Schedule 13D Amendment No. 3

0001193125-13-111249.txt : 20130318 0001193125-13-111249.hdr.sgml : 20130318 20130318083108 ACCESSION NUMBER: 0001193125-13-111249 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20130318 DATE AS OF CHANGE: 20130318 GROUP MEMBERS: MICHAEL E. OLSHAN GROUP MEMBERS: ROBERT S. TAUBMAN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Morgans Hotel Group Co. CENTRAL INDEX KEY: 0001342126 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 161736884 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-81634 FILM NUMBER: 13696167 BUSINESS ADDRESS: STREET 1: 475 TENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 212-277-4100 MAIL ADDRESS: STREET 1: 475 TENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10018 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: OTK Associates, LLC CENTRAL INDEX KEY: 0001428658 IRS NUMBER: 261803087 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 200 E. LONG LAKE ROAD STREET 2: SUITE 300 CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48304 BUSINESS PHONE: (248) 258-6800 MAIL ADDRESS: STREET 1: 200 E. LONG LAKE ROAD STREET 2: SUITE 300 CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48304 SC 13D/A 1 d503682dsc13da.htm SCHEDULE 13D AMENDMENT NO. 3 Schedule 13D Amendment No. 3

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under Securities Exchange Act of 1934

(Amendment No. 3)*

Morgans Hotel Group Co.

(Name of Issuer)

Common Stock, $0.01 par value per share

(Title of Class of Securities)

61748W108

(CUSIP Number)

OTK Associates, LLC

200 E. Long Lake Road, Suite 300

Bloomfield Hills, Michigan 48304

(248) 258-6800

Copy to:

David A. Fine

Jeffrey R. Katz

Ropes & Gray LLP

800 Boylston Street

Prudential Center

Boston, MA 02199

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

March 18, 2013

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box ¨.

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule §240.13d-7(b) for other parties to whom copies are to be sent.

*	The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of section 18 of the Securities Exchange Act of 1934 (the “Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Page 1 of 8

13D


CUSIP No. 61748W108		Page 2 of 8


1	Name of reporting person: OTK Associates, LLC
2	Check the appropriate box if a member of a group (a) ¨ (b) x (1)
3	SEC use only
4	Source of funds WC
5	Check box if disclosure of legal proceedings is required pursuant to Item 2(d) or 2(e) ¨
6	Citizenship or place of organization Delaware
Number of shares beneficially owned by each reporting person with		7	Sole voting power 4,500,000⁽¹⁾
		8	Shared voting power 0
		9	Sole dispositive power 4,500,000⁽¹⁾
		10	Shared dispositive power 0
11	Aggregate amount beneficially owned by each reporting person 4,500,000⁽¹⁾
12	Check box if the aggregate amount in Row (11) excludes certain shares ¨
13	Percent of class represented by amount in Row (11) 13.91%
14	Type of reporting person OO

(1)

This Schedule is filed by OTK Associates, LLC and its managers, Robert S. Taubman and Michael E. Olshan (the “Reporting Persons”). These Reporting Persons expressly disclaim status as a “group” for purposes of this Schedule 13D/A. The shares reported as beneficially owned by each Reporting Person are the same shares, which are owned by OTK Associates, LLC.

13D


CUSIP No. 61748W108		Page 3 of 8


1	Name of reporting person: Robert S. Taubman
2	Check the appropriate box if a member of a group (a) ¨ (b) x (1)
3	SEC use only
4	Source of funds WC
5	Check box if disclosure of legal proceedings is required pursuant to Item 2(d) or 2(e) ¨
6	Citizenship or place of organization United States of America
Number of shares beneficially owned by each reporting person with		7	Sole voting power 0
		8	Shared voting power 4,500,000⁽¹⁾
		9	Sole dispositive power 0
		10	Shared dispositive power 4,500,000⁽¹⁾
11	Aggregate amount beneficially owned by each reporting person 4,500,000⁽¹⁾
12	Check box if the aggregate amount in Row (11) excludes certain shares ¨
13	Percent of class represented by amount in Row (11) 13.91%
14	Type of reporting person IN

(1)

13D


CUSIP No. 61748W108		Page 4 of 8


1	Name of reporting person: Michael E. Olshan
2	Check the appropriate box if a member of a group (a) ¨ (b) x (1)
3	SEC use only
4	Source of funds WC
5	Check box if disclosure of legal proceedings is required pursuant to Item 2(d) or 2(e) ¨
6	Citizenship or place of organization United States of America
Number of shares beneficially owned by each reporting person with		7	Sole voting power 0
		8	Shared voting power 4,500,000⁽¹⁾
		9	Sole dispositive power 0
		10	Shared dispositive power 4,500,000⁽¹⁾
11	Aggregate amount beneficially owned by each reporting person 4,500,000⁽¹⁾
12	Check box if the aggregate amount in Row (11) excludes certain shares ¨
13	Percent of class represented by amount in Row (11) 13.91%
14	Type of reporting person IN

Item 1.

Security and Issuer.

The title of the class of equity securities to which this statement relates is common stock, par value $0.01 per share (“Common Shares”), of Morgans Hotel Group Co., a Delaware corporation (the “Issuer”). The address of the principal executive office of the Issuer is 475 Tenth Avenue, New York, New York 10018.

Item 2.

Identity and Background.

(a)-(c) This statement is being filed by OTK Associates, LLC, a Delaware limited liability company (“OTK”), and its managers, Robert S. Taubman and Michael E. Olshan. OTK was formed under the laws of the State of Delaware and is an investment entity. OTK’s business and principal office address is 200 E. Long Lake Road, Suite 300, Bloomfield Hills, Michigan 48304.

Robert S. Taubman’s present principal occupation or employment is Chairman of the Board, and President and Chief Executive Officer of Taubman Centers, Inc., a real estate investment trust, and The Taubman Company LLC, which provides property management, leasing, development and other administrative services to, among others, Taubman Centers, Inc. and its shopping centers. Robert S. Taubman’s, Taubman Centers, Inc.’s and The Taubman Company LLC’s business and principal office address is 200 E. Long Lake Road, Suite 300, Bloomfield Hills, Michigan 48304.

Michael E. Olshan’s present principal occupation or employment is Chairman and Managing Partner of O-CAP Management, L.P., a hedge fund. Michael E. Olshan’s and O-CAP Management, L.P.’s business and principal office address is 600 Madison Avenue, 14^th Floor, New York, New York 10022.

(d)-(e) During the past five years, none of the Reporting Persons (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) OTK is a limited liability company organized under the laws of Delaware. Robert S. Taubman and Michael E. Olshan are citizens of the United States of America.

Item 3.

Source and Amount of Funds or Other Consideration.

4,500,000 Common Shares were purchased by OTK for an aggregate consideration of approximately $68,400,000 of its working capital. OTK received funds through contributions of capital from its initial members.

Item 4.

Purpose of Transaction.

On March 15, 2013, the Reporting Persons sent a letter to the Secretary of the Issuer by email, fax and by hand delivery indicating its intent to (i) nominate seven (7) nominees identified by the Reporting Persons to the Board of Directors at the forthcoming 2013 annual meeting of stockholders (the “Annual Meeting”) and (ii) present proposals for shareholder vote at the Annual Meeting. A copy of the notification letter and shareholder proposals delivered to the Issuer is filed as Exhibit 99.1 hereto and is incorporated herein by reference.

In addition, on March 18, 2013 the Reporting Persons sent an open letter to the stockholders of the Issuer enumerating the reasons for the Reporting Person’s proposal to nominate a new slate of directors. A copy of such letter is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

On March 15, 2013, Ropes & Gray LLP, as counsel to and on behalf of the Reporting Persons, sent a letter by e-mail, fax and hand delivery to Mr. Michael Gross, President, Chairman and Chief Executive Officer of the Issuer by hand delivery. The letter makes a demand upon the Issuer to permit the Reporting Persons and their agents to inspect and make copies or abstracts of certain shareholder materials no later than March 22, 2013. A copy of the letter is filed as Exhibit 99.3 hereto and is incorporated herein by reference.

Page 5 of 8

The Reporting Persons reserve their rights to make alternative plans or proposals in the future or take any other steps to enhance the value of their investment. The Reporting Persons further reserve the right to increase, decrease or eliminate their investment in the Issuer or take any other action relative thereto.

STOCKHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO SOLICITATION OF PROXIES BY OTK ASSOCIATES, LLC AND ITS AFFILIATES FROM THE STOCKHOLDERS OF MORGANS HOTEL GROUP CO. FOR USE AT THE 2013 ANNUAL MEETING OF MORGANS HOTEL GROUP CO. WHEN THEY ARE AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. WHEN COMPLETED, SUCH MATERIALS WILL, ALONG WITH OTHER RELEVANT DOCUMENTS, BE AVAILABE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION’S WEBSITE AT HTTP://WWW.SEC.GOV OR BY CONTACTING THE PARTICIPANTS’ PROXY SOLICITOR, OKAPI PARTNERS, TOLL FREE AT (877) 869-0171, OR BY EMAIL TO INFO@OKAPIPARTNERS.COM.

INFORMATION RELATING TO THE POTENTIAL PARTICIPANTS IN A POTENTIAL PROXY SOLICITATION IS CONTAINED IN EXHIBIT 2 TO THE SCHEDULE 14A FILED PURSUANT TO RULE 14A-12 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY OTK ASSOCIATES, LLC ON MARCH 15, 2013, AS IT MAY BE AMENDED FROM TIME TO TIME. THE SCHEDULE 14A AND ANY AMENDMENTS ARE AVAILABLE AT NO CHARGE ON THE SECURITIES AND EXCHANGE COMMISSION’S WEBSITE AT HTTP://WWW.SEC.GOV.

Other than as described above, the Reporting Persons do not have any current plans or proposals which relate to, or would result in, (a) any acquisition or disposition of securities of the Issuer, (b) any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries, (c) any sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries, (d) any material change in the Issuer’s present capitalization or dividend policy, (e) any other material change in the Issuer’s business or corporate structure, (f) any changes in the Issuer’s articles of incorporation or bylaws or other actions which may impede the acquisition of control of the Issuer by any person, (g) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (i) a class of the Issuer’s equity securities becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, or (h) any action similar to those enumerated above.

Item 5.

Interest in Securities of the Issuer

(a), (b) The information required in these paragraphs with respect to each of the Reporting Person is set forth in Rows 7 through 13 of the cover pages to this Schedule 13D and Item 2(b) above and is incorporated herein by reference. The Reporting Persons hold an aggregate of 4,500,000 shares or 13.91% of the outstanding Common Shares.

(c) Except as described in this Schedule 13D, neither any Reporting Person nor, to any Reporting Person’s knowledge (i) any executive officer or director of such Reporting Person; (ii) any person controlling of such Reporting Person; or (iii) any executive officer or director of any corporation or other person ultimately in control of such Reporting Person, each as listed in Schedule A; has effected any transactions in the Common Shares during the last sixty days.

(d) Not Applicable.

(e) Not Applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships with respect to Securities of the Issuer.

The responses to Items 3, 4, and 5 are incorporated herein by reference.

Page 6 of 8

Item 7.

Material to be Filed as Exhibits.


Exhibit 99.1		Shareholder proposal submitted to the Issuer on March 15, 2013.

Exhibit 99.2		Letter to stockholders of Morgans Hotel Group Co. dated March 18, 2013.

Exhibit 99.3		Stockholder demand for list of stockholders, submitted to Mr. Michael Gross on March 15, 2013

Page 7 of 8

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: March 18, 2013


OTK ASSOCIATES, LLC

By:	/s/ Robert S. Taubman
	Name:	Robert S. Taubman
	Title:	Manager

By:	/s/ Michael E. Olshan
	Name:	Michael E. Olshan
	Title:	Manager

/s/ Robert S. Taubman
Name: Robert S. Taubman

/s/ Michael E. Olshan
Name: Michael E. Olshan

Page 8 of 8

INDEX TO EXHIBITS


Exhibit 99.1		Shareholder proposal submitted to the Issuer on March 15, 2013.

Exhibit 99.2		Letter to stockholders of Morgans Hotel Group Co. dated March 18, 2013.

Exhibit 99.3		Stockholder demand for list of stockholders, submitted to Mr. Michael Gross on March 15, 2013.

EX-99.1 2 d503682dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

OTK Associates, LLC

200 E. Long Lake Road, Suite 300

Bloomfield Hills, Michigan 48304

March 15, 2013

VIA HAND DELIVERY

Secretary

c/o Board of Directors

Morgans Hotel Group Co.

475 Tenth Avenue

New York, New York 10018

Re: Notice of Stockholder’s Intent to Nominate Directors and Present Proposals at the 2013 Annual Meeting of Stockholders of Morgans Hotel Group Co.

Gentlemen:

OTK Associates, LLC (“OTK”) hereby submits this letter (this “Letter”) to provide notice (the “Notice”) pursuant to the requirements set forth in Article I, Section 1.11 of the By-laws (the “By-law Requirements”), of Morgans Hotel Group Co. (the “Company”).

The By-law Requirements set forth the information required to propose a nominee for election to the Board and to make proposals to be presented at the annual meeting of stockholders. Any stockholder desiring to nominate any person for election as a director of the Company is required to set forth the name of the person to be nominated, the number and class of all shares of each class of stock of the Company beneficially owned by such person, the information regarding such person required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K adopted by the Securities and Exchange Commission (the “SEC”) and such stockholders name and address and the number and class of shares of each class of stock of the Company beneficially owned by such stockholder. The proposed nominee must also give his or her written consent to be named in a proxy statement as a nominee and to serve as a director if elected. Any stockholder desiring to make a proposal to be presented at the annual meeting of stockholders is required to deliver the text of the proposal to be presented and a brief written statement of the reasons why the stockholder favors the proposal.

According to the By-law Requirements, for a notice to be considered timely for the 2013 annual meeting (the “Annual Meeting”), a stockholder’s written notice must be delivered to the Secretary of the Company at the principal executive office of the Company not less than 60 days nor more than 90 days prior to the date of the Annual Meeting. This Notice sets forth the information required to nominate a director for election at the Annual Meeting of the stockholders.

OTK hereby represents that it intends to appear in person or by proxy at the Annual Meeting to nominate the persons listed below as directors of the Company for election by the holders of common stock of the Company (each, a “Nominee” and together, the “Nominees”):

John J. Dougherty

Jason T. Kalisman

Mahmood Khimji

Jonathan Langer

Andrea L. Olshan

Michael E. Olshan

Parag Vora

OTK’s principal address is 200 E. Long Lake Road, Suite 300, Bloomfield Hills, Michigan 48304. OTK is the beneficial owner of 4,500,000 shares of common stock, par value $0.01, of the Company (the “Common Stock”) entitled to vote at the Annual Meeting. OTK intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the Nominees and/or otherwise solicit proxies from stockholders of the Company in support of the Nominees.

In the event that OTK nominates the Nominees and, for any reason, any Nominee is unable to stand for election at the Annual Meeting, OTK, in person or by proxy, intends to nominate a person in the place of such Nominee (an “Alternate Nomination”). If, for any reason, more than seven directors are to be elected at the Annual Meeting, OTK intends to nominate additional persons (each, an “Additional Nominee”) such that OTK will nominate a slate of persons sufficient to constitute the number of members of the Board that are entitled to be elected at the Annual Meeting. In either event, OTK, at the earliest practicable time, will give notice to the Company of any Alternate Nomination or Additional Nominee.

Pursuant to the By-law Requirements, certain information about each Nominee is set forth in Annex A. In addition, each Nominee has consented to being named as a nominee on a proxy statement and to serve as a director of the Company, if elected. The written consent of each Nominee is attached as Annex B. The Annexes and all attachments thereto are hereby incorporated into and made a part of this Notice. Accordingly, all matters disclosed in any part of this Notice, including the Annexes and all attachments thereto, should be deemed disclosed for all purposes of this Notice.

OTK intends to submit, for a stockholder vote at the Annual Meeting, the following proposals:

•

“RESOLVED, that any provision of the Bylaws of Morgans Hotel Group Co. as of the date of effectiveness of this resolution that was not included in the Bylaws, effective as of March 15, 2013, be and hereby is repealed.”

•

OTK supports this proposal because OTK believes that it is in the best interests of the Company and its stockholders that the Company’s bylaws not be further amended by the Board without the approval of stockholders. Therefore, it proposes to repeal all amendments, if any, adopted by the Board on or after March 15, 2013, including any amendments that the Board has adopted, or might adopt, to impede the nominations proposed by OTK, to negatively impact OTK’s ability to solicit and/or obtain proxies from stockholders, to undermine the will of the stockholders expressed in those proxies or to modify the Company’s corporate governance regime.

•

“RESOLVED, that Section 2.6 of the Bylaws of Morgans Hotel Group Co. be amended and replaced in its entirety with the following: “At each meeting of the Board of Directors a majority of the entire Board shall constitute a quorum for the transaction of business. The vote of seventy-five (75%) of the directors present at a meeting at which a quorum is present shall be the act of the Board unless the certificate of incorporation or these by-laws shall require a vote of a greater number. In case at any meeting of the Board a quorum shall not be present, the members or a majority of the members of the Board present may adjourn the meeting from time to time until a quorum shall be present.”

•

OTK supports this proposal to amend the Bylaws to require a vote of 75% of the directors present at a meeting of the Board to approve actions as OTK believes that requiring a higher percentage of directors to approve Board actions is an appropriate corporate governance measure.

Please advise us immediately if this Notice is deficient in any way or any additional information is required so that we may promptly cure any deficiency.

[Signature page follows]

Neither the delivery of this Letter nor any delivery by OTK of additional information to the Company from and after the date hereof shall be deemed to constitute an admission by OTK or any of its affiliates that such delivery is required or as to the legality or enforceability of any other matter, or a waiver by OTK or any of its affiliates of its right to contest or challenge, in any way, the enforceability of any other matter.


Very truly yours,

OTK ASSOCIATES, LLC

By:	/s/ Robert S. Taubman
	Name:	Robert S. Taubman
	Title:	Manager

By:	/s/ Michael E. Olshan
	Name:	Michael E. Olshan
	Title:	Manager

[Signature Page to Letter of Nominations]

Annex A

Nominee – John Dougherty

(A)	Personal Information:

John Dougherty, age 62

(B)	Principal occupation or employment:

Since 1986, Mr. Dougherty has been Vice President of Olshan Hotel Management, Inc., a hotel management company, where he handles development, operations and the management of 7 Hilton and Marriott hotels, totaling 1,395 rooms and 1,000 employees. Mr. Dougherty is a director of Olshan Hotel Management, Inc., a privately owned company. Mr. Dougherty holds a Bachelor of Science degree from the Cornell University School of Hotel Management.

Mr. Dougherty would bring to the Board over 25 years of valuable experience in the real estate industry. In particular, Mr. Dougherty would provide the Board with valuable counsel, advice, and expertise with respect to hotel development projects of Morgans Hotel Group Co.

(C)	Class and number of shares of Morgans Hotel Group Co. that the Nominee beneficially owns:

None.

(D)	Description of all arrangements or understandings between OTK Associates, LLC and the Nominee and any other person pursuant to which the nominations are to be made by OTK Associates, LLC:

Mr. Dougherty has consented to being submitted for consideration as a nominee, to be named in a proxy statement as a nominee, and to serve as a director of Morgans Hotel Group Co. if elected. Mr. Dougherty’s written consent is attached as part of Annex B.

(E)	Legal Proceedings:

During the past 10 years, Mr. Dougherty has not been involved in any event or proceeding described in Item 401(f) of Regulation S-K.

(F)	Other information relating to the Nominee:

(i) Neither Mr. Dougherty nor any of his associates have any arrangement or understanding with respect to (a) any future employment by Morgans Hotel Group Co. or its affiliates; or (b) any future transactions to which Morgans Hotel Group Co. or any of its affiliates will or may be a party.

(ii) None of the entities referred to under item (B) with which the Nominee has been involved during the past five years is a parent, subsidiary, or other affiliate of Morgans Hotel Group Co.

Annex A

Nominee – Jason Taubman Kalisman

(A)	Personal Information:

Jason Taubman Kalisman, CFA, age 34

(B)	Principal occupation or employment:

Mr. Kalisman is the founder and Chief Executive Officer of The Talisman Group, an investment firm. Mr. Kalisman is also a Founding Member of OTK Associates, LLC, which is the largest shareholder of Morgans Hotel Group Co. Prior to founding The Talisman Group in 2012, Mr. Kalisman was at GEM Realty Capital, serving as a Vice President from 2010 to 2012 and a Financial Analyst in 2009. From 2008 to 2010, Mr. Kalisman attended Stanford Graduate School of Business. Mr. Kalisman served Goldman Sachs from 2001 to 2007 in both the Real Estate and Structured Products Groups. Mr. Kalisman graduated from Harvard College with a Bachelor of Arts degree in Economics and Stanford Graduate School of Business with a Master of Business Administration, where he was also a recipient of their Certificate in Global Management. Mr. Kalisman has also earned the right to use the Chartered Financial Analyst designation.

Mr. Kalisman has served as a director of Morgans Hotel Group Co. since April 2011 and has been a member of the Corporate Governance and Nominating Committee since July 2011.

Mr. Kalisman would bring to the Board his valuable expertise in the real estate and investment industries, as well as in corporate finance and governance matters. Mr. Kalisman’s service on the board of Morgans Hotel Group Co. brings valuable insight into the business of Morgans Hotel Group Co.

(C)	Class and number of shares of Morgans Hotel Group Co. that the Nominee beneficially owns:

None¹

(D)	Description of all arrangements or understandings between OTK Associates, LLC and the Nominee and any other person pursuant to which the nominations are to be made by OTK Associates, LLC:

Mr. Kalisman has consented to being submitted for consideration as a nominee, to be named in a proxy statement as a nominee, and to serve as a director of Morgans Hotel Group Co. if elected. Mr. Kalisman’s written consent is attached as part of Annex B. Mr. Kalisman owns an indirect interest in OTK Associates, LLC.

Mr. Kalisman owns an indirect interest in OTK Associates, LLC, which is a beneficial owner of 4,500,000 shares of the common stock of Morgans Hotel Group Co. Mr. Kalisman disclaims beneficial ownership of the securities reported to be owned by OTK Associates, LLC, except to the extent of his indirect pecuniary interest therein.

(E)	Legal Proceedings:

During the past 10 years, Mr. Kalisman has not been involved in any event or proceeding described in Item 401(f) of Regulation S-K.

(F)	Other information relating to the Nominee:

Neither Mr. Kalisman nor any of his associates have any arrangement or understanding with respect to (a) any future employment by Morgans Hotel Group Co. or its affiliates; or (b) any future transactions to which Morgans Hotel Group Co. or any of its affiliates will or may be a party.

Nominee – Mahmood Khimji

(A)	Personal Information:

Mahmood Khimji, age 52

(B)	Principal occupation or employment:

Since 1988, Mr. Khimji has been the Co-Founder and Principal of Highgate Holdings, a fully integrated hospitality management and real estate investment company. Mr. Khimji has previously served on the boards of Interstate Hotels & Resorts Inc. and MeriStar Hospitality Corporation. Mr. Khimji is a graduate of Columbia Law School.

Mr. Khimji would bring to the Board his extensive experience in hotel and real estate ownership, management and operations as well as his experience in serving on the board of a public company in the hotel management industry.

(C)	Class and number of shares of Morgans Hotel Group Co. that the Nominee beneficially owns:

None.

(D)	Description of all arrangements or understandings between OTK Associates, LLC and the Nominee and any other person pursuant to which the nominations are to be made by OTK Associates, LLC:

Mr. Khimji has consented to being submitted for consideration as a nominee, to be named in a proxy statement as a nominee, and to serve as a director of Morgans Hotel Group Co. if elected. Mr. Khimji’s written consent is attached as part of Annex B.

(E)	Legal Proceedings:

During the past 10 years, Mr. Khimji has not been involved in any event or proceeding described in Item 401(f) of Regulation S-K.

(F)	Other information relating to the Nominee:

(i) Neither Mr. Khimji nor any of his associates have any arrangement or understanding with respect to (a) any future employment by Morgans Hotel Group Co. or its affiliates; or (b) any future transactions to which Morgans Hotel Group Co. or any of its affiliates will or may be a party.

(ii) None of the entities referred to under item (B) with which the Nominee has been involved during the past five years is a parent, subsidiary, or other affiliate of Morgans Hotel Group Co.

Nominee – Jonathan Langer

(A)	Personal Information:

Jonathan Langer, age 43

(B)	Principal occupation or employment:

Since 2011, Mr. Langer has been a Partner at Fireside Investments, a private investing company. From March 2010 to March 2011, Mr. Langer worked in private investing at Bain Capital. From 1994 to 2009, Mr. Langer was a Managing Director at Goldman, Sachs & Co. Mr. Langer graduated from The Wharton School of the University of Pennsylvania with a Bachelor of Science in Engineering degree in Economics. Mr. Langer has served as a director of Kerzner International Resorts, Inc., Hilton Hotels & Resorts, and Strategic Hotel Capital.

Mr. Langer would bring to the Board his extensive experience buying and selling in the lodging and resort business, including experience with restructuring and turnarounds. His experience also includes working with asset companies, management companies, and branded companies and serving on the boards of public companies in the hospitality industry.

(C)	Class and number of shares of Morgans Hotel Group Co. that the Nominee beneficially owns:

None.

(D)	Description of all arrangements or understandings between OTK Associates, LLC and the Nominee and any other person pursuant to which the nominations are to be made by OTK Associates, LLC:

Mr. Langer has consented to being submitted for consideration as a nominee, to be named in a proxy statement as a nominee, and to serve as a director of Morgans Hotel Group Co. if elected. Mr. Langer’s written consent is attached as part of Annex B.

(E)	Legal Proceedings:

During the past 10 years, Mr. Langer has not been involved in any event or proceeding described in Item 401(f) of Regulation S-K.

(F)	Other information relating to the Nominee:

(i) Neither Mr. Langer nor any of his associates have any arrangement or understanding with respect to (a) any future employment by Morgans Hotel Group Co. or its affiliates; or (b) any future transactions to which Morgans Hotel Group Co. or any of its affiliates will or may be a party.

(ii) None of the entities referred to under item (B) with which the Nominee has been involved during the past five years is a parent, subsidiary, or other affiliate of Morgans Hotel Group Co.

Nominee – Andrea L. Olshan

(A)	Personal Information:

Andrea L. Olshan, age 32

(B)	Principal occupation or employment:

Since 2011, Ms. Olshan has served as Chief Executive Officer of Mall Properties Inc. (“MPI”), a full-service real estate operating and investing company which holds 11 million square feet of retail properties, 5 million square feet of office space, 20,000 multi-family residential units, and 1,395 hotel rooms in its portfolio, and over 1,000 employees. Prior to her appointment as Chief Executive Officer, Ms. Olshan served as Chief Operating Officer of MPI from 2008 to 2011 and was responsible for overseeing development, management, leasing, investment, and operations across MPI properties. Ms. Olshan graduated magna cum laude from Harvard University and holds a Masters in Business Administration from the Columbia Graduate School of Business. Ms. Olshan currently serves as a director of MPI. She has represented Morton Olshan as a managing member of the RCG Longview Debt Funds and in the general partnerships of the RCG Longview Equity Fund and the Normandy Realty Partners Funds.

Ms. Olshan would bring to the Board her valuable expertise and leadership in the real estate industry, including the development and management of hotels.

(C)	Class and number of shares of Morgans Hotel Group Co. that the Nominee beneficially owns:

None.²

(D)	Description of all arrangements or understandings between OTK Associates, LLC and the Nominee and any other person pursuant to which the nominations are to be made by OTK Associates, LLC:

Ms. Olshan has consented to being submitted for consideration as a nominee, to be named in a proxy statement as a nominee, and to serve as a director of Morgans Hotel Group Co. if elected. Ms. Olshan’s written consent is attached as part of Annex B. Ms. Olshan owns an indirect interest in OTK Associates, LLC.

(E)	Legal Proceedings:

During the past 10 years, Ms. Olshan has not been involved in any event or proceeding described in Item 401(f) of Regulation S-K.

Ms. Olshan owns an indirect interest in OTK Associates, LLC, which is a beneficial owner of 4,500,000 shares of the common stock of Morgans Hotel Group Co. Ms. Olshan disclaims beneficial ownership of the securities reported to be owned by OTK Associates, LLC, except to the extent of her indirect pecuniary interest therein.

(F)	Other information relating to the Nominee:

(i) Neither Ms. Olshan nor any of her associates have any arrangement or understanding with respect to (a) any future employment by Morgans Hotel Group Co. or its affiliates; or (b) any future transactions to which Morgans Hotel Group Co. or any of its affiliates will or may be a party.

(ii) None of the entities referred to under item (B) with which the Nominee has been involved during the past five years is a parent, subsidiary, or other affiliate of Morgans Hotel Group Co.

Nominee – Michael E. Olshan

(A)	Personal Information:

Michael E. Olshan, age 30

(B)	Principal occupation or employment:

Mr. Olshan founded O-CAP Management, L.P., a private investment fund that focuses primarily on hard asset sectors such as real estate, infrastructure, and natural resources, in July 2009 and currently serves as the Chairman and Managing Partner. Mr. Olshan has been a Manager of OTK Associates, LLC, an investment firm, since 2008. From March 2007 to July 2009, Mr. Olshan served as a Managing Director at JANA Partners, LLC, an investment advisory firm, where he part of an investment team overseeing a multi-billion dollar investment fund and focused on sourcing and analyzing event-driven opportunities primarily in REIT, real estate, lodging, gaming, and financials sectors throughout North America and Europe. Mr. Olshan also serves as a director of Mall Properties, Inc., a privately owned real estate firm that specializes in the development, acquisition and management of commercial real estate. Mr. Olshan graduated cum laude from Harvard University.

Mr. Olshan would bring to the Board his valuable expertise in the real estate and investment industries, including his experience serving on the board of a real estate company.

(C)	Class and number of shares of Morgans Hotel Group Co. that the Nominee beneficially owns:

OTK Associates, LLC has sole voting and investment power over 4,500,000 common shares of Morgans Hotel Group Co. OTK Associates, LLC is managed by Mr. Olshan and Robert S. Taubman, with actions taken and made by, or with the written consent of, both of them. As a result, Mr. Olshan may be deemed to share voting and investment power over the common shares of Morgans Hotels Group Co. beneficially owned by OTK Associates, LLC.

(D)	Description of all arrangements or understandings between OTK Associates, LLC and the Nominee and any other person pursuant to which the nominations are to be made by OTK Associates, LLC:

Mr. Olshan has consented to being submitted for consideration as a nominee, to be named in a proxy statement as a nominee, and to serve as a director of Morgans Hotel Group Co. if elected. Mr. Olshan’s written consent is attached as part of Annex B. Mr. Olshan is also a Manager of OTK Associates, LLC.

(E)	Legal Proceedings:

During the past 10 years, Mr. Olshan has not been involved in any event or proceeding described in Item 401(f) of Regulation S-K.

(F)	Other information relating to the Nominee:

(i) Neither Mr. Olshan nor any of his associates have any arrangement or understanding with respect to (a) any future employment by Morgans Hotel Group Co. or its affiliates; or (b) any future transactions to which Morgans Hotel Group Co. or any of its affiliates will or may be a party.

(ii) None of the entities referred to under item (B) with which the Nominee has been involved during the past five years is a parent, subsidiary, or other affiliate of Morgans Hotel Group Co.

Nominee – Parag Vora

(A)	Personal Information:

Parag Vora, age 37

(B)	Principal occupation or employment:

Mr. Vora is the Founder and Portfolio Manager of HG Vora Capital Management, an event driven and value oriented investment firm with specific expertise in lodging, amongst other sectors. From 2004 to 2008, Mr. Vora was an investment professional at Silver Point Capital, where he focused on investments in public and private companies with an emphasis on credit and distressed situations. Prior to Silver Point, Mr. Vora was a Vice President at Goldman Sachs in the Real Estate Investment Banking Division where he advised real estate and consumer-oriented businesses on mergers and acquisitions and leveraged finance transactions from 2000 to 2003. Mr. Vora currently serves as a director of funds managed by HG Vora Capital Management. Mr. Vora graduated from the University of Michigan in 1996 with a Bachelor of Arts degree, with Distinction, in Honors Economics and Spanish. He also received a Juris Doctor, cum laude, and a Masters of Business Administration from New York University in 2000.

Mr. Vora would bring to the Board his valuable expertise in the real estate and investment industries.

(C)	Class and number of shares of Morgans Hotel Group Co. that the Nominee beneficially owns:

None.

(D)	Description of all arrangements or understandings between OTK Associates, LLC and the Nominee and any other person pursuant to which the nominations are to be made by OTK Associates, LLC:

Mr. Vora has consented to being submitted for consideration as a nominee, to be named in a proxy statement as a nominee, and to serve as a director of Morgans Hotel Group Co. if elected. Mr. Vora’s written consent is attached as part of Annex B.

(E)	Legal Proceedings:

During the past 10 years, Mr. Vora has not been involved in any event or proceeding described in Item 401(f) of Regulation S-K.

(F)	Other information relating to the Nominee:

(i) Neither Mr. Vora nor any of his associates have any arrangement or understanding with respect to (a) any future employment by Morgans Hotel Group Co. or its affiliates; or (b) any future transactions to which Morgans Hotel Group Co. or any of its affiliates will or may be a party.

(ii) None of the entities referred to under item (B) with which the Nominee has been involved during the past five years is a parent, subsidiary, or other affiliate of Morgans Hotel Group Co.

Annex B

Consent of Nomination

The undersigned hereby consents to his name being submitted by OTK Associates, LLC (“OTK”) as a nominee for election as a director of Morgans Hotel Group Co. (the “Company”) in any proxy statement to be filed with the Securities and Exchange Commission and distributed to the holders of the common stock, $0.01 par value of the Company (the “Common Stock”) by OTK and in other materials in connection with the solicitation of proxies by OTK from holders of Common Stock to be voted at the 2013 annual meeting of shareholders of the Company and any adjournment thereof, and further consents to serve as a director of the Company, if elected.

Dated: March 11, 2013

/s/ John J. Dougherty

John J. Dougherty

Consent of Nomination

Dated: March 11, 2013

/s/ Jason Taubman Kalisman

Jason Taubman Kalisman

Chief Executive Officer

The Talisman Group, L.L.C.

Consent of Nomination

Dated: March 15, 2013

/s/ Mahmood Khimji

Mahmood Khimji

Consent of Nomination

Dated: March 14, 2013

/s/ Jonathan Langer

Jonathan Langer

Consent of Nomination

Dated: March 11, 2013

/s/ Andrea L. Olshan

Andrea L. Olshan

Consent of Nomination

Dated: March 12, 2013

/s/ Michael Olshan

Michael Olshan

Consent of Nomination

Dated: March 14, 2013

/s/ Parag Vora

Parag Vora

EX-99.2 3 d503682dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

OTK Associates, LLC

200 E. Long Lake Road, Suite 300

Bloomfield Hills, Michigan 48304

March 18, 2013

Dear Fellow Stockholders,

We are writing to inform you that on Friday, March 15, OTK Associates, LLC delivered notice to Morgans Hotel Group of its intent to nominate seven qualified candidates to the company’s board of directors at the upcoming annual meeting of stockholders on May 15, 2013.

As the company’s largest stockholder, with a 13.9% ownership stake or 4,500,000 common shares of Morgans, we are seeking your support to elect directors that have the skills and experience necessary to either grow the business and return the company to profitability or to appropriately evaluate and pursue strategic alternatives in a disinterested fashion. We are nominating a slate of directors that brings significant lodging industry expertise, capital markets experience and superior hotel operating acumen. We strongly believe that a reconfigured board is a prerequisite for improving the company’s financial performance and competitive position, and for harvesting additional value from its existing asset base.

OTK is a partnership between families that have a demonstrated track record of creating value in the real estate and lodging industries. OTK acquired its position in Morgans more than five years ago and has not sold any shares since that time. During this period, OTK has observed as various management teams and board members squandered resources and failed to capitalize on the extraordinary brand value of the company. OTK believes that new leadership is urgently needed to protect the interests of common stockholders and maximize stockholder value going forward, and we believe the majority of Morgans’ common stockholders will agree.

Need for Alignment of Interests:

•

As the company’s largest stockholder, our interests are best aligned with those of the entire stockholder base.

•

The current board has significant representation from individuals directly and indirectly affiliated with the company’s largest holder of convertible debt securities and preferred shares. The next board will have to anticipate and plan for the maturity of the convertible debt and the accelerated accrual of dividends on the preferred securities. Stockholders should be represented by a board whose interests are aligned first and foremost with its fiduciary duties to common stockholders, while cognizant of the company’s contractual obligations to creditors.

•

The board has engaged in a number of self-serving transactions and questionable employment decisions during its tenure. In March 2011, the board appointed a new chief executive officer who had never previously served in a public company operating role nor worked in the hotel and lodging sectors. The CEO has however served as a paid employee for Morgans’ largest holder of convertible debt securities and preferred shares from 2008 to 2011.

•

Additionally, directors have received various extraordinary payments and bonuses in addition to their base compensation for activities associated with ordinary board responsibilities.

Restoring Financial Performance:

•

Morgans was adversely affected by the recession, but unlike most other hotel companies, it has not recovered. Over the past five years, Morgans shares have decreased by approximately 68% representing approximately $325 million in value destruction. During that time S&P 500 Hotels, Restaurants & Leisure Index, Morgans’ self-selected reference index, has increased by 69%. Morgans’ five-year stock performance is in the bottom 20% of companies in the Nasdaq composite index.

•

Systemwide comparable RevPAR for the full year 2012 was approximately 5% below the level reported as of December 31, 2008, while total company revenue is down almost 37% over the same period. Adjusted EBITDA margin, based on adjusted EBITDA as reported by the company, has fallen 59.0% from 29.5% to 12.1% over that time.

•

Between 2008 and 2012, the company reported cumulative net losses of approximately $384 million, or just over 2.4x today’s remaining equity market cap. Over $144 million of those losses were recognized during 2011 and 2012 under the stewardship of current management.

Opportunity to Improve Management and Board Oversight:

•

Over the past several years the board has allowed management to pursue a litany of transactions that have destroyed significant equity capital and collectively generated negative returns to stockholders. These include deals that have resulted in terminated management contracts, accounting impairments, foreclosures and restructurings.

•

Poorly timed and ill executed capital markets transactions have limited the company’s financial and strategic flexibility.

•

Morgans’ overhead expense is disproportionate to its asset base and market capitalization. The combined total of executive compensation for named executive officers in 2011, the most recent year for which such information is available, was $20.4 million, or 68% of the company’s 2011 reported adjusted EBITDA.

•

Total SG&A expenses plus stock based compensation for 2011 and 2012 combined totaled over $94 million, or approximately 60% of today’s equity market capitalization and 1.8x the company’s reported adjusted EBITDA for those two years combined. The new board would take swift action to right size the expense structure and improve operating cash flow.

•

The proposed slate includes members with deep industry relationships and the ability to draw talent, establish a more efficient management structure and forge relationships with world-class partners.

The decision to nominate a new slate of board members has not been taken lightly. After five years of observation, OTK views it impossible, based on the company’s performance over time, to effect sweeping and necessary change without replacing substantially all of the current board. The slate we are proposing has been constructed to refocus the company on its core business, extend its collection of world recognized brands and to right-size its operating cost structure. Members of this slate possess the specific industry experience, financial sophistication and operating relationships to assist the company moving forward.

Morgans Hotel Group has been a leading name in luxury boutique hotels, and can be again with proper oversight and leadership. We ask for your support in electing directors committed to stabilizing the company and maximizing its value.

If you have questions, we urge you to call our proxy solicitors, Okapi Partners LLC, toll-free at (877) 869-0171. You may also email questions to info@okapipartners.com

Sincerely,

/s/ OTK Associates, LLC

OTK Associates, LLC

EX-99.3 4 d503682dex993.htm EX-99.3 EX-99.3

Exhibit 99.3

OTK Associates, LLC

200 E. Long Lake Road, Suite 300

Bloomfield Hills, Michigan 48304

March 15, 2013

VIA HAND DELIVERY

Michael Gross

Chief Executive Officer

Morgans Hotel Group Co.

475 Tenth Avenue

New York, New York 10018

Re: Stockholder Demand for List of Stockholders

Gentlemen:

OTK Associates, LLC (“OTK”) is the beneficial owner of 4,500,000 shares of common stock, par value $0.01 per share (“Common Stock”), of Morgans Hotel Group Co. (the “Company”). OTK’s principal address is 200 E. Long Lake Road, Suite 300, Bloomfield Hills, Michigan 48304. Attached hereto as Exhibit A is (i) a true and correct copy of a letter received by OTK from Bank of America Merrill Lynch, dated March 14, 2013, that reflects OTK’s beneficial ownership of 3,500,000 shares of Common Stock the Company and (ii) a true and correct copy of a letter received by OTK from Stifel Nicolaus, dated March 12, 2013, that reflects OTK’s beneficial ownership of 1,000,000 shares of Common Stock of the Company.

On March 15, 2013, OTK delivered notice (the “Notice”) to the Company of its intent to nominate seven individuals for election as directors of the Company at the Company’s 2013 annual meeting of stockholders (the “Annual Meeting”). In connection therewith, OTK hereby makes a formal demand under oath for OTK and its agents, designated below, to inspect, no later than March 22, 2013, the following documents and records of the Company and to make copies or abstracts therefrom:

(a)

A complete record or list of the Company’s stockholders, certified by the Company or its transfer agent, showing the names and addresses of each stockholder and the number of shares of stock registered in the name of each such stockholder, as well as the names, addresses and share amounts held by participants in dividend reinvestment plans and/or employee plans, in each case as of the most recent date available;

(b)

A CD-ROM, diskette or other electronic file that lists the holders of the Company’s stock requested in paragraph (a) above as of the most recent date available, showing the names, addresses and number of shares held by such stockholders, such computer processing data as is necessary for the undersigned to make use of such magnetic computer tape for verification purposes;

(c)

All daily transfer sheets showing changes in the names, addresses and number of shares of the Company’s stockholders which are in or come into the possession of the Company or its transfer agent, or which can reasonably be obtained from brokers, dealers, banks, clearing agencies or voting trustees or their nominees, from the date of the stockholder list referred to above;

(d)

All information in, or which comes into, the Company’s, its transfer agent’s or its proxy solicitor’s or any of their agents’ possession or control, or which can reasonably be obtained from brokers, dealers, banks, clearing agencies or voting trustees or their nominees, concerning the names, addresses and number of shares held by the participating brokers and banks named in the individual nominee names of Cede & Co. and other similar nominees of any central certificate depository system, including (i) respondent bank listings and omnibus proxies and (ii) Cede & Co. depository listings on a daily basis, in each case as of the most recent date available;

(e)

All information in, or which comes into, the Company’s possession or control, or which can reasonably be obtained from brokers, dealers, banks, clearing agencies, voting trustees or other nominees relating to the names of the beneficial owners of the Company’s stock (“NOBO’s”) pursuant to Rule 14b-1(c) or Rule 14b-2(c) under the Securities Exchange Act of 1934, as amended, and a NOBO list and CD-ROM, diskette or other electronic file in descending order balance or such other format as may be currently in the possession of or reasonably obtained by the Company or its agents (together with such computer processing data as is necessary to make use of such CD-ROM or diskette or other electronic file). If such information is not in the Company’s possession, custody or control, such information should be requested from any agent or service employed by the Company which may have such information in its possession, custody or control;

(f)

To the extent the Company, or any person or entity acting on its behalf, maintains electronic mail addresses or other electronic contact information concerning stockholders, all such information; and

(g)

To the extent not already referred to above, any CD-ROM, diskette or other electronic medium suitable for use by computer or word processor which contains any or all of the information requested in this letter, together with any program, software, manual or other instructions necessary for the practical use of such information.

OTK demands that modifications, additions or deletions to any and all information referred to in paragraphs (a) and (b) above be immediately furnished to OTK and its agents as such modification, additions or deletions become available to the Company or its agents or representatives.

-2-

OTK will bear the reasonable costs incurred by the Company in connection with the production of the above information.

The purpose of this demand is to enable OTK to communicate with other stockholders and to solicit proxies for the Annual Meeting.

OTK hereby designates any attorney at Ropes & Gray LLP or any employee of Okapi Partners LLC and any other persons designated by them or OTK, acting singly or in combination, as OTK’s agents to conduct the inspection and copying requested herein.

Please acknowledge receipt of this letter by signing the enclosed copy of this letter in the place indicated below and return it to counsel for OTK, Jeffrey R. Katz of Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, Massachusetts 02199. Please advise counsel for OTK at (617) 951-7072 as promptly as practicable when and where the items requested above will be made available to OTK and its agents. Please also advise counsel immediately whether you will voluntarily supply the requested information. If counsel to OTK has not received your response to this request by March 22, 2013, OTK will assume that you do not intend to comply with this demand and will seek appropriate recourse.

[Signature page follows]

-3-


Very truly yours,

OTK ASSOCIATES, LLC

By:		/s/ Robert S. Taubam
Name:		Robert S. Taubman
Title:		Manager

By:		/s/ Michael E. Olshan
Name:		Michael E. Olshan
Title:		Manager

Sworn to before me this 14^th day of

March, 2013

/s/ Katherine A. Beale

Katherine A. Beale

Notary Public/Commissioner of Oaths

Sworn to before me this 12^th day of

March, 2013

/s/ Ruth Carcamo

Ruth Carcamo

Notary Public/Commissioner of Oaths

[Signature Page to Shareholder’s Request for List of Stockholders]


Receipt Acknowledged On

, 2013

MORGANS HOTEL GROUP CO.

By:
Name:
Title:

[Receipt Acknowledgement Signature Page to Shareholder’s Request List of Stockholders]

Exhibit A

LOGO

Bank of America Merrill Lynch

March 14, 2013

Taubman Ventures Management

Attn: Sandy Ray

200 E. Long Lake Road, Suite 180

Bloomfield Hills, MI 48304

RE: Account

Dear Ms. Ray:

Please accept this letter as verification that OTK Associates, LLC is the beneficial owner of the account: which holds 3,500,000 shares of Morgans Hotel Group Company Stock.

Sincerely

/s/ John Bryant

John Bryant

Vice President

LOGO

March 12, 2013

Taubman Ventures Management

Attn: Sandy Ray

200 E. Long Lake Road, Suite 180

Bloomfield Hills, MI 48304

Re:

Dear Ms. Ray:

Please accept this letter as verification that OTK Associate LLC is the beneficial owner of account which holds 1,000,000 shares of Morgans Hotel Group Company stock.

Sincerely,

/s/ Tina Schweitzer

Tina Schweitzer

Stock Records

STIFEL, NICOLAUS & COMPANY, INCORPORATED

ONE FINANCIAL PLAZA | 501 NORTH BROADWAY | ST. LOUIS, MISSOURI 63102 | (314) 342-2000 | WWW.STIFEL.COM

MEMBER SIPC AND NYSE

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