Exhibit
10.1

       

    
      
        	
                

              	
                Kulicke
      & Soffa Industries Inc. 

              
	
                1005
      Virginia Drive 

              
	
                Fort
      Washington, PA  19034 USA

              
	 
      	
                 
      

              
	 
      	
                215-784-6000
      phone 

              
	 
      	
                215-659-7588
      fax 

              
	 
      	
                www.kns.com
      

              


      

    

    


    October
7, 2010

    


    Mr. C.
Scott Kulicke

    [Address
Omitted]

     

    


    Dear
Scott:

    


    This letter confirms the arrangements
related to your upcoming retirement from employment with Kulicke and Soffa
Industries, Inc. (the “Company”).  You ceased to be the chief
executive officer of the Company and a member of the board of directors as of
September 30, 2010 and your last day of employment will be October 9, 2010 (the
“Retirement Date”).  On behalf of the Company, I would like to thank
you for your contributions to the Company during your tenure.

    


    In connection with your retirement from
the Company:

    


    1.           The
Company will pay you your earned but unpaid base salary and accrued vacation
(currently six (6) days total) through the Retirement Date, which amount will be
included in your final paycheck.  Except as otherwise provided herein,
all Company compensation and other payments and benefits shall cease as of the
Retirement Date.  You acknowledge that, other than as set forth in
this letter, you have received payment in full of all of the compensation,
benefits and/or payments of any kind due to you from the Company through the
Retirement Date, including all wages, bonuses, equity, expense reimbursements,
payments to benefit plans and any other payment under a Company plan, program,
practice or promise.

    


    2.           You
are eligible to be paid a quarterly cash incentive under the Company’s Officer
Incentive Compensation Plan for the Company’s fourth fiscal quarter ended
October 2, 2010 in accordance with the terms of the Plan.  Payment
will be made in December 2010 in accordance with the Company’s normal payroll
practices existing at that time.

    


    3.           In
accordance with the terms of the applicable employee stock option and equity
plans, all of your unvested options to purchase shares of common stock in the
Company will vest on the Retirement Date and will be exercisable until the
earlier of (i) 12 months from your Retirement Date or (ii) the end of the
otherwise applicable term of such stock options as set forth in the applicable
stock option agreement.

    


    4.           In
accordance with the terms of the 2006 Equity Plan, the applicable length of
service period (the three (3) year performance period) for all performance share
units granted to you on October 2, 2007 will be complete before the Retirement
Date.  The number of performance shares received by you, if any, will
be calculated based on the achievement of the applicable performance goals of
the Company.  For each performance share unit earned, one share of
common stock of the Company will be delivered to you no later than the fifteenth
day of the third month following the end of the calendar year in which the
relevant performance period ends (estimated as February 2011).


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    5.           In
accordance with the terms of the 2008 Equity Plan, the number of performance
share units granted to you on October 8, 2008 will be pro rated based on the
full number of months in the applicable length of service period (the three (3)
year performance period) you worked through your Retirement Date (i.e., 24
months).  The number of performance shares received by you, if any,
will be calculated based on the achievement of the applicable performance goals
of the Company.  For each performance share earned, one share of
common stock of the Company will be delivered to you no later than the fifteenth
day of the of the third month following the end of the calendar year in which
the relevant performance period ends (estimated as February 2012).

    


    6.           The
Company will pay you in cash an amount equal to (i) the fair market value of the
shares of common stock of the Company to which you would have been entitled
pursuant to pro rata vesting under the performance share unit award granted to
you on October 8, 2008 had you remained employed through June 30, 2011 minus (ii) the fair
market value of the shares of common stock of the Company you actually received
pursuant to such award.  For purposes of this paragraph 6, the fair
market value of the shares of common stock will be the average closing sale
price per common share on the NASDAQ Global Market for the first five (5)
trading days of February 2012.  If the common shares are not listed on
the NASDAQ Global Market on such dates, the fair market value of the shares
shall be calculated in good faith by the Board of Directors of the
Company.  Such cash payment, if any, will be made in February
2012.

    


    7.           In
accordance with the terms of the 2008 Equity Plan, an additional 1/3 of the
restricted stock granted to you on October 8, 2008 will vest before the
Retirement Date and the remaining 1/3 of the restricted stock award will be
forfeited.

    


    8.           In
accordance with the terms of the 2009 Equity Plan, the number of performance
share units granted to you on December 8, 2009 will be pro rated based on the
full number of months in the applicable length of service period (the
performance period ending June 30, 2011) you worked through your Retirement Date
(i.e. 10 months).  The number of performance shares received by you,
if any, will be calculated based on the achievement of the applicable
performance goals of the Company for the performance period ending June 30,
2011.  For each performance share earned, one share of common stock of
the Company will be delivered to you no later than the fifteenth day of the of
the third month following the end of the performance period.

    


    9.           The
Company will pay you in cash an amount equal to (i) the fair market value of the
shares of common stock of the Company to which you would have been entitled
pursuant to the performance share unit award granted to you on December 8, 2009
had you remained employed through the last day of the applicable length of
service period (the performance period ending June 30, 2011) minus (ii) the fair
market value of the shares of common stock of the Company you actually received
pursuant to such award.  For purposes of this paragraph 9, the fair
market value of the shares of common stock will be the average closing sale
price per common share on the NASDAQ Global Market for the first five (5)
trading days of July 2011.  If the common shares are not listed on the
NASDAQ Global Market on such dates, the fair market value of the shares shall be
calculated in good faith by the Board of Directors of the
Company.  Such cash payment, if any, will be made in July
2011.


    
      
         


      

      
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    10.           You
agree to hold through December 31, 2011 the shares of common stock earned by you
under the performance share unit award granted to you on December 8,
2009.  Notwithstanding the foregoing, you may sell such shares to
cover any federal or state tax liability to the extent the taxes triggered by
the vesting of such units and the cash you receive pursuant to Section 9 above
exceed the amount of the cash you receive pursuant to Section 9
above.

    


    11.           You
acknowledge that you are subject to stock ownership requirements of 66,000
shares of common stock of the Company through October 9, 2010 and that you are
prohibited from trading in the Company’s common stock, except pursuant to an
authorized 10b5-1 plan, until, at the earliest, the second business day after
the filing of the Company’s annual report on Form 10-K for the fiscal year ended
October 2, 2010.

    


    12.           You
acknowledge that you are not otherwise entitled to certain of the payments and
benefits described in this letter, and the Company’s provision of these payments
and benefits is in consideration of your execution of a release of all
employment-related and other claims that you may have against the Company, its
officers, directors and stockholders.  You shall have 21 days to
consider the terms of this letter and the accompanying release.  If
you execute and do not revoke the release within seven days of its execution,
the release will become effective and the Company will commence cash payments in
accordance with the terms of this letter.  If you do not sign the
release or if you timely revoke it, you will not receive any cash payments from
the Company.  The form of the release is attached as Exhibit A to this
letter.

    


    13.           You
acknowledge that following the Retirement Date, you continue to be bound by the
confidentiality, noncompetition, nonsolicitation and other provisions in Section
3 of the Consulting Agreement between you and the Company dated as of the date
hereof (the “Consulting Agreement”).

    


    14.           The
Company’s Policy on Recovery of Previously Paid Executive Compensation adopted
by the Management Development and Compensation Committee of the Company’s Board
of Directors in December 2009 shall continue to apply to the performance share
unit awards described in this Letter Agreement and the cash incentives awarded
under the Company’s Officer Incentive Compensation Plan (including the cash
incentive described in paragraph 2 herein), and shall apply to the cash awards
described in paragraphs 6 and 9 of this Letter Agreement.

    


    15.           The
Company hereby reserves all of its rights and remedies under the Consulting
Agreement and under applicable law, and nothing in this letter shall be
construed as a waiver of those rights or remedies.

    


    16.           This
letter and the accompanying release shall be construed as a whole according to
their fair meaning.  They shall not be construed strictly for or
against you or the Company.  This letter and the accompanying release
shall be governed by the statutes and common law of the Commonwealth of
Pennsylvania.

    


    17.           This
letter and the accompanying release constitute the entire agreement between you
and the Company with respect to the subject matter hereof.  Amendments
to this letter and the accompanying release shall not be effective unless they
are in writing signed by you and a duly


    
      
         


      

      
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    authorized
representative of the Company.

    


    Please acknowledge you understand and
agree with the arrangement described above by signing below and returning a copy
of this letter and the executed release.

    


    
      
        
          
            
              
                
                  	
                          Sincerely,

                        
	 
      
	
                          /s/ Bruno Guilmart
      

                        
	
                          Bruno
      Guilmart

                        
	
                          President
      and Chief Executive
Officer

                        


                

              

            

          

        

      

    

    


    ACCEPTED
AND AGREED


    


    
      
        
          
            
              	
                      /s/ C. Scott Kulicke

                    
	
                      C.
      Scott
Kulicke

                    


            

          

        

      

    

     

    
      
         


      

      
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    RELEASE

    


    1.           Release.  In further
consideration of the compensation and benefits provided pursuant to the letter
between Kulicke and Soffa Industries, Inc. (the “Company”) and C. Scott Kulicke
(the “Executive”) and intending to be legally bound, Executive hereby
irrevocably and unconditionally releases and forever discharges the Company and
any and all of its parents, subsidiaries, affiliates, related entities, joint
venturers and each of its and their predecessors, successors, insurers, owners,
stockholders, directors, officers, employees, attorneys, and other agents
(“Released Parties”) of and from any and all rights, obligations, promises,
agreements, debts, losses, controversies, claims, causes of action, liabilities,
damages, and expenses, including without limitation attorneys’ fees and costs,
of any nature whatsoever, whether known or unknown, asserted or unasserted,
which he ever had, now has, or hereafter may have against the Released Parties,
or any of them, that arose at any time before or upon his signing this Release,
including without limitation the right to take discovery with respect to any
matter, transaction, or occurrence existing or happening at any time before or
upon his signing this Release and any and all claims arising under any oral or
written Company program, policy or practice, contract, agreement or
understanding any common-law principle of any jurisdiction, any federal, state
or local statute or ordinance, with all amendments thereto, including without
limitation the National Labor Relations Act of 1947, the Civil Rights Acts of
1866, 1871, 1964, and 1991, the Equal Pay Act, the Age Discrimination in
Employment Act of 1967 (as amended by the Older Workers Benefit Protection Act),
the Bankruptcy Code, the Fair Credit Reporting Act, the Worker Adjustment and
Retraining Notification Act, the Employee Retirement Income Security Act of
1974, the Americans With Disabilities Act of 1990, the Family and Medical Leave
Act of 1993, the Health Insurance Portability and Accountability Act of 1996,
the Sarbanes-Oxley Act of 2002, the Pennsylvania Human Relations Act, and any
other employee-protective law of any jurisdiction that may
apply.  (All claims encompassed by this Paragraph are hereinafter
referred to collectively as the “Claims”).

    


    2.           Covenant Not To
Sue.  Executive hereby represents and warrants that he has
brought no complaint, claim, charge, action or proceeding against any of the
Released Parties in any judicial, administrative or any other
forum.  Executive covenants to the fullest extent permitted by law
that he will not pursue any Claim in court, whether or not arising out of or
related to his employment by or the performance of any services to or on behalf
of the Company or the termination of that employment or those
services.

    


    3.           Knowing and
Voluntary Agreement.  Executive
acknowledges that he has carefully read and fully understands all of the
provisions and effects of this Release and the accompanying letter agreement;
that the Company has advised him in writing, by this Paragraph, to consult with
an attorney, and that he has consulted with an attorney of his choice, before
signing this Release and the accompanying letter agreement; that the Company has
provided him with no less than twenty-one (21) days to consider this Release and
the accompanying letter agreement before signing them; that the Company has
provided him with no less than seven days within which to revoke this Release
and the accompanying letter agreement after signing them, if he desires to do
so; that Executive is voluntarily entering into this Release and the
accompanying letter agreement free of coercion and duress; and that neither the
Company nor any of its agents or attorneys has made any representations or
promises concerning the terms or effects of this Release and the accompanying
letter agreement.


    
      
         


      

      
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    4.           Severability.  If
any provision of this Release is determined to be invalid or unenforceable, the
remainder of this Release other than such provision shall not be affected and
will remain in full force and effect; provided, however, that if any release or
waiver set forth in Section 1 of this Release is declared to be invalid, illegal
or unenforceable in whole or in material respect, the party on whose benefit the
release or waiver was provided shall have the right to elect to consider this
Release and the accompanying letter agreement to be nullified and, in such case,
any payments or benefits that have been or were to be afforded under this
Release and the accompanying letter agreement shall be returned to the Company
with interest unless prohibited by law.

    


    5.           Good Faith Settlement / Continuing
Rights and Obligations.  This Release and the accompanying
letter agreement constitute the good faith settlement of all claims or potential
claims Executive may have against the Released Parties, or any of them, and are
not and shall not in any way be construed as an admission of any wrongful or
discriminatory act against Executive or that the termination of Executive’s
employment was in any way wrongful or unlawful.  This Release and the
accompanying letter agreement shall not in any way impact or diminish the rights
and entitlements that the Company has under the Consulting Agreement or the
continuing duties and obligations that Executive owes the Company and others
under the Consulting Agreement.

    


    6.           Non-Disparagement.  Executive
agrees not to make any derogatory, unfavorable, negative or disparaging
statements concerning the Company and its affiliates, officers, directors,
managers, employees or agents, or its or their business affairs or
performance.

    


    7.           Effective
Date.  This Release shall become effective and enforceable,
unless sooner revoked pursuant to Paragraph 8, on the eighth day after Executive
signs this Release.  Executive shall deliver this Release bearing his
original signature to the Company at the following address:

    


     
Kulicke and Soffa Industries, Inc.

     
1005 Virginia Drive

      Fort
Washington, PA   19034

     
Attn:  General Counsel

    


    8.           Revocation.  Executive may revoke this
Release if, before 5:00 p.m. on the seventh day after Executive signs the
Release, he delivers to the Company, at the address specified in Paragraph 8,
written notice of his intent to revoke this Release. Executive
understands that, if he validly revokes this Release, the accompanying letter
agreement shall also be of no force or effect, and Executive shall not be
entitled to the payments or benefits contained in the letter agreement, except
to the extent Executive has an independent legal entitlement to such payments or
benefits.

    


    IN WITNESS WHEREOF, intending to be
legally bound, the undersigned has executed this Release this 7th day of
October, 2010.

    


    
      
        
          
            	
                          
                      /s/
      C. Scott Kulicke

                    

                  	 
      
	
                    C.
      Scott Kulicke

                  	 
      


          

        

      

    

     

    
      
         


      

      
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