UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF CALIFORNIA

BARBARA KELLER, Individually and On Behalfof All Others Similarly Situated,

CIVIL ACTION NO.Plaintiff,

vs .CLASS ACTION COMPLAINT

SIPEX CORPORATION, DOUGLAS M .MCBURNIE, WALID MAGHRIBI, PHILLIP A.KAGEL, CLYDE R. WALLIN,

Defendants .JURY TRIAL DEMANDED

Plaintiff, Barbara Keller ("Plaintiff'), individually and on behalf of all other persons similarl y

situated, by her undersigned attorneys, for her complaint against defendants, alleges the followin g

based upon personal knowledge as to herself and her own acts, and information and belief as to al l

other matters, based upon, inter olio, the investigation conducted by and through her a ttorneys ,

which included, among other things, a review of the defendants' public documents, conference call s

and announcements made by defendants, United States Securities and Exchange Commissio n

("SEC") filings, wire and press releases published by and regarding Sipex Corporation ("Sipex" or

the "Company") securities analysts' reports and advisories about the Company, and information

readily obtainable on the Internet . Plaintiff believes that substantial evidentiary support will exis t

for the allegations set forth herein after a reasonable opportunity for discovery .

NATURE OF THE ACTION

1 . This is a federal class action on behalf of purchasers of the securities of Sipex

between April 10, 2003 and January 20, 2005, inclusive (the "Class Period"), seeking to pursu e

remedies under the Securities Exchange Act of 1934 (the "Exchange Act")

JURISDICTION AND VENUE

2 . The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) o f

the Exchange Act, (15 U.S .C . §§ 78j(b) and 78t(a)), and Rule lOb-S promulgated thereunder (1 7

C . F .R . §240 .1 4b-5) .

3 . This Court has jurisdiction over the subject matter of this action pursuant to §27 o f

the Exchange Act (15 U.S .C. §78aa) and 28 U .S .C. § 1331 .

4. Venue is proper in this Judicial District pursuant to §27 of the Exchange Act, 1 5

U.S .C. § 78aa and 28 U.S.C. § 1391(b) . Many of the acts and transactions alleged herein, including

the preparation and dissemination of materially false and misleading information, occurred i n

substantial part in this Judicial District . Additionally, the Company maintains a principal executiv e

office in th is Judicial District .

5 . In connection with the acts, conduct and other wrongs alleged in this complaint,

defendants, directly or indirectly, used the means and instrumentalities of interstate commerce ,

including but not limited to, the United States mails, interstate telephone communications and th e

facilities of the national securities exchange .

2

PARTIES

6. Plaintiff, Barbara Keller, as set forth in the accompanying certification, incorporate d

by reference herein, purchased Sipex securities at artificially inflated prices during the Class Perio d

and has been damaged thereby.

7 . Defendant Sipex is Delaware Corporation with its principal executive offices locate d

at 233 South Hillview Drive, Milpitas, California 95035 .

8. Defendant Douglas M. McBumie ("McSurnie") is the Company's Chairman, Interim

President and Chief Executive Officer.

9 . Defendant Walid Maghribi ("Maghribi") was, until his resignation on December 6 ,

2004, the Company's Chief Executive Officer, President and Director .

10, Defendant Phillip A. Kagel ("Kagel") was, until his departure in April, 2004, th e

Company's Senior Vice President of Finance, Chief Financial Officer and Treasurer.

11 . Defendant Clyde R . Wallin ("Wallin") is the Company's Senior Vice President o f

Finance, Chief Financial Officer and Treasurer .

12. Defendants McBurnie, Maghribi, Nagel and Wallin are collectively referred t o

hereinafter as the "Individual Defendants." During the Class Period, each of the Individual

Defendants, as senior executive officers and/or directors of Sipex were privy to non-publi c

information concerning its business, finances, products, markets and present and future busines s

prospects via access to internal corporate documents, conversations and connections with othe r

corporate officers and employees, attendance at management and Board of Directors meetings an d

committees thereof and via reports and other information provided to them in connection therewith .

Because of their possession of such information, the Individual Defendants knew or recklessl y

3

disregarded the fact that adverse facts specified herein had not been disclosed to, and were being

concealed from, the investing public .

13 . Because of the Individual Defendants' positions with the Company, they had access

to the adverse undisclosed information about the Company's business, operations, operational trends ,

financial statements, markets and present and future business prospects via access to interna l

corporate documents (including the Company's operating plans, budgets and forecasts and report s

of actual operations compared thereto), conversations and connections with other corporate officer s

and employees, attendance at management and Board of Directors meetings and committees thereof

and via reports and other information provided to them in connection therewith .

14 . It is approp riate to treat the Individual Defendants as a group for plead ing purposes

and to presume that the false, misleading and incomplete information conveyed in the Company' s

public filings, press releases and other publications as alleged herein are the collective actions of the

narrowly defined group of defendants identified above . Each of the above officers of Sipex, b y

virtue of their high-level positions with the Company, directly participated in the management of th e

Company, was directly involved in the day-to-day operations of the Company at the highest level s

and was privy to confidential proprietary information concerning the Company and its business ,

operations, growth, financial statements, and financial condition, as alleged herein . Said defendants

were involved in drafting, producing, reviewing and/or disseminating the false and misleading

statements and information alleged herein, were aware, or recklessly disregarded, that the false an d

misleading statements were being issued regarding the Company, and approved or ratified thes e

statements, in violation of the federal securities laws .

4

15. As officers and controlling persons of a publicly-held company whose securities were ,

and are, registered with the SEC pursuant to the Exchange Act, and was traded on the NASDAQ an d

governed by the provisions of the federal securities laws, the Individual Defendants each had a dut y

to disseminate promptly, accurate and truthful information with respect to the Company's financia l

condition and performance, growth, operations, financial statements, business, markets ,

management, earnings and present and future business prospects, and to correct any previously-

issued statements that had become materially misleading or untrue, so that the market price of th e

Company's publicly-traded securities would be based upon truthful and accurate information . The

Individual Defendants' misrepresentations and omissions during the Class Period violated thes e

specific requirements and obligations .

16 . The Individual Defendants participated in the drafting, preparation, and/or approva l

of the various public and shareholder and investor reports and other communications complaine d

of herein and were aware of, or recklessly disregarded, the misstatements contained therein an d

omissions therefrom, and were aware of their materially false and misleading nature . Because o f

their Board membership and/or executive and managerial positions with Sipex, each of the

Individual Defendants had access to the adverse undisclosed information about Sipex financial

condition and performance as particularized herein and knew (or recklessly disregarded) that these

adverse facts rendered the positive representations made by or about Sipex and its business issued

or adopted by the Company materially false and misleading .

17. The Individual Defendants, because of their positions of control and authority a s

officers and/or directors of the Company, were able to and did control the content of the various SE C

filings, press releases and other public statements pertaining to the Company during the Class Period .

Each Individual Defendant was provided with copies of the documents alleged herein to be

misleading prior to or shortly after their issuance and/or had the ability and/or opportunity to prevent

their issuance or cause them to be corrected . Accordingly, each of the Individual Defendants is

responsible for the accuracy of the public reports and releases detailed herein and is therefore

primarily liable for the representations contained therein .

18 . Each of the defendants is liable as a participant in a fraudulent scheme and course o f

business that operated as a fraud or deceit on purchasers of Sipex securities by disseminating

materially false and misleading statements and/or concealing material adverse facts . The scheme:

(1) deceived the investing public regarding Sipex business, operations, management and the intrinsic

value of Sipex securities ; and (ii) caused Plaintiff and other members of the Class to purchase Sipex

securities at artificially inflated prices .

PLAINTIFF'S CLASS ACTION ALLEGATIONS

1 9. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased or otherwise

acquired the securities of Sipex between April 10, 2003 and January 20, 2005 inclusive (the "Class

Period") and who were damaged thereby . Excluded from the Class are defendants, the officers and

directors of the Company, at all relevant times, members of their immediate families and their legal

representatives, heirs, successors or assigns and any entity in which defendants have or had a control-

ling interest .

20. The members of the Class are so numerous that joinder of all members is imprac-

ticable. Throughout the Class Period, Sipex's securities were actively traded on the NASDAQ .

While the exact number of Class members is unknown to Plaintiff at this time and can only be

6

ascertained through appropriate discovery, Plaintiff believes that there are hundreds or thousands o f

members in the proposed Class . Record owners and other members of the Class may be identifie d

from records maintained by Sipex or its transfer agent and may be notified of the pendency of thi s

action by mail, using the form of notice similar to that customarily used in securities class actions .

21 . Plaintiff s claims are typical of the claims of the members ofthe Class as all member s

of the Class are similarly affected by defendants' wrongful conduct in violation of federal law tha t

is complained of herein .

22. Plaintiff will fairly and adequately protect the interests of the members of the Clas s

and have retained counsel competent and experienced in class and securities litigation .

23 . Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class . Among the

questions of law and fact common to the Class are :

(a) whether the federal securities laws were violated by defendants' acts as allege d

herein ;

(b) whether statements made by defendants to the investing public during the Class

Period misrepresented material facts about the business, operations and management of Sipex ; and

(c) to what extent the members of the Class have sustained damages and the prope r

measure of damages .

24. A class action is superior to all other available methods for the fair and efficien t

adjudication of this controversy since joinder of all members is impracticable . Furthermore, as the

7

damages suffered by individual Class members may be relatively small, the expense and burden o f

individual litigation make it impossible for members of the Class to individually redress the wrong s

done to them. There will be no difficulty in the management of this action as a class action .

SUBSTANTIVE ALLEGATION S

Background

25 . Sipex manufactures and markets high-performance, analog integrated circuits ("ICs" )

that are used by original equipment manufacturers ("OEMs") operating in the computing, consume r

electronics, communications and networking infrastructure markets . Some of the end product

applications that contain its ICs are cellular phones, base stations, computers, DVD players an d

digital cameras . Its portfolio of analog ICs is organized into three product families : power

management, serial interface and optical storage. Its wafer fabrication facility in Milpitas, California ,

along with a number of third-party contractors, fabricate, package and test its ICs . The products are

sold either directly or through a global network of manufacturers' representatives and distributors .

Materially False And MisleadingStatements Issued During The Class Perio d

26 . The Class Period commences on April 10, 2003. At that time, Sipex announced that

it expected its revenue to be approximately $15 .3 million for the first quarter of 2003, compared to

$16.6 million in the prior quarter . Commenting on these results, defendant Maghribi stated :

Various factors, including non linear shipments early in the quarter,significant price erosion on older power products, overall concerns inAsia and a shortfall in production from one of our foundriescontributed to the lower revenues . We continue to be concerned aboutAsia with the delays in purchasing decisions and curtailment of travelin and out of this region .

We are very disappointed to start the year on this note due, in part, toevents beyond our direct control . Despite this, we are maintaining our

8

strategy of focusing our resources to position the company for longterm growth .

27. On April 24, 2003, Sipex reported net revenue of $15.1 million for the first quarter

of 2003 . The $15 .1 million represented a 9% decrease in revenue when compared with $16 .6 million

reported for the prior quarter and a 6% decrease from the $16 .1 million reported for the same period

last year . Diluted loss per share for the first quarter of 2003 was $0 .26 compared with a $0 .28 loss

per share reported for the prior quarter and a $0 .12 loss per share reported for the first quarter in

2002. Gross margin for the first quarter of 2003 was breakeven compared to a loss o#'6 .0% for the

prior quarter and gross margin of 13 .5% for the first quarter of 2002. Commenting on these results,

defendant Maghribi stated :

We are obviously disappointed with our revenue levels. As reportedearlier, the decrease in revenue was primarily attributable to bothproduct mix on interface and significant pricing pressure oncommodity power products in Asia, which negatively affected ourrevenue and gross margin . We also experienced a shortfall inproduction from one of our foundries, which contributed to therevenue miss .

On a positive note, revenue from our optical storage products grew58% compared to the fourth quarter of 2002 and has shown consistentgrowth since introduction last year . These products are opening doorsfor us with market leaders in Japan and Europe . In our powermanagement products, we are seeing success with design wins in ournew family of white LED drivers for color screen cell phones andPDAs. We believe we will see significant revenue growth from theseproducts this quarter, which will help replace older obsolete products .We are also pleased that our distribution channels in Asia havereduced their inventory for the second quarter in a row, which webelieve positions us for growth if and when this region recovers .

In spite of disappointing financial results, our planned restructuringactivities have delivered the expected cost savings . We believe thatwe are on track to build a solid foundation for growth and to improveour gross margin through productivity improvements and a morefavorable product mix .

9

We enter 2003 with a much better product lineup, a significantlybetter cost structure, an improved inventory position and a muchbetter relationship with our customers . We believe economic andpolitical uncertainties are the most significant risks in our businessplan.

28. On May 13, 2003, Sipex filed its quarterly report with the SEC on Form 10-Q . The

Company's Form 10-Q was signed by defendant Kagel and reaffirmed Sipex's previously announce d

financial results . Additionally, and with respect to the presentation of its financial results, th e

Company stated :

These condensed consolidated financial statements are unaudited and,in our opinion, include all adjustments, consisting ofnorn3al recurringadjustments and accruals necessary for a fair presentation of theconsolidated balance sheets, operating results and cash flows for theperiods presented.

29. On July 23, 2003, Sipex announced that it expected its revenue to be approximatel y

$ 15 million for the second quarter of 2003, about flat with the prior quarter. Commenting on these

results, defendant Maghribi stated :

We are pleased to have been able to overcome a drop of over $1 .5million of legacy product revenue with increased revenue in powermanagement and optical storage products . Our core product revenueis expected to show an increase of around 11 % over the prior quarter.This is significant considering the past concerns over Asia, whichrebounded appreciably during the later part of June .

30 . On August 4, 2003, Sipex reported net revenue of $14 .9 million for the second

quarter of 2003 . The $14.9 million represented approximately 1% decrease in revenue whe n

compared with the $15 .1 million reported for the prior quarter and a 12% decrease from the $17 .0

million reported for the same period last year. Loss per share for the second quarter of 2003 was

$0.17 compared with a $0 .26 loss per share reported for the prior quarter and a $1 .70 loss per share

reported for the second quarter of 2002 . Gross margin for the second quarter of 2003 was $2 . 4

1 0

million or 16% compared to breakeven for the prior quarter and a loss of $2 .2 million for the second

quarter of 2002 . Commenting on these news, defendant Maghribi stated :

We are extremely happy to have been able to maintain our revenuelevels in spite of over $1 .5 million revenue drop in discontinuedlegacy products . Revenue of our base products increased 10% fromthe prior quarter to $14.5 million . This increase was driven by ourpower products and the continued growth in revenue of opticalstorage products. During this quarter we completed thetransformation of our revenue stream and thus we expect to seeinsignificant revenue from legacy products looking forward. Wecontinue to focus on executing on our new marketing and salesstrategies rolled out earlier in the year ; we are thrilled to see verygood support from our customer base .

Revenue from our optical storage products grew 11% compared tothe prior quarter . The growth was ahead of our expectations due tothe start of shipment of our Photo Detector IC (FDIC) product forthe home market . We believe this new market opportunity which isstill in its infancy will enable us to mitigate the cyclical nature of thedependence on DVD's for the PC market and could provide us witha catalyst for future growth.

In power management products, we have harnessed the success ofour new family of white LED drivers which jumped from zerorevenue during the prior quarter to nearly $800,000. We continue tosee good market acceptance for these products .

We are pleased with the continued improvement of our gross marginand the magnitude of the increase from the prior quarter. Thisincrease benefited very little from our conversion to two microntechnology on interface products and none from our processconversion on some old power products . We are keenly focused onincreasing our revenue on current and newly introduced products inorder to capitalize on the impact of these cost reductions . Wetherefore expect gross margin to continue to improve for the nextseveral quarters as we execute on our cost reduction strategies .

As was the case in prior quarters, we entered this quarter with aweak backlog position especially in Asia; however, based on ourbetter cost position, sharp focus on key opportunities, increasedenthusiasm from our distributors and representative network, we feelcomfortable that we will continue the historical growth rate of ou r

11

base products . We therefore expect our revenue for the currentquarter to grow approximately 10% from the prior quarter to therange of $16 to $16.8 million .

31 . On August 12, 2003, Sipex filed its quarterly report with the SEC on Form 10-Q . The

Company's Form 14-Q was signed by defendant Kagel and reaffirmed Sipex's previously announce d

financial results . Additionally, and with respect to the presentation of its financial results, th e

Company stated :

These condensed consolidated financial statements are unaudited and,in our opinion, include all adjustments, consisting ofnormal recurringadjustments and accruals necessary for a fair presentation of theconsolidated balance sheets, operating results and cash flows for theperiods presented.

32 . On October 14, 2003, Sipex announced that it expected its revenue for the thir d

quarter of 2003 to be approximately $16 . 5M, which is about 11% higher than the prior quarter .

Commenting on these results, defendant Maghribi stated :

We are very pleased to have been able to grow our revenue at a veryrespectable rate while obsoleting legacy products . We are encouragedby the widespread acceptance of our products and extremely pleasedwith the progress we continue to make in every aspect of ouroperations .

33 . On October 30, 2003, Sipex reported net revenue of $16.5 million for the third quarte r

of 2003 . The $16 .5 million represented an increase of approximately 11% over the previous quarter

and was roughly flat with the $16 . 6 million reported for the same period last year. Loss per share

for the third quarter of 2003 was $0.07 compared with a $0 .17 loss per share reported for the

previous quarter and a $0 .75 loss per share reported for the third quarter of 2002 . Gross profit for

the third quarter of 2003 was $4 .8 million, or 29%, compared to $2 .4 million, or 16%, for th e

1 2

previous quarter and a loss of $6 .6 million for the third quarter of 2002 . Commenting on thes e

results, defendant Maghribi stated :

We are extremely excited to have our first sequential growth quartersince the third quarter of last year . Excluding legacy products,revenue grew 28% when compared with the same period last year .For the third quarter of 2003, our total net revenue grew by $1 .6million from the previous quarter . This growth was driven byincreased sales of our Optical Storage and Interface product families,which grew 16% and 20% respectively . Optical Storage productsgrew faster than expected due mainly to the successful ramp of thenewly introduced Photo Detector IC (PDIC) for the home market .Interface product mix was enriched with a ramp in our multi-protocolfamily shipment while Power product revenue showed a 2% decreasedue to a focus on margin optimization . As we continue to focus onthe execution of our marketing and sales strategies, we are pleasedwith the increasing acceptance of our products and the accelerationof new account penetration, which are expected to translate into goodgrowth in the coming year.

We are extremely pleased with the leap in the overall gross profit,which doubled sequentially, and delighted to see the results of ouractions of the past year unfolding as planned . Interface and Powerproducts showed an increase in gross margin, in varying degrees, asa result of our continuous yield improvement effort and improvedmix. The gross margin has yet to benefit fully from our conversion totwo micron technology on interface products or from our processconversion on several old Power products . We therefore expect grossmargin to continue to improve for the next several quarters as wedeliver on our cost reduction strategies and grow our revenue .

Our operating loss narrowed dramatically as a result of the jump ingross margin and the continuing reduction in below the line expenses .We continue to invest in R&D as appropriate while reducing ouroverhead expenses . As outlined in our initial restructuring initiatives,we are on track to achieve profitability from operations at around $19million in revenue . We believe this is achievable within the first twoquarters of next year .

Again we entered the fourth quarter with a weak backlog positionespecially in Asia. While we feel fairly comfortable about the firstquarter of next year, due to specific identified opportunities, thefourth quarter could be challenging in term of revenue growth due t o

13

holidays and our focus on improving the gross profit . We aretherefore taking a more cautious stance and forecasting our revenueto be in the range of $1 6 .5 to 17 .5 million, with gross margin in thelow to mid 30's .

34. On November 17, 2003, Sipex reported that, following consultation with its

independent auditors, it would modify the accounting treatment of the previously announce d

convertible promissory note issued in June 2003 to an affiliate of Future Electronics, Inc ., the

Company's largest distributor . The effect of the revised accounting treatment was a non cas h

reduction of $1 .2 million to GAAP net sales, based on the fair value of the conversion right s

attributed to the propo rt ion of the annual sales target achieved in the third quarter of 2003 , Net los s

was also increased by the same amount . In addition, following a post close review, the Company

reduced net sales by $85,000 and increased net loss by $39,000 ($0.002 per share) . Commenting on

these results, defendant Maghribi stated :

After review with our new independent auditors, retained at thebeginning of the third quarter of 2003, it was determined that thismodification is the appropriate accounting method for the convertiblenote. While this accounting charge has no cash impact on theCompany, we intend to work with Future Electronics to change theagreement to reduce or eliminate the ongoing accounting effectswhile attempting to preserve the features with the positive impact onsales. We are extremely pleased with our ongoing businessrelationship with Future Electronics .

35 . On November 17, 2003, Sipex filed its quarterly report with the SEC on Form I O-Q .

The Company's Form 10-Q was signed by defendant Kagel and reaffirmed Sipex's previousl y

announced financial results . Additionally, and with respect to the presentation of its financial results ,

the Company stated :

These condensed consolidated financial statements are unaudited and,in our opinion, include all adjustments, consisting ofnormal recurringadjustments and accruals necessary for a fair presentation of th e

14

consolidated balance sheets, operating results and cash flows for theperiods presented .

36. On February 18, 2004, Sipex announced results for the quarter and year ended

December 31, 2003. On a non-GAAP, or pro forma basis, Sipex reported revenue of $17 .1 million

for the fourth quarter, consistent with earlier guidance . The $17.1 million represented an increase

of 4% over the previous quarter pro forma revenue of $16 .4 million and a 3 % increase compared to

the pro forma revenue of $16 .6 million reported for the same period last year . Pro forma diluted

(loss) per share for the fourth quarter of 2003 was $(0 .10) compared to the $(0 .12) pro forma per

share loss reported in the previous quarter (as restated) and the $(0.19) pro forma per share loss

reported for the fourth quarter of 2002 . On a GAAP basis, revenue for the fourth quarter was $4 .2

million, a decrease of 72% from the previous quarter of $15 .2 million, and a decrease of 75 %

compared to the 16.6 million reported for the same period of last year. Diluted (loss) per share for

the fourth quarter was $(0.60) compared to the $(0.17) per share loss for the previous quarter (as

restated) and $(0.28) loss per share reported for the fourth quarter of 2002 . For the year ended

December 31, 20D3, revenue was $49.4 million, down 25% from the $66 .3 million reported in 2002 .

Diluted (loss) per share for 2003 was $(1 .23 ) compared to $(2 .92) for 2002 . For the year ended

December 31, 2003, Non-GAAP or pro forma revenue was $64 million, down 4% from the $66

million reported in 2002 . Non-GAAP or pro forma diluted (loss) per share for 2003 was $(0 .69)

compared to $(1 .27) for 2002 . On a GAAP basis, gross margin for the fourth quarter of 2003 was

(187%) compared to 14% for the previous quarter (as restated) and (6.0%) for the fourth quarter of

2002. Commenting on these results, defendant Maghribi stated :

Based on our internal review during the close of the fourth quarter wedetermined that we erroneously understated the cost of sales duringthe second and third quarter of 2003 . These adjustments, however, d o

15

not change the trend in our improvement. We have substantiallystrengthened the Company's accounting functions during the fourthquarter with several key personnel changes and additions . This teamworked exceptionally hard to put in place the processes that identifiedthese adjustments .

We are pleased to have continued our pro forma revenue growth thatstarted last quarter. Revenue growth was driven by a 29% rise inpower products revenue, while interface revenue was modestlyhigher. Revenue from optical storage products dropped 22% due toa slowdown at one of our customers .

Sales of new products in the fourth quarter were robust, driven by a25% increase in multiprotocol products and 25% increase in newpower products with each achieving a record level .

Our pro forma gross margin benefited from the rise in new productsrevenue, our continuous yield improvement and by increasedshipment from our internal wafer fob .

For the year, we have achieved every milestone we set our eye on .Excluding legacy products, our pro forma revenue for 2003 increased28% when compared to 2002 while our pro forma gross marginincreased every quarter of the year when compared to the quarters ofthe prior year.

Due to our continuous focus on productivity improvement, newproducts introduction and major focus on strategic customers weexpect growth in revenue and gross margin to continue over the nextfour quarters . We continue to believe that profitability fromoperations could be achieved at a revenue level of around $19 millionper quarter .

We enter 2004 as a totally restructured company with a much betterproduct lineup, a significantly better cost structure, an improvedinventory position and tighter relationships with our customers . Welook forward to benefit from our focused effort and better marketenvironment .

While we entered this quarter with better backlog than the previousquarter, we continue to require high turn business to achieve ourrevenue target. Given the amount ofturn business required, we expect

16

that our revenue for the current quarter to be in the range of $ 1 8.2 to$18.8 million.

37 . On March 15, 2004, Sipex filed its annual report with the SEC on Form 10-K . The

Company's Form 10-K was signed by Defendants McBumie, Maghribi, and Kagel and reaffirme d

the Sipex's previously announced financial results . Additionally, the Company's Form 10- K

contained the following clean audit opinion by the Company's accountants, Deloitte & Touche, LLP

("De loitte") :

In our opinion, such consolidated financial statements present fairly,in all material respects, the financial position of Sipex Corporationand subsidiaries at December 31, 2003, and the results of theiroperations and their cash flows for the year then ended in conformitywith accounting principles generally accepted in the United States ofAmerica .

38. Additionally, the Company's Form 10-K stated the following with respect to Sipex' s

adequacy of Sipex's internal controls :

Our auditors have informed our Audit Committee of the existence ofreportable conditions in our internal control .

As part of the communications by our independent auditors, Deloitte& Touche LLP, or D&T, to our Audit Committee with respect toD&T's audit for the year ended December 31, 2003, D&T informedthe Audit Committee that they had identified the following"reportable conditions" in our internal control :

• Deficiencies in our process for deferring costs related to deferredsales to our largest distributor, Future ; and

• Deficiencies in our accounting department and related reliance onmanual reconciliations and analysis.

The reportable conditions noted above, if not addressed, could resultin accounting errors such as those underlying the restatements of ourconsolidated financial statements more fully discussed in Note 14 toour consolidated financial statements . Our failure to fully addres s

1 7

these reportable conditions could have a material adverse effect onour business, results of operations and financial condition[ .] . . .

39. On May 13, 2004, Sipex announced results for the first quarter of 2004 ended April

3, 2004. Sipex reported net sales of $18 .1 million, an increase of 330% compared to net sales o f

$4.2 million for the previous quarter and an increase of 20% compared to net sales of $15 .1 million

reported for the same period last year. Net sales for the quarter ended December 31, 2003, reported

on a GAAP basis, included a $12.9 million non-cash charge to reflect the impact of the accountin g

treatment from terminating the sales incentive feature of the 2003 convertible note issued to Futur e

Electronics . Diluted (loss) per share was $(0 .12) compared to the $(0.60) per share loss reported i n

the previous quarter and the $(0.26) per share loss reported for the same period last year . The current

quarter loss per share was favorably impacted by $0 .01 per share from the increase in the weighte d

average shares outstanding due to the conversion during the quarter of the notes payable to Futur e

Electronics . On a non-GAAP, or pro forma basis, net sales for the first quarter of 2004 increase d

6% compared to pro forma net sales of $17 .1 million reported for the fourth quarter of 2003 . Pro

forma diluted loss per share for the fourth quarter of 2003 was $(0 .11) . Commenting on these

results, defendant Maghribi stated :

We are pleased to have continued our revenue growth for threequarters in a row. Revenue growth was driven mainly by a 10% risein interface products revenue . Revenue from power productsincreased slightly while revenue from optical storage productsdeclined slightly as expected.

Gross margin was different than expected due to the sale of 5 microninterface products inventory which had a higher carrying cost andincreased valuation adjustments on some older inventory. This is inno way a reflection of a slowdown in our improvement which weexpect to continue for the next several quarters .

18

We are encouraged by the prospect for our optical storage products .We have reengaged with NEC after two quarters of absence andstarted shipping for the first time two components in the pickup heado€a 16X drive. This by itself is expected to add incremental net salesfor optical storage starting this quarter . We have also started shippingfor the first time, outside of Japan, pre-production volume on twoadditional components to a customer in Asia . In addition, we haveentered into two developmental contracts for two customers inEurope that could add to revenue in 2005. All in all, we anticipateoptical storage growing to net sales of over $5 million per quarterduring this year .

We are encouraged by the increasing acceptance of our products asrepresented by the significant growth of our interface products netsales over the year. We are also encouraged by the increasingacceptance of our products by direct OEM customers . However,while net sales growth from new power products has been slowerthan expected, we are experiencing high levels of design-in activity.

During the quarter we made a strategic decision to increase ourspending on R&D to better prepare us for 2005 . In addition, wedecided to increase our sales coverage for strategic accounts and addresources to our business and financial processes and systems . Whilethe first two actions are expected to increase our revenue and improveour product position and gross margin, the third action we believewill reduce our cost long term .

While we enter this quarter again with a high turns booking requiredequivalent to previous quarters, we believe that increased revenue onoptical storage products, still higher interface revenue and fastergrowth in new power products should enable us to achieve net salesin the range of $19 million to $20 million in the second quarter of2004.

40. On May 13, 2004, Sipex filed its quarterly report with the SEC on Form 10-Q . The

Company's Form 10-Q was signed by defendant Wallin and reaffirmed Sipex's previousl y

announced financial results . Additionally, and with respect to the presentation of its financial results ,

the Company stated :

19

In the opinion of management, the consolidated financial statementsreflect all adjustments, consisting only of normal recurringadjustments necessary for a fair presentation of the Company'sfinancial position and the operating results and cash flows for theperiod presented .

41 . On June 30, 2004, Sipex announced that it expected its sales for the second quarte r

of 2004 to be below previous guidance . Sipex expected to report net sales in the range of $16 to 16 . 3

million. These anticipated net sales are down 10% to 12% from the prior quarter, but up 7% to 10%

when compared to the same period last year . Commenting on these results, defendant Maghrib i

stated :

We are disappointed with these results. We are missing our salestarget in two areas. In optical storage products, our wafer foundry andbackend subcontractor were not able to ramp production of our newproducts as fast as needed to satisfy the strong demand . The rampfrom zero to more than a million units per month could not beachieved in the first quarter of production of the products . Asia wasthe second challenge due to end of the quarter pricing pressure fromour distributors. Consistent with our previously disclosed reductionin shipment of low margin products, we decided to run the businessin a more disciplined manner by refusing some turn opportunities thatdid not make sense .

We remain very encouraged by the prospect for our optical storageproducts . We are pleased that we have a strong backlog in place forthe next quarter so our manufacturing partners have the visibility theyneed to properly schedule their capacity.

In Asia, we believe that the demand for our products is real and wehope that our refusal to yield to end of the quarter demands forpricing concessions will enable us to have better pricing control andlead to higher gross margins .

42. On August 5, 2004, Sipex announced results for the second quarter of 2004 ende d

July 3, 2004. Sipex reported net sales of $15 .7 million, a decrease of 13 .0% compared to net sale s

of $18.1 million for the previous quarter and an increase of 5 .7% compared to net sales of $14 .9

20

million reported for the same period last year. Diluted (loss) per share was $(0.11 ) compared to the

$(0.12) per share loss reported in the previous quarter and the $(0 .20) per share loss reported for th e

same period last year. Commenting on these results, defendant Maghribi stated :

While on the surface the second quarter appears to be adisappointment, in addition to the shortfall in the shipment of opticalstorage products due to production constraints as previously reported,the shortfall in sales resulted from our deliberate actions to stem thedecline of prices in Asia . We are pleased to see our ASP's nowmoving to the highest level in the past two years .

While gross margin improved this quarter, it is still well below ourexpectation . The lack of significant improvement in gross margin isattributed to the delayed ramp up in shipments of our optical storageproducts due to production constraints, as previously reported . Weanticipate achieving a greater balance of supply and demand in thethird quarter.

We are excited about the acceptance of our optical storage productsand the prospects for this business in the coming quarters . We aregoing through a significant ramp to supply units during this quarterto a pick-up head manufacturer in japan for a 16X drive . In addition,we have entered into two developmental contracts for customers inEurope and Japan to develop components for the Blu-Ray andHDDVD pick-up heads that could extend our leadership past the 15Xdrive .

We enter the third quarter with the highest shippable backlog we haveseen in the past two years, driven mostly by strong backlog for opticalstorage products. Therefore, as compared to previous quarters, amuch lower level of turns business is required for us to achieveanticipated net sales in the range of $18 .5 million to $19 million inthe third quarter of 2004.

43. On August 12, 2004, Sipex filed its quarterly report with the SEC on Form 10-Q . The

Company's Form 10-Q was signed by defendant Wallin and reaffirmed Sipex's previousl y

announced financial results . Additionally, and with respect to the presentation of its financia l

results, the Company stated :

21

In the opinion of management, the consolidated financial statementsreflect all adjustments, consisting only of normal recurringadjustments necessary for a fair presentation of the Company'sfinancial position and the operating results and cash flows for theperiod presented .

44. On November 19, 2004, Sipex announced results for the third quarter of 2004 ende d

October 2, 2004 . Sipex reported net sales of $18 .8 million, an increase of 19% compared to net sales

of $15 .7 million for the previous quarter and an increase of 24% compared to net sales of $15 . 2

million (as restated) reported for the same period last year . Diluted (loss) per share was $(0 .16)

compared to the $(0 .11) per share loss reported in the previous quarter and the $(0 .17) per share loss

(as restated) reported for the same period last year . Commenting on these results, defendan t

Maghribi stated :

We are proud to have grown our revenues by 19% sequentially in avery tough and fast moving environment . Revenues from our twostrategic business lines, power management and optical storage, grewsequentially by 27% and 237%, respectively. Extremely strongdemand for our 16X drive PDIC and APC products drove revenuesto an all time high of nearly $5 million for these optical storageproducts.

While we executed well on our initiatives to increase our revenuesand reduce our external manufacturing costs, the general market slowdown on interface products impelled us to reduce production outputin our wafer fob in order to prevent a large inventory build that couldoverhang the market . This scale back in production output along withadditional inventory write-downs due to reduced demand on olderproducts contributed to the negative impact on gross margin .

We are excited about the continued acceptance of our optical storageproducts and the prospects for this business in the coming quarter andnext year . Our current customers are in field qualification of our nextgeneration products and we believe this bodes extremely well forcontinued success in this business .

22

Several of our new power products have gone into mass productionand drove our power management revenues to a strong 27%sequential quarterly growth .

We enter the fourth quarter with the highest shippable backlog wehave seen in the recent history of our company, driven mostly bystrong demand for our optical storage products and better backlogfrom our distributor network for the rest of the business . Turnsbusiness required for the quarter is at a low level of around 15% oftotal expected revenues from direct customers . With such a strongposition this early in the quarter, we anticipate net sales for thecurrent quarter to rise sequentially by 12% to 14% to between $21and $22 million.

45 . On November 12, 2004, Sipex filed its quarterly report with the SEC on Form 10-Q .

The Company's Form 10-Q was signed by defendant Wallin and reaffirmed Sepix's previousl y

announced financial results . Additionally and with respect to its financial results the Compan y

stated :

In the opinion of management, the consolidated financial statementsreflect all adjustments, consisting only of normal recurringadjustments necessary for a fair presentation of the Company'sfinancial position and the operating results and cash flows for theperiod presented .

46. The statements contained in ¶1 26-45 were materially false and misleading whe n

made because failed to disclose or indicate the following : (1) that the Company inappropriately

recognize revenue on sales for which price protection, stock rotation and/or return rights were

granted; (2) that the Company's financial results were in violation of Generally Accepted Accounting

Principles ("GAAP") ; (3) that the Company lacked adequate internal controls ; and (4) that as a result

of the above, the Company's financial results were materially inflated at all relevant times .

23

The Truth Begins to Emerge

47. On December 6, 2004, Sipex announced that Defendant Maghribi had resigned as the

Company's President and Chief Executive Officer because of disagreements with the Board ove r

growth and prospects for the company . Sipex also announced that Defendant Magribi had resigne d

from the Company's Board of Directors . The Board had named Defendant McBurnie as the interi m

president and Ch ief Executive Officer unt il such time as Defendant Maghribi ' s successor i s

determined .

48. On January 20, 2005, Sipex announced that the Company may restate its financia l

statements for the fiscal year ended December 31, 2003 and the fiscal quarters ended April 3, 2004,

July 3, 2004 and October 2, 2004 due to the possible improper recognition of revenue during these

periods on sales for which price protection, stock rotation and/or return rights may have been

granted. Mores specifically, the Company, in its press release, stated :

The audit committee of the Company's board of directors hascommenced an internal investigation, assisted by independent legalcounsel and forensic accounting experts retained for this purpose . Theinternal investigation is initially focused on the Company's financialand transactional records with regard to revenue recognition for thefiscal years ended December 31, 2003 and January 1, 2005 .Depending upon the results of the internal investigation, the Companyexpects that it may amend certain of its previously issued financialreports .

Due to the timing of the audit committee's investigation, theCompany will delay the announcement of its financial results for thequarter and fiscal year ended January 1, 2005 and may delay thetimely filing of its Form 10-K.

49. The news shocked the market. Shares of Sipex fell $0 .90 per share, or 23 .44 percent ,

on January 21, 2005, to close at $2 .94 per share, on unusually high volume .

24

3

SIPEX'S VIOLATION OF GAAP RULES

50 . GAAP states that "revenue should not be recognized until it is realized or realizabl e

and earned ." FASB Concepts Statement No . 5,X83. The conditions for the recognition of revenue

are met when "persuasive evidence of an arrangement exists, delivery has occurred or services have

been rendered, the seller's price is fixed or determinable, collectibility of the sales price is reasonably

assured and when the entity has substantially performed the obligations which entitle it to the

benefits represented by the revenue." Here, Autobytel improperly recognized revenue when revenue

from such transactions was not realizable and earned, which is in violation of GAAP .

51 . Given these accounting irregularities, the Company announced financial results tha t

were in violation of GAAP, the Company's own announced revenue recognition policies, and th e

following principles :

(a) The principle that "interim financial reporting should be based upon the sam e

accounting principles and practices used to prepare annual financial statements" was

violated (APB No . 28,X10) ;

(b) The principle that "financial reporting should provide information that is useful t o

present to potential investors and creditors and other users in making rationa l

investment, credit, and similar decisions" was violated (FASB Statement of Concept s

No . 1 , X34) ;

(c) The principle that "financial reporting should provide information about th e

economic resources of an enterprise, the claims to those resources, and effects of

25

3

transactions, events, and circumstances that change resources and claims to thos e

resources" was violated (FASB Statement of Concepts No . 1, ¶40) ;

(d) The principle that "financial reporting should provide information about a n

enterprise's financial performance during a period" was violated (FASB Statement

of Concepts No . 1, ¶42};

{e) The principle that "completeness, meaning that nothing is left out of the informatio n

that may be necessary to insure that it validly represents underlying events an d

conditions" was violated (FASB Statement of Concepts No. 2, ¶79) ;

(f) The principle that "financial reporting should be reliable in that it represents what i t

purports to represent" was violated (FASB Statement of Concepts No . 2, ¶¶58-59 ) ;

and

(g) The principle that "conservatism be used as a prudent reaction to uncertainty to tr y

to ensure that uncertainties and risks inherent in business situations are adequatel y

considered" was violated . (FASB Statement of Concepts No . 2, ¶95) .

52 . The adverse information concealed by defendants during the Class Period and

detailed above was in violation of Item 303 of Regulation S-K under the federal securities law (1 7

C.F.R. 229.303) .

UNDISCLOSED ADVERSE FACTS

53 . The market for Sipex's securities was open, well-developed and efficient at al l

relevant times . As a result of these materially false and misleading statements and failures t o

disclose, Sipex's securities traded at artificially inflated prices during the Class Period . Plaintiff and

other members of the Class purchased or otherwise acquired Sipex securities relying upon th e

26

3

integrity of the market price of Sipex's securities and market information relating to Sipex, and have

been damaged thereby .

54 . During the Class Period, defendants materially misled the investing public, thereby

inflating the price of Sipex's securities, by publicly issuing false and misleading statements and

omitting to disclose material facts necessary to make defendants' statements, as set forth herein, not

false and misleading. Said statements and omissions were materially false and misleading in that

they failed to disclose material adverse information and misrepresented the truth about the Company,

its business and operations, as alleged herein .

55 . At all relevant times, the material misrepresentations and omissions particularized

in this Complaint directly or proximately caused or were a substantial contributing cause of the

damages sustained by plaintiff and other members of the Class . As described herein, during the

Class Period, defendants made or caused to be made a series of materially false or misleading

statements about Sipex's business, prospects and operations . These material misstatements and

omissions had the cause and effect of creating in the market an unrealistically positive assessment

of Sipex and its business, prospects and operations, thus causing the Company's securities to be

overvalued and artificially inflated at all relevant times . Defendants' materially false and misleading

statements during the Class Period resulted in plaintiff and other members of the Class purchasing

the Company's securities at artificially inflated prices, thus causing the damages complained of

herein .

ADDITIONAL SCIENTER ALLEGATION S

56. As alleged herein, defendants acted with scienter in that defendants knew that the

public documents and statements issued or disseminated in the name of the Company were

27

materially false and misleading; knew that such statements or documents would be issued o r

disseminated to the investing public; and knowingly and substantially participated or acquiesced i n

the issuance or dissemination of such statements or documents as primary violations of the federal

securities laws. As set forth elsewhere herein in detail, defendants, by virtue of their receipt o f

information reflecting the true facts regarding Sipex, their con trol over , and/or receipt and/or

modification of Sipex allegedly materially misleading misstatements and/or their associations wit h

the Company which made them privy to confidential proprietary information concerning Sipex,

participated in the fraudulent scheme alleged herein .

57 . Defendants knew and/or recklessly disregarded the falsity and misleading nature o f

the information which they caused to be disseminated to the investing public . The ongoing

fraudulent scheme described in this complaint could not have been perpetrated over a substantia l

period of time, as has occurred, without the knowledge and complicity of the personnel at the highes t

level of the Company, including the Individual Defendants .

Applicab i lity Of Presumption Of Rel iance:Fraud-On-Th e-Market Doctrine

58. At all relevant times, the market for Sipex securities was an efficient market for th e

following reasons, among others :

(a) Sipex stock met the requirements for listing, and was listed and actively trade d

on the NASDAQ, a highly efficient and automated market ;

(b) As a regulated issuer, Sipex filed periodic public reports with the SEC and th e

NASDAQ;

28

(c) Sipex regularly communicated with public investors via established market

communication mechanisms, including through regular disseminations of press releases on th e

national circuits of maj or newswire services and through other widerranging public disclosures, suc h

as communications with the financial press and other similar reporting services ; and

(d) Sipex was followed by several securities analysts employed by major brokerag e

firms who wrote reports which were distributed to the sales force and certain customers of their

respective brokerage firms. Each of these reports was publicly available and entered the publi c

marketplace .

59 . As a result ofthe foregoing, the market for Sipex securities promptly digested current

information regarding Sipex from all publicly-available sources and reflected such information i n

Sipex stock price. Under these circumstances, all purchasers of Sipex securities during the Clas s

Period suffered similar injury through their purchase of Sipex securities at artificially inflated price s

and a presumption of reliance applies .

NO SAFE HARBOR

60. The statutory safe harbor provided for forward-looking statements under certai n

circumstances does not apply to any of the allegedly false statements pleaded in this complaint .

Many of the specific statements pleaded herein were not identified as "forward-looking statements"

when made . To the extent there were any forward-looking statements, there were no meaningful

cautionary statements identifying important factors that could cause actual results to diffe r

materially from those in the purportedly forward-looking statements . Alternatively, to the extent that

the statutory safe harbor does apply to any forward-looking statements pleaded herein, defendant s

are liable for those false forward-looking statements because at the time each of those forward-

29

looking statements was made, the particular speaker knew that the particular forward-looking

statement was false, and/or the forward-looking statement was authorized and/or approved by an

executive officer of Sipex who knew that those statements were false when made .

FIRST CLAIMViolation Of Section 10(b) Of

The Exchange Act Against And Rule 14b-5Promulgated Thereunder Against All Defendants

61 . Plaintiff repeats and realleges each and every allegation contained above as if fully

set forth herein .

62 . During the Class Period, defendants carried out a plan, scheme and course of conduc t

which was intended to and, throughout the Class Period, did : (i) deceive the investing public,

including Plaintiff and other Class members, as alleged herein ; and (ii) cause Plaintiff and other

members of the Class to purchase Sipex securities at artificially inflated prices . In furtherance of this

unlawful scheme, plan and course of conduct, defendants, and each of them, took the actions set

forth herein .

63. Defendants (a) employed devices, schemes, and artifices to defraud ; (b) made untrue

statements of material fact and/or omitted to state material facts necessary to make the statements

not misleading ; and (c) engaged in acts, practices, and a course of business which operated as a fraud

and deceit upon the purchasers of the Company's securities in an effort to maintain artificially high

market prices for Sipex securities in violation of Section 10(b) of the Exchange Act and Rule lOb-5 .

All defendants are sued either as primary participants in the wrongful and illegal conduct charged

herein or as controlling persons as alleged below .

30

64. Defendants, individually and in concert, directly and indirectly, by the use, means or

instrumentalities of interstate commerce and/or of the mails, engaged and participated in a

continuous course of conduct to conceal adverse material information about the business, operations

and future prospects of Sipex as specified herein .

65. These defendants employed devices, schemes and artifices to defraud, while in

possession of material adverse non-public information and engaged in acts, practices, and a course

of conduct as alleged herein in an effort to assure investors of Sipex value and performance and

continued substantial growth, which included the making of, or the participation in the making of,

untrue statements of material facts and omitting to state material facts necessary in order to make th e

statements made about Sipex and its business operations and future prospects in the light of the

circumstances under which they were made, not misleading, as set forth more particularly herein,

and engaged in transactions, practices and a course of business which operated as a fraud and deceit

upon the purchasers of Sipex securities during the Class Period .

66. Each of the Individual Defendants' primary liability, and controlling person liability ,

arises from the following facts : (i) the Individual Defendants were high-level executives and/or

directors at the Company during the Class Period and members of the Company's management team

or had control thereof; (ii) each of these defendants, by virtue of his responsibilities and activities

as a senior officer and/or director of the Company was privy to and participated in the creation,

development and reporting of the Company's internal budgets, plans, projections and/or reports ;

(iii) each of these defendants enjoyed significant personal contact and familiarity with the other

defendants and was advised of and had access to other members of the Company's management

team, internal reports and other data and information about the Company's finances, operations, an d

31

sales at all relevant times ; and (iv) each of these defendants was aware of the Company' s

dissemination of information to the investing public which they knew or recklessly disregarded wa s

materially false and misleading .

67. The defendants had actual knowledge of the misrepresentations and omissions o f

material facts set forth herein, or acted with reckless disregard for the truth in that they failed to

ascertain and to disclose such facts, even though such facts were available to them . Such defendants '

material misrepresentations and/or omissions were done knowingly or recklessly and for the purpos e

and effect of concealing Sipex operating condition and future business prospects from the investin g

public and supporting the artificially inflated price of its securities . As demonstrated by defendants '

overstatements and misstatements of the Company's business, operations and earnings throughou t

the Class Period, defendants, if they did not have actual knowledge of the misrepresentations an d

omissions alleged, were reckless in failing to obtain such knowledge by deliberately refraining fro m

taking those steps necessary to discover whether those statements were false or misleading .

68 . As a result of the dissemination of the materially false and misleading informatio n

and failure to disclose material facts, as set forth above, the market price of Sipex securities wa s

art i fic i ally inflated during the Class Pe riod . In ignorance of the fact that market prices of Sipex

publicly-traded securities were artificially inflated, and relying directly or indirectly on the false and

misleading statements made by defendants, or upon the integrity of the market in which the securitie s

trades, and/or on the absence of material adverse information that was known to or recklessl y

disregarded by defendants but not disclosed in public statements by defendants during the Clas s

Period, Plaintiff and the other members of the Class acquired Sipex securities during the Clas s

Period at artificially high prices and were damaged thereby .

32

69. At the time of said misrepresentations and omissions, Plaintiff and other member s

of the Class were ignorant of their falsity, and believed them to be true . Had Plaintiff and the other

members of the Class and the marketplace known the truth regarding the problems that Sipex wa s

experiencing, which were not disclosed by defendants, Plaintiff and other members of the Class

would not have purchased or otherwise acquired their Sipex securities, or, if they had acquired suc h

securities during the Class Period, they would not have done so at the artificially inflated price s

which they paid .

70 . By virtue of the forego ing, defendants have violated Section 10 (b) of the Exchange

Act, and Rule IOb-5 promulgated thereunder .

71 . As a direct and proximate result of defendants' wrongful conduct, Plaintiff and th e

other members ofthe Class suffered damages in connection with their respective purchases and sale s

of the Company's securities during the Class Period .

SECOND CLAIMV io lation Of Sect ion 20(a) Of

The Exchange Act Aga inst the Indiv idual Defen dant s

72 . Plaintiff repeats and realleges each and every allegation contained above as if fully

set forth herein .

73 . The Individual Defendants acted as controlling persons of Sipex within the meanin g

of Section 20(a) of the Exchange Act as alleged herein . By virtue of their high-level positions, and

their ownership and contractual rights, participation in and/or awareness of the Company' s

operations and/or intimate knowledge of the false financial statements filed by the Company wit h

the SEC and disseminated to the investing public, the Individual Defendants had the power t o

influence and control and did influence and control, directly or indirectly, the decision-making o f

33

the Company, including the content and dissemination of the various statements which Plaintif f

contend are false and misleading . The Individual Defendants were provided with or had unlimite d

access to copies of the Company's reports, press releases, public filings and other statements allege d

by Plaintiff to be misleading prior to and/or shortly after these statements were issued and had th e

ability to prevent the issuance of the statements or cause the statements to be corrected .

74. In particular, each of these defendants had direct and supervisory involvement in the

day-to-day operations of the Company and, therefore, is presumed to have had the power to contro l

or influence the particular transactions giving rise to the securities violations as alleged herein, an d

exercised the same .

75. As set forth above, Sipex and the Individual Defendants each violated Section 10(h )

and Rule I Ob-5 by their acts and omissions as alleged in this Complaint . By virtue of their position s

as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of th e

Exchange Act . As a direct and proximate result of defendants' wrongful conduct, Plaintiff and other

members of the Class suffered damages in connection with their purchases of the Company' s

securities during the Class Period .

WHEREFORE, Plaintiff prays for relief and judgment, as follows :

(a) Determining that this action is a proper class action, designating Plaintiff as Lea d

Plaintiff and certifying Plaintiff as a class representative under Rule 23 of the Federal Rules of Civi l

Procedure and Plaintiff's counsel as Lead Counsel ;

(b) Awarding compensatory damages in favor of Plaintiff and the other Clas s

members against all defendants, jointly and severally, for all damages sustained as a result o f

defendants' wrongdoing, in an amount to be proven at trial, including interest thereon ;

34

3

(c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in

this action, including counsel fees and expert fees ; and

(d) Such other and further relief as the Court may deem just and proper .

35

JURY TRIAL DEMANDED

Dated :

Plaintiff hereby demands a trial by jury .

GREEN WELLING, LLPBy:Robert Green, Esquire235 Pine Street, 15th FloorSan Francisco, California 94104(415) 477-6700

SCHIFFRIN & BARROWAY, LLPMarc A. TopazRichard A. ManiskasTamara SkvirkyThree Bala Plaza EastSuite 400Bala Cynwyd, PA 19004(b10 ) 667-7706

Attorneys for Plaintiff

36