NSTOR TECHNOLOGIES INC
EXHIBIT 10.5 8% PN 1,275,000
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>exhibit10-5.txt
<DESCRIPTION>EXHIBIT 10.5 8% PN 1,275,000
<TEXT>
                                  Exhibit 10.5


                             nSTOR TECHNOLOGIES INC.

                            (a Delaware corporation)

                               8% Promissory Note

Amount: $1,275,000                                    Dated:  September 10, 2001



        nSTOR TECHNOLOGIES,  INC., a Delaware corporation ("Company"), for value
received, hereby promises to pay to Halco Investments,  L.C., or to its order or
to such persons as it may designate from time to time ("Holder") in lawful money
of the United  States of America,  upon Holder's  presentation  and surrender of
this 8% Promissory Note ("Note") at the principal office of the Company: (i) the
principal  sum  of  One  Million  Two  Hundred  Seventy  Five  Thousand  Dollars
($1,275,000) on November 15, 2001, 10:00 a.m., local time ("Maturity"), and (ii)
interest on the unpaid  principal of this Note at the rate of eight percent (8%)
per annum.

        At the  option of the  Company,  any  payment  by the  Company  required
hereunder  may be made by check mailed to the Holder at the last address for the
Holder  appearing  on the records of the Company.  This Note may be prepaid,  in
whole or part, at any time.

1. No  Avoidance.  The Company  shall not, by  amendment of its  Certificate  of
Incorporation or through any reorganization,  transfer of assets, consolidation,
merger,  dissolution,  issuance  or sale of  securities  or any other  voluntary
action,  nor  shall  the  Holder,  by any  action,  avoid or seek to  avoid  the
performance of any of the provisions of this Note.

2.  Application  of Payments.  All payments  received  shall be applied first to
charges other than interest and  principal,  if any,  owing  hereunder,  then to
accrued interest then due, then to principal,  except that, after the occurrence
and during the continuation of any default under this Note, all amounts received
shall be applied in such order as Holder, in its sole discretion, may elect.

3. No Waiver.  The acceptance by Holder of any payment under this Note after the
date that such  payment  is due  shall not  constitute  a waiver of the right to
require prompt payment when due of future or succeeding payments or to declare a
default as herein  provided for any failure to so pay. The  acceptance by Holder
of the payment of a portion of any installment at any time that such installment
is due and payable in its  entirety  shall  neither  cure nor excuse the default
caused  by the  failure  to pay the  whole of such  installment  and  shall  not
constitute  a waiver of Holder's  right to require  full payment when due of all
future or succeeding installments.

4.  Default.  In the event that the  Company:  (i) fails to make any  payment of
principal or interest  hereunder  when due and such default  shall  continue for
thirty (30) days after written notice thereof has been delivered to the Company;
(ii) files a petition  or is subject to  proceedings  for  protection  under any
bankruptcy,  receivership,  reorganization  or  insolvency  laws;  (iii) makes a
general  assignment of all or substantially all of its assets for the benefit of
its  creditors;  (iv) has a trustee or receiver  appointed for the Company,  its
assets or a substantial  portion of its assets; (v) is adjudicated by a court of
competent jurisdiction to be insolvent or bankrupt; or (vi) fails to observe any
of the covenants or agreements on the part of the Company contained in this Note
continuing  (without  being  waived or cured)  for a period of thirty  (30) days
after  receipt from Holder of written  notice of such  failure;  then the Holder
may, by written notice to the Company,  declare the outstanding principal amount
of this  Note to be  immediately  due and  payable,  whereupon  the  outstanding
principal  amount hereof along with any accrued but unpaid interest shall become
and be  immediately  due and payable  without  presentment,  demand,  protest or
notice of any kind.

5.  Transferability.  This Note has not been registered under the Securities Act
of 1933, as amended (the "Act"),  nor under any state securities law and may not
be pledged,  sold,  assigned or transferred  until (i) a registration  statement
with  respect  thereto  is  effective  under  the Act and any  applicable  state
securities law or (ii) the Company receives an opinion of counsel to the Holder,
which  counsel is  satisfactory  to the  Company,  that the Note may be pledged,
sold, assigned or transferred without an effective  registration statement under
the Act or applicable state securities law.

6.  Registration.

               a. The Holder, by his acceptance of this Note,  acknowledges that
he is aware that this Note has not been  registered  under the Securities Act of
1933,  as  amended  ("Act"),  or the  securities  laws  of any  state  or  other
jurisdiction.

               b. The Holder  warrants and represents to the Company that he has
acquired  this  Note  for  investment  and not  with a view  to,  or for sale in
connection  with,  any  distribution  of  this  Note or with  any  intention  of
distributing or selling this Note.

               c. The Holder  has no right to demand  that the Company  register
this Note.

7. Deposit of Funds;  Authorization  and  Disbursement.  The principal amount of
this Note shall be deposited  in a brokerage  account in the name of the Company
at UBS/Paine  Webber Inc.,  5100 Town Center Circle,  Tower 11, 6th Floor,  Boca
Raton, Florida 33486. Maurice A. Halperin, the Company's Chairman,  shall be the
only authorized  signatory on such account.  All disbursements of funds shall be
authorized  by Mr.  Halperin  following  consultation  with the Company at least
seven (7) days in  advance  of the date the funds  requested  are  needed by the
Company.

8. Severability.  In case any provision of this Note is held invalid, illegal or
unenforceable by a court of competent jurisdiction,  the validity,  legality and
enforceability  of the remaining  provisions shall not in any way be affected or
impaired thereby.

9.  Choice of Law;  Venue;  Non-Jury  Trial.  This Note shall be governed by and
construed in accordance with the laws of the State of Florida, without reference
to choice of law principles,  and the sole venue for any legal action brought in
connection with this Note shall be Palm Beach County,  Florida in a court of law
with appropriate jurisdiction. The Holder hereby expressly waives its right to a
jury trial in any court action that may occur.  In any legal action  arising out
of or in connection with this Note, the prevailing party shall be entitled to an
award of the reasonable attorneys' fees

10.  Business Day. If any interest  payment date or the Maturity date under this
Note shall not be a business day in the State of Florida, payment may be made on
the next  succeeding  day that is a business  day in the State of  Florida,  and
shall be deemed  hereunder  as made on such  interest  payment  date or Maturity
date, notwithstanding any other provisions contained in this Note.

11. Notices. Unless otherwise provided herein, all demands,  notices,  consents,
requests  and other  communications  hereunder  shall be in writing and shall be
deemed to have been  given  when  delivered  in  person or mailed  first  class,
postage-paid,  addressed (i) if to the Company, to the Company's business office
in the State of Florida,  and (ii) if to the Holder, at the last address for the
Holder listed on the records of the Company.

12.  Modification.  This Note represents the entire understanding of the parties
hereto  relating to the subject matter hereof,  and supersedes any and all other
prior  agreements  between the parties.  The terms and  provisions  of this Note
cannot be modified or amended  orally or by course of dealing or conduct,  or in
any  other  manner,  except  in a  writing  signed  by the  party  against  whom
enforcement is sought.

13.  Binding  Effect.  This Note shall be binding on and inure to the benefit of
the respective parties hereto and their successors and assigns.

14.  Captions.  Section captions are provided for the convenience of the parties
and are not intended to affect the interpretation, performance or enforcement of
this Note.

15.  Compliance With Law. It is the  responsibility of the Holder to ensure that
all payments  received by the Holder comply with all tax,  securities  and other
applicable laws,  rules, and regulations of all applicable  authorities,  and to
provide the Company with any written  consents or other documents  necessary for
compliance with such laws, rules and regulations.  It is the  responsibility  of
the Company to pay any documentary stamp, governmental, agency or any other type
of tax upon this Note or upon the indebtedness  evidenced hereby when due (other
than any federal, state or local income tax imposed upon the Holder).


        IN WITNESS WHEREOF, the Company has caused this Note to be signed by its
authorized  officer and its corporate seal to be affixed hereto, as of this 10th
day of September, 2001.

                                            nSTOR TECHNOLOGIES, INC.,
                                            a Delaware corporation

                                            By: /s/ Thomas L. Gruber
                                               _______________________________
                                            Its:VP Finance, CFO

</TEXT>
</DOCUMENT>
