frequently than twice per year, an audit of the
           appropriate records of TOWER to verify *.

     6.2   All payments due to TOWER under this Agreement shall be payable in
           United States Dollars specified in the applicable purchase order.
           Payments will be made within * from date of invoice and transferred
           using means of electronic transfer of funds to a bank or other
           financial institution of TOWER'S choice.

     6.3   The following Wafer return/credit agreement shall apply with respect
           to Pre-Production and Production Wafers:

           6.3.1  Pre-Production Wafers (based on 10 Representative lots, after
                  passing 500 hour card qualification and excluding Development
                  Wafers)
                  Wafer sort yield smaller than * %           *
                  Wafer sort yield between * % and * %        *
                  Wafer sort yield greater than * %           *

           6.3.2  Production Wafers
                  Wafer sort yield smaller than * %           *
                  Wafer sort yield between * % and * %        *
                  Wafer sort yield greater than * %           *

           6.3.3  If wafer sort is performed by CUSTOMER (or by CUSTOMER'S
                  agent) then TOWER shall issue CUSTOMER a Return Materials
                  Authorization for the affected wafers and/or issue a credit
                  memorandum to CUSTOMER in an amount calculated according to
                  the provisions of the Section 6.3, provided that notification
                  is provided to Tower within twenty one (21) days from Wafer
                  delivery. No adjustment shall be made if yield shortfall is
                  due principally to product design sensitivity or process
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -14-

<PAGE>

                  sensitivity in CUSTOMER's control. To eliminate doubt CUSTOMER
                  will provide TOWER with sort results in a period of time no
                  longer than thirty (30) days, or otherwise CUSTOMER shall be
                  responsible for the full purchase price of such WIP that TOWER
                  could have avoided production thereof had it received the sort
                  results in a timely manner.

           6.3.4  The Wafer return/credit agreement set forth in Section 6.3
                  shall apply to Wafers that have die areas of up to * cm2. The
                  return/credit provisions for Wafers having dies with areas
                  larger than * cm2 will be adjusted using the following
                  formula:

                                  yield = *

                  where A is the die area in square inches and D is the defect
                  density per square inch, and shall be as follows:

                  Pre-Production Wafers (based on 10 Representative lots, after
                  passing 500 hour card qualification and excluding Development
                  Wafers):

                  Average defect density greater than *       *
                  Average defect density between * and *      *
                  Average defect density lower than *         *

                  Production Wafers:
                  Average defect density greater than *       *
                  Average defect density between * and *      *
                  Average defect density lower than *         *

                  However, if yield is lower due to specific nature of
                  CUSTOMER's unique process and/or design then the necessary
                  adjustments to the formulas shall be made.

     6.4   Notwithstanding Section 6.3, TOWER shall credit the order value of
           any order placed hereunder by 15%, by applying funds, to the extent
           funds remain in CUSTOMER'S Prepaid Wafer Account as described in
           Schedule 6.4, attached hereto and made a part hereof, against such
           order. TOWER'S invoice shall reflect the amount of the credit and
           indicate the use of funds from CUSTOMER'S Prepaid Wafer Account. The
           provision of this Section 6.4 shall apply solely to those Wafers
           ordered by CUSTOMER.

     6.5   Prices, other than for Wafers, for goods and services, including but
           not limited to mask
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -15-

<PAGE>

           reticles (as contemplated in this Agreement), Wafer probe, probe
           cards, probe program development, mask storage, which are provided by
           TOWER, shall be agreed upon in advance and in writing between the
           parties.

     6.6   *.

7.0  TAXES

     All quoted prices are exclusive of any present or future sales or use tax,
     revenue or value-added tax, import duty (including brokerage fees) or any
     other tax or charge applicable to the manufacture, sale or delivery of any
     Product. Such taxes and charges, when applicable, shall be paid by
     CUSTOMER, or immediately reimbursed to TOWER upon delivery of an invoice
     for same if applicable law requires TOWER to collect and remit such taxes
     or charges to relevant authorities. Not withstanding the foregoing taxes
     which are directly imposed on TOWER, such as income tax, shall be borne by
     TOWER.

8.0  TITLE AND RISK OF LOSS

     Title and risk of loss and damage to Production Wafers purchased by
     CUSTOMER shall vest in CUSTOMER when the Products have been delivered, ex
     works Tower's manufacturing facility. All Wafers to be delivered to
     CUSTOMER under this Agreement shall be packed, marked and shipped by TOWER
     according to current industry standard practices and care for
     transportation of Wafers of a similar type, unless otherwise specified by
     CUSTOMER. Deliveries of Wafers will be accompanied by the following
     information, as appropriate: (i) purchase order number, (ii) product type,
     (iii) lot number, (iv) number of Wafers, (v) the inspection results
     described in Section 5.8, and any other test or process information to be
     mutually agreed upon in writing by both parties. CUSTOMER shall be solely
     responsible for filing any claims for damage during shipment with the
     carrier.

9.0  WARRANTY

     9.1   TOWER hereby warrants to CUSTOMER that Production Wafers supplied
           hereunder shall be free from defects in material and workmanship,
           other than normal manufacturing yield loss, and shall conform in all
           material respects to the specifications set forth in Appendix II
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -16-

<PAGE>

           and shall have been manufactured pursuant to the Manufacturing
           Process qualified under Appendix I, for a period of * from the date
           of acceptance by CUSTOMER (the "Warranty Period"). The foregoing
           warranty does not apply to (a) any Product which has been subject to
           misuse, neglect, accident, or modification or which has been altered
           and therefore are not capable of being tested by Tower under its
           normal test conditions, (b) non-conformities which result from
           CUSTOMER's design or process or which result from testing procedures
           not previously agreed in writing by TOWER, or (c) any Products that
           are intended to be prototypes, risk production or engineering
           products. TOWER's sole obligation, and CUSTOMER's sole remedy
           hereunder for Products failing to meet the aforesaid warranty shall
           be, at TOWER's discretion, to replace the nonconforming Products or
           issue CUSTOMER a credit for the purchase price of the nonconforming
           Products, where within the warranty period: 1) TOWER has received
           written notice of any nonconformity; 2) after TOWER's written
           authorization to do so (represented by an RMA, which shall not be
           unreasonably withheld) CUSTOMER has returned the nonconforming
           Products to TOWER, freight prepaid; and 3) TOWER determines that the
           Products are nonconforming. Any replacement Products shall be subject
           to the foregoing warranty for only the unexpired term of the warranty
           with respect to the original nonconforming Products and shall be
           delivered to CUSTOMER, freight pre-paid by TOWER. TOWER warrants that
           Products sold hereunder shall at the time of delivery be free and
           clear of liens and encumbrances. THIS WARRANTY EXTENDS TO CUSTOMER
           AND ITS AFFILIATES ONLY AND TOWER SHALL HAVE NO OBLIGATION TO ACCEPT
           WARRANTY RETURNS DIRECTLY FROM CUSTOMER'S CUSTOMERS OR ANY OTHER
           USERS OF CUSTOMER'S PRODUCTS NOR WILL IT BEAR ANY OBLIGATION OR
           LIABILITY TO SUCH CUSTOMER'S CUSTOMERS WHATSOEVER. THIS WARRANTY IS
           IN LIEU OF ALL OTHER WARRANTIES WHETHER EXPRESS, IMPLIED OR STATUTORY
           INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
           PARTICULAR PURPOSE. IN NO EVENT SHALL TOWER BE LIABLE FOR ANY
           INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES DUE TO BREACH
           OF THIS WARRANTY OR ANY OTHER LIABILITY ARISING UNDER THIS AGREEMENT
           EVEN IF TOWER HAS BEEN ADVISED OF THE POSSIBILITY OF SAME. TOWER'S
           TOTAL LIABILITY FOR ALL CLAIMS ARISING UNDER THIS SECTION 9.1,
           REGARDLESS OF THE LEGAL THEORY FOR SAME, SHALL BE LIMITED TO THE
           TOTAL AMOUNTS ACTUALLY PAID TO TOWER BY CUSTOMER FOR PRODUCTS
           PURCHASED HEREUNDER DURING THE
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -17-

<PAGE>

           PRECEDING *, AND CUSTOMER SHALL INDEMNIFY AND HOLD TOWER HARMLESS
           FROM ANY ADDITIONAL WARRANTY CLAIMS REGARDLESS OF WHETHER SUCH WERE
           PUT FORTH BY CUSTOMER OR CUSTOMER'S CUSTOMER, OR OTHERWISE BY ANY
           THIRD PARTY.

           *.

     9.2   CUSTOMER acknowledges that Pre-Production Wafers provided to
           CUSTOMER, pursuant to the terms of Section 4.3 and 4.4, are not
           covered by this warranty and are sold "as is" and with all faults and
           without warranties either express or implied, unless specifically
           noted in the respective Sections 4.3 and 4.4 above.

     9.3   LIFE SUPPORT POLICY. TOWER does not authorize, endorse, certify or
           recommend the Products and/or Wafers for use as a critical component
           in life support devices or systems (as defined herein) without the
           express written permission of the chief executive officer of TOWER.
           For these purposes, "life support devices or systems" are devices or
           systems which (a) are intended for the surgical implant into the
           human body or (b) support or sustain human life, and whose failure to
           perform can be reasonably expected to result in a significant injury
           to or death of the human subject, and a "critical component" is any
           component of a life support device or system whose failure to perform
           can be reasonably expected to cause the failure of the life support
           device or system, or to affect its safety or effectiveness. CUSTOMER
           shall notify its customers that the Products are not intended for
           such use and that its customer assumes all risk associated with such
           use, and shall fully indemnify TOWER from any claims resulting of
           such unauthorized use.

10.0 LICENSE GRANTS

     10.1  CUSTOMER hereby grants to TOWER a nonexclusive, nontransferable,
           royalty-free, worldwide license to use the CUSTOMER Technical
           Information, and all improvements thereof, solely for the purpose of
           fabricating Wafers for CUSTOMER pursuant to the terms of this
           Agreement. However, TOWER may use improvements to its Manufacturing
           Process for the benefit of other customers without entitling CUSTOMER
           to any right or compensation from TOWER or TOWER'S customers, except
           to the extent such
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -18-

<PAGE>

           improvements are used with any process step that forms a
           metal-to-metal antifuse. CUSTOMER agrees not to file any suit, claim,
           action or other proceeding against TOWER for infringement or
           violation of CUSTOMER's intellectual property rights for anything
           included in TOWER's Manufacturing Process or designs provided to
           CUSTOMER by TOWER.

     10.2  TOWER hereby grants CUSTOMER * a non-exclusive, non-transferable,
           royalty free, worldwide license to use, only for the sale and
           distribution by CUSTOMER *, and their authorized agents, of
           CUSTOMER's * products, including components thereof manufactured
           by TOWER, TOWER's patents used for the manufacture of the Wafers for
           CUSTOMER *, but solely for products manufactured by TOWER.

     10.3  In the event CUSTOMER is or becomes a party to a separate agreement
           with a third party and such agreement grants to CUSTOMER certain
           "have-made" rights under such third party's patents or otherwise
           other intellectual property (collectively "IP"), and in the event
           that activity performed by TOWER to provide any Production Wafers to
           CUSTOMER infringes such third party's IP and such IP are covered
           under such "have-made" rights granted to CUSTOMER by the third party,
           then CUSTOMER shall exercise its "have made" rights for the benefit
           of TOWER, provided that such exercise is permitted under the relevant
           "have made" rights.

     10.4  In the event TOWER is or becomes a party to a separate agreement with
           a third party and such agreement grants to TOWER certain rights to
           manufacture products under such third party's IP, and in the event
           that any activity performed by TOWER to provide any Production Wafers
           to CUSTOMER hereunder infringes such third party's IP and such IP are
           covered under such manufacturing rights granted to TOWER by the third
           party, then TOWER shall exercise its manufacturing rights for the
           benefit of CUSTOMER, provided that such exercise is permitted under
           the relevant "have made" rights.

11.0 PATENTS AND OTHER PROPRIETARY RIGHTS

     11.1  The parties agree to abide by the terms of this Section 11.1 in the
           event there is any claim, liability or suit (or notice of any of the
           foregoing) brought against TOWER and/or
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -19-

<PAGE>

           CUSTOMER alleging: (i) that either party's or both parties' use of or
           compliance with any design, specification, process or method
           contained in CUSTOMER's Technical Information infringes any United
           States or foreign patent, trade secrets, copyright, mask work or
           other third party intellectual property right and/or (ii) that the
           Manufacturing Process or any proprietary information of TOWER related
           to the Manufacturing Process (including, without limitation,
           manufacturing drawings, bills of materials, specifications, data,
           descriptions and all other technical information, trade secrets,
           inventions (whether or not patentable) and know-how) infringes any
           United States or foreign patent, trade secrets, copyright, mask work
           or other third party intellectual property right.

           (a)    Each party shall promptly notify the other of any notice of a
                  claim of infringement as described above. If a claim of
                  infringement is brought against either party, both parties
                  shall promptly meet, confer and cooperate with each other in
                  good faith to resolve such claim on terms mutually agreeable
                  to both parties; each party shall bear its own costs and
                  expenses related thereto, except as covered in subparagraphs
                  (b), (d), (e), (f) and (g) of this Section 11.1.

           (b)    If a claim of infringement is brought against both TOWER and
                  CUSTOMER with respect to the Tower Technical Information
                  and/or the CUSTOMER Technical Information and/or the
                  Manufacturing Process, the parties shall promptly meet, confer
                  and cooperate with each other in good faith to mutually agree
                  on joint representation in connection with such claim. In the
                  event the parties agree upon joint representation, all costs
                  and expenses (including reasonable attorneys' fees) related to
                  such joint representation shall be shared equally between
                  TOWER and CUSTOMER. If, after conferring with each other in
                  good faith, the parties are unable to agree upon joint
                  representation, each party shall be free to retain its own
                  attorney; in such event, each party shall bear its own costs
                  and expenses (including attorneys' fees) related to such
                  individual representation, except as covered in subparagraphs
                  (d), (e), (f) and (g) of this Section 11.1. In any event,
                  whether the parties are jointly represented or individually
                  represented, both parties shall reasonably cooperate with each
                  other in good faith in defending and settling such claim of
                  infringement and shall not settle such claim in a manner
                  impacting the rights and obligations of the other party
                  without the prior written consent of the other.

           (c)    If a claim of infringement is brought against either or both
                  parties and a final non-
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -20-

<PAGE>

                  appealable court order restricts the use of the allegedly
                  infringing Tower Technical Information and/or Customer
                  Technical Information and/or Manufacturing Process, CUSTOMER
                  and TOWER agree that, to the extent reasonably possible on
                  reasonable terms and conditions, they will either (i) procure,
                  from the third party that has given notice of the claim, the
                  right to continue using the allegedly infringing TOWER
                  Technical Information and/or CUSTOMER Technical Information
                  and/or Manufacturing Process (to the extent reasonably
                  possible on reasonable terms and conditions, each party will
                  use its respective patent and license portfolios in an effort
                  to accomplish such procurement) or (ii) modify the allegedly
                  infringing TOWER Technical Information and/or CUSTOMER
                  Technical Information or Manufacturing Process to make it
                  non-infringing. In the event the parties cannot accomplish
                  either of the foregoing within ninety (90) days of such court
                  order, each party shall have the right to terminate this
                  Agreement with respect to the Product(s) subject to third
                  party claims and any such termination shall be effective
                  against both parties.

           (d)    If a claim of infringement is brought against CUSTOMER alone
                  with respect to the CUSTOMER Technical Information, or if the
                  parties choose to defend claims separately, and CUSTOMER is
                  required to pay attorneys' fees, damages, or a monetary
                  settlement amount (whether in a lump sum, through royalty
                  payments, or otherwise) with respect thereto, the parties
                  agree that CUSTOMER shall bear 100% of such attorneys' fees,
                  damages, or settlement payment and shall not be entitled to
                  any indemnification from TOWER.

           (e)    If a claim of infringement is brought against TOWER alone with
                  respect to the Manufacturing Process and/or TOWER Technical
                  Information, or if the parties choose to defend claims
                  separately, and TOWER is required to pay attorneys' fees,
                  damages, or a monetary settlement amount (whether in a lump
                  sum, through royalty payments, or otherwise) with respect
                  thereto, the parties agree that TOWER shall bear 100% of such
                  attorneys' fees, damages, or settlement payment and shall not
                  be entitled to any indemnification from CUSTOMER.

           (f)    If a claim of infringement is brought against both CUSTOMER
                  and TOWER and the parties have agreed upon joint
                  representation in the defense thereof in accordance with
                  subparagraph (b) above and the parties are required to pay
                  attorneys' fees, damages, or a settlement amount (provided,
                  however, such settlement was mutually agreed upon by
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -21-

<PAGE>

                  both parties), the parties agree that such attorneys' fees,
                  damages, or settlement amount shall be split equally between
                  TOWER and CUSTOMER, unless otherwise agreed in writing.

           (g)    For avoidance of doubt, the parties agree that:

                  (i)  Claims brought against TOWER due to any infringement
                       resulting from: (1) CUSTOMER Technical Information, or;
                       (2) the combination of CUSTOMER Technical Information
                       with the Manufacturing Process and/or Tower Technical
                       Information, shall be the sole responsibility of CUSTOMER
                       which shall indemnify and hold TOWER harmless against all
                       such claims, including also all reasonable cost and
                       expenses deriving thereof; and

                  (ii) Claims brought against Customer due to an infringement
                       caused solely by TOWER Technical Information or
                       Manufacturing Process, shall be the responsibility of
                       TOWER which shall indemnify and hold CUSTOMER harmless
                       against such claims, including also all reasonable cost
                       and expenses deriving thereof.

     11.2  The foregoing states the entire liability of the parties for
           infringement, provided however, that the total liability for either
           party under this provision shall not exceed the total sales of TOWER
           to CUSTOMER over a period of * immediately preceding such
           infringement claim.

     11.3  All ideas, designs, methods, processes and inventions conceived
           solely by personnel of one party while such personnel are engaged in
           performance of this Agreement, and patents, copyrights, mask works
           and other intellectual property rights arising therefrom, shall be
           owned solely by such party, except that each party shall own and
           shall retain all rights, title and interest in its respective
           technical information (CUSTOMER for CUSTOMER Technical Information
           and TOWER for TOWER Technical Information), and any modifications
           thereto. All intellectual property rights in the Confidential
           Information of a party shall remain the property of such party.

     11.4  All ideas, designs, methods, processes and inventions conceived
           jointly by personnel of both parties while such personnel are engaged
           in performance of this Agreement, and patents, copyrights, mask works
           and other intellectual property rights arising therefrom, shall be
           equally owned by both parties, except that each party own and shall
           retain all rights, title and interest in its respective technical
           information (CUSTOMER for
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -22-

<PAGE>

           CUSTOMER'S Technical Information and TOWER for TOWER Technical
           Information), and any modifications thereto. All intellectual
           property rights in the Confidential Information of a party shall
           remain the property of such party.

12.0 TRADEMARKS

           Neither party will, without the prior written consent of the other
           party, use in advertising, publicity, or otherwise any trade name,
           trademark, trade device, service mark, symbol or any other
           identification or any abbreviation, contraction or simulation thereof
           owned or used by the other party. CUSTOMER may use TOWER's MICROFLASH
           trademark accompanied by an industry customary footnote as follows:
           "MICROFLASH(R) is a trademark of Tower Semiconductor Ltd, for the
           N-ROM(TM) Technology licensed from Saifun Semiconductors Ltd.". Tower
           may reasonably change from time to time the content of such footnote.

13.0 CONFIDENTIALITY OBLIGATIONS

     13.1  CONFIDENTIAL INFORMATION: As used in this Agreement ("Confidential
           Information") shall mean: (i) all information related to Production
           Wafers fabricated by TOWER for CUSTOMER hereunder; (ii) CUSTOMER
           Technical Information; (iii) TOWER Technical Information, (iv) this
           Agreement and (v) all other information disclosed by one party to the
           other pursuant to this Agreement which is written, graphic, machine
           readable or in other tangible form or, subject to Section 13.3 below,
           intangible form.

     13.2  The parties shall not use or disclose Confidential Information except
           as herein provided. Each party agrees to keep the Confidential
           Information disclosed to it by the other party confidential and to
           use or disclose it only for the purposes described herein, for seven
           (7) years from each disclosure of the Confidential Information,
           except as the other party may otherwise agree in writing.

     13.3  Each party's obligation to keep the Confidential Information
           confidential shall extend only to the Confidential Information which
           is at the time of disclosure conspicuously labeled as "Confidential"
           or "Proprietary" (or other similar marking to indicate its
           confidential nature) belonging to the other party. If the
           Confidential Information is disclosed orally or through
           demonstration, it must be specifically designated as proprietary or
           confidential information at the time of the oral disclosure and
           confirmed in a writing to be received by
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -23-

<PAGE>

           the party to which the Confidential Information is disclosed within
           thirty (30) days after the oral disclosure. Such written confirmation
           shall set forth in detail the Confidential Information to be kept
           confidential.

     13.4  Each party will use at least the same degree of care in keeping the
           Confidential Information of the other party confidential as it uses
           for its own proprietary or confidential information of a similar
           nature, including but not limited to jointly developed Confidential
           Information disclosed to a third party in compliance with the
           provisions of this Agreement. Each party further agrees to refrain
           from reverse engineering, or otherwise analyzing for the purpose of
           copying, each other's Confidential Information.

     13.5  Subject to the restrictions imposed by law, the obligation of the
           party to which the Confidential Information is disclosed under this
           Agreement shall not extend to any Confidential Information that:

           (a)    was in the public domain at the time it was disclosed;

           (b)    was known to that party at the time of its disclosure,
                  provided that it can be evidenced by that party's records in
                  existence prior to the disclosure;

           (c)    was independently developed by that party or one of the group
                  companies of that party by employees of that party or group of
                  companies of that party who have had no possession or access
                  to such Confidential Information, provided that it can be
                  evidenced by that party's records in existence prior to the
                  disclosure;

           (d)    becomes part of the public domain after disclosure (through no
                  improper action or inaction of that party);

           (e)    is disclosed by the other party to a third party without
                  restrictions on such third party's rights to disclose or use
                  the same; or

           (f)    is disclosed after receipt of a party's written notification
                  that it will not accept any further Confidential Information
                  in confidence; or

           (g)    subject to Section 13.4 above, the disclosure of jointly
                  developed Confidential Information.
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -24-

<PAGE>

14.0 FORCE MAJEURE

     Neither party hereto shall be liable in any manner for failure or delay in
     fulfillment of all or part of this Agreement directly or indirectly owing
     to any causes or circumstances beyond its reasonable control, including,
     but not limited to, acts of God, governmental orders or restrictions, war,
     war-like conditions, sanctions, strikes, revolution, riot, plague, or other
     epidemics, fire and flood; provided, however, that nothing under this
     Section 14 shall relieve either party of its obligations to make any
     payment required under this Agreement.

15.0  INCIDENTAL, CONSEQUENTIAL DAMAGES

     No party shall be liable to the other for any incidental, indirect, special
     or consequential damages, or for lost profits, savings or revenues of any
     kind, whether or not there has been notification of possibility of such
     damages. CUSTOMER undertakes that TOWER shall not be liable to CUSTOMER's
     customers for any incidental, indirect, special or consequential damages,
     or for lost profits, savings or revenues of any kind, whether or not there
     has been notification of possibility of such damages, and CUSTOMER shall
     indemnify and hold TOWER harmless if such is brought against TOWER.

     If CUSTOMER's customer has a direct relationship with Tower, as
     contemplated in Section 2.3, then the provisions included in the agreement
     between Tower and such CUSTOMER's customer shall exclusively apply.

16.0 NOTICES

     All notices, demands or consents required or permitted hereunder shall be
     in writing and shall be delivered, sent by telegram, telex, or facsimile,
     or mailed by registered mail to the respective parties at the addresses set
     forth below or at such other address as shall have been given to the other
     party in writing for the purposes of the clause. Such notices and other
     communications shall be deemed effective upon the earliest to occur of:

     (a) actual delivery;

     (b) seven (7) business days after mailing, addressed and postage prepaid;
         return receipt requested, or

     (c) three (3) business days after transmission by fax with printed
         confirmation of fax
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -25-

<PAGE>

         transmission.

     Notices shall be given:

             To CUSTOMER:

             QuickLogic Corp.
             1277 Orleans Drive
             Sunnyvale, CA 94089
             USA
             Attention: President

             Tel:  408-990-4000
             Fax:  408-990-4040

             To TOWER:

             TOWER SEMICONDUCTOR LTD.
             Ramat Gavriel Industrial Zone
             P.O. Box 619
             Migdal Haemek 23105
             ISRAEL
             Attention: Vice President Marketing and Sales

             Tel:  +972-6-650-6611
             Fax:  +972-6-654-7788

17.0 WAIVER AND AMENDMENT

     No waiver of any right under this agreement shall be effective unless in
     writing and signed by the party against whom such waiver is sought to be
     enforced. No failure or delay by either party in exercising any right,
     power, or remedy hereunder shall operate as a waiver of any such right,
     power or remedy.

18.0 ASSIGNMENT

     Except as otherwise provided herein, neither party shall assign or in any
     way transfer any rights or obligations hereunder without the prior written
     consent of the other party, and such consent shall not be unreasonably
     withheld, and any attempted assignment or transfer without such consent
     shall be void and without effect; except that either party hereto may
     assign this Agreement to any person or entity acquiring all or
     substantially all of its business, assets or stock.
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -26-

<PAGE>

19.0 ARBITRATION

     19.1  In the event that any dispute or disagreement between the parties as
           to this Agreement shall arise, and such cannot be resolved by the
           Project Managers, prior to taking any other action, the matter shall
           be referred to responsible executives of the parties for
           consideration and resolution. Any party may commence such proceedings
           by delivering a written request to the other party for a meeting of
           such responsible executives. The other party shall be required to set
           a date for the meeting to be held within thirty (30) days after
           receipt of such request and the parties agree to exercise their best
           efforts to settle the matter amicably. All meetings shall be held at
           a location mutually agreed upon by both parties.

     19.2  If any dispute or disagreement is not settled within sixty (60) days
           from the initial meeting pursuant to Section 19.1 of this Agreement,
           such dispute or disagreement may, at the demand of any party, be
           submitted to arbitration by a panel of three (3) arbitrators
           knowledgeable in the area of the issues to be resolved and chosen
           pursuant to the Rules of Arbitration of the International Chamber of
           Commerce, unless the parties mutually agree otherwise in writing.
           Disputes under this provision shall be governed by the Rules of
           Arbitration of the International Chamber of Commerce then in effect.
           All proceedings before the arbitrators shall be conducted in the
           English language and shall be held in San Francisco, California,
           U.S.A.

     19.3  Each party will share equally in the costs and expenses of
           arbitration unless the arbitrators find that the position of the
           non-prevailing party or parties in such arbitration was frivolous, in
           which event the arbitrators may assess all of such costs and expenses
           together with reasonable attorneys' fees against the non-prevailing
           party or parties.

     19.4  The decision of the arbitrators pursuant to this Section 19 shall be
           final and shall be conclusive and binding on all parties.

20.0 GOVERNING LAW

     This Agreement and matters connected with the performance hereof shall be
     construed, interpreted, applied and governed in all respects in accordance
     with the laws of the State of California, without regard to conflicts of
     laws provisions thereof and without regard to the United
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -27-

<PAGE>

     Nations Convention on Contracts for the International Sale of Goods.

21.0 INTEGRATION

     This Agreement, including all attached Schedules and Appendices,
     constitutes the final, complete and exclusive agreement of the parties
     concerning the subject matter contained herein, and supersedes all prior
     agreements and understanding, whether written or oral, between the parties
     related thereto. This Agreement may not be modified in any respect except
     in a writing which states the modification and is signed by both parties
     hereto.

22.0 SEVERABILITY

     In the event that any provision of this Agreement shall be held to be
     unenforceable or illegal, such provision shall be deemed modified or, if
     necessary, deleted to the extent necessary so that the entire Agreement
     shall not fail, but shall continue in force and effect. In such event, the
     parties shall in good faith negotiate to replace such illegal or
     unenforceable provision with enforceable and legal provisions which will,
     in effect, most nearly and fairly accomplish the effect of the illegal or
     unenforceable provision, if possible.

23.0 EXPORT CONTROL

     The parties hereto understand and recognize that the materials and
     information made available to them hereunder and the product(s) produced
     through use thereof may be subject to the Export Administration Regulations
     of the United States Department of Commerce and other United States
     government regulations. The parties are familiar with and agree to comply
     with all such regulations, including any future modifications thereof.

24.0 RIGHTS AND REMEDIES CUMULATIVE

     The rights and remedies herein provided shall be cumulative and not
     exclusive of any other rights or remedies provided by law or otherwise.

25.0 HEADINGS

     The headings of the various sections of this Agreement have been inserted
     for convenience of reference only and shall not be deemed to be a part of
     this Agreement.

26.0 COUNTERPARTS

     This Agreement may be executed in any number of counterparts, and each such
     counterpart
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -28-

<PAGE>

     hereof shall be deemed to be an original instrument, but all such
     counterparts together shall constitute one Agreement.

27.0 PUBLIC ANNOUNCEMENTS

     Neither party shall publicly announce the execution and existence of this
     Agreement without first submitting the text of such public announcement to
     the other party and receiving the approval of the other party of such text
     (which approval shall not be unreasonably withheld), except that approval
     of the other party shall not be necessary when public disclosure is
     required by law or generally accepted accounting principles.

28.0 INDEPENDENT CONTRACTORS

     Each Party is an independent contractor of the other and neither shall be
     deemed an employee, agent, partner or joint venture of the other. Neither
     party shall make any commitment, by contract or otherwise, binding upon the
     other nor represent that it has any authority to do so.

29.0 TOWER IS A FOUNDRY

     TOWER is a Semiconductor Contract Manufacturer ("SCM" or "Foundry") that
     provides manufacturing services based on its manufacturing processes to
     other third party clients, some of which may be competitors of CUSTOMER.
     TOWER may use all its Manufacturing Processes, without any restrictions or
     limitations, subject to the terms of this Agreement, including Section
     10.1(a), and subject to the terms and conditions of its agreements with the
     licensors of Tower's manufacturing processes. Subject to the aforementioned
     limitations and the terms of this Agreement, including Section 10.1(a),
     Tower may also use processes based on its core processes with modifications
     proposed or specified by the CUSTOMER and/or a third party client, with no
     restrictions or limitations.
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -29-

<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Foundry Agreement to be
     executed in their respective corporate names by their duly authorized
     representatives on the date first written above.

              CUSTOMER                        TOWER SEMICONDUCTOR LTD.

  By:________________________________      By:________________________________

              E. Thomas Hart                        Dr. Yoav Nissan-Cohen

            President and CEO                             Co-CEO

________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -30-

<PAGE>

                                   APPENDIX I

                             QUALIFICATION CRITERIA

To Be Added.

________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -31-

<PAGE>

                                   APPENDIX II

                      MANUFACTURING AND ACCEPTANCE CRITERIA

To Be Added.

________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -32-

<PAGE>

                                  APPENDIX III
                      STANDARD TERMS AND CONDITIONS OF SALE

1.  SCOPE. The terms and conditions of sale contained herein apply to all
    quotations and offers made by Tower Semiconductor Ltd. ("Tower"), including
    all Purchase Orders ("POs") accepted by Tower for the manufacture and sale
    of Tower wafers, die, as well as other goods or services (the "GOODS").
    These terms and conditions may in some instances conflict with some of the
    terms and conditions affixed to the POs or other procurement documents
    issued by a Tower customer ("Customer") ordering GOODS. In the case of any
    such conflict, the terms and conditions herein shall govern, and acceptance
    of Customer's order is expressly conditioned upon Customer's acceptance of
    these terms and conditions whether by Customer's written acknowledgment, by
    implication, or by its acceptance and payment of GOODS ordered hereunder.
    Tower's failure to object to conflicting terms and conditions affixed to any
    POs or other communication from Customer shall not be deemed a waiver of
    these terms and conditions. Notwithstanding the foregoing, if any term or
    condition herein conflicts with terms or conditions of the Agreement, the
    terms and conditions of the Agreement shall apply. Any modification of these
    terms and conditions must be agreed to in a writing signed by eligible
    officers of each party.

2.  PAYMENT - TERMS. All prices quoted shall be Ex-works (as defined by
    Incoterms 2000) (at the wafer production facility set forth in paragraph 4
    below). Payment for GOODS due to Tower shall be * from date of invoice.
    All payments shall be in United States dollars, unless otherwise agreed in
    writing, and shall be electronically transferred to a bank or other
    financial institution of Tower's choice. Unless expressly waived by Tower,
    late payments will bear interest at the lesser of the three months LIBOR
    rate plus two percent, or the maximum rate allowed by applicable law. If
    Tower determines that it is necessary to bring legal action to collect
    delinquent accounts, Customer will pay or reimburse Tower for the reasonable
    costs of suit, collection and attorney's fees. In addition, upon
    delinquency, or if Tower has reason to doubt the creditworthiness of
    Customer, Tower at its sole discretion, may delay delivery of GOODS, cancel
    outstanding orders, reduce amounts, deliver C.O.D., require Customer to post
    an appropriate letter of credit, Bank Guarantee or any other security,
    and/or seek to enforce any of Tower's other available legal remedies. Tower
    shall retain a security interest and right of possession in the GOODS until
    Customer makes full payment.

3.  TAXES. All quoted prices are exclusive of any present or future sales or use
    tax, revenue or value-added tax, import duty (including brokerage fees) or
    any other tax or charge applicable to the manufacture, sale or delivery of
    any GOODS. Such taxes and charges, when applicable, shall be paid by
    Customer, or immediately reimbursed to Tower upon delivery of an invoice for
    same if applicable law requires Tower to collect and remit such taxes or
    charges to relevant authorities.

4.  DELIVERY. Sales of GOODS shall be Ex-works (Tower's Migdal Ha'emek,
    Israel facility or at such other Tower wafer production facility mutually
    agreed upon). Customer shall acknowledge to Tower the receipt of each
    delivery of GOODS stating quantity, type, and damages (if any) existing
    at delivery, within * following delivery of GOODS. Tower shall not be
    responsible for any claims relative to quantity and type made after such
    * period. On-time delivery shall be deemed to be any delivery made to
    Customer within the period of * prior to until * after the scheduled
    delivery date, or as agreed in writing. However, shipping up to

________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                  -33-

<PAGE>

    * ahead of delivery schedule is authorized. Tower shall use its
    commercially reasonable efforts to meet Customer's delivery schedules.
    Delivery schedule changes on existing POs may be made by mutual agreement
    of Tower and Customer. Tower reserves the right to make deliveries of
    GOODS in installments and these terms and conditions shall be severable
    with respect to such installments. Delivery delay or default of any
    installment shall not relieve Customer of its obligation to accept and
    pay for remaining deliveries of GOODS.

5.  ACCEPTANCE.

    a) Customer shall accept GOODS or reject them as nonconforming within *
       of receipt of each delivery. Failure to notify Tower in writing of
       nonconforming GOODS within such period shall be deemed an
       unconditional acceptance.

    b) The determination of conformity will be based solely on final electrical
       testing to be conducted using Tower's Electrical Test Specifications
       (ETS) procedures and the yield guarantees agreed upon in writing between
       Tower and Customer. Should the GOODS meet or exceed the criteria of the
       electrical testing and yield, Customer will not be allowed to reject
       GOODS. To reject GOODS Customer must request a return material
       authorization ("RMA") from Tower. Customer may ship the rejected GOODS to
       Tower only after receiving an RMA. Customer shall bear all risk of loss,
       damage, or destruction to the GOODS rejected by Customer until same are
       returned to Tower (either hereunder or under GENERAL WARRANTY). Tower
       will retest the GOODS and if they fail, Tower will either credit Customer
       for the price of the GOODS or replace same with conforming GOODS.

    c) To prevent splitting of production lots of GOODS that are wafers,
       Customer agrees to purchase an over-shipment of up to a full lot size
       minus one wafers, or the equivalent number of die or packaged die.

6.  INTELLECTUAL PROPERTY. All patent rights, copyrights, trademarks, trade
    names, trade dress, designs, mask works, trade secrets, know-how, ideas,
    proprietary information, confidential information, inventions, technical
    data, and any other information or materials commonly recognized as
    intellectual property in the semiconductor industry (collectively,
    "Intellectual Property Rights") owned by either Tower or Customer (or their
    respective licensors) shall continue to be owned by such parties, and no
    license is granted herein, except to the extent necessary for Tower to
    manufacture the GOODS for Customer.

7.  EXPORT CONTROL. Customer agrees: a) to fully comply with United States (the
    "US") laws and regulations, assuring Tower that, unless prior authorization
    is obtained from the competent US government agency, the customer does not
    intend and shall not knowingly export or re-export, directly or indirectly,
    any wafer, devices, technology or technical information received from Tower
    in contravention of any law and regulations published by any US government
    or other government agency; b) to determine the jurisdiction and export
    classification under the US Export Administration Regulations and the US
    International Traffic in Arms Regulations of any wafer or device
    manufactured by Tower under Customer's direction and to provide the results
    of such determination to Tower; c) to take steps, including screening of
    end-use and end-user as appropriate, to ensure that any wafer or device
    shipped ex-works from Tower will not be used in an sensitive nuclear,
    missile, or chemical/biological warfare end-use; d) that any end-user to
    whom Tower is directed to assist in delivery is not on the US Denied Person
    List, the US Proliferation Entities List, or, if subject to appropriate
    jurisdiction, the US Designated National list; and e) that
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -34-

<PAGE>

    the Customer shall not export or re-export, without the necessary export
    licenses from the appropriate authorities, to Albania, Armenia, Azerbaijan,
    Belarus, Bulgaria, Cambodia, China, Cuba, Estonia, Georgia, Kazakhstan,
    Kyrgyzstan, Libya, Laos, Latvia, Lithuania, Moldavia, Mongolia, North Korea,
    Romania, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Vietnam or
    Yugoslavia.
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -35-

<PAGE>

                                   APPENDIX IV

                   TRANSFER OF CUSTOMER TECHNICAL INFORMATION

To Be Added.

________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -36-

<PAGE>

                                   APPENDIX V

                              WAFER PROBE CRITERIA

To be added

________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -37-

<PAGE>

                                   APPENDIX VI

                               SCHEDULING EXAMPLE

The examples below illustrate certain of the provisions defined in Section 5.7
of the Agreement. In case of conflict between the Appendix VI and Section 5.7,
the provisions of Section 5.7 shall govern. In the examples below an assumption
is made that the Base Capacity is already * Wafers per month.

Example 1:  CUSTOMER has ordered for month * of the forecast * wafers and when
            it becomes month * CUSTOMER wishes to increase the number of wafers
            purchased to *. TOWER may approve such a request, but is not obliged
            to as it is beyond the capacity commitment.

Example 2:  CUSTOMER has ordered for month * of the forecast * wafers and when
            it becomes current CUSTOMER wishes to increase the number of wafers
            purchased to *. TOWER will approve such a request, assuming it does
            not contradict the provisions for sale of unused capacity and upside
            limitations.

Example 3:  CUSTOMER has initially forecasted for month * of the forecast use of
            * wafers. After * months, when that month becomes month * of the
            current forecast, CUSTOMER wishes to reduce the purchase to *
            wafers. TOWER will approve the request as it is within the minus *
            limit and within the allowed time frame. When the month becomes
            month * of the forecast the CUSTOMER wishes to reduce the purchase
            of wafers to *. TOWER may refuse such a request and allow the
            reduction only to * wafers, which is minus * of the highest forecast
            made for that month.

Example 4:  CUSTOMER has initially forecasted for month * of the forecast use of
            * wafers. After * months, when that month becomes month * of the
            current forecast, CUSTOMER wishes to increase the purchase to *
            wafers. TOWER will approve the request as it is within the plus *
            limit and within the allowed time frame, however it may be
            restricted subject to the provisions of the unused capacity and
            upside limitations. When the month becomes month * of the forecast
            the CUSTOMER wishes to increase the purchase of wafers to *. TOWER
            may refuse such a request and allow the increase only up to *
            wafers, which is plus * of the original forecast made for that
            month, however it may be restricted subject to the provisions of the
            unused capacity and upside limitations.
________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -38-

<PAGE>

                                  Schedule 6.4

                             PRE-PAID WAFER ACCOUNT

Immediately upon Closing of the Share Purchase Agreement, TOWER shall establish
a Pre-Paid Wafer Account, consisting of a credit balance in CUSTOMER'S favor,
equal to the amount of interest accumulated on the escrow funds and remitted to
TOWER on the Closing Date, to be used to credit the order value of any order
placed by CUSTOMER as provided in Section 6.4 of this Agreement.

Thereafter, upon each exercise by CUSTOMER of the Series A-1 through A-5
Additional Purchase Obligations (the Mandatory Additional Purchase Obligations),
as such Additional Purchase Obligations are described in Exhibit B to the Share
Purchase Agreement, if the Average Traded Price ("ATP") of the Ordinary Shares
is less than Strike Price on the day such Additional Purchase Obligations are
exercised, then TOWER shall increase CUSTOMER'S Pre-Paid Wafer Account by an
amount equal to difference between the ATP and Strike Price multiplied times the
number of Ordinary Shares purchased by CUSTOMER as a result of such exercise.

Average Traded Price or ATP shall mean as of date of any exercise of Additional
Purchase Obligations with respect to the Ordinary Shares, the average of the
Quoted Prices (as defined below) of the Ordinary Shares for the thirty (30)
consecutive trading days immediately preceding such date; provided, however,
that if ATP for any specific exercise is less than US $ *, the ATP shall be
adjusted for that exercise to a floor of US $ * "Quoted Price" of the Ordinary
Shares for any date shall be the last reported sales price (or, in case no such
sale takes place on such date, the average of the reported closing bid and ask
prices) of the Ordinary Shares as reported by NASDAQ or the principal national
securities exchange upon which the Ordinary Shares are listed or traded. If the
Ordinary Shares are not so quoted, listed or traded, the ATP shall be an amount
mutually agreed upon by CUSTOMER AND TOWER.

If an event described in clauses (a) through (d) of Section 4.1.1 of Exhibit B
to the Share Purchase Agreement occurs with respect to the Ordinary Shares prior
to the date of any exercise of Additional Purchase Obligations, the computation
of the Strike Price and the ATP, if such event occurs during the thirty day
calculation of the ATP, shall be appropriately adjusted, to take such event in
to account.

The Strike Price with respect to the Additional Purchase Obligations is US $ *.

________________________________________________________________________________

* An asterisk indicates confidential material has been omitted from this
document filed separately with the Securities and Exchange Commission pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                      -39-<PAGE>

                                                                   EXHIBIT 10.21

     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

    For purposes of this Agreement:

    1.1   The term "Holder" shall mean a member of the Purchaser Group and/or
          TIC, as the case may be.

    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).

    1.3   The term "Closing" means Closing as such term is defined in the SPA.

    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.

    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.

<PAGE>

    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.

    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.

    1.8   The term "Securities Act" means the United States Securities Act of
          1933, as amended.

    1.9   The term "SEC" means the United States Securities and Exchange
          Commission.

    1.10  The term "TIC" means The Israel Corporation Ltd.

    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

<PAGE>

          to be outstanding, or (iv) such shares have been sold pursuant to Rule
          144 or Rule 144A under the Securities Act.

    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, unless such holder has yet to
          exercise a Demand and jointly initiates a Demand with at least one (1)
          other Holder that has yet to exercise a Demand provided that (i) the
          Holders included in such joint initiation have aggregate holdings of
          at least 1,500,000 Ordinary Shares, and (ii) all the Holders included
          in such joint initiation hold under 1,500,000 Ordinary Shares on an
          individual basis as the result of the sale of 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

<PAGE>

          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

<PAGE>

          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 (the "Additional Registration") jointly
          initiated by members of the Purchaser Group holding a majority of the
          Purchaser Group Registrable Securities under Section 2.1. For purposes
          of clarity, in the event multiple Holders that have yet to exercise a
          Demand jointly initiate a Demand and each such holder holds under
          1,500,000 Ordinary Shares as the result of the sale of Ordinary Shares
          but together such holders hold at least 1,500,000 Ordinary Shares,
          such Demand shall be deemed to be a registration initiated on an
          individual basis by each Holder included in such joint initiation and
          shall not be considered an Additional Registration. 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

<PAGE>

          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

    Whenever required under this Agreement to file a registration statement with
    respect to the Registrable Securities, the Company shall:

<PAGE>

    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.

    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.

    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.

    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.

    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).

    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.

    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.

    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.

    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).

    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

<PAGE>

          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.

5.  INFORMATION

    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.

6.  EXPENSES OF REGISTRATION

    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.

7.  INDEMNIFICATION

    In the event any Ordinary Shares are included in a registration statement in
    accordance herewith:

    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.

<PAGE>

    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.

    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.

<PAGE>

8.  CONTRIBUTION

    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.

9.  DESIGNATION OF UNDERWRITER

    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.

    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.

10. RULE 144 REPORTING

    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:

    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;

    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;

    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.

<PAGE>

11. ASSIGNMENT OF REGISTRATION RIGHTS

    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.

12. AMENDMENTS, WAIVERS, ETC.

    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.

13. MARKET STAND-OFF AGREEMENT.

    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.

    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.

14. COUNTERPART

    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.

15. ENTIRE AGREEMENT

    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.

16. GOVERNING LAW AND JURISDICTION

    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.

<PAGE>

17. ADDITIONAL PARTIES

    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:
                                             ---------------------------
                                      Name:
                                             ---------------------------
                                      Title:
                                             ---------------------------

                                      SanDisk Corporation

                                      By:
                                             ---------------------------
                                      Name:
                                             ---------------------------
                                      Title:
                                             ---------------------------

                                      The Israel Corporation Ltd.

                                      By:
                                             ---------------------------
                                      Name:
                                             ---------------------------
                                      Title:
                                             ---------------------------

                                      Alliance Semiconductor Corp.

                                      By:
                                             ---------------------------
                                      Name:
                                             ---------------------------
                                      Title:
                                             ---------------------------

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

                                      By:
                                             ---------------------------
                                      Name:
                                             ---------------------------
                                      Title:
                                             ---------------------------

                                      QuickLogic Corp.

                                      By:
                                             ---------------------------
                                      Name:
                                             ---------------------------
                                      Title:
                                             ---------------------------

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