<PAGE>
 
                               ZAPATA CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 11. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
in conduct constituting breach of fiduciary duty and waste of the Company's
assets in connection with the Company's investment in Envirodyne. The complaint
alleges, among other things, that the purchase of the Envirodyne common stock
from Malcolm Glazer's affiliate was a wrongful expenditure of the Company's
funds and was designed to permit Malcolm Glazer to obtain substantial personal
financial advantages to the detriment of the Company. The complaint seeks
relief including, among other things, rescission of the Company's purchase of
the shares of Envirodyne common stock from the trust controlled by Malcolm
Glazer, voiding of the election of Robert V. Leffler, Jr. and W. George Loar
(both of whom were elected at the Company's Annual Meeting of Stockholders held
on July 27, 1995) and an award of unspecified compensatory damages and
expenses, including attorneys' fees. The compliant alleges, among other things,
that Messrs. Leffler and Loar (both of whom served on the special committee of
the Company's Board of Directors that approved the investment in Envirodyne)
lack independence from Malcolm Glazer because, in the case of Mr. Loar, he was
employed by a corporation indirectly controlled by Malcolm Glazer until his
retirement (which occurred more than five years ago), and in the case of Mr.
Leffler, that he has served as a paid consultant to Malcolm Glazer. The Company
believes that the complaint and allegations contained therein are without merit
and intends to defend the case vigorously.
 
  On November 16, 1995, a petition was filed in the 148th Judicial District
Court of Nueces County, Texas by Peter M. Holt, a former director of the
Company, and certain of his affiliates who sold their interests in Energy
Industries to the Company in November 1993 (collectively, with Mr. Holt, the
"Holt Affiliates"). The petition lists the Company, Malcolm Glazer and Avram
Glazer as defendants and alleges several causes of action based on alleged
misrepresentations on the part of the Company and the other defendants
concerning the Company's intent to follow a long-term development strategy
focusing its efforts on the natural gas services business. The petition did not
allege a breach of any provision of the purchase agreement pursuant to which
the Company acquired Energy Industries from the Holt Affiliates, but alleged
that various representatives of Zapata and Malcolm Glazer made representations
to Mr. Holt regarding Zapata's intention to continue in the natural gas
services industry. Among the remedies sought by the petition are the following
requests: (i) the Company's repurchase of the approximately 2.8 million shares
of Zapata common stock owned by the Holt Affiliates for $15.6 million, an
amount that represents a premium of approximately $4.7 million, or more than
40%, over the market value of such number of shares based on the closing price
of Common Stock on November 16, 1995; (ii) the disgorgement to the Holt
Affiliates of Zapata's profit to be made on its sale of Energy Industries; or
(iii) money damages based on the alleged lower value of the Common Stock had
the alleged misrepresentations not been made. The Company believes that the
petition and the allegations made therein are without merit and intends to
defend the case vigorously.
 
  Zapata is defending various claims and litigation arising from continuing and
discontinued operations. In the opinion of management, uninsured losses, if
any, resulting from these matters and from the matters discussed above will not
have a material adverse effect on Zapata's results of operations, cash flows or
financial position.
 
NOTE 12. FINANCIAL INSTRUMENTS
 
 Concentrations of Credit Risk
 
  As indicated in the industry segment information which appears in Note 16,
the market for the Company's services and products is primarily related to the
marine protein operations whose customers consist primarily of domestic feed
producers. The Company performs ongoing credit evaluations of its customers and
generally does not require material collateral. The Company maintains reserves
for potential credit losses, and such losses have been within management's
expectations.
 
                                       47