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                                                         EXHIBIT 10.87


                               SEVERANCE AGREEMENT

         This SEVERANCE AGREEMENT is dated as of January 10, 2001 (the
"Agreement") and is made by and between STAR TELECOMMUNICATIONS, INC., a
Delaware corporation ("STAR"), and MARY CASEY, an individual ("Ms. Casey"), with
reference to the following:

                                    RECITALS:

          A. Ms. Casey's executive positions at STAR were President and
     Secretary.

          B. Ms. Casey submitted her voluntary resignation, effective as of the
     date of this Agreement, and STAR accepted Ms. Casey's resignation as of
     such date.

          C. STAR and Ms. Casey each wish the employment relationship to end
     amicably, and in a way that ensures that there are no controversies,
     disputes or differences between them.

         NOW, THEREFORE, in consideration of the foregoing, and of the covenants
and provisions contained in this Agreement, the receipt and sufficiency of which
are hereby acknowledged, STAR and Ms. Casey agree as follows:

          1. TERMINATION OF EMPLOYMENT.

             a. Ms. Casey's employment at STAR terminated, effective as of the
date of this Agreement, provided that STAR shall pay Ms. Casey all salary due
her as of January 31, 2001, plus an amount equal to any earned but unused
vacation. Ms. Casey expressly acknowledges and agrees that, other than her
salary and accrued vacation pay, she is not entitled to further compensation
with respect to the termination of her employment.

             b. Upon termination of her employment at STAR, and by her signature
on this Agreement, Ms. Casey hereby (i) confirms her resignation as an officer
of

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STAR, and (ii) irrevocably appoints STAR as her attorney in her name and on her
behalf to execute any such thing and generally to use her name for the purpose
of giving effect to this resignation.

             c. As of the date of this Agreement, Ms. Casey acknowledges that
she delivered to STAR all documents, papers and properties belonging to STAR or
any of its parent, subsidiary or affiliated companies that may have been
prepared by Ms. Casey, or that have come into her possession in the course of
carrying out her obligations to STAR or any of its parent, subsidiary or
affiliated companies, and that she did not retain any copies thereof.

          2. SEVERANCE PAYMENT.

             Ms. Casey acknowledges and agrees that she is entitled to no
further compensation, payments or benefits from STAR after her employment
termination on January 10, 2001. Nevertheless, subject to the terms and
conditions of this Agreement, and provided that Ms. Casey does not breach any of
the terms of this Agreement, STAR agrees to pay Ms. Casey a gross amount of
forty thousand dollars ($40,000) per month, commencing February 2001 and
concluding January 2002 (the "Payment Period"), for a total gross sum of Four
Hundred Eighty Thousand Dollars ($480,000). Such monthly payments will be made
to Ms. Casey on the last day of each month until the total gross amount of
severance has been paid.

             There shall be no tax withholdings taken from each of the payments
specified in this Paragraph 2, and these payments will be reported to Ms. Casey
on an IRS 1099 Form with respect to all relevant tax periods relating thereto.
Ms. Casey agrees to indemnify and hold STAR harmless from any and all claims by
any and all federal and state taxing authorities arising out of the above
referenced payments.

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             In addition, STAR will grant to Ms. Casey the option to acquire
400,000 shares of STAR common stock, which options shall have an exercise price
equal to final closing price for such shares as listed on the NASDAQ on January
25, 2001. Such options will vest immediately upon execution of this Agreement
and can be exercised by Ms. Casey at any time thereafter during the life of such
options and shall terminate on the date that is six months and fifteen days
following her resignation from her position as a member the Board of Directors
of STAR. STAR and Ms. Casey agree to execute such additional documents and take
such additional actions as may be reasonably necessary to effectuate the agreed
grant of options.

         3. BENEFITS.

             a. CONTINUING INSURANCE PARTICIPATION. In addition to any insurance
continuation rights she may have under COBRA, Ms. Casey will be entitled to
continue to participate in the health, life, dental, vision, disability and
other insurance plans of STAR through December 31, 2001, on a basis consistent
with STAR's past practices. STAR shall be responsible for the payment of any
applicable premiums under such plans through December 31, 2001.

             b. AUTOMOBILE ALLOWANCE. STAR shall pay to Ms. Casey a monthly
automobile allowance equal to the car lease payments currently paid by STAR
on Ms. Casey's behalf through December 31, 2001.

             c. UNREIMBURSED EXPENSES; OTHER ITEMS. STAR shall pay to Ms. Casey
within a reasonable time of receipt of request therefor, all unreimbursed
employee expenses incurred by Ms. Casey in connection with her employment by
STAR through the date of this Agreement. STAR shall also pay or reimburse Ms.
Casey for her long distance telephone



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and cell phone charges and shall provide her with Internet access and an email
account through the Company's network, in each case through December 31, 2001.

        4. RELEASES BY THE PARTIES.

             a. RELEASE BY MS. CASEY. In consideration for STAR's payments and
other undertakings as described herein, Ms. Casey, for herself and her heirs,
legal representatives, successors and assigns, does hereby completely release
and forever discharge STAR, its parent, subsidiary and affiliated companies, and
their respective shareholders, officers, directors, representatives, employees,
former employees, agents, attorneys, successors and assigns from all claims,
rights, demands, actions, obligations and causes of action of any and every
kind, nature and character, known or unknown, that Ms. Casey may now have or has
ever had against them, arising from or in any way connected with the employment
relationship between the parties, any actions taken by any of them during the
employment relationship, the termination of that relationship, and any other
dealings of any kind between Ms. Casey and any of them up to the effective date
of this Agreement, including but not limited to (i) any and all claims of
"wrongful discharge," breach of express or implied contract, breach of the
implied covenant of good faith and fair dealing, wrongful discharge in violation
of public policy, intentional infliction of emotional distress, negligent
infliction of emotional distress, fraud and defamation; (ii) any and all claims
arising at common law, including but not limited to any tort of any nature;
(iii) any and all claims arising under any federal, state, county or municipal
statute, constitution or ordinance, including but not limited to Title VII of
the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans with
Disabilities Act, the Employee Retirement Income Security Act, the California
Fair Employment and Housing Act, the California Constitution, the California
Labor Code, and any other laws and regulations relating to



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employment discrimination; and (iv) any and all claims for bonuses, severance
pay, vacation pay, attorneys' fees and costs.

             b. RELEASE BY STAR. In consideration for Ms. Casey's acceptance of
the terms of this Agreement, STAR, for itself and its parent, subsidiary and
affiliated companies, and their respective shareholders, officers, directors,
representatives, employees, former employees, agents, attorneys, successors and
assigns, does hereby completely release and forever discharge Ms. Casey, her
family, heirs, successors and assigns from all claims, rights, demands, actions,
obligations and causes of action of any and every kind, nature and character,
known or unknown, that STAR may now have or has ever had against them, arising
from or in any way connected with the employment relationship between the
parties, any actions taken by any of them during the employment relationship,
the termination of that relationship, and any other dealings of any kind between
Ms. Casey and any of them up to the effective date of this Agreement.

             c. GENERAL RELEASE. It is each party's intention in the execution
of the her or its respective release set forth above, that the same shall be
effective as a bar to each and every claim hereinabove specified, and, in
furtherance of this intention, each party hereby expressly waives any and all
rights and benefits conferred upon her or it by Section 1542 of the California
Civil Code, which provides:

             A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
             NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
             THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
             HIS SETTLEMENT WITH THE DEBTOR.


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         5. CONFIDENTIALITY/NON-DISPARAGEMENT.

             Absent prior express written approval and permission of STAR, which
may be withheld in STAR's sole discretion, Ms. Casey will keep confidential and
not directly or indirectly make public or reveal to any person, firm,
corporation, association, partnership or entity of any identity or kind
whatsoever, including, without limitation, any current, former or future
employee of STAR or any of its affiliated, subsidiary or parent companies, any
information regarding the terms or existence of this Agreement, including,
without limitation, the fact of payment or the amount of payment (or any
information arising out of the fact of or amount of payment) Ms. Casey is
receiving under it.

             This confidentiality provision shall not prevent Ms. Casey from
providing any information regarding the terms or existence of this Agreement to
her spouse, to her attorneys, or to her accountants, tax consultants or the duly
designated taxing authorities of the United States of America or the State of
California, but Ms. Casey will be responsible for any disclosure by any of them
that would be prohibited by this provision if made by Ms. Casey. Ms. Casey
represents that, prior to executing this Agreement, Ms. Casey has not made any
disclosure that would violate this provision.

             Ms. Casey agrees that she will not publicly or privately say or do
anything to disparage STAR, its officers, directors, employees, business,
operations, products or services. Ms. Casey further agrees that she will not
take any action injurious to the business interest or reputation of STAR, its
officers, directors, employees, business, operations, products or services.

        6. TRADE SECRETS AND CONFIDENTIAL INFORMATION.

             Ms. Casey acknowledges that from time to time she has learned Trade
Secrets and confidential information of STAR, and its related entities and
customers, and Ms. Casey further


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acknowledges her fiduciary obligations with respect thereof. Without limiting
the scope of such fiduciary obligations, Ms. Casey agrees that she shall not, at
any time or in any manner, directly or indirectly, use for her own benefit or
the benefit of any other person or entity, or otherwise divulge, disclose, or
communicate to any person or entity, or permit the use by any person or entity
of, any information concerning any Trade Secret or confidential information of
STAR or any of its related entities or customers, without the prior express
written consent of STAR or the entity or customer to which the Trade Secret or
confidential information relates. Such consent may be withheld for any reason.
Ms. Casey represents that, prior to executing this Agreement, she has not
engaged in any conduct that would violate this provision.

             The term "Trade Secrets" shall be given its broadest possible
interpretation and shall mean any information, including, without limitation, a
formula, pattern, compilation, know-how, negative know-how, program, device,
method, technique, customer list, customer preference or process, that (i)
derives independent economic value, actual or potential, from not being
generally known to the public or to other persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.

          7. FIDUCIARY OBLIGATIONS.

             Ms. Casey acknowledges and agrees that, as a member of the Board of
Directors of STAR, she (a) owes certain fiduciary duties to the stockholders of
STAR, including without limitation, a duty of loyalty to such stockholders, and
(b) recognizes that, so long as she continues as a member of STAR's Board, such
duties may restrict or restrain her ability to compete with STAR in the
international long distance telecommunications market.


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          8. COOPERATION.

             Ms. Casey agrees that, subject to her availability, and if
requested to do so by STAR, she will assist STAR to resolve issues arising where
her personal knowledge or information may be of help without compensation beyond
that compensation specified in Paragraph 2.

          9. BREACH OR MISREPRESENTATION.

             Inasmuch as the actual damages that would result from any breach of
the provisions of Paragraphs 5, 6, 7 and 8, are uncertain and would be
impractical and extremely difficult to fix, Ms. Casey agrees that STAR shall be
entitled to injunctive relief to prevent any anticipated breach of the
provisions of Paragraph 5, 6, 7, and 8, in addition to any other legal or
equitable relief to which STAR may be entitled under this Agreement or
applicable law.

             Moreover, in the event of any breach of either Paragraphs 5, 6, 7
or 8 by Ms. Casey, and without in any way affecting any other covenant or
provision in this Agreement, including, without limitation, Ms. Casey's General
Release in Paragraph 4, above, and in addition to any relief to which STAR
otherwise is entitled under this Agreement or applicable law, including, but not
limited to, injunctive relief and the recovery of actual damages, Ms. Casey will
no longer be eligible to receive any payments described in Paragraph 2 of this
Agreement that are scheduled to take place, but have not yet taken place, after
the date of such breach or misrepresentation.

         10. MISCELLANEOUS.

             a. Ms. Casey represents and warrants that she has not heretofore
assigned or transferred to any person, firm, corporation or entity any claim or
other matter herein released. Ms. Casey agrees to indemnify STAR and anyone else
herein released and hold them


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harmless against any claims, costs or expenses, including, without
limitation, attorneys' fees actually paid or incurred, arising out of,
related to or in any manner whatsoever connected with any such transfer or
assignment.

             b. In the event that either party pursues litigation to remedy any
breach of this Agreement by the other party, or in the event either party
becomes involved in any litigation with the other party where the breach of this
Agreement is in issue, the prevailing party shall be entitled to recover from
the losing party the reasonable costs and attorneys' fees the prevailing party
incurs in connection with any such litigation, in addition to any other legal or
equitable relief to which the prevailing party may be entitled. In such
circumstances, however, all obligations under this Agreement, including, without
limitation, the General Releases and Covenants in Paragraphs 4, 5, 6, 7 and 8,
above, shall remain in full force and effect.

             c. In executing this Agreement, Ms. Casey has not relied and is not
relying on any representation or statement made by STAR or any of its related
entities, or by any agent, representative or attorney of STAR or any of its
related entities, with regard to the subject matter, basis or effect of this
Agreement or otherwise, other than those specifically stated in this Agreement.
This Agreement sets forth the entire agreement between Ms. Casey and STAR and,
except as expressly set forth herein, fully supersedes any and all prior
agreements or understandings between them pertaining to the subject matter of
this Agreement. It may not be altered, modified, amended or changed, in whole or
in part, except in a writing executed by Ms. Casey and the Chief Executive
Officer of STAR.

             d. Ms. Casey and STAR each agree to bear her and its own costs,
expenses, attorneys' fees and any other expenditures in connection with the
negotiation and preparation of this Agreement.


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             e. This Agreement shall be construed as if both parties
participated equally in its negotiation and drafting, and each party agrees that
any ambiguity contained in any provision of this Agreement shall not be
construed against any particular party to this Agreement by virtue of that
party's role in the negotiation or preparation of this Agreement.

             f. Ms. Casey acknowledges that (i) she has been given the
opportunity to seek the advice of independent legal counsel concerning this
Agreement, (ii) STAR has urged her to seek such independent legal advice, (iii)
she fully understands the terms of this Agreement including, without limitation,
the significance and consequences of her General Release in Paragraph 4, above,
(iv) she is not releasing any claims that may arise after the date of this
Agreement, (v) she is executing this Agreement in exchange for consideration in
addition to anything of value to which she already is entitled, and (vi) she is
fully satisfied with the terms of this Agreement, and is executing this
Agreement voluntarily, willingly and knowingly, and without any duress.

             g. If any provision or term, or part of a provision or term, of
this Agreement is declared or determined by any court to be illegal or invalid,
the validity of the remaining parts, provisions or terms shall not be affected
thereby, and said illegal or invalid part, provision or term shall not be deemed
to be a part of this Agreement.

             h. This Agreement may be executed in one or more counterparts, each
of which shall be deemed as an original, but all of which, together, shall
constitute one and the same instrument.

             i. This Agreement shall be governed by the laws of the State of
California, without reference to its choice of law rules.


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     THE UNDERSIGNED HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND AND AGREE TO IT:

            "STAR"                                  "MS. CASEY"
STAR TELECOMMUNICATIONS, INC.
By:
   ---------------------------                ---------------------------
       Brett S. Messing                       MARY CASEY
       Chairman and Chief Executive
       Officer
Date:                                         Date:
     -------------------------                     ----------------------



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