CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company retains as its general counsel the law firm of Kutchin & Rufo, P.C. to perform legal services on its behalf. Payments made by the Company to Kutchin & Rufo, P.C. in fiscal year 2004 were approximately $454,000. Edward D. Kutchin is a shareholder in the professional corporation of Kutchin & Rufo, P.C., is the clerk of the Company and the son-in-law of Herbert W. Pollack, the Chairman of the Board of Directors.

CODE OF BUSINESS CONDUCT AND ETHICS

The Company's Business Ethics and Conduct Booklet sets forth the Company's standards for ethical conduct that are expected of all directors, officers and employees of the Company. The Company has also adopted a supplemental Code of Ethics that applies to the Company's directors and principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Code of Ethics was filed with the Securities and Exchange Commission as an exhibit to Parlex's Annual Report on Form 10-K for fiscal 2004. You may also request a copy of these materials by writing to the Investor Relations Department, Parlex Corporation, One Parlex Place, Methuen, MA 01844. The Company intends to disclose any amendments to, or waivers from, the Company's Code of Ethics on its website.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission (the "Commission") initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent shareholders are required by the Commission's regulations to furnish the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge, each of our directors and executive officers filed all required reports during fiscal 2004. The following filings, however, were filed late in fiscal 2004: Mr. Davis was late in filing his Form 3, and Mr. Herbert Pollack was late in filing one Form 4.

AVAILABILITY OF FORM 10-K

Copies of the Company's Annual Report on Form 10-K with respect to the fiscal year ended June 30, 2004 (without exhibits), as filed with the Securities and Exchange Commission, are available to stockholders free of charge by writing to: Investor Relations Department, Parlex Corporation, One Parlex Place, Methuen, Massachusetts 01844.

By Order of the Board of Directors

Edward D. Kutchin
Clerk

October 22, 2004

PARLEX CORPORATION

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
CHARTER

A. Purpose. The primary purposes of the Nominating and Corporate Governance Committee are to:

* Identify individuals qualified to become Board members;

* Recommend to the Board the person(s) to be nominated by the Board for election as directors at the annual or any special meeting of stockholders;

* Recommend assignments of Directors to Board committees;

* Ensuring that the Audit, Compensation and Nominating and Corporate Governance Committees of the Board shall have the benefit of qualified and experienced "independent" Directors;

* Develop and recommend to the Board a set of effective corporate governance principles applicable to the Company, including policies relating to the size and composition of the Board, and tenure and retirement of Directors, and monitoring the implementation thereof; and

* Oversee the evaluation of the Board, Board committees, individual Directors and management, and make recommendations for improvement on an annual basis.

B. Structure and Membership.

1. Number and Selection. The Nominating and Corporate Governance Committee shall consist of three or more Directors. Member of the Committee shall be appointed by the Board of Directors, upon the recommendation of the Committee. The Board may remove members of the Nominating and Corporate Governance Committee from such Committee, with or without cause.

2. Independence. Except as otherwise permitted by the applicable rules of the Nasdaq Stock Market, each member of the Nominating and Corporate Governance Committee shall be "independent" as defined by such rules.

3. Chair. The Committee's chairperson shall be designated by the full Board or, if it does not do so, the members shall elect a Chairman by vote of a majority of the full Committee.

4. Compensation. The compensation of the Nominating and Corporate Governance Committee members shall be as determined by the Board.

C. Authority and Responsibilities. The Nominating and Corporate Governance Committee shall have the following authority and responsibilities:

1. Selection of Director Nominees. The Nominating and Corporate Governance Committee shall be responsible for (i) identifying individuals qualified to become Board members and (ii) recommending to the entire Board the persons to be nominated by the Board for election as directors at the annual meeting or any special meeting of the stockholders and the persons to be elected by the Board to fill any vacancies of the Board.

2. Search Firms. The Nominating and Corporate Governance Committee shall have the sole authority to retain and terminate any search firm to be used to identify director nominees, including the sole authority to approve the search firm's fees and other retention terms. The Committee is empowered, without further action by the Board, to cause the Company to pay the compensation of any search firm engaged by the Committee.

3. Selection of Committee Members. The Nominating and Corporate Governance Committee shall be responsible for recommending to the Board the Directors to be appointed to each committee of the Board.

4. Director Orientation. The Nominating and Corporate Governance Committee shall maintain an orientation program for new Directors and a continuing education program for all Directors.

5. Corporate Governance Framework. The Nominating and Corporate Governance Committee shall develop and recommend to the Board a set of corporate governance principles applicable to the Company. The Committee shall, from time to time as it deems appropriate, review and reassess the adequacy of such corporate governance principles and recommend any proposed changes to the Board for approval.

6. Evaluation of the Board. The Nominating and Corporate Governance Committee shall be responsible for overseeing an evaluation of the Board's performance, including the performance of Board committees and individual Directors, on an annual basis. The Committee shall determine the nature of the evaluation, supervise the conduct of the evaluation and prepare an assessment of the Board's performance, to be discussed with the Board.

7. Evaluation of Management. The Nominating and Corporate Governance Committee shall be responsible for overseeing an evaluation of the Company's management on an annual basis. The Committee shall determine the nature of the evaluation, supervise the conduct of the evaluation and prepare an assessment of management's performance, to be discussed with the Board.

D. Procedures and Administration.

1. Meetings. The Nominating and Corporate Governance Committee shall meet at least once a year, at the time of the regularly scheduled Board meetings, and other times on call of its chairman. The Committee shall keep such records of its meetings as it shall deem appropriate.

2. Subcommittees. The Nominating and Corporate Governance Committee may form and delegate authority to one or more subcommittees (including a subcommittee consisting of a single member), as it deems appropriate from time to time under the circumstances.

3. Reports to the Board. The Nominating and Corporate Governance Committee shall report a summary of its actions, decisions and recommendations to the next full meeting of the Board, providing minutes of all meetings of the Committee.

4. Charter. The Nominating and Corporate Governance Committee shall periodically review and reassess the adequacy of this Charter and recommend any proposed changes to the Board of Directors for approval.

5. Independent Advisors. The Nominating and Corporate Governance Committee shall have the authority to engage such external legal, accounting and other advisors as it deems necessary or appropriate to carry out its responsibilities. Such advisors may be the regular advisors to the Company. The Committee shall have sole authority to approve such advisor's related fees and retention terms.

6. Investigations. The Nominating and Corporate Governance Committee shall have the authority to conduct or authorize investigations into any matters within the scope of its responsibilities as it shall deem appropriate, including the authority to request any officer, employee or advisor of the Company to meet with the Committee or any advisors engaged by the Committee.

7. Annual Self-Evaluation. At least annually, the Nominating and Corporate Governance Committee shall evaluate its own performance.

APPENDIX B

PARLEX CORPORATION

AUDIT COMMITTEE
CHARTER

A. Purpose. The primary purposes of the Audit Committee are to:

* monitor the integrity of the financial statements of the Company;

* review the independent auditor's qualifications and independence;

* monitor the performance of the Company's internal audit functions;

* review the performance of the Company's independent auditors;

* monitor compliance by the Company with legal and regulatory requirements relating to the Company's financial statements; and

* prepare the report required by the rules of the Securities & Exchange Commission (the "Commission") to be included in the Company's annual proxy statement.

B. Structure and Membership.

1. Number and Selection. The Audit Committee shall consist of three or more Directors. Member of the Committee shall be appointed by the Board of Directors, upon the recommendation of the Committee. The Board may remove members of the Audit Committee from such Committee, with or without cause.

2. Independence. Except as otherwise permitted, each member of the Audit Committee shall meet the independence and experience requirements of the Nasdaq Stock Market and the rules of the Commission.

3. Audit Committee Financial Expert. At least one member of the Audit Committee shall be an "Audit Committee Financial Expert" as defined by the Commission.

4. Chair. The Committee's chairperson shall be designated by the full Board or, if it does not do so, the members shall elect a Chairman by vote of a majority of the full Committee.

5. Compensation. The compensation of the Audit Committee members shall be as determined by the Board.

C. Authority and Responsibilities. The Audit Committee shall have the following authority and responsibilities:

1. Selection of Independent Auditor. The Audit Committee shall have sole authority to appoint, retain or replace the Company's outside auditor (subject only to shareholder ratification, if applicable). The Audit Committee shall be directly responsible for the oversight and compensation of the work of the independent auditor (including the resolution of disagreements between the independent auditor and the Company's management regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent auditor shall report directly to the Audit Committee.

2. Approval of Services. The Audit Committee shall pre-approve all auditing services and permitted non-auditing services (including the fees and terms thereof) to be performed for the Company by the independent auditor, subject to the de minimis exemption for non- audit services described in Section 10A(i)(1)(B) of the Exchange Act of 1934 which are approved by the Audit Committee prior to completion of the audit.

The Audit Committee, to the extent it deems necessary or appropriate, shall also:

3. Review and discuss with management and the independent auditor the annual audited financial statements, including disclosures made in management's discussion and analysis.

4. Review and discuss with management and the independent auditor the Company's quarterly financial statements prior to the filing of its Form 10-Q, including the results of the independent auditor's review of the quarterly financial statements.

5. Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company's financial statements, including any significant changes in the Company's selection or application of accounting principles, any major issues as to the adequacy of the Company's internal controls and any special steps adopted in light of material control deficiencies.

6. Review and discuss quarterly reports from the independent auditors on:

(a) All critical accounting policies and practices to be used.

(b) All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor.

(c) Other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.

7. Discuss with management the Company's earnings press releases, including the use of any "pro forma" or "adjusted" non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies. Such discussion may be done generally (consisting of discussing the types of information to be disclosed and the types of presentations to be made).

8. Discuss with management and the independent auditor the effect of regulatory and accounting initiatives as well as any off-balance sheet structures on the Company's financial statements.

9. Discuss with management the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company's risk assessment and risk management policies

10. Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements with management.

11. Review disclosures made to the Audit Committee by the Company's chief executive officer and chief financial officer during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company's internal controls.

12. Review and evaluate the lead partner of the independent auditor team.

13. Obtain and review a report from the independent auditor at least annually regarding: (a) the independent auditor's internal quality- control procedures, (b) any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, (c) any steps taken to deal with any such issues, and (d) all relationships between the independent auditor and the Company. Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor's quality controls arc adequate and the provision of permitted non-audit services is compatible with maintaining the auditor's independence, taking into account the opinions of management and internal auditors. The Audit Committee shall present its conclusions with respect to the independent auditor to the Board.

14. Ensure the rotation of the audit partners as required by applicable law. Consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the independent auditing firm on a regular basis.

15. Recommend to the Board policies for the Company's hiring of employees or former employees of the independent auditor who participated in any capacity in the audit of the Company.

16. Discuss with the national office of the independent auditor issues on which they were consulted by the Company's audit team and matters of audit quality and consistency.

17. Meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit.

18. Review the appointment and replacement of the senior internal auditing executive.

19. Review the significant reports to management prepared by the internal auditing department and management's responses.

20. Discuss with the independent auditor and management the internal audit department responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit.

21. Obtain from the independent auditor assurance that Section 10A(b) of the Exchange Act has not been implicated.

22. Obtain reports from management, the Company's senior internal auditing executive and the independent auditor that the Company and its subsidiary/foreign affiliated entities are in conformity with applicable legal requirements and the Company's Code of Business Conduct and Ethics. Review reports and disclosures of insider and affiliated party transactions. Advise the Board with respect to the Company's policies and procedures regarding compliance with applicable laws and regulations and with the Company's Code of Business Conduct and Ethics.

23. Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

24. Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Company's financial statements or accounting policies.

25. Discuss with the Company's general counsel legal matters that may have a material impact on the financial statements or the Company's compliance policies.

D. Procedures and Administration.

1. Meetings. The Audit Committee shall meet at least quarterly, and other times on call of its chairman. The Audit Committee shall meet periodically with the management, internal auditors and independent auditors of the Company in separate executive sessions. The Audit Committee may request any officer or employee of the Company, or the Company's outside counsel, or independent auditor, to meet with any members of, or consultants to, the Committee. The Committee shall keep such records of its meetings as it shall deem appropriate.

2. Subcommittees. The Audit Committee may form and delegate authority to one or more subcommittees (including a subcommittee consisting of a single member), as it deems appropriate from time to time under the circumstances, including the authority to grant pre-approvals for audit and non-audit services, provided that the decisions of any such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next meeting.

3. Reports to the Board. The Audit Committee shall report a summary of its actions, decisions and recommendations to the next full meeting of the Board, providing minutes of all meetings of the Committee.

4. Charter. The Audit Committee shall periodically review and reassess the adequacy of this Charter and recommend any proposed changes to the Board of Directors for approval.

5. Independent Advisors. The Audit Committee shall have the authority to engage such external legal, accounting and other advisors as it deems necessary or appropriate to carry out its responsibilities. Such advisors may be the regular advisors to the Company. The Committee shall have sole authority to approve such advisor's related fees and retention terms.

6. Investigations. The Audit Committee shall have the authority to conduct or authorize investigations into any matters within the scope of its responsibilities as it shall deem appropriate, including the authority to request any officer, employee or advisor of the Company to meet with the Committee or any advisors engaged by the Committee.

7. Annual Self-Evaluation. At least annually, the Audit Committee shall evaluate its own performance.

E. Limitation of Audit Committee's Role

While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company's financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent auditor.

PARLEX CORPORATION