Item 5.02. Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 7, 2022, the Board of Directors (the
“Board”) of Custom Truck One Source, Inc. (the “Company”) appointed Ryan McMonagle as Chief Executive
Officer, effective March 20, 2023, as part of the Board’s succession plan. Mr. McMonagle succeeds Fred Ross, the Company’s
Chief Executive Officer, who notified the Board on December 7, 2022 that he would be retiring as Chief Executive Officer, effective March
20, 2023. Mr. Ross has agreed to remain with the Company as Founder and will continue to serve as a member of the Board.
Mr. McMonagle, age 44, has served as the Company’s
President and Chief Operating Officer since the consummation of Nesco Holdings II, Inc.’s acquisition of Custom Truck L.P. in April
2021. Mr. McMonagle joined Custom Truck L.P. as Chief Financial Officer in 2015. He became Chief Operating Officer of Custom Truck L.P.
in 2017. Previously, Mr. McMonagle was Chief Financial Officer of Sound United and DEI Holdings, a portfolio company of Charlesbank Capital
Partners, where he was responsible for the continued integration of multiple businesses, including Polk Audio, Definitive Technology and
Directed Electronics. Mr. McMonagle was previously Chief Financial Officer and Chief Development Officer for Smashburger, a portfolio
company of Consumer Capital Partners. Mr. McMonagle started his career at Bain and Company. Mr. McMonagle received his MBA from Harvard
Business School and bachelor’s degree in finance from Southern Methodist University.
In connection with Mr. McMonagle’s appointment
as Chief Executive Officer of the Company, the Company and Mr. McMonagle entered into an amended and restated employment agreement, dated
December 7, 2022 (the “McMonagle Employment Agreement”), pursuant to which Mr. McMonagle will serve as Chief Executive Officer
commencing on March 20, 2023 for an initial term of five years, subject to automatic renewal for successive one-year periods. As soon
as reasonably practicable following the effective date of the McMonagle Employment Agreement, Mr. McMonagle will be appointed as a member
of the Board and, following expiration of Mr. McMonagle’s term on the Board, the Company will continue to nominate him for election
to the Board while he remains Chief Executive Officer. Pursuant to the McMonagle Employment Agreement, Mr. McMonagle is entitled to receive
an annual base salary of $850,000 and an annual cash bonus equal to 50% of his annual base salary based on Company performance metrics
and/or individual performance objectives, in each case, as determined by the Board or its compensation committee. Mr. McMonagle will also
be eligible to receive equity awards under the Company’s Amended and Restated 2019 Omnibus Incentive Plan (the “Plan”),
as determined by the Board or its compensation committee.
Under the McMonagle Employment Agreement, in the
event that Mr. McMonagle’s employment is terminated either by the Company without “cause” or by Mr. McMonagle for “good
reason” (as such terms are defined therein) or in connection with the non-renewal of the term of employment by the Company, subject
to his execution and non-revocation of a general release of claims and continued compliance with the restrictive covenant obligations
set forth in his restrictive covenant agreement, Mr. McMonagle would be entitled to: (i) two times his base salary, payable in installments
during the 24-month period following his termination; (ii) any prior year’s earned but unpaid annual bonus; (iii) a prorated annual
bonus for the year of termination based on actual performance; and (iv) continued participation in the Company’s group health plan
for up to 24 months at the same cost applicable to active employees. In the event that Mr. McMonagle’s employment is terminated
due to his death or disability, Mr. McMonagle or his estate or beneficiaries would be entitled to continued participation in the Company’s
group health plan for up to 12 months at the same cost applicable to active employees.
In connection with Mr. Ross’ transition
to the role of Founder of the Company, the Company and Mr. Ross entered into an amended and restated employment agreement, dated December
7, 2022 (the “Ross Employment Agreement”), pursuant to which Mr. Ross will serve as Founder commencing on March 20, 2023 for
an initial term of one year, subject to automatic renewal for successive one-year periods, and will continue to serve on the Board as
a Class B director until such time as Mr. Ross voluntarily resigns, the Board requests that he resign or he is not renominated to the
Board or approved by the shareholders of the Company. Pursuant to the Ross Employment Agreement, Mr. Ross is entitled to receive an annual
base salary of $800,000 and an annual cash bonus equal to 50% of his annual base salary based on Company performance metrics and/or individual
performance objectives, in each case, as determined by the Board or its compensation committee. Mr. Ross will also be eligible to receive
equity awards under the Plan, as determined by the Board or its compensation committee.
Under the Ross Employment Agreement, in the event
that Mr. Ross’ employment is terminated either by the Company without “cause” or by Mr. Ross for “good reason”
(as such terms are defined therein) or in connection with the non-renewal of the term of employment by the Company, subject to his execution
and non-revocation of a general release of claims and continued compliance with the restrictive covenant obligations set forth in his
restrictive covenant agreement, Mr. Ross would be entitled to: (i) two times his base salary, payable in installments during the 24-month
period following his termination; (ii) any prior year’s earned but unpaid annual bonus; (iii) a prorated annual bonus for the year
of termination based on actual performance; and (iv) continued participation in the Company’s group health plan for up to 24 months
at the same cost applicable to active employees. In the event that Mr. Ross’ employment is terminated due to his death or disability,
Mr. Ross or his estate or beneficiaries would be entitled to continued participation in the Company’s group health plan for up to
12 months at the same cost applicable to active employees.
The foregoing descriptions of the McMonagle Employment
Agreement and the Ross Employment Agreement do not purport to be complete, and are qualified in their entirety by reference to the full
text of the McMonagle Employment Agreement and the Ross Employment Agreement, which are filed herewith as Exhibit 10.1 and Exhibit 10.2,
respectively, and are incorporated herein by reference.
