EX-10.1






RAIT FINANCIAL TRUST

2008 INCENTIVE AWARD PLAN

(As Amended and Restated May 20, 2008)




ARTICLE I




GENERAL




1.01 Purpose. The purposes of this Plan are to: (1) closely associate the interests of the
management and trustees of the Company with the shareholders of RAIT by reinforcing the
relationship between compensation and shareholder gains; (2) provide senior management and trustees
of the Company with an equity ownership in RAIT commensurate with RAIT’s performance, as reflected
in increased shareholder value; (3) provide the Company the ability to grant Cash Awards to senior
management that qualifies for the qualified performance-based compensation exemption under section
162(m) of the Code; (4) maintain competitive compensation levels; and (5) provide an incentive to
senior management and trustees for continuous employment or service with the Company.



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




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




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




(c) “Cash Award” means a cash award that is payable on the attainment of specified
performance goals over a performance period, as described in Article VIII.




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




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




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




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




Notwithstanding the foregoing, the Committee may provide for a different definition of
“Change of Control” in a Grant Agreement if such Grant is subject to the requirements of
section 409A of the Code and the Grant will become payable on a Change of Control.



 




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




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




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




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




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




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




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




(l) “Effective Date” means May 20, 2008. The Plan initially became effective on
December 5, 1997.




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




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




(o) “Fair Market Value” means (x) the closing price on the relevant date or on the next
business day, if such relevant date is not a business day, of a Common Share reported on the
New York Stock Exchange (or any other exchange on which the Common Shares are listed), or
(y) if the Common Shares are not principally traded on such exchange, the mean between the last
reported “bid” and “asked” prices of Common Shares on the relevant date, as reported on the OTC
Bulletin Board. If the Common Shares are not publicly traded or, if publicly traded, are not
subject to reported transactions or “bid” or “asked” quotations as set forth above, the Fair
Market Value per Common Share shall be as determined by the Committee. In no event shall the
Fair Market Value of any Common Share be less than its par value.




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




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




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




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




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




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



 




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




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




(x) “Parent” means any direct or indirect parent of RAIT.




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




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




(aa) “Plan” means this RAIT Financial Trust 2008 Incentive Award Plan (formerly known as
the RAIT Investment Trust 2005 Equity Compensation Plan).




(bb) “RAIT” means RAIT Financial Trust, a Maryland real estate investment trust (formerly
known as RAIT Investment Trust).




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




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




(ee) “Subsidiary” means any direct or indirect subsidiary of RAIT.




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




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



1



1.03 Administration.




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




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




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




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




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




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




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



 



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



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



1.06 Aggregate Limitation on Awards.




(a) Shares which may be issued under the Plan shall be Common Shares. The maximum number
of Common Shares which may be issued under the Plan shall be 4,500,000 Common Shares, subject
to adjustment as described in Section 11.10 below. The Common Shares may be authorized but
unissued Common Shares or reacquired Common Shares, including Common Shares purchased by RAIT
on the open market for purposes of the Plan. Grants paid in cash shall not count against the
foregoing Common Share limit.




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




(c) All Grants under the Plan, other than Dividend Equivalents and Cash Awards, shall be
expressed in Common Shares. The maximum aggregate number of Common Shares with respect to which
all Grants, other than Dividend Equivalents and Cash Awards, may be made under the Plan to any
individual during any calendar year shall be 1,000,000 Common Shares, subject to adjustment as
described in Section 11.10 below. The maximum aggregate number of Common Shares with respect to
which all Grants, other than Options, SARs, Dividend Equivalents and Cash Awards, that may be
made under the Plan to any individual in any calendar year shall be 500,000 Common Shares,
subject to adjustment as described in Section 11.10 below. A Participant may not accrue
Dividend Equivalents during any calendar year in excess of $5,000,000. The maximum Cash Award
that an Employee may be paid under the Plan in any twelve month period is $2,500,000. The
individual limits of this subsection (c) shall apply without regard to whether the Grants are
to be paid in Common Shares or in cash. All cash payments (other than Dividend Equivalents and
Cash Awards) shall equal the Fair Market Value of the Common Shares to which the cash payment
relates.



 



1.07 Effective Date and Term of Plan.




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




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



ARTICLE II




OPTIONS




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



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



2.03 Type of Option and Price.




(a) The Committee may grant Incentive Stock Options or Nonqualified Options or a
combination of Incentive Stock Options and Nonqualified Options. Incentive Stock Options may
only be granted to Employees of RAIT or its Parent or Subsidiaries; provided, however, that for
purposes of eligibility to receive an Incentive Stock Option, Parent must be a “parent
corporation,” as defined in section 424(e) of the Code,” of RAIT, and the Subsidiary must be a
“subsidiary corporation,” as defined in section 424(f) of the Code, of RAIT. Nonqualified
Options may be granted to Employees, Non-Employee Trustees and Consultants.




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



2.04 Term and Exercise.




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




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



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



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




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




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




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



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



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



 



ARTICLE III




SARSs




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



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



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



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



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



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



ARTICLE IV




UNITS




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



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



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



 



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



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



ARTICLE V




SHARE AWARDS




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



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



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



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



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



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



 



ARTICLE VI




DIVIDEND EQUIVALENTS




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



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



ARTICLE VII




OTHER SHARE-BASED AWARDS




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



ARTICLE VIII




CASH AWARDS




The Committee may grant Cash Awards to any Employee, subject to such terms, conditions and
restrictions as the Committee shall determine. Cash Awards shall be awarded subject to the
achievement of performance goals, as the Committee shall determine in the Grant Agreement, over the
performance period, as determined by the Committee and set in the Grant Agreement. All Cash Awards
shall be payable solely in cash.



ARTICLE IX




QUALIFIED PERFORMANCE-BASED COMPENSATION




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



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



9.03 Criteria Used for Objective Performance Goals. The Committee shall use objectively
determinable performance goals based on one or more of the following criteria: Common Share price,
earnings per Common Share, net earnings, operating earnings, adjusted earnings, total fees
generated, assets under management, economic book value, REIT taxable income, capital gains,
capital losses, funds from operations, enterprise value, market capitalization (of the Common
Shares, any series of the Company’s preferred shares or any combination of any or all classes or
series of the Company’s equity securities), return on capital, return on assets, shareholder
return, return on equity, growth in assets, unit volume, sales, market share, or strategic business
criteria consisting of one or more objectives based on meeting specific revenue goals, market
penetration goals, geographic business expansion goals, cost targets or goals relating to
acquisitions or divestitures. The performance goals may relate to the Participant’s business unit
or the performance of RAIT, a Subsidiary, a Parent, or Affiliate or RAIT and its Parent,
Subsidiaries and Affiliates as a whole, or any combination of the foregoing. For purposes of
measuring the performance goals, the goals may exclude any or all of the following, as determined
by the Committee at the time of establishing the performance goals: capital gains and capital
losses. Performance goals need not be uniform as among Participants.



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



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



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



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



 



ARTICLE X




CONSEQUENCES OF A CHANGE OF CONTROL




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



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



ARTICLE XI




MISCELLANEOUS




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



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



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



11.04 Withholding Taxes. Whenever RAIT proposes or is required to issue or transfer Common
Shares under the Plan, the Company shall have the right to require the Participant to remit to the
Company an amount sufficient to satisfy any Federal, state and/or local withholding tax
requirements prior to the delivery of any certificate or certificates for such shares. The Company
may also deduct from the payment of cash payable pursuant to a Grant or other wages paid by the
Company to the Participant the amount of any withholding taxes due with respect to such Grants.
Alternatively, if the Committee so permits, a Participant may elect to satisfy the Company’s tax
withholding obligation with respect to Grants paid in Common Shares by having shares withheld at
the time such Grants become taxable, up to an amount that does not exceed the Participant’s minimum
applicable withholding tax rate for federal (including FICA), state and local tax liabilities. In
addition, with respect to any required tax withholding amount that exceeds the minimum applicable
withholding tax rate, the Committee may permit a Participant to satisfy such withholding obligation
with respect to such excess amount by providing that the Participant may elect to deliver to RAIT
the Common Shares owned by the Participant that have been held by the Participant for the requisite
period of time to avoid adverse accounting consequences to RAIT. The elections described in this
Section 11.04 must be in a form and manner prescribed by the Committee and may be subject to the
prior approval of the Committee. For withholding tax purposes, the Common Shares shall be valued on
the date the withholding obligation is incurred.



11.05 Employment or Service.




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




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



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



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



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



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



 



11.10 Adjustments. If there is any change in the number or kind of Common Shares
outstanding (i) by reason of a Common Share dividend, spinoff, recapitalization, stock split or
combination or exchange of Common Shares, (ii) by reason of a merger, reorganization or
consolidation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of
any other extraordinary or unusual event affecting the outstanding Common Shares as a class without
RAIT’s receipt of consideration, or if the value of outstanding Common Shares is substantially
reduced as a result of a spinoff or RAIT’s payment of an extraordinary dividend or distribution,
the maximum number of Common Shares available for issuance under the Plan, the maximum number of
Common Shares for which any individual may receive pursuant to Grants (other than Dividend
Equivalents and Cash Awards) in any year, the kind and number of shares covered by outstanding
Grants, the kind and number of shares issued and to be issued under the Plan, and the price per
share or the applicable market value of such Grants shall be equitably adjusted by the Committee,
in such manner as the Committee deems appropriate, to reflect any increase or decrease in the
number of, or change in the kind or value of, the issued Common Shares to preclude, to the extent
practicable, the enlargement or dilution of rights and benefits under the Plan and such outstanding
Grants; provided, however, that any fractional shares resulting from such adjustment will be
eliminated. In addition, in the event of a Change of Control, the provisions of Article X of the
Plan shall apply. Any adjustments to outstanding Grants shall be consistent with section 409A or
422 of the Code, to the extent applicable. Any adjustments determined by the Committee shall be
final, binding and conclusive.



11.11 Amendment of the Plan.




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




(b) The Committee may at any time and from time to time terminate or modify or amend the
Plan in any respect, except that without shareholder approval the Committee may not
(i) increase the maximum number of Common Shares which may be issued under the Plan (other than
increases pursuant to Section 11.10), (ii) extend the maximum period during which any Grant may
be granted or exercised, or (iii) extend the term of the Plan. The termination or any
modification or amendment of the Plan, except as provided in subsection (a), shall not without
the consent of a Participant, adversely affect his or her rights under a Grant previously
awarded to him or her.



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



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



 



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



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



11.16 Funding of the Plan; Limitation on Rights. This Plan shall be unfunded. Neither RAIT nor
any other Company shall be required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Grants under this Plan. Nothing contained in the
Plan and no action taken pursuant hereto shall create or be construed to create a fiduciary
relationship between RAIT or any other Company and any Participant or any other person. No
Participant or any other person shall under any circumstances acquire any property interest in any
specific assets of RAIT or any other Company. To the extent that any person acquires a right to
receive payment from RAIT hereunder, such right shall be no greater than the right of any unsecured
general creditor of RAIT.



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



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



11.19 Participants Subject to Taxation Outside the United States. With respect to Participants
who are subject to taxation in countries other than the United States, the Committee may make
Grants on such terms and conditions as the Committee deems appropriate to comply with the laws of
the applicable countries, and the Committee may create such procedures, addenda and subplans and
make such modifications as may be necessary or advisable to comply with such laws.



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



 




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