| Item 1.01 | Entry into a Material Definitive Agreement. |
On January 9, 2023, Williams Industrial Services
Group Inc. (the “Company”) entered into the following agreements, each of which is described further below:
| · | a third amendment (the “RC Amendment”) to its Revolving Credit and Security Agreement, dated December 16, 2020,
by and among the Company and certain of its subsidiaries as borrowers or guarantors, PNC Bank, National Association, as agent for the
lenders, and the lenders party thereto (as amended, the “Revolving Credit Agreement”); |
| · | a third amendment (the “Term Loan Amendment”) to its Term Loan, Guarantee and Security Agreement, dated December
16, 2020, by and among the Company and certain of its subsidiaries as borrowers or guarantors, EICF Agent LLC, as agent for the lenders,
and the lenders party thereto (as amended, the “Term Loan Agreement”); and |
| · | two unsecured promissory notes in favor of the Wynnefield Lenders (as defined below) (together, the “Wynnefield Loans”). |
RC Amendment and Term Loan Amendment
The RC Amendment, among other things, (i)
modifies the financial covenants to require that the Company achieve certain designated minimum levels of trailing twelve-month EBITDA
(as defined in the Revolving Credit Agreement) as of the end of each fiscal month beginning on February 5, 2023, and ending December 31,
2023; (ii) amends the calculation of EBITDA to include (or “add back”) certain non-recurring losses and expenses incurred
in connection with projects executed by the Company’s Jacksonville, Florida office, one-time costs and expenses incurred in connection
with the Company’s transmission and distribution business segment start-up, non-recurring costs and expenses arising out of the
implementation by the Company of a new enterprise resource planning (“ERP”) system, and non-recurring costs and expenses
arising out of pro forma headcount reductions implemented by the Company and certain litigation with a former executive and a competitor
of the Company that was settled in the fourth quarter of 2022 (in each case, subject to certain specific dollar limits for certain fiscal
quarters commencing in the second fiscal quarter of 2021 and ending December 31, 2022); (iii) provides temporary reserve relief of up
to $1,000,000 from the date of the RC Amendment until June 30, 2023; (iv) reduces the Eligible Unbilled Receivables (as defined in the
Revolving Credit Agreement) sublimit from $7,500,000 to $5,500,000; (v) increases the Applicable Margin (as defined in the Revolving Credit
Agreement) by 2%; and (vi) provides for an amendment fee of $300,000 payable when the loan obligations under the Revolving Credit Agreement
are repaid or, if earlier, June 30, 2023, and an exit fee of $300,000 to be paid upon the occurrence of certain stated events, including
a prepayment or maturity of the loan obligations under the Revolving Credit Agreement.
The Term Loan Amendment, among other things,
(i) modifies the financial covenants to require that the Company achieve certain designated minimum levels of trailing twelve-month EBITDA
(as defined in the Term Loan Agreement) as of the end of each fiscal month beginning on February 5, 2023, and ending December 31, 2023;
(ii) amends the calculation of EBITDA to include (or “add back”) certain non-recurring losses and expenses incurred in connection
with certain projects executed by the Company’s Jacksonville, Florida office, one-time costs and expenses incurred in connection
with the Company’s transmission and distribution business segment start-up, non-recurring costs and expenses arising out of the
implementation by the Company of a new ERP system, and non-recurring costs and expenses arising out of pro forma headcount reductions
implemented by the Company and certain litigation with a former executive and a competitor of the Company that was settled in the fourth
quarter of 2022 (in each case, subject to certain specific dollar limits for certain fiscal quarters commencing in the second fiscal quarter
of 2021 and ending December 31, 2022); (iii) adjusts the applicable interest rate to SOFR (as defined in the Term Loan Agreement) plus
11%; (iv) for each quarterly interest payment commencing January 1, 2023 through and including January 1, 2024, caps the amount of quarterly
interest payable in cash at 10% per annum, with the remainder being payable in kind; (v) defers amortization payments from the January
1, 2023 quarterly payment date until and including the January 1, 2024 quarterly payment date; (vi) increases the excess cash flow sweep
from 50% to 75% for the fiscal year ending December 31, 2023 and each fiscal year thereafter; (vii) requires certain additional reporting
obligations, including the delivery of weekly updates of a 13-week cash flow forecast and hosting additional periodic conference calls
with management and named advisors; (viii) increases, from the pre-existing levels, the permitted total leverage of the Company for the
four quarter periods ended December 31, 2022 through March 31, 2024; and (ix) provides for an amendment fee equal to 1% of the principal
loan balance under the Term Loan Agreement, payable in kind.
The Company previously entered into a second
amendment to its Term Loan Agreement on December 30, 2022 (together with the Term Loan Amendment, the “Term Loan Amendments”),
pursuant to which, among other things, the lenders agreed to defer payment of the principal, and part of the interest, due on January
1, 2023 to January 9, 2023.
The Company expects to include each of the
RC Amendment and the Term Loan Amendments as an exhibit to a future periodic report, to be filed with the U.S. Securities and Exchange
Commission. The foregoing descriptions do not constitute a complete summary of the terms of the RC Amendment or the Term Loan Amendments
and are qualified in their entirety by reference to the full text of the respective amendment.
Wynnefield Loans
The Wynnefield Loans consist of (i) an Unsecured
Promissory Note by and among the Company, as borrower, certain of its subsidiaries, as guarantors under a separate Guaranty Agreement,
and Wynnefield Partners Small Cap Value, LP I in the aggregate principal amount of $400,000 and (ii) an Unsecured Promissory Note by and
among the Company, as borrower, certain of its subsidiaries, as guarantors under a separate Guaranty Agreement, and Wynnefield Partners
Small Cap Value, LP (together with Wynnefield Partners Small Cap Value, LP I, the “Wynnefield Lenders”) in the aggregate
principal amount of $350,000. All principal and interest will be due on the maturity date of the Wynnefield Loans, which will be the earliest
of (i) December 23, 2025; (ii) a change in control of the Company; (iii) a refinancing or maturity extension of either of the Term Loan
Agreement or the Revolving Credit Agreement; or (iv) an acceleration following the occurrence of an event of default (as defined in the
Wynnefield Loans, and which includes any default under the Term Loan Agreement or the Revolving Credit Agreement). The Wynnefield Loans
bear interest at the fixed rate of (i) 8.0% per annum from the closing date; (ii) 13.0% per annum from and after the maturity date; and
(iii) 13.0% per annum from and after an event of default (as defined in the Wynnefield Loans, and which includes any default under the
Term Loan Agreement or the Revolving Credit Agreement). The Wynnefield Loans are subject to an aggregate exit fee of $100,000, payable
upon the earlier of an event of default or payment in full of all obligations due under the Wynnefield Loans. In connection with the Wynnefield
Loans, the Company, certain of its subsidiaries, the Wynnefield Lenders and the agents under each of the Revolving Credit Agreement and
the Term Loan Agreement have entered into two Subordination and Intercreditor Agreements, pursuant to which the Wynnefield Lenders have
agreed, on the terms and subject to the conditions set forth therein, to subordinate the Wynnefield Loans to the obligations of the Company
under the Revolving Credit Agreement and the Term Loan Agreement.
The Wynnefield Lenders, together with their
affiliates, are the Company’s largest equity investor. Nelson Obus, a member of the Company’s Board of Directors, is a managing
member of Wynnefield Capital Management, LLC, the general partner of the Wynnefield Lenders.
The Company expects to include each of the
Wynnefield Loans as an exhibit to a future periodic report, to be filed with the U.S. Securities and Exchange Commission. The foregoing
description does not constitute a complete summary of the terms of the Wynnefield Loans and is qualified in its entirety by reference
to the full text of the respective agreement.