EXHIBIT 3
IRREVOCABLE PROXY
This Irrevocable Proxy (this "Proxy") is made effective as of
October 14, 2004, by and between Litespeed Master Fund, Ltd. ("Litespeed") and
Gryphon Master Fund, L.P. ("Gryphon").
A. Gryphon and Litespeed are parties to that certain Investment
Agreement, dated October 14, 2004, by and among Gadzooks, Inc. and the several
purchasers named therein (as amended, modified or supplemented from time to
time, the "Agreement"). Capitalized terms used herein and not otherwise defined
have the meanings assigned to such terms in the Agreement.
B. Litespeed has agreed to appoint Gryphon as Litespeed's proxy to
take action and make decisions on behalf of Litespeed on all matters for which a
Purchaser is entitled to consent, approve, waive, amend or otherwise make
decisions or take action under the Agreement, subject to the terms and
conditions contained in this Proxy.
NOW, THEREFORE, in consideration of $10 and other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Irrevocable Proxy.
(a) Effective as of the date hereof, Litespeed hereby
irrevocably appoints Gryphon as Litespeed's true and lawful
attorney-in-fact and proxy, for and in Litespeed's name, to give or
withhold consents, approvals or waivers, amend or modify the Agreement or
the Operative Agreements or otherwise make decisions or take action in its
capacity as a Purchaser under the Agreement.
(b) The appointment and proxy granted to Gryphon hereby is
coupled with an interest and thereby made irrevocable. The parties agree
that Gryphon's interest is irrevocable by virtue of the payment of $10 to
Litespeed, receipt of which is hereby acknowledged, as well as other good
and valuable consideration.
2. Term. This Proxy and the appointment specified herein will
automatically terminate when the standby closing has occured.
3. Modifications. Neither this Proxy, nor any provision hereof, may
be modified, waived, discharged or terminated except by a writing executed by
the parties hereto.
4. Applicable Law. This Proxy will be construed and enforced in
accordance with the laws of the State of Texas.
5. Proxy Binding Upon Transferees. If, at any time or from time to
time, any of Litespeed's interest as a Purchaser under the Agreement is now or
hereafter transferred to any party, the transferee will take such rights and
interest subject to all provisions, conditions and covenants of this Proxy, and,
as a condition precedent to the transfer of such rights or interests, the
transferee will agree in writing to be bound by all provisions of this Proxy as
a party hereto.
6. Counterparts. This Proxy may be executed in one or more
counterparts for the convenience of the parties hereto, all of which together
shall constitute one and the same instrument.
7. Absence of Understanding. Nothing contained in this Proxy, and no
action by any party pursuant to this Proxy, will be deemed to constitute the
parties hereto as a group with respect to the U.S. securities laws.
In witness whereof, the parties have executed this proxy to be effective
as of the date first above written.
[SIGNATURE PAGE FOLLOWS]
GRYPHON MASTER FUND, L.P.
By: Gryphon Partners, L.P.,
its General Partner
By: Gryphon Management Partners,
L.P., its General Partner
By: Gryphon Advisors, L.L.C.,
its General Partner
By: /s/ Xxxxxx X. Garden
--------------------------
Xxxxxx X. Garden,
Authorized Agent
LITESPEED MASTER FUND, LTD.
By: Litespeed Management L.L.C.
By: /s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx,
Managing Partner
