**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 timehereafter, 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 sourcewhatsoever), 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 orrepossessed 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 embeddedsoftware, 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 timehereafter, 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, orin 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 receivedwhen 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 toTrade 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 mostcomprehensive 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 notdue, 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 beliable 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 Bankto 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 moneyreceived 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 setforth 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 theCollateral 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, defensesand 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, whereapplicable, 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 incompliance 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 applicableFederal 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 thesecurity 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 writtennotice 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 orenforcement of any of its rights hereunder. 

(b) Debtor agrees with regard to the Collateral and Proceeds, unless Trade Bank agreesotherwise 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 toPayment 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 inany 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 ofInventory, 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 theordinary 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 permitTrade 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 andmake 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 appropriateand 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 orcollections 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) ondemand, 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 forthe 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 thisAgreement 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 toPayment 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 andexpenses 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 saleablecondition, 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 andcounterclaims. 

7. POWERS OF TRADE BANK. Debtor appoints Trade Bank its true attorney in fact to perform any of the following powers, whichare 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 anyobligation 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 ormodification 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) toresort 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 paymentof 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, deliverand 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 receivepayment 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 orreplacement 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 ininspecting 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 ofthe 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 andexecute 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, liensand 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 thesame. 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 securedby the Collateral and Proceeds, subject to all terms and conditions of this Agreement. 

9. EVENTS OF DEFAULT. The occurrence of any of thefollowing 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 anyIndebtedness, 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 hereinshall 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 Collateralor 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 ordestruction, 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 Collateralor 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 Bankshall 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 partialexercise 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, consentor 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 salesor 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 realizedin 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 TradeBank, 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 andProceeds, 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 theCollateral. 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 namerights 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 oftitle, 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 anypart 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 transfereeshall 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 andremedies herein given. 

12. STATUTE OF LIMITATIONS. Until all Indebtedness shall have been paid in full and all commitments by Trade Bankto 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 andfrom 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 thepayment in full of all Indebtedness secured hereunder. 

13. MISCELLANEOUS. When there is more than one Debtor named herein: (a) theword “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 shallhave 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 torequire 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 ornonperformance, 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 orindebtedness 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 suchother 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 ofreceipt 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 outsidecounsel 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) therealization, 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 inconnection 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 TradeBank’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 bebinding 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 orher 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 theremainder of such provision or any remaining provisions of this Agreement. 

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

Debtor warrants that Debtor is an organization registered under the lawsof Delaware. 

 

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

Debtor warrants that the Collateral (except goods in transit) islocated 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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