FORM OF

                           ADMINISTRATION AGREEMENT

      THIS  AGREEMENT  is made as of this[1st  day of January,  2003],  by and
between  Mercantile  Alternative  Strategies  Fund  LLC,  a  Delaware  limited
liability company (the "Company"), a registered,  non-diversified,  closed-end
management  investment  company under the  Investment  Company Act of 1940, as
amended (the "1940 Act")  consisting of limited  liability  company  interests
(the  "Interests");   and  Mercantile  Capital  Advisors,   Inc.,  a  Maryland
corporation (the "Administrator").

      WHEREAS,  the Company  desires  the  Administrator  to provide,  and the
Administrator is willing to provide  administrative and accounting services to
the Company on the terms and conditions set forth herein.

      NOW,  THEREFORE,  in  consideration  of the premises  and the  covenants
hereinafter  contained,  the Company  and the  Administrator  hereby  agree as
follows:

      ARTICLE 1.  Retention of the  Administrator.  The Company hereby retains
the Administrator to furnish the Company with accounting,  administrative  and
recordkeeping  services as set forth in this Agreement,  and the Administrator
hereby accepts such employment.

      ARTICLE 2.  Administrative  and Accounting  Services.  The Administrator
shall perform or arrange for and supervise  the  performance  by others of the
accounting  and  administrative  services  necessary  for the operation of the
Company. In performing its duties under this Agreement, the Administrator will
act  in all  material  respects  in  accordance  with  the  Company's  Limited
Liability Company  Agreement (the "LLC Agreement") and Offering  Memorandum as
they may be amended (provided copies are delivered to the Administrator).  The
Administrator  (i)  shall not have or be  required  to have any  authority  to
supervise the investment or reinvestment of the securities or other properties
which  comprise  the  assets of the  Company  and (ii) shall not  provide  any
investment  advisory  services  to the  Company,  and shall have no  liability
related to the foregoing. The Administrator shall provide the Company with all
necessary  office space,  equipment,  supplies,  personnel,  compensation  and
facilities (including facilities for Members' and Board of Directors meetings)
for providing such services.  The  Administrator  may sub-contract  with third
parties  to perform  certain or all of the  services  to be  performed  by the
Administrator  hereunder;  provided,  however,  that the  Administrator  shall
remain  principally  responsible  to the Company for the acts and omissions of
such other entities. In meeting its duties hereunder, Administrator shall have
the general authority to do all acts deemed in the Administrator's  good faith
belief to be  necessary  and  proper to  perform  its  obligations  under this
Agreement.

      ARTICLE 3. Allocation of Charges and Expenses.

      (A)  The  Administrator.  The  Administrator  shall  furnish  at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations  under this Agreement.  The  Administrator  shall also pay all
compensation, if any, of officers of the Company who are affiliated persons of
the  Administrator  or  any  affiliated   corporation  of  the  Administrator;
provided,   however,  that  unless  otherwise   specifically   provided,   the
Administrator



shall  not be  obligated  to pay  the  compensation  of  any  employee  of the
Administrator  retained by the Directors of the Company to perform services on
behalf of the Company.

      (B) Company  Expenses.  The Company assumes and shall pay or cause to be
paid all  other  expenses  of the  Company  not  otherwise  allocated  in this
Agreement,   including,  without  limitation,   organizational  costs,  taxes,
expenses for legal and auditing services, the expenses of preparing (including
typesetting),  printing  and  mailing  reports,  prospectuses,  statements  of
additional  information,  proxy  solicitation  and tender offer  materials and
notices to existing members,  all expenses incurred in connection with issuing
and redeeming Interests, the costs of pricing services, the costs of custodial
services,  the cost of initial and ongoing registration of the Interests under
Federal  and  state  securities  laws,  fees  and  out-of-pocket  expenses  of
Directors  who  are  not  affiliated  persons  of  the  Administrator  or  any
affiliated corporation of the Administrator, the costs of Directors' meetings,
insurance,  interest,  brokerage costs,  litigation and other extraordinary or
nonrecurring  expenses,  and all fees and charges of service  providers to the
Company.  The Company shall  reimburse the  Administrator  for its  reasonable
out-of-pocket  expenses,  including  all  reasonable  charges for SAS 70 audit
charges, and reasonable copying, postage,  telephone, and fax charges incurred
by the Administrator in the performance of its duties.

      ARTICLE 4. Compensation of the  Administrator.  The Company shall pay to
the  Administrator  compensation  at the annual  rate equal to 0.70% (70 basis
points) of the net assets of the Company until this Agreement is terminated in
accordance with Article 6. Such  compensation  shall be calculated and accrued
daily,  and paid to the  Administrator  monthly,  within 30 days of month-end,
otherwise the  Administrator  shall be entitled to charge and/or  set-off such
amounts  against  any  account  of the  Company.  If  this  Agreement  becomes
effective subsequent to the first day of a month or terminates before the last
day of a month, the Administrator's compensation for that part of the month in
which this  Agreement  is in effect  shall be prorated in a manner  consistent
with  the  calculation  of  the  fees  as  set  forth  above.  Payment  of the
Administrator's compensation for the preceding month shall be made promptly.

      ARTICLE  5.   Standard  of  Care;   Limitation   of   Liability  of  the
Administrator.  The  Administrator  shall  exercise due care and  diligence to
ensure the accuracy of all services performed under this Agreement. The duties
of the  Administrator  shall be confined to those  expressly set forth herein,
and  no  implied  duties  are  assumed  by or  may  be  asserted  against  the
Administrator  hereunder.  The Administrator shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in carrying  out its duties  hereunder,  except a loss
resulting  from  willful  misfeasance,  bad faith or gross  negligence  in the
performance  of  its  duties,  or by  reason  of  reckless  disregard  of  its
obligations  and  duties  hereunder.  (As  used in this  Article  5,  the term
"Administrator"  shall include  officers,  employees,  sub-administrators  and
other agents of the  Administrator  as well as that entity  itself.)  Under no
circumstances   shall  the   Administrator   be  liable  to  the  Company  for
consequential,  indirect or punitive damages. So long as the Administrator, or
its agents, acts without willful misfeasance, bad faith or gross negligence in
the  performance  of  its  duties,  and  without  reckless  disregard  of  its
obligations and duties hereunder,  the Company assumes full responsibility and
shall  indemnify the  Administrator  and hold it harmless from and against any
and all actions, suits and claims,  whether groundless or otherwise,  and from
and against any and all losses,  damages,



costs, charges, reasonable counsel fees and disbursements,  payments, expenses
and liabilities (including reasonable investigation expenses) arising directly
or indirectly out of any act or omission of the  Administrator in carrying out
its duties  hereunder.  The indemnity and defense  provisions set forth herein
shall indefinitely survive the termination of this Agreement.

      So  long as the  Administrator,  or its  agents,  acts  without  willful
misfeasance,  bad faith or gross  negligence in the performance of its duties,
and without reckless  disregard of its obligations and duties  hereunder,  the
Company assumes full  responsibility and shall indemnify the Administrator and
hold it  harmless  from and  against  any and all  actions,  suits and claims,
whether  groundless  or  otherwise,  and from and  against any and all losses,
damages, costs, charges, reasonable counsel fees and disbursements,  payments,
expenses  and  liabilities  (including  reasonable   investigation   expenses)
arising   directly  or   indirectly   out  of  the   Administrator's   willful
misfeasance,  bad  faith,  gross  negligence  or  reckless  disregard  of  its
obligations  and duties  hereunder.  The indemnity and defense  provisions set
forth herein shall indefinitely survive the termination of this Agreement.

      The  indemnification   rights  hereunder  shall  include  the  right  to
reasonable  advances  of  defense  expenses  in the  event of any  pending  or
threatened  litigation  with respect to which  indemnification  hereunder  may
ultimately be merited.  If in any case a party  hereunder  (the  "Indemnifying
Party")  is  asked  to  indemnify  or  hold  the  other  party  harmless  (the
"Indemnified  Party"),  the Indemnified Party shall promptly notify and advise
the  Indemnifying  Party of the pertinent  facts  concerning  the situation in
question,  and the Indemnified  Party will use all reasonable care to identify
and notify the  Indemnifying  Party promptly  concerning  any situation  which
presents  or appears  likely to present  the  probability  of such a claim for
indemnification, but failure to do so shall not affect the rights hereunder.

      The  Indemnifying  Party  shall be entitled  to  participate  at its own
expense  or, if it so  elects,  to assume the  defense of any suit  brought to
enforce any claims subject to this indemnity  provision.  If the  Indemnifying
Party  elects to assume the  defense of any such claim,  the defense  shall be
conducted by counsel chosen by the Indemnifying  Party and satisfactory to the
Indemnified Party, whose approval shall not be unreasonably  withheld.  In the
event that the  Indemnifying  Party  elects to assume the  defense of any suit
and retain counsel,  the Indemnified Party shall bear the fees and expenses of
any  additional  counsel  retained by it. If the  Indemnifying  Party does not
elect to assume  the  defense of a suit,  it will  reimburse  the  Indemnified
Party  for  reasonable  fees  and  expenses  of any  counsel  retained  by the
Indemnified Party.

      The Indemnified  Party may apply to the  Indemnifying  Party at any time
for  instructions  and may consult counsel for the  Indemnifying  Party or the
Company as applicable,  or its own counsel and with the Company's  accountants
and other experts,  at the Indemnifying  Party's expense,  with respect to any
matter  arising  in  connection  with  the  Indemnified  Party's  duties.  The
Indemnified  Party shall not be liable or accountable  for any action taken or
omitted by it in good faith in accordance  with such  instruction  or with the
opinion of such counsel, accountants or other experts.


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      Also,  the  Indemnified  Party  shall be  protected  in acting  upon any
document  which it  reasonably  believes to be genuine and to have been signed
or  presented  by the  proper  authorized  person  or  persons.  Nor shall the
Indemnified  Party be held to have  notice of any change of  authority  of any
officers,  employee  or agent  of the  Indemnifying  Party  until  receipt  of
written notice thereof from the Indemnifying Party.

      Nothing  herein  shall  make  the  Indemnified   Party  liable  for  the
performance  or  omissions  of  unaffiliated   third  parties  not  under  the
Indemnified  Party's  reasonable  control  unless  the  Indemnified  Party has
delegated its duties  hereunder to such third party such as, by way of example
and not limitation,  investment  advisers or sub-advisers,  postal or delivery
services,   telecommunications   providers  and   processing   and  settlement
services.

      The Administrator is entitled to rely on the price information  provided
by the underlying funds in which the Company invests,  and brokers in order to
calculate  the Company's  net asset value and the  Administrator  shall not be
liable for any valuation  errors  resulting from the use of such  information,
provided the Administrator  complies with the valuation  procedures  described
in the N-2 and adopted by the Company.

      ARTICLE 6. Duration and  Termination of this  Agreement.  This Agreement
shall become  effective on the date set forth above and shall remain in effect
for the full duration until  [January 1, 2006] and each Renewal Term,  each as
set forth in Schedule B, unless  terminated in accordance  with the provisions
of this Article 6. This Agreement may be terminated  only: (a) by either party
at the end of the  Initial  Term or the end of any  Renewal  Term on 90  days'
prior written notice;  (b) by either party hereto on such date as is specified
in written notice given by the  terminating  party, in the event of a material
breach of this Agreement by the other party,  provided the  terminating  party
has notified the other party of such material breach at least 45 days prior to
the specified  date of  termination  and the breaching  party has not remedied
such breach by the specified  date; or (c) as to any Company,  effective  upon
the  liquidation  of such Company.  For purposes of this  paragraph,  the term
"liquidation"  shall mean a transaction  in which the assets of the Mercantile
Small  Cap  Manager  Fund  are  sold or  otherwise  disposed  of and  proceeds
therefrom are  distributed  in cash to the members in complete  liquidation of
the interests of such members.

      ARTICLE  7.  Activities  of  the  Administrator.  The  services  of  the
Administrator  rendered to the  Company are not to be deemed to be  exclusive.
The  Administrator is free to render such services to others and to have other
businesses and interests.

      ARTICLE 8. Proprietary and Confidential  Information.  The Administrator
agrees on behalf of itself and its  employees to treat  confidentially  and as
proprietary  information  all  records and other  information  relative to the
Administrator and its members received by the Administrator in connection with
this Agreement,  including any non-public  personal  information as defined in
Regulation  S-P,  and that it shall not use or disclose  any such  information
except for the purpose of carrying out the terms of this Agreement;  provided,
however,  that Administrator may disclose such information as required by law,
or after prior  notification to and approval in writing by the  Administrator,
which approval may not be withheld where the  Administrator  may be exposed to
civil or criminal contempt proceedings or penalties for failure to comply.

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      ARTICLE 9. Certain Records.  The Administrator  shall maintain customary
records in  connection  with its duties as  specified in this  Agreement.  Any
records  required to be maintained  and preserved  pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Company  shall be prepared and  maintained  at the expense of
the  Administrator,  but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.

      In case of any request or demand for the  inspection  of such records by
another party, the Administrator may exhibit such records to any person in any
case where it is advised by its counsel that it may be held liable for failure
to do so,  unless  (in  cases  involving  potential  exposure  only  to  civil
liability)  the  Company  will  indemnify  the   Administrator   against  such
liability.

      ARTICLE 10.  Compliance with  Governmental  Rules and  Regulations.  The
Administrator  undertakes to comply in all material  respects with  applicable
requirements  of the Securities  Act of 1933,  the Securities  Exchange Act of
1934, the 1940 Act, the USA Patriot Act and any laws, rules and regulations of
governmental  authorities having jurisdiction with respect to the duties to be
performed by the Administrator  hereunder including any applicable  anti-money
laundering laws and regulations.

      ARTICLE  11.  Internet   Access.   Data  and  information  may  be  made
electronically  accessible to the Company  through  Internet  access to one or
more links provided by the Administrator or a Sub-Administrator  ("Web Link").
All rights in Web Link  (including  text and "look and feel"  attributes)  are
owned by the Sub-Administrator. Any commercial use of the content or any other
aspect of Web Link requires the written  permission of the  Sub-Administrator.
Use of the Web Link by the  Company  will be  subject  to any terms of use set
forth on the web site. Web Link and the information  (including text, graphics
and  functionality)  in the Web Link is presented  "As Is" and "As  Available"
without express or implied warranties  including,  but not limited to, implied
warranties of  non-infringement,  merchantability and fitness for a particular
purpose.  The  Sub-Administrator  neither  warrants  that the Web Link will be
uninterrupted  or error free, nor guarantees the  accessibility,  reliability,
performance,  timeliness, sequence, or completeness of information provided on
the Web Link.

      ARTICLE 12. Entire Agreement; Amendments. This Agreement constitutes the
entire  agreement   between  the  parties  hereto  and  supersedes  any  prior
agreement,  draft or proposal with respect to the subject matter hereof.  This
Agreement or any part hereof may be changed or waived only by an instrument in
writing signed by the party against which enforcement of such change or waiver
is sought.

      ARTICLE 13. Assignment. This Agreement shall not be assignable by either
party without the prior written consent of the other party.

      ARTICLE 14.  Agreement  for Sole  Benefit of the  Administrator  and the
Company.  This Agreement is for the sole and exclusive  benefit of the Company
and the  Administrator and will not be deemed to be for the direct or indirect
benefit of the clients or customers of the Company or the  Administrator.  The
clients or customers of the Company or the Administrator will not be

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deemed to be third party beneficiaries of this Agreement nor to have any other
contractual relationship with the Company by reason of this Agreement and each
party hereto  agrees to indemnify  and hold  harmless the other party from any
claims of its  clients or  customers  against the other  party  including  any
attendant  expenses  and  attorneys'  fees,  based  on this  Agreement  or the
services provided hereunder.

      ARTICLE 15.  Waiver.  Any term or  provision  of this  Agreement  may be
waived at any time by the party  entitled  to the  benefit  thereof by written
instrument  executed  by such  party.  No  failure of either  party  hereto to
exercise  any  power or right  granted  hereunder,  or to insist  upon  strict
compliance  with any  obligation  hereunder,  and no custom or practice of the
parties  with regard to the terms of  performance  hereof,  will  constitute a
waiver of the rights of such party to demand  full and exact  compliance  with
the terms of this Agreement.

      ARTICLE 16. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail,  federal express (or  substantially  similar  delivery  service),  postage
prepaid,  addressed  by the party  giving  notice to the other party at the last
address  furnished  by the other  party to the party  giving  notice:  if to the
Administrator at: Two Hopkins Plaza, Baltimore, MD 21201; and if to the Company,
Attention: Mercantile Alternative Strategies Fund, c/o SEI Mutual Fund Services,
One Freedom Valley Drive, Oaks, Pennsylvania, 19456.

      ARTICLE 17. Force  Majeure.  No breach of any  obligation  of a party to
this Agreement will  constitute an event of default or breach to the extent it
arises out of a cause,  existing  or future,  that is beyond the  control  and
without  negligence of the party otherwise  chargeable with breach or default,
including without  limitation:  work action or strike;  lockout or other labor
dispute; flood; war; riot; theft; earthquake or natural disaster. Either party
desiring to rely upon any of the  foregoing as an excuse for default or breach
will,  when the cause  arises,  give to the other party  prompt  notice of the
facts which constitute such cause;  and, when the cause ceases to exist,  give
prompt notice thereof to the other party.

      ARTICLE  18.  Equipment  Failures.  In the event of  equipment  failures
beyond the  Administrator's  control,  the Administrator shall take reasonable
steps to ensure that any  Sub-Administrator can minimize service interruptions
but shall have no liability with respect thereto. The Sub-Administrator  shall
be  required  to develop  and  maintain  a plan for  recovery  from  equipment
failures which may include  contractual  arrangements with appropriate parties
making  reasonable  provision for emergency use of electronic  data processing
equipment to the extent appropriate equipment is available.

      ARTICLE 19. Definitions of Certain Terms. The term "affiliated  person,"
when used in this Agreement,  shall have the meaning specified in the 1940 Act
and the rules and regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.

      ARTICLE 20. Headings.  All Article headings  contained in this Agreement
are for  convenience  of reference  only, do not form a part of this Agreement
and  will  not  affect  in any  way  the  meaning  or  interpretation  of this
Agreement. Words used herein, regardless of the

                                      6



number and gender  specifically  used, will be deemed and construed to include
any  other  number,  singular  or  plural,  and any other  gender,  masculine,
feminine, or neuter, as the contract requires.

      ARTICLE  21.  Governing  Law.  This  Agreement  shall  be  construed  in
accordance with the laws of the State of Delaware without giving effect to the
conflicts of laws  principles  thereof,  and the applicable  provisions of the
1940 Act. To the extent that the applicable laws of the State of Delaware,  or
any of the provisions herein,  conflict with the applicable  provisions of the
1940 Act, the latter shall control.

      ARTICLE 22. Multiple Originals. This Agreement may be executed in two or
more  counterparts,  each of which when so  executed  shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.

      ARTICLE  23.  Binding  Agreement.  This  Agreement,  and the  rights and
obligations  of the parties  hereunder,  shall be binding on, and inure to the
benefit of, the parties and their respective successors and assigns.

      ARTICLE  24.  Severability.  If any  part,  term  or  provision  of this
Agreement  is  held to be  illegal,  in  conflict  with  any law or  otherwise
invalid,  the remaining portion or portions shall be considered  severable and
not be  affected,  and the  rights and  obligations  of the  parties  shall be
construed  and  enforced as if the  Agreement  did not contain the  particular
part, term or provision held to be illegal or invalid.




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      IN WITNESS WHEREOF,  the parties hereto have executed and delivered this
Agreement as of the day and year first above written.



MERCANTILE CAPITAL ADVISORS, INC.


By:_______________________________
Name:
Title:



MERCANTILE ALTERNATIVE STRATEGIES FUND LLC


By:________________________________
Name:
Title:




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