TENNESSEE VALLEY AUTHORITY SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Establishment.  The Tennessee Valley Authority (TVA) hereby establishes, effective October 1, 1995, an unfunded supplemental retirement plan for selected employees and their beneficiaries as described herein, which shall be known as the “Supplemental Executive Retirement Plan” (the “Plan”).

Purpose.  The purpose of the Plan is to provide retirement benefits to selected employees of TVA which are comparable to those provided by competing organizations.

“Accrued Benefit” means an annual benefit commencing at the later of (a) the Normal Retirement Date or (b) the Participant’s age at the time of Separation from Service, and continuing during the expected lifetime of the Participant based on the applicable mortality table used by the TVA Retirement System.

“Actuarial Equivalent” means a benefit of equal value to a benefit otherwise payable in a different form or at a different time under the Plan, when computed on the basis of the mortality and interest rate that are used by the TVA Retirement System as in effect on the date distribution is made.

“Approved Termination” means termination of employment with TVA due to (a) retirement on or after the Participant’s Normal Retirement Date, (b) retirement on or after attainment of actual age 55, if such retirement has the approval of the Board or its delegatee, (c) death in service as an employee, (d) disability (as such term is defined under the Rules and Regulations of the TVA Retirement System) as determined by the Retirement Committee, or (e) any other circumstances approved by the Board or its delegatee.

“Average Compensation” means the highest average of Compensation during three consecutive Plan Years.  If a Participant has been an employee of TVA for less than three Plan Years, the average shall be determined based on the period of employment.

“Beneficiary” shall mean the person or persons, designated in writing by a Participant, who are to receive a benefit under this Plan in the event of a Participant’s death.  In the absence of any designated beneficiary or in the event that the designated beneficiary is deceased, then the beneficiary shall be the Participant’s estate.

“Board” means the Board of Directors of TVA.

“Compensation” means the sum of annual salary, unreduced by contributions under Internal Revenue Code sections 125, 132 and 402 (a)(8), plus annual incentive award.

“Credited Service” means actual service with TVA plus any additional service which the Board, or its delegatee, approves under this Plan.

“Date of Benefit Commencement” means the later of (a) the date benefit payments begin within four (4) months following the date the Participant turns age 55, but no later than March 15 of the year following the year in which the Participant turns age 55, or (b) the date benefit payments begin within four (4) months following the date of the Participant’s Separation from Service, but no later than March 15 of the year following the year of the Participant’s Separation from Service.

“Normal Retirement Date” shall mean the first of the month coincident with or next following the date on which the Participant has attained age 62.

“Participants” shall mean those employees participating in the Plan as provided in section 3.

“Plan Year“ is TVA’s fiscal year, October 1 to September 30.

“Prior Employer Offset” means the Actuarial Equivalent of the benefit earned under a prior employers’ qualified defined benefit pension plan or plans attributable to prior employer service, which is included in Credited Service under this Plan, assuming benefit payments are to begin at the Normal Retirement Date.  A Prior Employer Offset shall only apply if all or a portion of the period of service during which such benefit was earned is included in Credited Service.  The Board or its delegate may, in its sole discretion, waive all or part of the Prior Employer Offset for any Participant.

“Qualified Plan” means the retirement plan under which a Participant accrues benefits for his or her TVA service and may be any of the TVA Retirement System, the Civil Service Retirement System, or the Federal Employees Retirement System.

“Qualified Plan Offset” means the Actuarial Equivalent of the Participant’s benefit under the Qualified Plan, assuming the maximum benefit with no survivor elections and benefit payments beginning at the Normal Retirement Date, with the benefit calculated as follows:

For a Participant in the TVA Retirement System, Civil Service Retirement System, or Federal Employees Retirement System, the product of (a) the Participant’s average compensation (as defined under the Rules and Regulations of the TVA Retirement System), times (b) Credited Service (not to exceed 24 years), times (c) 1.3 percent.

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“Retirement Committee” means a group of three persons appointed by the Board or its delegatee to administer the Plan.

“Separation from Service” or “separates from service” means the same as the term “separation from service” as defined in 26 CFR §1.409A-1(h) of the Internal Revenue Code Section 409A final regulations.

“Social Security Offset” means the primary benefit amount, commencing at the Participant’s Normal Retirement Date, that would be calculated under the Social Security Act as in effect at the time of the Participant’s Separation from Service.

“Unapproved Termination” means a termination of employment with TVA that does not constitute an Approved Termination as such term is defined in section 2.3.

The Board, or its delegatee, shall select individual employees as Participants.  Each Participant so selected shall be designated as a Tier One or a Tier Two Participant.

Vesting.  A Participant will vest in his/her Accrued Benefit (a) after five (5) years of actual TVA service, unless otherwise waived by the Board or its delegatee, (b) upon death in service as an employee, or (c) upon disability (as such term is defined under the Rules and Regulations of the TVA Retirement System) as determined by the Retirement Committee.

A Particip