ITEM 1.01 Entry into a Material Definitive Agreement.

The information set forth in Item 2.03 below regarding new financial obligations is incorporated by reference into this Item 1.01.

ITEM 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On October 6, 2009, Key Technology, Inc. (the "Company") entered into Amendment No. 2 to Loan Agreement with Bank of America, N.A., its principal domestic lender, (the "Lender"), effective September 30, 2009. Amendment No. 2 amended the prior Credit Agreement between the Company and the Lender and, among other things, (i) extended the maturity date of the line of credit approximately two years to September 30, 2011 from December 1, 2009, (ii) increased the line of credit to $15,000,000 from $10,000,000, and (iii) changed the interest rate, at the Company's option, to either the Lender's prime rate or the British Bankers Association LIBOR Rate ("BBA LIBOR") plus 1.75% per annum from the Lender's prime rate minus 1.75% or BBA LIBOR plus 1.0% per annum. At September 30, 2009 the interest rate would have been 2.0%. There were no amounts outstanding under the credit facility at September 30, 2009. A copy of the Amendment No. 2 to Loan Agreement is filed as Exhibit 10.1 hereto and is incorporated herein by reference.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

The following exhibit is furnished with this Current Report on Form 8-K:

10.1 Amendment No. 2 to Loan Agreement effective September 30, 2009

---