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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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


    

     

     

    
      
         

      

      
        -
          2 -

        
          

        

      

      
         

      

    

     

    [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

              	 	 


      

       


    
      
         

      

      
        -
          3 -

        
          

        

      

      
         

      

    

     

    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

              	 


      



    
      
         

      

      
        -
          4 -