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                                                                   EXHIBIT 10(l)

                             RETENTION BONUS PLAN

     This Retention Bonus Plan (the "Plan") provides eligible employees of
REPUBLIC GROUP INCORPORATED (the "Company") with the opportunity to receive
retention bonuses, provided they remain in the employ of the Company through the
completion of a Change in Control (as hereinafter defined) of the Company and a
designated transition period thereafter. The Plan shall become effective upon
its adoption by the Company's Board of Directors (the "Board") and shall
terminate in accordance with Parts III and IV(7) hereof.

I.   ELIGIBILITY

          An employee of the Company shall be eligible to receive his or her
     designated retention bonus under the Plan if each of the following
     requirements is satisfied;

     (1)  the Board has selected such employee for participation in the Plan and
          the Company has delivered to the employee his retention bonus award
          letter prior to a Change in Control; and

     (2)  the employee remains actively employed by the Company or a successor
          on each Bonus Payment Date, or, prior to each such Date, the
          occurrence of any of the following events: (a) the involuntary
          termination of such employee's employment by the Company or a
          successor for any reason other than for Cause, (b) the employee's
          resignation for Good Reason.

          During the period that an employee satisfies the requirements set
     forth above, such employee shall be considered an "Eligible Employee".

          The amount of each Eligible Employee's retention bonus shall be
     determined by the Board at the time of such Eligible Employee's selection
     for participation in the Plan and shall be indicated on the retention bonus
     award letter attached hereto as Appendix A.

          An employee who would otherwise be an Eligible Employee will not be
     eligible for any retention bonus payable on a Bonus Payment Date after:

               .    such employee voluntarily terminates employment with the
                    Company or a successor other than for Good Reason,

               .    such employee's death or Disability,

               .    such employee is terminated by the Company or a successor
                    for Cause.

               For purposes of the Plan, the following definitions shall be in
               effect:

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               .    "Bonus Payment Dates" shall mean (i) the date of a Change in
                    Control, (ii) the date that is six (6) months following a
                    Change in

               .    Control, and (iii) if occurring prior to the date set forth
                    in (ii), the date of the involuntary termination of an
                    Eligible Employee's employment by the Company or a successor
                    for any reason other than for Cause, or the Eligible
                    Employee's resignation for Good Reason.

               .    "Cause" shall mean (i) fraud, embezzlement or theft
                    constituting a felony, (ii) willful and continued gross
                    inattention to the duties owed to the Company (other than by
                    reason of illness, accident or other physical or mental
                    incapacity), after a written demand for performance is
                    delivered to the employee by the Board or the Chief
                    Executive Officer of the Company which specifically
                    identifies the manner in which the Board or Chief Executive
                    Officer believes that the employee has not performed the
                    employee's duties, or (iii) any intentional or willful act
                    (or omission) that is materially injurious to the Company,
                    monetarily or otherwise. For purposes of this paragraph, an
                    act or omission is not "willful" unless it is done not in
                    good faith and without a reasonable belief that the act (or
                    omission) is in the best interests of the Company.

               .    "Change in Control" shall mean a change in the beneficial
                    ownership of the Company's voting stock or a change in the
                    composition of the Board which occurs as follows:

                    (i)   any "person" (as such term is used in Sections 13(d)
                          and 14(d)(2) of the Securities Exchange Act of 1934),
                          other than the Company, an executive officer of the
                          Company or his Affiliates, any employee benefit plan
                          of the Company, or any trustee of such a plan, is or
                          becomes a beneficial owner, directly or indirectly, of
                          stock of the Company representing thirty-five percent
                          (35%) or more of the total voting power of the
                          Company" then outstanding voting stock. "Affiliates"
                          refers to those persons defined in Rule 12b-2 under
                          the Securities Exchange Act of 1934, as amended;

                    (ii)  a tender offer (for which a filing has been made with
                          the Securities and Exchange Commission ("SEC") which
                          purports to comply with the requirements of Section
                          14(d) of the Securities Exchange Act of 1934 and the
                          corresponding SEC rules) is made for the stock of the
                          Company, which has not been negotiated and approved by
                          the Board, provided that in the case of a tender offer

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                          described in this paragraph (ii), the Change in
                          Control will be deemed to have occurred upon the first
                          to occur of (a) any time during the offer when the
                          person (using the definition in (i) above) making the
                          offer owns or has accepted for payment stock of the
                          Company with thirty-five percent (35%) of the total
                          voting power of the Company's stock or (b) three (3)
                          business days before the offer is to terminate unless
                          the offer is withdrawn first, if the person making the
                          offer could own, by the terms of the offer plus any
                          shares owned by this person, stock with thirty-five
                          percent (35%) or more of the total voting power of the
                          Company's stock when the offer terminates;

                    (iii) individuals who were the board's nominees for election
                          as directors of the Company immediately prior to a
                          meeting of the stockholders of the Company involving a
                          contest for the election of directors shall not
                          constitute a majority of the Board following the
                          election;

                    (iv)  there occurs a reorganization, merger or consolidation
                          or other transaction involving the Company (a
                          "Transaction"), with respect to which the stockholders
                          of the Company immediately prior to such Transaction
                          do not, immediately after the Transaction, own more
                          than fifty percent (50%) of the combined voting power
                          of the Company or other entity resulting from such
                          Transaction; or

                    (v)   all or substantially all of the assets of the Company
                          are sold, liquidated or distributed.

                    For purposes hereof, a person will be deemed to be the
                    beneficial owner of any voting securities of the Company
                    which it would be considered to own beneficially under SEC
                    Rule 13d-3 (or any similar or superseding statute or rule)
                    from time to time in effect.

               .    "Disability" shall mean an employee's inability, by reason
                    of physical or mental impairment, to engage in any
                    substantial gainful activity, of which the Board shall be
                    the sole judge.

               .    "Good Reason" shall mean one or more of the following
                    changes to the terms and conditions of an employee's
                    employment with the Company or a successor after a Change in
                    Control: (i) any change in the employee's position with the
                    Company to a position of lesser authority, (ii) any material
                    reduction in the employee's salary, bonuses, or employee
                    benefits; (iii) any change in the employee's

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                    job location or more than fifty (50) miles without
                    employee's consent; or (iv) any change in the circumstances
                    of employment which results in employee's inability to carry
                    out the duties, authority and powers attached to his
                    position.

II.  TERMS OF THE PLAN

          The amount of the retention bonus that will be payable to each
     individual Eligible Employee pursuant to the Plan shall be set forth in an
     award letter in the form attached to this Plan as Appendix A.

          The retention bonus will be payable in two  installments, 50% upon the
     date of a Change in Control, and the remaining 50% upon the date that is
     six (6) months following a Change in Control.   An Eligible Employee must
     remain employed by the Company or a successor in order to receive the
     installment payable on that date. However, if an Eligible Employee is
     involuntarily terminated by the Company or a successor other than for
     Cause, or resigns for Good Reason, then such Eligible Employee will receive
     the full amount (or the remaining balance, as the case may be) of his or
     her retention bonus in a lump-sum payment as soon as administratively
     feasible following the termination date.

          Retention bonuses do not constitute eligible earnings or compensation
     for purposes of any other employee plans, programs or arrangements now or
     hereafter offered by the Company or a successor.  Therefore, retention
     bonuses are not eligible for 401(k) plan savings election deferrals, and
     are not considered in determining your compensation under any of the
     Company's retirement or welfare benefit plans.

          Payment of the retention bonus will be subject to the collection by
     the Company or the successor of all applicable federal, state and local
     income and employment withholding taxes.

III. DURATION OF THE PLAN

          The Plan shall become effective upon its adoption by the Board.  If no
     Change of Control has occurred as of September 1, 2000, the Plan shall
     terminate on such date unless the Board, by written resolution, elects in
     its sole discretion to extend the term of the Plan for an additional period
     specified by the Board.  Notwithstanding any provision of this Plan to the
     contrary, if an Eligible Employee becomes entitled to a retention bonus
     before the Plan terminates, the employee's right to receive such bonus
     shall not be affected by the subsequent termination of the Plan.


IV.  OTHER IMPORTANT INFORMATION

     (1)  Plan Administration.  Within the scope of the terms of the Plan and in
          -------------------
          accordance therewith, as the administrator of the Plan, the Board has
          full discretionary authority to administer and interpret the Plan,
          including the discretionary authority to determine eligibility for
          participation and benefits under the Plan and the

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          amount of benefits (if any) payable per participant. All such
          determinations by the Board shall be final, binding and conclusive
          upon all persons.

     (2)  Benefits.  All bonuses will be paid from the general assets of the
          --------
          Company.  The Company will not establish any trust or escrow to fund
          the benefits which may become due and payable under the Plan.  The
          benefits provided under the Plan are not assignable or transferable.
          However, should a participant die prior to receipt of all or any
          portion of the retention bonus to which he or she becomes entitled
          under the Plan, then that unpaid amount shall be paid to the executor
          or administrator of that participant's estate.

     (3)  Successor Liability.  The terms and provisions of this Plan shall be
          -------------------
          binding upon any successor entity to the Company (including, without
          limitation, any assignee of all or substantially all of the assets of
          the Company), and such successor entity shall accordingly be liable
          for the payment of all benefits which become due and payable under the
          Plan with respect to the eligible employees of the Company.

      (4) Taxes.  The Company or a successor will withhold taxes and all other
          -----
          applicable payroll deductions from any payment made pursuant to the
          Plan.  Except to the extent otherwise agreed by the Company in
          writing, to the extent any retention bonus paid to any eligible
          employee under the Plan constitutes an "excess parachute payment"
          within meaning of Section 280G(b) of the Internal Revenue Code of
          1986, as amended, that employee shall be solely responsible for any
          and all excise taxes attributable to such payment, and those excise
          taxes shall accordingly be withheld from the retention bonus payable
          to such individual.

     (5)  No Right to Employment.  No provision of the Plan is intended to
          ----------------------
          provide any employee with any right to continue in the employ of the
          Company or a successor or otherwise affect the right of the Company or
          a successor, which right is hereby expressly reserved, to terminate
          the employment of any individual at any time for any reason, with or
          without Cause.

     (6)  Amendment or Termination of Plan.  The Board reserves the right to
          --------------------------------
          amend or terminate the Plan at any time prior to a Change in Control;
          provided, however, no amendment or termination will affect any
          Eligible Employee's entitlement to a retention bonus that has become
          payable prior to such amendment or termination.

     (7)  Applicable Law.  This Plan shall be governed by the laws of the State
          --------------
          of Texas, without giving effect to the conflicts of laws principles
          thereof


                                            REPUBLIC GROUP INCORPORATED


                                            By: /s/ Phil Simpson
                                               -------------------------------

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                                           Phil Simpson
                                    Name:___________________________
                                           Chairman of the Board
                                    Title:__________________________

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                     APPENDIX A - For Participants in the
                        Key Employee Continuation Plan


                          REPUBLIC GROUP INCORPORATED


June 6, 2000

________________________________
________________________________
________________________________

Dear_________________:

     In recognition of your efforts, the contributions you have made, and the
future contributions you will continue to make as an employee of Republic Group
Incorporated  (the "Company"), we are offering you the opportunity to earn a
special Retention Bonus (the 'Retention Bonus") in the amount indicated below.
The Retention Bonus will be fully subject to the terms of the Retention Bonus
Plan, to which this award letter is attached as Appendix A.

     The Retention Bonus is intended to encourage you to continue your
employment with the Company (and to reward you for such service) during the
period leading up to, and for a transition period following,  a transaction in
which the Company may be sold.  Your Retention Bonus is  generally payable in
two installments,  the first payment date  being the date of the closing of  a
transaction for the sale of the Company, when 50% of your Retention Bonus will
be paid.  The remaining 50% of your Retention Bonus will be paid on the second
payment date, which will occur on the earlier of (i) the date that is 6 months
after the closing, (ii) your termination by the Company for any reason other
than Cause, or (iii) your resignation for Good Reason.  Cause and Good Reason
shall have the meanings assigned to them in the Plan document.

     Please note that this letter is not a guarantee of continuing employment or
an employment contract between you and the Company.  You remain an at-will
employee of the Company.

     You are also a participant in the Company's Key Employee Continuation Plan,
adopted in 1991.  The Continuation Plan was originally intended to protect the
Company's key executives from the risk of involuntary termination of their
employment following a hostile takeover of the Company. The Company's Board of
Directors has amended the Continuation Plan so that, if a negotiated merger or
other transaction occurs, and your employment is involuntarily terminated within
one year thereafter, the Continuation Plan benefits will be triggered.  However,
the

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Company does not intend that key executives who participate in both programs
receive "double" benefits.  Therefore, the Continuation Plan has been amended to
provide that, if you are terminated by the buyer within one year after a
transaction, your Continuation Plan termination payment will be reduced by an
amount equal to 50% of the Retention Bonus that you received.  Attached to this
letter is a copy of the amended Continuation Plan with the new provisions
highlighted for your reference.  By your execution and delivery of this letter,
you agree to such amendment of the Continuation Plan and any award letter
thereunder, and accept your participation in the Retention Bonus Plan.

     This letter will become effective upon your execution of it in the space
provided below and its delivery to the Company.

                              REPUBLIC GROUP INCORPORATED



                              By:_______________________________
                              Name:_____________________________
                              Title:____________________________


Amount of Retention Bonus Award: ____ times your base salary

ACCEPTED AND AGREED TO:
-----------------------

_________________________________
Employee


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          APPENDIX A - For Participants who do not participate in the
                        Key Employee Continuation Plan


                          REPUBLIC GROUP INCORPORATED


June 6, 2000


________________________________
________________________________
________________________________

Dear_____________________:

     In recognition of your efforts, the contributions you have made, and the
future contributions you will continue to make as an employee of Republic Group
Incorporated  (the "Company"), we are offering you the opportunity to earn a
special Retention Bonus (the 'Retention Bonus") in the amount indicated below.
The Retention Bonus will be fully subject to the terms of the Retention Bonus
Plan, to which this award letter is attached as Appendix A.

     The Retention Bonus is intended to encourage you to continue your
employment with the Company (and to reward you for such service) during the
period leading up to, and for a transition period following,  a transaction in
which the Company may be sold.  Your Retention Bonus is generally payable in two
installments, the first payment date being the date of the closing of a
transaction for the sale of the Company, when 50% of your Retention Bonus will
be paid.  The remaining 50% of your Retention Bonus will be paid on the second
payment date, which will occur on the earlier of (i) the date that is 6 months
after the closing, (ii) your termination by the Company for any reason other
than Cause, or (iii) your resignation for Good Reason.  Cause and Good Reason
shall have the meanings assigned to them in the Plan document.

     Please note that this letter is not a guarantee of continuing employment or
an employment contract between you and the Company.  You remain an at-will
employee of the Company.

     By your execution and delivery of this letter, you accept your
participation in the Retention Bonus Plan.  This letter will become effective
upon your execution of it in the space provided below and its delivery to the
Company.

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                              REPUBLIC GROUP INCORPORATED


                              By:__________________________________
                              Name:________________________________
                              Title:_______________________________


Amount of Retention Bonus Award: ____ times your base salary

ACCEPTED AND AGREED TO:
-----------------------

__________________________________
Employee


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