**Exhibit10.5****LASERSCOPE****2006 INCENTIVE COMPENSATION PLAN****Effective as of December 21, 2005**     This Laserscope 2006 Incentive Compensation Plan (the “Incentive Plan”) has been approved bythe Laserscope (the “Company”) Board of Directors (the “Board”) and is hereby established by theCompany effective as of December 21, 2005.     1. Purpose. The purpose of this Incentive Plan is to motivate and provide a financialincentive for selected Company employees (including managers, directors and executives, but notcommissioned sales representatives) by providing cash bonuses for the successful achievement ofspecified Company strategic objectives and goals.     2. Eligibility & Participation. All United States based employees of the Company areeligible to participate in this Incentive Plan and only those employees designated by the“Committee” (as defined below) to participate in this Incentive Plan shall be “Participants” inthis Incentive Plan. The Committee may designate eligible employees to participate in thisIncentive Plan at any time by listing such employees in Appendix A attached hereto, whichAppendix may be amended at any time by the Committee. Participation in this Incentive Plan doesnot guarantee that any bonus payments will ever be made under this Incentive Plan. A Participant’srights hereunder may not be anticipated, assigned, attached, garnished, optioned, transferred ormade subject to seizure for the payment of Participant’s debts, judgments, alimony, or separatemaintenance or transferable, whether voluntarily, involuntarily or by operation of law, in theevent of Participant’s bankruptcy, insolvency, divorce or separation.     3. Bonus Amounts. Bonuses, if any, will be based on the formulas set forth in parts 1through 4 of Appendix B attached hereto which will take into account the Participant’s basesalary and the degree of satisfaction of certain objective performance goals which must be achievedby or over a specified period of time (the “Performance Period”), all of which shall be establishedby the Committee. Notwithstanding the foregoing, the Chief Executive Officer of the Company maygrant additional, discretionary, bonuses, subject to specified maximums and in consultation withthe Committee. Appendix B may be amended by the Committee, in its sole discretion, at any time andfor any reason; provided that no such amendment shall materially and adversely affect the thenexisting rights of any Participant.     4. Bonus Payment.          (a) The Committee shall, in itssole discretion, determine the degree to which the specified performance goals are satisfied and bonuses, if any, are earned for any Performance Period. Any bonus payable to a Participant under this Incentive Plan will be paid in a single-lumpsum cash payment as soon as practicable after such determination is made, provided that (a) if thePerformance Period is based on one or more calendar years, the bonus, if any, will be paid duringthe calendar year immediately following the end of the Performance Period, and (b) if thePerformance Period is based on some other period of time, the bonus, if any, shall be paid no laterthan the 15th day of the third month following the end of the later of the Participant’s taxableyear during which the bonus is earned and the Company’s fiscal year during which the bonus isearned. All bonus payments will be reduced by any required tax withholding and/or other
 

 
deductions. In no event shall the Company (or any person connected therewith) be liable to anyperson for the failure of any Participant to be entitled to any particular tax consequence withrespect to this Incentive Plan or any bonus paid pursuant to this Incentive Plan.          (b) If bonuses are earned and are payable for any given Performance Period, the Company willpay such bonuses first to non-executive employees, including managers and directors, and then toexecutives. In the event the Company is unable to pay all bonuses for any given Performance Periodto all the non-executive employees, the bonuses will be paid to such non-executive employees on apro rata basis. Bonuses, if any, to executives, including the Company’s Chief Executive Officer,will be paid only after bonuses earned by non-executives have been paid. In the event the Companyis unable to pay all bonuses for any given Performance Period to all the executive employees afterpaying satisfying non-executive bonuses, the executive bonuses will be paid to such executiveemployees on a pro rata basis. If the Company is unable to pay in full bonuses earned for a givenPerformance Period, the Company shall pay such shortfall at the end of any subsequent PerformancePeriod, if it is able to do so.     5. Changes in Employment Status. The rules set forth in this Section 5 will apply toany Participant who is newly hired or terminates employment during the applicable PerformancePeriod. However, notwithstanding anything stated herein, the Committee has the authority, in itssole and absolute discretion, to deviate from these rules for individual Participants.          (a) New Hires. Any bonus payable under this Incentive Plan to a Participant who ishired and selected for participation in this Incentive Plan during a Performance Period shall bepro-rated based on the base pay earned by the Participant during the Performance Period.          (b) Terminations. A Participant will not be eligible for any bonus payment unless theParticipant is an employee of the Company as of the bonus payment date (even if theapplicable performance goals were partly or entirely satisfied), unless the Participant is on aCompany-approved leave of absence and subject to any rights a Participant may have pursuant toanother written agreement with the Company. Notwithstanding the foregoing, if a Participantterminates employment before a bonus payment date as a result of his or her death or permanentdisability, such Participant will be eligible for a bonus that is pro-rated based on the base payearned by the Participant during the Performance Period.. For purposes of this Incentive Plan,“permanent disability” shall have the meaning (i) utilized in any Company long-term disability planor (ii) as defined in Internal Revenue Code Section 22(e) if no such disability plan exists.          (c) Leaves of Absence. Any bonus payable under this Incentive Plan to a Participantwho is on a Company-approved leave of absence during any part of the Performance Period shall bepro-rated based on the base pay earned by the Participant during the Performance Period.     6. Administration. This Incentive Plan shall be administered by the Board or anindependent committee of the Board appointed by the Board to administer this Incentive Plan (the“Committee”). Subject to the provisions of this Incentive Plan, the Committee shall have the fullauthority and discretion to: (a) determine who will participate in this Incentive Plan, (b)determine the time or times at which bonuses may be paid, (c) prescribe, amend and rescind rulesand regulations relating to this Incentive Plan; (d) take any actions it deems necessary oradvisable for the administration of this Incentive Plan; and (e) make all other determinationsnecessary or advisable
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for Incentive Plan administration. All decisions, interpretations and other actions of theCommittee shall be final, conclusive and binding on all parties who have an interest in thisIncentive Plan. Notwithstanding the foregoing, no decision by the Committee shall have the effectof impairing the then existing rights of a Participant under this Incentive Plan without suchParticipant’s consent.     7. Indemnification. No member of the Committee shall be personally liable for (i)any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or herin connection with or resulting from any claim, action, suit, or proceeding to which he or she maybe a party or in which he or she may be involved by reason of any action taken, failure to act,determination or interpretation made in good faith with respect to this Incentive Plan and (ii) anyand all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid byhim or her in satisfaction of any judgment in any such claim, action, suit, or proceeding againsthim or her, provided he or she shall give the Company an opportunity, at its own expense, to handleand defend the same before he or she undertakes to handle and defend it on his or her own behalf.The foregoing right of indemnification shall not be exclusive of any other rights ofindemnification to which such persons may be entitled under the Company’s Articles of Incorporationor Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company mayhave to indemnify them or hold them harmless.     8. Amendment and Termination. This Incentive Plan may be amended or terminated at anytime by the Board for any reason or no reason. No payments shall be made under this Incentive Planafter the plan is terminated. Unless affirmatively terminated by the Board, this Incentive Planshall continue to remain in effect even if Performance Periods or performance goals are notestablished on a recurring basis. Moreover, there is no requirement that Performance Periods orperformance goals be established whether on a one-time basis or a recurring basis.     9. No Employment Rights. No provision of this Incentive Plan shall be construed togive any person any right to become, to be treated as, or to remain an employee or consultant ofthe Company. The Company reserves the right to terminate any Participant’s employment or serviceat any time and for any reason or for no reason, with or without cause, and with or without advancenotice.     10. Effect on Other Benefits. Any payments made pursuant to this Incentive Plan shallnot be counted as compensation for purposes of any other employee benefit plan, program oragreement sponsored, maintained or contributed by the Company unless expressly provided for in suchemployee benefit plan, program or agreement.     11. Unfunded, Unsecured Obligation; No Equity Interest. This Incentive Plan shall atall times be entirely unfunded and no provision of this Incentive Plan shall require the Company,for purpose of satisfying any obligations under this Incentive Plan, to purchase assets or placeany assets in a trust or other entity to which contributions are made or otherwise to segregate anyassets, nor shall the Company maintain separate bank accounts, books, records or other evidence ofthe existence of a segregated or separately maintained or administered fund for such purposes.Additionally, nothing contained herein shall be construed as giving a Participant, his or herbeneficiary, or any other person, any equity or other interest of any kind in any assets of theCompany, nor any rights commonly associated with any such interest, including, but not limited to,the right to vote on any matters put before the Company’s shareholders, or creating a trust of anykind or a fiduciary relationship of any kind between the Company and any such person. As to any
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claim for any unpaid amounts under this Incentive Plan, a Participant, his or her beneficiary,and any other person having a claim for payment shall be general unsecured creditors.     12. Integration. This Incentive Plan represents the entire plan and agreement as tothe matters described herein. This Incentive Plan shall supersede all prior or contemporaneousplans or arrangements or understandings between the Company and any Participants or other persons,whether written or oral, express or implied, with respect to any subject covered by this IncentivePlan.     13. Enforceability. Whenever possible, each provision or portion of any provision ofthis Incentive Plan shall be interpreted in such manner as to be effective and valid underapplicable law but the invalidity or unenforceability of any provision or portion of any provisionof this Incentive Plan in any jurisdiction shall not affect the validity or enforceability of theremainder of this Incentive Plan in that jurisdiction or the validity or enforceability of thisIncentive Plan, including that provision or portion of any provision, in any other jurisdiction.In addition, should a court or arbitrator determine that any provision or portion of any provisionof this Incentive Plan, is not reasonable or valid, such provision should be interpreted andenforced to the maximum extent which such court or arbitrator deems reasonable or valid.     14. Governing Law. The Incentive Plan shall be governed by, and interpreted,construed, and enforced in accordance with, the laws of the State of California without regard toits or any other jurisdiction’s conflicts of laws provisions.     15. Execution. To record the adoption of this Incentive Plan, the Company has causedits authorized officer to execute the same.      **LASERSCOPE**