8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 20, 2006

____________________

ICO, INC.

(Exact name of registrant as specified in its charter)

Texas (State or other jurisdiction of incorporation) 0-10068 (Commission File Number) 76-0566682 (I.R.S. Employer Identification No.)

5333 Westheimer Road

Suite 600

Houston, Texas 77056

(Address of principal executive offices and zip code)

(713) 351-4100

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 Item 1.01Entry into a Material Definitive Agreement

On January 20, 2006, the Company entered into the Second Amendment to Second Amended and Restated Employment Agreement (“Amendment”) with Jon C. Biro, the Company’s Chief Financial Officer and Treasurer. The Amendment extends Mr. Biro’s employment agreement for an additional two-year term of employment, through January 28, 2008. The Amendment includes provisions for the increase in Mr. Biro’s annual base salary to $235,000 (from $230,000) effective November 1, 2005, and sets forth the fiscal year incentive compensation plan for Mr. Biro. The referenced base salary increase and incentive compensation plan were previously approved by the Compensation Committee of the Company’s Board of Directors and reported in the Company’s Form 8-K filed with the Securities and Exchange Commission on November 22, 2005.

Item 9.01Financial Statements and Exhibits.

(c)Exhibits

ExhibitDescription

10.1 Second Amendment to Second Amended and Restated Employment Agreement between ICO, Inc. and Jon Biro, dated January 20, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ICO, INC.

Date:January 20, 2006

By:	/s/ Jon C. Biro
Name:	Jon C. Biro
Title:	Chief Financial Officer & Treasurer

EX-10.1

SECOND AMENDMENT TO

SECOND AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

This Second Amendment to Second Amended and Restated Employment Agreement (“Second Amendment”) is entered into by and between ICO, Inc. (the “Company”) and Jon C. Biro (“Employee”), to be effective January 20, 2006 (the “Effective Date”).

WHEREAS, Employee and the Company entered into an Employment Agreement (the “Agreement”), being effective as of January 28, 2004, which Agreement was amended by the First Amendment to Second Amended and Restated Employment Agreement (the “First Amendment”), being effective February 11, 2005; and

WHEREAS, the parties desire to further amend the Agreement, as set forth herein.

NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and obligations contained herein, the Company and Employee agree as follows:

1.   Pursuant to Section 1.1(a) of the Agreement, the parties hereby agree to extend the Agreement for an additional two-year Extension Period.

2.   It is the parties’ agreement that Employee’s Annual Incentive Bonus (as defined in Section 2.2 of the Agreement) for the Company’s fiscal year 2006 (commencing October 1, 2006) shall be calculated pursuant to Exhibit A hereto, with the following clarification: For the purpose of the fiscal year 2006 incentive calculation, “Corporate Expenses,” as defined on page 2 of Exhibit A, shall also be adjusted (the “Adjustment”) to exclude unbudgeted business unit related expenses that are paid and included in corporate expenses for the Company’s fiscal year 2006. The Adjustment shall be reviewed and approved by the Company’s Chief Executive Officer.

3.   Effective November 1, 2005, Employee’s Base Salary (as defined in Section 2.1 of the Agreement) is increased to Two Hundred and Thirty-Five Thousand Dollars ($235,000) per annum.

IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement in multiple originals to be effective on the Effective Date.

ICO, Inc.	Employee
/s/ A. John Knapp, Jr.	/s/ Jon C. Biro
A. John Knapp, Jr.	Jon C. Biro
President & Chief Executive Officer	Chief Financial Officer
Date: January 20, 2005	Date: January 20, 2005

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Exhibit A

FY 2006 Incentive Plan Matrix- CFO
		Pay-out as a percentage of Base Salary *
Measurement	Weighting	0%	24%	48%
Corporate Expenses (1)	33%
ICO, Inc. consolidated ROE	33%
Subjective/Qualitative Factors	33%

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Exhibit A (continued)

ICO, Inc.

FY 2006 Incentive Plan Matrix - CFO

Explanation of Measurement Definitions and additional Explanatory Notes

Measurement definitions

*“Corporate Expenses”: Defined as Corporate general and administrative expenses, excluding stock option expenses and excluding Sarbanes-Oxley 404 implementation expenses. These targets assume the SEC and/or PCAOB will provide relief to small companies (including ICO) to reduce the burden of SOX 404. If this relief is not granted then the targets shall be adjusted to factor in SOX 404 expenses for FY 2006 (i.e. exclude such expenses from Corporate expenses for the purpose of the incentive calculation expenses for unbudgeted third-party-404 related audit and other fees necessary to comply).

*“ROE”: Net income from continuing operations, minus preferred dividends (whether paid or accrued towards Convertible Preferred Stock liquidation preference), divided by Stockholders' equity, less the liquidation preference of Convertible Preferred Stock. For purposes of this calculation, Stockholders' equity and liquidation preference balances shall be averaged using the previous four (4) quarter-end balances, plus the prior year-end balance (e.g. for FY 2006 bonus calculation the FY 2005 previous year end-balance plus the four quarter-end balances of fiscal year 2006).

Computational Note

For each measurement the bonus amount payable is calculated as the result achieved for each measurement (i.e. the 0%, 24% or 48% pay-out) times the weighting and multiplied by the CFO’s Base Salary. Results for each measurement falling between the targeted amounts adjust the pay-out targets by interpolating the percentage of: (i) the resulted achieved minus the lower threshold divided by, (ii) the difference between the higher and lower target, times (iii) the higher pay-out target percentage.

Additional Explanatory Notes

*Subject to Compensation Committee approval of all terms of grant, and subject to options being available under an existing ICO, Inc. employee stock option plan, for bonus amounts achieved in any measurement category based on exceeding any applicable 24% target, at the Committee’s discretion the Committee may, if requested by the CFO, award stock options in place of a portion of incentive cash compensation, priced, with such options vesting immediately and using the Company’s option pricing model in accordance with SFAS 123R.

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