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")
and the  persons  or  entities  listed  on the  signature  page  hereto  (each a
"Noteholder" and collectively, the "Noteholders").

        WHEREAS,  nStor is the maker of certain  promissory  notes issued to the
Noteholders  on the days and in the  amounts set forth on Schedule I hereto (the
"Notes"); and

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

        NOW THEREFORE, the parties hereto agree as follows:

     1. Exchange of Notes for Securities.

     a. On the  Closing  Date (as  hereafter  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 and interest due under the Notes.

     b. nStor agrees that it shall amend its  certificate  of  incorporation  as
soon as  reasonable  practicable  after the date  hereof to create  the Series I
Preferred  Stock having the rights,  preferences and privileges set forth in the
Certificate of Designation for the Series I 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
I  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 I 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.  nStor hereby represents and warrants to the
Noteholders the following:

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

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

     c. The Conversion  Shares,  when delivered to the Noteholders in accordance
with the terms of the  Certificate  of  Designation  of the  Series I  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 his or its Note,  possesses
all right,  title and interest  therein,  has the requisite  legal  capacity and
authority  to transfer his or its Note,  and has not  transferred,  pledged,  or
hypothecated  his or 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) he or 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) he or it is  purchasing  the
Securities  for investment for his or 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 he or 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 his or its
investment.  The financial  condition of the Noteholder is such that he or 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 his
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  Noteholder  acknowledges  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 I 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  Noteholder  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  Noteholder  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 the
Noteholder (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. 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 the Noteholders, 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.

                      [SIGNATURES APPEAR ON FOLLOWING PAGE]

     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
                                               ---------------------------
                                               Jack Jaiven, Vice President

                                            NOTEHOLDERS:

                                            THE CHARLOTTE MARDEN 1993 TRUST

                                            By: /s/ Bernard Marden

                                               ----------------------------
                                               Bernard A. Marden, Trustee
                                                1290 S. Ocean Boulevard
                                                Palm Beach, Florida 33480

                                                /s/ Kenneth Endelson
                                               ----------------------------
                                               Kenneth Endelson
                                                1000 Clint Moore Road
                                                Boca Raton, Florida 33487

                                            THE HERBERT GIMELSTOB FAMILY
                                            CHARITABLE FOUNDATION, INC.

                                            By: /s/ Herbert Gimelstob

                                               ----------------------------
                                               Herbert Gimelstob, Director
                                                2300 N.W. Corporate Boulevard
                                                Suite 222
                                                Boca Raton, Florida 33431

                                            HILCOAST DEVELOPMENT CORP.

                                            By: /s/ H. Irwin Levy
                                               ----------------------------
                                               H. Irwin Levy, Chairman of
                                               the Board of Directors:
                                                100 Century Boulevard
                                                West Palm Beach, Florida 33417

                                                /s/ H. Irwin Levy
                                               -----------------------------
                                               H. Irwin Levy
                                                100 Century Boulevard
                                                West Palm Beach, Florida 33417

                                            MLL CORP.

                                            By: /s/ H. Irwin Levy
                                               -----------------------------
                                                H. Irwin Levy
                                                Title:
                                                 100 Century Boulevard
                                                 West Palm Beach, Florid 33417

                                                 /s/ Patrice Auld
                                               -----------------------------
                                               Patricia Auld
                                                1137 Harvard Avenue Ease
                                                Seattle, Washington 98102

                                                 /s/ Bernard Marden
                                               -----------------------------
                                               Bernard Marden
                                                1290 S. Ocean Boulevard
                                                Palm Beach, Florida 33480

                                                /s/ Alan Miller
                                               -----------------------------
                                               Alan H. Miller
                                                450 Royal Palm Way
                                                Suite 400
                                                Palm Beach, Florida 33480

                                                /s/ Larry Hemmerich
                                               -----------------------------
                                               Larry Hemmerich
                                                10140 Mesa Rim Road
                                                Suite 400
                                                San Diego, California 92121


<TABLE>
<CAPTION>

                                   SCHEDULE I


                                                 Principal                 Number of      Number of
                     Description     Date of     amount of     Accrued      Preferred    Conversion
    Noteholder         of Note        Note       the Note      Interest   Shares Issued    Shares
------------------- --------------- ---------- -------------- ----------- ------------- -------------
<S>                 <C>             <C>        <C>            <C>         <C>           <C>
                    8%               3/14/01    $1,000,000    $10,191.94    1,010.20    1,403,056.68
The Charlotte       Convertible
Marden 1993 Trust   Subordinated
                    Promissory
                    Note

                    8%               3/27/01      $250,000      $876.64       250.88      348,444.72
Kenneth Endelson    Convertible
                    Subordinated
                    Promissory
                    Note

The Herbert         8%               3/13/01      $500,000    $2,761.68       502.76      698,278.34
Gimelstob Family    Convertible
Charitable          Subordinated
Foundation, Inc.    Promissory
                    Note

Hilcoast            8%               3/12/01      $500,000    $7,096.02       507.10      704,306.12
Development Corp.   Convertible
                    Subordinated
                    Promissory
                    Note

H. Irwin Levy       8%               3/12/01      $750,000    $5,095.78       755.10    1,048,750.84
                    Convertible
                    Subordinated
                    Promissory
                    Note

H. Irwin Levy       Promissory       1/16/01      $600,000    $16,116.31      616.12      855,722.91
                    Note

H. Irwin Levy       Promissory      12/29/00      $650,000    $17,459.34      667.46      927,028.52
                    Note

MLL Corp.           Promissory      11/15/00    $1,050,000    $29,054.67    1,079.05    1,498,681.75
                    Note

Patricia Auld       10%             11/20/00      $500,000    $13,835.99      513.84      713,667.24
                    Subordinated
                    Note

Bernard A. Marden   8%               3/14/01      $250,000     $2,479.28      252.48      350,666.95
                    Convertible
                    Subordinated
                    Promissory
                    Note

Alan H. Miller      8%               3/26/01      $500,000     $1,863.03      501.86      697,028.34
                    Convertible
                    Subordinated
                    Promissory
                    Note

Larry Hemmerich     Promissory       1/17/01      $125,000     $2,911.10      127.91      177,652.92
                    Note
</TABLE>