MORTGAGE NOTE



$300,000.00                                                    FEBRUARY 6, 2004



FOR VALUE RECEIVED, Metalico, Inc., a Delaware corporation ("Maker"), located at

186 North Avenue East, Cranford, New Jersey hereby promises to pay Michael J.

Drury ("Payee") or to an assignee of Payee approved by Maker which approval

shall not be unreasonably withheld, in the lawful money of the United States of

America, the principal sum of Three Hundred Thousand Dollars ($300,000) plus

five percent interest (5%) ("Mortgage Note"). The Mortgage Note will be payable

in monthly installments of $1,250 with a one year balloon terminating on

February 5, 2005. This Mortgage Note is issued by Maker to Payee in accordance

with Makers' Board of Director resolution dated January 16, 2004 attached hereto

as EXHIBIT "A". Proceeds from the Mortgage Note were used for funding of a Bank

of America Note payoff and Warrant retirement in the amount of $637,284 and

general working capital needs of Maker.



1.       SECURITY. This Mortgage Note is secured by the land owned by

Metalico-Evans, Inc., a wholly owned subsidiary of Maker, that certain lot,

tract or parcel of real estate more particularly described on EXHIBIT "B"

("Land") attached hereto.



2.       PAYMENT OF INTEREST. The Mortgage Note carries interest at five percent

(5%) per annum payable in monthly installments of $1,250 made every month,

commencing on the first day of the month immediately following the date of

closing of the Mortgage Note and the first day of the month thereafter.



3.       REPAYMENT OF PRINCIPAL. The principal of this Mortgage Note is payable

on February 5, 2005. The principal of this Mortgage Note may be voluntarily

prepaid at any time without penalty.



4.       MORTGAGE NOTE SUBORDINATE TO BANK INDEBTEDNESS. The indebtedness

represented by this Mortgage Note and the payment of principal and interest on

this Mortgage Note are hereby expressly understood to be subordinate to the

right of payment to Wells Fargo Foothill Corporation (f/k/a Foothill Capital

Corporation) under the terms of that certain Loan and Security Agreement dated

May 31, 2001 and the related loan documents, except that, this Mortgage Note in

the Land shall be a first lien and not subordinate to any other loan and

security agreement.



5.       COVENANTS. Maker hereby covenants and agrees with the Payee hereof, so

long as any amount due under this Mortgage Note is outstanding, upon request of

Payee, Maker will execute and deliver such further instruments and do such

further acts as may be reasonable necessary or proper to carry out more

effectively the purposes of this Mortgage Note.



6.       EVENTS OF DEFAULT. If one or more of the following events occurs,

namely:



(a)      If there is a failure in the interest payment, when the same becomes

due and payable, and such failure continues for 60 days after receipt by Maker

of written notice of such default; or

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