RAIT FINANCIAL TRUST
2012 INCENTIVE AWARD PLAN
SHARE APPRECIATION RIGHTS AWARD AGREEMENT

This SHARE APPRECIATION RIGHTS AWARD AGREEMENT, dated as of [Date of Grant] (the “Date of Grant”), is delivered by RAIT Financial Trust (“RAIT”), to [Name of Participant] (the “Participant”).

RECITALS

A. The RAIT Financial Trust 2012 Incentive Award Plan (the “Plan”) provides for the grant of share appreciation rights (“SARs”), which represent the right to receive the appreciation of an equal number common shares of beneficial interest, par value $0.03, of RAIT (“Common Shares”), in cash or Common Shares on a future settlement date.

B. The Compensation Committee of the Board of Trustees of RAIT (the “Committee”) has decided to make a restricted SAR grant, subject to the terms and conditions set forth in this Share Appreciation Rights Award Agreement (the “Agreement”) and the Plan, as an inducement for Participant to promote the best interests of RAIT and its shareholders. Participant may receive a copy of the Plan by contacting James J. Sebra, Chief Financial Officer and Treasurer, at (215) 243-9120.

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

1. Grant of SARs . Subject to the terms and conditions set forth in this Agreement and the Plan, RAIT hereby grants to Participant [Number of SARs Awarded] SARs (the “SARs”). The SARs will become vested in accordance with Paragraph 3 below and may be exercised in accordance with Paragraph 4 below. Each SAR shall represent the right to receive the excess of the Fair Market Value (as determined under the Plan) of a Common Share on the date of exercise (“Exercise Date”) over the Fair Market Value of a Common Share on the Date of Grant. Such increase in Fair Market Value is hereafter referred to as the “Value” of the SAR.

2. Accounts . RAIT shall establish and maintain a SAR account (the “SAR Account”) as a bookkeeping account on its records and shall record in such SAR Account the number of SARs granted to Participant . Participant shall not have any interest in any fund or specific assets of RAIT by reason of the SAR grant or the SAR Account established for Participant.

3. Vesting .

(a) Participant will become vested in the SARs awarded pursuant to this grant according to the following vesting schedule, provided Participant does not incur a termination of employment or service with the Company (as defined in the Plan) prior to the applicable vesting date (the “Vesting Date”):

The vesting of the SARs is cumulative, but shall not exceed 100% of the SARs subject to this Agreement. Participant’s SARs shall become fully vested if Participant is employed by, or providing service to, the Company on the third anniversary of the Date of Grant. In the event that the Participant’s dies or becomes disabled (as defined under section 409A(a)(2)(C) of the Internal Revenue Code (the “Code”)) while employed by, or providing services to, the Company, Participant shall be deemed fully vested in all shares awarded under this Agreement.

(b) If Participant’s employment or service with the Company terminates for any reason other than death or disability prior to Participant vesting in any of the SARs as provided in subparagraph (a), the SARs that are not vested as of Participant’s termination of employment or service shall terminate and Participant shall not have any exercise rights with respect to such unvested SARs.

(c) The above notwithstanding, in the event that Participant’s employment or service with the Company is terminated for “cause” or “willful misconduct,” as defined under the terms of the Participant’s employment or services agreement (if applicable); or as determined in the sole and absolute discretion of the Company, the Participant shall forfeit the right to exercise any vested SARs and the right to settlement of exercised SARs. Additionally, in the event that Participant engages in any conduct in violation or post-employment or post- services covenants or obligations to the Company, the Participant shall forfeit the right to exercise any vested SARs and the right to settlement of exercised SARs.

4. Exercise and Settlement of SAR Each SAR shall be exercisable on or after its applicable Vesting Date in accordance with the terms of Exhibit A of this Agreement and the Plan.

5. Change of Control . If a Change of Control (as defined in the Plan) occurs, unless the Committee determines otherwise as provided under the terms of the Plan and in accordance with the requirements of section 409A of the Code, (i) all of Participant’s unvested SARs as of such date shall continue to vest in accordance with their terms and (ii) all of Participant’s vested SARs as of such date shall be deemed exercised by Participant and shall be settled in accordance with the terms of Paragraph 4 .

6. Acknowledgment by Participant . By executing this Agreement, Participant hereby acknowledges that with respect to any right of settlement or payment pursuant to this Agreement, Participant is and shall be an unsecured general creditor of RAIT without any preference as against other unsecured general creditors of RAIT, and Participant hereby covenants for himself or herself, and anyone at any time claiming through or under Participant not to claim any such preference, and hereby disclaims and waives any such preference which may at any time be at issue, to the fullest extent permitted by applicable law. Participant also hereby agrees to be bound by the terms and conditions of the Plan and this Agreement. Participant further agrees to be bound by the determinations and decisions of the Committee with respect to this Agreement and the Plan and Participant’s rights to benefits under this Agreement and the Plan, and agrees that all such determinations and decisions of the Committee shall be binding on Participant, his or her beneficiaries and any other person having or claiming an interest under this Agreement and the Plan on behalf of Participant.

7. Restrictions on Exercise and Settlement of SARs .

(a) Participant agrees to be bound by RAIT’s policy regarding the transfer of interests in the Company and acknowledges that such policy may limit timing and manner in which Participant may exercise the SARs granted pursuant to this Agreement and/or sell any Common Shares issued by the Company in settlement of the SARs granted pursuant to this Agreement. The RAIT Insider Trading Policy is attached to this Agreement.

(b) The decision of RAIT to deliver Common Shares in settlement of the SARs shall be subject to the condition that if at any time the Committee shall determine in its discretion that the listing, registration or qualification of the Common Shares 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 issuance of Common Shares, the Common Shares may not be issued 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. The issuance of Common Shares and/or the payment of cash to Participant pursuant to this Agreement are subject to any applicable taxes and other laws or regulations of the United States or of any state having jurisdiction thereof.

8. Grant Subject to Plan Provisions . This grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. In the event of any contradiction, distinction or difference between this Agreement and the terms of the Plan, the terms of the Plan will control. Except as otherwise defined in this Agreement, capitalized terms used in this Agreement shall have the meanings set forth in the Plan. This grant is subject to the interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and obligations with respect to withholding taxes, (ii) the registration, qualification or listing of the Common Shares, (iii) changes in capitalization of RAIT, and (iv) other requirements of applicable law. The Committee shall have the authority to interpret and construe this grant pursuant to the terms of the Plan, its decisions shall be conclusive as to any questions arising hereunder and Participant’s acceptance of this grant is Participant’s agreement to be bound by the interpretations and decisions of the Committee with respect to this grant and the Plan.

9. No Rights as Shareholder . Participant shall not have any rights as a shareholder of RAIT, including the right to any cash dividends, or the right to vote, with respect to any SARs.

10. No Rights to Continued Employment or Service . This grant shall not confer upon Participant any right to be retained in the employment or service of the Company and shall not interfere in any way with the right of the Company to terminate Participant’s employment or service at any time. The right of the Company to terminate at will Participant’s employment or service at any time for any reason is specifically reserved.

11. Assignment and Transfers . No SARs awarded to Participant under this Agreement may be transferred, assigned, pledged, or encumbered by Participant. All SARs shall be settled during the lifetime of Participant only for the benefit of Participant. Any attempt to transfer, assign, pledge, or encumber the SAR by Participant shall be null, void and without effect. The rights and protections of RAIT hereunder shall extend to any successors or assigns of RAIT. This Agreement may be assigned by RAIT without Participant’s consent.

12. Withholding . Participant shall be required to pay to the Company, or make other arrangements satisfactory to the Company to provide for the payment of, any federal, state, local or other taxes that the Company is required to withhold with respect to the exercise and settlement of the SARs . Participant may elect to satisfy any tax withholding obligation of the Company with respect to the SARs by having cash or Common Shares withheld from the proceeds of such settlement up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax liabilities.

13. Effect on Other Benefits . The value of cash and/or Common Shares paid with respect to the SARs shall not be considered eligible earnings for purposes of any other plans maintained by the Company. Neither shall such value be considered part of Participant’s compensation for purposes of determining or calculating other benefits that are based on compensation, such as life insurance.

14. Termination of SAR . Participant’s right to exercise vested SARs shall terminate upon the earlier of (i) 30 days following termination of employment or service; or (ii) the 5 ^th anniversary of the Date of Grant .

15. Applicable Law . The validity, construction, interpretation and effect of this Agreement shall be governed by and construed in accordance with the laws of the State of Maryland without giving effect to the conflicts of laws provisions thereof.

16. Notice . Any notice to RAIT provided for in this instrument shall be addressed to RAIT in care of the Board of Trustees at the principal office of RAIT, and any notice to Participant shall be addressed to such Participant at the current address shown on the payroll records of the Company, or to such other address as Participant may designate to RAIT in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

17. Section 409A of the Code . This Agreement is intended to comply with the requirements of section 409A of the Code and shall in all respects be administered in accordance with such requirements. Notwithstanding any provision in this Agreement to the contrary, redemption and payment may only be made under this Agreement upon an event or in a manner permitted by section 409A of the Code or an applicable exemption. Each payment under this Agreement shall be treated as a separate payment for purposes of section 409A of the Code. In no event may Participant designate the calendar year of a payment.

IN WITNESS WHEREOF, RAIT has caused its duly authorized officer to execute this Share Appreciation Rights Award Agreement, and Participant has placed his or her signature hereon, effective as of the Date of Grant.

RAIT FINANCIAL TRUST

By:
Name: James J. Sebra
Title: Chief Financial Officer and Treasurer

1

I hereby accept the award of SARs described in this Agreement, and I agree to be bound by the terms of this Agreement and the Plan. I hereby acknowledge and agree that all of the decisions, interpretations and determinations of the Committee with respect to the SARs shall be final, binding and conclusive on me, my beneficiaries and any other persons having or claiming an interest under this Agreement.

Date Participant

2

EXHIBIT A

RAIT FINANCIAL TRUST
2012 INCENTIVE AWARD PLAN
EXERCISE AND SETTLEMENT OF VESTED SARS

Capitalized terms used herein are defined as defined in the Share Appreciation Rights Award Agreement (the “ Agreement ”) to which this Exhibit is attached unless otherwise defined herein . This Exhibit sets forth the procedures the Participant must follow to exercise the SARs granted to the Participant pursuant to the Agreement.

Each SAR shall be exercisable on or after its applicable Vesting Date in accordance with the terms of the Agreement and the Plan. Any such vesting is subject to the terms and conditions of the Plan and your SARs Award. A SAR shall be exercised upon delivery by the Participant to RAIT’s Human Resources department of a completed exercise election form (“ Election Form ”) substantially in the form attached as Appendix A to this Exhibit specifying the number of SARs to be exercised and the date of exercise (which shall be prospective). The number of SARs to be exercised may not exceed the number of vested SARs as of the date of exercise. Upon approval by the Committee, the aggregate Value of exercised SARs shall be settled and paid to Participant in cash, an equivalent value of Common Shares or any combination thereof as determined in the sole and exclusive discretion of the Committee.

In the Election Form, the Participant must designate a specific Exercise Date (MM/DD/YYYY). Such Exercise Date must be (i) during the period (the “ Vested Period ”) at any time on or after the date the Vesting Date until the termination of the vested SARs in accordance with the terms and conditions of the Plan and the Agreement, (ii) prospective and (iii) no later than thirty (30) days following submission of the Election Form. An Exercise Date is “prospective” if it is submitted to, and accepted and approved by, RAIT before the determination of the Fair Market Value on the relevant Exercise Date. You may designate the Exercise Date that is the same date you submit the attached Election Form provided all the conditions specified above are met. Your designation of the Exercise Date is irrevocable and is binding upon you and RAIT once it is accepted and approved by RAIT. Settlement will be completed within five (5) business days of the Exercise Date. Settlement will be made in cash, an equivalent value of Common Shares, or a combination of the two as determined in the sole discretion of the Committee.

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APPENDIX A

RAIT FINANCIAL TRUST
2012 INCENTIVE AWARD PLAN
SARS EXERCISE ELECTION FORM

I, a participant under the RAIT Financial Trust (“ RAIT ”) 2012 Incentive Award Plan (the “ Plan ”), or a person otherwise entitled to exercise the Share Appreciation Rights (“ SARs” ) thereunder, do hereby exercise the right to settlement of the following SARs on the date of exercise (the “ Exercise Date ”) identified below:

(The Exercise Date must comply with the conditions set forth in the Notice of Ability to Exercise Vested Share Appreciation Rights relating to these SARs.) I understand that RAIT may reduce the amount paid to me as necessary to satisfy withholding tax obligations. I further understand that RAIT may settle the exercised SARs in cash or in the equivalent value of Common Share of Beneficial Interest of RAIT, or a combination of the two as determined in the sole discretion of the Compensation Committee of the Board of Trustees of RAIT.

Send a completed copy of this SAR Exercise Form to:

Human Resources

I understand that this election and the designation of the Exercise Date above are irrevocable once accepted and approved by RAIT.

Print Name Date

Signature

4

ACCEPTED AND APPROVED ON BEHALF OF RAIT:

By: Name & Title: Date

5

RAIT FINANCIAL TRUST
2012 INCENTIVE AWARD PLAN
Share Award Grant Agreement

This is a Share Award dated as of [GRANT DATE] (the “ Date of Grant ”) from RAIT Financial Trust, a Maryland real estate investment trust (the “ Company ”), to [INSERT NAME] (“ Participant ” and, together with the Company, the “ Parties ”), under the terms of the RAIT Financial Trust 2012 Incentive Award Plan (the “ Plan ”).

1.  Defined Terms. Except as set forth below, all capitalized terms shall have the respective meaning as set forth thereto in Section 1.02 of the Plan.

(a) “ Disability” shall mean the inability of a Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, as provided in Code section 409A(a)(2)(C) and Treas. Reg. § 1.409A-3(i)(4).

(b) “ Share Award ” means the [        ] ([        ]) Common Shares which are the subject of this Grant.

(c) “ Restriction Period ” means, with respect to each Common Share which is the subject of this Grant, the period beginning on the Date of Grant and ending on the applicable Vesting Date.

(d) “ Vesting Date ” means the date on which the Participant has a non-forfeitable right to the Common Shares and related dividends subject to this Share Award following the lapse of all restrictions set forth in Section 4.

2.  Grant of Share Award . Subject to the terms and conditions set forth herein, the Company hereby grants to Participant the Share Award and Participant hereby acknowledges the restrictions on the Share Award. The Share Award is subject to the terms and conditions of the Plan now in effect and as they may be amended from time to time in accordance with the Plan. The terms and conditions of the Plan are and automatically shall be incorporated herein by reference and made a part hereof.

3.  Restrictions on Share Award and Related Dividends . Subject to the terms and conditions set forth in the Plan and herein and notwithstanding any other agreement to which the Participant is a party, during the Restriction Period, Participant shall not be permitted to sell, transfer, pledge, hypothecate, assign or otherwise dispose of the Common Shares and related dividends subject to this Share Award. The Company or its transfer agent, American Stock Transfer & Trust Company, LLC or any successor thereto (“ Transfer Agent ”), shall maintain a record of uncertificated Common Shares and related dividends subject to this Share Award during the Restriction Period. Any attempted sale, transfer, pledge, hypothecation, assignment or other disposition (each, a “ Disposition ”) of any Common Shares and related dividends subject to this Share Award in violation of this Share Award shall be void and of no effect, and the Company (or Transfer Agent, as appropriate) shall have the right to disregard any such Disposition on its books and records, to issue (or execute) “stop transfer” instructions and/or take such other action as the Company deems necessary or advisable to enforce the restrictions in this Share Award.

4.  Vesting . Subject to Section 5 , the restrictions set forth in Section 3 on the Share Award shall lapse with respect to the following portion of Common Shares and related dividends subject to the Share Award: (i) one third (1/3) on the first anniversary of the Date of Grant; (ii) one third (1/3) on the second anniversary of the Date of Grant; and (iii) one third (1/3) on the third anniversary of the Date of Grant. The date on which the restrictions lapse for a particular portion of the Share Award and related dividends shall be the Vesting Date for such portion. If the foregoing vesting schedule would produce fractional Common Shares, the number of Common Shares that are vested shall be rounded down to the nearest whole Restricted Unit; provided , however , that on the final vesting date, the number of Common Shares vesting shall be adjusted to the extent necessary so that 100% of the Share Award shall have vested. On or before the thirtieth (30 ^th ) day following each Vesting Date, the Company will direct the Transfer Agent to note that the restrictions on the applicable Common Shares subject to this Share Award arising out of this Share Award have lapsed.

5.  Forfeiture of Share Award (a) . If Participant’s employment or other service relationship with the Company and all Subsidiaries terminates during the Restriction Period for any reason other than death or Disability, Participant shall forfeit any remaining unvested Common Shares and related dividends subject to the Share Award as of the date of such termination of employment or other service relationship. Upon a forfeiture of unvested Common Shares and related dividends subject to the Share Award as provided in this Section 5 , the Share Award shall be deemed canceled and such Common Shares and dividends shall be transferred to the Company. If Participant’s employment or other service relationship with the Company and all Subsidiaries terminates during the Restriction Period as a result of death or Disability, the restrictions on the unvested Share Award shall lapse as of the date of such termination of employment or other service relationship.

6.  Lapse of Restrictions . Upon the lapse of the Restriction Period with respect to the applicable Common Shares and related dividends subject to this Share Award, the Participant’s ability to hold, sell, transfer, pledge, assign or otherwise encumber the stock and dividends shall be unrestricted subject to the tax withholding requirements set forth in Paragraph 10(c).

7.  Dividends, Voting and Recapitalization .

(a)  Dividends . Pursuant to Section 5.06 of the Plan, Participant shall be entitled to dividends attributable to Common Shares subject to this Share Award as follows:

(i)  Dividends on Vested Common Shares . With respect to Common Shares subject to this Share Award that have vested under Section 4 , i f any dividends are paid with respect to the Common Shares, Participant shall have the right to receive such dividends paid on such vested Common Shares in such amount and at such times as received by all other shareholders of the Company.

(ii)  Dividends on Unvested Common Shares . With respect to Common Shares subject to this Share Award that have not vested under Section 4 , if any dividends are paid with respect to the Common Shares, the Participant shall receive a credit to the Participant’s Share Award dividend account equal to the value of the cash dividends that would have been distributed if the unvested Common Shares at the time of the payment date of the relevant cash dividend were vested Common Shares. Within thirty (30) days following the Vesting Date of any unvested Common Shares, a cash payment will be paid to the Participant by the Company equal to the value of the aggregate amount of cash credited to the Participant’s Share Award dividend account for the corresponding unvested Common Shares that vested as of the Vesting Date. No interest shall accrue with respect to any cash amounts credited to the Participant’s Share Award dividend account. If any unvested Common Shares are forfeited for any reason prior to the Vesting Date, the aggregate amount credited to the Participant’s Share Award dividend account with respect to such unvested Common Shares shall terminate and the Participant shall not have any rights with respect to any such amounts.

(b)  Voting . Participant shall have the right to vote all Common Shares under this Share Award regardless of vested status while such Common Shares remain outstanding and the Participant otherwise retains such voting rights.

(c)  Recapitalization . In the event of any changes in the capital stock of the Company by reason of any stock dividends, split-ups or combinations of shares, reclassifications, mergers, consolidations, reorganizations or liquidations while any Common Shares comprising the Share Award shall be subject to restrictions on transfer and forfeiture hereunder, any and all new, substituted or additional securities to which Participant is entitled shall be subject immediately to the terms, conditions and restrictions of this Award.

8.  Notices . Any notice to the Company relating to this Share Award shall be addressed to the Company in care of the Chief Financial Officer of the Company at the principal office of the Company, and any notice to the Participant shall be addressed to such Participant at the current address shown on the payroll records of the Company, or to such other address as the Participant may designate to the Company in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

9.  Applicable Laws . The Company may from time to time impose any conditions on the Share Award as it deems necessary or advisable to ensure that the Award satisfies the conditions of applicable laws.

10.  Tax Matters .

(a) The Common Shares and related dividends subject to this Share Award are intended to constitute property that is subject to a substantial risk of forfeiture during the Restriction Period, and subject to federal income tax in accordance with Section 83 of the Code. Section 83 of the Code generally provides that Participant will recognize compensation income with respect to each installment of the Share Award on such installment’s Vesting Date in an amount equal to the then fair market value of the shares for which restrictions have lapsed. Alternatively, Participant may elect, pursuan t to Sect ion 83(b) of the Code, to recognize compensation income for all or any part of the Share Award at the Date of Grant in an amount equal to the fair market value of the Share Award subject to the election on the Date of Grant. Such election must be made within 30 days of the Date of Grant and Participant shall immediately notify the Company if such an election is made. Participant should consult his or her tax advisors to determine whether a Section 83(b) election is appropriate. If Participant (after consulting with his or her tax advisors) decides to file an 83(b) election, then instructions and an election form are attached hereto as Appendix A .

(b) The grant of this Share Award is intended to be exempt from the requirements of Section 409A of the Code, and, to the extent that further guidance is issued under Section 409A of the Code after the date of this Award, the Company may make any changes to this Award as are necessary to bring this award into compliance with the applicable exemptions under Section 409A of the Code and the Treasury regulations issued thereunder.

(c) The Participant shall be required to pay to the Company, or make other arrangements satisfactory to the Company to provide for the payment of, any federal, state, local or other taxes that the Company is required to withhold with respect to the grant, vesting or payment of the Common Shares and related dividends subject to this Share Award. The Participant may elect to satisfy any tax withholding obligation of the Company with respect to the Common Shares and related dividends subject to this Share Award by having Common Shares and related dividends subject to this Share Award withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax liabilities.

11.  Share Award Not to Affect Employment . The Share Award granted hereunder shall not confer upon Participant any right to continue in the employment or other service relationship of the Company or any Subsidiary or affiliate of the Company.

12.  Restrictions on Issuance or Transfer of Common Shares.

(a) The obligation of the Company to issue, or remove the restrictions on, Common Shares shall be subject to the condition that if at any time the Committee shall determine in its discretion that the listing, registration or qualification of the Common Shares 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, such issuance or removal, the Common Shares may not be issued or such restrictions removed 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. The issuance of Common Shares and the payment of cash to the Participant pursuant to this Agreement are subject to any applicable taxes and other laws or regulations of the United States or of any state having jurisdiction thereof.

(b) The Participant agrees to be bound by the Company’s policies regarding the transfer of the Common Shares subject to this Share Award and understands that there may be certain times during the year in which the Participant will be prohibited from selling, transferring, pledging, donating, assigning, mortgaging, or encumbering Common Shares.

13.  Miscellaneous.

(a)  Binding Effect . Subject to the limitations set forth herein, this Award shall inure to the benefit of and be binding upon the Parties hereto and their respective heirs, legal representatives, successors and assigns.

(b)  Entire Agreement; Amendments . This Award and the Plan constitute the entire agreement between the parties with respect to the Award and cannot be changed or terminated orally. No modification or waiver of any of the provisions hereof shall be effective unless in writing and signed by the party against whom it is sought to be enforced.

(c)  Counterparts . This Award may be executed in one or more counterparts, both of which taken together shall constitute one and the same agreement.

(d)  Governing Law . This Award shall be governed and construed and the legal relationships of the parties determined in accordance with the internal laws of the State of Maryland.

(e)  Severability . In the event that any provision in this Award shall be held invalid or unenforceable, such provision shall be severable from, and such invalidity or unenforceability shall not be construed to have any effect on, the remaining provisions of this Award.

(f)  Section Headings . The captions and section headings of this Award are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

RAIT FINANCIAL TRUST

1

ACKNOWLEDGMENT

The Participant acknowledges receipt of the Share Award, a copy of which is attached hereto; represents that he or she has read and is familiar with the terms and provisions thereof; hereby accepts this Share Award subject to all of the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising hereunder.

Date:

Signature of Participant

Name of Participant

SECTION 83(b) ELECTIONS

INSTRUCTIONS REGARDING SECTION 83(b) ELECTIONS:

1.

An 83(b) Election is Irrevocable.

2.

If you choose to make an 83(b) Election, an 83(b) Election Form must be filed with the Internal Revenue Service within 30 days after the date the Share Award is made to you. No exceptions to this rule are made.

3.

You must provide a copy of the 83(b) Election Form to the General Counsel or other designated officer of the Company. This copy should be provided to the Company at the same time that you file your 83(b) Election Form with the Internal Revenue Service.

4.

In addition to making the filing under Item 2 above, you must attach a copy of your 83(b) Election Form to your tax return for the taxable year in which you received the restricted stock.

5.

If you make an 83(b) Election and later forfeit the Common Shares, you will not be entitled to a deduction with respect to the gross income you recognized under the 83(b) Election.

You are urged to consult your personal tax advisor before making an 83(b) Election to discuss the consequences thereof and consider whether such an election is advisable under the circumstances (and to complete the election form).

SECTION 83(b) ELECTION FORM

Election Pursuant to Section 83(b) of the Internal Revenue Code
to Include Property in Gross Income in Year of Transfer

The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the Share Award described below and supplies the following information in accordance with the regulations promulgated thereunder:

1. The name, address, and taxpayer identification number of the undersigned are:

       -        -       

2. Description of the Share Award with respect to which the election is being made:        (        ) Common Shares of Beneficial Interest, par value of $0.03 of RAIT Financial Trust awards pursuant to the attached Share Award and the RAIT Financial Trust 2012 Incentive Award Plan .

3. Date on which the Share Award is made: [insert Date of Grant].

4. The taxable year of the taxpayer is 2013.

5. Nature of restrictions to which the Share Award is subject: The Share Award consists of Common Shares subject to potential forfeiture for (i) failure to remain employed by the Company during the Restriction Period; or (ii) failure to comply with the restrictions and conditions of the Share Award and the Plan.

6. The fair market value of a Common Share on the Date of Grant (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made is: $       , the NYSE per Common Share closing price on the Date of Grant. The cumulative fair market value of Common Shares subject to this Grant Award is $       (2. multiplied by 6. ).

7. The taxpayer did not pay any amount for these shares.

8. A copy of this statement was furnished to RAIT Financial Trust, for whom taxpayer rendered the services underlying the transfer of such property.

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SEPARATION AGREEMENT

WHEREAS, Jack Salmon (“ Executive ”) has been employed by RAIT Financial Trust (“ RAIT ”); and

WHEREAS, RAIT and Executive are parties to that certain Employment Agreement entered into and executed on October 31, 2012, effective as of June 1, 2012, (the “ Employment Agreement ”); and

WHEREAS, Executive is a Senior Vice President of RAIT as well as the executive designated by RAIT to serve as the Chief Executive Officer and President of Independence Realty Trust, Inc. (“IRT”), a non-traded real estate investment trust externally managed by RAIT; and

WHEREAS, Executive is resigning as an employee of RAIT, and RAIT and Executive have mutually agreed that Executive’s resignation will become effective on the resignation date defined in Paragraph 1(a) below;

WHEREAS, this Separation Agreement (this “ Agreement ”) is intended to set forth the terms and conditions of that resignation;

WHEREAS, for purposes of this Agreement, IRT is deemed to be an affiliate of RAIT; and

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

1.  Executive’s Resignation From RAIT .

(a) Executive hereby resigns as an employee of RAIT, effective February 28, 2013 (the “ Resignation Date ”), consistent with the provisions of Paragraph 1(e) below. RAIT waives the requirement in the Employment Agreement that Executive provide sixty (60) days’ written notice of his resignation to RAIT.

(b) In the event that Executive executes this Agreement on or before February 20, 2013 , agreeing to be bound by the General Release in Paragraph 3 below and agreeing to comply with the other terms and conditions of this Agreement, and does not thereafter revoke it during the seven (7) calendar day Revocation Period (“ Revocation Period ”) set forth in Paragraph 6 below, RAIT will:

(i) pay Executive a lump sum cash payment of One Million, Fifty-Five Thousand, Eighty-Three Dollars and Thirty-Four Cents ($1,055,083.34) (the “Amount”), less withholding of all applicable federal, state and local taxes and other deductions required by applicable law), on the Resignation Date; and

(ii) for a period of eighteen (18) months commencing            March 1, 2013, continue to cover Executive under its group medical coverage plan in effect on the Resignation Date, provided Executive is eligible for and makes a timely election for COBRA health care continuation coverage under Section 4980B of the Internal Revenue Code of 1986, as amended (the “ Code ”) for himself and, where applicable, his spouse and dependents, at the same premium rate as may be charged from time to time for employees generally as if Executive’s employment had continued in effect with RAIT during such period. The COBRA health care continuation coverage period under Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) shall run concurrently with the foregoing eighteen (18) month benefit period.

(c) The parties hereto agree that the foregoing commitments set forth in Paragraph 1(b) above satisfy any and all obligations of RAIT and its subsidiaries and affiliates to Executive in connection with his employment with and resignation from RAIT, and that RAIT and its subsidiaries and affiliates have no further obligations to Executive under the Employment Agreement or otherwise, except that:

(i) Executive shall receive his current Base Salary for the period through the Resignation Date, at the annualized rate set forth in Section 1.4 of the Employment Agreement;

(ii) Executive shall, through the Resignation Date, participate in all employee retirement and welfare benefit plans and programs referenced in Section 1.6 of the Employment Agreement that currently are in effect. Any rights of Executive under these plans and programs will be governed by the terms of the applicable plan documents; and

(iii) Executive may submit a final expense report for reimbursement by RAIT in accordance with Section 1.7 of the Employment Agreement.

(d) For clarity:

(i) The tranche of 75,000 Stock Appreciation Rights (“ SARs ”) scheduled to vest on January 24, 2013 have vested. Executive agrees and acknowledges that RAIT and RAIT’s subsidiaries and its affiliates have no remaining obligations to him for any unvested SARs or pursuant to any other equity compensation awarded to Executive by RAIT or its subsidiaries and affiliates;

(ii) any rights that Executive has under any Indemnification Agreements (the “ Indemnification Agreements ”) entered into by Executive and RAIT and/or its subsidiaries and or its affiliates, including IRT, shall continue in accordance with the terms thereof; and

(iii) RAIT agrees to waive the non-competition restriction set forth in Section 5.1(a) of the Employment Agreement as of the Resignation Date, with the understanding that such waiver shall not apply to the other restrictions and provisions set forth in Section 5 (and its subsections) of the Employment Agreement.

(e) As of the last day of the Revocation Period (provided Executive has not revoked the Agreement during the Revocation Period), Executive will cease to be a director, officer or manager of RAIT or its subsidiaries and or its affiliates, as applicable, including, without limitation, the Chief Executive Officer and President of IRT, and shall have no authority to bind RAIT or its subsidiaries or its affiliates. Notwithstanding the foregoing, Executive shall remain employed by RAIT through the Resignation Date set forth in Paragraph 1(a) above.

2.  General Release By Executive .

(a) For the consideration described herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Executive and his heirs, executors and administrators, intending to be legally bound, hereby release and discharge RAIT, and all of RAIT’s related parties, including RAIT’s subsidiaries and affiliates and its and their officers, trustees, directors, shareholders, employees, agents, other representatives, successors, assigns, heirs, executors, and administrators (hereinafter referred to collectively as “ Releasees ”), from any and all causes of actions, suits, debts, claims and demands whatsoever, arising out of Executive’s employment with RAIT or any of the Releasees and his resignation from RAIT, which he ever had, now has, or may have against RAIT or any other Releasee.

Particularly, but without limitation, Executive releases any claims relating in any way to his employment and his resignation from RAIT or any other Releasee, including any claims:

(i) arising out of the Employment Agreement (and any prior employment agreement between Executive and RAIT or its subsidiaries or its affiliates);

(ii) under any federal, foreign, state or local laws, including without limitation, the Age Discrimination in Employment Act and the Older Worker Benefit Protection Act, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. , as amended, the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. , the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. , as amended, the Family & Medical Leave Act, 29 U.S.C. § 2601 et seq. , the Worker Adjustment and Retraining Notification, 29 U.S.C. § 2101 et seq. , the Pennsylvania Human Relations Act, the Philadelphia Fair Employment Ordinance, the Sarbanes-Oxley Act, and any regulations promulgated thereunder, including without limitation any claims of discrimination, harassment, whistleblowing or other retaliation und any of such laws;

(iii) any other statutory, regulatory, common law or other claims of any kind, including without limitation, claims for breach of contract, libel, slander, fraud, wrongful discharge, promissory estoppel, equitable estoppel, misrepresentation, emotional distress, or pain and suffering; and

(iv) any claims for counsel fees and costs.

(b) Notwithstanding the foregoing, this Release shall not: (i) limit Executive’s ability to assert a defense or set-off against any claims asserted by any Releasee in any forum; or (ii) limit Executive’s rights under any applicable Indemnification Agreements.

(c) Executive agrees that neither he, nor any person, organization, or other entity on his behalf, will share in any remedy against any of the Releasees, involving any matter occurring at any time in the past up to and including the date of this Agreement, or involving any continuing effects of any actions or practices which may have arisen or occurred on or prior to the date of this Agreement, including any charge of discrimination or complaint under any and all federal, state, or local laws, and any common law claims now or hereafter recognized, as well as all claims for counsel fees and costs.

(d) This General Release includes all claims known and unknown by Executive, those that Executive may already have asserted or raised as well as those that Executive has never asserted or raised.

(e) This General Release does not apply to any claims: (i) for vested benefits under any RAIT retirement plan; (ii) to require RAIT to honor its commitments set forth in this Agreement; (iii) to interpret or determine the scope, meaning or effect of this Agreement; and (iv) that arise after Executive and RAIT have executed this Agreement.

3.  General Release by RAIT .

(a) For the General Release by Executive set forth in Paragraph 2 above and Executive’s additional undertakings set forth in this Agreement, RAIT hereby releases and discharges Executive, and his heirs, executors and administrators, intending to be legally bound, from any and all causes of actions, suits, debts, claims and demands whatsoever, arising out of Executive’s employment with RAIT, which RAIT ever had, now has, or may have against Executive.

(b) Notwithstanding the foregoing, this Release shall not limit RAIT’s ability to assert a defense or set-off against any claims asserted by Executive in any forum.

(c) This General Release includes all claims known and unknown by RAIT, those that RAIT may already have asserted or raised as well as those that RAIT has never asserted or raised.

(d) This General Release does not apply to any claims: (i) to require Executive to honor his obligations set forth in this Agreement (including without limitation, the continuing obligations acknowledged in Section 4 hereof and any obligations under the Indemnification Agreements); (ii) to interpret or determine the scope, meaning or effect of this Agreement; and (iii) that arise after the parties have executed this Agreement.

4.  Agreements and Acknowledgements . Executive agrees and acknowledges as follows:

(a) Executive agrees that he remains subject to Sections 5 (and its subsections) of the Employment Agreement relating to Non-Competition, Non-Solicitation, Intellectual Property, Developments and Confidentiality as set forth in Section 5 (and its subsections), except that RAIT (as set forth in Paragraph 1(d)(iii) above) waives the non-competition restriction in Section 5.1(a) of the Employment Agreement as of the Resignation Date. Executive agrees also that RAIT may, without limitation, exercise the rights and remedies referenced in Section 5.4 of the Employment Agreement in connection with any breach of any of Executive’s continuing restrictions set forth in Section 5 (and its subsections) of the Employment Agreement, excluding, for clarity, the non-competition restriction in Section 5.1(a) of the Employment Agreement waived by RAIT in Paragraph 1(d)(iii) above. The duration of any applicable restrictions contained in Section 5 (and its applicable subsections) shall begin on the Resignation Date;

(b) Executive remains subject to RAIT’s Insider Trading Policy until such time as he is not aware of any material nonpublic information concerning RAIT, which will in any event be deemed not to be before the date that is two (2) business days after the filing of RAIT’s 2012 audited financial statements on SEC form 10K;

(c) Executive shall deliver, on or before the Resignation Date, all property of RAIT to the person designated by RAIT to receive same, including keys, identification cards, RAIT’s (and its subsidiaries’ and its affiliates’) credit cards and equipment, such as cellphones, blackberries, computers, records and information belonging to RAIT, and any documents, memoranda or files, stored in whatever media, retaining no copies;

(d) For so long as any applicable Indemnification Agreements remain in effect and Executive is indemnified thereunder, Executive promises to assist RAIT with the transition of his job responsibilities to other employees of RAIT and its subsidiaries and its affiliates, including IRT, and to provide reasonable cooperation to RAIT and its attorneys in connection with any investigations, lawsuits, or other proceedings in which RAIT or its employees may become involved, in each case with respect to work performed for RAIT or its subsidiaries or its affiliates by Executive prior to the Resignation Date;

(e) Executive acknowledges and agrees that he will be fully responsible for the payment of any and all taxes (including, but not limited to, any and all applicable federal, state, and local income, excise, penalty or other taxes, plus interest) due and owing by him as a result of RAIT’s payment to him of the Amount and RAIT’s payment of any amounts or delivery of RAIT common shares or SARs to him or the exercise of the SARs; and

(f) Executive agrees and acknowledges that this Agreement is not and shall not be construed to be an admission of any violation of any federal, state or local statute or regulation, or of any duty owed to Executive by RAIT. RAIT agrees and acknowledges that this Agreement is not and shall not be construed to be an admission of any violation of any federal, state or local statute or regulation, or any duty owed to RAIT or its subsidiaries or its affiliates by Executive.

(g) Executive certifies that RAIT has not made any representations to Executive concerning this Agreement other than those contained herein.

(h) Executive acknowledges and agrees as follows:

(1) That he has read the terms of this Agreement, that he was given twenty-one (21) calendar days to review it (which he confirms was a reasonable and sufficient amount of time for him to do so), and that he understands its terms and effects, including the fact that he has agreed to RELEASE AND FOREVER DISCHARGE RAIT and the other Releasees from any legal action arising out of his employment relationship with RAIT or any of the Releasees or the Employment Agreement, the terms and conditions of that employment relationship, and his resignation from RAIT. For clarity, Executive also acknowledges and agrees that he waives any requirement in the Employment Agreement that he be given forty-five (45) calendar days to review this Agreement;

(2) That he has signed this Agreement voluntarily and knowingly in exchange for the consideration described herein, which he acknowledges is adequate and satisfactory to him;

(3) That he has been advised and is hereby advised in writing to consult with his attorney prior to signing this Agreement; and

(i) Executive agrees to comply with RAIT’s reasonable requests for information, including, without limitation, with respect to governmental filings and regulatory information requests.

5.  Indemnification, Litigation and Related Matters . The Indemnification Agreements and the provisions of RAIT’s Directors and Officers liability insurance policies (“ D&O Policies ”), Declaration of Trust and Bylaws relating to indemnification and advancement of expenses to officers of RAIT shall continue to apply to Executive with respect to work performed for RAIT by Executive prior to the Resignation Date. In addition, any changes to such provisions subsequent to the Resignation Date that are generally applicable to conduct of officers of RAIT occurring prior to the Resignation Date shall apply to Executive. RAIT shall continue to maintain liability insurance covering Executive with respect to work performed for RAIT by Executive prior to the Resignation Date on the same or substantially similar terms as for any other officer. RAIT agrees to keep Executive reasonably apprised of the status of any Proceedings that may implicate him or his conduct and/or might give rise to a right to indemnification under any applicable Indemnification Agreements or otherwise, including promptly providing relevant publically available documents such as pleadings and material filings.

6.  Revocation Period . The Revocation Period, for purposes of this Agreement, is the seven (7) day period following Executive’s execution of this Agreement, during which Executive may change his mind and decide that he does not want to be legally bound by the Agreement. The Agreement shall not be effective until after the Revocation Period has expired without Executive having revoked it. To revoke the Agreement, Executive, within seven (7) days of his execution of the Agreement, must: (i) deliver a letter to the office of Raphael Licht, COO or the office of Scott Schaeffer, CEO; or (ii) fax or email a letter to Mr. Licht and Mr. Schaeffer; or (iii) send them a letter via over-night delivery service to their attention at RAIT Financial Trust, 2929 Arch Street, Philadelphia, PA 19104. If the seventh day is a Sunday or federal holiday, then the document must be delivered, faxed, emailed, or sent by over-night delivery service, as applicable, on the following business day. For a revocation to be effective, Executive must have evidence confirming timely receipt by RAIT.

7.  Miscellaneous .

(a) Executive and RAIT hereby certify that each has read the terms of this Agreement, and that each understands this Agreement ‘s terms and effects.

(b) The parties acknowledge that the performance of the promises of each are expressly contingent upon the fulfillment and satisfaction of the obligations of the other party as set forth in this Agreement. This Agreement contains the entire agreement and understanding between Executive and RAIT with respect to any and all disputes or claims that Executive has, or could have had, against RAIT as of the date this Agreement is executed, and supersedes all other agreements between Executive and RAIT with regard to such disputes or claims, except that the following provisions of the Employment Agreement shall survive Executive’s resignation of his employment with RAIT to the extent necessary to the intended preservation of any such right and obligations: (i) Section 5 (captioned “Non-Competition, Non-Solicitation, Intellectual Property and Confidentiality”) and all of its subsections other than Section 5.1(a) relating to the non-competition restriction which RAIT waived as set forth in Paragraph 1(d)(iii) of this Agreement; (ii) Section 6 (captioned “Non-Exclusivity of Rights”); and (iii) Section 7 (captioned “Non-Exclusivity of Rights”).

(c) This Agreement shall not be changed unless in writing and signed by both Executive and RAIT.

(d) This Agreement will be construed in accordance with the laws of the Commonwealth of Pennsylvania, which, together with the laws of the United States of America, will control any and all disputes or questions of interpretation arising hereunder.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have executed the foregoing Agreement on the day signed and dated by the second party to execute the Agreement as set forth below (“the Execution Date ”).

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PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

By: /s/ Raphael Licht 2/1/2013 Date
Name: Raphael Licht
Title: Chief Operating Officer



Execution Date: February 1, 2013

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