<PAGE>

                                                                  EXHIBIT 10.30

          THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
          LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
          ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
          REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
          1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION
          THEREFROM. THE PRINCIPAL AMOUNT REPRESENTED HEREBY AND THE SECURITIES
          ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH
          ON THE FACE HEREOF PURSUANT TO SECTION 3(A)(4) HEREOF. A PROSPECTIVE
          ACQUIROR HEREOF IS ADVISED TO CONTACT THE ISSUER HEREOF AS TO THE
          ACTUAL OUTSTANDING PRINCIPAL AMOUNT HEREOF.



                                SIPEX CORPORATION

                       1.5% CONVERTIBLE SECURED NOTE DUE JUNE 30, 2007

          No. 2003-1      U.S. $10,560,000

                 1.       SECURITY.

                 This Security is a duly authorized 1.5% Convertible Secured
          Note due June 30, 2007 of Sipex Corporation, a Massachusetts
          corporation (the "Company"). Capitalized terms used and not otherwise
          defined herein, shall have the respective meanings given to those
          terms in Section 10 hereof.

                 2.       PRINCIPAL AMOUNT AND INTEREST.

                          (a) The Company for value received, hereby promises
          to pay to the order of Alonim Investments Inc., an Affiliate of Future
          Electronics Inc. ("Future Electronics"), or its registered assigns,
          the principal sum of U.S. $10,560,000 (the "Principal Amount") on June
          30, 2007 (the "Final Maturity Date"). Except as specifically set forth
          in this Security, the Company does not have any right, option, or
          obligation to pay any portion of the principal at any time prior to
          the Final Maturity Date. The Company also undertakes to pay to the
          Holder, interest, at the rate of 1.5% per annum, calculated and
          payable quarterly. Interest shall accrue as and from the date that the
          purchase price of this Security is paid by the Holder to the Company
          (or to an agreed upon escrow agent, as the case may be).

                          (b) Interest shall be computed on the basis of a 365
          day year, and actual days elapsed. Interest shall be payable in U.S.
          Dollars to the Holder in whose name this Security was registered at
          the close of business on the business day


<PAGE>


          immediately preceding an Interest Payment Date (as defined below). The
          first installment of interest shall be due and payable on September
          30, 2003, and successive installments of interest shall be due and
          payable on the last day of every third calendar month thereafter,
          provided, however, that if such day is not a Business Day, the
          interest shall be due and payable on the Business Day immediately
          following such day (each such date, an "Interest Payment Date").

                          (c) Payment of the Principal Amount of this Security
          shall be made upon the surrender of this Security to the Company, at
          the office designated by the Company for delivery of notices pursuant
          to Section 11(a) hereof (the "Designated Office"), in such coin or
          currency of the United States of America as at the time of payment
          shall be legal tender for the payment of public and private debts.

                          (d) Payment of the Principal Amount, and interest,
          shall be made by wire transfer of immediately available funds to the
          Holder entitled thereto in accordance with the wire transfer
          instructions provided by the Holder to the Company at least three
          Business Days prior to the Final Maturity Date or, if no such
          instructions have been so provided, by U.S. dollar check mailed to the
          address of the Holder entitled thereto as such address shall appear in
          the Note Register.

                          (e) Notwithstanding Section 2 (a), on July 31,
          2005, and again on July 31, 2006, the Holder shall have the right to
          receive, on each such occasion, the repayment of up to $3,000,000;
          provided, that the Holder shall have given to the Company at least
          ninety (90) days prior notice of such demand for partial repayment.
          Upon making any such partial repayment, the Company shall deliver to
          the Holder, upon presentation hereof, a new Security reflecting the
          revised Principal Amount.

                 3.       CONVERSION.

                 This Note shall be convertible into shares of Common Stock on
          the terms and conditions set forth in this Section 3, subject to
          vesting of the conversion rights ("Conversion Rights") granted herein,
          as provided for in Section 5 hereof.

                          (a) (1) Subject to compliance with applicable laws,
          including but not limited to the Hart-Scott-Rodino Antitrust
          Improvements Act of 1976, as amended, the provisions of Section
          4(a)(1) and Section 5, the Holder of this Security may, on one or more
          occasions, convert the Principal Amount of this Security (or any
          portion thereof) into Common Stock at any time following the date on
          which any of the Conversion Rights vest, but prior to the close of
          business on June 30, 2007, at the Conversion Price then in effect. The
          number of shares of Common Stock into which all or any portion of the
          Principal Amount may be converted upon any such conversion shall be a
          number of shares equal to the quotient (rounded down to the nearest
          whole share) obtained by dividing (A) the Principal Amount or portion
          thereof being converted by (B) the Conversion Price then in effect;
          provided that the Holder shall be entitled to receive upon such
          conversion only that number of shares of Common Stock equal to the (x)
          number of Conversion Rights which are then vested pursuant to the
          provisions of Section 5 (subject to any adjustments of the number of
          Conversion Rights required to reflect the


                                       2
<PAGE>

          adjustments to the Conversion Price as per Section 3(b) (8)), less (y)
          the aggregate number of shares of Common Stock received pursuant to
          any previous conversion or conversions under this Security.

                 Subject to the other provisions of this Agreement pertaining to
          adjustment of the Conversion Price (as defined below), the rate at
          which the Principal Amount may be converted into Common Stock (the
          "Conversion Price"), upon vesting of the Conversion Rights, shall be
          equal to the weighted average Closing Price of the Common Stock, for
          the twenty Trading Days immediately preceding the approval of the
          instant transaction by the Company's Board of Directors, $3.52. To
          convert this Security on any date after the vesting of the Conversion
          Rights, or any portion thereof (the date of each such conversion, a
          "Conversion Date"), the Holder hereof shall: (x) send by facsimile (or
          otherwise deliver) prior to 5:00 p.m., San Francisco time, on such
          date a copy of the fully executed conversion notice in the form
          attached as Exhibit A hereto (the "Conversion Notice") to the Company,
          (y) if required by Section 3(a)(4), surrender this Security to a
          common carrier for delivery to the Company as soon as practicable on
          or following such date (or an indemnification undertaking with respect
          to this Security in the case of its loss, theft or destruction) and
          (z) pay any transfer taxes or other applicable taxes or duties, if
          any, required in connection with the issuance of shares of Common
          Stock in the name of someone other than the Holder. Upon receipt by
          the Company of a facsimile copy of a Conversion Notice from the
          Holder, the Company shall as soon as practicable, but in any event on
          or before the second Business Day following the date of receipt of the
          Conversion Notice, send, via facsimile, a confirmation to the Holder
          and the transfer agent for the Common Stock stating that the
          Conversion Notice has been received, the date upon which the Company
          expects to deliver the Common Stock issuable upon such conversion and
          the name and telephone number of a contact person at the Company
          regarding the conversion. The Company shall not be obligated to issue
          shares of Common Stock upon a conversion unless the Holder complies
          with the foregoing requirements set forth in this paragraph.

                 On or prior to the third Business Day after any Conversion
          Date (the "Share Delivery Date"), the Company shall issue and deliver
          to the Holder or its nominee (x) that number of shares of Common Stock
          issuable upon conversion of the portion of this Security being
          converted and (y) if required pursuant to Section 3(a)(4), a new
          Security in the form hereof representing the balance of the Principal
          Amount hereof not being converted, if any, and (z) if applicable, cash
          in lieu of any fractional shares pursuant to Section 3(a)(5). If the
          Company's transfer agent is participating in DTC's Fast Automated
          Securities Transfer program, and so long as the certificate for the
          Common Stock to be issued upon conversion of this Security is not
          required to bear a legend and the Holder is not then required to
          return such certificate for the placement of a legend thereon and the
          Holder has provided the Company with the information required by DTC
          relating to the DTC account of the Holder or such Holder's nominee,
          the Company shall cause its transfer agent to electronically transmit
          the Common Stock issuable upon conversion to the Holder by crediting
          the account of the Holder or its nominee with DTC through its Deposit
          Withdrawal Agent Commission system. If the aforementioned conditions
          for a DTC Transfer are not satisfied, the Company shall deliver to the
          Holder physical certificates representing the Common Stock issuable
          upon

                                       3

<PAGE>

          conversion. Further, even if the aforementioned conditions to a DTC
          Transfer are satisfied, the Holder may instruct the Company in writing
          to deliver to the Holder physical certificates representing the Common
          Stock issuable upon conversion in lieu of delivering such shares by
          way of DTC Transfer.

                          (2) The Holder, as such, is not entitled to any
          rights of a holder of Common Stock until the Holder has converted this
          Security into Common Stock, and only to the extent this Security is
          deemed to have been converted into Common Stock pursuant to this
          Section 3.

                          (3) This Security shall be deemed to have been
          converted immediately prior to the close of business on the Conversion
          Date, and at such time the rights of the Holder of this Security as
          the Holder hereof shall cease with respect to the portion of this
          Security converted on such Conversion Date, and the Person or Persons
          entitled to receive the shares of Common Stock issuable upon
          conversion shall be deemed to be a stockholder of record on the
          Conversion Date; provided, however, that no surrender of this Security
          on any date that is not a Business Day shall be effective to
          constitute the person or persons entitled to receive the shares of
          Common Stock upon such conversion as the record holder or holders of
          such shares of Common Stock on such date, but such surrender shall be
          effective to constitute the person or persons entitled to receive such
          shares of Common Stock as the record holder or holders thereof for all
          purposes at the opening of business on the next succeeding Business
          Day.

                          (4) Upon conversion of any portion of this Security
          in accordance with the terms hereof, or upon partial repayment
          pursuant to Section 2(e), the Holder shall physically surrender this
          Security to the Company, upon receipt by the Holder from the Company
          of the shares of Common Stock (or partial repayment, as the case may
          be) and replacement Security showing the revised Principal Amount.

                          (5) The Company will not issue fractional shares of
          Common Stock upon conversion of this Security. In lieu thereof, the
          Company will pay an amount in cash for the current market value of the
          fractional shares. The current market value of a fractional share
          shall be determined (calculated to the nearest 1/1000th of a share) by
          multiplying the Closing Price of the Common Stock on the Trading Day
          immediately prior to the Conversion Date by such fractional share and
          rounding the product to the nearest whole cent.

                          (6) The Company shall, if the Holder so elects,
          deliver the Common Stock issuable upon conversion of this Security to
          any third party designated by the Holder, subject to compliance with
          Sections 3(e) and 11(b) hereof.

                 (b) The Conversion Price will be  subject to adjustments from
          time to time as follows:

                          (1) In case the Company shall hereafter pay a
          dividend or make a distribution to all holders of the outstanding
          Common Stock in shares of Common Stock or rights, options or warrants
          for Common Stock, the Conversion Price in effect on


                                      4

<PAGE>

          the day following the Record Date shall be reduced by multiplying such
          Conversion Price by a fraction:

                                   (A) the numerator of which shall be the
          number of shares of Common Stock outstanding at the close of business
          on the Record Date fixed for the determination of the holders entitled
          to such dividend or distribution; and

                                   (B) the denominator of which shall be the
          sum of such number of shares referred to in (A) above and the total
          number of shares constituting such dividend or other distribution.

                 Such reduction in the Conversion Price shall become effective
          immediately after the opening of business on the day following the
          Record Date.


                          (2) In case the outstanding shares of Common Stock
          shall be subdivided into a greater number of shares of Common Stock,
          the Conversion Price in effect on the day following the day upon which
          such subdivision becomes effective shall be proportionately reduced,
          and conversely, in case the outstanding shares of Common Stock shall
          be combined into a smaller number of shares of Common Stock, the
          Conversion Price in effect at the opening of business on the day
          following the day upon which such combination becomes effective shall
          be proportionately increased, such reduction or increase, as
          applicable, to become effective immediately after the opening of
          business on the day following the day upon which such subdivision or
          combination becomes effective.

                          (3) The Company may make such reductions in the
          Conversion Price, in addition to those required by Sections 3(b)(1) or
          (2) as the Board of Directors considers to be advisable to minimize
          any income tax to holders of Common Stock or rights to purchase Common
          Stock resulting from any dividend or distribution of stock (or rights
          to acquire stock) or from any event treated as such for income tax
          purposes or otherwise.

                          (4) To the extent permitted by applicable law,
          the Company from time to time may reduce the Conversion Price by any
          amount for any period of time if the period is at least 20 days and
          the reduction is irrevocable during the period and the Board of
          Directors determines in good faith that such reduction would be in the
          best interests of the Holder, which determination shall be conclusive
          and set forth in a Board Resolution. Whenever the Conversion Price is
          reduced pursuant to the preceding sentence, the Company shall mail to
          the Holder of this Security, at the Holder's address as it appears in
          the Note Register, a notice of the reduction at least 15 days prior to
          the date the reduced Conversion Price takes effect, and such notice
          shall state the reduced Conversion Price and the period during which
          it will be in effect. In the event that the Company elects to
          temporarily reduce the Conversion Price pursuant to this Section
          3(b)(4), the Conversion Price shall be adjusted upon the expiration of
          such temporary reduction to the Conversion Price that otherwise would
          then be in effect if such temporary reduction had not occurred, and
          the Conversion Price shall at no time be

                                       5

<PAGE>

          greater than the Conversion Price that otherwise would be in effect if
          such temporary reduction had not occurred.

                          (5) No adjustment in the Conversion Price shall be
          required unless such adjustment would require an increase or decrease
          of at least 1% in such price; provided, however, that any adjustments
          which by reason of this Section 3(b)(5) are not required to be made
          shall be carried forward and taken into account in any subsequent
          adjustment. All calculations under this Section 3 shall be made by the
          Company in good faith and shall be made to the nearest cent or to the
          nearest one hundredth of a share, as applicable. No adjustment need be
          made for a change in the par value or no par value of the Common
          Stock.

                          (6) Whenever the Conversion Price is adjusted as
          provided in Section 3(b), the Company shall compute the adjusted
          Conversion Price in accordance with Section 3(b) and shall prepare a
          certificate signed by an executive officer of the Company setting
          forth the adjusted Conversion Price and showing in reasonable detail
          the facts upon which such adjustment is based, and shall mail such
          certificate to the Holder of this Security at its last address in the
          Note Register within 5 Business Days of the effective date of such
          adjustment. Neither the failure to deliver such notice nor the
          existence of any defect therein shall affect the legality or validity
          of any such adjustment.

                          (7) For purposes hereof, "Record Date" shall
          mean, with respect to any dividend, distribution or other transaction
          or event in which the holders of Common Stock have the right to
          receive any cash, securities or other property or in which the Common
          Stock (or other applicable security) is exchanged for or converted
          into any combination of cash, securities or other property, the date
          fixed for determination of stockholders entitled to receive such cash,
          securities or other property (whether such date is fixed by the Board
          of Directors or by statute, contract or otherwise).

                          (8) Whenever the Conversion Price shall be adjusted
          pursuant to Section 3(b), the number of vested and unvested Conversion
          Rights shall thereupon be adjusted so that the then unexercised
          Conversion Rights shall represent the right to conversion into that
          number of shares of Common Stock (calculated to the nearest hundredth
          of a share of Common Stock) obtained by multiplying the Conversion
          Price then in effect immediately prior to such adjustment by the
          number of shares of Common Stock into which such then unexercised
          Conversion Rights may be converted immediately prior to such
          adjustment and dividing the product so obtained by the Conversion
          Price in effect after such adjustment. Any such adjustment to the
          Conversion Rights shall be set forth in the certificate required by
          Section 3(b)(6) with respect to adjustments of the Conversion Price.


                 (c) In case at any time after the date hereof:

                          (1) the Company shall declare a dividend (or any
          other distribution) on its Common Stock that would result in an
          adjustment to the Conversion Price pursuant to this Section 3;

                                       6



<PAGE>

                          (2) the Company shall authorize the granting to the
          holders of its Common Stock of rights or warrants to subscribe for or
          purchase any shares of capital stock of any class (or of securities
          convertible into shares of capital stock of any class) or of any other
          rights;

                          (3) there shall occur any reclassification of the
          Common Stock of the Company (other than a subdivision or combination
          of its outstanding Common Stock, a change in par value, a change from
          par value to no par value or a change from no par value to par value),
          or any merger, consolidation, statutory share exchange or combination
          to which the Company is a party and for which approval of any
          stockholders of the Company is required, or the sale, transfer or
          conveyance of all or substantially all of the assets of the Company;
          or
                          (4) there shall occur the voluntary or involuntary
          dissolution, liquidation or winding up of the Company;

          the Company shall cause to be provided to the Holder of this Security
          in accordance with Section 11(a), at least 20 days (or 10 days in any
          case specified in clause (1) or (2) above) prior to the applicable
          record or effective date hereinafter specified, a written notice
          (which notice shall not include any material non-public information)
          stating:

                                   (A) the date on which a record is to be
          taken for the purpose of such dividend, distribution, grant of rights
          or warrants, or, if a record is not to be taken, the date as of which
          the holders of shares of Common Stock of record to be entitled to such
          dividend, distribution, rights or warrants are to be determined; or


                                   (B) the date on which such reclassification,
          merger, consolidation, statutory share exchange, combination, sale,
          transfer, conveyance, dissolution, liquidation or winding up is
          expected to become effective, and the date as of which it is expected
          that holders of shares of Common Stock of record shall be entitled to
          exchange their shares of Common Stock for securities, cash or other
          property deliverable upon such reclassification, merger,
          consolidation, statutory share exchange, sale, transfer, dissolution,
          liquidation or winding up.

                 Neither the failure to give such notice nor any defect therein
          shall affect the legality or validity of the proceedings or actions
          described in clauses (1) through (4) of this Section 3(c).

                 (d) The Company shall use its best efforts to obtain
          shareholder approval at the next annual meeting of shareholders
          scheduled for May 30, 2003 (the "2003 Meeting") to increase authorized
          capital stock by an amount sufficient for Company to have enough
          shares authorized, un-issued and un-reserved to reserve sufficient
          numbers of shares of Common Stock for the purposes of effecting the
          conversion of this Security. Notwithstanding the foregoing, in the
          event that the Company does not obtain approval for the increase in
          the authorized capital stock at the 2003 Meeting, the Company shall
          use its best efforts to ensure the reservation of sufficient shares of
          Common Stock by decreasing the number of shares of Common


                                       7


<PAGE>

          Stock reserved for future grants of options to purchase the Company's
          Common Stock. If the Company has been unable to reserve sufficient
          shares of Common Stock within six (6) months following the date of the
          2003 Meeting, the Holder shall have the right to require the Company
          to repay to the Holder a pro-rata amount of the Principal Amount of
          this Security, based on the number of shares of Common Stock that have
          not been reserved for conversion of this Security as of such date, and
          the Company shall repay such portion of the Principal Amount, and
          accrued interest calculated as at the date of repayment, within thirty
          (30) days of a notice to that effect from the Holder. In the event of
          such partial repayment, the number of Conversion Rights that can vest
          pursuant to this Security shall be reduced by such amount repaid,
          provided however, that if certain Conversion Rights are no longer
          capable of vesting, the shortfall shall be first allocated against
          these Conversion Rights that can no longer vest. The Company covenants
          that all shares of Common Stock that may be issued upon conversion of
          this Security will upon issue be free from preemptive rights and
          validly issued, fully paid and nonassessable.

                 (e) Except as provided in the next sentence, the Company will
          pay any and all taxes (other than taxes on income) and duties that may
          be payable in respect of the issue or delivery of Common Stock upon
          conversion of this Security. The Company shall not, however, be
          required to pay any tax or duty that may be payable in respect of any
          transfer involved in the issue and delivery of Common Stock in a name
          other than that of the Holder of this Security, and no such issue or
          delivery shall be made unless and until the Person requesting such
          issue has paid to the Company the amount of any such tax or duty, or
          has established to the reasonable satisfaction of the Company that
          such tax or duty has been paid.

                 (f) If any of following events occur:

                          (1) any reclassification or change of the outstanding
          shares of Common Stock (other than a change in par value, or from par
          value to no par value, or from no par value to par value, or as a
          result of a subdivision or combination), as a result of which holders
          of Common Stock shall be entitled to receive Capital Stock, securities
          or other property or assets (including cash) with respect to or in
          exchange for such Common Stock;

                          (2) any merger, consolidation, statutory share
          exchange or combination of the Company with another Person as a result
          of which holders of Common Stock shall be entitled to receive stock,
          securities or other property or assets (including cash) with respect
          to or in exchange for such Common Stock; or

                          (3) any sale or conveyance of the properties and
          assets of the Company as, or substantially as, an entirety to any
          other Person as a result of which holders of Common Stock shall be
          entitled to receive stock, securities or other property or assets
          (including cash) with respect to or in exchange for such Common Stock,
          then the Company or the successor or purchasing entity, as applicable,
          shall execute with the Holder of this Security a supplemental
          agreement providing that this Security shall be convertible into the
          kind and amount of shares of capital stock and other securities or
          property or assets (including cash) that such Holder would have been
          entitled to receive


                                       8

<PAGE>

          upon such reclassification, change, merger, consolidation, statutory
          share exchange, combination, sale or conveyance had this Security been
          converted into Common Stock immediately prior to such
          reclassification, change, merger, consolidation, statutory share
          exchange, combination, sale or conveyance assuming the Holder, as a
          holder of Common Stock, did not exercise its rights of election, if
          any, as to the kind or amount of securities, cash or other property
          receivable upon such reclassification, change, merger, consolidation,
          statutory share exchange, combination, sale or conveyance (provided
          that, if the kind or amount of securities, cash or other property
          receivable upon such reclassification, change, merger, consolidation,
          statutory share exchange, combination, sale or conveyance is not the
          same for each of the shares of Common Stock in respect of which such
          rights of election shall not have been exercised ("Non-Electing
          Share"), then for the purposes of this Section 3(f) the kind and
          amount of securities, cash or other property receivable upon such
          reclassification, change, merger, consolidation, statutory share
          exchange, combination, sale or conveyance for each Non-Electing Share
          shall be deemed to be the kind and amount so receivable per share by a
          plurality of the Non-Electing Shares). Such supplemental agreement
          shall provide for adjustments that shall be as nearly equivalent as
          may be practicable to the adjustments provided for in this Section 3.
          If, in the case of any such reclassification, change, merger,
          consolidation, statutory share exchange, combination, sale or
          conveyance, the stock or other securities and assets receivable
          thereupon by a holder of Common Stock includes shares of stock or
          other securities and assets of a person other than the successor,
          purchasing or transferee entity, as applicable, in such
          reclassification, change, merger, consolidation, statutory share
          exchange, combination, sale or conveyance, then such supplemental
          agreement shall also be executed by such other person and shall
          contain such additional provisions to protect the interests of the
          Holder as the Board of Directors shall reasonably consider necessary
          by reason of the foregoing.

                 The above provisions of this Section 3(f) shall apply to
          successive or a series of related reclassifications, changes, mergers,
          consolidations, statutory share exchanges, combinations, sales and
          conveyances. If this Section 3(f) applies to any event or occurrence,
          then the other provisions of Section 3(b) shall not apply to the
          issuance of securities pursuant to such event or occurrence, provided
          that such other provisions shall continue to apply to all other
          issuances.

                          (g) The Company (i) will effect all registrations
          with, and obtain all approvals by, all governmental authorities that
          may be necessary under any United States federal or state law
          (including the Securities Act, the Exchange Act and state securities
          and Blue Sky laws) for the Common Stock issuable upon conversion of
          this Security to be lawfully issued and delivered as provided herein,
          and thereafter publicly traded (if permissible under the Securities
          Act) and qualified or listed as contemplated by clause (ii) (it being
          understood that the Company shall not be required to register the
          Common Stock issuable on conversion hereof under the Securities Act
          except pursuant to the registration rights contained in Section 4 of
          the Purchase Agreement); and (ii) will list the Common Stock required
          to be issued and delivered upon conversion of this Security, within 30
          calendar days after the first anniversary of the Issuance Date, on
          each national securities exchange on which outstanding Common Stock is
          listed or quoted at such time of such delivery, or if the Common Stock
          is not then listed on any national securities


                                       9

<PAGE>

          exchange, to qualify the Common Stock for quotation on the Nasdaq
          Stock Market or such other inter-dealer quotation system, if any, on
          which the Common Stock is then quoted.

                 4.       CONVERSION OR REPAYMENT AT THE OPTION OF THE HOLDER
          UPON A CHANGE OF CONTROL.

                          (a) Conversion Rights and Repayment.

                                   (1) Notwithstanding the fact that certain
          Conversion Rights may have not yet then vested, in the event that a
          Change of Control shall occur at any time prior to the Final Maturity
          Date, then all Conversion Rights that have yet to vest and remain
          eligible for vesting pursuant to Section 5 hereof, shall immediately
          become vested, and, the Holder of this Security shall have the right,
          at the Holder's option, but subject to the provisions of Sections 4(b)
          and 4(c), to convert the Principal Amount of this Security into Common
          Stock at the Conversion Price then in effect, on the terms and
          conditions of Section 3.

                                   (2) In the event that a Change of Control
          shall occur at any time that this Security is outstanding the Holder
          of this Security shall have the right (such right, together with the
          Conversion Rights described above under Section 4(a)(1), the "Change
          of Control Right"), at the Holder's option, but subject to the
          provisions of Sections 4(b) and 4(c), to elect to require that the
          Company repay the entire outstanding Principal Amount of this
          Security, together with all accrued and unpaid interest thereon up to,
          but excluding the day on which the Change of Control is consummated.


                          (b) No sooner than 15 days nor later than 10 days
          prior to the expected date of consummation of a Change of Control, but
          in no event prior to the public announcement of such Change of
          Control, the Company shall deliver written notice thereof via
          facsimile and overnight courier to the Holder (a "Change of Control
          Notice"). The Change of Control Notice shall include a form of
          Conversion Notice and a form of Notice of Election to Require
          Redemption, to be completed by the Holder and delivered to the Company
          pursuant to this Section 4(c), and shall state the following:

                                   (1) that it is a Change of Control Notice
          pursuant to this Section 4;

                                   (2) the events causing the Change of Control
          and the expected date of such Change of Control; and

                                   (3) the procedures with which such Holder
          must comply to exercise its right to have this Security converted or
          repurchased pursuant to Section 4(a), including the date by which the
          completed Conversion Notice or Notice of Election to Require Repayment
          and this Security must be delivered to the Company in order to have it
          converted or redeemed by the Company pursuant to Section 4(a), the
          address for delivery, the Conversion Price then in effect and any
          adjustments thereto, the amount of accrued and unpaid interest thereon
          as of the expected date of consummation of such


                                       10


<PAGE>

          Change of Control, and that this Security as to which a Conversion
          Notice has been given may be converted.

                 No failure by the Company to give the foregoing Change of
          Control Notice shall limit the Holder's right to exercise its rights
          pursuant to Section 4(a).

                          (c) To exercise a Change of Control Right pursuant to
          Section 4(a), a Holder must deliver to the Company, at its Designated
          Office on or prior to the close of business on the Business Day prior
          to the date on which the Change of Control is consummated, the
          following:

                                   (1) a completed Conversion Notice, the form
          of which is contained in Exhibit A hereto, or a completed Notice of
          Election to Require Repayment, the form of which is contained in
          Exhibit B hereto; and

                                   (2) this Security, with, if the Company so
          requires, due endorsement by, or a written instrument of transfer, in
          form satisfactory to the Company duly executed by, the Holder or such
          Holder's attorney duly authorized in writing.

                          (d) In the event that the Holder becomes entitled to
          convert this Security pursuant to this Section 4, the number of
          Conversion Rights exercisable by the Holder shall be adjusted to
          reflect any adjustment to the Conversion Price relative to the
          Conversion Price that was in effect on the Issuance Date as per
          Section 3(b)(8), which shall be applicable mutatis mutandis.

                 5.       VESTING OF CONVERSION RIGHTS

                          (a) Subject to the Conditions set forth hereafter, the
          Conversion Rights associated with this Security shall vest over a
          period of three (3) years, divided into three (3) periods of twelve
          (12) months each ("Reference Periods") as provided for in this Section
          5. The number of Conversion Rights indicated below with respect to a
          Reference Period shall vest in accordance with the schedule set forth
          below in the event that the Sales (as defined below) to Future
          Electronics for such Reference Period equal or exceed the target
          indicated below for such Reference Period (each, a "Target") and the
          vesting mechanism described in Section 5(c).

                          The Reference Periods, the Target for each Reference
          Period and the number of Conversion Rights subject to vesting with
          respect to each Reference Period are as follows:

<TABLE>
<CAPTION>


                                                                               NUMBER OF CONVERSION
                     PREFERENCE        DURATION OF     TARGET FOR SUCH         RIGHTS SUBJECT TO VESTING
                     PERIOD            REFERENCE       REFERENCE PERIOD IN     WITH RESPECT TO
REFERENCE PERIOD     NUMBER              PERIOD        USD$                    THE REFERENCE PERIOD
----------------     -------             ------        ----                    --------------------

<S>                 <C>              <C>              <C>                     <C>
 July 1, 2003 to
 June 30, 2004            1            12 months                30,000,000            1,000,000

 July 1, 2004 to          2            12 months                40,000,000            1,000,000
</TABLE>




                                       11


<PAGE>

          <TABLE>

          June 30, 2005

          <S>                 <C>              <C>                      <C>                   <C>
          July 1, 2005 to
          June 30, 2006             3            12 months                55,000,000             1,000,000
          </TABLE>



                 (b) Sales Computation. The sales for a given Reference Period
          ("Sales") shall be computed by taking into account the total
          consideration paid by Future Electronics and its Affiliates to the
          Company, inclusive of any adjustments by way of credit or debit, for
          products purchased by Future Electronics or its Affiliates from the
          Company. For clarification purposes, "Sales" is the amount that the
          Company would be able to report as revenue in its financial results in
          accordance with the revenue recognition rules set forth in the
          Company's most recent Form 10-K filing with the Commission, for the
          fiscal year ended December 31, 2002. More specifically, such rules
          provide that (i) sales made to Future Electronics pursuant to the
          distribution agreement dated as of July 1, 1993 by and between Future
          Electronics and the Company, as the same may be amended from time to
          time, (the "Distribution Agreement"), with return privileges and price
          protection rights, are only recognized as revenue upon resale by the
          Holder to its own customer; and (ii) sales made to Future Electronics
          outside of the Distribution Agreement (i.e. without price protection
          or return rights, other than for product related issues), are
          recognized by the Company as revenue immediately. The Company agrees
          that for the purposes of calculating the sales computation hereof, it
          shall use these revenue recognition rules, and to continue to apply
          these rules on a consistent basis through the end of the last
          Reference Period for which this Security shall be in effect, unless
          the Company has received the prior written consent of Future
          Electronics to such modification.

                 The amount (if any) by which the Sales exceed the Target
          during any given Reference Period shall carry over to the Sales
          computation for successive Reference Periods.

                 (c) Subject to the vesting mechanism described in Section 4,
          Conversion Rights allocated to a given Reference Period can vest
          in one of two ways:

                  1) Direct Vesting: If the Sales to Future Electronics for a
                     given Reference Period are equal to or greater than the
                     Target for such Reference Period (as set forth in Section
                     5(a)), the Conversion Rights for such Reference Period
                     shall vest at the end of such Reference Period; and

                  2) Deferred Vesting:

                     (i) If the Sales to Future Electronics for the first
          Reference Period are less than the applicable Target, but are more
          than $28,000,000, then the unvested Conversion Rights allocated to the
          first Reference Period shall vest at the end of the second Reference
          Period , provided that the aggregate Sales for the first, and second
          Reference Periods, exceed $70,000,000; and

                     (ii) If the Sales to Future Electronics for the second
          Reference Period are less than the applicable Target, but are more
          than $38,000,000, then the

                                       12

<PAGE>

          unvested Conversion Rights allocated to the second Reference Period
          shall vest at the end of the third Reference Period, provided that the
          aggregate Sales for the second and third Reference Periods, exceed
          $95,000,000;

                 (d) For greater certainty, the Holder and the Company
          hereby stipulate that once Conversion Rights can no longer vest,
          either through direct vesting or deferred vesting, such Conversion
          Rights shall not vest or be capable of vesting in any other way
          pursuant to any other provision of this Security.

                 (e) In the event that the Holder makes a demand for repayment
          of this Security or part thereof, either pursuant to the Default
          provisions hereof, or upon the Final Maturity Date, or pursuant to
          Section 2(e) some or all of the Conversion Rights shall be forfeited
          upon payment by the Company as provided below:

                  If the demand for repayment is only for part of the Principal
          Amount, or the repayment of this Security is only partial, the
          following principles shall be applicable:

                 1. the Conversion  Rights shall be forfeited on a pro rata
                    basis (the ratio being established by using the amount of
                    the partial repayment as the numerator, and the total amount
                    of the Principal Amount, as the denominator), upon repayment
                    by the Company; and

                 2. for purposes of determining which Conversion Rights have
                    been forfeited as a result of such partial repayment, the
                    Conversion Rights shall be deemed to be forfeited in the
                    following order:

                    i.   Conversion Rights that can no longer vest shall be
                 forfeited first;

                    ii.  Conversion Rights that can no longer vest directly, but
                 can still vest through "deferred vesting" (as described in
                 Paragraph 5 (c)) shall be forfeited second;

                    iii. Conversion Rights that can still vest either through
                 "direct vesting" (as described in Paragraph 5(c)), or deferred
                 vesting, shall be forfeited third; and

                    iv.  Vested Conversion Rights shall be forfeited last.

                 6.       COVENANTS OF THE COMPANY.

                          (a) The Company covenants and agrees that it will duly
          and punctually pay or cause to be paid the Principal Amount, and the
          interest accrued thereon at the respective times and in the manner
          provided for herein.

                          (b) Unless otherwise permitted herein, the
          Company will do or cause to be done all things necessary to preserve
          and keep in full force and effect its existence and the rights
          (charter and statutory) of the Company and each of its Subsidiaries;
          provided, however, that the Company shall not be required to preserve
          any such right with respect to a Subsidiary if the Company shall
          determine in good faith that the preservation thereof is no longer
          desirable in the conduct of the business of the Company

                                       13


<PAGE>
          and its Subsidiaries as a whole and that the loss thereof is not
          disadvantageous in any material respect to the Holder.

                          (c) The Company covenants and agrees that it shall,
          at all times during the term hereof and until the Final Maturity Date,
          comply with the financial tests set forth in Schedule "A" hereto, and
          that it shall:

                                    (i) on a quarterly basis, within five (5)
          business days of the release and disclosure of its most recent
          financial information, provide the Holder with a certificate signed by
          its Chief Financial Officer, attesting that the Company has been
          meeting the said financial tests, since the Issuance Date, or the date
          of the last such certificate, as the case may be; and

                                    (ii) within ten (10) business days of the
          Company not meeting any of the financial tests set forth in Schedule
          "A", the Company shall notify the Holder of such event, and provide
          the Holder with the reasons for such non-compliance, as well as the
          particulars of the Company's proposed remedial action, in respect of
          such non-compliance.

                          (d) The Company and its Affiliates, shall not,
          without the prior approval of the Holder, which may be withheld at the
          Holder's discretion acting reasonably and in good faith, enter into
          any contracts or agreements, or subscribe any obligations, the result
          of which would be to increase existing Indebtedness, or create new
          Indebtedness, amounting to $2,000,000, in the aggregate.

                 7.       EVENTS OF DEFAULT.

                          (a) "Event of Default", wherever used herein, means
          any one of the following events (whatever the reason for such Event of
          Default and whether it shall be voluntary or involuntary or be
          effected by operation of law or pursuant to any judgment, decree or
          order of any court or any order;

                                   (1) the Company defaults in the payment of
          the Principal Amount, or any partial payment of the Principal Amount
          requested pursuant to Section 2(e) (a "Defaulted Payment"), when the
          same becomes due and payable;

                                   (2) the Company defaults in the payment of
          interest, due and payable on an Interest Payment Date, and fails to
          cure such default within the next sixty (60) calendar days;

                                   (3) the failure of the Registration Statement
          (as defined in the Purchase Agreement) to be declared effective by the
          Commission pursuant to the requirements of the Registration and
          Standstill Agreement, by and between Future Electronics Inc. and the
          Company of even date herewith.

                                   (4) the Common Stock is suspended by the
          Commission or the Nasdaq National Market from trading on the Nasdaq
          National Market (or any of the alternatives to the Nasdaq National
          Market contemplated in the first sentence of the


                                       14

<PAGE>

          definition of "Closing Price" in Section 10), either (A) in writing by
          the Commission or the Nasdaq National Market (or such alternative) or
          (B) suspension is threatened by the Commission or the Nasdaq National
          Market (or such alternative) by the Company falling below the minimum
          listing maintenance requirements of the Nasdaq National Market (or
          such alternative) and the Company fails to meet the listing
          requirements within the time frame established by the Nasdaq National
          Market (or such alternative);

                                   (5) the Company fails, to perform or
          observe in any material respect any term, covenant or agreement
          contained in this Security, the Purchase Agreement or the Deed of
          Trust and, in any case, the default continues for a period of 30 days
          after written notice of such failure, requiring the Company to remedy
          the same, shall have been given to the Company by the Holder or in the
          event of a material breach of any representations or warranties of the
          Company in this Security, the Purchase Agreement or the Deed of Trust;


                                   (6) the Company or any Subsidiary of the
          Company (A) fails to make any payment at maturity, including any grace
          period, in respect of any obligation for borrowed money evidenced by
          an Instrument in an outstanding principal amount in excess of
          $2,000,000 and such failure continues without such Indebtedness having
          been discharged within 30 days or (B) defaults with respect to any
          Instrument, which default permits or results in the acceleration of
          Indebtedness represented by such Instrument in an amount in excess of
          $2,000,000 without such acceleration having been cured, waived,
          rescinded or annulled within 30 days;

                                   (7) the entry by a court having jurisdiction
          in the premises of (A) a decree or order for relief in respect of the
          Company or any Subsidiary of the Company in an involuntary case or
          proceeding under any applicable U.S. federal or state bankruptcy,
          insolvency, reorganization or other similar law or (B) a decree or
          order adjudging the Company or any Subsidiary of the Company bankrupt
          or insolvent, or approving as properly filed a petition seeking
          reorganization, arrangement, adjustment or composition of or in
          respect of the Company or any Subsidiary of the Company, under any
          applicable U.S. federal or state law, or appointing a custodian,
          receiver, liquidator, assignee, trustee, sequestrator or other similar
          official of the Company or any Subsidiary of the Company or ordering
          the winding up or liquidation of its affairs, and the continuance of
          any such decree or order for relief or any such other decree or order
          unstayed and in effect for a period of 90 consecutive days; or

                                   (8) the commencement by the Company or any
          Subsidiary of the Company of a voluntary case or proceeding under any
          applicable U.S. federal or state bankruptcy, insolvency,
          reorganization or other similar law or of any other case or proceeding
          to be adjudicated a bankrupt or insolvent, or the consent by the
          Company or any Subsidiary of the Company, to the entry of a decree or
          order for relief in respect of the Company or any Subsidiary of the
          Company in an involuntary case or proceeding under any applicable U.S.
          federal or state bankruptcy, insolvency, reorganization or other
          similar law or to the commencement of any bankruptcy or insolvency
          case or proceeding against the Company or any Subsidiary of the
          Company, or the filing by the Company or any Subsidiary of the Company
          of a petition or answer or consent seeking reorganization


                                       15

<PAGE>



          or relief under any applicable U.S. federal or state law, or the
          consent by the Company or any Subsidiary of the Company to the filing
          of such petition or to the appointment of or the taking of possession
          by a custodian, receiver, liquidator, assignee, trustee, sequestrator
          or other similar official of the Company or any Subsidiary of the
          Company, or the making by the Company or any Subsidiary of the Company
          of an assignment for the benefit of creditors, or the admission by the
          Company or any Subsidiary of the Company in writing of its inability
          to pay the Company's or any Subsidiary of the Company's debts
          generally as they become due, or the taking of corporate action by the
          Company or any Subsidiary of the Company expressly in furtherance of
          any such action.

                 A default under clause (5) above is not an Event of Default
          until the Holder notifies the Company of the default and, if
          applicable, the Company does not cure such default (and such default
          is not waived) within the time specified in clause (5) above after
          actual receipt of such notice. Any such notice must specify the
          default, if applicable demand that it be remedied, and state that such
          notice is a "Notice of Default".

                          (b) If an Event of Default (other than an Event of
          Default specified in Sections 7(a)(7) or 7(a)(8) hereof with respect
          to the Company) occurs and is continuing, the Holder, by written
          notice to the Company, may declare due and payable, in whole or in
          part, in its unfettered and absolute discretion, the Principal Amount
          , as well as any interest accrued on this Security to the date of
          payment. Upon a declaration of acceleration, such Principal Amount (or
          part thereof, as the case may be) and accrued and unpaid interest to
          the date of payment, shall be immediately due and payable.

                 On the occurrence and during the continuance of any Event
          of Default, in addition to and without limitation of the other rights
          of the Holder hereunder, (i) all Conversion Rights, which have not yet
          vested and remain eligible to vest pursuant to Section 5 hereof, shall
          immediately and automatically vest, and (ii) the provisions of this
          Security pertaining to adjustment of the Conversion Price and
          corresponding number of Conversion Rights shall apply mutatis
          mutandis.

                 If an Event of Default specified in Section 7(a)(7) and 7(a)(8)
          occurs with respect to the Company, the Principal Amount and accrued
          and unpaid interest on this Security shall become and be immediately
          due and payable, without any declaration or other act on the part of
          the Holder.

                          (c) If an Event of Default with respect to this
          Security occurs and is continuing, the Holder may pursue any available
          remedy by proceeding at law or in equity (including a decree of
          specific performance and/or other injunctive relief) to collect the
          Defaulted Payment or interest or any other amount due and payable on
          this Security or to enforce the performance of any provision of this
          Security.

                          (d) Notwithstanding any other provision in this
          Security, the Holder of this Security shall have the right, which is
          absolute and unconditional, to receive payment of the Principal Amount
          and accrued interest on or after the respective due dates, to convert
          this Security in accordance with Section 3 or to bring suit for the
          enforcement of any such payment or the right to convert, and such
          rights shall not be impaired or affected

                                       16


<PAGE>

          adversely without the consent of the Holder. Amounts set forth or
          provided for herein with respect to payments, conversion and the like
          (and the computation thereof) shall be the amounts to be received by
          the Holder and shall not, except as expressly provided herein, be
          subject to any other obligation of the Company (or the performance
          thereof).


                          (e) If the Holder of this Security has instituted any
          proceeding to enforce any right or remedy under this Security and such
          proceeding has been discontinued or abandoned for any reason, or has
          been determined adversely to the Holder, then and in every such case,
          subject to any determination in such proceeding, the Company and the
          Holder shall be restored severally and respectively to their former
          positions hereunder and thereafter all rights and remedies of the
          Holder shall continue as though no such proceeding had been
          instituted.

                          (f) Except as otherwise provided herein, no right or
          remedy conferred in this Security upon the Holder is intended to be
          exclusive of any other right or remedy available to the Holder under
          this Security, the Warrant, the Purchase Agreement, and the Deed of
          Trust and every right and remedy shall, to the extent permitted by
          law, be cumulative and in addition to every other right and remedy
          given hereunder or hereafter existing at law or in equity or
          otherwise. The assertion or employment of any right or remedy
          hereunder, or otherwise, shall not prevent the concurrent assertion or
          employment of any other appropriate right or remedy.

                          (g) The Company covenants (to the extent that it may
          lawfully do so) that it will not at any time insist upon, or plead, or
          in any manner whatsoever claim to take the benefit or advantage of,
          any stay or extension law wherever enacted, now or at any time
          hereafter in force, which may affect the covenants or the performance
          of this Security; and the Company (to the extent that it may lawfully
          do so) hereby expressly waives all benefit or advantage of any such
          law and covenants that it will not hinder, delay or impede the
          execution of any power herein granted to the Holder hereof, but will
          suffer and permit the execution of every such power as though no such
          law had been enacted.

                 8.       CONSOLIDATION, MERGER, ETC.

                          (a) The Company shall not consolidate with or merge
          into any other Person or, directly or indirectly, convey, transfer,
          sell or lease its properties and assets as, or substantially as, an
          entirety to any Person unless:

                                   (1) In the event that the Company shall
          consolidate with or merge into another Person or convey, transfer,
          sell or lease its properties and assets substantially as an entirety
          to any Person, the Person formed by such consolidation or into which
          the Company is merged or the Person which acquires by conveyance,
          transfer or sale, or which leases, all or substantially all of the
          properties and assets of the Company shall be a corporation,
          partnership, limited liability company or other business entity
          organized and validly existing under the laws of the Untied States of
          America, any State thereof or the District of Columbia, which shall,
          prior to or upon the consummation of such transaction, expressly
          assume, if other than the Company, by an agreement


                                     17

<PAGE>


          supplemental hereto, executed and delivered to the Holder of this
          Security in form reasonably satisfactory to the Holder, the due and
          punctual payment of the Principal Amount of and any interest on this
          Security and the performance or observance of every covenant of this
          Security on the part of the Company to be performed or observed,
          including without limitation the Conversion Rights provided herein;
          and

                                   (2) immediately after giving effect to such
          transaction, no Event of Default, and no event which, after notice or
          lapse of time or both, would become an Event of Default, shall have
          happened and be continuing.

                          (b) Upon any consolidation of the Company with, or
          merger of the Company into, any other Person or any conveyance,
          transfer, sale or lease of all or substantially all of the properties
          and assets of the Company in accordance with Section 8(a), the
          successor Person formed by such consolidation or into which the
          Company is merged or to which such conveyance, transfer, sale or lease
          is made shall succeed to, and be substituted for, and may exercise
          every right and power of, the Company under this Security with the
          same effect as if such successor Person had been named as the Company
          herein, and thereafter, except in the case of a lease, the predecessor
          Person shall be relieved of all obligations and covenants under this
          Security.

                 9.       SECURITY INTEREST. The Company covenants and agrees
          that this Security as well as any replacement Security or other
          instrument issued in complete or partial replacement hereof shall be
          secured by the Deed of Trust and the Security Agreement.

                 10.      DEFINITIONS. Unless otherwise defined in this
          Security, the following capitalized terms shall have the following
          respective meanings when used herein:

                 "Affiliate" of any specified Person means any other Person
          directly or indirectly controlling or controlled by or under direct or
          indirect common control with such specified Person. For the purposes
          of this definition, "control", when used with respect to any specified
          Person, means the power to direct the management and policies of such
          Person, directly or indirectly, whether through the ownership of
          voting securities, by contract or otherwise; and the terms
          "controlling" and "controlled" have meanings correlative to the
          foregoing.

                 "Board of Directors" means the board of directors of the
          Company or any authorized committee of the board of directors.

                 "Business Day" means each Monday, Tuesday, Wednesday, Thursday
          and Friday that is not a day on which the banking institutions in the
          State of New York are authorized or obligated by law or executive
          order to close or be closed.

                 "Capital Stock" of any Person means any and all shares,
          interests, rights to purchase, warrants, options, participations or
          other equivalents of or interest in (however designated) equity of
          such Person, but excluding any debt securities convertible into such
          equity.


                                       18

<PAGE>

                          A "Change of Control" shall be deemed to have occurred
          if any of the following occurs after the date hereof:

                          (1) the consolidation, merger or other business
           combination (including, without limitation, a reorganization or
           recapitalization) of the Company with or into another Person (other
           than (A) a consolidation, merger or other business combination
           (including, without limitation, reorganization or recapitalization)
           in which holders of the Company's voting power immediately prior to
           the transaction continue after the transaction to hold, directly or
           indirectly, the voting power of the surviving entity or entities
           necessary to elect a majority of the members of the board of
           directors (or their equivalent if other than a corporation) of such
           entity or entities, or (B) pursuant to a migratory merger effected
           solely for the purpose of changing the jurisdiction of incorporation
           of the Company);

                          (2) the sale or transfer of all or substantially all
          of the Company's assets; or

                          (3) the consummation of a purchase, tender or exchange
           offer made to and accepted by the holders of more than 50% of the
           outstanding shares of Common Stock (other than a purchase or tender
           or exchange offer made by the Company or any of its subsidiaries that
           does not result in the transaction constituting a "Rule 13e-3
           transaction" for purposes of Rule 13e-3 under the Exchange Act).

                 "Closing Date" means the date of the closing of the purchase
          and sale of this Security and the Warrant pursuant to the Purchase
          Agreement.

                 "Closing Price" means, as of any date, the last reported sales
          price per share of Common Stock on such date or, in case no such
          reported sale takes place on such date, the average of the reported
          closing bid and asked prices in either case on the Nasdaq National
          Market (the "NNM") or, if the Common Stock is not listed or admitted
          to trading on the NNM, on the principal national securities exchange
          on which the Common Stock is listed or admitted to trading or, if the
          Common Stock is not listed or admitted to trading on the NNM or any
          national securities exchange, the last reported sales price of the
          Common Stock as quoted on NASDAQ or, in case no reported sales take
          place, the average of the closing bid and asked prices as quoted on
          NASDAQ or any comparable system or, if the Common Stock is not quoted
          on NASDAQ or any comparable system, the closing sales price or, in
          case no reported sale takes place, the average of the closing bid and
          asked prices, as furnished by any two members of the National
          Association of Securities Dealers, Inc. selected from time to time by
          the Company for that purpose. If the Closing Price cannot be
          calculated for a security on a particular date on any of the foregoing
          bases, the Closing Price of such security on such date shall be the
          fair market value as mutually determined by the Company and the
          Holder, provided that any dispute as to such Closing Price shall be
          determined by the Company and the Holder in accordance with Section
          11(d).

                 "Commission" means the United States Securities and Exchange
          Commission, or any other federal agency at the time administering the
          Securities and Exchange Act of


                                       19



<PAGE>

          1934, as amended, or the Securities Act, whichever is the relevant
          statute for the particular purpose.

                 "Common Stock" means any stock of any class of the Company
          which has no preference in respect of dividends or of amounts payable
          in the event of any voluntary or involuntary liquidation, dissolution
          or winding up of the Company and which is not subject to redemption by
          the Company.

                 "Convertible Securities" shall mean any evidences of
          indebtedness, shares (other than Common Stock) or other securities
          convertible into or exchangeable for Common Stock.

                 "Deed of Trust" means the Deed of Trust dated as of May__, 2003
          entered into between the Company and the initial holder of this
          Security, creating a mortgage interest in and to the real property
          owned by the Company, subject only to the first ranking mortgage held
          by S & F Financial Holdings Inc..

                 "Defaulted Payment" has the meaning set forth in Section 7(a)
          (1) hereof.

                 "Exchange Act" means the Securities Exchange Act of 1934, as
          amended and the rules and regulations promulgated thereunder.

                 "fair market value" shall, except as otherwise specifically
          defined elsewhere, mean, if there is a current market for the asset,
          debt or transaction in question, the amount that a willing buyer would
          pay a willing seller in an arm's length transaction or, in the absence
          of a current market value for such asset, debt or transaction, the
          amount determined in good faith by an independent third party jointly
          selected by the Holder and the Company.

                 "Final Maturity Date" has the meaning set forth in Section 2(a)
          hereof.

                 "Holder" means the person in whose name this Security is
          registered on the Note Register.

                 "Indebtedness" means, with respect to any Person, at any date
          of determination (without duplication):

                          (a) all obligations and other liabilities (contingent
          or otherwise) of such Person for borrowed money (including obligations
          of the Company in respect of overdrafts, foreign exchange contracts,
          currency exchange agreements, interest rate protection agreements, and
          any loans or advances from banks, whether or not evidenced by notes or
          similar instruments) or evidenced by bonds, debentures, notes or
          similar instruments (whether or not the recourse of the lender is to
          the whole of the assets of such Person or to only a portion thereof),

                          (b) all reimbursement obligations and other
          liabilities (contingent or otherwise) of such Person with respect to
          letters of credit, bank guarantees or bankers' acceptances,

                                       20

<PAGE>

                          (c) all obligations and liabilities (contingent or
          otherwise) in respect of leases of such Person required, in conformity
          with generally accepted accounting principles, to be accounted for as
          capitalized lease obligations on the balance sheet of such Person,

                          (d) all obligations of such Person (contingent or
          otherwise) with respect to an interest rate swap, cap or collar
          agreement or other similar instrument or agreement,

                          (e) all direct or indirect guaranties or similar
          agreements by such Person in respect of, and obligations or
          liabilities (contingent or otherwise) of such Person to purchase or
          otherwise acquire or otherwise assure a creditor against loss in
          respect of, indebtedness, obligations or liabilities of another Person
          of the kind described in clauses (a) through (d),

                          (f) any indebtedness or other obligations described
          in clauses (a) through (e) secured by any mortgage, pledge, lien or
          other encumbrance existing on property which is owned or held by such
          Person, regardless of whether the indebtedness or other obligation
          secured thereby shall have been assumed by such Person and

                          (g) Any indebtedness or other obligation resulting
          from "off-balance" sheet financing, or any such transaction; and

                          (h) any and all deferrals, renewals, extensions and
          refunding of, or amendments, modifications or supplements to, any
          indebtedness, obligation or liability of the kind described in clauses
          (a) through (g).

                          (i) any partnership obligations of such Person, of
          the kind described in clauses (a) through (h).

                 "Instrument" means any bond, debenture, note or similar
          instrument.

                 "Note Register" means the register or other ledger maintained
          by the Company that records the record owners of this Security.

                 "Person" or "person" shall mean and include an individual, a
          partnership, a corporation (including a business trust), a joint stock
          company, a limited liability company, an unincorporated association, a
          joint venture or other entity or a governmental authority.

                 "Purchase Agreement" means the Securities Purchase Agreement
          entered into between the Company and the initial holder of this
          Security relating to the sale and purchase of this Security and the
          Warrant.

                 "Security" means the Convertible Secured Note of the Company
          due June 30, 2007, as amended, replaced, or supplemented from time to
          time, initially issued on May 27, 2003.


                                       21



<PAGE>

                 "Securities Act" means the Securities Act of 1933, as amended,
          and the rules and regulations promulgated thereunder.

                 "Security Agreement", means the Security Agreement dated as
          of May 27, 2003 entered into between the Company and the initial
          holder of this Security, creating a first ranking security interest in
          and to all accounts and accounts receivables, real and personal
          property of the Company including, but not limited to accounts
          receivable, inventory and fixed assets.

                 "Share Delivery Date" has the meaning set forth in Section
          3(a)(1) hereof.

                 "Subsidiary" means, in respect of any Person, any corporation,
          association, partnership or other business entity of which more than
          50% of the total voting power of shares of Capital Stock or other
          interests (including partnership interests) entitled (without regard
          to the occurrence of any contingency) to vote in the election of
          directors, managers, general partners or trustees thereof is at the
          time owned or controlled, directly or indirectly, by (i) such Person;
          (ii) such Person and one or more Subsidiaries of such Person; or (iii)
          one or more Subsidiaries of such Person.

                 "Trading Day" means, with respect to any security, a day
          during which trading in the security generally occurs on the Nasdaq
          National Market or, if the security is not quoted on the Nasdaq
          National Market, on the principal other national or regional
          securities exchange on which the security then is listed or, if the
          security is not listed on a national or regional securities exchange,
          on the National Association of Securities Dealers Automated Quotation
          System, or on the principal other market on which the security is then
          traded; provided, however, that "Trading Day" shall not include any
          day during which trading in the security is suspended for more than
          three hours between 9:30 a.m. (New York time) and 4:00 p.m. (New York
          time).

                 "Voting Stock" of a Person means all classes of Capital Stock
          or other interests (including partnership interests) of such Person
          then outstanding and normally entitled (without regard to the
          occurrence of any contingency) to vote in the election of directors,
          managers or trustees thereof.

                 11.      MISCELLANEOUS.

                          (a) The Company will give prompt written notice to
          the Holder of this Security of any change in the location of the
          Designated Office. Any notices, consents, waivers or other
          communications required or permitted to be given under the terms of
          this Security must be in writing and will be deemed to have been
          delivered: (i) upon receipt, when delivered personally; (ii) upon
          receipt, when sent by facsimile, provided that such notice is also
          delivered by regular mail; (iii) 1 Business Day after deposit with a
          nationally recognized overnight delivery service, in each case
          properly addressed to the party to receive the same. The addresses and
          facsimile numbers for such communications shall be:


                                       22


<PAGE>


                 If to the Company:

                           Sipex Corporation
                           233 South Hillview Drive
                           Milpitas, CA 95035
                           Telephone:  (408) 935-7608
                           Facsimile: (408) 935-7678
                           Attention: Phillip Kagel, Chief Financial Officer

                 with a copy to:

                           Wilson Sonsini Goodrich & Rosati, P.C.
                           650 Page Mill Road
                           Palo Alto, California  94304
                           Telephone: (650) 493-9300
                           Facsimile: (650) 493-6811
                           Attention: Robert G. Day

                 If to the Holder:

                           Alonim Investments Inc.
                           1501 McGill College Avenue, 26th Floor
                           Montreal, Quebec
                           H3A 3N9
                           Telephone: (514) ___________
                           Facsimile: (514) ___________
                           Attention: ______________
                           Executive Vice-President and Chief Financial Officer

                           With a copy to:

                           Future Electronics Inc.
                           237 Hymus Blvd.
                           Pointe Claire, Quebec
                           H9R 5C7
                           Telephone: (514) 694-7710 Ext: 2986
                           Facsimile: (514) 694-7515
                           Attention: Guy Lavergne, Esq.
                           Associate General Counsel


          or at such other address and/or facsimile number and/or to the
          attention of such other person as the recipient party has specified by
          written notice given to each other party 5 days prior to the
          effectiveness of such change. Written confirmation of receipt (A)
          given by the recipient of such notice, consent, waiver or other
          communication, (B) mechanically or electronically generated by the
          sender's facsimile machine containing the time, date, recipient
          facsimile number and an image of the first page of


                                       23



<PAGE>

          such transmission, or (C) provided by a courier or overnight courier
          service shall be rebuttal evidence of personal service, receipt by
          facsimile, or receipt from a nationally recognized overnight delivery
          service in accordance with clause (i), (ii) or (iii) above,
          respectively.

                          (b)      (1) The transfer of this Security is
          registrable on the Note Register upon surrender of this Security for
          registration of transfer at the Designated Office, duly endorsed by,
          or accompanied by a written instrument of transfer in form reasonably
          satisfactory to the Company duly executed by, the Holder hereof or
          such Holder's attorney duly authorized in writing, and thereupon one
          or more new Securities, of authorized denominations and for the same
          aggregate principal amount, will be issued to the designated
          transferee or transferees. Such Securities are issuable only in
          registered form without coupons in denominations of $500,000 (or such
          lesser remaining amount after all possible issuances in denominations
          of $500,000). No service charge shall be made for any such
          registration of transfer, but the Company may require payment of a sum
          sufficient to recover any tax or other governmental charge payable in
          connection therewith in the event that the Holder requests that this
          Security or the Common Stock issuable hereunder be issued in the name
          of someone other than the Holder. Prior to due presentation of this
          Security for registration of transfer, the Company and any agent of
          the Company may treat the Person in whose name this Security is
          registered as the owner thereof for all purposes, whether or not this
          Security be overdue, and neither the Company nor any such agent shall
          be affected by notice to the contrary.

                                   (2) This Security and the Common Stock
          issuable upon conversion of this Security have not been registered
          under the Securities Act, or the securities laws of any state or other
          jurisdiction. Neither this Security nor the Common Stock issuable upon
          conversion of this Security nor any interest or participation herein
          may be reoffered, sold, assigned, transferred, pledged, encumbered or
          otherwise disposed of (a "Transfer") in the absence of such
          registration or unless such transaction is exempt from, or not subject
          to, registration. The Holder by its acceptance of this Security or the
          Common Stock issuable upon conversion of this Security agrees that it
          shall not offer, sell, assign, transfer, pledge, encumber or otherwise
          dispose of this Security, other than for conversions pursuant to the
          terms hereof, or any portion thereof or interest therein. and then
          (other than with respect to a Transfer pursuant to a registration
          statement that is effective at the time of such Transfer) only to (a)
          the Company or (b) an Affiliate of the Holder and in the case of (b)
          above in which the transferor furnishes the Company with such
          certifications, legal opinions or other information as the Company may
          reasonably request to confirm that such transfer is being made
          pursuant to an exemption from, or in a transaction not subject to, the
          registration requirements of the Securities Act.

                                   (3) Upon presentation of this Security for
          registration of transfer at the Designated Office
          accompanied by (i) certification by the transferor that such transfer
          is in compliance with the terms hereof and (ii) by a written
          instrument of transfer in a form approved by the Company executed by
          the Holder, in person or by the Holder's attorney thereunto duly
          authorized in writing, and including the name, address and telephone
          and fax numbers of the transferee and name of the contact person of
          the transferee, such Security shall be transferred on the Note
          Register, and a new Security of


                                       24


<PAGE>

          like tenor and bearing the same legends shall be issued in the name of
          the transferee and sent to the transferee at the address and c/o the
          contact person so indicated. Transfers and exchanges of this Security
          shall be subject to such additional restrictions as are set forth in
          the legends on this Security and to such additional reasonable
          regulations as may be prescribed by the Company as specified in
          Section 11(b)(2) hereof. Successive registrations of transfers as
          aforesaid may be made from time to time as desired, and each such
          registration shall be noted on the Note register.

                                   (4) Upon receipt by the Company of evidence
          reasonably satisfactory to it of the loss, theft, destruction or
          mutilation of this Security, and in the case of loss, theft or
          destruction, receipt of indemnity reasonably satisfactory to the
          Company and upon surrender and cancellation of this Security, if
          mutilated, the Company will deliver a new Security of like tenor and
          dated as of such cancellation, in lieu of such Security.

                                   (5) The Holder represents that it is an
          "accredited investor" within the meaning of Rule 501(a) of the
          Securities Act. The Holder has been advised that this Security has not
          been registered under the Securities Act, or any state securities laws
          and, therefore, cannot be resold unless it is registered under the
          Securities Act and applicable state securities laws or unless an
          exemption from such registration requirements is available. The Holder
          is aware that the Company is under no obligation to effect any such
          registration or to file for or comply with any exemption from
          registration. The Holder has not been formed solely for the purpose of
          making this investment and is acquiring the Security for its own
          account for investment, and not with a view to, or for resale in
          connection with, the distribution thereof.

                                   (6) Such Holder understands that:

                                       (A) until the end of the holding
          period under Rule 144(k) of the Securities Act (or any successor
          provision), this Security (and all securities issued in exchange
          therefor or in substitution thereof, other than the shares of Common
          Stock issuable upon conversion of this Security, which shall bear the
          legend set forth in Section 11(b)(6)(B) of this Security, if
          applicable) shall bear a legend in substantially the following form:

               THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
               THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
               SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
               SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE
               ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
               UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
               SECURITIES LAWS OR AN EXEMPTION THEREFROM.

               THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
               TERMS AND CONDITIONS OF A VOTING


                                       25

<PAGE>

               AGREEMENT WHICH PLACES CERTAIN RESTRICTIONS ON THE VOTING OF THE
               SECURITIES REPRESENTED HEREBY. ANY PERSON ACCEPTING ANY INTEREST
               IN SUCH SECURITIES SHALL BE DEEMED TO AGREE TO AND SHALL BECOME
               BOUND BY ALL THE PROVISIONS OF SUCH AGREEMENT. A COPY OF SUCH
               VOTING AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER OF THIS
               CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT
               ITS PRINCIPAL PLACE OF BUSINESS.

          The legend set forth above shall be removed and the Company shall
          issue a new Security of like tenor and aggregate principal amount, and
          which shall not bear the restrictive legend required by this Section
          11(b)(6)(A), (i) if, in connection with a sale transaction, the Holder
          provides the Company with an opinion of counsel reasonably acceptable
          to the Company to the effect that a public sale, assignment, pledge or
          transfer of this Security may be made without registration under the
          Securities Act, or (ii) upon expiration of the applicable two-year
          holding period under Rule 144(k) of the Securities Act (or any
          successor rule). The Company shall not require such opinion of counsel
          for the sale of this Security in accordance with Rule 144 of the
          Securities Act in the event that the Holder provides such
          representations that the Company shall reasonably request confirming
          compliance with the requirements of Rule 144;

                                           (B) until the end of the
          holding period under Rule 144(k) of the Securities Act (or any
          successor provision), any stock certificate representing such shares
          of Common Stock shall bear a legend in substantially the following
          form unless, in the case of shares of Common Stock issued upon
          conversion of this Security, the Security submitted for conversion is
          not required to bear the legend specified in Section 11(b)(6)(A):

               THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
               REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
               APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
               OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
               HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
               STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
               AMENDED, OR AN EXEMPTION THEREFROM.

               THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
               TERMS AND CONDITIONS OF A VOTING AGREEMENT WHICH PLACES CERTAIN
               RESTRICTIONS ON THE VOTING OF THE SECURITIES REPRESENTED HEREBY.
               ANY PERSON ACCEPTING ANY INTEREST IN SUCH SECURITIES SHALL BE
               DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS
               OF SUCH AGREEMENT. A COPY OF SUCH VOTING AGREEMENT WILL BE
               FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT


                                       26

<PAGE>

               CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE
               OF BUSINESS.

          The legend set forth above shall be removed and the Company shall
          issue a stock certificate evidencing such shares of Common Stock, as
          the case may be, without such legend to the holder of the stock
          certificate evidencing such shares of Common Stock and upon which such
          legend is stamped, (i) if such shares of Common Stock have been resold
          or transferred pursuant to the registration statement contemplated by
          the Purchase Agreement and the registration statement was effective at
          the time of such transfer, (ii) if, in connection with a sale
          transaction, such holder provides the Company with an opinion of
          counsel reasonably acceptable to the Company to the effect that a
          public sale, assignment, pledge or transfer of the shares of Common
          Stock may be made without registration under the Securities Act, or
          (iii) upon expiration of the applicable two-year holding period under
          Rule 144(k) of the Securities Act (or any successor rule). The Company
          shall not require such opinion of counsel for the sale of such shares
          of Common Stock in accordance with Rule 144 of the Securities Act,
          provided that the Seller provides such representations that the
          Company shall reasonably request confirming compliance with the
          requirements of Rule 144; and

                                           (C) in the event Rule 144(k) as
          promulgated under the Securities Act (or any successor rule) is
          amended to change the two-year holding period under Rule 144(k) (or
          the corresponding holding period under any successor rule), (i) each
          reference in Sections 11(b)(6) of this Agreement to "two-year holding
          period" shall be deemed for all purposes of this Agreement to be
          references to such changed period, and (ii) all corresponding
          references in this Security shall be deemed for all purposes to be
          references to the changed period, provided that such changes shall not
          become effective if they are otherwise prohibited by, or would
          otherwise cause a violation of, the then-applicable federal securities
          laws.

                                   (7) Neither this Security nor any term
          hereof may be amended or waived orally or in writing, except that any
          term of this Security may be amended and the observance of any term of
          this Security may be waived (either generally or in a particular
          instance and either retroactively or prospectively), upon the approval
          of the Company and the Holder; provided, however, that the Company
          may, without the consent of the Holder, amend the Security for the
          purpose of (i) surrendering any right or power conferred upon the
          Company, (ii) providing for Conversion Rights of Holder if any
          reclassification or change of the Common Stock or any consolidation,
          merger or sale of all or substantially all of the Company's assets
          occurs, (iii) providing for the assumption of the Company's
          obligations to the Holder in the case of a merger, consolidation,
          conveyance, transfer or lease, or (iv) reducing the Conversion Price,
          provided that the reduction will not adversely affect the interests of
          the Holder.

                          (c) In any case in which the date of maturity of,
          the date of payment of any interest on this Security will not be a
          Business Day, then payment of such interest on or Principal Amount of
          this Security need not be made on such date, but may be made on the
          next succeeding Business Day with the same force and effect as if made
          on such date

                                       27

<PAGE>


          of maturity or date of payment, as the case may be, and no interest
          shall accrue for the period from and after such date.

                          (d) In the case of a dispute as to the determination
          of the Closing Price, the Conversion Price, the fair market value of
          assets (other than cash or securities), or the arithmetic calculation
          of any shares of Common Stock to be issued hereunder, the Company
          shall submit the disputed determinations or arithmetic calculations
          via facsimile within one Business Day from the manifestation of such
          dispute to the Holder. If the Company and the Holder are unable to
          agree upon such determination or calculation of the Closing Price, the
          Conversion Price or the fair market value of assets (other than cash
          or securities), or the arithmetic calculation of any shares of Common
          Stock to be issued hereunder, as the case may be, within one Business
          Day of such disputed determination or arithmetic calculation being
          submitted to the Holder, then the Company shall, within 10 Business
          Days, submit via facsimile (a) the disputed determination of Closing
          Price, the Conversion Price or the fair market value of assets (other
          than cash or securities) to an independent, reputable investment bank
          selected by the Company and approved by the Holder or (b) the disputed
          arithmetic calculation of any shares of Common Stock to be issued
          hereunder to the Company's independent, outside accountant. The
          Company shall make reasonable efforts to cause the investment bank or
          the accountant, as the case may be, to perform the determinations or
          calculations and notify the Company and the Holder of the results no
          later than 15 Business Days from the date it receives the disputed
          determinations or calculations. Such investment bank's or accountant's
          determination or calculation, as the case may be, shall be binding
          upon all parties absent demonstrable error. The fees and expenses of
          the accountant or investment bank, as the case may be, shall be paid
          by the party whose calculation or determination is, on a percentage
          basis, the least closest to that determined by the accountant or
          investment bank; provided, however, that if each of the amounts
          originally determined or calculated by the Company and the Holder are
          at least equal to 80% of the amount calculated or determined by the
          accountant or investment bank but not more than 120% of the amount
          calculated or determined by the accountant or investment bank, then
          the Company and the Holder will each pay one half of the fees and
          expenses of such accountant or investment bank.

                          (e) If (a) this Security is placed in the hands of
          an attorney for collection or enforcement or is collected or enforced
          through any legal proceeding or the Holder otherwise takes action to
          collect amounts due under this Security or to enforce the provisions
          of this Security or (b) there occurs any bankruptcy, reorganization,
          receivership of the Company or other proceedings affecting Company
          creditors' rights and involving a claim under this Security, then the
          Company shall pay the reasonable costs incurred by the Holder for such
          collection, enforcement or action or in connection with such
          bankruptcy, reorganization, receivership or other proceeding,
          including but not limited to reasonable attorneys fees and
          disbursements.


                                       28



<PAGE>

                          (f) THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED
          IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

                  [Remainder of page intentionally left blank.]










                                       29




<PAGE>





          IN WITNESS WHEREOF, the Company has caused this Security to be duly
          executed.

                 Dated:  May __, 2003


                                           SIPEX CORPORATION


                                           By: /s/ Walid Maghribi
                                               ---------------------------------

                                           Name:   Walid Maghribi
                                                --------------------------------

                                           Title:  President & CEO
                                                  ------------------------------


                                           ALONIM INVESTMENTS INC.


                                           By: /s/ Guy Lavergne
                                               ---------------------------------

                                           Name:   Guy Lavergne
                                                 -------------------------------

                                           Title:  Attorney
                                                   -----------------------------



                                           ACKNOWLEGED:


                                           FUTURE ELECTRONICS INC.


                                           By: /s/ Guy Lavergne
                                               ---------------------------------

                                           Name:   Guy Lavergne
                                                 -------------------------------

                                           Title:  Attorney
                                                  ------------------------------




<PAGE>



                                    EXHIBIT A

                                CONVERSION NOTICE


                 The undersigned holder of this Security hereby irrevocably
          exercises the Conversion Rights granted pursuant to this Security and
          does hereby convert the amount below designated, into Common Stock in
          accordance with the terms of this Security, and directs that such
          shares, and any Security representing any unconverted principal amount
          hereof, be delivered to and be registered in the name of the
          undersigned unless a different name has been indicated below. If
          shares of Common Stock are to be registered in the name of a Person
          other than the undersigned, the undersigned will pay all transfer
          taxes payable with respect thereto.

                                            Dated:
                                                   -----------------------------

                                            ALONIM INVESTMENTS INC.


                                            By:
                                                --------------------------------

                                            Name:
                                                  ------------------------------

                                            Title:
                                                  ------------------------------


          If shares are to be registered in the name of a Person other than the
          holder, please print such Person's name and address:

          ---------------------------------------------
          Name
                 -------------------------------------------------
          Address

          ---------------------------------------------
          Social Security or other Taxpayer Identification Number, if any

          If only a portion of the Security is to be converted, please indicate:

          1.     Principal amount to be converted: $
                                                     -----------
          2.     Number of Conversion Rights being exercised.:
                                                               -----------------
          3.     Principal amount of Security representing unconverted principal
                 amount to be issued:

          Amount: $
                    ----------



<PAGE>



                                    EXHIBIT B

                      NOTICE OF ELECTION TO REQUIRE PAYMENT

                 Pursuant to Section 4(a)(2) of the this 1.5 % Convertible
          Secured Note Due 2007 dated May __, 2003 of Sipex Corporation (the
          "Security"), the undersigned holder of this Security hereby
          irrevocably exercises the option to require redemption and repayment
          of the principal amount of this Security, or any portion of the
          principal amount hereof together with all accrued and unpaid interest
          thereon, on the day on which the Change of Control (as defined in this
          Security) is consummated and directs that such check for such payment
          and any Security representing any unconverted principal amount hereof
          be delivered to the undersigned unless a different name has been
          indicated below.

                                            Dated:
                                                   ----------------------

                                            ALONIM INVESTMENTS INC.


                                            By:
                                                --------------------------------

                                            Name:
                                                 -------------------------------

                                            Title:
                                                  ------------------------------

          If a check is to be delivered in the name of a Person other than the
          holder, please print such Person's name and address:

          ----------------------------
          Name

          ----------------------------
          Address

          ----------------------------
          Social Security or other Taxpayer Identification Number, if any

          If only a portion of the Security is to be redeemed and repaid, please
          indicate:
          4.     Principal amount to be redeemed and repaid: $
                                                                -----------
          5.     Principal amount of Security representing unconverted principal
                 amount to be issued:

          Amount: $
                   ---------

<PAGE>



                                   SCHEDULE A

                                 FINANCIAL TESTS





                 Current Ratio shall be equal to or greater than 2.25:1 at
          all times.

                 Tangible Net Worth shall be equal to or greater than $50
          million at all times.



                 DEFINITIONS

                 "CURRENT RATIO": total current assets divided by total current
          liabilities, excluding the current portion of long term debt
          associated with (i) Principal Amount of the Security and accrued
          interest thereon and (ii) the principal amount of that certain 5.75%
          Convertible Secured Note Due 2007 issued by the Company to S&F
          Financial Holdings Inc. as of September 27, 2002 and accrued interest
          thereon.

                 "TANGIBLE NET WORTH": the shareholders' equity less intangible
          assets.