Exhibit
4.14
ESCROW AGREEMENT
THIS ESCROW AGREEMENT
(this " Agreement ") is made and
entered into as of August ___, 2005 by SONORAN ENERGY, INC.,
a Washington corporation (the " Company "); CORNELL
CAPITAL PARTNERS, LP, a Delaware limited partnership (the "
Investor "); and DAVID GONZALEZ, ESQ. (the "
Escrow Agent ").
BACKGROUND
WHEREAS , the Company and the Investor have entered into a
Standby Equity Distribution Agreement (the " Standby Equity
Distribution Agreement ") dated as of the date hereof, pursuant
to which the Investor will purchase the Company's Common Stock, no
par value per share (the " Common Stock "), at a price per
share equal to the Purchase Price, as that term is defined in the
Standby Equity Distribution Agreement, for an aggregate price of up
to Fifteen Million Dollars ($15,000,000). The Standby Equity
Distribution Agreement provides that on each Advance Date the
Investor, as that term is defined in the Standby Equity
Distribution Agreement, shall deposit the Advance pursuant to the
Advance Notice in a segregated escrow account to be held by Escrow
Agent and the Company shall deposit shares of the Company's Common
Stock, which shall be purchased by the Investor as set forth in the
Standby Equity Distribution Agreement, with the Escrow Agent, in
order to effectuate a disbursement to the Company of the Advance by
the Escrow Agent and a disbursement to the Investor of the shares
of the Company's Common Stock by Escrow Agent at a closing to be
held as set forth in the Standby Equity Distribution
Agreement (the " Closing ").
WHEREAS , Escrow Agent has agreed to accept, hold, and
disburse the funds and the shares of the Company's Common Stock
deposited with it in accordance with the terms of this
Agreement.
WHEREAS , in order to establish the escrow of funds and
shares to effect the provisions of the Standby Equity Distribution
Agreement, the parties hereto have entered into this
Agreement.
NOW THEREFORE , in consideration of the foregoing, it is hereby
agreed as follows:
1.
Definitions . The following terms shall have the following
meanings when used herein:
a.
" Escrow Funds " shall mean the
Advance funds deposited with the Escrow Agent pursuant to this
Agreement.
b.
" Joint Written Direction " shall
mean a written direction executed by the Investor and the Company
directing Escrow Agent to disburse all or a portion of the Escrow
Funds or to take or refrain from taking any action pursuant to this
Agreement.
c.
" Common Stock Joint Written
Direction " shall mean a written direction executed by the
Investor and the Company directing Investor's Counsel to disburse
all or a
1
portion of the shares of the Company's
Common Stock or to refrain from taking any action pursuant to this
Agreement.
2.
Appointment of and Acceptance by
Escrow Agent .
a.
The Investor and the Company hereby
appoint Escrow Agent to serve as Escrow Agent hereunder.
Escrow Agent hereby accepts such appointment and, upon
receipt by wire transfer of the Escrow Funds in accordance with
Section 3 below, agrees to hold, invest and disburse the Escrow
Funds in accordance with this Agreement.
b.
The Investor and the Company hereby
appoint the Escrow Agent to serve as the holder of the shares of
the Company's Common Stock which shall be purchased by the
Investor. The Escrow Agent hereby accepts such appointment
and, upon receipt via D.W.A.C or the certificates representing of
the shares of the Company's Common Stock in accordance with Section
3 below, agrees to hold and disburse the shares of the Company's
Common Stock in accordance with this Agreement.
c.
The Company hereby acknowledges that the
Escrow Agent is general counsel to the Investor, a partner in the
general partner of the Investor and counsel to the Investor in
connection with the transactions contemplated and referenced herein
and will be acting as the escrow agent for shares of the Company's
Common Stock as outlined herein. The Company agrees that in
the event of any dispute arising in connection with this Escrow
Agreement or otherwise in connection with any transaction or
agreement contemplated and referenced herein, the Escrow Agent
shall be permitted to continue to represent the Investor and the
Company will not seek to disqualify such counsel.
3.
Creation of Escrow Account/Common
Stock Account .
a.
On or prior to the date of this Agreement
the Escrow Agent shall establish an escrow account for the deposit
of the Escrow Funds entitled as follows: Sonoran Energy,
Inc./Cornell Capital Partners, LP. The Investor will wire
funds to the account of the Escrow Agent as follows:
|
Bank:
|
Wachovia, N.A. of New Jersey
|
|
Routing #:
|
031201467
|
|
Account #:
|
2000014931134
|
|
Name on Account:
|
David Gonzalez Attorney Trust Account
|
|
Name on Sub-Account:
|
Sonoran Energy, Inc./Cornell Capital Partners, LP Escrow
account
|
2
b.
On or prior to the date of this Agreement
the Escrow Agent shall establish an account for the D.W.A.C. of the
shares of Common Stock. The Company will D.W.A.C. shares of the
Company's Common Stock to the account of the Escrow Agent as
follows:
|
Brokerage Firm:
|
Sloan Securities Corp.
|
|
Clearing House:
|
Fiserv
|
|
Account #:
|
56887298
|
|
DTC #:
|
0632
|
|
Name on Account:
|
David Gonzalez Escrow Account
|
4.
Deposits into the Escrow
Account. The Investor agrees
that it shall promptly deliver all monies for the payment of the
Common Stock to the Escrow Agent for deposit in the Escrow
Account.
5.
Disbursements from the Escrow
Account .
a.
At such time as Escrow Agent has
collected and deposited instruments of payment in the total amount
of the Advance and has received such Common Stock via D.W.A.C from
the Company which are to be issued to the Investor pursuant to the
Standby Equity Distribution Agreement, the Escrow Agent shall
notify the Company and the Investor. The Escrow Agent will continue
to hold such funds until the Investor and Company execute and
deliver a Joint Written Direction directing the Escrow Agent to
disburse the Escrow Funds pursuant to Joint Written Direction at
which time the Escrow Agent shall wire the Escrow Funds to the
Company. In disbursing such funds, Escrow Agent is authorized
to rely upon such Joint Written Direction from Company and may
accept any signatory from the Company listed on the signature page
to this Agreement and any signature from the Investor that Escrow
Agent already has on file. Simultaneous with delivery of the
executed Joint Written Direction to the Escrow Agent the Investor
and Company shall execute and deliver a Common Stock Joint Written
Direction to the Escrow Agent directing the Escrow Agent to release
via D.W.A.C to the Investor the shares of the Company's Common
Stock. In releasing such shares of Common Stock the Escrow
Agent is authorized to rely upon such Common Stock Joint Written
Direction from Company and may accept any signatory from the
Company listed on the signature page to this Agreement and any
signature from the Escrow Agent has on file.
In the event the Escrow Agent does not
receive the amount of the Advance from the Investor or the shares
of Common Stock to be purchased by the Investor from the Company,
the Escrow Agent shall notify the Company and the Investor.
In the event that the Escrow Agent has
not received the Common Stock to be purchased by the Investor from
the Company, in no event will the Escrow Funds be released to the
Company until such shares are received by the Escrow Agreement. For
purposes of this Agreement, the term "Common Stock certificates"
shall mean Common Stock certificates to be purchased pursuant to
the respective Advance Notice pursuant to the Standby Equity
Distribution Agreement.
6.
Deposit of Funds
. The Escrow Agent is hereby authorized
to deposit the wire transfer proceeds in the Escrow
Account.
3
7.
Suspension of Performance:
Disbursement Into Court .
a.
Escrow Agent . If at any time, there shall exist any dispute
between the Company and the Investor with respect to holding or
disposition of any portion of the Escrow Funds or the Common Stock
or any other obligations of Escrow Agent hereunder, or if at any
time Escrow Agent is unable to determine, to Escrow Agent's sole
satisfaction, the proper disposition of any portion of the Escrow
Funds or Escrow Agent's proper actions with respect to its
obligations hereunder, or if the parties have not within thirty
(30) days of the furnishing by Escrow Agent of a notice of
resignation pursuant to Section 9 hereof, appointed a successor
Escrow Agent to act hereunder, then Escrow Agent may, in its sole
discretion, take either or both of the following
actions:
i.
Suspend the performance of any of its
obligations (including without limitation any disbursement
obligations) under this Escrow Agreement until such dispute or
uncertainty shall be resolved to the sole satisfaction of Escrow
Agent or until a successor Escrow Agent shall be appointed (as the
case may be); provided however, Escrow Agent shall continue to
invest the Escrow Funds in accordance with Section 8 hereof;
and/or
ii.
Petition (by means of an interpleader
action or any other appropriate method) any court of competent
jurisdiction in any venue convenient to Escrow Agent, for
instructions with respect to such dispute or uncertainty, and to
the extent required by law, pay into such court, for holding and
disposition in accordance with the instructions of such court, all
funds held by it in the Escrow Funds, after deduction and payment
to Escrow Agent of all fees and expenses (including court costs and
attorneys' fees) payable to, incurred by, or expected to be
incurred by Escrow Agent in connection with performance of its
duties and the exercise of its rights hereunder.
iii.
Escrow Agent shall have no liability to
the Company, the Investor, or any person with respect to any such
suspension of performance or disbursement into court, specifically
including any liability or claimed liability that may arise, or be
alleged to have arisen, out of or as a result of any delay in the
disbursement of funds held in the Escrow Funds or any delay in with
respect to any other action required or requested of Escrow
Agent.
8.
Investment of Escrow Funds
. The Escrow Agent shall deposit the
Escrow Funds in a non-interest bearing money market
account.
If Escrow Agent has not received a Joint
Written Direction at any time that an investment decision must be
made, Escrow Agent may retain the Escrow Fund, or such portion
thereof, as to which no Joint Written Direction has been received,
in a non-interest bearing money market account.
9.
Resignation and Removal of Escrow
Agent . Escrow Agent may
resign from the performance of its duties hereunder at any time by
giving thirty (30) days' prior written notice to the parties or may
be removed, with or without cause, by the parties, acting jointly,
by furnishing a Joint Written Direction to Escrow Agent, at any
time by the giving of ten (10) days' prior written notice to Escrow
Agent as provided herein below. Upon any such notice of
resignation or removal, the representatives of the Investor and the
Company identified in Sections 13a.(iv)
4
and 13b.(iv), below, jointly shall
appoint a successor Escrow Agent hereunder, which shall be a
commercial bank, trust company or other financial institution with
a combined capital and surplus in excess of $10,000,000.00.
Upon the acceptance in writing of any appointment of Escrow
Agent hereunder by a successor Escrow Agent, such successor Escrow
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Escrow Agent,
and the retiring Escrow Agent shall be discharged from its duties
and obl