AIRCRAFT LEASE

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Exhibit 10.39

AIRCRAFT LEASE

        THIS LEASE made as of this 18th day of December, 2003 ("Lease") by and between N2T, Inc., an Oregon corporation ("Lessor"), and Oakley, Inc., a Washington corporation, with its principal offices located at One Icon, Foothill Ranch, CA 92610 ("Lessee").

1.     LEASE OF THE AIRCRAFT

        Subject to the terms and conditions contained herein, Lessor agrees to lease to Lessee and Lessee agrees to lease from Lessor that certain Global Express aircraft bearing manufacturers serial number 9010 and currently registered with the Federal Aviation Administration ("FAA") in the United States of America under registration number N701WH with two (2) Rolls Royce model BR710A2-20 engines, manufacturer's serial numbers 12121 and 12122, together with all accessories, parts, appliances, and appurtenances now or hereafter a part thereof, substitutions therefore, and repairs thereto (the "Aircraft").

2.     DELIVERY OF AIRCRAFT

        The Aircraft, together with all current and complete logs, books and records (including any computerized maintenance records) pertaining to the Aircraft and its maintenance in legible form, shall be delivered to Lessee at Hillsboro, Oregon or such other location as may be mutually agreed, on or about December 18, 2003. The date on which Lessee executes the Delivery and Acceptance Certificate in the form attached as Exhibit A hereto is referred to as the "Delivery Date."

3.     TERM

        The "Lease Term" shall commence on the Delivery Date and shall terminate on December 31, 2007 (or earlier in accordance with the next sentence). Lessee will have the right for any reason whatsoever to terminate this Lease before the end of the Lease Term, by giving Lessor not less than sixty (60) days' prior written notice of its intention so to terminate this Lease.

4.     RENT

        Notwithstanding Lessee's obligations to pay for the maintenance and operating costs of the Aircraft under Section 6, Lessee and Lessor hereby agree that no rent is due or payable under this Lease.

5.     CERTAIN COVENANTS OF LESSEE

        Lessee hereby covenants and agrees as follows:

(a)

Furnishing of Information

        Lessee shall furnish from time to time to Lessor such information regarding Lessee's use, operation or maintenance of the Aircraft as Lessor may reasonably request.

(b)

Lawful Use

        The Aircraft shall not be maintained, used, operated or stored in violation of any law or any rule, regulation or order of any government or governmental authority having jurisdiction (domestic or foreign), or in violation of any airworthiness certificate, license or registration relating to the Aircraft or its use, or in violation or breach of any representation or warranty made with respect to obtaining insurance on the Aircraft or any term or condition of such insurance policy. Aircraft operations shall be in compliance with Part 91 of Title 14 of the Code of Federal Regulations.

(c)

Aircraft Location

        The Aircraft shall not be operated or located in (i) any area excluded from coverage by the terms of insurance or (ii) any recognized or threatened area of hostilities, unless fully covered to Lessor's satisfaction by war risk insurance.

(d)

Base of the Aircraft

        The Aircraft shall be principally based at Hillsboro, Oregon or such other location as agreed to between Lessor and Lessee during the Lease Term and Lessee agrees to notify Lessor promptly of any change in the principal base.

(e)

Transportation Code Filings

        Lessee shall, at its sole cost and expense, take all steps necessary to preserve and protect the U.S. registration of the Aircraft under the applicable provisions of Title 49 of the U.S. Code, and the rules and regulations promulgated thereunder.

(f)

Aircraft Operation

        Lessee will be in operational control of the Aircraft at all times during the term hereof, and shall not sell, transfer, assign, encumber or, except with Lessor's prior written consent, sublet or part with such possession of the Aircraft or any of its rights under this Lease and shall be solely responsible for its possession, use and operation. Lessee shall bear all operating costs including, but not limited to: the cost of fuel, crew salaries, expenses and employee benefits; handling and custom fees and related charges; hangar and storage charges; insurance premiums for all insurance coverage required by this Lease; and all fines, fees or penalties arising directly or indirectly out of this Lease or Lessee's operation of the Aircraft.

(g)

Log Books

        Lessee shall maintain all current and complete logs, books and records (including any computerized maintenance records) pertaining to the Aircraft and its maintenance during the Lease Term in accordance with FAA rules and regulations and Lessee shall, at the end of the Lease Term, deliver such records in legible form to Lessor.

(h)

Pilots

        The Aircraft shall, at all times during the Lease Term, be operated by duly qualified, current, and rated (appropriate to the Aircraft) pilots paid and contracted for by Lessee and employed by Lessee, whose licenses are in good standing, who meet the requirements established and specified by the insurance policies required hereunder and by the FAA, and who have attended and successfully completed the manufacturer's approved training course for this type of Aircraft.

(i)

Alterations

        Lessee shall not in any way alter, modify or make additions or improvements to the Aircraft, except as specifically required by Section 6 or under applicable laws or regulations, without the prior written consent of Lessor. All non- severable alterations, modifications, additions and improvements which are made shall become the property of Lessor and shall be subject to all the terms of this Lease.

(j)

Identification

        Lessee shall keep a legible copy of this Lease in the Aircraft at all times.

(k)

Liens

        Without the prior written consent of Lessor, Lessee will not directly or indirectly create, incur, assume or suffer to exist any liens on or with respect to (x) the Aircraft or any part thereof,

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(y) Lessor's title thereto or (z) any interest of the Lessor therein, except (i) the respective rights of Lessor and Lessee as herein provided, (ii) Lessor Liens (as defined below), (iii) liens for taxes of Lessee either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material danger of the sale, forfeiture or loss of the Aircraft, any risk of any material civil liability or any risk of criminal liability on the part of Lessor, (iv) material mens, mechanics', workmen's, repairmen's, employees' or other like liens arising in the ordinary course of Lessee's business (including those arising under maintenance agreements entered into in the ordinary course of business) securing obligations that are not overdue for a period of more than thirty (30) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material danger of the sale, forfeiture or loss of the Aircraft or of any interest of Lessor therein, or any risk of criminal liability, (v) liens arising out of any judgment or award against Lessee not covered by insurance, unless the judgment secured shall not, within sixty (60) days after the entry thereof, have been discharged, vacated, reversed or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within sixty (60) days after the expiration of such stay, and (vi) any other lien with respect to which Lessee shall have provided a bond, cash collateral or other security adequate in the reasonable opinion of Lessor. Lessee shall promptly, at its own expense, take (or cause to be taken) such actions as may be necessary to discharge duly any such lien not excepted above if the same shall arise at any time. "Lessor Liens" means any Lien arising as a result of (a) claims against Lessor not related to this Lease, (b) acts or omissions of Lessor not related to this Lease or in breach of any representation, warranty or covenant hereunder, (c) events or circumstances that occurred prior to the commencement of this Lease, (d) taxes, fees, charges and assessments that are not indemnified or payable by Lessee hereunder, or (e) any transfer, sale or assignment by Lessor of any interest in this Lease or the Aircraft.

(l)

Taxes

        Lessee agrees to pay all property taxes, tolls, license fees or assessments, and landing fees (collectively, "Charges") which may be levied or assessed by any government against the Aircraft or the use thereof, in each case to the extent attributable to the period of the Lease Term. In addition, Lessee shall be liable to pay any retail sales or use tax that may be imposed on or with respect to the amount of the Fixed Rentals hereunder (a "Rental Tax"), but Lessee shall not be liable to pay any Rental Tax imposed or based on or with respect to any amount other than (i) the Fixed Rentals or (ii) in the case of Washington State retail sales tax, an assumed rental rate of approximately $7,000 per flight hour, and if Lessee is required to pay taxes above the amount Lessee is responsible for under this Section 5(1), Lessor is obligated to reimburse Lessee for the excess of the amount Lessee is responsible for under this Section 5(1). Lessee will reimburse Lessor for any such Charges and Rental Taxes which Lessor shall be required to pay; however, Lessee may contest any assessment of a Charge or a Rental Tax on Lessor and Lessor shall provide Lessee with a timely opportunity to defend against such assessment and cooperate in the defense thereof at Lessee's expense. Lessee shall, upon receipt of written request from Lessor, submit to Lessor evidence of Lessee's payment of any Charges and Rental Taxes due by Lessee.

6.     AIRCRAFT MAINTENANCE

(a)

Maintenance

        During the Lease Term and until such time as the Aircraft is returned to Lessor, Lessee agrees, at the direction of Lessor and at Lessee's expense, to cause the Aircraft to be maintained at all times in (A) fully operational, duly certified and airworthy condition and maintained in accordance with the manufacturer's recommended inspection program (FAR 91.409(f)(3)) and (B) condition adequate to comply with all regulations of the FAA or any other governmental agency having jurisdiction over the maintenance, use or operation of the Aircraft. Without limiting the foregoing, Lessee shall maintain, inspect, service and test the Aircraft and perform all repairs on the Aircraft in accordance with (i) all

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maintenance manuals for the Aircraft from time to time issued by the airframe manufacturer, the engine manufacturer or any other applicable manufacturer, (ii) all recommended service bulletins which might have a detrimental effect on the Aircraft airworthiness or safety of the Aircraft if not performed, and (iii) all airworthiness alerts and airworthiness directives issued by the FAA or any other governmental agency having jurisdiction. All work required by this Section 6(a) shall be undertaken and completed only by properly trained, licensed and certified maintenance personnel. All replacement parts shall be of the type approved by the airframe manufacturer, be of the same or better quality as the replaced part, and become the property of Lessor (free and clear of all liens and encumbrances other than the liens described in clauses (i) through (vi) of Section 5(k) hereof upon installation. Notwithstanding the foregoing, Lessor shall pay any extraordinary costs of maintenance or of complying with manufacturer's service bulletins or FAA airworthiness alerts and directives.

(b)

Rights Against Third Parties

        Lessor hereby assigns to Lessee for the Lease Term all presently existing and future rights of Lessor against the manufacturer of, or service facility for, the airframe, engines, accessories, equipment and component parts of the Aircraft or any replacement thereof with respect to the obligation of said manufacturer or service facility under the warranties granted pursuant to the sale or servicing of such property. Lessee shall perform, and Lessor shall cooperate with Lessee to perform, all acts necessary to make a claim under any such warranty at Lessee's own expense.

7.     INSPECTION

        Lessor or its designee shall have the right, but not the duty, to inspect the Aircraft at any reasonable time and upon reasonable notice, provided that each such inspection shall be subject to Lessees safety and security rules applicable to the location of the Aircraft and no exercise of such inspection right shall interfere with the normal operation or maintenance of the Aircraft by Lessee or violate requirements of applicable insurance policies. Upon Lessor's request, Lessee shall advise Lessor of the Aircraft's location and, within a reasonable time and, provided there is no undue inconvenience and delay to Lessee, shall permit Lessor to examine all information, logs, documents and Lessee's records regarding or with respect to the Aircraft and its use maintenance or condition.

8.     LOSS OR DAMAGE

(a)

Casualty Occurrences

        In the event of a Casualty Occurrence, the Lease Term and Lessee's liability hereunder for any further Fixed Rentals shall terminate, and Lessor shall be entitled to recover possession of the Aircraft. Lessee shall immediately report a Casualty Occurence to Lessor and, as required by law, to governmental agencies. Lessor and Lessee shall proceed diligently and cooperate fully with each other to secure a recovery for any Casualty Occurrence. All proceeds of insurance referred to in Section 9 below, and/or all proceeds of any compensation in connection with the condemnation, confiscation, seizure or requisition of the Aircraft, applicable to a Casualty Occurrence shall be paid to Lessor. As used herein, a "Casualty Occurrence" shall mean any of the following events with respect to the Aircraft: (i) loss of the Aircraft or the use thereof due to the destruction, damage beyond repair or rendition of the Aircraft permanently unfit for normal use for any reason whatsoever; (ii) any damage to the Aircraft (including, but not limited to, anything requiring the completion of an FAA Form 337 "Major Repair and Alteration Statement") which results in an insurance settlement with respect to the Aircraft on the basis of a total loss; (iii) the theft or disappearance of the Aircraft which shall have resulted in the loss of possession of the Aircraft by Lessee for a period of five (5) consecutive days or more; or (iv) the condemnation, confiscation or seizure of, or the requisition of title to or use or possession of, the Aircraft for a period of five (5) consecutive days or more. A Casualty Occurrence

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with respect to the Aircraft shall be deemed to have occurred if a Casualty Occurrence occurs with respect to the airframe of such Aircraft.

(b)

Repairable Damage

        If repairable damage occurs to the Aircraft or any part thereof that does not constitute a Casualty Occurrence, Lessee's obligation to pay rent under this Lease shall continue. To the extent necessary and appropriate, Lessee shall apply the proceeds of any insurance referred to in Section 9 below paid with respect to such damage to the repair of the Aircraft.

9.     INSURANCE

(a)

Public Liability and Property Damage Insurance

        Lessee represents and warrants that it will maintain in effect, at its own expense with insurers of recognized responsibility reasonably satisfactory to Lessor, (i) public liability insurance, including bodily injury and property damage (including, without limitation, passenger legal liability) in an amount not less than $200,000,000 for each single occurrence and (ii) such other property damage insurance (exclusive of manufacturer's property liability insurance) with respect to the Aircraft as is of the type and in the amounts usually carried by corporations similarly situated with Lessee, and owning or operating similar aircraft and engines and which covers risks of the kind customarily insured against by such corporations. Lessee shall provide at its own expense worker's compensation insurance with all-states coverage for the crew and maintenance personnel.

(b)

Insurance Against Loss or Damage to the Aircraft

        Les