This English translation is provided for the information purpose only.

If any discrepancy arises

between this translation and the Japanese original, the Japanese original shall prevail

July 30, 2012

To whom it may concern:
Covalent Materials CorporationRe:

Holding of Bondholders Meeting concerning Amendment to the Terms and Conditions(Extension of Maturity Date, etc.) of the 1st Series Unsecured Bond

At its board of directors meeting held today, Covalent Materials Corporation (the "Company")passed a resolution to hold a bondholders meeting to amend the terms andconditions thatinclude the extension of the maturity date prescribed in the terms and conditions with respect to¥55 billion in total of the 1st Series Unsecured Bond of the Company (with inter-bond pari passuclause) that the Company issued on February 18, 2008 (outstanding balance of ¥53.3 billion) (ISIN
Code: JP330135A829) (the "Bonds").
1. Background and Reasons for the Amendment to the Terms and Conditions
The Company has completed a business transfer of its silicon wafer business to Sino-American
Silicon Products Inc., (Taiwan) on March 29, 2012, and is currently concentrating its corporate
resources on the highly competitive ceramics business, and focusing on establishing corporate
structures that ensure profitability and lead to continuous growth as a specialized ceramics
manufacturer.

However, as at the end of March 2012, the Company did not hold sufficient funds

to cover the redemption amount of ¥ 53.3 billion of the outstanding Bonds by the redemption dateof February 18, 2013.

Therefore, there was a situation that could lead to doubts in theCompany’s status as a going concern at the end of the latest fiscal year.
changed to this day.

This situation has not

In order to overcome this situation, the Company has implemented

structural reforms, led by the radical review of unprofitable businesses, special invitations for early
retirement, a reduction of fixed charges, and seeking to enhance the Company’s profitability andstabilize its cash management including funding. However, the Company is facing difficulty infunding the redemption amounts of all of the outstanding Bonds until the redemption date,February 2013.

The financial condition of the Company must be promptly stabilized and doubts

in the Company’s status as a going concern need to be promptly dispelled, in order for theCompany to continue business.

For this purpose, we came to the conclusion that we must obtain

1the understanding of the bondholders to partially extend the redemption date of the Bonds andmodify the Bonds to amortizing bonds over 6 years.

For these reasons, we are making thisproposal.
2. Outline of Amendment to the Terms and Conditions(1)

February 18, 2013

Redemption of ¥40 million per ¥100 million of each Bond

(current maturity date)(2)

February 18, 2017

Redemption of ¥20 million per ¥100 million of each Bond(3)

February 18, 2018

Redemption of ¥20 million per ¥100 million of each Bond(4)February 18, 2019

Redemption of ¥20 million per ¥100 million of each BondThe interest rate of the Bonds will not change from the current rate of 2.87% per annum.
3. Holding of Bondholders Meeting concerning the Bonds
Amendment to the terms and conditions of the Bond will be determined through consultation at
the bondholders meeting scheduled as stated below. The validity of the resolution of thisbondholders meeting is subject to the approval of the Court.
Details(1)

Date and time of the Bondholders Meeting
September 12, 2012 (Wednesday) at 3:00 PM (Tokyo time)(2) Venue for the Bondholders Meeting”Basho” room, U-Port 6th floor
4-13, Nishi-Gotanda 8-chome, Shinagawa-ku, Tokyo(3) Purpose of the Bondholders Meeting
Partial amendment to the Terms and Conditions of the Bond
(4) Substance of the Proposal
The Condition 8 (1) of the Terms and Conditions of the Bond regarding the redemption method
and maturity date of the Bond shall be amended as follows:(Before amendment)
With regard to the principal of the Bond, the total amount shall be redeemed on February 18, 2013
(the “redemption date”).

2

(After amendment)
With regard to the principal of the Bond, ¥40 million shall be redeemed for each ¥100 million of
the Bond on February 18, 2013, ¥20 million shall be redeemed for each ¥100 million of the Bondon February 18, 2017, ¥20 million shall be redeemed for each ¥100 million of the Bond onFebruary 18, 2018 and ¥20 million shall be redeemed for each ¥100 million of the Bond onFebruary 18, 2019 (the “final redemption date”).
In addition, along with these amendments, the “redemption date” referenced in the Terms andCondition of the Bonds shall be deemed to be replaced with the “final redemption date.”

4. Holding of Briefing Session for Bondholders on Amendment to the Terms and Conditionsof the Bond
The Company will hold a briefing session for bondholders on amendment to the terms andconditions of the Bonds in advance of the bondholders meeting described in Section 3 above. At
the briefing session, we will explain matters including the background leading up to theamendment to the terms and conditions of the Bond, the current situation of the Company and theCompany's future strategies. Details such as the time and venue of the briefing session will beannounced in early August. You are cordially invited to attend.
In addition, the Company may make further communications with individual bondholders forcoming notification. For that purpose, bondholders are kindly requested to send the following
information by email or facsimile to the Company at the contacts listed below: {1} trade name,headquarters location and name of representative (for corporations) or name and address (forindividuals), {2} contact information (person in charge, address, telephone number, facsimile
number and email address) and {3} the face amount in yen of the Bonds held. After hearing fromyou, we intend to send notices directly to you to the extent reasonably possible.
In addition to seeking the support of financial institutions, the Company is presently pushing
forward on a number of fronts to improve financial strength and stability, and making every effort
to build a corporate platform designed to generate sustainable profits and growth. We deeply
apologize for causing tremendous burdens and issues for our bondholders and will act toimplement a thorough business restructuring with the strongest resolve. We hope to receive yourcontinued support in the future.

3*For inquiries regarding the bondholders meeting and the briefing session for bondholders:
6-3, Osaki 1-chome, Shinagawa-ku, Tokyo 141-0032, Japan
Accounting & Finance, Finance Group,Covalent Materials Corporation(TEL: +81-3-5437-8405

FAX: +81-3-5437-7254###4

E-mail: IR-contact@covalent.co.jp)