  We provide a manifestly N=2 supersymmetric formulation of the N=2 U(N_c)
gauge model constructed in terms of N=1 superfields in hep-th/0409060. The
model is composed of N=2 vector multiplets in harmonic superspace and can be
viewed as the N=2 U(N_c) Yang-Mills effective action equipped with the electric
and magnetic Fayet-Iliopoulos terms. We generalize this gauge model to an N=2
U(N_c) QCD model by introducing N=2 hypermultiplets in harmonic superspace
which include both the fundamental representation of U(N_c) and the adjoint
representation of U(N_c). The effect of the magnetic Fayet-Iliopoulos term is
to shift the auxiliary field by an imaginary constant. Examining vacua of the
model, we show that N=2 supersymmetry is spontaneously broken down to N=1.
