RAIT INVESTMENT TRUST

2005 EQUITY COMPENSATION PLAN

(Amended and Restated, As of May 18, 2005)

ARTICLE I

GENERAL

1.01 Purpose. The purposes of this Plan are to: (1) closely associate the
interests of the management and trustees of the Company with the shareholders of
RAIT by reinforcing the relationship between compensation and shareholder gains;
(2) provide senior management and trustees of the Company with an equity
ownership in RAIT commensurate with RAIT’s performance, as reflected in
increased shareholder value; (3) maintain competitive compensation levels; and
(4) provide an incentive to senior management and trustees for continuous
employment or service with the Company.

1.02 Definitions. In this Plan, the following definitions shall apply:

(a) “Affiliate” means any person or entity which directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with RAIT.

(b) “Board” means the Board of Trustees of RAIT.

(c) “Change of Control” means the first to occur of any of the following events:

(i) Any “person” (as such term is used in sections 13(d) and 14(d) of the
Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of RAIT representing more
than 50% of the voting power of the then outstanding securities of RAIT;
provided that a Change of Control shall not be deemed to occur as a result of a
transaction in which RAIT becomes a subsidiary of another real estate investment
trust and in which the shareholders of RAIT, immediately prior to the
transaction, will beneficially own, immediately after the transaction, shares
entitling such shareholders to more than 50% of all votes to which all
shareholders of the parent entity would be entitled in the election of trustees
(without consideration of the rights of any class of  shares to elect trustees
by a separate class vote);

(ii) The consummation of (A) a merger or consolidation of RAIT with another real
estate investment trust where the shareholders of RAIT, immediately prior to the
merger or consolidation, will not beneficially own, immediately after the merger
or consolidation,  shares entitling such shareholders to more than 50% of all
votes to which all shareholders of the surviving real estate investment trust
would be entitled in the election of trustees (without consideration of the
rights of any class of shares to elect trustees by a separate class vote),
(ii) a sale or other disposition of all or substantially all of the assets of
RAIT, or (iii) a liquidation or dissolution of RAIT; or

(iii) After the date this amended and restated Plan is approved by the
shareholders of RAIT, trustees are elected such that a majority of the members
of the Board shall have been members of the Board for less than two years,
unless the election or nomination for election of each new trustee who was not a
trustee at the beginning of such two-year period was approved by a vote of at
least two-thirds of the trustees then still in office who were trustees at the
beginning of such period.

(d) “Code” means the Internal Revenue Code of 1986, as amended.

(e) “Committee” means the Compensation Committee of the Board or its successor,
or such other committee that the Board has delegated with authority to
administer the Plan, subject to any limitations imposed by RAIT’s bylaws and
charter and applicable laws, rules and regulations. Notwithstanding the
foregoing, the “Committee” may be the Board, to the extent that the Board has
retained authority to administer the Plan with respect to all or any specific
Grants and the Board may ratify any Grants it deems necessary or appropriate.

(f) “Common Shares” means common shares of beneficial interest, par value $0.01,
of RAIT.

(g) “Company” means RAIT, any Parent, any Subsidiary, and any Affiliate.

(h) “Consultant” means consultants and advisors who perform services for the
Company, but does not mean any consultant or advisor who (i) does not render
bona fide services to the Company, (ii) performs services that are in connection
with the offer and sale of securities in a capital-raising transaction, and
(iii) directly or indirectly promotes or maintains a market for RAIT’s
securities.

(i) “Date of Grant” means the date a Grant is effective; provided, however, that
no retroactive Grants will be made.

(j) “Dividend Equivalent” means an amount determined by multiplying the number
of Common Shares or Units subject to a Grant by the per-share cash dividend, or
the per-share fair market value (as determined by the Committee) of any dividend
in consideration other than cash, paid by RAIT on its Common Shares on a
dividend payment date.

(k) “Effective Date” means May 18, 2005. The Plan initially became effective on
December 5, 1997.

(l) “Employee” means an employee of the Company (including any officer or
trustee who is an employee).

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(n) “Fair Market Value” means (x) the closing price on the Date of Grant or on
the next business day, if such Date of Grant is not a business day, of a Common
Share reported on the New York Stock Exchange (or any other exchange on which
the Common Shares are listed or, if applicable, the Nasdaq National Market), or
(y) if the Common Shares are not principally traded on such exchange or market,
the mean between the last reported “bid” and “asked” prices of Common Shares on
the relevant date, as reported on Nasdaq or, if not so reported, as reported by
the National Daily Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable, and as the Committee determines. If
the Common Shares are not publicly traded or, if publicly traded, are not
subject to reported transactions or “bid” or “asked” quotations as set forth
above, the Fair Market Value per Common Share shall be as determined by the
Committee. In no event shall the Fair Market Value of any Common Share be less
than its par value.

(o) “Grant” means an Option, SAR, Unit, Share Award, Dividend Equivalent or
Other Share-Based Award granted under the Plan.

(p) “Grant Agreement” means the written agreement that sets forth the terms and
conditions of a Grant, including any amendments thereto.

(q) “Non-Employee Trustee” means a member of the Board, or member of the board
of trustees of a Subsidiary, who is not an employee of the Company.

(r) “Incentive Stock Option” means an option that is intended to meet the
requirements of section 422 of the Code, as described in Article II.

(s) “Nonqualified Option” means a stock option that is not intended to meet the
requirements of section 422 of the Code, as described in Article II.

(t) “Option” means an Incentive Stock Option or Nonqualified Option to purchase
Common Shares at an Option Price for a specified period of time.

(u) “Option Price” means the purchase price per Common Share deliverable upon
the exercise of a Option.

(v) “Other Share-Based Award” means any Grant based on, measured by or payable
in Common Shares (other than Grants described in Articles II, III, IV, V, and
VI), as described in Article VII.

(w) “Parent” means a “parent corporation,” as defined in section 424(e) of the
Code, of RAIT.

(x) “Participant” means an Employee, Non-Employee Trustee or Consultant
designated by the Committee to receive a Grant under the Plan.

(y) “Phantom Share Plan” means the RAIT Investment Trust Phantom Share Plan.

(z) “Plan” means this RAIT Investment Trust 2005 Equity Compensation Plan
(formerly known as the RAIT Investment Trust 1997 Stock Option Plan).

(aa) “RAIT” means RAIT Investment Trust, a Maryland real estate investment
trust.

(bb) “SAR” means an award of a share appreciation right, as described in
Article III.

(cc) “Share Award” means an award of Common Shares, as described in Article V.

(dd) “Subsidiary” means a “subsidiary corporation,” as defined in section 424(f)
of the Code, of RAIT.

(ee) “Ten Percent Shareholder” means a person who on the date the Option is
granted owns ten percent (10%) or more of the total combined voting power of
RAIT and its Parent or Subsidiaries, taking into account the attribution rules
contained in section 424(d) of the Code.

(ff) “Unit” means an award of a phantom unit, representing one or more Common
Shares, as described in Article IV.

1.03 Administration.

(a) The Plan shall be administered and interpreted by the Committee. Ministerial
functions relating to the Plan may be performed by Employees designated with
such authority by the Committee.

(b) The Committee shall have the authority, in its sole discretion and from time
to time to:

(i) designate the Employees, Non-Employee Trustees and Consultants who are
eligible to participate in the Plan;

(ii) make Grants provided in the Plan in such form and amount as the Committee
shall determine;

(iii) impose such limitations, restrictions and conditions upon any such Grant
as the Committee shall deem appropriate; and

(iv) interpret the Plan and any Grant, adopt, amend and rescind rules and
regulations relating to the Plan and any Grant, and make all other
determinations and take all other actions necessary or advisable for the
implementation and administration of the Plan.

(c) The Committee shall have full power and express discretionary authority to
administer and interpret the Plan, to make factual determinations and to adopt
or amend such rules, regulations, agreements and instruments for implementing
the Plan and for the conduct of its business as it deems necessary or advisable,
in its sole discretion. The Committee’s interpretations of the Plan and all
determinations made by the Committee pursuant to the powers vested in it
hereunder shall be conclusive and binding on all persons who have any interest
in the Plan or in any Grants awarded hereunder. All powers of the Committee
shall be executed in its sole discretion, in the best interest of RAIT, not as a
fiduciary, and in keeping with the objectives of the Plan and need not be
uniform as to similarly situated individuals. No member of the Committee shall
be liable for any action taken or decision made in good faith relating to the
Plan or any Grant thereunder.

1.04 Eligibility for Participation. Participants in the Plan shall be selected
by the Committee from the Employees of the Company. In addition, Non-Employee
Trustees and Consultants who have contributed to the success of the Company
shall be eligible to participate in the Plan. In making this selection and in
determining the form of Grant and number of Common Shares or other rights
subject to the Grant, the Committee shall consider any factors deemed relevant,
including the individual’s functions, responsibilities, value of services to the
Company and past and potential contributions to the Company’s profitability and
sound growth.

1.05 Grants. Grants under the Plan may be in the form of any one or more of the
following: (i) Options, (ii) SARs, (iii) Units, (iv) Share Awards, (v) Dividend
Equivalents, and (vi) Other Share-Based Awards. All Grants shall be subject to
the terms and conditions set forth herein and to such other terms and conditions
consistent with the Plan as the Committee deems appropriate and as are specified
in writing by the Committee in separate guidelines or to the Participant in the
Grant Agreement or an amendment to the guidelines or Grant Agreement. The
Committee shall approve the form and provisions of each Grant Agreement. Grants
under a particular Article of the Plan need not be uniform as among
Participants. All Grants shall be made conditional upon the Participant’s
acknowledgment, in writing or by acceptance of the Grant, that all decisions and
determinations of the Committee shall be final and binding on the Participant,
his or her beneficiaries, and any other person having or claiming an interest
under such Grant. Notwithstanding any provision of the Plan to the contrary, the
Committee may make Grants that are contingent on, and subject to, shareholder
approval of the Plan or an amendment to the Plan.

1.06 Aggregate Limitation on Awards.

(a) Shares which may be issued under the Plan shall be Common Shares. The
maximum number of Common Shares which may be issued under the Plan shall be
2,500,000 Common Shares, subject to adjustment as described in Section 10.10
below. The Common Shares may be authorized but unissued Common Shares or
reacquired Common Shares, including Common Shares purchased by RAIT on the open
market for purposes of the Plan. Grants paid in cash shall not count against the
foregoing Common Share limit.

(b) For administrative purposes, when the Committee makes a Grant payable in
Common Shares, the Committee shall reserve Common Shares equal to the maximum
number of Common Shares that may be payable under the Grant. If and to the
extent Options or SARs granted under the Plan terminate, expire, or are
canceled, forfeited, exchanged or surrendered without having been exercised or
if any Share Awards, Units, Dividend Equivalents or Other Share-Based Awards are
forfeited or terminated, or otherwise not paid in full, the Common Shares
subject to such Grants which have not been issued shall again be available for
purposes of the Plan. Common Shares surrendered in payment of the Option Price
of an Option or withheld for purposes of satisfying the Company’s minimum tax
withholding obligations with respect to Grants under the Plan shall again be
available for issuance or transfer under the Plan. To the extent that any Grants
are paid in cash, and not in Common Shares, any Common Shares previously
reserved for issuance or transfer pursuant to such Grants shall again be
available for issuance or transfer under the Plan.

(c) All Grants under the Plan, other than Dividend Equivalents, shall be
expressed in Common Shares. The maximum aggregate number of Common Shares with
respect to which all Grants, other than Dividend Equivalents, may be made under
the Plan to any individual during any calendar year shall be 500,000 Common
Shares, subject to adjustment as described in Section 10.10 below. The maximum
aggregate number of Common Shares with respect to which all Grants, other than
Options, SARs and Dividend Equivalents, that may be made under the Plan to any
individual in any calendar year shall be 250,000 Common Shares, subject to
adjustment as described in Section 10.10 below. A Participant may not accrue
Dividend Equivalents during any calendar year in excess of $1,000,000. The
individual limits of this subsection (c) shall apply without regard to whether
the Grants are to be paid in Common Shares or in cash. All cash payments (other
than Dividend Equivalents) shall equal the Fair Market Value of the Common
Shares to which the cash payment relates.

1.07 Effective Date and Term of Plan.

(a) This amended and restatement of the Plan is effective as of the Effective
Date, subject to approval by RAIT’s shareholders.

(b) No Grants shall be made under the Plan after the day immediately preceding
the tenth anniversary of the Effective Date, provided, however, that the Plan
and all Grants made under the Plan prior to such date shall remain in effect
until such Grants have been satisfied or terminated in accordance with the Plan
and the terms of such Grants.

ARTICLE II

OPTIONS

2.01 Award of Options. The Committee may from time to time, and subject to the
provisions of the Plan and such other terms and conditions as the Committee may
prescribe, grant to any Participant in the Plan Options.

2.02 Option Agreements. The Grant of an Option shall be evidenced by a written
Grant Agreement, executed by RAIT and the holder of the Option, stating the
number of Common Shares subject to the Option, the type of Option, and the terms
and conditions of the Option.

2.03 Type of Option and Price.

(a) The Committee may grant Incentive Stock Options or Nonqualified Options or a
combination of Incentive Stock Options and Nonqualified Options. Incentive Stock
Options may only be granted to Employees of RAIT or its Parent or Subsidiaries.
Nonqualified Options may be granted to Employees, Non-Employee Trustees and
Consultants.

(b) The Option Price shall be determined by the Committee and shall not be less
than 100% of the Fair Market Value of a Common Share on the Date of Grant of the
Option; provided, however, that an Incentive Stock Option may not be granted to
an Employee who, at the Date of Grant, is a Ten Percent Shareholder, unless the
Option Price is not less than 110% of the Fair Market Value of the Common Shares
subject to the Option on the Date of Grant.

2.04 Term and Exercise.

(a) The Committee shall determine the term of each Option. The term shall not
exceed ten years from the Date of Grant. However, an Incentive Stock Option that
is granted to an Employee who, at the Date of Grant, is a Ten Percent
Shareholder, may not have a term that exceeds five years from the Date of Grant.
No Option shall be exercisable after the expiration of its term.

(b) Each Option shall be fully exercisable from and after the date(s) prescribed
by the Committee in the Grant Agreement for the Option, subject to such terms
and conditions set forth in the Grant Agreement. The Committee may accelerate
the exercisability of any or all outstanding Options at any time for any reason.
The Committee may also provide in the Grant Agreement that the Participant may
elect to exercise all or part of the Option before it otherwise has become
exercisable. Any Common Shares so purchased shall be restricted Common Shares
and shall be subject to a repurchase right in favor of RAIT during a specified
restriction period and shall have such other terms and conditions as determined
by the Committee.

2.05 Manner of Exercise. A Participant may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of exercise to RAIT or
its designated agent. The Participant shall pay the Option Price and any
withholding taxes for the Option (i) in cash or by certified check, (ii) with
the approval of the Committee, by delivering Common Shares owned by the
Participant and having a Fair Market Value on the date of exercise equal to the
Option Price or by attestation (on a form prescribed by the Committee) to
ownership of Common Shares having an aggregate Fair Market Value on the date of
exercise equal to the Option Price, (iii) subject to approval of the Committee
or its designee, in cash, on the T+3 settlement date that occurs after the
exercise date specified in the notice of exercise, provided that the Participant
exercises the Option through an irrevocable agreement with a registered broker
and the payment is made in accordance with procedures permitted by Regulation T
of the Federal Reserve Board and such procedures do not violate applicable law,
or (iv) by such other method as the Committee may approve, to the extent
permitted by applicable law. Common Shares used to exercise an Option shall have
been held by the Participant for the requisite period of time to avoid adverse
accounting consequences to RAIT with respect to the Option. Payment for the
Common Shares pursuant to the Option, and any required withholding taxes, must
be received by the time specified by the Committee depending on the type of
payment being made.

2.06 Termination of Employment or Service. Except as otherwise provided in the
Grant Agreement or in this Section 2.06, an Option may only be exercised while
the Participant is employed by, or providing service to, the Company.

(a) Unless the Committee determines otherwise, upon the death of the
Participant, any Option exercisable on the date of death may be exercised by the
optionee’s estate, or by a person who acquires the right to exercise such Option
by bequest or inheritance or by reason of the death of the Participant, provided
that such exercise occurs within the earlier of (i) the one year period after
the Participant’s termination of employment or service or (ii) the remaining
effective term of the Option. The provisions of this subsection shall apply
notwithstanding the fact that the Participant’s employment may have terminated
prior to death, but only to the extent of any rights exercisable on the date of
death.

(b) Unless the Committee determines otherwise, upon termination of the
Participant’s employment or service by reason of retirement or permanent
disability (as each is determined by the Committee), the Participant may, within
the earlier of (i) the six month period after the Participant’s termination of
employment or service or (ii) the remaining effective term of the Option,
exercise any Options to the extent such Options are exercisable at the time of
the Participant’s termination of employment or service; provided, however, that
if the Option is an Incentive Stock Option, if the termination of employment is
on account of retirement, the Option may only be exercised as an Incentive Stock
Option within 3 months after the Participant’s termination of employment and if
the Incentive Stock Option is exercised after the end of such 3 month period,
the Option will be exercised as a Nonqualified Option.

(c) Unless the Committee determines otherwise, if the Participant has a
termination of employment or service for any reason other than in subsection
(a) or (b), all Options held by the Participant shall terminate upon the
termination of the Participant’s employment or service.

2.07 Reload Options. In the event that Common Shares are used to exercise an
Option, the terms the Grant Agreement for such Option may provide for a Grant of
additional Options, or the Committee may grant additional Options, to purchase a
number of Common Shares equal to the number of whole Common Shares used to
exercise the Option and the number of whole Common Shares, if any, withheld in
payment of any taxes. Such Options shall be granted with an Option Price equal
to the Fair Market Value of the Common Shares on the Date of Grant of such
additional Options, or at such other Exercise Price as the Committee may
establish, provided, that the Option Price shall not be less than the Fair
Market Value of the Common Shares on the Date of Grant of such additional, and
the additional Option shall not have a term longer than the unexpired term of
the exercised Option and shall have such other terms as the Committee shall
determine.

2.08 Limits on Incentive Stock Options. Each Incentive Stock Option shall
provide that if the aggregate Fair Market Value on the Date of Grant with
respect to which Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year, under the Plan or any other stock option
plan of RAIT or a Parent or Subsidiary, exceeds $100,000, then the Option, as to
the excess, shall be treated as a Nonqualified Option.

ARTICLE III

SARSS

3.01 Award of SARs. The Committee may from time to time, and subject to the
provisions of the Plan and such other terms and conditions as the Committee may
prescribe, grant to any Participant in the Plan SARs. Each SAR shall represent
the right of the Participant to receive, upon settlement of the SAR, as
determined by the Committee, in its sole discretion, Common Shares or cash equal
to the amount by which the Fair Market Value of a Common Share on the date of
exercise of the SAR exceeds the base amount of the SAR as described below in
Section 3.04.

3.02 SAR Agreements. The Grant of an SAR shall be evidenced by a written Grant
Agreement, executed by RAIT and the holder of a SAR, and shall specify the
number of SARs to be granted, the base amount, the vesting and other
restrictions applicable to SARs, and the period during which SARs will remain
exercisable.

3.03 Terms. The Committee shall determine the terms and conditions of SARs and
may grant SARs separately from or in tandem with any Option (for all or a
portion of the applicable Option). Tandem SARs may be granted either at the time
the Option is granted or any time thereafter while the Option remains
outstanding; provided, however, that in the case of an Incentive Stock Option,
SARs may be granted only at the time of the grant of the Incentive Stock Option.

3.04 Base Amount. The Committee shall establish the base amount of the SAR at
the time the SAR is granted, but such base amount shall not be less than the
Fair Market Value of the corresponding Common Shares on the Date of Grant.

3.05 Payment With Respect to SARs. The Committee shall determine whether the
appreciation in an SAR shall be paid in the form of cash, in Common Shares, or
in a combination of the two, in such proportion as the Committee deems
appropriate. For purposes of calculating the number of Common Shares to be
received, Common Shares shall be valued at its Fair Market Value on the date of
exercise of the SAR. If Common Shares are to be received upon exercise of an
SAR, cash shall be delivered in lieu of any fractional share.

3.06 Termination of Employment or Service. The Committee shall determine in the
Grant Agreement under what circumstances a Participant may retain SARs after
termination of the Participant’s employment or service, and the circumstances
under which SARs may be forfeited.

ARTICLE IV

UNITS

4.01 Award of Units. The Committee may from time to time, and subject to the
provisions of the Plan and such other terms and conditions as the Committee may
prescribe, grant to any Participant in the Plan Units. Each Unit shall represent
the right of the Participant to receive, as determined by the Committee, in its
sole discretion, a Common Share or an amount based on the value of a Common
Share. All Units shall be credited to accounts on RAIT’s records for purposes of
the Plan.

4.02 Unit Agreements. The Grant of a Unit shall be evidenced by a written Grant
Agreement, executed by RAIT and the holder of a Unit, and shall specify the
number of Units to be granted, the vesting date, the redemption date, and the
other terms and conditions of the Unit.

4.03 Terms. The Committee may grant Units that are payable if specified
performance goals or other conditions are met, or under other circumstances.
Units may be redeemed at the end of a specified performance period or other
period, or redemption may be deferred to a date authorized by the Committee.

4.04 Redemption With Respect to Units. Redemptions with respect to Units shall
be made in cash, in Common Shares, or in a combination of the two, as determined
by the Committee.

4.05 Termination of Employment or Service. The Committee shall determine in the
Grant Agreement under what circumstances a Participant may retain Units after
termination of the Participant’s employment or service, and the circumstances
under which Units may be forfeited.

ARTICLE V

SHARE AWARDS

5.01 Award of Share Awards. The Committee may from time to time, and subject to
the provisions of the Plan and such other terms and conditions as the Committee
may prescribe, issue or transfer to any Participant in the Plan Share Awards.
Each Share Award shall represent the right of the Participant to receive a
Common Share if certain conditions are met.

5.02 Share Award Agreements. The Grant of a Share Award shall be evidenced by a
written Grant Agreement, executed by RAIT and the holder of a Share Award, and
shall specify the number of Common Shares to be granted pursuant to the Share
Award, when the restrictions, if any, will lapse, and the other terms and
conditions of the Share Award.

5.03 Terms. Common Shares issued or transferred pursuant to Share Awards may be
issued or transferred for consideration or for no consideration, and subject to
restrictions or no restrictions, as determined by the Committee. The Committee
may, but shall not be required to, establish conditions under which restrictions
on Share Awards shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate, including, without limitation,
restrictions based upon the achievement of specific performance goals. The
period of time during which the Share Awards will remain subject to restrictions
will be designated in the Grant Agreement as the “Restriction Period.”

5.04 Termination of Employment or Service. The Committee shall determine in the
Grant Agreement under what circumstances a Participant may retain Share Awards
after termination of the Participant’s employment or service, and the
circumstances under which Share Awards may be forfeited.

5.05 Restrictions on Transfer and Legend on Share Certificate. During the
Restriction Period, a Participant may not sell, assign, transfer, pledge or
otherwise dispose of the Common Shares subject to the Share Award. Each
certificate for a Common Share of a Share Award, or electronic book entry
equivalent, for a Common Share of a Share Award shall contain a legend giving
appropriate notice of the restrictions in the Grant. The Participant shall be
entitled to have the legend removed from the share certificate covering the
Common Shares subject to restrictions when all restrictions on such Common
Shares have lapsed. The Committee may determine that RAIT will not issue
certificates for Share Awards until all restrictions on such shares have lapsed,
or that RAIT will retain possession of certificates for Common Shares of Share
Awards until all restrictions on such shares have lapsed.

5.06 Right to Vote and to Receive Dividends. The Committee shall determine to
what extent, and under what conditions, the Participant shall have the right to
vote Common Shares of a Share Award and to receive any dividends or other
distributions paid on such Common Shares during the Restriction Period. The
Committee may determine that a Participant’s entitlement to dividends or other
distributions with respect to a Share Award shall be subject to achievement of
performance goals or other conditions.

ARTICLE VI

DIVIDEND EQUIVALENTS

6.01 General Requirements. When the Committee makes a Grant under the Plan, the
Committee may grant Dividend Equivalents in connection with such Grants, under
such terms and conditions as the Committee deems appropriate under this
Article VI. Dividend Equivalents may be paid to Participants currently or may be
deferred, as determined by the Committee. All Dividend Equivalents that are not
paid currently shall be credited to accounts on RAIT’s records for purposes of
the Plan. Dividend Equivalents may be accrued as a cash obligation, or may be
converted to Units for the Participant, as determined by the Committee. Unless
otherwise specified in the Grant Agreement, deferred Dividend Equivalents will
not accrue interest. The Committee may provide that Dividend Equivalents shall
be payable based on the achievement of specific performance goals.

6.02 Payment with Respect to Dividend Equivalents. Dividend Equivalents may be
payable in cash or Common Shares or in a combination of the two, as determined
by the Committee.

ARTICLE VII

OTHER SHARE-BASED AWARDS

The Committee may grant Other Share-Based Awards, which are awards that are
based on, measured by or payable in Common Shares to any Participant, on such
terms and conditions as the Committee shall determine. Other Share-Based Awards
may be awarded subject to the achievement of performance goals or other
conditions and may be payable in cash, Common Shares or any combination of the
foregoing, as the Committee shall determine in the Grant Agreement. Common
Shares to be issued under the Phantom Share Plan to participants in the Phantom
Share Plan shall be issued under the Plan pursuant to this Article VII.

ARTICLE VIII

QUALIFIED PERFORMANCE-BASED COMPENSATION

8.01 Designation as Qualified Performance-Based Compensation. The Committee may
determine that Units, Share Awards, Dividend Equivalents or Other Share-Based
Awards granted to an Employee shall be considered “qualified performance-based
compensation” under section 162(m) of the Code. The provisions of this
Article VIII shall apply to any such Grants that are to be considered “qualified
performance-based compensation” under section 162(m) of the Code. To the extent
that Grants of Units, Share Awards, Dividend Equivalents or Other Share-Based
Awards designated as “qualified performance-based compensation” under section
162(m) of the Code are made, no such Grant may be made as an alternative to
another Grant that is not designated as “qualified performance based
compensation” but instead must be separate and apart from all other Grants made.

8.02 Performance Goals. When Units, Share Awards, Dividend Equivalents or Other
Share-Based Awards that are to be considered “qualified performance-based
compensation” are granted, the Committee shall establish in writing (i) the
objective performance goals that must be met, (ii) the period during which
performance will be measured, (iii) the maximum amounts that may be paid if the
performance goals are met, and (iv) any other conditions that the Committee
deems appropriate and consistent with the Plan and the requirements of section
162(m) of the Code for “qualified performance-based compensation.” The
performance goals shall satisfy the requirements for “qualified
performance-based compensation,” including the requirement that the achievement
of the goals be substantially uncertain at the time they are established and
that the performance goals be established in such a way that a third party with
knowledge of the relevant facts could determine whether and to what extent the
performance goals have been met. The Committee shall not have discretion to
increase the amount of compensation that is payable upon achievement of the
designated performance goals, but the Committee may reduce the amount of
compensation that is payable upon achievement of the designated performance
goals.

8.03 Criteria Used for Objective Performance Goals. The Committee shall use
objectively determinable performance goals based on one or more of the following
criteria: Common Share price, earnings per Common Share, net earnings, operating
earnings, return on assets, shareholder return, return on equity, growth in
assets, unit volume, sales, market share, or strategic business criteria
consisting of one or more objectives based on meeting specific revenue goals,
market penetration goals, geographic business expansion goals, cost targets or
goals relating to acquisitions or divestitures. The performance goals may relate
to the Participant’s business unit or the performance of RAIT, a Subsidiary, a
Parent, or Affiliate or RAIT and its Parent, Subsidiaries and Affiliates as a
whole, or any combination of the foregoing. Performance goals need not be
uniform as among Participants.

8.04 Timing of Establishment of Goals. The Committee shall establish the
performance goals in writing either before the beginning of the performance
period or during a period ending no later than the earlier of (i) 90 days after
the beginning of the performance period or (ii) the date on which 25% of the
performance period has been completed, or such other date as may be required or
permitted under applicable regulations under section 162(m) of the Code.

8.05 Certification of Results. The Committee shall certify and announce the
results for the performance period to all Participants after RAIT announces
RAIT’s financial results for the performance period. The Committee shall
determine the amount, if any, to be paid pursuant to each Grant based on the
achievement of the performance goals and the terms of each Grant Letter.

8.06 Death, Disability or Other Circumstances. The Committee may provide in the
Grant Agreement that Grants shall be payable, in whole or in part, in the event
of the Participant’s death or disability, a Change of Control or under other
circumstances consistent with the Treasury regulations and rulings under section
162(m) of the Code.

8.07 Shareholder Approval for “Qualified Performance Based Compensation”. If
Units, Share Awards, Dividend Equivalents or Other Share-Based Awards are
granted as “qualified performance-based compensation” under this Article VIII,
the Plan must be reapproved by RAIT’s shareholders no later than the first
shareholders meeting that occurs in the fifth year following the year in which
the shareholders previously approved the provisions of Article VIII, if
additional Grants are to be made under Article VIII and if required by section
162(m) of the Code or the regulations thereunder.

ARTICLE IX

CONSEQUENCES OF A CHANGE OF CONTROL

9.01 Assumption of Grants. Upon a Change of Control where RAIT is not the
surviving entity (or survives only as a subsidiary of another entity), unless
the Committee determines otherwise, all outstanding Options and SARs that are
not exercised shall be assumed, or replaced with comparable options or rights,
by the surviving entity (or a parent or subsidiary of the surviving entity), and
other outstanding Grants shall be converted to similar grants of the surviving
entity (or a parent or subsidiary of the surviving entity).

9.02 Other Alternatives. Notwithstanding the foregoing, in the event of a Change
of Control, the Committee may take any of the following actions with respect to
any or all outstanding Grants: the Committee may (i) determine that outstanding
Options and SARs shall accelerate and become exercisable, in whole or in part,
upon the Change of Control or upon such other event as the Committee determines,
(ii) determine that the restrictions and conditions on outstanding Share Awards
shall lapse, in whole or in part, upon the Change of Control or upon such other
event as the Committee determines, (iii) determine that Participants holding
Units shall receive a redemption in settlement of such Units and that Dividend
Equivalents and Other Share-Based Awards shall become fully payable in cash or
Common Shares in amounts determined by the Committee, (iv) require that
Participants surrender their outstanding Options and SARs in exchange for a
payment by RAIT, in cash or Common Shares as determined by the Committee, in an
amount equal to the amount by which the then Fair Market Value of the Common
Shares subject to the Participant’s unexercised Options and SARs exceeds the
Option Price of the Options or the base amount of SARs, as applicable, or (v)
after giving Participants an opportunity to exercise their outstanding Options
and SARs, terminate any or all unexercised Options and SARs at such time as the
Committee deems appropriate. Such surrender, termination or settlement shall
take place as of the date of the Change of Control or such other date as the
Committee may specify. The Committee shall have no obligation to take any of the
foregoing actions, and, in the absence of any such actions, outstanding Grants
shall continue in effect according to their terms (subject to any assumption
pursuant to subsection (a)).

ARTICLE X

MISCELLANEOUS

10.01 General Restriction. Each Grant under the Plan shall be subject to the
requirement that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the Common Shares subject or related
thereto upon any securities exchange or under any state or Federal law, (ii) the
consent or approval of any government regulatory body, or (iii) an agreement by
the recipient of a Grant with respect to the disposition of Common Shares, is
necessary or desirable as a condition of, or in connection with, the granting of
such Grant or the issue or purchase of Common Shares thereunder, such Grant may
not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.

10.02 Repricing. Notwithstanding anything in the Plan to the contrary, the
Committee may not reprice Options, nor may the Committee amend the Plan to
permit repricing of Options, unless the shareholders of the Company provide
prior approval for such repricing.

10.03 Non-Assignability. No Grant under the Plan shall be assignable or
transferable by the recipient thereof, except by will or by the laws of descent
and distribution. During the life of the recipient, such Grant shall be
exercisable only by such person or by such person’s guardian or legal
representative. Notwithstanding the foregoing, the Committee may provide in a
Grant Agreement, or amend an otherwise outstanding Grant Agreement to provide,
that a Participant may transfer Nonqualified Options to family members of the
Participant, one or more trusts in which family members of the Participant have
more than 50% of the beneficial interest, foundations in which family members of
the Participant (or the Participant) control the management of assets, or any
other entity in which family members of the Participant (or the Participant) own
more than 50% of the voting interests, consistent with applicable securities
laws, according to such terms as the Committee may determine; provided that the
Participant receives no consideration for the transfer of a Nonqualified Option
and the transferred Nonqualified Option shall continue to be subject to the same
terms and conditions as were applicable to the Nonqualified Option immediately
before the transfer.

10.04 Withholding Taxes. Whenever RAIT proposes or is required to issue or
transfer Common Shares under the Plan, the Company shall have the right to
require the Participant to remit to the Company an amount sufficient to satisfy
any Federal, state and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. The Company may
also deduct from the payment of cash payable pursuant to a Grant or other wages
paid by the Company to the Participant the amount of any withholding taxes due
with respect to such Grants. Alternatively, if the Committee so permits, a
Participant may elect to satisfy the Company’s tax withholding obligation with
respect to Grants paid in Common Shares by having shares withheld at the time
such Grants become taxable, up to an amount that does not exceed the
Participant’s minimum applicable withholding tax rate for federal (including
FICA), state and local tax liabilities. In addition, with respect to any
required tax withholding amount that exceeds the minimum applicable withholding
tax rate, the Committee may permit a Participant to satisfy such withholding
obligation with respect to such excess amount by providing that the Participant
may elect to deliver to RAIT the Common Shares owned by the Participant that
have been held by the Participant for the requisite period of time to avoid
adverse accounting consequences to RAIT. The elections described in this
Section 10.04 must be in a form and manner prescribed by the Committee and may
be subject to the prior approval of the Committee. For withholding tax purposes,
the Common Shares shall be valued on the date the withholding obligation is
incurred.

10.05 Employment or Service.

(a) Nothing in the Plan or in any Grant Agreement entered into pursuant to the
Plan shall confer upon any Participant the right to continue in the employment
or service of the Company or effect any right which the Company may have to
terminate the employment or service of such Participant.

(b) The terms “employ” or “employment” shall, where the context requires, be
deemed to include the hiring, continuation or termination of the services of any
Consultant participating in the Plan.

10.06 Non-Uniform Determinations. The Committee’s determinations under the Plan
(including without limitation determinations of the persons to receive Grants,
the form, amount and timing of such Grants, the terms and provisions of such
Grants and the Grant Agreements evidencing same) need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
Grants under the Plan, whether or not such persons are similarly situated.

10.07 Rights as a Shareholder. The recipient of any Grant under the Plan shall
have no rights as a shareholder with respect thereto unless and until
certificates for Common Shares are issued to him.

10.08 Leaves of Absence. The Committee shall be entitled to make such rules,
regulations and determinations as it deems appropriate under the Plan in respect
of any leave of absence taken by the recipient of any Grant. Without limiting
the generality of the foregoing, the Committee shall be entitled to determine
(i) whether or not any such leave of absence shall constitute a termination of
employment or service within the meaning of the Plan and (ii) the impact, if
any, of any such leave of absence on Grants under the Plan theretofore made to
any recipient who takes such leave of absence.

10.09 Newly Eligible Persons. The Committee shall be entitled to make such
rules, regulations, determinations and Grants as it deems appropriate in respect
of any person who becomes eligible to participate in the Plan or any portion
thereof after the commencement of a Grant or incentive period.

10.10 Adjustments. In the event of any change in the number or kind of
outstanding Common Shares by reason of a share dividend or distribution,
recapitalization, merger, consolidation, split-up, combination, exchange of
shares or the like, or by reason of any other extraordinary or unusual event
affecting the outstanding Common Shares as a class without RAIT’s receipt of
consideration, the Committee may appropriately adjust the maximum number of
Common Shares which may be issued under the Plan, the maximum number of Common
Shares for which any individual may receive pursuant to Grants in any year, the
number of Common Shares subject to outstanding Grants, the kind of shares to be
issued or transferred under the Plan, and the price per Common Share or the
applicable market value of such Grants; provided, however, that any fractional
Common Shares resulting from such adjustment shall be eliminated. Any
adjustments determined by the Committee shall be final, binding and conclusive.

10.11 Amendment of the Plan.

(a) The Committee may amend or terminate this Plan at any time; provided,
however, that the Committee shall not amend the Plan without shareholder
approval if such approval is required in order to comply with the Code or
applicable laws, or to comply with applicable stock exchange requirements. The
Committee may also condition or modify Grants under this Plan in response to
changes in securities, tax or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply with the rules or
requirements of any stock exchange or automated quotation system (including the
Nasdaq Stock Market) on which the Common Shares are listed or quoted.

(b) The Committee may at any time and from time to time terminate or modify or
amend the Plan in any respect, except that without shareholder approval the
Committee may not (i) increase the maximum number of Common Shares which may be
issued under the Plan (other than increases pursuant to Section 10.10),
(ii) extend the maximum period during which any Grant may be granted or
exercised, or (iii) extend the term of the Plan. The termination or any
modification or amendment of the Plan, except as provided in subsection (a),
shall not without the consent of a Participant, adversely affect his or her
rights under a Grant previously awarded to him or her.

10.12 Deferrals. The Committee may permit or require a Participant to defer
receipt of the payment of cash or the delivery of Common Shares that would
otherwise be due to the Participant in connection with any Grant. The Committee
shall establish rules and procedures for such deferrals taking into account the
terms of the Plan and section 409A of the Code.

10.13 Grants in Connection with Transactions and Otherwise. Nothing contained in
this Plan shall be construed to (i) limit the right of the Committee to make
Grants under this Plan in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business or assets of any
corporation, real estate investment trust, firm or association, including Grants
to employees thereof who become Employees, or for other proper purposes, or
(ii) limit the right of RAIT to grant options or make other awards outside of
this Plan. Without limiting the foregoing, the Committee may make a Grant to an
employee of another real estate investment trust who becomes an Employee by
reason of a merger, consolidation, acquisition of shares or property,
reorganization or liquidation involving RAIT in substitution for a grant made by
such real estate investment trust. The terms and conditions of the substitute
Grants may vary from the terms and conditions required by the Plan and from
those of the substituted share incentives. The Committee shall prescribe the
provisions of the substitute Grants.

10.14 Compliance with Law. The Plan, the exercise of Options and the obligations
of RAIT to issue or transfer Common Shares under Grants shall be subject to all
applicable laws and to approvals by any governmental or regulatory agency as may
be required. With respect to persons subject to section 16 of the Exchange Act,
it is the intent of RAIT that the Plan and all transactions under the Plan
comply with all applicable provisions of Rule 16b-3 or its successors under the
Exchange Act. In addition, it is the intent of RAIT that the Plan and applicable
Grants comply with the applicable provisions of sections 162(m) and 422 of the
Code and any deferrals under the Plan comply with section 409A of the Code. To
the extent that any legal requirement of section 16 of the Exchange Act or
sections 162(m), 409A or 422 of the Code as set forth in the Plan ceases to be
required under section 16 of the Exchange Act or sections 162(m), 409A or 422 of
the Code, that Plan provision shall cease to apply. The Committee may revoke any
Grant if it is contrary to law or modify a Grant to bring it into compliance
with any valid and mandatory government regulation. The Committee may also adopt
rules regarding the withholding of taxes on payments to Participants. The
Committee may, in its sole discretion, agree to limit its authority under this
Section.

10.15 Enforceability. The Plan shall be binding upon and enforceable against
RAIT and its successors and assigns.

10.16 Funding of the Plan; Limitation on Rights. This Plan shall be unfunded.
Neither RAIT or any other Company shall be required to establish any special or
separate fund or to make any other segregation of assets to assure the payment
of any Grants under this Plan. Nothing contained in the Plan and no action taken
pursuant hereto shall create or be construed to create a fiduciary relationship
between RAIT or any other Company and any Participant or any other person. No
Participant or any other person shall under any circumstances acquire any
property interest in any specific assets of RAIT or any other Company. To the
extent that any person acquires a right to receive payment from RAIT hereunder,
such right shall be no greater than the right of any unsecured general creditor
of RAIT.

10.17 Rights of Participants. Nothing in this Plan shall entitle any Employee,
Non-Employee Trustee, Consultant or other person to any claim or right to
receive a Grant under this Plan.

10.18 No Fractional Common Shares. No fractional Common Shares shall be issued
or delivered pursuant to the Plan or any Grant. The Committee shall determine
whether cash, other awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

10.19 Governing Law. The validity, construction, interpretation and effect of
the Plan and Grant Agreements issued under the Plan shall be governed and
construed by and determined in accordance with the laws of State of Maryland,
without giving effect to the conflict of laws provisions thereof.