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EXHIBIT 10.1
 
AMENDMENT NO. 3 TO
SLC LICENSE AGREEMENT

This Amendment No. 3 to the SLC License Agreement (this “Amendment No. 3”) is
entered into as of December 11, 2013 (the “Amendment Effective Date”), by and
between Scientific Learning Corporation, Inc., a Delaware corporation (“SLC”)
and Posit Science Corporation (f/k/a Neuroscience Solutions Corporation), a
California corporation (“NSC”).

RECITALS:

A.           SLC and NSC previously entered into an SLC License Agreement
effective as of September 30, 2003 and subsequent Amendment #1 (dated July 1,
2010 ) and #2 (dated June 25, 2010) (collectively, the “License Agreement”). 
All terms defined in the License Agreement shall have the same meanings when
used in this Amendment No. 3 with initial letters capitalized.

B.            SLC seeks to monetize the value of its patent portfolio through
one or more licenses, sales, or assignments of the SLC Patents. To facilitate
this goal, SLC wishes to (i) convert the license granted to NSC under a
significant number of the Core SLC Patents from an exclusive to a non-exclusive
license, and (ii) terminate NSC’s right to sublicense certain other SLC Patents
through a sale of a division by NSC.

C.            In exchange for converting its license from an exclusive to a
non-exclusive license, NSC seeks to reduce the amounts payable to SLC.  The
parties also wish to clarify the scope of the products covered by the license
following a change of control of NSC.

D.            Accordingly, the parties desire to amend the License Agreement as
set forth herein.

AGREEMENT:
 
The Parties therefore agree as follows:
 

1. The following new definitions are hereby added to Section 1 (Definitions) of
the License Agreement:

 
“Acquirer” means any person or Entity that: (i) owns or controls, directly or
indirectly, all or substantially all of a party’s assets or the outstanding
voting securities or equity interests of a party after a Change in Control
occurs that involves that party, and (ii) was an unaffiliated party to that
party at any time prior to the initiation of that Change in Control.
 
“Entity” means any corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, cooperative, foundation, society, political party, union, company
(including any limited liability company or joint stock company), firm or other
enterprise, association, organization or entity.

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“Option Fee” means an amount equal to four times the amount payable by NSC under
this Agreement during twelve (12) months immediately preceding the effective
date of a Change in Control of NSC.

“Pre-existing NSC Acquirer Product” means any product that is developed, under
development, sold, marketed or otherwise made available by an Acquirer, or any
person or Entity affiliated with an Acquirer, at any time prior to a Change in
Control involving NSC.

“Fitting of Hearing Aids and Cochlear Implants” means activities designed to
select the appropriate hearing aid or cochlear implant, and improve the
performance of the selected hearing aid or cochlear implant by choosing
appropriate device settings.

“Reserved SLC Field” means the fields of Fitting of Hearing Aids and Cochlear
Implants.

2. The definition of Change of Control in section 1 is deleted entirely and
replaced with the following:

 
 “Change in Control” of an Entity means the occurrence of any of the following:
 
(i)            a merger, consolidation, share exchange, tender offer, exchange
offer, or similar transaction involving such Entity or any direct or indirect
downstream affiliate of such Entity after the completion of which the
shareholders of such Entity immediately prior to the completion of such merger,
consolidation, share exchange, tender offer, exchange offer, or similar
transaction beneficially own (within the meaning of Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended (the “United States Exchange
Act”), or comparable successor rules), directly or indirectly, outstanding
voting securities or equity interests representing less than fifty percent (50%)
of the combined voting power of either the surviving Entity in such merger,
consolidation, share exchange, tender offer, exchange offer, or similar
transaction or any direct or indirect upstream parent of the surviving Entity;
 
(ii)            an acquisition by any person or “group” (within the meaning of
section 13(d) or 14(d) of the United States Exchange Act or any comparable
successor provisions), other than any employee benefit plan or related trust
sponsored or maintained by such Entity or any direct or indirect affiliate of
such Entity, and other than in a merger, consolidation, share exchange, tender
offer, exchange offer, or similar transaction of the type referred to in clause
“(i)” of this definition, of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the United States Exchange Act, or comparable successor
rules) of outstanding voting securities or equity interests of such Entity
representing at least fifty percent (50%) of the combined voting power of such
Entity (in a single transaction or series of related transactions);
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(iii)            a transaction or series of transactions in which any Entity or
group of related Entities acquires or otherwise obtains all or substantially all
of such Entity's assets.

3. The last sentence of Section 1.7 (Health Field) of the License Agreement is
hereby deleted in its entirety and replaced with the following:

 
“Notwithstanding the above, the Health Field shall not include: (i) product or
services, whether or not in the preceding clauses (a) through (c), that are sold
or marketed in the Educational Field (without regard to the last sentence of
Section 1.6) and (ii) only with respect to the Non-Core SLC Patents, the
Reserved SLC Field.”
 

4. The last sentence of Section 1.15 (“SLC Patents”) of the License Agreement is
hereby deleted in its entirety and replaced with the following:

 
“SLC Patents do not include existing or future patents held by a third party
that merges or consolidates with SLC, or otherwise acquires SLC, in a
transaction involving a Change In Control of SLC or to whom SLC assigns the
Agreement (other than the SLC Patents existing immediately prior to such Change
In Control).”
 
 The next to last sentence of Section 3.1 (Ownership) of the License Agreement
is hereby deleted in its entirety and replaced with the following:

“Except for the licenses expressly granted in Section 2.1, 2.2, and 2.3, SLC and
its licensors reserve and retain all rights with respect to the (i) Patents
(including the Non-Core SLC Patents and including the full right to enforce or
assign such patents to any third party and (ii) SLC Software.

5. The first sentence of Section 2.4(d) (Sublicense in Connection with Sale of a
Division) of the License Agreement is hereby deleted in its entirety and
replaced with the following:

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“Notwithstanding the provisions of Section 2.4(a) to the contrary, NSC may,
without the express written consent of SLC, sublicense the license rights
granted to it under (i) Section 2.1 but only with respect to the Core SLC
Patents, and (ii) Sections 2.2 and 2.3, to a third party (provided that with
regard to both (i) and (ii) above, such third party is not a Competitor as
defined in Section 9.4) in connection with the sale by NSC of a “Division” (as
defined below) to such third party, provided that such sublicense shall (x) be
exclusive (even as to NSC) in a defined sub-field of use within the Health Field
which subfield encompasses and is limited to the health indications addressed by
the products and services of the Division, which exclusivity may be limited in
geographic territory, and (y) be granted pursuant to a written sublicense
agreement that imposes on the sublicensee terms consistent with, and no less
protective of SLC’s and its licensors’ rights than, the terms imposed on NSC
under this Agreement.”

6. Section 4.2 (Base Royalty) of the License Agreement is hereby deleted in its
entirety and replaced with the following:

“In consideration of the license rights granted under Section 2, NSC shall pay
to SLC a nonrefundable base royalty (“Base Royalty”) equal to the product
obtained by multiplying: (a) 0.4% (the “Applicable Base Royalty Percentage”) by
(b) Net Sales.”

7. Sub-section (b) of the second sentence of Section 4.10 (Minimum Annual Base
Royalty Payments) of the License Agreement is hereby deleted in its entirety and
replaced by the following:

“(b) for every year thereafter, Fifteen thousand dollars ($15,000) per year,
less in each year the Base Royalties reported and paid for Net Sales accrued
during the first quarter of such calendar year, regardless of actual Net Sales
during such years.”

8. Section 11.5 (Assignment) of the License Agreement is hereby deleted in its
entirety and replaced with the following:

 
“(a)            The license rights granted hereunder are personal to NSC. 
Neither party may assign or transfer this Agreement or any of its rights or
obligations hereunder, whether by operation of law or otherwise, without the
prior express written consent of the other party, which shall not be
unreasonably withheld. Notwithstanding the immediately preceding sentence, (i)
either party may assign this Agreement, with prior written notice but without
the prior express written consent of the other party, to an Acquirer upon a
Change in Control of such party, and in each case subject to Section 2.3b; (ii)
SLC may assign its right to receive payment under this Agreement to any party
without NSC’s consent; and (iii) SLC may assign its rights and delegate its
obligations under this Agreement to the Regents, in whole or in part, without
NSC’s consent.
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(b)            NSC’s right to assign or transfer this Agreement pursuant to
subsection (i) in the immediately preceding sentence shall be subject to the
Acquirer’s express acknowledgement and agreement in writing, prior to the
occurrence of such assignment, that:
 
(1)            the Acquirer receives no rights under the Patents as a result of
or by virtue of the assignment or transfer of this Agreement to make, use, offer
for sale, sell or import any product or service that (A) is a Pre-existing
Acquirer Product, or (B) is a new release or version of, or enhancement or
successor to, any Pre-existing Acquirer Product (“Acquirer Successor Product”),
and
 
(2)            following a Change in Control of NSC, the definition of “Licensed
Product” with respect solely to the SLC Patents listed as ‘Non-Core’ in Exhibit
A of the License Agreement (as amended by this Amendment No. 3), shall be and is
hereby amended to include solely those Licensed Products that are either (1)
made commercially available by NSC prior to the effective date of such Change in
Control, or (2) made commercially available after the effective date of such
Change in Control and are a natural successor releases or versions of a product
arising from or related to any Licensed Product (A) made commercially available
by NSC before the Change in Control, or (B) made commercially available after
the date of the Change in Control and under substantial development by NSC
before the Change in Control (provided that such development had not been
initiated for the purpose of enabling an Acquirer to avoid infringing such
patents or to avoid the payment of royalties in connection with Pre-existing
Acquirer Product or Acquirer Successor Product which royalties would be due but
for the acquisition that results in such Change in Control).  For clarity, none
of the foregoing changes to the definition to Licensed Product shall apply to
the definition of a Licensed Product with respect to the Core SLC Patents.
 
(c)            Any attempt by a party to assign or transfer this Agreement or
any of its rights or obligations under this Agreement in derogation of this
Section 11.5 shall be null, void, and ineffective from inception.  Subject to
the foregoing, this Agreement will bind and inure to the benefit of the parties
and be binding upon and inure to the benefit of their respective permitted
assigns.
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(d)            Following a Change in Control of NSC in accordance with the
foregoing, the Acquirer shall have the option (“Option”) to purchase a fully
paid-up license, under the SLC Patents, of the same scope as that set forth in
Section 2.1 of the Agreement (as amended).  To exercise the Option, the Acquirer
shall (i) provide SLC a written notice thereof no later than sixty (60) days
following the effective date of the Change in Control of NSC and (ii) deliver to
SLC (in lieu of the Minimum Annual Base Royalty Payment and the Base Royalty,
each of which may accrue following the exercise of the Option) full payment of
the Option Fee.  For clarity, the exercise of the Option by NSC is intended
solely to replace the Minimum Annual Base Royalty Payment and the Base Royalty
with the Option Fee, and shall not modify or expand the scope of the license
granted to NSC or the Acquirer, as the case may be, under the Agreement.”
 

9. Exhibit A (Licensed Patents) to the License Agreement shall be amended (i) by
re-designating as ‘Non-Core’ those SLC Patents that are listed on Exhibit A to
this Amendment No. 3 (in order to make such re-designated SLC Patents
non-exclusive), and (ii) with regard solely to the foregoing patents,
re-designating as “No” the “NSC Cost” column in Exhibit A to the License
Agreement (to indicate that NSC shall have no obligation to pay Prosecution
Expense for any patent re-designated hereby as “Non-Core”).

For clarity, (i) SLC Patents listed on Exhibit B to this Amendment No. 3 shall
remain “Core SLC Patents”; (ii) SLC Patents listed on Exhibit C to this
Amendment No. 3 shall remain “Non-Core”; (iii) jointly owned patents termed SLC
Patents in the Licensed Agreement that are not subject to this Amendment No. 3
are listed in Exhibit D to this Amendment No. 3, and (iv) patents listed on
Exhibit E to this Amendment No. 3 shall remain Third Party Patents.
 

10. SLC acknowledges and agrees that (i) no further patent prosecution payments
are due from NSC for the period prior to the effective date (ii) and that the
minimum payment in calendar year 2013 is $15,000 and the royalty rate for
calendar year 2013 is 0.4%, and (iii) that NSC has made $26,260.46 in royalty
payments to SLC for calendar year 2013 as of the date of this Amendment.

11. This Amendment No. 3 will be effective as of the Amendment Effective Date. 
Except as otherwise provided in this Amendment No. 3, the terms of the License
Agreement will remain in full force and effect.

IN WITNESS WHEREOF, and intending to be legally bound, the parties have caused
this Amendment No. 3 to be made and executed by their duly authorized
representatives.

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Scientific Learning Corporation, Inc.
Posit Science Corporation, f/k/a
 
Neuroscience Solutions Corporation, Inc.
 
 
 
 
 
 
By:
/s/ Robert C. Bowen
 
By:
/s/ Henry Mahncke
 
 
 
 
 
 
Title: 
CEO
 
Title:  
CEO
 
 
 
 
 
 
Date:
 Dec. 10, 2013
 
Date: 
Dec. 20, 2013
 

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EXHIBIT 10.1
 
Exhibit A: Core Patents to be Converted to Non-Core
 
Patent
Number
Assignee
Title
6019607
Scientific Learning
Method and apparatus for training of sensory and perceptual systems in LLI
systems
6036496
Scientific Learning
Universal screen for language learning impaired subjects
6190173
Scientific Learning
Method and Apparatus for Training of Auditory/Visual Discrimination Using Target
and Distractor Phoneme and Graphics
6224384
Scientific Learning
Method and Apparatus for Training of Auditory/Visual Discrimination Using Target
and Distractor Phoneme and Graphics
6234965
Scientific Learning
Methods and Apparatus for Improving Biochemical Based Therapy in Humans
6234979
Scientific Learning
Computerized Method and Device for Remediating Exaggerated Sensory Response in
an Individual With an Impaired Sensory Modality
6261101
Scientific Learning
Method and Apparatus for Cognitive Training of Humans Using Adaptive Timing of
Exercises
6289310
Scientific Learning
Apparatus for Enhancing Phoneme Differences According to Acoustic Processing
Profile for Language Learning Impaired Subject
6328569
Scientific Learning
Method for training of auditory/visual discrimination using target and foil
phonemes/graphemes within an animated story
6331115
Scientific Learning
Method for adaptive training of short term memory and auditory/visual
discrimination within a computer game
6334776
Scientific Learning
Method and apparatus for training of auditory/visual discrimination using target
and distractor phonemes/graphemes
6364666
Scientific Learning
Method for adaptive training of listening and language comprehension using
processed speech within an animated story
6599129
Scientific Learning
Method for adaptive training of short term memory and auditory/visual
discrimination within a computer game
6629844
Scientific Learning
Method and apparatus for training of cognitive and memory systems in humans
Application Pending
Scientific Learning
Remote computer-assisted compliance and monitoring system
Application Pending
Scientific Learning
Comprehensive learning assessment tool and method

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EXHIBIT 10.1
 
Exhibit B: Core Patents to Remain Core (US patents unless otherwise noted in
text)

Patent
Number
Assignee
Title
5927988
Scientific Learning
Method and apparatus for training of sensory and perceptual systems in LLI
subjects
6155971
Scientific Learning
Computer implemented methods for reducing the effects of tinnitus
6159014
Scientific Learning
Method and apparatus for training of cognitive and memory systems in humans
6210166
Scientific Learning
Method for adaptively training humans to discriminate between frequency sweeps
common in spoken language
6334777
Scientific Learning
Method for adaptively training humans to discriminate between frequency sweeps
common in spoken language
6358056
Scientific Learning
Method for adaptively training humans to discriminate between frequency sweeps
common in spoken language
753429 (Australia)
Scientific Learning
Method and apparatus for training of sensory and perceptual systems in LLI
subjects
963583 (Europe)
Scientific Learning
Method and apparatus for training of sensory and perceptual systems in LLI
subjects

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Exhibit C: Non-Core Patents to Remain Non-Core (all are US patents)

Patent
Number
Assignee
Title
5940798
Scientific Learning
Feedback modification for reducing stuttering
6280198
Scientific Learning
Remote computer implemented methods for cognitive testing
6290504
Scientific Learning
Method and apparatus for reporting progress of a subject using audio/visual
adaptive training stimuli
6565359
Scientific Learning
Remote computer-implemented methods for cognitive and perceptual testing
6726486
Scientific Learning
Method and apparatus for automated training of language learning skills
6986663
Scientific Learning
Method and Apparatus For Automated Training of Language Learning Skills
7101185
Scientific Learning
Method and Apparatus For Automated Training of Language Learning Skills
7150630
Scientific Learning
Method and Apparatus For Automated Training of Language Learning Skills

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Exhibit D: Jointly Assigned Patents Not Affected By This Amendment (all are US
patents, all are Core)

Patent
Number
Assignee
Title
6231344
Scientific Learning/UC
Prophylactic reduction and remediation of schizophrenic impairments through
interactive behavioral training
6221908
Scientific Learning/UC
System for stimulating brain plasticity
6267733
Scientific Learning/UC
Apparatus and methods for treating motor control and somatosensory perception
deficits
6409685
Scientific Learning/UC
Method for improving motor control in an individual by sensory training
6349598
Scientific Learning/UC
Method and apparatus for diagnosing and remediating language-based learning
impairments
6457362
Scientific Learning/UC
Method and apparatus for diagnosing and remediating language-based learning
impairments
6422869
Scientific Learning/UC
Method and apparatus for assessing and improving processing of temporal
information in humans

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Exhibit E: Third-Party Patents Not Affected By This Amendment (all are US
patents, all are Core)

Patent
Number
Assignee
Title
6413092
UC/Rutgers
Method and device for enhancing the recognition of speech among speech-impaired
individuals
6413094
UC/Rutgers
Method and device for enhancing the recognition of speech among speech-impaired
individuals
6413093
UC/Rutgers
Method and device for enhancing the recognition of speech among speech-impaired
individuals
6071123
UC/Rutgers
Method and device for enhancing the recognition of speech among speech-impaired
individuals
6413095
UC/Rutgers
Method and device for enhancing the recognition of speech among speech-impaired
individuals
6413096
UC/Rutgers
Method and device for enhancing the recognition of speech among speech-impaired
individuals
6413097
UC/Rutgers
Method and device for enhancing the recognition of speech among speech-impaired
individuals
6413098
UC/Rutgers
Method and device for enhancing the recognition of speech among speech-impaired
individuals
5813862
UC/Rutgers
Method and Device for Enhancing the Recognition of Speech Among Speech-Impaired
Individuals
6123548
UC/Rutgers
Method and Device for Enhancing the Recognition of Speech Among Speech-Impaired
Individuals
6302697
UC/Rutgers
Method and Device for Enhancing the Recognition of Speech Among Speech-Impaired
Individuals
712743 (Australia)
UC/Rutgers
Method and Device for Enhancing the Recognition of Speech Among Speech-Impaired
Individuals
797822 (Europe)
UC/Rutgers
Method and Device for Enhancing the Recognition of Speech Among Speech-Impaired
Individuals
86991 (Singapore)
UC/Rutgers
Method and Device for Enhancing the Recognition of Speech Among Speech-Impaired
Individuals

 
 
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