EMPLOYMENT AGREEMENT



      This Agreement (herein so called) is made and entered into as of the 1st

day of January, 2004 by and between Metalico, Inc., a Delaware corporation

(hereinafter referred to as "Employer"), and Eric W. Finlayson (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 Senior Vice President and Chief Financial Officer

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 as Senior

Vice President and Chief Financial Officer, and to manage its operations and

that of its subsidiaries. Employee will 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, NJ, 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, 2006, 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superseded by subsequent Agreement by the parties.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 $124,372 ("Base Salary") for year one(1), $130,590 ("Base

Salary") for year two (2) and $137,120 ("Base Salary") for year three (3) ("Base

Salary") 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



<PAGE>



the Board of Directors, taking into account the Company'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. You will be

eligible to participate in the Executive Management Stock Option and Bonus Plan.

Grants will be made semi-annually with amounts based on individual and Company

performance at the discretion of the Compensation Committee of the Board of

Directors. Stock option grants will have vesting requirements and the strike

price will be based on the fair market value on the date of grant. Bonuses will

be distributed annually at the discretion of the Compensation Committee.



                  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



                        3.2.2 There is any consolidation, merger or sale of all,

or substantially all, of the assets of Employer, then, in such event, any and

all new, substituted or additional securities or other property to which

Employee is entitled by reason of his ownership of the Stock Options, Stock

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