NORTH FACE INC, S-1, 1996-10-28

NORTH FACE INC
S-1, 1996-10-28
APPAREL, PIECE GOODS & NOTIONS

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 28, 1996

REGISTRATION NO. 333-

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE NORTH FACE, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 5136 94-204082
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Identification Number)
incorporation or Classification Code Number)
organization)
</TABLE>

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2013 FARALLON DRIVE
SAN LEANDRO, CALIFORNIA 94577
(510) 618-3500
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------------

MARSDEN S. CASON
CHIEF EXECUTIVE OFFICER
THE NORTH FACE, INC.
2013 FARALLON DRIVE
SAN LEANDRO, CALIFORNIA 94577
(510) 618-3500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------

COPIES TO:

<TABLE>
<S> <C>
JEFFREY D. SAPER, ESQ. PATRICK A. POHLEN, ESQ.
PATRICK J. SCHULTHEIS, ESQ. COOLEY GODWARD LLP
THEODORE C. CHEN, ESQ. FIVE PALO ALTO SQUARE
WILSON SONSINI GOODRICH & ROSATI, P.C. PALO ALTO, CALIFORNIA 94306
650 PAGE MILL ROAD (415) 843-5000
PALO ALTO, CALIFORNIA 94304-1050
(415) 493-9300
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AMOUNT PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SECURITY(2) PRICE(1)(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock.............................. 2,875,000 shares $24.03125 $69,089,844 $20,940
</TABLE>

(1) Includes up to 375,000 shares of Common Stock which may be purchased by the
Underwriters to cover over-allotments, if any.

(2) Estimated pursuant to Rule 457(c) solely for purposes of calculating the
registration fee, based on the average of the high and low trading prices
for the Common Stock as reported by the Nasdaq National Market on October
25, 1996.
----------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
<PAGE>
SUBJECT TO COMPLETION
OCTOBER 28, 1996
2,500,000 SHARES

THE NORTH FACE, INC. [LOGO]

COMMON STOCK

----------

Of the 2,500,000 shares of Common Stock offered hereby, 1,000,000 shares are
being sold by the Company and 1,500,000 shares are being sold by certain Selling
Stockholders. The Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholders. See "Principal and Selling Stockholders."
The Company's Common Stock is listed on the Nasdaq National Market under the
symbol "TNFI." On October 25, 1996, the last reported sale price of the Common
Stock as reported on the Nasdaq National Market was $23 15/16 per share. See
"Price Range of Common Stock."
--------------

THE COMMON STOCK OFFERED HEREBY ARE SUBJECT TO A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 8.
-------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PROCEEDS
PRICE UNDERWRITING PROCEEDS TO
TO DISCOUNTS AND TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS(3)
<S> <C> <C> <C> <C>
Per Share............... $ $ $ $
Total(3)................ $ $ $ $
</TABLE>

(1) See "Underwriting" for information relating to indemnification of the
Underwriters.

(2) Before deducting expenses of the offering payable by the Company estimated
at $750,000.

(3) Certain of the Selling Stockholders have granted to the Underwriters a
30-day option to purchase up to 375,000 additional shares of Common Stock
solely to cover over-allotments, if any. To the extent the option is
exercised, the Underwriters will offer the additional shares at the Price to
Public shown above. If the option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions and Proceeds to Selling
Stockholders will be $ , $ and $ , respectively. See
"Underwriting."
--------------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about November
, 1996.

ALEX. BROWN & SONS
INCORPORATED
HAMBRECHT & QUIST
J.P. MORGAN & CO.

THE DATE OF THIS PROSPECTUS IS , 1996
<PAGE>
DESCRIPTION OF PICTURES AND CAPTIONS:

FRONT COVER -- Gray screened image of mountain range.

INSIDE FRONT COVER -- Man ice climbing wall of ice and rock.

CAPTION: "The North Face Climbing Team member Axel Lowe on The Weeping Wall,
Banff, Canada."

INSIDE FRONT GATE-FOLD -- Man walking along rope on snowy ridge.

CAPTION: "The North Face Climbing Team member Pete Athans on the East Ridge of
Pumori, Nepal."

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS
(IF ANY), MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SEE "UNDERWRITING."

THIS PROSPECTUS INCLUDES TRADEMARKS AND SERVICE MARKS OF THE COMPANY AND CERTAIN
OTHER COMPANIES.
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO
APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED IN THIS PROSPECTUS, UNLESS THE
CONTEXT OTHERWISE REQUIRES, THE TERMS "THE NORTH FACE" AND "COMPANY" INCLUDE THE
NORTH FACE, INC. AND ITS SUBSIDIARIES AND THEIR RESPECTIVE OPERATIONS, AND
INCLUDE THE BUSINESS OF THE COMPANY'S PREDECESSOR. UNLESS OTHERWISE INDICATED,
ALL INFORMATION INCLUDED IN THIS PROSPECTUS ASSUMES THAT THE UNDERWRITERS'
OVER-ALLOTMENT OPTION WILL NOT BE EXERCISED AND HAS BEEN RETROACTIVELY ADJUSTED
TO GIVE EFFECT TO THE FOLLOWING TRANSACTIONS, ALL OF WHICH WERE COMPLETED IN OR
PRIOR TO JULY 1996: (I) STOCK SPLITS WHICH RESULTED IN EACH SHARE OF COMMON
STOCK BEING SPLIT INTO 4.44 SHARES AND (II) THE CONVERSION OF EACH SHARE OF THE
COMPANY'S SERIES A CONVERTIBLE PREFERRED STOCK (THE "PREFERRED STOCK"),
INCLUDING SHARES OF PREFERRED STOCK ISSUED AS CUMULATIVE DIVIDENDS ON THE
PREFERRED STOCK, INTO APPROXIMATELY 1.7743 SHARES OF COMMON STOCK . THIS
PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
FEDERAL SECURITIES LAWS. ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS COULD
DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS DUE TO
A NUMBER OF FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" AND
ELSEWHERE IN THIS PROSPECTUS.

THE COMPANY

The Company believes that The North Face-Registered Trademark- is the
world's premier brand of high-performance outdoor apparel and equipment. The
Company designs and distributes technically sophisticated outerwear, skiwear,
functional sportswear, tents, sleeping bags and backpacks, all under The North
Face-Registered Trademark- name.

The North Face has developed a superior reputation for quality, performance
and authenticity by providing technically advanced products capable of
withstanding the most extreme conditions. For nearly 30 years, the Company's
outdoor apparel and equipment have been the brand of choice for numerous high
altitude and polar expeditions. These products are used extensively by
world-class climbers, explorers and extreme skiers, whose lives depend on the
performance of their apparel and equipment. To maintain and further enhance this
unique legacy, the Company continuously develops and introduces innovative
products that are functional and are designed to be both technically superior
and, in many instances, to set the industry standard in each product category.
The Company cultivates its extreme image through its targeted marketing efforts
and its teams of world-class climbers, explorers and skiers.

As a result of its extreme image and technological leadership, The North
Face-Registered Trademark- brand has become increasingly popular among a broad
group of consumers. The Company believes this growing popularity is attributable
not only to its strong brand image but also to a fundamental shift in lifestyle
choices and consumer preferences toward more functional and high-performance
outdoor products. While The North Face expects its traditional market segments
to continue to benefit from these trends, the Company believes that it has an
opportunity to leverage The North Face-Registered Trademark- brand and expand
into new and broader product categories. For example, the Company recently
introduced Tekware-TM-, an innovative line of functional sportswear made from a
new generation of synthetic fabrics, designed both for outdoor activities and
everyday use.

To protect the integrity of The North Face-Registered Trademark- brand and
ensure a high level of customer service and education, the Company limits the
distribution of its products to a select number of specialty retailers. The
Company sells its products to approximately 1,500 wholesale customers
representing approximately 2,200 store fronts in the United States, Europe and
Canada. The Company recently introduced "Summit Shops," year-round concept shops
dedicated to The North Face-Registered Trademark- products located within
certain of the Company's wholesale customers, in order to promote The North
Face-Registered Trademark- brand and increase sales. There were 14 concept
shops, precursors to Summit Shops, opened in the first six months of 1996 and 25
Summit Shops opened during the third quarter of 1996. The Company expects that
an additional

3
<PAGE>
100 Summit Shops will be opened through the end of 1997. In addition, the
Company owns and operates nine retail and three outlet stores in the United
States.

Beginning in January 1993, a new management team began implementing a
variety of strategic and operational improvements, including hiring experienced
senior executives and initiating new sourcing, product development and marketing
strategies. Primarily as a result of these initiatives, the Company's financial
results improved significantly. During the past two years, the Company has
continued to implement additional operational improvements and began introducing
a wide range of new products. As a result, the Company reported net sales,
operating income and net income of $121.5 million, $10.5 million and $3.5
million, respectively, for 1995, increases of 36%, 43% and 104%, respectively,
over pro forma 1994. For the first nine months of 1996, the Company reported net
sales, operating income and net income before extraordinary item of $121.6
million, $10.7 million and $4.4 million, respectively, increases of 31%, 26% and
39%, respectively, over the first nine months of 1995.

The Company's growth strategy is to continue to build on the strength of The
North Face-Registered Trademark- brand. To maintain future growth, the Company
intends to (i) continue to develop and introduce new products; (ii) continue to
rapidly introduce Summit Shops; (iii) establish Tekware as a high-performance,
functional alternative to traditional sportswear; and (iv) selectively pursue
international opportunities.

RECENT DEVELOPMENTS

The Company recently announced third quarter results of operations. Net
sales increased 36.1% to $68.1 million for the third quarter ended September 30,
1996 compared to $50.1 million for the third quarter of 1995. Income before
extraordinary charge for debt extinguishment for the quarter increased 62.1% to
$7.4 million compared to $4.6 million in the comparable period of 1995.

THE OFFERING

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<S> <C>
Common Stock offered by the Company.......... 1,000,000 shares
Common Stock offered by the Selling 1,500,000 shares (1)
Stockholders................................
Common Stock to be outstanding after the 11,188,594 shares (1)(2)
offering....................................
Use of proceeds.............................. Repayment of debt, including debt held by an
affiliated stockholder. See "Use of
Proceeds."
Nasdaq National Market symbol................ TNFI
</TABLE>

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(1) Includes 242,571 shares to be sold in the offering by Selling Stockholders
which will be issued upon exercise of outstanding options.

(2) Based upon 9,946,023 shares outstanding as of September 30, 1996. Excludes
922,896 shares of Common Stock issuable upon exercise of stock options
outstanding as of September 30, 1996, at a weighted average exercise price
of $4.30 per share. Also excludes 796,800 shares of Common Stock reserved
for future issuance under the Company's stock incentive plans, employee
stock purchase plan and Directors' stock option plan. See "Management --
Stock Incentive Plans," "-- Employee Stock Purchase Plan" and "-- Directors'
Compensation."

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THE PREDECESSOR (1)
---------------------------------------
PERIOD
FROM APRIL
FISCAL YEAR ENDED MARCH 1,
31, TO
-------------------------- JUNE 6,
1992 1993 1994 1994
------- -------- ------- -----------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................. $68,912 $ 86,710 $87,411 $ 9,085
Gross profit............... 27,109 29,528 36,604 3,768
Operating income (loss).... (3,454) (6,548) 3,794 (1,522)
Interest expense........... (3,521) (4,209) (2,046) (58)
Income (loss) before
extraordinary item........ $(6,893) $(10,508) $ 826 $(1,673)
Pro forma income before
extraordinary item per
share and share
equivalents (3)...........
Shares used in computing
pro forma income before
extraordinary item per
share (3)(4)..............

<CAPTION>
THE COMPANY (1)
--------------------------------------------------------
PERIOD
FROM NINE MONTHS ENDED
JUNE 7, FISCAL YEAR ENDED
TO DECEMBER 31, SEPTEMBER 30,
DEC. 31, ----------------------- -----------------
1994 1994(2) 1995 1995 1996
----------- ------------ -------- ------- --------
<S> <C> <C> <C> <C> <C>
(PRO FORMA)
STATEMENT OF OPERATIONS DAT
Net sales.................. $60,574 $ 89,187 $121,534 $92,930 $121,629
Gross profit............... 29,514 41,439 55,064 40,954 52,510
Operating income (loss).... 9,855 7,334 10,524 8,458 10,658
Interest expense........... (2,598) (4,390) (5,530) (3,940) (3,834)
Income (loss) before
extraordinary item........ $ 4,635 $ 1,708 $ 3,485 $ 3,149 $ 4,373
Pro forma income before
extraordinary item per
share and share
equivalents (3)........... $ 0.47 $ 0.51
Shares used in computing
pro forma income before
extraordinary item per
share (3)(4).............. 7,434 8,532
</TABLE>

<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1996
------------------------
AS
ACTUAL ADJUSTED (5)
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<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................................................... $ 38,158 $ 49,673
Total assets............................................................................ 135,865 135,865
Short-term debt......................................................................... 30,079 18,566
Long-term debt.......................................................................... 10,617 139
Stockholders' equity.................................................................... 60,392 82,383
</TABLE>

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(1) The Company purchased substantially all of the assets and certain of the
liabilities of its predecessor, The North Face, a California corporation, on
June 7, 1994 (the "Acquisition"). See "The Company -- Background and
History" and "Management -- Compensation Committee Interlocks and Insider
Participation." In 1994, The North Face changed its fiscal year-end to
December 31. Due to this change and the Acquisition, a comparison of the
financial results of the Company and its predecessor is not meaningful.

(2) The unaudited pro forma information for the year ended December 31, 1994 has
been prepared assuming the Acquisition occurred on January 1, 1994. See
"Unaudited Pro Forma Financial Information." The pro forma results are
provided for comparative purposes only and do not purport to indicate the
results of operations that would have occurred if the Acquisition had taken
place on January 1, 1994 or which may occur in the future.

(3) Pro forma to give effect to the conversion of all shares of Preferred Stock
into shares of Common Stock at the beginning of the respective period.

(4) Supplemental pro forma income before extraordinary item per share,
reflecting the issuance of up to 3.8 million shares offered by the Company
during 1996, to fund the repayment of up to $41.4 million of the Company's
debt, and a corresponding reduction in interest expense, at the beginning of
the respective periods is as follows:

<TABLE>
<S> <C>
Year ended December 31, 1995....................................................... $ 0.51
Nine months ended September 30, 1996............................................... $ 0.51
</TABLE>

(5) Adjusted to reflect the sale by the Company of the 1,000,000 shares of
Common Stock offered hereby, at an assumed public offering price of
$23 15/16 per share, and the application of the estimated net proceeds
therefrom. See "Use of Proceeds."

5
<PAGE>
THE COMPANY

BACKGROUND AND HISTORY

The North Face was founded in 1965 by outdoor enthusiasts as a retailer of
high-performance climbing and backpacking equipment. The North Face name was
selected because, in the Northern Hemisphere, the north face of a mountain is
generally the coldest, iciest and most formidable to climb. In 1968, the Company
began to manufacture and wholesale backpacking equipment. In the early 1970's,
the Company began to offer outerwear and, in the early 1980's, added extreme
skiwear to its product offerings.

For nearly 30 years, the Company has been known as a leading supplier of
technical products to extreme users and serious outdoor athletes. Many of the
Company's innovative product designs have become industry standards. For
example, in 1975 the Company introduced the first geodesic dome tent, a design
which has set the standard for tents used in high altitude and polar
expeditions. In 1979, The North Face invented shingle construction, which has
become a standard among top-of-the-line sleeping bags with synthetic insulation.
In 1988, the Company introduced its Expedition System-Registered Trademark-, a
comprehensive, integrated cold weather clothing system, which has been widely
used by world-class climbers. By the late 1980's, The North Face had become the
only supplier in the United States to offer a comprehensive collection of
high-performance outerwear, skiwear, sleeping bags, backpacks and tents.

In the late 1980's, the Company's financial performance deteriorated for a
variety of reasons. The Company's inefficient product sourcing policies, which
included manufacturing a significant portion of its products, resulted in high
and volatile costs, excessive inventory of obsolete materials and finished goods
and significant delays in product delivery. In addition, the Company had engaged
in a retail expansion strategy that focused on opening outlet stores. The
Company produced lower priced products to sell in these outlets rather than
using them as a vehicle to dispose of excess inventory. This outlet strategy
failed to enhance the Company's brand image, adversely impacted its
relationships with its wholesale customers, and failed to target its traditional
consumers.

Beginning in January 1993, a new management team, including Marsden S.
Cason, the Company's current Chief Executive Officer, was recruited. The new
management team (i) hired a number of experienced senior executives and
mid-level managers; (ii) focused on profitability by establishing and
implementing specific sales and gross margin objectives; (iii) implemented new
sourcing strategies, which included relying principally on contract
manufacturers; (iv) closed eight outlets and one Company-operated retail store;
(v) implemented a more focused advertising strategy; and (vi) discontinued or
redesigned certain marginally profitable and unprofitable product lines and
styles. Primarily as a result of these actions, the Company achieved a
significant increase in sales and profitability.

BANKRUPTCY OF PARENT OF PREDECESSOR. In May 1988, the Company's
predecessor, a California corporation named The North Face, was acquired by
Odyssey Holding, Inc. ("OHI"), a subsidiary of Odyssey Worldwide Holdings B.V.
("Odyssey"). In addition to the Company's predecessor, Odyssey owned, directly
or indirectly, approximately 30 other businesses in the outdoor and brand name
apparel industries. The Chairman and Chief Executive Officer of both OHI and of
Odyssey was William N. Simon, who is currently the President and a director of
the Company and was Chairman of the Board of the Company's predecessor. In
January 1993, Marsden S. Cason, who is currently the Chief Executive Officer and
a director of the Company, became a director and executive officer of Odyssey
and the President and a director of the Company's predecessor. See "Management."
Also in January 1993, Odyssey and OHI, as well as certain other holding
companies affiliated with Odyssey, filed for protection in the United States
under Chapter 11 of the U.S. Bankruptcy Code. Although the Company's predecessor
did not file for bankruptcy protection, its assets came under the supervision of
the bankruptcy court supervising the sale

6
<PAGE>
of the assets of OHI. On June 7, 1994, TNF Holdings Company, Inc. ("TNF
Holdings"), a Delaware corporation organized by J.H. Whitney & Co., a New York
limited partnership ("Whitney"), Mr. Cason and William A. McFarlane, purchased
substantially all of the assets and certain of the liabilities of the Company's
predecessor (the "Acquisition") for a purchase price of $62.1 million. See Note
1 to the Consolidated Financial Statements. TNF Holdings made the Acquisition
for the purpose of owning and operating the former business of the Company's
predecessor. On June 8, 1994, TNF Holdings changed its name to The North Face,
Inc. Whitney and two of its affiliates provided a significant portion of the
financing for the Acquisition. See "Management -- Compensation Committee
Interlocks and Insider Participation." In September 1994, Mr. Simon, who
personally had guaranteed substantially all of the indebtedness of Odyssey and
its affiliated companies, filed a petition under Chapter 7 of the U.S.
Bankruptcy Code that was an independent proceeding and not part of the Odyssey
bankruptcy. In January 1995, Mr. Simon was granted a discharge by the bankruptcy
court and the proceeding was dismissed. See "Management -- Executive Officers
and Directors."

The Company's principal executive office is located at 2013 Farallon Drive,
San Leandro, California 94577, and its telephone number is (510) 618-3500. The
Company was incorporated in Delaware in 1994 under the name "TNF Holdings
Company, Inc." and changed its name to "The North Face, Inc." following the
Acquisition.

7
<PAGE>
RISK FACTORS

THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF THE FEDERAL SECURITIES LAWS. ACTUAL RESULTS AND THE TIMING OF CERTAIN
EVENTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS DUE TO A NUMBER OF FACTORS, INCLUDING THOSE SET FORTH BELOW AND
ELSEWHERE IN THIS PROSPECTUS. IN ADDITION TO THE OTHER INFORMATION IN THIS
PROSPECTUS, THE FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS.

CHANGING CONSUMER PREFERENCES. Although the Company believes that it has
benefitted from changing consumer preferences and increasing consumer interest
in outdoor activities and from lifestyle changes that emphasize apparel designed
for such activities, there can be no assurance that this belief is correct or
that these trends will continue. Any change in these developments or reduction
in consumer interest in outdoor sports and physical activities could have a
material adverse effect on the Company's results of operations and financial
condition. In addition, although the Company believes that its products
historically have not been significantly affected by fashion trends, all of the
Company's products are subject to changing consumer preferences. Consumer
preferences could shift rapidly to other types of outdoor equipment or apparel
or away from these types of products altogether. Any such shift could have a
material adverse effect on the Company's results of operations and financial
condition. Furthermore, there can be no assurance that the introduction of new
product categories, such as Tekware-TM- , or new marketing or distribution
strategies, such as the sale of the Company's products in retail formats that
are new to the Company, will not adversely impact The North
Face-Registered Trademark- brand or result in a shift of consumer preferences
away from the Company's product lines. The Company's future success depends in
part on its ability to anticipate and respond to changes in consumer
preferences, and there can be no assurance that the Company will respond in a
timely manner to such changes. Failure to anticipate and respond to changing
consumer preferences could lead to, among other things, lower sales, excess
inventories and lower margins, which would have a material adverse effect on the
Company's results of operations and financial condition. See "Business --
Industry Overview."

ABILITY TO ACHIEVE AND MANAGE POTENTIAL FUTURE GROWTH. The Company's future
profitability is critically dependent on its ability to achieve and manage
potential future growth effectively. There can be no assurance that the Company
will be successful in increasing net sales in the future or that the rate of
period-to-period net sales growth, if any, will not decline. Prior to January
1993, the Company's operational, financial and management systems were
relatively weak. Since that date, the Company implemented certain new controls
in operational, financial and management information systems. In addition, in
order to manage currently anticipated levels of future demand, the Company will
be required to (i) improve its management information systems and controls,
including inventory management, (ii) expand its distribution capabilities and
(iii) attract and retain qualified personnel, including middle management. In
the third quarter of 1996, the Company began the implementation of its Summit
Shop program, and the Company intends to open a substantial number of Summit
Shops in the near future. See "Business -- Summit Shops." The implementation of
this program will place significant strains on the Company's management
information systems and controls. The Company currently anticipates spending
approximately $2.0 to $3.0 million through the end of 1997 to upgrade its
management information systems. There can be no assurance that any upgrades of
its management information systems will be completed in a timely manner, that
any such upgrades will be adequate to meet the needs of the Company or that
these upgrades will not strain the Company's financial resources. Any disruption
or slowdown in the Company's order processing or fulfillment systems could cause
orders to be shipped late. Retailers may cancel orders or refuse to receive
goods on account of late shipments which would result in a reduction of net
sales and could mean increased administrative and shipping costs. See "Business
- -- Management Information Systems." If the Company's operations were to continue
to grow, of which there can be no assurance, there could be increasing strain on
the Company's management, financial, product design, marketing, distribution and
other resources, and the Company may experience serious operating difficulties,
including difficulties in hiring, training and managing an increasing number of
employees, difficulties in obtaining sufficient materials and manufacturing
capacity to produce its

8
<PAGE>
products, problems in upgrading its management information systems and delays in
production and shipments. There can be no assurance that the Company will be
able to manage future growth effectively. Any failure to manage growth
effectively could have a material adverse effect on the Company's results of
operations and financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

DEPENDENCE ON NEW PRODUCTS. The Company's continued growth and success
depend in large part on its ability to successfully develop and introduce new
products that are perceived to represent an improvement in performance or value
compared to products available in the marketplace. Failure to regularly develop
and introduce new products successfully could materially and adversely impact
the Company's future growth and profitability. In addition, the Company intends
to introduce certain new products, such as its recently introduced Tekware
product line, that may represent a significant shift in concept, design and
intended use from its traditional products. These products, which are targeted
more towards the recreational segment of the market, may have short life cycles,
thereby requiring more frequent product introductions than the Company's
traditional product lines. Furthermore, these products and the introduction of
more moderately priced products may dilute the Company's image as a leading
supplier of technologically superior products and lead to a reduced demand for
its existing products. See "Business -- Products" and "-- Product Design and
Development."

IMPLEMENTATION OF SUMMIT SHOP STRATEGY. In the third quarter of 1996, there
were 25 "Summit Shops," year-round concept shops dedicated to The North
Face-Registered Trademark- products, opened within certain of the Company's
wholesale customers, and the Company expects that an additional 100 Summit Shops
will be opened through the end of 1997. However, there can be no assurance that
additional Summit Shops will be opened in a timely manner, if at all, or, if
opened, that their performance will meet the Company's expectations. The
Company's ability to implement this expansion program successfully will depend
on a number of factors, including the Company's ability to identify qualified
and interested specialty retailers, to design and monitor the performance of
such shops, to maintain the freshness of the merchandise in Summit Shops and to
successfully implement its core inventory replenishment program. As part of its
Summit Shop program, The North Face has agreed to replenish its core product
inventory in each Summit Shop on a timely basis. This will require the Company
to arrange for the materials and production for certain products throughout the
year in order to meet forecasted and actual demand, a procedure that is
substantially different from the Company's current primarily two season
production cycle. In addition, in order to properly replenish the Summit Shops,
the Company will be required to maintain higher inventory levels than it has
maintained historically. There can be no assurance that the Company will be able
to efficiently source merchandise for the Summit Shops on a cost-effective basis
or that such merchandise will be available on a timely basis. While the Company
expects that an average 550 square foot Summit Shop will require a total
investment for furniture and fixtures of approximately $35,000, all or a
substantial majority of which will be provided by the Company, there can be no
assurance that Summit Shops will not require substantially more total capital
investment. In addition, the Company believes that the success of its Summit
Shop program is highly dependent on market acceptance of its recently introduced
Tekware-TM- line of products. Failure to successfully implement its Summit Shop
program could result in significant write-offs of inventory and fixtures and
have a material adverse effect on the Company's results of operations and
financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- General," "Business -- Selective
Distribution" and "-- Summit Shops."

INTRODUCTION AND ACCEPTANCE OF TEKWARE-TM-. In 1996, The North Face
introduced a new line of synthetic outdoor apparel, called "Tekware-TM-." The
Company's projected future growth is dependent in large part on consumer
acceptance of its Tekware product line. In addition, the Company has recently
hired several highly experienced executives to support the production,
merchandising and promotion of its Tekware products. The Company's limited
experience with marketing casual apparel could materially and adversely affect
its ability to introduce Tekware successfully or to develop the Tekware product
line. Because the Company selectively distributes its products to specialty
retailers, the availability of Tekware will be significantly limited as compared
to the availability of other casual apparel, thereby causing

9
<PAGE>
Tekware to receive reduced exposure to consumers, which may adversely impact the
acceptance of Tekware in the casual apparel market. In addition, because Tekware
is produced from synthetic materials, it may not appeal to those consumers who
prefer to purchase apparel made from cotton or other natural fabrics, further
limiting the potential consumer acceptance of the Tekware products. See
"Business -- Products -- Tekware."

RELIANCE ON UNAFFILIATED MANUFACTURERS. The Company currently relies on
approximately 50 unaffiliated manufacturers to produce substantially all of its
products, with ten of such manufacturers producing approximately 75% of the
Company's products for 1996. The Company has no long-term contracts with its
manufacturing sources, and it competes with other companies for production
facilities and import quota capacity. In the event any of the Company's key
manufacturers were unable or unwilling to continue to manufacture the Company's
products, the Company would have to rely on other current manufacturing sources
or identify and qualify new unaffiliated manufacturers. In such event, there can
be no assurance that the Company would be able to qualify such manufacturers for
existing or new products in a timely manner or that such manufacturers would
allocate sufficient capacity to the Company in order to meet its requirements.
Any significant delay in the Company's ability to obtain adequate supplies of
its products from its current or alternative sources, would materially and
adversely affect the Company's business and results of operations. Although the
Company believes that it has good relationships with its unaffiliated
manufacturers and maintains good control with respect to product specifications
and quality, there can be no assurance that these manufacturers will continue to
produce products that are consistent with the Company's standards. In this
regard, the Company has occasionally received, and may in the future continue to
receive, shipments of product from unaffiliated manufacturers that fail to
conform to the Company's quality control standards. In such event, unless the
Company is able to obtain replacement products in a timely manner, the Company
risks the loss of revenue resulting from the sale of such products and related
increased administrative and shipping costs. The failure of any key unaffiliated
manufacturer to supply products that conform to the Company's standards could
materially and adversely affect the Company's results of operations and its
reputation in the marketplace. Although the Company believes that it has good
relationships with its principal manufacturing sources, the Company's future
success is substantially dependent upon its ability to maintain such
relationships. If the Company experiences significant increased demand, which
cannot be assured, or if an existing unaffiliated manufacturer needs to be
replaced, the Company will need to significantly expand its manufacturing
capacity, both from current and new manufacturing sources. There can be no
assurance that such additional manufacturing capacity will be available when
required on terms that are acceptable to the Company.

In the past, the Company and its wholesale customers have been unable to
maximize sales of the Company's products due to the Company's inability to
accurately forecast reorder demand for certain of its products. Beginning in
October 1996, the Company initiated a core inventory replenishment program in
which significantly increased amounts of its finished core products will be
inventoried for more efficient reorder and certain of its unaffiliated
manufacturers will increase their materials inventories in order to manufacture
products more rapidly. There can be no assurance that the Company will be able
to successfully implement this program to meet its future reorder requirements.
The increased inventories resulting from this core inventory replenishment
program may result in increased excess inventory and material, increased
markdowns and lower margins. See "Business -- Sourcing and Manufacturing."

SEASONALITY AND QUARTERLY FLUCTUATIONS. The Company's business is subject
to significant seasonal and quarterly fluctuations. The Company's results of
operations may fluctuate from quarter to quarter as a result of, among other
things, the amount and timing of shipments to wholesale customers, the timing
and magnitude of discounts in retail stores, government shipments, advertising
and marketing expenditures, increases in the number of employees and overhead to
support growth and store opening costs. Historically, the Company has realized
substantially all of its profits in the third quarter and has recognized losses
during the first and second quarters of each year. The Company anticipates that
it will continue to incur net losses during each of the first and second
quarters for the foreseeable future. See

10
<PAGE>
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Quarterly Data and Seasonality."

The Company in the past has shipped tents to the United States Marine Corps
(the "Marine Corps") for housing troops. These shipments have resulted in
significant quarterly fluctuations in net sales, particularly during the first
and second quarters when net sales have historically been lower. For example,
the Company received $2.3 million and $1.7 million from the shipment of tents to
the Marine Corps in the first and second quarters of 1995, respectively, but
shipped no tents to the Marine Corps in the first or second quarters of 1996,
resulting in fluctuations that make period-to-period comparisons for these
quarters less meaningful. In September 1996, the Company received a new tent
contract from the Marine Corps totaling approximately $0.9 million with two
options for an additional $0.9 million each. The Company expects shipments to
commence under this contract in 1997. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Results of Operations" and
"-- Quarterly Data and Seasonality."

Furthermore, the Company expects its overall gross margins to decline in the
near term because the Company expects its lower margin wholesale business to
continue to expand more rapidly than its higher margin retail business. In the
event that the Company's operating results in any future quarters fall below the
expectations of securities analysts and investors, the trading price of the
Company's Common Stock would likely be materially and adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

INTERNATIONAL OPERATIONS. The Company recently expanded its operations in
Europe and Canada. In addition, the Company imports over half of its merchandise
from contract manufacturers located outside of the United States, primarily in
the Far East. As a result, the Company's business is subject to the risks
generally associated with doing business abroad, such as foreign governmental
regulations, foreign consumer preferences, political unrest, disruptions or
delays in shipments and changes in economic conditions in countries in which the
Company's operations and manufacturing sources are located. These factors, among
others, could influence the Company's ability to sell its products in
international markets, as well as its ability to manufacture its products or
procure certain materials. If any such factors were to render the conduct of
business in a particular country undesirable or impractical, there could be a
material and adverse effect on the Company's results of operations and financial
condition. The Company's sales in Europe and Canada are denominated in the local
currencies of the applicable wholesale customer; the Company's inventory
purchases from unaffiliated manufacturers in the Far East are denominated in
United States dollars. The Company does not engage in forward foreign exchange
hedging activities for its Canadian revenues, but, beginning in January 1996, it
entered into certain forward foreign exchange hedging activities with respect to
its European sales revenues. As a result, unanticipated changes in the value of
the United States dollar relative to the value of certain foreign currencies
could have a material adverse effect on the Company's results of operations and
financial condition. In addition, the Company's business is subject to the risks
associated with the imposition of additional United States legislation and
regulations relating to the manufacture and importation of foreign manufactured
apparel products, including quotas, duties, tariffs, taxes and other charges or
restrictions on imported apparel. The Company cannot predict whether additional
United States quotas, duties, tariffs, taxes or other charges or restrictions
will be imposed upon the importation of its products in the future, or what
effect any such actions would have on its business, financial condition and
results of operations. A significant portion of the Company's products is
produced in China. From time to time, the U.S. government has considered
imposing punitive tariffs on certain exports from China, primarily apparel.
There can be no assurance that these sanctions, if implemented, would not have a
material adverse effect on the Company's results of operations and financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Foreign Exchange Fluctuations," "Business --
International Operations" and "-- Sourcing and Manufacturing."

ECONOMIC CYCLICALITY; WEATHER. Sales of outerwear, outdoor equipment and
skiwear products historically have been subject to substantial cyclical
fluctuation, with purchases of these products tending to decline during periods
of recession in the general economy or uncertainty regarding future economic

11
<PAGE>
prospects that affect consumer spending habits, particularly on discretionary
items. This cyclicality and any related fluctuation in consumer demand could
have a material adverse effect on the Company's results of operations and
financial condition. In addition, various retailers, including some of the
Company's customers, have experienced financial difficulties during the past
several years, thereby increasing the risk that such retailers may not pay for
the Company's products in a timely manner, if at all.

Sales of certain of the Company's products are dependent upon the weather
and such sales may decline in years in which weather conditions, such as the
lack of snow, do not favor the use of the Company's products. Sustained periods
of unseasonable weather conditions could have a material adverse effect on the
Company's results of operations and financial condition.

COMPETITION. The markets for the Company's products are highly competitive,
and the recent growth in these markets has encouraged the entry of many new
competitors as well as increased competition from established companies.
Although the Company believes that it does not compete directly with any single
company with respect to its entire range of products, within each product
category the Company has significant competitors. In addition, the Company has
recently begun experiencing increased competition from major brand name apparel
companies who are attempting to duplicate the Company's styles, particularly in
the area of functional sportswear. These competitors are larger and have
significantly greater financial, marketing and other resources than the Company.
While the Company believes that it has been able to compete successfully because
of its brand image and recognition, the broad range and quality of its products,
and its selective distribution and customer service policies, including the
lifetime warranty that its products carry, there can be no assurance that the
Company will be able to maintain or increase its market share in the future. The
failure of the Company to compete successfully would materially and adversely
affect the Company's business and results of operations. See "Business --
Competition."

DEPENDENCE ON KEY PERSONNEL; NEW MANAGEMENT. In recent years, the Company
has made significant changes in its executive officers and management team.
Eight of the Company's nine officers have joined the Company or its predecessor
since the beginning of 1993, including the Company's vice president of
information services, who joined the Company in September 1996 and the Company's
vice presidents of merchandising, marketing and retail, each of whom joined the
Company between January and April 1996. These new senior personnel, among
others, have extensive national retail and wholesale experience and have
effected certain product development, merchandising, marketing and operational
strategy changes. There can be no assurance that the Company will successfully
assimilate these new executives and make these strategic modifications to
certain of its past operating policies in a timely and efficient manner.
Furthermore, the continued success of the Company is largely dependent on the
personal efforts and abilities of its senior management and certain other key
personnel and on the Company's ability to retain current management and to
attract and retain qualified personnel in the future. The loss of certain key
employees or the Company's inability to retain other qualified employees could
have a material adverse effect on the Company's results of operations and
financial condition. See "Management." The Company has not obtained and does not
expect to obtain key man life insurance on any of its senior management team.

NEED FOR ADDITIONAL CAPITAL. Various elements of the Company's business and
growth strategies, including its plans to broaden existing product lines and
introduce new products, its Summit Shop program and its plans to maintain higher
inventory levels, will require additional capital. There can be no assurance
that funds will be available to the Company on terms satisfactory to the Company
when needed. To the extent that the Company raises additional equity capital, it
could have a dilutive effect on existing stockholders.

DEPENDENCE ON KEY SUPPLIERS OF MATERIALS. Certain of the materials used to
manufacture the Company's products are available from a single or limited number
of independent suppliers, and there can be no assurance that there will not be a
significant disruption in the supply of these materials from current sources or,
in the event of such disruption, that the Company would be able to locate
alternative suppliers of materials of comparable quality at an acceptable price.
To the extent that delays in deliveries

12
<PAGE>
of materials from suppliers cause delays in shipments of products manufactured
from these materials, the Company's wholesale customers may request delays in
delivery to them of complementary products. Although the Company believes that
there are alternative suppliers of materials necessary to manufacture its
products, these materials may not be of comparable quality or may not be
perceived by consumers to be of comparable quality. As a result, the use of
alternative materials may adversely affect the Company's reputation for
high-quality products. In addition, although certain of the Company's materials
suppliers currently bear a portion of the cost of research and development of
key materials used in the Company's products and help defray the cost of
advertising products that incorporate such materials, there can be no assurance
that such suppliers will continue such arrangements or that other suppliers will
make similar arrangements in the future. Any significant reduction by the
Company's suppliers of their research and development activities or co-op
advertising arrangements would adversely affect the Company's results of
operations. See "Business -- Product Design and Development."

DEPENDENCE ON TRADEMARKS. The Company uses a number of trademarks, certain
of which the Company has registered with the United States Patent and Trademark
Office and in certain foreign countries. The Company believes that its
registered and common law trademarks have significant value and that some of its
trademarks are instrumental to its ability to create and sustain demand for and
market its products. The Company believes that there are no currently pending
challenges to the use or registration of any of the Company's registered
trademarks. There can be no assurance, however, that the Company's trademarks do
not or will not violate the proprietary rights of others, that they would be
upheld if challenged or that the Company would, in such an event, not be
prevented from using its trademarks, any of which could have a material adverse
effect on the Company and its business. In addition, the Company could incur
substantial costs to defend legal actions taken against it relating to the
Company's use of trademarks, which could have a material adverse effect on the
Company's results of operations and financial condition. See "Business --
International Operations" and "-- Trademarks and Licensing."

The Company uses various trademarks owned by other companies in the
promotion, distribution and sale of its products. It uses these trademarks with
the knowledge and, it believes, the approval of such companies and, in only one
case, pursuant to a licensing agreement. There can be no assurance that the
Company will be able to continue to use these trademarks or that the licensing
agreement will be renewed. In the event that the Company is unable to use the
trademarks of other companies in the future, such an occurrence could adversely
affect the Company's results of operations.

From time to time, the Company discovers products in the marketplace that
are counterfeit reproductions of the Company's products or that otherwise
infringe upon trademark rights held by the Company. If the Company is
unsuccessful in challenging a third party's products on the basis of trademark
infringement, continued sales of such product by that or any other third party
could adversely impact The North Face-Registered Trademark- brand, result in the
shift of consumer preferences away from the Company and generally have a
material adverse effect on the Company's results of operations and financial
condition. See "Business -- Trademarks and Licensing."

PRODUCT LIABILITY RISK; WARRANTY EXPOSURE. The Company's products are used
in mountain climbing, polar exploration and other inherently dangerous outdoor
activities, sometimes in severe or extreme weather conditions. Purchasers of the
Company's products rely on the design, integrity and durability of such
products. However, there can be no assurance that the Company's products will
not fail to perform properly. In August 1996, the Company signed a letter of
intent with respect to its proposed acquisition of A5 Adventures, Inc. ("A5"), a
manufacturer of specialized climbing equipment. Because of the nature of this
equipment, there can be no assurance that A5 or the Company will not be subject
to increased product liability claims resulting from the past or future sale of
A5 equipment. The Company maintains product liability insurance. However, there
can be no assurance that its insurance will be adequate to insure future product
liability, and there can be no assurance that the Company will be able to
maintain such insurance coverage or obtain additional coverage in the future on
acceptable terms. Although the Company has not experienced any significant
losses as a result of product recalls or product liability claims to date, there
can be no assurance that the Company will not incur liabilities for

13
<PAGE>
product recalls or product liability claims that could have a material adverse
effect on the Company's results of operations and financial condition.

Substantially all of the Company's products carry a lifetime warranty for
defects in quality and workmanship. The Company maintains a warranty reserve for
future warranty claims, but there can be no assurance that the actual costs of
servicing future warranty claims will not significantly exceed such reserve,
which could materially and adversely affect the Company's results of operations
and financial condition. See Note 2 of Notes to Consolidated Financial
Statements and "Business -- Selective Distribution."

BENEFITS TO EXISTING STOCKHOLDERS AND AFFILIATES. The consummation of this
offering will involve certain benefits to existing stockholders and affiliates
of the Company. In addition to the 1,500,000 shares of Common Stock being sold
by certain Selling Stockholders (from which the Company will not receive any of
the proceeds), the Company will use a portion of the proceeds it receives from
this offering to repay approximately $9.4 million of indebtedness subject to a
subordinated note, plus accrued interest, which is held by the Whitney
Subordinated Debt Fund, L.P. (the "Debt Fund"), a Selling Stockholder and an
affiliate of the Company. See "Use of Proceeds" and "Principal and Selling
Stockholders." The subordinated note was issued in connection with the
Acquisition. See "Management -- Compensation Committee Interlocks and Insider
Participation."

CONTROL BY EXISTING STOCKHOLDERS; ANTI-TAKEOVER DEVICES. Upon the
consummation of this offering, the Company's directors, officers and affiliates
will beneficially own approximately 46.1% of the issued and outstanding shares
of Common Stock. Although there are no agreements among such stockholders, if
they were to act in concert, they would be able to significantly affect the
election of the Company's directors and the outcome of voting relating to
increases in the Company's authorized capital stock, the merger or sale of the
assets of the Company, or other fundamental corporate transactions requiring
stockholder approval. See "Principal and Selling Stockholders."

Certain provisions of the Restated Certificate of Incorporation (the
"Charter") and by-laws (the "By-laws") of the Company may be deemed to have
anti-takeover effects and may delay, deter or prevent a change in control of the
Company that a stockholder might consider in his/her best interest. These
provisions (i) classify the Company's Board of Directors into three classes,
each of which will serve for overlapping three-year periods; (ii) provide that
only the Board of Directors or certain members thereof or officers of the
Company may call special meetings of the stockholders; (iii) eliminate the
ability of stockholders to take any action without a meeting; (iv) establish
certain advance notice procedures for nomination of candidates for election as
directors and for stockholder proposals to be considered at stockholders
meetings; and (v) authorize the issuance of "blank check" preferred stock having
such designations, rights and preferences as may be determined from time to time
by the Board of Directors. See "Description of Capital Stock -- Anti-takeover
Effects of Certain Provisions of the Company's Restated Certificate of
Incorporation and By-laws" and "-- Preferred Stock."

STOCK PRICE VOLATILITY. The trading price of the Common Stock has been
subject to significant fluctuation to date, and could be subject to wide
fluctuations in the future in response to quarter-to-quarter variations in
operating results, announcements of new products by the Company or its
competitors, general conditions in the markets for the Company's products or the
retail industry, changes in earnings estimates by analysts, or other events or
factors. In addition, the public stock markets have experienced extreme price
and trading volume volatility in recent months. This volatility has
significantly affected the market prices of securities of many companies for
reasons frequently unrelated to operating performance. The broad market
fluctuations may adversely affect the market price of the Company's Common
Stock.

SHARES ELIGIBLE FOR FUTURE SALE. Sales of substantial amounts of Common
Stock in the public market after this offering may adversely affect prevailing
market prices for the Common Stock and could impair the Company's ability to
raise capital in the future through the sale of its equity securities. Upon the
consummation of this offering, the Company will have 11,192,846 shares of Common
Stock outstanding

14
<PAGE>
assuming no exercise of outstanding stock options after October 28, 1996. Of
these shares, 5,711,024 shares will be freely tradeable without restriction
under the Securities Act of 1933, as amended (the "Securities Act"), except to
the extent any of these shares are held by affiliates within the meaning of the
Securities Act. The remaining 5,481,822 shares of Common Stock are "restricted
shares" within the meaning of the Securities Act (the "Restricted Shares"). Of
these Restricted Shares, approximately 432,969 Restricted Shares are currently
eligible for sale pursuant to Rule 144 ("Rule 144") and Rule 701 ("Rule 701")
promulgated under the Securities Act, approximately 173,381 Restricted Shares
will be eligible for sale in the public market after the termination of the
initial public offering lockup period on December 30, 1996 and approximately
4,875,471 shares (the "Lockup Shares") will be eligible for sale in the public
market beginning 90 days after the effective date of the Registration Statement
of which this Prospectus is a part upon the expiration of certain lock-up
arrangements entered into between the Underwriters and the holders of such
Lockup Shares. In some cases, such Lockup Shares and Restricted Shares may be
subject to compliance with Rule 144 and Rule 701. Of the Lockup Shares and the
Restricted Shares, approximately 4,621,331 shares will be subject to volume
limitations and other resale restrictions pursuant to Rule 144. As of October
28, 1996, options to purchase 922,897 shares of Common Stock were outstanding
under the Company's stock option plans. Holders of options to purchase 503,807
shares of Common Stock have granted the Underwriters a 90-day lock-up on shares
issuable upon the exercise of such options. Furthermore, pursuant to the terms
of a registration rights agreement, beneficial owners of an aggregate 5,243,252
shares of Common Stock have demand and/or incidental, or "piggyback,"
registration rights, permitting such holders, in the case of demand registration
rights, to request on three occasions (subject to certain limitations) that such
shares be registered for resale under the Securities Act at the Company's
expense and, in the case of piggyback rights, permitting such holders to include
their shares, at the Company's expense, in certain registration statements filed
by the Company. No prediction can be made as to the effect, if any, that sales
of shares of Common Stock or even the availability of such shares for sale will
have on the market prices prevailing from time to time. See "Shares Eligible for
Future Sale" and "Underwriting."

15
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,000,000 shares of
Common Stock offered hereby are estimated to be approximately $22.0 million
(based on an assumed offering price of $23 15/16), after deducting estimated
underwriting discounts, commissions and offering expenses payable by the
Company.

The Company intends to use such proceeds to repay certain indebtedness
consisting of
(i) $11.5 million under the Company's revolving line of credit, (ii) $1.1
million under the Company's term note debt and (iii) approximately $9.4 million
principal amount of the Company's Subordinated Note due June 7, 2001 (the
"Subordinated Note"), plus accrued interest. The revolving line of credit and
term note debt are a part of a combined $65.0 million credit facility
(collectively, the "Credit Facility"), with Heller Financial, Inc. and two
banks. The revolving line of credit bears interest (7.03% at September 30, 1996)
at prime less .25% or LIBOR plus 1.5% and is due in February 2000, with interim
reductions based on collateral availability. Approximately $29.8 million was
outstanding under the line of credit as of September 30, 1996. The term note
debt bears interest (6.95% at September 30, 1996) at prime less .25% or LIBOR
plus 1.5% and is due in quarterly installments through January 2000.
Approximately $1.1 million was outstanding under the term note as of September
30, 1996. The Subordinated Note bears interest at the rate of 10.101% per annum
and is held by the Debt Fund, a Selling Stockholder and an affiliate of the
Company. Approximately $9.4 million was outstanding under the Subordinated Note
as of September 30, 1996. The proceeds from the issuance of the Subordinated
Note were used to fund the Acquisition. See "Management -- Compensation
Committee Interlocks and Insider Participation." By repaying this debt, the
Company expects to have additional flexibility to pursue its growth strategy,
including the expansion of its Summit Shop program. From time to time, in the
ordinary course of business, the Company evaluates potential acquisitions of
such businesses or products. However, the Company has no present understandings,
commitments or agreements with respect to any material acquisition of other
businesses or products.

The Company will not receive any of the proceeds from the sale of shares by
the Selling Stockholders. See "Principal and Selling Stockholders."

DIVIDEND POLICY

The Company intends to retain any future earnings for funding growth and,
therefore, does not anticipate paying any cash dividends in the foreseeable
future. Further, pursuant to the terms of the Credit Facility, the Company is
and will be restricted in its ability to pay cash dividends on its capital
stock. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is listed on the Nasdaq National Market under the
symbol "TNFI." The following table lists the high and low closing prices since
the Company's Common Stock began trading on the Nasdaq National Market on July
2, 1996.

<TABLE>
<CAPTION>
FISCAL 1996: HIGH LOW
- ------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Period beginning July 2, 1996 and ending September 30, 1996.............. $32 $15 1/4
Period beginning October 1, 1996 and ending October 25, 1996............. $29 3/4 $23 15/16
</TABLE>

On October 25, 1996, the closing price of the Company's Common Stock as
reported by the Nasdaq National Market was $23 15/16 per share. As of October
25, 1996, the Company's Common Stock was held by approximately 34 stockholders
of record (including nominees and brokers holding street accounts).

16
<PAGE>
CAPITALIZATION

The following table sets forth the short-term debt and capitalization of the
Company as of September 30, 1996 (i) on an actual basis and (ii) as adjusted to
reflect the sale of the 1,000,000 shares of Common Stock offered by the Company
hereby (at an assumed offering price of $23 15/16), after deducting underwriting
discounts and commissions and estimated offering expenses payable by the
Company, and the application of the estimated net proceeds therefrom. The table
should be read in conjunction with the Consolidated Financial Statements of the
Company and related Notes thereto included elsewhere in this Prospectus. See
"Selected Consolidated Financial Data" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-----------------------
ACTUAL AS ADJUSTED
--------- ------------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Short-term debt, including current portion of long-term debt............................ $ 30,079 $ 18,566
--------- ------------
--------- ------------
Long-term debt, less current portion:
Long-term debt and capital leases, less current portion............................... $ 1,184 $ 139
Subordinated debt..................................................................... 9,433 --
--------- ------------
Total long-term debt, less current portion.......................................... 10,617 139
--------- ------------
Stockholders' equity:
Preferred Stock, $1.00 par value per share; authorized: 4,000,000 shares; none issued
and outstanding..................................................................... -- --
Common Stock, $0.0025 par value per share; authorized: 50,000,000 shares; issued and
outstanding: actual, 9,946,023 shares; as adjusted, 11,188,594 shares (1)........... 25 28
Additional paid-in capital............................................................ 51,869 73,857
Subscriptions receivable.............................................................. (112) (112)
Retained earnings..................................................................... 8,822 8,822
Cumulative translation adjustments.................................................... (212) (212)
--------- ------------
Total stockholders' equity.......................................................... 60,392 82,383
--------- ------------
Total capitalization.............................................................. $ 71,009 $ 82,522
--------- ------------
--------- ------------
</TABLE>

- --------------

(1) Includes 242,571 shares to be sold in the offering by Selling Stockholders
which will be issued upon exercise of outstanding options. Excludes 922,896
shares of Common Stock issuable upon exercise of stock options outstanding
as of September 30, 1996, at a weighted average exercise price of $4.30 per
share. Also excludes 796,800 shares of Common Stock reserved for future
issuance under the Company's stock option plans, employee stock purchase
plan and Directors' stock option plan. See "Management -- Stock Incentive
Plans," "-- Employee Stock Purchase Plan" and "-- Directors' Compensation."

17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected consolidated financial data presented below as of December 31,
1994 and 1995, and for the periods from April 1, 1994 to June 6, 1994, from June
7, 1994 to December 31, 1994, the fiscal year ended March 31, 1994 and the year
ended December 31, 1995 has been derived from the Company's audited financial
statements, which are included elsewhere in this Prospectus. The selected
consolidated financial data presented below as of March 31, 1994 was derived
from audited consolidated financial statements of the Company, which are not
included in this Prospectus. The selected consolidated financial data presented
below as of March 31, 1992 and 1993 and September 30, 1996, for the years ended
March 31, 1992 and 1993, and for the nine months ended September 30, 1995 and
1996 was derived from unaudited financial statements but was prepared on the
same basis as the audited consolidated financial statements and, in the opinion
of management, includes all adjustments which the Company considers necessary
for a fair presentation of the financial information set forth therein. The
information should be read in conjunction with the Consolidated Financial
Statements and related Notes included elsewhere in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Results for the interim periods are not necessarily indicative of
results for a full year.

<TABLE>
<CAPTION>
THE PREDECESSOR(1) THE COMPANY(1)
------------------------------------ -------------------------------------------------
PERIOD PERIOD
FROM FROM NINE MONTHS
FISCAL YEAR ENDED APRIL 1, JUNE 7, FISCAL YEAR ENDED ENDED
MARCH 31, TO TO DECEMBER 31, SEPTEMBER 30,
-------------------------- JUNE 6, DEC. 31, ------------------- -----------------
1992 1993 1994 1994 1994 1994 (2) 1995 1995 1996
------- -------- ------- -------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(PRO
FORMA)
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $68,912 $ 86,710 $87,411 $ 9,085 $60,574 $89,187 $121,534 $92,903 $121,629
Gross profit....................... 27,109 29,528 36,604 3,768 29,514 41,439 55,064 40,954 52,510
Operating expenses................. 30,563 36,076 32,810 5,290 19,659 34,105 44,540 32,496 41,852
------- -------- ------- -------- -------- -------- -------- ------- --------
Operating income (loss)............ (3,454) (6,548) 3,794 (1,522) 9,855 7,334 10,524 8,458 10,658
Interest expense................... (3,521) (4,209) (2,046) (58) (2,598) (4,390) (5,530) (3,940) (3,834)
Other income, net.................. 82 766 (200) 19 186 (264) 589 511 287
------- -------- ------- -------- -------- -------- -------- ------- --------
Income (loss) before provision for
taxes and extraordinary item...... (6,893) (9,991) 1,548 (1,561) 7,443 2,680 5,583 5,029 7,111
Provision for income taxes......... -- 517 722 112 2,808 972 2,098 1,880 2,738
------- -------- ------- -------- -------- -------- -------- ------- --------
Income (loss) before extraordinary
item $(6,893) $(10,508) $ 826 $(1,673) $ 4,635 $ 1,708 $ 3,485 $ 3,149 $ 4,373
------- -------- ------- -------- -------- -------- -------- ------- --------
------- -------- ------- -------- -------- -------- -------- ------- --------
Pro forma income before
extraordinary item per share and
share equivalents(3)(4)........... $ 0.47 $ 0.51
-------- --------
-------- --------
Shares used in computing pro forma
income before extraordinary item
per share......................... 7,434 8,532
-------- --------
-------- --------
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
AS OF MARCH 31, SEPTEMBER 30,
------------------------------- -------------------- --------------
1992 1993 1994 1994 1995 1996
--------- --------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital...................... $ 31,040 $ 23,725 $ 22,987 $ 14,189 $ 22,668 $ 38,158
Total assets......................... 59,959 53,318 50,363 66,549 84,508 135,865
Short-term debt...................... 846 782 1,511 1,327 4,838 30,079
Long-term debt....................... 46,467 48,580 46,895 29,047 36,388 10,617
Stockholders' equity................. (2,951) (13,346) (13,130) 17,179 20,568 60,392
</TABLE>

- ------------------

18
<PAGE>
(2) The unaudited pro forma information for the year ended December 31, 1994 has
been prepared assuming the Acquisition occurred on January 1, 1994. See
"Unaudited Pro Forma Financial Information." The pro forma results are
provided for comparative purposes only and do not purport to indicate the
results of operations that would have occurred if the Acquisition had taken
place on January 1, 1994 or which may occur in the future.

(3) Pro forma to give effect to the conversion of all shares of Preferred Stock
into shares of Common Stock at the beginning of the respective period.

<TABLE>
<S> <C>
Year ended December 31, 1995............................................................... $ 0.51
Nine months ended September 30, 1996....................................................... $ 0.51
</TABLE>

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

The following unaudited pro forma statement of operations for the year ended
December 31, 1994 is based on the historical financial statements of the Company
and the Company's predecessor included elsewhere in this Prospectus and has been
prepared assuming the Acquisition occurred on January 1, 1994. The unaudited pro
forma statement of operations and accompanying notes are based upon and should
be read in conjunction with the Consolidated Financial Statements and the Notes
thereto of the Company included elsewhere in this Prospectus. Such information
is not necessarily indicative of either future results of operations or the
results that might have occurred if the Acquisition had occurred on January 1,
1994.

<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------------------
THE PREDECESSOR THE COMPANY
---------------------------- ---------------- PRO FORMA
THREE MONTHS PERIOD FROM PERIOD FROM PRO FORMA ------------
ENDED MARCH APRIL 1, 1994 JUNE 7, 1994 TO ADJUSTMENTS YEAR ENDED
31, TO DECEMBER 31, INCREASE DECEMBER 31,
1994 JUNE 6, 1994 1994 (DECREASE) 1994
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Net sales......................... $20,530 $ 9,085 $60,574 $(1,002)(1) $89,187
------------ ------------- -------- ----------- ------------
Gross profit...................... 9,159 3,768 29,514 (1,002)(1) 41,439
Operating expenses................ 8,826 5,290 19,659 330(2) 34,105
------------ ------------- -------- ----------- ------------
Operating income (loss)........... 333 (1,522) 9,855 (1,332) 7,334
Interest expense.................. (429) (58) (2,598) 1,305(3) (4,390)
Other income, net................. (469) 19 186 (264)
------------ ------------- -------- ----------- ------------
Income (loss) before income taxes
and extraordinary item........... (565) (1,561) 7,443 (2,637) 2,680
Provision (benefit) for income
taxes............................ (136) 112 2,808 (1,812)(4) 972
------------ ------------- -------- ----------- ------------
Income (loss) before extraordinary
item............................. $ (429) $(1,673) $ 4,635 $ (825) $ 1,708
------------ ------------- -------- ----------- ------------
------------ ------------- -------- ----------- ------------
</TABLE>

- ------------------

(1) Represents royalties earned on sales made by the Company's previous licensee
in Japan. In connection with the Acquisition, the Company sold the right to
use its trademarks in Japan and no longer earns such royalties.

(2) Represents increases in operating expenses for the period from January 1,
1994 to June 6, 1994 of $221,000 in increased goodwill amortization related
to the Acquisition and $109,000 of management fees payable to Whitney
related to the Acquisition (see Note 13 to the Consolidated Financial
Statements).

(3) Represents interest expense on debt incurred in connection with the
Acquisition less $280,000 of interest incurred by the Company's predecessor
on debt which was not assumed by the Company. Interest rates on the revolver
and term loan were based on prime plus 2% and prime plus 2.5%, respectively.
The prime rate was approximately 6.25% during the year.

(4) Represents estimated tax effect of adjustments as well as tax benefits for
losses not previously benefitable by predecessor from January 1, 1994
through June 6, 1994.

19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

BACKGROUND/TURNAROUND. The North Face was founded in 1965 by outdoor
enthusiasts as a retailer of high-performance climbing and backpacking
equipment. While the Company had developed a reputation for technical excellence
among extreme users of its products, in the late 1980s its financial performance
deteriorated for a variety of reasons. The Company's inefficient product
sourcing policies, which included manufacturing a significant portion of
products itself, resulted in high and volatile costs, excessive inventory of
obsolete materials and finished goods and significant delays in product
delivery. In addition, the Company had engaged in a retail expansion strategy
that focused on opening discount outlets and producing lower priced products to
sell in those outlets. This outlet strategy failed to enhance the Company's
brand image, adversely impacted its relationships with its wholesale customers
and failed to target its traditional consumers.

Beginning in January 1993, a new executive management team, including
Marsden S. Cason, the Company's current Chief Executive Officer, was recruited.
The new management team (i) hired a number of experienced senior executives and
mid-level managers; (ii) focused on profitability by establishing and
implementing specific sales and gross margin objectives; (iii) implemented new
sourcing strategies, which included relying principally on contract
manufacturers; (iv) closed eight outlets and one Company-operated retail store;
(v) implemented a more focused advertising strategy; and (vi) discontinued or
redesigned certain unprofitable and marginally profitable product lines and
styles. Primarily as a result of these initiatives, the Company achieved
profitability in the year ended March 31, 1994. The assets and certain of the
liabilities of the Company's predecessor were acquired in June 1994 by the
Company, which had been formed for this purpose. See "Management -- Compensation
Committee Interlocks and Insider Participation."

ORDER CYCLE. The North Face currently is engaged primarily in a two-season
wholesale business, Spring (January to June) and Fall (July to December).
Wholesale customers place preseason orders, which generally are noncancellable,
with the Company from two to five months prior to the beginning of the season.
Reorders are placed throughout the season and products are shipped based on
availability. Preseason orders have typically accounted for 75% to 85% of total
sales to wholesale customers and historically have been an accurate indicator of
actual product shipments; however, there can be no assurance that preseason
orders will be an accurate indicator of actual product shipments in the future.
The Company has decided to increase its investment in inventory of core products
to better allow it to capture reorder opportunities. Accordingly, the foregoing
percentages may decline in the future. With the introduction of Tekware and
Summit Shops, the Company expects that it increasingly will be supplying its
products to its wholesale customers on a year-round basis, which is expected to
decrease preseason orders as a percentage of total sales to wholesale customers.
Preseason orders for the 1996 Fall season were $69.1 million compared to $51.4
million preseason orders for the 1995 Fall season.

PRODUCTION CYCLE. Based on preseason orders and expected reorders, the
Company places production orders with its contract manufacturers for an entire
season three to five months before the beginning of the season. Fixed production
prices are agreed upon approximately three months prior to placement of such
production orders. As a result, the Company's production costs are relatively
predictable one season in advance of the delivery of products. In the past, the
Company and its wholesale customers were unable to maximize sales of the
Company's most popular products due to the Company's strategy of determining
production quantities based primarily on preseason orders. As a result, the
Company frequently was unable to meet strong reorder demand for its most popular
items. In October 1996, the

20
<PAGE>
Company initiated a core inventory replenishment program in which its core
products and materials will be inventoried for rapid reorder or manufacturing.
As a result of this new program, the Company will maintain higher levels of
inventories. See "Risk Factors -- Implementation of Summit Shop Strategy," "--
Reliance on Unaffiliated Manufacturers," and "-- Need for Additional Capital."

SUMMIT SHOPS. In the third quarter of 1996, The North Face introduced
Summit Shops to increase sales to wholesale customers. There were 14 concept
shops, precursors to the Summit Shops, opened in the first six months of 1996
and 25 Summit Shops opened in the third quarter of 1996. The Company expects
that an additional 100 Summit Shops will be opened through the end of 1997. See
"Business -- Summit Shops." Summit Shops are designed to showcase the Company's
products using more modern merchandising techniques, enhance the Company's brand
and increase sales, while minimizing investment. An average 550 square foot
Summit Shop is expected to require a total investment for furniture and fixtures
of approximately $35,000, all or a substantial majority of which may be provided
by the Company. However, there can be no assurance that Summit Shops will not
require substantially more total capital investment. Additionally, the Company
will incur certain additional marketing and monitoring expenses associated with
Summit Shops. The Company's wholesale customers will operate the Summit Shops
and own the inventory. The Company will retain ownership of the furniture and
fixtures used in the Summit Shops. See "Risk Factors -- Implementation of Summit
Shop Strategy."

COMPANY-OPERATED RETAIL SALES. The North Face currently operates nine
retail stores and three outlets. New stores and outlets are included in
comparable store sales commencing in their thirteenth month of operation. The
Company currently does not plan to open any additional retail stores in the near
future because the Company believes that Summit Shops will provide comparable
merchandising and marketing benefits to those that are received from
Company-operated retail stores, with a lower commitment of financial and
operational resources and a higher return on investment. The North Face's gross
margins for its Company-operated retail stores are higher than for sales to its
wholesale customers. Consequently, due to the expected growing revenue
contribution from the Company's wholesale customers, the Company's overall gross
margins are expected to decline in the near term.

GOVERNMENT TENT SALES. The North Face historically has produced tents for
the Marine Corps. The timing of these sales has fluctuated historically and is
dependent on the Company's obtaining contracts from the Marine Corps. The timing
of the sales under these contracts can significantly affect the Company's
quarterly results. For example, the Company received $2.3 million and $1.7
million from the sale of tents to the Marine Corps in the first and second
quarters of 1995, respectively, but sold no tents to the Marine Corps in the
first nine months of 1996 and expects to sell no tents to the Marine Corps in
the fourth quarter of 1996, resulting in fluctuations that make period-to-period
comparisons for these quarters less meaningful. In September 1996, the Company
received a new tent contract from the Marine Corps totaling approximately $0.9
million with two options for an additional $0.9 million each. The Company
expects shipments to commence pursuant to this contract in 1997. There can be no
assurance, however, that the Company will obtain any additional contracts to
produce tents for the Marine Corps in the future. While the gross margins on
government sales typically are lower than on the Company's wholesale business,
such sales incur minimal operating expenses. As a result, the Company's
profitability can be impacted significantly by government sales, particularly in
the historically lower revenue first and second quarters. See "Risk Factors --
Seasonality and Quarterly Fluctuations."

CHANGE IN YEAR-END. In 1994, The North Face changed its fiscal year-end to
December 31. Due to this change and the Acquisition, comparison of the nine
month period ended December 31, 1994 to the fiscal year ended March 31, 1994 is
not meaningful. Therefore, the following discussion of results of operations is
based on the year ended December 31, 1995 compared to the pro forma results for
the year ended December 31, 1994, assuming the Acquisition had taken place on
January 1, 1994, and on the year ended March 31, 1994 compared to the year ended
March 31, 1993.

21
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items in
The North Face's consolidated statements of operations as a percentage of net
sales (except for income taxes which are shown as a percentage of pre-tax
income). As a result of recent strategic and operational changes,
period-to-period comparisons of financial results may not be meaningful and the
results of operations for historical periods may not be indicative of future
results.

<TABLE>
<CAPTION>
FISCAL YEAR YEAR ENDED NINE MONTHS ENDED
ENDED MARCH 31, DECEMBER 31, SEPTEMBER 30,
-------------------- ----------------------- --------------------
1993 1994 1994 1995 1995 1996
--------- --------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
(PRO FORMA)

Net sales................................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit............................. 34.1 41.9 46.5 45.3 44.1 43.2
Operating expenses....................... 41.6 37.5 38.3 36.6 35.0 34.4
--------- --------- ------------ --------- --------- ---------
Operating income (loss).................. (7.5) 4.4 8.2 8.7 9.1 8.8
Interest expense......................... (4.9) (2.3) (4.9) (4.6) (4.2) (3.1)
Other income (expense)................... 1.1 (0.3) (0.3) (0.5) 0.5 0.2
--------- --------- ------------ --------- --------- ---------
Income (loss) before provision for taxes
and extraordinary item................. (11.3) 1.8 3.0 4.6 5.4 5.8
Provision for income taxes............... (5.2) 46.6 36.3 37.6 37.4 38.5
--------- --------- ------------ --------- --------- ---------
Income (loss) before extraordinary
item................................... (12.1)% 0.9% 1.9% 2.9% 3.4% 3.6%
--------- --------- ------------ --------- --------- ---------
--------- --------- ------------ --------- --------- ---------
</TABLE>

The following table sets forth, for the periods indicated, the Company's net
sales by distribution channel and for domestic compared to international net
sales:

<TABLE>
<CAPTION>
FISCAL YEAR YEAR ENDED NINE MONTHS ENDED
ENDED MARCH 31, DECEMBER 31, SEPTEMBER 30,
-------------------- ------------------------- ----------------------
1993 1994 1994 1995 1995 1996
--------- --------- ------------ ----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
(PRO FORMA)

Wholesale customers................... $ 52,673 $ 51,720 $ 61,391 $ 87,386 $ 70,055 $ 100,443
Company-operated retail............... 33,681 31,225 26,877 29,968 18,876 21,020
Government............................ 356 4,466 919 4,180 3,972 166
--------- --------- ------------ ----------- --------- -----------
Total net sales................... $ 86,710 $ 87,411 $ 89,187 $ 121,534 $ 92,903 $ 121,629
--------- --------- ------------ ----------- --------- -----------
--------- --------- ------------ ----------- --------- -----------
United States......................... $ 71,658 $ 71,994 $ 70,822 $ 96,069 $ 75,036 $ 94,013
International......................... 15,052 15,417 18,365 25,465 17,867 27,616
--------- --------- ------------ ----------- --------- -----------
Total net sales................... $ 86,710 $ 87,411 $ 89,187 $ 121,534 $ 92,903 $ 121,629
--------- --------- ------------ ----------- --------- -----------
--------- --------- ------------ ----------- --------- -----------
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1995

NET SALES. Net sales increased by 30.9% to $121.6 million from $92.9
million for the nine months ended September 30, 1996 (the "First Nine Months
1996") compared to the nine months ended September 30, 1995 (the "First Nine
Months 1995").

Net sales to wholesale customers increased by 43.4% to $100.4 million from
$70.1 million for First Nine Months 1996 compared to First Nine Months 1995.
This increase related primarily to increased unit shipments to the Company's
existing wholesale customers resulting from (i) the introduction of new
products, including the initial shipments of Tekware, (ii) continued strong
sales of existing products, (iii) better service to wholesale customers, (iv) a
more targeted advertising and marketing campaign and (v) the opening of 25
Summit Shops and 14 concept shops during the First Nine Months 1996.

22
<PAGE>
Company-operated retail sales increased by 11.4% to $21.0 million from $18.9
million for First Nine Months 1996 compared to First Nine Months 1995. This
increase was attributable to comparable store sales increases of 2.3% as well
the opening of one new retail store in October 1995 and one outlet in July 1996.
In addition, the Company closed two outlets in mid 1995.

Government sales decreased by 95.8% to $0.2 million from $4.0 million for
First Nine Months 1996 compared to First Nine Months 1995. This decrease was due
to the timing of government tent shipments under a contract which was completed
in 1995.

GROSS PROFIT. Gross profit as a percentage of net sales for First Nine
Months 1996 was 43.2% compared to 44.1% for First Nine Months 1995. Gross profit
for net sales to wholesale customers for First Nine Months 1996 was 41.2%
compared to 42.6% for First Nine Months 1995. The lower margin for sales to
wholesale customers relates primarily to lower initial margins on the
introduction of the Company's new Tekware line. Company-operated retail gross
profit as a percentage of net sales was 52.6% for the First Nine Months 1996
compared to 50.1% for the First Nine Months 1995. The higher retail margin
relates primarily to lower volumes of discounted merchandise during the First
Nine Months 1996, particularly in the third quarter of 1996.

OPERATING EXPENSES. Operating expenses include selling, marketing and
general and administrative expenses. Operating expenses increased by 28.8% to
$41.9 million from $32.5 million for First Nine Months 1996 compared to First
Nine Months 1995, primarily as a result of increases in variable and fixed costs
to support the growth of the Company's business and the expansion of the
merchandising department to launch the Summit Shops program, as well as
operating costs associated with the operation of a new retail store and outlet.
Operating expenses decreased slightly as a percentage of net sales to 34.4% for
First Nine Months 1996 from 35.0% for First Nine Months 1995, as a result of a
lower growth rate in operating expenses than in sales.

INTEREST EXPENSE. Interest expense decreased to $3.8 million from $3.9
million for First Nine Months 1996 compared to First Nine Months 1995 primarily
as a result of the application of the proceeds from the Company's initial public
offering to repay debt, offset by higher levels of debt incurred to finance
working capital growth.

PROVISION FOR INCOME TAXES. Provision for income taxes as a percent of
pre-tax income was approximately 38.5% for First Nine Months 1996 compared to
37.4% for First Nine Months 1995. This increase relates to the mix of the
Company's pre-tax earnings between the U.S. and the United Kingdom, which have
different tax rates.

EXTRAORDINARY CHARGE. The Company reported a non-cash extraordinary charge
of approximately $860,000, net of income taxes, for First Nine Months 1996 as a
result of substantially restructuring both the Credit Facility and the
Subordinated Note in connection with the Company's initial public offering in
July 1996.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO PRO FORMA YEAR ENDED DECEMBER 31, 1994

NET SALES. Net sales increased by 36.3% to $121.5 million from $89.2
million for the year ended December 31, 1995 compared to the pro forma year
ended December 31, 1994.

Net sales to wholesale customers increased by 42.3% to $87.4 million from
$61.4 million for 1995 compared to 1994. This increase related primarily to
increased unit shipments to the Company's existing wholesale customers resulting
from (i) the introduction of new products, such as day packs and Nuptse
down-filled jackets, (ii) continued strong sales of existing products, such as
the Mountain Light family, and (iii) better service to wholesale customers. In
addition, the Company's sales in Canada increased substantially to $5.1 million
due to the termination of the Company's licensing agreement with a third party
and the opening of the Company's new Canadian operations in January 1995.

23
<PAGE>
Company-operated retail sales increased by 11.5% to $30.0 million from $26.9
million for 1995 compared to 1994. This increase related to an increase in
comparable store sales of 13.4% primarily due to the higher level of
liquidations in 1995 at two outlet stores closed in 1995. In addition, the
Company opened one new retail store in October 1995.

Government (Marine Corps) sales increased to $4.2 million from $0.9 million
for 1995 compared to 1994. This increase was due to the timing of tent shipments
under a U.S. government contract. The Acquisition in June 1994 delayed the
timing of shipments under the government contract until January 1995. This
contract was completed in 1995.

GROSS PROFIT. Gross profit as a percentage of net sales for 1995 was 45.3%
compared to 46.5% for 1994. Gross profit for net sales to wholesale customers
was 43.2% in 1995 compared to 43.9% in 1994. Company-operated retail gross
profit in 1995 was 53.6% compared to 52.7% in 1994. While retail gross margins
were slightly higher, the Company's overall gross margin decreased due to the
higher relative portion of sales to wholesale customers. The lower margins for
sales to wholesale customers result primarily from lower margins on the
Company's new Canadian business which carries higher duty costs as well as lower
margins on sales to European customers. The increase in Company-operated retail
gross margin for 1995 resulted principally from the lower percentage of outlet
store sales to total retail sales because of the closure of two Company-operated
outlets in mid-1995.

OPERATING EXPENSES. Operating expenses increased by 30.6% to $44.5 million
from $34.1 million for 1995 compared to 1994 due to increases in variable and
fixed costs to support the growth of the Company's business as well as operating
and start-up costs of a new retail store that opened in October 1995. These
expenses decreased, however, as a percentage of net sales from 38.3% for 1994 to
36.6% for 1995 as a result of a lower growth rate in operating expenses than in
sales.

INTEREST EXPENSE. Interest expense increased to $5.5 million from $4.4
million for 1995 compared to 1994, as a result of higher levels of debt incurred
to finance working capital growth.

PROVISION FOR INCOME TAXES. Provision for income taxes as a percent of
pre-tax income was approximately 37.6% for 1995 compared to 36.3% for 1994. This
increase in effective rate relates to the mix of the Company's earnings, with
higher pre-tax earnings growth in the United States where the tax rate is higher
than in the United Kingdom.

YEAR ENDED MARCH 31, 1994 COMPARED TO YEAR ENDED MARCH 31, 1993

NET SALES. Net sales increased slightly to $87.4 million from $86.7 million
for the year ended March 31, 1994 ("March 1994 Fiscal Year") compared to the
year ended March 31, 1993 ("March 1993 Fiscal Year").

Sales to wholesale customers decreased by 1.8% to $51.7 million from $52.7
million for March 1994 Fiscal Year compared to March 1993 Fiscal Year. The
Company's March 1994 Fiscal Year results were adversely impacted by the
Company's limited ability to finance the production of inventories. In addition,
net sales to wholesale customers for the March 1993 Fiscal Year were bolstered
by high levels of sales of discontinued merchandise and excess inventories.

Company-operated retail sales decreased by 7.3% to $31.2 million from $33.7
million for March 1994 Fiscal Year compared to March 1993 Fiscal Year. This
decrease related primarily to the closing of one Company-operated retail store
and six outlets in March 1994 Fiscal Year. On a comparable store basis, retail
sales increased 3.7%.

Government (Marine Corps) sales increased to $4.5 million from $0.4 million
for March 1994 Fiscal Year compared to March 1993 Fiscal Year. This increase
related to shipments under a new government tent contract.

GROSS PROFIT. Gross profit as a percentage of net sales for March 1994
Fiscal Year was 41.9% compared to 34.1% for March 1993 Fiscal Year. This
increase related to lower costs for sourced products

24
<PAGE>
in March 1994 Fiscal Year and substantial write-downs of excess and obsolete
inventory for March 1993 Fiscal Year.

OPERATING EXPENSES. Operating expenses decreased by 9.1% to $32.8 million
from $36.1 million for March 1994 Fiscal Year compared to March 1993 Fiscal
Year, primarily due to (i) write-offs taken in the March 1993 Fiscal Year by new
management in connection with store closure expenses, bad debt expense and
employee termination costs and (ii) the reduction in payroll and related
employee costs related to store closures and other headcount reductions.

INTEREST EXPENSE. Interest expense decreased by 51% to $2.0 million from
$4.2 million for March 1994 Fiscal Year compared to March 1993 Fiscal Year. This
decrease relates to the significant amounts of borrowings from related parties
which ceased to carry interest charges as a result of the bankruptcy of Odyssey.

PROVISION FOR INCOME TAXES. The effective income tax rate was approximately
46.6% for March 1994 Fiscal Year compared to 5.2% of the pre-tax loss for March
1993 Fiscal Year. The tax expense for the 1993 Fiscal Year, despite the
Company's pre-tax losses, related to foreign taxable income and the
unavailability of U.S. tax benefits for U.S. losses due to cumulative net
operating loss carryforwards. All cumulative tax net operating loss
carryforwards were eliminated as of the Acquisition. See Note 6 to the
Consolidated Financial Statements included elsewhere in this Prospectus for a
reconciliation of the effective tax rate to the U.S. federal tax rate.

QUARTERLY DATA AND SEASONALITY

The following table sets forth certain unaudited financial data for each of
the Company's last eleven fiscal quarters. The operating results for any quarter
are not necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
------------------------------------------
(PRO FORMA)(1)
--------------------
Q1 Q2 Q3 Q4
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales.......................................................... $ 19,958 $ 12,552 $ 33,046 $ 23,631
Gross profit....................................................... 8,587 5,346 15,628 11,878
Operating income (loss)............................................ (427) (1,719) 6,254 3,226
Net income (loss).................................................. (1,227) (1,631) 3,288 1,278
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------------------
Q1 Q2 Q3 Q4
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales.......................................................... $ 23,500 $ 19,342 $ 50,061 $ 28,631
Gross profit....................................................... 10,367 7,852 22,735 14,110
Operating income (loss)............................................ 1,057 (1,055) 8,456 2,066
Net income (loss).................................................. (85) (1,331) 4,565 336
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, 1996
-------------------------------
Q1 Q2 Q3
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales.......................................................... $ 31,020 $ 22,471 $ 68,138
Gross profit....................................................... 12,603 9,204 30,703
Operating income (loss)............................................ 139 (2,512) 13,031
Income (loss) before extraordinary item............................ (629) (2,410) 7,412
</TABLE>

- ------------------

(1) See footnote (1) to "Selected Consolidated Financial Data."

The Company's business is subject to seasonal and quarterly fluctuations.
Historically, the Company has realized substantially all of its profits in the
third quarter and has recognized losses during the first and second quarters.
The Company's results of operations may fluctuate from quarter to quarter as a

25
<PAGE>
result of, among other things, the amount and timing of shipments to wholesale
customers, government shipments, the timing and magnitude of discounts in retail
stores, advertising and marketing expenditures, increases in the number of
employees and overhead to support growth and store opening costs. For example,
the Company received $2.3 million and $1.7 million from the sale of tents to the
Marine Corps in the first and second quarters of 1995, respectively, but sold no
tents to the Marine Corps in the first and second quarters of 1996, resulting in
fluctuations that make period-to-period comparisons for these quarters less
meaningful. In addition, in the first quarter of 1996, Company-operated
comparable store sales increased 23.7% over the first quarter of 1995 due
primarily to higher sales of discounted merchandise in the first quarter of
1996. In addition, in the third quarter of 1996 comparable store sales decreased
17.9% over the third quarter of 1995 due primarily to the Company's decision to
shift the majority of sales of discounted merchandise from retail stores to
outlet stores, including the newly opened outlet store. Further, during the
second quarter of 1996, the Company significantly increased its operating
expenses due to increased sales commissions related to higher net sales, the
hiring of new executive officers, the expansion of the merchandising department
to launch the Summit Shop program and a significant increase of product
acquisition staff. Primarily as a result of the foregoing factors and expenses
associated with the operation of the new Chicago retail store, the Company
incurred a loss in the second quarter of 1996 which was significantly larger
than the loss incurred in the second quarter of 1995. See "Risk Factors --
Ability to Achieve and Manage Potential Future Growth." The Company anticipates
that it will continue to incur net losses during the first and second calendar
quarters for the foreseeable future. Additionally, the Company's effective tax
rate can vary significantly from quarter to quarter due to the relative mix of
earnings from the Company's domestic and international operations which are
taxed at different rates.

LIQUIDITY AND CAPITAL RESOURCES

In connection with the Acquisition, the Company issued 1,935,781 shares of
Preferred Stock and 2,271,064 shares of Common Stock in exchange for
approximately $12.8 million and borrowed $24.3 million pursuant to the
Subordinated Note. The proceeds from the issuance of the Preferred Stock, Common
Stock and Subordinated Note, together with borrowings under the Credit Facility,
were used to fund the Acquisition. See "Management -- Compensation Committee
Interlocks and Insider Participation."

Since June 7, 1994 (the date of the closing of the Acquisition), the Company
has satisfied its cash requirements through borrowings under the Credit Facility
and proceeds from the initial public offering. Its primary uses of cash have
been to purchase merchandise inventories, finance growth of the Company's
accounts receivable, upgrade the Company's management information systems and
open one retail store and one outlet. During the nine months ended September 30,
1996 and the year ended December 31, 1995, the Company used approximately $33.9
million and $2.8 million, respectively, for operations, primarily due to
increased levels of inventory and accounts receivable. These funds were provided
by borrowings under the Credit Facility and proceeds from the Company's initial
public offering. Historically, the Company's ability to maintain adequate levels
of inventory was constrained by its capital resources. In March 1995, the
Company obtained an increase in its Credit Facility. As a result, the Company
increased its levels of inventory in order to better enable it to meet reorder
demand in key products. The Company anticipates that inventory levels will
continue to increase as the Company expands its business and implements its core
inventory replenishment program. Such inventory increases are expected to be
financed by borrowings under the Credit Facility. The increased inventories
resulting from this core inventory replenishment program may result in increased
excess inventory and material, increased markdowns and lower margins. See "Risk
Factors -- Reliance on Unaffiliated Manufacturers."

The Credit Facility provides for borrowings up to $60.0 million under its
revolving line of credit with actual borrowings limited to available collateral
(approximately $33.0 million of gross availability as of September 30, 1996) and
for up to $5.0 million under a term note for capital expenditures (approximately
$3.9 million of remaining availability as of September 30, 1996) from Heller
Financial, Inc. and

26
<PAGE>
two banks. The Credit Facility provides a sub-limit for letters of credit of up
to $15.0 million to finance the Company's foreign purchases of merchandise
inventories. As of September 30, 1996, the Company had approximately $2.4
million of letters of credit outstanding under the Credit Facility. The Credit
Facility contains certain financial covenants that require the Company to
maintain a specified minimum tangible net worth and interest coverage and
leverage ratios, limit capital expenditures and restrict the Company's ability
to incur additional indebtedness and pay cash dividends on its capital stock.
The Company was in compliance with these covenants as of September 30, 1996.

The Company intends to use the net proceeds of this offering to repay
approximately $11.5 million outstanding under the revolving line of credit
portion of the Credit Facility, $1.1 million outstanding under the term note
debt portion of the Credit Facility and $9.4 million of the Subordinated Note,
plus accrued interest. See "Use of Proceeds." By repaying this debt, the Company
expects to have more flexibility to pursue its growth strategy, including
expansion of its Summit Shop program.

Upon consummation of the Company's initial public offering, the Company
restructured its Credit Facility to (i) increase the maximum available under the
revolving line of credit to the lesser of $60.0 million or available collateral,
(ii) provide for a new capital expenditure term note of up to $5.0 million and
(iii) reduce the rate of interest to prime less 0.25% or LIBOR plus 1.50%, at
the Company's option, with the possibility of a further reduction of 0.25% based
on the Company achieving certain levels of earnings before interest, taxes,
depreciation and amortization for the year ended December 31, 1996. In addition,
the restructured Credit Facility increased the Company's letter of credit
sub-limit to $15.0 million, which amount reduced availability under the
revolving portion of the Credit Facility. The restructured Credit Facility
continues to be secured by a first priority security interest in all of the
Company's real and personal property.

The Company estimates that its capital expenditures from October 1, 1996
through 1997 will be approximately $13.0 million. This amount will be used
principally for investment in Summit Shops, the upgrade of management
information systems, the expansion of the Company's administration, distribution
and laboratory facilities, expansion of its European sales and marketing
operations and remodels of existing retail stores. The Company expects that an
average 550 square foot Summit Shop will require a total investment for
furniture and fixtures of approximately $35,000, all or a substantial majority
of which may be provided by the Company. However, there can be no assurance that
Summit Shops will not require substantially more total capital investment. See
"Risk Factors -- Implementation of Summit Shop Strategy."

The Company anticipates that cash generated from this offering, from
operations and from funds available under the Credit Facility will be sufficient
to satisfy its cash requirements for at least the next 12 months.

FOREIGN EXCHANGE FLUCTUATIONS

The Company's inventory purchases from contract manufacturers in the Far
East are denominated in United States dollars; however, purchase prices for the
Company's products may be impacted by fluctuations in the exchange rate between
the United States dollar and the local currencies of the contract manufacturers,
which may have the effect of increasing the Company's cost of goods in the
future. In addition, the Company's sales in Europe and Canada are denominated in
the local currencies of the applicable specialty retailer, which may have a
negative impact on profit margins or the rate of growth of sales in those
countries if the U.S. dollar were to strengthen significantly. During the last
two years, exchange rate fluctuations have not had a material impact on the
Company's inventory costs or consolidated profit margins in Europe or Canada.
However, due to the number of foreign currencies involved and the fact that not
all of these foreign currencies fluctuate in the same manner against the United
States dollar, the Company cannot quantify in any meaningful way the potential
effect of such fluctuations on future income. Beginning in 1996, the Company
engages in certain forward foreign exchange hedging activities with respect to
its European sales revenues. The Company does not engage in forward foreign
exchange hedging activities for its Canadian revenues. See "Risk Factors --
International Operations."

27
<PAGE>
INFLATION

The Company believes that the relatively moderate rates of inflation over
the last two years in the United States, where it primarily competes, have not
had a significant effect on its net sales or results of operations. Higher rates
of inflation have been experienced in a number of foreign countries in which the
Company's products are manufactured but also have not had a material effect on
the Company's net sales or results of operations. In the past, the Company has
been able to offset its cost increases by increasing selling prices or changing
suppliers.

IMPACT OF NEW ACCOUNTING STANDARDS

See Note 2 to the Consolidated Financial Statements for a discussion of the
impact of new accounting standards.

28
<PAGE>
BUSINESS

THE COMPANY

The Company believes The North Face-Registered Trademark- is the world's
premier brand of high-performance outdoor apparel and equipment. The Company
designs and distributes technically sophisticated outerwear, skiwear, functional
sportswear, tents, sleeping bags and backpacks, all under The North
Face-Registered Trademark-name.

The North Face has developed a superior reputation for quality, performance
and authenticity by providing technically advanced products capable of
withstanding the most extreme conditions. For nearly 30 years, the Company's
outdoor apparel and equipment have been the brand of choice for numerous high
altitude and polar expeditions. These products are used extensively by
world-class climbers, explorers and extreme skiers, whose lives depend on the
performance of their apparel and equipment. To maintain and further enhance this
unique legacy, the Company continuously develops and introduces innovative
products that are functional, technically superior and designed to set the
industry standard in each product category. The Company cultivates its extreme
image through its targeted marketing efforts and its teams of world-class
climbers, explorers and skiers.

INDUSTRY OVERVIEW

Technical outdoor apparel and equipment historically have been used
primarily by professional climbers and serious outdoor enthusiasts. In recent
years, these products have become increasingly popular among a broader group of
consumers. The Company believes that this growth has been the result primarily
of (i) an increase in outdoor recreational activities by the general population,
(ii) a growing demand for highly functional products, (iii) a growing acceptance
of outdoor apparel as casual wear and (iv) an increase in the technical
sophistication of products in this field.

The trend towards more active outdoor lifestyles is demonstrated by
increased participation in a variety of outdoor activities such as camping,
hiking and backpacking. According to The Outdoor Recreation Coalition of
America, from 1993 to 1994 the number of people who participated in rock
climbing increased 32%, while participation in mountain biking increased 20% and
backpacking increased 11%. In addition, outdoor or rugged apparel has been
increasingly worn as casual clothing even by individuals who do not participate
in outdoor activities or require the functionality of a high-performance
product. Casual wear in general also has become increasingly popular,
particularly in the workplace as evidenced by the dramatic increase in "casual
days."

The Company believes that consumers recently have demonstrated an increasing
preference for functional, performance-oriented products. Purchase decisions
often are driven as much by a desire to create a particular perception of
themselves as healthy and active as by an actual need for these products. An
example of this trend is the growing popularity of sport utility vehicles which
have become one of the fastest growing segments of the automotive industry
despite the fact that most owners of such vehicles never venture off paved
streets. Finally, over the last decade, there have been significant
technological advances in materials and features that have increased product
functionality and performance. The number of products and product segments has
increased dramatically as marketers target specific functions and uses to
particular user groups. For example, in the footwear industry, there has been a

29
<PAGE>
proliferation of new products designed to suit a greater variety of activities
and conditions. See "Risk Factors -- Changing Consumer Preferences."

BUSINESS STRATEGY

The North Face's goal is to design and market the most recognized and
respected brand of high-performance, technically-oriented outerwear, skiwear,
outdoor equipment and functional sportswear in the world. Each element of the
Company's strategy is intended to enhance and reinforce the global brand image
of The North Face-Registered Trademark- among both consumers and retailers. Key
elements of the strategy are to:

OFFER TECHNICALLY SUPERIOR PRODUCTS. The North Face is committed to
offering technically superior products that are functional, reliable and durable
and that set the industry standard in each product category. Many of the
Company's existing product lines feature technically superior, high-performance
products designed to be used in remote, mountainous or polar environments and to
withstand the harshest conditions. To reinforce The North Face-Registered
Trademark- image of quality and reliability, the Company's products carry a
lifetime warranty. The Company believes that this standard of excellence
cultivates, for the entire range of The North Face-Registered Trademark-
products, a technical, extreme and authentic image that also appeals to the more
casual outdoor enthusiast seeking functional, high-performance products.

DESIGN INNOVATIVE PRODUCTS. The North Face is committed to maintaining a
premier position in the outdoor apparel and equipment industries by remaining on
the leading edge of product design and materials technology. More than 85% of
the products currently offered by The North Face are new products or have been
updated since 1993. In designing and developing new product styles and features,
the Company's teams of world-class climbers, explorers and extreme skiers
contribute design ideas and test new products. The Company also works closely
with suppliers to develop high-performance materials that result in lighter,
stronger and more efficient products, and frequently obtains from these
suppliers first and/or exclusive rights to use the new materials for a certain
period of time.

PROMOTE ITS EXTREME BRAND IMAGE. The Company devotes significant resources
to strengthening The North Face-Registered Trademark- brand by projecting a
technical, extreme and authentic image that appeals to professionals and serious
outdoor athletes as well as to broader segments of the population. The North
Face believes that the product choices of professionals and serious outdoor
athletes create greater product visibility and influence general consumer
preferences. The Company provides equipment and outerwear for expeditions and
other high profile outdoor activities and promotes The North Face's products
through its teams of world-class climbers, explorers and extreme skiers.

PROMOTE SUMMIT SHOPS. The North Face recently introduced Summit Shops,
year-round concept shops dedicated to The North Face-Registered Trademark-
products, located within certain of the Company's wholesale customers. Summit
Shops are designed to increase the Company's sales in specialty retailers by
broadening The North Face-Registered Trademark- product offerings, improving
merchandising and building brand awareness. The North Face designs and installs
Summit Shops and provides its specialty retailers operating guidelines and
merchandising and training support. The Company believes that Summit Shops will
provide specialty retailers with an opportunity to increase sales of The North
Face-Registered Trademark- products without devoting substantial additional
resources.

FOCUS ON SELECTIVE DISTRIBUTION. To protect the integrity of The North
Face-Registered Trademark- brand and promote a high level of customer service,
the Company limits the distribution of its products to a select group of
specialty mountaineering, backpacking and ski retailers, large specialty outdoor
retail chain stores and selected general sporting goods retailers. The Company's
wholesale customers typically sell high quality, technically-oriented products
that are consistent with the Company's standards and have well trained sales
personnel capable of providing superior customer service and technical guidance.
Through selective distribution, The North Face believes it increases brand
loyalty and encourages its wholesale customers to carry a broader array of its
products.

30
<PAGE>
SELECTIVELY OPERATE RETAIL STORES. To complement its wholesale distribution
strategy and to increase brand awareness in selected markets, The North Face
currently operates nine retail stores. These stores enable the Company to
display the full line of The North Face-Registered Trademark- products, obtain
feedback from customers, closely monitor the retail sell-through of its products
and obtain consumer information. The North Face does not plan to open additional
retail stores due to the recent development of its Summit Shops, which it
expects will provide many of the advantages of Company-operated retail stores,
with a higher return on investment.

GROWTH STRATEGY

The Company's growth strategy is to continue to build on the strong consumer
awareness and technical reputation of The North Face-Registered Trademark-
brand. While professionals and serious outdoor enthusiasts will remain a
critical part of the Company's consumer base, The North Face believes that it
will continue to benefit from increasingly active consumer lifestyles and what
it identifies as a growing preference for functional, high-performance outdoor
apparel and equipment. Key elements of the Company's growth strategy are to:

INTRODUCE NEW PRODUCTS AND COMPLEMENTARY PRODUCT CATEGORIES. The Company
intends to take advantage of the strength of The North Face-Registered
Trademark- brand by continuing to introduce new products within existing product
categories and by adding complementary product categories. The Company
introduces innovative new products within existing categories and extends core
product lines by creating new "families" of products around existing products, a
strategy which has been effective both in launching the new products and
increasing the sales of the core products. In addition, although the Company's
products historically have been concentrated primarily in premium price product
categories, the Company intends to continue to introduce products in more
moderate price-point segments, so as to access a broader consumer base.
Consistent with The North Face-Registered Trademark- image, however, the Company
ensures that these products offer the highest performance and function in their
category. Finally, the Company intends to introduce additional new product
categories, such as its recently introduced lines of windwear, day packs, gloves
and underwear. While the Company intends primarily to develop new products
internally, it may from time to time add products or complementary product
categories by acquiring companies or product lines. In this regard, in August
1996, the Company signed a letter of intent relating to its proposed acquisition
of A5, a manufacturer specializing in climbing equipment. A5 had estimated
revenues of less than $500,000 during 1995. Although the impact of this
transaction on revenues, operating expenses and assets of The North Face is not
expected to be significant, the proposed transaction reflects the Company's goal
of developing and maintaining technically sophisticated products for extreme
outdoor pursuits.

EXPAND SUMMIT SHOPS PROGRAM. The Company recently introduced the concept of
"Summit Shops" to promote The North Face-Registered Trademark- brand and
increase sales at specialty retailers. The Company is executing a plan to open
Summit Shops in a controlled manner, selecting specialty retailers willing to
make a substantial commitment to the concept by dedicating sufficient selling
space and financial and operating resources. The Company is opening Summit Shops
in its wholesale customers' stores, and may consider other high-end retail
formats. There were 14 concept shops, precursors to Summit Shops, opened in the
first six months of 1996 and 25 Summit Shops opened in the third quarter of
1996. The Company expects that an additional 100 Summit Shops will be opened
through the end of 1997.

PROMOTE TEKWARE AS A HIGH-PERFORMANCE ALTERNATIVE TO SPORTSWEAR. The
Company intends to broaden the distribution and increase its product offerings
of Tekware, an innovative new line of high-performance, functional clothing made
from a new generation of synthetic fabrics. Tekware generally maintains the look
and feel of cotton, while offering significant functional and performance
advantages over cotton, such as its quick-drying, abrasion- and shrink-resistant
properties. Management expects Tekware to change the way consumers think about
casual clothing for active outdoor use and to provide the Company with a
competitive advantage in the sportswear market. The Company believes that the
initial response to Tekware, which was introduced for Spring 1996, has been
positive.

31
<PAGE>
PURSUE INTERNATIONAL OPPORTUNITIES. The North Face intends to pursue sales
in international markets while selectively increasing its distribution in the
United States. The Company believes that many of the same lifestyle and consumer
trends that have benefited the Company in the U.S. are increasingly affecting
international markets, particularly in Europe and Canada. The North Face has
established regional headquarters in Europe and Canada, and recently combined
its domestic and international product development, sourcing and marketing
functions to improve efficiencies and develop an integrated effort designed to
increase its global focus. The Company anticipates that its international sales
will benefit both from expanding the distribution of its products and the
increased awareness of The North Face-Registered Trademark- brand. The Company
anticipates that Europe and Canada will provide the most significant near-term
opportunities but also will selectively pursue new markets in Asia.

PRODUCTS

The North Face offers a broad range of high-performance,
technically-oriented outerwear, skiwear, outdoor equipment and Tekware designed
for extreme applications, such as high altitude mountaineering, ice climbing,
rock climbing, backpacking, skiing and snowboarding. The Company characterizes
its apparel-related products as "equipment for the body." As a result of the
experience gained through nearly 30 years as the brand of choice for many of the
world's most challenging high altitude and polar expeditions, The North
Face-Registered Trademark- has achieved a unique level of authenticity. The
North Face-Registered Trademark- products are original designs and carry a
lifetime warranty for the original owner against defects in materials and
workmanship. In 1995, sales of outerwear, equipment, skiwear and other products
represented approximately 50%, 25%, 14% and 11%, respectively, of net sales. For
the first nine months of 1996, sales of outerwear, equipment, skiwear, Tekware
and other products represented approximately 50%, 28%, 11%, 7% and 4%,
respectively, of net sales.

The Company's goal is to offer the most technically advanced products in its
field and to establish the industry standard in each product category. The
Company designs its premium products for extreme applications, such as high
altitude mountaineering, ice climbing and polar expeditions, which it believes
represents only a small fraction of its potential customers. These premium
products serve to reinforce The North Face-Registered Trademark- brand image
while appealing to non-extreme users. The Company also strives to offer products
at more moderate price-points that remain "best of class" by incorporating many
of the features, materials and technology used in its leading edge designs. The
Company believes that this product design philosophy enhances The North
Face-Registered Trademark- brand while appealing to the broader consumer market.
See "Risk Factors -- Dependence on New Products."

OUTERWEAR

The Company's outerwear is engineered to provide protection in cold, wet and
windy conditions and to accommodate the range of motion required for the most
extreme activities. It is designed to adapt to varying conditions and
situations, taking into account the unpredictability of the weather and the fact
that some outdoor activities alternate between periods of extreme exertion and
total rest, requiring a proper balance between ventilation and insulation. Each
year, the Company enhances its outerwear lines by adding new products and design
innovations. Overall, the Company has introduced 65 new outerwear products in
1996, including two entirely new collections, "Search and Rescue-TM-" and
"Remote Terrain Gear." Among the exclusive features being introduced this year
are ergonomic swivel hoods, ten-piece articulated sleeves and multi-position
double slider underarm zippers. The Company now offers four principal lines of
outerwear and a line of Technical Apparel Accessories.

EXPEDITION SYSTEM-Registered Trademark- is an advanced, integrated cold
weather clothing system in which several pieces (including full body suits,
pants, jackets, vests, anoraks and accessories) work together in layers to
create warmth, protection and safety. Since 1994, the Company has significantly
expanded the Expedition System-Registered Trademark- product line by creating
new families of products around existing products, such as the Mountain Light
and Denali fleece families, adding new product segments, such as the Himalayan
and Kichatna Series, significantly upgrading and restyling existing products,
such as the Nuptse Series, and adding products specifically designed for women.

32
<PAGE>
WEATHER SYSTEMS is a collection of four distinct series of outerwear
designed to provide protection in wet and windy conditions, while maintaining
comfort throughout variations of season, temperature, moisture and wind, and
over a wide range of activities. For example, the Hydrenaline-TM- Series,
introduced in 1994, is a technically advanced line of shell outerwear based on a
proprietary microfiber fabric, Hydrenaline-TM-, that combines features of
breathability and water resistance and is ideal for hiking, running, mountain
biking, cross country skiing and other aerobic outdoor activities.

SEARCH AND RESCUE-TM- introduced a new concept to the outdoor industry. This
collection of one piece suits, shells and fleece is designed to support and
protect mountain search and rescue teams in extreme weather conditions. Although
intended for search and rescue experts, several pieces within the collection are
expected to appeal to consumers who desire its protective attributes for less
extreme outdoor activities.

REMOTE TERRAIN GEAR ("RTG") was created for backcountry snowboarding and
combines elements of the Company's Expedition System with unique snowboarding
features to create products such as pants that are cut in the seated
snowboarding position. Unlike most snowboarding clothing which caters to the
fashion tastes of snowboarders, the highly functional RTG is expected to appeal
to a performance-oriented snowboarding market.

TECHNICAL APPAREL ACCESSORIES includes a wide range of high-performance
thermal underwear, head wear, gloves and mittens which have been tested
extensively throughout the world in extreme conditions. This collection has been
expanded significantly in 1996 with the introduction of nine new products.

TEKWARE-TM-

In 1996, The North Face entered the broader casual apparel market with its
introduction of Tekware-TM-, an innovative line of high-performance outdoor
apparel made from a new generation of synthetic fabrics and developed in
collaboration with E.I. DuPont de Nemours & Co. ("DuPont") and other companies.
Tekware is offered in three lines, Climbing, Training and Trekking, each with
versions for men and women. Each line features a broad collection of pants,
shorts, shirts, pullovers, vests, tank tops and tights, each in several styles.
Tekware is designed for serious outdoor pursuits and is especially functional
for everyday use. Overall, the Company introduced 67 Tekware products for Spring
1996, currently offers 111 Tekware products for Fall 1996 and anticipates
offering 169 Tekware products for Spring 1997. Preseason orders for Tekware for
the 1997 Spring season as of October 28, 1996 have increased 120% over total
preseason orders for Tekware for the 1996 Spring season.

ADVANTAGES OF TEKWARE-TM- OVER COTTON CLOTHING

FEATURES TEKWARE COTTON
- ----------------------------------------- ------------- -----------
<S> <C> <C>
Quick Drying............................. X
Abrasion Resistant....................... X
Shrink Resistant......................... X
Tear Resistant........................... X
Fade Resistant........................... X
Stain Resistant.......................... X
Mildew Resistant......................... X
</TABLE>

Tekware has garnered positive publicity from the press. Explaining why they
selected Tekware for their prestigious "Editors' Choice" award, the editors of
BACKPACKER magazine wrote in the April 1996 issue: "We're not big fans of cotton
clothes for backcountry duty. Once wet, cotton takes forever to dry and in the
process it sucks away precious body warmth. Hypothermia is a real concern when
you wear jeans or a cotton T-shirt in the wilderness, and that's why some wise
woodsperson coined the phrase, 'cotton kills.' Naturally, when The North Face
touted its new Tekware clothing line as '100% Not Cotton,'

33
<PAGE>
it grabbed our attention. During our field tests we found that when nasty
weather or hard hiking soaks you, these non-absorbent, synthetic shirts and
pants keep you warm while your body heat quickly dries the fabric. . . .These
sensible clothes are built for the backcountry but won't make you look or feel
like a trail bum when you hit town."

Tekware provides an effective complement to the Company's other product
offerings and will be prominently featured in the Summit Shops. The Company
believes Tekware will be very appealing to wholesale customers and will increase
the amount of selling space devoted to The North Face-Registered Trademark-
products. The Company believes Tekware's broad, year-round product line and
consistent new product introductions will help create sustained consumer
interest in The North Face-Registered Trademark- brand. In addition, unlike some
of the Company's other product categories, Tekware has the potential to become a
repeat or "replenishment" business as consumers purchase new sportswear to
complement or replenish their existing wardrobes. See "Risk Factors --
Introduction and Acceptance of Tekware-TM-."

EQUIPMENT

Equipment is critical to The North Face-Registered Trademark- image and
reputation and plays an extremely important role in its research and
development, field testing and marketing activities. The Company offers three
comprehensive lines of technical outdoor equipment: tents, sleeping bags and
backpacks. The Company has increased its equipment sales over the last two years
by introducing new products and refining existing products. The Company
introduced 65 new equipment products in 1996.

TENTS. The North Face is regarded as the premier supplier of expedition
tents built to withstand extreme weather conditions. The North Face currently
offers an extensive line of 23 tent models, designed to suit a wide variety of
weather conditions and applications. The North Face offers 12 expedition-quality
tents, including models such as the VE-25, long renowned as the world's finest
base camp tent, and the Mountain-24, rated by CLIMBING MAGAZINE in 1995 as the
best two-person expedition tent. The Company's best selling tents are its
three-season and recreational tents that also offer superior features and are
used by a wide range of consumers for backpacking and camping.

SLEEPING BAGS. The Company offers 27 models of sleeping bags for
mountaineering and backpacking that differ in insulations, shell fabrics and
linings. The Company offers 13 models in the goose down line and 14 models in
its synthetic insulated line of sleeping bags to provide comfort in temperatures
ranging from -40 F to 30 F. During the last two years, the Company introduced
several innovations in fabrics, insulation and construction of both its goose
down and synthetic insulated lines. For Fall 1996, the Company introduced
synthetic sleeping bags made from Polarguard 3D, a high-performance product
developed by Hoechst Corporation ("Hoechst"), in close collaboration with The
North Face.

BACKPACKS. The North Face offers a comprehensive line of backpacks grouped
into three categories: (i) large volume, internal frame packs for extended
backcountry trips; (ii) "tech packs" for sport specific activities and (iii) day
packs. The large volume, internal frame pack category consists of three
different lines based on differing load carrying efficiencies. These packs are
made in a range of torso lengths and in sizes to fit both men and women. The
"tech pack" line consists of 11 models of sport specific packs designed by The
North Face teams of climbers, explorers and extreme skiers for specific
activities, such as high altitude climbing, ice climbing, rock climbing,
backcountry skiing and snowboarding. During the last year, the Company has
introduced new lines of daypacks, lumbar packs and cargo bags providing an
opportunity for a wide audience of hikers, students and the general public to
own a The North Face-Registered Trademark- product at a more moderate price. In
1996, the Company introduced 33 new products in the categories of backpacks,
"tech packs," day packs, cargo bags and pack accessories.

SKIWEAR

The Company offers skiwear designed for extreme skiing in remote areas.
While the Company's skiwear is designed for extreme users, it has become
increasingly popular among recreational skiers. The North Face-Registered
Trademark- skiwear products include parkas, jackets, anoraks, ski pants, ski
suits, gloves and other

34
<PAGE>
accessories. The Company's six skiwear collections -- Heli, Steep
Tech-Registered Trademark-, Men's Extreme-Registered Trademark- Gear, Women's
Extreme-Registered Trademark- Gear, Men's Extreme-Registered Trademark- Light
and Women's Extreme-Registered Trademark- Light -- have been designed for
specific applications, including helicopter skiing and backcountry skiing. The
Company's skiwear offers highly technical features for optimal weather
protection, maximum freedom of movement and appropriate ventilation, including
the use of tough, abrasion-resistant fabrics, such as Kevlar, that are
strategically overlaid or inset for added protection in areas of excessive wear
and tear, such as shoulders and elbows. The Company's skiwear collections are
reviewed annually and are redesigned, as appropriate, to add innovative
features. In 1996, the Company introduced 56 new skiwear garment products and 15
new skiwear accessory products.

PRODUCT DESIGN AND DEVELOPMENT

The Company's goal is to offer the most technically advanced products in the
world that establish the industry standard in each of the Company's product
categories. To remain on the leading edge of product design and materials
technology, the Company continually evaluates trends, monitors the needs and
desires of its consumers and works with its materials suppliers to develop new
materials and products and enhance product designs. See "Risk Factors --
Dependence on New Products" and "-- Dependence on Key Suppliers of Materials."
The Company regularly reviews its product lines and actively seeks input from a
variety of sources. At the forefront of the product development effort is a
24-member product development team, which includes experts in textiles and
design engineering. This team, which is responsible for overseeing testing of
designs and introducing new outerwear, outdoor equipment, skiwear and Tekware,
is organized along major product lines, each with a product manager. The product
development team works with staff designers and also with outside contract
designers. The Company's teams of climbers, explorers and extreme skiers also
are important components of the Company's product design and development effort.

The product development cycle, from initial design to introduction, can take
from 12 to 18 months, with tents and backpacks requiring more time than other
products. A new product may be produced in several prototypes before being
submitted for testing. New designs are tested by the Company's teams of
climbers, explorers and extreme skiers and by in-house and independent
laboratories, as well as by The North Face personnel. The Company maintains a
materials testing laboratory with equipment to execute a variety of tests,
including water resistance, air permeability, tear strength and abrasion
resistance.

The Company's products are designed with materials that are essential to
their technical performance. Most of these materials are developed in
collaboration with major suppliers, such as W.L. Gore & Associates, Inc.,
DuPont, Hoechst, Burlington Industries, Inc. and Mitsui Textiles. The Company
generally does not have written agreements with these suppliers. The Company
works closely with these suppliers to develop high-performance materials that
result in lighter, stronger and more efficient products. With an innovative
material, the Company generally seeks an exclusivity period, usually one to two
years, after which the supplier is free to make the material generally
available. These suppliers frequently provide much of the funding for research
and development of the materials they are developing for the Company, and often
contribute to the costs of promoting products incorporating their material. See
"Risk Factors -- Dependence on Key Suppliers of Materials."

MARKETING AND PROMOTION

The Company's goal is to increase brand awareness by projecting a technical,
extreme and authentic image that appeals to professionals and serious outdoor
enthusiasts as well as to broader segments of the population. The Company
conveys an extreme and highly technical image by featuring world-class climbers,
explorers, skiers and snowboarders using the Company's products on high
altitude, polar or backcountry expeditions. The North Face's marketing materials
utilize language and images that, while directed to the extreme athlete, also
create an emotional connection with broader segments of the population.

35
<PAGE>
Management believes that The North Face has obtained a high level of brand
awareness and loyalty from the extreme users of its products. In order to
bolster the loyalty of these individuals and to further enhance its extreme
image, the Company is increasing its support of selected high altitude and polar
expeditions and its teams of climbers, explorers and skiers. The North
Face-Registered Trademark- products have been the brand choice of many of the
world's most challenging expeditions for nearly 30 years. A small sampling of
these expeditions includes the 1969 Arctic Institute of North America Altitude
Expedition; 1978 American Woman's Himalayan Expedition; 1987 International K-2
Expedition; 1989 Trans-Antarctica Expedition; 1992 American Gasherbrum IV
Expedition; 1994 Sagmartha Environmental Expedition; 1995 Ak-Su Kyrgyzstan
Expeditions; and 1996 Shipton Spire Expeditions.

Recognizing that the product choices of professional athletes influence
consumer preferences, The North Face employs and/or has entered into contracts
with several world-class professional climbers, including Conrad Anker, Kitty
Calhoun-Grissom, Greg Child, Lynn Hill, Alex Lowe and Jay Smith; extreme skiers
Scot Schmidt and Rob and Eric DesLauriers; and backcountry snowboarders Jim and
Bonnie Zellers. These athletes are essential to the Company's product design and
testing. In addition, they participate in promotional activities on behalf of
the Company, including demonstrations and appearances at exhibitions, trade
shows, retailer clinics and promotional events, and appear in photos to promote
the Company in catalogs, advertisements, posters and videos. The Company has
entered into relationships with the Professional Ski Instructors of America and
with the National Ski Patrol pursuant to which each of these organizations
endorses the Company's skiwear.

In 1994, The North Face began an ongoing comprehensive consumer advertising
campaign in outdoor and ski publications. The Company's advertisements appear in
magazines such as OUTSIDE, CLIMBING MAGAZINE, BACKPACKER and POWDER. The Company
also has received editorial coverage in a wide range of general interest
publications, including VOGUE, ELLE, ESQUIRE, GQ and THE NEW YORK TIMES. The
Company provides a wide assortment of point of purchase advertising support to
retailers, including catalogs, descriptive product hang tags and visual aids.
Many of these point of purchase marketing tools are integrated into the
Company's newly developed Summit Shops. The Company also promotes sales by
operating sizable product displays at three industry trade shows, two of which
are held in the Spring and one in the Fall of each year. In the year ended
December 31, 1995 and the nine months ended September 30, 1996, the Company
incurred expenditures for advertising and promotional activities which were
approximately 4% and 3%, respectively, of net sales.

SUMMIT SHOPS

The Company recently introduced Summit Shops, year-round concept shops
dedicated to The North Face-Registered Trademark- products located within
certain of its wholesale customers. Summit Shops are intended to increase sales
at existing specialty retailers by offering an attractively designed,
professionally merchandised, dedicated selling space featuring a broad array of
The North Face-Registered Trademark- products. The objectives of the Summit
Shops are to (i) have dedicated year-round selling floor space within selected
specialty retailers' stores; (ii) help the Company's specialty retailers compete
against mainstream apparel retailers; (iii) create a repeat customer base; (iv)
modernize the specialty retailers' approach to merchandising The North
Face-Registered Trademark- products; (v) provide the ability to closely monitor
retail sell-through at specialty retailers; and (vi) maintain a consistent
product assortment at the specialty retail level. The Company has designed the
appearance of each Summit Shop, including its fixtures, merchandise displays,
descriptive placards and graphic images, to increase consumer awareness of The
North Face-Registered Trademark- brand and image. The Company provides
merchandising support for the Summit Shops, while the specialty retailer
provides the customer service and sales personnel. The Company also provides
sales and product training for the specialty retailers' personnel who work in
the Summit Shops. Each Summit Shop is expected to follow certain operational
guidelines and maintain minimum inventory levels.

Beginning in March 1996, Eastern Mountain Sports, Inc. ("EMS"), a major
outdoor retail chain, opened The North Face-Registered Trademark- concept shops,
the precursors to Summit Shops, in 14 of its stores. These concept shops carry
only The North Face-Registered Trademark- products. Unlike Summit Shops,
however, the fixtures and merchandising displays of the concept shops were
designed primarily by EMS. Based on the initial

36
<PAGE>
performance of the 14 concept shops, EMS opened one additional concept shop and
two Summit Shops during the third quarter and has informed the Company that it
would like to open additional Summit Shops in 1997.

There were 25 Summit Shops opened in the Company's wholesale customer stores
during the third quarter of 1996, averaging approximately 550 square feet in
size. The North Face expects that an additional 100 Summit Shops will be opened
through the end of 1997. See "Risk Factors -- Ability to Achieve and Manage
Potential Future Growth" and "-- Implementation of Summit Shop Strategy."

SELECTIVE DISTRIBUTION

To preserve the integrity of The North Face-Registered Trademark- image and
reputation, the Company currently limits its distribution to retailers that
market products that are consistent with the Company's technical standards and
that provide a high level of customer service and technical expertise. The
Company currently sells its products to a select group of specialty
mountaineering, backpacking and skiing retailers, premium sporting goods
retailers and major outdoor specialty retail chains. The Company does not sell
its products to national general sporting goods chains or to discount stores.
The Company sells its products in the United States to approximately 840
wholesale customers, representing an estimated 1,200 store fronts. In Canada,
the Company sells its products to approximately 210 wholesale customers,
representing an estimated 250 store fronts, and in Europe, it sells to
approximately 450 wholesale customers, representing an estimated 750 store
fronts. Major customers of the Company include Recreational Equipment Inc.
("REI") and EMS. No single customer accounted for more than 6% of net sales in
1995 or the first nine months of 1996.

While The North Face will continue to add selected wholesale customers, it
anticipates focusing primarily on increasing sales at existing wholesale
customers. To accomplish this, the Company recently developed Summit Shops and
established a new core inventory replenishment program. The Company believes
that Summit Shops will increase sales by increasing selling space devoted to,
and improving the merchandising of, The North Face-Registered Trademark-
products. See "Risk Factors -- Implementation of Summit Shop Strategy." The
Company believes the new core inventory replenishment program, which inventories
certain popular core products for quick reorder delivery, will enable it to
provide consistent product flow to both the Summit Shops and its other wholesale
customers. The North Face expects the new core inventory replenishment program
to increase the sales of its strongest selling items by increasing the Company's
ability to meet strong reorder demand.

The Company's products are sold in the United States, Canada and Europe to
wholesale customers by independent sales representatives. Sales representatives
conduct in-store clinics to educate sales personnel on the technical qualities
and uses of the Company's products, provide customer support, review each retail
account on a periodic basis and assist the Company in forecasting levels of
product needs. Sales representatives in the United States, Canada and Europe are
paid on a commission basis. Sales representatives in the United States sell The
North Face-Registered Trademark- products exclusively.

The Company maintains a specialty retailer and customer service department
to handle orders and consumer inquiries, as well as a warranty department to
handle the repair or replacement of defective or damaged merchandise. All of the
Company's products (other than those sold through the Company's outlet stores)
are covered by a lifetime warranty. Defective or damaged products returned to
the Company generally are replaced or repaired within 10 to 14 days of receipt.
Warranty expenses in 1995 and the first nine months of 1996 were approximately
0.8% of net sales. Although the Company does not expect warranty expenses to
increase as a percentage of net sales, there can be no assurance that such
expenses will not increase significantly in the future as a percentage of net
sales. See "Risk Factors -- Product Liability Risk; Warranty Exposure."

In June 1995, the Company opened a new 146,500 square foot distribution
facility in San Leandro, California. This facility, which also houses the
Company's executive and administrative headquarters, handles a majority of the
U.S. distribution of the Company's products, with the Company's secondary
distribution center in Richmond, California handling the excess during peak
periods. The Company's

37
<PAGE>
distribution centers are highly automated. The majority of the Company's
products are shipped by UPS and common carriers.

RETAIL OPERATIONS

RETAIL STORES. The Company's retail operations are an important component
of its marketing and product development strategies and provide a distinctive
environment in which to merchandise and sell the complete The North
Face-Registered Trademark- product line. Located primarily in high-end retail
shopping districts and regional shopping malls, these stores carry the full
range of The North Face-Registered Trademark- outerwear, equipment, skiwear and
Tekware as well as complementary products such as footwear and accessories from
other manufacturers. As a result of the Company's ability to control the visual
presentation and product assortment in its retail stores, the stores help build
brand awareness and introduce consumers to the full range of The North
Face-Registered Trademark- products. These stores also provide a means for the
Company to test the appeal of new products and merchandising techniques. By
working closely with store personnel, many of whom are outdoor enthusiasts, the
Company also obtains customer feedback that influences product design and
development.

The following table shows the approximate retail selling space at each of
the Company's nine retail stores:

<TABLE>
<CAPTION>
APPROXIMATE
SELLING YEAR
LOCATION SQUARE FOOTAGE OPENED
- --------------------------------------- --------------- ---------
<S> <C> <C>
Denver, CO............................. 8,500 1973
Boulder, CO............................ 3,400 1982
Seattle, WA............................ 4,600 1985
Oakbrook, IL........................... 3,000 1991
San Francisco, CA...................... 8,100 1991
Schaumberg, IL......................... 3,400 1991
Costa Mesa, CA......................... 5,500 1993(1)
Palo Alto, CA.......................... 7,800 1994(2)
Chicago, IL............................ 12,000 1995
</TABLE>

- ------------------

(1) Replaced a store in a nearby location initially opened in 1986.

(2) Replaced a store in a nearby location initially opened in 1979.

Although the Company considers its retail stores to be an important aspect
of its business strategy, the Company currently has no plans to open additional
retail stores, particularly given its focus on the introduction of additional
Summit Shops in 1996 and 1997. The Company believes that Summit Shops will
provide many of the same benefits as its Company-operated retail stores and that
the substantially reduced operational and financial commitments associated with
Summit Shops will result in a higher return on investment.

OUTLET STORES. The Company also operates three outlet stores, located in
Berkeley and San Francisco, California and Freeport, Maine. The outlets serve
primarily as an effective means to liquidate discontinued merchandise.

INTERNATIONAL OPERATIONS

International sales accounted for approximately 21% of the Company's net
sales in 1995 and 23% for the first nine months of 1996. The Company recently
implemented an integrated world-wide approach to product development, sourcing
and marketing in order to reduce costs, ensure consistent worldwide operations
and create a unified global brand. By offering the same product lines and
promoting the same extreme image in catalogs, advertising and point of purchase
materials, the Company has positioned The North Face-Registered Trademark- brand
in Europe consistently with the brand image in the United States and Canada.
Outside the United States, The North Face products are sold to wholesale
customers in Europe and Canada

38
<PAGE>
through the Company's wholly-owned subsidiaries and by a licensee in Hong Kong
and Macao. In Japan and Korea, substantially all of the Company's trademarks are
owned by Kabushiki Kaisha Goldwin ("Goldwin").

EUROPE. The North Face believes that it is currently well positioned in
Europe to take advantage of the same industry trends that are occurring in the
United States. Although the Company has operated in Europe for more than 12
years and believes it is recognized as a leader in the design, marketing and
distribution of highly technical outdoor apparel and equipment, only recently
has it begun to devote additional resources in Europe to increase sales. The
Company's European operations are headquartered in Port Glasgow, Scotland, where
it maintains a small factory and distribution center. The Company distributes
its products directly to approximately 450 wholesale customers representing an
estimated 750 store fronts throughout Europe. Its primary markets are the United
Kingdom, Germany, Italy, France, Spain, Sweden, Denmark and The Netherlands.
Independent sales agents reporting to the Company's sales director are
responsible for sales in each country.

CANADA. The Company's Canadian operations are headquartered in Toronto and
include a distribution center and a customer and warranty service center. Since
early 1995, the Company has sold its products in Canada through independent
sales representatives to approximately 210 wholesale customers representing an
estimated 250 store fronts in Canada, primarily in British Columbia, Ontario and
Quebec. Prior to 1995, the Company's products were sold in Canada through a
licensee. During 1995, The North Face undertook the following initiatives in
Canada: (i) established a sales, sales support, finance and distribution
facility in Toronto; (ii) hired a general manager to head the Canadian
operations; (iii) significantly expanded the available product categories; and
(iv) integrated the marketing and sourcing efforts with those of the U.S.
operations. The Company believes that additional growth opportunities exist in
the Canadian market.

ASIA. In Japan and Korea, substantially all of the Company's trademarks are
owned by Goldwin, a leading manufacturer and distributor of high-end sports and
outdoor apparel and equipment. The North Face-Registered Trademark- is the
leading high-performance outdoor brand in Japan. The North Face and Goldwin work
closely together in the areas of product design, sourcing and brand imaging. The
Company believes that Goldwin shares the Company's strategy of building a
unified global brand. The Company benefits from this relationship by selling
products made in the United States to Goldwin and by charging an administration
fee for orders which Goldwin adds to the Company's production in China and
Southeast Asia. In Hong Kong and Macao, the Company's products are sold through
a licensee, Mitsui & Co., Ltd. ("Mitsui"). Management plans to capitalize on the
Company's growing worldwide strength by exploring sales opportunities in other
Asian and Pacific Rim countries.

SOURCING AND MANUFACTURING

The Company sources virtually all of its products through approximately 50
unaffiliated manufacturers in North America and Asia, including Hong Kong,
China, Taiwan, Korea, Indonesia, Thailand and the Philippines. The Company's
European subsidiary operates a small manufacturing factory in Port Glasgow,
Scotland which accounts for a minor portion of the Company's total production.
The Company has implemented a global sourcing strategy that will enable it to
achieve greater economies of scale, improve gross margins and maintain uniform
quality standards for its products. The Company believes that it enjoys good
relationships with its suppliers and manufacturers and has the ability to secure
the necessary capacity to meet increased demand for its products. See "Risk
Factors--Reliance on Unaffiliated Manufacturers."

To ensure that products manufactured by others are consistent with its
standards, the Company manages all key aspects of the production process,
including establishing product specifications, selecting the materials to be
used to produce its products and the suppliers of such materials, and
negotiating the prices for such materials. The Company maintains a staff of
quality control specialists which conducts on-site inspections throughout the
production process, including at the mills before the fabrics are shipped, at
the factories as the products are made and, finally, before the finished
products are shipped.

39
<PAGE>
The Company currently is engaged primarily in a two season, wholesale
business, Spring (January to June) and Fall (July to December). Wholesale
customers place preseason orders from two to five months prior to the beginning
of the season for deliveries throughout the season. Reorders are taken
throughout the season and are based on availability. With the introduction of
the Company's new Tekware line and Summit Shops, the Company anticipates that it
increasingly will be supplying its products on a year-round basis. The Company
has recently introduced a core inventory replenishment program, under which it
maintains stocks of key products. The Company has established a plan to link
production flow with its suppliers so that key raw material vendors and contract
manufacturers are able to respond quickly to the Company's production needs.

The Company's Merchandise Forecasting and Planning Department analyzes
information which it receives from the Company's various sales arms and develops
forecasts for the Company's products. These forecasts are continually updated to
reflect advance orders and reorders and are turned into production quantities.
The Company's Product Acquisition Department, in turn, issues purchase orders to
the Company's unaffiliated manufacturers. Unaffiliated manufacturers purchase
the materials specified by the Company and manufacture and ship the products to
the Company. The Company's unaffiliated manufacturers sell finished products to
the Company on an FOB basis and are at risk for the quality and timely delivery
of the products. Approximately 35 to 40% of the Company's total production
requirements are financed with letters of credit; the balance is purchased under
open terms ranging from 14 to 60 days.

MANAGEMENT INFORMATION SYSTEMS

The Company believes that a high level of computerization is essential to
maintain and improve its competitive position. The Company's management
information and electronic data processing systems consist of a full range of
retail, financial, distribution and merchandizing systems. The Company currently
anticipates spending a total of approximately $2.0 to $3.0 million through the
end of 1997 to upgrade its management information systems, with particular
emphasis in sourcing, core inventory replacement and forecasting, and believes
that once in place, the upgraded systems, along with routine upgrades, will be
sufficient to accommodate the Company's anticipated growth in sales and planned
expansion for the foreseeable future. However, there can be no assurance that
any upgrades of its management information systems will be completed in a timely
manner, that any such upgrades will be adequate to meet the needs of the Company
or that these upgrades will not strain the Company's financial resources. See
"Risk Factors -- Ability to Achieve and Manage Potential Future Growth."

COMPETITION

The markets for the Company's products are highly competitive, and the
recent growth in these markets has encouraged the entry of many new competitors
as well as increased competition from established companies. Although the
Company believes that it does not compete directly with any single company with
respect to its entire range of products, within each product category the
Company has significant competitors. In addition, the Company has recently begun
experiencing increased competition from major brand name apparel companies who
are attempting to duplicate the Company's styles, particularly in the area of
functional sportswear. These competitors are larger and have significantly
greater financial, marketing and other resources than the Company. While the
Company believes that it has been able to compete successfully because of its
brand image and recognition, the broad range and quality of its products, and
its selective distribution and customer service policies, including the lifetime
warranty that its products carry, there can be no assurance that the Company
will be able to maintain or increase its market share in the future. The failure
of the Company to compete successfully would materially and adversely affect the
Company's business and results of operations. See "Risk Factors -- Competition."

TRADEMARKS AND LICENSING

The Company considers its trademarks to be among its most valuable assets
and has numerous trademark registrations in the United States, Europe and other
foreign countries. Among the Company's

40
<PAGE>
trademarks are The North Face-Registered Trademark-, "N" Design logo-Registered
Trademark-, Extreme-Registered Trademark-, Tekware-TM-, Steep Tech-Registered
Trademark-, Quick Pitch-TM-, Hydrenaline-TM-, Search and Rescue-TM- and
VaporWick-TM-. Because of the popularity of many of the Company's products and
their strong brand identity and distinctive design, The North Face-Registered
Trademark- brand in recent years has frequently been subject to unauthorized
copying and mislabeling of imitation goods. The Company maintains an aggressive
program of trademark enforcement and cooperation with domestic and foreign
customs officials and other authorities, and will continue to vigorously defend
its trademarks against infringement. See "Risk Factors -- Dependence on
Trademarks."

Currently, the Company has licensed its trademarks to Mitsui which markets
Company-designed products under The North Face-Registered Trademark- name in
Hong Kong and Macao.

In June 1994, Goldwin purchased from the Company substantially all of the
trademarks and trademark applications owned by the Company in Japan and Korea
and obtained the exclusive right to sell and distribute products under the
Company's trademarks in Japan and Korea. At the same time, the Company entered
into a marketing arrangement with Goldwin that ensures that brand, product image
and distribution strategies are synchronized. The Company benefits from this
relationship by selling products made in the U.S. to Goldwin and by charging an
administrative fee for orders which Goldwin adds to the Company's production in
China and Southeast Asia.

EMPLOYEES

As of September 30, 1996, the Company had 518 employees, of which 363 were
employed in the United States, 143 in Scotland and 12 in Canada. None of these
employees is currently covered by collective bargaining agreements. The Company
believes that its relations with its employees are good.

PROPERTIES

The principal executive and administrative offices of the Company are
located at 2013 Farallon Drive, San Leandro, California. The Company expects
that it will need to obtain additional space for its executive and
administrative offices and distribution facilities within the next three to six
months. The Company anticipates that it will be able to obtain such space as
needed on commercially reasonable terms. The general location, use and
approximate size of the Company's principal properties, all of which, other than
the facility in Scotland, are leased, are set forth below:

<TABLE>
<CAPTION>
APPROXIMATE GROSS
LOCATION USE SQUARE FEET
- -------------------------- ------------------------------------------------ -------------------
<S> <C> <C>
San Leandro, CA Executive and administrative offices and 146,500
distribution center
Richmond, CA Distribution center 106,000
San Francisco, CA Retail store 12,300
Palo Alto, CA Retail store 10,700
Costa Mesa, CA Retail store 7,100
Seattle, WA Retail store 6,000
Denver, CO Retail store 17,000
Boulder, CO Retail store 4,300
Chicago, IL Retail store 15,200
Oakbrook, IL Retail store 4,000
Schaumberg, IL Retail store 5,000
Berkeley, CA Outlet 14,200
San Francisco, CA Outlet 10,000
Freeport, ME Outlet 10,000
Port Glasgow, Scotland European headquarters, distribution center and 77,200
manufacturing facility
Brampton, Ontario Canadian headquarters and distribution center 22,200
</TABLE>

41
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information regarding the executive
officers, directors and certain key employees of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
Marsden S. Cason........................ 53 Chief Executive Officer and Director
William N. Simon........................ 49 President and Director
Roxanna Prahser......................... 38 Chief Financial Officer
Roger Kase.............................. 49 Vice President of Product Development
Carlo Armenise.......................... 47 Vice President of Retail
Maria DiGrande.......................... 34 Vice President of Merchandising
Jack A. Boys............................ 38 Vice President of Marketing
Tucker Hacking.......................... 41 Vice President of Product Acquisitions
Ray E. Newton, III (1)(2)............... 32 Chairman and Director
Peter M. Castleman (2).................. 40 Director
James Fifield........................... 54 Director
Michael Doyle (1)....................... 53 Director

OFFICERS AND KEY EMPLOYEES
Paul Tabet.............................. 33 Vice President of Information Systems
Conrad Anker............................ 33 Director of Alpine and Environmental Programs
Rick Fowler............................. 47 Director of Quality Assurance
George Docherty......................... 63 Managing Director of The North Face (Europe), Limited
Jean Pascal Papin....................... 46 Sales Director of The North Face (Europe), Limited
Conrad Tappert.......................... 32 General Manager of The North Face (Canada), Inc.
</TABLE>

- ------------------

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

The Company's Restated Certificate of Incorporation was amended and restated
in connection with the closing of the initial public offering to provide, among
other things, that the Board of Directors was divided into three classes, each
of whose members serve for a staggered three-year term. Commencing with the 1997
Annual Meeting of Stockholders, one class of directors will be elected each year
for a three-year term. Messrs. Castleman and Doyle are members of Class I, the
term of which expires at the 1997 Annual Meeting of Stockholders, Messrs. Simon
and Fifield are members of Class II, the term of which expires at the 1998
Annual Meeting of Stockholders and Messrs. Cason and Newton are members of Class
III, the term of which expires at the 1999 Annual Meeting of Stockholders.

Certain additional information concerning the above persons is set forth
below.

MARSDEN S. CASON, CHIEF EXECUTIVE OFFICER AND DIRECTOR. Mr. Cason has been
Chief Executive Officer of the Company and a director since June 1994. Mr. Cason
joined the Company's predecessor in January 1993 as President and director and
served as a director and executive officer of several other Odyssey affiliates.
See "The Company -- Background and History." Prior to joining the Company's
predecessor, from May 1991 through January 1993, Mr. Cason was the Chief
Executive Officer of Carol Management Company and Doral Resort Hotels, an owner
and manager of condominiums, hotels and conference centers. Prior to May 1991,
Mr. Cason was involved in various business ventures as a chief executive
officer.

WILLIAM N. SIMON, PRESIDENT AND DIRECTOR. Mr. Simon has been President of
the Company since December 1995 and a director of the Company since June 1995.
From May 1988 through June 1994, Mr. Simon served as the Chairman of the Board
of the Company's predecessor and was Vice Chairman of the Company from June 1994
to December 1995. From November 1978 through June 1994, Mr. Simon

42
<PAGE>
was Chairman and Chief Executive Officer of Odyssey, a designer and manufacturer
of high-end sports and outdoor apparel, and an executive officer and director of
several other Odyssey affiliates. Mr.Simon has been involved in the design and
manufacture of mountaineering and outdoor clothing and equipment for over 26
years. In September 1994, Mr. Simon filed a petition under Chapter 7 of the U.S.
Bankruptcy Code and in January 1995 was granted a discharge by the bankruptcy
court and the proceeding was dismissed. Mr. Simon personally had guaranteed
substantially all of the indebtedness of Odyssey and its affiliated companies
and his bankruptcy filing was made in order to terminate his personal liability
for these corporate obligations.

ROXANNA PRAHSER, CHIEF FINANCIAL OFFICER. Ms. Prahser has been Chief
Financial Officer of the Company since January 1996. Ms. Prahser served as the
Vice President of Finance for the Company from May 1995 through January 1996 and
as Director of Finance for the Company and its predecessor from March 1993
through May 1995. Prior to joining the Company's predecessor, Ms. Prahser spent
12 years at Arthur Andersen & Co., where she was an audit manager.

ROGER KASE, VICE PRESIDENT OF PRODUCT DEVELOPMENT. Mr. Kase joined the
Company as Vice President of Product Development in May 1995. From September
1993 through May 1995, he was Chief Operating Officer for Cary Children's
Clothing and from April 1991 through July 1993, Vice President -- Apparel
Division for Sam & Libby Inc., a manufacturer of footwear. Mr. Kase has over 20
years of experience in the apparel industry in both design and operations,
including 10 years as an executive with Esprit de Corp., a manufacturer of
women's clothing.

CARLO ARMENISE, VICE PRESIDENT OF RETAIL. Mr. Armenise joined the Company
as Vice President of Retail in April 1996. Prior to joining the Company, Mr.
Armenise was with Coach Leatherware Inc., a manufacturer, wholesaler and
retailer of leather goods and apparel, from September 1992 through April 1996.
His last position with Coach was as Director of Full Price Stores from June 1994
through April 1996. Prior to that, Mr. Armenise was with Gucci America Inc. from
June 1977 through September 1992 and served as its West Coast Assistant Regional
Manager from January 1990 through September 1992. Mr. Armenise has 19 years of
experience in the specialty retail leather goods accessories and apparel
industries.

MARIA DIGRANDE, VICE PRESIDENT OF MERCHANDISING. Ms. DiGrande joined the
Company as Vice President of Merchandising in January 1996. From January 1995
through January 1996, Ms. DiGrande operated her own retail market consulting
company, MarketQuest, and, from July 1992 through December 1994, she was
President of SIMINT Fashion Corp., a distributor of leading branded Italian
apparel. From June 1989 through July 1992, she was Director of Sales & Marketing
of SIMINT (U.S.A.) Inc. which owned and operated the Armani Exchange Stores. Ms.
DiGrande has over 14 years of experience in the apparel industries, including as
a sales and marketing executive for both Donna Karan International, Inc. and
Calvin Klein Ltd., manufacturers of apparel and accessories.

JACK A. BOYS, VICE PRESIDENT OF MARKETING. Mr. Boys joined the Company as
Vice President of Marketing in March 1996. From December 1993 to March 1996, Mr.
Boys was Vice President of Marketing for Avia Group International, Inc., a
manufacturer of athletic footwear, and from August 1992 to December 1993 he was
Vice President of Marketing for Le Coq Sportif International, an athletic
footwear and apparel manufacturer. Prior to August 1992, Mr. Boys spent over 10
years with Converse Inc., an athletic footwear company, where he was a senior
category manager.

TUCKER HACKING, VICE PRESIDENT OF PRODUCT ACQUISITIONS. Mr. Hacking has
been Vice President of Product Acquisitions for the Company since April 1996 and
Director of Product Acquisitions for the Company and its predecessor from April
1993 through April 1996. From January 1990 to April 1993, Mr. Hacking owned and
operated TTH Enterprises, Inc., a company specializing in the sports apparel
industry. From 1986 to 1988, Mr. Hacking served as the General Manager of
operations and sourcing for Adidas America, Inc., an athletic footwear and
apparel company. Mr. Hacking has 18 years of experience in the apparel industry.

43
<PAGE>
RAY E. NEWTON, III, CHAIRMAN AND DIRECTOR. Mr. Newton has been a director
of the Company since June 1994 and has served as the Chairman of the Company's
Board of Directors since January 1996. Mr. Newton joined Whitney in 1989 and has
been a General Partner since May 1992. Prior to joining Whitney, he was employed
by Morgan Stanley & Co. Incorporated, an investment banking firm, where he was
in the Merchant Banking Group. Mr. Newton is also a director of Brothers Gourmet
Coffees, Inc.

PETER M. CASTLEMAN, DIRECTOR. Mr. Castleman has been a director of the
Company since June 1994. Mr. Castleman has been a General Partner of J.H.
Whitney & Co. since January 1989 and has served as the Managing Partner of J.H.
Whitney & Co. since December 1992. He is also a director of Advance ParadigM,
Inc., UtiliMed, Inc., Brothers Gourmet Coffees, Inc. and a number of private
companies.

JAMES FIFIELD, DIRECTOR. Mr. Fifield has been a director of the Company
since September 1996. Mr. Fifield is the President and Chief Executive Officer
of EMI Music, a wholly-owned subsidiary of the EMI Group. Mr. Fifield joined EMI
Music in May 1988 as President and Chief Operating Officer and was appointed
President and Chief Executive Officer in April 1989. Before joining EMI Music,
Mr. Fifield served for three years as the President and Chief Executive Officer
of CBS/Fox Video and held a number of executive positions with General Mills
during a career spanning 20 years.

MICHAEL DOYLE, DIRECTOR. Mr. Doyle has been a director of the Company since
September 1996. Mr. Doyle has been the President of Michael Doyle and Associates
since September 1987. He has been an advisor to boards of directors and senior
management in the areas of strategic planning, visioning and organizational
renewal and transformation for over 25 years. Mr. Doyle's clients have included
Arthur Andersen, Builders Square, Dupont, General Electric, Hambrecht & Quist,
Lucasfilm and Motorola.

PAUL TABET, VICE PRESIDENT OF INFORMATION SYSTEMS. Mr. Tabet has been Vice
President of Information Systems for the Company since September 1996. Mr. Tabet
was previously with Clarion Corporation of America as MIS director from April
1995 to August 1996 and with Vans, Inc. as MIS director from November 1992 to
February 1995. From January 1988 through November 1992, Mr. Tabet was a senior
systems consultant with Deloitte & Touche and KPMG Peat Marwick. Mr. Tabet has
spent the last 8 years working with companies converting from legacy systems to
package system solutions.

CONRAD ANKER, DIRECTOR OF ALPINE AND ENVIRONMENTAL PROGRAMS. Mr. Anker has
been the Director of Alpine and Environmental Programs of the Company since
November 1995. Since 1987, Mr. Anker has been a member of the Company's climbing
team and served as a technical consultant to The North Face. Mr. Anker is one of
the most respected rock climbers and mountaineers in the United States. He has
made first ascents of peaks in Baffin Island, Canada, Argentina and the
Himalayas, as well as numerous "big wall" routes in Yosemite Valley.

RICK FOWLER, DIRECTOR OF QUALITY ASSURANCE. Mr. Fowler has been the
Director of Quality Assurance of the Company since March 1996. Prior to joining
the Company, Mr. Fowler spent over 23 years with Eddie Bauer Inc., where he
directed the first employee training program in 1979, started the quality
assurance program in 1981 and was the Director of Quality Assurance from 1986 to
March 1996.

GEORGE DOCHERTY, MANAGING DIRECTOR OF THE NORTH FACE (EUROPE), LIMITED. Mr.
Docherty has been the Managing Director of the Company's European operations
since September 1993. From December 1989 to August 1993, Mr. Docherty was Deputy
Managing Director of the Company's European operations and from April 1983 to
November 1989, was the Director of Manufacturing of the Company's predecessor.

JEAN PASCAL PAPIN, SALES DIRECTOR OF THE NORTH FACE (EUROPE), LIMITED. Mr.
Papin has been the Sales Director of the Company's European operations since
April 1995. From January 1989 to March 1995, Mr. Papin was a Managing Director
with Time Sport International, a manufacturer of bicycle equipment, and, from
May 1984 to December 1988, he was Director of the Golf and Racket Division of
Browning International, a manufacturer and distributor of sporting goods.

44
<PAGE>
CONRAD TAPPERT, GENERAL MANAGER OF THE NORTH FACE (CANADA), INC. Mr.
Tappert has been General Manager of the Company's Canadian subsidiary since
March 1995. Mr. Tappert was Vice President of Benetton Sportsystem Canada Inc.
from April 1994 through February 1995 and was Director of Sales and Marketing
from November 1990 to March 1994. Mr. Tappert has 11 years of experience in the
sporting goods industry.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to the compensation
of the Company's Chief Executive Officer and each of the five other most highly
compensated executive officers including the Company's former President and the
Company's former Vice President of Management Information Services and
Distribution (collectively, the "Named Executive Officers") for the fiscal year
ended December 31, 1995:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
--------------
NUMBER OF
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION
- ----------------------------------- ----------- --------- ------------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
Marsden S. Cason
Chief Executive Officer.......... $ 360,000 -- $ 1,200 -- --
William N. Simon
President........................ 360,000 -- 1,200 701,707 $ 20,500(2)
Roxanna Prahser
Chief Financial Officer.......... 133,500 $ 17,250 600 -- --
Roger Kase
Vice President of Product
Development...................... 91,400 -- 400 16,650 --
William A. McFarlane
Former President................. 360,000 -- 1,200 -- --
Barton L. Jackson
Former Vice President of
Management Information Systems &
Distribution..................... 153,500 20,250 800 -- --
</TABLE>

- ------------------

(1) Life insurance premiums.

(2) Payment for unused vacation time.

45
<PAGE>
OPTION GRANTS. The following table provides information with respect to the
stock option grants made to each Named Executive Officer during 1995:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
---------------------------------------------------------
NUMBER OF OF ASSUMED ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM(2)
OPTIONS TO EMPLOYEES IN PRICE PER EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR SHARE(1) DATE 5% 10%
- ----------------------------- -------------- --------------- ----------- ----------- ----------- -------------

<S> <C> <C> <C> <C> <C> <C>
Marsden S. Cason............. -- -- -- -- -- --

William N. Simon............. 701,707(3) 87.8% $ 1.13 6/7/2004 $ 437,163 $ 1,076,768

Roxanna Prahser.............. -- -- -- -- -- --

Roger Kase................... 16,650(4) 2.1 1.13 6/7/2004 10,373 25,549

William A. McFarlane......... -- -- -- -- -- --

Barton L. Jackson............ -- -- -- -- -- --
</TABLE>

- ------------------

(1) All options were granted at the fair market value of the Common Stock on the
date of grant, as determined by an independent valuation.

(2) The potential realizable value through the expiration date of the options
has been determined on the basis of the fair market value of the shares at
the time the options were granted, compounded annually over the term of the
option, net of exercise price. These values have been determined based upon
assumed rates of appreciation and are not intended to forecast the possible
future appreciation, if any, of the price or value of the Company's Common
Stock.

(3) All options are fully vested and immediately exercisable as of the date of
this Prospectus.

(4) Options for 4,162 shares are fully vested and immediately exercisable as of
the date of this Prospectus. The remaining options for 12,488 shares become
exercisable on June 7, 2004 unless certain targets are met as determined by
the Company's Board of Directors, in which case the options vest one-third
each on each of June 7, 1997, 1998 and 1999.

OPTION EXERCISES AND VALUE. None of the Named Executive Officers exercised
options during fiscal 1995. The following table summarizes the number of
securities underlying unexercised options and the value of such options on an
aggregated basis held by the Named Executive Officers at December 31, 1995:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES(1)

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE- MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(2)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------ ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Marsden S. Cason...................................... 25,643 76,928 $ 80,904 $ 242,708

William N. Simon...................................... 375,203 326,504 844,205 734,634

Roxanna Prahser....................................... 5,550 16,650 17,510 52,531

Roger Kase............................................ -- 16,650 -- 37,463

William A. McFarlane.................................. 12,821 38,464(3) 40,450 121,354

Barton L. Jackson..................................... 5,550 16,650 17,510 52,531
</TABLE>

- ------------------

(1) No options were exercised during the year ended December 31, 1995.

(2) Based upon a fair market value of $3.38 at December 31, 1995, as determined
by an independent valuation.

(3) Excludes 51,285 option shares forfeited by Mr. McFarlane effective July 1,
1996, due to his resignation from the Company.

46
<PAGE>
EMPLOYMENT AGREEMENTS

Ms. Prahser and Mr. Kase received letters from the Company that offered
employment and set forth compensation levels, eligibility for merit increases
and benefits, including eligibility to participate in the Company's stock
incentive plans. Each letter agreement specifies that employment with the
Company is voluntary and can be terminated at any time by either party.

OTHER AGREEMENTS

The Management Stock Purchase and Non-Competition Agreement, dated as of
June 7, 1994, among the Company and each of the stockholders party thereto, as
amended (the "Management Purchase Agreement"), provides for the purchase of
Common Stock by certain Named Executive Officers. The Management Purchase
Agreement also contains provisions requiring the individuals party thereto to
retain in confidence any confidential or proprietary information belonging to
the Company and restricts the ability of those individuals, while employed by
the Company and for a specified period thereafter, to own, manage or invest in,
or engage in certain other business relationships with, any competitor of the
Company. The Company retains the right to repurchase Common Stock sold pursuant
to the Management Purchase Agreement in the event of a breach of the
non-competition provisions of the agreement by the individual party thereto. Mr.
Cason holds 211,832 shares of Common Stock purchased pursuant to the Management
Purchase Agreement.

Mr. McFarlane resigned as a director and officer of the Company effective
December 19, 1995, but remained an employee of the Company with limited duties
through July 1, 1996. Mr. McFarlane advised the Company that he resigned to
pursue other interests. Pursuant to an agreement between Mr. McFarlane and the
Company, Mr. McFarlane is expected to receive $340,000 throughout 1996 as
consideration for his resignation and has received $20,000 as consideration for
his continued limited duties, including assistance with the transition of his
duties and with personnel, corporate legal and trademark matters. Mr. McFarlane
holds 283,882 shares of Common Stock purchased pursuant to the Management
Purchase Agreement.

STOCK INCENTIVE PLANS

1994 STOCK INCENTIVE PLAN. In 1994, the Company adopted the 1994 Stock
Incentive Plan (the "1994 Plan"), pursuant to which as of September 30, 1996 the
Named Executive Officers held nonqualified stock options ("NQSOs") to purchase
an aggregate of 757,477 shares of Common Stock with a weighted-average exercise
price of $0.98 per share. All NQSOs were granted at an exercise price that was,
at the time of grant, an amount equal to the fair market value of a share of
Common Stock, as determined by the Board of Directors. Mr. Cason holds 315,253
restricted shares of Common Stock under the 1994 Plan pursuant to the payment of
cash and delivery of a promissory note due June 7, 2004, bearing interest at a
rate of 9.0% per annum. As of September 30, 1996, $82,697 of principal and
interest was unpaid on the note. Options and restricted shares under the 1994
Plan become fully vested on June 7, 2004, with accelerated vesting over the four
years following the date of grant based upon specified performance goals, and in
the case of Mr. Cason, with accelerated vesting on the date of an initial public
offering with gross proceeds of at least $30 million. Mr. Cason's options and
restricted shares under the 1994 Plan vested and became exercisable as a result
of the initial public offering in July, 1996. The Company currently does not
anticipate making additional grants under the 1994 Plan.

Mr. McFarlane holds 183,898 shares of Common Stock under the 1994 Plan
pursuant to the payment of cash and delivery of a promissory note due June 7,
2004, bearing interest at a rate of 9.0% per annum. As of September 30, 1996,
$48,520 of principal and interest was unpaid on the note.

1995 AND 1996 STOCK INCENTIVE PLANS. The Company's 1995 Stock Incentive
Plan (the "1995 Plan") was adopted by the Company in April 1995 and the
Company's 1996 Stock Incentive Plan (the "1996 Plan") was adopted by the Company
in May 1996. The terms of the 1995 Plan and the 1996 Plan (together, the "Option
Plans") are substantially the same, except where noted below.

47
<PAGE>
A maximum of 240,870 and 683,950 shares of Common Stock (subject to
adjustment in the case of certain stock splits, stock dividends, and
reorganizations) have been reserved for issuance pursuant to options granted
under the 1995 Plan and the 1996 Plan, respectively. NQSOs granted to Mr. Kase
and Ms. Prahser under the 1995 Plan become fully vested on June 7, 2004, with
accelerated vesting through May 2000 based upon specified performance goals and
remain exercisable through June 7, 2004.

Under the terms of the Option Plans, NQSOs may be granted to officers,
directors, other employees and consultants of the Company and, in the case of
the 1996 Plan, to officers, directors and other employees of any majority-owned
subsidiary. Under the 1996 Plan, options with respect to no more than 400,000
shares may be granted to any individual in any year and no options may be
granted to a person who, at the time of grant, owns shares possessing 10% or
more of the total combined voting power of all classes of stock of the Company
or its parent or subsidiary corporations. All of the Company's officers,
directors and other salaried employees (approximately 180 persons) are eligible
to receive options under the 1995 Plan and the 1996 Plan. The Company currently
does not anticipate making additional grants under the 1995 Plan.

Under the terms of the 1996 Plan, incentive stock options ("ISOs") within
the meaning of section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") also may be granted to employees of the Company and of any majority
owned subsidiary. To the extent that the aggregate fair value (as defined in the
1996 Plan) of Common Stock with respect to which ISOs granted under the 1996
Plan and all other option plans of the Company (determined as of the date of
grant) or its subsidiaries exercisable for the first time by an individual
during any calendar year exceeds $100,000, such options shall be treated as
NQSOs.

The Option Plans are administered by a committee of the Company's Board of
Directors (the "Compensation Committee") unless the Company's Board of Directors
determines to administer the Option Plans itself. The Compensation Committee
under the 1996 Plan is intended to satisfy the provisions of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended, and Code
section 162(m), in each case to the extent applicable. The Compensation
Committee has authority, subject to the terms of the Option Plans, to exercise
all powers granted to it under the Option Plans; to construe, interpret and
implement the Option Plans and any agreements executed pursuant thereto; to
prescribe, amend and rescind rules and regulations relating to the Option Plans;
to make all necessary or advisable administrative determinations; to correct any
defect, supply any omission and reconcile any inconsistency in the Option Plans;
and to amend the Option Plans to reflect changes in law.

Subject to the provisions of the Option Plans, the Compensation Committee
has the authority to determine the terms of options granted thereunder, provided
that the per share exercise price of an option shall be no less than 100% of the
fair market value of a share of Common Stock at the date of grant and no options
may be exercisable more than ten years following the date of grant. Under the
1996 Plan, at least 20% of the shares subject to each option granted thereunder
will become exercisable per year over the five years following the date of
grant, unless otherwise permitted by applicable law. The Compensation Committee
may, with the grantee's consent, cancel any award and issue a new award in
substitution therefor, provided that the substituted award satisfies all
applicable Option Plan requirements as of the date made. The Compensation
Committee may accelerate the exercisability of any option.

Common Stock purchased upon the exercise of an option must be paid for (i)
by cash or certified or official check, (ii) by delivery of certain previously
acquired shares of Common Stock with a fair market value (as of the exercise
date) equal to the option exercise price and/or (iii) by such other method as
may be determined by the Compensation Committee (including by delivery of the
optionee's promissory note or by delivery of an exercise notice along with
instructions to a broker to deliver to the Company, from proceeds of the sale of
Common Stock received on such exercise, the exercise price). Upon exercise of an
option, the Company may require a grantee to remit an amount sufficient to
satisfy applicable tax withholding requirements; with the Compensation
Committee's approval, the grantee may elect to satisfy such obligation by
directing the Company to withhold shares valued at the amount of the withholding
obligation from the number purchased.

48
<PAGE>
Options may be transferred by a grantee only by will or by the laws of
descent and distribution, and may be exercised during the grantee's lifetime
only by the grantee. Generally, unless an option agreement otherwise provides
options that are exercisable immediately prior to the termination of the
optionee's employment remain exercisable for three months following such
termination (one year in the case of termination on account of death or, in the
case of the 1996 Plan, disability), but in no event beyond the stated term of
such option. In addition, options granted under the Option Plans terminate in
full on dismissal for cause (as defined in the Option Plans).

The Company's Board of Directors may amend, suspend or discontinue the
Option Plans at any time except that no amendment may materially impair an
optionee's rights under any option, without the optionee's consent. In the case
of the 1996 Plan, unless an amendment is approved (at a meeting held within 12
months before or after the date of such amendment) by the holders of a majority
of the issued and outstanding shares of Common Stock entitled to vote, no such
amendment may (i) materially increase the maximum number of shares as to which
awards may be granted under the Option Plans (except for certain adjustments to
reflect stock dividends or other recapitalization), (ii) materially increase the
benefits accruing to participants, (iii) materially change the requirements as
to eligibility for participation in the Option Plans, (iv) provide for the grant
of options having an exercise price less than the fair market value of Common
Stock on the date of grant, (v) permit an award to be exercisable more than 10
years after grant or (vi) extend the term of the Option Plans beyond 10 years.

Since the adoption of the 1994 Plan, the 1995 Plan and the 1996 Plan,
options to purchase an aggregate of 973,448, 248,640 and 87,150 shares,
respectively, of Common Stock have been granted to the following participants:

<TABLE>
<CAPTION>
1994 PLAN 1995 PLAN 1996 PLAN
------------------------- ------------------------- --------------------------
NUMBER OF NUMBER OF NUMBER OF
OPTIONS EXERCISE OPTIONS EXERCISE OPTIONS EXERCISE
NAME/GROUP OF OPTIONEE(S) GRANTED PRICE(S) GRANTED PRICE(S) GRANTED PRICE(S)
- ----------------------------- ----------- ------------ ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Marsden S. Cason............. 102,571 $ 0.23 -- $ -- -- $ --

William N. Simon (1)......... 701,707 1.13 -- -- -- --

Roxanna Prahser.............. 22,200 0.23 5,550 9.60 -- --

Roger Kase................... -- -- 27,750 1.13-9.60 -- --

William A. McFarlane......... 102,571 0.23 -- -- -- --

Barton L. Jackson............ 22,200 0.23 -- -- -- --

All current executive
officers as a group......... 870,877 0.23-1.13 138,750 1.13-9.60 -- --

Each other person who has
received 5% of the options
reserved:

Conrad Tappert............. -- -- 16,650 1.13 -- --

All other employees as a
group....................... -- -- 93,240 1.13-9.60 87,150 9.60-25.63
</TABLE>

- --------------

(1) Stock options were granted to William N. Simon under the 1994 Plan on June
22, 1995.

Options granted under the 1996 Plan may be canceled or may be replaced by
substitute options in connection with a change in control, and shares acquired
on exercise of such options may be subject to certain transfer restrictions, as
described in option agreements with the Named Executive Officers.

Under applicable provisions of the Code, optionees do not recognize income,
and the Company is not entitled to a tax deduction, when an option is granted.

49
<PAGE>
An optionee who holds the stock received on exercise of an ISO for at least
two years from the date the option was granted and at least one year from the
date of purchase generally pays no tax until the stock is sold, at which time
any profit or loss realized is long-term capital gain or loss, as the case may
be; the Company gets no tax deduction with respect to the issuance or sale of
such shares. The spread at exercise of an ISO is effectively treated as a tax
preference item in the year of exercise for purposes of calculating an
optionee's alternative minimum tax.

An optionee who sells the stock received on exercise of an ISO within two
years after the option was granted or within one year of the date of purchase is
taxed on the profit up to the date of exercise (which is ordinary income) and
the Company is entitled to a corresponding tax deduction; the income and
deduction items are recognized by the grantee and the Company, respectively, in
the year the stock is sold. Appreciation or depreciation after the date of
exercise is taxable to the grantee as capital gain or loss, respectively, and is
not deductible for federal income tax purposes by the Company.

Generally, on exercise of an NQSO, the amount by which the fair market value
of the shares of the Common Stock on the date of exercise exceeds the purchase
price of such shares will be taxable to the optionee as ordinary income, and
will be deductible for tax purposes by the Company in the year in which the
optionee recognizes income. If, in any year after 1993, an affected
participant's total compensation (including compensation related to options)
from the Company and its affiliates exceeds $1 million, such compensation in
excess of $1 million may not be tax deductible by the Company under Code section
162(m). Affected participants are generally the Company's chief executive
officer and the four most highly compensated employees of the Company (other
than the chief executive officer) at the end of the Company's taxable year.
Compensation that is "performance-based" within the meaning of Code section
162(m) is excluded from the calculation of total compensation for this purpose.
It is expected that compensation realized upon the exercise of 1996 Plan options
will be "performance-based" and, therefore, that such compensation will be
deductible without regard to the limits of Code section 162(m).

EMPLOYEE STOCK PURCHASE PLAN

The 1996 Employee Stock Purchase Plan (the "Employee Plan"), adopted in May
1996, reserves a total of 150,000 shares of Common Stock for issuance. 4,252
shares have been issued under this plan as of October 28, 1996. The Employee
Plan, which is intended to qualify under section 423 of the Code, is
administered by the Compensation Committee.

Generally, Company employees are eligible to participate in the Employee
Plan if they have been employed by the Company for at least 90 days and are
currently working at least 20 hours per week. The Employee Plan permits eligible
employees to purchase Common Stock through payroll deductions, which may not
exceed 10% of the employee's compensation. The price at which stock is purchased
under the Employee Plan is equal to 85% of the fair market value of the Common
Stock on the first day of the applicable offering period or the last day of the
applicable offering period, whichever is lower. Unless terminated earlier, the
Employee Plan will terminate on the date on which eligible employees become
entitled to purchase a number of shares greater than the number of reserved
shares available for purchase. Subject to certain exceptions and limitations,
the Board of Directors has the authority to amend or terminate the Employee
Plan.

DIRECTORS' COMPENSATION

Each member of the Company's Board of Directors is reimbursed by the Company
for out-of-pocket expenses incurred in connection with attending Board meetings.
No member of the Company's Board of Directors currently receives any additional
cash compensation for such service; provided, however, during 1995 Whitney,
which has two nominees on the Company's Board of Directors, received a
management fee in the amount of $250,000. See "-- Compensation Committee
Interlocks and Insider Participation."

50
<PAGE>
1996 DIRECTORS' STOCK OPTION PLAN. The 1996 Directors' Stock Option Plan
(the "Directors' Plan") was adopted by the Board of Directors and stockholders
in May 1996 and June 1996, respectively. A total of 100,000 shares of Common
Stock has been reserved for issuance under the Directors' Plan. The Directors'
Plan provides for the grant of nonqualified stock options to purchase 25,000
shares to each non-employee director of the Company initially elected to the
Board after the effective date of the Directors' Plan. If the disinterested
administration requirement of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 ceases to be applicable to awards made under all
equity-based plans of the Company, no further grants will be made as described
in the preceding sentence and in lieu thereof awards may be made under the
Directors' Plan on a discretionary basis to non-employee directors of the
Company. Options to purchase 50,000 shares have been granted under the
Directors' Plan at an average exercise price of $25.63 as of October 28, 1996.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Two members of the Company's Board of Directors, Messrs. Newton and
Castleman, are general partners of Whitney.

On June 7, 1994, the Company (then known as TNF Holdings Company, Inc.)
which had been organized by Whitney, Marsden S. Cason and William A. McFarlane,
acquired substantially all of the assets and certain of the liabilities of the
Company's predecessor, then a subsidiary of the Parent, for a purchase price of
$62.1 million, pursuant to a Purchase and Sale Agreement, dated as of May 25,
1994, by and among Odyssey Holding Inc. and The North Face and TNF Holdings
Company, Inc., the terms and conditions of which were approved by the U.S.
Bankruptcy Court for the Northern District of California (the "Bankruptcy
Court"), which had jurisdiction over the Chapter 11 proceeding involving Odyssey
and its affiliated companies.

In September 1994, three of Odyssey's principal secured creditors (the
"Banks") commenced an action against Mr. Cason alleging, in substance, that he
had breached his fiduciary duties and violated Bankruptcy Court orders by
causing various fund transfers between certain Odyssey entities and the
Company's predecessor. The Banks also named Mr. McFarlane as a defendant in the
action, alleging, in substance, that he had breached his fiduciary duties and
violated Bankruptcy Court orders by accepting an improper severance payment from
Odyssey. Both Mr. Cason and Mr. McFarlane denied the material allegations of the
complaint. The action was settled without any admission of liability in August
1995; pursuant to such settlement the Company paid the Banks an aggregate of $1
million on behalf of the defendants and reimbursed the defendants for certain
costs of defense.

In connection with the Acquisition, the Company, Whitney and the Whitney
1990 Equity Fund, L.P. (the "Equity Fund"), an affiliate of Whitney, entered
into a Preferred Stock Purchase Agreement pursuant to which the Company issued
an aggregate of 1,920,000 shares of Preferred Stock (converted into an aggregate
of 3,406,590 shares of Common Stock) to Whitney and the Equity Fund in
consideration of $12,166,667. In connection with the sale of the Preferred
Stock, the Company paid Whitney a fee of $200,000. In connection with the
initial public offering, the holders of the Preferred Stock converted their
Preferred Stock, plus accrued dividends, in accordance with its terms into
shares of Common Stock effective July 8, 1996. The Company also agreed to pay
Whitney a management fee of $250,000 per year, plus reimbursement of reasonable
out-of-pocket travel expenses incurred in connection with attendance by Whitney
representatives on the Board of Directors at regular Board meetings, not to
exceed $50,000 per year (which fee terminated upon consummation of the initial
public offering). During 1995, the Company paid Whitney a total of $250,000 as a
management fee and $16,009 for reimbursable expenses.

Also in connection with the Acquisition, the Company and the Debt Fund, an
affiliate of Whitney, entered into a Subordinated Note and Common Stock Purchase
Agreement (the "Purchase Agreement") pursuant to which the Company issued to the
Debt Fund a Subordinated Promissory Note due June 7, 2001 bearing interest at
the rate of 10.101% per annum (the "Subordinated Note") in the aggregate
principal amount of $24,333,333 in return for a loan of $24,013,645 and
1,419,415 shares of Common

51
<PAGE>
Stock at a purchase price of $0.225 per share. In connection with the issuance
of the Subordinated Note, the Company paid Whitney a fee of $730,000. The
proceeds from the issuance of the Preferred Stock, Subordinated Note and Common
Stock were applied, together with borrowings under the Credit Facility, to fund
the Acquisition. The Purchase Agreement, as amended, contains certain covenants
that, among other things, require the Company to maintain a specified minimum
tangible net worth and fixed charge, interest coverage and leverage ratios,
limit capital expenditures and restrict the Company's ability to incur
additional indebtedness and pay cash dividends on its capital stock. The Company
was in compliance with these covenants as of September 30, 1996 and expects to
remain in compliance with such covenants.

Approximately $14.9 million of the Subordinated Note, together with accrued
interest, was repaid in July, 1996 with the proceeds of the initial public
offering, and the Subordinated Note was amended and restated to reflect such
repayment (the "Restated Note"). As so amended, the Restated Note provides that
the Company may, but is not required to, prepay the balance of the Restated Note
with any proceeds of any future underwritten public offering by the Company of
its capital stock. See "Use of Proceeds." Approximately $9.4 million of the
Subordinated Note, plus accrued interest, will be repaid with the proceeds of
this offering.

Through September 22, 1995, the Company was a party to a license agreement
with High Performance Sports, Ltd. ("HPS"), the Managing Director of which is
Lily Simon, the wife of William N. Simon, the President of the Company. Under
this agreement, HPS had exclusive licenses to use the Company's trade names,
trademarks and logos and to sell its products and accessories in Hong Kong,
Taiwan and Macao. Revenues to the Company under this agreement were
approximately $280,000 during 1995. The Company believes that the terms of the
license agreement with HPS were at least as favorable to the Company as could
have been obtained at the time from an unaffiliated third party. Effective
September 22, 1995, the Company entered into a new license agreement with Mitsui
& Co. covering Hong Kong and Macao.

CERTAIN TRANSACTIONS

The Company has issued Common Stock to certain of its executive officers and
directors. See "Management -- Other Agreements" and "-- Stock Incentive Plans."
In addition, the Company also has been a party to certain transactions involving
the Company's executive officers, directors and stockholders. See "Management --
Compensation Committee Interlocks and Insider Participation."

52
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of shares of Common Stock as of September 30, 1996, and as adjusted to
reflect the sale of Common Stock offered by the Company hereby, for (i) each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each of the Company's directors who
owns shares of Common Stock, (iii) each Named Executive Officer, (iv) each
Selling Stockholder and (v) all directors and executive officers as a group:

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING NUMBER OF AFTER OFFERING
NAME AND ADDRESS OF ------------------------- SHARES -------------------------
BENEFICIAL OWNER (1)(2) NUMBER PERCENT OFFERED NUMBER PERCENT
- --------------------------------------------------- ----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Whitney 1990 Equity Fund, L.P. (3)................. 3,349,119 31.2% 728,873 2,620,246 22.3%
Whitney Subordinated Debt Fund, L.P. (3)........... 1,419,415 13.2 308,909 1,110,506 9.5
J.H. Whitney & Co. (3)............................. 837,280 7.8 182,218 655,062 5.6
Marsden S. Cason (4)............................... 629,657 5.9 140,000 489,657 4.2
William N. Simon (5)............................... 632,707 5.9 140,000 492,707 4.2
William A. McFarlane (6)........................... 499,066 4.7 * 499,066 4.3
Roxanna Prahser (7)................................ 11,100 * * 11,100 *
Roger Kase (8)..................................... 4,162 * * 4,162 *
Barton L. Jackson (9).............................. * * * * *
Michael Doyle (10)................................. 4,000 * * 4,000 *
All directors and executive officers as a group (12
persons).......................................... 1,292,726 12.1 280,000 1,012,726 8.6
</TABLE>

- ------------------

* Less than 1%.

(1) Determined in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934, as amended. Under this rule, a person is deemed to be the
beneficial owner of securities that can be acquired by such person within
60 days from September 30, 1996 upon the exercise of options, and each
beneficial owner's percentage ownership is determined by assuming that
options that are held by such person (but not those held by any other
person) and that are exercisable within 60 days from September 30, 1996
have been exercised. Unless otherwise noted, the Company believes that all
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them.

(2) Unless otherwise indicated, the address of each of the persons named above
is in care of the Company at 2013 Farallon Drive, San Leandro, California
94577.

(3) Whitney 1990 Equity Fund, L.P., Whitney Subordinated Debt Fund, L.P., and
J.H. Whitney & Co. are limited partnerships in which Ray E. Newton, III
and Peter M. Castleman, directors of the Company, are general partners.
Messrs. Newton and Castleman disclaim beneficial ownership of the
securities held by such partnerships, except to the extent of their
respective ownership interests in such partnerships. The address of each
of Whitney 1990 Equity Fund, L.P., Whitney Subordinated Debt Fund, L.P.
and J.H. Whitney & Co. is 177 Broad Street, Stamford, Connecticut 06901.

(4) Includes 102,571 shares of Common Stock issuable upon exercise of stock
options, all of which will be exercised and sold in this offering.

(5) Includes 632,707 shares of Common Stock issuable upon exercise of stock
options, 140,000 shares of which will be exercised and sold in this
offering.

(6) Mr. McFarlane's address is 1606 Martin Avenue, Pleasanton, California
94566. The number of shares of Common Stock beneficially owned by Mr.
McFarlane is estimated by the Company as of September 30, 1996.

(7) Includes 11,100 shares of Common Stock issuable upon exercise of stock
options.

(8) Includes 4,162 shares of Common Stock issuable upon exercise of stock
options.

(9) Mr. Jackson's address is 914 Los Luceros Drive, Eagle, Idaho 83616.

(10) Mr. Doyle's address is 906A Union Street, San Francisco, California 94133.

53
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The following description of the Company's capital stock does not purport to
be complete and is subject in all respects to applicable Delaware law and to the
provisions of the Company's Restated Certificate of Incorporation (the
"Charter") and By-laws, each of which was amended or restated prior to or
simultaneous with the closing of the initial public offering, and copies of
which will be incorporated by reference as exhibits to the Registration
Statement of which this Prospectus is a part. References to the Company's
Charter and By-laws in this Prospectus refer to the Charter and By-laws as
amended or restated.

The authorized capital stock of the Company currently consists of 50,000,000
shares of Common Stock, par value $0.0025 per share, and 4,000,000 shares of
Preferred Stock, par value $1.00 per share. Immediately after the completion of
the offering, the Company estimates that there will be outstanding an aggregate
of 11,188,594 shares of Common Stock (based upon shares outstanding as of
September 30, 1996), 922,896 shares of Common Stock will be issuable upon
exercise of outstanding options and no shares of Preferred Stock will be issued
or outstanding.

COMMON STOCK

Holders of the Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Holders of Common Stock do not
have cumulative voting rights, and therefore holders of a majority of the shares
voting for the election of directors can elect all of the directors. In such
event, the holders of the remaining shares will not be able to elect any
directors.

Holders of the Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor, subject to the terms of the agreements governing the
Company's long-term debt. The Company does not anticipate paying cash dividends
in the foreseeable future and currently is precluded from doing so pursuant to
the terms of the Credit Facility. See "Dividend Policy." In the event of the
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities.

Holders of the Common Stock have no preemptive, conversion or redemption
rights and are not subject to further calls or assessments by the Company.
Immediately upon consummation of this offering, all of the then outstanding
shares of Common Stock will be validly issued, fully paid and nonassessable.

The Common Stock is traded on the Nasdaq National Market under the symbol
"TNFI."

The transfer agent and registrar for the Common Stock is the America Stock
Transfer & Trust Company.

PREFERRED STOCK

The Board of Directors has the authority, without any vote or action by the
stockholders, to issue Preferred Stock in one or more series and to fix the
designations, preferences, rights, qualifications, limitations and restrictions
thereof, including the voting rights, dividend rights, dividend rate, conversion
rights, terms of redemption (including sinking fund provisions), redemption
price or prices, liquidation preferences and the number of shares constituting
any series.

CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK

The authorized but unissued shares of Common Stock and Preferred Stock are
available for future issuance without stockholder approval. These additional
shares may be utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate acquisitions and
employee benefit plans.

54
<PAGE>
The existence of authorized but unissued and unreserved Common Stock and
Preferred Stock may enable the Board of Directors to issue shares to persons
friendly to current management which could render more difficult or discourage
an attempt to obtain control of the Company by means of a proxy contest, tender
offer, merger, or otherwise, and thereby protect the continuity of the Company's
management.

REGISTRATION RIGHTS OF CERTAIN HOLDERS

Whitney, the Equity Fund, the Debt Fund and Messrs. Cason, and Simon
(holding in the aggregate 5,368,178 shares of Common Stock, including shares
that may be acquired within 60 days from September 30, 1996 upon the exercise of
options) have certain demand and/or incidental, or "piggyback," registration
rights with respect to the Common Stock of the Company pursuant to a
Registration Rights Agreement, dated as of June 7, 1994, between the Company and
such holders, as amended (the "Registration Rights Agreement"). The demand
registration rights held by Whitney, the Equity Fund and the Debt Fund
(representing 4,385,814 shares of Common Stock) generally provide that those
holders of Common Stock have the right to require that, on three occasions
(subject to certain limitations), the Company file a registration statement
under the Securities Act covering all or part of such shares and that the
Company will use its best efforts to effect such registration. With respect to
incidental, or "piggyback," registration rights held by all parties defined in
the Registration Rights Agreement, the Company is required to notify the holders
of Common Stock having such rights that it intends to register its securities
and, if requested by such holder, to include additional shares in such
registration. The Company generally is obligated to bear the expenses, other
than underwriting discounts and sales commissions, of the registration of such
shares. Any exercise by the holders of such registration rights may hinder
efforts by the Company to arrange future financings and may have an adverse
impact on the market price of the Common Stock. Mr. McFarlane has certain
incidental, or "piggyback," registration rights with respect to the Common Stock
of the Company pursuant to the Registration Rights Agreement.

DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law ("DGCL"). In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined) with a Delaware corporation for three years following
the date such person became an interested stockholder unless (i) before such
person became an interested stockholder, the board of directors of the
corporation approved the transaction in which the interested stockholder became
an interested stockholder or approved the business combination; (ii) upon
consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the transaction
commenced (excluding shares owned by persons who are both officers and directors
of the corporation, and held by certain employee stock ownership plans); or
(iii) following the transaction in which such person became an interested
stockholder, the business combination is approved by the board of directors of
the corporation and authorized at a meeting of stockholders by the affirmative
vote of the holders of at least two-thirds of the outstanding voting stock of
the corporation not owned by the interested stockholder. Whitney, the Equity
Fund and the Debt Fund are interested stockholders under the DGCL. However,
since their acquisitions of the Company's securities were approved in advance by
the Company's Board of Directors, they would not be prohibited from engaging in
a business combination for three years following their becoming interested
stockholders.

In addition, certain provisions of the Charter and By-laws of the Company
summarized in the following paragraphs may be deemed to have an anti-takeover
effect and may delay, defer or prevent an attempt to obtain control of the
Company by means of a proxy contest, tender offer, merger or other transaction
that a stockholder might consider in its best interest, including those attempts
that might result in a premium over the market price for the shares held by
stockholders.

55
<PAGE>
CLASSIFIED BOARD OF DIRECTORS. The Charter provides for the Board of
Directors to be divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of the Board of Directors
will be elected each year. Moreover, under the DGCL, in the case of a
corporation having a classified board, stockholders may remove a director only
for cause. This provision, when coupled with the provision of the By-laws
authorizing the Board of Directors to fill vacant directorships, may preclude a
stockholder from removing incumbent directors without cause and simultaneously
gaining control of the Board of Directors by filling the vacancies created by
such removal with its own nominees.

SPECIAL MEETING OF STOCKHOLDERS. The Charter provides that special meetings
of stockholders of the Company may be called only by the Board of Directors, the
Chairman of the Board of Directors or the Chief Executive Officer. This
provision will make it more difficult for stockholders to take actions opposed
by the Board of Directors.

STOCKHOLDER ACTION BY WRITTEN CONSENT. The Charter provides that no action
required or permitted to be taken at any annual or special meeting of the
stockholders of the Company may be taken without a meeting, and the power of
stockholders of the Company to consent in writing, without a meeting, to the
taking of any action is specifically denied.

ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. The By-laws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual or special meeting of stockholders, must provide
timely notice thereof in writing. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 70 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received no later than the close
of business on the seventh day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. The By-laws
also specify certain requirements for a stockholder's notice to be in proper
written form. These provisions may preclude some stockholders from bringing
matters before the stockholders at an annual or special meeting or from making
nominations for directors at an annual or special meeting.

LIMITATION OF LIABILITY

The Charter provides that to the fullest extent permitted by the DGCL, a
director of the Company shall not be liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director. Under current
Delaware law, liability of a director may not be limited (i) for any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases and (iv) for any transaction from which the
director derives an improper personal benefit. The effect of the provision of
the Charter is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of the fiduciary duty of care as
a director (including breaches resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (i) through (iv) above.
This provision does not limit or eliminate the rights of the Company or any
stockholder to seek nonmonetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care. In addition, the By-laws
provide that the Company shall indemnify its directors, officers, employees and
agents to the fullest extent permitted by Delaware law.

56
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this offering, the Company will have 11,192,846
shares of Common Stock outstanding, assuming no exercise of outstanding options
after October 28, 1996. Of these shares, 5,711,024 shares will be freely
tradeable without restriction under the Securities Act unless such shares are
purchased by "affiliates" of the Company, as such term is defined in Rule 144
under the Securities Act (the "Affiliates"). The remaining 5,481,822 shares of
Common Stock are "restricted securities" as that term is defined in Rule 144
under the Securities Act (the "Restricted Shares"). Restricted Shares may be
sold in the public market only if registered or if they qualify for an exemption
from registration under Rules 144, 144(k) or 701 promulgated under the
Securities Act, which rules are summarized below. As a
result of contractual restrictions described below and the provisions of Rules
144 and 701, additional shares will be available for sale in the public market
as follows: (i) approximately 432,969 Restricted Shares are currently eligible
for sale pursuant to Rule 144 ("Rule 144") and Rule 701 ("Rule 701") promulgated
under the Securities Act; (ii) approximately 173,381 Restricted Shares will be
eligible for sale in the public market after the termination of the initial
public offering lockup period on December 30, 1996; and (iii) approximately
4,875,471 shares (the "Lockup Shares") will be eligible for sale in the public
market beginning 90 days after the effective date of the Registration Statement
of which this Prospectus is a part upon the expiration of certain lock-up
arrangements entered into between the Underwriters and the holders of such
Lockup Shares. In some cases, such Lockup Shares and Restricted Shares may be
subject to compliance with Rule 144 and Rule 701. Of the Lockup Shares and the
Restricted Shares, approximately 4,621,331 shares will be subject to volume
limitations and other resale restrictions pursuant to Rule 144. For purposes of
Rule 144, non-Affiliates have held their Restricted Shares for more than two
years but less than three years.

The Company has registered on Form S-8 under the Securities Act of 1933
2,024,652 shares of Common Stock reserved for issuance under the 1994 Plan, the
Option Plans, the Employee Plan and the Directors' Plan (the "Stock Plans"). Any
future sale of substantial amounts of Common Stock in the open market may
adversely affect the market price of the Common Stock offered hereby.

Pursuant to the terms of the Registration Rights Agreement, beneficial
owners of an aggregate of 5,243,252 shares of Common Stock have demand and/or
incidental, or "piggyback," registration rights, permitting such holders, in the
case of demand registration rights, to request on three occasions (subject to
certain limitations) that such shares be registered for resale under the
Securities Act at the Company's expense and, in the case of piggyback rights,
permitting such holders to include their shares, at the Company's expense, in
certain registration statements filed by the Company. Registration of such
shares under the Securities Act would result in such shares becoming saleable
without restriction under the Securities Act (except for shares purchased by
Affiliates) immediately upon the effectiveness of such registration. No
prediction can be made as to the effect, if any, that sales of shares of Common
Stock or the availability of such shares for sale will have on the market prices
prevailing from time to time. See "Underwriting."

The Company and certain stockholders of the Company, who collectively hold
503,807 shares of Common Stock, have agreed that the Underwriters, with certain
limited exceptions, that they will not dispose of any shares of Common Stock,
for a period of 90 days after the date of this Prospectus without the written
consent of the Representatives of the Underwriters.

In general, under Rule144 as currently in effect, beginning on September 30,
1996, an Affiliate of the Company, or person (or persons whose shares are
aggregated) who has beneficially owned Restricted Shares for at least two years,
will be entitled to sell in any three-month period a number of shares that does
not exceed the greater of (i) one percent of the outstanding shares of the
Company's Common Stock or (ii) the average weekly trading volume of the
Company's Common Stock in the Nasdaq National Market during the four calendar
weeks immediately preceding the date on which notice of the sale is filed with
the Securities and Exchange Commission. Sales pursuant to Rule 144 are subject
to certain requirements relating to manner of sale, notice and availability of
current public information about the Company. A person (or person whose shares
are aggregated) who is not deemed to have been an Affiliate of

57
<PAGE>
the Company at any time during the 90 days immediately preceding the sale and
who has beneficially owned Restricted Shares for at least three years is
entitled to sell such shares pursuant to Rule 144(k) without regard to the
limitations described above.

The Securities and Exchange Commission has proposed certain amendments to
Rule 144 that would reduce by one year the holding periods required for shares
subject to Rule 144 and Rule 144(k) to become eligible for resale in the public
market. This proposal, if adopted, would increase the number of shares of Common
Stock eligible for immediate resale following the expiration of the lock-up
agreements described above. No assurance can be given concerning whether or when
the proposal will be adopted by the Commission.

Any employee, officer, or director of or consultant to the Company who was
awarded options or shares prior to the Company's initial public offering
pursuant to a written compensatory plan or contract is entitled to rely on the
resale provisions of Rule 701 under the Securities Act, which permits Affiliates
and non-Affiliates to sell their Rule 701 shares without having to comply with
Rule 144's holding period restrictions. In addition, non-Affiliates may sell
Rule 701 shares without complying with the public information, volume and notice
provisions of Rule 144.

58
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters, Alex. Brown & Sons Incorporated, Hambrecht & Quist LLC and J.P.
Morgan Securities Inc. (the "Underwriters"), have severally agreed to purchase
from the Company the following respective numbers of shares of Common Stock at
the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- --------------------------------------------------------------------------------- -----------
<S> <C>
Alex. Brown & Sons Incorporated..................................................
Hambrecht & Quist LLC............................................................
J.P. Morgan Securities Inc.......................................................

-----------
Total........................................................................ 2,500,000
-----------
-----------
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all shares of the Common Stock offered hereby if any of such shares are
purchased.

The Company has been advised by the Underwriters that the Underwriters
propose to offer the shares of Common Stock to the public at the initial public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other dealers. After the initial public
offering, the offering price and other selling terms may be changed by the
Underwriters.

Certain of the Selling Stockholders have granted to the Underwriters an
option, exercisable not later than 30 days after the date of this Prospectus, to
purchase up to 375,000 additional shares of Common Stock, at the public offering
price less the underwriting discounts and commissions set forth on the cover
page of this Prospectus. To the extent that the Underwriters exercise such
option, each of the Underwriters will have a firm commitment to purchase
approximately the same percentage thereof that the number of shares of Common
Stock to be purchased by it shown in the above table bears to 2,500,000 and the
Company and the Selling Stockholders will be obligated, pursuant to the option,
to sell such shares to the Underwriters. The Underwriters may exercise such
option only to cover over-allotments made in connection with the sale of Common
Stock hereby. If purchased, the Underwriters will offer such additional shares
on the same terms as those on which the 2,500,000 shares are being offered.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.

The Company and certain stockholders of the Company have agreed not to
offer, sell, or otherwise dispose of any shares of Common Stock for a period of
90 days after the date of this Prospectus without the prior written consent of
Alex. Brown & Sons Incorporated, except that the Company may issue and grant
options to purchase shares of Common Stock under the Option Plans, and
individual stockholders may dispose of shares of Common Stock under certain
circumstances, provided that the transferee agrees to be bound by the terms of
such agreement. See "Shares Eligible for Future Sale."

In connection with the offering, certain Underwriters and selling group
members (if any) who are qualifying registered market makers on Nasdaq may
engage in passive market making transactions in the Common Stock of the Company
on the Nasdaq National Market in accordance with Rule 10b-6A under the
Securities Exchange Act of 1934, as amended, during the two business day period
before commencement of sales in the offering. The passive marketing making
transactions must comply with applicable price and volume limits and be
identified as such. In general, a passive market maker may display its bid at a
price not in excess of the highest independent bid for the securities. If all
independent bids are

59
<PAGE>
lowered below the passive market maker's bid, however, such bid of the passive
market maker must then be lowered when certain purchase limits are exceeded. Net
purchases by a passive market maker on each day are generally limited to a
specified percentage of the passive market maker's average daily trading volume
in the Common Stock during a price period and must be discontinued when such
limit is reached. Passive market making may stabilize the market price of the
Common Stock at a level above that which might otherwise prevail and, if
commenced, may be discontinued at any time.

LEGAL MATTERS

The validity of the Common Stock offered hereby is being passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Certain legal matters will be passed upon for the Underwriters
by Cooley Godward LLP, Palo Alto, California.

EXPERTS

The financial statements of The North Face, Inc. as of December 31, 1994 and
1995 and for the period from June 7, 1994 to December 31, 1994, and for the year
ended December 31, 1995, and the financial statements of The North Face for the
period from April 1, 1994 through June 6, 1994 and the year ended March 31, 1994
included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and in the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock, reference is made
to the Registration Statement, exhibits and schedules. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each such instance reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. This
Registration Statement and the exhibits and schedules thereto may be inspected
without charge at the public reference facilities maintained by the Commission
at 450 Fifth Street N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and Citicorp Center, 500 Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials may be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
Commission's Web site is http://www.sec.gov.

The Company intends to furnish its stockholders with annual reports
containing financial statements audited by independent public accountants and
currently furnishes quarterly reports for the first three fiscal quarters of
each fiscal year containing unaudited financial information.

60
<PAGE>
THE NORTH FACE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Independent Auditors' Report.............................................. F-2

Consolidated Balance Sheets............................................... F-3

Consolidated Statements of Operations..................................... F-4

Consolidated Statements of Cash Flows..................................... F-5

Consolidated Statements of Stockholders' Equity........................... F-6

Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

THE STOCKHOLDERS OF THE NORTH FACE, INC.:

We have audited the accompanying consolidated balance sheets of The North
Face, Inc. and its subsidiaries ("Successor") as of December 31, 1994 and 1995
and the related consolidated statements of operations, stockholders' equity and
cash flows for the period from June 7, 1994 through December 31, 1994, the year
ended December 31, 1995, and the consolidated statements of operations,
stockholders' equity and cash flows of The North Face ("Predecessor") for the
period from April 1, 1994 through June 6, 1994, and the year ended March 31,
1994. These financial statements are the responsibility of the Predecessor's and
Successor's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the Successor consolidated financial statements referred to
above present fairly, in all material respects, the financial position of The
North Face, Inc. and its subsidiaries as of December 31, 1995 and 1994 and the
results of their operations and their cash flows for the year ended December 31,
1995 and for the period from June 7, 1994 through December 31, 1994, in
conformity with generally accepted accounting principles. Further, in our
opinion, the Predecessor consolidated financial statements referred to above
present fairly, in all material respects, the results of their operations and
their cash flows for the period from April 1, 1994 through June 6, 1994 and the
year ended March 31, 1994 in conformity with generally accepted accounting
principles.

/s/ DELOITTE & TOUCHE LLP

San Francisco, California

February 9, 1996 (June 20, 1996 as to Note 16)

F-2
<PAGE>
THE NORTH FACE, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER
--------------------
1994 1995
--------- --------- SEPTEMBER 30,
1996
--------------
(UNAUDITED)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents................................................. $ 826 $ 2,823 $ 882
Accounts receivable, net.................................................. 13,486 16,582 55,231
Inventories............................................................... 12,068 21,048 34,149
Deferred taxes............................................................ 1,703 2,230 2,235
Other current assets...................................................... 1,180 1,161 3,895
--------- --------- --------------
Total current assets.................................................. 29,263 43,844 96,392

Property and equipment, net............................................... 4,066 8,388 9,316
Trademarks and intangibles, net........................................... 30,602 30,108 29,527
Debt issuance costs, net.................................................. 2,447 1,739 86
Other assets.............................................................. 171 429 544
--------- --------- --------------
Total assets.......................................................... $ 66,549 $ 84,508 $ 135,865
--------- --------- --------------
--------- --------- --------------

LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.......................................................... $ 4,855 $ 9,526 $ 19,297
Accrued employee expenses................................................. 851 921 2,463
Short-term borrowings and current portion of long-term debt and
obligations under capital leases........................................ 1,327 4,838 30,079
Income taxes payable...................................................... 716 561 819
Other current liabilities................................................. 7,325 5,330 5,576
--------- --------- --------------
Total current liabilities............................................. 15,074 21,176 58,234
Long-term debt and obligations under capital leases....................... 4,714 12,055 1,184
Other long-term liabilities............................................... 5,249 6,376 6,622
Subordinated debt......................................................... 24,333 24,333 9,433
--------- --------- --------------
Total liabilities..................................................... 49,370 63,940 75,473
--------- --------- --------------
--------- --------- --------------
Commitments and contingencies

Stockholders' equity:

Series A Preferred Stock, $1.00 par value--shares authorized 4,000,000;
issued and outstanding 1,936,000 at December 31, 1994 and 1995 and none
at September 30, 1996................................................... 12,267 12,267 --
Cumulative Preferred Dividends Accrued.................................... 696 2,049 --
Common Stock, $.0025 par value--50,000,000 shares authorized; 3,431,000
issued and outstanding at December 31, 1994; 2,902,000 at December 31,
1995 and 9,946,023 at September 30, 1996................................ 8 7 25
Additional paid-in capital................................................ 764 645 51,869
Subscriptions receivable.................................................. (261) (142) (112)
Retained earnings......................................................... 3,939 6,071 8,822
Cumulative translation adjustments........................................ (234) (329) (212)
--------- --------- --------------
Total stockholders' equity............................................ 17,179 20,568 60,392
--------- --------- --------------
Total liabilities and stockholders' equity............................ $ 66,549 $ 84,508 $ 135,865
--------- --------- --------------
--------- --------- --------------
</TABLE>

See accompanying notes to consolidated financial statements

F-3
<PAGE>
THE NORTH FACE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------
FOR THE FOR THE
YEAR PERIOD FROM
ENDED APRIL 1, 1994 TO
MARCH 31, JUNE 6,
1994 1994
--------- ----------------
<S> <C> <C>
Net Sales........................................ $87,411 $ 9,085
Cost of Sales.................................... 50,807 5,317
--------- -------
Gross Profit..................................... 36,604 3,768
Operating Expenses............................... 32,810 5,290
--------- -------
Operating Income (Loss).......................... 3,794 (1,522)
Interest expense................................. (2,046) (58)
Other Income (Expense), Net...................... (200) 19
--------- -------
Income (Loss) Before Provision for Income Taxes,
and Extraordinary Item......................... 1,548 (1,561)
Provision (Benefit) for Income Taxes............. 722 112
--------- -------
Income (Loss) Before Extraordinary Items......... 826 (1,673)
Extraordinary Item--Gain (Loss) on Extinguishment
of Debt, Net of Income Taxes of $0 and $575.... 0 577
--------- -------
Net Income (Loss)................................ $ 826 $(1,096)
--------- -------
--------- -------
Pro Forma Per Share Information (Unaudited):
Income Before Extraordinary Loss...............
Extraordinary Loss, net of tax.................
Net Income.....................................
Shares used in pro forma per share calculation...

<CAPTION>
THE NORTH FACE, INC. (SUCCESSOR)
-----------------------------------------------
FOR THE
PERIOD FROM FOR THE NINE
JUNE 7, 1994 FOR THE MONTHS ENDED
TO YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -----------------
1994 1995 1995 1996
------------ ------------ ------- --------
<S> <C> <C> <C> <C>
(UNAUDITED)
Net Sales........................................ $60,574 $121,534 $92,903 $121,629
Cost of Sales.................................... 31,060 66,470 51,949 69,119
------------ ------------ ------- --------
Gross Profit..................................... 29,514 55,064 40,954 52,510
Operating Expenses............................... 19,659 44,540 32,496 41,852
------------ ------------ ------- --------
Operating Income (Loss).......................... 9,855 10,524 8,458 10,658
Interest expense................................. (2,598) (5,530) (3,940) (3,834)
Other Income (Expense), Net...................... 186 589 511 287
------------ ------------ ------- --------
Income (Loss) Before Provision for Income Taxes,
and Extraordinary Item......................... 7,443 5,583 5,029 7,111
Provision (Benefit) for Income Taxes............. 2,808 2,098 1,880 2,738
------------ ------------ ------- --------
Income (Loss) Before Extraordinary Items......... 4,635 3,485 3,149 4,373
Extraordinary Item--Gain (Loss) on Extinguishment
of Debt, Net of Income Taxes of $0 and $575.... 0 0 0 (863)
------------ ------------ ------- --------
Net Income (Loss)................................ $ 4,635 $ 3,485 $ 3,149 $ 3,510
------------ ------------ ------- --------
------------ ------------ ------- --------
Pro Forma Per Share Information (Unaudited):
Income Before Extraordinary Loss............... $ 0.47 $ 0.51
Extraordinary Loss, net of tax................. $ 0.00 $ (0.10)
Net Income..................................... $ 0.47 $ 0.41
------------ --------
------------ --------
Shares used in pro forma per share calculation... 7,434 8,532
------------ --------
------------ --------
</TABLE>

See accompanying notes to consolidated financial statements

F-4
<PAGE>
THE NORTH FACE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
---------------------------------
FOR THE PERIOD
FOR THE YEAR FROM
ENDED APRIL 1, 1994 TO
MARCH 31, 1994 JUNE 6, 1994
-------------- ----------------
<S> <C> <C>
Cash flows from Operating Activities:
Net Income (Loss)............................ $ 826 $(1,096)
Adjustments to reconcile net income (loss) to
cash provided by (used in) operating
activities:
Depreciation and amortization.............. 1,671 307
Deferred income taxes...................... (187) (93)
Provision for doubtful accounts............ 941 66
Other...................................... 115 0
Extraordinary (gain) loss on debt
extinguishment........................... 0 (577)
Effect of changes in:
Accounts receivable........................ (1,235) 1,851
Inventories................................ 8,862 617
Other assets............................... 2,084 (231)
Accounts payable and accrued liabilities... 876 (473)
-------------- --------
Net Cash Provided by (Used in) Operating
Activities................................. 13,953 371
-------------- --------
Investing Activities:
Acquisition of The North Face assets....... 0 0
Proceeds from sale of
trademark................................ 0 0
Acquisition of Canadian Subsidiary......... 0 0
Purchase of minority interest.............. (1,725) 0
Purchase of fixed assets................... (1,002) (58)
-------------- --------
Net Cash Used in Investing Activities........ (2,727) (58)
-------------- --------
Financing Activities:
Debt repayments............................ (201) (729)
Borrowings on term note.................... 0 0
Proceeds (payments) from revolver, net..... 0 0
Proceeds from acquisition debt............. 0 0
Payments of debt acquisition costs......... 0 0
Proceeds from sale of stock................ 0 0
Change in due to/from affiliates, net...... (2,946) (1,030)
-------------- --------
Net Cash Provided by (Used in) Financing
Activities................................. (3,147) (1,759)
-------------- --------
Effect of foreign currency fluctuations on
cash....................................... (18) 65
-------------- --------
Increase (Decrease) in Cash and Cash
Equivalents................................ 8,061 (1,381)
Cash and Cash Equivalents, Beginning of
Period..................................... 2,949 11,010
-------------- --------
Cash and Cash Equivalents, End of Period..... $11,010 $ 9,629
-------------- --------
-------------- --------
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest................................. $ 1,311 $ 2,836
-------------- --------
-------------- --------
Income taxes............................. $ 456 $ 0
-------------- --------
-------------- --------
Non-Cash Transactions:
Issuance of stock.......................... $ 0 $ 0
-------------- --------
-------------- --------
Cancellation of stock and related promissory
note....................................... $ 0 $ 0
-------------- --------
-------------- --------

<CAPTION>
THE NORTH FACE, INC. (SUCCESSOR)
---------------------------------------------------
FOR THE FOR THE NINE
PERIOD FROM FOR THE MONTHS ENDED
JUNE 7, 1994 TO YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, ------------------
1994 1995 1995 1996
--------------- ------------ -------- --------
<S> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from Operating Activities:
Net Income (Loss)............................ $ 4,635 $ 3,485 $ 3,149 $ 3,510
Adjustments to reconcile net income (loss) to
cash provided by (used in) operating
activities:
Depreciation and amortization.............. 1,345 3,075 2,135 2,184
Deferred income taxes...................... (259) (441) 205 (5)
Provision for doubtful accounts............ 268 338 255 568
Other...................................... 0 0 0 0
Extraordinary (gain) loss on debt
extinguishment........................... 0 0 0 863
Effect of changes in:
Accounts receivable........................ (5,912) (3,434) (22,618) (39,085)
Inventories................................ 1,195 (8,980) (11,090) (13,101)
Other assets............................... (542) (469) (312) (1,797)
Accounts payable and accrued liabilities... 696 3,631 4,726 12,980
--------------- ------------ -------- --------
Net Cash Provided by (Used in) Operating
Activities................................. 1,426 (2,795) (23,550) (33,883)
--------------- ------------ -------- --------
Investing Activities:
Acquisition of The North Face assets....... (59,710) 0 0 0
Proceeds from sale of
trademark................................ 10,800 0 0 0
Acquisition of Canadian Subsidiary......... 0 (73) (289) 0
Purchase of minority interest.............. 0 0 0 0
Purchase of fixed assets................... (327) (5,592) (3,598) (2,531)
--------------- ------------ -------- --------
Net Cash Used in Investing Activities........ (49,237) (5,665) (3,887) (2,531)
--------------- ------------ -------- --------
Financing Activities:
Debt repayments............................ (476) (2,595) (1,449) (21,358)
Borrowings on term note.................... 0 5,600 5,001 2,825
Proceeds (payments) from revolver, net..... (761) 7,847 23,854 18,003
Proceeds from acquisition debt............. 30,559 0 0
Payments of debt acquisition costs......... (2,413) (300) (300) (262)
Proceeds from sale of stock................ 12,333 0 0 35,148
Change in due to/from affiliates, net...... 0 0 0 0
--------------- ------------ -------- --------
Net Cash Provided by (Used in) Financing
Activities................................. 39,242 10,552 27,106 34,356
--------------- ------------ -------- --------
Effect of foreign currency fluctuations on
cash....................................... (234) (95) 50 117
--------------- ------------ -------- --------
Increase (Decrease) in Cash and Cash
Equivalents................................ (8,803) 1,997 (281) (1,941)
Cash and Cash Equivalents, Beginning of
Period..................................... 9,629 826 826 2,823
--------------- ------------ -------- --------
Cash and Cash Equivalents, End of Period..... $ 826 $ 2,823 $ 545 $ 882
--------------- ------------ -------- --------
--------------- ------------ -------- --------
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest................................. $ 2,398 $ 4,383
--------------- ------------
--------------- ------------
Income taxes............................. $ 3,476 $ 1,785
--------------- ------------
--------------- ------------
Non-Cash Transactions:
Issuance of stock.......................... $ 706 $ 0
--------------- ------------
--------------- ------------
Cancellation of stock and related promissory
note....................................... $ 0 $ 119
--------------- ------------
--------------- ------------
</TABLE>

See accompanying notes to consolidated financial statements

F-5
<PAGE>
THE NORTH FACE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
PREFERRED STOCK ----------------------------------------- CUMULATIVE
-------------------------- ADDITIONAL PREFERRED
SHARES SHARES PAID IN DIVIDENDS
DESCRIPTION OUTSTANDING AMOUNT OUTSTANDING AMOUNT CAPITAL ACCRUED
- --------------------------------------- --------------- --------- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Predecessor
March 31, 1993....................... 1,000 $ 5,416 $ 3,882
Net Income.........................
Translation Adjustments............
------ --------- ----- ----------- ----------- -------------
March 31, 1994....................... 1,000 5,416 3,882
Net Loss...........................
Translation Adjustments............
------ --------- ----- ----------- ----------- -------------
June 6, 1994......................... 1,000 $ 5,416 $ 3,882
------ --------- ----- ----------- ----------- -------------
------ --------- ----- ----------- ----------- -------------
- -----------------------------------------------------------------------------------------------------------------------------
The North Face, Inc. (Successor)
Preferred Stock Issued............. 1,936 $ 12,267
Common Stock Issued................ 3,431 $ 8 $ 764
Net Income.........................
Stock Dividends on Preferred
Stock............................ $ 696
Translation Adjustments............
------ --------- ----- ----------- ----------- -------------
December 31, 1994.................... 1,936 12,267 3,431 8 764 696
Net Income.........................
Cancellation of Restricted Stock... (529) (1) (119)
Stock Dividends on Preferred
Stock............................ 1,353
Translation Adjustments............
------ --------- ----- ----------- ----------- -------------
December 31, 1995.................... 1,936 12,267 2,902 7 645 2,049
Net Income (unaudited).............
Stock Dividends on Preferred Stock
(unaudited)...................... 759
Declaration of Preferred Dividends
(unaudited)...................... 443 2,808 (2,808)
Conversion of Preferred Stock
(unaudited)...................... (2,379) (15,075) 4,221 11 15,064
Exercise of Stock Options Including
Tax Benefit (unaudited).......... 130 1,049
Sale of Common Stock (unaudited)... 2,824 7 35,141
Cancellation of Restricted Stock
(unaudited)...................... (131) (30)
Translation Adjustments
(unaudited)......................
------ --------- ----- ----------- ----------- -------------
September 30, 1996 (unaudited)....... 0 $ 0 9,946 $ 25 $ 51,869 $ 0
------ --------- ----- ----------- ----------- -------------
------ --------- ----- ----------- ----------- -------------

SUBSCRIPTIONS RETAINED TRANSLATION
DESCRIPTION RECEIVABLE EARNINGS ADJUSTMENTS TOTAL
- --------------------------------------- --------------- ----------- --------------- ---------
<S> <C> <C> <C> <C>
Predecessor
March 31, 1993....................... $ (22,841) $ (395) $ (13,938)
Net Income......................... 826 826
Translation Adjustments............ (18) (18)
------ ----------- ------ ---------
March 31, 1994....................... (22,015) (413) (13,130)
Net Loss........................... (1,096) (1,096)
Translation Adjustments............ 65 65
------ ----------- ------ ---------
June 6, 1994......................... $ (23,111) $ (348) $ (14,161)
------ ----------- ------ ---------
------ ----------- ------ ---------
- ---------------------------------------
The North Face, Inc. (Successor)
Preferred Stock Issued............. $ 12,267
Common Stock Issued................ $ (261) 511
Net Income......................... $ 4,635 4,635
Stock Dividends on Preferred
Stock............................ (696) 0
Translation Adjustments............ $ (234) (234)
------ ----------- ------ ---------
December 31, 1994.................... (261) 3,939 (234) 17,179
Net Income......................... 3,485 3,485
Cancellation of Restricted Stock... 119 (1)
Stock Dividends on Preferred
Stock............................ (1,353) 0
Translation Adjustments............ (95) (95)
------ ----------- ------ ---------
December 31, 1995.................... (142) 6,071 (329) 20,568
Net Income (unaudited)............. 3,510 3,510
Stock Dividends on Preferred Stock
(unaudited)...................... (759) 0
Declaration of Preferred Dividends
(unaudited)...................... 0
Conversion of Preferred Stock
(unaudited)...................... 0
Exercise of Stock Options Including
Tax Benefit (unaudited).......... 1,049
Sale of Common Stock (unaudited)... 35,148
Cancellation of Restricted Stock
(unaudited)...................... 30 0
Translation Adjustments
(unaudited)...................... 117 117
------ ----------- ------ ---------
September 30, 1996 (unaudited)....... $ (112) $ 8,822 $ (212) $ 60,392
------ ----------- ------ ---------
------ ----------- ------ ---------
</TABLE>

See accompanying notes to consolidated financial statements

F-6
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ACQUISITION, BASIS OF PRESENTATION, BUSINESS AND PRO FORMA INFORMATION

ACQUISITION -- On June 7, 1994, TNF Holdings Company, Inc. (a Delaware
corporation) acquired substantially all of the net operating assets and certain
liabilities of The North Face (the "Predecessor") (a California corporation) for
approximately $62.1 million cash (including transaction costs of approximately
$2.4 million) plus assumed liabilities of approximately $18.4 million (the
"Acquisition"). TNF Holdings Company, Inc. then changed its name to The North
Face, Inc. (the "Successor"). The Acquisition was accounted for as a purchase
and accordingly, Successor recorded the assets acquired (including $41.8 million
for trademarks) and liabilities assumed at their fair values. Immediately
subsequent to the purchase, an equity investor purchased Successor's trademark
in Japan for $10.8 million. Due to the Acquisition and resulting change in
accounting basis, and significant differences in the capital structures of the
Successor and the Predecessor, the accompanying consolidated financial
statements of the Successor may not be comparable to those of the Predecessor.
References to the Company throughout these notes to consolidated financial
statements refer to the operations of Successor and Predecessor collectively.

As part of the Acquisition, all amounts due to affiliates remained with the
Predecessor and were not assumed by The North Face, Inc. A substantial portion
of this debt was non-interest bearing during the year ended March 31, 1994.

BUSINESS -- The Company wholesales and retails high-quality technical
outerwear, mountaineering equipment, skiwear and sports apparel. At December 31,
1995 the Company had a corporate headquarters and distribution center in San
Leandro, California, a sales office and distribution center in Toronto, Ontario,
and a European headquarters and factory in Port Glasgow, Scotland. The Company's
products are sold through independent retailers in the United States (the
"U.S."), Europe and Canada, as well as through its own eleven retail stores in
the U.S. The Company sources the majority of its merchandise outside the U.S.
Any event causing a sudden disruption of imports, including the imposition of
additional import restrictions, could have a materially adverse effect on the
Company's operations.

PRO FORMA INFORMATION (UNAUDITED) -- Upon consummation of the Company's
initial public offering, all outstanding shares of Series A Preferred Stock were
converted into 4,220,808 shares of Common Stock. The pro forma net income per
share and shares used in pro forma per share calculations for the year ended
December 31, 1995 and the nine months ended September 30, 1996 reflect this
conversion as of the beginning of each period. In accordance with the rules of
the Securities and Exchange Commission, all common stock equivalents issued
within one year of the Company's anticipated initial public offering have been
considered outstanding for all periods using the treasury stock method. Due to
the conversion of the Series A Preferred Stock into Common Stock, historical
earnings per share is not meaningful.

SUPPLEMENTAL PRO FORMA INCOME BEFORE EXTRAORDINARY ITEM PER SHARE
(UNAUDITED), reflecting the issuance of up to 3.8 million shares offered by the
Company during 1996 to fund the repayment of up to $41.4 million of the
Company's debt, and a corresponding reduction in interest expense, at the
beginning of the respective period, is as follows:

<TABLE>
<S> <C>
Year ended December 31, 1995........................................ $ 0.51
Nine months ended September 30, 1996................................ $ 0.51
</TABLE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include
the financial statements of the Company and its wholly-owned subsidiaries. All
intercompany accounts have been eliminated.

F-7
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual amounts could differ from those estimates.

CHANGE IN YEAR-END -- The Company changed its year-end to December 31 from
March 31 effective December 31, 1994.

FOREIGN CURRENCY TRANSLATION -- The assets and liabilities of the Company's
foreign subsidiaries have been translated into U.S. dollars using the exchange
rates in effect at period end, and the revenues have been translated into U.S.
dollars using the average exchange rates in effect during the period.
Adjustments resulting from translating foreign financial statements into U.S.
dollars are reported as translation adjustments as a separate component of
stockholders' equity.

ACCOUNTS RECEIVABLE are recorded upon the sale of inventory to independent
retailers. A sale occurs when inventories are shipped and title and risk of loss
have transferred from the Company to the buyer. Seasonal goods are generally
shipped to retailers prior to the selling season. The Company offers extended
payment terms for pre-season orders.

INVENTORIES are stated at the lower of average cost or market. The Company
principally contracts for the manufacture of its products in the U.S., Asia and
Europe. Costs related to these inventories represent landed cost, which consists
of the price paid to third party manufacturers, and inbound duties and freight.

TRADEMARKS AND INTANGIBLES of The North Face, Inc. represent trademarks
(less proceeds from sale of the Japan trademark) recorded in connection with the
Acquisition and are amortized on a straight-line basis over forty years.
Accumulated amortization at December 31, 1995 was approximately $1.2 million.
Amortization expense was $453,000 and $783,000 for the period from June 7, 1994
to December 31, 1994 and the year ended December 31, 1995, respectively.

PROPERTY AND EQUIPMENT is stated at cost. Depreciation and amortization is
computed using the straight-line method over the remaining estimated useful life
of the asset (or over the remaining lease term, if shorter, for capital leases).
The estimated useful lives of certain categories are as follows:

<TABLE>
<S> <C>
Leasehold improvements.......................................... 5-10 years
Machinery and equipment......................................... 5 years
Furniture, fixtures and office equipment........................ 3-7 years
</TABLE>

Expenditures for replacements and improvements are capitalized; maintenance
and repairs are expensed as incurred.

PRODUCT WARRANTY -- Substantially all of the Company's products carry a
lifetime warranty for defects in quality and workmanship. The Company maintains
warranty departments in the U.S., Canada and Europe and repairs the majority of
items returned under warranty. The Company's warranty liability for future
warranty claims related to past sales at December 31, 1994 and 1995 is
approximately $4.3 million and $4.5 million, respectively, of which the
non-current portion of $3.4 million and $3.6 million is classified as other long
term liabilities as of December 31, 1994 and 1995, respectively. The current
portion of the warranty liability is $0.9 million and is classified as other
current liabilities in both years. Warranty expense was approximately $740,000,
$156,000, $467,000 and $1,004,000 for the year ended March 31, 1994, the period
from April 1, 1994 to June 6, 1994 (the "two-month period"), the

F-8
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
period from June 7, 1994 to December 31, 1994 (the "seven-month period"), and
the year ended December 31, 1995, respectively.

DEFERRED RENT -- Certain of the Company's operating leases contain
predetermined fixed increases of the minimum rental rate during the initial
lease term. For these leases, the Company recognizes the related rental expense
on a straight-line basis over the life of the lease and records the difference
between the amount charged to rent expense and the rent paid as deferred rent.

INCOME TAXES -- The Company applies an asset and liability approach in
accordance with Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes. SFAS No. 109 requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of events
that have been recognized in the Company's financial statements or tax returns.
In estimating future tax consequences, SFAS No. 109 generally considers all
expected future events other than enactment of changes in the tax laws or rates.
Deferred taxes are provided for temporary differences between assets and
liabilities for financial reporting purposes and for income tax purposes and
valuation allowances are recorded against net deferred tax assets where
appropriate.

No U.S. income tax provisions have been provided on the cumulative
undistributed earnings of foreign operations as it is the Company's intention to
utilize those earnings in those foreign operations for an indefinite period of
time.

Cash and Cash Equivalents represent short-term investments with original
maturities of less than three months.

SFAS NO. 121 -- In 1996, the Company adopted SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of."
SFAS No. 121 establishes recognition and measurement criteria for impairment
losses when the Company no longer expects to recover the carrying value of a
long-lived asset. The effect on the consolidated financial statements of
adopting SFAS No. 121 was not material.

SFAS NO. 123 -- The Company is required to adopt SFAS No. 123, "Accounting
for Stock-Based Compensation" in 1996. SFAS No. 123 establishes accounting and
disclosure requirements using a fair value based method of accounting for stock
based employee compensation plans. Under SFAS No. 123, the Company may either
adopt the new fair value based accounting method or continue the intrinsic value
method and provide pro forma disclosures of net income and earnings per share as
if the accounting provisions of SFAS No. 123 had been adopted. The Company only
adopted the disclosure requirements of SFAS No. 123; and will include such
information in its financial statements for the year ending December 31, 1996.

UNAUDITED INTERIM INFORMATION -- The financial information with respect to
the nine month periods ended September 30, 1996 is unaudited. In the opinion of
management, such information contains all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the results of such
periods. The results of operations for the nine months ended September 30, 1996
are not necessarily indicative of the results to be expected for the full year.

3. ACCOUNTS RECEIVABLE

The allowance for doubtful accounts was $853,000 and $1,067,000 as of
December 31, 1994 and 1995, respectively. Write-offs to accounts receivable
during the year ended March 31, 1994, the two-

F-9
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. ACCOUNTS RECEIVABLE (CONTINUED)
month period ended June 6, 1994, the seven-month period ended December 31, 1994,
and the year ended December 31, 1995 were approximately $880,000, $123,000,
$27,000 and $71,000, respectively.

During the year ended March 31, 1994, the two-month period ended June 6,
1994, the seven-month period ended December 31, 1994 and the year ended December
31, 1995, no customer accounted for more than 10% of net sales.

4. INVENTORIES

Inventories as of December 31, 1994 and 1995 consist of (in thousands):

<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Finished goods................................................................... $ 9,778 $ 18,414
Work in process.................................................................. 468 237
Raw materials.................................................................... 1,822 2,397
--------- ---------
Total inventories................................................................ $ 12,068 $ 21,048
--------- ---------
--------- ---------
</TABLE>

5. PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 1994 and 1995 consist of (in
thousands):

<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Leasehold improvements............................................................ $ 2,865 $ 4,985
Furniture, fixtures and office equipment.......................................... 1,333 4,310
Machinery and equipment........................................................... 521 830
--------- ---------
Subtotal.......................................................................... 4,719 10,125
Less accumulated depreciation and amortization.................................... (653) (1,737)
--------- ---------
Total property and equipment, net................................................. $ 4,066 $ 8,388
--------- ---------
--------- ---------
</TABLE>

Depreciation and amortization expense related to property and equipment was
$1,415,000, $99,000, $653,000, and $1,268,000 for the year ended March 31, 1994,
the two-month period ended June 6, 1994, the seven-month period ended December
31, 1994, and the year ended December 31, 1995, respectively. Maintenance and
repair expense was $343,000, $80,500, $241,500, and $565,000 for the year ended
March 31, 1994, the two-month period ended June 6, 1994, the seven-month period
ended December 31, 1994, and the year ended December 31, 1995, respectively.

F-10
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. INCOME TAXES

The provision for income taxes consists of the following (in thousands):

<TABLE>
<CAPTION>
PREDECESSOR THE NORTH FACE, INC. (SUCCESSOR)
------------------------------------ ----------------------------------------
FOR THE FOR THE
FOR THE PERIOD FROM PERIOD FROM FOR THE
YEAR ENDED APRIL 1, 1994 TO JUNE 7, 1994 TO YEAR ENDED
MARCH 31, 1994 JUNE 6, 1994 DECEMBER 31, 1994 DECEMBER 31, 1995
----------------- ----------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Federal
Current................. $ 0 $ 0 $ 2,179 $ 825
Deferred................ 0 0 (327) 375
State
Current................. 6 0 530 202
Deferred................ 0 0 (31) 77
Foreign
Current................. 903 205 358 641
Deferred................ (187) (93) 99 (22)
------ ----- ------- -------
$ 722 $ 112 $ 2,808 $ 2,098
------ ----- ------- -------
------ ----- ------- -------
</TABLE>

The Predecessor was not in a U.S. federal tax paying position prior to the
Acquisition due to the availability of net operating loss (NOL) carryforwards.
These NOL carryforwards are not available to Successor as a result of the
Acquisition.

Reconciliation of the U.S. Federal statutory rate to the Company's effective
tax rate is as follows:

<TABLE>
<CAPTION>
PREDECESSOR THE NORTH FACE, INC. (SUCCESSOR)
----------------------------- ---------------------------------
FOR THE FOR THE
FOR THE PERIOD FROM PERIOD FROM FOR THE
YEAR ENDED APRIL 1, 1994 JUNE 7, 1994 TO YEAR ENDED
MARCH 31, TO JUNE 6, DECEMBER 31, DECEMBER 31,
1994 1994 1994 1994
------------ -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Statutory rate............ 34.0% 34.0% 34.0% 34.0%
State income taxes, net of
federal benefit.......... 0.4% 0.0% 4.4% 4.2%
Net losses without tax
benefit.................. 6.9% (40.4)% 0.0% 0.0%
Other..................... 5.3% (0.8)% (0.7)% (0.6)%
--- ----- --- ---
Effective tax rate........ 46.6% (7.2)% 37.7% 37.6%
--- ----- --- ---
--- ----- --- ---
</TABLE>

Deferred income taxes for the Company reflect the tax effects of temporary
differences between amounts of assets and liabilities for financial reporting
purposes and such amounts measured by tax laws.

F-11
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. INCOME TAXES (CONTINUED)
Significant components of the net deferred tax asset as of December 31, 1994 and
1995 are as follows (in thousands):

<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Deferred Tax Assets:
Inventory costs not yet deductible.............................................. $ 265 $ 313
State tax provisions............................................................ 162 86
Depreciation.................................................................... 64 271
Liabilities not yet deductible.................................................. 1,891 2,591
--------- ---------
2,382 3,261
--------- ---------
Deferred Tax Liabilities:
Depreciation.................................................................... (86) (83)
Intangibles..................................................................... (1,583) (2,883)
Liabilities deductible for tax not book......................................... (77) (100)
--------- ---------
(1,746) (3,066)
--------- ---------
Net Deferred Income Tax Asset..................................................... $ 636 $ 195
--------- ---------
--------- ---------
</TABLE>

Of the $636,000 net deferred income tax asset at December 31, 1994,
$1,703,000 is recorded as a current asset and $1,067,000 is included in other
long-term liabilities in the consolidated balance sheet. Of the $195,000 net
deferred income tax asset at December 31, 1995, $2,230,000 is recorded as a
current asset and $2,035,000 is included in other long-term liabilities in the
consolidated balance sheet.

The cumulative amount of undistributed earnings of the European foreign
subsidiary, which the Company intends to indefinitely reinvest outside of the
U.S. and upon which deferred income taxes are not provided, approximates
$4,908,000 at December 31, 1995.

7. PENSION PLAN

The Company's European subsidiary has a contributory defined benefit pension
plan covering substantially all full-time employees. Benefits are based on years
of service and compensation. The Company funds the plan in amounts not less than
the minimum statutory requirements in the United Kingdom. The plan's assets
consist of investments in the Discretionary Managed Fund operated by Prudential
Portfolio Managers Limited.

F-12
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. PENSION PLAN (CONTINUED)
Net pension plan expense consists of the following (in thousands):

<TABLE>
<CAPTION>
PREDECESSOR THE NORTH FACE, INC. (SUCCESSOR)
------------------------------------ --------------------------------------------
FOR THE FOR THE
FOR THE PERIOD FROM PERIOD FROM FOR THE
YEAR ENDED APRIL 1, 1994 TO JUNE 7, 1994 TO YEAR ENDED
MARCH 31, 1994 JUNE 4, 1994 DECEMBER 31, 1994 DECEMBER 31, 1994
----------------- ----------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Actual return on plan
assets..................... $ (131) $ 12 $ 35 $ (323)
Service cost................ 173 19 55 55
Interest cost on projected
benefit obligations........ 126 30 89 180
Net amortization.......... 51 (32) (94) 176
------ ----- ----- ------
Net pension plan expense.... $ 219 $ 29 $ 85 $ 88
------ ----- ----- ------
Contributions to the plan... $ 250 $ 69 $ 217 $ 346
------ ----- ----- ------
------ ----- ----- ------
</TABLE>

Actuarial present value of the benefit obligation as of December 31, 1994
and 1995 is as follows (in thousands):

<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Accumulated benefit obligation.................................................... $ 1,449 $ 1,431
Additional amounts related to pension benefit obligation compensation increases... 189 186
--------- ---------
Projected benefit obligation...................................................... 1,638 1,617
Less fair value of assets......................................................... (1,133) (1,118)
--------- ---------
Projected benefit obligation in excess of fair value.............................. $ 505 $ 499
--------- ---------
--------- ---------
</TABLE>

The projected benefit obligation of $505,000 and $499,000 at December 31,
1994 and 1995, respectively, is included in other long-term liabilities in the
consolidated balance sheet.

The significant assumptions for each of the years ended December 31, 1994
and 1995 were as follows:

<TABLE>
<S> <C>
Discount rate.................................................................. 9%
Expected long-term rate of return on plan assets............................... 9%
Rate of increase in future compensation levels................................. 7%
</TABLE>

F-13
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. DEBT

Long-term debt as of December 31, 1994 and 1995 consists of the following
(in thousands):

<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Term note........................................................................ $ 1,250 $ 4,600
Revolving line of credit......................................................... 3,965 11,812
Other............................................................................ 318 213
--------- ---------
Total.......................................................................... 5,533 16,625
Less current portion............................................................. (1,084) (4,630)
--------- ---------
Long-term debt................................................................... $ 4,449 $ 11,995
--------- ---------
--------- ---------
</TABLE>

Principal repayments on debt are due as follows at December 31, 1995 (in
thousands):

<TABLE>
<S> <C>
Year Ending December 31
1996...................................................................... $ 4,631
1997...................................................................... 1,126
1998...................................................................... 1,174
1999...................................................................... 1,318
2000...................................................................... 8,376
---------
$ 16,625
---------
---------
</TABLE>

Successor entered into a credit facility (the "Facility"), expiring in
February 2000, which includes a term note, a revolving line of credit and a
letter of credit facility. The term note (availability up to $6.0 million) is
payable in quarterly installments of $312,500 (pro rata based on amount
outstanding) beginning April 1, 1996, and carries interest payable monthly at
prime plus 1.25% or at LIBOR plus 3.0%. The rate on this term note at December
31, 1995 was 9.0%. The revolving line of credit provides for borrowing up to
$44.0 million with the actual borrowings limited to available collateral,
representing eligible receivables and inventory (approximately $19.5 million of
availability as of December 31, 1995). Interest on the revolving line of credit
is payable monthly at prime plus 1.0% or LIBOR plus 2.75%. The rate on the
revolver at December 31, 1995 was 9.0%. The revolving line of credit agreement
provides a sub limit facility for letters of credit up to a maximum of $15.0
million (approximately $3.5 million outstanding as of December 31, 1995). Fees
for outstanding letters of credit are payable quarterly at 2.0% per annum. The
Company also pays a monthly unused line fee on the revolver at .5% per annum.
Borrowings and outstanding letters of credit under the Facility are secured by
substantially all of the assets of the Company. The Facility includes certain
financial covenants and restrictions on new indebtedness and the payment of cash
dividends. The Facility also carries a prepayment penalty which expires on March
31, 1996. The Company was in compliance with all of its financial covenants as
of December 31, 1995. The Company incurred approximately $1.5 million of debt
issuance costs related to this facility which are being amortized over the
expected life of the Facility. Accumulated amortization of these costs at
December 31, 1994 and 1995 was approximately $225,000 and $1,004,000,
respectively.

During 1996, borrowings under the Facility increased to finance the
Company's seasonal working capital growth.

In addition, the Company has a European overdraft facility of approximately
$2.6 million. The Company also has a European letter of credit facility. The
bank overdraft facility is reduced by the value of outstanding letters of credit
at that time. As of December 31, 1995, the Company had outstanding letters of
credit under the European facility of approximately $524,000.

F-14
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. DEBT (CONTINUED)
DEBT EXTINGUISHMENT -- In May 1994, the Predecessor settled three notes
payable with a face value of $1,302,000 for cash of $725,000. These settlements
resulted in an extraordinary gain of $577,000.

9. SUBORDINATED DEBT

In connection with the Acquisition, the Company issued approximately $24.3
million of subordinated debt which matures on June 7, 2001 with 10.1% interest
payable quarterly. The subordinated debt agreement includes certain financial
covenants and restricts new indebtedness and the sale of assets and also
contains an acceleration clause in the case of a public offering. The Company
may also prepay this debt (but only after all senior debt has been repaid) with
no prepayment penalty. The Company incurred approximately $1.6 million of debt
issuance costs related to the subordinated debt which are being amortized over
the life of the debt. Accumulated amortization of these costs at December 31,
1994 and 1995 was approximately $128,000 and $357,000, respectively.

10. LEASES

The Company leases buildings, equipment and vehicles under non-cancelable
lease agreements that expire at various dates through 2003. The leases generally
provide for renewal options for periods ranging from three to ten years. The
building leases generally provide for additional rents based on store sales and
for payments of taxes, insurance and maintenance expenses related to the leased
assets.

Future minimum lease payments under all leases with initial or remaining
non-cancelable lease terms in excess of one year as of December 31, 1995 are as
follows (amounts in thousands):

<TABLE>
<CAPTION>
CAPITAL LEASES OPERATING LEASES
--------------- -----------------
<S> <C> <C>
Year Ending December 31
1996................................................................ $ 225 $ 3,720
1997................................................................ 61 3,323
1998................................................................ 0 3,245
1999................................................................ 0 3,234
2000................................................................ 0 2,823
Thereafter.......................................................... 0 2,590
------ --------
Minimum lease commitments........................................... 286 $ 18,935
--------
--------
Less: amount representing interest.................................. (18)
------
Present value of net minimum lease payments......................... 268
Less: current portion............................................... (208)
------
Long term portion................................................... $ 60
------
------
</TABLE>

The cost of property under capitalized leases was $348,000 and $245,000, as
of December 31, 1994 and 1995, respectively, and primarily represents furniture,
fixtures and office equipment. Accumulated amortization related to these leases
was approximately $151,000 and $174,000 as of December 31, 1994 and 1995,
respectively.

F-15
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. LEASES (CONTINUED)
Rental expense for operating leases was as follows (in thousands):

<TABLE>
<CAPTION>
FOR THE FOR THE
FOR THE PERIOD FROM PERIOD FROM FOR THE
YEAR ENDED APRIL 1, 1994 TO JUNE 7, 1994 TO YEAR ENDED
MARCH 31, 1994 JUNE 6, 1994 DECEMBER 31, 1994 DECEMBER 31, 1995
--------------- ----------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Minimum rentals........... $ 4,004 $ 636 $ 1,850 $ 2,569
Contingent rentals........ 184 4 71 121
------- ----- ------- -------
$ 4,188 $ 640 $ 1,921 $ 2,690
------- ----- ------- -------
------- ----- ------- -------
</TABLE>

11. COMMITMENTS AND CONTINGENCIES

LITIGATION -- The Company is party to claims and litigation that arise in
the normal course of business. Management believes that the ultimate outcome of
these claims and litigation will not have a material adverse effect on the
Company's results of operations or financial condition.

PURCHASE COMMITMENTS -- The Company has approximately $20.2 million of
purchase commitments as of December 31, 1995 related to goods ordered for future
production in the normal course of business. Certain of these commitments are
collateralized by the outstanding letters of credit (see Note 8).

FOREIGN CURRENCY RECEIVABLES AND LOANS -- The Company sells merchandise to
retailers through Europe and the U.K. These sales are denominated in the local
currency of the retailer's country. The Company's U.K. subsidiary generally
hedges these receivables using foreign currency loans ($3.8 million and $1.8
million outstanding at December 31, 1995 and 1994, respectively). These loans
are denominated in various currencies, including German Deutsch Marks, French
Francs, Swedish Krona, Swiss Francs, Spanish Pesetas, Italian Lira, Dutch
Guilders and Belgian Dollars. Proceeds from these loans are deposited with the
lending institution and can only be used to pay off the foreign currency loans.
The balance of the cash accounts at December 31, 1995 and 1994 was $3.8 million
and $1.8 million, respectively. The cash accounts must be maintained at a level
sufficient to collateralize the foreign currency loans. These cash accounts and
the related foreign currency loans have been offset against each other in the
balance sheet. Receivables and loans denominated in foreign currencies at
December 31, 1994 and 1995 were translated using the exchange rates at each
date.

12. STOCKHOLDERS' EQUITY

COMMON STOCK -- In connection with the Acquisition, on June 7, 1994 the
Company issued 2,271,000 shares of common stock with a par value of $.0025 per
share for cash of $166,000, services rendered of $26,000 and debt issuance costs
of $320,000.

SERIES A PREFERRED STOCK -- In connection with the Acquisition, on June 7,
1994 the Company issued 1,935,781 shares of Series A Preferred Stock for cash of
$12,166,667 and for services rendered of approximately $100,000. Series A
Preferred Stock is entitled to dividends of 10% of the face value payable
quarterly in either cash or additional shares of Series A Preferred Stock.
Series A Preferred Stock is convertible into Common Stock at a ratio of two and
one half shares of Series A Preferred Stock to 4.44 shares of common stock, as
adjusted in the event of future dilution. Series A Preferred Stock also carries
liquidation preferences of face value ($14,316,459 as of December 31, 1995).
Stockholders' equity includes accrued and undeclared preferred stock dividends.
Series A Preferred Stock has voting rights on an as converted basis.

F-16
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK INCENTIVE PLANS -- The Company's Stock Incentive Plans, as amended,
provide for the issuance of nonqualified stock options and restricted stock to
key employees and officers. A total of 1,889,000 shares of Common Stock may be
issued under these plans. Stock options must be issued at an exercise price of
not less than fair market value. Restricted stock may be issued with terms
determined by the compensation committee of the Board of Directors. Holders of
such restricted shares have no shareholder rights until all restrictions have
been eliminated. Stock grants vest in 2004 with earlier vesting if the Company
achieves certain profitability targets.

13. STOCKHOLDERS' EQUITY

Activity in the stock option plan from inception through December 31, 1995
was as follows:

<TABLE>
<CAPTION>
OPTIONS OPTION PRICE
----------- ------------------
<S> <C> <C>
Outstanding, June 7, 1994............................................. 0 $ 0.00
1994 Activity:
Granted........................................................... 444,000 $ .225
-----------
Outstanding, December 31, 1994........................................ 444,000 $ .225
1995 Activity:
Granted........................................................... 808,267 $ 1.126
Canceled.......................................................... (172,259) $ .225
-----------
Outstanding, December 31, 1995........................................ 1,080,008 $ .225 -- $1.126
-----------
-----------
Exercisable, December 31, 1995........................................ 443,139 $.225 -- $1.126
-----------
-----------
</TABLE>

At December 31, 1995, 178,710 shares were available for stock option grants.

During 1994, 1,159,950 restricted shares were issued in exchange for
$261,250 of nonrecourse promissory notes. During 1995, 529,443 of these shares
and $119,244 of the promissory notes were canceled. No shares are available for
restricted stock grants.

SECURITY HOLDERS' AGREEMENT -- Holders of common and preferred stock,
including holders under the Company's Stock Incentive Plans, are bound under the
Security Holders' Agreement which includes certain restrictions on the sale of
their shares, certain preemptive and rights of first refusal for sales of stock
by the Company or other holders of the Company's stock and certain registration
rights. This agreement also provides for the mandatory sale of the holders'
share in certain cases when the major shareholder has agreed to sell its
holdings.

14. RELATED PARTY TRANSACTIONS

A shareholder of the Company provides management services to the Company for
a fee of $250,000 per year, payable quarterly.

During 1995, the Company was a party to a license agreement with High
Performance Sports, Ltd., a related party. Revenues to the Company under this
agreement were approximately $280,000 during 1995.

15. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure of the estimated fair value of financial instruments. The
carrying value of cash and cash equivalents, accounts

F-17
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
receivable, accounts payable and debt approximates their estimated fair values
at December 31, 1995, except for the Company's subordinated debt which has a
fair value of approximately $23.1 million.

16. SEGMENT INFORMATION

The following table summarizes the Company's operations by geographical
area. The Company's intercompany sales are insignificant (in thousands).

<TABLE>
<CAPTION>
UNITED
STATES CANADA EUROPE CONSOLIDATED
--------- --------- --------- -------------
<S> <C> <C> <C> <C>
For the fiscal year ended March 31, 1994
Net Sales.................................................... $ 71,994 $ 0 $ 15,417 $ 87,411
Operating income............................................. 1,592 0 2,202 3,794
Income (loss) before provision for income taxes and
extraordinary item......................................... (427) 0 1,975 1,548
Identifiable assets.......................................... 40,992 0 9,371 50,363
For the period from April 1, 1994 to June 6, 1994
Net Sales.................................................... $ 5,714 $ 0 $ 3,371 $ 9,085
Operating income (loss)...................................... (1,830) 0 308 (1,522)
Income (loss) before provision for income taxes and
extraordinary item......................................... (1,868) 0 307 (1,561)
Identifiable assets.......................................... 36,840 0 9,086 45,926
For the period from June 7, 1994 to December 31, 1994
Net Sales.................................................... $ 49,899 $ 0 $ 10,675 $ 60,574
Operating income............................................. 8,268 0 1,587 9,855
Income (loss) before provision for income taxes and
extraordinary item......................................... 5,556 0 1,887 7,443
Identifiable assets.......................................... 57,323 0 9,226 66,549
For the fiscal year ended December 31, 1995
Net Sales.................................................... $ 96,069 $ 5,130 $ 20,335 $ 121,534
Operating income (loss)...................................... 8,635 (200) 2,089 10,524
Income (loss) before provision for income taxes and
extraordinary item......................................... 3,749 (271) 2,105 5,583
Identifiable assets.......................................... 72,411 1,617 10,480 84,508
</TABLE>

17. SUBSEQUENT EVENTS

On March 27, 1996, the Company amended its credit facility, principally to
increase the term note availability to $7 million and increase the revolving
line of credit facility to $58 million.

In March 1996 and May 1996, the Board of Directors declared stock dividends
which resulted in each share of common stock being split into 4.44 shares of
Common Stock. All stock related data in the accompanying financial statements
reflect the stock splits for all periods presented.

In March 1996, the Board of Directors authorized the amendment and
restatement of its Articles of Incorporation to increase the number of
authorized shares of Common Stock to 10,000,000 and Preferred Stock to
4,000,000. In May 1996, the Board of Directors authorized the amendment and
restatement of its Articles of Incorporation to increase the number of
authorized shares of Common Stock to 50,000,000.

F-18
<PAGE>
THE NORTH FACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

17. SUBSEQUENT EVENTS (CONTINUED)
INITIAL PUBLIC OFFERING OF COMMON STOCK (UNAUDITED) -- In July 1996, the
Company sold 2,823,611 shares of its Common Stock in the Company's initial
public offering of shares of Common Stock registered on Form S-1 with the
Securities and Exchange Commission (of which 2,600,000 shares were initially
sold to the underwriters on July 8, 1996 and 223,611 shares were sold on July
17, 1996, pursuant to the over allotment option granted to the underwriters).
These shares were sold at a price of $14.00 per share yielding net proceeds of
approximately $35.1 million after deducting underwriting discounts of $2.8
million and expenses of $1.7 million related to the offering. The proceeds were
used to repay certain portions of the Company's senior and subordinated
indebtedness.

Upon consummation of the Company's initial public offering, all outstanding
shares of Series A Preferred Stock, including accrued dividends, were converted
into 4,220,808 shares of Common Stock.

EXTRAORDINARY LOSS (UNAUDITED) -- Effective July 8, 1996, in conjunction
with the initial public offering, the Company's credit facility was
substantially restructured. The interest rate under the revolving portion of the
facility was reduced by 1.25% and interest under the term note portion was
reduced by 1.5% and the covenants were amended. Additionally, $14 million of
subordinated debt was repaid and the maturity date of the remaining $9 million
was extended to June 7, 2001. In connection with the restructuring of both the
credit facility and the subordinated debt, the Company recorded a non-cash
extraordinary loss in the third quarter of 1996 of $863,000, net of tax benefits
of $575,000, representing the write-off of deferred debt issuance costs.

F-19
<PAGE>
DESCRIPTION OF PICTURES AND CAPTIONS:

BACK INSIDE COVER -- (FOUR PICTURES DESCRIBED CLOCKWISE FROM UPPER LEFT,
CAPTIONS SHOULD APPEAR IN LOWER RIGHT CORNER OF EACH PHOTO)

<TABLE>
<CAPTION>
1) Man on skis jumping off cliff.
CAPTION: "THE NORTH FACE EXTREME TEAM MEMBER SCOT SCHMIDT BACK COUNTRY SKIING IN THE
CHUGACH RANGE, ALASKA."

<S> <C>
2) Looking down on man with large pack climbing up snow with glacial lake in background.
CAPTION: "CLIMBING TEAM MEMBER BILL CROUSE CLIMBS BETWEEN CAMP I AND CAMP II,
PUMORI, NEPAL."

3) Woman climbing up rock face above large circular indentation.
CAPTION: "ZOE BUNDROS CLIMBING IN RED RIVER GORGE, KENTUCKY."

4) Man and woman sitting outside tent on rock and snow outcropping.
CAPTION: "CLIMBING TEAM MEMBERS ALEX LOWE AND KITTY CALHOUN MAKE CAMP ON
MONT BLANC, FRANCE."
</TABLE>
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN
ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

--------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 3
The Company.................................... 6
Risk Factors................................... 8
Use of Proceeds................................ 16
Dividend Policy................................ 16
Price Range of Common Stock.................... 16
Capitalization................................. 17
Selected Consolidated Financial Data........... 18
Unaudited Pro Forma Statement of Operations.... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 20
Business....................................... 29
Management..................................... 42
Certain Transactions........................... 52
Principal and Selling Stockholders............. 53
Description of Capital Stock................... 54
Shares Eligible for Future Sale................ 57
Underwriting................................... 59
Legal Matters.................................. 60
Experts........................................ 60
Available Information.......................... 60
Index to Consolidated Financial Statements..... F-1
</TABLE>

2,500,000 SHARES

[LOGO]

COMMON STOCK

------------

PROSPECTUS
------------

ALEX. BROWN & SONS
INCORPORATED

HAMBRECHT & QUIST

J.P. MORGAN & CO.

, 1996

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all expenses, other than underwriting
discounts and commissions, in connection with the issuance and distribution of
the securities registered hereby. All the amounts shown are estimates, except
for the Securities and Exchange Commission registration fee, the NASD filing fee
and the Nasdaq National Market listing fee. All of the following fees and
expenses will be paid by the Company.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 20,940
NASD filing fee.................................................. 7,409
Nasdaq National Market listing fee............................... 17,500
Printing and engraving expenses.................................. 210,000
Legal fees and expenses.......................................... 200,000
Accounting fees and expenses..................................... 100,000
Public Company Directors and Officers Insurance Rider............ 65,000
Blue Sky fees and expenses (including counsel fees and
expenses)...................................................... 5,000
Transfer Agent, Registrar and Custodian fees and expenses........ 5,000
Miscellaneous.................................................... 119,151
---------
Total........................................................ $ 750,000
---------
---------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145(a) of the General Corporation Law of the State of Delaware
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no cause to believe his conduct was unlawful.

Section 145(b) provides that a Delaware corporation may indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted in
any of the capacities set forth above, against expenses actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted under similar standards, except that no indemnification may be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the court in which such action or suit was brought shall determine that despite
the adjudication of liability, such person is fairly and reasonably entitled to
be indemnified for such expenses which the court shall deem proper.

Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense of any claim, issue, or
matter therein, he shall be indemnified against expenses actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; and that the corporation may purchase and
maintain insurance on behalf of a director or officer of the corporation against
any liability asserted against him or incurred by him in any such capacity or
arising

II-1
<PAGE>
out of his status as such whether or not the corporation would have the power to
indemnify him against such liabilities under such Section 145.

Section 102(b)(7) of the General Corporation Law provides that a corporation
in its original certificate of incorporation or an amendment thereto validly
approved by stockholders may eliminate or limit personal liability of members of
its board of directors or governing body for breach of a director's fiduciary
duty. However, no such provision may eliminate or limit the liability of a
director for breaching his duty of loyalty, failing to act in good faith,
engaging in intentional misconduct or knowingly violating a law, paying a
dividend or approving a stock repurchase which was illegal, or obtaining an
improper personal benefit. A provision of this type has no effect on the
availability of equitable remedies, such as injunction or rescission, for breach
of fiduciary duty. The Company's Restated Certificate of Incorporation contains
such a provision.

The Company's Restated Certificate of Incorporation provides that the
Company shall indemnify officers and directors, and to the extent authorized by
the Board of Directors, employees and agents of the Company, to the full extent
permitted by and in the manner permissible under the laws of the State of
Delaware. In addition, the Restated Certificate of Incorporation also permits
the Board of Directors to authorize the Company to purchase and maintain
insurance against any liability asserted against any director, officer, employee
or agent of the Company arising out of his capacity as such.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since May 1, 1993, the Registrant issued and sold unregistered securities in
the following transactions:

1. On June 7, 1994, the Company issued to eight investors 2,271,064
shares of Common Stock for aggregate consideration of $511,501, of which
315,253 shares of Common Stock each was issued to two investors for cash and
promissory notes of $71,003 each.

2. On June 7, 1994, the Company issued to two investors 1,920,000 shares
of Series A Convertible Preferred Stock for aggregate consideration of
$12,166,667.

3. On June 7, 1994, the Company issued to one entity 15,781 shares of
Series A Convertible Preferred Stock in consideration for consulting
services rendered.

The issuance of the above securities was deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act of 1933, as amended, transactions not involving a public
offering. Appropriate legends were affixed to the share certificates and other
securities issued in such transactions. All purchasers had adequate access to
information about the Registrant through their relationships with the Company
and appropriate disclosure documents.

II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ ----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.

2.1(1) Purchase and Sale Agreement, dated as of May 25, 1994 by and among Odyssey Holding Inc. and The
North Face and TNF Holdings Company, Inc.

3.1 Amended and Restated Certificate of Incorporation of The North Face, Inc.

3.2(1) Amended and Restated Bylaws of The North Face, Inc.

4.1(1) Specimen Common Stock Certificate of The North Face, Inc.

5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.

10.1(1) Subordinated Note and Common Stock Purchase Agreement, dated as of June 7, 1994, between TNF
Holdings Company, Inc.,* and Whitney Subordinated Debt Fund, L.P., as amended by Amendment No. 1,
dated as of March 1, 1995, and Amendment No. 2, dated as of March 27, 1996.

10.1A(1) Subordinated Promissory Note due June 7, 2001 (issued pursuant to the Subordinated Note and Common
Stock Purchase Agreement, dated as of June 7, 1994, as amended, included in 10.1).

10.1B(1) Form of Amendment No. 3, dated as of , 1996, to Subordinated Note and Common Stock
Purchase Agreement (included in Exhibit 10.1).

10.1C(1) Form of Amended and Restated Promissory Note due June 7, 2001 (included in Exhibit 10.1A).

10.2(1) Preferred Stock Purchase Agreement, dated as of June 7, 1994, among TNF Holdings Company, Inc.,*
Whitney 1990 Equity Fund, L.P. and J.H. Whitney & Co., as amended by Amendment No. 1, dated as of
March 1, 1995, and Amendment No. 2, dated as of March 27, 1996.

10.2B(1) Form of Amendment No. 3, dated as of , 1996, to Preferred Stock Purchase Agreement
(included in Exhibit 10.2).

10.3(1) Management Stock Purchase and Non-Competition Agreement, dated as of June 6, 1994, among TNF
Holdings Company, Inc.,* Marsden S. Cason and William A. McFarlane, as amended by Amendment No. 1,
dated as of June 22, 1995.

10.4(1) Investor Stock Purchase Agreement, dated as of June 7, 1994, among TNF Holdings Company, Inc.,*
Richard T. Peery, Jack L. Richardson, Philip S. Schlein and Kenneth F. Siebel.

10.5(1) Stock Purchase Agreement, dated as of December 28, 1993, between TNF Holdings Company, Inc., a
California corporation, and Kabushiki Kaisha Goldwin, as amended by Memorandum, dated as of March
29, 1994, among TNF Holdings Company, Inc., a California corporation, and Kabushiki Kaisha Goldwin,
and Memorandum No. 2, dated as of May 20, 1994, between TNF Holdings Company, Inc., a California
corporation, and Kabushiki Kaisha Goldwin.

10.6(1) Securityholders Agreement, dated as of June 7, 1994, among TNF Holdings Company, Inc.,* Marsden S.
Cason, William A. McFarlane, J.H. Whitney & Co., Whitney 1990 Equity Fund, L.P., Whitney
Subordinated Debt Fund, L.P., Richard T. Peery, Jack L. Richardson, Philip S. Schlein and Kenneth F.
Siebel, as amended by Amendment No. 1, dated as of June 22, 1995.
</TABLE>

II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ ----------------------------------------------------------------------------------------------------
<C> <S>
10.7(1) Registration Rights Agreement, dated as of June 7, 1994, among TNF Holdings Company, Inc.,* J.H.
Whitney & Co., Whitney 1990 Equity Fund, L.P., Whitney Subordinated Debt Fund, L.P., Marsden S.
Cason and William A. McFarlane, as amended by Amendment No. 1, dated as of June 22, 1995, and
Amendment No. 2, dated as of May 20, 1996.

10.8(1) Amended and Restated Loan and Security Agreement, dated as of March 1, 1995, between The North Face,
Inc. and Heller Financial, Inc., as Agent and as a Lender, as amended by First Amendment, dated as
of May 4, 1995, Second Amendment, dated as of August , 1995, Third Amendment, dated as of March 27,
1996, and Fourth Amendment, dated May 8, 1996.

10.8A(1) Form of Second Amended and Restated Loan and Security Agreement, dated as of June , 1996, between
The North Face, Inc. and Heller Financial, Inc., as Agent and as a Lender.

10.9 TNF Holdings Company, Inc.* 1994 Stock Incentive Plan, as amended.

10.10(1) The North Face, Inc. 1995 Stock Incentive Plan.

10.11(1) The North Face, Inc. 1996 Stock Incentive Plan.

10.12(1) The North Face, Inc. 1996 Employee Stock Purchase Plan.

10.13(1) The North Face, Inc. 1996 Directors' Stock Option Plan.

10.14(1) Letter Employment Agreement, dated June 8, 1994, between Roxanna Prahser and TNF Holdings Company,
Inc.*

10.15(1) Letter Employment Agreement, dated May 3, 1995, between Roger Kase and The North Face, Inc.

10.16(1) Letter Employment Agreement, dated September 29, 1994, between Bart Jackson and The North Face, Inc.

10.17(1) Confidential Change in Status and General Release Agreement, entered into on April 25, 1996, to be
effective on and as of December 19, 1995, by and between William A. McFarlane and The North Face,
Inc.

10.18(1) Trademark License, dated October 29, 1993, between the North Face and W.L. Gore & Associates, Inc.

11.1 Computation of Pro Forma Net Income (Loss) Per Share.

21.1(1) List of Subsidiaries of The North Face, Inc.

23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in the opinion filed
as Exhibit 5.1 hereto).

23.2 Consent of Deloitte & Touche LLP.

24.1 Powers of Attorney (included on signature pages).

27.1 Financial Data Schedule.
</TABLE>

- --------------

* TNF Holdings Company, Inc., a Delaware corporation, changed its name to The
North Face, Inc. on June 8, 1994.

(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (No. 333-04107), declared effective on July 2, 1996.

(b) Financial Statement Schedules

All schedules are omitted because they are not applicable or are not
required, or because the required information is included in the financial
statements or notes thereto.

II-4
<PAGE>
ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
for such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.

(3) To provide to each underwriter at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by each such underwriter to permit prompt delivery to each
purchaser.

II-5
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San
Leandro, State of California, on October 28, 1996.

THE NORTH FACE, INC.

By: /s/ MARSDEN S. CASON
-----------------------------------------
Marsden S. Cason
CHIEF EXECUTIVE OFFICER

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Marsden S. Cason and Roxanna Prahser, and
each of them, his or her true and lawful agent, proxy and attorney-in-fact, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to (i) act on, sign and file
with the Securities and Exchange Commission any and all amendments (including
post-effective amendments) to this registration statement together with all
schedules and exhibits thereto and any subsequent registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together
with all schedules and exhibits thereto, (ii) act on, sign and file such
certificates, instruments, agreements and other documents as may be necessary or
appropriate in connection therewith, (iii) act on and file any supplement to any
prospectus included in this registration statement or any such amendment or any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and (iv) take any and all actions which may
be necessary or appropriate to be done, as fully for all intents and purposes as
he or she might or could do in person, hereby approving, ratifying and
confirming all that such agent, proxy and attorney-in-fact or any of his
substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURES TITLE OR CAPACITIES DATE
- ------------------------------ -------------------------- -------------------

Chief Executive Officer
/s/ MARSDEN S. CASON and Director
---------------------------- (Principal Executive October 28, 1996
Marsden S. Cason Officer)

/s/ WILLIAM N. SIMON
---------------------------- President and Director October 28, 1996
William N. Simon

/s/ ROXANNA PRAHSER Chief Financial Officer
---------------------------- (Principal Financial and October 28, 1996
Roxanna Prahser Accounting Officer)

/s/ RAY E. NEWTON, III
---------------------------- Chairman and Director October 28, 1996
Ray E. Newton, III

/s/ PETER M. CASTLEMAN
---------------------------- Director October 28, 1996
Peter M. Castleman

---------------------------- Director
James Fifield

/s/ MICHAEL DOYLE
---------------------------- Director October 28, 1996
Michael Doyle

II-6
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ----------- ------------------------------------------------------------------------------------------------ -----
<C> <S> <C>
1.1 Form of Underwriting Agreement.

3.1 Amended and Restated Certificate of Incorporation of The North Face, Inc.

5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation

10.9 TNF Holdings, Inc.* 1994 Stock Incentive Plan, as amended.

11.1 Computation of Pro Forma Net Income (Loss) Per Share.

23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in the opinion
filed as Exhibit 5.1 hereto).

23.2 Consent of Deloitte & Touche LLP.

24.1 Powers of Attorney (included on signature pages).

27.1 Financial Data Schedule.
</TABLE>

- --------------

* TNF Holdings Company, Inc., a Delaware corporation, changed its name to The
North Face, Inc. on June 8, 1994.

<PAGE>

2,500,000 Shares

THE NORTH FACE, INC.

Common Stock

UNDERWRITING AGREEMENT

November __, 1996

Alex. Brown & Sons Incorporated
Hambrecht & Quist LLC
J.P. Morgan Securities Inc.
As Representatives of the
Several Underwriters
c/o Alex. Brown & Sons Incorporated
135 East Baltimore Street
Baltimore, Maryland 21202

Ladies and Gentlemen:

The North Face, Inc., a Delaware corporation (the "Company"), proposes
to sell to the several underwriters (the "Underwriters") named in Schedule I
hereto for whom you are acting as representatives (the "Representatives") an
aggregate of 1,000,000 shares of the Company's Common Stock, $0.0025 par
value (the "Common Stock"), and the selling stockholders of the Company named
in Schedule II hereto (each, a "Selling Stockholder and together, the
"Selling Stockholders") propose to sell to the Underwriters an aggregate of
1,500,000 shares of Common Stock (the "Firm Shares"). The respective amounts
of the Firm Shares to be so purchased by the several Underwriters are set
forth opposite their names in Schedule I hereto, and the respective amounts
to be sold by each of the Selling Stockholders are set forth opposite their
names in Schedule II hereto. Certain of the Selling Stockholders named in
Schedule III also propose to sell at the Underwriters' option an aggregate of
up to 375,000 additional shares of the Company's Common Stock (the "Option
Shares"). The Company and the Selling Stockholders are sometimes referred to
herein collectively as the "Sellers."

As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and the
Option Shares (to the extent the aforementioned option is exercised) are herein
collectively called the "Shares."

<PAGE>

In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:

1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

(a) The Company represents and warrants as follows:

(i) A registration statement on Form S-1 (File No. 333-
________) with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Act") and the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has been
filed with the Commission under the Act. Copies of such registration statement,
including any amendments thereto, the preliminary prospectuses (meeting the
requirements of Rule 430A of the Rules and Regulations) contained therein, the
exhibits, financial statements and schedules, as finally amended and revised,
and any abbreviated registration statement filed pursuant to Rule 462(b) of the
Rules and Regulations (a "462(b) Registration Statement"), have heretofore been
delivered by the Company to you. Such registration statement, including any
462(b) Registration Statement, herein referred to as the "Registration
Statement," which shall be deemed to include all information omitted therefrom
in reliance upon Rule 430A and contained in the Prospectus referred to below,
has been declared effective by the Commission under the Act and no post-
effective amendment to the Registration Statement has been filed as of the date
of this Agreement. The form of prospectus first filed by the Company with the
Commission pursuant to its Rule 424(b) and Rule 430A is herein referred to as
the "Prospectus." Each preliminary prospectus included in the Registration
Statement prior to the time it becomes effective is herein referred to as a
"Preliminary Prospectus." Any reference herein to any Prospectus shall be deemed
to include any supplements or amendments thereto, filed with the Commission
after the date of filing of the Prospectus under Rules 424(b) and 430A, and
prior to the termination of the offering of the Shares by the Underwriters.

(ii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and conduct
its business as described in the Registration Statement; each of the
subsidiaries of the Company as listed in Exhibit 21.1 to Item 16(a) of the
Registration Statement (collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing or has such
other comparable status under the laws of the jurisdiction of its incorporation,
with corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement; the Company and each of
the Subsidiaries are duly qualified to transact business in all jurisdictions in
which the conduct of their business requires such qualification, except where
the failure to be qualified would not have a material adverse effect on the
condition (financial or otherwise), business, results of operations or prospects
of the Company or the Subsidiaries; the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable and, except as set forth in the Registration Statement,
are owned by the Company free and clear of all liens, encumbrances and security
interests; and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to

<PAGE>

convert any obligations into shares of capital stock or ownership interests in
the Subsidiaries are outstanding.

(iii) The outstanding shares of Common Stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable;
all Firm Shares and Option Shares to be sold by the Selling Stockholders have
been duly authorized and, as of the Closing Date or the Option Closing Date, as
the case may be, (as such dates are hereinafter defined) will be validly issued,
fully paid and non-assessable; the portion of the Firm Shares to be issued and
sold by the Company have been duly authorized for issuance and sale to the
Underwriters and when issued and paid for as contemplated herein will be validly
issued, fully paid and non-assessable; and no preemptive rights of stockholders
exist with respect to any of the Shares or the issue and sale thereof. Except as
disclosed in the Prospectus, there are no options to purchase from the Company,
nor any preemptive rights or other rights to subscribe for or to purchase from
the Company, any securities or obligations convertible into, or any contracts or
commitments by the Company to issue or sell, shares of the Company's capital
stock or any such options, rights or convertible securities or obligations.

(iv) The authorized and outstanding capital stock of the
Company and the Shares conform with the statements concerning them in the
Registration Statement and the Prospectus.

(v) The Commission has not issued an order preventing or
suspending the use of any Preliminary Prospectus relating to the proposed
offering of the Shares nor instituted proceedings for that purpose. The
Registration Statement contains and the Prospectus and any amendments or
supplements thereto will contain all statements which are required to be stated
therein by, and in all material respects conform or will conform, as the case
may be, to the requirements of, the Act and the Rules and Regulations. Neither
the Registration Statement nor any amendment thereto, and neither the Prospectus
nor any supplement thereto, contains or will contain, as the case may be, any
untrue statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
any Underwriter through the Representatives, specifically for use in the
preparation thereof.

(vi) The consolidated financial statements of the Company and
the Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, other than the pro forma financial statements, present
fairly the consolidated financial position and results of operations of the
Company and Subsidiaries, at the indicated dates and for the indicated periods.
Such financial statements have been prepared in accordance with generally
accepted principles of accounting, consistently applied throughout the periods
involved, and all adjustments necessary for a fair presentation of results for
such periods have been made. The summary financial and statistical data and the
pro forma financial statements included in the

<PAGE>

Registration Statement present fairly the information shown therein and have
been compiled on a basis consistent with the financial statements presented
therein.

(vii) There is no action or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency which is expected to
result in any material adverse change in the business or condition of the
Company and of the Subsidiaries taken as a whole, except as set forth in the
Registration Statement.

(viii) The Company and the Subsidiaries have good and
marketable title to all of the properties and assets reflected in the financial
statements (or as described in the Registration Statement) hereinabove
described, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except those reflected in such financial statements (or as described in the
Registration Statement) or which are not material in amount. The Company and the
Subsidiaries occupy their leased properties under valid and binding leases
conforming to the description thereof set forth in the Registration Statement.
All real and personal property owned or leased by the Company and the
Subsidiaries (A) complies with applicable federal, state, local and foreign
statutes, rules, regulations, orders and laws and all covenants, conditions and
restrictions, (B) is free from known defects, (C) is in good condition and
repair (ordinary wear and tear excepted), and (D) is in a condition suitable for
the business of the Company and the Subsidiaries as it is currently being
conducted, except where the failure to be in such compliance, to be free from
such compliance, to be free from such defects and to be in such condition would
not have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company or the Subsidiaries.

(ix) The Company and the Subsidiaries have filed all federal,
state and foreign income tax returns which have been required to be filed and
have paid all taxes indicated by said returns and all assessments received by
them or any of them to the extent that such taxes have become due, except such
taxes and assessments as are being contested in good faith, and the Company has
no knowledge of any tax deficiency which has been or might be asserted against
the Company or the Subsidiaries which might have a material adverse effect on
the condition (financial or otherwise), business, results of operations or
prospects of the Company or the Subsidiaries.

(x) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented, there
has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole or the earnings,
business affairs, management, or business prospects of the Company and its
Subsidiaries taken as a whole, whether or not occurring in the ordinary course
of business, and there has not been any material transaction entered into by the
Company or the Subsidiaries, other than transactions in the ordinary course of
business and changes and transactions contemplated by the Registration
Statement, as it may be amended or supplemented. The Company and the
Subsidiaries have no material contingent obligations which are not disclosed in
the Registration Statement, as it may be amended or supplemented.

<PAGE>

(xi) Neither the Company nor any of the Subsidiaries is (A)
in violation of its certificate of incorporation or bylaws or similar
instruments, (B) in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any contract,
indenture, mortgage, loan agreement, joint venture or other agreement or
instrument to which the Company or any Subsidiary is a party or by which it
or any of its properties may be bound, or (C) in violation of any law, order,
rule, regulation, injunction or decree of any government, government
instrumentality or court, domestic or foreign, of which it has knowledge,
except, in the case of (B) and (C), where any such default or violation would
not have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company.

(xii) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement on the part of the Company,
enforceable in accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited by applicable law or equitable
principles, and except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, or by general equitable principles;
the execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a
breach or violation of any of the terms and provisions of or constitute a
default under (A) the certificate of incorporation or bylaws of the Company,
(B) any indenture, mortgage, deed of trust, loan agreement, bond, debenture,
note agreement or other evidence of indebtedness, or any lease, contract or
other agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which the property of the Company or any of its Subsidiaries
is bound, or (C) any law, order, rule, regulation, writ, injunction, judgment
or decree of any court or governmental agency or body having jurisdiction
over the Company or any of its Subsidiaries or over the properties of the
Company or any if its Subsidiaries; except, in the case of (B) and (C), where
any such default or violation would not have a material adverse effect on the
condition (financial or otherwise), business, results of operations or
prospects of the Company.

(xiii) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or may be necessary to
qualify the Shares for public offering by the Underwriters under State
securities or Blue Sky laws) has been obtained or made and is in full force and
effect.

(xiv) The Company and each of the Subsidiaries holds all
material licenses, certificates and permits from governmental authorities which
are necessary to the conduct of their businesses; and neither the Company nor
any of the Subsidiaries has infringed any patents, patent rights, trade names,
trademarks, service marks, trade dress or copyrights of any third party, which
infringement is material to the business of the Company and the Subsidiaries
taken as a whole.

<PAGE>

(xv) Deloitte & Touche LLP, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and the
Rules and Regulations.

(xvi) There is no contract or document of the Company or any of
its Subsidiaries that is required to be described in the Prospectus or filed as
an exhibit to the Registration Statement by the Act or by the Rules and
Regulations which has not been accurately described in all material respects in
the Prospectus or filed as an exhibit.

(xvii) Each of the Company and the Subsidiaries is conducting
business in compliance with all applicable federal, state, local, and foreign
laws, rules and regulations of the jurisdictions in which it is conducting
business, including without limitation, all applicable federal, state, local and
foreign laws and regulations governing employee and labor matters (including
minimum wage, worker's compensation and related matters) and environmental
matters, except where the failure to be so in compliance would not have a
material adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company.

(xviii) Each of the Company and the Subsidiaries maintains
insurance of types and in amounts the Company deems adequate for their
businesses, including but not limited to, insurance covering real and personal
property owned or leased by the Company against theft, damage, destruction, acts
of vandalism and liability resulting from the sale of the Company's products and
all other risks customarily insured against, all of which insurance is in full
force and effect.

(xix) No labor disturbance by the employees of the Company or
any of the Subsidiaries exists or is imminent that might be expected to result
in any material adverse change in the condition (financial or otherwise),
business, results of operations or prospects of the Company.

(xx) Neither the Company nor any of the Subsidiaries has at any
time (A) made any contributions to any candidate for political office, or failed
to disclose fully any such contribution, in violation of applicable law or (B)
made any payment to any state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by applicable law.

(xxi) The Common Stock has been approved for quotation on the
Nasdaq National Market, and The Company has timely filed a Notice of Listing of
Additional Shares with The Nasdaq Stock Market with respect to the Shares.

(xxii) The Company has not distributed and will not distribute
prior to the Closing Date or on any date on which Option Shares are to be
purchased, as the case may be, any offering material in connection with the
offering and sale of the Shares other than the Preliminary Prospectus, the
Prospectus, the Registration Statement and other materials permitted by the Act
and the Rules and Regulations.

<PAGE>

(xxiii) The Company has not taken and will not take, directly
or indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.

(xxiv) The Company has not since the filing of the
Registration Statement, except in connection with the sale of the Shares of the
Company under this Agreement, (A) sold, bid for, purchased, attempted to induce
any person to purchase or paid anyone any compensation for soliciting purchases
of, the Shares or (B) paid or agreed to pay any person any compensation for
soliciting another to purchase any other securities of the Company.

(xxv) The Company is not, and will not on the Closing Date or
the Option Closing Date (as such dates are hereinafter defined) be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

(xxvi) The Company is not aware that (A) any executive, key
employee or significant group of employees of the Company or any Subsidiary
plans to terminate employment with the Company or such Subsidiary or (B) any
such executive or key employee is subject to a nondisclosure, noncompete,
confidentiality, employment, consulting or similar agreement that would be
violated by the present or proposed business activities of the Company or its
Subsidiaries.

(xxvii) Each of the Company and its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with management's
general or specific authorization, (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted principles of accounting and to maintain accountability for assets,
(C) access to its assets is permitted only in accordance with management's
general or specific authorization and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to differences.

(xxviii) The Company currently is not involved in any
discussions or negotiations with respect to any potential acquisition of any
third party or parties which, if consummated, would be required to be disclosed
in the Prospectus.

(b) Each of the Selling Stockholders severally represents and
warrants as follows:

(i) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder of this
Agreement and the Power of Attorney (the "Power of Attorney") and the Custody
Agreement (the "Custody Agreement") hereinafter referred to, and for the sale
and delivery of the Shares to be sold by such Selling Stockholder hereunder,
have been obtained; and such Selling Stockholder has the full right, power and
authority to enter into this Agreement, the Power of Attorney and the Custody

<PAGE>

Agreement and to sell, assign, transfer and deliver the Shares to be sold such
Selling Stockholder.

(ii) This Agreement, the Custody Agreement and the Power of
Attorney have been duly authorized, executed and delivered by such Selling
Stockholder and are valid and binding agreements on the part of such Selling
Stockholder, enforceable in accordance with their respective terms, except as
rights to indemnity and contribution hereunder may be limited by applicable law
or equitable principles, and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, or by general equitable principles;
the execution, delivery and performance of this Agreement, the Custody Agreement
and the Power of Attorney and the consummation of the transactions herein and
therein contemplated will not result in a breach or violation of any of the
terms and provisions of or constitute a default under (A) any indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, or any lease, contract or other agreement,
instrument or organizational documents to which such Selling Stockholder is a
party or by which the property of such Selling Stockholder is bound, or (B) any
law, order, rule, regulation, writ, injunction, judgment or decree of any court
or governmental agency or body having jurisdiction over such Selling Stockholder
or over the properties of such Selling Stockholder; except where any such
default or violation would not have a material adverse effect on the condition
(financial or otherwise), business, results of operations or prospects of such
Selling Stockholder.

(iii) Such Selling Stockholder has and at the Closing Date and
the Option Closing Date, as the case may be (as such dates are hereinafter
defined), will have good and valid title to the Firm Shares and the Option
Shares to be sold by such Selling Stockholder, free of any liens, encumbrances,
equities and claims, and full right, power and authority to effect the sale and
delivery of such Firm Shares and Option Shares; and upon the delivery of and
payment for such Shares pursuant to this Agreement, good and valid title
thereto, free of any liens, encumbrances, equities and claims, will be
transferred to the several Underwriters.

(iv) The sale of the Shares to be sold by such Selling
Stockholder hereunder and the performance of this Agreement, the Power of
Attorney and the Custody Agreement and the consummation by such Selling
Stockholder of the transactions herein and therein contemplated and the
fulfillment by such Selling Stockholder of the terms hereof and thereof will not
result in a breach of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust or other agreement or
instrument to which such Selling Stockholder is a party, or of any order, rule
or regulation applicable to such Selling Stockholder of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.

(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or which has constituted, or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock.

<PAGE>

(vi) To the extent that any statement or omissions made in the
Registration Statement, any Preliminary Prospectus, the Propsectus, or any
amendment or supplement to any of the foregoing are made in reliance upon and in
conformity with written information furnished to the Company by such Selling
Stockholder expressly for use therein, such Preliminary Prospectus, at the time
of filing, conformed in all material respects with the requirements of the Act
and the Rules and Regulations, and the Registration Statement and the Prospectus
conform and any amendment sor supplements will conform, in all material respects
to the requirements of the Act and the Rules and Regulations.

(vii) Such Selling Stockholder is familiar with the
Registration Statement and has no knowledge of any material fact, condition
or information not disclosed in the Registration Statement which has
materially adversely affected or may materially adversely affect the business
of the Company or any of the Subsidiaries; and the sale of the Option Shares
by such Selling Stockholder pursuant hereto is not prompted by any
information concerning the Company or any of the Subsidiaries which is not
set forth in the Registration Statement.

(viii) Such Selling Stockholder has reviewed the
representations and warranties contained in Section 1(a) hereof and has no
reason to believe that the representations and warranties of the Company
contained in Section l(a) are not true and correct.

(ix) Such Selling Stockholder has reviewed each Preliminary
Prospectus, the Prospectus and the Registration Statement and has no reason
to believe that the Preliminary Prospectus, at the time of filing, did not
contain any untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and the Registration Statement and the Prospectus do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the Selling Stockholder makes no representations or
warranties as to information contained in or omitted from the Registration
Statement or the Prospectus, or any such amendment or supplement, in reliance
upon, and in conformity with, written information furnished to the Company by
or on behalf of any Underwriter through the Representatives, specifically for
use in the preparation thereof.

(x) The Shares represented by certificates under the Custody
Agreement are subject to the interests of the Underwriters hereunder, and the
arrangements made by such Selling Stockholders for such custody, and the
appointment by such Selling Stockholder of the Attorneys-in-Fact by the Power of
Attorney, are to that extent, irrevocable. The obligations of any Selling
Stockholder hereunder shall not be terminated by operation of law, whether by
the dissolution of a partnership[, corporation or other entity] which is a
Selling Stockholder, by the death or incapacity of a Selling Stockholder or by
the occurrence of any other event. If any partnership, corporation or other
entity should be dissolved, or if any other event should occur, before the
delivery of the Shares hereunder, the Shares shall be delivered

<PAGE>

by or on behalf of such Selling Stockholder in accordance with the terms and
conditions of the Agreement and of the Custody Agreement, and such actions taken
by the Attorneys-in-Fact pursuant to the Power of Attorney shall be as valid as
if such dissolution, death, incapacity or other event had not occurred,
regardless of whether or not the Custodian, the Attorneys-in-Fact, or any of
them, hall have received notice of such death, incapacity, termination,
dissolution or other event.

2. PURCHASE, SALE AND DELIVERY OF THE SHARES. On the basis of the
representations, warranties and covenants herein contained, and subject to the
conditions herein set forth, the Company and Selling Stockholders agree to sell
to the Underwriters and each Underwriter agrees, severally and not jointly, to
purchase, at a price of $_____ per share, the number of Firm Shares set forth
opposite the name of each Underwriter in Schedule I hereof, subject to
adjustments in accordance with Section 9 hereof. The number of Firm Shares to
be purchased by each Underwriter from each Seller shall be as nearly as
practicable in the same proportion as the number of Firm Shares being purchased
by each Underwriter bears to the total number of Firm Shares to be sold
hereunder.

Certificates in negotiable form for the total number of the Shares to be
sold hereunder by the Selling Stockholders have been placed in custody with
American Stock Transfer & Trust Company, as custodian (the "Custodian")
pursuant to the Custody Agreement executed by each Selling Stockholder for
delivery of any Firm Shares and Option Shares to be sold hereunder by the
Selling Stockholders. Each of the Selling Stockholders specifically agrees
that any Firm Shares and Option Shares represented by the certificates held
in custody for the Selling Stockholders under the Custody Agreement are
subject to the interests of the Underwriters hereunder, that the arrangements
made by the Selling Stockholders for such custody are to that extent
irrevocable, and that the obligations of the Selling Stockholders hereunder
shall not be terminable by any act or deed of the Selling Stockholders (or by
any other person, firm or corporation including the Company, the Custodian or
the Underwriters) or by operation of law (including the death of an
individual Selling Stockholder or the dissolution of a partnership or
corporate Selling Stockholder) or by the occurrence of any other event or
events, except as set forth in the Custody Agreement. If any such event
should occur prior to the delivery to the Underwriters of the Firm Shares or
the Option Shares hereunder, certificates for the Firm Shares or the Option
Shares, as the case may be, shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such event has not
occurred. The Custodian is authorized to receive and acknowledge receipt of
the proceeds of sale of the Shares held by it against delivery of such Shares.

Payment for the Firm Shares to be sold hereunder by Company is to be
made to the order of the Company to an account of the Company designated by
notice to the Representatives at least two (2) business days prior to the
Closing Date, and payment for the shares to be sold hereunder by the Selling
Stockholders is to be made to the order of the Custodian for the account of the
Selling Stockholders, in each case in New York Clearing House funds by wire
transfer or certified or bank cashier's checks against delivery of certificates
therefor to the Representatives for the several accounts of the Underwriters
(including without

10.

<PAGE>

limitation by "full-fast" electronic transfer by Depository Trust Company). Such
payment and delivery are to be made at the offices of Alex. Brown & Sons
Incorporated, 135 East Baltimore Street, Baltimore, Maryland, at 10:00 a.m.,
Baltimore time, on the fifth business day after the date of this Agreement or at
such other time, date or place not later than five business days thereafter as
you and the Company shall agree upon, such time and date being herein referred
to as the "Closing Date." (As used herein, "business day" means a day on which
the New York Stock Exchange is open for trading and on which banks in New York
are open for business and not permitted by law or executive order to be closed.)
The certificates for the Firm Shares will be delivered in such denominations and
in such registrations as the Representatives request in writing not later than
the third full business day prior to the Closing Date, and will be made
available for inspection by the Representatives at least one business day prior
to the Closing Date.

In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, certain of
the Selling Stockholders named in Schedule III hereto hereby grant an option to
the several Underwriters to purchase the Option Shares at the price per share as
set forth in the first paragraph of this Section 2. The maximum number of
Option Shares to be sold by the Selling Stockholders is set forth opposite their
respective names on Schedule III hereto. The option granted hereby may be
exercised in whole or in part, but only once, and at any time upon written
notice given within 30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company, the Custodian and
to each of the Selling Stockholders setting forth the number of the Option
Shares as to which the several Underwriters are exercising the option, the names
and denominations in which the Option Shares are to be registered and the time
and date at which such certificates are to be delivered. If the option granted
hereby is exercised in part, the respective number of Option Shares to be sold
by each of the Selling Stockholders listed on Schedule III hereto shall be
determined on a pro rata basis in accordance with the percentages set forth
opposite their names on Schedule III hereto, adjusted by you in such manner as
to avoid fractional shares. The time and date at which certificates for Option
Shares are to be delivered shall be determined by the Representatives but shall
not be earlier than three (3) nor later than ten (10) full business days after
the exercise of such option, nor in any event prior to the Closing Date (such
time and date being herein referred to as the "Option Closing Date"). If the
date of exercise of the option is three or more days before the Closing Date,
the notice of exercise shall set the Closing Date as the Option Closing Date.
The number of Option Shares to be purchased by each Underwriter shall be in the
same proportion to the total number of Option Shares being purchased as the
number of Firm Shares being purchased by such Underwriter bears to 2,500,000,
adjusted by you in such manner as to avoid fractional shares. The option with
respect to the Option Shares granted hereunder may be exercised only to cover
over-allotments in the sale of the Firm Shares by the Underwriters. You, as
Representatives of the several Underwriters, may cancel such option at any time
prior to its expiration by giving written notice of such cancellation to the
Company. To the extent, if any, that the option is exercised, payment for the
Option Shares shall be made on the Option Closing Date in New York Clearing
House funds by certified or bank cashier's check drawn to the order of the each
of the Selling Stockholders for the shares to be sold by the Selling
Stockholders, in each case against delivery of certificates therefor (including
without limitation by "full-fast" electronic transfer by

11.

<PAGE>

Depository Trust Company) at the offices of Alex. Brown & Sons Incorporated, 135
East Baltimore Street, Baltimore, Maryland.

3. OFFERING BY THE UNDERWRITERS. It is understood that the several
Underwriters are to make a public offering of the Firm Shares as soon as the
Representatives deem it advisable to do so. The Firm Shares are to be initially
offered to the public at the initial public offering price set forth in the
Prospectus. The Representatives may from time to time thereafter change the
public offering price and other selling terms. To the extent, if at all, that
any Option Shares are purchased pursuant to Section 2 hereof, the Underwriters
will offer them to the public on the foregoing terms.

It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.

4. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.

(a) The Company covenants and agrees with the several Underwriters
and the Selling Stockholders that:

(i) The Company will (A) prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus
containing information previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Rules and Regulations,
(B) not file any amendment to the Registration Statement or supplement to the
Prospectus of which the Representatives shall not previously have been advised
and furnished with a copy or to which the Representatives shall have reasonably
objected in writing or which is not in compliance with the Rules and Regulations
and (C) file on a timely basis all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
subsequent to the date of the Prospectus and prior to the termination of the
offering of the Shares by the Underwriters.

(ii) The Company will advise the Representatives promptly of
any request by the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose, and the Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof, if issued.

(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or

12.

<PAGE>

required to file such a consent. The Company will, from time to time, prepare
and file such statements, reports, and other documents, as are or may be
required to continue such qualifications in effect for so long as the
Representatives may reasonably request for distribution of the Shares.

(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement, but
without exhibits, and of all amendments thereto, as the Representatives may
reasonably request.

(v) If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event shall occur as a
result of which, in the judgment of the Company or in the opinion of counsel for
the Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or, if
it is necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with such law.

(vi) As soon as practicable, but no later than the
Availability Date (as defined below), the Company will make generally available
to its security holders earnings statements (which need not be audited) in
reasonable detail covering a period of at least 12 months beginning after the
effective date of the Registration Statement which will satisfy the provisions
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations. For the
purpose of the preceding sentence, "Availability Date" means the 45th day after
the end of the fourth fiscal quarter following the fiscal quarter that includes
the effective date of the Registration Statement.

(vii) The Company will, for a period of five years from the
Closing Date, deliver to the Representatives copies of annual reports and copies
of all other documents, reports and information furnished by the Company to its
stockholders or filed with any securities exchange pursuant to the requirements
of such exchange or with the Commission pursuant to the Act or the Securities
Exchange Act of 1934, as amended.

(viii) No offering, sale or other disposition of any Common
Stock of the Company will be made for a period of 90 days after the date of this
Agreement, directly or indirectly, by the Company otherwise than hereunder or
with the prior written consent of the

13.

<PAGE>

Representatives except that the Company may, without such consent, issue
shares (i) upon the exercise of options granted pursuant to the 1994 Stock
Incentive Plan, the 1995 Stock Incentive Plan, the 1996 Stock Incentive Plan
and the 1996 Directors' Stock Option Plan, and (ii) under the 1996 Employee
Stock Purchase Plan.

(ix) The Company will use its best efforts to maintain approval
for quotation of the Shares on the Nasdaq National Market.

(x) The Company will use the net proceeds received from the
sale of the Shares by the Company substantially as set forth in the Registration
Statement and the Prospectus.

(b) Each of the Selling Stockholders covenants and agrees with the
several Underwriters and the Company that:

(i) No offering, sale or other disposition of any Common
Stock of the Company will be made for a period of 90 days after the date of
this Agreement, directly or indirectly, by such Selling Stockholder without
the prior written consent of the Representatives, except under certain
circumstances as set forth in each respective lockup agreement signed by such
Selling Stockholder, provided that the transferee agrees to be bound by the
terms of such agreement.

(ii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with
respect to the transactions herein contemplated, each of the Selling
Stockholders agrees to deliver to the Underwriters prior to or at the Closing
Date a properly completed and executed United States Treasury Department Form
W-9 (or other applicable form or statement specified by the Treasury
Department regulations in lieu thereof).

5. COSTS AND EXPENSES. The Company will pay all costs, expenses and fees
incident to the performance of the obligations of the Company and the Selling
Stockholders under this Agreement, including, without limiting the generality of
the foregoing, the following: accounting fees of the Company; the fees and
disbursements of counsel for the Company and the Selling Stockholders; the cost
of printing and delivering to, or as requested by, the Underwriters copies of
the Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Agreement Among Underwriters, the Underwriters' Selling
Memorandum, the Underwriters' Questionnaire, the Invitation Letter, the Power of
Attorney, the Listing Application, the Blue Sky Survey and any supplements or
amendments thereto; the filing fees of the Commission, the filing fees and
expenses incident to securing any required review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Shares;
the Listing Fee of the Nasdaq National Market; and the expenses, including the
fees and disbursements of counsel for the Underwriters, incurred in connection
with the qualification of the Shares under State securities or Blue Sky laws. To
the extent, if at all, that any of the Selling Stockholders engage special legal
counsel to represent them in connection with this offering, the fees and
expenses of such counsel shall be borne by such Selling Stockholders. Any
transfer taxes

14.

<PAGE>

imposed on the sale of the Shares to the several Underwriters will be paid by
the Sellers pro rata. The Company shall not, however, be required to pay for any
of the Underwriters' expenses (other than those related to qualification under
State securities or Blue Sky laws) except that, if this Agreement shall not be
consummated because the conditions in Section 7 hereof are not satisfied, or
because this Agreement is terminated by the Representatives pursuant to Section
6 hereof, or by reason of any failure, refusal or inability on the part of the
Company or the Selling Stockholders to perform any undertaking or satisfy any
condition of this Agreement or to comply with any of the terms hereof on their
part to be performed, unless such failure to satisfy said condition or to comply
with said terms be due to the default or omission of any Underwriter, then the
Company shall reimburse the several Underwriters for reasonable out-of-pocket
expenses, including fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares or
in contemplation of performing their obligations hereunder; but the Company and
the Selling Stockholders shall not in any event be liable to any of the several
Underwriters for damages on account of loss of anticipated profits from the sale
by them of the Shares.

6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. The several
obligations of the Underwriters to purchase the Firm Shares on the Closing Date
and the Option Shares, if any, on the Option Closing Date are subject to the
accuracy, as of the Closing Date or the Option Closing Date, as the case may be,
of the representations and warranties of the Company and the Selling
Stockholders contained herein, and to the performance by the Company and the
Selling Stockholders of their covenants and obligations hereunder and to the
following additional conditions:

(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and in effect
and no proceedings for that purpose shall have been taken or, to the knowledge
of the Company or the Selling Stockholders, shall be contemplated by the
Commission.

(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Wilson Sonsini
Goodrich and Rosati, P.C., special counsel for the Company and the Selling
Stockholders other than Whitney Subordinated Debt Fund, L.P., Whitney 1990
Equity Fund, L.P., and J.H. Whitney & Co. (the "Whitney Entities"), dated the
Closing Date or the Option Closing Date, as the case may be, addressed to the
Underwriters to the effect that:

(i) All of the Shares conform to the description thereof
contained in the Prospectus; the form of certificate representing the Company's
Common Stock is in due and proper form; and the Shares to be sold by the Company
pursuant to this Agreement have been duly authorized and will be validly issued,
fully paid and non-assessable when issued and paid for as contemplated by this
Agreement.

(ii) The Registration Statement has become effective under the
Act and, to the best of such counsel's knowledge, no stop order proceeding with
respect thereto has been instituted or is pending or threatened under the Act.

15.

<PAGE>

(iii) The Registration Statement, the Preliminary Prospectus
dated October __, 1996, the Prospectus and each amendment or supplement
thereto comply as to form in all material respects with the requirements of
the Act and the applicable rules and regulations thereunder (except that such
counsel need express no opinion as to the financial statements, schedules and
other financial and statistical information included therein).

(iv) The statements under the captions "Risk Factors -- Control
by Existing Stockholders; Anti-Takeover Devices," "Risk Factors -- Shares
Eligible for Future Sale," "Use of Proceeds," "Dividend Policy," "Management --
Other Agreements," "Management -- Stock Incentive Plans," "Management --
Compensation Committee Interlocks and Insider Participation," "Description of
Capital Stock" and "Shares Eligible for Future Sale" in the Prospectus, insofar
as such statements constitute a summary of documents referred to therein or
matters of law, are accurate summaries and fairly and correctly present the
information called for with respect to such documents and matters.

(v) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus which are not so filed or described
as required, and such contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly summarized in all material
respects.

(vi) Except as set forth in the Prospectus, such counsel knows
of no material legal proceedings pending or threatened (A) against the Company
or any of the Subsidiaries or (B) to which the assets of the Company or any of
the Subsidiaries may be subject.

(vii) The execution and delivery of this Agreement and the
performance by the Company of its obligations pursuant hereto do not and will
not conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, the certificate of incorporation or by-laws of
the Company, or any agreement or instrument filed or incorporated by
reference as an exhibit to the Registration Statement to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries may be bound.

(viii) This Agreement has been duly authorized, executed and
delivered by the Company.

(ix) All corporate action necessary by the Company to execute
and deliver this Agreement and to perform its obligations pursuant hereto and
consummate the transactions contemplated hereby has been taken by the
Company, its Board of Directors and its stockholders.

(x) To the best of such counsel's knowledge, there is no right
to require registration of any shares of capital stock of the Company in
connection with the filing of the Registration Statement that has not been
effectively satisfied or waived.

16.

<PAGE>

(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by State securities
and Blue Sky laws, as to which such counsel need express no opinion) except such
as have been obtained or made.

(xii) This Agreement, the Custody Agreement and the Power of
Attorney has been duly executed and delivered on behalf of the Selling
Stockholders (other than the Whitney Entities as to which no opinion need be
expressed).

(xiii) Each Selling Stockholder (other than the Whitney
Entities as to which no opinion need be expressed) has full legal right, power
and authority, and any approval required by law (other than as required by State
securities and Blue Sky laws as to which such counsel need express no opinion),
to sell, assign, transfer and deliver the Firm Shares and Option Shares to be
sold by such Selling Stockholder.

(xiv) Assuming that the Underwriters purchase the Shares in good
faith and without notice of any adverse claim as such term is used in Section
8-302 of the Uniform Commercial Code in effect in the state of California,
the delivery of the Shares by the Selling Stockholders (other than the
Whitney Entities as to which no opinion need to be expressed) will pass to
the underwriters valid title to such Shares, free and clear of all security
interests, liens, encumbrances, equities or other adverse claims.

In rendering such opinion, Wilson Sonsini Goodrich & Rosati, P.C. may
rely as to matters governed by the laws of states of the United States other
than Delaware or New York or Federal laws on local counsel in such
jurisdictions, provided that in each case Wilson Sonsini Goodrich & Rosati,
P.C. shall state that they believe that they and the Underwriters are
justified in relying on such other counsel. In addition to the matters set
forth above, such opinion shall also include a statement in such counsel's
customary form to the effect that nothing has come to the attention of such
counsel which leads them to believe that the Registration Statement, as of
the time it became effective under the Act, the Prospectus or any amendment
or supplement thereto, on the date it was filed pursuant to Rule 424(b) and
the Registration Statement and the Prospectus, or any amendment or supplement
thereto, as of the Closing Date or the Option Closing Date, as the case may
be, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading (except that such counsel need express no
view as to financial statements, schedules and other financial or statistical
information included therein). With respect to such statement, Wilson Sonsini
Goodrich & Rosati, P.C. may state that their belief is based upon the
procedures set forth therein, but is without independent check and
verification.

(c) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of____________________,
counsel for the Whitney Entities, dated the Closing Date or the Option Closing
Date, as the case may be, addressed to the Underwriters to the effect that:

17.

<PAGE>

(i) This Agreement, the Custody Agreement and the Power of
Attorney has been duly authorized, executed and delivered on behalf of the
Whitney Entities.

(ii) Each of the Whitney Entities has full legal right, power
and authority, and any approval required by law (other than as required by State
securities and Blue Sky laws as to which such counsel need express no opinion),
to sell, assign, transfer and deliver the Firm Shares and Option Shares to be
sold by such entity.

(iii) Assuming that the Underwriters purchase the Shares in good
faith and without notice of any adverse claim as such term is used in Section 8-
302 of the Uniform Commercial Code in effect in the state of New York, the
delivery of the Shares by the Whitney Entities will pass to the underwriters
valid title to such Shares, free and clear of all security interests, liens,
encumbrances, equities or other adverse claims.

(d) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinions of McGrigor Donald as
to matters relating to The North Face (Europe) Limited and Ostler Hoskins &
Harcourt as to matters relating to The North Face (Canada), Inc. dated the
Closing Date or the Option Closing Date, as the case may be, addressed to the
Underwriters to the effect that the respective Subsidiary has been duly
organized and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, with corporate power and
authority to own its properties and conduct its business as described in the
Prospectus; the respective Subsidiary is duly qualified to transact business in
all jurisdictions in which the conduct of its business requires such
qualification, or in which the failure to qualify would have a materially
adverse effect upon the business of the Company and the Subsidiaries taken as a
whole; and the outstanding shares of capital stock of the respective Subsidiary
has been duly authorized and validly issued, is fully paid and nonassessable and
is owned by the Company or a Subsidiary.

(e) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Crosby, Heafey,
Roach & May, Professional Corporation, corporate counsel for the Company,
dated the Closing Date or the Option Closing Date, as the case may be,
addressed to the Underwriters to the effect that:

(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and conduct
its business as described in the Prospectus; the Company is duly qualified to
transact business in all jurisdictions in which the conduct of its business
requires such qualification, or in which the failure to qualify would have a
materially adverse effect upon the business of the Company and the Subsidiaries
taken as a whole; and, to the best of such counsel's knowledge, except as set
forth in the Registration Statement (including pursuant to the Credit Facility
as defined in the Prospectus), the outstanding shares of capital stock of each
of the Subsidiaries are owned free and clear of all liens, encumbrances and
security interests, and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into any shares of capital stock or of ownership interests in the
Subsidiaries are outstanding.

18.

<PAGE>

(ii) The Company has authorized and outstanding capital stock
as set forth under the captions "Capitalization" and "Description of Capital
Stock" in the Prospectus; the authorized shares of its capital stock have
been duly authorized; the outstanding shares of its Common Stock have been
duly authorized and validly issued, are fully paid and non-assessable and, to
the best of such counsel's knowledge, were issued in compliance with the
registration and qualification requirements of all applicable federal and
state securities laws or applicable exemptions therefrom; no preemptive
rights of stockholders arising under the Company's certificate of
incorporation or bylaws or any instrument, document or other agreement
referred to in the Registration Statement or filed as an exhibit thereto or,
to the best of such counsel's knowledge, under the statutes, judicial and
administrative decisions, or the rules and regulations of the governmental
agencies of the State of Delaware exist with respect to any of the Shares or
the issue and sale thereof; and, to the best of such counsel's knowledge,
except as set forth in the Prospectus, no option, warrant or other right to
purchase, agreement or other obligation to issue, or right to convert any
obligation into, any share of capital stock or ownership interest in the
Company exists or is outstanding.

(iii) To the best of such counsel's knowledge, there is no
pending or threatened legal or governmental proceeding, judgment or order
against the Company based upon alleged infringement, dilution, unfair
competition or other claim arising from the Company's use of any of the marks
identified in the attached schedule (the "Schedule") of trademark registrations
and applications.

(iv) To the best of such counsel's knowledge, (a) all
registrations of marks listed in the Schedule are valid registrations effective
to the extent respectively provided by the laws of the jurisdictions in which
they were issued, (b) there is no pending or threatened legal or governmental
proceeding against the Company which seeks to invalidate, oppose or cancel any
registrations listed in the Schedule, and (c) there is no judgment or order of a
court or governmental agency issued against the Company which has invalidated or
canceled any registrations listed in the Schedule.

(v) To the best of such counsel's knowledge, the Company has
not filed any documents in any jurisdiction, or otherwise taken steps, to
abandon any of the registrations listed in the Schedule.

(vi) To the best of such counsel's knowledge, the Company owns
all the registrations and applications listed on the Schedule, except for the
registrations and applications in Japan and Korea which the Company sold to
Kabushiki Kaisha Goldwin as of June 7, 1994.

(vii) To the best of such counsel's knowledge, the statements in
the Prospectus under the caption "Business -- Trademarks and Licensing" (the
"Trademark Portion"), insofar as such statements constitute a summary of the
Company's marks and licensing status, are in all material respects accurate
summaries of the legal matters, documents and proceedings relating to such marks
and licensing status described therein.

19.

<PAGE>

In addition to the matters set forth above, such opinion shall also
include a statement in such counsel's customary form to the effect that
nothing has come to the attention of such counsel which leads them to believe
that the Trademark Portions of the Registration Statement, as of the time it
became effective under the Act, and the Prospectus or any amendment or
supplement thereto, on the date it was filed pursuant to Rule 424(b) and the
Trademark Portions of the Registration Statement and the Prospectus, or any
amendment or supplement thereto, as of the Closing Date or the Option Closing
Date, as the case may be, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (except that such counsel need
express no view as to financial statements, schedules and other financial or
statistical information included therein). With respect to such statement,
Crosby, Heafey, Roach & May, Professional Corporation may state that its
belief is based upon the procedures set forth therein, but is without
independent check or verification.

(f) The Representatives shall have received from Cooley Godward LLP,
counsel for the Underwriters, an opinion dated the Closing Date or the Option
Closing Date, as the case may be, substantially to the effect specified in
subparagraphs (i), (ii), (iii), and (viii) of Paragraph (b) of this Section 6,
and that the Company is a validly organized and existing corporation under the
laws of the State of Delaware. In rendering such opinion, counsel may rely as to
all matters governed other than by the laws of the states of California or
Delaware or Federal laws on the opinions of counsel referred to in Paragraphs
(b), (c), (d) and (e) of this Section 6. In addition to the matters set forth
above, such opinion shall also include a statement to the effect that nothing
has come to the attention of such counsel which leads them to believe that the
Registration Statement, as of the time it became effective under the Act, and
the Prospectus or any amendment or supplement thereto, on the date it was filed
pursuant to Rule 424(b) and the Registration Statement and the Prospectus, or
any amendment or supplement thereto, as of the Closing Date or the Option
Closing Date, as the case may be, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (except that such counsel need
express no view as to financial statements, schedules and other financial or
statistical information included therein). With respect to such statement,
Cooley Godward LLP may state that its belief is based upon the procedures set
forth therein, but is without independent check and verification.

(g) The Representatives shall have received at or prior to the
Closing Date from Cooley Godward LLP, a memorandum or summary, in form and
substance satisfactory to the Representatives, with respect to the
qualification for offering and sale by the Underwriters of the Shares under
the State securities or Blue Sky laws of such jurisdictions as the
Representatives may reasonably have designated to the Company.

(h) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a signed letter from Deloitte &
Touche LLP, dated the Closing Date or the Option Closing Date, as the case may
be, which shall confirm, on the basis of a review in accordance with the
procedures set forth in the letter signed by such firm and dated and delivered
to the Representatives on the date hereof, that nothing has come to their
attention during the period from the date five days prior to the date hereof to
a date not more

20.

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than five days prior to the Closing Date or the Option Closing Date, as the case
may be, which would require any change in their letter dated the date hereof if
it were required to be dated and delivered on the Closing Date or the Option
Closing Date, as the case may be. All such letters shall be in form and
substance satisfactory to the Representatives.

(i) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates of
the Company signed by the Chief Executive Officer and the Chief Financial
Officer of the Company to the effect that, as of the Closing Date or the Option
Closing Date, as the case may be, each of them severally represents as follows:

(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registration Statement
has been issued, and no proceedings for such purpose have been taken or are, to
his or her knowledge, contemplated by the Commission.

(ii) He or she does not know of any litigation instituted or
threatened against the Company of a character required to be disclosed in the
Registration Statement which is not so disclosed; he or she does not know of any
material contract required to be filed as an exhibit to the Registration
Statement which is not so filed; and the representations and warranties of the
Company contained in Section 1 hereof are true and correct as of the Closing
Date or the Option Closing Date, as the case may be.

(iii) He or she has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion, as of the effective
date of the Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and Prospectus
did not omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading and, in his or her
opinion, since the effective date of the Registration Statement, no event has
occurred which should have been set forth in a supplement to or an amendment of
the Prospectus which has not been so set forth in such supplement or amendment.

(j) The Company and the Selling Stockholders shall have furnished to
the Representatives such further certificates and documents confirming the
representations and warranties contained herein and related matters as the
Representatives may reasonably have requested.

(k) The Firm Shares and Option Shares, if any, have been approved for
quotation upon official notice of issuance, on the Nasdaq National Market.

The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Cooley Godward LLP,
counsel for the Underwriters.

21.

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If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company and the Selling Stockholders of
such termination in writing or by telegram at or prior to the Closing Date or
the Option Closing Date, as the case may be.

In such event, the Company, the Selling Stockholders and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).

7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY AND THE SELLING
STOCKHOLDERS. The obligations of the Company and the Selling Stockholders to
sell and deliver the portion of the Shares required to be delivered as and when
specified in this Agreement are subject to the conditions that at the Closing
Date or the Option Closing Date, as the case may be, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and in
effect and no proceedings for that purpose shall have been taken or, to the
knowledge of the Company or the Selling Stockholders, shall be contemplated by
the Commission.

8. INDEMNIFICATION.

(a) The Company and each of the Selling Stockholders, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act
against any losses, claims, damages or liabilities to which such Underwriter or
such controlling person may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that the Company and the Selling Stockholders will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through the Representatives specifically for use in the
preparation thereof, and provided, further, that neither the Company nor any
Selling Stockholder will not be liable to any Underwriter, the directors,
officers, employees or agents of such Underwriter or any person controlling such
Underwriter with respect to any loss, claim, damage or liability arising out of
or based on any untrue statement or alleged untrue statement or omission or
alleged omission to state a material fact in any Preliminary Prospectus which is
corrected in the Prospectus if the person asserting any such loss, claim, damage
or liability purchased from such Underwriter but was not sent or given a copy of
the Prospectus at or prior

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to the written confirmation of the sale of such Shares to such person. In no
event, however, shall the liability of any Selling Stockholder to the
Underwriters under this Agreement exceed the lesser of (i) that proportion of
the total losses, claims, damages or liabilities indemnified against equal to
the proportion of the total Shares sold hereunder which is being sold by such
Selling Stockholder or (ii) the net proceeds received by such Selling
Stockholder from the Underwriters in the offering. This indemnity agreement will
be in addition to any liability which the Company or the Selling Stockholders
may otherwise have.

(b) Each Underwriter will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed the Registration
Statement, the Selling Stockholders and each person, if any, who controls the
Company or the Selling Stockholders, within the meaning of the Act, against any
losses, claims, damages or liabilities to which the Company, or any such
director, officer, Selling Stockholder or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made; and
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, Selling Stockholder or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that each Underwriter shall
be liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, any Preliminary Prospectus, the Prospectus
or such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.

(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice, but the failure to give such
notice shall not relieve the indemnifying party or parties from any liability
which it or they may have to the indemnified party for contribution or otherwise
than on account of the provisions of Section 8(a) or (b). In case any such
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party and shall
pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding,

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any indemnified party shall have the right to retain its own counsel at its own
expense. Notwithstanding the foregoing, the indemnifying party shall pay as
incurred the reasonable fees and expenses of the counsel retained by the
indemnified party in the event that (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) and by the Company and the Selling Stockholders in the
case of parties indemnified pursuant to Section 8(b). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement or
judgment.

(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a) or (b) above in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other from the offering
of the Shares. If, however, the allocation provided by the immediately preceding
sentences is not permitted by applicable law or if the indemnified party failed
to give the notice required under Section 8(c) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Stockholders on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Stockholders
bears to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Selling Stockholders on the one hand or the
Underwriters on the other and the parties relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

The Company and the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 8(d)
were determined by pro rata

24.

<PAGE>

allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 8(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 8(d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.

(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment therein,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.

9. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and pay
for the portion of the Shares which such Underwriter has agreed to purchase and
pay for on such date (otherwise than by reason of any default on the part of the
Company or a Selling Stockholder), you, as Representatives of the Underwriters,
shall use your best efforts to procure within 24 hours thereafter one or more of
the other Underwriters, or any others, to purchase from the Company and the
Selling Stockholders such amounts as may be agreed upon and upon the terms set
forth herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 24
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion in the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
Selling Stockholders or you as the Representatives of the Underwriters will have
the right, by written notice given within the next 24-hour period to the parties
to this Agreement, to terminate this Agreement without liability on the part of
the non-defaulting Underwriters or of the Company or of the Selling Stockholders
except to the extent

25.

<PAGE>

provided in Section 8 hereof. In the event of a default by any Underwriter or
Underwriters, as set forth in this Section 9, the Closing Date or Option Closing
Date, as the case may be, may be postponed for such period, not exceeding seven
days, as you, as Representatives, may determine in order that the required
changes in the Registration Statement or in the Prospectus or in any other
documents or arrangements may be effected. The term "Underwriter" includes any
person substituted for a defaulting Underwriter. Any action taken under this
Section 9 shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.

10. NOTICES. All communication hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered or telegraphed and
confirmed as follows: if to the Underwriters, to Alex. Brown & Sons
Incorporated, 135 East Baltimore Street, Baltimore, Maryland 21202, Attention:
Alexander Daignault; if to the Company or the Selling Stockholders, to The North
Face, Inc., 2013 Farallon Drive, San Leandro, California 94577, Attention:
Marsden S. Cason, Chief Executive Officer.

11. TERMINATION. This Agreement may be terminated by you by notice to the
Company and the Selling Stockholders as follows:

(a) any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m.
(Baltimore time) on the first business day following the date of this Agreement;

(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole or the earnings, business affairs, management or business prospects of
the Company and its Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business, (ii) any outbreak of hostilities or other national
or international calamity or crisis or change in economic or political
conditions if the effect of such outbreak, calamity, crisis or change on the
financial markets of the United States would, in your reasonable judgment, make
the offering or delivery of the Shares impracticable, (iii) suspension of
trading in securities generally on the New York Stock Exchange or the American
Stock Exchange or limitation on prices (other than limitations on hours or
numbers of days of trading) for securities, on either such Exchange, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either federal or New York State
authorities, or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
reasonable opinion has a material adverse effect on the securities markets in
the United States; or

26.

<PAGE>

This Agreement also may be terminated by you, by notice to the Company
and the Selling Stockholders, as to any obligation of the Underwriters to
purchase the Option Shares, upon the occurrence at any time prior to the Option
Closing Date of any of the events described in subparagraph (b) above or as
provided in Sections 6 and 9 of this Agreement.

12. SUCCESSORS. This Agreement has been and is made solely for the
benefit of the Underwriters, the Company and the Selling Stockholders and their
respective successors, executors, administrators, heirs and assigns, and the
officers, directors and controlling persons referred to herein, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Shares merely because of such purchase.

13. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless
of(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or its directors or officers or the Selling Stockholders and (c)
delivery of and payment for the Shares under this Agreement.

This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland.

27.

<PAGE>

If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters in accordance with its terms.

Very truly yours,

THE NORTH FACE, INC.

By:________________________________________
Name:
Title:

MARSDEN S. CASON
WILLIAM N. SIMON
WHITNEY SUBORDINATED DEBT FUND, L.P.
WHITNEY 1990 EQUITY FUND, L.P.
J.H. WHITNEY & CO.

By:________________________________________
Attorney-in-Fact

The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.

ALEX. BROWN & SONS INCORPORATED

___________________________________

As Representatives of the several
Underwriters listed on Schedule I

By: Alex. Brown & Sons Incorporated

By:________________________________
Authorized Officer

28.

<PAGE>

SCHEDULE I

SCHEDULE OF UNDERWRITERS

Underwriter Number of Firm Shares
----------- to be Purchased
----------------------

Alex. Brown & Sons Incorporated . . .

Hambrecht & Quist LLC . . . . . . . .

J.P. Morgan Securities Inc. . . . . .

Total . . . . . . . . . . . . . . . . . . . . 2,500,000
---------
---------

29.

<PAGE>

SCHEDULE II

SCHEDULE OF SELLING STOCKHOLDERS

MAXIMUM NUMBER OF
NAME OF SELLER FIRM SHARES TO BE SOLD
-------------- ----------------------

Marsden S. Cason 140,000

William N. Simon 140,000

Whitney 1990 Equity 728,873
Fund, L.P.

Whitney Subordinated 308,909
Debt Fund, L.P.

J.H. Whitney & Co. 182,218
-------

Total 1,500,000
---------
---------

30.

<PAGE>

SCHEDULE III

SCHEDULE OF OPTION SHARES
PERCENTAGE OF TOTAL
MAXIMUM NUMBER OF SOLD NUMBER OF
NAME OF SELLER OPTION SHARES TO BE SOLD OPTION SHARES
-------------- ------------------------ -------------------

Whitney 1990 Equity Fund, 224,039 59.7%
L.P.

Whitney Subordinated Debt 94,952 25.3%
Fund

J.H. Whitney & Co. 56,009 15.0%
------------- ------

Total 375,000 100.00%
============= ======

31.

<PAGE>

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION

THE NORTH FACE, INC.

The North Face, Inc., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:

FIRST: The name of the corporation is The North Face, Inc.
(the "Corporation"). The name under which the Corporation was originally
incorporated was TNF Holdings Company, Inc. The original Certificate of
Incorporation of the Corporation was filed with the Secretary of State of the
State of Delaware on May 16, 1994; a Restated Certificate of Incorporation of
the Corporation was filed with the Secretary of State of the State of Delaware
on June 6, 1994; a Restated Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on June 7, 1994; a
Certificate of Amendment thereto was filed with the Secretary of State of the
State of Delaware on June 8, 1994, changing the Corporation's name to The North
Face, Inc.; and a Restated Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on March 26, 1996.

SECOND: The Amended and Restated Certificate of Incorporation of the
Corporation set forth below has been duly adopted in accordance with the
provisions of Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware (the "General Corporation Law") by the directors and
stockholders of the Corporation, and prompt written notice was duly given
pursuant to Section 228 of the General Corporation Law to those stockholders who
did not approve the Amended and Restated Certificate of Incorporation, as so
amended, by written consent.

THIRD: This Amended and Restated Certificate of Incorporation
restates, integrates and amends the provisions of the Corporation's Restated
Certificate of Incorporation, as follows:

1. NAME. The name of the Corporation is The North Face, Inc.

2. ADDRESS; REGISTERED OFFICE AND AGENT. The address of the
Corporation's registered office is 1013 Centre Road, City of Wilmington, County
of New Castle, State of Delaware 19805; and its registered agent at such address
is Corporation Service Company.

<PAGE>

3. PURPOSES. The purpose of the Corporation is to engage in, carry
on and conduct any lawful act or activity for which corporations may be
organized under the General Corporation Law.

4. CAPITAL STOCK.

4.1 NUMBER OF SHARES. The total number of shares of all classes
of capital stock that the Corporation shall have authority to issue is fifty-
four million (54,000,000), of which fifty million (50,000,000) shall be shares
of common stock of the par value of one-fourth of one penny ($0.0025) per share
(the "Common Stock") and four million (4,000,000) of which shall be shares of
preferred stock of the par value of one dollar ($1.00) per share (the "Preferred
Stock").

4.2 DESIGNATION OF CLASSES; RELATIVE RIGHTS, ETC. The
designation, relative rights, preferences and limitations of the shares of each
class are as follows:

4.2.1 The shares of Preferred Stock may be issued from
time to time in one or more series of any number of shares, provided that the
aggregate number of shares issued and not cancelled of any and all such series
shall not exceed the total number of shares of Preferred Stock hereinabove
authorized, and with distinctive serial designations, all as shall hereafter be
stated and expressed in the resolution or resolutions providing for the issue of
such shares of Preferred Stock from time to time adopted by the Board of
Directors (the "Board") pursuant to authority so to do which is hereby vested in
the Board. Each series of shares of Preferred Stock (a) may have such voting
powers, full or limited, or may be without voting powers; (b) may be subject to
redemption at such time or times and at such prices; (c) may be entitled to
receive dividends (which may be cumulative or non-cumulative) at such rate or
rates, on such conditions and at such times, and payable in preference to, or in
such relation to, the dividends payable on any other class or classes or series
of stock; (d) may have such rights upon the dissolution of, or upon any
distribution of the assets of, the Corporation; (e) may be made convertible into
or exchangeable for, shares of any other class or classes or of any other series
of the same or any other class or classes of shares of the Corporation at such
price or prices or at such rates of exchange and with such adjustments; (f) may
be entitled to the benefit of a sinking fund to be applied to the purchase or
redemption of shares of such series in such amount or amounts; (g) may be
entitled to the benefit of conditions and restrictions upon the creation of
indebtedness of the Corporation or any subsidiary, upon the issue of any
additional shares (including additional shares of such series or of any other
series) and upon the payment of dividends or the making of other distributions
on, and the purchase, redemption or other acquisition by the Corporation or any
subsidiary of, any outstanding shares of the Corporation and (h) may have such
other relative, participating, optional or other special rights, qualifications,
limitations or restrictions

<PAGE>

thereof; all as shall be stated in said resolution or resolutions providing for
the issue of such shares of Preferred Stock. Any of the voting powers,
designations, preferences, rights and qualifications, limitations or
restrictions of any such series of Preferred Stock may be made dependent upon
facts ascertainable outside of the resolution or resolutions providing for the
issue of such Preferred Stock adopted by the Board pursuant to the authority
vested in it by this Section 4.2.1, provided that the manner in which such facts
shall operate upon the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of such series of Preferred Stock is
clearly and expressly set forth in the resolution or resolutions providing for
the issue of such Preferred Stock. The term "facts" as used in the next
preceding sentence shall have the meaning given to it in section 151(a) of the
General Corporation Law. Shares of Preferred Stock of any series that have been
redeemed (whether through the operation of a sinking fund or otherwise) or that
if convertible or exchangeable, have been converted into or exchanged for shares
of any other class or classes shall have the status of authorized and unissued
shares of Preferred Stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be reclassified and
reissued as part of a new series of shares of Preferred Stock to be created by
resolution or resolutions of the Board or as part of any other series of shares
of Preferred Stock, all subject to the conditions or restrictions on issuance
set forth in the resolution or resolutions adopted by the Board providing for
the issue of any series of shares of Preferred Stock.

4.2.2 Subject to the provisions of any applicable law or
of the By-laws of the Corporation, as from time to time amended (the "By-laws),
with respect to the closing of the transfer books or the fixing of a record date
for the determination of stockholders entitled to vote and except as otherwise
provided by law or by the resolution or resolutions providing for the issue of
any series of shares of Preferred Stock, the holders of outstanding shares of
Common Stock shall exclusively possess voting power for the election of
directors and for all other purposes, each holder of record of shares of Common
Stock being entitled to one vote for each share of Common Stock standing in his
or her name on the books of the Corporation. Except as other provided by the
resolution or resolutions providing for the issue of any series of shares of
Preferred Stock, the holders of shares of Common Stock shall be entitled, to the
exclusion of the holders of shares of Preferred Stock of any and all series, to
receive such dividends as may be declared from time to time by the Board. In
the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment shall have been made to the
holders of shares of Preferred Stock of the full amount to which they shall be
entitled pursuant to the resolution or resolutions providing for the issue of
any series of shares of Preferred Stock, the holders of shares of Common Stock
shall be entitled, to the exclusion of the holders of shares of Preferred Stock
of any and all series, to share, ratably according to the number of shares of
Common Stock held by them, in all remaining assets of the Corporation available
for distribution to its stockholders.

<PAGE>

4.2.3 Subject to the provisions of this Certificate of
Incorporation and except as otherwise provided by law, the stock of the
Corporation, regardless of class, may be issued for such consideration and for
such corporate purposes as the Board may from time to time determine.

4.3 POWERS, PREFERENCES AND RIGHTS. The powers, preferences and
rights of the Series A Preferred Stock and the Common Stock and the
qualifications, limitations and restrictions thereof are as follows (capitalized
terms used herein and not otherwise defined shall have the meanings set forth in
Section 4.3(c)):

(a) SERIES A PREFERRED STOCK.

(i) RANKING. The Series A Preferred Stock shall, with
respect to dividend right and rights on liquidation, dissolution or winding up,
rank senior to the Common Stock and any other series or class of the
Corporation's preferred or common stock, now or hereafter authorized.

(ii) DIVIDENDS AND DISTRIBUTIONS.

(A) DIVIDENDS. The holders of shares of Series A
Preferred Stock shall be entitled to receive, as and when declared by the
Board of Directors, out of funds legally available therefor ("LEGALLY
AVAILABLE FUNDS"), dividends at an annual rate equal to 10% of the
aggregate Liquidation Preference of the then outstanding shares of
Preferred Stock, calculated on the basis of a 360-day year consisting of
twelve 30-day months. Dividends shall be paid quarterly in arrears on the
Dividend Payment Date commencing June 30, 1994 in the manner provided in
Section 4.3(a)(ii)(C).

(B) ACCRUED DIVIDENDS; RECORD DATE. Dividends
payable pursuant to Section 4.3(a)(ii)(A) shall begin to accrue and be
cumulative from the Issue Date, and shall begin to accrue on a daily basis,
in each case whether or not earned or declared. The Board of Directors may
fix a record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of the dividends payable
pursuant to Section 4.3(a)(ii)(A), which record date shall not be more than
60 days prior to the dividend Payment Date.

(C) PAYMENT. All dividends on Series A Preferred
Stock shall be payable at the option of the Corporation, either in cash,
subject to Section 4.3(a)(ii) (G), or by issuing additional fully paid and
nonassessable shares of Series A Preferred Stock at the rate of one share
for each $6.33681 of such dividend payable. The issuance of shares of
Series A Preferred Stock shall constitute full payment of such dividend and
all such

<PAGE>

shares which may be issued in payment of such dividend shall upon issuance be
duly authorized, validly issued, fully paid and nonassessable.

(D) RESERVATION OF SHARES. The Corporation shall
reserve and keep available out of its authorized and unissued shares of
Series A Preferred Stock solely for the purposes of paying dividends on
shares of Series A Preferred Stock pursuant to subparagraph (c) above, such
number of shares of Series A Preferred Stock as shall from time to time be
sufficient for such purpose, including immediately following the initial
issuance of shares of Series A Preferred Stock) at least the number of
additional shares of Series A Preferred Stock that would be required to
enable the Corporation to issue shares of Series A Preferred Stock to pay
all dividends that will accrue on the Series A Preferred Stock through the
seventh anniversary of the initial issuance. The Board of Directors shall,
from time to time, if necessary, propose to the stockholders of the
Corporation, amendments to this Amended and Restated Certificate of
Incorporation to increase the Corporation's authorized capital stock and
take such other actions as may be necessary to permit the issuance from
time to time of shares of Series A Preferred Stock upon the declaration of
any dividend payable in shares of Series A Preferred Stock.

(E) FRACTIONAL SHARES. Fractional shares of
Series A Preferred Stock shall be issued to the extent necessary to make
dividend payments in shares of Series A Preferred Stock. Each fractional
shares of Series A Preferred Stock outstanding shall be entitled to a
ratably proportionate amount of all dividends accruing with respect to each
outstanding share of Series A Preferred Stock and all of such dividends
with respect to such outstanding fractional shares of Series A Preferred
Stock shall be fully cumulative and shall accrued (whether or not earned or
declared) and shall be payable in the same manner and at such times as
provided for in this Section 4.3(a)(ii) with respect to dividends on each
outstanding share of Series A Preferred Stock.

(F) DIVIDENDS PRO RATA. All dividends paid with
respect to shares of Series A Preferred Stock pursuant to this
Section 4.3(a)(ii) shall be paid pro rata to the holders entitled thereto.
In the event that the Legally Available Funds shall be insufficient for the
payment of the entire amount of cash dividends payable at any Dividend
Payment Date, subject to Section 4.3(a)(ii)(G), such funds shall be
allocated for the payment of dividends with respect to the shares of
Series A Preferred Stock pro rata based upon the Liquidation Preference of
the outstanding shares.

(G) CERTAIN RESTRICTIONS.

<PAGE>

(1) Notwithstanding the foregoing provisions
of this Section 4.3(a)(ii), cash dividends on the Series A Preferred Stock
may not be declared, paid or set apart for payment if (a) the Corporation
is not solvent or would be rendered insolvent thereby or (b) at such time
the terms and provisions of any law or agreement of the Corporation,
including any agreement relating to its indebtedness, specifically prohibit
such declaration, payment or setting apart for payment or provide that such
declaration, payment or setting apart for payment would constitute a
violation or breach thereof or a default thereunder.

(2) If the dividends payable on shares of
Series A Preferred Stock are not paid in full in cash, then until all such
dividends shall have been paid in full in cash, the Corporation shall not
declare or pay cash dividends on, or redeem, purchase or otherwise acquire
for consideration, any shares of Common Stock or other shares of Junior
Stock, except with the prior written consent of holders of sixty-six and
two-thirds percent (66-2/3%) of the outstanding shares of Series A
Preferred Stock.

(3) The Corporation shall not permit any
Subsidiary of the Corporation, or cause any other Person, to make any
distribution with respect to, or purchase or otherwise acquire for
consideration, any shares of capital stock of the Corporation unless the
Corporation could, pursuant to subsection (2) of this
Section 4.3(a)(ii)(G), make such distribution or purchase or otherwise
acquire such shares at such time and in such manner.

(iii) VOTING RIGHTS. In addition to any voting rights
provided by law, shares of Series A Preferred Stock shall have the following
voting rights:

(A) Except as otherwise required by applicable
law and without limiting the provisions of Section 4.3(a)(iii)(B), each
share of Series A Preferred Stock shall entitle the holder thereof to vote,
in person or by proxy, at each special and annual meeting of stockholders,
on all matters voted on by holders of Common Stock, voting together as a
single class with the holders of the Common Stock and with holders of all
other shares entitled to vote thereon. With respect to any such vote, each
share of Series A Preferred Stock shall entitle the holder thereof to cast
that number of votes per share as is equal to the number of votes that such
holder would be entitled to cast assuming that such shares of Series A
Preferred Stock had been converted, on the record date for determining the
stockholders of the Corporation eligible to vote on any such matters, into
the maximum number of shares of Common Stock into which such shares of
Series A Preferred Stock are then convertible as provided in
Section 4.3(a)(vi).

<PAGE>

(B) Unless the consent or approval of a greater
number of shares shall then be required by law, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding shares of Series A Preferred Stock in person or by proxy, at
each special and annual meeting of stockholders called for the purpose, or
by written consent, shall be necessary to (1) authorize, increase the
authorized number of shares of or issue (including on conversion or
exchange of any convertible or exchangeable securities or by
reclassification) any shares of any class or classes of Senior Stock or
Parity Stock or any additional shares of Series A Preferred Stock (other
than shares of Series A Preferred Stock issued in payment of dividends as
provided in Section 4.3(a)(ii)), (2) authorize, adopt or approve each
amendment to this Amended and Restated Certificate of Incorporation that
would increase or decrease the par value of the shares of Series A
Preferred Stock, alter or change the powers, preferences or rights of any
other capital stock of the Corporation if after such alteration or change
such capital stock would be Senior Stock or Parity Stock, (3) amend, alter
or repeal this Amended and Restated Certificate of Incorporation so as to
affect the shares of Series A Preferred Stock adversely, including, without
limitation, by granting any voting right to any holder of notes, bonds,
debentures or other debt obligations of the Corporation, or (4) authorize
or issue any security convertible into, exchangeable for or evidencing the
right to purchase or otherwise receive any shares of any class or classes
of Senior Stock or Parity Stock.

(iv) REDEMPTION. The Corporation shall not have any
right or obligation to redeem any shares of Series A Preferred Stock.

(v) LIQUIDATION, DISSOLUTION OR WINDING UP.

(A) In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntary or involuntary, before
any distribution or payment to holders of Junior Stock, the holders of
shares of Series A Preferred Stock shall be entitled to be paid an amount
equal to the Liquidation Preference, plus an amount equal to all accrued
and unpaid dividends, if any, with respect to each share of Series A
Preferred Stock.

(B) If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation available for
distribution to the holders of Series A Preferred Stock shall be
insufficient to permit payment in full to such holders of the sums which
such holders are entitled to receive in such case, then all the assets
available for distribution to holders of the Series A Preferred Stock shall
be distributed among and paid to such holders ratably in proportion to the
amounts that would be payable to such holders if such assets were
sufficient to permit payment in full.

<PAGE>

(C) Neither the consolidation or merger of the
Corporation with or into any other Person nor the sale or other
distribution to another Person of all or substantially all the assets,
property or business of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of
this Section 4.3(a)(v).

(vi) CONVERSION.

(A) STOCKHOLDERS' RIGHT TO CONVERT. Each share
of Series A Preferred Stock shall be convertible, at the option of the
holder thereof, into fully paid and nonassessable shares of Common Stock at
the Conversion Price.

(B) NUMBER OF SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION. The number of shares of Common Stock to be issued upon
conversion of shares of Series A Preferred Stock pursuant to Section
4.3(a)(vi)(A) shall be equal to the product of (X) and (Y), where (X) is a
fraction, the numerator of which is the Liquidation Preference and the
denominator of which is the Conversion Price and (Y) is the number of
shares of Series A Preferred Stock to be converted.

(1) DIVIDEND; SUBDIVISION; COMBINATION OR
RECLASSIFICATION OF COMMON STOCK. If the Corporation shall, at any time or
from time to time, (a) declare a dividend on the Common Stock payable in
shares of its capital stock including Common Stock, (b) subdivide the
outstanding Common Stock, (c) combine the outstanding Common Stock into a
smaller number of shares, or (d) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification
in connection with a consolidation or merger in which the Corporation is
the continuing corporation), then in each such case, the Conversion Price
in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall
be adjusted to that price which will permit the number of shares of Common
Stock into which Series A Preferred Stock may be converted to be increased
or reduced in the same proportion as the number of shares of Common Stock
are increased or reduced in connection with such dividend, subdivision,
combination or reclassification. Any such adjustment shall become
effective immediately after the record date of such dividend or the
effective date of such subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur. If a dividend is declared and such dividend is

<PAGE>

not paid, the Conversion Price shall be adjusted to the Conversion Price in
effect immediately prior to the record date of such dividend.

(2) ISSUANCE OF RIGHTS TO PURCHASE COMMON
STOCK BELOW CURRENT MARKET PRICE OF DILUTION PRICE. If the Corporation
shall, at any time or from time to time, fix a record date for the issuance
of rights or warrants to all holders of its Common Stock entitling them
(for a period expiring with 45 calendar days after such record date) to
subscribe for or purchase shares of Common Stock or securities convertible
into Common Stock at a price per share of Common Stock, or having a
conversion price per share of Common Stock, if a security is convertible
into Common Stock (determined in each such case by dividing (X) the total
consideration payable to the Corporation upon exercise, conversion or
exchange of such rights, warrants or other securities convertible into
Common Stock by (Y) the total number of shares of Common Stock covered by
such rights, warrants or other securities convertible into Common Stock)
lower than either the Current Market Price per share of Common Stock on
such record date (or, if an ex-dividend date has been established for such
record date, on the day next preceding such ex-dividend date) or the
Dilution Price, then the Conversion Price shall be reduced to the price
determined by multiplying the Conversion Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so to be offered (or
the aggregate initial Conversion Price of the convertible securities so to
be offered) would purchase at the Applicable Price, and the denominator of
which shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such price
for subscription or purchase may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration
shall be determined in good faith by the Board of Directors. Any such
adjustment shall become effective immediately after the record date for
such rights or warrants. Such adjustment shall be made successively when
such a record date is fixed. If such rights or warrants are not issued to
the holders of Common Stock, the Conversion Price shall be adjusted to the
Conversion Price in effect immediately prior to such record date.

(3) CERTAIN DISTRIBUTIONS. If the
Corporation shall fix a record date for the distribution to all holders of
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Corporation is the continuing
corporation) of evidences of indebtedness, assets or other property (other
than regularly scheduled cash

<PAGE>

dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in capital stock for which adjustment
is made under Section 4.3(a)(vi)(C)(1)) or subscription rights or warrants
(excluding those referred to in Section 4.3(a)(vi)(C)(2)), then the
Conversion Price shall be reduced to the price determined by multiplying
the Conversion Price in effect immediately prior to such record date by a
fraction (which shall in no event be less than zero), the numerator of
which shall be the Current Market Price per share of Common Stock on such
record date (or, if an ex-dividend date has been established for such
record date, on the next day preceding such ex-dividend date), less the
fair market value (as determined in good faith by the Board of Directors)
of the portion of the assets, evidences of indebtedness, other property,
subscription rights or warrants so to be distributed applicable to one
share of Common Stock and the denominator of which shall be such Current
Market Price per share on Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed. Any such adjustment
shall become effective immediately after the record date for such
distribution. In the event that such distribution is not so made, the
Conversion Price shall be adjusted to be the Conversion Price in effect
immediately prior to such record date.

(4) ISSUANCE OF COMMON STOCK BELOW CURRENT
MARKET PRICE OR DILUTION PRICE. If the Corporation shall, at any time or
from time to time, directly or indirectly, sell or issue shares of Common
Stock (regardless of whether originally issued or from the Corporation's
treasury), or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of
Common Stock (excluding shares issued (a) in any of the transactions
described in Section 4.3(a)(vi)(C)(1), (2) or (3), (b) issued on June 7,
1994, or upon the exercise or conversion of options, warrants or any other
securities convertible into or exchangeable for shares of Common Stock
outstanding on June 7, 1994 and (c) to the Corporation's employees under
bona-fide employee benefit plans approved or adopted by the Corporation's
Board of Directors, if such shares would otherwise be included in this
Section 4.3(a)(vi)(C)(4)) at a price per share of Common Stock (determined,
in the case of rights, options, warrants or convertible or exchangeable
securities, by dividing (X) the total consideration received or receivable
by the Corporation in consideration of the sale or issuance of such rights,
options, warrants or convertible or exchangeable securities, plus the total
consideration payable to the Corporation upon exercise or conversion or
exchange thereof, by (Y) the total number of shares of Common Stock covered
by such rights, options, warrants or convertible or exchangeable
securities) lower than either the Current Market Price per share of Common
Stock or the Dilution Price immediately prior to such sale or issuance,
then the Conversion Price shall be reduced to a price determined by
multiplying

<PAGE>

the Conversion Price in effect immediately prior thereto by a fraction, the
numerator of which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to such sale or issuance plus the number of
shares of Common Stock which the aggregate consideration received
(determined as provided below) for such sale or issuance would purchase at
the Applicable Price and the denominator of which shall be the total number
of shares of Common Stock outstanding immediately after such sale or
issuance. Such adjustment shall be made successively whenever such sale or
issuance is made. For the purposes of such adjustments, the shares of
Common Stock which the holder of any such rights, options, warrants, or
convertible or exchangeable securities shall be entitled to subscribe for
or purchase shall be deemed to be issued and outstanding as of the date of
such sale or issuance and the consideration "received" by the Corporation
therefor shall be deemed to be the consideration actually received or
receivable by the Corporation (plus any underwriting discounts or
commissions in connection therewith) for such rights, options, warrants or
convertible or exchangeable securities, plus the consideration stated in
such rights, options, warrants or convertible or exchangeable securities to
be payable to the Corporation for the shares of Common Stock covered
thereby. If the Corporation shall sell or issue shares of Common Stock for
a consideration consisting, in whole or in part, of property other than
cash or its equivalent, then in determining the "price per share of Common
Stock" and the "consideration" received or receivable by or payable to the
Corporation for purposes of the first sentence and the immediately
preceding sentence of this Section 4.3(a)(vi)(C)(4), the fair value of such
property shall be determined in good faith by the Board of Directors. The
determination of whether any adjustment is required under this Section
4.3(a)(vi)(C)(4), by reason of the sale and issuance of rights, options,
warrants or convertible or exchangeable securities and the amount of such
adjustment, if any, shall be made only at the time of such issuance or sale
and not at the subsequent time of issuance or sale of Common Stock upon the
exercise of such rights to subscribe or purchase.

(5) DE MINIMIS ADJUSTMENT. No adjustment of
the Conversion Price shall be made if the amount of such adjustment would
result in a change in the Conversion Price per share of less than $.02, but
in such case any adjustment that would otherwise be required then to be
made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment, which together with any adjustment so
carried forward, would result in a change in the Conversion Price in excess
of $.05 per share. If the Corporation shall, at any time or from time to
time, issue Common Stock by way of dividends on any stock of the
Corporation or subdivide or combine the outstanding shares of the Common
Stock, such amounts of $.02 and $.05 (as theretofore increased or
decreased, if

<PAGE>

such amounts shall have been adjusted in accordance with the provisions of
this clause) shall forthwith be proportionately increased in the case of a
combination or decreased in the case of a subdivision or stock dividend so
as appropriately to reflect the same. Notwithstanding the provisions of
the first sentence of this Section 4.3(a)(vi)(C)(5), any adjustment
postponed pursuant to this Section 4.3(a)(vi)(C)(5) shall be made no later
than the earlier of (a) three years from the date of the transaction that
would, but for the provisions of the first sentence of this Section
4.3(a)(vi)(C)(5), have required such adjustment and (b) the date of any
conversion of shares of Series A Preferred Stock into shares of Common
stock.

(6) FRACTIONAL SHARES. Notwithstanding any
other provision of this Amended and Restated Certificate of Incorporation,
the Corporation shall not be required to issue fractions of shares upon
conversion of any shares of Series A Preferred Stock or to distribute
certificates which evidence fractional shares. In lieu of fractional
shares, the Corporation may pay therefor, at the time of conversion of
shares of Series A Preferred Stock as herein provided, an amount in cash
equal to such fraction multiplied by the greater of the Current Market
Price of a share of Common Stock on such date and the Dilution Price.

(D) REORGANIZATION, RECLASSIFICATION AND MERGER
ADJUSTMENT. If there occurs any capital reorganization or any
reclassification of the Common Stock of the Corporation, the consolidation
or merger of the Corporation with or into another Person (other than a
merger or consolidation of the Corporation in which the Corporation is the
continuing Corporation and which does not result in any reclassification or
change of outstanding shares of its Common Stock) or the sale or conveyance
of all substantially all of the assets of the Corporation to another
Person, then each share of Series A Preferred Stock shall thereafter be
convertible into the same kind and amounts of securities (including shares
of stock) or other assets, or both, which were issuable or distributable to
the holders of outstanding Common Stock of the Corporation upon such
reorganization, reclassification, consolidation, merger, sale or
conveyance, in respect of the number of shares of Common Stock into which
such shares of Series A Preferred Stock might have been converted
immediately prior to such reorganization, reclassification, consolidation,
merger, sale or conveyance; and, in any such case, appropriate adjustments
(as determined in good faith by the Board of Directors of the Corporation)
shall be made to assure that the provisions set forth herein (including
provisions with respect to changes in, and other adjustments of, the
Conversion Price) shall thereafter be applicable, as nearly as reasonably
may be practicable, in relation to any securities or other assets
thereafter deliverable upon the conversion of the Series A Preferred Stock.

<PAGE>

(E) MECHANICS OF CONVERSION. The option to
convert shall be exercised by surrendering for such purpose to the
Corporation, at any place where the Corporation shall maintain a transfer
agent for its Common Stock, certificates representing the shares to be
converted, duly endorsed in blank or accompanied by proper instruments of
transfer, and at the time of such surrender, the Person in whose name any
certificate for shares of Common Stock shall be issuable upon such
conversion shall be deemed to be the holder of record of such shares of
Common Stock on such date, notwithstanding that the share register of the
Corporation shall then be closed or that the certificates representing such
Common Stock shall not then be actually delivered in person.

(F) CERTIFICATE AS TO ADJUSTMENTS. Whenever the
Conversion Price or the securities or other property deliverable upon the
conversion of the Series A Preferred Stock shall be adjusted pursuant to
the provisions hereof, the Corporation shall promptly give written notice
thereof to each holder of shares of Series A Preferred Stock at such
holder's address as it appears on the transfer books of the Corporation and
shall forthwith file, at its principal executive office and with any
transfer agent or agents for the Series A Preferred Stock and the Common
Stock, a certificate, signed by the Chairman of the Board, President or one
of the Vice Presidents of the Corporation, and by its Chief Financial
Officer, its Treasurer or one of its Assistant Treasurers, stating the
adjusted Conversion Price and the securities or other property deliverable
per share of Series A Preferred Stock calculated to the nearest cent or to
the nearest one one-hundredth of a share and setting forth in reasonable
detail the method of calculation and the facts requiring such adjustment
and upon which such calculation is based. Each adjustment shall remain in
effect until a subsequent adjustment hereunder is required.

(G) RESERVATION OF COMMON STOCK. The Corporation
shall at all times reserve and keep available for issuance upon the
conversion of the shares of Series A Preferred Stock the maximum number of
its authorized but unissued shares of Common Stock as is reasonably
anticipated to be sufficient to permit the conversion of all outstanding
shares of Series A Preferred Stock, and shall take all action required to
increase the authorized number of shares of Common Stock if at any time
there shall be insufficient authorized but unissued shares of Common Stock
to permit such reservation or to permit the conversion of all outstanding
shares of Series A Preferred Stock.

(H) NO CONVERSION CHARGE OR TAX. The issuance
and delivery of certificates for shares of Common Stock upon the conversion
of shares of Series A Preferred Stock shall be made without charge to the
holder of shares of Series A Preferred Stock for any issuance or transfer

<PAGE>

tax, or other incidental expense in respect of the issuance or delivery of
such certificates or the securities represented thereby, all of which taxes
and expenses shall be paid by the Corporation.

(vii) NOTICE OF CERTAIN EVENTS. In case the Corporation
shall propose at any time or from time to time (A) to declare or pay any
dividend payable in stock of any class to the holders of Common Stock or to make
any other distribution to the holders of Common Stock (other than a regularly
scheduled cash dividend), (B) to offer to the holders of Common Stock rights or
warrants to subscribe for or to purchase any additional shares of Common Stock
or shares of stock of any class or any other securities, rights or options, (C)
to effect any reclassification of its Common Stock (D) to effect any
consolidation, merger or sale, transfer or other disposition of all or
substantially all of the property, assets or business of the Corporation which
would, if consummated, adjust the Conversion Price or the securities issuable
upon conversion of shares of Series A Preferred Stock, or (E) to effect the
liquidation, dissolution or winding up of the Corporation, then, in each such
case, the Corporation shall mail to each holder of shares of Series A Preferred
Stock, at such holder's address as it appears on the transfer books of the
Corporation, a written notice of such proposed action, which shall specify (1)
the date on which a record is to be taken for the purpose of such dividend or
distribution of rights or warrants or, if a record is not to be taken, the date
as of which the holders of shares of Common Stock of record to be entitled to
such dividend or distribution of rights or warrants are to be determined, or (2)
the date on which such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up is expected to become
effective, and such notice shall be so given as promptly as possible but in any
event at least ten (10) Business Days prior to the applicable record,
determination or effective date, specified in such notice.

(viii) CERTAIN REMEDIES. Any registered holder of shares
of Series A Preferred Stock shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Amended and Restated Certificate of
Incorporation and to enforce specifically the terms and provisions of this
Amended and Restated Certificate of Incorporation in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which such holder may be entitled at law or in equity.

(b) COMMON STOCK. Each holder of Common Stock shall be entitled
to one vote for each share of Common Stock held of record on all matters on
which stockholders generally are entitled to vote and to all other rights, power
sand privileges of stockholders under Delaware law. Upon the dissolution,
liquidation or winding up of the Corporation, after any preferential amounts to
be distributed to the holders of the Preferred Stock and any other class or
series of stock having a preference over the Common Stock then outstanding have
been paid or declared and

<PAGE>

funds sufficient for the payment thereof in full set apart for payment, the
holders of the Common Stock shall be entitled to receive pro rata all the
remaining assets of the Corporation available for distribution to its
stockholders.

(c) DEFINITIONS. For the purposes of this Amended and Restated
Certificate of Incorporation, the following terms shall have the meanings
indicated.

"APPLICABLE PRICE" shall mean the highest of (i) the Current Market
Price per share of Common Stock on the applicable record or other relevant date
and (ii) the Dilution Price.

"APPLICABLE RATE" shall mean .39960934.

"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or execution order to close.

"CLOSING PRICE" shall mean, with respect to each share of Common Stock
for any day, (i) the last reported sale price regular way or, in case no such
sale takes place on such day, the average of the closing bid and asked prices
regular way, in either case as reported on the principal national securities
exchange on which such Common Stock is listed or admitted for trading or (ii) if
such Common Stock is not listed or admitted for trading on any national
securities exchange, the last reported sale price or, in case no such sale takes
place on such day, the average of the highest reported bid and the lowest
reported asked quotation for such Common Stock, in either case as reported on
the Automatic Quotation System of NASDAQ or a similar service if NASDAQ is no
longer reporting such information.

"COMMON STOCK" has the meaning assigned to such term in Section 4.1.

"CONVERSION PRICE" shall mean, with respect to each share of Series A
Preferred Stock, the amount in dollars equal to the product of (i) the
Liquidation Preference for such share and (ii) a fraction, the numerator of
which is 1 and the denominator of which is the Applicable Rate. The Conversion
Price is subject to adjustment as set forth in Section 4.3(a)(vi).

"CURRENT MARKET PRICE" shall mean, with respect to shares of Common
Stock on any date, the average of the daily Closing Prices per share of such
Common Stock for the 10 consecutive trading days commencing 15 days before the
day in question. If on any such date the shares of Common Stock are not listed
or admitted for trading on any national securities exchange and not quoted in
NASDAQ or any similar service, the Current Market Price for such shares shall be
the fair market value

<PAGE>

as determined in good faith by a committee of disinterested members of the Board
of Directors based on a written opinion of an independent investment banking
firm of nationally recognized stature.

"DILUTION PRICE" shall mean the amount in dollars equal to the product
of (1) the Liquidation Preference for a share of Series A Preferred Stock and
(ii) a fraction, the numerator of which is 1 and the denominator of which is the
Applicable Rate, subject to appropriate adjustment for events described in
Section 4.3(a)(vi)(D).

"DIVIDEND PAYMENT DATE" shall mean the last day of each March, June,
September and December, except that if any Dividend Payment Date is not a
Business Day, then the next succeeding Business Day shall be the Dividend
Payment Date.

"GAAP" means generally accepted United States accounting principles in
effect from time to time.

"INITIAL PUBLIC OFFERING" shall mean the sale by the Corporation of
its capital stock pursuant to a registration statement on Form S-1 or otherwise
under the Securities Act.

"ISSUE DATE" shall mean the date on which shares of Series A Preferred
Stock are issued.

"JUNIOR STOCK" shall mean, with respect to she shares of Series A
Preferred Stock, any capital stock of the Corporation, including without
limitation the Common Stock, ranking junior to the Series A Preferred Stock with
respect to dividends, distribution in liquidation or any other preference, right
or power.

"LEGALLY AVAILABLE FUNDS" has the meaning assigned such term in
Section 4.3(a)(ii)(A).

"LIQUIDATION PREFERENCE" shall mean, with respect to each share of
Series A Preferred Stock, $6.33681.

"NASDAQ" shall mean the National Association of Securities Dealers,
Inc.

"PARITY STOCK" shall mean, with respect to shares of Series A
Preferred Stock, any capital stock of the Corporation ranking on a parity with
the Series A Preferred Stock with respect to dividends, distribution in
liquidation or any other preference, right or power.

<PAGE>

"PERSON" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, governmental agency or political subdivision thereof or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.

"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

5. ELECTION OF DIRECTORS. Members of the Board of Directors may be
elected either by written ballot or by voice vote.

6. TERM OF DIRECTORS. The number of directors of the Corporation
shall be fixed from time to time pursuant to the By-laws of the Corporation.
The directors of the Corporation shall be divided into three classes, as nearly
equal in number as reasonably possible, as determined by the Board, with the
initial term of office of the first class of such directors ("Class I
Directors") to expire at the annual meeting of stockholders to be held in 1997,
the initial term of office of the second class of such directors ("Class II
Directors") to expire at the annual meeting of stockholders to be held in 1998
and the initial term of office of the third class of such directors ("Class III
Directors") to expire at the annual meeting of stockholders to be held in 1999,
with each class of directors to hold office until their successors have been
duly elected and qualified. The initial Class I Director shall be William
Laverack, Jr.; the initial Class II Directors shall be Peter M. Castleman and
William N. Simon; and the initial Class III Directors shall be Ray E. Newton,
III and Marsden S. Cason. At each annual meeting of stockholders, directors
elected to succeed the directors whose terms expire at such annual meeting shall
be elected to hold office for a term expiring at the annual meeting of
stockholders in the third year following the year of their election and until
their successors have been duly elected and qualified. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain or attain a number of directors in each class as
nearly equal as reasonably possible but no decrease in the number of directors
may shorten the term of any incumbent director. No director may be removed
except for cause. This Section 6 may not be amended, modified or repealed
except by the affirmative vote of the holders of not less than seventy-five
percent (75%) of the voting power of all outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors,
considered for purposes hereof as a single class.

In the event that the holders of any class or series of stock of the
Corporation shall be entitled, voting separately as a class, to elect any
directors of the Corporation, then the number of directors that may be elected
by such holders shall be in addition to the number fixed pursuant to the By-laws
and, except as otherwise expressly provided in the terms of such class or
series, the terms of the directors elected by such holders shall expire at the
annual meeting of stockholders next succeeding their election without regard to
the classification of the remaining directors.

<PAGE>

7. ACTION BY STOCKHOLDERS. Notwithstanding the provisions of
section 228 of the General Corporation Law, any action required or permitted to
be taken by the stockholders of the Corporation must be effected at a duly
called annual or special meeting of such stockholders and may not be effected by
any consent in writing by such stockholders. Except as otherwise required by
law and subject to the rights under Section 4 hereof of the holders of any class
or series of stock having a preference over the Common Stock as to dividends or
upon liquidation, special meetings of stockholders of the Corporation may be
called only by the Board of Directors, the Chairman of the Board of Directors or
the Chief Executive Officer. Notwithstanding anything contained in this Amended
and Restated Certificate of Incorporation to the contrary, the affirmative vote
of the holders of at least 75% of the aggregate voting power of the outstanding
shares of stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to alter, amend,
adopt any provision inconsistent with or repeal this Section 7.

8. LIMITATION OF LIABILITY. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability of a director (a) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
or (d) for any transaction from which the director derived any improper personal
benefits.

Any repeal or modification of the foregoing provision shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.

9. INDEMNIFICATION.

9.1 To the extent not prohibited by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a director or
officer of the Corporation, or, at the request of the Corporation, is or was
serving as a director or officer of any other corporation or in a capacity with
comparable authority or responsibilities for any partnership, joint venture,
trust, employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees, disbursements and other
charges). Persons who are not directors or officers of the Corporation (or
otherwise entitled to indemnification

<PAGE>

pursuant to the preceding sentence) may be similarly indemnified in respect of
service to the Corporation or to an Other Entity at the request of the
Corporation to the extent the Board at any time specifies that such persons are
entitled to the benefits of this Section 9.

9.2 The Corporation shall, from time to time, reimburse or
advance to any director or officer or other person entitled to indemnification
hereunder the funds necessary for payment of expenses, including attorneys' fees
and disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; PROVIDED, HOWEVER, that, if required by
the General Corporation Law, such expenses incurred by or on behalf of any
director or officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such director, officer or other person is not
entitled to be indemnified for such expenses.

9.3 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 9
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, this Certificate of Incorporation, the
By-laws, any agreement, any vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office.

9.4 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 9
shall continue as to a person who has ceased to be a director or officer (or
other person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of such person.

9.5 The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section 9, the By-laws or under section 145 of the
General Corporation Law or any other provision of law.

<PAGE>

9.6 The provisions of this Section 9 shall be a contract between
the Corporation, on the one hand, and each director and officer who serves in
such capacity at any time while this Section 9 is in effect and any other person
entitled to indemnification hereunder, on the other hand, pursuant to which the
Corporation and each such director, officer, or other person intend to be, and
shall be, legally bound. No repeal or modification of this Section 9 shall
affect any rights or obligations with respect to any state of facts then or
theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.

9.7 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 9
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including its Board, its independent legal counsel and its
stockholders) to have made a determination prior to the commencement of such
action that such indemnification or reimbursement or advancement of expenses is
proper in the circumstances nor an actual determination by the Corporation
(including its Board, its independent legal counsel and its stockholders) that
such person is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a
presumption that such person is not so entitled. Such a person shall also be
indemnified for any expenses reasonably incurred in connection with successfully
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.

9.8 Any director or officer of the Corporation serving in any
capacity of (a) another corporation of which a majority of the shares entitled
to vote in the election of its directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.

9.9 Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Section 8 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; PROVIDED, HOWEVER, that if no such notice is given, the right to
indemnification or reimbursement

<PAGE>

or advancement of expenses shall be determined by the law in effect at the time
indemnification or reimbursement or advancement of expenses is sought.

10. ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS. The Board may from
time to time adopt, amend or repeal the By-laws of the Corporation; PROVIDED,
HOWEVER, that any By-laws adopted or amended by the Board may be amended or
repealed, and any By-laws may be adopted, by the stockholders of the Corporation
by vote of a majority of the holders of shares of stock of the Corporation
entitled to vote in the election of Directors of the Corporation voting together
as a single class.

WITNESS the signature of this Certificate this 8th day of July, 1996.

The North Face, Inc.

By: /s/ Marsden S. Cason
--------------------------------
Name: Marsden S. Cason
Title: Chief Executive Officer
Attest:

By: /s/ Roxanna Prahser
-------------------------------
Name: Roxanna Prahser
Title: Secretary

<PAGE>

EXHIBIT 5.1

October 28, 1996

The North Face, Inc.
2013 Farallon
San Leandro, California 94579

RE: REGISTRATION STATEMENT ON FORM S-1

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-1 to be filed by The
North Face, Inc., a Delaware corporation (the "Company"), with the Securities
and Exchange Commission on October 28, 1996, in connection with the registration
under the Securities Act of 1933, as amended, of 2,875,000 shares of the
Company's Common Stock, par value $0.0025 per share (the "Shares"), 1,000,000 of
which are authorized but heretofore unissued (the "Company Shares") and
1,875,000 shares of which (including an over-allotment option to purchase
375,000 shares) may be sold by selling stockholders (the "Selling Stockholder
Shares"). The Shares are to be sold to the underwriters for resale to the
public as described in the Registration Statement and pursuant to the
Underwriting Agreement filed as an exhibit thereto. As legal counsel to the
Company, we have examined the proceedings proposed to be taken in connection
with said sale and issuance of the Shares.

Based upon the foregoing, we are of the opinion that (i) the Selling
Stockholder Shares have been duly authorized and validly issued and are fully
paid and non-assessable and (ii) the Company Shares, when issued in the manner
described in the Registration Statement, will be duly authorized, validly
issued, fully paid and non-assessable.

<PAGE>

We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendment thereto.

Very truly yours,

WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

Enclosures

<PAGE>

TNF HOLDINGS COMPANY, INC.

1994 STOCK INCENTIVE PLAN
(As amended)

<PAGE>

TABLE OF CONTENTS

PAGE

ARTICLE I
GENERAL
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Administration. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Persons Eligible for Awards . . . . . . . . . . . . . . . . . . 3
1.4 Types of Awards Under Plan. . . . . . . . . . . . . . . . . . . 3
1.5 Shares Available for Awards . . . . . . . . . . . . . . . . . . 3
1.6 Definitions of Certain Terms. . . . . . . . . . . . . . . . . . 5

ARTICLE II
AWARDS UNDER THE PLAN
2.1 Agreements Evidencing Awards. . . . . . . . . . . . . . . . . . 6
2.2 Grant of Stock Options. . . . . . . . . . . . . . . . . . . . . 7
2.3 Exercise of Options . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Termination of Employment; Death. . . . . . . . . . . . . . . . 10
2.5 Grant of Restricted Stock . . . . . . . . . . . . . . . . . . . 12

ARTICLE III
MISCELLANEOUS
3.1 Amendment of the Plan; Modification of Awards . . . . . . . . . 14
3.2 Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 Nonassignability. . . . . . . . . . . . . . . . . . . . . . . . 16
3.4 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . 17
3.5 Right of Discharge Reserved . . . . . . . . . . . . . . . . . . 18
3.6 Nature of Payments. . . . . . . . . . . . . . . . . . . . . . . 18
3.7 Non-Uniform Determinations. . . . . . . . . . . . . . . . . . . 19
3.8 Other Payments or Awards. . . . . . . . . . . . . . . . . . . . 19
3.9 Section Headings. . . . . . . . . . . . . . . . . . . . . . . . 20
3.10 Effective Date and Term of Plan . . . . . . . . . . . . . . . . 20
3.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 20

<PAGE>

ARTICLE I
GENERAL
1.1 PURPOSE

The purpose of the TNF Holdings Company, Inc. 1994 Stock Incentive Plan
(the "Plan") is to provide for officers and other employees (including directors
whether or not employees) of, and consultants to, TNF Holdings Company, Inc.
(the "Company") an incentive (a) to enter into and remain in the service of the
Company, (b) to enhance the long-term performance of the Company, and (c) to
acquire a proprietary interest in the success of the Company.

1.2 ADMINISTRATION

1.2.1 Subject to Section 1.2.6, the Plan shall be administered by the
Compensation Committee (the "Committee") of the board of directors of the
Company (the "Board"), which shall consist of not less than two directors (at
least a majority of which are not officers or employees of the Company) and to
which the Board shall grant power to authorize the issuance of the Company's
capital stock pursuant to awards granted under the Plan. The members of the
Committee shall be appointed by, and serve at the pleasure of, the Board.

1.2.2 The Committee shall have the authority (a) to exercise all of the
powers granted to it under the Plan,

<PAGE>

(b) to construe, interpret and implement the Plan and any Plan Agreements
executed pursuant to Section 2.1, (c) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules governing its own operations,
(d) to make all determinations necessary or advisable in administering the Plan,
(e) to correct any defect, supply any omission and reconcile any inconsistency
in the Plan, and (f) to amend the Plan to reflect changes in applicable law.

1.2.3 Actions of the Committee shall be taken by the vote of a majority
of its members. Any action may be taken by a written instrument signed by a
majority of the Committee members, and action so taken shall be fully as
effective as if it had been taken by a vote at a meeting.

1.2.4 The determination of the Committee on all matters relating to the
Plan or any Plan Agreement shall be final, binding and conclusive.

1.2.5 No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
thereunder.

1.2.6 Notwithstanding anything to the contrary contained herein: (a)
until the Board shall appoint the members of the Committee, the Plan shall be
administered by the Board; and (b) the Board may, in its sole discretion, at

<PAGE>

any time and from time to time, resolve to administer the Plan. In either of
the foregoing events, the term "Committee" as used herein shall be deemed to
mean the Board.

1.3 PERSONS ELIGIBLE FOR AWARDS

Awards under the Plan may be made to such officers, directors, and other
employees of the Company, and to such consultants to the Company (collectively,
"key persons"), as the Committee shall in its sole discretion select with
consideration given to recommendations by senior management.

1.4 TYPES OF AWARDS UNDER PLAN

Awards under the Plan shall be in the form of (a) nonqualified stock
options or (b) restricted stock, as determined by the Committee in its sole
discretion. The term "award" means any of the foregoing.

1.5 SHARES AVAILABLE FOR AWARDS

1.5.1 The total number of shares of common stock of the Company, par
value $.01 per share ("Common Stock"), with respect to which awards may be
granted pursuant to the Plan shall not exceed 371,251 shares, no more than
229,245 of which shares may be used for awards in the form of nonqualified stock
options and no more than 142,006 of which shares may be used for awards in the
form of restricted

<PAGE>

stock. Such shares may be authorized but unissued Common Stock or authorized
and issued Common Stock held in the Company's treasury or acquired by the
Company for the purposes of the Plan. The Committee may direct that any stock
certificate evidencing shares issued pursuant to the Plan shall bear a legend
setting forth such restrictions on transferability as may apply to such shares
pursuant to the Plan.

1.5.2 If there is any change in the outstanding shares of Common Stock
by reason of a stock dividend or distribution, stock split-up, recapitalization,
combination or exchange of shares, or by reason of any merger, consolidation,
spinoff or other corporate reorganization in which the Company is the surviving
corporation, the number of shares available for issuance both in the aggregate
and with respect to each outstanding award, and the purchase price per share
under outstanding awards, shall be equitably adjusted by the Committee, whose
determination shall be final, binding and conclusive. After any adjustment made
pursuant to this Section 1.5.2, the number of shares subject to each outstanding
award shall be rounded to the nearest whole number.

1.5.3 Any shares subject to an award under the Plan that remain
unissued upon the cancellation or

<PAGE>

termination of such award for any reason whatsoever, and any shares of
restricted stock forfeited pursuant to Section 2.5.5, shall again become
available for awards under the Plan. Except as provided in this Section 1.5,
there shall be no limit on the number or the value of the shares of Common Stock
issuable to any individual under the Plan.

1.6 DEFINITIONS OF CERTAIN TERMS

1.6.1 The "Fair Market Value" of a share of Common Stock on any day
shall be the Fair Market Value of a share of Common Stock on any day determined
by the Committee; the Fair Market Value of a share of Common Stock as of the
date of adoption of the Plan is $1.00 per share. The "Fair Market Value" of all
or part of an option on any day shall be the product of (a) the number of shares
for which such option (or part thereof) is then exercisable, multiplied by (b)
the excess of the Fair Market Value of a share of Common Stock on such day over
the exercise price with respect to such option.

1.6.2 The term "employment" means, in the case of a grantee of an award
under the Plan who is not an employee of the Company, the grantee's association
with the Company as a-consultant or otherwise.

1.6.3 A grantee shall be deemed to have a "termination of employment" upon
ceasing to be employed by

<PAGE>

the Company and all of its subsidiaries or by a corporation assuming awards in a
transaction to which section 424(a) of the Code applies. The Committee may in
its discretion determine (a) whether any leave of absence constitutes a
termination of employment for purposes of the Plan, (b) the impact, if any, of
any such leave of absence on awards theretofore made under the Plan, and (c)
when a change in a non-employee's association with the Company constitutes a
termination of employment for purposes of the Plan. The Committee shall have
the right to determine whether the termination of a grantee's employment is a
dismissal for cause and the date of termination in such case, which date the
Committee may retroactively deem to be the date of the action that is cause for
dismissal. Such determinations of the Committee shall be final, binding and
conclusive.

1.6.4 The terms "parent corporation" and "subsidiary corporation" have
the meanings given them in section 424(e) and (f) of the Code, respectively.

ARTICLE II

AWARDS UNDER THE PLAN

2.1 AGREEMENTS EVIDENCING AWARDS

Each award granted under the Plan shall be evidenced by a written agreement
("Plan Agreement") which shall contain such provisions as the Committee may in
its

<PAGE>

sole discretion deem necessary or desirable. By accepting an award pursuant to
the Plan, a grantee thereby agrees (a) that the award shall be subject to all of
the terms and provisions of the Plan and the applicable Plan Agreement and (b)
to be bound by the terms and conditions of the Company's Securityholders
Agreement, dated as of the date of adoption of the Plan. As a condition to
receiving an award, a grantee shall have executed a counterpart of such
Securityholders Agreement.

2.2 GRANT OF STOCK OPTIONS

2.2.1 The Committee may grant nonqualified stock options to purchase
shares of Common Stock from the Company, to such persons, and in such amounts
and subject to such terms and conditions, as the Committee shall determine in
its sole discretion, subject to the provisions of the Plan.

2.2.2 Each Plan Agreement with respect to an option shall set forth the
amount (the "option exercise price") payable by the grantee to the Company upon
exercise of the option evidenced thereby. The option exercise price per share
shall be determined by the Committee in its sole discretion, provided that in no
event shall it be less than the Fair Market Value of a share of Common Stock.

2.2.3 Each Plan Agreement with respect to an option shall set forth the
periods during which the award

<PAGE>

evidenced thereby shall be exercisable, whether in whole or in part. Such
periods shall be determined by the Committee in its sole discretion; provided
that except as and to the extent that the Committee may otherwise provide
pursuant to Section 3.1.3, no option shall be exercisable prior to the first
anniversary of the date of grant.

2.3 EXERCISE OF OPTIONS

Subject to the provisions of this Article II, each option granted under the
Plan shall be exercisable as follows:

2.3.1 Unless the applicable Plan Agreement otherwise provides, an
option shall become exercisable on the tenth anniversary of the date the option
is granted.

2.3.2 Unless the applicable Plan Agreement otherwise provides, once an
installment becomes exercisable, it shall remain exercisable until expiration,
cancellation or termination of the award.

2.3.3 Unless the applicable Plan Agreement otherwise provides, an
option may be exercised from time to time AS to all or part of the shares as to
which such award is then exercisable.

2.3.4 An option shall be exercised by the filing of a written notice
with the Company, on such form and in

<PAGE>

such manner as the Committee shall in its sole discretion prescribe.

2.3.5 Any written notice of exercise of an option shall be accompanied
by payment for the shares being purchased. Such payment shall be made: (a) by
certified or official bank check (or the equivalent thereof acceptable to the
Company) for the full option exercise price; (b) BY (i) delivery of shares of
Common Stock and/or (ii) conversion in whole or in part of an option (to the
extent then exercisable), in either case having a Fair Market Value (determined
as of the exercise date) equal to all or part of the option exercise price,
together with a certified or official bank check (or the equivalent thereof
acceptable to the Company) for any remaining portion of the full option exercise
price; or (c) at the discretion of the Committee and to the extent permitted by
law, by such other provision, consistent with the terms of the Plan, as the
Committee may from time to time prescribe.

2.3.6 Promptly after receiving payment of the full option exercise
price, the Company shall, subject to the provisions of Section 3.2, deliver to
the grantee or to such other person as may then have the right to exercise the
award, a certificate or certificates for the shares of Common Stock for which
the award has been exercised. If the

<PAGE>

method of payment employed upon option exercise so requires, and if applicable
law permits, an optionee may direct the Company to deliver the certificate(s) to
the optionee's stockbroker.

2.3.7 No grantee of an option (or other person having the right to
exercise such award) shall have any of the rights of a stockholder of the
Company with respect to shares subject to such award until the issuance of a
stock certificate to such person for such shares. Except as otherwise provided
in Section 1.5.2, no adjustment shall be made for dividends, distributions or
other rights (whether ordinary or extraordinary, and whether in cash, securities
or other property) for which the record date IS prior to the date such stock
certificate is issued.

2.4 TERMINATION OF EMPLOYMENT; DEATH

2.4.1 Except to the extent otherwise provided in Section 2.4.2 or 2.4.3
or in the applicable Plan Agreement, all options not theretofore exercised shall
terminate upon termination OF the grantee's employment for any reason (including
death). To the extent options held by a grantee are not exercisable on the date
of any such termination, such options shall not thereafter become exercisable.

2.4.2 If a grantee's employment terminates for any reason other than
death or dismissal for cause, the

<PAGE>

grantee (or his legal representative, if applicable) may exercise any
outstanding option on the following terms and conditions: (a) exercise may be
made only to the extent that the grantee was entitled to exercise the award on
the date of employment termination; and (b) exercise must occur within three
months after employment terminates, but in no event after the expiration date of
the award as set forth in the Plan Agreement.

2.4.3 If a grantee dies while employed by the Company or any
subsidiary, or after employment termination but during the period in which the
grantee's awards are exercisable pursuant to Section 2.4.2, any outstanding
option shall be exercisable on the following terms and conditions: (a) exercise
may be made only to the extent that the grantee was entitled to exercise the
award on the date of death; and (b) exercise must occur by the earlier of the
first anniversary of the grantee's death or the expiration date of the award.
Any such exercise of an award following a grantee's death shall be made only by
the grantee's executor or administrator, unless the grantee's will specifically
disposes of such award, in which case such exercise shall be made only by the
recipient of such specific disposition. If a grantee's personal representative
or the recipient of a specific disposition under the grantee's

<PAGE>

will shall be entitled to exercise any award pursuant to the preceding sentence,
such representative or recipient shall be bound by all the terms and conditions
of the Plan and the applicable Plan Agreement which would have applied to the
grantee including, without limitation, the provisions of Section 3.2 hereof.

2.5 GRANT OF RESTRICTED STOCK

2.5.1 The Committee may grant restricted shares of Common Stock to such
persons, in such amounts, and subject to such terms and conditions as the
Committee shall determine in its sole discretion, subject to the provisions of
the Plan. Restricted stock awards may be made independently of or in connection
with any other award under the Plan. A grantee of a restricted stock award
shall have no rights with respect to such award unless such grantee accepts the
award within such period as the Committee shall specify by executing a Plan
Agreement in such form as the Committee shall determine and, if the Committee
shall so require, makes payment to the Company by certified or official bank
check (or the equivalent thereof acceptable to the Company) in such amount as
the Committee may determine.

2.5.2 Promptly after a grantee accepts a restricted stock award, the
Company shall issue to the grantee a certificate or certificates for the shares
of

<PAGE>

Common Stock covered by the award. Upon the issuance of such certificate(s),
the grantee shall have the rights of a stockholder with respect to the
restricted stock, subject to the forfeiture provisions of Section 2.5, subject
also to the nontransferability restrictions and Company repurchase rights
described in Sections 2.5.4 and 2.5.6, and subject also to any other
restrictions and conditions contained in the applicable Plan Agreement, except
that (unless otherwise provided in the applicable Plan Agreement) the grantee
shall not have the right to receive any dividends or distributions in respect of
the shares of Common Stock covered by the award until such shares have vested
pursuant to Section 2.5.5.

2.5.3 Unless the Committee shall otherwise determine, any certificate
issued evidencing shares of restricted stock shall remain in the possession of
the Company until such shares are free of any restrictions specified in the
applicable Plan Agreement.

2.5.4 Shares of restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of until such shares
vest pursuant to Section 2.5.5, except as specifically provided in the
applicable Plan Agreement.

<PAGE>

2.5.5 Unless the applicable Plan Agreement otherwise provides, shares
of restricted stock shall be forfeitable until the tenth anniversary of the date
hereof.

2.5.6 During the 90 days following the termination of the grantee's
employment for any reason (including death), the Company shall have the right to
require the return of any shares (together with any accumulated dividends
thereon) that are forfeitable pursuant to Section 2.5.5 on the date of such
termination, in exchange for which the Company shall repay to the grantee (or
the grantee's estate) any amount paid by the grantee for such shares.

ARTICLE III

MISCELLANEOUS

3.1 AMENDMENT OF THE PLAN; MODIFICATION OF AWARDS

3.1.1 The Board may from time to time suspend, discontinue, revise or
amend the Plan in any respect whatsoever, except that no such amendment shall
materially impair any rights or materially increase any obligations under any
award theretofore made under the Plan without the consent of the grantee (or,
upon the grantee's death, the person having the right to exercise the award).
For purposes of this Section 3.1, any action of the Board or the Committee that
alters or affects the tax treatment of any

<PAGE>

award shall not be considered to materially impair any rights of any grantee.

3.1.3 The Committee may amend any outstanding Plan Agreement,
including, without limitation, by amendment which would (a) accelerate the time
or times at which the award may be exercised, or (b) waive or amend any goals,
restrictions or conditions set forth in the Agreement, or (c) extend the
scheduled expiration date of the award. However, any such cancellation or
amendment that materially impairs the rights or materially increases the
obligations of a grantee under an outstanding award shall be made only with the
consent of the grantee (or, upon the grantee's death, the person having the
right to exercise the award).

3.2 RESTRICTIONS

3.2.1 If the Committee shall at any time determine that any Consent (as
hereinafter defined) is necessary or desirable as a condition of, or in
connection with, the granting of any award under the Plan, the issuance or
purchase of shares or other rights thereunder, or the taking of any other action
thereunder (each such action being hereinafter referred to as a "Plan Action"),
then such Plan Action shall not be taken, in whole or in part, unless and until
such Consent shall have been effected or obtained to the full satisfaction of
the Committee.

<PAGE>

3.2.2 The term "Consent" as used herein with respect to any Plan Action
means (a) any and all listings, registrations or qualifications in respect
thereof upon any securities exchange or under any federal, state or local law,
rule or regulation, (b) any and all written agreements and representations by
the grantee with respect to the disposition of shares, or with respect to any
other matter, which the Committee shall deem necessary or desirable to comply
with the terms of any such listing, registration or qualification or to obtain
an exemption from the requirement that any such listing, qualification or
registration be made and (c) any and all consents, clearances and approvals in
respect of a Plan Action by any governmental or other regulatory bodies.

3.3 NONASSIGNABILITY

No award or right granted to any person under the Plan or under any Plan
Agreement shall be assignable or transferable other than by will or by the laws
of descent and distribution. All rights granted under the Plan or any Plan
Agreement shall be exercisable during the life of the grantee or during the
period specified in Section 2.4.3 only by the grantee or the grantee's legal
representative.

<PAGE>

3.4 REQUIREMENT OF NOTIFICATION OF
ELECTION UNDER SECTION 83(b) OF THE CODE

If any grantee shall, in connection with the acquisition of shares of
Common Stock under the Plan, make the election permitted under section 83(b) of
the Code (i.e., an election to include in gross income in the year of transfer
the amounts specified in section 83(b)), such grantee shall notify the Company
of such election within 10 days of filing notice of the election with the
Internal Revenue Service, in addition to any filing and notification required
pursuant to regulations issued under the authority of Code section 83(b).

3.4 WITHHOLDING TAXES

3.4.1 Whenever cash is to be paid pursuant to an award under the Plan,
the Company shall be entitled to deduct therefrom an amount sufficient in its
opinion to satisfy all federal, state and other governmental tax withholding
requirements related to such payment.

3.5.2 Whenever shares of Common Stock are to be delivered pursuant to
an award under the Plan, the Company shall be entitled to require as a condition
of delivery that the grantee remit to the Company an amount sufficient in the
opinion of the Company to satisfy all federal, state and other governmental tax
withholding requirements related thereto. With the approval of the Committee,
which it shall

<PAGE>

have sole discretion to grant, the grantee may satisfy the foregoing condition
by electing to have the Company withhold from delivery shares having a value
equal to the amount of tax to be withheld. Such shares shall be valued at their
Fair Market Value on the date as of which the amount of tax to be withheld is
determined (the "Tax Date"). Fractional share amounts shall be settled in cash.
Such a withholding election may be made with respect to all or any portion of
the shares to be delivered pursuant to an award.

3.5 RIGHT OF DISCHARGE RESERVED

Nothing in the Plan or in any Plan Agreement shall confer upon any grantee
the right to continue in the employ of the Company or affect any right which the
Company may have to terminate such employment.

3.6 NATURE OF PAYMENT

3.6.1 Any and all grants of awards and issuances of shares of Common
Stock under the Plan shall be in consideration of services performed for the
Company by the grantee.

3.6.2 All such grants and issuances shall constitute a special
incentive payment to the grantee and shall not be taken into account in
computing the amount of salary or compensation of the grantee for the purpose of
determining any benefits under any pension, retirement,

<PAGE>

profit-sharing, bonus, life insurance or other benefit plan of the Company or
under any agreement between the Company and the grantee, unless such plan or
agreement specifically provides otherwise.

3.7 NON-UNIFORM DETERMINATIONS

The Committee's determinations under the Plan need not be uniform and may
be made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan (whether or not such persons are similarly situated).
Without limiting the generality of the foregoing, the Committee shall be
entitled, among other things, to make non-uniform and selective determinations,
and to enter into non-uniform and selective Plan agreements, as to (a) the
persons to receive awards under the Plan, (b) the terms and provisions of awards
under the Plan, and (c) the treatment of leaves of absence pursuant to Section
1.6.4.

3.8 OTHER PAYMENTS OR AWARDS

Nothing contained in the Plan shall be deemed in any way to limit or
restrict the Company from making any award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.

<PAGE>

3.9 SECTION HEADINGS

The section headings contained herein are for the purpose of convenience
only and are not intended to define or limit the contents of said sections.

3.10 EFFECTIVE DATE AND TERM OF PLAN

The Plan was adopted by the Board and approved by the Company's
shareholders on June 7, 1994.

3.11 GOVERNING LAW

All rights and obligations under the Plan shall be construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflict of laws.

* * * * *

<PAGE>
EXHIBIT 11.1

COMPUTATION OF PRO FORMA EARNINGS PER SHARE (1)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
------------------- --------------------
<S> <C> <C>
Number of Shares:
Weighted Average Shares Outstanding................................... 3,151 3,911
Incremental shares from assumed exercise of stock options (2)......... 644 613
Shares issued upon conversion of Series A Preferred Stock............. 3,632 4,008
------- -------
Weighted average common and common equivalent shares outstanding...... 7,427 8,532
------- -------
------- -------
Income Before Extraordinary Loss...................................... $ 3,485 $ 4,373
Extraordinary Loss.................................................... $ 0 $ (863)
------- -------
Net Income............................................................ $ 3,485 $ 3,510
------- -------
------- -------

Earnings per Share:
Income Before Extraordinary Loss.................................... $ 0.47 $ 0.51
Extraordinary Loss, net of tax...................................... $ 0.00 $ (0.10)
------- -------
Net Income.......................................................... $ 0.47 $ 0.41
------- -------
------- -------
</TABLE>

- --------------

(1) Pro forma for all periods presented due to the assumed conversion, as of the
beginning of each period, of all outstanding shares of Preferred Stock into
Common Stock in conjunction with the Company's initial public offering in
July 1996.

(2) In accordance with the rules of the Securities and Exchange Commission,
common stock and common stock equivalents issued within one year of this
initial public offering effective July 8, 1996 have been considered as
outstanding for all periods using the treasury stock method (assuming a
market price of $14.00), even though they are anti-dilutive in loss periods.

<PAGE>
EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of The North Face, Inc.
on Form S-1 of our report dated February 9, 1996 (June 20, 1996 as to Note 16)
on the financial statements of The North Face, Inc. and The North Face
("Predecessor") appearing in the Prospectus, which is a part of this
Registration Statement and to the reference to us under the heading "Experts" in
such Prospectus.

DELOITTE & TOUCHE LLP

San Francisco, California

October 25, 1996

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 882
<SECURITIES> 0
<RECEIVABLES> 55,231
<ALLOWANCES> 0
<INVENTORY> 34,149
<CURRENT-ASSETS> 96,392
<PP&E> 9,316
<DEPRECIATION> 0
<TOTAL-ASSETS> 135,865
<CURRENT-LIABILITIES> 58,234
<BONDS> 0
0
0
<COMMON> 25
<OTHER-SE> 60,367
<TOTAL-LIABILITY-AND-EQUITY> 135,865
<SALES> 121,629
<TOTAL-REVENUES> 0
<CGS> 69,119
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 41,852
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3,834)
<INCOME-PRETAX> 7,111
<INCOME-TAX> 2,738
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (863)
<CHANGES> 0
<NET-INCOME> 3,510
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41

</TABLE>