Sato vows to bulldoze the village (he owns the land) unless Miyagi fights him to the death. To save the village, Miyagi agrees, on one condition -- that Sato hand over to the villagers the deed to the land. They agree to meet at midnight. Meanwhile, Daniel's new girlfriend Kumiko (Tamlyn Tomita) is performing a tea ceremony for him. Suddenly, a wild storm rips through the village, sending the villagers scurrying for safety. One of the houses knocked down is the one where Sato and his nephew Chozen live. Chozen stumbles out of the rubble and tells Miyagi and Daniel that his uncle is dead, but Sato can be seen lying in the rubble, his chest pinned by a large timber. Daniel and Miyagi try to remove the timber, but it is too heavy, so Miyagi breaks it with a karate chop. As they help Sato into the shelter, a little girl is heard crying. She's stuck at the top of a belltower. Sato tells Chozen to help her, but he refuses, so Daniel goes and gets her down. After the storm is over, Sato and Miyagi make peace with each other, and Sato hands over the deed to the village. Daniel requests that, since the village has been damaged by the storm, the Obon festival be held at the castle of King Shohashi, and Sato agrees. Unfortunately, Chozen still has it in for Daniel. At the Obon dance, he suddenly takes Kumiko hostage with a knife at her throat and challenges Daniel to a fight to the death. They fight on a platform surrounded by water so that no one else can interfere. As the fight proceeds, Daniel appears to be getting the worst of it until Miyagi begins to twirl his den-den daiko, as do many of the villagers. Daniel gets the message and uses the drum technique to defeat Chozen. When Daniel offers him the chance to live or die, Chozen choses to die. Instead, Daniel tweaks his nose just like Miyagi did when he got into a fight with Kreese after the All Valley tournament. Daniel and Kumiko hug, while the villagers applaud them.