Exhibit 10.25

CONTINUING SECURITY AGREEMENT:

RIGHTS TO PAYMENT AND INVENTORY

1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
DESIGN WITHIN REACH, INC., a Delaware corporation, or any of them (“Debtor”),
hereby grants and transfers to WELLS FARGO HSBC TRADE BANK, NATIONAL ASSOCIATION
(“Trade Bank”) a security interest in all accounts, deposit accounts, chattel
paper (whether electronic or tangible), instruments, promissory notes,
documents, general intangibles, payment intangibles, software, letter of credit
rights, health-care insurance receivables and other rights to payment
(collectively called “Rights to Payment”), now existing or at any time
hereafter, and prior to the termination hereof, arising (whether they arise from
the sale, lease or other disposition of inventory or from performance of
contracts for service, manufacture, construction, repair or otherwise or from
any other source whatsoever), including all securities, guaranties, warranties,
indemnity agreements, insurance policies, supporting obligations and other
agreements pertaining to the same or the property described therein, and in all
goods returned by or repossessed from Debtor’s customers, together with a
security interest in all inventory, goods held for sale or lease or to be
furnished under contracts for service, goods so leased or furnished, raw
materials, component parts and embedded software, work in process or materials
used or consumed in Debtor’s business and all warehouse receipts, bills of
lading and other documents evidencing goods owned or acquired by Debtor, and all
goods covered thereby, now or at any time hereafter, and prior to the
termination hereof, owned or acquired by Debtor, wherever located, and all
products thereof (collectively called “Inventory”), whether in the possession of
Debtor, warehousemen, bailees or any other person, or in process of delivery,
and whether located at Debtor’s places of business or elsewhere (with all Rights
to Payment and Inventory referred to herein collectively as the “Collateral”),
together with whatever is receivable or received when any of the Collateral or
proceeds thereof are sold, leased, collected, exchanged or otherwise disposed
of, whether such disposition is voluntary or involuntary, including without
limitation, all Rights to Payment, including returned premiums, with respect to
any insurance relating to any of the foregoing, and all Rights to Payment with
respect to any claim or cause of action affecting or relating to any of the
foregoing (hereinafter called “Proceeds”).

2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Trade Bank;
(b) all obligations of Debtor and rights of Trade Bank under this Agreement; and
(c) all present and future obligations of Debtor to Trade Bank of other kinds.
The word “Indebtedness” is used herein in its most comprehensive sense and
includes any and all advances, debts, obligations and liabilities of Debtor, or
any of them, heretofore, now or hereafter made, incurred or created, whether
voluntary or involuntary and however arising, whether due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, including
under any swap, derivative, foreign exchange, hedge, deposit, treasury
management or other similar transaction or arrangement, and whether Debtor may
be liable individually or jointly with others, or whether recovery upon such
Indebtedness may be or hereafter becomes unenforceable.

3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Trade Bank, including without limitation, the payment
of all Indebtedness of Debtor to Trade Bank, and the termination of all
commitments of Trade Bank to extend credit to Debtor, existing at the time Trade
Bank receives written notice from Debtor of the termination of this Agreement.

 

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4. OBLIGATIONS OF TRADE BANK. Trade Bank has no obligation to make any loans
hereunder. Any money received by Trade Bank in respect of the Collateral may be
deposited, at Trade Bank’s option, into a non-interest bearing account over
which Debtor shall have no control, and the same shall, for all purposes, be
deemed Collateral hereunder.

5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Trade Bank
that: (a) Debtor’s legal name is exactly as set forth on the first page of this
Agreement, and all of Debtor’s organizational documents or agreements delivered
to Trade Bank are complete and accurate in every respect; (b) Debtor is the
owner and has possession or control of the Collateral and Proceeds; (c) Debtor
has the exclusive right to grant a security interest in the Collateral and
Proceeds; (d) all Collateral and Proceeds are genuine, free from liens, adverse
claims, setoffs, default, prepayment, defenses and conditions precedent of any
kind or character, except the lien created hereby or as otherwise agreed to by
Trade Bank, or as heretofore disclosed by Debtor to Trade Bank, in writing;
(e) all statements contained herein and, where applicable, in the Collateral are
true and complete in all material respects; (f) no financing statement covering
any of the Collateral or Proceeds, and naming any secured party other than Trade
Bank, is on file in any public office; (g) all persons appearing to be obligated
on Rights to Payment and Proceeds have authority and capacity to contract and
are bound as they appear to be; (h) all property subject to chattel paper has
been properly registered and filed in compliance with law and to perfect the
interest of Debtor in such property; and (i) all Rights to Payment and Proceeds
comply with all applicable laws concerning form, content and manner of
preparation and execution, including where applicable Federal Reserve
Regulation Z and any State consumer credit laws.

6. COVENANTS OF DEBTOR.

(a) Debtor agrees in general: (i) to pay Indebtedness secured hereby when due;
(ii) to indemnify Trade Bank against all losses, claims, demands, liabilities
and expenses of every kind caused by property subject hereto; (iii) to permit
Trade Bank to exercise its powers; (iv) to execute and deliver such documents as
Trade Bank deems necessary to create, perfect and continue the security
interests contemplated hereby; (v) not to change its name, and as applicable,
its chief executive office, its principal residence or the jurisdiction in which
it is organized and/or registered without giving Trade Bank prior written notice
thereof; (vi) not to change the places where Debtor keeps any Collateral or
Debtor’s records concerning the Collateral and Proceeds without giving Trade
Bank prior written notice of the address to which Debtor is moving same; and
(vii) to cooperate with Trade Bank in perfecting all security interests granted
herein and in obtaining such agreements from third parties as Trade Bank deems
necessary, proper or convenient in connection with the preservation, perfection
or enforcement of any of its rights hereunder.

(b) Debtor agrees with regard to the Collateral and Proceeds, unless Trade Bank
agrees otherwise in writing: (i) that Trade Bank is authorized to file financing
statements in the name of Debtor to perfect Trade Bank’s security interest in
Collateral and Proceeds; (ii) to insure Inventory and, where applicable, Rights
to Payment with Trade Bank named as loss payee, in form, substance and amounts,
under agreements, against risks and liabilities, and with insurance companies
satisfactory to Trade Bank; (iii) not to use any Inventory for any unlawful
purpose or in any way that would void any insurance required to be carried in
connection therewith; (iv) not to remove Inventory from Debtor’s premises except
in the ordinary course of

 

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Debtor’s business; (v) not to permit any lien on the Collateral or Proceeds,
including without limitation, liens arising from the storage of Inventory,
except in favor of Trade Bank; (vi) not to sell, hypothecate or dispose of, nor
permit the transfer by operation of law of, any of the Collateral or Proceeds or
any interest therein, except sales of Inventory to buyers in the ordinary course
of Debtor’s business; (vii) to furnish reports to Trade Bank of all
acquisitions, returns, sales and other dispositions of Inventory in such form
and detail and at such times as Trade Bank may require; (viii) to permit Trade
Bank to inspect the Collateral at any time; (ix) to keep, in accordance with
generally accepted accounting principles, complete and accurate records
regarding all Collateral and Proceeds, and to permit Trade Bank to inspect the
same and make copies thereof at any reasonable time; (x) if requested by Trade
Bank, to receive and use reasonable diligence to collect Rights to Payment and
Proceeds, in trust and as the property of Trade Bank, and to immediately endorse
as appropriate and deliver such Rights to Payment and Proceeds to Trade Bank
daily in the exact form in which they are received together with a collection
report in form satisfactory to Trade Bank; (xi) not to commingle Rights to
Payment, Proceeds or collections thereunder with other property; (xii) to give
only normal allowances and credits and to advise Trade Bank thereof immediately
in writing if they affect any Rights to Payment or Proceeds in any material
respect; (xiii) on demand, to deliver to Trade Bank returned property resulting
from, or payment equal to, such allowances or credits on any Rights to Payment
or Proceeds or to execute such documents and do such other things as Trade Bank
may reasonably request for the purpose of perfecting, preserving and enforcing
its security interest in such returned property; (xiv) from time to time, when
requested by Trade Bank, to prepare and deliver a schedule of all Collateral and
Proceeds subject to this Agreement and to assign in writing and deliver to Trade
Bank all accounts, contracts, leases and other chattel paper, instruments,
documents and other evidences thereof; (xv) in the event Trade Bank elects to
receive payments of Rights to Payment or Proceeds hereunder, to pay all expenses
incurred by Trade Bank in connection therewith, including expenses of
accounting, correspondence, collection efforts, reporting to account or contract
debtors, filing, recording, record keeping and expenses incidental thereto; and
(xvi) to provide any service and do any other acts which may be necessary to
maintain, preserve and protect all Collateral and, as appropriate and
applicable, to keep all Collateral in good and saleable condition, to deal with
the Collateral in accordance with the standards and practices adhered to
generally by users and manufacturers of like property, and to keep all
Collateral and Proceeds free and clear of all defenses, rights of offset and
counterclaims.

7. POWERS OF TRADE BANK. Debtor appoints Trade Bank its true attorney in fact to
perform any of the following powers, which are coupled with an interest, are
irrevocable until termination of this Agreement and may be exercised from time
to time by Trade Bank’s officers and employees, or any of them, whether or not
Debtor is in default: (a) to perform any obligation of Debtor hereunder in
Debtor’s name or otherwise; (b) to give notice to account debtors or others of
Trade Bank’s rights in the Collateral and Proceeds, to enforce or forebear from
enforcing the same and make extension or modification agreements with respect
thereto; (c) to release persons liable on Collateral or Proceeds and to give
receipts and acquittances and compromise disputes in connection therewith;
(d) to release or substitute security; (e) to resort to security in any order;
(f) to prepare, execute, file, record or deliver notes, assignments, schedules,
designation statements, financing statements, continuation statements,
termination statements, statements of assignment, applications for registration
or like papers to perfect, preserve or release Trade Bank’s interest in the
Collateral and Proceeds; (g) to receive, open and read mail addressed to Debtor;
(h) to take cash, instruments for the payment of money and other property to
which Trade Bank is entitled; (i) to verify facts concerning the Collateral and
Proceeds by inquiry of obligors thereon, or otherwise, in its own name or a
fictitious name; (j) to endorse, collect, deliver and receive payment under
instruments for the payment of money

 

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constituting or relating to Proceeds; (k) to prepare, adjust, execute, deliver
and receive payment under insurance claims, and to collect and receive payment
of and endorse any instrument in payment of loss or returned premiums or any
other insurance refund or return, and to apply such amounts received by Trade
Bank, at Trade Bank’s sole option, toward repayment of the Indebtedness or
replacement of the Collateral; (l) to exercise all rights, powers and remedies
which Debtor would have, but for this Agreement, with respect to all Collateral
and Proceeds subject hereto; (m) to enter onto Debtor’s premises in inspecting
the Collateral; (n) to make withdrawals from and to close deposit accounts or
other accounts with any financial institution, wherever located, into which
Proceeds may have been deposited, and to apply funds so withdrawn to payment of
the Indebtedness; (o) to preserve or release the interest evidenced by chattel
paper to which Trade Bank is entitled hereunder and to endorse and deliver any
evidence of title incidental thereto; and (p) to do all acts and things and
execute all documents in the name of Debtor or otherwise, deemed by Trade Bank
as necessary, proper and convenient in connection with the preservation,
perfection or enforcement of its rights hereunder.

8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor agrees to
pay, prior to delinquency, all insurance premiums, taxes, charges, liens and
assessments against the Collateral and Proceeds, and upon the failure of Debtor
to do so, Trade Bank at its option may pay any of them and shall be the sole
judge of the legality or validity thereof and the amount necessary to discharge
the same. Any such payments made by Trade Bank shall be obligations of Debtor to
Trade Bank, due and payable immediately upon demand, together with interest at a
rate determined in accordance with the provisions of this Agreement, and shall
be secured by the Collateral and Proceeds, subject to all terms and conditions
of this Agreement.

9. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an
“Event of Default” under this Agreement: (a) any default in the payment or
performance of any obligation, or any defined event of default, under (i) any
contract or instrument evidencing any Indebtedness, or (ii) any other agreement
between Debtor and Trade Bank, including without limitation any loan agreement,
relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by Debtor herein shall prove to be incorrect,
false or misleading in any material respect when made; (c) Debtor shall fail to
observe or perform any obligation or agreement contained herein; (d) any
impairment in the rights of Trade Bank in any Collateral or Proceeds, or any
attachment or like levy on any property of Debtor; and (e) Trade Bank, in good
faith, believes any or all of the Collateral and/or Proceeds to be in danger of
misuse, dissipation, commingling, loss, theft, damage or destruction, or
otherwise in jeopardy or unsatisfactory in character or value.

10. REMEDIES. Upon the occurrence of any Event of Default, Trade Bank shall have
the right to declare immediately due and payable all or any Indebtedness secured
hereby and to terminate any commitments to make loans or otherwise extend credit
to Debtor. Trade Bank shall have all other rights, powers, privileges and
remedies granted to a secured party upon default under the California Uniform
Commercial Code or otherwise provided by law, including without limitation, the
right (a) to contact all persons obligated to Debtor on any Collateral or
Proceeds and to instruct such persons to deliver all Collateral and/or Proceeds
directly to Trade Bank, and (b) to sell, lease, license or otherwise dispose of
any or all Collateral. All rights, powers, privileges and remedies of Trade Bank
shall be cumulative. No delay, failure or discontinuance of Trade Bank in
exercising any right, power, privilege or remedy hereunder shall affect or
operate as a waiver of such right, power, privilege or remedy; nor shall any
single or partial exercise of any such right, power, privilege or remedy
preclude,

 

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waive or otherwise affect any other or further exercise thereof or the exercise
of any other right, power, privilege or remedy. Any waiver, permit, consent or
approval of any kind by Trade Bank of any default hereunder, or any such waiver
of any provisions or conditions hereof, must be in writing and shall be
effective only to the extent set forth in writing. It is agreed that public or
private sales or other dispositions, for cash or on credit, to a wholesaler or
retailer or investor, or user of property of the types subject to this
Agreement, or public auctions, are all commercially reasonable since differences
in the prices generally realized in the different kinds of dispositions are
ordinarily offset by the differences in the costs and credit risks of such
dispositions. While an Event of Default exists: (a) Debtor will deliver to Trade
Bank from time to time, as requested by Trade Bank, current lists of all
Collateral and Proceeds; (b) Debtor will not dispose of any Collateral or
Proceeds except on terms approved by Trade Bank; (c) at Trade Bank’s request,
Debtor will assemble and deliver all Collateral and Proceeds, and books and
records pertaining thereto, to Trade Bank at a reasonably convenient place
designated by Trade Bank; and (d) Trade Bank may, without notice to Debtor,
enter onto Debtor’s premises and take possession of the Collateral. With respect
to any sale by Trade Bank of any Collateral subject to this Agreement, Debtor
hereby expressly grants to Trade Bank the right to sell such Collateral using
any or all of Debtor’s trademarks, trade names, trade name rights and/or
proprietary labels or marks. Debtor further agrees that Trade Bank shall have no
obligation to process or prepare any Collateral for sale or other disposition.

11. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In
disposing of Collateral hereunder, Trade Bank may disclaim all warranties of
title, possession, quiet enjoyment and the like. Any proceeds of any disposition
of any Collateral or Proceeds, or any part thereof, may be applied by Trade Bank
to the payment of expenses incurred by Trade Bank in connection with the
foregoing, including reasonable attorneys’ fees, and the balance of such
proceeds may be applied by Trade Bank toward the payment of the Indebtedness in
such order of application as Trade Bank may from time to time elect. Upon the
transfer of all or any part of the Indebtedness, Trade Bank may transfer all or
any part of the Collateral or Proceeds and shall be fully discharged thereafter
from all liability and responsibility with respect to any of the foregoing so
transferred, and the transferee shall be vested with all rights and powers of
Trade Bank hereunder with respect to any of the foregoing so transferred; but
with respect to any Collateral or Proceeds not so transferred, Trade Bank shall
retain all rights, powers, privileges and remedies herein given.

12. STATUTE OF LIMITATIONS. Until all Indebtedness shall have been paid in full
and all commitments by Trade Bank to extend credit to Debtor have been
terminated, the power of sale or other disposition and all other rights, powers,
privileges and remedies granted to Trade Bank hereunder shall continue to exist
and may be exercised by Trade Bank at any time and from time to time
irrespective of the fact that the Indebtedness or any part thereof may have
become barred by any statute of limitations, or that the personal liability of
Debtor may have ceased, unless such liability shall have ceased due to the
payment in full of all Indebtedness secured hereunder.

13. MISCELLANEOUS. When there is more than one Debtor named herein: (a) the word
“Debtor” shall mean all or any one or more of them as the context requires;
(b) the obligations of each Debtor hereunder are joint and several; and
(c) until all Indebtedness shall have been paid in full, no Debtor shall have
any right of subrogation or contribution, and each Debtor hereby waives any
benefit of or right to participate in any of the Collateral or Proceeds or any
other security now or hereafter held by Trade Bank. Debtor hereby waives any
right to require Trade Bank to (i) proceed against Debtor or any other person,
(ii) marshal assets or proceed against or exhaust any security from Debtor or
any other person, (iii) perform any

 

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obligation of Debtor with respect to any Collateral or Proceeds, and (d) make
any presentment or demand, or give any notice of nonpayment or nonperformance,
protest, notice of protest or notice of dishonor hereunder or in connection with
any Collateral or Proceeds. Debtor further waives any right to direct the
application of payments or security for any Indebtedness of Debtor or
indebtedness of customers of Debtor.

14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing, addressed to Trade Bank at the address specified in any
other loan documents entered into between Debtor and Trade Bank and to Debtor at
the address of its chief executive office (or principal residence, if
applicable) specified below or to such other address as any party may designate
by written notice to each other party, and shall be deemed to have been given or
made as follows: (a) if personally delivered, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

15. COSTS, EXPENSES AND ATTORNEYS’ FEES. Debtor shall pay to Trade Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys’ fees (to include outside
counsel fees and all allocated costs of Trade Bank’s in-house counsel), expended
or incurred by Trade Bank in connection with (a) the perfection and preservation
of the Collateral or Trade Bank’s interest therein, and (b) the realization,
enforcement and exercise of any right, power, privilege or remedy conferred by
this Agreement, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Trade Bank or any
other person) relating to Debtor or in any way affecting any of the Collateral
or Trade Bank’s ability to exercise any of its rights or remedies with respect
thereto. All of the foregoing shall be paid by Debtor with interest from the
date of demand until paid in full at a rate per annum equal to the greater of
ten percent (10%) or Wells Fargo Bank’s Prime Rate in effect from time to time.

16. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties, and may be amended or
modified only in writing signed by Trade Bank and Debtor.

17. OBLIGATIONS OF MARRIED PERSONS. Any married person who signs this Agreement
as Debtor hereby expressly agrees that recourse may be had against his or her
separate property for all his or her Indebtedness to Trade Bank secured by the
Collateral and Proceeds under this Agreement.

18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held
to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

Debtor warrants that Debtor is an organization registered under the laws of
Delaware.

 

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Debtor warrants that its chief executive office (or principal residence, if
applicable) is located at the following address: 225 Bush Street, 20th Floor,
San Francisco, CA 94104.

Debtor warrants that the Collateral (except goods in transit) is located or
domiciled at the following additional addresses: See Exhibit A attached hereto,
all terms of which are incorporated herein by this reference.

IN WITNESS WHEREOF, this Agreement has been duly executed as of July 17, 2006.

 

DESIGN WITHIN REACH, INC. By:  

/s/ Ray Brunner

Title:   President and Chief Executive Officer

 

 

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