EXCHANGE AGREEMENT

        This  Exchange  Agreement  is entered  into as of the 12th day of April,
2001 by and between nStor Technologies,  Inc., a Delaware corporation ("nStor"),
Sykes Family Trust  ("Sykes  Family  Trust") and Sykes  Childrens  Trust of 1993
("Sykes  Childrens  Trust"  and  together  with  the  Sykes  Family  Trust,  the
"Noteholders").

        WHEREAS,  nStor is the maker of certain  promissory  notes issued to the
Noteholders in the aggregate  principal amount of  $5,100,000.00  (the "Notes"),
which Notes mature on June 17, 2004; and

        WHEREAS,  nStor and the Noteholders have agreed that the Notes should be
satisfied,  without  payment of principal,  in accordance  with their terms,  in
exchange for the issuance by nStor to each Noteholder of the aggregate number of
shares of its Series H  Convertible  Preferred  Stock,  par value $.01 per share
("Series  H  Preferred  Stock")  set  forth on  Schedule  I,  which  shares  are
convertible  into shares of the Company's common stock, par value $.05 per share
("nStor Common Stock") at a conversion price of $0.72 per share.

        NOW THEREFORE, the parties hereto agree as follows:

     1. Exchange of Notes for Securities.

     a. On the Closing Date (as  hereinafter  defined),  the  Noteholders  shall
deliver the Notes, duly endorsed to nStor,  together with a Release, in the form
attached as Exhibit A, discharging  nStor from all liability with respect to any
principal due under the Notes.

     b. nStor agrees that it shall amend its  certificate  of  incorporation  as
soon as  reasonably  practicable  after the date  hereof to create  the Series H
Preferred  Stock having the rights,  preferences and privileges set forth in the
Certificate of Designation for the Series H Preferred  Stock, a form of which is
attached  hereto  as  Exhibit  B and,  immediately  after  the  filing  of  such
amendment,  shall issue certificates representing the number of shares of Series
H  Preferred  Stock set  forth in  Schedule  I (the  "Preferred  Shares")  to be
distributed among the Noteholders in the manner set forth therein. The Preferred
Shares,  and the shares of nStor Common Stock  issuable  upon  conversion of the
Series H Preferred Stock (the "Conversion Shares"), are collectively referred to
herein as the "Securities". The "Closing Date" shall be such date as the parties
may mutually agree.  The closing of the transactions  contemplated  hereby shall
take place at such place as the parties may agree.

     2. Representations of nStor. As of the date hereof, nStor hereby represents
and warrants to the Noteholders the following,  with the express intent that the
Noteholders shall rely on such representations and warranties:

    a. nStor is a corporation  validly  existing under the laws of the State of
Delaware.

     b. The execution,  delivery and performance of this Exchange Agreement have
been duly  authorized,  and are not in  conflict  with  nStor's  certificate  of
incorporation  or its bylaws  and nStor has all  necessary  corporate  power and
authority  to perform its  obligations  under this  Exchange  Agreement  and the
ancillary agreements related hereto

     c. The Preferred  Shares,  when delivered to the  Noteholders in accordance
with the terms hereof, will be duly authorized,  validly issued, fully paid, and
nonassessable.

     d. There is no class or series of  Preferred  Stock of the  Company  having
liquidation,  dividend,  redemption,  voting  or  other  rights  or  preferences
superior to the Series H Preferred Stock.

     e. The Conversion  Shares,  when delivered to the Noteholders in accordance
with the terms of the  Certificate  of  Designation  of the  Series H  Preferred
Stock, will be duly authorized, validly issued, fully paid and non-assessable.

     3.  Representations  of Noteholders.  Each Noteholder hereby represents and
warrants to nStor the following:

     a. Each  Noteholder  is the sole lawful  holder of its Note,  possesses all
right,  title  and  interest  therein,  has the  requisite  legal  capacity  and
authority  to  transfer  its  Note,  and  has  not  transferred,   pledged,   or
hypothecated  its Note or any  interest  therein to any third  party.  The Notes
delivered to nStor at the Closing will be the original Notes.

     b. Each  Noteholder  understands  and represents  that (i) it must bear the
economic risk of this  investment  for an indefinite  period of time because the
Securities have not been registered under the Securities Act of 1933, as amended
(the  "Securities  Act"),  or under any state  securities  laws and,  therefore,
cannot be resold unless they are  subsequently  registered  under the Securities
Act and the pertinent  state  securities  laws or unless an exemption  from such
registration  is  available;  and  (ii)  it is  purchasing  the  Securities  for
investment for its own account and not for the account of any other person,  and
not with any present view toward resale or other  "distribution"  thereof within
that meaning of the Securities Act.

     c. The  Noteholder  has such  knowledge  and  experience  in financial  and
business  matters  that it is capable of  evaluating  the merits and risks of an
investment in the Securities.  The Noteholder is aware that an investment in the
Securities  is  highly   speculative  and  subject  to  substantial  risks.  The
Noteholder is capable of bearing the high degree of economic risk and burdens of
this investment, including the possibility of a complete loss of its investment.
The financial condition of the Noteholder is such that it is under no present or
contemplated  future  need to dispose of any of the  Securities  to satisfy  any
existing or contemplated undertaking, need or indebtedness.

     4. Books and Records.  nStor has made available to each Noteholder,  or its
designated  representative,  during the course of this  transaction and prior to
the issuance of any of the  Securities,  the opportunity to ask questions of and
receive answers from nStor's officers and directors concerning nStor's financial
condition and  business,  to the extent that nStor or its officers and directors
possess  such  information  or can  acquire  it without  unreasonable  effort or
expense.  nStor has also  made  available  to each  Noteholder  for  inspection,
various documents, records, books and other written information about nStor, its
business and this investment.

     5.  Restricted  Stock and  Legend.  The  Noteholders  acknowledge  that the
Securities  offered  hereunder are being offered pursuant to a private placement
exemption  under  the  Securities  Act,  and  that  the  Securities  are  deemed
"restricted  securities" as defined in the  Securities  Act. Until the Preferred
Shares or Conversion  Shares become  registered with the Securities and Exchange
Commission (the "Commission"),  each certificate  representing a Preferred Share
or a Conversion Share shall bear a legend in substantially the following form:

        THE SHARE(S)  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED
        UNDER THE SECURITIES  ACT OF 1933, AS AMENDED (THE "ACT"),  OR UNDER ANY
        STATE  SECURITIES LAWS, AND THE CORPORATION HAS RELIED UPON AN EXEMPTION
        TO THE  REGISTRATION  REQUIREMENT  UNDER  THE ACT  FOR  THE  SALE OF THE
        SHARE(S) REPRESENTED BY THIS CERTIFICATE TO ITS HOLDER.  THEREFORE,  THE
        SHARES  REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED STOCK AND MAY NOT
        BE  SOLD  OR  TRANSFERRED  TO  ANY  THIRD  PARTY  WITHOUT  EITHER  BEING
        REGISTERED  UNDER THE ACT OR AN  OPINION OF  COUNSEL  ACCEPTABLE  TO THE
        COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT.

     6. Resales. The Noteholders agree not to resell or otherwise dispose of all
or any part of the Securities,  except as permitted by law,  including,  without
limitation, any and all applicable provisions of this Exchange Agreement and any
regulations  under  the  Securities  Act.  Prior to any  transfer  or  attempted
transfer of any of the Series H Preferred  Stock, or Conversion  Shares prior to
the registration  thereof under the applicable federal or state securities laws,
or any interest  therein,  the  Noteholders  shall give nStor written  notice of
their  intention to make such  transfer,  describing  the manner of the intended
transfer and the proposed  transferee.  Promptly  after  receiving  such written
notice,  nStor  shall  present  copies  thereof to its counsel or to any special
counsel  designated  by the  Noteholders  or by such  transferee,  who  shall be
reasonably  acceptable to nStor.  If in the opinion of such counsel the proposed
transfer  may be  effected  without  registration  of the  Securities  under the
applicable  federal or state  securities  laws, as promptly as practicable,  the
Securities  proposed to be transferred  shall be transferred in accordance  with
the terms of said  notice.  nStor  shall  not be  required  to  effect  any such
transfer prior to the receipt of such favorable opinion(s);  provided,  however,
nStor  may waive the  requirement  that the  Noteholders  obtain an  opinion  of
counsel, in its sole and absolute  discretion.  As a condition to such favorable
opinion,  counsel for nStor may require an  investment  letter to be executed by
the proposed transferee.

     7. Registration  Rights  Agreement.  The Conversion Shares shall constitute
Registrable  Securities  (as such term is defined in that  certain  Registration
Rights  Agreement  dated as of the date  hereof by and  between  the Company and
certain third  parties,  including the  Noteholders  (the  "Registration  Rights
Agreement")).  Each Noteholder is entitled to all of the benefits  afforded to a
holder  of  any  such  Registrable  Securities  under  the  Registration  Rights
Agreement  and each  Noteholder  agrees to be bound by and comply with the terms
and  conditions  of  the  Registration   Rights  Agreement   applicable  to  the
Noteholder.

     8. Legal Fees.  nStor hereby agrees to pay all reasonable legal fees of the
Noteholders in connection  with the  negotiation  and execution of this Exchange
Agreement.  In addition,  nStor will  reimburse the  Noteholders  for reasonable
legal fees incurred in connection with the  preparation of all filings  required
of the Noteholders under Section 16 and Rules 13d, or 13g, as applicable, of the
Securities Exchange Act of 1934, as amended.

     9. Miscellaneous.

     a. If nStor receives  conflicting  instructions,  notices or elections from
two or more persons or entities with respect to the same Securities, nStor shall
act upon  the  basis of  instructions,  notice  or  election  received  from the
registered owner of such Securities.

     b. Notices  required or permitted to be given hereunder shall be in writing
and shall be deemed to be sufficiently  given when personally  delivered or when
sent by registered  mail,  return receipt  requested,  addressed if to nStor, at
nStor  Technologies,  Inc., 100 Century Blvd., West Palm Beach, FL 33417,  attn:
Jack Jaiven, with a copy to Larry Hemmerich,  President of nStor, 10140 Mesa Rim
Road, San Diego,  California  92121, and if to a Noteholder,  at the address for
the delivery of notice to such Noteholder set forth with such  Noteholder's name
below,  or at such other address as each such party furnishes by notice given in
accordance  with this Section  8(b),  and shall be  effective,  when  personally
delivered,  upon receipt, and when so sent by certified mail, four business days
after deposit with the United States Postal Service.

     c. Failure of any party to exercise any right or remedy under this Exchange
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

     d. This Exchange Agreement shall be enforced,  governed by and construed in
accordance  with the laws of the State of Florida  applicable to the  agreements
made and to be performed  entirely  within such state,  without giving effect to
rules  governing  the conflict of laws.  In the event that any provision of this
Exchange  Agreement is invalid or unenforceable  under any applicable statute or
rule of law, then such provision shall be deemed  inoperative to the extent that
it may  conflict  therewith  and shall be deemed  modified to conform  with such
statute  or rule of law.  Any  provision  hereof  which  may  prove  invalid  or
unenforceable  under any law shall not affect the validity or  enforceability of
any other provision hereof.

     e. This  Exchange  Agreement  constitutes  the entire  agreement  among the
parties  hereto  with  respect  to  the  subject  matter  hereof.  There  are no
restrictions,  promises, warranties or undertakings,  other than those set forth
or referred to herein.  This Exchange Agreement  supersedes all prior agreements
and  understandings  among the parties hereto with respect to the subject matter
hereof.

     f. This  Exchange  Agreement  shall  inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties hereto.

     g. All pronouns and any variations thereof refer to the masculine, feminine
or neuter, singular or plural, as the context may require.

     h. The headings in this Exchange Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

     i. This  Exchange  Agreement  may be executed in two or more  counterparts,
each of which shall be deemed an original but all of which shall  constitute one
and the same agreement.  This Exchange Agreement,  once executed by a party, may
be delivered to the other party hereto by telephone line facsimile  transmission
of a copy of this  Exchange  Agreement  bearing  the  signature  of the party so
delivering this Exchange Agreement.

     IN WITNESS WHEREOF,  the parties have caused this Exchange  Agreement to be
duly executed as of the day and year first above written.

                                            nSTOR TECHNOLOGIES, INC.

                                            By:  /s/ Jack Jaiven, as VP
                                               ------------------------
                                               Name: Jack Jaiven
                                               Title: Vice President

                                            NOTEHOLDERS:

                                            SYKES FAMILY TRUST

                                            By: /s/ W. David Sykes, Trustee
                                               -----------------------------
                                               Name: W. David Sykes
                                               Title: Trustee
                                               Address: 2016 Ocean Front
                                                        Del Mar, CA 92014


                                            SYKES CHILDRENS TRUST OF 1993

                                            By: /s/ James C Harlan III
                                               -----------------------------
                                               Name: James C. Harlan III
                                               Title: Trustee
                                               Address: 5415 Oberlin Drive
                                                        San Diego, CA 92121



                                   SCHEDULE I
                                   NOTEHOLDERS

                                                      Principal       Number of
    Noteholder      Description    Date of Note     Amount of the     Preferred
    ----------       of Note       ------------       the Note          Shares
                    -----------                     -------------       Issued
                                                                     -----------

Sykes FamilyTrust   9.5%           June 8, 1999     $4,807,260.00      4,807.26
                    Subordinated
                    Note



Sykes Childrens     9.5%           June 8, 1999       $292,740.00        292.74
Trust of 1993       Subordinated
                    Note