FIFTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT


          This
Fifth Amendment to Loan and Security Agreement (this “Amendment”) is entered
into as of June 30, 2008, by and between COMERICA BANK (“Bank”) and SCIENTIFIC
LEARNING CORPORATION (“Borrower”). 


RECITALS


          Borrower
and Bank are parties to that certain Loan and Security Agreement dated as of
January 15, 2004, as amended from time to time including by that certain First
Amendment to Loan and Security Agreement dated as of September 29, 2004, that
certain Second Amendment to Loan and Security Agreement dated as of December 2,
2005, that certain Third Amendment to Loan and Security Agreement dated as of
September 5, 2006 and that certain Fourth Amendment to Loan and Security
Agreement dated as of June 5, 2007 (the “Agreement”). The parties desire to
amend the Agreement in accordance with the terms of this Amendment. 


          NOW,
THEREFORE, the parties agree as follows: 


          1.
       The following defined terms in
Section 1.1 of the Agreement hereby are added, amended or restated as follows: 


                    “Net
Worth” means the sum of the capital stock, partnership interest or limited
liability company interest of Borrower as determined in accordance with GAAP. 


                    “Revolving
Maturity Date” means July 1, 2009. 


          2.       The
number “1.50” in Section 6.8 of the Agreement is hereby replaced with the
number “1.25”. 


          3.       Section
6.9 of the Agreement is hereby amended and restated in its entirety to read as
follows: 


                    “6.9
Measured as of (i) the last day of each month if at least One Million Dollars
($1,000,000) of Advances are outstanding or (ii) the last day of each quarter
if less than One Million Dollars ($1,000,000) of Advances are outstanding, a
Net Worth greater than or equal to One Million Dollars ($1,000,000).” 


          4.       Exhibit
D to the Agreement is hereby replaced with Exhibit D attached hereto. 


          5.       Until
such time as Bank completes an audit of the Collateral to Bank’s satisfaction
Borrower shall not be permitted to request and Bank shall not make Credit
Extensions to Borrower in excess of Two Million Five Hundred Thousand Dollars
($2,500,000). 


          6.
       No course of dealing on the part of
Bank or its officers, nor any failure or delay in the exercise of any right by
Bank, shall operate as a waiver thereof, and any single or partial exercise of
any such right shall not preclude any later exercise of any such right. Bank’s
failure at any time to require strict performance by Borrower of any provision
shall not affect any right of Bank thereafter to demand strict compliance and
performance. Any suspension or waiver of a right must be in writing signed by
an officer of Bank. 


          7.
       Unless otherwise defined, all
initially capitalized terms in this Amendment shall be as defined in the
Agreement. The Agreement, as amended hereby, shall be and remain in full force
and effect in accordance with its respective terms and hereby is ratified and
confirmed in all respects. Except as expressly set forth herein, the execution,
delivery, and performance of this Amendment shall not operate as a waiver of,
or as an amendment of, any right, power, or remedy of Bank under the Agreement,
as in effect prior to the date hereof. 


          8.       Borrower
represents and warrants that the Representations and Warranties contained in
the Agreement as qualified by the Schedule are true and correct as of the date
of this Amendment, and that no Event of Default has occurred and is continuing.



-1-







          9.       As
a condition to the effectiveness of this Amendment, Bank shall have received,
in form and substance satisfactory to Bank, the following:


                              (a)       this
Amendment, duly executed by Borrower;


                              (b)       a
Certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Amendment;


                              (c)       a
signed Acknowledgement in the form attached hereto as Annex A;


                              (d)       an
amendment fee in the amount of $2,500, which may be debited from any of
Borrower’s accounts;


                              (e)       an
renewal fee in the amount of $6,500, which may be debited from any of
Borrower’s accounts;


                              (f)       all
reasonable Bank Expenses incurred through the date of this Amendment, which may
be debited from any of Borrower’s accounts; and


                              (g)       such
other documents, and completion of such other matters, as Bank may reasonably
deem necessary or appropriate.


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







          IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the first
date above written. 


	
 

	
 

	
 

	
 


	
 

	
SCIENTIFIC
 LEARNING CORPORATION 


	
 

	
 


	
 

	
By: 

	
 

	
 


	
 

	
 

	



	
 

	
 

	
 


	
 

	
Title: 

	
 


	
 

	
 

	



	
 

	
 

	
 


	
 

	
COMERICA
 BANK 


	
 

	
 


	
 

	
By:


	
 

	
 

	



	
 

	
 

	
 


	
 

	
Title:


	
 

	
 

	






[Signature Page to
Fifth Amendment to Loan & Security Agreement]







ANNEX A


COMERICA BANK MERGER ACKNOWLEDGMENT


          The
undersigned is a party to certain documents, instruments and/or agreements
(collectively, the “Documents”) with or between the undersigned and Comerica
Bank, a Michigan banking corporation (the “Merged Bank”). The Merged Bank has
been, or will be, merged with and into Comerica Bank, a Texas banking
association (the “Surviving Bank”). The undersigned hereby acknowledges and
agrees that any reference in the Documents to Comerica Bank, a Michigan banking
corporation, shall mean Comerica Bank, a Texas banking association, as
successor by merger to the Merged Bank. 


	
 

	
 

	
 


	


	
 

	



	
June 30,
 2008

	
 

	
SCIENTIFIC
 LEARNING CORPORATION


	
 

	
 

	
 


	
 

	
 

	



	
 

	
 

	
Title (if
 applicable)


	
 

	
 

	
 


	
 

	
 

	



	
 

	
 

	
Signature


	
 

	
 

	
 


	
 

	
 

	



	
 

	
 

	
Name













EXHIBIT D 

COMPLIANCE CERTIFICATE


	
 

	
 


	
TO:

	
COMERICA
 BANK 


	
 

	
 


	
FROM:

	
SCIENTIFIC
 LEARNING CORPORATION 





          The
undersigned authorized officer of SCIENTIFIC LEARNING CORPORATION hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is
in compliance for the period ending _______________ with all required covenants
except as noted below and (ii) all representations and warranties of Borrower
stated in the Agreement are true and correct in all material respects as of the
date hereof provided, however, that those representations and warranties the
date expressly referring to another date shall be true, correct and complete in
all material respects as of such date. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes (subject to year-end
adjustments with the absence of footnotes). 


Please indicate compliance status by circling
Yes/No under “Complies” column.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Reporting Covenant

	
 

	
Required

	
 

	
Complies

	
 


	


	
 

	


	
 

	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Monthly
 financial statements

	
 

	
Monthly
 within 25 days*

	
 

	
Yes

	
 

	
No

	
 


	
Annual (CPA
 Audited)

	
 

	
FYE within
 90 days

	
 

	
Yes

	
 

	
No

	
 


	
10K and 10Q

	
 

	
(as
 applicable)

	
 

	
Yes

	
 

	
No

	
 


	
A/R Agings

	
 

	
Monthly
 within 25 days*

	
 

	
Yes

	
 

	
No

	
 


	
A/R Audit

	
 

	
Upon Bank
 Request

	
 

	
Yes

	
 

	
No

	
 


	
Total amount
 of Borrower’s cash and investments

	
 

	
Amount: $______

	
 

	
Yes

	
 

	
No

	
 


	
Total amount
 of Borrower’s cash and investments maintained with Bank

	
 

	
Amount: $______

	
 

	
Yes

	
 

	
No

	
 








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Financial Covenant

	
 

	
Required

	
 

	
Actual

	
 

	
Complies

	
 


	


	
 

	


	
 

	


	
 

	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Adjusted Quick
Ratio**

	
 

	
1.25:1.00

	
 

	
____:1.00

	
 

	
Yes

	
 

	
No

	
 


	
Net
Worth**

	
 

	
$1,000,000

	
 

	
$________

	
 

	
Yes

	
 

	
No

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
*provided
 however if there are less than $1,000,000 of Advances outstanding such
 financial statements shall be delivered on a quarterly basis and not a
 monthly basis. 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
**measured
 monthly if $1,000,000 or more of Advances are outstanding and quarterly if
 less than $1,000,000 of Advances are outstanding. 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Comments Regarding Exceptions: See Attached.
 








	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Received by:

	
 


	
 

	
 

	
 

	



	
Sincerely,

	
 

	
   AUTHORIZED SIGNER


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Date: 

	
 


	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Verified:

	
 


	


	
 

	
 

	



	
SIGNATURE

	
 

	
AUTHORIZED SIGNER


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Date:

	
 


	


	
 

	
 

	



	
TITLE

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Compliance
 Status                
                 
       No


	
 

	
 

	
 

	
 

	
 

	



	


	
 

	
 

	
 

	
 

	



	
DATE

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	



	
 

	
 

	














	
 


	
Corporation Resolutions and Incumbency Certification 

 Authority to Procure Loans


	






I certify that I am the duly
elected and qualified Secretary of SCIENTIFIC LEARNING CORPORATION; that the
following is a true and correct copy of resolutions duly adopted by the Board
of Directors of the Corporation in accordance with its bylaws and applicable
statutes. 


Copy of Resolutions: 


Be it Resolved, That: 


          1.          Any
one (1) of the following __________________________ (insert titles only) of the
Corporation are/is authorized, for, on behalf of, and in the name of the
Corporation to: 


                              (a)          Negotiate
and procure loans, letters of credit and other credit or financial
accommodations from Comerica Bank (“Bank”), a Texas banking association,
including, without limitation, that certain Loan and Security Agreement dated
as of January 15, 2004, as amended from time to time including by that certain
First Amendment to Loan and Security Agreement dated as of September 29, 2004,
that certain Second Amendment to Loan and Security Agreement dated as of
December 2, 2005 and that certain Third Amendment to Loan and Security
Agreement dated as of September 5, 2006, that certain Fourth Amendment to Loan
and Security Agreement dated as of June 5, 2007 and that certain Fifth
Amendment to Loan and Security Agreement dated as of June __, 2008; 


                              (b)          Discount
with the Bank, commercial or other business paper belonging to the Corporation
made or drawn by or upon third parties, without limit as to amount; 


                              (c)          Purchase,
sell, exchange, assign, endorse for transfer and/or deliver certificates and/or
instruments representing stocks, bonds, evidences of Indebtedness or other
securities owned by the Corporation, whether or not registered in the name of
the Corporation; 


                              (d)          Give
security for any liabilities of the Corporation to the Bank by grant, security
interest, assignment, lien, deed of trust or mortgage upon any real or personal
property, tangible or intangible of the Corporation; and 


                              (e)          Execute
and deliver in form and content as may be required by the Bank any and all
notes, evidences of Indebtedness, applications for letters of credit,
guaranties, subordination agreements, loan and security agreements, financing
statements, assignments, liens, deeds of trust, mortgages, trust receipts and
other agreements, instruments or documents to carry out the purposes of these
Resolutions, any or all of which may relate to all or to substantially all of
the Corporation’s property and assets. 


          2.          Said
Bank be and it is authorized and directed to pay the proceeds of any such loans
or discounts as directed by the persons so authorized to sign, whether so
payable to the order of any of said persons in their individual capacities or
not, and whether such proceeds are deposited to the individual credit of any of
said persons or not; 


          3.          Any
and all agreements, instruments and documents previously executed and acts and
things previously done to carry out the purposes of these Resolutions are
ratified, confirmed and approved as the act or acts of the Corporation. 


          4.          These
Resolutions shall continue in force, and the Bank may consider the holders of
said offices and their signatures to be and continue to be as set forth in a
certified copy of these Resolutions delivered to the Bank, until notice to the
contrary in writing is duly served on the Bank (such notice to have no effect
on any action previously taken by the Bank in reliance on these Resolutions). 







          5.          Any
person, corporation or other legal entity dealing with the Bank may rely upon a
certificate signed by an officer of the Bank to effect that these Resolutions
and any agreement, instrument or document executed pursuant to them are still
in full force and effect and binding upon the Corporation. 


          6.          The
Bank may consider the holders of the offices of the Corporation and their
signatures, respectively, to be and continue to be as set forth in the
Certificate of the Secretary of the Corporation until notice to the contrary in
writing is duly served on the Bank. 


I further certify that the
above Resolutions are in full force and effect as of the date of this
Certificate; that these Resolutions and any borrowings or financial
accommodations under these Resolutions have been properly noted in the
corporate books and records, and have not been rescinded, annulled, revoked or
modified; that neither the foregoing Resolutions nor any actions to be taken
pursuant to them are or will be in contravention of any provision of the
articles of incorporation or bylaws of the Corporation or of any agreement,
indenture or other instrument to which the Corporation is a party or by which
it is bound; and that neither the articles of incorporation nor bylaws of the
Corporation nor any agreement, indenture or other instrument to which the
Corporation is a party or by which it is bound require the vote or consent of
shareholders of the Corporation to authorize any act, matter or thing described
in the foregoing Resolutions. 


I further certify that the
following named persons have been duly elected to the offices set opposite
their respective names, that they continue to hold these offices at the present
time, and that the signatures which appear below are the genuine, original
signatures of each respectively: 


(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED
SIGNERS BELOW)


	
 

	
 

	
 

	
 

	
 


	
NAME (Type or Print)

	
 

	
TITLE

	
 

	
SIGNATURE


	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	






In Witness Whereof, I have
affixed my name as Secretary and have caused the corporate seal (where
available) of said Corporation to be affixed on June __, 2008. 


	
 

	
 


	
 

	



	
 

	
Secretary 








	
 

	
 


	
The Above Statements are
 Correct.

	
 


	
 

	



	
 

	
SIGNATURE OF OFFICER OR
 DIRECTOR OR, IF NONE. A SHAREHOLDER OTHER THAN SECRETARY WHEN SECRETARY IS
 AUTHORIZED TO SIGN ALONE. 





Failure to complete the above when the
Secretary is authorized to sign alone shall constitute a certification by the
Secretary that the Secretary is the sole Shareholder, Director and Officer of
the Corporation.