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Employment Agreement [Amendment No. 1] - On Command Corp. and Brian A. C. Steel

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            This AMENDMENT, dated as of December 28, 1998, is made to the
EMPLOYMENT AGREEMENT dated as of September 11, 1996 (the "Agreement"), by and
between On Command Corporation, a Delaware corporation (the "Company"), and
Brian A. C. Steel, a resident of the State of California (the "Executive").

            WHEREAS, the Company and the Executive desire to amend certain of
the terms and conditions of the Agreement in connection with the Executive
becoming President of the Company to the terms and conditions set forth herein;

            NOW, THEREFORE, in consideration of the premises and the mutual
agreements made herein, and intending to be legally bound hereby, the Company
and the Executive agree as follows:

      1. Definition of "NEWCO". The first parenthetical in the introductory
paragraph of the Agreement is hereby amended to read as follows:

      ("NEWCO" or the "Company")

      2. Change in Title; Duties.

      Sections 1(a) and 1(b) of the Agreement are hereby deleted and replaced in
their entirety by the following:

            (a) Employment and Employment Period. The Company shall employ the
      Executive for a period (the "Employment Period") commencing on September
      11, 1996 (the "Effective Date") and continuing thereafter for a term
      ending on September 11, 2000 unless terminated in accordance with the
      provisions of this Agreement. Executive shall be employed by the Company
      to serve as Vice President, Chief Operating Officer and Chief Financial
      Officer from the Effective Date to December 31, 1998, and as President and
      Chief Operating Officer from December 31, 1998 through the remainder of
      the Employment Period. In the event that the Company desires to extend the
      employment of the Executive, it must give written notice of such desire by
      September 11, 1999, and after such notice the parties shall enter
<PAGE>   2
      into an exclusive negotiation period of not less than six months, unless
      otherwise mutually agreed upon by the parties in writing. Each 12 month
      period ending on September 11 is sometimes referred to herein as a "year
      of the Employment Period."

            (b) Offices, Duties and Responsibilities. Effective on the Effective
      Date, Executive shall be elected Executive Vice President, Chief Operating
      Officer and Chief Financial Officer of NEWCO. On December 31, 1998,
      Executive shall be elected President and Chief Operating Officer of the
      Company. The Executive shall report directly and solely to the Chief
      Executive Officer and the Board of Directors of the Company (the "Board"),
      or if there is no Chief Executive Officer, to the Chairman of the Board
      and the Board of Directors of the Company. The Executive's offices
      initially shall be located at OCV's present headquarters. Throughout the
      Employment Period, the Company shall cause the Executive to be a member of
      the Board. Until December 31, 1998, the Executive shall have all duties
      and authority customarily accorded a chief operating officer and chief
      financial officer, and from December 31, 1998, the Executive shall have
      all duties customarily accorded a president and chief operating officer,
      including, without limitation, the lead responsibility with full autonomy,
      subject to the customary authority and direction of the Board (and the
      Chairman of the Board or Chief Executive Officer, as the case may be), to
      direct and develop the operating capabilities and performance of the
      Company. The Executive shall be a member of any senior
      executive/management committees which may be established from time to time
      by the Board. The Executive shall not be required to perform services
      other than those comparable in scope, dignity and stature to those
      customarily performed by officers of the same rank at companies similar to
      the Company.

      3. Notification of Chief Executive Search. A new Subsection (d) is hereby
added to Section 1 of the Agreement to read as follows:

            (d) New Chief Executive Search. In the event that the Company, or
      any authorized representative of the Company, undertakes or authorizes a
      search for a

<PAGE>   3
      new chief executive officer or president of the Company, or solicits, or
      engages in any substantive discussions with, any person (or representative
      of any person) to become the chief executive officer or president of the
      Company, then and in such event, the Company will promptly notify the
      Executive about the existence of such search, solicitation or discussions
      as a courtesy to Executive, it being understood that details about the
      same need not be provided by the Company to the Executive.

      4. Base Compensation. The following sentence is hereby added at the end of
Section 2(a) of the Agreement:

      Commencing December 31, 1998, the Executive's Base Salary shall be
      increased to $375,000 per year.

      5. Bonus Compensation. The following sentence is hereby added at the end
of Section 2(b) of the Agreement:

      Notwithstanding anything in the foregoing to the contrary, the parties
      agree that the Compensation Committee will act in good faith to establish
      parameters or guidelines which will contemplate that the target level
      established for an Annual Bonus of 70% of Base Salary shall not be treated
      as a "cliff" target; rather, in the event the Company fails to meet 100%
      of the target level for a given period but nevertheless achieves a
      substantial part of the targeted performance, then and in such event, the
      parameters or guidelines will contemplate that Executive shall qualify for
      an Annual Bonus for such period, albeit at a level below 70% of Base

      6. Fringe Benefits. Clause (v) of Section 2(c) of the Agreement is amended
in its entirety to read as follows:

      (v) Executive's reasonable legal fees and costs incurred in connection
      with the drafting, negotiation and execution of this Agreement and
      amendments and proposed amendments hereto, including negotiations
      contemplated by clause (IX) of Section 5(a) of this Agreement

      7. Stock Option Term. A new Clause (w) is hereby inserted immediately
prior to Clauses (x) and (y) in Section 2(e) of the Agreement to read as

<PAGE>   4
            (w) One year after the date upon which a termination of employment
      occurs as a result of an Executive Election Event described in Clause (IX)
      of Section 5(a) of this Agreement;

      8. Termination. The Executive Election Event set forth in Clause (IX) of
Section 5(a) of the Agreement is hereby deleted and replaced in its entirety by
the following:

      (IX) (A) the election or appointment by the Board of Directors of a Chief
      Executive Officer other than the Executive, or (B) the failure of the
      Compensation Committee of the Board, prior to June 1, 1999, to review the
      Executive's entire compensation package provided under this Agreement and
      to propose increases or other amendments thereto as determined by the
      Compensation Committee in its sole discretion in light of the changes
      occurring in Executive's employment on December 31, 1998 (it being
      understood that the Compensation Committee shall have no obligation to
      propose any such increases or other amendments), or (C) the Executive and
      the Company failing to execute, on or before August 1, 1999, mutually
      satisfactory amendments to this Agreement either incorporating the
      proposals made by the Compensation Committee under the immediately
      preceding clause (B) or containing other amendments to this Agreement that
      are mutually satisfactory to the Executive and the Company; (provided that
      in the event the Executive exercises his Executive Election as a result of
      any of the conditions set forth in this clause (IX), then the Executive
      need provide only five (5) days advance written notice in lieu of the
      sixty (60) days advance written notice required by the first sentence of
      Section 5(a) above and the Company, in full satisfaction of all of the
      Company's obligations under this Agreement and in respect of the
      termination of the Executive's employment with the Company, shall, (a)
      through the first anniversary of his termination, pay the Executive his
      Base Salary, together with fringe benefits that are described in the
      introductory clause and prior to the proviso of Section 2(c) of this
      Agreement, (b) pay the Executive an Annual Bonus for the year in which his
      employment is terminated at the maximum amount payable under this
      Agreement, prorated through the date of his termination; and (c) a pro
      rata portion of the Option and any other stock options granted to the
      Executive under the Company's option plan or any

<PAGE>   5
      successor plan that were scheduled to vest during the year of termination
      shall vest as of the date of such termination of his employment.

      9. No Other Amendments. Except as specifically set forth in this
Amendment, all other provisions of the Agreement shall remain in full force and
effect during the Employment Period and, as applicable, thereafter to the extent
set forth in the Agreement.

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first set forth above.

                                         By: /s/ Brian Steel
                                             Brian Steel, Executive

                                         ON COMMAND CORPORATION

                                         By: /s/ Charles Lyons
                                         Title:  Chairman of the Board