Gibson, Dunn & Crutcher LLP
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Irvine, CA 92614-8557
(949) 451-3800
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EXHIBIT 5.01
May 16, 2002
(949) 451-3800
C 80253-00053
Salem Communications Corporation
Salem Communications Holding Corporation
4880 Santa Rosa Road
Suite 300
Camarillo, CA 93012
Re: Salem Communications Corporation
Registration Statement on Form S-3 (File No. 333-86580)
Ladies and Gentlemen:
As counsel for Salem Communications Corporation, a Delaware corporation
("Salem Communications"), and Salem Communications Holding Corporation, a
Delaware corporation and wholly-owned subsidiary of Salem Communications ("Salem
Holding"), we are familiar with the registration statement on Form S-3 (as
amended, the "Registration Statement") filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), on April 19, 2002, as amended by Amendment No. 1 to Registration
Statement filed with the Commission on May 10, 2002, with respect to the offer
and sale from time to time by the Salem Communications, Salem Holding and
certain selling security holders named in the Registration Statement (the
"Selling Security Holders") of up to $240,000,000 aggregate offering price of
the following: (i) one or more series of Salem Holding's debt securities (the
"Debt Securities"), which may be senior debt securities, senior subordinated
debt securities or subordinated debt securities, and which may include
guarantees of the Debt Securities (the "Guarantees") by some or all of the
direct and indirect subsidiaries of Salem Communications indicated in the
Registration Statement (the "Guarantors"), (ii) shares of Salem Communications
preferred stock, par value $.01 per share (the "Preferred Stock"), (iii) shares
of Salem Communications Class A common stock, par value $.01 per share (the
"Class A Common Stock"), including the offering and sale from time to time by
the Selling Security
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Salem Communications Holding Corporation
May 16, 2002
Page 2
Holders of up to 1,250,000 shares of the Class A Common Stock, and/or (iv)
warrants to purchase Debt Securities, Preferred Stock or Class A Common Stock
(the "Warrants"). The Debt Securities, Preferred Stock, Class A Common Stock,
Warrants and Guarantees are herein collectively referred to as the "Securities."
All capitalized terms which are not defined herein shall have the meanings
assigned to them in the Registration Statement.
We are familiar with the corporate action taken and proposed to be taken by
Salem Communications, Salem Holding and the Guarantors in connection with the
authorization, issuance and sale of the Securities. For the purpose of rendering
this opinion, we have made such factual and legal examinations as we deemed
necessary under the circumstances, and in that connection we have examined
originals or copies, certified or otherwise identified to our satisfaction, of
such documents, corporate records, certificates of public officials and other
instruments and have made such inquiries as we have deemed appropriate for the
purpose of rendering this opinion. We have obtained from officers of Salem
Communications, Salem Holding and the Guarantors such other certificates and
assurances as we consider necessary for the purpose of this opinion.
In connection with our examination of such documents, we have assumed the
genuineness of all signatures on, and the authenticity of, all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as copies. With respect to agreements and instruments
executed by natural persons, we have assumed the legal competency of such
persons.
On the basis of, and in reliance on, the foregoing examination and subject
to the assumptions, exceptions, qualifications and limitations contained herein
and subject to completion of the corporate action proposed to be taken by Salem
Communications, Salem Holding and the Guarantors referred to above (including
without limitation the due reservation of the Class A Common Stock and Preferred
Stock for issuance, the due authorization, approval and filing of the
Certificate of Incorporation (as defined below), the due authorization of the
Indenture (as defined below) and the due establishment of the specific terms of
the Debt Securities to be issued thereunder in accordance with the terms of the
Indenture, the due authorization of the Warrant Agreement (as defined below),
and the due establishment of the specific terms of the Guarantees in accordance
with the terms of the Indenture), and the due execution and delivery of the
Indenture(s) pursuant to which the Debt Securities will be issued (together, the
"Indenture"), the Warrant Agreement relating to the Warrants (the "Warrant
Agreement") and the Guarantees, each in materially the form filed or to be filed
as an exhibit to the Registration Statement (by amendment, by incorporation by
reference or by Current Reports on Form 8-K), we are of the opinion that:
1. When the Debt Securities, in substantially the form contained in (as
appropriate) the form of Senior Debt Indenture, the form of Senior Subordinated
Debt Indenture or the form of Subordinated Debt Indenture, shall have been
authorized, executed, authenticated and
Salem Communications Corporation
Salem Communications Holding Corporation
May 16, 2002
Page 3
delivered in accordance with the terms of the applicable Indenture, the Debt
Securities will be valid and binding obligations of Salem Holding, enforceable
against Salem Holding in accordance with their terms.
2. With respect to the Class A Common Stock to be offered by Salem
Communications, assuming the consideration offered in exchange for the shares is
valid consideration under state law, when Salem Communications receives
consideration per share for the Class A Common Stock in such an amount (not less
than the par value per share) as has been or may be determined by the Board of
Directors of Salem Communications, such Class A Common Stock will be validly
issued, fully paid and non-assessable.
3. With respect to the Class A Common Stock to be offered by the Selling
Security Holders, such Class A Common Stock is validly issued, fully paid and
non-assessable.
4. With respect to the Preferred Stock, assuming the consideration offered
in exchange for the shares is valid consideration under state law, when issued
pursuant to the Amended and Restated Certificate of Incorporation of Salem
Communications pursuant to Section 151 of the Delaware General Corporation Law
in materially the form filed as an Exhibit to the Registration Statement (the
"Certificate of Incorporation") and when Salem Communications receives
consideration per share for the Preferred Stock in such an amount (not less than
the par value per share) as has been or may be determined by the Board of
Directors of Salem Communications, the Preferred Stock will be validly issued,
fully paid and non-assessable.
5. With respect to the Warrants, when the Warrants or certificates
representing the Warrants have been duly executed, countersigned, registered,
delivered and authenticated in accordance with the terms authorized by Salem
Communications and the applicable Warrant Agreement, upon payment of the
consideration in such an amount as has been or may be determined by the Board of
Directors of Salem Communications, the Warrants will constitute legal, valid and
binding obligations of Salem Communications, enforceable against Salem
Communications in accordance with their terms.
6. When the Guarantees, and related Debt Securities in substantially the
form contained in the applicable Indenture, shall have been authorized, executed
and authenticated in accordance with the terms of the applicable Indenture, upon
payment of the consideration in such an amount as has been or may be determined
by the Board of Directors of the Guarantors, the Guarantees will be valid and
binding obligations of the Guarantors.
The opinions set forth herein are subject to the following further
assumptions, qualifications, limitations and exceptions being true and correct
at or prior to the time of the delivery of any Security:
Salem Communications Corporation
Salem Communications Holding Corporation
May 16, 2002
Page 4
(a) the Board of Directors of Salem Communications, Salem Holding or the
Guarantors, as applicable, shall have duly established the terms of such
Security and duly authorized and taken any other necessary corporate action to
approve the issuance and sale of such Security in conformity with its
Certificate of Incorporation, as amended, and its bylaws (or in conformity with
a Guarantor's certificate of formation, operating agreement or such other
organizational documents if such Guarantor is not a corporation), as amended,
through such time, and such authorization shall remain in effect and unchanged
at all times during which the Securities are offered and shall not have been
modified or rescinded;
(b) the Registration Statement, and any amendments thereto (including
post-effective amendments) and any additional registration statement filed under
Rule 462 will have been declared effective under the Act and such effectiveness
shall not have been terminated or rescinded;
(c) a prospectus supplement (a "Prospectus Supplement") will be prepared
and duly filed with the Commission describing the Securities offered thereby;
(d) all Securities will be issued and sold in compliance with applicable
federal and state securities laws and solely in the manner stated in the
Registration Statement and the appropriate Prospectus Supplement and there will
not have occurred any change in law affecting the validity or enforceability of
such Securities;
(e) with respect to Debt Securities, the applicable trustee shall have been
qualified under the Trust Indenture Act of 1939, as amended, and a Form T-1
shall have been properly filed as an exhibit to the Registration Statement;
(f) in the case of an Indenture or other agreement pursuant to which any
Securities are to be issued, there shall be no terms or provisions contained
therein which would have the effect, under applicable law, of vitiating the
validity and binding nature of such instrument; and
(g) in the case of an underwritten offering, the applicable underwriting
agreement shall have been duly authorized and the Securities so offered shall
have been issued and sold in accordance with the terms and conditions of the
applicable underwriting agreement.
We express no opinion (i) regarding the effectiveness of any waiver in
respect of the Securities of any rights of any party, or duties owing to it, as
a matter of law, or that is broadly stated or does not describe the right or
duty purportedly waived with reasonable specificity; or (ii) the effect on the
enforceability of the Guarantees against any Guarantor of any facts or
circumstances that would constitute a defense to the obligation of a surety,
unless such defense has been waived effectively by such Guarantor, and we also
express no opinion as to the effectiveness of any waiver of any such defense by
any Guarantor.
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Salem Communications Holding Corporation
May 16, 2002
Page 5
Our opinions set forth above are subject to the effect of (a) applicable
bankruptcy, reorganization, insolvency, moratorium and other similar laws and
court decisions of general application (including without limitation statutory
or other laws regarding fraudulent or preferential transfers) relating to,
limiting or affecting the enforcement of creditors' rights generally, and
(b) principles of equity (regardless of whether enforcement is considered in
proceedings at law or in equity) that may limit the enforceability of any of the
remedies, covenants or other provisions of the Securities, the Indenture, the
Warrant Agreement, or the Certificate of Incorporation or the availability of
injunctive relief or other equitable remedies or as such principles relate to,
limit or affect the enforcement of creditor's rights generally.
In addition, we express no opinion as to: (a) any provisions of the
Securities, the Indenture, the Warrant Agreement, or the Certificate of
Incorporation regarding the remedies available to any person (1) to take action
that is arbitrary, unreasonable or capricious or is not taken in good faith or
in a commercially reasonable manner, whether or not such action is permitted
under the Securities, the Indenture, the Warrant Agreement, or the Certificate
of Incorporation or (2) for violations or breaches that are determined by a
court to be non-material or without substantially adverse effect upon the
ability of Salem Communications, Salem Holding or any of the Guarantors to
perform their respective material obligations under the Securities, the
Indenture, the Warrant Agreement, or the Certificate of Incorporation; or
(b) the provisions of the Debt Securities or the Indenture that may provide for
interest on interest or penalty interest.
This opinion is limited to the present corporate laws of the State of
Delaware, the present laws of the State of New York and the present federal laws
of the United States and to the present judicial interpretations thereof and to
the facts as they presently exist. We express no opinion as to matters involving
the laws of any jurisdiction other than the States of New York and Delaware and
the United States, or with respect to Delaware, any other laws. We are not
admitted to practice law in the State of Delaware, but we are generally familiar
with the Delaware General Corporation Law as presently in effect and have made
such inquiries as we considered necessary to render our opinion. We undertake no
obligation to advise you as a result of developments occurring after the date
hereof or as a result of facts or circumstances brought to our attention after
the date hereof.
You have informed us that you intend to issue Securities from time to time
on a delayed or continuous basis, and this opinion is limited to the laws
referred to above as in effect on the date hereof. We understand that prior to
issuing any Securities (i) you will advise us in writing of the terms thereof
and (ii) you will afford us an opportunity to (x) review the operative documents
pursuant to which such Securities are to be issued (including the applicable
Prospectus Supplement) and (y) file such supplement or amendment to this opinion
(if any) as we may reasonably consider necessary or appropriate.
This opinion may be filed as an exhibit to the Registration Statement.
Consent is also
Salem Communications Corporation
Salem Communications Holding Corporation
May 16, 2002
Page 6
given to the reference to this firm under the caption "Legal Matters" in the
prospectus contained in the Registration Statement. In giving this consent, we
do not admit we are included in the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission promulgated thereunder.
Very truly yours,
/s/ Gibson, Dunn & Crutcher LLP
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GIBSON, DUNN & CRUTCHER LLP