10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[Mark One]

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 0-26482

TRIKON TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-4054321
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Ringland Way, Newport, South Wales NP18 2TA, United Kingdom
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code 44-1633-414-000

Not Applicable

Former name, former address and former fiscal year, if changed since last report

Indicate by check whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  x    No¨

As of August 5, 2005, the total number of outstanding shares of the Registrant’s common stock was 15,754,985.

Trikon Technologies, Inc.

INDEX

		PAGE NUMBER
PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets at June 30, 2005 and December 31, 2004	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2005 and June 30, 2004	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and June 30, 2004	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II. OTHER INFORMATION		27
Item 1.	Legal Proceedings	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3	Defaults Upon Senior Securities	27
Item 4.	Submission of Matters to a Vote of Security Holders	27
Item 5.	Other Information	27
Item 6.	Exhibits	27
SIGNATURES		28

2

Trikon Technologies, Inc.

PART 1 - - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	June 30, 2005			December 31, 2004
	(Unaudited)			(Note A)
Assets
Current assets:
Restricted cash	$	8,950		$	—
Cash and cash equivalents		4,171			21,202
Accounts receivable, net		7,874			6,654
Inventories, net		15,488			16,543
Prepaid and other current assets		1,477			2,203
Total current assets		37,960			46,602
Property, equipment and leasehold improvements, net		10,235			13,597
Demonstration systems, net		4,137			551
Other assets		258			391
Total assets	$	52,590		$	61,141
Liabilities and shareholders’ equity
Current liabilities:
Short term borrowing	$	8,950		$	9,600
Accounts payable		4,698			5,709
Accrued expenses		1,253			1,453
Deferred revenue		451			541
Warranty & related expenses		1,204			1,171
Current portion of long term debt and capital lease obligations		155			281
Other current liabilities		2,907			971
Total current liabilities		19,618			19,726
Long-term debt and capital lease obligations less current portion		54			91
Other non-current liabilities		661			782
Total liabilities	$	20,333		$	20,599
Shareholders’ equity:
Preferred stock:
Authorized shares — 20,000,000
Issued and outstanding — nil at June 30, 2005 and December 31, 2004		—			—
Common stock, $0.001 par value:
Authorized shares — 50,000,000 Issued and outstanding — 15,754,985 at June 30, 2005 and at December 31, 2004		261,416			261,416
Accumulated other comprehensive loss		2,329			2,886
Accumulated deficit		(231,488	)		(223,760	)
Total stockholders’ equity		32,257			40,542
Total liabilities and stockholders’ equity	$	52,590		$	61,141

See Notes to Unaudited Condensed Consolidated Financial Statements.

3

Trikon Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30, 2005			June 30, 2004 (Restated)			June 30, 2005			June 30, 2004 (Restated)
Revenues:
Product revenues	$	8,814		$	10,106		$	14,610		$	16,844
License revenues		70			66			2,085			109
		8,884			10,172			16,695			16,953
Costs and expenses:
Cost of goods sold		6,799			8,303			10,721			14,089
Research and development		2,220			2,710			4,497			5,607
Selling, general and administrative		3,673			3,773			7,369			8,282
		12,692			14,786			22,587			27,978
Loss from operations		(3,808	)		(4,614	)		(5,892	)		(11,025	)
Foreign currency (losses) gains		(1,563	)		(264	)		(1,823	)		359
Interest income, net		62			63			88			129
Loss before income tax charge		(5,309	)		(4,815	)		(7,627	)		(10,537	)
Income tax charge		(45	)		(55	)		(101	)		(120	)
Net loss	$	(5,354	)	$	(4,870	)	$	(7,728	)	$	(10,657	)
Loss per share data:
Basic	$	(0.34	)	$	(0.31	)	$	(0.49	)	$	(0.68	)
Diluted	$	(0.34	)	$	(0.31	)	$	(0.49	)	$	(0.68	)
Weighted average common shares used in the calculation:
Basic		15,755			15,745			15,755			15,723
Diluted		15,755			15,745			15,755			15,723

See Notes to Unaudited Condensed Consolidated Financial Statements.

4

Trikon Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Six Months Ended
	June 30, 2005			June 30, 2004 (Restated)
Operating Activities
Net loss	$	(7,728	)	$	(10,657	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property plant and equipment		2,220			2,726
Loss on disposal of property plant and equipment		(20	)		(13	)
Provision for losses on accounts receivable		(119	)		4
Changes in operating assets and liabilities:
Accounts receivable		(1,101	)		(938	)
Inventories (including demonstration systems)		(2,531	)		(87	)
Other current assets		726			2,285
Accounts payable and other liabilities		772			627
Income tax payable		(14	)		(139	)
Deferred revenue		(90	)		(98	)
Net cash used in operating activities		(7,885	)		(6,290	)
Investing Activities
Purchases of property, equipment and leasehold improvements		(1,112	)		(1,107	)
Proceeds from sale of property, plant and equipment		1,229			371
Other assets and liabilities		12			(101	)
Net cash used in investing activities		129			(837	)
Financing Activities
Issuance of common stock		—			194
Borrowings under short term loan		—			9,050
Repayments under bank credit lines		(9,600	)		(11,188	)
Payments on capital lease obligations		(163	)		(331	)
Net cash used in financing activities		(9,763	)		(2,275	)
Effect of exchange rate changes in cash		488			9
Net decrease in cash and cash equivalents		(17,031	)		(9,393	)
Cash and cash equivalents at beginning of period		21,202			31,646
Cash and cash equivalents at end of period	$	4,171		$	22,253

See Notes to Unaudited Condensed Consolidated Financial Statements.

5

Trikon Technologies, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2005

NOTE A BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts of Trikon Technologies, Inc. (“Trikon” or the “Company”) and its subsidiaries. All material intercompany balances and transactions have been eliminated.

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The operating results for the three months and six months ended June 30, 2005 and June 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

In May 2005, the Company decided to restate certain of its previously issued financial statements to reflect (i) the classification of accounts receivable and deferred revenues on contracts with a portion of the contract price that is withheld until final acceptance; (ii) the timing of recognition of costs on those contracts: and (iii) the allocation of facilities cost. (See notes 13 and 14 to the consolidated financial statements in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004).

The balance sheet at December 31, 2004 has been derived from the audited consolidated financial statements at that date included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2004, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K, as amended by the Company’s amended report on Form 10-K/A for the year ended December 31, 2004.

On March 14, 2005, the Company entered into an Agreement and Plan of Merger, subsequently amended on June 23, 2005, with Aviza Technology, Inc. (“Aviza”), a privately held global supplier of thermal process and atomic layer deposition systems. The consummation of the merger transaction is subject to the approval of the Trikon stockholders and other customary closing conditions. The requisite approval of the stockholders of Aviza has already been obtained. The merger is expected to close in the third or fourth quarter of 2005. On March 14, 2005, the Company also entered into an agreement with Aviza for the joint development of control software for an existing Aviza process module (the “JDA”). The total development fee payable by Aviza to the Company under the JDA is $1.2 million. The development fee includes $900,000 payable upon delivery and sale by the Company to Aviza of one standard, unmodified Trikon transport module. The JDA acknowledges that such delivery and sale and related payment was completed in December 2004 prior to executing the JDA. The JDA includes a grant of license rights to Aviza with respect to the process module control software to be developed under the JDA. The total license fee payable by Aviza to the Company under the JDA is $4 million, half of which was paid on March 14, 2005, the other half of which was payable by Aviza before July 31, 2005. The second payment of $2 million was not received by July 31, 2005, and the Company is in discussions with Aviza regarding this matter.

As of June 30, 2005 the Company had cash and cash equivalents of $4.2 million, working capital of $18.3 million and an accumulated deficit of $231.5 million. The Company incurred a net loss of $7.7 million in the six months ended June 30, 2005 and may incur additional losses through fiscal 2005. Management believes that cash and cash equivalents at June 30, 2005 will be sufficient to fund the Company’s cash requirements through at least June 30, 2006. However, if anticipated revenues and costs do not meet management’s expectations, then management would look to raise additional equity or debt financing or reduce planned expenditures and curtail operations to preserve cash.

6

NOTE B RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 123(R) “Share-Based Payment” that will require compensation costs related to share-based payment transactions to be recognized in the consolidated financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant date fair value of the equity instruments issued. Compensation cost will be recognized over the period that an employee provides services in exchange for the award. SFAS No. 123(R) replaces SFAS No. 123, and supersedes Accounting Principals Board (“APB”) Opinion No. 25. SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements as compensation cost based on their fair value on the date of grant. Fair value of share-based awards will be determined using option-pricing models and assumptions that appropriately reflect the specific circumstances of the awards.

The adoption of SFAS No. 123(R)’s fair market value method will have a significant impact on the Company’s results of operations, although it will have no impact on its overall financial position. The impact of adoption of SFAS No. 123(R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had the Company adopted SFAS No. 123(R) in prior periods, the impact of that standard would have approximated the impact of SFAS No. 123 as described in the disclosure of pro forma net income and earnings per share in Note H to the consolidated financial statements. SFAS No. 123(R) also requires the benefit of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current guidance. This requirement is not expected to have a material effect on the Company’s financial condition or results of operations. SFAS No. 123(R) is effective for fiscal years commencing after June 15, 2005. The Company will adopt this pronouncement beginning in fiscal year 2006.

In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulleting (“SAB”) No. 107, “Share Based Payments” to provide public companies additional guidance in applying the provisions of SFAS No. 123(R). Among other things, SAB No. 107 describes the SEC staff’s expectations in determining the assumptions that underlie the fair value estimates and discussed the interaction of SFAS 123(R) with certain existing SEC guidance.

In November 2004, FASB issued SFAS No. 151, “Inventory Costs an amendment of ARB No. 43, Chapter 4” (SFAS No. 151). SFAS No. 151 amends the guidance in Accounting Research Bulletin (“ARB”) No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, handling costs and wasted material (spoilage). Among other provisions, SFAS No. 151 requires that such items be recognized as current-period charges, regardless of whether they meet the criterion of “so abnormal” as stated in ARB No. 43. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company does not expect that adoption of SFAS No. 151 will have a material effect on its consolidated financial position, consolidated results of operations, or liquidity.

In May 2005, the FASB issued SFAS No. 154. “Accounting Changes and Error Corrections.” SFAS No. 154 is a replacement of APB No. 20 and SFAS No. 3. SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application as the required method for reporting a change in accounting principle. SFAS No. 154 provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. SFAS No. 154 also addresses the reporting of a correction of an error by restating previously issued financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company will adopt this pronouncement beginning in fiscal year 2006.

7

NOTE C INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or market value. The components of inventory consist of the following:

	June 30, 2005		December 31, 2004
	(In thousands)
Customer service spares	$	2,375	$	2,723
Finished goods		3,736		—
Components		7,679		7,648
Work in process		1,698		6,172
Total	$	15,488	$	16,543

NOTE D LIABILITIES

The components of other current liabilities are as follows:

	June 30, 2005		December 31, 2004
	(In thousands)
Customer deposits	$	2,152	$	26
Payroll taxes		648		693
Income taxes		61		80
Other		46		172
Total	$	2,907	$	971

Generally, the Company’s products are sold with a standard warranty, the period of which varies from 12 to 24 months, depending on a number of factors including the specific equipment purchased. The Company accounts for the estimated warranty cost as a charge to cost of sales at the time it recognizes revenue. The warranty cost is based upon historic product performance and is based on a rolling 12-month average of the historic cost per machine per warranty month outstanding.

Changes in the Company’s product warranty liability during the three months ended March 31, 2005 and June 30, 2005 were as follows (in thousands):

Balance, January 1, 2005	$	1,171
Provisions for warranty		170
Consumption of reserves		(286	)
Translation adjustment		(17	)
Balance, March 31, 2005	$	1,038
Provisions for warranty		282
Consumption of reserves		(60	)
Translation adjustment		(56	)
Balance, June 30, 2005	$	1,204

8

NOTE E COMPREHENSIVE LOSS

Comprehensive loss is comprised of the following:

	Three Months Ended						Six Months Ended
	June 30, 2005			June 30, 2004 (Restated)			June 30, 2005			June 30, 2004 (Restated)
	(In thousands)						(In thousands)
Net loss	$	(5,354	)	$	(4,870	)	$	(7,728	)	$	(10,657	)
Foreign currency translation adjustments		(338	)		(302	)		(557	)		216
Total	$	(5,692	)	$	(5,172	)	$	(8,285	)	$	(10,441	)

NOTE F EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended						Six Months Ended
	June 30, 2005			June 30, 2004 (Restated)			June 30, 2005			June 30, 2004 (Restated)
	(In thousands)						(In thousands)
Numerator:
Net loss	$	(5,354	)	$	(4,870	)	$	(7,728	)	$	(10,657	)
Denominator:
Weighted average shares outstanding		15,755			15,745			15,755			15,723

Basic and diluted earnings per share are calculated in accordance with SFAS No. 128, “Earnings Per Share,” which specifies the computation, presentation and disclosure requirements for earnings per share.

The effect of the Company’s potential issuance of common shares from the Company’s stock option program and unvested restricted stock are excluded from the diluted shares calculation in accordance with SFAS No. 128, as they are anti-dilutive when a loss is incurred.

NOTE G PREFERRED STOCK

The Board of Directors has the authority to issue up to 20,000,000 shares of Preferred Stock in one or more series with rights, preferences, privileges and restrictions to be determined at the Board’s discretion.

NOTE H STOCK BASED COMPENSATION EXPENSE

The Company has estimated the fair value of the options at the date of grant using a Black-Scholes option pricing model which was developed for use in estimating the value of traded options that have no vesting restrictions and are fully transferable.

No share based payment expense was recognized under APB No. 25 for the three and six month periods ended June 30, 2005 and 2004. If compensation expense had been determined based on the grant date fair value as computed under the Black-Scholes option pricing model for awards in the three and six month periods ending June 30, 2005 and 2004 in accordance with the provisions of SFAS No. 123 and SFAS No. 148, the Company’s net result and loss per share would have been reduced to the pro forma amounts indicated below:

9

	Three Months Ended						Six Months Ended
	June 30, 2005			June 30, 2004 (Restated)			June 30, 2005			June 30, 2004 (Restated)
	(In thousands)						(In thousands)
Net loss as reported	$	(5,354	)	$	(4,870	)	$	7,728		$	(10,657	)
Pro forma compensation expense calculated on the fair value method		(168	)		(263	)		(336	)		(533	)
Pro forma net loss	$	(5,522	)	$	(5,133	)		(8,064	)	$	(11,190	)
Pro forma loss per common share:
Basic	$	(0.35	)	$	(0.33	)	$	(0.51	)	$	(0.71	)
Diluted	$	(0.35	)	$	(0.33	)	$	(0.51	)	$	(0.71	)

On February 9, 2005, the Board of Directors resolved to amend the outstanding option agreements held by Christopher Dobson, Nigel Wheeler and John Macneil to provide for full acceleration of options with a per share exercise price below $6.00 upon the completion of the proposed merger transaction with Aviza Technology, Inc.

Under FASB Interpretation No. 44, if an award is modified to accelerate vesting, a new measurement date results because the modification may allow the employee to vest in an option or award that would have otherwise been forfeited pursuant to the award’s original terms. While measurement of compensation is made at the date of the modification, the recognition of compensation expense, if any, depends on whether the employee ultimately retains an option or award that would otherwise have been forfeited under the option or award’s original vesting terms. Compensation is measured based on the award’s intrinsic value at the date of modification in excess of the award’s original intrinsic value.

At the date of modification the Company’s share price was below the exercise price of the options and therefore no compensation expense results from the acceleration.

10

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Report. This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements included herein and any expectations based on such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Factors that could cause actual results to differ materially include, without limitation, global economic conditions and in particular the general uncertainty within the semiconductor capital equipment industry, the long sales cycle and implementation periods for Trikon’s systems, the acceptance of Trikon’s technologies and products, Trikon’s ability to respond to technological change, Trikon’s dependence on a limited number of customers and other factors such as those set forth below under the heading “Risk Factors” and the other risks and uncertainties described from time to time in our public announcements and SEC filings, including, without limitation, our Quarterly and Annual Reports on Form 10-Q, 10-K and 10-K/A respectively.

OVERVIEW

Our business is to design, manufacture, market and sell advanced production equipment, spares and related support services that are used to process semiconductor wafers for the manufacture of integrated circuits. Due to the large unit price associated with our systems, which typically vary between $0.8 million and $3.5 million, our backlog, shipments and revenues can be affected, positively or negatively, by a relatively small swing in orders.

Our products carry out processes to deposit and/or remove materials on the surface of a wafer. In particular, our products are used for chemical vapor deposition (CVD), physical vapor deposition (PVD) and plasma etch processes. We sell, install and service our systems to semiconductor manufacturers worldwide and our existing customers include a wide range of semiconductor companies, including large independent device makers. We use a direct sales model in all of our markets except in Asia, where we use a combination of direct sales and distributors.

Recent Developments

On March 14, 2005, we entered into an Agreement and Plan of Merger, as subsequently amended on June 23, 2005, (the “Merger Agreement”) with Aviza, a privately held global supplier of thermal process and atomic layer deposition systems. Under the terms of the Merger Agreement, a wholly-owned subsidiary of New Athletics, Inc., a newly formed Delaware corporation, will merge with and into us, and another wholly-owned subsidiary of New Athletics will merge with and into Aviza. Upon consummation of the mergers, we and Aviza will each continue as subsidiaries of New Athletics. The consummation of the mergers is subject to the approval of the Company’s stockholders and other customary closing conditions. The requisite approval of the stockholders of Aviza has already been obtained. The mergers are expected to close in the third or fourth quarter of 2005.

In addition, on March 14, 2005, the Company entered into an agreement for the joint development of control software for an existing Aviza process module (the “JDA”). The total development fee payable by Aviza to the Company under the JDA is $1.2 million. The development fee includes $900,000 payable upon delivery and sale by the Company to Aviza of one standard, unmodified Trikon transport module. The JDA acknowledges that such delivery and sale and related payment was completed in December 2004 prior to executing the JDA. The JDA also obligates Aviza to purchase, and Trikon to sell, eight additional Trikon transport modules incorporating the developed software, all on a cost-plus a specified percentage basis, and all within two years after the completion of the development work (for delivery no later than two and a half years after the date of the JDA).

The JDA includes a grant of license rights to Aviza with respect to the process-module control software to be developed under the JDA, and also with respect to certain manufacturing documentation and software source code for the existing Trikon transport module. The total license fee payable by Aviza to the Company under the JDA is $4 million, half of which was paid upon execution of the JDA, the other half of which was payable by Aviza before July 31, 2005. The second payment of $2 million was not received by July 31, 2005 and the Company is in discussions with Aviza regarding this matter. The JDA also specifies per-unit royalties that Aviza is to pay the Company for licensed products sold, subject to an overall cap of $2 million.

11

In May 2005, we decided to restate certain of our previously issued financial statements to reflect; (i) the classification of accounts receivable and deferred revenues on contracts with a portion of the contract price that is withheld until final acceptance; (ii) the timing of recognition of costs on those contracts; and (iii) the allocation of facilities cost. (See notes 13 and 14 to the consolidated financial statements on Form 10-K/A for the fiscal year ended December 31, 2004).

Critical Accounting Policies

General

Our discussion and analysis of the financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principles.

A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates generally require us to make assumptions about matters that are highly uncertain at the time of the estimate; and if different estimates or judgments were used, the use of these estimates or judgments would have a material effect on our financial condition or results of operations.

The estimates and judgments we make that affect the reported amount of assets, liabilities, revenues and expenses are based on our historical experience and on various other factors, which we believe to be reasonable in the circumstances under which they are made. Actual results may differ from these estimates under different assumptions or conditions. We consider our accounting policies related to revenue recognition, foreign currency translation, the valuation of inventories including demonstration inventory and accounting for the costs of installation and warranty obligations to be critical accounting policies.

Revenue Recognition

We derive our revenues from four sources – equipment sales, spare parts sales, the provision of services and license revenue. In accordance with Staff Accounting Bulletin 104 issued by the staff of the Securities and Exchange Commission, we recognize revenue when all the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services rendered, the sales price is fixed or determinable and collectivity is reasonably assured. For transactions that consist of multiple deliverables we allocate revenue to each of the deliverables based upon relative fair values and apply the revenue recognition criteria above to each element.

Generally, we recognize revenue on shipment, as the equipment is pre-tested in the factory prior to shipment and our terms of business are FOB factory. For new customers, or new products, revenue is recognized on shipment only if the customer attends and approves the pre-shipment testing procedures and we, and the customer, are satisfied that the performance of the equipment, once installed and operated, will meet the customer-defined specifications. Generally, even with new customers we recognize revenue on shipment because the customer attends and approves the pre-shipment testing. The amount of revenue recognized is reduced by the amount of any customer retention (typically between 10% and 20%), which is not payable by the customer until installation is completed and final customer acceptance is achieved.

The amount of revenue associated with customer retentions for systems shipped prior to the quarter end not recorded at June 30, 2005 was $5.6 million compared to $1.9 million at December 31, 2004. The total contract values for these specific shipments were $17.2 million and $16.4 million at June 30, 2005 and December 31, 2004, respectively.

Equipment shipped as demonstration or evaluation units are recognized as revenue on transfer of title and either final acceptance, or satisfactory completion of testing which demonstrates that the equipment meets all the customer defined specifications.

12

Revenue related to spare parts is recognized on shipment. Revenue related to service contracts is recognized ratably over the duration of the contracts. Revenue deferred on service contracts was $0.5 million at June 30, 2005 compared to $0.5 million at December 31, 2004.

Where technology has been sold, revenue has been recognized on receipt of the royalty payments. Where revenue has been licensed and delivered, the royalty is recognized as revenue when it becomes irrevocable.

Foreign Currency Translation

Most of our operations are located within the United Kingdom and most of our costs are incurred in British pounds. However, our system sales are generally in US dollars and, to a lesser extent, in euros, and we report in US dollars. As a result, fluctuations in the exchange rate between the US dollar and the British pound could have a significant effect on our reported earnings and net asset position. We have determined that the functional currency for all UK operations is the British pound and as a result our actual expenses expressed in US dollars will fluctuate with changes in foreign currency exchange rates and result in currency gains and losses, which are charged to net income. Changes in the value of non-US net assets as a result of these movements of foreign currency exchange rates are treated as changes to the cumulative translation adjustment on the balance sheet. We also have significant intercompany loans between the United Kingdom operating subsidiary and the parent, which are determined as being short-term in nature. This determination results in exchange gains and losses associated with these loans being accounted for in the statement of operations.

Inventory Valuation

Inventories are stated at the lower of cost or net realizable value, using standard costs which approximate to actual cost. We maintain a perpetual inventory system and continuously record the quantity on hand and standard cost of each product including purchased components, sub assemblies and finished goods. We maintain the integrity of the perpetual inventory through a cycle stock count program.

Our standard costs are re-assessed at least annually and generally reflect the most recent purchase cost and currently achievable assembly and test labor and overhead rates. We estimate our labor and overhead rates based upon average utilization rates and treat as a period cost abnormal absorption variances, which arise due to low or high production volumes. As a result of the recent low levels of production, significant negative volume variances are being experienced, which has resulted in a gross margin that is below levels that could be achieved at higher revenue levels.

We also make provision for slow moving and obsolete inventory and evaluate their adequacy on a quarterly basis. For our work in process and finished goods inventory, which generally consist of specific systems or modules, we compare the inventory on hand to current sales and market forecasts and other information that indicates the ability to identify a purchaser for such equipment. We apply a formula approach to reserves against raw materials and spares inventory based upon 12 months historic usage, applying different criteria to components that are required for current products, non current products and spares.

A major component of the estimate of inventory reserves is our forecast of future customer demand, technological and/or market obsolescence, and general semiconductor market conditions. If future customer demand or market conditions are less favorable than our projections, then additional inventory write-downs may be required, and these would be reflected in cost of sales in the period the reserves were adjusted.

Installation and Warranty

Generally we recognize the costs of installation when the machine is fully accepted by the customer. Our contracts cover on-site installation services and provide for a warranty of the machine. Our standard warranty period varies from 12 to 24 months, depending on a number of factors including the specific equipment purchased.

We account for the estimated warranty cost as a charge to cost of sales at the time we recognize revenue. The

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warranty reserve is based upon historic product performance and is based on a rolling 12-month average of the historic cost per machine per warranty month outstanding. We also recalculate the estimated warranty cost for all remaining systems still under warranty using the most recent historic average and the difference is included as a component of cost of sales. We do not maintain any general reserves for warranty obligations. Actual warranty costs in the future may vary from historic costs, which could result in adjustments to our warranty reserves in future periods that are more volatile than in recent years.

RESULTS OF OPERATIONS

The following table sets forth certain operating data as a percentage of total revenue for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30, 2005		June 30, 2004 (Restated)		June 30, 2005		June 30, 2004 (Restated)
Product revenues	99.2	%	99.4	%	87.5	%	99.4	%
License revenue	0.8	%	0.6	%	12.5	%	0.6	%
Total revenue	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	76.5	%	81.6	%	64.2	%	83.1	%
Gross margin	23.5	%	18.4	%	35.8	%	16.9	%
Operating expenses:
Research and development	25.0	%	26.6	%	26.9	%	33.1	%
Selling, general and administrative	41.3	%	37.1	%	44.1	%	48.9	%
Total operating expenses	66.3	%	63.7	%	71.0	%	82.0	%
Loss from operations	(42.8	)%	(45.3	)%	(35.2	)%	(65.1	)%
Foreign currency (losses) gains	(17.6	)%	(2.6	)%	(10.9	)%	2.1	%
Interest income, net	0.7	%	0.6	%	0.5	%	0.8	%
Loss before income tax charge	(59.7	)%	(47.3	)%	(45.6	)%	(62.2	)%
Income tax charge	(0.5	)%	(0.5	)%	(0.6	)%	(0.7	)%
Net loss	(60.2	)%	(47.8	)%	(46.2	)%	(62.9	)%

Product revenues

Product revenues for the three months ended June 30, 2005 decreased 13% to $8.8 million compared to $10.1 million for the three months ended June 30, 2004 and product revenues for the six months ended June 30, 2005 decreased 13% to $14.6 million compared to $16.8 million for the six months ended June 30, 2004. Shipments for the three months ended June 30, 2005 were $12 million compared to $9 million in the three months ended June 30, 2004.

Revenue from outside of the United States accounted for approximately 59% of total revenues in both of the three-month periods ended June 30, 2005 and June 30, 2004, and approximately 62% and 70% of total revenues in the six-month periods ended June 30, 2005 and June 30, 2004, respectively. We expect that sales outside of the United States will continue to represent a significant percentage of our product sales.

Due to the large unit price associated with our systems, we anticipate that our product sales will continue to be made to a small number of customers in each quarter. The quantity of product shipped in any particular quarter can fluctuate significantly and therefore is not indicative of a trend in customer or geographical mix.

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Our sales by type of product are as follows:

	Three Months Ended				Six Months Ended
	June 30, 2005		June 30, 2004		June 30, 2005		June 30, 2004
PVD	50	%	32	%	44	%	33	%
CVD	7	%	—		5	%	3	%
Etch	10	%	39	%	17	%	29	%
Spares and service	33	%	29	%	34	%	35	%
Total	100	%	100	%	100	%	100	%

License revenues

License revenues relate to an exclusive license of power supply technology, a non-exclusive license of Mori technology to a systems integrator in Japan for a non-competing application and the initial portion of a non-exclusive license fee of $2 million received upon execution of a joint development agreement entered into with Aviza on March 14, 2005. License revenues for the three and six-month periods ended June 30, 2005 were each 0.8% and 12.5% of total revenue, respectively.

Gross Margin

The gross margin on total revenues for the three-month period ended June 30, 2005 was 24% as compared to 18% for the three-month period ended June 30, 2004 and 36% for the six months ended June 30, 2005 compared with 17% for the six months ended June 30, 2004.

The improvement in gross margin in the three and six month periods ended June 30, 2005 is attributable to a combination of improved resource utilization and reduced costs. Despite this improvement, the gross margin for the three and six months period ended June 30, 2005 continues to be effected by low production volumes and negative manufacturing variances. As a result of the license fee, the overall gross margin for the six month period ended June 30, 2005 was 36%.

Research and development expenses

Research and development expenses for the three months ended June 30, 2005 were $2.2 million, or 25% of total revenues, compared with $2.7 million, or 27% of total revenues, for the three months ended June 30, 2004. For the six months ended June 30, 2005 research and development expenses were $4.5 million, or 27% of total revenues, compared with $5.6 million, or 33% of total revenues, for the six months ended June 30, 2004. Research and development expenses for the three and six month period ended June 30, 2004 include $322,000 relating to a reduction in force, no similar charges have been incurred in the three and six month periods ended June 30, 2005. The major focus of our research and development efforts will be the development of new processes in further advancing our proprietary PVD, CVD and etch technologies, especially the development of novel process solutions for emerging applications in addition to our Flowfill and Orion product lines at technology nodes of 90nm and below.

We have received an offer of a grant from the UK government to develop broad ion beam deposition technology in collaboration with other parties for magnetic random access memory (MRAM) applications. The grant will reimburse 50% of the total project costs to a maximum of $3.1 million. The project is contingent upon all parties accepting the offer and as at June 30, 2005 no costs had been incurred and no funding had been received. Although we have been informed that one party in the original consortium is unable to continue the program, we have been informed that it will be possible to substitute such party. We have identified an alternative and are awaiting confirmation of acceptability from the UK government. The expenditure and funding are expected to commence in Q4 of fiscal 2005 and would be expended/received over the 18-month period of the project.

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We have also accepted an offer of a grant from the Welsh Development Agency to develop a process to fabricate microfluidic substrates for the production of a single stage emulsion for R&D use by pharmaceutical and biotechnology companies. This grant will reimburse 50% of the total project costs to a maximum of $300,000. The project start date was March 8, 2005, and the project is expected to complete by May 2006. Costs have been recovered during the quarter in line with the payment schedule.

Trikon gains full ownership rights to all intellectual property generated from the development projects that are the subject of the UK government and Welsh Development Agency grant funding.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended June 30, 2005 were $3.7 million, or 41% of total revenues, compared to $3.8 million, or 37% of total revenues, in the three months ended June 30, 2004. The three month period ended June 30, 2004 included costs relating to a reduction in force of $322,000. There has been no comparable cost in fiscal 2005. Selling, general and administrative expenses for the second quarter of 2005 include legal, accounting and due diligence costs of $0.4 million expended in respect of the planned merger with Aviza. For the six months ended June 30, 2005 selling, general and administrative expenses were $7.4 million, or 44% of total revenues, compared to $8.2 million, or 49% of total revenues, in the six months ended June 30, 2004. Total non-recurring costs, net of a credit for property taxes, were $862,000 in the six month period ended June 30, 2004. Selling, general and administrative expenses for the six months ended June 30, 2005 include $1 million in respect of legal, accounting and due diligence costs associated with the planned merger transaction with Aviza.

Results from operations

We incurred a loss from operations of $3.8 million in the three months ended June 30, 2005 compared to $4.6 million in the three months ended June 30, 2004 and $5.9 million in the six months ended June 30, 2005 compared to a loss from operations of $11.0 million in the six months ended June 30, 2004.

The combination of higher gross margins reduced operating costs and license revenue receipts have contributed to a significant reduction in the loss from operations as compared to the six month period ended June 30, 2004.

Interest income (expense) net

Net interest income was $62,000 for the three months ended June 30, 2005 compared with net interest income of $63,000 for the three months ended June 30, 2004. During the six months ended June 30, 2005 net interest income was $88,000 compared to net interest income of $129,000 in the first half of the prior year. Lower cash balances are the primary reason for the lower interest income in the three and six month period ended June 30, 2005.

Income taxes

For the three months ended June 30, 2005, we recorded a tax charge of $45,000 compared with a tax charge of $55,000 for the three months ended June 30, 2004. For the six months ended June 30, 2005 we recorded a tax charge of $101,000 compared with a tax charge of $120,000 for the six months ended June 30, 2004. We expect to report a small tax charge for the fiscal year ending December 31, 2005 which will consist primarily of United States state taxes including Delaware and a small amount of Non-US or UK taxes were we have cost plus arrangements in place. In estimating the tax rate for the three and six months ended June 30, 2005, we have not provided any benefit for the deferred tax asset arising from operating losses generated that can only be offset against future profits.

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NEW ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 123(R) “Share-Based Payment” that will require compensation costs related to share-based payment transactions to be recognized in the consolidated financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant date fair value of the equity instruments issued. Compensation cost will be recognized over the period that an employee provides services in exchange for the award. SFAS No. 123(R) replaces SFAS No. 123, and supersedes Accounting Principals Board (“APB”) Opinion No. 25. SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements as compensation cost based on their fair value on the date of grant. Fair value of share-based awards will be determined using option-pricing models and assumptions that appropriately reflect the specific circumstances of the awards.

The adoption of SFAS No. 123(R)’s fair market value method will have a significant impact on the Company’s results of operations, although it will have no impact on its overall financial position. The impact of adoption of SFAS No. 123(R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had the Company adopted SFAS No. 123(R) in prior periods, the impact of that standard would have approximated the impact of SFAS No. 123 as described in the disclosure of pro forma net income and earnings per share in Note H to the consolidated financial statements. SFAS No. 123(R) also requires the benefit of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current guidance. This requirement is not expected to have a material effect on the Company’s financial condition or results of operations. SFAS No. 123(R) is effective for fiscal years commencing after June 15, 2005. The Company will adopt this pronouncement beginning in fiscal year 2006.

In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulleting (“SAB”) No. 107, “Share Based Payments” to provide public companies additional guidance in applying the provisions of SFAS No. 123(R). Among other things, SAB No. 107 describes the SEC staff’s expectations in determining the assumptions that underlie the fair value estimates and discussed the interaction of SFAS No. 123(R) with certain existing SEC guidance.

In November 2004, FASB issued SFAS No. 151, “Inventory Costs an amendment of ARB No. 43, Chapter 4” (SFAS No. 151). SFAS No. 151 amends the guidance in Accounting Research Bulletin (“ARB”) No. 43, Chapter 4, “Inventory Pricing”, to clarify the accounting for abnormal amounts of idle facility expense, handling costs and wasted material (spoilage). Among other provisions, SFAS No. 151 requires that such items be recognized as current-period charges, regardless of whether they meet the criterion of “so abnormal” as stated in ARB No. 43. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company does not expect that adoption of SFAS No. 151 will have a material effect on its consolidated financial position, consolidated results of operations, or liquidity.

In May 2005, the FASB issued SFAS No. 154. “Accounting Changes and Error Corrections.” SFAS No. 154 is a replacement of APB No. 20 and SFAS No. 3. SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application as the required method for reporting a change in accounting principle. SFAS No. 154 provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. SFAS No. 154 also addresses the reporting of a correction of an error by restating previously issued financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company will adopt this pronouncement beginning in fiscal year 2006.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2005, we had cash, restricted cash and cash equivalents of $13.1 million, compared to $21.2 million at December 31, 2004. Cash and cash equivalents was $4.2 million at June 30, 2005 compared to $11.6 million at December 31, 2004. We utilized cash from operations of $7.9 million in the six months ended June 30, 2005 compared to a use of cash by operations of $6.3 million in the six-month period of the prior year.

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As of December 31, 2003, we had a term loan from a British bank with a balance outstanding of 6.25 million British pounds (approximately $11.2 million at the exchange rate at such date). The term loan was repaid in full during the three months ended March 31, 2004.

In July 2003, we entered into a two-year revolving credit facility for 5 million British pounds ($9.0 million at the June 30, 2005 exchange rate) (the “2003 facility”). Interest on the 2003 facility, was incurred at the London Interbank Offer Rate (LIBOR) plus 1.75% for borrowings in British pounds and at the Bank’s short-term offered rate plus 1% for foreign currency.

The 2003 facility has subsequently been amended, and on June 30, 2005 an agreement was entered into to extend the term of the facility to December 31, 2005. In addition, the amendment lowers the minimum consolidated net worth that we are required to maintain under the financial covenants contained in the facility agreement from $40 million to $32 million. The net interest covenant remains at £70,000 per quarter and LIBOR plus 1.75%. As at June 30, 2005 we have drawn down £5 million (approximately $9 million at June 30, 2005 exchange rates) on the facility, which has been placed in a Lloyds TSB Bank deposit account and has certain restrictions placed upon its usage. To the extent the US dollar strengthens against the British pound, or we incur net losses, our consolidated net worth will continue to decline. If our consolidated net worth falls below $32 million, we would be in breach of this covenant, and our bank could exercise its right to cause us to repay amounts outstanding under the 2003 facility and not permit such amounts to be redrawn.

Our cash and cash equivalents net of amounts borrowed under the 2003 facility (as amended) was $4.2 million at June 30, 2005 and represents our primary source of liquidity. Our cash used in operating activities during the quarter ended June 30, 2005 was $4.7 million. We may use all, or a substantial part of our cash balance to fund our current obligations and our operations. The amount of cash reserves that we will use to fund our operations will depend on our ability to reduce our operating losses through revenue growth or cost reduction.

The amount of funding required by operations in the next twelve months will depend on numerous factors including, market conditions within the semi conductor industry, general economic conditions, our ability to increase our revenue, or reduce our expenditures or our ability to reduce our working capital requirements in areas such as inventory and accounts receivable. However, management believes, based upon our current forecast for revenues operating expenses, cash flows and other financial metrics that the resources available at June 30, 2005 are sufficient to fund operations for the next twelve months.

If anticipated revenues do not meet our expectations we would continue to seek to scale back our operations to lower the use of cash. We also anticipate that we would seek to raise additional debt or equity funding during the next twelve months and to seek an extension or replacement to the current line of credit.

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RISK FACTORS

There are numerous risks associated with the pending merger with Aviza Technology, Inc.

On March 14, 2005, we announced that we had entered into a definitive agreement to combine with Aviza to form a new company. The transaction is subject to a number of risks including risks related to the following:

• unanticipated expenses related to the merger transaction;

• the potential disruption of our ongoing business and distraction of our management;

• potential loss of key employees and employee productivity;

• adverse effects on existing business relationships with customers and customer prospects;

• potential revenue decline as a result of customer and potential customer uncertainty;

• the impairment of relationships with employees, customers, distributors, strategic partners and suppliers as a result of integration of management and other key personnel; and

• the failure to realize the expected benefits of combining with Aviza Technology, Inc.

In addition, if the merger is not consummated for any reason, we may be subject to a number of risks, including:

• the market price of our common stock could decline following an announcement that the merger has been abandoned to the extent that the current market price reflects a market assumption that the merger will be completed;

• the effect of incurring substantial costs related to the merger, such as legal, accounting and financial advisor fees, which will be required to be paid even if the merger is not consummated;

• our ability to retain key employees may be adversely affected;

• our relationships with customers may be adversely affected; and

• depending upon the reason for termination of the merger, the possible requirement that we pay a substantial termination fee to Aviza Technology, Inc.

In connection with the proposed merger, New Athletics, Inc. has filed a registration statement on Form S-4 that contains a proxy statement/prospectus with the Securities and Exchange Commission (File No. 333-126098). The proxy statement/prospectus contains important information about the proposed merger, risks relating to the merger, and related matters, we urge all of our stockholders to read the proxy statement/prospectus carefully.

We have experienced losses over the last few years and we may not be able to achieve profitability and may need to raise additional capital to support our operations.

We have experienced losses of $7.7 million during the six months ended June 30, 2005 and $13.7 million and $25.0 million for the years ended December 31, 2004 and 2003, respectively. We will need to increase sales and/or reduce costs to return to profitability. However, we may never generate sufficient revenues to achieve profitability. Even if we do achieve profitability, we may not sustain or increase profitability on a quarterly or annual basis in the future.

As of June 30, 2005, we had cash, restricted cash and cash equivalents of $13.1 million. This amount includes the equivalent of 5 million British pounds (approximately $9.0 million at the June 30, 2005 exchange rate)

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outstanding under our revolving credit facility that we may be required to repay if we breach the consolidated net worth covenant in the facility. We may need to raise additional capital in the next twelve months from the sale of equity. In addition, regardless of whether such financing is absolutely necessary, we may seek additional debt or equity financing in the next twelve months in order to strengthen our cash position. We may not be able to obtain additional financing on acceptable terms, or at all. If we issue additional equity or convertible debt securities to raise funds, the ownership percentage of our existing stockholders would be reduced and they may experience significant dilution. New investors may demand rights, preferences or privileges that differ from, or are senior to, those of existing holders of our common stock, including warrants in addition to the securities purchased and protection against future dilutive transactions. If we are unable to achieve positive cash flows or raise additional capital, we may be forced to implement further expense reduction measures, including, but not limited to, the sale of assets, the consolidation of operations, workforce reductions, and/or the delay, cancellation or reduction of certain product development, marketing or other operational programs.

We may not achieve profitability in fiscal 2005 and may not achieve the sales necessary to avoid further expense reduction measures in the future. Such expense reduction measures could materially adversely affect our results of operations and prospects and may not be successful in preserving sufficient cash to continue operations.

The semiconductor industry is highly cyclical and unpredictable.

Our business depends upon the capital expenditures of semiconductor manufacturers, which in turn depend on the current anticipated market demand for integrated circuits. The semiconductor industry has historically been cyclical due to sudden changes in demand for semiconductors and manufacturing capacity using the latest technology. These changes in demand have affected the timing and amounts of customers’ capital equipment purchases and investments in technology, and continue to affect our orders, net sales, gross margin and results of operations.

During periods of decreasing demand for integrated circuit manufacturing equipment, we must be able to appropriately align our cost structure with prevailing market conditions and effectively motivate and retain key employees. Conversely, during periods of increasing demand, we must have sufficient manufacturing capacity and inventory to meet customer demand, and must be able to attract, retain and motivate a sufficient number of qualified individuals. If we are not able to timely adjust our cost structure with business conditions and/or to effectively manage our resources and production capacity during changes in demand, our business, financial condition or results of operations may be materially and adversely affected.

We are exposed to risks associated with a highly concentrated customer base.

Our orders and revenue are from a relatively small number of customers, which we expect to continue. In the six months ended June 30, 2005, three customers exceeded 10% of product revenues. This may lead customers to demand from us less favorable pricing and other terms. In addition, sales to any single customer may vary significantly from quarter to quarter. If current customers delay, cancel or do not place orders, we may not be able to replace these orders with new orders in the corresponding period, and our results of operations will suffer. As our products are configured to customer specifications, changing, rescheduling or cancelling orders may result in significant and often non-recoverable costs. The resulting fluctuations in the amount of and terms of orders could have a material adverse effect on our business, financial condition and results of operations.

We will not be able to compete effectively if we fail to address the technology needs of our customers.

We operate in a highly competitive environment, and our future success is heavily dependent on effective development, commercialization and customer acceptance of new products compared to our competitors. In addition, our success is dependent upon our ability to timely and cost-effectively:

• develop and market new products and technologies;

• improve existing products and technologies;

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• expand into or develop equipment solutions for new markets for integrated circuit products;

• achieve market acceptance and accurately forecast demand for our products and technologies;

• achieve cost efficiencies across our product offerings;

• qualify new or improved products for volume manufacturing with our customers; and

• lower our customers’ cost of ownership.

The development, introduction and support of new or improved products and technologies, including those which enable smaller feature sizes, new materials and the utilization of 300mm wafers becomes increasingly expensive and unpredictable. For example, the adoption of our ORION^® technology for ultra low k deposition has been delayed as a result of integration issues at the potential customers. Until such integration issues are resolved, our ability to obtain commercial sales of our ORION^® technology is limited and there can be no assurance that these integration issues will be resolved. We also need to continue to develop technology for such customer needs as power semiconductors, SiP/Mems, BAW, Flowfill, and other applications and there can be no assurance that such developments will be consistent with the needs of these customers.

We may not be able to accurately forecast or respond to the technological trends in the semiconductor industry or respond to specific product announcements by our competitors. Our competitors may be developing technologies and products that are more effective or that achieve more widespread acceptance. In addition, we may incur substantial costs to ensure the functionality and reliability of our current and future products. If our new developed products are unreliable or do not meet our customers’ expectations, then reduced orders, higher manufacturing costs, delays in collecting accounts receivable or additional service and warranty expense could result. Our customers may purchase equipment for their new products but experience delays and technical and manufacturing difficulties in their introductions or transition to volume production using our systems causing significant delays between the sale of an initial tool into our customers development facility and limit the potential for follow on sales for manufacturing. Any of these events could negatively affect our ability to generate the return we expect to achieve on our investments in these new products.

Integrated circuit manufacturers have been slow to adopt the use of new materials and if we fail to continue to develop these solutions to achieve all the specifications required by device manufacturers and/or the device manufacturers fail to successfully integrate these technologies with their other processes, or our competitors develop competing solutions, then our ability to grow our revenues from these products would be negatively affected.

Our operating results could be negatively affected by currency fluctuations.

We are based in the United Kingdom, and most of our operating expenses are incurred in British pounds. Our revenues, however, are generally denominated in US dollars, and to a lesser extent in euro, and we report our financial results in US dollars. Accordingly, if the British pound increases in value against the US dollar, our expenses as a percentage of revenues will increase and gross margins and net income will be negatively affected.

The semiconductor industry is global and is expanding within the Asian region. If we are unable to penetrate this market our ability to grow our revenues will be restricted.

The percentage of worldwide semiconductor production that is based in the Asian region is growing, particularly within China. Our business has traditionally been strongest with the European semiconductor manufacturers and we have only small installed base and limited brand recognition in Asia. It will be necessary for us to penetrate the region by attracting new customers and expanding relationships in Asia to grow our business. While we have appointed a new sales representative in this region and hired a small number of employees, there is no assurance that we will be able to penetrate these geographic markets, which are subject to growth rates that are higher than worldwide growth rates. Failure to penetrate these markets may harm our competitive position and adversely affect our future business.

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Our competitors have greater financial resources and greater name recognition than we do and therefore may compete more successfully.

We face competition or potential competition from many companies with greater resources than ours. If we are unable to compete effectively with these companies, our market share may decline and our business could be harmed.

Virtually all of our primary competitors are substantially larger companies and some of them have broader product lines than ours. They have well-established reputations in the markets in which we compete, greater experience with high volume manufacturing, broader name recognition, substantially larger customer bases, and substantially greater financial, technical, manufacturing and marketing resources than we do. We also face potential competition from new entrants, including established manufacturers in other segments of the semiconductor capital equipment market who may decide to diversify and develop and market products that compete with our current offerings.

Semiconductor manufacturers are loyal to their current semiconductor equipment supplier, which may make it difficult for us to obtain new customers.

Because semiconductor manufacturers must make a substantial investment to install and integrate capital equipment into a semiconductor fabrication facility, these manufacturers will tend to choose semiconductor equipment manufacturers based on established relationships, product compatibility and proven system performance.

Once a semiconductor manufacturer selects a particular vendor’s capital equipment, the manufacturer generally relies for a significant period of time upon equipment from this vendor of choice for the specific production line application. To do otherwise creates risk for the manufacturer because the manufacture of a semiconductor requires many process steps and a fabrication facility will contain many different types of machines that must work cohesively to produce products that meet the customers’ specifications. If any piece of equipment fails to perform as expected, the customer could incur significant costs related to defective products, production line downtime, or low production yields.

Since most new fabrication facilities are similar to existing ones, semiconductor manufacturers tend to continue using equipment that has a proven track record. Based on our experience with major customers such as Infineon, we have observed that once a particular piece of equipment is selected from a vendor, the customer is likely to continue purchasing that same piece of equipment from the vendor for similar applications in the future. Our customer list, though limited, has increased during the six months ended June 30, 2005. Yet our broadening market share remains at risk due to choices made by customers that continue to be influenced by pre-existing installed bases by competing vendors. Consequently, our penetration of new customers and our ability to get additional orders may be limited.

A semiconductor manufacturer frequently will attempt to consolidate its other capital equipment requirements with the same vendor. Accordingly, we may face narrow windows of opportunity to be selected as the “vendor of choice” by potential new customers. It may be difficult for us to sell to a particular customer for a significant period of time once that customer selects a competitor’s product, and we may not be successful in obtaining broader acceptance of our systems and technology. If we are not able to achieve broader market acceptance of our systems and technology, we may be unable to grow our business and our operating results and financial condition will be harmed.

Our products generally have long sales cycles and implementation periods, which increase our costs of obtaining orders and reduce the predictability of our earnings.

Our products are technologically complex. Prospective customers generally must commit significant resources to test and evaluate our products and to install and integrate them into larger systems. In addition, customers often require a significant number of product presentations and demonstrations, in some instances evaluating equipment on site, before reaching a sufficient level of confidence in the product’s performance and compatibility with their requirements to place an order. As a result, our sales process is often subject to delays associated with lengthy approval processes that typically accompany the design and testing of new products. The sales cycles of our products often last for many months or even years. Longer sales cycles require us to invest significant resources in attempting to make sales and delay the generation of revenue. In addition, we may incur significant costs in supporting evaluation equipment at our customers’ facilities.

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Long sales cycles also subject us to other risks, including customers’ budgetary constraints, internal acceptance reviews and cancellations. In addition, orders expected in one quarter could shift to another because of the timing of customers’ purchase decisions. The time required for our customers to incorporate our products into their manufacturing processes can vary significantly with the needs of our customers and generally exceeds several months, which further complicates our planning processes and reduces the predictability of our operating results.

Customers are also demanding shorter delivery times from the time of placing a purchase order. We therefore are required to negotiate with our suppliers shorter lead times for the materials required and we may need to purchase inventory and to commence building for a customer prior to receipt of a confirmed purchase order. It is not possible to fully mitigate this risk within the supply chain. In the event a purchase order is not received from a customer where we had commenced manufacturing, then higher inventory levels would be incurred and potential inventory write-offs would also be incurred if an alternative customer is not identified to purchase that system

We depend upon sole suppliers for certain key components.

We depend on a number of sole suppliers for key components used in the manufacture of our products. If we are unable to obtain timely delivery of sufficient quantities of these components, we would be unable to manufacture our products to meet customer demand, unless we are able to locate replacement components. Most significantly, our cluster tools are designed around an automation module supplied by Brooks Automation. Due to the high cost of these modules we keep very few in inventory. If Brooks Automation fails to deliver the component on a timely basis, delivery of our cluster tools will be delayed and sales could be lost. Typically revenue from cluster tools containing Brooks Automation’s module accounts for approximately 35 to 40% of our quarterly revenue. If Brooks Automation is unable to deliver any such modules for a prolonged period of time, we will have to redesign our cluster tools so that we may utilize other wafer transport systems. There can be no assurance that we will be able to do so, or that customers will adopt the redesigned systems.

Our final assembly and testing is concentrated in one facility.

Our final assembly and testing activity is concentrated in our facility in Newport, United Kingdom. We have no alternative facilities to allow for continued production if we are required to cease production in our facility, as a result of a fire, natural disaster or otherwise. In such event, we will be unable to produce any products until the facility is replaced. Any such interruption in our manufacturing schedule could cause us to lose sales and customers, which could significantly harm our business

If we are unable to hire and retain a sufficient number of qualified personnel, our ability to manage growth will be negatively affected.

Our business and future operating results depend in part upon our ability to attract and retain qualified management, technical, sales and support personnel for our operations on a worldwide basis. Competition for qualified personnel is intense, and we cannot guarantee that we will be able to continue to attract and retain qualified personnel. Our operations could be negatively affected if we lose key executives or employees or are unable to attract and retain skilled executives and employees as needed.

Our ability to compete could be jeopardized if we are unable to protect our intellectual property rights from challenges by third parties.

Our success and ability to compete depend in large part upon protecting our proprietary technology. We rely on a combination of patent, trade secret, copyright and trademark laws, non-disclosure and other contractual agreements and technical measures to protect our proprietary rights.

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There can be no assurance that patents will be issued on our pending patent applications or that competitors will not be able to ascertain legitimately proprietary information embedded in our products that is not covered by patent or copyright. In such case, we may be precluded from preventing the competitor from making use of such information.

In addition, should we wish to assert our patent rights against a particular competitor’s product, there can be no assurance that any claim in any of our patents will be sufficiently broad nor, if sufficiently broad, any assurance that our patent will not be challenged, invalidated or circumvented, or that we will have sufficient resources to prosecute our rights. Failure to protect our intellectual property could have an adverse effect on our business.

Claims or litigation regarding intellectual property rights could seriously harm our business or require us to incur significant costs.

In recent years, there has been significant litigation in the United States in the semiconductor equipment industry involving patents and other intellectual property rights. Infringement claims may be asserted against us in the future and, if such claims are made, we may not be able to defend against such claims successfully or, if necessary, obtain licenses on reasonable terms. Any claim that our products infringe proprietary rights of others would force us to defend ourselves and possibly our customers against the alleged infringement. These claims and any resulting lawsuit, if successful, could subject us to significant liability for damages and invalidation of our proprietary rights. These lawsuits, regardless of their outcome, would likely be time-consuming and expensive to resolve and would divert management’s time and attention. Any potential intellectual property litigation could force us to do one or more of the following:

• lose or forfeit our proprietary rights;

• stop manufacturing or selling our products that incorporate the challenged intellectual property;

• obtain from the owner of the infringed intellectual property right a license to sell or use the relevant technology, which license may not be available on reasonable terms or at all and may involve significant royalty payments;

• pay damages, including treble damages and attorney’s fees in some circumstances; or

• re-design those products that use the challenged intellectual property.

If we are forced to take any of the foregoing actions, our business could be severely harmed.

Our operations are subject to health and safety and environmental laws that may expose us to liabilities for non-compliance.

We are subject to a variety of governmental regulations relating to the use, storage, discharge, handling, manufacture and disposal of all materials present at, or our output from, our facilities, including the toxic or other hazardous chemical by-products of our manufacturing processes. Environmental claims against us, or our failure to comply with any present or future regulations could result in, significant costs to remediate, the assessment of damages or imposition of fines against us; the suspension of production of our products; or the cessation of our operations.

New regulations could require us to purchase costly equipment or to incur other significant expenses. Our failure to control the use or adequately restrict the discharge of hazardous substances could subject us to future liabilities, which could negatively affect our operating results and financial condition.

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Any acquisitions we may make could disrupt our business and severely harm our financial condition.

We may consider it necessary to invest in complementary products, companies or technologies, such investments involve numerous risks, including but not limited to: (1) diversion of management’s attention from other operational matters; (2) inability to complete acquisitions as anticipated or at all; (3) inability to realize synergies expected to result from an acquisition; (4) failure to commercialize purchased technologies; (5) ineffectiveness of an acquired company’s internal controls; (6) impairment of acquired intangible assets as a result of technological advancements or worse-than-expected performance of the acquired company or its product offerings; (7) unknown and/or undisclosed commitments or liabilities; (8) failure to integrate and retain key employees; and (9) ineffective integration of operations. Mergers and acquisitions are inherently subject to significant risks, and the ability to effectively manage these risks could materially and adversely affect our business, financial condition and results of operations.

Changes in accounting rules may adversely affect our financial results.

We prepare our financial statements in conformity with Generally Accepted Accounting Principles (GAAP) of the United States of America. These principles are subject to interpretation by the Securities and Exchange Commission (the “SEC”) and the Financial Accounting Standards Board (FASB). A change in these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions. In particular, changes to FASB guidelines relating to accounting for stock-based compensation will likely increase our compensation expense, could make our net result less predictable in any given reporting period and could change the way we compensate our employees or cause other changes in the way we conduct our business.

You may have difficulty protecting your rights as a stockholder and in enforcing civil liabilities because many of our executive officers and the majority of the members of our board of directors and the majority of our assets are located outside the United States.

Our principal assets and manufacturing plants are located in the United Kingdom. In addition, most of the members of our board of directors and our executive officers are residents of jurisdictions other than the United States. As a result, it may be difficult for stockholders to serve process within the United States upon members of our board of directors and our executive officers, or to enforce against us or members of our board of directors or our executive officers judgments of the U.S. courts, to enforce outside the United States judgments obtained against members of our board of directors or our executive officers in U.S. courts, or to enforce in U.S. courts judgments obtained against members of our board of directors or our executive officers in courts in jurisdictions outside the United States, in any action, including actions that derive from the civil liability provisions of the U.S. securities laws. In addition, it may be difficult for our stockholders to enforce, in original actions brought in courts in jurisdictions located outside the United States, liabilities that derive from U.S. securities laws.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The following discussion and analysis about market risk disclosures may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements include declarations regarding our intent, belief or current expectations and involve risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements.

Our earnings and cash flow are subject to fluctuations in foreign currency exchange rates. Significant factors affecting this risk include our manufacturing and administrative cost base, which is predominately in British pounds, and product sales outside the United States, which may be expressed in currencies other than the United States dollar. We constantly monitor currency exchange rates and match currency availability and requirements whenever possible. We may from time to time enter into forward foreign exchange transactions in order to minimize risk from firm future positions arising from trading. As of June 30, 2005 and December 31, 2004, we did not have any open forward currency transactions.

Based upon second quarter income and expenditures, a hypothetical increase of 10% in the value of the British pound against all other currencies would have no material effect on revenues, which are primarily expressed in United States dollars but would increase operating costs and reduce cash flow by approximately $1 million. The same increase in the value of the British pound would increase the value of our net assets expressed in United States dollars by approximately $3.0 million. The effect of the hypothetical change in exchange rates ignores the effect this movement may have on other variables including competitive risk. If it were possible to quantify this impact, the results could be significantly different from the sensitivity effects shown above. In addition, it is unlikely that all currencies would uniformly strengthen or weaken relative to the British pound. In reality, some currencies may weaken while others may strengthen.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements.

In May 2005, we re-evaluated controls over the selection, application and monitoring of our accounting policies with respect to (i) the classification of accounts receivable and deferred revenues on contracts with a portion of the contract price that is withheld until final acceptance, (ii) the timing of recognition of costs on those contracts and (iii) the allocation of facilities cost, and deemed they were not effective. Accordingly, we decided to restate certain of our previously issued financial statements to reflect the corrections (see our Form 10-K/A for the fiscal year ended December 31, 2004, including notes 13 and 14 to our consolidated financial statements contained therein, for more regarding our restatement).

An evaluation was performed under the supervision and with the participation of our management team, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of June 30, 2005.

Changes in Internal Controls

In order to remediate our internal controls over financial reporting, subsequent to March 31, 2005, we sought additional advice and implemented additional review procedures over the selection application and monitoring of appropriate accounting policies to ensure overall compliance with GAAP. In order to reinforce our existing control procedures and to ensure that our policies continue to conform to GAAP and SEC pronouncements, among other things, we have subscribed to certain relevant informational databases designed expressly for the purpose of monitoring changes in GAAP and reinforced our existing procedures to discuss these changes with our audit committee, independent registered public accounting firm and other advisors as deemed necessary.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) that occurred during our last fiscal quarter that has materially affected or is reasonably likely to materially affect our financial reporting.

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Trikon Technologies, Inc.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On March 10, 2004 Dr. Jihad Kiwan departed the Company as Director and Chief Executive Officer. On March 29, 2004 and April 2, 2004 we received letters from a United Kingdom law firm and from a French law firm, respectively, on behalf of Dr. Kiwan, detailing certain monetary claims with respect to severance amounts due to Dr. Kiwan with respect to his employment with Trikon. On April 28, 2004 Dr. Kiwan filed a lawsuit in France. We are in the process of vigorously defending against this claim.

From time to time we become involved in ordinary, routine or regulatory legal proceedings incidental to our business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

On April 22, 2005 Trikon, through its wholly owned subsidiary ET Equipments Ltd., entered into a lease agreement for manufacturing premises at Units 2 & 3 Nine Mile Point Industrial Estate, Cwmfelinfach, Gwent, UK. The five year term lease has a start date of November 20, 2004 and base annual rent of £28,363 in the 1st year; rent continues at £56,727 per year thereafter to the termination of the lease.

ITEM 6. EXHIBITS

(a) The following exhibits are included herein:

2.1	Agreement and Plan of Merger by and among Trikon Technologies, Inc, Aviza Technology, Inc., New Athletics, Inc. Baseball Acquisition Corp. I and Baseball Acquisition Sub II dated as of March 14, 2005 and the amendment dated as of June 23, 2005 (incorporated by reference to Annex A to the registration statement on Form S-4 filed by New Athletics, Inc. on June 24, 2005 (File No. 333-126098))
10.1	Amendment and Restatement Agreement between Trikon and Lloyds TSB Bank plc (previously filed as an exhibit to the Company’s Current Report on Form 8-K on July 7, 2005 and incorporated by reference herein)
10.2	Lease Agreement between ET Equipments Ltd. and the Company concerning the Company’s facilities in Cwmfelinfach, Gwent, UK dated as of April 22, 2005
31.1	Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
31.2	Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
32.1	Certificate of Chief Executive Officer furnished pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350)
32.2	Certificate of Chief Financial Officer furnished pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TRIKON TECHNOLOGIES, INC.
Date: August 9, 2005	/s/ John Macneil
	John Macneil
	Chief Executive Officer, President and Director
	/s/ Martyn J. Tuffery
	Martyn J. Tuffery
	Senior Vice President and
	Acting Chief Financial Officer

28

EX-10.2

Exhibit 10.2

Dated 22 April 2005

Fordgate Industrial Limited

and

ET Equipments Limited

Lease

relating to Units 2 and 3 Nine Mile Point

Industrial Estate Cwmfelinfach

Teacher Stern Selby

37-41 Bedford Row

London WCIR 4JH

t + 44 (0)20 7242 3191

f + 44 (0)20 7242 1156

DX 77 Chancery Lane

Contents

1.	Definitions and Interpretation	2
2.	Demise	4
3.	Tenant’s Covenants	5
4.	Landlord’s Covenants	15
5.	Provisos	16
6.	Surety’s Covenants	18
7.	Certificate	19
8.	Enforcement by Third Parties	19
9.	New Tenancy	19
10.	No warranty as to Specified Use	19
11.	Exclusion of compensation	20
Schedule 1 - Rights granted to the Tenant		21
Schedule 2 - Rights and easements exempted		22
Schedule 3		23
Part I - Calculation of Service Charge		23
Part II - The Services		25

Particulars		:	22 day of April 2005
A.	Date	:
B.	Parties	:
C.	Landlord	:	Fordgate Industrial Limited (company number 2614751) whose registered office is at Fordgate, House 1 Allsop Place, London, NW1 5LF
D.	Tenant	:	ET Equipments Limited (Company number 01453887) whose registered office is at Coed Rheddyn Ringland Way Newport NP18 2TA
E.	The Premises	:	Units 2 & 3 on the Nine Mile Point Industrial Estate shown for identification purposes only edged red on the Plan
F.	The Estate	:	the Landlord’s freehold interest in the Nine Mile Point Industrial Estate aforesaid shown for identification purposes only edged blue on the Plan and which is registered at HM Land Registry with Title Number WA964069
G.	Term	:	5 years from and including the Term Commencement Date
H.	Term Commencement Date	:	20th day of November 2004
I.	Rent	:	From 20th November 2004 to 19th November 2005 Twenty Eight Thousand Three Hundred and Sixty Three Pounds and Fifty Pence (£28,363.50) and thereafter from 20th November 2005 to the expiry of the Term at a rate of Fifty Six Thousand Seven Hundred and Twenty Seven Pounds (£56,727.00) per annum
J.	Rent Commencement Date	:	20th day of November 2004
K.	Specified Use	:	Engineering workshop or any other use within use classes Bl B2 or B8 of the Town and Country Planning (Use Classes) Order 1987 subject to obtaining the Landlord’s prior written consent (not to be unreasonably withheld or delayed)

Lease
Dated		22 April 2005
Between
(1)	the Landlord
(2)	the Tenant
1.	Definitions and Interpretation
1.1	In this Lease the following expressions have the meaning attributed to them hereunder:-
	Common Parts	the Estate excepting the Lettable Units
	Conduits	any pipe wire duct cable channel sewer drain water-course gutter shaft flue subway or other service media through along under over or by means of which any gas electricity or other power or any air water soil or other matter may pass
	Enactment	every Act of Parliament directive and regulation now or thereafter to enacted or made and all subordinate legislation whatsoever deriving validity therefrom
	Estate	the land briefly described in the Particulars including all Lettable Units roadways pathways pedestrian access ways and areas car parking spaces and roads giving access thereto (except where these are maintainable at the public expense) refuse collection and disposal areas gardens verges and landscaped areas
	Landlord’s Surveyor	a duly qualified surveyor experienced in the management of industrial parks as shall be appointed by the Landlord from time to time
	Lettable Unit	any premises on the Estate which are occupied or let or available for occupation or letting, or other disposal
	Loss of Rent	three years loss of the Rent and Service Charge
	Tenant’s Proportion	the proportion that the total gross internal area of the Premises bears to the aggregate of the total gross internal areas of all Lettable Units on the Estate from time to time or ascertained according to such other method of calculation as the Landlord’s Surveyor acting reasonably may determine from time to time

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Insured Risks	loss or damage by or in consequence of fire storm tempest lightning explosion flood subsidence heave earthquake aircraft and other aerial devices and things dropped therefrom (in time of peace) impact by road vehicles riot civil commotion malicious damage bursting and overflowing of water tanks apparatus and pipes and such other risks as the Landlord shall insure against from time to time (subject in all cases to such excesses exclusions and limitations as may be imposed by the insurers or underwriters with whom such insurance is placed) except always such risks as cannot reasonably be insured by the Landlord on satisfactory terms or as the Landlord’s insurers or underwriters have refused to insure
Landlord	means the person referred to in the Particulars as the Landlord and shall include the person for the time being entitled to the reversion immediately expectant on the determination of the Term
Particulars	the details appearing on page 1 of this Lease
Perpetuity Period	means the period of eighty years commencing on the date of this Lease being the perpetuity period for the purposes of Section 1 of the Perpetuities and Accumulations Act 1964 applicable to this Lease
Plan	the plans annexed to this Lease
Premises	means the Premises briefly described in the Particulars including: (a)    all buildings erections structures fixtures and appurtenances on the Premises from time to time (b)    all additions alterations and improvements carried out during the Term (c)    the Conduits exclusively serving the Premises but excludes the airspace above the Premises and any fixtures installed by the Tenant that can be removed, from the Premises without defacing the Premises. Unless the contrary is expressly stated the Premises includes any part of parts of the Premises
Prescribed Rate	the yearly rate of four per cent above National Westminster Bank Plc lending rate from time to time (or such other clearing bank (being a member of CHAPS Limited) as the Landlord shall from time to time notify to the Tenant)

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	Tenant	the person referred to in the Particulars as the Tenant and shall include the Tenant’s successors in title
	Term	the Term set out in the Particulars [and includes any continuation or extension thereof (whether statutory or by the Tenant holding over or for any other reason)]
	Services	the services provided by the Landlord as set out in Part II of Schedule 3
1.2	In this Lease unless there be something in the subject or context inconsistent therewith where there are two or more persons included in the expression the Tenant or the Surety then covenants made by them shall be covenants by them jointly and severally
1.3	The terms defined in any schedule to this Lease or in the particulars shall where they appear elsewhere in this Lease have the meanings ascribed to them in such schedule or in the Particulars
1.4	The clause and paragraph headings are for convenience only and shall not affect the construction of this Lease
1.5	Any covenant by the Tenant not to do or omit to do an act or thing shall be deemed to include an obligation not to permit or suffer such act or thing to be done or omitted as the case may be
1.6	A specific Enactment includes every statutory modification consolidation and re-enactment and statutory extension of it for the time being in force except in relation to the Town and Country Planning (Use Classes) Order 1987 which shall be interpreted exclusively by the reference to the original provisions of Statutory Implement 1987 No. 764 whether or not the same may at any time have been revoked or modified
1.7	Where the context permits rents or other sums being due from the Tenant to the Landlord mean that they are exclusive of any VAT.
2.	Demise
	The Landlord demises to the Tenant the Premises together with the rights set out in Schedule 1 but subject to the exceptions and reservations set out in Schedule 2 for the Term Paying
2.1	First the Rent such rent to be paid by equal quarterly payments in advance on the usual quarter days in each year the first payment for the period from the Rent Commencement Date to the quarter day next following the Rent Commencement Date to be made on the Rent Commencement Date

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2.2	Secondly by way of additional rent all such monies as shall become payable in accordance with clause 3.3
2.3	Thirdly by way of additional rent all such monies as shall become payable in accordance with clause 3.8 and Schedule 3
2.4	Fourthly by way of additional rent all such monies as shall become payable in accordance with clause 3.4
2.5	Fifthly by way of additional rent all other amounts (including VAT) payable to the Landlord under this Lease
3.	Tenant’s Covenants
	The Tenant covenants with the Landlord:-
3.1	Rent
	To pay the several rents reserved by this Lease including all increases as and when the same are payable without any deduction (and all rights of set-off whether equitable or otherwise are hereby excluded) by standing order if required by the Landlord
3.2	Outgoings
	To pay all existing and future rates taxes duties charges assessments impositions and outgoings whatsoever (and whether or not of a capital or non-recurring nature) which now are or may at any time hereafter during the Term be charged levied assessed or imposed upon the Premises (but (and without prejudice to the rent fifthly reserved and clause 3.26) not the reversionary interest therein) or upon the owner or occupier
3.3	Interest on Arrears
	If payment of any of the rents and other sums payable under this Lease as rent is delayed for more than fourteen days to pay interest at the Prescribed Rate from the date upon which the same became payable (whether formally demanded or not) until the date of payment such interest to be compounded on the usual quarter days and paid without any deduction or set off save as required by statute
3.4	Insurance
	To pay to the Landlord within fourteen days of demand the cost to the Landlord of procuring insurance of the Premises and a fair proportion (to be conclusively determined by the Landlord’s Surveyor acting reasonably) of the cost to the Landlord of procuring insurance of the Common Parts (if applicable) against the Insured Risks and Loss of Rent and any other risks for which the Landlord shall insure under clause 42 below

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3.5	Repair
3.5.1	At all times during the Term to keep replace (where beyond economic repair) and maintain the Premises in good and substantial repair order and condition (damage by the Insured Risks excepted save to the extent that payment of any insurance monies be withheld by reason of or arising out of any act omission neglect or default of the Tenant or any sub-tenant or their respective servants agents licensees or invitees)
3.5.2	To keep in good and substantial repair all Conduits exclusively serving the Premises and to indemnify the Landlord against all liability howsoever arising from any failure to repair or the misuse or overloading of any such Conduits
3.5.3	To repair or replace (where beyond repair) forthwith by new articles & of similar kind and quality any fixtures fittings or plant or equipment (other than tenants or trade fixtures and fittings) upon or in the Premises which shall become in need of repair or replacement
3.6	Decoration
	Without prejudice to the generality of the foregoing covenant:-
3.6.1	To decorate the exterior of the Premises in a colour scheme approved by the Landlord (such approval not to be unreasonably withheld) in a good and workmanlike manner and with appropriate materials of good quality and clean the cladding in the last year of the Term howsoever determined and in the year preceding any surrender of it
3.6.2	In the last three months of the Term howsoever determined to paint polish paper or otherwise properly to treat as the case may be all the inside of the Premises in a workmanlike manner and in every case with materials of good quality in such colours patterns and materials as the Landlord’s Surveyor may reasonably require
3.6.3	To keep the Premises properly cleansed and to clean all internal faces of all windows at least once in every month
	Provided That the Tenant shall not be obliged to carry out any such decoration if the need for it is caused by any of the Insured Risks to the extent that the insurance money shall not have been rendered irrevocable or insufficient because of some act or default of the Tenant or of any person deriving title under or through it or their respective servants agents or invitees
3.7	Common Facilities
	Insofar as the same are not recovered under the Service Charge reserved in clause 3.8 below to contribute and pay a fair and proper proportion (as determined by the Landlord’s Surveyor save in the case of manifest error) of the costs and expenses of making laying repairing maintaining renewing rebuilding and cleansing all ways roads pavements sewers drains pipes watercourses mutual or party walls and fences mutual or parry structures landscaping and other items which may belong to or be used for the Premises in common with other premises near or adjoining thereto and forming part of the Estate
3.8	To Pay Service Charge
	To pay to the Landlord the Service Charge as defined and calculated and at the times and in the manner provided in Part I of Schedule 3

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3.9	Wants of Repair
3.9.1	To permit the Landlord or their duly authorised agents to give or leave on the Premises notice in writing to the Tenant of all defects want of repair and breaches of covenant for which the Tenant is responsible and within fourteen days (or sooner in emergency) to commence to repair and to make good the same according to such notice and thereafter to diligently and expeditiously carry out such remedial work to the reasonable satisfaction of the Landlord’s Surveyor; and
3.9.2	If the Tenant shall fail within such reasonable period or immediately in case of emergency to commence and then fails to diligently and expeditiously comply with such notice or if the Tenant shall make default in the performance of any of the covenants herein contained relating to the repair decoration or maintenance of the Premises it shall be lawful (but without prejudice to the right of re-entry and forfeiture hereinafter contained) for the Landlord and its duly authorised agents to enter upon the Premises with or without machinery and to carry out or cause to be carried out any of the works referred to in such notice for which the Tenant is responsible and all costs and expenses incurred together with interest at the Prescribed Rate from the date of demand by the Landlord shall be paid by the Tenant to the Landlord on demand and shall be recoverable as rent in arrears
3.10	Entry
	To permit the Landlord its duly authorised agents or the Landlord’s Surveyor with or without necessary appliances at all reasonable times and upon reasonable notice (except in the case of emergency) during the term (the Landlord causing as little interference to the Tenant as is reasonably practicable and as soon as its practicable making good all damage caused) to enter the premises :-
3.10.1	To examine the state of repair and condition and to take schedules or inventories of the fixtures fittings plant and machinery belonging to the Landlord or to be yielded up at the expiration or sooner determination of the Term
3.10.2	To execute any repairs or other work upon or to any adjoining or neighbouring premises or to carry out any repairs or other work which the Landlord must or may carry out under the provisions of this Lease upon or to the Premises
3.10.3	For any other purpose connected with the interest of the Landlord in the Premises (including measurement (or relating to any pending or intended step under the Landlord and Tenant Act 1954)) or its disposal or charge
3.10.4	To exercise the rights reserved by the Landlord in Schedule 2

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3.11	Alterations
	Not to:-
3.11.1	Alter remove from add to cut or injure the:
	(a)	Any structural element m the Premises or the exterior of the Premises
	(b)	non-structural parts of the Premises including any Conduits within or exclusively serving the Premises without the prior written consent of the Landlord (such consent not to be unreasonably withheld or delayed) and subject to such terms and conditions as the Landlord may require acting reasonably
3.11.2	Suspend from or impose upon any part of the Premises any excessive weight nor install any machine which shall be unduly noisy or cause vibrations or otherwise subject the Premises to any strain beyond that which it is designed to bear
3.11.3	Display advertisements or notices on the exterior of the Premises without the Landlord’s consent
3.11.4	Erect any aerial or satellite dish on or about the Premises without the written consent of the Landlord such consent not to be unreasonably withheld or delayed where such aerial or satellite dish is not visible from the nearest public highway
3.12	Reinstatement
	At the expiry of the Term (whether by effluxion of time or otherwise) unless otherwise required by the Landlord to remove :
3.12.1	all alterations and additions made to the Premises by the Tenant and anything which may have been installed under clause 3.11;
	and to restore and make good the Premises in a proper and workmanlike manner to the condition and design which existed before the alterations or additions were made with all services properly sealed off and to the Landlord’s reasonable satisfaction
3.13	Compliance with Statutes
	At the Tenant’s own expense to execute all works provide and maintain all arrangements and comply with the requirements of every enactment (which expression in this deed includes any Act of Parliament already or hereafter to be passed any statutory instrument notice direction order regulation bye-law rule and condition already or hereafter to be made under in pursuance of or deriving effect from any such Act) of Parliament any Government Department local authority or other public authority or duly authorised officer or court of competent jurisdiction so far as they relate to or affect the Premises or the Landlord or the Tenant or the use of the Premises or the employment at the Premises of any person or the use in the Premises of any machine

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3.14	Notifications
	To give full particulars to the Landlord of any permission notice order or proposal for a notice or order relevant to Die Premises or to the use or condition thereof or otherwise concerning the Tenant made given or issued to the Tenant or the occupier of the Premises by any lawful authority and if so required to produce such document to the Landlord and then without delay to take all reasonable or necessary steps to comply therewith and also at the request and at joint cost of the Landlord and Tenant of the Landlord to make or join with it in making such objections or representations against or in respect of any such notice order or proposal as aforesaid as it shall reasonably deem expedient
3.15	Use
3.15.1	Not to use or permit the Premises or any part thereof to be used otherwise than for the Specified Use
3.15.2	Not to discharge into any Conduits any fluid of a poisonous or noxious nature or of a type calculated or liable to pollute me water of any stream or river and not to do anything that causes the Waters of any stream or river to be polluted or the composition of them to be so changed as to render the Landlord liable to any action or proceedings by any person
3.15.3	Not to do or omit to do anything whereby -any policy of insurance relating to the Premises or any adjacent or nearby property on the Estate may become void or voidable or whereby the premium thereon may be increased and the Tenant covenants that it will comply with the proper requirements of the insurers of the Premises and pay on demand any increase in the premium and any part of the insurance proceeds withheld by the insurer arising from any act or omission of the Tenant any undertenant licensee or respective predecessors in title
3.15.4	Not to cause or allow any nuisance annoyance or inconvenience to the Landlord or its tenants or neighbours or use the Premises for any illegal or immoral act or purpose
3.16	Underletting
3.16.1	Save for an Underletting in accordance with the succeeding provisions of this clause not to underlet or part with or share possession of the whole or any part of the Premises provided that nothing contained in this sub-clause shall prevent the Tenant from sharing occupation of the whole of any part of me Premises with any member of the group (as defined by Section 42 of the Landlord and Tenant Act 1954) of companies of which the Tenant shall from time to time form part as long as no relationship of landlord and tenant is thereby created and the Tenant shall give written notice to the Landlord of any such occupation within ten days thereof
3.16.2	Subject to clause 3.16.1 above not to underlet the whole of the Premises without the previous written consent of the Landlord obtained for that purpose within the three months immediately prior thereto such consent not to be unreasonably withheld or delayed and on any permitted Underletting the Tenant shall procure
	(a)	on or before the grant of the relevant underlease that the underlessee enters into a covenant with the Landlord to observe and perform the covenants on the part of the Tenant contained in this Lease (except the covenant to pay rent) and those of the underlessee in the relevant underlease

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	(b)	on or before the grant of the relevant underlease if the Landlord shall so reasonably require that a guarantor or guarantors acceptable to the Landlord shall covenant with the Landlord to guarantee the observance and performance of the underlessee’s obligations under such underlease
3.16.3	Not to underlet the whole of the Premises at a fine or a premium nor at a rent less than the open market rent of the Premises at the time of such underlease nor without having complied fully with Section 38A of the Landlord: and Tenant Act 1954 with the effect that the provisions of Sections 24 to 28 (inclusive) of the Landlord and Tenant Act 1954 in respect of such underlease are excluded
3.16.4	To procure that any permitted underlease shall contain
	(a)	the same restrictions on assignment Underletting parting with possession and sharing of occupation and the same provisions for direct covenants and registration as in this Lease
	(b)	a prohibition on any further Underletting or assignment of the whole of the premises demised by the underlease without me consent of the Landlord
	(c)	covenants by the underlessee prohibiting the underlessee from doing or suffering any acts or thing upon or in relation to the premises demised by such underlease inconsistent with or in breach of the Tenant’s obligations in this Lease
	(d)	a condition for re-entry on breach of any covenant on the part of the underlessee
	(e)	a declaration that the underlease is excluded from the provisions of sections 24-28 (inclusive) of the Landlord and Tenant Act 1954
3.16.5	To enforce the performance by every such underlessee of the covenants and conditions in his underlease and not to release or waive any such covenants or conditions
3.17	Assignment
3.17.1	Not to assign or charge any part or parts (as distinct from the whole) of the Premises
3.17.2	Not to assign the whole of the Premises without the prior written consent of the Landlord (such consent not to be unreasonably withheld or delayed) obtained for that purpose within the three months immediately prior thereto provided that the Landlord shall be entitled (for the purposes of Section 19(1A) of the Landlord and Tenant Act 1927) :-
	(a)	to withhold its consent in any of the circumstances set out in clause 3.17.4 below

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	(b)	to impose all or any of the matters set out in clause 3.17.5 below as a condition of its consent
3.17.3	The provisos to clause 3.17.2 shall operate without prejudice to the right of the Landlord to withhold such consent on any other ground or grounds where such withholding of consent would be reasonable or to impose any further condition or conditions upon the grant of consent where the imposition of such condition or conditions would be reasonable (including the provision of guarantors reasonably acceptable to the Landlord who shall covenant with the Landlord in the terms set out in clause 6 below)
3.17.4	The circumstances referred to in clause 3.17.2(a) above are as follows :-
	(a)	where the proposed assignee (the Assignee) is a member of the group (as defined by Section 42 of the Landlord and Tenant Act 1954) of companies of which the Tenant shall from time to time form part
	(b)	where in the reasonable opinion of the Landlord the Assignee is not of sufficient financial standing to enable it to comply with the Tenant’s covenants in this Lease
	(c)	where the Assignee enjoys diplomatic or state immunity but this circumstance shall not apply where the Assignee is the Government of the United Kingdom of Great Britain and Northern Ireland or any department thereof
	(d)	where there is a substantial breach by the Tenant of the provisions of clause 3.5.1 above and an unsatisfied schedule of dilapidations or notice of repair or reinstatement served by the Landlord hereunder which is not the subject of a bona fide dispute
3.17.5	The conditions referred to in clause 3.17.2(b) above are as follows :-
	(a)	the execution by the Tenant and any surety of the Tenant and delivery to the Landlord prior to the assignment in question of a deed of guarantee (being an authorised guarantee agreement within Section 16 of the Landlord and Tenant (Covenants) Act 1995) in a form reasonably required by the Landlord
	(e)	the payment to the Landlord of all rents and other sums which have fallen due under this Lease prior to the date of the proposed assignment
	(c)	any other financial security as the landlord shall reasonably require for compliance by the Assignee with its obligation to pay rent and comply with the Tenant’s obligations under this Lease or by any surety of its obligations under its guarantee in such form as the Landlord shall reasonably require
	(d)	the grant of any requisite consent of any superior landlord or mortgagee and compliance with any lawfully imposed conditions of such consent prior to the relevant assignment

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3.18	Registration of Documents
	Within one month after the execution of any dealing or charge or any transmission by reason of a death or otherwise affecting the Premises to leave with the Solicitors for the time being of the Landlord a certified true copy of the deed instrument or other document evidencing or effecting such dealing charge or transmission together with a registration fee of Thirty Pounds (£30.00) and to procure that every underlease of the Premises shall contain a similar covenant by the underlessee and expressed to be for the benefit of the Landlord
3.19	Costs
	To pay to the Landlord all proper costs charges and expenses (including Solicitors’ Counsels’ and Surveyors’ and other professional costs and fees) incurred by the Landlord:
3.19.1	In any proceedings relating to the Premises under Sections 146 or 147 of the Law of Property Act 1925 or the preparation and service of a notice thereunder (whether of not any right of re-entry or forfeiture has been waived by the Landlord or a notice served under Section 146 is complied with by the Tenant or the Tenant has been relieved under the provisions of such Act and notwithstanding forfeiture is avoided other than by relief granted by the Court) and to keep the Landlord fully and effectively indemnified against all proper and reasonable costs expenses claims and demands whatsoever in respect of the said proceedings
3.19.2	In the preparation and service of a schedule of dilapidations at any time during or within six months after the expiration of the Term
3.19.3	In connection with the recovery of arrears of rent due from the Tenant
3.19.4	In respect of any application for consent or licence required by this Lease whether or not such consent be granted (unless the consent is unlawfully refused)
3.20	Planning
	In relation to the Planning Acts which in this Lease means the Town and Country Planning Act 1990 and legislation of a similar nature and any statutory modification or re-enactment thereof for the time being in force and any order instrument plan regulation permission and directive made or issued or to be made or issued thereunder or deriving validity therefrom :-
3.20.1	At all times to comply with the provisions of the Planning Acts and all licences consents and permissions (if any) already or hereafter to be granted or imposed thereunder
3.20.2	So often as occasion shall require at the Tenant’s own expense to obtain from the proper authority all such licences consents and permissions (if any) as may be required for the carrying out by the Tenant of any operations on or the use of the Premises or the institution or continuance by the Tenant thereon of any use thereof which may constitute development within the Planning Acts

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3.20.3	Unless the Landlord shall otherwise in writing direct to carry out before the expiration or sooner determination of this Lease any works stipulated to be carried out to the Premises pursuant to any planning permission whether or not the date by which the planning permission requires such works to be carried out falls within the Term
3.20.4	When called upon so to do to produce to the Landlord all plans documents and other evidence as it may reasonably require to satisfy itself mat the provisions of this covenant have been complied with in all respects
3.20.5	In any case where any planning permission has been granted subject to conditions the Landlord shall be entitled as a condition of giving its consent when otherwise required by this Lease to require the Tenant to provide security for the compliance with the conditions imposed by the permission and the permission shall not be acted upon until such security shall have been provided to the satisfaction of the Landlord
3.20.6	Not to apply for planning permission in respect of the Premises without the Landlord’s prior written consent (which shall not be unreasonably withheld in respect of any addition or alteration in respect of which the Landlord’s consent is not to be unreasonably withheld under the terms of this Lease) and if the Landlord attaches any reasonable conditions to any such consent not to apply for any planning permission except in accordance with those conditions
3.21	Fire Fighting
3.21.1	To keep the Premises sufficiently supplied and equipped with such fire fighting and extinguishing appliances as shall from time to tune be required by law or as shall be reasonably required by the Landlord and such appliances shall be open to inspection and shall be maintained to the reasonable satisfaction of the Landlord
3.21.2	Forthwith upon the happening of any event or thing against which insurance has been effected by the Landlord to give notice thereof to the Landlord
3.22	Notice Boards
	During the six months immediately preceding the determination of this Lease unless the Tenant has indicated that it wishes to renew this Lease to permit the Landlord or its agents to affix upon any part of the Premises a notice as to the proposed re-letting thereof and to permit the viewing of the Premises at reasonable times
3.23	Use of parking, accumulation of rubbish
	Not to
3.23.1	Use any car parking spaces within the Premises other than for the parking of vehicles
3.23.2	Allow trade empties or rubbish of any description to accumulate on the Premises or the Estate

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3.23.3	Allow to be hung or exposed outside or from any window of the Premises any clothes articles or other chattels of any description
3.24	Easements
	Not to stop up or obstruct any windows or light belonging to the Premises or permit any new encroachment or easement to be made into against or upon the Premises and to give notice to the Landlord of any such which shall be made or attempted and at the request and cost of the Landlord to adopt such means and take such steps as may be reasonably required by the Landlord to prevent the same
3.25	Regulations
	To comply with all reasonable regulations made by the Landlord from time to time for the management of the Estate
3.26	VAT
3.26.1	To pay to the Landlord by way of additional rent such VAT as may be or become payable in respect of the rents reserved by and other monies payable under and the consideration for all taxable supplies received or deemed to be received by the Tenant trader or in connection with this Lease (provided that where the Landlord has made the supply that the Landlord produce a valid VAT receipt)
3.26.2	In every case where the Tenant has agreed to reimburse or indemnify the Landlord in respect of any payment made by the Landlord under the terms of or in connection with this Lease to reimburse in addition any VAT paid by the Landlord on such payment (save to the extent that the same is recoverable by the Landlord as deductible input tax)
3.27	Freehold Title
	To observe and perform the covenants and obligations contained or referred to (and so far as they relate to the Premises) in the registers of title number WA964069
3.28	Indemnity
	To keep the landlord indemnified from and against all loss damage actions proceedings claims demands costs and expenses of whatsoever nature and whether in respect of any injury to or the death of any person or damage to any property movable or immovable or otherwise howsoever arising directly from the repair or the state of repair or condition of the Premises or from any breach of covenant on the part of the Tenant contained in this Lease from the use of the Premises or out of any works carried out at any time during the Term to the Premises or out of anything now or during the Term attached to or projecting from the Premises or as a result of any act neglect or default by the Tenant or by any sub-tenant or by their respective servants agents licensees or invitees

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3.29	Yield Up
	At the expiration or sooner determination of the Term quietly to yield up the Premises to the Landlord with vacant possession in such state and condition as shall in all respects be consistent with a full and due performance by the Tenant of the covenants on its part herein contained and reinstated and restored and made good to the extent required under clause 3.12 (trade or tenant’s fixtures and fittings only excepted subject to the Tenant making good all damage to the Premises occasioned by their removal) and upon such yielding up the Tenant shall remove all signs and nameplates indicating the connection or former connection of the Tenant with the Premises and all trade or tenant’s fixtures and fittings
4.	Landlord’s Covenants
	The Landlord covenants with the Tenant :-
4.1	Quiet Enjoyment
	That the Tenant paying the rents reserved on the days and in the manner appointed and observing and performing the covenants and conditions hereinbefore contained shall enjoy quiet possession of the Premises without any interruption by the Landlord or any person lawfully claiming through under or in trust for it
4.2	Insurance
4.2.1	To keep the Premises (including all fixtures therein but not Tenants trade fixtures) insured subject to such limitations or exclusions as the insurers may impose in such sum as shall in the Landlords opinion represent the full replacement cost thereof (including professional fees and incidental expenses) against loss or damage by the Insured Risks and Loss of Rent and Service Change
4.2.2	In the case of damage or destruction to the Premises by any of the Insured Risks (unless payment of the insurance monies or any part of them shall be refused in whole or in part by reason of any act or default of the Tenant any undertentant or their respective agents servants or any other person under its control) the Landlord will (subject to clauses 5.6 and 5.7) use reasonable endeavours to obtain any requisite planning permissions and consents and (if they are obtained) to lay out the insurance money received (except sums for loss of rent) towards replacing (but not necessarily in facsimile reinstatement) the parts of the Premises damaged or destroyed (making good any shortfall from its own funds) but if the Landlord is unable having used reasonable endeavours to obtain the necessary consents to carry out the relevant work the insurance monies shall belong to the Landlord
4.3	Services
	To use reasonable endeavours to provide the Services in accordance with the principles of good estate management and to at least a reasonable and proper standard PROVIDED THAT the Landlord shall not be responsible for any temporary delay or stoppage in connection with the provision of the Services or for any temporary omission to perform the same due to any cause or circumstances outside the Landlord’s control

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5.	Provisos
	Provided Always and It Is Hereby Agreed and Declared as follows:-
5.1	Forfeiture
	Notwithstanding and without prejudice to any other remedies and powers available to the Landlord if any of the rents shall be wholly or partly unpaid for twenty-one days after becoming payable (whether formally demanded or not) or if any covenant or condition herein contained shall not be performed or observed or if the Tenant for the time being hereunder being a company shall enter into liquidation whether compulsory or voluntary or pass a resolution for winding up (save for the purpose of amalgamation or reconstruction) or suffer a receiver to be appointed or being an individual or more than one individual any one shall have a receiving order made against him or become bankrupt or if the Tenant or if there is more than one tenant any of them shall enter into composition with its or their creditors or suffer any distress of execution to be levied on its or their goods then and in any such case it shall be lawful for the Landlord to re-enter upon the Premises and thereupon this Lease shall absolutely determine but without prejudice to any right of action of remedy of either party in respect of any breach of any of the other’s covenants
5.2	Notices
	Any demand or notice shall be duly and validly made given and served if sent by recorded or special delivery post by pre-paid letter addressed to the Tenant or the Surety respectively (and if there shall be more than one of them then any one of them) at its registered office or its last known address or at the Premises and to the Landlord at its last known address Any demand or notice sent by post shall be conclusively treated as having been made given or served seventy-two hours after posting
5.3	No Liability
	Nothing herein shall render the Landlord or the Tenant liable in respect of any of the covenants herein contained if and so far only as the performance and observance of such covenants conditions and provisions or any one or more of them shall hereafter become impossible or illegal under or by virtue of the provisions of the Planning Acts but subject as aforesaid this Lease shall not determine by reason only of any change modification or restriction of use of the Premises or obligations or requirements hereafter to be made or imposed under or by virtue of the Planning Acts
5.4	Disputes with adjoining occupiers
	Any dispute arising between the Tenant and any owner or occupier of adjacent or nearby premises (other than the Landlord) as to any right or privilege or wall or otherwise relating to the Estate or Premises shall be determined on behalf of the Tenant by the Landlord’s Surveyor whose decision shall bind the Tenant (save in the case of manifest error) and whose fees shall be payable as he may direct

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5.5	Cesser of Rent
	In case the Premises or the means of access thereto shall at any time during the Term be destroyed or damaged by any of the Insured Risks so as to be unfit for occupation or use and the policy or policies of insurance shall not have been vitiated or payment of the policy monies refused in whole or in part in consequence of some act or default of the Tenant any undertenant or their respective servants agents or licencees the rent reserved by this Lease or a fair proportion thereof shall be suspended until the Premises and means of access thereto shall be again rendered fit for occupation and use or until the expiration of three years from the date of the damage or destruction (whichever shall be the earlier) and any dispute regarding this clause shall be referred to the award of a single arbitrator to be appointed in default of agreement upon the application of the Landlord by the President for the time being of the Royal Institution of Chartered Surveyors in accordance with the provisions of the Arbitration Act 1996 or any statutory modification thereof for the time being in force
5.6	Determination following destruction
	If upon the expiry of three years from the date of the damage or destruction the Premises have not been rebuilt or reinstated so as to be fit for the Tenant’s occupation and use either party may by notice served at any time after the expiry of that period of 3 years determine this Lease and upon service of such notice this Lease will absolutely determine without prejudice to accrued liability and if this Lease is so determined the Landlord shall be solely entitled to all the insurance monies
5.7	Determination by me Landlord in last three years of the Term
	If during the last three years of the Term the Premises shall be so destroyed or damaged by any of the Insured Risks as to reader the Premises unfit for occupation and use and the Landlord does not wish to rebuild or reinstate the same then the Landlord may determine this Lease by giving to the Tenant not less than six months written notice such notice to be given not more than twelve months after such destruction or damage and such determination shall be without prejudice to any claim by either party against the other in respect of any antecedent breach of covenant and if this Lease is so determined then the Landlord shall be solely entitled to all the insurance monies
5.8	Landlord’s Liability
	In any case where the facts are or should reasonably be known to the Tenant the Landlord shall not be liable to the Tenant in respect of any failure of the Landlord to perform any of the Landlord’s obligations to the Tenant under this Lease whether express or implied unless and until the Tenant has notified the Landlord of the facts giving rise to the failure and the Landlord has failed within a reasonable time to remedy the same

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5.9	Section 62 LPA
	The operation of Section 62 of the Law of Property Act 1925 shall be excluded from this Lease and the only rights granted to the Tenant are those expressly set out in this Lease and the Tenant shall not by virtue of this Lease be deemed to have acquired or be entitled to and the Tenant shall not during the Term acquire or become entitled by any means whatsoever to any easement from or over or affecting any other land or premises now or at any time hereafter belonging to the Landlord and not comprised in this Lease
5.10	Representations
	The Tenant acknowledges that this Lease has not been entered into in reliance wholly or partly on a statement or representation by or on behalf of the Landlord except any such statement or representation that is expressly set out in this Lease
5.11	Section 25 Landlord and Tenant (Covenants) Act 1995
	Any provision in this Lease which is contrary to the provisions of Section 25 of the Landlord and Tenant (Covenants) Act 1995 shall be deemed to have excluded from it any effects or parts which are so contrary to such provisions and the balance of the provision shall remain in full force and effect
5.12	Jurisdiction
	This lease shall be governed by and construed in accordance with the law of England and Wales and the Tenant and the Surety submits to the exclusive jurisdiction of the English and Welsh courts and irrevocably agrees mat any process may be served on it by leaving a copy of the relevant document at the Premises provided however that the Landlord shall retain the right at its sole decision to sue the Tenant and the Surety elsewhere including in the courts of the Tenant’s and the Surety’s domicile
5.13	No waiver of Rent
	Acceptance of rent by the Landlord will not constitute acquiescence to a waiver or breach of any term or terms under this lease
6.	Surety’s Covenants
	The Surety covenants with the Landlord as a primary obligation
6.1	That the Tenant will pay the rents and other monies reserved by this Lease and made payable on the days and in manner aforesaid and will duly perform and observe all the covenants and conditions hereinbefore on the Tenant’s part contained in this Lease
6.2	That if the Tenant shall make default in payment of rents (including any increased rent) or in observing or performing the covenants contained in this Lease the Surety will pay the rents and observe and perform the covenants in respect of which the Tenant shall be in default

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	notwithstanding anytime or indulgence granted by the Landlord to the Tenant or that the Tenant may have ceased to exist or any other act or thing whereby but for this provision the Surety would have been released and;
6.3	That in the event of this Lease being disclaimed by the Tenant or on behalf of the Tenant under any statutory or other power or on forfeiture of this Lease by the Landlord the Surety will if the Landlord shall by notice to writing within three months after such disclaimer or forfeiture so require take from the Landlord a lease of the Premises for a term commensurate with the residue of the Term which would have remained had there been no disclaimer or forfeiture at the same rent and subject to the same covenants with toe exception of this clause such lease to take effect from the date of the disclaimer or forfeiture and in such case the Surety shall pay me costs of such new lease and execute and deliver to the Landlord a counterpart thereof
6.4	That if the Landlord shall not require the Surety to take a lease of the Premises in the event of such disclaimer or forfeiture me Surety shall nevertheless upon demand pay to me landlord a sum equal to the rent mat would have been payable under this Lease but for the disclaimer or forfeiture in respect of the period from the date of the disclaimer or forfeiture until the Premises shall have been relet by the Landlord
6.5	That the Surety shall not claim in any liquidation bankruptcy composition or arrangement of the Tenant in competition with the Landlord and shall remit to the Landlord the proceeds of all judgments and all distributions it may receive from any liquidator trustees or bankruptcy or supervisor of the Tenant and shall hold for the benefit of the Landlord all security and rights the Surety may have over assets of the Tenant whilst any liabilities of the Tenant or the Surety to die Landlord remain outstanding
7.	Certificate
	It is certified that there is no agreement for Lease to which this Lease gives effect
8.	Enforcement by Third Parties
	The parties to this Leases do not intend that any of its terms will be enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999 by any person not a party to it
9.	New Tenancy
	This lease is a new tenancy for the purposes of Section 1 of the Landlord and Tenant (Covenants) Act 1995
10.	No warranty as to Specified Use
	The Landlord gives no express or implied warranty that the Specified Use of the Property under this Lease is or will be or remain a lawful or authorised user under the Planning Acts or otherwise

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11.	Exclusion of compensation
	So far as the law shall allow the right of the Tenant (or any undertenant) to compensation on quitting the Property is excluded

In Witness of which the parties have duly executed this Lease as a deed which is delivered on the date first before written

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Schedule 1 - Rights granted to the Tenant

1. The right of free and uninterrupted passage of gas/electricity telephone cable water and soil through Conduits now laid or hereafter laid within the Perpetuity Period serving the Premises and passing in under through or over any adjoining or neighbouring land and the right to connect the Premises to such Conduits insofar as necessary PROVIDED prior written notice is given to the Landlord and the tenant(s) of the adjoining or neighbouring land and that any connection works are carried out as quickly as practicable causing as little disruption and inconvenience to the tenant(s) of the adjoining or neighbouring land as is possible and making good all damage caused at its own cost

2. The right with or without workmen at all reasonable times and after giving reasonable prior written notice to enter upon the airspace above the building erected upon the Premises and the adjoining premises of the Landlord for the-purpose of carrying out any necessary work to the Premises which cannot reasonably be carried out from the Premises and for the purpose of inspecting maintaining repairing or renewing any Conduits serving the Premises the Tenant making good all damage caused to the adjoining premises in carrying out such works and causing the minimum of inconvenience to the occupiers of such adjoining premises

3. The right

3.1 subject to the Landlord prior written approval as to size nature and location to place and maintain a sign on the exterior of the Premises displaying the name of the Tenant and the Tenant’s business

3.2 to have the Tenant’s name displayed on the name board at the entrance to the Estate

4. The right of way at all times with or without vehicles for all purposes over and along the access roads and pathways on the Estate

5. All rights of support shelter and protection for the Premises

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Schedule 2 - Rights and easements exempted

Excepting and Reserving in favour of the Landlord and its tenants agents and licensees and those authorised by the Landlord and all other persons who now have or may hereafter be granted similar rights :-

1. the full free and uninterrupted passage and running of water soil gas telephone electricity telecommunication and all other services and supplies of whatsoever nature from and to any other part of the Estate, through such, of the Conduits which are now or may hereafter during the Perpetuity Period be in or under or over the Premises and the right of entry onto the Premises for the purpose of inspecting repairing renewing relaying cleansing maintaining and connecting up to any such existing or future Conduits

2. the right to erect or to consent hereafter to any person erecting a new building or to alter any building for the time being on the, adjoining or neighbouring property of the Landlord in such manner as the Landlord or the person or persons exercising such right may think fit and notwithstanding that such alteration or erection may diminish the access of light and air enjoyed by the Premises and the right to deal with the Estate and any other adjoining or neighbouring property of the Landlord as it may think fit

3. the right to erect scaffolding for the purpose of repairing cleaning rebuilding renewing or altering the Estate or any part thereof notwithstanding that such scaffolding may temporarily restrict the access to or enjoyment and use of the Premises provided that the Landlord shall use reasonable endeavours to ensure the Tenant has satisfactory access at all times

4. the right for the Landlord and those authorised by the Landlord to enter the Premises for the purposes and in the manner mentioned in this Lease

5. all rights of light air support shelter and protection for the parts of the Estate not included in the Premises and all such rights (if any) as shall now or hereafter belong to and be enjoyed by any land or premises adjacent to the Estate

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Schedule 3

Part I - Calculation of Service Charge

1	In this Schedule :-
	Accounting Period	shall mean a period commencing on the twenty fifth day of December and ending on the twenty fourth day of December in any year or such other period as the Landlord’s Surveyor shall determine
	Interim Charge	such quarterly sum to be paid by way of an estimate of the anticipated Service Charge as the Landlord or the Landlord’s Surveyors shall reasonably specify
	Service Charge	the Tenant’s Proportion of the Total Expenditure
	Total Expenditure	the expenditure reasonably and properly incurred by the Landlord in any Accounting Period in providing the Services
2	The first payment of the Interim Charge shall be made on the execution of this Lease and shall be a proportionate sum of the Interim Charge up to the next quarter day and thereafter the Interim Charge shall be paid to the Landlord by equal quarterly payments in advance on the usual quarter days
3	As soon as reasonably practicable after the expiration of each Accounting Period mere shall be served upon the Tenant by the Landlord or its agent an audited certificate such certificate to be final and binding on the parties (save as to manifest error) and to contain the following information :-
3.1	the amount of Total Expenditure
3.2	the amount of the Interim Charge paid by the Tenant together with any surplus carried forward from the previous Accounting Period
3.3	the amount of the Service Charge
3.4	details of the breakdown of the Service Charge and all fair proportions and information and authority to inspect any invoices relating to the Service Charge
4	If the Interim Charge demanded during any Accounting Period exceeds the Service Charge for the Accounting Period in respect of which it was paid the surplus of the Interim Charge so paid over and above the Service Charge shall be carried forward by the Landlord and credited to tire account of the Tenant in computing the Service Charge in succeeding Accounting Periods as hereinafter provided or (if the Term shall have come to an end) shall be repaid to the Tenant

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5 If the Service Charge exceeds the Interim Charge together with any surplus from the previous year earned forward as aforesaid then the Tenant shall pay the excess to the Landlord or its agent within fourteen days of service upon me Tenant of the certificate referred to in the paragraph 3 above

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Part II - The Services

1 Keeping the Common Parts in good and substantial repair and condition and properly cleansed drained lighted and insured

2 The provision and maintenance of such fences and signage for the Estate as the Landlord shall properly consider necessary or as may be required

3 Repairing and maintaining or replacing any apparatus equipment fixtures fittings and decorations in or about the Common Parts the use of which is common to the Premises and adjoining or neighbouring premises including but without prejudice to the generality of the foregoing all electric lamp standards and time switches

4 Paying all rates taxes duties charges assessments and outgoings whatsoever (whether parliamentary parochial local or of any other description) assessed charged or imposed upon or payable in respect of the Common Parts or any part of them except insofar as the same are the responsibility of the Tenant or of any other tenant on the Estate

5 All proper and reasonable costs charges and expanses of abating a nuisance on the Estate and of executing all such works as may be necessary for complying with any notice served by a local authority in connection with the Common Parts or any part of them insofar as the same is not the liability of or Attributable to me fault of any individual tenant or occupier of any part of the Estate

6 Maintaining repairing cleansing emptying draining extending amending and renewing the Conduits on the Estate

7 Providing such managing agents, supervisory security staff and other staff for the Estate as the Landlord acting reasonably and in the interests of good estate management shall think fit including the cost of employing such staff and providing such uniforms vehicles and equipment etc as may be required for the proper performance of their duties and also providing renewing repairing and maintaining any reasonably necessary facilities therefor

8 Providing and maintaining all plants shrubs and landscaped areas and keeping the same properly planted and free from weeds and the grass regularly cut

9 Paying any special costs which may be levied by fee local (or other competent) authority on the Estate as a whole and which relate to or arise from the administration thereof and/or the provision of the Services

10 Providing maintaining renewing and insuring such equipment on the Estate as may from time to time in the reasonable opinion of the Landlord be necessary or desirable in the interests of good estate management

11 The proper and reasonable costs charges and remuneration of the Landlord the Landlord’s Surveyor or managing agent employed by the Landlord to manage the Estate

-25-

12 The proper and reasonable costs charges and expenses of preparing and supplying to tenants copies of regulations made by the Landlord governing the use of the Estate or any part of it

13 Keeping proper records of all costs charges and expenses incurred by the Landlord in providing the Services

14 The proper and reasonable charges and remuneration of suitably qualified accountants to be employed by the Landlord or the Landlord’s Surveyor for the purpose of auditing the accounts in respect of the Landlord’s costs and certifying the total amount thereof for the period to which the Account relates

15 All amounts which the Landlord may reasonably and properly expend on effecting and maintaining such other insurances (including without limitation in relation to public property owners and employers liability) as the Landlord may decide to effect in relation to the Estate or any part of it (other than insurances of any Lettable Unit) including fees for insurance valuations carried out at reasonable intervals and all fees and expenses payable to advisers in connection with effecting and maintaining insurance policies and claims

16 The cost of the supply of electricity gas oil and other fuel forte provision of the Services

17 The cost of making such provision (if any) for anticipated expenditure in respect of any of the services as the Landlord shall in its absolute discretion consider appropriate

18 Such other services or matters as may reasonably be necessary for the proper management of the Estate

-26-

Executed by TE Equipments Limited	)	/s/ W. J. Chappell
Acting by a director and the secretary/	)	/s/ A.N. Wheeler
Two directors	)
Director		A.N. Wheeler
Secretary		W. J. Chappell

-27-

Executed as a Deed by Fordgate Industrial Limited	)
acting by :-	)
Director	/s/ M.S.
Director/Secretary	/s/ R.S.

-28-

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

I, John Macneil, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Trikon Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 9, 2005

/s/ John Macneil

John Macneil

Chief Executive Officer,

President and Director

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

I, Martyn John Tuffery, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Trikon Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 9, 2005

/s/ Martyn J. Tuffery

Martyn J. Tuffery

Senior Vice President and

Acting Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer furnished pursuant to Section 1350 of Chapter 63 of Title 18 of

the United States Code (18 U.S. C. 1350) as adopted pursuant to Section 906 of the Sarbanes-Oxley Act

of 2002

I, John Macneil, the President and Chief Executive Officer of Trikon Technologies, Inc (the “Company”), do hereby certify to the best of my knowledge and belief that:

1. The Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2005 (the “Report”) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2005

/s/ John Macneil

John Macneil

Chief Executive Officer,

President and Director

EX-32.2

EXHIBIT 32.2

Certification of Chief Financial Officer furnished pursuant to Section 1350 of Chapter 63 of Title 18 of the

United States Code (18 U.S. C. 1350), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Martyn John Tuffery, Senior Vice President and the Chief Financial Officer of Trikon Technologies, Inc (the “Company”), do hereby certify to the best of my knowledge and belief that:

1. The Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2005 (‘the Report”) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 780(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2005

/s/ Martyn J. Tuffery

Martyn J. Tuffery

Senior Vice President and

Acting Chief Financial Officer