SECOND AMENDMENT TO LOAN AGREEMENT AND WAIVER

Exhibit 10.1

SECOND AMENDMENT TO LOAN AGREEMENT AND WAIVER

This Second Amendment to Loan Agreement and Waiver (this “ Amendment ”) is entered into as of August 4, 2009 by and among Design Within Reach, Inc., a Delaware corporation (“ Borrower ”), Wells Fargo Retail Finance, LLC, individually and as administrative agent (“ Agent ”) under the Loan Agreement referred to below, and the other financial institutions signatory hereto as lenders.

W I T N E S S E T H :

WHEREAS, Borrower, the lenders party thereto (“ Lenders ”) and Agent entered into that certain Loan, Guaranty and Security Agreement dated as of February 2, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”; unless otherwise specified herein, capitalized terms used in this Amendment shall have the meanings ascribed to them by the Loan Agreement);

WHEREAS, on the date hereof, Borrower is entering into that certain Securities Purchase Agreement (the “ Stock Purchase Agreement ”) by and between Borrower and Glenhill Special Opportunities Master Fund LLC (“ Glenhill ”), pursuant to which Borrower has agreed to sell certain shares of its common and preferred stock to Glenhill (the “ Stock Sale ”);

WHEREAS, Borrower has requested and the Lenders have agreed to amend the Loan Agreement and consent to the Stock Sale and waive any Default or Event of Default resulting therefrom, all subject to the terms and conditions hereof; and

WHEREAS, this Amendment shall constitute a Loan Document and these Recitals shall be construed as part of this Amendment;

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Amendments to Loan Agreement . Upon the “Effective Date” (as defined below), the Loan Agreement shall be amended as follows:

(a) Section 1.1 of the Loan Agreement shall be amended by (i) deleting the defined terms “Control Exercise Notice”, “Corporate Wholesale Receivables”, “Gross Collateral Availability”, “Revolver Increase Notice”, “Securities Account Availability Agreement” and “Triggering Event” set forth therein in their entirety and (ii) replacing the definitions of “Applicable Margin”, “Average Availability”, “Base Rate”, “Borrowing Base”, “Eligible Accounts” and “Maximum Revolver Amount” with the following, respectively:

““ Applicable Margin ” means, as of the Second Amendment Effective Date, the rates for Base Rate Loans, LIBOR Rate Loans, Documentary Letters of Credit and Standby Letters of Credit set forth below; provided that from the Second Amendment Effective Date until the last day of the fiscal quarter ending September 30, 2009, the Applicable Margin shall be the applicable rates per annum set forth below in Level II:

The Applicable Margin shall be adjusted quarterly as of the first day of each calendar quarter, based upon the Average Availability for the immediately preceding calendar quarter. If, as a result of any restatement of or other adjustment to the financial statements of the Credit Parties or for any other reason, the Agent or Required Lenders determine that (a) the Applicable Margin as calculated by the Borrower as of any applicable date was inaccurate and (b) a proper calculation of the Applicable Margin would have resulted in a higher level of pricing for any period, then the Borrower shall automatically and retroactively be obligated to pay to the Lender Group, and shall pay to the Lender Group promptly on demand by the Agent or Required Lenders, an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period.”

““ Average Availability ” means for any calendar quarter an amount equal to the Availability of Borrower for each day of such calendar quarter divided by the actual number of days in such calendar quarter, as determined by Agent, which determination shall be conclusive absent manifest error.”

““ Base Rate ” means, for any day, a per annum rate of interest equal to the greatest of (a) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%, (b) the rate of interest announced from time to time within Wells Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such 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 publications as Wells Fargo may designate and (c) the LIBOR Rate on such day for a one month Interest Period plus 1%. “ Federal Funds Effective Rate ” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by

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Agent from three Federal funds brokers of recognized standing selected by it. If for any reason Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (a) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the “prime rate” or the Federal Funds Effective Rate shall be effective on the effective date of such change in the “prime rate” or the Federal Funds Effective Rate, respectively.”

““ Borrowing Base ” means, as of any date of determination, the result of:

““ Eligible Accounts ” means those Accounts consisting of Credit Card Receivables that are created by any Credit Party in the ordinary course of its business, that arise out of such Credit Party’s sale of goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided , however , that such criteria may be revised from time to time by Agent in its Permitted Discretion to address the results of any audit performed by Agent from time to time after the Closing Date. In determining the amount to be included, Eligible Accounts shall be calculated at face value, net of customer deposits and unapplied cash. Eligible Accounts shall not include the following:

(a) Credit Card Receivables that the applicable Credit Card Processor has failed to pay within 5 days after the applicable sale date;

(b) Credit Card Receivables owed by an Account Debtor (or its Affiliates) where 50% or more of all Credit Card Receivables owed by that Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above,

(c) Credit Card Receivables that are not payable in Dollars or Canadian Dollars,

(d) Credit Card Receivables with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States or Canada, or (ii) is not organized under the laws of the United States or any state thereof or Canada, or (iii) is the government of any foreign country or sovereign state, or of

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any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (y) the Credit Card Receivable is supported by an irrevocable letter of credit satisfactory to Agent in its Permitted Discretion (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and is directly drawable by Agent, or (z) the Credit Card Receivable is covered by credit insurance in form, substance, and amount, and by an insurer, satisfactory to Agent in its Permitted Discretion,

(e) Credit Card Receivables with respect to which the Account Debtor is subject to an Insolvency Proceeding, or as to which any Credit Party has received notice of an imminent Insolvency Proceeding,

(f) Credit Card Receivables, the collection of which, Agent, in its Permitted Discretion, believes to be doubtful by reason of the Account Debtor’s financial condition,

(g) Credit Card Receivables that are not subject to a valid and perfected first priority Agent’s Lien or are not subject to a Credit Card Agreement, or

(h) Credit Card Receivables with respect to which Borrower or any Subsidiary thereof is liable for goods sold or services rendered by the applicable Account Debtor to Borrower or any Subsidiary thereof but only to the extent of the potential offset.”

““ Maximum Revolver Amount ” means $20,000,000.”

(b) Section 1.1 of the Loan Agreement shall be further amended by adding the following new definitions thereto in the appropriate alphabetical order:

““ New Proceeds ” means the “New Proceeds”, as defined in the Second Amendment.”

““ Proceeds Account ” has the meaning set forth in Section 2.7(f) .”

““ Second Amendment ” means that certain Second Amendment to Loan Agreement and Waiver dated as of August 4, 2009 by and among Borrower, Agent and the Lenders signatory thereto.”

““ Second Amendment Effective Date ” means the “Effective Date”, as defined in the Second Amendment.”

““ US Bank Proceeds means the “US Bank Proceeds”, as defined in the Second Amendment.”

(c) The definition of “Availability” set forth in Section 1.1 of the Loan Agreement shall be amended by deleting the text “but without regard to Section 7.15 ” where it appears in such definition.

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(d) The definition of “Eligible In-Transit Inventory” set forth in Section 1.1 of the Loan Agreement shall be amended by deleting the reference to “$3,000,000” appearing in the last sentence of such definition and substituting “$1,000,000” therefore.

(e) The definition of “Loan Documents” set forth in Section 1.1 of the Loan Agreement shall be amended by deleting the text “the Securities Account Availability Agreement,” where it appears in such definition.

(f) The definition of “Revolver Commitment” set forth in Section 1.1 of the Loan Agreement shall be amended by deleting the text “increased pursuant to Section 2.2 or” where it appears in such definition.

(g) Section 2.1(a) of the Loan Agreement shall be amended by deleting the last sentence thereof (beginning with the text “Notwithstanding the foregoing”) in its entirety.

(h) Section 2.2 of the Loan Agreement shall be amended by deleting such Section in its entirety and substituting therefore the text “[ Intentionally Omitted ]”.

(i) Clause (b) of Section 2.7 to the Loan Agreement shall be amended and restated by deleting the text “provided, so long as no Triggering Event shall have occurred and be continuing, Agent shall permit all funds in any Concentration Account to be forwarded, by daily sweeps, to the Designated Account” appearing therein in its entirety.

(j) Clause (b) of Section 2.7 to the Loan Agreement shall be further amended by deleting the last sentence thereof (beginning with the text “For purposes of clarification”) in its entirety.

(k) Clause (c) of Section 2.7 to the Loan Agreement shall be amended and restated in its entirety as follows:

“(c) With respect to each Concentration Account, each Cash Management Bank shall establish and maintain Cash Management Agreements with Agent and the applicable Credit Party, in form and substance acceptable to Agent in its Permitted Discretion. Each Cash Management Agreement shall provide, among other things, that (i) all items of payment deposited in such Concentration Account and proceeds thereof are subject to the control of Agent, (ii) the Cash Management Bank has no rights of setoff or recoupment or any other claim against the applicable Concentration Account other than for payment of its service fees and other charges directly related to the administration of such Concentration Account and for returned checks or other items of payment, and (iii) the applicable Cash Management Bank will forward by daily sweep all amounts in the applicable Concentration Account to the Agent’s Account or as otherwise directed by Agent to prepay the Obligations in such order as set forth in Section 2.4(b) ; provided , that any such prepayments of the Loans pursuant to this Section 2.7(c) may be reborrowed subject to Section 3.2 .”

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