[SanDisk Corporation Letterhead]

To: 

 

Tower Semiconductor Ltd.

      

 

P.O. Box 619

      

 

Migdal Haemek 23105

      

 

Israel

      

 

Fax: +972-4 ###-###-####

      

 

Atten: Co-Chief Executive Officer

cc: 

 

Yigal Arnon & Co.

      

 

One Azrieli Center

      

 

Tel-Aviv 67021

      

 

Israel

      

 

Fax: +972-3 ###-###-####

      

 

Attention: David H. Schapiro, Adv.

1. 

 

Wafer Partner and Equity Partner Undertaking.    The undersigned hereby confirms that in accordance with the terms set forth hereunder, it will advance the payment of the entire Series A-3 Additional Purchase Obligation by no later than April 5, 2002 or 2 business days following shareholder approval of this Amendment, without regard to whether the Series A-3 Mandatory Exercise Events occurs, and it will advance the payment of the entire Series A-4 Additional Purchase Obligation by no later than October 1, 2002, without regard to whether the Series A-4 Mandatory Exercise Events occurs.

2. 

 

Wafer Partner.

    

 

In consideration of its undertaking to advance the Series A-3 Additional Purchase Obligation, by no later than April 5, 2002 or 2 business days following shareholder approval of this Amendment without regard to whether the Series A-3 Mandatory Exercise Events occurs, and to advance the Series A-4 Additional Purchase Obligation, by no later than October 1, 2002, without regard to whether the Series A-4 Mandatory exercise Events occurs, following each payment advance, (i) the undersigned will be

    

 

issued fully-paid and non-assessable ordinary shares of Tower equivalent to sixty percent of the amount of the payment made in connection with the Series A-3 Additional Purchase Obligation and the Series A-4 Additional Purchase Obligation, divided by the average trading price for the ordinary shares during the 30 consecutive trading days preceding the date of actual payment, provided that such average trading price will not exceed $12.50, and (ii) the undersigned’s Pre-Paid Credit Accounts will be increased by the amount equivalent to forty percent of the amount of the payment made in connection with the Series A-3 Additional Purchase Obligation and the Series A-4 Additional Purchase Obligation, which will be applicable against Fab 2 production purchases as soon as such production commences at Fab 2, provided that until July 1, 2005 such amounts that are added to the Pre-Paid Credit Account may be applied towards only 7.5% of Fab 2 wafer purchases made by the undersigned.

3.

 

Equity Partner.

    

 

In consideration of its undertaking to advance the Series A-3 Additional Purchase Obligation, by no later than April 5, 2002 or 2 business days following shareholder approval of this Amendment without regard to whether the Series A-3 Mandatory Exercise Events occurs, and to advance the Series A-4 Additional Purchase Obligation, by no later then October 1, 2002, without regard to whether the Series A-4 Mandatory Exercise Events occurs, following each payment advance, the undersigned will be issued fully-paid and non-assessable ordinary shares of Tower equivalent to the amount of the payment made in connection with the Series A-3 Additional Purchase Obligation and the Series A-4 Additional Purchase Obligation, divided by the average trading price for the ordinary shares during the 30 consecutive trading days preceding the date of actual payment, provided that such average trading price will not exceed $12.50.

4.

 

Approvals.    This Amendment is subject to shareholder and third party approvals, as may be applicable.

5.

 

Entire Agreement.    All over provisions of the undersigned’s Fab 2 Investment Agreements shall remain unchanged.