SECURITIES PURCHASE AGREEMENT BY AND BETWEEN PRIVATE BUSINESS, INC. AND LIGHTYEAR PBI HOLDINGS, LLC

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

BY AND BETWEEN

PRIVATE BUSINESS, INC.

AND

LIGHTYEAR PBI HOLDINGS, LLC

Dated as of

December 9, 2005

TABLE OF CONTENTS

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SECURITIES PURCHASE AGREEMENT

          THIS SECURITIES PURCHASE AGREEMENT, entered into as of December 9, 2005, by and between Private Business, Inc., a Tennessee corporation (the “ Company ”), and Lightyear PBI Holdings, LLC, a Delaware limited liability company (“ Investor ”).

RECITALS

          WHEREAS , the Company has entered into an Agreement and Plan of Merger, dated October 20, 2005 (the “ Merger Agreement ”), with CSL Acquisition Corporation, Captiva Solutions, LLC (“ Captiva ”) and certain members of Captiva whereby the Company will acquire 100% of the membership interests in Captiva (the “ Acquisition ”);

           WHEREAS , pursuant to a Commitment Later dated September 19, 2005 (the “ Commitment Letter ”), the Investor has committed to provide up to $10 million to finance the Acquisition (the “ Lightyear Financing ”) if the Company is unable to secure commitments from third-parties to provide financing for the Acquisition on terms reasonably acceptable to the Company as determined by the disinterested directors of the Company;

           WHEREAS , pursuant to a resolution dated December 9, 2005, the disinterested directors of the Company have determined that obtaining the Lightyear Financing is in the best interests of the Company and its stockholders; and

           WHEREAS , subject to the terms and conditions set forth in this Purchase Agreement, the Investor wishes to purchase from the Company and the Company wishes to sell to the Investor (i) a $10 million aggregate principal amount Senior Subordinated Note of the Company due December 9, 2010 (the “ Note ”), the form of which is attached hereto as Exhibit B and (ii) certain warrants to purchase shares of the Company’s common stock pursuant to a Warrant Agreement, the form of which is attached hereto as Exhibit C , and

          NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows:

1.       DEFINITIONS

          For all purposes of this Purchase Agreement, certain capitalized terms shall have the meanings set forth in that Exhibit A , except as otherwise expressly provided herein.

2.       SALE AND PURCHASE OF WARRANTS AND NOTE

          2.1           Sale and Purchase of Warrants and Note .  On the basis of the representations, warranties and agreements contained herein, and subject to the terms and conditions hereof, the Company agrees to sell and issue to Investor, and Investor agrees to purchase from the Company on the Closing Date, (i) common stock purchase warrants, in the form attached hereto as Exhibit D (the “ Warrants ”), to acquire up to 3,787,879 shares of Common Stock at an initial exercise price of $1.32 per share and (ii) the Note.

          2.2           Purchase Price .  The aggregate purchase price for the Warrants and Note purchased and sold hereunder is $10 million (the “ Aggregate Purchase Price ”).

          2.3           Closing .  The closing (the “ Closing ”) of the purchase and sale of the Warrant and Note hereunder shall take place at the offices of Harwell Howard Hyne Gabbert & Manner, P.C., 315 Deaderick Street, Suite 1800, Nashville, TN, immediately prior to the consummation of the Acquisition.  At the Closing, payment will be made by Investor of the Aggregate Purchase Price by wire transfer of immediately available funds to an account designated by the Company not later than one business day prior to the date of Closing (the “ Closing Date ”).

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          The Company hereby represents and warrants to Investor as of the date hereof:

          3.1           Organization and Standing .  The Company and each of its subsidiaries (collectively, the “ PB Companies ”) is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and has all requisite corporate power and authority to own, operate and lease its respective Assets and to carry on its respective business as currently conducted.  The Company has all requisite power and authority to execute and deliver this Purchase Agreement, the Note and the Warrant Agreement and to carry out the transactions contemplated hereby and thereby.  Each PB Company is duly qualified to conduct business as a foreign corporation and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          3.2           Authorization; No Conflict; Enforcement .    (a)  The execution, delivery and performance by the Company of this Purchase Agreement, the Note and the Warrant Agreement, the fulfillment of and compliance by the Company with the respective terms and provisions hereof and thereof, and the consummation by the Company of the transactions contemplated hereby and thereby have been (or upon delivery will be) duly authorized by all necessary corporate action (which authorization has not been modified or rescinded and is in full force and effect) and, do not and will not: (i) conflict with, or violate any provision of any Law or any provision of the certificate of incorporation or bylaws of any PB Company; (ii) conflict with, or result in any breach of, or constitute a default by any PB Company under any Material Agreement to which any PB Company is a party or by which it or any of its Assets may be bound; or (iii) result in or require the creation or imposition of or result in the acceleration of any indebtedness, or of any Encumbrance of any nature upon, or with respect to, any PB Company or any of the Assets now owned or hereafter acquired by any PB Company.  This Purchase Agreement, the Note and the Warrant Agreement constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and general principles of equity.

          (b)          No approval, authorization, consent, order, filing, registration or notification is required to be obtained by any of the PB Companies from, or made or given by any of the PB Companies to, any Governmental Authority or any other Person in connection with the execution, delivery and performance of this Purchase Agreement, the Note or the Warrant Agreement or the consummation of the transactions contemplated hereby or thereby, other than such consents or approvals as have been duly obtained and are in full force and effect.

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          3.3           Capitalization . 

          (a)          The authorized capital stock of the Company consists of 120,000,000 shares, consisting of (a) 20,000,000 shares of preferred stock, without par value (the “ Preferred Stock ”), and (b) 100,000,000 shares of Common Stock, without par value.  As of the date hereof, (i) 20,000 shares of Series A Preferred Stock, par value $0.01 (the “ Series A Stock ”) were issued and outstanding, all of which shares were duly authorized, validly issued, fully paid and nonassessable and were issued free of preemptive (or similar) rights, (ii) 40,032 shares of Series B Preferred Stock, par value $0.01 (the “ Series B Stock ”) were issued and outstanding, all of which shares were duly authorized, validly issued, fully paid and nonassessable and were issued free of preemptive (or similar) rights, (iii) 14,815,377 shares of Common Stock were issued and outstanding, all of which shares were duly authorized, validly issued, fully paid and nonassessable and were issued free of preemptive (or similar) rights, (iv) no shares of Common Stock were held in the treasury of the Company, (v) an aggregate of 2,012,890 shares of Common Stock were reserved for issuance and issuable upon or otherwise deliverable in connection with the exercise of outstanding stock options (the “ Stock Options ”) (of which 1,730,202 shares were in respect of vested or exercisable options) and (vi) 16,000,000 shares of Common Stock were reserved for issuance and issuable upon, or otherwise deliverable in connection with, the exercise of the Warrants issued to the Investor on January 20, 2004 (the “ Existing Warrants ”).  All of the shares of Common Stock which may be issued pursuant to the Stock Options will be, when issued in exchange for the applicable exercise price thereof, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive (or similar) rights.  Except (i) as set forth above, (ii) as a result of the exercise of Stock Options outstanding as of the date hereof and referred to above and (iii) up to 197,444 shares of Common Stock pursuant shares of Common Stock pursuant to the Private Business, Inc. 2000 Employee Stock Purchase Plan there are outstanding (a) no shares of capital stock or other voting securities of the Company, (b) no securities of the Company convertible into or exercisable or exchangeable for shares of capital stock or voting securities of the Company, (c) no options, warrants or other rights to acquire from the Company, and no obligation of the Company to issue, any capital stock, voting securities or securities convertible into or exercisable or exchangeable for capital stock or voting securities of the Company and (d) no equity equivalents, interests in the ownership or earnings of the Company (including earn-outs or similar rights) or other similar rights (the shares, securities and other rights referred to in clauses (a), (b), (c) and (d), collectively, “ Company Securities ”).  Except for the Stock Options and Existing Warrants referred to above, (x) there are no outstanding obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any Company Securities or any voting or equity securities or interests of any subsidiary of the Company, (y) there is no voting trust or other agreement or understanding to which the Company or any of its subsidiaries is a party or is bound with respect to the voting of the capital stock or other voting securities of the Company of any of its subsidiaries and (z) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any of its subsidiaries to which the Company or any of its subsidiaries is a party. 

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          (b)          Each of the outstanding shares of capital stock of each of the Company’s subsidiaries is duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive (or similar) rights, and all such shares are owned by the Company or another direct or indirect wholly owned subsidiary of the Company free and clear of all Encumbrances of any nature whatsoever.  There are outstanding (a) no securities of the Company or any of its subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of any subsidiary of the Company, (b) no options, warrants or other rights to acquire from the Company or any of its subsidiaries, and no obligation of the Company or any of its subsidiaries to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of any subsidiary of the Company and (c) no equity equivalents, interests in the ownership or earnings of any subsidiary of the Company or other similar rights.  There are no outstanding contractual obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of any subsidiary or to provide funds to or make any investment in any such subsidiary or any other entity.  The Company has the ability to effect any action requiring the approval of the shareholders of any subsidiary of the Company and to designate all of the members of the board of directors of each subsidiary of the Company. 

          3.4           Compliance with Law; Approvals .  The business of each PB Company has been and is presently being conducted in all material respects in accordance with all applicable federal, state and local governmental laws, rules, regulations and ordinances.  Each PB Company has all franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          3.5           Status of Shares .  When issued in accordance with this Purchase Agreement, the Warrants to be issued to Investor will be duly authorized by all necessary corporate action on the part of the Company, and will be validly issued, fully paid and nonassessable with no personal liability attaching to the ownership thereof and will be free and clear of all Encumbrances except as expressly set forth in the Warrant or the Warrant Agreement.  The shares of Common Stock issuable upon exercise of the Warrants have been duly authorized by all necessary corporate action on the part of the Company and such shares of Common Stock have been validly reserved for issuance, and when issued upon exercise in accordance with the Warrant will be validly issued and outstanding, fully paid and nonassessable with no personal liability attaching to the ownership thereof and will be free and clear of all Encumbrances except for restrictions on transfer under applicable federal and state securities laws.

          3.6           Offering of Shares .  Assuming the accuracy of the representations and warranties of the Investor set forth in Article 4 hereof, the offer and sale of the Warrants to Investor is exempt from the registration and prospectus delivery requirements of the Securities Act.  Neither the Company nor anyone acting on its behalf has taken or will take any action (including any offering of any securities of the Company under circumstances that would require the integration of such offering with the offering of the Warrants under the Securities Act and the rules and regulations of the Commission thereunder) that would subject the offering, issuance and sale of the Warrants to the registration requirements of the Securities Act.

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          3.7           Vote Required .  The affirmative vote of the holders of a majority of the outstanding shares of Common Stock, Series A Stock and Series B Stock present at the meeting called therefor and entitled to vote thereon, voting as a single class (the “ Stockholder Approval ”) is the only vote of the holders of any class or series of the Company’s capital stock necessary, whether under applicable Law, the rules and regulations of the N