<PAGE>

================================================================================
THE SECURITIES OFFERED BY THIS INSTRUMENT HAVE NOT BEEN REGIS TERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND ANY SALE OF SUCH SECURITIES IS SUBJECT TO COMPLIANCE WITH, OR THE
AVAILABILITY OF EXEMPTIONS FROM COMPLIANCE WITH, THE REGISTRATION AND
QUALIFICATION REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THIS INSTRUMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO ANY PERSON IN
ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE MADE.
TRANSFER OF THIS INSTRUMENT AND THE SECURITIES OFFERED HEREBY IS RESTRICTED AS
PROVIDED IN SECTIONS 11, 12 AND 14 BELOW.
================================================================================



                             STOCK OPTION AGREEMENT

                  THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into,
effective as of January 3, 1997 (the "Effective Date"), by and between American
Film Technologies, Inc., a Delaware corporation (the "Company"), and Gerald M.
Wetzler (the "Holder").

                                 R E C I T A L S

                  WHEREAS, the Company wishes to obtain additional financing to
fund its operations through the sale of equity securities and the Holder desires
to invest in the Company; and

                  WHEREAS, the Company has made available to the Board of
Directors an Option to purchase Ten Million (10,000,000) shares of the Company's
$.002 par value per share common stock (the "Common Stock") at an exercise price
of Seven Cents ($.07) per share for an aggregate price of Two Hundred Thousand
Dollars ($200,000) for the Option (the "Option Price"); and

                  WHEREAS, Gerald M. Wetzler (the "Holder") has agreed to
purchase, and the Company has agreed to sell to the Holder the Option in its
entirety for the Option Price.

                  NOW, THEREFORE, the Company and the Holder covenant and agree
as follows:

                  1. Grant of the Option. For the sum of the Option Price or Two
Hundred Thousand Dollars ($200,000), the receipt of which is hereby
acknowledged, the Company hereby grants to the Holder the Option to acquire from
the Company, from time to time on the terms and conditions set forth herein, all
or any portion of an aggregate of Common Stock (hereinafter referred to as the
"Option Shares").

                                       -1-

<PAGE>



                  2. Exercise Price. The exercise price of the Option Shares
shall be Seven Cents ($.07) per share for the Common Stock (the "Exercise
Price"). Each of the number of Option Shares into which the Option Shares is
exercisable and the Exercise Price of the Option Shares is subject to adjustment
as provided in Section 5 hereof.

                  3. Term of the Option. Subject to the provisions of Section 11
hereof, the Option will have a three year term (the "Option Term") commencing on
the date hereof and terminating as of 5:00 p.m. (New York time) on January 3,
2000 (the "Expiration Date").

                  4. Vesting; Exercise. Subject to the provisions of Section 11
hereof, during the Option Term the Holder shall not have the right to exercise
all or any portion of the Option and receive the Option Shares represented
thereby until the occurrence of both of the following: (a) the filing of an
amendment to the Company's Certificate of Incorporation authorizing an increase
in the number of shares of Common Stock sufficient in amount to cover on the
date of filing the aggregate of all shares of Common Stock (i) currently
outstanding; (ii) issuable upon the exercise of all outstanding options and
warrants; and (iii) issuable upon the conversion of all outstanding shares of
convertible preferred stock or notes (the "Authorized Shares Amendment"); and
(b) six months from the date hereof.

                  5. Adjustments Upon Changes in Capitalization or Other
Significant Events.

                           (a) In the event of any increase or decrease in the
number of the issued shares of Common Stock by reason of a stock dividend, stock
split, reverse stock split or consolidation or combination of shares and the
like at any time or from time to time throughout the term of the Option such
that the holders of outstanding Common Stock shall have had an adjustment made,
without payment therefor, in the number of shares of Common Stock owned by them
or shall have become entitled or required to have had an adjustment made in the
number of shares of Common Stock owned by them, without payment therefor, there
shall be a corresponding adjustment as to the number of shares of Common Stock
into which the Preferred Stock is convertible.

                           (b) In the event the Company (or any other
corporation, the securities of which are receivable at the time upon exercise of
the Option) shall effect a plan of reorganization, recapitalization,
reclassification or other like capital transaction or shall merge or consolidate
with or into another corporation or shall convey all or substantially all of its
assets to another corporation (collectively, any such event being referred to as
a "Material Alteration Event") at any time or from time to time throughout the
term of the Option, then in each such case the Holder, upon any exercise of the
Option at any time after the consummation of such a Material Alteration Event
shall be entitled to receive (in lieu of the securities or other property to
which the Holder would have been entitled to receive upon exercise prior to such
consummation) the securities or other property to which the Holder would have
been entitled to have received upon consummation of the Material Alteration
Event without adjustment to the aggregate exercise price applicable in the event
the Holder elected to exercise the Option in full (except for any change in the
aggregate exercise price resulting from rounding-off of share quantities or
prices), and all subject to further adjustment as provided in Section 5(a)
hereof; provided that


                                       -2-

<PAGE>



prior to consummating any Material Alteration Event, the Company shall have
complied with its obligations in Section 6 hereof.

                  6. Obligation to Redeem Option.

                           (a) In the event that the Company intends to
consummate a Material Alteration Event at any time during the term of the
Option, in addition to any rights granted to the holder by Section 5(b) hereof,
it shall provide the Holder with written notice thereof no less than thirty (30)
days prior to the consummation thereof. The Holder shall thereafter have the
right, exercisable at any time prior to the third (3rd) business day immediately
preceding the consummation of the Material Alteration Event, to obligate the
Company to redeem the Option in its entirety (but not only a portion thereof) at
a price equivalent to (a) the average of the daily closing prices per share of
Common Stock for the five (5) consecutive business days immediately preceding
the Material Alteration Event on the principal national securities exchange on
which the Common Stock is listed or admitted to trading or, if not so listed or
admitted, on the National Market System, as reported by NASDAQ, or if not
admitted to trading thereon, the average of the closing bid and listed prices in
the over-the-counter market as reported by NASDAQ less (b) the Exercise Price at
such time (as adjusted in accordance with Section 5 hereof), such resulting
amount multiplied by the aggregate number of shares of Common Stock into which
the Option is exercisable at the time of such redemption.

                           (b) In the event that the Holder elects to have the
Option redeemed, it shall surrender the Option along with its notice of the
election to redeem the Option pursuant to 6(a) above. The Company shall pay to
Holder the payment calculated in Section 6(a) hereof, which payment shall be
made within five (5) days after the consummation of the Material Alteration
Event.

                           (c) If the Company fails to notify the Holder of the
intended consummation of a Material Alteration Event, the Holder's right to
obligate the Company to redeem the Option shall remain in full force and effect
until the earlier of (i) the tenth (10th) business day following the giving of
proper notice by the Company to the Holder as to the Material Alteration Event
or (ii) the expiration of the Option, in either case at the same price as would
have been applicable to such redemption if such notice had been duly delivered.

                           (d) If the Holder elects to have the Option redeemed
and if the Material Alteration Event is not consummated the Holder's redemption
of the Option shall be nullified, the Option shall be promptly returned to the
Holder and the Holder will continue to have all rights with respect to the
Option as set forth in this Agreement.

                           (e) If, as a result of any Material Alteration Event,
the Company ceases to exist, the Company shall have caused any successor
corporation thereto to assume the Option and the obligations under this
Agreement, and such successor corporation shall be bound by the provisions
hereunder, including, without limitation, this Section 6.



                                       -3-

<PAGE>

                  7. Exercise of the Option. To exercise all or any portion of
the Option, the Holder must do the following:

                           (a) deliver to the Company a written notice, in the
form of the attached Exhibit A, specifying the number of shares of Common Stock
for which the Option is being exercised;

                           (b) surrender the Agreement to the Company upon
complete exercise of the Option;

                           (c) tender payment, either in cash or in such other
manner as the Board of Directors of the Company (the "Board"), in its sole
discretion, shall approve, of the aggregate Exercise Price for the Option Shares
for which the Option is being exercised;

                           (d) pay, or make arrangements satisfactory to the
Board for payment to the Company of, all federal, state and local taxes, if any,
required to be withheld by the Company in connection with the exercise of the
Option or the relevant portion thereof; and

                           (e) execute and deliver to the Company any other
documents required from time to time by the Company in order to promote
compliance with the Securities Act of 1933, as amended (the "1933 Act"),
applicable state securities laws, or any other applicable law, rule or
regulation.

                  8. Delivery of Share Certificate. As soon as practicable after
the Option or any portion thereof has been duly exercised, the Company will
deliver to the Holder a certificate representing the Option Share for which the
Option was exercised. Unless the Option has expired or been exercised in full,
the Company and the Holder agree that the Company may affix to this Agreement an
appropriate notation indicating the number and kind of Option Shares for which
the Option was exercised and return this Agreement to the Holder. If any law or
regulation of the Securities and Exchange Commission (the "SEC") or of any other
federal or state governmental body having jurisdiction shall require the Company
or the Holder to take any action prior to issuance to the Holder of the Option
Shares specified in the written notice of exercise, or if any listing agreement
between the Company and any national securities exchange requires such shares to
be listed prior to issuance, the date for the delivery of such shares shall be
adjourned until the completion of such action and/or such listing.

                  9. Fractional Shares. In no event shall the Company be
required to issue fractional shares upon the exercise of any portion of the
Option.

                  10. Piggy-back Registration Rights; Indemnification.

                           (a) Subject to Section 10(i) below, and so long as
Holder holds or has the right to acquire any Option Share, in the event the
Company decides to file a registration statement ("Registration Statement")
under the 1933 Act on SEC Forms S-1 or S-3 or any other applicable form that
covers the offer and sale by the Company or any holders of Common Stock


                                       -4-

<PAGE>



any of the Company's securities for money (a "Company Registration"), the
Company shall give written notice (a "Registration Notice") thereof to the
Holder. If the Company receives a written request to include in the Company
Registration all or a portion of the Holder's shares within thirty (30) days
after a Registration Notice is given, the Company shall include such shares in
the Company Registration. If the Company Registration is to cover an
underwritten offering, such shares shall be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through the
underwriters.

                           (b) If in the good faith judgment of the managing
underwriter of an offering related to a Company Registration, to include any or
all of the shares requested to be registered by the Holder would interfere with
the successful marketing of the Company's securities or any other holder's
securities, if such Company Registration of such holder's securities is pursuant
to a demand registration right, then the amount of shares to be included in such
public offering shall be reduced to the amount allowed by the managing
underwriter in its good faith judgment. If such reduction occurs it shall be on
a pro rata basis with all other selling stockholders in such Company
registration.

                           (c) The Company may decline to file a Registration
Statement after giving a Registration Notice, or withdraw a Registration
Statement after filing and after a Registration Notice, but prior to the
effectiveness thereof; provided (i) that the Company shall promptly notify the
Holder, in writing, of any such action; and (ii) that the Company shall bear all
expenses incurred by the Holder in connection with such withdrawn Registration
Statement.

                           (d) All expenses incident to the Company's
performance of or compliance with this Agreement including, without limitation
(i) all registration and filing fees, all fees and expenses associated with
filings required to be made with the NASD, as may be required by rules and
regulations of the NASD (other than fees required in excess of fees which would
otherwise pertain in the event that the Holder is a member of the NASD), fees
and expenses of compliance with securities or blue sky laws (including fees and
disbursements of counsel in connection with blue sky qualifications for the
Holder's shares), rating agency fees, printing expenses (including expenses of
printing certificates for the Holder's shares in a form eligible for deposit
with the Depository Trust Company and of printing prospectuses if the printing
of prospectuses is reasonably requested by the holders of a Majority Amount),
messenger and delivery expenses, (ii) internal expenses (including, without
limitation, all salaries and expenses of their officers and employees performing
legal or accounting duties), securities acts liability insurance (if the Company
elects to obtain such insurance), (iii) fees and expenses of counsel for the
Company and its independent certified public accountants (including the expenses
of any special audit or "cold comfort" letters required by or incident to such
performance), (iv) fees and expenses of any special experts retained by the
Company in connection with such registration, and (v) fees and expenses of other
persons retained by the Company, (all such expenses being herein called
"Registration Expenses"), will be borne by the Company, provided that in no
event shall Registration Expenses include (A) any underwriting discounts or
commissions attributable to the sale of the Holder's shares, (B) any fees and
expenses of counsel for the Holder if such counsel is different than counsel for
the Company or any accountant or


                                       -5-

<PAGE>



other professional engaged by the Holder, or (C) any direct out-of-pocket
expenses of the Holder.

                           In the event that following effectiveness of a
Company Registration, pursuant to which the Holder is a selling stockholder, it
becomes necessary for the Company to prepare and file a supplemental prospectus
or amended prospectus in order to maintain the effectiveness of such
registration statement during the period referred to in Section 9(e)(ii) hereof,
the Company shall pay all printing costs associated with the printing of such
supplemental or amended prospectus to be distributed in connection with sales of
securities pursuant thereto.

                           (e) If and whenever the Company elects to file a
Registration Statement and is hereby required in connection therewith to
register the Holder's shares, the Company will:

                                    (i) Use its best efforts to effect such
registration to permit the sale of such shares in accordance with the intended
plan of distribution thereof, and pursuant thereto the Company will take the
actions set forth below as expeditiously as possible; provided, however, that in
all cases the Holder shall use its best efforts to cooperate with and assist the
Company in such registration.

                                    (ii) Prepare and file with the SEC as soon
as practicable a Registration Statement with respect to such shares and use its
best efforts to cause such Registration Statement to become effective and remain
effective until the shares covered by such Registration Statement have been
sold;

                                    (iii) Prepare and file with the SEC such
amendments and posteffective amendments to the Registration Statement, and
such supplements to the prospectus, as may be requested by the Holder or any
underwriter or as may be required by the rules, regulations or instructions
applicable to the registration form used by the Company or by the 1933 Act or
rules and regulations thereunder to keep the Registration Statement effective
until all shares covered by such Registration Statement are sold in accordance
with the intended plan of distribution set forth in such Registration Statement
or supplement to the prospectus.

                                    (iv) With respect to the following, promptly
notify the Holder and the managing underwriter, if any, and (if requested by any
such person) confirm such notice in writing:

                                          A. when any prospectus or any
supplement or posteffective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective;

                                          B. of any request by the SEC for
amendments or supplements to the Registration Statement or the prospectus or for
additional information;



                                       -6-

<PAGE>



                                          C. of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;

                                          D. of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and

                                          E. of the existence of any fact which
results in the Registration Statement, any prospectus or any document
incorporated therein by reference containing a misstatement.

                                    (v) Make every reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of the Registration
Statement at the earliest possible time.

                                    (vi) If requested by the managing
underwriter, if any, immediately incorporate in a supplement or post-effective
amendment such information as the managing underwriter agrees should be included
therein relating to the sale of the shares including, without limitation,
information with respect to the number of shares being sold to any underwriters,
the purchase price being paid therefor by such underwriters and with respect to
any other terms of the underwritten offering of the shares to be sold in such
offering; and make all required filings of such supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
supplement or post-effective amendment.

                                    (vii) Furnish to the Holder and the managing
underwriter, if any, without charge, at least one signed copy of the
Registration Statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference).

                                    (viii) Deliver to the Holder and any
underwriters, without charge, as many copies of each prospectus (and each
preliminary prospectus) as such persons may reasonably request (the Company
hereby consenting to the use of each such prospectus (or preliminary prospectus)
by the Holder and any underwriters in connection with the offering and sale of
the shares covered by such prospectus (or preliminary prospectus)).

                                    (ix) Prior to any public offering of shares,
register or qualify or cooperate with any underwriters and their respective
counsel in connection with the registration or qualification of such shares for
offer and sale under the securities or blue sky laws of such jurisdictions and
do anything else necessary or advisable to enable the disposition of the shares
covered by the Registration Statement in such jurisdictions; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process in any such jurisdiction where it
is not then so subject.



                                       -7-

<PAGE>



                                    (x) Cooperate with the managing underwriter,
if any, to facilitate the timely preparation and delivery of certificates that
do not bear any restrictive legends and that represent the shares to be sold and
cause such shares to be in such denominations and registered in such names as
the managing underwriter may request at least three business days prior to any
sale of shares to the underwriters.

                                    (xi) Use its best efforts to cause the
shares covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such shares.

                                    (xii) If the Registration Statement or any
prospectus contains a misstatement, prepare a supplement or post-effective
amendment to the Registration Statement or the related prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the shares, the prospectus
will not contain a misstatement.

                                    (xiii) Enter into such agreements (including
an underwriting agreement) and do anything else necessary or advisable in order
to expedite or facilitate the disposition of such shares and:

                                          A. make such representations and
warranties to the underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in primary underwritten offerings;

                                          B. obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriter, if any)
addressed to the underwriter, if any, covering the matters customarily covered
in opinions delivered to underwriters in primary underwritten offerings and such
other matters as may be reasonably requested by such underwriters;

                                          C. obtain "cold comfort" letters and
updates thereof from the Company's independent certified public accountants
addressed to the underwriters, if any; such letters shall be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
by underwriters in connection with primary underwritten offerings; and

                                          D. deliver such documents and
certificates as may be requested by the managing underwriter, if any, to
evidence compliance with clause (A) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company.

                           (f) The Company agrees to indemnify and hold harmless
the Holder from and against all claims arising out of or based upon any
misstatement or alleged misstatement, except insofar as such misstatement or
alleged misstatement was based upon


                                       -8-

<PAGE>



information furnished in writing to the Company by the Holder for use in the
document containing such misstatement or alleged misstatement.

                           (g) If any action or proceeding (including any
governmental investigation or inquiry) shall be brought or asserted against the
Holder in respect of which indemnity may be sought from the Company, the Holder
shall promptly notify the Company in writing, and the Company shall assume the
defense thereof, including the employment of counsel satisfactory to the Holder
and the payment of all expenses.

                                   The Holder shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such separate counsel shall be the expense of the
Holder unless (i) the Company has agreed to pay such fees and expenses, (ii) the
Company has failed to assume the defense of such action or proceeding or has
failed to employ counsel satisfactory to the Holder in any such action or
proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Holder and the Company, and
the Holder shall have been advised by counsel that there may be one or more
legal defenses available to the Holder that are different from or additional to
those available to the Company.

                                   If the Holder notifies the Company in writing
that it elects to employ separate counsel at the Company's expense as permitted
by the provisions of the preceding paragraph, the Company shall not have the
right to assume the defense of such action or proceeding on behalf of the
Holder. The foregoing notwithstanding, the Company shall not be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Holder in connection with any one such action or proceeding or
separate but substan tially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or circumstances.

                           (h) The Holder agrees to indemnify and hold harmless
the Company, its directors, officers, employees, agents and attorneys and each
person, if any, who controls the Company within the meaning of either Section 15
of the 1933 Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "1934 Act") to the same extent as the foregoing indemnity from the Company
to the Holder, with respect to information relating to the Holder furnished in
writing by the Holder for use in any Registration Statement, prospectus or
preliminary prospectus.

                                   In case any action or proceeding shall be
brought against the Company or its directors or officers or any such controlling
person, in respect of which indemnity may be sought against the Holder, the
Company or its directors or officers or such controlling person shall have the
rights and duties given to the Holder by Sections 10(f) and 10(g) above.

                           (i) Holder's rights hereunder shall terminate at such
time as Holder may within any three-month period sell in the public marketplace
all of the Option Shares owned


                                       -9-

<PAGE>



by Holder pursuant to Rule 144 promulgated under the 1933 Act or any successor
rule or regulation.

                  11. Nontransferability. The Option is not transferable other
than (a) by operation of law, (b) to one or more trusts of which the Holder is a
trustor, or (c) by will or the laws of descent and distribution. The Option may
be exercised during the lifetime of the Holder only by the Holder or his
court-appointed legal representative.

                  12. Warranties and Representations of the Holder. By executing
this Agreement, the Holder accepts the Option and represents and warrants to the
Company and covenants and agrees with the Company as follows:

                           (a) The Holder acknowledges that no registration
statement under the 1933 Act or under any state securities law has been filed
and that the Company has no obligation to file such a registration statement in
the future with respect to the Option or any Option Shares that may be acquired
upon exercise of the Option or any portion thereof, except as otherwise provided
by Section 10 hereof.

                           (b) The Holder warrants and represents that the
Option and any Option Shares acquired upon exercise of the Option or any portion
thereof will be acquired and held by the Holder for the Holder's own account,
for investment purposes only, and not with a view towards the distribution or
public offering thereof or with any present intention of reselling or
distributing the same at any particular future time.

                           (c) The Holder agrees not to sell, transfer or
otherwise voluntarily dispose of any Option Shares that may be acquired upon
exercise of the Option or any portion thereof unless (i) there is an effective
registration statement under the 1933 Act covering the proposed disposition and
compliance with governing state securities laws, (ii) the Holder delivers to the
Company, at the Holder's expense, a "no-action" letter or similar interpretative
opinion, satisfactory in form and substance to the Company, from the staff of
each appropriate securities agency, to the effect that such shares may be
disposed of by the Holder in the manner proposed, or (iii) the Holder delivers
to the Company, or legal counsel designated by the Holder and reasonably
satisfactory to the Company, to the effect that the proposed disposition is
exempt from registration under the 1933 Act and governing state securities laws.

                           (d) The Holder acknowledges and consents to the
appearance of a restrictive legend, in substantially the following form:

                           NOTICE:  RESTRICTIONS ON TRANSFER

                                    The securities represented by this
                           certificate have not been registered under the
                           Securities Act of 1933, or any state securities laws,
                           and may not be offered, sold, transferred,
                           encumbered, or otherwise disposed of except upon
                           satisfaction of certain conditions. Information
                           concerning these restrictions may be obtained from
                           the


                                      -10-

<PAGE>



                           corporation. Any offer or disposition of these
                           securities without satisfaction of said conditions
                           will be wrongful and will not entitle the transferee
                           to register ownership of the securities with the
                           corporation.

                           (e) The Holder agrees not to sell, transfer or
otherwise dispose of the Option, except as specifically permitted by this
Agreement and any applicable securities laws.

                           (f) The Holder agrees that until the filing of the
Authorized Share Amendment, Holder will not exercise any other option held by
Holder to the extent that the amount of shares issuable upon such exercise when
added to all shares of Common Stock (i) currently outstanding; (ii) issuable
upon the exercise of options or warrants other than those held by Holder; and
(iii) issuable upon the conversion of all outstanding notes and/or shares of
convertible preferred stock.

                  13. Warranties and Representations of the Company.

                           (a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.

                           (b) The grant of the Option to the Holder has been
duly authorized by all requisite corporation action on the part of the Company
and the shares of Common Stock represented by the Option will have been properly
reserved for issuance.

                           (c) The number of shares of Common Stock represented
by the Option (when coupled with all shares of Common Stock currently
outstanding and all Option Shares to be issued upon the exercise of all other
currently outstanding options granted by the Company) does not exceed the number
of shares of Common Stock, as the case may be, currently authorized for issuance
by the Company's Certificate of Incorporation, as amended (the "Certificate").

                           (d) No consents, approvals or permits are required to
be obtained from any third person, including, without limitation, any securities
commission, before the grant of the Option, nor do any conditions precedent
exist (other than those specifically identified herein) that would impair the
Company's ability to grant the Option hereunder or issue the Option Shares upon
the exercise of all or any portion of the Option.

                           (e) No Registration Statement involving the Common
Stock is currently on file with the SEC.

                  14. Procedures Upon Permitted Transfer. Before any sale,
transfer or other disposition of any of Option Shares acquired upon exercise of
the Option, the Holder agrees to give written notice to the Company of his or
her intention to effect such disposition. The notice must describe the
circumstances of the proposed transfer in reasonable detail and must specify the
manner in which the requirements of Section 12(c) above will be satisfied in
connection with the proposed disposition. After (a) legal counsel to the Company
has determined in good faith that


                                      -11-

<PAGE>



the requirements of Section 12(c) above will be satisfied and (b) the Holder has
executed such documentation as may be necessary to effect the proposed
disposition, the Company will, as soon as practicable, transfer such shares in
accordance with the terms of the notice. Any stock certificate issued upon such
transfer will bear a restrictive legend, in the form set forth in Section 12(d)
of this Agreement, unless in the opinion of the Company's legal counsel such
legend is not required. Compliance with the foregoing procedures is in addition
to compliance with any separate requirements applicable to the Holder under the
Certificate or otherwise.

                  15. Rights as Stockholder. The Option, in and of itself, does
not create rights in the Holder as a stockholder of the Company; provided that
upon any such exercise of the Option or any portion thereof that complies with
the requirements of this Agreement, the Holder shall immediately be vested with
all the rights afforded to other stockholders of the Company, regardless of when
the Company actually delivers certificates representing Option Shares to the
Holder.

                  16. Further Assurances. The Holder and the Company agree, from
time to time, to execute such additional documents as the other party hereto may
reasonably require to effectuate the purposes of this Agreement.

                  17. Binding Effect. This Agreement shall be binding upon the
Holder, the Company, the Holder's heirs, successors and assigns, and any
corporation or other entity that succeeds to the rights and liabilities of the
Company.

                  18. Cost of Litigation. In any action at law or in equity or
any arbitration to enforce any of the provisions or rights under this Agreement,
the unsuccessful party to such litigation, as determined by the court or
arbitrator in a final judgment or decree, shall pay the successful party or
parties all costs, expenses and reasonable attorneys' fees incurred by the
successful party or parties (including without limitation costs, expenses and
fees on any appeals), and if the successful party recovers judgment in any such
action or proceeding, such costs, expenses and attorneys' fees shall be included
as part of the judgment.

                  19. Entire Agreement; Modifications. This Agreement
constitutes the entire agreement and understanding between the Company and the
Holder regarding the subject matter hereof. No modification of the Option or
this Agreement, or waiver of any provision of this Agreement, shall be valid
unless in writing and duly executed by the Company and the Holder. The failure
of any party to enforce any of that party's rights against the other party for
breach of any of the terms of this Agreement shall not be construed as a waiver
of such rights as to any continued or subsequent breach.

                  20. Governing Law. This Agreement shall be governed by and
interpreted under the law of the State of California applicable to agreements
wholly negotiated, executed and to be performed in that state.

                  21. Notices. Any notices that either party to this Agreement
is required or may desire to give to the other shall be given by sending the
same to the other at the address


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<PAGE>



below, or at such other address as may be designated in writing by any party in
a notice to the other given in the manner prescribed in this Section 21. All
such notices shall be sufficiently given when deposited so addressed, postage
prepaid, in the United States mail. The addresses to which any such notices
shall be given are the following:

                  To Holder:

                           Gerald M. Wetzler
                           c/o American Film Technologies, Inc.
                           300 Park Avenue, 17th Floor
                           New York, New York  10022

                  With copy to:

                           Lee Mermelstein, Esq.
                           Jacobson & Mermelstein
                           52 Vanderbuilt Avenue
                           New York, New York 10017

                  To the Company:

                           4105 Sorrento Valley Boulevard
                           San Diego, California 92121
                           Attention:  Chief Financial Officer

                  With copy to:

                           Barry L. Burten, Esq.
                           Jeffer, Mangels, Butler & Marmaro LLP
                           2121 Avenue of the Stars, 10th Floor
                           Los Angeles, California 90067

                  22. Severability. Whenever possible, each provision of this
Agreement shall be interpreted so as to be effective and valid under applicable
law. If any provision of this Agreement is prohibited or deemed invalid under
any applicable law, however, such provision shall be ineffective only to the
extent of such prohibition or invalidity, and neither the remainder of such
provision nor this Agreement shall be invalidated as a result.

                  23. Counterparts. This Agreement may be executed by the
parties in one or more counterparts, all of which taken together shall
constitute one instrument.

                  24. Jurisdiction. The parties hereto agree to submit to the
exclusive jurisdiction of the Superior Court of the State of California, County
of Los Angeles, any controversy, claim or dispute arising out of or relating to
this Agreement or the method and manner of performance thereof or the breach
thereof.


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<PAGE>



                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.


"Company"                                 American Film Technologies, Inc.


                                          By:__________________________
                                                John Karl
                                          Its:  Chief Financial Officer


"Holder"                                  _____________________________
                                          Gerald M. Wetzler


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<PAGE>


                                    EXHIBIT A

                           Form of Exercise of Option





To:      American Film Technologies, Inc.
         4105 Sorrento Valley Boulevard
         San Diego, California 92121


                  The undersigned holds an option (the "Option") represented by
a Stock Option Agreement (the "Agreement") effective as of January 3, 1997. The
undersigned hereby exercises [the Option] [a portion of the Option] and elects
to purchase___________ shares of Common Stock (as defined in the Agreement) of
American Film Technologies, Inc. pursuant to the Option. This notice is
accompanied by full payment of the Exercise Price for the shares pursuant to
Section 4 of the Agreement computed as follows:

_____________shares of Common Stock x $.07 per share = $________

                  The undersigned acknowledges that no registration statement
under the Securities Act of 1933, as amended, or under any state securities law
has been filed and that the Company has no obligation to file such a
registration statement in the future with respect to the Shares, except as
provided in Section 10 of the Agreement. The undersigned warrants and represents
that the undersigned is acquiring and will hold the shares for the undersigned's
own account, for investment purposes only, and not with a view towards the
distribution or public offering of the shares or with any present intention of
reselling or distributing the shares at any particular future time. The
undersigned consents to the appearance of a restrictive legend, in the form
required by Section 12(d) of the Agreement, on the certificate for the shares.
The undersigned agrees not to sell, transfer or otherwise dispose of the shares
except as specifically permitted by the Agreement or any applicable securities
law expressly permitting such a disposition.


                  Date:  ______________ __, ____.



                                          __________________________________






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