Agreement No.: PS21-071 1 Certain identified information marked with “[***]” has been omitted from this document because it is both (i) not material and (ii) the type that the registrant treats as private or confidential. SERVICE AGREEMENT Volvo Car...
Agreement No.: PS21-071 5. DESCRIPTION OF THE SERVICE ACTIVITIES 5.1 The Service deliveries will be the following: Although the Service Specification below is intended to describe the Services, all such ancillary or incidental services not described but that are inherent subtasks of the Services or, based on common industry practice, usually held to be required for the proper performance and provision of services such as the Services, shall be deemed to be included in the Service Specification. • Support procurement with R&D activities to secure a successful localization • Support manufacturing with R&D activities connected to the introduction of the Polestar Vehicle in the Plant • Perform validation testing of the complete localized Polestar Vehicle and in-going components and systems. • Perform necessary activities to enable homologation and certification of the complete localized Polestar Vehicle 5.2 In addition Volvo Cars R&D will provide all management and business support needed to support the different functions and processes with decisions and business analysis to support and coordinate these decisions. 6. TIMING AND DURATION 6.1 [***] 6.2 The milestones and deadlines that are defined by VPDS [***]in Charleston shall apply for the deliverables under this Agreement. 7. ESTIMATED HOURS 7.1 The Parties estimate the hours that are required to perform the Services is described in Appendix 2 ______________________________ Agreement No.: PS21-071 1 SERVICE AGREEMENT APPENDIX 2 SERVICE CHARGES 1. GENERAL 1.1 This Appendix 2 stipulates the rules and principles for the Service Charges payable by Purchaser to Service Provider for Services delivered under this Agreement. 2. DEFINITIONS 2.1 Any capitalised terms used but not specifically defined in this Appendix shall have the meanings set out for such terms in the Agreement. In addition, the capitalised terms set out below in this Section 2 shall for the purposes of this Appendix have the meanings described herein. All capitalised terms in singular in the list of definitions shall have the same meaning in plural and vice versa. 3. SERVICE CHARGES 3.1 The Service Charge for the Services according to the Service Specifications in Appendix 1.1- 1.4 will be based on the actual hours required for the Services to be performed by Service Provider as set forth below this Appendix 2. 3.2 The Parties acknowledge that the Service Charges set forth in this Appendix 2 for Service provided in 2021 and 2022 are the actual Service Charges. 3.3 The Parties also acknowledge that the Services Charges for Service Provided in 2023 and 2024 are estimation of the amount of hours required for the performance of the Services and that this estimation may differ from the final actual number of hours charged by Service Provider. Hence, the Service Charges will ultimately be invoiced based on actual hours, not on estimated hours. However, the Parties have agreed [***]that the actual amount of hours may not exceed the estimated hours with more than 10%. 3.4 The hourly rates that are used to calculate the Service Charges shall be determined by Service Provider on an annual basis in compliance with applicable tax legislation, including but not limited to the principle of “arm’s length distance” between the Parties. The hourly rates shall be calculated using the cost plus method, i.e. full cost incurred plus an arm´s length mark-up. All costs Service Provider has in order to perform the Services shall be reimbursed by Purchaser. Other cost will be charged based on actual arm's length cost, not estimated cost 3.5 The hourly rates for 2021, 2022 and 2023 are outlined in Appendix 2A and 2B . The hourly rate for 2024 should be communicated to Purchaser no later than 31 December 2023. 3.6 The Service Charges (actual amounts for 2021 and 2022 and estimates for 2023 and 2024) for Services provided by Volvo Cars are outlined in the table in Appendix 2A. Style Definition: Heading 2,Heading 2 Alt+2,h2,Level 2 Topic Heading,H2,L2,Body Text (Reset numbering),(Alt+2),MA,Ma,Major,2,1.1.1 heading,Heading 21,KJL:1st Level,A,A.B.C.,Header 2,l2,UNDERRUBRIK 1-2,Heading 2 Hidden,CHS,H2-Heading 2,Header2,22,heading2,list2,list 2,o Agreement No.: PS21-071 2 3.7 The Service Charges (actual amounts for 2021 and 2022 and estimates for 2023 and 2024) for Services provided by Volvo Car USA LLC are outlined in the table in Appendix 2B: 4. PAYMENT TERMS 4.1 The Service Charges for the Services Provided by Volvo Cars and Volvo Car USA LLC 47- 4903750 under this Service Agreement, shall be invoiced and paid in accordance with the payment terms set forth in this Section 9. 4.2 The Service Charges for 2021, 2022 should be invoiced within 30 days of the signing of this Agreement and payable by the Purchaser within 30 days of the of such invoice, provided all necessary permits from authorities, as applicable, have been received. 4.3 The Service Charges for 2023 should be invoiced no later than 31 January 2024 and payable by the Purchaser within [***]30 days of the of such invoice, provided all necessary permits from authorities, as applicable, have been received. 4.4 The Service Charges for 2024 shall be invoiced on a quarterly basis, at the end of each quarter and payable within [***]30 days after the date of such invoice, provided all necessary permits from authorities, as applicable, have been received. 4.5 All Service Charges referred to in this Agreement shall be invoiced and paid in SEK or USD. 4.6 All amounts referred to in this Service Agreement are exclusive of VAT and surtaxes but inclusive of Withholding Tax applicable in accordance with local legislation. 4.7 Service Provider is responsible for charging and declaring sales tax or other taxes as follow from applicable law. Any applicable sales tax on the agreed price will be included in the invoices and paid by Purchaser. 4.8 Payment made later than the due date will automatically be subject to interest for late payments for each day it is not paid and the interest shall be based on the one (1) month applicable interbank rate, with an addition of [***]four per cent (4%) per annum. 4.9 Any paid portion of the Fee is non-refundable, with the exceptions set out in this Agreement. Agreement No.: PS21-071 1 SERVICE AGREEMENT APPENDIX 2A SERVICE CHARGES – VOLVO CARS The Service Charges (actual amounts for 2021 and 2022 and estimates for 2023 and 2024) for Services provided by Volvo Cars are outlined in the table below: [***]
Agreement No.: PS21-071 1 SERVICE AGREEMENT APPENDIX 2B SERVICE CHARGES – VOLVO CARS USA LLC The Service Charges (actual amounts for 2021 and 2022 and estimates for 2023 and 2024) for Services provided by Volvo Car USA LLC are outlined in the table below: [***] 1 Appendix 3 Governance and Change Structure 1. GENERAL 1.1 This Appendix 3 outlines the governance structure for this Agreement between the two Parties as well as how to handle changes along the development project. 2. DEFINITIONS 2.1 Any capitalised terms used but not specifically defined herein shall have the meanings set out for such terms in the Agreement. In addition, the capitalised terms set out below in this Section 2 shall for the purposes of this Appendix have the meanings described herein. All capitalised terms in singular in the list of definitions shall have the same meaning in plural and vice versa. 3. GOVERNANCE STRUCTURE 3.1 Direct Material Procurement The operational level forum for Direct Material procurement will follow the already established cross-functional forums, where procurement is required for the sourcing process. The Future Model Technical Meeting (“FMTM”) manage operational issues in the sourcing process, including cross-functional alignment with Polestar for sourcing strategy, decision and cost, and prepares the information to be formally decided in the Global Counsel (“GC”). Polestar is invited to the established functional forums and meetings as required and where Polestar will be informed of the overall progress of the sourcing of Polestar Technology including potential deviations from targets. The participants are the Volvo Cars Procurement program manager and Polestar Procurement Manager. Meeting cadence is based on request. The GC is the forum that decides on sourcing strategies, sourcing decisions and manages disagreements in deviations of program targets. The chairman of the meeting is the Volvo Cars Vice Presidents of Direct Material and participants are Volvo Cars Vice Presidents of Direct Material, Volvo Cars Sourcing Analyst, Volvo Cars Cost Estimate Director and Volvo Cars SQM Program Manager. At the supplier selection for Polestar Technology components, Polestar is responsible to participate in the FMTM and the GC and is regarded as one of the stakeholders and will have a final say in the GC. At the supplier selection for common platform components, Polestar is invited to be present in the GC. The meeting is held weekly. 3.2 Indirect Material Procurement The operational level forum for Indirect Material procurement will follow the already established cross-functional forums, where procurement is required for the sourcing process. The Supplier Choice Meeting (“SCM”) manage operational issues in the sourcing process, including cross-functional alignment with Polestar for sourcing strategy, decision and cost, and prepares the information to be formally decided in the Supplier Choice Meeting. Polestar is invited to the established functional forums and meetings as required and where Polestar will be informed of the overall progress of the sourcing of Polestar Technology including potential deviations from targets. The participants are the Volvo Cars 2 Procurement program manager and Polestar Procurement Manager. Meeting cadence is based on request. The SCM is the forum that decides on sourcing strategies, sourcing decisions and manages disagreements in deviations of program targets. The chairman of the meeting is the Volvo Cars Vice President of Indirect Material and participants are Volvo Cars Vice Directors of Indirect Material, Volvo Cars Sourcing Analyst, Volvo Cars Cost Buyer. The SCC is the next level of governance forum for procurement, Direct Material and Indirect Material and it also decides sourcing strategy, sourcing decisions and manages disagreements in deviations of program targets. However, the SCC is only deciding on items escalated by Polestar and items that has decision value of more than[***]. Sourcing decisions for certain, defined critical, commodities must be finally decided by SCC, after decision in SCM. The chairman of the meeting is Volvo Cars Head of Global Procurement and Volvo Cars Vice Presidents of Procurement, as well as other unit stakeholders depending on agenda. At the supplier selection for Polestar Technology components, Polestar is responsible to participate in the SCC and is regarded as one of the Stakeholders and will have a voice in the SCC. The next governance level for procurement is the E&Q Steering Committee as described in Section 3.3. 3.3 Manufacturing Engineering & SCM The governance and co-operation for the manufacturing engineering and logistics is to be primarily conducted at M&L Operational Program Meetings between the Parties, but if Polestar objects to decisions made in the M&L Operational Program Meeting issues can be escalated to the Volvo Polestar M&L Program Review Meeting. The Volvo Polestar M&L Program Review Meeting will handle issues where a decision regarding deviations from M&L objectives have to be made. The meeting participants are Volvo Cars Manufacturing Business Office (“MBO”) representative and Volvo Cars plant in Charleston General Manager and Polestar Manufacturing Business Office and Polestar Finance. The meeting chair is Volvo Cars MBO and the meeting is held quarterly. The next governance level for Manufacturing Engineering & SCM is the Volvo Polestar Steering Committee. The Steering Committee is handling escalated topics escalated by Polestar and discuss strategic questions related to production. 3.4 Joint Governance Level In the event that Polestar objects to decisions made in the Volvo Polestar Steering Committee and the Parties cannot agree on a joint solution for disagreements or disputes handled, the final governance level is the Volvo/Polestar Executive Alignment Meeting. The participants in the Volvo/Polestar Executive Meeting is Volvo CEO and CFO and Polestar CEO and CFO, as well as other relevant participants from both Parties related to the subjects discussed. The meeting is held monthly or as otherwise agreed, based on escalated items. 3 If the Volvo/Polestar Executive Alignment Meeting cannot settle the disagreement, such deadlock will be referred to the CEO and CFO of the owners of Polestar on the signing date of this Agreement, for deadlock resolution, according to the escalation principles described in the Agreement Section 18. The governance structure between Volvo Cars and Polestar is illustrated in a picture at the end of this appendix.