<PAGE> 1
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): February 25, 1998
AMERICA SERVICE GROUP INC.
(Exact Name of Registrant as Specified in Charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-19673 51-0332317
(State or Other Jurisdiction of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.)
105 Westpark Drive, Suite 300
Brentwood, Tennessee 37027
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (615) 373-3100
______________________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
Item 5. Other Events
America Service Group Inc. announced today the termination of its
pending Merger Agreement with MedPartners, Inc ("MedPartners"). The merger was
terminated with the mutual consent of the parties.
On February 25, 1998, ASG, MedPartners and a number of affiliates of
MedPartners entered into a Release and Settlement Agreement. The Release and
Settlement Agreement provides that MedPartners will pay ASG $3,510,660.49 in
cash over the next six months and reimburse or assume certain costs of ASG over
the next year totaling approximately an additional $2,000,000, including costs
associated with the terminated Merger Agreement and certain employee benefit
expenses. Each of MedPartners and ASG also released, relinquished, and
discharged all known and unknown claims, counterclaims, demands, rights,
liabilities, obligations, and causes of action, of every nature and description
whatsoever (in equity and at law), including without limitation any of the
foregoing that might have been asserted in litigation between ASG and
MedPartners regarding the terminated merger and in certain other instances. The
Release and Settlement Agreement is attached as Exhibit 2.1 hereto and its
terms are hereby incorporated herein by reference.
In addition, because significant amounts of confidential information
were shared by ASG and MedPartners in preparation for the consummation of the
terminated merger, ASG, MedPartners and certain affiliates of MedPartners
entered into a Non-Compete, Non-Solicitation and Standstill Agreement. Such
agreement provides that for a period of three years no party may directly or
indirectly or by assisting others (i) compete with each other to provide
services equivalent the services provided by any other party to such other
party's existing clients, (ii) recruit or hire away each others employees or
(iii) acquire, conduct a tender offer for or solicit proxies for each others
equity securities or take any other action to effect the control of the
management or the Board of Directors of each other party, among other customary
provisions.
On February 26, 1998, ASG issued a press release relating to the
termination of the Merger Agreement and the execution of the Release and
Settlement 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.
(c) Exhibits:
2.1 Release and Settlement Agreement, dated February 25,
1998, by and among America Service Group Inc.,
MedPartners, Inc., ASG Merger Corporation and EMSA
Correctional Care, Inc.
99.1 Press Release of America Service Group Inc., dated
February 26, 1998.
<PAGE> 3
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: February 26, 1998
<PAGE> 1
EXHIBIT 2.1
RELEASE AND SETTLEMENT AGREEMENT
THIS RELEASE AND SETTLEMENT AGREEMENT (the "Agreement") is made and
entered into this 25th day of February, 1998 by and among MedPartners, Inc., a
Delaware corporation ("MedPartners"), ASG Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of MedPartners (the "Subsidiary"),
EMSA Correctional Care, Inc., a Delaware corporation and an indirect wholly
owned subsidiary of MedPartners ("EMSA"), and America Service Group Inc., a
Delaware corporation ("ASG").
WITNESSETH:
WHEREAS, MedPartners, the Subsidiary and ASG entered into that certain
Plan and Agreement of Merger, dated October 1, 1997 (the "Merger Agreement"),
as amended by the Amendment to Plan and Agreement of Merger, dated December 29,
1997 (the "First Amendment"), and the Consent and Agreement, dated January 19,
1998 (the "Second Amendment") (collectively, the "Amended Merger Agreement");
WHEREAS, in connection with the negotiations surrounding the Merger
Agreement, MedPartners and ASG entered in that certain Confidentiality
Agreement, dated July 28, 1997;
WHEREAS, in the absence of this Agreement, ASG will file a lawsuit
against MedPartners and Subsidiary seeking actual, consequential and punitive
damages for the breach of certain of their representations, warranties,
covenants and agreements contained in the Amended Merger Agreement, and various
tort law claims, among other causes of action (the "Action");
WHEREAS, the Parties hereto wish to terminate the Amended Merger
Agreement and release their respective rights, claims, obligations and
liabilities thereunder;
<PAGE> 2
WHEREAS, in partial consideration of the payment by MedPartners to
ASG, ASG will assign all of its rights to EMSA and EMSA will assume all of
ASG's obligations and liabilities under each of the Joint Venture Agreements
between Prison Health Services, Inc. and EMSA related to the provision of
services to (i) Augusta-Richmond County, Georgia (3 facilities), (ii) Central
Region New York (Specialty Care Program), (iii) Ector County Detention Center,
Texas, (iv) Floyd County Indigent Care, Georgia, (v) Franklin County, Ohio,
(vi) Hampton Roads Regional Jail (Portsmith), Virginia, (vii) Marion County
Jail, Florida, (viii) State of New Mexico, and (ix) Trumball Correctional
Institution, Ohio (the "Joint Venture Agreements"); and
WHEREAS, in consideration of the covenants and consideration herein
set forth, MedPartners will assume all of ASG's obligations and liabilities
under the leases of the office space comprising ASG's Atlanta, Georgia, and
Newark, Delaware, regional offices and ASG will assign to MedPartners all of
its right, title and interest in and to any amounts received with respect to
any sublease or assignment of the Leases.
WHEREAS, the Parties are entering into a Non-Compete, Non-Solicitation
and Standstill Agreement (the "Non- Compete Agreement") in connection with the
settlement effected pursuant to this Agreement.
NOW, THEREFORE, in consideration of the covenants and consideration
herein set forth, and the payment described herein, the receipt and sufficiency
of which are hereby acknowledged by each of the Parties hereto, the Parties
agree as follows:
-2-
<PAGE> 3
ARTICLE 1.
DEFINITIONS
As used in this Agreement, the following terms have the meanings
specified below:
(a) "ASG" shall mean ASG and its predecessors,
successors, subsidiaries, affiliates, parents, divisions,
partners, assigns, insurers, agents, representatives, and present
or former directors, officers, and employees.
(b) "Leases" shall mean, collectively, the Lease, dated
September 19, 1996, between Piedmont Center, 1-4 LLC, a Delaware
limited liability company, and ASG, as amended, and the Agreement
of Lease, dated as of February 1, 1997, between American Trading
Real Estate Properties, Inc., a Maryland corporation, and Prison
Health Services, Inc., a Delaware corporation.
(c) "MedPartners" shall mean MedPartners, Inc. and its
predecessors, successors, subsidiaries, affiliates, parents,
divisions, partners, assigns, insurers, agents, representatives,
and present or former directors, officers, and employees,
including Subsidiary and EMSA.
(d) "Parties" means MedPartners and ASG, collectively.
(e) "Non-Compete Agreement" means the Non-Compete,
Non-Solicitation and Standstill Agreement attached hereto as
Exhibit A.
(f) "Released Claims" means all known and unknown
claims, counterclaims, demands, rights, liabilities, obligations,
and causes of action, of every nature and description whatsoever
(in equity and at law), including without limitation any of the
-3-
<PAGE> 4
foregoing that (i) might have been asserted by ASG or MedPartners in
the Action; (ii) arise out of or relate to (A) the Amended Merger
Agreement or (B) any of the facts that could have been alleged in the
Action; (iii) arise out of or relate to the Joint Venture
Agreements, including, without limitation, Section 2.08 thereof; or
(iv) arise out of or relate to ASG's employment of Mr. Gerald F.
Boyle. Notwithstanding the foregoing, Released Claims shall not
include any known or unknown claims, counterclaims, demands, rights,
liabilities, obligations, and causes of action, of every nature and
description whatsoever (in equity and at law) arising under or related
to the Confidentiality Agreement or the Non-Compete Agreement.
ARTICLE 2.
THE SETTLEMENT
2.1 Upon execution of this Agreement, MedPartners will pay
ASG the amounts set forth in Schedule 1 to this Agreement at the times set forth
therein, which payments, together with the performance by MedPartners of its
obligations set forth in Sections 2.5 and 2.6 shall be in full satisfaction of
the Released Claims and as consideration for ASG's interest in the Joint Venture
Agreements.
2.2 In consideration of the mutual covenants herein, and
upon execution of this Agreement, MedPartners hereby fully, finally, and forever
releases, relinquishes, and discharges all Released Claims against ASG. In
connection with such release, MedPartners and EMSA agree that they, their
affiliates, officers or directors will not arrange for, cooperate with, consent
to, encourage, support, supply information to, or solicit any individual, entity
or group (including stockholders of ASG) in the pursuit or prosecution of any
Released Claim against
-4-
<PAGE> 5
ASG, its officers or directors, unless in the written opinion of counsel to
MedPartners such action is necessary for MedPartner's Board of Directors to
fulfill its fiduciary duty or is otherwise required by law. In the event any
individual, entity or group (including stockholders of MedPartners) shall elect
to pursue a derivative suit (or any similar such action) involving any Released
Claim, MedPartners shall file a motion with the appropriate court for dismissal
of the suit and shall fully cooperate with ASG in the defense of any such suit
unless in the written opinion of counsel to MedPartners such action is
inconsistent with Fed.R.Civ.P. 11, similar state law provisions, or the
fiduciary duties of MedPartner's Board of Directors, or any committee thereof.
ASG shall reimburse MedPartners for any and all reasonable expenses incurred by
MedPartners in connection with filing such motion or cooperating with ASG in
such defense. Notwithstanding the foregoing, in the event MedPartners is a
named defendant in any such action, it shall assume and be responsible for any
attorney's fees, costs and expenses associated with its defense, except as set
forth in the preceding sentence.
2.3 In consideration of the mutual covenants herein, and upon
execution of this Agreement, the Joint Venture Agreements are hereby amended to
delete the entirety of Section 2.08, Article V and Section 10.02 of each Joint
Venture Agreement.
2.4 EMSA hereby assumes from ASG and ASG hereby assigns to EMSA the
Joint Venture Agreements and all of ASG's rights and obligations thereunder.
2.5 MedPartners hereby assumes all of ASG's obligations pursuant to
the Leases, effective as of February 1, 1998. ASG hereby assigns to
MedPartners all of its right, title and interest in and to any and all amounts
paid by any sublessee or assignee of the Leases or either of them and hereby
agrees to co-operate with MedPartners in its efforts to sublease or
-5-
<PAGE> 6
assign the Leases. MedPartners agrees to pay to ASG on the date of the
execution hereof the sum of $4,339.50, representing the amount of the security
deposit paid by ASG with respect to the Leases. ASG agrees that MedPartners
shall be entitled to receive, and agrees to pay to MedPartners, the amount of
any refund of such security deposit received by ASG.
2.6 MedPartners shall maintain at its own expense, the same employee
benefits program presently in effect for all employees of ASG, which employee
benefits program is more particularly described on Schedule 2 hereto, for the
period from January 1, 1998, through December 31, 1998. MedPartners shall
provide such benefits in a manner that will not require "reenrollment" by ASG's
employees.
2.7 MedPartners and EMSA jointly and severally agree to indemnify and
hold harmless ASG from, against and in respect of any and all claims,
liabilities, obligations, losses, costs, expenses, penalties, fines and
judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, cost of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to the Joint Venture Agreements.
2.8 In consideration of the mutual covenants herein, and upon
execution of this Agreement, ASG hereby fully, finally, and forever releases,
relinquishes, and discharges all Released Claims against MedPartners. In
connection with such release, ASG agrees that it, its affiliates, officers or
directors will not arrange for, cooperate with, consent to, encourage, support,
supply information to, or solicit any individual, entity or group (including
stockholders of ASG) in the pursuit or prosecution of any Released Claim
against MedPartners, its officers or directors, unless in the written opinion
of counsel to ASG such action is necessary for ASG's
-6-
<PAGE> 7
Board of Directors to fulfill its fiduciary duty or is otherwise required by
law. In the event any individual, entity or group (including stockholders of
ASG) shall elect to pursue a derivative suit (or any similar such action)
involving any Released Claim, ASG shall file a motion with the appropriate
court for dismissal of the suit and shall fully cooperate with MedPartners in
the defense of any such suit unless in the written opinion of counsel to ASG
such action is inconsistent with Fed.R.Civ.P. 11, similar state law provisions,
or the fiduciary duties of ASG's Board of Directors, or any committee thereof.
MedPartners shall reimburse ASG for any and all reasonable expenses incurred by
ASG in connection with filing such motion or cooperating with MedPartners in
such defense. Notwithstanding the foregoing, in the event ASG is a named
defendant in any such action, it shall assume and be responsible for any
attorney's fees, costs and expenses associated with its defense, except as set
forth in the preceding sentence.
2.9 The Parties agree to mutually terminate the Amended Merger
Agreement pursuant to Section 8.1(a) of the Merger Agreement.
2.10 Pursuant to Paragraph 1 of the Confidentiality Agreement
dated July 28, 1997, by and between ASG and MedPartners, ASG and MedPartners
and their respective affiliates shall promptly destroy all "Confidential
Information" (as defined in the Confidentiality Agreement) furnished by either
of them to the other.
ARTICLE 3.
OTHER
3.1 In entering into this Agreement, the undersigned represent that
they have read all the terms hereof, have discussed the terms with counsel and
that such terms are fully understood and voluntarily accepted.
-7-
<PAGE> 8
3.2 This Agreement shall be in all respects interpreted, enforced, and
governed by and under the laws of the State of Delaware, without regard to the
conflict of laws principles thereof.
3.3 Each party to this Agreement acknowledges that this Agreement
supersedes all prior agreements, discussions, or representations, whether oral
or written, with respect to the subject matter hereof, with the exception of
the Confidentiality Agreement and the Non-Compete Agreement. This Agreement
specifically supersedes the Amended Merger Agreement and the Joint Venture
Agreements. The Parties further acknowledge that this Agreement cannot be
varied or amended except by writing signed by the Parties hereto.
3.4 Each party represents and warrants that the person executing this
Agreement in its behalf is duly authorized and fully competent to execute this
Agreement in its behalf.
3.5 All payments required to be made pursuant to this Agreement shall
be made on the due date by wire transfer of immediately available funds to the
account of ASG specified on Schedule 1 hereto. Any payment that is required to
be made on a due date that is not a day on which commercial banks are open for
business in either Birmingham, Alabama, or Nashville, Tennessee, shall be made
on the next day on which such banks in both such cities are open for business,
without interest. Subject to the preceding sentence, any payment due pursuant
to this Agreement that is not paid on the due date shall bear interest at an
interest rate per annum equal to the "prime rate" from time to time announced
by SunTrust Bank, Atlanta, Georgia, plus 2%. If ASG shall be required to
collect any amount due to it pursuant to this Settlement Agreement by law or
through an attorney at law, MedPartners shall pay all reasonable costs of
-8-
<PAGE> 9
collection incurred by ASG, including, without limitation, reasonable
attorney's fees, to the extent actually incurred.
3.6 This Agreement shall be construed without regard to the Party or
Parties responsible for its preparation, and it shall be deemed to have been
prepared jointly by both Parties. Any ambiguity or uncertainty arising herein
shall not be interpreted or construed against any Party hereto.
CONSENTED AND AGREED:
MEDPARTNERS, INC.
By: /s/ Tracy P. Thrasher
---------------------------------
Name: Tracy P. Thrasher
Title: Secretary
ASG MERGER CORPORATION
By: /s/ Tracy P. Thrasher
---------------------------------
Name: Tracy P. Thrasher
Title: Secretary
EMSA CORRECTIONAL CARE, INC.
By: /s/ Tracy P. Thrasher
---------------------------------
Name: Tracy P. Thrasher
Title: Secretary
-9-
<PAGE> 10
AMERICA SERVICE GROUP INC.
By: /s/ Scott L. Mercy
------------------------------------
Name: Scott L. Mercy
Title: President and Chief
Executive Officer
-10-
<PAGE> 11
SCHEDULE 1 TO SETTLEMENT AGREEMENT
<TABLE>
<CAPTION>
PAYMENT AMOUNT: DUE DATE:
- --------------- ---------
<S> <C>
On execution $1,694,660.50
On April 1, 1998 $605,333.33
On July 1, 1998 $605,333.33
On September 1, 1998 $605,333.33
</TABLE>
WIRE TRANSFER INSTRUCTIONS:
All amounts due to ASG pursuant to the Settlement Agreement shall be remitted
to such account as shall be specified by ASG to MedPartners in writing.
-11-
<PAGE> 1
[AMERICA SERVICE GROUP INC. LOGO]
EXHIBIT 99.1
NEWS RELEASE
FOR RELEASE: February 26, 1998
Immediate
CONTACT: Scott L. Mercy Bruce A. Teal
President & CEO Sr. Vice President & CFO
(615) 376-1314 (615) 376-1361
AMERICA SERVICE GROUP INC. ANNOUNCES TERMINATION OF
MEDPARTNERS' MERGER AND SETTLEMENT AGREEMENT
NASHVILLE, TN (February 26, 1998) - American Service Group Inc. (NASDAQ:ASGR)
today announced the termination of its pending Merger Agreement with
MedPartners, Inc. (NYSE:MDM) and the execution of a Release and Settlement
Agreement with MedPartners.
The Merger Agreement was terminated upon the mutual consent of the parties.
The Settlement Agreement provides for MedPartners' cash payment to ASG of
approximately $3.5 million, and MedPartners' reimbursement or assumption of
certain other ASG costs of approximately $2.0 million. Due to the exchange of
confidential information in connection with the merger transaction, the
Settlement Agreement also contains customary non-competition, non-solicitation
and standstill provisions for three years.
"As originally planned, a combination of the correctional healthcare businesses
of ASG and MedPartners could have created significant value for all
stakeholders," said Scott L. Mercy, President and Chief Executive Officer.
"However, changed circumstances now require that ASG pursue its own
opportunities in this dynamic industry. We are pleased that we were able to
work with MedPartners' management to bring merger-related issues to closure."
ASG, through it principal operating subsidiary, Prison Health Services, Inc.,
is a leading national provider of correctional healthcare services in the
United States. The company employs over 1,500 clinical staff to provide
comprehensive medical care under contracts with state, country and local
government agencies.
[END]
