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                             STOCK OPTION AGREEMENT


         THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into,
effective as of October 17, 1996, by and between American Film Technologies,
Inc., a Delaware corporation (the "Company"), and Edward A. Payne (the
"Holder").


                                 R E C I T A L S

         WHEREAS, the Holder has rendered valuable services to the Company as a
member of its Board of Directors;

         WHEREAS, the Company wishes to retain the Holder's services as an
ongoing member of the Board of Directors;

         WHEREAS, as the sole and exclusive consideration to be paid to the
Holder for Holder's ongoing services as a director of the Company, the Company
has agreed to grant the stock option provided for herein to the Holder; and

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


         1.       Grant of the Option. For good and valuable consideration, the 
receipt of which is hereby acknowledged, the Company hereby grants to the Holder
a stock option (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
Fifty Thousand (50,000) shares of the Company's $.002 par value common stock
(the "Common Stock"), at the price of $.15 per share (the "Exercise Price").
Each of the number of shares of Common Stock into which the Common Stock is
exercisable and the Exercise Price is subject to adjustment as provided in
Section 4 hereof.

         2.       Term of the Option.  The Option will commence on the date 
hereof and will terminate on October 15, 2001 (the "Effective Date").

         3.       Vesting; Exercise.  Subject to the provisions of Section 8 
below, the Holder's right to exercise all or any portion of the Option and 
receive the shares of Common Stock represented thereby shall become immediately 
exercisable upon the Effective Date.

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


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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 Option is exercisable and to the Exercise Price, with the result 
that the Holder's proportionate share of Common Stock shall be maintained as 
before the occurrence of such event without change in 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).

         5.       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 
Exhibit "A" attached hereto and made a part hereof, 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 by cashiers or certified
check of the aggregate exercise price for the shares of Common Stock 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.

         6.       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 for the shares of Common Stock 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 of 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

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issuance to the Holder of the shares of Common Stock 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.

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

         8.       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 or her 
court-appointed legal representative.

         9.       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 SECURITIES OFFERED BY THIS INSTRUMENT HAVE NOT BEEN 
REGISTERED 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 AGREEMENT 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 AGREEMENT AND THE SECURITIES OFFERED HEREBY IS 
RESTRICTED AS PROVIDED IN SECTIONS 9 AND 11 HEREOF.

                  (b) 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 shares of Common Stock that may be acquired 
upon exercise of the Option or any portion thereof.

                  (c) The Holder warrants and represents that the Option and any
shares of Common Stock 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.

                  (d) The Holder agrees not to sell, transfer or otherwise 
voluntarily dispose of any shares of Common Stock that may be acquired upon 
exercise of the Option or any portion thereof unless (i) there is an effective 
registration statement

                                       -3-

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under the 1933 Act covering the proposed disposition and com pliance 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, an opinion of counsel 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.

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

                  NOTICE: RESTRICTIONS ON TRANSFER

                  THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED 
         UNDER UNITED STATES FEDERAL OR STATE SECURITIES LAWS, INCLUDING BUT NOT
         LIMITED TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") NOR 
         APPROVED BY ANY FEDERAL OR STATE REGULATORY AGENCY, INCLUDING BUT NOT 
         LIMITED TO THE SECURITIES AND EXCHANGE COMMISSION, AND MAY NOT BE 
         OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, 
         DIRECTLY OR INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE 
         BOOKS OF THE CORPORATION, WITHOUT REGISTRATION OF SUCH SECURITIES UNDER
         ALL APPLICABLE UNITED STATES FEDERAL OR STATE SECURITIES LAWS, 
         INCLUDING BUT NOT LIMITED TO THE ACT, OR COMPLIANCE WITH AN APPLICABLE 
         EXEMPTION THEREFROM, SUCH COMPLIANCE, AT THE DISCRETION OF THE 
         CORPORATION, TO BE EVIDENCED BY AN OPINION OF SHAREHOLDER'S COUNSEL, IN
         FORM ACCEPTABLE TO THE CORPORATION THAT NO VIOLATION OF SUCH 
         REGISTRATION OR QUALIFICATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
         TRANSFER OR ASSIGNMENT. ANY OFFER OR DISPOSITION OF THESE SECURITIES 
         WITHOUT SATISFACTION OF SAID CONDITIONS WILL BE WRONGFUL AND WILL NOT 
         ENTITLE THE TRANSFEREE TO REGISTER THE OWNERSHIP OF THE SECURITIES WITH
         THE CORPORATION.

                  (f) 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.

         10.      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 corporate action on the

                                       -4-

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part of the Company and the shares of Common Stock represented by the Option
have been properly reserved for issuance.

                  (c) The number of shares of Common Stock represented by the 
Option (when coupled with all shares currently outstanding and all 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 currently 
authorized for issuance by the Company's Certificate of Incorporation (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.

                  (e) No consents, approvals, nor permits are required to be 
obtained from any third person, other those which may be required under 
applicable securities laws, before the issuance of Common Stock upon the 
exercise of all or any portion of the Option.

         11.      Procedures Upon Permitted Transfer. Before any sale, transfer 
or other disposition of any of the shares of Common Stock 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 9(d) above will be satisfied in
connection with the proposed disposition. After (a) legal counsel to the Company
has determined in good faith that the requirements of Section 9(d) 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 9(e) 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.

         12.      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 Common Stock to the Holder.

                                       -5-

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         13.      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.

         14.      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.

         15.      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.

         16.      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.

         17.      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.

         18.      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 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 18. All such notices shall be in writing and delivered by telex,
facsimile, personal delivery or if sent by mail, certified or registered mail, 
return receipt requested deposited so addressed, postage prepaid. If sent by 
mail notices

                                       -6-

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shall be deemed delivered five (5) business days after deposit in the mail. The
addresses to which any such notices shall be given are the following:

         To Holder:

                  Edward A. Payne
                  C. Melchers Consulting, Inc.
                  126 East 56th Street, Tower 56
                  New York, New York 10022
                  Facsimile No. (212) 715-0734


         With copy to:

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

         To the Company:

                  Gerald M. Wetzler
                  c/o American Film Technologies, Inc.
                  300 Park Avenue, 17th Floor
                  New York, New York  10022
                  Facsimile No. (212) 572-6460

         With copy to:

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

         19.      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.

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

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


"Company"                                       American Film Technologies, Inc.



                                                By:__________________________
                                                        Gerald M. Wetzler
                                                Its:  Chief Executive Officer



"Holder"                                        _____________________________
                                                Edward A. Payne




                                       -8-

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                                    EXHIBIT A

                           Form of Exercise of Option
                           --------------------------




To:      American Film Technologies, Inc.
         300 Park Avenue, 17th Floor
         New York, New York  10022
         Facsimile No. (212) 572-6460


         The undersigned holds an option (the "Option") represented by a Stock
Option Agreement (the "Agreement") effective as of June 30, 1995. 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 5(c) of the Agreement.

         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. 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 10(e) 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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