SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

Exhibit 10.1

SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

This Sixth Amendment to Loan and Security Agreement (this “Amendment”) is entered into as of January 30, 2009, 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, 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 30, 2008, 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:

“LIBOR Addendum” means the Daily Adjusting LIBOR Addendum to Loan and Security Agreement attached hereto as Exhibit C.

“Revolving Maturity Date” means December 31, 2009.

“Sixth Amendment” means that certain Sixth Amendment to Loan and Security Agreement dated as of January 30, 2009.

2.         The last sentence in the defined term “Change of Control” in Section 1.1 of the Agreement hereby is amended and restated to read as follows:

“Notwithstanding the foregoing, the present holdings of, and any additional acquisition of, securities of the Borrower by Trigran Investments or any of its affiliates shall not constitute a Change of Control for purposes of this Agreement.”

“(i)       Subject to and upon the terms and conditions of this Agreement (1) Borrower may request Advances in an aggregate outstanding amount not to exceed the Revolving Line, less any amounts outstanding under the Letter of Credit, and (2) amounts borrowed pursuant to this Section 2.1(a) may be repaid and reborrowed at any time prior to the Revolving Maturity Date, at which time all Advances under this Section 2.1(a) shall be immediately due and payable. Each Advance must be in an amount equal to or greater than the lesser of Five Hundred Thousand Dollars ($500,000) or the amount that has not yet been drawn under the Revolving Line (less any amounts outstanding under the Letter of Credit). Except as set forth in the LIBOR Addendum, Borrower may prepay any Advances without penalty or premium.”

4.             The last sentence in Section 6.3 of the Agreement hereby is amended and restated in its entirety to read as follows:

“Notwithstanding the foregoing, if (x) the aggregate amount of outstanding Advances is less than or equal to Three Million Dollars ($3,000,000), and (y) the ratio of Borrower’s unrestricted cash at Bank to Borrower’s total Indebtedness to Bank is greater than or equal to 1.50 to 1.00, then all financial statements and other reporting items in this Section 6.3 which are required to be delivered to Bank on a monthly basis,

shall instead be delivered to Bank on a quarterly basis.”

6.             The last sentence in Section 6.8 of the Agreement hereby is amended and restated in its entirety to read as follows:

“The foregoing covenant shall be measured (i) as of the last day of each quarter if (A) the aggregate amount of outstanding Advances is less than or equal to Three Million Dollars ($3,000,000), and (B) the ratio of Borrower’s unrestricted cash at Bank to Borrower’s total Indebtedness to Bank is greater than or equal to 1.50 to 1.00, and (ii) as of the last day of each month at all other times.”

“6.9      Measured as of (i) the last day of each quarter if (A) the aggregate amount of outstanding Advances is less than or equal to Three Million Dollars ($3,000,000), and (B) the ratio of Borrower’s unrestricted cash at Bank to Borrower’s total Indebtedness to Bank is greater than or equal to 1.50 to 1.00, or (ii) the last day of each month at all other times, a Net Worth greater than or equal to (a) from the date of the Sixth Amendment through December 31, 2009, negative Two Million Dollars (-$2,000,000), and (b) at all times thereafter, One Dollar ($1.00).

“(b)      If Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this Agreement or in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within fifteen (15) days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature by cured within the fifteen (15) day period or cannot after diligent attempts by Borrower be cured within such fifteen (15) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made.”

12.           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.

13.          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.

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

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

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

(c)        an amendment fee in the amount of Twelve Thousand Five Hundred Dollars ($12,500), which may be debited from any of Borrower’s accounts;

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

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

16.       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.

[ Balance of Page Intentionally Left Blank ]

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

[ Signature Page to Sixth Amendment to Loan and Security Agreement ]

EXHIBIT C

LIBOR/PRIME RATE ADDENDUM

EXHIBIT D

COMPLIANCE CERTIFICATE

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.

SCHEDULE OF EXCEPTIONS

Permitted Indebtedness (Section 1.1)

Obligations of the Company under the Company’s Lease Agreement with Rotunda Partners II dated October 1, 2003, for the Oakland office. As of December 31, 2008, amount outstanding though the end of the lease: $5,406,000

Obligations of the Company under the Company’s Lease Agreement with TriPoint Tucson LLC dated April 5, 2006, as amended, for the Tucson office. As of December 31, 2008, amount outstanding though the end of the lease: $612,000

Obligations of the Company under the Company’s Lease Agreement with Clematis LLC dated February 26, 2008, for the Waltham office. As of December 31, 2008, amount outstanding though the end of the lease: $382,000

Obligations to pay royalties and patent expenses on patents licensed from the University of California and Rutgers, the State University of New Jersey, under the Exclusive License Agreement, dated September 27, 1996, between the Company and the Regents of the University of California, as amended. These patents cover most of our products and revenue. Amount paid in 2008: $857,784, including pass through payments; annual minimum $150,000.

Permitted Investments (Section 1.1)

1,772,727 shares of Series A Preferred Stock of Posit Science Corporation (formerly Neuroscience Solutions Corporation) (“PSC”), issued pursuant to the Technology Transfer Agreement dated September 30, 2003, between the Company and PSC and the related Series A Preferred Stock Purchase Agreement.

Permitted Liens (Section 1.1)

None.

Intellectual Property (Section  5.6)

Certain patents and patent applications are jointly owned by the Company and the University of California and/or the University of Texas, Dallas. These jointly owned cases are listed on Exhibit A to this Schedule of Exceptions.

In August 1999, Oklahoma State University wrote the Company suggesting that the Company’s advertising materials indicated that the Fast ForWord Language product might employ concepts covered by US Patent No. 5,711,671, which is owned by the University. The Company reviewed that patent, concluded that the Company’s products were not within the scope of the patent, and so notified the University. The Company has not had any discussions or correspondence with this University since August 2000.

Prior Names; Locations of Assets (Section 5.7)

The Company was originally incorporated in California under the name Scientific Learning Principles Corporation. The Company changed its name to Scientific Learning Corporation when it reincorporated in Delaware in May 1997.

In addition to the Company’s chief executive offices, Inventory and/or Equipment of the Company is also located at:

Transactions with Affiliates (Section 7.8)

Under a Technology Transfer Agreement with Posit Science Corporation (formerly Neuroscience Solutions Corporation (“PSC”)), the Company licensed to PSC patents owned by the Company, patents licensed by the Company from universities, and certain software developed by the Company. All of the licenses are limited to the health field, and most are exclusive for that field. PSC and the Company also agreed to license to one another certain patents that may be issued in the future. Dr. Michael M. Merzenich, who is a founder, significant stockholder and former officer and director of the Company, is also a founder, director, significant stockholder and officer of PSC. Drs. Paula A. Tallal, Steven L. Miller and William Jenkins, each of whom is a founder, director, officer, and/or significant shareholder of the Company, are or have been consultants to Posit Science Corporation and/or members of Posit’s Scientific Advisory Board.