EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”), is entered into and executed on
January 29, 2014, effective as of January 1, 2014 (the “Effective Date”), by and
between RAIT Financial Trust, a Maryland real estate investment trust (the
“Company”), with a principal office in Philadelphia, Pennsylvania, and Scott L.
N. Davidson (“Executive”).

WHEREAS, the Executive has been employed by the Company since April 5, 2010; and

WHEREAS, the Company wishes to expand his duties and responsibilities and his
title and provide him with certain benefits and security, including without
limitation certain severance and other benefits not previously made available to
Executive, as set forth in this Agreement, and the Executive wishes to accept
such duties and responsibilities, on the terms set forth below, effective as of
the Effective Date; and

WHEREAS, Executive agrees to be bound by the non-competition, non-solicitation,
intellectual property and confidentiality provisions as set forth in this
Agreement; and

WHEREAS, this Agreement supersedes all previous agreements between the Executive
and the Company;

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 Effective Date
and shall continue for a period of two (2) years, unless Executive’s employment
and the Agreement are terminated sooner in accordance with Section 2 below; and
shall be effective for successive one-year periods thereafter 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
(3) months before the expiration of each annual renewal. The period commencing
on the Effective Date 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 will receive the title of President
of the Company, and in that capacity shall perform all duties and accept all
responsibilities and limitations incident to such position as may be reasonably
assigned to him by the Chief Executive Officer of the Company, including without
limitation serving as the person in charge of the loan origination group of
employees and its and their activities as well as the person in charge of the
securitization group of employees and its and their activities

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 all of his
business time, attention and energy to the performance of his duties hereunder.
The term “devote all of his business time, attention and energy” in the
preceding sentence is not intended to prevent Executive from:

(a) serving as a director or trustee of a non-profit organization, subject to
the prior and ongoing approval of the Board of Directors, which will not be
unreasonably withheld; and

(b) spending time during the business day to attend to personal or family trust
business (as more fully described below in Section 4.1), so long as in the
aggregate of Section 1.3(a) above and this Section 1.3(b) such time does not
unreasonably interfere with the performance of his duties for the Company.

1.4 Base Salary. For all of the services rendered by Executive hereunder, the
Company shall pay Executive a base salary (“Base Salary”), which shall be at the
annual rate of Five Hundred Thousand Dollars ($500,000) beginning as of the
Effective Date, 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.

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 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 and
performance.

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 3) 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 3). Executive shall give the
Company not less than sixty (60) days’ prior written notice of such resignation.
In either event, the Company may relieve Executive of all responsibilities and
authority during any portion or all of this notice period with the understanding
that Executive shall remain an employee and receive all pay and benefits to
which he is entitled during such period. 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, pursuant to which Executive will
be eligible for the benefits set forth in Section 2.1(b) or (c) below, as
applicable, unless the termination of employment is for Cause.

(b) Upon any termination or non-renewal by the Company or resignation for Good
Reason by the Executive as 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
termination or non-renewal by the Company or resignation for Good Reason by the
Executive as described in Section 2.1(a) above, 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 exchange for the Company’s
undertakings in this Section 2.1(c)), 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 and applicable to the Company’s three (3) completed fiscal years
immediately prior to the Executive’s last day of employment (or, if he was not
employed for the entire period covered by the three (3) completed fiscal years
of the Company immediately prior to his termination, the average annual cash
bonus Executive received for and applicable to those completed fiscal years of
the Company for which he was employed for the entire fiscal year). Unless the
payment is required to be delayed pursuant to Section 17.2 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 and applicable to the fiscal year of
his termination (or, in the absence of a target bonus opportunity for and
applicable to the fiscal year of his termination, the lump sum cash payment
shall be equal to a pro rata portion of the average annual cash bonus Executive
received for the Company’s three (3) completed fiscal years immediately prior to
Executive’s last day of employment) (the “Cash Bonus”). In the absence of a
target annual cash bonus opportunity for and applicable to the fiscal year of
his termination and in the event that the Executive was not employed for the
entire period covered by the three (3) completed fiscal years of the Company
immediately prior to his termination, the Cash Bonus shall be calculated on the
basis of the annual cash bonus received for and applicable to those completed
fiscal years of the Company for which he was employed for the entire fiscal
year). 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 of 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 17.2 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.

(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.

For clarity, the foregoing payments and benefits referenced in
Sections 2.1(c)(i)-(iii), which Executive shall receive if he executes and does
not revoke the Release required by this Section 2.1(c), shall be in addition to
any other amounts earned, accrued and owing to Executive 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, without regard to whether Executive executes and
does not revoke the Release.

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 and has been formally determined to be
eligible for disability benefits under the Company’s long-term disability plan
(“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 (as Cash Bonus is defined in Section 2.1(c)(ii)
above.) The pro-rated Cash Bonus (the “Pro-Rata 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 of his termination of employment and the denominator of which is three
hundred sixty-five (365). Except as otherwise required to comply with the
requirements of Section 17 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-Rata Cash Bonus (determined according to
Section 2.3(a) above) for the Company’s fiscal year in which Executive’s death
occurs and, except as otherwise required to comply with the requirements of
Section 17 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 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 9. 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. Definitions and References.

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

(a) Executive’s commission of, or indictment for, or formal admission to a
felony, any crime of moral turpitude, dishonesty, or any crime involving the
Company; or Executive’s breach of the Company’s Code of Ethics;

(b) Executive’s engagement in fraud, misappropriation or embezzlement;

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

(d) Executive’s breach of Section 4 of this Agreement.

3.2 “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 forty-five (45) days but no more than sixty (60) days from the date
of such notice) is given no later than thirty (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 thirty (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.

3.3 “Code of Ethics” shall mean the RAIT Code of Business Conduct and Ethics,
the Company’s Equal Employment Opportunity Policy (including without limitation
its provisions relating to Prohibition of Sexual Harassment and Prohibition of
Harassment of Legally Protected Groups), the RAIT Insider Trading Policy, the
Company’s Section 16 Compliance Policy, the RAIT Stock Ownership Guidelines, the
Company’s Restricted List of Securities and Limitation of Personal Trading, the
Company’s Travel and Business Expense Policy & Procedure, and the RAIT Procedure
to Communicate with Audit Committee.

3.4 References to “termination” and “terminate” (whether or not these words are
capitalized) shall include separations from the Company for any reason and under
any circumstances, whether initiated by the Company, by Executive or by mutual
agreement, unless it is clear from the context in which such word is used that
the reference is intended to relate to a specific separation or type of
separation.

4. 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 information with
respect to the operation of the businesses of the Company, and/or its
affiliates, and other related matters not generally available to other
executives of the Company, and access to confidential information and business
and professional contacts. Executive hereby agrees to abide by the terms of the
non-competition, non-solicitation, intellectual property and confidentiality
provisions below, in consideration of: Executive’s employment as an officer and
the head of its loan origination and securitization groups and the public
stature which accompanies these positions, as well as access to confidential
information and business and professional contacts, and unique opportunities
afforded by the Company to Executive as a result of Executive’s employment in
these positions; Executive’s eligibility for the benefits set forth in this
Agreement (including without limitation the opportunity for the payment of
additional salary and bonuses as well as Company paid or subsidized medical
insurance referenced in Section 2.1(c) above and the opportunity to participate
in any long term incentive programs); and the Company’s entering into this
Agreement. Executive agrees and acknowledges that the foregoing, whether treated
separately or together, constitute full, adequate and sufficient consideration
for the restrictions and obligations set forth in those provisions.

4.1 Non-Competition and Non-Solicitation. Executive agrees that during his
employment with the Company and, with respect to Section 4.1(a) below, for a
period of twelve (12)  months after the termination of Executive’s employment
under any circumstances and, with respect to Section 4.1(b) and (c) below, for a
period of eighteen (18) months after the termination of Executive’s employment
under any circumstances, Executive (without regard to the state in which
Executive lives or works) 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, or perform work in connection with or on behalf of any Competing
Business (defined below) with respect to the activities of a Competing Business
within any state in which the Company, and/or its affiliates, currently engage
in any Substantial Business Activity (defined below) or with respect to any
state in which the Company, and/or its affiliates, engaged in any Substantial
Business Activity during the twenty-four (24) month period preceding Executive’s
last day of employment with the Company; 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; or

(b) solicit or divert, or attempt to solicit or divert, to any Competing
Business any individual or entity which is an active or prospective customer,
agent, mortgage broker, loan originator or borrower of, with or from the
Company, and/or its affiliates, or was such an active or prospective customer,
agent, mortgage broker, loan originator or borrower at any time during the
twelve (12) month period immediately preceding Executive’s termination of
employment ; or

(c) employ, attempt to employ, solicit or assist any Competing Business in
employing (or engaging as a consultant) any individual who is a current employee
of or consultant to the Company, and/or its affiliates, or who was an employee
or consultant to the Company and/or its affiliates during the six (6) month
period immediately preceding Executive’s termination of employment.

The phrase “Competing Business” shall mean: any entity or enterprise actively
engaged in any business or businesses the Company and/or its affiliates are
actively engaged in (or are expected to be actively engaged in within twelve
(12) months) at the time of Executive’s termination of employment. Without
limiting the scope of the preceding sentence, the phrase “Competing Business”
includes the solicitation, origination, aggregation, pricing, negotiation and/or
sale of (1) loans secured by mortgages on real estate, and/or (2) loans to
entities engaged in the real estate business, whether to hold these assets for
investment or for sale individually or by combining them in one or more entities
for sale as an investment (the process referred to as “securitization”). The
securitizations, depending upon the make-up of the assets, are often referred to
by their acronyms such as “CMBS” (Commercial Mortgage Backed Securities), “CDO
(Collateralized Debt Obligations), “CLO” (Collateralized Loan Obligations) or
other current or future similar acronyms.

The phrase “Substantial Business Activity” shall mean that the Company, and/or
its affiliates: (i) has, has had, or is taking action to establish a business
office; (ii) solicits, has solicited, makes or has made, loans secured by real
estate, or is or has reviewed applications by borrowers or brokers to engage in
these activities; (iii) solicits, has solicited, makes or has made, loans to
real estate developers and/or owners, or is or has reviewed applications by
borrowers or brokers to engage in these activities; (iv) owns, services or
manages real estate, or has owned, serviced or managed real estate; and/or
(v) has or has had a recorded and unsatisfied mortgage or other lien upon real
estate or personal property.

Executive owns an apartment in New York City that he currently leases and
ultimately will sell or exchange for another property, and is a trustee of a
family trust that owns office buildings and parking lots (collectively the
“Family Property”). Notwithstanding the provisions of Section 4.1(a) above, the
Company understands that Executive in his personal capacity with respect to the
apartment and in his capacity as a trustee in connection with the Family
Property may engage in purchase, sale, lease, exchange and financing
transactions (other than (i) lending to third parties secured by either real
estate or ownership interests in real estate, or (ii) securitizations of real
estate) so long as such permitted transactions do not conflict with or in any
way relate to or benefit from any transactions or activities involving the
Company that were completed in the previous year or are pending or contemplated.

In the event that the provisions of this Section 4.1 should ever be adjudicated
to exceed the time, geographic, business activities or other limitations
permitted by applicable law in any jurisdiction, then such provisions shall be
deemed reformed in such jurisdiction to the maximum time, geographic, business
activities or other limitations permitted by applicable law.

4.2 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 businesses, work or activities of the
Company, and/or its affiliates 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 4.2.

4.3 Confidentiality.

(a) Executive acknowledges that, by reason of Executive’s employment by the
Company, Executive will have access to confidential information of the Company,
and/or its affiliates, 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/or
its affiliates, and dealers, distributors, sales representatives, wholesalers,
customers, clients, real estate developers and/or owners, mortgage brokers,
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/or its affiliates, and covenants
that, both during his employment with the Company and following his termination
of employment under any circumstances         , 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 4.3 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, and/or its affiliates, during his employment (with
the exception of documents relating to Executive’s compensation or benefits to
which Executive is entitled following the termination of his employment) 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.

4.4 Equitable Relief. Executive acknowledges that the restrictions contained in
Sections 4.1, 4.2 and 4.3 hereof are, in view of the nature of the businesses of
the Company, and/or its affiliates, reasonable and necessary to protect the
legitimate interests of the Company, and/or its affiliates, and that any
violation of any provision of those Sections will result in irreparable injury
to the Company, and/or its affiliates. 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 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 the Federal District Court for the Eastern District of
Pennsylvania or the Common Pleas Court of Philadelphia. 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 9 hereof.

5. 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.

6. 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,
including, without limitation, Section 4 – Non-Competition, Non-Solicitation,
Intellectual Property and Confidentiality, Section 8 – Arbitration; Expenses,
and Section 18 – Claw-Back.

7. 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.

8. 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 and expenses
of the arbitrators and the American Arbitration Association.

9. 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:

Scott L. N. Davidson 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.

10. Contents of Agreement; Amendment and Assignment.

10.1 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.

10.2 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.

11. 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.

12. 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.

13. 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.

14. 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.

15. 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.

16. 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.

17. Section 409A.

17.1 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.

17.2 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.

17.3 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.

18. Claw-Back. Executive acknowledges that all compensation paid or payable to
Executive shall be subject to the provisions of any claw-back policy that
is adopted by the Company in response to the Dodd-Frank Wall Street Reform and
Consumer Protection Act and any other relevant laws and their rules and
regulations (including stock exchange rules), and is applicable to a group of
the Company’s senior level executives determined by the Company that includes,
at a minimum, the CEO, the President and the Chief Financial Officer.

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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:
  President

          EXECUTIVE: } By: /s/ Scott L. N. Davidson Name: Scott L. N. Davidson
EXECUTIVE:   By:   /s/     Scott L. N. Davidson Name:     Scott L. N. Davidson

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