EXPENSE WAIVER AND
                             REIMBURSEMENT AGREEMENT


     AGREEMENT  made this 1st day of July,  2003,  between The Merger Fund VL, a
Delaware statutory trust (the "Fund"), and Westchester Capital Management, Inc.,
a New York corporation (the "Adviser").

     WHEREAS, the Adviser has entered into an Investment Advisory Agreement with
the Fund, dated July 1, 2003 pursuant to which the Adviser provides, or arranges
for the provision of, investment  advisory and management  services to the Fund,
and for which it is  compensated  based on the  average  daily net assets of the
Fund; and

     WHEREAS,  the Fund and the Adviser have  determined  that it is appropriate
and in the best  interests of the Fund and its  shareholders  to limit the total
annual expenses of the Fund to 1.40%;

     NOW, THEREFORE, the parties hereto agree as follows:

     1.   Expense Waiver and Reimbursement by the Adviser. The Adviser agrees to
          reduce all or a portion of its  management  fee and, if necessary,  to
          bear certain other  expenses (to the extent  permitted by the Internal
          Revenue Code of 1986, as amended)  associated  with operating the Fund
          to the extent  necessary to limit the annualized  expenses of the Fund
          to 1.40% of the Fund's average daily net assets.

     2.   Duty of  Fund to  Reimburse.  Subject  to  approval  by the  Board  of
          Trustees of the Fund,  the Fund agrees to  reimburse  the Adviser on a
          monthly basis such reduced or waived management fees, and any expenses
          borne  pursuant to paragraph 1, in later periods;  provided,  however,
          that the Fund is not obligated to reimburse any such reduced or waived
          management  fees, or expenses borne pursuant to paragraph 1, more than
          three  years  after  the end of the  fiscal  year in which the fee was
          reduced  or waived or the  expense  was  borne.  The  Fund's  Board of
          Trustees shall review quarterly any reimbursement  paid to the Adviser
          with respect to the Fund in such quarter.

     3.   Assignment.  No  assignment  of this  Agreement  shall  be made by the
          Adviser without the prior consent of the Fund.

     4.   Duration and  Termination.  This Agreement  shall be effective for the
          ten-year  period from July 1, 2003 through  July 30,  2004,  and shall
          continue in effect from year to year thereafter upon mutual  agreement
          of the  Fund  and the  Adviser.  This  Agreement  shall  automatically
          terminate upon the  termination of the Investment  Advisory  Agreement
          between the Adviser and the Fund. The termination of this Agreement in
          no way relieves the Fund of its obligations under paragraph 2.

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

The Merger Fund VL                         Westchester Capital Management, Inc.



By: /s/ Frederick W. Green                 By: /s/ Frederick W. Green
   ----------------------------------          -----------------------


Name:    Frederick W. Green                Name:    Frederick W. Green
     --------------------------------           ----------------------


Title:   President                         Title:   President