<PAGE>

                                                                    EXHIBIT 10.1
                              AMENDMENT NO. 4 TO
                              ------------------

                                LOAN AGREEMENT
                                --------------


          This Amendment No. 4 to Loan Agreement ("Amendment") dated as of July
                                                   ---------
13, 1999, is made by and between anDATAco of California, Inc., a California
corporation ("Borrower"), and Wells Fargo Credit, Inc., successor in interest to
              --------
Wells Fargo Bank, National Association ("Lender").
                                         ------


                                   RECITALS
                                   --------

     This Amendment is made with reference to the following facts:

     A.   Borrower is currently indebted to Lender pursuant to the terms and
conditions of that certain Loan Agreement between Borrower and Lender dated as
of April 30, 1998 (as amended from time to time, the "Loan Agreement").
                                                      --------------
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth for such terms in the Loan Agreement.

     B.   Borrower has defaulted under the Loan Agreement.  Borrower failed to
maintain a Tangible Net Worth of at least $1,400,000.00 on April 30, 1999 as
required by Section 8.10(a) of the Loan Agreement (the "Existing Borrower
            ---------------                             -----------------
Default").  Lender sent to Borrower and Guarantor a notice of the Existing
-------
Borrower Default on June 11, 1999 (the "Default Notice", which notice
                                        --------------
erroneously referred to Borrower's failure to maintain a Tangible Net Worth of
at least $1,200,000.00 at all times during the period of January 31, 1999
through April 29, 1999), in which notice Lender informed Borrower and Guarantor,
among other things, of Lender's election to apply the default interest rate (the
"Default Rate") effective on the date of the Default Notice.
 ------------

     C.   W. David Sykes, an individual ("Sykes") has defaulted under that
                                         -----
certain Subordination Agreement entered into as of April 30, 1998 by Sykes in
favor of Lender in connection with the Loan Agreement (as amended from time to
time, the "Sykes Subordination Agreement").   Sykes transferred to nStor
           -----------------------------
Technologies, Inc., a Delaware corporation, its interest in that certain
Subordinated Promissory Note dated as of February 10, 1997 in the principal
amount of $5,195,548.87 executed by Borrower and payable to Sykes.  Such
transfer (the "Existing Sykes Default", and together with the Existing Borrower
               ----------------------
Default, the "Existing Defaults") violated the last sentence of Section 4 of the
              -----------------                                 ---------
Sykes Subordination Agreement.

     D.   Reference to the Existing Defaults is not deemed to refer to or
encompass all defaults that may currently exist under the Loan Agreement or
under any other document executed in connection therewith.

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     E.   Subject to the terms and conditions set forth herein, (i) Borrower and
Lender have agreed to amend the Loan Agreement as set forth below, and (ii)
Lender is willing (A) to waive the Existing Defaults and (B) to discontinue the
accrual of interest at the Default Rate on the outstanding principal balance of
that certain Second Amended and Restated Line of Credit Note dated December 14,
1998 by Borrower in favor of Lender (as amended from time to time, the "Note")
                                                                        ----
as a result of the Existing Borrower Default.

                                   AGREEMENT
                                   ---------

     NOW, THEREFORE, in consideration of the mutual covenants and benefits
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, Borrower and Lender agree as follows:

     1.   AMENDMENTS OF LOAN AGREEMENT
          ----------------------------

               1.1  Section 1.2.  Section 1.2 of the Loan Agreement is amended
                    -----------   -----------
to read in full as follows:

                    "1.2  'Applicable Inventory Advance Rate' shall mean, as
applicable, (i) the sum of twenty-five percent (25%) of the Value of Eligible
Inventory, until the earlier to occur of (A) July 16, 1999 and (B) Lender's
confirmation of an equity infusion into Borrower in the amount of $500,000 in
cash subsequent to July 9, 1999 (the earlier to occur of (A) and (B) shall be
                                                          -       -
referred to as the "Advance Rate Change Date"), or (ii) at all times after the
                    ------------------------
Advance Rate Change Date, the sum of twenty-three percent (23%) of the Value of
Eligible Inventory."

               1.2  Section 1.4.
                    -----------

                    (a)  Section 1.4(B) of the Loan Agreement is amended to
                         --------------
read in full as follows:

                              "(B)  (i) during the period of March 22, 1999
                         through September 30, 1999, the lesser of (a) Eighty-
                         five percent (85%) of the Net Amount of Eligible
                         Foreign Accounts, or (b) an amount equal to $400,000,
                         and (ii) during any other period during the term of
                         this Agreement, $0; plus"
                                             ----

                    (b)  Section 1.4(C) of the Loan Agreement is amended to
                         --------------
read in full as follows:

                              "(C)  the lesser of (i) the Applicable Inventory
                         Advance Rate, or (ii) an amount equal to $1,750,000;
                         less"
                         ----

               1.3  Section 8.10(a).  Section 8.10(a) of the Loan Agreement is
                    ---------------   ---------------
amended to read in full as follows:

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<PAGE>

                         "(a)  Tangible Net Worth not at any time during any
                    period specified below, or on any date specified below as
                    applicable, less than the amount set forth opposite such
                    period or date, as applicable, to be measured (i) at all
                    times prior to July 31, 1999, as of the end of each fiscal
                    quarter of Borrower, commencing with the fiscal quarter
                    ending July 31, 1998, and (ii) on and at all times
                    subsequent to July 31, 1999, as of the end of each fiscal
                    month of Borrower, commencing with the fiscal month ending
                    July 31, 1999:

                    Period or Date                    Minimum Tangible Net Worth
                    --------------                    --------------------------

          July 31, 1998 through October 30, 1998                $ 1,000,000.00
          October 31, 1998 through January 30, 1999             $ 1,000,000.00
          January 31, 1999 through April 29, 1999               $ 1,200,000.00
          April 30, 1999 through July 30, 1999                  $            0
          July 31, 1999 through October 30, 1999                $   900,000.00
          October 31, 1999 through January 30, 2000             $ 1,150,000.00
          January 31, 2000                                      $ 1,900,000.00
          February 1, 2000 through April 29, 2000               $ 3,600,000.00
          April 30, 2000 through July 30, 2000                  $ 3,900,000.00
          July 31, 2000 through October 30, 2000                $ 4,200,000.00
          October 31, 2000 and thereafter                       $ 4,500,000.00"


     2.   CERTAIN FEES CONCERNING FOREIGN ACCOUNTS
          ----------------------------------------

             Borrower agrees to pay to Lender a fee of $2,000.00 in connection
with the inclusion of Eligible Foreign Accounts in the definition of "Borrowing
Base", payable as follows: (i) $2,000.00 payable by Borrower to Lender on August
1, 1999. Each portion of such fee is earned when due and is nonrefundable.

     3.   EQUITY INFUSION
          ---------------

             Borrower agrees to cause nStor Technologies, Inc., a Delaware
corporation, to make to Borrower an equity infusion in the amount of $500,000.00
in cash on or before July 16, 1999.

     4.   CONDITIONS PRECEDENT
          --------------------

             The effectiveness of this Amendment and Lender's agreements set
forth herein are subject to the satisfaction of each of the following conditions
precedent. Bank hereby agrees that, upon satisfaction of the following
conditions precedent, (i) the Existing Defaults will be deemed waived and (ii)
interest will no longer accrue on the outstanding principal balance under the
Note at the Default Rate as a result of the Existing Borrower Default.

                                      -3-
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          4.1  Documentation.  Borrower shall have delivered or caused to be
               -------------
delivered to Lender, at Borrower's sole cost and expense, the following, each of
which shall be in form and substance satisfactory to Lender:

               (a)  The executed original of this Amendment, including the
     consent of Guarantor attached hereto as Exhibit A; and
                                             ---------

               (b)  An original of a subordination agreement executed by nStor
     Technologies, Inc., a Delaware corporation, in favor of Lender; and

               (c)  Such additional agreements, certificates, reports,
     approvals, instruments, documents, consents and/or reaffirmations as Lender
     may reasonably request.

          4.2  Representations and Warranties.  All of Borrower's
               ------------------------------
representations and warranties contained herein shall be true and correct on and
as of the date of execution hereof and no Event of Default shall have occurred
and be continuing under the Loan Agreement or any of the other Loan Documents,
as modified hereby.

          4.3  Waiver Fee.  Borrower shall have paid to Lender a nonrefundable
               ----------
waiver fee in the amount of $15,000.00.


     5.   REPRESENTATIONS AND WARRANTIES
          ------------------------------

             Borrower makes the following representations and warranties to
Lender as of the date hereof, which representations and warranties shall survive
the execution, termination or expiration of this Amendment and shall continue in
full force and effect until the full and final satisfaction and discharge of all
obligations of Borrower to Lender under the Loan Agreement and the other Loan
Documents:

          5.1  Reaffirmation of Prior Representations and Warranties.  Borrower
               -----------------------------------------------------
hereby reaffirms and restates as of the date hereof, all of the representations
and warranties made by Borrower in the Loan Agreement and the other Loan
Documents, except to the extent such representations and warranties specifically
           ------
relate to an earlier date.

          5.2  No Default.  After giving effect to this Amendment, no Event of
               ----------
Default or other default has occurred and remains continuing under any of the
Loan Documents.

          5.3  Due Execution.  The execution, delivery and performance of this
               -------------
Amendment and any instruments, documents or agreements executed in connection
herewith are within the powers of Borrower, have been duly authorized by all
necessary action, and do not contravene any law or the articles of incorporation
or bylaws of Borrower, result in a breach of,

                                      -4-
<PAGE>

or constitute a default under, any contractual restriction, indenture, trust
agreement or other instrument or agreement binding upon Borrower.

          5.4  No Further Consent.  The execution, delivery and performance of
               ------------------
this Amendment and any documents or agreements executed in connection herewith
do not require any consent or approval not previously obtained of any
stockholder, beneficiary or creditor of Borrower.

          5.5  Binding Agreement.  This Amendment, and each of the other
               -----------------
instruments, documents and agreements executed in connection herewith constitute
the legal, valid and binding obligation of Borrower or other party thereto and
are enforceable against Borrower in accordance with their terms, except as such
                                                                 ------
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws or equitable principles relating to or limiting
creditors' rights generally.


     6.   MISCELLANEOUS
          -------------

          6.1  Recitals Incorporated.  The Recitals set forth above are
               ---------------------
incorporated into and are made a part of this Amendment.

          6.2  Further Assurances.  Borrower, at its sole cost and expense,
               ------------------
agrees to execute and deliver all documents and instruments and to take all
other actions as may be specifically provided for herein and as may be required
in order to consummate the purposes of this Amendment. Borrower shall
diligently and in good faith pursue the satisfaction of any conditions or
contingencies in this Amendment.

          6.3  No Third Parties.  Except as specifically provided herein, no
               ----------------   ------
third party shall be benefitted by any of the provisions of this Amendment; nor
shall any such third party have the right to rely in any manner upon any of the
terms hereof, and none of the covenants, representations, warranties or
agreements herein contained shall run in favor of any third party.

          6.4  Time is of the Essence.  Time is of the essence for the
               ----------------------
performance of all obligations and the satisfaction of all conditions of this
Amendment. The parties intend that all time periods specified in this Amendment
shall be strictly applied, without any extension (whether or not material)
unless specifically agreed to in writing by all parties hereto.

          6.5  Costs and Expenses.  In addition to the obligations of Borrower
               ------------------
under the Loan Agreement, Borrower agrees to pay all costs and expenses
(including without limitation reasonable attorneys' fees) expended or incurred
by Lender in connection with the negotiation, documentation and preparation of
this Amendment and any other documents executed in connection herewith, and in
carrying out the terms of this Amendment, whether incurred before or after the
effective date hereof.

                                      -5-
<PAGE>

          6.6   Integration; Interpretation.  The Loan Documents, including this
                ---------------------------
Amendment and the documents, instruments and agreements executed in connection
herewith, contain or expressly incorporate by reference the entire agreement of
the parties with respect to the matters contemplated herein and supersede all
prior negotiations, discussions and correspondence. The Loan Documents shall
not be modified except by written instrument executed by all parties.

          6.7   Counterparts and Execution.  This Amendment may be executed in
                --------------------------
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. However, this Amendment
shall not be binding on Lender until all parties have executed it.

          6.8   Governing Law.  This Amendment shall be governed by and
                -------------
construed in accordance with the laws of the State of California.

          6.9   Non-Impairment of Loan Documents.  On the date all conditions
                --------------------------------
precedent set forth herein are satisfied in full, this Amendment shall be a part
of the Loan Agreement.  Except as expressly provided in this Amendment or in any
other document, instrument or agreement executed by Lender, all provisions of
the Loan Documents shall remain in full force and effect, and Lender shall
continue to have all its rights and remedies under the Loan Documents.

          6.10  No Waiver.  Nothing herein shall be deemed a waiver by Lender of
                ---------
any Event of Default, other than the Existing Borrower Default, and nothing
herein shall be deemed a waiver by Lender of any other default under the Loan
Agreement or any document executed in connection with the Loan Agreement, other
than the Existing Sykes Default. No delay or omission of Lender to exercise any
right, remedy or power under any of the Loan Documents shall impair such right,
remedy or power or be construed to be a waiver of any default or an acquiescence
therein, and single or partial exercise of any such right, remedy or power shall
not preclude other or further exercise thereof or the exercise of any other
right, remedy or power. No waiver of any term, covenant, or condition shall be
deemed to waive Lender's right to enforce such term, covenant or condition at
any other time.

          6.11  Successors and Assigns.  The terms of this Amendment shall be
                ----------------------
binding upon and inure to the benefit of the successors and assigns of the
parties to this Amendment.

          IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first set forth above.

                                      -6-
<PAGE>

ANDATACO OF CALIFORNIA, INC.,           WELLS FARGO CREDIT, INC.
a California corporation


By:    /s/ Diane Wong                   By:    /s/ Angelo Samperisi
   -----------------------------           --------------------------------
           Diane Wong                              Angelo Samperisi

Title: Vice President of Finance        Title: Vice President
      --------------------------               ----------------------------
      and Corporate Controller
      --------------------------

                                      -7-
<PAGE>

                                   Exhibit A

                             Consent of Guarantor





     In order to induce Lender to agree to the terms of the Amendment, Guarantor
(a) acknowledges receipt of a copy of the Amendment, (b) consents to Borrower
entering into the Amendment and all of the other documents, instruments and
agreements now or hereafter executed in connection therewith, (c) agrees that
nothing contained in the Amendment, or in any other document, instrument or
agreement executed in connection therewith, shall serve to diminish, alter,
amend or affect in any way Guarantor's obligations under that certain First
Amended and Restated Continuing Guaranty dated as of December 14, 1998 by
Guarantor in favor of Lender (the "Guaranty"). Guarantor expressly and
                                   --------
knowingly reaffirms its liability under the Guaranty and acknowledges that it
has no defense, offset or counterclaim against Lender with respect to the
Guaranty.


                                        "Guarantor"


                                        ANDATACO, INC.


                                        By: /s/ Diane Wong
                                            ----------------------------------
                                                Diane Wong

                                        Title: Vice President  Finance and
                                              --------------------------------

                                               Corporate Controller
                                               --------------------

                                      -8-