Document:

<PAGE>
                                                                    Exhibit 10.9

                                 SECOND ADDENDUM
                           TO THE TECHNOLOGY AGREEMENT

                                                Contract No.  04TAMA05657-042204

This Addendum, to the Technology Agreement dated May 4, 2000, between Saifun
Semiconductor Ltd., a company incorporated in Israel, with offices at Elrod
Bldg. 45 Hamelacha St. Industrial Zone South, Netanya 42504, Israel ("Saifun");
and Macronix International Co., Ltd., a company incorporated in Taiwan with an
office at 16 Li-Hsin Road, Science-Based Industrial Park, Hsin-Chu, Taiwan,
R.O.C. ("Macronix") ("TECHNOLOGY AGREEMENT"), the Amendment to the Technology
Agreement, dated 10th day of April 2003 ("AMENDMENT"), and the First Addendum
dated April 22, 2004 ("FIRST ADDENDUM"); is entered into this 22 day of April,
2004 ("EFFECTIVE DATE"), ("SECOND ADDENDUM"). The Technology Agreement,
Amendment, First Addendum, and this Second Addendum are hereinafter collectively
referred to as "AGREEMENT"). Saifun and Macronix shall be collectively referred
to herein as the "PARTIES."

PREFACE

WHEREAS Saifun and Macronix are parties to the Agreements.

WHEREAS the Parties wish to enhance their cooperation, such that Saifun shall
grant Macronix a license under Saifun's MLC Technology (as defined below)
according to the terms and conditions of this Second Addendum;

WHEREAS In addition, Saifun shall further assist Macronix in designing,
developing and implementing MLC Flash Products, as defined below;

WHEREAS The Parties wish to set their understandings in connection with the
above by adding this Addendum to the Technology Agreement and the First
Amendment;

NOW, THEREFORE, the Parties have agreed as follows:

1.    DEFINITIONS:

1.1. General: This Second Addendum is hereby added and attached to the
Technology Agreement as an integral part thereof. All provisions of the
Technology Agreement, which are not expressly modified or amended hereunder,
shall apply to the provisions of this Second Addendum, with the necessary
applicable changes (mutatis mutandis). The provisions of the Technology
Agreement, or a Party's rights under the Technology Agreement, shall not be
deemed limited, derogated from or otherwise amended, unless expressly provided
hereunder.

1.2. Definitions: Capitalized terms not defined herein shall have the meaning
defined in the Technology Agreement and in the Amendment. In addition to terms
elsewhere defined in this Second Addendum, the following terms used herein shall
have the meaning attached to them as follows:

"DEVELOPMENT PROJECT" - as defined in Section 3.1 below.

<PAGE>

"INITIAL MLC FLASH PRODUCT" shall mean the initial MLC Flash Product, to be
developed under this Second Addendum, according to specifications to be attached
to this Second Addendum as APPENDIX A.

"MACRONIX" shall mean Macronix International Co., Ltd. and its Subsidiary.

"MLC IMPROVEMENTS" shall mean Patents, technology, or know-how solely owned and
developed by Saifun, or provided by Saifun to Macronix, covering changes,
modifications and/or developments relating to the cell and array and circuits of
the Saifun MLC Technology implementing the Saifun MLC Technology for the
designing, developing or manufacturing of products based on Saifun MLC
Technology.

"MLC FLASH PRODUCT/S" shall mean a flash product based on or incorporating
Saifun MLC Technology, where Saifun MLC Technology enables such product to meet
one of the following grades, and is based on agreed qualification plan under
Appendix C:

1. ***

2. ***

3. ***

4. ***

The MLC Flash Product/s also includes Product Improvements of the above products
and the Initial MLC Flash Products.

"PRODUCT IMPROVEMENT" shall mean improvements, enhancements, modifications
provided by Saifun to any MLC Flash Product/s, as well as derivative products
thereof, and any Macronix Product based on, incorporating or related to any of
the above, respectively.

"SAIFUN MLC PATENTS" shall mean all Patents of Saifun covering or related to
Saifun MLC Technology.

"SAIFUN MLC TECHNOLOGY"- shall mean Saifun NROM Technology, or any part thereof,
which allows storing 4 bits of information per memory cell.

                                       2
<PAGE>

2. GRANT OF LICENSE FOR MLC PRODUCTS

2.1. The License: Saifun hereby grants to Macronix a non-exclusive,
non-transferable, worldwide license, without right to sub-license, under the
Saifun MLC Patents, Saifun MLC Technology (which is solely owned and developed
by Saifun, or provided by Saifun to Macronix), and MLC Improvements to use, make
to use, make (without sub-contracting or have made), design, co-design (with a
Subsidiary only) and have designed by a Subsidiary, develop, sell and offer to
sell, and otherwise dispose of MLC Products. In the event Macronix needs the
have-made and have-design rights for conducting Macronix' business in its normal
way of doing business, the Parties shall discuss in good faith and such request
shall not be unreasonably denied. It is agreed that the license hereunder
applies also to the outcomes of the Development Project, as further detailed in
Sections 3 below. Such outcomes are hereby licensed to Macronix under the same
terms and conditions of the license hereunder.

2.2. Consideration: In consideration for the rights granted or to be granted to
Macronix hereunder, Macronix shall pay Saifun a one time license fees as below:

(A)   LICENSE FEE:

In consideration for the licenses granted hereunder, Macronix shall pay to
Saifun an aggregate license fee of *** US Dollars ("License Fee"). Such License
Fee shall be paid as follows:

(1)   In connection with *** MLC Flash Product/s: a one-time license fee of ***
      US Dollars to be paid upon the earlier of the first *** MLC Flash
      Product/s shipment to or full *** MLC Flash Product/s qualification of any
      MLC Flash Product. Macronix shall notify Saifun immediately upon any such
      shipment

(2)   In connection with *** MLC Flash Product/s and/or *** MLC Flash Product/s:
      a one time license fee of *** US Dollars, to be in paid upon the earlier
      of either the first *** MLC Flash Product/s shipment to or full product
      qualification of a *** MLC Flash Product. Macronix shall notify Saifun
      immediately upon any such shipment.

It is agreed, however, that in the event the initial ***. US Dollars license fee
in connection with the *** MLC Flash Product/s are not actually paid to Saifun
in accordance with this Addendum for any reason, then Saifun shall be entitled
to the entire amount of *** US Dollar License Fee upon the earlier of either the
first *** MLC Flash Product/s shipment to or full product qualification of a ***
MLC Flash Product.

(B)   RUNNING ROYALTIES:  in addition to the license fees set forth above,
Macronix shall pay to Saifun running royalties for its sales of MLC Flash
Product/s as follows:

----------
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.

                                       3
<PAGE>

<Table>
<Caption>
   MLC Flash      Net Sales in             Percentage out of Net Sales
    Product       U.S. Dollars
---------------------------------------------------------------------------------
<S>               <C>            <C>             <C>             <C>
                                 ***             ***             ***
---------------------------------------------------------------------------------
                 ***             ***             ***             ***
---------------------------------------------------------------------------------
                 ***             ***             ***             ***
---------------------------------------------------------------------------------
</Table>

<Table>
<Caption>
MLC Flash Product           Net Sales in U.S.        Percentage out of the Net
                            Dollars                  Sales
---------------------------------------------------------------------------------
<S>                         <C>                      <C>
                            ***                      ***
---------------------------------------------------------------------------------
                            ***                      ***
---------------------------------------------------------------------------------
</Table>

(C) Capacity Corridor: Macronix undertakes capacity that 0.13u capacity will be
allocated to Saifun under Section 9 of the Technology Agreement. Macronix
undertakes that the maximum wafer price for 0.13u double level metal process
shall not exceed US$***.

(D) Relation to Technology Agreement: The license granted to Macronix hereunder
shall be in addition to the licenses granted under Sections 2 and 3 of the
Technology Agreement. Subject to the provisions of this Section 2, the MLC Flash
Products shall be considered Immediate Products under the Technology Agreement,
and the provisions of the Technology Agreement related to Immediate Products
shall apply to the license hereunder except Sections 2.4 (other than pre-paid
royalty to be offset as provided below) and 4.6(a) and (b) of the Technology
Agreement and those provisions of the Technology Agreement which are
contradicting to, or conflicting with, the provisions of this Second Addendum,
including but not limited to this Section 2, shall not apply to the MLC Flash
Products. For the avoidance of doubt, the pre-paid royalty payment actually made
by Macronix to Saifun according the Section 2.4 of the Technology Agreement will
be set off against the running royalties due from the MLC Flash Product/s as
provided in this Addendum.

(E) Reporting: Macronix agrees to use commercial
reasonable effort to provide Saifun with quarterly written royalty reports for
sales of Licensed Products within ***. after the end of each calendar quarter.
It is agreed in no event shall such reporting exceed *** after the end of each
calendar quarter.

(F) License and Immunities to Saifun Products: For the avoidance of doubt, it is
agreed that all rights, licenses and immunities granted to Saifun under the
Technology Agreement, in connection with Saifun NROM Technology and/or Saifun
Products, shall apply, in accordance with the Technology Agreement, to Saifun
MLC Technology and Saifun Products which utilize or otherwise incorporate or
based on Saifun MLC Technology. "Macronix NROM Patents", "Macronix NROM Process
Patents" and "Blocking Patents" of Macronix shall be deemed to include also
Macronix MLC Technology, which is owned by Macronix at any time. Saifun
recognizes and agrees that the MLC patent, technology, or know-how invented or
developed by Macronix and/or its subsidiary are owned by Macronix. In the event
of Development Project, Section 7A.1, 7A.4, 7A.5, and 7A.6 of the Amendment and
6.1 hereof shall apply.

----------
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.

                                       4
<PAGE>

3. DEVELOPMENT AND ASSISTANCE BY SAIFUN

3.1. Development Project: Saifun shall develop the Initial MLC Flash Product
accordance with the specifications to be attached hereto as APPENDIX A, and
Development Plan attached hereto as APPENDIX B ("DEVELOPMENT PLAN"), which
details development tasks, schedule and milestones of the development
("DEVELOPMENT PROJECT"). To that end, Saifun shall designate, in timely manner,
a design team that shall lead Development Project, and shall be dedicated to the
performance of Saifun's tasks hereunder.

3.2. Saifun's Tasks: Saifun's tasks include designing of the Initial MLC Flash
Product rendering support related to the associated process development
conducted by Macronix' development of the associated test programs, and
rendering engineering support during debugging/characterization phase etc., as
described in APPENDIX B. Macronix shall not liable for any extra cost and
expenses incurred which is attributable to delay and/or failure Saifun in
performing its tasks in accordance with the Development Plan or Development
Project.

3.3. Macronix's Tasks: The Development Plan details the tasks of Macronix under
Development Project. Such tasks include the dispatch of Macronix' engineers to
Saifun facilities as provided in Section 4.2 below. Macronix shall timely comply
with its task. Saifun shall not be liable for any delay or failure attributable
to Macronix' delay and failure of Macronix in performing its tasks in accordance
with the Development Plan Development Project.

3.4. Modifications of Project Plan/Specification: During the performance of the
Development Project, Macronix may request modifications and changes to the
Specifications and/or Development Plan. It is agreed that each such modification
may require additional development, and, to the extent the modification is not
attributable to Saifun, therefore may be subject to additional development fees
(beyond the Development Fee), which shall agreed upon by the Parties based on
their assessment of the implications of such modifications on the scope and
schedule of the Development Project. Each agreement as modification in an
Appendix hereto shall be reduced to writing and signed by the authorized
representatives of both parties.

3.5. Management: Each Party shall appoint one project manager who will be
responsible for the execution of the Development Project on behalf of such
Party. The managers shall convene weekly update meetings to follow on the
progress of the Development Project, and on the outcomes thereof.

4. SHARING THE OUTCOMES OF THE DEVELOPMENT PROJECT

4.1. General: Saifun shall endeavor to facilitate the delivery of the outcomes
of the Development Project to Macronix, solely to enable Macronix to effect its
rights under the Agreements. For that purpose, Macronix shall dispatch engineers
to Saifun's facilities, detailed below.

4.2. Designated Macronix' Engineers: Macronix shall assign a group of five (5)
Macronix engineers, in connection with the Development Project, such number may
be changed by Macronix subject to actual project requirement. Such engineers
shall be dispatched temporarily to Saifun's facilities, no later than May 31st,
2004. The identity and technical qualification of said Macronix' engineers shall
be agreed by the parties and shall be detailed in the Development Plan
("Designated Engineers"). It is agreed that a delay in assigning or dispatching
the

                                       5
<PAGE>

Designated Engineers may require assessment of the parties as the implications
of such delay on the Development Project, provided that the number of Designated
Engineers is subject to adjustment based on the actual needs of the Development
Project.

4.3. Sharing Outcomes: Saifun shall share with Macronix and the Designated
Engineers the results of the Development Projects, including design and process
proprietary and confidential information and related Intellectual Property (as
defined in the First Amendment). Such information shall be used solely to enable
Macronix to effect its rights under the Agreements, and shall be subject to the
confidentiality provisions therein.

4.4. Clarification: It is clarified that the mere sharing of information with
Macronix' Designated Engineers or other representatives, or the presence of
Designated Engineers and other Macronix' representative at Saifun's facilities,
does not amount to a joint development of any kind, and shall not deem any
outcome, or product conceived or developed under the Development Project, as
jointly developed, nor any Intellectual Property conceived or developed under
the Development Project as Joint Intellectual Property (as such term is defined
in the Amendment). It is further clarified that Macronix and/or its Subsidiary
shall have right to utilize all information conceived or developed during the
Development Project in connection with Licensed Products development under the
Agreements.

4.5. Status of Designated Engineers: Macronix' Designated Engineers will
continue to be employees of Macronix and will not become an employees or agents
of or consultants to Saifun. Traveling, lodging and associated expenses thereof
will be borne by Macronix. The Designated Engineers shall sign a confidentiality
agreement with Saifun and shall be personally bound thereby, as well as by
Saifun's internal policies and procedures. Macronix shall use commercial
reasonable efforts to ensure, and shall be liable for the compliance of its
Designated Engineers with said agreements, policies and procedures.

Except for injury or damage caused solely by the gross negligence or willful
misconduct of Saifun, or except for matters which are customarily covered by
corporate insurance policies, Saifun shall not be liable under any circumstances
for an injury or damage done to or suffered by the Designated Engineers or to
their property while at Saifun's premises and Macronix and the dispatched shall
assume all risks of such injury or damage.

5.    DEVELOPMENT FEE:

5.1. Development Fee: In consideration for the tasks of Saifun under the
Development Project, Macronix shall pay to Saifun the development fee stated in
APPENDIX B ("DEVELOPMENT FEE"), in accordance with the installment and terms
detailed therein. Subject to the provisions of Section 5.2 below, the
Development Fee stated above constitute the entire development fee to be paid to
Saifun for its services hereunder. For the avoidance of doubt, such Development
Fees shall be without prejudice to, and without limiting, Macronix' obligations
to pay license fees, royalties and other compensation under the Technology
Agreement and/or this Second Addendum (including without limitation, in Section
2. above).

5.2. Expenses: In addition to the Development Fee, Macronix shall bear Saifun's
reasonable traveling and lodging expenses incurred in the performance of the
Development Project. Any such travel by Saifun shall be pre-approved by Macronix
in writing.

                                       6
<PAGE>

6. CONFIDENTIALITY; LIMITED WARRANTY AND LIABILITY

6.1   Confidential Information. In addition to confidentiality provisions in the
      Agreements, (including without limitation Section 13 of the Technology
      Agreement), neither party shall include the Confidential Information
      actually received from the disclosing Party in any patent application
      filed by the receiving Party, and shall not otherwise misappropriate such
      Confidential Information of the disclosing party.

6.2   Warranty. Saifun warrants that the service and results delivered to
      Macronix are in accordance with this Addendum and the products developed
      thereof are functionable in compliance with the Specifications, Appendix
      A. In addition, Saifun warrants that its work does not infringe any third
      party's intellectual property rights.

6.3   Indemnification. Each Party undertakes, in respect of its tasks under the
      Development Project to use best efforts to correct errors that become
      known to such Party. Each party hereby represents and warrants to the
      other Party that in performing its tasks under the Development Project,
      such party shall not knowingly and intentionally infringe upon third
      party's Intellectual Property.

6.4   Limitation of Liability. If the use or sale of any product incorporating,
      embodying or based upon the design or information of Saifun is enjoined,
      Saifun, at its reasonable discretion and for the benefits of Macronix,
      with no expense to Macronix, shall (a) obtain for Macronix the right to
      use and sell the products; (b) shall make a modification of the products
      so that it no longer subject to such injunction or infringement, or (c)
      replace the unmodified the design of products, or infringing portions
      thereof, with reasonably equivalent non-infringing products. If (a), (b)
      and (c) are not available or commercially practical, then Saifun shall pay
      to Macronix damages incurred thereof. Liability for Saifun in accordance
      with this provision is limited to money actually received from Macronix in
      connection with the development fees and the actual paid-up license fee
      (excluding royalty payment) under this Addendum (maximum $*** upon
      Effective Date). Saifun agrees to defend and indemnify Macronix, at
      Saifun's expense, and to pay costs and damages arising in connection with
      this Addendum. It is agreed that to the extent Saifun grants
      indemnification terms under a similar license arrangements, which are
      better than the terms stated above in Sections 6.2 and 6.3, considering
      the nature of the license, the IP indemnification provisions, commercial
      terms such as license fees and royalties, and the circumstances of said
      similar licensee, then Macronix shall be entitled to match the above terms
      hereunder accordingly.

The foregoing undertaking and warranty are in lieu of any and all warranties,
express or implied, including without limitation warranties of merchantability
or fitness for a particular purpose.

----------
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.

                                       7
<PAGE>

7. TERM

      This Addendum shall enter into force or the Effective Date, and shall
continue in full force and effect until the termination or expiration of the
Technology Agreement.

      IN WITNESS WHEREOF, Saifun and MACRONIX have caused this Agreement to be
executed by their duly authorized representatives as of the Effective Date.

Saifun Semiconductors Ltd.                Macronix International Co.  Ltd.

By: /s/ Boaz Eitan                        By: [illegible]
    --------------                            -----------

Title: CEO and President                  Title: Senior Vice President
       -----------------                         ---------------------

Date: 22/4/2004                           Date: April 22, 2004
      ---------                                 --------------

                                       8
<PAGE>

APPENDIX A: MLC FLASH PRODUCT - SPECIFICATIONS

                                       9
<PAGE>

                          APPENDIX B: DEVELOPMENT PLAN

***

DESIGNATED ENGINEERS BY MACRONIX AT SAIFUN FACILITIES:

*** ENGINEERS WILL BE DISPATCHED FROM MACRONIX TO SAIFUN, NO LATER THAN ***

TARGETED SCHEDULE:

Program start - ***

Tape out - ***

Tape out *** MLC Flash Product - ***

Eng. Samples *** MLC Flash Product - ***

Commercial Release *** MLC Flash Product - ***

Commercial Release *** MLC Flash Product - ***

*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.

                                       10
<PAGE>

DEVELOPMENT FEE:

The Development Fee is *** US Dollars ($***), which shall be paid in three
installments as follows:

1.    US$*** shall be paid by the Tape Out according to the following payment
      scheme

      (i)   US$*** shall be paid in six (6) equal monthly installments,
            starting on the Effective Date, and ending upon Tape Out of the
            Initial MLC Flash Product;

      (ii)  The remaining US$*** shall be paid immediately on Tape Out,
            targeted on November 31, 2004.

2.    An additional US$*** shall be paid upon release of Engineering
      Samples (according to the schedule stated above), but in any event, no
      later than five (5) months after the Tape Out, provided a delay in
      schedule is not attributable to Saifun, in which case the payment shall
      be delayed until correction of the design failure.  In the event the
      engineering sample is delayed for over ten (10) months after the tape
      out date and the delay is attributable to Saifun, Macronix shall have
      rights to terminate the development project and Saifun shall refund
      US$*** to Macronix within 45 days after the termination.

3.    An additional US$*** shall be paid upon the commercial samples release
      of the Initial MLC Flash Product (according to the schedule stated above),
      but in any event, no later. than six (6) months after the engineering
      sample date, provided a delay is not attributable to Saifun, in which case
      the payment shall be delayed until correction of the design failure.

4.    An additional US$*** shall be paid upon the release of Engineering
      Samples of *** MLC Flash Product, but in any event, no later than five
      (5) months after the *** MLC Flash Product Tape Out.

5.    An additional amount of US$*** shall be paid upon the Commercial Release
      of *** MLC Flash Product, but in any event, no later than six (6) months
      after Engineering Samples release of the *** MLC Flash Product.

Payment of the said installments shall be made with forty-five (45) days
following the applicable date for each installment as detailed above, to the
bank account designated by Saifun.

*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.

                                       11
<PAGE>

                     APPENDIX C: QUALIFICATION REQUIREMENTS<PAGE>

                                                                   Exhibit 10.10

                                    AGREEMENT

                                       ON

         TERMINATION OF JOINT VENTURE AGREEMENT AND RELATED TRANSACTIONS

                            between, on the one side

Saifun Semiconductors Ltd.
Sappir Industrial Park
P.O. Box 8385 Netanya
Israel 42504

                                         - hereinafter referred to as "SAIFUN" -

Saifun Ventures Ltd.
Sappir Industrial Park
P.O. Box 8385 Netanya
Israel 42504

                                - hereinafter referred to as "SAIFUN VENTURES" -

                             and, on the other side

Infineon Technologies AG
Sankt-Martin-Strasse 53
81541 Munich
Germany

                                       - hereinafter referred to as "INFINEON" -

This Agreement ("AGREEMENT") is entered into on December 20, 2004 between Saifun
Semiconductors Ltd., Netanya, Israel, registered with the Company Register under
No 51-239733-2, Saifun Ventures Ltd., Netanya, Israel 42504, registered with the
Company Register under No. 51-308780-9, and Infineon Technologies AG, Munich,
Germany, registered with the Commercial Register of the Local Court
(Amtsgericht) of Munich under HRB 126492.

                                      -1-
<PAGE>

                                    SECTION 1
                            BACKGROUND AND OBJECTIVES

1.1   On April 6, 2001, Saifun and Infineon have entered into a Joint Venture
      Agreement (the "JVA") establishing a joint venture (the "JOINT VENTURE")
      in Germany and Israel regarding the development, production and
      distribution of so-called "MASS STORAGE PRODUCTS". In connection with the
      establishment of the Joint Venture, Saifun and Infineon have incorporated
      a limited liability company in Israel (currently named "Infineon
      Technologies Flash Limited") and a limited liability business partnership
      (GmbH & Co. KG) in Germany (currently named "Infineon Technologies Flash
      GmbH & Co. KG"), the general partner of which is a German limited
      liability company (GmbH) (currently named "Infineon Technologies Flash
      Geschaftsfuhrungs GmbH"). The limited liability company in Israel shall
      also be referred to as "JV LTD.", the limited liability business
      partnership shall be referred to as "JV KG" and its sole general partner
      as "JV GMBH". The three companies shall also hereinafter be referred to as
      the "JV COMPANIES". Originally, Infineon held 51% of the interest in each
      of the JV Companies and Saifun held 49%.

1.2   In connection with the establishment of the Joint Venture, several other
      agreements have been entered into following the signing of the JVA. These
      agreements together with any amendments and additional agreements entered
      into from time to time in the context of the Joint Venture (the "ANCILLARY
      AGREEMENTS") are listed in Exhibit 1.2.

1.3   On August 21, 2001, Saifun transferred its shares in JV GmbH and its
      limited partnership interest in JV KG to its fully owned subsidiary,
      Saifun Ventures. Moreover, effective as of June 1, 2001, Saifun
      transferred its shares in JV Ltd. to Saifun Ventures. In the respective
      transfer deeds, Saifun Ventures has agreed to be bound by the JVA and the
      Ancillary Agreements.

1.4   On January 9, 2003, the Parties amended and restated the JVA by entering
      into a certain Amended and Restated Joint Venture Agreement (the "AJVA")
      to extend the existing cooperation to the field of CODE FLASH PRODUCTS (as
      defined in Schedule D to the AJVA). In this context, certain Ancillary
      Agreements were amended and additional agreements were entered into.
      Moreover, the stake of Infineon in each of the JV Companies was increased
      from 51% to 70% whereas the stake of Saifun Ventures was reduced from 49%
      to 30%.

1.5   Infineon and Saifun Ventures are sometimes referred to as the "PARTIES"
      and individually as a "PARTY". Saifun shall be included in the term
      "Parties" where the context so requires, taking into account that Saifun
      is a party to this Agreement and the AJVA, but not a direct
      shareholder/partner in the JV Companies any more. The term "AFFILIATE"
      shall be defined as provided for in Sections 15 et. seq. of the German
      Stock Corporation Act (AktG). The term "SUBSIDIARY" shall include any
      Affiliate which is controlled by or the majority of the shares

                                      -2-
<PAGE>

      of which are owned by any of the Parties. The Schedules and Exhibits to
      this Agreement form integral and combined parts of this Agreement.

1.6   The Parties intend to terminate the Joint Venture and Infineon intends to
      buy the shares in JV GmbH and JV Ltd. as well as the partnership interest
      in JV KG. In this context, upon fulfillment of the conditions to First
      Closing and/or Second Closing (as applicable) as described in Section 9
      hereof, the Parties and the JV Companies shall take the steps described in
      Sections 2 through 8 of this Agreement:

                                    SECTION 2
                              TERMINATION OF AJVA /
              TERMINATION AND/OR AMENDMENT OF ANCILLARY AGREEMENTS

2.1   The Parties will terminate by mutual agreement the AJVA (including the
      JVA) with effect as of Second Closing (as defined in Section 9 hereof),
      save for Sections 9.2, 9.3 and 9.5 of the AJVA which shall remain in full
      force and effect. The provisions of the AJVA relating to and/or regulating
      the termination of the Joint Venture and the AJVA (in particular Section 7
      thereof) shall not apply to this termination by mutual agreement
      contemplated in this Agreement but rather this termination shall be
      regulated by the terms and conditions of this Agreement.

2.2   Upon First Closing, the rights and obligations of the Parties and their
      respective Affiliates arising out of or relating to any financing
      arrangements, including the financing guaranty agreement between Saifun,
      Infineon and JV KG of spring 2004 (the "FINANCING GUARANTEE") shall be
      regulated in accordance with Section 7 hereof.

2.3

2.3.1 Upon First Closing, the following Ancillary Agreements shall be terminated
      by mutual agreement by the relevant parties thereto with effect as of
      First Closing:

            -     Master Loan Agreement between JV Ltd. and Saifun Ventures of
                  May 21, 2001;

            -     Master Loan Agreement between JV KG and Saifun of February 19,
                  2003,

      whereas the Individual Loan Agreement between JV Ltd. and Saifun of May
      29, 2001 shall be assigned by Saifun to Infineon.

2.3.2 Upon Second Closing, the following Ancillary Agreements shall not be
      terminated, but shall be replaced and superseded with the amended and
      restated agreements as set forth herein (the "AMENDED ANCILLARY
      AGREEMENTS") and the Parties shall execute, and/or cause the

                                      -3-
<PAGE>

      respective parties thereto to execute, as applicable, the Amended
      Ancillary Agreements as follows:

            -     the amended and restated Basic Agreement on Development Orders
                  in accordance with the draft agreement attached hereto as
                  Exhibit 2.3.2.1;

            -     the amended and restated License Agreement in accordance with
                  the draft agreement attached hereto as Exhibit 2.3.2.2 (the
                  "AMENDED LICENSE AGREEMENT"); and

            -     the amended and restated Wafer Production and Testing
                  Agreements in accordance with the draft agreements attached
                  hereto as Exhibit 2.3.2.3.

2.4   Upon Second Closing and in accordance with the waiver letter attached
      hereto as Exhibit 2.4, the Parties shall, other than as set forth
      explicitly in this Agreement (including any Exhibits thereto), irrevocably
      waive all rights, claims, demands, complaints and interests arising out of
      or relating to the JVA, AJVA and/or Ancillary Agreements (other than the
      Amended Ancillary Agreements).

                                    SECTION 3
               SALE AND TRANSFER OF SHARES IN JV LTD. AND JV GMBH
                   AS WELL AS OF PARTNERSHIP INTEREST IN JV KG

3.1   Upon First Closing, Saifun Ventures shall sell and transfer its entire
      490,000 ordinary shares of NIS 0.01 par value per share in JV Ltd. to
      Infineon for a purchase price of US$ 1,100. Infineon shall accept such
      sale. The sale and transfer deed shall be executed on First Closing.

      Saifun Ventures agrees that notwithstanding the foregoing transfer of
      shares in JV Ltd., and the provisions of Section 9.3.13 hereunder, Saifun
      Ventures shall maintain after First Closing and until dissolution one of
      the current board members appointed by Saifun Ventures to the board of
      directors of JV Ltd., Boaz Eitan or Kobi Rozengarten, (which shall be a
      non-voting board member), in order to aid in and support the facilitation
      of the dissolution of JV Ltd. as further described in Section 5 below
      (including to co-sign the solvency affidavit required for the voluntary
      liquidation), provided that such remaining Saifun board member shall act
      as one out of at least three acting board members.

      Except for the regulations of the preceding paragraph, with effect as of
      First Closing, Saifun and Saifun Ventures shall cause the dismissal or
      resignation of the directors or equivalent board and management members of
      the JV Companies appointed by them and as listed in Exhibit 9.3.13,
      provided that even after the First Closing, Saifun shall

                                      -4-
<PAGE>

      designate one of its employees, at no cost for JV Ltd., to facilitate the
      dissolution of JV Ltd. until the liquidation of JV Ltd. is consummated.

      Infineon will designate one employee in order to facilitate the
      dissolution of the JV Ltd. until the liquidation of JV Ltd. is
      consummated.

3.2   Upon First Closing, Saifun Ventures shall sell and transfer its entire
      share in the nominal amount of EUR 12,250 in JV GmbH to Infineon for a
      purchase price of US$ 15,700. Infineon shall accept such sale. The sale
      and transfer deed shall be executed on First Closing.

3.3   Upon First Closing, Saifun Ventures shall sell and transfer its entire
      partnership interest in the nominal amount of EUR 245,000 in JV KG to
      Infineon for a purchase price of US$ 983,200. Infineon shall accept such
      sale. The sale and transfer deed shall be executed on First Closing.

3.4   The drafts of the sale and transfer deed pursuant to Section 3.1 is
      attached hereto as Exhibit 3.4.1 and the sale and transfer deed pursuant
      to Sections 3.2 and 3.3 is attached hereto as Exhibit 3.4.2.

                                    SECTION 4
                            PAYMENT OF PURCHASE PRICE

4.1   Upon the terms and subject to the conditions of this Agreement, at First
      Closing, Infineon shall pay for the sale and transfer of the shares and
      partnership interest in JV GmbH, JV Ltd. and JV KG as described in Section
      3 hereof the aggregate purchase price of US$ 1 million (the "PURCHASE
      PRICE").

4.2   The Purchase Price shall be paid by wire transfer to the bank accounts as
      further specified in the agreements pursuant to Exhibits 3.4.1 and 3.4.2.

                                    SECTION 5
                         UNDERTAKINGS RELATED TO JV LTD.

5.1   The Parties acknowledge that it is the intention of Infineon, upon Second
      Closing, to take all necessary steps to facilitate and procure the
      voluntary dissolution of JV Ltd. in accordance with the provisions set
      forth herein. Saifun Ventures shall assist Infineon in the facilitation of
      such voluntary dissolution of JV Ltd.. Saifun Ventures agrees to assume
      its share of 30% in the liabilities of JV Ltd., other than the ones
      resulting from the ordinary course of business, which are neither recorded
      as a liability on the balance sheet of JV Ltd. as of First Closing nor
      explicitly assumed by a Party under this Agreement or any Ancillary
      Agreement. Saifun guarantees for Saifun Venture's

                                      -5-
<PAGE>

      fulfillment of such obligation. The direct cost of the liquidation (legal
      advice, filings, etc.) shall be borne by Infineon.

5.2   Exhibit 5.2(a) hereto lists all employees of JV Ltd. (excluding those that
      have been delegated from Saifun to JV Ltd and currently work in Infineon's
      Dresden facility) (the "EMPLOYEES") as of the date indicated thereon.
      Exhibit 5.2(b) hereto lists all employees of JV Ltd. who currently work in
      Infineon's Dresden facility and who will be transferred to Saifun (the
      "DRESDEN EMPLOYEES"). Exhibit 5.2 (c) hereto lists the consultants that
      are currently working for JV Ltd. (the "CONSULTANTS").

5.3   The Parties agree that JV Ltd. shall furnish the Employees, the Dresden
      Employees and the Consultants with a termination notice in accordance with
      the requirements of any applicable contract or law pertaining to the
      dismissal of employees or consultants, as applicable. The termination
      notices shall provide for the timely termination of the employments
      effective as of Second Closing or such other date as indicated in Exhibits
      5.2 (a) or 5.2 (b) or as subsequently agreed to between JV KG and Saifun
      (the "ALTERNATIVE TRANSFER DATE"). Saifun shall, or shall cause one of its
      Affiliates to, offer employment, effective as of Second Closing or the
      Alternative Transfer Date, as the case may be, to each Employee, and
      Consultant on terms and conditions of employment similar (in particular
      with respect to salaries and fringe benefits) to those that apply to such
      Employee, or Consultant immediately before Second Closing, and with
      respect to Dresden Employees, on terms not less favorable than the terms
      of their employment immediately prior to their assignment to Dresden,
      except with respect to any future entitlement of such Employee, Dresden
      Employee or Consultant under the SARP (as defined below) (the "EMPLOYMENT
      OFFERS"). The Employment Offers shall also comply with any applicable law.
      Immediately after signing of this Agreement (and with respect to Dresden
      Employees prior to their Alternative Transfer Date), (i) the Parties shall
      cause JV Ltd. to allow Saifun to approach the Employees, Dresden Employees
      and Consultants for the purpose of the Employment Offers, and (ii) Saifun
      shall approach the Employees, Dresden Employees and Consultants (safe for
      the provisions in Sec. 5.4) in order to fulfill its obligations towards
      Infineon and its Affiliates under this Section 5.

5.4   The Parties agree that JV Ltd. will continue to employ the Dresden
      Employees until immediately prior to their Alternative Transfer Dates and
      Mr. Moti Shulak until the transfer of his employment to Infineon or an
      Infineon Affiliate. The timing of the liquidation of JV Ltd will - to the
      extent possible - be coordinated with the aforementioned return dates of
      the Dresden Employees.

5.5   Except as provided with regards to the SARP under Section 5.7 below, the
      Parties agree that JV Ltd., at no cost to Saifun, shall be responsible to
      pay any and all payments and benefits due to the Employees, Dresden
      Employees and Consultants when due, under the respective employment
      agreement or mandatory law, as listed in Exhibits 5.2 (a), (b) and (c)
      (the "Wages") and will discharge all such obligations in respect of the
      Employees,

                                      -6-
<PAGE>

      Dresden Employees and Consultants up to (including with respect to)
      termination of employment, whether or not such payments fall due before or
      after the termination of employment ("TERMINATION OF EMPLOYEES
      LIABILITIES"). Infineon agrees to save, defend, indemnify and hold
      harmless Saifun and its Affiliates from and against all Termination of
      Employees Liabilities, except in the event that the Parties agree not to
      comply with the requirement of a thirty (30) days notice period, without
      receiving appropriate waiver letter from the employees.

5.6   With regard to employees, Saifun shall be responsible for any liabilities
      in respect of any Employee or any former employee of JV Ltd. (i) arising
      out of the failure of Saifun to comply with its obligations under this
      Section 5, and (ii) with respect to his or her employment with Saifun and
      its Affiliates from and after Second Closing.

5.7   Upon First Closing, the Parties shall cause JV Ltd. to assign to Saifun
      and Saifun shall release JV Ltd. and Infineon from and assume any and all
      liabilities and obligations of any kind and nature, whether known or
      unknown, expressed or implied, arising out of, relating to or otherwise in
      respect of [***]. Subject to the foregoing, Saifun agrees to save, defend,
      indemnify and hold harmless JV Ltd. and its Affiliates from and against
      all Saifun Assumed Liabilities.

5.8   For the avoidance of doubt and except for the provisions with respect to
      the Affiliates of the Parties, nothing herein shall be deemed or construed
      as an agreement for the benefit of a third party (Vertrag zugunsten
      Dritter), in particular not for the benefit of the Employees, Dresden
      Employees, Consultants or [***].

5.9   Upon Second Closing, Saifun shall terminate the sublease agreement between
      Saifun and the JV Ltd. as well as the cost sharing for the Security Guard
      and the JV Ltd shall assign to Saifun the car lease agreements used by the
      Employees as well as the phone system lease.

5.10  Upon First Closing, the Parties shall, or shall cause the respective
      parties thereto to, terminate the Ancillary Agreements pertaining to JV
      Companies as listed in Exhibit 5.10.

5.11  Immediately after the transfer of the shares in JV Ltd. according to
      Section 3.1 JV Ltd. shall sell and transfer certain assets in accordance
      with Exhibit 5.11 to JV KG as the remaining shareholder. Such sale and
      transfer shall take place at no cost to Saifun.

*** Omitted pursuant to a confidential treatment request. The confidential
    information has been filed separately with the SEC.

                                      -7-
<PAGE>

5.12  Thereafter, JV Ltd. will then be dissolved - on a voluntarily basis - in
      accordance with applicable law.

                                    SECTION 6
                       SALE AND TRANSFER OF SAIFUN SHARES

6.1   JV Ltd. currently holds 1,072,407 Ordinary Shares, NIS0.01 par value per
      share, of Saifun (the "SAIFUN SHARES"). The Saifun Shares have been
      deposited with Eitan, Pearl, Latzer & Cohen-Zedek Trustee for Employee
      Benefit Programs (the "TRUSTEE") pursuant to the trust agreement of August
      2, 2001, as amended as of April 15, 2002, attached hereto as Exhibit 6.1.1
      (the "TRUST AGREEMENT"). The Trustee currently holds the Saifun Shares in
      trust for JV Ltd. for the purpose of the SARP. Upon First Closing, the
      Parties shall cause JV Ltd. to terminate the Trust Agreement with the
      Trustee with immediate effect and cause the Trustee to release the Saifun
      Shares from the trust in accordance with Section 5 of the Trust Agreement.
      As soon as practical following the First Closing, JV Ltd. shall transfer
      the Saifun Shares to Infineon at no cost to Saifun in accordance with the
      Infineon Share Purchase Agreement attached hereto in Exhibit 6.1.2.
      Infineon's obligation to sell the Saifun Shares as specified under the
      Amended License Agreement shall be triggered upon the consummation of the
      transfer and assignment of the Saifun Shares to Infineon. Infineon shall
      agree to take all necessary actions to consummate the transfer and
      assignment.

6.2   The Trustee has confirmed in writing to the Parties that it has not made
      any distributions of Saifun Shares or rights pertaining thereto to any
      third party.

6.3   JV Ltd.'s ownership in the Saifun Shares free and clear of any
      Encumbrance, as described herein, is evidenced by (i) the excerpt from the
      Companies Registrar concerning Saifun sent to Infineon on Dec. 13, 2004,
      showing that JV Ltd. holds the Saifun Shares, (ii) the excerpt from the
      Companies Registrar concerning JV Ltd. sent to Infineon on Dec. 13, 2004,
      showing that JV Ltd. has not Encumbered the Saifun Shares, and (iii) the
      confirmation by the secretary of Saifun and an updated shareholder
      register attached hereto as Exhibit 6.3.1, showing that JV Ltd. owns the
      Saifun Shares and is registered as a shareholder in Saifun`s shareholder
      registry. For the purpose of this Agreement, "ENCUMBRANCE" means any
      registered charge, claim, limitation, condition, equitable interest,
      mortgage, lien, option, pledge, security interest, easement, encroachment,
      adverse claim.

6.4   As between the Parties, Infineon shall not be obligated to provide any
      warranties and representations, except that (i) it did not encumber the
      Saifun Shares itself and (ii) that, as of the First Closing, no registered
      liens existed and Infineon did not know of any unregistered encumbrances
      as of the First Closing. (iii) Infineon will confirm that it obtained the
      power and authority to enter into the sale of Saifun Shares agreement with
      the third party. Infineon and its Affiliates shall not be obligated to
      provide any further indemnities or otherwise have any liability whatsoever
      with respect to or in

                                      -8-
<PAGE>

      connection with the purchase and holding of the Saifun Shares by Infineon
      and the sale and transfer of the Saifun Shares to a third party. In case a
      third party request additional warranties, representations or indemnities
      or any other liability from Infineon, Infineon shall not be obligated to
      sell the Saifun Shares.

6.5   Saifun shall use its best efforts to provide a third potential buyer or
      Infineon upon IPO with piggy back registration rights for the Saifun
      Shares.

                                    SECTION 7
                    SHAREHOLDER LOANS AND FINANCING GUARANTEE

7.1   Upon First Closing, Saifun and Infineon shall be released from any past,
      present and future obligations to provide further equity contributions or
      other financing to the JV Companies under Section 4 of the AJVA and/or the
      Financing Guarantee.

7.2   Effective as of First Closing, (i) Saifun hereby irrevocable assigns to
      Infineon, and Infineon accepts the assignment of, Saifun's right to
      repayment of the loan granted to JV Ltd. under the Individual Loan
      Agreement between Saifun and JV Ltd. of May 29, 2001, including all other
      rights under such Individual Loan Agreement; and (ii) Saifun and any of
      its Affiliates hereby irrevocably waive their right to repayment of any
      other loans granted to and any other payments or financial contributions
      made to JV Ltd. or any other JV Company under the other loan agreements as
      listed in Section 2.3.1, any individual loan agreement, any other
      agreement or on any ground whatsoever.

7.3   Upon First Closing, the Parties shall irrevocably waive, and will cause JV
      KG to irrevocably waive, any and all rights and obligations arising out of
      or relating to the Financing Guarantee between Infineon, Saifun and JV KG
      in accordance with the written waiver form a draft of which is attached
      hereto as Exhibit 7.3.

                                    SECTION 8
                         BOARD AND SHAREHOLDER APPROVAL

The Parties shall obtain all board approvals, shareholder approvals, if needed
and any other approvals necessary for the execution of this Agreement and the
transactions contemplated thereby, and shall deliver to the other on Signing
executed originals thereof.

                                      -9-
<PAGE>

                                    SECTION 9
                         CLOSING AND CLOSING CONDITIONS

9.1   The transactions contemplated by this Agreement designated to take place
      on the First Closing, shall become effective at the time of the first
      closing ("FIRST CLOSING") to be held at Munich, Germany at 10 a.m. local
      time on the fifth business day following the date hereof or at such other
      place or at such other time or on such other date as the Parties mutually
      may agree in writing. The day on which First Closing takes place is
      referred to as the "FIRST CLOSING DATE".

      The transactions contemplated by this Agreement designated to take place
      on the Second Closing, shall become effective at the time of the second
      closing ("SECOND CLOSING") to be held at Munich, Germany at 10 a.m. local
      time on the fifth business day following the satisfaction or, to the
      extent permitted by applicable law, waiver of all applicable conditions to
      the obligations of the Parties set forth in this Section 9 for the Second
      Closing (other than such conditions as may, by their terms, only be
      satisfied at Second Closing or on the Second Closing Date) or at such
      other place or at such other time or on such other date as the Parties
      mutually may agree in writing. The day on which Second Closing takes place
      is referred to as the "SECOND CLOSING DATE".

9.2   The respective obligations of the Parties to consummate the transactions
      contemplated by this Agreement shall be subject to the fulfillment, at or
      prior to Second Closing, of the following conditions precedent:

      9.2.1 To the extent applicable, Infineon or any of its Affiliates shall
            have obtained any material consents of, or registrations,
            declarations or filings with, any governmental authority legally
            required for the consummation of the transactions contemplated by
            this Agreement and the Ancillary Agreements.

      9.2.2 Expiration of the 30-day termination prior notice period for the
            Employees or sooner if the appropriate waiver will have been
            obtained.

9.3   The following shall occur at First Closing or Second Closing as indicated
      below,

      9.3.1 At the Second Closing, the Parties shall confirm in writing that the
            conditions to Second Closing pursuant to Section 9.2 hereof have
            been fulfilled or waived;

      9.3.2 Within 7 days as of the First Closing, Infineon shall deliver to
            Saifun, by wire transfer to the bank account set forth in Section
            4.2 hereof (or as otherwise designated in writing by Saifun to
            Infineon at least two business days prior to the First Closing
            Date), an amount equal to the Purchase Price set forth in Section
            4.1 hereof in immediately available funds in US Dollars;

                                      -10-
<PAGE>

      9.3.3 At the First Closing, the termination agreements and the assignment,
            as the case may be, with respect to the loan agreements as set forth
            in Section 2.3.1 herein shall be duly executed by the relevant
            parties thereto;

      9.3.4 At the Second Closing, the amended and restated Ancillary Agreements
            as set forth in Section 2.3.3 herein shall be duly executed by the
            relevant parties thereto;

      9.3.5 At the Second Closing, the Parties shall duly execute and submit to
            each other the waiver letter in accordance with Section 2.4 hereof;

      9.3.6 At the First Closing, the transfer deeds described in Section 3
            hereof shall be duly executed;

      9.3.7 At the First Closing, the Parties shall provide that a report to the
            Israeli Registrar of the Companies ready for immediate filing in a
            mutually agreeable form, contemplating the transfer of 490,000
            ordinary shares of JV Ltd. from Saifun to Infineon is executed.

      9.3.8 At the First Closing, the Parties shall pass a resolution of the
            Board of Directors and of the shareholders of JV Ltd. in the form
            attached as Exhibit 9.3.8 hereto approving the transactions
            contemplated herein.

      9.3.9 At the First Closing, the Parties shall procure that (i) the
            managing directors of JV GmbH are immediately notified of the
            transfer pursuant to Sec. 16 GmbHG and that (ii) the filing of the
            transfer of the limited partnership interest in JV KG is duly
            executed in front of a notary and (iii) filed in due course for
            registration with the commercial register.

      9.3.10 At the Second Closing, each of Saifun shall confirm the execution
            of its undertakings according to Section 5.9.

      9.3.11 At the First Closing, the termination agreements with respect to
            the Ancillary Agreements pertaining to JV Companies as set forth in
            Section 5.10 herein shall be duly executed by the relevant parties
            thereto;

      9.3.12 At the Second Closing, in the event that all required consents for
            the transfer of the Saifun Shares have been granted, the ownership
            in the Saifun Shares shall be validly transferred and the respective
            share

                                      -11-
<PAGE>

             certificates, if any, shall be delivered to Infineon; for the
             avoidance of doubt, this Section 9.3.12 is not a precondition to
             Second Closing; and

      9.3.13 At the First Closing, Saifun shall cause the dismissal or
             resignation of the directors or equivalent board and management
             members of the JV Companies appointed by or otherwise representing
             Saifun listed in Exhibit 9.3.13.

9.4   Within two (2) weeks following Second Closing, Infineon will cause JV Ltd.
      to pay to Saifun any outstanding amounts due under the Basic Agreement on
      Development Order and any other accounts payable when due.

9.5   Saifun shall deliver as soon as practical after the transfer of the Saifun
      Shares to Infineon an updated copy of its shareholder register showing
      Infineon as the new, duly registered owner of the Saifun Shares. For the
      avoidance of doubt, this Section 9.5 is not a precondition to First or
      Second Closing.

9.6   Infineon agrees to provide Saifun with audited financial statements for
      the JV Companies for the year end 2004 (December 30, 2004) and should do
      its best reasonable efforts to provide the same by February 15, 2005.
      Saifun acknowledges that the audited financial statements may be on a
      going concern basis or on a liquidation value basis.

      Should the First Closing be effective after December 30, 2004, Infineon
      shall provide Saifun with consolidated financial statements as of the date
      of First Closing as soon as practical.

      Infineon agrees to cause its auditors to provide a letter of consent
      (including the audit letter) and a comfort letter with respect of the
      financial statements of the JV Companies to be included and disclosed in
      Saifun's registration statement.

      Saifun will bear any additional cost of Infineon's auditors with respect
      to this Section incurred only due to Saifun's requirements.

                                   SECTION 10
                               GENERAL PROVISIONS

10.1  This Agreement including any documents enclosed hereto or mentioned herein
      shall be governed by the substantive law of the Federal Republic of
      Germany, excluding its conflict of laws provisions. Notwithstanding the
      foregoing, the agreements enclosed hereto (including those under Exhibits
      2.3.2.1, 2.3.2.2 and 2.3.2.3) shall be

                                      -12-
<PAGE>

      governed by such laws as provided in each of these agreements and any
      disputes related to such agreements shall be settled as provided in each
      of these agreements.

10.2  All disputes that may arise out of or in connection with this Agreement
      including disputes regarding the validity thereof shall exclusively and
      finally be settled under the Rules of Arbitration of the International
      Chamber of Commerce, Paris by three arbitrators, appointed in accordance
      with said Rules. The third arbitrator (Chairman of the Arbitral Tribunal)
      shall be appointed by the arbitrators nominated by each Party within four
      weeks after the nomination of the second arbitrator has been confirmed by
      the International Court of Arbitration. The arbitration shall be conducted
      in the English language. The place of arbitration shall be Geneva,
      Switzerland. In as far as the said Rules do not provide procedural
      regulation, the procedural law of the Canton of Geneva shall apply.

10.3  All notices and other communications required or permitted hereunder shall
      be in the English language and unless otherwise provided herein will be
      deemed to have been duly given by delivery in person or dispatched by
      email or facsimile (both confirmed in writing by mail dispatch on the same
      or subsequent business day) to the appropriate Party's address specified
      below:

      Infineon:

      For the attention of the head of the legal department

      Michael von Eickstedt
      Infineon Technologies AG
      Sankt-Martin-Str. 53
      81669 Munich, Germany

      Saifun Ventures and Saifun:

      For the attention of the head of the finance department
      Saifun Semiconductors Ltd.
      45, Hamelache St., Poleg Industrial Park
      Netanya, Israel
      Fax: +972-9-885031

      with a copy to:

      Eitan, Pearl, Latzer & Cohen-Zedek
      Attention: Advocate Doron Latzer
      Fax: +972-9-9799001

                                      -13-
<PAGE>

      or to such other address or addresses such Party may from time to time
      designate by written notice

10.4  This Agreement will be binding upon and inure to the Parties and the
      respective successors and assignees.

10.5  Each Party shall hold and shall cause its representatives and Affiliates,
      to hold in strict confidence and not to disclose or provide any third
      party, any Confidential Information. For the purposes of this Agreement,
      "CONFIDENTIAL INFORMATION" shall mean any facts and circumstances of any
      kind which are not publicly known or do not become known publicly in
      connection with the Parties and the transactions contemplated in this
      Agreement including the existence, content and status of any negotiations
      in relation to this Agreement, the terms of this Agreement, trade and
      business secrets.

      The Parties hereto shall keep the terms of this Agreement confidential and
      shall not now or hereafter divulge these terms to any third party except

      (a)   that each party may disclose the existence, but not the terms of
            this Agreement, as is reasonably necessary for purposes of providing
            information in confidence, of the type customarily provided to
            investors and to shareholders, in the ordinary course of doing
            business; or

      (b)   with the prior written consent of the other Parties; or

      (c)   to any governmental body having jurisdiction to call therefore; or
            as required under the law or statute, rule or regulation, including
            the rules, regulations and requirements of the Securities and
            Exchange Commission.

      (d)   as otherwise may be required by law, including to legal and
            financial advisors in their capacity of advising a Party in such
            matters, provided that such advisors are subject to confidentiality
            undertakings; or

      (e)   in confidence to their own legal counsel, accountants, banks and to
            purchasers or investors who need to know this information, but (i)
            solely to the extent necessary for preparing and implementing
            certain transactions (a "TRANSACTION") and (ii) provided, however,
            such legal counsel, accountants, banks and purchaser or investors
            agree to be bound by a confidentiality obligation similar to the
            confidentiality obligation assumed by the Parties herein. For
            purposes of this Section 10.5 (e), a Transaction shall be:

                                      -14-
<PAGE>

            (1)   In the case of Saifun, Saifun's diligent preparation and
                  execution of an IPO, follow-on offerings, private placements
                  and debt financing and similar transactions; provided that in
                  the event of private placements, or debt financing or similar
                  transactions by a direct competitor of Infineon, Confidential
                  Information may be disclosed under this Section following an
                  execution of a binding undertaking, or, prior to such
                  execution with the prior written consent of Infineon which
                  shall not be unreasonably withheld; and

            (2)   [***]

      The Parties shall mutually agree on the content of a press release or
      other form of publicity relating to this Agreement.

10.6  In the event that one or several provisions of this Agreement (including
      Schedules and Exhibits) should be invalid or unenforceable or if this
      Agreement should be incomplete, the validity and enforceability of the
      other provisions of this Agreement shall not be affected thereby. In such
      case, the void, unenforceable or incomplete provision hereto shall be
      deemed replaced by such valid and enforceable provision or such provisions
      completing this Agreement which are to the extent possible in line with
      the commercial intent of this Agreement (including Schedules and Exhibits)
      as of the date hereof.

10.7  The costs required for notarization of this agreement as well as the
      Schedules and Exhibits requiring notarization shall be borne by the
      Parties in proportion to the shareholding of the respective Parties in the
      JV Companies prior to this Agreement. Other fees and expenses, in
      particular for advisors, attorneys, accountants or the like, shall be
      borne by the respective Party commissioning in such services, but not
      directly or indirectly by the JV Companies.

                  [Remainder of page intentionally left blank.]

*** Omitted pursuant to a confidential treatment request. The confidential
    information has been filed separately with the SEC.

                                      -15-
<PAGE>

The exhibits 5.2(a), 5.2(b), 5.2(c) and Schedule 1 to Exhibit 5.11 exclusively
consist of inventories and other schedules within the meaning of Section 14 of
the German Notarisation Act ("Beurkundungsgesetz"). The Notary Public hereby
confirms that these exhibits have been presented to the appeared persons for
examination. The appeared state that these annexes are present before them here
and now. The appeared persons have signed these annexes on every page. The
appeared hereby expressly declare that these annexes shall not be read out to
them.

IN WITNESS THEREOF this Notarial Deed and all its exhibits other than exhibits
5.2(a), 5.2(b), 5.2(c) and Schedule 1 to Exhibit 5.11 have been read out to the
appeared persons before me, the Notary Public, after which the appeared have
approved and signed this deed, after which I, the Notary Public, have singed as
well and have affixed my official seal; the exhibits 5.2(a), 5.2(b), 5.2(c) and
Schedule 1 to Exhibit 5.11, to which the parties have made reference in their
preceding declarations, have not been read out to the appeared persons according
to their express wish, but have been signed by the appeared persons and have
been affixed to this deed as well.

Basel, this 20th (twentieth) day of December 2004 (two thousand and four)

                                        Infineon Technologies AG

                                        /s/ [illegible]       /s/ [illegible]
                                        -------------------   -----------------

                                        Saifun Semiconductors Ltd.

                                        /s/ Igal Shany
                                        -------------------

                                        Saifun Ventures Ltd.

                                        /s/ Igal Shany
                                        -------------------

                                        Notary

Allg. Prot. Nr. 51/2004                 /s/ [illegible]
                                        -------------------

                                      -16-

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