Document:

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                                                                   Exhibit 10.35

                             EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made and entered into this 16th day of August,
2000, by PhotoWorks, Inc., a Washington corporation (the "Company"), and Gary
Christophersen (the "Employee").

                                  BACKGROUND
                                  ----------

     WHEREAS, the Company employs Employee in the capacity of Chief Executive
Officer; and

     WHEREAS, the Company has informed Employee it is seeking a successor to
Employee for the position of Chief Executive Officer; and

     WHEREAS, the Company desires that Employee remain in the position of Chief
Executive Officer until a successor is located, that Employee assist in the
selection of the successor, that Employee assist in the transition of duties to
the successor, and thereafter continue to serve the Company in the capacity of
Chairman of the Board for the duration of the term of this Agreement; the
parties therefore agree as follows:

                                   AGREEMENT
                                   ---------

     1.   Positions and Duties.

          1.1  Title. The Company agrees to continue to employ Employee, and
Employee agrees to continue to serve the Company, as its Chief Executive Officer
until a successor is hired. Thereafter, Employee shall continue in the employ of
the Company as its Chairman of the Board for the duration of this Agreement,
with the Title of Chairman of the Board and/or such title as the parties
mutually agree, which title shall reflect appropriately Employee's experience,
current position, and status within the Company.

          1.2  Duties. While serving as Chief Executive Officer, Employee shall
report directly to the Board of Directors of the Company and perform those
duties which are customary for the position of Chief Executive Officer of a
public company, and shall assist in the recruitment and selection of his
successor. Thereafter, Employee shall cooperate and assist in a transition of
his present duties to the successor, assist the Company in achieving its
strategic goals and business plan, and perform such other and further duties as
may be reasonably requested of Employee by the Board of Directors or its
designee; provided, such other and further duties shall be of a nature and level
of responsibility appropriate for an executive level employee.

          1.3  Time Commitment of Employee. During the period Employee serves as
Chief Executive Officer he shall continue to commit his time and efforts to the
Company
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at a level commensurate with his past level of commitment, except that after
either August 20, 2000 or Employee's successor is hired, whichever occurs
earlier, Employee agrees to commit at least three working days per week to the
business of the Company. The parties recognize Employee may explore or undertake
other business activities unrelated to and non-competitive with the business of
the Company, and Employee agrees that any such activities shall not interfere
with his commitments hereunder.

     2.   Term of Agreement. The term of this Agreement (the "Term") shall be
one year, commencing June 30, 2000 (the "Effective Date"), and terminating
without further action by either party at the conclusion of the term, unless
earlier terminated as provided herein or extended by written agreement of the
parties upon such terms as they mutually agree.

     3.   Compensation.

          3.1  Base Salary. As payment for the services rendered by Employee
during the Term of this Agreement, subject to Section 4 hereof, the Company
shall pay to Employee an annual base salary (the "Base Salary") of $250,000 per
year. The Base Salary shall be payable pro rata on the Company's normal payroll
schedule.

          3.2  Bonus. Within five business days after the Effective Date, the
Company shall pay Employee a bonus in the amount of $150,000. If Employee shall
resign during the Term of this Agreement, Employee shall repay the Bonus to the
Company, with such repayment obligation to be reduced by twenty-five percent
(25%) of the amount of the bonus for each successive ninety day period of
employment completed by Employee during the Term. If Employee shall be
terminated for "cause" (as defined in Section 4.1) during the Term of this
Agreement, Employee shall repay fifty percent (50%) of the Bonus to the Company,
with such repayment obligation to be reduced by twelve and one-half percent
(12.5%) of the total amount of the Bonus for each successive ninety day period
of employment completed by Employee during the Term. Any bonus repayment owed by
Employee shall be paid to the Company within five business days after the
effective date of termination or resignation. In the event of Employee's death
or permanent disability during the Term of this Agreement, Employee or his
estate shall retain 100% of the Bonus.

          3.3  Employee Benefits. Employee shall be entitled to all employee
benefits that the Company may make generally available from time to time for its
executive employees, including without limitation, those available, if any,
under any group health, dental, life or disability insurance plans. Employee's
existing level of benefits shall not be diminished during the Term without
Employee's written consent.

          3.4  Deduction from Compensation. The Company shall deduct and
withhold from all compensation payable to Employee all amounts required to be
deducted or withheld pursuant to any present or future law, ordinance,
regulation, order, writ, judgment, or decree requiring such deduction and
withholding. Employee agrees that any

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sums owed by Employee to the Company may be offset by the Company against any
compensation owed Employee.

          3.5  Travel and Other Expenses. The Company shall pay, or promptly
reimburse Employee for those travel, promotional and similar expenditures
incurred by Employee which the Company determines are reasonably necessary for
the proper discharge of Employee's duties under this Agreement and for which
Employee submits appropriate receipts and indicates the amount, date, location
and business character.

     4.   Termination.

          4.1  Termination For Cause. The Company may terminate this Agreement
at any time without prior notice for "cause," with no further obligation to
Employee other than payment of the amount of unpaid earned Base Salary accrued
pursuant to Section 3.1 to the date of such termination. For purposes of this
Agreement, "cause" shall consist of: (a) any act of dishonesty or fraud by
Employee directly related to the business; (b) Employee's conviction of a felony
involving fraud, embezzlement or any other act of moral turpitude; (c)
Employee's gross negligence or willful misconduct in the performance of his
duties under, or any material breach of, this Agreement; (d) Employee's failure
to abide by the policies of the Company and/or lawful directives of the Board of
Directors; or (e) Employee's absence from work during the Term for a period or
periods cumulatively in excess of sixty days (excluding vacation time and leave
related to a disability). Termination for "cause" under sections (c) and (d)
shall occur only after Employee has received a written warning of such
violations from the Company, and his termination has been approved by a
unanimous vote of the Board of Directors.

          4.2  Limitation of Duties. The Company may relieve Employee of his
duties hereunder without terminating his employment. In such event Employee
shall be entitled to continue to receive the Base Salary and insurance benefits
for the remainder of the Term, and shall have no obligation to repay any portion
of the bonus. Employee agrees to execute a mutually agreeable release of any and
all claims against the Company as a condition precedent to the Company's
continuing payment of the Base Salary and provision of insurance benefits
pursuant to this Section 4.2. Such release shall not affect Employee's stock
option rights or indemnification rights.

          4.3  Return of Company Property. At the time of termination of
Employee's employment, or as earlier requested, Employee shall return to the
Company all products, books, records, forms, specifications, formulae, data,
data processes, designs, papers and writings relating to the business of the
Company, including without limitation proprietary or licensed computer programs,
customer lists and customer data, and/or copies or duplicates thereof in the
Employee's possession or under the Employee's control. The Employee shall not
retain any copies or duplicates of such property and all licenses granted to him
by the Company to use computer programs or software shall be revoked as of the
date of such termination.

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     5.   Non-Competition and Non-Solicitation.

          5.1  Employee agrees that during the Term of this Agreement, Employee
will not in any capacity (including without limitation, as an employee, officer,
agent, director, consultant, owner, shareholder, partner, member or joint
venturer) directly or indirectly, whether or not for compensation, engage in or
assist others to engage in any business that is, or is preparing to be, in
competition with the Company with respect to any product or service that during
Employee's employment the Company developed, distributed or offered or planned
to develop, distribute or offer. A business that is in competition with the
Company is defined as one that is offering, or is preparing to offer,
photographic imaging services, such as film processing, image archiving,
digitization, reprints, editing, albuming, or other photo-related services,
either online or offline.

          5.2  Employee further agrees that during his employment and for one
year thereafter he will not attempt to entice away from the Company any actual
or identified potential customer of Company, nor will he assist others in doing
so. Employee further agrees that during his employment and for one year
thereafter he will not encourage or solicit or assist others to encourage or
solicit any other employee or consultant then serving the Company to leave such
relationship for any reason.

          5.3  Employee acknowledges that the covenants in Sections 5.1, and 5.2
are reasonable in relation to the business in which Company is engaged, the
position Employee has been afforded with Company, and Employee's knowledge of
Company's business, and that compliance with such covenants will not prevent him
from pursuing his livelihood. Employee specifically acknowledges that breach of
said covenants would cause irreparable harm to the Company for which monetary
damages would not provide adequate compensation, and that injunctive relief to
restrain any actual or threatened breach would be appropriate.

       6. Other Provisions.

          6.1  Compliance With Other Agreements. Employee represents and
warrants to the Company that the execution, delivery and performance of this
Agreement will not conflict with or result in the violation or breach of any
term or provision of any order, judgment, injunction, contract, agreement,
commitment or other arrangement to which Employee is a party or by which he is
bound. Employee acknowledges that the Company is relying on his representation
and warranty in entering into this Agreement, and agrees to indemnify the
Company from and against all claims, demands, causes of action, damages, costs
or expenses (including attorneys' fees) arising from any breach thereof.

          6.2  Nondelegable Duties. This is a contract for Employee's personal
services. The duties of Employee under this Agreement are personal and may not
be delegated or transferred in any manner whatsoever, and shall not be subject
to involuntary alienation, assignment or transfer by the Employee during his
life.

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          6.3  Entire Agreement. This Agreement is the only agreement and
understanding between the parties pertaining to the subject matter of this
Agreement and supersedes all prior agreements, summaries of agreements,
descriptions of compensation packages, discussions, negotiations,
understandings, representations or warranties, whether verbal or written,
between the parties pertaining to such subject matter; provided, nothing herein
is intended to relieve Employee of any duties or obligations owed the Company
under Confidentiality, Inventions and Non-Competition Agreement dated 1996
between Employee and the Company. Further, nothing herein is intended to
supersede the stock option agreements dated March 5, 1997, March 4, 1998,
February 9, 1999, January 18, 2000, and April 5, 2000, respectively, between
Employee and Company.

          6.4  Governing Law. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of Washington, without
regard to its laws as to choice or conflict of laws.

          6.5  Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions,
and this Agreement shall be construed in all respects as if any invalid or
unenforceable provision were omitted.

          6.6  Amendment and Waiver. This Agreement may be amended, modified or
supplemented only by a writing executed by each of the parties. Either party may
in writing waive any provision of this Agreement to the extent such provision is
for the benefit of the waiving party. No waiver by either party of a breach of
any provision of this Agreement shall be construed as a waiver of any subsequent
or different breach, and no forbearance by a party to seek a remedy for
noncompliance or breach by the other party shall be construed as a waiver of any
right or remedy with respect to such noncompliance or breach.

          6.7  Binding Effect. The provisions of this Agreement shall bind and
inure to the benefit of the parties and their respective successors and
permitted assigns.

          6.8  Notice. All notices and other communications under this Agreement
shall be in writing and shall be given by personal or courier delivery,
facsimile or first class mail, certified or registered with return receipt
requested, and shall be deemed to have been duly given upon receipt if
personally delivered or delivered by courier, on the date of transmission if
transmitted by facsimile, or three days after mailing if mailed, to the
addresses of the Company and the address of Employee contained in the records of
the Company at the time of such notice. Any party may change such party's
address for notices by notice duly given pursuant to this Section.

          6.9  Headings. The Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year indicated below.

EMPLOYEE:                           PHOTOWORKS, INC.:

/s/ Gary Christophersen             By: /s/ Paul Goodrich
Gary Christophersen
Dated: August 16, 2000              Title:  Board Member
                                    Dated:  August 17, 2000

                                    /s/ Howard Lee
                                    President/CEO
                                    December 5, 2000

                                       6<PAGE>

                                                                   Exhibit 10.36

                         AGREEMENT TO RESTRUCTURE DEBT
                         -----------------------------

     FCB Worldwide, Inc. d/b/a FCB Seattle ("FCB") and PhotoWorks, Inc.
("PhotoWorks") enter into this Agreement to Restructure Debt ("Agreement")
effective as of the 1/st/ day of November, 2000 (the "Effective Date").

     WHEREAS, PhotoWorks is indebted to FCB in the amount of $2,052,409.11 (the
"Outstanding Balance"), which represents unpaid principal and accrued interest
due and payable to FCB as of the Effective Date;

     WHEREAS, FCB and PhotoWorks desire to restructure the debt to allow
PhotoWorks to repay the Outstanding Balance plus interest over time;

     NOW THEREFORE, FCB and PhotoWorks, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, agree to the following
terms:

1.   PhotoWorks hereby acknowledges that it owes FCB $2,052,409.11 as of the
     Effective Date, pursuant to the April 27, 2000 agency-client agreement
     between the parties (the "Agency Agreement"). PhotoWorks represents and
     warrants that it does not and will not ever dispute the validity of this
     debt. (Subject to final media audit. LCB)

2.   PhotoWorks hereby agrees to repay the Outstanding Balance, plus interest at
     the rate of 1% per month on the then unpaid portion of the Outstanding
     Balance until the entire Outstanding Balance is repaid, as follows.
     PhotoWorks shall make monthly interest payments to FCB on the then unpaid
     portion of the Outstanding Balance beginning on December 1, 2000 (for
     interest accrued for the prior month) and continuing on the first business
     day of each consecutive month until the entire Outstanding Balance is
     repaid. Further, PhotoWorks shall make principal payments to reduce the
     Outstanding Balance in the amounts and no later than the dates shown below.

          March 23, 2001       $410,481.82
          June 28, 2001        $410,481.82
          October 2, 2001      $410,481.82
          December 28, 2001    $410,481.82
          March 22, 2002       $410,481.82

     A schedule showing the required interest and principal payments is attached
     hereto as Exhibit A. All required payments shall be made by wire transfer
     to the following account:
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     Bank:        Bank One - Chicago, IL
     Acct. Name:  True North Communications Inc.
     Acct. Num:   10-03540
     ABA Num:     071 000 013

3.   For as long as PhotoWorks is making timely payments in accordance with
     paragraph 2 above, FCB shall refrain from filing any legal action against
     PhotoWorks to recover the then unpaid portion of the Outstanding Balance
     plus interest. If PhotoWorks misses or is late in making a single payment
     required by paragraph 2 above, then the then unpaid portion of the
     Outstanding Balance plus interest shall become immediately due and payable,
     and FCB may at its option commence legal proceedings immediately to collect
     such sums. Interest will continue to accrue until the entire Outstanding
     Balance plus interest is paid to FCB.

4.   Beginning on December 20, 2000, and continuing on the 20th of each
     consecutive month until the entire Outstanding Balance is repaid,
     PhotoWorks shall send copies to FCB of its actual monthly statement of cash
     flows for the prior month along with its then most current projection of
     future cash flows. For calendar quarter-ends and calendar year-ends,
     PhotoWorks shall have an additional 10 day grace period to provide such
     information to FCB.

5.   If FCB receives any vendor invoices or talent charges after the Effective
     Date that are not included in the Outstanding Balance for work previously
     authorized by and billable to PhotoWorks, FCB shall invoice PhotoWorks for
     such costs and PhotoWorks shall pay such invoices within 30 days of receipt
     from FCB. If not paid within 30 days, such invoices will become subject to
     interest charges and all other applicable provisions of the Agency
     Agreement.

6.   If FCB receives any vendor rebates, refunds, or credits after the Effective
     Date that are not included in the Outstanding Balance for charges
     attributable to PhotoWorks (including any partial credit agreed to by The
     Hacker Group), FCB shall credit such amounts against PhotoWorks' then
     Outstanding Balance. Such credits will not change the principal payments
     due on the dates provided in paragraph 2 above, except insofar as they
     would reduce the amount of the final principal payment.

7.   No delay or omission on the part of FCB in the exercise of any right or
     remedy hereunder shall operate as a waiver thereof, nor shall any single or
     partial exercise of any right or remedy preclude any other or further
     exercise thereof or the exercise of any other right or remedy.

8.   This Agreement inures to and binds the successors and assigns of FCB and
     PhotoWorks.

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9.   Time is of the essence as to the terms of this Agreement.

10.  This Agreement shall be construed according to the substantive laws of the
     State of Washington, excluding its conflict of laws rules. The parties
     agree and consent that jurisdiction and venue of all matters relating
     hereto shall be vested exclusively in the federal, state and local courts
     located within the State of Washington. In any action to enforce any
     provisions of this Agreement, the prevailing party shall be entitled to
     recover all reasonable costs and expenses, including attorneys' fees,
     related to any such action.

     IN WITNESS WHEREOF, the parties to this Agreement have caused it to be duly
     executed and effective as of the date and year first written above.

PHOTOWORKS, INC.              FCB WORLDWIDE, INC. d/b/a
                              FCB SEATTLE

/s/ Howard Lee                /s/ Peter Hatt
By:     Howard Lee            By:    Peter Hatt
Title:  President & CEO       Title: Chairman
Dated:  11-29-00              Dated: 11-22-00

                                       3
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------

PhotoWorks Payment Schedule
As of 11/22/2000

<TABLE>
<CAPTION>
          Date                 Item               Interest Payments        Principle Payments                   Balance
----------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                     <C>                      <C>                               <C>
Beginning Balance                                                                                            $ 2,052,409.11

December 1, 2000          Nov 2000 Interest            20,524.09                      -                      $ 2,052,409.11
January 1, 2001           Dec 2000 Interest            20,524.09                      -                      $ 2,052,409.11
February 1, 2001          Jan 2001 Interest            20,524.09                      -                      $ 2,052,409.11
March 1, 2001             Feb 2001 Interest            20,524.09                      -                      $ 2,052,409.11
March 23, 2001            Principle Pmt 1/5                    -             410,481.82                      $ 1,641,927.29
April 1, 2001             Mar 2001 Interest            19,464.78                      -                      $ 1,641,927.29
May 1, 2001               Apr 2001 Interest            16,419.27                      -                      $ 1,641,927.29
June 1, 2001              May 2001 Interest            16,419.27                      -                      $ 1,641,927.29
June 28, 2001             Principle Pmt 2/5                    -             410,481.82                      $ 1,231,445.47
July 1, 2001              Jun 2001 Interest            16,145.62                      -                      $ 1,231,445.47
August 1, 2001            Jul 2001 Interest            12,314.45                      -                      $ 1,231,445.47
September 1, 2001         Aug 2001 Interest            12,314.45                      -                      $ 1,231,445.47
October 1, 2001           Sep 2001 Interest            12,314.45                      -                      $ 1,231,445.47
October 2, 2001           Principle Pmt 3/5                    -             410,481.82                      $   820,963.65
November 1, 2001          Oct 2001 Interest             8,474.46                      -                      $   820,963.65
December 1, 2001          Nov 2001 Interest             8,209.64                      -                      $   820,963.65
December 28, 2001         Principle Pmt 4/5                    -             410,481.82                      $   410,481.83
January 1, 2002           Dec 2001 Interest             7,812.40                      -                      $   410,481.83
February 1, 2002          Jan 2001 Interest             4,104.82                      -                      $   410,481.83
March 1, 2002             Feb 2001 Interest             4,104.82                      -                      $   410,481.83
March 22, 2002            Mar 2001 Interest             4,104.82                      -                      $   410,481.83
March 22, 2002            Principle Pmt 5/5                    -             410,481.82                      $         0.01
                                              ------------------------------------------

Totals                                              $ 224,299.63         $ 2,052,409.10
</TABLE>

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