First Supplemental Indenture






	
		Exhibit 4.2

	   
	
		FIRST SUPPLEMENTAL INDENTURE

	 
	          This FIRST SUPPLEMENTAL INDENTURE (the "First Supplemental
		Indenture"), is entered into as of March 12, 2007, by and among NATIONAL
		RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a cooperative
		association duly organized and existing under the laws of the District
		of Columbia (the "Company"), U.S. BANK NATIONAL ASSOCIATION, a
		national banking association duly organized and existing under the laws
		of the United States of America, as successor trustee (the "Successor
		Trustee"), and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national
		banking association duly organized and existing under the laws of the
		United States of America and ultimate successor in interest to Bank One
		Trust Company, N.A., as resigning trustee (the "Resigning Trustee").
		
	
		    

	
		W I T N E S S E T H:

	          WHEREAS, the Company and the Resigning Trustee are parties to a
		certain Indenture, dated as of May 15, 2000 (the "Indenture"),
		relating to the issuance from time to time by the Company of its
		unsecured variable denomination floating rate demand notes (the "Securities")
		on terms to be specified at the time of issuance;
	          
	          WHEREAS, Section 6.09 of the Indenture provides that the
		Resigning Trustee may resign at any time by giving written notice of
		such resignation to the Company and that the Company may appoint a
		successor trustee upon the resignation or removal of the Resigning
		Trustee;
	
		    

	
		          WHEREAS, Section 8.01 of the Indenture provides
		that the Company and the Trustee may from time to time without the
		consent of any Holder enter into one or more supplemental indentures to
		the Indenture to evidence and provide for the acceptance of appointment
		under the Indenture of a successor trustee with respect to the
		Securities;

	
		    

	
		          WHEREAS, the Company previously filed with the
		Securities and Exchange Commission (the "SEC") a Registration
		Statement on Form S-3 (the "Old Registration Statement") with
		respect to the sale of up to $300,000,000 of Variable Denomination
		Floating Rate Demand Notes (the "Old Notes") issued pursuant to
		the Indenture and offered under the Company's old Daily Liquidity
		Program as described in the Old Registration Statement (the "Old
		Program");

	
		           

	
		          WHEREAS, the Company intends to file with the
		SEC a Registration Statement on Form S-3 (the "New Registration
		Statement") with respect to the sale of up to $20,000,000,000 of
		Variable Denomination Floating Rate Demand Notes issued pursuant to the
		Indenture and offered under the Company's new Daily Liquidity Program as
		described in the New Registration Statement (the "New Program"),
		which New Registration Statement will be automatically effective upon
		filing;

	 
	
		          WHEREAS, in connection with the filing of the
		New Registration Statement and the creation of the New Program, the Old
		Program will be terminated and all of the

	 
	


	
		outstanding Old Notes will be redeemed (the date and
		time of such termination and redemptions, which shall be simultaneous
		with the commencement of the New Program, the "New Program Effective
		Time").

	 
	
		          WHEREAS, the Resigning Trustee desires to resign
		as trustee under the Indenture effective upon the New Program Effective
		Time, the Company desires to appoint the Successor Trustee, effective as
		of the New Program Effective Time, as successor trustee under the
		Indenture and the Successor Trustee desires to accept its appointment as
		successor trustee under the Indenture;

	 
	
		          WHEREAS, the parties hereto deem it advisable to
		enter into this First Supplemental Indenture for the purpose of
		appointing the Successor Trustee as a successor trustee; and

	 
	
		          WHEREAS, all conditions and requirements of the
		Indenture necessary to make this First Supplemental Indenture a valid,
		binding and legal instrument in accordance with its terms have been
		performed and fulfilled by the parties hereto.

	 
	
		          NOW, THEREFORE, in consideration of the premises
		and the covenants and agreements contained herein, and for other good
		and valuable consideration, the receipt of which is hereby acknowledged,
		and for the equal and proportionate benefit of the Holders, the Company,
		the Resigning Trustee, and the Successor Trustee hereby agree as
		follows:

	 
	1.           RESIGNATION
		OF RESIGNING TRUSTEE
	
		    

	
		           1.1          Pursuant
		to Section 6.09(2) of the Indenture, the Resigning Trustee hereby
		resigns as trustee under the Indenture, such resignation to be effective
		as of the New Program Effective Time. The Company hereby waives the
		30-day notice requirement set forth in Section 6.09(2) of the Indenture.

	 
	
		           1.2          The
		Resigning Trustee hereby represents and warrants to the Successor
		Trustee, as successor trustee, and the Company that:

	 
	
		                              
		(a)           This
		First Supplemental Indenture has been duly authorized, executed and
		delivered on behalf of the Resigning Trustee and constitutes a legal,
		valid and binding obligation of the Resigning Trustee.

	 
	
		                              
		(b)           No
		covenant or condition contained in the Indenture has been waived by the
		Resigning Trustee or has been waived in a writing delivered to the
		Resigning Trustee by the Holders pursuant to the Indenture;

	 
	                              
		(c)           There is
		no action, suit or proceeding pending or, to the best of the knowledge
		of the Resigning Trustee, threatened against the Resigning Trustee
		before any court or governmental authority arising out of any action or
		omission by the Resigning Trustee under the Indenture;
	   
	
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		(d)           To the
		best of the knowledge of the Resigning Trustee, there has occurred no
		Event of Default or default under the Indenture, and no event which,
		after notice or lapse of time or both, would become an Event of Default
		or default under the Indenture has occurred and is continuing as of the
		date of this First Supplemental Indenture;

	
		 
	
		                              
		(e)           There are
		no outstanding duties of the Resigning Trustee under the Indenture
		arising prior to the date of this First Supplemental Indenture which
		have not been performed;

	
		 
	
		                              
		(f)          As of the date of this Supplemental
		Indenture, the Indenture is in full force and effect and has not been
		amended or supplemented except as described in the recitals herein;

	
		 
	
		                              
		(g)           All items
		required to be delivered to the trustee under the Indenture have been
		delivered by the Resigning Trustee to the Successor Trustee.

	 
	
		           1.3          The Resigning
		Trustee, effective as of the Effective Time, hereby assigns, transfers,
		delivers and confirms to the Successor Trustee all right, title and
		interest of the Resigning Trustee in and to the trust under the
		Indenture and all the rights, powers, trusts and duties of the Resigning
		Trustee as trustee under the Indenture and all property held by such
		Resigning Trustee under the Indenture. The Resigning Trustee shall
		execute and deliver such further instruments and shall do such other
		things as the Successor Trustee may request at the requesting party's
		expense so as to more fully and certainly vest and confirm in the
		Successor Trustee all the rights, powers, trusts and duties hereby
		assigned, transferred, delivered and confirmed to the Successor Trustee
		as trustee under the Indenture.

	   
	
		          1.4          The Resigning Trustee shall deliver to
		the Successor Trustee, as of or promptly after the date of this
		Supplemental Indenture hereof, all property held by it as trustee under
		the Indenture and all documents required to be delivered under the
		Indenture.

	   
	2.          ACCEPTANCE OF RESIGNATION AND
		APPOINTMENT
	
		 
	
		          2.1          The Company hereby accepts and confirms
		the resignation and removal of the Resigning Trustee as trustee under
		the Indenture, such resignation and removal to become effective as of
		the New Program Effective Time. The Company hereby appoints, effective
		as of the New Program Effective Time, the Successor Trustee as successor
		trustee under the Indenture to succeed to the Resigning Trustee, and
		hereby vests the Successor Trustee with, all the rights, powers, trusts
		and duties of the Resigning Trustee under the Indenture with like effect
		as if originally named as trustee under the Indenture. The Company
		agrees to give the Resigning Trustee and the Successor Trustee at least
		five New York banking days prior written notice of the occurrence of the
		New Program Effective Time, specifying an exact date.

	 
	
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		          2.2          The Company hereby represents and
		warrants to the Resigning Trustee and the Successor Trustee that:

	
		 
	
		                    
		(a)          The Company is a cooperative association duly and validly
		organized and existing pursuant to the laws of the District of Columbia.

	 
	
		                    
		(b)          The Indenture has been duly authorized, executed and delivered
		by the Company and constitutes a legal, valid and binding obligation of
		the Company.

	 
	
		                    
		(c)          No event has occurred and is continuing which is, or after
		notice or lapse of time, or both, would become, an Event of Default or
		default under the Indenture.

	 
	
		                    
		(d)          There is no action, suit or proceeding pending or, to the
		Company's best knowledge, threatened against the Company before any
		court or any governmental authority arising out of any action or
		omission by the Company under the Indenture.

	 
	
		                    
		(e)          This First Supplemental Indenture has been duly authorized,
		executed and delivered on behalf of the Company and constitutes a legal,
		valid and binding obligation of the Company.

	 
	
		                    
		(f)          All conditions precedent relating to the appointment of U.S.
		Bank National Association, as successor trustee under the Indenture have
		been complied with by the Company.

	 
	
		                    
		(g)          $194,688,176 aggregate principal amount of Securities are
		outstanding as of the close of business on the business day immediately
		prior to the date hereof.

	 
	
		                    
		(h)          The Security Register maintained by the Company accurately
		reflect the amount of Securities issued and outstanding under the
		Indenture.

	 
	
		                    
		(i)          The Company reaffirms its obligation to indemnify the Resigning
		Trustee pursuant to the terms of the Indenture.

	 
	
		3.          ACCEPTANCE OF APPOINTMENT OF SUCCESSOR
		TRUSTEE

	 
	
		          3.1          The Successor Trustee hereby represents
		and warrants to the Company that:

	 
	
		                    
		(a)          The Successor Trustee is a national banking association duly
		organized and existing under the laws of the United States of America,
		is authorized to exercise corporate trust powers, and is qualified and
		eligible under the provisions of the Indenture to act as a successor
		trustee under the Indenture.

	 
	
		                    
		(b)          This First Supplemental Indenture has been duly authorized,
		executed and delivered on behalf of the Successor Trustee, as successor
		trustee, and constitutes a legal, valid and binding obligation of the
		Successor Trustee.

	 
	
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		          3.2          The Successor Trustee hereby accepts its
		appointment as successor trustee under the Indenture and accepts the
		rights, powers, trusts and duties of the Resigning Trustee as trustee
		under the Indenture, upon the terms and conditions set forth therein,
		with like effect as if originally named as trustee under the Indenture,
		such appointment to be effective as of the New Program Effective Time.

	 
	
		          3.3          For purposes other than with respect to
		the Old Program, references in the Indenture to "Corporate Trust Office"
		or other similar terms shall be deemed to refer to the corporate trust
		office of the Successor Trustee, as successor trustee, located at 100
		Wall Street, 16th Floor, New York, New York 10005, or any other office
		of the Successor Trustee which the Successor Trustee from time to time
		shall designate in a written notice to the Company.

	 
	
		          3.4           Effective as
		of the New Program Effective Time, references in the Indenture to "Bank
		One Trust Company, N.A." shall be deemed to refer to "U.S. Bank National
		Association" for purposes other than with respect to the Old Program.

	 
	
		          3.5           On and after
		the New Program Effective Time, each reference in the Indenture to "this
		Indenture," "hereunder," "hereof" or words of like import referring to
		the Indenture, shall mean and be a reference to the Indenture as amended
		hereby.

	 
	
		          3.6           Pursuant to
		Section 6.9(6) of the Indenture, the Company shall give or cause to be
		given notice of the resignation of the Resigning Trustee and the
		appointment of the Successor Trustee by mailing notice of such event by
		first-class mail, postage prepaid, to all Holders as their names appear
		in the Securities Register. Each notice shall include the name of the
		Successor Trustee and the address of its corporate trust office set
		forth in Section 3.3 hereof.

	 
	
		4.          MISCELLANEOUS

	 
	
		          4.1.          Ratification of Indenture; First
		Supplemental Indenture as Part of Indenture. Except as expressly amended
		hereby, the Indenture is in all respects ratified and confirmed and all
		the terms, conditions and provisions thereof shall remain in full force
		and effect. Upon the execution and delivery of this First Supplemental
		Indenture by the Company, the Resigning Trustee, and the Successor
		Trustee, this First Supplemental Indenture shall form a part of the
		Indenture for all purposes, and each Holder heretofore or hereafter
		authenticated and delivered shall be bound hereby. Any and all
		references, whether within the Indenture or in any notice, certificate
		or other instrument or document, shall be deemed to include a reference
		to this First Supplemental Indenture (whether or not made), unless the
		context shall otherwise require.

	 
	
		          4.2.          New York Law to Govern. THE INTERNAL
		LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS
		FIRST SUPPLEMENTAL INDENTURE, INCLUDING, WITHOUT LIMITATION, SECTIONS
		5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

	 
	
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		          4.3.          Counterparts. The parties may
		sign any number of copies of this First Supplemental Indenture. Each
		signed copy shall be an original, but all of them together represent the
		same agreement.

	 
	
		          4.4.          Effect of Headings. The Section
		headings herein have been inserted for convenience only and shall not
		affect the construction hereof. 

	 
	
		          4.5.          Entire Agreement. This First
		Supplemental Indenture, together with the Indenture as amended hereby,
		contains the entire agreement of the parties, and supersedes all other
		representations, warranties, agreements and understandings between the
		parties, oral or otherwise, with respect to the matters contained herein
		and therein.

	 
	
		          4.6.          Benefits of First Supplemental
		Indenture. Nothing in this First Supplemental Indenture or the
		Indenture, express or implied, shall give to any person, other than the
		parties hereto and thereto and their successors hereunder and
		thereunder, and the Holders, any benefit of any legal or equitable
		right, remedy or claim under the Indenture or this First Supplemental
		Indenture.

	
		   

	
		          4.7.          Defined Terms. Unless otherwise
		indicated, capitalized terms used herein and not defined shall have the
		respective meanings given such terms in the Indenture.

	 
	
		          4.8.          Trust Indenture Act Controls. If
		any provision of this First Supplemental Indenture limits, qualifies or
		conflicts with another provision of this First Supplemental Indenture or
		the Indenture that is required to be included by the Trust Indenture Act
		of 1939, as amended (the "Act"), as in force at the date of this
		First Supplemental Indenture is executed, the provision required by the
		Act shall control. 

	 
	
		          4.9.          Severability. In case any one or
		more of the provisions of this First Supplemental Indenture shall be
		held invalid, illegal or unenforceable, in any respect for any reason,
		the validity, legality and enforceability of any such provision in every
		other respect and of the remaining provisions shall not in any way be
		affected or impaired thereby, it being intended that all of the
		provisions hereof shall be enforceable to the full extent permitted by
		law. 

	 
	
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		          IN WITNESS WHEREOF, the parties hereto have
		caused this First Supplemental Indenture to be duly executed, all as of
		the date first above written.

	
		   





	 	NATIONAL RURAL UTILITIES 

		COOPERATIVE FINANCE CORPORATION
	 	 
	 	
		By:     /s/ Steven L. Lilly

	 	          Name:
		Steven L. Lilly
	 	          Title:  
		Chief Financial Officer
	 	 
	 	 
	 	U.S. BANK NATIONAL 

		ASSOCIATION
	  	
		  
	 	
		By:     /s/ Beverly A.
		Freeney 
		

	 	          Name: 
		Beverly A. Freeney
	 	          Title:   
		Vice President
	 	 
	 	 
	 	THE BANK OF NEW YORK 

		TRUST COMPANY, N.A.
	 	 
	 	By:     /s/ Alma Marcella
		Burgess
	 	          Name: 
		Alma Marcella Burgess
	 	          Title:   
		Assistant Treasurer