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                                                                   EXHIBIT 10.42

                    SECOND AMENDMENT TO SETTLEMENT AGREEMENT



         THIS SECOND AMENDMENT dated as of September 30, 2002 (the "Amendment")
to the Settlement Agreement (the "Agreement") dated as of July 26, 2002, as
amended, by and among The Williams Companies Inc. ("TWC", and, collectively with
its direct and indirect subsidiaries, the "TWC Entities") Williams
Communications Group, Inc. ("WCG" and, collectively with its direct and indirect
subsidiaries, the "Company" or the "WCG Entities") and CG Austria, Inc. ("CG
Austria") each as a debtor and debtor in possession in cases commenced (the
"Chapter 11 Cases") under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court") the official committee of
unsecured creditors (the "Committee") appointed in the Chapter 11 Cases; and
Leucadia National Corporation ("Leucadia") (collectively, the "Parties"). All
capitalized terms not otherwise defined herein shall have the meanings given to
such terms in the Agreement.

         WHEREAS, the parties wish to modify the provisions in the Agreement
relating to the payment of the purchase price under the Building Purchase
Agreement.

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and obligations contained herein, the Parties hereto hereby
agree as follows:

         1. Section 1(b) of the Agreement is hereby deleted in its entirety and
replaced with the following:

              (b) The Building Purchase. In accordance with the Building
                  Purchase Agreement, WKBC shall transfer and convey the
                  Building Purchase Assets to WTC for the consideration
                  specified therein. WTC's obligations to WHBC under the
                  Building Purchase Agreement will be evidenced by (i) a long
                  term note in the original principal amount of $100,000,000,
                  and (ii) a short term note in the accreted principal amount of
                  $74,360,295.30 (collectively, the "Building Purchase Notes").
                  The obligations under the Building Purchase Notes will be
                  secured by the following (the documents evidencing the
                  following will be referred to, collectively, as the "Building
                  Purchase Collateral Documents"): (a) a first priority mortgage
                  on and lien in the Building Purchase Assets (specifically
                  including all furniture, fixtures and equipment (other than
                  certain equipment related to or used in connection with WCG's
                  network)), and (b) a fully subordinated, second priority lien
                  on 66% of the stock of Wiltel Communications Pty Limited, an
                  Australian subsidiary of a new, domestic, wholly owned
                  subsidiary of WCLLC, which lien shall be subject to a mutually
                  agreeable Intercreditor Agreement between WHBC and the
                  Administrative Agent (as defined in the Plan) on behalf of the
                  Lenders. In connection with the closing of the Building
                  Purchase Agreement, the Administrative Agent for the benefit
                  of the secured parties,



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                  including, without limitation, the Lenders, shall be granted a
                  fully subordinated, second priority lien and mortgage on the
                  Building Purchase Assets (the "Lender Second Mortgage").

         2. The definition of "Building Purchase Agreement" in the Glossary of
Settlement Agreement Defined Terms shall be deleted in its entirety and replaced
with the following:

                  "Building Purchase Agreement" means the agreement dated as of
                  July 26, 2002, a true and correct copy of which is annexed
                  hereto as Exhibit 4, pursuant to which, as a component of the
                  TWC Settlement, WTC shall purchase, the Building Purchase
                  Assets from WHBC, as such agreement is amended from time to
                  time.

         3. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.

         4. Except as specifically amended hereby, the Agreement is in all
respects confirmed, ratified and approved.

         IN WITNESS WHEREOF, the Parties hereto have executed this Amendment on
and as of the date and year first above written.


                            [Signature Pages Follow]


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WILLIAMS COMMUNICATIONS GROUP, INC.            THE OFFICIAL COMMITTEE OF
                                                  UNSECURED CREDITORS


-------------------------------                (signature illegible)
By:                                            By: Kirkland & Ellis
   ----------------------------                Its:  Counsel
Its:
    ---------------------------



CG AUSTRIA, INC.                               LEUCADIA NATIONAL CORPORATION

-------------------------------                ---------------------------------
By:                                            By:
   ----------------------------                   ------------------------------
Its:                                           Its:
    ---------------------------                    -----------------------------

                                               THE WILLIAMS COMPANIES, INC.

                                               ---------------------------------
                                               By:
                                                  ------------------------------
                                               Its:
                                                   -----------------------------


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WILLIAMS COMMUNICATIONS GROUP, INC.   THE OFFICIAL COMMITTEE OF UNSECURED
                                      CREDITORS BY: AMALGAMATED GADGET, L.P., AS
                                      INVESTMENT;  BY: SCEPTOR HOLDINGS, INC.,
                                      ITS GENERAL PARTNER;
                                      BY: David R. Gillespie, CFO

/s/ HOWARD S. KALIKA                  /s/ DAVID GILLESPIE
BY: HOWARD S. KALIKA                  BY: R2 INVESTMENTS, LPC
Its: Vice President                   Its: CHAIRPERSON


CG AUSTRIA, INC.                      LEUCADIA NATIONAL CORPORATION
/s/  Howard S. Kalika                 /s/ Joseph A. Orlando
By:  Howard S. Kalika                 By: Joseph A. Orlando
     -----------------------------    ------------------------------------------
Its:  Vice President and Treasurer    Its:  Vice President & CFO


                                      THE WILLIAMS COMPANIES, INC.


                                      /s/ JACK D. MCCARTHY
                                      By: Jack D. McCarthy
                                          --------------------------------------
                                      Its: Senior Vice President and
                                           Chief Financial Officer