2. Compensation conditions
(1) The manufacturing subsidiary shall approve the conditions of claims compensation which
have been determined by the sales subsidiary and agreed to by its distributor. The
manufacturing subsidiary will study and determine alteration of warranty terms upon
mutual agreement, if sales subsidiary have special claim compensation condition.
(2) The sales subsidiary shall make a report to the manufacturing subsidiary, once a year (in
March, in principle), concerning the conditions of compensation pursuant to the following
(4) and the basis of calculation thereof, with respect to each distributor.
(3) Calculation of warranty claim compensation, which is payable by the manufacturing
subsidiary to the sales subsidiary, shall be made upon the following conditions. The same
conditions shall apply to the calculation of the expenses payable by manufacturing
subsidiary to sales subsidiary, in the event of a product improvement carried out at the
responsibility of manufacturing subsidiary.
(4) The conditions of compensation shall be pursuant to the concept that the compensation is
limited to "total expenses (excluding profit)" necessary for claims handling. Each item of
expenses to be compensated to distributors and sub-dealers shall be calculated as
follows: