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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                              --------------------

                                    FORM 8-K

                                 CURRENT REPORT

                              --------------------

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



       Date of report (Date of earliest event reported): February 19, 1997



                    CELLULAR TECHNICAL SERVICES COMPANY, INC.
             (Exact Name of Registrant as Specified in its Charter)



            Delaware                    0-19437                   11-2962080
 (State or Other Jurisdiction       (Commission File          (I.R.S. Employer 
      of Incorporation)                  Number)             Identification No.)


            2401 Fourth Avenue
            Seattle, Washington                                      98121
  (Address of Principal Executive Offices)                         (Zip Code)

                                 (206) 443-6400
              (Registrant's telephone number, including area code)



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<PAGE>



         This Current Report on Form 8-K is filed by Cellular Technical Services
Company,  Inc., a Delaware  corporation (the "Company"),  in connection with the
matters described herein.



Item 5.  Other Events

         On February 19, 1997, the Company and Mr. William  Zollner entered into
an  employment  agreement  pursuant  to which Mr.  Zollner  became  employed  as
President and Chief Operating  Officer of the Company.  Reference is made to the
employment agreement attached as an Exhibit to this Report.


Item 7.  Financial Statements, Pro Forma Information and Exhibits

(c)      Exhibits.
         ---------

99       Employment  Agreement dated February 19, 1997,  between the Company and
         William Zollner.


                                       -2-


<PAGE>




                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Date:    March 6, 1997
                                                   CELLULAR TECHNICAL SERVICES,
                                                    COMPANY, INC.


                                                   By: /s/ Michael E. McConnell
                                                       ------------------------
                                                       Michael E. McConnell,
                                                       Chief Financial Officer

                                       -3-









                                   EXHIBIT 99



                                       -4-


<PAGE>



                              EMPLOYMENT AGREEMENT

                  This  Agreement  is  entered  into as of  February  19,  1997,
between CELLULAR TECHNICAL SERVICES COMPANY,  INC., a Delaware  corporation (the
"Company"), and

WILLIAM C. ZOLLNER (the  "Executive").  In consideration of the mutual promises,
covenants and obligations contained herein, the parties agree as follows:

                  I.  Employment and Term.  Company hereby employs  Executive as
                      -------------------
the President and Chief Operating Officer of Company on the terms and conditions
set forth in this  Agreement,  and Executive  hereby  accepts and agrees to such
employment  with  Company,  for an original  term  beginning on the date of this
Agreement and ending on the second (2nd) anniversary of this Agreement,  subject
to  continuation  set forth below.  The Chief  Executive  Officer of Company and
Executive  shall meet and  discuss in good faith the terms of a new or  extended
contract of Executive's  employment with Company at least three (3) months prior
to the end of the  original  term  and each  extended  term  thereafter.  Unless
otherwise extended,  replaced, or terminated as set forth herein, this Agreement
shall, after the original term,  continue  thereafter on a month-to-month  basis
terminable by either party upon written notice
 of termination to the other party
in accordance  with  Subsection 9.1, below, at least thirty (30) days before the
termination date.

                  II.  Duties.  Executive  is  employed to perform the duties of
                       ------
President and Chief  Operating  Officer of Company and shall have such authority
and perform  such  duties  consistent  with such  position as may be assigned to
Executive  by the Chief  Executive  Officer  and/or  the Board of  Directors  of
Company  from time to time.  Executive  shall  perform  such duties  faithfully,
diligently,  to the best of Executive's ability, and in a manner consistent with
the best interests of Company.  Executive  shall devote  Executive's  full time,
skills,  and efforts to the performance of such duties and to the furtherance of
the best interests of Company.  All of the foregoing duties and responsibilities
will be subject to the terms of this  Agreement,  the  supervision  of the Chief
Executive  Officer and the Board of Directors of Company,  and the  then-current
plans, practices,  policies, and procedures established by Company and generally
applicable to comparable executives of Company.

                  III.  Compensation,  Benefits,   Vacation,  and  Expenses.  In
                       ----------------------------------------------------
consideration  for Executive's  services under this  Agreement,  Executive shall
receive  the  following  compensation  and  benefits  during  the  term  of this
Agreement:

                           A.  Base   Salary.   Executive   shall   receive  an
                               -------------
annualized  base salary of  $162,000.00,  which shall be paid in accordance with
Company's usual payroll policies for comparable  executives of Company.  Company
shall consider increases to such base salary at least annually. Such base salary
shall not be subject  to  reduction  except for Cause (as  defined in Section 6,
below).  Any  change in such  base  salary:  (i) shall not serve to cancel  this
Agreement  or  otherwise  limit or  reduce  any  other  right or  obligation  to
Executive  under  this  Agreement;  and (ii)  shall  merely  serve to amend this
Subsection  with  respect to such  change in base  salary,  and all of the other
terms of this Agreement shall continue in full force and effect.

                           B.  Incentive  Compensation  and  Bonuses.  Executive
                               -------------------------------------
shall receive annual  incentive  compensation and bonuses in accordance with the
terms of the Executive Incentive Compensation Plan attached hereto as Exhibit A,
subject to Company's  then-current plans,  practices,  policies,  and procedures
with respect to incentive compensation  established by the Board of Directors of
Company  (or  a  committee  thereof)  and  generally  applicable  to  comparable
executives of Company.




<PAGE>



                          C. Stock  Options.  Company  will  grant to  Executive
                             --------------
options to purchase  shares of voting  common  stock of Company  pursuant to the
terms of that  certain  Stock  Option  Contract  dated as of  February  19, 1997
between  Executive and Company  attached hereto as Exhibit B. Such options shall
be in such amounts,  exercisable at such per-share  exercise  price,  and vested
under such  vesting  schedule as set forth in such Stock Option  Contract.  Such
Stock Option  Contract  shall be subject to all of the terms and  conditions  of
Company's 1996 Stock Option Plan.

                          D. Benefits. Executive and Executive's family shall be
                             --------
entitled to  participate  in and shall  receive all  benefits  under all welfare
benefit plans,  practices,  policies, and programs generally provided by Company
(including  without  limitation  all  health,  medical,  dental,   prescription,
disability,  salary continuance,  life insurance, 401(k) retirement savings, and
other benefit plans and programs) to comparable executives of Company.

                          E. Annual  Vacation.  Executive shall be entitled to a
                             ----------------
minimum of three (3) weeks paid annual  vacation,  which shall be in addition to
Company  holidays and sick leave.  Such vacation may be scheduled in Executive's
reasonable discretion,  subject to reasonable oversight by the President,  Chief
Executive  Officer,  and/or the Board of Directors of Company.  Annual  vacation
increases,  accruals, and the like will be provided pursuant to the vacation and
leave policies,  practices,  and procedures established by Company and generally
applicable to comparable executives of Company.

                          F.   Expenses.   Executive   shall  be   entitled   to
                               --------
reimbursement  for reasonable  business  expenses  incurred by Executive for the
benefit of Company.  Executive shall present from time to time itemized accounts
or receipts for such expenses in accordance with the plans, practices, policies,
and  procedures  established  by Company and generally  applicable to comparable
executives of Company.

                          G. Relocation Expenses. In consideration for Executive
                             -------------------
relocating to Seattle, Washington,  Company agrees to reimburse Executive for up
to  $65,000.00  of  Executive's   expenses  (inclusive  of  all  associated  tax
reimbursements)  relating to such relocation,  which reimbursement shall be paid
in one lump sum upon submission of appropriate documentation for same.

                  IV. Proprietary  Rights. Upon the execution of this Agreement,
                      -------------------
Executive  and  Company  shall  enter  into  that  certain  Agreement  Regarding
Confidential  Information  and Property Rights attached hereto as Exhibit C, and
Executive shall fully comply with the provisions of such agreement.

                  V. Restrictive Covenants.
                     ---------------------

                          A.  Nonsolicitation.  During  the term of  Executive's
                              ---------------
employment  with  Company  and for a period  of  twelve  (12)  months  after the
termination thereof,  however caused, Executive shall not directly or indirectly
do  any  of  the  following  without  Company's  prior  written  approval:   (i)
communicate with or solicit any person or entity which was a customer of Company
or which Company was actively soliciting to be a customer during the twelve (12)
month period preceding termination of Executive's  employment with Company (each
being a  "Customer")  for the  purpose of  marketing  services  or  products  in
competition   with  any  services  or  products  of  Company,   whether  or  not
communication is initiated by the Customer,  Executive, or any other party; (ii)
in any manner interfere with Company's  business  relationship with any Customer
or potential  customer or otherwise  urge any Customer or potential  customer to
discontinue business or not to do business with Company; or (iii) hire, offer to
hire, solicit, or endeavor to entice away any employee,  agent, or consultant of
Company or

                                       -2-


<PAGE>


any of its  affiliates,  or otherwise urge any such person to discontinue his or
her relationship with Company, whether or not communication is initiated by such
person, Executive, or any other party.

                          B.  Noncompetition.  During  the  term of  Executive's
                              --------------
employment  with  Company  and for a period  of  twelve  (12)  months  after the
termination thereof,  however caused (except by Executive with Good Reason or by
either  party  following  a Change of  Control,  in which case the terms of this
Subsection  shall not apply),  Executive shall not directly or indirectly do any
of the following without Company's prior written approval:  (i) engage as owner,
employee,  consultant,  or otherwise,  within the United States, in any facet of
the business activities of Company or any of its affiliates,  except as required
in the ordinary course of Executive's employment with Company, or (ii) otherwise
compete,  within the United States,  with the business  activities of Company or
any of its  affiliates;  provided,  that Executive  shall have the right to make
passive  investments in any entity so long as Executive does not  participate in
the business of such entity in violation of this Subsection.

                          C.  Nondisparagement.  During the term of  Executive's
                              ----------------
employment  with  Company  and for a period  of  twelve  (12)  months  after the
termination  thereof,  however caused,  Executive shall not make any disparaging
remarks  about  Company or its  products  or  services  to any person or entity,
provided that the terms of this Subsection will not limit  Executive's  right to
give  truthful  testimony  in the event that  Executive  is  required to testify
pursuant to a court order or applicable law.

                          D.  Injunctive  Relief.  Executive  agrees  that if he
                              ------------------
violates  the  provisions  of this  Section 5 or  otherwise  threatens to do so,
Company,  in  addition to any other  rights and  remedies  available  under this
Agreement  or  otherwise,  shall be  entitled  to  obtain an  injunction  issued
(without  the  necessity  of a bond)  by any  court  of  competent  jurisdiction
restricting Executive from committing or continuing any such violation.

                  VI.  Termination of Employment.
                       -------------------------

                          A.  Definitions.  For purposes of this Agreement,  the
                              -----------
following terms shall have the following definitions:

                              1.  "Cause"  shall  mean and be deemed to exist if
any of the  following  events  occur:  (i) a  material  breach by  Executive  of
Executive's  obligations  under  this  Agreement  (other  than  as a  result  of
incapacity  due to Disability or death)  caused  either by  Executive's  willful
misconduct  committed in bad faith  without  reasonable  belief that the conduct
causing such breach is in the best interests of Company, or by Executive's gross
negligence; (ii) actual fraud or embezzlement on the part of Executive; or (iii)
the  conviction  of Executive of, or a plea of guilty or no contest by Executive
to, a felony involving moral turpitude.

                              2.  "Disability"  shall mean the definition of the
term "Disability" in Company's  disability  benefit plan covering  executives of
Company as in effect from time to time, or, if no such  disability  benefit plan
exists,   then  such  term   shall  mean  the   inability,   by  reason  of  any
medically-determined   physical   or  mental   impairment,   of   Executive   to
satisfactorily  perform  Executive's  duties hereunder for a period of more than
ninety (90)  consecutive  days or an  aggregate of more than ninety (90) days in
any rolling twelve-month period.

                              3. "Good Reason" shall mean and be deemed to exist
if any of the following  events occur without the written  approval of Executive
(and  regardless of whether the event occurs before or after a Change of Control
of Company): (i) Company reduces, in any material respect, Executive's position,
title,  responsibilities,  or  then-current  base  salary  contemplated  by this
Agreement without Cause or assigns  Executive duties which are inconsistent,  in
any material respect, with such position, title, or

                                       -3-


<PAGE>



responsibilities without Cause; (ii) Company fails to pay any amount when due to
Executive hereunder or materially breaches any other obligation  hereunder which
is not remedied  within  thirty (30) days after  receipt of written  notice from
Executive  specifying such breach; or (iii) any failure by Company or any of its
successors  or assigns to comply with and satisfy their  respective  obligations
under Subsection 9.2, below.

                              4. Change of Control"  shall mean and be deemed to
exist if any of the following events occur:

i) the  occurrence  of a change of  "control" of Company (as such quoted term is
defined in Rule 12b-2 promulgated under the Securities  Exchange Act of 1934, as
amended  from time to time (the  "Act"))  or any  change  in the  "ownership  or
effective control" or in the "ownership of a substantial  portion of the assets"
of  Company  (as such  quoted  phrases  are used in  Section  280G(b)(2)  of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")); or

ii) any "person" (as such quoted term is used in Sections 3(a)(9), 13(d), and/or
14(d)(2)  of the Act)  other than the  Company,  any  entity  controlled  by the
Company,  or any employee benefit plan (or trust) sponsored or maintained by the
Company,  becomes  the  "beneficial  owner" (as such quoted term is used in Rule
13d-3  promulgated  under the Act),  directly or  indirectly,  of 25% or more of
either:   (A)   Company's   then-outstanding   shares  of  voting  common  stock
("Outstanding  Company Common  Stock"),  or (B) the combined voting power of the
then-outstanding  voting securities of Company entitled to vote generally in the
election of directors ("Outstanding Company Voting Securities"); or

iii) the following persons  (collectively,  the "Incumbent Board") cease for any
reason to  constitute  a majority  of the Board of  Directors  of  Company:  (A)
individuals who, as of the date hereof,  constitute the Board of Directors,  and
(B)  individuals  who become  members of the Board of  Directors  after the date
hereof whose election, or nomination for election by Company's shareholders, was
approved by a vote of at least a majority of the directors  then  comprising the
Board of Directors,  but excluding, for this purpose, any director designated by
a person who has entered into an agreement  with Company to effect a transaction
described in this  definition of Change of Control or whose initial  election or
appointment to the Board of Directors  occurs as a result of either an actual or
threatened  election contest (as such terms are used in Rule 14a-11  promulgated
under the Act) or other actual or threatened solicitation of proxies or consents
by or on  behalf  of a person  other  than the  directors  then  comprising  the
incumbent Board of Directors; or

iv) the  approval by Company's  shareholders  of any merger,  consolidation,  or
other   business   combination   involving   Company,   other   than  a  merger,
consolidation,  or other business combination with respect to which, immediately
following  such  business  combination:  (A)  all  or  substantially  all of the
beneficial  owners,  respectively,  of the Outstanding  Company Common Stock and
Outstanding Company Voting Securities outstanding immediately prior thereto, are
the  beneficial  owners of at least 60% of,  respectively,  the shares of voting
common  stock of the  surviving  entity,  and the  combined  voting power of the
voting  securities of the  surviving  entity  entitled to vote  generally in the
election of directors,  outstanding  immediately after such business combination
in  substantially  the  same  proportion  as  their  ownership  in  the  Company
immediately prior to such business combination,  (B) no "person" (as such quoted
term is used in Sections 3(a)(9),  13(d), and/or 14(d)(2) of the Act) other than
the Company,  any entity controlled by the Company, or any employee benefit plan
(or trust)  sponsored or maintained by the Company or the surviving  entity,  is
the  "beneficial  owner" (as such quoted term is used in Rule 13d-3  promulgated
under  the  Act),  directly  or  indirectly,  of  25%  or  more  of  either  the
then-outstanding  shares of voting common stock of the  surviving  entity or the
combined voting power of the then-outstanding voting securities of the surviving
entity entitled to vote generally in the election of

                                       -4-


<PAGE>



directors,  and (C) at least a majority of the members of the board of directors
of the surviving  entity were members of the Incumbent  Board at the time of the
execution of the initial agreement providing for such business combination; or

v) the  approval  by  Company's  shareholders  of any sale,  exchange,  or other
disposition (in one transaction or a series of related  transactions)  of all or
substantially  all of the assets of Company,  other than to a  corporation  with
respect  to  which,   immediately   following  such  disposition:   (A)  all  or
substantially  all of the beneficial  owners,  respectively,  of the Outstanding
Company  Common Stock and  Outstanding  Company  Voting  Securities  outstanding
immediately  prior  thereto,  are the  beneficial  owners  of at  least  60% of,
respectively,  the shares of voting  common stock of such  corporation,  and the
combined voting power of the voting  securities of such corporation  entitled to
vote generally in the election of directors,  outstanding immediately after such
disposition  in  substantially  the same  proportion  as their  ownership in the
Company  immediately prior to such disposition,  (B) no "person" (as such quoted
term is used in Sections 3(a)(9),  13(d), and/or 14(d)(2) of the Act) other than
the Company,  any entity controlled by the Company, or any employee benefit plan
(or trust)  sponsored or maintained by the Company or such  corporation,  is the
"beneficial  owner" (as such quoted term is used in Rule 13d-3 promulgated under
the Act), directly or indirectly,  of 25% or more of either the then-outstanding
shares of voting common stock of such  corporation or the combined  voting power
of the  then-outstanding  voting securities of such corporation entitled to vote
generally  in the  election  of  directors,  and (C) at least a majority  of the
members  of the board of  directors  of such  corporation  were  members  of the
Incumbent Board at the time of the execution of the initial agreement  providing
for such disposition; or

vi) the  approval by the  shareholders  of Company of any plan or  proposal  for
liquidation or dissolution of Company.

Notwithstanding  anything to the contrary,  if a Change of Control occurs and if
this Agreement or Executive's employment with Company is terminated prior to the
date on which the Change of Control occurs,  then a "Change of Control" shall be
deemed  to have  occurred  on the  date  immediately  prior  to the date of such
termination,   so  long  as  Executive  can  reasonably  demonstrate  that  such
termination:  (A) was at the  request  of a third  party  who  had  taken  steps
reasonably calculated to effect the Change of Control, or (B) otherwise arose in
connection with or anticipation of the Change of Control.

                          A. Termination  Upon Death of Executive.  In the event
                             ------------------------------------
of the  death  of  Executive  during  the  term of this  Agreement,  Executive's
employment  shall   automatically   terminate  without  further   obligation  to
Executive's estate under this Agreement, except that Executive's estate shall be
entitled to receive  all monies and other  rights to which  Executive  otherwise
would have been entitled  hereunder  through the end of the calendar month after
the month in which death  occurred,  plus all accrued  and unpaid  monies  owing
through  such  date  under  this  Agreement,  all of  which  shall  be  paid  to
Executive's estate or beneficiary,  as applicable,  in a lump sum in cash within
thirty (30) days after the month in which death occurred.

                          B.  Termination  Upon  Disability  of  Executive.   If
                              --------------------------------------------
Company  determines in good faith that the  Disability of Executive has occurred
during the term of this  Agreement,  Company  may provide to  Executive  written
notice in accordance  with  Subsection 9.1, below, of its intention to terminate
Executive's employment. In such event, Executive's employment with Company shall
terminate  effective at the end of six (6) months after  Executive's  receipt of
such  notice,  provided  that within the six (6) month period after such receipt
the Executive  shall not have returned to full-time  performance  of Executive's
duties  hereunder.  Until the termination of employment at the expiration of the
six (6) month period,  Executive shall receive Executive's regular  compensation
and benefits as specified in Section 3, above.  If Executive's  employment is so
terminated,

                                       -5-


<PAGE>



Company  shall have no further  obligation  to Executive  under this  Agreement,
except that  Executive  shall be entitled to receive upon the effective  date of
such  termination  all such  monies and rights to which  Executive  is  entitled
hereunder through the effective date of such  termination,  plus all accrued and
unpaid monies owing  hereunder  through such date, all of which shall be paid to
Executive in cash within thirty (30) days after such date.

                          C.  Termination For Cause,  Etc. Company may terminate
                              ---------------------------
Executive's  employment with Company for Cause by providing Executive with prior
written notice of termination  in accordance  with  Subsection  9.1,  below.  If
Company  terminates  Executive's  employment  for Cause in accordance  with this
Subsection  or  terminates  Executive's  employment  in the manner  specified in
Section 1, above, or if Executive terminates  Executive's  employment other than
as  provided  under  Subsection  6.5,  below,  Company  shall  have  no  further
obligation to Executive  under this  Agreement,  except that Executive  shall be
entitled to receive upon the effective date of such termination only such monies
and rights to which Executive is entitled  hereunder  through the effective date
of such termination,  plus all accrued and unpaid monies owing hereunder through
such date,  all of which shall be paid to Executive  in cash within  thirty (30)
days after  such date.  

                          D.  Termination  For Good Reason,  Etc.  Executive may
                              ----------------------------------
terminate  Executive's  employment  with  Company for Good  Reason by  providing
Company with prior written notice of termination in accordance  with  Subsection
9.1,  below.  If during the term of this  Agreement  (and  regardless of whether
before or after a Change of Control of Company):  (i) Executive  terminates this
Agreement  or  Executive's  employment  with  Company for Good  Reason,  or (ii)
Company terminates this Agreement or Executive's  employment with Company in any
manner other than as expressly  permitted under Subsections 1, 6.2, 6.3, or 6.4,
above,  then:  (A) Company  shall make a lump sum payment equal to one (1) times
the highest annual  compensation  (as  reportable on  Executive's  IRS W-2 form)
received by Executive  from Company  during any of the most recent two (2) years
ending on or prior to the date on which the  termination  occurs;  (B) all stock
options   granted  to  Executive  shall  become  fully  vested  and  immediately
exercisable at Executive's  election,  regardless of whether Executive exercises
any other  rights  afforded  Executive  under this  Agreement;  (C) all  welfare
benefit  plans,  practices,  policies,  and  programs  applicable  to  Executive
hereunder  and in  existence  during  the ninety  (90) day  period  prior to the
effective date of termination, or if more favorable to Executive those in effect
generally at any time thereafter with respect to other comparable  executives of
Company, shall continue as to Executive for an additional one (1) year after the
effective date of  termination,  provided,  however,  that if Executive  becomes
reemployed  with another  employer and is eligible to receive  medical and other
welfare  benefits  under another  employer  provided plan, the medical and other
welfare benefits  described herein shall not apply to the extent  duplicative to
those  provided  under  such  other  plan  during  such  applicable   period  of
eligibility;  and (D) Executive  shall be entitled to receive upon the effective
date of such  termination  all such  monies  and  rights to which  Executive  is
entitled  hereunder  through the effective  date of such  termination,  plus all
accrued and unpaid  monies  owing  hereunder  through  such date.  The  payments
described in clauses (A) and (D) above shall be paid to Executive in cash within
sixty (60) days after the effective date of termination.

                          E. Effect of Termination. Upon the termination of this
                             ---------------------
Agreement or Executive's employment with Company, all obligations of the parties
hereunder  shall  cease,  except the terms of Sections 4 through 9 hereof  shall
survive such termination for any reason.

                  VII. Change of Control.
                       -----------------

                          A.  Acceleration  of  Vesting  of  Options.  Upon  the
                              --------------------------------------
occurrence of a Change of Control of Company during the term of this  Agreement,
all stock options granted to Executive shall become fully

                                       -6-


<PAGE>


vested and  immediately  exercisable  at  Executive's  election,  regardless  of
whether  Executive  exercises  any other rights  afforded  Executive  under this
Agreement.

                          B. Compensation  Reduction.  Notwithstanding any other
                             -----------------------
provision of this Agreement to the contrary, if any payments or benefits made by
Company to Executive  hereunder or otherwise  would be subject to the excise tax
or taxes  imposed  by  Section  4999 of the Code  (collectively,  the  "Affected
Amount"),  such  Affected  Amount  shall be reduced so that  Executive  shall be
entitled to receive an Affected Amount with a "present value" (as determined for
purposes  of Section  280G of the Code) of not more in the  aggregate  than 2.99
times the  Executive's  applicable  "base amount" under Section 280G of the Code
(collectively,  the "Limited  Amount");  provided,  however,  that if the entire
Affected  Amount,  when reduced by such excise tax or taxes, is greater than the
Limited Amount,  then no reduction shall be made under this  Subsection.  Unless
the parties  otherwise agree to in writing,  any reduction under this Subsection
shall be conclusively  determined by the independent certified public accounting
firm  regularly  employed by Company  during the ninety (90) day period prior to
the effective date of the event triggering the payment of the Affected Amount to
Executive, and the determination of such independent certified public accounting
firm shall be final and binding on all parties.

                 VII. Indemnification. Company shall indemnify and hold harmless
                      ---------------
Executive and Executive's family,  heirs, estate, and legal representatives from
and against any and all  claims,  damages,  losses,  liabilities,  and  expenses
(including without limitation all reasonable  attorneys' fees) arising out of or
in  connection   with   Executive's   performance  of  Executive's   duties  and
responsibilities  hereunder in Executive's capacity as an officer or employee of
Company  or any of its  affiliates  to the  maximum  extent  permitted  by  law.
Executive shall notify Company of any indemnifiable  claim coming to Executive's
attention which may result in any  indemnification  obligation on Company's part
hereunder.  Company shall have the right to conduct the defense against any such
claim brought by a third party with counsel of its selection. The obligations of
Company under this Section shall  continue  following  the  termination  of this
Agreement and/or the termination of Executive's employment with Company. After a
Change of Control  of  Company,  Company  shall pay  promptly  as  incurred  all
reasonable  attorneys' fees and related  expenses which Executive may incur as a
result of any dispute or contest (regardless of the outcome thereof) by Company,
Executive,  or others with respect to the validity or enforceability  of, or the
rights and/or obligations under, any provision of this Agreement.

                  IX. Miscellaneous.
                      -------------

                          A. Notices.
                             -------

                              1. All notices  hereunder by either party shall be
given by  personal  delivery,  by sending  such notice by U.S.  certified  mail,
postage prepaid,  or by a reputable courier service,  fees prepaid, to the other
party at its address set forth on the signature page below.  Any notice given in
accordance with this Subsection  shall be effective as of the date of receipt or
attempted  delivery (if receipt is refused),  as the case may be. Each party may
change its address for notice purposes upon written  notification thereof to the
other party in accordance with this Subsection.

                              2.  All  notices  of   termination   described  in
Sections 1, 6.3,  6.4, and 6.5 shall be provided in writing in  accordance  with
Subsection 9.1.1 and shall: (i) indicate the specific  termination  provision in
this Agreement relied upon; (ii) to the extend applicable, provide in reasonable
detail the facts and  circumstances  claimed to provide a basis for  termination
under the provision so indicated;  and (iii) indicate the  applicable  effective
date of  termination.  The failure by either party to set forth in the notice of
termination any

                                       -7-


<PAGE>



fact or  circumstance  which  contributes  to a  showing  of  justification  for
termination  shall not waive any right of such party  hereunder or preclude such
party from  subsequently  asserting such fact or  circumstance in enforcing such
party's rights hereunder.

                          B.  Assignment;  Binding  Effect.  This  Agreement  is
                              ----------------------------
personal  to  Executive  and,  therefore  neither  this  Agreement  nor  any  of
Executive's rights,  powers,  duties or obligations hereunder may be assigned by
Executive  without  Company's  prior written  approval.  This Agreement shall be
binding  upon and inure to the  benefit  of  Executive  and  Executive's  heirs,
estate,  and legal  representatives,  and shall be binding upon and inure to the
benefit of Company and its  successors  and assigns.  Company  shall require its
successors  and  assigns to  expressly  assume  and agree to perform  under this
Agreement  in the same  manner  and to the same  extent  that  Company  would be
required to perform if no such  succession  or  assignment  had take place,  and
Company's  successors and assigns shall so expressly assume and agree to perform
under this Agreement. For purposes of this Agreement,  successors and assigns of
Company shall include  without  limitation  all persons  acquiring,  directly or
indirectly, any voting securities or assets of Company which results in a Change
of  Control  of  Company,  whether  by  merger,  consolidation,  stock  or asset
purchase,  or otherwise,  and such  successors  and assigns shall  thereafter be
deemed "Company" for the purposes hereof.

                          C.  Taxes.  Company  may  withhold  from  any  amounts
                              -----
payable under this  Agreement  such federal,  state,  or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

                          D.  Headings.  The  headings  in  this  Agreement  are
                              --------
included for the  convenience  of  reference  and will be given no effect in the
construction of this Agreement.

                          E. Severability. The invalidity or unenforceability of
                             ------------
any provision of this Agreement shall not affect the validity or  enforceability
of any other  provision of this  Agreement.  In the event that any  provision of
this  Agreement  is deemed  invalid or  unenforceable  by any court of competent
jurisdiction,  such  provision  shall be deemed  to be  modified  to the  extent
necessary  for the  provision to be legally  enforceable  to the fullest  extent
permitted by applicable law. Any court of competent  jurisdiction may enforce or
modify any  provision  of this  Agreement  in order that the  provision  will be
enforced by the court to the fullest extent permitted by applicable law.

                          F. Waiver.  Any waivers  hereunder must be in writing.
                             ------
No consent or waiver,  express or  implied,  by any party to or of any breach or
default  by  the  other  in the  performance  by the  other  of its  obligations
hereunder  shall be deemed or  construed  to be a consent or waiver to or of any
other  breach or default in the  performance  by such other party of the same or
any other obligations of such party hereunder.

                          G. Governing  Law. This Agreement and the  obligations
                             --------------
of the  parties  hereunder  shall be  interpreted,  construed,  and  enforced in
accordance with the laws of the state of Washington applicable to contracts made
and to be performed in the state of  Washington,  without  regard to conflict of
laws principles.

                          H.  Entire  Agreement;  Amendments;   Conflicts.  This
                              -------------------------------------------
Agreement  and the  attached  Exhibits  (which are  incorporated  herein by this
reference):  (i)  contain the entire  agreement  and  understanding  between the
parties with respect to the subject matter hereof;  and (ii) supersede all prior
agreements,  negotiations,  representations,  and  proposals,  written and oral,
relating  to  the  subject  matter  hereof.  This  Agreement  may  be  modified,
supplemented, and/or amended only by a writing signed by both Executive and an

                                       -8-


<PAGE>



authorized  representative of Company. In the event of any conflict between this
Agreement and any other agreement  between  Executive and Company,  the terms of
this Agreement shall control.

                  EXECUTED as of the date set forth above.


EXECUTIVE:                             COMPANY:
- ---------                              --------
                                       CELLULAR TECHNICAL SERVICES COMPANY, INC.
                                       By_______________________________________
________________________________       _________________________________________
Signature                              Print Name
WILLIAM C. ZOLLNER
________________________________       _________________________________________
Print Name                             Title
Executive's Address for Notices:       Company's Address for Notices:
- -------------------------------        -----------------------------
________________________________       2401 Fourth Avenue, Suite 808
________________________________       Seattle, Washington  98121
________________________________       Attention: Legal Department


Attachments:
- -----------

Exhibit A - Executive Incentive Compensation Plan
Exhibit B - Stock Option Contract
Exhibit C - Agreement Regarding Confidential Information and Property Rights



                                       -9-


<PAGE>



                                    EXHIBIT A


                                      -10-


<PAGE>



                      EXECUTIVE INCENTIVE COMPENSATION PLAN


     This  Exhibit  pertains  to and is made a part of that  certain  letter  of
Employment  Agreement  ("Employment  Agreement")  dated as of February 19, 1997,
between CELLULAR TECHNICAL SERVICES COMPANY, INC. (the "Company") and WILLIAM C.
ZOLLNER (the "Executive").

               1.   Bonus Criteria.
                    ---------------

                    1.1 For Fiscal Year 1997.  For  Company's  fiscal year ended
                        --------------------
December 31, 1997,  Executive will be entitled to an incentive  bonus if Company
equals or exceeds year-end earnings per share of $0.5625, as follows:

                        (i) if Company equals or achieves  year-end earnings per
share  between  $0.5625 and $0.75,  Executive  will be entitled to an  incentive
bonus equal to $70,000.00,  plus  $3,684.21 for each $0.01 that Company  exceeds
year-end  earnings  per share of  $0.5625,  up to a maximum of  $140,000.00  for
achieving year-end earnings of $0.75 per share; plus

                        (ii) if Company exceeds  year-end  earnings per share of
$0.75,  Executive will be entitled to an incentive  bonus equal to $1,000.00 for
each $0.01 that Company exceeds year-end earnings per share of $0.75; plus

                        (iii) such  additional  amount as the Board of Directors
of  Company  (or the  Compensation  and  Stock  Option  Committee  thereof)  may
determine in its sole discretion.

For purposes of the above incentive bonuses, "year-end earnings per share" means
Company's year-end earnings per share as reported in Company's SEC Form 10-K for
fiscal year ended December 31, 1997.

                    1.2 For Fiscal Years After 1997.  Executive's bonus for each
                        ---------------------------

fiscal year after 1997 will be based on corporate performance and other criteria
specifically  identified  for the Executive by the Board of Directors of CTS (or
the Compensation and Stock Option Committee thereof).

               2.   Additional  Stock  Option  Grants.  In addition to the stock
                    ---------------------------------
options  described  in Section  3.3 of the  Employment  Agreement,  the Board of
Directors of CTS (or the Compensation  and Stock Option  Committee  thereof) may
grant  additional  stock options to Executive in such amounts,  at such exercise
price, under such vesting schedule,  and pursuant to such additional terms as it
may determine in its sole discretion.


                                      -11-


<PAGE>



                                    EXHIBIT B


                                      -12-


<PAGE>




                   OFFICER NONQUALIFIED STOCK OPTION CONTRACT


                            (1996 STOCK OPTION PLAN)


               THIS  NONQUALIFIED  STOCK  OPTION  CONTRACT  entered  into  as of
February 19, 1997 between CELLULAR TECHNICAL SERVICES COMPANY,  INC., a Delaware
corporation  (the  "Company"),  and WILLIAM C.  ZOLLNER  (the  "Optionee").  The
Company and Optionee hereby agree as follows:

                  I. The Company,  in accordance  with the allotment made by the
Compensation  and Stock  Option  Committee  of the Board of Directors of Company
(the  "Committee")  and  subject to the terms and  conditions  of the 1996 Stock
Option Plan of the Company (the "Plan"), hereby grants to the Optionee an option
to purchase an aggregate of 300,000 shares of the common stock,  $.001 par value
per share, of the Company  ("Common  Stock") at an exercise price of $11.375 per
share,  being at least equal to the fair  market  value of such shares of Common
Stock on the date hereof. This option is not intended to constitute an incentive
stock option  within the meaning of Section 422 of the Internal  Revenue Code of
1986, as amended (the "Code").

                  II. The term of this  option  shall be ten (10) years from the
date hereof,  subject to earlier  termination as provided in the Plan.  However,
this option shall not be  exercisable  until the  completion of one full year of
Optionee's employment with the Company after the date hereof, on which date this
option  shall  become  exercisable  as to 20% of the  total  number of shares of
Common  Stock  subject  hereto,  and after which date this option  shall  become
exercisable  as to an additional 20% of such shares on each of the next four (4)
successive  anniversaries  of such date. The right to purchase  shares of Common
Stock  under this  option  shall be  cumulative,  so that if the full  number of
shares  purchasable  in a period  shall not be  purchased,  the  balance  may be
purchased  at any  time or  from  time to time  thereafter,  but not  after  the
expiration  of the option.  In addition,  this option  shall become  immediately
exercisable in full upon a "Change of Control" (as defined below) of the Company
during  the term of this  option  or as  otherwise  provided  in any  employment
agreement  between the  Optionee  and the  Company.  Notwithstanding  any of the
foregoing:  (a)  Optionee  may not  exercise  this  option  beyond the date that
Optionee's  employment  relationship  with the  Company  terminates,  except  as
otherwise  provided  in the  Plan or in any  employment  agreement  between  the
Optionee  and the  Company,  and (b) in no event  may a  fraction  of a share of
Common Stock be purchased  under this option.  For purposes of this Contract,  a
"Change of  Control"  shall mean and be deemed to exist if any of the  following
events occur:

                  i) the occurrence of a change of "control" of Company (as such
quoted term is defined in Rule 12b-2 promulgated  under the Securities  Exchange
Act of 1934,  as  amended  from time to time (the  "Act"))  or any change in the
"ownership or effective  control" or in the "ownership of a substantial  portion
of the assets" of Company (as such quoted phrases are used in Section 280G(b)(2)
of the  Internal  Revenue  Code of  1986,  as  amended  from  time to time  (the
"Code")); or

                  ii) any  "person"  (as such  quoted  term is used in  Sections
3(a)(9),  13(d), and/or 14(d)(2) of the Act) other than the Company,  any entity
controlled by the Company,  or any employee benefit plan (or trust) sponsored or
maintained by the Company,  becomes the "beneficial  owner" (as such quoted term
is used in Rule 13d-3 promulgated under the Act), directly or indirectly, of 25%
or more of either: (A) Company's  then-outstanding shares of voting common stock
("Outstanding  Company Common  Stock"),  or (B) the combined voting power of the
then-outstanding  voting securities of Company entitled to vote generally in the
election of directors ("Outstanding Company Voting Securities"); or



<PAGE>



                  iii)  the  following  persons  (collectively,  the  "Incumbent
Board")  cease for any reason to constitute a majority of the Board of Directors
of Company: (A) individuals who, as of the date hereof,  constitute the Board of
Directors,  and (B)  individuals  who become  members of the Board of  Directors
after the date hereof whose  election,  or nomination  for election by Company's
shareholders,  was  approved by a vote of at least a majority  of the  directors
then  comprising the Board of Directors,  but excluding,  for this purpose,  any
director  designated by a person who has entered into an agreement  with Company
to effect a  transaction  described in this  definition  of Change of Control or
whose  initial  election or  appointment  to the Board of Directors  occurs as a
result of either an actual or  threatened  election  contest  (as such terms are
used in Rule 14a- 11  promulgated  under the Act) or other actual or  threatened
solicitation  of proxies or consents by or on behalf of a person  other than the
directors then comprising the incumbent Board of Directors; or

                  iv) the  approval  by  Company's  shareholders  of any merger,
consolidation,  or other business  combination  involving Company,  other than a
merger,  consolidation,  or other  business  combination  with respect to which,
immediately following such business combination: (A) all or substantially all of
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities outstanding immediately prior thereto, are
the  beneficial  owners of at least 60% of,  respectively,  the shares of voting
common  stock of the  surviving  entity,  and the  combined  voting power of the
voting  securities of the  surviving  entity  entitled to vote  generally in the
election of directors,  outstanding  immediately after such business combination
in  substantially  the  same  proportion  as  their  ownership  in  the  Company
immediately prior to such business combination,  (B) no "person" (as such quoted
term is used in Sections 3(a)(9),  13(d), and/or 14(d)(2) of the Act) other than
the Company,  any entity controlled by the Company, or any employee benefit plan
(or trust)  sponsored or maintained by the Company or the surviving  entity,  is
the  "beneficial  owner" (as such quoted term is used in Rule 13d-3  promulgated
under  the  Act),  directly  or  indirectly,  of  25%  or  more  of  either  the
then-outstanding  shares of voting common stock of the  surviving  entity or the
combined voting power of the then-outstanding voting securities of the surviving
entity entitled to vote generally in the election of directors, and (C) at least
a majority of the members of the board of directors of the surviving entity were
members  of the  Incumbent  Board at the time of the  execution  of the  initial
agreement providing for such business combination; or

                  v)  the  approval  by  Company's  shareholders  of  any  sale,
exchange,  or other  disposition  (in one  transaction  or a series  of  related
transactions) of all or substantially  all of the assets of Company,  other than
to a corporation with respect to which,  immediately following such disposition:
(A) all or  substantially  all of the beneficial  owners,  respectively,  of the
Outstanding  Company  Common Stock and  Outstanding  Company  Voting  Securities
outstanding immediately prior thereto, are the beneficial owners of at least 60%
of, respectively, the shares of voting common stock of such corporation, and the
combined voting power of the voting  securities of such corporation  entitled to
vote generally in the election of directors,  outstanding immediately after such
disposition  in  substantially  the same  proportion  as their  ownership in the
Company  immediately prior to such disposition,  (B) no "person" (as such quoted
term is used in Sections 3(a)(9),  13(d), and/or 14(d)(2) of the Act) other than
the Company,  any entity controlled by the Company, or any employee benefit plan
(or trust)  sponsored or maintained by the Company or such  corporation,  is the
"beneficial  owner" (as such quoted term is used in Rule 13d-3 promulgated under
the Act), directly or indirectly,  of 25% or more of either the then-outstanding
shares of voting common stock of such  corporation or the combined  voting power
of the  then-outstanding  voting securities of such corporation entitled to vote
generally  in the  election  of  directors,  and (C) at least a majority  of the
members  of the board of  directors  of such  corporation  were  members  of the
Incumbent Board at the time of the execution of the initial agreement  providing
for such disposition; or

                                       -2-


<PAGE>



                  vi) the approval by the shareholders of Company of any plan or
proposal for liquidation or dissolution of Company.

Notwithstanding  anything to the contrary,  if a Change of Control occurs and if
the Optionee's  employment  relationship with the Company is terminated prior to
the date on which the Change of Control occurs, then a "Change of Control" shall
be deemed to have  occurred  on the date  immediately  prior to the date of such
termination,   so  long  as  Optionee  can  reasonably   demonstrate  that  such
termination:  (A) was at the  request  of a third  party  who  had  taken  steps
reasonably calculated to effect the Change of Control, or (B) otherwise arose in
connection with or anticipation of the Change of Control.

                III. This option shall be exercised by giving  written notice to
the Company, at its address identified on the signature page below, stating that
the Optionee is exercising the option hereunder, specifying the number of shares
being  purchased,  and accompanied by payment in full of the aggregate  purchase
price therefor:  (a) in cash or by certified check, (b) with previously acquired
shares of Common  Stock  which have been held by the  Optionee  for at least six
months, or (c) a combination of the foregoing.

                IV.   The Company  may  withhold  cash  and/or  shares of Common
Stock to be issued to the Optionee in the amount which the Company determines is
necessary to satisfy its obligation to withhold taxes or other amounts  incurred
by reason of the grant or  exercise  of this  option or the  disposition  of the
underlying  shares of Common Stock.  Alternatively,  the Company may require the
Optionee to pay the Company such amount in cash promptly upon demand.

                V.      Notwithstanding the foregoing,  this option shall not be
exercisable  by the  Optionee  unless  (a) a  Registration  Statement  under the
Securities  Act of 1933, as amended (the  "Securities  Act") with respect to the
shares of Common Stock to be received  upon the exercise of this option shall be
effective and current at the time of exercise, or (b) there is an exemption from
registration  under the  Securities Act for the issuance of the shares of Common
Stock upon such  exercise.  The Optionee  hereby  represents and warrants to the
Company that,  unless such a Registration  Statement is effective and current at
the time of exercise  of this  option,  the shares of Common  Stock to be issued
upon the  exercise of this option will be acquired by the  Optionee  for his own
account,  for investment only, and not with a view to the resale or distribution
thereof.  In any event,  the  Optionee  shall notify the Company of any proposed
resale of the shares of Common Stock issued to him upon exercise of this option.
Any subsequent  resale or distribution of shares of Common Stock by the Optionee
shall be made only pursuant to (i) a Registration Statement under the Securities
Act which is effective  and current with respect to the sale of shares of Common
Stock  being  sold,  or  (ii)  a  specific   exemption  from  the   registration
requirements of the Securities Act, but in claiming such exemption, the Optionee
shall,  prior  to any  offer of sale or sale of such  shares  of  Common  Stock,
provide the Company  (unless  waived by the  Company)  with a favorable  written
opinion of counsel, in form and substance satisfactory to the Company, as to the
applicability  of such  exemption to the  proposed  sale or  distribution.  Such
representations  and warranties  shall also be deemed to be made by the Optionee
upon  each  exercise  of this  option.  Nothing  herein  shall be  construed  as
requiring  the Company to register  the shares  subject to this option under the
Securities Act.

                VI.   Notwithstanding anything herein to the contrary, if at any
time the  Committee  shall  determine,  in its  discretion,  that the listing or
qualification  of the  shares  of Common  Stock  subject  to this  option on any
securities  exchange or under any applicable  law, or the consent or approval of
any  governmental  regulatory body, is necessary or desirable as a condition to,
or in  connection  with,  the  granting  of an  option or the issue of shares of
Common  Stock  hereunder,  this option may not be  exercised in whole or in part
unless such

                                       -3-


<PAGE>



listing, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.

                VII.  The  Company  may  affix  appropriate   legends  upon  the
certificates  for shares of Common Stock issued upon exercise of this option and
may issue such "stop transfer"  instructions to its transfer agent in respect of
such shares as it determines,  in its discretion, to be necessary or appropriate
to:  (a)  prevent  a  violation  of,  or  to  perfect  an  exemption  from,  the
registration requirements of the Securities Act; or (b) implement the provisions
of the Plan or this Contract or any other agreement  between the Company and the
Optionee with respect to such shares of Common Stock.

                VIII.  Nothing  in the  Plan or  herein  shall  confer  upon the
Optionee any right to continue in the employ of the  Company,  any Parent or any
of its Subsidiaries,  or interfere in any way with any right of the Company, any
Parent or its  Subsidiaries  to terminate  such  employment  at any time for any
reason  whatsoever  without  liability to the Company,  any Parent or any of its
Subsidiaries.

                IX.    This option is not transferable by the Optionee otherwise
than by will or the  laws of  descent  and  distribution  and may be  exercised,
during the  lifetime of the  Optionee,  only by the  Optionee or the  Optionee's
legal representatives.

                X.      All notices  hereunder by either party shall be given by
personal  delivery,  by sending  such  notice by U.S.  certified  mail,  postage
prepaid, or by a reputable courier service,  fees prepaid, to the other party at
its  address  identified  on the  signature  page  below.  Any  notice  given in
accordance  with this  section  shall be  effective as of the date of receipt or
attempted  delivery (if receipt is refused),  as the case may be. Each party may
change its address for notice purposes upon written  notification thereof to the
other party in accordance with this section.

                XI.   The Company  and the  Optionee  agree that:  (a) they will
both be subject to and bound by all of the terms and  conditions  of the Plan, a
copy of which is  attached  hereto  and made a part  hereof;  (b) any  undefined
capitalized  term used herein shall have the meaning ascribed to it in the Plan;
(c) in the event of a conflict  between the terms of this Contract and the terms
of the Plan,  the terms of the Plan shall govern;  (d) the Company may amend the
Plan and the  options  granted to the  Optionee  under the Plan,  subject to the
limitations  contained  in the Plan;  and (e)  Optionee  shall  comply  with all
applicable  laws  relating to the Plan and the grant and exercise of this option
and the  disposition of the shares of Common Stock acquired upon exercise of the
option,  including  without  limitation,  federal and state securities and "blue
sky" laws.

                XII. This Contract  shall be: (a) governed by, and construed and
enforced in accordance  with, the laws of the State of Delaware,  without regard
to the  conflicts  of law rules  thereof;  and (b) binding upon and inure to the
benefit of any successor or assign of the Company and to any heir,  distributee,
executor,  administrator  or legal  representative  entitled  to the  Optionee's
rights  hereunder.  The  invalidity,   illegality  or  unenforceability  of  any
provision herein shall not affect the validity,  legality or  enforceability  of
any other provision.


                                       -4-


<PAGE>



EXECUTED as of the date first set forth above.

OPTIONEE:                                                   CTS:
- --------                                                    ---
                                       CELLULAR TECHNICAL SERVICES COMPANY, INC.
- ------------------------------         By---------------------------------------
Signature
WILLIAM C. ZOLLNER
- ------------------------------         -----------------------------------------
Print Name                             Print Name
- ------------------------------         -----------------------------------------
Social Security Number                 Title
Optionee's Address for Notices:        CTS's Address for Notices:
- ------------------------------         -------------------------
- ------------------------------         2401 Fourth Avenue, Suite 808
- ------------------------------         Seattle, Washington  98121
- ------------------------------         Attention: Chief Financial Officer


Attachments:
- ------------

1996 Stock Option Plan


                                       -5-


<PAGE>



                                    EXHIBIT C

                                       -6-


<PAGE>




[GRAPHIC OMITTED]                         EMPLOYEE AGREEMENT REGARDING
                               Intellectual Property and Proprietary Information
- --------------------------------------------------------------------------------

         IN CONSIDERATION of my employment or my continued employment at will by
Cellular  Technical   Services  Company,   Inc.  and/or  any  of  its  partners,
subsidiaries,  or affiliated companies (hereinafter  collectively referred to as
the "Company"), and in further consideration of the Company's award to me, while
employed by the Company, of an inventor's honorarium for the specific assignment
to the Company of each original U.S. Patent Application:

         A.       I hereby  assign  and agree to assign to the  Company,  all my
                  right,   title  and   interest  in  and  to  all   inventions,
                  discoveries,  improvements, ideas, computer or other apparatus
                  programs  and  related  documentation,   and  other  works  of
                  authorship   (hereinafter  each  and  collectively  designated
                  "Intellectual   Property"),   whether   or  not   capable   of
                  registration  under  applicable  patent or  copyright  laws or
                  susceptible  to other forms of  protection,  which  during the
                  period of my  employment  by the Company I may make or create,
                  solely or jointly with others, in whole or in part, either:

                  1.       in the course of such employment, or

                  2.       relating to  the business or research or  development
                           of the Company, or

                  3.       with  the  use  of  the  time,  material,  equipment,
                           supplies,  or   facilities  of  the  Company,  or its
                           private  proprietary,  confidential  or  trade secret
                           information.

         This  Agreement  does not apply to an invention for which no equipment,
supplies,  facilities,  or private,  proprietary,  confidential  or trade secret
information  of the Company was used and which was developed  entirely on my own
time,  unless (a) the  invention  related (i)  directly  to the  business of the
Company, or (ii) to the Company's actual or demonstrably anticipated research or
development,  or (b) the invention results from any work performed by me for the
Company.

         B.       I further agree, without charge to the Company:

                  1.        to  disclose   promptly  to  the  Company  all  such
                            Intellectual Property,

                  2.        to promptly, at the request of the Company,  execute
                            a specific  assignment  to the Company of all right,
                            title and  interest to such  Intellectual  Property,
                            including without limitation priority rights arising
                            from patent applications, and

                  3.        to do anything else  reasonably  necessary to enable
                            the Company to secure  patents,  copyrights or other
                            forms of protection for such  Intellectual  Property
                            in the United States and in other countries.

         C.       I acknowledge and agree that in performing my responsibilities
                  as  an  employee  of  the  Company,  I  will  have  access  to
                  information regarding equipment,  devices, software,  designs,
                  research  know-  how,  processes,  technical  data  and  other
                  technology,  customers,  marketing  and  production  plans and
                  strategies,   payroll  and  other  financial  information  and
                  administrative    information,     and    other    information
                  (collectively the "Information"),  pertaining to the Company's
                  business or its actual or anticipated  research or development
                  (collectively  the  "Business"),  which the Company  considers
                  confidential and proprietary.  Therefore,  in order to protect
                  the  legitimate  business  interests  of the  Company  in such
                  Information, I agree as follows:

                  1.       During the term of my employment with the Company and
                           for  a  period  of  five  (5)  years   following  the
                           termination   thereof,   I  will  hold  in  strictest
                           confidence all  Information of the Company of which I
                           become   aware  in  the  course  of  my   employment,
                           regardless of the form


<PAGE>


                           of such Information, e.g., oral, written, electronic,
                           or  otherwise.  During this period,  I will treat all
                           such Information as secret and  confidential,  but in
                           any  event  with  no  less  care  than  that  which a
                           reasonable  person or  business  would  utilize  with
                           respect  to  trade  secrets  or  highly  confidential
                           information. In particular, I will:

                           a.       restrict   disclosure  of  the   Information
                                    solely  to those  employees  of the  Company
                                    with a "need to know" and not  disclose  the
                                    Information  to any  other  person or entity
                                    without prior written  authorization  of the
                                    Company;

                           b.       insure   the  proper   safekeeping   of  the
                                    Information    and   timely   and   complete
                                    disposition or destruction of materials; and

                           c.       not use the  Information  for my own benefit
                                    or the  benefit  of  others,  or  engage  in
                                    conduct  which  is   competitive   with  the
                                    Business.

                           For  purposes  of this  Agreement,  a "need  to know"
                           means  that  the  employee  requires  access  to  the
                           Information   in   order  to   perform   his  or  her
                           responsibilities as an employee of the Company.

                  2.       Notwithstanding  the above, I will have no obligation
                           to  preserve   the   confidentiality   or  honor  the
                           restriction  on use in Paragraph 1, above,  as to any
                           Information  which  becomes part of the public domain
                           by other than an  unauthorized  disclosure or through
                           my  fault.  I agree  that I will  have the  burden of
                           proving   the   existence   of   the   exception   to
                           confidentiality described in this Paragraph 2.

                  3.       All  information  shall  be  deemed  and  remain  the
                           property of the Company.

                  4.       If I am  required to disclose  the  Information  by a
                           legal or regulatory  action,  then I will immediately
                           notify  the  Company  in such time as to  permit  the
                           Company to intervene or contest such disclosure.

                  5.       I agree to indemnify the Company and hold it harmless
                           from any and all claims, judgments,  damages, losses,
                           costs,  and  expenses,   including  attorney's  fees,
                           resulting from any publication, disclosure, or use by
                           me in violation of this Agreement.

         D.       I further agree that the various provisions of this Agreement:

                  1.       shall be  interpreted in accordance  with  Washington
                           law,

                  2.       shall   be   binding   upon  my   heirs,   executors,
                           administrators, successors and assigns,

                  3.       shall be deemed  separable  from each other,  and the
                           invalidity  of one  provision  shall not  affect  the
                           validity of any other provision,

                  4.       shall not be deemed to provide or imply the  duration
                           or other terms and conditions of my employment, and



                                       -2-


<PAGE>


                  5.       shall  not  be  modified,  supplemented,  or  altered
                           except by a writing  signed by both  parties  to this
                           Agreement.
         E.       In  the  event  of a  breach  or  threatened  breach  of  this
                  Agreement,  the parties shall be entitled to injunctive relief
                  and all  other  remedies  provided  by law.  In the event of a
                  dispute  regarding this Agreement,  the prevailing party shall
                  be  entitled  to  recover  all  attorney's  fees  and  related
                  expenses incurred, including those incurred on appeal.

         F.       The  masculine,  feminine,  singular and plural of any word or
                  words used in this  Agreement  shall be deemed to include  and
                  refer to the gender and number appropriate in the context.

         G.       I hereby  acknowledge  having on this day  received  a copy of
                  this Agreement.


EMPLOYEE:                                                   COMPANY:
- --------                                                    -------

William C. Zollner,                    Cellular Technical Services Company, Inc.
- ------------------
President & Chief Operating Officer    2401 Fourth Avenue, Suite 808
- -----------------------------------
Employee name and title                Seattle, WA  98121

/s/ William C. Zollner      2/19/97    By  /s/ Lynne Sederholm
- -----------------------------------        -------------------
Employee signature and date
                                       Its  Human Resources Manager

                                       Date  /s/ 2/20/97
                                             -----------





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