MHGC Morgans Hotel Grp. Co.

Item 8.01. Other Events.

On June 8, 2016, the joint venture in which Morgans Hotel Group Co. (the “Company”) has a 50% interest in the ownership of the Mondrian South Beach hotel (“Mondrian South Beach”), entered into a purchase and sale agreement to sell its interest in Mondrian South Beach. Pursuant to the terms and conditions of the purchase and sale agreement, the buyer paid the joint venture a cash purchase price sufficient for the joint venture to extinguish its outstanding mortgage and mezzanine loans of $18.7 million and $28.0 million, respectively, plus accrued interest, as of March 31, 2016, in full at a negotiated discount, and the buyer assumed certain liabilities of Mondrian South Beach. As a result of the debt extinguishment, the Company’s operating company, Morgans Group LLC, was released from the condominium purchase guarantee of up to $14.0 million and the construction completion guarantee. As part of this transaction, on June 8, 2016, Morgans Hotel Group Management LLC and the joint venture mutually terminated their existing management agreement for Mondrian South Beach and the Company entered into a license agreement with the buyer to allow the hotel to remain under the Mondrian brand. The license agreement grants the buyer a limited, non-exclusive right to use the Mondrian brand and other specified intellectual property of the Company, subject to certain termination rights, in exchange for a license fee that varies with Mondrian South Beach’s monthly gross revenue for the term of the license agreement, but is subject to a minimum annual fee payable to the Company.