Exhibit 10.3

Execution Version

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WARRANT AGREEMENT

 

Dated as of December 9, 2005

 

between

 

PRIVATE BUSINESS, INC.

 

and

 

LIGHTYEAR PBI HOLDINGS, LLC

 

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                    WARRANT AGREEMENT (this “Agreement”), dated as of December
9, 2005 between PRIVATE BUSINESS, INC., a Tennessee corporation (the “Company”),
and LIGHTYEAR PBI HOLDINGS, LLC, a Delaware limited partnership (the “Initial
Holder”).

                    NOW, THEREFORE, the parties hereto hereby agree as follows:

                    1.          Grant.  The Company hereby grants to the Initial
Holder warrants (“Warrants”) which shall entitle the registered holder thereof
to purchase from the Company, (i) at any time or from time to time after the
date hereof until 5:00 P.M., New York time, on January 20, 2014 (the “Expiration
Date”), up to 1,893,940 shares (the “Initial Warrant Shares”) of Common Stock,
no par value, of the Company (“Common Stock”), subject to adjustment as provided
in Section 6, at the exercise price of $1.32 per share, subject to adjustment as
provided in Section 6 (the “Exercise Price”) and (ii) at any time or from time
to time beginning at 12:01 A.M., New York time, on June 9, 2007 until the
Expiration Date, up to 1,893,939 shares (the “Second Warrant Shares” and,
together with the Initial Warrant Shares, the “Warrant Shares”) of Common Stock,
subject to adjustment as provided in Section 6, at the Exercise Price, all
subject to the terms and upon the conditions set forth herein.  Notwithstanding
the foregoing, upon a Change in Control (as defined in the Company’s Senior
Subordinated Note due 2010, dated the date hereof (the “Note”)), the Warrant to
purchase the Second Warrant Shares shall become immediately exercisable.  Each
Warrant not exercised or deemed exercised on or prior to the Expiration Date
shall become invalid and all rights thereunder, and all rights in respect
thereof under this Agreement, shall cease as of that time. 

                    2.          Warrant Certificates.  The Warrants shall be
evidenced by certificates issued pursuant to this Agreement (the “Warrant
Certificate”) in the form set forth in Exhibit A hereto, with such appropriate
insertions, omissions, substitutions, and other variations as are required or
permitted by this Agreement.

                    3.          Exercise of Warrant.

                    (a)         General.  Subject to the provisions of this
Agreement, upon surrender to the Company at its principal office of a Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment in accordance with Section 3(b) of the Exercise Price then
in effect, the Company shall issue and deliver promptly to the registered holder
of such Warrant Certificate, a certificate or certificates for the Warrant
Shares or other securities or property to which the registered holder is
entitled, registered in the name of such registered holder or, upon the written
order of such registered holder, in such name or names as such registered holder
may designate; provided, however, that if such exercise would result in the
Initial Holder acquiring beneficial ownership of Common Stock (together with all
other Common Stock owned by the Initial Holder at such time) with a value in
excess of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the “HSR Act”), notification threshold (the “HSR Threshold”), then only the
exercise of those Warrants which when exercised do not exceed the HSR Threshold
shall be exercised and the Form of Election to Purchase shall be deemed to
relate only to such Warrants.  The exercise of additional Warrants in excess of
the HSR Threshold shall not occur until the Initial Holder has received approval
of such exercise under the HSR Act or the time for such approval has passed.  In
the case of an exercise of Warrants, any certificate or certificates
representing Warrant Shares shall be deemed to have

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been issued and any person so designated to be named therein shall be deemed to
have become the holder of record of the Warrant Shares as of the date of the
surrender of such Warrant Certificate (together with such duly executed Form of
Election to Purchase) and payment of the Exercise Price.

                    (b)         Payment.  Payment of the Exercise Price shall be
made, at the option of the registered holder of the Warrants, (i) in cash, (ii)
by wire transfer payable to the order of the Company, (iii) on a net basis, such
that without the exchange of any funds, such holder receives that number of
Warrant Shares that would otherwise be issuable upon a cash exercise of such
Warrants less that number of Warrant Shares having a current market price equal
to the aggregate Exercise Price that would otherwise have been paid by such
holder for the number of Warrant Shares with respect to which such Warrant is
being exercised or (iv) through a reduction in the aggregate principal amount of
the Note, such that without the exchange of any funds, such holder receives (a)
that number of Warrant Shares determined by dividing (x) the aggregate principal
reduction of the Note (which amount shall not exceed the amount that would
result in the issuance of that number of Warrant Shares that remain available
for exercise pursuant to this Warrant Agreement) by (y) the Exercise Price,
together with a replacement note having equivalent terms as the Note but having
a principal amount equal to the principal amount plus accrued interest
outstanding under the Note prior to such exchange minus the dollar amount equal
to the aggregate Exercise Price that would otherwise have been paid by such
holder for the number of Warrant Shares with respect to which such Warrant is
being exercised.  In the case of clauses (iii) and (iv) of the preceding
sentence, such exchange shall be treated by the parties as a recapitalization
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
“Code”), to the extent permitted by applicable law.  For the purpose of any
computation under this paragraph 3(b), the current market price per share of
Common Stock on any day shall be deemed to be the average of the Closing Prices
of the Common Stock for the ten (10) consecutive trading days ending on the day
before the day the Warrant Certificate (together with a duly executed Form of
Election to Purchase) is delivered to the Company.  The term “Closing Price”
shall mean, for each trading day, the last reported sale price regular way on
the principal national securities exchange on which the Common Stock is then
listed or admitted for trading or, if the Common Stock is not listed on a
national securities exchange, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange member
firm selected from time to time by the Company for that purpose.  If for any
reason the current market price per share cannot be determined pursuant to the
foregoing provisions of this paragraph, the current market price per share shall
be the fair market value thereof as determined by an independent (i.e. not
having any significant relationship with the Company or Investor or its
affiliates) appraiser or investment bank chosen by the members of the Company’s
Board of Directors (the “Board”) that are not affiliated with the Initial
Holder.

                    (c)         Exercise in Whole or in Part.  The purchase
rights evidenced by a Warrant Certificate shall be exercisable, at the election
of the registered holder thereof, in whole or in part, but only for lots of
10,000 Warrant Shares or integral multiples thereof if less than all the
Warrants then held by such registered holder are being exercised.  If less than
all of the Warrant Shares purchasable under any Warrant Certificate are
purchased, the Company shall cancel such Warrant Certificate upon the surrender
thereof and shall execute and deliver a new Warrant Certificate of like tenor
for the remaining number of Warrant Shares purchasable thereunder.

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                    (d)         Fractional Shares.  No fractional shares of
Common Stock shall be issued upon exercise of any Warrants. Instead the Company
shall round the results of an exercise up to the nearest full share of Common
Stock.

                    (e)         Reservation of Shares.  The Company will at all
times reserve and keep available out of its authorized Common Stock solely for
the purpose of issuance upon exercise of the Warrants as herein provided, such
number of shares of Common Stock as shall from time to time be issuable upon the
exercise of all outstanding Warrants.  All shares of Common Stock that may be
issued upon exercise of the Warrants will, upon issuance, be validly issued,
fully paid and nonassessable and not subject to preemptive rights of any
stockholder.

                    (f)         Legend on Warrant and Stock Certificates. The
Warrant Certificates and any other instruments which evidence the shares issued
upon exercise of the Warrants shall, unless no longer required in the reasonable
judgment of the Company or as set forth in an opinion of counsel reasonably
acceptable to the Company, bear a legend substantially to the following effect
in conspicuous print:

 

THIS WARRANT HAS OR AS APPLICABLE, THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED, NOR WILL ANY ASSIGNEE OR ENDORSEE HEREOF
BE RECOGNIZED AS AN OWNER OR HOLDER HEREOF BY THE COMPANY FOR ANY PURPOSE,
UNLESS AND UNTIL THIS WARRANT IS REGISTERED UNDER SUCH ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.

                    (g)         Acknowledgment of Continuing Obligation.  The
Company will, at the time of any exercise of the Warrants in whole or in part,
upon request of the registered holder, acknowledge in writing its continuing
obligation to such registered holder in respect of any rights to which the
registered holder shall continue to be entitled after exercise in accordance
with the Warrants; provided, however, that the failure of the registered holder
to make any such request shall not affect the continuing obligation of the
Company to the registered holder in respect of such rights.

                    4.          Restrictions on Transfer.

                    (a)         Warrant Register.  The Company shall maintain at
its principal office a Warrant Register for registration of Warrant Certificates
and transfers thereof.  The Company shall initially register the outstanding
Warrants in the name of the Initial Holder.  The Company may deem and treat the
registered holder(s) of the Warrant Certificates as the absolute owner(s)
thereof and of the Warrants represented thereby (notwithstanding any notation of
ownership or other writing on the Warrant Certificates made by any person) for
the purpose of any exercise thereof or any distribution to the holder(s)
thereof, and for all other purposes, and the Company shall not be affected by
any notice to the contrary.  For the purpose of this Agreement, all references
to a holder herein shall refer to a registered holder of Warrants.

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                    (b)         Warrants and Warrant Shares Not Registered. 
Each registered holder of the Warrants, by acceptance thereof, represents and
acknowledges that the Warrants and the Warrant Shares which may be purchased
upon exercise of a Warrant are not registered under the Securities Act of 1933,
as amended (the “Securities Act”), that the issuance of the Warrants and the
offering and sale of such Warrant Shares are being made in reliance on the
exemption from registration afforded by Rule 506 of Regulation D as promulgated
under the Securities Act and Section 4(2) thereunder as not involving any public
offering and that the Company’s reliance on such exemption is predicated in part
on the representations made by the Initial Holder of the Warrants to and with
the Company that such holder (1) is acquiring the Warrants in good faith solely
for its own account, for investment and not with a view toward resale or other
distribution within the meaning of the Securities Act, (2) is an “accredited
investor” within the meaning of Rule 501(a) under the Securities Act, and (3)
has such knowledge and experience in financial and business matters such that it
is capable of evaluating the merits and risks of its investment in the
Warrants.  Neither the Warrants nor the related Warrant Shares may be
transferred except (i) pursuant to an effective registration statement under the
Securities Act, (ii) pursuant to Rule 144 under the Securities Act if the
transferor delivers a certificate, in form and substance reasonably satisfactory
to the Company, that such transfer complies with the requirements of Rule 144,
or (iii) pursuant to any other available exemption from registration if such
transferee makes the representations set forth in the preceding sentence in
writing to the Company and provides to the Company an opinion of counsel in a
form reasonably satisfactory to the Company.

                    (c)         Notice and Registration of Transfer.  Each
registered holder of the Warrants, by acceptance thereof, agrees that prior to
any disposition by such holder of the Warrants or of any Warrant Shares, such
holder will give written notice to the Company expressing such holder’s
intention to effect such disposition and describing briefly such holder’s
intention as to the manner in which the Warrants or the Warrant Shares
theretofore issued or thereafter issuable upon exercise hereof, are to be
disposed of, whereupon, but only if such transfer is permitted pursuant to
paragraph 4(b) above, such transferring holder shall be entitled to dispose of
the Warrants and/or the Warrant Shares theretofore issued upon the exercise
thereof, all in accordance with the terms of the notice delivered by such holder
to the Company.  In the event of such transfer, the Company shall register the
transfer of any outstanding Warrants in the Warrant Register upon surrender of
the Warrant Certificate(s) evidencing such Warrants to the Company at its
principal office, accompanied by a written instrument of transfer in form
reasonably satisfactory to it, duly executed by the registered holder thereof. 
Upon any such registration or transfer, new Warrant Certificate(s) evidencing
such transferred Warrants shall be issued to the transferee(s) and, if less than
all of the Warrants are to be transferred, the transferor, and the surrendered
Warrant Certificate(s) shall be canceled.

                    5.          Special Agreements of the Company.  The Company
covenants and agrees as follows:

                    (a)         Listing on Securities Exchanges.  If the Common
Stock is listed on a stock exchange or quoted on the Nasdaq National Market or
the Nasdaq Small Cap Market, the Company will use its reasonable best efforts to
procure at its sole expense the listing of all Warrant Shares (subject to
issuance or notice of issuance) on all stock exchanges on which the Common Stock
is then listed, or the quotation of the Warrant Shares on the Nasdaq National
Market or the Nasdaq Small Cap Market, as the case may be, and maintain the
listing or quotation of such shares and other securities after issuance.

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                    (b)         Actions in Avoidance; Non-Dilution.  The Company
will not, by amendment of its Amended and Restated Charter, as amended, or
through any reorganization, transfer of assets, consolidation, merger, issue or
sale of securities or otherwise, avoid or take any action which would have the
effect of avoiding the observance or performance of any of the terms to be
observed or performed hereunder by the Company but will at all times in good
faith assist in carrying out all of the provisions of the Warrants and in taking
all of such action as may be necessary or appropriate in order to protect the
rights of the registered holders of the Warrants against impairment.  Without
limiting the generality of the foregoing, the Company will (a) take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares upon the exercise
of this Warrant, and (b) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.

                    If any shares of Common Stock required to be reserved for
purposes of exercise of Warrants would require, under any federal law (other
than the Securities Act), registration with or approval of any governmental
authority, before such shares may be issued upon exercise, the Company will use
its reasonable best efforts to cause such shares to be duly registered or
approved by such governmental authority, at its expense.

                    6.          Adjustment of Exercise Price and Number of
Warrant Shares Issuable.  The number and kind of shares purchasable upon the
exercise of Warrants and the Exercise Price shall be subject to adjustment from
time to time as follows:

                    (a)         In case the Company shall pay or make a dividend
or other distribution on any class of capital stock of the Company in Common
Stock other than the payment of regularly scheduled dividends on any series of
preferred stock, the Exercise Price in effect at the opening of business on the
day following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Exercise Price by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator of which shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination
of the holders entitled to such dividends and distributions.  For the purposes
of this paragraph 6(a), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company.  The
Company will not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.

                    (b)         In case the outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock, the
Exercise Price in effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be reduced, and, conversely,
in case the outstanding shares of Common Stock shall each be combined into a
smaller number of shares of Common Stock, the Exercise Price in effect at the

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opening of business on the day following the day upon which such combination
becomes effective shall be increased to equal the product of the Exercise Price
in effect on such date and a fraction the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to such subdivision or
combination, as the case may be, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such subdivision
or combination, as the case may be.  Such reduction or increase, as the case may
be, shall become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes effective.

                    (c)         In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock (A) evidences of its
indebtedness or (B) shares of any class of capital stock, cash or other property
or assets (including securities, but excluding any dividend or distribution
referred to in paragraph 6(a) or 6(b) above), then in each case, the Exercise
Price in effect at the opening of business on the day following the date fixed
for the determination of holders of Common Stock entitled to receive such
distribution shall be adjusted by multiplying such Exercise Price by a fraction
of which the numerator shall be the current market price per share (determined
as provided in paragraph 6(e) below) of the Common Stock on such date of
determination less the then fair market value as determined by the Board (whose
determination shall be conclusive) of the portion of the capital stock, cash or
other assets or evidences of indebtedness so distributed (and for which an
adjustment to the Exercise Price has not previously been made pursuant to the
terms of this paragraph 6) applicable to one share of Common Stock, and the
denominator shall be such current market price per share of the Common Stock,
such adjustment to become effective immediately after the opening of business on
the day following such date of determination of the holders entitled to such
distribution.

                    (d)         The reclassification or change of Common Stock
into securities, including securities other than Common Stock, (other than any
reclassification upon a consolidation or merger to which paragraph 6(l) below
shall apply) shall be deemed to involve (A) a distribution of such securities
other than Common Stock to all holders of Common Stock (and the effective date
of such reclassification shall be deemed to be “the date fixed for the
determination of holders of Common Stock entitled to receive such distribution”
within the meaning of paragraph 6(c) above), and (B) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be “the day upon which such subdivision
or combination becomes effective” within the meaning of paragraph 6(b) above).

                    (e)         If the Common Stock is listed or admitted to
trading on a principal national securities exchange in the United States, the
Nasdaq National Market or the Nasdaq Small Cap Market or in the over-the-counter
market, for the purpose of any computation under this Section 6, the current
market price per share of Common Stock on any day shall be deemed to be the
average of the Closing Prices of the Common Stock for the 10 consecutive trading
days immediately preceding the trading day before the day in question; provided
that, in the case of paragraph 6(c), if the period between the date of the
public announcement of the dividend or distribution and the date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution shall be less than 10 trading days, the period shall be such lesser
number of trading days but, in any event, not less than five trading days;

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                    (f)         If the Common Stock is not quoted or listed by
any such organization, exchange or market, the current market price per share
shall be the fair market value thereof as determined by an independent (i.e. not
having any significant relationship with the Company or Investor or its
affiliates) appraiser or investment bank chosen by the members of the Company’s
Board that are not affiliated with the Initial Holder.

                    (g)         No adjustment in the Exercise Price need be made
until all cumulative adjustments amount to 1% or more of the Exercise Price as
last adjusted.  Any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
paragraph 6 shall be made to the nearest 1/1,000th of a cent or to the nearest
1/1,000th of a share, as the case may be.

                    (h)         For purposes of this paragraph 6, “Common Stock”
includes any stock of any class of the Company which has no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which is
not subject to redemption by the Company.  However, subject to the provisions of
paragraph 6(k) below, shares issuable on exercise of the Warrants shall include
only shares of the class designated as Common Stock of the Company on the date
hereof or shares of any class or classes resulting from any reclassification
thereof and which have no preferences in respect of dividends or amounts payable
in the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Company and which are not subject to redemption by the
Company; provided that, if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.

                    (i)         No adjustment in the Exercise Price shall reduce
the Exercise Price below the then par value of the Common Stock.  The Company
hereby agrees with each holder of Warrants that it shall not increase the par
value of the Common Stock.  No adjustment in the Exercise Price need be made
under paragraphs 6(a) and 6(c) above if the Company issues or distributes to
each registered holder of Warrants the shares of Common Stock, evidences of
indebtedness, assets or other property, rights, options or warrants referred to
in those paragraphs which each registered holder would have been entitled to
receive had the Warrants been exercised prior to the happening of such event or
the record date with respect thereto.

                    (j)         Whenever the Exercise Price is adjusted pursuant
to paragraphs 6(a), 6(b) or 6(c) above, (A) the number of Warrant Shares
purchasable upon exercise of any Warrant shall be adjusted by multiplying such
number of Warrant Shares by a fraction the numerator of which is the Exercise
Price immediately prior to such adjustment and the denominator of which is the
Exercise Price immediately after such adjustment and (B) the Company shall
promptly mail to registered holders of Warrants, first class, postage prepaid, a
notice of the adjustment together with a certificate from the Company’s
independent public accountants briefly stating the facts requiring the
adjustment and the manner of computing it.  The certificate shall be conclusive
evidence that the adjustment is correct.

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                    (k)          If:

 

          (A)     the Company plans to take any action which would require an
adjustment in the Exercise Price pursuant to this paragraph 6;

 

 

 

 

          (B)     the Company plans to consolidate or merge with, or transfers
all or substantially all of its assets to, another corporation, and stockholders
of the Company must approve the transaction; or

 

 

 

 

          (C)     there is to be a dissolution or liquidation of the Company;

the Company shall mail to registered holders of the Warrants, first class,
postage prepaid, a notice stating the proposed record or effective date, as the
case may be.  The Company shall mail the notice at least 15 days before such
proposed record or effective date.  However, failure to mail the notice or any
defect in it shall not affect the validity of any transaction referred to in
clause (A), (B) or (C) of this paragraph 6(k).

                    (l)         In the case of any consolidation of the Company
or the merger of the Company with or into any other entity or the sale or
transfer of all or substantially all the assets of the Company pursuant to which
the Company’s Common Stock is converted into other securities, cash or assets or
other property, upon consummation of such transaction, each Warrant shall
automatically thereafter become exercisable for the kind and amount of
securities, cash or other assets or other property receivable upon the
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock into which such Warrant might have been converted immediately prior
to such consolidation, merger, transfer or sale (assuming such holder of Common
Stock failed to exercise any rights of election and received per share the kind
and amount of consideration receivable per share by a plurality of non-electing
shares).  Appropriate adjustment (as determined by the Board) shall be made in
the application of the provisions herein set forth with respect to the rights
and interests thereafter of the holders of Warrants, to the end that the
provisions set forth herein (including provisions with respect to changes in and
other adjustment of the Exercise Price and the number of shares of Common Stock
issuable upon the exercise of the Warrants) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
securities or assets or property thereafter deliverable upon the exercise of
Warrants.  If this paragraph 6(l) applies to any transaction, paragraphs 6(a),
6(b) and 6(d) do not apply to such transaction.

                    (m)         In any case in which this paragraph 6 shall
require that an adjustment as a result of any event become effective from and
after a record date, the Company may elect to defer until after the occurrence
of such event the issuance to the holder of any Warrants exercised after such
record date and before the occurrence of such event of the additional shares of
Common Stock issuable upon such conversion over and above the shares issuable on
the basis of the Exercise Price and number of Warrant Shares in effect
immediately prior to adjustment; provided, however, that if such event shall not
have occurred and authorization of such event shall be rescinded by the Company,
the Exercise Price and number of Warrant Shares shall be recomputed immediately
upon such recission to the price that would have been in effect had such event
not been authorized, provided that such recission is permitted by and effective
under applicable laws.

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                    (n)         If any event occurs as to which the foregoing
provisions of this paragraph 6 are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board, fairly and
adequately protect the purchase rights of the Warrants in accordance with the
essential intent and principles of such provisions, then the Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of the Board, to protect such purchase rights as aforesaid.

                    (o)         As soon as practicable after any adjustment of
the Exercise Price, the number or type of shares issuable upon exercise of the
Warrants or otherwise pursuant to this paragraph 6, the Company will give
written notice thereof to the registered holders of the Warrants setting forth
such adjustment and showing in detail the facts upon which such adjustment is
based; provided that this provision shall not be construed to create a
presumption that the registered holder has conceded its right to challenge the
Company’s adjustment if it believes it was not done in accordance with the terms
of this Agreement.

                    (p)         If the Company shall repay all or any portion of
the Note (the “Repayment Amount”) on or prior to the date that is 18 months from
the date hereof, the number of Warrant Shares purchasable upon exercise of the
Warrant shall be reduced by a number determined by dividing (i) the product of
(x) the Repayment Amount and (y) 0.5 and (z) 0.5 by (ii) the Exercise Price.

                    7.          Exchange and Replacement of Warrant
Certificates.  Each Warrant Certificate is exchangeable without expense, upon
the surrender thereof by the registered holder thereof at the principal
executive office of the Company, for a new Warrant Certificate of like tenor and
date representing in the aggregate the right to purchase the same number of
Warrant Shares in such denominations as shall be designated by the registered
holder thereof at the time of such surrender.  Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Warrant Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of such Warrant Certificate, if mutilated, the
Company will make and deliver a new Warrant Certificate of like tenor, in lieu
thereof.

                    8.          Payment of Taxes.  The Company will pay all
documentary stamp taxes attributable to the initial issuance of the Warrants and
of the Warrant Shares upon the exercise of Warrants; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance of any Warrant Certificates or
any certificates for Warrant Shares in a name other than that of the registered
holder of such Warrant Certificate, and the Company shall not be required to
issue or deliver such Warrant Certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the reasonable satisfaction of the Company
that such tax has been paid.

                    9.          Statement on Warrants.  Irrespective of any
adjustment in the number or kind of shares issuable upon the exercise of the
Warrants or the Exercise Price, Warrant Certificates theretofore or thereafter
issued may continue to express the same number and kind of shares and the same
Exercise Price as are stated in the Warrant Certificates initially issuable
pursuant to this Agreement.

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                    10.        Registration.  The Company acknowledges that
registered holders shall have the same registration rights as provided in the
Securityholders Agreement, dated as of January 20, 2004, between the Company and
the Initial Holder.

                    11.        Notices.  All notices, requests, consents and
other communications hereunder shall be in writing and shall be deemed to have
been duly made when delivered by hand or sent by facsimile transmission (with
receipt confirmed), or, if timely delivered to an air courier guaranteeing
overnight delivery service, on the next business day, or five business days
after being deposited in the mail, first class, certified or registered, postage
prepaid, return receipt requested, in each case addressed as follows (or to such
other place or places as either of the parties shall designate by written notice
to the other):

 

(i)

if to registered holder, to the address set forth on the Warrant Register
maintained by the Company;

 

 

 

 

 

with copies to:

 

 

 

 

 

c/o The Lightyear Fund, L.P.

 

 

375 Park Avenue, 11th Floor

 

 

New York, New York 10152

 

 

Attention: Lori. J. Forlani

 

 

Facsimile: (212) 328-0516

 

 

 

 

 

and

 

 

 

 

 

Simpson Thacher & Bartlett LLP

 

 

425 Lexington Avenue

 

 

New York, New York 10017

 

 

Attention:  Caroline B. Gottschalk

 

 

Facsimile:  (212) 455-2502; and

 

 

 

 

(ii)

if to the Company, to:

 

 

 

 

 

Private Business, Inc.

 

 

9020 Overlook Boulevard

 

 

Brentwood, TN  37027

 

 

Attention:  Michael Berman

 

 

Facsimile:  (615) 565-3261

 

 

 

 

 

with copies to:

 

 

 

 

 

Harwell Howard Hyne Gabbert & Manner, P.C.

 

 

315 Deaderick Street, Suite 1800

 

 

Nashville, TN 37238

 

 

Attention: David Cox

 

 

Facsimile: (615) 251-1056

10

                    12.        Amendment.  The Company, with the consent of the
registered holders of the unexercised Warrants evidencing at least a majority of
the Warrant Shares underlying the unexercised Warrants, may amend or supplement
this Agreement or waive compliance by the Company in a particular instance with
any provision of this Agreement; provided that without the consent of each
registered holder affected, no such amendment shall (i) (with respect to
Warrants held by a non-consenting registered holder) increase the Exercise Price
or decrease the number of Warrant Shares issuable upon exercise of any Warrant
or (ii) change the formula contained in Section 6(p).

                    13.        Successors.  Except as otherwise provided herein,
all the covenants and provisions of this Agreement by or for the benefit of the
Company and the registered holders of the Warrants shall inure to the benefit of
their respective successors and assigns hereunder.

                    14.        Governing Law.  This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Tennessee and for all purposes shall be construed in
accordance with the laws of such State (without regard to the conflicts of law
principles thereof).

                    15.        Benefits of This Agreement.  Nothing in this
Agreement shall be construed to give to any person other than the Company and
the registered holders of the unexercised Warrant Certificates (which shall
include any transferee of all or any portion of the Warrants) any legal or
equitable right, remedy or claim under this Agreement, and this Agreement shall
be for the sole and exclusive benefit of the Company and such registered
holders.  Prior to the exercise of the Warrants, no holder of a Warrant
Certificate, as such, shall be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to receive dividends or
subscription rights, the right to vote, to consent, to exercise any preemptive
right, to receive any notice of meetings of stockholders for the election of
directors of the Company or any other matter or to receive any notice of any
proceedings of the Company, except as may be specifically provided for herein. 
The holders of the Warrants are not entitled to share in the assets of the
Company in the event of the liquidation, dissolution or winding up of the
Company’s affairs.

                    16.        Counterparts.  This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and such counterparts shall together constitute one
and the same instrument.

                    17.        Headings.  The headings in this Agreement are
intended solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.

                    18.        Remedies.  The Company and the holder hereof each
stipulates that the remedies at law of each party hereto in the event of any
default or threatened default by the other party in the performance or
compliance with any of the terms of this Warrant are not and will not

11

be adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

                    19.        Severability.  The provisions of this Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.

                    20.        Limitation of Liability; Not Stockholders.  No
provision of this Agreement shall be construed as conferring upon a registered
holder of Warrants the right to vote, consent, receive dividends or receive
notice, other than as herein expressly provided, in respect of meetings of
stockholders for the election of directors of the Company or any other matter
whatsoever as a stockholder of the Company.  No provision hereof, in the absence
of affirmative action by a registered holder of Warrants to purchase shares of
Common Stock, and no mere enumeration herein of the rights or privileges of a
registered holder of Warrants, shall give rise to any liability of such
registered holder for the purchase price of any Common Stock issued upon
exercise of the Warrant or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.

[Signature Page Follows]

12

                    IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.

 

PRIVATE BUSINESS, INC.

 

 

 

 

 

By:

/s/ Henry M. Baroco

 

 

--------------------------------------------------------------------------------

 

Name:

Henry M. Baroco

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

LIGHTYEAR PBI HOLDINGS, LLC

 

 

 

 

 

 

 

By:

/s/ Timothy Kacani

 

 

--------------------------------------------------------------------------------

 

Name:

Timothy Kacani

 

Title:

Chief Financial Officer