NSTOR TECHNOLOGIES INC
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>exhibit10.txt
<TEXT>
                                                                      Exhibit 10


                                OPTION AGREEMENT

        THIS OPTION  AGREEMENT (the  "Agreement") is made and entered into as of
the 31st day of December, 2004 by and among  PACIFIC  TECHNOLOGY  GROUP, INC., a
Nevada corporation ("PTG"), HALCO INVESTMENTS, L.C., a Florida limited liability
company  ("Halco")  and nSTOR  TECHNOLOGIES,  INC., a Delaware  corporation
("Optionee").

                                 R E C I T A L S

        WHEREAS,  Optionee  has  reached  an  agreement  with H.  Irwin Levy and
certain of his affiliates to convert  approximately  $9.1 million of debt of the
Optionee held by Mr. Levy and his  affiliates  (the "Levy Debt") to 9,100 shares
of convertible preferred stock of the Optionee with a stated value of $1,000 per
share of preferred stock (the "Stated Value"), which convertible preferred stock
shall (i) accrue  dividends  at 5% per annum,  (ii) be  convertible  into common
stock of the Optionee at a conversion  price of $0.25 per share beginning on the
one year  anniversary  of the date of issuance  and (iii) be  redeemable  by the
Optionee at a price per share equal to the Stated  Value plus accrued and unpaid
dividends (the "Debt Conversion"); and

        WHEREAS,  the conversion of the Levy Debt is subject to the execution by
PTG and Halco of this Option Agreement; and

        WHEREAS,  PTG is the current  record holder of 24,784,727  shares of the
issued and  outstanding  common  stock,  par value $0.01 per share (the  "Common
Stock"), of Optionee; and

        WHEREAS,  PTG has agreed to grant to Optionee an irrevocable,  exclusive
option to  purchase  20,000,000  shares of the  Common  Stock  (the "PTG  Option
Shares") from PTG as contemplated  by this Agreement,  subject to the conversion
of the Levy Debt; and

        WHEREAS,  Halco is the current beneficial holder of 50,015,048 shares of
the issued and outstanding Common Stock of Optionee; and

        WHEREAS, Halco has agreed to grant to Optionee an irrevocable, exclusive
option to purchase  48,000,000  shares of the Common  Stock (the  "Halco  Option
Shares") from Halco as contemplated by this Agreement, subject to the conversion
of the Levy Debt;

        NOW,  THEREFORE,  in  consideration of the premises set forth herein and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

1.  Incorporation  of Recitals.  The above recitals are true and correct and are
incorporated herein as if set forth in full.

2.  Options.  Subject  to the terms and  conditions  of this  Agreement  and the
conversion of the Levy Debt:

               (a) PTG  hereby  grants to  Optionee  an  irrevocable,  exclusive
right,  privilege,  and option (the "PTG  Option")  to  purchase  the PTG Option
Shares for a purchase  price of Twenty-Two  Cents ($0.22) per share (the "Option
Price"); and

               (b) Halco  hereby  grants to Optionee an  irrevocable,  exclusive
right,  privilege,  and option (the "Halco Option") to purchase the Halco Option
Shares for the Option Price.

3. Option  Period.  The PTG Option and the Halco Option shall be  exercisable at
any  time,  or from time to time,  on or prior to  November  30,  2005 and shall
terminate on November 30, 2005 (the "Option Period").

4.  Exercise
               (a)  Optionee may exercise the PTG Option and the Halco Option in
whole or in part. If exercised in part, the Optionee shall purchase Halco Option
Shares and PTG Option Shares pro rata,  based on the total number of such shares
purchased by Optionee.

               (b) This Option may be exercised by delivery of written notice of
exercise (the "Exercise  Notice") to PTG and Halco on any business day, at their
principal  offices,  addressed  to the  attention  of the person  designated  in
Section 8 hereof.  The Exercise  Notice  shall  specify the number of PTG Option
Shares and Halco  Option  Shares  with  respect  to which  this  Option is being
exercised.  If  Optionee  provides  the  Exercise  Notice to PTG and Halco,  the
parties agree to consummate  the  transaction  at a closing  ("Closing"),  which
shall take  place at such time and place as the  parties  may agree,  but in any
event no less than three (3) nor more than  thirty (30) days after the giving of
the Exercise Notice.

5. Payment for and Delivery of Shares.  At closing,  PTG and Halco shall cause a
certificate or certificates  representing the PTG Option Shares and Halco Option
Shares to be delivered to Optionee, together with stock powers executed in favor
of Optionee and such other  documentation  as may be necessary to transfer title
to the PTG  Option  Shares  and Halco  Option  Shares to  Optionee,  in form and
substance reasonably  satisfactory to Optionee.  In exchange for delivery of the
PTG Option Shares and Halco Option  Shares,  Optionee shall pay the Option Price
by wire transfer of immediately  available  funds to the accounts  designated by
PTG and Halco.

6. Covenants and Representations of PTG.

               (a) PTG is a corporation duly organized,  validly existing and in
good standing under the laws of its  jurisdiction of  incorporation  and has the
requisite  power and authority to enter into and perform its  obligations  under
this Agreement.

               (b)  The  execution  and  delivery  of  this  Agreement  and  the
consummation of the transaction  contemplated  hereby have been duly and validly
authorized by the Board of Directors of PTG and no other  corporate  proceedings
on the part of PTG are  necessary to authorize  this  Agreement or to consummate
the transactions contemplated hereby.

               (c)  This  Agreement  has  been  duly and  validly  executed  and
  delivered by PTG and constitutes a legal, valid and binding obligation of PTG,
  enforceable against PTG and in accordance with its terms.

               (d) The execution,  delivery and performance of this Agreement by
  PTG and the consummation by it of the transactions  contemplated hereby do not
  require the consent, waiver, approval,  license or authorization of, or result
  in the  acceleration  of any obligation  under, or constitute a default under,
  any term,  condition or provision of PTG's  organizational  documents,  or any
  indenture,  mortgage,  lien, lease, agreement,  contract,  instrument,  order,
  judgment,  ordinance,  regulation or decree or any restriction to which PTG or
  any property of PTG or its subsidiaries is bound.

               (e) PTG holds of record and owns  directly  all of the PTG Option
  Shares,  free and  clear  of any  restrictions  on  transfer  (other  than any
  restrictions  under  the  Securities  Act  of  1933,  as  amended,  and  state
  securities laws), taxes,  security interests,  claims, liens, charges or other
  encumbrances,  options,  warrants,  purchase rights,  contracts,  commitments,
  equities  and  demands.  PTG is not a party to any option,  warrant,  purchase
  right,  or other  contract  or  commitment  that  could  require  PTG to sell,
  transfer,  or  otherwise  dispose of the PTG Option  Shares  (other  than this
  Agreement).  PTG is not a  party  to any  voting  trust,  proxy,  shareholders
  agreement,  or other agreement or understanding  with respect to the voting of
  the PTG Option  Shares.  Upon  Closing,  any PTG Option  Shares  delivered  to
  Optionee  pursuant to this Agreement  shall be delivered free and clear of all
  security interests, claims, liens, charges or other encumbrances.

               (f) Until the termination of the Option Period, PTG covenants and
  agrees that it shall not,  directly or  indirectly,  without the prior written
  consent of Optionee  (which  consent shall be in Optionee's  sole and absolute
  discretion) sell, transfer, pledge, hypothecate or convey in any manner any of
  the PTG Option Shares. PTG represents and warrants that it has no knowledge of
  any Transfer (as defined  below) or potential  Transfer.  The term  "Transfer"
  shall  mean the  sale,  transfer  or other  disposition  (whether  by  merger,
  consolidation or otherwise) of all or any part of the PTG Option Shares.

               (g) During the Option Period,  the  certificate  of  certificates
  representing the PTG Option Shares, together with executed stock powers, shall
  be held in escrow  with Paul  Weber,  PTG's  attorney  pursuant  to the Escrow
  Agreement of even date herewith.

7.      Covenants and Representations of Halco.

(a) Halco is a limited liability company duly organized, validly existing and in
good  standing  under  the laws of its  jurisdiction  of  formation  and has the
requisite  power and authority to enter into and perform its  obligations  under
this Agreement.

               (b)  The  execution  and  delivery  of  this  Agreement  and  the
consummation of the transaction  contemplated  hereby have been duly and validly
authorized by the Board of Directors of Halco and no other corporate proceedings
on the part of Halco are necessary to authorize  this Agreement or to consummate
the transactions contemplated hereby.

               (c)  This  Agreement  has  been  duly and  validly  executed  and
delivered by Halco and  constitutes  a legal,  valid and binding  obligation  of
Halco, enforceable against Halco and in accordance with its terms.

               (d) The execution,  delivery and performance of this Agreement by
Halco and the consummation by it of the transactions  contemplated hereby do not
require the consent, waiver, approval, license or authorization of, or result in
the  acceleration of any obligation  under,  or constitute a default under,  any
term,  condition  or  provision  of  Halco's  organizational  documents,  or any
indenture,  mortgage,  lien,  lease,  agreement,  contract,  instrument,  order,
judgment,  ordinance,  regulation or decree or any restriction to which Halco or
any property of Haclo or its subsidiaries is bound.

               (e) Halco  holds of  record  and owns  directly  all of the Halco
Option Shares,  free and clear of any  restrictions  on transfer (other than any
restrictions under the Securities Act of 1933, as amended,  and state securities
laws), taxes, security interests,  claims, liens, charges or other encumbrances,
options,  warrants,  purchase  rights,  contracts,   commitments,  equities  and
demands. Halco is not a party to any option,  warrant,  purchase right, or other
contract or commitment that could require Halco to sell, transfer,  or otherwise
dispose of the Halco Option Shares (other than this  Agreement).  Halco is not a
party to any voting trust, proxy,  shareholders agreement, or other agreement or
understanding  with  respect  to the  voting of the Halco  Option  Shares.  Upon
Closing,  any  Halco  Option  Shares  delivered  to  Optionee  pursuant  to this
Agreement shall be delivered free and clear of all security  interests,  claims,
liens, charges or other encumbrances.

               (f) Until the  termination of the Option Period,  Halco covenants
and agrees that it shall not, directly or indirectly,  without the prior written
consent of Optionee  (which  consent  shall be in  Optionee's  sole and absolute
discretion) sell, transfer,  pledge,  hypothecate or convey in any manner any of
the Halco Option Shares.  Halco represents and warrants that it has no knowledge
of any Transfer (as defined below) or potential  Transfer.  The term  "Transfer"
shall  mean  the  sale,  transfer  or  other  disposition  (whether  by  merger,
consolidation or otherwise) of all or any part of the Halco Option Shares.

               (g) During the Option Period,  the  certificate  of  certificates
representing the Halco Option Shares, together with executed stock powers, shall
be held in escrow with Thomas N.  Silverman,  Halco's  attorney  pursuant to the
Escrow Agreement of even date herewith.

8. Adjustments Upon Changes in Capitalization. In the event of any change in the
number of issued  and  outstanding  shares  of  Optionee  by reason of any stock
dividend, stock split, recapitalization, merger, rights offering, share exchange
or other  change in the  corporate or capital  structure  of Optionee,  Optionee
shall receive, upon exercise of this Option, the number of PTG Option Shares and
Halco Option Shares to which  Optionee  would have been entitled if Optionee had
exercised  the Option  and had been a holder of record of the PTG Option  Shares
and Halco Option Shares on the record date fixed for determination of holders of
shares of Common  Stock  entitled to receive  such  Common  Stock and the Option
Price shall be adjusted appropriately.

9. Notices.  All notices,  requests,  demands,  claims, and other communications
hereunder  will be in writing.  Any notice,  request,  demand,  claim,  or other
communication  hereunder shall be deemed duly given (two business days after) if
it is sent by registered or certified mail,  return receipt  requested,  postage
prepaid, and addressed to the intended recipient as set forth below:

        If to PTG:                             Copy to:

        Pacific Technology Group, Inc.         Pacific Holdings Group
        2901 N. Dallas Parkway                 2901 N. Dallas Parkway
        Suite 450                              Suite 450
        Plano, Texas  75093                    Plano, Texas  75093
        Attn:    Paul Weber,                   Attn:  Caroline Lee
               General Counsel                        General Manager

        If to Halco:

        c/o Barry S. Halperin                  Thomas N. Silverman, P.A.
        500 Southeast Fifth Avenue             Suite 102
        Penthouse #01                          4400 PGA Boulevard
        Boca Raton, Florida 33432              Palm Beach Gardens, Florida 33410


        If to Optionee:                        Copy to:

        nStor Technologies, Inc.               Greenberg Traurig
        1601 Forum Way, Suite 500              Suite 2000
        West Palm Beach, Florida  33401        401 East Las Olas Boulevard
        Attn:  H. Irwin Levy                   Fort Lauderdale, Florida 33301
                                               Attn:  Donn Beloff, Esq.

        Any  party  may  send  any  notice,  request,  demand,  claim,  or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service,  telecopy,  telex,  ordinary  mail,  or electronic  mail),  but no such
notice,  request,  demand, claim, or other communication shall be deemed to have
been duly  given  unless  and until it  actually  is  received  by the  intended
recipient. Any party may change the address to which notices, requests, demands,
claims,  and other  communications  hereunder  are to be delivered by giving the
other parties notice in the manner herein set forth.

10. Miscellaneous.

               (a) In the event of any litigation arising out of this Agreement,
the  prevailing  party  shall be  entitled  to  recover  all costs  incurred  in
connection  therewith,  including,  but not  limited  to,  all  court  costs and
reasonable  attorneys' fees and paralegal fees and costs,  whether incurred in a
court of original or appellate jurisdiction, or in any bankruptcy proceeding.

               (b) This  Agreement  shall be binding on the  parties  hereto and
their respective successors and assigns; provided, however, that neither PTG nor
Halco  shall  have any  right  whatsoever  to  assign  this  Agreement,  and any
attempted transfer by PTG or Halco shall be void ab initio.

               (c) If any  provision  hereof  shall for any reason be held to be
invalid, illegal, or unenforceable,  in whole or in part or in any respect, then
and in either of those events,  such provision only shall be held for naught and
shall not affect any other  provision  of this  Agreement or the validity of the
remaining  obligations  and the  remaining  provisions of this  Agreement  shall
remain  operative  and in full force and effect and shall in no way be affected,
prejudiced, or disturbed thereby.

               (d) This Agreement  constitutes  the entire  agreement  among the
parties  regarding  the  conveyance  of the PTG Option  Shares and Halco  Option
Shares described  herein.  None of the terms or provisions of this Agreement may
be changed, waived, modified,  discharged, or terminated except by instrument in
writing  executed  by the party or  parties  against  which  enforcement  of the
change, waiver, modification, discharge, or termination is asserted.

               (e) Each of the  parties  acknowledges  and agrees that the other
parties would be damaged  irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are  breached.  Accordingly,  each of the parties  agrees that the other parties
shall be entitled to an injunction  or  injunctions  to prevent  breaches of the
provisions of this Agreement and to enforce  specifically this Agreement and the
terms and provisions  hereof in any action instituted in any court of the United
States or any state thereof having  jurisdiction over the parties and the matter
(subject to the provisions set forth in Section 10(f) below), in addition to any
other remedy to which they may be entitled, at law or in equity.

               (f) This Agreement  shall be construed and enforced in accordance
with the laws of the  State of  Florida,  without  reference  to  choice  of law
principles.  Any suit, action or proceeding against any Party arising out of, or
with respect to, this Agreement or any judgment  entered by any court in respect
thereof shall be brought in the courts of Palm Beach  County,  Florida or in the
U.S.  District Court for the Southern  District of Florida and each Party hereby
irrevocably (a) accepts and consents to the exclusive  personal  jurisdiction of
such courts for the purpose of any such suit, action or proceeding,  (b) waives,
to the  fullest  extent  permitted  by law,  any  objection  which it may now or
hereafter  have to the  laying of venue of any such suit,  action or  proceeding
brought in such courts,  and (c) waives any claim that any such suit,  action or
proceedings brought in such courts has been brought in an inconvenient forum.

               (g) This Agreement may be executed in any number of counterparts,
each of which, when executed,  shall be deemed an original and all of which when
taken together shall be deemed one and the same instrument.

11. Jury Trial Waiver. PTG, HALCO AND OPTIONEE DO HEREBY KNOWINGLY, VOLUNTARILY,
IRREVOCABLY, UNCONDITIONALLY, AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY
IN RESPECT OF ANY  LITIGATION  BASED  HEREON,  OR  ARISING  OUT OF,  UNDER OR IN
CONNECTION  WITH THIS  AGREEMENT  OR ANY COURSE OF  CONDUCT,  COURSE OF DEALING,
STATEMENTS   (WHETHER  VERBAL  OR  WRITTEN)  OR  ACTIONS  OF  ANY  PERSON.  THIS
IRREVOCABLE WAIVER OF THE RIGHT TO A JURY TRIAL IS A MATERIAL INDUCEMENT FOR THE
PARTIES TO ENTER INTO THIS AGREEMENT.

        IN WITNESS WHEREOF, PTG, Halco and Optionee have executed this Agreement
as of the day and year first above written.

                                        PACIFIC TECHNOLOGY GROUP, INC.


                                        By: /s/ Andy Cheng
                                            ----------------------------
                                        Name: Andy Cheng
                                            ----------------------------
                                        Title: President
                                            ----------------------------


                                        HALCO Investments, L.C.


                                        By: /s/ Barry Halperin
                                            ----------------------------
                                        Name: Barry Halperin
                                            ----------------------------
                                        Title: Manager
                                            ----------------------------


                                        nSTOR TECHNOLOGIES, INC.


                                        By: /s/ H. Irwin Levy
                                            -----------------------------
                                        Name: H. Irwin Levy
                                            -----------------------------
                                        Title: Chairman of the Board
                                            -----------------------------



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