Exhibit 10.4

FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), entered
into as of August 4, 2011, by and between RAIT Financial Trust, a Maryland real
estate investment trust (the “Company”), with a principal office in
Philadelphia, Pennsylvania, and Kenneth R. Frappier (“Executive”).

WHEREAS , the Company and Executive previously entered into an Employment
Agreement dated as of February 5, 2008 as amended December 15, 2008 (as amended,
the “ Prior Agreement ” );

WHEREAS , the Company and Executive desire to amend the terms and conditions of
Executive’s employment with the Company set forth in the Prior Agreement to
reflect the terms and conditions set forth herein;

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

1. Employment. The Company continues to employ Executive, and Executive hereby
accepts such continued employment and agrees to perform Executive’s duties and
responsibilities, in accordance with the terms, conditions and provisions
hereinafter set forth.

1.1 Employment Term. This Agreement shall be effective as of the date of this
Agreement and shall continue until the first anniversary of the date of this
Agreement, unless the Agreement is terminated sooner in accordance with
Section 2 or 3 below; and shall be effective for successive one-year periods in
accordance with the terms of this Agreement (subject to termination as
aforesaid) unless either party notifies the other party of non-renewal in
writing prior to three months before the expiration of each annual renewal. The
period commencing on the date of this Agreement and ending on the date on which
the term of Executive’s employment under the Agreement shall terminate is
hereinafter referred to as the “Employment Term.”

1.2 Duties and Responsibilities. Executive shall serve as the Executive Vice
President – Portfolio and Risk Management of the Company. Executive shall
perform all duties and accept all responsibilities incident to such positions as
may be reasonably assigned to him by the Board of Trustees of the Company (the
“Board”) or the Chief Executive Officer of the Company.

1.3 Extent of Service. Executive agrees to use Executive’s best efforts to carry
out Executive’s duties and responsibilities under Section 1.2 hereof and,
consistent with the other provisions of this Agreement, to devote such business
time, attention and energy thereto as is reasonably necessary to carry out those
duties and responsibilities. The foregoing shall not be construed as preventing
Executive from providing service to, or making investments in, other businesses
or enterprises provided there is no conflict with Executive’s ability to satisfy
his obligations to the Company.

1.4 Base Salary. For all of the services rendered by Executive hereunder, the
Company shall continue to pay Executive a base salary (“Base Salary”), which
shall be at the annual rate of $385,000 beginning as of April 1, 2011, payable
in installments at such times as the Company customarily pays its other senior
level executives. Executive’s Base Salary shall be reviewed annually for
appropriate increases by the Board pursuant to the Board’s normal performance
review policies for senior level executives but shall not be decreased.

1.5 Bonus. Executive shall continue to be eligible to receive annual bonuses in
such amounts as the Board may approve in its sole discretion or under the terms
of any annual incentive plan of the Company maintained for other senior level
executives.

1.6 Retirement and Welfare Plans and Perquisites. Executive shall continue to be
entitled to participate in all employee retirement and welfare benefit plans and
programs or executive perquisites made available to the Company’s senior level
executives as a group or to its employees generally, as such retirement and
welfare plans or perquisites may be in effect from time to time and subject to
the eligibility requirements of the plans. Nothing in this Agreement shall
prevent the Company from amending or terminating any retirement, welfare or
other employee benefit plans or programs from time to time as the Company deems
appropriate.

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1.7 Reimbursement of Expenses; Vacation. Executive shall continue to be provided
with reimbursement of reasonable expenses related to Executive’s employment by
the Company on a basis no less favorable than that which may be authorized from
time to time for senior level executives as a group, and shall be entitled to
vacation and sick leave in accordance with the Company’s vacation, holiday and
other pay for time not worked policies.

1.8 Incentive Compensation. Executive shall continue to be entitled to
participate in any short-term and long-term incentive programs (including
without limitation any equity compensation plans) established by the Company for
its senior level executives generally, at levels commensurate with the benefits
provided to other senior executives and with adjustments appropriate for his
position as Executive Vice President – Portfolio and Risk Management.

2. Termination. Executive’s employment shall terminate upon the occurrence of
any of the following events:

2.1 Termination Without Cause; Resignation for Good Reason; Non-Renewal by the
Company.

(a) The Company may remove Executive at any time without Cause (as defined in
Section 4) from the position in which Executive is employed hereunder upon not
less than sixty (60) days’ prior written notice to Executive. In addition,
Executive may initiate a termination of employment by resigning under this
Section 2.1 for Good Reason (as defined in Section 4). Executive shall give the
Company not less than sixty (60) days’ prior written notice of such resignation.
In addition, the Company may initiate a termination of employment by sending a
notice of non-renewal of this Agreement to the Executive, as described in
Section 1.1.

(b) Upon any removal or resignation described in Section 2.1(a) above, Executive
shall be entitled to receive only the amount due to Executive under the
Company’s then current severance pay plan for employees, if any. No other
payments or benefits shall be due under this Agreement to Executive, but
Executive shall be entitled to any benefits accrued and earned in accordance
with the terms and conditions of any applicable benefit plans and programs of
the Company in which Executive participated prior to his termination of
employment.

(c) Notwithstanding the provisions of Section 2.1(b), in the event that
Executive executes and does not revoke a written mutual release upon such
removal or resignation, in a form acceptable to the Company (the “Release”), of
any and all claims against the Company and all related parties with respect to
all matters arising out of Executive’s employment by the Company, or the
termination thereof (other than claims for any entitlements under the terms of
this Agreement or under any plans or programs of the Company under which
Executive has accrued and is due a benefit), and any claims against Executive
for actions within the scope of his employment by the Company, Executive shall
be entitled to receive, in lieu of the payment described in Section 2.1(b), the
following:

(i) Executive shall receive a lump sum cash payment equal to one and a half
times the sum of (x) Executive’s Base Salary, as in effect immediately prior to
his termination of employment and (y) the average annual cash bonus Executive
received for the three year period immediately prior to his termination of
employment. One-half of the amount described in the preceding sentence shall be
consideration for Executive’s entering into the restrictive covenants described
in Section 5 below. Unless the payment is required to be delayed pursuant to
Section 18.2 below, the payment shall be made on the sixtieth (60th) day
following Executive’s last day of employment with the Company, provided
Executive executes the Release during the forty-five (45) day period following
Executive’s last day of employment and the revocation period for the Release has
expired without revocation by Executive.

(ii) Executive shall receive a lump sum cash payment equal to a pro rata portion
of Executive’s target annual cash bonus for the fiscal year of his termination
(or, in the absence of a target bonus opportunity for the fiscal year, a pro
rata portion of the average annual cash bonus Executive received for the three
year period immediately prior to his termination of employment) (the “Cash
Bonus”). The pro rated Cash Bonus shall be determined by multiplying the Cash
Bonus by a fraction, the numerator of which is the number of days during which
Executive was employed by the Company in the fiscal year prior to his
termination of employment and the denominator of which is three hundred
sixty-five (365). Unless the payment is required to be delayed pursuant to
Section 18.2 below, the payment shall be made on

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the sixtieth (60th) day following Executive’s last day of employment with the
Company, provided Executive executes the Release during the forty-five (45) day
period following Executive’s last day of employment and the revocation period
for the Release has expired without revocation by Executive.

(iii) For a period of eighteen (18) months following the date of termination,
Executive shall continue to receive the medical coverage in effect at the date
of his termination (or generally comparable coverage) 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 had continued
in employment with the Company 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.

(iv) Executive shall also receive any other amounts earned, accrued and owing
but not yet paid under Section 1 above and under any applicable benefit plans
and programs of the Company (other than severance plans or programs) in which
Executive participated prior to his termination of employment, subject to the
terms and conditions of any such plans and programs.

2.2 Voluntary Termination. Executive may voluntarily terminate his employment
for any reason upon sixty (60) days’ prior written notice or by sending a notice
of non-renewal of this Agreement to the Company, as described in Section 1.1. In
any such event, after the effective date of such termination, except as provided
in Section 2.1 with respect to a resignation for Good Reason, no further
payments shall be due under this Agreement, except that Executive shall be
entitled to any benefits accrued and due in accordance with the terms and
conditions of any applicable benefit plans and programs of the Company in which
Executive participated prior to his termination of employment.

2.3 Disability. The Company may terminate Executive’s employment, to the extent
permitted by applicable law, if Executive has been unable to perform the
material duties of his employment for a period of ninety (90) consecutive days
in any twelve (12) month period because of physical or mental injury or illness
(“Disability”); provided, however, that the Company shall continue to pay
Executive’s Base Salary until the Company acts to terminate Executive’s
employment. Executive agrees, in the event of a dispute under this Section 2.3
relating to Executive’s Disability, to submit to a physical examination by a
licensed physician jointly selected by the Board and Executive. If the Company
terminates Executive’s employment for Disability, Executive shall be entitled to
receive the following:

(a) Executive shall receive a lump sum cash payment equal to a pro rata portion
of Executive’s Cash Bonus. The pro rated Cash Bonus shall be determined as
provided in Section 2.1(c)(ii) above. Except as otherwise required to comply
with the requirements of Section 18 below, payment shall be made on the sixtieth
(60th) day following Executive’s last day of employment with the Company.

(b) The Company shall pay to Executive any amounts earned, accrued and owing but
not yet paid under Section 1 above and any other benefits accrued and earned in
accordance with the terms and conditions of any applicable benefit plans and
programs of the Company in which Executive participated prior to his termination
of employment.

2.4 Death. If Executive dies while employed by the Company, the Company shall
pay to Executive’s executor, legal representative, administrator or designated
beneficiary, as applicable, (i) any amounts earned, accrued and owing but not
yet paid under Section 1 above and any benefits accrued and earned under the
Company’s benefit plans and programs in which Executive participated prior to
his termination of employment, in accordance with the terms and conditions of
such plans and programs, and (ii) a pro rated Cash Bonus for the fiscal year in
which Executive’s death occurs, which pro rated Cash Bonus shall be determined
according to Section 2.1(c)(iii) above and, except as otherwise required to
comply with the requirements of Section 18 below, shall be paid on the sixtieth
(60th) day following the date of Executive’s death. Otherwise, the Company shall
have no further liability or obligation under this Agreement to Executive’s
executors, legal representatives, administrators, heirs or assigns or any other
person claiming under or through Executive.

2.5 Cause. The Company may terminate Executive’s employment at any time for
Cause upon written notice to Executive, in which event all payments under this
Agreement shall cease, except for Base Salary

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to the extent already accrued. Executive shall be entitled to any benefits
accrued and earned before his termination in accordance with the terms and
conditions of any applicable benefit plans and programs of the Company in which
Executive participated prior to his termination of employment.

2.6 Notice of Termination. Any termination of Executive’s employment shall be
communicated by a written notice of termination to the other party hereto given
in accordance with Section 10. The notice of termination shall (i) indicate the
specific termination provision in this Agreement relied upon, (ii) briefly
summarize the facts and circumstances deemed to provide a basis for a
termination of employment and the applicable provision hereof, and (iii) specify
the termination date in accordance with the requirements of this Agreement.

3. Change of Control.

3.1 Change of Control. Upon a “Change of Control” (as defined below) while
Executive is employed by the Company, all outstanding unvested equity-based
awards held by Executive shall fully vest and shall become immediately
exercisable, as applicable.

3.2 Termination for Good Reason Following a Change of Control. If, within the
six (6) month period following a Change of Control, Executive terminates his
employment with the Company for any reason or no reason, such termination shall
be deemed a termination by Executive for Good Reason covered by Section 2.1;
provided, however, that Executive shall give the Company not less than thirty
(30) days’ prior written notice of such resignation.

3.3 Code Section 280G.

(a) Executive shall bear all expense of, and be solely responsible for, all
federal, state, local or foreign taxes due with respect to any amount payable to
or other benefit receivable by Executive hereunder, including, without
limitation, any excise tax imposed by Section 4999 of the Code; provided,
however, that any such amount or benefit deemed to be a Parachute Payment (as
defined below) alone or when added to any other amount payable or paid to or
other benefit receivable or received by Executive which is deemed to constitute
a Parachute Payment (whether or not under an existing plan, arrangement or other
agreement), and would result in the imposition on Executive of an excise tax
under Section 4999 of the Code, (all such amounts and benefits being hereinafter
called “Total Payments”) shall be reduced to the extent necessary so that no
portion thereof shall be subject to the excise tax imposed by Section 4999 of
the Code but only if, by reason of such reduction, the net after-tax benefit
received by the Executive shall exceed the net after-tax benefit received by the
Executive if no such reduction was made. For purposes of this Section 3.3, “net
after-tax benefit” shall mean (i) the total of all payments and the value of all
benefits which the Executive receives or is then entitled to receive from the
Company that would constitute Parachute Payments, less (ii) the amount of all
federal, state and local income taxes payable with respect to the foregoing
calculated at the maximum marginal income tax rate for each year in which the
foregoing shall be paid to the Executive (based on the rate in effect for such
year as set forth in the Code as in effect at the time of the first payment of
the foregoing) and the amount of applicable employment taxes, less (iii) the
amount of excise taxes imposed with respect to the payments and benefits
described in (i) above by Section 4999 of the Code. For purposes of this
Section 3.3, “Parachute Payment” shall mean a “parachute payment” as defined in
Section 280G of the Code.

(b) The foregoing determination shall be made by tax counsel appointed by the
Executive (the “Tax Counsel”). The Tax Counsel shall submit its determination
and detailed supporting calculations to both the Executive and the Company
within 15 days after receipt of a notice from either the Company or the
Executive that the Executive may receive payments which may be Parachute
Payments. If the Tax Counsel determines that such reduction is required by this
Section 3.3, the Total Payments shall be reduced to the extent necessary so that
no portion thereof shall be subject to the excise tax imposed by Section 4999 of
the Code, and the Company shall pay such reduced amount to the Participant. The
manner in which the Total Payments are reduced shall be mutually agreed to by
the Company and the Executive and approved by Tax Counsel; provided, however,
that if the Company and the Executive do not agree within 15 days of the receipt
of the Tax Counsel’s determination, the reduction shall be accomplished by,

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first, reducing any lump sum cash payments included in the Total Payments and,
if further reductions are necessary, by such other reductions as shall be
recommended by Tax Counsel. If the Tax Counsel determines that no reduction is
necessary under this Section 3.3, it will, at the same time as it makes such
determination, furnish the Executive and the Company an opinion that the
Executive shall not be liable for any excise tax under Section 4999 of the
Code. The Executive and the Company shall each provide the Tax Counsel access to
and copies of any books, records, and documents in the possession of the
Executive or the Company, as the case may be, reasonably requested by the Tax
Counsel, and otherwise cooperate with the Tax Counsel in connection with the
preparation and issuance of the determinations and calculations contemplated by
this Section 3.3. The fees and expenses of the Tax Counsel for its services in
connection with the determinations and calculations contemplated by this
Section 3.3 shall be borne by the Company.

4. Definitions.

4.1 “Cause” shall mean any of the following grounds for termination of
Executive’s employment:

(a) Executive shall have been convicted of a felony;

(b) Executive intentionally and continually fails substantially to perform his
reasonably assigned material duties to the Company (other than a failure
resulting from Executive’s incapacity due to physical or mental illness), which
failure has been materially and demonstrably detrimental to the Company and has
continued for a period of at least 30 days after a written notice of demand for
substantial performance, signed by a duly authorized officer of the Company, has
been delivered to Executive specifying the manner in which Executive has failed
substantially to perform; or

(c) Executive breaches Section 5 of this Agreement.

4.2 “Good Reason” shall mean, without Executive’s consent,:

(a) the material reduction of Executive’s title, authority, duties and
responsibilities or the assignment to Executive of duties materially
inconsistent with Executive’s position or positions with the Company;

(b) a reduction in Base Salary of the Executive; or

(c) the Company’s material and willful breach of this Agreement.

Notwithstanding the foregoing, (i) Good Reason shall not be deemed to exist
unless notice of termination on account thereof (specifying a termination date
of at least 45 days but no more than 60 days from the date of such notice) is
given no later than 30 days after the time at which the event or condition
purportedly giving rise to Good Reason first occurs or arises and (ii) if there
exists (without regard to this clause (ii)) an event or condition that
constitutes Good Reason, the Company shall have 30 days from the date notice of
such a termination is given to cure such event or condition and, if the Company
does so, such event or condition shall not constitute Good Reason hereunder.

4.3 “Change of Control” shall mean the occurrence of any of the following:

(a) The acquisition of the beneficial ownership, as defined under the Securities
Exchange Act of 1934, of twenty-five percent (25%) or more of the Company’s
voting securities or all or substantially all of the assets of the Company by a
single person or entity or group of affiliated persons or entities other than by
a Related Entity (as defined below); or

(b) The merger, consolidation or combination of the Company with an unaffiliated
entity, other than a Related Entity (as defined below) in which the directors of
the Company as applicable immediately prior to such merger, consolidation or
combination constitute less than a majority of the board of directors of the
surviving, new or combined entity unless one-half of the board of directors of
the surviving, new or combined entity, were directors of the Company immediately
prior to such transaction and the Company’s chief executive officer immediately
prior to such transaction continues as the chief executive officer of the
surviving, new or combined entity; or

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(c) During any period of two consecutive calendar years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least two-thirds thereof, unless the election or nomination for the election
by the Company’s stockholders of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period; or

(d) The transfer of all or substantially all of the Company’s assets or all or
substantially all of the assets of its primary subsidiaries to an unaffiliated
entity, other than to a Related Entity (as defined below).

For purposes of the definition of “Change of Control” as set forth herein, the
term “Related Entity” shall mean an entity that is an “affiliate” of
Mr. Scott F. Schaeffer, or any member of Mr. Schaeffer’s immediate family, as
determined in accordance with Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.

5. Non-Competition, Non-Solicitation, Intellectual Property and Confidentiality.
Executive hereby acknowledges that, during and solely as a result of his
employment by the Company, Executive will receive special training and education
with respect to the operation of the Company’s business and other related
matters, and access to confidential information and business and professional
contacts. In consideration of Executive’s employment and in consideration of the
special and unique opportunities afforded by the Company to Executive as a
result of Executive’s employment, Executive hereby agrees to abide by the terms
of the non-competition, non-solicitation, intellectual property and
confidentiality provisions below. Executive agrees and acknowledges that his
employment is full, adequate and sufficient consideration for the restrictions
and obligations set forth in those provisions.

5.1 Non-Competition and Non-Solicitation. In consideration of the Company’s
entering into this Agreement, Executive agrees that during the Employment Term
and, with respect to Section 5.1(a) below, for a period of eight (8) months
after the termination of the Employment Term and, with respect to Section 5.1(b)
and (c) below, for a period of twelve (12) months after the termination of the
Employment Term, without regard to its termination for any reason which does not
constitute a breach of this Agreement by the Company or a resignation for Good
Reason by the Executive, Executive shall not, unless acting pursuant hereto or
with the prior written consent of the Board:

(a) directly or indirectly, own, manage, operate, finance, join, control or
participate in the ownership, management, operation, financing or control of, or
be connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit Executive’s name
to be used in connection with any Competing Business (defined below) within any
state in which the Company currently engages in any substantial business
activity or any state in which the Company engaged in any substantial business
activity during the thirty-six month period preceding the date the Executive’s
employment terminates; provided, however, that notwithstanding the foregoing,
this provision shall not be construed to prohibit the passive ownership by
Executive of not more than five percent (5%) of the capital stock of any
corporation which is engaged in any Competing Business having a class of
securities registered pursuant to the Securities Exchange Act of 1934, as
amended;

(b) solicit or divert to any Competing Business any individual or entity which
is an active or prospective customer of Company or was such an active or
prospective customer at any time during the preceding 12 months; or

(c) employ, attempt to employ, solicit or assist any Competing Business in
employing any employee of the Company whether as an employee or consultant.

The term “Competing Business” shall mean: any entity or enterprise actively
engaged in any business the Company is actively engaged in (or is expected to be
actively engaged in within 12 months) at the time of termination.

In the event that the provisions of this Section 5.1 should ever be adjudicated
to exceed the time, geographic, product or other limitations permitted by
applicable law in any jurisdiction, then such

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provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or other limitations permitted by applicable law.

5.2 Developments. Executive shall disclose fully, promptly and in writing to the
Company any and all inventions, discoveries, improvements, modifications and
other intellectual property rights, whether patentable or not, which Executive
has conceived, made or developed, solely or jointly with others, while employed
by the Company and which (i) relate to the business, work or activities of the
Company or (ii) result from or are suggested by the carrying out of Executive’s
duties hereunder or from or by any information that Executive may receive as an
employee of the Company. Executive hereby assigns, transfers and conveys to the
Company all of Executive’s right, title and interest in and to any and all such
inventions, discoveries, improvements, modifications and other intellectual
property rights and agrees to take all such actions as may be requested by the
Company at any time and with respect to any such invention, discovery,
improvement, modification or other intellectual property rights to confirm or
evidence such assignment, transfer and conveyance. Furthermore, at any time and
from time to time, upon the request of the Company, Executive shall execute and
deliver to the Company, any and all instruments, documents and papers, give
evidence and do any and all other acts that, in the opinion of counsel for the
Company, are or may be necessary or desirable to document such assignment,
transfer and conveyance or to enable the Company to file and prosecute
applications for and to acquire, maintain and enforce any and all patents,
trademark registrations or copyrights under United States or foreign law with
respect to any such inventions, discoveries, improvements, modifications or
other intellectual property rights or to obtain any extension, validation,
reissue, continuance or renewal of any such patent, trademark or copyright. The
Company shall be responsible for the preparation of any such instruments,
documents and papers and for the prosecution of any such proceedings and shall
reimburse Executive for all reasonable expenses incurred by Executive in
compliance with the provisions of this Section 5.2.

5.3 Confidentiality.

(a) Executive acknowledges that, by reason of Executive’s employment by the
Company, Executive will have access to confidential information of the Company,
including, without limitation, information and knowledge pertaining to products,
inventions, discoveries, improvements, innovations, designs, ideas, trade
secrets, proprietary information, manufacturing, packaging, advertising,
distribution and sales methods, sales and profit figures, customer and client
lists and relationships between the Company and dealers, distributors, sales
representatives, wholesalers, customers, clients, suppliers and others who have
business dealings with them (“Confidential Information”). Executive acknowledges
that such Confidential Information is a valuable and unique asset of the Company
and covenants that, both during and after the Employment Term, Executive will
not disclose any Confidential Information to any person (except as Executive’s
duties as an officer of the Company may require or as required by law or in a
judicial or administrative proceeding) without the prior written authorization
of the Board. The obligation of confidentiality imposed by this Section 5.3
shall not apply to information that becomes generally known to the public
through no act of Executive in breach of this Agreement.

(b) Executive acknowledges that all documents, files and other materials
received from the Company during the Employment Term (with the exception of
documents relating to Executive’s compensation or benefits to which Executive is
entitled following the Employment Term) are for use of Executive solely in
discharging Executive’s duties and responsibilities hereunder and that Executive
has no claim or right to the continued use or possession of such documents,
files or other materials following termination of Executive’s employment by the
Company. Executive agrees that, upon termination of employment, Executive will
not retain any such documents, files or other materials and will promptly return
to the Company any documents, files or other materials in Executive’s possession
or custody.

5.4 Equitable Relief. Executive acknowledges that the restrictions contained in
Sections 5.1, 5.2 and 5.3 hereof are, in view of the nature of the business of
the Company, reasonable and necessary to protect the legitimate interests of the
Company, and that any violation of any provision of those Sections will result
in irreparable injury to the Company. Executive also acknowledges that in the
event of any such violation, the Company shall be entitled to preliminary and
permanent injunctive relief, without the necessity of proving actual damages,
and to an equitable accounting of all earnings, profits and other benefits
arising from any such violation, which rights shall be cumulative and in
addition to any other rights or remedies to

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which the Company may be entitled. Executive agrees that in the event of any
such violation, an action may be commenced for any such preliminary and
permanent injunctive relief and other equitable relief in any federal or state
court of competent jurisdiction sitting in Pennsylvania or in any other court of
competent jurisdiction. Executive hereby waives, to the fullest extent permitted
by law, any objection that Executive may now or hereafter have to such
jurisdiction or to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that such suit, action or
proceeding has been brought in an inconvenient forum. Executive agrees that
effective service of process may be made upon Executive by mail under the notice
provisions contained in Section 10 hereof.

6. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit
Executive’s continuing or future participation in or rights under any benefit,
bonus, incentive or other plan or program provided by the Company and for which
Executive may qualify; provided, however, that if Executive becomes entitled to
and receives the payments provided for in Section 2.1(c) of this Agreement,
Executive hereby waives Executive’s right to receive payments under any
severance plan or similar program applicable to all employees of the Company.

7. Survivorship. The respective rights and obligations of the parties under this
Agreement shall survive any termination of Executive’s employment to the extent
necessary to the intended preservation of such rights and obligations.

8. Mitigation. Executive shall not be required to mitigate the amount of any
payment or benefit provided for in this Agreement by seeking other employment or
otherwise and there shall be no offset against amounts due Executive under this
Agreement on account of any remuneration attributable to any subsequent
employment that Executive may obtain.

9. Arbitration; Expenses. In the event of any dispute under the provisions of
this Agreement, other than a dispute in which the primary relief sought is an
equitable remedy such as an injunction, the parties shall be required to have
the dispute, controversy or claim settled by arbitration in Philadelphia,
Pennsylvania in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected by
the other two arbitrators. Any award entered by the arbitrators shall be final,
binding and nonappealable and judgment may be entered thereon by either party in
accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrators shall
have no authority to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. Each party shall be responsible
for its own expenses relating to the conduct of the arbitration (including
reasonable attorneys’ fees and expenses) and shall share the fees of the
American Arbitration Association.

10. Notices. All notices and other communications required or permitted under
this Agreement or necessary or convenient in connection herewith shall be in
writing and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):

If to the Company, to:

RAIT Financial Trust

Cira Centre

2929 Arch Street, 17th Floor

Philadelphia, PA 19104

Attention: Chief Executive Officer

If to Executive, to:

Kenneth R. Frappier at his most recent home address set forth in the records of
the Company.

or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.

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11. Contents of Agreement; Amendment and Assignment.

11.1 This Agreement sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment approved by the
Board and executed on its behalf by a duly authorized officer and by Executive.
This Agreement supersedes the provisions of any employment or other agreement
between Executive and the Company that relate to any matter that is also the
subject of this Agreement and such provisions in such other agreements will be
null and void.

11.2 All of the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective heirs, executors,
administrators, legal representatives, successors and assigns of the parties
hereto, except that the duties and responsibilities of Executive under this
Agreement are of a personal nature and shall not be assignable or delegable in
whole or in part by Executive. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the Company,
within fifteen (15) days of such succession, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the Company
would be required to perform if no such succession had taken place.

12. Severability. If any provision of this Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provision or application of this Agreement which can be given effect
without the invalid or unenforceable provision or application and shall not
invalidate or render unenforceable such provision or application in any other
jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.

13. Remedies Cumulative; No Waiver. No remedy conferred upon a party by this
Agreement is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given under this Agreement or now or hereafter existing at law or in equity. No
delay or omission by a party in exercising any right, remedy or power under this
Agreement or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by such party from
time to time and as often as may be deemed expedient or necessary by such party
in its sole discretion.

14. Beneficiaries/References. Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive’s death by giving the Company written notice
thereof. In the event of Executive’s death or a judicial determination of
Executive’s incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive’s beneficiary, estate or other
legal representative.

15. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.

16. Withholding. All payments under this Agreement shall be made subject to
applicable tax withholding, and the Company shall withhold from any payments
under this Agreement all federal, state and local taxes as the Company is
required to withhold pursuant to any law or governmental rule or regulation.
Except as specifically provided otherwise in this Agreement, Executive shall
bear all expense of, and be solely responsible for, all federal, state and local
taxes due with respect to any payment received under this Agreement.

17. Governing Law. This Agreement shall be governed by and interpreted under the
laws of the Commonwealth of Pennsylvania without giving effect to any conflict
of laws provisions.

18. Section 409A.

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18.1 Interpretation. Notwithstanding the other provisions hereof, this Agreement
is intended to comply with the requirements of Section 409A of the Code, to the
extent applicable, and this Agreement shall be interpreted to avoid any penalty
sanctions under Section 409A of the Code. Accordingly, all provisions herein, or
incorporated by reference, shall be construed and interpreted to comply with
Section 409A and, if necessary, any such provision shall be deemed amended to
comply with section 409A of the Code and regulations thereunder. If any payment
or benefit cannot be provided or made at the time specified herein without
incurring sanctions under section 409A of the Code, then such benefit or payment
shall be provided in full at the earliest time thereafter when such sanctions
will not be imposed. For purposes of section 409A of the Code, each payment made
under this Agreement shall be treated as a separate payment. In no event may the
Executive, directly or indirectly, designate the calendar year of payment.

18.2 Payment Delay. Notwithstanding any provision to the contrary in this
Agreement, if on the date of the Executive’s termination of employment, the
Executive is a “specified employee” (as such term is defined in section
409A(a)(2)(B)(i) of the Code and its corresponding regulations) as determined by
the Board (or its delegate) in its sole discretion in accordance with its
“specified employee” determination policy, then all cash severance payments
payable to the Executive under this Agreement that are deemed as deferred
compensation subject to the requirements of section 409A of the Code shall be
postponed for a period of six months following the Executive’s “separation from
service” with the Company (or any successor thereto). The postponed amounts
shall be paid to the Executive in a lump sum on the date that is six (6) months
and one (1) day following the Executive’s “separation from service” with the
Company (or any successor thereto). If the Executive dies during such six-month
period and prior to payment of the postponed cash amounts hereunder, the amounts
delayed on account of section 409A of the Code shall be paid to the personal
representative of the Executive’s estate on the sixtieth (60th) day after
Executive’s death. If any of the cash payments payable pursuant to this
Agreement are delayed due to the requirements of section 409A of the Code, there
shall be added to such payments interest during the deferral period at an
annualized rate of interest equal to the prime rate as reported in the Wall
Street Journal (or, if unavailable, a comparable source) at the relevant time.

18.3 Reimbursements. All reimbursements provided under this Agreement shall be
made or provided in accordance with the requirements of section 409A, including,
where applicable, the requirement that (i) any reimbursement is for expenses
incurred during the Executive’s lifetime (or during a shorter period of time
specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the taxable year following the
year in which the expense is incurred, and (iv) the right to reimbursement is
not subject to liquidation or exchange for another benefit.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.

 

RAIT FINANCIAL TRUST By:   /s/ Scott F. Schaeffer Name:   Scott F. Schaeffer
Title:   Chairman, Chief Executive Officer and President EXECUTIVE By:   /s/
Kenneth R. Frappier   Kenneth R. Frappier