|Scientific Learning
Corporation2003 Management Incentive Plan


Purpose


To provide significant cash awards to
participants for the achievement and over-achievement of Scientific Learnings
collective financial goals, as well as each participants individual goals and
overall performance in adding value for shareholders, customers and employees.


Participants


All members of the Leadership Team,
director-level employees and selected manager-level employees. At January 31, 2003, the
total number of participants was 22. The regional sales directors (K-12 and private
sector) are included in sales incentive compensation plans and are therefore excluded from
this Plan.


Target Incentive Awards


Intended to deliver market average
incentive compensation at 100% achievement of goals. Awards increase for overachievement.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Title                        | Target Award
(% of Base Salary Awarded at 100% Achievement
of Goals) | Max Award
(Max % of Base Salary Awarded on
Overachievement)
|---------------------------- | -------------------------------------------------------------------- | -----------------------------------------------------------
|CEO                          | 50%                                                                  | 100%                                                       
|                            
|VP, Sales K-12               | 50%                                                                  | 100%                                                       
|                            
|CFO                          | 35%                                                                  | 70%                                                        
|                            
|Chief Ed. Officer, Other VPs | 30%                                                                  | 60%                                                        
|                            
|Directors                    | 20%                                                                  | 30%                                                        
|                            
|Managers                     | 10%                                                                  | 15%                                                        
|                            

|Trigger


A condition to the payment of any
bonuses under the Plan is that the Company achieves an operating profit (according to
GAAP) for 2003. For example, even if an individual achieves his/her individual goals and
the Company achieves the booked sales goal, if the Company records an operating loss for
2003, no bonuses will be paid under the Plan. If shared or individual goal accomplishment
would call for payment of bonuses, but payment of the full bonus attributable to those
goals would cause the operating profit condition not to be met, then the only bonus to be
paid for such goals will be such lesser bonus as will still permit accomplishment of the
operating profit trigger.


Goals


All participants in the Plan will
have shared Company financial goals and individual goals closely related to the
individuals own area of responsibility.


Shared Goals


Shared goals for the 2003 Plan are:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    | Hurdle Level (Minimum for
Payment of Bonus) | Target Level (100%
Goal Achievement) | Max. Overachievement Level
|------------------- | ------------------------------------------- | ------------------------------------ | --------------------------
|Booked sales*       | $33 million                                 | $35 million                          | $45 million               
|                   
|Operating cash flow | $2 million                                  | $2.5 million                         | $4 million                
|                   

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|*Booked sales for the VP Sales for
the K-12 sector is defined as booked sales in the K-12 sector. His goal levels for booked
sales in the K-12 sector are: Hurdle level (minimum achievement for bonus payment): $26
million; target level (100% achievement): $31 million; maximum overachievement level: $40
million. For all other participants, booked sales are total Company booked sales.


Individual Goals


Individual goal performance under the
2003 Plan is based on both the following.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Achievement
of agreed-upon individual goals closely related to the individuals area of
responsibility. These goals will be agreed in writing between the participant and his/her
manager.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Contribution
to adding value for shareholders, customers and employees.
|- | -----------------------------------------------------------------------

|WEIGHTING OF SHARED AND
INDIVIDUAL GOALS
|----------------------------------------

|                         | Booked Sales Goal | Operating Cash Flow
Goal | Individual Goals
|------------------------ | ----------------- | ------------------------ | ----------------
|
|CEO                      | 30                | 15                       | 40              
|                        
|VP Sales K-12            | 50                | 25                       | 20              
|                        
|CFO                      | 30                | 10                       | 40              
|                        
|Chief Ed Off., other VPs | 30                | 9                        | 40              
|                        
|Directors*               | 30                | 6                        | 40              
|                        
|Managers*                | 30                | 3                        | 40              
|                        

|*For managers and directors, the CEO
has discretion to allocate the bonus opportunity differently among the various goals to
reflect the priorities and responsibilities of that particular person.


Hurdles. Scaling and
Over Achievement


Hurdles


Provided that the trigger has been
satisfied, the bonus payout starts for each goal when the specified hurdle level for that
goal is achieved:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                |                                  
|------------------------------- | ---------------------------------
|     Booked sales goal:        | $33 million (94% of target level)
|     Operating cash flow goal: | $2 million (80% of target level) 
|     Individual goals:         | 80%                              

|Scaling


Once the hurdle for the goal has been achieved,
and provided that the trigger has been satisfied:
|-----------------------------------------------------------------------------------------------------------

| | At
the hurdle level, 50% of that goals portion of the target level is earned.
|- | ------------------------------------------------------------------------------

| | At
100% of the goal, then all of that goals target level is earned.
|- | --------------------------------------------------------------------

| | Between
the hurdle level and 100% achievement of the goal, the portion of the award earned is
scaled ratably.
|- | -------------------------------------------------------------------------------------------------------------

|Over Achievement
|----------------

| | Officers
can double their bonus through overachievement and directors and managers can increase
their bonus by 50% through overachievement.
|- | -------------------------------------------------------------------------------------------------------------------------------------------

| | The
overachievement potential is divided among the goals in the same percentage as the bonus
for achievement.
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| | The
maximum overachievement bonus is paid at the following levels of overachievement:
|- | -------------------------------------------------------------------------------------

| |                                |                 
| | ------------------------------ | ----------------
| |      Booked sales goal        | $45 million     
| |      Operating cash flow goal | $4 million      
| |      Individual goals         | 200% achievement

| | Between
100 % achievement and the maximum bonus overachievement level, each goals portion
of the bonus is scaled ratably.
|- | --------------------------------------------------------------------------------------------------------------------------

|The attached chart shows the impact
at particular levels of the hurdles, scaling and overachievement calculations.


Timing


Awards are made in February,
following the completion of the annual audit for the prior year. Plan participants must be
employed at employed at Scientific Learning when the bonus awards are made to receive an
award. Participants hired during the plan year will be eligible for a pro-rated award
(unless otherwise agreed to, in writing, when the participant is hired).


Compensation Committee
Discretion


The Compensation Committee has
discretion to pay bonuses to reflect achievement even if specific goals are not met, and
to interpret the terms of the Plan.
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|% of Base Salary
Available as Bonus at Specified Levels of Achievement of Goals
|-------------------------------------------------------------------------------

|                            | % of Base Salary Available as Bonus
|--------------------------- | -----------------------------------
|                           
|
|                           
|
|                           
|CEO                         | 7.5                                
|                           
|VP Sales K-12               | 12.5                               
|                           
|CFO                         | 5.25                               
|                           
|Chief Ed Officer, other VPs | 4.5                                
|                           
|Directors*                  | 3                                  
|                           
|Managers*                   | 1.5                                
|                           

|* Subject to
adjustment by the CEO, as described above.
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