Exhibit 10.36 






	Approved by the Compensation
      Committee 1/27/04 
	 
	 Scientific
      Learning Corporation

      2004 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.
        The total number of participants at January 2003 is approximately 23 persons.
        The regional sales directors (K-12 and private sector) who are included
        in sales incentive compensation plans are 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	 	40% 	 	80%	 
	Chief Ed.
      Officer, Other VPs	 	30% 	 	60%	 
	Directors	 	20% 	 	30%	 
	Managers	 	10% 	 	15%	 







	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
        2004 Plan are: 






		Hurdle Level
      (Minimum

      for Payment of Bonus)	 	Target Level
      (100% 

      Goal Achievement)	 	Max. Overachievement
      

      Level	 
	 	 
	 	
	 	
	 
	Operating
      income	$	 2.4
      million	 	$	 3.4
      million	 	$	 5.0
      million	 
	Booked sales	$	 37
      million	 	$	 40
      million	 	$	 43
      million	 



	 
	Individual Goals
      
	
      
      
 Individual goal
        performance under the 2004 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. 
	 	 
	Hurdle level
      for individual goals is 80%. Maximum overachievement level is 200%. 




	
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	Approved by the Compensation
      Committee 1/27/04 
	 
	Weighting of
      Shared Goals and Individual Performance 


	 	 	 	 
	Goal	 	% of Target Award 

      Allocated to Goal	 
	
	 	
	 
	Operating
      income	 	30% 	 
	Booked sales	 	40%	 
	Individual
      performance	 	30%	 
	 



	
      
      *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 and
      Scaling
	 
	The bonus payout starts
      for each goal when the specified hurdle level for that goal is achieved.
      At the hurdle level, 50% of that goal’s portion of the target award
      is earned. At 100% of the goal, then 100% of that goal’s target award
      is earned. Between the hurdle level and 100% achievement of the goal, the
      portion of the award earned is scaled ratably. 
	 
	Overachievement
      
	 




	•	
      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. 





	•	 The maximum overachievement
      award is paid at the maximum overachievement levels specified above. 





	 •	Between 100%
      achievement and the maximum bonus overachievement level, each goal’s
      portion of the award is scaled ratably.  


	 
	Illustration
	 
	The attached chart illustrates,
      for particular positions, the percentage of base salary payable for each
      goal, at the hurdle, 100% and maximum overachievement levels. 
	 
	Timing 
	 
	
      
      Awards will be paid
        in the first quarter of 2005, following the completion of the 2004 audit.
        Plan participants must be employed at Scientific Learning in a position
        that is eligible for an award under this Plan when the awards are paid
        in order to receive an award. Participants hired during 2004 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 awards to reflect achievement even if specific goals
        are not met, and to interpret the terms of the Plan. 





	
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	Approved by the Compensation
      Committee 1/27/04 
	 
	%
        of Base Salary Available as MIP Award at Specified Levels of Achievement
        of Goals 

	 


	 	 	 %
        of Base Salary Available as Bonus
	 
	 	 	
	 
	 	 	Operating
        Income
	
	
	Booked
        Sales
	
	
	Individual
        Goals
	
	
	Total
	 
	 	 	
	 	 	
	 	 	
	 	 	
	 
	 	 	At
      Hurdle	 	 	100%	 	 	Max
      Over	 	 	At
      Hurdle	 	 	100%	 	 	Max
      Over	 	 	At
      Hurdle	 	 	100%	 	 	Max
      Over	 	 	At
      Hurdle	 	 	100%	 	 	Max
      Over	 
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 
	           CEO	 	7.5	%	 	15	%	 	30	%	 	10	%	 	20	%	 	40	%	 	7.5	%	 	15	%	 	30	%	 	25	%	 	50	%	 	100	%
	      VP
      Sales K-12
	           CFO	 	5.25	%	 	10.5	%	 	21	%	 	7	%	 	14	%	 	28	%	 	5.25	%	 	10.5	%	 	21	%	 	17.5	%	 	35	%	 	70	%
	 Chief
      Ed Officer, 	 	4.5	%	 	9	%	 	18	%	 	6	%	 	12	%	 	24	%	 	4.5	%	 	9	%	 	18	%	 	15	%	 	30	%	 	60	%
	           other
      VPs
	        Directors*	 	3	%	 	6	%	 	9	%	 	4	%	 	8	%	 	12	%	 	3	%	 	6	%	 	9	%	 	10	%	 	20	%	 	30	%
	        Managers*	 	1.5	%	 	3	%	 	4.5	%	 	2	%	 	4	%	 	6	%	 	1.5	%	 	3	%	 	4.5	%	 	5	%	 	10	%	 	15	%




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




	
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