Document:

<PAGE>

                                                                    Exhibit 4(1)

                     5.875% SENIOR NOTES DUE APRIL 1, 2006
                     6.50% SENIOR NOTES DUE APRIL 1, 2011

                          SECURITIES RESOLUTION NO. 2
                                      OF
                         WISCONSIN ENERGY CORPORATION

     The actions described below are taken by the Board (as defined in the
Indenture referred to below) of WISCONSIN ENERGY CORPORATION (the "Company"), or
by an Officer or committee of Officers pursuant to Board delegation,  pursuant
to resolutions adopted by the Board of Directors of the Company as of December
14, 2000 and Section 2.01 of the Indenture dated as of March 15, 1999 (the
"Indenture") between the Company and Bank One Trust Company, National
Association (successor to The First National Bank of Chicago), as Trustee.
Terms used herein and not defined have the same meaning as in the Indenture.

     A.   5.875% Senior Notes Due April 1, 2006

     RESOLVED, that a new series of Securities is authorized as follows:

     1.   The title of the series is 5.875% Notes due April 1, 2006 ("5.875
Notes").

     2.   The form of the 5.875% Notes shall be substantially in the form of
Exhibit 1 hereto.

     3.   The 5.875% Notes shall have the terms set forth in Exhibit 1.

     4.   The 5.875% Notes shall have such other terms as are set forth in
Exhibit 3 hereto.

     5.   The 5.875% Notes shall be sold to the underwriter(s) named in the
Prospectus Supplement dated March 23, 2001 on the following terms:

          Aggregate Principal Amount:  $550,000,000
          Price to Public:  99.508%
          Underwriting Discount:  .6%
          Closing Date:  March 28, 2001
<PAGE>

                                      -2-

     B.   6.50% Senior Notes due April 1, 2011

     RESOLVED, that a new series of Securities is authorized as follows:

     1.   The title of the series is 6.50% Senior Notes due 2011 ("6.50%
Notes").

     2.   The form of the 6.50% Notes shall be substantially in the form of
Exhibit 2 hereto.

     3.   The 6.50% Notes shall have the terms set forth in Exhibit 2.

     4.   The 6.50% Notes shall have such other terms as are set forth in
Exhibit 3 hereto.

     5.   The 6.50% Notes shall be sold to the underwriter(s) named in the
Prospectus Supplement dated March 23, 2001 on the following terms:

            Aggregate Principal Amount: $450,000,000
            Price to Public: 99.774%
            Underwriting Discount: .65%
            Closing Date: March 28, 2001

     This Securities Resolution shall be effective as of March 23, 2001.
<PAGE>

                                   EXHIBIT 1

No. _____________                                                $_____________

                         WISCONSIN ENERGY CORPORATION
                     5.875% Senior Notes due April 1, 2006

WISCONSIN ENERGY CORPORATION

promises to pay to ______________________________________________

or registered assigns
the principal sum of ____________________________________________ Dollars
on April 1, 2006

Interest Payment Dates: April 1 and October 1
Record Dates:           March 15 and September 15

                                        Dated:

BANK ONE TRUST COMPANY,                 WISCONSIN ENERGY
NATIONAL ASSOCIATION                    CORPORATION
Transfer Agent and Paying Agent
                                        by _____________________________________
                                        [Title of Authorized Officer]

Authenticated:

BANK ONE TRUST COMPANY,                 (CORPORATE SEAL)
NATIONAL ASSOCIATION
Registrar, by

_____________________________           ________________________________________
Authorized Signature                    Secretary/Assistant Secretary

<PAGE>

                         WISCONSIN ENERGY CORPORATION
                     5.875% Senior Notes due April 1, 2006

1.  Interest.

     Wisconsin Energy Corporation (the "Company"), a Wisconsin corporation,
     promises to pay interest on the principal amount of this Security at the
     rate per annum shown above.  The Company will pay interest semiannually on
     April 1 and October 1 of each year commencing October 1, 2001.  Interest on
     the Securities will accrue from the most recent date to which interest has
     been paid or, if no interest has been paid, from March 28, 2001.  Interest
     will be computed on the basis of a 360-day year of twelve 30-day months.

2.  Method of Payment.

     The Company will pay interest on the Securities to the persons who are
     registered holders of Securities at the close of business on the record
     date for the next interest payment date, except as otherwise provided in
     the Indenture.  Holders must surrender Securities to a Paying Agent to
     collect principal payments.  The Company will pay principal and interest in
     money of the United States that at the time of payment is legal tender for
     payment of public and private debts.  The Company may pay principal and
     interest by check payable in such money.  It may mail an interest check to
     a holder's registered address.

3.  Securities Agents.

     Initially, Bank One Trust Company, National Association  (successor to The
     First National Bank of Chicago) will act as Paying Agent, Transfer Agent
     and Registrar.  The Company may change any Paying Agent or Transfer Agent
     without notice.  The Company or any Affiliate may act in any such capacity.
     Subject to certain conditions, the Company may change the Trustee.

4.  Indenture.

     The Company issued the securities of this series (the "Securities") under
     an Indenture dated as of March 15, 1999 (the "Indenture") between the
     Company and Bank One Trust Company, National Association (successor to The
     First National Bank of Chicago) (the "Trustee").  The terms of the
     Securities include those stated in the Indenture and in the Securities
     Resolution establishing the Securities and those made part of the Indenture
     by the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb).
     Securityholders are referred to the Indenture, the Securities Resolution
     and such Act for a statement of such terms.
<PAGE>

                                      -2-

5.  Redemption.

     The Securities will be redeemable as a whole or in part, at the Company's
option at any time, at a redemption price equal to the greater of (a) 100% of
the principal amount of the Securities being redeemed or (b) the sum of the
present values of the remaining scheduled payments of principal and interest
thereon (exclusive of interest accrued to the date of redemption) discounted to
the redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate applicable to each series plus 25
basis points, plus accrued interest to the redemption date.

     "Treasury Rate" means with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity or interpolated (on a
day count basis) of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue  (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date.

     "Comparable Treasury Issue" means the United States Treasury security or
securities selected by an Independent Investment Banker as having an actual or
interpolated maturity comparable to the remaining term of the Securities being
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of a comparable maturity to the remaining term of such Securities.

     "Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with the Company.

     "Comparable Treasury Price" means, with respect to any redemption date, (a)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (b) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.

     "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m. New York
time on the third business day preceding such redemption date.

     "Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Salomon Smith Barney Inc., their respective successors, and
three other primary U.S. Government securities dealers in The City of New York
(a "Primary Treasury Dealer"), selected by the Company.  If any Reference
Treasury Dealer shall cease to be a Primary Treasury Dealer, the Company will
substitute another Primary Treasury Dealer for that dealer.
<PAGE>

                                      -3-

     Procedures for redemption of the Securities will be governed by Article III
of the Indenture.

6.  Denominations, Transfer, Exchange.

     The Securities are in registered form without coupons in denominations of
     $1,000 and whole multiples of $1,000.  The transfer of Securities may be
     registered and Securities may be exchanged as provided in the Indenture.
     The Transfer Agent may require a holder, among other things, to furnish
     appropriate endorsements and transfer documents and to pay any taxes and
     fees required by law or the Indenture.  The Transfer Agent need not
     exchange or register the transfer of any Security or portion of a Security
     selected for redemption.  Also, it need not exchange or register the
     transfer of any Securities for a period of 15 days before a selection of
     Securities to be redeemed.

7.  Persons Deemed Owners.

     The registered holder of a Security may be treated as its owner for all
     purposes.

8.  Amendments and Waivers.

     Subject to certain exceptions, the Indenture or the Securities may be
     amended with the consent of the holders of a majority in principal amount
     of the securities of all series affected by the amendment.  Subject to
     certain exceptions, a default on a series may be waived with the consent of
     the holders of a majority in principal amount of the series.

     Without the consent of any Securityholder, the Indenture or the Securities
     may be amended, among other things, to cure any ambiguity, omission, defect
     or inconsistency; to provide for assumption of Company obligations to
     Securityholders; or to make any change that does not materially adversely
     affect the rights of any Securityholder.

9.  Restrictive Covenants.

     The Securities are unsecured general obligations of the Company initially
     limited to $550,000,000 principal amount.  The Company may from time to
     time without notice to, or the consent of, the holders of the Securities,
     create and issue further senior securities of the same series, equal in
     rank to the Securities in all respects (or in all respects except for the
     payment of interest accruing prior to the issue date of the new securities
     or except for the first payment of interest following the issue date of the
     new securities) so that the new securities may be consolidated and form a
     single series with the Securities and have the same terms as to status,
     redemption or otherwise as the Securities.  The Indenture does not limit
     other unsecured debt.
<PAGE>

                                      -4-

     In addition to the restrictions on the Securities contained in the
     Indenture, the Securities will be subject to the following additional
     restrictive covenant:

     Limitation upon Liens on Stock of Certain Subsidiaries

     For so long as any Securities remain outstanding, the Company will not
     create or incur or allow any of its subsidiaries to create or incur any
     pledge or security interest on any of the capital stock of Wisconsin
     Electric Power Company ("Wisconsin Electric") or Wisconsin Gas Company
     ("Wisconsin Gas") held by the Company or one of the Company's subsidiaries
     on the issue date of the Securities.

10.  Successors.

     When a successor assumes all the obligations of the Company under the
     Securities and the Indenture, the Company will be released from those
     obligations.

11.  Defeasance Prior to Redemption or Maturity.

     Subject to certain conditions, the Company at any time may terminate some
     or all of its obligations under the Securities and the Indenture if the
     Company deposits with the Trustee money or U.S. Government Obligations for
     the payment of principal and interest on the Securities to redemption or
     maturity.  U.S. Government Obligations are securities backed by the full
     faith and credit of the United States of America or certificates
     representing an ownership interest in such Obligations.

12.  Defaults and Remedies.

     An Event of Default includes: default for 60 days in payment of interest on
     the Securities; default in payment of principal on the Securities; default
     for 60 days in the payment of any sinking fund obligation; default by the
     Company for a specified period after notice to it in the performance of any
     of its other agreements applicable to the Securities; certain events of
     bankruptcy or insolvency; and any other Event of Default provided for in
     the series.  If an Event of Default occurs and is continuing, the Trustee
     or the holders of at least 25% in principal amount of the Securities may
     declare the principal of all the Securities to be due and payable
     immediately.

     In addition, an Event of Default under the Securities shall also include a
     failure to pay when due principal, interest or premium in an aggregate
     amount of $25 million or more with respect to any Indebtedness (as defined
     below) of the Company or its principal utility subsidiaries, Wisconsin
     Electric and Wisconsin Gas, or the acceleration of any such Indebtedness
     aggregating $25 million or more which default shall not be cured, waived or
     postponed pursuant to an agreement with the holders of such Indebtedness
     within 60 days after written notice as provided in the Indenture, or such
     accel-
<PAGE>

                                      -5-

     eration shall not be rescinded or annulled within 30 days after written
     notice as provided in the Indenture. As used herein, "Indebtedness" means
     the following obligations of the Company, Wisconsin Electric and Wisconsin
     Gas (and specifically excludes obligations of the Company's other
     subsidiaries and intercompany obligations): (a) all obligations for
     borrowed money, (b) all obligations evidenced by bonds, debentures, notes
     or similar instruments, or upon which interest payments are customarily
     made, (c) all obligations under conditional sale or other title retention
     agreements relating to property purchased, to the extent of the value of
     such property (other than customary reservations or retentions of title
     under agreements with suppliers entered into in the ordinary course of
     business), and (d) all obligations, other than intercompany items, issued
     or assumed as the deferred purchase price of property or services purchased
     which would appear as liabilities on a balance sheet of the Company,
     Wisconsin Electric or Wisconsin Gas.

     Securityholders may not enforce the Indenture or the Securities except as
     provided in the Indenture.  The Trustee may require indemnity satisfactory
     to it before it enforces the Indenture or the Securities.  Subject to
     certain limitations, holders of a majority in principal amount of the
     Securities may direct the Trustee in its exercise of any trust or power.
     The Trustee may withhold from Securityholders notice of any continuing
     default (except a default in payment of principal or interest) if it
     determines that withholding notice is in their interests.  The Company must
     furnish an annual compliance certificate to the Trustee.

13.  Trustee Dealings with Company.

     Bank One Trust Company, National Association (successor to The First
     National Bank of Chicago), the Trustee under the Indenture, in its
     individual or any other capacity, may make loans to, accept deposits from,
     and perform services for the Company or its Affiliates, and may otherwise
     deal with those persons, as if it were not Trustee.

14.  No Recourse Against Others.

     A director, officer, employee or stockholder, as such, of the Company shall
     not have any liability for any obligations of the Company under the
     Securities or the Indenture or for any claim based on, in respect of or by
     reason of such obligations or their creation.  Each Securityholder by
     accepting a Security waives and releases all such liability.  The waiver
     and release are part of the consideration for the issue of the Securities.

15.  Authentication.

     This Security shall not be valid until authenticated by a manual signature
     of the Registrar.
<PAGE>

                                      -6-

16.  Abbreviations.

     Customary abbreviations may be used in the name of a Securityholder or an
     assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the
     entirety), JT TEN (=joint tenants with right of survivorship and not as
     tenants in common), CUST (=custodian), U/G/M/A (=Uniform Gifts to Minors
     Act), and U/T/M/A (=Uniform Transfers to Minors Act).

The Company will furnish to any Securityholder upon written request and without
charge a copy of the Indenture and the Securities Resolution, which contains the
text of this Security in larger type.  Requests may be made to:

Corporate Secretary, Wisconsin Energy Corporation, 231 West Michigan Street,
P.O. Box 2949, Milwaukee, WI  53201.
<PAGE>

                                   EXHIBIT 2

No. _____________                                               $_____________

                         WISCONSIN ENERGY CORPORATION
                     6.50% Senior Notes due April 1, 2011

WISCONSIN ENERGY CORPORATION

promises to pay to ______________________________________________

or registered assigns
the principal sum of ____________________________________________ Dollars
on April 1, 2011

Interest Payment Dates: April 1 and October 1
Record Dates:           March 15 and September 15

                                        Dated:

BANK ONE TRUST COMPANY,                 WISCONSIN ENERGY
NATIONAL ASSOCIATION                    CORPORATION
Transfer Agent and Paying Agent
                                        by _____________________________________
                                        [Title of Authorized Officer]

Authenticated:

BANK ONE TRUST COMPANY,                 (CORPORATE SEAL)
NATIONAL ASSOCIATION
Registrar, by

_______________________________         ________________________________________
Authorized Signature                    Secretary/Assistant Secretary
<PAGE>

                         WISCONSIN ENERGY CORPORATION
                     6.50% Senior Notes due April 1, 2011

17.  Interest.

     Wisconsin Energy Corporation (the "Company"), a Wisconsin corporation,
     promises to pay interest on the principal amount of this Security at the
     rate per annum shown above. The Company will pay interest semiannually on
     April 1 and October 1 of each year commencing October 1, 2001. Interest on
     the Securities will accrue from the most recent date to which interest has
     been paid or, if no interest has been paid, from March 28, 2001. Interest
     will be computed on the basis of a 360-day year of twelve 30-day months.

18.  Method of Payment.

     The Company will pay interest on the Securities to the persons who are
     registered holders of Securities at the close of business on the record
     date for the next interest payment date, except as otherwise provided in
     the Indenture. Holders must surrender Securities to a Paying Agent to
     collect principal payments. The Company will pay principal and interest in
     money of the United States that at the time of payment is legal tender for
     payment of public and private debts. The Company may pay principal and
     interest by check payable in such money. It may mail an interest check to a
     holder's registered address.

19.  Securities Agents.

     Initially, Bank One Trust Company, National Association (successor to The
     First National Bank of Chicago) will act as Paying Agent, Transfer Agent
     and Registrar. The Company may change any Paying Agent or Transfer Agent
     without notice. The Company or any Affiliate may act in any such capacity.
     Subject to certain conditions, the Company may change the Trustee.

20.  Indenture.

     The Company issued the securities of this series (the "Securities") under
     an Indenture dated as of March 15, 1999 (the "Indenture") between the
     Company and Bank One Trust Company, National Association (successor to The
     First National Bank of Chicago) (the "Trustee"). The terms of the
     Securities include those stated in the Indenture and in the Securities
     Resolution establishing the Securities and those made part of the Indenture
     by the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb).
     Securityholders are referred to the Indenture, the Securities Resolution
     and such Act for a statement of such terms.
<PAGE>

                                      -2-

21.  Redemption.

     The Securities will be redeemable as a whole or in part, at the Company's
option at any time, at a redemption price equal to the greater of (a) 100% of
the principal amount of the Securities being redeemed or (b) the sum of the
present values of the remaining scheduled payments of principal and interest
thereon (exclusive of interest accrued to the date of redemption) discounted to
the redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate applicable to each series plus 30
basis points, plus accrued interest to the redemption date.

     "Treasury Rate" means with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity or interpolated (on a
day count basis) of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date.

     "Comparable Treasury Issue" means the United States Treasury security or
securities selected by an Independent Investment Banker as having an actual or
interpolated maturity comparable to the remaining term of the Securities being
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of a comparable maturity to the remaining term of such Securities.

     "Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with the Company.

     "Comparable Treasury Price" means, with respect to any redemption date, (a)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (b) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.

     "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m. New York
time on the third business day preceding such redemption date.

     "Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Salomon Smith Barney Inc., their respective successors, and
three other primary U.S. Government securities dealers in The City of New York
(a "Primary Treasury Dealer"), selected by the Company. If any Reference
Treasury Dealer shall cease to be a Primary Treasury Dealer, the Company will
substitute another Primary Treasury Dealer for that dealer.
<PAGE>

                                      -3-

     Procedures for redemption of the Securities will be governed by Article III
of the Indenture.

22.  Denominations, Transfer, Exchange.

     The Securities are in registered form without coupons in denominations of
     $1,000 and whole multiples of $1,000. The transfer of Securities may be
     registered and Securities may be exchanged as provided in the Indenture.
     The Transfer Agent may require a holder, among other things, to furnish
     appropriate endorsements and transfer documents and to pay any taxes and
     fees required by law or the Indenture. The Transfer Agent need not exchange
     or register the transfer of any Security or portion of a Security selected
     for redemption. Also, it need not exchange or register the transfer of any
     Securities for a period of 15 days before a selection of Securities to be
     redeemed.

23.  Persons Deemed Owners.

     The registered holder of a Security may be treated as its owner for all
     purposes.

24.  Amendments and Waivers.

     Subject to certain exceptions, the Indenture or the Securities may be
     amended with the consent of the holders of a majority in principal amount
     of the securities of all series affected by the amendment. Subject to
     certain exceptions, a default on a series may be waived with the consent of
     the holders of a majority in principal amount of the series.

     Without the consent of any Securityholder, the Indenture or the Securities
     may be amended, among other things, to cure any ambiguity, omission, defect
     or inconsistency; to provide for assumption of Company obligations to
     Securityholders; or to make any change that does not materially adversely
     affect the rights of any Securityholder.

25.  Restrictive Covenants.

     The Securities are unsecured general obligations of the Company initially
     limited to $450,000,000 principal amount. The Company may from time to time
     without notice to, or the consent of, the holders of the Securities, create
     and issue further senior securities of the same series, equal in rank to
     the Securities in all respects (or in all respects except for the payment
     of interest accruing prior to the issue date of the new securities or
     except for the first payment of interest following the issue date of the
     new securities) so that the new securities may be consolidated and form a
     single series with the Securities and have the same terms as to status,
     redemption or otherwise as the Securities. The Indenture does not limit
     other unsecured debt.
<PAGE>

                                      -4-

     In addition to the restrictions on the Securities contained in the
     Indenture, the Securities will be subject to the following additional
     restrictive covenant:

     Limitation upon Liens on Stock of Certain Subsidiaries

     For so long as any Securities remain outstanding, the Company will not
     create or incur or allow any of its subsidiaries to create or incur any
     pledge or security interest on any of the capital stock of Wisconsin
     Electric Power Company ("Wisconsin Electric") or Wisconsin Gas Company
     ("Wisconsin Gas") held by the Company or one of the Company's subsidiaries
     on the issue date of the Securities.

26.  Successors.

     When a successor assumes all the obligations of the Company under the
     Securities and the Indenture, the Company will be released from those
     obligations.

27.  Defeasance Prior to Redemption or Maturity.

     Subject to certain conditions, the Company at any time may terminate some
     or all of its obligations under the Securities and the Indenture if the
     Company deposits with the Trustee money or U.S. Government Obligations for
     the payment of principal and interest on the Securities to redemption or
     maturity. U.S. Government Obligations are securities backed by the full
     faith and credit of the United States of America or certificates
     representing an ownership interest in such Obligations.

28.  Defaults and Remedies.

     An Event of Default includes: default for 60 days in payment of interest on
     the Securities; default in payment of principal on the Securities; default
     for 60 days in the payment of any sinking fund obligation; default by the
     Company for a specified period after notice to it in the performance of any
     of its other agreements applicable to the Securities; certain events of
     bankruptcy or insolvency; and any other Event of Default provided for in
     the series. If an Event of Default occurs and is continuing, the Trustee or
     the holders of at least 25% in principal amount of the Securities may
     declare the principal of all the Securities to be due and payable
     immediately.

     In addition, an Event of Default under the Securities shall also include a
     failure to pay when due principal, interest or premium in an aggregate
     amount of $25 million or more with respect to any Indebtedness (as defined
     below) of the Company or its principal utility subsidiaries, Wisconsin
     Electric and Wisconsin Gas, or the acceleration of any such Indebtedness
     aggregating $25 million or more which default shall not be cured, waived or
     postponed pursuant to an agreement with the holders of such Indebtedness
     within 60 days after written notice as provided in the Indenture, or such
     accel-
<PAGE>

                                      -5-

     eration shall not be rescinded or annulled within 30 days after written
     notice as provided in the Indenture. As used herein, "Indebtedness" means
     the following obligations of the Company, Wisconsin Electric and Wisconsin
     Gas (and specifically excludes obligations of the Company's other
     subsidiaries and intercompany obligations): (a) all obligations for
     borrowed money, (b) all obligations evidenced by bonds, debentures, notes
     or similar instruments, or upon which interest payments are customarily
     made, (c) all obligations under conditional sale or other title retention
     agreements relating to property purchased, to the extent of the value of
     such property (other than customary reservations or retentions of title
     under agreements with suppliers entered into in the ordinary course of
     business), and (d) all obligations, other than intercompany items, issued
     or assumed as the deferred purchase price of property or services purchased
     which would appear as liabilities on a balance sheet of the Company,
     Wisconsin Electric or Wisconsin Gas.

     Securityholders may not enforce the Indenture or the Securities except as
     provided in the Indenture. The Trustee may require indemnity satisfactory
     to it before it enforces the Indenture or the Securities. Subject to
     certain limitations, holders of a majority in principal amount of the
     Securities may direct the Trustee in its exercise of any trust or power.
     The Trustee may withhold from Securityholders notice of any continuing
     default (except a default in payment of principal or interest) if it
     determines that withholding notice is in their interests. The Company must
     furnish an annual compliance certificate to the Trustee.

29.  Trustee Dealings with Company.

     Bank One Trust Company, National Association (successor to The First
     National Bank of Chicago), the Trustee under the Indenture, in its
     individual or any other capacity, may make loans to, accept deposits from,
     and perform services for the Company or its Affiliates, and may otherwise
     deal with those persons, as if it were not Trustee.

30.  No Recourse Against Others.

     A director, officer, employee or stockholder, as such, of the Company shall
     not have any liability for any obligations of the Company under the
     Securities or the Indenture or for any claim based on, in respect of or by
     reason of such obligations or their creation. Each Securityholder by
     accepting a Security waives and releases all such liability. The waiver and
     release are part of the consideration for the issue of the Securities.

31.  Authentication.

     This Security shall not be valid until authenticated by a manual signature
     of the Registrar.
<PAGE>

                                      -6-

32.  Abbreviations.

     Customary abbreviations may be used in the name of a Securityholder or an
     assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the
     entirety), JT TEN (=joint tenants with right of survivorship and not as
     tenants in common), CUST (=custodian), U/G/M/A (=Uniform Gifts to Minors
     Act), and U/T/M/A (=Uniform Transfers to Minors Act).

The Company will furnish to any Securityholder upon written request and without
charge a copy of the Indenture and the Securities Resolution, which contains the
text of this Security in larger type. Requests may be made to:

Corporate Secretary, Wisconsin Energy Corporation, 231 West Michigan Street,
P.O. Box 2949, Milwaukee, WI 53201.
<PAGE>

                                   EXHIBIT 3

                                 5.875% Notes
                                  6.50% Notes

                              Supplemental Terms

     In addition to the terms set forth in Exhibits 1 and 2 to Securities
Resolution No. 2, the 5.875% Notes and the 6.50% Notes shall have the following
terms:

     Section 1. Definitions. Capitalized terms used and not defined herein shall
have the meaning given such terms in the Indenture. The following is an
additional definition applicable to the 5.875% Notes and the 6.50% Notes:

     "Depositary" means, with respect to each of the 5.875% Notes and the 6.50%
     Notes, each issued as one or more global Securities, The Depository Trust
     Company, New York, New York, or any successor thereto registered under the
     Securities Exchange Act of 1934 or other applicable statute or regulation.

     Section 2. Securities Issuable as Global Securities.

     (a) The 5.875% Notes and the 6.50% Notes shall each be issued in the form
of one or more permanent global Securities and shall, except as otherwise
provided in this Section 2, be registered only in the name of the Depositary or
its nominee. Each global Security shall bear a legend substantially to the
following effect:

     "Unless this certificate is presented by an authorized representative
     of The Depository Trust Company, a New York corporation ("DTC"), to
     the Company or its agent for registration of transfer, exchange, or
     payment, and any certificate issued is registered in the name of
     Cede & Co. or in such other name as is requested by an authorized
     representative of DTC (and any payment is made to Cede & Co. or to such
     other entity as is requested by an authorized representative of DTC),
     ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
     TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,
     Cede & Co., has an interest herein."

     (b) If at any time (i) the Depositary with respect to the 5.875% Notes or
the 6.50% Notes, as the case may be, notifies the Company that it is unwilling
or unable to continue as Depositary for such global Security or (ii) the
Depositary for the 5.875% Notes or the 6.50% Notes, as the case may be, shall no
longer be eligible or in good standing under the Securities
<PAGE>

                                      -2-

Exchange Act of 1934 or other applicable statute or regulation, the Company
shall appoint a successor Depositary with respect to such global Security. If a
successor Depositary for such global Security is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of such
ineligibility, the Transfer Agent shall register the exchange of such global
Security for an equal principal amount of Registered Securities in the manner
provided in Section 2.07 of the Indenture.

     (c)  The Transfer Agent shall register the transfer or exchange of a global
Security for Registered Securities pursuant to Section 2.07 of the Indenture if
(i) a Default or Event of Default shall have occurred and be continuing with
respect to the 5.875% Notes or the 6.50% Notes, as the case may be, or (ii) the
Company determines that the 5.875% Notes or the 6.50% Notes, as the case may be,
shall no longer be represented by global Securities.

     (d)  In any exchange provided for in the preceding paragraphs (b) or (c),
the Company will execute and the Registrar will authenticate and deliver
Registered Securities. Registered Securities issued in exchange for a global
Security shall be in such names and denominations as the Depositary for such
global Security shall instruct the Registrar. The Registrar shall deliver such
Registered Securities to the persons in whose names such Securities are so
registered.

     (e)  The 5.875% Notes and the 6.50% Notes will each trade in the
Depositary's Same-Day Funds Settlement System. All payments of principal and
interest on global Securities will be made by the Company in immediately
available funds.
<PAGE>

                             OFFICERS' CERTIFICATE
                                  RELATING TO
                           SECURITIES RESOLUTION NO.2
                                       OF
                          WISCONSIN ENERGY CORPORATION

     The undersigned, as Officers of Wisconsin Energy Corporation (the
"Company"), do hereby certify that the foregoing is a true and correct copy of
 -------
Securities Resolution No. 2, relating to the Indenture between the Company and
Bank One Trust Company, National Association (successor to The First National
Bank of Chicago), as Trustee (the "Indenture"), which has been duly adopted by
                                   ---------
the Board (as defined in the Indenture) of the Company or by an Officer or a
committee of Officers pursuant to the authorized delegation of the Board on the
23rd day of March; and that said resolution has not been rescinded and remains
in full force and effect. Capitalized terms used but not defined herein have the
meanings given such terms in the Indenture.

     IN WITNESS WHEREOF, this Officers' Certificate has been duly executed on
this 28th day of March, 2001.

                              By:    /s/ Jeffery West
                                     -----------------------
                              Name:  Jeffrey West
                              Title: Treasurer

                              By:    /s/ Thomas H. Fehring
                                     -----------------------
                              Name:  Thomas H. Fehring
                              Title: Corporate Secretary<PAGE>

                                                                Exhibit 10.1 (a)

                              EXCHANGE AGREEMENT

     This Agreement (the "Agreement") is entered into as of April 23, 2001,
between WISCONSIN ENERGY CORPORATION (the "Corporation"), and PAUL DONOVAN (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 $944,750.00 (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/ Paul Donovan
                                        ---------------------------------
                                        PAUL DONOVAN

                                       2
<PAGE>

                                                                Exhibit 10.1 (b)

                                                            April 23, 2001

Mr. Paul Donovan

     Re:  Split Dollar Agreement Dated as of April 23, 2001

Dear Paul:

     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
23, 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
<PAGE>

Mr. Paul Donovan
____________, 2001
Page 2

          the Company on the Policy which the Company and you intend to report
          for income tax 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 after you have acquired a vested interest in benefits under
the Company's Supplemental Executive Retirement Plan and before the completion
of the 16 annual premium payments provided for in Schedule A of the Split Dollar
Agreement, the Company will continue to make annual payments to you or to the
Decedent's estate or other designated beneficiary, as the case may be, 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
<PAGE>

Mr. Paul Donovan
____________, 2001
Page 3

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 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 23/rd/
day of April, 2001.

/s/ Paul Donovan
-------------------------------------------
Paul Donovan
<PAGE>

                                                                Exhibit 10.1 (c)

                            SPLIT DOLLAR AGREEMENT

     This Split Dollar Agreement (the "Agreement") is made, as of April 23,
2001, among WISCONSIN ENERGY CORPORATION (the "Corporation") and PAUL DONOVAN
(the "Participant") and the PAUL AND PATRICIA R. DONOVAN 2000 IRREVOCABLE TRUST,
dated December 1, 2000 (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 February 27,
     2020, the date of the death of the Decedent, the date of the Participant's
     termination of employment with the Corporation prior to his having acquired
     a vested interest in benefits under the Corporation's Supplemental
     Executive Retirement Plan, or the occurrence of any event entitling the
     Corporation to withdraw its Collateral Interest under that certain
<PAGE>

     letter agreement between the Corporation and the Participant dated
     _______________, 2001.

          (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 Paul and Patricia R. Donovan 2000
     Irrevocable Trust, dated December 1, 2000.

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

          (n) "Participant" shall mean Paul Donovan.

          (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. N101078030 on the lives of Paul and Patricia R.
     Donovan.

     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

                                       2
<PAGE>

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 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 to the Participant (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 16 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
     Decedent's estate or other designated beneficiary.  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.

                                       3
<PAGE>

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

     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

                                       4
<PAGE>

     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, 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

                                       5
<PAGE>

     subparagraph (c) below, except as otherwise provided in subparagraphs
     (c)(iii) and (iv) below.

          (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

                                       6
<PAGE>

          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 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.

                                       7
<PAGE>

     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:

          To the Owner:                 The Paul and Patricia R. Donovan
                                            2000 Irrevocable Trust, dated
                                            December 1, 2000
                                        _ Laura P. Donovan, Trustee
                                        132 East Delaware, Apt. 5505
                                        Chicago, IL   60611

          To the Participant:           Paul Donovan
                                        2515 Cherokee Trail
                                        Rockford, IL 61107

          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/ Paul Donovan
                                             -----------------------------------
                                             PAUL DONOVAN

                                             THE PAUL AND PATRICIA R. DONOVAN
                                             2000 IRREVOCABLE TRUST, dated
                                             December 1, 2001, Owner

                                             By: /s/ Laura P. Donovan
                                                 -------------------------------
                                                 Laura P. Donovan, as Trustee

                                       9
<PAGE>

                                  SCHEDULE A

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

1.   The first premium payment in the amount of $116,008 (made in two
     installments, but deemed for purposes of this Schedule to have been made in
     one lump sum on February 27, 2001) was paid by the Company as of February
     27, 2001.

2.   On each anniversary of the payment date set forth in (1) above, a premium
     payment of $116,008 shall be made by the Company to and including February
     27, 2016.

                                       10
<PAGE>

                                                                Exhibit 10.1 (d)

                             COLLATERAL ASSIGNMENT

     This Collateral Assignment (the "Assignment") is made and entered into as
of April 23, 2001, by and between the PAUL AND PATRICIA R. DONOVAN 2000
IRREVOCABLE TRUST, dated December 1, 2000 (the "Owner"), as the owner of a life
insurance policy, No. N101078030 (the "Policy"), issued by NATIONWIDE LIFE
INSURANCE COMPANY (the "Insurer"), on the lives of PAUL DONOVAN (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
                                           ----------------------------------

                                       PAUL AND PATRICIA R. DONOVAN 2000
                                       IRREVOCABLE TRUST, dated December 1,
                                       2000, Owner

                                       By: /s/ Laura P. Donovan
                                           ----------------------------------
                                           Laura P. Donovan, as Trustee

                                ACKNOWLEDGMENT

STATE OF____________)
                    ) SS.
COUNTY______________)

     On this _____ day of _______________, 2001, before me personally came Laura
P. Donovan, 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

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