<PAGE>


                           EXCLUSIVE LICENSE AGREEMENT

     This  agreement  is made and effective this Oct. 15, 2001 between Turbodyne
Systems, Inc. and Turbodyne Technologies, Inc. collectively.  "Turbodyne" herein
called  licensee, and having an address of 6155 Carpinteria Ave, Carpinteria, CA
93013, and David T. St. James having and address of 1187 Coast Village Rd #1-414
Montecito,  CA  93108  and  hereinafter  called  "licensor".

     Whereas  the licensor has invented and developed three inventions evidenced
by  patent  applications  to be filed with the United States Patent Office under
the  titles  of

     a-   "Electrically  assisted  engine  charging  system."
     b-   "Intelligent  engine  air  intake  system."
     c-   "Exhaust  gas  driven  electric  generating  system."

     And  is  desirous of granting an exclusive worldwide license with the right
to  sublicense  to  the  licensee  on  the  three  inventions.
     And  whereas  the  licensee  is desirous of licensing the above inventions,
from  the  licensor. Therefore, the parties for good and valuable considerations
and  other  premises  contained  herein,  agree  as  follows:


1.     GRANT  OF  LICENSE.
       ------------------

Licensor  hereby  grants  to  licensee  the worldwide exclusive license with the
right  to sublicense to make, have made, use and sell products incorporating the
technology  for  the  inventions  together  with know how and any trade secrets.

2.     CONSIDERATION  AND  ROYALTY
       ---------------------------

A.     With  the  signing of this agreement licensee pays to licensor the sum of
$300,000.00  in  cash  evidencing a payment of $100,000.00 for each invention so
licensed.  As  an alternative the parties agree, that due to financial condition
of  the licensee, the licensor agrees to treat the above sum of $300,000.00 as a
private  placement  under  regulation  "D"  in  the  common  stock  of Turbodyne
Technologies,  Inc.  at  the  price of $0.15 per share, representing the current
discounted  value  of  the  shares.  The licensor therefore agrees to accept two
million shares of the common stock of Turbodyne Technologies, Inc. plus warrants
to  purchase  two million shares of common stock of Turbodyne Technologies, Inc.
at  a  price of $0.30 per share for a period of four years from the date of this
agreement.


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B.     A  royalty equal to 2% (two percent) of gross sales price of the products
manufactured and sold payable quarterly by licensee.  This royalty is payable on
all  the  products manufactured and sold by the licensee as well as any products
manufactured and sold by any sub-licensee of the licensee.  Gross sales price is
defined  as  gross  invoice  price  of  products  incorporating  the  licensed
technology,  less,  commissions,  discounts  and  shipping  costs.

3.     SECURITY  COLLATERAL
       --------------------

     In  order  to  guarantee  the performance of this agreement, in view of the
weak  financial  condition  of the licensee, Turbodyne Technologies, Inc. hereby
pledges  all  of  the  outstanding and issued shares of stock of its fully owned
subsidiary  "Turbodyne  Systems,  Inc." to the licensor as a security collateral
for the performance of this agreement and subject to the terms and conditions of
the  pledge  agreement  attached  as  exhibit  "A".
     It  is  further  agreed that under no circumstance, Turbodyne Technologies,
Inc. will sell, hypothecate, transfer or otherwise alienate its ownership of the
shares  so  pledged.

4.     PATENT  ENFORCEMENT
       -------------------

     In  the  event either party discovers material evidence of manufacture, use
or  sale  by  a third party of a product which materially infringes any claim of
patents  comprising  a portion of licensed patent pending or granted patent, the
party  that  discovered  the  evidence  shall notify the other party promptly in
writing  upon  such  discovery.
     The licensee shall have the obligation to initiate an action to enforce the
licensed  patent.  Any such enforcement shall be at the expense of licensee. The
licensor  shall  fully  cooperate  with the licensee in such enforcement and any
damage  award received form the third parties, after the deduction of litigation
costs,  shall  be divided 20% to licensor and 80% to licensee. In the event that
the  licensee determines not to pursue litigation after a 60 day notice then the
licensor  at  its own expense hall have the right and authority on behalf of the
parties  to  bring  suit  and  any  recovered  damages is for the account of the
licensor.

5.     PATENT  ENFORCEMENT
       -------------------

     Any improvements in the subject matter of the invention conceived by Either
party or their agents shall be for the exclusive use of the licensee and subject
to  royalty  payments  under  the  terms  and  conditions  of  this  agreement.


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6.     FILING  AND  MAINTAINING  PATENTS
       ---------------------------------

     Effective  the date of this agreement the licensee shall be responsible for
the  prosecution  including  all  costs  of the patent application, and licensor
shall  fully  co-operate  with  the  licensee.
     Licensee  shall be responsible for the maintenance costs of the patents and
licensor  shall fully co-operate with the licensee whenever required to sign any
documentation  for  perfecting of letter patents and foreign applications, which
shall  be  filed  in countries with reasonable expectation of commercial return.

7.     BOOKS  AND  RECORDS
       -------------------

     Licensee  shall  keep  adequate  books  and records in sufficient detail to
enable  the  royalties payable hereunder to be determined, and shall permit said
records  to  be  inspected  at  any  time  during  regular business hours by the
licensor  or  its  authorized  agent.

8.     ASSIGNABILITY
       -------------

     Either party shall have the right to assign this agreement to a third party
and notify the other party of such assignment or sub-license within five working
days.
     In  the  event  that  the licensee assigns this agreement to a third party,
then the licensee shall guarantee the performance of this agreement by the third
party.
     By  this agreement, the licensee at the option of the licensor, assigns the
payment  of royalties payable to the licensor per the terms of this agreement to
the  third  party  sub-licensee  of the licensor up to the amounts payable under
this agreement, so that the licensor can receive its royalties directly from the
third  party  sub-licensees.  Any  such  payments  received from the third party
sub-licensees  shall  be credited towards royalties payable under this agreement
by  the  licensor  to  the  licensee.

9.     NOTICE
       ------

     Any  notices  to be given to either party hereunder shall be in writing and
shall  be  delivered personally or by registered mail, return receipt requested.


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10.     DEFAULT
        -------

     In  the event of a default in the payment of any royalties pursuant to this
agreement by licensee and upon sending of the notice of default by the licensor.
If such default is not cured within 30 days from the date of notice, then at the
option  of  the  licensor the license shall be declared null and void and become
the  sole  property  of  the  licensor.
     In  the event of non-monetary defaults, the parties if unable to settle the
dispute within 30 days, the matter can be submitted to arbitration in California
according  to  the  rules  of  American  Arbitration  Society.

11.     GOVERNING  LAW
        --------------

This  agreement  shall  be  governed  by  the  laws  of the State of California.


     In  witness  whereof  the parties have caused this agreement to be executed
and  delivered  as  of  the  date  first  above  written.

Turbodyne Systems, Inc. (licensee)               Inventor (licensor)

By:  /s/ Charles B. Caverno
_______________________________                  David T. St. James

Title:  Secretary                                /s/ David T. St. James
_______________________________                  _______________________

By:  /s/ Daniel Black
_______________________________

Title:  Director
_______________________________


Turbodyne Technologies, Inc.

By:  /s/ Charles B. Caverno
_______________________________

Title:  Chief Financial Officer
_______________________________

By:  /s/ Daniel Black
_______________________________

Title:  President
_______________________________


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