Document:

EX-10.6

Exhibit 10.6

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made and entered on March 21, 2007
retroactively effective as of January 1, 2007 (the “Effective Date”) and amended and restated as of
June 24, 2008 (the “Restatement Date”) by and between Metalico, Inc., a Delaware corporation
(hereinafter referred to as “Employer”), and Eric W. Finlayson (hereinafter referred to as
“Executive”).

W I T N E S S E T H:

     WHEREAS, Employer desires to employ Executive, and Executive 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; and

     WHEREAS, Employer and Executive wish to amend and restate the Agreement pursuant to the
transition relief afforded under Internal Revenue Service Notice 2007-86 in order to assure its
compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     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 Executive, as of 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, and and to serve in such capacity for the benefit of
Employer and its subsidiaries. Executive 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. Executive accepts such employment and shall render the services
described above.

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

          2. Term. The term of Executive’s employment by Employer hereunder shall be for a period of
three (3) years from the Effective Date terminating on December 31, 2009 (the “Employment Period”),
subject to the termination provisions of Section 6 hereof.

          3. Base Salary. During the Employment Period, for all services rendered by Executive under
this Agreement, Employer shall pay Executive annual salaries (each a “Base Salary”, the term “Base
Salary” as used in this Agreement referring to the appropriate Base Salary as in effect from time
to time) of: (i) for 2007, $160,000; (ii) for 2008, an amount equal to the sum of (A) the Base
Salary for 2007 and (B) the Annual Adjustment for 2008; and (iii) for 2009, an amount equal to the
sum of (A) the Base Salary for 2008 and (B) the Annual Adjustment for 2009. Each Base 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. A Base Salary may be
increased from time to time at the discretion of the Board of Directors, taking into account the
growth and earnings of Employer and its subsidiaries. In addition, Employer shall provide to
Executive an automobile with applicable insurance comparable with other members of senior
management. For all purposes under this Agreement:

	 	(a)	 	“Annual Adjustment” for any given year means an amount equal to the
product of (i) the Base Salary for the immediately preceding year times (ii) the
applicable CPI Multiplier; and
	 
	 	(b)	 	“CPI Multiplier” shall mean the change, expressed as a percentage,
in the Consumer Price Index for urban wage earners and clerical workers, U.S.
City Average, All Items (1982-1984=100) published by the United States Department
of Labor, Bureau of Labor Statistics or the most recent successor of that index
(the “CPI”) (i) for the Annual Adjustment for 2008, from the third-quarter
average of 2006 to the third-quarter average for 2007, and (ii) for the Annual Adjustment for 2009, from the
third-quarter average of

 

 

2007 to the third-quarter average for 2008;
provided, however, that (A) if the change in the CPI for any measuring
period is less than 3.5%, then the CPI Multiplier as determined from such
change shall be 3.5%, and (B) if the change in the CPI for any measuring period
is greater than 7%, then the CPI Multiplier as determined from such change
shall be 7%.

               3.1 Incentive Stock Options and Bonus Plan. Executive shall be eligible to participate in
Employer’s Executive Bonus Plan, 1997 Long-Term Incentive Plan (the “1997 LTIP”), 2006 Long-Term
Incentive Plan (the “2006 LTIP” and collectively, with the 1997 LTIP, the “LTIP’s”), and any other
benefit or compensation plans made available to Employer’s executive officers from time to time.
Awards shall be made at the discretion of the Compensation Committee of Employer’s Board of
Directors (the “Board”) not less often than annually with amounts based on individual and Employer
performance. Grants of stock options and other equity interests, under the LTIP’s or otherwise,
shall be subject to the provisions of the LTIP’s or other appropriate governing or chartering
documentation for such plan or plans, including vesting requirements and terms for determining an
exercise or strike price, except as expressly superseded by the terms of this Agreement.

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

	 	(a)	 	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
	 
	 	(b)	 	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 Executive is entitled by reason of his ownership of 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 Executive for all purposes under 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. Executive shall be entitled, during each calendar year, to four (4) weeks paid
vacation. Vacation shall vest with Executive on the first day of each calendar year. Executive
shall also be entitled to holidays and 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 are afforded general management of Employer. Employer shall
provide in Executive’s name term life insurance in the face amount of not less than Three Hundred
Thousand Dollars ($300,000), and, subject to the provisions of Section 6.2, Employer may elect to
provide disability insurance. Employer agrees to reimburse Executive for all reasonable
out-of-pocket expenses incurred by Executive in the fulfillment of his duties hereunder, including
travel expenses. Such reimbursements will be made promptly, within thirty (30) days of Executive’s
submission to Employer of an itemized list of such expenses, together with receipts therefor
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, Executive shall be deemed
to be an Executive of Employer for purposes of determining Executive’s coverage under and
eligibility to participate in, any Executive benefit plans or programs which Employer now has or
may hereafter initiate. In the event it is necessary to amend any such plan or program in order to
assure that Executive 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 Executive dies during the Employment Period, this Agreement
shall terminate, except that the representative of Executive’s estate shall be entitled to receive
within 30 days the compensation herein provided for the month in which death occurs and the amount
accrued and payable under Section 4 hereof, except as otherwise stated herein. All unvested options
granted to Executive will immediately be 100% fully vested and all rights and privileges granted
Executive shall accrue to Executive’s estate.

               6.2 Termination upon Disability. If during the Employment Period Executive becomes physically
or mentally disabled, whether totally or partially, so that Executive 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 (Executive’s condition of disability for such period hereinafter referred to as “Disability”),
Employer may, at its option, at any time

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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 Executive, terminate the
Employment Period. Nothing in this Section 6.2 shall be deemed to extend the Employment Period.
Upon such termination, Executive shall be entitled to receive within 30 days the compensation
herein provided for the month in which termination occurs and the amount accrued and payable under
Section 4 hereof, except as otherwise stated herein. All unvested options granted the Executive
will immediately be 100% fully vested.

               6.3 Termination for Cause. If Executive (a) neglects his duties hereunder and such gross
neglect shall not be discontinued promptly after written notice thereof, (b) is convicted of any
felony, (c) fails or refuses to comply with the reasonable written policies of Employer or
directives of the executive officers of Employer that are not inconsistent with his position and
such failure shall not be discontinued promptly after written notice thereto, or (d) materially
breaches affirmative or negative covenants or undertakings hereunder and such breach shall not be
remedied promptly, evidenced by proper Employer documentation or other written notice to Executive
(the terms of clauses (a) through (d) of this Section 6.3 referred to collectively as “Cause”),
then Employer may at any time, upon thirty days written notice to Executive, terminate the
Employment Period. Upon such termination, Executive shall have no right to receive unvested
options, grants or any compensation or benefit from Employer hereunder except for accrued and
unpaid salary and vacation to the date of termination which shall be paid within 30 days.

               6.4 Termination by Employer for Any Other Reason. If Executive’s employment hereunder shall
be terminated by Employer for any reason other than as provided under Sections 6.1, 6.2, or 6.3 of
this Agreement, and in addition to accrued and unpaid salary and vacation to the date of
termination, Employer shall pay to Executive, as liquidated damages and not as a penalty, an amount
equal to 100% of the annual Base Salary of Executive as of the date of termination. Such amount
shall be payable (i) in a lump sum immediately subsequent to the date of such termination in the
event of a termination in connection with, upon, or within one year after a Change in Control (as
hereinafter defined), or a termination by Executive for Good Reason (as hereinafter defined) in
connection with, upon, or within one year after a Change in Control, and (ii) in installments
commencing immediately in accordance with the customary payroll policy of Employer in effect at the
time such payment is made in the event of any other termination governed by this Section 6.4.
Executive shall also be entitled to a continuation, at Employer’s expense, of all health and
medical benefits and life insurance provided under Section 4 herein for the twelve-month period
following such termination of employment so long as such continuation of coverage is permitted
under Employer’s benefit plans and applicable law; provided, however, that such coverage
shall terminate if Executive commences employment with a subsequent employer within such
twelve-month period at such time as Executive’s coverage under such subsequent employer’s benefit
plans becomes effective. If any such continuation of coverage is not permitted under Employer’s
benefit plans and applicable law, Employer shall pay the monthly premium payments as and when due
for any equivalent alternative coverage such as COBRA payments or the like. It is expressly agreed
and understood that said payments of liquidated damages will be in complete satisfaction of any and
all claims, liabilities and damages of any nature whatsoever relating to or growing out of
Executive’s employment or Employer’s termination without Cause of Executive’s employment, except as
otherwise stated herein. All payments under this Section 6.4 shall be conditioned upon execution
and delivery by the Executive within 30 days of his termination of an appropriate mutual release by
Executive and Employer which release shall be provided to the Executive within 5 days of his
termination). All unvested options and stock grants granted to Executive shall immediately be 100%
fully vested as of the date of any termination under this Section 6.4.

               6.5 Voluntary Termination.

                    6.5.1 General. In the event Executive voluntarily terminates his employment with Employer,
during or after the Employment Period, Executive shall be entitled to accrued and unpaid salary and
vacation to the date of such termination within 30 days of termination but otherwise shall have no
right to any compensation or benefit from Employer hereunder except as expressly stated herein.

                    6.5.2 Good Reason. In the event Executive voluntarily resigns from his employment with
Employer during the Employment Period for Good Reason (as hereinafter defined), Executive shall be
entitled to all compensation and benefits provided under Section 6.4 as though such resignation
were deemed to be a termination thereunder.

               6.6 Change in Control.

                    6.6.1 Stock Options and Grants. Employer and Executive hereby acknowledge that, from time to
time, Employer has issued and may in the future issue to Executive options to purchase shares of
the capital stock of Employer, either pursuant to the LTIP’s, this Agreement, or otherwise (the
“Options”). Employer and Executive hereby agree that if there is a Change in Control of Employer,
then all of the Options and grants then issued and outstanding to Executive 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.” Executive’s right to exercise the Vested Options shall
expire as provided under the LTIP’s or in
any applicable option or granting agreement (an “Option Agreement”) between Employer and
Executive with respect to Vested Options governed by such Option Agreement.

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                    6.6.2 No Mitigation; No Offset. In the event of any termination of Executive’s employment
under this Agreement, Executive shall be under no obligation to seek other employment, and there
shall be no offset against amounts due under this Agreement on account of any remuneration
attributable to any subsequent employment that Executive may obtain.

               6.7 Definitions. For purposes of this Agreement:

                    6.7.1 “Change in Control” shall mean the occurrence of: (i) 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, Employer or any subsidiary or
any Executive benefit plan of Employer 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
Employer or any successor of Employer; (ii) the termination of service as directors, for any reason
other than death or disability, from 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; (iii) approval by the stockholders of Employer of any merger or
consolidation or statutory share exchange as a result of which the common stock of Employer shall
be changed, converted or exchanged (other than a merger or share exchange with a wholly-owned
subsidiary of Employer) or liquidation of Employer or any sale or disposition of 50% or more of the
assets or earning power of Employer except for a tax free distribution of any portion of Employer
to its shareholders; or (iv) approval by the stockholders of Employer of any merger or
consolidation or statutory share exchange to which Employer is a party as a result of which the
persons who were stockholders of Employer 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 Employer of a subsidiary of Employer or any other
entity designated by the Board in which Employer owns at least a 50% interest (including, but not
limited to, partnerships and joint ventures.)

                    6.7.2 “Good Reason” shall mean the occurrence, without Executive’s prior written consent, of
any of the following events:

               (i) a substantial reduction of Executive’s duties, responsibilities, or status as an
officer (except temporarily during any period of disability), or Executive being required to
report to any person other than the Chief Executive Officer of Employer, the Executive Vice
President of Employer, or the Board, provided that, if Executive retains similar
title, authority, and status with Employer or any entity that acquires Employer (or any
affiliate or subsidiary of such entity) following a Change of Control, the parties agree that
any change in the title of Executive shall not constitute a significant reduction of
Executive’s duties and authorities hereunder;

               (ii) a change in the office or location where Executive is based on the date of this
Agreement of more than thirty (30) miles, which new location is more than sixty (60) miles
from Executive’s primary residence; or

               (iii) a breach by Employer of any material term of this Agreement.

provided that a termination by Executive with Good Reason shall be effective only if
Executive delivers a notice of termination for Good Reason to Employer, and Employer within sixty
(60) days following its receipt of such notification has failed to cure the circumstances giving
rise to Good Reason.

          7. Certain Covenants of Executive.

               7.1 Covenants Against Competition. Executive acknowledges that (i) the principal businesses
of Employer involve diversified metals recycling and product manufacturing and such other and
related activities as Employer may become involved in (collectively the “Employer’s Business”);
(ii) the Employer’s 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, Executive
covenants and agrees that:

                    7.1.1 Non-Compete.

                         (a) During Executive’s employment with Employer, Executive shall not in the Eastern,
Midwestern, or Southern 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,

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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, Executive, trustee, consultant or in any
other relationship or capacity; provided, however, that Executive 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 Executive (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) up to two (2) years following the termination (whether voluntary or involuntary) of
Executive’s employment with Employer or any of its affiliates or subsidiaries for any reason
whatsoever, Employer may elect to enforce one-year covenants set forth below by paying to
Executive, in addition to any amounts provided under Section 6, for each one-year period a lump sum
amount equal to one hundred percent (100%) of his Base Salary as of the date of termination. This
lump sum amount shall be paid within ten (10) days of Executive’s termination for the first year
after termination and within ten (10) days of the first anniversary of the date of such termination
for the second year. Employer shall deliver written notice of its intent to enforce such one-year
covenants (i) as promptly as possible but in any event on or before the effective date of
termination for the first year, and (ii) not less than thirty (30) days before the first
anniversary of the date of such termination for the second year. The sum paid shall constitute a
payment to enforce the following covenants: (i) Executive shall not in the United States of America
to the detriment of Employer 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
Executive’s employment with Employer; and (ii) Executive shall not within two hundred (200) miles
of a plant owned by 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, Executive, trustee, consultant or in any other
capacity directly or indirectly.

                    7.1.2. Confidential Information. During and after the term of Executive’s employment with
Employer, Executive 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 made available or disclosed to or developed by Executive, 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 confidential and
proprietary items (and all copies thereof) made or compiled by Executive or made available to
Executive concerning the business of Employer, its subsidiaries or its affiliates and all equipment
of Employer in Executive’s control or possession shall be Employer’s property and shall be
delivered to Employer promptly upon the termination of Executive’s employment with Employer, or at
any other time on request. It is the intention of the parties that the broadest possible
protection be given to Employer’s trade secrets and other proprietary information and nothing in
this Section 7.1.3 shall in any way be construed to narrow or limit the protection and remedies
afforded by applicable law.

                    7.1.4. Employees of Employer. During Executive’s employment with Employer, and for a period
of two years following the termination (whether voluntary or involuntary) of Executive’s employment
with Employer or any of its subsidiaries or affiliates, Executive shall not, directly or
indirectly, solicit or encourage any Executive of Employer, its subsidiaries or its affiliates to
leave the employment of Employer, its subsidiaries or its affiliates.

                    7.1.5. Cooperation. Executive agrees to cooperate with Employer, during Executive’s
employment with Employer and thereafter (including following the Executive’s termination of
employment for any reason), by being reasonably available to testify on behalf of Employer or any
subsidiary or affiliate in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and to assist Employer, or any subsidiary or affiliate, in any
such action, suit or proceeding, by providing information and meeting and consulting with the Board
or its representatives or counsel, or representatives or counsel to Employer, or any subsidiary or
affiliate, as reasonably requested. Employer agrees to reimburse Executive for all expenses
actually incurred or compensation lost in connection with his provision of testimony or assistance
(including attorneys’ fees incurred in connection therewith) upon submission of appropriate
documentation to Employer. Nothing in this Section 7.1.5 shall obligate Executive to provide
availability or services after the termination of his employment requiring excessive or materially
inconvenient commitments of Executive’s skills, time, or resources.

               7.2 Rights and Remedies upon Breach. If Executive 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:

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                    7.2.1 Accounting. The right and remedy to require Executive to account for and pay over to
Employer all compensation, profits, monies, accruals, increments or other benefits (collectively,
“Benefits”) derived or received by Executive as the result of any transactions constituting a
breach of any of the Restrictive Covenants, and Executive shall account for and pay over such
Benefits to Employer.

               7.3 Injunctive Relief. Executive acknowledges that due to the confidential nature of his
employment relationship, any breach of the Restrictive Covenants by Executive shall cause
irreparable harm to Employer and Employer may, at its option, obtain injunctive relief. Executive
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 any payments due under Section 3 herein
during the Employment Period or any payments due under Section 6 herein upon or after termination
of Executive’s employment, then unless Employer cures the default within sixty (60) days, the
Restrictive Covenants shall be terminated and declared null and void.

          8. Indemnification.

               8.1 Right to Indemnification. Employer shall indemnify and defend Executive if Executive 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 (a “Proceeding”), by
reason of the fact that Executive is or was a director or officer or Executive of Employer or any
of its subsidiaries or affiliates, in which capacity Executive is or was serving at the request of
Employer as a director, officer, Executive or agent of another corporation, partnership, joint
venture, trust or other enterprise, including service with respect to Executive benefit plans,
whether or not the basis of such Proceeding is the Executive’s alleged action in an official
capacity while serving as a director, officer, Executive or agent, against all liabilities, costs,
expenses (including reasonable attorneys’ fees), judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement actually and reasonably incurred by him in connection with such
Proceeding to the fullest extent and in the manner set forth in and permitted or authorized by
Employer’s certificate of incorporation or bylaws, the general corporation law of the state of
incorporation of Employer, resolutions of the Board, and any other applicable law, as from time to
time in effect. Such indemnification shall continue as to Executive even if he has ceased to be a
director, officer, Executive or agent of Employer or other entity and shall inure to the benefit of
Executive’s heirs, executors and administrators. Employer shall advance to Executive all
reasonable costs and expenses incurred by him in connection with a Proceeding within twenty (20)
days after receipt by Employer of a written request for such advance. Such request shall include
undertakings by Executive (i) to repay the amount of such advance if it shall ultimately be
determined that he is not entitled to be indemnified against such costs and expenses and (ii) to
assign to Employer all rights of Executive to indemnification under any policy of directors and
officers liability insurance to the extent of the amount of expenses actually paid by Employer to
or on behalf of Executive.

               8.2 Control of Defense. Unless precluded by an actual conflict of interest, Employer will
have the right to control the defense of any claim covered by this Section 8, using counsel
selected by Employer and reasonably satisfactory to Executive. In the event that a conflict of
interest prevents Employer from defending the claim, Executive shall do so at Employer’s expense
with counsel reasonably satisfactory to Employer, but Employer shall be entitled to participate in
the defense. Employer shall not settle any claim defended by it unless the settlement includes an
unconditional release of Executive from liability thereon or unless Executive consents to the
settlement, which consent shall not be unreasonably withheld or delayed. Executive shall not
settle any claim defended by Executive without the consent of Employer, which consent shall not be
unreasonably withheld or delayed. If Employer wishes to accept any settlement offer with respect
to a claim and Executive refuses to consent, Employer shall not be obligated to indemnify Executive
beyond the amount of the settlement so offered. Each party shall promptly notify the other party
of, and at all times keep the other informed with respect to, any claim covered by this Section 8.

               8.3 No Presumption. Neither the failure of Employer (including the Board or their respective
independent legal counsel or Employer’s stockholders) to have made a determination prior to the
commencement of any Proceeding
concerning payment of amounts claimed by Executive under Section 8.1 above that
indemnification of Executive is proper because he has met the applicable standard of conduct, nor a
determination by Employer (including the Board or their respective independent

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legal counsel or Employer’s stockholders) that Executive has not met such applicable standard of conduct, shall
create a presumption that Executive has not met the applicable standard of conduct.

               8.4 Insurance. Employer agrees to continue and/or maintain a directors and officers liability
insurance policy covering Executive to the same extent Employer provides such coverage for its
other executive officers and directors and for not less than the amounts in effect for its other
executive officers and directors.

          9. No Conflicting Agreement. Executive 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, faxed, or sent by certified, registered or
express mail, postage prepaid, and shall be deemed given when so delivered personally, faxed, or if
mailed, three days after the date of mailing, as follows:

	 	 	 	 	 	 	 
	 

	 	if to Employer, to:
	 	Metalico, Inc.	 	 
	 

	 	 	 	186 North Avenue East	 	 
	 

	 	 	 	Cranford, NJ 07016	 	 
	 
	 	 	 	 	 	 
	 

	 	if to Executive, to:
	 	Eric W. Finlayson
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

               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 Severability. If any term or provision of this Agreement is found to be unenforceable,
illegal or contrary to public policy by a court of competent jurisdiction, the parties hereto agree
that this Agreement shall remain in full force and effect except for such term or provision held to
be unenforceable.

               10.4 Non-Disparagement. The parties agree that, during the Employment Period and thereafter
(including following Executive’s termination of employment for any reason): (i) Executive will not
make statements or representations, or otherwise communicate, directly or indirectly, in writing,
orally, or otherwise, or take any action which may, directly or indirectly, disparage Employer or
any subsidiary or affiliate or their respective officers, directors, employees, advisors,
businesses or reputations; and (ii) the officers and directors of Employer will not make any
statements or representations or otherwise communicate, directly or indirectly, in writing, orally,
or otherwise, or take any action which may, directly or indirectly, disparage Executive.
Notwithstanding the foregoing, nothing in this Agreement shall preclude either Executive or
Employer from making truthful statements or disclosures that are required by applicable law,
regulation or legal process.

               10.5 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.

               10.6 Governing Law. This Agreement shall be governed by 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.

               10.7 Taxes. Any payments made pursuant to this Agreement shall be subject to any tax or
similar withholding requirements under applicable federal, state or local employment or income tax
laws or similar statutes or other provisions of law then in effect. This Agreement is intended to
comply with the requirements of Section 409A of the Code and the regulations thereunder (“Section
409A”). To the extent that any provision in this Agreement is ambiguous as to its compliance with
Section 409A, the provision shall be interpreted in a manner so that no payment due to Executive
hereunder shall be deemed subject to an “additional tax” within the meaning of Section
409A(a)(1)(B) of the Code. For purposes of Section 409A, each payment made
under this Agreement shall be treated as a separate payment. Notwithstanding anything
contained herein to the contrary, Executive shall not be considered to have terminated employment
with the Company for purposes of this Agreement unless Executive has

Page 7 

 

incurred a “termination of
employment” from the Company within the meaning of Treasury Regulation §1.409A-1(h)(1)(ii)
promulgated under Section 409A. Notwithstanding the foregoing, if applicable and necessary to
comply with the restriction in Section 409A(a)(2)(B) of the Code concerning payments to “specified
employees,” any payment made to Executive pursuant to this Agreement on account of the Employee’s
separation from service that would otherwise be due hereunder within six months after such
separation from service shall nonetheless be delayed until the first business day of the seventh
month following Executive’s separation from service. In no event may Executive, directly or
indirectly, designate the calendar year of any payment. All reimbursements provided under this
Agreement shall be made or provided in accordance with the requirements of Section 409A, including,
where applicable, the requirement that (i) any reimbursement is for expenses incurred during
Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the
amount of expenses eligible for reimbursement during a calendar year may not affect the expenses
eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the calendar year following the year in which the
expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange
for another benefit. Executive further acknowledges that, while this Agreement is intended to
comply with Section 409A, any tax liability incurred by Executive under Section 409A is solely the
responsibility of Executive.

               10.8 Assignment. This Agreement, and Executive’s rights and obligations hereunder, may not be
assigned by Executive. Employer may assign this Agreement and its rights, together with its
obligations, 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.

               10.9 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.

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

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

	 	 	 	 	 	 	 
	 	 	METALICO, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Carlos E. Agüero            	 	 
	 

	 	 	 	President                        	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	ERIC W. FINLAYSON	 	 

Page 8EX-10.26

Exhibit 10.26

 

SUBSCRIPTION AND INVESTMENT AGREEMENT

(SERIES C)

BY AND AMONG

BEACON ENERGY CORP.

THE INVESTORS IDENTIFIED HEREIN

AND

METALICO, INC.

MAY 15, 2008

 

SUBSCRIPTION AND INVESTMENT AGREEMENT

     THIS SUBSCRIPTION AND INVESTMENT AGREEMENT (this “Agreement”) is made as of May 15, 2008 by
and among BEACON ENERGY CORP., a Delaware corporation (the “Company”), the investors identified on
the signature pages hereto (each, an “Investor” and together, the “Investors”), and METALICO, INC.,
a Delaware corporation (“Metalico”).

RECITALS:

     WHEREAS, the Investors, severally and not jointly, have agreed to invest in the Company sums
aggregating to                      Dollars ($                    ) (the “Investment”) in exchange for an
aggregate of                                 shares of the Company’s Series C Common Stock, par value $.001 (the
“Purchased Shares”) and the Company has agreed to issue the Purchased Shares to the Investors in
exchange for the Investment in accordance with the allocations set forth on Schedule 2.1
hereto; and

     WHEREAS, the Company and the Investors wish to set forth herein their understandings and
agreements pertaining to this transaction and the ownership by the Investors of the Purchased
Shares; and

     WHEREAS, Metalico owns a substantial portion of the outstanding capital stock of the Company
and will obtain material benefits from the Investments;

     NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company, the Investors and Metalico (individually each a “Party” and
collectively, the “Parties”) hereby agree as follows:

 

 

ARTICLE I — DEFINITIONS

     SECTION 1.1. Defined Terms. As used in this Agreement, the following terms have the
meanings specified below:

     “Act” means the U.S. Securities Act of 1933, as amended.

     “Aggregate Purchase Price” has the meaning ascribed to such term in Section 2.2.

     “Closing Date” means May 15, 2008, or such earlier or later date that the Parties may agree
to.

     “Common Stock” has the meaning ascribed to such term in the Company’s Certificate of
Incorporation.

     “Investment” has the meaning ascribed to such term in the Recitals.

     “Person” means any natural person, corporation, business trust, limited liability company,
joint venture, association, company or partnership.

     “Purchase Price” has the meaning ascribed to such term in Section 2.2.

     “Purchased Shares” has the meaning ascribed to such term in the Recitals.

     “Risk Factors” means the risk factors prepared by the Company and set forth in “Exhibit A”
attached hereto.

     “Voting Agreement” means that certain agreement dated as of the date hereof by and among the
Investors, the Company, Metalico and the other parties specified therein.

     “Stock Certificate” has the meaning ascribed to such term in Section 2.3.

ARTICLE
II — PURCHASE OF SHARES

     SECTION 2.1. Purchase of Shares. On the Closing Date, each of the Investors will
purchase, severally and not jointly, from the Company, and the Company will issue to each Investor,
the Purchased Shares in accordance with the terms and conditions set forth herein and the
allocations set forth on Schedule 2.1 hereto. Each Investor’s obligations under this
Agreement are several and not joint obligations and no Investor shall have any obligation or
liability for the performance or non-performance by any other Investor of such other Investor’s
obligations under this Agreement.

     SECTION 2.2. Purchase Price. The purchase price for each Purchased Share is Thirty
Six Dollars ($36.00) (the “Purchase Price”) and the aggregate purchase price for all the Purchased
Shares by the Investors (the “Aggregate Purchase Price”) is                      Dollars ($                    ).
The Purchase Price with respect to each of the Purchased Shares purchased by each Investor is
payable in full by each such Investor to the Company in immediately available funds on the Closing
Date.

     SECTION 2.3. Delivery of Stock Certificate. On the Closing Date, the Company will
issue and deliver to each Investor a complete, original and duly executed stock certificate
representing the Purchased Shares purchased by such Investor (the “Stock Certificate”), free and
clear of any and all mortgages, pledges, liens, claims, encumbrances or security interests of any
kind (“Liens”). Each Stock Certificate shall contain the following legends:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SHARES UNDER SUCH ACT OR ANY THEN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS. IF REQUESTED BY THE
COMPANY, THE HOLDER OF SUCH SHARES MUST PROVIDE TO THE COMPANY AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT ANY SUCH SALE, OFFER FOR SALE, PLEDGE OR HYPOTHECATION OF
THE SHARES DOES NOT REQUIRE REGISTRATION UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.”

- 2 -

 

SECTION 2.4. Conditions to Closing. The Investors’ obligations hereunder shall be
subject to the consummation by the Company of the transaction contemplated by the Smithfield
Agreement (as defined below); and a $1,000,008 investment by Mr. Agüero and/or entities controlled
by him.

ARTICLE
III — COVENANTS OF THE COMPANY

     SECTION 3.1. Financial and Other Reporting by the Company. The Company will deliver
to each Investor with reasonable promptness:

          (i) that certain power point presentation and financial model of the Company dated as of April
16, 2008, as amended through the date hereof;

          (ii) audited financial statements of the Company as of the end of each fiscal year and
unaudited financial statements at the end of each fiscal quarter;

          (iii) notice, after any officer of the Company obtains knowledge or notice, either written or
oral, of any condition or event particular to the Company which could reasonably be expected to
have a material adverse effect on the business, operations, or prospects of the Company; and

          (iv) any such other information and data with respect to the Company as from time to time may
be reasonably requested by the Investor.

     SECTION 3.2. Use of Proceeds. The Company will use the proceeds of the sale of the
Purchased Shares to fund its acquisition of certain assets of Smithfield Bioenergy pursuant to the
terms and conditions of that certain Asset Purchase Agreement dated February 5, 2008, and amended
by First Amendment to Purchase Agreement dated as of April 15, 2008, attached hereto as Exhibit
3.2 (as further amended, provided that the Investors have been provided a copy of, and
approved, any such amendment(s)) by and between the Company and Smithfield Bioenergy LLC (the
“Smithfield Agreement”), as well as the funding of various and ancillary start-up costs, the
payment of general operating expenses including payroll, and other general corporate purposes.

               SECTION 3.3. Business of the Company. The business of the Company shall be to become
a vertically integrated international biofuels production, storage, distribution and marketing
company; to own farmland for the production of biofuels feedstock; and to acquire and operate
existing biofuel production facilities.

               SECTION 3.4. Investor Relations Firm. On or before the effective date of the
registration or acceptance for trading of the Company’s stock by a Trading Platform (as defined in
Section 5.1), the Company shall retain an investor relations firm to promote the Company’s stock.

               SECTION 3.5. Anti-Dilution. Until the Platform Date (as defined in Section 5.1), the
Company shall not issue any shares of common stock or securities convertible into or exercisable
for shares of common stock at a price per share less than $36.00 (as such may be adjusted to
account for any stock split, reverse stock split, merger or other corporate re-organization),
except for options (and the shares of common stock underlying such options) under a stock option
plan or similar arrangement approved by the Company’s Board of Directors.

               SECTION 3.6. Registration Rights. The Company shall not grant demand, piggyback or
any other form of registration rights to any Person unless, prior to or simultaneously with any
such grant, the Investors shall be granted registration rights on terms not less favorable than
those granted to such person with respect to all the Purchased Shares and any and all other shares
of capital stock of the Company then held or thereafter acquired by the Investors.

               SECTION 3.7. Public Trading Event. By its execution of this Agreement, the Company
agrees to use its best efforts to cause a Public Trading Event to occur.

               SECTION 3.8. Amendment of Stock Agreements. The Company and Metalico agree not to
amend any stock purchase agreements with any other investors without the Investors’ prior written
consent.

ARTICLE
IV — COMPANY REPRESENTATIONS AND WARRANTIES

     The Company hereby makes the following representations and warranties to each Investor as of
the Closing Date:

- 3 -

 

     SECTION 4.1. Organization; Powers. The Company (a) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware; (b) has all
requisite corporate power and authority to own its property and assets and to carry on its business
as now conducted and as proposed to be conducted; and (c) has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement. The Company does not (i) own of
record or beneficially, directly or indirectly, (A) any shares of capital stock or securities
convertible into capital stock of any other Person, or (B) any participating interest in any
Person, or (ii) control, directly or indirectly, any other Person.

     SECTION 4.2. Authorization; Conflicts. The execution, delivery and performance by the
Company of this Agreement and the Voting Agreement has been duly authorized by all necessary
corporate action on the part of the Company. Except as set forth on Schedule 4.2 hereto:
(a) the Company is not in violation or default of any provision of (i) its Certificate of
Incorporation or By-laws, or (ii) any material contract, agreement, obligation, commitment,
license, indenture, mortgage, deed of trust, loan or credit agreement or any other agreement or
instrument to which the Company is a party or any of its assets are bound; (b) the execution,
delivery and performance of this Agreement, the Voting Agreement and the other agreements required
to consummate the transactions contemplated hereunder and thereunder will not conflict with or,
with or without notice or the lapse of time, result in any default or in any modification of any
provision of the Company’s Certificate of Incorporation or By-laws (except for modifications
necessary to reflect the terms of this Agreement, the Voting Agreement or any other agreement or
document required by the terms hereof) or the terms of any contract, agreement, obligation,
commitment, license, indenture, mortgage, deed of trust, loan or credit agreement or any other
agreement or instrument to which the Company is a party or by which any of its assets are bound, or
result in the creation of any Lien upon any of the properties or assets of the Company, or result
in the loss or adverse modification of any license, permit, franchise, or other authorization
granted to, otherwise held by or used by the Company; and (c) the execution, delivery and
performance of this Agreement, the Voting Agreement or any other agreement or document required by
the terms hereof by the Company will not violate any judgment, decree, order, statute, rule or
regulation of any federal, state or local government or agency having jurisdiction over the Company
or any of the Company’s assets.

     SECTION 4.3. Enforceability. This Agreement has been duly executed and delivered by
the Company and constitutes a legal, valid and binding obligation of the Company enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws relating to or affecting creditors’ rights
generally.

     SECTION 4.4. Company Ownership. The authorized capital stock of the Company consists
of 1,000,000 shares of common stock, par value $0.001 per share (“Common Stock”), and no shares of
preferred stock, of which 646,986 shares of Common Stock are issued and outstanding. All of the
outstanding shares of capital stock of the Company are or will be, by the Closing Date, validly
issued, fully paid and non-assessable and, to the knowledge and expectation of the Company, are now
owned or will be owned immediately after the Closing, of record and, to the knowledge of the
Company, beneficially, in the amounts and by the persons as set forth in Schedule 4.4 free
and clear of any Liens. The designation, powers, preferences, rights, qualifications, limitations
and restriction in respect of the Purchased Shares are as set forth in the Company’s certificate of
incorporation as it has been or may be amended from time to time and are valid, binding and
enforceable in accordance with all applicable laws. The Purchased Shares, when issued, will be
validly issued, fully paid and non-assessable and with no personal liability attaching to the
ownership thereof and will be free and clear of all Liens. Except as set forth on Schedule
4.4, (i) there are no outstanding subscriptions, warrants, options, calls, commitments or other
rights to purchase or acquire, or securities convertible into or exchangeable for, any capital
stock of the Company, or any obligation of the Company to issue any thereof; (ii) there are no
preemptive or participation rights with respect to the issuance or sale of the Company’s capital
stock; and (iii) there are no voting trusts or agreements, stockholders’ agreements, pledge
agreements, buy-sell agreements, rights of first refusal or proxies relating to any securities of
the Company (whether or not the Company is a party thereto).

     SECTION 4.5. Financial Statements.  The Company has delivered to the Investors: (i)
audited financial statements for the periods ending December 31, 2006 and December 31, 2007, and
(ii) unaudited monthly financials for the months January, February and March, 2008 ((i) and (ii)
collectively, the “Financial Statements”). The Financial Statements have been prepared in
conformity with United States generally accepted accounting principles applied on a consistent
basis throughout the periods involved and present fairly the financial position of the Company as
of the dates indicated and the results of its operations for the periods then ended.

     SECTION 4.6. Subsidiaries; Investments. Except as set forth on Schedule 4.6
hereto, the Company does not directly or indirectly control or have any stock ownership or other
proprietary interest in any other corporation, partnership, trust, association, joint venture or
other entity.

     SECTION 4.7. Registration Rights. Other than as set forth on Schedule 4.7,
the Company has not granted any rights to demand or require registration of any of its securities
under the Act.

- 4 -

 

     SECTION 4.8. Securities Exemption. Assuming the relevant representations and
warranties of the Investors are true, the sale and issuance of the Purchased Shares pursuant to
this Agreement is exempt from the registration requirements of the Act and under applicable state
securities laws, and the Company has not and will not take any actions which would cause the sales
contemplated hereunder to be ineligible for such exemption.

ARTICLE
V — PUBLIC TRADING EVENT

     SECTION 5.1 Public Trading Event. For purposes of this Section 5, “Public Trading
Event” means the occurrence of one of the following

          (i) as of April 30, 2008, the Company shall have completed the filing of an appropriate
application and required supporting materials with any of the following national securities
exchanges or listing services providing a platform for public trading in the Company’s common
stock: the American Stock Exchange, the New York Stock Exchange, the NASDAQ market, or the OTC
Bulletin Board (each a “Traditional Trading Platform”) or

          (ii) as of July 31, 2008 completed an alternative listing arrangement through a reverse merger
with a public shell, a listing on the Pink Sheets trading system, acquisition by a Special Purpose
Acquisition Company (“SPAC”) or any other similar mechanism deemed appropriate by the Company’s
Board of Directors (each a “Non-Traditional Trading Platform” and, collectively together with the
Traditional Trading Platform each a “Trading Platform”).

     “Platform Date” shall mean the earlier to occur of (a) the date as of which a filing
contemplated under clause (i) above of this Section 5.1 is declared “effective” by the Securities
Exchange Commission and (b) the date as of which an arrangement contemplated under clause (ii)
above of this Section 5.1 is completed.

     If the Company elects to cause a Public Trading Event to occur by making the filing
contemplated in clause (i) above, the Company shall use its reasonable efforts to have its filed
application, as such may be amended, declared “effective” by the Securities Exchange Commission no
later than September 30, 2008. If the Company fails to have such filed application declared
effective by September 30, 2008, it shall have until December 1, 2008 to complete a listing through
a Non-Traditional Trading Platform.

     By its execution of this Agreement, the Company agrees to use its best efforts to cause a
Public Trading Event to occur. By its execution of this Agreement, Metalico agrees to use its best
efforts to seek the authorization of its Board of Directors, to the extent necessary, to cause or
permit any actions by the Company necessary or appropriate to achieve a Public Trading Event and
the effectiveness of any resulting registration or listing, provided that nothing in this
Section 5.1 shall be deemed to obligate Metalico to perform any act in violation of applicable law
or regulation.

     SECTION 5.2 Insider Information. Upon the registration or acceptance for trading of
the Company’s stock by a Trading Platform, the Company’s obligations to individual Investors under
Sections 3.1(iii) and (iv) shall automatically terminate unless, with respect to any individual
Investor, such Investor delivers written notice to the Company to the effect that such Investor
wishes to continue receiving the information contemplated thereunder. Each Investor acknowledges
that receipt of such information may subject it to insider trading restrictions under federal
securities law.

ARTICLE VI — INVESTOR REPRESENTATIONS AND WARRANTIES

     Each Investor, severally and not jointly, hereby makes the following representations and
warranties to the Company as of the Closing Date:

     SECTION 6.1. Investor Review. Investor has had an opportunity to discuss in detail
the Company’s business, management and financial affairs with the Company’s officers and management
employees and has reviewed all documents and records of the Company which the Company has provided
in response to any request by the Investor.

     SECTION 6.2. No Registration. Investor acknowledges that, because the Purchased
Shares have not been registered under the Act, there are substantial restrictions on their
transferability. Investor also acknowledges that (i) the Purchased Shares will not be, and the
Investor has no rights to require that the Purchased Shares be, registered under the Act or under
any other Federal or state securities laws; (ii) there will be no public market for the Purchased
Shares; (iii) Investor will not be able to avail himself, herself, or itself of the provisions of
Rule 144 adopted by the Securities and Exchange Commission under the Act with respect to the resale
of the Purchased Shares, and will only be able to avail himself, herself or itself of the
provisions of such Rule

- 5 -

 

144 with respect to the resale of the Purchased Shares pursuant to such Rule; (iv) he, she or it
may have to hold the Purchased Shares indefinitely; and (v) it may not be possible for him, her or
it to liquidate his, her, or its Investment.

     SECTION 6.3. Purchase for Account of Investor. The Purchased Shares are being
acquired by the Investor solely for his, her or its own account, for investment, and are not being
purchased with a view to or for the resale, distribution, subdivision or fractionalization thereof;
the Investor has no present plans to enter into any such contract, undertaking, agreement or
arrangement. In order to induce the Company to issue and sell the Purchased Shares subscribed for
hereunder, it is agreed that the Company will have no obligation to recognize the ownership,
beneficial or otherwise, of the Purchased Shares by anyone but the Investor.

     SECTION 6.4. Experience of Investor/Risk Factors. The Investor (i) has substantial
experience in investing in and evaluating investment opportunities in privately-held companies,
(ii) is capable of evaluating the risks and merits of its investment in the Company, (iii) has the
capacity to protect his, her or its own interests and (iv) acknowledges that the Purchased Shares
are speculative investments. In addition, Investor has read and understands all of the Risk
Factors as set forth in Exhibit A, and understand that the Risk Factors are not intended to
be exclusive.

     SECTION 6.5. Accredited Investor. Investor is an “Accredited Investor” within the
definition set forth in Rule 501(a) of the Act. The Investor (i) has adequate means of providing
for his, her or its current needs and possible personal contingencies, and has no need for
liquidity of the Investment; (ii) has a net worth sufficient to, and can bear the economic risk of,
losing the entire Investment; and (iii) does not have an overall commitment to non-readily
marketable investments which is disproportionate to his, her or its net worth and the Investment
subscribed for herein will not cause such overall commitment to become excessive.

     SECTION 6.6. Organization; Powers. Each Investor is a limited partnership, duly
organized, validly existing and in good standing under the laws of the State of Delaware and has
all requisite limited partnership power and authority to execute, deliver and perform its
obligations under this Agreement.

     SECTION 7.2. Authorization. This Agreement has been duly authorized by all necessary
limited partnership action on each Investor’s part and has been duly executed and delivered by each
Investor’s duly authorized officers and constitutes each Investor’s legal, valid and binding
obligations, enforceable against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar laws relating to or
affecting creditors’ rights generally.

ARTICLE
VII — REPRESENTATIONS AND WARRANTIES OF METALICO

     Metalico hereby makes the following representations and warranties to each Investor:

               SECTION 7.1. Organization; Powers. Metalico is duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement.

               SECTION 7.2. Authorization. This Agreement has been duly authorized by all necessary
corporate action on Metalico’s part and has been duly executed and delivered by Metalico’s duly
authorized officers and constitutes Metalico’s legal, valid and binding obligations, enforceable
against it in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws relating to or affecting
creditors’ rights generally.

ARTICLE VII — MISCELLANEOUS

     SECTION 8.1 Notices.

     (a) Notices and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or registered mail or by
overnight express mail or sent by facsimile, as follows:

     (i) if to the Company, to Beacon Energy Corp., 186 North Avenue East, 1st Floor, Cranford, NJ
07016 (Facsimile No. (908) 497-1097), with a copy to Kathleen M. Porter, Robinson & Cole LLP, One
Boston Place, Boston, MA 02108 (Facsimile No. (617) 557-5999).

- 6 -

 

     (ii) if to any of the Investors, to such Investor, c/o The Argentum Group, 60 Madison Av.,
Suite 701, New York, NY 10010, Attention: Walter Barandiaran (Facsimile No. (212) 949-8294), with a
copy to Andrew C. Peskoe, Esq., Golenbock Eiseman Assor Bell & Peskoe LLP, 437 Madison Avenue, New
York, NY 10022 (Facsimile No. (212) 754-0330);

     (iii) if to Metalico, to Metalico, Inc., 186 North Ave. East , Cranford, NJ 07016, Attn:
Carlos E. Agüero, President (Facsimile No. (908) 497-1097), with a copy to Metalico, Inc., 186
North Ave. East , Cranford, NJ 07016 , Attn: Arnold S. Graber, Executive Vice President and General
Counsel (Facsimile No. (908) 497-1097).

or to such other addresses and to the attention of such other individuals as any party shall have
designated to the other parties by notice given in the foregoing manner.

     (b) All notices and other communications given to any Party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given (i) two business days after being
sent by registered or certified mail, return receipt requested, postage prepaid or (ii) one
business day after being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery or (iii) on the date on which it is sent by facsimile transmission with
acknowledgement of receipt at the number to which it is required to be sent in each case to the
intended recipient as set forth above.

     SECTION 8.2 Survival of Agreement; Indemnification. (a) All covenants, agreements,
representations and warranties made by the Company and/or Metalico shall be considered to have been
relied upon by each of the Investors and shall survive the Closing. All covenants, agreements,
representations and warranties made by the Investors shall be considered to have been relied upon
by each of the Company and/or Metalico and shall survive the Closing.

     (b) The Company agrees to indemnify and hold the Investors, Metalico and their respective
partners, officers, directors, employees and advisors harmless against and in respect of any and
all damages, losses, liabilities, obligations, costs and expenses (including reasonable attorneys’
fees) that the Investors may suffer or incur arising out of or in connection with:

     (i) a breach of any of the representations, warranties, covenants or agreements made by
the Company set forth herein, in the Voting Agreement or any Schedules or Exhibits hereto
(notwithstanding any investigations or verifications made by or on behalf of the Investors);

     (ii) (A) any matter, claim or litigation where the Company is a party, (B) the
Investors’ participation in management or business decisions or actions of or dealings with
the Company or the service of any of the Investors or their designees as officers or directors
of the Company, or (C) any third party claim or litigation arising out of or connected with
the execution of this Agreement, the Voting Agreement or the consummation of the transactions
contemplated hereby or referred to herein or the Investors’ investment in the Company,
including, without limitation, any claim in respect of any fees, commissions or compensation
of or by finders, consultants, investment bankers or placement agents, provided that there is
no indemnification of the Investors under (A), (B) or (C) to the extent such matter, claim or
litigation arises out of or is connected to a misrepresentation or breach by an Investor in
this Agreement, the Voting Agreement, or in the consummation of the transactions contemplated
hereby or referred to herein;

     (iii) any and all actions, suits, proceedings, claims, demands, assessments, judgments,
costs and expenses, including, without limitation legal fees and expenses, incident to any of
the foregoing or incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing any such indemnity.

     (b) The Investors agree, severally and not jointly, to indemnify and hold the Company,
Metalico and their respective partners, officers, directors, employees and advisors harmless
against and in respect of any and all damages, losses, liabilities, obligations, costs and expenses
(including reasonable attorneys’ fees) that any of them may suffer or incur arising out of or in
connection with:

     (i) a breach of any of the representations, warranties, covenants or agreements made by
the Investors set forth herein, in the Voting Agreement or any Schedules or Exhibits hereto;
and

     (ii) any and all actions, suits, proceedings, claims, demands, assessments, judgments,
costs and expenses, including, without limitation legal fees and expenses, incident to any of
the foregoing or incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing any such indemnity.

     SECTION 8.3 Binding Effect. This Agreement shall become effective when it shall have
been executed by both Parties.

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     SECTION 8.4 Successors and Assigns. 

     (a) Whenever in this Agreement any of the Parties hereto is referred to, such reference shall
be deemed to include the permitted successors and assigns of such Party; and all covenants,
promises and agreements by or on behalf of the Company, Metalico or any Investor that are contained
in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

     (b) Neither the Company nor Metalico shall assign or delegate any of their respective rights
or duties hereunder without the prior written consent of the Investors, and any attempted
assignment or delegation without such consent shall be null and void.

     SECTION 8.5 Expenses. The Company will pay directly all legal fees incurred by the
Investors in connection with the preparation of this Agreement and all other related documents in
connection therewith as well as any amendments, modifications or waivers of the provisions hereof
or thereof.

     SECTION 8.6 Applicable Law. This Agreement and the rights and obligations of the
parties hereunder shall be enforced, governed and construed in all respects in accordance with the
internal substantive laws of the State of Delaware (without reference to principles of conflicts or
choice of law that would cause the application of the internal laws of any other jurisdiction).
Each Party hereby irrevocably submits and consents to the jurisdiction of Delaware with respect to
any dispute, controversy, legal action or other proceeding that arises from, concerns or touches
this Agreement or the Investment and acknowledges that he, she or it will accept service of process
by registered or certified mail or the equivalent directed to his, her or its address set forth
herein or by whatever other means are permitted by such courts. Each Party hereby acknowledges
that said courts have jurisdiction over any such dispute, controversy, legal action or other
proceeding and that he, she or its hereby waives any objection to personal jurisdiction or venue in
these courts or that such courts are an inconvenient forum.

     SECTION 8.7 Waivers; Amendment. No failure or delay of an Investor in exercising any
power or right hereunder shall operate as a waiver thereof nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Investors hereunder are cumulative and are not exclusive of
any rights or remedies that it would otherwise have.

     SECTION 8.8. Further Assurances. The Company, Metalico and each Investor each agree
that they will execute any and all further documents, agreements and instruments, and take all
further action that may be required (and that an Investor may reasonably request from time to time)
in order to effectuate the transactions contemplated by this Agreement.

     SECTION 8.9 Severability. In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any way, the validity,
legality and enforceability of the remaining provisions contained herein and therein shall not in
any way be affected or impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction).

     SECTION 8.10 Counterparts. This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall constitute an original but
all of which when taken together shall constitute a single contract and shall become effective.
Delivery of an executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.

[Signature page is the next page]

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     IN WITNESS WHEREOF, the Parties hereto have caused this Subscription Agreement to be duly
executed by their respective authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	BEACON ENERGY CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	Carlos E. Agüero 	 
	 	 	Title:  	Chairman 	 
	 
	 	[INVESTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	METALICO, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Carlos E. Agüero 	 
	 	 	Title:  	President 	 
	 

- 9 -

 

Exhibit A

IMPORTANT: Investment in the securities offered hereunder involves a high degree of risk.
Prospective investors should carefully consider, among other things, the factors set forth below,
together with the other information provided to them, before making a decision to purchase the
Purchased Shares offered hereby. If any of the following risks actually occurs, we may not be able
to conduct our business as currently planned, and our financial condition and operating results
could be seriously harmed. In that case, the value of our common stock could decline, and you
could lose all or part of your investment.

We caution you that the following list of important factors is not exclusive. Additional risks and
uncertainties not presently known to us, or risks that we currently consider immaterial, may also
impair our operations or results. You should carefully consider the factors below and other
uncertainties and events, as well as the risks identified in the biofuel business generally.

We have incurred losses and anticipate continued losses and negative cash flow.

The Company currently generates no income and has never been profitable. We expect to continue to
incur net losses and generate negative cash flow until we can produce sufficient revenues to cover
our costs. We may never become profitable. Even if we do achieve profitability, we may be unable
to sustain or increase our profitability in the future. Although there are none currently planned,
it is highly likely that additional offerings will be required that will have the effect of
diluting your investment. Adequate funds for the Company’s long term goals, whether through
financial markets or collaborative or other arrangements with corporate partners or from other
sources may not be available when needed. The Company has no commitments to obtain any additional
funds and there can be no assurance that additional funds can be obtained on terms acceptable to
the Company, if at all.

Our results will be highly dependent on commodity prices, which are subject to significant
volatility and uncertainty, and the availability of supplies, so our results could fluctuate
substantially.

     The Company’s results are substantially dependent on many different commodity prices,
especially prices for feedstock, biodiesel, petroleum diesel and materials used in the construction
of a biodiesel plant. As a result of the volatility of the prices for these items, our results may
fluctuate substantially and the Company may experience periods of declining prices for our products
and increasing costs for our raw materials, which could result in operating losses.

     The price of feedstock is influenced by market demand, the Company, other conditions, animal
processing and rendering plant decisions, factors affecting crop yields, farmer planting decisions
and general economic, market and regulatory factors. These factors include government policies and
subsidies with respect to agriculture and international trade, and global and local demand and
supply. The significance and relative effect of these factors on the price of feedstock is
difficult to predict. Any event that tends to negatively affect the supply of feedstock, such as
increased demand, adverse weather or crop disease, could increase feedstock prices and potentially
harm our business and make it unprofitable to operate. In addition, the Company may also have
difficulty, from time to time, in physically sourcing feedstock on economical terms due to supply
shortages. Such a shortage could require us to suspend operations until feedstock is available at
economical terms, which would have a material adverse effect on our business, results of operations
and financial position. Existing and additional biodiesel facilities will compete in the
procurement of feedstock which could result in shortages and/or increases in price, which would
negatively impact the Company. In addition, there are alternative uses for many of the biodiesel
feedstocks which could also result in shortages and/or price increases.

     Biodiesel fuel is a commodity whose price is determined based on the price of petroleum
diesel, world demand, supply and other factors, all of which are beyond our control. World prices
for biodiesel fuel have fluctuated widely in recent years. The Company expects that prices will
continue to fluctuate in the future. Price fluctuations will have a significant impact upon our
revenue, the return on our investment in biodiesel plants and on our general financial condition.
Price fluctuations for biodiesel fuel may also impact the investment market, and our ability to
raise investor capital. Although market prices for biodiesel fuel rose to near-record levels during
2007 and have remained near those levels since then, there is no assurance that these prices will
remain at high levels. Future decreases in the prices of biodiesel or petroleum diesel fuel may
have a material adverse effect on our financial condition and future results of operations.

Reliance on Key Personnel

The Company’s success is, and will continue to be, substantially dependent upon the continued
services of its current management. The inability or unwillingness of existing management to
continue to operate in their respective capacities would materially and adversely affect the
Company’s operating results and the ability of the Company to manage its operations.

Competition

The Company is still relatively small, and it faces competition from larger, well capitalized
companies that develop their own products and systems, similar to the products and systems that the
Company is developing. Competition could adversely affect the overall profitability of the
Company.

- 1 -

 

Exhibit A

Lack of Liquidity in Investment

The Purchased Shares have not been registered under the Securities Act of 1933, or any state
securities laws and, unless and until so registered, will be subject to significant restrictions on
resale. The Company does not intend to register any of its securities or to list any of its
securities on any national securities exchange or to seek the admission thereof to trading on any
NASDAQ market or electronic bulletin board. Prior to this Offering, there has been no public
market for any of the Company’s securities.

Substantial Control by Officers, Directors and Founders

Currently, the Company is controlled by a very small group of stockholders who will and, subsequent
to this offering, will continue to control and influence the operation of the Company.
Accordingly, subscribers to this offering will have no control or influence over the day-to-day
activities of the Company by virtue of their investment.

The U.S. biodiesel industry is highly dependent upon myriad federal and state legislation and
regulation.

     The production of biodiesel is made significantly more competitive by federal and state tax
incentives. The federal excise tax incentive program for biodiesel was originally enacted as part
of the American Jobs Creation Act of 2004 and the current federal program provides fuel blenders,
generally distributors, with a one cent tax credit for each percentage point of vegetable oil
derived biodiesel blended with petroleum diesel. For example, distributors that blend soybean
derived biodiesel with petroleum diesel into a B20 blend would receive a twenty cent per gallon
excise tax credit. The program also provides blenders of recycled oils, such as yellow grease from
restaurants, with a one-half cent tax credit for each percentage point of recycled oil derived
biodiesel blended with petroleum diesel. For example, distributors that blend recycled oil derived
biodiesel with petroleum diesel into a B20 blend would receive a ten cent per gallon excise tax
credit.

     In addition, a number of states provide mandates, programs and other incentives to increase
biodiesel production and use, such as mandates for fleet use or for overall use within the state,
tax credits, financial grants, tax deductions, financial assistance, tax exemptions and fuel rebate
programs. These incentives are meant to lower the cost of biodiesel in comparison to petroleum
diesel. The elimination or significant reduction in the federal excise tax incentive program or
state incentive programs benefiting biodiesel may have a material and adverse effect on the
Company’s results of operation and financial condition.

Forward Looking Statements And Uncertainty Of Financial Projections

Statements that are not based on historical fact, including without limitation statements
containing the words “believes,” “anticipates,” “intends,” “expects,” and words of similar import,
or references to strategy, constitute “forward looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Potential investors should consider all
financial forecasts previously provided by the Company in light of the underlying assumptions to
reach their own conclusions as to the reasonableness of those assumptions and to evaluate the
projections on the basis of that analysis. The Company does not make any representation or warranty
as to the accuracy or completeness of any projections.

- 2 -

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