SALEM COMMUNICATIONS CORP /DE/
EXHIBIT 10.1
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>6
<FILENAME>a86540exv10w1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.1


                 SALEM COMMUNICATIONS HOLDING CORPORATION
                              AMENDMENT NO. 3


      AMENDMENT NO. 3 (this "Amendment"), dated as of December 16, 2002, to the
Fourth Amended and Restated Credit Agreement, dated as of June 15, 2001, by and
among SALEM COMMUNICATIONS HOLDING CORPORATION, a Delaware corporation (the
"Borrower"), THE BANK OF NEW YORK, as administrative agent for the Lenders
thereunder (in such capacity, the "Administrative Agent"), the other agents
party thereto, and the Lenders party thereto, as amended by Amendment No. 1,
dated as of December 27, 2001, and Amendment No. 2, dated as of April 30, 2002
(the "Credit Agreement").


                                    RECITALS

I. Except as otherwise provided herein, capitalized terms used herein which are
not defined herein shall have the meanings set forth in the Credit Agreement.

II. The Borrower has requested that the Administrative Agent and the Required
Lenders amend the Credit Agreement upon the terms and conditions contained
herein, and the Administrative Agent and the Required Lenders are willing to do
so.

      Accordingly, in consideration of the covenants, conditions and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and pursuant to Section
11.1 of the Credit Agreement, the parties hereto agree as follows:


      1.    The definition of "Net Debt Proceeds" contained in Section
1.1 of the Credit Agreement is deleted in its entirety.

      2. Section 1.1 of the Credit Agreement is amended by amending and
restating in their entirety the definitions of "Total Leverage Ratio", "Total
Senior Leverage Ratio" and "2001 Subordinated Indenture Notes" to read as
follows:

            "Total Leverage Ratio": the ratio of (i) Total Adjusted Funded Debt
            less cash and cash equivalents (including the deposit in trust with
            the trustee under the 1997 Subordinated Indenture referenced in
            Section 8.1(a)(vii)(B)) of the Parent and its Subsidiaries on a
            Consolidated basis in excess of $5,000,000 to (ii) Consolidated
            Annual Adjusted Operating Cash Flow.

            "Total Senior Leverage Ratio": the ratio of (i) Total Funded Debt
            less (a) cash and cash equivalents (including the deposit in trust
            with the trustee under the 1997 Subordinated Indenture referenced
<PAGE>
            in Section 8.1(a)(vii)(B)) of the Parent and its Subsidiaries on a
            Consolidated basis in excess of $5,000,000 and (b) the outstanding
            principal amount of the 1997 Subordinated Indenture Notes, the 2001
            Subordinated Indenture Notes and the Refinancing Subordinated
            Indenture Notes to (ii) Consolidated Annual Adjusted Operating Cash
            Flow.

            "2001 Subordinated Indenture Notes": the Senior Subordinated Notes,
            due 2011, issued in the original aggregate principal amount not
            exceeding $200,000,000 and not less than $100,000,000 pursuant to
            the 2001 Subordinated Indenture and the 2001 Subordinated Indenture
            Offering Memorandum.


      3.    Section 1.1 of the Credit Agreement is amended by adding the
following defined terms in the appropriate alphabetical order:


            "Refinancing Subordinated Indenture": either, but not both of, (i)
            the 2001 Subordinated Indenture under which the 2001 Subordinated
            Indenture Second Issuance Notes are issued pursuant to the
            Refinancing Subordinated Indenture Prospectus Supplement, provided
            that any company order and related documents executed and delivered
            in connection therewith shall be in all respects in form and
            substance satisfactory to the Administrative Agent, or (ii) the
            subordinated indenture between the Borrower and The Bank of New York
            (or other financial institution), as trustee, executed and delivered
            pursuant to the Refinancing Subordinated Indenture Prospectus
            Supplement, provided that (x) such indenture shall contain
            covenants, events of default, subordination terms and other
            provisions generally no more onerous than those contained in, at the
            Borrower's election, either the 1997 Subordinated Indenture or the
            2001 Subordinated Indenture and shall be in all respects in form and
            substance satisfactory to the Administrative Agent and (y) the
            Refinancing Subordinated Indebtedness Notes issued pursuant thereto
            shall mature no earlier than December 31, 2007, shall bear interest
            at an interest rate not exceeding 9.5% per annum and shall provide
            for no required amortization, sinking fund, repurchase or redemption
            prior to stated maturity.

            "Refinancing Subordinated Indenture Guaranty": either, but not both
            of, (i) the 2001 Subordinated Indenture Second Issuance Guaranty or
            (ii) the subordinated guaranty or guaranties executed and delivered
            by the Parent or one or more of its Subsidiaries pursuant to the
            Refinancing Subordinated Indenture, provided that


                                      -2-
<PAGE>
            such guaranty shall be in all respects in form and substance
            satisfactory to the Administrative Agent.

            "Refinancing Subordinated Indenture Net Proceeds Escrow": the
            deposit in escrow with The Bank of New York (or other financial
            institution satisfactory to the Administrative Agent) of the net
            proceeds of the Refinancing Subordinated Indenture Notes for the
            purpose of effecting any one or more of the transactions set forth
            in Sections 8.1(a)(vii)(A) or 8.1(a)(vii)(B), provided that the
            escrow agreement governing such escrow shall be in all respects in
            form and substance satisfactory to the Administrative Agent.

            "Refinancing Subordinated Indenture Notes": either, but not both of,
            (i) the 2001 Subordinated Indenture Second Issuance Notes or (ii)
            the senior subordinated notes in an aggregate original principal
            amount not exceeding $100,000,000, provided that such notes shall be
            in all respects in form and substance satisfactory to the
            Administrative Agent.

            "Refinancing Subordinated Indenture Prospectus Supplement": the
            final prospectus supplement, together with the base prospectus
            attached thereto, delivered with regard to the issuance by the
            Borrower of the Refinancing Subordinated Indenture Notes, provided
            that such prospectus supplement shall be in all respects in form and
            substance satisfactory to the Administrative Agent.

            "2001 Subordinated Indenture Second Issuance Guaranty": the
            subordinated guaranty or guaranties executed and delivered by the
            Parent or one or more of its Subsidiaries pursuant to the 2001
            Subordinated Indenture and the Refinancing Subordinated Indenture
            Prospectus Supplement.

            "2001 Subordinated Indenture Second Issuance Notes": the Senior
            Subordinated Notes, due 2011, issued in the original aggregate
            principal amount not exceeding $100,000,000 pursuant to the 2001
            Subordinated Indenture and the Refinancing Subordinated Indenture
            Prospectus Supplement.


      4.    Section 2.4(b)(vii) of the Credit Agreement is deleted in its
entirety.

      5.    Section 2.4(c)(ii) of the Credit Agreement is amended by
amending and restating the first sentence thereof to read as follows:


                                      -3-
<PAGE>
            Reductions of the RC Commitments made pursuant to Section 2.4(a) or
            2.4(b)(ii), (iii), (iv) and (v) shall be applied in the inverse
            order among the remaining RC Commitment reductions set forth in
            Section 2.4(b)(i).

      6.    Section 2.5(b) of the Credit Agreement is amended by deleting
the last sentence thereof.

      7.    Section 7.13 of the Credit Agreement is amended and restated
in its entirety to read as follows:

            7.13 Refinancing Subordinated Indenture.


            Deliver or cause to be delivered to the Administrative Agent and
            each Lender (i) immediately after the completion thereof, the
            Refinancing Subordinated Indenture Prospectus Supplement, (ii)
            immediately after the execution and delivery thereof, either (x) any
            company order and related documents executed and delivered in
            connection therewith in the event that the Borrower shall have
            issued Refinancing Subordinated Indenture Notes pursuant to clause
            (i) of the definition of "Refinancing Subordinated Indenture Notes"
            or (y) the Refinancing Subordinated Indenture in the event that the
            Borrower shall have issued Refinancing Subordinated Indenture Notes
            pursuant to clause (ii) of the definition of "Refinancing
            Subordinated Indenture Notes", and (iii) immediately after the
            execution and delivery thereof, the Refinancing Subordinated
            Indenture Guaranty.


      8.    Section 8.1(a) of the Credit Agreement is amended and
restated in its entirety to read as follows:

            (a) Create, incur, assume or suffer to exist any liability for
            Indebtedness, or permit any Loan Party so to do, except: (i)
            Indebtedness under the Loan Documents; (ii) Indebtedness (including
            Contingent Obligations) of the Loan Parties existing on the date
            hereof as set forth in Schedule 8.1 and other Indebtedness of the
            Borrower in an aggregate outstanding principal amount for all such
            Indebtedness under this clause (ii) not in excess of $25,000,000;
            (iii) Indebtedness of the Loan Parties under the 1997 Subordinated
            Indenture Notes and the 1997 Subordinated Indenture Guaranty; (iv)
            intercompany Indebtedness between any of the Loan Parties, provided
            that, in the case of intercompany Indebtedness of the Other Media
            Subsidiaries, such intercompany Indebtedness is permitted by Section
            8.5(h); (v) refinancings of any Indebtedness

                                      -4-
<PAGE>
            permitted under clause (ii) above with other Indebtedness permitted
            under clause (i) or (ii) above; (vi) Indebtedness of the Loan
            Parties under the 2001 Subordinated Indenture Notes and the 2001
            Subordinated Indenture Guaranty; and (vii) Indebtedness of the Loan
            Parties under the Refinancing Subordinated Indenture Notes and the
            Refinancing Subordinated Indenture Guaranty, provided that the
            Borrower shall immediately apply the net proceeds thereof to any one
            or more of the following: (A) the prepayment of RC Loans, which RC
            Loans may only be reborrowed in connection with a borrowing of RC
            Loans the proceeds of which are used to redeem or repurchase 1997
            Subordinated Indenture Notes pursuant to and in accordance with
            Section 8.17(a); (B) the deposit in trust with the trustee under the
            1997 Subordinated Indenture for the sole purpose of redeeming or
            repurchasing the 1997 Subordinated Indenture Notes pursuant to and
            in accordance with the 1997 Subordinated Indenture and Section
            8.17(a)(ii); or (C) the deposit in the Refinancing Subordinated
            Indenture Net Proceeds Escrow.


      9. Section 8.2 of the Credit Agreement is amended by (i) inserting the
word "and" at the end of clause (x) thereof, (ii) replacing "; and" at the end
of clause (xi) with a period and (iii) deleting clause (xii) thereof.


      10.   Section 8.11 of the Credit Agreement is amended and restated
in its entirety to read as follows:

            8.11 Prepayments of Indebtedness.

            Prepay, redeem or purchase, or obligate itself to prepay, redeem or
            purchase, in whole or in part, any Indebtedness (other than the
            Loans) prior to the due date thereof, or permit any Loan Party so to
            do, other than (i) the prepayment by any Loan Party of Indebtedness
            owing by such Loan Party to any other Loan Party, (ii) the
            prepayment of Indebtedness permitted under Section 8.1(a)(ii) with
            the proceeds of other Indebtedness permitted under Section 8.1(a)(i)
            or (ii) or, subject to Sections 2.4(b)(v) and 2.5, with the proceeds
            of Class A common Stock issued by the Parent, and (iii) as permitted
            by Section 8.17.

      11.   Section 8.17(a) of the Credit Agreement is amended and
restated in its entirety to read as follows:


                  (a) Enter into or agree to any amendment, modification or
            waiver of any term or condition of the 1997 Subordinated


                                      -5-
<PAGE>

            Indenture, the 1997 Subordinated Indenture Notes, the 1997
            Subordinated Indenture Guaranty, the 2001 Subordinated Indenture
            (except for any company order and related documents referenced in
            the definition of "Refinancing Subordinated Indenture"), the 2001
            Subordinated Indenture Notes, the 2001 Subordinated Indenture
            Guaranty, the Refinancing Subordinated Indenture, the Refinancing
            Subordinated Indenture Notes or the Refinancing Subordinated
            Indenture Guaranty, or purchase, redeem or make any payment with
            respect to Indebtedness under the 1997 Subordinated Indenture Notes,
            the 1997 Subordinated Indenture Guaranty, the 2001 Subordinated
            Indenture Notes, the 2001 Subordinated Indenture Guaranty, the
            Refinancing Subordinated Indenture Notes or the Refinancing
            Subordinated Indenture Guaranty, or permit any Loan Party so to do,
            provided that (i) the Borrower may make required payments to the
            extent expressly permitted pursuant to the subordination terms set
            forth therein and (ii) the Borrower may redeem or repurchase all or
            a portion of the 1997 Subordinated Indenture Notes (and pay any call
            or prepayment premium payable in connection therewith) (A) in the
            manner described in Section 8.1(a)(vii) with the net proceeds of the
            Refinancing Subordinated Indenture Notes and/or the proceeds of RC
            Loans in an aggregate amount not exceeding $105,000,000, provided
            that the Borrower shall have issued at least $75,000,000 in
            principal amount of Refinancing Subordinated Indenture Notes and
            applied the net proceeds thereof in accordance with Section
            8.1(a)(vii), or (B) with the proceeds of RC Loans in an aggregate
            amount not exceeding $26,250,000, provided further that, in the case
            of this clause (ii), no Default or Event of Default shall exist
            immediately before or after giving effect thereto.


      12.   Section 8.17(b) of the Credit Agreement is amended and
restated in its entirety to read as follows:

                  (b) Permit any Subsidiary of the Parent (including any
            Unrestricted Parent Subsidiary) to be a party to either the 1997
            Subordinated Indenture Guaranty, the 2001 Subordinated Indenture
            Guaranty or the Refinancing Subordinated Indenture Guaranty if such
            Subsidiary is not a Subsidiary Guarantor party to the Subsidiary
            Guaranty.

      13.   Paragraphs 1 through 12 of this Amendment shall not become
effective until:


                                      -6-
<PAGE>
                  (a) The Administrative Agent shall have received counterparts
            of this Amendment duly executed by the Borrower, the Guarantors, the
            Administrative Agent and the Required Lenders;

                  (b) The Borrower shall have paid all fees and expenses
            required to be paid in connection with the effectiveness of this
            Amendment.

      14. In all other respects the Credit Agreement and other Loan Documents
shall remain in full force and effect.

      15. In order to induce the Administrative Agent and the Required Lenders
to execute and deliver this Amendment, the Borrower and the Guarantors each (a)
certifies that, immediately before and after giving effect to this Amendment,
all representations and warranties contained in the Loan Documents to which it
is a party shall be true and correct in all respects with the same effect as
though such representations and warranties had been made on the date hereof,
except as the context otherwise requires or as otherwise permitted by the Loan
Documents or this Amendment, (b) certifies that, immediately before and after
giving effect to this Amendment, no Default or Event of Default shall exist
under the Loan Documents, as amended, and (c) agrees to pay all of the
reasonable fees and disbursements of counsel to the Administrative Agent
incurred in connection with the preparation, negotiation and closing of this
Amendment.

      16. Each of the Borrower and the Guarantors (a) reaffirms and admits the
validity, enforceability and continuing effect of all Loan Documents to which it
is a party, and its obligations thereunder, and (b) agrees and admits that as of
the date hereof it has no valid defenses to or offsets against any of its
obligations to any Credit Party under any Loan Document to which it is a party.

      17. This Amendment may be executed in any number of separate counterparts
and all of said counterparts taken together shall be deemed to constitute one
and the same document. It shall not be necessary in making proof of this
Amendment to produce or account for more than one counterpart signed by the
party to be charged.

      18. This Amendment shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York, without regard to principles
of conflict of laws.

      19.   The parties have caused this Amendment to be duly executed as
of the date first written above.

                         [signature pages follow]


                                      -7-
<PAGE>
                 SALEM COMMUNICATIONS HOLDING CORPORATION
                              AMENDMENT NO. 3
               FOURTH AMENDED AND RESTATED CREDIT AGREEMENT


                              SALEM COMMUNICATIONS HOLDING CORPORATION


                              By:   /s/  Jonathan L. Block
                                 ---------------------------------
                              Name:  Jonathan L. Block
                              Title:  Vice President and Secretary
<PAGE>
                 SALEM COMMUNICATIONS HOLDING CORPORATION
                              AMENDMENT NO. 3
               FOURTH AMENDED AND RESTATED CREDIT AGREEMENT


                              SALEM COMMUNICATIONS CORPORATION


                              By:   /s/  Jonathan L. Block
                                 ---------------------------------
                              Name:  Jonathan L. Block
                              Title:  Vice President and Secretary
<PAGE>
                 SALEM COMMUNICATIONS HOLDING CORPORATION
                              AMENDMENT NO. 3
               FOURTH AMENDED AND RESTATED CREDIT AGREEMENT




ATEP RADIO, INC.
BISON MEDIA, INC.
CARON BROADCASTING, INC.
CCM COMMUNICATIONS, INC.
COMMON GROUND BROADCASTING, INC.
GOLDEN GATE BROADCASTING COMPANY, INC.
INSPIRATION MEDIA, INC.
KINGDOM DIRECT, INC.
NEW ENGLAND CONTINENTAL MEDIA, INC.
NEW INSPIRATION BROADCASTING COMPANY, INC.
PENNSYLVANIA MEDIA ASSOCIATES, INC.
RADIO 1210, INC.
REACH SATELLITE NETWORK, INC.
SALEM COMMUNICATIONS ACQUISITION CORPORATION
SALEM MEDIA CORPORATION
SALEM MEDIA OF COLORADO, INC.
SALEM MEDIA OF GEORGIA, INC.
SALEM MEDIA OF HAWAII, INC.
SALEM MEDIA OF KENTUCKY, INC.
SALEM MEDIA OF OHIO, INC.
SALEM MEDIA OF OREGON, INC.
SALEM MEDIA OF PENNSYLVANIA, INC.
SALEM MEDIA OF VIRGINIA, INC.
SALEM MEDIA OF TEXAS, INC.
SALEM MUSIC NETWORK, INC.
SALEM RADIO NETWORK INCORPORATED
SALEM RADIO OPERATIONS - PENNSYLVANIA, INC.
SALEM RADIO PROPERTIES, INC.
SALEM RADIO REPRESENTATIVES, INC.
SCA LICENSE CORPORATION
SOUTH TEXAS BROADCASTING, INC.
SRN NEWS NETWORK, INC.
VISTA BROADCASTING, INC.




By:   /s/  Jonathan L. Block
   ---------------------------------
Name:  Jonathan L. Block
Title:  Vice President and Secretary
<PAGE>
                 SALEM COMMUNICATIONS HOLDING CORPORATION
                              AMENDMENT NO. 3
               FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

                              INSPIRATION MEDIA OF PENNSYLVANIA, LP
                              By:   Salem Radio Operations-Pennsylvania,
                                    Inc.  its General Partner


                              By:   /s/  Jonathan L. Block
                                 ---------------------------------
                              Name:  Jonathan L. Block
                              Title:  Vice President and Secretary
<PAGE>
                 SALEM COMMUNICATIONS HOLDING CORPORATION
                              AMENDMENT NO. 3
               FOURTH AMENDED AND RESTATED CREDIT AGREEMENT



                              INSPIRATION MEDIA OF TEXAS, LLC
                              SALEM MEDIA OF ILLINOIS, LLC
                              SALEM MEDIA OF NEW YORK, LLC
                              SALEM RADIO OPERATIONS, LLC
                              By:   Salem Media Corporation, as Manager


                              By:   /s/  Jonathan L. Block
                                 ---------------------------------
                              Name:  Jonathan L. Block
                              Title:  Vice President and Secretary
<PAGE>
                 SALEM COMMUNICATIONS HOLDING CORPORATION
                              AMENDMENT NO. 3
               FOURTH AMENDED AND RESTATED CREDIT AGREEMENT


                              ONEPLACE, LLC
                              By:   Salem Communications Corporation,
                                    as Manager

                              By:   /s/  Jonathan L. Block
                                 ---------------------------------
                              Name:  Jonathan L. Block
                              Title:  Vice President and Secretary
<PAGE>

                 SALEM COMMUNICATIONS HOLDING CORPORATION
                              AMENDMENT NO. 3
               FOURTH AMENDED AND RESTATED CREDIT AGREEMENT


                              THE BANK OF NEW YORK,
                              in its individual capacity
                              and as Administrative Agent


                              By:   /s/  Stephen M. Nettler
                                 ---------------------------
                              Name:  Stephen M. Nettler
                              Title:  Vice President
<PAGE>
                 SALEM COMMUNICATIONS HOLDING CORPORATION
                              AMENDMENT NO. 3
               FOURTH AMENDED AND RESTATED CREDIT AGREEMENT



                              FLEET NATIONAL BANK



                              By:   /s/  Srbui Seferian
                                 ---------------------------------
                              Name:  Srbui Seferian
                              Title:  Vice President
<PAGE>
                    SALEM COMMUNICATIONS HOLDING CORPORATION
                                 AMENDMENT NO. 3
                  FOURTH AMENDED AND RESTATED CREDIT AGREEMENT


                              UNION BANK OF CALIFORNIA, N.A.



                              By:   /s/  Mathew H. Fleming
                                 ---------------------------
                              Name:  Mathew H. Fleming
                              Title:  Vice President
<PAGE>
                    SALEM COMMUNICATIONS HOLDING CORPORATION
                                 AMENDMENT NO. 3
                  FOURTH AMENDED AND RESTATED CREDIT AGREEMENT


                             THE BANK OF NOVA SCOTIA



                              By:   /s/  Ian A. Hodgart
                                 ---------------------------------
                              Name:  Ian A. Hodgart
                              Title:  Authorized Signatory
<PAGE>
                    SALEM COMMUNICATIONS HOLDING CORPORATION
                                 AMENDMENT NO. 3
                  FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

                              FIRST HAWAIIAN BANK


                              By:   /s/  Shannon Davis
                                 ---------------------------------
                              Name:  Shannon Davis
                              Title:  Assistant Vice President
<PAGE>
                    SALEM COMMUNICATIONS HOLDING CORPORATION
                                 AMENDMENT NO. 3
                  FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

                              CITY NATIONAL BANK


                              By:   /s/  Patrick Davis
                                 ---------------------------------
                              Name:  Patrick Davis
                              Title:  Vice President
<PAGE>
                    SALEM COMMUNICATIONS HOLDING CORPORATION
                                 AMENDMENT NO. 3
                  FOURTH AMENDED AND RESTATED CREDIT AGREEMENT


                              ING BARINGS LLC

                              By:   /s/  Annie May
                                 ---------------------------------
                              Name:  Annie May
                              Title:  Vice President
<PAGE>
                    SALEM COMMUNICATIONS HOLDING CORPORATION
                                 AMENDMENT NO. 3
                  FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

                              DEUTSCHE BANK TRUST COMPANY AMERICAS

                              By:   /s/  Gregory Shefrin
                                 ---------------------------------
                              Name:  Gregory Shefrin
                              Title:  Director
<PAGE>
                    SALEM COMMUNICATIONS HOLDING CORPORATION
                                 AMENDMENT NO. 3
                  FOURTH AMENDED AND RESTATED CREDIT AGREEMENT


                              JPMORGAN CHASE BANK

                              By:   /s/  David M. Mallett
                                 ---------------------------------
                              Name:  David M. Mallett
                              Title:  Vice President


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