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                                                                    EXHIBIT 10.4

                                         [Form for Independent Contractor Grants
                                      With Early Exercise Feature and Payment of
                                         Exercise Price Through Promissory Note]

                       GRANT OF NON-QUALIFIED STOCK OPTION
                        PURSUANT TO RAIT INVESTMENT TRUST
                             1997 STOCK OPTION PLAN

      THIS AGREEMENT, made as of this ____ day of ______, ______ (the "Date of
Grant") by and between __________("Grantee") and RAIT INVESTMENT TRUST (together
with its successors and assigns hereinafter referred to as, the "Company").

      WHEREAS, the Board of Trustees of the Company (the "Board") previously
adopted, with subsequent shareholder approval, the RAIT Investment Trust 1997
Stock Option Plan (the "Plan");

      WHEREAS, the Plan provides for the granting of non-qualified stock options
by a committee of disinterested trustees (the "Committee") to eligible
employees, trustees, and independent contractors of the Company to purchase, or
to exercise certain rights with respect to, common shares of the beneficial
interest of the Company, par value $.01 per share (the "Shares"), in accordance
with the terms and provisions thereof;

      WHEREAS, the Compensation Committee of the Board of Trustees has been
designated by the Board of Trustees to act as the Committee under the Plan; and

      WHEREAS, the Committee considers the Grantee to be a person who is
eligible for a grant of non-qualified stock options under the Plan, and has
determined that it would be in the best interest of the Company to grant the
non-qualified stock options on the terms and conditions hereinafter set forth.

      NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:

      1.    Grant of Option.

            Subject to the terms and conditions hereinafter set forth, the
Company, with the approval and at the direction of the Committee, hereby grants
to the Grantee, an option to purchase up to ______ Shares at a price of $_____
per share. Such option is hereinafter referred to as the "Option" and the shares
of stock purchasable upon exercise of the Option are hereinafter sometimes
referred to as the "Option Shares."

      2.    Installment Exercise.

            Subject to such further limitations as are provided herein[, and
except as provided in Paragraph 4 below,] the Option shall become vested and
exercisable in _______ installments, the Grantee having the right hereunder to
purchase from the Company the

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following number of Option Shares upon exercise of the Option, on and after the
following dates, in cumulative fashion:

                  [To be set by the Committee]

      3.    Termination of Option.

            (a) The Option and all rights hereunder with respect thereto, to the
extent such rights shall not have been exercised, shall terminate and become
null and void after the expiration of _____ years from the Date of Grant (the
"Option Term").

            (b) Upon the termination of Grantee's service with the Company for
any reason (such event being a "termination of the Grantee's service"), the
Option, to the extent not previously exercised, shall immediately terminate and
become null and void, except in a case where the termination of the Grantee's
service is because of his or her death.

                  Upon a termination of the Grantee's service by reason of
death, the Option may be exercised within the earlier to occur of the: (i) one
year period following the date of the Grantee's death, if the Grantee's death
occurs while he or she is providing service to the Company, or (ii) end of the
Option Term.

            (c) In the event of the death of Grantee, the Option may be
exercised by the Grantee's legal representative(s), but only to the extent that
the Option was outstanding and exercisable on the date of death.

            (d) A transfer of the Grantee's service between the Company and any
subsidiary of the Company, or between any subsidiaries of the Company, shall not
be deemed to be a termination of the Grantee's service.

            (e) Notwithstanding any other provisions set forth herein or in the
Plan, if the Grantee shall (i) commit any act of malfeasance or wrongdoing
affecting the Company or any subsidiary of the Company, (ii) breach any covenant
not to compete, or service contract, with the Company or any subsidiary of the
Company, or (iii) engage in conduct that would warrant the Grantee's discharge
for cause (excluding general dissatisfaction with the performance of the
Grantee's duties, but including any act of disloyalty or any conduct clearly
tending to bring discredit upon the Company or any subsidiary of the Company),
any unexercised portion of the Option shall immediately terminate and become
null and void.

[Note: The following permits exercise of the Option prior to it becoming vested.
References to Paragraph 4 below have been noted throughout the Form of Agreement
in the event it is determined not to offer Grantee's the ability to exercise the
Option prior to it becoming vested.]

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[4.   Early Exercise of Option.

            (a) Notwithstanding the foregoing, the Grantee may elect to exercise
the Option before the Option has become vested and exercisable pursuant to
Paragraph 2 and while the Grantee is providing service to the Company. In the
event of such early exercise, the Grantee will receive Shares that are subject
to the restrictions described in subparagraph (b) below ("Restricted Shares")
upon exercise of the Option. The Grantee may exercise the Option by any of the
methods described in Paragraph 5 below.

            (b) If the Grantee exercises the Option pursuant to this Paragraph
4, the Shares for which the Option has not yet become vested according to the
schedule set forth in Paragraph 2 shall be Restricted Shares and shall be
subject to the restrictions described below until the date on which the Option
would have become vested with respect to the Shares. The Restricted Shares shall
vest, and shall cease to be subject to the restrictions, according to the
vesting provisions described in Paragraph 2. The period before the Option would
have become exercisable with respect to the Shares is referred to as the
"Restricted Period." Restricted Shares shall be subject to the following
restrictions.

                  (i) Restricted Shares may not be transferred, assigned,
pledged or otherwise disposed of by the Grantee or subjected to any security
interest to anyone other than the Company until the end of the Restriction
Period for the Shares.

                  (ii) Unless the Committee determines otherwise, in its sole
discretion, if the Grantee's service with the Company terminates for any reason
during the Restriction Period the unvested Restricted Shares shall be forfeited
and must be immediately returned to the Company. The Company shall pay to the
Grantee, as consideration for the return of the Restricted Shares, the lesser
of: (i) the amount paid by the Grantee for each returned Share, or (ii) the then
fair market value (as defined in Paragraph 7 below) of each returned Share.

                  (iii) The Restricted Shares shall be held in escrow by the
Company until the end of the Restriction Period for the Shares, or the Company
may hold non-certificated Shares until the restrictions lapse. During the
Restriction Period, the Grantee shall receive any distributions with respect to
the Restricted Shares and may vote the Restricted Shares; provided that if any
dividend or distribution is payable in Shares or other property or if a
reclassification, split up or similar event occurs during the Restriction
Period, the Shares or other property issued or declared with respect to the
Restricted Shares shall be subject to the same restrictions as the Shares to
which they relate. Notwithstanding the foregoing, in the event any dividend or
distribution is payable in cash on the Restricted Shares during the Restriction
Period, such cash proceeds shall be paid directly to the Grantee, free and clear
of any restrictions.

                  (iv) As the Shares vest and are released from the
restrictions, a certificate for the vested Shares shall be issued to the
Grantee, free of the restrictions under this Paragraph 4.]

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      5.    Exercise of Option.

            (a) Subject to the provisions of Paragraphs 2 [and 4] above, the
Grantee may exercise the Option with respect to all or any part of the number of
Option Shares granted hereunder by giving the Secretary of the Company written
notice of intent to exercise, in the form attached hereto (the "Notice of
Exercise"). The Notice of Exercise shall specify the number of Option Shares as
to which the Option is to be exercised and the date of exercise thereof, which
date shall be at least five days after the giving of such notice unless an
earlier time shall have been mutually agreed upon.

            (b) Full payment (in U.S. dollars) by the Grantee of the option
price for the Option Shares purchased shall be made on or before the exercise
date specified in the Notice of Exercise in cash, or, as and to the extent
permitted under the Plan, in whole or in part through the surrender of
previously acquired Shares at their fair market value on the exercise date.
[Notwithstanding the foregoing, the Committee may authorize loans by the Company
to the Grantee in connection with the exercise of an Option, upon such terms and
conditions as the Committee, in its sole discretion, deems appropriate. The
Committee may also permit the Grantee to exercise an Option through the
execution of a promissory note in an amount that is equal to the option price
for the Option Shares that the Grantee desires to purchase. Any such promissory
note shall provide that interest shall accrue at a rate determined by the
Committee, which shall be a rate that is no less than the Applicable Federal
Rate (as defined in Section 7872(f)(2) of the Internal Revenue Code of 1986, as
amended (the "Code")), unless the Committee determines otherwise, and the
promissory note shall have such other terms and conditions as the Committee, in
its sole discretion, deems appropriate.]

[Note: The foregoing permits exercise of the Option through the execution of a
promissory note.]

                  [Except in the case of exercise of the Option as described in
Paragraph 4,] on the exercise date specified in the Notice of Exercise or as
soon thereafter as is practicable, the Company shall cause to be delivered to
the Grantee, a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued Shares or reacquired Shares, as the
Company may elect) upon full payment for such Option Shares. The obligation of
the Company to deliver Shares shall, however, be subject to the condition that
if at any time the Committee shall determine in its discretion that the listing
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the Option or the issuance or purchase of
Shares thereunder, the Option may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.

            (c) If the Grantee fails to pay for any of the Option Shares
specified in the Notice of Exercise or fails to accept delivery thereof, the
Grantee's right to purchase such Option Shares may be terminated by the Company.
The date specified in the Notice of

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Exercise as the date of exercise shall be deemed to be the date of exercise of
the Option, provided that payment in full for the Option Shares to be purchased
upon such exercise shall have been received by such date.

      6.    Adjustment of and Changes in Shares of the Company.

            In the event of a reorganization, recapitalization, change of
shares, stock split, spin-off, stock dividend, reclassification, subdivision or
combination of shares, merger, consolidation, rights offering, or any other
change in the trust structure or shares of beneficial interest of the Company,
the Committee shall make such adjustment as it deems appropriate in the number
and kind of Shares subject to the Option [or Restricted Shares] or in the option
price; provided, however, that no such adjustment shall give the Grantee any
additional benefits under the Option [or in the Restricted Shares].

      7.    Fair Market Value.

            As used herein, the "fair market value" of a Share shall be the
closing sale price for the Shares reported by the New York Stock Exchange (or
any other stock exchange or interdealer automated quotation system on which the
Shares are listed) on a given day or, if there is no sale on such day, then the
closing sale price on the last previous date on which a sale is reported.

      8.    No Rights as Shareholder.

            Neither the Grantee nor any personal representative shall be, or
shall have any of the rights and privileges of, a shareholder of the Company
with respect to any Shares purchasable or issuable upon the exercise of the
Option, in whole or in part, prior to the date of exercise of the Option.

      9.    Non-Transferability of the Option.

            During the Grantee's lifetime, the Option shall be exercisable only
by the Grantee or any guardian or legal representative of the Grantee, and the
Option shall not be transferable except, in the case of death of the Grantee, by
will or the laws of descent and distribution, nor shall the Option be subject to
attachment, execution or other similar process. In the event of (a) any attempt
by the Grantee to alienate, assign, pledge, hypothecate or otherwise dispose of
the Option, except as provided for herein, or (b) the levy of any attachment,
execution or similar process upon the rights or interest hereby conferred, the
Company may terminate the Option by notice to the Grantee and it shall thereupon
become null and void.

      10.   Service Not Affected.

            Neither the granting of the Option nor its exercise shall be
construed as granting to the Grantee any right with respect to the continuance
of service with the Company. Except as may otherwise be limited by a written
agreement between the

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Company and the Grantee, the right of the Company and any employing subsidiary
to terminate at will the Grantee's service with the Company or any employing
subsidiary at any time (whether by dismissal, discharge, or otherwise) is
specifically reserved by the Company, or the employing subsidiary (whichever the
case may be), and acknowledged by the Grantee.

      11.   Amendment of Option.

            The Option may be amended by the Board or the Committee at any time
(i) if the Board or the Committee determines, in its sole discretion, that
amendment is necessary or advisable in light of any addition to or change in the
Code or in the regulations issued thereunder, or any federal or state securities
law or other law or regulation, which change occurs after the Date of Grant and
by its terms applies to the Option; or (ii) other than in the circumstances
described in clause (i), with the consent of the Grantee.

      12.   Notice.

            Any notice to the Company provided for in this instrument shall be
addressed to it in care of its Secretary at its executive offices at 1818 Market
Street, 28th Floor, Philadelphia, Pennsylvania 19103 or at such other address as
to which the Company shall have notified Grantee in writing and any notice to
the Grantee shall be addressed to the Grantee at the current address shown on
the payroll records of the Company. Any notice shall be deemed to be duly given
if and when properly addressed and posted by registered or certified mail,
postage prepaid.

      13.   Incorporation of Plan by Reference.

            The Option is granted pursuant to the terms of the Plan, the terms
of which are incorporated herein by reference, and the Option shall in all
respects be interpreted in accordance with the Plan. The Committee shall
interpret and construe the Plan and this instrument, and its interpretations and
determinations shall be conclusive and binding on the parties hereto and any
other person claiming an interest hereunder, with respect to any issue arising
hereunder or thereunder. By accepting this grant, the Grantee hereby agrees to
be bound by the interpretations and determinations of the Committee with respect
hereto.

      14.   Governing Law.

            The validity, constructions, interpretations and effect of this
instrument shall exclusively be governed by and determined in accordance with
the laws of the Commonwealth of Pennsylvania, except to the extent preempted by
federal law, which shall apply to the extent it governs.

                    [SIGNATURES CONTAINED ON FOLLOWING PAGE]

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      IN WITNESS WHEREOF, the Company has caused its duly authorized officers to
execute and attest to this Grant of Non-Qualified Stock Option, and to apply the
corporate seal hereto, and the Grantee has placed his or her signature hereon,
effective as of the date hereof.

Witness:                                    RAIT INVESTMENT TRUST

_______________________                     By: ________________________________

                                                Name:
                                                Title:

I hereby accept the Option grant described in this Agreement. I agree to be
bound by the terms of the Plan and this Agreement and the determinations and
interpretations of the Committee with respect to the Plan and this Agreement.

                                            ACCEPTED AND AGREED TO:

                                            By: ________________________________

                                                          Grantee

                                                _______________________________
                                                          Date

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