Exhibit 10.18

                      FIFTH LOAN MODIFICATION AGREEMENT

      This Fifth Loan Modification Agreement  (this "Loan Modification
Agreement') is entered into as of June 25, 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 3.12 of the Loan Agreement is hereby amended by
                  deleting the following text in its entirety:

                  "3.12  Indebtedness. Except as shown on the Schedule
                  hereto, Borrower shall not create, incur, assume, or be
                  liable for any indebtedness for money borrowed, or permit
                  any of Borrower's subsidiaries to do so.  Notwithstanding
                  the foregoing, Borrower's subsidiaries, Parlex (Shanghai)
                  Circuit Co., Ltd. and Parlex (Shanghai) Interconnect
                  Products Co., Ltd., may incur indebtedness (provided such
                  indebtedness is not guaranteed by any Borrower and
                  Borrower furnishes Silicon with evidence satisfactory to
                  Silicon that there shall be no recourse against any
                  Borrower in connection with any such indebtedness) of not
                  more than US$13,000,000 in the aggregate."

                  and substituting the following Section 3.12 therefor:

                  "3.12  Indebtedness. Except as shown on the Schedule
                  hereto, Borrower shall not create, incur, assume, or be
                  liable for any indebtedness for money borrowed, or permit
                  any of Borrower's subsidiaries to do so.  Notwithstanding
                  the foregoing, Borrower's subsidiaries, Parlex Asia
                  Pacific Limited, Parlex (Shanghai) Circuit Co., Ltd. and
                  Parlex (Shanghai) Interconnect Products Co., Ltd., may
                  incur indebtedness (provided such indebtedness is not
                  guaranteed by any Borrower except as set forth in Section
                  5.5(ix)) of not more than US$13,000,000 in the
                  aggregate."

            B.    Section 5.5(ix) of the Loan Agreement is hereby amended
                  by adding the following text at the end of the Section:


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                  "(other than with respect to an unsecured guarantee by
                  one or more of the Borrowers of indebtedness of Parlex
                  Asia Pacific Limited, Parlex (Shanghai) Circuit Co., Ltd.
                  and Parlex (Shanghai) Interconnect Products, Co., Inc. to
                  Bank of China provided the amount guaranteed by the
                  Borrower or Borrowers, as the case may be, may not exceed
                  $5,000,000 in the aggregate for all Borrowers)"

            C.    Section 2 of the Schedule to the Loan Agreement is hereby
                  amended by deleting same in its entirety and substituting
                  the following therefor:

                  "      Interest Rate (Section 1.2):

                  A rate equal to the Prime Rate (as defined below) plus
                  2.25% per annum (which applicable interest rate shall be
                  reduced to a rate equal to the Prime Rate plus 2.00% per
                  annum in the event Borrowers furnish Silicon with
                  evidence satisfactory to Silicon that no Borrower is a
                  guarantor or otherwise liable for any indebtedness of any
                  of Borrower's subsidiaries and that there shall be no
                  recourse against any Borrower in connection with any such
                  indebtedness at any time).  Interest shall be calculated
                  on the basis of a 360-day year for the actual number of
                  days elapsed. "Prime Rate"  is the greater of (i) 4.0% or
                  (ii) the rate announced from time to time by Silicon as
                  its "prime rate;" it is a base rate upon which other
                  rates charged by Silicon are based, and it is not
                  necessarily the best rate available at Silicon.  The
                  interest rate applicable to the Obligations shall change
                  on each date there is a change in the Prime Rate.
                  Notwithstanding the foregoing, (i) upon Borrower's
                  achievement of two (2) consecutive quarters of positive
                  operating income, the interest rate hereunder shall be
                  reduced to the Prime Rate (as defined above) plus 1.25%
                  per annum, and (ii) upon Borrower's achievement of two
                  (2) consecutive quarters of positive net income, the
                  interest rate hereunder shall be further reduced to the
                  Prime Rate (as defined above) plus  0.75% per annum.
                  Such reduction in the interest rate shall be effective
                  immediately upon receipt by Silicon of sufficient
                  evidence of such achievement of positive operating income
                  and/or positive net income, as applicable.
                  Notwithstanding the foregoing, such reduction in the
                  interest rate shall be effective no later than the day
                  upon which Borrower files a second consecutive quarterly
                  statement on Form 10-Q indicating positive operating
                  income or  a second consecutive quarterly statement on
                  Form 10-Q indicating positive net income, as applicable."

      4.    FEES.  Borrower shall pay to Bank a modification fee equal to
Twenty Thousand Dollars ($20,000.00), 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.

      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


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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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