SEATTLE FILMWORKS, INC.
                         1999 EMPLOYEE STOCK OPTION PLAN
                       NONQUALIFIED STOCK OPTION AGREEMENT

                  (A)      Name of Holder:
                  (B)      Grant Date:
                  (C)      Number of Shares:
                  (D)      Exercise Price:
                  (E)      Expiration Date:
                  (F)      Vesting Commencement Date: _________________

     THIS  NONQUALIFIED  STOCK OPTION  AGREEMENT (the  "Agreement")  is made and
entered  into as of the date set  forth in Item (B)  above  (the  "Grant  Date")
between Seattle  FilmWorks,  Inc., a Washington  corporation (the "Company") and
the person named in Item A above ("Holder").

     THE PARTIES AGREE AS FOLLOWS:

     1.  Grant of  Option;  Grant  Date.  The  Company  hereby  grants to Holder
pursuant to the Company's  1999 Employee Stock Option Plan, as amended from time
to time (the "Plan"),  a copy of which is available from the Company on request,
the right (the "Option") to purchase up to the number of shares of the Company's
Common  Stock  listed in Item (C) above (the  "Option  Shares") at the price per
share set  forth in Item (D)  above  (the  "Exercise  Price"),  on the terms and
conditions set forth in this Agreement and in the Plan, the terms and conditions
of the Plan being incorporated into this Agreement by reference.  This Option is
not intended to qualify as an incentive stock option for purposes of Section 422
of the Internal Revenue Code of 1986, as amended.  The number and kind of Option
Shares  and the  Exercise  Price may be  adjusted  in certain  circumstances  in
accordance with the provisions of Section 9 of the Plan.

     2. Termination of Option.  A vested Option shall  terminate,  to the extent
not  previously  exercised,  upon the  occurrence  of the first of the following
events:

                  (a)      five years from the date of grant;

                  (b) the  expiration  of three months from the date of Holder's
termination  of  employment  by or services to the Company for any reason  other
than death or disability (as defined in the Plan);

                  (c) the  expiration  of one year from (i) the date of Holder's
death;  or (ii) Holder's  termination of employment by or service to the Company
coincident with disability (as defined in the Plan); or

                  (d) immediately upon Holder's  termination of employment by or
service to the Company for Cause (as defined in the Plan).

     3. Exercise of Options.

     3.1 Exercise Schedule.  This Option shall vest and be exercisable according
to the  following  schedule:  (a) 25% on the  date one year  after  the  Vesting
Commencement  Date;  and (b) the balance in a series of twelve  (12)  successive
equal quarterly  installments for each quarter thereafter.  The unvested portion
of the Option, if any, shall terminate immediately upon the Holder's termination
of  employment  by or service to the  Company  for any  reason  whatsoever.  The
vesting  schedule for the Option is subject to  acceleration  in accordance with
the provisions of Section 9.2 of the Plan.
<PAGE>

     3.2  Manner of  Exercise.  Holder  may  exercise  this  Option  by: (i) the
surrender  of this  Option  Agreement  to the  Secretary  of the  Company at the
principal  office of the Company,  accompanied by an executed notice of exercise
in the form attached hereto as Exhibit 3.2 (or at the option of the Company such
other  form of stock  purchase  agreement  as shall  then be  acceptable  to the
Company),  (ii)  paying in full the  Exercise  Price in the manner  provided  in
Section  3.4  below  and  (iii)  paying  his or  her  share  of  any  applicable
withholding  or  employment  taxes.  This Option may not be exercised as to less
than 100  Shares  at any one time (or the  lesser  number  of  remaining  shares
covered by this Option).  The date the Company  receives each of the above items
will be considered the date this Option was exercised.

     3.3 Payment.  Payment is required to be made for Option Shares purchased at
the time  written  notice of  exercise  of the Option is given to the Company as
provided  in  Section  7.5 of the  Plan.  The  proceeds  of  any  payment  shall
constitute general funds of the Company.

     4.   Nonassignability   of  Option.   This  Option  is  not  assignable  or
transferable  by Holder  except in  accordance  with Section 8 of the Plan.  Any
attempt to assign,  pledge,  transfer,  hypothecate or otherwise dispose of this
Option in a manner not herein permitted, and any levy of execution,  attachment,
or similar process on this Option, shall be null and void.

     5. Restriction on Issuance of Shares.

     5.1  Legality of  Issuance.  The Company  shall not be obligated to sell or
issue any Option Shares pursuant to this Agreement if such sale or issuance,  in
the  judgment of the Company  and the  Company's  counsel,  might  constitute  a
violation by the Company of any provision of law,  including without  limitation
the provisions of the Securities Act of 1933, as amended (the "Securities Act").

     5.2 Registration or Qualification of Securities. The Company may, but shall
not be required to,  register or qualify the sale of any Option Shares under the
Securities Act or any other  applicable  law. The Company shall not be obligated
to take any  affirmative  action in order to cause the grant or exercise of this
Option or the issuance or sale of any Option Shares  pursuant  thereto to comply
with any law.

     6.  Restriction  on  Transfer.  Regardless  of whether a sale of the Option
Shares has been  registered  under the Securities Act or has been  registered or
qualified  under the  securities  laws of any  state,  the  Company  may  impose
restrictions  upon  the  sale,  pledge,  or  other  transfer  of  Option  Shares
(including the placement of appropriate  legends on stock  certificates)  if, in
the judgment of the Company and the Company's  counsel,  such  restrictions  are
necessary or desirable in order to achieve compliance with the provisions of the
Securities  Act, the securities  laws of any state,  or any other law, or if the
Company does not desire to have a trading market develop for its securities.

     7. Professional  Advice.  The acceptance and exercise of the Option and the
sale  of  Option  Shares  has  consequences  under  federal  and  state  tax and
securities  laws which may vary depending upon the individual  circumstances  of
the Holder. Accordingly, Holder acknowledges that he has been advised to consult
his personal  legal and tax advisor in  connection  with this  Agreement and his
dealings  with  respect  to the Option and the  Option  Shares.  Holder  further
acknowledges  that the  Company has made no  warranties  or  representations  to
Holder with respect to the income tax  consequences of the grant and exercise of
this Option or the sale of the Option Shares and Holder is in no manner  relying
on the Company or its representatives for an assessment of such consequences.

     8. Assignment; Binding Effect. Subject to the limitations set forth in this
Agreement,  this Agreement shall be binding upon and inure to the benefit of the
executors,  administrators,  heirs, legal representatives, and successors of the
parties hereto;  provided,  however,  that Holder may not assign any of Holder's
rights under this Agreement.

     9.  Damages.  Holder  shall be  liable  to the  Company  for all  costs and
damages,  including  incidental  and  consequential  damages,  resulting  from a
disposition  of Option Shares which is not in conformity  with the provisions of
this Agreement.

                                       2
<PAGE>

     10.  Governing Law. This  Agreement  shall be governed by, and construed in
accordance  with, the laws of the State of Washington  excluding those laws that
direct the application of the laws of another jurisdiction.

     11.  Notices.  All notices and other  communications  under this  Agreement
shall be in  writing.  Unless  and until  Holder is  notified  in writing to the
contrary, all notices, communications, and documents directed to the Company and
related to the Agreement,  if not delivered by hand, shall be mailed,  addressed
as follows:

                           Seattle FilmWorks, Inc.
                           1260 - 16th Avenue West
                           Seattle, Washington  98119
                           c/o Corporate Secretary


Unless  and until the  Company is  notified  in  writing  to the  contrary,  all
notices,  communications,  and documents intended for Holder and related to this
Agreement,  if not  delivered  by hand,  shall be mailed to Holder's  last known
address as shown on the Company's  books.  Notices and  communications  shall be
mailed  by first  class  mail,  postage  prepaid;  documents  shall be mailed by
registered mail,  return receipt  requested,  postage prepaid.  All mailings and
deliveries  related to this  Agreement  shall be deemed  received  when actually
received,  if by hand delivery,  and two (2) business days after mailing,  if by
mail.

     12. Arbitration.  Any and all disputes or controversies arising out of this
Agreement  shall  be  finally  settled  by  arbitration  conducted  in  Seattle,
Washington,  in  accordance  with  the  then  existing  rules  of  the  American
Arbitration Association, and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction  thereof;  provided that nothing
in this Section 12 shall  prevent a party from  applying to a court of competent
jurisdiction  to obtain  temporary  relief  pending  resolution  of the  dispute
through arbitration. The parties hereby agree that service of any notices in the
course of such  arbitration  at their  respective  addresses  as provided for in
Section 11 shall be valid and sufficient.

     13. Rights of Holder.  Neither this Option, the execution of this Agreement
nor the  exercise  of any portion of this  Option  shall  confer upon Holder any
right to, or guarantee of, continued  employment by, or service as a director or
consultant  to,  the  Company,  or in any way limit the right of the  Company to
terminate Holder's relationship with the Company.

     Agreement  Subject to Plan.  This Option and this Agreement  evidencing and
confirming  the same are  subject to the terms and  conditions  set forth in the
Plan and in any  amendments  to the Plan  existing  now or in the future,  which
terms and conditions are  incorporated  herein by reference.  A copy of the Plan
will be made available to Holder upon request. Should any conflict exist between
the provisions of the Plan and those of this Agreement,  those of this Agreement
shall govern and control.  This  Agreement and the Plan set forth the entire and
exclusive  understanding  between the  Company  and Holder  with  respect to the
Option and shall be deemed to  integrate,  replace and  supersede  all  previous
communications,  representations  or  agreements  between the  parties,  whether
written or oral,  regarding  the grant of stock  options or the  purchase  by or
issuances of shares to Holder. Neither this Agreement nor any term hereof may be
changed,  waived,  discharged or  terminated  except by an instrument in writing
signed by the Company and the Holder.

                                       3
<PAGE>

     IN WITNESS  WHEREOF,  the parties have executed this Option Agreement as of
the Effective Date.

                             SEATTLE FILMWORKS, INC.


                             By _________________________
                             Title ______________________


Holder hereby  accepts and agrees to be bound by all of the terms and conditions
of this Agreement and the Plan.


                             _____________________________
                             Holder

                                       4
<PAGE>

                                   EXHIBIT 3.2

                               NOTICE OF EXERCISE

                   (To be signed only upon exercise of Option)


To:      Seattle FilmWorks, Inc.
         ____________________________

         The  undersigned,  the holder of an option to purchase shares of common
stock of Seattle  FilmWorks,  Inc.  pursuant to an Option  Agreement dated as of
____________,  199_  (the  "Option  Agreement")  hereby  irrevocably  elects  to
exercise the purchase  right  represented  by the Option  Agreement  for, and to
purchase  under that Option  Agreement,  __________  shares of Common  Stock and
herewith  makes  payment  of  $_____________  for those  shares  and  payment of
$___________  for holder's share of withholding  and employment  taxes resulting
from such exercise.  Holder hereby confirms the representations,  warranties and
agreements set forth in the Option Agreement.

         DATED: __________________, 19__.


                            HOLDER:


                            ____________________________________


                            By: ________________________________
                            Title: _____________________________

                            ADDRESS:

                            ____________________________________
                            ____________________________________
                            ____________________________________