Document:

Employee Stock Purchase Plan

 Exhibit 10.06 
  
 DESIGN WITHIN REACH, INC. 
  
 EMPLOYEE STOCK PURCHASE PLAN 
  
 Design Within Reach, Inc., a Delaware corporation (the “Company”), hereby adopts the Design Within Reach, Inc. Employee Stock Purchase
Plan (the “Plan”), effective as of the Effective Date (as defined herein). 
  
 1. Purpose. The purposes of the Plan are as follows: 
  
 (a) To assist employees of the Company and its Designated Subsidiaries (as defined below) in acquiring a stock ownership interest in the Company pursuant to a plan which is intended to qualify as an “employee
stock purchase plan” within the meaning of Section 423(b) of the Internal Revenue Code of 1986, as amended. 
  
 (b) To help employees provide for their future security and to encourage them to remain in the employment of the Company and its Designated Subsidiaries.

  
 2. Definitions. 
  
 (a) “Administrator” shall mean the administrator of the
Plan, as determined pursuant to Section 14 hereof. 
  
 (b)
“Board” shall mean the Board of Directors of the Company. 
  
 (c) “Code” shall mean the Internal Revenue Code of 1986, as amended. 
  
 (d) “Committee” shall mean the committee appointed to administer the Plan pursuant to Section 14 hereof. 
  
 (e) “Common Stock” shall mean the common stock of the
Company. 
  
 (f) “Company” shall mean Design
Within Reach, Inc., a Delaware corporation, and any successor by merger, consolidation or otherwise. 
  
 (g) “Compensation” shall mean all base straight time gross earnings and commissions, exclusive of payments for overtime, shift premium,
incentive compensation, incentive payments, bonuses, expense reimbursements, fringe benefits and other compensation. 
  
 (h) “Designated Subsidiary” shall mean any Subsidiary which has been designated by the Administrator from time to time in its sole
discretion as eligible to participate in the Plan. The Administrator may designate, or terminate the designation of, a subsidiary as a Designated Subsidiary without the approval of the stockholders of the Company. 
  
 (i) “Effective Date” shall mean the date on which the
Company’s Registration Statement on Form S-1 filed with respect to the Company’s initial public offering becomes effective. 

 (j) “Eligible Employee” shall mean an Employee of the Company or a Designated
Subsidiary: (i) who does not, immediately after the Option is granted, own stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company, a Parent or a Subsidiary (as determined under
Section 423(b)(3) of the Code); (ii) whose customary employment is for more than twenty (20) hours per week; and (iii) who has been continuously employed by the Company for at least six months. For purposes of clause (i), the rules of Section 424(d)
of the Code with regard to the attribution of stock ownership shall apply in determining the stock ownership of an individual, and stock which an employee may purchase under outstanding options shall be treated as stock owned by the employee. For
purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or Designated Subsidiary and meeting the requirements of Treasury
Regulation Section 1.421-7(h)(2). Where the period of leave exceeds ninety (90) days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated
on the ninety-first (91st) day of such leave. 
  
 (k) “Employee” shall mean any person who renders services to the Company or a Subsidiary in the status of
an employee within the meaning of Code Section 3401(c). “Employee” shall not include any director of the Company or a Subsidiary who does not render services to the Company or a Subsidiary in the status of an employee within the meaning of
Code Section 3401(c). 
  
 (l) “Enrollment Date”
shall mean the first Trading Day of each Offering Period. 
  
 (m)
“Exercise Date” shall mean the last Trading Day of each Purchase Period. 
  
 (n) “Fair Market Value” shall mean, as of any date, the value of Common Stock determined as follows: 
  
 (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market
or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day
prior to the date of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
  
 (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the
mean of the closing bid and asked prices for the Common Stock on the date prior to the date of determination as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
  
 (iii) In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Administrator; or 
  
 (iv) For purposes of the first Offering Period under the Plan, the Fair Market Value shall be the initial price to the public as set forth in the final prospectus included within the registration statement in Form S-1
filed with the Securities and Exchange Commission for the initial public offering of the Company’s Common Stock (the “Registration Statement”). 
  

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 (o) “Offering Period” shall mean (i) the period commencing on the Effective Date and
ending on the last Trading Day on or before the May 1 or November 1 following the Effective Date that is at least six (6) months but not more than twelve (12) months following the Effective Date, and (ii) subject to Section 24, each twelve- (12)
month period commencing on any November 1 or May 1 after the Effective Date and terminating on the last Trading Day in the periods ending twelve (12) months later. The duration and timing of Offering Periods may be changed pursuant to Section 4 of
this Plan. 
  
 (p) “Parent” means any
corporation, other than the Company, in an unbroken chain of corporations ending with the Company if, at the time of the determination, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. 
  
 (q) “Plan” shall mean this Design Within Reach, Inc. Employee Stock Purchase Plan. 
  
 (r) “Purchase Period” shall mean the approximately six (6) month period commencing after one Exercise Date and ending with the next
Exercise Date, except that the first Purchase Period of any Offering Period shall commence on the Enrollment Date and end with the next Exercise Date. Notwithstanding the foregoing, the first Purchase Period with respect to the initial Offering
Period under the Plan shall end on the last Trading Day on or before the next occurring June 1 following the Effective Date and such period may be more or less than six-months in duration. 
  
 (s) “Purchase Price” shall mean 85% of the Fair Market Value
of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower; provided, however, that the Purchase Price may be adjusted by the Administrator pursuant to Section 20; provided, further,
that the Purchase Price shall not be less than the par value of a share of Common Stock. 
  
 (t) “Subsidiary” shall mean any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company if, at the time of the determination, each of the corporations
other than the last corporation in an unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
  
 (u) “Trading Day” shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading. 
  
 3.
Eligibility. 
  
 (a) Any Eligible Employee who shall be
employed by the Company or a Designated Subsidiary on a given Enrollment Date for an Offering Period shall be eligible to participate in the Plan during such Offering Period, subject to the requirements of Section 5 and the limitations imposed by
Section 423(b) of the Code. 
  

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 (b) Each person who, during the course of an Offering Period, first becomes an Eligible Employee
subsequent to the Enrollment Date will be eligible to become a participant in the Plan on the first day of the first Purchase Period following the day on which such person becomes an Eligible Employee, subject to the requirements of Section 5 and
the limitations imposed by Section 423(b) of the Code. 
  
 (c) No
Eligible Employee shall be granted an option under the Plan which permits his rights to purchase stock under the Plan, and to purchase stock under all other employee stock purchase plans of the Company, any Parent or any Subsidiary subject to the
Section 423, to accrue at a rate which exceeds $25,000 of fair market value of such stock (determined at the time the option is granted) for each calendar year in which the option is outstanding at any time. For purpose of the limitation imposed by
this subsection, the right to purchase stock under an option accrues when the option (or any portion thereof) first becomes exercisable during the calendar year, the right to purchase stock under an option accrues at the rate provided in the option,
but in no case may such rate exceed $25,000 of fair market value of such stock (determined at the time such option is granted) for any one calendar year, and a right to purchase stock which has accrued under an option may not be carried over to any
option. This limitation shall be applied in accordance with Section 423(b)(8) of the Code and the Treasury Regulations thereunder. 
  
 4. Offering Periods. Subject to Section 24, the Plan shall be implemented by consecutive, overlapping Offering Periods which shall continue until
the Plan expires or is terminated in accordance with Section 20 hereof. The Administrator shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without stockholder
approval if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected thereafter. 
  
 5. Participation. 
  
 (a) Each Eligible Employee who is employed by the Company or a Designated Subsidiary on the calendar day immediately preceding the Effective Date shall
automatically become a participant in the Plan with respect to the first Offering Period. Each such participant shall be granted an option to purchase shares of Common Stock and shall be enrolled in such first Offering Period to the extent of
fifteen percent (15%) of his or her Compensation for the pay days during the first Offering Period (or, if less, the maximum amount of contributions permitted to be made by such participant for such Offering Period by payroll deduction under the
terms of this Plan). Participants wishing to purchase shares of Common Stock during the first Offering Period shall do so by making a lump sum cash payment to the Company not later than ten (10) calendar days before each Exercise Date of such
Offering Period, and each such payment may be made in an amount not exceeding fifteen percent (15%) of such participant’s Compensation for the pay days occurring during such Offering Period and occurring prior to such lump sum payment;
provided, however, that such participant shall not be required to make such lump sum cash payments, or exercise all or any portion of such option to purchase shares of Common Stock by making such lump sum payments. Following the
Effective Date, each such participant may, during the period designated from time to 
  

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 time by the Administrator for such purpose, elect to make such contributions (or a lesser amount of contributions) for
the first Offering Period by payroll deductions in accordance with Section 6, in lieu of making contributions in such lump sum cash payments under this subsection (a), or may elect to make no contributions for such Offering Period; provided,
however, that, to make contributions by payroll deductions, such participant must complete the form of subscription agreement provided by the Company for the first Offering Period under this Plan. If (i) during such Offering Period, such a
participant elects to make contributions by payroll deduction, or elects to make no contributions for such Offering Period, or (ii) on or prior to the tenth (10th) calendar day before the last Exercise Date of such Offering Period, such a participant fails to make any lump sum cash payment, such participant shall be deemed to have elected not to make
contributions by lump sum payment with respect to such first Offering Period. Except as described in subsection (e) below, a participant may not make contributions by lump sum payment for any Offering Period other than the first Offering
Period. 
  
 (b) Following the first Offering Period, an Eligible
Employee may become a participant in the Plan by completing a subscription agreement authorizing payroll deductions in the form of Exhibit A to this Plan and filing it with the Company’s payroll office fifteen (15) days (or such shorter or
longer period as may be determined by the Administrator, in its sole discretion) prior to the applicable Enrollment Date. 
  
 (c) Each person who, during the course of an Offering Period, first becomes an Eligible Employee subsequent to the Enrollment Date will be eligible to
become a participant in the Plan on the first day of the first Purchase Period following the day on which such person becomes an Eligible Employee. Such person may become a participant in the Plan by completing a subscription agreement authorizing
payroll deductions in the form of Exhibit A to this Plan and filing it with the Company’s payroll office fifteen (15) days (or such shorter or longer period as may be determined by the Administrator, in its sole discretion) prior to the first
day of any Purchase Period during the Offering Period in which such person becomes an Eligible Employee. The rights granted to such participant shall have the same characteristics as any rights originally granted during that Offering Period except
that the first day of the Purchase Period in which such person initially participates in the Plan shall be the “Enrollment Date” for all purposes for such person, including determination of the Purchase Price. 
  
 (d) Except as provided in subsection (a), payroll deductions for a
participant shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10
hereof.  
  
 (e) During a leave of absence approved by the
Company or a Subsidiary and meeting the requirements of Treasury Regulation Section 1.421-7(h)(2), a participant may continue to participate in the Plan by making cash payments to the Company on each pay day equal to the amount of the
participant’s payroll deductions under the Plan for the pay day immediately preceding the first day of such participant’s leave of absence. If a leave of absence is unapproved or fails to meet the requirements of Treasury Regulation
Section 1.421-7(h)(2), the participant will cease automatically to participate in the Plan. In such event, the company will automatically cease to deduct the participant’s payroll under the Plan. The Company will pay to the participant his or
her total payroll deductions for the quarterly purchase period, in cash in one lump sum (without interest), as soon as practicable after the participant ceases to participate in the Plan. 
  

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 (f) A participant’s completion of a subscription agreement will enroll such participant in the Plan
for each successive Purchase Period and each subsequent Offering Period on the terms contained therein until the participant either submits a new subscription agreement, withdraws from participation under the Plan as provided in Section 10 hereof or
otherwise becomes ineligible to participate in the Plan. 
  
 6.
Payroll Deductions. 
  
 (a) At the time a participant
files his or her subscription agreement, he or she shall elect to have payroll deductions made on each pay day during the Offering Period in an amount from one percent (1%) to fifteen percent (15%) of the Compensation which he or she receives on
each pay day during the Offering Period. 
  
 (b) All payroll
deductions made for a participant shall be credited to his or her account under the Plan and shall be withheld in whole percentages only. Except as described in Section 5(a) hereof, a participant may not make any additional payments into such
account. 
  
 (c) A participant may discontinue his or her
participation in the Plan as provided in Section 10 hereof, or may increase or decrease the rate of his or her payroll deductions during the Offering Period by completing or filing with the Company a new subscription agreement authorizing a change
in payroll deduction rate. The Administrator may, in its discretion, limit the number of participation rate changes during any Offering Period. The change in rate shall be effective with the first full payroll period following five (5) business days
after the Company’s receipt of the new subscription agreement (or such shorter or longer period as may be determined by the Administrator, in its sole discretion). 
  
 (d) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(c)
hereof, a participant’s payroll deductions may be decreased to zero percent (0%) at any time during a Purchase Period. 
  
 (e) At the time the option is exercised, in whole or in part, or at the time some or all of the Company’s Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock. At any time, the
Company may, but shall not be obligated to, withhold from the participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any
tax deductions or benefits attributable to sale or early disposition of Common Stock by the Employee. 
  
 7. Grant of Option. On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period shall be granted
an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of the Company’s Common Stock determined by dividing such participant’s payroll 
  

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 deductions accumulated prior to such Exercise Date and retained in the participant’s account as of the Exercise Date
by the applicable Purchase Price; provided, however, that in no event shall a participant be permitted to purchase during each Offering Period more than 200,000 shares of the Company’s Common Stock (subject to any adjustment
pursuant to Section 19) and during each Purchase Period more than 50,000 shares of the Company’s Common Stock (subject to any adjustment pursuant to Section 19); and provided, further, that such purchase shall be subject to the
limitations set forth in Sections 3(c) and 13 hereof. The Administrator may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum number of shares of the Company’s Common Stock a participant may purchase
during each Purchase Period and Offering Period. Exercise of the option shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof or otherwise becomes ineligible to participate in the Plan. The
option shall expire on the last day of the Offering Period. 
  
 8.
Exercise of Option. 
  
 (a) Unless a participant withdraws
from the Plan as provided in Section 10 hereof or otherwise becomes ineligible to participate in the Plan, his or her option for the purchase of shares shall be exercised automatically on the Exercise Date, and the maximum number of full shares
subject to the option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares shall be purchased; any payroll deductions accumulated in a
participant’s account which are not sufficient to purchase a full share shall be retained in the participant’s account for the subsequent Purchase Period or Offering Period. During a participant’s lifetime, a participant’s option
to purchase shares hereunder is exercisable only by him or her. 
  
 (b) If the Administrator determines that, on a given Exercise Date, the number of shares with respect to which options are to be exercised may exceed (i) the number of shares of Common Stock that were available for sale under the Plan on
the Enrollment Date of the applicable Offering Period, or (ii) the number of shares available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company shall make a pro rata allocation
of the shares of Common Stock available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all participants
exercising options to purchase Common Stock on such Exercise Date, and continue all Offering Periods then in effect, or (y) provide that the Company shall make a pro rata allocation of the shares available for purchase on such Enrollment Date or
Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Exercise Date, and terminate any
or all Offering Periods then in effect pursuant to Section 20 hereof. The Company may make pro rata allocation of the shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment Date. The balance of the amount credited to the account of each participant which has not been applied to the purchase of
shares of stock shall be paid to such participant in one lump sum in cash as soon as reasonably practicable after the Exercise Date, without any interest thereon. 
  

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 9. Deposit of Shares. As promptly as practicable after each Exercise Date on which a purchase of
shares occurs, the Company may arrange for the deposit, into each participant’s account with any broker designated by the Company to administer this Plan, of the number of shares purchased upon exercise of his or her option. 
  
 10. Withdrawal. 
  
 (a) A participant may withdraw all but not less than all of the payroll
deductions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by giving written notice to the Company in the form of Exhibit A to this Plan. All of the participant’s payroll deductions
credited to his or her account during the Offering Period shall be paid to such participant as soon as reasonably practicable after receipt of notice of withdrawal and such participant’s option for the Offering Period shall be automatically
terminated, and no further payroll deductions for the purchase of shares shall be made for such Offering Period. If a participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering
Period unless the participant delivers to the Company a new subscription agreement. 
  
 (b) A participant’s withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding
Offering Periods which commence after the termination of the Offering Period from which the participant withdraws. 
  
 11. Termination of Employment. Upon a participant’s ceasing to be an Eligible Employee, for any reason, he or she shall be deemed to have
elected to withdraw from the Plan and the payroll deductions credited to such participant’s account during the Offering Period shall be paid to such participant or, in the case of his or her death, to the person or persons entitled thereto
under Section 15 hereof, as soon as reasonably practicable and such participant’s option for the Offering Period shall be automatically terminated. 
  
 12. Interest. No interest shall accrue on the payroll deductions or lump sum contributions of a participant in the Plan. 
  
 13. Shares Subject to Plan. 
  
 (a) Subject to adjustment upon changes in capitalization of the Company as
provided in Section 19 hereof, the maximum number of shares of the Company’s Common Stock which shall be made available for sale under the Plan shall be 300,000 shares, plus an annual increase to be added on each December 31 during the term of
the Plan equal to the least of (i) 100,000 shares, or (ii) a lesser amount determined by the Board. If any right granted under the Plan shall for any reason terminate without having been exercised, the Common Stock not purchased under such right
shall again become available for issuance under the Plan. The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. 
  
 (b) With respect to shares of stock subject to an option granted under the Plan, a participant shall not be deemed to be a
stockholder of the Company, and the participant shall not 
  

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 have any of the rights or privileges of a stockholder, until such shares have been issued to the participant or his or
her nominee following exercise of the participant’s option. No adjustments shall be made for dividends (ordinary or extraordinary, whether in cash securities, or other property) or distribution or other rights for which the record date occurs
prior to the date of such issuance, except as otherwise expressly provided herein. 
  
 14. Administration. 
  
 (a) The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee as set forth below. The Board may delegate administration of the Plan to a Committee comprised of two or more members of the
Board, each of whom is a “non-employee director” within the meaning of Rule 16b-3 which has been adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and which is otherwise constituted to
comply with applicable law, and the term “Committee” shall apply to any persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. Each member of the Committee shall serve for a term commencing on a date specified by the Board and continuing until the member dies or resigns or is removed from office by
the Board. References in this Plan to the “Administrator” shall mean the Board unless administration is delegated to a Committee or subcommittee, in which case references in this Plan to the Administrator shall thereafter be to the
Committee or subcommittee. 
  
 (b) It shall be the duty of the
Administrator to conduct the general administration of the Plan in accordance with the provisions of the Plan. The Administrator shall have the power to interpret the Plan and the terms of the options and to adopt such rules for the administration,
interpretation, and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. The Administrator at its option may utilize the services of an agent to assist in the administration of the Plan including
establishing and maintaining an individual securities account under the Plan for each participant. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Administrator under the
Plan. 
  
 (c) All expenses and liabilities incurred by the
Administrator in connection with the administration of the Plan shall be borne by the Company. The Administrator may, with the approval of the Board, employ attorneys, consultants, accountants, appraisers, brokers or other persons. The
Administrator, the Company and its officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Administrator in good faith
shall be final and binding upon all participants, the Company and all other interested persons. No member of the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the
options, and all members of the Board shall be fully protected by the Company in respect to any such action, determination, or interpretation. 
  

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 15. Designation of Beneficiary. 
  
 (a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the
participant’s account under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares and cash. In addition, a participant may
file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such designation to be effective. 
  
 (b) Such designation of beneficiary may be changed by the participant at any time by written notice to the Company. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 
  
 16. Transferability. Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof. 
  
 17. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. 
  
 18. Reports. Individual accounts shall be maintained for each participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any. 
  
 19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Asset Sale. 
  
 (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock which have been authorized for issuance under the Plan but not yet placed under option, the maximum number of shares each participant may purchase each Purchase Period (pursuant to
Section 7), as well as the price per share and the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued shares
of 
  

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 Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock
subject to an option. 
  
 (b) Dissolution or Liquidation.
In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the “New Exercise Date”), and shall terminate immediately prior to the
consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date shall be before the date of the Company’s proposed dissolution or liquidation. The Administrator shall notify each
participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise Date and that the participant’s option shall be exercised
automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof. 
  
 (c) Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses
to assume or substitute for the option, any Purchase Periods then in progress shall be shortened by setting a New Exercise Date and any Offering Periods then in progress shall end on the New Exercise Date. The New Exercise Date shall be before the
date of the Company’s proposed sale or merger. The Administrator shall notify each participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed
to the New Exercise Date and that the participant’s option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof. 

 
 20. Amendment or Termination. 
  
 (a) The Board may at any time and for any reason terminate or amend the
Plan. Except as provided in Section 19 hereof, no such termination can affect options previously granted, provided that an Offering Period may be terminated by the Board if the Board determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its stockholders. Except as provided in Section 19 and this Section 20 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant
without the consent of such participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company shall obtain stockholder
approval in such a manner and to such a degree as required. 
  

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 (b) Without stockholder consent and without regard to whether any participant rights may be considered to
have been “adversely affected,” the Administrator shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the
participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with the Plan. 
  
 (c) In the event the Board determines that the ongoing operation of the Plan may result in unfavorable financial accounting
consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to: 
  
 (i) altering the Purchase Price for any Offering Period including an
Offering Period underway at the time of the change in Purchase Price; 
  
 (ii) shortening any Offering Period so that the Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Administrator action; and 
  
 (iii) allocating shares. 
  
 Such modifications or amendments shall not require stockholder approval or the consent of any Plan participants. 
  
 21. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. 
  
 22. Conditions To Issuance of Shares. The Company shall not be
required to issue or deliver any certificate or certificates for shares of Stock purchased upon the exercise of options prior to fulfillment of all the following conditions: 
  
 (a) The admission of such shares to listing on all stock exchanges, if any, on which is then listed; and 
  
 (b) The completion of any registration or other qualification of such shares
under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable; and

  

 12 

 (c) The obtaining of any approval or other clearance from any state or federal governmental agency which
the Administrator shall, in its absolute discretion, determine to be necessary or advisable; and 
  
 (d) The payment to the Company of all amounts which it is required to withhold under federal, state or local law upon exercise of the option; and

  
 (e) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may from time to time establish for reasons of administrative convenience. 
  
 23. Term of Plan. The Plan shall become effective on the Effective Date. Subject to approval by the stockholders of the Company in accordance with
this Section, the Plan shall be in effect until the tenth (10th) anniversary of the date of the initial adoption of
the Plan by the Board, unless sooner terminated under Section 20 hereof. The Plan shall be submitted for the approval of the Company’s stockholders within twelve (12) months after the date of the initial adoption of the Plan by the Board.

  
 24. Automatic Transfer to Low Price Offering Period. To
the extent permitted by any applicable laws, regulations, or stock exchange rules, if the Fair Market Value of the Common Stock on any Exercise Date in an Offering Period is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then (i) a new twelve- (12) month Offering Period will automatically begin on the first trading day following that Exercise Date, and (ii) all participants in such Offering Period shall be automatically withdrawn from such
Offering Period immediately after the exercise of their option on such Exercise Date and automatically re-enrolled in the immediately following Offering Period as of the first day thereof. 
  
 25. Equal Rights and Privileges. All Eligible Employees of the Company
(or of any Designated Subsidiary) will have equal rights and privileges under this Plan so that this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code or applicable Treasury regulations
thereunder. Any provision of this Plan that is inconsistent with Section 423 or applicable Treasury regulations will, without further act or amendment by the Company, the Board or the Administrator, be reformed to comply with the equal rights and
privileges requirement of Section 423 or applicable Treasury regulations. 
  
 26. No Employment Rights. Nothing in the Plan shall be construed to give any person (including any Eligible Employee or participant) the right to remain in the employ of the Company, a Parent or a Subsidiary or
to affect the right of the Company, any Parent or any Subsidiary to terminate the employment of any person (including any Eligible Employee or participant) at any time, with or without cause. 
  
 27. Notice of Disposition of Shares. Each participant shall give
prompt notice to the Company of any disposition or other transfer of any shares of stock purchased upon exercise of an option if such disposition or transfer is made: (a) within two (2) years from the Enrollment Date of the Offering Period in which
the shares were purchased or (b) within one (1) year after the Exercise Date on which such shares were purchased. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption
of indebtedness or other consideration, by the participant in such disposition or other transfer. 
  

 13 

 28. Governing Law. The validity and enforceability of this Plan shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to otherwise governing principles of conflicts of law. 
  

 14Credit Agreement by and btwn DWR and Wells Fargo HSBC

 EXHIBIT 10.07 
  

  
 CREDIT AGREEMENT 
  
 by and between

  
 DESIGN WITHIN REACH, INC., a California corporation

  
 and 
  
 WELLS FARGO HSBC TRADE BANK, N.A. 
  
 Dated as of 
  
 July 10, 2002 
  

  
 Exhibit A — Addendum to Credit Agreement 
 Exhibit B — Revolving Credit
Facility Supplement 
 Exhibit C — Collateral/Credit Support Document 
 Exhibit D — Borrowing Base Certificate 
  

			
	 WELLS FARGO HSBC TRADE BANK
	 	CREDIT AGREEMENT
	

  
 DESIGN WITHIN REACH, INC.
(“Borrower”), organized under the laws of the State of California whose chief executive office is located at the address specified after its signature to this Agreement (“Borrower’s Address”) and WELLS FARGO HSBC TRADE
BANK, N.A. (“Trade Bank”), whose address is specified after its signature to this Agreement, have entered into this CREDIT AGREEMENT as of July 10, 2002 (“Effective Date”). All references to this “Agreement”
include those covenants included in the Addendum to Agreement (“Addendum”) attached as Exhibit A hereto. 
  
 I. CREDIT FACILITY 
  
 1.1 The Facility. Subject to the terms and conditions of this Agreement, Trade Bank will make available to Borrower a Revolving Credit Facility (“Facility”) for which a Facility
Supplement (“Supplement”) is attached as Exhibit B hereto. Additional terms for the Facility (and each subfacility thereof (“Subfacility”)) are set forth in the Supplement. The Facility will be available from the Closing Date up
to and until July 31, 2003 (“Facility Termination Date”). Collateral and credit support required for the Facility is set forth in Exhibit C hereto. Definitions for those capitalized terms not otherwise defined are contained in Article 8
below. 
  
 1.2 Credit Extension Limit. The
aggregate outstanding amount of all Credit Extensions may at no time exceed the lesser of (a) Two Million Five Hundred Thousand Dollars ($2,500,000) or (b) the Borrowing Base in effect from to time (“Overall Credit Limit”). The aggregate
outstanding amount of all Credit Extensions outstanding at any time under Revolving Credit Facility may not exceed that amount specified as the “Credit Limit” in the Supplement for the Facility, and the aggregate outstanding amount of all
Credit Extensions outstanding at any time under each Subfacility (or any subcategory thereof) may not exceed that amount specified as the “Credit Sublimit” in the Supplement for the Facility. An amount equal to 100% of each unfunded Credit
Extension shall be used in calculating the outstanding amount of Credit Extensions under this Agreement. 
  
 The Subfacility(s) of the Revolving Credit Facility are as follows: 
  

	 	(1)	Sight Commercial Letters of Credit 

  

	 	(2)	Standby Letters of Credit 

  
 1.3 Overadvance. All Credit Extensions made hereunder shall be added to and deemed part of the Obligations when made. If, at any time
and for any reason, the aggregate outstanding amount of all Credit Extensions made pursuant to this Agreement exceeds the dollar limitation in Section 1.2 or the Borrowing Base, then Borrower shall immediately pay to Trade Bank on demand, in cash,
the amount of such excess. 
  
 1.4 Repayment; Interest and
Fees. Each funded Credit Extension shall be repaid by Borrower, and shall bear interest from the date of disbursement at those per annum rates and such interest shall be paid, at the times specified in the Supplement, Note or Facility
Document. Borrower agrees to pay to Trade Bank with respect to (a) the Revolving Credit Facility, interest at a per annum rate equal to the Prime Rate plus .50% as specified in the Note, and (b) the Subfacilities, the fees specified in the
Supplement as well as those fees specified in the relevant Facility Document(s). Interest and fees will be calculated on the basis of a 365 day year, actual days elapsed. Any overdue payments of principal (and interest to the extent 

  

 Page 1 

 
permitted by law) shall bear interest at a per annum floating rate equal to the Prime Rate plus 5.00%. 
  
 1.5 Prepayments. Credit Extensions under any Facility
may only be prepaid in accordance with the terms of the related Supplement. At the time of any prepayment (including, but not limited to, any prepayment which is a result of the occurrence of an Event of Default and an acceleration of the
Obligations) Borrower will pay to Trade Bank all interest accrued on the amount so prepaid to the date of such prepayment and all costs, expenses and fees specified in the Loan Documents. 
  
 II. REPRESENTATIONS AND WARRANTIES 
  
 Borrower represents and warrants to Trade Bank that the following representations and warranties are true and correct:

  
 2.1 Legal Status. Borrower is duly
organized and existing and in good standing under the laws of the jurisdiction indicated in this Agreement, and is qualified or licensed to do business in all jurisdictions in which such qualification or licensing is required and in which the
failure to so qualify or to be so licensed could have a material adverse affect on Borrower. 
  
 2.2 Authorization and Validity. The execution, delivery and performance of this Agreement, and all other Loan Documents to which Borrower is a party, have been duly and validly authorized,
executed and delivered by Borrower and constitute legal, valid and binding agreements of Borrower, and are enforceable against Borrower in accordance with their respective terms. 
  
 2.3 Borrower’s Name. The name of Borrower set forth at the end of this Agreement is its correct
name. If Borrower is conducting business under a fictitious business name, Borrower is in compliance with all laws relating to the conduct of such business under such name. 
  
 2.4 Financial Condition and Statements. All financial statements of Borrower delivered to Trade Bank
have been prepared in conformity with GAAP, and completely and accurately reflect the financial condition of Borrower (and any consolidated Subsidiaries), in accordance with GAAP at the times and for the periods stated in such financial statements.
Neither Borrower nor any Subsidiary has any material contingent liability not reflected in the aforesaid financial statements. Since the date of the financial statements delivered to Trade Bank for the last fiscal period of Borrower to end before
the Effective Date, there has been no material adverse change in the financial condition, business or prospects of Borrower. Borrower is solvent. 
  
 2.5 Litigation. Except as disclosed in writing to Trade Bank prior to the Effective Date, there is no action, claim, suit,
litigation, proceeding or investigation pending or (to best of Borrower’s knowledge) threatened by or against or affecting Borrower or any Subsidiary in any court or before any governmental authority, administrator or agency which may result in
(a) any material adverse change in the financial condition or business of Borrower, or (b) any material impairment of the ability of Borrower to carry on its business in substantially the same manner as it is now being conducted. 
  
 2.6 No Violation. The execution, delivery, and
performance by Borrower of each of the Loan Documents do not violate any provision of any law or regulation, or contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or result in a breach of or 

  

 Page 2 

 
constitute a default under any contract, obligation, indenture, or other instrument to which Borrower is a party or by which Borrower may be bound.

  
 2.7 Income Tax Returns. Borrower has no
knowledge of any pending assessments or adjustments of its income tax payable with respect to any year. 
  
 2.8 No Subordination. There is no agreement, indenture, contract, or instrument to which Borrower is a party or by which Borrower may
be bound that requires the subordination in right of payment of any of Borrower’s obligations subject to this Agreement to any other obligation of Borrower. 
  
 2.9 ERISA. Borrower is in compliance in all material respects with all applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended or recodified from time to time (“ERISA”); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to
by Borrower (each, a “Plan”); no Reportable Event, as defined in ERISA, has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan;
and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under GAAP. 
  
 2.10 Other Obligations. Except as disclosed in writing to Trade Bank prior to the Effective Date, neither Borrower nor any Subsidiary
are in default of any obligation for borrowed money, any purchase money obligation or any material lease, commitment, contract, instrument or obligation. 
  
 2.11 No Defaults. No Event of Default, or event which with the giving of notice or the passage of time or both would constitute an
Event of Default, has occurred and is continuing. 
  
 2.12
Information Provided to Trade Bank. The information provided to the Trade Bank concerning Borrower’s business is true and correct in all material respects. 
  
 2.13 Environmental Matters. Except as disclosed by Borrower to Trade Bank in writing prior to the
Effective Date, Borrower (as well as any Subsidiary) is each in compliance in all material respects with all applicable Federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any Borrower’s or any Subsidiary’s operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, the Federal Toxic Substances Control Act and the California Health and Safety Code, as any of the same may be amended, modified or supplemented from time to
time. None of the operations of Borrower or of any Subsidiary is the subject of any Federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous
waste or substance into the environment. 
  
 III. CONDITIONS
TO EXTENDING FACILITIES 
  
 3.1 Conditions to
Initial Credit Extension. The obligation of Trade Bank to make the first Credit Extension is subject to the fulfillment to Trade Bank’s satisfaction of the following conditions: 
  

	 	(a)	Approval of Trade Bank Counsel. All legal matters relating to making the Facilities available to Borrower must be satisfactory to counsel for Trade Bank.

  

 Page 3 

	 	(b)	Documentation. Trade Bank must have received, in form and substance satisfactory to Trade Bank, the following documents and instruments duly executed and
in full force and effect: 

  

	 	(1)	a corporate borrowing resolution and incumbency certificate if Borrower is a corporation, a partnership or joint venture borrowing certificate if Borrower is a partnership or joint
venture, and a limited liability company borrowing certificate if Borrower is a limited liability company; 

  

	 	(2)	the Facility Documents for each Facility, including, but not limited to, note(s) (“Notes”) for any Revolving Credit or Term Loan Facility, Trade Bank’s standard
Continuing Commercial Letter of Credit Agreement or Continuing Standby Letter of Credit Agreement for any letter of credit Facility; 

  

	 	(3)	those guarantees, security agreements, deeds of trust, subordination agreements, intercreditor agreements, factoring agreements, tax service contracts, and other Collateral
Documents required by Trade Bank to evidence the collateral/credit support specified in the Supplement; 

  

	 	(4)	if an audit or inspection of any books, records or property is specified in the Supplement for any Facility, an audit or inspection report from Wells Fargo or another auditor or
inspector acceptable to Trade Bank reflecting values and property conditions satisfactory to Trade Bank; and 

  

	 	(5)	if insurance is required in the Addendum, the insurance policies specified in the Addendum (or other satisfactory proof thereof) from insurers acceptable to Trade Bank.

  
 3.2 Conditions to Making Each Credit
Extension. The obligation of Trade Bank to make each Credit Extension is subject to the fulfillment to Trade Bank’s satisfaction of the following conditions: 
  

	 	(a)	Representations and Warranties. The representations and warranties contained in this Agreement, the Facility Documents and the Collateral Documents will be true and
correct in all material respects on and as of the date of the Credit Extension with the same effect as though such representations and warranties had been made on and as of such date; 

  

	 	(b)	Documentation. Trade Bank must have received, in form and substance satisfactory to Trade Bank, the following documents and instruments duly executed and in full force
and effect: 

  

	 	(1)	 if the Credit Extension is the issuance of a Commercial Letter of Credit, Trade Bank’s standard Application For Commercial Letter 

  

 Page 4 

	 	 
of Credit or standard Application and Agreement For Commercial Letter of Credit; 

  

	 	(2)	if the Credit Extension is the issuance of a Standby Letter of Credit, Trade Bank’s standard Application For Standby Letter of Credit or standard Application and Agreement For
Standby Letter of Credit; 

  

	 	(3)	if a Borrowing Base Certificate is required for the Credit Extension, a Borrowing Base Certificate demonstrating compliance with the requirements for such Credit Extension.

  

	 	(c)	Fees. Trade Bank must have received any fees required by the Loan Documents to be paid at the time such Credit Extension is made. 

  
 IV. AFFIRMATIVE COVENANTS 
  
 Borrower covenants that so long as Trade Bank remains committed to make
Credit Extensions to Borrower, and until payment of all Obligations and Credit Extensions, Borrower will comply with each of the following covenants: (For purposes of this Article IV, and Article V below, reference to “Borrower” may also
extend to Borrower’s subsidiaries, if so specified in the Addendum.) 
  
 4.1 Punctual Payments. Punctually pay all principal, interest, fees and other Obligations due under this Agreement or under any Loan Document at the time and place and in the manner specified herein or
therein. 
  
 4.2 Notification to Trade Bank.
Promptly, but in no event more than 5 calendar days after the occurrence of each such event, provide written notice in reasonable detail of each of the following: 
  

	 	(a)	Occurrence of a Default. The occurrence of any Event of Default or any event which with the giving of notice or the passage of time or both would constitute an Event
of Default; 

  

	 	(b)	Borrower’s Trade Names; Place of Business. Any change of Borrower’s (or any Subsidiary’s) name, trade name or place of business, or chief executive
officer; 

  

	 	(c)	Litigation. Any action, claim, proceeding, litigation or investigation threatened or instituted by or against or affecting Borrower (or any Subsidiary) in any court or
before any government authority, administrator or agency which may materially and adversely affect Borrower’s (or any Subsidiary’s) financial condition or business or Borrower’s ability to carry on its business in substantially the
same manner as it is now being conducted; 

  

	 	(d)	Uninsured or Partially Uninsured Loss. Any uninsured or partially uninsured loss through liability or property damage or through fire, theft or any other cause
affecting Borrower’s (or any Subsidiary’s) property in excess of the aggregate amount required hereunder; 

  

 Page 5 

	 	(e)	Reports Made to Insurance Companies. Copies of all material reports made to insurance companies; and 

  

	 	(f)	ERISA. The occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan.

  
 4.3 Books and Records. Maintain at
Borrower’s address books and records in accordance with GAAP, and permit any representative of Trade Bank, at any reasonable time, to inspect, audit and examine such books and records, to make copies of them, and to inspect the properties of
Borrower. 
  
 4.4 Tax Returns and Payments. Timely
file all tax returns and reports required by foreign, federal, state and local law, and timely pay all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower. Borrower may, however, defer payment of any
contested taxes, provided that Borrower (i) in good faith contests Borrower’s obligation to pay the taxes by appropriate proceedings promptly instituted and diligently conducted, (ii) notifies Trade Bank in writing of the commencement of, and
any material development in, the proceedings, (iii) posts bonds or takes any other steps required to keep the contested taxes from becoming a lien upon any of the Collateral, and (iv) makes provision, to Trade Bank’s satisfaction, for eventual
payment of such taxes in the event Borrower is obligated to make such payment. 
  
 4.5 Compliance with Laws. Comply in all material respects with the provisions of all foreign, federal, state and local laws and regulations relating to Borrower, including, but not limited to, those
relating to Borrower’s ownership of real or personal property, the conduct and licensing of Borrower’s business, and health and environmental matters. 
  

4.6 Taxes and Other Liabilities. Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real and
personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except (a) such as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Trade Bank’s satisfaction, for eventual payment thereof in the event that Borrower is obligated to make such payment. 
  
 4.7 Insurance. Maintain and keep in force insurance of the types and in amounts customarily carried in lines of business similar to that of
Borrower, including, but not limited to, fire, extended coverage, public liability, flood, property damage and workers’ compensation, with all such insurance to be in amounts satisfactory to Trade Bank and to be carried with companies approved
by Trade Bank before such companies are retained, and deliver to Trade Bank from time to time at Trade Bank’s request schedules setting forth all insurance then in effect. All insurance policies shall name Trade Bank as an additional loss
payee, and shall contain a lenders loss payee endorsement in form reasonably acceptable to Trade Bank. (Upon receipt of the proceeds of any such insurance, Trade Bank shall apply such proceeds in reduction of the outstanding funded Credit Extensions
and shall hold any remaining proceeds as collateral for the outstanding unfunded Credit Extensions, as Trade Bank shall determine in its sole discretion, except that, provided no Event of Default has occurred and is continuing, Trade Bank shall
release to Borrower insurance proceeds with respect to equipment totaling less than $100,000, which shall be utilized by Borrower for the replacement of the equipment with respect to which the insurance proceeds were paid, if Trade Bank receives
reasonable assurance that the insurance proceeds so released will be so used.) If Borrower fails to provide or pay for any insurance, Trade Bank may, but is not obligated to, obtain the insurance at Borrower’s expense. 
  

 Page 6 

 4.8 Further Assurances. At Trade Bank’s request and in form and substance satisfactory
to Trade Bank, execute all documents and take all such actions at Borrower’s expense as Trade Bank may deem reasonably necessary or useful to perfect and maintain Trade Bank’s perfected security interest in the Collateral and in order to
fully consummate all of the transactions contemplated by the Loan Documents. 
  
 V. NEGATIVE COVENANTS 
  
 Borrower covenants that so long as Trade Bank remains committed to make any Credit Extensions to Borrower and until all Obligations and Credit Extensions have been paid, Borrower will not: 
  
 5.1 Merge or Consolidation, Transfer of Assets. Merge into or
consolidate with any other entity; make any substantial change in the nature of Borrower’s business as conducted as of the date hereof; acquire all or substantially all of the assets of any other entity; nor sell, lease, transfer or otherwise
dispose of all or a substantial or material portion of Borrower’s assets except in the ordinary course of its business. 
  
 5.2 Use of Proceeds. Borrower will not use the proceeds of any Credit Extension except for the purposes, if any, specified for such Credit
Extension in the Supplement covering the Facility under which such Credit Extension is made. 
  
 5.3 Liens. Mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of Borrower’s assets now owned or hereafter acquired, except (i) any of the foregoing
in favor of Trade Bank or which is existing as of, and disclosed to Trade Bank in writing prior to, the date hereof (ii) purchase money security interests, or (iii) any other liens imposed by operation of law which do not exceed $50,000 in the
aggregate. 
  
 5.4 Acquisitions of Assets. Borrower
will not acquire any assets or enter into any other transaction outside the ordinary course of Borrower’s business. 
  
 5.5 Loans and Investments. Borrower will not make any loans or advances to, or investments in, any person or entity except for (i) accounts
receivable created in the ordinary course of Borrower’s business and (ii) loans to employees of Borrower not to exceed $10,000 in the aggregate. 
  
 5.6 Indebtedness For Borrowed Money. Borrower will not incur any indebtedness for borrowed money, except to Trade Bank and except for
indebtedness subordinated to the Obligations by an instrument or agreement in form acceptable to Trade Bank. 
  
 5.7 Guarantees. Borrower will not guarantee or otherwise become liable with respect to the obligations of any other person or entity, except
for endorsement of instruments for deposit into Borrower’s account in the ordinary course of Borrower’s business. 
  
 5.8 Investments in, or Acquisitions of, Subsidiaries. Borrower will not make any investments in, or form or acquire, any subsidiaries.

  
 5.9 Capital Expenditures. Borrower shall not
make any capital expenditures in an aggregate amount in excess of $3,000,000 during fiscal year 2002 and $500,000 during fiscal year 2003. 
  

 Page 7 

 VI. EVENTS OF DEFAULT AND REMEDIES 
  
 6.1 Events of Default. The occurrence of any of the following
shall constitute an “Event of Default”: 
  

	 	(a)	Failure to Make Payments When Due. Borrower’s failure to pay principal, interest, fees or other amounts when due under any Loan Document.

  

	 	(b)	Failure to Perform Obligations. Any failure by Borrower to comply with any covenant or obligation in this Agreement or in any Loan Document (other than those referred
to in subsection (a) above), and such default shall continue for a period of twenty calendar days from the earlier of (i) Borrower’s failure to notify Trade Bank of such Event of Default pursuant to Section 4.2(a) above, or (ii) Trade
Bank’s notice to Borrower of such Event of Default. 

  

	 	(c)	Untrue or Misleading Warranty or Statement. Any warranty, representation, financial statement, report or certificate made or delivered by Borrower under any Loan
Document is untrue or misleading in any material respect when made or delivered. 

  

	 	(d)	Defaults Under Other Loan Documents. Any “Event of Default” occurs under any other Loan Document; any Guaranty is no longer in full force and effect (or any
claim thereof made by Guarantor) or any failure of a Guarantor to comply with the provisions thereof; or any breach of the provisions of any Subordination Agreement or Intercreditor Agreement by any party other than the Trade Bank.

  

	 	(e)	Defaults Under Other Agreements or Instruments. Any default in the payment or performance of any obligation, or the occurrence of any event of default, under the terms
of any other agreement or instrument pursuant to which Borrower, any Subsidiary or any Guarantor or general partner of Borrower has incurred any debt or other material liability to any person or entity. 

  

	 	(f)	Concealing or Transferring Property. Borrower conceals, removes or transfers any part of its property with intent to hinder, delay or defraud its creditors, or makes
or suffers any transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law. 

  

	 	(g)	Judgments and Levies Against Borrower. The filing of a notice of judgment lien against Borrower, or the recording of any abstract of judgment against Borrower, in any
county in which Borrower has an interest in real property, or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower, or the entry of a judgment against Borrower.

  

	 	(h)	 Event or Condition Impairing Payment or Performance. Any event occurs or condition arises which Trade Bank in good faith believes impairs or is
substantially likely to impair the prospect of payment or 

  

 Page 8 

	 	 
performance by Borrower of the Obligations, including, but not limited to any material adverse change in Borrower’s financial condition, business or
prospects. 

  

	 	(i)	Voluntary Insolvency. Borrower, any Subsidiary or any Guarantor (i) becomes insolvent, (ii) suffers or consents to or applies for the appointment of a receiver,
trustee, custodian or liquidator of itself or any of its property, (iii) generally fails to pay its debts as they become due, (iv) makes a general assignment for the benefit of creditors, or (v) files a voluntary petition in bankruptcy, or seeks
reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time (“Bankruptcy Code”), or under
any state or Federal law granting relief to debtors, whether now or hereafter in effect. 

  

	 	(j)	Involuntary Insolvency. Any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors is filed or commenced against Borrower, any Subsidiary or Guarantor, or an order for relief is entered against it by any court of competent jurisdiction under the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or other relief for debtors. 

  

	 	(k)	Change in Ownership. Any change greater than 20% in the ownership of Borrower, any general partner of Borrower or any Guarantor which the Trade Bank determines, in its
sole discretion, may adversely affect the creditworthiness of Borrower or credit support for the Obligations. 

  
 6.2 Remedies. Upon the occurrence of any Event of Default, or at any time thereafter while an Event of Default is continuing, Trade Bank, at
its option, and without notice or demand of any kind (all of which are hereby expressly waived by Borrower), may do any one or more of the following: (a) terminate Trade Bank’s obligation to make Credit Extensions or to make available to
Borrower the Facilities or other financial accommodations; (b) accelerate and declare all or any part of the Obligations to be immediately due, payable, and performable, notwithstanding any deferred or installment payments allowed by any instrument
evidencing or relating to any Credit Extension; and/or (c) exercise all its rights, powers and remedies available under the Loan Documents, or accorded by law, including, but not limited to, the right to resort to any or all Collateral or other
security for any of the Obligations and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law. Notwithstanding the provisions in the foregoing sentence, if any Event of Default set out in subsections (i)
and (j) of Section 6.1 above shall occur, then all the remedies specified in the preceding sentence shall automatically take effect without notice or demand of any kind (all of which are hereby expressly waived by Borrower) with respect to any and
all Obligations. All rights, powers and remedies of Trade Bank may be exercised at any time by Trade Bank and from time to time after the occurrence and during the continuance of an Event of Default, are cumulative and not exclusive, and shall be in
addition to any other rights, powers or remedies provided by law or equity. 
  
 VII. GENERAL PROVISIONS 
  
 7.1 Notices. All notices to be given under this Agreement shall be in writing and shall be given personally or by regular first-class mail, by certified mail return receipt requested, by a private delivery service which
obtains a signed receipt, or by facsimile transmission 

  

 Page 9 

 
addressed to Trade Bank or Borrower at the address indicated after their signature to this Agreement, or at any other address designated in writing by one
party to the other party. Trade Bank is hereby authorized by Borrower to act on such instructions or notices sent by facsimile transmission or telecommunications device which Trade Bank believes come from Borrower. All notices shall be deemed to
have been given upon delivery, in the case of notices personally delivered or delivered by private delivery service, upon the expiration of 3 calendar days following the deposit of the notices in the United States mail, in the case of notices
deposited in the United States mail with postage prepaid, or upon receipt, in the case of notices sent by facsimile transmission. 
  
 7.2 Waivers. No delay or failure of Trade Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or
operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or
remedy. Any waiver, consent or approval by Trade Bank under any of the Loan Documents must be in writing and shall be effective only to the extent set out in such writing. 
  
 7.3 Benefit of Agreement. The provisions of the Loan Documents shall be binding upon and inure to the benefit
of the respective successors, assigns, heirs, executors, administrators, beneficiaries and legal representatives of Borrower and Trade Bank; provided, however, that Borrower may not assign or transfer any of its rights under any Loan Document
without the prior written consent of Trade Bank, and any prohibited assignment shall be void. No consent by Trade Bank to any assignment shall release Borrower from its liability for the Obligations unless such release is specifically given by Trade
Bank to Borrower in writing. Trade Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Trade Bank’s rights and benefits under each of the Loan Documents. In connection
therewith, Trade Bank may disclose any information relating to the Facilities, Borrower or its business, or any Guarantor or its business. 
  
 7.4 Joint and Several Liability. If Borrower consists of more than one person or entity, the liability of each of them shall be joint and
several, and the compromise of any claim with, or the release of, any one such Borrower shall not constitute a compromise with, or a release of, any other such Borrower. 
  
 7.5 No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit
of Borrower and Trade Bank and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, any of the Loan
Documents to which it is not a party. 
  
 7.6 Governing Law
and Jurisdiction. This Agreement shall, unless provided differently in any Loan Document, be governed by, and be construed in accordance with, the internal laws of the State of California, except to the extent Trade Bank has greater rights
or remedies under federal law whether as a national bank or otherwise. Borrower and Trade Bank (a) agree that all actions and proceedings relating directly or indirectly to this Agreement shall be litigated in courts located within California; (b)
consent to the jurisdiction of any such court and consent to service of process in any such action or proceeding by personal delivery or any other method permitted by law; and (c) waive any and all rights Borrower may have to object to the
jurisdiction of any such court or to transfer or change the venue of any such action or proceeding. 
  

 Page 10 

 7.7 Mutual Waiver of Jury Trial. Borrower and Trade Bank each hereby waive the right to
trial by jury in any action or proceeding based upon, arising out of, or in any way relating to, (a) any Loan Document, (b) any other present or future agreement, instrument or document between Trade Bank and Borrower, or (c) any conduct, act or
omission of Trade Bank or Borrower or any of their directors, officers, employees, agents, attorneys or any other persons or entities affiliated with Trade Bank or Borrower, which waiver will apply in all of the mentioned cases whether the case is a
contract or tort case or any other case. Borrower represents and warrants that no officer, representative or agent of Trade Bank has represented, expressly or otherwise, that Trade Bank would not seek to enforce this waiver of jury trial.

  
 7.8 Severability. Should any provision of any
Loan Document be prohibited by, or invalid under applicable law, or held by any court of competent jurisdiction to be void or unenforceable, such defect shall not affect, the validity of the other provisions of the Loan Documents. 
  
 7.9 Entire Agreement; Amendments. This Agreement and the other
Loan Documents are the final, entire and complete agreement between Borrower and Trade Bank concerning the Credit Extensions and the Facilities; supersede all prior and contemporaneous negotiations and oral representations and agreements. There are
no oral understandings, representations or agreements between the parties concerning the Credit Extensions or the Facilities which are not set forth in the Loan Documents. This Agreement and the Supplement(s) may not be waived, amended or superseded
except in a writing executed by Borrower and Trade Bank. 
  
 7.10
Collection of Payments. Unless otherwise specified in any Loan Document, other than this Agreement or any Note, all principal, interest and any fees due to Trade Bank by Borrower under this Agreement, the Addendum, any Supplement, any
Facility Document, any Collateral Document or any Note, will be paid by Trade Bank having Wells Fargo debit any of Borrower’s accounts with Wells Fargo and forwarding such amount debited to Trade Bank, without presentment, protest, demand for
reimbursement or payment, notice of dishonor or any other notice whatsoever, all of which are hereby expressly waived by Borrower. Such debit will be made at the time principal, interest or any fee is due to Trade Bank pursuant to this Agreement,
the Addendum, any Supplement, any Facility Document, any Collateral Document or any Note. 
  
 7.11 Costs, Expenses and Attorneys’ Fees. Borrower will reimburse Trade Bank for all costs and expenses, including, but not limited to, reasonable attorneys’ fees and expenses (which counsel
may be Trade Bank or Wells Fargo employees), expended or incurred by Trade Bank in the preparation and negotiation of this Agreement, the Notes, the Collateral Documents, the Addendum, and the Facility Documents, in amending this Agreement, the
Collateral Documents, the Notes, the Addendum, or the Facility Documents, in collecting any sum which becomes due Trade Bank on the Notes, under this Agreement, the Collateral Documents, the Addendum, the Supplement(s), or any of the Facility
Documents, in the protection, perfection, preservation and enforcement of any and all rights of Trade Bank in connection with this Agreement, the Notes, any of the Collateral Documents, any of the Supplement(s), any of the Addendum, or any of the
Facility Documents, including, without limitation, the fees and costs incurred in any out-of-court work out or a bankruptcy or reorganization proceeding. 
  

 Page 11 

 VIII. DEFINITIONS 
  
 8.1 “Accounts Receivable” means all presently existing and hereafter arising “Rights to
Payment” (as that term is defined in the “Continuing Security Agreement - Rights to Payment and Inventory” executed by Borrower in favor of Trade Bank) which arise from the sale, lease or other disposition of Inventory, or from
performance of contracts for service, manufacture, construction or repair, together with all goods returned by Borrower’s customers in connection with any of the foregoing. 
  
 8.2 “Agreement” means this Agreement and the Addendum attached hereto, as corrected or modified from
time to time by Trade Bank and Borrower. 
  
 8.3
“Banking Day” means each day except Saturday, Sunday and a day specified as a holiday by federal or California statute. 
  
 8.4 “Borrowing Base” means an amount equal to the sum of: (a) seventy-five percent (75%) of Borrower’s Eligible Accounts
Receivable, plus (b) forty percent (40%) of Borrower’s Eligible Inventory. All of the foregoing shall be determined by Trade Bank upon receipt and review of all collateral reports required hereunder and such other documents and
collateral information as Trade Bank may from time to time require. Borrower acknowledges that said Borrowing Base was established by Trade Bank with the understanding that, among other items, the aggregate of all returns, rebates, discounts,
credits, and allowances for the immediately preceding three (3) months at all times shall be less than five percent (5%) of Borrower’s gross sales for said period. If such dilution of Borrower’s accounts for the immediately preceding three
(3) months at any time exceeds five percent (5%) of Borrower’s gross sales for said period, or if there at any time exists any other matters, events, conditions or contingencies which Trade Bank reasonably believes may affect payment of any
portion of Borrower’s accounts, Trade Bank, in its reasonable discretion, may reduce the foregoing advance rate against Borrower’s Eligible Accounts Receivable to a percentage appropriate to reflect such additional dilution and/or
establish reserves against Borrower’s Eligible Accounts Receivable. 
  
 8.5 “Closing Date” means the date on which the first Credit Extension is made. 
  
 8.6 “Collateral” means all property securing the Obligations. 
  
 8.7 “Collateral Documents” means those security agreement(s), deed(s) of trust, guarantee(s),
subordination agreement(s), intercreditor agreement(s), and other credit support documents and instruments required by the Trade Bank to effect the collateral and credit support requirements set forth in the Supplement with respect to the
Facilities. 
  
 8.8 “Credit” means any
discount, allowance, credit, rebate, or adjustment granted by Borrower with respect to an Account Receivable. 
  
 8.9 “Credit Extension” means each extension of credit under the Facilities (whether funded or unfunded), including, but not
limited to, (a) the issuance of sight or usance commercial letters of credit or commercial letters of credit supported by back-up letters of credit, (b) the issuance of standby letters of credit, (c) the issuance of shipping guarantees, (d) the
making of revolving credit working capital loans, (e) the making of loans against imports for letters of credit, (f) the making of clean import loans outside letters of credit, (g) the making of advances against export orders, (h) the making of
advances against export letters of credit, (i) 

  

 Page 12 

 
the making of advances against outgoing collections, (j) the making of term loans, and (k) the entry into foreign exchange contracts. 
  
 8.10 “Credit Limit” means, with respect to the any
Facility, the amount specified under the column labeled “Credit Limit” in the Supplement for that related Facility. 
  
 8.11 “Credit Sublimit” means, with respect to any Subfacility, the amount specified after the name of that Subfacility under the
column labeled “Credit Sublimit” in the Supplement for the related Facility. 
  
 8.12 “Dollars” and “$” means United States dollars. 
  
 8.13 “Eligible Accounts Receivable” means those Accounts Receivable which have been created in the ordinary course of
Borrower’s business and upon which Borrower’s right to receive payment is absolute and not contingent upon the fulfillment of any conditions whatsoever, and shall not include: 
  

	 	(a)	any account which is past due sixty (60) days after the invoice date with respect to Accounts Receivable with payment terms of net thirty (30) or net sixty (60) days from invoice
date; and any [or one] day after the due date with respect to Accounts Receivable with payment terms of net 90 days; 

  

	 	(b)	any account for which there are any right of setoff, defense or discount (except regular discounts allowed in the ordinary course of business to promote prompt payment) or for which
any defense or counterclaim has been asserted; 

  

	 	(c)	any account which represents an obligation of any state or municipal government or of the United States government or any political subdivision thereof; 

  

	 	(d)	any account which represents an obligation of an account debtor located in a foreign country; 

  

	 	(e)	any account which arises from the sale or lease to or performance of services for, or represents an obligation of, an employee, affiliate, partner, parent or subsidiary of Borrower.

  

	 	(f)	that portion of any account which represents interim or progress billings or retention rights on the part of the account debtor; 

  

	 	(g)	any account which represents an obligation of any account debtor when twenty percent (20%) or more of Borrower’s accounts from such account debtor is not eligible pursuant to
(a) above; 

  

	 	(h)	that portion of any account from an account debtor which represents the amount by which Borrower’s total accounts receivable from said account debtor exceeds twenty-five
percent (25%) of Borrower’s total accounts receivable; 

  

	 	(i)	 any account deemed ineligible by Trade Bank when Trade Bank, in its sole discretion, deems the creditworthiness or financial condition of the 

  

 Page 13 

	 	 
account debtor, or the industry in which the account debtor is engaged, to be unsatisfactory. 

  
 8.14 “Eligible Inventory” means all Inventory of
Borrower comprised of finished goods (other than Inventory deemed ineligible in Trade Bank’s sole discretion), that have been in Borrower’s stock for not more than twelve (12) calendar months, valued at the lower of cost or fair market
value on a first in first out basis in accordance with GAAP, that is subject to no liens other than liens in favor of Trade Bank, and is located at Borrower’s warehouses in the United States. 
  
 8.15 “Facility Documents” means, with respect to any
Facility, those documents specified in the Supplement for that Facility, and any other documents customarily required by Trade Bank for such Facility. 
  
 8.16 “Facility Termination Date” means, with respect to any Facility, the date specified in the Supplement for that Facility after
which no further Credit Extensions will be made under that Facility. 
  
 8.17 “GAAP” means generally accepted accounting principles, which are applicable to the circumstances, as of the date of determination, set out in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and in the statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the
accounting profession. 
  
 8.18
“Inventory” has the meaning assigned to such term in the “Continuing Security Agreement — Rights to Payment and Inventory” executed by Borrower in favor of Trade Bank. 
  
 8.19 “Loan Documents” means this Agreement, the
Addendum, the Supplement(s), the Facility Documents and the Collateral Documents. 
  
 8.20 “Note” has the meaning specified in Section 3.1(b)(2) above. 
  
 8.21 “Obligations” means (a) the obligation of Borrower to pay principal, interest and fees on all funded Credit Extensions and
fees on all unfunded Credit Extensions, and (b) the obligation of Borrower to pay and perform when due all other indebtedness, liabilities, obligations and covenants required under the Loan Documents. 
  
 8.22 “Person” means and includes natural persons,
corporations, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof. 
  
 8.23 “Prime Rate” means the rate most recently announced by Wells Fargo at its principal office in San Francisco, California as its “Prime Rate”, with the understanding that the Prime Rate is one of Wells
Fargo’s base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or
publications as Wells Fargo may designate. Any change in an interest rate resulting from a change in the Prime Rate shall become effective as of 12:01 a.m. of the Banking Day on which each change in the Prime Rate is announced by Wells Fargo.

  

 Page 14 

 8.24 “Subsidiary” means (i) any corporation at least the majority of whose
securities having ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) are at the time owned by Borrower and/or one or more Subsidiaries, and (ii) any joint
venture or partnership in which Borrower and/or one or more Subsidiaries has a majority interest. 
  
 8.25 “Wells Fargo” means Wells Fargo Bank, N.A. 
  
 IX. ARBITRATION 
  
 9.1 Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies
between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise arising out of or relating to in any way (i) the loan and related loan and security documents which are
the subject of this Agreement and its negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.

  
 9.2 Governing Rules. Any arbitration proceeding
will (i) proceed in a location in California selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law
provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the
claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes
(the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to, as applicable, as the “Rules”). If there is any inconsistency between the terms hereof and the Rules, the
terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law. 
  
 9.3 No Waiver of Provisional Remedies, Self-Help and
Foreclosure. The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or
repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph. 
  
 9.4 Arbitrator Qualifications and Powers. Any arbitration
proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney
licensed in the State of California or a neutral retired judge of the state or federal judiciary of California, in 

  

 Page 15 

 
either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator
will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the
arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of
California and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery
of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver
of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief. 
  
 9.5 Discovery. In any arbitration proceeding discovery will be permitted in accordance with the Rules. All
discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date and within 180 days of the filing of the dispute with the AAA. Any requests for an
extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation and that no alternative means for
obtaining information is available. 
  
 9.6 Class
Proceedings and Consolidations. The resolution of any dispute arising pursuant to the terms of this Agreement shall be determined by a separate arbitration proceeding and such dispute shall not be consolidated with other disputes or included
in any class proceeding. 
  
 9.7 Payment Of Arbitration
Costs And Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding. 
  
 9.8 Real Property Collateral; Judicial Reference. Notwithstanding anything herein to the contrary, no dispute shall be submitted to
arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of California, thereby agreeing that all indebtedness and obligations of the parties, and all
mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such dispute is not submitted to arbitration, the dispute shall be referred to a referee in accordance with
California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in accordance with said Section 638. A referee with the qualifications required herein for arbitrators shall be
selected pursuant to the AAA’s selection procedures. Judgment upon the decision rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and
645. 
  
 9.9 Miscellaneous. To the maximum extent
practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration 

  

 Page 16 

 
proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its
business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the documents between the parties or the subject
matter of the dispute shall control. This Agreement may be amended or modified only in writing signed by each party hereto. 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. This arbitration provision shall survive termination, amendment or expiration of
any of the documents or any relationship between the parties. 
  
 Borrower and Trade Bank have caused this Agreement to be executed by their duly authorized officers or representatives on the date first written above. 
  

			
	 “BORROWER”
  
 DESIGN WITHIN REACH, INC.

		
	 By:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  
 Borrower’s Address:

 283 Fourth Street 
 Oakland, CA 94607 
  

			
	 “LENDER”
  
 WELLS FARGO HSBC TRADE BANK,
 NATIONAL ASSOCIATION

		
	 By:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  
 Lender’s Address:

 525 Market Street, 25th Floor 
 San Francisco, CA 94105

  

 Page 17 

			
	 
	WELLS FARGO HSBC TRADE BANK	 	 EXHIBIT A
 ADDENDUM TO CREDIT AGREEMENT

	

  
 THIS ADDENDUM IS ATTACHED TO THE
CREDIT AGREEMENT (“CREDIT AGREEMENT”) BETWEEN WELLS FARGO HSBC TRADE BANK AND THE FOLLOWING BORROWER: 
  
 NAME OF BORROWER: DESIGN WITHIN REACH, INC. 
  
 ADDITIONAL AFFIRMATIVE COVENANTS 
  
 The following covenants are part of Article IV of the Credit Agreement: 
  
 REPORTS. Borrower will furnish the following information or deliver the following reports to Trade Bank at the times indicated below: 
  

	 	•	Annual Financial Statements: Not later than one hundred twenty (120) calendar days after and as of the end of each of Borrower’s fiscal years, an annual unqualified
audited financial statement of Borrower prepared by a certified public accountant acceptable to Trade Bank and prepared in accordance with GAAP, to include balance sheet, income statement, statement of cash flow, and customary footnotes.

  

	 	•	Monthly Financial Statements: Not later than thirty (30) calendar days after and as of the end of each calendar month, a financial statement of Borrower, prepared by
Borrower, to include balance sheet and income statement. 

  
 Certificate of Compliance: At the time each financial statement of Borrower required above is delivered to Trade Bank, a certificate of the president or chief financial officer of Borrower that said financial statements are accurate
and that there exists no Event of Default under the Agreement nor any condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of Default. 
  

	 	•	Borrowing Base Certificate: Not later than fifteen (15) calendar days after and as of the end of each month, a borrowing base certificate. 

  

	 	•	Accounts Receivable Aged Listing: Not later than fifteen (15) calendar days after and as of each month-end, an aged listing of accounts receivable, including both factored
and unfactored accounts. 

  

	 	•	Accounts Payable Aged Listing: Not later than fifteen (15) calendar days after and as of each month-end, an aged listing of accounts payable. 

  

	 	•	Inventory List: Not later than fifteen (15) calendar days after and as of the end of each month, an inventory report showing the types, locations and unit or dollar values of
all the inventory collateral. 

  

	 	•	Insurance: Borrower will maintain in full force and effect insurance coverage on all Borrower’s property, including, but not limited to, the following types of insurance
coverage: 

  
 policies of fire insurance

 marine cargo insurance 
 business personal property insurance 
  

 Page 1 of 2 

 All the insurance referred to in the preceding sentence must be in form, substance and amounts, and issued by companies,
satisfactory to Trade Bank, and cover risks required by Trade Bank and contain loss payable endorsements in favor of Trade Bank. 
  
 FINANCIAL COVENANTS. Borrower will maintain the following (if Borrower has any Subsidiaries which must be consolidated under GAAP, the following applies to
Borrower and the consolidated Subsidiaries): 
  

	 	•	Tangible Net Worth. Not at any time less than $6,200,000. (“Tangible Net Worth” means the aggregate of total shareholders’ equity determined in
accordance with GAAP plus indebtedness which is subordinated to the Obligations to Trade Bank under a subordination agreement in form and substance acceptable to Trade Bank or by subordination language acceptable to Trade Bank in the
instrument evidencing such indebtedness less (i) all assets which would be classified as intangible assets under GAAP, including, but not limited to, goodwill, licenses, patents, trademarks, trade names, copyrights, capitalized software and
organizational costs, licenses and franchises, and (ii) assets which Trade Bank determines in its business judgment would not be available or would be of relatively small value in a liquidation of Borrower’s business, including, loans to
officers or affiliates and other items). 

  

	 	•	Total Liabilities divided by Tangible Net Worth. Not at any time greater than 1.0 to 1.0. (“Tangible Net Worth” has the meaning given to it above, and “Total
Liabilities” excludes indebtedness which is subordinated to the Obligations to Trade Bank under a subordination agreement in form and substance acceptable to Trade Bank or by subordination language acceptable to Trade Bank in the instrument
evidencing such indebtedness.) 

  

	 	•	Quick Asset Ratio. Not at any time less than .40 to 1.0. “Quick Asset Ratio” means “Quick Assets” divided by total current liabilities, and
“Quick Assets” means cash on hand or on deposit in banks, readily marketable securities issued by the United States, readily marketable commercial paper rated “A-1” by Standard & Poor’s Corporation (or a similar
rating by a similar rating organization), certificates of deposit and bankers acceptances, and accounts receivable (net of allowance for doubtful accounts). 

  

	 	•	Net Income After Taxes. Not less than $1 on a quarterly basis (determined as of each fiscal quarter end). 

  
 BY SIGNING HERE BORROWER AGREES TO THE DESIGNATED PROVISIONS IN THIS ADDENDUM:

  

	
	
	  
	

	 (SIGNATURE)

  

 Page 2 of 2 

			
	WELLS FARGO HSBC TRADE BANK	 	 EXHIBIT B
 REVOLVING CREDIT FACILITY SUPPLEMENT

  
 THIS SUPPLEMENT IS AN INTEGRAL PART OF THE CREDIT AGREEMENT BETWEEN WELLS FARGO HSBC TRADE BANK AND THE FOLLOWING BORROWER: 
  
 NAME OF BORROWER: DESIGN WITHIN REACH, INC. 
  
 FACILITY TERMINATION DATE: July 31, 2003 
  
 CREDIT LIMIT FOR THIS REVOLVING CREDIT LOAN FACILITY AND SUBLIMITS: Credit Limit: the lesser of (a) Two Million Five Hundred
Thousand Dollars ($2,500,000) or (b) the Borrowing Base in effect from time to time. 
  
 CREDIT SUBLIMITS: Subject to the Revolving Credit Facility Credit Limit, the Credit Sublimit for each Subfacility specified below refers to the aggregate amount which may be outstanding at any one time under each such
Subfacility. 
  

				
	 •      Sight Commercial Letters of Credit
	  	$	1,500,000
	 •      Standby Letters of Credit
	  	$	1,500,000

  
 FACILITY
DESCRIPTION: Trade Bank will make the Revolving Credit Facility available to finance Borrower’s working capital requirements. Subject to the credit sublimits specified above, the Revolving Credit Facility may be supported by (i)
a standby letter of credit in favor of Trade Bank, (ii) a guarantee or (iii) accounts receivable, inventory or other collateral. Revolving Credit Loans cannot be used to repay outstanding Revolving Credit Loans or Term Loans that have matured or to
repay amounts due under any other Facilities provided to Borrower. 
  
 FACILITY DOCUMENTS: 
  

	 	•	Revolving Credit Loans Note: The term and prepayment conditions of the Loans under Revolving Credit Facility are set forth in Revolving Credit Loans Note.

  
 INTEREST RATES: 
  

	 	•	Loans under Revolving Credit Facility: All outstanding Loans under Revolving Credit Facility will bear interest at the following rate: 

  
 Prime Rate: The Prime Rate plus .50% per annum. 
  
 Interest Payment Dates: Interest on all outstanding Loans under
Revolving Credit Facility will be paid at least once each month on the last day of the month. 
  
 FEES: 
  

	 	•	Facilities Fee: Borrower will pay the following Facilities Fee to Trade Bank before any Facility, including this Facility, is made available to Borrower: $6,250.

  

	 	•	Sight Commercial Credits: 

  
 Issuance of Fees/Fees For Increasing Credit Amounts or Extending Expiration Dates: (Minimum $150) 
 1/8 of 1% of the amount of each Sight Commercial Credit and of any increase in such amount. 
 Payable: At the time each Sight Commercial Credit is issued or increased and at the time the expiration date of any Sight Commercial Credit is
extended. 
  

 Page 1 of 3 

 Amendment Fees: (Minimum $100) 
 $100 for each amendment, unless the amendment is an increase in the Sight Commercial Credit amount or an extension of the expiration date, in which case
the Issuance Fee above will substitute for any Amendment Fee. 
 Payable: At the time each amendment is issued. 
  
 Negotiation/Payment/Examination Fees: (Minimum $125) 
 1/4 of 1% of the face amount of each drawing under each Sight Commercial Credit. 
 Payable: At the time any draft or other documents are negotiated, paid or examined. 
  

	 	•	Standby Credits: 

  
 Commission Fees/Fees For Increasing Credit Amounts or Extending Expiration Dates: (Minimum $410) 
 2% of the amount of each Standby Credit and of any increase in such amount. 
 Payable: At the time each Standby Credit is issued or increased and at the time the expiration date of any Standby Credit is extended. 
 Amendment Fees: (Minimum $130) 
 $130
for each amendment, unless the amendment is an increase in the Standby Credit amount or an extension of the expiration date, in which case the Commission Fee above will substitute for any Amendment Fee. 
 Payable: At the time each amendment is issued. 
  
 Negotiation/Payment/Examination Fees: (Minimum $250) 
 1/4 of 1% of the face amount of each drawing under each Standby Credit. 
 Payable: At the time any
draft or other documents are negotiated, paid or examined. 
  
 COLLATERAL: See Exhibit C – Collateral/Credit Support Document. 
  
 SUBFACILITIES DESCRIPTION, PURPOSE, DOCUMENTS, TERM, AND PREPAYMENTS: 
  

	 	•	Sight Commercial Credits: 

  
 Description and Purpose: Trade Bank will issue sight commercial letters of credit (each a “Sight Commercial Credit”) for the account of
Borrower for the purpose or purposes stated below. Subject to the credit sublimits specified above, these Sight Commercial Credits will be transferable or not transferable and have the goods related to them consigned to or not consigned to, or
controlled by or not controlled by, Trade Bank. The Sight Commercial Credit Sublimit specified above refers to the aggregate undrawn amount of all Sight Commercial Credits which may be at any one time outstanding under this Facility together with
the aggregate amount of all drafts drawn under such sight Commercial Credits which have not been reimbursed as provided below at such time. 
  
 This Subfacility may only be used for the following purpose: For the importation of furniture. 
  
 Documents: 
  
 Before the first Sight Commercial Credit is issued:

 Trade Bank’s standard form Commercial Letter of Credit Agreement; 
  

 Page 2 of 3 

 Before each Sight Commercial Credit is issued: 
 Trade Bank’s standard form Application For Commercial Letter of Credit; 
  
 Before each Sight Commercial Credit is amended: 

Trade Bank’s standard form Application For Amendment To Letter of Credit; 
  
 Term: No Sight Commercial Credit may expire more than one hundred
eighty (180) calendar days after the date it is issued. 
  

	 	•	Standby Credits: 

  
 Description and Purpose: Trade Bank will issue standby letters of credit (each a “Standby Credit”) for the account of Borrower for the
purpose or purposes stated below. Subject to the credit sublimits specified above, these Standby Credits will be issued to support Borrower’s open account trade terms, bid and performance bonds, industrial revenue bonds, worker’s
compensation obligations and or the moving of Borrower as a new customer from another bank to Trade Bank. The Standby Credit Sublimit specified above refers to the aggregate undrawn amount of all Standby Credits which may be at any one time
outstanding under this Subfacility together with the aggregate amount of all drafts drawn under such Standby Credits which have not been reimbursed as provided below at such time. 
  
 This Subfacility may only be used for the following purpose: To secure lease deposits for new retail space. 
  
 Documents: 
  
 Before the first Standby Credits is issued: 
 Trade Bank’s standard form Standby Letter of Credit Agreement. 
  
 Before each Standby Credit is issued: 
 Trade Bank’s standard form Application For Standby Letter of Credit. 
  
 Before each Standby Credit is amended: 
 Trade Bank’s standard form Application For Amendment To Letter of Credit. 
  
 Term: No Standby Credit will expire more than three hundred sixty
(360) calendar days after the date it is issued. Standby Credits will be available by sight drafts only. 
  
 REIMBURSEMENT FOR SIGHT COMMERCIAL CREDITS AND STANDBY CREDITS: 
  
 The amount of each drawing paid by Trade Bank under a Sight Commercial Credit or Standby Credit will be reimbursed to Trade Bank as follows: 

 
 by Trade Bank having Wells Fargo Bank debit any of Borrower’s
accounts with Wells Fargo Bank and forwarding such amount debited to Trade Bank; or 
  
 immediately on demand of Trade Bank; or 
  
 by treating such amount drawn as an advance to Borrower under Borrower’s Revolving Credit Facility. 
  
 DEFAULT INTEREST RATE ON UNREIMBURSED SIGHT COMMERCIAL CREDITS AND STANDBY CREDITS: 
  
 Default interest will accrue at a per annum rate equal to the Prime Rate plus five percent (5.00%) (“Default Interest
Rate”) and be paid at least once each month as follows: 
  
 All drawings (i) under Sight Commercial Credits and (ii) under Standby Credits, not reimbursed on the day they are paid by Trade Bank, will bear interest at the Default Interest Rate from the date they are paid to the date such payment is
fully reimbursed. 
  
 BY INITIALING HERE BORROWER AGREES TO ALL THE TERMS OF
THIS SUPPLEMENT:                      
  

 Page 3 of 3 

 EXHIBIT C 

			
	WELLS FARGO HSBC TRADE BANK	 	COLLATERAL/CREDIT SUPPORT DOCUMENT
	

  

	•	Personal Property Security From
Borrower:                                       
                             

 First priority lien in the following assets of Borrower: 
 accounts receivable 
 inventory 
 Collateral Documents: 
 Security Agreement: Rights to Payment and Inventory 

UCC-1 Financing Statement 
  
 BY INITIALING HERE BORROWER AGREES TO ALL THE TERMS OF THIS EXHIBIT:___________ 

 EXHIBIT D 

			
	WELLS FARGO HSBC TRADE BANK	 	BORROWING BASE CERTIFICATE
	

  

													
	 	 	 	 	 	 	 	 	 	 	 	  	For Month Ended:___________________
	COMPANY NAME: Design Within Reach, Inc.	 	 	 	 	  	 
	1.	 	Previous Aged Trial Balance As Of: ______________	 	 	 	 	  	 
	 	 	(Trade Receivables only) $ _________________	 	 	 	 	  	 
	2.	 	Additions:	 	Gross Invoices	 	$ ___________	 	(Cash Sales Included _______________)
	 	 	 	 	Credit Memos	 	$ (___________)	 	 	 	 	  	 
	3.	 	Deductions:	 	Cash Receipts	 	$ (___________)	 	 	 	 	  	 
	 	 	 	 	Cash Discounts	 	$ (___________)	 	 	 	 	  	 
	 	 	SUBTOTAL	 	 	 	$ ___________	 	 	 	 	  	 
	4.	 	Journal Entries:	 	Refunds	 	 	 	 	 	 	  	 
	 	 	 	 	Misc. Debit Adj.	 	$ ___________	 	 	 	 	  	 
	 	 	 	 	Write-Offs	 	$ (___________)	 	 	 	 	  	 
	 	 	 	 	Misc. Credit Adj.	 	$ (___________)	 	 	 	 	  	 
	 	 	SUBTOTAL	 	 	 	$ ___________	 	 	 	 	  	 
	5.	 	Control Balance (Sum lines 1, 2, 3 and 4)	 	$ ___________	 	 	  	 
	6a.	 	G/L Balance	 	$ ___________	 	 	  	 
	6b.	 	Aging Balance	 	 	 	 	  	 
	6c.	 	Beginning A/R Balance (use the lower of 5, 6a, or 6b)	 	$ ___________	 	 	  	 
	7.	 	Less: Ineligible Accounts Receivable from Exhibit 1	 	$ (___________)	 	 	  	 
	8.	 	Net Eligible Accounts Receivable (Line 6c minus Line 7)	 	$ ___________	 	 	  	 
	9.	 	Maximum Advance on Accounts Receivable (75% of Line 8)	 	 	 	$ ___________	  	 
	10.	 	Total Finished Goods Inventory from Exhibit 1	 	$ ___________	 	 	  	 
	11.	 	Less: Ineligible Finished Goods Inventory from Exhibit 1 	 	$ ___________	 	 	  	 
	12.	 	Net Eligible Finished Goods Inventory (Line 10 less Line 11)	 	$ ___________	 	 	  	 
	13.	 	Maximum Advance on Finished Goods Inventory	 	$ ___________	 	 	  	 
	 	 	        (40% of Line 12)	 	$ ___________	 	 	  	 
	14.	 	Plus: Inventory in Transit and Inventory under Open Letters of Credit	 	$ ___________	 	 	  	 
	15.	 	Maximum Advance on Inventory in Transit and Inventory under Open Letters of Credit (40% of Line 14)	 	$ ___________	 	 	  	 
	16.	 	 Maximum Advance on Inventory:
 (Line 13
plus Line 15)
	 	$ ___________	 	 	  	 
	17.	 	Maximum Advance on A/R and Inventory (Line 9 plus Line 16)	 	 	 	$ ___________	  	 
	18.	 	Maximum Borrowing Base (Line 17 or $2,500,000, whichever is lower)	 	 	 	$ ___________	  	 
	21.	 	Less: Outstanding Loan Balance as of ________________	 	 	 	 	  	 
	21a.	 	Loan	 	$(___________)	 	 	  	 
	21b.	 	Open Letters of Credit (100%)	 	$(___________)	 	 	  	 
	21c.	 	 	 	SUBTOTAL	 	 	 	 	 	$(___________)	  	 
	22.	 	Availability (Overadvance) (Line 20 minus Line 21c)	 	 	 	$ ___________	  	 

  

 Exhibit 1 to 
 Borrowing Base Certificate 
  
 For Month Ended: ___________________________ 
  
 Design Within Reach,
Inc. 
  

					
	INELIGIBLE ACCOUNTS RECEIVABLE	  	 
			
	1.	 	 Past 60 days for invoices with due dates 30 or 60 days after
 invoice date; and past 1 day for invoices with due dates 90 or
 greater after invoice date
	  	$_____________
	2.	 	20% excess delinquency	  	$_____________
	3.	 	Intra-company or subsidiary entity receivable (unless approved by Trade Bank)	  	$_____________
	4.	 	Accounts subject to contingencies	  	$_____________
	5.	 	 That portion of Accounts from account debtors exceeding 25%
 of total accounts outstanding
	  	$_____________
	6.	 	Accounts owing from account debtor outside of U.S. or Canada	  	$_____________
	7.	 	Accounts owing from U.S. or governmental agency or entity	  	$_____________
	8.	 	Total Ineligible Accounts Receivable (Total Lines 1-7)	  	$_____________
		
	INVENTORY	  	$_____________
			
	9.	 	Finished Goods	  	$_____________
	10.	 	Reserves	  	$_____________
	Total Inventory (Total Lines 9-10)	  	$_____________
		
	INELIGIBLE INVENTORY	  	$_____________
			
	11.	 	Display Items and Floor demos.	  	$_____________
	12.	 	 Slow-moving, Unsellable Items
 (In Borrower’s
stock for 365 calendar days or more)
	  	$_____________
	13.	 	Damaged, Defective Items	  	$_____________
	14.	 	Obsolete, Discontinued, Close-out Items	  	$_____________
	15.	 	Packaging and Shipping Materials	  	$_____________
	16.	 	Supplies	  	$_____________
	17.	 	Private Label	  	$_____________
	18.	 	Bill and Hold	  	$_____________
	19.	 	Returned Items	  	$_____________
	20.	 	Consigned Inventory	  	$_____________
	Ineligible Inventory (Total lines 11-20)	  	$_____________

 CERTIFICATION 
  
 Reference is made to the Credit Agreement, dated July 10, 2002 (“Credit Agreement”) between the undersigned (“Borrower”)
and the WELLS FARGO HSBC TRADE BANK, N.A. (“Trade Bank”). Terms defined in the Credit Agreement or in the Attachment to this Certificate and used in the above Borrowing Base Certificate shall have the meanings assigned to them in the
Credit Agreement. 
  
 The above accounts and inventory are assigned to Trade Bank
and a security interest granted in accordance with the terms and conditions of the existing Continuing Security Agreement: Rights to Payment and Inventory (“Security Agreement”) between undersigned and Trade Bank to which reference is
made. We hereby certify that the foregoing is true and correct in all particulars and the accounts described above as collateral for loans represent accounts which conform to the representations and warranties set forth in the Credit Agreement and
Security Agreement. 
  

									
	 Design Within Reach, Inc.
	 	 	 	ACCEPTED: WELLS FARGO HSBC TRADE BANK, N.A.
	 	 	 	 	Received by:
					
	By:	 	 	 	 	 	By:	 	 
	 	 	
	 	 	 	 	 	

					
	Title:	 	 	 	 	 	Title:	 	 
	 	 	
	 	 	 	 	 	

					
	Date:	 	 	 	 	 	Date:	 	 
	 	 	
	 	 	 	 	 	

  
 Attached hereto are true and correct
copies of each of the following: 
  

	 	a.	Detailed agings of accounts receivable and accounts payable. 

	 	b.	Exhibit 1 – calculation and description of ineligible accounts, inventory values by category and ineligible inventory. 

	 	c.	A reconciliation of A/R aging (Line 6b) to G/L (Line 6a) if difference exists.

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