Document:

EXHIBIT 4.2

                    AMENDMENT TO THE ARTICLES OF ASSOCIATION

At the shareholders' meeting that was held on September 28, 2006, it was
proposed that for the purpose of ensuring the availability of a sufficient
number of authorized shares for issuance in connection with the anticipated
raising of additional capital, Tower Semiconductor Ltd. increase its authorized
share capital from 500,000,000 shares NIS 1.00 per share to 800,000,000, NIS
1.00 per share.

The shareholders of Tower Semiconductor Ltd. resolved the following:

"[T]O INCREASE THE NUMBER OF THE COMPANY'S AUTHORIZED ORDINARY SHARES TO
800,000,000 AND AUTHORIZED SHARE CAPITAL TO NIS 800,000,000 AND TO AMEND THE
COMPANY'S ARTICLES OF ASSOCIATION TO REFLECT SUCH INCREASE."

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 2005
             (AS AMENDED AND RESTATED EFFECTIVE AS OF MAY 17, 2006)

            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 Ltd. Employee Share Option Plan 2005 (the "2005 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 ordinary shares ("ORDINARY
          SHARES") in the Company, pursuant to a plan approved by the Board of
          Directors of the Company (the "BOARD"). Options under this Plan will
          be granted to the Company's employees pursuant to the provisions of
          Section 102 ("SECTION 102") of the Israeli Income Tax Ordinance (New
          Version), 1961 as amended from time to time, the Law Amending the
          Income Tax Ordinance (Number 132) 2002 (as amended, the "ORDINANCE")
          and the rules promulgated thereunder (the "RULES"). Options under this
          Plan will be granted to United States residents who are employees of
          the Company's United States Subsidiary, Tower Semiconductor USA, Inc.
          ("TSU") pursuant to the United States Internal Revenue Code of 1986,
          as amended (the "CODE").

     1.3  The Plan shall become effective upon its adoption by the Board and the
          Company's shareholders (the "EFFECTIVE DATE").

2.   SCOPE:

     2.1  The total number of Options that may be granted under this Plan is
          9,824,660. Each Option shall be exercisable into one Ordinary Share of
          the Company (nominal value NIS 1.00 per share) (the "UNDERLYING
          SHARE").

     2.2  The total number of ISO (as defined below) Options that may be granted
          under this Plan is 1,000,000 Options. Accordingly, the maximum number
          of Underlying Shares that may be issued as result of the exercise of
          ISO Options granted under this Plan is 1,000,000.

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3.   OPTIONS GRANTED UNDER SECTION 102:

     Options granted pursuant to Section 102(b) shall be either (a) capital
     gains track options under Section 102(b)(2), in which income resulting from
     the sale of Underlying Shares is taxed as capital gain ("102 CAPITAL GAINS
     TRACK OPTIONS"), or (b) ordinary income track options under Section
     102(b)(1), in which income resulting from the sale of Underlying Shares 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 Income Tax Authorities to
     issue 102 Capital Gains Track Options under the Company's Employee Share
     Option Plan 2003/1, the Company may currently grant only 102 Capital Gains
     Track Options. The Company may change such election not earlier than
     January 1, 2005, following the approval of the Board, all in accordance
     with the provisions of Section 102(g) of the Ordinance.

4.   OPTIONS GRANTED UNDER THE CODE:

     Options granted to US residents who are employees of TSU shall either
     qualify as Incentive Stock Options within the meaning of Section 422 of the
     Code ("ISOS"), or not qualify as ISOs and be classified as Non-qualified
     Stock Options ("NSOS") as designated in the Option Letter (as defined
     below). Options granted as ISO's shall comply with the requirements of
     Section 422 of the Code.

5.   ELIGIBLE GRANTEES:

     5.1. Options may be granted to any employee of the Company or any
          Subsidiary ("GRANTEE"). No Option under this Plan may be granted to
          any person serving as a member of the Board. The grant of an Option 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.

     5.2. Options designated as ISOs will be treated as NSOs if (i) a Grantee of
          ISOs at the Date of Grant (as defined in Section 6.2 below) owns
          shares representing more than 10% of the voting power of the Company
          or its parent or a Subsidiary, (ii) at the Date of Grant, the
          aggregate Fair Market Value (as defined in Section 8 below) 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), (iii) a disposition of
          Underlying Shares is made within two years from the Date of Grant of
          the Options or within one year from the exercise thereof, (iv) the
          Grantee was not an employee of the Company at all times during the
          period beginning on the Date of Grant and ending on the day 3 months
          before the date of exercise of such Grantee's Options, or (v) such
          Options otherwise fail to fully comply with the requirements for ISOs
          under the Code.

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6.   OPTIONS:

     6.1. Options may be granted from the later of (i) the Effective Date; or
          (ii) 30 (thirty) days from the filing of this Plan with the Israeli
          Income Tax Authorities in accordance with applicable law.

     6.2. Options may be granted until 10 (ten) years from the Effective Date.

     6.3. Options shall be granted by issuance of an Option letter to the
          Grantee stating, inter alia, the number of Underlying Shares, the
          dates when the Options may be exercised, the Option exercise price and
          such other terms and conditions at the discretion of the Compensation
          and Options Committee (the "COMMITTEE"), provided that they are
          consistent with this Plan and with applicable law (the "OPTION
          LETTER"). The date of the Option Letter shall be the date of grant of
          the respective Options (the "DATE OF GRANT").

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

     6.5. The Grantee shall have no right to vote or receive dividends (subject
          to Section 12.1) or any other rights of a shareholder prior to his/her
          exercise of the Options and until the issuance of the stock
          certificate evidencing the Underlying Shares.

7.   VESTING AND EXERCISE OF OPTIONS:

     7.1. Unless otherwise explicitly determined by the Board and stated in an
          individual Option Agreement, Options shall vest and become exercisable
          as follows, subject to the terms under which they were awarded:
          one-quarter (1/4) of the Options shall vest and become exercisable 12
          months after the Date of Grant, one-quarter (1/4) of the Options shall
          vest and become exercisable 24 months after the Date of Grant,
          one-quarter (1/4) of the Options shall vest and become exercisable 36
          months after the Date of Grant, and one-quarter (1/4) of the Options
          shall vest and become exercisable 48 months after the Date of Grant,
          all provided that the Grantee is employed by the Company or any
          Subsidiary on such dates.

     7.2. The consideration to be paid for the Underlying Shares, including the
          method of payment, shall be determined by the Company and may consist
          entirely of (1) cash, (2) check, or (3) cashless in the case of same
          day sale. The procedure for exercise of the Options shall be provided
          to each Grantee together with the Option Letter. The Company may
          change the procedures for exercise of the Options at its discretion,
          by giving notice thereof to the Grantee.

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     7.3. If any Option has not been exercised within ten (10) years after the
          Date of Grant (or any shorter period set forth in the Option Letter),
          such Option shall immediately terminate and all of the Grantee's
          interests in and rights to such Option shall immediately expire.

8.   OPTIONS' EXERCISE PRICE:

     Unless otherwise explicitly determined by the Board and stated in an
     individual Option Agreement, 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 on the last market trading day (the "FAIR MARKET
     VALUE") prior to the Date of Grant. To avoid doubt: (a) Options designated
     as ISOs must be granted with an exercise price equal to the Fair Market
     Value of the Company's shares on the date of grant in order to qualify for
     ISO treatment under the Code and (b) Options designated as 102 Capital
     Gains Track Options whose exercise price is less than the "102 Fair Market
     Value", shall be subject to Section 102(b)(3) of the Ordinance.

     "102 FAIR MARKET VALUE" shall mean with respect to 102 Capital Gains Track
     Options only, and for the sole purpose of determining tax liability
     pursuant to Section 102(b)(3) of the Ordinance, the average value of the
     Company's shares on the thirty (30) trading days preceding the date of
     grant.

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9.   TRUSTEE; REQUIRED HOLDING PERIODS:

     9.1. All Options and the Underlying Shares will be held in trust by David
          H. Schapiro Legal Services (the "TRUSTEE") (i) in accordance with
          Section 102 and the regulations, rules, orders and procedures
          promulgated thereunder with respect to Israeli residents; or (ii)
          pursuant to the Company's instructions and all applicable laws with
          respect to non-Israeli residents (all such Options shall be referred
          to as the "TRUSTEE OPTIONS").

     9.2. 102 Trustee Options and the Underlying Shares 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 (the "REQUIRED HOLDING
          PERIOD").

     9.3. 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.

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

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

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

10.  RESERVED SHARES:

     10.1. The Company has reserved 9,824,660 authorized but unissued Ordinary
          Shares (nominal value NIS 1.00 per share) for purposes of the Plan,
          subject to adjustments as provided in Section 12 below. If any Options
          granted under the Plan terminate, expire or otherwise cease to exist,
          such Options shall again be available for grant under the Plan or any
          other incentive plan that the Company may adopt.

     10.2. The Company will maintain a sufficient quantity of Ordinary Shares,
          NIS 1.00 nominal value, in its registered capital and shall increase
          said quantity as appropriate to allow for the exercise of the Options
          under the Plan.

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11.  TERMINATION OF EMPLOYMENT; TERMINATION OF RIGHT TO EXERCISE:

     11.1. Subject to the provisions of paragraph 11.2 and 11.3 hereof, unless
          determined otherwise by the Board, if a Grantee ceases to be employed
          by the Company for any reason, all of the Grantee's rights in respect
          of all Options that are vested and exercisable under the Plan on the
          date of termination shall terminate sixty (60) days from the date of
          termination. Options which are not vested and exercisable on the date
          of termination will become void and unexercisable as of such date.

     11.2. Notwithstanding paragraph 11.1, in the event the Company terminates
          the employment of a Grantee under circumstances that entitle the
          Company (1) to withhold severance pay, in whole or in part, 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, all of the Grantee's exercisable
          Options shall become void and unexercisable on the last day of the
          Grantee's employment, unless otherwise set forth in the Grantee's
          employment agreement.

     11.3. If a Grantee dies, becomes unable to continue to be employed by the
          Company due to incapacitation from an accident, illness or other cause
          approved by the Committee, or retires at the legal retirement age, all
          of the Grantee's exercisable Options as of such date 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 become
          void and unexercisable. In the case of an ISO, if the Grantee's
          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 Grantee's last day of
          employment.

12.  ADJUSTMENTS:

     12.1. In the event that the Company shall issue any of its Ordinary Shares
          or other securities as bonus shares (ioeau aeaa), each Grantee who has
          been granted Options as of such date shall, upon exercising his/her
          Options, be entitled to receive, for the purchase price payable upon
          such exercise, bonus shares at no additional cost, in an amount and of
          such class, as the Grantee would have received had he been the holder
          of the Underlying Shares at the time the Company issued such bonus
          shares. No fractional shares will be issued under this Section. The
          Company may aggregate and sell all fractional shares and will be
          entitled to the proceeds of the sale thereof.

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<PAGE>

     12.2. 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, however, the number of Underlying Shares will be
          increased to take into account the element of economic benefit of the
          rights issue ("i0eea aaeaa"), as is represented by the ratio between
          the price per share of the Company's Ordinary Shares on the effective
          date of the future rights offering and the base price per share of the
          Company's Ordinary Shares that is established by the Tel-Aviv Stock
          Exchange (the "TASE") on the following trading day. If the TASE does
          not establish a base price per share of the Company's Ordinary Shares,
          no adjustment in the number of Underlying Shares issuable upon
          exercise of the Options will be made with respect to such future
          rights offering.

     12.3. If the Company consolidates its Ordinary Shares, NIS 1.00 nominal
          value, into shares with a higher nominal value, or if it splits them
          into a larger number of shares having a lower nominal value, the
          number of Underlying Shares issued upon exercise of the Options will
          be adjusted as appropriate.

     12.4. In the event that the Company is a party to any agreement or
          arrangement 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, such as a merger or reorganization (the
          "EXCHANGE TRANSACTION"), the Company will endeavor to cause such other
          corporation to issue such securities as those offered to the Company's
          ordinary shareholders to any Grantee who exercises his/her Options, as
          if said Grantee was the holder of the Underlying Shares on the
          determining date in connection with the Exchange Transaction.

     12.5. VOLUNTARY LIQUIDATION: In the event of a decision to voluntarily
          liquidate the Company, each Grantee will be (i) deemed to have
          exercised his/her vested and exercisable Options immediately prior to
          such decision; and (ii) entitled to payment equal to the amount that
          he/she would receive in liquidation if he/she were a holder of the
          Underlying Shares immediately prior to the decision to voluntarily
          liquidate less the exercise price.

     12.6. The Committee is authorized to implement all adjustments and execute
          the required calculations, pursuant to the principles in this Section
          12.

13.  CONTINUATION OF EMPLOYMENT:

     Neither the Plan nor the Option Letter shall impose any obligation on the
     Company or any Subsidiary to continue employing any Grantee.

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14.  APPLICATION OF FUNDS:

     The proceeds received by the Company from the sale of Underlying Shares
     will be used for general corporate purposes of the Company or any
     Subsidiary.

15.  TAX CONSEQUENCES:

     15.1. Any tax consequences arising from (i) the grant or exercise of any
          Option, (ii) the issuance of Underlying Shares and payment therefor,
          (iii) the sale, transfer or exchange of Underlying Shares, or (iv) any
          other event or act of the Company or the Grantee hereunder, and any
          commissions and other expenses related thereto, shall be borne solely
          by the Grantee. The Company, any of its Subsidiaries and/or the
          Trustee may withhold any taxes, expenses and commissions as required.
          The Grantee agrees to indemnify the Company, any of its Subsidiaries
          and/or the Trustee and hold them harmless from and against any and all
          liability for any such tax consequences, commissions, expenses 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.

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

16.  ADMINISTRATION:

     16.1. The Plan will be administered by the Board, taking into account the
          recommendations of the Committee.

     16.2. 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.

17.  AMENDMENT AND TERMINATION OF THE PLAN:

     The Board may, at any time, terminate or amend the Plan in any respect,
     subject to the Company's shareholders' approval, if required.

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<PAGE>

18.  GOVERNING LAW:

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

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

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