AMERICA SERVICE GROUP INC /DE, 8-K, 1997-10-02

AMERICA SERVICE GROUP INC /DE
8-K, 1997-10-02
MISC HEALTH & ALLIED SERVICES, NEC

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): October 1, 1997

AMERICA SERVICE GROUP INC.
(Exact Name of Registrant as Specified in its Charter)

DELAWARE
(State or Other Jurisdiction of Incorporation)

0-19673 51-0332317
(Commission File No.) (I.R.S. Employer Identification No.)

105 Westpark Drive, Suite 300
Brentwood, Tennessee 37027
(Address of Principal Executive Offices)

(615) 373-3100
(Registrant's Telephone Number, Including Area Code)

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Item 5. Other Events

On October 1, 1997, America Service Group Inc. (the "Company") executed
a Plan and Agreement of Merger (the "Merger Agreement") with MedPartners, Inc.,
a Delaware corporation ("MedPartners"), pursuant to which a wholly owned
subsidiary of MedPartners will be merged with and into the Company (the
"Merger"). Pursuant to the Merger Agreement, each share of Common Stock of the
Company will be converted into and represent the right to receive .71 shares of
common stock, par value $.001 per share, of MedPartners. The Merger is
conditioned upon, among other things, approval by stockholders of the Company
and upon certain regulatory approvals. The Merger Agreement is attached as
Exhibit 2.1 hereto and its terms are hereby incorporated herein by reference.

On October 1, 1997, MedPartners and the Company issued a press release
relating to the execution of the Merger Agreement. A copy of the press release
is attached hereto as Exhibit 99.1 and is hereby incorporated herein by
reference.

Item 7. Financial Statements and Exhibits.

2.1 Plan and Agreement of Merger, dated October 1,
1997, by and among America Service Group Inc.,
MedPartners, Inc. and ASG Merger Corporation, a
wholly owned subsidiary of MedPartners, Inc.

99.1 Press Release of MedPartners, Inc. and America
Service Group Inc., dated October 1, 1997.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

AMERICA SERVICE GROUP INC.

/s/ MICHAEL CATALANO
-----------------------------------
By: Michael Catalano
Executive Vice President and
General Counsel

Dated: October 1, 1997

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EXHIBIT 2.1

================================================================================

PLAN AND AGREEMENT OF MERGER
DATED AS OF OCTOBER 1, 1997
BY AND AMONG
MEDPARTNERS, INC.,
ASG MERGER CORPORATION
AND
AMERICA SERVICE GROUP INC.

================================================================================
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TABLE OF CONTENTS

PLAN AND AGREEMENT OF MERGER
BY AND AMONG
MEDPARTNERS, INC.,
ASG MERGER CORPORATION,
AND
AMERICA SERVICE GROUP INC.

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Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1. The Merger.
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Section 2. Effect of the Merger on the Capital Stock of the Constituent Corporations; Exchange of Certificates.
2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Certificate of Incorporation of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 By-laws of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Directors and Officers of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Assets, Liabilities, Reserves and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Corporate Acts of the Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Section 3. Representations and Warranties of ASG
3.1 Organization, Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 ASG Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Foreign Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 ASG Public Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 Contracts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Properties and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>

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3.10 Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Employee Benefit Plans; Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Compliance with Laws in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.16 Commissions and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.17 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.18 Pooling Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.19 No Untrue Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20 Medicare and Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 4. Representations and Warranties of the Subsidiary
4.1 Organization, Existence and Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Commissions and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section 5. Representations and Warranties of MedPartners
5.1 Organization, Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 MedPartners Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 MedPartners Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 Subsidiaries and Affiliated Entities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.5 Organization, Existence and Good Standing of MedPartners Subsidiaries and Other MedPartners Entities 15
5.6 Foreign Qualifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.7 Subsidiary Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.8 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.9 MedPartners Public Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.10 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.11 Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.12 Compliance with Laws in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.13 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.14 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.15 Commissions and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.16 No Stockholder Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.17 No Untrue Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 6. Access to Information and Documents
6.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Return of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Effect of Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>

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<TABLE>
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Section 7. Covenants
7.1 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Material Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.4 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.5 Exemption from State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6 HSR Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.7 Public Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.8 Resignation of ASG Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.9 Notice of Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.10 No Solicitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.11 Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.12 Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.13 Pooling and Tax-Free Reorganization Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.14 Affiliate and Pooling Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.15 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.16 ASG Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.17 Publication of Combined Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Section 8. Termination, Amendment and Waiver
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.5 Procedure for Termination, Amendment, Extension or Waiver . . . . . . . . . . . . . . . . . . . . . 28
8.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Section 9. Conditions to Closing
9.1 Mutual Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Conditions to Obligations of MedPartners and the Subsidiary . . . . . . . . . . . . . . . . . . . . 29
9.3 Conditions to Obligations of ASG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Section 10. Miscellaneous
10.1 Nonsurvival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.6 "Including" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.7 "Knowledge" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.8 "Material adverse change" or "material adverse effect" . . . . . . . . . . . . . . . . . . . . . . . 33
10.9 "Hazardous Materials" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>

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<TABLE>
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10.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.12 Integration of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.15 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.16 No Rule of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Testimonium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>

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PLAN AND AGREEMENT OF MERGER

PLAN AND AGREEMENT OF MERGER ("Plan of Merger"), made and entered into
as of the 1st day of October 1997, by and among MEDPARTNERS, INC., a Delaware
corporation ("MedPartners"), ASG MERGER CORPORATION, a Delaware corporation
(the "Subsidiary") and AMERICA SERVICE GROUP INC., a Delaware corporation
("ASG") (the Subsidiary and ASG being sometimes collectively referred to herein
as the "Constituent Corporations").

W I T N E S S E T H:

WHEREAS, the respective Boards of Directors of MedPartners, the
Subsidiary and ASG have approved the merger of the Subsidiary with and into ASG
(the "Merger"), upon the terms and conditions set forth in this Plan of Merger,
whereby each share of Common Stock of ASG (the "ASG Common Stock"), not owned
directly or indirectly by ASG, will be converted into the right to receive the
Merger Consideration (as herein defined) (the ASG Common Stock may be sometimes
hereinafter referred to as the "ASG Shares");

WHEREAS, each of MedPartners, the Subsidiary and ASG desire to make
certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the Merger;

WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code"); and

WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a "pooling of interests".

NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein, the parties hereto do hereby agree
as follows:

Section 1. THE MERGER.

1.1 The Merger. Upon the terms and conditions set forth in this
Plan of Merger, and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL"), the Subsidiary shall be merged into ASG at the
Effective Time (as defined in Section 1.3). Following the Effective Time, the
separate corporate existence of the Subsidiary shall cease and ASG shall
continue as the surviving corporation (the "Surviving Corporation") as a
business corporation incorporated under the laws of the State of Delaware under
the name America Service Group Inc.

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and shall succeed to and assume all the rights and obligations of the
Subsidiary and ASG in accordance with the DGCL.

1.2 The Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. Central Time on a date to be specified by the parties
(the "Closing Date"), which shall be no later than the second business day
after satisfaction of the conditions set forth in Sections 9.1, 9.2 and 9.3,
but in no event later than March 31, 1998, at the offices of Haskell Slaughter
& Young, L.L.C., Birmingham, Alabama, unless another date or place is agreed to
in writing by the parties hereto.

1.3 Effective Time. Subject to the provisions of this Plan of
Merger, ASG and the Subsidiary shall file a Certificate of Merger in accordance
with the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL and as soon as practicable on or after the
Closing Date. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State or at
such other time as the Subsidiary and ASG shall agree should be specified in
the Certificate of Merger (the "Effective Time").

1.4 Effect of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.

Section 2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES.

2.1 Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of any holder of shares of ASG
Common Stock or any shares of capital stock of the Subsidiary:

(a) Subsidiary Common Stock. Each share of capital stock of the
Subsidiary issued and outstanding immediately prior to the Effective Time of
the Merger shall be converted into one issued and outstanding and nonassessable
share of Common Stock of the Surviving Corporation.

(b) Cancellation of Treasury Stock. Each share of ASG Common
Stock that is owned by ASG shall automatically be canceled and retired and
shall cease to exist, and none of the Common Stock, par value $.001 per share,
of MedPartners (the "MedPartners Common Stock"), cash or other consideration
shall be delivered in exchange therefor.

(c) Conversion of ASG Shares. At the Effective Time, each ASG
Shares (other than the ASG Shares to be canceled in accordance with Section
2.1(b)) issued and outstanding immediately prior to the Effective Time, shall
be converted into the right to receive 0.71 shares of MedPartners Common Stock
(the "Exchange Ratio"), including the corresponding right (the "MedPartners
Right"), with respect to each share of MedPartners Common Stock, to purchase
one

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one-hundredth of a share of Series C Junior Participating Preferred Stock, par
value $.001 per share (the "MedPartners Series C Preferred Stock") of
MedPartners pursuant to the terms of the Stockholders Rights Agreement, dated
as of March 1, 1995, among MedPartners, Inc., now MP of Delaware, Inc. and a
wholly owned subsidiary of MedPartners, Inc. and Chemical Bank, a national
banking association, as it may be amended from time to time (the "MedPartners
Rights Agreement"). All such shares of MedPartners Common Stock shall be fully
paid and nonassessable and, together with the MedPartners Rights, are
hereinafter sometimes referred to as the "MedPartners Shares." Upon such
conversion, all such ASG Shares shall be canceled and cease to exist, and each
holder thereof shall cease to have any rights with respect thereto other than
the right to receive the MedPartners Shares issued in exchangetherefor and cash
in lieu of fractional MedPartners Shares in accordance with the terms provided
herein. Prior to the Rights Distribution Date (as defined in the MedPartners
Rights Agreement) and unless the context otherwise requires, all references in
this Agreement to the MedPartners Stock shall be deemed to include the
MedPartners Rights.

(d) Stock Options. At the Effective Time, all rights with respect
to ASG Common Stock pursuant to any ASG stock options which are outstanding at
the Effective Time, whether or not then vested or exercisable, shall be
converted into and become rights with respect to MedPartners Common Stock, and
MedPartners shall assume each ASG stock option in accordance with the terms of
any stock option plan under which it was issued and any stock option agreement
by which it is evidenced. It is intended that the foregoing provisions shall
be undertaken in a manner that will not constitute a "modification" as defined
in Section 425 of the Code, as to any stock option which is an "incentive stock
option." Each ASG stock option so assumed shall be exercisable for that number
of shares of the MedPartners Common Stock equal to the number of the ASG Shares
subject thereto multiplied by the Exchange Ratio, and shall have an exercise
price per share equal to the ASG exercise price divided by the Exchange Ratio.

(e) Anti-Dilution Provisions. If after the date hereof and prior
to the Effective Time MedPartners shall have declared a stock split (including
a reverse split) of MedPartners Common Stock or a dividend payable in
MedPartners Common Stock, or any other distribution of securities or dividend
(in cash or otherwise) to holders of MedPartners Common Stock with respect to
their MedPartners Common Stock (including without limitation such a
distribution or dividend made in connection with a recapitalization,
reclassification, merger, consolidation, reorganization or similar transaction)
then the Merger Consideration shall be appropriately adjusted to reflect such
stock split, dividend or other distribution of securities.

2.2 Exchange of Certificates. (a) Exchange Procedures. As soon
as reasonably practicable, but no later than ten business days after the
Effective Time, MedPartners' exchange agent (the "Exchange Agent") shall mail
to the holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding ASG Shares (the
"Certificates") whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 2.1, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the

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<PAGE> 9

Certificates to the Exchange Agent and shall be in such form and have such
other customary provisions as MedPartners may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of MedPartners Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor a certificate representing
that number of whole shares of MedPartners Common Stock which such holder has
the right to receive pursuant to the provisions of this Section 2, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of ASG Shares which is not registered in the transfer
records of ASG, a certificate representing the proper number of shares of
MedPartners Common Stock may be issued to a person other than the person in
whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes required
by reason of the issuance of shares of MedPartners Common Stock to a person
other than the registered holder of such Certificate or establish to the
satisfaction of MedPartners that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of MedPartners
Common Stock and cash in lieu of any fractional shares of MedPartners Common
Stock as contemplated by this Section 2.2. No interest will be paid or will
accrue on any cash payable in lieu of any fractional shares of MedPartners
Common Stock. To the extent permitted by law, the former shareholder of record
of ASG shall be entitled to vote after the Effective Time at any meeting of
MedPartners stockholders the number of whole shares of MedPartners Common Stock
into which his respective ASG Shares are converted, regardless of whether such
holder has exchanged his Certificates for certificates representing MedPartners
Common Stock in accordance with this Section 2.2.

(b) No Further Ownership Rights in ASG Shares. All shares of
MedPartners Common Stock issued upon the surrender for exchange of Certificates
in accordance with the terms of this Section 2 (including any cash paid
pursuant to Section 2.2(c)) shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to the ASG Shares theretofore
represented by such Certificates.

(c) No Fractional Shares. No certificates or scrip representing
fractional shares of MedPartners Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a stockholder of
MedPartners. Notwithstanding any other provision of this Plan of Merger, the
holder of shares of ASG Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of MedPartners
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of MedPartners Common Stock multiplied
by the MedPartners Trading Price.

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<PAGE> 10

2.3 Certificate of Incorporation of Surviving Corporation. In
accordance with Section 251(e) of the DGCL, the certificate of incorporation of
ASG shall be amended and restated at the Effective Time in the manner provided
in Section 251(c)(4) of the DGCL such that from and after the Effective Time
the Certificate of Incorporation of ASG shall be identical to the Certificate
of Incorporation of the Subsidiary except that such Certificate of
Incorporation shall provide that the Surviving Corporation's name is "American
Service Group Inc."

2.4 By-laws of the Surviving Corporation. The By-laws of the
Subsidiary shall be the By-laws of the Surviving Corporation from and after the
Effective Time and until thereafter altered, amended or repealed in accordance
with the DGCL, the Articles of Incorporation of the Surviving Corporation and
the said By-laws.

2.5 Directors and Officers of the Surviving Corporation. The
directors and officers of the Subsidiary immediately prior to the Effective
Time shall be the directors and officers of the Surviving Corporation, each to
hold office in accordance with the Articles of Incorporation and By-laws of the
Surviving Corporation.

2.6 Assets, Liabilities, Reserves and Accounts. At the Effective
Time, the assets, liabilities, reserves and accounts of each of the Subsidiary
and ASG shall be taken up on the books of the Surviving Corporation at the
amounts at which they respectively are carried on the books of said
corporations immediately prior to the Effective Time, except as otherwise set
forth in this Plan of Merger and subject to such adjustments, or elimination of
intercompany items, as may be appropriate in giving effect to the Merger in
accordance with generally accepted accounting principles.

2.7 Corporate Acts of the Subsidiary. All corporate acts, plans,
policies, approvals and authorizations of the Subsidiary, its stockholder, its
Board of Directors, committees elected or appointed by the Board of Directors,
and all officers and agents, valid immediately prior to the Effective Time,
shall be those of the Surviving Corporation and shall be as effective and
binding thereon as they were with respect to the Subsidiary to the extent not
inconsistent with the terms of this Plan of Merger.

Section 3. REPRESENTATIONS AND WARRANTIES OF ASG.

ASG hereby represents and warrants to MedPartners and the Subsidiary
as follows:

3.1 Organization, Existence and Good Standing. ASG is a Delaware
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. ASG has all necessary corporate power to own
its properties and assets and to carry on its business as presently conducted.
ASG does not, and has not within the two years immediately preceding the date
of this Plan of Merger owned, directly or indirectly, any shares of MedPartners
Common Stock or Common Stock of the Subsidiary.

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<PAGE> 11

3.2 ASG Capital Stock. ASG's authorized capital consists of (i)
10,000,000 shares of Common Stock, par value $.01 per share, of which 3,518,711
shares are issued and outstanding as of the date of this Plan of Merger and no
shares are held in treasury and (ii) 2,000,000 shares of Preferred Stock, par
value $.01 per share, of which no shares are issued and outstanding as of the
date of this Plan of Merger and no shares are held in treasury. All of the
issued and outstanding ASG Shares are duly and validly issued, fully paid and
nonassessable. Except as set forth in Exhibit 3.2 to the Disclosure Schedule
delivered to MedPartners and the Subsidiary by ASG at the time of the execution
and delivery of this Plan of Merger (the "ASG Disclosure Schedule"), there are
no options, warrants, or similar rights granted by ASG or any other agreements
to which ASG is a party providing for the issuance or sale by it of any
additional securities which would remain in effect after the Effective Time.
There is no liability for dividends declared or accumulated but unpaid with
respect to any of the ASG Shares. ASG has not made any distributions to any
holders of ASG Shares or participated in or effected any issuance, exchange or
retirement of ASG Shares, or otherwise changed the equity interests of the
holder of ASG Shares in contemplation of effecting the Merger within the two
years immediately preceding the date of this Plan of Merger. Any ASG Shares
that ASG has re-acquired during the two years immediately preceding the date of
this Plan of Merger have been so re-acquired only for purposes other than
"business combinations", as such term is defined in Accounting Principles Board
Opinion No. 16, as amended ("Business Combinations").

3.3 Subsidiaries. Except as set forth on Exhibit 3.3 to the ASG
Disclosure Schedule, ASG does not own stock in and does not control, directly
or indirectly, any other corporation, association or business organization.
Except as set forth on Exhibit 3.3 to the ASG Disclosure Schedule, ASG does not
own an equity interest in, nor does ASG control, directly or indirectly, any
other joint venture or partnership. The outstanding shares of capital stock or
other equity interests of each ASG subsidiary have been duly authorized and are
validly issued, fully paid and nonassessable. Except as set forth on Exhibit
3.3 to the ASG Disclosure Schedule, all shares of Capital Stock or other equity
interest of each ASG subsidiary owned by ASG or any of its subsidiaries are
owned by ASG, either directly or indirectly, free and clear of all liens,
encumbrances, equities and claims.

3.4 Foreign Qualifications. ASG shall take all actions necessary
and requested by MedPartners to assist MedPartners in ensuring that within
thirty (30) days after the Closing Date ASG is qualified to do business and is
in good standing in each jurisdiction where the nature or character of the
property owned, leased or operated by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure
to so qualify would not have a material adverse effect on its business or
operations.

3.5 Power and Authority. Subject to the satisfaction of the
conditions precedent set forth herein, ASG has the corporate power to execute,
deliver and perform this Plan of Merger and all agreements and other documents
executed and delivered or to be executed and delivered by it pursuant to this
Plan of Merger, and, subject to the satisfaction of the conditions precedent
set forth herein has taken all action required by its Amended and Restated
Certificate of

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<PAGE> 12

Incorporation, By-laws or otherwise, to authorize the execution, delivery and
performance of this Plan of Merger and such related documents. Except as set
forth in Exhibit 3.5 to the ASG Disclosure Schedule, the execution and delivery
of this Plan of Merger does not and, subject to the receipt of required
stockholder and regulatory approvals and any other required third-party
consents or approvals, the consummation of the Merger will not, violate any
provisions of the Amended and Restated Certificate of Incorporation or Bylaws
of ASG or any provisions of, or result in the acceleration of any obligation
under, any mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree, to which ASG is a party, or by which it is bound, or
violate any restrictions of any kind to which it is subject which, if violated
or accelerated would have a material adverse effect on ASG.

3.6 ASG Public Information. ASG has heretofore made available to
MedPartners a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by it with the Securities and
Exchange Commission (the "SEC") (as any such documents have since the time of
their original filing been amended, the "ASG Documents") since January 1, 1996,
which are all the documents (other than preliminary material) that it was
required to file with the SEC since such date. As of their respective dates,
the ASG Documents did not contain any untrue statements of material facts or
omit to state material facts required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the ASG Documents complied
in all material respects with the applicable requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated under such statutes. The financial statements contained in the ASG
Documents, together with the notes thereto, have been prepared in accordance
with generally accepted accounting principles consistently followed throughout
the periods indicated (except as may be indicated in the nates thereto, or, in
the case of the unaudited financial statements, as permitted by Form 10-Q),
reflect all known liabilities of ASG and its consolidated subsidiaries, fixed
or contingent, required to be stated therein, and present fairly the financial
condition of ASG and its consolidated subsidiaries at such dates and the
consolidated results of operations and cash flows of ASG and its consolidated
subsidiaries for the periods then ended. The consolidated balance sheet of ASG
at June 30, 1997, included in the Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1997 of ASG is herein sometimes referred to as the "ASG
Balance Sheet."

3.7 Contracts, etc. (a) Except as set forth in Exhibit 3.7 to the
ASG Disclosure Schedule, to ASG's knowledge, all material contracts, leases,
agreements and arrangements to which ASG is a party are (i) legally valid and
binding in accordance with their terms, (ii) in full force and effect, and
(iii) do not violate any federal, state or local law, rule, regulation or
ordinance, and ASG has provided MedPartners and the Subsidiary with copies of
all such documents. To the knowledge of ASG, (i) all parties to such
contracts, leases, agreements and arrangements are in compliance with the
provisions of such contracts, leases, agreements and arrangements, (ii) no
party is in default under such contract, lease agreement or arrangement, and no
event has occurred which, but for the passage of time or the giving of notice
or both, would constitute a

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<PAGE> 13

default thereunder, except, in each case, where the invalidity of the lease,
contract, agreement or arrangement or the default or breach thereunder or
thereof would not, individually or in the aggregate, have a material adverse
effect on ASG, and (iii) except as set forth in Exhibit 3.7 to the ASG
Disclosure Schedule, ASG has not received any notice of termination or
cancellation or a request to renegotiate any material contracts, leases,
agreements or arrangements.

(a) Except as set forth in Exhibit 3.7 to the ASG Disclosure
Schedule, no contract or agreement to which ASG is a party will, by its terms,
terminate as a result of the transactions contemplated hereby or require any
consent from any obligor thereto in order to remain in full force and effect
immediately after the Effective Time, except for contracts or agreements which,
if terminated, would not have a material adverse effect on ASG. Set forth on
Exhibit 3.7 to the ASG Disclosure Schedule is a list of all material contracts
to which ASG is a party which cannot be terminated on 90 days notice, without
cause.

(b) Except as set forth in Exhibit 3.7 to the ASG Disclosure
Schedule, ASG has not granted any right of first refusal or similar right in
favor of any third party with respect to any material portion of its properties
or assets (excluding liens described in Section 3.8) or entered into any
non-competition agreement or similar agreement restricting its ability to
engage in any business in any location.

3.8 Properties and Assets. ASG owns or leases all of the real and
personal property included in the ASG Balance Sheet (except assets recorded
under capital lease obligations and such property as has been disposed of
during the ordinary course of ASG's business since the date of the ASG Balance
Sheet), free and clear of any liens, claims, charges, exceptions or
encumbrances, except for those (i) if any, which in the aggregate are not
material and which do not materially affect the continued use of such property,
or (ii) which are set forth in Exhibit 3.8 to the ASG Disclosure Schedule.

3.9 Legal Proceedings. Except as listed in Exhibit 3.9 to the ASG
Disclosure Schedule, there are no actions, suits or proceedings pending or, to
the knowledge of ASG, threatened against ASG, at law or in equity, relating to
or affecting ASG, including the ability of ASG to consummate the Merger. ASG
does not know of any justification for any such action, suit or proceeding.

3.10 Subsequent Events. Except as set forth in Exhibit 3.10 to the
ASG Disclosure Schedule or as contemplated by this Plan of Merger, ASG has not,
since the date of the ASG Balance Sheet:

(a) Incurred any material adverse change.

(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise), which discharge or
satisfaction would have a material adverse effect on

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<PAGE> 14

ASG, other than (i) liabilities shown or reflected on the ASG Balance
Sheet or (ii) liabilities incurred since the date of the ASG Balance
Sheet in the ordinary course of business.

(c) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor which
would have a material adverse effect on ASG, except as may have been
required due to income or operations of ASG since the date of the ASG
Balance Sheet.

(d) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets, tangible or intangible, which
assets are material to the business or financial condition of ASG.

(e) Sold or transferred any of the assets material to the
consolidated business of ASG, canceled any material debts or claims or
waived any material rights, except in the ordinary course of business.

(f) Granted any general or uniform increase in the rates
of pay of employees or any material increase in salary payable or to
become payable by ASG to any officer or employee, consultant or agent
(other than normal increases consistent with past practices), or by
means of any bonus or pension plan, contract or other commitment,
increased in a material respect the compensation of any officer,
employee, consultant or agent.

(g) Except for this Plan of Merger and any other
agreement executed and delivered pursuant to this Plan of Merger,
entered into any material transaction other than in the ordinary
course of business or permitted under other Sections of this Plan of
Merger.

(h) Issued any stock, bonds or other securities or any
options or rights to purchase any of its securities.

3.11 Accounts Receivable. Since the date of the ASG Balance Sheet,
ASG has not changed any principle or practice with respect to the recordation
of accounts receivable or the calculation of reserves therefor, or any material
collection, discount or write-off policy or procedure. ASG is in compliance
with the terms and conditions of all third-party payor arrangements relating
to its accounts receivable, except to the extent that such noncompliance would
not have a material adverse effect on ASG.

3.12 Tax Returns. ASG has filed all tax returns required to be
filed by it or requests for extensions to file such returns or reports have
been timely filed and granted and have not expired, except to the extent that
such failures to file, taken together, do not have a material adverse effect on
ASG. ASG has made all payments shown as due on such returns. ASG has not been
notified

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<PAGE> 15

that any tax returns of ASG are currently under audit by the Internal Revenue
Service or any state or local tax agency and has received no notice of any
claimed tax liability of ASG or any ASG shareholder. No agreements have been
made by ASG for the extension of time or the waiver of the statute of
limitations for the assessment or payment of any federal, state or local taxes.

3.13 Employee Benefit Plans; Employment Matters. (a) Except as
set forth in Exhibit 3.13(a) to the ASG Disclosure Schedule, ASG has neither
established nor maintained nor is obligated to make contributions to or under
or otherwise participate in (i) any bonus or other type of incentive
compensation plan, program or arrangement (whether or not set forth in a
written document), (ii) any pension, profit-sharing, retirement or other plan,
program or arrangement, or (iii) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of
ERISA. All such plans listed in Exhibit 3.13(a) (individually, a "ASG Plan"
and collectively, the "ASG Plans") have been operated and administered in all
material respects in accordance with, as applicable, ERISA, the Code, the Age
Discrimination in Employment Act of 1967, as amended, and the related rules and
regulations adopted by those federal agencies responsible for the
administration of such laws. No act or failure to act by ASG has resulted in a
"prohibited transaction" (as defined in ERISA) with respect to the ASG Plans
that is not subject to a statutory or regulatory exception and that could have
a material adverse effect on ASG. No "reportable event" (as defined in ERISA,
but excluding any event for which notice is waived under the ERISA regulations)
has occurred with respect to any of the ASG Plans which is subject to Title IV
of ERISA. ASG has not previously made, is not currently making, and is not
obligated in any way to make, any contributions to any multi-employer plan
within the meaning of the Multi-Employer Pension Plan Amendments Act of 1980.

(b) Except as set forth in Exhibit 3.13(b) to the ASG Disclosure
Schedule, ASG is not a party to any oral or written (i) union, guild or
collective bargaining agreement which agreement covers employees in the United
States (nor is it aware of any union organizing activity currently being
conducted in respect to any of its employees), (ii) agreement with any
executive officer or other key employee the benefits of which are contingent,
or the terms of which are materially altered, upon the occurrence of a
transaction of the nature contemplated by this Plan of Merger and which
provides for the payment of in excess of Twenty-Five Thousand Dollars
($25,000.00), or (iii) agreement or plan, including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Plan of Merger or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Plan of Merger.

3.14 Compliance with Laws in General. Except as set forth in
Exhibit 3.14 to the ASG Disclosure Schedule, ASG has not received any notices
of, nor to the best of its knowledge, have there been any, material violations
of any federal, state and local laws, regulations and ordinances relating to
its business and operations, including, without limitation, the Occupational
Safety and Health Act, the Americans with Disabilities Act, the Medicare or
applicable Medicaid statutes and regulations, including billing and coding, and
any Environmental Laws, and no notice of any

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<PAGE> 16

pending inspection or violation of any such law, regulation or ordinance has
been received by ASG which, if it were determined that a violation had
occurred, would have a material adverse effect on ASG.

3.15 Regulatory Approvals. Except as disclosed in Exhibit 3.15 to
the ASG Disclosure Schedule, and to the best knowledge of ASG, ASG holds all
licenses, certificates of need and other regulatory approvals required or
necessary to be applied for or obtained in connection with its business as
presently conducted or as proposed to be conducted, except where the failure to
obtain such license, certificate of need or regulatory approval would not have
a material adverse effect on ASG. All such licenses, certificates of need and
other regulatory approvals relating to the business, operations and facilities
of ASG are in full force and effect, except where any failure of such license,
certificate of need or regulatory approval to be in full force and effect would
not have a material adverse effect on ASG. Any and all past litigation
concerning such licenses, certificates of need and regulatory approvals, and
all claims and causes of action raised therein, has been finally adjudicated.
No such license, certificate of need or regulatory approval has been revoked,
conditioned (except as may be customary) or restricted, and no action
(equitable, legal or administrative), arbitration or other process is pending,
or to the best knowledge of ASG, threatened, which in any way challenges the
validity of, or seeks to revoke, condition or restrict any such license,
certificate of need, or regulatory approval. Subject to compliance with
applicable securities laws and the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended ("HSR Act"), the consummation of the Merger will not
violate any law or restriction to which ASG is subject which, if violated,
would have a material adverse effect on ASG.

3.16 Commissions and Fees. There are no valid claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Plan of Merger which may be now or hereafter asserted
against MedPartners resulting from any action taken by ASG or its officers,
Directors or agents, or any of them. Exhibit 3.16 to the ASG Disclosure
Schedule sets forth a copy of the agreement between ASG and Equitable
Securities Corporation relating to certain financial advisory services.

3.17 Vote Required. The affirmative vote of the holders of a
majority of the outstanding ASG Shares entitled to vote thereon is the only
vote of the holders of any class or series of ASG capital stock necessary for
ASG to approve this Plan of Merger, the Merger and the transactions
contemplated thereby.

3.18 Pooling Matters. To the best knowledge of ASG, neither ASG
nor any of its affiliates has taken or agreed to take any action that (without
giving effect to any actions taken or agreed to be taken by MedPartners or any
of its affiliates) would prevent MedPartners from accounting for the business
combination to be effected by the Merger as a pooling of interests for
financial reporting purposes.

3.19 No Untrue Representations. No representation or warranty by
ASG in this Plan of Merger, and no Exhibit or certificate issued by ASG and
furnished or to be furnished to

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<PAGE> 17

MedPartners and the Subsidiary pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact in response to the disclosure requested, or omits or will
omit to state a material fact necessary to make the statements or facts
contained therein in response to the disclosure requested not misleading in
light of all of the circumstances then prevailing.

3.20 Medicare and Medicaid. Neither ASG nor any of its affiliates
participates in either the Medicare or Medicaid programs as those programs are
defined in the Medicare Act and the Medicaid Act, respectively, and do not
receive any payments or funds therefrom.

Section 4. REPRESENTATIONS AND WARRANTIES OF THE SUBSIDIARY.

The Subsidiary hereby represents and warrants to ASG as follows:

4.1 Organization, Existence and Capital Stock. The Subsidiary is
a corporation duly organized and validly existing and is in good standing under
the laws of the State of Delaware. The Subsidiary's authorized capital consists
of 1,000 shares of Common Stock, par value $1.00 per share, all of which shares
are issued and registered in the name of MedPartners. The Subsidiary has not,
within the two years immediately preceding the date of this Plan of Merger,
owned, directly or indirectly, any ASG Shares.

4.2 Power and Authority. The Subsidiary has the corporate power
to execute, deliver and perform this Plan of Merger and all agreements and
other documents executed and delivered, or to be executed and delivered, by it
pursuant to this Plan of Merger, and, subject to the satisfaction of the
conditions precedent set forth herein, has taken all actions required by law,
its Certificate of Incorporation, its By-laws or otherwise, to authorize the
execution and delivery of this Plan of Merger and such related documents. The
execution and delivery of this Plan of Merger does not and, subject to the
receipt of required regulatory approvals and any other required third-party
consents or approvals, the consummation of the Merger contemplated hereby will
not, violate any provisions of the Certificate of Incorporation or By-laws of
the Subsidiary, or any agreement, instrument, order, judgment or decree to
which the Subsidiary is a party or by which it is bound, violate any
restrictions of any kind to which the Subsidiary is subject, or result in the
creation of any lien, charge or encumbrance upon any of the property or assets
of the Subsidiary.

4.3 Commissions and Fees. There are no claims for brokerage
commissions, investment bankers' fees or finder's fees in connection with the
transaction contemplated by this Plan of Merger resulting from any action taken
by the Subsidiary or any of its officers, directors or agents.

4.4 Legal Proceedings. There are no actions, suits or proceedings
pending or threatened against the Subsidiary, at law or in equity, relating to
or affecting the Subsidiary, including

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<PAGE> 18

the Merger. The Subsidiary does not know or have any reasonable grounds to
know of any justification for any such action, suit or proceeding.

Section 5. REPRESENTATIONS AND WARRANTIES OF MEDPARTNERS.

MedPartners hereby represents and warrants to ASG as follows:

5.1 Organization, Existence and Good Standing. MedPartners is a
corporation duly organized and validly existing and is in good standing under
the laws of the State of Delaware. MedPartners has all necessary corporate
power to own its properties and assets and to carry on its business as
presently conducted. MedPartners is not, and has not been within the two years
immediately preceding the date of this Plan of Merger, a subsidiary or division
of another corporation, nor has MedPartners within such time owned, directly or
indirectly, any ASG Shares.

5.2 MedPartners Capitalization. MedPartners has an authorized
capitalization of 9,500,000 shares of Preferred Stock, par value $.001 per
share, of which no shares are issued and outstanding, and no shares are held in
treasury, 500,000 shares of Series C Junior Participating Preferred Stock, par
value $.001 per share, of which no shares are issued and outstanding and no
shares are held in treasury and 400,000,000 shares of Common Stock, par value
$.001 per share, of which 194,665,107 shares were issued and outstanding at
August 6, 1997, and no shares are held in treasury. All of the issued and
outstanding shares of MedPartners Common Stock have been duly and validly
issued and are fully paid and nonassessable. Except as set forth in Exhibit
5.2 to the Disclosure Schedule delivered to ASG by MedPartners at the time of
the execution and delivery of this Plan of Merger (the "MedPartners Disclosure
Schedule"), there are no options, warrants, or similar rights granted by
MedPartners or any affiliate thereof or other agreements to which MedPartners
or any such affiliate is a party providing for the issuance or sale by it of
any additional securities which would remain in effect after the Effective
Time. There is no liability for dividends declared or accumulated but unpaid
with respect to any shares of MedPartners Common Stock. MedPartners has not
made any distributions to any holder of MedPartners Common Stock or
participated in or effected any issuance, exchange or retirement of MedPartners
Common Stock, or otherwise changed the equity interests of holders of
MedPartners Common Stock, in contemplation of effecting the Merger within the
two years immediately preceding the date of this Plan of Merger. Any shares of
MedPartners Common Stock that MedPartners has re-acquired during the two years
immediately preceding the date of this Plan of Merger have been so re-acquired
only for purposes other than Business Combinations.

5.3 MedPartners Common Stock. On the Closing Date, MedPartners
will have a sufficient number of authorized but unissued shares of its Common
Stock available for issuance to the holders of ASG Shares in accordance with
the provisions of this Plan of Merger. The MedPartners Common Stock to be
issued pursuant to this Plan of Merger will, when so delivered, be (i) duly and
validly issued, fully paid and nonassessable and (ii) registered in a
registration statement on Form S-4 filed with the Securities and Exchange
Commission ("SEC").

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<PAGE> 19

5.4 Subsidiaries and Affiliated Entities. (a) Attached as
Exhibit 5.4 to the MedPartners Disclosure Schedule is a list of all
subsidiaries of MedPartners (individually, a "MedPartners Subsidiary", and
collectively, the "MedPartners Subsidiaries") and their states of incorporation
and all professional corporations or professional associations (the
"MedPartners Professional Corporations") of which MedPartners has control and
their states of incorporation. Except as set forth in Exhibit 5.4 to the
MedPartners Disclosure Schedule, MedPartners does not control, directly or
indirectly, any other corporation, association, partnership or business
organization. The outstanding shares of capital stock or other equity
interests of each MedPartners Subsidiary have been duly authorized and are
validly issued, fully paid and nonassessable. All shares of capital stock or
other equity interest of each MedPartners Subsidiary owned by MedPartners or
any of its subsidiaries are owned by MedPartners, either directly or
indirectly, free and clear of all liens, encumbrances, equities or claims.

(b) Also disclosed in Exhibit 5.4 to the MedPartners Disclosure
Schedule is a list of all general or limited partnerships in which a general
partner is MedPartners, a MedPartners Subsidiary or another partnership
controlled by MedPartners (individually a "MedPartners Partnership" and
collectively, the "MedPartners Partnerships"), and all limited liability
companies in which MedPartners or a MedPartners Subsidiary is a member
(individually, a "MedPartners LLC"; the MedPartners Professional Corporations
and the MedPartners LLCs being collectively called the "Other MedPartners
Entities"), and their states of organization.

(c) Except as set forth in Exhibit 5.4, neither MedPartners nor
any MedPartners Subsidiary controls, directly or indirectly, any other joint
venture or partnership.

(d) Although the financial results of the medical groups
affiliated with MedPartners physician practice management business are
consolidated for accounting purposes on the MedPartners Balance Sheet, the
terms "MedPartners Subsidiary" and "Other MedPartners Entity" do not include
any affiliated medical groups.

5.5 Organization, Existence and Good Standing of MedPartners
Subsidiaries and Other MedPartners Entities.

(a) Each MedPartners Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its respective state of
incorporation. Each MedPartners Subsidiary and each MedPartners Professional
Corporation has all necessary corporate power to own its properties and assets
and to carry on its business as presently conducted.

(b) Each MedPartners Partnership that is a limited partnership is
validly formed, each MedPartners Partnership that is a general partnership has
been duly organized, and each MedPartners Partnership is in good standing under
the laws of its respective state of organization. Each MedPartners Partnership
has all necessary power to own its property and assets and to carry on its
business as presently conducted.

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(c) Each MedPartners LLC that is a limited liability company is
validly formed and in good standing under the laws of its respective state of
organization. Each MedPartners LLC has all necessary power to own its property
and assets and to carry on its business as presently conducted.

5.6 Foreign Qualifications. MedPartners, each MedPartners
Subsidiary and each MedPartners LLC is qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the nature or
character of the property owned, leased or operated by it or the nature of the
business transacted by it makes such qualification necessary, except where the
failure to so qualify would not have a material adverse effect on MedPartners.

5.7 Subsidiary Common Stock. MedPartners owns, beneficially and
of record, all of the issued and outstanding shares of Common Stock, par value
$1.00 per share, of the Subsidiary (the "Subsidiary Common Stock"), which are
validly issued and outstanding, fully paid and nonassessable, free and clear of
all liens and encumbrances. MedPartners has, or will by the Effective Time
have, taken all such actions as may be required in its capacity as the sole
stockholder of the Subsidiary to approve the Merger.

5.8 Power and Authority. MedPartners has corporate power to
execute, deliver and perform this Plan of Merger and all agreements and other
documents executed and delivered, or to be executed and delivered, by it
pursuant to this Plan of Merger, and, subject to the satisfaction of the
conditions precedent set forth herein has taken all actions required by law,
its Certificate of Incorporation, its By-laws or otherwise, to authorize the
execution and delivery of this Plan of Merger and such related documents. The
execution and delivery of this Plan of Merger does not and, subject to the
receipt of required regulatory approvals and any other required third-party
consents or approvals, the consummation of the Merger contemplated hereby will
not, violate any provisions of the Certificate of Incorporation or By-laws of
MedPartners, or any provision of, or result in the acceleration of any
obligation under, any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree to which MedPartners is a party or by
which it is bound, or violate any restrictions of any kind to which MedPartners
is subject. The execution and delivery of this Plan of Merger has been
approved by the Board of Directors of MedPartners.

5.9 MedPartners Public Information. MedPartners has heretofore
made available to ASG a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by it or its
predecessors, MedPartners, Inc. and MedPartners/Mullikin Inc., with the SEC (as
any such documents have since the time of their original filing been amended,
the "MedPartners Documents") since January 1, 1996, which are all the documents
(other than preliminary material) that it was required to file with the SEC
since such date. As of their respective dates, the MedPartners Documents did
not contain any untrue statements of material facts or omit to state material
facts required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the MedPartners Documents complied
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, and the rules and regulations promul-

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<PAGE> 21

gated under such statutes. The financial statements contained in the
MedPartners Documents, together with the notes thereto, have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods indicated (except as may be indicated in the notes
thereto, or, in the case of the unaudited financial statements, as permitted by
Form 10-Q), reflect all known liabilities of MedPartners, fixed or contingent,
required to be stated therein, and present fairly the financial condition of
MedPartners at said dates and the consolidated results of operations and cash
flows of the Parent for the periods then ended. The consolidated balance sheet
of MedPartners at June 30, 1997, included in the Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 1997 of MedPartners is herein sometimes
referred to as the "MedPartners Balance Sheet."

5.10 Legal Proceedings. Except as disclosed in Exhibit 5.10, or in
the MedPartners Documents, there is no pending or threatened litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting MedPartners or the transactions contemplated by this
Plan of Merger, which if resolved adversely to MedPartners, would have a
material adverse effect on MedPartners and, to the knowledge of MedPartners, no
basis for any such action exists.

5.11 Subsequent Events. Except as set forth in Exhibit 5.11 to the
MedPartners Disclosure Schedule, MedPartners has not, since the date of the
MedPartners Balance Sheet:

(a) Incurred any material adverse change.

(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i)
liabilities shown or reflected on the MedPartners Balance Sheet or
(ii) liabilities incurred since the date of the MedPartners Balance
Sheet in the ordinary course of business, which discharge or
satisfaction would have a material adverse effect on MedPartners.

(c) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor which
would have a material adverse effect on MedPartners, except as may
have been required due to income or operations of MedPartners since
the date of the MedPartners Balance Sheet.

(d) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets, tangible or intangible, which
assets are material to the consolidated business or financial
condition of MedPartners.

(e) Sold or transferred any of the assets material to the
consolidated business of MedPartners, canceled any material debts or
claims or waived any material rights, except in the ordinary course of
business.

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<PAGE> 22

(f) Granted any general or uniform increase in the rates
of pay of employees or any material increase in salary payable or to
become payable by MedPartners to any officer or employee, consultant
or agent (other than normal merit increases), or by means of any bonus
or pension plan, contract or other commitment, increased in a material
respect the compensation of any officer, employee, consultant or
agent.

(h) Issued any stock, bonds or other securities or any
options or rights to purchase any of its securities (other than stock
issued upon the exercise of outstanding options under MedPartners'
stock option plans or stock options granted under such plans), except
as set forth in Exhibit 5.11(h) to the MedPartners Disclosure
Schedule.

5.12 Compliance with Laws in General. MedPartners has not received
any notices of material violations of any federal, state and local laws,
regulations and ordinances relating to its business and operations, including,
without limitation, the Occupational Safety and Health Act, the Americans with
Disabilities Act, the Medicare or applicable Medicaid statutes and regulations
and any Environmental Laws, and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by
MedPartners which, if it were determined that a violation had occurred, would
have a material adverse effect on MedPartners.

5.13 Regulatory Approvals. Except as disclosed in the MedPartners
Documents or in Exhibit 5.13 to the MedPartners Disclosure Schedule,
MedPartners and each MedPartners Subsidiary, as applicable, holds all licenses,
certificates of need and other regulatory approvals required or necessary to be
applied for or obtained in connection with its business as presently conducted
or as proposed to be conducted, except where the failure to obtain such
license, certificate of need or regulatory approval would not have a material
adverse effect on MedPartners. All such licenses, certificates of need and
other regulatory approvals relating to the business, operations and facilities
of MedPartners and each MedPartners Subsidiary are in full force and effect,
except where any failure of such license, certificate of need or regulatory
approval to be in full force and effect would not have a material adverse
effect on MedPartners. Any and all past litigation concerning such licenses,
certificates of need and regulatory approvals, and all claims and causes of
action raised therein, has been finally adjudicated. No such license,
certificate of need or regulatory approval has been revoked, conditioned
(except as may be customary) or restricted, and no action (equitable, legal or
administrative), arbitration or other process is pending, or to the best
knowledge of MedPartners, threatened, which in any way challenges the validity
of, or seeks to revoke, condition or restrict any such license, certificate of
need, or regulatory approval. Subject to compliance with applicable securities
laws and the HSR Act, the consum-

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<PAGE> 23

mation of the Merger will not violate any law or restriction to which
MedPartners is subject which, if violated, would have a material adverse effect
on MedPartners.

5.14 Investment Intent. MedPartners is acquiring the ASG Shares
hereunder for its own account and not with a view to the distribution or sale
thereof, and MedPartners has no understanding, agreement or arrangement to
sell, distribute, partition or otherwise transfer or assign all or any part of
the ASG Shares to any other person, firm or corporation.

5.15 Commissions and Fees. There are no claims for brokerage
commissions, investment bankers' fees or finder's fees in connection with the
transactions contemplated by this Plan of Merger resulting from any action
taken by MedPartners or any of its officers, directors or agents.

5.16 No Stockholder Vote Required. No vote is required of the
holders of the outstanding capital stock of MedPartners to approve this Plan of
Merger, the Merger and the transactions contemplated hereby.

5.17 No Untrue Representations. No representation or warranty by
MedPartners in this Plan of Merger, and no Exhibit or certificate issued by
MedPartners and furnished or to be furnished to ASG pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact in response to the disclosure
requested, or omits or will omit to state a material fact necessary to make the
statements or facts contained therein in response to the disclosure requested
not misleading in light of all of the circumstances then prevailing.

Section 6. ACCESS TO INFORMATION AND DOCUMENTS.

6.1 Access to Information. Between the date hereof and the
Closing Date, ASG will give to MedPartners and its counsel, accountants and
other representatives full access to all the personnel, properties, documents,
contracts, personnel files and other records of ASG and shall furnish
MedPartners with copies of such documents and with such information with
respect to the affairs of ASG as MedPartners may from time to time reasonably
request. ASG will disclose and make available to MedPartners and its
representatives all books, contracts, accounts, personnel records, letters of
intent, papers, records, communications with regulatory authorities and other
documents relating to the business and operations of ASG. In addition, ASG
shall make available to MedPartners all such banking, investment and financial
information as shall be necessary to allow for the efficient integration of
ASG's banking, investment and financial arrangements with those of MedPartners
at the Effective Time.

6.2 Return of Records. If the transactions contemplated hereby
are not consummated and this Plan of Merger terminates, each party agrees to
promptly return all documents, contracts, records or properties of the other
party and all copies thereof furnished pursuant to this Section

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<PAGE> 24

6 or otherwise. All information disclosed by any party or any affiliate or
representative of any party shall be deemed to be "Confidential Information"
under the terms of the Confidentiality Agreement between ASG and MedPartners
(the "Confidentiality Agreement").

6.3 Effect of Access. (a) Nothing contained in this Section 6
shall be deemed to create any duty or responsibility on the part of either
party to investigate or evaluate the value, validity or enforceability of any
contract, lease or other asset included in the assets of the other party.

(b) With respect to matters as to which any party has made express
representations or warranties herein, the parties shall be entitled to rely
upon such express representations and warranties irrespective of any
investigations made by such parties, except to the extent that such
investigations result in actual knowledge of the inaccuracy or falsehood of
particular representations and warranties.

Section 7. COVENANTS.

7.1 Preservation of Business. From the date of this Agreement,
ASG will use its reasonable best efforts to preserve the business organization
of ASG intact, to keep available to MedPartners and the Surviving Corporation
the services of the present employees of ASG, and to preserve for MedPartners
and the Surviving Corporation the goodwill of the suppliers, customers and
others having business relations with ASG.

7.2 Material Transactions. Except as contemplated by this
Agreement, prior to the Effective Time, neither ASG nor any ASG Subsidiary nor
other ASG Entities will (other than as required pursuant to the terms of this
Plan of Merger and the related documents), without first obtaining the written
consent of MedPartners:

(a) Encumber any asset or enter into any transaction or
make any contract or commitment relating to the properties, assets and
business of ASG, other than in the ordinary course of business or as
otherwise disclosed herein.

(b) Enter into any employment contract which is not
terminable upon notice of 30 days or less, at will, and without
penalty to ASG except as provided herein.

(c) Enter into any contract or agreement (i) which cannot
be performed within three months or less, or (ii) which involves the
expenditure of over Twenty-Five Thousand Dollars ($25,000.00).

(d) Issue or sell, or agree to issue or sell, any shares
of capital stock or other securities of ASG.

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<PAGE> 25

(e) Make any payment or distribution to the trustee under
any bonus, pension, profit-sharing or retirement plan or incur any
obligation to make any such payment or contribution which is not in
accordance with ASG's usual past practice, or make any payment or
contributions or incur any obligation pursuant to or in respect of any
other plan or contract or arrangement providing for bonuses, executive
incentive compensation, pensions, deferred compensation, retirement
payments, profit-sharing or the like, establish or enter into any such
plan, contract or arrangement, or terminate any plan.

(f) Extend credit to anyone, except in the ordinary
course of business consistent with prior practices.

(g) Guarantee the obligation of any person, firm or
corporation, except in the ordinary course of business consistent with
prior practices.

(h) Amend its Amended and Restated Certificate of
Incorporation or By-laws.

(i) Take any action of a character described in Section
3.10(a) to 3.10(h), inclusive.

7.3 Meeting of Stockholders. ASG will take all steps necessary in
accordance with its Amended and Restated Certificate of Incorporation and
Bylaws to call, give notice of, convene and hold meetings of its stockholders
(the "Stockholder Meeting") as soon as practicable after the effectiveness of
the Registration Statement (as defined in Section 7.4 hereof), for the purpose
of approving and adopting this Plan of Merger and the transactions contemplated
hereby and for such other purposes as may be necessary. Unless this Plan of
Merger shall have been validly terminated as provided herein, the Board of
Directors of ASG (subject to the provision of Section 8.1(d) hereof) will (i)
recommend to its stockholders the approval and adoption of this Plan of Merger,
the transactions contemplated hereby and any other matters to be submitted to
the stockholders in connection therewith, to the extent that such approval is
required by applicable law in order to consummate the Merger, and (ii) use its
reasonable, good faith efforts to obtain the approval by its stockholders of
this Plan of Merger and the transactions contemplated hereby.

7.4 Registration Statement.

(a) MedPartners shall prepare and file with the SEC and
any other applicable regulatory bodies, as soon as reasonably practicable, a
Registration Statement on Form S-4 with respect to the shares of the
MedPartners Common Stock to be issued in the Merger (the "Registration
Statement"), and will otherwise proceed promptly to satisfy the requirements of
the Securities Act, including Rule 145 thereunder. Such Registration Statement
shall contain a proxy statement of ASG containing the information required by
the Exchange Act (the "Proxy Statement"). MedPartners shall use its reasonable
best efforts to cause the Registration Statement

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<PAGE> 26

to be declared effective and to maintain such effectiveness until all of the
shares of the MedPartners Common Stock covered thereby have been distributed.
MedPartners shall promptly amend or supplement the Registration Statement to
the extent necessary in order to make the statements therein not misleading or
to correct any statements which have become false or misleading. MedPartners
shall use its reasonable best efforts to have the Proxy Statement approved by
the SEC under the provisions of the Exchange Act. MedPartners shall provide
ASG with copies of all filings made pursuant to this Section 7.4 and shall
consult with ASG on responses to any comments made by the Staff of the SEC with
respect thereto.

(b) The information specifically designated as being
supplied by ASG for inclusion or incorporation by reference in the Registration
Statement shall not, at the time the Registration Statement is declared
effective, at the time the Proxy Statement is first mailed to holders of ASG
Common Stock, at the time of the Stockholder Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, not misleading. The information specifically designated as being
supplied by ASG for inclusion or incorporation by reference in the Proxy
Statement shall not, at the date the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to holders of ASG Common Stock, at the
time of the Stockholder Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. If at
any time prior to the Effective Time any event or circumstance relating to ASG,
or its officers or directors, should be discovered by ASG which should be set
forth in an amendment to the Registration Statement or a supplement to the
Proxy Statement, ASG shall promptly inform MedPartners. All documents, if any,
that ASG is responsible for filing with the SEC in connection with the
transactions contemplated hereby will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and
the rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.

(c) The information specifically designated as being
supplied by MedPartners for inclusion or incorporation by reference in the
Registration Statement shall not, at the time the Registration Statement is
declared effective, at the time the Proxy Statement is first mailed to holders
of the ASG Common Stock, at the time of the Stockholder Meeting and at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, not misleading. The information specifically
designated as being supplied by MedPartners for inclusion or incorporation by
reference in the Proxy Statement in connection with the Stockholder Meeting
shall not, at the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to holders of ASG Common Stock, at the time
of the Stockholder Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to MedPartners or its officers or Directors, should be
discovered by MedPartners which should be set forth in an

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<PAGE> 27

amendment to the Registration Statement or a supplement to the Proxy Statement,
MedPartners should promptly inform ASG and shall promptly file such amendment
to the Registration Statement. All documents that MedPartners is responsible
for filing with the SEC in connection with the transactions contemplated herein
will comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder.

(d) Prior to the Closing Date, MedPartners shall use its
reasonable best efforts to cause the shares of MedPartners Common Stock to be
issued pursuant to the Merger to be registered or qualified under all
applicable securities or Blue Sky laws of each of the states and territories of
the United States, and to take any other actions which may be necessary to
enable the Common Stock to be issued pursuant to the Merger to be distributed
in each such jurisdiction.

(e) Prior to the Closing Date, MedPartners shall file a
Subsequent Listing Application with the NYSE relating to the shares of
MedPartners Common Stock to be issued in connection with the Merger, and shall
cause such shares of MedPartners Common Stock to be listed on the NYSE, upon
official notice of issuance prior to the Closing Date.

(f) ASG shall furnish all information to MedPartners with
respect to ASG and ASG Subsidiaries as MedPartners may reasonably request for
inclusion in the Registration Statement or the Proxy Statement and shall
otherwise cooperate with MedPartners in the preparation and filing of such
documents.

7.5 Exemption from State Takeover Laws. ASG shall take all
reasonable steps necessary and within its power to exempt the Merger from the
requirements of any state takeover statute or other similar state law which
would prevent or impede the consummation of the transactions contemplated
hereby.

7.6 HSR Act Compliance. MedPartners and ASG shall promptly make
their respective filings, and shall thereafter use their reasonable best
efforts to promptly make any required submissions, under the HSR Act with
respect to the Merger and the transactions contemplated hereby. MedPartners
and ASG will use their respective reasonable best efforts to obtain all other
permits, authorizations, consents and approvals from third parties and
governmental authorities necessary to consummate the Merger and the
transactions contemplated hereby.

7.7 Public Disclosures. MedPartners and ASG will consult with
each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated by this Plan of Merger,
and shall not issue any such press release or make any such public statement
prior to such consultation except as may be required by applicable law or
requirements of The New York Stock Exchange, Inc. (the "NYSE") or the Nasdaq
Stock Market, as the case may be. The parties shall issue a joint press
release, mutually acceptable to MedPartners and ASG, promptly upon execution
and delivery of this Plan of Merger.

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<PAGE> 28

7.8 Resignation of ASG Directors. On or prior to the Closing
Date, ASG shall deliver to MedPartners evidence satisfactory to MedPartners of
the resignation of the directors of ASG, such resignations to be effective on
the Closing Date.

7.9 Notice of Subsequent Events. Each party hereto shall notify
the other parties of any changes, additions or events of which they have
knowledge which would cause any material change in or material addition to any
Exhibit to its Disclosure Schedule delivered by the notifying party under this
Plan of Merger, promptly after the occurrence of the same. If the effect of
such change or addition would, individually or in the aggregate with the effect
of changes or additions previously disclosed pursuant to this Section 7.9,
constitute a material adverse effect on the notifying party, the non-notifying
party may, within ten days after receipt of such notice, elect to terminate
this Plan of Merger. If the non-notifying party does not give written notice
of such termination within such 10-day period, the non-notifying party shall be
deemed to have consented to such change or addition and shall not be entitled
to terminate this Plan of Merger by reason thereof.

7.10 No Solicitations. ASG shall not, directly or indirectly,
furnish information and access, in response to unsolicited requests therefor,
to any corporation, partnership, person or other entity or group, participate
in discussions and negotiate with such corporation, partnership, person or
other entity or group concerning any proposal to acquire such party upon a
merger, purchase of assets, purchase of or tender offer for shares of its
Common Stock or similar transaction (an "Acquisition Transaction"). ASG shall
notify MedPartners of any unsolicited request for information and access in
connection with a possible Acquisition Transaction involving such party, such
notification to include the identity of such third party and the proposed terms
of such possible Acquisition Transaction.

7.11 Other Actions. Subject to the provisions of Section 7.6
hereof, none of ASG, MedPartners and the Subsidiary shall knowingly or
intentionally take any action, or omit to take any action, if such action or
omission would, or reasonably might be expected to, result in any of its
representations and warranties set forth herein being or becoming untrue in any
material respect, or in any of the conditions to the Merger set forth in this
Plan of Merger not being satisfied, or (unless such action is required by
applicable law) which would materially adversely affect the ability of ASG or
MedPartners to obtain any consents or approvals required for the consummation
of the Merger without imposition of a condition or restriction which would have
a material adverse effect on the Surviving Corporation or which would otherwise
materially impair the ability of ASG or MedPartners to consummate the Merger in
accordance with the terms of this Plan of Merger or materially delay such
consummation.

7.12 Accounting Methods. Neither MedPartners or ASG shall change,
in any material respect, its methods of accounting in effect at its most recent
fiscal year end, except as required by changes in generally accepted accounting
principles, if applicable, as concurred by such parties' independent
accountants.

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7.13 Pooling and Tax-Free Reorganization Treatment. Neither
MedPartners nor ASG shall intentionally take or cause to be taken any action,
whether on or before the Effective Time, which would disqualify the Merger as a
"pooling of interests" for accounting purposes or as a "reorganization" within
the meaning of Section 368(a) of the Code.

7.14 Affiliate and Pooling Agreements. MedPartners and ASG will
each use their respective reasonable, good faith efforts to cause each of their
respective Directors and executive officers and each of their respective
"affiliates" (within the meaning of Rule 145 under the Securities Act) to
execute and deliver to MedPartners as soon as practicable an agreement in the
form attached hereto as Exhibit 7.14 relating to the disposition of shares of
ASG Common Stock and shares of MedPartners Common Stock held by such person and
the shares of MedPartners Common Stock issuable pursuant to this Plan of
Merger.

7.15 Cooperation. (a) MedPartners and ASG shall together, or
pursuant to an allocation of responsibility agreed to between them, (i)
cooperate with one another in determining whether any filings required to be
made or consents required to be obtained in any jurisdiction prior to the
Effective Time in connection with the consummation of the transactions
contemplated hereby and cooperate in making any such filings promptly and in
seeking to obtain timely any such consents, (ii) use their respective best
efforts to cause to be lifted any injunction prohibiting the Merger, or any
part thereof, or the other transactions contemplated hereby, and (iii) furnish
to one another and to one another's counsel all such information as may be
required to effect the foregoing actions.

(b) Subject to the terms and conditions herein provided, and
unless this Plan of Merger shall have been validly terminated as provided
herein, each of MedPartners and ASG shall use all reasonable efforts (i) to
take, or cause to be taken, all actions necessary to comply promptly with all
legal requirements which may be imposed on such party (or any subsidiaries or
affiliates of such party) with respect to the Plan of Merger and to consummate
the transactions contemplated hereby and (ii) to obtain (and to cooperate with
the other party to obtain) any consent, authorization, order or approval of, or
any exemption by, any governmental entity and/or any other public or private
third party which is required to be obtained or made by such party or any of
its subsidiaries or affiliates in connection with this Plan of Merger and the
transactions contemplated hereby. Each of MedPartners and ASG will promptly
cooperate with and furnish information to the other in connection with any such
burden suffered by, or requirement imposed upon, either of them or any of their
subsidiaries or affiliates in connection with the foregoing.

7.16 ASG Stock Options.

(a) As soon as reasonably practicable after the Effective Time,
MedPartners shall deliver to the holders of ASG stock options, appropriate
notices setting forth such holders' rights pursuant to any stock option plans
under which such ASG stock options were issued and any stock option agreements
evidencing such options which shall continue in full force and effect on the
same terms and conditions (subject to the adjustments required by Section
2.1(d) or this Section

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<PAGE> 30

7.16 after giving effect to the Merger and the assumption of such options by
MedPartners as set forth herein) as in effect immediately prior to the
Effective Time. MedPartners shall comply with the terms of the stock option
plans, and the stock option agreements as so adjusted, and shall use its
reasonable best efforts to ensure, to the extent required by, and subject to
the provisions of, such plans or agreements, that ASG stock options which
qualified as incentive stock options prior to the Effective Time shall continue
to qualify as incentive stock options after the Effective Time.

(b) MedPartners shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of MedPartners Common Stock
for delivery upon exercise of ASG stock options assumed by MedPartners in
accordance with Section 2.1(d). As soon as practicable after the Effective
Time, MedPartners shall file with the SEC a registration statement on Form S-8
with respect to shares of MedPartners Common Stock subject to such assumed ASG
stock options and shall use its best efforts to maintain the effectiveness of a
registration statement or registration statements covering such options (and
maintain the current status of the prospectus or prospectuses contained
therein) for so long as such ASG stock options remain outstanding. MedPartners
shall administer the plans assumed pursuant to Section 2.1(d) hereof in a
manner that complies with Rule 16b-3 promulgated under the Exchange Act to the
extent the applicable plan complied with such rule prior to the Merger.

(c) Except to the extent otherwise agreed to by the parties, all
restrictions or limitations on transfer and vesting with respect to ASG stock
options awarded under any plan, program, or arrangement of ASG or any of its
subsidiaries, to the extent that such restrictions or limitations shall not
have already lapsed, shall remain in full force and effect with respect to such
options after giving effect to the Merger and the assumption by MedPartners as
set forth above.

7.17 Publication of Combined Results. MedPartners agrees that
MedPartners shall cause publication of the combined results of operations of
MedPartners and ASG in its Quarterly Report on Form 10-Q which shall contain a
full calendar month of such combined results, provided however that such period
shall be tolled for such period as the financial statements required for the
preparation of such financial statements for such publication are not
reasonably available to MedPartners. For purposes of this Section 7.13, the
term "publication" shall have the meaning provided in SEC Accounting Series
Release No. 135.

Section 8. TERMINATION, AMENDMENT AND WAIVER.

8.1 Termination. This Plan of Merger may be terminated at any
time prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the holders of ASG Common Stock:

(a) by mutual written consent of MedPartners, the
Subsidiary and ASG;

(b) by either MedPartners or ASG:

25
<PAGE> 31

(i) if, upon a vote at a duly held meeting of
stockholders or any adjournment thereof, any required approval of the
holders of ASG Common Stock shall not have been obtained;

(ii) if the Merger shall not have been consummated on or
before March 31, 1998, unless the failure to consummate the Merger is
the result of a willful and material breach of this Plan of Merger by
the party seeking to terminate this Plan of Merger; provided, however,
that the passage of such period shall be tolled for any part thereof
(but not exceeding 60 days in the aggregate) during which any party
shall be subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the consummation of
the Merger or the calling or holding of a meeting of stockholders;

(iii) if any court of competent jurisdiction or other
governmental entity shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable;

(iv) in the event of a material breach by the other party
of any representation, warranty, covenant or other agreement contained
in this Plan of Merger which (A) would give rise to the failure of a
condition set forth in Section 9.2(a) or (b) or Section 9.3(a) or (b),
as applicable, and (B) cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such
breach (a "Material Breach") (provided that the terminating party is
not then in Material Breach of any representation, warranty, covenant
or other agreement contained in this Plan of Merger); or

(v) if either MedPartners or ASG gives notice of
termination pursuant to Section 7.8;

(c) by either MedPartners or ASG in the event that (i)
all of the conditions to the obligation of such party to effect the
Merger set forth in Section 9.1 shall not have been satisfied and (ii) any
condition to the obligation of such party to effect the Merger set forth in
Section 9.2 (in the case of MedPartners) or Section 9.3 (in the case of ASG)
is not capable of being satisfied prior to the end of the period referred to
in Section 8.1(b)(ii); or

(d) by ASG, if ASG's Board of Directors shall have (i)
determined, in the exercise of its fiduciary duties under applicable
law, not to recommend the Merger to the holders of ASG Shares or shall have
withdrawn such recommenda-

26
<PAGE> 32

tion or (ii) approved, recommended or endorsed any Acquisition
Transaction (as defined in Section 7.8) other than this Merger or (iii)
resolved to do any of the foregoing.

(e) by ASG, if the arithmatic average of the closing
prices per share of the MedPartners Common Stock, as reported on the New
York Stock Exchange Composite Tape, during any consecutive thirty
(30)-trading day period between the date hereof and the date five trading
days before the ASG meeting of stockholders to consider the Merger is less
than eighty percent (80%) of the closing price per share of MedPartners
Common Stock as reported on the New York Stock Exchange Composite Tape on
the date this Plan of Merger is executed and delivered, and MedPartners has
received written notice of the decision to terminate this Plan of Merger
within two trading days after any such thirty (30)-trading day period.

8.2 Effect of Termination. In the event of termination of this
Plan of Merger as provided in Section 8.1, this Plan of Merger shall forthwith
become void and have no effect, without any liability or obligation on the part
of any party, other than the provisions of Sections 6.2 and 8.6, and except to
the extent that such termination results from the willful and material breach
by a party of any of its representations, warranties, covenants or other
agreements set forth in this Plan of Merger.

8.3 Amendment. This Plan of Merger may be amended by the parties
at any time before or after any required approval of matters presented in
connection with the Merger by the holders of ASG Shares; provided however, that
after such approval there shall be made no amendment that pursuant to Section
251(d) of the DGCL requires further approval by such stockholders without such
further approval. This Plan of Merger may not be amended except by an
instrument in writing signed on behalf of each of the parties.

8.4 Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Plan of Merger or in any
document delivered pursuant to this Plan of Merger or (c) subject to the
proviso of Section 8.3, waive compliance with any of the agreements or
conditions contained in this Plan of Merger. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Plan of Merger to assert any of its rights under this Plan of Merger or
otherwise shall not constitute a waiver of such rights, except as otherwise
provided in Section 7.6.

8.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Plan of Merger pursuant to Section 8.1, an amendment of
this Plan of Merger pursuant to Section 8.3, or an extension or waiver pursuant
to Section 8.4 shall, in order to be effective, require in the case of
MedPartners, the Subsidiary or ASG, action by its Board of Directors or the
duly authorized designee of the Board of Directors.

27
<PAGE> 33

8.6 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, except that expenses (other than legal,
accounting and investment banking costs, which shall be paid by the party
incurring such expenses) incurred in connection with preparing, filing,
printing and mailing the Proxy Statements and the Registration Statement shall
be shared equally by MedPartners and ASG.

Section 9. CONDITIONS TO CLOSING.

9.1 Mutual Conditions. The respective obligations of each party
to effect the Merger shall be subject to the satisfaction, at or prior to the
Closing Date, of the following conditions (any of which may be waived in
writing by MedPartners, the Subsidiary and ASG):

(a) None of MedPartners, the Subsidiary or ASG nor any of
their respective subsidiaries shall be subject to any order, decree or
injunction by a court of competent jurisdiction which (i) prevents or
materially delays the consummation of the Merger or (ii) would impose
any material limitation on the ability of MedPartners effectively to
exercise full rights of ownership of the Common Stock of the Surviving
Corporation or any material portion of the assets or business of ASG,
taken as a whole.

(b) No statute, rule or regulation shall have been
enacted by the government (or any governmental agency) of the United
States or any state that makes the consummation of the Merger and any
other transaction contemplated hereby illegal.

(c) Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.

(d) The holders of shares of ASG Common Stock shall have
approved the adoption of this Agreement and any other matters
submitted to them for the purpose of approving the transactions
contemplated hereby.

(e) The shares of MedPartners Common Stock to be issued
in connection with the Merger shall have been listed on the NYSE, upon
official notice of issuance, and shall have been issued in
transactions qualified or exempt from registration under applicable
securities or Blue Sky laws of such states and territories of the
United States as may be required.

(f) The Merger shall qualify for "pooling of interests"
accounting treatment.

28
<PAGE> 34

(g) MedPartners, the Subsidiary and ASG shall have
received all consents, waivers, approvals and authorizations of third
parties with respect to all material contracts, leases, service
agreements and management agreements to which such entities are
parties, which consents, waivers, approvals and authorizations are
required of such third parties by such documents, in form and
substance acceptable to MedPartners or ASG, as the case may be, except
where the failure to obtain such consent, approval or authorization
would not have a material effect on the business of the Surviving
Corporation.

(h) The Registration Statement shall have been declared
effective and no stop order with respect to the Registration Statement
shall be in effect.

9.2 Conditions to Obligations of MedPartners and the Subsidiary.
The obligations of MedPartners and the Subsidiary to consummate the Merger and
the other transactions contemplated hereby shall be subject to the
satisfaction, at or prior to the Closing Date, of the following conditions (any
of which may be waived by MedPartners and the Subsidiary):

(a) Each of the agreements of ASG to be performed at or
prior to the Closing Date pursuant to the terms hereof shall have been
duly performed in all material respects, and ASG shall have performed,
in all material respects, all of the acts required to be performed by
it at or prior to the Closing Date by the terms hereof.

(b) The representations and warranties of ASG set forth
in Section 3.10(a) shall be true and correct as of the date of this
Plan of Merger and as of the Closing Date. The representations and
warranties of ASG set forth in this Plan of Merger that are qualified
as to materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, as of
the date of this Plan of Merger and as of the Closing as though made
at and as of such time, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties that are qualified as to materiality
shall be true and correct, and those that are not so qualified shall
be true and correct in all material respects, as of such earlier
date); provided, however, that ASG shall not be deemed to be in breach
of any such representations or warranties by taking any action
permitted (or approved by MedPartners) under Section 7.2 or otherwise
permitted herein. MedPartners and the Subsidiary shall have been
furnished with a certificate, executed by a duly authorized officer of
ASG, dated the Closing Date, certifying in such detail as MedPartners
and the Subsidiary may reasonably request as to the fulfillment of the
foregoing conditions.

(c) MedPartners shall have received an opinion from
Haskell Slaughter & Young, L.L.C. to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of
the Code, which opinion may be based

29
<PAGE> 35

upon reasonable representations of fact provided by officers of
MedPartners, the Subsidiary and ASG.

(d) MedPartners shall have received an opinion from King
& Spalding substantially to the effect set forth in Exhibit 9.2(d)
hereto.

(e) All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board
or other regulatory body required in connection with the execution,
delivery and performance of this Plan of Merger shall have been
obtained or made, except for filings in connection with the Merger and
any other documents required to be filed after the Effective Time.

(f) MedPartners shall have received an undertaking from
holders ("Holders") of options to purchase not less than 516,000 shares
of ASG stock (such number to be reduced by the number of shares with
respect to which Holders have made cashless exercises of options since
the date of this Plan of Merger) that if they should exercise such
options prior to or after (as contemplated by Section 2.1(d) hereof)
the Effective Time, such exercises will be cashless exercises.

9.3 Conditions to Obligations of ASG. The obligations of ASG to
consummate the Merger and the other transactions contemplated hereby shall be
subject to the satisfaction, at or prior to the Closing Date, of the following
conditions (any of which may be waived by ASG):

(a) Each of the agreements of MedPartners and the
Subsidiary to be performed at or prior to the Closing Date pursuant to
the terms hereof shall have been duly performed, in all material
respects, and MedPartners and the Subsidiary shall have performed, in
all material respects, all of the acts required to be performed by
them at or prior to the Closing Date by the terms hereof.

(b) The representations and warranties of MedPartners set
forth in Section 5.11(a) shall be true and correct as of the date of
the Plan of Merger and as of the Closing Date. The representations
and warranties of MedPartners set forth in this Plan of Merger that
are qualified as to materiality shall be true and correct, and those
that are not so qualified shall be true and correct in all material
respects, as of the date of this Plan of Merger and as of the Closing
as though made at and as of such time, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties that are qualified as
to materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, as of
such earlier date). ASG shall have been furnished with a certificate,
executed by duly authorized officers of MedPartners and the
Subsidiary, dated the Closing Date, certifying in such detail as ASG
may reasonably request as to the fulfillment of the foregoing
conditions.

30
<PAGE> 36

(c) ASG shall have received an opinion from King &
Spalding to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code, which
opinion may be based upon reasonable representations of fact provided
by officers of MedPartners, the Subsidiary and ASG.

(d) ASG shall have received an opinion from Haskell
Slaughter & Young, L.L.C. substantially to the effect set forth in
Exhibit 9.3(d) hereto.

Section 10. MISCELLANEOUS.

10.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Plan of Merger or in any instrument
delivered pursuant to this Plan of Merger shall survive the Effective Time.

10.2 Notices. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery
or by facsimile and overnight courier to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:

If to MedPartners:

MedPartners, Inc.
3000 Galleria Tower, Suite 1000
Birmingham, Alabama 35244
Facsimile: (205) 982-7709
Attention: J. Brooke Johnston, Jr., Esq.
Senior Vice President and General Counsel

31
<PAGE> 37

with a copy to:

Haskell Slaughter & Young, L.L.C.
1200 AmSouth Harbert Plaza
1901 Sixth Avenue North
Birmingham, Alabama 35203
Facsimile: (205) 324-1133
Attention: Robert E. Lee Garner, Esq.

If to ASG:

America Service Group Inc.
Suite 300
105 WestPark Drive
Brentwood, TN 37027
Attention: Michael Catalano, Esq.
Executive Vice President and General
Counsel

with a copy to:

King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
Facsimile: (404) 572-5100
Attention: Philip A. Theodore, Esq.

All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications with the overnight courier.

10.3 Further Assurances. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Plan of Merger.

10.4 Indemnification. MedPartners and Subsidiary agree that all
rights to indemnification for acts or omissions occurring prior to the
Effective Time now existing in favor of the current or former directors or
officers of ASG as provided in its articles of incorporation or bylaws shall
survive the Merger and shall continue in full force and effect in accordance
with their terms. The provisions of this Section 10.4 are intended to be for
the benefit of, and shall be enforceable by, each such indemnified party and
each such indemnified party's heirs and representatives.

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<PAGE> 38

10.5 Governing Law. This Plan of Merger shall be interpreted,
construed and enforced in accordance with the laws of the State of Delaware,
applied without giving effect to any conflicts-of-law principles.

10.6 "Including". The word "including", when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific terms or matters as provided immediately following
the word "including" or to similar items or matters, whether or not
non-limiting language (such as "without limitation", "but not limited to", or
words of similar import) is used with reference to the word "including" or the
similar items or matters, but rather shall be deemed to refer to all other
items or matters that could reasonably fall within the broadest possible scope
of the general statement, term or matter.

10.7 "Knowledge". "To the knowledge", "to the best knowledge,
information and belief", or any similar phrase shall be deemed to refer to the
knowledge of the Chairman of the Board, Chief Executive Officer or Chief
Financial Officer of a party and to include the assurance that such knowledge
is based upon a reasonable investigation, unless otherwise expressly provided.

10.8 "Material adverse change" or "material adverse effect".
"Material adverse change" or "material adverse effect" means, when used in
connection with ASG or MedPartners, any change, effect, event or occurrence
that has, or is reasonably likely to have, individually or in the aggregate, a
material adverse impact on the business or financial position of such party and
its subsidiaries taken as a whole; provided, however, that "material adverse
change" and "material adverse effect" shall be deemed to exclude the impact of
(i) changes in generally accepted accounting principles, (ii) changes in
applicable law, and (iii) any changes resulting from any restructuring or other
similar charges or write-offs taken by ASG with the consent of MedPartners;
provided, however, that no such charges or write-offs will be taken if such
would adversely affect pooling-of-interests accounting treatment for the
Merger. Moreover, it shall not be deemed a "material adverse change" or
"material adverse effect" so long as future financial performance shall be
consistent with discussions between the parties in connection with the Merger.

10.9 "Hazardous Materials". The term "Hazardous Materials" means
any material which has been determined by any applicable governmental authority
to be harmful to the health or safety of human or animal life or vegetation,
regardless of whether such material is found on or below the surface of the
ground, in any surface or underground water, airborne in ambient air or in the
air inside any structure built or located upon or below the surface of the
ground or in building materials or in improvements of any structures, or in any
personal property located or used in any such structure, including, but not
limited to, all hazardous substances, imminently hazardous substances,
hazardous wastes, toxic substances, infectious wastes, pollutants and
contaminants from time to time defined, listed, identified, designated or
classified as such under any Environmental Laws (as defined in Section 10.10)
regardless of the quantity of any such material.

10.10 Environmental Laws. The term "Environmental Laws" means any
federal, state or local statute, regulation, rule or ordinance, and any
judicial or administrative interpretation

33
<PAGE> 39

thereof, regulating the use, generation, handling, storage, transportation,
discharge, emission, spillage or other release of Hazardous Materials or
relating to the protection of the environment.

10.11 Captions. The captions or headings in this Plan of Merger are
made for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this Plan of
Merger.

10.12 Integration of Exhibits. All Exhibits attached to this Plan
of Merger are integral parts of this Plan of Merger as if fully set forth
herein, and all statements appearing therein shall be deemed disclosed for all
purposes and not only in connection with the specific representation in which
they are explicitly referenced.

10.13 Entire Agreement. This instrument, including all Exhibits
attached hereto and the Confidentiality Agreement, contains the entire
agreement of the parties and supersedes any and all prior or contemporaneous
agreements between the parties, written or oral, with respect to the
transactions contemplated hereby. Such agreement may not be changed or
terminated orally, but may only be changed by an agreement in writing signed by
the party or parties against whom enforcement of any waiver, change,
modification, extension, discharge or termination is sought.

10.14 Counterparts. This Plan of Merger may be executed in several
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and the
same instrument.

10.15 Binding Effect. This Plan of Merger shall be binding on, and
shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Plan of Merger. No party may assign any right or
obligation hereunder without the prior written consent of the other parties.

10.16 No Rule of Construction. The parties acknowledge that this
Plan of Merger was initially prepared by MedPartners, and that all parties have
read and negotiated the language used in this Plan of Merger. The parties
agree that, because all parties participated in negotiating and drafting this
Plan of Merger, no rule of construction shall apply to this Plan of Merger
which construes ambiguous language in favor of or against any party by reason
of that party's role in drafting this Plan of Merger.

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<PAGE> 40

IN WITNESS WHEREOF, MedPartners, the Subsidiary and ASG have caused
this Plan and Agreement of Merger to be executed by their respective duly
authorized officers, all as of the day and year first above written.

MEDPARTNERS, INC.

By: /s/ Larry R. House
-------------------------
Larry R. House
Chairman, President and
Chief Executive Officer

ASG MERGER CORPORATION

By: /s/ Larry R. House
-------------------------
Larry R. House
President

AMERICA SERVICE GROUP INC.

By: /s/ Scott L. Mercy
-------------------------
Scott L. Mercy
President and
Chief Executive Officer

<PAGE> 1
[MEDPARTNERS LOGO]

FOR IMMEDIATE RELEASE:

Contracts:
FOR MedPartners: For American Service Group:

Harold O. Knight Scott Mercy
Chief Financial Officer President and CEO
205-733-8996 615-373-3100

Randy Pittman
Vice President-Finance
205-733-8996

Tom Bartels
Director - Investor Relations
205-733-8996

Tom Dingledy
Vice President - Communications
205-733-8996

MEDPARTNERS, INC. TO ACQUIRE AMERICAN SERVICE GROUP INC.
FOR $59 MILLION

BIRMINGHAM, ALABAMA AND BRENTWOOD, TENNESSEE-OCTOBER 1, 1997-MedPartners, Inc.
(NYSE:MDM) and America Service Group Inc. (ASG) (Nasdaq:ASGR) today announced
that MedPartners will acquire ASG in a stock transaction valued at $59 million.
ASG provides correctional medical services to 50,000 inmates in 14 states.
Combined with MedPartners' Government Services Division, the entity is the
second largest provider of correctional medical services in the country with
approximately $240 million in annualized revenue. MedPartners became a
provider of correctional care with the acquisition of InPhyNet Medical
Management in June 1997.

<PAGE> 2
Add 1/MedPartners-ASG

Under terms of the agreement, ASG stockholders will receive 0.71 shares
of MedPartners stock for each share of ASG stock; the transaction will be
accounted for as a pooling of interests. It is subject to the approval of ASG
stockholders and other customary regulatory agencies. The transaction is
expected to close in the fourth quarter 1997.

"We are pleased to welcome the physicians, employees and clients of ASG
to the MedPartners family," said Larry R. House, MedPartners' chairman and chief
executive officer. "By combining ASG's 19 years of correctional healthcare
experience with MedPartners' size and experience, we solidify our goal of
being the premier correctional healthcare company. Correctional care is well
positioned to continue its rapid growth, as only 30 percent of all facilities
currently use contracted medical services."

"The addition of ASG is consistent with our growth strategy in the
Government Services Division," said Marta Prado, MedPartners' chief operating
officer of Government Services. "Through this combination, the division will
broaden its geographic scope, improve its operational effectiveness and
strengthen our management team. We will also recognize efficiencies through
economics of scale; elimination of duplicate services and operational
synergies."

ASG operates in 14 states under 34 contracts to provide capitated
services to approximately 50,000 inmates. The combined companies will have 465
affiliated physicians and 84 contracts in 23 states with approximately 100,000
globally capitated lives.

"We are pleased to be joining our team with MedPartners," said Scott L.
Mercy, president and chief executive officer of ASG. "MedPartners' demonstrated
competencies in physician practice management and pharmaceutical services will
generate measurable benefit for ASG clients and employees alike."

<PAGE> 3
Add 2/MedPartners-ASG

America Service Group Inc. is a leading national provider of
correctional healthcare in the United States. ASG contracts with state, county
and local government agencies to provide a wide range of on-site healthcare
programs as well as off-site hospitalization and specialty outpatient care.
The company employs 1,500 medical, professional and support staff nationally.

MedPartners, Inc., based in Birmingham, Alabama, is the nation's
largest manager of physician practices operating in 39 states. The company
develops, consolidates and managers healthcare delivery systems. Through the
company's network of affiliated group and IPA physicians, MedPartners provides
primary and specialty healthcare services to prepaid managed care enrollees and
fee-for-service patients. MedPartners also manages the nation's largerst
independent prescription benefits management (PBM) company. Through the PBM,
the company dispenses 53 million prescriptions annually.