MSTI Holdings, Inc.
259-263 Goffle Road
Hawthorne, New Jersey 07506

January 11, 2008

To the MSTI Holdings, Inc. Debenture Holders:

Reference is hereby made to that certain Securities Purchase Agreement, dated as
of May 24, 2007 (the “Purchase Agreement”), by and among MSTI Holdings, Inc., a
Delaware corporation (the “Company”) and each entity identified on the signature
pages thereto (each, including its successors and assigns, a “Purchaser” and,
collectively, the “Purchasers”). Capitalized terms used in this letter agreement
and not otherwise defined shall have the meanings ascribed to them in the
Purchase Agreement.
 
1.  Subsequent Equity Sales. Pursuant to Section 4.13(a) of the Purchase
Agreement, as amended, the Company is prohibited from issuing shares of Common
Stock or Common Stock Equivalents until 90 days after the Registration Statement
is declared effective, except for Exempt Issuances. The undersigned Purchasers
hereby waive any non-compliance with the aforementioned Section 4.13(a), and
waive any default or Event of Default (as such term is defined in the
Debentures), and any breach or threatened breach, arising under the Purchase
Agreement or any other Transaction Document, including without limitation the
Debentures and the Warrants, and waive any and all penalties, damages, claims,
and adjustments (including the price protection adjustment described in Section
3(b) of the Warrants) resulting or that could result from the issuance of (i)
options to purchase an aggregate of 1,278,000 shares of Common Stock at an
exercise price of $0.65 per share to certain employees, directors and
consultants of the Company under its 2007 Incentive Stock Plan, and (ii) an
aggregate of up to 500,000 shares of Common Stock to certain consultants of the
Company.
 
2. Equipment Lease Financing. Pursuant to Section 7(b) of the Debentures, as
long as the Debentures are outstanding, the Company is prohibited from creating
any Liens (as such term is defined in the Debenture) on its assets. The
undersigned hereby waive any non-compliance with such section and agree that the
creation of Liens in connection with the Company entering into equipment lease
financing(s) arrangements solely with respect to (i) the equipment listed on
Schedule I attached hereto, and (ii) equipment purchased by the Company that is
paid for after the date hereof, in an aggregate amount of up to $3 million,
shall be permitted under such section and not constitute a default or Event of
Default (as such term is defined in the Debentures). For purposes of clarity,
the $3 million amount referenced in the preceding section includes, and is not
in addition to, the equipment amounts listed on Schedule I hereto.
 
3. Miscellaneous. Subject to the waivers and agreements provided herein, the
Transactions Documents shall remain in full force and effect. Except as
expressly set forth herein, this letter agreement shall not be deemed to be a
waiver, amendment or modification of any provisions of the Transaction Documents
or of any right, power or remedy of the Purchasers, or constitute a waiver of
any provision of the Transaction Documents (except to the extent herein set
forth), or any other document, instrument and/or agreement executed or delivered
in connection therewith, in each case whether arising before or after the date
hereof or as a result of performance hereunder or thereunder. The Purchasers
reserve all rights, remedies, powers or privileges available under the
Transaction Documents, at law or otherwise, subject to the terms of this letter
agreement. This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.
 
 
 

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4. Filing of 8-K. On or before 5:30 pm (New York time) on the date after all
Purchasers have signed this letter agreement, the Company shall file a Current
Report on Form 8-K, reasonably acceptable to each Purchaser disclosing the
material terms of this letter agreement, which shall include this letter
agreement as an attachment thereto.
 
5. Independent Nature of Purchasers' Obligations and Rights. The Company has
elected to provide all Purchasers with the same terms and letter agreement for
the convenience of the Company and not because it was required or requested to
do so by the Purchasers. The obligations of each Purchaser under this letter
agreement, and any Transaction Document, are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance or non-performance of the obligations of any other
Purchaser under this letter agreement or any Transaction Document. Nothing
contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this letter agreement or the Transaction Documents. Each Purchaser shall be
entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this letter agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. Each
Purchaser has been represented by its own separate legal counsel in their review
and negotiation of this letter agreement and the Transaction Documents.
 
Please indicate your acknowledgment of and agreement to the foregoing by signing
a copy of this letter and returning an executed original to the Company. This
letter agreement may be executed by the parties hereto in counterparts, and
execution may be evidenced by facsimile or other electronic transmission of a
signed signature page by any party hereto, and all of such counterparts together
shall constitute one and the same instrument.
 

          Sincerely,  
   
   
      /s/ Frank Matarazzo         Frank Matarazzo   Chief Executive Officer

 
 
 
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[DEBENTURE HOLDER SIGNATURE PAGE]

ACCEPTED AND AGREED:

DKR SOUNDSHORE OASIS HOLDING FUND LTD.

By: DKR Oasis Management Company LP,
its investment manager
 

By:/s/ Barbara Burger
 
Dated: January 30, 2008
Name: Barbara Burger
   
Title: Authorized Signatory
               
ALPHA CAPITAL ANSTALT
         
By: /s/ Konrad Ackerman
 
Dated: January 30, 2008
Name: Konrad Ackerman
   
Title: Director
               
GEMINI MASTER FUND, LTD.
         
By: /s/ Steven W. Winters
 
Dated: January 30, 2008
Name: Steven W. Winters
   
Title: President
               
WHALEHAVEN CAPITAL FUND LIMITED
         
By: /s/ Brian Mazzella
 
Dated: January 29, 2008
Name: Brian Mazzella
   
Title: CFO
               
CMS CAPITAL
         
By: /s/ Howard Weiss
 
Dated: January 29, 2008
Name: Howard Weiss
   
Title: Director
   

 
 
BRIO CAPITAL L.P.

By: /s/ Shaye Hirsch
 
Dated: January 29, 2008
Name: Shaye Hirsch
   
Title: Mananger of General Partner
   

 
 
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SCHEDULE I
 

Equipment Description
 
 Amount
         
CSI Digital IPTV headend equipment
  $ 1,000,000.00            
Blonder Tongue headend equipment
 
$
150,000.00
           
WINCOM microwave equipment
  $ 31,389.00            
NBS telephone equipment
 
$
44,100.00
           
Network hardware resale internet switch  
  $ 49,895.00            
TOTAL
 
$
1,275,384.00
 

 
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