Document:

EXHIBIT 4.6

                            TOWER SEMICONDUCTOR LTD.
                           CEO SHARE OPTION PLAN 2005
                    (AS AMENDED 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. CEO Share Option Plan 2005 (the "PLAN").

     1.2  The purpose and intent of the Plan is to provide incentives to the
          Chief Executive Officer ("CEO") of Tower Semiconductor Ltd. (the
          "COMPANY") who is also an officer of any of its wholly owned
          subsidiaries (each, a "SUBSIDIARY") by providing him/her with options
          ("OPTIONS") to purchase ordinary shares ("ORDINARY SHARES") of the
          Company, and was approved by the Company's Board of Directors (the
          "BOARD"). Options under this Plan may be granted either (i) 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");
          or (ii) pursuant to the United States Internal Revenue Code of 1986,
          as amended (the "CODE").

     1.3  The Plan shall become effective upon its approval by the Board (the
          "EFFECTIVE DATE"). The Plan has been amended in accordance with
          resolutions of the Board dated May 17, 2006 (the "AMENDMENT DATE")

2.   SCOPE:

     The total number of Options that may be granted under this Plan, including
     grants granted prior to the Amendment Date is 12,068,988 _, of which the
     total number of ISO (as defined below) Options that may be granted under
     this Plan is 662,862 Options and the total number of 102 Trustee Options
     (as defined below) that may be granted under this Plan is 11,406,126_
     Options. Each Option shall be exercisable into one Ordinary Share of the
     Company (nominal value NIS 1.00 per share) (the "UNDERLYING SHARE").

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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, 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 Tower Semiconductor
     USA, Inc. 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 the CEO of the Company and of any Subsidiary
          (collectively referred to as the "GRANTEE"). The grant of an Option to
          the 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 fail to fully comply with any of the requirements for ISOs
          under the Code.

6.   OPTIONS:

     6.1. 102 Trustee 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.

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     6.2. Options granted under the Code may be granted from the Effective Date.

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

     6.4. 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 Board,
          provided that they are consistent with this Plan and with applicable
          law (the "OPTION LETTER"). The Option Letter shall also list the date
          of grant of the respective Options (the "DATE OF GRANT").

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

     6.6. 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 share
          certificate evidencing the Underlying Shares.

7.   VESTING AND EXERCISE OF OPTIONS:

     7.1. Options shall vest and become exercisable as set forth in the Option
          Letter.

     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.

     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:

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 initial date the Board
approved the Option grant, unless otherwise determined by the Board and set
forth in the Option Letter.

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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.

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. The 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") and the Grantee shall not be entitled to sell or otherwise
          dispose of the Underlying Shares purchasable upon the exercise of such
          102 Trustee Options during the Required Holding Period, unless
          permissible and in accordance with the Ordinance and the Rules.

     9.3. The Trustee and 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) or performs a share split or a similar dissolution, such bonus
          shares or other similar rights on shares which derive from 102 Trustee
          Options shall be subject to the provisions of this Section 9 and the
          Required Holding Period for such bonus shares or other similar rights
          shall be measured from the commencement of the Required Holding Period
          for the 102 Trustee Options. All such bonus shares and/or other
          similar rights shall be held by the Trustee in accordance with Section
          102 and the regulations, rules, orders and procedures promulgated
          thereunder with respect to Israeli residents.

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     9.5. The Trustee shall not exercise the voting rights vested in the
          Underlying Shares, unless the Trustee believes, after consulting with
          the Company's Compensation and Options 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 Grantee of such
          replacement.

10.  RESERVED SHARES:

     10.1. The Company has reserved 12,068,988 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,
          they shall no longer be available for grant under this Plan.

     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.

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,
          unless otherwise set forth in the Grantee's Option Letter.

     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
          Option Letter.

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<PAGE>

     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.

     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.

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     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.

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 and the
          Code, as applicable, (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.

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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:

     Subject to applicable law, the Board may, at any time, terminate or amend
     the Plan in any respect.

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.

                                       8EXHIBIT 4.7

                                   APPENDIX B

                          Option Grant Letter Agreement

                RE: GRANT OF OPTIONS - CEO SHARE OPTION PLAN 2005

Dear : Mr. Russell Ellwanger

     Tower Semiconductor Ltd. (the "Company") is pleased to grant you, subject
to the receipt of the requisite corporate approvals, options ("Options") to
purchase up to 662,862 Ordinary Shares, nominal value NIS 1.00 each, of the
Company (the "Shares"), pursuant to the CEO Share Option Plan of the Company,
(the "Plan"), as of July 15, 2005 (the "Date of Grant"). Capitalized terms not
defined in this letter agreement (this "Option Agreement") shall have the
meaning ascribed to them in the Plan.

     The grant and issuance of Options pursuant to this Option Agreement is
subject to the receipt of all the approvals required under Section 102 of the
Income Tax Ordinance ("Section 102"). The Options will therefore be issued to
the Trustee, as such term is defined in the Plan. The Options are granted as 102
Capital Gains Track Options.

     The exercise price of the Options shall be $1.56 per Share. The terms and
conditions set forth in this Option Agreement are subject to and supplemented by
the terms and conditions set forth in the Plan attached hereto. You are urged to
review the Plan and shall be deemed to be fully aware of all the terms and
conditions governing the Options set forth in the Plan. By your signature below,
you agree to be bound by the terms and conditions of the Plan.

     The Options granted pursuant to this Option Agreement will be issued once
you sign and return to the Company: (I) this Option Agreement, (II) the attached
Employee's Declaration, and (III) any other form which is required under Section
102 and which will be provided to you by the Company.

     The issuance of the Options is subject to the main terms and conditions set
out below. The full terms and conditions of the Options are set out in the Plan.

1.   ISSUANCE OF OPTIONS.

     The Options are hereby issued to the Trustee for your benefit, subject to
     the terms and conditions hereunder.

     The Options will not be listed in any stock exchange and are not
     transferable (except to your legal heirs or estate).

<PAGE>

2.   VESTING; PERIOD OF EXERCISE.

     2.1  VESTING SCHEDULE. Subject to the terms and conditions of the Plan and
          this Option Agreement, the Options granted pursuant to this Option
          Agreement shall become exercisable (vest) over a period of four years
          in accordance with the following vesting schedule:

          (a)  Twenty five percent (25%) of the Options shall vest on May 1,
               2006.

          (b)  Twenty five percent (25%) of the Options shall vest on May 1,
               2007.

          (c)  Twenty five percent (25%) of the Options shall vest on May 1,
               2008.

          (d)  Twenty five percent (25%) of the Options shall vest on May 1,
               2009.

     2.2  Subject to Section 2.5(i), the above Options will vest and become
          exercisable only if on the date of vesting you serve as chief
          executive officer of the Company.

     2.3  Other than as set forth in applicable law and Section 2.5 below,
          vested Options may be exercised in whole or in part, at any time
          within a period of ten (10) years from the Date of Grant (the
          "Exercise Period"). Any Option not exercised within the Exercise
          Period shall lapse and become void and unexercisable.

     2.4  The Company will come to an agreement with you as to how to value the
          Ordinary Shares of the Company in the event that they are not publicly
          traded at the time of an option exercise.

     2.5  In the event of the termination of your relationship with the Company
          as chief executive officer of the Company (the "Employment")
          subsequent to the Date of Grant, the Options will be treated as
          follows:

               (i)  In the event the Company terminates you without cause (as
                    defined in Section 7(a) of your employment agreement with
                    the Company (the "Employment Agreement")), all Options that
                    were to vest over the 12 months from the date of termination
                    shall become fully vested and exercisable immediately upon
                    such date of termination. All options that are vested and
                    exercisable on the date of termination shall lapse and
                    become unexercisable sixty (60) days from such date. Any
                    remaining unvested options will terminate immediately upon
                    termination.

               (ii) In the event: (a) the Company terminates you for cause, or
                    (b) you terminate your employment with the Company pursuant
                    to Section 7(c) of the Employment Agreement, all of your
                    Options (including vested Options) will terminate
                    immediately upon the date of termination.

     2.6  Notwithstanding anything to the contrary in the Plan and subject to
          any applicable law, upon the Company consummating of any transaction
          that results in the sale of all or substantially all of the assets or
          shares of the Company, all Options that were to vest over the next 12
          months from the date such transaction is consummated shall become
          exercisable immediately prior to such date.

<PAGE>

     2.7  The procedure for exercise of the Options shall be as detailed on the
          website of the Company (www.towersemi.com). However, the Company may
          change the procedure for exercise of the Options at its discretion.
          The Company will notify you of any changes in the procedure.

3.   NOTICES.

     All notices, consents and other communications under this Option Agreement
     shall be sent in writing and shall be deemed to have been given when (a)
     delivered by hand, (b) mailed by certified or registered mail, return
     receipt requested or express delivery service, or (c) when received by the
     addressee, if sent by Express Mail, Federal Express or other express
     service, in each case to the appropriate addresses set forth below (or to
     such other addresses as a party may designate as to itself by notice to the
     other parties).

          (a)  If to you, at your address listed beneath your signature below;

          (b)  If to the Company: Human Resources Department, Tower
               Semiconductor, P.O. Box 619, Migdal Ha'emek, Israel;

          (c)  If with respect to Option exercise procedures: sob@tomfish.com or
               facsimile no.: 972-3-6849282.

4.   NO WAIVER.

     The delay or failure on the part of any party hereto to insist, in any one
     instance or more, upon strict performance of any of the terms or conditions
     of this Option Agreement, or to exercise any right or privilege herein
     conferred shall not be construed as a waiver of any such terms, conditions,
     rights or privileges but the same shall continue and remain in full force
     and effect.

                                          Sincerely,

                                          Tower Semiconductor Limited

Name of Employee: Mr. Russell Ellwanger                 Date: ____________

Employee signature: _____________________

Employee Passport Number: ______________

Employee address:   _____________________

<PAGE>

EMPLOYEE'S DECLARATION

     1. I, the undersigned, confirm that the contents of this Option Agreement
are acceptable and agreed to by me.

     2. 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 mine or of the Company hereunder, and any commissions and other expenses
related thereto, shall be borne solely by me. The Company, any of its
Subsidiaries and/or the Trustee may withhold any taxes, expenses and commissions
as required. I agree 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 me.

     3. I acknowledge and agree that in the event the Company issues securities
as bonus shares or performs a share split or a similar dissolution, such bonus
shares or other similar rights on the shares granted to me pursuant to this
Option Agreement, shall be transferred by the Company to the Trustee, and the
terms and provisions of the Ordinance and the Rules (as such terms are defined
below) shall apply to the bonus shares and/or other similar rights, as shall the
Trustee's undertakings under the Agreement between the Trustee and the Company.

     4. Without derogating from the former provisions, I acknowledge that the
ultimate liability for income tax, social insurance or other tax-related
withholding in connection with this grant or its exercise is my responsibility.
I specifically acknowledge that any and all applicable laws and regulations in
Israel pertaining to the granting of options including but not limited to the
provisions set forth in Section 102 of the Income Tax Ordinance [New Version] -
1961 (the "Ordinance") and any rules promulgated thereunder including any
amendment thereto, any interpretation published by the Israeli tax authorities
in their official guidelines and any judicial interpretation of the Israeli
courts, shall each apply with respect to my options and may affect the terms of
my options. Any exercise of an option and sale of shares received upon the
exercise of my options (the "Shares"), which deviates from the rules set forth
in Section 102 of the Ordinance or in regulations promulgated thereunder may
result in adverse tax consequences for me. I further acknowledge that each of
the Company, brokers effecting transactions relating to my options and the
Trustee (as defined in the Plan) is under no obligation to inform me as to
whether a particular transaction I may consider effecting complies with the
provisions of Section 102 of the Ordinance or the rules promulgated thereunder.
I further acknowledge that the Company has not, nor does it intend to, provide
tax advice with respect to the tax ramifications of an option grant under the
laws of any jurisdiction, including Section 102 of the Ordinance or any rules
promulgated thereunder, and that I am urged to seek my own personal tax advice.

<PAGE>

     5. APPOINTMENT OF A TRUSTEE. I acknowledge that the Trustee has been
appointed to administer my options in accordance with Section 102 of the
Ordinance and the Income Tax Rules (Tax Benefits Regarding the Grant of Options
to Employees), 2003 (the "Rules") and pursuant to an agreement between the
Company and the Trustee that may be amended from time to time (the "Trust
Agreement"). In accordance with the terms of this Option Agreement, the Company
and/or the Trustee are responsible, among other things, to: (a) withhold and pay
any applicable taxes owed to the tax authorities in Israel in connection with my
options, including as a result of an exercise of my options and sale of the
Shares by me, prior to releasing any funds owed to me, (b) provide the tax
authorities in Israel with an annual report in accordance with the Rules, and
(c) provide the Israeli tax authorities with a report regarding the grant of
Options under the Plan, within ninety (90) days from the Grant Date in
accordance with the Rules. Any fees associated with the exercise of my options
as specified in the Trust Agreement will be borne solely by me. In accordance
with the approval granted by the Israel tax authorities in connection with the
Plan, certain of the functions related to the administration of my options may
be performed by the Company.

     6. REQUIRED HOLDING PERIOD. In accepting this grant, I acknowledge that
unless otherwise permitted by the Income Tax Authorities, the Rules as of the
Option Date, prohibit me from selling my Shares during a period of twenty-four
months from the end of the tax year in which the grant took place as my options
are subject to the "capital gains track" as set forth in Section 102(b)(2) of
the Ordinance (the "Capital Gains Track"). Notwithstanding the above, if I elect
to sell my Shares during the Required Holding Period, I hereby acknowledge that
the sale of the Shares will be taxed in accordance with the relevant provisions
of Section 102 of the Ordinance and the Rules regarding a breach of the terms of
the Required Holding Period. For the avoidance of doubt, a sale of the Shares
during the Required Holding Period will forfeit my right to receive the tax
benefits of the Capital Gains Track and the income derived from the exercise of
the Options and the sale of the Shares will be taxed as regular employment
income (and not at the reduced capital gains tax rate, if applicable) and will
be generally subject to National Insurance and Health Tax.

     7. I am aware that: (i) the Company intends to issue additional shares and
options in the future to various entities and individuals, as the Company in its
sole discretion shall determine; and (ii) the Company may increase its share
capital by new securities in such amount as it finds expedient; and I hereby
waive any claim I might or may have regarding such issuance or increase other
than any claim or right I may have pursuant to any written agreement between
myself and the Company or its subsidiary Tower Semiconductor USA, Inc.

<PAGE>

     8. I am aware that pursuant to Section 102(b)(3) if my options are issued
with an exercise price lower than the average closing price of the Company's
shares on the 30 (thirty) trading days preceding the issuance of the options, a
part of any benefit ultimately derived from the exercise of the Options and the
sale of the Shares, generally up to the amount equivalent to the difference
between these prices, will be taxed as regular employment income and not at the
reduced capital gains tax rate and generally will be subject to National
Insurance and Health Tax.

     9. TRANSFER OF INFORMATION. I hereby consent to the transfer of information
that the Company is required to report to the tax authorities and to the Trustee
relating to the Options in accordance with the provisions of Section 102 of the
Ordinance and the Rules.

Name of Employee: Mr. Russell Ellwanger                 Signature: ___________

Passport Number: _______________                        Date: _______________

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