SUBSCRIPTION AGREEMENT

     This Agreement is entered into as of the 29th day of December,  2000 by and
between nStor Technologies,  Inc., a Delaware corporation ("nStor") and H. Irwin
Levy (the "Noteholder").

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

        WHEREAS, the principal balance of the Notes on the date hereof is
3,600,000; and

        WHEREAS,  in consideration for the Loans,  nStor desires to issue to the
Noteholder a warrant to purchase  200,000 shares of common stock, par value $.05
per share,  of nStor (the "nStor  Common  Stock") upon the terms and  conditions
described to the Board; and

        WHEREAS,  nStor and the Noteholder desire that, effective as of the date
hereof,  the  principal  amount of the Notes be reduced to  $1,600,000  plus any
accrued  interest  on the Notes,  in exchange  for the  issuance by nStor to the
Noteholder of (i) 2,000 shares of Series G Preferred  Stock,  par value $.01 per
share of the  Company  (the  "Series G  Preferred  Stock") and (ii) a warrant to
purchase  500,000  shares of nStor Common Stock,  upon the terms and  conditions
described to the Board.

        NOW THEREFORE, the parties hereto agree as follows:

1.      Exchange of Notes for Shares.

               a. On the date hereof, (i) the Noteholder shall deliver the
        Note,  duly  endorsed  to nStor;  and (ii)  nStor  shall  deliver to the
        Noteholder  (A) a warrant to  purchase  500,000  shares of nStor  Common
        Stock  ("Warrant A"), (B) a warrant to purchase  200,000 shares of nStor
        Common Stock ("Warrant B" and together with Warrant A, the  "Warrants"),
        and (C) a new  promissory  note issued by nStor to the Noteholder in the
        principal amount of $650,000.

               b. The Company  agrees that it shall amend its  certificate
        of incorporation as soon as reasonable practicable after the date hereof
        to create the Series G Preferred  Stock  having the rights,  preferences
        and  privileges  set forth in the  Certificate  of  Designation  for the
        Series G Preferred  Stock, a form of which is attached hereto as Exhibit
        A and,  immediately  after the  filing of such  amendment,  shall  issue
        certificates  representing 2,000 shares of Series G Preferred Stock (the
        "Preferred Shares") to the Noteholder. The Preferred Shares, the Warrant
        and the shares of nStor Common Stock  issuable  upon the exercise of the
        Warrants (the "Warrant  Shares") are collectively  referred to herein as
        the "Securities".

2.      Representations  of nStor.  nStor hereby represents and warrants to the
Noteholder 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 Noteholder
        in accordance  with the terms hereof and the  Certificate of Designation
        of the  Series  G  Preferred  Stock,  will be duly  authorized,  validly
        issued, fully paid, and nonassessable.

               c. The Warrant Shares,  when delivered to the Noteholder in
        accordance  with the  terms of the  Warrants,  will be duly  authorized,
        validly issued, fully paid, and nonassessable.

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

               a. The  Noteholder  is the sole lawful  holder of the Note,
        possesses all right, title and interest therein, has the requisite legal
        capacity and  authority to transfer the Note,  and has not  transferred,
        pledged,  or hypothecated  the Note or any interest therein to any third
        party.  The Note  delivered to nStor pursuant to Section 1 hereof is the
        original Note.

               b. The Noteholder  understands and represents  that: (i) he
        must bear the economic risk of this investment for an indefinite  period
        of time because none of the Securities  have 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 acquiring 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. The  Noteholder  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.  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  investment.  The financial
        condition  of the  Noteholder  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.

               d. nStor has made available to the Noteholder,  or
        his designated representative, during the course of this transaction and
        prior to the issuance of any of the  Preferred  Shares and the Warrants,
        the  opportunity  to ask  questions  of and  receive  answers  from  the
        officers and directors of nStor  concerning  the terms and conditions of
        the offering or otherwise relating to the financial data and business of
        nStor,  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 the Noteholder for inspection,
        documents, records, books and other written information about nStor, its
        business and this investment at nStor's  principal  executive  office at
        10140 Mesa Rim Road, San Diego, California, 92121.


4. 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 Warrant  Shares become  registered  with the  Securities  and Exchange
Commission (the "Commission"),  each certificate  representing a share of Common
Stock or Series G  Preferred  Stock  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.



5. Resales.  The Noteholder  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 Agreement and any
regulations  under  the  Securities  Act.  Prior to any  transfer  or  attempted
transfer of any of the Securities issued hereunder, or any interest therein, the
Noteholder  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 the
Noteholder or by such transferee which 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.

6. Indemnification.  Each party hereto shall indemnify,  defend and hold
the other  harmless  from and against all claims,  losses,  liabilities,  costs,
expenses, obligations,  damages, including, without limitation, litigation costs
and reasonable  attorneys' fees , sustained,  incurred or required to be paid by
the  other  that  would  not have been  sustained,  incurred  or paid is all the
representations,   warranties,  agreements  or  covenants  of  the  other  party
hereunder had been true, correct and duly performed.

7.      Miscellaneous.

           a. 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 Noteholder, at 100 Century Blvd., West
        Palm  Beach,  FL 33417,  or at such  other  address  as each such  party
        furnishes by notice given in  accordance  with this  Section  7.a.,  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.

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

           c. This  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  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.

           d. This 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  Agreement  supersedes  all  prior
        agreements and  understandings  among the parties hereto with respect to
        the subject matter hereof.

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

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

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

           h. This  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 Agreement, once executed by
        a party,  may be delivered  to the other party hereto by telephone  line
        facsimile transmission of a copy of this Agreement bearing the signature
        of the party so delivering this Agreement.


                      [Signatures Appear on Following Page]


        IN WITNESS  WHEREOF,  the parties have caused this  Agreement to be duly
executed by their  respective  officers  thereunto duly authorized as of the day
and year first above written.

                                        nSTOR TECHNOLOGIES, INC.



                                        By: /s/ Jack Jaiven
                                       ----------------------------------------
                                       Name: Jack Jaiven
                                       Title: Vice President


                                        NOTEHOLDER:

                                       /s/ H. Irwin Levy
                                     --------------------------------------
                                        H. Irwin Levy