Document:

Exhibit 4.2

                    AMENDMENT TO THE ARTICLES OF ASSOCIATION

At the shareholders'  meeting that was held on December 7, 2003, it was proposed
that for the purpose of reserving sufficient  quantities of shares to permit the
issuance  of shares in  connection  with the  raising of  capital  for the Fab 2
project,  Tower  Semiconductor  Ltd.  increase its authorized share capital from
100,000,000 shares NIS 1.00 per share to 150,000,000, NIS 1.00 per share.

The shareholders of Tower Semiconductor Ltd. resolved the following:

"That the increase in the number of the Company's  authorized ordinary shares to
150,000,000 and authorized share capital to NIS 150,000,000 and the amendment of
the  Company's  Articles of  Association  to reflect  such  increase,  is hereby
approved."

The above  resolution was adopted by a majority of the  Shareholders  present in
person or by proxy.Exhibit 4.3

                            TOWER SEMICONDUCTOR LTD.

                         EMPLOYEE SHARE OPTION PLAN 2004

   A PLAN UNDER SECTION 102 OF THE INCOME TAX ORDINANCE AND THE UNITED STATES
                         INTERNAL REVENUE CODE OF 1986

1.    Name and Purpose:

      1.1   This plan, as amended from time to time, shall be known as the Tower
            Semiconductor  Limited  Employee  Share  Option Plan 2004 (the "2004
            Plan" or the "Plan").

      1.2   The  purpose  and  intent of the Plan is to  provide  incentives  to
            employees  of  Tower  Semiconductor  Ltd.  (the  "Company")  and its
            wholly-owned  subsidiaries  (each, a "Subsidiary") by providing them
            with options ("Options") to purchase shares in the Company, pursuant
            to a plan  approved by the Board of  Directors  of the Company  (the
            "Board"). Options granted under this Plan to the Company's employees
            will be made  pursuant to the  provisions  of Section 102  ("Section
            102") of the Israeli  Income Tax Ordinance  (New  Version),  1961 as
            amended from time to time and,  most  recently,  by the Law Amending
            the  Income  Tax  Ordinance  (Number  132)  2002  (as  amended,  the
            "Ordinance")  and the rules  promulgated  thereunder  (the "Rules").
            Options  granted under this Plan to United States  residents who are
            employees  of  the  Company's   United  States   Subsidiary,   Tower
            Semiconductor  USA, Inc. ("TSU") will be made pursuant to the United
            States Internal Revenue Code of 1986, as amended (the "Code").

2.    Section 102 Election:

            Options granted pursuant to Section 102(b) shall be granted pursuant
      to either (a) Section  102(b)(2)  thereof as capital gains track  options,
      pursuant to which income  resulting  from the sale of shares  derived from
      such  Options  is  taxed as a  capital  gain  ("102  Capital  Gains  Track
      Options"),  or (b)  Section  102(b)(1)  thereof as ordinary  income  track
      options,  pursuant  to which  income  resulting  from  the sale of  shares
      derived  from such  Options is taxed as  ordinary  income  ("102  Ordinary
      Income Track Options"; together with 102 Capital Gains Track Options, "102
      Trustee  Options").  Pursuant  to the  Company's  election  filed with the
      Israeli Tax Authorities to issue 102 Capital Gains Track Options under the
      Company's  Employee  Share Option Plan 2003/1,  the Company may only grant
      102  Capital  Gains  Track  Options at any given time  unless it elects to
      change such  election,  which may be made no earlier  than January 1, 2005
      and  following  the  approval  of the Board,  all in  accordance  with the
      provisions of Section 102(g).

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3.    Types of Options granted under the Code:

            Options  granted to US residents  who are employees of TSU under the
      Code shall be either an Option  intended to qualify as an incentive  stock
      option within the meaning of Section 422 of the Code ("ISO"), or an Option
      not intended to qualify as an ISO ("NSO").

4.    Scope:

            The total number of Options which can be granted under this Plan are
      Options  to  purchase  up to  2,071,578  Ordinary  Shares  of the  Company
      (nominal value NIS 1.00 per share),  subject to adjustments as provided in
      Section 13 below.

5.    Administration:

      5.1.  The Plan  will be  administered  by the  Board of  Directors  of the
            Company, taking into account the recommendations of the Compensation
            and Options  Committee (the  "Committee"),  a  sub-committee  of the
            Board.

      5.2.  No  member  of  the  Board   shall  be  liable  for  any  action  or
            determination  made in good  faith  with  respect to the Plan or any
            Option granted hereunder.

6.    Eligible Grantees:

      6.1.  Subject to the provisions of the Plan and any restriction imposed by
            any  applicable  law,  Options may be granted to any employee of the
            Company or any  Subsidiary  ("Grantee").  No option award under this
            Plan (an "Option  Award") may be granted to any person  serving as a
            member  of the  Board.  The  grant of an  Option  Award to a Grantee
            hereunder,  shall neither entitle such Grantee to  participate,  nor
            disqualify him/her from participating, in any other grant of Options
            pursuant to this Plan or any other share  incentive  or share option
            plan of the Company or any Subsidiary.

      6.2.  Grants of ISO's shall be made only to US residents who are employees
            of TSU  eligible to receive them under  Section 422 of the Code.  If
            (i) a Grantee of ISO's at the time of the Option  Award owns  shares
            representing more than 10% of the voting power of the Company or its
            parent or a  Subsidiary,  (ii) the  aggregate  Fair Market Value (as
            defined  hereunder),  as at the  time of the  grant,  of the  shares
            underlying ISOs which first become  exercisable  during any calendar
            year exceeds $100,000 (taking such Options into account in the order
            in which they were granted) or (iii) such Options  otherwise fail to
            fully comply with the  requirements  for ISO's under the Code,  such
            Options shall be treated as NSOs.  Options  designated as ISO's will
            be treated as NSOs if a disposition of underlying shares exercisable
            under the  Option  is made  within  two  years  from the date of the
            granting of the Option or within one year after the  exercise of the
            Option.

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7.    Trustee; Required Holding Periods:

      7.1.  Option Awards and/or shares in the Company which will be issued upon
            the exercise of the Option  Awards will be held in trust by David H.
            Schapiro Legal Services (the  "Trustee") in accordance  with Section
            102 and the  regulations,  rules,  orders or procedures  promulgated
            thereunder  with respect to Israeli  residents,  and with respect to
            non-Israeli residents,  the Trustee shall hold such Options, and any
            shares  issued upon the  exercise of any of such  Options,  in trust
            pursuant  to the  Company's  instructions  from  time  to  time  and
            according to all applicable laws.

      7.2.  102 Trustee  Options and any shares received  following  exercise of
            102 Trustee  Options  shall be held by the Trustee for the requisite
            period  prescribed  by the  Ordinance  and the Rules,  or such other
            period as may be  required  or  unless  otherwise  permitted  by the
            Israeli Income Tax Authorities (the "Required Holding Period").

      7.3.  The Trustee and each Grantee shall comply with the  applicable  laws
            and the terms and  conditions  of the Trust  Agreement  entered into
            between the Company and the Trustee.

      7.4.  In the event that the  Company  issues  securities  as bonus  shares
            (ioeau aeaa) on shares which derive from 102 Trustee  Options,  such
            bonus shares shall also be subject to the provisions of this Section
            and the  Required  Holding  Period  for such bonus  shares  shall be
            measured from the  commencement  of the Required  Holding Period for
            the 102 Trustee Option from which the bonus shares were issued.

      7.5.  The Trustee  shall not use the voting  rights  vested in such shares
            issuable  upon  exercise  of Options,  unless the Trustee  believes,
            after  consulting  with the  Committee  and the  Grantees who hold a
            majority  of the  issued  Options,  that the said  rights  should be
            exercised for the protection of the Grantees as a minority among the
            Company's shareholders.

      7.6.  The Company  shall be entitled to replace the Trustee  with  another
            appointee  from time to time and shall  notify the  Grantees of such
            replacement.

8.    Reserved Shares:

      8.1   The Company has reserved 2,071,578  authorized but unissued Ordinary
            Shares  (nominal value NIS 1.00 per share) for purposes of the Plan,
            subject to  adjustments  as  provided  in  Section 13 below.  If any
            Options granted under the Plan terminate,  expire or otherwise cease
            to exist,  they shall again be available  for grant  through  Option
            Awards  under the Plan or under any  other  incentive  plan that the
            Company may adopt.

      8.2   The Company will maintain a sufficient  quantity of Ordinary Shares,
            NIS 1.00  nominal  value,  in its  registered  capital to ensure the
            execution of the exercise right hereunder,  and if necessary it will
            cause its registered capital to be increased.

9.    Option Awards:

      9.1.  Option  Awards may be granted as of the  Effective  Date (as defined
            hereunder),  provided that Option Awards to the Company's  employees
            may be granted as of the  Effective  Date and 30 (thirty)  days from
            the filing of this Plan with the Israeli  Income Tax  Authorities in
            accordance  with  applicable  law.  The date of grant of each Option
            Award  shall be the date of the Option  Award  letter  issued to the
            Grantee (the "Date of Grant").

      9.2.  The  instrument  granting the Option Award shall state,  inter alia,
            the  number  of shares  covered  thereby,  the dates  when it may be
            exercised,  the option price and such other terms and  conditions as
            the Committee at its discretion  may  prescribe,  provided that they
            are consistent with this Plan and with applicable laws.

<PAGE>

      9.3.  The Options  hereunder  will not be listed in any stock exchange and
            are  not  transferable  (except  to the  Grantee's  legal  heirs  or
            estate).

      9.4.  The  Grantee  shall  have no  right  to vote  or  receive  dividends
            (subject to Section 13.1) or any other rights of a shareholder prior
            to its  exercise of the Options and until the  issuance of the stock
            certificate evidencing such shares.

10.   Options' Exercise Prices:

            The  purchase  price in $US of each share will be the closing  sales
      price of the  Company's  shares as  reported  by  NASDAQ or the  principal
      national securities exchange upon which the Company's shares are listed or
      traded for the last market  trading day (the "Fair Market Value") prior to
      the Date of Grant.

11.   Vesting and Exercise of Option Award:

      11.1. Option Awards shall become  exercisable (vest) pursuant to the terms
            under which they were awarded,  subject to the terms and  conditions
            of this  Plan:  one-quarter  (1/4) of the  Options  granted  in each
            Option Award shall vest and become  exercisable  12 months after the
            Date of Grant,  one-quarter  (1/4) of the  Options  granted  in each
            Option Award shall vest and become  exercisable  24 months after the
            Date of Grant,  one-quarter  (1/4) of the  Options  granted  in each
            Option Award shall vest and become  exercisable  36 months after the
            Date of Grant, and one-quarter  (1/4) of the Options granted in each
            Option Award shall vest and become  exercisable  48 months after the
            Date of Grant, subject to the Grantee's continuing to be an Employee
            on such dates.  Each option will be  exercisable  into one  Ordinary
            Share.

      11.2. The  consideration  to be paid  for the  shares  to be  issued  upon
            exercise of an Option,  including  the method of  payment,  shall be
            determined by the Company and may consist  entirely of (1) cash, (2)
            check,  or (3) cashless in case of same day sale.  The procedure for
            exercise of the Options shall be published in the Company's website.
            The Company may change the procedures for exercise of the Options at
            its discretion, by giving notice thereof to the Grantees.

      11.3. Anything  herein  to the  contrary  notwithstanding,  if any  Option
            Award, or any part thereof,  has not been exercised  within ten (10)
            years  after the Date of Grant (or any  shorter  period set forth in
            the instrument  granting such Option Award),  such Option Award,  or
            such part thereof, shall terminate,  and all interests and rights of
            the Grantee in and to the Option  Award or such part  thereof  shall
            expire.

<PAGE>

12.   Termination of Employment; Termination of Right to Exercise:

      12.1. Subject to the provisions of paragraph 12.2 and 12.3 hereof,  unless
            determined  otherwise by the Board of Directors if a Grantee  should
            cease to be  employed  by the  Company  for any  reason,  all of the
            Grantee's rights which have vested and are exercisable in respect of
            all Option Awards  granted to the Grantee under the Plan,  and which
            are  not  exercised  within  sixty  (60)  days  after  the  date  of
            termination of the employee-employer  relationship,  shall terminate
            upon the  expiration  of such  sixty-day  period.  Options which are
            unvested at the time of termination of the Grantee's employment with
            the Company will become void and  unexercisable  at the time of such
            termination.

      12.2. Notwithstanding  paragraph  12.1,  in the event the  employment of a
            Grantee  is  terminated  by the  Company  under  circumstances  that
            entitle  the Company  (1) not to pay  severance  pay, or to pay only
            part  of  the  severance  pay,  pursuant  to the  provisions  of the
            Severance  Pay Law,  5723-1963,  or (2) to terminate the Grantee for
            Cause  as  such  term  is  defined  in  such  Grantee's   employment
            agreement,   vested   Options   shall  lapse  and  become  void  and
            unexercisable  on the last day of the Grantee's  employment with the
            Company  or on such  date as set forth in the  Grantee's  employment
            agreement.

      12.3. Anything herein to the contrary notwithstanding, if a Grantee should
            die,  or become  unable to continue to be employed by the Company by
            reason of becoming  incapacitated while in the employ of the Company
            due  to  an  accident,  illness  or  other  cause  approved  by  the
            Committee,  or if a Grantee  should  retire at the legal  retirement
            age, vested Options can be exercised by the Grantee or the Grantee's
            estate or legal  representative,  as the case may be, within one (1)
            year after the Grantee's  last day of  employment  with the Company.
            Thereafter,   such   Options   shall   lapse  and  become  void  and
            unexercisable.  In the case of an ISO, if such  disability  is not a
            "disability"  as such term is  defined in  Section  22(e)(3)  of the
            Code,  such ISO shall be treated  for tax  purposes  as an NSO as of
            three months and one day from the date of such termination.

13.   Adjustments:

      13.1. In the event that the Company shall issue any of its Ordinary Shares
            or  other  securities  as bonus  shares  (ioeau  aeaa)  upon or with
            respect to any shares  which shall at the time be subject to a right
            of purchase by a Grantee  hereunder,  each Grantee  upon  exercising
            such right  shall be  entitled to receive  (for the  purchase  price
            payable upon such exercise), the shares as to which he is exercising
            such right and, in addition  thereto (at no additional  cost),  such
            number of shares of the class or classes in which such bonus  shares
            (stock  dividend) were declared,  as the Grantee would have received
            had he been the  holder of the  shares as to which he is  exercising
            his  right at all times  between  the date of the  granting  of such
            right and the date of its  exercise.  No  fractional  shares will be
            issued under this Section.  All resulting  fractional  shares may be
            aggregated  and sold by the  Company,  who will be  entitled  to the
            proceeds of the sale thereof.

      13.2. If securities of any kind are offered to the Company's  shareholders
            by means of a rights  offering,  the  exercise  price of the Options
            will not be adjusted but the number of shares into which the Options
            are exercisable ("Underlying Shares") will be increased to take into
            account the element of economic  benefit of the rights issue ("i0eea
            aaeaa"),  as  such  element  is  calculated  by the  Tel-Aviv  Stock
            Exchange (the "TASE") in accordance with its rules.

<PAGE>

      13.3. If the Company  consolidates its Ordinary  Shares,  NIS 1.00 nominal
            value,  into shares having a larger nominal  value,  or if it splits
            them into a larger number of shares having a lesser  nominal  value,
            then the number of  Underlying  Shares that is  allotted  due to the
            Options'  exercise will be decreased or  increased,  as the case may
            be, after such an action.

      13.4. In the  event  that  the  Company  is a party  to any  agreement  or
            arrangement   for   exchanging   shares   (such  as  a   merger   or
            reorganization) (hereinafter, the "Exchange Transaction"),  in which
            the  holders  of the  Company's  ordinary  shares  are  offered  the
            opportunity to exchange their shares for the securities of any other
            corporation,  the Company will cause such other corporation to allot
            such  securities  as were  offered to its ordinary  shareholders  as
            aforesaid to any Grantee who exercises  his/her  options  during the
            exercise period and subject to the exercise  conditions,  as if that
            Grantee was the holder of the Underlying  Shares on the  determining
            date for purposes of the said Exchange Transaction.

      13.5. Voluntary  Liquidation:  In the event of a decision  to  voluntarily
            liquidate the Company,  each Grantee will be deemed to have used his
            exercise right  immediately prior to the decision having been taken,
            without having to pay the exercise price. In this event, the Grantee
            will be entitled  to a payment  which is equal to the amount that he
            would  receive  in  liquidation  if he were a holder  of  Underlying
            Shares  immediately  prior to the  decision to  liquidate,  less the
            exercise price.

      13.6. In any event in which the  execution  of an  adjustment  is actually
            required as detailed in this Section 13, the Committee is authorized
            to  implement  the actual  adjustment  and to execute  the  required
            calculations, all subject to the principles in this Section 13.

14.   Continuance of Employment:

            Neither  the Plan nor the  Option  Award  letter  shall  impose  any
      obligation on the Company or a Subsidiary,  to continue any Grantee in its
      employ or as a member of its Board of  Directors,  and nothing in the Plan
      or in any Option Award pursuant  thereto shall confer upon any Grantee any
      right to continue  in the employ or as a member of the Board of  Directors
      of the Company or a Subsidiary,  or restrict the right of the Company or a
      Subsidiary,  to terminate  such  employment or position as a member of its
      Board of Directors at any time.

15.   Governing Law:

      15.1. The Plan and all  instruments  issued  hereunder in connection  with
            Options granted  pursuant to the provisions of Section 102, shall be
            governed by, and  interpreted  in accordance  with,  the laws of the
            State of Israel.

      15.2. The Plan and all  instruments  issued  hereunder in connection  with
            Options  granted  pursuant to the  provisions of the Code,  shall be
            governed by, and  interpreted  in accordance  with,  the laws of the
            State of California.

<PAGE>

16.   Application of Funds:

            The  proceeds  received  by the  Company  from  the  sale of  shares
      pursuant to Option Awards  granted under the Plan will be used for general
      corporate purposes of the Company or any Subsidiary.

17.   Tax Consequences:

      17.1. Any tax  consequences  arising  from the  grant or  exercise  of any
            Option Award,  from the payment for shares  covered  thereby or from
            any other  event or act (of the Company or the  Grantee)  hereunder,
            and commissions and other expenses  relating  thereto shall be borne
            solely by the  Grantee.  Furthermore,  the  Grantee  shall  agree to
            indemnify  the  Company  and/or any of its  Subsidiaries  and/or the
            Trustee  and  hold  them  harmless  against  and  from  any  and all
            liability for any such tax or interest or penalty thereon, including
            without  limitation,   liabilities  relating  to  the  necessity  to
            withhold, or to have withheld, any such tax from any payment made to
            the Grantee.  The Company and/or any of its Subsidiaries  and/or the
            Trustee may withhold any taxes,  expenses and  commissions  from the
            exercise of the Options and/or the sale of the underlying shares.

      17.2. The Grantee will confirm in writing that he/she (1) understands that
            the Options are granted pursuant to a Plan under Section 102, (2) is
            aware  which  taxation  track  applies to the  Options  and (3) will
            undertake that he/she will not exercise the Options prior to the end
            of the Required Holding Period unless otherwise permitted.

18.   Amendment and Termination of the Plan

            The Plan shall become  effective  upon its adoption by the Company's
      shareholders  (the  "Effective  Date"),  and the Company may issue Options
      under this Plan  until the date that is ten (10) years from the  Effective
      Date. The Board may, at any time and from time to time, terminate,  alter,
      adjust or amend the Plan in any  respect,  except  that if at any time the
      approval of the shareholders of the Company is required, the Board may not
      effect such modification or amendment without such approval.

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