Certificate of Designation of Series G
                                 Preferred Stock
                                       of
                            nStor Technologies, Inc.

It is certified that:

        A. The name of the company is nStor  Technologies,  Inc., a Delaware
corporation (hereinafter the "Company").

        B. The certificate of  incorporation  of the Company,  as amended,
authorizes the issuance of one million  (1,000,000)  shares of Preferred  Stock,
$.01 par value per share,  and expressly  vests in the Board of Directors of the
Company  the  authority  provided  therein to issue all of said shares in one or
more series and by resolution or  resolutions to establish the  designation  and
number and to fix the  relative  rights  and  preferences  of each  series to be
issued.

     C.  The  Board of  Directors  of the  Company,  pursuant  to the  authority
expressly vested in it, has adopted the following  resolutions  creating a class
of Series G Preferred Stock:

  RESOLVED,  that a  portion  of the  one  million  (1,000,000)
authorized  shares of Preferred  Stock of the Company  shall be  designated as a
separate series possessing the rights and preferences set forth below:

        1. Designation and Amount.  The shares of such series shall have a
par value of $.01 per share and shall be designated as Series G Preferred  Stock
(the  "Series G  Preferred  Stock")  and the number of shares  constituting  the
Series G Preferred  Stock shall be Two Thousand  (2,000).  The Company may issue
fractional  shares of Series G  Preferred  Stock.  Each whole  share of Series G
Preferred Stock shall have a stated value of One Thousand  Dollars ($1,000) (the
"Stated Value").

2.      Dividends.

     (a) The holders of the outstanding shares of Series G Preferred Stock shall
be entitled to receive cash  dividends at an annual rate of ten percent (10%) of
the Stated Value as permitted by law and as adjusted  from time to time pursuant
to Section 2(b) below (the "Dividend  Rate").  Such  dividends  shall be payable
quarterly on the 10th day following the end of each calendar  quarter,  with the
first  dividend  payment  due  on  April  10,  2001.  Such  dividends  shall  be
cumulative,  whether or not there are  profits,  surplus  or other  funds of the
Company legally available for the payment of dividends.  If there shall not have
been a sum sufficient for the payment  therefor set apart,  the deficiency shall
first  be paid  before  any  dividend  or  other  distribution  shall be paid or
declared and set apart with respect to any other class of the Company's  capital
stock, now or hereafter outstanding.

     (b) In the event that the Company  fails to pay the full cash  dividends to
the holders of the outstanding Series G Preferred Stock pursuant to Section 2(a)
above for two or more  consecutive  calendar  quarters,  then (i) such dividends
shall cumulate, whether or not earned and (ii) for each two consecutive calendar
quarters for which full cash  dividends  are not paid,  the  Dividend  Rate as a
percentage  of the Stated  Value shall be  increased  by one percent (1%) of the
Stated Value.  At such time as all accrued but unpaid  dividends are paid to the
holders of the  outstanding  Series G Preferred  Stock,  the Dividend Rate shall
return to ten percent  (10%) of the Stated  Value,  unless and until the Company
again fails to pay the full cash  dividends to the holders of Series G Preferred
Stock for two or more consecutive calendar quarters, in which case, the Dividend
Rate will again be increased pursuant to the preceding sentence. Notwithstanding
anything to the contrary  contain  herein,  in no event shall the Dividend  Rate
exceed fifteen percent (15%).

3.     Liquidation, Dissolution or Winding Up.

               (a) In the event of any liquidation,  dissolution or winding
up of the Company, whether voluntary or involuntary, before any distribution may
be made with respect to the Common  Stock or any other  series of capital  stock
issued after the date hereof,  holders of each share of Series G Preferred Stock
shall be  entitled  to be paid out of the assets of the  Company  available  for
distribution to holders of the Company's  capital stock of all classes,  whether
such assets are capital,  surplus,  or capital earnings,  an amount equal to the
Stated Value plus all accrued but unpaid dividends  (whether or not declared) on
such shares (collectively, the "Liquidation Amount").

               (b) If the assets of the Company  available for distribution
to its shareholders shall be insufficient to pay the holders of shares of Series
G Preferred Stock the full amount of the Liquidation  Amount to which they shall
be  entitled,  the  holders of shares of Series G  Preferred  Stock  shall share
ratably in any  distribution  of assets  according to the amounts which would be
payable with respect to the shares of Series G Preferred Stock held by them upon
such  distribution if all amounts payable on or with respect to said shares were
paid in full.

               (c) After the payment of the  Liquidation  Amount shall have
been  made in full to the  holders  of the  Series  G  Preferred  Stock or funds
necessary for such payment shall have been set aside by the Company in trust for
the account of holders of the Series G Preferred Stock so as to be available for
such payments,  the holders of the Series G Preferred Stock shall be entitled to
no further  participation in the distribution of the assets of the Company,  and
the remaining  assets of the Company legally  available for  distribution to its
shareholders  shall  be  distributed  among  the  holders  of other  classes  of
securities of the Company in accordance with their respective terms.

        4. Voting  Power.
The holders of Series G Preferred Stock shall not be entitled to vote on matters
submitted to the holders of Common Stock.

        5. Redemption at the Option of the Company.
The Company may at any time, at its election,  redeem,  in whole or from time to
time in part, the shares of the then  outstanding  Series G Preferred Stock at a
purchase  price per share equal to the Stated  Value plus all accrued but unpaid
dividends (whether or not declared) to the date of redemption.  The Company will
mail or cause to be delivered  to each holder of the Series G Preferred  Stock a
written notice of the Company's  election to redeem shares of Series G Preferred
Stock not less than thirty  (30) days prior to the date set for the  redemption.
The notice will state:  (i) the total number of shares of the Series G Preferred
Stock being redeemed;  (ii) the number of shares of the Series G Preferred Stock
held by the holder  that the  Company  intends to  redeem;  (iii) the  aggregate
purchase price for the shares of Series G Preferred Stock being  redeemed;  (iv)
the redemption date; and (v) that the holder is to surrender to the Company,  at
the office of the  Company  or the  transfer  agent for the  Series G  Preferred
Stock, the certificate or certificates representing the Series G Preferred Stock
to be redeemed.  Such notice shall be  accompanied  by a  representation  by the
Company to the effect that the  consummation  of the redemption  will not render
the Company  insolvent  or unable to pay its debts as they become due,  that the
consummation  of the redemption  will not conflict with or result in a breach or
violation of any of the terms or  provisions  of, or constitute a default (or an
event  that  with the  giving  of  notice  or the  lapse  of time or both  would
constitute a default) under, or give rise to a right of termination,  amendment,
cancellation or acceleration of any right or obligation of the Company or any of
its subsidiaries  under, or give rise to a loss of any material benefit to which
the  Company or any of its  subsidiaries  is  entitled  under,  or  require  any
consent,  approval or authorization  under,  any indenture,  credit agreement or
other material  agreement to which the Company or any of the  subsidiaries  is a
party or by which  any of them are bound or to which  any of their  property  is
subject,  or give  the  holder  of any  note,  debenture  or other  evidence  of
indebtedness the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company or any of its subsidiaries.  As
soon as practical  following the redemption  date and receipt of the certificate
or certificates representing the shares of Series G Preferred Stock so redeemed,
the Company shall  deliver to the holder the aggregate  price payable in respect
of the redeemed shares and a new certificate representing the unredeemed portion
of the shares,  if any. At the effective  date of the  redemption,  the redeemed
shares shall no longer be deemed  outstanding shares of Series G Preferred Stock
for any  purpose  and shall  thereafter  only be deemed to entitle the holder to
receive  the  redemption  price  upon  surrender  of the  certificates  formerly
representing such shares of Series G Preferred Stock.

        6. No Reissuance of Series G Preferred  Stock. Any share or shares
of Series G Preferred  Stock  acquired  by the Company by reason of  redemption,
purchase  or  otherwise  shall be  cancelled,  shall  return  to the  status  of
authorized but unissued  preferred stock of no designated  series, and shall not
be reissuable by the Company as Series G Preferred Stock.

        7. Restrictions and Limitations.

               (a)  Corporate  Securities  Action.   Except  as  expressly
provided  herein  or as  required  by law,  so long as any  shares  of  Series G
Preferred Stock remain outstanding,  the Company shall not, and shall not permit
any subsidiary (which shall mean any corporation,  association or other business
entity for which the Company  and/or any of its other  subsidiaries  directly or
indirectly  owns at the time more than fifty  percent  (50%) of the  outstanding
voting shares,  or more than 50% of the combined voting power of the outstanding
voting shares,  of such  corporation or trust),  without the approval by vote or
written  consent by the holders of at least a majority  of the then  outstanding
shares of Series G  Preferred  Stock,  voting as a separate  class,  to take any
action,  or fail to take any action,  which would adversely affect the rights of
the holders of Series G Preferred Stock.

               (b) Amendments to Charter. Without limiting the
generality  of  the  preceding  paragraph,  the  Company  shall  not  amend  its
certificate of  incorporation  without the approval by the holders of at least a
majority  of the then  outstanding  shares of Series G  Preferred  Stock if such
amendment would:

                    (i) change the relative  seniority  rights of the holders of
               Series  G  Preferred  Stock as to the  payment  of  dividends  in
               relation  to  the  holders  of any  other  capital  stock  of the
               Company,  or create any other  class or series of  capital  stock
               entitled to  seniority as to the payment of dividends in relation
               to the holders of Series G Preferred Stock;

                    (ii)  reduce the amount  payable to the  holders of Series G
               Preferred  Stock upon the voluntary or  involuntary  liquidation,
               dissolution or winding up of the Company,  or change the relative
               seniority of the liquidation preferences of the holders of Series
               G Preferred  Stock to the rights upon  liquidation of the holders
               of other  capital  stock of the  Company,  or change the dividend
               rights of the holders of Series G Preferred Stock; or

                    (iii)  cancel or modify  the  rights of the  holders  of the
               Series G Preferred Stock provided for in this Section 7.

        8. No Dilution or Impairment.  The Company shall not, by amendment
of its certificate of incorporation or through any  reorganization,  transfer of
assets, consolidation,  merger, dissolution,  issue or sale of securities or any
other voluntary action,  avoid or seek to avoid the observance or performance of
any of the terms of the Series G Preferred Stock set forth herein,  but shall at
all times in good faith  assist in the carrying out of all such terms and in the
taking  of all such  actions  as may be  necessary  or  appropriate  in order to
protect  the  rights of the  holders  of the Series G  Preferred  Stock  against
dilution or other impairment.  Without limiting the generality of the foregoing,
the Company shall not consolidate  with or merge into any other person or permit
any such person to consolidate with or merge into the Company (if the Company is
not the surviving  person),  unless such other person shall expressly  assume in
writing  and will be bound by all of the terms of the Series G  Preferred  Stock
set forth herein.

        9.     Notices of Record Date.  In the event of:

               (a) any taking by the  Company of a record of the holders of
any class of securities for the purpose of determining  the holders  thereof who
are  entitled to receive any  dividend  or other  distribution,  or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or

               (b)  any  capital   reorganization  of  the  Company,   any
reclassification or  recapitalization  of the capital stock of the Company,  any
merger of the Company, or any transfer of all or substantially all of the assets
of the Company to any other corporation, or any other entity or person, or

               (c)    any voluntary or involuntary  dissolution,  liquidation or
winding up of the Company,

then,  and in each such  event the  Company  shall mail or cause to be mailed to
each holder of Series G  Preferred  Stock a notice  specifying:  (i) the date on
which  any  such  record  is to be  taken  for the  purpose  of  such  dividend,
distribution  or right;  and a description  of such  dividend,  distribution  or
right,  (ii)  the  date on  which  any  such  reorganization,  reclassification,
recapitalization,  transfer, merger,  dissolution,  liquidation or winding up is
expected to become  effective;  and (iii) the time, if any, that is to be fixed,
as to when the holders of record of Common Stock (or other  securities) shall be
entitled to exchange  their  shares of Common  Stock (or other  securities)  for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  recapitalization,  transfer, merger, dissolution, liquidation
or winding up. Such notice shall be mailed at least ten (10) business days prior
to the date specified in such notice on which such action is to be taken.

                                            Signed on December 28, 2000.


                                              /s/ Jack Jaiven
                                            -------------------------------
                                            Jack Jaiven, Vice President