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                                                                  EXHIBIT 99.3


                           AMERICA SERVICE GROUP INC.
                               BOARD OF DIRECTORS

                                     CHARTER
                                       OF
                                 AUDIT COMMITTEE

I.       ORGANIZATION

         The Audit Committee (the "Committee") of the Board of Directors shall
         be comprised of three directors who are independent of management and
         the Company. Members of the Committee shall be considered independent
         if they have no relationship to the Company that may interfere with the
         exercise of their independence from management and the Company. All
         Committee members will be financially literate, and at least one member
         will have accounting or related financial management expertise.

II.      STATEMENT OF POLICY

         The Committee shall provide assistance to the directors in fulfilling
         their oversight responsibility to the shareholders, potential
         shareholders, the investment community and others relating to the
         Company's financial statements and the financial reporting process, the
         systems of internal accounting and financial controls, the internal
         audit function and the annual independent audit of the Company's
         financial statements. In so doing, it is the responsibility of the
         Committee to maintain free and open communication between the
         Committee, independent auditors, internal auditors and management of
         the Company. In discharging its oversight role, the Committee is
         empowered to investigate any matter brought to its attention with full
         access to all books, records, facilities and personnel of the Company
         and the power to retain outside counsel or other experts for this
         purpose.

III.     RESPONSIBILITIES

         In carrying out its responsibilities, the Committee believes its
         policies and procedures should remain flexible, in order to best react
         to changing conditions and to ensure to the directors and shareholders
         that the corporate accounting and reporting practices of the Company
         are in accordance with all requirements and are of the highest quality.


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         In carrying out these responsibilities, the Committee will:

                  -     Obtain the full Board of Directors' approval of this
                        Charter and review and reassess this Charter as
                        conditions dictate (at least annually).

                  -     Review and recommend to the directors the independent
                        auditors to be selected to audit the financial
                        statements of the Company and its divisions and
                        subsidiaries.

                  -     Have a clear understanding with the independent auditors
                        that they are ultimately accountable to the Board of
                        Directors and the Committee, as the shareholders'
                        representatives who have the ultimate authority in
                        deciding to engage, evaluate and, if appropriate,
                        terminate their services.

                  -     Review with the independent auditors, the Company's
                        internal auditor, if any, and financial and accounting
                        personnel, the adequacy and effectiveness of the
                        accounting and financial controls of the Company, and
                        elicit any recommendations for the improvement of such
                        internal controls or particular areas where new or more
                        details controls or procedures are desirable. Particular
                        emphasis should be given to the adequacy of internal
                        controls to expose any payments, transactions or
                        procedures that might be deemed illegal or otherwise
                        improper. Further, the Committee periodically should
                        review Company policy statements to determine their
                        adherence to the code of conduct.

                  -     Review reports received from regulators and other legal
                        and regulatory matters that may have a material effect
                        on the financial statements or related Company
                        compliance policies.

                  -     Inquire of management and the independent auditors about
                        significant risks or exposures and assess the steps that
                        management has taken to minimize such risks to the
                        Company.

                  -     Review the quarterly financial statements with financial
                        management and the independent auditors prior to the
                        filing of the Form 10-Q (or prior to the press release
                        of results, if possible) to determine that the
                        independent auditors do not take exception to the
                        disclosure and content of the financial statements and
                        discuss any other matters required to be communicated to
                        the Committee by the auditors. The chair of the
                        Committee may represent the entire Committee for
                        purposes of this review.

                  -     Review the financial statements contained in the annual
                        report to shareholders with management and the
                        independent auditors to determine that the independent
                        auditors are satisfied with the disclosure and content
                        of the financial statements to be presented to the
                        shareholders. Review with financial management and the
                        independent auditors the results of their timely
                        analysis of significant financial reporting issues and
                        practices, including changes in, or adoptions of,
                        accounting principles and disclosure practices, and
                        discuss any other matters required to be communicated to
                        the Committee by the auditors. Also review with
                        financial management and the independent auditors their
                        judgments about the quality, not just acceptability, of
                        accounting principles and the clarity



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                        of the financial disclosure practices used or proposed
                        to be used, and particularly, the degree of
                        aggressiveness or conservatism of the organization's
                        accounting principles and underlying estimates, and
                        other significant decisions made in preparing the
                        financial statements.

                  -     Provide sufficient opportunity for the internal and
                        independent auditors to meet with the members of the
                        Committee without members of management present. Among
                        the items to be discussed in these meetings are the
                        independent auditors' evaluation of the Company's
                        financial and accounting personnel, and the cooperation
                        that the independent auditors received during the course
                        of the audit.

                  -     Review accounting and financial human resources and
                        succession planning within the Company.

                  -     Report the results of the annual audit to the Board of
                        Directors. If requested by the Board, invite the
                        independent auditors to attend the full Board of
                        Directors' meeting to assist in reporting the results of
                        the annual audit or to answer other directors' questions
                        (alternatively, the other directors, particularly the
                        other independent directors, may be invited to attend
                        the Committee meeting during which the results of the
                        annual audit are reviewed).

                  -     On an annual basis, obtain from the independent auditors
                        a written communication delineating all their
                        relationships and professional services as required by
                        Independence Standards Board Standard No. 1,
                        Independence Discussions with Audit Committees. In
                        addition, review with the independent auditors the
                        nature and scope of any disclosed relationships or
                        professional services and take, or recommend that the
                        Board of Directors take, appropriate action to ensure
                        the continuing independence of the auditors.

                  -     Review the report of the Committee in the annual report
                        to shareholders and the annual report on Form 10-K
                        disclosing whether or not the Committee had reviewed and
                        discussed with management and the independent auditors,
                        as well as discussed within the Committee (without
                        management or the independent auditors present), the
                        financial statements and the quality of accounting
                        principles and significant judgments affecting the
                        financial statements.

                  -     Submit the minutes of all meetings of the Committee to,
                        or discuss the matters discussed at each Committee
                        meeting with, the Board of Directors.

                  -     Investigate any matter brought to its attention within
                        the scope of its duties, with the power to retain
                        outside counsel for this purpose if, in its judgment,
                        that is appropriate.

                  -     Review the Company's disclosure in the proxy statement
                        for its annual meeting of shareholders that describes
                        that the Committee has satisfied its responsibilities
                        under this Charter for the prior year. In addition,
                        include a copy of this Charter in the annual report to
                        shareholders or the proxy statement at least triennially
                        or the year after any significant amendment to the
                        Charter.



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