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 H.
Irwin Levy ("Levy").

        WHEREAS,  during calendar year 2000,  Levy, the Chairman of the Board of
nStor and a company  controlled by him made loans (the "Loans") to nStor,  which
Loans were evidenced by two promissory notes issued by nStor (the " Notes"); and

        WHEREAS,  effective December 31, 2000, the principal amount of the Notes
was reduced to $1,600,000 plus accrued interest, in exchange for the issuance by
nStor to Levy of Two Thousand  (2,000)  shares of its Series G Preferred  Stock,
par value $.01 per share (the  "Series G  Preferred  Stock"),  with an  attached
warrant to purchase 500,000 shares of common stock, par value $.05 per share, of
nStor (the "Warrant"); and

        WHEREAS,  nStor and Levy have agreed  that the Series G Preferred  Stock
and the  Warrant  should be canceled  without  payment of accrued  dividends  in
accordance  with their  terms,  in exchange for the issuance by nStor to Levy of
2,056.99 shares of its Series I Convertible  Preferred Stock, par value $.01 per
share  ("Series  I  Preferred   Stock"),   which  shares  are  convertible  into
2,856,932.84  shares of the  Company's  common  stock,  par value $.05 per share
("nStor Common Stock").

        NOW THEREFORE, the parties hereto agree as follows:

     1. Exchange of Notes for Securities.

     a. On the  Closing  Date (as  hereafter  defined),  Levy shall  deliver the
certificates  representing all of the shares of Series G Preferred Stock held by
Levy and the Warrant,  duly endorsed,  to nStor,  which certificates and Warrant
shall be deemed  canceled  and Levy shall  thereafter  have no rights  whatsover
under or with respect to the Series G Preferred Stock or Warrant,  including the
right to receive accrued dividends.

     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  A and,  immediately  after  the  filing  of  such
amendment,  shall issue  certificates  representing  Two Thousand  Fifty Six and
99/100 (2,056.99) shares of Series I Preferred Stock (the "Preferred Shares") to
Levy. 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 Levy
the following:

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

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

     c. The Conversion  Shares,  when  delivered to Levy 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 Levy. Levy hereby  represents and warrants to nStor
the following:

     a.  Levy is the  sole  lawful  holder  of the  Series  G  Preferred  Stock,
possesses  all  right,  title and  interest  therein,  has the  requisite  legal
capacity and  authority to transfer  the Series G Preferred  Stock,  and has not
transferred,  pledged,  or  hypothecated  the  Series G  Preferred  Stock or any
interest therein to any third party.

     b. Levy  understands and represents that (i) he 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 is purchasing  the Securities for investment for his 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. Levy has such knowledge and experience in financial and business matters
that he is capable of  evaluating  the merits and risks of an  investment in the
Securities.  Levy is  aware  that an  investment  in the  Securities  is  highly
speculative  and subject to  substantial  risks.  Levy is capable of bearing the
high  degree of  economic  risk and burdens of this  investment,  including  the
possibility  of a complete loss of his  investment.  The financial  condition of
Levy is such that he 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 Levy, or his 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  Levy  for  inspection,  various
documents,  records,  books and  other  written  information  about  nStor,  its
business and this investment.

     5.  Restricted  Stock and Legend.  Levy  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.  Levy agrees 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 applicable  federal or state securities laws, or
any interest  therein,  Levy shall give nStor written notice of his 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
Levy 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
Levy 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 Levy (the "Registration  Rights  Agreement")).
Levy is  entitled  to all of the  benefits  afforded  to a  holder  of any  such
Registrable  Securities under the Registration  Rights Agreement and Levy agrees
to be bound by and  comply  with the terms and  conditions  of the  Registration
Rights Agreement applicable him.

     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 Levy,  at the  address  for the
delivery of notice to Levy set forth under  Levy's  name on the  signature  page
hereto, 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

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


                                    Exhibit A

                          Certificate of Designation of

                            Series I Preferred Stock