Pencil Pro - Terms and conditions

Updated 10 June 2025

Pencil Pro: Enterprise Terms and Conditions

These Enterprise Terms and Conditions (together with any Order Forms, the “Agreement”) are entered into as of [DATE] (“Effective Date”) by and between:

(A) 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 (“Pencil”); and

(B) [CUSTOMER], a [STATE] [FORM] with its principal business address at [INSERT ADDRESS] (“Customer”).

The Agreement sets out the terms and conditions that govern Customer’s rights to access and use the Pencil Pro Platform for use in connection with the Authorised Brand (including to allow Customer create Outputs for the Authorised Brand).

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(s) in respect of which Customer is permitted under this Agreement to use the Pencil Pro Platform and the Services, which is set out in the relevant Order Form.
  2. “Authorised Users” means those of Customer’s employees or other staff who are authorised from time to time by Pencil to use the Pencil Pro 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 Pencil Pro Platform (“Access Credentials”).
  3. “Beta Feature” means any feature or functionality of the Pencil Pro 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 or the principal place of business of the Customer (as set out in pre-amble to this Agreement set out above).
  5. “BYOM Fees” means the fees set forth on the Order Form associated with any Customer Model and/or “Bring Your Own Model” use of the Pencil Pro Platform in accordance with Section 2.6.
  6. “Claim” means any claim, demand, complaint, proceeding or other action.
  7. “Connected Application” means any system or application owned or controlled by Customer, which is connected to the Pencil Pro Platform by, on behalf or at the direction of Customer (including through Customer’s linking of its account for a Connected Application with the Pencil Pro Platform using integrations made available as part of the Pencil Pro Platform). For greater clarity, a Customer’s ‘Digital Asset Management Platform’ may constitute a Connected Application.
  8. “Connected Content” means any Content (including any information or data relating to advertising performance) made available within the Pencil Pro Platform via any Connected Applications or otherwise made available via Connected Applications and uploaded to the Pencil Pro Platform (e.g., manually).
  9. “Content” means any text, images, audio, video, data or information, or any other materials.
  10. “Customer Content” means any Inputs, Outputs, Customer Models and Connected Content.
  11. “Documentation” means any manuals, instructions, user guides published by Pencil that describe the Pencil Pro Platform and its use, operation, features and functionality.
  12. “Fees” means any fees for Customer’s subscription to the Pencil Pro Platform, provision of the Services (if any) and any fees associated with one or more Customer Model(s) (where applicable), as set out in or determined pursuant to the Order Form and these Enterprise Terms and Conditions.
  13. “Generation” means a single generation of an Output using the Pencil Pro Platform.
  14. “Generation Credits” means credits to be applied against the production of a Generation by or on behalf of Customer.
  15. “Inputs” means any Content input by Customer and its Authorised Users to be processed by the Pencil Pro Platform to create Outputs (including any website properties input by Customer the Pencil Pro Platform’s ‘URL scanning’ tooling, together with any Content displayed on those properties).
  16. “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.
  17. “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).
  18. “Order Form” means (i) an order form signed by the Parties for a subscription to use the Pencil Pro Platform to generate Content for the Authorised Brand and/or associated Services, which incorporates these Enterprise Terms and Conditions; or (ii) an order form or statement of work signed by Customer and Pencil for the provision of certain Services, which incorporates these Enterprise Terms and Conditions.
  19. “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 Pencil Pro Platform based on the Inputs through Customer’s and its Authorised Users’ permitted use of the Pencil Pro Platform.
  20. “Pencil Affiliates” means any company or entity that directly or indirectly controls, is controlled by, or is under common control with, Pencil. For these purposes, “control” (and inflections thereof) means to hold, directly or indirectly, more than 50% of the respective shares, or other interests, with voting rights or the power to otherwise direct or cause the direction of the general management of a company or other entity (including through economic or contractual interest).
  21. “Pencil Pro Platform” means Pencil’s cloud-based software‑as‑a‑service ‘Pencil Pro’ platform (including, where the context permits and requires, the Platform Interface) as described in the Documentation, which is owned, operated and/or licensed by Pencil (including, where applicable, any Platform Configurations (as defined below)).
  22. “Pencil Technology” means collectively (i) the Pencil Pro 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 Pencil Pro 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 Pencil Pro Platform; (iv) the Documentation as updated and amended from time to time; and (v) any and all Intellectual Property Rights in or to each of (i)-(iv).
  23. “Platform Interface” means the standard web-based interface required for Customer to access and use the Pencil Pro Platform for the ordinary operation thereof under this Agreement, which is as notified to Customer from time to time (including, where relevant, https://pro.trypencil.com or other https://trypencil.com domain as may be relevant in the circumstances).
  24. “Services” means those services which Pencil agrees to provide under this Agreement pursuant to the Order Form, which may involve one or more of: (i) use of the Pencil Pro Platform by Pencil’s or certain Pencil Affiliates’ employees or other staff for the benefit of Customer on a ‘managed service’ basis (“Managed Services”); (ii) certain configuration or implementation services with respect to the Pencil Pro Platform, or certain development of requested modifications or additions to the Pencil Pro Platform (“Platform Configuration Services”); and (iii) certain other creative, design, marketing, or other professional services relating to the Pencil Pro Platform and/or any Outputs, as further set forth in an Order Form (“Professional Services”).
  25. “Term” means the initial term as set out in the Order Form (“Initial Term”), together with the renewal term(s) (if any) as set out in the Order Form (each, a “Renewal Term”).
  26. “Workspace” means a ‘Workspace’ made available via the Pencil Pro Platform that is allocated to the Authorised Brand for a given market, geography or similar, and which is identified in the Order Form.
2. To the extent not defined in this Section 1 or elsewhere in these Enterprise Terms and Conditions, the capitalised terms set out as headings in the Order Form shall have the meaning given to them in that Order Form.
3. Where applicable, to the extent of any inconsistency or conflict between any provision(s) of these Enterprise Terms and Conditions and any provision(s) of the Order Form, the relevant provision(s) of the Order Form shall govern and prevail.
4. 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 AND SERVICES
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 16.5) and non-sublicensable right during the Term: (a) for Customer’s Authorised Users (up to the limits on the number of such Authorised Users set out in the Order Form) to use the ordinary features and functionalities of the Pencil Pro Platform as part of Customer’s internal business operations via the Workspace(s) in connection with the Authorised Brand; and (b) where agreed pursuant to an Order Form, for Customer to apply its trade marks, trade names, service marks, trade dress, logos and ‘look and feel’ to the Pencil Pro Platform using the ordinary features and functionalities made available by Pencil for that purpose (“Marks”).
2. No Training. Pencil will not use and will not permit any providers of Third-Party AI Models (as defined below) to use any Customer Content, to develop or improve the Pencil Technology and/or any Third-Party AI Models (including any models, algorithms, and systems that are part of or integrated with the Pencil Pro Platform), provided that, such Customer Content will be used to train and improve any dedicated model associated with any Workspace(s) and which is made accessible via the Pencil Pro Platform (such models, each a “Dedicated Model”). The Dedicated Models shall not be made available by Pencil for use by any other Pencil customers, and no Dedicated Model shall be made available to or used by Customer or its Authorised Users other than via the relevant Workspace to which that model is dedicated.
3. Availability; Response Times.
  1. Availability. Pencil will use commercially reasonable efforts to maintain the ongoing operation and availability of the Pencil Pro Platform at or above 99.99% across any given ninety (90) day period (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 (as defined below)); and/or (c) resulting from any breach, non-performance or any other default by Customer under this Agreement). Availability of the Pencil Pro Platform shall be as determined by Pencil and as shown at https://status.trypencil.com/ (or any successor webpage) from time to time. Customer may subscribe to receive updates whenever Pencil creates, updates or resolves an incident relating to the availability of the Pencil Pro Platform using the functionality available at that webpage.
  2. Response and Resolution Times. Pencil will use commercially reasonable efforts to respond to and resolve any reproducible issue set out below in the applicable time period associated with its Priority Level (measured from the time that Pencil receives notification from Customer of the issue), provided that classification of any issue among Priority Levels shall be as determined by Pencil in its reasonable discretion having regard to the Priority Level definitions specified below. Pencil will use commercially reasonable efforts triage a reported issue and assign a Priority Level within eight (8) hours following Pencil’s written notice of a reproducible issue. To report an issue, Customer shall send an email to support@trypencil.com or utilize the in-platform help chat, with sufficient information for Pencil to verify the issue. If resolution cannot be reached within the target timeframe, Pencil will send Customer a new estimated resolution time.

Priority Level

Time

Description

24 hours

Pencil Pro Platform is down and not accessible on the webpage. For the avoidance of doubt, this does not cover a Generation failure.

48 hours

Generation failures in a multiple Workspaces resulting in associated business blockers.

Export not received or not correct.

7 days

One-off Generation failure or one-off failure in editor/chat tool (including scenarios where Generation production works on retry by the Authorised User).

15 days

Minor UX and other minor bugs which do not block any activity or operation of the Pencil Pro Platform (including production of Generations) and/or issues for which there is a temporary workaround.

‍

Service Credits. In the event a P0 or P1 Priority Level issue is not resolved within the applicable resolution timeframe, Customer is entitled to receive Generation Credits (i) for a P0 Priority Level issue, in the amount of 0.1% of the Generation Credits purchased by Customer for the Initial Term as set forth in the applicable Order Form and (ii) for a P1 Priority Level Issue, in the amount of 0.05% of the Generation Credits purchased by Customer for the Initial Term as set forth in the applicable Order Form. In order to receive a Generation Credit under this Section, Customer (A) must have first reported the applicable issue to Pencil in accordance with Section 2.3(b) and (B) must provide Pencil with written notice of the Generation Credit request within thirty (30) days following expiration of the applicable resolution timeframe.

Authorised Users.
1. General. 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 Pencil Pro 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.
2. Pencil Affiliate Usage. Where Customer has separately contracted with a Pencil Affiliate outside the terms and conditions of this Agreement (e.g., not as part of the Services) for the provision of certain ‘in-house agency’, creative, design or other marketing services by that Pencil Affiliate, and those services include the use of the Pencil Pro Platform on behalf of Customer to perform those services, any employees or staff of that Pencil Affiliate shall be Customer’s Authorised Users with respect such use and may use the Pencil Pro Platform on behalf of Customer to support performance those services. Unless and as expressly agreed by Pencil’s entry into and execution of such agreement, Pencil shall not be a party to, nor have any obligations under any contract between Customer and a Pencil Affiliate with respect to such services.
Additional Services. In addition to making available the Pencil Pro Platform, Pencil and/or a Pencil Affiliate shall also provide the Services to Customer if and as agreed in an Order Form. Pencil and any relevant Pencil Affiliate shall provide any such Services in accordance with reasonable care and skill consistent with good industry standards and practices.
1. Managed Services. Where it is agreed in the Order Form that Pencil will provide Managed Services to Customer, unless otherwise agreed in that Order Form, the Managed Services shall consist of Pencil’s or certain of Pencil Affiliates’ employees or other staff using the Pencil Pro Platform to demonstrate its operation, features and functionalities (including Generations of Outputs) or otherwise on a ‘managed service’ basis (which may include production and delivery of certain performance data and/or other data showing the potential impact of the Pencil Pro Platform with respect to time and cost to Customer (any such data and materials embodying that data are Pencil’s Confidential Information)).
2. Platform Configuration Services. Where it is agreed in the Order Form that Pencil will provide Platform Configuration Services to Customer, unless otherwise agreed in that Order Form: (i) the Parties shall collaborate to agree a plan outlining the design, specifications and associated development, integration and testing timelines for the production of any agreed upon Platform Configuration(s) (the “Platform Configurations Plan”); (ii) once the Platform Configuration Plan is agreed and finalised, Pencil shall use commercially reasonable efforts to develop the relevant Platform Configuration(s) in accordance with the Platform Configurations Plan and to make such Platform Configuration(s) available to Customer for testing by Authorised Users approved by Pencil within agreed upon Workspace(s) as set out in the Platform Configurations Plan; (iii) Customer shall then have fourteen (14) days from Pencil’s notification of the availability of such Platform Configurations to test those Platform Configurations in any agreed-upon Workspace(s) and to provide any feedback to Pencil from such testing; and (iv) following completion of such testing, Pencil will use commercially reasonable efforts to address and incorporate Customer’s feedback coming out of such testing (if any) to produce the final Platform Configurations in accordance with the Platform Configurations Plan, following which Pencil shall make the final Platform Configurations available to Customer for use by its Authorised Users within any agreed-upon Workspaces. Unless otherwise agreed, Fees for the Platform Configuration Services shall be due and payable in advance on the Effective Date.
3. Professional Services. From time to time, Customer and Pencil may enter into an Order Form specifying certain Professional Services to be performed by Pencil’s or certain of Pencil Affiliates’ employees or other staff hereunder. The applicable Order Form shall set forth the details of the Professional Services to be performed, including the Fees associated therewith. In the event of any conflict between any provision in these Enterprise Terms and Conditions and the Order Form for Professional Services, the applicable provision in these Enterprise Terms and Conditions shall control, unless the applicable provision in the Order Form or statement of work expressly supersedes the applicable provision in these Enterprise Terms and Conditions.
Bring Your Own Model. If the Order Form indicates that Customer is authorised to integrate certain artificial intelligence models or systems owned or licensed by Customer (each, a “Customer Model”) with the Pencil Pro Platform for use within the Pencil Pro Platform by its Authorised Users, this Section 2.6 shall apply. Customer shall promptly provide Pencil with all information (including any developer documentation, API keys and/or any other credentials) and cooperation reasonably required or requested by Pencil in order to integrate the Customer Model and make it available within Pencil Pro Platform for use by Customer and its Authorised Users. Customer shall pay Pencil the BYOM Fees, which shall consist of: (a) a minimum guaranteed subscription Fee; (b) the Fees for any Platform Configuration Services required to integrate the Customer Model within the Pencil Pro Platform; and (c) the specific Fees payable per Generation created using the Customer Model. Customer acknowledges and agrees that, as between the Parties, Customer not Pencil, is solely responsible and liable for each Customer Model and all Outputs generated by a Customer Model (the “Customer Model Outputs”) and that Pencil expressly disclaims any and all responsibility and liability for the Customer Model Outputs and the Customer Model (including with respect to any unavailability of any Customer Model due to act or omission of, or circumstance affecting, any third-party provider of a Customer Model). Without limiting the foregoing, Pencil’s obligations under Section 10.1 and representations and warranties under Section 6.1 shall not apply, in whole or in part, to any Customer Model nor Customer Model Outputs. Customer represents and warrants on an ongoing basis that Customer has obtained all rights, consents and authorisations necessary for the integration of the Customer Model by Pencil and the ongoing use of the Customer Model within the Pencil Pro Platform as described herein.

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) unless and to the limited extent expressly agreed otherwise under the Order Form, any configurations, software, technology or similar (including in response to any feature requests for the Pencil Pro Platform) in relation to the Pencil Pro Platform that are produced, conceived, created, developed as part of or in connection with the Platform Configuration Services (“Platform Configurations”, which excludes, for the avoidance of doubt, Outputs which may be generated by Pencil as part of any Managed Services or Professional Services). Customer will not acquire any right, title or interest in or to the Pencil Technology, nor any Platform Configurations, other than the limited right to use the Pencil Pro Platform (including any such Platform Configurations) set out in Section 2.1, and Pencil reserves all rights therein and thereto not expressly granted in this Agreement.
2. 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 Customer Content and its Marks.
3. 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 Customer 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 its Marks, and under any other relevant Intellectual Property Rights owned or licensed by Customer, solely as necessary to provide, operate and make available the Pencil Pro Platform to Customer and/or to provide the Services.
4. Professional Services Deliverables. Any rights in or to any deliverables or work product generated as part of the Professional Services (which shall exclude always any Platform Configurations) shall be as set out in express terms and conditions of the Order Form under which such Professional Services are to be performed. Absent any such express agreement to the contrary, all right, title and interest, including all Intellectual Property Rights, in and to such deliverables or work product shall be owned and retained by Pencil.
FEES
1. Payments. Customer shall pay the Fees in advance in accordance with this Section 4 and any relevant terms of the Order Form.
2. Invoicing and Payment. Pencil shall issue Customer with invoices in respect of any Fees that come due and payable and Customer shall pay the amounts shown in all such invoices in full into the Pencil Bank Account shown in the Order Form (or such other account as directed by Pencil) within thirty (30) days of the invoice date, unless otherwise agreed in the Order Form.
3. Fees. All Fees: (a) shall be payable in the currency agreed in the Order Form; (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).
4. Generations 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 Order Form.
  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 Order Form 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.
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 maximum rate permitted by applicable law, 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 Pencil Pro Platform and/or any and all other parts of the Services upon thirty (30) 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
1. 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 that violates applicable law; (b) provide or otherwise make the Pencil Technology available to any third parties other than Authorised Users; (c) use the Pencil Technology and/or any Outputs to create, market or distribute any product or service that is similar to or competitive with any 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) engage in any competitive analysis or benchmarking of the Pencil Technology; (i) remove, alter or obscure any trade mark notice, copyright notice or any other proprietary notice from the Pencil Technology, unless and to the extent permitted in accordance with Section 2.1(b); (j) circumvent, disable, or interfere with security-related, rate-limiting, 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; (k) reverse engineer, decompile, unbundle or disassemble the whole or any part of the Pencil Technology, unless and to the extent permitted by unavoidable laws of Customer’s jurisdiction for limited interoperability purposes; (l) impose an unreasonable or disproportionately large load or strain on the Pencil Technology or make a disproportionate number of queries to the Pencil Pro Platform and/or any Third-Party AI Models in a manner that would materially exceed the then-available number of Generation Credits and have a material adverse effect on the operation of the Pencil Pro Platform; (m) automatically publish or make generally available any Outputs without human intervention, review and approval; (n) use the Pencil Technology and/or any Outputs in any manner or for any purpose that contradicts the restrictions set forth in the Appendix A (Use-based Restrictions); or (o) take any action designed or intended to do any of the foregoing.
2. Limits and Suspension. Without limitation to any other rights and remedies available to it in the circumstances, provided that they do not frustrate Customer’s ability to produce Generations up to the Customer’s then-current number of available Generation Credits, Pencil may impose permanent or temporary reasonable limits on use of the Pencil Pro Platform or suspend the provision of any access to the Pencil Pro Platform and/or any and all other parts of the Services for any breach of the foregoing restrictions for any breach of the foregoing restrictions.
3. Applicable Only to Direct Use. The provisions of this Section 5 relating to restrictions on the use of Pencil Technology shall apply only with respect to the Customer’s and its Authorised Users’ direct use of the Pencil Pro Platform, and shall not apply to use by Pencil’s or Pencil Affiliate’s, as applicable, employees, staff or other representatives as part of the Services.
WARRANTIES AND DISCLAIMERS
1. Pencil Warranties. Pencil 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 Pencil Pro 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 Pencil Pro 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 Pencil Pro Platform, Documentation, Services 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 Pencil Pro Platform, Documentation, Services, the Outputs, Third-Party AI Models and/or Connected Applications, 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: (a) any Outputs produced without human intervention may not constitute valid, subsisting or enforceable Intellectual Property Rights and/or be capable of registration in certain jurisdictions (e.g., they may not be considered to be ‘original’ or ‘novel’ for the purposes of relevant law pertaining to the validity, subsistence or enforceability of certain Intellectual Property Rights); and (b) Pencil shall not be, unless and to the extent expressly agreed otherwise as part of any Managed Services or Professional Services, responsible for reviewing or attempting to verify the fitness for a given purpose, accuracy or currency of any Outputs. Customer shall be solely responsible for Customer’s use of the Pencil Pro Platform, the Services and any Output.
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 the obligations under this Agreement; (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, nor 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
1. Customer shall: (a) implement and maintain effective security policies and procedures to prevent unauthorised disclosure of Access Credentials and unauthorised access to the Pencil Pro Platform; (b) secure any systems and devices Customer and its Authorised Users use to access the Pencil Pro Platform; (c) ensure that all Authorised Users of the Pencil Pro Platform only access the Pencil Pro 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 Pencil Pro Platform; (e) ensure that it maintains connectivity to the extent necessary to prevent network performance degradation; (f) where applicable, ensure that any Customer Models are made available to Pencil as necessary to enable their availability and operation as part of the Pencil Pro Platform; and (g) maintain all necessary back-up copies of all Customer 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 Pencil Pro 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 Pencil Pro Platform will vary depending upon the particular Third-Party AI Models enabled or disabled by Customer through its configuration of the Pencil Pro Platform and/or particular Workspaces. Customer acknowledges that by using the Pencil Pro Platform, it is instructing Pencil to share relevant Customer 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 Pencil Pro Platform that rely upon such Third-Party AI Models.
2. Connected Applications. Certain elements of the Pencil Pro Platform may permit or enable Customer and/or its Authorised Users to link or otherwise connect or integrate Customer’s Connected Applications to the Pencil Pro Platform (including via pre-built integrations or Platform Configurations). By connecting any Connected Application to the Pencil Pro Platform, Customer (a) represents and warrants that it is entitled to link or otherwise connect the Connected Application to the Pencil Pro Platform; and (b) instructs Pencil to access and/or share any Customer 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.
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.

INDEMNITIES
1. Pencil Indemnities. Subject to Sections 10.2 and 10.3, Pencil shall indemnify Customer from and against Losses incurred by Customer as a result of damages and costs (including reasonable legal and professional fees and disbursements) awarded in final judgment or agreed in final settlement of any Claim brought by a third party against Customer that: (a) any Output (excluding any Customer Model Output) infringes, misappropriates or violates the Intellectual Property Rights of that third party (this indemnity, the “Output Indemnity”); and (b) Customer’s use of the Pencil Pro Platform (excluding always any Outputs, Customer Models or any use of the foregoing) within the scope of the rights granted under this Agreement, infringes, misappropriates or violates the Intellectual Property Rights of that third party (this indemnity, the “Platform Indemnity”). The obligations set forth in this Section 10.1 as they may apply in the circumstances shall constitute Pencil’s entire liability and Customer’s sole remedy (i) for any actual or alleged infringement, misappropriation or violation of any Intellectual Property Rights of a third party arising out of or in connection with this Agreement and (ii) with respect to Customer’s and any third party’s use of the Outputs.
2. General Exclusions. Pencil shall have no liability whatsoever to Customer under the Output Indemnity and/or the Platform Indemnity in respect of any Indemnified Claims arising directly or indirectly as a result of: (a) any breach, non-performance or any other default by Customer under this Agreement, or Customer’s actions that contribute to, induce or encourage the relevant infringement, misappropriation or violation; (b) any use of the Pencil Pro Platform in combination with other products, hardware, equipment, software, data or other Content not provided to Customer by Pencil or a Pencil Affiliate under this Agreement (including as part of any Managed Services or Professional Services); (c) any modification of the Pencil Pro Platform or any Output by any person other than Pencil; (d) the Inputs (save where input by Pencil or a Pencil Affiliate under this Agreement as part of the Managed Services or Professional Services and not based on or constituting Content provided by or on behalf of Customer), the Connected Content and/or the Connected Applications; and/or (e) any continued use of the Pencil Pro Platform and/or any Output after: (i) Customer is told to cease such use; and/or (ii) Customer knew or ought reasonably to have known that the Pencil Pro Platform or Output (as applicable) infringed, misappropriated or violated of any third-party right (including Intellectual Property Rights), including in the event that the Pencil Pro Platform and/or any Output was known or suspected to be subject to any Claims alleging any such infringement, misappropriation or violation; and/or (f) any allegation of infringement, misappropriation or violation of a trade mark-related right resulting from Customer’s use of an Output in its trade or commerce.
3. Output Indemnity Specific Exclusions. Pencil shall have no liability whatsoever to Customer under the Output Indemnity in respect of any Indemnified Claims arising directly or indirectly as a result of: (a) any modification to any Output by any person other than by Pencil as part of any Managed Services or Professional Services; (b) use of any Output by any person in connection with any Content (including Customer’s Inputs) that, alone or in combination, infringe, misappropriate or violate any third party’s Intellectual Property Rights; (c) Customer’s or its Authorised Users’ intentional, negligent or reckless generation of an Output that infringes, misappropriates or violates any third party’s Intellectual Property Rights (including where the Input would itself have given rise to the Indemnified Claim); and (d) the context in which any Output is used.
4. Customer Model Indemnity. Where applicable, Customer shall indemnify Pencil from and against Losses incurred by Pencil or any Pencil Affiliates as a result of damages and costs (including reasonable legal and professional fees and disbursements) awarded in final judgment or agreed in final settlement of any Claim brought by a third party against Pencil or any Pencil Affiliates that any Customer Model (including Pencil’s integration and deployment thereof as part of the Pencil Pro Platform) or any Customer Model Output infringes, misappropriates or violates the rights (including Intellectual Property Rights) of that third party.
5. Control of Claims. A Party seeking indemnification under this Section 10 shall: (a) notify the other Party (the “Indemnifying Party”) in full, accurate and complete detail in writing promptly (and in any event within ten (10) Business Days) after it becomes aware of any event or any Claim which may give rise to a claim for indemnification (an “Indemnified Claim”); (b) allow the Indemnifying Party sole authority to control the defence and settlement of any Indemnified Claim; (c) provide the Indemnifying Party with all reasonable cooperation in the defence of such Indemnified Claim; and (d) not settle or compromise any Indemnified Claim or make any admission of liability without the express prior written consent of the Indemnifying Party. In event of any Indemnified Claim, at its option, the Indemnifying Party may elect to: (x) modify or replace all or any relevant materials or technology so that it becomes non-infringing; (y) obtain any required licence(s) to use the applicable third-party Intellectual Property Rights; or (z) terminate this Agreement on written notice; provided that, where Pencil is the so terminating Indemnifying Party, Pencil refund to Customer any pre-paid Fees reduced pro-rata to reflect the remainder of the Initial Term or then-current Renewal Term (as applicable).
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) in respect of Pencil, its liability under the Platform Indemnity; (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 (save to the limited extent such liability arises under the Output Indemnity); (ii) any loss or corruption of Content; and/or (iii) any breach, non-performance or any other default by Customer under this Agreement.
3. Liability Caps. Subject to Section 11.1 and 11.2, Pencil’s total aggregate liability to Customer: (a) under the Output Indemnity shall under no circumstances exceed the lesser of: (i) Five Million U.S. Dollars ($5,000,000); and (ii) five (5) times the Fees paid by Customer under this Agreement for Customer’s access to the Workspace used to generate the Output that it is the subject of the Claim covered by the Output Indemnity; and (b) in respect of any and all other 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 for Customer’s access to the Pencil Pro Platform (excluding, for the avoidance of doubt and without limitation, any fees paid for Services) 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 – provided that, the existence of more than one Indemnified Claim, 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 Party gives written notice to the other Party not later than sixty (60) days 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. Both a failure by Customer to pay any Fees when due and/or any breach by Customer of Section 5 shall each 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) Pencil shall delete and destroy any Dedicated Model(s) and shall certify in writing (on request from Customer) that it has complied with its obligations under this Section 13.1(c); (d) cease to collect Connected Content for Customer and disable any connections to Connected Applications; and (e) subject to Section 13.1(c), 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 AI Model 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 AI Model to whom 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.

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 warranty, indemnities or service level or availability commitments whatsoever in relation to the Beta Features (e.g., Sections 2.3, 6.1 (insofar as the limited warranty therein would otherwise be given by Pencil) and 10.1 do 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 Feature(s) at any time with or without notice, at which point Customer and its Authorised Users must stop using the Beta Feature. Customer shall not disclose to any third party or publish (including via the internet or social media) details of any Beta Feature (including details of its any evaluation or testing (including any Outputs, results, screenshots, questions, or workflows) of the Beta Feature) without Pencil’s prior written consent.

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 and/or Services (“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. Neither Party may assign or transfer all or any of its rights or obligations under this Agreement, without the prior written consent of the other Party; provided that, a Party may, without such prior written consent but with not less than five (5) Business Days’ prior notice to the other Party, assign or transfer this Agreement in connection with undergoing a change of control (with “control” for these purposes meaning the power of a person to secure that the affairs of such Party 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 such Party or any other entity; or (b) as a result of any powers conferred by the articles of association or any other document regulating such Party or any other entity).
6. Notices. Any notice required to be given under this Agreement will be sent by email to the Notice Address set out in the Order Form. 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 details given on the Order Form by giving written notice to the other Party.
7. Variation. Unless and only to the extent expressly permitted in this Agreement, no variation of this Agreement shall be effective unless it is in writing and signed by the Parties (or their authorised representatives).
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 16.12, “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.

[Signature Page Follows]

This Agreement are hereby executed by the parties and entered into by them with effect on and from the Effective Date:

EXECUTED by PENCIL AI LIMITED

_______________________________

(Signature)

Acting by:

_______________________________

(Print name of signatory)

Title:

_______________________________

(Title of authorised signatory)

EXECUTED by [CUSTOMER]

_______________________________

(Signature)

Acting by:

_______________________________

(Print name of signatory)

Title:

_______________________________

(Title of authorised signatory)

Appendix A – Use-based Restrictions

Customer shall not use the Pencil Technology, Services and/or any Outputs:

in any manner that violates any industry self-regulatory advertising guidelines or codes of practice (including the UK Code of Non-broadcast Advertising and Direct Promotional Marketing) and/or any other industry self-regulatory principles or codes of conduct by 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 personalised to or targeted at specific demographics;
in direct connection with the administration of justice, law enforcement, immigration or asylum processes; and/or
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 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.

‍