Pencil Core - Terms and conditions

Updated 10 June 2025

Pencil: Terms and Conditions

These Terms and Conditions, together with the terms and selections made set forth on the relevant online order page (the “Online Order”), form the “Agreement” entered into by and between Customer and Pencil, which governs and conditions the nature and scope of the services to be provided by Pencil to Customer pursuant to the Online Order, including provision of access to the Platform for use in connection with the Authorised Brand (including to allow Customer create Outputs for that Authorised Brand).

This Agreement is entered into by and between Customer and Pencil automatically when Customer concludes a purchase through the Online Order and clicks to accept these Terms and Conditions. Where applicable, in respect of any person who concludes such order on behalf of another person or entity, you represent and warrant that you have the full and sufficient authority to accept the Terms and Conditions on behalf of such other person or entity and all references to “Customer” herein are noted to be references to that other person or entity.

THE PARTIES AGREE AS FOLLOWS:

INTERPRETATION
1. The following definitions apply to this Agreement (including the introductory language set out, above):
  1. “Authorised Brand” means the relevant authorised brand in respect of which Customer is permitted under this Agreement to use the Platform, which is identified by Customer in the Online Order.
  2. “Authorised Users” means those of Customer’s employees or other staff who are authorised from time to time by Pencil to use the Platform under this Agreement via certain of the Workspace(s) allocated to the Authorised Brand, and are provided usernames, passwords and other necessary credentials by Pencil for the purpose of accessing and using those Workspace(s) via the Platform (“Access Credentials”).
  3. “Beta Feature” means any feature or functionality of the Platform, which is made available by Pencil on a ‘beta’, pre-release or evaluation basis.
  4. “Business Day” means any day which is not a Saturday, Sunday or public holiday in London, United Kingdom.
  5. “Claim” means any claim, demand, complaint, proceeding or other action.
  6. “Connected Application” means any system or application owned or controlled by Customer, which is connected to the Platform by, on behalf of or at the direction of Customer (including through Customer’s linking of its account for a Connected Application with the Platform using integrations made available as part of the Platform). For greater clarity, a Customer’s ‘Digital Asset Management Platform’ may constitute a Connected Application.
  7. “Connected Content” means any Content (including any information or data relating to advertising performance) made available within the Platform via any Connected Applications or otherwise made available via Connected Applications and uploaded to the Platform (e.g., manually).
  8. “Content” means any text, images, audio, video, data, information, or any other materials.
  9. “Customer” means the person or entity who completes a purchase through an Online Order.
  10. “Documentation” means any manuals, instructions, user guides published by Pencil that describe the Platform and its use, operation, features and functionality.
  11. “Fees” means the fees for Customer’s subscription to the Platform, as set out on https://www.trypencil.com/pricing for the relevant subscription identified on the Online Order.
  12. “Generation” means a single generation of an Output using the Platform.
  13. “Initial Term” means the relevant subscription term selected by Customer on the Online Order prior to purchase of a subscription to access the Platform.
  14. “Inputs” means any Content input by Customer and its Authorised Users to be processed by the Platform to create Outputs (including any website properties input to by Customer the Platform’s ‘URL scanning’ tooling, together with any Content displayed on those properties).
  15. “Intellectual Property Rights” means all copyright and related rights, patents, rights to inventions, utility models, trade marks, service marks, trade, business and domain names, rights in trade dress or get-up, rights in goodwill or to sue for passing off, unfair competition rights, rights in designs, rights in computer software, database rights, topography rights, moral rights, rights in confidential information (including know-how and trade secrets), so-called ‘personality rights’ and ‘publicity rights’ (including rights to natural person’s name, image and likeness), and any other intellectual property rights, in each case whether registered or unregistered and including all applications for and renewals or extensions of such rights, and all similar or equivalent rights or forms of protection in any part of the world.
  16. “Losses” means all losses, liabilities, damages, costs, claims, charges, regulatory fines, demands, actions and expenses (including legal and professional fees and disbursements and costs of investigation, litigation, settlement, judgment, interest and penalties).
  17. “Outputs” means any visual or audio Content (including copy, storyboards, designs, voiceovers and other visual or audio Content), which is generated and returned by the Platform based on the Inputs through Customer’s and its Authorised Users’ permitted use of the Platform.
  18. “Pencil” means Pencil AI Limited, a company incorporated and registered under the laws of England and Wales with company number 14789571 with its registered office at 151 Rosebery Avenue, London EC1R 4AB.
  19. “Pencil Technology” means collectively (i) the Platform, as updated from time to time; (ii) any and all other technology and software owned or used by Pencil as part of, or in connection with, the Platform, software code (in any form including source code and executable or object code), neural networks, models (including architectures, weights, (hyper)parameters, coefficients, embeddings, calibrations and algorithms (whether or not, instantiated in software code)), and other computer systems or technologies; (iii) any benchmarking, analytics or technical data relating to the performance or operation of the Platform; (iv) the Documentation as updated and amended from time to time; (v) any Pencil Improvements; and (vi) any and all Intellectual Property Rights in or to each of (i)-(v).
  20. “Platform” means Pencil’s cloud-based software‑as‑a‑service ‘Pencil’ platform (including the Platform Interface) as described in the Documentation, which is owned, operated and/or licensed by Pencil, which may be used by Customer to generate Outputs, the features and functionalities of which shall be dependent upon the subscription purchased through the Online Order.
  21. “Platform Interface” means the standard web-based interface required for Customer to access and use the Platform for the ordinary operation thereof under this Agreement, which is as notified to Customer from time to time (including, where relevant, https://app.trypencil.com or https://pro.trypencil.com or other https://trypencil.com domain as may be relevant in the circumstances).
  22. “Renewal Term” means the relevant subscription term selected by Customer on the Online Order prior to purchase of a subscription to access the Platform.
  23. “Term” means the Initial Term and any Renewal Term(s).
  24. “Workspace” means a ‘Workspace’ made available via the Platform that is allocated to the Authorised Brand for a given market, geography or similar, and which is identified in the Online Order or for which Customer receives a ‘Workspace ID’ following creation via the Platform.
2. The following rules of interpretation shall apply in this Agreement: (a) any reference to this Agreement terminating shall, where the context requires, include a reference to this Agreement terminating by expiry of the Term; (b) the words “include” and “including” (or similar) shall be construed as illustrative only and shall not limit the sense of the description, definition, phrase or term(s) that comes before the relevant term; and (c) any reference to the “Parties” means Pencil and Customer and “Party” shall mean one of them.
PLATFORM
1. Platform Access. Subject to Customer’s and its Authorised Users’ continued compliance with this Agreement (including payment of all Fees due and payable in accordance with Section 4), Pencil hereby grants Customer a limited, personal, non-exclusive, non-transferable (subject only to Section 15.5) and non-sublicensable right during the Term for Customer and its Authorised Users (up to the limits on the number of such Authorised Users set out in the Online Order) to use the ordinary features and functionalities of the Platform as part of Customer’s internal business operations via the Workspace(s) in connection with the Authorised Brand.
2. Availability. Pencil will use commercially reasonable efforts to maintain the operation and availability of the Platform (subject always to (a) any scheduled or emergency maintenance or upgrades; and/or (b) circumstances outside Pencil’s reasonable control (including any Force Majeure Event); and/or (c) resulting from any breach, non-performance or any other default by Customer under this Agreement).
3. Authorised Users. Customer is solely responsible for the acts and omissions of its Authorised Users. Customer shall immediately notify Pencil of any unauthorised use of any Authorised User’s Access Credentials. Customer shall: (a) ensure that: (i) only Authorised Users access the Platform; and (ii) each Authorised User maintains the confidentiality of the Access Credentials; (b) not allow any Access Credentials allocated to an Authorised User to be used by more than one individual Authorised User; (c) immediately notify Pencil if any Authorised User ceases to be employed or otherwise engaged by Customer; and (d) Authorised Users only access Workspace(s) for which they have been allocated Access Credentials.
4. Beta Testing. From time to time, Customer may have the option to participate in a programme where Customer and its Authorised Users are permitted at no additional cost to access certain Beta Features. Customer may only use the Beta Features to internally evaluate and test such Beta Features and for no other purpose whatsoever. The Beta Features are not generally available and are provided by Pencil “as is”, without any conditions, warranties, representations, undertakings, or other terms either express or implied whatsoever (including as to non-infringement, merchantability, satisfactory quality, use of reasonable skill and care or fitness for any particular purpose). Furthermore, Pencil does not provide any indemnities or service level or availability commitments whatsoever in relation to the Beta Features (e.g. Section 2.2 does not apply in respect of Beta Features). As Pencil sees fit in its sole discretion, it may from time to time impose, and Customer shall comply with, certain additional restrictions or limitations on Customer’s and its Authorised Users’ use of the Beta Features. Pencil may terminate Customer’s access to any Beta Features at any time with or without notice, at which point Customer and its Authorised Users must stop using the Beta Features. Customer shall not disclose to any third party or publish (including via the internet or social media) details of any Beta Features (including details of its any evaluation or testing (including any Outputs, results, screenshots, questions, or workflows) of the Beta Features) without Pencil’s prior written consent.
OWNERSHIP AND LICENSING
1. Pencil Ownership. As between the Parties, Pencil retains sole ownership of all right, title and interest, including all Intellectual Property Rights, in and to: (a) the Pencil Technology and (b) the Outputs. Customer will not acquire any right, title or interest in or to the Pencil Technology nor the Outputs, and Pencil reserves all rights therein and thereto not expressly granted in this Agreement.
2. Output Licence. Pencil hereby grants to Customer a limited, non-exclusive, worldwide, perpetual, royalty-free and fully paid-up licence to use the Outputs as part of Customer’s ordinary commercial operations.
3. Customer Ownership. As between the Parties, Customer retains sole ownership of all right, title and interest, including all Intellectual Property Rights, in and to all Inputs and Connected Content.
4. Licence to Pencil. Customer hereby grants to Pencil a non-exclusive, worldwide, royalty-free and fully paid-up licence during the Term to use the Inputs, Outputs, Connected Content, any Connected Applications, the Authorised Brand (including the name of the Authorised Brand, any trade marks, trade names, service marks, trade dress, logos and ‘look and feel’ of or associated with the Authorised Brand) and Customer’s trade marks, trade names, service marks, trade dress, logos and ‘look and feel’ (“Marks”), and under any other relevant Intellectual Property Rights owned or licensed by Customer, as necessary to provide, operate and make available the Platform to Customer.
5. Improvement and Training Licence. Customer hereby grants Pencil a non-exclusive, fully sub-licensable, transferable, worldwide, perpetual and irrevocable, royalty-free and fully paid-up licence to use Inputs and Connected Content on an anonymised, de-identified or aggregated basis to develop or improve the Pencil Technology and related technology, products and improvements (“Pencil Improvements”), including to train models that are part of the Pencil Technology and/or to create new, improved or augmented algorithms, models and model weights.
FEES
1. Payments. Customer shall pay the Fees in advance in accordance with this Section 4 and any relevant terms of the Online Order.
2. Generation Credits.
  1. The Fees shall be charged based upon a Generation Credit charging model. Customer shall pay the Fees based upon the subscription tier purchased by Customer from time to time, which shall be as shown in the Online Order.
  2. The tier of subscription purchased by Customer from time to time shall entitle it to a specific number of Generation Credits within a given period (each a “Specified Period”, and the relevant number of Generation Credits available in that Specified Period, the “Credit Limit”).
  3. The number of Generation Credits that will be applied against the Credit Limit for a given Generation may vary based upon the categorisation of the relevant Third-Party AI Model used for such Generation (e.g., a Generation from a ‘Standard Model’ may require fewer Generation Credits than a Generation from a ‘Premium Model’).
  4. Where Customer exceeds the Credit Limit, then each Generation in excess of the Credit Limit used by Customer in the Specified Period shall be charged the applicable number of Generation Credits for each such Generation (which may vary based upon the categorisation of the relevant Third-Party AI Model used for such Generation) at the per Generation Credit rate for additional Generation Credits set forth in the Order Form (each, an “Excess Generation Credit”). The Fees for any such Excess Generation Credits shall be added to the next invoice to be issued by Pencil.
  5. The Online Order shall set out: (i) for each available subscription tier: (A) the base Fees payable; (B) the applicable Credit Limit; (C) details of the number of Generation Credits required per Generation from given Third-Party AI Models or categories of Third-Party AI Models; and (D) the duration of the Specified Period; and (ii) the Fees payable for each Excess Generation Credit.
3. Payment Processing and Payment. Customer acknowledges that: (a) Pencil uses a third-party service provider for payment services (e.g., card acceptance, merchant settlement, and related services) (“Third-Party Payment Processor”); (b) Pencil shall process Customer’s payment for the Fees (including any Fees payable in respect of ant Renewal Term(s)) via its appointed Third-Party Payment Processor; (c) Customer shall provide complete and accurate payment and billing information and a valid and authorised payment method by which it shall pay the Fees; (d) Customer hereby authorises Pencil, and its Third-Party Payment Processor appointed from time to time, to charge such payment method for all Fees coming due and payable to Pencil under and in accordance with this Agreement and agrees that no additional notice or consent is required for such purpose; (e) if Customer’s payment method is rejected or payment for the Fees otherwise cannot be processed via that payment method, then Pencil will notify Customer and Customer will timely pay the Fees by another mechanism agreeable to Pencil, pending which Pencil may suspend Customer’s and its Authorised Users access to the Platform as described in Section 4.6; and (f) Customer acknowledges and agrees that this Agreement shall automatically renew and Customer’s payment method shall continue to charge the then-current Fees for its ‘Pencil Standard’ Subscription unless and until this Agreement is terminated in accordance with its terms (including in accordance with Section 12.1(z)).
4. Fees. All Fees: (a) shall be payable in the currency shown on https://www.trypencil.com/pricing or otherwise displayed to Customer during the ordering process; (b) are non-cancellable and non-refundable unless and to the extent expressly provided otherwise in this Agreement; and (c) are exclusive of any and all taxes (including value added tax).
5. Fee Changes. Pencil reserves the right to increase the Fees following the Initial Term, and each Renewal Term thereafter, provided that Pencil will provide notification of any such increase at least ninety (90) days in advance of the end of the Initial Term or then-current Renewal Term (as applicable).
6. Late payments. In addition to any other rights or remedies available to Pencil, if Customer fails to pay any sums by the due date: (a) any such sums will accrue interest equal to the higher of: (i) six percent (6%) per annum above the Bank of England’s base lending rate from time to time; or (ii) the default statutory rate applicable from time to time under the Late Payment of Commercial Debts (Interest) Act 1998, accruing on a daily basis and being compounded quarterly, from the time the indebtedness arose, with interest on all overdue interest accruing at the same rate and calculated and payable in the same manner until fully paid, whether before or after judgment; and (b) Pencil may suspend the provision of any access to the Platform upon fourteen (14) days’ prior notice until payment of the sums is made by Customer in full without liabilityto Customer or prejudice to any other rights or remedies available to Pencil in the circumstances.
RESTRICTIONS

Customer shall not and shall not suffer, allow, assist or enable any other person (including Authorised Users) to: (a) use the Pencil Technology and/or any Outputs in any manner or for any purpose that is restricted by or inconsistent with this Agreement and/or applicable law (including using the Platform and/or any Outputs in connection with any other brand than the Authorised Brand and/or allowing Authorised Users to access Workspace(s) for which they do not have active Access Credentials); (b) provide or otherwise make the Pencil Technology available to any third parties (other than to Authorised Users as permitted under Section 2.1); (c) use the Pencil Technology and/or Outputs to create, market or distribute any product or service that is similar to, competitive with, or otherwise replicates or seeks to replicate any features or functionalities of, the Platform or any other part of the Pencil Technology; (d) introduce to the Pencil Technology any ‘back door’, ‘drop dead device’, ‘time bomb’, ‘Trojan horse’, ‘virus’ or ‘worm’ or any other equivalent code, software routine or instructions designed or intended to disrupt, disable, harm or otherwise impede in any manner the operation of the Pencil Technology or any device, system, data or file owned or controlled by Pencil or any third party; (e) use the Pencil Technology in a manner (including through query access) to gather information as to infer the operation of, or replicate, all or any part of any machine learning models, datasets or other technologies forming part of the Pencil Technology or any Third-Party AI Models (including as part of any so-called ‘model extraction’, ‘model inference’ or ‘model inversion’ techniques or similar); (f) modify, copy, resell, rent, lease, sub-licence, load, merge, adapt, translate or create derivative works of the Pencil Technology; (g) contest, challenge or otherwise make any claim or take any action adverse to Pencil’s ownership of, or interest in, the Pencil Technology; (h) re-use, disseminate, copy, or otherwise use the Pencil Technology in a way that infringes, misappropriates, or violates any Intellectual Property Rights or other right of Pencil or any third party; (i) engage in any competitive analysis or benchmarking of the Pencil Technology; (j) remove, alter or obscure any trade mark notice, copyright notice or any other proprietary notice from the Pencil Technology; (k) circumvent, disable, or interfere with security-related, rate-limiting, or authentication-related or copy protection features of the Pencil Technology or features that limit, prevent or restrict use, access to, or copying of the Pencil Technology, or that enforce limitations on the use of the Pencil Technology; (l) reverse engineer, decompile, unbundle or disassemble the whole or any part of the Pencil Technology unless and to the extent unavoidably permitted by unavoidable laws of Customer’s jurisdiction for limited interoperability purposes; (m) impose (or which may impose, in Pencil’s sole discretion) an unreasonable or disproportionately large load or strain on the Pencil Technology or make a disproportionate number of queries to the Platform and/or Third-Party AI Models; (n) automatically publish or make generally available any Outputs without human intervention, review and approval; (o) use the Pencil Technology and/or any Outputs in any manner or for any purpose that contradicts the restrictions set forth in Appendix A (Use-based Restrictions); or (p) take any action designed or intended to do any of the foregoing. Pencil may immediately suspend the provision of any access to the Platform for any breach of the foregoing restrictions.

WARRANTIES AND DISCLAIMERS
1. Limited Warranties. Each Party warrants and represents on an ongoing basis that it has, and undertakes that it shall continue to have for the duration of this Agreement at all relevant times, the requisite power, capacity and authority to enter into this Agreement, to perform and carry out its the obligations under this Agreement. Pencil warrants that, during the Term, the Platform will materially conform to the then-current Documentation when used in accordance with that Documentation and the provisions of this Agreement; provided that such warranty shall not apply to the extent any breach arises directly or indirectly as a result of any defects or issues arising as a result of any use of the Platform in combination with other products, hardware, equipment, software, or Content not provided to Customer by Pencil.
2. Pencil Disclaimer. Except as expressly provided in this Agreement, the Platform, the Documentation and the Outputs are provided “as is” and to the fullest extent permitted by law, Pencil disclaims all other conditions, warranties, representations, undertakings, or other terms which might have effect between the Parties with respect to the Platform, the Documentation and/or the Outputs, or otherwise be implied or incorporated into this Agreement, whether by statute, common law, custom or otherwise, including any implied conditions, warranties, undertakings or other terms relating to satisfactory quality, accuracy, reasonable skill and care, fitness for any particular purpose, non-infringement, ability to achieve a particular result or arising from course of dealing or usage of trade. Furthermore, Customer acknowledges that Pencil: (a) gives no express or implied warranty, representation, nor undertakings that the Outputs do not infringe third party rights (including Intellectual Property Rights), nor that any Outputs will constitute valid, subsisting or enforceable Intellectual Property Rights and/or be capable of registration in any jurisdiction; (b) does not warrant, represent, endorse, support or guarantee the completeness, truthfulness, accuracy, legality, originality, reliability, performance, appropriateness, fitness for purpose or any other attributes of any Outputs; and (c) shall not be responsible for reviewing or attempting to verify the accuracy or currency of any Outputs. Customer shall be solely responsible for Customer’s use of the Platform and any Output and for evaluating the fitness of any Output as appropriate for Customer’s specific use case or any other purpose.
3. Customer Warranties. Customer warrants and represents on an ongoing basis that it has, and undertakes that it shall continue to have for the duration of this Agreement at all relevant times: (a) the requisite power, capacity and authority to enter into this Agreement, to perform and carry out its obligations under this Agree; (b) sufficient rights to make available to grant Pencil the rights and licences granted by Customer under this Agreement; and (c) without limitation to the generality of (b), it has not included, and shall not include, any names, images or likenesses of real natural persons, not any Content or other embodiments of Intellectual Property Rights, that it does not have the right to use and to grant Pencil the right to use as contemplated in this Agreement.
CUSTOMER DEPENDENCIES

Customer shall: (a) implement and maintain effective security policies and procedures to prevent unauthorised disclosure of Access Credentials and unauthorised access to the Platform; (b) secure any systems and devices Customer and its Authorised Users use to access the Platform; (c) ensure that all Authorised Users of the Platform only access the Platform using a supported version of the systems and technologies (e.g., browsers, operating systems, etc.) that are listed in the Documentation as supported by Pencil from time to time; (d) ensure that it has an internet connection with adequate bandwidth for Authorised Users to access and use the Platform; (e) ensure that it maintains connectivity to the extent necessary to prevent network performance degradation; and (f) maintain all necessary back-up copies of all Inputs, Outputs and Connected Content, and Customer further acknowledges that it, and not Pencil, is solely responsible for doing so.

THIRD-PARTY AI MODELS AND CONNECTED APPLICATIONS
1. Third-Party AI Models. Certain elements of the Platform may incorporate functionality of, or enable access to, certain third-party tools, systems, applications and/or platforms (including certain third-party artificial intelligence models, algorithms, and platforms) (“Third-Party AI Models”). The incorporation of the functionality of, or Customer’s and its Authorised Users’ ability to access, certain Third-Party AI Models via the Platform will vary depending upon the particular ‘Magic Tools’ enabled or disabled by Customer through its configuration of the Platform and/or particular Workspaces and the ‘Magic Tools’ available to Customer under the subscription purchased through the Online Order. Customer acknowledges that by using the Platform (including through its configuration of relevant ‘Magic Tools’, as and where applicable), it is instructing Pencil to share any Inputs, Outputs and/or Connected Content with the relevant providers of such Third-Party AI Models to the extent necessary to facilitate such functionality or access. Customer acknowledges that Customer and/or its Authorised Users may be required to enter into certain agreements with the providers of such Third-Party AI Models and in the event the relevant agreements are not entered into, Customer and/or its Authorised Users may be unable to access: (a) such Third-Party AI Models; and/or (b) any or all of those elements or functionalities of the Platform that rely upon such Third-Party AI Models.
2. Connected Applications. Certain elements of the Platform may permit or enable Customer and/or its Authorised Users to link or otherwise connect or integrate Customer’s Connected Applications to the Platform (including via pre-built integrations). By connecting any Connected Application to the Platform, Customer (a) represents and warrants that it is entitled to link or otherwise connect the Connected Application to the Platform; and (b) instructs Pencil to access and/or share any Inputs, Outputs and/or Connected Content with the relevant providers of such Connected Applications. Customer acknowledges and agrees that Pencil may access Connected Content so that it may be used in accordance with the terms of this Agreement.
3. Third-Party Terms. When using any Third-Party AI Models and any Connected Applications, Customer agrees that it shall comply with any terms, conditions and policies of the provider of any Third-Party AI Model or Connected Application (as applicable) (“Third-Party Terms”), as may be notified to it by or on behalf of Pencil including those specified in Section Appendix B (Third-Party Terms), and shall comply with that Appendix B (as and where applicable).
4. General. Customer acknowledges that such Third-Party AI Models and any Connected Applications are not under Pencil’s control and Pencil is not responsible for those Third-Party AI Models nor Connected Applications, and Pencil will have no liability for any unavailability or failure of any Third-Party AI Model or Connected Application, or any third-party provider’s decision to discontinue, suspend or terminate any Third-Party AI Model or Connected Application. To the fullest extent permitted by law, Pencil expressly disclaims any and all express or implied conditions, warranties, representations, undertakings, or other terms of any nature relating to Third-Party AI Models or Connected Applications.
DATA PROTECTION

The Pencil Data Processing Addendum shown from time to time at: https://www.trypencil.com/legals/data-processing-addendum or any successor webpage (the “DPA”) shall apply in accordance with its terms in relation to Pencil’s Processing of Customer Personal Data on Customer’s behalf in performance of this Agreement. If and where the DPA applies in accordance with the foregoing, to the extent of any inconsistency or conflict between any provision(s) of this Agreement and any provision(s) of the DPA, the relevant provision(s) of the DPA shall govern and prevail in preference to any relevant provision(s) of this Agreement insofar as they relate to Pencil’s Processing of Customer Personal Data. Any capitalised terms used in this Section 9, but not defined in this Agreement, shall have the meaning given to them in the DPA.

INDEMNITY

Customer agrees to indemnify Pencil on demand for, and hold harmless Pencil from and against, any and all Losses suffered or incurred by Pencil or any Pencil Affiliate arising out of or in connection with any third party Claim brought, made or threatened against Pencil that: (a) any Inputs, Outputs, Connected Content or Customer’s Marks infringes, misappropriates or violates the rights (including Intellectual Property Rights) of any third party; and/or (b) otherwise arises or results from: (i) the use, licensing, sale, development, import, export, exploitation, modification, enhancement, improvement of or to, and/or reliance upon, any Outputs; or (ii) Customer’s breach of this Agreement and/or violation of applicable law.

LIMITATION OF LIABILITY
1. Unlimited Liability. Nothing in this Agreement limits or excludes the liability of either Party: (a) for death or personal injury caused by its negligence; (b) for fraud or fraudulent misrepresentation; (c) under the indemnities under Section 10; (d) for any other act, omission, or liability which may not be limited or excluded by applicable law; or (e) in respect of Customer, Customer’s liability to pay Pencil any sums due and payable under this Agreement.
2. Exclusions. Subject only to Section 11.1, Pencil shall not in any circumstances be liable to Customer whether in contract, tort (including for negligence), breach of statutory duty (howsoever arising), misrepresentation (whether innocent or negligent), restitution or otherwise, for: (a) any (i) loss, damage or liability (in each case whether direct or indirect) of profits, business, business opportunities, revenue, turnover, reputation or goodwill, anticipated savings or wasted expenditure (including management time); or (ii) special, indirect or consequential loss or damage whatsoever, in each case (i) and (ii) however arising under or in connection with this Agreement and even if Pencil was aware of the possibility that such loss or damage might be incurred; or (b) any loss, damage or liability (in each case whether direct or indirect) arising as a result of (i) Customer’s or any third party’s use of any Output; (ii) any loss or corruption of data or information; and/or (iii) any breach, non-performance or any other default by Customer under this Agreement.
3. Cap. Subject to Section 11.1 and 11.2, Pencil’s total aggregate liability to Customer in respect of any and all Claims (whether in contract, tort (including negligence or breach of statutory duty), misrepresentation (whether innocent or negligent), restitution or otherwise) arising in connection with the performance or contemplated performance of this Agreement shall under no circumstances exceed one hundred per cent (100%) of the Fees paid by Customer under this Agreement in the twelve (12) months immediately preceding the first event (or first event in any series of connected events) giving rise to a Claim against Pencil for the specific Workspace(s) which form the subject matter of that Claim – provided that, the existence of more than one Claim or event (or series of connected events) from which liability arises shall not enlarge the limits set out in this Section 11.3.
TERM AND TERMINATION
1. Commencement and duration. Unless terminated earlier pursuant to the terms of Section 12.2, this Agreement shall: (a) commence on the effective date of this Agreement and continue for the Initial Term; and (b) automatically renew for further successive Renewal Terms at the end of the Initial Term and at the end of each Renewal Term, unless either: (i) Customer elects to cancel its subscription prior to the commencement of any Renewal Term through its configuration of the relevant settings within Customer’s account for the Platform; or (ii) Pencil gives Customer notice before the end of the Initial Term or then-current Renewal Term to terminate this Agreement upon the expiry of the Initial Term or then-current Renewal Term.
2. Termination. Without affecting any other right or remedy available to it, either Party may terminate this Agreement with immediate effect by giving written notice to the other Party if the other Party: (a) commits a material breach of any term of this Agreement which breach is irremediable or (if such breach is remediable) fails to remedy that breach within a period of thirty (30) days after being notified to do so; or (b) becomes insolvent or unable to pay its debts, proposes a voluntary arrangement, has a receiver, administrator or manager appointed over the whole or any part of its business or assets, suffers the presentation of any petition, the making of any order shall or the passing of any resolution for its winding up (except for the purposes of a bona fide solvent amalgamation or reconstruction), bankruptcy or dissolution, otherwise proposes or enters into any composition or arrangement with its creditors or any class of them, ceases to carry on business or claims the benefit of any statutory moratorium, or undergoes any similar or equivalent process in any jurisdiction. The Parties acknowledge and agree that any failure by Customer to pay any Fees when due and/or any breach by Customer of Section 5 shall constitute a ‘material breach’ for the purposes of Section 12.2(a).
CONSEQUENCES OF TERMINATION
1. Consequences. On termination of this Agreement: (a) notwithstanding Section 4, Customer shall promptly (and in any event within ten (10) Business Days of the date of termination) pay Pencil any outstanding balances owing to Pencil under this Agreement; (b) any and all licences, permissions and authorisations granted to Customer and/or its Authorised Users by Pencil under this Agreement will terminate automatically; (c) cease to collect Connected Content for Customer and disable any connections to Connected Applications; and (d) each Party will promptly return all Confidential Information (as defined below) received from the other Party, together with all copies, or certify (on request from the other Party) in writing that all such Confidential Information and copies thereof have been destroyed.
2. Limitations. Any obligation to return, destroy or permanently erase Confidential Information outlined in Section 13.1 shall not apply: (a) in respect of any Confidential Information, that Pencil may be entitled to retain as necessary to comply with any legal, regulatory, judicial, audit, or internal compliance requirements; (b) in respect of any Confidential Information retained by a Third-Party AI Model or Connected Application, in accordance with any relevant Third-Party Terms; and (c) to any Confidential Information that is retained by Pencil on electronic back‑up media made in the ordinary course of business and from which it cannot readily be isolated from other information and deleted, provided that, in each case, the provisions of Section 14 shall continue to apply to Pencil’s retention of any such Confidential Information at all relevant times.
3. Survival and accrued rights. Any provision of this Agreement that either expressly or by implication is intended to come into or continue in force on or after termination of this Agreement shall remain in full force and effect. Termination of this Agreement shall not affect any rights, remedies, obligations or liabilities of the Parties that have accrued up to the date of termination, including the right to claim damages in respect of any breach of this Agreement which existed at or before the date of termination.
CONFIDENTIAL INFORMATION

In this Agreement, “Confidential Information” means any information that is clearly labelled or identified as confidential, or reasonably ought to be treated as being confidential. Confidential Information excludes any information which: (a) is or becomes publicly known other than through a breach of this Agreement; (b) was in the receiving Party’s lawful possession before the disclosure; (c) is lawfully disclosed to the receiving Party by a third party without restriction on disclosure; or (d) is independently developed by the receiving Party and that independent development can be shown by contemporary written evidence without reference to or reliance upon the other’s Confidential Information. Neither Party shall use the other’s Confidential Information for any purpose other than the performance and enjoyment of the obligations and rights set out in this Agreement. Each Party shall keep the other’s Confidential Information confidential and, except as otherwise provided in this Agreement, shall limit access to the other’s Confidential Information to its employees, agents, representatives or subcontractors who have a genuine ‘need to know’, who are subject to confidentiality obligations no less restrictive than those set forth in this Section 14, and who have been informed of the confidential nature of such Confidential Information, provided that Pencil may make available Customer’s Confidential Information to the providers of any relevant Third Party Service and/or Connected Application to be used under and in accordance with any relevant Third Party Terms. In respect of any Third-Party AI Model, Pencil shall ensure that any providers of any relevant Third Party Service to whom Input and/or Connected Content (collectively, “Customer Content”) is provided are subject to duties of confidentiality that are as least as protective as those set out in this Section 14. Notwithstanding the foregoing, the receiving Party may disclose the other’s Confidential Information to the limited extent that such disclosure is required by law or by the order of a court or similar regulatory or administrative body; provided that the receiving Party shall promptly notify the other Party in writing of such required disclosure and shall cooperate with the other Party if the other Party seeks a protective order in relation to any such disclosure and/or any limitations on the further use and disclosure of such Confidential Information. For the avoidance of doubt, any Customer Content constitutes Customer’s Confidential Information, and Pencil Technology constitutes Pencil’s Confidential Information.

GENERAL
1. Marketing. Customer acknowledges and agrees that Pencil may, and Customer hereby grants Pencil a right and licence to, include Customer’s name, the Authorised Brand and a description of the technology and services provided to Customer in respect of the Authorised Brand under this Agreement in case study marketing content, lists of or references to any of Pencil’s clients on its website and/or in proposals, and in other marketing materials.
2. Feedback. If Customer provides feedback, suggestions or recommendations to Pencil regarding the Pencil Technology (“Feedback”), Customer hereby grants Pencil an unrestricted, unconditioned, irrevocable and perpetual right and licence to freely use and exploit such Feedback without any requirement of compensation.
3. Force Majeure. No Party will be in breach of this Agreement nor liable for any failure to perform its obligations under this Agreement if that failure results from circumstances beyond its reasonable control (including, in respect of Pencil, any failure resulting from the action or omission of a provider of any Third-Party AI Model and/or any Connected Application, or any unavailability of a Third-Party AI Model and/or any Connected Application, resulting from circumstances beyond Pencil’s reasonable control) (a “Force Majeure Event”). If a Force Majeure Event continues for three (3) months, the unaffected Party may terminate this Agreement by giving thirty (30) days’ written notice to the other Party.
4. Subcontracting. Pencil may engage any third party to perform its obligations under this Agreement (including to providers of Third-Party AI Models), provided that Pencil shall remain fully liable to Customer for performance of such obligations (subject to the exclusions and limitations outlined herein).
5. Assignment. The Customer will not assign, transfer, charge, sub-contract or deal in any other manner with all or any of its rights or obligations under this Agreement, without the prior written consent of Pencil; provided that, Customer may, with not less than five (5) Business Days’ prior notice to Pencil, assign the benefit of this Agreement (in whole and not in part) in connection with Customer undergoing a change of control (with “control” for these purposes meaning the power of a person to secure that the affairs of Customer are conducted in accordance with the wishes of that person either: (a) by means of the holding of shares, or the possession of voting power, in or in relation to Customer or any other entity; or (b) as a result of any powers conferred by the articles of association or any other document regulating Customer or any other entity). Pencil may at any time freely assign, transfer, charge, sub-contract or deal in any other manner with all or any of its rights or obligations under this Agreement.
6. Notices. Any notice required to be given under this Agreement will be sent by email (i) if to Customer to the email address provided in the Online Order and (ii) if to Pencil to support@trypencil.com. Notices will be deemed to have been received at the time of transmission as shown by the sender’s records (or if sent outside business hours, at 9am on the first Business Day following its dispatch). A Party may change its notice address by giving written notice to the other Party or, in the case of Customer, by updating the Customer’s email address associated with Customer’s account on the Platform.
7. Variation. In addition to any other variation rights set out herein, Pencil may amend this Agreement from time to time by posting a new copy of these Terms and Conditions on this webpage or a successor page or otherwise providing Customer with notice of such amendment. If Customer does not agree to any such amendment, Customer must and shall stop using the Platform. Customer’s continued use of the Platform after any amendment by Pencil of these Terms and Conditions constitutes Customer’s binding acceptance of such amendment, provided that Pencil may also require Customer to further evidence such acceptance in a specified manner prior to continued use of the Platform.
8. Waiver. A waiver of any right or remedy under this Agreement or by law is only effective if given in writing and shall not be deemed a waiver of any subsequent breach or default. A failure or delay by a Party to exercise any right or remedy provided under this Agreement or by law shall not constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict any further exercise of that or any other right or remedy. No single or partial exercise of any right or remedy provided under this Agreement or by law shall prevent or restrict the further exercise of that or any other right or remedy.
9. Entire Agreement. This Agreement constitutes the entire agreement and understanding between the Parties relating to the matters contemplated by this Agreement and supersedes all previous agreements (if any and whether in writing or not) between the Parties in relation to such matters. The Parties acknowledge and agree that, except as otherwise expressly provided for in this Agreement, they are not entering into this Agreement on the basis of, and are not relying on and have not relied on, any statement, representation, warranty or other provision (in any case whether oral, written, expressed or implied) made, given, or agreed to by any person (whether a Party to this Agreement or not) in relation to the subject matter of this Agreement, provided that nothing in this Agreement shall exclude any Party from liability for fraud or fraudulent misrepresentation.
10. No Partnership or Agency. Nothing in this Agreement is intended to, or shall be deemed to, establish any partnership or joint venture between any of the Parties, constitute any Party the agent of another Party, or authorise any Party to make or enter into any commitments for or on behalf of any other Party. Each Party confirms it is acting on its own behalf and not for the benefit of any other person.
11. Rights of Third Parties. A person who is not a Party to this Agreement shall not be entitled to enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999.
12. Governing law and jurisdiction. The Agreement and all matters arising from it (including any dispute relating to the existence, validity or termination of this Agreement or any contractual or non-contractual obligation) shall be governed by, and construed in accordance with, the laws of England. In relation to any legal action or proceedings to enforce this Agreement or arising out of or in connection with this Agreement (including any dispute relating to the existence, validity or termination of this Agreement or any contractual or non-contractual obligation) (for the purposes of this Section 15.12, “Proceedings”) each of the Parties irrevocably submits to the exclusive jurisdiction of the courts of England and waives any objection to Proceedings in such courts on the grounds of venue or on the grounds that the Proceedings have been brought in an inappropriate forum provided that a judgment or order of any court may be enforced in any court of competent jurisdiction.

Appendix A – Use-based Restrictions

Customer shall not use the Platform and/or any Outputs:

in any manner that violates any applicable law, rule or regulation;
in any manner that violates any industry self-regulatory advertising guidelines or codes of practice (including the UK Code of Non-braodcast Advertising and Direct Promotional Marketing) and/or any other industry self-regulatory principles or codes of conduct by which Customer is bound or otherwise represents compliance;
in any manner that infringes, violates or misappropriates any rights of any third party (including Intellectual Property Rights, privacy rights or rights in respect of private information, publicity rights or any other rights to a persons’ name, image or likeness);
for any purpose that is or might reasonably be considered to be obscene, lewd, lascivious, offensive, pornographic, indecent, vulgar, prurient, excessively violent, hateful or inflammatory;
for the purpose of, or in any manner that is reckless or negligent as to the risk of, exploiting, harming or attempting to exploit or harm natural persons under the age of eighteen (18) or vulnerable natural persons (having regard to their social, economic, physical or mental characteristics or circumstances);
to generate or disseminate demonstrably false or misleading information and/or content for the purpose of, or in any manner that is reckless or negligent as to the risk of, exploiting any natural persons;
to generate Outputs that promote, encourage, or depict acts of self-harm, such as suicide, cutting, and eating disorders, and/or that are offensive to human dignity;

‍

for any military, para-military, militia or similar uses;
in any manner that is threatening, harmful, abusive or likely to incite violence or foment political unrest or insurrection;
to make any solely-automated decisions which have legal or any similarly significant effects (including that would or would purport to create or modify a binding, enforceable obligation);
for the purpose of, or in any manner that is reckless or negligent as to the risk of, prejudicially discriminating against or harming natural persons or groups based on online or offline social behaviour or known or predicted personal or personality characteristics;
for any purpose that has, or in any manner that is reckless or negligent as to the risk of having, a high risk of economic harm (including multi-level marketing, gambling, payday lending, and/or automated determinations of eligibility for credit, employment, educational institutions, or public assistance services);
for or in connection with any fraudulent or deceptive activity (including scams, coordinated inauthentic behaviour, astroturfing, such as fake grassroots support or fake review generation, disinformation, spam and pseudo-pharmaceuticals);
for or in connection with any political campaigning or lobbying, which involves generating high volumes of campaign materials, generating campaign materials personalized to or targeted at specific demographics;
in direct connection with the administration of justice, law enforcement, immigration or asylum processes;
for any use intended to, or which has the effect of, discriminating against natural persons or groups based on legally protected characteristics or categories (including any ‘special categories of personal data’ as defined in the General Data Protection Regulation 2016/679 of the European Union);
in any manner that results in the use of in any manner that results in the use of Outputs constituting ‘deep fakes’ (meaning AI-generated or manipulated images or videos that resemble existing persons, objects, places, entities or events and would falsely appear to a person to be authentic or truthful) without disclosing that the Output has been artificially generated or manipulated; and/or
for any use or purpose that would render an AI system a ‘high-risk AI system’ for the purposes of Article 6 of the EU Artificial Intelligence Act (Regulation (EU) 2024/1689).

Appendix B – Third-Party Terms

Where any of the following is used by Customer as a Connected Application or a Third-Party AI Model, Customer shall comply with the following:

Google DV360 and Google Display Network

Customer agrees to be bound by, and to comply with, the Google Ads policies as outlined at https://support.google.com/adspolicy/answer/6008942

YouTube

Customer agrees to be bound by, and to comply with, the YouTube terms of service as outlined at https://www.youtube.com/t/terms

Getty

With respect to Outputs generated using Getty Images AI Generator as a Third-Party AI Model:

Content in such Outputs that is not Content owned or used under licence by Customer that is subsequently incorporated or combined with any such initial Content (including through operation of the Pencil Pro Platform) (such initial Content, “Getty Images Content”) may be used only under sub-licence from Getty Images (including Getty Images (UK) Limited), and any such Getty Images Content is not subject to Section 3.2 of the Agreement.
Pencil hereby grants Customer a right to use the Getty Images Content as part of a relevant Output comprising such Getty Images Content consistent with the grant of rights (and any relevant restrictions) to ‘royalty-free content’ as set forth in the Getty Images Content Licence Agreement shown at: https://www.gettyimages.co.uk/eula (as may be updated from time to time) (the “Getty Standard Terms”).
Customer agrees to be bound by, and to comply with the Getty Standard Terms (including, in particular, any terms relating to use of Content generated using Getty Images AI Generator) and, furthermore, Customer shall not: (i) sell, modify, re-use, re-sell the Getty Images Content on a stand-alone basis; (ii) activate the “right-click” function in the Getty Images Content, or reverse engineer, decompile, or disassemble any software, platform, system, or technology to enable the download or use Getty Images Content without payment of fees; or (iii) obtain any ownership rights to the Getty Images Content.
Customer may only distribute Outputs comprising any Getty Images Content in their final-form only and only in digital form.
The only right granted to Getty Images Content under the Agreement is the limited sublicence granted in the immediately preceding sub-section. No other use of Getty Images Content is permitted under the Agreement.

OpenAI

With respect to any Third-Party AI Model made available by OpenAI, Customer agrees to be bound by, and to comply with, OpenAI’s Service Terms, Sharing & Publication Policy, Usage Policies, and any other applicable guidelines or policies OpenAI may publish from time to time applicable to the relevant Third-Party AI Model(s) concerned.

Google

With respect to any AI models or systems that are Third-Party AI Model(s) made available by Google, Customer agrees to be bound by, and to comply with, Google’s Generative AI Prohibited Use Policy (https://policies.google.com/terms/generative-ai/use-policy) (as may be updated from time to time), and any other applicable guidelines or policies Google may publish from time to time applicable to the relevant Third-Party AI Model(s) concerned.

With respect to the Connected Application or a Third-Party AI Model to which they apply, the Third-Party Terms and the provisions of this Appendix B shall govern and prevail in preference to any relevant provision(s) of the Agreement to the extent of any inconsistency or conflict with any provisions of the Agreement.

‍