Promissory Note



 Exhibit 10.20.02 

PROMISSORY NOTE 
  

															
	 Principal
 $10,000,000.00
	 	 Loan Date

05-21-2012
	 	 Maturity

06-15-2014
	 	 Loan No

20974
	 	 Call / Coll

51 / 00
	 	Account	 	 Officer

GLASS
	 	Initials


 

References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing “***” has been omitted due to text length limitations. 

  

							
	Borrower:	  	 Salem Communications Corporation
 4880 Santa Rosa Road #300
 Camarillo, CA 93012
	  	Lender:	  	 First California Bank

Oxnard Branch
 300 Esplanade Drive,
Suite 102
 Oxnard, CA 93036


  

			
	Principal Amount: $10,000,000.00	  	Date of Note: May 21, 2012

 PROMISE TO PAY. Salem Communications Corporation (“Borrower”) promises to pay to First California Bank
(“Lender”), or order, in lawful money of the United States of America, the principal amount of Ten Million & 00/100 Dollars ($10,000,000.00), together with interest on the unpaid principal balance from May 21, 2012, until
paid in full. 
 PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in accordance
with the following payment schedule, which calculates interest on the unpaid principal balances as described in the “INTEREST CALCULATION METHOD” paragraph using the interest rates described in this paragraph: 23 monthly consecutive
interest payments, beginning July 15, 2012, with interest calculated on the unpaid principal balances using an interest rate based on the Wall Street Journal Prime Rate as published in the Wall Street Journal and announced by Lender (currently
3.250%), plus a margin of 1.000 percentage points, adjusted if necessary for the minimum and maximum rate limitations for this loan, resulting in an initial interest rate of 4.250%; 7 quarterly consecutive principal payments of $1,250,000.00 each,
beginning September 15, 2012, during which interest continues to accrue on the unpaid principal balances using an interest rate based on the Wall Street Journal Prime Rate as published in the Wall Street Journal and announced by Lender
(currently 3.250%), plus a margin of 1.000 percentage points, adjusted if necessary for the minimum and maximum rate limitations for this loan, resulting in an initial interest rate of 4.250%; and one principal and interest payment of $1,254,574.65
on June 15, 2014, with interest calculated on the unpaid principal balances using an interest rate based on the Wall Street Journal Prime Rate as published in the Wall Street Journal and announced by Lender (currently 3.250%), plus a margin of
1.000 percentage points, adjusted if necessary for the minimum and maximum rate limitations for this loan, resulting in an initial interest rate of 4.250%. This estimated final payment is based on the assumption that all payments will be made
exactly as scheduled and that the Index does not change; the actual final payment will be for all principal and accrued interest not yet paid, together with any other unpaid amounts under this Note. Notwithstanding the foregoing, the rate of
interest accrual described for the principal only payment stream applies only to the extent that no other interest rate for any other payment stream applies. Unless otherwise agreed or required by applicable law, payments will be applied first to
any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing.

 VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent
index which is the Wall Street Journal Prime Rate as published in the Wall Street Journal and announced by Lender (the “Index”). The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable
during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrower’s request. The interest rate change will not occur more often than each day. Borrower
understands that Lender may make loans based on other rates as well. The Index currently is 3.250% per annum. The interest rate or rates to be applied to the unpaid principal balance during this Note will be the rate or rates set forth
herein in the “Payment” section. Notwithstanding any other provision of this Note, after the first payment stream, the interest rate for each subsequent payment stream will be effective as of the due date of the last payment in the
just-ending payment stream. NOTICE: Under no circumstances will the interest rate on this Note be less than 4.250% per annum or more than the maximum rate allowed by applicable law. Whenever increases occur in the interest rate, Lender, at its
option, may do one or more of the following: (A) increase Borrower’s payments to ensure Borrower’s loan will pay off by its original final maturity date, (B) increase Borrower’s payments to cover accruing interest,
(C) increase the number of Borrower’s payments, and (D) continue Borrower’s payments at the same amount and increase Borrower’s final payment. 
 INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method. This calculation method results in a higher effective interest rate than the numeric interest
rates stated in this Note. 
 PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. In any event, even upon full prepayment of this Note,
Borrower understands that Lender is entitled to a minimum interest charge of $50.00. Other than Borrower’s obligation to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount owed earlier than
it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may
result in Borrower’s making fewer payments. Borrower agrees not to send Lender payments marked “paid in full”, “without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing
any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the
payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: First California Bank, 2200 Sepulveda Boulevard
Torrance, CA 90501. 
 LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 6.000% of the unpaid portion of the
regularly scheduled payment or $5.00, whichever is greater. 









					
	PROMISSORY NOTE
	Loan No. 20974	  	(Continued)	  	 Page
 2


  

 INTEREST AFTER DEFAULT. Upon default, the interest rate on this Note shall, if permitted under
applicable law, immediately increase by adding an additional 5.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no
default. After maturity, or after this Note would have matured had there been no default, the Default Rate Margin will continue to apply to the final interest rate described in this Note. 
 DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under this Note: 
 Payment Default. Borrower fails to make any payment when due under this Note. 
 Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to
perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. 
 Default
in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of
Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any of the related documents. 
 False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or the related documents is false or misleading in
any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. 

Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the
appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

 Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial
proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts,
with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender
written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for
the dispute. 
 Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the
indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. 
 Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. 
 Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of this Note is impaired. 

Cure Provisions. If any default, other than a default in payment is curable and if Borrower has not been given a notice of a breach
of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within fifteen (15) days; or
(2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender’s sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical. 
 LENDER’S RIGHTS. Upon default, Lender may declare the
entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount. 

ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender
that amount which is deemed reasonable. This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit, including attorneys’ fees, expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower also will pay any court costs, in addition to all other sums provided by law. 

GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of California. 
 RIGHT OF
SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone
else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable
law, to charge or setoff all sums owing on the debt against any and all such accounts. 
 COLLATERAL. This loan is unsecured. 

VENUE AND JURISDICTION. The party(ies) and/or undersigned to this Agreement and Lender agree that all actions or proceedings arising in connection
with this Agreement and the other agreements, instruments and documents executed and/or delivered by the party(ies)/undersigned and Lender in connection herewith shall be tried and litigated only in the State and Federal courts located in the county
of Ventura, Los Angeles, Orange, San Bernardino, Riverside, San Diego and San Luis Obispo, State of California, as Lender may elect, provided, however, that any suit seeking enforcement against any collateral or other property may be brought, at
Lender’s option, in the courts of any jurisdiction where Lender elects to bring such action or where such collateral or other property may be found. The party(ies)/undersigned to this Agreement and Lender waive, to the extent permitted under
applicable law, any right each may have to assert the doctrine of forum non conveniens or to object to venue to the extent any proceeding is brought in accordance with this paragraph. The undersigned consents to the full personal jurisdiction of any
state or federal court in California. 
 BUSINESS LOAN AGREEMENT. Reference is made to that certain Business Loan Agreement dated
May 21, 2012, for additional terms and conditions. 









					
	PROMISSORY NOTE
	Loan No. 20974	  	(Continued)	  	 Page
 3


  

 COMMERCIAL GUARANTY. This Note is supported by four (4) Commercial Guaranties, dated as of
May 21, 2012. 
 FACSIMILE AND COUNTERPART. This Agreement may be executed in two or more counterparts, which, taken together, shall
constitute the whole of the agreement as between the parties. Each executed counterpart may be delivered in the form of a photocopy, facsimile, or scanned document, each of which shall have the same legal force and effect as delivery of an original.

 SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives,
successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. 
 GENERAL PROVISIONS. If any part of
this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this
Note, to the extent allowed by law, waive any applicable statute of limitations, presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs
this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several. 
 PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE. 

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. 
 BORROWER: 
 SALEM COMMUNICATIONS CORPORATION 

 

			
	By:	 	 /s/ EVAN D. MASYR

		 	Evan D. Masyr, Chief Financial Officer of Salem
Communications Corporation

 LASER PRO Lending, Ver. 5.60.00.005 Copr. Harland Financial Solutions, Inc. 1997, 2012. All Rights
Reserved. —CA F:\CFIWIN\CFI\LPL\D20.FC TR-6094 PR-4 (M)