Harbinger Group Inc.
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SEC Filings

HRG GROUP, INC. filed this Form 10-K on 03/28/2002
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process of finding a third party to sublease the New York City office space,
which was previously used by Charged Productions. Zapata also leases office
space in Houston, Texas, which is subleased to Omega Protein for use as
executive offices.
     Omega Protein owns its Reedville, Virginia, Moss Point, Mississippi and
Abbeville, Louisiana plants and the real estate on which they are located
(except for a small leased parcel comprising a portion of the Abbeville
facility). Omega leases from unaffiliated third parties the real estate on which
the Cameron, Louisiana and Morgan City, Louisiana plants are located. Omega also
leases from unaffiliated third parties warehouses and tank space for storage of
its products, generally at terminals located along the Mississippi River and
Tennessee River. Omega's material storage facilities are located in
Guntersville, Alabama, St. Louis, Missouri and East Dubuque, Illinois. In
February 2002, Omega purchased the material storage facility located in St.
Louis, Missouri.
     Zap.Com's headquarters are located in Rochester, New York, in space
subleased to it by Zapata on a month-to-month basis. Zapata has advised Zap.Com
that it will not charge rent or other fees for the use of this space for future
periods until further notice.

     On April 30, 1999, a State District Court in Houston, Texas entered
judgment against Zapata in a lawsuit brought by a former employee which was
commenced on April 1, 1998. The former employee claimed that he was entitled to
the value of options for approximately 240,000 shares (24,000 shares subsequent
to the reverse stock split) of Zapata stock, which he alleges should have been
issued to him in 1998 pursuant to his employment agreement with Zapata. The
judgment against Zapata was for approximately $3.45 million, which includes
pre-judgment interest. Zapata then appealed, and on March 15, 2001, the Court of
Appeals for the 14th District at Houston issued an opinion reversing the jury
verdict in favor of the former employee and rendering judgment in favor of
Zapata. On January 10, 2002, the Texas Supreme Court denied the former
employee's petition for review.
     A non-operating wholly-owned subsidiary of Zapata, Energy Industries, Inc.,
was named as a defendant in three case commenced in 1996 and 1997 pending in the
83rd Judicial District Court of Upton County, Texas involving the death of one
individual and personal injuries to two others. The cases resulted from an
explosion and fire at a gas processing plant in Upton County caused by the
failure of a valve cover. Zapata was named as a defendant in one of the cases.
The owners of the plant have also filed a cross-claim against Energy Industries
for property damage and lost profits resulting from the explosion and fire.
Plaintiffs and the cross-plaintiff owners base their claim on a theory of
manufacturing or design defect of the valve cover. Plaintiffs seek compensatory
damages. Zapata and Energy Industries deny liability in each of the lawsuits,
and have vigorously contested these matters and intend to vigorously defend
against these actions. In January 2002, Zapata's primary insurance carrier for
these lawsuits, for the first time, notified it that it did not believe that
Zapata and Energy Industries had primary insurance coverage for the losses
arising out of these incidents. The insurance carrier had been providing for the
defense of these actions and had not reserved its rights with respect to that
defense. The insurance carrier has not yet discontinued providing for the
defense of these actions or formally reserved its rights with respect to that
defense or formally indicated that it would not provide coverage for any loss
arising out of these lawsuits. Zapata has disputed these assertions that there
is no primary insurance coverage. A loss of primary insurance coverage could
jeopardize excess coverage that Zapata or Energy Industries has for these
claims. These cases involve plaintiffs with very serious injuries, including
death. While the results of any ultimate resolution of these lawsuits cannot be
predicted, in the opinion of the Company's management, based upon discussions
with defense counsel, any losses resulting from these matters will not have a
material adverse effect on Zapata's results of operations, cash flow or
financial position.
     Zapata is involved in litigation relating to claims arising out of its past
and current operations in the normal course of business. Zapata maintains
insurance coverage against such potential ordinary course claims in an amount in
which it believes to be adequate. While the results of any ultimate resolution
cannot be

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