Innovative Industrial Properties, Inc. (NYSE:IIPR) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Item5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.

Grant of Shares of Restricted Stock

On January 18, 2017, the Compensation Committee of the Board of
Directors (the Board) of Innovative Industrial Properties, Inc.
(the Company) granted restricted shares of Class A common stock
(the Shares) to each of its executive officers, in the amounts
set forth below:

The Shares vest ratably on each of January 1, 2018, January 1,
2019 and January 1, 2020 for each of Messrs. Gold, Smithers,
Sistek and Wolfe and Ms. Hastings, provided that he or she
continues to be an employee of the Company or a non-employee
member of the Board on each such date.

The Shares were issued to each of Messrs. Gold, Smithers, Sistek
and Wolfe and Ms. Hastings to a Restricted Stock Award Grant
Notice and Restricted Stock Award Agreement (the Award Agreement)
under the Companys 2016 Omnibus Incentive Plan.

Entry into Severance and Change of Control Agreements

Effective as of January 18, 2017, the Company entered into
severance and change of control agreements (the Severance and
Change of Control Agreements) with Messrs. Gold, Smithers, Sistek
and Wolfe (the Executives). Except as provided below, each of the
Severance and Change of Control Agreements with the Executives
contains substantially similar terms.

The Severance and Change of Control Agreements expire on December
31, 2019, but will automatically renew for successive three-year
terms unless either party gives written notice of non-renewal
within 90 days before the end of the current term.

The Severance and Change of Control Agreements provide that, if
an Executives employment is terminated by the Company without
cause or by the Executive for good reason (each as defined in the
applicable Severance and Change of Control Agreement) (a
Qualifying Termination), the Executive will be entitled to
severance payments and certain benefits, subject to certain
conditions specified below.

If the Executive experiences a Qualifying Termination, other than
within two years of a change of control (as defined in the
applicable Severance and Change of Control Agreement), (a) the
Executive will receive (i) a cash payment equal to the sum of his
annual base salary and his average annual cash bonus during the
past three years, multiplied by three, with respect to Messrs.
Gold and Smithers, and two, with respect to Messrs. Sistek and
Wolfe, and (ii) 18 months of premiums the Executive would be
required to pay to continue health plan coverage under the
Company’s health plans; and (b) the Executive’s unvested equity
awards subject to time-based vesting will vest on a pro-rated
basis and the Executive’s performance-based equity awards will
be earned on a pro-rated basis based on the level of achievement
as of such date of termination. Each Severance and Change of
Control Agreement provides for a phase-in over a three-year
period ending on December 31, 2019 of severance amounts payable
under (a) above and equity awards vesting under (b) above, where
the Executive is entitled to a percentage of such severance and a
percentage of such equity awards vest based on a schedule set
forth in the Severance and Change of Control Agreement.

In the event of a Qualifying Termination of the Executive within
two years after a change of control of the Company, in addition
to the compensation set forth above, all unvested equity awards
subject to time-based vesting will vest immediately, and all
unearned performance-based equity awards will vest at the greater
of actual performance or target. A Qualifying Termination of the
Executive within two years after a change of control of the
Company is not subject to the phase in for payment of severance
and vesting of equity awards described above for a Qualifying
Termination not within two years after a change of control.

The Severance and Change of Control Agreements require each
Executive to sign a general release of claims against the Company
as a condition of receiving the severance payment. In addition,
for one year after termination of employment for any reason, the
Executive is prohibited from directly or indirectly soliciting
(a) any of the Company’s employees to leave the Company or (b)
any prospective employees negotiating with the Company on the
date of termination to cease negotiations. The Executive is also
required to provide consulting services to the Company for up to
20 hours per month during the six months after any termination of
employment and requires the Executive to maintain the
confidentiality of the Company’s confidential information.

If the Executive retires for other than good reason and gives the
Company a specified advance notice before retiring, or if the
Executive dies or terminates employment because of disability,
all unvested stock rights awards that vest based on continued
employment will vest immediately on the date of such retirement
or termination. The Executive will remain eligible to receive
performance shares awarded under the Company’s equity incentive
plans before his termination if the Company achieves the stated
performance goals during the remainder of the performance period,
as if the Executives employment had not terminated. To qualify
for these benefits on retirement, the Executive must retire after
a specified age or with a combination of age plus years of
service, depending on the benefit in question, as well as give
the Company the required number of years of advance notice of
retirement.

The Severance and Change of Control Agreements also provide that
severance payments are subject to recoupment as required by any
recoupment policy approved by the Board.

If an Executives employment is terminated by the Company for
cause or by the Executive without good reason (and other than for
death, disability or a qualifying retirement), the Executive will
not be entitled to any severance payment or benefits under the
Severance and Change of Control Agreement.

None of the Severance and Change of Control Agreements provide
for tax gross-up payments to the Executive if any amounts paid or
payable to the Executive would be subject to the excise tax
imposed on certain so-called excess parachute payments under
Section4999 of the Internal Revenue Code of 1986, as amended.

A copy of the Award Agreement is filed as Exhibit 10.1 hereto and
copies of the Severance and Change of Control Agreements are
filed as Exhibits 10.2, 10.3, 10.4, 10.5 and 10.6 hereto and are
incorporated herein by reference. The foregoing descriptions of
the Award Agreement and the Severance and Change of Control
Agreements are qualified in their entirety by reference to the
full text of the Award Agreement and Severance and Change of
Control Agreements.

Item9.01 Financial Statements and Exhibits.

About Innovative Industrial Properties, Inc. (NYSE:IIPR)

Innovative Industrial Properties, Inc. is focused on the acquisition, ownership and management of specialized industrial properties leased to state-licensed operators for their regulated medical-use cannabis facilities. The Company intends to acquire its properties through sale-leaseback transactions and third-party purchases. It is focused on leasing its properties on a triple-net lease basis, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including maintenance, taxes and insurance. The Company intends to conduct business in an umbrella partnership real estate investment trust (UPREIT), structure through its operating partnership. The Company’s real estate investments will consist of primarily properties suitable for cultivation and production of medical-use cannabis.

Innovative Industrial Properties, Inc. (NYSE:IIPR) Recent Trading Information

Innovative Industrial Properties, Inc. (NYSE:IIPR) closed its last trading session up +0.20 at 18.90 with 19,506 shares trading hands.