Document:

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)Subordination Agreement

 Exhibit 10.20.03 

SUBORDINATION AGREEMENT 
 THIS AGREEMENT is entered into by and among SALEM COMMUNICATIONS CORPORATION (“Borrower”), FIRST CALIFORNIA BANK (“Creditor”), and WELLS FARGO BANK, NATIONAL ASSOCIATION
(“Agent”), in its capacity as administrative agent for itself, the swing line lender, L/C issuer and each lender from time to time (collectively, the “Senior Parties”) under the Credit Agreement dated as of December 1, 2009,
as amended from time to time (the “Senior Credit Agreement,” together with all of the Loan Documents as defined therein, the “Senior Debt Documents”), by and among the Borrower, the Agent and the other Senior Parties thereto.

 RECITALS 
 A. Borrower is indebted to Creditor, and Borrower proposes to obtain credit or has obtained credit from Senior Parties; and 
 B. Senior Parties have indicated that they will extend or continue credit to Borrower if certain conditions are met, including without limitation, the requirement that Creditor execute this Agreement.

 NOW, THEREFORE, as an inducement to Senior Parties to extend or continue credit and for other valuable consideration, the
parties hereto agree as follows: 
 1. INDEBTEDNESS SUBORDINATED. Creditor subordinates all Indebtedness now or at any time
hereafter owing under that certain Business Loan Agreement dated as of May __, 2012 between Borrower and Creditor (as amended, modified, renewed, extended or replaced, the “Junior Loan Agreement” and “Junior Debt”) to all
Indebtedness now or at any time hereafter owing from Borrower to Senior Parties under the Senior Debt Documents (“Senior Debt”). Creditor irrevocably consents and directs that all Senior Debt shall be paid in full in cash or other
immediately available funds prior to Borrower making any payment on any Junior Debt, except such payments as are expressly permitted by this Agreement. As long as this Agreement is in effect, Creditor will not, except to the extent permitted herein,
take any action or initiate any proceedings, judicial or otherwise, to enforce Creditor’s rights or remedies with respect to any Junior Debt. Nothing contained in this Agreement shall restrict Creditor’s rights and remedies against any
guarantors of the Junior Debt. Creditor may receive payments from such guarantors and may enforce its rights and remedies against such guarantors without regard to any restrictions set forth in this Agreement. Such rights and remedies include the
right of Creditor to accelerate the Junior Debt in connection with enforcement actions against the guarantors even though Creditor may be precluded from acceleration of the Junior Debt as against Borrower. 

2. INDEBTEDNESS DEFINED. The word “Indebtedness” is used herein in its most comprehensive sense and includes any and all
advances, debts, obligations and liabilities of Borrower heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, including under any swap, derivative, foreign exchange, hedge, deposit, treasury management or other similar transaction or arrangement, and whether Borrower may be liable individually or jointly with others, including
without limitation, obligations and liabilities arising from notes, repurchase agreements and trust receipts, and any and all interest and other amounts thereon which may accrue subsequent to Borrower becoming subject to any state or federal
debtor-relief statute. 

  
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 3. RESTRICTION OF PAYMENT OF JUNIOR DEBT; DISPOSITION OF PAYMENTS RECEIVED BY CREDITOR.
Borrower will not make, and Creditor will not accept or receive, any payment or benefit in cash, by setoff or otherwise, directly or indirectly, on account of principal, interest or any other amounts owing on any Junior Debt, except such payments as
are expressly permitted herein. Borrower is permitted to make and Creditor to receive all regularly scheduled principal payments not to exceed $1,250,000 per quarter and accrued interest at the non-default interest rate thereon (“Permitted
Subordinated Debt Payments”) under that certain Junior Loan Agreement existing on the date hereof; provided however, that: 

(a) Borrower shall not make, nor Creditor receive, any prepayment or accelerated payment under the Junior Loan Agreement, and

 (b) no Permitted Subordinated Debt Payment shall be made by Borrower or accepted by Creditor if, at the time of such payment
after Creditor has received written notice from Agent that a Senior Payment Default has occurred and is continuing. 
 Such notice shall be sent
to Creditor by overnight delivery addressed to Mr. Matthew D. Fuhr, Senior Vice President / Deputy Chief Credit Officer, First California Bank, 15622 Arrow Highway, Irwindale, CA 91706. 

A “Senior Payment Default” means any “Event of Default” under the Senior Debt Documents resulting from the failure of Borrower or any
other loan party to pay, on a timely basis, any principal, interest, fees or other obligations under such Senior Debt Documents including, without limitation, any default in payment of Senior Debt after acceleration thereof. 

If any payment is made in violation of this Agreement, Creditor shall promptly deliver the same to Agent in the form received, with any endorsement or
assignment necessary for the transfer of such payment or amounts setoff from Creditor to Agent, to be either (in Agent’s sole discretion) held as cash collateral securing the Senior Debt or applied in reduction of the Senior Debt in such order
as Agent shall determine, and until so delivered, Creditor shall hold such payment in trust for and on behalf of, and as the property of, Agent. 
 (c) Notwithstanding any provision in Section 3(b) to the contrary, if the Senior Payment Default has been cured and/or waived in accordance with the Senior Debt Documents and no other Senior Payment
Default has occurred and is continuing, then Creditor shall be permitted to receive the Permitted Subordinated Debt Payments it would have been paid had no such payment blockage been in effect. 

4. DISPOSITION OF EVIDENCE OF INDEBTEDNESS. If there is any existing promissory note or other evidence of any of the Junior Debt,
including the Junior Loan Agreement, or if any promissory note or other evidence of Indebtedness is executed at any time hereafter with respect thereto, then Borrower and Creditor will mark the same with a legend stating that it is subject to this
Agreement. 
 5. AGREEMENT TO BE CONTINUING; APPLIES TO BORROWER’S EXISTING INDEBTEDNESS AND ANY INDEBTEDNESS HEREAFTER
ARISING. This Agreement shall be a continuing agreement and shall apply to any and all Senior Debt or Junior Debt now existing or hereafter arising. 
 6. TERMINATION BY CREDITOR. Creditor may, to the extent provided herein, terminate this Agreement by delivering written notice to Agent. Any such notice must be sent to

  
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Agent by registered U.S. mail, postage prepaid, addressed to its Ventura/Santa Barbara Commercial Banking Office at 601 E. Daily Drive, Suite 110, Camarillo, California 93010, or at such other
address as Agent shall from time to time designate. If such notice is received by Agent, this Agreement shall terminate as of the date of receipt, except that the obligations of Creditor and the rights of Senior Parties hereunder shall continue with
respect to all Senior Debt which existed at the time of Agent’s receipt of such notice, or thereafter arose pursuant to any agreement to extend credit by which Senior Parties are bound at the time of its receipt of such notice, and any
extensions, renewals or modifications of any such then existing or committed Senior Debt, including without limitation, modifications to the amount of principal or interest payable on any Senior Debt and the release of any security for or any
guarantors of all or any portion of any Senior Debt. Senior Party (to Senior Party’s knowledge) and Borrower severally represent and warrant to Creditor that no default or breach exists under the Senior Debt and the Senior Debt Documents and
that no event, act, or omission has occurred which with the giving of notice or the passage of time would constitute a default or breach under the Senior Debt and the Senior Debt Documents. 

7. REPRESENTATIONS AND WARRANTIES; INFORMATION. Borrower and Creditor represent and warrant to Agent that: (a) no interest in the
Junior Debt has been assigned or otherwise transferred to any person or entity; (b) payment of the Junior Debt has not been heretofore subordinated to any other creditor of Borrower; and (c) Creditor has the requisite power and authority
to enter into and perform its obligations under this Agreement. Creditor further represents and warrants to Agent that Creditor has established adequate, independent means of obtaining from Borrower on a continuing basis financial and other
information pertaining to Borrower’s financial condition. Creditor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Creditor’s risks hereunder, and Creditor agrees that
no Senior Party shall have any obligation to disclose to Creditor information or material about Borrower which is acquired by such Senior Party in any manner. Any Senior Party may, at such Senior Party’s sole option and without obligation to do
so, disclose to Creditor any information or material relating to Borrower which is acquired by such Senior Party by any means, and Borrower hereby agrees to and authorizes any such disclosure by such Senior Party. 

8. TRANSFER OF ASSETS OR REORGANIZATION OF BORROWER. If any petition is filed or any proceeding is instituted by or against Borrower
under any provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, or any other or similar law relating to bankruptcy, insolvency, reorganization or other relief for debtors, or generally affecting creditors’ rights, or
seeking the appointment of a receiver, trustee, custodian or liquidator of or for Borrower or any of its assets, any payment or distribution of any of Borrower’s assets, whether in cash, securities or any other property, which would be payable
or deliverable with respect to any Junior Debt, shall be paid or delivered to Agent until all Senior Debt is paid in full in cash or other immediately available funds. 
 9. OTHER AGREEMENTS; NO THIRD PARTY BENEFICIARIES. Agent shall have no direct or indirect obligations to Creditor of any kind with respect to the manner or time in which Agent exercises (or refrains from
exercising) any of its rights or remedies with respect to the Senior Debt, Borrower or any of Borrower’s assets. Creditor understands that there may be various agreements between Senior Parties and Borrower evidencing and governing the Senior
Debt, and Creditor acknowledges and agrees that such agreements are not intended to confer any benefits on Creditor. Creditor further acknowledges that Agent may administer the Senior Debt and any of Senior Parties’ agreements with Borrower in
any way Agent deems appropriate, without regard to Creditor or the Junior Debt. Creditor waives any right Creditor might otherwise have to require a marshalling of any security held by Agent for all or any part of

  
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the Senior Debt or to direct or affect the manner or timing with which Agent enforces any of its security. Nothing in this Agreement shall impair or adversely affect any right, privilege, power
or remedy of Agent with respect to the Senior Debt, Borrower or any assets of Borrower, including without limitation, Agent’s right to: (a) waive, release or subordinate any of Agent’s security or rights; (b) waive or ignore any
defaults by Borrower; and/or (c) restructure, renew, modify or supplement the Senior Debt, or any portion thereof, or any agreement with Borrower relating to any Senior Debt. All rights, privileges, powers and remedies of Agent may be exercised
from time to time by Agent without notice to or consent of Creditor. 
 10. BREACH OF AGREEMENT BY BORROWER OR CREDITOR. In the
event of any breach of this Agreement by Borrower or Creditor, then and at any time thereafter Agent shall have the right to declare immediately due and payable all or any portion of the Senior Debt without presentment, demand, notice of
nonperformance, protest, notice of protest or notice of dishonor, all of which are hereby expressly waived by Borrower and Creditor. No delay, failure or discontinuance of Agent in exercising any right, privilege, power or remedy hereunder shall be
deemed a waiver of such right, privilege, power or remedy; nor shall any single or partial exercise of any such right, privilege, power or remedy preclude, waive or otherwise affect the further exercise thereof or the exercise of any other right,
privilege, power or remedy. Any waiver, permit, consent or approval of any kind by Agent with respect to this Agreement must be in writing and shall be effective only to the extent set forth in such writing. 

11. LIQUIDATED DAMAGES. Inasmuch as the actual damages which could result from a breach by Creditor of its duties under this Agreement
are uncertain and would be impractical or extremely difficult to fix, Creditor shall pay to Agent, in the event of any such breach by Creditor, as liquidated and agreed damages, and not as a penalty, all sums received by Creditor in violation of
this Agreement on account of the Junior Debt, which sums represent a reasonable endeavor to estimate a fair compensation for the foreseeable losses that might result from such a breach. 

12. COSTS, EXPENSES AND ATTORNEYS’ FEES. If any party hereto institutes any arbitration or judicial or administrative action or
proceeding to enforce any provisions of this Agreement, or alleging any breach of any provision hereof or seeking damages or any remedy, the losing party or parties shall pay to the prevailing party or parties all costs and expenses, including
reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of such prevailing party’s in-house counsel), expended or incurred by the prevailing party or parties in connection therewith, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought
by Agent or any other person) relating to Borrower, Creditor or any other person or entity. 
 13. SUCCESSORS; ASSIGNS;
AMENDMENT. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties. This Agreement may be amended or modified only in writing signed by all
parties hereto. 
 14. OBLIGATIONS JOINT AND SEVERAL; CONSTRUCTION. If this Agreement is executed by more than one Creditor, it
shall bind them jointly and severally. All words used herein in the singular shall be deemed to have been used in the plural where the context so requires. 
 15. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the

  
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extent of such prohibition or invalidity, without invalidating the remainder of such waiver or other provision or any remaining provisions of this Agreement. 

16. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 

17. ARBITRATION. 
 (a) Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees,
officers, directors, attorneys, and other agents), whether in tort, contract or otherwise, in any way arising out of or relating to this Agreement and its negotiation, execution, collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or termination. 
 (b) Governing Rules. Any arbitration
proceeding will (i) proceed in a location in California selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any
conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute
resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for
large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”). If there is any inconsistency
between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other
party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law. 

(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right of any
party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies
such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any
dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph. 
 (d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the
Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired judge of the state or federal judiciary of California, in either case with a
minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an 

  
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issue is arbitrable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at
the arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of
California and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery
of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver
of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief. 
 (e) Discovery. In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited to matters directly relevant to the dispute being
arbitrated and must be completed no later than 20 days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the
request for discovery is essential for the party’s presentation and that no alternative means for obtaining information is available. 
 (f) Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed this Agreement
or any other contract, instrument or document relating to any Indebtedness, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private
attorney general capacity. 
 (g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and
expenses of the arbitration proceeding. 
 (h) Real Property Collateral; Judicial Reference. Notwithstanding anything
herein to the contrary, no dispute shall be submitted to arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security interest
specifically elects in writing to proceed with the arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of California, thereby agreeing that all
indebtedness and obligations of the parties, and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such dispute is not submitted to arbitration, the dispute shall
be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the AAA’s selection procedures. Judgment upon the decision rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance
with California Code of Civil Procedure Sections 644 and 645. 
 (i) Miscellaneous. To the maximum extent practicable,
the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by a 

  
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party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute,
the arbitration provision most directly related to the documents between the parties or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the documents or any
relationship between the parties. 
 (j) Small Claims Court. Notwithstanding anything herein to the contrary, each party
retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction. Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding
attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court. 

  
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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 18, 2012. 

 

									
	BORROWER:	 		 	AGENT:
			
	SALEM COMMUNICATIONS CORPORATION	 		 	WELLS FARGO BANK, NATIONAL ASSOCIATION
					
	By:	 	 /s/ EVAN D. MASYR
	 		 	By:	 	 /s/ PATRICK BISHOP

	Name:	 	EVAN D. MASYR	 		 	Name:	 	PATRICK BISHOP
	Title:	 	SVP & CFO	 		 	Title:	 	VICE PRESIDENT
				
	CREDITOR:	 		 		 	
				
	FIRST CALIFORNIA BANK	 		 		 	
					
	By:	 	 /s/ RICHARD R. GLASS
	 		 		 	
	Name:	 	RICHARD R. GLASS	 		 		 	
	Title:	 	SVP	 		 		 	

  
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