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                                                                    EXHIBIT 10.3

                              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 Carlos E. Aguero (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 President and Chief Executive 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 President
and Chief Executive 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superseded by subsequent Agreement by the parties.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 $249,952 ("Base Salary") for year one (1), $262,450("Base
Salary") for year two (2) and $275,572 ("Base Salary") for year three(3) 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

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Directors, taking into account the Company's growth and earnings. In addition,
Employer shall grant 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
Grants, stock purchases, or the shares deliverable upon their exercise or
purchase shall be immediately subject to the provisions of this Agreement and be
included on a pro rata basis based upon the number of vested and unvested shares
then held by Employee for all purposes of this Agreement with the same force and
effect as the stock presently subject to this Agreement and with respect to
which such securities or property were distributed. Whenever a specific number
of Stock Options, Stock Grants, or stock purchases are stated in this Agreement,
that number shall be amended so as to reflect the original intention of the
parties.

            4. BENEFITS. Employee shall be entitled, during each calendar year,
to four (4) weeks paid vacation. Vacation shall vest with Employee on the first
day of each calendar year. Employee shall also be entitled to holidays, sick
leave, and shall, along with his spouse and family, be eligible for
participation in such group insurance program, including hospitalization, major
medical, life, vision and dental as afforded general management of Employer.
Employer shall provide in the Employee's name term life insurance in the face
amount of not less than Two Hundred and Fifty Thousand Dollars ($250,000), and
subject to the provisions of Section 6.2, Employer may elect to provide
disability insurance. Employer agrees to reimburse Employee for all reasonable
out-of-pocket expenses incurred by Employee in the fulfillment of his duties
hereunder, including travel expenses. Such reimbursements will be made promptly,
within thirty (30) days of Employee's submission to Employer of an itemized list
of such expenses, together with receipts therefore indicating the date upon and
the purpose for which such expenses were incurred and such other information as
may be reasonably required from time to time by Employer to substantiate such
expenditures for federal income tax purposes.

            5. STATUS AS EMPLOYEE. At all times during the Employment Period,
Employee shall be deemed to be an Employee of Employer for purposes of
determining Employee's coverage under and eligibility to participate in, any
Employee benefit plans or programs which Employer now

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has or may hereafter initiate. In the event it is necessary to amend any such
plan or program in order to assure that Employee is not discriminated against
thereunder, Employer will promptly use its best efforts to make all such
amendments or cause the same to be made.

            6. TERMINATION.

                  6.1 TERMINATION UPON DEATH. If Employee dies during the Term,
this Agreement shall terminate, except that the representative of Employee's
estate shall be entitled to receive the compensation herein provided for the
month in which death occurs, the amount accrued and payable under Section 4
hereof, except as otherwise stated herein. All unvested options granted the
Employee will immediately be 100% fully vested and all rights and privileges
granted Employee shall accrue to the estate.

                  6.2 TERMINATION UPON DISABILITY. If during the Term, Employee
becomes physically or mentally disabled, whether totally or partially, so that
Employee is unable substantially to perform his services hereunder for (i) a
period of six consecutive months, or (ii) for shorter periods aggregating six
months during any consecutive twelve month period (Employee's disability for
such period "Disability"), Employer may, at its option, at any time after the
last day of the six consecutive months of disability or the day on which such
shorter periods of disability during any consecutive twelve month period equal
an aggregate of six months, by written notice to Employee, terminate the Term of
Employee's employment hereunder. Nothing in this Section 6.2 shall be deemed to
extend the Term. Upon such termination, Employee shall be entitled to receive
the compensation herein provided for the month in which Disability occurs, the
amount accrued and payable under Section 4 hereof, except as otherwise stated
herein. All unvested options granted the Employee will immediately be 100% fully
vested and all rights and privileges granted Employee shall accrue to the
estate.

                  6.3 TERMINATION FOR CAUSE. If Employee is convicted of any
felony or is guilty of dishonesty or any substantial misconduct which causes a
material adverse effect on Employer or its business or operations, Employer may,
at any time, by thirty days written notice to Employee terminate the term of
Employee's employment hereunder. Except for accrued and unpaid salary and
vacation to the date of termination, Employee shall have no right to receive
unvested options, grants or any compensation or benefit from Employer hereunder.

                  6.4 NO TERMINATION WITHOUT CAUSE. Notwithstanding anything to
the contrary contained herein, Employer may not terminate Employee's employment
hereunder except (i) in accordance with Section 6.3 hereof or (ii) upon the
unanimous consent of the non-management members of the Company's Board of
Directors. In the event of a breach of this Section 6.4 by Employer, Employee
shall be entitled to injunction or other court order requiring performance of
this Agreement, to damages for breach of this Agreement, and to any other remedy
prescribed herein or by law. The parties hereto further mutually agree that the
remedies prescribed herein or prescribed by law shall be cumulative and not in
limitation of or substitution for any other remedies available hereunder or
otherwise.

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                  6.5 VOLUNTARY TERMINATION. In the event Employee voluntarily
terminates his employment with Employer, during or after the Employment Period,
Employee shall have no right to receive any compensation or benefit from
Employer hereunder, except for accrued and unpaid compensation and vacation due
on the date of such termination, except as otherwise stated herein.

            6.6 STOCK OPTIONS AND CHANGE IN CONTROL. The Company and Employee
      hereby acknowledge that, from time to time, the Company has issued and may
      in the future issue to Employee options to purchase shares of the capital
      stock of the Company, either pursuant to this Employment Agreement or
      otherwise (the "OPTIONS"). The Company and Employee hereby agree that if
      there is a Change in Control (as hereinafter defined) of the Company, then
      all of the Options and Grants then issued and outstanding to Employee
      shall automatically and immediately become vested and exercisable (the
      "VESTED OPTIONS"). The date on which the Change in Control occurs shall be
      the "VESTING DATE." Employee's right to exercise the Vested Options shall
      expire on the third anniversary of the Vesting Date. For purposes of this
      Section 6.8, a "CHANGE IN CONTROL" shall mean the occurrence of: (a) the
      sale of all or substantially all of the capital stock of the Company owned
      by Carlos E. Aguero or his equivalent beneficial owner; (b) the
      resignation from the Board of Directors of Carlos E. Aguero unless caused
      by his death or disability; (c) the acquisition at any time by a "person"
      or "group" (as those terms are used in Sections 13(d)(2) of the Securities
      Exchange Act of 1934, as amended (the "EXCHANGE ACT") (excluding, for this
      purpose, the Company or any subsidiary or any employee benefit plan of the
      Company or any subsidiary) of beneficial ownership (as defined in Rule
      13d-3 under the Exchange Act) directly or indirectly, of securities
      representing 50% or more of the combined voting power in the election of
      directors of the then-outstanding securities of the Company or any
      successor of the Company; (d) the termination of service as directors, for
      any reason other than death or disability from the board of directors of
      the Company (the "BOARD"), during any period of two (2) consecutive years
      or less, of individuals who at the beginning of such period constituted a
      majority of the Board, unless the election of or nomination for election
      of each new director during such period was approved by a vote of at least
      two-thirds of the directors still in office who were directors at the
      beginning of the period; (e) approval by the stockholders of the Company
      of any merger or consolidation or statutory share exchange as a result of
      which the common stock of the Company shall be changed, converted or
      exchanged (other than a merger or share exchange with a wholly-owned
      subsidiary of the Company) or liquidation of the Company or any sale or
      disposition of 50% or more of the assets or earning power of the Company
      except for a tax free distribution of any portion of the Company to its
      shareholders; or (f) approval by the stockholders of the Company of any
      merger or consolidation or statutory share exchange to which the Company
      is a party as a result of which the persons who were stockholders of the
      Company immediately prior to the effective date of the merger or
      consolidation or statutory share exchange shall have beneficial ownership
      of less than 50% of the combined voting power in the election of directors
      of the surviving corporation following the effective date of such merger
      or consolidation or statutory share exchange. "CHANGE IN CONTROL" shall
      not include any reduction in ownership by the Company of a subsidiary of
      the Company or any other

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      entity designated by the Board in which the Company owns at least a 50%
      interest (including, but not limited to, partnerships and joint
      ventures.)"

            6.7 TERMINATION OR CHANGE OF CONTROL. Notwithstanding anything to
      the contrary contained herein, upon a Change of Control or in the event
      Employee is terminated upon the unanimous consent of the non-management
      members of the Board of Directors pursuant to clause (ii) of the first
      sentence of Section 6.4, then Employee shall be entitled to receive a
      severance payment on the date of such Change of Control or termination
      date equal to the greater of $870,000 or the total amount of Base Salary
      that would otherwise have been paid to Employee from the date of such
      Change of Control or termination date until the third anniversary of the
      Effective Date. Such severance payment shall reduce dollar-for-dollar the
      principal amount owing to Employee under those existing unsecured
      obligations of Employer in favor of Employee. Employer shall make such
      severance payment in one lump sum within ten (10) days after the date of
      such Change of Control or termination date."

            7. CERTAIN COVENANTS OF EMPLOYEE.

                  7.1 COVENANTS AGAINST COMPETITION. Employee acknowledges that
(i) the principal businesses of Employer involves diversified metals recycling &
product manufacturing, and such other and related activities as Employer may
become involved in; (ii) the Employer Business is national in scope; and (iii)
his work for Employer has brought him and will continue to bring him into close
contact with many confidential affairs not readily available to the public. In
order to induce Employer to enter into this Agreement, Employee covenants and
agrees that:

                        7.1.1 NON-COMPETE.

                              (a) During Employee's employment with Employer,
Employee shall not in the Eastern or Midwestern United States, including any
market region in which Employer, its subsidiaries or affiliates has done or
contemplates doing business, directly or indirectly, (i) engage in a business
which is competitive with the Employer's Business for his own account; (ii)
except for employment by Employer, its subsidiaries or affiliates, enter the
employ of, or render any services to, any person engaged in such activities; or
(iii) become interested in any person engaged in a business which is competitive
with the Employer's Business, directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, employee, trustee, consultant
or in any other relationship or capacity; provided, however, that Employee may
own, directly or indirectly, solely as an investment, securities of any entity
which are traded on any national securities exchange or in the over-the-counter
market if Employee (a) is not a controlling person of, or a member of a group
which controls, such entity, or (b) does not, directly or indirectly, own 1% or
more of any class of securities of such entity; and

                              (b) for a period of up to two (2) years following
the termination (whether voluntary or involuntary) of Employee's employment with
Employer or any of its affiliates or subsidiaries, Employer may elect to enforce
one year covenants set forth below by paying to

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Employee for each one year period a lump sum amount equal to one hundred percent
(100%) of his base salary. This lump sum amount shall be paid within ten (10)
days of Employee's termination. The severance paid shall constitute a payment to
enforce the following covenants; (i) Employee shall not in the United States of
America directly or indirectly contract, solicit, sell to, serve or divert
anyone who was a transporter, supplier or customer of Employer or did business
with Employer during Employee's employment with Employer; or (ii) Employee shall
not within two hundred (200) miles of a plant owned by the Employer, its
subsidiary or an affiliate directly or indirectly engage in a business which is
competitive with the Employer's business for his own account or as a partner,
shareholder, officer, director, principal, agent, employee, trustee, consultant
or in any other capacity directly or indirectly.

                        7.1.2. CONFIDENTIAL INFORMATION. During and after the
term of Employee's employment with Employer, Employee shall keep secret and
retain in strictest confidence, and shall not use for the benefit of himself or
others except in connection with the business and affairs of Employer, all
confidential matters of Employer and its subsidiaries or affiliates, including,
without limitation, trade "know-how", secrets, customer lists, details of
contracts, pricing policies, operational methods, marketing plans or strategies,
business acquisition plans, new personnel acquisition plans, research projects,
and other business affairs of Employer, its subsidiaries, or affiliates,
heretofore or hereafter, and shall not disclose them to anyone, either during or
after employment by Employer, except as required in the course of performing
duties hereunder or with Employer's express written consent. Confidential
matters shall not include information that is public knowledge, obtained from
third parties and/or required to be disclosed by law.

                        7.1.3 PROPERTY OF EMPLOYER. All memoranda, notes, lists,
records and other documents (and all copies thereof) made or compiled by
Employee or made available to Employee concerning the business of Employer, its
subsidiaries or its affiliates shall be Employer's property and shall be
delivered to Employer promptly upon the termination of Employee's employment
with Employer, or at any other time on request.

                        7.1.4. EMPLOYEES OF EMPLOYER. During Employee's
employment with Employer, and for a period of two years following the
termination (whether voluntary or involuntary) of Employee's employment with
Employer or any of its subsidiaries or affiliates (the "Restricted Period"),
Employee shall not, directly or indirectly, solicit or encourage any Employee of
Employer, its subsidiaries or its affiliates to leave the employment of
Employer, its subsidiaries or its affiliates.

                  7.2 RIGHTS AND REMEDIES UPON BREACH. If Employee breaches, or
threatens to commit a breach of, any of the provisions of Section 7.1 (the
"Restrictive Covenants"), Employer shall have the following rights and remedies,
each of which rights and remedies shall be independent of the other and
severally enforceable, and all of which rights and remedies shall be in addition
to, and not in lieu of, any other rights and remedies available to Employer
under law or in equity:

                        7.2.1 ACCOUNTING. The right and remedy to require
Employee to account for and pay over to Employer all compensation, profits,
monies, accruals, increments or other benefits (collectively, "Benefits")
derived or received by Employee as the result of any

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transactions constituting a breach of any of the Restrictive Covenants, and
Employee shall account for and pay over such Benefits to Employer.

                  7.3 INJUNCTIVE RELIEF. Employee acknowledges that due to the
confidential nature of his employment relationship, any breach of the
Restrictive Covenants by Employee shall cause irreparable harm to Employer and
Employer may, at its option, obtain injunctive relief. Employee further
acknowledges that the scope and content of the Restrictive Covenants are
reasonable.

                  7.4 SEVERABILITY OF COVENANTS. If a Court of competent
jurisdiction determines that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants
shall not thereby be affected and shall be given full effect, without regard to
the invalid portions.

                  7.5 BLUE-PENCILING. If a Court of competent jurisdiction
construes any of the Restrictive Covenants, or any part thereof, to be
unenforceable because of the duration of such provision or the area covered
thereby, such court shall have the power to reduce the duration or area of such
provision and, in its reduced form, such provision shall then be enforceable and
shall be enforced.

                  7.6 EMPLOYER'S DEFAULT. If Employer defaults on payments due
under Section 3(A) herein, then unless Employer cures the default within sixty
(60) days, the Restrictive Covenants shall be terminated and declared null and
void.

            8. INDEMNIFICATION. Employer shall indemnify and defend Employee if
Employee is made a party, or threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that Employee is or was
an officer or director or Employee of Employer or any of its subsidiaries or
affiliates, in which capacity Employee is or was serving, against expenses
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the fullest extent and in the manner set forth in
and permitted by the general corporation law of the state of incorporation of
Employer, and any other applicable law, as from time to time in effect.

            9. NO CONFLICTING AGREEMENT. Employee represents and warrants that
as of the effective date of this Agreement, he will not be a party to any
Agreement, contract or understanding which would in any way restrict or prohibit
him from undertaking or performing his employment in accordance with the terms
and conditions of this Agreement.

            10. OTHER PROVISIONS.

                  10.1 NOTICES. Any notice or other communication required or
which may be given hereunder shall be in writing and shall be delivered
personally, telegraphed or telexed, or sent by certified, registered or express
mail, postage prepaid, and shall be deemed given when so

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delivered personally, telegraphed or telexed, or if mailed, two days after the
date of mailing, as follows:

             (i) if to Employer, to:       Metalico, Inc.
                                           186 North Avenue East
                                           Cranford, NJ 07016

            (ii) if to Employee, to:       Carlos E. Aguero
                                           612 Girard Avenue
                                           Westfield, NJ 07090

                  10.2 ENTIRE AGREEMENT. This Agreement contains the entire
Agreement between the parties with respect to the subject matter hereof and
supersedes all prior Agreements, written or oral, with respect thereto.

                  10.3 WAIVERS AND AMENDMENTS. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any right, power or privilege hereunder, nor any single or partial exercise
of any right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.

                  10.4 GOVERNING LAW. The parties hereto have relied on New
Jersey law in negotiating this Agreement, and it is expressly agreed that this
Agreement shall be governed and construed in accordance with the laws of the
State of New Jersey applicable to Agreements made and to be performed entirely
within such State, without regard to its conflicts of laws provisions.

                  10.5 ASSIGNMENT. This Agreement, and the Employee's rights and
obligations hereunder, may not be assigned by Employee. Employer may assign this
Agreement and its rights, together with its obligation, as stated in Section
6.6, hereunder in connection with any sale, transfer or other disposition of all
or substantially all of its assets or business, whether by merger, consolidation
or otherwise.

                  10.6 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

                  10.7 HEADING. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.

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                           COUNTERPART SIGNATURE PAGE

            IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.

                                   METALICO, INC.

                                   By:   _______________________________________

                                   Its:  _______________________________________

                                         _______________________________________
                                         Employee

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