-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, En4rHnCVxSKt3vKedTzdO/OWp5sd1+pxFHBZuJ0CINiEFnQgzPK6VxRuot3nvwfo fDa9oMNqjdiC7PJgbUYgfw== 0000895345-99-000415.txt : 19990716 0000895345-99-000415.hdr.sgml : 19990716 ACCESSION NUMBER: 0000895345-99-000415 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990715 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICA SERVICE GROUP INC /DE CENTRAL INDEX KEY: 0000877476 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 210332317 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-42037 FILM NUMBER: 99665071 BUSINESS ADDRESS: STREET 1: 105 WESTPARK DR STREET 2: STE 300 CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: 6153733100 MAIL ADDRESS: STREET 1: 105 WESTPARK DR STREET 2: STE 300 CITY: BRENTWOOD STATE: TN ZIP: 37027 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HEALTHCARE CAPITAL PARTNERS LP CENTRAL INDEX KEY: 0001038823 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 061458417 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: THE MILL STREET 2: 10 GLENVILLE ST CITY: GREENWICH STATE: CT ZIP: 06831 BUSINESS PHONE: 2035328011 MAIL ADDRESS: STREET 1: THE MILL STREET 2: 10 GLENVILLE ST CITY: GREENWICH STATE: CT ZIP: 06831 SC 13D/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)* AMERICA SERVICE GROUP INC. - --------------------------------------------------------------------------- (Name of Issuer) - --------------------------------------------------------------------------- Common Stock, par value $.01 per share - --------------------------------------------------------------------------- (Title of Class of Securities) - --------------------------------------------------------------------------- 02364 L 109 - --------------------------------------------------------------------------- (CUSIP Number) DAVID A. FREEMAN DAVID A. FREEMAN HEALTH CARE CAPITAL PARTNERS L.P. HEALTH CARE EXECUTIVE PARTNERS L.P. c/o FERRER FREEMAN THOMPSON & CO. LLC c/o FERRER FREEMAN THOMPSON & CO. LLC THE MILL THE MILL 10 GLENVILLE STREET 10 GLENVILLE STREET GREENWICH, CT 06831 GREENWICH, CT 06831 (203) 532-8011 (203) 532-8011 - --------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 17, 1999 - --------------------------------------------------------------------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this Schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box |_|. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 02364 L 109 Page 2 of 6 Pages 1 NAME OF REPORTING PERSONS/S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Health Care Capital Partners L.P. TIN: 06-1458417 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (See Instructions) (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS (See Instructions) OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES 637,788 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 637,788 10 SHARED DISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 637,788 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES (See Instructions) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 15.0%; or, if Health Care Capital Partners L.P. and Health Care Executive Partners L.P. are deemed to be a group, 15.6% 14 TYPE OF REPORTING PERSON (See Instructions) PN SCHEDULE 13D CUSIP No. 02364 L 109 Page 3 of 6 Pages 1 NAME OF REPORTING PERSONS/S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Health Care Executive Partners L.P. TIN: 06-1477466 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (See Instructions) (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS (See Instructions) OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES 26,312 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 26,312 10 SHARED DISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 26,312 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES (See Instructions) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.6%; or, if Health Care Capital Partners L.P. and Health Care Executive Partners L.P. are deemed to be a group, 15.6% 14 TYPE OF REPORTING PERSON (See Instructions) PN This statement constitutes Amendment No. 1 to the statement on Schedule 13D, dated January 26, 1999 (the "Schedule 13D"), previously filed by Health Care Capital Partners L.P. ("HCCP") and Health Care Executive Partners L.P. ("HCEP"), Delaware limited partnerships, in respect of the common stock, par value $.01 per share ("Common Stock"), of America Service Group Inc., a Delaware corporation (the "Issuer"). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Schedule 13D. ITEM 4. ITEM 4 OF THE SCHEDULE 13D IS HEREBY AMENDED TO ADD THE FOLLOWING PARAGRAPH TO THE END THEREOF. On June 17, 1999, the Issuer, HCCP and HCEP entered into an Amendment to Securities Purchase Agreement (the "Amendment"). Pursuant to the Amendment, the Issuer agreed to redeem $7.5 million aggregate principal amount of the Notes on July 2, 1999 at a redemption price in cash equal to $7,660,000, which the parties agreed is the "Redemption Price" specified in Section 9.1 of the Securities Purchase Agreement, thereby reducing the aggregate principal amount of the Notes held by HCCP and HCEP from $15 million to $7.5 million. The Issuer also agreed that, other than the principal amount of the Notes to be redeemed pursuant to the Amendment, no other Notes shall be redeemable at the option of the Issuer unless (a) the Issuer shall have duly convened the Stockholders Meeting and (b) the Issuer shall then be permitted to defer the payment of penalty interest pursuant to section 8.3(b) of the Securities Purchase Agreement. The Amendment provides that, simultaneously with the payment of the Redemption Price, the Issuer shall execute and deliver an amended and restated Warrant Certificate to each of HCCP and HCEP. On July 2, 1999, the Issuer, HCCP and HCEP entered into a letter agreement, which provides that, notwithstanding such provision, the amended and restated Warrant Certificates, dated July 2, 1999, and amended and restated Notes, dated July 2, 1999, reflecting the amount redeemed shall be issued and delivered to HCCP and HCEP by the Issuer no later than July 16, 1999. Among others, each amended and restated Warrant Certificate amends the Warrant to provide that, upon the redemption of $7.5 million aggregate principal amount of the Notes by the Issuer, the Current Warrant Price shall be reduced to $.01 per share with respect to one-half of the warrants issued to the holder of the Warrant. Among others, the Amendment amends the Securities Purchase Agreement to provide that the Issuer shall have until August 31, 1999 to convene the Stockholders Meeting to permit stockholders to consider and vote upon the approval of the Stock Issuance. The Amendment further amends the Securities Purchase Agreement to provide that, for as long as HCCP and HCEP, their Affiliates and Affiliates of the general partner of HCCP and HCEP own the percentage of the aggregate Face Value of Preferred Stock issued under the Securities Purchase Agreement or Common Stock issuable upon conversion of such Preferred Stock specified in the table below, the Issuer shall fix and maintain the number of directors as specified in such table and shall take all necessary action to cause the appointment of the number of nominees of HCCP and HCEP specified in such table as members of the Board. If HCCP and HCEP own 25% or less of the aggregate Face Value of Preferred Stock issued under the Securities Purchase Agreement or Common Stock issuable upon conversion of such Preferred Stock, HCCP and HCEP shall not be entitled to any representation on the Board. The percentage of the aggregate Face Value of Preferred Stock issued under the Securities Purchase Agreement or Common Stock issuable upon conversion of such Preferred Stock shall be computed based on 200,000 shares of Preferred Stock, which represents the 150,000 shares of Preferred Stock issuable upon conversion of the Notes and the 50,000 shares of Preferred Stock issued under the Securities Purchase Agreement. HCCP and HCEP also agreed that their nominees shall be persons reasonably acceptable to the Issuer. Number of HCCP's and Percentage of Stock Size of Board HCEP's Directors ------------------- ------------- ---------------- Greater than or 9 3 equal to 62.5% Less than 62.5% but 8 2 greater than 33 1/3% Less than or equal to 7 1 33 1/3% but greater than 25% ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1: Amendment to Securities Purchase Agreement, dated June 17, 1999, among the Issuer, HCCP and HCEP. Exhibit 2: Letter Agreement, dated July 2, 1999, among the Issuer, HCCP and HCEP. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: July 15, 1999 HEALTH CARE CAPITAL PARTNERS L.P. By: FERRER FREEMAN THOMPSON & CO. LLC, its General Partner By: /s/ David A. Freeman -------------------------------------- Name: David A. Freeman Title: Member HEALTH CARE EXECUTIVE PARTNERS L.P. By: FERRER FREEMAN THOMPSON & CO. LLC, its General Partner By: /s/ David A. Freeman -------------------------------------- Name: David A. Freeman Title: Member Schedule II ----------- Joint Filing Agreement ---------------------- In accordance with Rule 13d-1(k) of Regulation 13D of the Securities Exchange Act of 1934, as amended, the persons or entities below agree to the joint filing on behalf of each of them of this Amendment No. 1 to Schedule 13D (including any and all amendments thereto) with respect to the Common Stock of America Service Group Inc. and further agree that this Joint Filing Agreement be included as an Exhibit to such joint filings. In evidence thereof the undersigned, being duly authorized, hereby execute this Agreement as of the 15th day of July, 1999. HEALTH CARE CAPITAL PARTNERS L.P. By: FERRER FREEMAN THOMPSON & CO. LLC, its General Partner By: /s/ David A. Freeman -------------------------------------- Name: David A. Freeman Title: Member HEALTH CARE EXECUTIVE PARTNERS L.P. By: FERRER FREEMAN THOMPSON & CO. LLC, its General Partner By: /s/ David A. Freeman -------------------------------------- Name: David A. Freeman Title: Member EXHIBIT INDEX ------------- Exhibit No. - ----------- 1. Amendment to Securities Purchase Agreement, dated June 17, 1999, among the Issuer, HCCP and HCEP. 2. Letter Agreement, dated July 2, 1999, among the Issuer, HCCP and HCEP. EX-1 2 AMENDMENT --------- TO -- SECURITIES PURCHASE AGREEMENT ----------------------------- THIS AMENDMENT, dated June 17, 1999 (this "Amendment") to that certain Securities Purchase Agreement, dated January 26, 1999 (the "Agreement"), by and among America Service Group Inc. ("ASG"), Health Care Capital Partners L.P. ("HCCP") and Health Care Executive Partners, L.P. ("HCEP," and together with HCCP, the "Purchasers"), is entered into by and among ASG and the Purchasers. The capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Agreement. WITNESSETH: ---------- WHEREAS, ASG intends to redeem $7.5 million of the Notes on or before July 9, 1999, pursuant to Section 9.1 of the Agreement; WHEREAS, the Purchasers agree to waive ASG's obligation to provide notice of such redemption in accordance with Section 9.3(a) of the Agreement; and WHEREAS, ASG and the Purchasers desire to amend the Agreement as set forth below; NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and sufficiency of which are acknowledged hereby, ASG and the Purchasers hereby agree as follows: 1. Redemption of Notes. ASG hereby agrees to redeem $7.5 million aggregate principal amount of the Notes on July 2, 1999 by paying $7,660,000, which the parties agree is the "Redemption Price" specified in Section 9.1 of the Agreement, to the Purchasers prior to 2:00 p.m. on such date. The Redemption Price shall be paid by wire transfer of immediately available funds to the Purchasers as follows: (i) $7,355,643 shall be paid to HCCP by wire transfer to Account No. 00-353-017 at Bankers Trust Company (ABA No. 021001033) and (ii) $304,357 shall be paid to HCEP by wire transfer to Account No. 00-358-096 at Bankers Trust Company (ABA No. 021001003). Simultaneously with the payment of the Redemption Price, ASG and the Purchasers shall execute and deliver amended and restated Warrant Certificates reflecting the amendments set forth in Exhibit "A" to this Amendment. Purchasers hereby waive the receipt of notice of redemption of the Notes pursuant to Section 9.3(a) of the Agreement. ASG hereby agrees that it will not take action to redeem any Notes and that no other Notes shall be redeemable at the option of the Company, other than the principal amount of the Notes to be redeemed pursuant to this Amendment, except in the event that (a) the Company shall have duly convened the Stockholders Meeting and (b) the Company shall then be entitled to defer the payment of penalty interest pursuant to the proviso of Section 8.3(b) of the Agreement. 2. Amendments to the Agreement. The Agreement is hereby amended as follows: (a) Section 6.12 - Board Membership. Section 6.12 shall be amended and restated to read as follows: For as long as the Purchasers and their Affiliates and Affiliates of the general partner of the Purchasers own the percentage of the aggregate Face Value of Preferred Stock issued hereunder or Common Stock issuable upon conversion of such Preferred Stock specified in the table below, the Company shall fix and maintain the number of directors as specified in such table and shall take all necessary action to cause the appointment of the number of nominees of the Purchasers specified in such table as members of the Board. If the Purchasers own 25% or less of the aggregate Face Value of Preferred Stock issued hereunder or Common Stock issuable upon conversion of such Preferred Stock, the Purchasers shall not be entitled to any representation on the Board. The percentage of the aggregate Face Value of Preferred Stock issued hereunder or Common Stock issuable upon conversion of such Preferred Stock shall be computed based on 200,000 shares of Preferred Stock, which represents the 150,000 shares of Preferred Stock issuable upon conversion of the Notes and the 50,000 shares of Preferred Stock issued hereunder. The Purchasers agree that their nominees shall be persons reasonably acceptable to the Company. Percentage Size of Number of Purchasers' of Stock Board Directors ---------- ------- --------------------- Greater than or 9 3 equal to 62.5% Less than 62.5% but 8 2 greater than 33-1/3% Less than or equal to 7 1 33 1/3% but greater than 25% So long as the Purchasers are entitled to designate directors pursuant to this Section 6.12, the Company shall cause the Board to appoint at least one Director designated by the Purchasers to the executive, audit and compensation committees of the Board and each other committee established by the Board. At each subsequent annual meeting for the election of directors, the Purchasers will be entitled to propose (and the Company will nominate and recommend) such persons nominated by the Purchasers as members of the Board. In the event of any vacancy arising by reason of the resignation, death, removal or inability to serve as the Purchasers' nominee, the Purchasers shall be entitled to designate a successor to fill each vacancy until the next annual meeting for the election of directors. The Company agrees that if such nominee or nominees is not elected, (i) the Purchasers will be entitled to have observational rights at all meetings of the Board of Directors and the Purchasers shall have the same access to information concerning the business and operations of the Company and its Subsidiairies at the same time as the directors of the Company and shall be entitled to participate in discussions and consult with the Board, without voting, and (ii) the Company will nominate and recommend such person or persons proposed by the Purchasers at each subsequent annual meeting until the nominee or nominees of the Purchasers has been elected to the Board. (b) Section 6A. The phrase "one-third (unless a greater percentage is required below) of shares of Preferred Stock issued or issuable hereunder" in Section 6A shall be amended by inserting at at the end of such phrase "based on 200,000 shares of Preferred Stock, which represents the 150,000 shares of Preferred Stock issuable upon conversion of the Notes and the 50,000 shares of Preferred Stock issued hereunder." (c) Section 6C. The phrase "at least 25% of the aggregate Face Value of Preferred Stock issued pursuant to this Agreement" in Section 6C shall be amended by inserting at the end of such phrase "based on 200,000 shares of Preferred Stock, which represents the 150,000 shares of Preferred Stock issuable upon conversion of the Notes and the 50,000 shares of Preferred Stock issued hereunder." (d) Section 6.3. The phrase "So long as the Purchasers hold Issuable Preferred Stock" in the first sentence of Section 6.3 shall be deleted and the phrase "So long as the Purchasers hold any shares of Preferred Stock issued hereunder or any shares of Common Stock issued upon conversion of the Preferred Stock issued hereunder" shall be inserted in lieu thereof. (e) Section 6.19. The reference to "no later than six months from the Closing Date" at the end of Section 6.19 shall be deleted and "no later than August 31, 1999" shall be inserted in lieu thereof. (f) Section 8.3. The reference to "July 26, 1999" in clauses (b)(ii) and (b)(iii) of Section 8.3 shall be deleted and "August 31, 1999" shall be inserted in lieu thereof. 3. Entire Agreement. The Agreement, as amended by this Amendment, sets forth the entire understanding of the parties with respect to the transaction contemplated hereby. 4. Effect of Amendment. On or after the date hereof, each reference in the Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like import, and each reference in any other documents entered into in connection with the Agreement, shall mean and be a reference to the Agreement, as amended hereby. 5. Ratification of Agreement. Except as specifically amended above, the Agreement shall remain in full force and effect and is hereby ratified and confirmed. 6. Governing Law. This Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York. 7. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, ASG and the Purchasers have caused this Amendment to be executed and delivered by their respective officers thereunto duly authorized. AMERICA SERVICE GROUP INC. By: /s/ Bruce A. Teal ----------------------------------- Bruce A. Teal Senior Vice President and Chief Financial Officer HEALTH CARE CAPITAL PARTNERS L.P. By: FERRER FREEMAN THOMPSON & CO., its General Partner By: /s/ David A. Freeman ------------------------------ David A. Freeman Member HEALTH CARE EXECUTIVE PARTNERS L.P. By: FERRER FREEMAN THOMPSON & CO., its General Partner By: /s/ David A. Freeman ------------------------------ David A. Freeman Member Exhibit "A" ----------- AMENDMENT TO WARRANT NO. 1 THIS AMENDMENT, dated July 2, 1999 (this "Amendment"), to Warrant No. 1, dated January 26, 1999 (the "Warrant"), whereby Health Care Capital Partners L.P. ("HCCP") is entitled to purchase from America Service Group Inc. ("ASG") 129,640 shares of the Common Stock, par value $0.01 per share, of ASG, is entered into by and among HCCP and ASG. The capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Warrant. WITNESSETH: ---------- WHEREAS, ASG has redeemed $7.5 million of the Notes on July 2, 1999, pursuant to Section 9.1 of the Securities Purchase Agreement (the "Agreement"); WHEREAS, ASG and HCCP agree that upon such redemption the Current Warrant Price shall be reduced to $.01 per share with respect to one-half of the Warrants issued under the Warrant; and WHEREAS, ASG and HCCP desire to amend the Warrant as set forth below; NOW, THEREFORE, in consideration of good valuable consideration, the receipt and sufficiency of which are acknowledged hereby, ASG and HCCP hereby agree to amend the Warrant as follows: 1. Section 4 - Adjustments. Clauses (a)(i) and (a)(ii) of Section 4.2 are amended by the deletion therefrom of the references of "July 26, 1999", and by the substitution of "August 31, 1999", for such date. Section 4.2 is further amended to add the following subsection: (c) notwithstanding Section 4.2 (b) (iii), upon the redemption of $7.5 million aggregate principal amount of the Notes on July 2, 1999 by the Company, the Current Warrant Price shall be reduced to $.01 per share with respect to one-half of the warrants issued to the Holder under this Warrant. The exercise price of the remaining warrants shall be determined in accordance with the other provisions of Section 4 of this Warrant. 2. Entire Agreement. The Warrant, as amended by this Amendment, sets forth the entire understanding of the parties with respect to the warrants issued to HCCP under the Agreement. 3. Effect of Amendment. On or after the date hereof, each reference in the Warrant to "this Warrant," "hereunder," "hereof," "herein," or words of like import, and each reference in any other documents entered into in connection with the Warrant, shall mean and be a reference to the Agreement, as amended hereby. 4. Ratification of Agreement. Except as specifically amended above, the Agreement shall remain in full force and effect and is hereby ratified and confirmed. 5. Governing Law. The Warrant and this Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York. 6. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, ASG and HCCP have caused this Amendment to be executed and delivered by their respective officers thereunto duly authorized. AMERICA SERVICE GROUP INC. By: -------------------------------------- Bruce A. Teal Senior Vice President and Chief Financial Officer HEALTH CARE CAPITAL PARTNERS L.P. By: FERRER FREEMAN THOMPSON & CO., its General Partner By: ---------------------------------- David A. Freeman Member AMENDMENT TO WARRANT NO. 2 THIS AMENDMENT, dated July 2, 1999 (this "Amendment"), to Warrant No. 2, dated January 26, 1999 (the "Warrant"), whereby Health Care Executive Partners, L.P. ("HCEP") is entitled to purchase from America Service Group Inc. ("ASG") 5,360 shares of the Common Stock, par value $0.01 per share, of ASG, is entered into by and among HCEP and ASG. The capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Warrant. WITNESSETH: ---------- WHEREAS, ASG has redeemed $7.5 million of the Notes on July 2, 1999, pursuant to Section 9.1 of the Securities Purchase Agreement (the "Agreement"); WHEREAS, ASG and HCEP agree that upon such redemption the Current Warrant Price shall be reduced to $.01 per share with respect to one-half of the Warrants issued under the Warrant; and WHEREAS, ASG and HCEP desire to amend the Warrant as set forth below; NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and sufficiency of which are acknowledged hereby, ASG and HCEP hereby agree to amend the Warrant as follows: 1. Preamble. The reference to "129,640 shares of Common Stock" in the preamble shall be deleted and "5,360 shares of Common Stock" shall be inserted in lieu thereof. 2. Section 4 - Adjustments. Clauses (a)(i) and (a)(ii) of Section 4.2 are amended by the deletion therefrom of the references to "July 26, 1999", and by the substitution of "August 31, 1999", for such date. Section 4.2 is further amended to add the following subsection: (c) notwithstanding Section 4.2(b)(iii), upon the redemption of $7.5 million aggregate principal amount of the Notes on July 2, 1999 by the Company, the Current Warrant Price shall be reduced to $.01 per share with respect to one-half of the warrants issued to the Holder under this Warrant. The exercise price of remaining warrants shall be determined in accordance with the other provisions of Section 4 of this Warrant. 3. Entire Agreement. The Warrant, as amended by this Amendment, sets forth the entire understanding of the parties with respect to the warrants issued to HCEP under the Agreement. 4. Effect of Amendment. On or after the date hereof, each reference in the Warrant to "this Warrant," "hereunder," "hereof," "herein," or words of like import, and each reference in any other documents entered into in connection with the Warrant, shall mean and be a reference to the Agreement, as amended hereby. 5. Ratification of Agreement. Except as specifically amended above, the Agreement shall remain in full force and effect and is hereby ratifed and confirmed. 6. Governing Law. The Warrant and this Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York. 7. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, ASG and HCEP have caused this Amendment to be executed and delivered by their respective officers thereunto duly authorized. AMERICA SERVICE GROUP INC. By: -------------------------------------- Bruce A. Teal Senior Vice President and Chief Financial Officer HEALTH CARE EXECUTIVE PARTNERS L.P. By: FERRER FREEMAN THOMPSON & CO., its General Partner By: ---------------------------------- David A. Freeman Member EX-2 3 HEALTH CARE CAPITAL PARTNERS L.P. and HEALTH CARE EXECUTIVE PARTNERS L.P. The Mill 10 Glenville Street Greenwich, CT 06831 July 2, 1999 BY FACSIMILE - ------------ America Service Group Inc. 105 Westpark Drive, Suite 300 Brentwood, TN 37027 Re: Issuance of Notes and Warrant Certificates ------------------------------------------ Reference is made to the Amendment to Securities Purchase Agreement, dated June 17, 1999 (the "Amendment"), among America Service Group Inc. ("ASG"), Health Care Capital Partners L.P. ("HCCP") and Health Care Executive Partners L.P. ("HCEP," and together with HCCP, the "Purchasers"). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Amendment. Section 1 of the Amendment provides that 1) ASG shall redeem $7.5 million aggregate principal amount of the Notes on July 2, 1999 by paying the Redemption Price to the Purchasers; and 2) simultaneously with the payment of the Redemption Price, ASG shall execute and deliver to the Purchasers amended and restated Warrant Certificates reflecting the amendments set forth in Exhibit A to the Amendment (the "Amended Warrant Certificates"). By this letter, we are confirming that notwithstanding Section 1 of the Amendment, ASG and the Purchasers have agreed that 1) ASG shall pay the Redemption Price to the Purchasers on July 2, 1999; and 2) no later than July 16, 1999, ASG shall issue and deliver to the Purchasers a) the Amended Warrant Certificates, dated as of July 2, 1999 and b) amended and restated Notes, dated as of July 2, 1999, reflecting the principal amount redeemed. In addition, notwithstanding the later delivery of the Amended Warrant Certificates, ASG and the Purchasers agree that the Amended Warrant Certificates shall be effective as of July 2, 1999. If you are in agreement with the foregoing, please execute this letter in duplicate and return one signed original to the undersigned at the address set forth above. HEALTH CARE CAPITAL PARTNERS L.P. By: FERRER FREEMAN THOMPSON & CO. LLC, its General Partner By: /s/ David A. Freeman -------------------------------- Name: David A. Freeman Title: Member HEALTH CARE EXECUTIVE PARTNERS L.P. By: FERRER FREEMAN THOMPSON & CO. LLC, its General Partner By: /s/ David A. Freeman -------------------------------- Name: David A. Freeman Title: Member Accepted and Agreed to as of July 2, 1999 AMERICA SERVICE GROUP INC. By: /s/ Jean L. Byassee ---------------------------- Name: Jean L. Byassee Title: General Counsel -----END PRIVACY-ENHANCED MESSAGE-----