Exhibit 10.5
                                  ------------

                            LOAN AND PLEDGE AGREEMENT



                                     BETWEEN



                              MARS OVERSEAS LIMITED



                                       AND


                           COPYTELE INTERNATIONAL LTD.



                             DATED 2nd NOVEMBER 2007



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                                TABLE OF CONTENTS


1.       DEFINITION AND INTERPRETATION........................................3
2.       LOAN & PAYMENT.......................................................5
3.       CREATION OF SECURITY.................................................6
4.       TAXES................................................................7
5.       REPRESENTATIONS AND WARRANTIES.......................................7
6.       BORROWERS' CONVENANTS................................................8
7.       EVENTS OF DEFAULT...................................................10
8.       REMEDIES ON EVENT OF DEFAULT........................................11
9.       CONTINUING OBLIGATIONS..............................................11
10.      COSTS, CHARGES AND EXPENSES.........................................12
11.      INDEMNITY...........................................................12
12.      RELEASE AND TERMINATION.............................................12
13.      MISCELLANEOUS.......................................................12


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                            LOAN AND PLEDGE AGREEMENT

This LOAN AND PLEDGE AGREEMENT (this "Agreement") is made on this 2nd day of
November, 2007 by and among:

(1)      COPYTELE INTERNATIONAL LTD., a company incorporated under the laws of
         the British Virgin Islands and having its registered office at Icaza
         Gonzalez-Ruiz & Aleman, (BVI) Trust Limited, Vanterpool Plaza, Second
         Floor, Wickham Cay 1, Road Town, Tortola, British Virgin Islands
         (hereinafter referred to as the "Borrower" which expression shall
         include its successors and permitted assigns); and

(2)      MARS OVERSEAS LIMITED, a company incorporated under the laws of the
         Cayman Islands and having its registered office at PO Box 309 GT,
         Ugland House, South Church Street, George Town, Grand Cayman, Cayman
         Islands (the "Lender" which expression includes its successors and
         permitted assigns).

The Borrower and the Lender are individually referred to as a "Party" and
together as the "Parties".

     WHEREAS

          A.   The Borrower has requested  the Lender for a senior  secured loan
               for a sum of US$5,000,000.

          B.   The Borrower has agreed to acquire  1,495,845  Global  Depository
               Receipts of Videocon  Industries Ltd.  ("Pledged  GDRs") having a
               face value of US$ 10 each.

          C.   The Loan will be secured by pledge of the  Pledged  GDRs and will
               be subject to other terms and conditions  hereinafter  appearing;
               and

          D.   The Lender  requires  the  Borrower  to create the pledge and the
               Borrower  has  agreed  to  create  the  pledge  on the  terms and
               conditions set out under this Agreement.

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto, hereby agrees as follows:

1.                DEFINITION AND INTERPRETATION

1.1.              The following terms used in this Agreement shall have the
                  meanings assigned to them herein:

                    (a)  "Agent  Bank"  means a bank  acceptable  to Lender  and
                         Borrower in which  Lender shall have an account for the
                         purpose of repayment of the Loan;

                    (b)  "Applicable  Law"  includes  all  applicable  statutes,
                         enactments,    laws,   ordinances,    rules,   by-laws,
                         regulations,   notifications,   guidelines,   policies,
                         directions,  directives and orders of any  Governmental
                         Authority,  statutory authority, tribunal, board, court
                         or a recognized stock exchange, as may be applicable;

                    (c)  "Approvals"    means   all   approvals,    permissions,
                         authorizations, consents and notifications whether from
                         any Governmental Authority,  regulatory or departmental
                         authority or otherwise  including,  without limitation,
                         approvals   of  any   authority,   or   any   corporate
                         authorizations as may be applicable;

                    (d)  "Business  Day" means a day  (other  than  Saturday  or
                         Sunday) on which banks are open for general business in
                         London, England;

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                    (e)  "Charter Documents" means the Memorandum of Association
                         and Articles of Association of Borrower;

                    (f)  "Closing  Date"  means the date of the  drawdown of the
                         Loan pursuant to this Agreement,  which shall be a date
                         mutually  agreed  between the Parties  hereto and which
                         shall not in any event be later  than the 30th day from
                         the date of  execution  of this  Agreement,  and in the
                         event  the  30th  day  is  not a  Business  Day or is a
                         Saturday or a Sunday,  then the next Business Day, such
                         that on or prior to such date the  Borrower  shall have
                         purchased  the Pledged  GDRs and the Lender  shall have
                         purchased  20,000,000  shares  of the  common  stock of
                         CopyTele  Inc.  pursuant  to  a  certain   Subscription
                         Agreement, dated the date hereof, between CopyTele Inc.
                         and the Lender;

                    (g)  "Designated  Account"  (i)  of  the  Lender  means  the
                         account of the Lender in the Agent Bank for the purpose
                         of  repayment  of the  Loan,  and (ii) of the  Borrower
                         means the account of the Borrower in the Agent Bank for
                         purposes of receiving the Loan.

                    (h)  "Encumbrance" means any mortgage, charge (whether fixed
                         or floating), pledge, lien, hypothecation,  assignment,
                         security  interest  or other  encumbrances  of any kind
                         securing  or  conferring  any  priority  of  payment in
                         respect of any obligation of any Person;

                    (i)  "Escrow  Agent"  means the Escrow Agent to be appointed
                         pursuant to the Escrow Agreement;

                    (j)  "Escrow  Agreement"  means the escrow  agreement  to be
                         executed on the or prior to the Closing  Date among the
                         Borrower, the Lender and the Escrow Agent, in such form
                         as  the  Borrower  and  Lender  may  agree  and  as  is
                         acceptable  to the  Escrow  Agent,  in  each  case,  as
                         amended from time to time;

                    (k)  "Event of Default"  means the  occurrence of any of the
                         events or  circumstances  specified in Clause 7 of this
                         Agreement;

                    (l)  "Final Settlement Date" means the date on which all the
                         Obligations have been  irrevocably and  unconditionally
                         paid and discharged in full to the  satisfaction of the
                         Lender;

                    (m)  "Finance Documents" means the following,  executed in a
                         form and manner satisfactory to the Lender:

                          i)   this Agreement;

                         ii)   the Escrow Agreement;

                        iii)   all other documents and agreements relating to
                               the above, as  such documents may be amended or
                               supplemented  from time to time.

                    (n)  "GDR  Certificate/Receipt"  means a document evidencing
                         holding of GDRs by the Borrower;

                    (o)  "Governmental   Authority"   means  any  government  or
                         political  subdivision thereof; any department,  agency
                         or  instrumentality  of  any  government  or  political
                         subdivision thereof; any court or arbitral tribunal and
                         includes the governing body of any securities exchange;

                    (p)  "Loan" shall have the meaning  ascribed to it in Clause
                         2.1 of this Agreement;

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                    (q)  "Maturity  Date" shall mean the seventh  anniversary of
                         the Closing Date;

                    (o)  "Maturity Value" shall mean, when the loan is repaid on
                         the Maturity Date, a sum of US$ 5 million;

                    (r)  "Obligations" means all amounts payable pursuant to the
                         terms  of  the  Finance  Documents,  including  without
                         limitation:

                         i)    the principal amount of the Loan;

                        ii)    any and all sums incurred by the Escrow Agent in
                               order to preserve the security provided under the
                               Finance Documents or its security interest
                               therein; and

                       iii)    in the event of any proceeding for the collection
                               or enforcement of the above, after a Default
                               shall have occurred, the expenses incurred for
                               the purpose of retaking, holding, preparing for
                               sale, selling or otherwise disposing of the
                               Security, or of any exercise by the Lender and/or
                               the Escrow Agent of their respective rights under
                               the various Finance Documents, together with
                               legal fees and court costs;

                    (s)  "Security"     means     collectively,      the     GDR
                         Certificates/Receipts   or  any   other   document   or
                         instrument  evidencing  ownership of GDRs, the transfer
                         documents duly signed relating to the Pledged GDRs, and
                         the Pledeged GDRs.

                    (t)  "Taxes"  shall  mean  any and all  present  and  future
                         taxes, levy, impost, premium, duty or other charge of a
                         similar nature,  including  without  limitation,  gross
                         receipts,   sales,   turn-over,    value   added,   use
                         consumption,   property,  income,  franchise,  capital,
                         occupational,  license,  excise and documentary  stamps
                         taxes,  and customs and other duties,  assessments,  or
                         fees, however imposed, withheld, levied, or assessed by
                         any country or  government  subdivision  thereof or any
                         other taxing  authority  together with interest thereon
                         and penalties in respect thereof.


1.2.              In this Agreement:

                    (a)  a provision of law is a reference to that  provision as
                         amended or re-enacted;

                    (b)  a Clause is a reference to a section of this Agreement;

                    (c)  words  importing  the plural shall include the singular
                         and vice-versa;

                    (d)  a Person shall be construed as including  references to
                         an  individual,  firm,  company or other body,  whether
                         incorporated or not; and

                    (e)  the index and the  headings in this  Agreement  are for
                         convenience  and are to be ignored in  construing  this
                         Agreement.

2.                LOAN & PAYMENT

2.1.              At the request of the Borrower, and subject to the terms and
                  conditions set out in this Agreement, on the Closing Date, the
                  Lender shall lend to the Borrower, and the Borrower shall
                  borrow from the Lender, the principal amount of US$5,000,000
                  (the "Loan"). The Loan shall not bear interest.

2.2.              Lender shall make the Loan by making remittance of the said
                  amount to the Designated Account of the Borrower.

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2.3.              The Maturity Value shall be due and payable in lump sum on the
                  Maturity Date. In no case and under no circumstances,
                  arrangements or events whatsoever, shall the Loan be repayable
                  before the seventh anniversary of the Closing Date; and the
                  Borrower shall also have no option to pre-pay before the
                  Maturity Date. The Borrower shall make repayment of the Loan
                  on the Maturity Date by depositing in the Designated Account
                  of the Lender cash in the amount of the Maturity Value.

2.4.              In the event  there is any  pre-payment  before the  seventh
                  anniversary of the Closing Date in  contravention  of Clause
                  2.3 above, due to any reason whatsoever,  the Borrower shall
                  be liable to pay and shall pay a pre-payment premium at 200%
                  of the Loan to the Lender. In case of pre-payment,  the Loan
                  shall  be paid in a  single  tranche  and  deposited  to the
                  Designated Account of the Lender.  Without prejudice to what
                  is stated hereinabove,  in the event of the Borrower desires
                  to prepay the Loan  before the  Maturity  Date,  it shall be
                  mandatory that (a) pursuant to an escrow agreement among the
                  Lender,  the  Borrower  and the  Agent  Bank  dated the date
                  hereof  the  prepaid  amount  of the  Loan  shall be kept in
                  escrow in the  Designated  Account of the  Lender  until the
                  Maturity Date and shall be paid to the Lender on the date of
                  payment,  (b) any interest accruing on the prepaid amount of
                  the Loan  kept in escrow in the  Designated  Account  of the
                  Lender  shall be also  retained in escrow in the  Designated
                  Account until the Maturity Date and shall paid to the Lender
                  on the date of payment,  and (c) the lien over the  Security
                  will not be vacated until the Maturity Date.

2.5.              The Borrower shall drawdown the Loan in a single tranche.

2.6.              The Closing of the Loan pursuant to this Agreement and the
                  drawdown thereof shall take place on the Closing Date and is
                  subject to the fulfillment of the following conditions
                  precedent to the satisfaction of the Lender:

                         i)    The Lender shall have received, the following,
                               each dated such day (unless otherwise specified),
                               in form and substance satisfactory to the Lender:

                               A)   copies of the Charter  Documents of the
                               Borrower  and each  amendment thereto,  certified
                               as true,  correct  and  complete  by the  company
                               secretary / director of the Borrower;

                               B) copies of the resolution of the shareholders
                               and the resolutions of the board of directors of
                               the Borrower, approving the transactions
                               contemplated by the Finance Documents to which
                               the Borrower, is or will be a party, in each case
                               certified as true, correct and complete by the
                               company secretary / director of the Borrower.

                        ii)    The Borrower shall have acquired the Pledged
                               GDRs; and

                       iii)    The Parties and the Escrow Agent shall have
                               entered into the Escrow Agreement.


3.                CREATION OF SECURITY

3.1.              In order to secure the due performance, payment and discharge
                  in full of the Obligations, and in consideration of the Loan
                  being advanced by the Lender the Borrower hereby pledges in
                  favour of the Escrow Agent, for the benefit of the Lender, as
                  security for the due discharge of the Obligations, the Pledged
                  GDRs, and shall deposit and deliver to the Escrow Agent such
                  relevant instruments or documents, including security
                  receipts/forms/depository slips, GDR Certificate/Receipts or
                  any other document required for effectuating the pledge of the
                  Pledged GDRs.

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3.2.              The Borrower shall provide any information and assistance as
                  may be reasonably necessary to perfect the pledge created over
                  the Pledged GDRs in favour of the Escrow Agent for the benefit
                  of the Lender.

3.3.              The Borrower hereby agrees and undertakes that, until the
                  Final Settlement Date, the Borrower shall not, and shall not
                  attempt to, transfer any of the Pledged GDRs directly or
                  indirectly or in any form or method whatsoever.

3.4.              The Borrower agrees and undertakes that it shall not
                  sell/transfer or enter into any agreement for sale/transfer of
                  the Pledged GDRs to any third party in any manner whatsoever
                  until the seventh anniversary of the Closing Date. The
                  Borrower shall give irrevocable instructions to the Escrow
                  Agent not to accept any instructions for
                  withdrawal/cancellation of the Pledged GDRs or for
                  sale/transfer of the Pledged GDRs other than in accordance
                  with the terms of the Escrow Agreement.

3.5.              The Pledged GDRs shall continue to remain pledged with the
                  Escrow Agent for security of repayment of the Loan for a
                  period of seven years or repayment of the Loan, whichever is
                  later. Further, even in case of prepayment of the Loan prior
                  to the expiry of seven years as stated above in Clause 2.4,
                  the Pledged GDRs shall continue to remain pledged with the
                  Escrow Agent until the seventh anniversary of Closing Date.

4.                TAXES

4.1.              The Borrower shall bear all Taxes as may be applicable or as
                  may be levied in  relation  to each  Facility  and all other
                  amounts payable under the Finance Documents. Notwithstanding
                  anything to the  contrary  stated  herein,  it is  expressly
                  agreed that all  payments to be made to the Lender under the
                  Finance  Documents  shall  be made  free  and  clear  of and
                  without  any  deduction  for or on  account of any Taxes and
                  without any  set-off or  counter-claim.  If the  Borrower is
                  required to make deduction on account of any Taxes, then, in
                  such  case,  the  sums  (other  than the  interest  amounts)
                  payable  to the  Lender  shall be  increased  to the  extent
                  necessary to ensure that,  after making such deduction,  the
                  Lender  receive and retain  (without any  liability for such
                  deductions)  a sum  equal to the sum  which  it  would  have
                  received and retained,  had no such  deduction  been made or
                  required to be made.

4.2.              Without prejudice to the provisions of Clause 4.1 above, if
                  the Lender is required to make any payment on account of any
                  Taxes in relation to any sum received or receivable by it
                  hereunder (excluding income tax payable by the Lender) or any
                  liability in respect of such payment is imposed, levied or
                  assessed against such Lender, the Borrower shall, upon demand
                  of such Lender, promptly reimburse to such Lender such payment
                  or liability together with interest, penalties and expenses,
                  if any, paid or incurred in connection therewith.

5.                REPRESENTATIONS AND WARRANTIES

5.1.              The Borrower hereby represents and warrants to the Lender as
                  of the date of this Agreement (which representations and
                  warranties shall survive the execution and delivery of this
                  Agreement and continue until the Final Settlement Date) as
                  follows:

                    (a)  the  Borrower is duly  organised  and validly  existing
                         under the laws of British  Virgin  Islands  and has the
                         power  and  authority  to carry on  business  as is now
                         being carried on and to own its property and assets;

                    (b)  the Borrower has the power and  authority to enter into
                         and perform its obligations under the Finance Documents
                         in accordance  with the terms thereof and has taken all
                         necessary  corporate and other actions to authorise the
                         execution,  delivery and performance of the obligations
                         under the Finance Documents;

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                    (c)  the execution,  delivery and performance of the Finance
                         Documents   and   creation   of  a  valid  and  legally
                         enforceable  pledge in favour of the  Escrow  Agent for
                         the  benefit  of the  Lender by the  Borrower  will not
                         contravene  (i) any  Applicable  Law or  regulation  to
                         which the Borrower is subject or (ii) any  provision of
                         the  Charter  Documents  of the  Borrower  or (iii) any
                         agreement  or  obligation  or  document  binding  on or
                         applicable to the Borrower;

                    (d)  the Finance  Documents  and the pledge  created  herein
                         constitute legally binding and enforceable  obligations
                         of the Borrower;

                    (e)  no clearance,  authorizations,  Approvals,  waivers, no
                         objections  or other  action  by,  and no  notice to or
                         filing,  registration with, any Governmental  Authority
                         or any other Person is required for the due  execution,
                         delivery,  recordation,  filing or  performance  by the
                         Borrower of any Finance  Document or for the  creation,
                         perfection and the maintenance of the various  security
                         interest  created  pursuant  to the  Finance  Documents
                         (including for the maintenance of the first priority as
                         contemplated therein);

                    (f)  no Event of Default has occurred;

                    (g)  the  Borrower  has not  granted  or  agreed to grant in
                         favour  of any  other  person  any  interest  in or any
                         option or other rights in respect of any of the Pledged
                         GDRs;

                    (h)  no actions, proceedings or steps have been taken and/or
                         are proposed or threatened for the liquidation, winding
                         up or dissolution,  administration,  reorganization  or
                         insolvency of the Borrower, or for the appointment of a
                         receiver,  trustee or similar officer in respect of the
                         Borrower or its assets  before any court,  Governmental
                         Authority  or  administrative  body  and/or  under  any
                         applicable bankruptcy,  insolvency, winding-up or other
                         similar law;

                    (i)  no   actions,   suits,   proceedings,   investigations,
                         litigation,  arbitration or administrative  proceedings
                         of any kind in any court or before  any  arbitrator  or
                         any  Governmental  Authority are at present  current or
                         pending   against   the   Borrower  or  its  assets  or
                         threatened  which has or is  likely to have a  material
                         adverse effect;

                    (j)  there  are  no  third  party  consents  required  to be
                         obtained  for the  Borrower to lawfully  enter into and
                         perform their respective  obligations under the Finance
                         Documents;

                    (k)  there are no actions,  proceedings,  disputes or claims
                         pending   before  any  court,   government   agency  or
                         administrative body, or threatened against or affecting
                         the  Borrower or its assets and which  would  adversely
                         affect the  ability of the  Borrower  to perform  their
                         respective obligations under the Finance Documents;

                    (l)  on the Closing  Date,  the Borrower  shall be the legal
                         and  beneficial  owner  of,  and  shall  have  good and
                         marketable title to, or valid and enforceable rights in
                         respect of, all of its  property  and assets over which
                         the  security  interest  is  proposed  to be created in
                         favour  of the  Escrow  Agent  for the  benefit  of the
                         Lender  pursuant  to the  Finance  Documents  and  such
                         assets  will not be subject to any  Encumbrances  other
                         than those created pursuant to the Finance Documents.

6.                BORROWERS' CONVENANTS

6.1.              Positive Covenants

                  The Borrower irrevocably and unconditionally covenants and
                  undertakes that so long as any Obligations remain outstanding,
                  and until the Final Settlement Date, it shall:

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                    (a)  maintain  its   corporate   existence  (to  the  extent
                         applicable)  and all rights and privileges  enjoyed and
                         obtain,  comply  with  the  terms of and do all that is
                         necessary  to  maintain  in full  force and  effect all
                         Approvals  required to enable it to  lawfully  carry on
                         its business;

                    (b)  obtain,  comply  with  the  terms of and do all that is
                         necessary  to  maintain  in full  force and  effect all
                         Approvals as may be required to enable it to enter into
                         and perform its obligations under the Finance Documents
                         and the transactions contemplated thereby and to ensure
                         the legality, validity, enforceability or admissibility
                         in  evidence  of  the   Finance   Documents   and  this
                         Agreement;

                    (c)  comply  with  all  Applicable  Laws and the  terms  and
                         conditions of the Approvals;

                    (d)  pay regularly all Taxes, assessments,  dues, duties and
                         impositions as may, from time to time be payable to any
                         Governmental Authority;

                    (e)  comply in all  respects  with the terms of the  Finance
                         Documents;

                    (f)  use reasonable  commercial efforts to do or cause to be
                         done everything  which is necessary,  in the reasonable
                         opinion  of the  Lender,  to  create  and  perfect  the
                         security  with respect to the Pledged GDRs  pursuant to
                         the Finance Documents  (including,  without limitation,
                         any  further  registration  or filing in respect of the
                         security);

                    (g)  pay or reimburse  to the Lender all  charges,  Taxes or
                         penalties  imposed on or in pursuance of this Agreement
                         or on any  instruments,  issued  hereunder,  payable in
                         relation to the interest  amounts on the pre-paid  Loan
                         amount paid to the Lender;

                    (h)  perform and execute, on the request of the Lender, such
                         acts and deeds, as may be reasonably  necessary  and/or
                         required  to  carry  out  the  intent  of  the  Finance
                         Documents; and

                    (i)  do all  such  acts  and  things  as  may be  reasonably
                         required by the Lender to protect  the  interest of the
                         Lender under the Finance Documents.

6.2.              Negative Covenants

                  The Borrower covenants and agrees that so long as any
                  Obligations remain outstanding and until the Final Settlement
                  Date, without the prior written consent of the Lender :

                    (a)  the Borrower shall not undertake any further  borrowing
                         in any manner whatsoever;

                    (b)  the  Borrower  shall not dispose of or create any other
                         Encumbrance  or grant any third  party  rights over the
                         Pledged  GDRs  which has been  pledged in favour of the
                         Escrow Agent for the benefit of the Lender;

                    (c)  the  Borrower  shall not effect  and/or  enter into any
                         transaction  of merger,  amalgamation,  reconstruction,
                         consolidation,      reconstruction,      restructuring,
                         reorganization or other similar transactions  including
                         those  relating to change in its  shareholding  pattern
                         (whether   legal  or   beneficial)   other  than  those
                         permitted  in  terms  of the  Finance  Documents,  as a
                         result  whereof  the  Borrower  is  not  the  surviving
                         entity,  or as a result  of  which an Event of  Default
                         arises;

                    (d)  the  Borrower  shall not  amend,  alter or  modify  its
                         Charter  Documents  in a manner  which may  affect  the
                         terms of the Finance  Documents or the rights of any of
                         the Lender thereunder in any manner whatsoever;

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                    (e)  the Borrower  shall not wind up,  liquidate or dissolve
                         or initiate  any  voluntary  winding up process  and/or
                         cause any  circumstance  to arise which could result in
                         any person  initiating  winding up actions  against the
                         Borrower  and/or any other actions which in the opinion
                         of the Lender  would  affect or is likely to affect the
                         rights  and  benefits  of the  Lender  including  their
                         rights in relation to the security;

                    (f)  the  Borrower  shall  ensure that  except as  otherwise
                         provided in the Finance Documents, the security created
                         thereunder  shall be free of  encumbrances,  except for
                         the security  interest created thereon in favour of the
                         Escrow Agent for the benefit of the Lender;

                    (g)  the  Borrower  shall  not  grant in favour of any other
                         Person any interest in or any option or other rights in
                         respect of the Pledged GDRs or any part thereof.

                    (h)  the  Borrower   shall  not  enter  into  any  corporate
                         arrangement   including  but  not  limited  to  merger,
                         amalgamation,  joint  venture or  partnership  with any
                         other entity.

                    (g)  the Borrower  shall not at any point of time,  have any
                         creditors,  unsecured  lenders  or  any  other  outside
                         liability  in  any  form  whatsoever,   other  than  an
                         unsecured   loan  of  an  amount  not   exceeding   US$
                         16,300,000/-   (US$  Sixteen   Million   Three  Hundred
                         Thousand)  from CopyTele  Inc.,  Parent  Company of the
                         Borrower.  The loan so obtained from CopyTele Inc.shall
                         be interest free and shall be  subordinate  to the Loan
                         obtained from the Lender..

7.                EVENTS OF DEFAULT

7.1.              The occurrence of any of the following events shall constitute
                  an Event of Default (the "Event of Default"):

                    (a)  the  Borrower  fails to pay any  amount  due  under the
                         Finance  Documents on the due date or on demand, as the
                         case may be;

                    (b)  failure to maintain the first priority exclusive pledge
                         over the Pledged GDRs in favour of the Escrow Agent for
                         the  benefit  of the  Lender  pursuant  to the  Finance
                         Documents;

                    (c)  any  representation  or statement  made by the Borrower
                         under  any  of the  Finance  Documents,  including  any
                         representation   or  statement   with  respect  to  the
                         security,  or any certificate or statement delivered by
                         the Borrower pursuant thereto is or proves to have been
                         incorrect  or  misleading  when  made and  affects  the
                         performance  of the  obligations  by the Borrower under
                         the Finance Documents or cause the breach of any of the
                         provisions of the Finance Documents;

                    (d)  any amendment to or alteration or  modification  of the
                         Charter  Documents  in a manner  which may  affect  the
                         terms of the  Finance  Documents  or the  rights of the
                         Lender thereunder in any manner whatsoever, without the
                         consent of the Lender;

                    (e)  the  Borrower  fails to maintain a valid legal title to
                         the Pledged GDRs;

                    (f)  the  Borrower  commences  or takes  steps to initiate a
                         voluntary winding up or restructuring process under any
                         applicable bankruptcy,  insolvency, winding up or other
                         similar laws now or hereafter in effect,  or consent to
                         the  entry of an order  for  relief  in an  involuntary
                         proceeding  under  any such  law,  or  consents  to the
                         appointment   or  taking   possession  by  a  receiver,
                         liquidator, assignee (or similar official) for any part
                         of their properties;

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<PAGE>

                    (g)  the  Borrower  is  deemed  unable  to pay its  debts or
                         becomes  unable  to pay its  debts as they  fall due or
                         suspends  or  threatens  to  suspend  making   payments
                         (whether  principal or interest) with respect to any of
                         its debts;

                    (h)  Breach of any of the  covenants  as mentioned in Clause
                         6.1 and Clause 6.2 above

8.                REMEDIES ON EVENT OF DEFAULT


8.1.              Upon an Event of Default, the Pledged GDRs shall be forfeited
                  by the Escrow Agent for the benefit of the Lender who shall
                  hold the same as trustee for the Lender and then deal with
                  Pledged GDRs as per the instructions of the Lender.

8.2.              In addition to the above, the Lender shall also have a right
                  to:

                    (a)  enforce the security  interest  created pursuant to the
                         Finance Documents;

                    (b)  exercise  all the rights and  remedies  available to it
                         under  the  Finance  Documents  in such  manner  as the
                         Lender may deem fit without  intervention  of the Court
                         and  without  any  consent of the  Borrower  and/or any
                         Person.

8.3.              The Borrower agrees that at any time after an Event of Default
                  occurs, the Lender shall have the right, without prejudice to
                  its other rights under this Agreement and the other Finance
                  Documents and/or under any Applicable Law, in its discretion
                  to exercise all the rights, powers and remedies vested in it
                  (whether vested in it by or pursuant to this Agreement, the
                  other Finance Documents or by any Applicable Law) for the
                  protection, perfection and enforcement of its rights in
                  respect of the Security, and the Lender shall be entitled,
                  without limitation, to exercise the rights set out below:

                    (a)  to give suitable  instructions to the Escrow Agent such
                         that the Pledged  GDRs are  released and handed over to
                         the Lender;

                    (b)  to transfer or register in the name of its nominees, as
                         it shall deem fit, all or any of the Pledged  GDRs,  at
                         the cost of the Borrower;

                    (c)  to  receive  all  amounts  payable  in  respect  of the
                         Security;

                    (d)  to receive  cash  proceeds  and/or to sell the non-cash
                         Security   (or   any   part   thereof),   without   the
                         intervention  of the court or other judicial  authority
                         and/or  Governmental  Authority,  at public or  private
                         sale  or  on  any  securities  exchange  for  cash,  or
                         transfer  or  procure  registration  in the name of the
                         Escrow Agent, or any of its nominees at the cost of the
                         Borrower,  as the  Escrow  Agent may deem  commercially
                         reasonable  and  apply  the  proceeds  thereof  towards
                         payment of the  Obligations,  provided  that the Escrow
                         Agent  shall  not be  obliged  to make  any sale of any
                         Security  relating to Pledged GDRs if it desires not to
                         do so,  regardless  of the fact that notice of sale may
                         have been given;

                    (e)  to take all such actions including vote all or any part
                         of the Pledged GDRs (whether or not  transferred in the
                         name of the  Escrow  Agent)  with  respect  thereto  as
                         though it were the outright owner thereof;

                    (f)  exercise  such other  rights as the Lender may deem fit
                         under Applicable Law.

9.       CONTINUING OBLIGATIONS

         The liabilities and obligations of the Borrower under or pursuant to
         this Agreement and the other Finance Documents shall remain in full
         force and effect notwithstanding any act, omission, event or
         circumstance whatsoever until the Final Settlement Date.

                                       11
<PAGE>

10.      COSTS, CHARGES AND EXPENSES

         Each Party shall bear all its own costs, charges and expenses
         (including legal and other fees on a full indemnity basis), and Taxes
         on it pertaining to the Loan in connection with the negotiation,
         preparation, execution, registration, administration, modification and
         amendment of this Agreement, the other Finance Documents and any other
         document delivered hereunder and in exercising, protecting, perfecting,
         preserving or enforcing any of its rights or powers hereunder or there
         under (including the security interest created under or pursuant to the
         Finance Documents) or in suing for or seeking to recover any sums due
         hereunder or thereunder or in defending any claims brought against it
         in respect of this Agreement and any other document delivered hereunder
         or pursuant to this Agreement or in releasing this Agreement, the other
         Finance Documents or the security interest created hereunder or
         pursuant to this Agreement and the other Finance Documents on the Final
         Settlement Date.

11.      INDEMNITY

         The Borrower shall indemnify and hold harmless the Lender, the Escrow
         Agent and their nominees, agents, officers, and directors ("Indemnified
         Parties") against all actions, proceedings, claims, demands, judgments,
         losses, liabilities, obligations, damages, costs and expenses
         ("Losses") imposed, asserted against or incurred by them which may be
         incurred, sustained or raised in respect of any Event of Default or the
         non-performance of or non-observance of any of the undertakings,
         representations and warranties and agreements on the part of the
         Borrower herein contained or contained in any other Finance Documents
         or in respect of any inaccuracy in the representation and warranties
         relating in any way whatsoever to the security interest created
         hereunder.

12.      RELEASE AND TERMINATION

         Upon the occurrence of the Final Settlement Date, this Agreement shall
         terminate and the Escrow Agent shall, as provided in the Escrow
         Agreement, release the Security from the pledge granted hereby, and
         shall deliver to Borrower such Security as may be in the possession of
         the Escrow Agent. However, in no case or in no event whatsoever, the
         securities shall be released to the Borrower before the seventh
         anniversary of the Closing Date.

13.      MISCELLANEOUS

13.1.    Governing Law

         This Agreement shall be governed by and construed in accordance with
         the laws of England.

13.2.             Dispute Resolution

                    (a)  In the event any Party is in breach of any of the terms
                         of this  Agreement,  another  Party may  serve  written
                         notice  to  require  the  Party in  breach to cure such
                         breach  within  thirty (30) days of the receipt of such
                         written notice thereof.

                    (b)  In the case of any  dispute or claim  arising out of or
                         in connection  with or relating to this  Agreement,  or
                         the breach (where such breach has not been cured by the
                         Party in breach  within  thirty  (30) days of a written
                         notice thereof),  termination or invalidity hereof, the
                         Parties  shall attempt to first resolve such dispute or
                         claim through  discussions between senior executives of
                         the Investor.

                    (c)  If the dispute is not resolved through such discussions
                         within  thirty  (30) days  after one Party has served a
                         written  notice  on  the  other  Party  requesting  the
                         commencement of discussions,  dispute or claim shall be
                         finally settled by arbitration under the United Nations
                         Commission on International Trade Law Arbitration Rules
                         (the  "UNCITRAL  Rules") as are in force at the time of
                         any  such   arbitration.   For  the   purpose  of  such
                         arbitration,  there  shall  be one  arbitrator  jointly
                         appointed by the Parties,  failing which there shall be
                         three (3)  arbitrators in accordance  with the UNCITRAL
                         Rules (the  "Arbitration  Board").  The  Company  shall
                         appoint one arbitrator,  and the Investor shall appoint
                         one arbitrator.  The two arbitrators shall then jointly
                         appoint a third arbitrator, who shall serve as Chairman
                         of the Arbitration Board.

                                       12
<PAGE>

                    (d)  All arbitration  proceedings  shall be conducted in the
                         English language and the place of arbitration  shall be
                         in London, England, United Kingdom.

                    (e)  Each Party shall  co-operate  in good faith to expedite
                         (to the maximum extent  practicable) the conduct of any
                         arbitral proceedings commenced under this Agreement.

                    (f)  The costs and expenses of the  arbitration,  including,
                         the fees of the  third  arbitrator  on the  Arbitration
                         Board,  shall be  borne  equally  by each  Party to the
                         dispute or claim and each Party shall pay its own fees,
                         disbursements  and other charges of its counsel and the
                         arbitrators nominated by it, except as may be otherwise
                         determined by the  Arbitration  Board.  The Arbitration
                         Board would have the power to award interest on any sum
                         awarded  pursuant to the  arbitration  proceedings  and
                         such sum would carry  interest,  if awarded,  until the
                         actual payment of such amounts.

                    (g)  Any award made by the Arbitration  Board shall be final
                         and binding on each of the Parties that were parties to
                         the dispute.

13.3.             Notice/Communication

                    (a)  Each  notice,  demand or other  communication  given or
                         made  under  this  Agreement  shall be in  writing  and
                         delivered or sent to the relevant  Party at its address
                         or fax number  set out below (or such other  address or
                         fax number as the  addressee  has by seven (7) Business
                         Days'  prior  written  notice  specified  to the  other
                         Parties).  Any  notice,  demand or other  communication
                         given  or made by  letter  between  countries  shall be
                         delivered  by  registered   airmail  or   international
                         courier   service.   Any   notice,   demand   or  other
                         communication  so addressed to the relevant Party shall
                         be deemed to have been  delivered  (i) if  delivered in
                         person  or by  messenger,  when  proof of  delivery  is
                         obtained by the delivering  Party, (ii) if sent by post
                         within  the same  country,  on the fifth day  following
                         posting, and if sent by post to another country, on the
                         tenth day following posting, and (iii) if given or made
                         by fax, upon dispatch and the receipt of a transmission
                         report confirming dispatch.

                    (b)  The initial  address and  facsimile for the Parties for
                         the purposes of the Agreement are:

                    If to the Borrower:

                     Name     :     COPYTELE INTERNATIONAL LTD.

                     Address  :     c/o CopyTele, Inc.
                                    900 Walt Whitman Road
                                    Melville, New York 11747

                    Attention :     Mr. Denis A. Krusos

                    Fax       :     631-549-5974

                                       13
<PAGE>

                    Telephone :     631-549-5900


                    If to the Lender:

                    Name      :     MARS OVERSEAS LIMITED

                    Address   :     C/o Videocon Industries Limited
                                    Fort House, Second Floor,
                                    Dr. D. N. Road, Fort ,
                                    Mumbai, India: 400001

                    Attention :     Mr. Venugopal N. Dhoot

                    Fax       :     +91 22 6655 0580

                    Telephone :     + 91 22 6611 3600

13.4.    Waiver/Forbearance

         Any waiver of any provision of this Agreement and any waiver of any
         default under this Agreement shall only be effective if made in writing
         and signed by the Lender. Any waiver or forbearance or delay on the
         part of the Lender to insist upon the performance of any terms and
         conditions of this Agreement, or to exercise any right or privilege
         conferred under this Agreement, or to demand any penalties resulting
         from any breach of any of the terms or conditions of this Agreement
         shall not be construed as a waiver on the part of the Lender of any of
         the terms or conditions of this agreement or of its rights or
         privileges or of any other default on the part of the Borrower, and all
         original rights and powers of the Lender under this Agreement will
         remain in full force, notwithstanding any such forbearance or delay.
         For the avoidance of doubt it is clarified that the waiver by the
         Lender of any of its rights under this Agreement on a particular
         occasion shall not constitute a waiver on any subsequent occasion of
         such right.

13.5.    Severability

         If at any time any provision of this Agreement is or becomes illegal,
         invalid or unenforceable in any respect under the law of any
         jurisdiction, the legality, validity and enforceability of such
         provision under the law of any other jurisdiction, and of the remaining
         provisions of this Agreement shall not be affected or impaired thereby.
         In the event that any of the terms or provisions of this Agreement or
         portions or applications thereof, are held to be prohibited,
         unenforceable or invalid under any law, a reasonable adjustment in such
         term or provision shall be made with a view towards effecting the
         purpose of such terms and provisions of this Agreement, and the
         enforceability and validity of the remaining terms and provisions, or
         portions or applications thereof, shall not be affected thereby.

13.6.    Survival

         Any expiry or termination of this Agreement or the release of any
         securities on the occurrence of the Final Settlement Date shall not
         affect Clauses 1.1, 1.2, 11, 12 and 13 which shall survive expiry or
         termination of this Agreement and/or the release of any of the
         securities.

13.7.             No Assignment

                    (a)  The terms and  provisions  of this  Agreement  shall be
                         binding  upon,  and the benefits  hereof shall inure to
                         the Parties hereto and their respective  successors and
                         assigns.

                                       14
<PAGE>

                    (b)  Neither Party shall assign this Agreement or any of the
                         rights,  duties or  obligations  hereunder  without the
                         prior written consent of the other Party.

13.8.             Variation of the Terms

         No amendment, modification or variation of this Agreement shall be
         binding on either the Borrower or the Lender unless such amendment,
         modification or variation is in writing and is signed by each of the
         Borrower and the Lender.

13.9.    No Third Party Beneficiaries

         This Agreement does not create, and shall not be construed as creating,
         any rights enforceable by any person not a party to this Agreement
         (except as provided in Clause 11) under the Contracts (Rights of Third
         Parties) Act 1999 or otherwise.

13.10.   Counterparts

         This Agreement may be executed in one or more counterparts, including
         counterparts transmitted by facsimile, each of which shall be deemed an
         original, but all of which signed and taken together shall constitute 1
         (one) document.

IN WITNESS WHEREOF the Parties hereto have executed these presents the day and
year first hereinabove written.

COPYTELE INTERNATIONAL LTD.



By: /s/ Denis A. Krusos
    -------------------
Name:   Denis A. Krusos
Title:  Chairman and Chief Executive Officer



MARS OVERSEAS LIMITED



By: /s/ Venugopal N. Dhoot
    ----------------------
Name:   Venugopal N. Dhoot
Title:  DIRECTOR




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