Compensation Committee

Amended and Restated Compensation Committee Charter.

As Adopted by the Board of Directors on July 25, 2007

The charter of the Compensation Committee (the "Committee") of the Board of Directors (the "Board") of Scientific Learning Corporation (the "Company") is as follows, subject to amendment by the Board from time to time:

ROLE

The role of the Committee is to act on behalf of the Board in fulfilling the Board's responsibilities to oversee the Company's compensation policies, plans and programs; to review and determine the compensation to be paid to the Company's executive officers; and to review and recommend to the Board the compensation to be paid to the Company's directors.

The Committee shall seek to maintain an overall compensation structure designed to attract, retain and motivate management and other employees by providing appropriate levels of risk and reward, in proportion to individual contribution and performance. The Committee shall seek to establish appropriate incentives for management to further the Company's long-term strategic plan and long-term value as a going concern and to avoid undue emphasis on short-term market value.

MEMBERSHIP

The Committee shall consist of at least two Board members. All of the members of the Committee shall satisfy the "outside director" standard within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"). All of the members of the Committee shall satisfy the "non-employee director" standard within the meaning of Section 16b-3 of the Securities Exchange Act of 1934, as amended from time to time (the "Exchange Act"). Each member shall satisfy the independence requirements of the Nasdaq Small Cap or National Market ("Nasdaq") applicable to compensation committees, as in effect from time to time, when and as required by Nasdaq and applicable to the Company, including any exceptions permitted by these requirements.

The members of the Committee and the Committee chairperson shall be nominated by the Nominating and Corporate Governance Committee and appointed by the Board and serve at the discretion of the Board.

PRIMARY COMMITTEE RESPONSIBILITIES

The primary responsibilities of the Committee are set forth below. The Committee may supplement and, except as otherwise required by applicable law or the requirements of Nasdaq, deviate from these activities as appropriate under the circumstances:

• Overall Compensation Strategy — The Committee shall review, modify (as needed) and approve the overall compensation strategy and policies for the Company, including:
  • reviewing and approving corporate performance goals and objectives relevant to the compensation of the Company's executive officers and other senior management, as appropriate;
  • establishing policies with respect to cash compensation, consistent with the objectives of linking compensation to performance and establishing compensation levels sufficient to attract, retain and motivate qualified employees;
  • establishing policies with respect to equity compensation arrangements with the objective of appropriately balancing the perceived value of equity compensation and the dilutive and other costs of that compensation to the Company; and
  • reviewing and approving the terms of any employment agreements, severance arrangements, change-of-control protections and any other compensatory arrangements for the Company's executive officers and other senior management, as appropriate.

  The term "compensation," as used in this charter, shall include salary, long-term incentives, bonuses, perquisites, equity incentives, severance arrangements, retirement benefits and other related benefits and benefit plans.

• Compensation of Chief Executive Officer — The Committee, meeting in executive session, shall determine, in its sole discretion, the compensation and other terms of employment of the Company's Chief Executive Officer and shall evaluate the Chief Executive Officer's performance in light of relevant corporate performance goals and objectives, taking into account, among other things, the policies of the Committee and the Chief Executive Officer's performance in:
  • fostering a corporate culture that promotes the highest levels of integrity and the highest ethical standards;
  • developing and executing the Company's long-term strategic plan and conducting the business of the Company in a manner appropriate to enhance long-term stockholder value;
  • achieving any other corporate performance goals and objectives deemed relevant to the Chief Executive Officer as established by the Committee; and
  • achieving the Chief Executive Officer's individual performance goals and objectives.

  In determining the long-term incentive component of the Chief Executive Officer's compensation, the Committee should seek to achieve an appropriate level of risk and reward, taking into consideration the Company's performance and relative stockholder return, the value of similar incentive awards given to chief executive officers of comparable companies, the awards given to the Company's Chief Executive Officer in past years, and such other criteria as the Committee deems advisable.

• Compensation of Other Officers — With respect to Company's executive officers other than the Chief Executive Officer:

  The Chief Executive Officer shall recommend to the Committee the cash compensation, equity-based compensation and other terms of employment of each such officer. The Committee shall have the responsibility and authority to make all determinations with respect to the compensation of such officers, taking into consideration the officer's performance, the Company's performance, market levels of compensation for similar positions, and such other criteria as the Committee deems advisable. The Chief Executive Officer may be present during these deliberations, but may not vote.

• Compensation of Directors — The Committee shall recommend to the Board the type and amount of compensation to be paid or awarded to Board members, including consulting, retainer, Board meeting, committee and committee chair fees and stock option grants or awards.
• Administration of Benefit Plans — The Committee shall recommend to the Board the adoption, amendment and termination of the Company's stock option plans, stock appreciation rights plans, pension and profit sharing plans, incentive plans, stock bonus plans, stock purchase plans, bonus plans, deferred compensation plans and similar programs.

  The Committee shall also have full power and authority to adopt and administer the Company's non-equity incentive plans, such as the Management Incentive Plan and other cash bonus plans. In connection therewith, the Committee shall have full power and authority to adopt plan documents, establish guidelines, interpret plan documents, select participants, approve awards, and exercise such other power and authority as may be permitted or required under such non-equity incentive plans.

• Other Compensation Matters — The Committee shall review and approve such other compensation matters as the Board or the Chief Executive Officer may wish to submit to the Committee.
• Committee Report and CD&A — The Committee shall review and recommend for inclusion in the Company's annual proxy statement the Compensation Discussion and Analysis and shall review and approve the Committee report included in the Company's annual proxy statement, both in accordance with applicable rules and regulations of the SEC.
• Committee Self-Assessment — The Committee shall review, discuss and assess its own performance at least annually. The Committee shall also periodically review and assess the adequacy of this charter, including the Committee's role and responsibilities as outlined in this Charter, and shall recommend any proposed changes to the Board for its consideration.

SINGLE PERSON EQUITY GRANT COMMITTEE

The Board has established a Single Person Equity Grant Committee which has been delegated the authority to grant restricted stock units and options under the Company's 1999 Equity Incentive Plan to persons who are not (a) "Covered Employees" under Section 162(m) of the Code; (b) individuals with respect to whom the Company wishes to comply with Section 162(m) of the Code or (c) then subject to Section 16 of the Exchange Act. The authority delegated by the Board to the Committee with respect to the Company's 1999 Equity Incentive Plan pursuant to this Amended and Restated Charter shall not affect this prior delegation of authority to the Single Person Equity Grant Committee. The Committee has established, and may from time to time modify, guidelines to be followed by the Single Person Equity Grant Committee in exercising the authority delegated to it. The guidelines now in effect are attached to this charter.

COMMITTEE PROCESSES

• Meeting Frequency — The Committee shall hold such regular or special meetings as the Committee or its chair deems necessary or appropriate and shall meet at least annually.
  
• Resources and Authority — The Committee shall have full access to all books, records, facilities and personnel of the Company as deemed necessary or appropriate by any member of the Committee to discharge his or her responsibilities hereunder. The Committee shall have the authority to obtain, at the expense of the Company, advice and assistance from internal or external legal, accounting, or other advisors and consultants. In addition, the Committee shall have sole authority to retain and terminate any compensation consultant to assist in the evaluation of director, chief executive officer or senior executive compensation, including sole authority to approve such consultant's reasonable fees and other retention terms, all at the Company's expense. Other reasonable expenditures for external resources that the Committee deems necessary or appropriate in the performance of its duties are permitted. The Committee shall have the authority to perform such other functions, and shall have such powers, as may be necessary or appropriate in the efficient and lawful discharge of its responsibilities hereunder.
  
• Reporting to the Board of Directors — The Committee, through the Committee chair, shall report all material activities of the Committee to the Board from time to time.

GUIDELINES FOR THE SINGLE PERSON EQUITY GRANT COMMITTEE
ESTABLISHED BY THE COMPENSATION COMMITTEE
March 7, 2006

1. Hire and Promotion. The Equity Grant Committee may grant restricted stock units to employees who are not corporate officers of the Company upon their hire, promotion or reclassification, in accordance with the levels most recently approved by the Compensation Committee.
2. Bonuses - Pools. The Equity Grant Committee may from time to time make bonus restricted stock unit grants to employees of the Company who are not corporate officers in such amounts as the Equity Grant Committee shall determine, so long as the aggregate number of shares covered by such restricted stock unit grants does not exceed the pool for such bonus grants approved by the Compensation Committee.
3. Bonuses - Other. The Equity Grant Committee may from time to time make bonus restricted stock unit grants to employees of the Company who are not corporate officers of the Company on other occasions in an amount not to exceed 2,500 per person per year.
4. Vesting. Except as otherwise authorized by the Compensation Committee from time to time, the restricted stock units granted by the Equity Grant Committee to employees shall vest over a period of 4 years from the applicable vesting commencement date (approximately the date of hire, promotion, reclassification, bonus, etc.) so long as the individual is providing continuous service to the Company, in installments of 25% at the end of the first vesting year and 12.5% at the end of the next six six-month periods.
5. Consultants. The Equity Grant Committee may grant restricted stock units or options to consultants to the Company in such amounts as the Equity Grant Committee may determine, not to exceed 3,000 restricted stock unit shares or 6,000 option shares per year per individual. Such awards shall vest as determined by the Equity Grant Committee.
6. Procedure. The Equity Grant Committee is authorized to meet or to act by written consent for the purpose of considering and granting stock awards in accordance with these resolutions as often as such Equity Grant Committee deems necessary or appropriate. All grants will be reported to the Compensation Committee no less frequently than annually.

Approved Levels for Restricted Stock Unit Grants

(Hiring and Promotion)