The following (definition + example and usage note) are from the
American Heritage Dictionary. The first part, in particular, is from the edition I have on my computer. The online edition does not include a definition for
hang out at all. However, you can see the Usage Note online
here.
hang out. Slang. 1. To spend one's free time in a certain place: “a group of boys who
hung out together around what they called ‘Barry's Corner’” (Linda Ellerbee).
USAGE NOTE: Hanged, as a past tense and a past participle of hang, is used in the sense of “to put to death by hanging,” as in
Frontier courts hanged many a prisoner after a summary trial. A majority of the Usage Panel objects to
hung used in this sense.
In all other senses of the word, hung is the preferred form as past tense and past participle, as in
I hung my child's picture above my desk. 
hang out 
Re: hang out 
Linear Mode
