Exhibit 4.2


 





MEMBER CAPITAL SECURITIES, SERIES 2017,
MAY NOT BE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION (“NATIONAL
RURAL”) AND ONLY NATIONAL RURAL’S VOTING MEMBERS MAY PURCHASE AND HOLD THE MEMBER CAPITAL SECURITIES, SERIES 2017.
ANY PURPORTED TRANSFER OF MEMBER CAPITAL SECURITIES, SERIES 2017, WITHOUT NATIONAL RURAL’S PRIOR WRITTEN CONSENT WILL BE
VOID AB INITIO. 


 


Certificate No.:


 


PRINCIPAL AMOUNT:


 


MATURITY DATE:


 


ISSUE DATE:


 


INTEREST PAYMENT DATES:


 


REGULAR RECORD DATES:


 


INTEREST RESET DATES:


 


NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
CORPORATION


 


FLOATING RATE MEMBER CAPITAL SECURITIES


 


SERIES 2017


 


National Rural Utilities
Cooperative Finance Corporation, a cooperative association duly organized and existing under the laws of the District of Columbia
(herein referred to as the “Company,” which term includes any successor Person under the Indenture), for value received,
hereby promises to pay to              , or registered assigns, the
principal sum of                  on the Maturity
Date set forth above and to pay interest thereon as set forth below, until the principal hereof is paid or made available for payment.


 


Interest on the member
capital securities, series 2017 (the “Securities”), will be payable in arrears on the Interest Payment Dates set forth
above of each year, and at maturity, commencing on                 
    , 20XX.


 


The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will be payable to, as provided in such Indenture, the Person
in whose name this Security is registered at the close of business on the Regular Record Dates set forth above of each year. Interest
will be paid on such principal sum from the Maturity Date or from the most recent Interest Payment Date until the principal amount
thereof becomes due and payable.


 


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 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.


 




     


     


    

 


IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed.


 


	 	NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
	 	 
	 	 	 
	 	By:	

	 	Name: 	J.
Andrew Don
	 	Title:	
        Senior Vice President &

        Chief Financial Officer



 





	ATTEST:	 
	 	 
	 	 
	Assistant Secretary-Treasurer	 




 







     


     


    

 


CERTIFICATE OF AUTHENTICATION


 


Dated:                     


 


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


 


	 	U.S. BANK NATIONAL ASSOCIATION
	 	 
	 	 	 
	 	By:	

	 	 	Authorized Signatory



 



     


     


    

 


REVERSE OF SECURITY 


 


This Security is one
of a duly authorized issue of subordinated debt securities of the Company (the “Series 2017 member capital securities,”
and, herein called the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of
October 15, 1996, as amended (herein called the “Indenture,” which term shall have the meaning assigned to it
in such instrument), between the Company and U.S. Bank National Association, as successor trustee (herein called the “Trustee,”
which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, 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. This Security is one of
the series designated on the face hereof.


 


The amount of interest
payable on any Interest Payment Date shall be computed on the basis of the actual number of days in the applicable interest period
divided by 360.


 


The Securities will bear
interest for each interest period at a rate determined by the calculation agent, which shall initially be the Company, until such
time as the Company appoints a successor calculation agent (herein called the “Calculation Agent,” which term includes
any successor Calculation Agent). All calculations of the Calculation Agent, in the absence of manifest error, shall be conclusive
for all purposes and binding on the Company, the Holders and the Trustee.


 


In the event that any
date on which interest is payable on the Securities is not a Business Day, then payment of the interest payable on such date will
be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the following month, such payment will be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date.


 


Any interest not 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
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,
as more fully provided in the Indenture referred to on the reverse hereof.


 


The interest rate on
each Security will equal the interest rate calculated by reference to the specified interest rate formula set forth in an applicable
pricing supplement plus or minus any Spread and/or multiplied by an Spread Multiplier. The applicable pricing supplement will designate
one or more interest rate bases for the Security. The basis or bases will be determined by reference to the London Interbank Offered
Rate (“LIBOR”) or another interest rate basis or formula as set forth in the pricing supplement. A Security with a
basis or bases determined by reference to LIBOR shall be a LIBOR Security. If a Security’s basis is determined by reference
to another interest rate, the Security shall be a Floating Rate Security.


 


The rate of interest
on each Security will be reset according to the index maturity, as specified in the applicable pricing supplement. Unless specified
otherwise in the applicable pricing supplement, the interest rate will be reset each Interest Reset Date. The Interest Reset Dates
shall be as set forth on the front page hereof. The interest rate for the first interest period will be the initial interest rate
set forth in the applicable pricing supplement. The interest rate for the ten calendar days immediately prior to the Security’s
maturity will be that in effect on the tenth calendar day preceding maturity, unless otherwise specified in an applicable pricing
supplement.


 


If any Interest Reset
Date would otherwise be a day that is not a Business Day, the Interest Reset Date shall be postponed to the next succeeding Business
Day. For this purpose, “Business Day” shall mean (i) with respect to a LIBOR Security only, any day on which dealings
in deposits in U.S. dollars are transacted in the London interbank market, and (ii) with respect to any other Floating Rate
Security, any week day other than a day on which banking institutions in the Borough of Manhattan, City and State of New York are
authorized by law to close.


 






     


     


    

 


The interest determination
date pertaining to an Interest Reset Date for a LIBOR Security shall be the second London Business Day prior to that Interest Reset
Date.


 


The interest rate on
the Floating Rate Securities will in no event be higher than the maximum rate permitted by New York law as the same may be modified
by U.S. law of general application. Under present New York law, subject to certain exceptions, the maximum rate of interest for
any loan to an individual is 16% for a loan less than $250,000, and 25% for a loan of $250,000 or more but less than $2,500,000,
in each case calculated per year on a simple interest basis. There is no limit on the maximum rate of interest on loans made to
individuals in an amount equal to $2,500,000 or more. Under present New York law, the maximum rate of interest which may be charged
to a corporation for any loan up to $2,500,000 is 25% per year on a simple interest basis. There is no limit on the maximum rate
of interest on loans made to corporations in an amount equal to $2,500,000 or more.


 


Upon the request of a
Holder, the Calculation Agent will provide the interest rate which will become effective as a result of a determination made on
the most recent interest determination date with respect to that Security. Unless otherwise specified in an applicable pricing
supplement, the calculation date, if applicable, pertaining to any interest determination date will be the earlier of the tenth
calendar day after such interest determination date, or, if such day is not a Business Day, the next succeeding Business Day or
the Business Day preceding the applicable interest payment date or maturity, as the case may be.


 


LIBOR will be determined
by the Calculation Agent in accordance with the following procedures:


 


With respect to any Interest
Determination Date relating to a Floating Rate Security for which LIBOR is an applicable base rate, LIBOR will be the rate for
deposits in U.S. dollars having the index maturity specified in the applicable pricing supplement, commencing on the applicable
Interest Reset Date that appears on the designated LIBOR page, as defined below, as of 11:00 a.m., London time, on that Interest
Determination Date. If no rate appears on the designated LIBOR page at such time on an Interest Determination Date, LIBOR on such
Interest Determination Date will be determined as follows:


 


The Calculation Agent
will request the principal London offices of each of four major reference banks in the London interbank market, as selected by
the Calculation Agent after consultation with the Company, to provide the Calculation Agent with its offered quotation for deposits
in U.S. dollars for the period of the index maturity specified in the applicable pricing supplement, commencing on the applicable
Interest Reset Date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on that Interest Determination
Date and in a principal amount that is representative for a single transaction in U.S. dollars in the market at the time. If at
least two quotations are so provided, LIBOR for that Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are so provided, LIBOR for that Interest Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 a.m., New York City time, on that Interest Determination Date by three major reference banks in New
York City, selected by the Calculation Agent after consultation with the Company, for loans in U.S. dollars to leading European
banks, having the index maturity specified in the applicable pricing supplement and in a principal amount that is representative
for a single transaction in U.S. dollars in that market at that time. If fewer than three banks selected by the Calculation Agent
are quoting as set forth above, LIBOR with respect to that Interest Determination Date will be LIBOR for the immediately preceding
interest reset period, or if there was no interest reset period, the rate of interest payable will be the initial interest rate.


 


The Calculation Agent
will, upon the request of the holder of any Security, provide the interest rate then in effect.


 


Each Security will be
issued in certificated form. Payment of the principal of and any interest on this Security payable at maturity or upon redemption
will be made in immediately available funds at the office of the paying agent in the Borough of Manhattan, City and State of New
York. Payments in immediately available funds will be made only if the certificated Security is presented to the paying agent in
time for the paying agent to make payments in immediately available funds in accordance with normal procedures. Interest on the
Securities will be paid by wire transfer in immediately available funds, but only if appropriate instructions have been received
in writing by the paying agent on or prior to the applicable regular record date for the payment of interest. If no instructions
have been received in writing by the paying agent, the funds will be paid by check mailed to the address of the person entitled
to such interest.


 






     


     


    

 


The Securities of this
series are subject to redemption upon not less than 30 nor more than 60 days’ notice by mail, at any time on or after the
date that is ten years from the Issue Date set forth on the front of this Security, as a whole or in part, at the election of the
Company, at a Redemption Price equal to 100% of the principal amount to be redeemed, together in the case of any such redemption
with accrued interest to, but not including, the Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holder of such Security, or one or more Predecessor Securities, of record at the
close of business on the related Regular Record Date referred to on the face hereof, all as provided in the Indenture.


 


In the event of redemption
of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.


 


The indebtedness evidenced
by this Security is unsecured and subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness,
which shall include all subordinated indebtedness of the Company that may be held by or transferred to non-members of the Company,
and this Security is issued subject to the provisions of the Indenture with respect thereto. The Securities of this series will
rank (i) pari passu to the Company’s member subordinated certificates and the Company’s other subordinated indebtedness
that may only be held by or transferred to members of the Company, including the Company’s previously issued and outstanding
member capital securities, and (ii) senior to the Company’s unretired patronage capital. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and
(c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder
of such Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such Holder upon said provisions.


 


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


 


If an Event of Default
with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the Indenture.


 


In addition to the events
of default set forth in the Indenture, the following will constitute an Event of Default under the Indenture with respect to the
Securities: the Company shall pay any dividend or interest on, or principal of, or redeem, purchase, acquire, retire or make a
liquidation payment with respect to, any Members’ Subordinated Certificates, Members’ Equity or patronage capital,
if such payment is made during an Extension Period, and either (i) such Extension Period has not expired or been terminated
or (ii) the Company has not made all payments due on the Securities as a result of such expiration or termination.


 


No payment will be made
in respect of the Securities if, at the time of such payment or immediately after giving effect thereto, (i) there exists
a default by the Company in the payment of principal or mandatory prepayments or premium, if any, of sinking funds or interest
on any senior or subordinated indebtedness (as defined in the instrument under which the same is outstanding) of the Company, or
(ii) there shall have occurred an event of default (other than a default in the payment of principal, premium, if any, mandatory
prepayments, sinking funds or interest) with respect to any senior or subordinated indebtedness (as defined in the instrument under
which the same is outstanding) permitting the holders thereof (or of the indebtedness secured thereby) to accelerate the maturity
thereof, and such event of default shall not have been cured or waived or shall not have ceased to exist.


 


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 not less than a majority in aggregate principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of not less than
a majority 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 Holder 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 herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.


 


As provided in and subject
to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the
Holders of not less than 33 1/3% in aggregate principal amount of the Securities of this series at the time Outstanding
shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered
the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in aggregate principal
amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to
institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or interest
hereon on or after the respective due dates expressed herein.


 


No reference herein to
the Indenture 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 interest on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.


 


The Company may at its
option at any time and from time to time during the term of the Securities of this series defer the interest payment period for
a period not exceeding 10 consecutive semi-annual interest payments (or an equivalent period of quarterly or other interest payment
periods) (a “Deferral Period”), and at the end of such Deferral Period, the Company shall pay all interest then accrued
and unpaid (together with interest thereon at the same rate as specified for the Securities of this series to the extent permitted
by applicable law) through the last day of such Deferral Period, provided that if any principal amount of this Security is paid
on such day, then not including interest for such day with respect to such principal amount; provided, that during such Deferral
Period the Company may not declare or pay any dividend or interest on, or principal of, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its Members’ Subordinated Certificates, Members’ Equity or patronage capital.
Prior to the termination of any such Deferral Period, the Company may further defer the payment of interest, provided that such
Deferral Period, together with all such previous and further deferrals thereof, may not exceed 10 consecutive semi-annual interest
payment periods (or an equivalent period of quarterly or other interest payment periods) or extend beyond the Stated Maturity of
the Securities of this series. Upon the termination of any such Deferral Period and the payment of all amounts then due, the Company
may elect a new Deferral Period, subject to the above conditions. No interest during a Deferral Period, except at the end thereof,
shall be due and payable. The Company shall give the Holder of this Security notice of its intent to defer payment of interest
in writing at least ten Business Days before the earlier of (i) the next interest payment due date and (ii) the date
CFC is required to give notice to holders of the Securities of the record or payment date for such interest payment.


 


The Securities of this
series are issuable only in registered form without coupons and in minimum denominations of $25,000 and integral multiples of $5,000
in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series
are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor and of authorized denominations,
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.


 


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 absolute owner
hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall
be affected by notice to the contrary.


 


The Securities may not
be transferred without the Company’s prior written consent and only the Company’s voting members may purchase and hold
the securities. Any purported transfer of the Securities without the Company’s prior written consent will be void ab initio.


 


The following terms shall
have the following meanings:


 






     


     


    

 


A “Business Day”
is any week day other than a day on which banking institutions in the Borough of Manhattan, City and State of New York are authorized
by law to close.


 


The “designated
LIBOR page” is the display on the Reuters screen “LIBOR01” page (or such other page as may replace such page
on that service or such other page as may be nominated by the ICE Benchmark Administration Limited (“IBA”) or its successor
or such other entity assuming the responsibility of IBA or its successor in calculating the London interbank offered rates for
U.S. dollar deposits in the event IBA or its successor no longer does so).


 


The “Spread”
is the number of basis points specified in the applicable pricing supplement as applying to the interest rate for the Security.


 


The “Spread Multiplier”
is the percentage specified in the applicable pricing supplement as applying to the interest rate for the Security.


 


All terms used in this
Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.