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                                 EXHIBIT 10.7

                          SECOND AMENDMENT AND WAIVER
                                      TO
                          SECOND AMENDED AND RESTATED
                          LOAN AND SECURITY AGREEMENT
                                    AND TO
                           THE AMENDED AND RESTATED
                            REIMBURSEMENT AGREEMENT

    THIS SECOND AMENDMENT AND WAIVER (the "Amendment and Waiver") dated as of 
June 9, 1997 is entered into by and among PEN-TAB INDUSTRIES, INC., a Delaware 
corporation (the "Borrower"), Pen-Tab Holdings, Inc. (formerly known as Pen-Tab 
Industries, Inc.), a Virginia corporation (the "Parent") and BANK OF AMERICA 
ILLINOIS (the "Bank").

                              W I T N E S E T H:
                              - - - - - - - - -

    WHEREAS, the Borrower, the Parent and the Bank are parties to a certain 
Second Amended and Restated Loan and Security Agreement dated as of February 4, 
1997, as amended and modified through the date hereof (herein called the "Credit
Agreement"; terms used but not otherwise defined herein are used herein as 
defined in the Credit Agreement);

    WHEREAS, the Borrower, the Parent and the Bank are also parties to a certain
Amended and Restated Reimbursement Agreement dated as of February 4, 1997 
(herein called the "Reimbursement Agreement");

    WHEREAS, the Borrower and the Parent have reported to the Bank the existence
of certain non-compliance with Section 11.2 of the Credit Agreement and certain 
non-compliance with Section 7.1 of the Reimbursement Agreement, and have 
requested that the Bank waive such noncompliance; and

    WHEREAS, the Borrower and the Parent have further requested that the Credit 
Agreement be amended (i) to revise the definition of Minimum Consolidated Net 
Worth, and (ii) to permit the issuance of certain performance standby letters of
credit;

    NOW, THEREFORE, in consideration of the premises, and intending to be 
legally bound hereby, the Borrower, the Parent and the Bank hereby agree as 
follows:

    SECTION 1.  WAIVER.
                ------

    Subject to and upon the terms and conditions hereof and in reliance on the 
Borrower's and the Parent's warranties set forth in Section 3 below, as of the 
                                                    ---------
date hereof, the Bank waives
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the Borrower's non-compliance with Section 11.2 of the Credit Agreement and the 
Borrower's related non-compliance with Section 7.1 of the Reimbursement 
Agreement from the Closing Date to and including the date hereof; provided, that
                                                                  -------- 
at all times from the Closing Date to and including the date hereof the Minimum 
Consolidated Net Worth shall have equalled or exceeded - $27,150,000.

     SECTION 2.  AMENDMENTS.
                 ----------

     Subject to and upon the terms and conditions hereof and in reliance on the 
Borrower's and the Parent's warranties set forth in Section 3 below, as of the 
                                                    ---------
date hereof the Credit Agreement is amended as follows:

     (a)  Clause (a) of the definition of Minimum Consolidated Net Worth set 
forth in Section 1.1 of the Credit Agreement is amended by replacing the 
reference therein to "$-26,400,000" with a reference to "$-27,150,000".

     (b)  The first sentence of Section 2.2 of the Credit Agreement is amended 
to read in its entirety as follows:

     SECTION 2.2  LC Commitment.  The Bank agrees to issue from time to time 
                  -------------  
   before the Termination Date such performance standby letters of credit and
   commercial and import letters of credit (such letters of credit being herein
   collectively called "Letters of Credit" and individually a "Letter of
   Credit") as the Borrower may request."

     (c)  Section 3.2 of the Credit Agreement is amended to read in its entirety
   as follows:

     SECTION 3.2  Expiration and other Terms.  Each Letter of Credit may expire 
                  --------------------------
   before, on or after the Termination Date; provided, that with respect to each
                                             --------
   Letter of Credit expiring after the Termination Date, (i) the Borrower hereby
   agrees to pledge cash collateral to the Bank, no later than thirty (30) days
   prior to the Termination Date, in an amount, and pursuant to documentation,
   satisfactory to the Bank, and (ii) with respect to commercial and import
   Letters of Credit, in no event shall the expiration date exceed more than one
   year from the date of issuance of such Letter of Credit."

     SECTION 3.  WARRANTIES.
                 ----------

     To induce the Bank to enter into this Amendment and Waiver, the Borrower
and the Parent warrant to the Bank as of the date hereof that:
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    (a) After giving effect to this Amendment and Waiver, all representations 
and warranties contained in the Credit Agreement, the Loan Documents, the 
Reimbursement Agreement and the LC Documents are true and correct in all
material respects on and as of the date hereof (except to the extent such
representations and warranties expressly refer to an earlier date).

    (b) After giving effect to this Amendment and Waiver, no Default or Event of
Default (such terms are used herein as defined in the Credit Agreement and the 
Reimbursement Agreement) has occurred and is continuing.

    (c) The execution, delivery and performance by the Borrower and the Parent 
of this Amendment and Waiver have been duly authorized by all necessary 
corporate and other action and do not and will not require any registration 
with, consent or approval of, notice to or action by, an Person (including any 
Governmental Authority) in order to be effective and enforceable. The Credit 
Agreement and the Reimbursement Agreement as modified by this Amendment and 
Waiver constitute the legal, valid and binding obligations of the Borrower and 
the Parent, enforceable against them in accordance with the Credit Agreement's 
and the Reimbursement Agreement's respective terms, without defense, 
counterclaim or offset.

    SECTION 4.  GENERAL.
                -------

    (a) As hereby modified, each of the Credit Agreement and the Reimbursement 
Agreement shall remain in full force and effect and is hereby ratified, approved
and confirmed in all respects.

    (b) The Borrower and the Parent each acknowledge and agree that the 
execution and delivery by the Bank of this Amendment and Waiver shall not be 
deemed to create a course of dealing or otherwise obligate the Bank to execute 
similar waivers under the same or similar circumstances in the future.

    (c) This Amendment and Waiver shall be binding upon and shall inure to the 
benefit of the Borrower, the Parent and the Bank and the respective successors 
and assigns of such Persons.

    (d) This Amendment and Waiver may be executed in any number of counterparts 
and by the different parties on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall together 
constitute but one and the same Amendment and Waiver.


                                   * * * * *


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Delivered at Chicago, Illinois, as of the date and year first above written.

                                       BANK OF AMERICA ILLINOIS

                                       By: /s/ L. Richard DiDonato
                                          -----------------------------------
                                       Name: L. Richard DiDonato
                                       Title: Vice President


                                       PEN-TAB INDUSTRIES, INC., a
                                       Delaware corporation

                                       By: /s/ William Leary
                                          -----------------------------------
                                       Name: William Leary
                                       Title: Vice President


                                       PEN-TAB HOLDINGS, INC. (formerly
                                       known as Pen-Tab Industries, Inc.),
                                       a Virginia Corporation

                                       By: /s/ William Leary
                                          -----------------------------------
                                       Name: William Leary
                                       Title: Vice President



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