Sec Form 13D Filing - Gores Sponsor III LLC filing for PAE Inc (PAE) - 2020-02-18

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D

Information To Be Included in Statements Filed Pursuant to § 240.13d-1(a) and

Amendments Thereto Filed Pursuant to § 240.13d-2(a)

PAE Incorporated

(Name of Issuer)

Class A Common Stock

(Title of Class of Securities)

69290Y109

(CUSIP Number)

Gores Sponsor III, LLC

9800 Wilshire Blvd.

Los Angeles, CA 90212

310-209-3010

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

February 10, 2020

(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 off §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-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 §240.13d-7 for other parties to whom copies are to be sent.

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 (“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).

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This Schedule 13D (“Schedule 13D”) relates to shares of par value $0.0001 per share (“Class A Common Stock”), of PAE Incorporated (formerly known as Gores Holdings III, Inc., the “Issuer”), whose principal executive offices are located at 360 North Crescent Drive, Beverly Hills, California 90210.

This statement is being filed by the following persons (each a “Reporting Person” and, collectively, the “Reporting Persons”):

Sponsor and AEG are each organized under the laws of the State of Delaware. The business address of Sponsor and AEG is 9800 Wilshire Blvd. Beverly Hills, CA 90212. Sponsor and AEG are principally engaged in the business of investing in securities, including the Issuer.

Information with respect to the executive officers and directors of Sponsor and AEG (collectively, the “Related Persons”), including name, business address, present principal occupation or employment and the organization in which such employment is conducted, and citizenship is listed on the attached Schedule A, which is incorporated herein by reference.

Alec Gores is a citizen of the United States of America. Mr. Gores is the founder, Chairman, and Chief Executive Officer of Gores Group, LLC (“Gores Group”). The business address of Mr. Gores is 9800 Wilshire Blvd. Beverly Hills, CA 90212.

During the last five years, none of the Reporting Persons or Related Persons (i) has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was 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.

On November 3, 2017, prior to the initial public offering of the Issuer (the “IPO”), Sponsor purchased 10,781,250 shares of the Issuer’s Class F Common Stock, par value $0.0001 per share (the “Founder Shares”) for an aggregate purchase price of $25,000. In connection with the IPO, Sponsor also purchased 6,666,666 warrants to purchase shares of Class A Common Stock on a one-for-one basis at an exercise price of $11.50 per share (“Warrants”) at a price of $1.50 per Warrant. On September 4, 2018, Sponsor sold 75,00 0 Founder Shares to certain members of the Issuer’s board of directors. On October 22, 2018, Sponsor forfeited 781,250 Founder Shares to the Issuer for no consideration in connection with the election by the underwriters of the IPO not to exercise the remaining unused portion of the over-allotment option.

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On February 10, 2020, prior to the Business Combination (as defined below), Sponsor distributed 921,574 Founder Shares and 1,182,925 Warrants to its members. In addition, AEG purchased 1,969,947 shares of Class A Common Stock, Mr. Gores’s spouse purchased 54,348 shares of Class A Common Stock and a series of trusts for the benefit of Mr. Gores’s children purchased 1,086,958 shares of Class A Common Stock, in each case at a purchase price of $9.20 per share in a private placement completed on February 10, 2020 prior to the Business Combination (the “2020 Private Placement”).

On February 10, 2020, in connection with the Business Combination, 3,000,000 Founder Shares were cancelled. The remaining 6,003,426 Founder Shares were automatically converted into shares of Class A Common Stock on a one-to-one basis at the time of the Business Combination. Sponsor also directly owns the remaining 5,483,471 Warrants, which will become exercisable on March 11, 2020.

Sponsor obtained the funds to purchase the Founder Shares and the Warrants through capital contributions from its members. AEG obtained the funds to purchase shares of Class A Common Stock through capital contributions from its members. Mr. Gores’s spouse and each of the trusts for the benefit of Mr. Gores’s children used personal family funds to purchase shares of Class A Common Stock.

Business Combination

On February 10, 2020, pursuant to the Agreement and Plan of Merger dated as of November 1, 2019 by and among the Issuer, Shay Holding Corporation and the other parties thereto, the Issuer acquired the business conducted by Shay Holding Corporation and was renamed PAE Incorporated (the “Business Combination”).

Subscription Agreements

On November 1, 2019, the Issuer entered into Subscription Agreements with certain investors, as amended by joinder letters from time to time, pursuant to which the investors agreed to purchase an aggregate of 23,913,044 shares of Class A Common Stock in the 2020 Private Placement for a price of $9.20 per share. Each of the purchases in the Private Placement by AEG and the trusts and family members of Mr. Gores described in Item 3 above were completed pursuant to such Subscription Agreements on February 10, 2020.

The shares of Class A Common Stock issued in connection with the Subscription Agreements were issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The Subscription Agreements provide that the Issuer shall, within 30 days after the Business Combination, file a registration statement with the Securities Exchange Commission (“SEC”) to register the resale of such shares of Class A Common Stock and shall use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof.

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Registration Rights Agreement

In connection with the consummation of the Business Combination, on February 1, 2020, the Issuer, Sponsor and certain other holders of the Issuer’s Class A Common Stock (the “Restricted Stockholders”) entered into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which (a) any outstanding share of Class A Common Stock or any other equity security (including the Warrants and including shares of Class A Common Stock issued or issuable upon the exercise of any other equity security) of the Issuer held by a Restricted Stockholder as of the date of the Registration Rights Agreement or thereafter acquired by a Restricted Stockholder (including the shares of Class Common A Stock issued upon conversion of Founder Shares and upon exercise of any Warrants) and (b) any other equity security of the Issuer issued or issuable with respect to any such share of Class A Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, are entitled to registration rights.

The Registration Rights Agreement provides that the Issuer shall, within 30 days after the Business Combination, file with a shelf registration statement with the SEC to register the resale of the securities held by the Restricted Stockholders and shall use its reasonable best efforts to have such registration statement declared effective as soon as practicable after the filing thereof, but in no event later than 60 days following the initial filing thereof. The Reporting Persons party to the Registration Rights Agreement are entitled to make up to six demands for registration, excluding short form demands, that the Issuer register shares of Class A Common Stock held by these parties. In addition, the Restricted Stockholders have certain “piggy-back” registration rights. The Issuer will bear the expenses incurred in connection with the filing of any registration statements filed pursuant to the terms of the Registration Rights Agreement. The Issuer and the Restricted Stockholders agreed in the Registration Rights Agreement to provide customary indemnification in connection with offerings of Class A Common Stock effected pursuant to the terms of the Registration Rights Agreement.

Letter Agreement

On September 6, 2018, Sponsor and certain individuals entered into a letter agreement with the Issuer pursuant to which they agreed to restrictions on the transfer of the Founder Shares and Warrants until a specified date, which (i) in the case of the shares of Class A Common Stock issued upon conversion of the Founder Shares, is August 8, 2020, and (ii) in the case of the Warrants and the shares of Class A Stock underlying the Warrants, is March 11, 2020.

The foregoing descriptions of the Subscription Agreements, the Registration Rights Agreement and the Letter Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements filed as exhibits to this Schedule 13D, and incorporated herein by reference.

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General

The Reporting Persons acquired the securities described in this Schedule 13D for investment purposes and they intend to review their investments in the Issuer on a continuing basis. Any actions the Reporting Persons might undertake may be made at any time and from time to time without prior notice and will be dependent upon the Reporting Persons’ review of numerous factors, including, but not limited to: an ongoing evaluation of the Issuer’s business, financial condition, operations and prospects; price levels of the Issuer’s securities; general market, industry and economic conditions; the relative attractiveness of alternative business and investment opportunities; and other future developments.

The Reporting Persons may acquire additional securities of the Issuer, or retain or sell all or a portion of the securities then held, in the open market or in privately negotiated transactions. In addition, the Reporting Persons may engage in discussions with management, the board of directors, and shareholders of the Issuer and other relevant parties or encourage, cause or seek to cause the Issuer or such persons to consider or explore extraordinary corporate transactions, such as: a merger, reorganization; sales or acquisitions of assets or businesses; changes to the capitalization or dividend policy of the Issuer; or other material changes to the Issuer’s business or corporate structure, including changes in management or the composition of the Issuer’s board of directors.

Except as set forth above, the Reporting Persons and Related Persons have no present plans or proposals which would result in or relate to any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

(a)-(b)

The following sets forth, as of the date of this Schedule 13D, the aggregate number of shares of Class A Common Stock and percentage of Class A Common Stock beneficially owned by each of the Reporting Persons, as well as the number of shares of Class A Common Stock as to which each Reporting Person has the sole power to vote or to direct the vote, shared power to vote or to direct the vote, sole power to dispose or to direct the disposition, or shared power to dispose or to direct the disposition of, as of the date hereof, based on 92,040,654 shares of Class A Common Stock outstanding as of February 10, 2020, as reported in the Current Report on Form 8-K, filed with the SEC on February 14, 2020 by the Issuer. The shares of Class A Common Stock held by each of the Reporting Persons includes 5,483,741 shares of Class A Common Stock issuable upon exercise of 5,483,741 Warrants held of record by Sponsor.

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(c) Except as described in Item 4, during the past 60 days none of the Reporting Persons or Related Persons has effected any transactions in the Class A Common Stock.

(d) None.

(e) Not Applicable.

Item 4 above summarizes certain provisions of the Subscription Agreement, the Registration Rights Agreement and the Letter Agreement, and is incorporated herein by reference. A copy of each of these agreements is included as an exhibit to this Schedule 13D, and each is incorporated herein by reference.

Except as set forth herein, none of the Reporting Persons or Related Persons has any contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of the Issuer, including but not limited to any contracts, arrangements, understandings or relationships concerning the transfer or voting of such securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies.

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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.

Dated: February 18, 2020

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SCHEDULE A

The name, present principal occupation or employment and citizenship of each of the executive officers of the Reporting Persons are set forth below. The business address of each individual associated with Gores Spo nsor III, LLC and AEG Holdings, LLC is 9800 Wilshire Blvd. Beverly Hills, CA 90212.

Gores Sponsor III, LLC

AEG Holdings, LLC