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Employment Agreement

EMPLOYMENT AGREEMENT

This Agreement (herein so called) is made and entered into as of the 1^st day of January, 2006 by and between Metalico, Inc., a Delaware corporation (hereinafter referred to as ?Employer?), and Warren Jennings (hereinafter referred to as ?Employee?).

W I T N E S S E T H:

WHEREAS, Employer desires to employ Employee, and Employee desires to be employed by Employer, as an executive subject to the direction and control of Employer, upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises, and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

1. Employment, Duties and Acceptance.

1.1 Employment by Employer. Employer employs Employee, as of the date hereof (the ?Effective Date?) to render full-time services to Employer in a supervisory and managerial capacity, and to manage its operations and that of its subsidiaries. Employee shall perform the duties that are consistent with such position as he shall reasonably be directed to perform by Employer.

1.2 Acceptance of Employment. Employee accepts such employment and shall render the services described above.

1.3 Place of Employment. Employee?s principal place of employment shall be Employer?s business location in Union County, New Jersey, subject to reasonable travel as the rendering of the services hereunder may require.

2. Term. The term of Employee?s employment by Employer hereunder (the ?Employment Period?) shall be for a period of three (3) years from the Effective Date terminating on December 31, 2008, subject to the termination provisions of Sections 6.1 through 6.5 hereof. There shall be automatic one (1) year extensions of the Employment Period thereafter unless this Agreement is terminated upon 30 days written notice by Employee or Employer, unless superseded by subsequent Agreement by the parties.

3. Compensation. During the Employment Period, for all services rendered by Employee under this Agreement, Employer shall pay Employee an annual salary at the rate of $180,000 (?Base Salary?) for year one (1), with such annual increases thereafter for years (2) and (3) as Employer shall determine but expected to be in a range

of 3% to 5 % each calendar year. Employee?s salary shall be payable in accordance with the customary payroll policy of Employer in effect at the time such payment is made, or as may otherwise be mutually agreed upon by the parties. The base salary may be increased from time to time at the discretion of the Board of Directors, taking into account Employer?s growth and earnings. In addition, Employer shall provide to Employee an automobile with applicable insurance comparable with other senior management.

3.1 Incentive Stock Options and Bonus Plan. Employee shall be eligible to participate in Employer?s Executive Management Stock Option and Bonus Plan. Grants shall be made annually with amounts based on individual and Company performance at the discretion of the Compensation Committee of the Board of Directors. Stock option grants shall have vesting requirements and the strike price shall be based on the fair market value on the date of grant. Bonuses shall be distributed annually at the discretion of the Compensation Committee and the Board of Directors.

3.2 Changes in Common Stock of Employer. If from time to time during the term of this Agreement:

3.2.1 There is a dividend of any security, stock split or other change in the character or amount of any of the outstanding securities of Employer; or

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