<PAGE>



                                  Exhibit 10.5

         Employment Agreement between Scott F. Schaeffer and Registrant


         THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of January
23, 2002 by and between RAIT Investment Trust, a Maryland real estate investment
trust (the "Company"), with a principal office in Philadelphia, Pennsylvania,
and Scott F. Schaeffer ("Executive").

         WHEREAS, Executive desires to continue employment with the Company, and
the Company desires to continue to employ Executive upon the terms and
conditions hereinafter set forth;

         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
October 1, 2001 (the "Effective Date"), and shall continue for three years,
until September 30, 2004, unless the Agreement is terminated sooner in
accordance with Section 2 or 3 below. In addition, the term of the Agreement
shall automatically renew daily so that it is at all times for a five year
period. 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. Commencing on the Effective
Date, Executive shall serve as the President and Chief Operating Officer of the
Company. Executive shall perform all duties and accept all responsibilities
incident to such position as may be reasonably assigned to him by the Board of
Trustees of the Company (the "Board").

                  1.3. Extent of Service. Executive agrees to use Executive's
best efforts to carry out Executive's duties and responsibilities under Section
1.2 hereof and, consistent with the other provisions of this Agreement, to
devote such business time, attention and energy thereto as is reasonably
necessary to carry out those duties and responsibilities.

                  1.4. Base Salary. For all the services rendered by Executive
hereunder, the Company shall pay Executive a base salary ("Base Salary"),
commencing on the Effective Date, at the annual rate of $300,000, 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.

<PAGE>


                  1.5. Bonus. Executive shall 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 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 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 stock option plans) established by the Company for its
senior level executives generally, at levels commensurate with the benefits
provided to other senior executives and with adjustments appropriate for his
position as President and Chief Operating Officer.

                  1.9. Car Allowance. The Company shall provide Executive with a
car allowance of not less than $500 per month.


         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

                  (a) The Company may remove Executive at any time without Cause
(as defined in Section 4) from the position in which Executive is employed
hereunder upon not less than sixty (60) days' prior written notice to Executive;
provided, however, that, that in the event that such notice is given, Executive
shall be under no obligation to render any additional services to the Company
and shall be allowed to seek other employment. In addition, Executive may
initiate a termination of employment by resigning under this Section 2.1 for
Good Reason (as defined in Section 4). Executive shall give the Company not less
than sixty (60) days' prior written notice of such resignation.

                  (b) Upon any removal or resignation described in Section
2.1(a) above, Executive shall be entitled to receive only the amount due to
Executive under the Company's then current severance pay plan for employees, if
any. No other payments or benefits shall be due under this Agreement to
Executive, but Executive shall be entitled to any benefits accrued and earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.
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                  (c) Notwithstanding the provisions of Section 2.1(b), in the
event that Executive executes and does not revoke a written mutual release upon
such removal, resignation or Non-Renewal, in a form acceptable to the Company
(the "Release"), of any and all claims against the Company and all related
parties with respect to all matters arising out of Executive's employment by the
Company, or the termination thereof (other than claims for any entitlements
under the terms of this Agreement or under any plans or programs of the Company
under which Executive has accrued and is due a benefit), and any claims against
Executive for actions within the scope of his employment by the Company,
Executive shall be entitled to receive, in lieu of the payment described in
Section 2.1(b), the following:

                           (i) Executive shall receive a lump sum cash payment
equal to (x) one-half of the Executive's Base Salary payable over the remaining
portion of the Employment Term, at the rate in effect immediately before
Executive's termination of employment and (y) a pro rated bonus, if any, for the
year in which Executive's termination of employment occurs. One-half of the
amount described in the preceding sentence shall be consideration for the
Executive's entering into the restrictive covenants described in Section 5
below. The pro rated bonus shall be based on the amount of Executive's annual
bonus, if any, for the fiscal year in which Executive's termination occurs,
multiplied 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 and the denominator of which is three hundred sixty-five (365).
Payment shall be made within thirty (30) days after the effective date of the
termination or the end of the revocation period for the Release, if later.

                           (ii) 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 herself and, where applicable, his spouse and dependents, as the
same may be changed from time to time for employees generally, as if Executive
had continued in employment during such period; or, as an alternative, the
Company may elect to pay Executive cash in lieu of such coverage in an amount
equal to Executive's after-tax cost of continuing such coverage, where such
coverage may not be continued (or where such continuation would adversely affect
the tax status of the plan pursuant to which the coverage is provided). The
COBRA health care continuation coverage period under Section 4980B of the
Internal Revenue Code of 1986, as amended, shall run concurrently with the
foregoing eighteen (18) month benefit period.

                           (iii) Executive shall also receive any other amounts
earned, accrued and owing but not yet paid under Section 1 above.

                  2.2. Voluntary Termination. Executive may voluntarily
terminate his employment for any reason upon thirty (30) days' prior written
notice. In 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 of any
applicable benefit plans and programs of the Company.
<PAGE>

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

                  (a) The Company shall pay to Executive any amounts earned,
accrued and owing but not yet paid under Section 1 above and a pro rata bonus,
if any, for the year in which his termination occurs, calculated according to
Section 2.1(c)(i) above.

                  (b) Executive shall receive any other benefits accrued and
earned in accordance with the terms of any applicable benefit plans and programs
of the Company.

                  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 and (ii) a pro
rated bonus, if any, for the year in which Executive's death occurs, which bonus
shall be calculated according to Section 2.1(c)(i) above. 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 of any applicable benefit
plans and programs of the Company.

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


         3. Change of Control.

                  3.1. Effect of Change of Control. If a Change of Control
occurs and Executive's employment terminates under the circumstances described
below, the provisions of Section 2.1 shall apply.

                  3.2. Termination Without Cause Upon or After a Change of
Control. Upon or after a Change of Control, the Company (by action of the Board)
may remove Executive at any time without Cause from the position in which
Executive is employed hereunder or Executive may initiate termination of
employment by resigning under this Section 3 for Good Reason (as defined in
Section 4) (in either case the Employment Term shall be deemed to have ended)
upon not less than sixty (60) days' prior written notice to Executive (or in the
case of resignation for Good Reason, Executive shall give the Company not less
than sixty (60) days' prior written notice of such resignation); provided,
however, that, in the event that such notice is given, Executive shall be under
no obligation to render any additional services to the Company and shall be
allowed to seek other employment. In any such event, the provisions of Section
2.1(b) or (c), as applicable, shall then apply.

         4. Definitions.

                  (a) "Cause" shall mean any of the following grounds for
termination of Executive's employment:


                           (i) Executive shall have been convicted of a felony,

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

                           (iii) Executive breaches Section 5 of this Agreement.

                  (b) "Good Reason" shall mean the occurrence of either of the
following events during the Employment Term:

                           (i) the Company's termination of Betsy Cohen as Chief
Executive Officer and Chairman of the Board without Cause (as such term is
defined in the written employment agreement between the Company and Mrs. Cohen
dated January 23, 2001 (the "Cohen Employment Agreement")) or Betsy Cohen's
resignation from such positions for Good Reason (as defined in the Cohen
Employment Agreement), unless Executive has expressly consented in writing
thereto; or

                           (ii) the Company ceasing to be publicly owned.

<PAGE>


                  (c) Change of Control. As used herein, a "Change of Control"
shall mean the occurrence of any of the following:


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

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

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

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

         For purposes of the definition of "Change of Control" as set forth
         herein, the term "Related Entity" shall mean an entity that is an
         "affiliate" of the Executive or Betsy Cohen, or any member of the
         Executive's or Mrs. Cohen's immediate family including her spouse or
         children, as determined in accordance with Rule 12b-2 of the General
         Rules and Regulations under the Securities Exchange Act of 1934, as
         amended.

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

<PAGE>


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

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

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

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

         The term "Competing Business" shall mean: any entity or enterprise in
the business of providing equity alternatives through lending or other financial
devices on residential or commercial property.

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

                  5.2. Developments. Executive shall disclose fully, promptly
and in writing to the Company any and all inventions, discoveries, improvements,
modifications and other intellectual property rights, whether patentable or not,
which Executive has conceived, made or developed, solely or jointly with others,
while employed by the Company and which (i) relate to the business, work or
activities of the Company or (ii) result from or are suggested by the carrying
out of Executive's duties hereunder or from or by any information that Executive
may receive as an employee of the Company. Executive hereby assigns, transfers
and conveys to the Company all of Executive's right, title and interest in and
to any and all such inventions, discoveries, improvements, modifications and
other intellectual property rights and agrees to take all such actions as may be
requested by the Company at any time and with respect to any such invention,
discovery, improvement, modification or other intellectual property rights to

<PAGE>

confirm or evidence such assignment, transfer and conveyance. Furthermore, at
any time and from time to time, upon the request of the Company, Executive shall
execute and deliver to the Company, any and all instruments, documents and
papers, give evidence and do any and all other acts that, in the opinion of
counsel for the Company, are or may be necessary or desirable to document such
assignment, transfer and conveyance or to enable the Company to file and
prosecute applications for and to acquire, maintain and enforce any and all
patents, trademark registrations or copyrights under United States or foreign
law with respect to any such inventions, discoveries, improvements,
modifications or other intellectual property rights or to obtain any extension,
validation, reissue, continuance or renewal of any such patent, trademark or
copyright. The Company shall be responsible for the preparation of any such
instruments, documents and papers and for the prosecution of any such
proceedings and shall reimburse Executive for all reasonable expenses incurred
by Executive in compliance with the provisions of this Section 5.2.

                  5.3. Confidentiality.

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

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


                  5.4. Equitable Relief. Executive acknowledges that the
restrictions contained in Sections 5.1, 5.2 and 5.3 hereof are, in view of the
nature of the business of the Company, reasonable and necessary to protect the
legitimate interests of the Company, and that any violation of any provision of
those Sections will result in irreparable injury to the Company. Executive also

<PAGE>

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


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


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

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

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


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

         If to the Company, to:

                  RAIT Investment Trust
                  1818 Market Street
                  Philadelphia, PA  19103

         With a required copy to:

                  Morgan, Lewis & Bockius LLP
                  1701 Market Street
                  Philadelphia, PA  19103-2921
                  Attention:  Robert J. Lichtenstein, Esquire

         If to Executive, to:

                  ------------------

                  ------------------

                  ------------------

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.

         11. Contents of Agreement; Amendment and Assignment.


                  (a) 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.

                  (b) 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
delegatable 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.
<PAGE>


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

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

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

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

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

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

<PAGE>

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

                                                   RAIT INVESTMENT TRUST


                                                   By:
                                                      --------------------------
                                                   Name:
                                                        ------------------------
                                                   Title:
                                                         -----------------------


                                                   -----------------------------
                                                   Executive