<PAGE>

                                                                Exhibit 10.2 (a)

                              EXCHANGE AGREEMENT


     This Agreement (the "Agreement") is entered into as of April 19, 2001,
between WISCONSIN ENERGY CORPORATION (the "Corporation"), and GEORGE E.
WARDEBERG (the "Participant").


                                   RECITALS

     The Participant is an officer of and employed by the Corporation and is
covered under the Corporation's Supplemental Executive Retirement Plan (the
"SERP").  The Corporation has offered him certain benefits under a Split Dollar
Agreement between him and the Corporation of even date herewith (the "Split
Dollar Agreement") in exchange for and in lieu of certain benefits under the
SERP. The Participant wishes to make such an exchange and the parties are
entering into this Agreement to accomplish the same.


                                   AGREEMENT

     NOW, THEREFORE, it is mutually agreed that:

     1.  Elimination of Certain Benefits Under the SERP.  The Participant, in
         ----------------------------------------------
return for the Corporation's entering into the Split Dollar Agreement,
irrevocably agrees to the elimination of such amount of SERP benefits as have a
present value of $1,352,083.00 (the "Waived Amount"), determined as of the date
that benefits otherwise would become payable to or with respect to him under the
terms of the SERP (the "Determination Date") and calculated using an after-tax
discount rate of 4.5% (which has been determined based upon the discount rate of
7.5% used by the Corporation's outside actuaries to value the Corporation's
benefit obligations under the SERP and assuming a tax rate of 40% for the
Corporation) and mortality using 60% of the GAM `83 Mortality Table (i.e.,
assuming only 60% of the mortality rate in that table for males, to take into
account more favorable life expectancy). If as of the Determination Date, the
total present value of all of the SERP benefits to which the Participant or his
beneficiary is entitled exceeds the Waived Amount, then the Corporation may in
its sole discretion determine how much of Benefit "A" and Benefit "B" under the
SERP shall be eliminated, in order that the aggregate elimination equals the
Waived Amount.

     As of the date hereof, the Participant acknowledges that he shall have no
further rights or claims of any sort whatsoever with regard to the Waived
Amount, notwithstanding any other provision contained in any agreement between
the Participant and the Corporation or in any benefit plan or program of the
Corporation.
<PAGE>

     2.  Executive Split Dollar Agreement.  The Corporation has provided the
         --------------------------------
Participant with the Split Dollar Agreement which provides for the issuance of
an insurance policy by Nationwide Life Insurance Company.  By his signature
below, the Participant acknowledges that he has received a copy of the Split
Dollar Agreement.  A further copy of the Split Dollar Agreement is attached to
and made a part of this Agreement.  This Agreement and the Split Dollar
Agreement, collectively, shall be considered one complete contract between the
parties.

     3.  Tax Consequences.  The Corporation does not guarantee that the tax
         ----------------
consequences to the Participant will be as the Participant may have expected,
and the Participant assumes the risk that different interpretations of currently
applicable tax law or subsequent changes in applicable law may result in
unexpected tax consequences.

     4.  Acknowledgment.  The Participant hereby acknowledges that he has read
         --------------
and understands this Agreement and the Split Dollar Agreement.

     5.  Successors and Assigns.  This Agreement shall inure to the benefit of,
         ----------------------
and be binding upon, the Corporation and its successors and assigns, and the
Participant and his or her assignees, devisees and heirs.

     6.  Governing Law.  This Agreement shall be governed by and construed under
         -------------
the internal laws of the State of Wisconsin, without regard to its conflicts of
law principles.

     IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
first written above.


                                        WISCONSIN ENERGY CORPORATION


                                        By: /s/ Thomas H. Fehring
                                            ------------------------------------



                                        /s/ George E. Wardeberg
                                        ----------------------------------------
                                        GEORGE E. WARDEBERG

                                       2
<PAGE>

                                                                Exhibit 10.2 (b)


                                                        April 19, 2001



Mr. George E. Wardeberg



     Re:  Split Dollar Agreement Dated as of April 19, 2001

Dear George:

     The Company and you are ready to enter into the above agreement (the "Split
Dollar Agreement") in consideration of your agreement to waive certain non-
qualified deferred compensation accruals you might otherwise become entitled to
receive under the Company's Supplemental Executive Retirement Plan.  Your waiver
would be provided for in the proposed Exchange Agreement between us dated April
19, 2001 (the "Exchange Agreement").  All capitalized terms used in this letter
which are not otherwise defined shall have the meaning given to them in either
the Split Dollar Agreement or the Exchange Agreement.

     The purpose of this letter is to set forth the Company's promise to you,
your spouse or your estate (and references to "you" in this letter shall be
deemed to include your spouse or your estate) should you "become income taxable"
as defined below, under the following circumstances:

     (a)  One circumstance would apply if you become income taxable or would
          become income taxable at a determinable future date on any of the Cash
          Surrender Value at any time prior to or coincident with the date the
          Company exercises its rights under the Collateral Assignment to
          withdraw its Collateral Interest from the Joint Life Policy.  The
          first to occur of such dates is referred to in this letter as the
          "Company Withdrawal Date."

     (b)  Another circumstance would apply if you would become income taxable on
          the value of your non-qualified deferred compensation accruals which
          you have agreed to eliminate (the "Waived Benefits") under the
          Exchange Agreement at any time prior to a Company Withdrawal Date.

     (c)  Another circumstance would apply if your imputed compensation income
          calculated under Section 7872 of the Code with respect to the premiums
          paid by the Company on the Policy which the parties intend to report
          for income tax
<PAGE>

Mr. George E. Wardeberg
________, 2001
Page 2

          purposes under IRS Notice 2001-10 as loans (the "Loans") is ever
          determined by an applicable federal interest rate (the "AFR") which is
          more than 3 percentage points higher than the AFR which first applies
          to the Loans in 2001.

     (d)  Finally, it is recognized that you might "become income taxable" under
          other circumstances, not described in paragraphs (a), (b) and (c).

     You will be considered to have become income taxable for purposes of this
letter upon the occurrence of either of two events.  First, you will be
considered to have become income taxable upon your providing us with written
documentation establishing that the Internal Revenue Service has determined that
you must recognize income for federal income tax purposes either with respect to
the Cash Surrender Value or the Waived Benefits at any time prior to the Company
Withdrawal Date.  Secondly, you will be considered to have become income taxable
for purposes of this letter upon your providing us with the opinion of a
nationally recognized accounting firm that in the reasonable judgment of such
accounting firm, you should recognize such income (either relating to the Cash
Surrender Value or the Waived Benefits) or that you should recognize other
income relating to the Split Dollar Agreement or Exchange Agreement in a manner
not anticipated under existing law as of the date of this letter (which would
include any change in the operation or structure of Section 7872 of the Code as
applied to the Loans).

     Should you become income taxable as defined above, then we agree that, the
Company will exercise the right to withdraw the entire amount of its Collateral
Interest from the Joint Life Policy.  However, the withdrawal will be
accomplished only after 60 days' prior notice (as provided in the Split Dollar
Agreement) to you, so that you will have the opportunity to contribute
replacement funds (including, if you so desire, the funds paid to you by the
Company under the next paragraph of this letter) to prevent the Joint Life
Policy from expiring.

     Whether or not you have become income taxable as defined above, the Company
shall have the right on demand at any time, on 60 days' prior notice (as
provided in the Split Dollar Agreement) to you, to withdraw the entire amount of
its Collateral Interest from the Joint Life Policy.  However, if the Company
does so at any time before the completion of the 7 annual premium payments
provided for in Schedule A of the Split Dollar Agreement, the Company will
continue to make annual payments to the Owner, in the amounts and at the times
provided for in Section 3(c) of the Split Dollar Agreement.

     Notwithstanding any other provision of this letter, the Split Dollar
Agreement and the Exchange Agreement, this letter is also intended to express
the Company's commitment to you that (i) should you wish at some point in the
future to enter into another agreement similar to the Exchange Agreement or
modify the Exchange Agreement under which you waive certain additional non-
qualified deferred compensation accruals in return for certain increased premium
<PAGE>

Mr. George E. Wardeberg
________, 2001
Page 3

payments to be made by the Company under the Split Dollar Agreement, under the
same principles used in connection with the initial establishment of the Split
Dollar Agreement, the Company would do so, and (ii) should you wish to change
the terms for repayment of Loans at any time, the Company will work with you in
good faith to restructure the same on mutually agreeable basis.

     If you are in agreement, please indicate your acceptance in the space
provided below on the enclosed duplicate of this letter and it will then serve
as a binding agreement between us.

                                                  Very truly yours,

                                                  WISCONSIN ENERGY CORPORATION



                                                  By: /s/ Thomas H. Fehring
                                                      --------------------------


The above letter is accepted on this 19/th/
day of April, 2001.


/s/ George E. Wardeberg
-------------------------------------------
George E. Wardeberg
<PAGE>

                                                                Exhibit 10.2 (c)

                            SPLIT DOLLAR AGREEMENT


     This Split Dollar Agreement (the "Agreement") is made, as of April 19,
2001, among WISCONSIN ENERGY CORPORATION (the "Corporation") and GEORGE E.
WARDEBERG (the "Participant") and the GEORGE AND DEANNA WARDEBERG 2001 JOINT
INSURANCE TRUST, dated March 30, 2001 (the "Owner").


                                   RECITALS

     A.  The Participant desires to insure his life and the life of his spouse
for the benefit and protection of the Participant's family or other
beneficiary(ies) under the Policy (as defined below);

     B.  The Corporation desires to help the Participant provide life insurance
for the benefit and protection of his family or beneficiary by providing funds
from time to time to pay the premiums due on the Policy [which the parties
intend to report for income tax purposes as loans (the "Loans")] in accordance
with this Agreement, in exchange for the waiver by the Participant of certain
benefits, with such exchange to be on a cost-neutral basis to the Corporation;
and

     C.  The Owner desires to assign certain rights and interests in the Policy
to the Corporation, to the extent provided herein, as security for repayment of
the Loans provided by the Corporation for the acquisition and/or maintenance of
the Policy.


                                   AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements and covenants set forth below, the parties to this Agreement agree as
follows:

     1.   Definitions.  For purposes of this Agreement, unless otherwise clearly
          -----------
apparent from the context, the following phrases or terms shall have the
following indicated meanings:

          (a)  "Aggregate Premiums Paid" shall mean, at any time, an amount
     equal to the Loans which are the cumulative premiums paid by the
     Corporation on the Joint Life Policy.

          (b)  "Benefit Measurement Date" shall mean the earliest of April 9,
     2020, the date of the death of the Decedent, or the occurrence of any event
     entitling the Corporation to withdraw its Collateral Interest under that
     certain letter agreement between the Corporation and the Participant dated
     _______________, 2001.
<PAGE>

          (c) "Cash Surrender Value" shall mean an amount that equals, at any
     specified time, the cash surrender value as determined under the terms of
     the Policy.

          (d) "Code" shall mean the Internal Revenue Code of 1986, as amended.

          (e) "Collateral Assignment" shall mean an assignment made by the Owner
     in favor of the Corporation in a form mutually agreed to by the Corporation
     and the Owner and accepted by the Insurer.

          (f) "Collateral Interest" shall mean the Corporation's interest in the
     Policy, which shall equal, at any time, the lesser of Aggregate Premiums
     Paid or Cash Surrender Value (except as otherwise provided in Section 6),
     and which shall be repaid to the Corporation in accordance with Section 6
     below.

          (g) "Decedent" shall mean, as to a Joint Life Policy, the second to
     die of the Participant and his spouse.

          (h) "Designated Beneficiary" shall mean the beneficiary designated
     under the Policy.

          (i) "Economic Income" shall mean taxable compensation income imputed
     to the Participant as a result of the Loans under Section 7872 of the Code.

          (j) "Insurer" shall mean Nationwide Life Insurance Company.

          (k) "Joint Life Policy" means a policy which pays upon the death of
     the second to die of the Participant and his spouse.

          (l) "Owner" shall mean the George and Deanna Wardeberg 2001 Joint
     Insurance Trust, dated March 30, 2001.

          (m) "Owner's Death Benefit" shall mean all Policy proceeds in excess
     of the Collateral Interest.

          (n) "Participant" shall mean George E. Wardeberg.

          (o) "Plan" shall mean the plan described in Section 8(a) below.

          (p) "Policy" shall mean the following Joint Life Policy that is issued
     by the Insurer, Policy No. N101087470 on the lives of George E. and Deanna
     Wardeberg.

     2.   Acquisition of Policy; Ownership of Insurance. The parties to this
          ---------------------------------------------
Agreement shall cooperate in applying for and obtaining the Policy.  The Policy
shall be issued to the Owner as the sole and exclusive owner of the Policy,
subject to the rights and interests granted to the Corporation as provided in
this Agreement and the Collateral Assignment.  Concurrent with the signing of
this Agreement, the Owner will collaterally assign the Policy to the
Corporation, in the

                                       2
<PAGE>

form of the Collateral Assignment, as security for the payment of the Collateral
Interest, which assignment shall not be altered or changed without the mutual
consent of the Corporation and the Owner.

     3.   Premium Payments on Policy.
          --------------------------

          (a)  Payments and Reimbursements.  Prior to the occurrence of the
               ---------------------------
     Benefit Measurement Date, the Corporation shall pay to the Insurer, on or
     before each applicable premium due date, the premiums for the Policy as
     shown on Schedule A attached and made a part hereof.  The parties intend to
     report such premium payments for income tax purposes as loans from the
     Corporation (the "Loans").  In the event that the Corporation fails to make
     any such payment, the Owner or the Participant may make (but is not
     required to make) any such payment, and the Corporation shall immediately
     reimburse the Owner or the Participant, as the case may be, for any amount
     so paid, plus an additional amount such that after payment by the
     Participant of federal and state income taxes and Medicare taxes on the
     aggregate of all amounts so paid by the Corporation, the amount remaining
     will be equal to the applicable premium payment.

          (b)  Tax Reimbursement.  On or before March 15/th/ following each
               -----------------
     calendar year until the Benefit Measurement Date, the Corporation shall
     reimburse the Participant for the Participant's state and federal tax
     liability attributable to the Participant's Economic Income for such
     calendar year, plus an additional gross-up amount such that after payment
     by the Participant of all applicable state and federal taxes (including any
     Medicare or Social Security taxes) on the aggregate of all amounts so paid,
     the Participant will be in the same position as if he had not been taxed on
     such Economic Income, reimbursement and additional gross-up amount.  The
     Participant also acknowledges that any reimbursement and gross-up amount
     under this Section 3(b) itself will be taxable income, subject to all
     applicable withholding.

          (c)  If the Decedent dies prior to the completion of the 7 annual
     premium payments provided for on Schedule A, the Corporation shall continue
     to make annual payments on or before the dates specified in Schedule A in
     an amount equal to the "Calculated Amount" as set forth below, to the
     Owner.  The Calculated Amount shall be determined by calculating the stream
     of level annual payments that would be required for the remaining payment
     period which would have an aggregate present value equal to the after-tax
     cash costs to the Corporation of the payments the Corporation would have
     incurred had it made all of the remaining payments provided for on Schedule
     A, plus the tax reimbursement payments called for by subparagraph (b)
     above, but taking into account in the calculation of such present value the
     recovery by the Corporation of its Collateral Interest on the Benefit
     Measurement Date.  Present value for purposes of this subparagraph (c)
     shall be determined using the same assumptions as provided in paragraph 1
     of that certain Exchange Agreement between the Corporation and the
     Participant of even date herewith.

          (d)  This Agreement shall be treated as a "plan" covered by the
     Corporation's Rabbi Trust Agreement dated as of December 1, 2000.

                                       3
<PAGE>

     4.   Corporation's Rights. The Corporation's rights and interests in and to
          --------------------
the Policy shall be specifically limited to (i) the right to be paid its
Collateral Interest in accordance with Section 6 below, and (ii) the rights
specified in the Collateral Assignment.

     5.   Owner's Rights.  Subject to the terms of this Agreement and the
          --------------
Collateral Assignment, the Owner of the Policy shall be entitled to exercise all
rights in the Policy, including the right to select investments under the Policy
while the Collateral Assignment is in effect, except for the following, which
may be exercised only in accordance with Section 6:

          (a)  To borrow against or pledge the Policy;

          (b)  To surrender, cancel or assign the Policy; or

          (c)  To take a distribution or withdrawal from the Policy.

     In particular, subject to the terms and conditions of the Policy, and the
provisions of Section 6 below, the Owner may assign its rights under this
Agreement and the Collateral Assignment, including but not limited to an
assignment to an insurance trust of which the Participant is a settlor.  In the
event of an assignment of its rights, the Owner shall promptly notify the
Corporation of the name and address of the new Owner or assignee, including the
name and address of any trustee.

     Owner shall make all investment decisions under the Policy.  Neither Owner
nor the Corporation shall be liable for any loss in value of investments under
the Policy.

     6.   Collateral Interest.  On the Benefit Measurement Date, the Collateral
          -------------------
Interest shall be paid or repaid to the Corporation in the following manner:

          (a)  Notwithstanding any provision of this Agreement or the Policy
     that may be construed to the contrary, when the Benefit Measurement Date
     occurs, (i) the Corporation shall be entitled to that portion of the
     Policy's death proceeds or Cash Surrender Value if one or more of the
     insureds is still alive, that equals the sum of the Collateral Interest,
     and (ii) the Owner or the Designated Beneficiary, as the case may be, shall
     be entitled to the Owner's Death Benefit, or any remaining Cash Surrender
     Value if one or more of the insureds is still alive; provided, however, if
     the Benefit Measurement Date occurs due to the suicide of the Decedent, and
     the proceeds from the Policy are limited by either a suicide or
     contestability provision under the Policy, the Corporation shall be
     entitled to that portion of the higher of the Policy's Cash Surrender Value
     or death proceeds that does not exceed the Aggregate Premiums Paid. In
     either event, promptly following the Decedent's death, the Corporation and
     the Owner or the Designated Beneficiary shall take all steps necessary to
     collect the death proceeds of the Policy by submitting the proper claims
     forms to the Insurer. The Corporation shall notify the Insurer of the
     amount of the Owner's Death Benefit (except when the Policy's proceeds are
     limited because of the Decedent's death by suicide) and the Corporation's
     Collateral Interest in the Policy at the time of such death. Such amounts
     shall be paid,

                                       4
<PAGE>

     respectively, by the Insurer to the Owner or to the Designated Beneficiary,
     as the case may be, and the Corporation.

          (b)  The Corporation agrees to keep records of its premium payments
     and to furnish the Owner and the Insurer with a statement of its Collateral
     Interest whenever either party requires such statement.

          (c)  The Participant and/or Owner hereby acknowledge, understand and
     agree that, upon the release of the Corporation's Collateral Interest, the
     Corporation shall have no further interest in the Policy and shall have no
     obligation to make any additional premium payments.

          (d)  Upon payment to the Corporation of its Collateral Interest in
     accordance with this Section 6, this Agreement, and the Participant's
     participation in the Plan, shall terminate and no party shall have any
     further rights or obligations under the Agreement or the Plan with respect
     to any other party, except to the extent otherwise provided in Section 3(c)
     hereof and except as provided in that certain letter dated _______________,
     2001 from the Corporation to the Participant regarding this Split Dollar
     Agreement.

          (e)  Notwithstanding anything to the contrary in this Agreement, the
     Corporation shall not have any obligation to seek or inquire after the
     whereabouts of an Owner or a Participant upon a Benefit Measurement Date.

     7.   Insurer.
          -------

          (a)  The Insurer is not a party to this Agreement, shall in no way be
     bound by or charged with notice of its terms, and is expressly authorized
     to act only in accordance with the terms of the Policy.  The Insurer shall
     be fully discharged from any and all liability under the Policy upon
     payment or other performance of its obligations in accordance with the
     terms of the Policy.

          (b)  The signature(s) required for the Insurer to recognize the
     exercise of a right under the Policy shall be specified in the Collateral
     Assignment.

     8.   Plan; Named Fiduciary; Claims Procedure.
          ---------------------------------------

          (a)  This Agreement is part of the Wisconsin Energy Corporation Split
     Dollar Plan, which consists of all Wisconsin Energy Corporation Split
     Dollar Agreements that so reference their association with the Plan.  The
     provisions in this paragraph 8 are intended to meet the requirements of the
     Employee Retirement Income Security Act of 1974, as amended.  The
     Corporation shall be the Plan Administrator and it shall have full and
     complete discretionary authority to control and manage the administration
     of this Agreement and to decide all matters arising under the claims
     procedure set forth in subparagraph (c) below, except as otherwise provided
     in subparagraphs (c)(iii) and (iv) below.

                                       5
<PAGE>

          (b)  The Corporation is the named fiduciary of the Plan for purposes
     of this Agreement.

          (c)  The following claims procedure shall be followed in handling any
     benefit claim under this Agreement and the Plan:

               (i)    The Owner or the Designated Beneficiary, as the case may
          be, (the "Claimant"), shall file a claim for benefits by notifying the
          Corporation in writing. If the claim is wholly or partially denied,
          the Corporation shall provide a written notice within ninety (90) days
          specifying the reasons for the denial, the provisions of this
          Agreement on which the denial is based, and additional material or
          information, if any, that is necessary for the Claimant to receive
          benefits. Such written notice shall also indicate the steps to be
          taken by the Claimant if a review of the denial is desired.

               (ii)   If a claim is denied, and a review is desired, the
          Claimant shall notify the Corporation in writing within sixty (60)
          days after receipt of written notice of a denial of a claim. In
          requesting a review, the Claimant may review Plan documents and submit
          any written issues and comments the Claimant feels are appropriate.
          The Corporation shall then review the claim and provide a written
          decision within sixty (60) days of receipt of a request for a review.
          This decision shall state the specific reasons for the decision and
          shall include references to specific provisions of this Agreement, if
          any, upon which the decision is based.

               (iii)  If a claim is allowed, or if a claim is denied and a court
          of competent jurisdiction thereafter overrules such denial and the
          time for appeal of any such court judgment has passed, the Corporation
          shall pay the amount allowed or ordered, as the case may be, and, if
          such amount causes the Claimant to become income taxable, an
          additional gross-up amount such that after payment by the claimant of
          all applicable state and federal income taxes on the aggregate of all
          amounts so paid, the claimant will be in the same position as if the
          claimant had not become income taxable on the amount paid, plus
          interest at the prime rate as reported in the Wall Street Journal (or
          if the same is not then published, at the prime rate as reported in
          the comparable financial journal then being published with the highest
          circulation) from the date the claim was filed.

               (iv)   In the event that a court of competent jurisdiction makes
          a specific finding that the Corporation through its own negligence,
          recklessness or bad faith has failed to make a premium payment
          required by Section 3(a) above and that such failure has caused the
          Joint Life Policy to lapse and the time for appeal of any such court
          judgment has passed, the Corporation shall pay the full stated policy
          death benefit to the Owner plus interest from the date a judgment is
          entered by such court or the date of death of the Decedent, whichever
          is earlier, at the prime rate as reported in the Wall Street Journal
          (or if the same is not then published, at the prime rate as reported
          in the comparable financial journal then

                                       6
<PAGE>

          being published with the highest circulation). In addition, the
          Corporation shall pay to the Owner an additional gross-up amount such
          that after payment by the Owner of all state and federal taxes
          (including any Medicare or Social Security taxes) on the aggregate of
          all amounts so paid, the Owner will be in the same position as if the
          Owner had not been taxed on the payments.

               (v)   Subject to the preceding subsections (iii) and (iv), the
          Corporation's liability under this Agreement shall not exceed the
          amount of proceeds from the Policy.

     9.   Amendment of Agreement.  This Agreement shall not be modified or
          ----------------------
amended except by a writing signed by all the parties hereto.

     10.  Binding Agreement.  This Agreement shall be binding upon the heirs,
          -----------------
administrators, executors, successors and assigns of each party to this
Agreement, including a new corporation into which the Corporation is merged or
to which substantially all the assets of the Corporation are transferred.  In
case of any transaction in which a successor to the Corporation, its assets and
its businesses would not by the foregoing provision or by operation of law be
bound, the Corporation shall require such successor to expressly and
unconditionally assume and agree to perform the Corporation's obligations under
this Agreement.

     11.  State Law.  This Agreement shall be subject to and be construed under
          ---------
the internal laws of the State of Wisconsin, without regard to its conflicts of
laws principles.

     12.  Validity.  In case any provision of this Agreement shall be illegal or
          --------
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts of this Agreement, but this Agreement shall be construed and
enforced as if such illegal or invalid provision had never been inserted in this
Agreement.

     13.  Not a Contract of Employment.  The terms and conditions of this
          ----------------------------
Agreement shall not be deemed to constitute a contract of employment between the
Corporation and the Participant.  Such employment is hereby acknowledged to be
an "at will" employment relationship that can be terminated at any time for any
reason, with or without cause, unless otherwise expressly provided in a separate
written employment agreement.  Nothing in this Agreement shall be deemed to give
the Participant the right to be retained in the service of the Corporation or to
interfere with the right of the Corporation to discipline or discharge the
Participant at any time.

     14.  Examination.  Pursuant to his duty under Section 2, the Participant
          -----------
shall submit to a medical examination if required by the Insurer.  In addition,
if the Policy is a Joint Life Policy, the Participant's spouse shall submit to a
medical examination if required by the Insurer.

     15.  Notice.  Any notice or filing required or permitted to be given under
          ------
this Agreement to the Owner, Participant or the Corporation shall be sufficient
if in writing and hand-delivered, or sent by registered or certified mail, to
the address below:

                                       7
<PAGE>

          To the Owner:                      George A. Dionisopoulos
                                             Foley & Lardner
                                             777 East Wisconsin Avenue
                                             Milwaukee, WI   53202-5367


          To the Participant:                George E. Wardeberg
                                             9701 North Columbia Drive, 22W
                                             Mequon, WI   53092

          To the Corporation:                Wisconsin Energy Corporation
                                             Attn:  Corporate Secretary
                                             231 West Michigan Street
                                             Milwaukee, WI   53201

or to such other address as may be furnished to the Owner, Participant or the
Corporation in writing in accordance with this notice provision.  Such notice
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or
certification.  Any notice or filing required or permitted to be given to the
Owner and/or the Participant or the Designated Beneficiary under this Agreement
shall be sufficient if in writing and hand-delivered, or sent by mail, to the
last known address of the Owner and/or the Participant, as the case may be.

     16.  Tax Consequences.  The Corporation does not guarantee that the tax
          ----------------
consequences of the Participant's and/or Owner's participation in this Agreement
and the Plan will be as the parties hereto may have expected, and by signing
this Agreement the Participant and Owner assume the risk that different
interpretations of currently applicable tax law or subsequent changes in
applicable tax law may result in unexpected tax consequences.

     17.  Entire Agreement.  This Agreement, the Exchange Agreement, the
          ----------------
Collateral Assignment and the letter agreement referred to in Section 1(b)
constitute the entire agreement between the parties hereto with regard to the
subject matter of this Agreement and supersede all previous negotiations,
agreements and commitments in respect thereto.  No oral explanation or oral
information by the parties to this Agreement shall alter the meaning or
interpretation of this Agreement.

     IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date first written above.

                                       8
<PAGE>

                                        WISCONSIN ENERGY CORPORATION


                                        By: /s/ Thomas H. Fehring
                                            ------------------------------------

                                        /s/ George E. Wardeberg
                                        ----------------------------------------
                                        GEORGE E. WARDEBERG

                                        THE GEORGE AND DEANNA WARDEBERG
                                        2001 JOINT INSURANCE TRUST,
                                        dated March 30, 2001, Owner


                                        By: /s/ George A. Dionisopoulos
                                            ------------------------------------
                                            George A. Dionisopoulos, as Trustee

                                       9
<PAGE>

                                  SCHEDULE A

                Premium Payments to Be Made by the Corporation
                ----------------------------------------------


1.   The first premium payment in the amount of $255,392 was paid by the Company
     as of April 9, 2001.

2.   On each anniversary of the payment date set forth in (1) above, a premium
     payment of $255,392 shall be made by the Company to and including April 9,
     2007.

                                       10
<PAGE>

                                                                Exhibit 10.2 (d)

                             COLLATERAL ASSIGNMENT


     This Collateral Assignment (the "Assignment") is made and entered into as
of April 19, 2001, by and between the GEORGE AND DEANNA WARDEBERG 2001 JOINT
INSURANCE TRUST, dated March 30, 2001 (the "Owner"), as the owner of a life
insurance policy, No. N101087470 (the "Policy"), issued by NATIONWIDE LIFE
INSURANCE COMPANY (the "Insurer"), on the lives of GEORGE E. WARDEBERG (the
"Participant") and his spouse, and WISCONSIN ENERGY CORPORATION (the
"Corporation").


                                   RECITALS

     The Corporation desires to help the Owner provide life insurance for the
benefit and protection of the Participant's family or beneficiary by paying the
premiums therefor which the parties intend to report for income tax purposes as
loans, in exchange for the waiver by the Participant of certain benefits, with
such exchange to be on a cost-neutral basis to the Corporation, as more
specifically provided in the Wisconsin Energy Corporation Split Dollar Agreement
entered into between the Participant, the Owner and the Corporation as of the
date hereof (the "Agreement").

     In consideration of the Corporation agreeing to provide such funds in
accordance with the terms and conditions of the Agreement, the Owner agrees to
grant to the Corporation a security interest in the Policy to serve as
collateral for the payment of the Corporation's Collateral Interest (as defined
in the Agreement) and for the performance of all obligations of the Owner and
the Participant to the Corporation under the Agreement.


                                   AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements and covenants set forth below, the parties to this Assignment agree
as follows:

     1.  Assignment.  The Owner hereby grants to the Corporation, and its
         ----------
permitted successors, a security interest in the Policy to secure the payment of
the Corporation's Collateral Interest and the performance of all obligations of
the Owner and the Participant to the Corporation, either now existing or
hereafter arising, pursuant to the terms of the Agreement.

     2.  Signatures.  To facilitate the operation of this Assignment, the
         ----------
parties agree that the Insurer is hereby notified that the following signatures
are sufficient, without the signature or consent of the other party, to exercise
the following rights under the Policy while the Assignment is in effect:

         (a)  The Owner may sign a request to change the beneficiary and select
     investments under the Policy without the signature or consent of the
     Corporation; and
<PAGE>

         (b)  The exercise of any other right under the Policy not specifically
     set forth above shall be exercised with the signature of both the
     Corporation and the Owner.

     3.  Policy Proceeds.  Any amount payable from the Policy upon the death of
         ---------------
the Decedent shall first be paid to the Corporation to the extent of its
Collateral Interest (as such terms are defined in the Agreement).  Any balance
will be paid to the Designated Beneficiary (as defined in the Agreement) under
the Policy upon or after the Decedent's death.  A settlement option may be
elected by the recipient of the proceeds.  For purposes of this Section, the
amount of the Collateral Interest shall be determined for purposes of the
Insurer by an affidavit delivered to the Insurer and signed by the Corporation.

     4.  Endorsement.  The Trustee shall hold the Policy while this Assignment
         -----------
is operative and, upon request, forward the Policy to the Insurer, without
unreasonable delay, for endorsement of any designation or change of beneficiary,
any election of optional mode of settlement, or the exercise of any other right
reserved by the Owner in this Assignment.

     5.  Insurer.  The Insurer is hereby authorized to recognize the
         -------
Corporation's claims to rights hereunder without investigating the reason for
any action taken by the Corporation, the validity or amount of any of the
liabilities of the Owner to the Corporation under the Agreement, the existence
of any default therein, the giving of any notice required herein, or the
application to be made by the Corporation of any amounts to be paid to the
Corporation or the transfer of the Policy to the Corporation.  The Insurer shall
not be responsible for the sufficiency or validity of this Assignment and is not
a party to the Agreement (or any other similar split-dollar agreement) between
the Corporation and the Owner or the Participant.

     6.  Reassignment.  Upon the full payment of the Corporation's Collateral
         ------------
Interest in accordance with the terms and conditions of this Assignment and the
Agreement, the Corporation shall release its Collateral Interest and shall, to
the extent necessary to accomplish the sole and unrestricted ownership by the
Owner, reassign the Policy and all specific rights included in this Assignment
to the Owner.

     7.  Amendment of Assignment; Termination.  This Assignment shall not be
         ------------------------------------
modified, amended or terminated, except by a writing signed by all the parties
hereto.

     8.  Binding Agreement; Assigns.  This Assignment shall be binding upon the
         --------------------------
heirs, administrators, executors and permitted successors and assigns of each
party to this Assignment.

     9.  State Law.  This Assignment shall be subject to and be construed under
         ---------
the internal laws of the State of Wisconsin, without regard to its conflicts of
law principles.

     10. Validity.  In case any provision of this Assignment shall be illegal or
         --------
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts of this Assignment, but this Assignment shall be construed and
enforced as if such illegal or invalid provision had never been inserted in this
Assignment.

     IN WITNESS WHEREOF, the Owner and the Corporation have signed this
Assignment as of the date first written above.

                                       2
<PAGE>

                                      WISCONSIN ENERGY CORPORATION


                                      By: /s/ Thomas H. Fehring
                                          -------------------------------------

                                      THE GEORGE AND DEANNA WARDEBERG
                                      2001 JOINT INSURANCE TRUST,
                                      dated March 31, 2001, Owner


                                      By: /s/ George A. Dionisopoulos
                                          --------------------------------------

                                          George A. Dionisopoulos, as Trustee

                                ACKNOWLEDGMENT


STATE OF____________)
                    ) SS.
COUNTY______________)

     On this _____ day of _______________, 20__, before me personally came
__________________________, to me known to be the trustee(s) of the trust
described above and who executed this Assignment and acknowledged that she
executed the same.


                                          ______________________________________
                                          Notary Public
                                          State of _______________
                                          My commission expires:________________



                       (Executed in Duplicate Original)

                                       3