IDT CORPORATION



                                520 BROAD STREET



                            NEWARK, NEW JERSEY 07102



                                                               January 21, 2001



PT-1 Communications Inc.

STAR Telecommunications, Inc.

223 East de La Guerra Street

Santa Barbara, California 93101

Attention: Brett Messing, Chief Executive Officer



Ladies and Gentlemen:



         This Agreement will confirm the results of our negotiations and our

mutual understanding regarding the transaction (the "Transaction") pursuant to

which IDT Corporation ("IDT") will acquire the Transferred Assets and assume the

Assumed Liabilities (each such term, as hereinafter defined) of PT-1

Communications Inc. ("PT-1"), a wholly owned subsidiary of Star

Telecommunications Inc. ("Star"), for a total purchase price of $1.00, on the

terms and subject to the conditions set forth herein.



         1. Definitive Agreements. It is the intention of the parties that this

Agreement shall be a binding and enforceable agreement with respect to the

matters described herein. Notwithstanding the foregoing, the parties intend to

enter into more complete documentation (the "Final Documentation") after the

date hereof which shall, among other things, modify the Transaction structure in

such manner as the parties may mutually agree in order to make such structure as

tax efficient as is practicable for all parties. Each of IDT and PT-1 shall

negotiate in good faith to cause the Final Documentation to be executed and

delivered by the parties as promptly as is practicable after the date hereof and

to reflect in all material terms the substantive provisions hereof. Upon the

execution and delivery of the Final Documentation, this Agreement shall be

deemed to be superseded in its entirety by the Final Documentation.



         2. Transferred Assets. The "Transferred Assets" will include, without

limitations, all of the assets of PT-1 relating to its debit card business (the

"Business"), including, without limitation:



     (a)  the PT-1, PT1, PT-I and PTI brand names and all other trademarks,

          copyrights, service marks, software, know-how and other intellectual

          property owned by or used in the Business, and any and all derivative

          forms thereof;



     (b)  all accounts receivable and other amounts owing to PT-1 (including,

          without limitation, all prepaid expenses) with respect to the Business

          as of the date upon which the Transaction is consummated (which date

          is expected to occur on or about February 1, 2001; the "Closing

          Date"); and





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     (c)  other assets material to the Business (including, without limitation,

          intercompany agreements with Star, distributor agreements, and

          non-compete agreements in favor of PT-1), except (i) the switches and

          related switching infrastructure used in the Business and (ii) those

          which IDT in its sole discretion elects not to acquire.



The Transferred Assets shall be sold, transferred, conveyed and assigned free

and clear of any and all liens, pledges, security interests, encumbrances and

all other adverse claims of any kind or nature whatsoever, other than the

Assumed Liabilities.



         3. Assumed Liabilities. The "Assumed Liabilities" will include only the

deferred revenue (i.e., the unutilized minutes on phone cards then in

distribution) reflected on the balance sheet of PT-1 as of the Closing Date (as

hereinafter defined).



         4. Use of Name. (a) PT-1 hereby agrees to, unconditionally, irrevocably

and in perpetuity, relinquish to IDT all rights to, and cease the use of, the

names "PT-1", "PT1", "PT-I", "PTI" and any and all derivative forms thereof, as

well as to the trademarks, tradenames and other intellectual property relating

to each of the debit cards distributed by PT-1 (including, without limitation,

New York Millionaires, Hola Mexico and PT-1 Phonecard).



         (b) For a period of 6 months following the Closing Date, IDT shall

grant to Star a royalty-free, non-exclusive (and non-transferable) license to

use the PT-1 brand name solely in connection with the existing "dial-around"

business of PT-1; provided that PT-1 shall not take any action or permit to

exist with respect to its use of the PT-1 brand name any condition which could

impair the goodwill attached to such mark.



         5. Employees and Facilities. (a) During the period between the date

hereof and the Closing Date, IDT shall review the existing employees of the

Business and shall designate to PT-1 which (if any) of such employees IDT

desires to hire. PT-1 shall be solely responsible for any liabilities or

obligations relating to employee, severance pay, post-employment or retiree

benefits or compensation arrangements (including, without limitation, any and

all liabilities that may arise under the WARN Act) with respect to (i) all

employees of the Business who IDT does not so elect to hire, and (ii) any such

employees which IDT makes an offer of employment but which do not accept such

employment with IDT.



         (b) In the event that IDT so notifies PT-1 on or prior to the Closing

Date, PT-1 shall make available to IDT any facilities (or portions thereof)

utilized by PT-1 in the Business for the term requested by IDT (not to exceed

the term of PT-1's contractual rights on the date hereof) and at a price equal

to PT-1's actual direct cost (or the relevant pro rated portion thereof) for the

use of such facilities (or portions thereof); provided that, with respect to

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