Exhibit 10.1

AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is entered into as
of September 3, 2014, by and between KEY TRONIC CORPORATION, a Washington
corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

RECITALS

Bank and Borrower are parties to a Credit Agreement dated on or about August 19,
2009 (the "First Credit Agreement"). Borrower has requested that Bank extend
additional credit to Borrower, and Bank has agreed to provide such credit to
Borrower on the terms and conditions contained herein.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank and Borrower hereby agree that the First Credit
Agreement is amended and restated in its entirety as follows:

ARTICLE I
CREDIT TERMS

1.    LINE OF CREDIT AND TERM NOTE.

1.1    Line of Credit. Subject to the terms and conditions of this Agreement,
Bank hereby agrees to make advances to Borrower from time to time up to and
including August 31, 2019, not to exceed at any time the aggregate principal
amount of Thirty Million and 00/100 Dollars ($30,000,000.00) ("Line of Credit"),
the proceeds of which shall be used by Borrower for working capital and general
corporate purpose needs of Borrower and its subsidiaries. Borrower's obligation
to repay advances under the Line of Credit shall be evidenced by the First
Replacement Revolving Line of Credit Note ("Line of Credit Note"), all terms of
which are incorporated herein by this reference. All advances under the Line of
Credit shall bear interest at the rates provided for in the Line of Credit Note.
Borrower shall pay Bank an annual fee for the Line of Credit, the amount of
which shall be determined as follows (the "Annual Fee"): (a) if Borrower's Cash
Flow Leverage Ratio is less than 1.00X, the Annual Fee shall be 00.15% of the
amount committed; (b) if Borrower's Cash Flow Leverage Ratio is between 1.01X
and 2.00X, the Annual Fee shall be 00.20% of the amount committed; and (c) if
Borrower's Cash Flow Leverage Ratio is greater than 2.00X, the Annual Fee shall
be 00.25% of the amount committed. The Annual Fee shall be determined, pro-rated
and payable quarterly, beginning December 15, 2014. Borrower's Cash Flow
Leverage Ratio shall be determined quarterly in accordance with Section 4.9(a)
of this Agreement.

    

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1.2    Letter of Credit Subfeature. As a subfeature under the Line of Credit,
Bank agrees from time to time during the term thereof to issue or cause an
affiliate to issue standby commercial letters of credit for the account of
Borrower (each, a "Letter of Credit" and collectively, "Letters of Credit");
provided however, that the aggregate undrawn amount of all outstanding Letters
of Credit shall not at any time exceed Five Hundred Thousand and 00/100 Dollars
($500,000.00). The form and substance of each Letter of Credit shall be subject
to approval by Bank, in its sole discretion. Each Letter of Credit shall be
issued for a term not to exceed three hundred sixty (360) days, as designated by
Borrower; provided however, that no Letter of Credit shall have an expiration
date later than the maturity date of the Line of Credit. The undrawn amount of
all Letters of Credit shall be reserved under the Line of Credit and shall not
be available for borrowings thereunder. Each Letter of Credit shall be subject
to the additional terms and conditions of the Letter of Credit agreements,
applications and any related documents required by Bank in connection with the
issuance thereof. Each drawing paid under a Letter of Credit shall be deemed an
advance under the Line of Credit and shall be repaid by Borrower in accordance
with the terms and conditions of this Agreement applicable to such advances;
provided however, that if advances under the Line of Credit are not available,
for any reason, at the time any drawing is paid, then Borrower shall immediately
pay to Bank the full amount drawn, together with interest thereon from the date
such drawing is paid to the date such amount is fully repaid by Borrower, at the
rate of interest applicable to advances under the Line of Credit. In such event
Borrower agrees that Bank, in its sole discretion, may debit any account
maintained by Borrower with Bank for the amount of any such drawing, Borrower
shall pay to Bank a fee upon the issuance of each Letter of Credit equal to two
percent (2.00%) of the face amount thereof (the “Letter of Credit Issuance Fee”.
In addition to the Letter of Credit Issuance Fee, Borrower shall pay Bank
(i) fees upon the payment or negotiation of each drawing under any Letter of
Credit, and (ii) fees upon the occurrence of any other activity with respect to
any Letter of Credit (including without limitation, the transfer, amendment or
cancellation of any Letter of Credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.

1.3    Borrowing and Repayment under Line of Credit. Borrower may from time to
time during the term of the Line of Credit borrow, partially or wholly repay its
outstanding borrowings, and reborrow, subject to all of the limitations, terms
and conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit, which includes
outstanding letters of credit, shall not at any time exceed the lesser of the
maximum principal amount available thereunder, as set forth above, or an amount
which would cause Borrower to fail to achieve and maintain the required Asset
Coverage Ratio. At all times, Borrower shall maintain an Asset Coverage Ratio of
not less than 1.30 to 1.00. “Asset Coverage Ratio” is defined as the sum of all
domestic and Canadian Accounts Receivable divided by the outstanding balance of
the Line of Credit Note (inclusive of outstanding letters of credit). As used
herein Accounts Receivable shall have the meanings ascribed to such term by
Article 9 of the Uniform Commercial Code in effect in the State of Washington.
    
1.4     Term Note. Subject to the terms and conditions of this Agreement, Bank
hereby agrees to make advances to Borrower in the maximum principal amount of
Thirty Five Million and 00/100 Dollars ($35,000,000.00) (the "Term Loan"), the
proceeds of which shall be used by Borrower to acquire all of the outstanding
shares of CDR Manufacturing, Inc. ("CDR"), pursuant to the terms of a Stock
Purchase Agreement between Borrower, CDR and the shareholders of CDR (the "Stock
Purchase Agreement"). Borrower's obligation to repay advances under the Term
Loan shall be evidenced by a promissory note dated as of the date hereof (the
"Term Note"), all terms of which are incorporated herein by this reference. All
advances under the Term Loan shall bear interest at the rates provided for in
the Term Note.

1.5    Collection of Payments. Borrower authorizes Bank to collect principal,
interest and fees due under the Line of Credit Note, Term Note or this Credit
Agreement by charging Borrower's deposit account number 4020010104 with Bank, or
any other deposit account maintained by Borrower with Bank, for the full amount
thereof. Should there be insufficient funds in any such deposit account to pay
all such sums when due, the full amount of such deficiency shall be immediately
due and payable by Borrower.

    

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1.6     Collateral. As security for all indebtedness and other obligations of
Borrower to Bank, including, without limitations, its obligations under the Line
of Credit Note, Term Note, this Credit Agreement and the Loan Documents (as
defined herein), any interest rate swap agreements, foreign exchange agreement,
and any foreign exchange swap agreement, Borrower hereby grants to Bank security
interests of first priority in (a) all Borrower's inventory, accounts,
equipment, general intangibles, payment intangibles, and any and all cash and
non-cash proceeds or products of the foregoing, including, without limitation,
proceeds in deposit accounts or proceeds represented by insurance claims or
policies; and (b) a pledge of sixty five (65%) percent of Borrower’s stock
ownership interest in the foreign subsidiaries listed on Schedule 1.6-1 attached
hereto, which stock ownership interest shall be no less than sixty five (65%)
percent of the total issued and authorized shares in each such subsidiary. In
addition Borrower shall cause each Domestic Subsidiary to grant Bank a first
priority security interest in each such Domestic Subsidiary's inventory,
accounts, equipment, general intangibles, payment intangibles, and all cash and
non-cash proceeds or products of the foregoing, including, without limitation,
proceeds in deposit accounts or proceeds represented by insurance claims or
policies. All of the foregoing shall be evidenced by and subject to the terms of
such security agreements, financing statements, and other documents as Bank
shall reasonably require, all in form and substance satisfactory to Bank.
Borrower shall pay to Bank immediately upon demand the full amount of all
charges, costs and expenses (to include fees paid to third parties, including
Bank’s reasonable attorney’s fees, and all allocated costs of Bank personnel,
including Bank’s in-house counsel), expended or incurred by Bank in connection
with any of the foregoing security, including without limitation, filing and
recording fees and costs of appraisals, audits and title insurance.

1.7     Guaranties. The payment and performance of all indebtedness and other
obligations of Borrower to Bank, including, without limitation, Borrower’s
obligations under the Line of Credit Note, the Term Note, this Credit Agreement
and the Loan Documents (as defined herein) shall be guaranteed jointly and
severally by each of Borrower’s now existing and hereafter formed Domestic
Subsidiaries, including, but not limited to, those subsidiaries identified in
Schedule 1.6-2 attached hereto, which guaranties shall be evidenced by and
subject to the terms of guaranties in form and substance satisfactory to Bank.

ARTICLE II
REPRESENTATIONS AND WARRANTIES

Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.

2.1.    LEGAL STATUS. Borrower is a corporation, duly organized and existing and
in good standing under the laws of the state of Washington, and is qualified or
licensed to do business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so licensed could have a
material adverse effect on Borrower.

2.2.    AUTHORIZATION AND VALIDITY. This Agreement and each promissory note,
contract, instrument and other document required hereby or at any time hereafter
delivered to Bank in connection herewith (collectively, the "Loan Documents")
have been duly authorized, and upon their execution and delivery in accordance
with the provisions hereof will constitute legal, valid and binding agreements
and obligations of Borrower or the party which executes the same, enforceable in
accordance with their respective terms.

2.3.    NO VIOLATION. The execution, delivery and performance by Borrower of
each of the Loan Documents do not violate any provision of any law or
regulation, or contravene any provision of the Articles of Incorporation,
By-Laws, or any resolution of the Board of Directors of Borrower, or result in
any breach of or default under any contract, obligation, indenture or other
instrument to which Borrower is a party or by which Borrower or its assets may
be bound.

2.4.    LITIGATION. There are no pending, or to the best of Borrower's knowledge
threatened, actions, claims, investigations, suits or proceedings by or before
any governmental authority, arbitrator, court or administrative agency which
could have a material adverse effect on the financial condition or operation of
Borrower other than those disclosed by Borrower to Bank in writing prior to the
date hereof.

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2.5.    CORRECTNESS OF FINANCIAL STATEMENT. The annual financial statement of
Borrower dated June 30, 2013, and all interim financial statements delivered to
Bank since said date, true copies of which have been delivered by Borrower to
Bank prior to the date hereof, (a) are complete and correct and present fairly
the financial condition of Borrower, (b) disclose all liabilities of Borrower
that are required to be reflected or reserved against under generally accepted
accounting principles, whether liquidated or unliquidated, fixed or contingent,
and (c) have been prepared in accordance with generally accepted accounting
principles consistently applied. Since the dates of such financial statements
there has been no material adverse change in the financial condition of
Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or
otherwise encumbered any of its assets or properties except in favor of Bank or
as otherwise permitted by Bank in writing.

2.6.    INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments
or adjustments of its income tax payable with respect to any year.

2.7.    NO SUBORDINATION. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower's obligations
subject to this Agreement to any other obligation of Borrower.

2.8.    PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all
permits, consents, approvals, franchises and licenses required and rights to all
trademarks, trade names, patents, and fictitious names, if any, necessary to
enable it to conduct the business in which it is now engaged in compliance with
applicable law.

2.9.    ERISA. Borrower is in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time ("ERISA"); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event
as defined in ERISA has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.

2.10.    OTHER OBLIGATIONS. Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.

2.11.    ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in
writing prior to the date hereof, Borrower is in compliance in all material
respects with all applicable federal or state environmental, hazardous waste,
health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.

ARTICLE III
CONDITIONS

3.1.    CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to
extend any credit contemplated by this Agreement is subject to the fulfillment
to Bank's satisfaction of all of the following conditions:

(a)    Approval of Bank Counsel. All legal matters incidental to the extension
of credit by Bank shall be satisfactory to Bank's counsel.

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(b)     Closing of Stock Purchase Agreement. Bank shall have received
satisfactory evidence that Borrower has closed under the Stock Purchase
Agreement and acquired all of the outstanding shares of CDR.

(c)    Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed: (i) this Agreement,
the First Replacement Revolving Line of Credit Note, the Term Note, the Amended
and Restated Continuing Security Agreement (Rights to Payment and Inventory),
Amended and Restated Security Agreement: Equipment, and Amended and Restated
Pledge Agreement, and each and every other instrument or document required
thereby; (ii) a Landlord Release Agreement, executed by each landlord or lessor
of a facility leased by Borrower, or any of its Domestic Subsidiaries, in form
and content acceptable to Bank, in which each such landlord acknowledges and
consents to Bank's security interest in the Collateral, confirms that such
security interest has priority over and is superior to any interest the landlord
has or may have in such collateral, and provides Bank with a reasonable
opportunity to remove or otherwise liquidate such Collateral following the
occurrence of an Event of Default; (iii) a Borrowing Resolution, authorizing
Borrower’s entering into the Term Loan and Line of Credit, this Agreement, and
executing the Loan Documents; (iv) the guaranties of each of Borrower’s Domestic
Subsidiaries; (v) a Resolution Authorizing Guaranty from each of Borrower’s
Domestic Subsidiaries; and (vi) such other documents as Bank may require under
this Agreement.

(d)    Filing Authorization. Borrower hereby authorizes Lender, or its agent, to
file such UCC financing statements, amendments and continuation statements in
the filing offices of the various states that Lender deems necessary and
appropriate to perfect its security interests.

(e)    Financial Condition. There shall have been no material adverse change, as
determined by Bank, in the financial condition or business of Borrower or any
guarantor hereunder, nor any material decline, as determined by Bank, in the
market value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower or any such guarantor.

(f)    Insurance. Borrower shall have delivered to Bank evidence of insurance
coverage on all Borrower's property, in form, substance, amounts, covering risks
and issued by companies satisfactory to Bank, and where required by Bank, with
loss payable endorsements in favor of Bank, including without limitation,
policies of fire and extended coverage insurance covering all real property
collateral required hereby, with replacement cost and mortgagee loss payable
endorsements, and such policies of insurance against specific hazards affecting
any such real property as may be required by governmental regulation or Bank.

(g)    Lien Search. Bank shall have received such lien searches as it may
require to confirm that its lien on the Collateral is in a first priority
position, subject only to such exceptions as are acceptable to Bank, in its sole
discretion.

3.2.    CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make
each extension of credit requested by Borrower hereunder shall be subject to the
fulfillment to Bank's satisfaction of each of the following conditions:

(a)    Compliance. The representations and warranties contained herein and in
each of the other Loan Documents shall be true on and as of the date of the
signing of this Agreement and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, except to the extent any
such representation or warranty is specifically stated as of a specific date, in
which case such representation or warranty shall be true on and as of such
specific date, and on each such date, no Event of Default as defined herein, and
no condition, event or act which with the giving of notice or the passage of
time or both would constitute such an Event of Default, shall have occurred and
be continuing or shall exist.

(b)    Documentation. Bank shall have received all additional documents which
may be required in connection with such extension of credit.

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ARTICLE IV
AFFIRMATIVE COVENANTS

Borrower covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

4.1.    PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or other
liabilities due under any of the Loan Documents at the times and place and in
the manner specified therein, and immediately upon demand by Bank, the amount by
which the outstanding principal balance of any credit subject hereto at any time
exceeds any limitation on borrowings applicable thereto.

4.2.    ACCOUNTING RECORDS. Maintain adequate books and records in accordance
with generally accepted accounting principles consistently applied, and permit
any representative of Bank, at any reasonable time, to inspect, audit and
examine such books and records, to make copies of the same, and to inspect the
properties of Borrower.

4.3.    FINANCIAL STATEMENTS. Provide to Bank all of the following, in form and
detail satisfactory to Bank, which statements shall be in accordance with
generally accepted accounting principles consistently applied (and consistent
with prior practices):

(a)concurrently with its execution of this Agreement and prior to funding of the
Term Loan, Borrower shall provide Bank with its pro forma Certificate of
Compliance showing, following the closing of the Stock Purchase Agreement,
Borrower's compliance with the financial covenants imposed by Section 4.9 as of
the date hereof.

(b)not later than 120 days after and as of the end of each fiscal year, an
audited consolidated and consolidating financial statement of Borrower
(including balance sheet and statements of income, retained earnings and cash
flow), together with all notes to management, prepared by and including the
unqualified opinion of a recognized independent accounting firm acceptable to
Bank.

(b)    not later than 45 days after and as of the end of each fiscal quarter, a
financial statement of Borrower, prepared by Borrower, to include a balance
sheet, statements of income, retained earnings and cash flow,

(c)    not later than 45 days after and as of the end of each calendar quarter,
an aged listing of accounts receivable, and immediately upon each request from
Bank, a list of the names and addresses of all Borrower's account debtors;

(d)    no later than August 15 of each calendar year, consolidated projected
financial statements for the coming fiscal year, to include a balance sheet,
statements of income and cash flows and expenses;

(e)    no later than 45 days after and as of each fiscal quarter, a certificate
of a senior financial officer of Borrower: (i) stating that said financial
statements are accurate and that there exists no Event of Default nor any
condition, act or event which with the giving of notice or the passage of time
or both would constitute an Event of Default, and (ii) with calculations showing
compliance with the financial covenants, together with copies of all supporting
work papers; and

(f)     from time to time such other information as Bank may reasonably request.

4.4.    COMPLIANCE. Preserve and maintain all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business; and comply with the provisions of all documents pursuant to which
Borrower is organized and/or which govern Borrower's continued existence and
with the requirements of all laws, rules, regulations and orders of any
governmental authority applicable to Borrower and/or its business.

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4.5.    INSURANCE. Maintain and keep in force, for each business in which
Borrower is engaged, insurance of the types and in amounts customarily carried
in similar lines of business, including but not limited to fire, extended
coverage, public liability, flood, property damage and workers' compensation,
with all such insurance carried with companies and in amounts satisfactory to
Bank, and deliver to Bank from time to time at Bank's request schedules setting
forth all insurance then in effect.

4.6.    FACILITIES. Keep all properties useful or necessary to Borrower's
business in good repair and condition, and from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.

4.7.    TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction, for eventual payment thereof in the
event Borrower is obligated to make such payment.

4.8.    LITIGATION. Promptly give notice in writing to Bank of any litigation
pending or threatened against Borrower with a claim in excess of $1,000,000.00.

4.9.    FINANCIAL CONDITION. Maintain Borrower's financial condition as follows,
using generally accepted accounting principles consistently applied and used
consistently with prior practices (except to the extent modified by the
definitions herein):

(a)     Cash Flow Leverage Ratio. Borrower will not allow the ratio of Funded
Debt to EBITDA (plus up to $1,000,000.00 of approved cash closing costs incurred
in connection with closing under the Stock Purchase Agreement), measured
quarterly on a trailing four (4) quarter basis, to exceed 3.00 to 1.00, for
quarters ending on or prior to June 30, 2015, or 2.50 to 1.00, for quarters
ending on or after September 30, 2015. As used herein, (i) “EBITDA" is defined
as net profit before tax of Borrower and CDR, plus interest expense (net of
capitalized interest expense), depreciation expense and amortization expense;
and (ii) “Funded Debt" is defined as the sum of all obligations for borrowed
money (including subordinated debt) plus all capital lease obligations.

(b)     Fixed Charge Coverage Ratio. Borrower shall maintain a Fixed Charge
Coverage Ratio of not less than 1.25 to 1.00, measured quarterly on a trailing
four (4) quarter basis. "Fixed Charge Coverage Ratio" is the sum of Borrower and
CDR net profit after tax, plus depreciation, plus amortization, plus capital
contributions, plus interest expense, plus up to $1,000,000.00 of approved cash
closing costs incurred in connection with the closing of the Stock Purchase
Agreement, minus distributions and dividends, divided by the sum of the current
portion of long term debt and capital leases plus interest expense as of the
measurement period.

(c)     Minimum Profit. Borrower’s and CDR's minimum net profit, after payment
of all applicable taxes, will not be less than $2,000,000.00, measured quarterly
on a trailing four (4) quarter basis.

4.10.    NOTICE TO BANK. Promptly (but in no event more than five (5) days after
the occurrence of each such event or matter) give written notice to Bank in
reasonable detail of: (a) the occurrence of any Event of Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute an Event of Default; (b) any change in the name or the
organizational structure of Borrower; (c) the occurrence and nature of any
Reportable Event or Prohibited Transaction, each as defined in ERISA, or any
funding deficiency with respect to any Plan; or (d) any termination or
cancellation of any insurance policy which Borrower is required to maintain, or
any uninsured or partially uninsured loss through liability or property damage,
or through fire, theft or any other cause affecting Borrower's property in
excess of an aggregate of $1,000,000.00.

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ARTICLE V
NEGATIVE COVENANTS

Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's prior written
consent:

5.1.    USE OF FUNDS. Use any of the proceeds of any credit extended hereunder
except for the purposes stated in Article I hereof.

5.2.    OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans, capital leases or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to Bank,
and (b) any other liabilities of Borrower in an aggregate amount less than
$1,000,000.00.

5.3.    MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate
with any other entity; make any substantial change in the nature of Borrower's
business as conducted as of the date hereof; acquire all or substantially all of
the assets of, or equity interests in, any other entity; nor sell, lease,
transfer or otherwise dispose of all or a substantial or material portion of
Borrower's assets except in the ordinary course of its business. Provided,
however, notwithstanding the forgoing, so long as there is no default under this
Agreement, and consummation of the contemplated acquisition does not give rise
to a default, then with respect to: (a) acquisitions with a purchase price of
$5,000,000.00 or less do not require the prior notice or consent of Bank, (b)
acquisitions with a purchase price of more than $5,000,000.00 but less than
$10,000,000.00, then Borrower shall provide Bank with (i) written notice of its
intent to consummate such acquisition within five (5) business days of execution
of the agreement(s) giving it the right to do so, and (ii) the certification of
its Chief Financial Officer that, after giving effect to any such acquisition,
the pro-forma financial statements of Borrower confirm its continued compliance
with the financial covenants required under this Agreement; and (c) acquisitions
with a purchase price greater than $10,000,000.00, Borrower shall have received
Bank's prior written consent to any such acquisition, which consent may be given
or withheld in the exercise of Bank's reasonable commercial discretion.

5.4.    GUARANTIES. Guarantee or become liable in any way as surety, endorser
(other than as endorser of negotiable instruments for deposit or collection in
the ordinary course of business), accommodation endorser or otherwise for, nor
pledge or hypothecate any assets of Borrower as security for, any liabilities or
obligations of any other person or entity, except any of the foregoing in favor
of Bank.

5.5.    LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or
investments in any person or entity, except any of the foregoing existing as of,
and disclosed to Bank prior to, the date hereof.

5.6.    DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or distribution
either in cash, stock or any other property on Borrower's stock now or hereafter
outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of
any class of Borrower's stock now or hereafter outstanding, except that Borrower
may repurchase shares of any class of Borrower's stock in an amount not to
exceed $4,000,000.00.

5.7.    PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a security
interest in, or lien upon, all or any portion of Borrower's assets now owned or
hereafter acquired, except any of the foregoing in favor of Bank or which is
existing as of, and disclosed to Bank in writing prior to, the date hereof, and
except for purchase money security interests to secure indebtedness permitted
under Section 5.2(b) of this Credit Agreement.

ARTICLE VI
EVENTS OF DEFAULT

6.1.    The occurrence of any of the following shall constitute an "Event of
Default" under this Agreement:

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(a)    Borrower shall fail to pay when due any principal, interest, fees or
other amounts payable under any of the Loan Documents.

(b)    Any financial statement or certificate furnished to Bank in connection
with, or any representation or warranty made by Borrower or any other party
under this Agreement or any other Loan Document shall prove to be incorrect,
false or misleading in any material respect when furnished or made.

(c)    Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those specifically described as an “Event of Default” in this 6.1),
and with respect to any such default that by its nature can be cured, such
default shall continue for a period of twenty (20) days from its occurrence.

(d)    Any default in the payment or performance of any obligation, or any
defined event of default, under the terms of any contract, instrument or
document (other than any of the Loan Documents) pursuant to which Borrower, any
guarantor hereunder (with each such guarantor, referred to herein as a "Third
Party Obligor") has incurred any debt or other liability to any person or
entity, including Bank.

(e)    Borrower or any Third Party Obligor shall become insolvent, or shall
suffer or consent to or apply for the appointment of a receiver, trustee,
custodian or liquidator of itself or any of its property, or shall generally
fail to pay its debts as they become due, or shall make a general assignment for
the benefit of creditors; Borrower or any Third Party Obligor shall file a
voluntary petition in bankruptcy, or seeking reorganization, in order to effect
a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time ("Bankruptcy Code"), or under any state or federal
law granting relief to debtors, whether now or hereafter in effect; or Borrower
or any Third Party Obligor shall file an answer admitting the jurisdiction of
the court and the material allegations of any involuntary petition; or Borrower
or any Third Party Obligor shall be adjudicated a bankrupt, or an order for
relief shall be entered against Borrower or any Third Party Obligor by any court
of competent jurisdiction under the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or other relief for
debtors.

(f)    The filing of a notice of judgment lien against Borrower or any Third
Party Obligor; or the recording of any abstract of judgment against Borrower or
any Third Party Obligor in any county in which Borrower or such Third Party
Obligor has an interest in real property; or the service of a notice of levy
and/or of a writ of attachment or execution, or other like process, against the
assets of Borrower or any Third Party Obligor; or the entry of a judgment
against Borrower or any Third Party Obligor; or any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
federal law relating to bankruptcy, reorganization or other relief for debtors
is filed or commenced against Borrower or any Third Party Obligor.

(g)    There shall exist or occur any event or condition that Bank in good faith
believes impairs, or is substantially to impair, the prospect of payment or
performance by Borrower, any Third Party Obligor, of its obligations under any
of the Loan Documents.

(h)    The dissolution or liquidation of Borrower or any Third Party Obligor, or
any of its directors, stockholders or members, shall take action seeking to
effect the dissolution or liquidation of Borrower or such Third Party Obligor.

(i)    Any change in control of Borrower or any entity or combination of
entities that directly or indirectly control Borrower, with “control” defined as
ownership of an aggregate of twenty-five percent (25%) or more of the common
stock, members’ equity or other ownership interest (other than a limited
partnership interest); or if Borrower is a partnership, any withdrawal,
resignation or expulsion of any of the general partners in Borrower.

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(j)    Any sale, lease, transfer or other disposition, except in the ordinary
course of its business, of all or a substantial or material portion of the
assets of Borrower or any Third Party Obligor.

6.2.    REMEDIES. Upon the occurrence of any Event of Default: (a) all
indebtedness of Borrower under each of the Loan Documents, any term thereof to
the contrary notwithstanding, shall at Bank's option and without notice become
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by Borrower; (b) the
obligation, if any, of Bank to extend any further credit under any of the Loan
Documents shall immediately cease and terminate; and (c) Bank shall have all
rights, powers and remedies available under each of the Loan Documents, or
accorded by law, including without limitation the right to resort to any or all
security for any credit subject hereto and to exercise any or all of the rights
of a beneficiary or secured party pursuant to applicable law. All rights, powers
and remedies of Bank may be exercised at any time by Bank and from time to time
after the occurrence of an Event of Default, are cumulative and not exclusive,
and shall be in addition to any other rights, powers or remedies provided by law
or equity.

ARTICLE VII
MISCELLANEOUS

7.1.    NO WAIVER. No delay, failure or discontinuance of Bank in exercising any
right, power or remedy under any of the Loan Documents shall affect or operate
as a waiver of such right, power or remedy; nor shall any single or partial
exercise of any such right, power or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power
or remedy. Any waiver, permit, consent or approval of any kind by Bank of any
breach of or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.

7.2.    NOTICES. All notices, requests and demands which any party is required
or may desire to give to any other party under any provision of this Agreement
must be in writing delivered to each party at the following address:

BORROWER:    Ronald F. Klawitter
Chief Financial Officer
Key Tronic Corporation
P.O. Box 14687
Spokane, WA 99214
    

BANK    WELLS FARGO BANK, NATIONAL ASSOCIATION
Attn: Cody Christensen
601 W. 1st Avenue, Suite 900
Spokane, Washington 99201
                
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by facsimile,
upon receipt during regular business hours.

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7.3.    COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this
Agreement and the Loan, Bank's continued administration hereof and thereof, and
the preparation of any amendments and waivers hereto and thereto, (b) the
enforcement of Bank's rights and/or the collection of any amounts which become
due to Bank under any of the Loan Documents, and (c) the prosecution or defense
of any action in any way related to any of the Loan Documents, including without
limitation, any action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to Borrower or any other person or entity.

7.4.    SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Borrower may not
assign or transfer its interests or rights hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose all documents and information which Bank now has or may hereafter
acquire relating to any credit subject hereto, Borrower or its business, any
guarantor hereunder or the business of such guarantor, or any collateral
required hereunder.

7.5.    ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan Documents
constitute the entire agreement between Borrower and Bank with respect to each
credit subject hereto and supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof. This
Agreement may be amended or modified only in writing signed by each party
hereto.

7.6.    NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into
for the sole protection and benefit of the parties hereto and their respective
permitted successors and assigns, and no other person or entity shall be a third
party beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any other of the Loan Documents to which it
is not a party.

7.7.    TIME. Time is of the essence of each and every provision of this
Agreement and each other of the Loan Documents.

7.8.    SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

7.9.    COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.

7.10.    GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.

    

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7.11.    ARBITRATION.

(a)    Arbitration. The parties hereto agree, upon demand by any party, to
submit to binding arbitration all claims, disputes and controversies between or
among them (and their respective employees, officers, directors, attorneys, and
other agents), whether in tort, contract or otherwise in any way arising out of
or relating to (i) any credit subject hereto, or any of the Loan Documents, and
their negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit.

(b)    Governing Rules. Any arbitration proceeding will (i) proceed in a
location in Washington selected by the American Arbitration Association (“AAA”);
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein as applicable, as the “Rules”). If
there is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
similar applicable state law.

(c)    No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

(d)    Arbitrator Qualifications and Powers. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00. Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Washington or a neutral retired judge of the
state or federal judiciary of Washington, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of Washington and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Washington Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

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(e)    Discovery. In any arbitration proceeding, discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than twenty (20) days before the hearing date. Any requests for an extension of
the discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.

    
(f)    Class Proceedings and Consolidations. No party hereto shall be entitled
to join or consolidate disputes by or against others in any arbitration, except
parties who have executed any Loan Document, or to include in any arbitration
any dispute as a representative or member of a class, or to act in any
arbitration in the interest of the general public or in a private attorney
general capacity.

(g)    Payment Of Arbitration Costs And Fees. The arbitrator shall award all
costs and expenses of the arbitration proceeding.

(h)    Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.

KEY TRONIC CORPORATION
 
WELLS FARGO BANK,
 
 
 
NATIONAL ASSOCIATION
 
 
 
 
 
By:
/s/ Ronald F. Klawitter
 
By:
 /s/ Cody Christensen
Title:
CFO
 
Title:
Vice President

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SCHEDULE 1.6-1

1.
Key Tronic Juarez, S.A. De C.V.

2.
Key Tronic Reynosa, S.A. De C.V.

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SCHEDULE 1.6-2

1.
CDR Manufacturing, Inc.

2.
CDR Holdings, LLC

3.
Ayrshire Electronics of Mississippi, LLC

4.
Ayrshire Electronics of Arkansas, LLC

5.
Ayrshire Electronics of Mexico, LLC.