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                                                                  EXHIBIT 10.6.1

May 18, 1995



Mr. David A. Lahar
1737 Webster St.
San Francisco, CA  94115

Dear Dave:

         I am writing to confirm our recent discussions regarding the
compensation package for your work as the President of Aurora Electronics, Inc.
Attached is a copy of the Fiscal 1995 - 1996 Executive Compensation Plan -
Update (the "Plan").  Your compensation will be paid pursuant to the terms and
conditions described in this letter as further explained in the Plan, and also
subject to normal company policies as they apply now and change from time to
time.  Details include:

<TABLE>
<S>                   <C>
BASE SALARY:          $150,000 per year.  Payments will be made on the normal
                      payroll schedule.

DEBT REDUCTION        For debt reduction from Corporate Transactions, as
  BONUS #1:           described in the Plan, your bonus percentage shall be
                      0.65%

DEBT REDUCTION        For debt reduction from Operations, as described in the
  BONUS #2:           Plan, your bonus percentage shall be 0.20%

EVA BONUS:            For EVA bonus payments, as described in the Plan, your EVA
                      factor shall be 0.039

STOCK OPTIONS:        As described in the Plan, you were granted options to
                      purchase an additional 50,000 shares of Aurora common
                      stock by the Options Committee of the Board, with an
                      exercise price of $3.375 per share on May 15, 1995.

SEVERANCE:            The Company recognizes the difficulties that this period
                      places on its executives.  As a result, it wishes to
                      modify the severance terms of your employment as well.
                      This paragraph replaces entirely all of Aurora's prior
                      severance agreements with you.

                      This letter and your response do not constitute a contract
                      of employment for a stated term.  As always since you
                      joined Aurora, you have the right to terminate your
                      employment at any time, and Aurora retains a similar right
                      to terminate your employment at will. Termination by the
                      Company may be for (1) cause, or (2) other.  In the event
                      that you are terminated for cause (e.g. insubordination,
                      moral turpitude, theft, violation of the law, breach of
                      fiduciary duties, abuse of employees, willful
                      misrepresentation, etc.), or you voluntarily resign, your
                      compensation will cease after 30 days, and the vesting of
                      your options will cease immediately.  If you are
                      terminated for any other reason, your compensation and
                      option vesting will continue for 12 months.
</TABLE>

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<TABLE>
<S>                   <C>
CHANGE OF             In the event of a change of control of the Company, the
  CONTROL:            following will occur:

                      -   All of your stock options will be deemed to have
                          vested immediately prior to such change;

                      -   If within 90 days you are not offered employment
                          from the surviving company under terms and conditions
                          acceptable to you, or you are terminated by the
                          surviving company within those 90 days, you may resign
                          unconditionally and you will continue to receive your
                          base salary, insurance and automobile benefits for a
                          period of two years.  You will also receive a full and
                          immediate payout of all earned but unpaid bonuses and
                          deferred compensation (vested and unvested).

                      A change of control shall be defined as a (a) an event
                      that results in a change in ownership of over 40% of the
                      common stock of the corporation or the change in over 50%
                      of the membership of the Board of Directors, or (b) the
                      sale of a majority of the assets of the Company.
</TABLE>


         Your compensation and expense reimbursement, or any part thereof, may
be paid directly to you or to your personal management company, EOS Capital,
Inc.  However, with respect to any payments made to EOS, you agree that Aurora
will not be liable for any amounts in excess of that amount for which it would
be liable if payments were made directly to you.

         The remainder of your terms of employment remain unchanged.

Best personal regards,


/s/ Jim C. Cowart
---------------------
Jim C. Cowart


Accepted and agreed:   /s/ David A. Lahar
                     ------------------------------
                              David A. Lahar

                                 05/19/95
                     ------------------------------
                                  (Date)


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<PAGE>   3
                            AURORA ELECTRONICS, INC.

             FISCAL 1995 - 96 EXECUTIVE COMPENSATION PLAN - UPDATE
                          DISCUSSION OF SPECIFIC TERMS

1.  Bonus formulas are designed to target two goals: (a) reduction of debt, and
    (b) generation of net income (EVA).  Debt reduction bonus payments will be
    calculated according to the following table:

<TABLE>
<CAPTION>
                                DEBT REDUCTION VIA           DEBT REDUCTION FROM
                              CORPORATE TRANSACTIONS              OPERATIONS
                              ----------------------              ----------
    <S>                     <C>                              <C>
    Jim C. Cowart
    Bobby Allison
    Dave Lahar              See attached letter
    John Grazer
</TABLE>

    At the end of each of the six quarters ending 9/30/96, the cumulative net
    reduction of total debt since 3/31/95 will be calculated, and the indicated
    executive will earn a bonus (subject to the Payment Terms discussed below)
    equal to that debt reduction multiplied by the percentage in the table for
    the source of funds for that debt reduction.  Corporate Transaction debt
    reduction will include proceeds from external financing, litigation, sale
    of businesses, negotiated restructurings, etc.  All other debt reductions
    (including income from affiliates after the establishment of their
    affiliation) will be considered from Operations.

2.   EVA bonus payments will be calculated according to the following table:

<TABLE>
<CAPTION>
                                       EVA FACTOR
                                       -----------
                  <S>                <C>
                  Jim C. Cowart
                  Bobby Allison
                  Dave Lahar         See attached letter
                  John Grazer
</TABLE>

    EVA bonus payments will be calculated for the five quarters ending 9/30/96,
    and the indicated executive will earn a bonus (subject to the Payment Terms
    discussed below) equal to the factor indicated in the table multiplied by
    the amount, if any, by which earnings of the company exceeds a 17.5% return
    on shareholders' average equity.  Average equity shall be calculated as one
    half the sum of the beginning and ending equity amounts.  Net earnings of
    the company shall be calculated using actual taxes paid.

3.   Each executive shall be granted 50,000 options exercisable at market on
    the day of the grant.  The specific targets for option vesting are as shown
    in the following table:

<TABLE>
<CAPTION>
               QUARTER ENDING         EBITA MARGIN         PRE TAX INCOME
               --------------         ------------         --------------
          <S>                         <C>                  <C>
          9/30/95                         7.60%             $   900,000
          12/31/95                        8.60%               1,500,000
          3/31/96                         10.50%              2,500,000
          6/30/96                         9.90%               2,300,000
          9/30/96                         9.90%               2,300,000
</TABLE>

    Each quarter that the target is met, 5,000 of the options shall vest.  Once
    a target is missed, the options shall revert to the option pool.

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<PAGE>   4
4.   Payment Terms.  There are six quarters for the Debt Reduction Bonus plan,
    and five quarters for the EVA Bonus plan.  It is desirable to (a) maintain
    an incentive for continuing performance in every quarter, (b) protect the
    Company against payments that become too large as a result of declines in
    performance, and (c) distribute cash to executives as soon as it is earned.
    At the end of each quarter, the total bonus payable under that plan from
    its inception to that date will be calculated, and a payment shall be made
    to the eligible executive such that the total payments under that plan to
    the end of the quarter shall be as shown in the following table:

<TABLE>
<CAPTION>
                QUARTER ENDING         DEBT REDUCTION PLAN         EVA PLAN
                --------------         -------------------         --------
           <S>                         <C>                         <C>
           6/30/95                             1/21                    n/a
           9/30/95                             3/21                   1/15
           12/31/95                            6/21                   3/15
           3/31/96                             10/21                  6/15
           6/30/96                             15/21                  10/15
           9/30/96                             100%                   100%
</TABLE>

    Payment dates shall be the date of the filing of the 10-Q or 10-K covering
    the relevant quarter.  Bonuses will be payable to an executive only if he
    was employed by the company on the first and last day of the quarter.

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