<PAGE>
                                                                EXHIBIT 3(XIII)

                       EMPLOYMENT AND STOCK INCENTIVE AGREEMENT


THIS AGREEMENT made as of the 1st day of August, 1997

BETWEEN:

          TURBODYNE SYSTEMS, INC.,
          ------------------------
          6155 Carpenteria Avenue
          Carpenteria, California U.S.A.  93013

          ("TSI")

                                                              OF THE FIRST PART

AND:
          TURBODYNE TECHNOLOGIES INC.,
          ----------------------------
          Suite 510, 1090 West Pender Street
          Vancouver, British Columbia, Canada

          ("Turbodyne")

                                                             OF THE SECOND PART


AND:

          EDWARD M. HALIMI,
          -----------------
          163 Hot Springs Road
          Montecito, California, U.S.A.  93108

          ("Halimi")

                                                              OF THE THIRD PART

WHEREAS:

A.        Turbodyne and TSI wish to engage Halimi as the President and Chief
Executive Officer of each of Turbodyne and TSI.

B.        Halimi has agreed to accept such engagement upon the terms and
conditions hereinafter set forth.

NOW THIS AGREEMENT WITNESSES that in consideration of the mutual promises,
covenants and agreements herein contained, the parties hereto agree as follows:

1.        ENGAGEMENT OF EMPLOYEE

1.1       Turbodyne and TSI hereby employ Halimi in the positions of President
and Chief Executive Officer of each of Turbodyne and TSI for the term of this
Agreement and Halimi hereby accepts such retainer.


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1.2       During the term of this Agreement, Halimi shall perform all such acts
and do all such things as and when the same may be necessary to properly and
efficiently carry out the duties of President and Chief Executive Officer of
each of Turbodyne and TSI, and such duties shall include but shall not be
limited to:

     (a)  general responsibility for the supervision and management of day by
          day operations of each of Turbodyne and TSI, subject to the policy
          decisions made by the board of directors of Turbodyne;

     (b)  performing such other duties and observing such instructions as may be
          reasonably assigned to him from time to time in his capacity of
          President and Chief Executive Officer by the Board of Directors; and 

     (c)  generally at all times abiding by all lawful directions given to him
          by the Board of Directors of the Company.

1.3       Mr. Halimi agrees to devote his business time and efforts to carrying
out his duties under this Agreement up to approximately 40 business hours a
week.  Turbodyne and TSI acknowledge and consent to Halimi devoting a portion of
his non-business time to Halimi's business interests which are not related to or
competitive with the business of Turbodyne or TSI, provided that such activities
are not in derogation to Halimi carrying out his duties under this Agreement.

1.4       With regard to the services to be performed by Halimi pursuant to 
the terms of this Agreement, Halimi shall not be liable to TSI, Turbodyne, or 
any subsidiary, or to any third party, for any acts or omissions in the 
performance of the services on the part of  Halimi, as long as said acts or 
omissions of Halimi are provided or undertaken in good faith or do not 
constitute willful misconduct.  Halimi shall be entitled to rely on the items 
set forth in Corporations Code Section 309(b).  Turbodyne and TSI shall 
defend, indemnify (to the maximum extent permitted by California law) and 
hold Halimi and his agents and successors free and harmless from any and all 
obligations, costs, claims, judgments, attorney's fees, attachments or any 
other liability arising from or growing out of the services rendered to TSI, 
Turbodyne, or any subsidiary, pursuant to the terms of this Agreement or in 
any way connected with the rendering of the services specified in this such 
services are provided or undertaken in good faith or do not constitute 
willful misconduct.  In addition, Halimi shall be entitled to the benefit of 
the indemnity provisions of the By-laws of Turbodyne and TSI and where 
applicable, the provisions of the CANADA BUSINESS CORPORATIONS ACT with 
respect to Turbodyne and any provision of the Nevada Corporations Act General 
Corporation Law with respect to TSI.

1.5       Turbodyne and TSI agree to indemnify and save harmless Halimi from any
liability incurred by Halimi as a result of a personal guarantee granted by
Halimi in favour of Turbodyne or TSI, provided that the granting of the
guarantee by Halimi has been approved by the board of directors of either
Turbodyne or TSI.  Turbodyne and TSI agree that Halimi will be given
consideration for the granting of such personal guarantees in amounts not to
exceed industry standard customary fees for the granting of such guarantees.  In
determining the consideration, the parties will consider the magnitude of the
guarantee and the risk associated with the guarantee.

2.        REMUNERATION

2.1       Turbodyne agrees to pay Halimi during the term of this Agreement the
following salary and bonus amounts:

     (a)  A base salary of $15,000 US per month, payable in accordance with the
          normal payroll schedule of TSI or Turbodyne; and

     (b)  an annual cash bonus based on the consolidated net operating income
          (before taxes) of Turbodyne, TSI or Pacific Baja Light Metals Corp.
          ("Pacific Baja"), whichever is greater.  In determining the

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                                         iii

          consolidated net operating income of TSI or Pacific Baja, no expenses
          shall be considered in the determination of net operating income that
          are not direct expenses of Pacific Baja or TSI, and no non-arms length
          charges will be applied against the net operating income.  Any
          contracts with Turbodyne or any Turbodyne affiliate will be at arm's
          length rates for this calculation.  Such consolidated net incomes
          shall be calculated on a calendar year basis during the term of this
          agreement based on the annual audited financial statements of
          Turbodyne.  The cash bonus shall be determined based on the
          consolidated net operating income (before taxes) of Turbodyne, TSI or
          Pacific Baja Light Metals Corp., whichever is greater, in accordance
          with the following schedule:

<TABLE>
<CAPTION>

          CONSOLIDATED                  PERCENTAGE
          NET PROFIT                    BASE SALARY
          ------------                  ------------

          <S>                           <C>
          $0 or less                    0%
          $1 - $500,000                 25%
          $500,001 - $1,000,000         50%
          $1,000,001 - $2,500,000       80%
          $2,500,001 - $5,500,000       100%
          $5,500,001 +                  150%

</TABLE>

          The cash bonus shall be paid on a quarterly basis within 30 days of
          the end of each quarter, based on management prepared financial
          statements, provided that each payment of the quarterly cash bonus
          will not exceed eighty percent of the estimated annual cash bonus,
          pro-rated for the respective quarter.  The cash bonus shall be
          adjusted at the end of each year, within five (5) days following the
          issue by Turbodyne of its annual audited financial statements.  In the
          event the cash bonus to be paid exceeds the amounts advanced to Halimi
          on a quarterly basis, the excess cash bonus will be paid to Halimi in
          full within ten (10) days following the date of such determination. 
          In the event the quarterly advances of the cash bonus paid during the
          year exceeds the cash bonus to be paid based on annual audited
          financial statements, Halimi will pay the excess within ten (10) days
          following such determination.

The Compensation payable pursuant to this Section 2.1 shall be retroactive to
January 1, 1997, notwithstanding the date of execution of this Agreement, in
view of the performance by Halimi of the duties described in this Agreement
since January 1, 1997.

3.        STOCK OPTIONS

3.1            In addition to the compensation payable pursuant to Section 2.1,
Turbodyne shall grant to Halimi options to acquire 200,000 shares of stock in
Turbodyne in each year of the term of this agreement.  The option price and the
terms and conditions of the options shall be determined in accordance with the
Turbodyne stock option plan in effect at the time of granting of the options. 
The options shall be in effect for a five year term following the granting of
the options.  It is understood that these stock options are intended to give Mr.
Halimi in incentive to manage Turbodyne and its subsidiary to the benefit of
Turbodyne.  To the extent Turbodyne registers any stock in the United States or
Canada under any registration statement during the term of this agreement,
Turbodyne agrees to register sufficient shares to cover the options herein
described.  The options are granted in consideration of the execution of this
contract and will survive Mr. Halimi's termination.  Turbodyne represents that
any shares referred to above will be issued to Mr. Halimi free and clear of any
liens and encumbrances.


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                                  iv
4.        OTHER BENEFITS

4.1       Halimi, and Halimi's spouse and children, shall be entitled to 
participate in any life and disability insurance, pension, dental, medical, 
pharmaceutical, hospitalization, health insurance and such other employee 
benefit programs as may be provided from time to time by Turbodyne and TSI. 
Halimi will be entitled to participate in any pension plan approved by the 
board of directors of Turbodyne or TSI from time to time and available to the 
officers and directors of Turbodyne and TSI.

4.2       Turbodyne and TSI shall promptly reimburse Halimi for all 
reasonable travelling, promotional and other expenses actually and properly 
incurred in connection with Halimi's duties hereunder, provided that Halimi 
furnishes receipts to Turbodyne and TSI in respect of such expenses and 
Turbodyne and TSI may review such expenses on a monthly basis.

4.3       Halimi shall be entitled to a reasonable period of paid annual 
vacation, but such periods shall not be less than four (4) weeks per year 
provided that all such vacations shall be taken at such times as Turbodyne 
and TSI and Halimi may mutually agree upon.

4.4       TSI will provide Mr. Halimi with the use of a new automobile and 
reimburse him for any reasonable related automobile expenses incurred on 
behalf of the business of Turbodyne and TSI. 

4.5       Turbodyne and TSI will reimburse Halimi for all reasonable 
relocation expenses actually and properly incurred as a result of Halimi 
being required by Turbodyne or TSI to relocate from the Santa Barbara region 
in order to continue to perform his duties hereunder.

4.6       Halimi will be entitled to receive an employee housing loan in an 
amount equal to 25 percent of the purchase price of a principal residence 
selected by Halimi, provided that the purchase price of the principal 
residence will not exceed $1,000,000.  The employee housing loan will be 
repayable on the earlier of the sale of the principal residence or the 
termination of this Agreement, provided that if Halimi sells his principal 
residence, he will be entitled to a similar employee housing loan on a 
replacement principal residence.  Interest will be calculated and paid 
annually by Halimi at interest rates prevailing in the housing mortgage 
market for secured housing loans.  In the event of termination of this 
Agreement, Halimi may elect to set off any amount of the employee loan due 
against any amounts owing by Turbodyne or TSI pursuant to the terms and 
conditions of this Agreement.

4.7       Turbodyne and TSI will obtain and maintain appropriate directors' 
and officers' insurance at amounts appropriate for the risk involved in 
acting as a director and officer of Turbodyne and TSI, provided that the 
coverage will be in amounts and on terms no less favourable than currently in 
place as of the date of this Agreement.



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                              v

5.        CONFIDENTIALITY AND NON-COMPETITION 

5.1       Halimi shall not, either during the course of his employment 
hereunder or at any time there-after, disclose to any person, any 
confidential information concerning the business or affairs of Turbodyne and 
TSI which Halimi may have acquired in the course of or incidental to his 
employment hereunder or otherwise, and Halimi shall not directly or 
indirectly use (whether for his own benefit or the detriment or intended 
detriment of Turbodyne and TSI) any confidential information he may acquire 
with respect to the business and affairs of Turbodyne and TSI.

5.2       Halimi agrees with Turbodyne and TSI that he will not, either alone 
or in conjunction with any individual, firm, corporation, association or 
other entity, whether as principal, agent, director, officer, employee, 
shareholder or in any other capacity whatsoever:

     (a)  during the term of this Agreement and for a one year period from the
          termination of this Agreement, carry on, or be engaged in, concerned
          with or interested in, directly or indirectly, any business which is
          in whole or in part competitive with the business of Turbodyne and
          TSI;

     (b)  during the term of this Agreement and for a two year period from the
          termination of this Agreement, attempt to solicit any suppliers,
          customers or employees of the business of Turbodyne and TSI away from
          Turbodyne and TSI;

     (c)  during the term of this Agreement and for a two year period from the
          termination of this Agreement, knowingly take any act as a result of
          which the relations between Turbodyne and TSI and the suppliers or
          customers of the business of Turbodyne and TSI may be impaired or
          which may otherwise be detrimental to the business of Turbodyne and
          TSI.

5.3       Subject to Section 5.5, any and all inventions and improvements on 
which Halimi may conceive or make, during the period of his employment, 
relating, or in any way, pertaining to or connected with any of the matters 
which have been, are or may become the subject of Turbodyne and TSI's 
investigations, or in which Turbodyne and TSI has been, is, or may become 
interested, shall be the sole and exclusive property of Turbodyne and TSI, 
and Halimi will, whenever requested by Turbodyne and TSI, execute any and all 
applications, assignments and other instruments which Turbodyne and TSI shall 
deem necessary in order to apply for and obtain letters of patent for U.S. or 
foreign countries for the inventions or improvements and in order to assign 
and convey to Turbodyne and TSI the sole and exclusive right, title and 
interest in and to the inventions or improvements, all expenses in connection 
with them to be borne by Turbodyne and TSI. Halimi's obligations to execute 
the papers referred to in this paragraph shall continue beyond the 
termination of the period of his employment with respect to any and all 
inventions or improvements conceived or made by him during the period of the 
employment, and the obligations shall be binding on the assigns, executors, 
administrators or other legal representatives of Halimi.

5.4       Subject to section 5.5, all inventions and discoveries relating to 
the business of Turbodyne and TSI  and all knowledge and information which 
Halimi may acquire during his employment, shall be held by Halimi in trust 
for the benefit of Turbodyne and TSI, and Halimi agrees that he will not 
divulge, or authorize anyone else to divulge, either during the times he is 
so employed or afterwards, knowledge of the inventions or discoveries, or any 
information acquired in the course of his employment under this agreement, or 
any confidential information concerning Turbodyne and TSI's business that he 
may acquire otherwise.

5.5       Halimi will be entitled to receive royalties in accordance with the 
Company's policy of granting royalties for inventions in the event of any 
invention made or conceived by Halimi which becomes property of the Company 
pursuant to the times and conditions of this Agreement.


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                             vi

6.        TERM

6.1       This Agreement shall be in effect for a period of five (5) years from
the effective date of this Agreement, as first above written, unless sooner
terminated by the parties pursuant to the terms herein contained.  The term of
this Agreement shall be automatically extended by successive one year terms upon
the expiry of each one year anniversary of this Agreement, commencing with the
initial year of the term of this Agreement, without any action of the parties,
unless notice is given in writing by either party to this Agreement prior to 30
days prior to the expiry of each one year anniversary of the party's election
not to extend the term of the Agreement.

7.        TERMINATION

7.1       Turbodyne and TSI may terminate this Agreement:

     (a)  at any time in the event of any fraudulent activity or conduct, or in
          the event of any intentional misconduct adversely and materially
          affecting the business of Turbodyne and TSI;

     (b)  upon the death of Halimi;

     (c)  if Halimi shall suffer any permanent disability.  For purposes of this
          agreement "permanent disability" shall be defined as Halimi's
          inability, by reason of physical or mental illness or other cause, to
          perform the majority of this usual duties for a period of greater than
          six months.  Turbodyne and TSI's option shall be exercised in writing
          and delivered to Mr. Halimi and shall be effective upon delivery;

     (d)  in the event of any assignment or attempted assignment of this
          Agreement by Halimi, except as expressly permitted by this Agreement;

provided that those obligations of Halimi in this Agreement expressly stated to
continue on termination shall continue upon termination and shall not terminate
upon termination of this Agreement.  Upon any such termination, Halimi shall be
entitled to receive the compensation accrued by unpaid as of the date of his
termination including a pro rata cash bonus, and shall not be entitled to any
additional compensation, except as expressly provided in this Agreement.

7.2       Halimi may terminate this Agreement at any time upon 3 months written
notice to Turbodyne and TSI, provided that those obligations of Halimi in this
Agreement expressly stated to continue on termination shall continue upon
termination and shall not terminate upon termination of this Agreement.

7.3       Turbodyne and TSI agree that the following circumstances will be
deemed to be termination of Halimi without cause:

     (a)  the assignment to Halimi of any duties materially and substantially
          inconsistent with Halimi's present position, duties, responsibility or
          status with Turbodyne or TSI as of the date of this Agreement;

     (b)  the removal of Halimi from or any failure to appoint Halimi to any
          such position;

     (c)  the termination or material reduction in Halimi's facilities, or staff
          reporting and available to Halimi;


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                                        vii

     (d)  a change in Halimi's site of employment for a total period of more
          than two (2) months during any period of twelve (12) months, provided
          that the relocation of Halimi to Los Angeles, California (or adjacent
          areas), will not be considered to be a breach of this Agreement.

In the event of termination of this Agreement without cause, Halimi will be
entitled to receive the compensation to be paid to Halimi from the date of
termination to the date of expiry of the then current term of this Agreement,
provided that those obligations of Halimi in this Agreement expressly stated to
continue on termination shall continue upon termination and shall not terminate
upon termination of this Agreement.

8.        ARBITRATION

8.1       The parties shall use all reasonable efforts to resolve amicably any
controversy or claim arising out of, relating to this Agreement, or the breach
thereof.  However, in the event such controversy or claim cannot be resolved by
agreement of the parties, it shall be settled by arbitration in Los Angeles
County, California, in accordance with the then existing rules of the American
Arbitration Association, except that the parties shall be entitled to all
discovery to which they would normally be entitled in civil litigation in the
California Superior Court.  California law shall govern.  Any judgment upon the
award of the arbitrator may be rendered and enforced in any court having
jurisdiction thereof.

9.        NOTICES

9.1       Any notice required or permitted to be given under this Agreement 
shall be in writing and may be delivered personally or by telecopier, or by 
pre-paid registered post addressed to the parties at the above-mentioned 
addresses or at such address of which notice may be given by either of such 
parties.  Any notice shall be deemed to have been received if personally 
delivered or by telex or telecopier, on the date of delivery and, if mailed 
as aforesaid, then on the fourth business day after and excluding the day of 
mailing.

10.       ASSIGNMENT

10.1      This Agreement is a personal service contract and may not be 
assigned in whole or in part by Halimi, provided that Halimi may assign the 
benefit of this Agreement to a company, all of the voting shares are owned by 
Halimi. In the event of such an assignment Halimi will continue to be bound 
by the terms and conditions of this Agreement and will agree not to dispose 
of any interest or shares of the company to which the benefit of this 
agreement has been assigned.  Any sale of any interest or shares in such a 
company will be deemed to be an assignment of this Agreement.

11.       INTERPRETATION

11.1      This Agreement shall be governed by and construed in accordance with
the laws of the State of California.

11.2      All headings used in this Agreement are for convenience of reference
only and are not to be used as an aid in the interpretation of this Agreement.

11.3      This Agreement replaces and supercedes all other consulting agreements
and employment agreements, between Halimi and TSI and between Halimi and
Turbodyne Technologies Inc.

11.4           If there is a dispute as to the terms and conditions of this
Agreement, the prevailing party shall be entitled to reasonable attorneys fees
and costs incurred in connection with such dispute. 


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                                   viii

11.5      No amendment of this agreement shall be valid unless made in writing
and signed by all parties hereto. 


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


TURBODYNE SYSTEMS, INC.       
by its authorized signatory:


---------------------------------
Authorized Signatory


The common seal of
TURBODYNE TECHNOLOGIES INC. 
is hereby affixed in the presence of         
its authorized signatory:                                   c/s


---------------------------------
Authorized Signatory


SIGNED, SEALED AND DELIVERED  )
BY EDWARD M. HALIMI in        )
the presence of:              )
                              )
                              )
----------------------------  )    -----------------------------
Signature                     )    EDWARD M. HALIMI
                              )
----------------------------  )
Name                          )
                              )
----------------------------  )
Address                       )