<PAGE>


                              SETTLEMENT AGREEMENT
                              --------------------

THIS  AGREEMENT  is  dated  for  reference  the  29th  day  of  January,  2003.

AMONG:

          TURBODYNE  SYSTEMS  INC., of 6155 Carpinteria Avenue, Carpinteria, CA,
          ------------------------
          93013


          a  company  incorporated  pursuant  to the laws of the State of Nevada

          ("TSI")
                                                               OF THE FIRST PART

AND:

          TURBODYNE  TECHNOLOGIES INC., of 6155 Carpinteria Avenue, Carpinteria,
          ----------------------------
          CA,  93013

          ("TTI")
                                                              OF THE SECOND PART

AND:

          EDWARD  M.  HALIMI,  of 1200 North San Marcos Road, Santa Barbara, CA,
          ------------------
          93111

          ("Halimi")
                                                               OF THE THIRD PART

AND:

          MARCH TECHNOLOGIES INC., of 1200 North San Marcos Road, Santa Barbara,
          -----------------------
          CA,  93111

          ("March")
                                                              OF THE FOURTH PART


WHEREAS:

A.   Pursuant  to an Employment Agreement dated for reference August 1, 1997, as
     amended  January 27, 1998 (the "Employment Agreement"), Halimi was employed
     as  President  and  Chief  Executive  Officer  of  each  of  TTI  and  TSI.

B.   In  November  of  2000  the  Company  ceased  making  payments to Halimi as
     required  by  the  Employment  Agreement.

C.   TSI  and  TTI wish to resolve any outstanding liability to Halimi under the
     Employment  Agreement.


<PAGE>

D.   Halimi  was  a director and officer of TTI at the time it delisted from the
     NASDAQ  stock  market  (the  "NASDAQ  Delisting").

E.   In  connection with an application for listing on the proposed BBX Exchange
     TTI  wishes to be able to provide evidence to the BBX Exchange that none of
     its directors or officers at the time of the NASDAQ delisting will have any
     significant  involvement  in  the  affairs  of  the  Company.

F.   TSI  and  TTI  wish  to retain the right to obtain consulting services from
     Halimi  because  of  the specialized knowledge of Halimi in relation to TSI
     and  TTI's  technology.

G.   March  Technologies Inc., a company affiliated with Halimi, holds 3,250,000
     common shares of TTI (the "Escrow Shares"), which shares are currently held
     in  escrow  by  TTI's transfer agent, Computershare Trust Company of Canada
     ("Computershare").


NOW  THEREFORE in consideration of the foregoing and of the mutual covenants and
agreements  hereinafter provided, the parties have agreed and do hereby agree as
follows:

1.     For  the consideration set out in paragraph two (2) hereof, Halimi agrees
to release TTI and TSI from any and all liability under the Employment Agreement
(the  "Release  of  Liabilities").

2.     The  consideration for the Release of Liabilities shall be $900,000 to be
satisfied  and  paid  by  the  issuance  to  March  of 45,000 shares of Series X
Preferred  Stock  of  TTI  at  a  price  of  $20.00  per  share.

3.     The  shares of Series X Preferred Stock  shall be identical to the common
shares of TTI save and except that they shall be non-voting (except where voting
is  specifically  required  by  the  Nevada  Revised  Statutes)  and  shall  be
convertible at any time at the option of the holder into common shares of TTI on
a  one  hundred  (100)  common  shares  for  each one (1) Preferred Share basis.

4.     March  Technologies Inc. agrees to cancel and surrender to TTI the Escrow
Shares  in  consideration of the issuance of 32,500 shares of Series X Preferred
Stock.


<PAGE>

5.     Notwithstanding  that  the  shares  of  Series X Preferred Stock shall be
convertible  at  any  time  into  common  shares,  March agrees that it will not
exercise  its  rights  to  convert  any  shares of Series X Preferred Stock into
common  shares  at  any  time  if,  after conversion, March would own legally or
beneficially  more  than  one half of one percent (0.5%) of the common shares of
TTI  then  issued and outstanding.  In the event that March wishes to convert at
any  time  such  number  of  shares  as  shall,  when aggregated with previously
converted  shares,  be  more  than  one half of one percent (0.5%) of the common
shares  of TTI, March shall provide to TTI evidence that it has disposed through
sales  in  accordance  with  Rule 144, or bona fide dispositions under available
exemptions,  (or  offshore sales in accordance with Regulation S) the previously
converted  shares.

6.     The  parties  acknowledge and agree that the shares of Series X Preferred
Stock  to  be  issued  are  restricted  shares, as contemplated under the United
States  Securities  Act  of  1933 (the "1933 Act") which will be issued to March
        -------------------------
pursuant to Section 4(2) of the 1933 Act without registration and that all share
certificates  representing  the  shares  of  Series  X  Preferred  Stock will be
endorsed  with  the  following  legend:

     "THE  SECURITIES  REPRESENTED  BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER  THE  SECURITIES  ACT  OF  1933  (THE "ACT"), AND HAVE BEEN ISSUED IN
     RELIANCE  UPON  EXEMPTIONS  FROM  THE REGISTRATION REQUIREMENTS OF THE ACT.
     SUCH  SECURITIES  MAY  NOT  BE  REOFFERED  FOR  SALE OR RESOLD OR OTHERWISE
     TRANSFERRED  UNLESS  THEY ARE REGISTERED UNDER THE APPLICABLE PROVISIONS OF
     THE  ACT  OR  ARE  EXEMPT  FROM  SUCH  REGISTRATION."

7.1     Closing  shall  take  place  at the offices of TTI's legal counsel, Cane
O'Neill  Taylor, LLC at Las Vegas, Nevada, on the 5th business day following the
execution  of  this Agreement or at such other time and place as the parties may
mutually  agree.

7.2     On  the  Closing  Date:

     (a)  Halimi  and  March  shall  deliver  to  TTI  and  TSI:

          i.   a  release  in  the  form  attached  as  Schedule  A  hereto;

          ii.  such  documents  as  may  be required to effect the surrender and
               cancellation  of  the  Escrow  Shares;  and

         iii.  copy  of  board  minutes  or  resolutions  of March approving the
               execution  of  this  Settlement Agreement and the cancellation of
               the  Escrow  Shares.

     (b)  TTI  and  TSI  shall  deliver  to  Halimi  and  March:

          i.   a  release  in  the  form  attached  as  Schedule  B  hereto;

          ii.  share  certificates  representing  77,500  shares  of  Series  X
               Preferred  Stock  registered  in  the  name  of  March;  and


<PAGE>

         iii.  copy  of  board minutes or resolutions approving the execution of
               this  Settlement  Agreement  and  the  issuance  of the shares of
               Series  X  Preferred  Stock  .

8.     Following  the closing  of  the  Agreement and for a period of five years
thereafter,  Halimi  shall  provide consulting services if and when requested by
the  management  of  TTI and subject to reasonable notice to Halimi at a rate of
$150.00  per  hour.

9.     This  Agreement  constitutes the entire agreement between the parties and
there  are  no  representations  or warranties, express or implied, statutory or
otherwise, and no agreements collateral hereto other than as expressly set forth
or  referred  to  herein.

10.     Time  shall  be  of  the  essence  of  this  Agreement.

11.     This  Agreement  shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the State of Nevada,
and  each  of  the parties hereto irrevocably attorns to the jurisdiction of the
courts  of  the  State  of  Nevada.

12.     Any  notice  to be given under this agreement shall be duly and properly
given  if  made  in  writing  and  by  delivering or telecopying the same to the
addressee  at  the address as set out on page one of this agreement.  Any notice
given  as aforesaid shall be deemed to have been given or made on, if delivered,
the  date  on which it was delivered or, if telecopied, on the next business day
after  it  was  telecopied.  Any  party hereto may change its address for notice
from time to time by notice given to the other parties hereto in accordance with
the  foregoing.

13.     The  parties  shall deliver to each other such further documentation and
shall  perform  such  further acts as and when the same may be required to carry
out  and  give  effect  to  the  terms  and  intent  of  this  Agreement.

14.     This  Agreement  shall  enure  to the benefit of and be binding upon the
parties  hereto and their respective heirs, personal representatives, successors
and  assigns.

15.     Neither  this Agreement nor any provision hereof may be amended, waived,
discharged  or terminated orally, but only by an instrument in writing signed by
the  party  against  whom  enforcement  of  the  amendment, waiver, discharge or
termination  is  sought.

16.     This Agreement has been prepared by Cane O'Neill Taylor, LLC counsel for
TTI.  The  parties  acknowledge  that Cane O'Neill Taylor, LLC have advised that
they  may  have  a  conflict of interest in that Mr. Halimi has been a long-time
client  of  Cane O'Neill Taylor, LLC and its predecessor law firms.  The parties
agree to Cane O'Neill Taylor, LLC acting in drafting this agreement on behalf of
TTI  notwithstanding the potential conflict of interest and acknowledge that the
obligations  of  TTI  under  this  Agreement  will  be  subject to TTI obtaining
independent legal advice.  Halimi and March acknowledge that they have also been
advised  to  obtain  independent  legal  advice.


<PAGE>

17.     This  Agreement  may  be  executed in one or more counter-parts, each of
which  so  executed shall constitute an original and all of which together shall
constitute  one  and  the  same  agreement.

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


TURBODYNE SYSTEMS INC.

By:
     /s/  Daniel  Black
     ------------------
     Its duly authorized signatory


TURBODYNE TECHNOLOGIES INC.

By:
     /s/  Charles  Caverno
     ---------------------
     Its duly authorized signatory


MARCH TECHNOLOGIES INC.

By:
     /s/  Melanie St. James
     ----------------------
     Its duly authorized signatory




     /s/  Edward M. Halimi
     ---------------------
     EDWARD M. HALIMI



<PAGE>

                                  SCHEDULE "A"

   Release in favor of Turbodyne Technologies Inc. and Turbodyne Systems Inc.




<PAGE>

                                  SCHEDULE "B"

        Release in favor of Edward M. Halimi and March Technologies Inc.