SEC Contract Filing

Filing Date: 2017-01-24

Document Content:
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>4
<FILENAME>v457355_ex10-4.htm
<DESCRIPTION>EXHIBIT 10.4
<TEXT>
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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right; text-indent: 1in"><B>Exhibit 10.4</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right; text-indent: 1in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: center">SEVERANCE
AND CHANGE OF CONTROL AGREEMENT</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">THIS AGREEMENT, effective
as of the 18th day of January, 2017, is by and between Innovative Industrial Properties, Inc., a Maryland corporation (the &ldquo;<U>Company</U>&rdquo;),
IIP Operating Partnership, LP, a Delaware limited partnership (the &ldquo;<U>Partnership</U>&rdquo;), and Robert Sistek (the &ldquo;<U>Employee</U>&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">WHEREAS, to induce
the Employee to remain as an executive officer of the Company and a key employee of the Partnership, the Company, the Partnership
and the Employee desire to enter into this Severance and Change Of Control Agreement (the &ldquo;<U>Agreement</U>&rdquo;); and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">WHEREAS, the parties
agree that the restrictive covenants underlying certain of the Employee&rsquo;s obligations under this Agreement are necessary
to protect the goodwill or other business interests of the Innovative Industrial Entities (as defined below) and that such restrictive
covenants do not impose a greater restraint than is necessary to protect such goodwill or other business interests.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">NOW, THEREFORE, in
consideration of the premises and other good and valuable consideration, including the Employee&rsquo;s agreement to continue as
an executive officer of the Company and as an employee of the Partnership, the Employee&rsquo;s agreement to provide consulting
services following termination of employment pursuant to the terms hereof, and the restrictive covenants contained herein, the
Employee, the Company, and the Partnership agree as follows:</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Definitions</U>.
The following words, when capitalized in this Agreement, shall have the meanings ascribed below and shall supersede the meanings
given to any such terms in any other award agreement or related plan document in effect prior to the date of this Agreement, including
but not limited to the definitions of &ldquo;Cause,&rdquo; &ldquo;Change of Control,&rdquo; or &ldquo;Good Reason&rdquo;:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&ldquo;<U>Affiliate</U>&rdquo;
shall have the meaning given to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&ldquo;<U>Average
Annual Cash Bonus</U>&rdquo; means the average of the annual cash bonus, if any, paid or payable to the Employee with respect to
the three (3) most recently completed calendar years prior to termination of employment (or the period of the Employee&rsquo;s
employment, if shorter).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&ldquo;<U>Base
Performance Share Value</U>&rdquo; means the fair market value as of the date of the Change of Control of the number of unvested
shares underlying the Employee&rsquo;s outstanding performance share awards that would have been earned pursuant to the terms of
the award if the performance period for each such award ended immediately prior to the Change of Control. For such purposes, the
level of achievement of the performance goals established for each such award will be determined on the date immediately prior
to the Change of Control as follows: (X) if the goal is a market-based goal, such as total stockholder return or stock price, then
the actual performance to date shall be used, and (Y) if the goal is not a market-based goal, then the annualized forecasted number
for such goal as mos