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



DATED: December 29, 2000                                                  NO. __


                                     WARRANT

                            nSTOR TECHNOLOGIES, INC.

                       Warrant to Purchase 500,000 Shares
                          of Common Stock, par value $.05 per share

                   VOID AFTER 5:00 P.M., EASTERN STANDARD TIME
                                     ON DECEMBER 29, 2003


        This certifies  that,  for value  received,  H. Irwin Levy ("Levy"),  or
registered  assigns  (collectively  with Levy,  the  "Holder"),  is  entitled to
purchase from nStor Technologies,  Inc., a Delaware corporation (the "Company"),
Five  Hundred  Thousand  (500,000)  fully  paid and  nonassessable  shares  (the
"Shares") of the Common Stock, par value $.05 per share, of the Company ("Common
Stock") at a price of $1.50 per Share (the "Exercise Price") at any time or from
time to time after June 30,  2001,  subject  to the prior  cancellation  of this
Warrant as set forth in  Section  1(d),  to and  including  5:00  p.m.,  Eastern
Standard  Time on December  31,  2003 (the  "Exercise  Period"),  subject to the
terms, conditions and adjustments set forth in this Warrant (the "Warrant").

1.      Exercise of Warrants.
(a) This Warrant may be exercised in whole or in part by the Holder during
the Exercise Period upon  presentation and surrender  hereof,  with the attached
Purchase Form duly executed, at the office of the Company located at 100 Century
Boulevard,  West  Palm  Beach,  FL 33417,  accompanied  by full  payment  of the
Exercise Price multiplied by the number of Shares of the Company being purchased
(the "Purchase Price"), whereupon the Company shall cause the appropriate number
of  Shares  to be issued  and  shall  deliver  to the  Holder,  as  promptly  as
practicable, a certificate representing the Shares being purchased. This Warrant
may be exercised for not less than 1,000 Shares and in additional  increments of
1,000 Shares at any time and from time to time during the Exercise Period.  Upon
each partial  exercise  hereof,  a new warrant  evidencing  the remainder of the
Shares  will be issued  to the  Holder,  at the  Company's  expense,  as soon as
reasonably  practicable,  at the same  Exercise  Price,  for the  same  Exercise
Period, and otherwise of like tenor as the Warrant partially exercised.

(b) Payment  of the  Purchase  Price may be made as  follows  (or by any
combination of the following): (i) in United States currency by cash or delivery
of a certified or bank cashier's  check payable to the order of the Company,  or
by wire  transfer of  immediately  available  funds to an account  designated in
writing by the Company,  in the amount of the Purchase Price,  (ii) by surrender
to the Company of this  Warrant in  exchange  for the number of shares of Common
Stock equal to the product of (x) the number of shares to which this  Warrant is
being  exercised  multiplied  by (y) a fraction,  the  numerator of which is the
Current  Market  Price (as defined  below) of the Common Stock less the Exercise
Price and the  denominator  of which is the Current  Market  Price,  or (iii) by
surrender to the Company for cancellation  certificates  representing (A) shares
of Common  Stock of the  Company  owned by the  Holder  (properly  endorsed  for
transfer in blank) having a Current  Market Price (as defined below) on the date
of  Warrant  exercise  equal to the  Purchase  Price or (B)  shares  of Series G
Preferred Stock of the Company owned by the Holder (properly  endorsed in blank)
having a stated value equal to the Purchase Price.  For purposes of this Section
1(b), the term "Current Market Price" shall mean, on any date specified  herein,
the amount per share of the Common  Stock,  equal to (i) the last  reported sale
price of such Common Stock, on such date or, in case no such sale takes place on
such date, the average of the closing bid and asked prices thereof on such date,
in either case as  officially  reported  on the  principal  national  securities
exchange on which such Common Stock is then listed or admitted for trading, (ii)
if such Common  Stock is not then listed or admitted for trading on any national
securities  exchange but is designated as a national  market system  security by
the NASD,  the last  reported  trading  price of the Common  Stock on such date,
(iii) if there shall have been no trading on such date or if the Common Stock is
not so designated, the average of the closing bid and asked prices of the Common
Stock on such date as shown by the NASD automated  quotation  system, or (iv) if
such Common  Stock is not then listed or  admitted  for trading on any  national
exchange or quoted in the over-the-counter market, the fair value thereof (as of
a date which is within 20 days of the date as of which the  determination  is to
be made)  determined  in good faith by an  independent  investment  banking firm
selected  jointly by the Company and the Holder or, if that selection  cannot be
made within ten days, by an independent  investment banking firm selected by the
American  Arbitration  Association  in accordance  with its rules,  and provided
further,  that the Company  shall pay all of the fees and  expenses of any third
parties incurred in connection with determining the Current Market Price.

(c) The Holder  shall be deemed for all purposes to have become the holder
of record of the Shares so  purchased  upon  exercise of this  Warrant as of the
close of business  on the date as of which this  Warrant,  together  with a duly
executed Purchase Form, was delivered to the Company and payment of the Purchase
Price  was  made,  regardless  of  the  date  of  delivery  of  any  certificate
representing the Shares so purchased, except that if the Company were subject to
any legal  requirements  prohibiting  it from issuing  shares of Common Stock on
such date,  the Holder shall be deemed to have become the record  holder of such
Shares  on the next  succeeding  date as of which  the  Company  ceased to be so
prohibited.

(d)  Notwithstanding  anything to the contrary contained in this Warrant, in the
event that the Company shall redeem all or a portion of the outstanding Series G
Preferred Stock, par value $.01 per share,  held by the Holder on or before June
30,  2001,  then a  corresponding  pro-rata  portion  of this  Warrant  shall be
canceled  ("Canceled  Warrants")  and all  rights of the Holder  hereunder  with
respect to the Canceled  Warrants  shall be  terminated.  If any portion of this
Warrant is  canceled  pursuant  to the  preceding  sentence,  the  Holder  shall
promptly surrender this Warrant to the Company. If less than all of this Warrant
is canceled  pursuant to this Section  1(b),  the Company shall  promptly,  upon
receipt of this  Warrant  from the Holder,  issue to the Holder a new warrant of
like tenor for the balance of the shares of Common Stock purchasable hereunder.

        2. Exchange; Transfer or Assignment.
This Warrant is exchangeable, without expense, at the option of the Holder, upon
surrender  hereof to the Company for other  warrants of like tenor of  different
denominations  entitling the Holder to purchase in the aggregate the same number
of Shares  purchasable  hereunder.  Subject to  compliance  with Section 5, this
Warrant and all rights hereunder are transferable,  in whole or in part, without
charge to the Holder,  upon  surrender of this Warrant with an  assignment  form
attached  hereto  duly  completed  and  executed  (with  signature  guaranteed),
whereupon  the  Company,  if it  determines  that  the  proposed  assignment  is
permitted  pursuant to the provisions  hereof,  shall register the assignment of
this Warrant in accordance with the information contained in the assignment form
and shall  execute  and  deliver a new  warrant or  warrants  in the name of the
assignee or assignees named in such  assignment form (and, if applicable,  a new
warrant  in the name of the  Holder  evidencing  any  remaining  portion  of the
Warrant not theretofore transferred or assigned) and this Warrant shall promptly
be canceled.  Conditions to the transfer of this Warrant or any portion  thereof
shall be that the proposed  transferee deliver to the Company his or its written
agreement  to accept  and be bound by all of the terms  and  conditions  of this
Warrant.

        3. Rights and  Obligations of Warrant  Holders.
This Warrant does not confer upon the Holder any rights as a shareholder  of the
Company,  either at law or in equity.  The  rights of the Holder are  limited to
those expressed  herein and the Holder,  by acceptance  hereof,  consents to and
agrees to be bound by and to comply  with all the  provisions  of this  Warrant.
Each Holder,  by  acceptance  of this  Warrant,  agrees that the Company and its
transfer  agent,  if any,  may,  prior to any  presentation  of this Warrant for
registration  of transfer,  deem and treat the person in whose name this Warrant
is  registered  as the  absolute,  true and lawful owner of this Warrant for all
purposes  whatsoever  and neither the  Company nor any  transfer  agent shall be
affected by any notice to the contrary.

        4. Covenants and Warranties of the Company.
The Company  covenants  and agrees that:  (i) all Shares which may be issued and
delivered  upon exercise of this Warrant and payment of the Purchase Price will,
upon delivery, be duly authorized,  validly issued, fully-paid and nonassessable
shares of Common  Stock;  and (ii) the  Company  shall at all times  during  the
Exercise  Period  reserve and keep available a number of authorized but unissued
shares  of  Common  Stock  sufficient  to permit  the  exercise  in full of this
Warrant.  The Company  will take all such  actions as may be necessary to assure
that all  shares of  Common  Stock may be so  issued  without  violation  by the
Company of any applicable law or government regulation or any requirement of any
securities  exchange upon which shares of Common Stock may be listed (except for
official  notice of issuance,  which the Company  will  transmit  promptly  upon
issuance  of such  shares).  The Company  will at no time close its  shareholder
books or records in any manner which interferes with the timely exercise of this
Warrant.

        The  Company  represents  and  warrants  that:  (i)  the  Company  is  a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware; (ii) the Company has all requisite corporate power and
authority to issue this Warrant and to consummate the transactions  contemplated
hereby,  and such issuance and consummation  will not conflict with, result in a
material breach of, constitute a material default under or material violation of
any provision of the Company's  Certificate of Incorporation  or Bylaws,  and to
the best  knowledge of the Company,  any law or regulation  of any  governmental
authority or any provision of any  agreement,  judgment or decree  affecting the
Company;  and (iii) all corporate  action required to be taken by the Company in
connection  with the execution and delivery of this Warrant and the  performance
of the Company's obligations hereunder has been taken.

        5. Disposition of Warrants or Shares.
The Holder  acknowledges  that  neither  this  Warrant  nor the Shares have been
registered  under  the Act or  applicable  state  law.  The  Holder  agrees,  by
acceptance of this Warrant,  (i) that no sale,  transfer or distribution of this
Warrant or the Shares  shall be made except in  compliance  with the Act and the
rules  and  regulations   promulgated   thereunder,   including  any  applicable
prospectus  delivery  requirements  and the  restrictions  on transfer set forth
herein,  and (ii) that if distribution of this Warrant or any Shares is proposed
to be made by him or it otherwise  than by delivery of a prospectus  meeting the
requirements  of Section 10 of the Act,  such  action  shall be taken only after
submission to the Company of an opinion of counsel,  reasonably  satisfactory in
form and  substance to the  Company's  counsel,  to the effect that the proposed
distribution will not be in violation of the Act or applicable state law.

        6.     Adjustment.
The number of Shares  purchasable  upon the  exercise  of this  Warrant  and the
Exercise Price per Share are subject to adjustment from time to time as provided
in this Section 6.

               (a) Subdivision or  Combination  of Shares.  If the Company
shall at any time  subdivide  its  outstanding  shares  of Common  Stock  into a
greater number of shares  (including a stock split effected as a stock dividend)
or  combine  its  outstanding  shares of Common  Stock  into a lesser  number of
shares,  the number of Shares  issuable  upon  exercise of this Warrant shall be
adjusted  to such  number as is  obtained  by  multiplying  the number of Shares
issuable upon exercise of this Warrant  immediately prior to such subdivision or
combination  by a fraction,  the numerator of which is the  aggregate  number of
shares of Common  Stock  outstanding  immediately  after  giving  effect to such
subdivision or combination and the denominator of which is the aggregate  number
of shares of Common Stock  outstanding  immediately prior to such subdivision or
combination,  and the Exercise Price per Share shall be correspondingly adjusted
to such amount as shall,  when  multiplied by the number of Shares issuable upon
full  exercise of this  Warrant  (as  increased  or  decreased  to reflect  such
subdivision or combination  of outstanding  shares of Common Stock,  as the case
may be), equal the product of the Exercise Price per Share in effect immediately
prior to such  subdivision  or  combination  multiplied  by the number of Shares
issuable  upon  full  exercise  of  this  Warrant   immediately  prior  to  such
subdivision or combination.

               (b) Effect of Sale, Merger or Consolidation.  If any capital
reorganization  or  reclassification  of the capital  stock of the  Company,  or
consolidation or merger of the Company with another corporation,  or sale of all
or  substantially  all of the Company's assets to another  corporation  shall be
effected  after the date hereof in such a way that holders of Common Stock shall
be  entitled  to  receive  stock,  securities  or assets  with  respect to or in
exchange  for  Common  Stock,  then,  as a  condition  of  such  reorganization,
reclassification,  consolidation,  merger or sale, lawful and adequate provision
shall be made whereby the Holder shall thereafter have the right to purchase and
receive,  upon the basis and the terms and conditions  specified in this Warrant
and in lieu of the Shares  immediately  theretofore  purchasable  and receivable
upon the exercise of this Warrant, such shares of stock, securities or assets as
may be  issued  or  payable  with  respect  to or in  exchange  for a number  of
outstanding shares of Common Stock equal to the number of shares of Common Stock
immediately  theretofore  purchasable  and receivable  upon the exercise of this
Warrant,  and in any such case appropriate  provision shall be made with respect
to the rights and interests of the Holder to the end that the provisions of this
Warrant  (including,  without  limitation,  provisions  for  adjustments  of the
Exercise  Price and of the number of Shares  issuable  upon the exercise of this
Warrant)  shall  thereafter  be  applicable,  as nearly as may be  possible,  in
relation to any shares of stock,  securities  or assets  thereafter  deliverable
upon the  exercise  of this  Warrant.  The  Company  shall not  effect  any such
consolidation,  merger  or sale  unless  prior  to or  simultaneously  with  the
consummation  thereof  the  successor  corporation  (if other than the  Company)
resulting from such  consolidation or merger or the corporation  purchasing such
assets shall assume, by written instrument  executed and delivered to the Holder
at its last address  appearing on the books of the Company,  the  obligation  to
deliver  to the  Holder  such  shares of  stock,  securities  or  assets  as, in
accordance with the foregoing sentence, the Holder may be entitled to purchase.

               (c) Notice to Holder of Adjustment. Whenever  the
number of Shares purchasable upon exercise of this Warrant or the Exercise Price
per Share is adjusted as herein  provided,  the Company shall cause to be mailed
to the Holder,  in accordance  with the  provisions of Section 9 hereof,  notice
setting forth the adjusted number of Shares purchasable upon the exercise of the
Warrant and the adjusted  Exercise  Price and showing in  reasonable  detail the
computation of the adjustment and the facts upon which such adjustment is based.

               (d)    Notices  to  Holder of  Certain  Events.  If at any time
after the date hereof:

                      (i)    the  Company  shall  declare  any  dividend or
                             other  distribution  upon  or with  respect  to the
                             Common Stock payable  otherwise than in cash out of
                             the  consolidated net income of the Company and any
                             subsidiaries   thereof,   including   any  dividend
                             payable   in  shares  of  Common   Stock  or  other
                             securities of the Company; or

                      (ii)   the Company shall offer for subscription to the
                             holders of its Common Stock any  additional  shares
                             of stock of any class or any other  securities
                             convertible  into stock or any rights to  subscribe
                             thereto; or

                      (iii)  there  shall  be  any  capital   reorganization  or
                             reclassification   of  the  capital  stock  of  the
                             Company (other than a change in par value,  or from
                             par value to no par value,  or from no par value to
                             par  value  or as  result  of  the  subdivision  or
                             combination  of shares),  or any  conversion of the
                             Shares into securities of another corporation, or a
                             sale of all or  substantially  all of the assets of
                             the Company,  or a  consolidation  or merger of the
                             Company  with  another  corporation  (other  than a
                             merger  with a  subsidiary  in which the Company is
                             the  continuing  corporation  and  which  does  not
                             result  in any  reclassification  or  change of the
                             Shares issuable upon exercise of the Warrants); or

                      (iv)   there  shall  be  a   voluntary   or   involuntary
                             dissolution, liquidation or winding up of the
                             Company;

then, in any one or more of said cases,  the Company shall cause to be mailed to
the Holder, not less than ten (10) days before any record date or other date set
for the  definitive  action,  written notice of the date upon which the books of
the  Company  shall  close or a  record  shall be  taken  for  purposes  of such
dividend, distribution or subscription rights or upon which such reorganization,
reclassification,   conversion,   sale,  consolidation,   merger,   dissolution,
liquidation  or winding up shall take  place,  as the case may be.  Such  notice
shall also set forth facts as shall  indicate  the effect of such action (to the
extent  such  effect  may be known at the date of such  notice) on the number of
Shares and the kind and amount of the shares of stock and other  securities  and
property  deliverable  upon  exercise of the  Warrants.  Such notice  shall also
specify the date as of which the holders of record of the shares of Common Stock
shall participate in said dividend, distribution or subscription rights or shall
be entitled to exchange  their  shares of Common Stock for  securities  or other
property  deliverable upon such  reorganization,  reclassification,  conversion,
sale, consolidation, merger, dissolution, liquidation or winding up, as the case
may be (on which  date in the event of  voluntary  or  involuntary  dissolution,
liquidation  or winding up of the  Company,  the right to exercise  the Warrants
shall terminate).

               (e) Fractional  Shares. The Company shall not be required to
issue any fraction of a Share upon the exercise of this  Warrant.  The number of
full Shares  which shall be issuable  upon the full or partial  exercise of this
Warrant shall be computed on the basis of the  aggregate  number of Shares as to
which this Warrant is being exercised.  In lieu of any fractional  interest in a
Share otherwise deliverable upon the exercise of this Warrant, the Company shall
pay a cash adjustment  (which may be effected as a reduction of the amount to be
paid by the Holder upon such exercise) in respect of such fraction of a Share in
an amount equal to the same  fraction  multiplied  by the closing sales price of
the Common Stock on the principal  securities exchange on which the Common Stock
is traded, or if the Common Stock is not so listed for trading,  the closing bid
price of the Common  Stock,  in each case on the date of the notice of  exercise
required  pursuant to Section 1 above, or the next  succeeding  trading date, if
the date of such  notice is not a trading  date,  or if the Common  Stock is not
traded on such dates, the next succeeding trading date on which the Common Stock
is traded.

               (f) No Other  Adjustments.  No  adjustment  to the number of
Shares  subject to this  Warrant or the  Exercise  Price per Share shall be made
pursuant to this Section 6 except as expressly provided herein.

        7.  Registration  Rights  Agreement.
The Shares issuable upon exercise of this Warrant 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 initial
Holder of this Warrant (the "Registration  Rights  Agreement")).  Each Holder of
this Warrant is entitled to all of the benefits afforded to a holder of any such
Registrable  Securities under the Registration Rights Agreement and such Holder,
by its  acceptance  of this  Warrant,  agrees to be bound by and comply with the
terms and conditions of the  Registration  Rights  Agreement  applicable to such
Holder as a holder of such Registrable Securities.

        8.  Survival.
The various rights and obligations of the Holder and of the Company as set forth
in Sections 3, 4, and 5 hereof  shall  survive the  exercise of this Warrant and
the surrender of this instrument upon such exercise.

        9.  Notice.
All notices required by this Warrant to be given or made by the Company shall be
given or made by first class mail, postage prepaid,  addressed to the registered
holder  hereof  at the  address  of such  holder  as shown  on the  books of the
Company.

        10. Loss or  Destruction.
Upon  receipt of evidence  reasonably  satisfactory  to the Company of the loss,
theft,  destruction  or mutilation of this Warrant and, in the case of any loss,
theft  or  destruction,  upon  delivery  of an  indemnity  agreement  reasonably
satisfactory in form and amount to the Company and its counsel,  or, in the case
of any such  mutilation,  upon surrender and  cancellation of this Warrant,  the
Company,  at its  expense,  will  execute and deliver,  in lieu  thereof,  a new
Warrant of like tenor.

        11.    Miscellaneous.

               (a) Neither this Warrant nor any term hereof may be changed,
waived,  discharged or terminated except by a written instrument executed by the
Company and the Holder.

               (b) This  Warrant  shall be governed by, and  construed  and
enforced in accordance with, the internal laws of the State of Delaware, without
regard to principles of conflicts of laws thereof.

               (c) Each  provision of this Warrant shall be  interpreted in
such a manner as to be effective,  valid and enforceable  under  applicable law,
but if any  provision  of  this  Warrant  is  held  to be  invalid,  illegal  or
unenforceable  under  any  applicable  law or  rule  in any  jurisdiction,  such
provision will be ineffective only to the extent of such invalidity,  illegality
or unenforceability in such jurisdiction,  without invalidating the remainder of
this  Warrant  in  such  jurisdiction  or any  provision  hereof  in  any  other
jurisdiction.

               (d) No course of dealing or delay or failure to exercise any
right  hereunder  on the part of the  Holder  shall  operate as a waiver of such
right or otherwise prejudice the Holder's rights, power or remedies.

               (e) The  Company  shall pay all  expenses  incurred by it in
connection  with,  and all  documentary  stamp and other taxes (other than stock
transfer  taxes) and other  governmental  charges that may be imposed in respect
of, the issue,  sale and delivery of this Warrant and the Shares  issuable  upon
the exercise hereof.

               (f) This Warrant and the rights evidenced hereby shall inure
to the benefit of and be binding upon the  successors and assigns of the Company
and the successors and permitted assigns of the Holder.


                      [SIGNATURES APPEAR ON FOLLOWING PAGE]



        IN WITNESS WHEREOF the Company has caused this Warrant to be executed by
its duly authorized officer as of the 29th day of December, 2000.



ATTEST:                             nSTOR TECHNOLOGIES, INC.


By: /s/ Orilla F. Floyd                            By:  /s/ Jack Jaiven
Name:   Orilla F. Floyd                            Jack Jaiven
Title:  Secretary                                  Vice President



                                   ASSIGNMENT

        To be executed by the registered  holder to effect a permitted  transfer
of the within Warrant. Capitalized terms have the same meanings ascribed to them
in the within Warrant.


FOR VALUE RECEIVED__________________________________ ("Assignor") hereby sells,
assigns and transfers unto

                                            ("Assignee")
-------------------------------------------
(Name)


(Address)



the right to purchase  __________ shares of Common Stock of nStor  Technologies,
Inc.  evidenced  by the  within  Warrant,  together  with all  right,  title and
interest    therein,    and   does    irrevocably    constitute    and   appoint
_____________________________  attorney to transfer  the said right on the books
of said corporation with full power of substitution in the premises.

        In satisfaction of a condition to the  effectiveness of this assignment,
Assignor hereby certifies that Assignee is a corporation  controlled by or under
common control with Assignor.


Date:                                              Assignor:
       -----------------------


                                       By:
                                      Its:


                                        Signature:
                                                  ----------------------------


                                  PURCHASE FORM

        To be executed upon exercise of the within  Warrant.  Capitalized  terms
have the same meanings ascribed to them in the within Warrant.


TO:  nStor Technologies, Inc.

        The  undersigned  hereby  exercises the right to purchase  _____________
Shares of Common Stock evidenced by the within  Warrant,  according to the terms
and  conditions  thereof,  and hereby makes payment of the Purchase  Price.  The
undersigned  requests  that  certificates  for the Shares shall be issued in the
name set forth below:

Dated:                              Name:__________________________________

                                         ----------------------------------
                                    (Address)
                                         ----------------------------------

                                     Social Security No.___________________
                                     or other identifying number