Document:

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                                                                    Exhibit 10.4

                               HEALTHPROJECTS, LLC
                           AMERICA SERVICE GROUP, INC.
                               SERVICES AGREEMENT

This Agreement is entered into by and between America Service Group, Inc.
("ASG"), and healthprojects, LLC ("healthprojects"), this 17th day of September,
2001 ("Effective Date").

In consideration of the mutual promises contained herein, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

SECTION 1: SERVICES; PAYMENT

1.1 Services

      a)    ASG agrees to retain healthprojects to perform the tasks, projects
            and activities (the "Services") as directed by ASG management and
            until such time as ASG management and healthprojects agree is
            necessary.

      b)    A standard list of healthprojects services is included and entitled
            Attachment A ("Description of Services and General Terms"). The
            specific terms and conditions associated with the engagement will be
            delineated in the applicable Attachment A.

      c)    In no event shall healthprojects be required under this Agreement or
            any Attachment A to provide ASG with any proprietary or third-party
            software products, information products, or equipment. Any agreement
            regarding these items will be separate and independent of the terms
            and conditions herein.

1.2 Services for Others

healthprojects and its members shall be free to represent or perform services
for other persons and companies during and after the term of this Agreement,
including consulting or other services for companies whose businesses or
proposed businesses are or might become competitive with the business of ASG
and/or companies or persons with existing or potential business relationships
with ASG.

1.3 Payment

      a)    ASG shall pay healthprojects for the Services rendered under this
            Agreement and related expenses in accordance with the applicable
            Attachment A. In addition, ASG shall pay for additional services as
            mutually agreed in writing by the parties. Such related expenses
            shall include all travel, food, and lodging expenses incurred by
            healthprojects while performing the Services. Such expenses shall be
            presented to ASG monthly along with healthprojects' other charges
            and shall be paid as provided below.

      b)    All payments are net 15 days, unless otherwise specified in the
            applicable Attachment A, with penalties for late payment assessed
            after 30 days as follows: 1.5% per month. In addition, ASG agrees to
            reimburse healthprojects for all reasonable costs of collections,
            including attorneys' fees.

      c)    ASG shall be responsible for any and all applicable taxes. however
            designated, incurred as a result of or otherwise in connection with
            this Agreement or the Services. including but not limited to state
            and local privilege, excise, sales, and use taxes and any taxes or

                                     Page 1

                                 HEALTHPROJECTS
                                  [LETTERHEAD]
<PAGE>
                               HEALTHPROJECTS, LLC
                           AMERICA SERVICE GROUP, INC.
                               SERVICES AGREEMENT

            amounts in lieu thereof paid or payable by healthprojects, but
            excluding taxes based upon the net income of healthprojects.

1.4 Independent Contractor

In making and performing this Agreement, the parties act and shall act at all
times as independent contractors, and at no time shall either party make any
commitments or incur any charges or expenses in the name of the other party.
healthprojects shall be responsible for all compensation, fees and taxes
applicable to its employees and subcontractors. Nothing herein shall be deemed
or construed to create a joint venture, partnership or agency relationship
between the parties for any purpose. This Agreement does not create an
employer-employee relationship between ASG and any of healthprojects' employees.
healthprojects will retain sole and absolute discretion and judgment in the
manner and means of carrying out healthprojects' activities and responsibilities
hereunder.

1.5 No Assignment by healthprojects

This Agreement may not be assigned by healthprojects without the prior written
consent of ASG, except in connection with the sale of all or substantially all
of the assets of healthprojects or in connection with a corporate
reorganization. healthprojects, however, shall have the right to use
subcontractors to perform Services under this Agreement.

1.6 ASG Responsibilities

      a)    ASG shall supply healthprojects personnel with suitable office
            space, desks, storage, and other normal office equipment support,
            including adequate computer resources, telephone service, postage,
            copying, typing, and general office supplies that may be necessary
            in connection with healthprojects' performance of the Services at
            ASG's site.

SECTION 2: CONFIDENTIALITY; INTELLECTUAL PROPERTY

2.1 Confidentiality

      a)    The parties acknowledge that they may have previously executed a
            Confidentiality or Nondisclosure Agreement (the "Confidentiality
            Agreement") The provisions of any Confidentiality Agreement shall
            remain in force; provided, however that ASG acknowledges that it may
            be necessary for healthprojects to disclose certain information in
            contravention of any Confidentiality Agreement relating to ASG in
            order to satisfactorily perform its consulting services hereunder
            and more specifically to further the development of business
            relationships, strategic alliances and partnership arrangements with
            third parties for the benefit of ASG. Accordingly and
            notwithstanding any contrary term in any Confidentiality Agreement,
            healthprojects is hereby authorized to disclose all such
            information, which is reasonable and necessary in order to perform
            the Services. The foregoing authorization shall not, however, apply
            to information that ASG shall have identified as "Strictly
            Confidential - Not to be Disseminated to Third Parties," provided,
            however that advance written notice of such information shall be
            provided to healthprojects.

      b)    ASG agrees that healthprojects may identify ASG as a client of
            healthprojects and use ASG's logo in connection therewith in
            healthprojects' marketing, public relations and

                                     Page 2

                                 HEALTHPROJECTS
                                  [LETTERHEAD]
<PAGE>
                               HEALTHPROJECTS, LLC
                           AMERICA SERVICE GROUP, INC.
                               SERVICES AGREEMENT

            promotional materials, including but not limited to press releases,
            press commentary, electronic and on-line materials. healthprojects
            agrees not to describe the services it provides for ASG in any such
            materials that identify ASG or use ASG's logo without first
            obtaining ASG's consent.

2.2 Intellectual Property

      a)    Except with respect to materials and information provided to
            healthprojects by Customer that is confidential and/or proprietary
            to ASG under the terms of the Confidentiality Agreement,
            healthprojects shall own all intellectual property rights in all
            deliverable items developed by healthprojects in the course of the
            Services, including, but not limited to, any reports, analyses,
            letters, memoranda, documentation, and lists, information and
            materials regarding potential customers, prospects, alliance
            partners, and providers of financing and other services (the "Work
            Product"). In addition, healthprojects shall retain all intellectual
            property rights in all pre-existing reports, analyses, letter, and
            memoranda. documentation, know-how, techniques, lists, information
            and materials regarding potential customers, prospects, alliance
            partners, and providers of financing and other services, as well as
            all other materials, which have been previously developed or
            acquired, by healthprojects and that are used in connection with the
            Services. The parties will cooperate with each other and execute
            such other documents as may be appropriate to achieve the objective
            of this section.

      b)    Upon receipt in full of payment under the applicable Attachment A,
            healthprojects hereby grants ASG a non-exclusive, perpetual,
            royalty-free license to use, copy or modify the Work Product for its
            own benefit or for the benefit of its customers. ASG agrees not to
            sell, distribute or otherwise disclose the Work Product to any third
            party, without healthprojects' prior written consent.

SECTION 3: WARRANTY

healthprojects warrants that its Services will be performed in accordance with
applicable industry standards and the applicable Attachment A. THE PRECEDING
WARRANTY IS HEALTHPROJECTS' SOLE AND EXCLUSIVE WARRANTY CONCERNING THE SERVICES
AND ANY WORK PRODUCT, AND HEALTHPROJECTS DISCLAIMS ALL OTHER WARRANTIES AND
REPRESENTATIONS, EXPRESS OR IMPLIED.

SECTION 4 - LIMITATION OF LIABILITY

4.1 Reliance on Information and Deliverables.

Pursuant to this Agreement, healthprojects may obtain and deliver to ASG
information that has been obtained from a variety of sources, including but not
limited to proprietary data services, government information, industry
publications, ASG press releases, web sites, marketing materials and other
generally available public sources. All information, statements, facts,
analyses, interpretations and opinions contained in healthprojects' deliverables
are provided "AS- IS," without representation or warranty by healthprojects, its
affiliates, officers, employees, contractors or business partners as to
accuracy, completeness, usefulness or otherwise. ASG agrees not to utilize
information provided in order to support the sale of securities and acknowledges
and agrees that healthprojects shall not be deemed to give investment advice or
advocate the purchase or sale of any security or investment.

                                     Page 3

                                 HEALTHPROJECTS
                                  [LETTERHEAD]

<PAGE>
                               HEALTHPROJECTS, LLC
                           AMERICA SERVICE GROUP, INC.
                               SERVICES AGREEMENT

4.2 Limitation of Liability

The limit of healthprojects' liability (whether in contract, tort, negligence,
strict liability in tort, or by statute or otherwise) to ASG or to any third
party concerning performance or non-performance by healthprojects, or in any
manner related to this Agreement, for any and all claims shall not exceed in the
aggregate the fees paid by ASG to healthprojects hereunder with respect to the
work involved. ASG's exclusive remedy for any claim arising out of these
arrangements shall be for healthprojects, upon receipt of written notice, to use
its best efforts to cure the breach at its expense, and, failing that, the
return of fees paid to healthprojects for the work related to the breach.

4.3 Indemnification

      a)    healthprojects covenants and agrees to defend, indemnify and hold
            ASG harmless from and against any and all actions, claims, damages,
            expenses, costs, judgments, legal and other fees, filed or assessed
            against or incurred by ASG as a result of (i) any acts or omissions
            of healthprojects, including, without limitations, any injuries to
            or deaths to persons, or any damage to property or equipment, or
            (ii) the breach by healthprojects of any obligation to ASG as set
            forth in this Agreement.

      b)    ASG covenants and agrees to defend, indemnify and hold
            healthprojects harmless from and against any and all actions,
            claims, damages, expenses, costs, judgments, legal and other fees,
            filed or assessed against or incurred by healthprojects or its
            employees as a result of (i) any acts or omissions of ASG or its
            employees, including, without limitations, any injuries to or deaths
            to persons, or any damage to property or equipment, or (ii) the
            breach by ASG of any obligation to healthprojects as set forth in
            this Agreement. To the extent any individual member of
            healthprojects is appointed as a director of ASG during the term of
            this Agreement, ASG shall indemnify such individual to the same
            extent ASG is required to indemnify its other directors.
            Furthermore, ASG shall provide such individual the same directors
            liability coverage as provided to other directors of ASG.

4.4 Consequential Damages

In no event shall either party be liable for consequential, incidental or
punitive loss, damage or expenses (including but not limited to lost profits,
savings, data, or the cost of recreating lost data), even if it has been advised
of their possible existence. Any action by either party must be brought within
two (2) years after the cause of action arose.

SECTION 5: MISCELLANEOUS

5.1 Actions: Expenses

In the event of any action at law or in equity to enforce the provisions of this
Agreement, the unsuccessful party shall pay to the other all costs and expenses
so incurred, including but not limited to attorneys' fees.

5.2 Governing Law

This Agreement shall be construed in accordance with and governed by the laws of
the State of Tennessee, without regard to its conflicts of law provisions.

                                     Page 4

                                 HEALTHPROJECTS
                                  [LETTERHEAD]

<PAGE>
                               HEALTHPROJECTS, LLC
                           AMERICA SERVICE GROUP, INC.
                               SERVICES AGREEMENT

5.3 Entire Agreement; Amendment; Waiver

This Agreement expresses the entire understanding with respect to the subject
matter hereof and supersedes and terminates any prior oral or written agreements
with respect to the subject matter hereof. Any term of this Agreement may be
amended and observance of any term of this Agreement may be waived only with the
written consent of the parties hereto. Waiver of any term or condition of this
Agreement by any party shall not be construed as a waiver of any subsequent
breach or failure of the same term or condition or a waiver of any other term or
condition of this Agreement. The failure of any party at any time to require
performance by any other party of any provision of this Agreement shall not
affect the right of any such party to require future performance of such
provision or any other provision of this Agreement.

5.4 Force Majeure

Neither party shall be liable for any failure to perform its obligations under
this Agreement if prevented from doing so by a cause or causes beyond its
reasonable control, including but not limited to, personnel unavailability or
shortage that is beyond the reasonable control of a party, Acts of God or the
public enemy, fires, floods, storms, riots, war or restraints of government.

5.5 Term

The term of this Agreement shall commence on the execution hereof and shall
continue until terminated by either of the parties upon 30 days advance written
notice to the other party.

healthprojects and ASG hereby accept and agree to the above terms and execute
this Agreement as of the date first set forth above.

        healthprojects                         America Service Group, Inc.

        By: ___________________________        By: ____________________________

        Name: _________________________        Name: __________________________

        Title: ________________________        Title: _________________________

        Date: _________________________        Date: __________________________

                                     Page 5

                                 HEALTHPROJECTS
                                  [LETTERHEAD]

<PAGE>
                               HEALTHPROJECTS, LLC
                           AMERICA SERVICE GROUP, INC.
                               SERVICES AGREEMENT

                              ATTACHMENT A (Cont.)

A.2 Payment

      Services performed by healthprojects shall be reimbursed based on the
      following hourly rates:

<TABLE>
<S>                               <C>
      Richard D. Wright           $200/hr.
      Eric W. Thrailkill          $150/hr.
      Christopher D. Wright       $150/hr.
</TABLE><PAGE>

                                                                    Exhibit 10.5

                              EMPLOYMENT AGREEMENT

         AGREEMENT dated the 15th day of October, 2001, between Michael W.
Taylor (Employee) and America Service Group Inc., a Delaware Corporation (the
Company).

         WHEREAS, the Company seeks to employ the Employee; and

         WHEREAS, the Employee accepts the positions contemplated herein;

         NOW, THEREFORE, the parties hereby agree as follows:

         1.       Employment and Duties. The Company hereby employs the Employee
as Senior Vice President and Chief Financial Officer of the Company and/or such
other offices and duties as the Company shall reasonably determine from time to
time, consistent with Employee's responsibilities. Employee shall perform the
duties and services of the offices and titles for which he is employed from time
to time hereunder.

         2.       Performance. From the date hereof, Employee agrees to actively
devote all of his time and effort during normal business hours as agreed with
the Company, to the performance of his duties hereunder and to use his
reasonable best efforts and endeavors to promote the interests and welfare of
the Company.

         3.       Term. The term of Employee's employment hereunder shall
commence as of the date hereof and shall continue as an employment at will
unless terminated by written notice from either party to the other at least
thirty (30) days prior to termination.

         4.       Compensation. For all services rendered by Employee, the
Company agrees to pay Employee from and after the date hereof: (i) a salary (the
Base Salary) at an annual rate of not less than Two Hundred thousand and No/100,
payable in such installments as the parties shall mutually agree; plus (ii) such
additional compensation as the Compensation Committee of the Board (the
Committee) shall from time to time determine.

         5.       Employee Benefits. During the period of his employment under
this Agreement, Employee shall be entitled to vacation, insurance, and other
employment benefits customarily provided by the Company to its executives,
including increased or changed benefits as are from time to time provided to the
Company's executives generally.

                                      -1-
<PAGE>
         6.       Expenses. The Company shall promptly pay or reimburse Employee
for all reasonable expenses incurred by him in connection with the performance
of his duties and responsibilities hereunder, including, but not limited to,
payment or reimbursement of reasonable expenses paid or incurred for travel and
entertainment relating to the business of the Company.

         7.       Termination.

         (a)      Termination for Cause. Employee may be terminated from his
employment hereunder, either before Term End or thereafter, and without advance
notice, by the Company for cause. For purposes hereof, cause shall mean: (i)
violation of the material terms of this Agreement, (ii) intentional commission
of an act, or failure to act, in a manner which constitutes dishonesty or fraud
or which has a direct material adverse effect on the Company or its business;
(iii) Employee's conviction of or a plea of guilty to any felony or crime
involving moral turpitude; (iv) continued incompetence, as determined by the
chief executive officer of the Company, using reasonable standards; (v) drug
and/or alcohol abuse which impairs Employees performance of his duties or
employment; (vi) breach of loyalty to the Company, whether or not involving
personal profit, as determined by the chief executive officer of the Company
using reasonable standards; or (vii) failure to follow the directions of the
chief executive officer of the Company within 20 days after notice to Employee
of such failure provided that the directions are not inconsistent with
Employee's duties and further provided that Employee is not directed to violate
any law or take any action that he reasonably deems to be immoral or unethical.

         (b)      Disability, Death. If Employee shall fail to or be unable to
perform the duties required hereunder because of any physical or mental
infirmity, and such failure or inability shall continue for any six (6)
consecutive months while Employee is employed hereunder, the Company shall have
the right to terminate this Agreement. Except as otherwise provided herein, this
Agreement shall terminate upon the death of Employee, and the estate of Employee
shall be entitled to receive all unpaid amounts due Employee hereunder to such
date of death.

         (c)      Termination Without Cause. The Company shall have the right to
terminate the employment of Employee at any time, without cause, cause being
determined under Section 7(a), upon thirty (30) days advance written notice.

         (d)      Change in Control. For purposes of this Agreement, a change in
control of the Company shall mean (a) a change in control of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 (Exchange
Act); provided however, that without limitation, such a change in control shall
be deemed to have occurred if (i) any person (as such term is used in Sections
13(d) and 14(d) (2) of the Exchange Act) other than Employee or any other person
currently the beneficial owner of 10% or more of the outstanding common stock of
the Company, becomes the beneficial owner, directly or indirectly, of securities
of the Company representing 50% or more of the combined voting power of the
Company's then outstanding securities and (b) as a result of such change in
control Employee will not be offered a continuation of his job after such change
in control.

         (e)      Voluntary Termination. Employee may voluntarily terminate his
employment

                                      -2-
<PAGE>
hereunder at any time, for any reason or for no reason.

         (f)      Termination Compensation. If Employee's employment hereunder
is terminated pursuant to Sections 7(a), 7(b) or 7(e) of this Agreement, the
Company shall pay the Employee his full base salary through the Termination
Date, plus, within five (5) business days of the Termination Date, any bonuses,
incentive compensation, or other payments due which pursuant to the terms of any
compensation or benefit plan have been earned or vested at of the Termination
Date. If Employee's employment is terminated by the Company under Section 7(c)
without cause, or if there is a change in control of the Company as defined in
Section 7(d), all unexercised options granted to Employee under the Company's
Incentive Stock Plan or Amended Incentive Stock Plan shall accelerate and shall
immediately vest. If Employee's employment is terminated pursuant to Sections
7(c) or 7(d) of this Agreement, the Company shall pay the Employee the
following:

                  (i)      within five (5) business days of the termination, his
                  full base salary through the Termination Date, plus any
                  bonuses, incentive compensation, or other payments due which
                  pursuant to the terms of any compensation or benefit plan have
                  been earned or vested as of the Termination Date;

                  (ii)     within five (5) business days of the termination, to
                  compensate for all accrued but unpaid leave such as holidays
                  and vacation under the Company's paid leave plan, an amount
                  equal to the Employee's then current base salary multiplied by
                  the product of (A) the total number of leave days accrued,
                  divided by (B) the total number of work days in the fiscal
                  year in which the Termination Date occurs;

         (g)      as of the termination pursuant to Section 7(b), 7(c) or 7(d),
a continuation, on at least a monthly basis, of Employee's annual base salary
for one year following the Termination Date.

         8.       Covenant Not to Compete, Nonemployment, Noninducement.

         (a)      Employee acknowledges that in the course of his employment he
will become familiar with the Company and its affiliates confidential
information concerning the Company and its affiliates and that his services are
of special, unique and extraordinary value to the Company and its affiliates.
Therefore, Employee agrees that, during his employment with the Company, and for
one year after Employee ceases to perform duties hereunder, neither Employee nor
any company with which Employee is affiliated as an employee, consultant or
independent contractor, will directly or indirectly (A) engage in any business
similar to the Business of the Company, as described below, anywhere in the
United States of America, or have interest directly or indirectly in any
Business; provided, however, that nothing herein shall prohibit Employee from
(i) owning in the aggregate not more than 5% of the outstanding stock of any
class of stock of a corporation so long as Employee has no active participation
in the business of such corporation; (ii) affiliating with any company which may
participate in the Business, so long as that participation at the time of
affiliation aggregates less than 10% of such company's revenue; or (iii)
directly or through an affiliate, acquiring, merging or

                                      -3-
<PAGE>
otherwise gaining control, or purchasing an interest in an organization as long
as the Business represents less than 10% of the acquiree's revenue at the time
of the transaction, (B) employ or retain as an independent contractor any
employee of the Company, or (C) recruit, solicit or otherwise induce any
employee of the Company to discontinue such employment relationship. For
purposes hereof, the Business shall consist of (A) delivery of pharmaceuticals
and supplies to correctional facilities, and (B) any other business in which the
Company is significantly engaged as of the date that Employee ceases to perform
duties hereunder.

         (b)      If, at the time of enforcement of this Section 8 a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area.

         (c)      In the event of the breach by Employee of any of the
provisions of this Section 8, the Company, in addition and supplementary to
other rights and remedies existing in its favor, may apply to any court of law
or equity of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce or prevent any violations of the provisions
hereof.

         9.       Notices. All notices hereunder, to be effective, shall be in
writing and shall be deemed delivered when delivered by and or when sent by
first-class, certified mail, postage and fees prepaid, to the following
addresses or as otherwise indicated in writing by the parties:

                  (i)    If to the Company:

                         America Service Group Inc.
                         105 Westpark Drive
                         Nashville, TN 37027
                         Attn:  General Counsel

                 (ii)    If to Employee:

                         Michael W. Taylor
                         105 Westpark Drive
                         Brentwood, TN  37027

         10.      Assignment. This Agreement is based upon the personal services
of Employee and the rights and obligations of Employee hereunder shall not be
assignable except as herein expressly provided. This Agreement shall inure to
the benefit of and be enforceable by the Employee's personal and legal
representatives, executors, administrators, successors, heirs, and distributees,
devisees and legatees. If the Employee should die while entitled to any payments
hereunder, any amounts would still be payable to his estate hereunder as if he
would have continued to live. All such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Employee's devisee, legatee or other designee and if there is no such devisee,
legatee or designee, to the Employee's estate.

                                      -4-
<PAGE>
         11.      Entire Agreement. This Agreement supersedes all prior
understandings and agreements with respect to the provisions hereof and contains
the entire agreement of the parties and may be amended only in writing, signed
by the parties hereto.

         12.      Severability. The provisions of this Agreement are severable,
and the invalidity of any provision shall not affect the validity of any other
provision. In the event that any arbitrator or court of competent jurisdiction
shall determine that any provision of this Agreement or the application thereof
is unenforceable because of the duration or scope thereof, the parties hereto
agree that said arbitrator or court in making such determination shall have the
power to reduce the duration and scope of each provision to the extent necessary
to make it enforceable, and that the Agreement in its reduced form shall be
valid and enforceable to the full extent permitted by law.

         13.      Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company
(except for any severance or termination policies, plans, programs or practices)
and for which the Employee may qualify, nor shall anything herein limit or
reduce such rights as the Employee may have under any other Agreement with the
Company. Amounts which are vested benefits or which the Employee is otherwise
entitled to receive under any plan or program of the Company shall be payable in
accordance with such plan or program, except as explicitly modified by this
Agreement.

         14.      Governing Law. This Agreement shall be construed under the
governed by the internal laws of the State of Tennessee.

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a binding contract as of the day and year first above written.

                                      AMERICA SERVICE GROUP INC.

                                      By:
                                             -----------------------------------

                                      -5-
<PAGE>
                                      EMPLOYEE:

                                      By:
                                             -----------------------------------

                                      -6-

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