EXHIBIT 10.1
                               Silicon Valley Bank
                                3003 Tasman Drive
                          Santa Clara, California 95054
                       (408) 654-1000 - Fax (408) 980-6410

                     ACCOUNTS RECEIVABLE PURCHASE AGREEMENT

        This Accounts Receivable Purchase Agreement (the "Agreement") is made as
of the Effective  Date by and between  Silicon Valley Bank  ("Buyer"),  having a
place of business at the address specified above, and NSTOR CORPORATION, INC., a
Delaware  corporation  ("Seller"),  having its  principal  place of business and
chief executive office at 6190 Corte Del Cedro, Carlsbad,  California 92009, and
with a FAX number of (760) 683-2544.

1. Definitions.  When used herein,  the following terms shall have the following
meanings.

        "Account  Balance" shall mean, on any given day, the gross amount of all
Purchased Receivables unpaid on that day.

        "Account  Debtor" shall have the meaning set forth in the Code and shall
include  any  person  liable  on any  Purchased  Receivable,  including  without
limitation, any guarantor of the Purchased Receivable and any issuer of a letter
of credit or banker's acceptance.

        "Adjustments" shall mean all discounts,  allowances,  returns, disputes,
counterclaims,  offsets,  defenses,  rights of  recoupment,  rights  of  return,
warranty  claims,  or short  payments,  asserted  by or on behalf of any Account
Debtor with respect to any Purchased Receivable.

        "Advance" shall have the meaning set forth in Section 2.2 hereof.

        "Bankruptcy  Code" means the United  States  Bankruptcy  Code (11 U.S.C.
Sections 101 et seq.), as amended, and any successor statute.

        "Business" means the business of Seller as conducted by Seller as at the
date hereof and as proposed to be conducted by Seller  hereafter,  including the
ownership,  operation and lease of assets and property in  connection  therewith
and  the  investment  therein  and  all  other  activities  necessary,   useful,
incidental or ancillary to the foregoing.

        "Code" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.

        "Collateral" shall have the meaning set forth in Section 8 hereof.

        "Collateral Handling Fee" shall have the meaning as set forth in Section
3.3 hereof.

        "Collections"  shall  mean all good funds  received  by Buyer from or on
behalf of an Account Debtor with respect to Purchased Receivables.

        "Compliance Certificate" shall mean a certificate, in a form provided by
Buyer to Seller, which contains the certification of the chief financial officer
of Seller that, among other things, the representations and warranties set forth
in this  Agreement  are true and  correct  as of the date  such  certificate  is
delivered.

        "Effective  Date"  means  the date of  execution  and  delivery  of this
Agreement by Buyer, as set forth underneath  Buyer's executed signature block on
the signature page hereof.

        "Event of Default" shall have the meaning set forth in Section 9 hereof.

        "Finance  Charges"  shall  have the  meaning  set forth in  Section  3.2
hereof.

        "Financing Documents" means, collectively,  this Agreement and all other
present and future documents,  instruments and agreements  between Buyer, on the
one hand,  and Seller or any guarantor of any of the  Obligations,  on the other
hand,  including,  but not limited to those  relating to this  Agreement  or any
other  Financing  Document,  and all  amendments and  modifications  thereto and
replacements therefor.

        "GAAP" means U.S. generally  accepted accounting principles consistently
applied.

        "Invoice  Transmittal"  shall  mean a writing  signed  by an  authorized
representative  of Seller which  accurately  identifies  the  receivables  which
Buyer, at its election,  may purchase, and includes for each such receivable the
correct amount owed by the Account  Debtor,  the name and address of the Account
Debtor, the invoice number, the invoice date and the account code.

        "Material  Adverse  Change" means (i) a material  adverse  change in the
business,  operations,  or condition  (financial or otherwise) of the Seller, or
(ii) a material  impairment  of the  prospect of repayment of any portion of the
Obligations  or (iii) a material  impairment of the value or priority of Buyer's
security interests in the Collateral.

        "Obligations"  shall  mean  all  advances,   financial   accommodations,
liabilities, obligations, covenants and duties owing, arising, due or payable by
Seller to Buyer of any kind or nature,  present or future,  arising  under or in
connection  with this Agreement or under any other  Financing  Document or other
document,  instrument  or  agreement,  whether  or not  evidenced  by any  note,
guarantee  or other  instrument,  whether  arising on  account or by  overdraft,
whether direct or indirect (including those acquired by assignment)  absolute or
contingent,  primary or secondary,  due or to become due, now owing or hereafter
arising,  and however acquired;  including,  without  limitation,  all Advances,
Finance Charges,  Collateral Handling Fees, interest,  Repurchase Amounts, fees,
expenses, professional fees and attorneys' fees and any other sums chargeable to
Seller  hereunder or  otherwise,  and  including  any interest and other amounts
that,  but for the  provisions of the  applicable  Bankruptcy  Code,  would have
accrued.

        "Permitted  Liens"  means the  following:  (i) purchase  money  security
interests  in specific  items of  Equipment;  (ii)  leases of specific  items of
Equipment;  (iii)  liens for taxes not yet  payable;  (iv)  additional  security
interests  and liens  consented  to in writing by Buyer,  which  consent  may be
withheld in its good faith  business  judgment;  (v)  security  interests  being
terminated  substantially  concurrently  with this Agreement;  (vi) (A) liens of
landlords,  warehousemen,  and other bailees,  if and to the extent such lien is
(1) pursuant to applicable law, expressly junior and subordinate to the security
interests of Buyer, or (2) subject to a landlord  agreement or bailee  agreement
(in form  and  substance  satisfactory  to  Buyer  in its  good  faith  business
judgment)  duly executed and delivered to Buyer by such  lienholder  and in full
force and effect; and (B) liens of materialmen,  mechanics,  carriers,  or other
similar  liens  arising  in  the  ordinary   course  of  business  and  securing
obligations  which are not  delinquent;  (vii) liens incurred in connection with
the extension,  renewal or refinancing of the  indebtedness  secured by liens of
the type  described  above  in  clauses  (i) or (ii)  above,  provided  that any
extension, renewal or re-placement lien is limited to the property encumbered by
the existing lien and the principal amount of the indebted-ness  being extended,
renewed or refinanced  does not in-crease;  and (viii) Liens in favor of customs
and revenue  authorities  which secure  payment of customs  duties in connection
with the  importation  of goods.  Buyer  will have the  right to  require,  as a
condition to its consent under  sub-paragraph (iv) above, that the holder of the
additional security interest or lien sign an intercreditor  agreement on Buyer's
then standard form, acknowledge that the security interest is subordinate to the
security interest in favor of Buyer, and agree not to take any action to enforce
its subordinate security interest so long as any Obligations remain outstanding,
and Seller hereby agrees that any uncured  default in any obligation  secured by
the  subordinate  security  interest  shall also  constitute an Event of Default
under this Agreement.

        "Purchased  Receivables"  shall  mean all those  accounts,  receivables,
chattel paper,  instruments,  contract rights,  documents,  general intangibles,
letters of credit, drafts,  bankers acceptances,  and rights to payment, and all
proceeds  thereof (all of the  foregoing  being  referred to as  "receivables"),
arising out of the invoices and other agreements identified on or delivered with
any Invoice  Transmittal  delivered  by Seller to Buyer  which  Buyer  elects to
purchase and for which Buyer makes an Advance.

        "Refund" shall have the meaning set forth in Section 3.5 hereof.

        "Reserve" shall have the meaning set forth in Section 2.4 hereof.

        "Repurchase  Amount"  shall have the  meaning  set forth in Section  4.2
hereof.

        "Reconciliation   Date"  shall  mean  the  last  calendar  day  of  each
Reconciliation Period.

        "Reconciliation Period" shall mean each calendar month of every year.

All accounting terms used in this Agreement,  unless otherwise indicated,  shall
have the  meanings  given to such terms in  accordance  with GAAP,  consistently
applied.  All  other  terms  contained  in  this  Agreement,   unless  otherwise
indicated,  shall have the  meanings  provided  by the Code,  to the extent such
terms are defined therein.

2. Purchase and Sale of Receivables.

     2.1. Offer to Sell Receivables.  During the term hereof,  and provided that
there does not then  exist any Event of  Default or any event that with  notice,
lapse of time or  otherwise  would  constitute  an Event of Default,  Seller may
request that Buyer purchase  receivables and Buyer may, in its sole  discretion,
elect to  purchase  receivables.  Seller  shall  deliver  to  Buyer  an  Invoice
Transmittal  with respect to any  receivable for which a request for purchase is
made. An authorized representative of Seller shall sign each Invoice Transmittal
delivered  to Buyer.  Buyer  shall be  entitled  to rely on all the  information
provided  by Seller to Buyer on or with the Invoice  Transmittal  and to rely on
the signature on any Invoice Transmittal as an authorized signature of Seller.

     2.2. Acceptance of Receivables.  Buyer shall have no obligation to purchase
any  receivable  listed on an Invoice  Transmittal.  Buyer may exercise its sole
discretion  in approving  the credit of each Account  Debtor  before  buying any
receivable.  Upon acceptance by Buyer of all or any of the receivables described
on any Invoice  Transmittal,  Buyer shall pay to Seller eighty  percent (80%) of
the face amount of each  receivable  Buyer desires to purchase,  net of deferred
revenue and offsets related to each specific Account Debtor.  Such payment shall
be the "Advance" with respect to such receivable.  Buyer may, from time to time,
in its sole  discretion,  change the  percentage  of the  Advance.  Upon Buyer's
acceptance  of  the  receivable  and  payment  to  Seller  of the  Advance,  the
receivable  shall  become a "Purchased  Receivable."  It shall be a condition to
each Advance that (i) all of the  representations  and  warranties  set forth in
Section 6 of this Agreement be true and correct in all material  respects on and
as of the date of the related  Invoice  Transmittal and on and as of the date of
such  Advance as though  made at and as of each such date,  and (ii) no Event of
Default or any event or condition  that with notice,  lapse of time or otherwise
would  constitute an Event of Default shall have occurred and be continuing,  or
would result from such Advance. Notwithstanding the foregoing, in no event shall
the aggregate amount of all Purchased Receivables outstanding at any time exceed
Two Million Five Hundred Thousand Dollars ($2,500,000) (the "Line Amount"),  and
Buyer shall have no obligation to make Advances in excess of Two Million Dollars
($2,000,000) in the aggregate at any one time outstanding.

      2.3.  Effectiveness of Sale to Buyer. Effective upon Buyer's payment of an
Advance,  and for and in  consideration  therefor  and in  consideration  of the
covenants of this  Agreement,  Seller  hereby  absolutely  sells,  transfers and
assigns to Buyer,  all of  Seller's  right,  title and  interest  in and to each
Purchased  Receivable  and all  monies  due or which may  become  due on or with
respect to such Purchased Receivable.  Buyer shall be the absolute owner of each
Purchased Receivable. Buyer shall have, with respect to any goods related to the
Purchased Receivable,  all the rights and remedies of an unpaid seller under the
Code and other  applicable  law,  including  the rights of  replevin,  claim and
delivery, reclamation and stoppage in transit.

     2.4.  Establishment  of a  Reserve.  Upon  the  purchase  by  Buyer of each
Purchased Receivable,  Buyer shall establish a reserve. The reserve shall be the
amount by which the face amount of the Purchased  Receivable exceeds the Advance
on that Purchased Receivable (the "Reserve"); provided, the Reserve with respect
to all Purchased Receivables  outstanding at any one time shall be an amount not
less than twenty  percent  (20%) of the Account  Balance at that time and may be
set at a higher  percentage at Buyer's sole  discretion.  The reserve shall be a
book  balance  maintained  on the records of Buyer and shall not be a segregated
fund.

3. Collections, Charges and Remittances.

     3.1.  Collections.  Upon  receipt  by Buyer  of  Collections,  Buyer  shall
promptly  credit such  Collections to Seller's  Account Balance on a daily basis
three (3)  business  days after the date  received  by the Buyer in  immediately
available  funds;  provided,  that if Seller is in default under this Agreement,
Buyer shall apply all  Collections  to Seller's  Obligations  hereunder  in such
order and manner as Buyer may determine. If an item of collection is not honored
or Buyer  does not  receive  good  funds for any  reason,  the  amount  shall be
included in the Account  Balance as if the Collections had not been received and
Finance Charges under Section 3.2 shall accrue thereon.

     3.2. Finance Charges. On each Reconciliation Date Seller shall pay to Buyer
a finance charge equal to the greater of (a) Five Thousand  Dollars ($5,000) for
such  Reconciliation  Period,  and (b)  the  product  of (i)  0.875%  per  month
multiplied  by (ii) the average  daily Account  Balance  outstanding  during the
applicable Reconciliation Period (the "Finance Charges"). Buyer shall deduct the
accrued Finance Charges from the Reserve as set forth in Section 3.5 below.

     3.3.  Collateral Handling Fee. On each Reconciliation Date Seller shall pay
to Buyer a  collateral  handling  fee equal to  three-sixteenths  of one percent
(0.1875%) per month of the average daily Account Balance  outstanding during the
applicable  Reconciliation  Period (the "Collateral  Handling Fee"). Buyer shall
deduct the Collateral  Handling Fee from the Reserve as set forth in Section 3.5
below.

     3.4. Accounting.  Buyer shall prepare and send to Seller after the close of
business for each  Reconciliation  Period, an accounting of the transactions for
that Reconciliation  Period,  including the amount of all Purchased Receivables,
all Collections,  Adjustments, Finance Charges, and the Collateral Handling Fee.
The  accounting  shall be deemed  correct and  conclusive  unless  Seller  makes
written  objection  to Buyer  within  thirty (30) days after the Buyer mails the
accounting to Seller.

     3.5. Refund to Seller.  Provided that there does not then exist an Event of
Default or any event or condition  that with notice,  lapse of time or otherwise
would  constitute  an Event of Default,  Buyer  shall  refund to Seller by check
after the Reconciliation Date, the amount, if any, which Buyer owes to Seller at
the end of the  Reconciliation  Period  according to the accounting  prepared by
Buyer for that  Reconciliation  Period (the  "Refund").  The Refund  shall be an
amount equal to the result of (A) below less (B) below:
        (A) The sum of:
               (1)  The  Reserve  as of the  beginning  of  that  Reconciliation
               Period,   plus  (2)  the  Reserve   created  for  each  Purchased
               Receivable purchased during that
Reconciliation Period,
minus
        (B)    The total for that  Reconciliation  Period of: (1) the Collateral
               Handling Fee;
               (2) Finance Charges;
               (3) Adjustments;
               (4) Repurchase  Amounts, to the extent Buyer has agreed to accept
payment thereof by deduction from the Refund;
               (5) the Reserve  for the  Account  Balance as of the first day of
the  following  Reconciliation  Period in the  minimum  percentage  set forth in
Section 2.4 hereof; and
               (6) all amounts due, including professional fees and expenses, as
set forth in Section 12 for which oral or written  demand has been made by Buyer
to Seller  during that  Reconciliation  Period to the extent Buyer has agreed to
accept payment thereof by deduction from the Refund.

In the event the formula set forth in this  Section 3.5 results in an amount due
to Buyer from  Seller,  Seller shall make such payment in the same manner as set
forth in Section  4.3 hereof for  repurchases.  If the formula set forth in this
Section 3.5 results in an amount due to Seller from Buyer, Buyer shall make such
payment by check or wire  transfer,  subject to Buyer's rights under Section 4.3
and Buyer's rights of offset and recoupment.

3.6.  Facility Fee. In  consideration  for Buyer  entering into this  Agreement,
Seller shall pay to Buyer a facility fee of  $10,000.00,  which shall be due and
payable concurrently with the execution and delivery of this Agreement and shall
be fully earned on the Effective Date and  non-refundable  when paid. Seller and
Buyer  hereby  acknowledge  and agree  that,  solely in the  event  that  Seller
requests in writing an increase in the Line Amount and Buyer agrees (in its sole
and absolute  discretion) in writing to such increase in the Line Amount (and no
Default or Event of Default  exists at the time of such request and  agreement),
an  additional  facility  fee,  in an amount  equal to 1.00% of the  incremental
increase in the then extant Line Amount so  requested  and agreed,  shall be due
and  payable  and  fully  earned  concurrently  with the  effectiveness  of such
incremental increase and non-refundable when paid.


4. Recourse and Repurchase Obligations.

     4.1.  Recourse.  Buyer's  acquisition of Purchased  Receivables from Seller
shall be with full recourse against Seller. In the event the Obligations  exceed
the amount of Purchased  Receivables and Collateral,  Seller shall be liable for
any deficiency.

     4.2.  Seller's  Agreement to  Repurchase.  Seller agrees to pay to Buyer on
demand,  the  full  face  amount,  or  any  unpaid  portion,  of  any  Purchased
Receivable:
        (A) which  remains  unpaid  ninety (90)  calendar days after the invoice
date; or
        (B) which is owed by any Account Debtor who has filed,  or has had filed
        against  it,  any  bankruptcy  case,   assignment  for  the  benefit  of
        creditors,  receivership,  or  insolvency  proceeding  or who has become
        insolvent  (as defined in the  Bankruptcy  Code) or who is generally not
        paying its debts as such debts  become due; or (C) with respect to which
        there has been any breach of  warranty  or  representation  set forth in
        Section  6  hereof  or any  breach  of any  covenant  contained  in this
        Agreement;  or (D) with respect to which the Account  Debtor asserts any
        discount,  allowance,  return, dispute,  counterclaim,  offset, defense,
        right of recoupment, right of return, warranty claim, or short payment;
together with all reasonable  attorneys' and professional  fees and expenses and
all court costs incurred by Buyer in collecting such Purchased Receivable and/or
enforcing its rights under,  or collecting  amounts owed by Seller in connection
with, this Agreement (collectively, the "Repurchase Amount").

     4.3.  Seller's Payment of the Repurchase Amount or Other Amounts Due Buyer.
When any  Repurchase  Amount or other amount owing to Buyer  becomes due,  Buyer
shall inform Seller of the manner of payment which may be any one or more of the
following  in Buyer's  sole  discretion:  (a) in cash  immediately  upon  demand
therefor;  (b) by delivery of  substitute  invoices  and an Invoice  Transmittal
acceptable to Buyer which shall thereupon become Purchased  Receivables;  (c) by
adjustment to the Reserve pursuant to Section 3.5 hereof;  (d) by deduction from
or offset against the Refund that would  otherwise be due and payable to Seller;
(e) by  deduction  from or offset  against  the amount that  otherwise  would be
forwarded  to Seller in  respect  of any  further  Advances  that may be made by
Buyer; or (f) by any combination of the foregoing as Buyer may from time to time
choose.

     4.4. Seller's Agreement to Repurchase All Purchased  Receivables.  Upon and
after the occurrence of an Event of Default,  Seller shall,  upon Buyer's demand
(or, in the case of an Event of Default under Section 9(B),  immediately without
notice or demand from  Buyer)  repurchase  all the  Purchased  Receivables  then
outstanding,  or such portion  thereof as Buyer may demand.  Such demand may, at
Buyer's option,  include and Seller shall pay to Buyer  immediately upon demand,
cash in an amount equal to the Advance with respect to each Purchased Receivable
then  outstanding  together  with  all  accrued  Finance  Charges,  Adjustments,
Collateral  Handling Fees,  attorney's and  professional  fees,  court costs and
expenses as provided  for herein,  and any other  Obligations.  Upon  receipt of
payment in full of the  Obligations,  Buyer shall  immediately  instruct Account
Debtors to pay Seller  directly,  and return to Seller any Refund due to Seller.
For the  purpose of  calculating  any Refund due under this  Section  only,  the
Reconciliation  Date  shall be deemed to be the date Buyer  receives  payment in
good funds of all the Obligations as provided in this Section 4.4.

5. Power of  Attorney.  Seller does  hereby  irrevocably  appoint  Buyer and its
successors and assigns as Seller's true and lawful  attorney in fact, and hereby
authorizes Buyer,  regardless of whether there has been an Event of Default, (a)
to sell, assign,  transfer,  pledge,  compromise,  or discharge the whole or any
part of the Purchased  Receivables;  (b) to demand,  collect,  receive, sue, and
give  releases to any Account  Debtor for the monies due or which may become due
upon or with respect to the Purchased Receivables and to compromise,  prosecute,
or defend any  action,  claim,  case or  proceeding  relating  to the  Purchased
Receivables, including the filing of a claim or the voting of such claims in any
bankruptcy case, all in Buyer's name or Seller's name, as Buyer may choose;  (c)
to  prepare,  file and sign  Seller's  name on any  notice,  claim,  assignment,
demand,  draft,  or  notice of or  satisfaction  of lien or  mechanics'  lien or
similar  document  with  respect  to  Purchased  Receivables;  (d) to notify all
Account Debtors with respect to the Purchased  Receivables to pay Buyer directly
(and,  without  limiting the generality of the  foregoing,  to do so pursuant to
written payment  instructions printed on letterhead of Seller or Parent but sent
by Buyer); (e) to receive, open, and dispose of all mail addressed to Seller for
the purpose of collecting  the Purchased  Receivables;  (f) to endorse  Seller's
name on any checks or other forms of payment on the Purchased  Receivables;  (g)
to  execute on behalf of Seller any and all  instruments,  documents,  financing
statements  and  the  like  to  perfect  Buyer's   interests  in  the  Purchased
Receivables  and  Collateral;  and (h) to do all acts and  things  necessary  or
expedient,  in furtherance  of any such  purposes.  If Buyer receives a check or
item which is payment for both a Purchased  Receivable  and another  receivable,
the funds shall  first be applied to the  Purchased  Receivable  and, so long as
there does not exist an Event of Default or an event that with notice,  lapse of
time or  otherwise  would  constitute  an Event of Default,  the excess shall be
remitted to Seller. Upon the occurrence and continuation of an Event of Default,
all of the power of attorney  rights granted by Seller to Buyer  hereunder shall
be applicable with respect to all Purchased Receivables and all Collateral.

6. Representations, Warranties and Covenants; Additional Provisions; Conditions.

6.1.    Receivables-related Warranties, Representations and Covenants. To induce
        Buyer to buy receivables and to renders its services to Seller, and with
        full  knowledge  that the truth and accuracy of the  following are being
        relied upon by the Buyer in determining whether to accept receivables as
        Purchased  Receivables,  Seller  represents,   warrants,  covenants  and
        agrees, with respect to each Invoice Transmittal  delivered to Buyer and
        each receivable described therein, that:

        (A) Seller is the  absolute  owner of each  receivable  set forth in the
        Invoice  Transmittal  and has full  legal  right to sell,  transfer  and
        assign such receivables;

        (B) The correct amount of each receivable is as set forth in the Invoice
        Transmittal and is not in dispute;

        (C)  The  payment  of  each   receivable  is  not  contingent  upon  the
        fulfillment  of any  obligation or contract,  past or future and any and
        all  obligations  required of the Seller have been  fulfilled  as of the
        date of the Invoice Transmittal;

        (D) Each receivable set forth on the Invoice  Transmittal is based on an
        actual sale and delivery of goods and/or services actually rendered,  is
        presently  due and owing to Seller,  is not past due or in default,  has
        not been previously sold, assigned, transferred, or pledged, and is free
        of any and all liens,  security  interests and  encumbrances  other than
        liens, security interests or encumbrances in favor of Buyer or any other
        division or affiliate of Silicon Valley Bank;

        (E) There are no defenses,  offsets, or counterclaims against any of the
        receivables,  and no  agreement  has been made under  which the  Account
        Debtor may claim any deduction or discount,  except as otherwise  stated
        in the Invoice Transmittal;

        (F) Each  Purchased  Receivable  shall be the  property of the Buyer and
        shall be collected by Buyer,  but if for any reason it should be paid to
        Seller,  Seller shall promptly notify Buyer of such payment,  shall hold
        any  checks,  drafts,  or monies so received in trust for the benefit of
        Buyer, and shall promptly transfer and deliver the same to the Buyer;

        (G) Buyer  shall  have the right of  endorsement,  and also the right to
        require  endorsement by Seller,  on all payments  received in connection
        with each Purchased Receivable and any proceeds of Collateral;

        (H) Seller,  and to Seller's  best  knowledge,  each Account  Debtor set
        forth in the Invoice  Transmittal,  are and shall remain solvent as that
        term is defined in the Bankruptcy Code and the Code, and no such Account
        Debtor has filed or had filed  against  it a  voluntary  or  involuntary
        petition for relief under the Bankruptcy Code;

        (I) Each Account Debtor named on the Invoice Transmittal will not object
        to the payment for, or the quality or the quantity of the subject matter
        of, the receivable and is liable for the amount set forth on the Invoice
        Transmittal;

        (J) Each Account Debtor shall promptly be notified,  after acceptance by
        Buyer,  that the Purchased  Receivable  has been  transferred  to and is
        payable  to Buyer,  and  Seller  shall not take or permit  any action to
        countermand such notification; and

        (K) All  receivables  forwarded  to and accepted by Buyer after the date
        hereof, and thereby becoming Purchased Receivables,  shall comply in all
        material   respects   with  each  and   every   one  of  the   foregoing
        representations,  warranties, covenants and agreements referred to above
        in this Section 6.1.

     6.2. Additional Warranties,  Representations and Covenants.  In addition to
the foregoing warranties,  representations and covenants, to induce Buyer to buy
receivables  and to render its  services to Seller,  Seller  hereby  represents,
warrants, covenants and agrees that:

        (A) Seller will not assign, transfer, sell, or grant, or permit any lien
        or security interest in any Purchased Receivables or Collateral to or in
        favor of any other  party,  without  Buyer's  prior  written  consent or
        except as otherwise expressly permitted under this Agreement.

        (B) The Seller's name, form of organization,  chief executive office and
        jurisdiction of organization, and the place where the records concerning
        all Purchased  Receivables  and  Collateral are kept is set forth at the
        beginning of this Agreement,  Collateral is located only at the location
        set forth in the  beginning  of this  Agreement,  or, if  located at any
        additional  location,  as set  forth  on a  schedule  attached  to  this
        Agreement,  and Seller  will give Buyer at least  thirty (30) days prior
        written notice if such name,  organization,  chief  executive  office or
        other   locations  of   Collateral  or  records   concerning   Purchased
        Receivables  or  Collateral  is changed or added and shall  execute  any
        documents  necessary  to  perfect  Buyer's  interest  in  the  Purchased
        Receivables and the Collateral.

        (C) Seller shall (i) pay all of its normal gross payroll for  employees,
        and  all  foreign,   federal,  state,  and  local  taxes  (collectively,
        "Taxes"),  as and when due, including without limitation all payroll and
        withholding Taxes and state sales, use, and other ad valorem taxes; (ii)
        deliver at any time and from time to time at Buyer's  request,  evidence
        satisfactory to Buyer that all such amounts have been paid to the proper
        Tax  authorities;  and (iii) if requested by Buyer,  pay its payroll and
        related  Taxes  through  a  bank  or  an  independent   payroll  service
        acceptable to Buyer.

        (D) Seller has not, as of the time  Seller  delivers to Buyer an Invoice
        Transmittal,  or as of the time Seller  accepts any Advance  from Buyer,
        filed a voluntary  petition for relief under the Bankruptcy  Code or had
        filed against it an involuntary petition for relief.

        (E) If  Seller  owns,  holds  or has any  interest  in,  any  copyrights
        (whether  registered,  or  unregistered),  patents  or  trademarks,  and
        licenses of any of the  foregoing,  such interest has been  disclosed to
        Buyer and is  specifically  listed and  identified on a schedule to this
        Agreement, and Seller shall immediately notify Buyer if Seller hereafter
        obtains any interest in any additional copyrights,  patents,  trademarks
        or licenses that are significant in value or are material to the conduct
        of its business.

        (F) Seller shall provide Buyer with:  (i) a Compliance  Certificate on a
        monthly  basis to be received  by Buyer no later than the 30th  calendar
        day following  each calendar  month or on a more frequent or other basis
        if and as  requested  by Buyer,  (ii) monthly  financial  statements  of
        Seller  (including  balance sheet and income statement of Seller) within
        30 days after the end of each month;  (iii) annual financial  statements
        of  Seller,   audited  by  independent   certified  public   accountants
        acceptable to Buyer, within 90 days after the end of each fiscal year of
        Seller; (iv) monthly accounts receivable agings (separately  identifying
        Purchased  Receivables and non-Purchased  Receivables),  aged by invoice
        date,  within 30 days after the end of each month;  (v) monthly accounts
        payable  agings,  aged by invoice date,  and  outstanding  or held check
        registers,  within 30 days  after the end of each  month;  (vi)  monthly
        reconciliations  of accounts  receivable  agings (aged by invoice date),
        transaction reports, and general ledger, within 30 days after the end of
        each month.

        (G) Seller  shall  provide  Buyer with a deferred  revenue  listing upon
        request.

        (H) On request by Buyer,  Seller will promptly  furnish any  information
        Buyer may reasonably request to determine financial condition of Seller,
        including,  but not  limited  to all of  Seller's  Obligations,  and the
        condition of any of Seller's  receivables  which may include but are not
        limited to Purchased Receivables.

        (I) At all times from and after a date as soon as practicable  after the
        Effective  Date (and in any event not later than 90 days  following  the
        Effective  Date),  Seller will  maintain its primary  operating  deposit
        accounts  and  investment  securities  accounts  with  Buyer or  Buyer's
        institutional  affiliates.  As to any deposit  accounts  and  investment
        property  (including   securities   accounts)  maintained  with  another
        institution,  Seller shall cause such institution,  within 30 days after
        the Effective Date, to enter into a control agreement in form acceptable
        to Buyer in its good faith business judgment in order to perfect Buyer's
        first-priority  security  interest in such  deposit  accounts  and grant
        Buyer  "control"  (within  the  meaning of Articles 8 and 9 of the Code)
        over  such  investment   property   (including   securities   accounts).
        Thereafter, Seller shall not maintain any deposit accounts or investment
        property  (including  securities  accounts)  with any  bank,  securities
        intermediary,  or other  institution  unless Buyer has  received  such a
        control agreement duly executed by such party in favor of Buyer covering
        such  deposit  account  or  investment  property  (including  securities
        accounts), as the case may be.

        (J) All  Collections  and all  other  proceeds  of  Collateral  shall be
        directly paid by third parties,  or promptly deposited by Seller, into a
        lockbox  account or such other  "blocked  account" as Buyer may specify,
        pursuant to a blocked  account or other cash dominion  agreement in such
        form as Buyer may specify in its good faith business judgment, and funds
        from such lockbox account or other blocked account,  as the case may be,
        shall be forwarded directly to a cash collateral account maintained with
        and  controlled by Buyer in accordance  with the terms and conditions of
        such   agreement(s).   Seller  shall  keep  such   agreements  and  such
        arrangements  in full  force  and  effect  throughout  the  term of this
        Agreement,  and until all  Obligations  have been paid and  performed in
        full.

        (K) If  Seller  owns,  holds  or has any  interest  in,  any  copyrights
        (whether  registered,  or  unregistered),  patents  or  trademarks,  and
        licenses of any of the  foregoing,  such interest has been  disclosed to
        Buyer and is  specifically  listed and  identified on a schedule to this
        Agreement, and Seller shall immediately notify Buyer if Seller hereafter
        obtains any interest in any additional copyrights,  patents,  trademarks
        or licenses that are significant in value or are material to the conduct
        of its business.

        (L)  Seller  shall  allow  Buyer to audit  the  Collateral  at  Seller's
        expense.  The charge for such audits  shall be at Buyer's  then  current
        standard  charge for the same,  plus  Buyer's  reasonable  out-of-pocket
        expenses in connection therewith.

        (M) Seller will comply with all other covenants and agreements set forth
        in the Intellectual  Property Security  Agreement or any other Financing
        Document.

        (N)  Seller   shall  not  enter  into  any  merger,   amalgamation,   or
        consolidation with or into any other entity, party or person, or acquire
        all or  substantially  all of the  capital  stock or assets  of  another
        person.

        (O) All  financial  statements  now or in the future  delivered to Buyer
        have been, and will be,  prepared in conformity with GAAP and now and in
        the future will fairly  present the results of operations  and financial
        condition of Seller,  in accordance  with GAAP, at the times and for the
        periods  therein  stated.  Between  the last  date  covered  by any such
        statement  provided  to Buyer  and the date  hereof,  there  has been no
        Material Adverse Change.

        (P)  Seller  does not own any  maskworks,  computer  software,  or other
        copyrights  that are registered  (or are the subject of any  application
        for registration)  with the United States Copyright Office.  Seller will
        NOT register with the United States  Copyright Office (or apply for such
        registration of) any of Seller's maskworks,  computer software, or other
        copyrights, unless Seller has provided Buyer not less than 30 days prior
        written notice of the commencement of such  registration/application and
        Seller has executed and  delivered to Buyer such  security  agreement(s)
        and other documentation (in form and substance  reasonably  satisfactory
        to  Buyer)  which  Buyer  in its  good  faith  business  judgment  deems
        necessary for the grant, attachment,  and perfection of Buyer's security
        interests in such maskworks, computer software, or other copyrights (and
        all  proceeds  and  products  (including  without  limitation  licensing
        revenue)  thereof) and for filing with respect to such  registration  or
        application.

        (Q) With  respect  to any  leased  premises  of  Seller,  Seller  shall,
        promptly  upon  Buyer's  request  therefor,  deliver to Buyer a landlord
        agreement (in form and substance satisfactory to Buyer) duly executed by
        the lessor of such leased premises.

        (R)  Seller  hereby  represents  and  warrants  that,  as of the date of
        execution and deliver of this  Agreement,  no goods of Seller are in the
        possession of any  warehouseman  or other bailee,  and hereby  covenants
        that Seller  promptly shall deliver written notice to Buyer of any goods
        of Seller being in the possession of any  warehouseman  or other bailee.
        With  respect  to  any  goods  of  Seller  in  the   possession  of  any
        warehouseman  or other  bailee,  Seller  shall,  promptly  upon  Buyer's
        request  therefor,  deliver  to  Buyer a bailee  agreement  (in form and
        substance  satisfactory to Buyer) duly executed by such  warehouseman or
        other bailee.

        (S) Seller shall pay any and all brokerage  commissions  or finders fees
        incurred  in  connection  with  or as a  result  of  Seller's  obtaining
        financing   from  Buyer  under  this   Agreement.   Seller   agrees  and
        acknowledges  that payment of all such brokerage  commissions or finders
        fees shall be the sole  responsibility  of Seller,  and Seller agrees to
        indemnify, defend, and hold Buyer harmless from and against any claim of
        any broker or finder  arising out of Seller's  obtaining  financing from
        Buyer under this Agreement (and any reasonable  attorneys fees and costs
        incurred by Buyer in connection therewith).

        (T) All  present  and  future  indebtedness  of Seller to its  officers,
        directors,  shareholders, and subsidiaries ("Inside Debt") shall, at all
        times, be  subordinated  to the Obligations  pursuant to a subordination
        agreement on Buyer's standard form.  Seller represents and warrants that
        there is no Inside Debt presently outstanding, other than the Designated
        Subordinated  Debt  (as  defined  in  Section  6.4(D)  below).  Prior to
        incurring  any Inside Debt in the future,  Seller shall cause the person
        to whom such  Inside Debt will be owed to execute and deliver to Buyer a
        subordination agreement on Buyer's standard form.

        (U) Seller  shall not pay or declare any  dividends  on  Seller's  stock
        (except for dividends  payable solely in stock of Seller).  Seller shall
        not  redeem,  retire,   purchase  or  otherwise  acquire,   directly  or
        indirectly, any of Seller's stock.

6.3. Payments without Setoffs or Counterclaims,  etc. All payments hereunder and
under  the other  Financing  Documents  made by or on behalf of Seller  shall be
made: (a) without setoff or counterclaim; and (b) free and clear of, and without
deduction or withholding for or on account of, any foreign,  federal,  state, or
local Taxes.

6.4.  Conditions  Precedent.  In addition to any other conditions  precedent set
forth in this  Agreement,  the making of the  initial  Advance  or other  credit
extension or the purchase of the initial receivable  hereunder is subject to the
following additional conditions:

        (A) Buyer  shall have  received  lien  searches  listing  all  effective
        financing statements that name Seller (or any predecessor corporation or
        any  tradename  thereof or any seller of assets  acquired  by any Seller
        outside of the ordinary  course of business) as debtor that are filed in
        the applicable filing offices with respect to such Seller, none of which
        financing statements shall cover any of the Collateral of Seller, except
        (1)  financing  statements  perfecting  Permitted  Liens,  (2) financing
        statements as to which Buyer has received duly executed authorization by
        the applicable  secured party to file executed  termination  statements,
        partial release statements, or authorizations to discharge, each in form
        and  substance  satisfactory  to Buyer,  or (3) as  otherwise  agreed in
        writing by Buyer.

        (B) nStor  Technologies,  Inc.  ("Parent")  shall execute and deliver to
        Buyer a continuing  guaranty with respect to all of the  Obligations  of
        Seller,  in form and substance  satisfactory to Buyer (the  "Guaranty").
        Throughout the term of this Agreement,  Seller shall not cause,  suffer,
        or permit the Guaranty to cease to be in full force and effect.

        (C) Seller shall execute and deliver to Buyer an  intellectual  property
        security  agreement,  in form and substance  satisfactory  to Buyer (the
        "Intellectual Property Security Agreement"). Throughout the term of this
        Agreement,  Seller shall not cause,  suffer,  or permit the Intellectual
        Property Security Agreement to cease to be in full force and effect.

        (D) (i) Buyer shall have  received  copies of all  material  agreements,
        instruments, and other documents consisting of, evidencing, securing, or
        otherwise   relating  to,  the  series  of  Seller's   10%   Convertible
        Subordinated Promissory Notes still outstanding as of the Effective Date
        (including,   without   limitation,   that   certain   10%   Convertible
        Subordinated  Promissory Note dated June 14, 2002, made by Seller to the
        order of H. Irwin Levy in the original principal amount of $650,000,  as
        amended by that certain letter agreement,  dated June 30, 2003,  between
        Seller and H. Irwin Levy, pursuant to which the principal amount of such
        note was increased  from  $650,000 to $818,370 due to the  conversion of
        accrued but unpaid interest into additional principal), in each case, as
        amended, restated, supplemented, or otherwise modified from time to time
        (collectively,  the "Designated  Subordinated  Debt  Documents"),  which
        copies shall be certified by the  Secretary of Seller as true,  correct,
        and  complete  and are in full force and  effect;  and (ii)  (unless the
        Designated  Subordinated  Debt has been repaid in full or converted into
        equity securities of Seller on or before the Effective Date) all holders
        of any  indebtedness  evidenced  by any one or  more  of the  Designated
        Subordinated Debt Documents (the "Designated  Subordinated  Debt") shall
        execute  and  deliver to Buyer a  subordination  agreement,  in form and
        substance  satisfactory  to Buyer  (the  "Designated  Subordinated  Debt
        Subordination  Agreement"),  pursuant to which the obligations of Seller
        under  the  Designated   Subordinated  Debt  Documents   (including  the
        Designated Subordinated Debt) shall be subordinated in favor of Buyer in
        accordance with the terms and conditions of the Designated  Subordinated
        Subordination Agreement.  Seller represents and warrants that Seller has
        reviewed the Designated  Subordinated Debt  Subordination  Agreement and
        that all holders of record with respect to the  Designated  Subordinated
        Debt (and all holders of security  interests (if any) securing same) are
        signatories to the Designated Subordinated Debt Subordination Agreement.
        Seller  hereby  covenants and agrees that,  throughout  the term of this
        Agreement,  Seller  shall not cause,  suffer,  or permit the  Designated
        Subordinated Debt  Subordination  Agreement to cease to be in full force
        and effect (unless, the Designated Subordination Debt has been repaid in
        full  (but  only if and to the  extent  expressly  permitted  under  the
        Designated Subordinated Debt Subordination  Agreement) or converted into
        equity  securities of Borrower).  Seller hereby  represents and warrants
        that no  obligation  of Seller  under or in  respect  of the  Designated
        Subordinated  Debt  Documents is secured.  Seller  hereby  covenants and
        agrees that,  at all times,  no obligation of Seller under or in respect
        of the Designated  Subordinated Debt Documents shall be secured.  Seller
        hereby  represents  and warrants  that,  as of the date of the Effective
        Date,  the  aggregate  outstanding  principal  amount of the  Designated
        Subordinated Debt is $818,370.

7.  Adjustments.  In the  event  of a  breach  of  any  of the  representations,
warranties,  or  covenants  set  forth  in  Section  6.1,  or in the  event  any
Adjustment or dispute is asserted by any Account  Debtor,  Seller shall promptly
advise Buyer and shall,  subject to the Buyer's approval,  resolve such disputes
and advise Buyer of any adjustments. Unless the disputed Purchased Receivable is
repurchased by Seller and the full Repurchase Amount is paid, Buyer shall remain
the absolute owner of any Purchased Receivable which is subject to Adjustment or
repurchase under Section 4.2 hereof,  and any rejected,  returned,  or recovered
personal  property,  with the right to take  possession  thereof at any time. If
such  possession  is not  taken by Buyer,  Seller  is to  resell it for  Buyer's
account at Seller's  expense  with the  proceeds  made  payable to Buyer.  While
Seller retains  possession of said returned  goods,  Seller shall segregate said
goods and mark them "property of Silicon Valley Bank."

8. Security  Interest.  To secure the prompt payment and performance to Buyer of
all of the Obligations, Seller hereby grants to Buyer a continuing lien upon and
security  interest in all of Seller's now existing or hereafter  arising  rights
and  interest in the  following,  whether  now owned or  existing  or  hereafter
created,   acquired,  or  arising,  and  wherever  located  (collectively,   the
"Collateral"):
        (A)  All  accounts,   receivables,   contract  rights,   chattel  paper,
        instruments,  documents, letters of credit, bankers acceptances, drafts,
        checks, cash, investment property,  securities,  and general intangibles
        (including,  without limitation,  all claims, causes of action,  deposit
        accounts,  guaranties,  rights in and claims  under  insurance  policies
        (including   rights  to  premium   refunds),   rights  to  tax  refunds,
        copyrights, patents, trademarks, rights in and under license agreements,
        and all  other  intellectual  property);  (B) All  inventory,  including
        Seller's rights to any returned or rejected goods, with respect to which
        Buyer  shall  have all the rights of any unpaid  seller,  including  the
        rights of replevin,  claim and  delivery,  reclamation,  and stoppage in
        transit;  (C)  All  monies,   refunds  and  other  amounts  due  Seller,
        including,  without limitation,  amounts due Seller under this Agreement
        (including Seller's right of offset and recoupment);  (D) All equipment,
        machinery, furniture,  furnishings,  fixtures, tools, supplies and motor
        vehicles;
        (E) All farm products,  crops, timber,  minerals and the like (including
        oil and gas); (F) All accessions to, substitutions for, and replacements
        of, all of the foregoing; (G) All books and records pertaining to all of
        the  foregoing;  and (H) All proceeds of the  foregoing,  whether due to
        voluntary or involuntary disposition, including insurance proceeds.
        Seller is not authorized to sell,  assign,  transfer or otherwise convey
any Collateral  without Buyer's prior written consent,  except for: (i) the sale
of  inventory  of Seller in the  Seller's  usual  course of  business;  (ii) the
non-exclusive  licensing  of  intellectual  property of Seller,  in the Seller's
usual course of business; and (iii) up to $5,000 in the aggregate of immaterial,
worn-out, or obsolete Equipment.  Seller hereby authorizes and authenticates UCC
financing  statements,  in a form acceptable to Buyer, and agrees to execute and
deliver any other  instruments  and documents  requested by Buyer,  to evidence,
perfect,  or protect the interests of Buyer in the Collateral.  Seller agrees to
deliver to Buyer the originals of all  instruments,  chattel paper and documents
evidencing or related to Purchased Receivables and Collateral.

9. Default.  The occurrence of any one or more of the following shall constitute
an Event of Default hereunder.
        (A) Seller fails to pay any amount owed to Buyer as and when due;
        (B) There  shall be  commenced  by or against  Seller any  voluntary  or
        involuntary  case under the  Bankruptcy  Code, or any assignment for the
        benefit of creditors,  or appointment of a receiver or custodian for any
        of its assets;  (C) Seller shall become  insolvent in that its debts are
        greater than the fair value of its assets,  or Seller is  generally  not
        paying its debts as they become due or is left with  unreasonably  small
        capital; (D) Any involuntary lien,  garnishment,  attachment or the like
        is issued  against  or  attaches  to the  Purchased  Receivables  or any
        Collateral;  (E) The breach, in any material  respect,  of any covenant,
        agreement,  warranty,  or  representation in this Agreement or any other
        Financing  Document  shall  constitute  an  immediate  Event of  Default
        hereunder;  (F) Seller is not in  compliance  with,  or  otherwise is in
        default  under,  any  term  of any  document,  instrument  or  agreement
        evidencing a debt,  obligation  or liability of any kind or character of
        Seller, now or hereafter existing,  in favor of Buyer or any division or
        affiliate  of Silicon  Valley  Bank,  regardless  of whether  such debt,
        obligation  or liability is direct or  indirect,  primary or  secondary,
        joint,  several or joint and several,  or fixed or contingent,  together
        with any and all renewals and extensions of such debts,  obligations and
        liabilities,  or any part  thereof;  (G) An event of default shall occur
        under any  guaranty  executed by any  guarantor  of the  Obligations  of
        Seller to Buyer under this Agreement,  or any material  provision of any
        such guaranty  shall for any reason cease to be valid or  enforceable or
        any such  guaranty  shall be  repudiated  or  terminated,  including  by
        operation  of law;  (H) A default or event of default  shall occur under
        any agreement between Seller and any creditor of Seller that has entered
        into a  subordination  agreement  with Buyer;  (I) Any creditor that has
        entered into a  subordination  agreement  with Buyer shall breach any of
        the terms of or not comply with such subordination  agreement; (J) There
        is a Material  Adverse  Change;  or (K) Parent ceases to own 100% of the
        issued and outstanding capital stock of Seller.

10.  Remedies Upon  Default.  Upon the  occurrence  of an Event of Default,  (1)
without  implying  any  obligation  to buy  receivables,  Buyer may cease buying
receivables or extending any financial  accommodations  to Seller;  (2) all or a
portion of the Obligations  shall be, at the option of and upon demand by Buyer,
or with respect to an Event of Default described in Section 9(B),  automatically
and without notice or demand,  due and payable in full; and (3) Buyer shall have
and may exercise all the rights and remedies  under this  Agreement or any other
Financing Document,  and under applicable law, including the rights and remedies
of a secured party under the Code, all the power of attorney rights described in
Section 5 with respect to all Collateral,  and the right to collect, dispose of,
sell, lease, use, and realize upon all Purchased  Receivables and all Collateral
in any commercial  reasonable manner.  Seller and Buyer agree that any notice of
sale  required to be given to Seller shall be deemed to be  reasonable  if given
five (5) days prior to the date on or after  which the sale may be held.  In the
event that the Obligations are accelerated  hereunder,  Seller shall  repurchase
all of the Purchased Receivables as set forth in Section 4.4.

11. Accrual of Interest. If any amount owed by Seller hereunder is not paid when
due, including,  without  limitation,  amounts due under Section 3.5, Repurchase
Amounts,  amounts due under Section 12, and any other Obligations,  such amounts
shall  bear  interest  at a per annum  rate  equal to the per annum  rate of the
Finance  Charges until the earlier of (i) payment in good funds or (ii) entry of
a final  judgment  thereof,  at which  time the  principal  amount  of any money
judgment remaining unsatisfied shall accrue interest at the highest rate allowed
by applicable law.

12.  Fees,  Costs and  Expenses;  Indemnification.  The Seller will pay to Buyer
immediately upon demand all fees, costs and expenses (including  reasonable fees
of attorneys and  professionals  and their  reasonable  costs and expenses) that
Buyer  incurs or may from  time to time  impose  in  connection  with any of the
following:  (a)  preparing,  negotiating,   administering,  and  enforcing  this
Agreement or any other agreement executed in connection herewith,  including any
amendments, waivers or consents in connection with any of the foregoing, (b) any
litigation or dispute (whether  instituted by Buyer, Seller or any other person)
in any way relating to the Purchased Receivables, the Collateral, this Agreement
or any other  agreement  executed  in  connection  herewith  or  therewith,  (c)
enforcing any rights against Seller or any guarantor, or any Account Debtor, (d)
protecting  or  enforcing  its  interest  in the  Purchased  Receivables  or the
Collateral,  (e) collecting the Purchased  Receivables and the Obligations,  and
(f) the  representation  of Buyer in  connection  with  any  bankruptcy  case or
insolvency   proceeding   involving  Seller,  any  Purchased   Receivable,   the
Collateral,  any Account  Debtor,  or any guarantor.  Seller shall indemnify and
hold Buyer  harmless  from and  against any and all  claims,  actions,  damages,
costs,  expenses, and liabilities of any nature whatsoever arising in connection
with any of the foregoing.

13. Severability,  Waiver, and Choice of Law. In the event that any provision of
this  Agreement  is deemed  invalid  by reason of law,  this  Agreement  will be
construed as not  containing  such  provision and the remainder of the Agreement
shall remain in full force and effect.  Buyer retains all of its rights, even if
it makes an  Advance  after an Event of  Default.  If Buyer  waives  an Event of
Default,  it may enforce a later Event of Default.  Any consent or waiver under,
or  amendment  of,  this  Agreement  must be in writing  signed by Seller and an
authorized  officer of Buyer.  Nothing  contained herein, or any action taken or
not taken by Buyer at any time,  shall be construed at any time to be indicative
of any obligation or willingness on the part of Buyer to amend this Agreement or
to grant to Seller any waivers or consents.  This Agreement has been transmitted
by Seller to Buyer at  Buyer's  office in the State of  California  and has been
executed and accepted by Buyer in the State of California.  This Agreement shall
be governed by and interpreted in accordance with the internal laws of the State
of California.

14. Account Collection  Services.  Certain Account Debtors may require or prefer
that all of Seller's  receivables be paid to the same address  and/or party,  or
Seller and Buyer may agree that all receivables  with respect to certain Account
Debtors  be paid to one  party.  In such  event  Buyer and Seller may agree that
Buyer  shall  collect  all  receivables  whether  owned by  Seller  or Buyer and
(provided  that there does not then exist an Event of Default or event that with
notice,  lapse or time or otherwise  would  constitute an Event of Default,  and
subject to Buyer's rights in the Collateral) Buyer agrees to remit to Seller the
amount of the  receivables  collections  it receives with respect to receivables
other than  Purchased  Receivables.  It is understood  and agreed by Seller that
this Section does not impose any  affirmative  duty on Buyer to do any act other
than to turn  over  such  amounts.  All such  receivables  and  collections  are
Collateral and in the event of Seller's default  hereunder,  Buyer shall have no
duty to remit  collections of Collateral  and may apply such  collections to the
obligations  hereunder  and Buyer shall have the rights of a secured party under
the Code.

15.  Notices.  All notices shall be given to Seller and Buyer at the  respective
addresses  or faxes set forth on the first page of this  Agreement  and shall be
deemed to have been  delivered and received:  (a) if mailed,  three (3) calendar
days after deposited in the United States mail, first class,  postage  pre-paid,
(b) one (1)  calendar  day after  deposit  with an  overnight  mail or messenger
service;  or (c) on the  same  date of  confirmed  transmission  if sent by hand
delivery, telecopy, telefax or telex.

16. Jury Trial.  SELLER AND BUYER EACH HEREBY (a) WAIVE THEIR RESPECTIVE  RIGHTS
TO A JURY TRIAL ON ANY CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT,  ANY  RELATED  AGREEMENTS,  OR ANY OF THE  TRANSACTIONS  CONTEMPLATED
HEREBY OR THEREBY; (b) RECOGNIZE AND AGREE THAT THE FOREGOING WAIVER CONSTITUTES
A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT; AND (c) REPRESENT AND
WARRANT  THAT IT HAS  REVIEWED  THIS  WAIVER,  HAS  DETERMINED  FOR  ITSELF  THE
NECESSITY  TO  REVIEW  THE SAME  WITH  ITS  LEGAL  COUNSEL,  AND  KNOWINGLY  AND
VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.

17. Term and  Termination.  The term of this Agreement shall be for one (1) year
from the Effective Date. Seller and Buyer shall each have the right to terminate
this Agreement at any time.  Notwithstanding  the foregoing,  any termination of
this Agreement shall not affect Buyer's security  interest in the Collateral and
Buyer's  ownership  of the  Purchased  Receivables,  and  this  Agreement  shall
continue  to be  effective,  and Buyer's  rights and  remedies  hereunder  shall
survive such  termination,  until all transactions  entered into and Obligations
incurred  hereunder or in connection  herewith have been completed and satisfied
in full.

18. Titles and Section Headings. The titles and section headings used herein are
for convenience only and shall not be used in interpreting this Agreement.

19. Other  Agreements.  The terms and  provisions  of this  Agreement  shall not
adversely  affect  the rights of Buyer or any other  division  or  affiliate  of
Silicon Valley Bank under any other document, instrument or agreement. The terms
of such other  documents,  instruments and agreements shall remain in full force
and effect  notwithstanding  the execution of this Agreement.  In the event of a
conflict  between any provision of this Agreement and any provision of any other
document,  instrument or agreement  between Seller on the one hand, and Buyer or
any other division or affiliate of Silicon Valley Bank on the other hand,  Buyer
shall  determine in its sole  discretion  which  provision  shall apply.  Seller
acknowledges  specifically that any security  agreements,  liens and/or security
interests currently securing payment of any obligations of Seller owing to Buyer
or any other division or affiliate of Silicon  Valley Bank also secure  Seller's
obligations  under  this  Agreement,  and are valid and  subsisting  and are not
adversely affected by execution of this Agreement.  Seller further  acknowledges
that (a) any collateral  under other  outstanding  security  agreements or other
documents between Seller and Buyer or any other division or affiliate of Silicon
Valley Bank secures the  obligations  of Seller under this  Agreement  and (b) a
default  by Seller  under  this  Agreement  constitutes  a default  under  other
outstanding  agreements  between  Seller  and  Buyer or any  other  division  or
affiliate of Silicon Valley Bank.

[remainder of page intentionally left blank; signature page immediately follows]


     IN WITNESS  WHEREOF,  Seller and Buyer have  executed  this  Agreement  and
delivered same as of the Effective Date.

SELLER:
NSTOR CORPORATION, INC.


By /s/ Thomas L. Gruber
Title Acting President, Chief Operating
      and Financial Officer


BUYER:

SILICON VALLEY BANK

By /s/ Robert Anderson
Title  Vice President Commerical Finance Division


[To be completed by Buyer:]
Effective Date:_______________________________



                                    Exhibit A
SVB/nStor/AR Purchase Agr-2


                                   EXHIBIT "A"

                  TO FINANCING STATEMENT AND SECURITY AGREEMENT

This FINANCING  STATEMENT and SECURITY  AGREEMENT  covers the following types or
items of property (in  addition  to, and without  limiting the types of property
set forth on page 1 hereof):

A)      All accounts, receivables,  contract rights, chattel paper, instruments,
        documents, letters of credit, bankers acceptances, drafts, checks, cash,
        securities,   investment   property,   deposit  accounts,   and  general
        intangibles  (including,  without  limitation,  all  claims,  causes  of
        action,  guaranties,  rights  in and  claims  under  insurance  policies
        (including   rights  to  premium   refunds),   rights  to  tax  refunds,
        copyrights, patents, trademarks, rights in and under license agreements,
        and all other intellectual property);

B)      All  inventory,  including  Seller's  rights to any returned or rejected
        goods,  with  respect  to which  Buyer  shall have all the rights of any
        unpaid  seller,  including  the rights of replevin,  claim and delivery,
        reclamation, and stoppage in transit;

C)      All monies,  refunds and other  amounts due Seller,  including,  without
        limitation,  amounts due Seller under this Agreement (including Seller's
        right of offset and recoupment);

D)      All  equipment,  machinery,  furniture,  furnishings,  fixtures,  tools,
        supplies and motor vehicles;

E)      All farm products,  crops, timber,  minerals and the like (including oil
        and gas);

F)      All accessions to,  substitutions  for, and  replacements of, all of the
        foregoing;

G)      All books and records pertaining to all of the foregoing; and

H)      All proceeds of the  foregoing,  whether due to voluntary or involuntary
        disposition, including insurance proceeds.


Initials TG