<PAGE>
 
                                                                    EXHIBIT 10.7

                               SECOND AMENDMENT
                                      TO
                          REVOLVING CREDIT AGREEMENT

     This SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Amendment") is
made and entered into as of the         day of August, 1996, by and among 
CULLIGAN WATER TECHNOLOGIES, INC., a Delaware corporation (the "Parent"),
CULLIGAN INTERNATIONAL COMPANY, a Delaware corporation ("CIC"), the Subsidiaries
of the Parent and CIC other than the Excluded Subsidiaries (as defined the
Credit Agreement referred to below) (the Parent and CIC and such Subsidiaries
herein referred to collectively as the "Borrowers" and, individually, as a
"Borrower"), THE FIRST NATIONAL BANK OF BOSTON ("FNBB"), a national banking
association, CREDIT LYONNAIS NEW YORK BRANCH ("Credit Lyonnais"), a duly
licensed branch under New York Banking Law of a foreign corporation organized
under the laws of the Republic of France, WELLS FARGO BANK, NATIONAL ASSOCIATION
("Wells Fargo"), a national banking association, the other Lenders (as defined
in the Credit Agreement referred to below), FNBB as Administrative and Managing
Agent for the Lenders (in such capacity, the "Managing Agent"), and CREDIT
LYONNAIS and WELLS FARGO as Co-Agents for the Lenders (the "Co-Agents" and,
collectively with the Managing Agent, the "Agents").

     WHEREAS, the Borrowers, the Lenders and the Agents are party to a Revolving
Credit Agreement dated as of July 14, 1995, as amended by a First Amendment to 
Revolving Credit Agreement dated as of January 29, 1996 (as so amended, the 
"Credit Agreement"), pursuant to which the Lenders have extended credit to the 
Borrowers on the terms set forth therein;

     WHEREAS, the Borrower has requested that the Lenders and the Agents amend 
the Credit Agreement, and the Lenders and the Agents are willing to amend the 
Credit Agreement on the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the foregoing, and for other good and 
valuable consideration, the receipt and sufficiency of which are hereby 
acknowledged, the parties agree to amend the Credit Agreement as follows:


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                                      -2-
 
     1. Definitions. Capitalized terms used herein without definition that are 
defined in the Credit Agreement shall have the meanings assigned to such terms 
in the Credit Agreement.

     2. Amendments to (S)7.4 of the Credit Agreement. Section 7.4 of the Credit 
Agreement is further amended by deleting clause (h) of the proviso therein in 
its entirety and replacing it with the following:

     "(h) the total cash consideration (including the amount of any Indebtedness
     assumed in connection therewith) shall not exceed (A) for 51-99% owned
     Subsidiaries (including Excluded Subsidiaries), notwithstanding the
     provisions of (S)8.2 hereof, (i) in the event the Leverage Ratio (as
     defined in (S)8.2 hereof), as at the end of the fiscal quarter immediately
     preceding the proposed acquisition or Investment, as adjusted for all
     acquisitions or Investments made since such date plus the proposed
     acquisition or Investment (the "Adjusted Leverage Ratio"), shall exceed
     3.12:1, $35,000,000 in the aggregate through the term of this Agreement, or
     (ii) provided the Adjusted Leverage Ratio shall be greater than 2.50:1 but
     shall not exceed 3.12:1, $42,500,000 in the aggregate through the term of
     this Agreement, or (iii) provided the Adjusted Leverage Ratio shall not
     exceed 2.50:1, $50,000,000 in the aggregate through the term of this
     Agreement; or (B) for acquisitions of less than 51% interest in any Person
     (including Excluded Subsidiaries), notwithstanding the provisions of (S)8.2
     hereof, (i) in the event the Adjusted Leverage Ratio shall exceed 3.12:1,
     $15,000,000 in the aggregate through the term of this Agreement, or (ii)
     provided the Adjusted Leverage Ratio shall be greater than 2.50:1 but shall
     not exceed 3.12:1, $32,500,000 in the aggregate through the term of this
     Agreement, or (iii) provided the Adjusted Leverage Ratio shall not exceed
     2.50:1, $50,000,000 in the aggregate through the term of this Agreement;
     provided that any acquisition or Investment permitted hereunder when made
     shall not be required to be sold or otherwise divested because subsequent
     thereto the Adjusted Leverage Ratio shall increase from the Adjusted
     Leverage Ratio calculated at the time of the making of such acquisition or
     Investment; and"

     3. Representations and Warranties. The Borrowers jointly and severally 
represent and warrant as follows:

          (a) The execution, delivery and performance of this Amendment and the
     Credit Agreement, as modified by this Amendment, and the transactions
     contemplated hereby and thereby (i) are within the corporate authority of
     each of the Borrowers,


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                                      -3-

     (ii) have been duly authorized by all necessary corporate proceedings on
     the part of each of the respective Borrowers, (iii) do not conflict with or
     result in any material breach or contravention of any provision of law,
     statute, rule or regulation to which any Borrower is subject or any
     judgment, order, writ, injunction, license or permit applicable to any
     Borrower so as to materially adversely affect the assets, business or any
     activity of any Borrowers, and (iv) do not conflict with any provision of
     the corporate charter or bylaws of any Borrower or any agreement or other
     instrument binding upon any Borrower.

          (b) The execution, delivery and performance of this Amendment and the
     Credit Agreement, as modified by this Amendment, will result in valid and
     legally binding obligations of the Borrowers enforceable against each in
     accordance with the respective terms and provisions hereof and thereof,
     except as enforceability is limited by bankruptcy, insolvency,
     reorganization, moratorium or other laws relating to or affecting generally
     the enforcement of creditors rights and except to the extent that
     availability of the remedy of specific performance or injunctive relief is
     subject to the discretion of the court before which any proceeding 
     therefore may be brought.

          (c) The execution, delivery and performance by the Borrowers of this
     Amendment and the Credit Agreement, as modified by this Amendment, and the
     consummation by the Borrowers of the transactions contemplated hereby and
     thereby do not require any approval or consent of, or filing with, any
     governmental agency or authority other than those already obtained.

          (d) The representations and warranties contained in (S)5 of the Credit
     Agreement are true and correct in all material respects as of the date
     hereof as though made on and as of the date hereof.

          (e) No Default or Event of Default under the Credit Agreement has 
     occurred and is continuing.

     4. Ratification, Affirmation, etc. Except as expressly amended hereby, the 
Credit Agreement, the other Loan Documents and all documents, instruments and 
agreements related thereto are hereby ratified and confirmed in all respects and
shall continue in full force and effect. Each of the Borrowers hereby affirms 
its irrevocable and unconditional acceptance of joint and several liability for 
the Obligations as and to the extent set forth in (S)4.13 of the Credit 
Agreement. 


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                                      -4-
 
This Amendment and the Credit Agreement shall hereafter be read and construed 
together as a single document, and all references in the Credit Agreement, any 
other Loan Document or any agreement or instrument related to the Credit 
Agreement shall hereafter refer to the Credit Agreement as amended by this 
Amendment.

     5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN 
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO CONFLICT
OF LAWS) AND SHALL TAKE EFFECT AS A SEALED INSTRUMENT IN ACCORDANCE WITH SUCH 
LAWS.

     6. Counterparts. This Amendment may be executed in any number of 
counterparts and by different parties hereto on separate counterparts, each of 
which when so executed and delivered shall be an original, but all of which 
counterparts taken together shall be deemed to constitute one and the same 
instrument.

     7. Effectiveness. This Amendment shall become effective upon receipt by the
Managing Agent of requisite counterpart signatures required under (S)26 of the 
Credit Agreement. All proceedings in connection with the transactions 
contemplated by this Amendment and all documents incident thereto shall be 
reasonably satisfactory in substance and form to the Managing Agent, and the 
Managing Agent shall have received all information and such counterpart 
originals or certified or other copies of such documents as the Managing Agent 
may reasonably request.


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                                      -5-

     IN WITNESS WHEREOF, each of the undersigned have duly executed this 
Amendment as an instrument under seal as of the date first set forth above.


                      THE BORROWERS:         CULLIGAN WATER TECHNOLOGIES, INC.
                                             
                                             By: /s/ Edward A. Christensen
                                                 -------------------------
                                             Title: Vice President
                                                    ----------------------

                                             CULLIGAN INTERNATIONAL
                                               COMPANY
                                             
                                             By: /s/ Edward A. Christensen
                                                 -------------------------
                                             Title: Vice President
                                                    ----------------------

                                             CULLIGAN DES PLAINES VALLEY 
                                               WATER CONDITIONING, INC.  
                                             CULLIGAN DUTCHESS-PUTNAM    
                                               WATER CONDITIONING, INC.  
                                             CULLIGAN OF FLORIDA, INC.   
                                             CULLIGAN PENINSULA          
                                               INDUSTRIAL WATER          
                                               CONDITIONING COMPANY      
                                             CULLIGAN WATER CONDITIONING,
                                               INC.                      
                                             CULLIGAN WATER CONDITIONING 
                                               OF BATTLE CREEK, INC.     
                                             CULLIGAN WATER CONDITIONING 
                                               OF BUTLER, INC.           
                                             CULLIGAN WATER CONDITIONING 
                                               OF GREATER DETROIT, INC.  
                                             CULLIGAN WATER CONDITIONING 
                                               OF HOUSTON, INC.          
                                             CULLIGAN WATER CONDITIONING 
                                               OF ORANGE COUNTY, INC.    
                                             CULLIGAN WATER CONDITIONING 
                                               OF SOUTH BEND, INC.        
                                       
                                             By: /s/ Michael A. Siri
                                                 -------------------------
                                                     Michael A. Siri
                                                     Treasurer     


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                                      -6-


                                             CULLIGAN WATER CONDITIONING
                                               OF TIPPECANOE COUNTY, INC.
                                             GREATER CHICAGO CULLIGAN
                                               WATER CONDITIONING, INC.  
                                             INDIANA SOFT WATER SERVICE, 
                                               INC.  
                                             INLAND EMPIRE DEALERSHIP    
                                               PROPERTY, INC.            
                                             HIGHQUALITY WATER SERVICES, 
                                               INC.
                                             DALLAS-FORT WORTH WATER     
                                               QUALITY, INC.
                                             ST. LOUIS SOFT WATER SERVICE,
                                               INC.           
                                             CWC FINANCE CORP.           
                                             CWC INTERNATIONAL, INC.     
                                             CWM INTERNATIONAL, INC.     
                                             CULLIGAN DISTRIBUTION       
                                               SERVICES, INC.      
                                             SANTA BARBARA DEALERSHIP
                                               PROPERTY, INC.
                                             CWG, INC.
                                       
                                             By: /s/ Michael A. Siri
                                                 -------------------------
                                                     Michael A. Siri
                                                     Treasurer


                                             EVERPURE, INC.
                                             
                                             By: /s/ Edward A. Christensen
                                                 -------------------------
                                             Title: Vice President
                                                    ----------------------


                                             CULLIGAN OF CANADA, LTD.
                                             
                                             By: /s/ Edward A. Christensen
                                                 -------------------------
                                             Title: Vice President
                                                    ----------------------


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                                      -7-


                                             CULLIGAN WATER CONDITIONING 
                                               (ONTARIO) LTD.
                                             
                                             By: /s/ Edward A. Christensen
                                                 -------------------------------
                                             Title: Vice President
                                                    ----------------------------

                                             WATER CONDITIONING FINANCE
                                               LIMITED  
                                             
                                             By: /s/ Edward A. Christensen
                                                 -------------------------------
                                             Title: Vice President
                                                    ----------------------------

                                             CULLIGAN ESPANA S.A.       
                                             CULLIGAN ITALIANA S.p.A.    
                                             CULLIGAN INTERNATIONAL (U.K.)
                                               LIMITED
                                             CULLIGAN N.V.               
                                             N.V. EVERPURE (EUROPE) S.A. 
                                             CULLIGAN de MEXICO S.A. de C.V.
                                             EVERPURE JAPAN, INC.
                                             CULLIGAN HUNGARY
                                               VIZKEZELESI Rt.

                                             
                                             By: /s/ Edward A. Christensen
                                                 -------------------------------
                                             Title: Director or Authorized Agent
                                                    ----------------------------

                                             CULLIGAN WASSERTECHNIK Gmbh   
                                             
                                             By: /s/ Edward A. Christensen
                                                 -------------------------------
                                             Title: Authorized Agent
                                                    ----------------------------

                                             CULLIGAN FRANCE S.A.
                                             TECHNINO S.A.
                                             SOFADIM, S.A.
                                             
                                             By: /s/ Edward A. Christensen
                                                 -------------------------------
                                             Title: Authorized Agent
                                                    ----------------------------


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                                      -8-

 
                   THE LENDERS:           THE FIRST NATIONAL BANK OF
                                          BOSTON, individually and as
                                          Managing Agent

                                          By: /s/ J. Lee Harper, Jr.
                                              ------------------------
                                          Title: Vice President
                                                 ---------------------


                                          CREDIT LYONNAIS NEW YORK    
                                          BRANCH, individually and as
                                          Co-Agent        

                                          By: /s/ Robert Ivosevich
                                              ------------------------
                                          Title: Senior Vice President
                                                 ---------------------


                                          WELLS FARGO BANK,           
                                          NATIONAL ASSOCIATION,
                                          individually and as Co-Agent

                                          By: /s/ Alan W. Wray
                                              ------------------------
                                          Title: Vice President
                                                 ---------------------

                                          
                                          BANK OF AMERICA ILLINOIS

                                          By: /s/ Timothy J. Pepowski
                                              ------------------------
                                          Title: Senior Vice President
                                                 ---------------------


                                          BANQUE PARIBAS

                                          By: /s/ Ann C. Pifer
                                              ------------------------
                                          Title: Vice President
                                                 ---------------------

                                          By: /s/ John J. McCormick, III
                                              ------------------------
                                          Title: Vice President
                                                 ---------------------




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                                      -9-

 
                                          HARRIS TRUST AND SAVINGS BANK

                                          By: /s/ R. Michael Newton
                                              ------------------------
                                          Title: Vice President
                                                 ---------------------

                                          
                                          LASALLE NATIONAL BANK

                                          By: /s/ Michael Foster
                                              ------------------------
                                          Title: Senior Vice President
                                                 ---------------------


                                          THE BANK OF NOVA SCOTIA

                                          By: /s/ M. D. Smith
                                              ------------------------
                                          Title: Agent, Operations
                                                 ---------------------


                                          UNION BANK

                                          By: /s/ Julie B. Bloomfield
                                              ------------------------
                                          Title: Vice President
                                                 ---------------------