JOINT DEVELOPMENT AND ENGINEERING SERVICES AGREEMENT

Exhibit 10.1

JOINT DEVELOPMENT AND ENGINEERING SERVICES AGREEMENT

THIS JOINT DEVELOPMENT AND ENGINEERING SERVICES AGREEMENT (this “ Agreement ”) is entered into, effective as of September 29, 2008 (the “ Effective Date ”), by and between Kulicke and Soffa Industries, Inc. (“ K&S ”), a Pennsylvania corporation, and W.C. Heraeus GmbH, a German corporation (the “ Purchaser ”). The Purchaser and K&S may be referred to herein as a “Party” or the “Parties” as the case may require.

BACKGROUND

The Parties have entered into a certain Master Sale and Purchase Agreement, dated as of July 31, 2008, as amended by Amendment No. 1 dated September 5, 2008 (as amended, the “ Purchase Agreement ”), pursuant to which the Purchaser has agreed to acquire the Business (as that term is defined in the Purchase Agreement) of K&S. K&S has conducted certain activities, including process engineering and research and development activities related to bonding wire, related to the Business. In order to support the continued development of new and current products in the Business following the Effective Date, the Parties desire to enter into this Agreement, pursuant to which K&S will provide, or cause to be provided, for the time periods and consideration described below, certain of the services that have been provided by or on behalf of K&S to the Business before the Effective Date, and the Parties will jointly develop and test certain new bonding wire technologies.

The execution and delivery of this Agreement is a condition precedent to the closing of the transactions contemplated by the Purchase Agreement.

In consideration of the foregoing and the mutual representations, warranties and covenants set forth in this Agreement, and for other good and valuable consideration, and intending to be legally bound hereby, the Parties agree as follows:

1. Term .

1.1. This Agreement shall commence on the Effective Date and shall continue for a period of five (5) years, subject to earlier termination as provided in Section 9 (the “ Initial Term ”).

1.2. The Parties may renew this Agreement for an additional term upon written agreement of both parties (any such additional term, together with the Initial Term, the “ Term ”). If a Party desires to renew the agreement, that Party shall contact the other Party in writing at least ninety (90) days prior to the end of the Initial Term.

2. Purpose of Agreement . This Agreement contemplates certain activities between K&S and Purchaser including (i) K&S providing certain engineering services to Purchaser and (ii) K&S and Purchaser jointly developing and testing certain new bonding wire technologies. Notwithstanding anything to the contrary in this Agreement, K&S may provide any services under this Agreement through any of its subsidiaries, in which case any payment for such services shall be made to the subsidiary providing the service.

3. Engineering and Application Services .

3.1 During the first year following the Effective Date of this Agreement, Purchaser shall pay K&S a monthly fee of US$14,200 for K&S to make available up to two effective full time engineering personnel to assist Purchaser in support of the Business (“ Base Support ”). The Base Support obligation shall renew annually at the same number of effective full-time engineering personnel and the same monthly fee unless, at least 60 days prior to the applicable renewal anniversary date, (i) Purchaser provides to K&S written notice of intent to terminate, modify the scope of or change the volume of the Base Support or (ii) K&S provides written notice to change the monthly fee for the Base Support. During such 60-day period, the parties shall meet to negotiate in good faith the terms and conditions for Base Support during the following year under this Agreement. In the event Purchaser requires engineering support services beyond the Base Support, Purchaser shall request such services and, upon agreement by K&S, Purchaser shall pay for such services on a time and materials basis at a rate of each engineer’s daily salary and benefits, plus travel and lodging, unless the Parties agree on other terms.

3.2 During the first year following the Effective Date of this Agreement, if K&S requests Purchaser to make available Purchaser’s engineering personnel to assist K&S in support of the Business, and Purchaser agrees, K&S shall pay for such services on a time and materials basis at a rate of each engineer’s daily salary and benefits, plus travel and lodging, unless the Parties agree on other terms following the first year of this Agreement, K&S requests such services of Purchaser, K&S shall provide sixty (60) days notice prior to the first year anniversary of the Agreement (and any subsequent anniversary thereof) of the anticipated scope, extent and required amount of full time personnel for such services, which services shall be provided on a flat monthly fee basis for the following year. The parties shall meet to define and agree to such services and fee prior to each annual renewal thereof under this Agreement.

4. First Access .

4.1. K&S shall provide Purchaser with reasonable access to K&S’s existing wire bonding equipment and tools for the purpose of Purchaser establishing that its new bonding wire products function properly with K&S’s wire bonding equipment and tools. K&S shall also provide Purchaser with the right of first access before any other bonding wire company to any newly-developed K&S wire bonding equipment and tools (“ New K&S Products ”) to establish that Purchaser’s bonding wire products function properly with the New K&S Products.

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4.2. Purchaser shall provide K&S with reasonable access to Purchaser’s new bonding wire products for the purpose of K&S determining that its wire bonding equipment and tools function properly with the Purchaser’s new bonding wire products.

5. Research and Development Projects .

5.1. The Parties shall consider during the Term proposals to work jointly on research and/or development projects for bonding wire development (“ R&D Projects ”). The Parties shall meet at least once each calendar year to propose and discuss R&D Projects. Either Party may provide the other Party with a written proposal for an R&D Project. The proposal shall set out a deadline of at least sixty (60) days to respond in writing as to whether the other Party wishes to participate on the R&D Project. If the Party receiving the proposal elects to participate in the R&D Project, the Parties shall use reasonable best efforts to agree upon the terms and conditions for the R&D Project, including the activities and materials to be provided by each Party, how the costs and expenses will be borne by the Parties, and whether a royalty will be paid by one party to the other. Any such royalty shall be agreed upon by the Parties prior to work beginning on a proposed R&D Project. The Parties will meet at least quarterly to review the progress of accepted R&D Projects.

5.2. In the event any patents, trademarks, copyrights, trade secrets, know how, novel processes, methods, software, or inventions, whether patentable or not, are jointly conceived, jointly reduced to practice and/or jointly developed by the Parties during or as a result of an R&D Project or otherwise (“ Intellectual Property ”), unless otherwise agreed to by the Parties, and such Intellectual Property pertaining to bonding wire shall be owned by Purchaser and Intellectual Property pertaining to wire bonding equipment, including capillaries, shall be owned by K&S.

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5.3. In the case where Intellectual Property includes aspects that may be considered to pertain to both bonding wire and bonding wire equipment, such Intellectual Property shall be jointly owned by the Parties (the “Joint Intellectual Property”). It shall be the responsibility of the Party that proposed the R&D Project from which the Joint Intellectual Property originated to apply for, secure, and maintain the Joint Intellectual Property. Costs associated with pursuing and securing legal rights to the Joint Intellectual Property shall be borne by. the Party who proposed the R&D Project. If the Party who proposed the R&D Project decides not to pursue the Joint Intellectual Property, it shall inform the other Party in writing within 30 days of such decision, and allow the other Party, at its sole option and cost, to pursue legal rights in the Joint Intellectual Property.

5.4. Licensing of the Joint Intellectual Property shall be permitted only upon the written consent of the Parties, which shall not be unreasonably withheld. Costs of any such licensing effort to be borne solely by the initiating Party. In the case where the parties jointly initiate the licensing effort, costs shall be distributed among the Parties proportional to time and effort expended. Otherwise, revenue derived from licensing the Joint Intellectual Property shall be distributed evenly among the Parties.

5.5. Enforcement of the Joint Intellectual Property, such as the threatening or initiating litigation, shall be permitted only upon the written consent of the Parties, which shall not be unreasonably withheld. Costs of any such enforcement effort, including costs of defending the Joint Intellectual Property, shall be borne solely by the Party initiating the enforcement. Revenue derived from the Joint Intellectual Property based on enforcement shall be allocated to the Party prosecuting the enforcement effort.

5.6. It is expected that the Intellectual Property and Joint Intellectual Property may include confidential information of either or both Parties. In the event that either Party wishes to file for patent protection of a Project Invention, the Parties agree that they each shall not unreasonably refuse to grant the other Party a release from the confidentiality obligations under this Agreement to the extent that such release is necessary to permit filing of a patent application. The Parties agree to fully coope