RAIT Financial Trust
Cira Centre
2929 Arch Street, 17th Floor
Philadelphia, PA 19104

As of August 7, 2008

Mr. Plamen M. Mitrikov

Via electronic mail and address specified in personnel file

     
Re:
  Reimbursement of Certain Expenses Relating to
 
   
 
  Employment Outside of the United States
 
   

Dear Plamen:

The purpose of this letter agreement is to memorialize our mutual understanding
relating to RAIT Financial Trust’s (“RAIT”) obligations with respect to your
employment in the United Kingdom.

Specifically, commencing on August 1, 2008 and continuing for as long as RAIT
requires you to work in the United Kingdom, RAIT will provide you with a monthly
cash payment equal to $5,500 per month. This monthly amount is in addition to
your other compensation from RAIT and is intended to compensate you for the
costs associated with your renting an apartment in the United Kingdom while you
are working for RAIT. RAIT will pay to you a one-time lump sum cash payment
equal to $66,000, which shall be paid to you within 30 days from the date of
this letter agreement, associated with apartment rent you paid in the United
Kingdom up to and through July 31, 2008.

In addition, since your position with RAIT will require you to spend a
significant portion of your time working in the United Kingdom and this is
expected to continue for more than one year, the United States and United
Kingdom will seek to tax you on your employment income as well as the overbase
allowances (such as housing) that you receive. This arrangement will likely put
you in a position where your total global tax liability will exceed what you are
accustomed to paying in the United States for Federal, State and local taxes.
This excess liability is attributable to the higher United Kingdom tax rate as
compared to the United States top marginal rate as well as the tax incurred on
your overbase allowances. You will also incur double taxation of income because
the State of New York will not offer a credit for taxes paid to the United
Kingdom. As a result, RAIT has agreed to protect you against any additional
income taxes you will be liable for due to your work arrangement between the
United States and the United Kingdom (including the 2007 fiscal year). As a
result of this tax protection agreement, you will be reimbursed for any excess
income taxes that are incurred as a direct result of your agreed work
arrangement with RAIT in the United Kingdom. You will be responsible for the
same tax liability as if you continued to live and work only in the United
States (Federal, State, and local taxes). In connection with this, RAIT will
retain, at RAIT’s cost, a reputable accounting firm to assist you with the
preparation of your United States and United Kingdom tax filing requirements and
also to assist with the appropriate calculations to determine any reimbursements
from RAIT.

This letter agreement is intended to comply with the applicable requirements of
section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and
its corresponding regulations and related guidance with respect to all amounts
subject to such requirements, and shall be administered in accordance with such
requirements with respect to those amounts that are subject to such
requirements. If any payment or benefit cannot be provided or made at the time
specified herein without incurring sanctions under section 409A, then such
benefit or payment shall be provided in full at the earliest time thereafter
when such sanctions will not be imposed. To the extent that any provision of
this letter agreement would cause a conflict with the requirements of section
409A of the Code, or would cause the payment under this letter agreement to fail
to satisfy the requirements of section 409A, such term shall be deemed null and
void to the extent permitted by applicable law. For purposes of section 409A of
the Code, each payment made under this letter agreement shall be treated as a
separate payment and the right to a series of installment payments shall be
treated as the right to a series of separate payments. In no event may you,
directly or indirectly, designate the calendar year of payment. All
reimbursements provided under this letter agreement shall be made or provided in
accordance with the requirements of section 409A of the Code and its
corresponding regulations.

Your Employment Agreement with RAIT, dated as of June 8, 2006, will continue in
accordance with its terms, as supplemented by this letter agreement for the
period while you are employed by RAIT in the United Kingdom. All amounts payable
to you under this letter agreement shall be subject to applicable tax
withholding requirements, and RAIT may withhold from any amounts payable to you
under this letter agreement all amounts that RAIT is required to withhold with
respect to such payments. You are solely responsible for the payment of all
individual tax liabilities relating to the amounts payable to you under this
letter agreement. The amounts payable to you under this letter agreement are not
intended to be included in your compensation for purposes of determining your
level of benefits under any RAIT employee benefit program.

If you agree with the terms set forth in this letter agreement as it relates to
your employment with RAIT while you are in the United Kingdom, please execute
this letter agreement where indicated below and return it to me, no later than
August 8, 2008.

Please call me with any questions.

Sincerely,

/s/ Raphael Licht
Raphael Licht
Chief Administrative Officer, Chief Legal Officer and Secretary

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I hereby agree that the terms set forth in this letter agreement reflect my
entire understanding and agreement with RAIT as to the additional benefits that
will be provided to me while I am employed by RAIT in the United Kingdom.

/s/ Plamen M. Mitrikov Plamen M. Mitrikov

    Date: as of August 8, 2008

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