Document:

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                                                                     EXHIBIT 4.6

                                     FORM OF
                                PLEDGE AGREEMENT

       PLEDGE AGREEMENT, dated as of [_______________ ___, _____] (this
"Agreement"), among XO Communications, Inc., a Delaware corporation (the
"Company"), [______________________________], as collateral agent (in such
capacity, together with its successors in such capacity, the "Collateral
Agent"), and [_______________________________________], as Purchase Contract
Agent and as attorney-in-fact of the Holders (as hereinafter defined) from time
to time of the Securities (as hereinafter defined) (in such capacity, together
with its successors in such capacity, the "Purchase Contract Agent") under the
Purchase Contract Agreement (as hereinafter defined).

                                    RECITALS

       The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement, dated as of the date hereof (as modified and supplemented
and in effect from time to time, the "Purchase Contract Agreement"), pursuant to
which there will be issued Shares (as defined in the Purchase Contract
Agreement, and as used herein, the "Securities").

       Each Security consists of (a) one Purchase Contract (as hereinafter
defined) and (b) [type and description of underlying securities] ("Underlying
Securities") having a principal amount equal to $__________ (the "Stated
Amount") and maturing on __________, ____ (the "Stock Purchase Date"), subject
to the pledge of such Underlying Securities created hereby.

       Pursuant to the terms of the Purchase Contract Agreement and the Purchase
Contracts, the Holders (as defined in the Purchase Contract Agreement) from time
to time of the Securities have irrevocably authorized the Purchase Contract
Agent, as attorney-in-fact of such Holders, among other things to execute and
deliver this Agreement on behalf of such Holders and to grant the pledge
provided hereby of the Underlying Securities constituting part of such
Securities as provided herein and subject to the terms hereof.

       Accordingly, the Company, the Collateral Agent and the Purchase Contract
Agent, on its own behalf and as attorney-in-fact of the Holders from time to
time of the Securities, agree as follows:

       Section 1.       Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:

       (1)    the terms defined in this Article have the meanings assigned to
   them in this Article and include the plural as well as the singular; and

       (2)    the words "herein," "hereof" and "hereunder" and other words of
   similar import refer to this Agreement as a whole and not to any particular
   Article, Section or other subdivision.

       "Act" has the meaning specified in the Purchase Contract Agreement.

       "Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.

      ["Applicable Treasury Regulations" means Subpart O-Book-Entry Procedure of
Title 31 of the Code of Federal Regulations (31 CFR (S) 306.115 et. seq.) and
any other regulations of the United States Treasury Department from time to time
applicable to the transfer or pledge of book-entry U.S. Treasury Securities.]

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       "Business Day" means any day that is not a Saturday, a Sunday or a day on
which the New York Stock Exchange or banking institutions or trust companies in
The City of New York are authorized or obligated by law or executive order to be
closed.

       "Code" has the meaning specified in Section 5(a) hereof.

       "Collateral Agent" has the meaning specified in the first paragraph of
this instrument.

       "Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor shall have become such, and thereafter
"Company" shall mean such successor.

       "Early Settlement" has the meaning specified in the Purchase Contract
Agreement.

       "Early Settlement Amount" has the meaning specified in the Purchase
Contract Agreement.

       "Holder" when used with respect to a Security, or a Purchase Contract
constituting a part thereof, has the meaning specified in the Purchase Contract
Agreement.

       "Opinion of Counsel" has the meaning specified in the Purchase Contract
Agreement.

       "Outstanding Units" has the meaning specified in the Purchase Contract
Agreement.

       "Outstanding Unit Certificates" has the meaning specified in the Purchase
Contract Agreement.

       "Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

       "Pledge" has the meaning specified in Section 2 hereof.

       "Pledged Securities" has the meaning specified in Section 2
hereof.

       "Purchase Contract" has the meaning specified in the Purchase Contract
Agreement.

       "Purchase Contract Agent" has the meaning specified in the first
paragraph of this instrument.

       "Security" has the meaning specified in the Recitals.

       "Stated Amount" has the meaning specified in the Recitals.

       "Stock Purchase Date" has the meaning specified in the Recitals.

       "Termination Event" has the meaning specified in the Purchase Contract
Agreement.

       "Underlying Securities" has the meaning specified in the Recitals.

       "Unit Certificate" has the meaning specified in the Purchase Contract
Agreement.

       Section 2.       The Pledge. As collateral security for the performance
when due by the Holders from time to time of the Securities of their respective
obligations under the Purchase Contracts constituting part of such Securities,
such Holders acting through the Purchase Contract Agent, as their attorney-in-
fact, hereby pledge and grant to the Collateral Agent, for the benefit of the
Company, a security interest in all of the right, title and interest of such
Holders in the Underlying Securities constituting a part of such Securities.
Prior to or concurrently with the execution and delivery of this Agreement, the
initial Holders shall (i) cause the Underlying Securities to be delivered to the
Collateral Agent [by Federal Reserve Bank-Wire to the account of the Collateral
Agent designated

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by it for such purpose] and (ii) [take appropriate action so that the applicable
Federal Reserve Bank through which such Underlying Securities have been
purchased will reflect such transfer and the Pledge by appropriate entries in
its records in accordance with Applicable Treasury Regulations] [take
appropriate action to reflect such transfer and the Pledge by appropriate
entries in its records]. In addition, the execution and delivery hereof by the
Purchase Contract Agent and the Collateral Agent shall constitute (i) the
notification to the Collateral Agent (as bailee or otherwise) of the Pledge and
(ii) an acknowledgment by the Collateral Agent (as third party in possession or
otherwise) of the Pledge and of its holding of such Underlying Securities
subject to the Pledge, in each case, for purposes of perfecting the Pledge under
[Applicable Treasury Regulations and other] applicable law, including, to the
extent applicable, the Uniform Commercial Code as adopted and in effect in any
applicable jurisdiction. The pledge provided in this Section 2 is herein
referred to as the "Pledge" and the Underlying Securities subject to the Pledge,
excluding any Underlying Securities released from the Pledge as provided in
Section 4 hereof, are hereinafter referred to as the "Pledged Securities."
Subject to the Pledge, the Holders from time to time of the Securities shall
have full beneficial ownership of the Underlying Securities constituting a
part of such Securities.

       Section 3.       Distribution of Principal and Interest. (a) All payments
of principal of, or interest on, any Underlying Securities constituting part of
the Securities received by the Collateral Agent shall be paid by the Collateral
Agent by wire transfer in same day funds no later than ____________, New York
City time on the Business Day such interest payment is received by the
Collateral Agent (provided that in the event such interest payment is received
by the Collateral Agent on a day that is not a Business Day or after
____________, New York City time, on a Business Day, then such payment shall be
made no later than ____________, New York City time, on the next succeeding
Business Day) (i) in the case of (A) interest payments and (B) any principal
payments with respect to any Underlying Securities that have been released from
the Pledge pursuant to Section 4 hereof, to the Purchase Contract Agent to the
account designated by it for such purpose and (ii) in the case of principal
payments on any Pledged Securities, to the Company, in full satisfaction of the
respective obligations of the Holders of the Securities of which such Pledged
Securities are a part under the Purchase Contracts forming a part of such
Securities. All such payments received by the Purchase Contract Agent as
provided herein shall be applied by the Purchase Contract Agent pursuant to the
provisions of the Purchase Contract Agreement. If, notwithstanding the
foregoing, the Purchase Contract Agent shall receive any payments of principal
on account of any Pledged Securities, the Purchase Contract Agent shall hold
the same as trustee of an express trust for the benefit of the Company (and
promptly deliver over to the Company) for application to the obligations of the
Holders of the Securities of which such Underlying Securities are a part under
the Purchase Contracts relating to the Securities of which such Underlying
Securities are a part, and such Holders shall acquire no right, title or
interest in any such payments of principal so received.

       Section 4.       Release of Pledged Securities. (a) Upon
notice to the Collateral Agent by the Company or the Purchase Contract Agent
that there has occurred a Termination Event, the Collateral Agent shall release
all Pledged Securities from the Pledge and shall transfer all such Underlying
Securities, free and clear of any lien, pledge or security interest created
hereby, to the Purchase Contract Agent.

       (b)    Upon notice to the Collateral Agent by the Purchase Contract Agent
that one or more Holders of Securities have elected to effect Early Settlement
of their respective obligations under the Purchase Contracts forming a part of
such Securities in accordance with the terms of the Purchase Contracts and the
Purchase Contract Agreement, and that the Purchase Contract Agent has received
from such Holders, and paid to the Company, the related Early Settlement Amounts
pursuant to the terms of the Purchase Contracts and the Purchase Contract
Agreement and that all conditions to such Early Settlement have been satisfied,
then the Collateral Agent shall release from the Pledge Pledged Securities with
a principal amount equal to the product of (i) the Stated Amount times (ii) the
number of such Purchase Contracts as to which such Holders have elected to
effect Early Settlement.

       (c)    Transfers of Underlying Securities pursuant to Section 4(a) or (b)
shall be by Federal Reserve Bank-Wire or in another appropriate manner, (i) if
the Collateral Agent shall have received such notification at or prior to
____________, New York City time, on a Business Day, then no later than
____________, New York City time, on such Business Day and (ii) if the
Collateral Agent shall have received such notification on a day that is not a
Business Day or after ____________, New York City time, on a Business Day, then
no later than ____________, New York City time, on the next succeeding Business
Day.

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       Section 5.       Rights and Remedies. (a) The Collateral Agent shall
have all of the rights and remedies with respect to the Pledged Securities of a
secured party under the Uniform Commercial Code as in effect in the State of
New York (the "Code") (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such additional
rights and remedies to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights and remedies hereunder may be
asserted.

       (b)    Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of principal payments of any Pledged
Securities as provided in Section 3 hereof in satisfaction of the obligations
of the Holder of the Securities of which such Pledged Securities are a part
under the Purchase Contracts forming a part of such Securities, the Collateral
Agent shall have and may exercise, with reference to such Pledged Securities
and such obligations of such Holder, any and all of the rights and remedies
available to a secured party under the Code after default by a debtor, and as
otherwise granted herein or under any other law.

       (c)    Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of principal of or interest on
the Pledged Securities.

       (d)    The Purchase Contract Agent agrees that, from time to time, upon
the written request of the Collateral Agent, the Purchase Contract Agent shall
execute and deliver such further documents and do such other acts and things as
the Collateral Agent may reasonably request in order to maintain the Pledge, and
the perfection and priority thereof, and to confirm the rights of the Collateral
Agent hereunder.

       Section 6.       The Collateral Agent.

       The Collateral Agent and the Company hereby agree between themselves as
follows (it being understood and agreed that neither the Purchase Contract Agent
nor any Holder of Securities shall have any rights under this Section 6):

       6.01   Appointment, Powers and Immunities. The Collateral Agent shall act
as agent for the Company hereunder with such powers as are specifically vested
in the Collateral Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. The Collateral Agent: (a) shall
have no duties or responsibilities except those expressly set forth in this
Agreement and no implied covenants or obligations shall be inferred from this
Agreement against the Collateral Agent, nor shall the Collateral Agent be bound
by the provisions of any agreement by any party hereto beyond the specific terms
hereof; (b) shall not be responsible to the Company for any recitals contained
in this Agreement, or in any certificate or other document referred to or
provided for in, or received by it under, this Agreement, the Securities or the
Purchase Contract Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement (other than as
against the Collateral Agent), the Securities or the Purchase Contract Agreement
or any other document referred to or provided for herein or therein or for any
failure by the Company or any other Person (except the Collateral Agent) to
perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder (except pursuant to directions furnished under Section 6.02 hereof);
(d) shall not be responsible for any action taken or omitted to be taken by it
hereunder or under any other document or instrument referred to or provided for
herein or in connection herewith or therewith, except for its own negligence;
and (e) shall not be required to advise any party as to selling or retaining, or
taking or refraining from taking any action with respect to, any securities or
other property deposited hereunder.

       No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess of the value of the Pledged Securities.

       6.02   Instructions of the Company. The Company shall have the right, by
one or more instruments in writing executed and delivered to the Collateral
Agent, to direct the time, method and place of conducting any proceeding for any
right or remedy available to the Collateral Agent, or of exercising any power
conferred on the Collateral Agent, or to direct the taking or refraining from
taking of any action authorized by this

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Agreement; provided, however, that (i) such direction shall not conflict with
the provisions of any law or of this Agreement and (ii) the Collateral Agent
shall be adequately indemnified as provided herein. Nothing in this Section 6.02
shall impair the right of the Collateral Agent in its discretion to take any
action or omit to take any action which it deems proper and which is not
inconsistent with such direction.

       6.03   Reliance by Collateral Agent. The Collateral Agent shall be
entitled to rely upon any certification, order, judgment, opinion, notice or
other communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it to be genuine and correct and
to have been signed or sent by or on behalf of the proper Person or Persons
(without being required to determine the correctness of any fact stated
therein), and upon advice and statements of legal counsel and other experts
selected by the Collateral Agent. As to any matters not expressly provided for
by this Agreement, the Collateral Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
given by the Company in accordance with this Agreement.

       6.04   Rights in Other Capacities. The Collateral Agent and its
affiliates may (without having to account therefor to the Company) accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with the Purchase Contract Agent and
any Holder of Securities (and any of their subsidiaries or affiliates) as if it
were not acting as the Collateral Agent, and the Collateral Agent and its
affiliates may accept fees and other consideration from the Purchase Contract
Agent and any Holder of Securities without having to account for the same to the
Company, PROVIDED that the Collateral Agent covenants and agrees with the
Company that the Collateral Agent shall not accept, receive or permit there to
be created in its favor any security interest, lien or other encumbrance of any
kind in or upon the Pledged Securities.

       6.05   Non-Reliance on Collateral Agent. The Collateral Agent shall not
be required to keep itself informed as to the performance or observance by the
Purchase Contract Agent or any Holder of Securities of this Agreement, the
Purchase Contract Agreement, the Securities or any other document referred to or
provided for herein or therein or to inspect the properties or books of the
Purchase Contract Agent or any Holder of Securities. The Collateral Agent shall
not have any duty or responsibility to provide the Company with any credit or
other information concerning the affairs, financial condition or business of the
Purchase Contract Agent or any Holder of Securities (or any of their affiliates)
that may come into the possession of the Collateral Agent or any of its
affiliates.

       6.06   Compensation and Indemnity. The Company agrees: (i) to pay the
Collateral Agent from time to time reasonable compensation for all services
rendered by its hereunder and (ii) to indemnify the Collateral Agent for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of its powers and duties under this Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of such powers and
duties.

       6.07   Failure to Act. In the event of any ambiguity in the provisions of
this Agreement or any dispute between or conflicting claims by or among the
undersigned and/or any other person or entity with respect to any funds or
property deposited hereunder, the Collateral Agent shall be entitled, at its
sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such dispute or
conflict shall continue, and the Collateral Agent shall not be or become liable
in any way to any of the undersigned for its failure or refusal to comply with
such conflicting claims, demands or instructions. The Collateral Agent shall be
entitled to refuse to act until either (i) such conflicting or adverse claims or
demands shall have been finally determined by a court of competent jurisdiction
or settled by agreement between the conflicting parties as evidenced in a
writing, satisfactory to the Collateral Agent or (ii) the Collateral Agent shall
have received security or an indemnity satisfactory to the Collateral Agent
sufficient to save the Collateral Agent harmless from and against any and all
loss, liability or expense which the Collateral Agent may incur by reason of its
acting. The Collateral Agent may in addition elect to commence an interpleader
action or seek other judicial relief or orders as the Collateral Agent may deem
necessary. Notwithstanding anything contained herein to the contrary, the
Collateral Agent shall not be required to take any action that is in its opinion
contrary to law or to the terms of this Agreement, or which would in its opinion
subject it or any of its officers, employees or directors to liability.

       6.08   Resignation of Collateral Agent. Subject to the appointment and
acceptance of a successor Collateral Agent as provided below, (a) the Collateral
Agent may resign at any time by giving notice

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thereof to the Company and the Purchase Contract Agent, (b) the Collateral Agent
may be removed at any time by the Company and (c) if the Collateral Agent fails
to perform any of its material obligations hereunder in any material respect for
a period of not less than 20 days after receiving notice of such failure by the
Purchase Contract Agent and such failure shall be continuing, the Collateral
Agent may be removed by the Purchase Contract Agent. The Purchase Contract Agent
shall promptly notify the Company of any removal of the Collateral Agent
pursuant to clause (c) of the immediately preceding sentence. Upon any such
resignation or removal, the Company shall have the right to appoint a successor
Collateral Agent. If no successor Collateral Agent shall have been so appointed
and shall have accepted such appointment within 30 days after the retiring
Collateral Agent's giving of notice of resignation or such removal, then the
retiring Collateral Agent may petition any court of competent jurisdiction for
the appointment of a successor Collateral Agent. The Collateral Agent shall be a
bank which has an office in New York, New York with a combined capital and
surplus of at least $50,000,000. Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall take all appropriate action to transfer any
money and property held by it hereunder (including the Pledged Securities) to
such successor Collateral Agent. The retiring Collateral Agent shall, upon such
succession, be discharged from its duties and obligations as Collateral Agent
hereunder. After any retiring Collateral Agent's resignation hereunder as
Collateral Agent, the provisions of this Section 6 shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Collateral Agent.

       6.09   Right to Appoint Agent or Advisor. The Collateral Agent shall have
the right to appoint agents or advisors in connection with any of its duties
hereunder, and the Collateral Agent shall not be liable for any action taken or
omitted by such agents or advisors selected in good faith.

       6.10   Survival. The provisions of this Section 6 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent.

       Section 7.       Amendment.

       7.01   Amendment Without Consent of Holders. Without the consent of any
Holders, the Company, the Collateral Agent and the Purchase Contract Agent, at
any time and from time to time, may amend this Agreement, in form satisfactory
to the Company, the Collateral Agent and the Purchase Contract Agent, for any of
the following purposes:

       (1)    to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company; or

       (2)    to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company;
or

       (3)    to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent or Purchase Contract Agent; or

       (4)    to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other such provisions herein, or to
make any other provisions with respect to such matters or questions arising
under this Agreement, provided such action shall not adversely affect the
interests of the Holders.

       7.02   Amendment with Consent of Holders. With the consent of the Holders
of not less than a majority of the Outstanding Units, by Act of said Holders
delivered to the Company, the Agent and the Collateral Agent, the Company, when
authorized by a Board Resolution, the Agent and the Collateral Agent may amend
this Agreement for the purpose of modifying in any manner the provisions of this
Agreement or the rights of the Holders in respect of the Securities; PROVIDED,
HOWEVER, that no such supplemental agreement shall, without the consent of the
Holder of each Outstanding Unit affected thereby,

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       (1)    change the amount or type of Underlying Securities underlying a
Security, impair the right of the Holder of any Security to receive interest
payments on the Underlying Securities or otherwise adversely affect the Holder's
rights in or to such Underlying Securities; or

       (2)    otherwise effect any action that would require the consent of the
Holder of each Outstanding Unit affected thereby pursuant to the Purchase
Contract Agreement if such action were effected by an agreement supplemental
thereto; or

       (3)    reduce the percentage of Outstanding Units the consent of whose
Holders is required for any such amendment.

       It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.

       7.03   Execution of Amendments. In executing any amendment permitted by
this Section, the Collateral Agent and the Purchase Contract Agent shall be
entitled to receive and (subject to Section 6.01 hereof, with respect to the
Collateral Agent, and Section 701 of the Purchase Contract Agreement, with
respect to the Purchase Contract Agent) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement.

       7.04   Effect of Amendments. Upon the execution of any amendment under
this Section, this Agreement shall be modified in accordance therewith, and such
amendment shall form a part of this Agreement for all purposes; and every Holder
of Unit Certificates theretofore or thereafter authenticated, executed on behalf
of the Holders and delivered under the Purchase Contract Agreement shall be
bound thereby.

       7.05   Reference to Amendments. Unit Certificates authenticated, executed
on behalf of the Holders and delivered after the execution of any amendment
pursuant to this Section may, and shall if required by the Collateral Agent or
the Purchase Contract Agent, bear a notation in form approved by the Purchase
Contract Agent and the Collateral Agent as to any matter provided for in such
amendment. If the Company shall so determine, new Unit Certificates so modified
as to conform, in the opinion of the Collateral Agent, the Purchase Contract
Agent and the Company, to any such amendment may be prepared and executed by the
Company and authenticated, executed on behalf of the Holders and delivered by
the Purchase Contract Agent in accordance with the Purchase Contract Agreement
in exchange for Outstanding Unit Certificates.

       Section 8.       Miscellaneous.

       8.01   No Waiver. No failure on the part of the Collateral Agent or any
of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any of its agents of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.

       8.02   Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

       8.03   Notices. All notices, requests, consents and other communications
provided for herein (including, without limitation, any modifications of, or
waivers or consents under, this Agreement) shall be given or

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made in writing (including, without limitation, by telecopy) delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.

       8.04   Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the Company,
the Collateral Agent and the Purchase Contract Agent, and the Holders from time
to time of the Securities, by their acceptance of the same, shall be deemed to
have agreed to be bound by the provisions hereof and to have ratified the
agreements of, and the grant of the Pledge hereunder by, the Purchase Contract
Agent.

       8.05   Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.

       8.06   Severability. If any provision hereof is invalid and unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.

       8.07   Expenses, etc. The Company agrees to reimburse the Collateral
Agent for: (a) all reasonable out-of-pocket costs and expenses of the Collateral
Agent (including, without limitation, the reasonable fees and expenses of
counsel to the Collateral Agent), in connection with (i) the negotiation,
preparation, execution and delivery or performance of this Agreement and (ii)
any modification, supplement or waiver of any of the terms of this Agreement;
(b) all reasonable costs and expenses of the Collateral Agent (including,
without limitation, reasonable fees and expenses of counsel) in connection with
(i) any enforcement or proceedings resulting or incurred in connection with
causing any Holder of Securities to satisfy its obligations under the Purchase
Contracts forming a part of the Securities and (ii) the enforcement of this
Section 8.07; and (c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any other document referred to herein and all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated hereby.

       8.08   Security Interest Absolute. All rights of the Collateral Agent and
security interests hereunder, and all obligations of the Holders from time to
time of the Securities hereunder, shall be absolute and unconditional
irrespective of:

              (a)    any lack of validity or enforceability of any provision of
       the Purchase Contracts or the Securities or any other agreement or
       instrument relating thereto;

              (b)    any change in the time, manner or place of payment of, or
       any other term of, or any increase in the amount of, all or any of the
       obligations of Holders of Securities under the related Purchase
       Contracts, or any other amendment or waiver of any term of, or any
       consent to any departure from any requirement of, the Purchase Contract
       Agreement or any Purchase Contract or any other agreement or instrument
       relating thereto; or

              (c)    any other circumstance which might otherwise constitute a
       defense available to, or discharge of, a borrower, a guarantor or a
       pledgor.

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       IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

                                     XO COMMUNICATIONS, INC.

                                     By:
                                        ---------------------------------
                                         Name:
                                         Title:

                                     Address for Notices:

                                     11111 Sunset Hills Road
                                     Reston, Virginia 20190
                                     Attention:
                                     Telecopy:  (    ) ___-____

                                     ------------------------------
                                     as Purchase Contract Agent and as
                                     attorney-in-fact of the Holders
                                     from time to time of the Units

                                     By:
                                        ---------------------------------
                                         Name:
                                         Title:

                                     Address for Notices:

                                     [address]
                                     Attention:
                                     Telecopy:  (    ) ___-____

                                     ------------------------------
                                     as Collateral Agent

                                     By:
                                        ---------------------------------
                                         Name:
                                         Title:

                                     Address for Notices:

                                     [address]
                                     Attention:
                                     Telecopy:  (    ) ___-____

                                       9<PAGE>   1
                                                                     EXHIBIT 4.2

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THIS SECURITY AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                             THE RYLAND GROUP, INC.

                            8% SENIOR NOTES DUE 2006

CUSIP. 783764AH6

NO. R-1                                                             $100,000,000

       THE RYLAND GROUP, INC., a Maryland corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co., or registered assigns, the principal sum of One Hundred Million Dollars on
August 15, 2006, at the office or agency of the Company referred to below, and
to pay interest thereon on February 15, 2002 and semi-annually thereafter on
February 15 and August 15 in each year, accruing from August 16, 2001, at the
rate of 8% per annum until the principal hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be February 1 or August 1 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of the Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.

       Payment of the principal of, and interest on, this Security will be made
at the office of the Trustee in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address

<PAGE>   2

                                                                               2

shall appear in the Security Register or (ii) by wire transfer to an account
maintained by the Person entitled thereto.

       Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

       Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

<PAGE>   3

                                                                               3

       IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:  August 16, 2001                       THE RYLAND GROUP, INC.

                                              By:
                                                   ---------------------------
                                                   David L. Fristoe
                                                   Senior Vice President

Attest:

------------------------------
Sheri L. Markham
Assistant Secretary

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

              This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.

                      -------------------------------------
     The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee

                    By:
                        ----------------------------------------------
                               Authorized Officer

<PAGE>   4
                                                                               4

                               REVERSE OF SECURITY

       This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of June 28, 1996 (herein called the
"Indenture), between the Company and The Chase Manhattan Bank (formerly known as
Chemical Bank), as Trustee, herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. The terms
of this Security include the covenants and terms established by the Certificate
of the Chief Executive Officer and Chief Financial Officer dated August 16,
2001, pursuant to the authority granted under the Indenture (such terms and
covenants shall be referred to herein collectively with the terms and covenants
set out in the Indenture that are applicable to the Securities of this series as
the "Indenture Terms"). Defined terms used herein that are not otherwise defined
shall have the meanings given such terms in the Indenture Terms. This Security
is one of the series designated on the face hereof, in an aggregate principal
amount of $100,000,000. The Company may subsequently issue additional securities
as part of this series of Securities under the Indenture.

       The Securities of this series are not subject to redemption prior to
maturity.

       The Indenture Terms contain provisions for defeasance at any time of the
entire indebtedness of this Security upon compliance with certain conditions set
forth therein.

       The Company may not consolidate with or merge into, or transfer or lease
all or substantially all of its assets as an entirety to another person unless
the person is a corporation, such corporation assumes by a supplemental
indenture all the obligations of the Company under the Securities and the
Indenture and after giving effect to the transaction no Event of Default shall
exist.

       The following constitute Events of Default: default for 30 days in
payment of any interest on any Security when due; default in payment of
principal of (or premium, if any, on) any Security when due; default in
performance, or breach, of any covenant or agreement of the Company in the
Indenture Terms which continues for 60 days after written notice to the Company
by the Trustee or by the Holders of at least 25% in principal amount of the
Securities of this series; the occurrence of any event that results in the
acceleration of any Indebtedness (other than Non-Recourse Indebtedness) of the
Company or any of its Restricted Subsidiaries that has an outstanding principal
amount of $10,000,000 or more in the aggregate; a default in the payment of any
principal or interest in respect of any Indebtedness of the Company or any of
its Restricted Subsidiaries (other than Non-Recourse Indebtedness) that has an
outstanding principal amount of $10,000,000 or more and the continuation of such
default for ten business days from the date such principal or interest payment
became due and payable (after giving effect to any applicable grace period set
forth in the documents governing such Indebtedness) and certain events of
bankruptcy, insolvency or reorganization as provided in the Indenture Terms. If
any Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the outstanding Securities of this series may
declare the principal of all of the Securities of that series to be due and
payable immediately. Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities of this series may direct the Trustee in its exercise of any trust or
power conferred upon the Trustee with respect to such Securities. The Trustee
may withhold from Holders of the Securities of this series notice of any
continuing default (except a default in payment of principal or interest) if it
determines that withholding notice is in their interests. The Company must
furnish an annual compliance certificate to the Trustee.

<PAGE>   5
                                                                               5

       The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. Without the consent of any
Holder of Securities, the Indenture or the Securities may be amended to cure any
ambiguity, omission, defect or inconsistency or to make any change that does not
adversely affect the rights of any Holder of Securities in any material respect.
The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holders of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

       No reference herein to the Indenture Terms and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, places and rates, and in the
coin or currency, herein prescribed.

       As provided in the Indenture Terms and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency appointed by the Company in any place where the principal of
and any premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

       The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000.00 and any integral multiple thereof.
As provided in the Indenture Terms and subject to certain limitations set forth
therein, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.

       No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

       A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture Terms or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder of Securities of this
series by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Securities of this series.

       Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

<PAGE>   6
                                                                               6

       No recourse shall be had for the payment of the principal of (and
premium, if any) or interest on this Security, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture Terms or
any indenture supplemental thereto, against any incorporator, stockholder,
officer or director, as such, past, present or future, of the Company or of any
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.

       The Chase Manhattan Bank (formerly known as Chemical Bank), the Trustee
under the Indenture, or any banking institution serving as successor Trustee
thereunder, in its individual or any other capacity, may make loans to, accept
deposits from and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates as if it were not Trustee.

       The Company will furnish to any Holder of the Securities of this series
upon written request and without charge a copy of the Indenture. Requests may be
made to: The Ryland Group, Inc., 24025 Park Sorrento, Suite 400, Calabasas,
California 91302, Attention: Treasurer.

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