SCHEDULE OF HOLDERS TO FORM OF WARRANT
<TABLE>
<CAPTION>
     Holder                                                 Number of Shares
-----------------------------                              -----------------
<S>                                                              <C>
The Tahoma Fund, L.L.C.                                          410,526

Madrona Venture Fund I-A, L.P                                    212,210

Orca Bay Capital Corporation                                     104,211

Madrona Managing Director Fund, LLC                               26,474

Madrona Venture Fund I-B, L.P.                                    24,474

Tim and Alexa Carver                                               5,263

Stanley McCammon                                                   5,263

Aaron Singleton                                                    1,053

</TABLE>
<PAGE>

THIS WARRANT AND THE SHARES OF COMMON  STOCK THAT MAY BE  PURCHASED  PURSUANT TO
THE EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933,  AS  AMENDED  (THE  "ACT"),  OR
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD,  OFFERED FOR
SALE,  PLEDGED,  HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
UNLESS THE TRANSFER IS IN ACCORDANCE  WITH RULE 144 OR A SIMILAR RULE AS THEN IN
EFFECT  UNDER  THE ACT,  OR  APPLICABLE  STATE  SECURITIES  LAWS OR  UNLESS  THE
CORPORATION  RECEIVES AN OPINION OF COUNSEL REASONABLY  ACCEPTABLE TO IT STATING
THAT SUCH  SALE OR  TRANSFER  IS EXEMPT  FROM THE  REGISTRATION  AND  PROSPECTUS
DELIVERY REQUIREMENTS OF THE ACT.

                                                    Void after February 14, 2005

No.____                          PHOTOWORKS, INC.

                                     WARRANT
                            ________________________


     THIS CERTIFIES  THAT, for $125.00 and other value  received,  _____________
(together with its permitted  assignees,  the "Holder") is entitled to subscribe
for and purchase  ________ shares (as adjusted  pursuant to Section 3 hereof) of
the fully paid and  nonassessable  Common Stock,  par value $0.01 per share (the
"Shares"), of PhotoWorks, Inc., a Washington corporation (the "Company"), at the
price of $6.00 per  share  (the  "Exercise  Price")  (as  adjusted  pursuant  to
Section 3  hereof),  subject to the provisions and upon the terms and conditions
hereinafter set forth.

     1. Method of Exercise; Payment.

     (a) Cash  Exercise.  Subject  to  Section 8  hereof,  the  purchase  rights
represented by this Warrant may be exercised by the Holder from time to time, in
whole or in part,  by the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A duly executed) at the principal  office of the
Company,  and by payment to the Company, by certified,  cashier's or other check
acceptable to the Company, of an amount equal to the aggregate Exercise Price of
the shares being purchased.

<PAGE>

     (b) Net Issue Exercise.

     (i) in lieu of  exercising  this  Warrant,  the Holder may elect to receive
shares  equal  to the  value  of this  Warrant  (or the  portion  thereof  being
cancelled) by surrender of this Warrant at the  principal  office of the Company
together with notice of such election, in which event the Company shall issue to
the Holder a number of shares of the Company's  Common Stock  computed using the
following formula:

                           X = Y (A-B)
                               -------
                                  A

Where   X = the number of shares of Common Stock to be issued to the Holder.

        Y = the number of shares of Common Stock purchasable under this Warrant.

        A = the fair market value of one share of the Company's Common Stock.

        B = the Exercise Price (as adjusted to the date of such calculation).

     (ii) This Warrant shall automatically be exercised pursuant to Section 1(b)
hereof  immediately  before its expiration  pursuant to Section 9  hereof unless
Holder notifies the Company in writing to the contrary before such termination.

     (c) Fair Market  Value.  For  purposes of this  Section 1,  the fair market
value of the Company's Common Stock shall mean:

     (i) The average of the closing bid and asked prices of the Company's Common
Stock quoted in the NASDAQ National Market System or the closing price quoted on
any exchange on which the Common Stock is listed,  whichever is  applicable,  as
published in the Western Edition of The Wall Street Journal for the five trading
days prior to the date of determination of fair market value;

     (ii) If the  Company's  Common  Stock is not  traded  in the  Nasdaq  Stock
Market,  over-the-counter market or on an exchange, the fair market value of the
Common  Stock per share  shall be the price  per share  that the  Company  could
obtain from a willing buyer for shares sold by the Company from  authorized  but
unissued  shares of Common  Stock as such price  shall be agreed by the  parties
hereto,  or if  agreement  cannot be reached  within five (5)  business  days of
delivery of the notice pursuant to Section 1(b)  hereof,  as shall be determined
by a panel of  appraisers.  One appraiser  shall be selected by the Holder,  one
appraiser shall be chosen by the Company and the third appraiser shall be chosen
by the first two appraisers.  If the appraisers cannot reach agreement as to the
fair market value on the foregoing  basis on or before the thirtieth  (30th) day
following the Holder's notice of election  pursuant to  Section 1(b),  then each

                                       2

<PAGE>

appraiser  shall deliver its  appraisal  and the appraisal  which is neither the
highest  nor the  lowest  shall be the fair  market  value of a share of  Common
Stock.  In the event that the Holder  fails to choose an  appraiser or the three
appraisers  fail to deliver an appraisal on or before the  thirtieth  (30th) day
after such notice,  the appraisal of the appraiser selected by the Company shall
control and shall be fair market  value for the  purposes of this  Warrant.  The
cost of the  appraiser  selected  by each party shall be borne by that party and
the cost of the third  appraiser  shall be borne  one-half  (1/2) by each party.
Appraisers selected under this Section 1(c) must be unaffiliated with the Holder
and the Company and must have  reasonable  professional  qualifications  for the
appraisal.

     (d)  Stock  Certificates.  In the  event  of  any  exercise  of the  rights
represented by this Warrant,  certificates  for the Shares so purchased shall be
delivered to the Holder  within a reasonable  time and,  unless this Warrant has
been fully exercised or has expired, a new Warrant  representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.

     2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable upon
the exercise of the rights  represented by this Warrant will,  upon issuance and
receipt of the Exercise Price  therefor,  be fully paid and  nonassessable,  and
free from all  preemptive  rights,  rights of first  refusal,  taxes,  liens and
charges with respect to the issue  thereof.  During the period  within which the
rights  represented  by this Warrant may be exercised,  the Company shall at all
times have authorized and reserved for issuance  sufficient shares of its Common
Stock to provide for the exercise of the rights represented by this Warrant.

     3.  Adjustment  of  Exercise  Price and  Number of  Shares.  Subject to the
provisions of Section 8 hereof,  the number and kind of  securities  purchasable
upon the  exercise of this  Warrant and the  Exercise  Price  therefor  shall be
subject to adjustment  from time to time upon the occurrence of certain  events,
as follows:

     (a) Reference Price. The price upon which adjustments to the Exercise Price
and  number of Shares  pursuant  to  Section  3(d)  below  shall be based  shall
initially be $4.75 (the "Reference Price"). The initial Reference Price shall be
subject to adjustment as provided in accordance with this Section 3.

     (b)  Adjustments  for Dividends,  Splits,  Subdivisions,  Combinations,  or
Consolidation  of Common Stock. If the outstanding  shares of Common Stock shall
be  increased  by  stock  dividend   payable  in  Common  Stock,   stock  split,
subdivision,  or other  similar  transaction  occurring  after  the date of this
Warrant into a greater number of shares of Common Stock,  concurrently  with the
effectiveness of such event, the number of Shares issuable upon exercise of this
Warrant  shall be  increased in  proportion  to the  percentage  increase in the
outstanding  number  of  shares  of  Common  Stock  and the  Exercise  Price and

                                       3

<PAGE>

Reference Price shall proportionately be decreased. If the outstanding shares of
Common  Stock  shall  be  decreased   by  reverse   stock  split,   combination,
consolidation,  or other similar  transaction  occurring  after the date of this
Warrant into a lesser  number of shares of Common Stock,  concurrently  with the
effectiveness of such event, the number of shares issuable upon exercise of this
Warrant  shall be  decreased in  proportion  to the  percentage  decrease in the
outstanding  number  of  shares  of  Common  Stock  and the  Exercise  Price and
Reference Price shall be proportionately increased.

     (c) Adjustments for  Reclassification,  Exchange and  Substitution.  If the
Common Stock shall be changed  into the same or a different  number of shares of
any  other  class or  classes  of  stock,  whether  by  capital  reorganization,
reclassification,  or otherwise  (other than a  subdivision  or  combination  of
shares  provided  for above or in  connection  with a merger of the  Company  as
provided  in  Section  8 below),  concurrently  with the  effectiveness  of such
reorganization  or  reclassification,  this  Warrant  shall  be  proportionately
adjusted  such that upon  exercise,  the Holder  shall  receive,  in lieu of the
number of shares of Common  Stock which the holders  would  otherwise  have been
entitled to receive,  a number of shares of such other class or classes of stock
equivalent  to the number of shares of Common  Stock that the Holder  would have
received had this Warrant been exercised immediately before that change.

     (d) Adjustments on Issuance of Additional Stock. If the Company shall issue
"Additional  Stock" (as defined below) for a  consideration  per share less than
the Reference Price in effect on the date and  immediately  prior to such issue,
then and in such event, each of the Reference Price and the Exercise Price shall
be reduced  concurrently with such issue to a price (calculated to three decimal
places)  determined by multiplying such price by a fraction (i) the numerator of
which  shall be the  number of shares of Common  Stock  outstanding  immediately
prior to such  issue  plus the  number  of  shares  of  Common  Stock  which the
aggregate  consideration  received by the Company for the total number shares of
Additional  Stock so issued  (or  deemed to be  issued)  would  purchase  at the
Reference Price; and (ii) the denominator of which shall be the number of shares
of Common Stock  outstanding  immediately prior to such issue plus the number of
shares of Additional Stock so issued; provided that for purposes of this Section
3(d), all shares of Common Stock issuable (a) upon conversion of the outstanding
Series A Preferred Stock,  (b) upon exercise of warrants or options  outstanding
as of the  date of this  Warrant  or  which  are  otherwise  excluded  from  the
definition of "Additional Stock" below, (c) pursuant to any stock option,  stock
purchase or other stock incentive  plan,  provided such plan or the amendment to
such plan under which such shares are  available  has been approved by the Board
of  Directors  as of the  date of this  Warrant  or such  shares  are  otherwise
excluded from the definition of "Additional  Stock" below, and (d) upon exercise
or  conversion  of  any  other  security  or  debt  instrument  of  the  Company
outstanding  as of the date of this Warrant or which is otherwise  excluded from
the  definition of  "Additional  Stock" below shall be deemed to be Common Stock
outstanding.

                                       4

<PAGE>

     Upon any adjustment in the Exercise Price pursuant to this  subsection (d),
the number of Shares  purchasable  upon the  exercise of this  Warrant  shall be
adjusted to the number  obtained by (i) multiplying the number of Shares subject
to this Warrant by the Exercise Price,  each as in effect  immediately  prior to
such  adjustment and (ii) dividing the product so obtained by the Exercise Price
in effect immediately after such adjustment.

     For  purposes of this  subsection  (d)  "Additional  Stock"  shall mean all
Common  Stock  issued (or deemed to be issued  upon the  issuance  of Options or
Convertible  Securities as provided below) by the Company after the date of this
Warrant,  other  than  Common  Stock  issued  or  issuable  at any time (a) upon
conversion of the Series A Preferred; (b) to officers,  directors, and employees
of, and consultants or contractors to, the Company pursuant to any stock option,
stock  purchase  or  other  stock  incentive  plan,  provided  such  plan or the
amendment to such plan under which such shares are  available  has been approved
by the Board of Directors as of the date of this  Warrant;  (c) as a dividend or
distribution  with  respect  to  the  Series  A  Preferred;   (d)  to  financial
institutions  or lessors in  connection  with  commercial  credit  arrangements,
equipment  financings,  leasing  arrangements  or similar  transactions;  (e) in
connection with a merger of the Company with or into another  corporation or the
acquisition by the Company of another entity; (f) at any time by way of dividend
or other  distribution on shares of Common Stock excluded from the definition of
Additional  Shares of Common Stock;  (g) upon exercise of the warrants issued to
the original  purchasers  of the Series A Preferred;  (h) that is  designated as
excluded from the definition of Additional  Stock by the vote or written consent
(before or after the date of issuance or deemed issuance) of holders of at least
a majority of the then outstanding shares of Series A Preferred;  or (i) that is
described in subsections (b) or (c) of this Section 3.

     For the purpose of making any  adjustment  in the  Reference  Price and the
Exercise Price as provided above, the consideration  received by the Company for
any issue or sale of Additional Stock will be computed as follows:

     (i) to the extent it  consists of cash,  as the amount of cash  received by
the Company before deduction of any offering expenses payable by the Company and
any underwriting or similar  commissions,  compensation,  or concessions paid or
allowed by the Company in connection with such issue or sale;

     (ii) to the extent it  consists of  property  other than cash,  at the fair
market value of that property as determined in good faith by the Company's Board
of Directors; and

                                       5

<PAGE>

     (iii) if Common  Stock is  issued  or sold  together  with  other  stock or
securities or other assets of the Company for a consideration which covers both,
as  the  portion  of the  consideration  so  received  that  may  be  reasonably
determined  in good  faith by the Board of  Directors  to be  allocable  to such
Common Stock.

     If the Company (1) grants any rights or options to subscribe for, purchase,
or  otherwise   acquire  shares  of  Common  Stock  or  Convertible   Securities
(collectively,  "Options"), or (2) issues or sells any security convertible into
or  exchangeable  for  shares  of  Common  Stock   (collectively,   "Convertible
Securities"),  then, in each case,  the maximum number of shares of Common Stock
issuable  upon the  exercise of such Options or  conversion  or exchange of such
Convertible  Securities  shall be deemed to be Additional Stock issued as of the
time such Options or  Convertible  Securities  are issued  (except to the extent
excluded from the definition of Additional Stock) above, and the Reference Price
and Exercise  Price will be adjusted as above  provided to reflect (on the basis
of the  determination  of the price per share as  provided  below)  the issue or
sale.  In such  event,  the  price per share or  Common  Stock  issuable  on the
exercise  of the  Options  or the  conversion  or  exchange  of the  Convertible
Securities will be determined by dividing the total amount,  if any, received or
receivable  by the Company as  consideration  for the granting of the Options or
the issue or sale of the  Convertible  Securities,  plus the  minimum  aggregate
amount of  additional  consideration  payable to the  Company on exercise of the
Options or conversion of the  Convertible  Securities,  by the maximum number of
shares of Common  Stock  issuable  on the  exercise  or  conversion.  No further
adjustment of the  Reference or Exercise  Prices will be made as a result of the
actual  issuance of shares of Common Stock on the exercise of any such rights or
options or the conversion of any such convertible securities.

     Upon the  redemption  or  repurchase  of any such  Options  or  Convertible
Securities  or the  expiration  or  termination  of the right to  convert  into,
exchange  for, or exercise  with respect to,  Common  Stock,  the  Reference and
Exercise Prices will be readjusted to such price as would have been obtained had
the adjustment made upon their issuance been made upon the basis of the issuance
of only the number of such Options or  Convertible  Securities  as were actually
converted  into,  exchanged for, or exercised with respect to, Common Stock.  If
the  purchase  price or  conversion  or exchange  rate  provided for in any such
Option or  Convertible  Security  changes at any time,  then,  upon such  change
becoming  effective,  the Reference Price and Exercise Price then in effect will
be readjusted to such price as would have been obtained had the adjustment  made
upon the issuance of such Options or Convertible  Securities  been made upon the
basis of (1) the issuance of only the number of shares of Common Stock  actually
delivered  upon  the  conversion,  exchange  or  exercise  of  such  Options  or
Convertible  Securities,  and the total consideration received therefor, and (2)
the  granting or issuance,  at the time of such  change,  of any such Options or
Convertible  Securities then still  outstanding for the  consideration,  if any,
received by the Company therefor and to be received on the basis of such changed
price or rate.

                                       6

<PAGE>

     (e) Adjustments. Whenever the number of Shares purchasable hereunder or the
Exercise  Price  thereof  shall be adjusted  pursuant to Section 3  hereof,  the
Company shall provide  notice to the holder of this Warrant  setting  forth,  in
reasonable  detail,  the  event  requiring  the  adjustment,  the  amount of the
adjustment,  the method by which such adjustment was calculated,  and the number
of Shares which may be purchased and the Exercise  Price  therefor  after giving
effect to such adjustment.

     4. Fractional  Shares.  No fractional shares of Common Stock will be issued
in connection with any exercise hereunder. In lieu of such fractional shares the
Company shall make a cash payment therefor based upon the Exercise Price then in
effect.

     5. Restrictions Upon Transfer.

     (a) The Company  need not  register a transfer of this  Warrant  unless the
conditions  specified  in the  legend on the front page  hereof  are  satisfied.
Subject to the satisfaction of such conditions, any transfer of this Warrant and
all rights  hereunder,  in whole or in part, shall be registered on the books of
the Company to be maintained for such purpose, upon surrender of this Warrant at
the principal office of the Company,  or the office or agency  designated by the
Company, together with a written assignment of this Warrant substantially in the
form of Exhibit C hereto duly  executed  by Holder or its agent or attorney  and
funds  sufficient  to pay any  transfer  taxes  payable  upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall,
subject to the  conditions  set forth in the  legend,  execute and deliver a new
Warrant  or  Warrants  in the  name  of the  assignee  or  assignees  and in the
denomination specified in such instrument of assignment,  and shall issue to the
assignor a new Warrant  evidencing  the portion of this Warrant not so assigned,
and this War-rant shall promptly be canceled.  A Warrant,  if properly assigned,
may be exercised by a new Holder for the purchase of Shares without having a new
Warrant issued.

     (b) Subject to the conditions set forth in the legend,  this Warrant may be
divided  or  combined  with  other  Warrants  upon  presentation  hereof  at the
aforesaid  office or  agency  of the  Company,  together  with a written  notice
specifying the names and  denominations  in which new Warrants are to be issued,
signed by  Holder or its agent or  attorney.  Subject  to  compliance  with this
Section 6  as to any  transfer  which  may  be  involved  in  such  division  or
combination,  the Company shall execute and deliver a new Warrant or Warrants in
exchange  for the Warrant or  Warrants  to be divided or combined in  accordance
with such notice.

     (c) The Company shall prepare,  issue and deliver at its own expense (other
than transfer taxes) the new Warrant or Warrants under this Section 5.

     (d) The Company  agrees to  maintain,  at its  aforesaid  office or agency,
books for the registration and the registration of transfer of the Warrants.

                                       7

<PAGE>

     6. Restrictive Legend.

     (a) The Shares  issuable upon exercise of this Warrant  (unless  registered
under the Act) shall be stamped or imprinted with a legend in substantially  the
following form:

     THE  SHARES   REPRESENTED  BY  THIS  CERTIFICATE  HAVE  BEEN  ACQUIRED  FOR
     INVESTMENT AND HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933,
     AS  AMENDED  (THE  "ACT"),  OR  APPLICABLE  STATE  SECURITIES  LAWS.  THESE
     SECURITIES  MAY NOT BE SOLD,  OFFERED FOR SALE,  PLEDGED,  HYPOTHECATED  OR
     TRANSFERRED IN THE ABSENCE OF SUCH  REGISTRATION  UNLESS THE TRANSFER IS IN
     ACCORDANCE WITH RULE 144 OR A SIMILAR RULE AS THEN IN EFFECT UNDER THE ACT,
     OR APPLICABLE STATE  SECURITIES LAWS OR UNLESS THE CORPORATION  RECEIVES AN
     OPINION OF COUNSEL  REASONABLY  ACCEPTABLE  TO IT STATING THAT SUCH SALE OR
     TRANSFER  IS  EXEMPT  FROM  THE   REGISTRATION   AND  PROSPECTUS   DELIVERY
     REQUIREMENTS OF THE ACT.

     (b) The  Company  need not  register  a  transfer  of  Shares  bearing  the
restrictive legend set forth in this Section 5, unless the conditions  specified
in such legend are  satisfied.  The Company may also instruct its transfer agent
not to  register  the  transfer  of the  Shares,  unless  one of the  conditions
specified in the legend set forth in this Section 5 is satisfied.

     7. Rights of Shareholders.  No holder of this Warrant shall be entitled, as
a Warrant holder, to vote or receive dividends or be deemed the holder of Common
Stock or any other  securities  of the Company which may at any time be issuable
on the exercise hereof for any purpose,  nor shall anything  contained herein be
construed to confer upon the holder of this Warrant,  as such, any of the rights
of a  shareholder  of the  Company  or any  right  to vote for the  election  of
directors or upon any matter  submitted to shareholders at any meeting  thereof,
or to give or  withhold  consent  to any  corporate  action  (whether  upon  any
recapitalization,  issuance of stock,  reclassification  of stock, change of par
value, consolidation,  merger, conveyance, or otherwise) or to receive notice of
meetings,  or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares  purchasable  upon the exercise
hereof shall have become deliverable, as provided herein.

     8. Expiration of Warrant.  This Warrant shall expire and shall no longer be
exercisable upon the first to occur of the following:

     (a) at 5:00 p.m., Washington local time, on February 14, 2005; and

                                       8

<PAGE>

     (b) the  closing of any sale of all or  substantially  all of the assets of
the  Company  or  acquisition  of this  Company  by  another  entity by means of
consolidation,  corporate  reorganization or merger in which the shareholders of
the Company  immediately  prior such  transaction  possess  less than 50% of the
outstanding voting power of the Company after the transaction; provided that the
Company shall provide at least 20 days' prior written  notice of the date of any
such event to the Holder.

     9. Notices,  Etc. All notices and other  communications from the Company to
the Holder and from the Holder to the Company  shall be delivered  personally or
by  nationally-recognized  overnight  courier  at such  address as may have been
furnished to the Company in writing by the Holder or by the Holder in writing to
the Company.

     10. Governing Law,  Headings.  This Warrant is being delivered in the State
of  Washington  and shall be  construed  and  enforced  in  accordance  with and
governed  by the  laws of such  State.  The  headings  in this  Warrant  are for
purposes of reference  only, and shall not limit or otherwise  affect any of the
terms hereof.

         Issued this ________ day of _____________________, 2000.

                                     PHOTOWORKS, INC.

                                     By: _____________________
                                     Title:___________________

                                       9