Exhibit 10.3

                     FOURTH LOAN MODIFICATION AGREEMENT

      This Fourth Loan Modification Agreement (this "Loan Modification
Agreement') is entered into as of May 10, 2004, by and between SILICON
VALLEY BANK, a California-chartered bank, with its principal place of
business at 3003 Tasman Drive, Santa Clara, California 95054 and with a
loan production office located at One Newton Executive Park, Suite 200,
2221 Washington Street, Newton, Massachusetts 02462, doing business under
the name "Silicon Valley East" ("Bank") and PARLEX CORPORATION, a
Massachusetts corporation, with offices at One Parlex Place, Methuen,
Massachusetts, 01844, PARLEX DYNAFLEX CORPORATION, a California
corporation, with offices at One Parlex Place, Methuen, Massachusetts
01844, and POLY-FLEX CIRCUITS, INC., a Rhode Island corporation, with
offices at 28 Kenney Drive, Cranston, Rhode Island 02920 (jointly and
severally, individually and collectively, "Borrower").

      1.    DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among
other indebtedness and obligations which may be owing by Borrower to Bank,
Borrower is indebted to Bank pursuant to a loan arrangement dated as of
June 11, 2003, evidenced by, among other documents,  a certain Loan and
Security Agreement dated as of June 11, 2003 between Borrower and Bank, as
amended from time to time (as amended, the "Loan Agreement").  Capitalized
terms used but not otherwise defined herein shall have the same meaning as
in the Loan Agreement.

      2.    DESCRIPTION OF COLLATERAL.  Repayment of the Obligations is
secured by the Collateral as described in the Loan Agreement and certain
Intellectual Property Security Agreements each dated June 11, 2003 (the "IP
Agreements")  (together with any other collateral security granted to Bank,
the "Security Documents").

      Hereinafter, the Security Documents, together with all other
documents evidencing or securing the Obligations shall be referred to as
the "Existing Loan Documents".

      3.    DESCRIPTION OF CHANGE IN TERMS.

            Modification to Loan Agreement.
            -------------------------------

            A.    Section 5a. of the Schedule to the Loan Agreement is
                  hereby amended by deleting same in its entirety and
                  substituting the following therefor:

                  "Borrower shall have EBITDA of no less than (i) $1.00,
                  tested on a monthly basis, as of the periods ending
                  April 30, 2004 and May 31, 2004, and (ii) $250,000.00,
                  tested on a trailing three month basis, as of the period
                  ending June 30, 2004 and as of the last day of each month
                  thereafter."

            Waiver.
            -------

            B.    The Bank hereby waives Borrower's failure to comply with
                  the "Minimum EBITDA" covenant previously set forth in
                  Section 5a. of the Schedule to the Loan Agreement for the
                  period ending March 31, 2004. The Bank's waiver of
                  Borrower's compliance with said foregoing affirmative
                  covenant shall apply only to the foregoing specified
                  period and shall not be deemed to constitute a continuing
                  waiver.

      4.    FEES.  Borrower shall pay to Bank a modification fee equal to
Ten Thousand Dollars ($10,000.00), which fee shall be due on the date
hereof and shall be deemed fully earned as of the date hereof. Borrower
shall also reimburse Bank for all reasonable legal fees and expenses
incurred in connection with this amendment to the Existing Loan Documents.

      5.    RATIFICATION OF INTELLECTUAL PROPERTY SECURITY AGREEMENTS.
Borrower hereby ratifies, confirms, and  reaffirms, all and singular, the
terms and conditions of the IP Agreements and acknowledges, confirms and
agrees that the IP Agreements contain an accurate and complete listing of
all Intellectual Property.


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      6.    RATIFICATION OF PERFECTION CERTIFICATES.  Borrower hereby
ratifies, confirms, and reaffirms, all and singular, the terms and
disclosures contained in certain Perfection Certificates delivered to the
Bank on or about June 11, 2003, and acknowledges, confirms and agrees the
disclosures and information provided therein has not changed, as of the
date hereof.

      7.    CONSISTENT CHANGES.  The Existing Loan Documents are hereby
amended wherever necessary to reflect the changes described above.

      8.    RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby ratifies,
confirms, and reaffirms all terms and conditions of all security or other
collateral granted to the Bank, and confirms that the indebtedness secured
thereby includes, without limitation, the Obligations.

      9.    NO DEFENSES OF BORROWER.  Borrower hereby acknowledges and
agrees that Borrower has no offsets, defenses, claims, or counterclaims
against the Bank with respect to the Obligations, or otherwise, and that if
Borrower now has, or ever did have, any offsets, defenses, claims, or
counterclaims against the Bank, whether known or unknown, at law or in
equity, all of them are hereby expressly WAIVED and Borrower hereby
RELEASES the Bank from any liability thereunder.

      10.   CONTINUING VALIDITY.  Borrower understands and agrees that in
modifying the existing Obligations, Bank is relying upon Borrower's
representations, warranties, and agreements, as set forth in the Existing
Loan Documents.  Except as expressly modified pursuant to this Loan
Modification Agreement, the terms of the Existing Loan Documents remain
unchanged and in full force and effect.  Bank's agreement to modifications
to the existing Obligations pursuant to this  Loan Modification Agreement
in no way shall obligate Bank to make any future modifications to the
Obligations.  Nothing in this Loan Modification Agreement shall constitute
a satisfaction of the Obligations.  It is the intention of Bank and
Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing.  No maker will
be released by virtue of this Loan Modification Agreement.

      11.   COUNTERSIGNATURE.  This Loan Modification Agreement shall
become effective only when it shall have been executed by Borrower and
Bank.

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      This Loan Modification Agreement is executed as a sealed instrument
under the laws of the Commonwealth of Massachusetts as of the date first
written above.

BORROWER:

PARLEX CORPORATION

By: /s/ Peter J. Murphy
----------------------------------
Name: Peter J. Murphy
Title: Chief Executive Officer

PARLEX DYNAFLEX CORPORATION

By: /s/ Peter J. Murphy
----------------------------------
Name: Peter J. Murphy
Title: Chief Executive Officer

POLY-FLEX CIRCUITS, INC.

By: /s/ Peter J. Murphy
----------------------------------
Name: Peter J. Murphy
Title: Treasurer

BANK:

SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST

By: /s/ David E. Rodriguez
----------------------------------
Name:  David E. Rodriguez
Title:  Vice President


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