EX-4.2






THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER SET FORTH IN A SECURITIES PURCHASE AGREEMENT, DATED AS OF OCTOBER 1, 2012,
AS AMENDED AND MODIFIED FROM TIME TO TIME, AND THE ISSUER RESERVES THE RIGHT TO REFUSE THE TRANSFER
OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY
OF SUCH CONDITIONS SHALL BE FURNISHED BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE



RAIT FINANCIAL TRUST




Common Share Appreciation Right




Right No. 4 New York, New York



March 27, 2014




RAIT FINANCIAL TRUST, a Maryland real estate investment trust (the “Company”), for value
received, hereby certifies that ARS VI Investor I, LP, a Delaware limited partnership (formerly ARS
VI Investor I, LLC) (the “Purchaser”), or its registered assigns, is the holder of Common Share
Appreciation Rights of the Company representing a number of common shares of beneficial interest,
par value $0.03 per share, of the Company (the “Common Shares”) equal to 2,357,483.45, which shall
be adjusted or readjusted from time to time as provided herein (as adjusted, the “Shares”), at the
exercise price per share of $6.00 (the “Initial Exercise Price”), which shall be adjusted or
readjusted from time to time as provided herein (as adjusted, the “Exercise Price”), at any time or
from time to time, subject to the terms, conditions and adjustments set forth below in this Right
(as defined below).



This Common Share Appreciation Right is one of the Common Share Appreciation Rights (each a
“Right” and collectively, the “Rights,” such term to include any such common share appreciation
rights issued in substitution therefor) that may be issued from time to time pursuant to the
Securities Purchase Agreement (as may be amended from time to time, the “Purchase Agreement”),
dated as of October 1, 2012 (the “Signing Date”), by and among the Company, RAIT Partnership, L.P.,
a Delaware limited partnership, Taberna Realty Finance Trust, a Maryland real estate investment
trust, RAIT Asset Holdings IV, LLC, a Delaware limited liability company, and the Purchaser.
Assuming the maximum number of Rights issuable pursuant to the Purchase Agreement are issued, the
Rights represent an aggregate of up to 6,735,667 Common Shares as of the Signing Date, subject to
adjustment as provided herein, at an exercise price per Common Share as of the Signing Date of
$6.00. All capitalized terms used herein which are not otherwise defined in Section 12
hereof shall have the meanings set forth in the Purchase Agreement.



1. EXERCISE OF RIGHT



1.1 Manner of Exercise; Payment.



1.1.1 Exercise. The Holder hereof may exercise, at any time and from time to time
commencing on the earlier of (i) the second (2nd) anniversary of the Signing Date and
(ii) the consummation of a Change of Control, this Right, in whole or in part, during normal
business hours on any Trading Day prior to the termination of this Right provided for in
Section 11 hereof by surrender of this Right (or an affidavit of loss in form and substance
reasonably satisfactory to the Company) to the Company at its office maintained pursuant to
Section 10.2(a) hereof, accompanied by an exercise notice in substantially the form
attached to this Right as Exhibit A (or a reasonable facsimile thereof) duly executed by
such Holder (each, an “Exercise Notice”), and such Holder shall thereupon be entitled to receive in
settlement of such Right an aggregate amount for all Shares for which the Right is being exercised
(such amount, the “Settlement Amount”) equal to the product of (i) the average VWAP of a
Common Share for the five (5) consecutive Trading Days ending on the date immediately preceding the
Exercise Date minus the Exercise Price per Share multiplied by (ii) the number of
Shares for which the Right is being exercised.



1.1.2 Each exercise of this Right shall be deemed to have been effected immediately prior to
the close of business on the Trading Day on which this Right (or an affidavit of loss in form and
substance reasonably satisfactory to the Company) and the Exercise Notice shall be deemed to have
been surrendered to the Company as provided in Section 1.1 hereof (the “Exercise Date”).



1.1.3 The Company shall as soon as reasonably practicable, but in any event no later than ten
(10) days following the Exercise Date, pay the Settlement Amount payable to such Holder at the
Company’s option, either (i) in cash, by wire transfer of immediately available funds, (ii) by
executing and delivering to the Holder of this Right a promissory note in the form attached hereto
as Exhibit B, having a principal amount equal to the Settlement Amount payable to the
Holder, or (iii) any combination of cash or such a promissory note.



1.1.4 Notwithstanding anything to the contrary contained in this Right, the Company shall not
actually issue at any time any Common Shares upon exercise of this Right, and the Holder shall not
have the right to receive upon exercise of this Right any Common Shares.



1.2 Delivery of New Right Certificate. As soon as practicable after each exercise of this
Right, in whole or in part, and in any event within two (2) Trading Days after the Exercise Date,
the Company at its sole expense will cause to be issued in the name of and delivered to the Holder
hereof or, subject to Section 10 hereof, as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct in case such exercise is in part only, a new Right or Rights
of like tenor, dated the date hereof and calling in the aggregate on the face or faces thereof for
the number of Shares equal (without giving effect to any adjustment thereof) to the number of such
shares called for on the face of this Right minus the number of such shares designated by the
Holder upon such exercise as provided in Section 1.1 hereof.



2. ADJUSTMENTS OF COMMON SHARES.



2.1 General; Number of Shares; Exercise Price



2.1.1 The number of Common Shares for which this Right may be exercised shall be determined by
multiplying the number of Shares for which this Right would otherwise (but for the provisions of
this Section 2) be exercisable, as designated by the Holder hereof pursuant to
Section 1.1 hereof, by the fraction of which (a) the numerator is the Initial Exercise
Price and (b) the denominator is the Exercise Price in effect on the date of such exercise.



2.1.2 Notwithstanding anything to the contrary contained in this Section 2, the
Exercise Price shall not be adjusted for:



(a) issuances or sales of up to an aggregate of 3,070,187 Additional Common Shares (or
Options, Other Securities, Convertible Securities for Additional Common Shares or any other
securities under the Company’s 2012 Incentive Award Plan (as amended and restated as of May 22,
2012) and its predecessors or successors) to employees, trustees, directors or non-affiliated
consultants of the Company or its Subsidiaries;



(b) issuances or sales of Common Shares or Other Securities pursuant to plans of the Company
for reinvestment of dividends or interest payable on securities of the Trust but not investments of
additional optional amounts in Common Shares or Other Securities under those plans;



(c) issuances or sales of Common Shares, Other Securities, Options or Convertible Securities
under contracts, agreements, Options, Other Securities, Convertible Securities or other
arrangements in existence on the Signing Date and set forth on Schedule A hereto;



(d) issuances or sales of Common Shares, Other Securities, Options or Convertible Securities
for a consideration per share that is not less than the greater of the Current Market Price and the
Exercise Price; or



(e) purchases, redemptions and other retirement of Common Shares, Options, Other Securities or
Convertible Securities for a consideration per share below the Current Market Price.



2.2 Adjustment of Exercise Price.



2.2.1 Issuance of Additional Common Shares. Except as provided in Section
2.1.2, in the event the Company, at any time or from time to time, on or after the Signing Date
shall issue or sell Additional Common Shares (including Additional Common Shares deemed to be
issued pursuant to Section 2.3 or 2.4 hereof) without consideration or for
consideration per share less than the greater of the Current Market Price or the Exercise Price in
effect immediately prior to such issue or sale, then, and in each such case, subject to Section
2.7 hereof, such Exercise Price shall be reduced, concurrently with such issue or sale, to a
price (calculated to the nearest .001 of a cent) determined by multiplying such Exercise Price by a
fraction:




(a) the numerator of which shall be the sum of (i) the number of Common Shares
outstanding immediately prior to such issue or sale plus (ii) the number of
Common Shares issuable upon exercise of Options or conversion of Convertible
Securities outstanding immediately prior to such issue or sale if the issuance, sale
or grant of such Options or Convertible Securities resulted in an adjustment to the
Exercise Price prior to such issue or sale plus (iii) the number of Common
Shares which the aggregate consideration received by the Company for the total
number of such Additional Common Shares so issued or sold would purchase at the
greater of such Current Market Price and such Exercise Price; and




(b) the denominator of which shall be the sum of (i) the number of Common
Shares outstanding immediately after such issue or sale (including any such Common
Shares deemed to be outstanding pursuant to Section 2.8) plus (ii)
the number of Common Shares included in the numerator pursuant to clause (ii) of
Section 2.2.1(a).



2.2.2 Extraordinary Dividends. In the event that during any twelve-month period
commencing immediately following the Signing Date (an “Annual Dividend Period”), the Company makes
dividends or other distributions (including without limitation any distribution of securities or
property, but excluding dividends or distributions referred to in Section 2.4) on the
Common Shares in an amount that, when added to all other dividends or such distributions made on
the Common Shares during such Annual Dividend Period (collectively, the “Aggregate Annual Dividend
Amount”) exceed the Ordinary Dividend Amount (as defined below), then, and in each such case, the
Exercise Price shall be reduced immediately thereafter (but in no event reduced by more than the
amount of such excess, which amount is hereafter referred to as the “Excess Amount”)) to the price
determined by multiplying the Exercise Price in effect immediately prior to the reduction by the
quotient of (x) the average VWAP of a Common Share for the five (5) consecutive Trading
Days ending on the date immediately preceding the first date on which the Common Shares trade
regular way on the Principal Market without the right to receive such dividend or distribution (the
“Market Price”), minus the Excess Amount divided by (y) such Market Price.
“Ordinary Dividend Amount” means the aggregate amount of $0.40 per Common Share (the “Initial
Dividend Amount”) for the Annual Dividend Periods ending on or prior to the second anniversary of
the Signing Date, which Initial Dividend Amount shall increase by an additional 5% on the second
anniversary of the Signing Date (as increased, the “Adjusted Dividend Amount”) and which Adjusted
Dividend Amount shall further increase by 5% of the amount of the immediately preceding Adjusted
Dividend Amount each successive anniversary of the Signing Date following the second anniversary of
the Signing Date. If any dividend or distribution is declared but not so paid or made, the Exercise
Price shall be readjusted to the Exercise Price that would have been in effect if such dividend or
distribution had not been declared. The amount of any non-cash dividend or distribution shall be
the fair market value thereof as determined in good faith by the Board of Trustees or a committee
thereof. The Ordinary Dividend Amount shall be subject to adjustment in a manner inversely
proportional to the adjustments to the number of Common Shares represented by this Right.



2.2.3 Above Market Purchases of Common Shares. Except as provided in Section
2.1.2, if, at any time after the Signing Date, the Company shall repurchase (a “Repurchase”),
by self-tender offer or otherwise, any outstanding Common Shares for a consideration per share that
exceeds the Current Market Price in effect immediately prior to the earlier of (i) the date of such
Repurchase, (ii) the commencement of an offer to repurchase or (iii) the public announcement of
either (such date being referred to as the “Determination Date”), then, and in each such case,
subject to Section 2.7 hereof, such Exercise Price shall be reduced, concurrently with such
issue or sale, to a price determined by multiplying such Exercise Price by a fraction:




(a) the numerator of which shall be (x) the product of (1) the Current Market
Price as of the Determination Date times (2) the sum of (i) the number of
Common Shares outstanding immediately following the consummation of the Repurchase
plus (ii) the number of Common Shares issuable upon exercise of Options or
conversion of Convertible Securities outstanding immediately prior to such issue or
sale if the issuance, sale or grant of such Options or Convertible Securities
resulted in an adjustment to the Exercise Price prior to such issue or sale
less (y) the Repurchase Premium (as defined below), and




(b) the denominator of which shall be (x) the product of (1) the Current Market
Price as of the Determination Date times (2) the sum of (i) the number of
Common Shares outstanding immediately following the consummation of the Repurchase
(including any such Common Shares deemed to be outstanding pursuant to Section
2.8) plus (ii) the number of Common Shares included in the numerator
pursuant to clause (ii) of Section 2.2.3(a)(x)(2).



The amount by which the aggregate repurchase prices for all securities repurchased in any
Repurchase exceeds the Current Market Price for such securities is referred to as the “Repurchase
Premium”.



2.3 Treatment of Options and Convertible Securities.



2.3.1 Issuance of Options or Convertible Securities. In the event that the Company,
at any time or from time to time, on or after the Signing Date, issues, sells, grants or assumes,
or fixes a record date for the determination of holders of any class of securities entitled to
receive, any Options or Convertible Securities for consideration per share (determined pursuant to
Section 2.5 hereof) less than the greater of the Current Market Price or the Exercise Price
in effect on the date of and immediately prior to such issue, sale, grant or assumption or
immediately prior to the close of business on such record date (or, if the Common Shares trade on
an ex-dividend basis, on the date immediately prior to the commencement of ex-dividend trading),
then, and in each such case, the maximum number of Additional Common Shares (as set forth in the
instruments related thereto, without regard to any provision contained therein for a subsequent
adjustment of such number the purpose of which is to protect against dilution) issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, or, in the case of any instrument the value
of which is linked to Common Shares, the maximum number of Common Shares to which the value is
linked, shall be deemed to be Additional Common Shares issued as of the time of such issue, sale,
grant or assumption or, in case such a record date shall have been fixed, as of the close of
business on such record date (or, if the Common Shares trade on an ex-dividend basis, on the date
immediately prior to the commencement of ex-dividend trading). Except as otherwise provided in
Section 2.3.2, (a) with respect to Options, no adjustment of the Exercise Price shall be
made (i) upon the actual issuance of (A) such Common Shares or (B) of such Convertible Securities
upon exercise of such Options, (ii) upon the actual issuance of such Common Shares upon conversion
or exchange of such Convertible Securities upon exercise of such Options or (iii) upon the actual
issuance of such Common Shares upon conversion or exchange of such Convertibles Securities, and (b)
with respect to Convertible Securities, (i) no adjustment of the Exercise Price shall be made upon
the actual issuance of such Common Shares upon conversion or exchange of such Convertible
Securities, and (ii) if any such issuance or sale of such Convertible Securities is made upon
exercise of any Options to purchase any such Convertible Securities, no further adjustment of the
Exercise Price shall be made by reason of such issuance or sale.



2.3.2 Change in Option Price or Conversion Rate; Termination of Options or Convertible
Securities. If a change occurs in (a) the maximum number of Common Shares issuable in
connection with any Option or Convertible Security, (b) the purchase price provided for in any
Option, (c) the additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities, or (d) the rate at which Convertible Securities are convertible into or
exchangeable for Common Shares, then the Exercise Price in effect at the time of such event shall
be readjusted (or adjusted, in the event that no adjustment was made in connection with the
original issue sale, grant or assumption, or fixing of a record date for the determination of
holders of any class of securities entitled to receive such Options or Convertible Securities) to
the Exercise Price that would have been in effect at such time had such Options or Convertible
Securities that remain outstanding provided for such changed maximum number of shares, purchase
price, additional consideration or conversion rate, as the case may be, at the time initially
granted, issued, sold or assumed.



2.3.3 Expiration or Cancellation of Options or Convertible Securities. In any case in
which Additional Common Shares shall be deemed to be issued under Section 2.3.1 in
connection with the issuance, sale, grant or assumption of Options or Convertible Securities then
upon the expiration, cancellation or retirement of any such Options or Convertible Securities which
have not been exercised or converted, the Exercise Price and any subsequent adjustments based
thereon shall be adjusted and recomputed as if:




(i) in the case of Options for Common Shares or Convertible Securities,
the only Additional Common Shares issued or sold were the Additional Common
Shares, if any, actually issued or sold upon the exercise of such Options or
the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by
the Company for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration actually received by the
Company upon such exercise, or for the issue or sale of all such Convertible
Securities which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Company upon such conversion
or exchange, and




(ii) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued or sold upon the exercise of
such Options were issued at the time of the issue or sale, grant or
assumption of such Options, and the consideration received by the Company
for the Additional Common Shares deemed to have then been issued was the
consideration actually received by the Company for the issue, sale, grant or
assumption of all such Options, whether or not exercised, plus the
consideration deemed to have been received by the Company (pursuant to
Section 2.5) upon the issue or sale of such Convertible Securities
with respect to which such Options were actually exercised;



2.4 Treatment of Share Dividends, Share Splits, etc. In the event the Company, at any time or
from time to time, on or after the Signing Date shall declare or pay any dividend on the Common
Shares payable in Common Shares, or shall effect a subdivision of the outstanding Common Shares
into a greater number of Common Shares (by reclassification or otherwise than by payment of a
dividend in Common Shares), then, and in each such case, Additional Common Shares shall be deemed
to have been issued (a) in the case of any such dividend, immediately after the close of business
on the record date for the determination of holders of any class of securities entitled to receive
such dividend, or (b) in the case of any such subdivision, at the close of business on the day
immediately prior to the day upon which such corporate action becomes effective.



2.5 Computation of Consideration. For the purposes of this Section 2:




(a) the consideration for the issue or sale of any Additional Common Shares
shall, irrespective of the accounting treatment of such consideration:




(i) insofar as it consists of cash, be computed at the amount of cash
received by the Company net of any expenses paid or incurred by the Company
or any commissions or compensations paid or concessions or discounts allowed
to underwriters, dealers or others performing similar services in connection
with such issue or sale;




(ii) insofar as it consists of property (including securities) other
than cash received by the Company, be computed at the fair market value
thereof (as determined by the Board of Trustees or a committee of the Board
of Trustees) at the time of such issue or sale;




(iii) insofar as it consists neither of cash nor of other property, be
computed as having no value; and




(iv) in the event Additional Common Shares are issued or sold together
with other shares or securities or other assets of the Company for a
consideration which covers both, be the portion of such consideration so
received, computed as provided in clauses (i), (ii) and
(iii) above, allocable to such Additional Common Shares, all as
determined in good faith by the Board of Trustees or a committee of the
Board of Trustees;




(b) Additional Common Shares deemed to have been issued pursuant to Section
2.3 hereof shall be deemed to have been issued for a consideration per share
determined by dividing:




(i) the total amount of cash and other property, if any, received and
receivable by the Company as consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in question,
plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration the purpose of which is to protect against dilution) payable
to the Company upon the exercise in full of such Options or the conversion
or exchange of such Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, in
each case computing such consideration as provided in the foregoing
clause (a),




by




(ii) the maximum number of Common Shares (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number the purpose of which is
to protect against dilution) issuable upon the exercise of such Options or
upon the conversion or exchange of such Convertible Securities; and




(c) Additional Common Shares deemed to have been issued pursuant to Section
2.4 hereof shall be deemed to have been issued for no consideration.



2.6 Adjustment for Combinations, etc. In case the outstanding Common Shares shall be combined
or consolidated, by reclassification or otherwise, into a lesser number of Common Shares, the
Exercise Price in effect immediately prior to such combination or consolidation shall, concurrently
with the effectiveness of such combination or consolidation, be proportionately increased.



2.7 Minimum Adjustment of Exercise Price. If the amount of any adjustment of the Exercise
Price required pursuant to this Section 2 would be less than $0.00001, then such amount
shall be carried forward and adjustment shall be made with respect thereto at the time of and
together with any subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least $0.00001.



2.8 Shares Deemed Outstanding. For purposes of calculating adjustments (if any) to the
Exercise Price upon the issuance, sale or grant of Options or Convertible Securities, there shall
be deemed to be outstanding, immediately after giving effect to any such issuance, sale or grant,
the Common Shares issuable upon the exercise of such Options or conversion of such Convertible
Securities. In addition, for purposes of calculating adjustments to the Exercise Price, effect
shall be given to all antidilution provisions contained in any then outstanding Options and
Convertible Securities which cause an adjustment in the number of Common Shares so issuable
thereunder by virtue of the issuance of Common Shares, Options or Convertible Securities and any
such additional Common Shares so issuable as a result of such antidilution provisions shall be
deemed outstanding immediately after giving effect to any such issuance, sale or grant.



2.9 Contest and Appraisal Rights. (a) If the holders of Rights representing a majority of
the Common Shares represented by the Rights at the time outstanding (the “Required Interest”)
shall, for any reason whatsoever, disagree with the Company’s determination of the Current Market
Price of the Common Shares (i.e., under circumstances where the VWAP is determined by the Board of
Trustees as provided in the definition of the term “VWAP”) or of the fair market value of any
property (or securities) given to the Company as consideration for the issue or sale of Additional
Common Shares, then such holders shall by notice to the Company (an “Appraisal Notice”) given
within thirty (30) days after the Company’s determination elect to dispute such determination, and
such dispute shall be resolved as set forth in clause (b) of this Section 2.9.



(b) The Company shall, within thirty (30) days after an Appraisal Notice shall have been
given, engage an Appraiser to make an independent determination of the Current Market Price for the
Common Shares or of the fair market value of any property (or securities) given to the Company as
consideration for the issue or sale of additional Common Shares, as the case may be (the
“Appraiser’s Determination”). In arriving at its determination, the Appraiser shall base any
valuation upon (i) in the case of the Current Market Price of the Common Shares, the fair market
value of the Company assuming that the Company were sold as a going concern, without regard to the
existence of any control block, the anticipated impact upon current market prices of any such sale,
the lack or depth of a market for the Common Shares, the Rights or other securities of the Company,
or any other factors concerning the liquidity or marketability of the Common Shares, the Rights or
other securities of the Company, and (ii) in the case of the fair market value of any property (or
securities) given to the Company as consideration for the issue or sale of Additional Common
Shares, the fair market value of such property (or securities) assuming that such property (or
securities) were sold to an unaffiliated third party in an arm’s-length transaction. The
Appraiser’s Determination shall be final and binding on the Company and the holders of the Rights.
The costs of conducting an appraisal shall be borne by the party whose assertion of the Current
Market Price or fair market value was the farthest from the final determination of the Current
Market Price or fair market value determined by the Appraiser.



3. CONSOLIDATION, MERGER, ETC.



3.1 Adjustments for Consolidation, Merger, Sale of Assets, Reorganizations, etc. In the event
the Company, on or after the Signing Date, (a) shall consolidate with or merge into any other
Person and shall not be the continuing or surviving corporation of such consolidation or merger, or
(b) shall permit any other Person to consolidate with or merge into the Company and the Company
shall be the continuing or surviving Person but, in connection with such consolidation or merger,
the Common Shares or Other Securities shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (c) shall transfer all or
substantially all of its properties or assets to any other Person, or (d) shall effect a capital
reorganization or reclassification of the Common Shares or Other Securities (other than a capital
reorganization or reclassification to the extent that such capital reorganization or
reclassification results in the issuance of Additional Common Shares for which adjustment in the
Exercise Price is provided in Section 2.2.1 hereof), then, and in the case of each such
transaction, proper provision shall be made so that, upon the basis and the terms and in the manner
provided in this Right, the Holder of this Right, upon the exercise hereof at any time after the
consummation of such transaction, shall be entitled to receive (at the aggregate Exercise Price in
effect at the time of such consummation for all Common Shares or Other Securities issuable upon
such exercise immediately prior to such consummation), in lieu of the Common Shares or Other
Securities issuable upon such exercise prior to such consummation, the greatest amount of
securities, cash or other property to which such Holder would actually have been entitled as a
shareholder upon such consummation if such Holder had exercised the rights represented by this
Right immediately prior thereto, subject to adjustments (subsequent to such consummation) as nearly
equivalent as possible to the adjustments provided for in Sections 2 and 3 hereof.



3.2 Assumption of Obligations. The Company will not effect any of the transactions described
in clauses (a) through (d) of Section 3.1 hereof unless, at or prior to the consummation
thereof, each person (other than the Company) which may be required to deliver any securities, cash
or property upon the exercise of this Right as provided herein shall assume, by written instrument
delivered to, and reasonably satisfactory to, the Holder of this Right, (a) the obligations of the
Company under this Right (and if the Company shall survive the consummation of such transaction,
such assumption shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Right), (b) the obligation to deliver to such Holder such
securities, cash or property as such Holder may be entitled to receive in accordance with the
foregoing provisions of this Section 3, and such Person shall have similarly delivered to
such Holder an opinion of counsel for such Person, which counsel and opinion shall be reasonably
satisfactory to such Holder, stating that this Right shall thereafter continue in full force and
effect and the terms hereof (including, without limitation, all of the provisions of this
Section 3) shall be applicable to the securities, cash or property which such Person may be
required to deliver upon any exercise of this Right or the exercise of any rights pursuant hereto.
Notwithstanding the forgoing, this Section 3.2 shall not restrict the Company from
consummating a Change of Control, as contemplated by Section 11.



4. RESTRICTIONS ON TRANSFERS. This Right is subject to the restrictions on transfers set forth in
the Purchase Agreement.



5. NO DILUTION OR IMPAIRMENT. The Company shall not, by amendment of its Declaration of Trust or
through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale
of securities or any other voluntary action, impermissibly avoid or seek to avoid the observance or
performance of any of the terms of this Right.



6. ACCOUNTANTS’ REPORT AS TO ADJUSTMENTS. In each case of any adjustment or readjustment in the
Common Shares (or Other Securities) represented by this Right, the Company, at its sole expense,
will promptly compute such adjustment or readjustment in accordance with the terms of this Right
and deliver to the Holder of this Right a certificate of the chief executive officer or chief
financial officer of the Company setting forth such computation and showing in reasonable detail
the method of calculation thereof and the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or to be received by the Company for
any Additional Common Shares issued or sold or deemed to have been issued, (b) the number of Common
Shares outstanding or deemed to be outstanding, and (c) the Exercise Price in effect immediately
prior to such issue or sale and as adjusted and readjusted (if required by Section 2
hereof) on account thereof. The Company will also keep copies of all such certificates at its
office maintained pursuant to Section 10.2(a) hereof and will cause the same to be
available for inspection at such office during normal business hours by any Holder of a Right.



7. NOTICES OF CORPORATE ACTION. In the event of:




(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, or any right to subscribe for, purchase
or otherwise acquire any shares of beneficial interest of any class or any other
securities or property, or to receive any other right, or




(b) any capital reorganization of the Company, any reclassification or
recapitalization of the shares of beneficial interest of the Company, any
consolidation or merger involving the Company and any other Person or any transfer
of all or substantially all the assets of the Company to any other Person, or




(c) any voluntary or involuntary dissolution, liquidation or winding-up of the
Company, or




(d) any issuance of any Common Shares, Convertible Security or Option by the
Company (other than (i) issuances or sales of Common Shares pursuant to plans of the
Company for reinvestment of dividends or interest payable on securities of the Trust
and investments in additional optional amounts in Common Shares under those plans,
(ii) issuances or sales to employees, trustees, directors or non-affiliated
consultants of the Company or its subsidiaries and (iii) issuances from time to time
under the Company’s ATM program), or




(e) any Change of Control (as defined in the Purchase Agreement),



which has not been publicly reported by press release or on a current report on Form 8-K filed by
the Company with the SEC within four (4) business days, the Company will mail no later than the
fifth (5th) business day to each holder of a Right a notice specifying (i) the date or
expected date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend, distribution or right, (ii)
the date or expected date on which any such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation, winding-up or Change of Control is to
take place, (iii) the time, if any such time is to be fixed, as of which the holders of record of
Common Shares (or Other Securities) shall be entitled to exchange their Common Shares (or Other
Securities) for the securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up and a description in reasonable detail of the transaction and (iv) the date of such
issuance, together with a description of the security so issued and the consideration received by
the Company therefor. Notwithstanding the foregoing, the Company shall mail a notice of any Change
of Control to the holders of Rights upon the earlier of (i) the public announcement of the entry of
any agreement for a Change of Control and (ii) if the holder is bound by a confidentiality
agreement and restrictions on trading of securities of the Company based on non-public information,
within two (2) business days of the final approval of such Change of Control transaction by the
Board of Trustees.



8. CALL RIGHTS. From and after the second (2nd) anniversary of the Signing Date, the
Company may purchase all or any portion of this Right at the Call Redemption Price by delivery of a
written notice to the Holder (each, a “Call Right Notice”), which Call Right Notice shall specify
that portion of this Right that the Company shall redeem pursuant to this Section 8 (which
portion shall be determined by a number of Common Shares represented by this Right on the Call
Demand Date as specified by the Company in such Call Right Notice, which shall be a date no later
than thirty (30) days after the Call Right Notice is sent (the “Call Payment Date”). On the Call
Payment Date, the Company shall pay the Call Redemption Price payable to such Holder at the
Company’s option, either (i) in cash, by wire transfer of immediately available funds, (ii) by
executing and delivering to the Holder of this Right a promissory note in the form attached hereto
as Exhibit B, having a principal amount equal to the Call Redemption Price payable to the
Holder, or (iii) any combination of cash or promissory note, and if the election made pursuant to
this Section 8 is only with respect to a portion of this Right, the Company shall issue to
the Holder a new Right or Rights of like tenor, dated the date hereof and calling in the aggregate
on the face or faces thereof for the number of Shares equal to the number of such Shares called for
on the face of this Right minus the number of Common Shares representing that portion of the Right
being redeemed, as set forth in the applicable Call Right Notice. Holders of Rights shall
surrender this Right (or an affidavit of loss in form and substance reasonably satisfactory to the
Company). Assuming compliance by the Company with its obligation to pay hereunder on the Call
Payment Date, the right to exercise this right for Shares that are being redeemed hereunder
pursuant to this Section 8 shall terminate, and this Right shall represent (i) the right of
the Holder to receive the applicable Call Redemption Price from the Company in accordance with this
Section 8 and (ii) in the case of a redemption only with respect to a portion of this
Right, a new Right or Rights for the remaining portion of this Right as described in this
Section 8.



9. PUT RIGHTS. From and after the earlier to occur of (i) the fifth (5th) anniversary
of the Signing Date or (ii) the occurrence of a Mandatory Redemption Triggering Event (as defined
in the Series D Preferred Shares Articles Supplementary), the Holder of this Right may demand that
the Company purchase all or any portion of this Right (without regard to any limitations on
exercise hereof, at the Put Redemption Price by delivery of a written notice to the Company (each,
a “Put Right Notice”) and surrender of this Right (or an affidavit of loss in form and substance
reasonably satisfactory to the Company) to the Company at its office maintained pursuant to
Section 10.2(a) hereof (the “Put Demand Date”), which Put Right Notice shall specify that
portion of this Right that the Company shall redeem pursuant to this Section 9 (which
portion shall be determined by a number of Common Shares otherwise represented by this Right on the
Put Demand Date as specified by the Holder in such Put Right Notice). The Company shall as soon as
reasonably practicable, but in any event no later than ten (10) days after the Put Demand Date (the
“Put Payment Date”), pay the Put Redemption Price payable to such Holder at the Company’s option,
either (i) in cash, by wire transfer of immediately available funds, (ii) where such put is
triggered by an event set forth under clauses (iv)-(vi) of the definition of Mandatory Redemption
Triggering Event, by executing and delivering to the Holder of this Right a promissory note in the
form attached hereto as Exhibit B, having a principal amount equal to the Put Redemption
Price payable to the Holder, or (iii) any combination of clause (i) and, if applicable, clause (ii)
and if the election made pursuant to this Section 9 is only with respect to a portion of
this Right, the Company shall issue to the Holder a new Right or Rights of like tenor, dated the
date hereof and calling in the aggregate on the face or faces thereof for the number of Right
Shares equal to the number of such Right Shares called for on the face of this Right minus the
number of Common Shares representing that portion of the Right being redeemed, as set forth in the
applicable Put Right Notice.



Upon surrender of this Right (or an affidavit of loss in form and substance reasonably satisfactory
to the Company) in accordance with the procedures set forth in this Section 9, the right to
purchase Common Shares represented by that portion of this Right that is being redeemed pursuant to
this Section 9 shall terminate, and this Right shall represent (i) the right of the Holder
to receive the applicable Put Redemption Price from the Company in accordance with this Section
9 and (ii) in case the demand for redemption by the Holder is only with respect to a portion of
this Right, a new Right or Rights for the remaining portion of this Right as described in this
Section 9.



10. OWNERSHIP, TRANSFER AND SUBSTITUTION OF RIGHTS.



10.1 Ownership of Rights. The Company may treat the person in whose name any Right is
registered on the register kept at the office of the Company maintained pursuant to Section
10.2(a) hereof as the owner and holder thereof for all purposes, notwithstanding any notice to
the contrary. A Right may be exercised by a new holder without a new Right first having been
issued.



10.2 Office; Transfer and Exchange of Rights.




(a) The Company shall maintain an office (which may be an agency maintained at
a bank) where notices, presentations and demands in respect of this Right may be
made upon it. Such office may be maintained at 2929 Arch Street, 17th
Floor, Philadelphia, PA 19104, Attention: Chief Financial Officer, until such time
as the Company shall notify the holders of the Rights of any change of location of
such office.




(b) The Company shall cause to be kept at its office maintained pursuant to
Section 10.2(a) hereof a register for the registration and transfer of the
Rights. The names and addresses of holders of Rights, the transfer thereof and the
names and addresses of transferees of Rights shall be registered in such register.
The Person in whose names any Right shall be so registered shall be deemed and
treated as the owner and Holder thereof for all purposes of this Right, and the
Company shall not be affected by any notice or knowledge to the contrary.




(c) Upon the surrender of any Right (or an affidavit of loss in form and
substance reasonably satisfactory to the Company), properly endorsed and subject to
Section 4 hereof, for registration of transfer or for exchange at the office
of the Company maintained pursuant to Section 10.2(a) hereof, the Company,
at its expense, will promptly (and in any event within five Trading Days) execute
and deliver to or upon the order of the holder thereof a new Right or Rights of like
tenor, in the name of such holder or as such holder (upon payment by such holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face or
faces therefor for the number of Common Shares called for on the face or faces of
the Right or Rights so surrendered.



10.3 Replacement of Rights. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any Right and, in the case of any such loss, theft or
destruction of any Right held by a Person other than the initial holder hereof or any institutional
investor, upon delivery of indemnity satisfactory to the Company in form and amount or, in the case
of any such mutilation, upon surrender of such Right for cancellation at the office of the Company
maintained pursuant to Section 10.2(a) hereof, the Company, at its sole expense, will
execute and deliver, in lieu thereof, a new Right of like tenor and dated the date hereof.



11. TERMINATION. This Right shall automatically terminate without any action on the part of the
Holder thereof or the Company on the earlier of (i) the fifteenth (15th) anniversary of
the Signing Date unless exercised on or prior to such date or (ii) (x) thirty (30) days following
the receipt of notice by the Holder of a Change of Control pursuant to Section 7 or (y) if
later, the date the Change of Control occurs, in each case, unless exercised prior to the
consummation of such Change of Control. Upon termination of this Right, all rights and obligations
of the parties hereunder shall terminate and this Right shall have no futher force and effect;
provided, however, that the Holder’s righs pursuant to Section 9 hereof
shall survive any such termination pursuant to clause (ii) of this Section 12 for at least
thirty (30) days following the occurrence of such Change of Control.



12. DEFINITIONS. As used herein, unless the context otherwise requires, the following terms have
the following respective meanings:



“Additional Common Shares” means all of the Common Shares (including treasury shares) issued
or sold (or, pursuant to Section 2.3 or 2.4 hereof, deemed to be issued) by the
Company after the Signing Date, whether or not subsequently reacquired or retired by the Company,
other than the Common Shares for which a Right has been exercised.



“Adjusted Dividend Amount” shall have the meaning given to such term in Section 2.2.2
hereof.



“Annual Dividend Period” shall have the meaning given to such term in Section 2.2.2 hereof.



“Appraisal Notice” shall have the meaning given to such term in Section 2.9(a) hereof.



“Appraiser” an independent nationally recognized investment bank or other qualified financial
institution acceptable to the Company and the Required Interest.



“Appraiser’s Determination” shall have the meaning given to such term in
Section 2.9(a) hereof.



“Board of Trustees” shall mean the board of trustees of the Company.



“Call Payment Date” shall have the meaning given to such term in Section 8 hereof.



“Call Redemption Price” means the aggregate amount determined by multiplying (a) the aggregate
number of Common Shares representing that portion of the Right to be redeemed, as specified in the
Call Right Notice delivered pursuant to Section 8 hereof and (b) the applicable price per
Common Share determined by reference to the following table (provided that, in determining the
aggregate number of Common Shares representing that portion of this Right to be redeemed pursuant
to clause (a) above, no adjustments shall be made thereto pursuant to Section 2):



	 	 	 	 	 
	If the Redemption Date is:	 	Applicable Price
	On or after the second anniversary of the Signing Date and
prior to the sixth anniversary of the Signing Date:
	 	$	5.00	 
	 
	 	 	 	 
	On or after the sixth anniversary of the Signing Date and
prior to the seventh anniversary of the Signing Date:
	 	$	6.00	 
	 
	 	 	 	 
	On or after the seventh anniversary of the Signing Date:
	 	$	7.00	 
	 
	 	 	 	 






“Call Right Notice” shall have the meaning given to such term in Section 8 hereof.



“Change of Control” shall have the meaning given to such term in the Series D Preferred Shares
Articles Supplementary.



“Closing Date” shall have the meaning given to such term in the Purchase Agreement.



“Common Shares” shall have the meaning given to such term in the introduction to this Right,
such term to include any shares of beneficial interest into which such Common Shares shall have
been changed or any shares of beneficial interest resulting from any reclassification of such
Common Shares, and all other shares of beneficial interest of any class or classes (however
designated) of the Company the holders of which have the right, without limitation as to amount,
either to all or to a share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.



“Company” shall have the meaning given to such term in the introduction to this Right, such
term to include any Person which shall succeed to or assume the obligations of the Company in
compliance with Section 3 hereof.



“Convertible Securities” means any evidences of indebtedness (including the Company’s 7.0%
senior convertible notes), shares of beneficial interest (other than Common Shares) or other
securities directly or indirectly convertible into or exchangeable for, and any instrument the
value of which is linked to, Additional Common Shares.



“Current Market Price” means, on any date specified herein, the arithmetic average of the VWAP
of a Common Share for the five (5) consecutive Trading Days ending on the date immediately
preceding such date, except that (i) Common Shares, Convertible Securities and/or Options sold to a
dealer or underwriter or through an underwritten public offering (whether on a firm commitment or
best efforts basis) at a price equal to or greater than the Exercise Price and (ii) Common Shares,
Convertible Securities and/or Options sold in “at-the-market offerings” within the meaning of Rule
415(a)(4) at a price equal to or greater than the Exercise Price shall, in each case, conclusively
be deemed to have been sold at the Current Market Price.



“Determination Date” shall have the meaning given to such term in Section 2.2.3
hereof.



“Exercise Date” shall have the meaning given to such term in Section 1.1.2 hereof.



“Exercise Notice” shall have the meaning given to such term in Section 1.1.1 hereof.



“Exercise Price” shall have the meaning given to such term in the introduction of this Right.



“Holder” shall mean the registered holder hereof or its permitted assigns.



“Initial Dividend Amount” shall have the meaning given to such term in Section 2.2.2
hereof.



“Initial Exercise Price” shall have the meaning given to such term in the introduction to this
Right.



“Market Price” shall have the meaning given to such term in Section 2.2.2 hereof.



“Options” means rights, options or warrants to subscribe for, purchase or otherwise acquire
either Additional Common Shares or Convertible Securities.



“Ordinary Dividend Amount” shall have the meaning set forth in Section 2.2.2 hereof.



“Other Securities” means any shares of beneficial interest or other equity units (other than
the Common Shares) and other securities of the Company or any other Person (corporate or otherwise)
(other than any promissory notes or similar Indebtedness) which may be represented by these Rights,
in lieu of or in addition to Common Shares and which at any time shall have been represented by
these Rights in exchange for or in replacement of Common Shares or Other Securities pursuant to
Section 3 hereof or otherwise.



“Person” means an individual, a partnership, a limited liability company, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated organization or any
federal, state, county or municipal governmental or quasi-governmental agency, department,
commission, board, bureau, instrumentality or similar entity, foreign or domestic, having
jurisdiction over either the Company or any holder of a Right.



“Principal Market” means the New York Stock Exchange.



“Purchase Agreement” shall have the meaning given to such term in the introduction to this
Right.



“Purchaser” shall have the meaning given to such term in the introduction to this Right.



“Put Demand Date” shall have the meaning given to such term in Section 9 hereof.



“Put Payment Date” shall have the meaning given to such term in Section 9 hereof.



“Put Redemption Price” means the aggregate amount determined by multiplying (a) the aggregate
number of Common Shares representing that portion of this Right to be redeemed, as specified in the
Put Right Notice delivered pursuant to Section 9 hereof and (b) the applicable price per
Common Share determined by reference to the following table (provided that, in determining the
aggregate number of Common Shares representing that portion of this Right to be redeemed pursuant
to clause (a) above, no adjustments shall be made thereto pursuant to Section 2):



	 	 	 	 	 
	If the Redemption Date is:	 	Applicable Price
	Prior to the sixth anniversary of the Signing Date:
	 	$	1.23	 
	 
	 	 	 	 
	On or after the sixth anniversary of the Signing Date and
prior to the seventh anniversary of the Signing Date:
	 	$	1.60	 
	 
	 	 	 	 
	On or after the seventh anniversary of the Signing Date:
	 	$	1.99	 
	 
	 	 	 	 






“Put Right Notice” shall have the meaning given to such term in Section 9 hereof.



“Registration Rights Agreement” means that certain Registration Rights Agreement by and
between the Company and the Purchaser dated as of the Signing Date as from time to time in effect.



“Repurchase” shall have the meaning given to such term in Section 2.2.3 hereof.



“Repurchase Premium” shall have the meaning given to such term in Section 2.2.3
hereof.



“Required Interest” shall have the meaning given to such term in Section 2.9(a)
hereof.



“Right” shall have the meaning given to such term in the introduction of this Right.



“SEC” means the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.



“Securities Act” means the Securities Act of 1933, or any similar federal statute, and the
rules and regulations of the SEC thereunder, all as the same shall be amended and in effect at the
time.



“Series D Preferred Shares” means the Company’s Series D Cumulative Redeemable Preferred
Shares of Beneficial Interest, par value $0.01 per share.



“Series D Preferred Shares Articles Supplementary” means the Articles Supplementary to the
Company’s Declaration of Trust, as amended) designating and classifying the Series D Preferred
Shares.



“Settlement Amount” shall have the meaning given to such term in Section 1.1.1 hereof.



“Share” shall have the meaning given to such term in the introduction of this Right.



“Signing Date” shall have the meaning given to such term in the introduction to this Right.



“Trading Day” means any day on which the Common Shares are traded on the Principal Market, or,
if the Principal Market is not the principal trading market for the Common Shares, then on the
principal securities exchange or securities market on which the Common Shares are then traded,
provided that “Trading Day” shall not include any day on which the Common Shares are
scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common
Shares are suspended from trading during the final hour of trading on such exchange or market (or
if such exchange or market does not designate in advance the closing time of trading on such
exchange or market, then during the hour ending at 4:00:00 p.m., New York time).



“VWAP” means, for any security as of any date, the dollar volume-weighted average price for
such security on the Principal Market during the period beginning at 9:30:01 a.m., New York time
(or such other time as the Principal Market publicly announces is the official open of trading),
and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly
announces is the official close of trading), as reported by Bloomberg, L.P. through its “Volume at
Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of
such security in the over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal
Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York
City Time (or such other time as the Principal Market publicly announces is the official close of
trading), as reported by Bloomberg, L.P., or, if no dollar volume-weighted average price is
reported for such security by Bloomberg, L.P. for such hours, the average of the highest closing
bid price and the lowest closing ask price of any of the market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
If the VWAP cannot be calculated for a security on a particular date on any of the foregoing bases,
the VWAP of such security shall be the fair market value of such security on such date as
determined by the Board of Trustees in good faith. If the holders of the Required Interest
disagree for any reason with the Board of Trustee’s determination of the VWAP in accordance with
the previous sentence, then such dispute shall be resolved pursuant to Section 2.9 with the
term “VWAP” being substituted for the term “Current Market Price.” All such determinations shall
be appropriately adjusted for any share splits, share dividends, combinations, recapitalizations
and the like during the applicable calculation period.



13. REMEDIES. Each of the Company and the Holder of this Right acknowledges that the remedies at
law available to the Company or the Holder of this Right, as applicable in the event of any default
or threatened default by the other in the performance of or compliance with any of the terms of
this Right are not and will not be adequate and that, to the fullest extent permitted, such terms
may be specifically enforced by a decree for the specific performance of any agreement contained
herein or by an injunction against a violation of any of the terms hereof or otherwise, and each of
the Company and the Holder of this Right hereby agrees to waive any requirement for the securing or
posting of any bond in connection with such remedy.



14. TIME IS OF THE ESSENCE. With regard to all dates and time periods set forth or referred to in
this Right, time is of the essence.



15. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. Nothing contained in this Right shall be construed as
conferring upon the Holder hereof any rights as a shareholder of the Company or as imposing any
obligation on such Holder to purchase any securities or as imposing any liabilities on such Holder
as a shareholder of the Company, whether such obligation or liabilities are asserted by the Company
or by creditors of the Company.



16. SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.



16.1 Each of the Company and the Holder of this Right agrees that irreparable damage would
occur to the other in the event that any of the provisions of this Right were not performed in
accordance with their specific terms or were otherwise breached. It is accordingly agreed that the
Company or the Holder of this Right, as applicable, shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Right and to enforce specifically
the terms and provisions hereof and thereof this being in addition to any other remedy to which the
Company or the Holder of this Right, as applicable, may be entitled by law or equity.



16.2 The Company and Holder (i) hereby irrevocably submit to the exclusive jurisdiction of the
United States District Court and other courts of the United States sitting in New York City in the
State of New York for the purposes of any suit, action or proceeding arising out of or relating to
this Right and (ii) hereby waive, and agree not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. The Company and Holder consent to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address in effect for notices
to it under this Right and agree that such service shall constitute good and sufficient service of
process and notice thereof. Nothing in this Section 16.2 shall affect or limit any right
to serve process in any other manner permitted by law



16.3 EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS RIGHT, THE
RELATED DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE RELATED DOCUMENTS, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 16.



17. NOTICES. Any notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand delivery or facsimile
(with facsimile machine confirmation of delivery received) at the address or number designated
below (if delivered on a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other than on a business
day during normal business hours where such notice is to be received) or (b) on the second business
day following the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur. The address for such
communications shall be:



	 	 	 
	If to the Company:
	 	RAIT Financial Trust

2929 Arch Street

17th Floor

Philadelphia, PA 19104

Telephone Number: (215) 243-9000

Fax: (215) 405-2945

Attention: Chief Financial Officer

	With copies to:
	 	Pepper Hamilton LLP

3000 Two Logan Square

Philadelphia, Pennsylvania 19103-2799

Telephone Number: (215) 981-4563

Fax: (215) 981-4750

Attention: Michael H. Friedman, Esq.

	If to the Holder:
	 	ARS VI Investor I, LP

c/o Almanac Realty Investors, LLC

1140 Avenue of the Americas, 17th Floor

New York, NY 10036

Telephone Number: (212) 403-3511

Fax: (212) 403-3520

Attention: Andrew M. Silberstein

	With copies to:
	 	Proskauer Rose LLP

Eleven Times Square

New York, New York 10036-8299

Telephone Number: (212) 969-3210

Fax: (212) 969-2900

Attention: Arnold S. Jacobs, Esq.







Either party hereto may from time to time change its address for notices by giving at least ten
(10) days advance written notice of such changed address to the other parties hereto.



18. WAIVERS. No waiver by any party of any default with respect to any provision, condition or
requirement of this Right shall be deemed to be a continuing waiver in the future or a waiver of
any other provisions, condition or requirement hereof nor shall any delay or omission of any party
to exercise any right hereunder in any manner impair the exercise of any such right accruing to it
thereafter. This Right and any term hereof may be changed, waived, discharged or terminated only
by an instrument in writing signed by the Company and the Required Interest; provided however that
no such change, waiver, discharge or termination that would treat the Holder of this Right in a
discriminatory manner may be made without the prior written consent of the Holder of this Right.



19. HEADINGS. The article, section and subsection headings in this Right are for convenience only
and shall not constitute a part of this Right for any other purpose and shall not be deemed to
limit or affect any of the provisions hereof.



20. GOVERNING LAW. This Right shall be governed by and construed in accordance with the internal
procedural and substantive laws of the State of New York, without giving effect to the choice of
law provisions of such state that would cause the application of the laws of any other
jurisdiction.



21. COUNTERPARTS. This Right may be executed in one or more counterparts (including by facsimile
or other electronic transmission), all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of the parties and
delivered to the other parties (including by facsimile or other electronic transmission).



[SIGNATURE PAGE FOLLOWS]




	 	 	 
	RAIT FINANCIAL TRUST
	By:

	 	/s/ James Sebra
	
 
	 	 







	 	 	Name:
James Sebra





Title: Chief Financial OfficerEXHIBIT A

FORM OF EXERCISE NOTICE

[To be executed only upon exercise of Right]




To RAIT FINANCIAL TRUST



The undersigned registered Holder of the within Right hereby irrevocably exercises such Right
for       1 Common Shares.




	 	 	Dated:






(Signature of Holder)




(Street Address)




(City) (State) (Zip Code)



EXHIBIT B




THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR AN EXEMPTION THEREFROM.



PROMISSORY NOTE




$[      ] [DATE]



FOR VALUE RECEIVED, RAIT Financial Trust, a Maryland real estate investment trust (the
“Company”), promises to pay to the order of [      ] (“Holder”), the principal amount of
[      ] ($[      ]) and interest on the outstanding principal amount as provided
below.



This note (this “Note”) is being issued pursuant to one of the Common Share Appreciation
Rights issued by the Company (the “SARs”) pursuant to the Securities Purchase Agreement, dated as
of October 1, 2012, by and among the Company, RAIT Partnership, L.P., Taberna Realty Finance Trust,
RAIT Asset Holdings IV, LLC and ARS VI Investor I, LP (formerly ARS VI Investor I, LLC) (the
“Purchase Agreement”). Capitalized terms not otherwise defined herein shall have the meanings
provided in the Purchase Agreement.



The terms and conditions of this Note are as follows:



1. This Note shall accrue interest (calculated on the basis of a 360-day year of 30-day
months, computed annually) on the unpaid principal amount of this Note at a rate of twelve and one
half percent (12.5%) per annum (the “Interest Rate”), payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year until such unpaid principal is paid or prepaid
in cash in full.



2. The principal amount of this Note and all accrued and unpaid interest thereon shall be due
on [      ]2 (the “Maturity Date”). On the Maturity Date, the Company shall pay
to Holder all principal and accrued but unpaid interest thereon.



3. Each payment upon this Note shall be made at [      ] or any other place that Holder may
direct in writing.



4. The Company, at its option, may make prepayments of the principal of, and the interest on,
this Note in whole or in part (in minimum increments of $1,000,000, or if less, the remaining
principal amount of the Note), at any time without premium or penalty, but with accrued interest to
the date of such prepayment applicable to the principal amount of the Note being prepaid.



5. Each of the following shall constitute an “Event of Default” under this Note:




a. The occurrence of a Change of Control;




b. the Company shall, pursuant to or within the meaning of the United States
Bankruptcy Code or any other foreign, federal or state law relating to insolvency or
relief of debtors (a “Bankruptcy Law”) (i) commence a voluntary case or proceeding,
(ii) consent to the entry of an order for relief against it in an involuntary case,
(iii) consent to the appointment of a trustee, receiver, assignee, liquidator or
similar official or (iv) make an assignment for the benefit of its creditors;




c. a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (i) is for relief against the Company in an involuntary case, (ii) appoints
a trustee, receiver, assignee, liquidator or similar official for the Company or
substantially all of the Company’s properties or (iii) orders the liquidation of the
Company, and in each case, the order or decree is not dismissed within 90 days;




d. the Company fails to pay when due any principal or interest under this Note or
any other note issued pursuant to the Warrants, the Common Share Appreciation Rights
or the Articles Supplementary, and such failure continues unremedied for a period of
ten (10) days; or




e. the occurrence of a default or event of default and the continuation thereof
under the terms of any agreement, contract, note or other instrument to which any
Issuer Party or any of their respective Subsidiaries is a party which has resulted
in the acceleration of in excess of $25.0 million in Recourse Indebtedness and which
acceleration has not been rescinded or cured and has not been stayed or restricted
by judicial order or process and such occurrence and continuation continues for a
period of two (2) business days after Holder’s delivery of written notice to the
Company of such occurrence and continuation.




Upon the occurrence of any Event of Default specified in clauses (a) through (c)
above after the issuance of this Note and separate from the event that gave rise to
the issuance of this Note, all amounts owing with respect to this Note shall become
immediately due and payable to Holder automatically and without any requirement of
notice from Holder. Upon the occurrence of an Event of Default specified in clauses
(d) through (e) above, Holder may declare all amounts owing with respect to this
Note and any other note issued to the Holder pursuant to the Warrants, the Common
Share Appreciation Rights or Articles Supplementary to be, and they shall thereupon
forthwith become, immediately due and without presentment, demand, protest or other
notice of any kind.



6. Nothing in this Note shall require the Company to pay interest at a rate in excess of the
maximum rate permitted by applicable law and the interest rate otherwise applicable to this Note
(including any default rate of interest) shall be reduced, if necessary, to conform to such maximum
rate.



7. The Company waives demand for payment, presentment, notice of dishonor and protest of this
Note.



8. No waiver by any party of any default with respect to any provision, condition or
requirement of this Note shall be deemed to be a continuing waiver in the future or a waiver of any
other provisions, condition or requirement hereof nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right accruing to it
thereafter. No provision of this Note may be waived other than in a written instrument signed by
the party against whom enforcement of such waiver is sought.



9. Holder may sell or assign, or grant participations in, all or a portion of, its interest in
this Note without the prior written consent of the Company (the “Note Interest”) and, in
connection therewith, may make available to any prospective purchaser, assignee or participant any
information relative to the Company in his possession. The Holder shall promptly notify the Company
of any such sale, assignment or participation grant. The Company may not assign any of its rights
hereunder without the prior written consent of Holder.



10. This Note and any term hereof may be changed, discharged or terminated only by an
instrument in writing signed by the Company and the Holder. If any term or provision of this Note
shall be held invalid, illegal or unenforceable, the validity of all other terms and provisions
hereof shall in no way be affected thereby. The parties hereby irrevocably submit to the exclusive
jurisdiction of the United States District Court and other courts of the United States sitting in
New York City in the State of New York for the purposes of any suit, action or proceeding arising
out of or relating to this Note. This Note shall be governed by and construed in accordance with
the internal procedural and substantive laws of the State of New York, without giving effect to the
choice of law provisions of such state that would cause the application of the laws of any other
jurisdiction.



IN WITNESS WHEREOF, the undersigned has executed this Note on the day and year first above
written.



RAIT FINANCIAL TRUST



	 	 	 
	By:

Name:

	 	     



	Title:

	 	







Acknowledged and agreed to by:



[HOLDER]



By:      

Name:

Title:





	1	 	Insert here the number of shares called for
on the face of this Right (or, in the case of a partial exercise, the portion
thereof as to which this Right is being exercised), in either case without
making any adjustment pursuant to the adjustment provisions of the Right. In
the case of a partial exercise, a new Right or Rights will be issued and
delivered, representing the unexercised portion of the Right, to the holder
surrendering the Right.





2 (a) The maturity date will be the
third (3rd) anniversary of the applicable Exercise Date or Put Date.
 (b) For the exercise of a call right on the SARS, the maturity date will be
one (1) year from the date of the Call Right Notice.



1



Schedule A





	 	(a)	 	16,452,072 Common Shares reserved for issuance under the Company’s 7.00% Convertible
Senior Notes due 2031.






	 	(b)	 	47,812 Common Shares reserved for issuance under the Company’s 6.875% Convertible
Senior Notes due 2027.






	 	(c)	 	Warrants (as defined in the Purchase Agreement) to purchase 9,931,000 Common Shares






2