<PAGE>
 
          Effective as of September 30, 1992 Cimarron entered into an employment
agreement with Robert W. Jackson (the "Jackson Agreement").  The Jackson
Agreement provides for Mr. Jackson's continuing employment as President, Chief
Executive Officer and Director of Cimarron for a period of five years. However,
if Mr. Jackson's employment is terminated for cause, his salary will cease as of
such date.  If Mr. Jackson's employment is terminated by death or total or
permanent disability, his salary will cease as of the end of the month in which
such event occurs.  If Mr. Jackson's employment is terminated without cause,
Cimarron will be obligated to pay the salary then being paid for the remainder
of the term of the Jackson Agreement.  In the event that Mr. Jackson voluntarily
resigns for "good reason," Cimarron is obligated to continue to pay the salary
then being paid for the remainder of the term of the Jackson Agreement.  "Good
reason" is defined as (i) the assignment to Mr. Jackson of any duties materially
inconsistent with his position, a substantial change in his reporting
responsibilities or the failure to re-elect him as President, Chief Executive
Officer or Director of Cimarron; (ii) a reduction in Mr. Jackson's base salary
or benefits; (iii) the transfer of Mr. Jackson; or (iv) a material breach by
Cimarron of the Jackson Agreement.  If Mr. Jackson voluntarily resigns without
good reason, his salary will cease as of the date of resignation.



 

              COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

          Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the Commission and the New York
Stock Exchange initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company.  Directors, officers
and greater than 10% stockholders are required by the Commission's regulations
to furnish the Company with copies of all Section 16(a) forms they file.


          To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 1994 all
reports required by Section 16(a) to be filed by its directors, officers and
greater than 10% beneficial owners were filed on a timely basis.



 

               CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          The Company allowed Jack T. Trotter, a director of the Company until
November 1994, the use of a corporate aircraft under an arrangement which
provided the Company with full recovery of the expenses associated with such
use, including all direct and indirect costs.  For fiscal 1994, Mr. Trotter paid
the Company a total of  $317,000 for the use of the corporate aircraft.


          On February 14, 1995, the Company entered into a stock purchase
agreement for the sale of Zapata Protein, Inc. with ZP Acquisition Corp. ("ZP").
R. C. Lassiter held an ownership interest in ZP, which committed to buy all of
the issued and outstanding shares of Zapata Protein for $56 million.  ZP and its
guarantors failed to close the transaction and perform their obligations under
the purchase agreement and related guaranty agreement.  The Company has filed a
lawsuit in the District Court of Harris County, Texas, number 95-26579, styled
Zapata Corporation v. ZP Acquisition Corp., et al, seeking to recover all
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damages arising from the aforementioned failure to close the Zapata Protein
transaction.

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