NORTH CAROLINA

WAKE COUNTY

IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
File No. 15-CvS-9995

Intersal, Inc.,
Plaintiff,
v.

MOTION FOR LEAVE TO FILE FIRST
AMENDED COMPLAINT

Susan Kluttz, Secretary, North Carolina
Department of Cultural Resources
(NCDCR), North Carolina Department of
Cultural Resources (NCDCR), and State of
North Carolina,
Defendants.

Plaintiff, by and through the undersigned counsel, moves the Court, pursuant to Rule 15 of
the North Carolina Rules of Civil Procedure, for leave to file its First Amended Complaint. In
support hereof, Plaintiff shows the Court the following:
1.

Plaintiff filed this action on July 27, 2015.

2.

Defendants were properly served with the Summons and Complaint.

3.

Defendants transferred this action to Business Court on September 4, 2015.

4.

Subsequent to the filing of this action, the North Carolina General Assembly

enacted, Session Law 2015-218 on August 11, 2015, the same being signed by the Governor on
August 18, 2015.
5.

SECTION 4.(a) of Session Law 2015-218 attempts to undermine Plaintiff’s claims

for relief, creating serious constitutional issues.
6.

Defendants filed their Answer on October 7, 2015, raising allegedly public policy

issues in part precipitated by the enactment of SECTION 4.(a) of Session Law 2015-218.

7.

The Joint Case Management Report was submitted to the Court on October 26,

8.

Rule 15 provides that “leave [to amend a complaint] shall be freely given when

2015.

justice so requires.”
9.

Plaintiff should be granted leave to amend as there is no apparent reason to deny

leave to amend and no prejudice that can be demonstrated that would result from grant of such
leave. Madry v. Madry, 106 N.C.App. 34, 415 S.E.2d 74 (1992).
10.

It is well established that denying leave to amend is limited to the following

justifications: (1) undue delay; (2) bad faith or dilatory tactics; (3) undue prejudice; (4) futility of
amendment; and (5) repeated failure to cure defects by previous amendments. Isenhour v.
Universal Underwriters Ins. Co., 345 N.C. 151, 478 S.E.2d 197 (1996) (motion for leave to amend
denied after more than five years from filing of the original complaint); Smith v. McRary, 306 N.C.
664, 295 S.E.2d 444 (1982) (no error in denying motion to amend when facts sought to be added
were irrelevant to the cause and denial created no prejudice); United Leasing Corp. v. Miller, 60
N.C. App. 40, 298 S.E. 2d 409 (1982) (denying plaintiff’s right to amend to add a new claim for
relief on the date of defendant’s motion to dismiss after completed discovery when trial was only
one month away).
11.

None of the aforestated bases for denial exists.

12.

The amendment is contemplated in the Joint Case Management Report

13.

Amendment is necessary to add a necessary party Defendant and add additional

necessary claims for relief.
14.

The amendment will have no effect on the timely disposition of this matter.

15.

There is no prejudice to the Defendants if Plaintiff’s Motion is granted.

2

16.

Attached hereto as Exhibit A, is the proposed First Amended Complaint for

Plaintiff.
WHEREFORE, the Plaintiff respectfully requests that the Court grant the Plaintiff Leave
to file its First Amended Complaint as set forth on Exhibit A, pursuant to Rule 15 of the North
Carolina Rules of Civil Procedure.
This the 2nd day of November, 2015.

/s/______________________________
David H. Harris, Jr.
State Bar No. 9841
Linck Harris Law Group, PLLC
2530 Meridian Parkway, Suite 300
Durham, North Carolina 27713
919-806-4220
866-274-0756 (Fax)
dharris@linckharris.com
Counsel for Plaintiff

3

EXHIBIT 1

NORTH CAROLINA

IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
File No. 15-CvS-9995

WAKE COUNTY
Intersal, Inc.,
Plaintiff,
v.

FIRST AMENDED COMPLAINT AND
MOTION FOR RULE 65 RELIEF

Susan Kluttz, Secretary, North Carolina
Department of Cultural Resources, North
Carolina Department of Cultural Resources,
State of North Carolina, and Friends of
Queen Anne’s Revenge,

JURY TRIAL DEMANDED

Defendants.

AMEND

INTRODUCTION
1.

This is an action for breach of contract, infringement of intellectual property rights

and civil conspiracy, as well as constitutional claims precipitated by Legislative action taken and
arguments already raised by Defendants. Intersal is seeking declaratory and injunctive relief and
damages. All Exhibits to this Complaint are incorporated herein by reference as if fully set out.
JURISDICTION AND VENUE
2.

The Court has jurisdiction over the subject matter of this action pursuant to, inter

alia, N.C. Gen. Stat. §§ 7A-240, 7A-243, 7A-245 and 7A-248.
3.

The Court has jurisdiction over the persons of Defendants pursuant to one or more

provisions of N.C. Gen. Stat. § 1-75.4.
4.

Venue lies in the Court pursuant to N.C. Gen. Stat. §§ 1-82 and 7A-45.4(b).

PARTIES
PLAINTIFF
5.

Plaintiff Intersal, Inc. (“Intersal”) is a corporation duly incorporated in and validly

existing pursuant to the laws of the State of Florida and is duly registered in North Carolina.
STATE DEFENDANTS
6.

Defendant Susan Kluttz is Secretary of the North Carolina Department of Natural

and Cultural Resources, and is being sued in her official capacity.
7.

Defendant North Carolina Department of Natural and Cultural Resources, formerly

North Carolina Department of Cultural Resources, 1 hereinafter referred to as “DNCR” or “DCR”
or “Department,” is an Executive Agency of the State of North Carolina pursuant to Chapter 143B,
Article 1, of the North Carolina General Statutes.
8.

Defendant State of North Carolina (“State”) is a State of the United States of

America and, as such, is subject to the Constitution of the United States and the Constitution of
North Carolina. References to the “State,” as the context requires, include actions by the North
Carolina General Assembly and the Governor.
9.

Susan Kluttz, DNCR and the State of North Carolina, shall hereinafter be

collectively referred to as the “State Defendants.”
NON-STATE DEFENDANT
10.

Defendant Friends of Queen Anne’s Revenge (“FoQAR”) is a nonprofit

corporation duly organized and existing pursuant to the laws of the State of North Carolina.

1

Pursuant Session Law 2015-241, SECTION 14.30.(a), ratified and approved on September 18, 2015, the North
Carolina Department of Cultural Resources was renamed the North Carolina Department of Natural and Cultural
Resources.

2

11.

All references to each Defendant or Defendants includes their respective officials,

officers, employees, agents, attorneys and contractors pursuant to the doctrine of Respondeat
Superior.
NON-PARTIES
12.

Nautilus Productions, LLC (“Nautilus”) is a limited liability company duly

organized and existing pursuant to the laws of the State of North Carolina. Rick Allen is the Owner
of Nautilus.
FACTUAL ALLEGATIONS
13.

Intersal is a successful and well-respected marine research and recovery

corporation.
14.

On November 21, 1996, operating under a valid search permit (96BUI585) issued

to it by DNCR, Intersal discovered what is believed to be Pirate Blackbeard’s Flagship, Queen
Anne’s Revenge (“QAR”), near Beaufort Inlet, North Carolina, just over a mile off Bogue Banks.
The identity of the site was confirmed by the number and size of the cannon and anchors exposed
on the sand bottom, and by examination and dating of the various artifacts recovered.
15.

Intersal’s discovery of QAR was based on historical research provided by Intersal’s

then-president, Philip Masters, as well as trade secret survey data and other information gathered
and developed by Intersal.
16.

Rather than immediately securing its rightful claim to three-quarters of any QAR

treasure found as specified in Intersal’s QAR search permit, or file an In Rem action in federal
court in Admiralty, Intersal, being more interested in exclusive possession QAR Project 2 media
and replica rights and continued renewal of the El Salvador search permit (DCR BUI584), Intersal

2

The term "Project" or “QAR Project” or “project” refers all survey, documentation, recovery, preservation,
conservation, interpretation and exhibition activities related to any portion of the shipwreck of QAR or its artifacts.

3

negotiated with the State Defendants, and, on September 1, 1998, twenty (20) months after the
initial discovery of QAR, executed an Agreement with the State Defendants (hereinafter referred
to as the “1998 Agreement”). Exhibit 1, pp. 11-23.
17.

The 1998 Agreement, inter alia, granted Intersal the commercial rights to:
A.

Partner in all aspects of the QAR Project, including oversight and exhibition

activities;
B.

Produce high quality exact or miniature replicas of any Blackbeard artifacts

of Intersal’s choosing (each of these replicas must be numbered as part of a limited edition);
and
C.

Exclusive right to all commercial narrative of the Project, including all

operational and exhibition activities; and right to produce, co-produce or commission a
documentary film (or series of films) detailing the story of the research, search for,
discovery, and salvage of QAR.
18.

Additionally, pursuant to the 1998 Agreement, Intersal agreed to forego entitlement

to its share of any coins and precious metals recovered from the QAR site so that all QAR artifacts
remain as one intact collection, and to permit DNCR to determine ultimate disposition of the
artifacts.
19.

Also, in the 1998 Agreement, DNCR stated its belief that Intersal’s efforts

connected to QAR and El Salvador “are of benefit to the historical heritage of the State”, and
recognized Intersal’s “efforts and participation in the QAR Project as sufficient to satisfy any
performance requirements associated with annual renewal” of Intersal’s El Salvador search permit
(DCR BUI584), and “…for the life of this agreement, renewal of said permits cannot be denied
without just cause.” 1998 Agreement, ¶ 33.

4

20.

Further, the 1998 Agreement provided in pertinent part that:

Intersal shall have the exclusive right to make and market all commercial
narrative (written, film, CD Rom, and/or video) accounts of Project related
activities undertaken by the Parties….All Parties agree to cooperate in the making
of a non commercial educational video and/or film documentary, or series of such
documentaries, as long as there is no broadcast originating outside of North
Carolina, and there is no distribution or dissemination for sale of the said
educational documentary without Intersal’s written permission…. Intersal shall
have the exclusive rights to make (or have made) molds or otherwise reproduce (or
have reproduced) any QAR artifacts of its choosing for the purpose of marketing
exact or miniature replicas.
21.

In 2004, the QAR became a federally protected site when it was listed on the

National Register of Historic Places, Federal Site Number 31CR314.
22.

The 1998 Agreement was renewed pursuant to Paragraph 36 of the 1998

Agreement, exercised in writing to DNCR by QAR Project 1998 Agreement partners, via letters
dated 10/28/12 and 12/4/12, respectively, and was amended at least once (Exhibit 1, pp. 24-25).
23.

For more than a decade, Nautilus and Intersal have maintained a contractual

relationship in which Nautilus acts as Intersal’s QAR Video Designee, for both the 1998
Agreement and the QAR Settlement Agreement. Nautilus performs this service on a volunteer
basis, and receives no remuneration from Intersal. Nautilus Productions owns all the digital media
and the copyright to the footage it shoots as Intersal’s QAR Video Designee. Intersal receives 25%
of gross proceeds from Nautilus licensing of QAR footage gathered while serving as Intersal’s
QAR Video Designee. By definition, Nautilus is an independent contractor, not a subsidiary or
joint partner with Intersal in the QAR Project.
24.

DNCR violated the 1998 Agreement in a number of respects, including, without

limitation:
A.

Failure to recognize the validly executed 1998 Agreement contract renewal

option, 1998 Agreement ¶ 36;
5

B.

Violation of 1998 Agreement conflict of interest provisions, by DNCR

employees with specific responsibility for oversight of QAR Project and Intersal’s El
Salvador search permit (DCR BUI584), by serving on the FoQAR board of directors,
including the FoQAR Treasurer, whose spouse received ten thousand dollars ($10,000)
from FoQAR as part of a contract with an independent media company, which was
executed by the FoQAR board (1998 Agreement ¶ 23);
C.

Undertaking a pattern of obstruction, delay, and failure to follow established

procedure, by the same DNCR employees with specific oversight responsibility referenced
in subparagraph B above, concerning permit renewal process for Intersal’s El Salvador
search permit (DCR BUI584), which renewal was referenced in and affected by provisions
of the 1998 Agreement, ¶ 33; and
D.

Violation of Intersal’s QAR 1998 Agreement exclusive media rights, via

FoQAR contract with an independent media company as referenced in subparagraph B
above, representing a clear tortious interference of contractual relations by FoQAR, and
directly conflicting with the 1998 Agreement exclusive media rights and/or provisions for
dissemination of educational documentaries, 1998 Agreement ¶¶ 16 and 17, respectively.
25.

On July 26, 2013, Intersal filed Petition for a Contested Case, with the North

Carolina Office of Administrative Hearings (“OAH”), Intersal v. N.C. Dep’t of Cultural
Resources, 13DCR15732, seeking a remedy to the State Defendants’ violations of the 1998
Agreement and violations of Intersal’s contractual and intellectual property rights.
26.

The Department of Justice (“DOJ”) represented DNCR in this matter.

27.

OAH ordered mediation in the matter. DOJ represented DNCR during negotiations.

6

28.

As a result of mediation, a new agreement was executed on October 15, 2013

among Intersal and DNCR, as well as Rick Allen and Nautilus (collectively, “Nautilus”), 3 relating,
inter alia, to media rights arising out of the discovery of QAR (“QAR Settlement Agreement”).
Exhibit 1, pp. 1-10. 4
29.

The QAR Settlement Agreement lacks of a savings clause.

30.

In addition, ¶1 of the QAR Settlement Agreement states, “This Agreement

supersedes the 1998 Agreement, attached as Attachment A, and all prior agreements between
DCR, Intersal, and Nautilus regarding the QAR Project.”
31.

However, the QAR Settlement Agreement make does not repeat provisions related

to title to QAR, such as ¶14 of the 1998 Agreement, which states: “Subject to their rights under
this Agreement, Intersal and MRI hereby assign to the Department, and the Department hereby
accepts, on behalf of the People of North Carolina, the interests of Intersal and MRI in the title and
ownership of QAR and its artifacts.”
32.

The QAR Settlement Agreement provides in pertinent part:

16. Media and Access Passes.
a.

Procedure.

1)
DCR agrees to establish and maintain access to a website for
the issuance of Media and Access Passes to QAR-Project related artifacts
and activities.
2)
DCR shall manage the issuance of Media and Access Passes
after receiving access requests from third parties via the website.
3)
The website shall be the primary means of access for
requests, and shall include, at a minimum:

3

Rick Allen and Nautilus was brought into the negotiations at the request of DOJ.

4

One of the terms of the QAR Settlement Agreement was the voluntary dismissal of Intersal’s contested case Intersal
v. N.C. Dep’t of Cultural Resources, 13DCR15732.

7

(a)
An Intersal terms of use agreement, to be
electronically submitted;
(b)
(c)
websites.

The QAR media fact sheet; and
Links to DCR, Intersal, and Nautilus Productions

4)
Upon electronic submission of requests and terms of use, if
applicable, electronic notice shall be sent to DCR and Intersal or its designee
showing acceptance or nonacceptance of the terms of use.
5)
Intersal shall bear the sole responsibility for managing and
enforcing its terms of use.
6)
For requests for access that are not received through the
website, DCR shall provide the requestor with substantially the same
information contained on the website.
b.

Non-commercial Media.

1)
All non-commercial digital media, regardless of producing
entity, shall bear a time code stamp, and watermark (or bug) of Nautilus
and/or DCR, as well as a link to DCR, Intersal, and Nautilus websites, to be
clearly and visibly displayed at the bottom of any web page on which the
digital media is being displayed.
2)
DCR agrees to display non-commercial digital media only
on DCR’s website.
...
32.
Effect of Breach of Agreement. In the event DCR, Intersal, or Nautilus
breaches this Agreement, DCR, Intersal, or Nautilus may avail themselves of all
remedies provided by law or equity.
33.

Despite the new QAR Settlement Agreement and prior agreements, the State

Defendants continued and continues to violate the QAR Settlement Agreement and Intersal’s
intellectual property rights. A summary of significant violations include:
A.

Displaying over two thousand (2,000) QAR digital media images (including

thirty (30) images taken and improperly copyright claimed by Special Deputy Attorney

8

General Karen Blum, the DOJ counsel who represented DNCR during mediation) and over
two hundred (200) minutes of QAR digital media video on websites other than DNCR’s
own website, without watermark and/or without time code stamp, or website links, in
violation of QAR Settlement Agreement, ¶¶ 16.b.2 and 16.b.1, respectively;
B.

Undertaking a pattern of obstruction, delay, and failure to follow established

procedure concerning permit renewal process and “special conditions” for Intersal’s El
Salvador search permit (DCR BUI584) (by the same state employees mentioned in
subparagraphs 24 B and C above), which process is specifically referenced in and affected
by provisions of the QAR Settlement Agreement, ¶ 3;
C.

Failing to implement specific mandates of the QAR Settlement Agreement,

including changes to QAR Project media policy (¶ 16.a) and the QAR Project Business
panel (¶¶ 19, 6,8);
D.

Upon information and belief, failing to properly inform QAR Settlement

Agreement partners, contractors and members of the press of QAR Project activities and
opportunities covered under the collaborative commercial narrative opportunity and/or
media procedure language of the QAR Settlement Agreement, ¶¶ 15, 16;
E.

Failing to return to Intersal’s QAR Project Video Designee Nautilus all

Nautilus-produced video in their possession as required by the QAR Settlement Agreement,
¶.21;
F.

Setting arbitrary, discriminatory and capricious standards and requirements

for, and restrictions on the participation of Intersal’s QAR Project Video Designee Nautilus
in 2014 and 2015 QAR recovery operations, which were not required of or imposed on all
other non-DNCR employees, volunteers, etc.;

9

G.

Interference with Intersal’s QAR Settlement Agreement collaborative media

rights, by DNCR allowing FoQAR filming of QAR recovery operations via independent
media company Zion Consulting Group on September 14, 2015 (without completing
existing QAR commercial narrative request form or giving Nautilus its “right of first
refusal”, QAR Settlement Agreement, ¶ 20), footage from which was posted to Facebook
by FoQAR on October 28, 2015 without time code stamp, watermark or website links,
despite FoQAR board members being aware of the provisions of the QAR Settlement
Agreement, which actions represent clear tortious interference with contractual relations
by FoQAR, and directly conflict with Intersal’s QAR Settlement Agreement collaborative
media rights and/or provisions for dissemination of QAR digital media for commercial use
documentaries, QAR Settlement Agreement ¶¶ 15, 16.b.2 and 16.b.1, respectively;
H.

Continued failure by DNCR to implement the QAR Settlement Agreement

media policy, via DNCR allowing FoQAR to bring Raeford Brown and crew, from the talk
radio show “Live and Local with Raeford and Friends”) to dive the QAR shipwreck shoot
footage aboard the 2015 QAR recovery vessel on September 9, 2015, upon information and
belief, without disseminating the Intersal terms of service document or advising said Press
representatives of changes to the QAR media policy found in the QAR Settlement
Agreement (¶ 16); and
I.

Committing numerous additional violations of the QAR Settlement

Agreement before and after receipt of Intersal’s Demand Letter dated September 23, 2014,
which when added to the major violations listed above and herein, represent a continued
pattern of egregious, retaliatory and discriminatory agency action against Intersal, and a
continued attempt to deny Intersal rightful access to QAR Project revenue streams and

10

commercial narrative opportunities, including a percentage of planned admission fees for
public viewing of QAR artifacts and ancillary proceeds from related activities, in violation
of QAR Settlement Agreement, ¶ 15.
34.

On March 2, 2015, Intersal filed a second Petition for a Contested Case, with the

North Carolina Office of Administrative Hearings (“OAH”), Intersal v. N.C. Dep’t of Cultural
Resources, 15DCR 016102, seeking a remedy to the State Defendants’ violations of the QAR
Settlement Agreement and violations of Intersal’s contractual and intellectual property rights.
35.

After DOJ moved to dismiss, alleging lack of OAH subject matter jurisdiction to

hear contractual claims, an allegation not raised in the earlier OAH Petition, making clear that DOJ
was more interested in making case law than resolving the issue, Intersal dismissed the Petition
without prejudice on May 26, 2015 and proceeded to prepare to file this present action.
ILLEGALITY BY THE NORTH CAROLINA GENERAL ASSEMBLY
36.

Subsequent to the initial filing of this action, the North Carolina General Assembly,

upon information and belief, at the behest of Defendants, enacted Session Law 2015-218 on
August 11, 2015, the same being signed by the Governor on August 18, 2015.
37.

SECTION 4.(a) of Session Law 2015-218, inter alia, amends N.C. Gen. Stat. 121-

25 by adding a subsection (b) which reads as follows:
(b) All photographs, video recordings, or other documentary materials of a derelict
vessel or shipwreck or its contents, relics, artifacts, or historic materials in the
custody of any agency of North Carolina government or its subdivisions shall be a
public record pursuant to G.S. 132-1. There shall be no limitation on the use of or
no requirement to alter any such photograph, video recordings, or other
documentary material, and any such provision in any agreement, permit, or license
shall be void and unenforceable as a matter of public policy.
Session Law 2015-218, SECTION 4.(a).

11

38.

This provision was added on July 23, 2015, after Intersal dismissed its second OAH

Petition, and after Intersal made clear that it was planning to take this matter to Superior Court or
federal court. It is clear that the State Defendants, by this amendment, intended to deprive Intersal
of any legal remedy for breaching of two contracts.
FURTHER ACTS OF RETALIATION
39.

DNCR, through its Office of State Archaeology (OSA) violated the QAR

Settlement Agreement, ¶ 3, by adding to Intersal’s El Salvador search permit renewal (14BUI584)
new language that directly contradicts and subverts existing permit language retained per the QAR
Settlement Agreement, ¶ 3.
40.

The existing permit language retained per the QAR Settlement Agreement (which

language originated in the 1998 Agreement) insures that Intersal’s continued efforts connected to
the QAR Project remain sufficient to satisfy any performance requirements associated with renewal
of the El Salvador search permit (BUI584). Intersal has been a contributing QAR Project partner
without pause since 1998, and DNCR has issued BUI584 permit renewals to Intersal based on this
existing permit language since 1998.
41.

In 2013 and 2014, OSA failed to follow proper and established procedure connected

to BUI584 renewal, by failing to acknowledge on time receipt of or perform oversight of BUI584
report drafts, followed by unwarranted delays in granting renewal. These actions are part of the
continuing pattern of DNCR contract violations and retaliatory behavior towards Intersal described
above and herein.
42.

After Intersal’s September 2014 Demand Letter was dispatched to DNCR, in

November 2014, OSA sent Intersal a renewal of the El Salvador permit (14BUI584) containing

12

specific language that immediately follows, directly contradicts and subverts the letter and spirit
of the existing permit language retained as a requirement of the QAR Settlement Agreement.
43.

DNCR rejected Intersal’s request that the offending language be removed from the

renewal document.
44.

These actions are part of the continuing pattern of DNCR contract violations and

retaliatory behavior towards Intersal described above and herein.
45.

On October 20, 2015, OSA sent a letter to Intersal, seeking to suddenly impose

upon Intersal requirements and standards that DNCR does not now, nor has ever followed or
imposed upon itself.
46.

This letter is part of the continuing pattern of DNCR retaliatory behavior towards

Intersal described above and herein,
47.

In further acts of retaliation, Intersal has not been formally approved of the pending

commercial salvage operation.
48.

Intersal has been informed and discussed the operation with DNCR, but has not

received an acknowledgement as required by the permit.
DAMAGES
49.

All actions taken by Defendants were taken with the clear intent to deprive Intersal

is its of its contractual rights (including media rights), commercial opportunities, income, revenue
streams, commercial narrative opportunities (including a percentage of planned admission fees for
public viewing of QAR artifacts), and ancillary proceeds from related activities, and to remove
Intersal from the QAR Project, in favor of third parties, including, without limitation, FoQAR.

13

50.

Intersal, upon information and belief, has been damaged in the amount of at least

EIGHT MILLION SIX HUNDRED THIRTEEN THOUSAND SEVEN HUNDRED FIFTY
DOLLARS ($8,613,750).
WAIVER OF SOVEREIGN IMMUNITY
51.

Defendants Kluttz and DNCR are authorized officer and agency of the State of

North Carolina.
52.

The 1998 Agreement and the QAR Settlement Agreement are purportedly valid

contracts between Intersal and DNCR, authorized by the duly authorized officer and agency of the
State of North Carolina.
53.

“[W]henever the State of North Carolina, through its authorized officers and

agencies, enters into a valid contract, the State implicitly consents to be sued for damages on the
contract in the event it breaches the contract.” Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412,
423-24 (1976).
54.

Sovereign immunity is also waived with respect to the constitutional and federal

law violations noted herein.
FIRST CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS—VIOLATION OF
THE CONTRACTS CLAUSE
Article I, Section 10 of the United States Constitution
55.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

56.

Article I, Section 10 of the United States Constitution provides: “No state shall . . .

pass any . . . Law impairing the Obligation of Contracts . . . .”
57.

The 1998 Agreement and the QAR Settlement Agreement each create an obligation

of contracts by the State towards Intersal.

14

58.

The enactment of Session Law 2015-218, SECTION 4.(a) by the General Assembly

impairs the State’s obligation of contracts by attempting to render ineffective those sections of the
1998 Agreement and the QAR Settlement Agreement relating to Intersal’s contractual rights.
59.

The State’s action of attempting to render ineffective those sections of the 1998

Agreement and the QAR Settlement Agreement relating to Intersal’s contractual rights is an
impairment that was not reasonable or necessary to serve any important public purpose.
60.

The 1998 Agreement and the QAR Settlement Agreement each create enforceable

contract rights in Intersal that the State seeks to unconstitutionally abrogate by the enactment of
Session Law 2015-218, SECTION 4.(a).
61.

The State’s action of attempting to render ineffective those sections of the 1998

Agreement and the QAR Settlement Agreement relating to Intersal’s contractual rights, by the
enactment of Session Law 2015-218, SECTION 4.(a), is unconstitutional as a violation of the
Contracts Clause of the United States Constitution.
SECOND CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS — VIOLATION
OF THE BILL OF ATTAINDER PROHIBITION
Article I, Section 10 of the United States Constitution
62.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

63.

Article I, Section 10 of the United States Constitution provides: “No State shall . .

. pass any Bill of Attainder . . . .”
64.

Article I, Section 10 of the United States Constitution prohibits the State from

enacting bills of attainder, defined as bills of pains and penalties which are legislative acts inflicting
punishment on a person without a trial, and serves as a general safeguard against legislative
exercise of the judicial function, or more simply – trial by legislature.
65.

The bill of attainder prohibition also protects private corporations, such as Intersal.

15

66.

Session Law 2015-218, SECTION 4.(a) is a Bill of Attainder in that it singles out

Intersal for punishment without a trial, by attempting to abrogate Intersal’s contractual rights—
circumventing the judiciary.
67.

As such Session Law 2015-218, SECTION 4.(a) is unconstitutional, inter alia, to

the extent it attempts to abrogate Intersal’s contractual rights.
THIRD CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS —TAKING
WITHOUT JUST COMPENSATION
Amendments V and XIV of the United States Constitution
Article I, Section 19 of the Constitution of North Carolina
68.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

69.

Amendment V of the Constitution of the United States provides in pertinent part

“nor shall private property be taken for public use, without just compensation.”
70.

Amendment V of the Constitution of the United States is made applicable to the

State by Amendment XIV of the Constitution.
71.

Article I, Section 19 of the Constitution of North Carolina provides in pertinent part

“No person shall be . . . in any manner deprived of his life, liberty, or property, but by the law of
the land.”
72.

The execution of the 1998 Agreement and the QAR Settlement Agreement, gives

contract rights, property rights and liberty rights to Intersal.
73.

The Takings Clause of the Fifth Amendment of the United States Constitution,

incorporated to the State by the Fourteenth Amendment of the United States Constitution, and the
Law of the Land Clause of the North Carolina Constitution require that Intersal’s property,
contractual and liberty rights created by the 1998 Agreement and the QAR Settlement Agreement
cannot be taken without a public purpose and without just compensation.

16

74.

Session Law 2015-218, SECTION 4.(a), on its face, violates the Federal and State

Constitutions, as it fails to state a public purpose for attempting to render ineffective those sections
of the 1998 Agreement and the QAR Settlement Agreement relating to Intersal’s contractual rights.
75.

Session Law 2015-218, SECTION 4.(a) violates the Federal and State Constitutions

in that it fails to specify the just compensation to be paid to Intersal for the loss of those sections
of the 1998 Agreement and the QAR Settlement Agreement relating to Intersal’s contractual rights
or specify any procedure for the determination of just compensation. Session Law 2015-218,
SECTION 4.(a) bypasses all statutory mechanisms and simply abrogates those sections of the 1998
Agreement and the QAR Settlement Agreement relating to Intersal’s contractual rights, thereby
taking property without just compensation.
76.

Session Law 2015-218, SECTION 4.(a) fails to state a public purpose for the

77.

There is no public purpose for the taking required by Session Law 2015-218,

taking.

SECTION 4.(a).
78.

Session Law 2015-218, SECTION 4.(a) is unconstitutional as a violation of the

Takings Clause of the Fifth Amendment of the United States Constitution, incorporated to the
State by the Fourteenth Amendment of the United States Constitution, and the Law of the Land
Clause of the North Carolina Constitution, to the extent that it abrogates Intersal’s contractual
rights created by the 1998 Agreement and the QAR Settlement Agreement.
FOURTH CLAIM FOR RELIEF AS TO STATE DEFENDANTS —DENIAL OF DUE
PROCESS
Amendments XIV of the United States Constitution
Article I, Section 19 of the Constitution of North Carolina
79.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

17

80.

Amendment XIV of the Constitution of the United States provides in pertinent part

“nor shall any State deprive any person of life, liberty, or property, without due process of law . .
. .”
81.

Article I, Section 19 of the Constitution of North Carolina provides in pertinent part

“No person shall be . . . in any manner deprived of his life, liberty, or property, but by the law of
the land.”
82.

Intersal was never given notice of Session Law 2015-218, SECTION 4.(a) relating

to Intersal’s contractual rights and was never given an opportunity to be heard
83.

Session Law 2015-218, SECTION 4.(a) provides no adversary proceeding to

determine judicially, with right of appeal, whether those sections of the 1998 Agreement and the
QAR Settlement Agreement relating to Intersal’s contractual rights and should be declared void.
84.

No public hearings were held with respect to Session Law 2015-218, SECTION

4.(a), to provide Intersal with any opportunity to debate whether those sections of the 1998
Agreement and the QAR Settlement Agreement relating to Intersal’s contractual rights should be
voided, for what reasons, and/or any just compensation to Intersal for its loss that it bargained for
by giving up other rights relating to the QAR and the loss of its investment in time, energy and
funds, and the future loss associated with the lost contractual rights.
85.

Session Law 2015-218, SECTION 4.(a) is unconstitutional on its face as a violation

of due process as encapsulated in the Fourteenth Amendment of the United States Constitution
and the Law of the Land Clause of the North Carolina Constitution, to the extent that it abrogates
Intersal’s contractual rights created by the 1998 Agreement and the QAR Settlement Agreement.

18

FIFTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS —VIOLATION OF
SEPARATION OF POWERS
Article I, Section 6 of the North Carolina Constitution
Article IV of the North Carolina Constitution
86.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

87.

Article I, Section 6 of the North Carolina Constitution states: “The legislative,

executive, and supreme judicial powers of the State government shall be forever separate and
distinct from each other.”
88.

Article IV of the North Carolina Constitution clearly states:
a. The judicial power of the State shall . . . be vested . . . in a General Court of
Justice. The General Assembly shall have no power to deprive the judicial
department of any power or jurisdiction that rightfully pertains to it as a coordinate department of the government . . . .

89.

To any extent that the State alleges any justification for by attempting to abrogate

those sections of the 1998 Agreement and the QAR Settlement Agreement relating to Intersal’s
contractual rights, the General Assembly violated the State Constitution by acting as its own
judiciary and attempting to deprive the courts of the opportunity to resolve the dispute.
90.

Session Law 2015-218, SECTION 4.(a) is unconstitutional as a violation of the

separation of powers clauses of the North Carolina Constitution, to the extent that it abrogates
Intersal’s contractual rights created by the 1998 Agreement and the QAR Settlement Agreement.
SIXTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS —BREACH OF
CONTRACT
91.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

92.

The 1998 Agreement and the QAR Settlement Agreement constitutes valid

contracts between Intersal and the State Defendants, an authorized officer and agency of the State
of North Carolina.

19

93.

The State Defendants’ actions described above constitute several breaches of the

terms of said valid contracts.
94.

Intersal has been monetarily damaged by the State Defendants’ breach of contract.

95.

Intersal is entitled to monetary damages from the State Defendants’ in an amount

greater than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
SEVENTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS— UNJUST
ENRICHMENT AND QUANTUM MERUIT
96.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

97.

In the alternative, to the extent that all or part of the 1998 Agreement and/or the

QAR Settlement Agreement are declared unenforceable, to prevent unjust enrichment, Intersal is
entitled to recover in quantum meruit on an implied contract theory for the reasonable value of
services rendered to and accepted by Defendants.
98.

Therefore, Intersal is entitled to monetary payment from the State in an amount

greater than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
EIGHTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS—FRAUD
99.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

100.

State Defendants actions, as described above, constitute fraud in that: (1) the State

made several material misrepresentations of a past or existing facts; (2) the misrepresentations
were be definite and specific; (3) the misrepresentations were made with knowledge of their falsity
or in culpable ignorance of their truth; (4) the misrepresentations were made with intention that
they should be acted upon; (5) Intersal, as the recipient of the misrepresentations, reasonably relied
upon them and acted upon them; and (6) the misrepresentations resulted in damage to Intersal.
101.

Specifically, the State Defendants TWICE negotiated agreements with Intersal, the

1998 Agreement and the QAR Settlement Agreement, providing contractual rights to Intersal. Now
20

the State Defendants are opining that said provisions are void as against public policy. While
Session Laws 2015-218, SECTION 4.(a) has only been recently enacted, the State Defendants are
also opining that Chapter 132 of the North Carolina General Statutes prohibit enforcement of
Intersal’s contractual rights created by the aforesaid agreements.
102.

Assuming, arguendo, that the State Defendants’ position is correct, State

Defendants knew or should have known this fact, but engaged in allegedly arm’s length two
agreements with Intersal.
103.

The State Defendants’ actions meets the elements of fraud.

104.

Intersal is entitled to monetary damages from the State Defendants in an amount

greater than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
NINTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS—BAD FAITH
105.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

106.

Every contract or agreement, including the 1998 Agreement and/or the QAR

Settlement Agreement, implies good faith and fair dealing between the parties to it, and a duty of
cooperation on the part of both parties.
107.

The facts shown above, and as will be shown through discovery and trial, show that

the State Defendants breached their duty of good faith and fair dealing.
108.

Intersal was damaged by the State Defendants’ breach.

109.

Intersal is entitled to monetary damages from the State Defendants in an amount

greater than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
TENTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS —UNCLEAN
HANDS
110.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

21

111.

The State has acted inequitably and with unclean hands in that it committed various

acts inconsistent with or in breach of the spirit and letter of the 1998 Agreement and the QAR
Settlement Agreement, erected obstacles to the QAR Project implementation and documentation,
interfered with Intersal’s rights and/or obligations to be shown through discovery and at trial.
112.

The State Defendants’ unclean hands bars any equitable claim or defense the State

Defendants may raise.
ELEVENTH CLAIM FOR RELIEF AS TO STATE DEFENDANTS —42 U.S.C. § 1983
113.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

114.

The collective and separate actions of the State Defendants as noted above,

constitute violations of 42 U.S.C. § 1983.
115.

Intersal is entitled to damages from the State Defendants, jointly and severally, in

an amount greater than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
TWELFTH CLAIM FOR RELIEF AS TO FoQAR—TORTIOUS INTERFERENCE
WITH CONTRACTUAL RELATIONS
116.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

117.

The actions of FoQAR, described above, constitute tortious interference with

contractual relations.
118.

As a direct and proximate result of FoQAR’s actions, Intersal was damaged,

including, but not limited to, pecuniary loss and inconvenience.
119.

FoQAR is liable to Intersal in an amount greater than TWENTY-FIVE

THOUSAND DOLLARS ($25,000.00).
120.

FoQAR’s actions were fraudulent, willful, wanton and malicious, and in total

disregard of the truth and the rights of Intersal.

22

121.

FoQAR should be required to respond in punitive damages on account of said

actions, to Intersal, in an amount greater than TWENTY-FIVE THOUSAND DOLLARS
($25,000.00).
THIRTEENTH CLAIM FOR RELIEF AS TO ALL DEFENDANTS—CIVIL
CONSPIRACY
122.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

123.

All Defendants have engaged in a conspiracy to undercut and diminish Intersal’s

contractual rights for monetary gain.
124.

The wrongful acts complained of above were agreed upon by Defendants and

performed by the co-conspirators in furtherance of that conspiracy.
125.

Intersal was injured as a result of that conspiracy.

126.

The actions of Defendants described above constitute civil conspiracy.

127.

As a direct and proximate result of Defendants’ actions, Intersal was damaged,

including, but not limited to, pecuniary loss and inconvenience.
128.

Defendants are jointly and severally liable to Intersal in an amount greater than

TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
129.

FoQAR’s actions were fraudulent, willful, wanton and malicious, and in total

disregard of the truth and the rights of Intersal.
130.

FoQAR should be required to respond in punitive damages on account of said

actions, to Intersal, in an amount greater than TWENTY-FIVE THOUSAND DOLLARS
($25,000.00).
FOURTEENTH CLAIM FOR RELIEF—DECLARATORY JUDGMENT
Article 26, Chapter 1, General Statutes of North Carolina
Rule 57 of the North Carolina Rules of Civil Procedure
131.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
23

132.

Intersal is entitled to Declaratory Judgment as follows:
A.

Declare Session Law 2015-218, SECTION 4.(a) unconstitutional as a

violation of the Contract Clause of the United States Constitution to the extent that it
abrogates Intersal’s contractual rights created by the 1998 Agreement and the QAR
Settlement Agreement;
B.

Declare Session Law 2015-218, SECTION 4.(a) unconstitutional as a Bill

of Attainder, to the extent that it abrogates Intersal’s contractual rights created by the 1998
Agreement and the QAR Settlement Agreement;
C.

Declare Session Law 2015-218, SECTION 4.(a) unconstitutional as a

violation of the Takings Clause of the Fifth Amendment of the United States Constitution,
incorporated to the State by the Fourteenth Amendment of the United States Constitution,
and the Law of the Land Clause of the North Carolina Constitution, to the extent that it
abrogates Intersal’s contractual rights created by the 1998 Agreement and the QAR
Settlement Agreement;
D.

Declare Session Law 2015-218, SECTION 4.(a) unconstitutional on its face

as a violation of due process as encapsulated in the Fourteenth Amendment of the United
States Constitution and the Law of the Land Clause of the North Carolina Constitution, to
the extent that it abrogates Intersal’s contractual rights created by the 1998 Agreement and
the QAR Settlement Agreement;
E.

Declare Session Law 2015-218, SECTION 4.(a) unconstitutional as a

violation of the separation of powers clauses of the North Carolina Constitution, to the
extent that it abrogates Intersal’s contractual rights created by the 1998 Agreement and the
QAR Settlement Agreement;

24

F.

Declare Chapters 121 and 132 of the North Carolina General Statutes, to the

extent that said provisions abrogate Intersal’s contractual rights created by the 1998
Agreement and the QAR Settlement Agreement, unenforceable;
G.

In the alternative, declare that the QAR Settlement Agreement is void and

the provisions of the 1998 Agreement continue to be in effect;
H.

In the alternative, declare that both the 1998 Agreement and the QAR

Settlement Agreement are void, and as such, based on Fla. Dep’t of State v. Treasure
Salvors, 458 U.S. 670, 102 S.Ct. 3304 (1982), title to the QAR is vested in Intersal;
I.

Declare the State Defendant’s actions constitute breach of contract by an

executive agency of the State and violates Intersal’s intellectual property rights;
J.

Declare that the incorrect language in the El Salvador search permit

(15BUI584) must be removed; and
K.

Make further declarations a warranted by the State Defendants’ actions as

shown above and as is just and proper.
FIFTEENTH CLAIM FOR RELIEF—RULE 65 RELIEF
133.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

134.

Defendants continue to violate the 1998 Agreement and the QAR Settlement

Agreement.
135.

Intersal has no adequate remedy at law; monetary damages are incapable of fully

compensating Intersal for the losses incurred from DNCR’s continued violations of the QAR
Settlement Agreement.
136.

Thus, in the absence of immediate action, imminent and irreparable harm will be

inflicted upon Intersal.

25

137.

For the foregoing reasons, Intersal requests that this Court enter a temporary

restraining order, preliminary injunction, and permanent injunction enjoining DNCR from further
violation of the QAR Settlement Agreement and further recovery of artifacts from the QAR site.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff respectfully requests the Court to enter Judgment as follows:
1.

Accept this Verified Complaint as an Affidavit;

2.

Enter Declaratory Judgment as prayed for in the Fourteenth Claim for Relief;

3.

Enter a temporary restraining order, preliminary injunction, and permanent

injunction enjoining Defendants from further violation of the Intersal’s contractual rights, as
specified in the 1998 Agreement and the QAR Settlement Agreement and further recovery of
artifacts from the QAR site;
4.

Enter Judgment against Defendants, as prayed above, in an amount greater than

TWENTY-FIVE THOUSAND DOLLARS ($25,000), to be determined by the Jury, plus
prejudgment and post judgment interest.
5.

Enter an order directing Defendants to renew the El Salvador permit without the

language that is in violation of the QAR Settlement Agreement.
6.

Award to Intersal its cost, expenses, and fees, including reasonable attorneys’ fees,

pursuant to applicable statutory and common law;
7.

Direct a trial by jury on all issues so triable; and

8.

Grant such other and further relief as the Court deems just and proper.
MOTION FOR RULE 65 RELIEF

1.

Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.

26

2.

Upon information and belief, Defendants continue to violate Intersal’s contractual

rights, as specified in the 1998 Agreement and the QAR Settlement Agreement.
3.

Intersal has no adequate remedy at law; monetary damages are incapable of fully

compensating Intersal for the losses incurred from Defendants continued violations of the QAR
Settlement Agreement.
4.

Thus, in the absence of immediate action, imminent and irreparable harm will be

inflicted upon Intersal.
5.

For the foregoing reasons, Intersal requests that this Court enter a temporary

restraining order, preliminary injunction, and permanent injunction enjoining Defendants from
further violation of Intersal’s contractual rights, as specified in the 1998 Agreement and the QAR
Settlement Agreement, and further recovery of artifacts from the QAR site.
This the ______ day of November 2015.

______________________________
David H. Harris, Jr.
Counsel for Plaintiff
State Bar No. 9841
Linck Harris Law Group, PLLC
2530 Meridian Parkway, Suite 300
Durham, North Carolina 27713
919-806-4220
866-274-0756 (Fax)
dharris@linckharris.com

27

NORTH CAROLINA
WAKE COUNTY

IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
File No. 15-CvS-9995

Intersal, Inc.,
Plaintiff,
v.

CORPORATE AFFIDAVIT

Susan Kluttz, Secretary, North Carolina
Department of Cultural Resources, North
Carolina Department of Cultural Resources,
State of North Carolina, and Friends of
Queen Anne’s Revenge,
Defendants.

The undersigned, being duly sworn, states the following:
1.

I am the Chairperson of the Board of Plaintiff Intersal, Inc., a corporation duly

incorporated in and validly existing pursuant to the laws of the State of Florida and duly registered
as a foreign corporation with the North Carolina Secretary of State.
2.

I am duly authorized to execute this Affidavit on behalf of Intersal, Inc.

3.

I have read the foregoing First Amended Complaint and know the contents thereof.

4.

The allegations set forth in the First Amended Complaint are true and of my own

knowledge, except for those allegations set forth upon information and belief, and as to those
allegations, I believe them to be true.

28

Further affiant sayeth not.

______________________________
John Masters
Signed and sworn to before me this day by John Masters.

Date: __________________
______________________________
Notary Public
(Official Seal)
______________________________
Notary Public’s Printed Name
My commission expires: ___________________

29

EXHIBIT 1
Settlement Agreement
This Settlement Agreement, made this the 15th day of October, 2013, by and between the North
Carolina Department of Cultural Resources (“DCR”), Intersal, Inc. (“Intersal”), and Rick Allen and Nautilus
Productions, LLC (collectively, “Nautilus”):
WHEREAS, Intersal, a private research firm, operating under a valid permit issued to it by DCR,
discovered the site believed to be Queen Anne’s Revenge (“QAR”) on 21 November 1996. QAR was
located near Beaufort Inlet, North Carolina, by Intersal’s director of operations, Michael E. Daniel, who
used historical research provided by Intersal’s president, Phil Masters. Daniel now heads up Maritime
Research Institute (“MRI”), the non-profit corporation formed to work on the project in cooperation with
State archaeologists and historians of the North Carolina Department of Cultural Resources, Office of
Archives and History; and
WHEREAS, DCR, MRI, and Intersal previously executed a Memorandum of Agreement on 1
September 1998 (“1998 Agreement”); and
WHEREAS, as a result of the 1998 Agreement, Intersal and Michael E. Daniel agreed to forego
entitlement to their share of any coins and precious metals recovered from the QAR site in order that all
QAR artifacts remain as one intact collection, and in order to permit DCR to determine ultimate
disposition of the artifacts;
WHEREAS, Nautilus has been filming underwater and other footage of the QAR project for
approximately fifteen (15) years as the project’s videographer;
WHEREAS, various disputes and uncertainties have arisen between DCR, Intersal, and Nautilus
regarding the terms of the 1998 Agreement and related issues; and
WHEREAS, Intersal and DCR currently are in administrative appeal litigation regarding the terms
of the 1998 Agreement, and desire to fully settle such litigation and related issues; and
WHEREAS, DCR, Intersal, and Nautilus desire to resolve fully their differences and continue their
mutual efforts to promote the history of Blackbeard the Pirate, and continue the archaeological recovery
and conservation of his flagship, the Queen Anne’s Revenge (“QAR”).
NOW, THEREFORE, DCR, Intersal, and Nautilus contract, settle and agree as follows:
I. GENERAL
1.

Prior Agreements. This Agreement supersedes the 1998 Agreement, attached as Attachment
A, and all prior agreements between DCR, Intersal, and Nautilus regarding the QAR project.

2.

No Admission of Liability. DCR, Intersal, and Nautilus mutually agree that this Agreement is
entered into for the purpose of compromising all disputed claims, grievances, or allegations, and is
not to be construed as an admission by DCR, Intersal, or Nautilus regarding the merit or lack of
merit of DCR’s, Intersal’s, or Nautilus’s contentions, nor an admission of any wrongdoing by the
same.
II. EL SALVADOR PERMIT

3.

El Salvador Permit. In consideration for Intersal’s significant contributions toward the discovery

of the QAR and continued cooperation and participation in the recovery, conservation, and
promotion of the QAR, DCR agrees to continue to issue to Intersal an exploration and recovery

Exh. 1 Page 1

EXHIBIT 1

permit for the shipwreck El Salvador in the search area defined in the current permit dated 9
August 2013. DCR agrees to continue to issue the permit through the year in which the QAR
archaeology recovery phase is declared complete so long as the requirements contained in the
permit are fulfilled. Subject to the provisions of Article 3 of Chapter 121 of the North Carolina
General Statutes, entitled, “Salvage of Abandoned Shipwrecks and Other Underwater
Archaeological Sites,” and the North Carolina Administrative Code, DCR agrees to recognize
Intersal’s efforts and participation in the QAR project as sufficient to satisfy any performance
requirements associated with annual renewal of Intersal’s permit for the El Salvador. DCR expects
to complete recovery of the QAR shipwreck by the end of 2016. The Secretary of DCR shall have
the exclusive authority to determine when recovery of QAR is complete. The Secretary shall timely
notify Intersal in writing of DCR’s determination that recovery is complete. If the recovery phase is
complete prior to 2016, DCR agrees to renew the permit through at least the end of 2016.
III. EXACT AND MINIATURE REPLICAS AND COLLECTIBLES
4.

Artifact Replicas. DCR and Intersal may make, or have made, molds or otherwise reproduce, or
have reproduced, replicas of QAR artifacts for educational, scientific, retail sale, or other
commercial purposes. All aspects of the conservation of artifacts, including whether or not to
conserve the artifact, shall be at the sole discretion of DCR.

5.

Types of Replicas. DCR and Intersal may make two types of replicas:

6.

a.

Miniature or Exact Replicas. Miniature or exact replicas shall be museum or archival quality
and shall be produced on a limited edition basis, be individually numbered, or otherwise
uniquely identified to facilitate authentication.

b.

Collectibles. Collectibles shall be true representations of artifacts. Collectibles do not have to
be miniatures or exact replications, and may be constructed of materials that do not rise to
the level of museum or archival quality, and may be mass produced without being
individually identifiable.

Selection of Miniature or Exact Replicas to Produce. Up to ten (10) QAR artifacts may be in
the replication process at any given time. DCR and Intersal shall select one artifact each, taking
alternate turns, until each has selected up to five (5) artifacts for possible replication. DCR and
Intersal must present a separate business plan for the production, marketing, and sale of each of
its selected replicas. The Business Panel must review and approve the business plan. Once a
prototype is made, the Business Panel must review and approve the prototype, and accompanying
packaging, marketing, or audio, visual, or literary materials (e.g., booklets, DVDs, etc.) for
replication quality and historical accuracy. The Business Panel will issue its decisions in writing and
provide the same to Intersal and DCR. Upon approval by the Business Panel, the entity seeking to
reproduce the artifact may proceed with production, marketing, sales, and distribution. If, two (2)
years after the written approval of the prototype by the Business Panel, the replica has not been
offered for sale or distribution, the artifact will be placed back into the available pool of artifacts to
replicate. The replication, sale, or distribution of replicas (as opposed to selection) need not be on
alternating bases, but may be done according to DCR’s and Intersal’s respective plans and
schedules.
Intersal agrees that the sword hilt it currently plans to produce as a miniature or exact replica shall
be Intersal’s first selection and shall fall under the terms of this Agreement.

7.

Production of Subsequent Miniature or Exact Replicas. DCR and Intersal may, individually
or collectively, produce more than one artifact replica at a time. When either DCR or Intersal
completes a replica and has offered it for sale or distribution, it may begin producing another

Exh. 1 Page 2

2

EXHIBIT 1

artifact according to the approval process in ¶ III.6. Once DCR or Intersal has offered an artifact
for sale and distribution, it may choose another artifact from the artifact pool so that it has up to
five (5) artifacts eligible for replication at any given time. If either DCR or Intersal decides to
relinquish an artifact before the end of two (2) years, the artifact will be placed back into the
available pool of artifacts to replicate. DCR and Intersal may enter into a written agreement as to
the further selection of artifacts after the first ten (10) have been selected.
Except by written agreement, neither Intersal nor DCR may select additional artifacts until they
have produced, or the Business Panel has declined, all five (5) of its initially-selected artifacts.
8.

Collectibles. Either DCR or Intersal may propose the reproduction, marketing, sales, and
distribution of collectible replicas as defined above. The reproduction, marketing, sales, and
distribution of collectible artifacts shall be approved in advance by DCR and Intersal, or, if
consensus cannot be reached between them, by the Business Panel.

9.

Replicas to be Used in Exhibits, Scientific Study, or Educational Tools. Understanding that
there may be times when original artifacts cannot be used, DCR may make, or have made, molds
or otherwise reproduce, or have reproduced, any QAR artifacts of its choosing for use in museums
or traveling exhibits, as educational props in its exhibits, museums or laboratories, as scientific
tools, or for scientific study. These replicas shall not be sold.

10.

Costs. DCR and Intersal shall each be responsible for their own costs of making miniature or
exact replicas, or collectibles produced by or for them.

11.

Profits. DCR and Intersal agree to share the profits generated by the sale of miniature or exact
replicas and collectibles. The entity producing the replica shall receive 80% of the net income after
taxes; the other entity shall receive the remaining 20%. Where DCR is the entity producing,
selling, and distributing the replica, DCR will account for its marketing and operations in
determining net income. Either DCR or Intersal may request from the other documentation
regarding marketing, distribution, or other costs.

12.

Miniature or Exact Replicas Sold at Auctions or Fundraisers. If DCR or Intersal sells a
miniature or exact replica at auction or a fundraiser, the gross/net income shall be based on a fair
market value and not on the price the replica was sold for at auction or a fundraiser.

13.

Termination. After five (5) years, either DCR or Intersal may terminate, with or without cause,
this Reproduction Agreement section upon ninety (90) days written notice.
IV. PROMOTION OPPORTUNITIES

14.

Commercial Documentaries. Intersal, through Nautilus, has documented approximately fifteen
(15) years of underwater and other activities related to the QAR project. For purposes of this
Commercial Documentaries section, Intersal represents to DCR that Nautilus Productions shall
remain Intersal’s designee. Intersal shall have the exclusive right to produce a documentary film
about the QAR project for licensing and sale. Intersal may partner with DCR if it chooses to do so.
If Intersal chooses to partner with DCR, DCR and Intersal shall negotiate an appropriate costsharing agreement, and will agree about the documentary script for historical accuracy, content
and story line. If DCR and Intersal do not partner to make a documentary, the Intersal
documentary script shall be reviewed by DCR for historical accuracy prior to final release by
Intersal or its agents.

Exh. 1 Page 3

3

EXHIBIT 1

Intersal agrees to allow DCR to use its completed documentary, free of charge, in its museums and
exhibits for educational purposes. DCR agrees to recognize Intersal’s participation in the making of
the documentary.
Termination. Either DCR or Intersal may terminate this Commercial Documentaries section at
any time after four (4) years have passed from the date the Secretary of DCR notifies Intersal in
writing of DCR’s determination that recovery is complete. Notice of termination must be given in
writing six (6) months in advance.
15.

Other Commercial Narrative. DCR and Intersal agree to collaborate in making other
commercial narrative such as, but not limited to, books and e-books, mini- and full-length
documentaries, and video games. Any profit-sharing agreements shall be based on the amount of
work contributed by each entity. If DCR and Intersal cannot reach an agreement on the sharing
and production of any such commercial ventures that they propose to undertake, DCR and Intersal
will refer the issues to a mutually selected, neutral arbitrator for binding arbitration, with arbitration
to be concluded within three (3) months of selection of the neutral arbitrator.

16.

Media and Access Passes.
a.

b.

Procedure.
1)

DCR agrees to establish and maintain access to a website for the issuance of Media
and Access Passes to QAR-project related artifacts and activities.

2)

DCR shall manage the issuance of Media and Access Passes after receiving access
requests from third parties via the website.

3)

The website shall be the primary means of access for requests, and shall include, at a
minimum:
(a)

An Intersal terms of use agreement, to be electronically submitted;

(b)

The QAR media fact sheet; and

(c)

Links to DCR, Intersal, and Nautilus Productions websites.

4)

Upon electronic submission of requests and terms of use, if applicable, electronic notice
shall be sent to DCR and Intersal or its designee showing acceptance or nonacceptance of the terms of use.

5)

Intersal shall bear the sole responsibility for managing and enforcing its terms of use.

6)

For requests for access that are not received through the website, DCR shall provide
the requestor with substantially the same information contained on the website.

Non-commercial Media.
1)

All non-commercial digital media, regardless of producing entity, shall bear a time code
stamp, and watermark (or bug) of Nautilus and/or DCR, as well as a link to DCR,
Intersal, and Nautilus websites, to be clearly and visibly displayed at the bottom of any
web page on which the digital media is being displayed.

2)

DCR agrees to display non-commercial digital media only on DCR’s website.

Exh. 1 Page 4

4

EXHIBIT 1

c.

Termination. This Media and Access Pass section shall terminate after the 5th anniversary
of the signing of this Agreement. After five (5) years, DCR and Intersal may agree to extend
this provision by mutual written consent.
V. RECORDS

17.

Public Records. Nothing in this Agreement shall prevent DCR from making records available to
the public pursuant to North Carolina General Statutes Chapters 121 and 132, or any other
applicable State or federal law or rule related to the inspection of public records.

18.

Records Management. During the recovery phase of the QAR project, DCR and Intersal agree
to make available to each other records created or collected in relation to the QAR project. The
entity requesting copies bears the cost of reproduction. Within one (1) year after the completion of
the recovery phase, Intersal shall allow DCR to accession duplicate or original records that were
created or collected by Intersal during the project and that are related to the site, or the recovery
or conservation of the QAR materials. Such records shall include relevant field maps, notes,
drawings, photographic records, and other technical, scientific and historical documentation created
or collected by DCR or Intersal pursuant to the study of the site and the recovery of materials
therefrom. These materials shall become public records curated by DCR. All digital media provided
by Intersal under the terms of this paragraph shall include a time code stamp and watermarks (or
bugs). It is expressly recognized and agreed that, to the extent Intersal possesses confidential
information or documents related to its search for El Salvador, no such documents or information
fall under the terms of this paragraph.
VI. Business Panel

19.

Business Panel. Members of the Business Panel shall include a secretary level representative
from DCR, the president of Intersal, the president of Nautilus Productions, one representative from
the North Carolina Department of Commerce or its successor, and one member of the academic
community.
Business Panel meetings shall be subject to the open meetings laws codified at Article 33 of
Chapter 143 of the North Carolina General Statutes.
VII.

20.

NAUTILUS PRODUCTIONS

Right of First Refusal. Nautilus Productions shall have the right of first refusal on the production
of all commercial and non-commercial digital media for which no time code stamp, and watermark
or bug of Nautilus has been affixed. Nautilus Productions agrees that digital media produced inhouse by DCR staff shall not be included in this right of first refusal.
Termination. This Right of First Refusal provision shall terminate after the 5th anniversary of the
signing of this Agreement.

21.

Return of Video. DCR agrees to return to Nautilus Productions all archival footage, still
photographs, and other media, produced by Nautilus Productions, which do not bear a time code
stamp and a Nautilus Productions watermark (or bug). DCR may retain, for research purposes,
archival footage, still photographs, and other media that contain a time code stamp and watermark
(or bug), and as to such media, DCR shall provide Nautilus with a current, accurate list.

22.

Copyright Violations. DCR agrees to compensate Nautilus Productions by payment of the cash
sum of $15,000 for any copyright infringements by DCR or its support groups occurring through the
date of the signing of this contract, including Friends of the Maritime Museum display photograph

Exh. 1 Page 5

5

EXHIBIT 1

of the pile (central portion of the QAR shipwreck), DCR’s Flickr account showing anchor A1 on the
pile, DCR’s website showing anchor A1 on the pile, DCR’s News website showing anchor A2, and
Friends of the QAR website showing mapping dividers (artifact). DCR shall pay Nautilus
Productions $15,000 by 31 January 2014.
VIII.

MISCELLANEOUS

23.

DCR Agreement and Release. Except as expressly provided in this Agreement, DCR and the
State, their successors and assigns hereby release and forever discharge Intersal and Nautilus,
including their officers, agents and employees, from any and all claims, demands, actions, causes
of action, rights, damages, costs, attorney fees, expenses and compensation whatsoever, whether
arising out of common law or statute, whether state or federal claim, that DCR or the State now
have, or that were or could have been made relating to their rights under the 1998 Agreement or
any other prior agreements related to the Adventure, El Salvador, or Queen Anne’s Revenge
shipwrecks. DCR expressly represents that it is not aware of any contracts that other State
agencies have entered into that infringe upon the intellectual property rights of Nautilus
Productions.

24.

Intersal Agreement and Release. Except as expressly provided in this Agreement, Intersal and
its successors and assigns hereby release and forever discharge the State, its officers, agents and
employees, including DCR, from any and all claims, demands, actions, causes of action, rights,
damages, costs, attorney fees, expenses and compensation whatsoever, whether arising out of
common law or statute, whether state or federal claim, that Intersal now has, or that were or could
have been made relating to Intersal’s rights under the 1998 Agreement or any other prior
agreements related to the Adventure, El Salvador, or Queen Anne’s Revenge shipwrecks.

25.

Petition for Contested Case Hearing. Intersal agrees to withdraw its petition for contested
case hearing in Intersal v. N.C. Dep’t of Cultural Resources (13DCR15732) within five (5) business
days of the signing of this Agreement.

26.

Nautilus Productions/Rick Allen Agreement and Release. Except as expressly provided in
this Agreement, Nautilus and Rick Allen, and their heirs, successors, and assigns, hereby release
and forever discharge the State, its officers, agents and employees, including DCR, whether
individually or in their capacity as State employees, and its support groups, including the Friends of
the Maritime Museum and the Friends of the QAR, from any and all claims, demands, actions,
causes of action, rights, damages, costs, attorney fees, expenses and compensation whatsoever,
whether arising out of common law or statute, whether state or federal claim, that Nautilus now
has, or that were or could have been made relating to Nautilus’s and Rick Allen’s rights under the
1998 Agreement or any other prior agreements related to the Queen Anne’s Revenge shipwreck or
United States Copyright Act. Nautilus and Rick Allen agree that, as part of this Agreement and
Release, Nautilus/Rick Allen shall withdraw the public records request it submitted to DCR on 28
August 2013, within five (5) business days of the signing of this Agreement.

27.

Binding Effect of Agreement on Successors in Interest. This Agreement shall be binding on
and inure to the benefit of the successors and assigns of DCR, Intersal, and Nautilus.

28.

Non-disparagement Clause. DCR, Intersal, and Nautilus agree that they will not disparage one
another professionally or in any public forum regarding any allegations related to this Agreement.

29.

Choice of Laws. This Agreement is entered into in the State of North Carolina and shall be
construed and interpreted in accordance with its laws.

Exh. 1 Page 6

6

EXHIBIT 1

30.

Counterparts. This Agreement may be executed in counterparts, any of which shall be deemed
to be an original and all of which together shall be deemed the same instrument.

31.

Entire Agreement. The foregoing constitutes the entire agreement as specified by DCR, Intersal,
and Nautilus, and the considerations stated herein are contractual and are not mere recitals.

32.

Effect of Breach of Agreement. In the event DCR, Intersal, or Nautilus breaches this
Agreement, DCR, Intersal, or Nautilus may avail themselves of all remedies provided by law or
equity.

33.

Review and Construction. Intersal, DCR and Nautilus have read and reviewed all of the terms
of this Agreement, with the benefit of advice from legal counsel of their choosing. The terms of
this Agreement have been drafted and revised with input from all of them and, thus, the terms of
this Agreement shall not be construed for or against any of them as author.

34.

Notice. Notices under this Agreement shall be provided as follows:
To DCR: Secretary, North Carolina Department of Cultural Resources, 109 East Jones Street,
Raleigh, NC 27601
To Intersal: Intersal, Inc., c/o Haft Steinlauf & Co., 1200 South Pine Island Road, Plantation,
Florida 33324
To Nautilus: Nautilus Productions, LLC, c/o Mr. Rick Allen, P.O. Box 53269, Fayetteville, NC 28305
Any of the entities named above may change its contact information as stated above by providing
written notice of the new information to all other entities named above.

[THIS SECTION INTENTIONALLY LEFT BLANK]

Exh. 1 Page 7

7

EXHIBIT 1

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Exh. 1 Page 8

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Nautilus Productions:

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STATE OF NORTH CAROLINA
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Exh. 1 Page 9

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EXHIBIT 1

North Carolina Department of Cultural Resources:

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Exh. 1 Page 10

EXHIBIT 1

STATE OF NORTH CAROLfNA

COUNTY OF WAKE

AGREEMENT

THIS AGREEMENT is entered into this 1st day of Sept.

, 1998, by and among the

State of North Cal'olina represented by the Department of Cultural Resources (hereinafter the
"Department"), Intersal, Inc., a Florida corporation (hereinafter "Intersal"), and Maritime
Research Institute, Inc., a North Carolina nonprofit corporation (hereinafter "MRI").

WITNESSETH, THAT:
WHEREAS, under the provisions of the federal Abandoned Shipwreck Act of 1987 {43
U.S.C. §§ 2101-2106) and Article 3 of Chapter 121 of the General Statutes of North Carolina

(N.C.G.S. §§121-22 through 121-28), the title to non-federal abandoned shipwrecks and artifacts
embedded in the submerged lands of the State of North Carolina is transferred by the United
States to the State of North Carolina and all such artifacts are placed under the custody and

control of the Department; and

WHEREAS, working under a permit issued by the Department, Intersal, under the
direction of Michael E. Daniel, located a shipwreck site believed to be that of the ship QUEEN
ANNE'S REVENGE (hereinafter "QAR") within the State waters of North Carolina, and are to be

credited with the discovery of said vessel; and
WHEREAS, QAR was the flagship of the pirate Edward Teach or Thatch (a.k.a.
"Blackbeard'') and was lost while attempting to enter Beaufort Inlet in 1718 and is of inestimable
historical and archaeological value; and

Exh. 1 Page 11

EXHIBIT 1

2
WHEREAS, lntersal has been searching for QAR and other 18th Century shipwrecks at
Beaufort Inlet under permits issued by the Department since 198 7, and has expended a

considerable amount of personnel and financial assets in that effort; and
WHEREAS, paragraph L of the QAR Pennit (BUI 585) issued to lntersal states that
"Any material recovered during Phase Five (the salvage phase] of the project shall be divided
between the Department and the Permittee, according to a system to be developed, with 25% of

all coins and precious metals retained by the Department, and 75% of the material awarded to the
Permittee. The Department and the Permittee agree that the most appropriate disposition of other
artifacts, such as vessel structure, ship's fittings, weapons, personal effects, and non-precious

cargo shall be a suitable facility, possibly in the Beaufort area [the North Carolina Maritime
Museum], where the material can be curated for scientific study and public display;" and,

WHEREAS, Intersal and Michael E. Daniel are willing to forego entitlement to any coins
and precious metals recovered from the QAR site in order that all QAR artifacts remain as one

intact collection and in order to permit the Department to determine ultimate disposition of the

artifacts; and,

.

WHEREAS, the Department recognizes MRI, as a partner in the project for the life of
this Agreement; and,

WHEREAS, in order to facilitate this Agreement, the Department recognizes Intersal and
MRI as partners, to work in partnership with the Department to research, survey, search, recover,
preserve, protect, conserve, curate, and promote the collection for the life of this Agreement; and,
WHEREAS, Intetsal, MRI, and the Department, in a spirit of partnership, are willing to

establish a five-member project Advisory Committee with the responsibilities set out in

Exh. 1 Page 12

EXHIBIT 1

3

paragraph 12 of this Agreement; and,
WHEREAS, Intersal has shown in the past, and continues to evidence, a strong awareness
of and commitment to the historical significance of QAR through the quantity and quality of

Intersal's historicaJ research, its willingness to employ state of the art equipment in its
underwater search and recovery efforts, and the prompt reporting of its activities to the
Department; and,
WHEREAS, all of the Parties to this Agreement are desirous that all aspects of the project

be accomplished in a manner that will preserve and protect the QAR and its artifacts and will
provide the highest degree of historical and archaeological knowledge both to the general public

and to serious scholastic study; and

WHEREAS, the Department is responsible for the protection of the public heritage of

North Carolina; and
WHEREAS, the officers oflntersal, aware of their responsibility to protect the interests
of their stockholders, are also aware of the importance of the QAR site to the public heritage of

North Carolina; and
WHEREAS, lntersal and MRI agree that title and ownership of the QAR and its artifacts
shall be as set out in paragraph 14 of this Agreement; and
WHEREAS, the Parties believe that the terms of this document will create a relationship

that will facilitate and finance the project in an appropriate manner;
NOW, THEREFORE, the Parties to this Agreement hereby agree as follows:
ARTICLE I1.

PARTIES

The Department is an agency of the State of North Carolina;

Exh. 1 Page 13

EXHIBIT 1

4
2.

MRI is a North Carolina non-profit corporation incorporated under the provisions

of Chapter SSA of the General Statutes of North Carolina. MRI shall be fully qualified under
State and Federal law to engage in fund raising and to receive philanthropic tax exempt

contributions as project funds.
3.

Intersal is a corporation incorporated under the laws of the State of Florida.

4.

By entering into this Agreement, the Parties named above certify that they are

legally constituted entities with full authority to perform the terms of the agreement. The laws of

North Carolina will be applied to interpreting and enforcing the terms of this document.
ARTICLE II - DEFINITIONS
5.

The term "Parties" means the parties to this Agreement, i.e. the Department, MRI

and Intersal.

6.

The term "Recovery" means the location, identification, and retrieval of any

portion of the shipwreck of the QAR, or artifact from the site area.
7.

The term "Artifact" means those materials showing human workmanship or

modification or having been used or intended to be used or consumed by humans, including

.

relics, monuments, tools and fittings, utensils, instruments, weapons, ammunition, and treasure
trove and precious materials including gold, silver, bulJion,jewelry, pottery, ceramics, and

similar or related materials from QAR.
8.

The term "Preservation" means the protection of the shipwreck of QAR and

artifacts while on the site area.
9.

The term "Conservation" means the protection, treatment and long term curation

of any portion of the shipwreck of QAR or any artifacts after recovery from the site area.

Exh. 1 Page 14

EXHIBIT 1

5

1O.

The term "Site Area" means the area located within 300 yards of a point at

coordinates 76 degrees 40.972 minutes West Longitude and 34 degrees 40.513 minutes North
Latitude, the area surrounding the shipwreck, and this may be further defined by the Parties in

the event artifacts or debris from the shipwreck are ~iscovered outside of this area.
11.

The term "Project" means all survey, documentation, recovery, preservation,

conservation, interpretation and exhibition activities related to any portion of the shipwreck of
QAR or its artifacts.

ARTICLE III - GENERAL PROVISIONS
12.

The primary responsibility for the planning and accomplishment of the

preservation, recovery and conservation of the shipwreck of the QAR and the artifacts and all
operations, including security operations, and any determinations as to priority of operations,

is that of the Secretary of the Department. The State Archaeologist, the Supervisor of the
Underwater Archaeology Unit, a representative of MRI, a representative of lntersal, and a
representative selected by the Secretary of the Department from outside the Division of

Archives and History shall form the Advisory Committee on Archaeological Operations
(" Advisory Committee") having planning and oversight responsibility for the recovery and
preservation of the shipwreck of the QAR and its artifacts, however, the final decisions with
regard to such matters rest with the Secretary of the Department.

13.

Any and all funds raised by MRl shall be used as directed by MRI to cover costs

associated with the project, which shall include the payment of MRI's employees and operating
expenses. Any MRI funds remaining after the payment of such costs may be used by MRI in the
furtherance of its non-profit purpose of maritime research consistent with its charter and bylaws.

Exh. 1 Page 15

EXHIBIT 1

6

14.

Subject to their rights under this Agreement, lntersal and MRI hereby assign to

the Department, and the Department hereby accepts, on behalf of the People of North Carolina,
the interests oflntersal and MRI in the title and ownership of QAR and its artifacts.
15.

The Parties agree that MRI shall con9uct research, documentation, search, survey,

recovery, preservation, conservation and curation, in conjunction with the Department. In
addition, MRI may on its own conduct fund raising activities related to the project regarding the
QAR site (except as noted in paragraphs 16 and 17).

16.

Except as provided in paragraph 20 and this paragraph, lntersal shall have the

exclusive right to make and market all commercial narrative (written, film, CD Rom, and/or
video} accounts of project related activities undertaken by the Parties. lntersal (or its designee)

will be responsible for its own costs related to the making and marketing of such narrative

accounts, and may participate in operations in the course of making such accounts. All Parties
agree to cooperate to a reasonable degree in the making of a film and/or video documentary, or
group of documentaries, that lntersal will produce (or contract to be produced) with regard to

project activities.

17.

All Parties agree to cooperate in the making of a non commercial educational

video and/or film documentary, or series of such documentaries, as long as there is no broadcast
originating outside of North Carolina, and there is no distribution or dissemination for sale of the

said educational documentary without lntersal 's written permission. Intersal shall have the rights
to reasonable access and usage, subject to actual costs of duplication, of all video and/or film
footage generated in the making of said educational documentary.
The Parties agree to reasonably cooperate with all legitimate news media inquiries

Exh. 1 Page 16

EXHIBIT 1

7

regarding the project, using guidelines described in this paragraph and paragraph 3 5.

18.

Subject to Intersal establishing compliance with standard museum practices

relating to the preservation and conservation of artifacts, lntersal shall have the exclusive rights

to make (or have made) molds or otherwise reproduce (or have reproduced) any QAR artifacts of

its choosing for the purpose of marketing exact or miniature replicas. Intersal will be responsible
for all costs related to its making and marketing of such replicas. All such replicas will be
approved by the Advisory Committee, be made on a limited edition basis, and be individually

numbered or otherwise uniquely identified to facilitate authentication. The Advisory Committee
shall have the right to veto the reproduction, marketing or sale of a replica when the quality of
the replica is deemed to be inappropriate. The Department shall have the right to sell such
replicas at any state owned or state sponsored shop. Furthermore, the Department may make ( or

have made) molds or otherwise reproduce (or have reproduced) any QAR artifacts of its
choosing for non-commercial educational purposes. The Department will be responsible for all
costs related to its making and use of such replicas.
19.

MRI shall have the right to designate other entities as official sponsors of the

project, or other similar designations with the approval of the Advisory Committee.
20.

The Department shall have the right to authorize access to, and publish accounts

and other research documents relating to, the artifacts, site area, and project operations for non
commercial educational or historical purposes. Nothing in this document shall infringe to any
extent the public's right to access public records in accordance with Chapters 121 and 132 of the
General Statutes ofNorth Carolina.
21.

MRI and the State of North Carolina jointly shall have the exclusive right to

Exh. 1 Page 17

EXHIBIT 1

8
nationally and internationally tour and exhibit a representative cross section of the artifacts, if
MRI establishes its compliance with standard museum practices with regard to a proposed tour

and exhibit. Either entity may initiate and administer such a tour, and either entity may
participate in a tour initiated and administered by th~ other. Each entity shall be responsible for

the costs incurred by their participation in such a tour and funds generated by each entity on such

a tour may be used to cover that entity's costs.
Nothing in this paragraph shall affect the Department's responsibility and authority with
regard to the curation of the artifacts and their display for non commercial purposes.

22.

The Parties agree to cooperate with each other and with any law enforcement or

other government agency to protect the site area from unauthorized visitation, diving and
unauthorized collection of Artifacts.

23.

The Parties will neither knowingly solicit nor accept gifts from third parties when

such gifts may involve conflict of interest or an appearance of a conflict of interest.
ARTICLE IV 24.

REIMBURSEMENT TO INTERSAL: EXCESS PROCEEDS

All net profits (as certified by Intersal to the reasonable satisfaction of the

Department) from Intersat•s sale of media rights and replicas shall be entirely due to Intersal, up
to an amount which represents lntersal's costs to date which have been expended in connection

with the search and recovery of artifacts from the QAR. Any further funds received by lntersal
from these sources shall be divided 75% (seventy five percent) of the net profits (as certified by
Intersal to the satisfaction of the Department) to lntersal, and 25% (twenty-five percent) to be
donated by Intersal to MRI to be used by MRI as directed by the Advisory Committee

·ror the

purposes enumerated in this Agreement. The Advisory Committee shall take into account the

Exh. 1 Page 18

EXHIBIT 1

9

goal of ensuring that the heritage of the QAR is avai]able to aJI of the citizens of the State of

North Carolina.
ARTICLE V -

25.

PLANS, REPORTS AND RECORDS

The Department, Intersal, and MRI shall provide the Advisory Committee with

copies of their plans, status reports, records of fund raising activities and expenditures relating to
the project. If the Advisory Committee determines that it needs additional or different
information, it may establish a system for receiving the same. The provisions of this paragraph
are in addition to the requirement of paragraph 30.

ARTICLE VI - CHARITABLE FUND RAISING ACTIVITIES BY MRI
26.

The Advisory Committee, the Department, lntersal, and MRl will all make

available to each other such information and data as may reasonably be required and are
generally available to inform potential donors and others about the project.
27.

All Parties recognize that MRI is an independent entity with authority to solicit

both funds and equipment for the purposes enumerated in this agreement.

28.

All funds raised by MRI shall be used as directed by MRI, according to the

provisions of paragraph 12 herein.

ARTICLE VII - ACCESSION OF RECORDS
29.

Subject to the provisions of G.S. § 70-18, for the purposes of maintaining

pertinent project records, MRI, Intersal and the Department agree to make available for
duplication by each other, or, when appropriate, to provide the Department with, relevant field
maps, notes, drawings, photographic records and other such technical, scientific and historical

documentation created or collected by MRI, Intersal or the Department pursuant to the study of

Exh. 1 Page 19

EXHIBIT 1

10

the site and the recovery of materials therefrom. These materials shall become public records
curated by the Department.

ARTICLE VIII - MAINTENANCE OF FINANCIAL RECORDS AND AUDIT
30.

The parties to the Agreement shalJ d~velop procedures for keeping records

pertaining to costs and funds associated with the project. These procedures shall incorporate, and
apply as appropriate, the standards for financial management systems set forth in the Uniform

Administrative Requirements for Grants and Cooperative Agreements to State and Local
Governments, at 32 CFR Section 33.20.

ARTICLE IX -NOTICES
31.

Any notice, request, demand or other communication required or permitted to be

given under this document shall be deemed to have been duly given if in writing and either
delivered personally or by telegram or mailed by first class, registered, or certified mail, as

follows:
If to the Department: 109 East Jones Street, Raleigh, NC 27601-2807;
lfto MRI: P. 0. Box 8681, Jupiter, FL 33468;
Ifto Intersal: 104 Stanton Road, Beaufort, NC 28516.
A Party can change the address to which such communications are to be sent by giving
written notice to the other party in the manner provided in this paragraph.
ARTICLE X -

32.

OBLIGATIONS OF APPROPRIATIONS

Nothing herein shall constitute, nor be deemed to constitute, an obligation of

current or future appropriations by the General Assembly of North Carolina.
ARTICLE XI -

Exh. 1 Page 20

ADDITIONAL PROVISIONS

EXHIBIT 1

I1
33.

The Department recognizes that Intersal's efforts and cooperation with regard to

the QAR permit have had, and will continue to have, a significant impact on its compliance with
the performance standards agreed to with regard to Intersal's permit to search for the El

Salvador. The Department believes that the cooperation and continued effort oflntersal with

regard to both its QAR permit and its El Salvador permit are of benefit to the historical heritage
of the State. The Department believes that the cooperation and effort of MIU with regard to this
project and the search for the Adventure are of benefit to the historical heritage of the State.
Subject to the provisions of Article 3 of Chapter 121 of the General Statutes of North Carolina
and subchapter .04R ofTitle 7 of the North Carolina Administrative Code, the Department
agrees to recognize Intersal's and MRI's efforts and participation in the QAR project as
sufficient to satisfy any performance requirements associated with annual renewal of lntersal's
permits for either El Salvador or Adventure, and for the life of this Agreement, renewal of said
permits cannot be denied without just cause.

34.

In the event that it is determined that the shipwreck site which is the subject of

this Agreement is not the QAR, lntersal and the State shall enter into a contract along the terms
of the pennit issued to lntersal for the exploration and recovery of the QAR. In the event that the

ship El Salvador is discovered as a result of project operations, the terms oflntersal's El
Salvador permit (BUI 584) shall apply.
35.

All press releases concerning the project shall contain the following information,

when appropriate: "Intersal, Inc., a private research firm, discovered the site believed to be

Queen Anne's Revenge on November 21, 1996. QAR was located near Beaufort Inlet, NC by
Intersal's director of operations, Mike Daniel, who used historical research provided by IntersaJ's

Exh. 1 Page 21

EXHIBIT 1

12 ·
president, Phil Masters. Daniel now heads up Maritime Research Institute, the non-profit
corporation formed to work on the project in cooperation with State archaeologists and historians
of the North Carolina Department of Cultural Resources, Division of Archives and History."

The Parties agree that their spokespersons and employees will be instructed, when being
interviewed by legitimate news media, to endeavor to give appropriate credit where due for the
discovery of QAR, and mention the continuing participation of each of the Parties in the project.
36.

This document shall become effective when signed by all the Parties and shall be

effective for a period of fifteen (15) years, unless sooner terminated by written consent of all
Parties. The Parties shall have the option to renew this agreement for an additional period of ten

years. The option must be exercised in writing to the Department or its successors on or before
the expiration of this Agreement.
37.

This Agreement shall be governed by the law ofNorth Carolina.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, this the .1st

day of Sept.

, 1998.

Maritime Research Institute, Inc.

Exh. 1 Page 22

EXHIBIT 1

13

Jntersal, Inc.
\

· The State of North Carolina

By:.....s1~~~~~~~..:::......:...._-=::=!~
Witness: ~ ~ ~ ~ . t r a : 1 . - 1 - . ~ ~ ; . . . . . . . . ; : : ~ ~ ~ ~

Exh. 1 Page 23

EXHIBIT 1

STATE OF NORTH CAROLINA
COUNTY OF WAKE
AMENDMENT TO AGREEMENT
WHEREAS , on the I" day of September, 1998, the State of North Carolina represented
by the Department of Cultural Resources (hereinafter the "Department'), Intersal, Inc., a Florida
corporation (hereinafter "Intersal"), and Maritime Research Institute, Inc., a North Carolina nonprofit corporation (hereinafter "MRI") entered into an Agreement pertaining to the shipwreck
site believed to be that of the ship QUEEN ANNE'S REVENGE (hereinafter "QAR"), which is
located within the state waters of North Carolina.; and
WHEREAS, the parties to said Agreement desire to amend said Agreement in order to
expand the Advisory Committee on Archaeological Operations ("Advisory Committee") in order
to include additional persons involved in said project on the "Advisory Committee" including the
QAR Project Director, the Director of the No1ih Carolina Maritime Museum, an additional
member from MRI and an additional member from Intersal;
THEREFORE, A1iicle III, Paragraph 12 of the Agreement between the Department,
Intcrsal, and MRI entered into on the I st day of September, 1998 is amended as follows:
12.
The primary responsibility for the planning and accomplishment of the
preservation, recove1y and conservation of the shipwreck of the QAR and the artifacts and all
operations, including security operations, and any determinations as to priority of operations, is
that of the Secretary of the Department. The State Archaeologist, the Supervisor of the
Unde1water Archaeology Unit, the QAR Project Director, the Director of the North Carolina
Ma1itime Museum, two representatives of MRI, two representatives oflntersal, and a
representative selected by the Secretary of the Department from outside the Division of Archives
and Histo1y shall fom1 the Advisory Committee on Archaeological Operations ("Advisory
Committee") having planning and oversight responsibility for the recove1y and preservation of
the shipwreck of the QAR and its artifacts, however, the final decisions with regard to such
matters rest with the Secretary of the Depaiiment.
IN WITNESS WHEREOF, parties hereunto have executed this Amendment to
Agreement this the_ day of
, 2001.

Exh. 1 Page 24

EXHIBIT 1

By: -+--------,H---

Witness:

Ll. Jh~. 'r,,~~-

The Sta

B~:-~~~:t(.e.d"'::::~·~~

Exh. 1 Page 25

CERTIFICATE OF SERVICE
THE UNDERSIGNED HEREBY CERTIFIES that on this date a copy of the foregoing or
attached document was served upon counsel of record for all parties of record or the parties by
depositing in a post-paid, properly addressed wrapper in a post office or official depository under
the exclusive care and custody of the United States Postal Service, addressed as follows:
Olga Vysotskaya
Special Deputy Attorney General
Composite Litigation Group
Office of the Attorney General
North Carolina Department of Justice
Post Office Box 629
Raleigh, North Carolina 27602-0629
Tel: (919) 716-0185
Fax: (919) 716-6759
E-Mail: ovysotskaya@ncdoj.gov
Amar Majmundar
Special Deputy Attorney General
Composite Litigation Group
Office of the Attorney General
North Carolina Department of Justice
Post Office Box 629
Raleigh, North Carolina 27602-0629
Tel: (919) 716-0185
Fax: (919) 716-6759
E-Mail: amajmundar@ncdoj.gov
This the 2nd day of November, 2015.

/s/______________________________
David H. Harris, Jr.
State Bar No. 9841
Linck Harris Law Group, PLLC
2530 Meridian Parkway, Suite 300
Durham, North Carolina 27713
919-806-4220
866-274-0756 (Fax)
dharris@linckharris.com
Counsel for Plaintiff

4