EXHIBIT 4.2


 





DESCRIPTION OF SHARES


 


We were incorporated under the laws of the
State of Maryland. Your rights are governed by Maryland law, our charter and our bylaws. The following summary of the terms of
our stock is only a summary and you should refer to our charter and bylaws for a full description.


 


Authorized Stock


 


Our charter provides that we may issue up
to 60,000,000 shares of common stock and 10,000,000 shares of preferred stock.


 


Our charter contains a provision permitting
our Board of Directors, without any action by the stockholders, to amend the charter to increase or decrease the aggregate number
of shares of common stock or preferred stock that we are authorized to issue and to change the aggregate number of shares, change
the number of shares of any class or series of stock we have the authority to issue, and classify or reclassify any unissued common
stock or preferred stock into one or more classes or series by setting or changing the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such stock.


 


We believe that the power of the Board of
Directors to issue additional authorized but unissued shares of common stock or preferred stock and to classify or reclassify unissued
shares of common stock or preferred stock and thereafter to cause us to issue such classified or reclassified shares of stock will
provide us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs which
might arise. The additional common stock or preferred stock will generally be available for issuance without further action by
our stockholders.


 





Common Stock


 


All of our common stock will be duly authorized,
fully paid and nonassessable. Subject to the preferential rights of any other class or series of stock and to the provisions of
our charter regarding the restriction on the ownership and transfer of shares of our stock, holders of our common stock will be
entitled to receive distributions if authorized by our Board of Directors and to share ratably in our assets available for distribution
to the stockholders in the event of a liquidation, dissolution or winding-up.


 


Each outstanding share of our common stock
entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors. There
is no cumulative voting in the election of directors, which means that the holders of a majority of the outstanding common stock
can elect all of the directors then standing for election, and the holders of the remaining common stock will not be able to elect
any directors.


 


Holders of our common stock have no conversion,
sinking fund, redemption or exchange rights, and have no preemptive rights to subscribe for any of our securities. Maryland law
provides that a stockholder has appraisal rights in connection with some transactions. However, our charter provides that the holders
of our stock do not have appraisal rights unless a majority of the Board of Directors determines that such rights shall apply.
Shares of our common stock have equal dividend, distribution, liquidation and other rights.


 


Under our charter, we cannot make some material
changes to our business form or operations without the approval of stockholders holding at least a majority of the shares of our
stock entitled to vote on the matter. These include (1) amendment of our charter, (2) our liquidation or dissolution, (3) our reorganization,
and (4) our merger, consolidation or the sale or other disposition of all or substantially all of our assets. Share exchanges in
which we are the acquirer, however, do not require stockholder approval.


 


Our bylaws provide that the election of directors
requires a majority of all the votes cast at a meeting of our stockholders at which a quorum is present. Our charter provides that
the affirmative vote of the holders of a majority of our outstanding stock entitled to vote generally in the election of directors
may remove any director with or without cause.


 


Our registrar and transfer agent is DST
Systems, Inc.


 



     

     


    




 


Preferred Stock


 


Shares of preferred stock may be issued in
the future in one or more series as authorized by our Board of Directors. Prior to the issuance of shares of any series, the Board
of Directors is required by our charter to fix the number of shares to be included in each series and the terms, preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions
of redemption for each series. Because our Board of Directors has the power to establish the preferences, powers and rights of
each series of preferred stock, it may provide the holders of any series of preferred stock with preferences, powers and rights,
voting or otherwise, senior to the rights of holders of our common stock. The issuance of preferred stock could have the effect
of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender
offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our common stock.


 


Issuance of Additional Securities and Debt Instruments


 


Our directors are authorized to issue additional
stock or other convertible securities for cash, property or other consideration on such terms as they may deem advisable. Subject
to restrictions in our charter, our directors may cause us to issue debt obligations on such terms and conditions as they may determine,
including debt with the right to convert into stock. Subject to certain restrictions, our directors may also cause us to issue,
options and rights to buy our common stock on such terms as they deem advisable to our stockholders, as part of a financing arrangement,
or pursuant to stock option plans. Our directors may cause us to issue warrants, options and rights to buy our common stock even
though their exercise could result in dilution in the value of our outstanding common stock.


 





Restrictions on Issuance of Securities


 


Our charter provides that we will not issue:


 


		•	equity securities which are redeemable solely at the
option of the holder;


  


		•	debt securities unless the historical debt service
coverage in the most recently completed fiscal year is sufficient to properly service the higher level of debt;


  


		•	options or warrants to purchase stock to our advisor,
Sponsor, director(s) or any affiliates of our advisor, Sponsor or directors except on the same terms as sold to the general public
and in an amount not to exceed 10% of our outstanding common or preferred stock on the date of grant of any options or warrants;
or


  


		•	equity securities on a deferred payment basis or similar
arrangement.


 


Restrictions on Ownership and Transfer


 


The resale of our shares may be restricted
by limitations on transferability of shares imposed by state suitability standards or blue sky laws. Specifically, the REIT Sponsors
must establish minimum income and net worth standards for purchasers of shares in REITs such as us, for which there is not likely
to be a substantial and active secondary market, such as us. The NASAA REIT Guidelines require a Sponsor to propose minimum income
and net worth standards that are reasonable given the type of REIT and risk associated with the purchase of shares. REITS with
greater investor risk must have minimum standards with a substantial net worth requirement. Generally, unless a particular state
regulator decides otherwise, stockholders must have a minimum annual gross income of $70,000 and a minimum net worth of $70,000,
or a minimum net worth of $250,000. For specific states with increased minimum income and net worth requirements.


 


In order to qualify as a REIT under the Code,
among other purposes, our charter provides that, subject to exceptions described below, no person may beneficially or constructively
own, or be deemed to beneficially or constructively own by virtue of the attribution provisions of the Code, (i) more than 9.8%
in value of our aggregate outstanding shares of capital stock or (ii) our capital stock to the extent that such ownership would
result in us being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership
interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including, but not limited
to, ownership that would result in us owning (actually or constructively) an interest in a tenant that is described in Section
856(d)(2)(B) of the Code if the income derived by the Company from such tenant would cause us to fail to satisfy any of the gross
income requirements of Section 856(c) of the Code). Our charter further provides that any transfer of our common stock or preferred
stock that would result in our common stock and preferred stock being beneficially owned by fewer than 100 persons shall be null
and void, and the intended transferee will not acquire any rights in the common stock or preferred stock intended to be transferred.









     

     


    

 


Subject to the exceptions described below,
to the extent that any person beneficially or constructively owns our common or preferred stock in excess of the 9.8% ownership
limit or that would cause us to be “closely held” within the meaning of the Code or would otherwise cause us to fail
to qualify as a REIT, such shares will be transferred automatically by operation of law, to a trust, the beneficiary of which will
be a qualified charitable organization selected by us. The trustee will be a person unaffiliated with us who is designated by us.
The automatic transfer will be effective as of the close of business on the business day prior to the date of the transfer. Within
20 days of receiving notice from us of the transfer of shares to the trust, the trustee of the trust shall sell the shares held
in the trust to a person or entity who could own such shares without violating the ownership limits. Upon such sale, the trustee
will distribute to the prohibited transferee an amount equal to the lesser of the price paid by the prohibited transferee for the
shares held in the trust or the sales proceeds received by the trust for such shares.


 


In the case of any shares held in the trust
resulting from any event other than a transfer or from a transfer for no consideration, such as a gift, the trustee will be required
to sell the shares held in the trust to a qualified person or entity and distribute to the prohibited owner an amount equal to
the lesser of the market price of the shares held in the trust as of the date of the event causing the shares to be held in the
trust or the sales proceeds received by the trust for the shares held in the trust. In either case, any proceeds in excess of the
amount distributable to the prohibited transferee or prohibited owner, as applicable, will be distributed to the charitable beneficiary.
Prior to a sale of any of the shares by the trust, the trustee will be entitled to receive, in trust for the charitable beneficiary,
all dividends and other distributions paid by us with respect to the shares, and also will be entitled to exercise all voting rights
with respect to the shares. Subject to the MGCL, effective as of the date that such shares have been transferred to the trust,
the trustee shall have the authority, in its sole discretion to:


 


		•	rescind as void any vote cast by a prohibited transferee
or prohibited owner, as applicable, prior to the discovery by us that such shares have been transferred to the trust; and


  


		•	recast such vote in accordance with the desires of
the trustee acting for the benefit of the charitable beneficiary.


 


However, if we have already taken irreversible
corporate action, then the trustee shall not have the authority to rescind and recast such vote. Any dividend or other distribution
paid to the prohibited transferee or prohibited owner prior to the discovery by us that such shares had been automatically transferred
to a trust as described above, will be required to be repaid to the trustee upon demand for distribution to the charitable beneficiary.
In the event that the transfer to the trust as described above is not automatically effective for any reason to prevent violation
of the ownership limits or such other limit as provided in the charter or as otherwise permitted by the Board of Directors, our
charter provides that the transfer of the shares will be null and void.


 


In addition, our shares which are held in
trust shall be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of:


 


		•	the price per share on the transaction that resulted
in such transfer to the trust, or, in the case of a gift, the market price at the time of the gift; and


  


		•	the market price on the date we accept such offer.


 


We shall have the right to accept such offer
until the trustee has sold the shares of stock held in the trust. Upon such a sale to us, the interest of the charitable beneficiary
in the shares sold shall terminate and the trustee shall distribute the net proceeds of the sale to the prohibited transferee or
prohibited owner.


 


Our charter requires all persons who directly
or indirectly beneficially own more than 5%, or any lower percentage as required pursuant to regulations under the Internal Revenue
Code, of our outstanding shares of common and preferred stock, within 30 days after December 31 of each year, to provide to us
a written statement stating their name and address, the number of shares of common and preferred stock they beneficially own directly
or indirectly, and a description of how the shares are held. In addition, each beneficial owner must provide to us any additional
information as we may request in order to determine the effect, if any, of their beneficial ownership on our status as a REIT and
to ensure compliance with the 9.8% ownership limit.


 






     

     


    

 


Our Board of Directors may exempt prospectively
or retroactively a person from the 9.8% ownership limit upon certain conditions. However, our Board of Directors may not grant
an exemption from the 9.8% ownership limit to any proposed transferee whose beneficial ownership of our common and preferred stock
in excess of the ownership limit would result in the termination of our status as a REIT.


 


Prior to the listing of our shares on a national
stock exchange or the trading of our shares in the over-the-counter market, we will not issue stock certificates except to stockholders
who make a written request to us therefor. Until such time, ownership of our shares will be recorded by us in book-entry form.
Once issued, all certificates representing any shares of our common or preferred stock will bear a legend referring to the restrictions
described above.


 


Provisions of Maryland Law and Our Charter and Bylaws


 


The following paragraphs summarize material
provisions of Maryland law and of our charter and bylaws. The following summary does not purport to be complete, and you should
review our charter and bylaws.


 


Business Combinations.  Under
Maryland law, some business combinations (including a merger, consolidation, share exchange or, under some circumstances, an asset
transfer or issuance or reclassification of equity securities) between a Maryland corporation and any person who beneficially owns
ten percent or more of the voting power of the corporation’s outstanding voting stock or an affiliate or associate of the
corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of
ten percent or more of the voting power of the then-outstanding stock of the corporation (an interested stockholder) or an affiliate
of such an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder
becomes an interested stockholder. A person is not an interested stockholder under the statute if, the Board of Directors of the
corporation approved in advance the transaction which otherwise would have resulted in the person becoming an interested stockholder.
The Board of Directors may provide that its approval is subject to compliance with any terms and conditions determined by the Board
of Directors. Thereafter, any such business combination generally must be recommended by the Board of Directors of such corporation
and approved by the affirmative vote of at least:


 


		•	80% of the votes entitled to be cast by holders of
outstanding shares of voting stock of the corporation; and


 


		•	two-thirds of the votes entitled to be cast by holders
of voting stock of the corporation other than shares held by the interested stockholder with whom (or with whose affiliate) the
business combination is to be effected or held by an affiliate or associate of the interested stockholder. These super-majority
vote requirements do not apply if the corporation’s common stockholders receive a minimum price (as defined in the Maryland
business combination statute) for their shares and the consideration is received in cash or in the same form as previously paid
by the interested stockholder for its shares.


 


These provisions of Maryland law do not apply,
however, to business combinations that are approved or exempted by our Board of Directors prior to the time that the interested
stockholder becomes an interested stockholder. Our board, by resolution, has exempted any business combinations involving us and
The Lightstone Group or any of its affiliates from these provisions. As a result, the five-year prohibition and the super-majority
vote requirements will not apply to any business combinations between any affiliate of The Lightstone Group and us. As a result,
any affiliate of The Lightstone Group may be able to enter into business combinations with us, which may or may not be in the best
interests of our stockholders.


 






     

     


    

 


Control Share Acquisition.  With
some exceptions, Maryland law provides that holders of control shares of a Maryland corporation acquired in a control share acquisition
have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding
shares (1) owned by the acquiring person, (2) owned by officers, and (3) owned by employees who are also directors. Control shares
mean voting shares of stock which, if aggregated with all other shares of stock owned by an acquiring person or in respect of which
the acquiring person can exercise or direct the exercise of voting power, would entitle the acquiring person to exercise voting
power in electing directors within one of the following ranges of voting power:


 


		•	one-tenth or more but less than one-third;


 


		•	one-third or more but less than a majority; or


 


		•	a majority or more of all voting power.


 










Control shares do not include shares the
acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A control share acquisition
occurs when, subject to some exceptions, a person directly or indirectly acquires ownership or the power to direct the exercise
of voting power (except solely by virtue of a revocable proxy) of issued and outstanding control shares. A person who has made
or proposes to make a control share acquisition, upon satisfaction of some specific conditions, including an undertaking to pay
expenses, may compel our Board of Directors to call a special meeting of stockholders to be held within 50 days of demand to consider
the voting rights of the control shares. If no request for a meeting is made, we may present the question at any stockholders’
meeting.


 


If voting rights are not approved at the
meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then, subject to
some conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights
have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares,
as of the date of the last control share acquisition by the acquirer or of any meeting of stockholders at which the voting rights
of such shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and
the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal
rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price
per share paid by the acquirer in the control share acquisition.


 


The control share acquisition statute does
not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or to
acquisitions approved or exempted by the charter or bylaws of the corporation.


 


Our bylaws contain a provision exempting
from the control share acquisition statute any and all acquisitions of our shares of stock. We cannot assure that such provision
will not be amended or eliminated at any time in the future.


 


Tender Offers


 


At our stockholders’ annual meeting
held on September 16, 2010, an amendment to our charter to add a new section regarding tender offers was approved by our stockholders.
Under our amended charter, any tender offer made by any person, including any “mini-tender” offer, must comply with
most of the provisions of Regulation 14D of the Exchange Act, including the notice and disclosure requirements. Among other things,
the offeror must provide notice of such tender offer at least ten business days before initiating the tender offer. If the offeror
does not comply with the provisions set forth above, we will have the right to redeem that offeror’s shares of stock, including
shares acquired in the tender offer. Additionally, the non-complying offeror would be responsible for our related expenses.