Exhibit 99.1

                                                               February 23, 2004


Mr. Denis A. Krusos c/o CopyTele, Inc. 900 Walt Whitman Road
Melville, New York  11747

         RE:      Grant of Non-Qualified Stock Option To Employees


Dear Mr. Krusos:

         On April 21,  2003,  the Board of  Directors  of  CopyTele,  Inc.  (the
"Company")  adopted the CopyTele,  Inc. 2003 Share  Incentive Plan (the "Plan").
The Plan provides for the grant of certain  rights,  options and other awards to
non-employee  directors of the Company and certain key employees and consultants
of the Company and its  subsidiaries.  A copy of the Plan is annexed  hereto and
shall be deemed a part hereof as if fully set forth  herein.  Unless the context
otherwise  requires,  all terms  defined in the Plan shall have the same meaning
when used herein.

          1.  The  Company  hereby  grants  to  you,  as a  matter  of  separate
inducement  and  not in  lieu of any  salary  or  other  compensation  for  your
services,  the right and option to purchase,  in  accordance  with the terms and
conditions  set forth in the Plan,  but  subject  to the  limitations  set forth
herein and in the Plan,  an aggregate  of 500,000  shares of Common Stock of the
Company at a price of $0.43 per share,  such option price being, in the judgment
of the Stock Option  Committee,  not less than one hundred percent (100%) of the
fair market value of such share at the date hereof (the "Non-Qualified Option").

         Notwithstanding,  the foregoing,  it is specifically  understood by you
that no warranty is made to you with  respect to the value of such  shares.  The
Non-Qualified  Option is not intended to qualify as an "incentive  stock option"
within the  meaning of Section  422 of the  Internal  Revenue  Code of 1986,  as
amended. The Non-Qualified Option shall be referred to herein as the "Option".

          2.  Subject to the  provisions  and  limitations  of sections 6 of the
Plan, the Option may be exercised by you, on a cumulative basis, during a period
of ten years from the date  hereof and  terminating  at the close of business on
February 22, 2014, as follows:

         (a) the Option may be exercised by you upon the date hereof; and

         (b) the total  number of shares  subject to the Option may be purchased
by you during the ten years following the date hereof.

          3. In no event shall you exercise the Option for a fraction of a share
or for less than one hundred  (100) shares  (unless the number  purchased is the
total balance for which the Option is then exercisable).


<PAGE>

          4.  The  unexercised   portion  of  the  Option  granted  herein  will
automatically  and without  notice  terminate  and become null and void upon the
expiration  of ten years from the date of the grant of the Option.  In the event
your service as an employee of the Company is terminated prior to the expiration
of ten  years  from the  date  hereof,  the  Option  shall,  to the  extent  not
theretofore exercised,  terminate and become null and void, except to the extent
described  below.  None of the events described below shall extend the period of
exercisability of the Option beyond ten years from the date hereof:

         (a) if you  die,  the  Option  shall,  to the  extent  not  theretofore
exercised,  remain  exercisable  for two (2) years  after  your  death,  by your
legatee, distributee, guardian or legal or personal representative.

         (b) if your  employment is terminated by reason of your  disability (as
defined in the plan),  voluntary  retirement  or dismissal by the Company  other
than for cause as defined in the Plan, provided you are otherwise eligible,  the
Option shall, to the extent not theretofore  exercised,  remain  exercisable for
three (3) months after the date of such termination of employment in the case of
termination  by reason of retirement  or dismissal  other than for cause and two
(2) year after the date of  termination of employment in the case of termination
by reason of disability; and

         (c) if you die  during  either  the  three  (3)  month  or two (2) year
period,  whichever  is  applicable,  specified in clause (b) above and at a time
when you were  entitled to exercise the Option,  your legal  representative,  or
such person who  acquired the Option by reason of your death may, not later than
two (2) years from your date of death,  exercise  the Option,  to the extent not
theretofore exercised, in respect of any or all of such number of shares subject
to the Option.

          5. The Option is not transferable by you otherwise than by will or the
laws of descent and distribution, and is exercisable, during your lifetime, only
by you.  The Option may not be pledged or  hypothecated  in any way  (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar proceeding. Any attempted assignment,  pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof, and the levy of any
attachment  or similar  proceeding  upon the Option,  shall be null and void and
without effect.

          6. Any  exercise of the Option  shall be in writing  addressed  to the
Corporate  Secretary  of the Company at the  principal  place of business of the
Company,  specifying  the Option being  exercised and the number of shares to be
purchased.  The purchase price for the shares being purchased shall be delivered
to the  Corporate  Secretary  within  five days of the time such  writing  is so
delivered.

          7. If the Company, in its sole discretion,  shall determine that it is
necessary,  to comply  with  applicable  securities  laws,  the  certificate  or
certificates  representing the shares purchased  pursuant to the exercise of the
Option shall bear an appropriate legend in form and substance,  as determined by
the Company,  giving notice of applicable  restrictions  on transfer under or in
respect of such laws.

         8. You hereby  covenant and agree with the Company that if, at the time
of exercise of the Option,  there does not exist a Registration  Statement on an
appropriate form under the Securities Act of 1933, as amended (the "Act"), which
Registration   Statement  shall  have  become  effective  and  shall  include  a
prospectus  which is current with  respect to the shares  subject to the Option,
you shall make the  representations  (i) that you are  purchasing the shares for
your own account and not with a view to


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the resale or distribution  thereof,  (ii) that any subsequent offer for sale or
sale of any such  shares  shall be made either  pursuant  to (x) a  Registration
Statement on an  appropriate  form under the Act, which  Registration  Statement
shall  become  effective  and shall be current  with respect to the shares being
offered and sold, or (y) a specific exemption from the registration requirements
of the Act, but in claiming such  exemption,  you shall,  prior to any offer for
sale or sale of such shares, obtain a favorable written opinion from counsel for
or approved by the Company as to the  applicability  of such exemption and (iii)
that you agree that the certificates  evidencing such shares shall bear a legend
to the effect of the foregoing.

         By your acceptance  hereof,  you agree to reimburse the Company for any
taxes required by any  government to be withheld or otherwise  deducted and paid
by the Company in respect of the issuance or  disposition  of the shares subject
to the Non-Qualified  Option. In lieu thereof,  the Company shall have the right
to  withhold  the  amount of such taxes from any other sums due or to become due
from the Company to you.  The Company  may,  in its  discretion,  hold the stock
certificate  to which  you are  entitled  upon the  exercise  of the  Option  as
security  for  the  payment  of  such  withholding  tax  liability,  until  cash
sufficient to pay that liability has been accumulated.  In addition, at any time
that the Company becomes subject to a withholding  obligation  under  applicable
law with respect to the exercise of a Non-Qualified  Option (the "Tax Date") you
may elect to satisfy, in whole or in part, your related personal tax liabilities
(an "Election") by (a) directing the Company to withhold from shares issuable in
the  related  exercise  either a specified  number of shares or shares  having a
specified  value  (in each  case  not in  excess  of the  related  personal  tax
liabilities), (b) tendering shares previously issued pursuant to the exercise of
the Option or other  shares of the  Company's  common stock owned by you, or (c)
combining any or all of the foregoing options in any fashion.  An Election shall
be  irrevocable.  The withheld shares and other shares tendered in payment shall
be valued at their fair market value on the Tax Date. The Stock Option Committee
may  disapprove  of any  Election,  suspend  or  terminate  the  right  to  make
Elections,  provide  that  the  right  to make  Elections  shall  not  apply  to
particular shares or exercises,  or impose additional conditions or restrictions
on the right to make an Election as it shall deem appropriate.  In addition, you
authorize  the  Company  to  effect  any such  withholding  upon  exercise  of a
Non-Qualified Option by retention of shares issuable upon such exercise having a
fair  market  value at the date of  exercise  which is equal to the amount to be
withheld;  provided,  however, that the Company is not authorized to effect such
withholding without your prior written consent if such withholding would subject
you to liability under Section 16(b) of the Securities Exchange Act of 1934.

         This  agreement is subject to all terms,  conditions,  limitations  and
restrictions  contained in the Plan,  which shall be controlling in the event of
any conflicting or inconsistent provisions.

         This  agreement is not a contract of  employment  and the terms of your
employment  shall not be affected hereby or by any agreement  referred to herein
except to the extent specifically so provided herein or therein.  Nothing herein
shall be  construed  to impose any  obligation  on the Company to continue  your
employment, and it shall not impose any obligation on your part to remain in the
employ of the Company thereof.




<PAGE>





         Please  indicate your acceptance of all the terms and conditions of the
Option and the Plan by signing and returning a copy of this letter.

                                                  Very truly yours,
                                                  COPYTELE, INC.

                                                  /s/ Frank J. DiSanto
                                                  --------------------
                                                  Frank J. DiSanto
                                                  President



ACCEPTED:

/s/ Denis A. Krusos
--------------------
Denis A. Krusos