<PAGE>   1





                                  EXHIBIT 10r






                              EMPLOYMENT AGREEMENT


     THIS AGREEMENT, made and entered into as of January 1, 1997 by and between
PETER S. WILLMOTT (the "Executive") and Zenith Electronics Corporation (the
"Company");

WITNESSETH THAT:

     WHEREAS, the parties desire to enter into this Agreement pertaining to the
employment of the Executive by the Company;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, it is hereby covenanted and agreed by the Executive and the
Company as follows:

     1.  Performance of Services.  The Executive's employment with the Company
shall be subject to the following:

(a)  Subject to the terms of this Agreement, the Company hereby agrees to
     employ the Executive as its President and Chief Executive Officer during
     the Agreement Term (as defined below), and the Executive hereby agrees to
     remain in the employ of the Company during the Agreement Term.  During the
     Agreement Term, while he is employed by the Company, the Executive shall
     be a member of the Board of Directors of the Company (the "Board").

(b)  During the Agreement Term, while the Executive is employed by the
     Company, the Executive shall devote his full time, energies and talents to
     serving as its President and Chief Executive Officer.

(c)  The Executive agrees that he shall perform his duties faithfully and
     efficiently subject to the directions of the Board.  The Executive's
     duties may include providing services for both the Company and the
     Subsidiaries (as defined below), as determined by the Board; provided,
     that the Executive shall not, without his consent, be assigned tasks that
     would be inconsistent with those of President and Chief Executive Officer.
     The Executive will have such authority, power, responsibilities and
     duties as are inherent to his positions and necessary to carry out his
     responsibilities and the duties required of him hereunder.

(d)  Notwithstanding the foregoing provisions of this paragraph 1, during the
     Agreement Term, the Executive may devote reasonable time to activities
     other than those required under this Agreement, including the supervision
     of his personal investments, and activities involving professional,
     charitable, educational, religious and similar types of organizations,
     speaking engagements, membership on the boards of directors of other
     organizations, and similar type activities, to the extent that such other
     activities do not, in the judgement of the Board, materially inhibit or
     prohibit the performance of the Executive's duties under this Agreement,
     or conflict in any material way with the business of the Company or any
     Subsidiary.

(e)  Subject to the provisions of this Agreement, the Executive shall not be
     required to perform services under this Agreement during any period that
     he is Disabled.  The Executive shall be considered "Disabled" during any
     period in which he has a physical or mental disability which
     renders him incapable, after reasonable accommodation, of performing his
     duties under this Agreement.  In the event of a dispute as to whether 
     the


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     Executive is Disabled, the Company may refer the same to a mutually
     acceptable licensed practicing physician, and the Executive agrees
     to submit to such tests and examinations as such physician shall deem
     appropriate.

(f)  The "Agreement Term" shall be the period beginning on January 1, 1997
     (the "Effective Date") and ending on December 29, 1998.

(g)  For purposes of this Agreement, the term "Subsidiary" shall mean any
     corporation, partnership, joint venture or other entity during any period
     in which at least a fifty percent interest in such entity is owned,
     directly or indirectly, by the Company (or a successor to the Company).

     2.  Compensation.  Subject to the terms of this Agreement, during the
Agreement Term, while the Executive is employed by the Company, the Company
shall compensate him for his services as follows:

(a)  The Executive shall receive, in substantially equal monthly or more
     frequent installments, in accordance with the Company's regular payroll
     practices, an annual base salary of $750,000 (the "Salary").

(b)  For Company performance based on the performance period beginning on the
     Effective Date and ending December 31, 1997 (the "1997 Performance
     Period") and for the performance period beginning on the January 1, 1998
     and ending December 31, 1998 (the "1998 Performance Period"), the
     Executive shall participate in a bonus program.  The bonus program shall
     provide, for each performance period, a maximum bonus amount of 120% of
     the Executive's annual Salary, and a minimum bonus amount for each
     performance period of not less than   60% of the Executive's annual
     Salary, with the minimum payable only if the target goals for the
     performance period are achieved.  The performance goals for each
     performance period shall be established by the Organization and
     Compensation Committee of the Board after consultation with the Executive.
     The performance goals for the 1997 Performance Period shall be
     established not later than March 31, 1997.  The value for each bonus award
     will be distributed in cash.  For the 1997 Performance Period, the bonus
     shall be distributed not later than February 28, 1998, and for the 1998
     Performance Period, the bonus shall be distributed not later than February
     28, 1999. Notwithstanding the foregoing provisions of this paragraph (b),
     for the 1997 Performance Period, the Executive shall be entitled to a
     bonus of not less than $450,000.

(c)  As provided in Exhibit 1, which is attached to and forms a part of this
     Agreement, the Executive shall be entitled to receive a cash payment based
     on the value of 150,000 shares of common stock of the Company ("Company
     Stock").

(d)  As provided in Exhibit 2, which is attached to and forms a part of this
     Agreement, the Executive shall be entitled to receive the award of options
     to purchase 150,000 shares of Company Stock.

(e)  The Executive shall be provided with the welfare benefits and other
     fringe benefits to the same extent and on the same terms as those benefits
     are provided by the Company from time to time to the Company's other
     senior management employees, except that the Salary, and the bonus,
     stock-based awards, and other incentive compensation benefits for the
     Executive shall be determined under the provisions of this agreement
     rather than the policies applicable to other employees.

(f)  If the Executive's Date of Termination is December 29, 1998, and he is
     precluded from receiving an allocation under the Zenith Salaried Profit
     Sharing Retirement Plan and/or the Zenith Electronics Corporation
     Supplemental Salaried Profit Sharing Retirement Plan for the year ending
     December 31, 1998 by reason of his not being employed by the Company on
     that date, the Company shall make a cash payment to the Executive equal to
     the amount which would have been allocated to his accounts under those
     plans, based on his actual compensation from the Company for 1998, but
     determined as though he had been employed through December 31, 1998.  Such
     payment shall be made not later than January 20, 1999.



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(g)  The Executive shall be provided, at the Company's expense, transportation
     between his home and the office, and the Executive is authorized to incur
     reasonable expenses for entertainment, traveling, meals, lodging and
     similar items in promoting the Company's business.  The Company will
     reimburse the Executive for all reasonable expenses so incurred, and for
     reasonable legal fees incurred in connection with the negotiation of this
     Agreement.

(h)  The Executive shall be entitled to coverage under the indemnification
     agreement dated April 24, 1990 between the Executive and the Company (the
     "Indemnification Agreement"), and coverage under such agreement shall
     continue during the period in which the Executive is employed, and for
     five years after the Date of Termination, or such period longer than five
     years as is consistent with the Company policy applicable to other senior
     executives of the Company.

     3.  Termination.  The Executive's employment with the Company during the
Agreement Term may be terminated by the Company or the Executive without any
breach of this Agreement only under the circumstances described in paragraphs
3(a) through 3(f):

(a)  Death.  The Executive's employment hereunder will terminate upon his
     death.

(b)  Disability. The Company may terminate the Executive's employment during
     any period in which he is Permanently Disabled.  The Executive shall be
     considered "Permanently Disabled" during any period in which (i) he has a
     physical or mental disability which renders him incapable, after
     reasonable accommodation, of performing his duties under this Agreement;
     and (ii) such disability is determined by the Board to be of a long-term
     nature.  In the event of a dispute as to whether the Executive is
     Permanently Disabled, the Company may refer the same to a mutually
     acceptable licensed practicing physician, and the Executive agrees to
     submit to such tests and examination as such physician shall deem
     appropriate.

(c)  Cause.  The Company may terminate the Executive's employment hereunder at
     any time for Cause.  For purposes of this Agreement, the term "Cause"
     shall mean:

     (i)  the willful and continued failure by the Executive to substantially
     perform his duties with the Company (other than any such failure resulting
     from the Executive's being Disabled) within a reasonable period of time
     after a written demand for substantial performance is delivered to the
     Executive by the Board, which demand specifically identifies the manner in
     which the Board believes that the Executive has not substantially
     performed his duties;

     (ii)  the willful engaging by the Executive in conduct which is
     demonstrably and materially injurious to the Company, monetarily or
     otherwise; or

     (iii)  the engaging by the Executive in egregious misconduct involving
     serious moral turpitude to the extent that, in the reasonable judgment of
     the Company's Board, the Executive's credibility and reputation no longer
     conform to the standard of the Company's executives.

     For purposes of this Agreement, no act, or failure to act, on the
     Executive's part shall be deemed "willful" unless done, or omitted to be
     done, by the Executive not in good faith and without reasonable belief
     that the Executive's action or omission was not contrary to the best
     interest of the Company.

(d)  Constructive Discharge.  If (i) the Company commits a material breach of
     the Agreement; (ii) the Executive provides written notice to the Company
     of the occurrence of such material breach, which specifically identifies
     the manner in which the Executive believes that the breach has occurred;
     (iii) the Company fails to correct such breach within a reasonable time
     (not to exceed 10 business days) after such notice is given; and (iv)
     the Executive resigns within the 60-calendar-day period following the
     Executive's discovery of such breach, then, for purposes of this paragraph
     3(d), the Executive shall be considered to have been dismissed by the
     Company for reasons other than Cause. For purposes of this paragraph (d),
     a "material 


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     breach" of the Agreement shall include (without limitation), in the
     absence of the Executive's express written consent, the occurrence of
     either of the following circumstances:

     (i)  The assignment to the Executive of any duties materially inconsistent
     with the Executive's position as President and Chief Executive Officer, or
     the removal from the Executive of the authority for any material
     responsibilities normally attendant to the office of the President and
     Chief Executive Officer.

     (ii)  The failure of the Executive to be elected as a member of the Board.

(e)  Termination by Executive.  The Executive may terminate his employment
     hereunder at any time for any reason by giving the Company prior written
     Notice of Termination (as defined in paragraph 3(g)), which Notice of
     Termination shall be effective not less than 30 calendar days after it is
     given to the Company, provided that nothing in this Agreement shall
     require the Executive to specify a reason for any such termination.
     However, to the extent that the procedures specified in paragraph 3(d) are
     required, the procedures of this paragraph 3(e) may not be used in lieu of
     the procedures required under paragraph 3(d).

(f)  Termination by Company.  The Company may terminate the Executive's
     employment hereunder at any time for any reason, by giving the Executive
     prior written Notice of Termination, which Notice of Termination shall be
     effective immediately, or such later time as is specified in such notice.
     The Company shall not be required to specify a reason for the termination
     under this paragraph 3(f), provided that termination of the Executive's
     employment by the Company shall be deemed to have occurred under this
     paragraph 3(f) only if it is not for reasons described in paragraph 3(b),
     3(c), 3(d) or 3(e).

(g)  Notice of Termination.  Any termination of the Executive's employment by
     the Company or the Executive (other than a termination pursuant to
     paragraph 3(a)) must be communicated by a written Notice of Termination to
     the other party hereto.  For purposes of this Agreement, a "Notice of
     Termination" means a dated notice which indicates the specific termination
     provision in this Agreement relied on and which sets forth in reasonable
     detail the facts and circumstances, if any, claimed to provide a basis for
     termination of the Executive's employment under the provision so
     indicated.

(h)  Date of Termination.  "Date of Termination" means the last day the
     Executive is employed by the Company, provided that the Executive's
     employment is terminated in accordance with the foregoing provisions of
     this paragraph 3.

     4.  Rights Upon Termination.  The Executive's right to payment and
benefits under this Agreement for periods after his Date of Termination shall
be determined in accordance with the following provisions of this paragraph 4:

(a)  General.  If the Executive's Date of Termination occurs during the
     Agreement Term for any reason, the Company shall pay to the Executive:

     (i)  The Executive's Salary for the period ending on the Date of
     Termination.

     (ii)  Payment for unused vacation days, as determined in accordance with
     Company policy as in effect from time to time, which amounts shall be paid
     in accordance with the Company's regular payroll practices.


     (iii)  Payment of any unpaid bonus amount for the 1997 Performance Period
     in accordance with actual performance for the period (subject to the
     minimum for the period set forth above), but only if the Date of
     Termination has occurred on or after December 31, 1997.  Amounts paid
     under this paragraph (iii) shall be paid to the Executive at the time such
     bonus amounts would otherwise have been paid to the Executive if he had
     remained in the employ of the Company through the end of the Agreement
     Term.





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     (iv)  Any other payments or benefits due to be provided to the Executive
     pursuant to any employee compensation or benefit plans or arrangements (as
     the terms of those compensation or benefit plans or arrangements may be    
     modified by paragraph 2 of this Agreement), to the extent such payments
     and benefits are earned as of the Date of Termination.  Except as may
     otherwise be expressly provided to the contrary in this Agreement, nothing
     in this Agreement shall be construed as requiring the Executive to be
     treated as employed by the Company for purposes of any employee benefit
     plan or arrangement following the date of the Executive's Date of
     Termination.

(b)  Resignation and Termination for Cause.  If the Executive's Date of
     Termination occurs during the Agreement Term under circumstances described
     in paragraph 3(c) (relating to the Executive's termination for Cause) or
     paragraph 3(e) (relating to the Executive's resignation), then, in
     addition to the amounts payable in accordance with paragraph 4(a):

     (i)  All unexercised stock options granted to the Executive prior to the
     Date of Termination and which are exercisable immediately prior to the
     Date of Termination shall continue to be exercisable by the Executive for
     a period of 90 days after the Date of Termination.

     (ii)  The Executive shall receive a cash payment from the Company equal to
     the Fair Market Value of the vested Share Units credited to his Stock
     Account as of the Date of Termination.

(c)  Death.  If the Executive's Date of Termination occurs during the
     Agreement Term because of the Executive's death, then, in addition to the
     amounts payable in accordance with paragraph 4(a):

     (i)  The Executive's estate shall receive from the Company, for the period
     continuing through the end of the Agreement Term, the Salary amount
     described in paragraph 2(a), as in effect on his Date of Termination, in
     monthly or more frequent installments in accordance with the Company's
     regular payroll practices.

     (ii)  The Executive's estate shall receive from the Company a payment (or
     payments) in lieu of bonus (or bonuses).  If the Date of Termination
     occurs during the 1997 Performance Period, the Executive's estate shall be
     entitled to a payment based on actual performance for that performance
     period (provided that such amount shall be not less than $450,000), and
     the Executive's estate shall be entitled to a payment for the 1998
     Performance Period in an amount determined by the Board, provided that
     such amount shall be not less than $450,000.  If the Date of Termination
     occurs during the 1998 Performance Period, the Executive's estate shall be
     entitled to a payment based on actual performance for that performance
     period.  Amounts payable under this paragraph (ii) shall be paid at the
     time such bonus amounts would otherwise have been paid to the Executive if
     he had remained in the employ of the Company through the end of the
     Agreement Term.

     (iii)  All unexercised stock options granted to the Executive prior to the
     Executive's death (regardless of whether they are exercisable prior to the
     Date of Termination) shall be exercisable by the Executive's estate, heirs
     and assigns for a period expiring on the third anniversary of the Date of
     Termination.

     (iv)  The Executive's estate shall receive a cash payment from the Company
     equal to the Fair Market Value of the Share Units credited to his Stock
     Account as of the Date of Termination (regardless of whether such Share
     Units are vested prior to the Date of Termination).

     By writing filed with the Company in accordance with the procedures
     established by it, the Executive may designate one or more beneficiaries
     to receive the benefits which would otherwise be provided to the
     Executive's estate under this paragraph (c).

(d)  Disability.  If the Executive's Date of Termination occurs during the
     Agreement Term under circumstances described in paragraph 3(b) (relating
     to the Executive's being Disabled), then, in addition to the amounts
     payable in accordance with paragraph 4(a):



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     (i)  The Executive shall receive from the Company for the period
     continuing through the end of the Agreement Term (regardless of whether
     the Executive continues to be Disabled through the end of the Agreement
     Term), the Salary amount described in paragraph 2(a), as in effect on his
     Date of Termination, in monthly or more frequent installments in
     accordance with the Company's regular payroll practices.

     (ii)  The Executive shall receive from the Company a payment (or payments)
     in lieu of the bonus (or bonuses).  If the Date of Termination occurs
     during the 1997 Performance Period, the Executive shall be entitled to a
     payment based on actual performance for that performance period (provided
     that such amount shall be not less than $450,000), and the Executive shall
     be entitled to a payment for the 1998 Performance Period in an amount
     determined by the Board, provided that such amount shall be not less than
     $450,000. If the Date of Termination occurs during the 1998 Performance
     Period, the Executive shall be entitled to a payment based on actual
     performance for that performance period.  Amounts payable under this
     paragraph (ii) shall be paid at the time such bonus amounts would
     otherwise have been paid to the Executive if he had remained in the employ
     of the Company through the end of the Agreement Term.

     (iii)  All unexercised stock options granted to the Executive prior to the
     Date of Termination (regardless of whether they are exercisable prior to
     the Date of Termination) shall be exercisable by the Executive for a
     period expiring on the third anniversary of the Date of Termination.

     (iv)  The Executive shall receive a cash payment from the Company equal to
     the Fair Market Value of the Share Units credited to his Stock Account as
     of the Date of Termination (regardless of whether such Share Units are
     vested prior to the Date of Termination).

     (v)  If the Executive continues to be Disabled through the end of the
     Agreement Term, then, for the period after the end of the Agreement Term,
     the Executive shall be entitled to receive disability income replacement
     coverage to the extent provided under the disability policy applicable to
     other senior management employees of the Company.  During any period while
     the Executive is Disabled, and is otherwise entitled to receive Salary (or
     Salary replacement) payments under this Agreement, any Salary payments
     otherwise due to the Executive shall be reduced by the amount of any
     benefits paid for the same period of time under such disability income
     replacement coverage.

(e)  Discharge without Cause.  If the Executive's Date of Termination occurs
     during the Agreement Term under circumstances described in paragraph 3(d)
     (relating to constructive discharge) or paragraph 3(f) (relating to
     termination by the Company without Cause), then, in addition to the
     amounts payable in accordance with paragraph 4(a):

     (i)  The Executive shall receive from the Company, for the period
     continuing through the end of the Agreement Term, the Salary amount
     described in paragraph 2(a), as in effect on his Date of Termination, in
     monthly or more frequent installments in accordance with the Company's
     regular payroll practices.

     (ii)  The Executive shall receive from the Company a payment (or payments)
     in lieu of the bonus (or bonuses), which payment shall be based on actual
     performance for the performance period (but shall not be less than the
     rate of $450,000 for each of the performance periods).  However, if the
     Executive is entitled to payment for the 1997 Performance Period in
     accordance with paragraph 4(a)(iii) because the Date of Termination occurs
     on or after December 31, 1997, no payment shall be made for the 1997
     Performance Period under this paragraph (ii).  Amounts payable under this
     paragraph (ii) shall be paid at the time the bonus amounts would otherwise
     have been paid to the Executive if he had remained in the employ of the
     Company through the end of the Agreement Term.

     (iii)  All unexercised stock options granted to the Executive prior to the
     Date of Termination (regardless of whether they are exercisable prior to
     the Date of Termination) shall be exercisable by the Executive for a
     period expiring on the third anniversary of the Date of Termination.

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     (iv)  The Executive shall receive a cash payment from the Company equal to
     the Fair Market Value of the Share Units credited to his Stock Account as
     of the Date of Termination (regardless of whether such Share Units are
     vested prior to the Date of Termination).

(f)  Other Severance Benefits.  Except as may be otherwise specifically
     provided by an amendment of this paragraph (f) adopted in accordance with
     paragraph 10, payments under this paragraph 4 shall be in lieu of any
     benefits that may be otherwise payable to or on behalf of the Executive
     pursuant to the terms of any severance pay arrangement of the Company or
     any Subsidiary or any other, similar arrangement of the Company or any
     Subsidiary providing benefits upon involuntary termination of employment.

     5.  Duties on Termination.  Subject to the terms and conditions of this
Agreement, during the period beginning on the date of delivery of a Notice of
Termination, and ending on the Date of Termination, the Executive shall
continue to perform his duties as set forth in this Agreement, and shall also
perform such services for the Company as are necessary and appropriate for a
smooth transition to the Executive's successor. Notwithstanding the foregoing
provisions of this paragraph 5, the Company may suspend the Executive from
performing his duties under this Agreement following the delivery of a Notice
of Termination providing for the Executive's resignation, or delivery by the
Company of a Notice of Termination providing for the Executive's termination of
employment for any reason; provided, however, that during the period of
suspension (which shall end on the Date of Termination), the Executive shall
continue to be treated as employed by the Company for other purposes, and his
rights to compensation or benefits shall not be reduced by reason of the
suspension.

     6.  Mitigation and Set-Off.  The Executive shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise.  The Company shall not be entitled to
set off against the amounts payable to the Executive under this Agreement any
amounts owed to the Company by the Executive, any amounts earned by the
Executive in other employment after termination of his employment with the
Company, or any amounts which might have been earned by the Executive in other
employment had he sought such other employment.

     7.  Noncompetition and Confidentiality.  Except as otherwise provided in
this Agreement, the Executive shall be subject to such restrictions on
competition, interference with  the business of the Company and its
Subsidiaries, and on the use, disclosure and retention of trade secrets and
confidential information as are applicable to other senior management employees
of the Company.

     8.  Assistance with Claims.  The Executive agrees that, for the period
beginning the Effective Date, and continuing for a reasonable period after the
Executive's termination of employment with the Company, the Executive will
assist the Company in defense of any claims that may be made against the
Company, and will assist the Company in the prosecution of any claims that may
be made by the Company, to the extent that such claims may relate to services
performed by the Executive for the Company.  The Executive agrees to promptly
inform the Company if he becomes aware of any lawsuits involving such claims
that may be filed against the Company.  The Company agrees to reimburse the
Executive for all of the Executive's reasonable out-of-pocket expenses
associated with such assistance, including travel expenses.  For periods after
the Executive's employment with the Company terminates, the Company agrees to
provide reasonable compensation to the Executive for such assistance.  The
Executive also agrees to promptly inform the Company if he is asked to assist
in any investigation of the Company (or its actions) that may relate to
services performed by the Executive for the Company, regardless of whether a
lawsuit has then been filed against the Company with respect to such
investigation.

     9.  Nonalienation.  The interests of the Executive under this Agreement
are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Executive or the Executive's beneficiary.


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     10.  Amendment.  This Agreement may be amended or cancelled only by mutual
agreement of the parties in writing without the consent of any other person.
So long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.

     11.  Applicable Law.  The provisions of this Agreement shall be construed
in accordance with the laws of the State of Illinois, without regard to the
conflict of law provisions of any state.  All disputes shall be litigated in
Chicago, Illinois.

     12.  Severability.  The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified).

     13.  Waiver of Breach.  No waiver by any party hereto of a breach of any
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time.  The failure of any party hereto to take any action
by reason of such breach will not deprive such party of the right to take
action at any time while such breach continues.

     14.  Successors.  This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business.

     15.  Notices.  Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or
sent by facsimile or prepaid overnight courier to the parties at the addresses
set forth below (or such other addresses as shall be specified by the parties
by like notice).  Such notices, demands, claims and other communications shall
be deemed given:

(a)  in the case of delivery by overnight service with guaranteed next day
     delivery, the next day or the day designated for delivery;

(b)  in the case of certified or registered U.S. mail, five days after deposit
     in the U.S. mail; or

(c)  in the case of facsimile, the date upon which the transmitting party
     received confirmation of receipt by facsimile, telephone or otherwise;

provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received.  Communications that
are to be delivered by the U.S. mail or by overnight service are to be
delivered to the addresses set forth below:

to the Company:

     Zenith Electronics Corporation
     1000 Milwaukee Avenue
     Glenview, IL  60025

or to the Executive:

     Peter S. Willmott
     Zenith Electronics Corporation
     1000 Milwaukee Avenue


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     Glenview, IL  60025

All notices to the Company shall be directed to the attention of Chairman of
the Board of Directors of the Company, with a copy to the General Counsel of
the Company.  Each party, by written notice furnished to the other party, may
modify the applicable delivery address, except that notice of change of address
shall be effective only upon receipt.

     16.  Costs of Enforcement.  The following provisions of this paragraph 16
shall apply if it becomes necessary or desirable for the Executive to retain
legal counsel or incur other costs and expenses in connection with either
enforcing any and all of his rights under this Agreement or defending against
any allegations of breach of this Agreement by the Company:

(a)  The Executive shall be entitled to recover from the Company reasonable
     attorneys' fees, costs and expenses incurred by him in connection with
     such enforcement or defense.

(b)  Payments required under this paragraph 16 shall be made by the Company to
     the Executive (or directly to the Executive's attorney) at the time the
     attorneys' fees, costs, and expenses are incurred by the Executive.

(c)  The Executive shall be entitled to select his legal counsel; provided,
     however, that such right of selection shall not affect the requirement
     that any costs and expenses reimbursable under this paragraph 16 be
     reasonable.

(d)  The Executive's rights to payments under this paragraph 16 shall not be
     affected by the final outcome of any dispute with the Company; provided,
     however, that to the extent that the court shall determine that under the
     circumstances recovery by the Executive of all or a part of any such fees
     and costs and expenses would be unjust, the Executive shall not be
     entitled to such recovery; and to the extent that such amount have been
     recovered by the Executive previously, the Executive shall repay such
     amounts to the Company.

     17.  Survival of Agreement.  Except as otherwise expressly provided in
this Agreement, the rights and obligations of the parties to this Agreement
shall survive the termination of the Executive's employment with the Company.

     18.  Entire Agreement.  Except as otherwise provided herein, this
Agreement (including the Exhibits attached hereto) constitutes the entire
agreement between the parties concerning the subject matter hereof and
supersedes all prior and contemporaneous agreements, if any, between the
parties relating to the subject matter hereof.

     IN WITNESS THEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
and its corporate seal to be hereunto affixed, all as of the day and year first
above written.


                             /s/  Peter S. Willmott
                             -------------------------------
                             PETER S. WILLMOTT


                             Zenith Electronics Corporation


                             By  /s/ Richard F. Vitkus
                             -------------------------------
                             Richard F. Vitkus
                             Senior Vice President
ATTEST:




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<PAGE>   10

/s/ Wayne M. Koprowski
Wayne M. Koprowski
Assistant Secretary



(SEAL)




                                     80

<PAGE>   11




EXHIBIT 1

SHARE UNIT AWARDS

     Under paragraph 2(c) of the employment agreement (the "Agreement") between
Zenith Electronics Corporation (the "Company") and Peter S. Willmott (the
"Executive"), the Executive is entitled to receive a cash payment based on
150,000 shares of common stock of the Company ("Company Stock").  Except as
otherwise expressly provided in the Agreement, this Exhibit 1 sets forth the
terms and conditions of such award.

(a)  A "Stock Account" shall be established by the Company in the name of the
     Executive, which will reflect an unfunded obligation of the Company to pay
     cash to the Executive, as determined in accordance with this Exhibit 1.

(b)  As of the Effective Date, 150,000 Share Units shall be allocated to the
     Executive's Stock Account.

(c)  As of the record date for the payment of any dividend with respect to
     Company Stock which record date occurs on or after the Effective Date and
     on or before the Date of Termination, the Executive's Stock Account will
     be credited with additional Share Units equal to (i) the amount of the
     dividends or other distribution that would have been paid with respect to
     the number of shares of Company Stock equal to the number of Share Units
     credited to the Stock Account as of the dividend record date; divided by
     (ii) the Fair Market Value of a share of Company Stock on the day such
     dividend is payable.

(d)  Except as otherwise provided in the Agreement, the Executive's right to
     Share Units allocated to his Stock Account shall become vested in
     accordance with the following:

     (i)  The Executive shall be vested in 25% of the Share Units as of
     December 31, 1997, if the Executive is then employed by the Company.

     (ii)  The Executive shall be vested in 25% of the Share Units as of
     December 29, 1998, if the Executive is then employed by the Company.

     (iii)  The Executive shall be vested in 25% of the Share Units in
     proportion to the achievement of performance goals for the 1997
     Performance Period and 25% of the Share Units in proportion to the
     achievement of the performance goals for the 1998 Performance Period.

(e)  If the Executive remains in the employ of the Company through the end of
     the Agreement Term (i.e., through December 29, 1998), or is otherwise
     entitled to such cash payments under the Agreement, he shall receive a
     cash payment from the Company equal to the Fair Market Value of the vested
     Share Units credited to his Stock Account as of his Date of Termination.

(f)  The cash to be paid to the Executive with respect to Share Units credited
     to his Stock Account following his Date of Termination shall be
     distributed within 20 days after such Date of Termination, provided that
     no such payment shall be made prior to the Executive's Date of
     Termination.

(g)  In the event of recapitalization, stock split, stock dividend,
     combination or exchange of shares, merger, consolidation, rights offering,
     separation, reorganization or liquidation, or other change in the
     corporate structure or shares of the Company, the Share Units and the
     right to shares of Company Stock shall be adjusted to the same extent such
     adjustment would be made with respect to shares awarded under the 1987
     Zenith Stock Incentive Plan (the "Stock Incentive Plan").

(h)  The Company shall use a procedure to grant the Share Units under this
     Exhibit 1 so that, to the extent that the grant is a "purchase" for
     purposes of Section 16(b) of the Securities Exchange Act of 1934, the
     grant will be exempt from Section 16(b) by reason of SEC Rule 16b-3 (or
     other SEC rules).




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<PAGE>   12


(i)  For purposes of this Agreement:

     (i)  The "Fair Market Value" of a Share Unit as of any date shall be the
     Fair Market Value of a share of Company Stock on that date.

     (ii)  The "Fair Market Value" of a share of Company Stock as of any date
     shall be determined on the same manner as is used to determine such fair
     market value in establishing the minimum option exercise price for a stock
     option under the Stock Incentive Plan.

     (iii)  For purposes of determining the amount of cash to be distributed to
     the Executive with respect to Share Units credited to his Stock Account as
     of his Date of Termination, the "Fair Market Value" of a Share Unit shall
     be determined as of the Date of Termination.




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<PAGE>   13





EXHIBIT 2

STOCK OPTION AWARDS

     Under paragraph 2(d) of the employment agreement (the "Agreement") between
Zenith Electronics Corporation (the "Company") and Peter S. Willmott (the
"Executive"), the Executive is entitled to receive the award of options to
purchase 150,000 shares of common stock of the Company ("Company Stock").
Except as otherwise expressly provided in the Agreement, this Exhibit 2 sets
forth the terms and conditions of such options.

(a)  As of the Effective Date, the Executive shall be granted an option to
     purchase 100,000 shares of Company stock.  As of January 1, 1998 if the
     Executive is then employed by the Company, the Executive shall be granted
     an option to purchase an additional 50,000 shares of Company stock.  The
     option exercise price per share of Company Stock under each option shall
     equal the fair market value of a share of Company Stock on the date the
     option is granted.

(b)  The option granted as of the Effective Date shall first become
     exercisable with respect to 50% of the shares covered thereby as of
     January 1, 1998, if the Executive is then employed by the Company.  The
     option granted as of the Effective Date shall first become exercisable
     with respect to the remaining 50% of the shares covered thereby as of
     December 29, 1998, if the Executive is then employed by the Company.  The
     option granted as of January 1, 1998 shall first become exercisable with
     respect to 100% of the shares covered thereby as of December 29, 1998, if
     the Executive is then employed by the Company.

(c)  If the Executive continues to be employed by the Company through the last
     day of the Agreement Term, all unexercised stock options then held by the
     Executive shall be exercisable by the Executive (or his executor or
     assigns) through the third anniversary of the last day of the Agreement
     Term.

(d)  If the Executive dies after the Date of Termination, but before the
     expiration of the period during which options are exercisable by the
     Executive under the Agreement (including this Exhibit 2), such options
     shall continue to be exercisable until such expiration of the period by
     the Executive's estate (or his executor or assigns or, if applicable, the
     beneficiary designated by the Executive).

(e)  The options granted under this Exhibit 2 shall not be incentive stock
     options.

(f)  The options granted under this Exhibit 2 will provide that after the
     option has been granted, and prior to its exercise, the options may be
     transferred by the Executive, for no consideration, to or for the benefit
     of the Executive's Immediate Family (including, without limitation, to a
     trust for the benefit of the Executive's Immediate Family or to a
     partnership for members of a Executive's Immediate Family), subject to
     such limits as the Committee may establish, and the transferee shall
     remain subject to all the terms and conditions applicable to the options
     prior to such transfer.  The Executive's "Immediate Family" shall mean the
     Executive's spouse, children, stepchildren, adoptive relationships,
     sisters, brothers and grandchildren (and, for this purpose, shall also
     include the Executive).

(g)  The Company shall use a procedure to grant the options under this Exhibit
     2 so that, to the extent that the grant is a "purchase" for purposes of
     Section 16(b) of the Securities Exchange Act of 1934, the grant will be
     exempt from Section 16(b) by reason of SEC Rule 16b-3 (or other SEC
     rules).

(h)  The options awarded under this Exhibit 2 shall be granted under and
     subject to the terms and conditions of the 1987 Zenith Stock Incentive
     Plan.





                                     83

<PAGE>   14







                         ZENITH ELECTRONICS CORPORATION
                         EMPLOYEE SHARE UNIT AGREEMENT


     THIS AGREEMENT, entered into as of January 1, 1997 (the "Agreement Date"),
by and between PETER S. WILLMOTT (the "Executive"), and Zenith Electronics
Corporation, a Delaware corporation (the "Company");

WITNESSETH THAT:

     WHEREAS, pursuant to the terms of Exhibit 1 of the employment agreement
between the Executive and the Company dated January 1, 1997 (the "Employment
Agreement"), the Company is to establish a stock account in the name of the
Executive, which will reflect an unfunded obligation of the Company to pay cash
to the Executive, based on the value of units representing shares of Company
stock allocated to the Stock Account, and the rights provided by this Agreement
are in settlement of that obligation;

     NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Executive, as follows:

     1.  Establishment of Stock Account.  As of the Effective Date, the Company
shall establish a Stock Account, which shall be used to record the number of
Share Units allocated for the benefit of the Executive.

     2.  Adjustments to Stock Account.  The Stock Account shall be adjusted in
accordance with the following:

(a)  As of the Effective Date, 150,000 Share Units shall be allocated to the
     Stock Account for the benefit of the Executive, which 150,000 Share Units
     shall be the opening account balance of the Stock Account.

(b)  As of the record date for the payment of any dividend with respect to
     common stock of the Company ("Stock"), which record date occurs on or
     after the Effective Date, and on or before the Date of Termination, the
     Stock Account will be credited with additional Share Units equal to (i)
     the amount of the dividends or other distributions that would have been
     paid with respect to the number of shares of Stock equal to the number of
     Share Units credited to the Stock Account as of the dividend record date;
     divided by (ii) the Fair Market Value of a share of Stock on the day such
     dividend is payable.  For purposes of this Agreement, the term "Date of
     Termination" shall be defined as set forth in the Employment Agreement.

(c)  Immediately after distribution of the Value of the vested portion of the
     Stock Account in accordance with paragraph 6, the number of Share Units
     allocated to the Stock Account shall be reduced to zero, and the Stock
     Account shall be cancelled.

     3.  Adjustment to Share Units.  In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event with respect to Stock, or any distribution to holders
of Stock which would not otherwise result in a corresponding adjustment to the
number of Share Units allocated to the Stock Account in accordance with
paragraph 2, the Share Units allocated to the Stock Account shall be adjusted
by the committee (the "Committee") which administers the 1987 Zenith Stock
Incentive Plan (the "Plan") to the same extent such adjustment would be made
with respect to shares awarded under the Plan.

     4.  Statement of Stock Account.  As soon as practicable after the end of
calendar year 1997 and calendar year 1998, the Company shall provide the
Executive with a statement of the transactions in his Stock Account during that
year and the number of Share Units allocated to his Stock Account as of the end
of the year.

     5.  Vesting.  The Executive shall be vested in the Share Units allocated
to the Stock Account as of his Date of Termination in accordance with the
following:



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<PAGE>   15

(a)  The Executive shall be vested 25% of the Share Units allocated to the
     Stock Account as of his Date of Termination, if the Executive's Date of
     Termination has not occurred before December 31, 1997.

(b)  The Executive shall be vested in an additional 25% of the Share Units
     allocated to the Stock Account as of his Date of Termination, if the
     Executive's Date of Termination has not occurred before December 29, 1998.

(c)  The Executive shall be vested in 25% of the Share Units allocated to the
     Stock Account as of his Date of Termination, in proportion to the
     achievement of performance goals for the 1997 Performance Period, and
     shall be vested in the remaining 25% of the Share Units allocated to the
     Stock Account as of his Date of Termination, in proportion to the
     achievement of the performance goals for the 1998 Performance Period, as
     those Performance Periods and performance goals are established in
     accordance with the Employment Agreement.

(d)  Notwithstanding the foregoing provisions of this paragraph 5, the
     Executive shall become vested in 100% of the Share Units allocated to his
     Stock Account as of his Date of Termination (which vesting shall be deemed
     to occur prior to the determination and distribution of the Value of his
     Stock Account in accordance with paragraph 6), if the Executive's Date of
     Termination occurs prior to December 29, 1998 under circumstances
     described in paragraph 3(b) of the Employment Agreement (relating to the
     Executive's being Disabled), under circumstances described in paragraph
     3(d) of the Employment Agreement (relating to constructive discharge), or
     under circumstances described in paragraph 3(f) of the Employment
     Agreement (relating to termination by the Company without Cause), or the
     Date of Termination occurs prior to December 29, 1998 by reason of his
     death.

     6.  Distribution.  On, or within 20 days after, the Executive's Date of
Termination, but in no event prior to the Date of Termination, the Executive
shall receive a cash payment from the Company equal to the Value of the vested
portion of the Stock Account, determined as of the Date of Termination, and
based on the vesting provisions set forth in paragraph 5.  The "Value" of the
Stock Account as of the Date of Termination shall equal the product of: (a)
number of Share Units (including fractional Share Units) allocated to the Stock
Account as of that date; multiplied by (b) the Fair Market Value of a share of
Stock.  The Value of the vested portion of the Stock Account shall be equal to
the Value of the Stock Account, but proportionately reduced to reflect the
portion of the Share Units allocated to the Stock Account that is not vested on
the Date of Termination.  As used in this Agreement, the "Fair Market Value" of
a share of Stock shall mean the closing transaction price of a share of Stock
as reported in The Wall Street Journal as New York Stock Exchange Composite
Transactions for the date as of which such value is being determined or, if
there shall be no reported transaction on such date, on the next preceding date
for which a transaction was reported; provided that if the Fair Market Value
for any date cannot be determined as above provided, Fair Market Value shall be
determined by the Committee by whatever means or method as the Committee, in
the good faith exercise of its discretion, shall at such time deem appropriate.

     7.  Withholding.  All amounts payable under this Agreement shall be
subject to withholding of all applicable taxes, and the Executive shall also be
responsible for payment of any withholding taxes which become due with respect
to such payment prior to the date such payment occurs.

     8.  Heirs.  Any amounts payable to the Executive under this Agreement that
are not paid at the time of the Executive's death shall be paid at the time and
in the form determined in accordance with the provisions of this Agreement, to
the beneficiary designated by the Executive in writing filed with the Committee
in such form and at such time as the Committee shall require.  If a deceased
Executive fails to designate a beneficiary, or if the designated beneficiary of
the deceased Executive dies before the Executive or before complete payment of
the amounts distributable under this Agreement, the Committee shall direct
that benefits to be paid under this Agreement be paid to the legal
representative or representatives of the estate of the last to die of the
Executive and his beneficiary.



                                     85

<PAGE>   16

     9.  Transferability.  The interests of the Executive under this Agreement
may not be sold, transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process, other than by will or the laws of
descent and distribution.

     10.  Limitation of Implied Rights.  Neither the Executive nor any other
person shall, by reason of the establishment of the Stock Account, or by reason
of the allocation of Share Units to that account, acquire any right in or title
to any assets, funds or property of the Company whatsoever prior to the date of
distribution with respect to the Stock Account.  The Executive shall have only
a contractual right to the cash distributable under this Agreement, unsecured
by any assets of the Company. Nothing contained in this Agreement shall
constitute a guarantee by the Company that the assets of the Company shall be
sufficient to provide any benefits specified under this Agreement.

     11.  Share Units Confer No Rights as Stockholder.  The Executive shall not
be considered a stockholder of the Company by reason of the allocation of Share
Units to the Stock Account, and shall not be entitled to any privileges of
Stock ownership with respect to Share Units.

     12.  Counterparts.  This Agreement may be executed in two counterparts
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.

     13.  Successors.  This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Executive, acquire any rights hereunder in
accordance with this Agreement.

     14.  Governing Law.  This Agreement and all determinations made and
actions taken pursuant hereto, to the extent not governed by the laws of the
United States, shall be governed by the laws of the State of Illinois and
construed in accordance therewith without giving effect to principles of
conflicts of laws.

     15.  Amendment.  This Agreement may be amended by written Agreement of the
Executive and the Company, without the consent of any other person.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Agreement Date.


                             ZENITH ELECTRONICS CORPORATION



                             By /s/ Richard F. Vitkus
                             --------------------------------
                                     Richard F. Vitkus
                                     Senior Vice President


/s/  Peter S. Willmott
-------------------------
PETER S. WILLMOTT


Attest:


/s/  Wayne M. Koprowski
-------------------------
Wayne M. Koprowski
Assistant Secretary




                                     86

<PAGE>   17



                         ZENITH ELECTRONICS CORPORATION
                        EMPLOYEE STOCK OPTION AGREEMENT


     THIS AGREEMENT, entered into as of January 1, 1997 (the "Agreement Date"),
by and between PETER S. WILLMOTT (the "Executive"), and Zenith Electronics
Corporation, a Delaware corporation (the "Company");

WITNESSETH THAT:

     WHEREAS, the Company maintains the 1987 Zenith Stock Incentive Plan (the
"Plan"), which is incorporated into and forms a part of this Agreement; and

     WHEREAS, pursuant to the terms of paragraph (a) of Exhibit 2 of the
employment agreement between the Executive and the Company dated January 1,
1997 (the "Employment Agreement"), the Executive is entitled to receive an
option to purchase 100,000 shares of common stock of the Company, par value
$1.00 ("Stock"), and the option award reflected by this Agreement, which is
made under the Plan, is in settlement of that obligation (which award is in
addition to the grant of an option to purchase 50,000 shares of Stock, to be
made to the Executive as of January 1, 1998, subject to the terms of the
Employment Agreement);

     NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Executive, as follows:

     1.  Award and Purchase Price.  Subject to the terms of this Agreement and
the Plan, the Executive is hereby granted an option to purchase a total of
100,000 shares of Stock (the "Option"). The price of each share of Stock
subject to the Option shall be $10.875.  The Option is not intended to
constitute an "incentive stock option" as that term is used in Code section
422.

     2.  Exercise Date.  The Option shall become exercisable with respect to
50,000 shares of Stock as of January 1, 1998, if the Executive's Date of
Termination has not occurred before that date; and the Option shall become
exercisable with respect to the remaining 50,000 shares of Stock as of December
29, 1998, if the Executive's Date of Termination has not occurred before that
date.  The Option shall become fully exercisable on the Executive's Date of
Termination (regardless of the extent to which is was exercisable immediately
prior to the Date of Termination), if the Executive's Date of Termination
occurs prior to December 29, 1998 under circumstances described in paragraph
3(b) of the Employment Agreement (relating to the Executive's being Disabled),
under circumstances described in paragraph 3(d) of the Employment Agreement
(relating to constructive discharge), or under circumstances described in
paragraph 3(f) of the Employment Agreement (relating to termination by the
Company without Cause), or the Executive's Date of Termination occurs prior to
December 29, 1998 by reason of his death.  For purposes of this Agreement, the
term "Date of Termination" shall be defined as set forth in the Employment
Agreement.

     3.  Expiration Date.  The Option shall expire on, and shall not be
exercisable after, the "Expiration Date" determined in accordance with the
following:

(a)  If the Executive's Date of Termination occurs on or after December 29,
     1998, the Expiration Date shall be December 29, 2000.





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<PAGE>   18

(b)  If the Executive's Date of Termination occurs prior to December 29, 1998
     under circumstances described in paragraph 3(b) of the Employment
     Agreement (relating to the Executive's being Disabled), under
     circumstances described in paragraph 3(d) of the Employment Agreement
     (relating to constructive discharge), or under circumstances described in
     paragraph 3(f) of the Employment Agreement (relating to termination by the
     Company without Cause), or if the Executive's Date of Termination occurs
     prior to December 29, 1998 by reason of his death, the Expiration Date
     shall be the three-year anniversary of his Date of Termination.

(c)  If the Executive's Date of Termination occurs prior to December 29, 1998
     under circumstances described in paragraph 3(c) of the Employment
     Agreement (relating to the Executive's termination for Cause) or paragraph
     3(e) of the Employment Agreement (relating to the Executive's
     resignation), the Expiration Date shall be the 90-day anniversary of the
     Date of Termination.

In no event, however, shall the Expiration Date be later than the ten-year
anniversary of the Agreement Date.  No portion of the Option shall be
exercisable after the Executive's Date of Termination except to the extent that
it is exercisable on the Executive's Date of Termination; provided, however,
that, subject to the limitations in paragraphs (a), (b) and (c), next above,
the Option shall remain exercisable after the Executive's Date of Termination
to the extent that it becomes exercisable on the Executive's Date of
Termination in accordance with the provisions of paragraph 2 of this Agreement.

     4.  Method of Exercise.  Any portion of the Option that is exercisable may
be exercised in whole or in part in accordance with the following:

(a)  The Option may be exercised by filing a written notice with the Treasurer
     of the Company, provided that the notice is filed on or before the date
     the Option expires.  The exercise notice shall specify the number of whole
     shares of Stock to be purchased, and shall accompanied by payment therefor
     in full (or arrangement made for such payment to the Company's
     satisfaction) either (i) in cash, (ii) by delivery of previously owned
     whole shares of Stock (which the Executive has held for at least six
     months prior to the delivery of such shares or which the Executive
     purchased on the open market, and in each case for which the Executive has
     good title, free and clear of all liens and encumbrances) having a Fair
     Market Value, determined as of the date of exercise, equal to the
     aggregate purchase price payable pursuant to the Option by reason of such
     exercise, (iii) in cash by a broker-dealer acceptable to the Company to
     whom the Executive has submitted an irrevocable notice of exercise or (iv)
     a combination of (i) and (ii).  The Executive shall execute such documents
     in connection with the Option exercise as the Company may reasonably
     request. The Committee shall have sole discretion to disapprove of an
     election pursuant to any of clauses (ii), (iii) and (iv) and, to the
     extent that the Executive is subject to Section 16 of the Exchange Act,
     the Company may require that the method of making such payment be in
     compliance with Section 16 and the rules and regulations thereunder.  Any
     fraction of a share of Stock which would be required to pay such purchase
     price shall be disregarded and the remaining amount due shall be paid in
     cash by the Executive.  No certificate representing a share of Stock shall
     be delivered until the full purchase price therefor has been paid.

(b) Upon the exercise of the Option, in whole or in part, the Company shall
deliver or cause to be delivered one or more certificates representing the
number of shares purchased against full payment therefor.  The Company shall
pay all original issue or transfer taxes and all fees and expenses incident to
such delivery, except as otherwise provided in paragraph 5.

(c)  As used in this Agreement, the "Fair Market Value" of a share of Stock
     shall mean the closing transaction price of a share of Stock as reported
     in The Wall Street Journal as New York Stock Exchange Composite
     Transactions for the date as of which such value is being determined or,
     if there shall be no reported transaction on such date, on the next
     preceding date for which a transaction was reported; provided that if the
     Fair Market Value for any date cannot be determined as above provided,
     Fair Market Value shall be determined by the Committee by whatever means
     or method as the Committee, in the good faith exercise of its discretion,
     shall at such time deem appropriate.




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<PAGE>   19

     5.  Withholding.

     (a)  As a condition precedent to the delivery of Stock upon exercise of
the Option, the Executive shall, upon request by the Company, pay to the
Company in addition to the purchase price of the shares, such amount as the
Company may be required, under all applicable federal, state, local or other
laws or regulations, to withhold and pay over as income or other withholding
taxes (the "Required Tax Payments") with respect to such exercise of the
Option.  If the Executive shall fail to advance the Required Tax Payments after
request by the Company, the Company may, in its discretion, deduct any Required
Tax Payments from any amount then or thereafter payable by the Company to the
Executive.

     (b)  The Executive may elect to satisfy his obligation to advance the
Required Tax Payments (which, for purposes of this paragraph (b), shall include
such increased amount as the Company may be required to withhold by reason of
an election by the Executive) by any of the following means: (i) a cash payment
to the Company, (ii) delivery to the Company of previously owned whole shares
of Stock (which the Executive has held for at least six months prior to the
delivery of such shares or which the Executive purchased on the open market and
in each case for which the Executive has good title, free and clear of all
liens and encumbrances) having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Option (the "Tax Date"), equal to the Required Tax Payments, (iii) authorizing
the Company to withhold whole shares of Stock which would otherwise be
delivered upon exercise of the Option having an aggregate Fair Market Value
determined as of the Tax Date equal to the Required Tax Payments, (iv) a cash
payment by a broker-dealer acceptable to the Company to whom the Executive has
submitted an irrevocable notice of exercise or (v) any combination of (i), (ii)
and (iii); provided, however, that the Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (ii)-(v) and, to the
extent that the Executive is subject to Section 16 of the Exchange Act, the
Company may require that the method of satisfying any such obligation be in
compliance with Section 16 and the rules and regulations thereunder.  Any
fraction of a share of Stock which would be required to satisfy any such
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Executive.

     6.  Heirs.  Subject to the terms of the Plan, any benefits to be provided
to the Executive under this Agreement that have not been provided at the time
of the Executive's death shall be provided at the time and in the form
determined in accordance with the provisions of this Agreement, to the
beneficiary designated by the Executive in writing filed with the Committee in
such form and at such time as the Committee shall require.  If a deceased
Executive fails to designate a beneficiary, or if the designated beneficiary of
the deceased Executive dies before the Executive or before complete provision
of the benefits under this Agreement, the Committee shall direct that benefits
to be provided under this Agreement be provided to the legal representative or
representatives of the estate of the last to die of the Executive and his
beneficiary.

     7.  Adjustment.  In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event with respect to Stock, or any distribution to holders of Stock other than
a regular cash dividend, the number and class of securities subject to the
Option and the purchase price per security shall be appropriately adjusted by
the Committee without an increase in the aggregate purchase price.  If any
adjustment would result in a fractional security being subject to the Option,
the Company shall pay the Executive, in connection with the first exercise of
the Option occurring after such adjustment, an amount in cash determined by
multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the
exercise date over (B) the exercise price of the Option.  The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.

     8.  Transferability.

(a)  Except to the extent otherwise provided in paragraph (b) next below, the
     Option may not be sold, transferred, assigned, pledged, hypothecated,
     encumbered or otherwise disposed of (whether by operation of law or
     otherwise), or be subject to execution, attachment or similar process,
     other than by will or the 



                                     89

<PAGE>   20

     laws of descent and distribution. During the Executive's lifetime,
     the Option shall be exercisable only by the Executive.

(b)  Notwithstanding the foregoing provisions of this paragraph 8, the Option
     may be transferred by the Executive for no consideration to or for the
     benefit of the Executive's Immediate Family (including, without
     limitation, to a trust for the benefit of an Executive's Immediate Family
     or to a partnership for members of an Executive's Immediate Family),
     subject to such limits and exceptions as the Committee may establish, and
     the transferee shall remain subject to all the terms and conditions
     applicable to the Option prior to such transfer.  The foregoing right to
     transfer the Option shall also apply to the right to consent to amendments
     to the Option agreement.  The Executive's "Immediate Family" shall mean
     the Executive's spouse, children, stepchildren, adoptive relationships,
     sisters, brothers and grandchildren (and, for this purpose, shall also
     include the Executive).

     9.  Definitions.  Except where the context clearly implies or indicates
the contrary, a word, term, or phrase used in the Plan is similarly used in
this Agreement.

     10.  Notices.  All notices, request or other communications provided for
in this Agreement shall be made, if to the Company, to Zenith Electronics
Corporation, 1000 Milwaukee Avenue, Glenview, Illinois 60025-2493, Attention:
Treasurer, and if the Executive, to the Executive's last known address set
forth in the records of the Company, or such other address as shall be provided
to the Company in writing by the Executive.  All notices, requests or other
communications provided for in this Agreement shall be made in writing either
(a) by personal delivery to the party entitled thereto, (b) by facsimile with
confirmation of receipt, (c) by mailing in the United States mails to the last
known address of the party entitled thereto or (d) by express courier service.
The notice, request or other communication shall be deemed to be received upon
personal delivery, upon confirmation of receipt of facsimile transaction or
upon receipt by the party entitled thereto if by United States mail or express
courier service; provided, however, that if a notice, request or other
communication sent to the Company is not received during regular business
hours, it shall be deemed to be received on the next succeeding business day of
the Company.

     11.  Option Confers No Rights as Stockholder.  The Executive shall not be
entitled to any privileges of ownership with respect to shares of Stock subject
to the Option unless and until purchased and delivered upon the exercise of the
Option, in whole or in part, and the Executive becomes a stockholder of record
with respect to such delivered shares; and the Executive shall not be
considered a stockholder of the Company with respect to any such shares not so
purchased and delivered.

     12.  Agreement Subject to the Plan.  This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith.  The
Executive hereby acknowledges receipt of a copy of the Plan.

     13.  Counterparts.  This Agreement may be executed in two counterparts
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.

     14.  Successors.  This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Executive, acquire any rights hereunder in
accordance with this Agreement or the Plan.

     15.  Governing Law.  This Agreement, the Option and all determinations
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Illinois and construed in accordance therewith without giving effect to
principles of conflicts of laws.

     16.  Amendment.  This Agreement may be amended by written Agreement of the
Executive and the Company, without the consent of any other person.




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<PAGE>   21

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Agreement Date.

                             ZENITH ELECTRONICS CORPORATION


                             By  /s/  Richard F. Vitkus
                             ---------------------------------
                                      Richard F. Vitkus

/s/ Peter S. Willmott
--------------------------
PETER S. WILLMOTT


Attest:

/s/  Wayne M. Koprowski
--------------------------
Wayne M. Koprowski
Assistant Secretary








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